PLEDGE AGREEMENT
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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:
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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
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.
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.) Xxxxx Xxx Xxx, Xxxx
Xxxxx Xxx Xxx, Xxxx, President
