<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
January 24, 2000
Date of Report (Date of earliest event reported):
ASIA RESOURCES HOLDINGS LIMITED
(Exact name of registrant as specified in its charter)
Delaware 1-8334 75-1071598
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification Number)
Rm. 2005, 20/F, Universal Trade Centre
3-5A, Arbuthnot Road
Central, Hong Kong
(Address of principal executive offices)
Registrant's telephone number, including area code: 011-852-2810-6226
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
The information set forth below under "Item 2. Acquisition or
Disposition of Assets" is incorporated herein by reference.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 24, 2000 (the "Closing Date"), pursuant to an Acquisition
Agreement dated as of September 10, 1999 (the "Acquisition Agreement") among
the Registrant, Horler Holdings, Ltd. ("Horler"), Far Beyond Investments
Limited ("Far Beyond") and the shareholders of Far Beyond (the "FB
Shareholders"), the FB Shareholders transferred all of the issued and
outstanding shares of the capital stock of Far Beyond (the "Far Beyond
Shares") to the Registrant in exchange for 8,757,951 shares of the Common
Stock of the Registrant representing approximately 88% of the outstanding
shares of the Common Stock of the Registrant. Far Beyond owns a 70% equity
interest in Harbin Asibao Chemical Fiber Company Limited ("Asibao"), a
Sino-foreign joint venture company that produces and distributes polyester
filament and polyester staple fiber.
Concurrently with the closing of the Acquisition Agreement, pursuant to
a Disposal Agreement (the "Disposal Agreement") between the Registrant and
Horler, the Registrant transferred to Horler the entire entire share capital
of Westronix Limited ("WL") in full and final satisfaction of the outstanding
indebtedness owed to Horler in the principal amount of $30,000,000 under a 9%
Secured Convertible Note. Also, concurrently with such closing, pursuant to
an Assignment Agreement (the "Assignment Agreement") between the Registrant
and China Strategic Holdings Limited ("CSH"), the Registrant assigned to CSH,
in settlement of the outstanding indebtedness of Registrant owed to CSH, two
promissory notes (the "Notes") executed in favor of the Registrant in the
aggregate principal amount of $1,700,000. WL owns all of the outstanding
capital stock of China Construction Holdings Limited ("CCHL"), which in turn
is a holder of a 51% interest in HangZhou Zhongche Huantong Development Co.,
Ltd. ("HZHD"). HZHD was the only operating subsidiary of the Registrant and
is a Sino-foreign joint venture company established to develop the HangZhou
toll road. Pursuant to the Disposal Agreement (but prior to giving effect to
the acquisition of the Far Beyond Shares) and the Assignment Agreement, the
Registrant disposed of all of its assets other than approximately $150,000 in
cash or cash equivalents and all of its liabilities.
The consideration for the Far Beyond Shares was determined through
negotiations between the management of the Registrant and the FB
Shareholders. The consideration for the sale of the share capital of WL was
determined through negotiations between the management of the Registrant and
Horler and was confirmed by a written opinion from Horwath Corporate
Solutions Limited ("Horwath") delivered to the Board of Directors of
Registrant to the effect that the consideration to be received by the
Registrant pursuant to the Disposal Agreement was fair from a financial point
of view to the stockholders of the Registrant. The consideration for the
assignment of the Notes was determined through negotiations between the
management of the Registrant and CSH and was confirmed by a written Opinion
of Horwath to the Board of directors to the effect that the consideration
received by the Registrant pursuant to the
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<PAGE>
Assignment Agreement was fair from a financial point of view to the
stockholders of the Registrant.
On the Closing Date, the executive officers and directors of the
Registrant resigned. Immediately following such resignations, the following
persons became members of the Board of Directors of the Registrants: Ching
Lung Po, Zhao Rui Min, Liu Ming Xue, Liu Feng Jie and Wan Wai On.
On the Closing Date, the Board of Directors of the Registrant elected
Ching Lung Po as President, Zhao Rui Min and Liu Ming Yue as Vice Presidents,
Liu Fing Jie as Chief Financial Officer and Wan Wai On as the Secretary of
the Registrant.
The following table sets forth the beneficial ownership of the Common
Stock of the Registrant as of January 24, 2000 by each person known to the
Registrant to own more than 5% of the outstanding common stock of the
Registrant after giving effect to the issuance of shares to the FB
Shareholders. In accordance with Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), a person is deemed to be a
"beneficial owner" of a security if he, she or it has or shares the power to
vote or direct the voting of such security or the power to dispose or direct
the disposition of such security. A person is also deemed to be a beneficial
owner of any security of which that person has the right to acquire
beneficial ownership within sixty (60) days of January 24, 2000. More than
one person may be deemed to be the beneficial of the same securities. The
percentage ownership of each stockholder is calculated based on the total
number of outstanding shares of common stock of the Registrant as of January
24, 2000.
<TABLE>
<CAPTION>
Name Number of Shares Percent
- ---- ---------------- -------
<S> <C> <C>
Hearty Holdings Limited 4,046,174 40.65%
Rm. 2005 Universal Trade Centre
3-5A Arbuthnot Road
Central, Hong Kong
Megastone Development Limited 1,734,074 17.42%
20/F Asia Pacific Finance Tower
Citibank Plaza, 3 Garden Road
Central, Hong Kong
Liu Ming Xue (1) 2,023,087 20.32%
Rm. 2005 Universal Trade Centre
3-5A Arbuthnot Road
Central, Hong Kong
Cao Yu Shan (1) 2,023,087 20.32%
Rm. 2005 Universal Trade Centre
3-5A Arbuthnot Road
Central, Hong Kong
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Name Number of Shares Percent
- ---- ---------------- -------
<S> <C> <C>
Well Gain Investments Limited 700,636 7.0%
Room 2103-2104, 21/F Treasure Centre
42 Hung To Road
Kwun Tong, Hong Kong
Zhu Yi Xin (2) 700,636 7.0%
Rm. 2005 Universal Trade Centre
3-5A Arbuthnot Road
Central, Hong Kong
NJI No. 2 Investment Fund 1,992,400 20.0%
6 Battery Road, No. 42-01
Singapore 049909
</TABLE>
(1) Messieurs Liu and Cao each own 50% of the share capital of Hearty
Holdings Limited.
(2) Mr. Zhu owns all of the share capital of Well Gain Investments
Limited.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Effective November 24, 1999 the Registrant dismissed Arthur Anderson &
Co. ("Anderson") as the Registrant's independent accountants. The dismissal
of Anderson was approved by the Registrant's Board of Directors.
Anderson audited the Registrant's financial statements for the years
ended December 31, 1998 and 1997. Anderson's report for such periods did not
contain an adverse opinion or a disclaimer of opinion, nor was the report
qualified or modified as to uncertainty, audit scope or accounting principles.
During the period from January 1, 1997 to December 31, 1998, there were
no disagreements with Anderson on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which disagreement, if not resolved to the satisfaction of Anderson, would
have caused such firm to make reference to the subject matter of the
disagreement in connection with its reports on the Registrant's financial
statements. In addition, there were no such events as described under Item
304(a)(1)(IV)(B) of Regulation S-K during the fiscal year ended December 31,
1999 and the subsequent interim periods through January 24, 2000.
The Registrant has provided Anderson with a copy of the disclosures
contained herein, and has requested that it furnish the Registrant with a
letter addressed to the Securities and Exchange Commission stating whether it
agrees with the statements made by the Registrant in response to Item 304(a)
regarding its involvement with the Registrant as independent accountants and,
if not, stating the respects in which it does not agree.
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ITEM 5. OTHER EVENTS
(a) Registrant has moved its principal executive offices to Rm. 2005,
20/F, Universal Trade Center, 3-5A, Arbuthnot Road, Central Hong
Kong.
ITEM 7. FINANCIAL STATEMENTS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
The financial statements required by this item are not included in
this initial report on Form 8-K but will be filed by amendment not
later than 60 days after the date that this initial report on Form
8-K must be filed.
(b) PRO FORMA FINANCIAL INFORMATION.
The financial statements required by this item are not included in
this initial report on Form 8-K but will be filed by amendment not
later than 60 days after the date that this initial report on Form
8-K must be filed.
(c) EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
Exhibit 2.1 Acquisition Agreement dated as September 10, 1999
between the Registrant, Horler, Far Beyond and the
FB Shareholders.
Exhibit 2.2 Disposal Agreement between the Registrant and Horler.
Exhibit 2.3 Assignment Agreement between the Registrant and CSH.
</TABLE>
5
<PAGE>
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.
ASIA RESOURCES HOLDINGS LIMITED
Date: February 4, 2000 By: /s/ Ching Lung Po
-------------------------
Ching Lung Po, President
6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
2.1 Acquisition Agreement dated as September 10, 1999 between the
Registrant, Horler, Far Beyond and the FB Shareholders.
2.2 Disposal Agreement between the Registrant and Horler.
2.3 Assignment Agreement between the Registrant and CSH.
</TABLE>
7
<PAGE>
EXHIBIT 2.1
ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (the "AGREEMENT"), is dated as of September
10, 1999, by and among Asia Resources Holdings Limited, a Delaware
corporation (the "COMPANY"), Horler Holdings Ltd., a British Virgin Islands
corporation ("Horler"); Far Beyond Investments Limited, a British Virgin
Islands corporation (hereinafter "Far Beyond"); and the shareholders of Far
Beyond named on the signature pages hereof (the "FB SHAREHOLDERS").
RECITALS
WHEREAS, the Company has agreed to transfer, convey and assign, and
Horler has agreed to accept and assume, all of the assets and properties
(other than at least U.S. $150,000 in cash or cash equivalents) and all of
the liabilities and obligations of the Company, in each case as the same
shall exist on the Closing Date (as defined below), immediately prior to the
consummation of the Exchange (as defined below).
WHEREAS, the FB Shareholders own all of the issued and outstanding
ordinary shares of U.S.$1.00 each in the capital of Far Beyond (hereinafter
collectively referred to as the "FAR BEYOND STOCK");
WHEREAS, the Company wishes to acquire all of the Far Beyond Stock in
exchange for a total of 8,757,851 shares of common stock of the Company, with
a par value of $0.01 per share (the "Company Common Stock"), which shares of
COMPANY COMMON STOCK shall equal, in the aggregate, 88% of the aggregate
issued and outstanding Company Common Stock following the closing referred to
in Section 7 hereof;
WHEREAS, the FB Shareholders wish to exchange their Far Beyond Stock for
Company Common Stock;
WHEREAS, Horler is the principal stockholder of the Company and will
directly benefit by the transactions contemplated herein;
NOW, THEREFORE, in consideration of the premises herein contained, the
mutual covenants hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto covenant and agree as follows:
TERMS
1. EXCHANGE OF SECURITIES.
Subject to the terms and conditions hereinafter set forth, at the time
of the closing referred to in Section 7 hereof (the "CLOSING DATE"), the
Company will issue and deliver to the FB Shareholders (or their nominees), as
set forth on the SCHEDULE 1 ATTACHED HERETO, an aggregate of 8,757,851 shares
of the Company Common Stock in exchange for which the FB Shareholders
<PAGE>
will deliver, or cause to be delivered to the Company, all of the Far Beyond
Stock (the "EXCHANGE").
2. REPRESENTATIONS AND WARRANTIES BY FAR BEYOND.
Far Beyond represents and warrants to the Company and Horler that, as of
the date hereof and as of the Closing Date:
(a) Far Beyond is a corporation duly organized, validly existing and in
good standing under the laws of the British Virgin Islands. Copies of the
Memorandum and Articles of Association for Far Beyond have heretofore been
furnished to the Company and such documents are true and correct copies of
the Memorandum and Articles of Association of Far Beyond and include all
amendments thereto.
(b) Far Beyond is the owner of a 70% joint venture interest in Harbin
Asibao Chemical Fiber Company Limited ("ASIBAO"), a Sino-foreign equity joint
venture established under the laws of the People's Republic of China ("PRC").
(c) The consolidated balance sheets of Far Beyond and its subsidiary,
including Asibao (the "FAR BEYOND GROUP") as at December 31, 1997 and 1998,
and the consolidated statements of income, consolidated changes in
stockholders' equity and consolidated statements of cash flow for each of the
years ended December 31, 1996, 1997 and 1998 attached hereto as SCHEDULE 2(C)
(THE "FAR BEYOND FINANCIAL STATEMENTS") prepared by Far Beyond and audited by
Ernst & Young, Certified Public Accountants, fairly present, as of such dates
the consolidated financial condition of the Far Beyond Group and the results
of operations, changes in stockholders equity and cash flow for the periods
then ended, and since December 31, 1998, no dividends or distributions of
capital, surplus, or profits has been paid or declared by Far Beyond (in
redemption of its outstanding shares or otherwise). The consolidated audited
financial statements of the Far Beyond Group have been prepared in accordance
with generally accepted accounting principles in the United States ("US
GAAP").
(d) Since December 31, 1998, the Far Beyond Group has not experienced any
material adverse changes with respect to its business condition (financial or
otherwise) taken as a whole;
(e) Except for such non-compliance as would not have a material adverse
effect on the Far Beyond Group taken as a whole, each member of the Far Beyond
Group has complied, in all material respects, with the terms and provisions of
all agreements to which it is a party and all laws, rules, regulations and
orders to which it or its assets are subject.
(f) The Far Beyond Group is not involved in any pending litigation which
would materially adversely affect the Far Beyond Group taken as a whole, which
has not been provided for or referred to in the Far Beyond Financial Statements
and there are no facts or circumstances known to the Far Beyond Group which
might give rise to any such litigation and there are no unsatisfied judgments or
court orders against any member of the Far Beyond Group.
(g) The Far Beyond Group has good and marketable title to all the
properties owned by it, free and clear of all liens, security interests,
charges, encumbrances and defects,
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except for such liens, security interests, charges, encumbrances and defects as
would not have a material adverse effect on the Far Beyond Group taken as a
whole.
(h) The parties to the joint venture of Asibao have paid their respective
capital contributions in full in accordance with the provisions of the joint
venture contract of Asibao and all relevant laws and regulations of the People's
Republic of China ("PRC").
(i) Asibao has been duly established and is validly existing as a
sino-foreign equity joint venture in the PRC in accordance with the laws, the
relevant rules and regulations of the PRC. The copies of the joint venture
contract, articles of association, approval certificates, letters and business
licenses and all amendments thereto of Asibao supplied to the Company are
complete and accurate in all respects and all legal and procedural requirements
and all other formalities concerning the said documents have been duly and
properly complied with in all material respects.
(j) Asibao has obtained all requisite material permits, consents or
approvals, including but not limited to these relating to environmental
protection, required in relation to its business and operations.
(k) None of the members of the Far Beyond Group use any processes or
products and is not engaged in any activities which infringe any patents,
copyrights, trademarks, service marks, designs, trade or business names or other
registrable or unregistrable intellectual property rights of any third party.
3. REPRESENTATIONS AND WARRANTIES BY THE FB SHAREHOLDERS.
Each FB Shareholder, severally and not jointly, represents and warrants
to the Company that, as of the date hereof and as of the Closing Date:
(a) Such FB Shareholder has good and marketable title to all of the shares
of Far Beyond Stock which it is selling, transferring and exchanging, free and
clear of any and all liens or encumbrances.
(b) Such FB Shareholder has full power to exchange its shares of Far Beyond
Stock upon the terms provided for in this Agreement.
(c) Such FB Shareholder understands that (i) the Company is relying upon an
exemption from registration under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), as set forth in Section 4 thereof, which relate to
"transactions by an issuer not involving any public offering," and applicable
regulations promulgated by the Securities and Exchange Commission ("SEC")
thereunder or other exemption under such Act; and (ii) the Company is also
relying upon the securities laws of any state on the basis that the Exchange is
a transaction exempt from the registration requirements of such laws.
(d) The Company has made available to such FB Shareholder and its
representative, if any, the opportunity to ask questions of and receive answers
from the Company concerning the terms and conditions of the Exchange and to
obtain any additional information desired by the FB Shareholder concerning the
Company.
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<PAGE>
(e) The investment by such FB Shareholder in the Company Common Stock is a
suitable investment for such FB Shareholder, given the investment goals and
objectives of such FB Shareholder.
(f) Such FB Shareholder, either individually or together with his purchaser
representative, if one has been retained, has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of an investment in the Company Common Stock. The FB Shareholder
understands the effect of accepting the Exchange and the differing rights,
restrictions and obligations of a holder of Company Common Stock.
(g) Such FB Shareholder is purchasing the Company Common Stock for his own
account, for investment purposes only, and not with a view to the sale, pledge,
hypothecation, or other distribution or disposition thereof or of any interest
therein, except as referenced in Section 3(h).
(h) Such FB Shareholder understands that resale or transfer of the Company
Common Stock will be prohibited indefinitely unless either (i) the Company
causes the Company Common Stock to be registered under the Securities Act or,
(ii) an exemption from such registration is available and such resale or
transfer will not otherwise violate federal or state securities laws. Such FB
Shareholder further understands that a legend will be affixed to the
certificates representing the Company Common Stock setting forth the foregoing
limitations.
(i) Since December 31, 1998, FB has not experienced any material adverse
changes with respect to its business condition (financial or otherwise), results
of operations, assets, liabilities or prospects. Without limiting the generality
of the foregoing:
(i) FB has not declared, paid or made nor is proposing to declare, pay
or make any dividend or other distribution;
(ii) The financial year end of FB has continued to be and has not
changed from December 31.
(iii) No event has occurred which would entitle any third party (with
or without the giving of notice, the lapse of time, or both) to call for the
repayment of indebtedness prior to its normal maturity date;
(iv) The business of FB has been carried on in the ordinary and usual
course and in the same manner (including nature and scope) as in the past, no
fixed asset or stock has been written up nor any debt written off, and no
unusual or abnormal contract has been entered into by FB;
(v) No asset of FB has been acquired or disposed, or has been agreed
to be acquired or disposed of, otherwise than in the ordinary course of business
and there has been no disposal or parting with possession of any of its
property, assets (including know-how) or stock in trade or any payments by FB,
and no contract involving expenditure by it on capital account has been entered
into by FB, and no liability has been created or has otherwise arisen (other
than in the ordinary course of business as previously carried on);
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<PAGE>
(vi) There has been no disposal of any asset (including stock) or
supply of any service or business facility of any kind (including a loan of
money or the letting, hiring or licensing of any property whether tangible or
intangible) in circumstances where the consideration actually received or
receivable for such disposal or supply was less than the consideration which
could be deemed to have been received for tax purposes;
(vii) No event has occurred which gives rise to a tax liability to FB
or deemed (as opposed to actual) income, profits or gains or which results in FB
becoming liable to pay or bear a tax liability directly or primarily chargeable
against or attributable to another person or entity; and
(viii) No remuneration (including bonuses) or benefit payable to any
officer or employee of FB has been increased nor has the Company undertaken any
obligation to increase any such remuneration at any future date with or without
retrospective effect.
(j) FB has complied, in all material respects, with the terms and
provisions of all agreements to which it is a party and all laws, rules,
regulations and orders or to which it or its assets are subject.
(k) Since December 31, 1998, FB has not provided any guarantees to any
third party.
(l) Except as set forth on Schedule 3(l) attached hereto, the Company does
not have any pension plan, profit sharing plan, or stock-purchase plan for any
of its employees.
(m) FB and the FB Shareholders will use their best efforts to do, or cause
to be done, all things necessary, proper or advisable to consummate the
transactions contemplated hereby.
4. REPRESENTATION, WARRANTIES AND COVENANTS BY THE COMPANY AND HORLER
Each of the Company and Horler jointly and severally represents and
warrants to the FB Shareholders and Far Beyond that, as of the date hereof and
as of the Closing Date (except as modified by the conditions precedent):
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power to own its properties and carry on its business as now being conducted and
as proposed to be conducted and has authorized capital stock consisting of (i)
as of the date hereof, 7,971,014 shares of Company Common Stock and as of the
closing Date, 9,952,117 shares of Company Common Stock of which 597,133 shares
of Company Common Stock are duly and validly issued and outstanding, fully paid
and non-assessable and (ii) 10,000,000 shares of Preferred Stock, none of which
is outstanding. Certified copies of the Certificate of Incorporation, Amendments
of the Certificate of Incorporation and the By-Laws for the Company have been
furnished by the Company to the FB Shareholders and Far Beyond and such
documents are true and correct copies of the Certificate of Incorporation and
the By-Laws of the Company and include all amendments thereto. No other
securities of the Company, or rights, options or warrants to subscribe for or
acquire securities of the Company, other than the above-described shares, exist
or are issued,
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<PAGE>
outstanding or agreed to be issued. The Company has not granted to any party
registration or similar rights with respect to its capital stock.
(b) The Company has all of the corporate power and authority necessary to
execute, deliver and perform this Agreement and to issue and deliver the Company
Common Stock required to be delivered hereunder.
(c) The execution, delivery and performance of this Agreement have been
duly authorized by all necessary corporate (including stockholder) action of the
Company. This Agreement, the Disposal Agreement, the Registration Rights
Agreement, and the Assignment Agreement constitute the valid and binding
obligations of the Company enforceable in accordance with their respective
terms, except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditor's rights and by
general principles of equity. The execution, delivery and performance by the
Company and Horler of this Agreement, the Disposal Agreement, the Registration
Rights Agreement and the Assignment Agreement, the consummation of the Exchange,
the issuance and sale of the Company Common Stock to the FB Shareholders, and
the consummation of the other transactions contemplated by this Agreement, the
Disposal Agreement, the Registration Rights Agreement and the Assignment
Agreement to be performed by the Company and Horler do not and will not require
the authorization, consent, permit or approval of, or declaration to or filing
with, any court, regulatory or public body or governmental authority not already
obtained or made, or result in the creation of any lien, security interest,
charge or encumbrance upon the capital stock or assets of the Company.
(d) The Company has good marketable title to all the properties owned by
it, free and clear of all liens, security interests, charges, encumbrances and
defects.
(e) The consolidated balance sheets of the Company and its consolidated
subsidiaries (the "Company Group") prepared by the Company and audited by Arthur
Andersen & Co., Certified Public Accountants, as at December 31, 1996, 1997 and
1998, and the consolidated statements of operations and cash flow for each of
the years ended December 31, 1996, 1997 and 1998, and the consolidated
statements of changes in shareholders' equity (deficit) for each of the years
ended December 31, 1996, 1997 and 1998 attached hereto as SCHEDULE 4(E) (THE
"COMPANY FINANCIAL STATEMENTS"), present fairly as of such dates the
consolidated financial condition of the Company Group and the results of the
operations for the periods then ended and, since December 31, 1998, no dividends
or distributions of capital, surplus, or profits has been paid or declared by
the Company (in redemption of its outstanding shares or otherwise) and no
additional shares have been issued by the Company. The audited consolidated
financial statements of the Company have been prepared in accordance with US
GAAP
(f) Since December 31, 1998, no member of the Company Group has experienced
any material adverse changes with respect to its business condition (financial
or otherwise), results of operations, assets, liabilities or prospects. Without
limiting the generality of the foregoing:
(i) The Company has not declared, paid or made nor is proposing to
declare, pay or make any dividend or other distribution;
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<PAGE>
(ii) The financial year end of the Company has continued to be and has
not changed from December 31.
(iii) No event has occurred which would entitle any third party (with
or without the giving of notice, the lapse of time, or both) to call for the
repayment of indebtedness prior to its normal maturity date;
(iv) The business of each member of the Company Group has been carried
on in the ordinary and usual course and in the same manner (including nature and
scope) as in the past, no fixed asset or stock has been written up nor any debt
written off, and no unusual or abnormal contract has been entered into by the
Company;
(v) Save and except as provided by the Disposal Agreement and the
Assignment Agreement (as defined below) no asset of the Company has been
acquired or disposed, or has been agreed to be acquired or disposed of,
otherwise than in the ordinary course of business and there has been no disposal
or parting with possession of any of its property, assets (including know-how)
or stock in trade or any payments by the Company, and no contract involving
expenditure by it on capital account has been entered into by the Company, and
no liability has been created or has otherwise arisen (other than in the
ordinary course of business as previously carried on);
(vi) There has been no disposal of any asset (including stock) or
supply of any service or business facility of any kind (including a loan of
money or the letting, hiring or licensing of any property whether tangible or
intangible) in circumstances where the consideration actually received or
receivable for such disposal or supply was less than the consideration which
could be deemed to have been received for tax purposes;
(vii) No event has occurred which gives rise to a tax liability to the
Company or deemed (as opposed to actual) income, profits or gains or which
results in the Company becoming liable to pay or bear a tax liability directly
or primarily chargeable against or attributable to another person or entity; and
(viii) No remuneration (including bonuses) or benefit payable to any
officer or employee of the Company has been increased nor has the Company
undertaken any obligation to increase any such remuneration at any future date
with or without retrospective effect.
(g) The Company has complied, in all material respects, with the terms and
provisions of all agreements to which it is a party and all laws, rules,
regulations and orders or to which it or its assets are subject.
(h) Intentionally deleted.
(i) Since December 31, 1998, except for the transactions provided herein,
the Company has not provided any guarantees to any third party.
(j) Except as set forth on Schedule 4(j) attached hereto, the Company does
not have any pension plan, profit sharing plan, or stock-purchase plan for any
of its employees.
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<PAGE>
(k) Neither the execution or delivery of this Agreement nor the issuance of
the Company Common Stock hereunder, nor the performance, observance or
compliance with the terms and provisions of this Agreement, will violate any
provision of law, rule or regulation, any order of any court or other
governmental agency, the Certificate of Incorporation or By-laws of the Company
or any indenture, agreement or other instrument to which the Company is a party,
or by which the Company is bound or by which any of its property is bound.
(l) The Company Common Stock deliverable hereunder will, upon their
delivery in accordance with the terms hereof, be duly authorized, validly
issued, fully paid and non-assessable and will comprise 88% of the issued and
outstanding shares of Company Common Stock as at the Closing Date.
(m) The Company Common Stock is currently listed for trading on the OTC
Bulletin Board, and the Company has received no notice that its Common Stock is
subject to being delisted therefrom.
(n) The Company has complied with all applicable foreign, federal and state
laws, rules and regulations, including, without limitation, the requirements of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and the
Securities Act.
(o) As of the date hereof, except for its shares of capital stock in
Westronix Ltd., the Company does not have any subsidiary or hold directly or
indirectly any equity security or interest in any third party, and as of the
Closing Date, the Company will not have any subsidiary or hold directly or
indirectly any equity security or interest in any third party.
(p) The Company is required to file reports under Section 12(g) of the
Exchange Act, and is current in its filings thereunder. All of the filings made
by the Company under the Securities Act or the Exchange Act ("Filings") comply
with the requirements thereof and the rules and regulations of the Securities
and Exchange Commission thereunder. None of the Filings made by the Company make
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading.
(q) The Company has not received any demand for payment of any and has paid
all outstanding obligations of the Company relating to sales tax, use tax,
Social Security Tax, Federal Income Withholding Tax, all foreign, federal and
state income tax, workmen's compensation, unemployment compensation taxes and
any other foreign, federal and state taxes incurred by the Company.
(r) Except as set forth on SCHEDULE 4(R) attached hereto, the Company has
no contracts, agreements, leases, licenses, arrangements, commitments or other
undertakings (collectively, the "Company Contracts") to which the Company is a
party or to which it or its property is subject. Except as disclosed in SCHEDULE
4(R) the Company is not in material default, or alleged to be in material
default, under any Company Contract and, to the knowledge of the Company, no
other party to any Company Contract to which the Company is a party is in
default thereunder nor, to the knowledge of the Company, does there exist any
condition or event which, after notice or lapse of time or both, would
constitute a default by any party to any such Company Contract.
<PAGE>
(s) Except as set forth on SCHEDULE 4(S) attached hereto, there are no
contracts, agreements, arrangements or other transactions between the Company
and any officer, director, or 5% stockholder, a member of any such officer,
director or 5% stockholder's family, or any affiliate of any such officer,
director or 5% stockholder.
(t) The Company is not involved in any pending or threatened litigation and
there is no dispute, claim, arbitration, proceeding or, to the knowledge of the
Company, threatened against the Company affecting any of its properties or
assets that might result, either in any case or in the aggregate, in any
material adverse change in the business, operations, affairs or financial
condition of the Company or its properties or assets, or that might call into
question the validity of this Agreement, or any action taken or to be taken
pursuant hereto.
(u) The Company and Horler will use their best efforts to do, or cause to
be done, all things necessary, proper or advisable to consummate the
transactions contemplated hereby, at the earliest practicable date, including
without limitation the Exchange on the Closing Date.
(v) The Company hereby acknowledges that the Far Beyond Stock to be
exchanged for the Company Common Stock is not registered under the Securities
Act or the laws of any other jurisdiction and are subject to restrictions on
their transfer and resale under applicable federal and state law.
(w) The Company understands that (i) in agreeing to transfer their Far
Beyond Stock to the Company in the Exchange, the FB Shareholders are relying
upon an exemption from registration under the Securities Act, as set forth in
Section 4 thereof, which relate to private resales of securities, and (ii) the
FB Shareholders are also relying upon the securities laws of any state on the
basis that the Exchange is a transaction exempt from the registration
requirements of such laws.
(x) As of the Closing, the Company and Horler will have had access to and
will have thoroughly reviewed all documents and instruments, including but not
limited to the Memorandum and Articles of Association, of Far Beyond, as
amended, and will have been able to obtain such information, and have had the
opportunity to ask all questions of, and receive answers from Far Beyond and the
FB Shareholders, which they deem necessary or relevant to the Exchange and will
have utilized such opportunity to the extent deemed necessary by it to allow it
to make a fully informed decision which respect to the Exchange.
(y) The Company is purchasing the Far Beyond Stock for its own account, for
investment purposes only, and not with a view to the sale, pledge,
hypothecation, or other distribution or disposition thereof or of any interest
therein.
(z) The Company understands that resale or transfer of the Far Beyond Stock
will be prohibited indefinitely unless the Far Beyond Stock is registered under
the Securities Act or an exemption from such registration is available and such
resale or transfer will not otherwise violate federal or state securities laws.
(aa) As of the Closing, the Company will have no liabilities or
obligations of any kind whatsoever including, without limitation, any tax
liabilities arising from the
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<PAGE>
transactions contemplated by the Assignment Agreement and Disposal Agreement
and will have cash or cash equivalents of at least U.S. $150,000
(bb) The Company is not an investment company as such term is defined
in the Investment Company Act of 1940 and the General Rules and Regulations
promulgated thereunder or a company controlled by an investment company.
5. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.
The obligation of the Company to consummate the Exchange pursuant to
Section 1 is subject to the satisfaction of the following conditions as of the
Closing Date:
(a) the representations and warranties made by the FB Shareholders and
Far Beyond shall be accurate in all material respects as of the date hereof
and as of the Closing Date and the terms and conditions of this Agreement to
be performed and complied with by the FB Shareholders on or prior to the
Closing Date shall have been performed and complied with by the FB
Shareholders on or prior to the Closing Date, and the Company will have
received a certificate, in the form attached as EXHIBIT 5(a), signed by each
of the FB Shareholders and Far Beyond, dated the Closing Date, certifying to
such effect;
(b) Far Beyond and the FB Shareholders shall have received all corporate,
regulatory and other third party approvals and authorizations necessary to
consummate the Exchange.
(c) Hearty Holdings Limited, Megastone Development Limited and Horler shall
have entered into a Co-Sale Agreement in form and substance reasonably
acceptable to the parties thereto and the other FB Shareholders; and
(d) Far Beyond and the FB Shareholders shall have delivered to the Company
the documents as set out in Exhibit 5(d).
6. CONDITIONS TO THE OBLIGATIONS OF FAR BEYOND AND THE FB SHAREHOLDERS.
The obligation of the FB Shareholders to consummate the Exchange pursuant
to Section 1 is subject to the satisfaction of the following conditions as of
the Closing Date:
(a) the representations and warranties made by the Company and Horler
shall be accurate in all material respects as of the date hereof and as of
the Closing Date and the terms and conditions of this Agreement to be
performed and complied with by the Company and Horler on or prior to the
Closing Date shall have been performed and complied with by the Company and
Horler on or prior to the Closing Date, and the FB Shareholders will have
received a certificate, in the form attached as EXHIBIT 6(a), signed by each
of the Company and Horler, dated the Closing Date, certifying to such effect;
(b) the FB Shareholders shall have received the opinion, dated the Closing
Date, of counsel for the Company, acceptable to the FB Shareholders, to the
effect that (i) the Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and that it has
the corporate power and authority to execute, deliver and perform each of this
Agreement, the Registration Rights Agreement, the Disposal Agreement
10
<PAGE>
and the Assignment Agreement and to own and operate its properties wherever the
same may be located as of the Closing Date; (ii) each of this Agreement, the
Registration Rights Agreement, the Disposal Agreement and the Assignment
Agreement has been duly authorized, executed and delivered by the Company and
each of this Agreement, the Registration Rights Agreement, the Disposal
Agreement and the Assignment Agreement is a legal, valid and binding obligation
of the Company, enforceable in accordance with its terms; (iii) the Company
Common Stock to be delivered to the FB Shareholders pursuant to the terms of
this Agreement have been duly authorized and validly issued, and are fully paid
and nonassessable; (iv) the authorized share capital of the Company consists of
(a) 30,000,000 shares of Company Common Stock of which 9,952,117 shares of
Company Common Stock are issued and outstanding after giving effect to the
transactions contemplated hereby and (b) 10,000,000 shares of Preferred Stock,
none of which is issued or outstanding; and (v) the issuance of the Company
Common Stock herein contemplated does not violate any Federal or Delaware law or
require the registration of the Company Common Stock pursuant to any Federal or
state law dealing with the issuance, sale, transfer, and/or exchange of
securities;
(c) The Company shall have received all of the regulatory, stockholder and
other third party approvals and authorizations necessary to (a) consummate the
Exchange and the disposal of the assets and liabilities as set forth in
subparagraph (e) below including, without limitation, increasing the authorized
number of shares of Common Stock to 30,000,000, and (b) authorize a change in
the corporate name of the Company as designated by Far Beyond;
(d) The Company shall have paid all of its own costs and expenses
associated with the acquisition of Far Beyond by the Company;
(e) The Company shall have transferred all of its assets (except cash and
cash equivalents) and assigned all of its liabilities pursuant to a Disposal
Agreement and Assignment Agreement in (the "Disposal Agreement" and the
"Assignment Agreement") to the effect that, as of the Closing, the only asset of
the Company shall be cash and cash equivalents of at least US $150,000, and the
Company shall have no liabilities whatsoever, contingent or otherwise, save and
except for liability for costs and taxes incurred for the transactions
contemplated by this Agreement and the Disposal Agreement, all of which shall be
the responsibility of Horler. All such transfers and assignments shall be [in
form and substance reasonably satisfactory to FB Shareholders and its counsel]
[substantially on the form of Exhibit 6(e) attached hereto];
(f) The Company shall have entered into a registration rights agreement
with Horler, all the FB Shareholders, including NJI No. 2 Investment Fund and
Bank of Bermuda (Cayman) Ltd., as trustee for and on behalf of Japan Asia
Development Trust, and the Financial Consultants in the form attached as
EXHIBIT 6(f) (the "Registration Rights Agreement"); and
(g) The Company shall have cooperated with Far Beyond and the FB
Shareholders to carry out financial due diligence on the Company to support
the conditions as set out in Section 6(e) above; and Far Beyond and the FB
Shareholders shall be satisfied with the results thereof.
(h) The Company shall have delivered evidence reasonably satisfactory to
Far Beyond and the FB Shareholders regarding the approval of the stockholders
of this Company for
11
<PAGE>
this Agreement, the Disposal Agreement and the Assignment Agreement, and the
transactions contemplated herein and therein.
(i) The Company shall have received a fairness opinion from an independent
third party reasonably acceptable to the FB Shareholders as to the transactions
contempalted by the Assignment Agreement and Disposal Agreement.
7. Closing Date.
The Closing Date shall take place on, or prior, to November 15, 1999 at
20/F., Asia Pacific Finance Tower, Citibank Plaza, 3 Garden Road, Hong Kong, or
at such other time and place as the parties hereto shall mutually agree.
8. ACTIONS AT CLOSING.
At Closing, the Company and the FB Shareholders will each deliver, or
cause to be delivered to the other, certificates representing the Company
Common Stock and Far Beyond Stock to be exchanged in accordance with Section
1, and each party shall pay any and all taxes required to be paid in
connection with the issuance and delivery of its own securities. All share
certificates shall be in the name of the party to which the same are
deliverable or its nominees except the FB Shareholders' shares, which will be
accompanied by an instrument of transfer executed in favor of the Company.
In addition, the Company will deliver to the FB Shareholders or Financial
Consultants, as the case may be:
(1) certified copies of all corporate resolutions and other corporate
proceedings taken by the Company to authorize the execution, delivery and
performance of this Agreement, the Registration Rights Agreement, the
Assignment Agreement and the Disposal Agreement;
(2) certified copies of resolutions of the directors and shareholders
of the Company electing or appointing (as the case may be) such number of
new directors and officers of the Company as may be designated by the FB
Shareholders;
(3) the written resignations of all directors and such officers and
auditors of the Company required by the FB Shareholders, which resignations
will contain an acknowledgment from each of them that they have no claims
against the Company for loss of office, unpaid compensation, or otherwise;
and
(4) all registration certificates, statutory books, minute books and
common seal of the Company, all account books and all documents and papers
in connection with the affairs of the Company and all documents of title
relating to the Company's assets (unless already in the possession of the
FB Shareholders) as are required by the FB Shareholders.
(5) a certificate representing 597,133 shares of the Company Common
Stock to be issued to the Financial Consultants as set forth in a letter of
instructions to be delivered to the Company on or prior to the Closing.
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<PAGE>
FB will deliver to the Company certified copies of all corporate
resolutions and other corporate proceedings taken by FB and the FB
Shareholders to authorize the execution, delivery and performance of the
Agreement, the Registration Rights Agreement, the Assignment Agreement and
the Disposal Agreement.
9. CONFIDENTIAL INFORMATION; DELIVERY; RETURN; NON-DISCLOSURE.
(a) DELIVERY OF INFORMATION. Until the earlier of the Closing Date
or the termination of this Agreement (such date hereinafter the "TERMINATION
DATE"), pursuant to the terms of this Agreement:
(1) Far Beyond will provide the Company and its officers,
directors, employees, agents, counsel, accountants, financial advisors,
consultants and other representatives and Horler (together "COMPANY
REPRESENTATIVES") with reasonable access, upon reasonable prior notice, to
all officers, employees and accountants of Far Beyond and Asibao and to
their assets, properties, contracts, books, records and all such other
information and data concerning the business and operations of Far Beyond
or Asibao as the Company Representatives reasonably may request in
connection with such investigation, but only to the extent that such access
does not unreasonably interfere with the business and operations of Far
Beyond or Asibao.
(2) The Company will provide the FB Shareholders and Far Beyond
and their officers, directors, employees, agents, counsel, accountants,
financial advisors, consultants and other representatives (together "FAR
BEYOND REPRESENTATIVES") with reasonable access, upon reasonable prior
notice, to all officers, employees and accountants of the Company and to
its assets, properties, contracts, books, records and all such other
information and data concerning the business and operations of the Company
as the Far Beyond Representatives reasonably may request in connection with
such investigation.
(b) ACKNOWLEDGEMENTS; DEFINITIONS:
(1) The Company has been and, pursuant to the terms of this
Section, shall continue to be privy to certain proprietary and confidential
information of Far Beyond, Asibao and/or the FB Shareholders (the "FAR
BEYOND CONFIDENTIAL Information"). As used herein, the term "FAR BEYOND
CONFIDENTIAL INFORMATION" shall include, but not be limited to, any and all
information or documentation whatsoever which has been disclosed or made
available to the Company Representatives by Far Beyond, the FB Shareholders
or Asibao, regarding their products, services, techniques, manufacturing or
other processes, activities, businesses, properties, operations, clients,
customers, prospective clients, price lists, suppliers, business associates
equipment, Trade Secrets (as defined herein), computer software, scientific
discoveries, experiments, data, equipment designs, training, devices,
charts, manuals, payroll, financial statements and improvements thereto and
any other information or materials disclosed or delivered to the Company
Representatives which the disclosing party may from time to time designate
and treat as confidential, proprietary or as a trade secret, including
without limitation all information relating (directly or indirectly) to the
material set forth in the Far Beyond business plan delivered or to be
delivered to the Company Representatives.
13
<PAGE>
(2) Far Beyond and/or the FB Shareholders have been and, pursuant
to the terms of this Section, shall continue to be privy to certain
proprietary and confidential information of the Company (the "COMPANY
CONFIDENTIAL INFORMATION"). As used herein, the term "COMPANY CONFIDENTIAL
INFORMATION" shall include, but not be limited to, any and all information
or documentation whatsoever which has been disclosed or made available to
Far Beyond Representatives by the Company regarding its products, services,
techniques, manufacturing or other processes, activities, businesses,
properties, operations, clients, customers, prospective clients, price
lists, suppliers, business associates, equipment, Trade Secrets (as defined
herein), computer software, scientific discoveries, experiments, data,
equipment designs, training devices, charts, manuals, payroll, financial
statements and improvements thereto and any other information or materials
disclosed or delivered to Far Beyond Representatives which the disclosing
party may from time to time designate and treat as confidential,
proprietary or as a trade secret.
(3) Reference to "CONFIDENTIAL INFORMATION" herein shall include
and relate to both Far Beyond Confidential Information and the Company
Confidential Information.
(4) As used herein, the term "TRADE SECRET" shall mean the whole
or any portion of any formula, pattern, device, combination of devices, or
compilation of information which is for use, or is used in the operation of
the other party's businesses and which provides such party's business as
advantage, or an opportunity to obtain an advantage, over those who do not
know or use it. For purposes of interpretation hereunder the following
shall apply:
Irrespective of novelty, invention, patentability, the state of the
prior art, and the level of skill in the business, art or field to which the
subject matter pertains, when the owner thereof takes measures to prevent it
from becoming available to persons other than those selected by the owner to
have access thereto for limited purposes, a trade secret is considered to be
a secret, of value, for use or in use by the business, and of advantage to
the business, or providing an opportunity to obtain an advantage, over those
who do not know or use it.
In addition, a "TRADE SECRET" shall include information (not readily
compiled from publicly available sources) which has been made available by
Far Beyond, Asibao and/or the FB Shareholders to the Company Representatives
or by the Company to the Far Beyond Representatives, as the case may be,
during the course of their involvement with each other, including but not
limited to the names, addresses, telephone numbers, qualifications,
education, accomplishments, experience and resumes of all persons who have
applied or been recruited for employment, for either or both permanent and
temporary jobs, job order specifications and the particular characteristics
and requirements of persons generally hired by the disclosing party, as well
as specific job listings from companies with whom the disclosing party does,
or attempts to do, business, as well as mailing lists, computer runoffs,
financial or other information not generally available to others.
(c) NON-DISCLOSURE; THE COMPANY:
(1) The Company, for itself, its officers, employees, directors,
agents, affiliates, subsidiaries, independent contractors, and related
parties, including Horler (all
14
<PAGE>
of whom are to be deemed included in any reference herein to the Company)
agrees that it will not at any time during or after the termination or
expiration of this Agreement, except as authorized or directed herein or in
writing by Far Beyond and/or the FB Shareholders, use for the Company's own
benefit, copy, reveal, sell, exchange or give away, disclose, divulge or
make known or available in any manner to any person, firm, corporation or
other entity (whether or not the Company receives any benefit therefrom),
any Far Beyond Confidential Information.
(2) The Company will take all actions necessary to ensure that the Far
Beyond Confidential Information is maintained as secret and confidential
and its disclosure shall only be made to the extent necessary, to a limited
group of the Company's employees, officers and/or directors who are
actually engaged in the evaluation of the Far Beyond Confidential
Information; provided however, the Company acknowledges and agrees that it
shall be responsible and held liable for the actions or inactions of such
employees, officers and directors (regardless whether or not such actions
or inactions are within their scope of employment) with respect to the
maintenance of the secrecy and confidentiality of the Far Beyond
Confidential information.
(3) The Company understands that if it discloses to others, use for
its own benefit (other than as part of an agreement with Far Beyond and the
FB Shareholders, which expressly provides for such use) or for the benefit
of any person or entity other than Far Beyond and/or the FB Shareholders,
copies or makes notes of any such Far Beyond Confidential Information, such
conduct will constitute a breach of the confidence and trust bestowed upon
the Company by Far Beyond and the FB Shareholders and will constitute a
breach of this Agreement and render the Company responsible for any and all
damages suffered by Far Beyond and/or the FB Shareholders as a result
thereof.
(4) Provided, however, notwithstanding the foregoing, the terms of
this subsection (c) shall not be applicable to any information which the
Company is compelled to disclose by judicial or administrative process or
by other requirements of law (including, without limitation, in connection
with obtaining the necessary approvals of the Exchange of governmental or
regulatory authorities), except that the Company shall procure the
confidential treatment of any Far Beyond Confidential Information which it
is compelled to disclose by this Section 9(c)(4) and that access thereto
shall be strictly restricted to persons to whom such judicial and
administrative process requires. In the event of any such disclosure of any
Far Beyond Confidential Information, Far Beyond and the FB Shareholders
shall have the right to petition any court of competent jurisdiction for
any remedy or order (interim or otherwise) for the protection of
confidentiality of such Far Beyond Confidential Information.
(d) NON-DISCLOSURE: FAR BEYOND AND THE FB SHAREHOLDERS:
(1) Far Beyond and the FB Shareholders, for themselves, their
officers, employees, directors, agents, affiliates, subsidiaries,
independent contractors, and related parties (all of whom are to be deemed
included in any reference herein to Far Beyond and the FB Shareholders)
severally (but not jointly) agree that they will not at any time during or
after the termination or expiration of any agreement or negotiations for an
agreement
15
<PAGE>
with the Company, except as authorized or directed herein or in writing by
the Company, use for Far Beyond and the FB Shareholders' own benefit, copy,
reveal, sell, exchange or give away, disclose, divulge or make known or
available in any manner to any person, firm, corporation or other entity
(whether or not Far Beyond and the FB Shareholders receive any benefit
therefrom), any Company Confidential Information.
(2) Far Beyond and the FB Shareholders severally (but not jointly)
agree to take all actions necessary to ensure that the Company Confidential
Information is maintained as secret and confidential and its disclosure
shall only be made, to the extent necessary, to a limited group of Far
Beyond and/or the FB Shareholders' own employees, officers, directors
and/or professional advisors who are actually engaged in the evaluation of
the Company Confidential Information; provided, however, Far Beyond and the
FB Shareholders severally (but not jointly) acknowledge and agree that they
shall be responsible and held liable for the actions or inactions of such
employees, officers, directors and/or professional advisors (regardless
whether or not such actions or inactions are within their scope of
employment) with respect to the maintenance of the secrecy and
confidentiality of the Company Confidential Information.
(3) Far Beyond and the FB Shareholders understand that if they
disclose to others, use for their own benefit (other than as part of an
agreement with the Company, which contemplates such use) or for the benefit
of any person or entity other than the Company, copies or make notes of any
such Company Confidential Information, such conduct will constitute a
breach of the confidence and trust bestowed upon Far Beyond and the FB
Shareholders by the Company and will constitute a breach of this Agreement
and render Far Beyond and the FB Shareholders severally (but not jointly)
responsible for any and all damages suffered by the Company as a result
thereof.
(4) Provided, however, notwithstanding the foregoing, the terms of
this subsection (d) shall not be applicable to (i) any information which
Far Beyond and/or the FB Shareholders are compelled to disclose by judicial
or administrative process or by other requirements of law (including,
without limitation, in connection with obtaining the necessary approvals of
the Exchange of governmental or regulatory authorities), (ii) information
that is publicly available, (iii) information previously in the possession
of Far Beyond and/or the FB Shareholders, (iv) information obtained
independently from third parties and (v) with respect to the FB
Shareholders, information that is disclosed for inter-fund reporting
purposes.
(e) RETURN OF INFORMATION:
(1) At any time after the Termination Date, upon request of Far
Beyond or any FB Shareholder, the Company will, and will cause the Company
Representatives to promptly (and in no event later than five days after
such request) redeliver or cause to be redelivered to Far Beyond or the FB
Shareholder (as applicable) all Far Beyond Confidential Information and
destroy or cause to be destroyed all notes, memoranda, summaries, analyses,
compilations and other writings relating thereto or based thereon prepared
by the Company or any Company Representative. Such destruction shall be
certified in writing to Far Beyond and the FB Shareholders by an authorized
officer supervising such destruction.
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<PAGE>
(2) At any time after the Termination Date, upon request of the
Company, the FB Shareholders and/or Far Beyond will, and will cause the Far
Beyond Representatives to, promptly (and in no event later than five days
after such request) redeliver or cause to be redelivered to the Company all
original Company Confidential Information.
10. EQUITABLE RELIEF.
The Company, Far Beyond and the FB Shareholders agree that money damages
would not be a sufficient remedy for any breach or threatened breach of any
provision set forth in Sections 9, 11(b) or 12 by the other, and that, in
addition to all other remedies which any party hereto may have, each party
will be entitled to specific performance and injunctive or other equitable
relief as a remedy for any such breach or threatened breach. No failure or
delay by any party hereto in exercising any right, power or privilege
hereunder will operate as a waiver thereof, nor will any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power or privilege hereunder.
11. CONDUCT AND BUSINESS.
(a) Between the date hereof and the Closing Date, Far Beyond shall
conduct its business in substantially the same manner in which it has
heretofore been conducted, and the FB Shareholders will not permit Far Beyond
to: (1) enter into any contracts, agreements or arrangements, other than in
the ordinary course of business, or (2) declare or make any distribution of
any kind to the FB Shareholders.
(b) Between the date hereof and the Closing Date, the Company shall
conduct its business in substantially the same manner in which it has
heretofore been conducted, and the Company will not; (1) enter into any
contracts, agreements or arrangements, other than in the ordinary course of
business, or (2) declare or make any distribution of any kind to the
shareholders of the Company. Further, also during such time period, the
Company hereby agrees that neither the Company nor any of its affiliates or
associates (as such terms are defined in Rule 12b-2 under the Exchange Act)
will, and the Company and they will not assist or encourage others to,
directly or indirectly, except as expressly permitted by this Agreement (1)
sell or dispose of or agree, offer, seek or propose to sell or dispose of (or
request permission to do so from any person) ownership (including, but not
limited to, beneficial ownership as defined in Rule 13d-3 under the Exchange
Act) of (x) any of the assets or business of the Company, (y) any securities
of the Company (whether outstanding or to be issued0 or (z) any rights or
options to acquire such ownership (including to or from a person other than
the Company), or (2) enter into any discussions, negotiations, arrangements
or understandings with any person or entity with respect to any of the
foregoing save and except for the Disposal Agreement and the Assignment
Agreement.
12. NO PUBLIC DISCLOSURE.
(a) Far Beyond and the FB Shareholders hereby acknowledge that they
are aware (and that the Far Beyond Representatives who have been apprised of
this Agreement and the FB Shareholders' consideration of the Exchange have
been, or upon becoming so apprised will be advised) of the restrictions
imposed by federal and state securities laws on a person possessing material
"non-public" information about a company with a class of securities
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<PAGE>
registered under the Exchange Act. In this regard, each such FB Shareholder
agrees that while it is in possession of material non-public information with
respect to the Company and its subsidiaries, such FB Shareholder will not
purchase or sell any securities of the Company, or communicate such
information to any third party, in violation of any such laws.
(b) Without the prior written consent of the other, neither the FB
Shareholder or Far Beyond, on the one hand, nor the Company or Horler, on the
other, will, and will each cause their respective representatives not to,
make any release to the press or other public disclosure with respect to
either the fact that discussions or negotiations have taken place concerning
the Exchange, the existence or contents of this Agreement or any prior
correspondence relating to this transaction, except for such public
disclosure as may be necessary, in the written opinion of outside counsel
(reasonably satisfactory to the other party) for the party proposing to make
the disclosure not to be in violation of or default under any applicable law,
regulation or governmental order. If either party proposes to make any
disclosure based upon such an opinion, that party will deliver a copy of such
opinion to the other party, together with the text of the proposed
disclosure, as far in advance of its disclosure as is practicable, and will
in good faith consult with and consider the suggestions of the other party
concerning the nature and scope of the information it proposes to disclose.
13. BROKERAGE FEE.
Each party hereto represents that no brokers have been employed in this
transaction except that the Financial Consultants shall be entitled to
597,133 shares of Company Common Stock at the Closing.
14. AGREEMENT TO INDEMNIFY.
Subject to the terms and conditions of this Section, Horler and the
Company each hereby agree, jointly and severally, to indemnify, defend and
hold the FB Shareholders harmless from and against all demands, claims,
actions or causes of action, assessments, losses, damages, liabilities, costs
and expenses, including without limitation, interest, penalties, court costs
and reasonable attorneys' fees (including paralegal and law clerk fees and
other legal expenses and costs) and expenses, asserted against, relating to,
imposed upon or incurred by the FB Shareholders by reason of or resulting
from a breach of (i) any agreement set forth in this Agreement by the Company
or the Company Representatives, or (ii) any representation or warranty given
by the Company or Horler contained in or made pursuant to this Agreement, or
(iii) any liability of the Company Group existing, accruing or arising on or
before the Closing Date; provided that, in the case of clause (ii), notice of
such breach of representation or warranty is given to the Company or Horler
within two years of the Closing Date, except with respect to the
representations and warranties contained in Sections 4(a) through 4(d), 4(k)
and 4(l), which shall survive without limitation.
Subject to the terms and conditions of this Section, each of Far Beyond
and the FB Shareholders hereby agrees, severally and not jointly, to
indemnify, defend and hold the Company harmless from and against all demands,
claims, actions or causes of action, assessments, losses, damages,
liabilities, costs and expenses, including without limitation, interest,
penalties, court costs and reasonable attorneys' fees (including paralegal
and law clerk fees and other legal expenses and costs) and expenses, asserted
against, relating to, imposed
18
<PAGE>
upon or incurred by the Company by reason of or resulting from a breach of
(i) any agreement set forth in this Agreement by Far Beyond or such FB
Shareholder, or (ii) any representation or warranty given by Far Beyond or
such FB Shareholder contained in or made pursuant to this Agreement, provided
that notice of such breach of representation or warranty is given to Far
Beyond or the FB Shareholder within two years of the Closing Date, except
with respect to the representations and warranties contained in Sections 2(a)
- - 2(b), 3(a) and 3(b), which shall survive without limitation.
All of the foregoing are hereinafter collectively referred to as "CLAIMS"
and singularly as a "CLAIM."
(a) CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of the FB Shareholders, Far Beyond,
and Horler and the Company, with respect to Claims resulting from the
assertion of liability by any of them, shall be subject to the following
terms and conditions:
(1) The party hereto seeking indemnification (the "INDEMNITEE")
will give the other party hereto from whom indemnification is sought (the
"INDEMNITOR") notice of any such Claim reasonably promptly after the
Indemnitee receives notice thereof, and the Indemnitor will have the right
to undertake the defense thereof by representatives of its own choosing.
The failure of any Indemnitee to give notice as provided herein shall not
relieve the Indemnitor of its obligations under Section 14 above, except to
the extent that the Indemnitor is prejudiced by the failure to give such
notice. When the Indemnitor undertakes the defense of any claim, the
Indemnitee shall have the right to participate in contesting such claim at
its own costs and expense.
(2) In the event that the Indemnitor, within ten (10) business
days after notice of any such Claim, fails to defend such Claim, the
Indemnitee will (upon giving written notice to the Indemnitor) have the
right, but not the obligation, to undertake the defense, compromise or
settlement of such Claim on behalf of and for the account and risk of the
Indemnitor, subject to the right of the Indemnitor to assume the defense of
such Claim at any time prior to settlement, compromise or final
determination thereof.
(3) The Indemnitor shall not, without the Indemnitee's written
consent, settle or compromise any Claim or consent to entry of any judgment
which does not include an unconditional release from all liability in
respect of such Claim, other than liability specified in the settlement,
from the claimant or plaintiff to the Indemnitee. To the greatest extent
reasonably possible, the parties shall attempt to obtain general releases
from such plaintiff or claimant.
15. COST AND EXPENSES.
Except as contemplated by Section 6(e), each party hereto shall pay its
own costs and expenses incident to the negotiation and preparation of this
Agreement, the Registration Rights Agreement, the Assignment Agreement and
the Disposal Agreement and to the consummation of the transactions
contemplated herein and therein, provided that if the transactions
contemplated by this Agreement are not completed because (i) Far Beyond and
the FB Shareholders cannot deliver to the Company any of the documents
mentioned in Section 5(d) or any of the Far
19
<PAGE>
Beyond representations and warranties in Section 2 is not accurate in all
material respects, Far Beyond shall forthwith indemnify and reimburse the
Company and Horler for the costs and expenses incurred by the Company and
Horler on this Agreement, the Disposal Agreement and the Assignment Agreement
provided that the aggregate liability shall not exceed HK $600,000 or (ii)
the Company and Horler cannot satisfy any of the conditions contemplated by
Section 6 hereof, the Company shall forthwith indemnify and reimburse Far
Beyond and FB Shareholders collectively for the costs and expenses incurred
in relation to this Agreement provided that the aggregate liability of the
Company hereunder shall not exceed HK $600,000. Such amounts shall constitute
liquidated damages and, upon receipt of such amount, the parties shall be
released from any further liability or obligation hereunder.
16. MISCELLANEOUS.
(a) WAIVER; STRICT CONSTRUCTION:
No change or modification of this Agreement shall be valid unless
the same is in writing and signed by all the parties hereto. No waiver of any
provision of this Agreement shall be valid unless in writing and signed by
the person against whom sought to be enforced. The failure of any party at
any time to insist upon strict performance of any condition, promise,
agreement or understanding set forth herein shall not be construed as a
waiver of relinquishment of the right to insist upon strict performance of
the same condition, promise, agreement or understanding at a future time.
(b) ENTIRE AGREEMENT.
This Agreement, together with all schedules and exhibits hereto
sets forth all of the promises, agreements, conditions, understandings,
warranties and representations among the parties hereto, and there are no
promises, agreements, conditions, understandings, warranties or
representations, oral or written, express or implied, among them other than
as set forth herein. This Agreement is, and is intended by the parties to be,
an integration of any and all prior agreements or understandings, oral or
written.
(c) HEADINGS.
The headings in this Agreement are inserted for convenience of
reference only and are not to be used in construing or interpreting the
provisions of this Agreement.
(d) COUNTERPARTS.
This Agreement may be executed in two or more identical counterparts,
each of which will be deemed an original and all of which will constitute one
instrument.
(e) CONSTRUCTION.
Unless the context clearly otherwise requires the use of the singular
will include the plural and the use of the plural will include the singular, and
the use of any gender will include the other two genders.
(f) SEVERABILITY.
20
<PAGE>
If a covenant or provision provided in this Agreement is deemed to
be contrary to law, that covenant or provision will be deemed ineffective and
will not affect the validity, interpretation, or effect of the other
provisions of either this Agreement or any agreement executed pursuant to it
or the application of that covenant or provision to other circumstances not
contrary to law
(g) COMPUTATION OF TIME.
Whenever the last day for the exercise of any privilege or the
discharge of any duty hereunder falls upon Saturday, Sunday, or any public or
legal holiday, whether Delaware or federal, the party having the privilege or
duty will have until 5:00 p.m. Pacific Standard Time on the next succeeding
regular business day to exercise the privilege or discharge the duty.
(h) INTERPRETATION.
No provision of this Agreement will be construed against or
interpreted to the disadvantage of any party by any court or other
governmental or judicial authority by reason of such party having or being
deemed to have structured or dictated such provision.
(i) GOVERNING LAW.
This Agreement and the obligations of the parties hereunder will be
interpreted, construed, and enforced in accordance with the Laws of the State of
Delaware.
(j) ATTORNEYS' FEES.
In the event a lawsuit is brought by any party to enforce or
interpret the terms hereof, or for any dispute arising out of this
transaction, the party prevailing in any such lawsuit shall be entitled to
recover from the non-prevailing party its costs and expenses thereof,
including its legal fees in reasonable amount and prejudgment and
post-judgment interest at the highest rate allowable under Delaware law.
(k) ASSIGNMENT.
This Agreement shall not be assignable by any party without the
prior written consent of the other.
(l) NOTICES.
All notices, requests, instructions or other documents to be given
hereunder shall be in writing and sent by registered mail or overnight
courier:
If to Far Beyond, then:
Far Beyond Investments Limited
Rm 2005, 20/F., Universal Trade Center
3-5A Arbuthnot Road
Central, Hong Kong
Attn: David Ching
21
<PAGE>
with copies to:
Bernard Chan
Orient Financial Services Ltd.
13C, Chinaweal Centre
414-424 Jaffee Road
Wanchai, Hong Kong
David L. Ficksman, Esq.
Loeb & Loeb
1000 Wilshire Boulevard
Suite 1800
Los Angeles, California 90017-2475
If to the Company, then:
c/o 52/F, Bank of China Tower
1 Garden Road
Central, Hong Kong
If to Horler, then:
c/o 52/F, Bank of China Tower
1 Garden Road
Central, Hong Kong
Attn: Ms. Catherine Ma
If to the FB Shareholders then:
To the names and addresses of the FB Shareholders set out on the
signature page of this Agreement.
(m) BENEFIT AND BURDEN.
This Agreement shall inure to the benefit of, and shall be binding
upon, the parties hereto and their legatees, distributees, estates, executors
or administrators, successors and assigns, and personal and legal
representatives.
22
<PAGE>
IN WITNESS WHEREOF, on the date first written above, the parties
hereto have duly executed this Agreement and the Company and Far Beyond have
caused their corporate seal to be affixed hereto as of the date and year
first above written.
ASIA RESOURCES HOLDINGS LIMITED
By: /s/ LIEN KAIT LONG
--------------------------------
Lien Kait Long
Its: Director
ATTEST: /s/ MA WAI MAN CATHERINE
--------------------------------
Name: Ma Wai Man Catherine
Its: Secretary
FAR BEYOND INVESTMENTS LIMITED, A BRITISH VIRGIN ISLANDS CORPORATION
By: /s/ CHING LUNG PO
-------------------------------
Ching Lung Po
Its: Chairman
ATTEST: /s/ LIU MING XUE
-------------------------------
Liu Ming Xue
Its: Secretary
HORLER HOLDINGS LTD
P.O. Box 71
Craigmuire Chamber
Road Town
Tortola, British Virgin Islands
By: /s/ MA WAI MAN CATHERINE
-------------------------------
Name: Ma Wai Man Catherine
Its: Director
SHAREHOLDERS OF FAR BEYOND INVESTMENTS LIMITED:
Hearty Holdings Limited
c/o Room 2005, Universal Trade Centre
3-5A, Arbuthnot Road
Central, Hong Kong
By: /s/ CAO YASHAN
--------------------------------
Cao Yashan
Its: Managing Director
ATTEST: /s/ LIU MING XUE
--------------------------------
Liu Ming Xue
Its: Secretary
23
<PAGE>
WELL GAIN INVESTMENTS LIMITED
Room 2103-2104,21/F, Treasure Centre
42 Hung To Road,
Kwun Tong, Hong Kong
By: /s/ ZHU YI XIN
-------------------------------
Zhu Yi Xin
Its: Managing Director
ATTEST: /s/ ZHU YI LI
-------------------------------
Zhu Yi Li
Its: Secretary
JADE LIMITED
c/o Nomura/Jafco Investment (Asia) Ltd.
6 Battery Road #42-01
Singapore, 049909
Republic of Singapore
By: /s/ DAISUKE FUJIE
-------------------------------
Daisuke Fujie
Its: Director
NJI NO. 2 INVESTMENT FUND
c/o Nomura/Jafco Investment (Asia) Ltd.
6 Battery Road #42-01
Singapore, 049909
Republic of Singapore
By: /s/ MASAKI KOTAKE
-------------------------------
Masaki Kotake
Its: Director
MEGASTONE DEVELOPMENT LIMITED
c/o Room 2005, Universal Trade Centre
3-5A, Arbuthnot Road
Central, Hong Kong
By: /s/ CHING LUNG PO
--------------------------------
Ching Lung Po
Its: Director
24
<PAGE>
EXHIBIT 2.2
THIS AGREEMENT dated 10th September, 1999 is made
BETWEEN:-
(1) ASIA RESOURCES HOLDINGS LIMITED, a company incorporated in Delaware
whose registered office is at P.O. Box 1237 Corsicana, TX 75151 (the
"Vendor"); and
(2) HORLER HOLDINGS LIMTED, a company incorporated in British Virgin
Islands whose registered office is at P.O. Box 71, Craigmuir Chambers,
Road Town, Tortola, British Virgin Islands (the "Purchaser")
WHEREAS the Vendor has agreed to sell and the Purchaser has agreed to purchase
the Sale Shares subject to the terms and conditions hereinafter set out.
IT IS HEREBY AGREED:-
1. INTERPRETATION
(A) In this Agreement and the Recitals hereto, unless the context otherwise
requires:-
"Acquisition Agreement" means the agreement of even date between the
Vendor, the Purchaser, Far Beyond Investments Limited ("Far Beyond")
and shareholders of Far Beyond;
"business day" means a day other than a Saturday on which banks are
open for business in Hong Kong;
"Company" means Westronix Limited, details of which are set out in
Schedule 1;
"Completion" means the time fixed for completion pursuant to Clause
3(B) and where the context requires also means the performance by the
parties of their respective obligations in accordance with the
provisions of Clause 3;
"Condition" means the condition set out in Clause 3(A);
1
<PAGE>
"Consideration" means an amount equivalent to the aggregate amount due
from the Vendor to the Purchaser as at Completion under the Secured
Convertible Promissory Note including any interest accrued thereon and
any late charges;
"Hong Kong" means the Hong Kong Special Administrative Region of the
People's Republic of China;
"Sale Shares" means the one share of US$1.00 of the Company which
represents the entire issued share capital of the Company;
"Secured Convertible Promissory Note" means the 9% Secured Convertible
Promissory Note of US$30,000,000 issued by the Vendor (formerly known
as Regal International, Inc.) to the Purchaser dated 10th September
1996;
"US$" means dollars of the United States of America.
(B) In this Agreement, words importing the singular include the plural and
vice versa, words importing gender or the neuter include both genders
and the neuter and references to persons include bodies corporate or
unincorporate.
(C) References in this Agreement to statutory provisions are references to
those provisions as respectively amended or re-enacted from time to
time (if and to the extent that the provisions as amended or re-enacted
are for the purposes hereof equivalent to those provisions before such
amendment or re-enactment) and shall include any provision of which
they are reenactments (if and to the extent aforesaid) and any
subordinate legislation made under such provisions.
(D) References herein to "Clauses" and "Schedules" are to clauses of and
schedules to this Agreement respectively and a reference to this
Agreement includes a reference to each Schedule hereto.
(E) The headings and table of contents in this Agreement are for
convenience only and shall not affect its interpretation.
2
<PAGE>
2. SALE AND PURCHASE OF THE SALE SHARES
Subject to satisfaction of the Condition, the Vendor as beneficial
owner shall sell and the Purchaser shall purchase or procure the
purchase of the Sale Shares at the Consideration (payable at Completion
pursuant to Clause 3) free from all rights of preemption, options,
liens, claims, equities, charges, encumbrances or third-party rights of
any nature and with all dividends, benefits and other rights now or
hereafter being attached or accruing thereto as from the date of this
Agreement.
3. COMPLETION
(A) Completion of this Agreement is conditional upon the shareholders of
the Vendor in general meetings having approved this Agreement which is
a related party transaction.
(B) Completion shall take place immediately before the closing pursuant to
the Acquisition Agreement provided that if closing of the Acquisition
Agreement does not take place, Completion shall be deemed not to have
taken place. Completion shall take place at the offices of 20/F., Asia
Pacific Finance Tower, Citibank Plaza, 3 Garden Road, Hong Kong when
all (but not part only) of the following businesses set out in
subclauses, (C) and (D) shall be transacted.
(C) The Vendor shall procure that before Completion a board meeting of the
Company is held and that at such meeting resolutions are passed to
approve the registration of the transfer of the Sale Shares to the
Purchaser or its nominee upon presentation of duly executed transfers.
(D) At Completion:-
(a) the Vendor shall deliver or procure the delivery to the
Purchaser of:-
(i) instruments of transfer in respect of the Sale Shares
duly executed by the registered and beneficial owner
thereof in favor of the Purchaser and/or its nominee;
(ii) the share certificates in respect of the Sale Shares;
3
<PAGE>
(iii) certified true copies of any power of attorney or
other authority pursuant to which this Agreement and
any document referred to in (i) above may have been
executed;
(b) the Vendor shall deliver to the Purchaser in respect of the
Company:-
(i) the corporate seal, cheque books, chops and all
copies of the memorandum and articles of association
of the Company;
(ii) the statutory books of the Company duly made up to
date and any unissued share certificates and such
other records (including all title documents to the
assets including financial records) of the Company as
may exist;
(iii) all current insurance policies, books and records,
title documents of the Company, all contracts to
which the Company is a party and such licenses,
authorizations and registrations granted to or owned
by the Company.
(c) The Purchaser shall (i) deliver to the Vendor the original
Secured Convertible Promissory Note marked cancelled and (ii)
pursuant to Clause 4, pay to the Vendor the Consideration.
(E) The Purchaser shall not be obliged to complete the purchase of the Sale
Shares or perform any obligations hereunder unless the Vendor complies
fully with its obligations under Sub-Clauses (C) and (D).
(F) For avoidance of doubt, this Agreement shall automatically terminate if
the Acquisition Agreement is terminated and the parties shall in such
event be released from all their obligations hereunder and shall have
no claims against each other for such termination.
4. SET-OFF
The parties agree that the Purchaser shall with effect from Completion
set-off the sum of the Consideration which is otherwise payable on
Completion against the indebtedness due from the Vendor to the
Purchaser as at Completion under the Secured Convertible
4
<PAGE>
Promissory Note. Upon Completion, the Vendor shall be deemed to be
released from all liabilities and obligations under the Secured
Convertible Promissory Note and the Consideration shall be deemed to
be fully paid and satisfied by the Purchaser.
5. CLAIMS
(A) The Vendor hereby waives and agrees to waive all claims which it may
have against the Company or in respect of any assets of the Company.
(B) For the purpose hereof "Claims" means any and all rights and claims,
contingent or otherwise and whether or not known to the parties or any
of them, which the Vendor and may have against the Company subsisting
at or before Completion, together with any such rights or claims
arising out of any events or omissions at or before Completion.
6. THE PURCHASER INDEMNITY
It is being understood that the Purchaser is fully familiar with the
operation of the Company. The Purchaser shall indemnify and hold
harmless the Vendor (i) from any obligation and liabilities arising
from this transaction, and (ii) any claim by or any obligation or
liability to any third party arising out of or in relation to the
Company or any assets of the Company, whether known or unknown, actual
or contingent, to the extent the same are arisen on or before the
closing under the Acquisition Agreement, provided that notice of any
claim under this Clause 6 by the Vendor must be delivered by the Vendor
to the Purchaser within 2 years from Completion.
7. TAX INDEMNITY
(A) Subject to other provisions of this clause, the Purchaser hereby
covenants with and undertakes to indemnify and keep indemnified the
Vendor against any loss and liability suffered by the Vendor and costs
and expenses reasonably incurred as a result of or in connection with
any claim by any fiscal authorities falling on the Vendor resulting
from or by reference to or arising out of the sale and purchase of the
Sale Shares herein.
(B) If the Vendor shall become aware of a claim relevant for the purpose of
this clause, the Vendor shall forthwith give written notice thereof to
the Purchaser at the address given in
5
<PAGE>
this Agreement (or such other address or addresses as the Purchaser
may from time to time notify the Vendor for the purpose of this
Agreement) and shall take such action as the Purchaser may reasonably
request and at the costs of the Purchaser to avoid, resist or
compromise any such claim.
(C) The liabilities of the Purchaser under this clause shall cease after 24
months from Completion except in respect of matters which have been the
subject of a bona fide written claim made within the said period by the
Vendor to the Purchaser.
8. ANNOUNCEMENTS AND CONFIDENTIALITY
(A) Each of the parties hereby undertakes to the other that it will not, at
any time after the date of this Agreement, divulge or communicate to
any person other than to their respective professional advisers, or
when required by law, or to their respective officers or employees
whose province it is to know the contents of this Agreement or the
negotiations in respect thereof and that it will not, at any time after
Completion, divulge or communicate to any person other than to their
respective professional advisers, or when required by law or to their
respective officers or employees whose province it is to know, any
confidential information concerning the business, accounts, finance or
contractual arrangements or other dealings, transactions or affairs of
the Company which may be within or may come to its knowledge and that
it shall prevent the publication or disclosure of any such confidential
information concerning such matters provided that the parties'
obligations under this Sub-Clause (A) shall cease and determine upon
Completion.
(B) No public announcement or communication of any kindshall be made in
respect of the subject matter of this Agreement unless specifically
agreed between the parties or unless an announcement is required
pursuant to relevant law or statutory requirements. Any announcement
by either party required to be made pursuant to any relevant law or
statutory requirements shall be issued only after such prior
consultation with the other party as is reasonably practicable in the
circumstances.
6
<PAGE>
9. NOTICES
Each notice, demand or other communication given or made under this
Agreement shall be in writing and delivered or sent by post or airmail
or by facsimile transmission to the relevant party at its address or
fax number set out below (or such other address or fax number as the
addressee has by five (5) days' prior written notice specified to the
other parties):-
To the Purchaser:
52/F., Bank of China Tower,
1 Garden Road
Central
Hong Kong
Fax Number 2537 6591
Attention Ms. Catherine Ma
To the Vendor:
Rm 2005, 20/F., Universal Trade Centre,
3-5A Arbuthorot Road
Central
Hong Kong
Fax Number: 2757 7535
Attention: Mr. David Ching
Any notice, demand or other communication so addressed to the relevant
party shall be deemed to have been delivered (a) if given or made by
letter, 3 business days after the date of dispatch; and (b) if given or
made by fax, when dispatched.
10. MISCELLANEOUS
(A) All provisions of this Agreement shall, so far as they are capable of
being performed or observed, continue in full force and effect
notwithstanding Completion except in respect of those matters then
already performed.
7
<PAGE>
(B) If at any time one or more provisions hereof is or becomes invalid,
illegal, unenforceable or incapable of performance in any respect under
the laws of any relevant jurisdiction, the validity, legality,
enforceability or performance in that jurisdiction of the remaining
provisions hereof or the validity, legality, enforceability or
performance under the laws of any other relevant jurisdiction of these
or any other provisions hereof shall not thereby in any way be affected
or impaired.
(C) Time shall be of the essence of this Agreement.
(D) Each party shall bear its own legal and professional fees, costs and
expenses incurred in connection with this Agreement.
(E) This Agreement shall be binding on and shall enure for the benefit of
the successors and assigns of the parties hereto but shall not be
capable of being assigned by any party without the written consent of
the other party.
(F) This Agreement sets forth the entire agreement and understanding
between the parties or any of them in relation to the sale and purchase
of the Sale Shares the other transactions contemplated by this
Agreement and supersedes and cancels in all respects all previous
agreements, letters of intent, correspondence, understandings,
agreements and undertakings (if any) between the parties hereto with
respect to the subject matter hereof, whether such be written or oral.
(G) This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and
each of which shall be binding on and enforceable against the party who
shall have executed it.
(H) No variation or amendment to or waiver of any of the provisions of this
Agreement shall be valid or effective unless in writing and signed by
or on behalf of each party.
(I) Each of the parties to this Agreement shall cooperate with the other
and shall execute and deliver to the other such other instruments and
documents and take such other action as may reasonably be requested
from time to time by that other party in order to carry out, evidence
and confirm their respective rights and the intended purpose of this
Agreement.
8
<PAGE>
11. GOVERNING LAW AND JURISDICTION
(A) This Agreement is governed by and shall be construed in accordance with
the laws of Hong Kong and the parties hereto hereby submit to the
non-exclusive jurisdiction of Hong Kong in connection herewith.
(B) The submission to the jurisdiction of the courts of Hong Kong shall not
(and shall not be construed so as to) limit the right of either of the
parties hereto to take proceedings against the other in any court of
competent jurisdiction, nor shall the taking of proceedings by either
of the parties hereto in any one or more jurisdictions preclude it from
taking proceedings in any other jurisdiction (whether concurrently or
not) if and to the extent permitted by applicable law.
IN WITNESS whereof the parties hereto have executed this Agreement the day and
year first before written.
Signed by /s/Lien Kait Long )
For and on behalf of )
ASIA RESOURCES HOLDINGS LIMITED )
in the presence of:- )
/s/ Jackie W.H. Wah
Solicitor, Hong Kong
Signed by /s/Ma Wai Man, Catherine )
For and on behalf of )
HORLER HOLDINGS LIMITED )
in the presence of:- )
/s/ Jackie W.H. Wah
Solicitor, Hong Kong
9
<PAGE>
SCHEDULE 1
1. COMPANY NAME : Westronix Limited
2. PLACE OF INCORPORATION : British Virgin Islands
3. DATE OF INCORPORATION : 3rd July 1996
& CERTIFICATE NUMBER : 190869
4. REGISTERED OFFICE : P.O. Box 957, Offshore Incorporations
Centre, Road Town, Tortola, British Virgin Islands
5. DIRECTORS : Oei Hong Leong
(ALTERNATE DIRECTORS) : Li Ling Xiu
Lien Kait Long
Ma Wai Man, Catherine
6. SECRETARY : Treasure Way Services Limited
7. SHARE CAPITAL : Authorized :- US$50,000 (50,000 shares
of US$1.00 each)
Issued :- 1 share of US$1.00
8. SHAREHOLDERS : Asia Resources Holdings Limited
9. AUDITORS : Arthur Andersen
10
<PAGE>
EXHIBIT 2.3
DATED THE 10TH DAY SEPTEMBER, 1999
ASIA RESOURCES HOLDINGS LIMITED
AND
CHINA STRATEGIC HOLDINGS LIMITED
-----------------------
ASSIGNMENT AGREEMENT
RELATING TO THE SALE AND PURCHASE OF
CERTAIN PROMISSORY NOTES OF
ASIA RESOURCES HOLDINGS LIMITED
-----------------------
<PAGE>
THIS AGREEMENT dated the 10th day of September 1999 is made between:-
(1) ASIA RESOURCES HOLDINGS LIMITED, a company incorporated in Delaware
whose registered office is at P.O. Box 1237 Corsicana, TX 75151 ("the
Vendor").
(2) CHINA STRATEGIC HOLDINGS LIMITED, a company incorporated in Hong Kong
whose principal place of business is situated at 52/F., Bank of China
Tower, 1 Garden Road, Central, Hong Kong ("the Purchaser").
WHEREAS:-
(A) The Vendor was the holder of the New Regal Promissory Note and the
Harlequin Promissory Note hereinafter defined.
(B) The New Regal Promissory Note and the Harlequin Promissory Note are
both secured by a pledge agreement issued by Harlequin in favor of the
Vendor dated 13th February 1996 on the entire capital stock of Regal
(New) International Inc. ("New Regal") which pledge agreement was
further varied by a Deed of Variation dated 27th July 1998 made between
the Vendor, New Regal and Harlequin Investment Holdings Limited.
(C) The Vendor is indebted to the Purchaser in the sum of US$131,096.00
(D) The Vendor has agreed to assign to the Purchaser and the Purchaser has
agreed to accept the New Regal Promissory Note and the Harlequin
Promissory Note in full and final settlement of the outstanding
indebtedness of the Vendor to the Purchaser as at Completion as part of
satisfaction of the terms and conditions of the Acquisition Agreement.
2
<PAGE>
IT IS HEREBY AGREED:-
1. INTERPRETATION
(A) In this Agreement and the Recitals hereto, unless the context otherwise
requires:-
"Acquisition Agreement" means the agreement of even date between the
Vendor, Horler Holdings Limited, Far Beyond Investments Limited ("Far
Beyond") and shareholders of Far Beyond;
"Completion" means the completion of the assignment under this
Agreement in accordance with the provisions of Clause 3;
"Consideration" means an amount equivalent to the aggregate amount due
from the Vendor to the Purchaser as at Completion including any
interest accrued thereon.
"Harlequin Promissory Note" means a promissory note dated 27th July
1998 issued by Harlequin Investment Holdings Limited ("Harlequin") to
the Vendor for the sum of US$800,000.00, a copy of which is annexed to
Schedule A of this Agreement;
"New Regal Promissory Note" means a promissory note dated 13th February
1996 issued by New Regal to the Vendor for the sum of US$900,000.00, a
copy of which is annexed to Schedule B of this Agreement;
"Pledge Agreement" means a pledge agreement made by Harlequin in favor
of the Vendor dated 13th February 1996 on the entire capital stock of
New Regal and varied by a Deed of Variation dated 27th July 1998 made
between the Vendor, New Regal and Harlequin, copies of the pledge
agreement and the Deed of Variation are annexed to Schedule C of this
Agreement;
"Promissory Notes" means the New Regal Promissory Note and the
Harlequin Promissory Note;
the singular includes the plural and vice versa, words importing gender
or the neuter include both genders and the neuter and references to
persons include bodies corporate or unincorporate;
3
<PAGE>
references to statutory provisions are references to those provisions
as respectively amended or re-enacted from time to time (if and to the
extent that the provisions as amended or re-enacted are for the
purposes hereof equivalent to those provisions before such amendment or
re-enactment) and shall include any provision of which they are
reenactments (if and to the extent aforesaid) and any subordinate
legislation made under such provisions; and a reference to a "Clause"
or a "Sub-Clause" or a "Schedule" is a reference to a clause or a
sub-clause of the relevant Clause or a schedule to this Agreement and a
reference to this Agreement includes a reference to each Schedule.
(B) The table of contents and headings in this Agreement are for
convenience only and shall not affect its interpretation.
2. CONSIDERATION
The Vendor shall on the terms of this Agreement sell or procure the
sale of the Promissory Notes for the Consideration and the Purchaser
shall purchase or procure the purchase of the Promissory Notes at the
Consideration with effect from the date of Completion free from all
rights of preemption, options, liens, claims, equities, charges,
encumbrances or third-party rights of any nature and with all rights
attached or accruing thereto at or after Completion.
3. COMPLETION
(A) Completion of this Agreement is conditional upon the shareholders of
the Vendor in general meetings having approved this Agreement which is
a related party transaction.
(B) Completion shall take place immediately prior to the closing pursuant
to the Acquisition Agreement provided that if closing of the
Acquisition Agreement does not take place, Completion shall be deemed
to have not taken place. Completion shall take place at 20/F., Asia
Pacific Finance Tower, Citibank Plaza, 3 Garden Road, Hong Kong when
all (but not part only) of the following business shall be transacted:-
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the Vendor shall deliver to the Purchaser:-
(i) assignments of the Promissory Notes substantially in
the form set out in Schedule D (the "Assignments");
(ii) such other documents as may be necessary to give the
Purchaser or its nominees a good title to the
Promissory Notes and to enable the Purchaser or its
nominees to become the legal and/or beneficial owners
thereof; and
(iii) certified board minutes of the Vendor pursuant to
which the Assignments and the execution of the
Assignments by the Vendor is approved and authorized.
(iv) a pledge agreement substantially in the same terms
and conditions of the Pledge Agreement, duly executed
by Harlequin in favor of the Purchaser together with
the original Pledge Agreement marked cancelled; and
(v) the original Promissory Notes.
(C) For avoidance of doubt, this Agreement shall automatically terminate if
the Acquisition Agreement is terminated and the parties shall in such
event be released from all their obligations hereunder and shall have
no claims against each other for such termination.
4. SET-OFF
The parties agree that the Purchaser shall with effect from Completion
set-off the sum of the Consideration which is otherwise payable on
Completion against the outstanding indebtedness due from the Vendor to
the Purchaser as at Completion so that as of Completion, the Vendor
shall have no liability whatsoever to the Purchaser.
5. TAX INDEMNITY
(A) Subject to other provisions of this clause, the Purchaser hereby
covenants with and undertakes to indemnify and keep indemnified the
Vendor against any loss and liability suffered by the Vendor and costs
and expenses reasonably incurred as a result of or in
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<PAGE>
connection with any claim by any fiscal authorities falling on the
Vendor resulting from or by reference to or arising out of the
assignment of the Promissory Notes contemplated herein.
(B) If the Vendor shall become aware of a claim relevant for the purpose of
this clause, the Vendor shall forthwith give written notice thereof to
the Purchaser at the address given in this Agreement (or such other
address or addresses as the Purchaser may from time to time notify the
Vendor for the purpose of this Agreement) and shall take such action as
the Purchaser may reasonably request and at the costs of the Purchaser
to avoid, resist or compromise any such claim.
(C) The liabilities of the Purchaser under this clause shall cease after 24
months from Completion except in respect of matters which have been the
subject of a bona fide written claim made within the said period by the
Vendor to the Purchaser.
6. MISCELLANEOUS
(A) No public disclosure of any kind may be made by any party with respect
to this Agreement without consultation with and the consent of the
others (such consent not to be unreasonably withheld).
(B) Save as herein otherwise provided, all provisions of this Agreement
shall, so far as they are capable of being performed or observed,
continue in full force and effect notwithstanding Completion except in
respect of those matters then already performed.
(C) If at any time one or more provisions hereof is or becomes invalid,
illegal, unenforceable or incapable of performance in any respect, the
validity, legality, enforceability or performance of the remaining
provisions hereof shall not thereby in any way be affected or impaired.
(D) Time is of the essence of this Agreement. Any extension, waiver or
variation of any provision of this Agreement shall not be deemed to
affect this provision, which shall apply to any such extended, waived
or varied provision and, except to that extent, there shall be no
implied waiver of this provision.
6
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(E) Each party shall bear its own costs including but not limited to all
the legal and professional fees, costs and expenses incurred in
connection with this Agreement unless otherwise provided in this
Agreement.
(F) This Agreement is binding upon and shall enure for the benefit of the
successors of the parties.
7. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with
the laws of Hong Kong and the parties hereto hereby irrevocably submit
to the non-exclusive jurisdiction of the Hong Kong courts.
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
SIGNED BY /s/Lien Kait Long )
for and on behalf of )
ASIA RESOURCE HOLDINGS LIMITED )
in the presence of:- )
/s/ Jackie W.K. Wah
Solicitor, Hong Kong
SIGNED BY /s/Ma Wai Man, Catherine )
for and on behalf of )
CHINA STRATEGIC HOLDINGS LIMITED )
in the presence of:- )
s/ Jackie W.K. Wah
Solicitor, Hong Kong
7
<PAGE>
SCHEDULE A
8
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SCHEDULE A
PROMISSORY NOTE
Principal Amount
US$300,000.00
FOR VALUE RECEIVED, Harlequin Investment Holdings Limited, a British Virgin
Islands corporation (the "Maker") does hereby promise to pay to the order of
Regal International, Inc., a Delaware corporation (hereinafter "Holder"), at the
address described by Holder, the amount of Eight Hundred Thousand US Dollars
(US$800,000). This Note shall bear no interest.
The outstanding principal balance of this Note shall be due and payable in full
on February 1, 2001.
This Note is secured by a Pledge Agreement dated 13th February 1996 granting,
the Holder a security interest in all the outstanding shares of Regal (New)
International, Inc. registered in the name of the Maker.
The Maker waivers presentment, demand, protest, notice of dishonor and notice of
intent to accelerate.
If any provision of this Note shall be determined to be invalid or unenforceable
under law, such determination shall not affect the validity or enforcement of
the remaining binding upon provisions of this Note. This Note is executed under
seal and shall be binding upon the successors and assigns of the Maker.
Upon default, the Maker shall be liable for interest at the rate of 23% per
annum on the unpaid principal balance and accrued and unpaid interest plus all
reasonable costs of collection including, but not limited to, reasonable
attorneys' fees.
This Note shall be governed by and construed in accordance with the laws of the
State of New York and the United States of America.
EXECUTED this 27th day of July, 1998
HARLEQUIN INVSTMENT HOLDINGS LIMITED
by:
-----------------------------------------
9
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SCHEDULE B
10
<PAGE>
SCHEDULE B
CONVERTIBLE PROMISSORY NOTE
PRINCIPAL AMOUNT
US$900,000.00
FOR VALUE RECEIVED, Regal (New) International, Inc., a Texas
corporation (the "MAKER") does hereby promise to pay to the order of Regal
International, Inc., a Delaware corporation (hereinafter "HOLDER"), at the
address described by Holder, the principal amount of Nine Hundred Thousand US
Dollars (US$900,000) with interest (computed on the basis of a 365 day year) on
the unpaid principal balance of such principal amount at the rate of nine
percent (9%) per annum from the date hereof until maturity. Principal and
interest shall be due and payable in sixty (60) equal, monthly installments of
$18,682.37 payable on the seventh day of March 1996 and continuing on the
seventh day of each month thereafter until paid in full.
This Note is secured by a certain Pledge Agreement of even date
herewith granting the Holder a security interest in all the outstanding shares
of Regal (New) International, Inc. registered in the name of the Harlequin
Investment Holdings Limited.
The Maker waives presentment, demand, protest, notice of dishonor and
notice of intent to accelerate.
If any provision of this Note shall be determined to be invalid or
unenforceable under law, such determination shall not affect the validity or
enforcement of the remaining provisions of this Note. This Note is execute under
seal and shall be binding upon the successors and assigns of the Maker.
Upon default, the Maker shall be liable for interest at the rate of 18%
per annum on the unpaid principal balance and accrued and unpaid interest plus
all reasonable costs of collection including, but not limited to, reasonable
attorneys' fees.
This Note shall be governed by and construed in accordance with the
laws of the State of New York and the United States of America.
The indebtedness represented by this Note is subordinate and inferior
to a certain $1,500,000 Secured Credit Facility by and between Fremont Financial
Corporation and Maker.
The conversion privileges with respect to this Note are attached hereto
as Exhibit A and made a part hereof for all purposes.
EXECUTED the 13th day of February, 1996, but effective as of January
31, 1996.
REGAL (NEW) INTERNATIONAL, INC.
by:
------------------------------
JANAK DESAI PRESIDENT
11
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CONVERSION OF NOTE.
A. Subject to and upon compliance with the provisions hereof, at the
option of the holder thereof, this Note may, during the 30-day period beginning
on the date Holder receives the audited Balance Statement of the Maker as of the
Valuation Date (herein defined) of each year and at the maturity hereof, be
converted at the principal amount thereof and accrued interest thereon into
fully paid and nonassessable shares (calculated as to each conversion to the
nearest 1/100th of a share) of Common Stock, $0.10 par value, of the Maker (the
"Common Stock"), at the Conversion Price, determined as hereinafter provided, in
effect at the time of conversion.
B. The conversion price (herein called the "Conversion Price") shall be
an amount per share of Common Stock equal to the Book Value (as herein defined)
divided by the number of shares outstanding on Net Valuation Date. The
Conversion Price shall be subject to adjustment from time to time as herein
provided. The Conversion Price prior to any adjustment and the adjusted
Conversion Price after each adjustment are hereinafter referred to as the actual
Conversion Price.
C. "Net Book Value" as used herein shall be an amount equal to the
amount of the Corporation's assets, less the amount of its liabilities, as of
the end of the most recent fiscal year (the "Valuation Date") as disclosed by
the Maker's books of account regularly maintained in accordance with generally
accepted accounting principles consistently applied.
D. in no event shall this Note be convertible into a number of shares
of Common Stock which would result in the Holder owning more than forty-nine
percent (49%) of the total issued and outstanding shares of Common Stock after
the conversion. In such event, the Conversion Price will be automatically
increased so that this Note is convertible into an amount of shares which is
equal to forty-nine percent (49%) of the issued and outstanding shares of Common
Stock after the conversion of this Note.
RESTRICTIONS ON TRANSFER; COMPLIANCE WITH SECURITIES ACT.
A. The holder acknowledges that the securities issued upon conversion
of the Note are characterized as "restricted securities" under the federal
securities laws since they are being acquired from the Company in a transaction
not involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the Act
only in compliance with certain conditions and under limited circumstances,
including the following:
(i) A registration statement with respect thereto has become
effective under the Act, or
(ii) There is presented to the Company an opinion of counsel
reasonably satisfactory to the Company to the effect that registration under
the Act is not necessary; or
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(iii) There is presented to the Company a letter from the
staff of the Securities and Exchange Commission to the effect that the staff
will not recommend that said Commission take any action in respect of such
offer or transfer and to the effect that said staff concurs in the opinion
that such registration or compliance is not necessary (provided that the
Company reasonably agrees with the facts stated in such letter insofar as
they pertain to it); or
(iv) There is presented to the Company written evidence
that the sale, pledge or transfer complies with the provisions of Rule 144 as
amended under the Act.
B. It is understood that the certificates evidencing the COMMON Stock
issuable upon conversion of this Note, when issued, will bear legends
substantially to the following effect:
"THE SHARES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION, BUT HAS BEEN ISSUED PURSUANT TO THE PRIVATE OFFERING
EXEMPTION UNDER THE SECURITIES ACT OF 1993, AS AMENDED (THE "ACT"), AND
THE PRIVATE OFFERING EXEMPTION UNDER THE SECURITIES LAWS OF THE STATES
OF DELAWARE AND TEXAS, AND THE REGISTERED HOLDER OF SUCH SECURITY HAS
EXECUTED AN INVESTMENT REPRESENTATION WITH RESPECT THERETO.
ACCORDINGLY, THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THIS SECURITY IS RESTRICTED AND MAY NOT BE ACCOMPLISHED
EXCEPT IN ACCORDANCE WITH THE ACT AND THE APPLICABLE RULES ADOPTED
UNDER IT AND WITH THE PERMISSION OF THE COMPANY UPON THE FURNISHING OF
AN OPINION OF COUNSEL SATISFACTORY TO COUNSEL FOR THE COMPANY THAT
REGISTRATION IS UNNECESSARY FOR SUCH TRANSACTIONS."
C. This Note shall be non-transferable except to a group, company or
affiliate of CSH ceases to be group, company or affiliate of CSH, this Note must
be transferred to CSH or another group or affiliated company.
13
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SCHEDULE C
14
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SCHEDULE C
PLEDGE AGREEMENT
This Pledge Agreement (the "Agreement"), dated February 13, 1996 to be
effective as of January 31, 1996, is made by and between Harlequin Investment
Holdings Limited ("Pledgor") and Regal International, Inc. (the "Secured
Party").
INTRODUCTORY PROVISIONS:
A. Regal (New) International, Inc., a Texas corporation ("New Regal"),
has as of this day executed a promissory note in the principal amount of
$900,000 ("the $900,000 Note") payable to the order of the Secured Party and a
second promissory note in the principal amount of $800,000 ("the $800,000 Note")
payable to the order of Secured Party.
B. As a condition to accepting the $900,000 Note and the $800,000 Note,
the Secured Party requires that Pledgor pledge to and grant a security interest
in Pledgor's shares of Capital Stock of the New Regal to secure the payment of
the $900,000 Note and $800,000 Note and performance of the New Regal's
obligations to Secured Party.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, the parties hereto agree as follows:
1. THE PLEDGE AND SECURITY INTEREST. The Pledgor hereby grants to the
Secured Party a security interest in and to any and all present or future rights
of the Pledgor in and to all of the following rights, interests, and property
(all of the following being herein sometimes called the "Collateral"): (a)
100,000 shares of the common stock of New Regal registered in the name of the
Pledgor represented by Stock Certificate No. 001, (b) any and all substitutes,
replacements, accessions, attachments, increases, profits, revisions, additions
thereto, or dividends and coupons thereon; and (c) any and all proceeds arising
from or by virtue of the sale or other disposition of, or from the collection
of, the Collateral described in (a) and (b) preceding.
2. THE INDEBTEDNESS. This Agreement is being executed and delivered to
secure and the security interest herein granted (the "SECURITY INTEREST") shall
secure full payment and performance by New Regal of all of the indebtedness and
obligations owing to the Secured Party by New Regal pursuant to the terms of the
$900,000 Note and the $800,000 Note, together with any and all renewals and
extensions thereof [all of such debts, indebtedness, liabilities and duties
referred to in this paragraph are hereinafter collectively referred to
collectively as the "Indebtedness"].
3. NEGATIVE COVENANTS OF THE PLEDGOR. The Pledgor further covenants and
agrees that, without the prior written consent of the Secured Party, the Pledgor
will not (a) sell, assign or
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<PAGE>
transfer any of the Pledgor's rights in the Collateral; or (b) create any
other security interest in, mortgage or otherwise encumber the Collateral, or
any part thereof, or permit the same to be or become subject to any lien,
attachment, execution, sequestration, other legal or equitable process or any
encumbrance of any kind or character, except the Security Interests herein
created; or (c) take any action, or allow the Corporation to take any action,
which would dilute the equity percentage of the Shares without the prior
written consent of Secured Party.
4. DEFAULT. As used herein, the term "Default" means the occurrence of
one or more of the following: (a) the failure to timely pay or perform any
obligations or covenants of the Indebtedness as and when due and payable or
performable; (b) the sale, loss, theft, destruction, encumbrance or transfer of
any of the Collateral in violation hereof, or substantial damage to any of the
Collateral; (c) the levy on, seizure or attachment of the Collateral, or any
part thereof.
5. REMEDIES. Upon the occurrence of an event of Default, in addition
to any and all other rights and remedies which the Secured Party may then
have hereunder, under the Uniform Commercial Code of the State of New York or
of any other pertinent jurisdiction (the "Code"), or otherwise, the Secured
Party may, at its option (a) reduce its claim to judgment or foreclose or
otherwise enforce the Security Interest, in whole or in part, by any
available judicial procedure; (b) after notification, if any, provided for
herein, sell, lease, or otherwise dispose of, at the office of the Secured
Party, on the premises of the Pledgor, or elsewhere, all or any part of the
Collateral, in its then condition or following any commercially reasonable
preparation or processing, and any such sale or other disposition may be as a
unit or in parcels, by public or private proceedings, and by way of one or
more contracts (it being agreed that the sale of any part of the Collateral
shall not exhaust the Secured Party's power of sale, but sales may be made
from time to time, and at any time, until all of the Collateral has been sold
or until the Indebtedness has been paid and performed in full), and at any
such sale it shall not be necessary to exhibit any of the Collateral; (c) at
its discretion, retain the Collateral in satisfaction of the Indebtedness
whenever the circumstances are such that the Secured Party is entitled to do
so under the Code or otherwise; (d) exercise any and all other rights,
remedies, and privileges it may have under any document which secures the
Indebtedness; and (e) take any other action allowed under applicable law.
Any and all proceeds ever received by the Secured Party from any sale
or other disposition of the Collateral, or any part thereof, or the exercise of
any other remedy pursuant here to shall be applied by the Secured Party to the
Indebtedness in such order and manner as the Secured Party, in its sole
discretion, may deem appropriate, notwithstanding any directions or instructions
to the contrary by the Pledgor.
With respect to any part of the Collateral which is stock certificates,
bonds, or other securities, the Secured Party shall have authority, upon the
occurrence of an event of Default, without notice to the Pledgor, either to have
them registered in the Secured Party's name, or in the name of a nominee, and,
with or without such registration, to demand of the entity issuing the same, and
to receive and receipt for, any and all dividends and other distributions
payable in respect thereof, regardless of the medium in which paid and whether
they be ordinary or extraordinary. Any entity making payment to the Secured
Party hereunder shall be fully protected in relying upon the written statement
of the Secured Party that the Secured Party then holds the Security Interests
which entitles it to receive such payment, and the receipt of the
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Secured Party for such payment shall be full acquittance therefor to the
person making such payment.
6. RIGHTS CUMULATIVE. All rights and remedies of the Secured Party
hereunder are cumulative of each other and of every other right or remedy which
the Secured Party may otherwise have at law or in equity or under any other
contract or other writing for the enforcement of the Security Interests herein
or in the collection of the Note or the Indebtedness, and the exercise of one or
more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
7. POWER OF ATTORNEY. The Secured Party is hereby appointed the
attorney-in-fact of the Pledgor for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instruments which the
Secured Party may deem necessary or advisable to accomplish the purposes hereof,
which appointment as attorney-in-fact is irrevocable and coupled with an
interest.
8. NO WAIVERS. No failure on the part of the Secured Party to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise by the Secured
Party of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
9. BINDING EFFECT. This Agreement shall be binding on the Pledgor and
the Pledgor's heirs and assigns and shall inure to the benefit of the Secured
Party, and the Secured Party's successors and assigns.
10. TERMINATION. This Agreement and the Security Interests in the
Collateral will terminate when the Indebtedness secured hereby has been paid in
full by extinguishment thereof but not by renewal, modification or extension
thereof.
11. GOVERNING LAW. THE LAW GOVERNING THIS AGREEMENT WILL BE THAT OF THE
STATE OF NEW YORK IN FORCE ON THE DATE OF EXECUTION OF THIS AGREEMENT.
12. AGREEMENT AS FINANCING STATEMENT. The Secured Party shall have the
right at any time to execute and file this Agreement as a financing statement,
but the failure of the Secured Party to do so shall not impair the validity or
enforceability of this Agreement.
PLEDGOR:
HARLEQUIN INVESTMENT
HOLDINGS, LTD.
by:
----------------------------------------
Richard N. Gray
17
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SCHEDULE C
THIS DEED OF VARIATION is made the 27th day of July 1998
BETWEEN:-
1. REGAL INTERNATIONAL, INC, a Delaware corporation, whose principal
executive office, is situated at 17th Floor, Printing House, 6 Duddell
Street, Central, Hong Kong
2. REGAL (NEW) INTERNATIONAL, INC, a Texas corporation, whose registered
office is situated at PO Box 1237, Highway 31 East, Texas 75151, USA
("New Regal")
3. HARLEQUIN INVESTMENT HOLDINGS LIMITED, a British Virgin Islands
corporation, whose registered office is situated at Creque Building,
Road Town, Tortola, BVI ("Harlequin")
WHEREAS:-
1. New Regal is a wholly owned subsidiary of Harlequin.
2. By an Asset Purchase Agreement made between Regal, New Regal and
Harlequin dated 8th February 1996 ("the A P Agreement"), New Regal has
agreed to purchase certain assets from Regal under the terms and
conditions of the A P Agreement.
3. Pursuant to the terms and conditions of the A P Agreement:-
a. New Regal has issued and delivered a promissory note to Regal
for the sum of US$900,000, bearing interest at nine percent
(9%) per annum and being payable (principal and interest) in
sixty (60) equal monthly installments of US$18,682, and such
note to be convertible on each anniversary date thereof into
shares of common stock of New Regal at a conversion price
based on the net book value of New Regal's most recent audited
annual balance sheet.
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b. New Regal has also issued and delivered to Regal a promissory
note dated 13th February 1996 for the sum of US$800,000,
bearing no interest and being due and payable in full on 1st
February 2001 (the "US$800,000 Note").
4. The above promissory notes are secured by a pledge agreement made by
Harlequin in favor of Regal dated 13th February 1996 on the entire
Capital Stock of New Regal ("the Pledge Agreement").
5. Harlequin has requested and Regal has agreed to vary the above
arrangement by Harlequin assuming all the obligations, and liabilities
of New Regal under the US$800,000 Note without affecting the validity
and enforceability of the Pledge Agreement.
NOW THIS DEED WITNESSETH:-
1. THE US$800,000 NOTE
1.1 In consideration of Regal's agreement to release New Regal from the
US$800,000 Note, Harlequin agrees and undertakes to assume al! the
obligations and liabilities of New Regal under the US$800,000 Note.
1.2 Harlequin shall forthwith execute and deliver, to Regal the promissory
note annexed to the Schedule herein ("the Harlequin Promissory Note").
1.3 Upon Regal's receipt of the duly executed Harlequin Promissory Note,
New Regal shall be deemed to be released and discharged from the
US$800,000.00 Note.
2. THE PLEDGE AGREEMENT
2.1 The parties agree that the Harlequin Promissory Note shall also be
secured by Harlequin's shares of Capital Stock of New Regal.
2.2 With effect from Regal's receipt of the duly executed Harlequin
Promissory Note:-
a. Any reference to "the $800,000 Note in the Pledge Agreement
shall mean reference to "the Harlequin Promissory Note".
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b. Clause 2 of the Pledge Agreement shall be replaced by the
following provisions:-
"2. THE INDEBTEDNESS. This Agreement is being executed
and delivered to secure and the security interest
herein granted (the "Security Interest") shall secure
full payment and performance by New Regal of all the
indebtedness and obligations owing to the secured
Party by New Regal pursuant to the terms of the
$900,000 Note and by the Pledgor of all the
indebtedness and obligations owing to the Secured
Party by the Pledgor pursuant to the terms of the
Harlequin Promissory Note, together with any and all
renewals and extensions thereof (all of such debts,
indebtedness, liabilities and duties referred to in
this paragraph are hereinafter collectively referred
to collectively as the "Indebtedness")".
2.3 Save and except as provided in this Deed, the Pledge Agreement shall
remain in full force and effect.
2.4 The parties further agree and undertake to execute and deliver to the
other parties such other deeds and documents as may be necessary to
perfect the transactions contemplated herein.
3. MISCELLANEOUS
3.1 The terms and conditions of this Deed shall inure to the benefit of and
be binding upon the respective successors and permitted assigns of the
parties. However, neither this Deed nor any of the rights, interests or
obligations hereunder of any party hereto shall be assigned without the
prior written consent of the other party.
3.2 Each of the parties shall bear the costs of its own expenses and
professional fees incurred in connection with the negotiation and
execution of this Deed.
3.3 This Deed shall be governed by and construed in accordance the laws of
the State of New York and the United States of America in force and on
the date of execution of this Deed.
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IN WITNESS WHEREOF the parties hereto have caused this Deed to be executed on
the date hereinbefore written.
SEALED with the COMMON SEAL of ) FOR AND ON BEHALF OF
REGAL INTERNATIONAL INC. in the ) REGAL INTERNATIONAL INC.
presence of:- )
-----------------------
AUTHORIZED SIGNATURE(S)
17/F Printing House
6 Duddell Street
Central, Hong Kong
SEALED with the COMMON SEAL of )
REGAL (NEW) INTERNATIONAL INC. )
in the presence of:- )
SEALED with the COMMON SEAL of )
HARLEQUIN INVESTMENT HOLDINGS )
LIMITED in the presence of:- )
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SCHEDULE D
ASSIGNMENT OF PROMISSORY NOTE
DATE ,1999
ASIA RESOURCES HOLDINGS LIMITED
AND
CHINA STRATEGIC HOLDINGS LIMITED
------------------------
PROMISSORY NOTE ASSIGNMENT
------------------------
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THIS AGREEMENT dated _______ day of August 1999 is made between:-
(1) ASIA RESOURCES HOLDINGS LIMITED, a company incorporated in Delaware
whose registered office is at P.O. Box 1237 Corsicana, TX 75151 ("the
Assignor").
(2) CHINA STRATEGIC HOLDINGS LIMITED, a company incorporated in Hong Kong
whose principal place of business is situated at 52/F., Bank of China
Tower, 1 Garden Road, Central, Hong Kong ("the Assignee").
WITH THE CONSENT OF:-
(3) [NEW REGAL HARLEQUIN], a company incorporated under the laws of
(_________) with its registered office at
__________________________________________________ _________________]
("the Debtor")
WHEREAS the Debtor is at the date hereof indebted to the Assignor in the amount
set opposite its name in Schedule 1 and the Assignor has agreed to assign and
the Assignee has agreed to accept this assignment of the Debt.
IT IS HEREBY AGREED:-
1. INTERPRETATION
(A) In this Agreement and the Recital hereto, unless the context otherwise
requires:-
"Debt" means the debt of aggregate amount of US$[ ] owed by the Debtor
to the Assignor as at the date hereof which amount is the total and all
amounts of debts owed by the Debtor to the Assignor;
"Debtor" means [New Regal/Harlequin];
"US$" means Dollars of United States of America.
(B) References herein to "Clauses", "Sub-clauses", "Schedules" are
references to those contained in this Agreement.
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(C) Words herein importing the singular include the plural and vice versa,
words importing gender or the neuter include both genders and the
neuter and references to persons include bodies corporate or
unincorporated.
(D) Headings herein are for convenience only and shall not affect the
construction of this Agreement.
2. ASSIGNMENT
The Assignor hereby as beneficial owner assigns with the consent of the
Debtor to the Assignee absolutely all the right title and interest of
the Assignor in the Debt free and clear of all mortgages, charges,
liens or any other third party rights.
3. SEVERABILITY
If at any time one or more provisions hereof is or becomes invalid,
illegal, unenforceable or incapable of performance in any respect, the
validity, legality, enforceability or performance of the remaining
provisions hereof shall not in any way be affected or impaired thereby.
4. FURTHER ASSURANCE
Each of the parties hereto shall sign or execute any document or do any
deed, act or things as may reasonably be requested by the other parties
hereto to give full force and effect to the terms of this Agreement
provided that the party which makes such request shall be responsible
for the cost incurred by the other parties.
5. COUNTERPARTS
This Agreement may be executed in any number of counterparts by the
parties hereto on separate counterparts, each of which when executed
and delivered shall constitute an original and all of which when taken
together shall constitute one and the same document.
24
<PAGE>
6. GOVERNING LAW
This Agreement is governed by and shall be construed in accordance with
the laws of Hong Kong Special Administrative Region of People's
Republic of China ("Hong Kong") and the parties hereto hereby submit to
the non-exclusive jurisdiction of the Hong Kong Courts.
IN WITNESS whereof the parties hereto have executed this Agreement the day and
year first above written.
SIGNED BY )
for and on behalf of )
ASIA RESOURCES HOLDINGS LIMITED )
in the presence of:- )
SIGNED BY )
for and on behalf of )
CHINA STRATEGIC HOLDINGS LIMITED )
in the presence of:- )
SIGNED BY )
for and on behalf of )
[NEW REGAL/HARLEQUIN] )
in the presence of:- )
25
<PAGE>
SCHEDULE 1 TO PROMISSORY NOTES ASSIGNMENT
DETAILS OF TOTAL AMOUNT DUE FROM THE DEBTOR
TO THE ASSIGNOR
<TABLE>
<CAPTION>
<S> <C> <C> <C>
DEBTOR PRINCIPAL AMOUNT EVIDENCED BY INTEREST ACCRUED
[New Regal/Harlequin] [US$900,000.00/ Promissory Note [9:% per annum/Nil]
US$800,000.00]
</TABLE>
26
