SHARE PLEDGE AGREEMENT
This
SHARE
PLEDGE AGREEMENT, dated
as
of November 12, 2008 (this “Agreement”),
is
executed among Xx. Xxxx You-Bin, being an individual resident in the People’s
Republic of China (“Xx.
Xxxx”),
and
American Dairy, Inc., a Utah corporation (the “Company”,
and
together with Xx. Xxxx, the “Pledgors”),
and
The Bank of New York Mellon, in its capacity as collateral agent (with its
successors in such capacity, the “Collateral
Agent”)
for
the benefit of the Secured Parties (as defined below).
(1) The
Company issued certain 7.75% Convertible Notes due October 2, 2009 (the
“Original
Notes”)
pursuant to a Subscription Agreement dated October 2, 2006 (the “Subscription
Agreement”)
between
the Company and the subscribers identified on the signature page attached
thereto (the “Holders”);
(2) The
Pledgors own the issued and outstanding equity interests in the Company and
American Flying Crane Corporation, a Delaware Corporation (“AFC”),
as
applicable, set forth on Exhibit
A
attached
hereto and made a part hereof (the “Equity
Interests”);
(3) The
Company is entering into this Agreement as part of the inducement to Holders
to
accept 216,639 shares of Company common stock issued to the Holders
contemporaneously with execution of this Agreement in settlement and compromise
of a claim of the Holders for amounts due from the Company under Section
2(c) of
that certain Registration Rights Agreement between the Company and the Holders
dated October 2, 2006 (the “Registration
Rights Agreement”)
for
the period from October 1, 2007 through September 30, 2008; and
(4) In
connection with the transactions contemplated herein, on the date hereof,
the
Company is issuing its Amended and Restated 7.75% Convertible Notes due October
2, 2009 (the “Notes”),
which
will amend and restate the Original Notes, and AFC is issuing its guarantee
of
the Notes (the “Guarantee”).
NOW,
THEREFORE, for
and
in consideration of the foregoing and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Pledgors
and
the Collateral Agent hereby agree as follows:
1. Defined
Terms.
Unless
otherwise defined herein, each capitalized term used herein that is defined
in
the Subscription Agreement shall have the meaning specified for such term
in the
Subscription Agreement. Unless otherwise defined, herein or in the Subscription
Agreement, terms used in Article 8 or Article 9 of the Uniform Commercial
Code
as in effect from time to time in the State of New York are used herein as
therein defined. In addition, the following terms used in this Agreement
shall
have the meanings set forth below:
1
“2007
Note Documents”
shall
mean, collectively, (i) those certain 1.0% Guaranteed Senior Secured Convertible
Notes due 2012 issued by the Company on June 1, 2007 and June 27, 2007 (the
“2007
Notes”);
(ii)
that certain Indenture dated June 1, 2007 by and among the Company, AFC,
and The
Bank of New York Mellon, as Trustee, which governs certain of the 2007 Notes
(the “June
1, 2007 Indenture”);
(iii)
that certain Indenture dated June 27, 2007 by and among the Company, AFC,
and
The Bank of New York Mellon, as Trustee, which governs certain of the 2007
Notes
(the “June
27, 2007 Indenture”);
(iv)
that certain Share Pledge Agreement dated June 1, 2007 by and among the Company,
Xx. Xxxx, and the Bank of New York Mellon, as Collateral Agent (the
“2007
Pledge Agreement”);
and
(v) the other documents executed in connection therewith, in each case as
the
same may be amended, restated or otherwise supplemented from time to
time.
“Event
of Default” shall
mean an Event of Default as set forth in Section Article III of the
Notes.
“Indentures”
shall
mean the June 1, 2007 Indenture and the June 27, 2007 Indenture.
“Secured
Obligations” shall
mean all obligations owing by the Company under the Notes and under this
Agreement, including, without limitation, interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding.
“Secured
Parties” shall
mean each of the Collateral Agent, the holders of any Note (“Holders”)
and
each other party to whom any Secured Obligation is owed.
2. Pledge.
Each
Pledgor hereby pledges to the Collateral Agent, for the benefit of the Secured
Parties, and grants to the Collateral Agent for the benefit of the Secured
Parties, a security interest in, the following (collectively, the “Pledged
Collateral”):
(a) All
of
the right, title and interest of such Pledgor in the Equity Interests, whether
now existing or hereafter arising, and the certificates evidencing the shares
of
such capital stock (such now-existing shares being identified on Exhibit
A
attached
hereto and made a part hereof), and (in the case of the Company as the Pledgor)
all options and warrants for the purchase of additional equity interests
in AFC
now or hereafter held in the name of the Company (all of said Equity Interests
and (in the case of the Company as the Pledgor) options and warrants and
all
capital stock held in the name of the Company as a result of the exercise
of
such options or warrants being hereinafter collectively referred to as the
“Pledged
Stock”),
herewith delivered to the Collateral Agent, accompanied by undated Powers
(as
defined below) executed in blank by such Pledgor, and, subject to Section
9
hereof,
all dividends, distributions, cash, instruments and other property from time
to
time received, receivable or otherwise distributed in respect of, or in exchange
for, any or all of the Pledged Stock;
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(b) All
Additional Equity Interests (as defined below) from time to time acquired
by the
Company from the date hereof in any manner, and the certificates representing
such Additional Equity Interests (any such additional equity interests shall
constitute part of the Pledged Stock and the Collateral Agent is irrevocably
authorized to amend Exhibit
A
from
time to time to reflect such additional equity interests), and subject to
Section
9
hereof,
all options, warrants, dividends, distributions, cash, instruments and other
rights and options from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Equity Interests
or Additional Equity Interests; and
(c) All
proceeds of the foregoing.
3. Security
for Liabilities.
The
Pledged Collateral secures the full and prompt payment, performance and
observance when due (whether at stated maturity, by acceleration or otherwise)
of the Secured Obligations.
4. Delivery
of Pledged Collateral; Registration and Acknowledgments.
All
certificates representing or evidencing the Pledged Collateral, if any, and
a
copy of the UCC financing statements filed with the State of Utah or the
District of Columbia, as applicable, pursuant to Section 27 below, shall
be
physically delivered to and held by or on behalf of the Collateral Agent,
pursuant hereto and shall be in suitable form for transfer by delivery and
shall
be accompanied by duly executed instruments of transfer, powers, or assignments
in blank as appropriate (such instruments of transfer, powers, or assignments
in
blank, in the form of Exhibit
B
attached
hereto and made a part hereof, being the “Powers”),
all
in form and substance satisfactory to the Collateral Agent. After the occurrence
and during the continuance of a an Event of Default, the Collateral Agent
shall
have the right, at any time in its discretion and without notice to any Pledgor,
to transfer to or to register in the name of the Collateral Agent or any
of its
nominees any or all of the Pledged Collateral, subject only to the revocable
rights specified in Sections
8
and
9.
In
addition, the Collateral Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral
for
certificates or instruments of smaller or larger denominations.
5. Pledged
Collateral Adjustments.
If,
during the term of this Agreement:
(a) Any
stock
dividend, reclassification, readjustment or other change, is declared or
made in
the capital structure of any Pledged Entity (as defined below) which affects
the
Pledged Collateral, or any option included within the Pledged Collateral
is
exercised, or both, or
(b) Any
subscription warrants, shares, or any other rights or options or other
securities shall be issued in connection with the Pledged
Collateral,
then
all
new, substituted and additional shares, warrants, rights, options or other
securities, issued by reason of any of the foregoing, shall be immediately
delivered to and held by the Collateral Agent, under the terms of this Agreement
and shall constitute Pledged Collateral hereunder.
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6. Subsequent
Changes Affecting Pledged Collateral.
Each
Pledgor represents and warrants that it has made its own arrangements for
keeping itself informed of changes or potential changes affecting the Pledged
Collateral (including, but not limited to, rights to convert, rights to
subscribe, payment of distributions, reorganization or other exchanges, offers
to purchase and voting rights), and each Pledgor agrees that none of the
Collateral Agent or any of the Secured Parties shall have any obligation
to
inform such Pledgor of any such changes or potential changes or to take any
action or omit to take any action with respect thereto. The Collateral Agent
may, after the occurrence and during the continuance of an Event of Default,
without notice and at its option, transfer or register the Pledged Collateral
or
any part thereof into its or its nominee’s name with or without any indication
that such Pledged Collateral is subject to the security interest
hereunder.
7. Representations
and Warranties.
Each
Pledgor represents and warrants, severally and not jointly, as follows, in
each
case as of the date hereof:
(a) Such
Pledgor is the sole legal and beneficial owner of the Equity Interests set
forth
opposite its name on Exhibit
A
attached
hereto and made a part hereof, free and clear of any Lien except for the
Lien
created by this Agreement and the 2007 Note Documents;
(b) All
of
the Pledged Stock pledged by such Pledgor has been duly authorized and validly
issued, is fully paid and non-assessable; such Pledgor has acquired its
ownership in such Pledged Collateral in good faith without notice of any
adverse
claims, other than the 2007 Note Documents;
(c) All
of
the Pledged Stock pledged by such Pledgor is presently represented by the
certificates listed on Exhibit
A
hereto
and are a “Certificated Security” within the meaning given to such term in
Section 8-102(a)(4) of the UCC (as defined below). As of the date hereof,
there
are no existing options, warrants, calls or commitments of any character
whatsoever relating to such Pledged Stock, other than as set forth in the
2007
Note Documents;
(d) Such
Pledgor has full power and authority to enter into this Agreement and perform
the obligations hereunder;
(e) Other
than as set forth in the 2007 Note Documents, there are no restrictions upon
the
voting rights associated with, or upon the transfer of, any of the Pledged
Collateral pledged by such Pledgor;
(f) Other
than as set forth in the 2007 Note Documents, such Pledgor has the right
to
vote, pledge, assign and grant a security interest in or otherwise transfer
the
Pledged Collateral pledged by such Pledgor free of any Liens;
(g) Other
than for consents by the holders of the 2007 Note Documents and such filing
or
registration, if any, as may be required by the Secured Parties under Regulation
U on Federal Reserve Form FR G-1, no authorization, approval, or other action
by, and no notice to or filing with, any Governmental Authority and no consent
from any other party (including, without limitation, any stockholder, partner,
member or creditor of such Pledgor or any of its Affiliates) is required
either
(i) for the pledge of the Pledged Collateral pledged by such Pledgor pursuant
to
this Agreement or for the execution, delivery or performance of this Agreement
by such Pledgor or (ii) for the exercise by the Collateral Agent of the voting
or other rights provided for in this Agreement or the remedies in respect
of
such Pledged Collateral pursuant to this Agreement (except as may be required
in
connection with such disposition by laws affecting the offering and sale
of
securities generally);
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(h) The
pledge of the Pledged Collateral pursuant to this Agreement, together with
the
delivery of the stock certificates in accordance with Section
4
hereof
to the Collateral Agent, creates a valid and perfected security interest
in the
Pledged Collateral, in favor of the Collateral Agent for the benefit of the
Secured Parties, securing the payment and performance of the Secured
Obligations, subject only to the pledge and security interest created under
the
2007 Note Documents; the Collateral Agent shall have “control” (within the
meaning given to such term in Section 8-106 of the UCC) of the Pledged
Collateral and the Collateral Agent will be a “protected purchaser” (within the
meaning given to such term in Section 8-303 of the UCC);
(i) This
Agreement has been duly executed and delivered by and on behalf of such Pledgor
and constitutes the legal, valid and binding obligation of such Pledgor,
enforceable against such Pledgor in accordance with its terms;
(j) There
is
no action, suit, proceeding, governmental investigation or arbitration, at
law
or in equity, or before or by any Governmental Authority, pending, or to
the
knowledge of such Pledgor, threatened against such Pledgor, the respective
Pledged Entity (as defined below) or any of its property which will materially
and adversely affect the value of the Pledged Collateral pledged by such
Pledgor
or the ability of such Pledgor to perform its obligations under this
Agreement;
(k) Other
than for consents by the holders of the 2007 Note Documents, the execution,
delivery and performance of this Agreement by such Pledgor (i) does not violate,
constitute a breach of or a default (with the passage of time or otherwise)
under, require the consent of any person or a Governmental Authority or result
in the imposition of a Lien (other than the Lien created by this Agreement)
on
any assets of such Pledgor under or pursuant to (x) any indenture, mortgage,
or
any other agreement to which such Pledgor is a party or by which any of its
properties or assets may be bound or (y) any statute, rule, regulation, law
or
ordinance, or any judgment, decree or order applicable to such Pledgor; (ii)
complies with all corporate organization documents of such Pledgor; and (iii)
does not violate any restriction on such transfer or encumbrance of the Pledged
Collateral pledged by such Pledgor;
(l) The
Powers delivered by such Pledgor are effective endorsements duly executed
by an
appropriate person and give the Collateral Agent the authority they purport
to
confer;
(m) The
Pledged Stock pledged by such Pledgor (i) in the case of the Company as the
Pledgor, constitutes all of the equity interests in AFC held by the Company
as
of the date hereof and (ii) in the case of Xx. Xxxx as the Pledgor, constitutes
all of the equity interests in the Company held by Xx. Xxxx that have been
pledged under the 2007 Note Documents; and
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(n) The
respective Pledged Entity has been duly incorporated and is validly existing
as
a corporation in good standing under the laws of its jurisdiction of
incorporation (i.e.,
Utah in
the case of the Company as the Pledged Entity, and Delaware in the case of
the
AFC as the Pledged Entity).
8. Voting
Rights.
During
the term of this Agreement, and except as provided in this Section
8
below,
each Pledgor shall have the right to vote the Pledged Stock pledged by such
Pledgor on all corporate questions in a manner not inconsistent with the
terms
of this Agreement to which it is a party; provided,
however,
that no
such vote shall be cast, and no consent as a stockholder shall be given or
action taken, which would have the effect of impairing the position or interest
of any Secured Party in respect of the Pledged Collateral or which would
authorize, effect or consent to (i) the dissolution or liquidation, in whole
or
in part, of the issuer of Pledged Stock (a “Pledged
Entity”,
i.e.
the
Company in the context of the pledge of its shares by Xx. Xxxx, and AFC in
the
context of the pledge of its shares by the Company); (ii) the consolidation
or
merger of a Pledged Entity with any other Person; (iii) the sale, disposition
or
encumbrance of all or substantially all of the assets of a Pledged Entity,
except for Liens in favor of the Collateral Agent for the benefit of the
Secured
Parties; (iv) any change in the authorized number of shares, the stated capital
or the authorized share capital of a Pledged Entity or the issuance of any
additional shares of its Equity Interests; or (v) the alteration of the voting
rights with respect to the Equity Interests of a Pledged Entity. After the
occurrence and during the continuation of an Event of Default, the Collateral
Agent shall have the right to, following written notice from the Collateral
Agent to each Pledgor, exercise all voting rights pertaining to the Pledged
Collateral, including the right to take action by shareholder
consent.
9. Dividends
and Other Distributions.
(a) So
long as no Event of Default shall have occurred and be continuing:
(i) Each
Pledgor shall be entitled to receive and retain any and all dividends and
distributions paid in respect of the Pledged Collateral, notwithstanding
such
dividends and distributions being subject to the pledge and assignment thereof
pursuant to Section
2,
provided,
however,
that
any and all
(A) dividends
and distributions paid or payable other than in cash with respect to, and
instruments and other property received, receivable or otherwise distributed
with respect to, or in exchange for, any of the Pledged Collateral;
(B) dividends
and other distributions paid or payable in cash with respect to any of the
Pledged Collateral on account of a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus or paid-in
surplus; and
6
(C) cash
paid, payable or otherwise distributed with respect to principal of, or in
redemption of, or in exchange for, any of the Pledged Collateral;
shall
be
Pledged Collateral, and shall be forthwith delivered to the Collateral Agent
to
hold, for the benefit of the Secured Parties, as Pledged Collateral and shall,
if received by such Pledgor, be received in trust for the Collateral Agent,
for
the benefit of the Secured Parties; and
(ii) The
Collateral Agent shall execute and deliver (or cause to be executed and
delivered) to the relevant Pledgor all such proxies and other instruments
as
such Pledgor may reasonably request for the purpose of enabling such Pledgor
to
receive the dividends which it is authorized to receive and retain pursuant
to
clause (i) above.
(b) After
the
occurrence and during the continuation of an Event of Default:
(i)All
rights of each Pledgor to receive the dividends and other distributions which
it
would otherwise be authorized to receive and retain pursuant to Section
9(a)(i)
hereof
shall cease, and all such rights shall thereupon become vested in the Collateral
Agent, for the benefit of the Secured Parties, which shall thereupon, subject
only to the 2007 Note Documents, have the sole right to receive and hold
as
Pledged Collateral such dividends and other distributions;
(ii)All
dividends and other distributions which are received by each Pledgor contrary
to
the provisions of clause (i) of this Section
9(h)
shall be
received in trust for the Collateral Agent, for the benefit of the Secured
Parties, subject only to the 2007 Note Documents;
(iii)Each
Pledgor shall, upon the reasonable request of the Collateral Agent, at the
Company’s expense, execute and deliver, and cause the respective Pledged Entity
and its officers and directors to execute and deliver, all such instruments
and
documents, and do or cause to be done all such other acts and things, as
may be
required by applicable law or may be necessary or, in the opinion of the
holders
of at least a majority in aggregate principal amount of the Notes then
outstanding or their counsel, advisable to register the applicable Pledged
Collateral under the provisions of the Securities Act, and to exercise its
best
efforts to cause the registration statement relating thereto to become effective
and to remain effective for such period as prospectuses are required by law
to
he furnished, and to make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Holders of at least a majority
in aggregate principal amount of the Notes then outstanding or their counsel,
are necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Commission applicable
thereto;
(iv)Each
Pledgor shall, at the Company’s expense, use its best efforts to qualify the
Pledged Collateral pledged by such Pledgor under U.S. state securities or
“Blue
Sky” laws and to obtain all necessary governmental approvals for the sale of
such Pledged Collateral;
7
(v)The
Company shall, at the Company’s expense, cause the respective Pledged Entity to
make available to the holders of its securities, as soon as practicable,
earning
statements which will satisfy the provisions of Section 11(a) of the Securities
Act; and
(vi)Each
Pledgor shall, at the Company’s expense, do or cause to be done all such other
acts and things as may be necessary to make such sale of the Pledged Collateral
pledged by such Pledgor or any part thereof valid and binding and in compliance
with applicable law.
The
Company will reimburse the Collateral Agent for all expenses incurred by
the
Collateral Agent, including, without limitation, reasonable attorneys’ and
accountants’ fees and expenses in connection with the foregoing. Upon or at any
time after the occurrence and during the continuation of an Event of Default,
if
the Secured Parties (pursuant to the terms of the Indenture) determines that,
prior to any public offering of any securities constituting part of the Pledged
Collateral, such securities should be registered under the Securities Act
and/or
registered or qualified under any other federal or state law and such
registration and/or qualification is not practicable, then each Pledgor agrees
that it will be commercially reasonable if a private sale, upon at least
ten
(10) Business Days’ notice to each Pledgor, is arranged so as to avoid a public
offering, even though the sales price established and/or obtained at such
private sale may be substantially less than prices which could have been
obtained for such security on any market or exchange or in any other public
sale.
10. Transfers
and other Liens.
Each
Pledgor agrees that it will not, without the prior written consent of the
Collateral Agent: (i) sell, transfer or otherwise dispose of or grant any
option
with respect to, or create or permit to exist any Lien upon or with respect
to,
any of the Pledged Collateral, except as expressly permitted by this Agreement;
or (ii) take any action in connection with any of the Pledged Collateral
which
would materially impair the value of the Pledged Collateral or otherwise
materially and adversely affect the interest or rights of the Collateral
Agent
or the Secured Parties hereunder.
Each
Pledgor further agrees that it will procure, or take reasonable efforts to
procure, that the respective Pledged Entity and any other direct or indirect
subsidiary thereof shall carry on business only in the ordinary course and
will
not dispose of or agree to dispose of a substantial part of its assets or
undertaking or take any action in connection with any of the Pledged Collateral
pledged by such Pledgor which would materially impair the value of such Pledged
Collateral or otherwise materially and adversely affect the interest or rights
of the Collateral Agent or the Secured Parties hereunder.
11. Defense
of Title.
Each
Pledgor will defend the title to the Pledged Collateral pledged by such Pledgor
and the Liens of the Collateral Agent in such Pledged Collateral against
the
claim of any Person and will maintain and preserve such Liens.
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12. Additional
Equity Interests.
The
Pledgors will, upon the Company obtaining ownership of any additional equity
interests in AFC, which equity interests are not already Pledged Collateral
(the
“Additional
Equity Interests”),
promptly (and in any event within three (3) Business Days) deliver to the
Collateral Agent an amendment to this Agreement, duly executed by the Pledgors
and in form and substance reasonably satisfactory to the Secured Parties,
in
respect of any such Additional Equity Interests, pursuant to which the Company
shall pledge to the Collateral Agent all of such Additional Equity Interests.
The Pledgors hereby authorize the Collateral Agent to attach such amendment
to
this Agreement and agrees that all Pledged Stock listed on any such amendment
delivered to the Collateral Agent shall for all purposes hereunder be considered
Pledged Collateral.
13. Remedies.
(a) The
Collateral Agent shall have, in addition to any other rights given under
this
Agreement or by law, all of the rights and remedies with respect to the Pledged
Collateral of a secured party under the Uniform Commercial Code as in effect
in
the State of New York (the “UCC”)
(whether or not the UCC applies to the affected Pledged Collateral). In
addition, after the occurrence and during the continuation of an Event of
Default, the Collateral Agent shall have such powers of sale and other powers
as
may be conferred by applicable law. With respect to the Pledged Collateral
or
any part thereof which shall then be in or shall thereafter come into the
possession or custody of the Collateral Agent or which the Collateral Agent
shall otherwise have the ability to transfer under applicable law, the
Collateral Agent may, with the consent of the holders of a majority in aggregate
principal amount of the Notes at the time outstanding, without notice except
as
specified below, after the occurrence and during the continuation of an Event
of
Default, sell or cause the same to be sold at any exchange, broker’s board or at
public or private sale, in one or more sales or lots, at such price as the
Collateral Agent or the Secured Parties (acting as the holders of a majority
in
aggregate principal amount of the Notes at the time outstanding) may deem
best,
for cash or on credit or for future delivery, without assumption of any credit
risk, and the purchaser of any or all of the Pledged Collateral so sold shall
thereafter own the same, absolutely free from any claim, encumbrance or right
of
any kind whatsoever. The Collateral Agent or any Secured Party may, in its
own
name, or in the name of a designee or nominee, buy the Pledged Collateral
at any
public sale and, if permitted by applicable law, buy the Pledged Collateral
at
any private sale. The Company agrees to pay to the Collateral Agent all
reasonable expenses (including, without limitation, court costs and reasonable
attorneys’ and paralegals’ fees and expenses) of, or incident to, the
enforcement of any of the provisions hereof. The Collateral Agent agrees
to
distribute any proceeds of the sale of the Pledged Collateral to the Holders,
and the Company and AFC, as the guarantor under the Guarantee, and any other
guarantor that shall have executed a written guarantee of the Notes, shall
remain liable for any deficiency following the sale of the Pledged
Collateral.
(b) Unless
any of the Pledged Collateral threatens to decline speedily in value or is
or
becomes of a type sold on a recognized market, the Collateral Agent will
give
the Pledgors reasonable notice of the time and place of any public sale thereof,
or of the time after which any private sale or other intended disposition
is to
be made. Any sale of the Pledged Collateral conducted in conformity with
reasonable commercial practices of banks, commercial finance companies,
insurance companies or other financial institutions disposing of property
similar to the Pledged Collateral shall be deemed to be commercially reasonable.
Notwithstanding any provision to the contrary contained herein, each Pledgor
agrees that any requirements of reasonable notice shall be met if such notice
is
received by such Pledgor as provided in Section
30
below at
least ten (10) Business Days before the time of the sale or disposition.
Any
other requirement of notice, demand or advertisement for sale is waived,
to the
extent permitted by law. The Collateral Agent shall not be obligated to make
any
sale of the Pledged Collateral regardless of notice of sale having been given.
The Collateral Agent 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.
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(c)In
view
of the fact that U.S. federal and state securities laws may impose certain
restrictions on the method by which a sale of the Pledged Collateral may
be
effected after an Event of Default, each Pledgor agrees that after the
occurrence and during the continuation of an Event of Default, the Collateral
Agent may, from time to time, attempt to sell all or any part of the Pledged
Collateral by means of a private placement restricting the bidders and
prospective purchasers to those who are qualified and will represent and
agree
that they are purchasing for investment only and not for distribution. In
so
doing, the Collateral Agent may solicit offers to buy the Pledged Collateral,
or
any part of it, from a limited number of investors deemed by the Collateral
Agent, in its reasonable judgment, to be financially responsible parties
who
might be interested in purchasing the Pledged Collateral. If the Collateral
Agent solicits such offers from not less than four (4) such investors, then
the
acceptance by the Collateral Agent of the highest offer obtained therefrom
shall
be deemed to be a commercially reasonable method of disposing of such Pledged
Collateral; provided,
however,
that
this Section
13
does not
impose a requirement that the Collateral Agent solicit offers from four (4)
or
more investors in order for the sale to be commercially reasonable.
(d) Each
Pledgor agrees to the maximum extent permitted by applicable law that, following
the occurrence and during the continuance of an Event of Default, it will
not at
any time plead, claim or take the benefit of any appraisal, valuation, stay,
extension, moratorium or redemption law now or hereafter in force in order
to
prevent or delay the enforcement of this Agreement, or the absolute sale
of the
whole or any part of the Pledged Collateral or the possession thereof by
any
purchaser at any sale hereunder, and each Pledgor waives the benefit of all
such
laws to the extent it lawfully may do so. Each Pledgor agrees that it will
not
interfere with any right, power and remedy of the Collateral Agent provided
for
in this Agreement or now or hereafter existing at law or in equity or by
statute
or otherwise, or the exercise or beginning of the exercise by the Collateral
Agent of any one or more of such rights, powers or remedies. No failure or
delay
on the part of the Collateral Agent to exercise any such right, power or
remedy
and no notice or demand which may be given to or made upon any Pledgor by
the
Collateral Agent with respect to any such remedies shall operate as a waiver
thereof, or limit or impair the Collateral Agent’s right to take any action or
to exercise any power or remedy hereunder, without notice or demand, or
prejudice its rights as against any Pledgor in any respect.
(e) Each
Pledgor further agrees that a breach of any of the covenants by the Pledgor
contained in this Section
13
will
cause irreparable injury to the Collateral Agent, that the Collateral Agent
shall have no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this Section
13
shall be
specifically enforceable against such Pledgor, and each Pledgor hereby waives
and agrees not to assert any defenses against an action for specific performance
of such covenants.
10
14. Security
Interest Absolute.
All
rights of the Collateral Agent and security interests hereunder, and all
obligations of each Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(i) any
lack
of validity or enforceability of the Notes or any other agreement or instrument
relating thereto;
(ii) any
change in the time, manner or place of payment of, or in any other term of,
all
or any part of the Secured Obligations, or any other amendment or waiver
of or
any consent to any departure from the Notes or this Agreement;
(iii) 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
part of the Secured Obligations;
(iv) the
insolvency of any of the Pledgors or the Pledged Entities; or
(v) any
other
circumstance which might otherwise constitute a defense available to, or
a
discharge of, such Pledgor in respect of the Secured Obligations or of this
Agreement.
15. Collateral
Agent Appointed Attorney-in-Fact.
Each
Pledgor hereby appoints the Collateral Agent its attorney-in-fact, with full
authority, in the name of such Pledgor or otherwise, after the occurrence
and
during the continuation of an Event of Default, from time to time in the
Collateral Agent’s sole discretion, to take any action and to execute any
instrument which the Collateral Agent or any Secured Party may deem necessary
or
advisable to accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made payable
to such
Pledgor representing any dividend or other distribution in respect of the
Pledged Collateral or any part thereof and to give full discharge for the
same
and to arrange for the transfer of all or any part of the Pledged Collateral
on
the books of the respective Pledged Entity to the name of the Collateral
Agent
or the Collateral Agent’s nominee.
11
16. The
Intercreditor Agreement.
Notwithstanding any provision to the contrary in this Agreement, this Agreement,
the Liens and security interests granted to the Collateral Agent pursuant
to
this Agreement, and the exercise of any right or remedy by the Collateral
Agent
and the other Secured Parties hereunder are subject to the provisions of
that
certain Intercreditor Agreement of even date herewith by and among the Pledgors,
Citadel Equity Fund Ltd. and RFA Management Company, LLC (as the same may
be
amended, supplemented, modified or replaced from time to time, the “Intercreditor
Agreement”).
The
Collateral Agent and each Secured Party acknowledge and agree to be bound
by the
provisions of the Intercreditor Agreement. In the event of any conflict between
the terms of the Intercreditor Agreement and this Agreement, the terms of
the
Intercreditor Agreement shall govern and prevail. Without limiting the
generality of the foregoing, and notwithstanding anything herein to the
contrary, all rights and remedies of the Collateral Agent (and the Secured
Parties) shall be subject to the terms of the Intercreditor Agreement, and
until
the First Priority Obligations Payment Date (as used and defined in the
Intercreditor Agreement), (a)
no
Pledgor shall take any action that is inconsistent with such Pledgor’s
obligations under the First Priority Documents (as used and defined in the
Intercreditor Agreement) and (b)
any
obligation of any Pledgor hereunder with respect to the delivery or control
of
any Pledged Collateral, the notation of any Lien on any certificate of title,
xxxx of lading or other document, the giving of any notice to any bailee
or
other Person, the provision of voting rights or the obtaining of any consent
of
any Person shall be deemed to be satisfied if (i)
the
Pledgor complies with the requirements of the similar provision of the
applicable First Priority Document
and (ii)
where applicable, the Pledgor includes the Collateral Agent, as agent for
the
Secured Parties hereunder, as lienholder or secured party with respect to
any
documentation for each item of Pledged Collateral perfected by endorsement,
notation or control or for which consent is obtained. Except for matters
pertaining to the filing, amendment and continuation of financing statements,
until
the
First Priority Obligations Payment Date, neither the Collateral Agent nor
any
other Secured Party may require any Pledgor to take any action with respect
to
the creation, perfection or priority of its security interest, whether pursuant
to the express terms hereof or pursuant to the further assurances provisions
hereof, unless the First Priority Representative (as used and defined in
the
Intercreditor Agreement) shall have authorized
such
Pledgor to take similar action, and delivery of any Pledged Collateral to
the
First Priority Representative pursuant to the First Priority Documents shall
satisfy any delivery requirement hereunder.
17. Waivers.
Each
Pledgor waives to the fullest extent permitted by applicable laws presentment
and demand for payment of any of the Liabilities, protest and notice of dishonor
or an Event of Default with respect to any of the Liabilities and all other
notices to which the Pledgor might otherwise be entitled except as otherwise
expressly provided herein or in the Notes.
18. Term.
This
Agreement shall remain in full force and effect until the final payment in
full,
in cash, of the Secured Obligations. Upon the termination of this Agreement
as
provided above (other than as a result of the sale of the Pledged Collateral),
the Collateral Agent will release the security interest created hereunder
and,
if it then has possession of any Pledged Stock pledged hereunder, will deliver
such Pledged Stock previously delivered to it and the Powers to the relevant
Pledgor.
19. Reinstatement.
This
Agreement shall remain in full force and effect and continue to be effective
should any petition be filed by or against any Pledgor or the Pledged Entity
for
liquidation or reorganization, should any Pledgor or any Pledged Entity become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any
Pledgor’s or any Pledged Entity’s assets, and shall continue to be effective or
be reinstated, as the case may be.
20. Definitions.
The
singular shall include the plural and vice versa and any gender shall include
any other gender as the context may require.
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21. Binding
Effect; Successors and Assigns.
This
Agreement shall be binding upon each Pledgor and its successors and assigns,
and
shall inure to the benefit of the Collateral Agent and the Secured Parties,
and
their respective successors and assigns. Nothing set forth herein is intended
or
shall be construed to give any other Person any right, remedy or claim under,
to
or in respect of this Agreement, the Notes, or any Collateral. Each Pledgor’s
successors shall include, without limitation, a receiver, trustee or
debtor-in-possession of or for such Pledgor.
22. Governing
Law.
This
Agreement has been executed and delivered by the parties hereto in New York,
New
York. Any dispute between the Collateral Agent and the Pledgor arising out
of or
related to the relationship established between them in connection with this
Agreement, and whether arising in contract, tort, equity, or otherwise, shall
be
resolved in accordance with the laws of the State of New York.
23. Consent
to Jurisdiction and Service of Process.
THE
COLLATERAL AGENT HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF THE
STATE
OR FEDERAL COURTS LOCATED IN XXX XXXX XXXXXX, XXXX XX XXX XXXX, XXX XXXX.
EACH
PLEDGOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED
IN
XXX XXXX XXXXXX, XXXX XX XXX XXXX, XXX XXXX SHALL HAVE EXCLUSIVE JURISDICTION
TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY PLEDGOR AND THE COLLATERAL
AGENT PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATING
TO THIS AGREEMENT; PROVIDED
THAT THE
COLLATERAL AGENT AND EACH PLEDGOR ACKNOWLEDGE THAT ANY APPEALS FROM THOSE
COURTS
MAY HAVE TO BE HEARD
BY
X XXXXX XXXXXXX XXXXXXX XX XXX XXXX XXXXXX; AND, PROVIDED,
FURTHER,
NOTHING
IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE COLLATERAL AGENT
FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION
TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE SECURED OBLIGATIONS,
OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE COLLATERAL AGENT.
EACH PLEDGOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN
ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH PLEDGOR HEREBY WAIVES
ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS
AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH PLEDGOR HEREBY WAIVES PERSONAL SERVICE OF
THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE
MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PLEDGOR AT THE ADDRESS SET
FORTH
IN THIS AGREEMENT FOR SUCH PLEDGOR AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR FIVE (5) DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
The
Collateral Agent shall have the right to proceed against each Pledgor or
its
personal property in a court in any location to enable the Collateral Agent
to
obtain personal jurisdiction over such Pledgor, to realize on the Pledged
Collateral or any other security for the Secured Obligations or to enforce
a
judgment or other court order entered in favor of the Collateral
Agent.
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24. WAIVER
OF JURY TRIAL.
EACH PLEDGOR AND THE COLLATERAL AGENT WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING
IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN THE COLLATERAL AGENT AND ANY PLEDGOR
ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH. EITHER OF THE PLEDGORS OR THE COLLATERAL AGENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE
OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
25. Advice
of Counsel.
Each
Pledgor represents and warrants to the Collateral Agent that it has discussed
this Agreement and, specifically, the provisions of Sections 22 through 24
hereof, with its counsel.
26. Severability.
If any
provision of this Agreement is held to be prohibited or unenforceable in
any
jurisdiction the substantive laws of which are held to he applicable hereto,
such prohibition or unenforceability shall not affect the validity or
enforceability of the remaining provisions hereof, to the extent permitted
by
applicable law, and shall not invalidate or render unenforceable such provision
in any other jurisdiction, to the extent permitted by applicable
law.
27. Further
Assurances.
Each
Pledgor agrees that at any time and from time to time, at the expense of
such
Pledgor, such Pledgor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be required by applicable
law or may be necessary or desirable, or that the Collateral Agent or any
Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable
the
Collateral Agent to exercise and enforce its rights and remedies hereunder
with
respect to any of the Pledged Collateral, including, without limitation,
the
filing of financing statements under Article 9 of the Uniform Commercial
Code of
(i) the State of Utah, in the case of the Company as the Pledgor, and (ii)
the
District of Columbia, in the case of Xx. Xxxx as the Pledgor, which initial
filing shall be completed or caused to be completed by such Pledgor within
ten
(10) days from the date hereof. Each Pledgor hereby further agrees that it
shall
not make any change to its name, jurisdiction, the form of its organization
or
principal residence without prior written notice or otherwise permitted under
the Indenture. Each Pledgor authorizes the Collateral Agent to file any
financing statements and amendments thereto relating to the Pledged Collateral,
in form and substance required by the Collateral Agent (acting at the direction
of the Holders of the Notes), which describe the Pledged Collateral and include
therein all other information which is required by Article 9 of the UCC or
other
applicable law with respect to the preparation or filing of a financing
statement or amendment.
14
28. The
Collateral Agent’s Duty of Care.
(a) The
Collateral Agent shall not be liable for any acts, omissions, errors of judgment
or mistakes of fact or law including, without limitation, acts, omissions,
errors or mistakes with respect to the Pledged Collateral, except for those
arising out of or in connection with the Collateral Agent’s (i) gross negligence
or willful misconduct, or (ii) failure to use reasonable care with respect
to
the safe custody of the Pledged Collateral in the Collateral Agent’s possession.
Without limiting the generality of the foregoing, the Collateral Agent shall
be
under no obligation to take any steps necessary to preserve rights in the
Pledged Collateral against any other parties but may do so at its option.
All
expenses incurred in connection therewith shall be for the sole account of
the
Company, and shall constitute part of the Secured Obligations secured
hereby.
(b) Without
limiting the generality of the foregoing, (i) the Collateral Agent shall
not be
subject to any fiduciary or other implied duties, regardless of whether an
Event
of Default has occurred and is continuing and (ii) the Collateral Agent shall
not have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby,
provided that it shall not amount to gross negligence or willful misconduct
or a
failure to use reasonable care.
(c) No
provision of this Agreement shall require the Collateral Agent to expend
or risk
its own funds or otherwise incur any financial liability in the performance
of
any of its duties hereunder, or in the exercise of any of its rights or powers,
if it shall have reasonable grounds for believing that repayment of such
funds
or adequate indemnity against such risk or liability is not reasonably assured
to it. The Collateral Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement or the Indenture. The Collateral
Agent shall not be liable for any delay or failure to act as may be required
hereunder when such delay or failure is due to any act of God, interruption
or
other circumstances beyond its control provided
it
exercises such diligence as the circumstances may reasonably require. The
Collateral Agent shall be entitled to rely on any communication, instrument,
paper or other document reasonably believed by it to be genuine and correct
and
to have been signed or sent by the proper person. After receiving any direction
from the Pledgors or the Secured Parties, the Collateral Agent may (at the
expense of the Pledgors) consult with legal counsel of its selection (provided
that such counsel shall be a firm of nationally recognized reputation), and
the
written advice of such counsel (or any Opinion of Counsel caused by the Pledgors
to be furnished by the Company to the Collateral Agent) shall be full and
complete protection in respect of any action taken, suffered or omitted by
it
hereunder in good faith and in reliance thereon.
(d) The
Collateral Agent shall not be deemed to have notice of any Event of Default
unless an officer of the Collateral Agent has actual knowledge thereof or
unless
written notice of any such Event of Default is received by the Collateral
Agent
at the office of the Collateral Agent specified in or pursuant to Section
30
hereof.
15
(e) The
Collateral Agent’s sole duty with respect to the custody, safekeeping and
physical preservation of the Pledged Collateral shall be to deal with it
in the
same manner as the Collateral Agent deals with similar property for its own
account.
(f) In
no
event shall the Collateral Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Collateral Agent has been advised of the
likelihood of such loss or damage and regardless of the form of
action.
(g) The
Collateral Agent shall not be responsible for or have any duty to ascertain
or
inquire into (i) any statement, warranty or representation made herein or
in
connection herewith, (ii) the contents of any certificate, report or other
document delivered thereunder or in connection therewith, (iii) the performance
or observance of any of the covenants, agreements or other terms or conditions
set forth herein, or (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or
document.
(h) The
Collateral Agent is authorized to take such actions and to exercise such
powers
as are delegated to the Collateral Agent by the terms hereof, together with
such
actions and powers as are reasonably incidental thereto.
(i) The
bank
or other entity serving as the Collateral Agent shall, in its capacity as
a
Secured Party, have the same rights and powers as any other Secured Party
and
may exercise the same as though it were not the Collateral Agent. The Collateral
Agent and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Pledgor or any of its Affiliates
as if
it were not the Collateral Agent hereunder.
29.Additional
Provisions Relating to the Collateral Agent.
(a) Any
corporation, bank, trust company or association into which the Collateral
Agent
may be merged or converted or with which it may be consolidated, or any
corporation, bank, trust company or association resulting from any merger,
conversion or consolidation to which the Collateral Agent shall be a party,
or
any corporation, bank, trust company or association succeeding to all or
substantially all the corporate trust business of the Collateral Agent, shall
be
the successor of the Collateral Agent hereunder, without the execution or
filing
of any paper or any further act on the part of any of the parties
hereto.
(b) The
following procedures shall be utilized for the resignation or removal of
the
Collateral Agent:
(i) The
Collateral Agent may at any time resign by giving written notice of such
resignation to the Company and to the Holders of the Notes. Upon receiving
such
notice of resignation, the Company shall promptly appoint a successor collateral
agent by written instrument, in duplicate, executed by order of the Board
of
Directors, one copy of which instrument shall be delivered to the resigning
Collateral Agent and one copy to the successor collateral agent. If no successor
collateral agent shall have been so appointed and have accepted appointment
sixty (60) days after the mailing of such notice of resignation to the Holders,
the resigning Collateral Agent may, upon ten (10) Business Days’ notice to the
Company and the Holders, petition, at the expense of the Company, any court
of
competent jurisdiction for the appointment of a successor collateral agent,
or,
any Holder who has been a bona fide holder of a Note or Notes for at least
six
(6) months may, petition any such court for the appointment of a successor
collateral agent. Such court may thereupon, after such notice, if any, as
it may
deem proper and prescribe, appoint a successor collateral agent.
16
(ii) In
case
at any time any of the following shall occur:
(a) the
Collateral Agent shall cease to be eligible in accordance with the provisions
of
Section 29(c) and shall fail to resign after written request therefor by
the
Company or by any such Holder; or
(b) the
Collateral Agent shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or a receiver of the Collateral Agent or of its property
shall be appointed, or any public officer shall take charge or control of
the
Collateral Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then,
in
any such case, the Company may remove the Collateral Agent and appoint a
successor collateral agent by written instrument, in duplicate, executed
by
order of the Board of Directors, one copy of which instrument shall be delivered
to the Collateral Agent so removed and one copy to the successor collateral
agent, or, any Holder who has been a bona fide holder of a Note or Notes
for at
least six (6) months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of
the
Collateral Agent and the appointment of a successor collateral agent;
provided
that if
no successor collateral agent shall have been appointed and have accepted
appointment sixty (60) days after either the Company or such Holder has removed
the Collateral Agent, or the Collateral Agent resigns, the Collateral Agent
so
removed may petition, at the expense of the Company, any court of competent
jurisdiction for an appointment of a successor collateral agent. Such court
may
thereupon, after such notice, if any, as it may deem proper and prescribe,
remove the Collateral Agent and appoint a successor collateral
agent.
(iii) The
holders of a majority in aggregate principal amount of the Notes at the time
outstanding may at any time remove the Collateral Agent and nominate a successor
collateral agent which shall be deemed appointed as successor collateral
agent
unless, within ten (10) days after notice to the Company of such nomination,
the
Company objects thereto, in which case the Collateral Agent so removed or
any
Holder, or, if such Collateral Agent so removed or any Holder fails to act,
the
Company, upon the terms and conditions and otherwise as in Section
29(b)
provided, may petition any court of competent jurisdiction for an appointment
of
a successor collateral agent.
(iv) Any
resignation or removal of the Collateral Agent and appointment of a successor
collateral agent pursuant to any of the provisions of this Section shall
become
effective upon acceptance of appointment by the successor collateral agent
as
provided in Section
29(c).
17
(c)
Any
successor collateral agent appointed as provided in Section
29(b)
shall
execute, acknowledge and deliver to the Company and to its predecessor
collateral agent an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor collateral agent
shall
become effective and such successor collateral agent, without any further
act,
deed or conveyance, shall become vested with all the rights, powers, duties
and
obligations of its predecessor hereunder, with like effect as if originally
named as collateral agent herein; but, nevertheless, on the written request
of
the Company or of the successor collateral agent, the collateral agent ceasing
to act shall execute and deliver an instrument transferring to such successor
collateral agent all of the rights and powers of the collateral agent so
ceasing
to act. Upon request of any successor collateral agent, the Company shall
execute any and all instruments in writing for more fully and certainly vesting
in and confirming to such successor collateral agent all such rights and
powers.
Upon
acceptance of appointment by a successor collateral agent as provided in
this
Section, the Company (or the former collateral agent, at the written direction
of the Company) shall mail or cause to be mailed notice of the succession
of
such collateral agent hereunder to the Holders of the Notes. If the Company
fails to mail such notice within ten (10) days after acceptance of appointment
by the successor collateral agent, the successor collateral agent shall cause
such notice to be mailed at the expense of the Company.
(d) At
any
time or times, for the purpose of meeting any legal requirements of any
jurisdiction in which any of the Pledged Collateral may at the time be located,
the Collateral Agent shall have the power to appoint any Person or Persons
either to act as co-collateral agent, or co-collateral agents, jointly with
the
Collateral Agent of all or any part of the Pledged Collateral or to act as
separate collateral agent or separate collateral agents of all or any part
of
the Pledged Collateral and to vest in such Person or Persons, in such capacity,
such title to the Pledged Collateral or any part thereof, and such rights,
powers, duties or obligations as the Collateral Agent may consider necessary
or
desirable, subject to the other provisions of this Section
29.
(e)
Unless
otherwise provided in the instrument appointing such co-collateral agent
or
separate collateral agent, every co-collateral agent or separate collateral
agent in respect of the custody, control or management of the Pledged Collateral
shall, to the extent permitted by law, be appointed subject to the following
terms:
(i) All
rights, power, duties and obligations under this Agreement conferred upon
the
Collateral Agent shall be exercised solely by the Collateral Agent;
(ii) All
rights, powers, duties and obligations conferred or imposed upon the collateral
agents shall be conferred or imposed upon and exercised or performed by the
Collateral Agent, or by the Collateral Agent and such co-collateral agent
or
co-collateral agents, or separate collateral agent or separate collateral
agents
jointly, except to the extent that, under the law of any jurisdiction in
which
any particular act or acts are to be performed, the Collateral Agent shall
be
incompetent or unqualified to perform such act or acts, in which event such
act
or acts shall be performed by such co-collateral agent or co-collateral agents
or separate collateral agent or separate collateral agents;
18
(iii) Any
request in writing by the Collateral Agent to any co-collateral agent or
separate collateral agent to take or to refrain from taking any action hereunder
shall be sufficient warrant for the taking, or the refraining from taking,
of
such action by such co-collateral agent or separate collateral
agent;
(iv) Any
co-collateral agent or separate collateral agent to the extent permitted
by law
may delegate to the Collateral Agent the exercise of any right, power, duty
or
obligation, discretionary or otherwise;
(v) The
Collateral Agent at any time, by an instrument in writing, may accept the
resignation of, or remove, any co-collateral agent or separate collateral
agent
appointed under this Section
29.
As
successor to any co-collateral agent or separate collateral agent so resigned
or
removed may be appointed in the manner provided in this Section
29;
(vi) No
collateral agent hereunder shall be personally liable by reason of any act
or
omission of any other collateral agent hereunder;
(vii) Any
demand, request, direction, appointment, removal, notice, consent, waiver
or
other action in writing delivered to the Collateral Agent shall be deemed
to
have been delivered to each such co-collateral agent or separate collateral
agent; and
(viii) Any
Collateral received by any such co-collateral agent or separate collateral
agent
hereunder shall forthwith, so far as may be permitted by law, be turned over
to
the Collateral Agent to be held pursuant to the terms hereof.
(f) Upon
the
acceptance in writing of such appointment by any such co-collateral agent
or
separate collateral agent, it or he shall be vested with the estate, right,
title and interest in the Pledged Collateral, or any portion thereof; and
with
such rights, powers, duties, trusts or obligations, jointly or separately
with
the Collateral Agent, all as shall be specified in the instrument of
appointment, subject to all the terms hereof.
(g) In
case
any co-collateral agent or separate collateral agent shall become incapable
of
acting, resign or be removed, the right, title and interest in the Pledged
Collateral and all rights, powers, duties and obligations of said co-collateral
agent or separate collateral agent shall, so far as permitted by law, vest
in
and be exercised by the Collateral Agent unless and until a successor
co-collateral agent or separate collateral agent shall be appointed pursuant
to
this Section 29.
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30. 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 (i) personally served or hand delivered, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by express courier service with charges
prepaid, or (iv) transmitted by 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 (i) if personally served, when served,
or
upon hand delivery, (ii) if mailed, on the third business day after deposit
in
first class mail with postage prepaid and properly addressed, (iii) if by
express courier service, when received, and (iv) if by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address
or
number designated below, on the day transmitted (if delivered on a business
day
during normal business hours where such notice is to be received), or the
first
business day following such transmittal (if delivered other than on a business
day during normal business hours where such notice is to be received). The
addresses for such communications shall be: (i) if to Xx. Xxxx or the Company,
to: Star City International Building, 10, Jiuxianqiuo Road, C-16th
Floor,
Chaoyang, Beijing, People's Republic of China, Attn: Xx. Xxxx You-Bin, facsimile
number: 86 10 8456 7768, with a copy by facsimile only to: Xxxx Xxxxxx, Xxxxx
Day, 0000 Xxxxxxxxx Xxxxxx, X.X., Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, facsimile
number: (000) 000-0000; and (ii) if to the Collateral Agent, to: The Bank
of New
York Mellon, 000 Xxxxxxx Xxxxxx, 0X, Xxx Xxxx, Xxx Xxxx 00000,
Fax:
(000) 000-0000/5803, Attention: Global Finance Americas.
31. Indemnity
and Expenses.
The
Company agrees, upon demand, to indemnify the Collateral Agent against any
and
all losses, claims, damages, penalties, fines, liabilities or expenses,
including incidental and out-of-pocket expenses and reasonable attorneys
fees
incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Agreement and to pay to the Collateral
Agent the amount of any and all expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Collateral
Agent may incur in connection with (i) the administration of this Agreement,
(ii) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Pledged Collateral, (iii) the
exercise or enforcement of any of the rights of
the
Collateral Agent hereunder or (iv) the failure by any Pledgor to perform
or
observe any of the provisions hereof.
32. Amendments,
Waivers and Consents.
None of
the terms or provisions of this Agreement may be waived, altered, modified
or
amended, and no consent to any departure by any Pledgor herefrom shall be
effective, except by or pursuant to an instrument in writing which is duly
executed by each Pledgor and the Collateral Agent and (ii) complies with
the
terms of the Notes. Any such waiver shall be valid only to the extent set
forth
therein. A waiver by the Collateral Agent of any right or remedy under this
Agreement on any one occasion shall not be construed as a waiver of any right
or
remedy which the Collateral Agent would otherwise have on any future occasion.
No failure to exercise or delay in exercising any right, power or privilege
under this Agreement on the part of the Collateral Agent shall operate as
a
waiver thereof; and no single or partial exercise of any right, power or
privilege under this Agreement shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
33. Section
Headings.
The
section headings herein are for convenience of reference only, and shall
not
affect in any way the interpretation of any of the provisions
hereof.
20
34. Execution
in Counterparts.
This
Agreement may be executed in any number of counterparts, each of which shall
be
an original, but all of which shall together constitute one and the same
agreement.
35. Merger.
This
Agreement embodies the entire agreement and understanding, between the Pledgors
and the Collateral Agent or any holder of the Notes and supersedes all prior
agreements and understandings, written and oral, relating to the subject
matter
hereof.
36. Termination;
Release of Collateral.
Notwithstanding anything in this Agreement to the contrary, unless an Event
of
Default shall be in existence, the Company may, sell, assign, transfer or
otherwise dispose of any Pledged Collateral pledged by the Company in a bona
fide sale transaction to an unaffiliated third party so long as (i) the Company
receives consideration at least equal to the fair market value of such Pledged
Collateral, (ii) at least 75% of the consideration paid to the Company is
in the
form of cash or the assumption of liabilities of the Company or its subsidiaries
(other than contingent liabilities or liabilities that are by their terms
subordinated to the Notes or Guarantee) as a result of which the Company
(and
its subsidiaries) are no longer obligated with respect to such liabilities,
and
(iii) the Company delivers a certificate of its President or Chief Financial
Officer to the Collateral Agent and the Secured Parties certifying that such
sale or other disposition complies with the foregoing. The proceeds of any
such
sale of the Pledged Collateral shall be applied in accordance with the terms
of
Section 4.12 of the June 27, 2007 Indenture, if applicable, and in the event
that the Company is required to make an offer to repurchase the 2007 Notes
(or
any refinancing thereof to the extent permitted by the Intercreditor Agreement
and the Subscription Agreement (the “Refinanced
Notes”))
pursuant to said Section 4.12 (or any successor provision in respect of any
Refinanced Notes), the Allocable Excess Proceeds (as defined in the June
27,
2007 Indenture) shall be applied to the 2007 Notes or the Refinanced Notes,
as
applicable, in accordance with said Section 4.12 (or such successor provision
in
respect of any Refinanced Notes) and the balance of such Allocable Excess
Proceeds, if any, shall be applied to any accrued and unpaid interest and
then
to the outstanding principal balance of the Notes on a pari passu basis among
the Holders; provided,
however,
if the
First Priority Obligations Payment Date shall have occurred, the entire
Allocable Excess Proceeds that would exist under the June 27, 2007 Indenture
if
the 2007 Notes were outstanding under the June 27, 2007 Indenture, shall
be
applied to pay any accrued and unpaid interest on the Notes and then to the
outstanding principal amount of the Notes, on a pari passu basis. In addition,
the Pledged Collateral pledged by the Company shall be subject to release
in
accordance with Section 10.04 of the June 27, 2007 Indenture (such Pledged
Collateral referred to in the immediately preceding sentence being the
“Released
Collateral”)
The
Liens under this Agreement shall terminate with respect to such Pledged
Collateral upon such sale, transfer, assignment, disposition and payment
as
aforesaid pursuant to this Section 36, and upon the written request of the
Company, the Collateral Agent shall execute and deliver, at the cost of the
Company, such instrument or document as may be necessary to release the Liens
granted hereunder; provided
further however,
that
(i) the Collateral Agent shall not be required to execute any such documents
on
terms which would expose the Collateral Agent or any holder of the Notes
to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (ii) such release
shall
not in any manner discharge, affect or impair the Secured Obligations or
any
Liens on (or obligations of the Company in respect of) all interests retained
by
the Company, including without limitation, the proceeds of any sale, all
of
which shall continue to constitute part of the Pledged Collateral pledged
by the
Company.
21
37. Non-Recourse
Obligations.
Notwithstanding any other provision in this Agreement, the Subscription
Agreement or any other document relating to this Agreement or the Subscription
Agreement, except for any damages, costs and expenses attributable to willful
misconduct, bad faith or breach of this Agreement by Xx. Xxxx, (i) Xx. Xxxx
shall not be personally liable, and neither the Collateral Agent nor any
of the
Secured Parties shall commence or prosecute any action against Xx. Xxxx,
for
payment or performance of any Secured Obligations, and any indemnification
or
expense reimbursement provided for herein or therein; (ii) neither the
Collateral Agent nor any of the Secured Parties shall seek, obtain, or enforce
a
deficiency judgment against Xx. Xxxx; (iii) the Collateral Agent’s and the
Secured Party’s recourse against Xx. Xxxx for the Secured Obligations shall be
limited to the Pledged Collateral; and (iv) the Collateral Agent and each
Secured Party waive any right to exercise any banker’s right of set-off, arising
from any of the Secured Obligations, against any funds of Xx. Xxxx in the
Collateral Agent’s custody, control, or possession.
38. Margin
Stock Representations.
The
Pledors represent and confirm that the Company used the proceeds of the sale
of
the Notes for general corporate purposes, including the expansion of the
Company's and its subsidiaries' business and general working capital. No
part of
the proceeds from the sale of the Notes was used, directly or indirectly,
for
the purpose of buying or carrying any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System (12
CFR
221) or to involve the Company in a violation of Regulation X of said Board
(12
CFR 224). As used in this Section, the terms “margin stock” and “buying or
carrying margin stock” shall have the meanings assigned to them in said
Regulation U. The Company does not own any margin stock.
39. Consent
of The Bank of New York Mellon.
By
signing below, The Bank of New York Mellon, in its capacity as collateral
agent
under the 2007 Pledge Agreement and the Indentures, hereby in accordance
with
the consent of the holders of the 2007 Notes, upon which it will conclusively
rely, consents to this Agreement.
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IN
WITNESS WHEREOF, each
Pledgor and the Collateral Agent have executed this Agreement as of the
date set
forth above.
XX. XXXX YOU-BIN | ||
|
|
|
By: | /s/ Leng You-Bin | |
Name: | Leng You-Bin |
AMERICAN DAIRY, INC | ||
|
|
|
By: | /s/ Xxxxxxxx Xxxx | |
Name: | Xxxxxxxx Xxxx | |
Title: | Chief Financial Officer |
Acknowledged
and agreed to
as
of the
date first written above.
The
Bank
of New York Mellon, as Collateral Agent
By: | /s/ Xxxx Xxx |
Name: | Xxxx Xxx |
Title: | Assistant Vice President |
For
purposes of Section 39 of this Agreement:
The
Bank
of New York Mellon, as collateral agent under the 2007 Pledge Agreement
and the
Indentures
By: | /s/ Xxxx Xxx |
Name: | Xxxx Xxx |
Title: | Assistant Vice President |