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EXHIBIT 1.3
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT is made on the 12th day of December, 2000 BETWEEN :-
(1) Eco-Haru Mfr. Holdings Limited, a company incorporated in the British
Virgins Islands with its registered office situate at Wickhams Cay, Road
Town, Tortola, British Virgin Islands (hereinafter referred to as the
"Subscriber");
(2) Tonga Group Holding Limited, a company incorporated in the British Virgin
Islands with its registered office situate at TrustNet Xxxxxxxx, P.O. Box
3444, Road Town, Tortola, British Virgin Islands (hereinafter referred to
as the "Issuer"); and
(3) Tonga Group Services Limited, a company incorporated in the British Virgin
Islands with its registered office situate at TrustNet Xxxxxxxx, P.O. Box
3444, Road Town, Tortola, British Virgin Islands (hereinafter referred to
as the "Guarantor").
WHEREAS:-
(A) As at the date hereof, the Guarantor holds 100% interest in the Issuer.
(B) The Issuer presently has an authorised share capital of US$50,000 divided
into 50,000 shares of US$1.00 each and issued capital of US$1,000. It is
negotiating with the Suriname Government to secure the integration of a
forestry concession into the group and entering into certain business
cooperation in connection with the logging and sawn timber business
associated with the forestry concession. The group is considering seeking a
listing of its shares on a recognized stock exchange in Asia at an
appropriate time.
(C) The Issuer has agreed to issue convertible notes (the "Notes") in the
aggregate principal amount of US$14,200,000 to the Subscriber. The
Subscriber has agreed to subscribe for the Notes upon and subject to the
terms and conditions set out in this Agreement.
NOW IT IS HEREBY AGREED AS FOLLOWS:-
1. INTERPRETATION
1.1 In this Agreement, including the Recitals hereto, the words and expressions
set out below shall have the meanings attributed to them below unless the
context otherwise required:-
"Agreement" this Subscription Agreement.
"Business Day" a day (excluding Saturday) on which banks in
Hong Kong are open for business.
"Certificate" the certificate to be issued in respect of
each Note in the form set out in Schedule 1.
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"Closing" the date fixed for closing pursuant to Clause
3.1 or where the context so admits or
requires, the performance by the parties
hereto of their respective obligations under
Clause 3.1 and Schedule 2.
"Conditions" the terms and conditions to be attached to the
Certificate in the form set out in Schedule 1
(with such amendments thereto as the parties
may agree), and "Condition" refers to the
relative numbered paragraph of the Conditions.
"Conversion Rights" the rights attached to the Notes to convert
the principal amount or a part thereof into
Shares.
"Conversion Shares" the Shares to be issued by the Issuer under
the Notes.
"Notes" the convertible notes in the aggregate
principal amount of US$14,200,000 to be issued
by the Issuer with benefits of and subject to
the provisions of the Conditions and "Notes"
shall be construed accordingly.
"Notes holder" the person who is for the time being the
holder of a Note.
"Shares" the shares of US$1.00 each in the issued share
capital of the Issuer existing on the date of
this Agreement and all other (if any) stock or
shares from time to time and for the time
being ranking pari passu therewith and all
other (if any) shares or stock resulting from
any sub-division, consolidation or
re-classification of Shares.
"US$" United States dollars.
1.2 Expressions defined in the Conditions shall, unless the context otherwise
requires, have the same meaning where used herein.
1.3 The expressions "Issuer", "Guarantor" and "Subscriber" shall where the
context permits include their respective successors and permitted assigns
and any persons deriving title under them.
1.4 In this Agreement, unless the context requires otherwise, references to
statutory provisions shall be construed as references to those provisions
as replaced, amended, modified or re-enacted from time to time; words
importing the singular include the plural and vice versa and words
importing a gender include every gender; references to this Agreement shall
be construed as references to such document as the same may be amended or
supplemented from time to time; unless otherwise stated, references to
Clauses and the Schedule are to clauses of and the schedule to this
Agreement. Clause headings are inserted for reference only and shall be
ignored in construing this Agreement.
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2. ISSUE OF AND SUBSCRIPTION FOR THE NOTES
2.1 Immediately following the execution of this Agreement, the Subscriber shall
subscribe for cash the Notes in the aggregate principal amount of
US$14,200,000 (hereinafter referred to as the "Full Value") at subscription
price equal to 100% of the aforesaid principal amount. The Subscriber shall
effect payment of such subscription price to or to the order of the Issuer.
2.2 The Issuer shall issue the Notes at the Full Value to the Subscriber or to
such person as the Subscriber may direct.
3. CLOSING
3.1 The Subscriber shall effect payment to the Issuer within four (4) Business
Days from the date of this Agreement (or such other date as the Issuer and
the Subscriber shall agree).
3.2 Closing shall take place on December 18, 2000 (or such other date as the
Issuer and the Subscriber shall agree), provided that this Agreement shall
not have terminated in accordance with Clause 5, each party shall perform
its respective obligations set out in Schedule 2.
4. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS BY THE ISSUER AND GUARANTOR
4.1 The Issuer hereby represents, warrants and undertakes to the Subscriber
that as at the date hereof and as at Closing:-
(a) The Issuer is duly incorporated and validly existing in good standing
under the laws of British Virgin Islands.
(b) Save as mentioned in this Agreement, the Issuer has the authority to
enter into and perform this Agreement and that in entering into this
Agreement and issuing the Notes and the Conversion Shares, the Issuer
does not do so in breach of or in conflict with any applicable laws or
any order or judgment or agreement applicable to the Issuer or the
Guarantor or any assets or business of any of the same or give to
others any rights of termination, amendment, acceleration or
cancellation under any agreement that is material in nature and this
Agreement constitutes and the Notes, when issued and delivered, will
constitute valid, binding and enforceable obligations of the Issuer.
(c) The Issuer has full power and authority to issue the Notes and the
Conversion Shares and perform its obligations thereunder, and in
particular the Issuer will on listing have sufficient authorised but
unissued share capital for the Issuer to perform its obligations under
the Notes and the directors of the Issuer are authorised to issue the
Notes convertible into Shares, the Conversion Shares when issued, will
be duly authorised, validly issued and fully paid and shall rank pari
passu in all respects with all other Shares outstanding at the date of
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conversion and thereafter and be entitled to all dividends and
distributions on the record date which falls on a date on or after the
date of the conversion notice.
(d) Subject as otherwise provided herein, the issue of the Notes and the
Certificates and the Conversion Shares will not infringe and will not
be contrary to the laws of the British Virgin Islands and will not
result in any breach of the terms of the Memorandum and Articles of
Association of the Issuer and of any agreement or obligation
applicable to the Issuer.
(e) Upon the issue of the Notes and the execution of the Certificates by
the Issuer and delivery of the same, the Notes will constitute valid
and binding obligations of the Issuer enforceable against the Issuer
and the Certificates will constitute valid evidence of enforceable
obligations of the Issuer.
(f) There is no option, right to acquire or right to subscribe, over or
affecting any part of the issued or unissued share capital of the
Issuer and there are no securities, rights or obligations convertible
into or exchangeable for any part of the issued or unissued share
capital of the Issuer and there is no agreement or commitment to give
or create any of the foregoing.
(g) The Issuer agrees that so long as any of the Notes remain outstanding,
the Issuer will not issue any securities or Equity Linked Securities
other than the Shares to be issued upon the conversion of the Notes
and under the preliminary Offer Document dated December 12, 2000.
4.2 The Guarantor hereby represents, warrants and undertakes to the Subscriber
that as at the date hereof and as at Closing:-
(a) The Guarantor is duly incorporated and validly existing in good
standing under the laws of the British Virgin Islands.
(b) The Guarantor undertakes to repay any outstanding sums under the Notes
in the event that the Issuer fails to honor the repayment in respect
of the Notes.
(c) The Guarantor undertakes that Net Assets Value of the Issuer will not
be less than US$14,200,000 at any time from the date of Closing until
the Final Maturity Date or the date when no Notes remain outstanding,
whichever is earlier.
4.3 The Issuer and the Guarantor undertake to notify the Subscriber forthwith
on any matter of event coming to its attention prior to Closing which shows
any of the representations or warranties contained in Clauses 4.1 and 4.2
to be or to have been untrue or inaccurate in any material respect.
4.4 Any liability of the Issuer and Guarantor pursuant to the representations
and warranties contained in Clauses 4.1 and 4.2 shall continue for the
benefit of the Subscriber notwithstanding Closing but shall cease with
respect to the Subscriber, when it ceases to be a Notes holder or when the
conversion rights are exercised under the Conditions of the Notes. In the
event that a Notes holder transfers the
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Notes in compliance with the Conditions of the Notes, the Issuer and
Guarantor agree to assign the benefit of the representations and warranties
for the benefit of such transferee of the Note, such benefit shall cease
with respect to such transferee when it ceases to be a Notes holder or when
its Conversion Shares are issued.
5. TERMINATION AND FORCE MAJEURE
5.1 The Subscriber has the right to terminate its obligations to subscribe for
the Notes pursuant to this Agreement, by notice in writing by the
Subscriber to the Issuer at any time prior to Closing if in the opinion of
Subscriber, the business or financial or trading position and prospects of
the Issuer, the Guarantor and the group as a whole would be materially and
adversely affected by any of the following taking place after execution
hereof but before Closing:-
(a) the introduction of any new law or regulation or any change in
existing law or regulation (or the judicial interpretation thereof);
or
(b) the occurrence of any local, national or international event or change
(whether or not forming part of a series or events of changes
occurring or continuing after the date hereof) of a political,
military or financial or economic nature or in the nature of any
local, national or international outbreak or escalation of hostilities
or armed conflict.
5.2 If, on or prior to Closing, the Subscriber shall receive notification
pursuant to Clause 4.3 of, or shall otherwise become aware of, the fact
that any of the representations or warranties contained in Clauses 4.1 and
4.2 was, in any material respect when given, untrue or inaccurate or would
in any material respect be untrue or inaccurate, if given on Closing such
that, in the opinion of the Subscriber, the financial or trading position
or prospect of the Issuer, the Guarantor and the Issuer taken as a whole
are materially and adversely different from that which was represented or
warranted in Clauses 4.1 and 4.2, then the Subscriber shall be entitled
(but not bound) by notice in writing to the Issuer to elect to terminate
this Agreement in which event the Subscriber shall be released and
discharged from its obligations under this Agreement and at the same time
the Issuer shall be released and discharged from its obligation to the
Subscriber under this Agreement.
5.3 Upon the exercise of their right to terminate their obligations under this
Agreement pursuant to Clause 5.1 or 5.2, all obligations of the Subscriber
hereunder shall cease and determine and the Issuer shall not have any claim
against the Subscriber in respect of any matter or thing arising out of or
in connection with this Agreement (but without prejudice to the other
accrued rights and liabilities of the parties hereto).
6. NOTICES
Any notice required or permitted to be given by or under this Agreement
shall be in writing to the party by delivering to the following address or
facsimile number:-
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The Issuer & the Guarantor: Room 2105 Witty Commercial Xxxxxxxx
0X - 0X Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx, Xxxx Xxxx
Fax No : 0000 0000
The Subscriber: x/x XxxxxXxxxxxxxx (Xxxxxxxx) Xxxxxxx
Xxxxx X, 00xx Xxxxx
Xxxx Xxxx Industrial Centre
489-491 Castle Peak Road
Xxxxxx Sha Wan, Kowloon
Hong Kong
Fax No : 0000 0000
or to such other address or facsimile number as the party concerned may
have been notified to the other party pursuant to this Clause and may be
given by sending it by hand to such address or by facsimile transmission to
such facsimile number, or to such other address or facsimile number as the
party concerned may have notified to the other party in accordance with
this Clause. Such notice shall be deemed to be served on the day of
delivery or facsimile transmission (or, if the day of delivery or
transmission is not a Business Day or if the delivery or transmission is
made after 5:00 p.m.
Hong Kong time, deemed to be served on the immediately
following Business Day), or if sooner upon acknowledgement of receipt by or
on behalf of the party to which it is addressed.
7. COSTS AND EXPENSES
Each party shall bear its own legal accountancy and other costs and
expenses (if any) incurred in connection with the preparation, negotiation and
settlement of this Agreement. Capital fee or stamp duty (if any) relating to the
issue and delivery of the Notes or the Conversion Shares shall be borne by the
Issuer.
8. GENERAL PROVISIONS RELATING TO AGREEMENT
8.1 As regards any date or period, time shall be of the essence of this
Agreement.
8.2 This Agreement shall be binding on and enure for the benefit of the
successors of each of the parties and shall not be assignable except as
provided in Clause 4.4.
8.3 The exercise of or failure to exercise any right or remedy in respect of
any breach of this Agreement shall not, save as provided herein, constitute
a waiver by such party of any other right or remedy it may have in respect
of that breach.
8.4 Any right or remedy conferred by this Agreement on any party for breach of
this Agreement (including without limitation the breach of any
representations and warranties) shall be in addition and without prejudice
to all other rights and remedies available to it in respect of that breach.
8.5 This Agreement and the Schedules hereto together with the Notes and the
Certificate
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constitute the entire agreement between the parties with respect to its
subject matter (neither party having relied on any representation or
warranty made by the other party which is not contained in this Agreement)
and no variation of this Agreement shall be effective unless made in
writing and signed by all of the parties.
8.6 This Agreement and the Schedules hereto together with the Notes and the
Certificate supersedes all and any previous agreements, arrangements or
understanding between the parties relating to the matters referred to in
this Agreement and all such previous agreements, understanding or
arrangements (if any) shall cease and determine with effect from the date
hereof.
8.7 If at any time any provision of this Agreement is or becomes illegal, void
or unenforceable in any respect, the remaining provisions hereof shall in
no way be affected or impaired thereby.
9. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with the
laws of
Hong Kong Special Administrative Region of the People's Republic of
China.
10. COUNTERPARTS
This Agreement may be executed by the parties hereto in any number of
counterparts and on separate counterparts, each of which when so executed shall
be deemed an original but all of which shall constitute one and the same
instrument and is binding on all parties.
AS WITNESS whereof this Agreement has been duly executed on the date first
above written.
Signed by : )
For and on behalf of )
Eco-Haru Mfr. Holdings Limited )
In the presence of :- )
Signed by : )
For and on behalf of )
Tonga Group Holding Limited )
In the presence of :- )
Signed by )
For and on behalf of )
Tonga Group Services Limited )
In the presence of :- )
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SCHEDULE 1
Form of the Certificate
TONGA GROUP HOLDING LIMITED
(INCORPORATED IN THE BRITISH VIRGIN ISLANDS WITH LIMITED LIABILITY)
US$14,200,000 CONVERTIBLE NOTES
Issued pursuant to the
Subscription Agreement for US$14,200,000 Convertible
Notes dated [______] made between the Issuer and the Subscriber and a resolution
of its Board of Directors passed on ________, 2000.
THIS IS TO CERTIFY that Eco-Haru Mfr. Holdings Limited whose registered
office is situate at Wickhams Cay, Road Town, Tortola, British Virgin Islands is
the registered holder (the "Notes holder") of the above-mentioned Convertible
Notes (the "Notes"). The Notes are issued with the benefit of and subject to the
terms and conditions attached hereto which shall form an integral part of this
Certificate.
GIVEN under the Seal of Tonga Group Holding Limited this ____ day of
December, 2000.
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Director
Notes :-
The Notes cannot be transferred to bearer on delivery and is only
transferable to the extent permitted by Condition 2 of the terms and conditions
thereof. This Certificate must be delivered to Tonga Group Holding Limited for
cancellation and reissue of an appropriate certificate in the event of any such
transfer.
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TERMS AND CONDITIONS OF THE NOTES
The Notes shall be held subject to and with the benefit of the terms and
conditions set out below. Expressions defined in the
Subscription Agreement
dated [ ] between the Subscriber, Tonga Group Holding Limited (the "Issuer")
and Tonga Group Services Limited (the "Guarantor") relating to the Note (the
"
Subscription Agreement") shall bear the same meanings in this Certificate.
1. MATURITY
Subject as provided herein, the outstanding principal amount of the Note
together with interest accrued thereon at the rate referred to in Conditions
3.01 up to but excluding the date of repayment shall, unless previously repaid
or converted into Shares plus eight per cent ("8%") of the face value of the
outstanding principal amount in accordance with these Conditions, be repaid
subject to and in accordance with the terms of the Note on the third anniversary
date of the initial issue of the Note (the "Maturity Date"). The Notes may not
be repaid or otherwise redeemed otherwise than in accordance with these
Conditions.
2. STATUS AND TRANSFER
2.01 The obligations of the Issuer arising under these Notes constitute general,
unsecured obligations of the Issuer and will rank equally among themselves,
pari passu with all other present and future unsecured and unsubordinated
obligations of the Issuer except for obligations accorded preference by
mandatory provisions of applicable law. No application will be made for a
listing of the Notes on any stock exchange.
2.02 Subject to all applicable laws and regulations, the Notes may not be
transferred or assigned, either in part or in whole, without the prior
written consent of the Issuer (which consent shall however not be
unreasonably withheld) unless the transfer satisfies the following
condition:-
(a) At any time before the Maturity Date if the Notes are transferred to
any other company under the same ultimate control as the Notes holder
with the beneficial ownership of the Notes being transferred to a
company under the same ultimate control as the beneficial owner of the
Notes before the relevant transfer, or any successor organization
created by any group reorganization.
2.03 For the purpose of this Condition 2, any change in:-
(a) the beneficial ownership of the Notes (whether or not the registered
holder of the Notes are changed); or
(b) the ultimate control of the Notes holder
shall be regarded as a transfer of the Notes, and the Notes holder shall
procure that the conditions, requirements and other provisions regarding
transfer under this Condition 2 shall be followed and complied with by the
beneficial owner of the Notes and by its ultimate beneficial shareholder
accordingly.
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2.04 Any assignment or transfer of the Notes shall be in respect of a minimum of
US$1,000,000 of the outstanding principal amount of the Notes, but not
otherwise.
2.05 In relation to any assignment or transfer of the Notes permitted under or
otherwise pursuant to this Condition:-
(a) The Notes may only be transferred by execution of a form of transfer
(the "Transfer Form") which shall be in any usual or common form under
the hand of the transferor and the transferee (or their duly
authorised representatives) or, where either the transferor or
transferee is a corporation under its common seal (if any) and under
the hand of one of its officers duly authorised in writing or
otherwise executed by a duly authorised officer thereof. In this
Condition "transferor" shall, where the context permits or requires,
include joint transferors or can be construed accordingly.
(b) The Certificate of the Notes must be delivered for registration to the
Issuer accompanied by (i) a duly executed Transfer Form; (ii) in the
case of the execution of the Transfer Form on behalf of a corporation
by its officers, the authority of that person or those persons to do
so; (iii) such other evidence (including legal opinions) as the Issuer
may reasonable require if the Transfer Form is executed by some other
person on behalf of the Notes holder; and (iv) such other evidence
(including legal opinions) as the Issuer may reasonably require to
support that the conditions and requirements of this Condition 2 are
satisfied. The Issuer shall, within seven (7) Business Days of such
documents from the Notes holder, cancel the existing Certificate and
issue a new certificate under the seal of the Issuer, in favour of the
transferee or assignee as applicable.
2.06 Any legal and other costs and expenses which may be incurred by the Issuer
in connection with any transfer or assignment of the Notes or any request
therefor shall be borne by the Notes holder and promptly on demand
reimbursed to the Issuer.
3. INTEREST
3.01 Subject to Condition 3.03, the Notes will bear interest from and including
the date of issue at the rate of 8 per cent (8%) per annum on the principal
amount of the Notes outstanding from time to time. Subject to Condition
3.02, interest shall only be payable on conversion or as the case may be,
redemption of the Notes.
3.02 In the event of any conversion of the Notes, the Issuer shall, upon
delivery to the Notes holder of the Certificates for the Shares to which
the Notes holder shall become entitled in consequence of such conversion,
pay interest to the Notes holder at the rate specified in Condition 3.01 in
respect of the principal amount of the Notes being converted calculated up
to (but excluding) the Conversion Notice Date (as defined in Condition
5.03(e)) concerned, provided that the Issuer may, at its option, satisfy
all or part of the interest due by the issue of additional shares in
accordance with the provisions of Condition 5.01.
3.03 In the event that the Issuer fails to pay the outstanding principal amount
of the Notes
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or the interest payable under Condition 3.01 or 3.02 when due in accordance
with the terms of the Notes, the Issuer shall pay, an additional interest
on such overdue sum from and including the due date to but excluding the
date of actual payment at eight per cent (8%) per annum.
3.04 Interest shall accrue from day to day, shall be calculated on the basis of
the actual number of days elapsed and a 365 day year, including the first
day of the period during which it accrues and excluding the last.
4. PAYMENTS
4.01 Payment of the interest and principal (if any is payable under the terms
and conditions of the Notes) in respect of the Notes shall be made on the
due date into such bank account or such other place as the Notes holder may
notify the Issuer in writing from time to time. All payments by the Issuer
shall be in United States dollars or such other currency as may be
requested by the Notes holder in immediately available funds.
4.02 If the due date for payment of any amount in respect of the Notes is not a
Business Day, the Notes holder will be entitled to payment on the next
following Business Day in the same manner together with interest accrued in
respect of any such delay at the rate specified in Condition 3.01.
4.03 For the purpose of these Conditions "Business Day" shall mean a day
(excluding Saturday) on which banks are open for business in
Hong Kong.
5. CONVERSION
5.01 The Notes holder will have the right to convert US$10,000,000 of the
outstanding principal amount of the Notes during the Conversion Period as
defined hereinbelow upon presentation of the Notes Certificate and a
Conversion Notice into fifteen per cent (15%) of the total equity share
capital (adjusted to include any further share capital to be issued
following conversion but on or prior to the listing of the Shares on a
recognized stock exchange) on that Conversion Date or on a pro-rata basis
if less than US$10,000,000 is converted. The balance of the principal
amount in respect of the Notes not so converted, immediately following that
Conversion Date, shall be entitled to be converted into Shares at the New
Issue price upon listing.
5.02 No fraction of a Share will be issued on conversion. Shares to be issued
upon conversion shall rank pari passu in all respects with all other
existing Shares outstanding at the date of the Conversion Notice Date and
be entitled to all dividends and other distributions as the record date of
which falls on a date on or after the Conversion Notice Date.
5.03 For the purposes of these Conditions:-
(a) "Conversion Period" shall be any time after three (3) months from the
date of Closing up to the Maturity Date.
(b) "Conversion Notice Date" means the date on which the Notes holder
gives
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written notice pursuant to Condition 6.01 exercising Conversion
Rights.
6. PROCEDURE FOR CONVERSION
6.01 The Conversion Rights pursuant to Condition 5.01 may, subject as provided
herein, be exercised on any Business Day prior to the Maturity Date by the
Notes holder giving written notice to the Issuer in accordance with
Condition 13 stating the intention of the Notes holder to convert into
Shares all or part of the Notes and (on a partial conversion) the principal
amount of the Notes to be converted and the address in
Hong Kong for the
delivery of the share certificates of the Conversion Shares pursuant to
Condition 6.03. Any such conversion notice shall be in the form annexed to
the Conditions.
6.02 The Issuer shall be responsible for payment of all taxes and stamp duty,
issue and registration duties (if any) and Stock Exchange levies and
charges (if any) arising on any conversion.
6.03 The Issuer shall procure that the Shares arising on conversion shall be
allotted and issued, credited as fully paid, to the Notes holder or as it
may direct which issue shall be effected promptly but in any event within
five (5) Business Days after, and with effect from, the Conversion Notice
Date against delivery of the Certificate (which the Notes holder is obliged
to deliver to the Issuer following such Conversion) and that certificates
for the Shares to which the Notes holder shall become entitled in
consequence of such conversion shall be issued and delivered to the Notes
holder in
Hong Kong and (if appropriate) together with an endorsement on
the Certificate by a director of the Issuer for any balance of the Notes
not converted.
7. PROTECTION OF THE NOTES HOLDERS
7.01 So long as the Notes are outstanding, unless with prior written approval of
all the Notes holders:-
(a) the Issuer shall not declare or pay any interim, final or special
dividend in cash out of its profits available for distribution or
distribution in specie;
(b) the Issuer shall keep available for issue, free from pre-emptive
rights, out of its authorised but unissued capital such number of
shares as would enable the Issuer to satisfy in full the Conversion
Rights and all other rights for the time being outstanding of
subscription for and conversion into Shares.
(c) the Issuer shall not make any reduction of share capital, share
premium account, capital redemption reserve fund or contributed
surplus account involving any repayment to shareholders whether in
cash or in specie (other than to shareholders having the right on a
winding up of the Issuer to return of capital in priority to holders
of shares) or reduce any uncalled liability in respect thereof;
(d) the Issuer shall not in any way modify the rights attaching to the
Shares as such or create or issue or permit to be in issue any other
class of equity share capital carrying any right which is more
favourable than the corresponding
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attaching to the shares or attach any special rights or privileges to
any such other class of equity share capital;
(e) the Issuer shall not consolidate or subdivide any of the shares or
otherwise alter their nominal value and procure that at no time shall
there be in issue Shares of differing nominal values;
(f) the Issuer shall ensure that all shares issued upon conversion of the
Notes will be duly authorised and validly issued fully paid and
registered as freely transferable;
(g) the Issuer shall use its best endeavours to secure the integration of
a forestry concession in Suriname comprising of no less than 278,000
hectares, 80% of which is unlogged virgin forest, into the group and
entering into certain business cooperation with the Suriname
Government in the manner denoted in the Appendix attaching to these
Conditions in connection with the forestry concession within 3 months
from the date of Closing ("Target Date");
(h) the Issuer shall use its best endeavours to ensure that a listing of
and dealings in its shares on a recognized stock exchange in Asia is
obtained within 3 years from the date of Closing;
(i) the Issuer shall send to the Notes holder free of charge such
financial information as shall be necessary to ascertain the financial
or trading conditions of the Issuer and its subsidiaries.
8. REPAYMENT AND REDEMPTION
8.01 If listing shall not have been obtained within 3 years from the date of
Closing, the Issuer shall pay such principal moneys outstanding under the
Notes to the Notes holder entitled thereto, together with all interest
accrued thereon within seven (7) Business Days from the date thereof.
8.02 If the Issuer fails to fulfill its commitment under Condition 7.01(g), the
Issuer is required to repay the outstanding principal of the Notes plus
accrued interest within seven (7) Business Days from the Target Date.
8.03 The Notes holder shall be entitled, by giving written notice to the Issuer,
to require redemption of the Notes or any part thereof if:
(a) the Issuer's audited financial accounts shows net profits (after tax
and minority interests but before extraordinary items) on a
consolidated or combined basis is less than US$2,500,000 in any of the
financial year after the date of this Agreement;
(b) the Issuer shall seek listing on a stock exchange without the consent
of the Notes holder and/or the market capitalization of the Issuer
upon listing is less than US$66,000,000
and redemption of the Notes shall be effected within seven (7) Business
Days of such
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written notice being given to the Issuer. In such circumstances, the amount
to be repaid shall be equal to the principal moneys outstanding on the
Notes together with all accrued interest.
9. EVENTS OF DEFAULT
If any of the following events ("Events of Defaults) occurs, the Notes
holder may either give notice to the Issuer that the Notes are immediately due
and payable at its principal amount then outstanding together with (i) any
accrued and unpaid interest under Condition 3.01 calculated up to but excluding
the date of payment and (ii) additional interest in the amount of eight per cent
(8%) per annum on the principal amount of the Note remaining outstanding
calculated from the date of issue of the Notes to the date of such notice.
(a) The Issuer defaults in performance of any of its material obligations
contained in the terms and conditions of the Notes, and such event
continues to subsist for a continuous period of seven (7) Business
Days after notice of such event is sent from the Notes holder to the
Issuer or if the Shares arising on conversion are not allotted and
issued in accordance with Condition 6.03 within five (5) Business Days
after and with effect from the date the Conversion Notice is served;
or.
(b) An encumbrancer takes possession or a receiver, manager or other
similar officer is appointed of the whole or any material part of the
undertaking, property, assets or revenues of the Issuer, its
subsidiaries and the Guarantor; or
(c) Any of the Issuer, its subsidiaries and the Guarantor becomes
insolvent or is unable to pay its debts as they mature or applies for
or consents to or suffers the appointment of any administrator,
liquidator or receiver or the whole or any material part of the
undertaking, property, assets or revenues of any of the Issuer, its
subsidiaries and the Guarantor, or takes any proceeding under any law
for a readjustment or deferment of its obligations or any part of them
or makes or enters into a general assignment or compromise with or for
the benefits of its creditors; or
(d) An order is made or an effective resolution passes for winding up of
the Issuer, any of its subsidiaries (other than a restructuring
pursuant to an internal group reorganization) or the Guarantor; or
(e) A moratorium is agreed or declared in respect of any indebtedness of
any of the Issuer, its subsidiaries or the Guarantor or any
governmental authority or agency condemns, seizes, compulsorily
purchase or expropriates all or any material part of the assets of any
of the Issuer, its subsidiaries or the Guarantor; or
(f) The Issuer fails to pay any sum due from it under the Notes when due;
or
(g) Any representation or warranty made by the Issuer and the Guarantor
pursuant to the
Subscription Agreement proves to have been incorrect
in any material respect.
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10. VOTING
Notes holders will not be entitled to receive notices of, attend or vote at
any meetings of the Issuer by reason only of being a Notes holder and shall not
be entitled to any representation of the board of directors of the Issuer.
11. EXPERTS
In giving any certificate or making any adjustment hereunder, the auditors
of the Issuer or (as the case may be) any merchant bank appointed by the Issuer
shall be deemed to be acting as experts and not as arbitrators and, in the
absence of manifest error, their decision be conclusive and binding on the
Issuer and the Notes holder and all persons claiming through or under them
respectively.
12. REGISTER
The Issuer shall maintain a register in the British Virgin Islands of the
particulars of the Notes and the Notes holders.
13. REPLACEMENT CERTIFICATE
If the certificate for a Notes is lost or mutilated the Notes holder shall
forthwith notify the Issuer and a replacement certificate for the Notes shall be
issued if the Notes holder provides the Issuer with (i) the mutilated
certificate for the Note; (ii) a declaration by the Notes holder or its officer
that the Notes had been lost or mutilated (as the case may be ) or other
evidence that the certificate for the Notes had been lost or mutilated; and
(iii) an appropriate indemnity in such form and content as the Issuer may
reasonably require. Any certificate for the Notes replaced in accordance with
this Condition shall forthwith be cancelled. All out of pocket expenses incurred
by the Issuer in connection with any investigation in relation to the foregoing
or in relation to the re-issue of certificate shall be for the account of the
relevant Notes holder.
14. NOTICES
Any notice required or permitted to be given by delivering it pursuant to
these Conditions shall be in writing and shall be deemed duly served if left at
or sent by registered post or facsimile transmission to the respective party:-
(a) in the case of the Notes holder
x/x XxxxxXxxxxxxxx (Xxxxxxxx) Xxxxxxx
Xxxxx X, 00xx Xxxxx
Xxxx Xxxx Industrial Centre
489-491 Castle Peak Road
Xxxxxx Sha Wan, Kowloon
Hong Kong
Fax : (000) 0000 0000
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(b) in the case of the Issuer :
Room 2105 Witty Commercial Xxxxxxxx
0X - 0X Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx, Xxxx Xxxx
Fax No: (000) 0000 0000
or to such other address as the party concerned may have notified to the other
party pursuant to this Condition 14 and such notice shall, if sent by post, be
deemed to be served on the day of delivery or, if sent by facsimile
transmission, be deemed to be served on the same day as when the fax is sent if
received any time before 5:00 p.m.
Hong Kong time or the next Business Day, if
received after 5:00 p.m.
Hong Kong time (or, in each case, on the immediately
following Business Day, if the day of delivery is not a Business Day), or if
sooner upon acknowledgement of receipt by or on behalf of the party to which it
is addressed.
15. AMENDMENT
The terms and conditions of the Notes may not be varied, expanded or
amended otherwise than with and in accordance with the prior consent of the
Issuer and the Notes holders.
16. GOVERNING LAW AND JURISDICTION
The Notes and the terms of the Notes are governed by and shall be construed
in accordance with the laws of the Hong Kong Special Administrative Region of
the People's Republic of China.
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CONVERSION NOTICE
To be attached to Notes Conditions
The undersigned hereby irrevocably elects to convert the proportion of the
Note specified below into shares of US$1.00 each of Tonga Group Holding Limited
(the "Issuer") in accordance with the Condition, as of the date specified below.
Notes No:
--------------------------------------------------------------------
Amount to be converted:
------------------------------------------------------
Conversion Notice Date:
------------------------------------------------------
Date of giving notice unless otherwise agreed
Principal Amount of
Note to be Converted:
--------------------------------------------------------
Address for delivery of certificate:
-----------------------------------------
Signature of Notes holder:
---------------------------------------------------
Name of Notes holder:
--------------------------------------------------------
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SCHEDULE 2
COMPLETION REQUIREMENT
1. OBLIGATION OF THE SUBSCRIBER
At Closing, the Subscriber shall:-
(a) deliver to the Issuer reasonable evidence of the authority for the
execution of this Agreement and the subscription of the Notes; and
(b) undertake to pay to the Issuer or such person as the Issuer may direct
within four (4) Business Days from the date of the
Subscription
Agreement such sum as is equal to the subscription price payable for
the Notes into the bank account of the Issuer or to such person
maintained with Wing Hang Bank, Limited.
2. OBLIGATIONS OF THE ISSUER
At Closing, the Issuer shall deliver to the Subscriber (or to such person
at such place as the Subscriber may direct):
(a) a certified copy of board resolution of the Issuer approving and
authorising the execution and Closing of this Agreement and the issue
of the Notes and the Certificate and the Conversion Shares upon the
terms and subject to the Conditions contained herein;
(b) The Certificate duly issued in favour of the Subscriber (or its
nominee); and
(c) confirmation signed by a director of the Issuer and the Guarantor
confirming that the representations and warranties set out in the
Subscription Agreement will be true and accurate in all material
respects at Closing.
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APPENDIX
Principal terms of cooperation in the business activities of BRUYNZEEL
SURINAME HOUTMASSTSCHAPPIJ N.V. whose address is situated at Republic of
Suriname (hereinafter referred to as the "Company")
Background:-
(A) The Government of Suriname is the registered and beneficial owner of 100%
issued shares in the Company.
(B) The Company holds the registered and concession right of the forestry
concession in Suriname comprising of 278,000 hectares, 80% of which are
unlogged virgin forest. The location of the forestry concession is set out
in Schedule A hereto.
(C) The Company has a plant site of 36 hectares under a long-term lease with
the Government from 1948 to 2023, comprising of a sawmill, plywood mill,
boiler plant and warehouses.
(D) The Company is principally engaged in log harvesting, the production of
sawn timber and plywood and the distribution of log, sawn timber and
plywood for the domestic market and export to the Caribbean Region.
(E) The Suriname Government is desirous of selling its entire interest,
representing 100% issued shares, in the Company and entering into certain
business cooperation arrangement with the buyer in respect of the business
activities of the Company.
The proposed business cooperation arrangement is as under:
(1) The Company shall lay off the entire existing employees (full time and
part-time) and shall deal with the Suriname Government of the existing
pension plan. The Suriname Government shall pay all related costs and
expenses in relation to such lay off and the existing pension plan.
(2) The buyer shall pay to the Suriname Government United States Dollars one
million (US$1,000,000) on (date, year 1) and United States Dollars one
million (US$1,000,000) on (date, year 2) to pay the pension plan and
compensation for the lay off employees. The Suriname Government has to
covenant with the Company and the buyer that the whole of the two sums
shall be exclusively used for payment of the pension fund and compensation
for the Company's employees and shall indemnify the Company and the buyer
from all costs, expenses and other liabilities relating to any pension fund
or compensation payable to such employees.
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(3) The buyer shall have the exclusive right to nominate five individuals to
form the Board of Directors of the Company. The Company agrees to appoint
Mr. Hendrison as the Managing Director of the new management team. The
senior management shall comprise of five executives with one from the labor
union (if it exists) and the others from the existing management.
(4) The buyer agrees that the new management of the Company will have full
authority to rehire the lay off employees who meet the new standard of
hiring policy or contract. The age bracket should be within the average of
25 to 30 years old. The total labor force for the newly organized Company
should not exceed five hundred but not lower than two hundred fifty.
(5) The buyer will bring in overseas technical know-how and overseas management
personnel of not more than twenty per cent of the total labor force of the
Company. The buyer will use its best endeavors to procure the Company to
make contribution with a view to enhancing the local employment and the
development of the national economy of Suriname.
(6) The buyer will use its best endeavors to procure the Company to secure the
FSC certificate under the new management for the products of the Company.
(7) The buyer will procure the new management of the Company to work with the
trade union (if it exists) in a harmonious attitude for the benefit of the
Company.
(8) The buyer will procure the Company under the new management to provide
internal training by engaging overseas consultants to hold seminars and
scholarship for those outstanding employees to further their education
abroad.
(9) The Company under new management will invest up to United States Dollars
thirteen Million and Five Hundred Thousand (US$13,500,000) to be primarily
financed by its profits generated from the normal operations to upgrade the
production and operation of its machinery and equipment as follows:
Year 1 Initial capital of US$4,000,000 is wholly applied to pay the
pension fund and the working capital.
Year 2 up to US$2,500,000-
Year 3 up to US$5,500,000-
Year 4 up to US$5,500,000-
(10) In consideration of the responsibilities and covenants undertaken by the
Suriname Government, the Suriname Government shall be entitled to a profit
share equal to 10% of the after-tax earnings of the Company, payable within
two months from the date of issue of the audited accounts for the relevant
financial year. The Suriname Government shall be entitled to the profit
share on a pro-rata basis for the period less than a full financial year.
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Conditions precedent:-
(1) The Company shall secure final approval from the Foreign Exchange
Commission of the Republic of Suriname that no transfer tax and other taxes
shall be imposed on the offshore holding company of the Company.
(2) The Company shall procure favorable exchange control and tax treatment for
the Company including but not limited to withholding tax exemption (for
dividend, interest, management fees paid to offshore holding company),
granting tax holidays of ten years in respect of the Company's income,
favorable export duty on all products of the Company, as well as liaising
with the trade union (if it exists) for the best benefit of the Company.
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