PLEDGE AGREEMENT
This
PLEDGE AGREEMENT (this “Agreement”)
made
this 10th day of April, 2007, between Wits Basin Precious Minerals Inc., a
Minnesota corporation (“Pledgor”),
and
China Gold, LLC, a Kansas limited liability company (the “Pledgee”).
WITNESSETH:
WHEREAS,
the Pledgee and Pledgor have entered into a transaction pursuant to which the
Pledgee may purchase one or more convertible secured promissory notes of Pledgor
in an aggregate amount of up to $25,000,000 (collectively, the “Notes”);
and
WHEREAS,
as partial security for Pledgor’s obligations under the Note, Pledgor has agreed
to grant to Pledgee a security interest in 1,000 shares of common stock, par
value $.01 per share, of Wits-China Acquisition Corp., a wholly owned subsidiary
of Pledgor incorporated in the State of Minnesota (“Wits-China”),
such
shares constituting all of the outstanding shares of capital stock of
Wits-China, and any other subsidiary thereof which holds assets relating to
Properties (as defined in that certain Convertible Notes Purchase Agreement
dated of even date herewith between Pledgor and Pledgee (the “Purchase
Agreement”))
(collectively, all shares of common stock of Wits-China and such other
subsidiaries shall be referred to herein as the “Shares”).
NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants and
promises set forth herein, and in consideration of other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the
parties agree as follows:
1. Pledgor
hereby grants and pledges to Pledgee a security interest in all of Pledgor’s
right, title and interest in and to the Shares, together with all distributions,
additions, substitutions or replacements for any of the foregoing property
and
together with proceeds of any and all of the foregoing property, each whether
now owned or hereafter acquired (the “Collateral”),
as
security solely for the payment and performance of Pledgor’s obligations to pay
the principal and accrued interest, if any, due under the Note (the
“Secured
Obligations”).
2. All
certificates or instruments representing or evidencing the Collateral shall
be
promptly delivered by Pledgor to Pledgee pursuant thereto at Pledgee’s principal
place of business, and shall be in a suitable form for transfer by delivery,
or
shall be accompanied by duly executed instruments of transfer or assignments
in
blank, all in the form and substance reasonably satisfactory to
Pledgee.
3. Pledgee’s
duty of care with respect to Collateral in its possession shall be deemed
fulfilled if it exercises reasonable care in the physically safekeeping such
Collateral or, in the case of Collateral in the custody or possession of a
bailee or other third party, exercise reasonable care in the selection of the
bailee or other third party, and Pledgee need not otherwise preserve, protect,
insure or care for any Collateral. Pledgee shall have no liability or
responsibility to any third party for any action taken or omitted with respect
to the Collateral on the direction of any third party.
4. Pledgee,
in the name of Pledgor or otherwise, after the occurrence and continuance of
an
Event of Default (as defined in Section 5 below), shall have the authority
but
shall not be obligated to exercise, any rights and remedies granted hereunder,
all rights and remedies of a secured party under the Uniform Commercial Code
or
any other applicable law, including the right to receive all dividends or
distributions with respect to, and to exercise all voting and other rights
as a
holder of, the Shares, and the right to offer and sell the Collateral. So long
as no Event of Default shall have occurred and be continuing, Pledgor shall
be
entitled to receive all distributions and to exercise all voting rights with
respect to the Shares.
5. As
used
herein, the term “Event
of Default”
shall
mean Pledgor’s failure to perform its material obligations under the Notes when
due.
6. If
any
notification of intended disposition of any of the Collateral is required by
law, such notification shall be deemed reasonably and properly given if mailed
at least 10 days before such disposition addressed to Pledgor at the following
address:
00
Xxxxx
Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx,
XX 00000-0000
7. No
delay
or failure by Pledgee in the exercise of any right or remedy shall constitute
a
waiver thereof, and no single or partial exercise by Pledgee of any right or
remedy shall preclude other or further exercise thereof or the exercise of
any
other right or remedy.
8. Pledgor
agrees that from time to time, at Pledgor’s expense, it will promptly execute
and deliver, or cause to be delivered, all further instruments and documents,
and take all further action that may reasonably necessary in order to perfect
and protect any security interest granted or purported to be granted hereby
or
to enable Pledgee to exercise and enforce its rights and remedies hereunder
with
respect to the Collateral.
9. This
Agreement shall take effect when signed by Pledgor and Pledgee.
10. Any
notice or other communication required or which may be given hereunder shall
be
in writing and shall be delivered personally, or sent by facsimile transmission
with telephone confirmation, or sent by certified, registered, or express mail,
postage prepaid, and shall be deemed given when so delivered personally, or
sent
by facsimile transmission, or if mailed, three days after the date of mailing,
as follows:
If
to
Pledgor:
Wits
Basin Precious Minerals Inc.
00 Xxxxx Xxxxxx Xxxxxx,
Xxxxx 000
Xxxxxxxxxxx,
XX 00000-0000
Attention: 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,
Xxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
If
to
Pledgee: China
Gold, LLC
0000
Xxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attn:
C. Xxxxxx Xxxxxx, Managing Partner
Facsimile:
(000) 000-0000
2
With
a copy to: Xxxxxxx
X. Xxxxxxx
Xxxxxxxxxx Xxxxxxx Xxxxxxxx Suelthaus PC
0000
Xxxxxxx Xxxx., Xxxxx
000
Facsimile:
(000)
000-0000
11. This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original, but all of which shall constitute one
agreement.
12. This
Agreement shall be governed by the laws of the State of Kansas and, unless
the
context otherwise requires, all terms used herein which are defined in Articles
1 and 9 of the Uniform Commercial Code, as in effect in such state, shall have
the meanings therein stated. If any provision or application of this Agreement
is held unlawful or unenforceable in any respect, such illegality or
unenforceability shall not affect any other provisions or applications which
can
be given effect and this Agreement shall be construed as if the unlawful or
unenforceable application had never been contained herein or prescribed hereby.
All representations and warranties contained in this Agreement shall survive
the
execution, delivery and performance of this Agreement and in the creation and
payment of the Secured Obligations.
Signature
Page Follows
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
| PLEDGOR: | ||
|
a
Minnesota Corporation
|
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| |
|
|
| By: | /s/ Xxxx X. Xxxxx | |
|
Its Chief Financial Officer |
||
|
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| PLEDGEE: | ||
|
China
Gold, LLC
a
Kansas limited liability company
|
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| |
|
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| By: | Xxxx Xxxxxxxxxx | |
|
Xxxx Xxxxxxxxxx |
||
|
Manager
of Pioneer Holdings, LLC
Manager
of Pledgee
|
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