Exhibit 10.23
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT dated as of December 21, 2000
between Xxxxx Xxx Qi, Hai Nan, Xxxx Xxxx, Xxxxxxxx Xxx, and Pak Xxxxxx, (each,
individual shareholders of the Company (as defined below) and referred to herein
as a "Pledgor" and, collectively referred to herein as the "Pledgors"); and
ORION CAPITAL INCORPORATED ("Orion").
Tengtu International Corp., a Delaware corporation (the
"Company"), the Pledgors and Orion are parties to a Loan Agreement, dated as of
November 17, 2000 (as modified and supplemented and in effect from time to time,
the "November Loan Agreement"), providing, subject to the terms and conditions
thereof, for an extension of credit by Orion to the Company. On the date hereof,
the Company, Pledgors and Orion are entering into a second Loan Agreement (as
modified and supplemented and in effect from time to time, the "December Loan
Agreement" and, together with the November Loan Agreement, the "Loan
Agreements"), providing, subject to the terms and conditions thereof, for the
refinancing of the credit extended by Orion to the Company under the November
Loan Agreement and an additional extension of credit to be made by Orion to the
Company.
To induce Orion to enter into the Loan Agreements and to
extend credit thereunder, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each Pledgor agreed,
among other things, to pledge and grant a security interest in the Collateral
(as so defined) as security for the Secured Obligations. Accordingly, the
parties hereto agree as follows:
Section 1. Definitions. Terms defined in the Loan Agreement
are used herein as defined therein. In addition, as used herein:
"Collateral" shall have the meaning ascribed thereto in
Section 3 hereof.
"Notes" shall mean the promissory notes of the Company issued
pursuant to the Loan Agreements.
"Obligations" shall mean the prompt payment in full when due
(whether at stated maturity, by acceleration or otherwise) of the principal of
and interest on the Loans made by Orion to, and the Note held by Orion of, the
Company and all other amounts from time to time owing to Orion by the Company
under the Loan Agreements and under the Notes, in each case strictly in
accordance with the terms thereof.
"Pledged Stock" shall have the meaning ascribed thereto in
Section 3(a) hereof.
"Secured Obligations" shall mean, collectively, (a) the
Obligations, (b) all obligations of the Pledgors under the Loan Agreements and
the Notes and (c) all obligations of the Pledgors to Orion hereunder.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect from time to time in the State of New York.
Section 2 Representations and Warranties. Each Pledgor
represents and warrants to Orion that:
2.01 No Breach. None of the execution and delivery of this
Agreement, the consummation of the transactions herein contemplated or
compliance with the terms and provisions hereof will conflict with or result in
a breach of, or require any consent under, any applicable law or regulation, or
any order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which such Pledgor is a party or by
which such Pledgor is bound or to which such Pledgor is subject, or constitute a
default under any such agreement or instrument, or result in the creation or
imposition of any lien upon such Pledgor's earnings or assets pursuant to the
terms of any such agreement or instrument.
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2.02 Action. This Agreement has been duly and validly executed
and delivered by such Pledgor and constitutes his or her legal, valid and
binding obligation, enforceable in accordance with its terms.
2.03 Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any governmental or regulatory authority
or agency is necessary for the execution, delivery or performance by such
Pledgor of this Agreement or for the validity or enforceability hereof.
2.04 Pledged Stock.
(a) Such Pledgor is the sole beneficial owner of the
Collateral in which he or she purports to grant a security interest pursuant to
Section 3 hereof and no lien or other encumbrance exists or will exist upon such
Collateral at any time (and no right or option to acquire the same exists in
favor of any other Person), except for the pledge and security interest in favor
of Orion created or provided for herein, which pledge and security interest
constitute a first priority perfected pledge and security interest in and to all
of such Collateral.
(b) The Pledged Stock represented by the certificates
identified under the name of such Pledgor in Annex 1 hereto is duly authorized,
validly existing, fully paid and non-assessable and none of such Pledged Stock
is or will be subject to any contractual restriction, or any restriction under
the charter or by-laws of the Company, upon the transfer of such Pledged Stock
(except for any such restriction contained herein).
(c) Such Pledgor has owned the Pledged Stock represented by
the certificates identified opposite the name of such Pledgor in Annex 1 hereto
for a least one year prior to the date hereof.
2.05 Affiliate Status. Such Pledgor is an "affiliate" of
Debtor (as that term is defined in Rule 144 under the Securities Act of 1933, as
amended)
Section 3 The Pledge. As collateral security for the prompt
payment in full when due (whether at stated maturity, by acceleration or
otherwise) of the Secured Obligations, each Pledgor hereby pledges and grants to
Orion a security interest in all of such Pledgor's right, title and interest in
the following property, whether now owned by such Pledgor or hereafter acquired
and whether now existing or hereafter coming into existence (all being
collectively referred to herein as "Collateral"):
(a) the number of shares of common stock of the Company
represented by the certificates identified in Annex 1 hereto opposite the name
of such Pledgor, together with the certificates evidencing the same
(collectively, the "Pledged Stock");
(b) all shares, securities, moneys or property representing a
dividend on any of the Pledged Stock, or representing a distribution or return
of capital upon or in respect of the Pledged Stock, or resulting from a
split-up, revision, reclassification or other like change of the Pledged Stock
or otherwise received in exchange therefor, and any subscription warrants,
rights or options issued to the holders of, or otherwise in respect of, the
Pledged Stock;
(c) in the event of any consolidation or merger in which the
Company is not the surviving corporation, all shares of each class of the
capital stock of the successor corporation formed by or resulting from such
consolidation or merger; and
(d) all proceeds of and to any of the property of such Pledgor
described in the preceding clauses of this Section 3 (including, without
limitation, all causes of action, claims and warranties now or hereafter held by
either Pledgor in respect of any of the items listed above) and, to the extent
related to any property described in said clauses or such proceeds, all books,
correspondence, credit files, records, invoices and other papers.
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Section 4 Further Assurances; Remedies. In furtherance of the
grant of the pledge and security interest pursuant to Section 3 hereof, the
Pledgors hereby jointly and severally agree with Orion as follows:
4.01 Delivery and Other Perfection. Each Pledgor shall:
(a) if any of the shares, securities, moneys or property
required to be pledged by such Pledgor under Section 3 hereof are received by
such Pledgor, forthwith either (x) transfer and deliver to Orion such shares or
securities so received by such Pledgor (together with the certificates for any
such shares and securities duly endorsed in blank or accompanied by undated
stock powers duly executed in blank), all of which thereafter shall be held by
Orion, pursuant to the terms of this Agreement or (y) take such other action as
Orion shall deem necessary or appropriate to duly record the lien created
hereunder in such shares, securities, moneys or property in said Section 3;
(b) give, execute, deliver, file and/or record any financing
statement, notice, instrument, document, agreement or other papers that may be
necessary or desirable (in the judgment of Orion) to create, preserve, perfect
or validate the security interest granted pursuant hereto or to enable Orion to
exercise and enforce its rights hereunder with respect to such pledge and
security interest, including, without limitation, causing any or all of the
Collateral to be transferred of record into the name of Orion or its nominee;
(c) keep full and accurate books and records relating to the
Collateral, and stamp or otherwise xxxx such books and records in such manner as
Orion may reasonably require in order to reflect the security interests granted
by this Agreement; and
(d) permit representatives of Orion, upon reasonable notice,
at any time during normal business hours to inspect and make abstracts from his
or her books and records pertaining to the Collateral, and forward copies of any
notices or communications received by such Pledgor with respect to the
Collateral, all in such manner as Orion may require.
4.02 Other Financing Statements and Liens. Without the prior
written consent of Orion, no Pledgor shall file or suffer to be on file, or
authorize or permit to be filed or to be on file, in any jurisdiction, any
financing statement or like instrument with respect to the Collateral in which
Orion is not named as the sole secured party.
4.03 Preservation of Rights. Orion shall not be required to
take steps necessary to preserve any rights against prior parties to any of the
Collateral.
4.04 Collateral.
(a) So long as no Event of Default (as defined in the Notes)
shall have occurred and be continuing, the Pledgors shall have the right to
exercise all voting, consensual and other powers of ownership pertaining to the
Collateral for all purposes not inconsistent with the terms of this Agreement,
the Loan Agreements, the Notes or any other instrument or agreement referred to
herein or therein
(b) Unless and until an Event of Default has occurred and is
continuing, the Pledgors shall be entitled to receive and retain any dividends
on the Collateral paid in cash out of earned surplus.
(c) If any Event of Default shall have occurred, then so long
as such Event of Default shall continue, and whether or not Orion exercises any
available right to declare any Secured Obligation due and payable or seeks or
pursues any other relief or remedy available to it under applicable law or under
this Agreement, the Loan Agreements, the Notes or any other agreement relating
to such Secured Obligation, all dividends and other distributions on the
Collateral shall be paid directly to Orion and retained by it as part of the
Collateral, subject to the terms of this Agreement, and, if Orion shall so
request in writing, the Pledgors jointly and severally agree to execute and
deliver to Orion appropriate additional dividend, distribution and other orders
and documents to that end.
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4.05 Events of Default, Etc. During the period during which an
Event of Default shall have occurred and be continuing:
(a) Orion shall have all of the rights and remedies with
respect to the Collateral of a secured party under the Uniform Commercial Code
(whether or not said Code is in effect in the jurisdiction where the rights and
remedies are asserted) and such additional rights and remedies to which a
secured party is entitled under the laws in effect in any jurisdiction where any
rights and remedies hereunder may be asserted, including, without limitation,
the right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral as if
Orion were the sole and absolute owner thereof (and each Pledgor agrees to take
all such action as may be appropriate to give effect to such right);
(b) Orion in its discretion may, in its name or in the name of
the Pledgors or otherwise, demand, xxx for, collect or receive any money or
property at any time payable or receivable on account of or in exchange for any
of the Collateral, but shall be under no obligation to do so; and
(c) Orion may, upon ten business days' prior written notice to
the Pledgors of the time and place, with respect to the Collateral or any part
thereof that shall then be or shall thereafter come into the possession, custody
or control of Orion, sell, lease, assign or otherwise dispose of all or any part
of such Collateral, at such place or places as Orion deems best, and for cash or
for credit or for future delivery (without thereby assuming any credit risk), at
public or private sale, without demand of performance or notice of intention to
effect any such disposition or of the time or place thereof (except such notice
as is required above or by applicable statute and cannot be waived), and Orion
or anyone else may be the purchaser, lessee, assignee or recipient of any or all
of the Collateral so disposed of at any public sale (or, to the extent permitted
by law, at any private sale) and thereafter hold the same absolutely, free from
any claim or right of whatsoever kind, including any right or equity of
redemption (statutory or otherwise), of the Pledgors, any such demand, notice
and right or equity being hereby expressly waived and released. Orion may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
sale may be so adjourned.
The Pledgors recognize that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, Orion may be compelled, with respect to any sale of all or any
part of the Collateral, to limit purchasers to those who will agree, among other
things, to acquire the Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. The Pledgors acknowledge that
any such private sales may be at prices and on terms less favorable to Orion
than those obtainable through a public sale without such restrictions, and,
notwithstanding such circumstances, agree that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that Orion
shall have no obligation to engage in public sales and no obligation to delay
the sale of any Collateral for the period of time necessary to permit the
Company or issuer thereof to register it for public sale.
4.06 Deficiency. If the proceeds of sale, collection or other
realization of or upon the Collateral pursuant to Section 4.05 hereof are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Secured Obligations, the Pledgors shall not be liable for any
deficiency.
4.07 Private Sale. Orion shall incur no liability as a result
of the sale of the Collateral, or any part thereof, at any private sale pursuant
to Section 4.05 hereof conducted in a commercially reasonable manner. Each
Pledgor hereby waives any claims against the Orion arising by reason of the fact
that the price at which the Collateral may have been sold at such a private sale
was less than the price that might have been obtained at a public sale or was
less than the aggregate amount of the Secured Obligations, even if Orion accepts
the first offer received and does not offer the Collateral to more than one
offeree.
4.08 Application of Proceeds. Except as otherwise herein
expressly provided and except as provided below in this Section 4.08, the
proceeds of any collection, sale or other realization of all or any part of the
Collateral pursuant hereto shall be applied by Orion:
First, to the payment of the costs and expenses of such
collection, sale or other realization, including reasonable out-of-pocket costs
and expenses of Orion and the fees and expenses of its agents and counsel, and
all expenses incurred and advances made by Orion in connection therewith;
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Next, to the payment in full of the Secured Obligations; and
Finally, to the payment to the respective Pledgor, or their
respective heirs, executors, administrators, successors or assigns, or as a
court of competent jurisdiction may direct, of any surplus then remaining.
As used in this Section 4, "proceeds" of Collateral shall mean
cash, securities and other property realized in respect of, and distributions in
kind of, Collateral, including any thereof received under any reorganization,
liquidation or adjustment of debt of the Pledgors or any issuer of or obligor on
any of the Collateral.
4.09 Attorney-in-Fact. Without limiting any rights or powers
granted by this Agreement to Orion while no Event of Default has occurred and is
continuing, upon the occurrence and during the continuance of any Event of
Default Orion is hereby appointed the attorney-in-fact of each Pledgor for the
purpose of carrying out the provisions of this Section 4 and taking any action
and executing any instruments that Orion may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of the
foregoing, so long as Orion shall be entitled under this Section 4 to make
collections in respect of the Collateral, Orion shall have the right and power
to receive, endorse and collect all checks made payable to the order of either
Pledgor representing any dividend, payment or other distribution in respect of
the Collateral or any part thereof and to give full discharge for the same.
4.10 Perfection. Prior to or concurrently with the execution
and delivery of this Agreement, each Pledgor shall deliver to Orion all
certificates identified in Annex 1 hereto, accompanied by undated stock powers
duly executed in blank.
4.11 Termination. When all Secured Obligations shall have been
paid in full, this Agreement shall terminate, and Orion shall forthwith cause to
be assigned, transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining Collateral and
money received in respect thereof, to or on the order of the respective Pledgor.
4.12 Further Assurances. Each Pledgor agrees that, from time
to time upon the written request of Orion, such Pledgor will execute and deliver
such further documents and do such other acts and things as Orion may reasonably
request in order fully to effect the purposes of this Agreement.
Section 5 Miscellaneous.
5.01 No Waiver. No failure on the part of Orion to exercise,
and no course of dealing with respect to, and no delay in exercising, any right,
power or remedy hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise by Orion of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies herein are cumulative and are not exclusive
of any remedies provided by law.
5.02 Notices. All notices, requests, consents and demands
hereunder shall be in writing and telexed, telecopied or delivered to the
intended recipient at the "Address for Notices" specified beneath its or his or
her name on the signature pages hereof or, as to any party, at such other
address as shall be designated by such party in a notice to each other party.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telex or telecopier or
personally delivered or, in the case of a mailed notice, upon receipt, in each
case given or addressed as aforesaid.
5.03 Expenses. The Pledgors jointly and severally agree to
reimburse Orion for all reasonable costs and expenses of Orion (including,
without limitation, the reasonable fees and expenses of legal counsel) in
connection with (i) any default or Event of Default and any enforcement or
collection proceeding resulting therefrom, including, without limitation, all
manner of participation in or other involvement with (w) performance by Orion of
any obligations of the Pledgors in respect of the Collateral that the Pledgors
have failed or refused to perform, (x) bankruptcy, insolvency, receivership,
foreclosure, winding up or liquidation proceedings, or any actual or attempted
sale, or any exchange, enforcement, collection, compromise or settlement in
respect of any of the Collateral, and for the care of the Collateral and
defending or asserting rights and claims of Orion in respect thereof, by
litigation or otherwise, (y) judicial or regulatory proceedings and (z) workout,
restructuring or other negotiations or proceedings (whether or not the workout,
restructuring or transaction contemplated thereby is consummated) and (ii) the
enforcement of this Section 5.03, and all such costs and expenses shall be
Secured Obligations entitled to the benefits of the collateral security provided
pursuant to Section 4 hereof.
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5.04 Amendments, Etc. The terms of this Agreement may be
waived, altered or amended only by an instrument in writing duly executed by the
Company, each Pledgor and Orion. Any such amendment or waiver shall be binding
upon the Company, Orion, each holder of any of the Secured Obligations and each
Pledgor.
5.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective heirs, executors,
administrators, successors and assigns of the Company, each Pledgor, Orion and
each holder of any of the Secured Obligations (provided, however, that no
Pledgor shall assign or transfer his or her rights hereunder without the prior
written consent of Orion).
5.06 Captions. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.
5.07 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
5.08 Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to the conflicts of laws provisions thereof. The
Company and each Pledgor hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State or, to
the extent permitted by law, in such Federal court. The Company and each Pledgor
hereby agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. The Company and each Pledgor hereby
irrevocably and unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement in any court referred to above, and hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court. The Company and each
Pledgor irrevocably consents to service of process in the manner provided for
notices below. Nothing in this Agreement will affect the right of Orion to serve
process in any other manner permitted by law.
5.09 Waiver of Jury Trial. EACH OF THE PLEDGORS AND THE
COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
5.10 Agents and Attorneys-in-Fact. Orion may employ agents and
attorneys-in-fact in connection herewith and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
in good faith.
5.11 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in favor of the Orion in order to
carry out the intentions of the parties hereto as nearly as may be possible and
(ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have caused this
Guarantee, Pledge and Security Agreement to be duly executed and delivered as of
the day and year first above written.
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Xxxxx Xxx Qi
Address for Notices:
Room 602, Entrance Xx. 0, Xxxxxxxx 0, Xxxxxxxxx 0
Xxxxxx Xxxxxx Avenue, Science City
Xxxxxx Xxxxxxxx
Xxxxxxx 00000, Xxxxxxxx Xxxxxxxx of China
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Hai Nan
Address for Notices:
c/o Taiji Computer Corporation
0000 Xxxx Xxxxxx
Xxxxxxxxx, XX X0X0X0
-----------------------------
Xxxx Xxxx
Address for Notices:
00000 Xxxxxxxxx Xxx, X000
Xxxxxxx, XX 00000
-----------------------------
Xxxxxxxx Xxx
Address for Notices:
c/o Tengtu United Electronics
Development Co. Ltd.
0xx Xxxxx, Xxxxxx Xxxx Xx Xxxxxxxx,
Xxxx Building of West Railway Station,
Beijing, China 100055
-----------------------------
Pak Xxxxxx
Address for Notices:
c/o Tengtu International Corp.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, X.X., X0X 0X0 Xxxxxx
ORION CAPITAL INCORPORATED
By ------------------------
Title:
Address for Notices:
Sherway Executive Center
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 000X
Xxxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
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XXXXX 0
XXXXXXX XXXXX
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Name Number of Shares Certificate Numbers
---- ---------------- -------------------
Xxxxx Xxx Qi 200,000 882, 883, 884 and 885
Hai Nan 200,000 915
Xxxx Xxxx 200,000 910
Xxxxxxxx Xxx 200,000 908
Pak Xxxxxx 200,000 45
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