<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO___________)*
Asia Resources International Holdings Limited
------------------------------
(Name of Issuer)
Common Stock, $0.01 Par Value Per Share
------------------------------
(Title of Class of Securities)
04516W 10 6
------------------------------
(CUSIP Number)
David L. Ficksman, Esq.
Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1800, Los Angeles, CA 90017
(213) 688-3400
------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
January 24, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of
that section of the Exchange Act but shall be subject to all other provisions of
the Exchange Act.
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CUSIP No. 38105N103
1 NAME OF REPORTING PERSON
Well Gain Investments Limited
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_] (b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [_]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH -0-
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
-0-
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[_]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
14 TYPE OF REPORTING PERSON
CO
2
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CUSIP No. 38105N103
1 NAME OF REPORTING PERSON
Zhu Yi Xin
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_] (b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [_]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NUMBER OF 7 SOLE VOTING POWER
SHARES 700,636
BENEFICIALLY
OWNED BY 8 SHARED VOTING POWER
EACH -0-
REPORTING
PERSON 9 SOLE DISPOSITIVE POWER
700,636
10 SHARED DISPOSITIVE POWER
-0-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
700,636 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[_]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.0%
14 TYPE OF REPORTING PERSON
IN
3
<PAGE>
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D relates to the common stock, $0.01 par
value per share (the "Common Stock"), of Asia Resources Holdings Limited, a
Delaware corporation (the "Company"). The principal executive offices of the
Company is located at Rm. 2005, 20/F, Universal Trade Centre, 3-5A Arbuthnot
Road, Central, Hong Kong.
ITEM 2. IDENTITY AND BACKGROUND
(a) - (c) This statement on Schedule 13D is filed by Well Gain
Investments Limited, a Chinese corporation ("Well Gain") and Mr. Zhu
(collectively, the "Reporting Persons"). The principal executive office of Well
Gain is located at Room 2103-2104, 21/F Treasure Centre, 42 Hung To Road, Kwun
Tong, Hong Kong. The address of Mr. Zhu is Rm. 2005, 20/F, Universal Trade
Centre, 3-5A Arbuthnot Road, Central, Hong Kong. The principal business of Well
Gain is investments. Mr. Zhu owns 100% of the outstanding shares of Well Gain.
Set forth on Annex A hereto is a schedule setting forth the name and present
principal occupation or employment of each Reporting Person's director(s), and
the name, principal business and address of any corporation or other
organization in which such employment is conducted. Annex A is incorporated by
reference into this Item 2 and elsewhere on this statement on Schedule 13D as
applicable.
(d) and (e) During the past five years, no Reporting Person nor,
to the best of each Reporting Person's knowledge, any person named in Annex A
to this Schedule 13D, has (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of or prohibiting
or mandating activity subject to federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On January 24, 2000 (the "Closing Date"), pursuant to an Acquisition
Agreement dated as of September 10, 1999 (the "Acquisition Agreement") among the
Company, 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. The
consideration for the Far Beyond Shares was determined through negotiations
between the management of the Company and the FB Shareholders.
Prior to the Share Exchange, Well Gain was the registered owner of
50,000 FB shares. In connection with the Share Exchange, Well Gain received
700,636 shares of the common stock of the Company.
In connection with the acquisition, the name of the Company will be
changed to Asia Fiber Holdings Limited.
ITEM 4. PURPOSE OF TRANSACTION
Each Reporting Person entered into the above mentioned transaction to
acquire the shares of Common Stock for investment purposes. The Common Stock was
acquired pursuant to the Acquisition Agreement as described in Item 3 of this
statement on Schedule 13D.
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<PAGE>
Other than as set forth in Item 3 or Item 4 of this statement on
Schedule 13D, each Reporting Person currently has no plan or proposal which
relates to, or may result in, any of the matters listed in Items 4(a) - (i) of
Schedule 13D (although each Reporting Person reserves the right to develop such
plans).
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
The Table below sets forth the aggregate number of shares and
percentage of the Company's outstanding shares beneficially owned by each
Reporting Person. Except as otherwise noted, each person listed has sole voting
and disparitive power over all shares listed opposite his name. Any of the
aforementioned persons whose name do not appear in the Table below do not, to
the best of each Reporting Person's knowledge, beneficially own any shares of
the Company.
Unless otherwise indicated in a footnote in the following Table, no
Reporting Person has consummated any Transactions in the Company's shares during
the past 60 days other than as set forth herein.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
--------------------
Number of Percentage
Shares of Total
--------- ----------
<S> <C> <C>
Zhu Yi Xin...........................700,636(1) 7.0%
Well Gain Investments Limited........700,636(2) 7.0%
</TABLE>
- --------------
(1) Represents of 700,636 shares of the common stock of the Company
registered in the name of Well Gain Investments Limited. Mr. Zhu Yi Xin
owns 100% of the outstanding shares of Well Gain Investments Limited.
(2) Mr. Zhu Yi Xin owns 100% of the outstanding shares of Well Gain
Investments Limited
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Other than as described in Item 4 above, to each Reporting Person's
knowledge, there are no contracts, arrangements, understandings or relationships
(legal or otherwise) among the persons named in Item 2 and between such persons
and any person with respect to any securities of the Company, including but not
limited to transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of profits,
division of profits or loss, or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- ------------
99.1 Acquisition Agreement dated as of September 10, 1999
by and between Asia Resources Holdings Limited,
Horler Holdings Ltd., Far Beyond Investments Limited,
Hearty Holdings Limited, Well Gain Investments
Limited, JADT Limited, NJI No.2 Investment Fund,
Megastone Development Limited.
5
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information named in this statement is true, complete and correct.
Date: February 3, 2000 WELL GAIN INVESTMENTS LIMITED
By: /s/ Zhu Yi Xin
---------------------------------
Zhu Yi Xin
-------------------------------------
Its: Director
--------------------------------
Date: February 3, 2000
/s/ Zhu Yi Xin
-------------------------------------
Zhu Yi Xin
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<PAGE>
ANNEX A
DIRECTOR OF WELL GAIN INVESTMENTS LIMITED
Set forth below are the name, business address, present principal
occupation or employment of the director of Well Gain Investments Limited.
<TABLE>
NAME PRESENT PRINCIPAL EMPLOYMENT BUSINESS ADDRESS
- ---- ---------------------------- ----------------
DIRECTOR
<S> <C> <C>
Zhu Yi Xin * Sole Director Room 2005, Universal Trade
Centre 3-5A, Arbuthnot Road,
Central, Hong Kong
</TABLE>
* Chinese Citizenship
7
<PAGE>
EXHIBIT 99.1
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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<PAGE>
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.
3
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(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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(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,
5
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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;
6
<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.
7
<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.
12
<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
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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
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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.
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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
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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.
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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
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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
