SECURITY AGREEMENT - PLEDGE
RHINE INVESTMENT HOLDINGS COMPANY LIMITED, Room 1016 North Tower, Concordia
Plaza, 1 Science Museum Road, Tsimshatsui East, Kowloon, Hong Kong, hereinafter
called "Debtor", and CHAN XXX XXXX, 000 Xxxx Xxxxxxxx, Xxx. 0, Xxx Xxxx, Xxx
Xxxx, 00000, hereinafter called "Secured Party", agree as follows:
Section I. Creation of Security Interest.
Debtor hereby pledges, grants a security interest in, mortgages, assigns,
transfers, delivers, sets over and confirms unto Secured Party the Collateral
described in Section II of this Agreement to secure performance and payment of
that certain promissory note of even date in the principal amount of $230,000
payable to Secured Party hereinafter sometimes called the "Secured
Indebtedness".
Section II. Collateral.
The Collateral of this Security Agreement consists of Nine Hundred Eighteen
Thousand Seven Hundred Fifty (918,750) shares of common stock of IWI Holding
Limited (the "Company") represented by Share Certificate No. 1454 (the "Common
Share Certificate") and Three Million, Six Hundred Forty Four Thousand, Eight
Hundred Eighty (3,644,880) shares of Series A Preferred Stock of the Company
represented by share certificate No. P-1 (the "Preferred Share Certificate").
Upon the execution of this Agreement, the Common and Preferred Share
Certificates have been delivered to Secured Party. A true and correct copy of
these certificates are attached hereto as Exhibit "A". The Collateral includes
also, without limitation, rights to receive dividends, stock dividends,
dividends paid in stock, distributions upon redemption or liquidation,
distributions as a result of split-ups, recapitalizations or rearrangements, all
stock rights, rights to subscribed, voting rights, rights to receive securities,
and all new securities; and all other property which Debtor may hereafter become
entitled to receive on account of such securities, and in the event Debtor
receives any such property, Debtor will immediately deliver same to Secured
Party to be held by Secured Party in the same manner as the property originally
deposited as Collateral. The Collateral of this Agreement also includes (i) the
proceeds of any and all property described above and (ii) any and all cash
dividends of and from any and all property described above.
Section III. Payment Obligations of Debtor.
3.1 Debtor shall pay to Secured Party any sum or sums due or which may
become due pursuant to the Secured Indebtedness.
3.2 Debtor shall pay the entire unpaid indebtedness of Debtor to Secured
Party, due pursuant to the Note upon Debtor's default under this Agreement.
Section IV. Representations and Warranties.
Debtor represents and warrants that:
4.1 All information, reports, statements and other data furnished by Debtor
to Secured Party prior to, contemporaneously with or subsequent to the execution
of this Security Agreement or in connection with the Indebtedness Secured hereby
are and shall be true, correct and complete and do not and shall not omit to
state any fact or circumstance necessary to make the information contained
therein not misleading.
4.2 All investment securities and any like property delivered to Secured
Party as Collateral are genuine, duly and validly authorized and issued, fully
paid and nonassessable, free of all liens, claims, demands, equities or other
security interests, and are hereby duly and validly pledged and hypothecated to
Secured Party in accordance with law.
4.3 Debtor owns the Collateral and has the right to pledge the same and to
transfer any interest therein; all consents required for the pledge of the
Collateral herein provided have been obtained; the Collateral is free and clear
from all security interests and encumbrances except the security interest
evidenced hereby; there is no financing statement covering the Collateral or its
proceeds on file in any public office; and so long as the indebtedness secured
hereby remains unpaid the Debtor will warrant and defend the title to the
Collateral and its proceeds against the claims and demands of all persons
whomsoever claiming or to claim the same or any part thereof.
4.4 The execution, delivery and performance by Debtor of this Agreement do
not and will not contravene or violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect and applicable to Debtor or the corporate papers of Debtor,
or result in a breach of or constitute a default (with or without the giving of
notice or the lapse of time or both) under any indenture or loan, credit or
other agreement to which Debtor is a party or by which Debtor or any of Debtor's
property may be bound or affected.
4.5 This Agreement constitutes the legal, valid and binding obligation of
Debtor enforceable against Debtor in accordance with its terms.
4.6 No authorization, consent, approval, license, order or exemption of, or
filing or registration with, any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, is or will be
necessary to the valid execution, delivery or performance by Debtor of this
Agreement or to the enforcement hereof by Secured Party.
4.7 No representation or warranty contained herein or made in connection
with the indebtedness secured hereby, and no certificate, schedule or other
document furnished in connection herewith, contains or will contain, at the time
so made or furnished, a misstatement of material fact or omits or will omit to
state a material fact required to be stated therein in order to make the
statements contained therein not misleading.
4.8 Debtor is now in a solvent condition, and no bankruptcy or insolvency
proceedings are pending or contemplated by or against Debtor.
Section V. Covenants.
5.1 Debtor covenants and agrees during the term of this Agreement with
Secured Party as follows:
(a) Debtor shall furnish to Secured Party such stock powers and other
instruments as may be required by Secured Party to assure the
transferability of the Collateral when and as often as may be
requested by Secured Party.
(b) Debtor will continuously maintain the corporate existence of Debtor.
(c) Debtor will cause to be paid prior to delinquency all taxes and
assessments heretofore or hereafter levied or assessed against the
Collateral, or any part thereof, or against the Secured Party for or
on account of the indebtedness secured hereby or the interest created
by this Agreement, and will furnish Secured Party with receipts or
other satisfactory evidence showing payment of such taxes and
assessments at least ten (10) days prior to the applicable default
date therefor.
(d) If the validity or priority of this Agreement or of any rights,
titles, security interests or other interests created or evidenced
hereby shall be attacked, endangered or questioned, or if any legal
proceedings are instituted with respect thereto, Debtor will give
prompt written notice thereof to Secured Party and, at Debtor's own
cost and expense, will diligently endeavor to cure any legitimate
defect that may be developed or claimed, and will take all necessary
and proper steps for the defense of such legal proceedings
(e) Debtor will, on request of Secured Party, (i) promptly correct any
obvious clerical defect, error or omission which may be discovered in
the contents of this Agreement or in any other instrument executed in
connection herewith or in the execution or acknowledgment thereof;
(ii) execute, acknowledge and deliver to Secured Party such further
instruments (including without limitation further security agreements,
financing statements and continuation statements) and do such further
acts as may be necessary, desirable or proper to carry out more
effectively the purposes of this Agreement and such other instruments
and to subject to the security interests hereof and thereof any
property intended by the terms hereof and thereof to be covered hereby
and thereby, including specifically, but without limitation, any
renewals, additions, substitutions, replacements or appurtenances to
the then Collateral; and (iii) execute, acknowledge and deliver to
Secured Party any document or instrument (including specifically any
financing statement) deemed advisable by Secured Party to protect the
security interest hereunder against the rights or interests of third
persons, and Debtor will pay all costs connected with any of the
foregoing.
(f) Notwithstanding the security interest in proceeds granted herein,
Debtor will not sell, exchange, lend, assign, transfer or otherwise
dispose of all or any part of the Collateral or any interest therein,
or permit any of the foregoing, without the prior written consent of
Secured Party.
(g) Debtor will not change its address, name or identity or corporate
structure without notifying Secured Party of such change in writing at
least ten (10) days prior to the effective date of such change.
(h) Debtor shall furnish Secured Party all such information as Secured
Party may reasonably request with respect to the Collateral.
Section VI. Voting Rights and Dividends.
6.01 So long as the Debtor is not in default under the terms of the Note or
this Agreement, Debtor shall be entitled to exercise all voting and consensual
powers and rights pertaining to the Collateral or any part thereof for all
purposes not inconsistent with the terms of this Agreement and shall be entitled
to receive and retain all dividends on the Collateral or any part thereof.
Section VII. Events of Default.
7.1 Debtor shall be in default under this Agreement upon the occurrence or
the happening of any of the following events or conditions (hereinafter called
"Event of Default"):
(a) Upon the occurrence of an event of default as such term is defined in the
Note, including but not limited to the failure to pay any principal of or
interest on the Note as and when due in accordance with the terms of the
Note; or
(b) Debtor shall fail to perform any covenant contained in the Note, this
Agreement or in any other instrument now or hereafter securing or
guaranteeing the Secured Indebtedness, and which has not been cured by the
Debtor after ten (10) days written notice.
Section VIII. Remedies in Event of Default.
8.1 Upon the occurrence of an Event of Default, Secured Party may give
Maker written notice of the default and ten (10) days opportunity to cure such
default. If after such time, Maker fails to cure the default then Secured Party
may, without further notice or authority, sell or dispose of all or any part of
the Collateral and may apply the proceeds of any such sale or disposition in or
towards discharge of the Secured Indebtedness in such manner as it in its
absolute discretion thinks fit. The Secured Party shall be entitled to exercise
such power of sale in such manner and at such time or times as it shall think
fit (whether by private sale or otherwise) so that the Collateral may be sold to
any person and at any price which the Secured Party considers to be the best
obtainable in the circumstances.
8.2 The Secured party's remedies herein expressly provided shall be in
substitution for those rights and remedies provided under the Uniform Commercial
Code of New York and in lieu of any and all other remedies existing at law or in
equity.
Section IX. Additional Agreements.
9.1 If all of the Secured Indebtedness is paid as the same becomes due and
payable, and if all of the covenants, warranties, undertakings and agreements
made in this Agreement are kept and performed, then and in that event only, all
rights under this Agreement shall terminate and the Collateral shall become
wholly clear of the security interest evidenced hereby, and such security
interest shall be released by Secured Party in due form at Debtor's cost.
9.2 A carbon, photographic or other reproduction of this Agreement of any
financing statement relating to this Agreement shall be sufficient as a
financing statement.
9.3 Debtor will pay all such recording, filing, re-recording and refiling
taxes, fees and other charges.
9.4 In the event the ownership of the Collateral or any part thereof
becomes vested in a person other than Debtor, Secured Party may, without notice
to Debtor, deal with such successor or successors in interest with reference to
this Agreement and to the indebtedness secured hereby in the same manner as with
Debtor, without in any way vitiating or discharging Debtor's liability hereunder
or for the payment of the indebtedness secured hereby.
9.5 If any part of the secured indebtedness cannot be lawfully secured by
this Agreement, or if any part of the Collateral cannot lawfully be subject to
the security interest hereof to the full extent of such indebtedness, then all
payments made shall be applied on said indebtedness first in discharge of that
portion thereof which is not secured by this Agreement.
9.6 Secured Party may assign this Agreement so that the assignee shall be
entitled to the rights and remedies of Secured Party hereunder and in the event
of such assignment, Debtor will assert no claims or defenses relating to the
payment of the Note it may have against the assignee except those granted in
this Agreement.
9.7 Any notice, request, demand or other communication required or
permitted hereunder shall be given in writing by delivering same in person to
the intended addressee, or by United States Postal Service, postage prepaid,
registered or certified mail, return receipt requested, or by prepaid telegram
(provided that such telegram is confirmed by mail in the manner previously
described), sent to the intended addressee at the address shown in this
Agreement, or to such different address as the addressee shall have designated
by written notice sent in accordance herewith and actually received by the other
party at least ten (10) days in advance of the date upon which such change of
address shall be effective.
9.8 This Agreement shall be binding upon Debtor, and the heirs, devisees,
administrators, executors, personal representatives, receivers, trustees,
successors and assigns of Debtor, including all successors in interest of Debtor
in and to all or any part of the Collateral, and shall inure to the benefit of
Secured Party and the successors and assigns of Secured Party. All references in
this Agreement to Debtor or Secured Party shall be deemed to include all such
parties.
9.9 Whenever possible each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law. A
determination that any provision of this Agreement is unenforceable or invalid
shall not affect the enforceability or validity of any other provision, and any
determination that the application of any provision of this Agreement to any
person or circumstance is illegal or unenforceable shall not affect the
enforceability or validity of such provision as it may apply to any other
persons or circumstances.
9.10 Secured Party may, by any employee or employees it designates,
execute, sign, endorse, transfer, or deliver in the name of Debtor, notes,
checks, drafts, or other instruments for the payment of money and receipts or
any other documents necessary to evidence, perfect and realize upon the security
interests and obligations of this Agreement.
9.11 Secured Party's duty with reference to the Collateral shall be solely
to use reasonable care in the custody and preservation of the Collateral in
Secured Party's possession.
9.12 The pronouns used in this Agreement are in the masculine gender but
shall be construed as feminine or neuter as occasion may require.
9.13 The term "Debtor" as used in this Agreement shall be construed as
singular or plural to correspond with the number of persons executing this
Agreement as Debtor. If more than one person executes this Agreement as Debtor,
their obligations under this Agreement shall be joint and several.
9.14 The section headings appearing in this Agreement have been inserted
for convenience only and shall be given no substantive meaning or significance
whatever in construing the terms and provisions of this Agreement.
9.15 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York and the United States of America.
EXECUTED as of this 1st day of July, 1998.
RHINE INVESTMENT HOLDINGS COMPANY LIMITED
By: /s/ KS Ng
-----------------------
Name: KS Ng
Title: Financial Director
"DEBTOR"
/s/ Chan Xxx Xxxx
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CHAN XXX XXXX
"SECURED PARTY"
ATTACHMENTS:
EXHIBIT "A" - THE SHARE CERTIFICATES
