STOCK PLEDGE AGREEMENT
STOCK
PLEDGE AGREEMENT
(this
“Agreement”),
dated
September 12, 2007 by and between Xinshengxiang Industrial Development Co.,
Ltd.
(the “Pledgor”);
the
Lenders identified on Schedule A hereto (collectively, “Pledgee”);
and
the Collateral Agent;
WITNESSETH:
WHEREAS,
the
Pledgee will lend up to $5,000,000 to Xxxxxxxx Xxxxxx Enterprises Inc., a Nevada
corporation (“Borrower”),
with
such loan to be evidenced by one or more promissory notes (“Note”);
and
WHEREAS,
the
Pledgor is a shareholder of Borrower, and it is to his benefit and advantage
that the loans be made and the Notes be issued; and
WHEREAS,
in
order
to induce Pledgee to make the loan and accept the Note, the Pledgor has agreed
to secure all of the Borrower’s obligations under the Notes with the grant to
the Collateral Agent of a first priority security interest in shares of $.0001
Common Stock of the Borrower which Common Stock is owned of record and
beneficially controlled by the Pledgor.
NOW,
THEREFORE,
in
consideration of the premises and the mutual covenants herein contained, and
for
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties hereby agree as follows:
1. Definitions.
The
following terms shall have the following meanings wherever used in this
Agreement:
· “Collateral
Agent” shall mean the person appointed pursuant to the Collateral Agent
Agreement.
· “Collateral
Agent Agreement” shall mean the agreement dated at or about the date of this
Agreement, entered into by the parties hereto, Borrower and the Collateral
Agent
pursuant to which the Collateral Agent was appointed to act on behalf of the
Pledgees.
· “Event
of Default”
shall
have the meaning given thereto in the Notes.
· “Obligations”
shall
mean all principal and interest and other payments which may be due and payable
under the Notes, whether upon stated maturity, by acceleration, or otherwise,
outstanding at any time and under this Agreement, and pursuant to the
“Transaction Documents” as defined in the “Subscription Agreement” pursuant to
which the Notes are being issued.
· “Pledged
Stock”
shall
mean in the aggregate, 17,100,000 shares of Common Stock of the Company, $0.0001
par value.
· “Satisfaction
Date”
shall
mean that date on which all of the Obligations have been paid or otherwise
satisfied in full.
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· “Reissue
Date”
shall
mean the date that the Pledgor distributes the Pledged Stock to its
shareholders.
2.
Pledge
of the Pledged Stock/Additional Deposits.
(a)
As
security for the due and timely payment and performance of all of the
Obligations, the Pledgor pledges to the Pledgees, and grants to the Pledgees
a
first priority lien and security interest in, all of the Pledged Stock (as
same
are constituted from time to time), together with all cash dividends, stock
dividends, interest, profits, premiums, redemptions, warrants, subscription
rights, options, substitutions, exchanges and other distributions now or
hereafter made on the Pledged Stock and all cash and non-cash proceeds thereof,
until the earlier of the Reissue Date or the Satisfaction Date. The Pledged
Stock and all property at any time pledged to the Pledgee hereunder or in which
the Pledgee is granted a security interest (whether described herein or not)
and
all income therefrom and proceeds thereof are herein included in the definition
of Pledged Stock.
(b)
In
furtherance of the pledge hereunder, the Pledgor is, concurrently herewith,
delivering to the Collateral Agent, the certificates representing all of the
Pledged Stock, each of which now remains in the name of the Pledgor and
accompanied by appropriate undated stock powers duly endorsed in blank by the
Pledgor bearing “medallion” signature guarantees.
(c)
If,
while
this Agreement is in effect, the Pledgor becomes entitled to receive or receives
any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or issued in connection
with
any reorganization), option or rights, whether as an addition to, in
substitution of, or in exchange for, any Pledged Stock or otherwise, the Pledgor
agrees to accept the same as agent for the Pledgee, to hold the same in trust
on
behalf of and for the benefit of the Pledgee, and to deliver the same forthwith
to the Pledgee in the exact form received, with the endorsement of the Pledgor
when necessary and/or appropriate undated “medallion” stock or other powers duly
executed in blank, to be held by the Pledgee, subject to the terms hereof,
as
additional collateral security for the Obligations. Any sums paid on or in
respect of the Pledged Stock on the liquidation or dissolution of the Pledgor
shall be paid over to the Pledgee, to be held by the Pledgee, subject to the
terms and conditions hereof, as additional collateral security for the
Obligations.
3.
Retention
of the Pledged Stock.
(a)
Except
as
otherwise provided herein, the Pledgee and Collateral Agent shall have no
obligation with respect to the Pledged Stock, except to use reasonable care
in
the custody and preservation thereof, to the extent required by
law.
(b)
The
Collateral Agent shall hold the Pledged Stock in the form in which same are
delivered herewith, unless and until there shall occur an Event of
Default.
4.
Rights
of the Pledgor.
Throughout the term of this Agreement, so long as an Event of Default has not
occurred and is continuing, the Pledgor shall have the right to vote the Pledged
Stock in all matters presented to the stockholders of the Borrower for vote
thereon, except in a manner inconsistent with the terms of this Agreement or
detrimental to the interests of the Pledgee.
Notwithstanding
anything contained herein to the contrary, the Pledgee agrees and acknowledges
that the Pledgor shall be distributing the Pledged Stock to its shareholders
whereupon this Agreement shall be automatically terminated and have no further
force and effect.
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5.
Event
of Default; Power of Attorney.
(a)
Upon
the
occurrence and during the continuance of any Event of Default, the Collateral
Agent shall have the right to: (i) exercise all voting and corporate rights
of,
and all rights of conversion, exchange, subscription or any other rights,
privileges or options pertaining to, any Pledged Stock as if the Collateral
Agent were the absolute owner thereof, including (without limitation) the right
to exchange, at its discretion, any and all of the Pledged Stock upon the
merger, consolidation, reorganization, recapitalization or other readjustment
of
the Pledgor or upon the exercise by the Pledgor or the Pledgee of any right,
privilege or option pertaining to any of the Pledged Stock and, in connection
therewith, to deposit and deliver any and all of the Pledged Stock with any
committee, depository, transfer agent, registrar or other designated agency
on
such terms and conditions as the Pledgee may determine, all without liability
except to account for property actually received by it; (ii) apply any funds
or
other property received in respect of the Pledged Stock to the Obligations,
and
receive in its own name any and all further distributions which may be paid
in
respect of the Pledged Stock, all of which shall, upon receipt by the Collateral
Agent, be applied to the Obligations; (iii) transfer all or any portion of
the
Pledged Stock (as determined by the Pledgee in its discretion) on the books
of
the Pledgor to and in the name of the Pledgee, Collateral Agent or such other
person or persons as the Pledgee may designate; (iv) effect any sale, transfer
or disposition of all or any portion of the Pledged Stock and in furtherance
thereof, take possession of and endorse any and all checks, drafts, bills of
exchange, money orders or other documents and instruments received on account
of
the Pledged Stock; (v) collect, xxx for and give acquittance for any money
due
on account of any of the foregoing; and (vi) take any and all other action
contemplated by this Agreement, or as otherwise permitted by law, or as the
Pledgee and/or Collateral Agent may reasonably deem necessary or appropriate,
in
order to accomplish the purposes of this Agreement.
(b)
In
furtherance of the foregoing powers of the Pledgee, the Pledgor hereby
authorizes and appoints the Collateral Agent, with full powers of substitution,
as the true and lawful attorney-in-fact of the Pledgor, in his name, place
and
xxxxx, to take any and all such action as the Collateral Agent, in its sole
discretion, may deem necessary or appropriate in furtherance of the exercise
of
the aforesaid powers. Such power of attorney shall be coupled with an interest,
and shall be irrevocable until the Satisfaction Date. Without limitation of
the
foregoing, such power of attorney shall not in any manner be affected or
impaired by reason of any act of the Pledgor or by operation of law. Nothing
herein contained, however, shall be deemed to require or impose any duty upon
the Pledgee, and/or Collateral Agent to exercise any of the rights or powers
granted herein.
(c)
The
foregoing rights and powers granted to the Pledgee and Collateral Agent, and
the
foregoing power of attorney, shall be fully binding upon any person who may
acquire any beneficial interest in any of the Pledged Stock or any other
property held or received by the Pledgee and/or Collateral Agent
hereunder.
6.
Foreclosure;
Sale of Pledged Stock.
(a) Without
limitation of paragraph 5 above, in the event that the Collateral Agent shall
make any sale or other disposition of any or all of the Pledged Stock following
an Event of Default, the Pledgee may also:
(i) offer
and
sell all or any portion of the Pledged Stock publicly through a registered
broker-dealer, or by means of a private placement restricting the offer or
sale
to a limited number of prospective purchasers who meet such suitability
standards as the Collateral Agent and its counsel may deem appropriate, and
who
may be required to represent that they are purchasing Pledged Stock for
investment and not with a view to distribution;
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(ii) sell
any
or all of the Pledged Stock upon credit or for future delivery, without being
in
any way liable for failure of the purchaser to pay for the subject Pledged
Stock; and
(iii)
receive
and collect the net proceeds of any sale or other disposition of any Pledged
Stock, and apply same in such order and to such of the Obligations (including
the customary costs and expenses of the sale or disposition of the Pledged
Stock) as the Collateral Agent may, in its absolute discretion, deem
appropriate.
(b) Upon
any
sale of any of the Pledged Stock in accordance with this Agreement, the
Collateral Agent shall have the right to assign, transfer and deliver the
subject Pledged Stock to the purchaser(s) thereof, and each such purchaser
shall
be entitled to hold such Pledged Stock absolutely free from any right or claim
of the Pledgor and/or any other person claiming any beneficial interest in
the
Pledged Stock, including any equity of redemption (which right and all other
such rights are hereby waived by the Pledgor to the fullest extent permitted
by
law).
(c) Following
the occurrence and during the existence of an Event of Default, Pledgor and
Borrower will cooperate and provide such certificate, resolutions,
representations, legal opinions and all other matters necessary to facilitate
a
transfer or sale of any part of the Pledged Stock pursuant to Rule 144. Pledgor
and Borrower are unaware of any impediment to the resale of the Pledged Stock
in
reliance on Rule 144 by the Pledgee upon an Event of Default. Pledgor and
Borrower will not take any action that would impede or limit the Pledgee’s
ability to sell all the Pledged Stock upon an Event of Default, pursuant to
Rule
144. For so long as any Pledged Stock is subject to this Agreement, the Pledgor
will not sell any security of Borrower which sale would or could be aggregated
with sales by the Pledgee and/or Collateral Agent pursuant to Rule 144. Borrower
shall issue instructions to its transfer agent to comply with the foregoing
sentence. Borrower will not permit the transfer of any security of Borrower
if
such transfer would or could aggregate for purposes of Rule 144 with sales
of
the Pledged Stock by the Pledgor or any sales of the Pledged Stock. Pledgor
represents and warrants that he has not sold any security of Borrower during
the
ninety (90) days prior to the date of this Agreement. Borrower acknowledges
that
upon transfer of the Pledged Stock to the Pledgee or other transferee, the
Pledgee’s holding period under subsections (d) and (k) of Rule 144 may be
“tacked” with the Pledgor’s holding period. Pledgor and Borrower further
represent that the Notes were issued in a bona fide
loan
transaction. Schedule A hereto sets forth the holding periods of the components
of the Pledged Stock as calculated pursuant to Rule 144.
(d) Nothing
herein contained shall be deemed to require the Pledgee and/or Collateral Agent
to effect any sale or disposition of any Pledged Stock at any time, or to
consummate any proposed public or private sale at the time and place at which
same was initially called. It is the intention of the parties hereto that the
Pledgee and Collateral Agent shall, subject to any further conditions imposed
by
this Agreement, at all times following the occurrence of an Event of Default,
have the right to use or deal with the Pledged Stock as if the Pledgee and/or
Collateral Agent were the outright owner thereof, and to exercise any and all
rights and remedies, as a secured party in possession of collateral or
otherwise, under any and all provisions of law.
(e) The
Pledgor may take action and exercise rights in connection with any portion
of
the Pledged Stock regardless of the existence of any other security for the
Obligations.
7.
Covenants,
Representations and Warranties.
In
connection with the transactions contemplated by this Agreement, and knowing
that the Pledgee is and shall be relying hereon, the Pledgor hereby covenants,
represents and warrants that:
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(a)
the
Pledged Stock has been and will be duly and validly issued, is and will be
fully
paid and non-assessable, and is and will be owned by the Pledgor free and clear
of any and all restrictions, pledges, liens, encumbrances or other security
interests of any kind, save and except for the pledge to the Collateral Agent
pursuant to this Agreement;
(b)
there
are
and will be no options, warrants or other rights in respect of the sale,
transfer or other disposition of any of the Pledged Stock by the Pledgor, and
the Pledgor has the absolute right to pledge the Pledged Stock hereunder without
the necessity of any consent of any Person;
(c)
neither
the execution or delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, nor the compliance with or performance of
this
Agreement by the Pledgor, conflicts with or will result in the breach or
violation of or a default under the terms, conditions or provisions of (i)
any
mortgage, security agreement, indenture, evidence of indebtedness, loan or
financing agreement, or other agreement or instrument to which the Pledgor
is a
party or by which the Pledgor is bound, or (ii) any provision of law, any order
of any court or administrative agency, or any rule or regulation applicable
to
the Pledgor;
(d)
this
Agreement has been duly executed and delivered by the Pledgor, and constitutes
the legal, valid and binding obligation of the Pledgor, enforceable against
the
Pledgor in accordance with its terms;
(e)
there
are
no actions, suits or proceedings pending or threatened against or affecting
the
Pledgor that involve or relate to the Pledged Stock; and
(f) upon
execution of this Agreement by Pledgor, the Pledgee shall have the senior
security interest in the Pledged Stock.
8. UCC
Filings.
Pledgor
hereby grants to Collateral Agent the right and authority to file UCC Financing
Statements in Nevada, New York and any other jurisdiction in the sole discretion
of Pledgee to memorialize the security interest herein granted.
9. Return
of the Pledged Stock.
To the
extent that the Pledgee and/or Collateral Agent shall not previously have taken,
acquired, sold, transferred, disposed of or otherwise realized value on the
Pledged Stock in accordance with this Agreement, at the Satisfaction Date,
any
security interest in the Pledged Stock shall automatically terminate, cease
to
exist and be released, and the Pledgee and/or Collateral Agent shall forthwith
return the Pledged Stock to and in the name of the Pledgor, and file, at
Pledgor’s expenses, releases of Collateral Agent’s security interest in the
Pledged Stock.
10. Expenses
of the Pledgee.
All
expenses incurred by the Pledgee and/or Collateral Agent including but not
limited to reasonable attorneys’ fees) in connection with any actual or
attempted sale or other disposition of Pledged Stock hereunder shall be
reimbursed to the Pledgee by the Pledgor (jointly and severally) on demand,
or,
at the Pledgee’s option, such expenses may be added to the Obligations and shall
be payable on demand.
11. Further
Assurances.
From
time to time hereafter, each party shall take any and all such further action,
and shall execute and deliver any and all such further documents and/or
instruments, as any other party may request in order to accomplish the purposes
of and fulfill the parties’ obligations under this Agreement, in order to enable
the Collateral Agent to exercise any of its rights hereunder, and/or in order
to
secure more fully the Collateral Agent’s interest in the Pledged
Stock.
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12. Miscellaneous.
(a) All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
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 (a) 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 where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: (i) if to the Pledgor, to: c/o
Xxxxxxxx
Xxxxxx Enterprises Inc., 0 Xxx Xxxxx, Xxxxxx Xxxxxxxxx, Xxx Xxxxxxxxx 00000,
Attn: Xxxxx Fan, telecopier:
(000) 000-0000, with a copy by telecopier only to: Xxxxx Xxxxx & Associates,
00 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxx Xxxxxx, XX 00000, Attn: Xxxxx Xxxxx, Esq.,
telecopier: (000) 000-0000, (ii) if to the Pledgees, to: the addresses and
telecopier numbers identified on Schedule A hereto,
with an
additional copy by telecopier only to: Grushko & Xxxxxxx, P.C., 000 Xxxxx
Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, telecopier: (000) 000-0000, and
(iii) if to the Collateral Agent, to: Xxxxxxx Xxxx, Esq., Grushko & Xxxxxxx,
P.C., 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, telecopier: (000)
000-0000.
(b) If
any
notice to Pledgor of the sale or other disposition of Pledged Stock is required
by then applicable law, five (5) business days prior written notice (which
Pledgor agrees is reasonable notice within the meaning of Section 9-504(3)
of
the Uniform Commercial Code) to Pledgor of the time and place of any sale of
Pledged Stock which Pledgor agrees may be by private sale. The rights granted
in
this Section are in addition to any and all rights available to Pledgee under
the Uniform Commercial Code.
(c) The
laws
of the State of New York including but not limited to Article 9 of the Uniform
Commercial Code as in effect from time to time, shall govern the construction
and enforcement of this Agreement and the rights and remedies of the parties
hereto. The parties hereby consent to the exclusive jurisdiction of all courts
sitting in the State and County of New York, in connection with any action
or
proceeding under or relating to this Agreement, and waive trial by jury in
any
such action or proceeding.
(d) This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns. The Pledgor shall not,
however, assign any of its or his rights or obligations hereunder without the
prior written consent of the Pledgee, and the Pledgee shall not assign its
rights hereunder without simultaneously assigning its obligations hereunder
to
the subject assignee. Except as otherwise referred to herein, this Agreement,
and the documents executed and delivered pursuant hereto, constitute the entire
agreement between the parties relating to the specific subject matter
hereof.
(e) Neither
any course of dealing between the Pledgor and the Pledgee nor any failure to
exercise, or any delay in exercising, on the part of the Pledgee and/or
Collateral Agent, any right, power or privilege hereunder shall operate as
a
waiver thereof; nor shall any single or partial exercise of any right, power
or
privilege operate as a waiver of any other exercise of such right, power or
privilege or any other right, power or privilege.
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(f) The
Pledgee’s and Collateral Agent’s rights and remedies, whether hereunder or
pursuant to any other agreements or by law or in equity, shall be cumulative
and
may be exercised singly or concurrently.
(g) No
change, amendment, modification, waiver, assignment of rights or obligations,
cancellation or discharge hereof, or of any part hereof, shall be valid unless
the Pledgee shall have consented thereto in writing.
(h) The
captions and paragraph headings in this Agreement are for convenience of
reference only, and shall not in any way define, limit or describe the
construction, terms or provisions of this Agreement.
(i) If
any
provision of this Agreement is held invalid or unenforceable, either in its
entirety or by virtue of its scope or application to given circumstances, such
provision shall thereupon be deemed modified only to the extent necessary to
render same valid, or not applicable to given circumstances, or excised from
this Agreement, as the situation may require, and this Agreement shall be
construed and enforced as if such provision had been included herein as so
modified in scope or application, or had not been included herein, as the case
may be.
(j) All
of
the rights granted to the Pledge hereunder will be exercised by the Collateral
Agent on behalf of Pledgee, pursuant to the Collateral Agent
Agreement.
(k) This
Agreement may be executed in any number of 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 transmission.
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IN
WITNESS WHEREOF,
the
parties hereto have executed this Stock Pledge Agreement on and as of the
date
first set forth above.
PLEDGOR:
XINSHENGXIANG
INDUSTRIAL DEVELOPMENT CO., LTD.
/s/
Ding
Xxxxx Xxxxx
By:
Ding
Xxxxx Xxxxx
Its:
Manager
COLLATERAL
AGENT:
/s/
Xxxxxxx Xxxx
Xxxxxxx
Xxxx
ACKNOWLEDGEMENT:
Xxxxxxxx
Xxxxxx Enterprises Inc. acknowledge and agrees to be bound by the terms of
Section 5(d) of this Stock Pledge Agreement and will not take or allow any
action contrary to the terms of this Stock Pledge Agreement that would impair
the value of the Pledged Stock or Pledgees’ interests therein.
| XXXXXXXX XXXXXX ENTERPRISES INC. | ||
| |
|
|
| By: | /s/ Xxxxx Fan | |
|
Name: Xxxxx Fan |
||
| Title: Chief Executive Officer | ||
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SCHEDULE
A TO STOCK PLEDGE AGREEMENT
|
LENDER
|
PRINCIPAL
AMOUNT
OF
NOTE TO BE ISSUED ON THECLOSING DATE
|
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