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
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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 0000 (xxx "Xxxxxxxx Xxx"); 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
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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.
(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
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.
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.
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
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
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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
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
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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
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
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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.
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 :
To Shareholder: China Strategic Holdings Limited
52nd Floor, Bank of China Tower
0 Xxxxxx Xxxx
Xxxx Xxxx
Attn : Ms Ma Wai Man, Xxxxxxxxx
Executive Director
To Company: Regal International Inc.
X.X. Xxx 0000
Xxxxxxxxx, Xxxxx 00000
Attn : Xx Xxxxx Xxx Xxx, Xxxx
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.
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 :---------------------------
Name : Xxxxx Xxx Xxx, Xxxx
Title : President
CHINA STRATEGIC HOLDINGS LIMITED
By :------------------------------
Name : Oei Hong Xxxxx
Title : Executive Director
WESTRONIX LIMITED
By :-----------------------------
Name : Ma Wai Man, Xxxxxxxxx
Title : Director
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.
SCHEDULE A
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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
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).
