SECOND AMENDED AND RESTATED PLEDGE AGREEMENT
|
|
EXHIBIT
10.4
|
|
|
SECOND AMENDED AND
RESTATED PLEDGE AGREEMENT
|
THIS
SECOND AMENDED AND RESTATED PLEDGE AGREEMENT (this “Agreement”), is entered into
as of December 22, 2008 by and between Wits Basin Precious Minerals Inc., a
Minnesota corporation (“Pledgor”), and China Gold,
LLC, a Kansas limited liability company, together with its successors and
assigns and all other holders of securities and equity interests pursuant to the
Convertible Notes Purchase Agreement (hereinafter defined) (together with its
respective successors and assigns, “Purchaser”).
RECITALS
The
following recitals are a material part of this Agreement.
A. Pledgor
and Purchaser are parties to that certain Convertible Notes Purchase Agreement
dated as of April 10, 2007 as amended from time to time (as the same may
hereafter be further modified, amended, restated or supplemented from time to
time, the “Purchase
Agreement”), pursuant to which Purchaser loaned Pledgor an aggregate
principal amount of $9.8 million in convertible secured promissory notes (the
“Prior
Notes”). On November 10, 2008, the parties converted the Prior
Notes (including accrued and unpaid interest thereon) into a Promissory Note
dated November 10, 2008 in the principal amount of $9,800,000 (the “First Amended
Note”). Capitalized terms used in this Agreement without
definition have the definitions given to them in the Purchase
Agreement.
B. Pursuant
to the Purchase Agreement, Pledgor and Purchaser entered into that certain
Pledge Agreement dated as of April 10, 2007 (“Original Pledge Agreement”)
whereby Pledgor agreed to provide Purchaser security documents, in form and
substance satisfactory to Purchaser, granting Purchaser a security interest in
all of the assets acquired from the use of proceeds for its purchase of the
Prior Notes. Accordingly, Pledgor pledged certain shares of common
stock of Wits-China Acquisition Corp, a Minnesota corporation. On
February 7, 2008, the parties amended the Original Pledge Agreement pursuant to
an Amended and Restated Pledge Agreement (the “Amended Pledge Agreement”) to
provide Purchaser a pledge of the equity interests in two additional wholly
owned subsidiaries of Pledgor, namely China Global Mining Resources Limited, a
Hong Kong corporation (“CGMR
HK”), and China Global Mining Resources Limited, a British Virgin Islands
corporation with registered number 1386052 (“Original BVI Co”), which held
assets acquired with proceeds from the Prior Notes received from
Purchaser.
C. On
October 28, 2008, Purchaser loaned Pledgor an additional $441,000 pursuant to
the terms of a Promissory Note dated October 28, 2008 (the “Additional Note”), with
Pledgor’s payment obligations under the Additional Note secured by the Amended
Pledge Agreement, amongst other forms of security.
D. Pledgor
has entered into an agreement (the “JV Transaction”) with London
Mining Plc (“London
Mining”), whereby London Mining and Pledgor have formed a new joint
venture company, China Global Mining Resources (BVI) Limited, a newly
incorporated British Virgin corporation with registered number 1513743 (“CGMR BVI”), which will acquire
and operate certain mining properties in the People’s Republic of China (the
“PRC
Properties”). Pledgor and certain of its subsidiaries
currently hold the rights to acquire the PRC Properties (the “Rights”), and such Rights are
subject to the security interest of Purchaser.
E. On
even date herewith, Pledgor and Purchaser entered into that certain Amendment
No. 3 to the Purchase Agreement (“Amendment No. 3”), whereby the
parties consolidated the First Amended Note and Additional Note, and Pledgor
issued Purchaser in lieu thereof a promissory note dated December 22,
2008 in the aggregate principal amount of
$10,421,107.18. Additionally, pursuant to Amendment No. 3, the
parties modified certain terms of First Amended Note and Additional Note to,
among other modifications, amend certain terms of Purchaser’s security interest
to release from such security interest Pledgor’s equity interest in CGMR HK and
include in such security interest Pledgor’s equity interest in the CGMR
BVI.
F. Pursuant
to the terms of Amendment No. 3, Pledgor and Purchaser wish to amend and restate
the Amended Pledge Agreement on the terms and conditions set forth herein to
permit Issuer to complete the JV Transaction.
G. This
Agreement supersedes in its entirety the Amended Pledge Agreement, which shall
have no continuing effect from the date hereof.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing facts and premises hereby made a
part of this Agreement, the mutual promises hereinafter set forth and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the parties, Issuer and Purchaser agree as follows:
1. Pledge. As security
for the prompt payment and performance of the Secured Obligations (defined
below) in full when due, whether at stated maturity, by acceleration or
otherwise (including amounts that would become due but for the operation of the
provisions of the United States Bankruptcy Code (11 U.S.C. Section 101, et seq.), as
in effect from time to time, and any successor statute thereto (“Bankruptcy Code”)), Pledgor by
this Agreement pledges, grants, transfers, and assigns to Purchaser a security
interest in all of Pledgor’s right, title, and interest in and to the Collateral
(defined below).
For the
purposes of this Agreement, (a) “Collateral” means Pledgor’s
interest from time to time in the Pledged Interests, the Future Rights, and the
Proceeds, collectively; (b) “Pledged Interests” means (i)
all Equity Interests of Pledgor, and (ii) the certificates or instruments
representing such Equity Interests, if any; (c) “Equity Interests” means all
securities, shares, units, options, warrants, interests, participations, or
other equivalents (regardless of how designated) of Wits-China and THE ORIGINAL
BVI CO (together with Wits-China, the “Subsidiaries”) and CGMR BVI;
(d) “Future Rights”
means: (x) all Equity Interests (other than Pledged Interests) of Pledgor, and
all securities convertible or exchangeable into, and all warrants, options, or
other rights to purchase, Equity Interests of Pledgor; and (y) the certificates
or instruments representing such Equity Interests, convertible or exchangeable
securities, warrants, and other rights and all dividends, cash, options,
warrants, rights, instruments, and other property or proceeds from time to time
received, receivable, or otherwise distributed in respect of or in exchange for
any or all of such Equity Interests; and (e) “Proceeds” means all proceeds
(including proceeds of proceeds) of the Pledged Interests and Future Rights
including all: (I) rights, benefits, distributions, premiums, profits,
dividends, interest, cash, instruments, documents of title, accounts, contract
rights, inventory, equipment, general intangibles, payment intangibles, deposit
accounts, chattel paper, and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for, or as a
replacement of or a substitution for, any of the Pledged Interests, Future
Rights, or proceeds thereof (including any cash, Equity Interests, or other
securities or instruments issued after any recapitalization, readjustment,
reclassification, merger or consolidation with respect to Pledgor and any
security entitlements, as defined in Section 8-102(a)(17) of the Uniform
Commercial Code, with respect thereto); (II) “proceeds,” as such term is defined
in Section 9-102(a)(64) of the Uniform Commercial Code; (III) proceeds of any
insurance, indemnity, warranty, or guaranty (including guaranties of delivery)
payable from time to time with respect to any of the Pledged Interests, Future
Rights, or proceeds thereof; (VI) payments (in any form whatsoever) made or due
and payable to Pledgor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Pledged Interests, Future Rights, or proceeds thereof; and (V) other amounts
from time to time paid or payable under or in connection with any of the Pledged
Interests, Future Rights, or proceeds thereof.
2
Notwithstanding
any other provision of this Agreement to the contrary, Purchaser acknowledges
and agrees that (i) Pledgor has incorporated CGMR BVI and intends to sell a 50%
interest in CGMR BVI to London Mining subsequent to entering into this
Agreement, (ii) that only Pledgor’s 50% interest in CGMR BVI shall constitute an
Equity Interest hereunder, and (iii) that any actions taken by Purchaser
hereunder with respect to CGMR BVI or the related Equity Interest shall be
subject to the terms of that certain Shareholders’ Agreement entered into on
London Mining’s subscription into CGMR BVI (the “Shareholders’
Agreement”).
2. Secured
Obligations. The obligations secured by this Agreement (the
“Secured Obligations”)
are all liabilities, obligations, or undertakings owing by Pledgor or Subsidiary
to Purchaser of any kind or description arising out of or outstanding under,
advanced or issued pursuant to, or evidenced by this Agreement, or the other
Investment Documents, as amended from time to time, irrespective of whether for
the payment of money, whether direct or indirect, absolute or contingent, due or
to become due, voluntary or involuntary, whether now existing or hereafter
arising, and including all interest (including interest that accrues after the
filing of a case under the Bankruptcy Code) and any and all costs, fees
(including attorneys fees), and expenses which Pledgor is required to pay
pursuant to any of the foregoing, by law, or otherwise.
3. Delivery and Registration of
Collateral.
(a) All
certificates or instruments representing or evidencing the Collateral shall be
promptly delivered by Pledgor to Purchaser or Purchaser’s designees pursuant to
this Agreement at a location designated by Purchaser and shall be held by or on
behalf of Purchaser pursuant to this Agreement, and shall be in suitable form
for transfer by delivery, or shall be accompanied by a duly executed instrument
of transfer or assignment in blank, in form and substance satisfactory to
Purchaser.
(b) Upon
the occurrence and during the continuance of an Event of Default, Purchaser
shall have the right, at any time in their discretion and without notice to
Pledgor, to transfer to or to register on the books of Subsidiary (or of any
other Person maintaining records with respect to the Collateral) in the name of
Purchaser or any of its nominees any or all of the Collateral. In
addition, Purchaser shall have the right at any time to exchange certificates or
instruments representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations. Notwithstanding the
foregoing, in the event this Section 3(b) is applicable to CGMR BVI, Purchaser’s
rights shall be subject to the execution and delivery to CGMR BVI of a signed
Deed of Adherence (as defined in the Shareholders’ Agreement), which Purchaser
undertakes to execute.
(c) If,
at any time and from time to time, any Collateral (including any certificate or
instrument representing or evidencing any Collateral) is in the possession of a
Person other than Purchaser or Pledgor (a “Holder”), then Pledgor shall
immediately, at Purchaser’s option, either cause such Collateral to be delivered
into Purchaser’s possession, or cause such Holder to enter into a control
agreement, in form and substance satisfactory to Purchaser, and take all other
steps deemed necessary by Purchaser to perfect the security interest of
Purchaser in such Collateral, all pursuant to Sections 9-106 and 9-313 of the
Uniform Commercial Code or other applicable law governing the perfection of
Purchaser’s security interest in the Collateral in the possession of such
Holder.
3
(d) Any
and all Collateral (including dividends, interest, and other cash distributions)
at any time received or held by Pledgor shall be so received or held in trust
for Purchaser, shall be segregated from other funds and property of Pledgor and
shall be forthwith delivered to Purchaser in the same form as so received or
held, with any necessary endorsements; provided that cash dividends or
distributions received by Pledgor may be retained by Pledgor in accordance with
Section
4.
(e) If
at any time, and from time to time, any Collateral consists of an uncertificated
security or a security in book entry form, then Pledgor shall immediately cause
such Collateral to be registered or entered, as the case may be, in the name of
Purchaser, or otherwise cause Purchaser’s security interest thereon to be
perfected in accordance with applicable law.
4. Voting Rights and
Dividends.
(a) So
long as no Event of Default shall have occurred and be continuing, Pledgor shall
be entitled to exercise any and all voting and other consensual rights
pertaining to the Collateral or any part thereof for any purpose not
inconsistent with the terms of the Investment Documents and shall be entitled to
receive and retain any cash dividends or distributions paid or distributed in
respect of the Collateral;
(b) Upon
the occurrence and during the continuance of an Event of Default, all rights of
Pledgor to exercise the voting and other consensual rights or receive and retain
cash dividends or distributions that it would otherwise be entitled to exercise
or receive and retain, as applicable pursuant to Section 4(a), shall
cease, and all such rights shall thereupon become vested in Purchaser, who shall
thereupon have the sole right to exercise such voting or other consensual rights
and to receive and retain such cash dividends and distributions; provided that
with respect to exercise of any rights (including the right to receive and
retain dividends) relating to the Equity Interest in CGMR BVI, such rights shall
be subject to the terms of the Shareholders' Agreement. Pledgor shall
execute and deliver (or cause to be executed and delivered) to Purchaser all
such proxies and other instruments as Purchaser may reasonably request for the
purpose of enabling Purchaser to exercise the voting and other rights which they
are entitled to exercise and to receive the dividends and distributions that
they are entitled to receive and retain pursuant to the preceding sentence;
provided that with respect to exercise of any rights (including the right to
receive and retain dividends) relating to the Equity Interest in CGMR BVI, such
rights shall be subject to the terms of the Shareholders'
Agreement.
5. Release. On
completion of any acquisition of all or part of Pledgor's equity interest in
CGMR BVI by London Mining or a member of its Group (as defined in the
Shareholders' Agreement) or a third party under the "Come Along" provisions of
the Shareholders' Agreement undertaken in accordance with the terms of the
Shareholders' Agreement (an "Acquisition"), the Pledgor's
equity interest in CGMR BVI, or such part acquired, will automatically and
irrevocably be released and Purchaser agrees to take any further action
(including the execution, delivery and filing (as applicable) of any necessary
documents or agreements) necessary to effect such release, and shall, prior to
the completion of the Acquisition deliver to CGMR BVI all documents and items
held by Purchaser pursuant to Section 3 of this agreement.
6. Representations and
Warranties. Pledgor represents, warrants, and covenants as
follows:
(a) Pledgor
has the authority to pledge the Pledged Interests to Purchaser under the terms
of this Agreement.
4
(b) Pledgor
has taken all steps it deems necessary or appropriate to be informed on a
continuing basis of changes or potential changes affecting the Collateral
(including rights of conversion and exchange, rights to subscribe, payment of
dividends, reorganizations or recapitalization, tender offers and voting and
registration rights), and Pledgor agrees that Purchaser shall have no
responsibility or liability for informing Pledgor of any such changes or
potential changes or for taking any action or omitting to take any action with
respect thereto.
(c) All
information in this Agreement or hereafter supplied to Purchaser by or on behalf
of Pledgor in writing with respect to the Collateral is, or in the case of
information hereafter supplied will be, accurate and complete in all material
respects.
(d) Pledgor
is and will be the sole legal and beneficial owner of the Collateral (including
the Pledged Interests and all other Collateral acquired by Pledgor after the
date hereof) free and clear of any adverse claim, Lien, or other right, title,
or interest of any party, other than the Liens in favor of
Purchaser.
(e) This
Agreement, and the filing of a UCC financing statement by Purchaser with the
Minnesota Secretary of State describing the Collateral, creates a valid,
perfected security interest in the Pledged Interests in favor of Purchaser
securing payment of the Secured Obligations, and, except with respect to the
filing of a UCC financing statement, all actions of Pledgor necessary to achieve
such perfection have been duly taken.
(f) Schedule 1 to this
Agreement is true and correct and complete in all material respects. Without
limiting the generality of the foregoing: (i) except as set forth on Schedule 1, all the
Pledged Interests are in uncertificated form, and, except to the extent
registered in the name of Purchaser or its nominees pursuant to the provisions
of this Agreement, are registered in the name of Pledgor; and (ii) as of the
date of this Agreement, the Pledged Interests as to Subsidiary and CGMR BVI
constitute at least the percentage of all the fully diluted issued and
outstanding Equity Interests of Subsidiary and CGMR BVI as set forth in Schedule 1 to this
Agreement.
(g) There
are no presently existing Future Rights or Proceeds owned by
Pledgor.
(h) The
Pledged Interests have been duly authorized and validly issued and are fully
paid and non-assessable.
(i) Neither
the pledge of the Collateral pursuant to this Agreement nor the extensions of
credit represented by the Secured Obligations violates Regulation T, U or X of
the Board of Governors of the Federal Reserve System.
7. Further
Assurances.
(a) Pledgor
agrees that from time to time, at the expense of Pledgor, Pledgor will promptly
execute and deliver all further instruments and documents, and take all further
action that may be necessary or reasonably desirable, or that Purchaser may
request, in order to perfect and protect any security interest granted or
purported to be granted by this Agreement or to enable Purchaser to exercise and
enforce their rights and remedies under this Agreement with respect to any
Collateral. Without limiting the generality of the foregoing, Pledgor will: (i)
at the request of Purchaser, xxxx conspicuously each of its records pertaining
to the Collateral with a legend, in form and substance reasonably satisfactory
to Purchaser, indicating that such Collateral is subject to the security
interest granted by this Agreement; (ii) execute such instruments or notices as
may be necessary or reasonably desirable, or as Purchaser may request, in order
to perfect and preserve the Liens granted or purported to be granted by this
Agreement; (iii) allow inspection of the Collateral by Purchaser or Persons
designated by Purchaser; and (iv) appear in and defend any action or proceeding
that may affect Pledgor’s title to or Purchaser’s security interest in the
Collateral.
5
(b) Pledgor
by this Agreement authorizes Purchaser to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of
the Collateral. A carbon, photographic, or other reproduction of this Agreement
or any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(c) Pledgor
will furnish to Purchaser, upon the request of Purchaser: (i) a certificate
executed by Pledgor, and dated as of the date of delivery to Purchaser,
itemizing in such detail as Purchaser may request, the Collateral which, as of
the date of such certificate, has been delivered to Purchaser by Pledgor
pursuant to the provisions of this Agreement; and (ii) such statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Purchaser may request.
8. Covenants of
Pledgor. Pledgor shall:
(a) To
the extent it may lawfully do so, use its best efforts to prevent Subsidiary
from issuing Future Rights or Proceeds; and
(b) Upon
receipt by Pledgor of any material notice, report, or other communication from
Subsidiary or any Holder relating to all or any part of the Collateral, deliver
such notice, report or other communication to Purchaser as soon as possible, but
in no event later than five (5) days following the receipt thereof by
Pledgor.
9. Purchaser as Pledgor’s
Attorneys-in-Fact.
(a) Pledgor
by this Agreement irrevocably appoints Purchaser as Pledgor’s attorneys-in-fact,
with full authority in the place and stead of Pledgor and in the name of
Pledgor, Purchaser or otherwise, to enter into any control agreements Purchaser
deems necessary pursuant to Section 3 of this
Agreement, and from time to time at Purchaser’s discretion, upon the occurrence
and during the continuance of an Event of Default, to take any action and to
execute any instrument that Purchaser may reasonably deem necessary or advisable
to accomplish the purposes of this Agreement, including: (i),to receive,
indorse, and collect all instruments made payable to Pledgor representing any
dividend, interest payment or other distribution in respect of the Collateral or
any part thereof to the extent permitted under this Agreement and to give full
discharge for the same and to execute and file governmental notifications and
reporting forms; or (ii) to arrange for the transfer of the Collateral on the
books of Subsidiary or any other Person to the name of Purchaser or to the names
of Purchaser’s nominees.
(b) In
addition to the designation of Purchaser as Pledgor’s attorneys-in-fact in
subsection (a), Pledgor by this Agreement irrevocably appoints Purchaser as
Pledgor’s agents and attorneys-in-fact to make, execute and deliver after the
occurrence and during the continuance of an Event of Default any and all
documents and writings which may be necessary or appropriate for approval of, or
be required by, any regulatory authority located in any city, county, state or
country where Pledgor or Subsidiary engage in business, in order to transfer or
to more effectively transfer any of the Pledged Interests or otherwise enforce
Purchaser’s rights under this Agreement.
10. Remedies upon
Default. Upon the occurrence and during the continuance of an
Event of Default:
6
(a) Purchaser
may exercise in respect of the Collateral, in addition to other rights and
remedies provided for in this Agreement or otherwise available to it, all the
rights and remedies of a secured party on default under the Uniform Commercial
Code (irrespective of whether the Uniform Commercial Code applies to the
affected items of Collateral), and Purchaser may also without notice (except as
specified below) sell the Collateral or any part thereof in one or more parcels
at public or private sale, at any exchange, broker’s board or at any of
Purchaser’s office or elsewhere, for cash, on credit or for future delivery, at
such time or times and at such price or prices and upon such other terms as
Purchaser may deem commercially reasonable, irrespective of the impact of any
such sales on the market price of the Collateral. To the maximum extent
permitted by applicable law, Purchaser may be the purchaser of any or all of the
Collateral at any such sale and shall be entitled, for the purpose of bidding
and making settlement or payment of the purchase price for all or any portion of
the Collateral sold at any such public sale, to use and apply all or any part of
the Secured Obligations as a credit on account of the purchase price of any
Collateral payable at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of Pledgor,
and Pledgor by this Agreement waives (to the extent permitted by law) all rights
of redemption, stay, or appraisal that it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten (10) calendar days notice to Pledgor of the time and place of any
public sale or the time after which a private sale is to be made shall
constitute reasonable notification. Purchaser shall not be obligated to make any
sale of Collateral regardless of notice of sale having been given. Purchaser may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. To the maximum extent permitted
by law, Pledgor by this Agreement waives any claims against Purchaser arising
because the price at which any Collateral may have been sold at such a private
sale was less than the price that might have been obtained at a public sale,
even if Purchaser accepts the first offer received and do not offer such
Collateral to more than one offeree.
(b) Pledgor
by this Agreement agrees that any sale or other disposition of the Collateral
conducted in conformity with reasonable commercial practices of banks, insurance
companies, or other financial institutions in the city and state where Purchaser
is located in disposing of property similar to the Collateral shall be deemed to
be commercially reasonable.
(c) Pledgor
by this Agreement acknowledges that the sale by Purchaser of any Collateral
pursuant to the terms hereof in compliance with the Securities Act of 1933 as
now in effect or as hereafter amended, or any similar statute hereafter adopted
with similar purpose or effect (the “Securities Act”), as well as
applicable “Blue Sky” or other state securities laws may require strict
limitations as to the manner in which Purchaser or any subsequent transferee of
the Collateral may dispose thereof. Pledgor acknowledges and agrees that in
order to protect Purchaser’s interest it may be necessary to sell the Collateral
at a price less than the maximum price attainable if a sale were delayed or were
made in another manner, such as a public offering under the Securities Act.
Pledgor has no objection to sale in such a manner and agrees that Purchaser
shall have no obligation to obtain the maximum possible price for the
Collateral. Without limiting the generality of the foregoing, Pledgor agrees
that upon the occurrence and during the continuation of an Event of Default,
Purchaser may, subject to applicable law, from time to time attempt to sell all
or any part of the Collateral by a private placement, restricting the bidders
and prospective Purchaser to those who will represent and agree that they are
purchasing for investment only and not for distribution. In so doing, Purchaser
may solicit offers to buy the Collateral or any part thereof for cash from a
limited number of investors reasonably believed by Purchaser to be institutional
investors or other accredited investors who might be interested in purchasing
the Collateral. If Purchaser shall solicit such offers, then the acceptance by
Purchaser of one of the offers shall be deemed to be a commercially reasonable
method of disposition of the Collateral.
Pledgor
acknowledges that there is no adequate remedy at law for failure by it to comply
with the provisions of this Section and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section may be specifically enforced.
7
(d) PLEDGOR
EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW: (i) ANY CONSTITUTIONAL
OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO THE TIME PURCHASER DISPOSES OF ALL
OR ANY PART OF THE COLLATERAL AS PROVIDED IN THIS SECTION; (ii) ALL RIGHTS OF
REDEMPTION, STAY, OR APPRAISAL THAT IT NOW HAS OR MAY AT ANY TIME IN THE FUTURE
HAVE UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING OR HEREAFTER ENACTED; AND
(iii) EXCEPT AS SET FORTH IN SUBSECTION (a) OF THIS SECTION 10, ANY
REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.
(e) Notwithstanding
any term of this Agreement to the contrary, any rights or actions by Purchaser
under this Section 10 relating to the CGMR BVI shall be subject to the terms of
the Shareholders’ Agreement.
11. Application of
Proceeds. Upon the occurrence and during the continuance of an
Event of Default, any cash held by Purchaser as Collateral and all cash Proceeds
received by Purchaser in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral pursuant to the exercise by
Purchaser of their remedies as secured creditors as provided in Section 10 shall
be applied from time to time by Purchaser as provided in Section 9-615 of the
Uniform Commercial Code.
12. Indemnity and
Expenses. Pledgor agrees:
(a) To
indemnify and hold harmless Purchaser and each of their directors, officers,
employees, agents and affiliates from and against any and all claims, damages,
demands, losses, obligations, judgments and liabilities (including, without
limitation, reasonable attorneys’ fees and expenses) in any way arising out of
or in connection with this Agreement or the Secured Obligations, except to the
extent the same shall arise as a result of the gross negligence or willful
misconduct of the party seeking to be indemnified; and
(b) To
pay and reimburse Purchaser upon demand for all reasonable costs and expenses
(including, without limitation, reasonable attorneys’ fees and expenses) that
Purchaser may incur in connection with (i) the custody, use or preservation of,
or the sale of, collection from or other realization upon, any of the
Collateral, including the reasonable expenses of re-taking, holding, preparing
for sale or lease, selling or otherwise disposing of or realizing on the
Collateral, (ii) the exercise or enforcement of any rights or remedies granted
under this Agreement or under any of the other Investment Documents or otherwise
available to them (whether at law, in equity or otherwise), or (iii) the failure
by Pledgor to perform or observe any of the provisions hereof. The provisions of
this Section shall survive the execution and delivery of this Agreement, the
repayment of any of the Secured Obligations, and the termination of this
Agreement or any other Investment Document.
13. Duties of
Purchaser. The powers conferred on Purchaser under this
Agreement are solely to protect their interests in the Collateral and shall not
impose on them any duty to exercise such powers. Except as provided in Section
9-207 of the Uniform Commercial Code, Purchaser shall have no duty with respect
to the Collateral or any responsibility for taking any necessary steps to
preserve rights against any Persons with respect to any Collateral.
14. Amendments; etc. No
amendment or waiver of any provision of this Agreement nor consent to any
departure by Pledgor from this Agreement shall in any event be effective unless
the same shall be in writing and signed by Purchaser and Pledgor, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure on the part of Purchaser to
exercise, and no delay in exercising any right under this Agreement, any other
Investment Document, or otherwise with respect to any of the Secured
Obligations, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement, any other Investment Document, or
otherwise with respect to any of the Secured Obligations preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided for in this Agreement or otherwise with respect to any of the Secured
Obligations are cumulative and not exclusive of any remedies provided by
law.
8
15. Notices. Unless
otherwise specifically provided in this Agreement, all notices shall be in
writing addressed to the respective party as set forth below, and may be
personally served, faxed, or sent by overnight courier service or United States
mail:
If to Pledgor:
00 Xxxxx
Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx,
XX 00000-0000
Attn:
Xxxx Xxxxx, Chief Financial Officer
Facsimile:
(000) 000-0000
with a
copy to:
Xxxxxx Xxxxxxx Xxxxxx & Brand,
LLP
3300 Xxxxx Fargo Center
00 Xxxxx
Xxxxxxx Xxxxxx
Xxxxxxxxxxx,
XX 00000-0000
Attn:
Xxxxxxx Xxxxx, Esq.
Facsimile:
(000) 000-0000
If to Purchaser:
China
Gold, LLC
0000
Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx
Xxxx, XX 00000
Attn: C.
Xxxxxx Xxxxxx
Facsimile:
000-000-0000
with a
copy to:
Xxxxxxx
X. Xxxxxxx, Esq.
Polsinelli
Xxxxxxx Xxxxxxxx Suelthaus PC
0000
Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx
Xxxx, XX 00000
Facsimile:
000-000-0000
Any
notice given pursuant to this Section shall be deemed to have been given: (a) if
delivered in person, when delivered; (b) if delivered by fax, on the date of
transmission if transmitted on a Business Day before 5:00 p.m. at the place of
receipt or, if not, on the next succeeding Business Day; (c) if delivered by
overnight courier, two (2) days after delivery to such courier properly
addressed; or (d) if by United States mail, four (4) Business Days after
depositing in the United States mail, with postage prepaid and properly
addressed. Any party to this Agreement may change the address or fax number at
which it is to receive notices under this Agreement by notice to the other party
in writing in the foregoing manner.
9
16. Continuing Security
Interest. This Agreement shall create a continuing security
interest in the Collateral and shall: (a) remain in full force and effect until
the indefeasible payment in full of the Secured Obligations; (b) be binding upon
Pledgor and its successors and assigns; and (c) inure to the benefit of
Purchaser and their successors, transferees, and assigns. Upon the indefeasible
payment in full of the Secured Obligations, the security interests granted in
this Agreement shall automatically terminate and all rights to the Collateral
shall revert to Pledgor. Upon any such termination, Purchaser will, at Pledgor’s
expense, execute and deliver to Pledgor such documents as Pledgor shall
reasonably request to evidence such termination. Such documents shall be
prepared by Pledgor and shall be in form and substance reasonably satisfactory
to Purchaser.
17. Security Interest
Absolute. To the maximum extent permitted by law, all rights
of Purchaser, all security interests under this Agreement, and all obligations
of Pledgor under this Agreement, other than under the terms of the Shareholders'
Agreement where applicable, shall be absolute and unconditional irrespective
of:
(a) any
lack of validity or enforceability of any of the Secured Obligations or any
other agreement or instrument relating thereto, including any of the Investment
Documents;
(b) any
change in the time, manner, or place of payment of, or in any other term of, all
or any of the Secured Obligations, or any other amendment or waiver of or any
consent to any departure from any of the Investment Documents, or any other
agreement or instrument relating thereto;
(c) any
exchange, release, or non-perfection of any other collateral, or any release or
amendment or waiver of or consent to departure from any guaranty for all or any
of the Secured Obligations; or
(d) any
other circumstances that might otherwise constitute a defense available to, or a
discharge of, Pledgor.
18. Construction. Section
and subsection headings in this Agreement are included in this Agreement for
convenience of reference only and shall not constitute a part of this Agreement
or be given any substantive effect. Unless the context of this
Agreement clearly requires otherwise, references to the plural include the
singular and to the singular include the plural, the part includes the whole,
the term “including” is not limiting, and the term “or” has, except where
otherwise indicated, the inclusive meaning represented by the phrase “and/or.”
The words “hereof,” “herein,” “hereby,” “hereunder,” and other similar terms in
this Agreement refer to this Agreement as a whole and not exclusively to any
particular provision of this Agreement. Article, section, subsection, exhibit,
and schedule references are to this Agreement unless otherwise specified. All of
the exhibits or schedules attached to this Agreement shall be deemed
incorporated in this Agreement by reference. Any reference to any of the
following documents includes any and all alterations, amendments, restatements,
extensions, modifications, renewals, or supplements thereto or thereof, as
applicable: this Agreement or any of the other Investment
Documents. No inference in favor of, or against, any party shall be
drawn from the fact that such party has drafted any portion of this Agreement,
each party having been represented by counsel of its choice in connection with
the negotiation and preparation of this Agreement and the other Investment
Documents.
19. Interpretation. Neither
this Agreement nor any uncertainty or ambiguity in this Agreement shall be
construed or resolved against Purchaser or Pledgor, whether under any rule of
construction or otherwise. On the contrary, this Agreement has been reviewed by
both of the parties and their respective counsel and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of the parties to this
Agreement.
10
20. Severability. In
case any provision in or obligation under this Agreement shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision
or obligation in any other jurisdiction, shall not in any way be affected or
impaired thereby.
21. Counterparts; Facsimile
Execution. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same Agreement. Delivery of an executed
counterpart of this Agreement by facsimile shall be equally as effective as
delivery of an original executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by facsimile also shall
deliver an original executed counterpart of this Agreement but the failure to
deliver an original executed counterpart shall not affect the validity,
enforceability, or binding effect of this Agreement.
22. Waiver of
Marshaling. Each of Pledgor and Purchaser acknowledges and
agrees that in exercising any rights under or with respect to the Collateral:
(a) Purchaser is under no obligation to marshal any Collateral; (b) may, in
their absolute discretion, realize upon the Collateral in any order and in any
manner they so elect; and (c) may, in their absolute discretion, apply the
proceeds of any or all of the Collateral to the Secured Obligations in any order
and in any manner they so elect. Pledgor and Purchaser waive any right to
require the marshaling of any of the Collateral.
23. Conflict Among
Provisions. In the event of a conflict between the terms,
covenants and conditions of this Agreement and those of any other Investment
Document (unless otherwise specifically provided), the terms, covenants and
conditions of the document which shall enlarge the interest of Purchaser in the
Collateral, afford Purchaser greater financial benefits or financial security or
better assure payment of the Obligations in full, shall control; provided,
however, that in the event of a conflict between any provision of this Agreement
and the provisions of any other document, instrument or agreement which grants
Purchaser a security interest in all or any part of the Pledged Interest, the
provisions of this Agreement shall control.
24. Sole and Absolute Discretion of
Purchaser. Whenever pursuant to this Agreement (a) Purchaser exercises
any right given to them to consent, approve or disapprove, (b) any arrangement,
document, item or term is to be satisfactory to Purchaser, or (c) any other
decision or determination is to be made by Purchaser, the decision of Purchaser
to consent, approve or disapprove, all decisions that arrangements, documents,
items, or terms are satisfactory or not satisfactory and all other decisions and
determinations made by Purchaser, shall be in the sole and absolute discretion
of Purchaser and shall be final and conclusive, except as may be otherwise
expressly and specifically provided in this Agreement.
25. Consent to Forum. AS PART OF
THE CONSIDERATION FOR NEW VALUE THIS DAY RECEIVED, PLEDGOR BY THIS AGREEMENT
CONSENTS TO THE JURISDICTION OF ANY STATE COURT LOCATED WITHIN XXXXXXX COUNTY,
KANSAS OR FEDERAL COURT IN THE DISTRICT COURT OF KANSAS, AND CONSENTS THAT ALL
SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO PLEDGOR
AT THE ADDRESS STATED IN THE PURCHASE AGREEMENT AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. PLEDGOR WAIVES
ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS
PROVIDED IN THIS AGREEMENT AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF
JURISDICTION OR VENUE. PLEDGOR FURTHER AGREES NOT TO ASSERT AGAINST
PURCHASER (EXCEPT BY WAY OF A DEFENSE OR COUNTERCLAIM IN A PROCEEDING INITIATED
BY PURCHASER) ANY CLAIM OR OTHER ASSERTION OF LIABILITY WITH RESPECT TO THE
INVESTMENT DOCUMENTS, PURCHASER’S CONDUCT OR OTHERWISE IN ANY JURISDICTION OTHER
THAN THE FOREGOING JURISDICTIONS.
11
26. Waiver of Jury Trial. TO THE FULLEST
EXTENT PERMITTED BY LAW, AND AS SEPARATELY BARGAINED-FOR CONSIDERATION TO
PURCHASER, PLEDGOR BY THIS AGREEMENT WAIVES ANY RIGHT TO TRIAL BY JURY (WHICH
PURCHASER ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY
KIND ARISING OUT OF OR OTHERWISE RELATING TO ANY OF THE INVESTMENT DOCUMENTS,
THE OBLIGATIONS, THE PLEDGED INTEREST, OR PURCHASER’S CONDUCT IN RESPECT OF ANY
OF THE FOREGOING.
27. Entire Agreement. This
agreement, the Purchase Agreement, Amendment No. 3, the Note and the Amended and
Restated Security Agreement between the Pledgor and Purchaser dated on or around
the date of the Agreement (i) constitute the final expression of the agreement
between Pledgor and Purchaser concerning the Pledge; and (ii) may not be
contradicted by evidence of any prior or contemporaneous oral agreements or
understandings between Pledgor and Purchaser. Neither this agreement
nor any of the terms hereof may be terminated, amended, supplemented, waived or
modified orally, but only by an instrument in writing executed by the party
against which enforcement of the termination, amendment, supplement, waiver or
modification is sought.
[Remainder
of page intentionally left blank; signature page follows]
12
IN WITNESS WHEREOF, Pledgor
and Purchaser have caused this Agreement to be duly executed and delivered by
their officers thereunto duly authorized as of the date first written
above.
|
PLEDGOR:
|
||
|
a
Minnesota corporation
|
||
|
By:
|
/s/ Xxxx X. Xxxxx
|
|
|
Xxxx
X. Xxxxx, Chief Financial Officer
|
||
|
PURCHASER:
|
CHINA
GOLD, LLC,
|
|
|
a
Kansas limited liability company
|
||
|
By:
|
/s/ C. Xxxxxx Xxxxxx
|
|
|
C.
Xxxxxx Xxxxxx, Manager
|
||
13
SCHEDULE
1
Pledged
Interests
|
Name of Subsidiary
|
Jurisdiction
of
Organization
|
Type of
Interest
|
Number
of
Shares/Units
(if applicable)
|
Certificate
Numbers
(if any)
|
Percentage
of
Outstanding
Interests in
Subsidiary
|
|||||||||||
|
China
Global Mining Resources Limited (1386052)
|
British
Virgin Islands
|
Common
Stock
|
— | — | 100 | % | ||||||||||
|
Wits-China
Acquisition Corp.
|
Minnesota
|
Common
Stock
|
1,000 | N/A | 100 | % | ||||||||||
|
China
Global Mining Resources (BVI) Limited (1513743)
|
British
Virgin Islands
|
Common
Stock
|
100
B Shares
|
1 | 50 | % | ||||||||||
