SECURITY AGREEMENT
Exhibit
4.54
1. Identification.
This Security Agreement (the
“Agreement”), dated as of May 8, 2008, is entered into by and between
China Cablecom Holdings, Ltd., a British Virgin Islands company (“Debtor”), and Collateral Agents, LLC,
a Delaware Limited
Liability Company, as the collateral agent (the "Collateral
Agent"), acting in the
manner and to the extent described in the “Collateral Agent Agreement” (hereinafter defined) for the benefit
of the parties identified on Schedule
A hereto (collectively, the "Lenders"). Other capitalized terms employed
herein shall have the meanings attributed to them in the Subscription
Agreement.
2. Recitals.
2.1 The Lenders have made loans to Debtor
(the "Loans"). It is beneficial to
Debtor that the Loans were
made and are being made.
2.2 The Loans are evidenced by certain
promissory notes (each a “Note;” collectively, the “Notes”) issued by Debtor on or about the date
of this Agreement pursuant to a subscription agreement (the “Subscription
Agreement”) to which Debtor and the Lenders are
parties. The Notes are further identified on Schedule
“A” hereto and were and will be executed by
Debtor as “Borrower” for the benefit of each Lender as the
“Holder” thereof.
2.3 China Cablecom Ltd., a British
Virgin Islands company
(“Guarantor”) is a wholly-owned subsidiary of
Borrower. It is beneficial to Guarantor that the loans were made and
are being made.
2.4 In
consideration of the Loans made by the Lenders to Debtor and for other good and
valuable consideration, and as security for the performance by Debtor of its
obligations under the Notes and as security for the repayment of the Loans and
all other sums due from Debtor to the Lenders arising under the Transaction
Documents and any other written agreement between or among them (collectively,
the "Obligations"),
Debtor, for good and valuable consideration, the receipt of which is
acknowledged, has agreed to grant to the Collateral Agent, for the
benefit of the Lenders, a security interest in the “Collateral”
(hereinafter defined), on the terms and conditions hereinafter set
forth. Obligations include all future advances by the Lenders to
Debtor made pursuant to the Subscription Agreement.
2.5 The Lenders have appointed the
Collateral Agent pursuant to that certain “Collateral
Agent Agreement” dated at or about the date of this
Agreement, among the Lenders and the Collateral Agent.
2.6 The following defined terms which are
defined in the Uniform Commercial Code in effect in the State of New York on the
date hereof are used herein
as so defined: Accounts, Chattel Paper, Documents, Equipment, General
Intangibles, Instruments, Inventory and Proceeds. All Other terms not
defined herein shall have the meanings attributed to them in the Subscription
Agreement.
3. Grant of
General Security Interest in the Collateral.
3.1 As security for the Obligations of
Debtor, Debtor hereby grants the Collateral Agent, for the benefit of the
Lenders, a security interest in the Collateral.
3.2 “Collateral” shall mean all of the following property of
Debtor:
(A)
All now owned and hereafter
acquired right, title and interest of Debtor in, to and in respect of all
Accounts, Goods, or personal property, all present and future books and records
relating to the foregoing and all products and Proceeds of the
foregoing:
(i) All now owned and hereafter acquired
right, title and interest of Debtor in, to and in respect of all: Accounts,
interests in goods represented by Accounts, returned, reclaimed or repossessed
goods with respect thereto
and rights as an unpaid vendor; contract rights; Chattel Paper; investment
property; General Intangibles, tax and duty claims and refunds, registered and
unregistered patents (including, but not limited to, the patents, patents
pending and applications), trademarks, service marks,
certificates, copyrights, trade names, applications for the foregoing, trade
secrets, goodwill, processes, drawings, blueprints, customer lists, licenses,
whether as licensor or licensee, choses in action and other claims, and existing and future leasehold
interests in equipment, and fixtures; Documents; Instruments; letters of credit,
bankers’ acceptances or guaranties; cash monies,
deposits, including but not limited to that certain deposit account
number: YR500088 in
the name of China Cablecom
Holdings Ltd., held
at UBS AG, Stamford, CT,
ABA Number: 000000000;
securities, bank accounts, deposit accounts, credits and other property now or
hereafter owned or held in any capacity by Debtor; as well as agreements or
property securing or
relating to any of the items referred to above;
(ii) Goods: All now owned and hereafter
acquired right, title and interest of Debtor in, to and in respect of goods,
including, but not limited to:
(a) All Inventory, wherever located,
whether now owned or
hereafter acquired, of whatever kind, nature or description, including all raw
materials, work-in-process, finished goods, and materials to be used or consumed
in Debtor’s business; finished goods, timber cut
or to be cut, oil, gas, hydrocarbons, and minerals extracted or to be
extracted, and all names or marks affixed to or to be affixed thereto for
purposes of selling same by the seller, manufacturer, lessor or licensor thereof
and all Inventory which may be returned to Debtor by its customers or repossessed by Debtor and all
of Debtor’s right, title and interest in and to
the foregoing (including all of Debtor’s rights as a seller of
goods);
(b) All Equipment and fixtures, wherever
located, whether now owned or hereafter acquired, including, without limitation, all machinery,
furniture and fixtures, and any and all additions, substitutions, replacements
(including spare parts), and accessions thereof and thereto (including, but not
limited to, Debtor’s rights to acquire any of the
foregoing, whether by exercise of a purchase
option or otherwise);
(iii) Property: All now owned and hereafter
acquired right, title and interests of Debtor in, to and in respect of any other
personal property in or upon which Debtor has or may hereafter have a security interest, lien or right of
setoff;
(iv) Books and
Records: All
present and future books and records relating to any of the above including,
without limitation, all computer programs, printed output and computer readable
data in the possession or
control of Debtor, any computer service bureau or other third party;
and
(v) Products and
Proceeds: All
products and Proceeds of the foregoing in whatever form and wherever located,
including, without limitation, all insurance proceeds and all claims against third parties for loss or
destruction of or damage to any of the foregoing.
(B) All now owned and hereafter acquired
right, title and interest of Debtor in, to and in respect of the
following:
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(i) the shares of stock of Guarantor
representing 100% of the
outstanding equity ownership of Guarantor together with documents necessary to
enable the transfer of such equity pursuant to Section 3.3 below, and the shares
of stock, partnership interests, member interests or other equity interests at
any time and from time to time acquired by
Debtor of any and all entities now or hereafter existing (Guarantor and such
entities, being hereinafter referred to collectively as the "Pledged
Issuers") including but not
limited to, 100% of the equity ownership of each Pledged Issuer, the certificates
representing such shares, partnership interests, member interests or other
interests, all options and other rights, contractual or otherwise, in respect
thereof and all dividends, distributions, cash, instruments, investment property and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares, partnership interests, member
interests or other interests (all of which will be delivered to Collateral Agent upon execution of this
Agreement);
(ii) all additional shares of stock,
partnership interests, member interests or other equity interests from time to
time acquired by Debtor, of any Pledged Issuer, the certificates representing
such additional shares, all
options and other rights, contractual or otherwise, in respect thereof and all
dividends, distributions, cash, instruments, investment property and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of
such additional shares, interests or equity; and
(iii) all security entitlements of Debtor in,
and all Proceeds of any and all of the foregoing in each case, whether now owned
or hereafter acquired by Debtor and howsoever its interest therein may arise or
appear (whether by ownership, security interest, lien, claim or
otherwise).
(C) Collateral shall not include the items
described on Schedule B hereto.
3.3 The Collateral Agent is hereby
specifically authorized, after an “Event of Default” (hereinafter defined) and the
expiration of any applicable cure period, to transfer any Collateral into the
name of the Collateral Agent and to take any and all action reasonably deemed
advisable by the Collateral Agent to remove any transfer restrictions affecting
the Collateral.
4. Perfection of Security
Interest.
4.1 The
Collateral Agent is instructed to prepare and file, at Debtor’s cost and
expense, financing statements in such jurisdictions deemed advisable to the
Collateral Agent, including, but not limited to the State of New York,
Washington, D.C., and the British Virgin Islands The financing
statements are deemed to have been filed for the benefit of the Collateral
Agent.
4.2 All
certificates and instruments constituting Collateral from time to time required
to be pledged to the Collateral Agent pursuant to the terms hereof (the "Additional
Collateral") shall be delivered to the Collateral Agent promptly upon
receipt thereof by or on behalf of Debtor. All such certificates and
instruments shall be held by or on behalf of the Collateral Agent pursuant
hereto and shall be delivered in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment or
undated stock powers executed in blank, all in form and substance satisfactory
to the Collateral Agent. If any Collateral consists of uncertificated
securities, unless the immediately following sentence is applicable thereto,
Debtor shall cause the Collateral Agent (or its custodian, nominee or other
designee) to become the registered holder thereof, or cause each issuer of such
securities to agree that it will comply with the instructions originated by the
Collateral Agent with respect to such securities without further consent by
Debtor. If any Collateral consists of security entitlements, Debtor
shall transfer such security entitlements to the Collateral Agent (or its
custodian, nominee or other designee) or cause the applicable securities
intermediary to agree that it will comply with entitlement orders by the
Collateral Agent without further consent by Debtor.
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4.3 Within
five (5) Days after the receipt by Debtor of any Additional Collateral, a “Pledge Amendment”
duly executed by Debtor, in substantially the form of Annex I hereto, shall be
delivered to the Collateral Agent in respect of the Additional Collateral to be
pledged pursuant to this Agreement. Debtor hereby authorizes the Collateral
Agent to attach each Pledge Amendment to this Agreement and agrees that all
certificates or instruments listed on any Pledge Amendment delivered to the
Collateral Agent shall for all purposes hereunder constitute
Collateral.
4.4 If
Debtor shall receive, by virtue of Debtor being or having been an owner of any
Collateral, any: (i) stock certificate (including, without limitation, any
certificate representing a stock dividend or distribution in connection with any
increase or reduction of capital, reclassification, merger, consolidation, sale
of assets, combination of shares, stock split, spin-off or split-off),
promissory note or other instrument; (ii) option or right, whether as an
addition to, substitution for, or in exchange for, any Collateral, or otherwise;
(iii) dividends payable in cash or in securities or other property; or
(iv) dividends or other distributions in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital, capital
surplus or paid-in surplus, Debtor shall receive such stock certificate,
promissory note, instrument, option, right, payment or distribution in trust for
the benefit of the Collateral Agent, shall segregate it from Debtor's other
property and shall deliver it forthwith to the Collateral Agent, in the exact
form received, with any necessary endorsement and/or appropriate stock powers
duly executed in blank, to be held by the Collateral Agent as Collateral and as
further collateral security for the Obligations. Notwithstanding
anything to the contrary set forth herein except during the occurrence and
continuance of (a) an Event of Default or (b) an event which with the passage of
time or the giving of notice could become an Event of Default, Debtor shall be
entitled to collect and receive for its own use cash dividends paid on the
Collateral.
5. Distribution.
5.1 So long as an Event of Default does not
exist, Debtor shall be entitled to exercise all voting power pertaining to any
of the Collateral, provided such exercise is not contrary to the interests of
the Lenders and does not impair the Collateral.
5.2. At any time an Event of Default exists
or has occurred and has not been cured, all rights of Debtor, upon notice given
by the Collateral Agent, to exercise the voting power and receive payments,
which it would otherwise be entitled to pursuant to Section 5.1, shall cease and all such
rights shall thereupon become vested in the Collateral Agent, which shall
thereupon have the sole right to exercise such voting power and receive such
payments.
5.3 All dividends, distributions, interest
and other payments which
are received by Debtor contrary to the provisions of Section 5.2 shall be
received in trust for the benefit of the Collateral Agent as security and
Collateral for payment of the Obligations and shall be segregated from the other
funds of Debtor, and shall be forthwith paid over to
the Collateral Agent as Collateral in the exact form received with any necessary
endorsement and/or appropriate stock powers duly executed in blank, to be held
by the Collateral Agent as Collateral and as further collateral security for the
Obligations.
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6. Further
Action By Debtor; Covenants and Warranties.
6.1 Collateral Agent at all times shall have
a perfected security interest in the Collateral. Debtor represents
that it has and will continue to have full exclusive title to the Collateral free from
any liens, leases, encumbrances, judgments or other claims, except those in
favor of Collateral Agent. The Collateral Agent's security interest
in the Collateral constitutes and will continue to constitute a first,
prior security interest in favor of
Collateral Agent. Debtor will do all reasonable acts and things, and
will execute and file all instruments (including, but not limited to, security
agreements, financing statements, continuation statements, etc.)
reasonably requested by Collateral Agent to
establish, maintain and continue the perfected security interest of Collateral
Agent in the perfected Collateral, and will promptly on demand, pay all costs
and expenses of filing and recording, including the costs of any searches reasonably deemed necessary
by Collateral Agent from time to time to establish and determine the validity
and the continuing priority of the security interest of Collateral Agent, and
also pay all other claims and charges that, in the opinion of Collateral Agent, exercised in good
faith, are reasonably likely to materially prejudice, imperil or otherwise
affect the Collateral or Collateral Agent’s security interests
therein.
6.2 Except in connection with sales of
Collateral (a) in the ordinary course of business, (b) for fair value
and in cash on ten business days prior notice to Collateral Agent, or (c) which
Collateral is substituted by assets of identical or greater value (subject to
the consent of the Collateral Agent) or which is inconsequential in value, Debtor will not sell,
transfer, assign or pledge those items of the Collateral (or allow any such
items to be sold, transferred, assigned or pledged), without the prior written
consent of the Collateral Agent other than a transfer of the Collateral to a wholly-owned United States
or British Virgin Islands formed and located subsidiary on prior notice to the
Collateral Agent, and provided the Collateral remains subject to the security
interest herein described. Although Proceeds of Collateral are covered by this Agreement, this
shall not be construed to mean that the Collateral Agent consents to any sale of
the Collateral, except as provided herein. Sales of Collateral in the
ordinary course of business shall be free of the security interest of the Collateral Agent and the
Collateral Agent shall execute such documents (including, without limitation,
releases and termination statements) as may be required by Debtor to evidence or
effectuate the same.
6.3 Debtor will, at all reasonable times
during regular business
hours and upon reasonable notice, allow the Collateral Agent or its
representatives free and complete access to the Collateral and all of Debtor's
records which in any way relate to the Collateral, for such inspection and
examination as the Collateral Agent reasonably deems
necessary.
6.4 Debtor, at its sole cost and expense,
will protect and defend this Security Agreement, all of the rights of the
Collateral Agent and the Lenders hereunder, and the Collateral against the
claims and demands of all
other persons.
6.5 Debtor will promptly notify the
Collateral Agent of any levy, distraint or other seizure by legal process or
otherwise of any material part of the Collateral, and of any threatened or filed
claims or proceedings that are reasonably likely to materially and
adversely affect or impair any of the rights of the Collateral Agent under this
Security Agreement in any material respect.
6.6 Debtor, at its own expense, will obtain
and maintain in force insurance policies covering losses or damage to those items of
Collateral which constitute physical personal property, which insurance shall be
of the types customarily insured against by companies in the same or similar
business, similarly situated, in such amounts (with such deductible amounts) as is customary for such
companies under the same or similar circumstances, similarly
situated. Debtor shall make the Collateral Agent a loss payee thereon
to the extent of its interest in the Collateral. The Collateral Agent is hereby
irrevocably (until the Obligations are paid in
full) appointed Debtor’s attorney-in-fact to endorse any check
or draft that may be payable to such Debtor so that the Collateral Agent may
collect the proceeds payable for any loss under such insurance. The
proceeds of such insurance, less any costs and
expenses incurred or paid by the Collateral Agent in the collection thereof,
shall be applied either toward the cost of the repair or replacement of the
items damaged or destroyed, or on account of any sums secured hereby, whether or not then due or
payable.
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6.7 The Collateral Agent may, at its option,
and without any obligation to do so, pay, perform and discharge any and all
amounts, costs, expenses and liabilities herein agreed to be paid or performed
by Debtor upon Debtor's failure to do so. All amounts
expended by the Collateral Agent in so doing shall become part of the
Obligations secured hereby, and shall be immediately due and payable by Debtor
to the Collateral Agent upon demand.
6.8 Upon the request of the Collateral Agent, Debtor will furnish
to the Collateral Agent within five (5) Business Days thereafter, or to any
proposed assignee of this Security Agreement, a written statement in form
reasonably satisfactory to the Collateral Agent, duly acknowledged, certifying the amount of the
principal and interest and any other sum then owing under the Obligations,
whether to its knowledge any claims, offsets or defenses exist against the
Obligations or against this Security Agreement, or any of the terms and
provisions of any other agreement of
Debtor securing the Obligations. In connection with any assignment by
the Collateral Agent of this Security Agreement, Debtor hereby agrees to cause
the insurance policies required hereby to be carried by Debtor, if
any, to be endorsed in form satisfactory to
the Collateral Agent or to such assignee, with loss payable clauses in favor of
such assignee, and to cause such endorsements to be delivered to the Collateral
Agent within ten (10) Business Days after request therefor by the Collateral
Agent.
6.9 Debtor will, at its own expense, make,
execute, endorse, acknowledge, file and/or deliver to the Collateral Agent from
time to time such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports and other reasonable assurances or instruments
and take further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, as the Collateral Agent may reasonably require to
perfect its security interest hereunder.
6.10 Debtor shall cause each Subsidiary of
such Debtor in existence on the date hereof and each Subsidiary not in existence
on the date hereof to execute and deliver to the Collateral Agent promptly and in any
event within ten (10) days after the formation, acquisition or change in status
thereof: (A) a guaranty guaranteeing the Obligations in substantially the same
form as the “Guaranty” provided by Guarantor at or about
the date hereof; and (B) if requested by the
Collateral Agent, a security and pledge agreement substantially in the form of
this Agreement together with: (x) certificates evidencing all of the capital
stock of each Subsidiary of and any entity owned by such Subsidiary; (y) undated stock powers
executed in blank with signatures guaranteed; and (z) such opinion of counsel
and such approving certificate of such Subsidiary as the Collateral Agent may
reasonably request in respect of complying with any legend on any such certificate or any other matter
relating to such shares; and (C) such other agreements, instruments, approvals,
legal opinions or other documents reasonably requested by the Collateral Agent
in order to create, perfect, establish the first priority of or otherwise protect any lien
purported to be covered by any such pledge and security agreement or otherwise
to effect the intent that all property and assets of such Subsidiary shall
become Collateral for the Obligations. For purposes of this
Agreement, “Subsidiary” means, with respect to any entity at
any date, any other corporation, limited or general partnership, limited
liability company, trust, estate, association, joint venture or other business
entity of which more than 30% of: (a) its outstanding capital stock having (in the absence
of contingencies) ordinary voting power to elect a majority of the board of
directors or other managing body of such entity; (b) in the case of a
partnership or limited liability company, its interest in the capital
or profits of such partnership or limited
liability company; or (c) in the case of a trust, estate, association,
joint venture or other entity, its beneficial interest in such trust, estate,
association or other entity business is owned directly by such entity. As of the date of this
Agreement, the Guarantor is the only Subsidiary of
Debtor.
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7. Name
Change/Address Change. Debtor agrees to
notify Collateral Agent not later than fifteen (15) Business Days after the
effectuation of a name change of Debtor or any Subsidiary or the change of
location of any Collateral.
8. Power of
Attorney.
At any time an Event of Default has
occurred and is continuing, Debtor hereby irrevocably constitutes and appoints
the Collateral Agent as the true and lawful attorney of Debtor, with full power of
substitution, in the place and stead of such Debtor and in the name of such
Debtor or otherwise, at any time or times, in the discretion of the Collateral
Agent, to take any action and to execute any instrument or document
which the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this
Agreement. This power of attorney is coupled with an interest and is
irrevocable until the Obligations are satisfied.
9. Performance
By The Collateral Agent.
If Debtor fails to perform any material
covenant, agreement, duty or obligation under this Agreement, the Collateral
Agent may, after any applicable cure period, at any time or times in its
discretion, take action to effect performance of such
obligation. All reasonable expenses of the Collateral
Agent incurred in connection with the foregoing authorization shall be payable
by Debtor as provided in Section 13.1 hereof. No discretionary right,
remedy or power granted to the Collateral Agent under any part of this Agreement shall be deemed to impose
any obligation whatsoever on the Collateral Agent with respect thereto; such
rights, remedies and powers being solely for the protection of the Collateral
Agent.
10. Event of
Default.
An event of default ("Event of
Default") shall be deemed to have occurred
hereunder upon the occurrence of any material event of default as defined and
described in this Agreement, in the Notes, the Subscription Agreement, other
Transaction Documents, and any other agreement to which Debtor and Lenders are parties. Upon and
after any Event of Default, after the applicable cure period, if any, any or all
of the Obligations shall become immediately due and payable at the option of the
Collateral Agent, for the benefit of the Lenders, and the Collateral Agent may dispose of the
Collateral, as provided below. A default by Debtor of any of its material
obligations pursuant to this Agreement and any of the Transaction Documents
shall be an Event of Default hereunder and an “Event of Default” as defined in the Notes and the
Subscription Agreement.
11. Disposition
of Collateral.
Upon and after any Event of Default
which is then continuing and after the applicable cure period, if
any:
11.1 The Collateral Agent may exercise its
rights with respect to each
and every component of the Collateral, without regard to the existence of any
other security or source of payment for the Obligations. In addition
to other rights and remedies provided for herein or otherwise available to it,
the Collateral Agent shall have all of the rights and
remedies of a lender on default under the Uniform Commercial Code now and then
in effect in the State of New York.
11.2 If any notice to Debtor of the sale or
other disposition of the Collateral is required by then applicable law, at least ten (10) Business
Days prior written notice (which Debtor agrees is reasonable notice within the
meaning of Section 9.612(a) of the Uniform Commercial Code) shall be given to
Debtor of the time and place of any sale of the Collateral which Debtor hereby agrees may be by
private sale to unaffiliated third parties. The rights granted in
this Section are in addition to any and all rights available to the Collateral
Agent under the Uniform Commercial Code.
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11.3 The Collateral Agent is authorized, at any such sale, if the
Collateral Agent deems it advisable to do so, in order to comply with any
applicable securities laws, to restrict the prospective bidders or purchasers to
persons who will represent and agree, among other things, that they are purchasing the Collateral for their
own account for investment, and not with a view to the distribution or resale
thereof, or otherwise to restrict such sale in such other manner as the
Collateral Agent deems advisable to ensure such
compliance. Sales of securities made subject to such
restrictions shall be deemed to have been made in a commercially reasonable
manner.
11.4 All proceeds received by the Collateral
Agent for the benefit of the Lenders in respect of any sale, collection or other
enforcement or disposition
of the Collateral, shall be applied (after deduction of any amounts payable to
the Collateral Agent pursuant to Section 13.1 hereof) against the Obligations
pro rata among the Lenders in proportion to their interests in the
Obligations. Upon payment in full of all
Obligations, Debtor shall be entitled to the prompt return of all of the
Collateral, including cash, which has not been used or applied toward the
payment of the Obligations or used or applied to any and all costs or
expenses of the Collateral Agent incurred in
connection with the liquidation of the Collateral (unless another person is
legally entitled thereto). Any assignment of the Collateral by the
Collateral Agent to Debtor shall be without representation or warranty of
any nature whatsoever and wholly without
recourse. To the extent allowed by law, each Lender may purchase the
Collateral and pay for such purchase by offsetting up to such Lender’s pro rata portion of the purchase price
with sums owed to such Lender by Debtor arising under the Obligations but not
in excess of the amount that would be otherwise distributed to such Lender
pursuant to this Section 11.4.
12.
Waiver
of Automatic Stay. Debtor acknowledges
and agrees that should a proceeding under any bankruptcy or insolvency law be commenced by or
against Debtor, or if any of the Collateral should become the subject of any
bankruptcy or insolvency proceeding, then the Collateral Agent should be
entitled to, among other relief to which the Collateral Agent or the Lenders may be entitled under the Note,
Subscription Agreement and any other agreement to which Debtor, the Lenders or
the Collateral Agent are parties, (collectively "Loan
Documents") and/or
applicable law, an order from the court granting immediate relief from the automatic stay pursuant to
11 U.S.C. Section 362 to permit the Collateral Agent to exercise all of its
rights and remedies pursuant to the Loan Documents and/or applicable
law. Debtor EXPRESSLY WAIVES THE BENEFIT OF THE AUTOMATIC STAY
IMPOSED BY 11 U.S.C. SECTION
362. FURTHERMORE, Debtor EXPRESSLY ACKNOWLEDGES AND AGREES THAT
NEITHER 11 U.S.C. SECTION 362 NOR ANY OTHER SECTION OF THE BANKRUPTCY CODE OR
OTHER STATUTE OR RULE (INCLUDING, WITHOUT LIMITATION, 11 U.S.C. SECTION 105)
SHALL STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT IN
ANY WAY THE ABILITY OF THE COLLATERAL AGENT TO ENFORCE ANY OF ITS RIGHTS AND
REMEDIES UNDER THE LOAN DOCUMENTS AND/OR APPLICABLE LAW. Debtor
hereby consents to any motion for relief from stay which may be filed by
the Collateral Agent in any bankruptcy or
insolvency proceeding initiated by or against Debtor, and further agrees not to
file any opposition to any motion for relief from stay filed by the Collateral
Agent. Debtor represents, acknowledges and agrees that this provision is a specific and
material aspect of this Agreement, and that the Collateral Agent would not agree
to the terms of this Agreement if this waiver were not a part of this
Agreement. Debtor further represents, acknowledges and agrees that
this waiver is knowingly, intelligently and
voluntarily made, that neither the Collateral Agent nor any person acting on
behalf of the Collateral Agent has made any representations to induce this
waiver, that Debtor has been represented (or has had the opportunity to be represented) in the signing
of this Agreement and in the making of this waiver by independent legal counsel
selected by Debtor and that Debtor has had the opportunity to discuss this
waiver with its counsel.
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13.
Miscellaneous.
13.1 Expenses. Debtor shall pay to the
Collateral Agent, on demand, the amount of any and all reasonable expenses,
including, without limitation, reasonable attorneys' fees, reasonable legal
expenses and reasonable brokers' fees, which the Collateral Agent may incur
in connection with the: (a)
sale, collection or other enforcement or disposition of the Collateral; (b)
exercise or enforcement of any the rights, remedies or powers of the Collateral
Agent hereunder or with respect to any or all of the Obligations upon
any breach or threatened breach; or (c)
failure by Debtor to perform and observe any agreements of Debtor contained
herein which are performed by the Collateral Agent.
13.2 Waivers,
Amendment and Remedies. No course of dealing by the
Collateral Agent and no
failure by the Collateral Agent to exercise, or delay by the Collateral Agent in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, and no single or partial exercise thereof shall preclude any other or
further exercise thereof or the exercise of any other
right, remedy or power of the Collateral Agent. No amendment,
modification or waiver of any provision of this Agreement and no consent to any
departure by Debtor therefrom, shall, in any event, be effective unless
contained in a writing signed by the
Collateral Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. The
rights, remedies and powers of the Collateral Agent, not only hereunder,
but also under any instruments and
agreements evidencing or securing the Obligations and under applicable law are
cumulative, and may be exercised by the Collateral Agent from time to time in
such order as the Collateral Agent may elect.
13.3 Notices. All notices,
demands, requests, consents, approvals, and other communications required or
permitted hereunder shall be in writing and, unless otherwise specified herein,
shall be (a) personally served, (b) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (c) delivered by a
reputable overnight courier service with charges prepaid, or (d) transmitted by
hand delivery, telegram, or facsimile, addressed as set forth below or to such
other address as such party shall have specified most recently by written
notice. Any notice or other communication required or permitted to be
given hereunder shall be deemed effective upon hand delivery or delivery by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours, or the first business day following such
delivery (if delivered other than on a business day during normal business
hours), (ii) on the first business day following the date deposited with an
overnight courier service with charges prepaid, or (iii) on the fifth business
day following the date of mailing pursuant to subpart (b) above, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such communications
shall be:
|
To Debtor:
|
|
|
Xxxx 0000-0000, 0 Xxxxx
Xxxxxxx
|
|
|
1 Hongqiao,
Shanghai
|
|
|
200030,
PRC
|
|
|
Attn: Xxxxx Xxxx, President and
CFO
|
|
|
Fax: (000)
000-0000
|
|
|
With
a copy by fax only to:
|
Loeb
& Loeb LLP
|
|
000
Xxxx Xxxxxx
|
|
|
Xxx
Xxxx, XX 00000
|
|
|
Attn:
Xxxxxxxx X. Xxxxxxxx, Esq.
|
|
|
Fax:
(000) 000-0000
|
- 9 -
|
To
Lenders:
|
To
the addresses and telecopier numbers set
|
|
forth
on Schedule
A
|
|
|
To the Collateral
Agent:
|
Collateral
Agents, LLC
|
|
000
Xxxx 00xx
Xxxxxx, Xxxxx 0000
|
|
|
Xxx
Xxxx, XX 00000
|
|
|
Attn:
General Counsel
|
|
|
Fax:
(000) 000-0000
|
|
|
If to Debtor, Lender or Collateral
Agent,
|
|
|
with a copy by telecopier only
to:
|
|
|
Grushko & Xxxxxxx,
P.C.
|
|
|
000 Xxxxx Xxxxxx, Xxxxx
0000
|
|
|
Xxx Xxxx, Xxx Xxxx
00000
|
|
|
Fax: (000)
000-0000
|
|
13.4 Term;
Binding Effect. This Agreement shall: (a)
remain in full force and effect until payment and satisfaction in full of all of
the Obligations; (b) be binding upon Debtor, and its successors and permitted
assigns; and (c) inure to
the benefit of the Collateral Agent, for the benefit of the Lenders and their
respective successors and assigns.
13.5 Captions. The captions of Paragraphs,
Articles and Sections in this Agreement have been included for convenience
of reference only, and
shall not define or limit the provisions hereof and have no legal or other
significance whatsoever.
13.6 Governing
Law; Venue; Severability. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New
York without regard to conflicts
of laws principles that
would result in the application of the substantive laws of another
jurisdiction, except to the extent that the perfection of the security
interest granted hereby in respect of any item of Collateral may be governed by
the law of another jurisdiction. Any legal action or proceeding
against Debtor with respect to this Agreement may be brought in the courts in
the State of New York or of the United
States for the Southern District of New York, and, by
execution and delivery of this Agreement, Debtor hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. The parties executing this
Agreement and other agreements referred
to herein or delivered in connection herewith agree to submit to the exclusive
jurisdiction of such courts and hereby irrevocably waive trial by
jury. Debtor hereby irrevocably waives any objection which it may now
or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement brought in the aforesaid courts and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding
brought in any such court has been brought in an inconvenient
forum. If any provision of this Agreement, or the application thereof
to any person or circumstance, is held invalid, such invalidity shall not affect
any other provisions which can be given
effect without the invalid provision or application, and to this end the
provisions hereof shall be severable and the remaining, valid provisions shall
remain of full force and effect. Each party hereby irrevocably
waives personal service of process and consents to process being served in any
suit, action or proceeding in connection with this Agreement or any other
Transaction Document by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address
in effect for notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any other manner permitted by
law.
- 10 -
13.7 Entire
Agreement. This
Agreement contains the entire agreement of the parties and supersedes all other
agreements and understandings, oral or written, with respect to the matters
contained herein.
13.8 Counterparts/Execution. This Agreement may be
executed in any number of identical counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one and the same
instrument. This Agreement may be executed by facsimile signature and
delivered by facsimile or other electronic transmission.
14. Intercreditor
Terms. As
between the Lenders, any distribution under Section 11.4 shall be made proportionately based upon
the remaining principal amount (plus accrued and unpaid interest) to each as to
the total amount then owed to the Lenders as a whole. The rights of
each Lender hereunder are pari
passu to the rights of the
other Lenders
hereunder. Any recovery hereunder shall be shared ratably among the
Lenders according to the then remaining principal amount owed to each (plus
accrued and unpaid interest) as to the total amount then owed to the Lenders as
a whole.
15. Termination;
Release. When
the Obligations have been indefeasibly paid and performed in full or all
outstanding Convertible Notes have been converted into shares of Common Stock
pursuant to the terms of the Convertible Notes and the Subscription
Agreements, this Agreement shall terminate and the
Collateral Agent, at the request and sole expense of Debtor, will execute and
deliver to Debtor the proper instruments (including UCC termination statements)
acknowledging the termination of the Security Agreement and duly assign, transfer and deliver to Debtor,
without recourse, representation or warranty of any kind whatsoever, such of the
Collateral, including, without limitation, Securities and any Additional
Collateral, as may be in the possession of the Collateral Agent.
16. Collateral
Agent.
16.1 Collateral
Agent Powers. The powers conferred on the
Collateral Agent hereunder are solely to protect its interest (on behalf of the
Lenders) in the Collateral and shall not impose any duty on it to exercise any
such powers.
16.2 Reasonable
Care. The
Collateral Agent is required to exercise reasonable care in the custody and
preservation of any Collateral in its possession; provided,
however, that the
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of
any of the Collateral if it takes such action for that purposes as any owner
thereof reasonably requests in writing at times other than upon the occurrence
and during the continuance of any Event of Default and after the
applicable cure period, if any, but failure of
the Collateral Agent to comply with any such request at any time shall not in
itself be deemed a failure to exercise reasonable care.
[THIS SPACE INTENTIONALLY LEFT
BLANK]
- 11 -
IN WITNESS WHEREOF,
the undersigned
have executed and delivered
this Security Agreement, as of the date first written above.
“DEBTOR”
a British Virgin Islands
company
|
By:
|
|
|
Its:
|
|
|
“COLLATERAL
AGENT”
|
|
|
COLLATERAL AGENTS,
LLC
|
|
|
By:
|
|
|
Its:
|
|
- 12 -
SCHEDULE A
TO SECURITY AGREEMENT
|
LENDERS
|
NOTE
PRINCIPAL AMOUNT
|
|||
|
PLATINUM
PARTNERS VALUE ARBITRAGE FUND, L.P.
c/o
CIBC Bank and Trust Company (Cayman) Limited
11
Xx. Xxx’x Drive, Xxxxxx Town
Grand
Cayman, Cayman Islands
Fax
No.: (000) 000-0000
Email:
xxxxxxxxxx@xxxxxxxxxx.xxx
Taxpayer
ID# (if applicable): 00-0000000
|
$ | 24,509,807.49 | ||
|
MLR
CAPITAL OFFSHORE MASTER FUND, LTD.
c/o
MLR Capital Management, LLC
000
Xxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx, XX 00000
Fax
No.: (000) 000-0000
Email:
xxxx@xxxxxxxxxx.xxx
Taxpayer
ID# (if applicable): 00-0000000
|
$ | 1,731,796.09 | ||
|
KATA,
LTD.
c/o
MLR Capital Management, LLC
000
Xxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx, XX 00000
Fax
No.: (000) 000-0000
Email: xxxx@xxxxxxxxxx.xxx
Taxpayer
ID# (if applicable): 00-0000000
|
$ | 1,007,416.67 | ||
|
ATLAS
MASTER FUND, LTD.
c/o
Balyasny Asset Management LP
000
Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Fax
No.: (000) 000-0000
Email: xxxxxxxxx@xxxxxxxx.xxx
Taxpayer
ID# (if applicable): 00-0000000
|
$ | 1,196,667.08 | ||
|
JAYHAWK
PRIVATE EQUITY FUND II, L.P.
c/o
Jayhawk Capital Management, L.L.C.
0000
Xxxx 000xx Xxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
Fax
No.: (000) 000-0000
Taxpayer
ID# (if applicable): 00-0000000
|
$ | 1,942,875.00 | ||
|
XXXXXX
XXXXX
c/o
Velvet Asset Management
000
Xxxxx Xxxxxx, 0xx Xxxxx
Xxx
Xxxx, XX 00000
Fax
No.: (000) 000-0000
Taxpayer
ID# (if applicable): ###-##-####
|
$ | 601,958.36 | ||
|
THE
XXXXXX AND XXXX XXXXXXXX TRUST
000
Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxxxxx, XX 00000
Taxpayer
ID# (if applicable): ###-##-####
|
$ | 1,210,833.48 | ||
|
CENTURION
CREDIT GROUP, LLC
c/o
Centurion Credit Management, LP
000
Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Fax
No.: (000) 000-0000
Taxpayer
ID# (if applicable): 00-0000000
|
$ | 6,656,145.83 | ||
|
XXXXX
XXXXXXX
Xxx
Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Fax
No.: (000) 000-0000
Taxpayer
ID# (if applicable): ###-##-####
|
$ | 287,833.33 | ||
|
EL
EQUITIES, LLC
Xxx
Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Fax
No.: (000) 000-0000
Taxpayer
ID# (if applicable): 00-0000000
|
$ | 503,708.33 | ||
|
XXXXX
XXXXX #0, LP
Xxx
Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Fax
No.: (000) 000-0000
Taxpayer
ID# (if applicable): 00-0000000
|
$ | 3,525,958.33 | ||
|
TOTALS
|
$ | 43,175,000.00 |
- 13 -
SCHEDULE
B TO SECURITY AGREEMENT
All
Collateral located within the People’s Republic of China.
- 14 -
ANNEX I
TO
SECURITY AGREEMENT
PLEDGE
AMENDMENT
This Pledge Amendment, dated _________
__ 200_, is delivered pursuant to Section 4.3 of the Security Agreement referred
to below. The undersigned hereby agrees that this
Pledge Amendment may be attached to the Security Agreement, dated __________,
2008, as it may heretofore have been or hereafter may be amended, restated,
supplemented or otherwise modified from time to time and that the shares listed on this Pledge Amendment
shall be hereby pledged and assigned to Collateral Agent and become part of the
Collateral referred to in such Security Agreement and shall secure all of the
Obligations referred to in such Security Agreement.
|
Name of Issuer
|
Number
of Shares
|
Class
|
Certificate
Number(s)
|
|||
- 15 -
