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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 Chambers, 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 Chambers, 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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     <Table>
     <S>                           <C>
     The Issuer & the Guarantor:   Room 2105 Witty Commercial Building
                                   1A - 1L Tung Choi Street
                                   Mongkok, Kowloon, Hong Kong
                                   Fax No : 2781 0008

     The  Subscriber:              c/o EganaGoldpfeil (Holdings) Limited
                                   Block C, 11th Floor
                                   Hong Kong Industrial Centre
                                   489-491 Castle Peak Road
                                   Cheung Sha Wan, Kowloon
                                   Hong Kong
                                   Fax No : 2744 9909
     </Table>
     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.



----------------------------
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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<PAGE>   13
          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

                                       13


<PAGE>   14
     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.

                                       14
<PAGE>   15
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
          c/o EganaGoldpfeil (Holdings) Limited
          Block C, 11th Floor
          Hong Kong Industrial Centre
          489-491 Castle Peak Road
          Cheung Sha Wan, Kowloon
          Hong Kong

         Fax : (852) 2744 9909

                                       15
<PAGE>   16
     (b) in the case of the Issuer :
         Room 2105 Witty Commercial Building
         1A - 1L Tung Choi Street
         Mongkok, Kowloon, Hong Kong

         Fax No: (852) 2781 0008

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.

                                      16




<PAGE>   17

                                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:
                      --------------------------------------------------------

                                       17
<PAGE>   18
                                   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.

                                       18
<PAGE>   19
                                                                        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.

                                       1
<PAGE>   20
(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.

                                       2
<PAGE>   21
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.

                                       3