SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Regal International, Inc.
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
758819-10-16
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(CUSIP Number)
Iwona Alami, Esq.
30251 Golden Lantern, Suite E, California 92677 (714) 495-8163
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(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications
September 10, 1996
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(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [-----].
Check the following box if a fee is being paid with the Statement [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities and
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
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SCHEDULE 13D
1. NAME OF REPORTING PERSONS - SS OR IRS IDENTIFICATION NUMBER OF ABOVE
PERSON:
Horler Holdings Limited, whose sole shareholder is China Strategic
Holdings Limited.
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
------ A
------ B
3. SEC USE ONLY:
4. SOURCE OF FUNDS: Convertible note issued in exchange for shares of
private company.
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2E:
6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Horler Holdings Limited is incorporated under the laws of the British
Virgin Islands; China Strategic Holdings Limited is incorporated under
the laws of Hong Kong.
7. SOLE VOTING POWER 993,377,483
8. SHARED VOTING POWER
9. SOLE DISPOSITIVE POWER 993,377,483
10. SHARED DISPOSITIVE POWER
11. AGGREGATE AMOUNT OWNED BY EACH REPORTING PERSON: 96.15%
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES:
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 96.15%
14. TYPE OF REPORTING PERSON CO
2
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ITEM 1. Security and Issuer.
Common Stock, $.01 par value, of Regal International, Inc. (The
"Company"), at 52/F Bank of China Tower, 1 Garden Road, Hong Kong.
ITEM 2. Identity and Background.
This statement is filed on behalf of:
1. (a) Name: Horler Holdings Limited, a British Virgin
Islands corporation
(b) Business Address: P.O. Box 71, Craigmuir Chambers, Road Town,
Tortola, British Virgin Islands
(c) Principal Business: Investment holdings company
(d) During the last five years, Horler Holdings Limited has not been
convicted in a criminal proceeding.
(e) During the last five years, Horler Holdings Limited has not been a
party to a civil proceeding of a judicial or administrative
proceeding, the result of which was to make it subject to a
judgement, decree or final order enjoining future violations of or
prohibiting or mandatory activities subject to, federal or state
securities laws or funding any violations with respect to such laws.
(f) State of Incorporation: British Virgin Islands
2. (a) Name: China Strategic Holdings Limited, a Hong Kong
corporation
(b) Business Address: 52/F Bank of China Tower, 1 Garden Road, Hong
Kong
(c) Principal Business: Investment holdings company
(d) During the last five years, China Strategic Holdings Limited has not
been convicted in a criminal proceeding.
(e) During the last five years, China Strategic Holdings Limited has not
been a party to a civil proceeding of a judicial or administrative
proceeding, the result of which was to make it subject to a
judgement, decree or final order enjoining future violations of or
prohibiting or mandatory activities subject to, federal or state
securities laws or funding any violations with respect to such laws.
(f) State of Incorporation: Hong Kong
3
<PAGE>
ITEM 3. Source and Amount of Funds or Other Consideration.
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Horler Holdings Limited ("Horler") is a wholly-owned subsidiary of China
Strategic Holdings Limited ("CSH"), and a holder of a $30 million convertible
note (the "Note"). The Note has been issued to CSH in connection with CHS's
transfer of all of the outstanding shares of common stock of Westronix
Limited ("Westronix") to the Company. Westronix is the owner of 51% interest
in Hangzhou Zhongche Huantong Development Co., Ltd. ("Hangzhou Huantong").
Hangzhou Huantong was established in 1993 together with Hangzhou
Transportation Development Corporation to develop the construction project
called "Hangzhou Toll Road". The Note is convertible into 993,377,483 shares
of common stock of the Company. CSH is a sole shareholder of Horler, whose
substantial beneficial owners are listed in Item 2 above.
ITEM 4. Purpose of Transaction.
- ------ -----------------------
See Item 3. The Note was issued to Horler as consideration for the Company=s
acquisition of common stock of Westronix from CSH. The acquisition of
Westronix by the Company, changed the business of Regal International, Inc.
to construction of infrastructure projects in China.
ITEM 5. Interest in Securities of the Issuer
- ------ ------------------------------------
(a) Horler Holdings Limited and CSH is the beneficial owner of 993,377,483
shares of Common Stock having the right to acquire such shares upon the
conversion of the Convertible Note. Such shares of Common Stock would
represent 96.15% of the total shares of Common Stock outstanding after such
conversion. The percentage set forth in this Item 5 is based upon a total of
81,806,198 shares outstanding as of January 1, 1996 and the addition of
993,377, 483 shares upon conversion of the Convertible Note.
(b) Horler Holdings Limited and CSH has the power to dispose of the
Convertible Note and the shares of Common Stock underlying the Convertible
Note, and to vote the shares of Common Stock received upon the conversion of
the Convertible Note.
(c) Within the past sixty (60) days, Horler Holdings Limited and CSH have
not disposed of any shares of Common Stock.
(d) Not applicable.
(e) Not applicable.
ITEM 6. Contracts, Arrangements, Understandings or Relationships with
- ------ -------------------------------------------------------------
Respect to Securities of the Issuer.
- ------------------------------------
In February, 1996, Harlequin Investment Holdings Limited borrowed $200,000
from CSH (the "Loan") and secured such loan with the pledge of a certain
promissory note from the Company to Harlequin in the original principal
amount of $1,002,604 (the "Note"). The Note was subsequently converted into
20,052,082 shares of common stock of the Company and such shares were
substituted as collateral for the Note. The Loan was repaid in full in March
1996.
The $13.5 million Convertible Note issued by the Company to Horler
Holdings Limited in February, 1996 was repaid in full in September, 1996.
On February 8, 1996, CSH loaned $800,000 to Harlequin (the "Second Loan").
The Second Loan was secured by the pledge by Harlequin of 26,500,000 shares
of common stock of the Company. The Second Loan was repaid in full in March
1996. In February 1996, CSH through Horler acquired 40,500,000 shares of
common stock of the Company from Harlequin.
ITEM 7. Materials to be Filed as Exhibits.
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1. Acquisition Agreement, dated as of September 9, 1996 by and between the
Company and CSH.
2. Convertible Promissory Note, dated as of September 9, 1996 issued by the
Company to Horler.
3. Pledge Agreement , dated as of September 9, 1996 executed by the Company.
4
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: December 12, 1996
HORLER HOLDINGS LIMITED
BY: _/s/ Mico Chung_
-----------------------------
ITS:__Director__________________
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CHINA STRATEGIC HOLDINGS LIMITED
BY: __/s/ Mico Chung__________________________
-----------------------------
ITS:__Director__________________________
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5
ACQUISITION AGREEMENT
---------------------
THIS ACQUISITION AGREEMENT (the "Agreement") is dated as of 10th September
1996, by and between Regal International, Inc., a Delaware Corporation (the
"Company"), Westronix Limited ("WL") and China Strategic Holdings Limited, a
Hong Kong Company ("Shareholder").
RECITALS
--------
WHEREAS, Shareholder owns all of the issued and outstanding stock of WL (the
"WL Shares"); and
WHEREAS, WL is a British Virgin Islands company and its sole asset is the
100% equity interest in China Construction International Group Limited
("CCIG") which owns 51% of a Sino-foreign joint venture known as Hangzhou
Zhongche Huantong Development Co., Ltd. ("Hangzhou JV").
WHEREAS, the Company is a U.S. public company required to file reports under
Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act");
and
WHEREAS, the Company desires to acquire all the WL Shares, and Shareholder
desires to exchange all the WL Shares from the Company; and
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in reliance upon the representation and warranties
hereinafter set forth, the parties agree as follows:
I. EXCHANGE OF THE SHARES AND CONSIDERATION
1.01 Shares Being Exchanged. Effective at the closing of this Agreement
(the "Closing"), and subject to the terms and conditions of this Agreement,
Shareholder shall assign, transfer and deliver to the Company the WL Shares.
1.02 Consideration. Subject to the terms and conditions of this Agreement,
and in consideration of the assignment and delivery of the WL Shares to the
Company, the Company shall at Closing pay to Shareholder and/or its
designee(s), and Shareholder and/or its designee(s) shall purchase, acquire
and accept from the Company, an aggregate of US$30 million (equivalent to
Rmb250 million) (the "Consideration") in the form of a Convertible Note
with terms and details as shown on the attached Schedule A.
1.03 Adjustment of Consideration. On or before ninety (90) days subsequent
to the Closing, the principal amount of the Convertible Note may be
automatically reduced and adjusted downward as herein set forth.
(a) The Company is entitled to engage an independent third party (at the
cost of the Company) to issue an opinion ("Fairness Opinion") on the
Consideration.
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(b) If the Fairness Opinion states an amount which is 10% less than the
Consideration, the principal amount of the Convertible Note should be
automatically reduced and adjusted downward to such amount.
1.04 Closing. The Closing of the transaction contemplated by this Agreement
(the "Closing") shall take place at a place as mutually agreed upon on or
before September 10, 1996.
1.05 Method of Closing. The method of closing shall require the parties to
satisfy the conditions specified in Section 5.
II. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
Shareholder represents and warranties to the Company as follows, as of the
Closing:
2.01 Organization. WL is a corporation duly organized, validly existing and
in good standing under the laws of the British Virgin Islands, CCIG is a
corporation duly organized, validly existing and in good standing under
the laws of Hong Kong. CCIG and WL each have the corporate power and
authority to carry on its business as presently conducted; and each of WL and
CCIG is qualified to do business in all jurisdictions where the failure to be
so qualified would have a material adverse effect on its respective business.
2.02 Capitalization.
(a) All of the issued and outstanding shares of WL and CCIG are duly
authorized, validly issued, fully paid and non assessable.
(b) There are no outstanding options, warrants, or rights to purchase any
securities of WL or CCIG.
2.03 Subsidiaries and Investments. WL does not own any capital stock or have
any interest in any corporation, partnership or other form of business
organization, other than its 100% ownership interest in CCIG. CCIG
does not own any capital stock or have any interest in any corporation,
partnership or other form of organization other than its joint venture
interests in Hangzhou JV as described in the recitals.
2.04 Financial Statements. All financial statements provided by the
Shareholder with respect of CCIG, WL and Hangzhou JV have been properly
prepared and fairly present the Company's financial condition and the results
of its operations as of the relevant dates thereof and are not misleading.
2.05 Litigation. There is no litigation, proceeding or investigation pending
or threatened against WL or CCIG affecting any of its properties,
subsidiaries, or assets against any officer, director, or stockholder or
consultant that might
<PAGE>
result, either in any case or in the aggregate, in any material adverse
change in the business, operations, affairs or condition of WL or CCIG or
their properties or assets, or that might call into question the validity of
this Agreement, or any action taken or to be taken pursuant hereto.
2.06 Title to Assets. WL and CCIG each has good and marketable title to all
of its assets and properties now carried on its books. The assets of WL and
CCIG consist solely of the assets named in the recitals and neither WL nor
CCIG has any liabilities, contingent or otherwise.
2.07 No Conflict. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with
or result in a breach of any term or provision of, or constitute a default
under, the Memorandum and Articles of Association of WL or any agreement,
contract or instrument to which WL is a party or by which it or any of its
assets are bound.
2.08 Authority. WL and Shareholder have full power and authority to enter
into this Agreement and to carry out the transactions contemplated herein.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, have been duly authorized and approved by
shareholder and no other corporate proceedings on the part of WL and/or
Shareholder are necessary to authorize this Agreement and the transactions
contemplated hereby.
2.09 Warranties relating to the Hangzhou JV. The Shareholder and WL
represent and warrant that as of the date hereof and as of the Closing :
(a) Hangzhou JV has been validly established and validly exists and operates
as a Sino-foreign equity joint venture in the People's Republic of China
("PRC") in accordance with the relevant rules and regulations of the PRC and
is validly existing under the laws of the PRC and all legal and procedural
requirements and all other formalities concerning the Hangzhou JV have been
duly and properly complied with.
(b) Hangzhou JV has obtained all requisite permits, consents or approvals
(including, but not limited to, those relating to environmental pollution)
required in relation to its business and operations.
(c) the financials of CCIG and Hangzhou JV have been properly prepared and
disclosed to Regal and there has been no material adverse change in the
financial condition of Hangzhou JV since December 31, 1995.
(d) All capital contributions required to be provided by shareholder in
accordance with the terms of the joint venture agreement have been injected
in Hangzhou JV by Shareholder in full.
(e) The transfer and sale of ownership of WL will not violate the terms of
the joint venture agreement which controls the activities of the joint
venture and the relationship of the joint venture.
<PAGE>
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Shareholder as follows, as of
the Closing :
3.01 Organization.
(a) The Company is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware, has the corporate
power and authority to carry on its business as presently conducted; and is
qualified to do business in all jurisdictions where the failure to be so
qualified would have a material adverse effect on the business of the
Company.
(b) The copies of the Certificate of Incorporation of the Company, as
certified by the Secretary of State of Delaware, and the Bylaws of the
Company heretofore furnished to Shareholder are complete and correct copies
of the Articles of Incorporation and the Bylaws of the Company as amended and
in effect on the date hereof. All minutes of meetings and actions in writing
without a meeting of the Board of Directors and shareholders of the Company
are contained in the minute book of the Company and no minutes or actions in
writing without a meeting have been excluded in such minute book.
3.02 Capitalization of the Company. The authorized capital stock of the
Company consists of 150,000,000 shares of Common Stock, par value US$0.01 per
share, of which 81,806,198 shares shall be issued and outstanding at the
Closing prior to issuance of Consideration. All outstanding shares are duly
authorized, validly issued, fully paid and nonassessable, and at the Closing
the Consideration will be duly authorized, validly issued, fully paid and
non-assessable. Except for such outstanding Shares, Convertible Note
US$13.5 million to convert into 447,019,867 shares and options to purchase
1,100,000 shares, there are no outstanding shares of capital stock or other
securities or other equity interests of the Company or rights of any kind to
acquire such stock, other securities or other equity interests.
3.03 Authority. The Company has full power and authority to enter into this
Agreement and to carry out the transactions contemplated herein. The
execution and delivery of this agreement, the consummation of the
transactions contemplated hereby, and the issuance of the Company Shares in
accordance with the terms hereof, have been duly authorized and approved by
the Board of Directors of the Company and no other corporate proceedings on
the part of Company are necessary to authorize this Agreement; the
transactions contemplated hereby and the issuance of the Consideration in
accordance with the terms hereof.
<PAGE>
3.04 No Undisclosed Liabilities. The Company is not subject to any material
undisclosed liability or obligation of any nature, whether absolute, accrued,
contingent, or otherwise and whether due or to become due.
3.05 Litigation. There is no litigation, proceeding or investigation pending
or to the knowledge of the Company, threatened against the Company affecting
any of its properties or assets, or, to the knowledge of the company,
against any officer, director or stockholder of the Company that might
result, either in any case or in the aggregate, in any material adverse
change in the business, operations, affairs or condition of the Company or
any of its properties or assets, or that might call in to question the
validity of this Agreement, or any action taken or to be taken pursuant
hereto.
3.06 Title to Assets. The Company has good and marketable title to all of
its assets and properties now carried on its books, including those reflected
in the balance sheet contained in the Company's financial statements and is
free and clear of all liens, claims, charges, security interests or other
encumbrances, except as described in the Form 8KA filed on April 1, 1996.
3.07 Contracts and Undertaking. The Company (including any of its
subsidiaries) has no contracts, agreements, leases, licenses, arrangements,
commitments and other undertakings (collectively "Contracts") to which the
Company or any such subsidiary is a party or by which it or its property is
bound that have not been disclosed to Shareholder. The Company is not in
material default, or alleged to be in material default, under any Contract
and, to the knowledge of the Company, no other party to any Contract to which
the Company is party is in default thereunder nor, to the knowledge of the
Company, does there exist any condition or event which, after notice or lapse
of time or both, would constitute a default by any party to any such
Contract.
3.08 Transactions with Affiliates, Directors and Shareholders. Except as set
forth on Exhibit 3.09 there no contracts, agreements, arrangements or other
transactions between the Company, and any officer, director, or 5%
stockholder of the Company, or any corporation or other entity controlled by
any such officer, director or 5% stockholder, a member of any such officer,
director or 5% stockholder's family, or any affiliate of any such officer,
director or 5% stockholder.
3.09 No Conflict. The execution and delivery of this Agreement and the
consummation of the transaction contemplated hereby will not conflict with
or result in a breach of any term or provision of, or constitute a default
under, the Certificate of Incorporation or Bylaws of the Company, or any
agreement, contract or instrument to which the Company is a party or by
which it or any of its assets are bound.
3.10 Disclosure. Neither this Agreement nor any other agreement, document,
certificates or written or oral statement furnished to Shareholder by or on
behalf of the Company in connection with the transactions contemplated
hereby, contains any untrue statement of a material fact or when taken as a
<PAGE>
whole omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
3.11 Financial Statements. Since the filing of the Form 8KA on April 1, 1996
and the financial statements of the Company (the "Financial Statements") set
forth in its public filings (a) were prepared in accordance with the books
and records of the Company; (b) were prepared in accordance with generally
accepted accounting principles consistently applied; (c) are accurate and
fairly present the Company's financial condition and the results of its
operations as of the relevant dates thereof and for the periods covered
thereby; (d) contain and reflect all necessary adjustments and accruals for a
fair presentation of the Company's financial condition and the results of its
operations for the periods covered by said financial statements; and (e)
contain and reflect adequate provisions for all reasonably anticipated
liabilities with respect to the period(s) then ended.
3.12 Absence of Material Changes. Since the filing of the Form 8KA on April
1, 1996 and except as required or permitted under this Agreement, there has
not been :
(a) any material change in the condition (financial or otherwise) of the
properties, assets, liabilities or business of Company, except changes in the
ordinary course of business which, individually and in the aggregate, have
not been materially adverse.
(b) any undisclosed redemption, purchase or other acquisition of any shares
of the capital stock of Company, or any issuance of any shares of capital
stock or the granting, issuance or exercise of any rights, warrants, options
or commitments by the Company relating to their authorized or issued capital
stock.
3.13 Compliance with Law. The Company has in all material respects complied
with and it is now in all material respects in compliance with, all Federal
and State laws applicable to the Company, except that the Company is not
current in its SEC filings. The Consideration will be issued in full
compliance with all state and federal securities laws.
IV. COVENANTS AND AGREEMENTS OF THE PARTIES EFFECTIVE PRIOR TO CLOSING
4.01 Corporate Examinations and Investigations. Prior to the Closing,
Shareholder shall be entitled, through its employees and representatives, to
make such investigations and examinations of the books, records and financial
condition of the Company as Shareholder may request. In order that
Shareholder may have the full opportunity to do so, the Company shall furnish
Shareholder and its representatives during such period with all such
information concerning the affairs of the Company as Shareholder or its
representatives may reasonably request and cause the Company's officers,
employees, consultants, agents, accountants and attorneys to cooperate fully
with Shareholder or its representatives in connection with such review and
<PAGE>
examination and to make full disclosure of all information and documents
requested by Shareholder and/or its representatives. Any such investigations
and examinations shall be conducted at reasonable times and under reasonable
circumstances, it being agreed that any examination of original documents
will be at the Company's premises, with copies thereof to be provided to
Shareholder and/or its representatives upon request.
4.02 Cooperation; Consents. Prior to the Closing Date, each party shall
cooperate with the other parties to the end that the parties shall (i) in a
timely manner make all necessary filings with, and conduct negotiations with,
all authorities and other persons the consent or approval of which, or a
license or permit from which is required for the consummation of the
transactions contemplated by this Agreement and (ii) provide to each other
party such information as the other party may reasonably request in order to
enable it to prepare such filings and to conduct such negotiations.
4.03 Conduct of Business. From the date hereof through the Closing, the
Company shall (i) conduct its business in the ordinary course and in such a
manner so that the representations and warranties, contained herein shall
continue to be true and correct as of the Closing, as if made at and as if
made at and as of the Closing and (ii) not enter into any transaction not
envisioned or required by this transactions, or incur any liability, without
first obtaining the written consent of shareholder. Without the prior
written consent of Shareholder, except as expressly set forth herein, the
Company shall not undertake or fail to undertake any action if such action
or failure would render any of said warranties and representations untrue as
of the closing.
4.04 Litigation. From the date hereof through the Closing, each party hereto
shall promptly notify the other parties of any lawsuits, claims, proceedings
or investigations which after the date hereof are threatened or commenced
against such party or any of its affiliates or any officer, director,
employee, consultant, agent or shareholder thereof, in their capacities as
such, which, if decided adversely, could reasonably be expected to have a
material adverse effect upon the condition (financial or otherwise), of any
assets, liabilities, business, operations or prospects of such party or any
of its subsidiaries.
4.05 Notice of Default. From the date hereof through the Closing, each
party hereto shall give to the other parties prompt written notice of the
occurrence or existence of any event, condition or circumstance occurring
which would constitute a violation or breach of this Agreement by such party
or which would render inaccurate in any material respect any of such party's
representations or warranties contained herein.
V. CONDITIONS TO CLOSING
5.01 Conditions to Obligation of Shareholder. The obligations of Shareholder
under this Agreement shall be subject to each of the following conditions :
(a) Representations and Warranties of Company to be True.
The representations and warranties of Company herein contained shall be true
<PAGE>
in all material respects at the Closing with the same effect as though made
at such time. The Company shall have performed in all material respects all
obligations and complied in all material respects, to its actual knowledge,
with all covenants and conditions required by this Agreement to be performed
or complied with by it at or prior to the Closing.
(b) No Legal Proceedings. No injunction or restraining order shall be in
effect prohibiting this Agreement, and no action or proceeding shall have
been instituted and, at what would otherwise have been the Closing, remain
pending before the court to restrain or prohibit the transactions
contemplated by this Agreement.
(c) Statutory Requirements. All statutory requirements for the valid
consummation by the Company of the transactions contemplated by this
Agreement shall have been fulfilled. All authorizations, consents and
approvals of all government and other persons required to be obtained in
order to permit consummation by the Company of the transactions contemplated
by this Agreement shall have been obtained.
5.02 Conditions to Obligations of Company. The obligation of the Company
under this Agreement shall be subject to the following conditions :
(a) Representations and Warranties of Shareholder and WL to be True.
The representations and warranties of Shareholder and WL herein contained
shall be true in all material respects as of the Closing, and shall have the
same effect as though made at the Closing; Shareholder and WL shall have
performed in all material respects all obligations and complied in all
material respects, with all covenants and conditions required by this
Agreement to be performed or complied with by them prior to the Closing.
(b) No Legal Proceedings. No injunction or restraining order shall be in
effect, and no action or proceeding shall have been instituted and, at what
would otherwise have been the Closing, remain pending before the court to
restrain or prohibit the transactions contemplated by this Agreement.
(c) Statutory Requirements. All statutory requirements for the valid
consummation by Shareholder of the transactions contemplated by this
Agreement shall have been fulfilled. All authorizations, consents and
approvals of all governmental bodies and other persons required to be
obtained in order to permit consummation by Shareholder of the transactions
contemplated by this Agreement shall have been obtained.
VI. MISCELLANEOUS
6.01 Further Assurances. From time to time, at the other party's request
and without further consideration, each of the parties will execute and
deliver to the others such documents and take such action as the other party
may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
<PAGE>
6.02 Expenses of Sale. Except as otherwise provided herein, each party
shall bear its own direct and indirect expenses incurred in connection with
the negotiation and preparation of this Agreement and the consummation and
performance of the transactions contemplated herein. Without limitation,
such expenses shall include the fees and expenses of all attorneys, brokers,
investment bankers, accountants, agents and finders and other professionals
incurred in connection herewith, acting on behalf of such party. The parties
shall indemnify each other against any claims, costs, losses, expenses or
liabilities arising from any claim or commissions, finder's fees or other
compensation in connection with the contemplated transactions which may be
asserted by any person based on any agreement for payment by the other party.
6.03 Use and Confidentiality. All of the information, records, books, and
data to which the parties are given access as set forth herein shall be used
by the parties solely for the purpose of confirming the representations and
warranties set forth herein. Subject to any obligation to comply with (i)
any law (ii) any rule or regulation of any authority or securities exchange
or (iii) any subpoena or other legal process to make information available
to the persons entitled thereto, whether or not the transactions contemplated
herein shall be concluded, all information obtained by any party about any
other, and all of the terms and conditions of this Agreement, shall be kept
in confidence by each party, and each party shall cause its shareholders,
directors, trustees, officers, employees, agents and attorneys, to hold such
information confidential. Such confidentiality shall be maintained to the
same degree as such party maintains its own confidential information and
shall be maintained until such time, if any, as any such data or information
either is, or becomes, published or a matter of public knowledge; provided,
however,that the foregoing shall not apply to any information obtained by
either party through its own independent investigations of the other party or
received by such party from a third party not under any obligation to keep
such information confidential nor to any information obtained by such party
which is generally known to others to be engaged in the trade or business;
and provided, further, that from and after the Closing, such party shall be
under no obligation to maintain confidential any such information concerning
the other party. If this Agreement shall be terminated for any reason, each
party shall return or cause to be returned to the other all written data,
information, files, records and copies of documents, worksheets and other
materials obtained by such party in connection with the transactions
contemplated herein.
6.04 Notices. All notices, requests and other communications thereunder
shall be in writing and shall be delivered by courier or other means of
personal service (including by means of a nationally recognized courier
service or professional messenger service), or sent to telex or telecopy or
mailed first class, postage prepaid, by certified mail, return receipt
requested, or by Federal Express or other reputable overnight delivery
service, in all cases, addressed to:
<PAGE>
To Shareholder: China Strategic Holdings Limited
52nd Floor, Bank of China Tower
1 Garden Road
Hong Kong
Attn : Ms Ma Wai Man, Catherine
Executive Director
To Company: Regal International Inc.
P.O. Box 1237
Corsicana, Texas 75151
Attn : Mr Chung Cho Yee, Mico
President
All notices, requests and other communications shall be deemed given on the
date of actual receipt or delivery as evidenced by written receipt,
acknowledgment or other evidence of actual receipt or delivery to the
address. In case of service by telecopy, a copy of such notice shall be
personally delivered or sent by registered or certified mail, in the manner
set forth above, within three (3) business days thereafter. Either party
hereto, may, from time to time, by notice in writing served as set forth
above, designate a different address or a different or additional person to
which all such notices or communications thereafter are to be given.
6.05 Parties in Interest. Except as otherwise expressly provided herein,
all the terms and provisions of this Agreement shall be binding upon and
shall inure to the benefit of the parties and shall be enforceable by the
respective heirs, beneficiaries, personal and legal representatives,
successors and assigns of the parties hereto.
6.06 Entire Agreement; Amendments. This Agreement, including the Schedules,
Exhibits and other documents and writings referred to herein or delivered
pursuant hereto, which form a part hereof, contain the entire understanding
of the parties with respect to its subject matter. There are no
restrictions, agreements, promises, warranties, covenants or undertakings
other than those expressly set forth herein or therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to its subject matter. This Agreement may be amended only by a
written instrument duly executed by the parties or their respective
successors or assigns.
6.07 Headings, Etc. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretations of this Agreement.
6.08 Pronouns. All pronouns and any variations thereof shall be deemed to
refer to the masculine, feminine or neuter, singular or plural, as the
identity of the person, persons, entity or entities may require.
<PAGE>
6.09 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
6.10 Governing Law. This Agreement shall be governed by the laws of the
State of California applicable to contracts to be performed in the State of
California.
IN WITNESS WHEREOF, the Agreement has been duly executed and delivered by the
parties hereto as the date first above written.
REGAL INTERNATIONAL INC
By :/s/ Chung Cho Yee, Mico
-----------------------
Name : Chung Cho Yee, Mico
Title : President
CHINA STRATEGIC HOLDINGS LIMITED
By :/s/ Oei hong Leong
------------------------
Name : Oei Hong Leong
Title : Executive Director
WESTRONIX LIMITED
By :/s/ Ma Wai Man, Catherine
-------------------------
Name : Ma Wai Man, Catherine
Title : Director
<PAGE>
EXHIBIT 3.09
Except for the transaction disclosed in filings made by the Company, Horler
Holdings Limited, China Strategic Holdings Limited with the U.S. Securities
and Exchange Commission, all of which are public record, there are no
contracts, agreement, arrangements or other transactions between the Company
and any officer, director, or 5% stockholder of the Company, or any
corporation or other entity controlled by any such officer, director or 5%
stockholder, a member of any such officer, director or 5% stockholder's
family, or any affiliate of any such officer, director or 5% stockholder.
<PAGE>
SCHEDULE A
-----------
TERMS OF THE PROMISSORY NOTE:
1. Issuer
Regal International, Inc., a Delaware corporation
2. Noteholder
Horler Holdings Limited
3. Principal Amounts
US$30 million
4. Repayment Term
(a) The principal of the Note is due and payable in full in cash three
(3) years from the date of issue. The Issuer has the right to call for
early redemption by giving 14 days' notice to the Noteholder.
(b) The interest on the Note accrues at nine percent (9%) per annum and is
payable as follows:
(i) No interest will accrue on the Note during the first six months from
the date of issue;
(ii) Accrued Interest will be due and payable annually to be charged after
the first six months period; and
(iii) All interest is payable annually.
5. Conversion
The Noteholder will have the right at any time from the date of issue to
convert the outstanding principal and interest on the Note, in whole or
any part or parts, into common stock of the Issuer at the conversion price.
6. Conversion Price
The initial conversion price is US$0.0302 per share, subject to adjustment
in the event that any alteration in the capital structure of the Issuer
while any part of the Note remains outstanding, whether by way of
capitalization of profits or reserves, rights issue, consolidation or
reduction of the share capital of the Issuer, or as the Auditors shall at
the request of the Issuer or the Noteholder certify in writing to be in their
opinion fair and reasonable, provided that such alterations shall be made on
the basis that no such alterations shall be made to the
<PAGE>
effect of which would be to enable a capital stock to be issued at less than
its nominal value or which would give the Noteholder a different proportion
of the issued share capital of the Issuer to which he was previously entitled
and if any alteration in the capital structure of the Issuer is the result of
an issue of Shares as consideration in a transaction. The capacity of the
Auditors in this paragraph is that of experts and their certification shall
be final and binding on the Issuer and the Noteholder.
7. Other Rights
If while any part of the Note is outstanding, a general offer is made to
shareholders of the Issuer to acquire the whole or any part of the issued
share capital of the Issuer, the Issuer is required to use its reasonable
endeavors to procure that a similar offer is extended in respect of the Note
or in respect of any shares issued on conversion of the Note during the
period of the offer, unless the prior written approval of the Noteholder is
obtained.
8. Voting
The Noteholder will not be entitled to attend or vote at any meetings of the
Stockholders of the Issuer by reason only of it being the Noteholder.
9. Transferability
The Note can only be transferred to any group company of the Noteholder on
the condition that a further transfer of the Note to another group company of
the Noteholder will be made in the event that the transferee company ceases
to be a group company of the Noteholder.
10. Unregistered Shares
The shares of common stock of the Issuer to be received upon conversion of
the Note have not and it is anticipated will not have been registered under
the Securities Act of 1933, as amended. Noteholder agrees it will execute an
Investment Letter recognizing that such shares will be unregistered shares.
11. Security for the Note
This note shall be secured in favour of Noteholder by all assets of
Westronix Limited and its related subsidiaries by way of continuing security
for the due and punctual payment to the Noteholder of all sums (including
principal and interest).
<PAGE>
This security has not been registered with the Securities and Exchange
Commission or the Securities Commissioner of the State of Domicile of
Subscriber, but has been issued pursuant to the private offering exemption
under the Securities Act of 1933, as amended (the "Act"), and the private
offering exemption under the securities laws of the State of Delaware and
Texas and the registered holder of such security has executed an investment
representation with respect thereto. Accordingly, the sale,
transfer, pledge, hypothecation or other disposition of this security is
restricted and may not be accomplished except in accordance with the Act and
the applicable rules adopted under it and with the permission of the Company
upon the furnishing of an opinion of counsel satisfactory to counsel for the
Company that registration is unnecessary for such transaction.
REGAL INTERNATIONAL, INC.
9% Secured Convertible Promissory Note
US$30,000,000
Regal International, Inc. (the "Company" or "Maker"), a Delaware corporation;
for value received hereby promises to pay to Horler Holdings Limited
("Horler"), a British Virgin Islands Company, the principal amount of
US$30,000,000 with interest (computed on the basis of a 365-day year) on the
unpaid balance of such principal amount at the rate of 9% per annum from
September 10, 1996, until maturity. Accrued interest on this Note shall be
due and payable an each anniversary date hereof. Principal and any unpaid
interest on this Note shall be due and payable an September 9, 1999. Payment
of principal and interest shall be made in lawful money of the United States
of America in federal or other immediately available funds at the registered
address of the registered holder of this Note as set forth in the register
kept by the Company at its principal office for the purpose of registration
of the Note referred to below. Any amount of principal and interest in
default under this Note shall bear interest at the highest lawful rate or if
there be no highest lawful rate at eighteen percent (18%) per annum.
SECTION 1. Security for the Note.
Payment of this Note is secured by a security interest and pledge of all the
outstanding shares of Westronix Limited, a British Virgin Islands Company
(the "Shares"), all as set forth in a Pledge Agreement of even date herewith.
SECTION 2. Conversion of Note.
2.1 Subject to and upon compliance with the provisions of this Section 2, at
the option of the holder thereof, this Note may at any time on or before the
maturity hereof, be converted at the principal amount thereof and accrued
interest thereon into fully paid and nonassessable shares (calculated as to
each conversion to the nearest 1/100th of a share) of Common Stock, $0.01 par
value, of the Company (the "Conunon Stock"), at the conversion price,
determined as hereinafter provided, in effect at the time of conversion.
<PAGE>
2.2 The conversion price (herein called the "Conversion Price") shall be
US$0.0302 per share of Common Stock. The Conversion Price shall be subject
to adjustment from time to time as herein provided. The Conversion Price
prior to any adjustment and the adjusted Conversion Price after each
adjustment are hereinafter referred to as the actual Conversion Price.
SECTION 3. Restrictions On transfer; Compliance with Securities Act.
A. The holder acknowledges that the securities issued upon conversion of the
Note is characterized as "restricted securities" under the federal securities
laws since they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable
regulations such securities may be resold without registration under the Act
only in compliance with certain conditions and under limited circumstances,
including the following:
(i) A registration statement with respect thereto has become effective under
the Act, or
(ii) There is presented to the Company an opinion of counsel reasonably
satisfactory to the Cornpany to the effect that registration under the Act is
not necessary, or
(iii) There is presented to the Company a letter from the staff of the
Securities and Exchange Commission to the effect that the staff will not
recommend that said Commission take any action in respect of such offer or
transfer and to the effect that said staff concurs in the opinion that such
registration or compliance is not necessary (provided that the Company
reasonably agrees with the facts stated in such letter insofar as they
pertain to it); or
(iv) There is presented to the Company written evidence that the sale,
pledge or transfer complies with the provisions of Rule 144 as amended under
the Act.
B. It is understood that the certificates evidencing the Common Stock
issuable upon conversion of this Note, when issued will bear legends
substantially to the following effect:
"THE SHARES HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION, BUT
HAS BEEN ISSUED PURSUANT TO THE PRIVATE
OFFERING EXEMPTION UNDER THE SECURITIES ACT
OF 1993, AS AMENDED (THE "ACT"), AND THE
PRIVATE OFFERING EXEMPTION UNDER THE
SECURITIES LAWS OF THE STATES OF DELAWARE
AND TEXAS, AND THE REGISTERED HOLDER OF
SUCH SECURITY HAS EXECUTED AN INVESTMENT
REPRESENTATION WITH RESPECT THERETO.
ACCORDINGLY, THE SALE, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHIER DISPOSITION OF THIS
SECURITY IS RESTRICTED AND MAY NOT BE
ACCOMPLISHED EXCEPT IN ACCORDANCE WITH
THE ACT AND THE APPLICABLE RULES ADOPTED
UNDER IT AND WITH THE PERMISSION OF THE
COMPANY UPON THE FURNISHNG OF AN OPINI0N
OF COUNSEL SATISFACTORY TO COUNSEL FOR THE
COMPANY THAT REGISTRATION IS UNNECESSARY
FOR SUCH TRANSACTIONS."
<PAGE>
C. This Note shall be non-transferable except to a group, company or affiliate
of Horler ceases to be group, company or affiliate of Horler, this Bond must
be transferred to Horler or another group or affiliated company.
SECTION 5. Adjustment of Purchase Rights.
A. For the purposes of this Note, the following provisions shall be
applicable:
If at any time or from time to time the Company shall by subdivision,
consolidation or reclassification of shares, or otherwise, change as a whole
the outstanding shares of its Common Stock into a different number or class
of shares outstanding immediately prior to such change, and the Purchase
Price and the number of shares purchasable under each Note shall be
correspondingly adjusted.
B. Upon each adjustment of the Conversion Price and upon each change in the
number of shares of Common Stock deliverable upon the conversion of this
Note, and in the event of any change in the rights of the holders of this
Note by reason of other events hereinabove set forth, the Company shall
forthwith give written notice thereof to the holder of this Note in the
form of a certificate, executed by its Present or one of its Vice Presidents,
stating the adjusted Conversion Price and the new number of shares so
deliverable, or specifying the other shares of Stock, securities or assets
and the amount thereof so deliverable and setting forth in reasonable
detail the method of calculation and the facts upon which such calculation
is based.
SECTION 6. Special Agreements of the Company.
A. The Company does not have sufficient authorised and reserved shares of
Common Stock to issue to the holder of this Note upon conversion. The Company
agrees to call a meeting of Stockholders of the Company to approve an
Amendment to the Articles of Incorporation increasing the number of shares of
Common Stock authorised for issuance. After such amendment to the Articles
of Incorporation, the Company covenants and agrees that it will reserve and
set apart and have at all times a number of shares of authorised but
unissued Common Stock deliverable upon the conversion of this Note or any
other rights or privileges provided for therein sufficient to enable it at
any time to fulfill all its obligations thereunder.
B. If, at any time while this Note is outstanding, the Company shall at any
time consolidate with or merge into another corporation, the holder hereof
will the thereafter receive a security of such other corporation
substantially similar to this Note convertible into the securities or
property to which a holder of the same number of shares of Common Stock then
deliverable upon the conversion hereof would have been entitled upon such
consolidation or merger, and the Company shall take such steps in connection
with such consolidation or merger as may be necessary to assure that the
provisions hereof shall be applicable, as nearly as reasonably may be, in
relation to any securities or property thereafter deliverable upon the
conversion of this Note. A sale of all or substantially all the assets of the
Company for securities of another company shall be deemed a consolidation or
merger for the foregoing purpose.
<PAGE>
SECTION 7. Prepayment
This Note may be prepaid, in whole or in part, at any time provided that the
Company gives the holder of this Note at least thirty (30) days prior written
notice of its intention to prepay and the opportunity to convert this Note
into shares of Common Stock.
SECTION 8. Take Along Agreement
If this Note is outstanding and a general offer is made to the Stockholders
of the Company (as a group) to acquire all or any portion of the outstanding
shares of Common Stock, the Company shall be required (a) to notify the
holder hereof the offer, and (b) to use its best efforts to have such offer
extended to the shares of Common Stock issuable upon conversion of this Note,
unless the holder hereof advises the Company in writing of its desire not to
sell its shares of Common Stock pursuant to the offer.
SECTION 9. Miscellaneous.
As used herein the term "Highest Lawful Rate" means the maximum nonusurious
interest rate, if any, that; at any time and from time to time, may be
contracted for, taken, reserved, charged, or received with respect to the
purchase money loan evidenced by this Note under the laws of
the United States and the State of Delaware applicable to the holder hereof
and such loan. It is the intention of Payee and each holder hereof to
conform strictly to the applicable usury laws now or hereafter in force, and
therefore, all agreements between Maker and Payee are expressly limited so
that in no contingency or event whatsoever, whether by reason of advancement
of the proceeds hereof, acceleration of maturity of the unpaid principal
balance hereof, or otherwise, shall the amount paid or agreed to be paid to
the holder hereof for the use, forbearance, or detention of the money to be
advanced hereunder exceed the Highest Lawful Rate. If any term hereof is
susceptible of being construed as obligating Maker for the payment of
interest in excess of that authorised by applicable law, or it, from any
other circumstances whatsoever, including, but not limited to, acceleration
of the maturity of the indebtedness evidenced hereby, fulfillment of any
provision hereof or of any other agreement referred to herein at the time
performance of such provision shall be due, shall involve transcending the
limit of validity prescribed by law which a court of competent jurisdiction
may deem applicable hereto, then, ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity, and if from any circumstance
the holder hereof shall ever receive or be entitled to receive as interest an
amount which would exceed the Highest Lawful Rate, such amount which would be
excessive interest shall be cancelled automatically as of the date of the
occurrence of such circumstance, and if theretofore paid, at the election of
the Maker, shall be either refunded, credited on the principal amount hereof,
or applied to the future payment of interest to become due hereunder, and in
such event no holder shall be subject to any penalties provided by law for
contracting for, charging, or receiving interest in excess of the Highest
Lawful Rate. This provision shall control every other provision of all
agreements between the undersigned and the holder hereof.
Should the indebtedness represented by this Note or any part thereof be
collected at law or in equity or through any bankruptcy, receivership,
probate or other court proceedings. or if this Note is placed in the hands of
attorneys for collection after default, Maker and all endorsers, guarantors
and sureties of this Note jointly and severally agree to pay in addition to
the principal and interest due and payable hereon reasonable attorneys' and
collection fees.
<PAGE>
The Maker of this Note waives presentment for payment, demand, notice of
demand and of dishonor of this Note, notice of intention to accelerate the
maturity of this Note, notice of such acceleration, protest and notice of
protest, diligence in collecting.
All Of the covenants, stipulations, promises and agreements in this Note
contained by or on behalf of Maker or Payee shall bind their respective
successors and assigns, whether so expressed or not.
In the event any one or more of the provisions contained in this Note shall
for any reason be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect
any other provision hereof, and this Note shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.
EXECUTED this 10th day of September, 1996
REGAL INTERNATIONAL, INC.
By:/s/(sd.) Chung Cho Yee, Mico
-----------------------------
Chung Cho Yee Mico, President
<PAGE>
PLEDGE AGREEMENT
----------------
This Pledge Agreement (the "Agreement") dated of September 10, 1996 is made
by and between Regal International, Inc. ("Pledgor") and China Strategic
Holdings Limited (the "Secured Party").
INTRODUCTORY PROVISIONS:
--------------------------
A. Pledgor has as of this day executed a 9% Secured Convertible Promissory
Note in the principal amount of US$30,000,000 ("the Note") payable to the
order of the Secured Party in consideration for the purchase of all the
outstanding capital stock of Westronix Limited (the "Shares").
B. As a condition to accepting the Note, the Secured Party requires that
Pledgor pledge to and grant a security interest in the Shares to secure the
payment of the Note.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and confessed, the parties hereto agree as follows:
1. The Pledge and Security Interest. The Pledgor hereby grants to the
Secured Party a interest in and to any and all present or future rights of
the Pledgor in and to all of the following rights, interests, and property
(all of the following being herein sometimes called the "Collateral"): (a)
all the issued and outstanding shares of the capital stock of Westronix
Limited registered in the name of the Pledgor (b) any and all substitutes,
replacements, accessions, attachments, increases, profits, revisions,
additions thereto, or dividends and coupons thereon and (c) any and all
proceeds arising from or by virtue of the sale or other disposition of, or
from the collection of, the Collateral described in (a) and (b) preceding.
2. The Indebtedness. This Agreement is being executed and delivered to
secure and the security interest herein granted (the "Security Interest")
shall secure full payment and performance by Regal of all of the indebtedness
and obligations owing to the Secured Party by Regal pursuant to the terms of
the Note, together with any and all renewals and extensions thereof [all of
such debts, indebtedness, liabilities and duties referred to in this
paragraph are hereinafter collectively referred to collectively as the
"Indebtedness"].
3. Negative Covenants of the Pledgor. The Pledgor further covenants and
agrees that, without the prior written consent of the Secured Party, the
Pledgor will not (a) sell assign or transfer any of the Pledgor's rights in
the Collateral; of (b) create any other security interest in, mortgage or
otherwise encumber the Collateral, or any part thereof or permit the same to
be or become subject to any lien, attachment, execution, sequestration, other
legal or equitable process or any encumbrance of any kind or character,
except the Security Interests herein created; or (c) take any action, or
<PAGE>
allow the Corporation to take any action which would dilute the equity
percentage of the Shares without the prior written consent of Secured Party.
4. Default. As used herein, the term "Default" means the occurrence of one
or more of the following: (a) the failure to timely pay or perform any
obligations or covenants of the Indebtedness as and when due and payable or
performable; (b) the sale, loss, theft, destruction, encumbrance or transfer
of any of the Collateral in violation hereof, or substantial damage to any of
the Collateral; (c) the levy on. seizure or attachment of the Collateral, or
any part thereof.
5. Remedies. Upon the occurrence of an event of Default, in addition to any
and all other rights and remedies which the Secured Party may then have
hereunder, under the Uniform Commercial Code of the State of New York or of
any other pertinent jurisdiction (the "Code"), or otherwise, the Secured
Party may, at its option (a) reduce its claim to judgment or foreclose or
otherwise enforce the Security Interest, in whole or in part, by any
available judicial procedure; (b) after notification, if any provided for
herein, sell, lease, or otherwise dispose of, at the office of the Secured
Party, on the premises of the Pledgor, or elsewhere, all or any part of the
Collateral, in its then condition or following any commercially reasonable
preparation or processing, and any such sale or other disposition may be as a
unit or in parcels, by public or private proceddings, and by way of one or
more contracts (it being agreed that the sale of any part of the Collateral
shall not exhaust the Secured Party's power of sale, but sales may be made
from time to time, and at any time, until all of the Collateral has been sold
or until the Indebtedness has been paid and performed in full), and at any
such sale it shall not be necessary to exhibit any of the Collateral; (c) at
its discretion, retain the Collateral in satisfaction of the Indebtedness
whenever the circumstances are such that the Secured Party is entitled to do
so under the Code or otherwise; (d) exercise any and all other rights,
remedies, and privileges it may have under any document which secures the
Indebtedness; and (e) take any other action allowed under applicable law.
Any and all proceeds ever received by the Secured Party from any sale or
other disposition of the Collateral, or any part thereof, or the exercise of
any other remedy pursuant here to shall be applied by the Secured Party to
the Indebtedness in such order and as the Secured Party, in its sole
discretion, may deem appropriate, notwithstanding any directions or
instructions to the contrary by the Pledgor.
With respect to any part of the Collateral which is stock certificates,
bonds, or other securities, the Secured Party shall have authority, upon the
occurrence of an event of Default, without notice to the Pledgor, either to
have them registered in the Secured Party's name, or in the name of a
nominee, and, with or without such registration, to demand of the entity
issuing the same, and to receive and receipt for, any and all dividends and
other distributions payable in respect thereof, regardless of the medium in
witch paid and whether they be ordinary or extraordinary. Any entity making
payment to the Secured Party hereunder shall be fully protected in relying
upon the written statement of the Secured Party that the Secured Party then
holds the Security Interests which entitles it to receive such payment, and
the receipt of the Secured Party for such payment shall be full acquittance
therefor to the person making such payment.
<PAGE>
6. Rights Cumulative. All rights and remedies of the Secured party
hereunder are cumulative of each other and of every other right or remedy
which the Secured Party may otherwise have at law or in equity or under any
other contract of other writing for the enforcement of the Security Interests
herein or in the collection of the Note or the Indebtedness, and the exercise
of one or more rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of other rights or remedies.
7. Power of Attorney. The Secured Party is hereby appointed the
attorney-in-fact of the Pledgor for the purpose of carrying out the
provisions of this Agreement and taking any action and executing any
instruments which the Secured Party may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest.
8. No Waivers. No failure on the part of the Secured Party to exercise, and
no delay in exercising any right, power or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise by the Secured
Party of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
9. Binding Effect. This agreement shall be binding on the Pledgor and the
Pledgor's heirs and assigns and shall inure to the benefit of the Secured
Party, and the Secured Party's successors and assigns.
10. Termination. This Agreement and Security Interests in the Collateral
will terminate when the Indebtedness secured hereby has been paid in full by
extinguishment thereof but not by renewal, modification or extension thereof.
11. Governing Law. THE LAW GOVERNING THIS AGREEMENT WILL BE THAT OF THE
STATE OF NEW YORK IN FORCE ON THE DATE OF EXECUTION OF THIS AGREEMENT.
12. Agreement as Financing Statement. The Secured Party shall have the
right at any time to execute and file this Agreement as a financing
statement, but the failure of the Secured Party to do so shall not impair the
validity or enforceability of this Agreement.
PLEDGOR:
REGAL INTERNATIONAL, INC.
by: /s/ (sd.) Chung Cho Yee, Mico
Chung Cho Yee, Mico, President
