<PAGE> 1
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
Date of Report (Date of earliest event reported) March 31, 1998
------------------------------
MBf USA, Inc.
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(Exact name of registrant as specified in its charter)
Maryland 0-17458 73-1326131
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
500 Park Boulevard, Suite 1260, Itasca, Illinois 60143
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (630) 285-9191
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N/A
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(Former name or former address, if changed since last report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
MBf USA, Inc. and its subsidiary, American Health Products Corporation
("AHPC"), has announced that its principal shareholder, MBf International, Ltd.
("MBf International") sold all of its Company Class A Common Stock to Wembley
Rubber Products (M) Sdn. Bhd. ("Wembley") pursuant to a closing of its May 1997
Sale and Purchase Agreement, as amended.
Per the Sale and Purchase Agreement, Wembley has purchased 1,252,538
shares of the Company's Class A Common Stock from the Company's former majority
shareholder, MBf International, at $5.00 per share for a value of $6.27
million. The Class A Common Stock is empowered to elect a majority of the
Company's directors. MBf International will retain its 1,682,275 shares of
Class B Common Stock of the Company. Simultaneously, Wembley purchased
2,500,000 new, unregistered shares of MBf USA's Class B Common Stock at $2.70
per share, which carry demand registration rights. The pricing of this
component was at a slight discount off the public stock price as of the date of
the agreement. As a result, Wembley now holds 55% of the Company's Common
Stock. MBf USA received $6.75 million in proceeds which will be applied toward
working capital to expand market share, introduce new products, reduce debt and
introduce advanced technologies to the Company's 70% owned latex glove
manufacturing factory in Indonesia. The Company has received a fairness
opinion from the Griffing Group supporting this transaction.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a) Press release dated April 1, 1998.
b) Press release dated April 8, 1988.
c) Sale and Purchase Agreement dated May 20, 1997 between MBf
International Limited and Wembley Rubber Products (M) Sdn. Bhd.
d) Offshore Securities Subscription Agreement dated May 20, 1997
between MBf USA, Inc. and Wembley Rubber Products (M) Sdn. Bhd.
ITEM 9. SALES OF EQUITY SECURITIES PURSUANT TO REGULATION S
See response to Item 1. Changes in Control of Registrant.
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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, thereunto duly authorized.
MBf USA, Inc.
(Registrant)
DATE: April 10, 1998 By: /s/ Edward J. Marteka
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Name: Edward J. Marteka
Title: President
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[MBf USA, INC. LETTERHEAD]
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Exhibit - 7(a)
FOR IMMEDIATE RELEASE
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MBf USA RECEIVES $6.75 MILLION CAPITAL INFUSION
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WEMBLEY COMPLETES PURCHASE OF MBf USA CLASS A COMMON STOCK
AND 2.5 MILLION UNREGISTERED SHARES OF CLASS B COMMON STOCK
-----------------------------------------------------------
Itasca, Illinois - April 1, 1998 -- MBf USA, Inc. (The Nasdaq SmallCap Stock
Market Symbol MBFA) (the "Company") and its subsidiary, American Health
Products Corporation ("AHPC"), today announced MBf International, Ltd. ("MBf
International") sold all of its MBf USA's Class A Common Stock to Wembley
Rubber Products (M) Sdn. Bhd. ("Wembley"), the largest Malaysian powder-free
glove manufacturer and principal supplier of the Company's powder-free latex
glove business.
As per the previously announced May 1997 Sale and Purchase agreement, Wembley
has purchased 1,252,538 shares of MBf USA's Class A Common Stock from the
Company's former majority shareholder, MBf International, at $5.00 per share
for a value of $6.27 million. MBf International will retain its 1,682,275
shares of Class B Common Stock of the Company. Simultaneously, Wembley
purchased 2,500,000 new unregistered shares of MBf USA's Class B Common Stock
at $2.70 per share, which carry demand registration rights. As a result,
Wembley now holds 55% of the Company's Common Stock. MBf USA received $6.75
million in proceeds which will be applied toward working capital to expand
market share, introduce new products, reduce debt and introduce advanced
technologies to the Company's 70% owned latex glove manufacturing factory in
Indonesia. The Company has received a fairness opinion from the Griffing Group
supporting this transaction.
(continued)
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MBf USA, Inc. News Release Page 2
April 1, 1998
Edward J. Marteka, President of the Company said, "Wembley's investment in AHPC
demonstrates its confidence and commitment to support faster glove sales. The
aggressive sales and marketing team at American Health Products Corporation
will benefit from Wembley as one of the largest powder-free glove producers in
Malaysia. The $6.75 million capital injection enables AHPC to increase further
its manufacturing technologies at our Indonesian glove plant and thereby
benefit from the growing demand for powder-free gloves."
Richard Wong Chin Mun, President & CEO of Wembley commented, "Wembley's main
business is manufacturing and marketing "Gloves For All Reasons" - medical,
retail, food, industrial, and specialty. Increased resources channeled to
Research and Development, further improvement in glove technology and wide
product offering should accelerate AHPC's growth and increase its margins."
This press release contains forward looking statements which involve numerous
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in such forward looking statements as a result of
certain factors, including those set forth in the Company's filings with
Securities and Exchange Commission.
MBf USA, Inc. and its subsidiaries market Glovetex brand and OEM medical
examination gloves in the United States.
## ## ##
CONTACT: or- MBf USA's INVESTOR RELATIONS COUNSEL:
MBf USA, Inc. The Equity Group Inc.
Edward J. Marteka, President Marie Driscoll (212) 836-9605
Stephen Tan, Chief Financial Officer Linda Latman (212) 836-9609
T: (630) 285-9191
F: (630) 285-9289
<PAGE> 1
[MBf USA, INC. LETTERHEAD]
Exhibit - 7(b)
FOR IMMEDIATE RELEASE
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MBf USA WELCOMES WEMBLEY
AND ANNOUNCES PERSONNEL CHANGES
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Itasca, Illinois -- April 8, 1998 -- MBf USA, Inc. (The Nasdaq SmallCap Stock
Market Symbol MBFA) (the "Company") and its subsidiary, American Health
Products Corporation ("AHPC"), today announced the replacement of Loi Heng Sewn
and Stephen Tan as Chairman & CEO and CFO respectively, with Richard Wong, as
Chairman of the Board and Chief Executive Officer, and Lew Kwong Ann as Chief
Financial Officer of the Company.
Mr. Wong is also the President and CEO of Wembley Rubber Products (M) Sdn. Bhd.
("Wembley"), Malaysia, and Mr. Lew is CFO of Wembley. Wembley is among the
largest Malaysian powder-free glove manufacturers and principal supplier of
powder-free latex gloves to the Company.
Changes to the Board include the resignation of Loy Teik Hok, and the
appointments of Yg. Bhg. Datuk Kamaruddin Bin Taib as a Class A Director, and
the appointment of Loi Heng Sewn as a Class B Director.
The above personnel changes are in accordance with Wembley's desire to work
closely with the Company and expand the Company's glove business.
Edward J. Marteka will remain President of both MBf USA and AHPC. Mr. Marteka
will also remain as a Class A Director, as will George Jeff Mennen. Don Arnwine
and Robert Simmons will remain as Class B Directors.
Mr. Marteka reported that, "These appointments reflect the change in majority
stock ownership from MBf International, Ltd., to Wembley Rubber Products. It
also reinforces and supports MBf USA's quest for stronger market position. We
believe that Wembley provides the Company with an abundant supply of an
enlarged range of glove products."
(continued)
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MBf USA, Inc., New Release
April 1, 1998
This press release contains forward looking statements which involve numerous
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in such forward looking statements as a result of
certain factors, including those set forth in the Company's filings with the
Securities and Exchange Commission.
MBf USA, Inc. and its subsidiaries market Glovetex brand and OEM medical
examination gloves in the United States.
#### #### #####
CONTACT: or- MBf USA's INVESTOR RELATIONS COUNSEL
MBf USA, Inc. The Equity Group Inc.
Edward J. Marteka, President Marie Driscoll (212) 836-9605
Lew Kwong Ann, Chief Financial Officer Linda Latman (212) 836-9609
Robert Carter, Controller
T: (630) 285-9191
F: (630) 285-9289
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Exhibit - 7(c)
Dated this 20th day of May, 1997
MBf INTERNATIONAL LIMITED
AND
WEMBLEY RUBBER PRODUCTS (M) SDN. BHD.
==========================================
SALE AND PURCHASE AGREEMENT
(Shares in MBf USA Inc.)
==========================================
TENGKU MOHAMED & ALAN LIM
Advocates & Solicitors
Kuala Lumpur
Malaysia
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TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Article Subject Page
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<S> <C> <C>
I Recitals 1
II Definitions/Interpretation 2
III Sale and Purchase 7
IV Conditions Precedent 8
V Delivery of Documents 9
VI Completion 10
VII Non-Compliance 11
VIII Vendor's Covenants and Undertakings 12
IX Representations, Warranties and Undertakings 16
X Purchaser's Covenants and Undertakings 19
XI General Terms 21
Schedule
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Vendor's Warranties and Undertakings 25
Appendix
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A Audited Accounts 27
B Particulars of Existing Contracts 28
C Details of Loans, Debts and Securities 29
D List of the licenses given to the Company/Subsidiary(ies) 30
E List of the Subsidiary and Associates Company 31
F Disclosures Letter 32
</TABLE>
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THIS AGREEMENT is made on this 20th day of May, 1997.
BETWEEN
MBf INTERNATIONAL LIMITED, a company incorporated under the laws of Hongkong
and having its registered office at 17th Floor, One Pacific Place, 88 Queens
Way, Hongkong (hereinafter called "the Vendor") the one part;
AND
WEMBLEY RUBBER PRODUCTS (M) SDN. BHD. (147817-V), a company incorporated in
Malaysia and having its registered office at 29th Floor, Wisma Denmark, 86,
Jalan Ampang, 50450 Kuala Lumpur (hereinafter called "the Purchaser") of the
other part.
ARTICLE I
RECITALS
Section 1.1 The Company
1.1.1. MBf USA INC., is a company incorporated under the laws of the State
of Maryland of the United States of America and having its registered
office at 500, Park Boulevard, Suite 1260, Itasca, Illinois 60143-2639
United States of America (hereinafter referred to as "the Company")
with the following capital structure and with its common stock traded
on the National Association of Securities Dealers Automated Quotation
System (hereinafter referred to as "the NASDAQ") SmallCap Market under
the symbol "MBFA".
1.1.1.1 an authorised share capital of United States Dollars Twelve
Thousand Five Hundred Twenty Five and Cents Thirty Seven
(USD12,525.37) only divided into One Million Two Hundred
Fifty Two Thousand Five Hundred and Thirty Seven (1,252,537)
ordinary shares of USD0.01 per share all of which have
fully paid-up or credited as fully paid-up (hereinafter
referred to as "the Series A Common Stock");
1.1.1.2 an authorised share capital of United States Dollars One
Hundred Thousand (USD100,000.00) only divided into Ten
Million (10,000,000) ordinary shares of USD0.01 per share of
which Three Million Fifty Eight Thousand Three Hundred and
Thirty Three (3,058,333) have been issued and fully paid-up
or credited as fully paid-up (hereinafter referred to as
"the Common Stock").
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2
1.1.2 The principal businesses of the Company and its subsidiaries are in
the manufacturing and marketing of surgical and examination gloves.
Section 1.2 Shareholding of the Vendor
As at the date hereof, the Vendor is the registered holder and/or beneficial
owner of -
1.2.1 all the Series A Common Stock (hereinafter referred to as "the Sale
Shares"); and
1.2.2 One Million Six Hundred Eighty Two Thousand Two Hundred and Seventy
Five (1,682,275) of the Common Stock.
Section 1.3 Audited Accounts
The financial position of the Company as at the 31st day of December, 1996 is
shown in the audited accounts and balance sheet annexed hereto as Appendix A.
Section 1.4 Agreed Sale and Purchase
The Vendor has agreed to sell and the Purchaser has agreed to purchase the Sale
Shares at the price and upon the terms and conditions hereinafter contained.
ARTICLE II
DEFINITIONS/INTERPRETATION
Section 2.1 Definitions
In this Agreement unless there be something in the subject or context
inconsistent therewith the following expressions bear the following meanings
namely:
2.1.1 Accounts Date means the 31st day of December, 1996.
2.1.2 Audited Accounts means the audited accounts and balance sheet of the
Company as at the Accounts Date and annexed hereto as the Appendix A.
2.1.3 Balance Deposit means the sum of United States Dollars Three Hundred
Twenty Six Thousand Two Hundred Sixty Eight and Cent Fifty
(USD326,268.50) only.
2.1.4 Balance Sum means the sum of United States Dollars Five Million Six
Hundred Thirty Six Thousand Four Hundred Sixteen and Cent Fifty
(USD5,636,416.50) only.
<PAGE> 5
3
2.1.5 Bank Negara means the Central Bank of Malaysia established by the
Central Bank of Malaysia Ordinance, 1958.
2.1.6 Bank Negara Approval means the approval of Bank Negara to the
remittance of the Purchase Price to the Vendor.
2.1.7 Business Day means any day which is not a Saturday or Sunday or a
public holiday established by law in Malaysia or any part of Malaysia
and applicable to the Federal Territory of Kuala Lumpur.
2.1.8 Common Stock means the Three Million Fifty Eight Thousand Three
Hundred and Thirty Three (3,058,333) shares of the issued and
outstanding common stock of the Company which have been fully paid-up
or credited as fully paid-up.
2.1.9 Company means MBf USA INC., is a company incorporated under the laws
of the State of Maryland of the United States and having its
registered office at 500, Park Boulevard, Suite 1260, Itasca, Illinois
60143-2639 United States and shall, where the context so admits,
include its successors in title.
2.1.10 Completion Date means the day falling on or before the 9th day of
July, 1997 subject to an automatic extension of one (1) month if not
later than the 8th day of August, 1997.
2.1.11 Deposit Sum means the sum of United States Dollars Six Hundred Twenty
Six Thousand Two Hundred and Sixty Eight and Cent Fifty
(USD626,268.50) only comprising the Earnest Moneys and the Balance
Deposit.
2.1.12 Disclosure Letter means the letter from the Vendor to the Purchaser
qualifying the warranties, representations, statements, covenants and
undertakings of the Vendor set out in this Agreement and annexed
hereto as Appendix F.
2.1.13 Earnest Moneys means the sum of United States Dollars Three Hundred
Thousand (USD300,000.00) only paid by the Purchaser to the Vendor
prior to the execution of this Agreement.
2.1.14 Joint Venture Agreement means the written agreement dated the 8th day
of April, 1994 entered into between MBf Holdings Berhad, PT Ongko
Multicorpora and PT Prakarsa Bangun Mandiri in relation to their
relationship inter se as shareholders of MBf Buana and which
expression shall include all amendments thereof and additions thereto
pursuant to the
<PAGE> 6
4
written agreement dated the 17th day of October, 1994 entered into
between the parties thereto and the supplementary agreement dated the
21st day of August, 1995 made between MBf Holdings Berhad of the first
part, PT Sigmakarya Perdana Multicorpora of the second part and PT
Prakarsa Bangun Mandiri of the third part.
2.1.15 Knowledge means the knowledge - actual or constructive - of the
executive officers of the party to whom knowledge is represented or
imposed for the purposes of this Agreement.
2.1.16 Lenders' Approval means the consent of the lenders of the Company and
(if required) its Subsidiaries [but excluding MBf Bank (Tonga)] to the
proposed sale and purchase of the Sale Shares and in the case of MBf
Buana, the consent of its lenders to the transfer of the shareholding
in MBf Buana to the Company from its holding company, namely MBf
Holdings Berhad.
2.1.17 MBf Buana means P. T. MBf BUANA MULTICORPORA a company incorporated
under the laws of Indonesia and having its registered office at Al
Jermal, No. 20 B Kelurahan Sei Mati, Medan - Labuhan km 17, Indonesia
and shall, where the context so admits, include its successors in
title.
2.1.18 NASDAQ means the National Association of Securities Dealers Automated
Quotation System of the United States.
2.1.19 Option Period means the option period referred to in Section 4.4 hereof.
2.1.20 Purchase Price means the sum of United States Dollars Six Million Two
Hundred Sixty Two Thousand Six Hundred and Eighty Five (USD6,262,685.00)
only and referred to in Section 3.3 hereof.
2.1.21 Purchaser means WEMBLEY RUBBER PRODUCTS (M) SDN, BHD. (147817-V), a
company incorporated in Malaysia and having its registered office at
29th Floor, Wisma Denmark, 86, Jalan Ampang, 50450 Kuala Lumpur and
shall, where the context so admits, include its successors in title and
assigns.
2.1.22 Purchaser's Solicitors means Messrs Tengku Mohamed & Alan Lim of Suite
19.07-19.09, 19th Floor, Wisma Cyclecarri, 288, Jalan Raja Laut, 50350
Kuala Lumpur.
2.1.23 Relevant Approvals means the Bank Negara Approval and the Lenders,
Approval, collectively.
<PAGE> 7
5
2.1.24 Relevant Authorities means including without limitation the relevant
government ministries, agencies, statutory bodies, local and municipal
authorities of the United States and/or Hongkong, as the case may be.
2.1.25 said Documents means the certificates to the Sale Shares together with
the duly executed Memoranda of Transfer in respect thereof.
2.1.26 Sale Shares means all the Series A Common Stock which are beneficially
owned by the Vendor.
2.1.27 Series A Common Stock means the One Million Two Hundred Fifty Two
Thousand Five Hundred and Thirty Seven (1,252,537) ordinary shares of
the Company of USD0.01 per share which have the power to elect a
majority of the members of the board of directors of the Company all of
which have fully paid-up or credited as fully paid-up and referred to
in Section 1.1.1.1 hereof.
2.1.28 Subscription Agreement means the written agreement dated the day
of , 1997 entered into between the Company and the Purchaser
whereby the Purchaser shall be entitled to subscribe for Two Million
and Five Hundred Thousand (2,500,000) shares of the common stock of the
Company at a par value of USD0.01 per share from treasury at the price
of USD2.70 per share.
2.1.29 Subsidiary means a company or corporation in which the Company controls
more then fifty per centum (50%) of its issued capital and voting
rights and the expression "Subsidiaries" shall be construed
accordingly.
2.1.30 United States means the United States of America.
2.1.31 United States Dollars or USD means the lawful currency for the time
being and from time to time of the United States of America.
2.1.32 Vendor means MBf INTERNATIONAL LIMITED, a company incorporated under
the laws of Hongkong and having its registered office at 17th Floor,
One Pacific Place, 88 Queens Way, Hongkong and shall, where the context
so admits, include its successors in title and permitted assigns.
2.1.33 Vendor's Solicitors means Messrs K K Chong, Chai, Koo & Partners of
No. 24, Jalan Perumahan Gurney, 54000 Kuala Lumpur.
<PAGE> 8
6
Section 2.2 Interpretation
2.2.1 Any reference to a statutory provision shall include such provision and
any regulations made in pursuance thereof as may from time to time be
modified or re-enacted whether before or after the date of this
Agreement so far as such modification or re-enactment applies or is
capable of applying to any transactions entered into prior to
completion and (so far as liability thereunder may exist or can arise)
shall include also any past statutory provisions or regulations (as
from time to time modified or re-enacted) which such provisions or
regulations have directly or indirectly replaced.
2.2.2 Any reference to "Accounts" shall include the relevant balance sheets
and profit and loss accounts together with all documents which are or
would be required by the relevant law to be annexed to the Accounts of
the Company concerned to be laid before the Company in general meeting
for the accounting period in question.
2.2.3 Any reference to "Claim" shall include any notice, demand, assessment,
letter or other document issued or action taken by the tax authorities
or other statutory, body or official whosoever (whether of Malaysia,
Singapore or elsewhere in the world) whereby the Company is or may be
placed or sought to be placed under a liability to make a payment of
deprived of any relief, allowance, credit or repayment otherwise
available.
2.2.4 References to Recitals, Sections, Schedules and Appendices are to
Recitals, Sections, Schedules and Appendices of this Agreement.
2.2.5 References in this Agreement to "Ringgit Malaysia or RM" are references
to the lawful currency for the time being and from time to time of
Malaysia.
2.2.6 Words importing the masculine gender only shall include the feminine
and neuter genders and vice versa.
2.2.7 Words in the Singular number only shall include the plural number and
vice versa.
2.2.8 The headings of each of the provisions herein contained are inserted
merely for convenience of reference and shall be ignored in the
interpretations and construction of any of the provisions herein
contained. References to Articles are, except where the context
otherwise requires, references to Articles hereof.
<PAGE> 9
7
ARTICLE III
SALE AND PURCHASE
Section 3.1 Agreement to sell and purchase
The Vendor hereby agrees to sell and the Purchaser hereby agrees to purchase
the Sale Shares free from all claims, debentures, charges, liens, encumbrances
and equities whatsoever together with all rights attached thereto and all
dividends and distributions declared paid or made in respect thereof on and
after the date hereof at the Purchase Price and subject to the terms and
conditions herein contained.
Section 3.2 Purchase Price
The Purchaser shall pay to the vendor the Purchase Price at the times and in
the following manner:
3.2.1 the Balance Deposit to the Vendor's Solicitors as stakeholders upon
execution of this Agreement; and
3.2.2 the Balance Sum on the Completion Date.
Section 3.3 Stakeholders
3.3.1 The Vendor's Solicitors shall upon receipt of the Balance Deposit
place the same in an interest bearing account with a licensed financial
institution.
3.3.2 The Vendor's Solicitors shall deal with the Balance Deposit together
with the interest accrued thereon in the following manner:
3.3.2.1 release the same to the Vendor on the Completion Date; or
3.3.2.2 release the same to the Purchaser in the event that any of
the conditions precedent set out in Section 4.1 hereof is not
fulfilled by the Completion Date following written direction
from the Purchaser to deliver the same.
3.3.3 Notwithstanding anything to the contrary contained herein, should a
dispute arise between the Vendor and the Purchaser as to whether the
Balance Deposit should be returned to the Purchaser, the Vendor's
Solicitors shall be authorised to hold the same, without liability to
either party hereto, pending either their joint written directions as
to its disposition, or the directions of a court of competent
jurisdiction, and the Vendors Solicitors shall have no liability to
either party hereto for actions taken in good faith with respect to the
<PAGE> 10
8
foregoing and shall be authorized to file an interpleader action in the
courts at Kuala Lumpur for a determination as to whom the Balance
Deposit should be delivered, with the losing party to bear all costs of
such action.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent
This Agreement is conditional upon:
4.1.1 the following being obtained on or before the Completion Date:
4.1.1.1 the Bank Negara Approval; and
4.1.1.2 the Lenders' Approval; and
4.1.2 the terms of the supply agreement between American Health Products
Corporation and PIE Healthcare Sdn Bhd dated August 1, 1995 ("Supply
Agreement") being duly amended as follows:
4.1.2.1 the price of the Products (as defined in the Supply
Agreement) shall remain for the duration of the Supply
Agreement at United States Dollars Twenty Seven (USD27.00)
only per One Thousand (1,000) pieces with effect from May 1,
1997 or any increase or decrease in the price as may be
mutually agreed hereafter; and
4.1.2.2 the terms of payment shall be by open credit with sixty (60)
days term with effect from May 1, 1997;
4.1.3 the simultaneous completion of the Subscription Agreement.
Section 4.2 Application for Approval
4.2.1 The Purchaser shall submit to Bank Negara the necessary applications
within one (1) month from the date hereof. The Vendor shall exercise
its best endeavour to assist the Purchaser in making the aforesaid
applications.
4.2.2 The Vendor shall Use its best endeavours to satisfy the condition
precedent set out in Section 4.1 hereof.
<PAGE> 11
9
Section 4.3 Notification
In the event that any of the Relevant Approvals being refused or given or
granted upon the fulfillment of any conditions therein referred to, the party
being notified of such refusal or given such approval or granted such approval
subject to the fulfillment of any conditions shall immediately notify the other
party in writing and, where relevant or available, shall forward a copy thereof
to the other party.
Section 4.4 The Option period
In the event that a condition is imposed in respect of any of the Relevant
Approvals which materially and adversely affects any of the parties hereto,
that party or parties so affected shall have the option, to be exercised within
fourteen (14) days from the date on which the condition is made known to such
party or until the Completion Date, whichever is the earlier, ("the Option
Period") by written notice in writing to the other party, to reject such
condition, whereupon the such approval shall be deemed not to have been
obtained for the purpose hereof. If such option is not exercised within the
Option Period the such approval in respect of which the said condition is
imposed shall be deemed to have been obtained for the purpose hereof.
Section 4.5 Non fulfilment of conditions precedent
In the event that any of the conditions precedent mentioned in Section 4.1
hereof not being fulfilled by the Completion Date despite all reasonable
efforts by the parties hereto, the Vendor and the Vendor's Solicitors shall
respectively refund the Earnest Moneys free of interest and the Balance Deposit
together with all interest accrued thereon to the Purchaser and thereafter
neither parties hereto shall have any claims against each other and this
Agreement shall be deemed to have lapsed and be of no further force and effect.
ARTICLE V
DELIVERY OF DOCUMENTS
Section 5.1 DELIVERY OF DOCUMENTS TO VENDORS' SOLICITORS
The Vendor shall deliver and deposit with the Vendor's Solicitors as
stakeholders the said Documents on the date hereof. The Vendor's Solicitors
shall and are hereby expressly authorized to deal with the said Documents in
the following manner:
5.1.1 to release to the Purchaser the said Documents on the Completion Date;
or
5.1.2 to return the said Documents to the Vendor in the event that this
Agreement is terminated pursuant to the provisions of this Agreement.
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Section 5.2 Resignation letter
Upon execution of this Agreement and the appointment of two nominees of the
Purchaser as additional Class A Directors (as provided under the Company
Articles of Incorporation and Bylaws, as applicable) of the Company, the
Purchaser shall cause such nominees to execute and deposit with the Purchaser's
Solicitors the nominees' undated resignation letters as directors of the Company
to be dealt with in the following manner:
5.2.1 release such letters to the Purchaser on the Completion Date; or
5.2.2 release such letters to the Vendor's Solicitors forthwith in the event
that this Agreement is terminated pursuant to the provisions herein
contained.
ARTICLE VI
COMPLETION
Section 6.1 Completion of Sale and Purchase
Completion of the sale and purchase of the Sale Shares shall take place at
ll.OO a.m. on the Completion Date (or such other date as the parties hereto may
agree upon in writing) at the office of the Purchaser when the following
actions shall be taken by the parties hereto simultaneously:
6.1.1 The Vendor's Solicitors shall forward to the Purchaser the said
Documents;
6.1.2 The Vendor shall deliver to the Purchaser the following:
6.1.2.1 a circular resolution of the Board of Directors of the
Company approving the following:
6.1.2.1.1 appointment of four (4) nominees of the Purchaser
as additional Class A Directors of the Company;
and
6.1.2.1.2 the transfer of the Sale Shares in favour of the
Purchaser or its nominee(s) and for the transfers
to be registered in the Company's register
subject to stamping; and
<PAGE> 13
11
6.1.2.1.3 the resignation letters of all the present Class
A Directors except Edward J. Marteka and the
newly appointed Class A Directors pursuant to
Section 6.2.1.1 hereof without any claim
whatsoever for compensation for loss of office;
6.1.2.2 a certified copy of the certificate of incorporation of the
Company;
6.1.2.3 all the statutory books, books of account and documents of
record of the Company, complete and up to date and all
amendments thereto, and the original copies of all the
contracts entered into by the Company. However, for the
purpose of this sub-section, delivery shall be deemed made to
the extent that such books or documents are at the Company's
registered office and/or in the possession or control of the
Company or the Vendor on the Completion Date; and
6.1.2.4 the appropriate forms to amend the mandates given by the
Company to its bankers.
6.1.3 Subject to the Vendor observing and performing the covenants and
undertakings herein contained, the Purchaser shall deliver to the
Vendor a bank draft favouring the Vendor for the Balance Sum.
Section 6.2 Further Assurances
The Vendor shall execute and do all such further assurances and things for
vesting the Sale Shares in the Purchaser or its nominee or nominees and giving
the Purchaser or its nominee or nominees the full benefit of this Agreement as
the Purchaser shall reasonably require.
ARTICLE VII
NON-COMPLIANCE
Section 7.1 Default by Purchaser
Should the Purchaser commit a material breach of any of its covenants or
undertakings under this Agreement or fail to pay the Balance Sum in the manner
provided herein and/or to proceed with the purchase of the Sale Shares in the
manner herein set out after fulfilment of the conditions precedent set out in
Article IV hereof the Vendor shall be entitled to -
<PAGE> 14
12
7.1.1 terminate this Agreement and forfeit the Deposit Sum as agreed
liquidated damages for breach of contract by the Purchaser and
this Agreement shall be of no further force and effect and
the Vendor shall be at liberty thereafter to resell the Sale
Shares to such person or persons and upon such terms as the Vendor
shall deem fit and neither parties hereto shall have any claims
against each other; or
7.1.2 sue for specific performance and all reliefs flowing therefrom.
Section 7.2 Default by Vendor
Should the Vendor fail to perform any of its obligations under this Agreement
the Purchaser shall be entitled to -
7.2.1 terminate this Agreement whereupon the Vendor shall, within seven
(7) days from the date of such termination, (a) refund to the
Purchaser the Deposit Sum together with all interest accrued on
the Balance Deposit and (b) pay to the Purchaser a further sum of
United States Dollars Six Hundred Twenty Six Thousand Two Hundred
and Sixty Eight and Cent Fifty (USD626,268.50) as agreed
liquidated damages for breach of contract by the Vendor and
thereafter this Agreement shall be of no further force and effect
and neither parties hereto shall have any claims against each
other; or
7.2.2 sue for specific performance and all reliefs flowing therefrom.
ARTICLE VIII
VENDOR'S COVENANTS AND UNDERTAKINGS
Section 8.1 Company's assets and business
Pending the completion of the sale and purchase herein provided, the Vendor
shall take such steps as shall lie within their power to procure that the
Company will not, save in each case, with the Purchasers prior consent in
writing do or permit or cause to do or omit or neglect or refuse to do anything
otherwise than in the ordinary course of business which would or could result
in or give rise to or cause any diminution or depletion in the assets or the
financial position of the Company or any reduction in the value of the Sale
Shares or in their control in the share capital of the Company.
Section 8.2 Appointment of Purchaser's nominees as directors
8.2.1 The Vendor shall cause:
<PAGE> 15
13
8.2.1.1 two (2) Purchaser's nominees to be appointed as
additional Class A Directors of the Company within
ten (10) days following the date of execution of this
Agreement; and
8.2.1.2 four (4) Purchaser's nominees to be appointed as
additional Class A Directors of the Company on the
Completion Date provided the transaction contemplated
under this Agreement is completed on such date.
8.2.2 Subject to Section 5.2.2 hereof and other lawful terminations of
this Agreement, the Vendor shall not without the written consent
of the Purchaser, remove or cause to be removed the nominees of
the Purchaser as Class A Directors of the Company.
Section 8.3 Tax
The Vendor hereby undertakes to pay all taxes payable in connection with
any gains made by the Vendor (if any) in respect of the sale of the Sale Shares
and further covenants and undertakes to indemnify the Purchaser against any
claims, demands, actions or proceedings whatsoever resulting from the Vendor's
non-compliance with any relevant statutory provisions in respect of the
disposal of the Sale Shares.
Section 8.4 Indemnity for diminution of the Company assets
The Vendor shall indemnify the Purchaser twenty nine point zero five per
centum (29.05%) of any damages, deficiencies, losses, costs, liabilities and
expenses (including legal fees and disbursements) and in particular, but
without prejudice to the generality of the foregoing, from and against any
depletion or diminution of the assets of the Company, resulting directly or
indirectly from or arising out of any breach of any of the representations,
warranties, covenants and agreements made by the Vendor herein in relation to
the businesses of Company and the Subsidiaries.
Section 8.5 Indemnity regarding tax
The Vendor covenants with the Purchaser that it shall indemnify and at all
times keep the Purchaser and/or the Company indemnified up to twenty nine
point zero five per centum (29.05%) of any diminution of the net assets of the
Company which results from the Company being called upon to pay any tax or duty
other than as specifically provided for in the Audited Accounts and other than
sales tax and income tax on normal trading income arising from transactions
entered into in the ordinary Course of business having regard to past practices
after the Accounts Date.
<PAGE> 16
14
Section 8.6 MBf Buana
The vendor hereby covenants and undertakes with the Purchaser that it shall on
or before the Completion Date cause MBf Buana to increase its paid up capital
to United States Dollars Two Million and Five Hundred Thousand
(USD2,500,000.00) only as approved by the Investment Co-ordination Board of
Indonesia by way of capitalisation of the advances made by the shareholders of
MBf Buana without affecting the shareholding structure of MBf Buana as set out
in the Joint Venture Agreement i.e. the total shareholdings of the Indonesian
parties shall represent thirty per centum (30%) of the issued and paid up
capital of MBf Buana.
Section 8.7 Moratorium on shareholding
The Vendor hereby covenants and undertakes not to increase directly or
indirectly its stock capital in the Company, whether through reissue of the
treasury stock or any other means whatsoever prior to the Purchaser acquiring
more than fifty per centum (50%) of the issued stock and voting rights in the
Company.
Section 8.8 Restrictions pending completion
The Vendor hereby covenants and undertakes with the Purchaser that as from the
date hereof and pending completion of the sale and purchase of the Sale Shares,
unless with the prior written consent of the Purchaser first had and
obtained, the Vendor shall ensure that the Company will:
8 8.1 continue to conduct its present business until completion according to
its present practice and in usual course of business;
8.8.2 not sell, transfer, lease, let, encumber, dispose of or otherwise
howsoever deal or part with the possession of any of the Company's
fixed assets, properties and undertakings or any part or parts thereof
except in the ordinary course of business or by reason of commitments
entered into prior to this Agreement and disclosed to the Purchaser on
or before the date hereof;
8.8.3 not give indemnities or enter into any guarantees or sureties in
favour of any person body or corporation or on behalf of any
person body or corporation other than guarantees or sureties given in
the ordinary course of business;
8.8.4 not incur any borrowing or indebtedness except in the ordinary course
of business;
8.8.5 not create or issue or agree to create or issue any share or loan
capital or give or agree to give any option in respect of any share or
loan capital;
<PAGE> 17
15
8.8.6 not pass any resolution by the Company in general meeting except to (a)
give effect to this Agreement or (b) to consummate actions in the
ordinary course of business which are not expected to materially and/or
adversely affect the value of the Company or the Purchaser's interest
in the Company, and (c) not to make any alteration to the provisions of
the Company's Articles of Incorporation;
8.8.7 not in any way depart from the normal course of its day to day business
either as regards the nature, scope or manner of conducting the same;
8.8.8 not pay or agree to pay to any of the Directors or Officers of the
Company any remuneration or other emoluments or benefits
whatsoever other than those which have been disclosed to and agreed by
the Purchaser.
8.8.9 maintain its listing status on NASDAQ with its issue common stock
freely traded on NASDAQ; provided that:
8.8.9.1 should the company's stocks be delisted by NASDAQ due to
matters beyond the Company's control (e.g. due to decline in
stock price below USD1.00 or decline in net worth etc)
then such decline will not create any liability to the
Purchaser but will provide the Purchaser on or before the
Completion Date an option to elect not to move forward with the
purchase and in which event, the Vendor shall refund to the
Purchaser all moneys paid by the Purchaser under this
Agreement; and
8.8.9.2 there shall be no obligations to have the non-registered
stocks of the Company freely tradeable until such stocks are
registered pursuant to an appropriate registration statement.
SECTION 8.9 NO LASUE FROM TREASURY
The Vendor shall ensure that the shares held in the treasury of the company
shall not be issued by the Company up to the Completion Date unless otherwise
consented to by the Purchaser.
SECTION 8.10 NON-GLOVE BUSINESS LIABILITIES
In the event there are any liabilities, cost or expenses incurred by the
Company or any of its Subsidiaries arising from any claims or demands
(including goods returned) relating to or incidental to or arising from the
non-glove business of the Company (in particular, the Playboy Condom business),
whether now or hereafter; the Vendor shall within fourteen
<PAGE> 18
16
(14) days of being notified by the Purchaser of such liabilities, costs or
expenses remit directly to the Purchaser the sum equivalent to twenty nine
point zero five per centum (29.05%) of the amount of such liability, costs or
expenses subject to the following:
8.10.1 the Vendor's obligation in this Section 8.11 shall be limited to
claims or demands arising up to a period of One (1) year from the
Completion Date;
8.10.2 the Vendor shall have no liability unless notice from the Purchaser of
any claim or demand has been delivered to the vendor within One (1)
year following the Completion Date;
8.10.3 "liabilities" for the purposes of this Section 8.11 shall mean the net
liabilities of the Company or any of its Subsidiaries i.e less any
insurance claims (if any); and
8.10.4 the Vendor shall be entitled to retain twenty nine point zero five
per centum (29.05%) of the goods returned, if applicable.
ARTICLE IX
REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
Section 9.1 Vendor's warranties and undertakings
The Vendor hereby warrants and undertakes to and with the Purchaser and
its successors in title in relation to the Company and its Subsidiaries in the
terms set out in the Schedule annexed hereto subject only to:
9.1.1 any exceptions expressly provided for under the terms of this
Agreement and as disclosed by the Vendor in the Disclosure Letter;
9.1.2 any matter or thing hereafter done or omitted to be done at the
request in writing or with the approval in writing of the Purchaser; and
9.1.3 all warranties are to the Vendors best knowledge after making due
enquiries.
Section 9.2 Warranties and undertakings on completion
The Vendor further warrants and undertakes to and with the Purchaser and its
successors in title that:
9.2.1 subject as aforesaid all warranties and undertakings on its part
herein contained will be fulfilled down to and will be substantially
and fundamentally true and correct on the Completion Date in all
respects as if they had been entered into fresh on the Completion
Date; and
<PAGE> 19
17
9.2.2 if after the signing hereof and before the Completion Date any event
shall occur which results or may result in any of the said warranties or
undertakings being unfulfilled, untrue or incorrect at completion, the
Vendor shall immediately notify the Purchaser thereof prior to the
Completion Date. The Vendor shall have no liability to the Purchaser as
a result of the foregoing, however the Purchaser shall have no
obligation to consummate the transaction contemplated herein with
respect to such event provided that the Purchaser provides written
notice to the Vendor within Fifteen (15) Business Days or such other
period as the parties hereto may mutually agree of learning of such
warranty being untrue or incorrect that it wishes to terminate this
Agreement or to renegotiate the terms of this Agreement.
Section 9.3 Warranties etc., to continue after completion
Notwithstanding the completion of the sale and purchase hereunder but with the
exception of paragraphs 25, 26 and 27 of the Schedule annexed hereto, all
warranties, undertakings and obligations given hereunder or undertaken herein
shall -
9.3.1 continue hereafter to have, full force and effect for a period of one
(1) year from the Completion Date; and
9.3.2 the Vendor shall have no liability unless notice from the Purchaser of
any claim or demand has been delivered to the Vendor within one (1)
year following the Completion Date.
Section 9.4 Right of Purchaser to rescind Agreement
If prior to the Completion Date it shall be found that any of the warranties
or undertakings on the part of the Vendor have not in all material respects been
carried out or complied with or are otherwise untrue or incorrect in any
material respect, the Purchaser shall be entitled by notice in writing to the
Vendor to rescind this Agreement which shall be the sole remedy of the Purchaser
if this Agreement is not completed. In the event of rescission of this
Agreement by the Purchaser under this Section, the Vendor shall refund to the
Purchaser the Earnest Moneys free of interest and the Balance Deposit together
with all interest accrued thereon within fourteen (14) days from the date or
receipt of the Purchaser's notification of rescission of this Agreement, failing
which, the Vendor shall pay to the Purchaser interest on the total amount
payable to the Purchaser at the rate of one per centum (1%) per month calculated
from the expiry of the fourteen (14) days to the date or actual refund thereof
to the Purchaser.
Section 9.5 Discrepancies
Notwithstanding anything to the contrary contained in this Agreement -
<PAGE> 20
18
9.5.1 the Vendors liability for breach of any representation or warranty
shall be credited dollar for-dollar to the extent that any of the
assets of the Company are understated or the liabilities of the Company
are overstated in the Audited Accounts;
9.5.2 should there be a breach of a representation or warranty, the Vendor
shall have no liability for the first United States Dollars Thirty
Thousand (USD30,000.00) only of diminution in the value of the net
assets of the Company as a result of such breach [subject always to a
maximum aggregate cumulative amount of United States Dollars One
Hundred Thousand (USDl00,000.00) only for all such breaches], and in
all events, if due to a breach the diminution in value of the net
assets of the Company is reduced beyond the aforesaid figure, the
Vendor's liability to the Purchaser shall be limited to twenty nine
point zero five per centum (29.05%) of such diminution subject to a
maximum sum equivalent to the Purchase Price;
9.5.3 to the extent any adjustment is made to the Audited Accounts to
conform or respond to any requirement imposed by the Securities
Exchange Commission, so long as the net tangible asset backing of the
Company is intact, such adjustment shall not result in a breach of any
representation or warranty of the Vendor or create any liability of the
Vendor to the Purchaser and shall not be deemed a default under
condition 3 of the Schedule annexed hereto;
9.5.4 the Vendor shell have no liability with respect to breaches of
representations or warranties for which notice by the Vendor of breach
has not been delivered to the Vendor within one (l) year following the
Completion Date; and
9.5.5 the Vendor may further disclose any matter on any of the
schedules or reference therein on the date of execution of this
Agreement or any supplement up to the Completion Date to the extent the
matter disclosed in the schedules or reference therein are inconsistent
with any of the representations or warranties contained in this
Agreement. Should the Purchaser objects to any of such supplemental
disclosures, it shall be entitled to -
9.5.5.1 complete this Agreement subject to such disclosure but upon
the Vendor's undertaking to indemnify the Purchaser up to
twenty nine point zero five per centum (29.05%) of any
liability arising from or as may be suffered by the Company;
or
<PAGE> 21
19
9.5.5.2 terminate this Agreement with its sole remedy being the
return of the Earnest Moneys and the Balance Deposit together
with interest accrued thereon.
ARTICLE X
PURCHASER'S COVENANTS AND UNDERTAKINGS
SECTION 10.1 Substitution of quarantee
The Purchaser shal1 procure - on or before the expiry of three (3) months from
the Completion Date or the date the Purchaser acquires more than fifty per
centum (50%) of the issued capital and voting rights of the Company, whichever
is the later - unconditional releases without liability all guarantees given by
the Vendor, its related corporations (as defined under Section 6 of the
Malaysian Companies Act 1965) or its ultimate holding company, namely MBf
Holdings Berhad to any third parties ("Third Parties") for the benefit of the
Company and/or its Subsidiaries in relation directly to the Company's and its
subsidiaries principal businesses as set out in Section 1.1.2 hereof
("Guarantees") to be discharged by offering its guarantee as substitution of
the Guarantees, failing which, the following consequences shall ensue:
10.1.1 in the event that any of the Third Parties shall refuse to grant such
releases, then the Purchaser shall endeavour within a further period
three (3) months procure such other financing or arrangement to repay
or otherwise satisfy the liabilities owing to such Third Party(ies)
to procure the releases of such guarantee (6) , failing which, the
Purchaser shall cause the Company to pay to the Vendor interest at the
rate of one point eight per centum (1.8%) per annum on the amount
guaranteed by the Vendor from the expiry of the aforesaid period of
six (6) months to the date of release of the Guarantees and, pending
such release, the Purchaser shall further indemnify the Vendor against
any claim arising from the Guarantees; and/or
10.1.2 in the event that a call is made on any of such Guarantees and the
Purchaser is given an opportunity to verify the authencity of
such call and the amount thereof, then the Purchaser shall within
fourteen (l4) days from the date of receipt of notification and
satisfactory documentary evidence that the Vendor has indeed made such
payment, indemnify the Vendor of any amount paid under such Guarantee
("Guaranteed Amount"), failing which, interest at the rate of fifteen
per centum (15%) per annum shall be paid on the Guaranteed Amount from
the due date to the date of actual payment thereof; provided that all
payment hereunder made by the Purchaser shall be deemed as advances to
the Company and shall be repayable by the Company on demand made by
the Purchaser.
<PAGE> 22
20
Section 10.2 Inter-company debts
The parties hereto hereby agree that all advances made by the Vendor and/or its
related corporations (but excluding MBf Bank (Tonga)) to the Company ("Inter-Co
Advances") shall be repaid by the Purchaser on behalf of the Company on the
Completion Date in exchange therefor, the Vendor and/or its related
Corporations, as the case may be, shall simultaneous with the repayment
thereof, assign to the Purchaser all its rights to such Inter-Co Advances. For
the avoidance of doubt, the Vendor hereby agrees that any amount owing by the
Vendor and/or its related corporations to the Purchaser and/or its related
corporations shall be set off against the Inter-co Advances and any shortfall
or excess, as the case may be, shall be paid on the Completion Date, failing
which, interest at the rate of fifteen per centum (15%) per annum shall be paid
on the shortfall or excess, as the case may be, from the due date to the date
of actual payment thereof, without prejudice to the other rights and remedies
of the party concerned.
Section 10.3 Chance of name
After the Completion Date, the Purchaser shall use its voting power in the
Company and cause its nominee directors to take all steps necessary to -
10.3.1 procure the change of name of the Company and its Subsidiaries by
dropping the word "MBf" within three (3) months from the Completion
Date; and
10.3.2 cease to use the MBf logo within one (1) month from the Completion
Date.
Section 10. 4 MBf director
The Purchaser shall within ten (10) days from the Completion Date cause a
nominee of the Vendor, namely Loi Heng Sewn to be appointed as class B
director of the Company, or failing which, a class A director of the Company.
Section 10.5 Joint Venture Agreement
After the Completion Date, the parties hereto shall use their respective
voting power in the Company and cause its nominee directors to take all steps
necessary to procure that the Company shall, upon the transfer of the shares in
MBf Buana from MBf Holdings Berhad to the Company, enter into such agreement(s)
as may be necessary to effect the substitution of the Company as a party to the
Joint Venture Agreement in place of MBf Holdings Berhad and until such time as
the substitution is effected, the Purchaser shall cause the Company to be
bound by the terms of the Joint Venture Agreement.
<PAGE> 23
21
Section 10.6 Glove Business
The Purchaser hereby agrees that in the event that the Vendor shall cause the
Company or its Subsidiaries to implement or carry out any activity in relation
to the glove business of the Company or its Subsidiaries with the prior written
consent of the Chief Executive Officer of the Purchaser or the person(s)
authorized in writing by the latter, the Purchaser shall not be entitled to any
indemnity from the Vendor in the event of any diminution of the assets of the
Company or its Subsidiaries arising out of such activity.
ARTICLE XI
GENERAL TERMS
Section 11.1 Costs
All stamp duty for and in respect of this Agreement and the subsequent
Transfer of the Sale Shares to the Purchaser and all transfer fees (if any)
shall be borne and paid by the Purchaser but each party hereto shall bear its
own solicitor's fees.
Section 11.2 Successors in Title and Assigns
This Agreement shall be binding upon the respective successors in title and
permitted assigns of the parties hereto.
Section 11.3 Governing Law
11.3.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of Malaysia and the parties hereto hereby
submit to the jurisdiction of the courts of Malaysia of competent
jurisdiction in all matters concerning with the obligations and
liabilities under this Agreement.
11.3.2 The Vendor hereby irrevocably agrees that any legal
action or proceedings against it with respect to this Agreement
may be brought in the Courts of Malaysia and the Vendor hereby
irrevocably appoints the Vendor's Solicitors as its agents to receive
service of process in Kuala Lumpur, Malaysia and such appointment shall
not be revoked without the consent in writing of the Purchaser.
11.3.3 the Vendor agrees that if a final judgment is entered into against it
in Malaysia (after the vendor has exhausted all avenues of appeal in
Malaysia which the Vendor is entitled to take and wishes to take) in
respect of any claim or action by the Purchaser against it then if in
order to enforce that judgment:
<PAGE> 24
22
11.3.3.1 the Purchaser wishes to register that judgment in
Hongkong and/or a State of the United States
selected by the Purchaser, the Vendor will consent to
that registration and not directly or indirectly seek
to defend or oppose it; and
11.3.3.2 if the Purchaser subsequently wishes to have that
registration recognised in another State in the
United States where assets of the Vendor are located
for the purposes of enforcing judgment against the
Vendor, then the Vendor will consent to that action
and not directly or indirectly seek to defend or
oppose it.
Section 11.4 Severability
Any terms, conditions, stipulation, provision, covenant or undertaking of
this Agreement which is illegal, prohibited or unenforceable in any
jurisdiction shall as to such jurisdiction be ineffective to the extend of such
illegality, voidness, prohibition or unenforceability without invalidating the
remaining provisions hereof and any such illegality, voidness, prohibition or
unenforceability in any such term condition stipulation provision covenant or
undertaking in any other jurisdiction.
Section 11.5 Time the essence
Time wherever mentioned herein shall be deemed to be of the essence of this
Agreement.
Section 11.6 Knowledge or acquiescence
Knowledge or acquiescence by one (1) party hereto of any breach of any of the
terms and conditions or undertakings herein contained shall not operate as or
to be deemed to be waiver of such terms and conditions or any of them and
notwithstanding such knowledge or acquiescence by such party hereto shall be
entitled to exercise its rights under this Agreement and to require strict
performance by the other party of the terms conditions and undertakings herein.
SECTION 11.7 Entire Agreement
Unless otherwise agreed to between the parties hereto the terms and
conditions herein contained constitute the sole and entire agreement and
understanding between the parties hereto and supersede all previous proposals,
negotiations, commitments and understandings which might have been made prior
to the execution of this Agreement between the parties hereto with respect to
the subject matter hereof, whether written or oral.
<PAGE> 25
23
Section 11.8 Schedule and Appendices
The Schedule and the Appendices annexed hereto shall be taken read and
construed as an essential parts of this Agreement.
Section 11.9 Confidentiality
Except as required by any governmental or other regulatory authority, or
any competent court having jurisdiction, no public announcement or press
release shall be made by or on behalf of any party hereto about the existence
or contents of this Agreement, or the negotiations hereunder, without the prior
written consent of the other Parties hereto.
Section 11.10 Variation of terms be mutual agreement
It is hereby expressly agreed and declared by the parties hereto that
notwithstanding any of the provisions of this Agreement to the contrary, the
provisions and terms of this Agreement may at any time and from time to time be
varied or amended by mutual consent of the parties hereto by means of a mutual
exchange of letters or such other means as the parties may agree upon from time
to time and thereupon such amendments and variations shall be deemed to become
effective and the relevant provisions of this Agreement shall be deemed to have
been amended or varied accordingly and shall be read and construed as if such
amendments and variations have been incorporated in and had formed part of this
Agreement at the time of execution hereof.
Section 11.11 No Assignment
This Agreement and all rights and obligations hereunder are personal to the
parties hereto and each party hereto shall not assign or attempt to assign any
such rights or obligations to any third party without the prior written consent
of the other party hereto, save and except that the Purchaser shall be entitled
to nominate a nominee or nominees to accept the transfer of some or the whole
of the Sale Shares as it shall deem fit.
Section 11.12 Notices
Any notice required to be given by one party hereto to the other party
hereto hereunder shall be in the English Language and shall be sufficient given
if forwarded by hand or prepaid registered post or by telefax or telegram or
cable to the address or addresses hereinbelow stated of the other parties and
shall be deemed to be duly served:
11.12.1 if delivered by courier, on delivery and acknowledged receipt thereof;
or
11.12.2 if it is sent by prepaid registered post, seven (7) days after
posting thereof; or
11.12.3 if it is sent by telegram or cable on the Business Day next after
the date of despatch; or
<PAGE> 26
24
11.12.4 if it is sent by telefax, immediately after transmission thereof
confirm by a transmission report stating the correct facsimile
number and the number of pages sent and that such transmission is
"OK", if the date of transmission is not a Business Day, then the
notice by telefax shall be deemed to be served on the immediately
following Business Day.
For the Vendor:
- ---------------
21st Floor, Plaza MBf,
Jalan Ampang,
50730 Kuala Lumpur.
Attn: Tan Mong Sing
- -------------------
Telefax: (603) 2613280
For the Purchaser:
- ------------------
29th Floor, Wisma Denmark,
86, Jalan Ampang,
50450 Kuala Lumpur.
Attn: Mr. Richard Wong
- ----------------------
Telefax: 603-8461437
<PAGE> 27
(1)
1. Information
The Recitals are true and all other information in writing including those
appended to this Agreement which has been given by the Vendor and/or the
Directors or officials or professional advisers of the Vendor or the
Company to any of the directors or officials or professional advisers of
the Purchaser in the course of the negotiations leading to this Agreement
was when given to the best of the knowledge and belief of the Vendor after
making due and careful enquiries true, complete and accurate in all
material respects and after making due and careful enquiries the Vendor is
not aware of any fact or matter not disclosed in writing to the Purchaser
which renders any such information untrue, inaccurate or misleading or the
disclosure of which might reasonably affect the willingness of the
Purchaser to purchase the Sale Shares or the price at or terms upon which
the Purchaser would be willing to purchase them to the extent that any
materials supplied or appended to this Agreement are of a later date than
prior materials and such later date materials contradicted or are
inconsistent with the prior materials, the later materials shall be deemed
to supersede the prior materials in all respects.
2. Copies of Accounts, Memorandum and Articles etc.
The copies of the Audited Accounts and other accounts, and of the
Articles of Incorporation of the Company and its Subsidiaries delivered to
the Purchaser are true copies and in the case of the Articles of
Incorporation have attached thereto copies of all such resolutions and
agreements as are required by laws to be delivered to the Relevant
Authorities for registration of the Articles with the State of Maryland.
3. Accounts
3.1 The Audited Accounts have been prepared in accordance with the
relevant law and on a consistent basis in accordance with
accounting principles, standards and practices generally accepted at
the date thereof in Malaysia and the United States so as to give a
true and fair view of the state of affairs of the Company and its
Subsidiaries at the Accounts Date and of the profits or losses for
the period concerned and as at the respective dates, the following
have been made in the Audited Accounts:
3.1.1 full provision for all actual liabilities;
3.1.2 proper provision (or note in accordance with good accountancy
practice) for all contingent liabilities; and
<PAGE> 28
(2)
3.1.3 provision reasonably regarded as adequate for all bad and
doubtful debts;
3.2 full provision or reserve have been made in the Audited Accounts for
all taxation liable to be assessed on the Company and its Subsidiaries
or for which it is or may become accountable in respect of -
3.2.1 profits, gains or income (as computed for taxation purposes)
arising or accruing or deemed to arise or accrue on or before
the Accounts Date;
3.2.2 any transactions affected or deemed to be effected on or before
the Accounts Date or provided for in the Audited Accounts; and
3.2.3 distributions or payments made or deemed to be made on or before
the Accounts Date or provided for in the Audited Accounts;
3.3 proper provision or reserve for deferred taxation in accordance with
accounting principles and standards generally accepted at the date
thereof has been made in the Audited Accounts.
4. Changes since Accounts Date
Since the Accounts Date as regards the Company and its Subsidiaries, each
to the best knowledge of the Vendor after making due and careful enquiries -
4.1 has carried on its business in its ordinary course and so as to
maintain the same as a going concern;
4.2 has not disposed of any assets or assumed or incurred any material
liabilities (including contingent liabilities) otherwise than in the
ordinary course of carrying on its business;
4.3 business has not been materially and adversely affected by the loss of
any important asset or customer or by any abnormal factor not
affecting similar businesses to a like extent and after making due and
careful enquiries the Vendor is not aware of any facts which are likely
to give rise to any such affects;
4.4 has not declared made or paid to its members any dividend or other
distribution except as provided for hereunder or in the relevant
balance sheet;
<PAGE> 29
(3)
4.5 has made no exceptional change in the basis of the emoluments or other
terms of employment of its directors or any of its employees having
regard to its past practice and the prevailing industry practice.
5. LITIGATION ETC.
5.1 Since the Accounts Date no claim for damages or product liability has
been made against the Company and/or any of its Subsidiaries.
5.2 Neither the Company nor any of its Subsidiaries is at present engaged
whether as plaintiff or defendant or otherwise in any legal action,
proceeding or arbitration (other than as plaintiff in the collection
of debts arising in the ordinary course of its business) or is being
prosecuted for any criminal offence.
5.3 There are no circumstances known to the Vendor after making due and
careful enquiries likely to lead to any such claim or legal action,
proceeding or arbitration (other than as aforesaid) or prosecution.
6. Taxation
6.1 To the best of the knowledge, information and belief; of the Vendor
after making due and careful enquiries there in no liability to
taxation in respect of the Company and/or any of its subsidiaries
(other than as specifically provided for in the Audited Accounts
and other than sales tax and income tax on ordinary trading income
arising from transactions entered into in the ordinary course of
business after the Accounts Date) and there are no circumstances
likely to give rise to such a liability and in particular (but
without limitation) there exist no grounds for -
6.1.1 assessment on the Company and/or any of its Subsidiaries of
additional liability to tax in respect of any transaction
between or involving the Company and/or any of its Subsidiaries
on the one hand and on the other hand any company deemed to be
related to the Company or any person in which the Vendor and/or
any Director of the Vendor or the Company and/or any of its
Subsidiaries and/or any person connected with any of them has
during the three (3) years immediately preceding the date of
the agreement been interested;
<PAGE> 30
(4)
6.1.2 any claim for tax against the Company and/or any of its
Subsidiaries under the provisions of any taxation statutes in
connection with the transfer of assets to or for the provision
of any benefit to any person or whereby, arising from any
circumstances, the Company and/or any of its Subsidiaries may
be held liable for any taxation primarily chargeable against
some other person or company.
6.2 Neither the Company nor any of its Subsidiaries has received any tax
concession, relief or other special tax treatment, whether in
relation to its assets or the business to bc carried on by it or
otherwise.
6.3 All documents in the possession or under the control of the Company and
its Subsidiaries or to the production of which the Company and its
Subsidiaries are entitled which are necessary to establish the title,
interest or benefit of the Company and item Subsidiaries, as the
case may be, to any asset or in any transaction have been duly stamped;
6.4 No relief or exemption has been obtained from stamp duty which has
become liable for forfeiture or which has been obtained in respect of
a transaction carried out within the period in which it may become
liable to forfeiture.
6.5 Neither the Company nor any of its Subsidiaries is involved in any
dispute with any revenue to affect in any way the its liability
(whether accrued, contingent or future) to taxation or other sums
imposed, charged, levied or payable under the provisions of any
taxation statute.
7. Tax returns
The Company and its Subsidiaries have duly made all returns and given or
delivered all notices, accounts and information which on or before the date
hereof ought to have been made, given or delivered for the purposes of
taxation and all such returns, notices, accounts and information (and all
other information supplied to the relevant revenue or other fiscal
authority concerned for any such purpose) have to the best of the knowledge
and belief of the Vendor after making due and careful enquiries been
correct and made on a proper basis and none of such returns, notices,
account or information is disputed in any material respect by the fiscal
authority concerned and there is no fact known to the Vendor after making
due and careful enquiries which might be the occasion of any such dispute
or of any claim for taxation in respect of any financial period down to and
including the Accounts Date not provided for in the Audited Accounts.
<PAGE> 31
(5)
8. Employees
8.1 To the best knowledge of the Vendor after making due and careful
enquiries, there are not in existence any contracts of service with
directors or employees of the Company and/or any of its Subsidiaries,
nor any consultancy agreements with the Company and/or any of its
Subsidiaries which cannot be terminated by three (3) months' notice
or less without giving rise to any claim for damages or compensation
for unfair dismissal).
8.2 Full particulars of all existing contracts of service with employees
of the Company and its Subsidiaries and of all material consultancy
agreements with the Company and its Subsidiaries are annexed hereto
as Appendix B.
8.3 There are no amounts owing to any present or former Directors or to
members of the Company and its Subsidiaries other than remuneration
accrued due or for reimbursement of business expenses.
8.4 Save to the extent (if any) to which provision or allowance has been
made in the Audited Accounts, neither the Company nor any of its
Subsidiaries has made or agreed to make any payment to or provided or
agreed to provide any benefit for any present or former director or
employee (if applicable) which is not allowable as a deduction for the
purposes of taxation.
8.5 Save to the extent (if any) to which provision or allowance has been
made in the Audited Accounts -
8.5.1 no liability has been incurred by the Company and/or any of its
Subsidiaries for breach of any contract of service or for
services, or for compensation for wrongful dismissal or unfair
dismissal; and
8.5.2 no gratuitous payment has been made or promised by the Company
and/or any of its Subsidiaries in connection with the actual
or proposed termination or suspension of employment of any
present or former director or employee.
<PAGE> 32
(6)
8.6 The Company and its Subsidiaries have in relation to each of their
employees (and so far as relevant to each of its former employees)
complied in all material respects with all obligations imposed on it
by all statutes, regulations and codes of conduct and practice relevant
to the relations between each of them and its employees and have
maintained current adequate and suitable records regarding the service
of each of their employees.
Neither the Company nor any of its Subsidiaries has in existence or
is proposing to introduce any share incentive scheme, share option
scheme or profit sharing scheme for all or any part of its directors
or employees.
8.8 All contributions due and payable by the Company and is Subsidiaries to
any employees provident fund or to any scheme or fund established by law
contribution to which by the Company and/or any of its Subsidiaries is
compulsory in respect of the employment of its employees have been paid.
9. Pensions
There are not in existence nor has any proposal been announced to establish
any retirement, death or disability benefit schemes for Directors or
employees nor are there any obligations to or in respect of present or
former Directors or employees with regard to retirement, death or
disability pursuant to which the Company and/or any of its Subsidiaries
is/are or may become liable to make payments and no pension or retirement
or sickness gratuity is currently being paid or has been promised by the
Company and/or any of its Subsidiaries to or in respect of any former
Director or former employee.
10. No Commission or additional remuneration scheme
There is not in existence any scheme, agreement or arrangement whereby a
Director or employee of the Company and/or any of its Subsidiaries is/are
remunerate or additionally remunerated by way of commission or additional
remuneration payable based on sales or turnover of the Company and/or such
Subsidiary, as the case may be.
11. Debts to, contracts with, etc. connected persons
11.1 With the exception of the loans, debts and securities more
particularly set out in Appendix C annexed thereto and which will
have been discharged prior to completion, to the best knowledge of
the Vendor after making due and careful enquiries there are -
<PAGE> 33
(7)
11.1.1 no loans made by the Company and/or any of its Subsidiaries
to the Vendor and/or any director of the Company or
Subsidiary and/or any person with any of them or to any
member of the Company or Subsidiary;
11.1.2 no debts owing to the Company and/or any of its Subsidiaries
by the Vendor and/or any Director of the Company or
Subsidiary and/or any such person as aforesaid or by any
member of the Company or Subsidiary;
11.1.3 no debts owing by the Company or any of its subsidiaries
other than debts which have arisen in the ordinary course
of business; and
11.1.4 no securities for any such loans or debts as aforesaid.
11.2 There are no existing contracts or engagements to which the Company
and/or any of its Subsidiaries is/are a party(ies) and in which any
Director of the Company or Subsidiary and/or any person connected
with any of them as mentioned in sub-paragraph 11.1 above are
interested.
12. Capital commitments, unusual contracts, guarantees etc.
Neither the Company nor any of its Subsidiaries -
12.1 have any material capital commitments;
12.2 is a party to any contract entered into otherwise than in the ordinary
and usual course of business or any contract of an onerous or long-term
nature having regard to past practice;
12.3 has delegated any powers under a power of attorney which remains in
effect;
12.4 has by reason of any default by it in any of its obligations become
bound or liable to be called upon to repay prematurely any loan
capital or borrowed moneys;
12.5 is a party to any agreement which is or may become terminable as a
result of the entry into or completion of this Agreement; or
12.6 has entered into or bound by any guarantee or indemnity under which
any liability or contingent liability is outstanding.
<PAGE> 34
(8)
13. Book debts
13.1 to the best knowledge of the vendor after making due and careful
enquiries, none of the book debts which are included in the Audited
Accounts has been released in terms that any debtor pays less than
the book value of his debt or has been written off.
13.2 None of the book debts which are included in the Audited Accounts or
which have subsequently arisen have been outstanding for more than nine
(9) months from their due dates for payment and all such debts have
realized or will realize in the normal course of collection their full
value as included in the Audited Accounts or in the books of the
Company and its Subsidiaries after taking into account the provision
for bad and doubtful debts made in the Audited Accounts.
14. Insurance
To the best knowledge of the Vendor after making due and careful enquiries,
all the assets of the Company and its Subsidiaries which are of an
insurable nature have at all material times been and are at the date
hereto insured in amounts reasonably regarded as adequate against fire and
other risks normally insured against by companies carrying on similar
businesses or owning property of a similar nature and the Company and its
Subsidiaries have at all material times been and is at the date hereof
adequately covered against accident, third party and other risks normally
covered by insurance by such companies. The particulars of the insurances of
the Company and its Subsidiaries which have been supplied to the Purchaser
are true and correct. In respect of all such insurances -
14.1 all premiums have been duly paid to date; and
14.2 all the policies are in force and are not voidable on account of any
act, omission or non-disclosure on the part of the insured party.
15 Title to assets
15.1 all assets of the company and its subsidiaries exceeding value of
United States dollars two Thousand (USD2,000.00) only and all debts due
to it which are included in the Audited Accounts or have otherwise been
represented as being the property of or due to the Company and/or its
Subsidiaries at the Accounts Date used or held for the purposes of its
business were at the Accounts Date the absolute property of the
Company and/or its Subsidiaries, as
<PAGE> 35
(9)
the case may be, and (save for those subsequently disposed of or
realized in the ordinary course of trading) all such assets and all
assets and debts which have subsequently been acquired or arisen are
now the absolute property of the company and/or any its subsidiaries
and none is the subject of any assignment, option, right or charge,
lien or hypothecation or other encumbrance whatsoever (excepting only
liens subject to any factoring arrangement, hire-purchase, conditional
sale or credit sale agreement and also those used for securing credit
facilities needed for its operations in its ordinary course of
business) and there are no circumstances under which by operation of
law or otherwise the company or its subsidiaries', as the case may be,
title, right or interest in and to such asset may be adversely affected
in any way whatsoever.
15.2 There are no outstanding notices served on the Company and/or any of
its Subsidiaries in respect of any of its assets and in particular and
without limitation any land , if any, owned by the Company and/or its"
Subsidiaries is not subject to any acquisition proceedings or notice
of intended acquisition.
15.3 All taxes and outgoings due and payable on the land (if any) owned by
the Company and/or any of its Subsidiaries have been duly paid and all
conditions affecting such land whether express or implied, have been
duly complied with by the Company or the Subsidiary, as the case may
be, and neither the Company nor any of its Subsidiaries has done or
suffered to be done or omitted any act, matter or thing in or
respecting its land which may render the same liable to forfeiture or
which shall contravene the provision of any legislation now or
hereafter in force affecting such land.
16. Compliance with leases and other agreements
To the best knowledge of the Vendor after making due and careful enquiries -
16.1 the terms of all leases, tenancies, licenses, concessions and
agreements of whatsoever nature to which the Company and/or any of its
Subsidiaries is/are a party(ies) have been duly complied with by all
the parties thereof; and
16.2 No such lease, tenancy, licence, concession or agreement will become
subject to avoidance, revocation or be otherwise affected upon or in
consequence of the making or implementation of this Agreement.
<PAGE> 36
(10)
17 Statutory, municipal and other requirements consents end licenses
to the best knowledge of the vendor after making due and careful enquiries,
all statutory, municipal and other requirements applicable to the carrying
on of the business of the company and its subsidiaries as now carried on,
and all conditions applicable to the ownership of its assets and any
licenses and consents involved in the ownership of its assets and the
carrying on of such business have been complied with and the vendor is not
aware of any breach thereof or of any intended or contemplated refusal or
revocation of any such licenses or consents and none of such licenses or
consents or any term thereof upon which it is held will otherwise affected
upon or in consequence of the making or implementation of this Agreement. A
list of the licenses given to the Company and its subsidiaries are annexed
hereto as Appendix D.
18. Books and records
To the best knowledge of the Vendor after making due and careful enquiries,
the records, statutory books and books of account of the Company and its
Subsidiaries are duly entered up and maintained in accordance with all legal
requirements applicable thereto and contain true, full and accurate records
of all matters required to be dealt with therein and all such books and all
records and documents (including documents of title) which are its property
are in its possession or under its control and all accounts, documents and
returns required to be delivered or made to the Relevant Authorities have
been duly and correctly delivered or made.
19. Share capital
19.1 Neither the Company nor any of its Subsidiaries has since the Accounts
Date issued or agreed to issue any shares.
19.2 Save for the options granted to employees of the Company and the
warrants issued by the Company and disclosed to the Purchaser prior to
the date hereof, no unissued share of the Company and its Subsidiaries
are under option or agreed conditionally or unconditionally to be
placed under option.
20. Subsidiary and associated company
All the Subsidiaries and associated companies of the Company are listed
in the Company's group structure annexed hereto as Appendix E.
<PAGE> 37
(11)
21. Sale shares free from encumbrances
The Sale Shares are beneficially owned by the Vendor free from any claims,
charges, liens, encumbrances or equities; the Vendor has and will until the
Completion Date continue to retain the unrestricted rights to transfer the
Sale Shares and there is not, nor will there be any option over or right to
acquire any of the Sale Shares
22. Sale Shares
The Sale Shares constitute one hundred per centum (100%) of the issued and
paid up series A common stock capital of the Company.
23. MBf Buana
MBf Holdings Berhad has received the approval of the relevant Indonesian
authorities for the transfer of all the shares presently held by it on trust
for the Company in MBf Buana ("Buana Shares") to the Company and the former
shall transfer the Buana Shares to the Company upon receipt of the consent
of the lenders of MBf Buana; accordingly, the Company is now the absolute
beneficial owner of the Buana Shares.
24. Liquidation of Subsidiaries
Save as disclosed in the Audited Accounts, the Company will not incur any
further liabilities (whether actual, contingent or otherwise) in respect of
the liquidation of its following Subsidiaries:
(a) Premier Latex Inc.; and
(b) Disposable Garments Inc.
25 Playboy condom business
The license agreement entered into between the Company and Playboy
Enterprise Inc. in respect of the distribution of the Playboy brand condoms
has been lawfully and properly terminated and save for the liabilities
disclosed in the Audited Accounts, the Company is not and will not be
exposed to any other liabilities (whether actual, contingent or otherwise)
in connection therewith.
<PAGE> 38
(12)
26. Consultancy Agreement with Dr. C. Everett Koop
The total liabilities of the Company to Dr. C. Everett Koop under the
Consultancy Agreement dated the 24th day of March, 1994 entered into
between the Company and Dr. C. Everett Koop is accurately set out in the
Autdited Accounts and the Company is not and will not be exposed to any
further liabilities (whether actual, contingent or otherwise) in
connection therewith.
27. Investment in Laboratory Specialist America Inc. ("LSAI")
27.1 The Company will be able to recover the principal amount under the
Note receivable from LSAI amounting to United States Dollars Three
Hundred Fifty Three Thousand One Hundred and Twenty Three
(USD353,123.00) only together with the interest accrued thereon on
the maturity date.
27.2 The Stock Exchange and Assignment Agreements dated the 23rd day of
February, 1994 entered into between the Company and Laboratory
Specialist Inc. has been lawfully and properly terminated and the
Company is not and will not be exposed to any further liabilities
(whether actual, contingent or otherwise) in connection therewith.
<PAGE> 39
26
IN WITNESS WHEREOF the parties hereto have hereunto caused this Agreement to be
excuted on this day and year first above written.
SIGNED by Tan Mong Sing )
for and on behalf of )
MBf INTERNATIONAL LIMITED ) /s/ Tan Mong Sing
in the presence of: ) ----------------------------------
/s/ Tan Mong Sing
- ------------------------------
SIGNED by Richard Wong Chin Mun )
for and on behalf of )
WEMBLEY RUBBER PRODUCTS )
(M) SDN. BHD. (147817-V) ) /s/ Richard Wong Chin Mun
in the presence of: ) ----------------------------------
/s/ Lim Meng Sue
- ------------------------------
LIM MENG SUE
Advocate & Solicator
Kuala Lumpur
<PAGE> 1
EXHIBIT-7(d)
OFFSHORE SECURITIES SUBSCRIPTION AGREEMENT
MBf USA, INC.
WEMBLEY RUBBER PRODUCTS (M) SDN. BHD.
This Offshore Securities Subscription Agreement (the "Agreement") is dated
as of May 20, 1997 and is executed in reliance upon the transaction exemption
afforded by Regulation S ("Regulation S") under the Securities Act of 1933, as
amended (the "Securities Act"), as promulgated by the Securities and Exchange
Commission (the "SEC").
This Agreement has been executed by the undersigned in connection with the
private placement of shares of Common Stock (the "Common Stock") of MBf USA,
Inc., 500 Park Boulevard, Suite 1260, Itasca, Illinois 60143-2639, a
corporation organized under the laws of Maryland, United States of America (the
"Issuer").
The shares of Common Stock of Issuer subscribed for hereunder are
sometimes referred to herein as the "Shares".
The undersigned subscriber is Wembley Rubber Products (M) Sdn. Bhd., 28th
Floor Wisma Denmark, 86 Jalan Ampang, 50450 Kuala Lumpur, Malaysia (the
"Purchaser").
WHEREAS, Issuer, through its American Health Products Corporation
subsidiary ("AHPC") is in the business of the purchase and sale of latex
gloves, among other things;
WHEREAS, Purchaser is in the business of manufacture and sale of latex
gloves and is a major supplier of powder-free latex gloves to Issuer;
WHEREAS, Purchaser's purchase of the Shares is contingent upon the due
execution and delivery of the registration rights agreement appended hereto as
Appendix B and the due execution and delivery of the Sale & Purchase Agreement
between the MBf International Ltd, a Hong Kong Corporation and Purchaser (the
"Sale and Purchase Agreement") appended hereto as Appendix C.
WHEREAS, Issuer's Common Stock is traded on the NASDAQ Small Cap Market;
WHEREAS, Issuer has provided Purchaser with detailed financial and
operating information as referenced herein, and has provided Purchaser an
opportunity to ask questions of Issuer with respect to all aspects of Issuer's
business.
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
-1-
<PAGE> 2
1. Purchase of Common Stock. Purchaser hereby purchases from Issuer
and Issuer hereby sells to Purchaser two-million five-hundred thousand
(2,500,000) shares of Common Stock (the "Shares") at the subscription price of
US$2.70 per share, in consideration of six-million seven-hundred fifty thousand
dollars (US$6,750,000). Purchaser shall pay 5% of the total consideration upon
signing and the remaining amount to be paid simultaneously with the closing of
the transaction under the Sale and Purchase Agreement referred to in paragraph
7 but which payment shall be made no later than August 8, 1997 subject to the
closing of the transaction under the Sale and Purchase Agreement.
2. Subscriber Representations; Access to Information; Independent
Investigation.
a. Offshore Transaction. Purchaser represents and warrants to
Issuer as follows:
(i) Neither Purchaser or any person or entity for whom Purchaser
is acting as fiduciary is a U.S. person. A U.S. person means any one of the
following:
(1) any natural person resident in the United States of
America;
(2) any partnership or corporation organized or incorporated
under the laws of the United States;
(3) any estate of which any executor or administrator is a
U.S. person;
(4) any trust of which any trustee is a U.S. person;
(5) any agency or branch of a foreign entity located in the
United States;
(6) any non-discretionary account or similar account (other
than an estate or trust) held by a dealer or other fiduciary
for the benefit or account of a U.S. person;
(7) any discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary
organized, incorporated or (if an individual) resident in the
United States; and
(8) any partnership or corporation if:
(A) organized or incorporated under the laws of any
foreign jurisdiction; and
(B) formed by a U.S. person principally for the purpose
of investing in securities not registered under the
Securities Act, unless it is organized or incorporated,
and owned, by accredited investors (as
-2-
<PAGE> 3
defined in Rule 501(a) under the Securities Act) who are
not natural persons, estates or trusts.
(ii) At the time the agreement to purchase was originated,
Purchaser was outside the United States and is outside of the United States as
of the date of the execution and delivery of this Agreement. No offer to
purchase Shares was made in the United States.
(iii) Purchaser is purchasing the Shares for its own account or for
the account of beneficiaries for whom Purchaser has full investment discretion
with respect to the Shares and from whom Purchaser has full authority to bind
so that each such beneficiary is bound hereby as if such beneficiary were a
direct Purchaser hereunder and all representations, warranties and agreements
herein were made directly by such beneficiary. Purchaser is not purchasing
the Shares on behalf of any U.S. person and the sale has not been prearranged
with a purchaser in the United States.
(iv) All subsequent offers and sales of the Shares will be made
(a) outside the United States in compliance with Rule 903 or Rule 904 of
Regulation S, (b) pursuant to registration of the Shares under the Securities
Act, or (c) pursuant to an exemption from such registration. Purchaser
understands the conditions of the exemption from registration afforded by
Section 4(1) of the Securities Act and acknowledges that there can be no
assurance that it will be able to rely on such exemption. In any case,
Purchaser will not resell the Shares to U.S. Persons or within the United
States until after the end of the forty day period commencing on the date of
issuance of the Shares to Purchaser (the "Restriction Period").
(v) Purchaser has no existing short position with respect to the
Common Stock of Issuer and agrees not to enter into any short sales or other
hedging transactions either directly or indirectly with respect to the Common
Stock of Issuer at any time after the execution of this Agreement by Purchaser.
(vi) Purchaser understands that the Shares have not been
registered under the Securities Act and may not be offered or sold in the
United States, to U.S. persons or for the account or benefit of a U.S. person
(other than distributors as defined in Regulation S) unless the Shares are
registered under the Securities Act or an exemption from the registration
requirements is available.
(vii) Purchaser acknowledges that the purchase of the Shares
involves a high degree of risk and acknowledges further that it can bear the
economic risk of the purchase of such Shares, including the total loss of its
investment. Purchaser acknowledges that it has obtained the advise of
competent legal counsel in its domicile jurisdiction that it is qualified under
the laws of its domicile to purchase the Shares and that the offer and sale of
such Shares will not violate the laws of its domicile jurisdiction.
(viii) Purchaser understands that the Shares are being offered and
sold to it in reliance on a specific exemption from the registration
requirements of Federal and state securities laws and that Issuer is relying
upon the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of Purchaser set forth herein to determine
the applicability of such exemptions and the suitability of Purchaser to
acquire the Shares.
-3-
<PAGE> 4
(ix) Purchaser is sufficiently experienced in financial and
business matters to be capable of evaluating the merits and risks of its
investments and to make an informed decision relating thereto.
(x) In evaluating its investment, Purchaser has consulted its own
investment and/or legal and/or tax advisors.
(xi) Purchaser understands that, in the view of the SEC, the
statutory basis for the exemption claimed for this transaction would not be
present if the offering of the Shares, although in technical compliance with
Regulation S, is part of a plan or scheme to evade the registration provisions
of the Securities Act. Purchaser has no present intention to sell such Shares
in the United States, to a U.S. person or for the account or benefit of a U.S.
person other than in compliance with the federal securities laws. In the event
that Purchaser transfers the Shares, it acknowledges that the transferee
thereof will be required to sign a Purchaser Representation Letter in the form
set forth in Appendix A hereto.
(xii) Purchaser is not an underwriter of, or dealer in, the Shares.
Purchaser is not participating, pursuant to a contractual agreement, in the
distribution of the Shares.
If Purchaser is purchasing the Shares subscribed for hereby in
representative or fiduciary capacity, the representations and warranties in
this Agreement shall be deemed to have been made on behalf of the person or
persons for whom Purchaser is so purchasing.
The foregoing representations and warranties are true and accurate
as of the date hereof, shall be true and accurate as of the date of the
acceptance by Issuer of Purchaser's subscription and shall survive thereafter.
If Purchaser has knowledge, prior to the acceptance of this Agreement by
Issuer, that any such representation and warranty shall not be true and
accurate in any respect then Purchaser, prior to such acceptance, will give
written notice of such fact to Issuer specifying which representation and
warranty is not true and accurate and the reasons therefor.
b. Current Public Information. Purchaser acknowledges that
Purchaser has been furnished with or has acquired copies of Issuer's most
recent Annual Report on Form 10-K and any Quarterly Report on Form 10-Q filed
thereafter (collectively, the "SEC Filing") and other publicly available
documents. Purchaser acknowledges that Issuer has not prepared a Confidential
Private Placement Memorandum or other offering document in connection with
Purchaser's purchase of the Shares. Purchaser further acknowledges that the
following risk factors among others exist with respect to Issuer:
(i) Sourcing of Products. AHPC presently purchases its latex
examination gloves from a restricted few manufacturers based in Asia. Issuer's
business could be adversely impacted should any such supplier for any reason
fail to supply the gloves on a regular, high quality basis and at competitive
terms.
(ii) Customers. Issuer's several largest customers constitute a
substantial portion of its business, and loss of any one such customer could
severely, adversely impact Issuer's business.
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<PAGE> 5
(iii) Financing. Issuer requires significant financing of its
purchase orders, inventory and accounts receivable, which financing is backed
by the guarantee of Issuer's Malaysian affiliates. Should such guarantees be
withdrawn or should Issuer's lender(s) require increased financial stability of
Issuer irrespective of such guarantees, there can be no assurances that Issuer
will be able to maintain adequate financing to support its operations.
(iv) Market for Common Stock. The Common Stock of Issuer is
traded on the NASDAQ small cap market. Due to continued losses over the years,
trading volume has decreased and there has been a reduction in the volume of
shares traded and in price. Should Purchaser choose to sell a large block of
Shares, the market may be unable to absorb the same, with a potential resultant
decline in price. In addition, continued listing on NASDAQ is contingent upon
maintenance of a per share price of at least $1.00, and a net worth of at least
$1,000,000. Should Issuer continue to generate losses, there is a risk that
its Common Stock could be delisted, which would reduce liquidity for the Common
Stock.
c. Independent Investigation: Access. Purchaser acknowledges
that, in making the decision to purchase the Shares subscribed for, Purchaser
has relied upon independent investigations made by it and its purchaser
representatives, if any, and Purchaser and such representatives, if any, have,
prior to any sale to Purchaser, been given access and the opportunity to
examine all material books and records of Issuer, all material contracts and
documents relating to this offering and an opportunity to ask questions of, and
to receive answers from, Issuer or any person acting on its behalf concerning
the terms and conditions of this offering. Purchaser and its advisors, if any,
have been furnished with access to all publicly available materials relating to
the business, finances and operation of Issuer and materials relating to the
offer and sale of the Shares which have been requested. Purchaser and its
advisors, if any, have received complete and satisfactory answers to any such
inquiries.
d. No Government Recommendation or Approval. Purchaser
understands that no Federal or state agency has made or will make any finding
or determination relating to the fairness for public investment in the Shares
or has passed or made, or will pass on or make, any recommendation or
endorsement of the Shares.
e. Entity Purchases. If Purchaser is a partnership, corporation
or trust, the person executing this Agreement on its behalf represents and
warrants that:
(i) He or she has made due inquiry to determine the truthfulness
of the representations and warranties made pursuant to this Agreement;
(ii) He or she is duly authorized (if the undersigned is a trust,
by the trust agreement) to make this investment and to enter into and execute
this Agreement on behalf of such entity.
f. Confidentiality. Purchaser agrees to maintain in confidence
the information provided by Issuer in this Agreement, to the extent such
information is not presently contained in the public domain.
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<PAGE> 6
3. Issuer Representations.
Issuer represents and warrants to Purchaser as follows:
a. Reporting Company Status. Issuer is a reporting issuer as
defined by Rule 902 of Regulation S. Issuer is in full compliance with all
reporting obligations under Sections 13 or 15(d) of the Securities Exchange Act
of 1934, as amended.
b. Offshore Transaction. Issuer has not offered these securities
to any person in the United States or to any U.S. person or for the account or
benefit of any U.S. person. At the time the buy order was originated, Issuer
and/or its agent reasonably believed that Purchaser was outside of the United
States and was not a U.S. Person. Issuer and/or its agent reasonably believe
that the transaction has not been pre-arranged with a Purchaser in the United
States.
c. No Directed Selling Efforts. In regard to this transaction,
Issuer has not conducted any "directed selling efforts" as that term is defined
in Rule 902 of Regulation S nor has Issuer conducted any general solicitation
relating to the offer and sale of the Shares to U.S. persons residing within
the United States or elsewhere.
d. The Shares. The Shares, when issued and delivered, will be
duly and validly authorized and issued, fully paid and non-assessable and will
not subject the holders thereof to any liability solely by reason of being such
holders.
e. Subscription Agreement. This Agreement, when acknowledged by
the signature of an officer of Issuer, has been duly authorized, validly
executed and delivered on behalf of Issuer and is a valid and binding agreement
in accordance with its terms.
f. Non-contravention. The execution and delivery of this
Agreement, the consummation of the issuance of the Shares and the transactions
contemplated hereunder do not and will not conflict with or result in a breach
by Issuer of any of the terms or provisions of, or constitute a default under,
the certificate of incorporation or by-laws of Issuer or any indenture,
mortgage, deed of trust or other material agreement or instrument to which
Issuer is a party or by which it or any of its properties or assets are bound
or any existing applicable law, rule or regulation or any applicable decrees,
judgment or order of any court, Federal or State regulatory body,
administrative agency or other governmental body having jurisdiction over
Issuer or any of its properties or assets.
g. Prior Issuances Under Regulation S. Issuer has not issued
any shares of stock under Regulation S subsequent to the SEC Filings.
Securities Law Compliance. With respect to the Issuer's actions, the
offer and the sale of Shares shall conform in all respects with the
requirements of Regulation S and with the requirements of all other published
rules and regulations of the SEC currently in effect relating to "private
offerings" to non-residents of the United States of the type contemplated
herein. Neither the offer,
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<PAGE> 7
sale or delivery of the Shares in conformity with the terms hereof will violate
Section 5 of the Securities Act, as presently in effect.
h. Authorization and Validity of the Agreement. This Agreement
has been duly authorized and when validly executed and delivered on behalf of
Issuer, will be a valid and binding agreement of the Issuer in accordance with
its terms, except as may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting the enforcement of creditors' rights generally and to
the extent such document contains indemnification or contribution provisions
for violations of federal securities laws, as enforceability of such provisions
may be limited under federal securities laws.
4. Expiration of Restricted Period. The transaction restriction in
connection with this offshore offer and sale restricts the Purchaser from
offering and selling to U.S. persons or for the account or benefit of a U.S.
person for a forty-day period following issuance of the Shares. Title to the
Shares may be transferred by Purchaser to other non United States persons or
entities in accordance with Regulation S.
5. Exemption: Reliance on Representations. Purchaser understands that
the offer and sale of the Shares is not being registered under the Securities
Act. Issuer is relying on the rules governing offers and sales made outside
the United States pursuant to Regulation S. Rules 901 through 903 of
Regulation S govern this transaction.
6. Transfer Agent Instructions.
a. Legends on Certificates. The transaction restriction in
connection with this offshore offer and sale restricts Purchaser from offering
and selling to U.S. persons, or for the account or benefit of a U.S. person,
for a forty-day period. A restrictive legend will be placed on Purchaser's
Share certificates, which legend shall read substantially as follows:
The shares of the Issuer represented by this certificate have
been issued pursuant to Regulation S promulgated under the
Securities Act of 1933, as amended ("Act"), and have not been
registered under the Act. These shares are subject to certain
terms and conditions set forth in a Stock Subscription Agreement
between the Holder and Issuer and may not be offered or sold
within the United States or to or for the account of a "U.S.
Person" (as that term is defined in Regulation S) until after
the forty-day period following completion of the Regulation S
offering of the Issuer pursuant to which these shares have been
issued. The Issuer will notify the transfer agent of the date of
completion of such offering and of the expiration of such forty
day restricted period.
Purchaser Representation Letter. Issuer agrees to accept a Purchaser
Representation Letter signed by the transferee, in connection with any resale
of the Shares by Purchaser, in the form of Appendix A hereto, as sole and
sufficient evidence that Purchaser has complied with applicable securities laws
and, upon receipt of such a letter, shall promptly instruct its transfer agent
to transfer the Shares if so requested by Purchaser, as expeditiously as
practical after receipt of the certificates and the Purchaser Representation
Letter; provided Issuer shall not be required to deliver such
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<PAGE> 8
instructions if it knows, or reasonably believes, any of the representations
made in the Purchaser Representation Letter are false.
7. Conditions to Issuer's Obligation to Sell. Issuer reserves the
right, in its complete discretion, to reject this Agreement. Purchaser
understands that Issuer's obligation to sell the Shares subscribed for
hereunder is conditioned (i) upon the counterpart execution of this Agreement
by both parties, whether by delivery of originals, facsimile or photocopy
signature and (ii) the execution and delivery of the Sale and Purchase
Agreement. Provided that Issuer and Purchaser have complied with the
conditions set forth in this Paragraph 7, immediately upon delivery of
counterpart executed copies hereof and acceptance of payment therefor by issue,
the Shares shall be deemed issued to Purchaser and fully paid for.
8. Return of Deposit to Purchaser. The Issuer shall refund to the
Purchaser the 5% deposit referred to in paragraph 1 herein free of interest, in
the event closing of the transaction under the Sale and Purchase Agreement does
not take place by the date referred to in paragraph 1 by reason of
non-fulfillment of the conditions precedent set forth in Section 4.1 of the
Sale and Purchase Agreement, or in the event of other lawful termination of the
Sale and Purchase Agreement by the Purchaser. Issuer shall be entitled to
forfeit the 5% deposit in the event that Purchaser fails to pay the balance
purchase consideration of USD6,412,500 under this Agreement by the closing date
of the transaction under the Sale and Purchase Agreement referred to in
paragraph 1 for reasons other than those set forth in this Paragraph 8.
9. Registration Rights. Issuer hereby agrees to grant to Purchaser the
registration rights set forth in Appendix B attached hereto and made a part
hereof; Issuer agrees to execute said agreement.
10. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Illinois without regard to its choice of law
principles.
11. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereof with respect to the subject matter hereof and
supersedes any and all prior or contemporaneous representations, warranties,
agreements and understandings in connection therewith. This Agreement may be
amended only by a writing executed by all parties hereto.
12. Full Name and Address of Purchaser for Stock Certificate and
Delivery Purposes:
NAME: Wembley Rubber Products (M) Sdn. Bhd.
ADDRESS: As set forth in preamble to this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first set forth above.
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MBf USA, Inc. Wembley Rubber Products (M) Sdn. Bhd.
By: /s/ Loi Heng Sewn By: /s/
------------------------------ ------------------------------
Loi Heng Sewn, Chairman Its: Chief Executive Officer
Date of Execution: May 20, 1997 Date of Execution: May 20, 1997
--------------- ---------------
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<PAGE> 10
APPENDIX "A"
PURCHASER REPRESENTATIONS LETTER
Dear Sirs:
The undersigned ________________ has purchased on _______________ two
million-five-hundred thousand (2,500,000) shares of Common Stock, par value
$.01 per share (the "Shares"), of MBf USA, Inc. (the "Company") and, in
connection with such purchase, has executed and delivered a transfer form
("Transfer Form"). As the forty day transaction restriction period has expired,
the purchaser hereby requests that the Shares be transferred to ____________.
The undersigned represents and warrants as follows:
(1) The offer to purchase the Shares was made to it outside of the United
States and the undersigned was, at the time the subscription form was
executed and delivered, and is now, outside the United States.
(2) It is not a U.S. Person (as such term is defined in Section 902(a) of
Regulation S ("Regulation S") promulgated under the United States
Securities Act of 1933, as amended (the "Securities Act"), and it has
purchased the Shares for its own account and not for the account or
benefit of any other person.
(3) All offers and sales by the undersigned of the Shares shall be made
pursuant to an effective registration statement under the Securities
Act or pursuant to an exemption from, or in a transaction not subject
to the registration requirements of the Securities Act.
(4) It is familiar with and understands the terms, conditions and
requirements contained in Regulation S and definitions of U.S. persons
contained in Regulation S.
(5) The undersigned has not engaged in any "directed selling efforts" (as
such term is defined in Regulation S) with respect to the Shares.
Dated this ______ day of the month of _______________, 199 _____.
By:
_________________________________
Official Signature of Transferee
Title: ______________________________ Country of Execution: ____________
<PAGE> 11
APPENDIX "B"
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of the 20th day of May, 1997, by and between MBf USA, INC., a Maryland
corporation (the "Company"), and Wembley Rubber Products (M) Sdn. Bhd., a
Malaysia corporation (the "Holder").
WITNESSETH:
WHEREAS, Holder has agreed to purchase shares (the "Shares") of common
stock, par value $.01 per share (the "Common Stock"), of the Company pursuant
to an Offshore Securities Subscription Agreement (the "Subscription
Agreement"), between the Company and Holder in connection with a private
placement of the Shares by the Company (the "Offering") pursuant to Regulation
S promulgated under the Securities Act of 1933, as amended (the "Securities
Act").
WHEREAS, as additional consideration for the purchase of the Shares by the
Holder and as required in the Subscription Agreement, the Company desires to
grant to Holder registration rights with respect to the Shares;
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto agree as follows:
1. a. Piggyback Registration. If, at any time during the five-year
period commencing forty-five days from the initial closing of the Offering, the
Company shall file a registration statement (other than a registration
statement on Form S-4, Form S-8, or on any other form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities (as
hereinafter defined) with the Securities and Exchange Commission (the
"Commission") while any Registrable Securities are outstanding, the Company
shall give the Holder at least 30 days' prior written notice of the filing of
such registration statement. If requested by the Holder in writing within 20
days after receipt of any such notice, the Company shall, at the Company's sole
expense (other than the fees and disbursements of counsel for the Holder, and
the underwriting discounts, if any, payable in respect of the Registrable
Securities sold by the Holder), register all or, at the Holder's option, any
portion of the Registrable Securities concurrently with the registration of
such other securities, all to the extent requisite to permit the public
offering and sale of the Registrable Securities through the facilities of all
appropriate securities exchanges, if any, on which the Company's Common Stock
is being sold or on the over-the-counter market, and will use its best efforts
through its officers, directors, auditors, and counsel to cause such
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<PAGE> 12
registration statement to become effective as promptly as practicable.
Notwithstanding the foregoing, if such offering is underwritten and if the
managing underwriter of any such offering shall advise the Company in writing
that, in its opinion, the distribution of all or a portion of the Registrable
Securities requested to be included in the registration concurrently with the
securities being registered by the Company would materially adversely affect
the distribution of such securities by the Company for its own account, then
the Holder shall delay the offering and sale of the Registrable Securities (or
the portions thereof so designated by such managing underwriter) for such
period, not to exceed 120 days (the "Delay Period"), as the managing
underwriter shall request, provided that no such delay shall be required as to
any Registrable Securities if any securities of the Company are included in
such registration statement and eligible for sale during the Delay Period for
the account of any person other than the Company and the Holder unless the
securities included in such registration statement and eligible for sale during
the Delay Period for such other person shall have been reduced pro rata to the
reduction of the Registrable Securities which were requested to be included and
eligible for sale during the Delay Period in such registration. As used
herein, "Registrable Securities" shall mean the shares of Common Stock acquired
by the Holder pursuant to the Offering which have not been previously sold
pursuant to a registration statement or Rule 144 promulgated under the
Securities Act.
a. Demand Registration. If, at any time after the closing of the
Offering, the Company shall receive a written request from the Holder of
Registrable Securities (as hereinafter defined), to register the sale of all or
part of such Registrable Securities, the Company shall, as promptly as
practicable, at the Company's sole cost and expense (other than the fees and
disbursements of counsel for the Holder, and the underwriting discounts, if
any, payable in respect of the Registrable Securities sold by the Holder, and
the underwriting discounts, if any, payble in respect of the Registrable
Securities sold by the Holder), prepare and file with the U.S. Securities and
Exchange Commission (the "Commission") a registration statement sufficient to
permit the public offering and sale of the Registrable Securities through the
facilities of all appropriate securities exchanges, if any, on which the
Company's Common Stock is being sold or on the over-the-counter market, and
will use its best efforts through its officers, directors, auditors, and
counsel to cause such registration statement to become effective as promptly as
practicable; provided, however, that the Company shall only be obligated to
file one such registration statement. The registration statement filed by the
Company pursuant to this Section 1(1) may include securities sold by the
Company or on behalf of persons other than the Holder. The Company does not
presently contemplate that any Registrable Securities registered pursuant to
this Section 1(a) will be underwritten.
b. In the event of a registration pursuant to the provisions of
this Section 1, the Company shall use its best efforts to cause the Registrable
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the Holder may reasonably
request; provided, however, that the Company shall not be required to qualify
to do business in any state by reason of this Section 1(c) in which it is not
otherwise required to qualify to do business.
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<PAGE> 13
c. The Company shall keep effective any registration or
qualification contemplated by this Section 1 and shall from time to time amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document and communication for such period of
time as shall be required to permit the Holder to complete the offer and sale
of the Registrable Securities covered thereby. The Company shall in no event
be required to keep any such registration or qualification in effect for a
period in excess of 24 months from the date on which the Holder is first free
to sell all such Registrable Securities; provided, however, that, if the
Company is required to keep any such registration or qualification in effect
with respect to securities other than the Registrable Securities beyond such
period, the Company shall keep such registration or qualification in effect as
it relates to the Registrable Securities for so long as such registration or
qualification remains or is required to remain in effect in respect of such
other securities.
d. In the event of a registration pursuant to the provisions of
this Section 1, the Company shall furnish to the Holder such number of copies
of the registration statement and of each amendment and supplement thereto (in
each case, including all exhibits), such reasonable number of copies of each
prospectus contained in such registration statement and each supplement or
amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Securities Act and the rules and regulations
thereunder, and such other documents, as the Holder may reasonably request to
facilitate the disposition of the Registrable Securities included in such
registration.
e. In the event of a registration pursuant to the provisions of
this Section 1, the Company shall furnish the Holder with an opinion of its
counsel (reasonably acceptable to the Holder) to the effect that (i) the
registration statement has become effective under the Securities Act and no
order suspending the effectiveness of the registration statement, preventing or
suspending the use of the registration statement, any preliminary prospectus,
any final prospectus, or any amendment or supplement thereto has been issued,
nor has the Commission or any securities or blue sky authority of any
jurisdiction instituted or threatened to institute any proceedings with respect
to such an order, (ii) the registration statement and each prospectus forming a
part thereof (including each preliminary prospectus), and any amendment or
supplement thereto, comply as to form with the Securities Act and the rules and
regulations thereunder, and (iii) such counsel has no knowledge of any material
misstatement or omission in such registration statement or any prospectus, as
amended or supplemented. Such opinion shall also state the jurisdictions in
which the Registrable Securities have been registered or qualified for sale
pursuant to the provisions of Section 1(c).
f. The Company agrees that until all the Registrable Securities
have been sold under a registration statement or pursuant to Rule 144 under the
Securities Act, it shall use its best efforts to keep current in filing all
reports, statements and other materials required to be filed with the
Commission to permit the Holder to sell such securities under Rule 144.
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<PAGE> 14
g. The Company shall notify the Holder promptly when such
registration statement has become effective or a supplement to any prospectus
forming a part of such registration statement has been filed.
h. The Company shall promptly notify the Holder at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, would include an untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing, and at the reasonable request of
the Holder prepare and furnish to it such number of copies of a supplement to
or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Securities or securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made.
i. If requested by the underwriter for any underwritten offering
of Registrable Securities on behalf of the Holder, the Company and the Holder
will enter into an underwriting agreement with such underwriter for such
offering, which shall be reasonably satisfactory in substance and form to the
Company and the Company's counsel, the Holder and the underwriter, and such
agreement shall contain such representations and warranties by the Company and
the Holder and such other terms and provisions as are customarily contained in
an underwriting agreement with respect to secondary distributions solely by
selling stockholders, including, without limitation, indemnities substantially
to the effect and to the extent provided in Section 2 hereof.
j. Holder rights under this Agreement are assignable to
subsequent purchasers of the Shares.
2. Indemnification. a. Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless the Holder, its officers,
directors, partners, employees, agents, and counsel, and each person, if any,
who controls any such person within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all loss, liability, charge, claim, damage, and
expense whatsoever (which shall include, for all purposes of this Section 2,
but not be limited to, attorneys' fees and any and all reasonable expenses
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), as and when incurred,
arising out of, based upon, or in connection with (i) any untrue statement or
alleged untrue statement of a material fact contained (A) in any registration
statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, relating to
the sale of any of the Registrable Securities or (B) in any application or
other document or communication (in this Section 2 collectively called an
"application") executed by or on behalf of the Company or based upon written
information
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<PAGE> 15
furnished by or on behalf of the Company filed in any jurisdiction in order to
register or qualify any of the Registrable Securities under the securities or
blue sky laws thereof or filed with the Commission or any securities exchange;
or any omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements made therein not misleading,
unless (x) such statement or omission was made in reliance upon and in
conformity with written information furnished to the Company with respect to
the Holder by or on behalf of such person expressly for inclusion in any
registration statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto, or in any application, as the case may be, or
(y) such loss, liability, charge, claim, damage or expense arises out of the
Holder's failure to comply with the terms and provisions of this Agreement, or
(ii) any breach of any representation, warranty, covenant, or agreement of
the Company contained in this Agreement. The foregoing agreement to indemnify
shall be in addition to any liability the Company may otherwise have, including
liabilities arising under this Agreement.
If any action is brought against the Holder or any of its officers,
directors, partners, employees, agents, or counsel, or any controlling persons,
of such person (an "indemnified party") in respect of which indemnity may be
sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of
the institution of such action (but the failure so to notify shall not relieve
the Company from any liability other than pursuant to this Section 2(a)) and
the Company shall promptly assume the defense of such action, including the
employment of counsel (reasonably satisfactory to such indemnified party or
parties), provided that the indemnified party shall have the right to employ
its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of such indemnified party of parties unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action or the Company shall not have
promptly employed counsel reasonably satisfactory to such indemnified party or
parties shall have reasonably concluded that there may be one or more legal
defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any of which
events such fees and expenses shall be borne by the Company and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this Section 2 to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld. The Company shall not, without the prior written consent
of each indemnified party that is not released as described in this sentence,
settle or compromise any action, or permit a default or consent to the entry of
judgment in or otherwise seek to terminate any pending or threatened action, in
respective of which indemnity may be sought hereunder (whether or not any
indemnified party is a party thereto), unless such settlement compromise,
consent, or termination includes an unconditional release of each indemnified
party from all liability in respect of such action. The Company agrees promptly
to notify the Holder of the commencement of any litigation or proceedings
against the Company or any of it officers or directors in connection with the
sale of any Registrable Securities or any preliminary prospectus, prospectus,
registration statement, or amendment or supplement thereto, or any application
relating to any sale of any Registrable Securities.
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<PAGE> 16
a. The Holder agrees to indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who shall have signed any
registration statement covering Registrable Securities held by the Holder, each
other person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, and its or their respective
counsel, to the same extent as the foregoing indemnify from the Company to the
Holder in Section 2(a), but only with respect to statements or omissions, if
any, made in any registration statement, preliminary prospectus, or final
prospectus (as from time to time amended and supplemented), or any amendment or
supplement thereto, or in any application, in reliance upon and in conformity
with written information furnished to the Company with respect to the Holder by
or on behalf of the Holder, expressly for inclusion in any such registration
statement, prelimianry prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, as the case may be. If any action
shall be brought against the Company or any other person so indemnified based
on any such registration statement, preliminary prospectus, or final prospectus
or any amendment or supplement thereto, or in any application, and in respect
of which indemnity may be sought against the Holder pursuant to this Section
2(b), the Holder shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the indemnified parties, by the provisions of Section 2(a).
b. To provide for just and equitable contribution, if (i) an idemnified
party makes a claim for indemnification pursuant to Section 2(a) or 2(b)
(subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such cases, or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act or otherwise,
then the Company (including for this purpose any contribution made by or on
behalf of any director of the Company, any officer of the Company who signed
any such registration statement, any controlling person of the Company, and its
or their respective counsel), as one entity, and the Holder, included in such
registration in the aggregate (including for this purpose any contribution by
or on behalf of an indemnified party), as a second entity, shall contribute to
the losses, liabilities, claims, damages, and expenses whatsoever to which any
of them may be subject, on the basis of relevant equitable considerations such
as the relative fault of the Company and the Holder in connection with the
facts which resulted in such losses, liabilities, claims, damages, and
expenses. The relative fault, in the case of an untrue statement, alleged
untrue statement, omission, or alleged omission shall be determined by, among
other things, whether such statement, alleged statement, omission, or alleged
omission relates to information supplied by the Company or by the Holder, and
the parties' or alleged intent, knowledge, access to information, and
opportunity to correct or prevent such statement, alleged statement, omission,
or alleged omission. The Company and the Holder agree that is would be unjust
and inequitable if the respective obligations of the Company and the Holder for
contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages, and expenses (even if the
Holder and the other indemnified parties were treated as one entity for such
purpose) or by any method of allocation that does not reflect the equitable
considerations referred to in this Section 2(c). No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any
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person who is not guilty of such fraudulent misrepresentation. For purposes of
this Section 2(c), each person, if any, who controls the Holder within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act and each officer, director, partner, employee, agent, and counsel of the
Holder or control person shall have the same rights to contribution as the
Holder or control person and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed any such
registration statement, each director of the Company, and its or their
respective counsel shall have the same rights to contribution as the Company,
subject in each case to the provisions of this Section 2(c). Anything in this
Section 2(c) to the contrary notwithstanding, no party shall be liable for
contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 2(c) is intended to supersede any
right to contribution under the Securities Act, the Exchange Act or otherwise.
3. Termination of Registration Rights. The Company's obligations pursuant
to this Agreement (other than pursuant to paragraph 2) shall terminate as to
the Holder on the earlier of (i) when the Holder can remove the restrictive
legend on the Holder's shares pursuant to Rule 144(k) under the 1933 Act (or
any successor) or (ii) five years and forty-five days from the closing of the
Offering.
4. Miscellaneous.
a. Remedies. In the event of a breach by the Company of its
obligations under this Agreement, the Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.
b. Agreements and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified of supplemented,
unless such amendment, modification or supplement is in writing and signed by
the parties hereto.
c. Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, or telecopies, initially to the address set forth
below, and thereafter at such other address, notice of which is given in
accordance with the provisions of this of this Section 4(c):
(i) if to the Company:
MBf USA, Inc.
Attn: Chairman
500 Park Blvd., Suite 1260
Itasca, Illinois 60143-2639
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<PAGE> 18
(ii) if to the Holder:
Wembley Rubber Products (M) Sdn. Bhd.
29th Floor, Wisma Denmark
86, Jalan Ampang
50450 Kuala Lumpur, Malaysia
All such notices and communications shall be deemed to have been duly given:
when delivered by hand, if personally delivered; two business days after being
deposited in the mail, postage prepaid, if mailed; when answered back, if
telexed; and when receipt is acknowledged, if telecopied.
d. Successors and Assigns. This Agreement shall insure to the
benefit of and be binding upon the successors and assigns of each of the
parties.
e. Counterparts. This Agreement may be executed in any number of
counterparts, via original, photocopy or facsimile signature and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.
f. Headings. The headings in this Agreement are for convenience of
references only and shall not limit or otherwise affect the meaning hereof.
g. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois without reference to its
conflicts of law provisions. Any dispute regarding this Agreement will be
litigated in the state or federal courts situated in Cook County, Illinois, to
which jurisdiction all parties consent.
h. Severability. In the event that any one or more of the
provisions contained herein, or the application hereof in any circumstance is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provisions contained herein shall not be affected or
impaired thereby.
i. Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and intended to be a complete and
exclusive statement of this agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are not restrictions,
promises warranties or undertakings, other than those set forth or referred to
herein, concerning the registration rights granted by the Company pursuant to
this Agreement.
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<PAGE> 19
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first written above.
MBf USA, Inc.
By: /s/ Loi Heng Sewn
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Loi Heng Sewn, Chairman
Wembley Rubber Products (M) Sdn. Bhd.
By: /s/
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Its: Chief Executive Officer
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