AMENDED AND RESTATED PLEDGE AGREEMENT
Exhibit
10.5
AMENDED
AND RESTATED PLEDGE AGREEMENT
THIS
AMENDED AND RESTATED PLEDGE AGREEMENT (this “Agreement”),
is
entered into as of February 7, 2008 by and between Wits Basin Precious
Minerals Inc., a Minnesota corporation (“Pledgor”),
and
China
Gold, LLC, a Kansas limited liability company, together with its successors
and
assigns and all other holders of securities and equity interests pursuant to
the
Convertible Notes Purchase Agreement (hereinafter defined) (together with its
respective successors and assigns, “Purchaser”).
RECITALS
The
following recitals are a material part of this Agreement.
A. Pledgor
and Purchaser are parties to that certain Convertible Notes Purchase Agreement
dated as of April 10, 2007 as amended from time to time (as the same may
hereafter be further modified, amended, restated or supplemented from time
to
time, the “Securities
Purchase Agreement”),
pursuant to which, among other things, Pledgor has agreed to issue and sell,
and
Purchaser has agreed to purchase from Pledgor, one
or
more Secured Convertible Notes in the aggregate principal amount of up to
$12,000,000 (“Notes”).
Capitalized terms used in this Agreement without definition have the definitions
given to them in the Securities Purchase Agreement.
B. Pursuant
to the Securities Purchase Agreement, Pledgor and Purchaser entered into that
certain Pledge Agreement dated as of April 10, 2007 (“Original Pledge
Agreement”) whereby Pledgor pledged certain shares of common stock of Wits-China
Acquisition Company, Inc., a Minnesota corporation and wholly-owned subsidiary
of Pledgor (“Wits-China”), then and thereafter owned by Pledgor, in order to
provide security for the obligations of Pledgor to Purchaser pursuant to the
terms of the Securities Purchase Agreement.
C. Section
3.11 of the Securities Purchase Agreement provides that Purchaser shall receive
Security Documents, in form and substance satisfactory to Purchaser, granting
Purchaser a security interest in all of the assets acquired from the use of
proceeds for its purchase of the Notes.
D. Pledgor
has advised Purchaser that it has acquired or established China Global Mining
Resources Limited, a Hong Kong corporation, and China Global Mining Resources
Limited, a British Virgin Islands corporation, which holds assets acquired
with
Note proceeds received from Purchaser and that it beneficially owns certain
Equity Interests (as hereinafter defined) in both of theses
entities.
E. To
comply
with the terms of the Securities Purchase Agreement, Pledgor desires amend
the
Original Pledge Agreement to pledge, grant, transfer, and assign to Purchaser
a
security interest in the Collateral (as hereinafter defined) to secure the
Secured Obligations (as hereinafter defined), as provided in this
Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of these recitals and for good and valuable
consideration, the receipt of sufficiency of which is hereby acknowledged and
intending to be legally bound hereby, Pledgor and Purchaser amend and restate
the Original Stock Pledge Agreement and agree as follows:
1. Pledge.
As
security for the prompt payment and performance of the Secured Obligations
(defined below) in full when due, whether at stated maturity, by acceleration
or
otherwise (including amounts that would become due but for the operation of
the
provisions of the United States Bankruptcy Code (11 U.S.C. Section 101,
et seq.),
as in
effect from time to time, and any successor statute thereto (“Bankruptcy
Code”)),
Pledgor by this Agreement pledges, grants, transfers, and assigns to Purchaser
a
security interest in all of Pledgor’s right, title, and interest in and to the
Collateral (defined below).
For
the
purposes of this Agreement, (a) “Collateral”
means
Pledgor’s interest in the Pledged Interests, the Future Rights, and the
Proceeds, collectively; (b) “Pledged
Interests”
means
(i) all Equity Interests of Pledgor, and (ii) the certificates or instruments
representing such Equity Interests, if any; (c) “Equity
Interests”
means
all securities, shares, units, options, warrants, interests, participations,
or
other equivalents (regardless of how designated) of Wits-China Acquisition
Corp.
a Minnesota corporation, China Global Mineral Resources, Inc., a British Virgin
Islands corporation, and China Global Mineral Resources, a Hong Kong corporation
(collectively the “Subsidiaries”);
(d)
“Future
Rights”
means:
(x) all Equity Interests (other than Pledged Interests) of Pledgor, and all
securities convertible or exchangeable into, and all warrants, options, or
other
rights to purchase, Equity Interests of Pledgor; and (y) the certificates or
instruments representing such Equity Interests, convertible or exchangeable
securities, warrants, and other rights and all dividends, cash, options,
warrants, rights, instruments, and other property or proceeds from time to
time
received, receivable, or otherwise distributed in respect of or in exchange
for
any or all of such Equity Interests; and (e) “Proceeds”
means
all proceeds (including proceeds of proceeds) of the Pledged Interests and
Future Rights including all: (I) rights, benefits, distributions, premiums,
profits, dividends, interest, cash, instruments, documents of title, accounts,
contract rights, inventory, equipment, general intangibles, payment intangibles,
deposit accounts, chattel paper, and other property from time to time received,
receivable, or otherwise distributed in respect of or in exchange for, or as
a
replacement of or a substitution for, any of the Pledged Interests, Future
Rights, or proceeds thereof (including any cash, Equity Interests, or other
securities or instruments issued after any recapitalization, readjustment,
reclassification, merger or consolidation with respect to Pledgor and any
security entitlements, as defined in Section 8-102(a)(17) of the Uniform
Commercial Code, with respect thereto); (II) “proceeds,” as such term is defined
in Section 9-102(a)(64) of the Uniform Commercial Code; (III) proceeds of any
insurance, indemnity, warranty, or guaranty (including guaranties of delivery)
payable from time to time with respect to any of the Pledged Interests, Future
Rights, or proceeds thereof; (VI) payments (in any form whatsoever) made or
due
and payable to Pledgor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Pledged Interests, Future Rights, or proceeds thereof; and (V) other amounts
from time to time paid or payable under or in connection with any of the Pledged
Interests, Future Rights, or proceeds thereof.
2
2. Secured
Obligations.
The
obligations secured by this Agreement (the “Secured
Obligations”)
are
all liabilities, obligations, or undertakings owing by Pledgor or Subsidiary
to
Purchaser of any kind or description arising out of or outstanding under,
advanced or issued pursuant to, or evidenced by this Agreement, or the other
Investment Documents, irrespective of whether for the payment of money, whether
direct or indirect, absolute or contingent, due or to become due, voluntary
or
involuntary, whether now existing or hereafter arising, and including all
interest (including interest that accrues after the filing of a case under
the
Bankruptcy Code) and any and all costs, fees (including attorneys fees), and
expenses which Pledgor is required to pay pursuant to any of the foregoing,
by
law, or otherwise.
3. Delivery
and Registration of Collateral.
(a) All
certificates or instruments representing or evidencing the Collateral shall
be
promptly delivered by Pledgor to Purchaser or Purchaser’s designees pursuant to
this Agreement at a location designated by Purchaser and shall be held by or
on
behalf of Purchaser pursuant to this Agreement, and shall be in suitable form
for transfer by delivery, or shall be accompanied by a duly executed instrument
of transfer or assignment in blank, in form and substance satisfactory to
Purchaser.
(b) Upon
the
occurrence and during the continuance of an Event of Default, Purchaser shall
have the right, at any time in their discretion and without notice to Pledgor,
to transfer to or to register on the books of Subsidiary (or of any other Person
maintaining records with respect to the Collateral) in the name of Purchaser
or
any of its nominees any or all of the Collateral. In addition, Purchaser shall
have the right at any time to exchange certificates or instruments representing
or evidencing Collateral for certificates or instruments of smaller or larger
denominations.
(c) If,
at
any time and from time to time, any Collateral (including any certificate or
instrument representing or evidencing any Collateral) is in the possession
of a
Person other than Purchaser or Pledgor (a “Holder”),
then
Pledgor shall immediately, at Purchaser’s option, either cause such Collateral
to be delivered into Purchaser’s possession, or cause such Holder to enter into
a control agreement, in form and substance satisfactory to Purchaser, and take
all other steps deemed necessary by Purchaser to perfect the security interest
of Purchaser in such Collateral, all pursuant to Sections 9-106 and 9-313 of
the
Uniform Commercial Code or other applicable law governing the perfection of
Purchaser’s security interest in the Collateral in the possession of such
Holder.
(d) Any
and
all Collateral (including dividends, interest, and other cash distributions)
at
any time received or held by Pledgor shall be so received or held in trust
for
Purchaser, shall be segregated from other funds and property of Pledgor and
shall be forthwith delivered to Purchaser in the same form as so received or
held, with any necessary endorsements; provided that cash dividends or
distributions received by Pledgor may be retained by Pledgor in accordance
with
Section
4.
(e) If
at any
time, and from time to time, any Collateral consists of an uncertificated
security or a security in book entry form, then Pledgor shall immediately cause
such Collateral to be registered or entered, as the case may be, in the name
of
Purchaser, or otherwise cause Purchaser’s security interest thereon to be
perfected in accordance with applicable law.
3
4. Voting
Rights and Dividends.
(a) So
long
as no Event of Default shall have occurred and be continuing, Pledgor shall
be
entitled to exercise any and all voting and other consensual rights pertaining
to the Collateral or any part thereof for any purpose not inconsistent with
the
terms of the Investment Documents and shall be entitled to receive and retain
any cash dividends or distributions paid or distributed in respect of the
Collateral.
(b) Upon
the
occurrence and during the continuance of an Event of Default, all rights of
Pledgor to exercise the voting and other consensual rights or receive and retain
cash dividends or distributions that it would otherwise be entitled to exercise
or receive and retain, as applicable pursuant to Section
4(a),
shall
cease, and all such rights shall thereupon become vested in Purchaser, who
shall
thereupon have the sole right to exercise such voting or other consensual rights
and to receive and retain such cash dividends and distributions. Pledgor shall
execute and deliver (or cause to be executed and delivered) to Purchaser all
such proxies and other instruments as Purchaser may reasonably request for
the
purpose of enabling Purchaser to exercise the voting and other rights which
they
are entitled to exercise and to receive the dividends and distributions that
they are entitled to receive and retain pursuant to the preceding sentence.
5. Representations
and Warranties.
Pledgor
represents, warrants, and covenants as follows:
(a) Pledgor
has the authority to pledge the Pledged Interests to Purchaser under the terms
of this Agreement.
(b) Pledgor
has taken all steps it deems necessary or appropriate to be informed on a
continuing basis of changes or potential changes affecting the Collateral
(including rights of conversion and exchange, rights to subscribe, payment
of
dividends, reorganizations or recapitalization, tender offers and voting and
registration rights), and Pledgor agrees that Purchaser shall have no
responsibility or liability for informing Pledgor of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto.
(c) All
information in this Agreement or hereafter supplied to Purchaser by or on behalf
of Pledgor in writing with respect to the Collateral is, or in the case of
information hereafter supplied will be, accurate and complete in all material
respects.
(d) Pledgor
is and will be the sole legal and beneficial owner of the Collateral (including
the Pledged Interests and all other Collateral acquired by Pledgor after the
date hereof) free and clear of any adverse claim, Lien, or other right, title,
or interest of any party, other than the Liens in favor of
Purchaser.
(e) This
Agreement, and the filing of a UCC financing statement with the Minnesota
Secretary of State describing the Collateral, creates a valid, perfected
security interest in the Pledged Interests in favor of Purchaser securing
payment of the Secured Obligations, and all actions necessary to achieve such
perfection have been duly taken.
4
(f) Schedule
1
to this
Agreement is true and correct and complete in all material respects. Without
limiting the generality of the foregoing: (i) except as set forth on
Schedule
1,
all the
Pledged Interests are in uncertificated form, and, except to the extent
registered in the name of Purchaser or its nominees pursuant to the provisions
of this Agreement, are registered in the name of Pledgor; and (ii) as of the
date of this Agreement, the Pledged Interests as to Subsidiary constitute at
least the percentage of all the fully diluted issued and outstanding Equity
Interests of Subsidiary as set forth in Schedule
1
to this
Agreement.
(g) There
are
no presently existing Future Rights or Proceeds owned by Pledgor.
(h) The
Pledged Interests have been duly authorized and validly issued and are fully
paid and non-assessable.
(i) Neither
the pledge of the Collateral pursuant to this Agreement nor the extensions
of
credit represented by the Secured Obligations violates Regulation T, U or X
of
the Board of Governors of the Federal Reserve System.
6. Further
Assurances.
(a) Pledgor
agrees that from time to time, at the expense of Pledgor, Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action that may be necessary or reasonably desirable, or that Purchaser may
request, in order to perfect and protect any security interest granted or
purported to be granted by this Agreement or to enable Purchaser to exercise
and
enforce their rights and remedies under this Agreement with respect to any
Collateral. Without limiting the generality of the foregoing, Pledgor will:
(i)
at the request of Purchaser, xxxx conspicuously each of its records pertaining
to the Collateral with a legend, in form and substance reasonably satisfactory
to Purchaser, indicating that such Collateral is subject to the security
interest granted by this Agreement; (ii) execute such instruments or notices
as
may be necessary or reasonably desirable, or as Purchaser may request, in order
to perfect and preserve the Liens granted or purported to be granted by this
Agreement; (iii) allow inspection of the Collateral by Purchaser or Persons
designated by Purchaser; and (iv) appear in and defend any action or proceeding
that may affect Pledgor’s title to or Purchaser’s security interest in the
Collateral.
(b) Pledgor
by this Agreement authorizes Purchaser to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part
of
the Collateral. A carbon, photographic, or other reproduction of this Agreement
or any financing statement covering the Collateral or any part thereof shall
be
sufficient as a financing statement where permitted by law.
5
(c) Pledgor
will furnish to Purchaser, upon the request of Purchaser: (i) a certificate
executed by Pledgor, and dated as of the date of delivery to Purchaser,
itemizing in such detail as Purchaser may request, the Collateral which, as
of
the date of such certificate, has been delivered to Purchaser by Pledgor
pursuant to the provisions of this Agreement; and (ii) such statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Purchaser may request.
7. Covenants
of Pledgor.
Pledgor
shall:
(a) To
the
extent it may lawfully do so, use its best efforts to prevent Subsidiary from
issuing Future Rights or Proceeds; and
(b) Upon
receipt by Pledgor of any material notice, report, or other communication from
Subsidiary or any Holder relating to all or any part of the Collateral, deliver
such notice, report or other communication to Purchaser as soon as possible,
but
in no event later than five (5) days following the receipt thereof by
Pledgor.
8. Purchaser
as Pledgor’s Attorneys-in-Fact.
(a) Pledgor
by this Agreement irrevocably appoints Purchaser as Pledgor’s attorneys-in-fact,
with full authority in the place and stead of Pledgor and in the name of
Pledgor, Purchaser or otherwise, to enter into any control agreements Purchaser
deems necessary pursuant to Section
3
of this
Agreement, and from time to time at Purchaser’s discretion, upon the occurrence
and during the continuance of an Event of Default, to take any action and to
execute any instrument that Purchaser may reasonably deem necessary or advisable
to accomplish the purposes of this Agreement, including: (i),to receive,
indorse, and collect all instruments made payable to Pledgor representing any
dividend, interest payment or other distribution in respect of the Collateral
or
any part thereof to the extent permitted under this Agreement and to give full
discharge for the same and to execute and file governmental notifications and
reporting forms; or (ii) to arrange for the transfer of the Collateral on the
books of Subsidiary or any other Person to the name of Purchaser or to the
names
of Purchaser’s nominees.
(b) In
addition to the designation of Purchaser as Pledgor’s attorneys-in-fact in
subsection (a), Pledgor by this Agreement irrevocably appoints Purchaser as
Pledgor’s agents and attorneys-in-fact to make, execute and deliver after the
occurrence and during the continuance of an Event of Default any and all
documents and writings which may be necessary or appropriate for approval of,
or
be required by, any regulatory authority located in any city, county, state
or
country where Pledgor or Subsidiary engage in business, in order to transfer
or
to more effectively transfer any of the Pledged Interests or otherwise enforce
Purchaser’s rights under this Agreement.
6
9. Remedies
upon Default.
Upon
the occurrence and during the continuance of an Event of Default:
(a) Purchaser
may exercise in respect of the Collateral, in addition to other rights and
remedies provided for in this Agreement or otherwise available to it, all the
rights and remedies of a secured party on default under the Uniform Commercial
Code (irrespective of whether the Uniform Commercial Code applies to the
affected items of Collateral), and Purchaser may also without notice (except
as
specified below) sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any exchange, broker’s board or at any of
Purchaser’s office or elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and upon such other terms as
Purchaser may deem commercially reasonable, irrespective of the impact of any
such sales on the market price of the Collateral. To the maximum extent
permitted by applicable law, Purchaser may be the purchaser of any or all of
the
Collateral at any such sale and shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion
of
the Collateral sold at any such public sale, to use and apply all or any part
of
the Secured Obligations as a credit on account of the purchase price of any
Collateral payable at such sale. Each purchaser at any such sale shall hold
the
property sold absolutely free from any claim or right on the part of Pledgor,
and Pledgor by this Agreement waives (to the extent permitted by law) all rights
of redemption, stay, or appraisal that it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Pledgor agrees that, to the extent notice of sale shall be required by law,
at
least ten (10) calendar days notice to Pledgor of the time and place of any
public sale or the time after which a private sale is to be made shall
constitute reasonable notification. Purchaser shall not be obligated to make
any
sale of Collateral regardless of notice of sale having been given. Purchaser
may
adjourn any public or private sale from time to time by announcement at the
time
and place fixed therefor, and such sale may, without further notice, be made
at
the time and place to which it was so adjourned. To the maximum extent permitted
by law, Pledgor by this Agreement waives any claims against Purchaser arising
because the price at which any Collateral may have been sold at such a private
sale was less than the price that might have been obtained at a public sale,
even if Purchaser accepts the first offer received and do not offer such
Collateral to more than one offeree.
(b) Pledgor
by this Agreement agrees that any sale or other disposition of the Collateral
conducted in conformity with reasonable commercial practices of banks, insurance
companies, or other financial institutions in the city and state where Purchaser
is located in disposing of property similar to the Collateral shall be deemed
to
be commercially reasonable.
(c) Pledgor
by this Agreement acknowledges that the sale by Purchaser of any Collateral
pursuant to the terms hereof in compliance with the Securities Act of 1933
as
now in effect or as hereafter amended, or any similar statute hereafter adopted
with similar purpose or effect (the “Securities
Act”),
as
well as applicable “Blue Sky” or other state securities laws, may require strict
limitations as to the manner in which Purchaser or any subsequent transferee
of
the Collateral may dispose thereof. Pledgor acknowledges and agrees that in
order to protect Purchaser’s interest it may be necessary to sell the Collateral
at a price less than the maximum price attainable if a sale were delayed or
were
made in another manner, such as a public offering under the Securities Act.
Pledgor has no objection to sale in such a manner and agrees that Purchaser
shall have no obligation to obtain the maximum possible price for the
Collateral. Without limiting the generality of the foregoing, Pledgor agrees
that upon the occurrence and during the continuation of an Event of Default,
Purchaser may, subject to applicable law, from time to time attempt to sell
all
or any part of the Collateral by a private placement, restricting the bidders
and prospective Purchaser to those who will represent and agree that they are
purchasing for investment only and not for distribution. In so doing, Purchaser
may solicit offers to buy the Collateral or any part thereof for cash from
a
limited number of investors reasonably believed by Purchaser to be institutional
investors or other accredited investors who might be interested in purchasing
the Collateral. If Purchaser shall solicit such offers, then the acceptance
by
Purchaser of one of the offers shall be deemed to be a commercially reasonable
method of disposition of the Collateral.
7
Pledgor
acknowledges that there is no adequate remedy at law for failure by it to comply
with the provisions of this Section and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section may be specifically enforced.
(d) PLEDGOR
EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW: (i) ANY CONSTITUTIONAL
OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO THE TIME PURCHASER DISPOSES OF
ALL
OR ANY PART OF THE COLLATERAL AS PROVIDED IN THIS SECTION; (ii) ALL RIGHTS
OF
REDEMPTION, STAY, OR APPRAISAL THAT IT NOW HAS OR MAY AT ANY TIME IN THE FUTURE
HAVE UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING OR HEREAFTER ENACTED; AND
(iii) EXCEPT AS SET FORTH IN SUBSECTION (a) OF THIS SECTION
9,
ANY
REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.
10. Application
of Proceeds.
Upon
the occurrence and during the continuance of an Event of Default, any cash
held
by Purchaser as Collateral and all cash Proceeds received by Purchaser in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral pursuant to the exercise by Purchaser of their remedies
as secured creditors as provided in Section 9 shall be applied from time to
time
by Purchaser as provided in Section 9-615 of the Uniform Commercial
Code.
11. Indemnity
and Expenses.
Pledgor
agrees:
(a) To
indemnify and hold harmless Purchaser and each of their directors, officers,
employees, agents and affiliates from and against any and all claims, damages,
demands, losses, obligations, judgments and liabilities (including, without
limitation, reasonable attorneys’ fees and expenses) in any way arising out of
or in connection with this Agreement or the Secured Obligations, except to
the
extent the same shall arise as a result of the gross negligence or willful
misconduct of the party seeking to be indemnified; and
(b) To
pay
and reimburse Purchaser upon demand for all reasonable costs and expenses
(including, without limitation, reasonable attorneys’ fees and expenses) that
Purchaser may incur in connection with (i) the custody, use or preservation
of,
or the sale of, collection from or other realization upon, any of the
Collateral, including the reasonable expenses of re-taking, holding, preparing
for sale or lease, selling or otherwise disposing of or realizing on the
Collateral, (ii) the exercise or enforcement of any rights or remedies granted
under this Agreement or under any of the other Investment Documents or otherwise
available to them (whether at law, in equity or otherwise), or (iii) the failure
by Pledgor to perform or observe any of the provisions hereof. The provisions
of
this Section shall survive the execution and delivery of this Agreement, the
repayment of any of the Secured Obligations, and the termination of this
Agreement or any other Investment Document.
12. Duties
of Purchaser.
The
powers conferred on Purchaser under this Agreement are solely to protect their
interests in the Collateral and shall not impose on them any duty to exercise
such powers. Except as provided in Section 9-207 of the Uniform Commercial
Code,
Purchaser shall have no duty with respect to the Collateral or any
responsibility for taking any necessary steps to preserve rights against any
Persons with respect to any Collateral.
8
13. Amendments;
etc.
No
amendment or waiver of any provision of this Agreement nor consent to any
departure by Pledgor from this Agreement shall in any event be effective unless
the same shall be in writing and signed by Purchaser and Pledgor, and then
such
waiver or consent shall be effective only in the specific instance and for
the
specific purpose for which given. No failure on the part of Purchaser to
exercise, and no delay in exercising any right under this Agreement, any other
Investment Document, or otherwise with respect to any of the Secured
Obligations, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement, any other Investment Document,
or
otherwise with respect to any of the Secured Obligations preclude any other
or
further exercise thereof or the exercise of any other right. The remedies
provided for in this Agreement or otherwise with respect to any of the Secured
Obligations are cumulative and not exclusive of any remedies provided by
law.
14. Notices.
Unless
otherwise specifically provided in this Agreement, all notices shall be in
writing addressed to the respective party as set forth below, and may be
personally served, faxed, or sent by overnight courier service or United States
mail:
If
to
Pledgor:
00
Xxxxx
Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx,
XX 00000-0000
Attn:
Xxxx Xxxxx, Chief Financial Officer
Facsimile:
(000) 000-0000
with
a
copy to:
Xxxxxx
Xxxxxxx Xxxxxx & Brand, LLP
3300
Xxxxx Fargo Center
00
Xxxxx
Xxxxxxx Xxxxxx
Xxxxxxxxxxx,
XX 00000-0000
Attn:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
If
to
Purchaser:
China
Gold, LLC
0000
Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx
Xxxx, XX 00000
Attn:
C.
Xxxxxx Xxxxxx
Facsimile:
000-000-0000
9
with
a
copy to:
Xxxxxxx
X. Xxxxxxx, Esq.
Polsinelli
Xxxxxxx Xxxxxxxx Suelthaus PC
0000
Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx
Xxxx, XX 00000
Facsimile:
000-000-0000
Any
notice given pursuant to this Section shall be deemed to have been given: (a)
if
delivered in person, when delivered; (b) if delivered by fax, on the date of
transmission if transmitted on a Business Day before 5:00 p.m. at the place
of
receipt or, if not, on the next succeeding Business Day; (c) if delivered by
overnight courier, two (2) days after delivery to such courier properly
addressed; or (d) if by United States mail, four (4) Business Days after
depositing in the United States mail, with postage prepaid and properly
addressed. Any party to this Agreement may change the address or fax number
at
which it is to receive notices under this Agreement by notice to the other
party
in writing in the foregoing manner.
15. Continuing
Security Interest.
This
Agreement shall create a continuing security interest in the Collateral and
shall: (a) remain in full force and effect until the indefeasible payment in
full of the Secured Obligations; (b) be binding upon Pledgor and its successors
and assigns; and (c) inure to the benefit of Purchaser and their successors,
transferees, and assigns. Upon the indefeasible payment in full of the Secured
Obligations, the security interests granted in this Agreement shall
automatically terminate and all rights to the Collateral shall revert to
Pledgor. Upon any such termination, Purchaser will, at Pledgor’s expense,
execute and deliver to Pledgor such documents as Pledgor shall reasonably
request to evidence such termination. Such documents shall be prepared by
Pledgor and shall be in form and substance reasonably satisfactory to
Purchaser.
16. Security
Interest Absolute.
To the
maximum extent permitted by law, all rights of Purchaser, all security interests
under this Agreement, and all obligations of Pledgor under this Agreement,
shall
be absolute and unconditional irrespective of:
(a) any
lack
of validity or enforceability of any of the Secured Obligations or any other
agreement or instrument relating thereto, including any of the Investment
Documents;
(b) any
change in the time, manner, or place of payment of, or in any other term of,
all
or any of the Secured Obligations, or any other amendment or waiver of or any
consent to any departure from any of the Investment Documents, or any other
agreement or instrument relating thereto;
(c) any
exchange, release, or non-perfection of any other collateral, or any release
or
amendment or waiver of or consent to departure from any guaranty for all or
any
of the Secured Obligations; or
(d) any
other
circumstances that might otherwise constitute a defense available to, or a
discharge of, Pledgor.
10
17. Construction.
Section
and subsection headings in this Agreement are included in this Agreement for
convenience of reference only and shall not constitute a part of this Agreement
or be given any substantive effect.
Unless
the context of this Agreement clearly requires otherwise, references to the
plural include the singular and to the singular include the plural, the part
includes the whole, the term “including” is not limiting, and the term “or” has,
except where otherwise indicated, the inclusive meaning represented by the
phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and other
similar terms in this Agreement refer to this Agreement as a whole and not
exclusively to any particular provision of this Agreement. Article, section,
subsection, exhibit, and schedule references are to this Agreement unless
otherwise specified. All of the exhibits or schedules attached to this Agreement
shall be deemed incorporated in this Agreement by reference. Any reference
to
any of the following documents includes any and all alterations, amendments,
restatements, extensions, modifications, renewals, or supplements thereto or
thereof, as applicable: this Agreement or any of the other Investment
Documents.
No
inference in favor of, or against, any party shall be drawn from the fact that
such party has drafted any portion of this Agreement, each party having been
represented by counsel of its choice in connection with the negotiation and
preparation of this Agreement and the other Investment Documents.
18. Interpretation.
Neither
this Agreement nor any uncertainty or ambiguity in this Agreement shall be
construed or resolved against Purchaser or Pledgor, whether under any rule
of
construction or otherwise. On the contrary, this Agreement has been reviewed
by
both of the parties and their respective counsel and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of the parties to this
Agreement.
19. Severability.
In case
any provision in or obligation under this Agreement shall be invalid, illegal
or
unenforceable in any jurisdiction, the validity, legality and enforceability
of
the remaining provisions or obligations, or of such provision or obligation
in
any other jurisdiction, shall not in any way be affected or impaired
thereby.
20. Counterparts;
Facsimile Execution.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original and all of which together shall constitute one and the same
Agreement. Delivery of an executed counterpart of this Agreement by facsimile
shall be equally as effective as delivery of an original executed counterpart
of
this Agreement. Any party delivering an executed counterpart of this Agreement
by facsimile also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original executed counterpart shall
not
affect the validity, enforceability, or binding effect of this
Agreement.
21. Waiver
of Marshaling.
Each of
Pledgor and Purchaser acknowledges and agrees that in exercising any rights
under or with respect to the Collateral: (a) Purchaser is under no obligation
to
marshal any Collateral; (b) may, in their absolute discretion, realize upon
the
Collateral in any order and in any manner they so elect; and (c) may, in their
absolute discretion, apply the proceeds of any or all of the Collateral to
the
Secured Obligations in any order and in any manner they so elect. Pledgor and
Purchaser waive any right to require the marshaling of any of the
Xxxxxxxxxx.
00
00. Conflict
Among Provisions.
In the
event of a conflict between the terms, covenants and conditions of this
Agreement and those of any other Investment Document (unless otherwise
specifically provided), the terms, covenants and conditions of the document
which shall enlarge the interest of Purchaser in the Collateral, afford
Purchaser greater financial benefits or financial security or better assure
payment of the Obligations in full, shall control; provided, however, that
in
the event of a conflict between any provision of this Agreement and the
provisions of any other document, instrument or agreement which grants Purchaser
a security interest in all or any part of the Pledged Interest, the provisions
of this Agreement shall control.
23. Sole
and Absolute Discretion of Purchaser.
Whenever pursuant to this Agreement (a) Purchaser exercises any right given
to
them to consent, approve or disapprove, (b) any arrangement, document, item
or
term is to be satisfactory to Purchaser, or (c) any other decision or
determination is to be made by Purchaser, the decision of Purchaser to consent,
approve or disapprove, all decisions that arrangements, documents, items, or
terms are satisfactory or not satisfactory and all other decisions and
determinations made by Purchaser, shall be in the sole and absolute discretion
of Purchaser and shall be final and conclusive, except as may be otherwise
expressly and specifically provided in this Agreement.
24.
Consent
to Forum.
AS PART
OF THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, PLEDGOR BY THIS AGREEMENT
CONSENTS TO THE JURISDICTION OF ANY STATE COURT LOCATED WITHIN XXXXXXX COUNTY,
KANSAS OR FEDERAL COURT IN THE DISTRICT COURT OF KANSAS, AND CONSENTS THAT
ALL
SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO PLEDGOR
AT THE ADDRESS STATED IN THE SECURITIES PURCHASE AGREEMENT AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. PLEDGOR WAIVES
ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED IN THIS AGREEMENT AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK
OF
JURISDICTION OR VENUE. PLEDGOR FURTHER AGREES NOT TO ASSERT AGAINST PURCHASER
(EXCEPT BY WAY OF A DEFENSE OR COUNTERCLAIM IN A PROCEEDING INITIATED BY
PURCHASER) ANY CLAIM OR OTHER ASSERTION OF LIABILITY WITH RESPECT TO THE
INVESTMENT DOCUMENTS, PURCHASER’S CONDUCT OR OTHERWISE IN ANY JURISDICTION OTHER
THAN THE FOREGOING JURISDICTIONS.
25. Waiver
of Jury Trial.
TO THE FULLEST EXTENT PERMITTED BY LAW, AND AS SEPARATELY BARGAINED-FOR
CONSIDERATION TO PURCHASER, PLEDGOR BY THIS AGREEMENT WAIVES ANY RIGHT TO TRIAL
BY JURY (WHICH PURCHASER ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR OTHERWISE RELATING TO ANY OF THE
INVESTMENT DOCUMENTS, THE OBLIGATIONS, THE PLEDGED INTEREST, OR PURCHASER’S
CONDUCT IN RESPECT OF ANY OF THE FOREGOING.
[Remainder
of page intentionally left blank; signature page
follows]
12
IN
WITNESS WHEREOF,
Pledgor
and Purchaser have caused this Agreement to be duly executed and delivered
by
their officers thereunto duly authorized as of the date first written
above.
|
a
Minnesota corporation
|
|||
|
By:
|
/s/
Xxxx X. Xxxxx
|
||
|
Xxxx
X. Xxxxx, Chief Financial Officer
|
|||
|
PURCHASER:
|
CHINA
GOLD, LLC,
|
||
|
a
Kansas limited liability company
|
|||
|
By:
|
/s/
C. Xxxxxx Xxxxxx
|
||
|
C.
Xxxxxx Xxxxxx, Manager
|
|||
13
SCHEDULE
1
Pledged
Interests
|
Name
of Subsidiary
|
Jurisdiction
of
Organization
|
Type
of Interest
|
Number
of
Shares/Units
(if
applicable)
|
Certificate
Numbers
(if
any)
|
Percentage
of
Outstanding
Interests
in
Subsidiary
|
|||||
|
China
Global Mining Resources Limited
|
British
Virgin Islands
|
Common
Stock
|
—
|
—
|
100%
|
|||||
|
China
Global Mining Resources Limited
|
Hong
Kong
|
Common
Stock
|
—
|
—
|
100%
|
|||||
|
Wits-China
Acquisition Corp.
|
Minnesota
|
Common
Stock
|
1,000
|
N/A
|
100%
|
