ACCOUNT PLEDGE AND SECURITY AGREEMENT Dated as of January 29, 2008 between CHINA NATURAL GAS, INC. as the Grantor and DB Trustees (Hong Kong) Limited as Collateral Agent
Dated
as of January 29, 2008
between
as
the Grantor
and
DB
Trustees (Hong Kong) Limited
as
Collateral Agent
ACCOUNT
PLEDGE AND SECURITY AGREEMENT, dated
as
of January 29. 2008 by CHINA
NATURAL GAS, INC.
(the
“Grantor”),
in
favor of DB Trustees (Hong Kong) Limited (“DB”),
as
agent (in such capacity, the “Collateral
Agent”)
for
the Secured Parties (as defined in the Indenture referred to
below).
W
I T N E
S S E T H:
WHEREAS,
pursuant to the Indenture, dated as of even date herewith (as the same may
be
amended, restated, supplemented or otherwise modified from time to time, the
“Indenture”),
by
and between the Grantor and DB, as agent for the Trustee, the Grantor shall
issue the Notes;
NOW,
THEREFORE,
in
consideration of the premises and to induce the Holders, the Grantor and the
Collateral Agent to enter into the Indenture, the Grantor hereby agrees with
the
Collateral Agent as follows:
| ARTICLE I |
DEFINED
TERMS
|
| Section 1.1 |
Definitions
|
(a) Unless
otherwise defined herein, terms defined in the Indenture and used herein have
the meanings given to them in the Indenture. Terms used herein without
definition that are defined in the UCC have the meanings given to them in the
UCC.
(b) The
following terms shall have the following meanings:
“Agreement”
means
this Account Pledge and Security Agreement.
“Collateral”
has
the
meaning specified in Section 2.1
(Collateral).
“Deposit
Account”
means
the deposit account at Citibank, N.A. where the proceeds from the Notes are
deposited on the Issue Date.
“Deposit
Account Agreement”
means
a
letter agreement, substantially in the form of Annex
A (with
such changes as may be agreed to by the Collateral Agent), executed by the
Grantor, the Collateral Agent and the relevant financial institution.
“Pledged
Collateral”
means,
collectively, all funds in the Deposit Account.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“UCC”
means
the Uniform Commercial Code as from time to time in effect in the State of
New
York; provided,
however,
that,
in the event that, by reason of mandatory provisions of law, any of the
attachment, perfection or priority of the Collateral Agent’s and the Secured
Parties’ security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New
York,
the term “UCC”
shall
mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such
provisions.
2
| Section 1.2 |
Certain
Other Terms
|
(a) In
this
Agreement, in the computation of periods of time from a specified date to a
later specified date, the word “from”
means
“from and including” and the words “to”
and
“until”
each
mean “to but excluding” and the word “through”
means
“to and including.”
(b) The
terms
“herein,”
“hereof,”
“hereto”
and
“hereunder”
and
similar terms refer to this Agreement as a whole and not to any particular
Article, Section, subsection or clause in this Agreement.
(c) References
herein to an Annex, Schedule, Article, Section, subsection or clause refer
to
the appropriate Annex or Schedule to, or Article, Section, subsection
or
clause in this Agreement.
(d) The
meanings given to terms defined herein shall be equally applicable to both
the
singular and plural forms of such terms.
(e) Where
the
context requires, provisions relating to any Collateral, when used in relation
to the Grantor, shall refer to the Grantor’s Collateral or any relevant part
thereof.
(f) Any
reference in this Agreement to the Indenture shall include all appendices,
exhibits and schedules thereto, and, unless specifically stated otherwise all
amendments, restatements, supplements or other modifications thereto, and as
the
same may be in effect at any time such reference becomes operative.
(g) The
term
“including”
means
“including without limitation” except when used in the computation of time
periods.
(h) The
terms
“Holder,”
“Grantor,”
“Collateral
Agent”
and
“Secured
Party”
include
their respective successors.
(i) References
in this Agreement to any statute shall be to such statute as amended or modified
and in effect from time to time.
| ARTICLE II |
GRANT
OF SECURITY INTEREST
|
| Section 2.1 |
Collateral
|
For
the
purposes of this Agreement, all of the following property now owned or at any
time hereafter acquired by the Grantor or in which the Grantor now has or at
any
time in the future may acquire any right, title or interests is collectively
referred to as the “Collateral”:
(a) the
Deposit Account and any interest earned upon any cash deposited in the Deposit
Account; and
(b) all
books
and records pertaining to Deposit Account.
3
| Section 2.2 |
Grant
of Security Interest in
Collateral
|
The
Grantor, as collateral security for the full, prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise)
of the Note Obligations of the Grantor, hereby mortgages, pledges and
hypothecates 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 lien
on
and security interest in, all of its right, title and interest in, to and under
the Collateral of the Grantor.
| Section 2.3 |
Cash
Collateral Account
|
The
Company has established the Deposit Account at Citibank, N.A., designated as
“Citibank N.A. – China Natural Gas, Inc. Deposit Account”. Such Deposit
Account shall be a Cash Collateral Account. For the purpose of this Agreement,
“Cash
Collateral Account”
means
any Deposit Account that is (a) established to receive cash and cash
equivalents and (B) under the joint control of the Grantor and Abax Lotus Ltd.
(“Abax”).
| ARTICLE III |
REPRESENTATIONS
AND WARRANTIES
|
To
induce
the Collateral Agent to enter into this Agreement on behalf of the Holders,
the
Grantor hereby represents and warrants each of the following to the Collateral
Agent, the Holders, the Grantors and the other Secured Parties:
| Section 3.1 |
Title;
No Other Liens
|
Except
for the Lien granted to the Collateral Agent pursuant to this Agreement and
the
other Liens permitted to exist on the Collateral under the Indenture, the
Grantor has rights in or the power to transfer the Collateral in which a Lien
is
granted by it hereunder, free and clear of any other Lien.
| Section 3.2 |
Perfection
and Priority
|
The
security interest granted pursuant to this Agreement shall constitute a valid
and continuing perfected security interest in favor of the Collateral Agent
in
the Collateral and for which perfection is governed by the UCC upon in the
case of all Collateral in which a security interest may be perfected by filing
a
financing statement under the UCC, the completion of the filings and other
actions specified herein (which, in the case of all filings and other documents
referred to on such schedule, have been delivered to the Collateral Agent in
completed and duly executed form). Such security interest shall be prior to
all
other Liens on the Collateral except for Liens arising by operation of law
or
otherwise as permitted under the Indenture.
| Section 3.3 |
Jurisdiction
of Organization; Chief Executive
Office
|
Such
Grantor’s jurisdiction of organization, legal name, organizational
identification number, if any, and the location of such Grantor’s chief
executive office or sole place of business, in each case as of the date hereof,
is specified on Schedule 1 (Jurisdiction of Organization, Principal Executive
Office) and such Schedule 1 (Jurisdiction of Organization, Principal Executive
Office) also lists all jurisdictions of incorporation, legal names and locations
of such Grantor’s chief executive office or sole place of business for the five
years preceding the date hereof.
4
| Section 3.4 |
Deposit
Account
|
The
Deposit Account maintained by the Grantor on the date hereof is listed
below:
Title:
China
Natural Gas, Inc.
Type: Money
Market Account at Citibank, N.A.
Account
Number: 9936817369
SWIFT
Code: citius33
Routing
Number:
▇▇▇▇▇▇▇▇▇
Account
Manager: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ (Business Banker)
Authorized
Signatories: Ji
Qinan,
together with
either
▇▇▇▇
▇▇▇▇,
or
▇▇▇▇
▇▇▇▇▇ Dong.
| ARTICLE IV |
COVENANTS
|
The
Grantor agrees with the Collateral Agent to the following, as long as any Note
Obligation remains outstanding and, in each case, unless the Holders of a
majority in aggregate principal amount of Notes then outstanding (excluding
any
Notes beneficially owned by the Grantor or any Affiliate thereof) otherwise
consent in writing:
| Section 4.1 |
Generally
|
The
Grantor shall (a) except for the security interest created by this
Agreement, not create or suffer to exist any Lien upon or with respect to any
Collateral, except Liens permitted under the Indenture, (b) not use or
permit any Collateral to be used unlawfully or in violation of any provision
of
this Agreement, the Notes, Indenture or any other Security Document (the
“Related
Documents”),
or
any Governmental Authority and (c) not enter into any agreement or
undertaking restricting the right or ability of the Grantor or the Collateral
Agent to realize upon any Collateral.
| Section 4.2 |
Maintenance
of Perfected Security Interest; Further
Documentation
|
(a) The
Grantor shall maintain the security interest created by this Agreement as a
perfected security interest having at least the priority described in
Section 3.2 (Perfection
and Priority)
and
Section 2.2 and shall defend such security interest and such priority against
the claims and demands of all Persons.
(b) The
Grantor shall furnish to the Collateral Agent from time to time statements
and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Collateral Agent may reasonably
request, all in reasonable detail and in form and substance satisfactory to
the
Collateral Agent.
(c) At
any
time and from time to time, upon the written request of the Collateral Agent,
and at the sole expense of the Grantor, the Grantor shall promptly and duly
execute and deliver, and have recorded, such further instruments and documents
and take such further action as the Collateral Agent may reasonably request
for
the purpose of obtaining or preserving the full benefits of this Agreement
and
of the rights and powers herein granted, including the filing of any financing
or continuation statement under the UCC (or other similar laws) in effect in
any
jurisdiction with respect to the security interest created hereby and the
execution and delivery of a Deposit Account Agreement.
5
| Section 4.3 |
Changes
in Locations, Name,
Etc.
|
(a) Except
upon 15 days’ prior written notice to the Collateral Agent and delivery to the
Collateral Agent of additional financing statements and all other necessary
documents to maintain the validity, perfection and priority of the security
interests provided for herein, such Grantor shall not do any of the
following:
(i) change
its jurisdiction of organization or its location, in each case from that
referred to in Section 3.3
(Jurisdiction
of Organization; Chief Executive Office);
or
(ii) change
its legal name or any trade name used to identify it in the conduct of its
business or ownership of its properties or organizational identification number,
if any, or corporation, limited liability company or other organizational
structure to such an extent that any financing statement filed in connection
with this Agreement would become misleading.
(b) The
Grantor shall keep and maintain at its own cost and expense satisfactory and
complete records of the Collateral, including a record of all payments received
and all credits granted with respect to the Collateral and all other dealings
with the Collateral.
| Section 4.4 |
Pledged
Collateral
|
(a) Except
as
provided in Article
V (Remedial
Provisions),
the
Grantor shall be entitled to receive all interest paid in respect of the Pledged
Collateral. If any sum of money or property so paid or distributed in respect
of
any Pledged Collateral shall be received by the Grantor, the Grantor shall,
until such money or property is paid or delivered to the Collateral Agent,
hold
such money or property in trust for the Collateral Agent, segregated from other
funds of the Grantor, as additional security for the Note
Obligations.
(b) The
Grantor shall not, without the consent of the Holders of a majority in aggregate
principal amount of Notes then outstanding (excluding any Notes beneficially
owned by the Grantor or any Affiliate thereof) agree to any amendment of any
charter document or agreement governing the Deposit Account that in any way
adversely affects the perfection of the security interest of the Collateral
Agent in the Pledged Collateral pledged by the Grantor hereunder.
| Section 4.5 |
Accounts
|
The
Collateral Agent shall have the right to make test verifications of the Deposit
Account in any manner and through any medium that it reasonably considers
advisable, and the Grantor shall furnish all such assistance and information
as
the Collateral Agent may reasonably require in connection therewith. At any
time
and from time to time, upon the Collateral Agent’s request and at the expense of
the Grantor, the Grantor shall cause independent public accountants or others
to
furnish to the Collateral Agent reports showing reconciliations, aging and
test
verifications of, and trial balances for, the Deposit Account; provided,
however,
that
unless a Default or Event of Default shall be continuing, the Collateral Agent
shall request no more than four such reports during any calendar
year.
6
| Section 4.6 |
Payment
of Obligations
|
The
Grantor shall pay and discharge or otherwise satisfy at or before maturity
or
before they become delinquent, as the case may be, all taxes, assessments and
governmental charges or levies imposed upon the Collateral or in respect of
income or profits therefrom, as well as all claims of any kind (including claims
for labor, materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if the amount or validity thereof is
currently being contested in good faith by appropriate proceedings, reserves
in
conformity with GAAP with respect thereto have been provided on the books of
the
Grantor and such proceedings could not reasonably be expected to result in
the
sale, forfeiture or loss of any material portion of the Collateral or any
interest therein.
| ARTICLE V |
REMEDIAL
PROVISIONS
|
| Section 5.1 |
Code
and Other Remedies
|
During
the continuance of an Event of Default, the Collateral Agent is under no
obligation to exercise, in addition to all other rights and remedies granted
to
it in this Agreement and in any other instrument or agreement securing,
evidencing or relating to the Note Obligations, all rights and remedies of
a
secured party under the UCC or any other applicable law unless the Holders
have
offered to the Collateral Agent indemnity reasonably satisfactory against the
costs and expenses that might be incurred by it in the course of exercising
the
rights and remedies hereunder. Without limiting the generality of the foregoing,
the Collateral Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate
and
realize upon any Collateral, and may forthwith sell, lease, assign, give option
or options to purchase, or otherwise dispose of and deliver any Collateral
(or
contract to do any of the foregoing), upon such terms and conditions as it
may
deem advisable and at such prices as it may deem best, for cash or on credit
or
for future delivery without assumption of any credit risk. The Collateral Agent
shall apply the net proceeds of any action taken by it pursuant to this
Section 5.1,
after
deducting all costs and expenses of every kind incurred in connection therewith
or incidental to the care or safekeeping of any Collateral or in any way
relating to the Collateral or the rights of the Collateral Agent and any other
Secured Party hereunder, including reasonable attorneys’ fees and disbursements,
to the payment in whole or in part of the Note Obligations, in such order as
the
Indenture shall prescribe, and only after such application and after the payment
by the Collateral Agent of any other amount required by any provision of law,
need the Collateral Agent account for the surplus, if any, to the Grantor.
To
the extent permitted by applicable law, the Grantor waives all claims, damages
and demands it may acquire against the Collateral Agent or any other Secured
Party arising out of the exercise by them of any rights hereunder.
| Section 5.2 |
Pledged
Collateral
|
During
the continuance of an Event of Default, upon notice by the Collateral Agent
to
the Grantor (i) the Collateral Agent shall have the right to receive any
proceeds of the Pledged Collateral and make application thereof to the
Obligations in the order set forth in the Indenture and (ii) the Collateral
Agent or its nominee may exercise any right pertaining to the Pledged
Collateral as if it were the absolute owner thereof, all without liability
except to account for property actually received by it; provided,
however,
that
the Collateral Agent shall have no duty to exercise any such right, privilege
or
option and shall not be responsible for any failure to do so or delay in so
doing.
7
| Section 5.3 |
Proceeds
to be Turned Over To Collateral
Agent
|
Unless
otherwise expressly provided in the Indenture, all proceeds received by the
Collateral Agent hereunder in cash or Cash Equivalents shall be held by the
Collateral Agent in the Cash Collateral Account. All Proceeds while held by
the
Collateral Agent in Cash Collateral Account (or by the Grantor in trust for
the
Collateral Agent) shall continue to be held as collateral security for the
Note
Obligations and shall not constitute payment thereof until applied as provided
in the Indenture.
| Section 5.4 |
Deficiency
|
The
Grantor shall remain liable for any deficiency if the proceeds of any sale
or
other disposition of the Collateral are insufficient to pay the Note Obligations
and the fees and disbursements of any attorney employed by the Collateral Agent
or any other Secured Party to collect such deficiency.
| ARTICLE VI |
THE
COLLATERAL AGENT
|
| Section 6.1 |
Collateral
Agent’s Appointment as
Attorney-in-Fact
|
(a) The
Grantor hereby irrevocably constitutes and appoints the Collateral Agent and
any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of the Grantor and in the name of the Grantor or in its own name,
for
the purpose of carrying out the terms of this Agreement, to take any appropriate
action and to execute any document or instrument that may be necessary or
desirable to accomplish the purposes of this Agreement, and, without limiting
the generality of the foregoing, the Grantor hereby gives the Collateral Agent
the power and right, on behalf of the Grantor, without notice to or assent
by
the Grantor, to do any of the following:
(i) file
any
claim or take any other action or proceeding in any court of law or equity
or
otherwise deemed appropriate by the Collateral Agent for the purpose of
collecting any such moneys in the Deposit Account;
(ii) pay
or
discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repair or pay any insurance called for by the terms
of
this Agreement (including all or any part of the premiums therefor and the
costs
thereof);
(iii) execute,
in connection with any sale provided for in Section 5.1
(Code
and Other Remedies),
any
endorsement, assignment or other instrument of conveyance or transfer with
respect to the Collateral; and
8
(iv) (A)
ask or demand for, collect, and receive payment of and receipt for, any moneys,
claims and other amounts due or to become due at any time in respect of or
arising out of any Collateral, (B) sign and indorse any assignment,
verification, notice and other document in connection with any Collateral,
(C) commence and prosecute any suit, action or proceeding at law or in
equity in any court of competent jurisdiction to collect any Collateral and
to
enforce any other right in respect of any Collateral, (D) defend any suit,
action or proceeding brought against the Grantor with respect to any Collateral,
(E) settle, compromise or adjust any such suit, action or proceeding and,
in connection therewith, give such discharges or releases as the Collateral
Agent may deem appropriate and (F) generally, sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any Collateral as
fully and completely as though the Collateral Agent were the absolute owner
thereof for all purposes, and do, at the Collateral Agent’s option and the
Grantor’s expense, at any time, or from time to time, all acts and things that
the Collateral Agent deems necessary to protect, preserve or realize upon the
Collateral and the Collateral Agent’s and the other Secured Parties’ security
interests therein and to effect the intent of this Agreement, all as fully
and
effectively as the Grantor might do.
Anything
in this clause (a)
to the
contrary notwithstanding, the Collateral Agent agrees that it shall not exercise
any right under the power of attorney provided for in this clause (a)
unless
an Event of Default shall be continuing.
(b) If
the
Grantor fails to perform or comply with any of its agreements contained herein,
the Collateral Agent, at its option, but without any obligation so to do, may
perform or comply, or otherwise cause performance or compliance, with such
agreement.
(c) The
expenses of the Collateral Agent incurred in connection with actions undertaken
as provided in this Section 6.1,
together with interest thereon at a rate per annum equal to the rate per annum
at which interest would then be payable on past due payments under the
Indenture, from the date of payment by the Collateral Agent to the date
reimbursed by the Grantor, shall be payable by the Grantor to the Collateral
Agent on demand.
(d) The
Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be
done by virtue hereof. All powers, authorizations and agencies contained in
this
Agreement are coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are
released.
| Section 6.2 |
Duty
of Collateral Agent
|
The
Collateral Agent’s sole duty with respect to the custody and safekeeping of the
Collateral in its possession shall be to deal with it in accordance with this
Agreement and any instructions, direction, or request delivered to it in writing
under this Agreement. None of the Collateral Agent, any other Secured Party
nor
any of their respective officers, directors, employees or agents shall be liable
for failure to demand, collect or realize upon any Collateral or for any delay
in doing so or shall be under any obligation to sell or otherwise dispose of
any
Collateral upon the request of the Grantor or any other Person or to take any
other action whatsoever with regard to any Collateral. The powers conferred
on
the Collateral Agent hereunder are solely to protect the Collateral Agent’s
interest in the Collateral and shall not impose any duty upon the Collateral
Agent or any other Secured Party to exercise any such powers. The Collateral
Agent and the other Secured Parties shall be accountable only for amounts that
they actually receive as a result of the exercise of such powers, and neither
they nor any of their respective officers, directors, employees or agents shall
be responsible to the Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful default.
9
| Section 6.3 |
Authority
of Collateral Agent
|
The
Grantor acknowledges that the rights and responsibilities of the Collateral
Agent under this Agreement with respect to any action taken by the Collateral
Agent or other right or remedy provided for herein or resulting or arising
out
of this Agreement shall, as between the Collateral Agent and the other Secured
Parties, be governed by the Indenture and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Collateral Agent and the Grantor, the Collateral Agent shall be conclusively
presumed to be acting as agent for the Holders with full and valid authority
so
to act or refrain from acting, and the Grantor shall be under any obligation,
or
entitlement, to make any inquiry respecting such authority.
| Section 6.4 |
Filing
of Financing
Statements
|
The
Grantor or its Affiliates counsel and other representatives shall at any time
and from time to time, to file or record financing statements, amendments to
financing statements, and other filing or recording documents or instruments
with respect to the Collateral in such form to properly and effectively perfect
the security interests of the Collateral Agent under this Agreement. The Grantor
or its Affiliates, counsel and other representatives shall also at any time
and
from time to time, file continuation statements with respect to previously
filed
financing statements. A photographic or other reproduction of this Agreement
shall be sufficient as a financing statement or other filing or recording
document or instrument for filing or recording in any jurisdiction. The Grantor
shall promptly provide the Collateral Agent with documents evidencing such
filings or recordings.
| Section 6.5 |
Indemnity
|
The
Grantor shall indemnify the Collateral Agent against any and all losses, claims,
damages, penalties, fines, liabilities or expenses, including incidental and
out-of-pocket expenses and attorneys fees (for purposes of this Section,
“losses”) incurred by it arising out of or in connection with the acceptance or
administration of its duties under this Agreement, including the costs and
expenses of enforcing this Agreement and the Pledged Collateral hereunder
against the Grantor (including this Section) and defending itself against any
claim (whether asserted by the Grantor or any Holder or any other Person) or
liability in connection with the exercise or performance of any of its powers
or
duties hereunder, except to the extent such losses may be attributable to its
gross negligence or willful default. The Collateral Agent shall notify the
Grantor promptly of any claim for which it may seek indemnity. Failure by the
Collateral Agent to so notify the Grantor shall not relieve the Grantor of
its
obligations under this Section, to the extent the Grantor has been prejudiced
thereby. The Grantor shall defend the claim, and the Collateral Agent shall
cooperate in the defense. The Grantor need not pay for any settlement made
without its consent, which consent shall not be unreasonably withheld. The
Grantor needs not reimburse any expense or indemnify against any loss incurred
by the Collateral Agent through the Collateral Agent's own willful default
or
gross negligence. The obligations of the Grantor under this Section shall
survive the termination and discharge of this Agreement, the resignation or
removal of the Collateral Agent and payment in full of the Secured Obligations
through the expiration of the applicable statute of limitation.
10
| Section 6.6 |
No
Implicit Duties
|
The
Collateral Agent shall be obliged to perform such duties and only such duties
as
are set out in this Agreement and no implied duties or obligations shall be
read
into this Agreement or the against the Collateral Agent.
| Section 6.7 |
Illegality
|
In
the
event that the Collateral Agent shall be uncertain as to its duties or rights
hereunder or shall receive instructions, claims or demands from the Issuer,
in
its opinion, conflict with any of the provisions of this Agreement, it shall
be
entitled to refrain from taking any action until it is directed in writing
by a
final order or judgment of a court of competent jurisdictions.
| Section 6.8 |
Not
Liable for Action.
|
The
Collateral Agent shall not be liable for any action taken or omitted by it
except to the extent that a court of competent jurisdiction determines that
the
Collateral Agent’s gross negligence or willful default was the primary cause of
any loss to the Grantor. Notwithstanding any other term or provision of this
Agreement to the contrary, the Collateral Agent shall not be liable under any
circumstances for special, punitive, indirect or consequential loss or damage
of
any kind whatsoever including but not limited to loss of profits, whether or
not
foreseeable, even if the Collateral Agent is actually aware of or has been
advised of the likelihood of such loss or damage and regardless of whether
the
claim for such loss or damage is made in negligence, for breach of contract,
breach of trust, breach of fiduciary obligation or otherwise. The provisions
of
this Section shall survive the termination or expiry of this Agreement or the
resignation or removal of the Collateral Agent.
| Section 6.9 |
Delegations
and Expert Advice
|
The
Collateral Agent may execute any of its powers and perform any of its duties
hereunder directly or through delegates or attorneys and may consult with
counsel, accountants and other skilled persons to be selected and retained
by
it. The Collateral Agent may engage and consult, at the expense of the Grantor
with any legal adviser and professional adviser selected by it and rely upon
any
advice so obtained and each of the Collateral Agent and its directors, officers,
employees and duly appointed agents shall be protected and shall not be liable
in respect of any action taken, or omitted to be done or suffered to be taken,
in accordance with such advice.
| Section 6.10 |
Successor
|
Any
corporation into which the Collateral Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Collateral Agent shall be a party,
or
any corporation succeeding to all or substantially all the corporate trust
business of the Collateral Agent, shall be the successor to the Collateral
Agent
hereunder without the execution or filing of any papers or any further act
on
the part of any of the parties hereto.
11
| Section 6.11 |
Retirement
of Collateral Agent
|
The
Collateral Agent may retire at any time on giving not less than 30 days prior
written notice to the Grantor without assigning any reason and without being
responsible for any costs, charges and expenses occasioned by such retirement.
The Grantor hereby covenants that in the event of the Collateral Agent giving
notice under this Section, they shall use their best endeavours to procure
a new
Collateral Agent to be appointed and if the they fail to procure the appointment
of a new Collateral Agent 15 days prior to the expiry of such written notice,
the Collateral Agent shall appoint a successor Collateral Agent and shall notify
all transaction parties in writing of its resignation.
| ARTICLE VII |
MISCELLANEOUS
|
| Section 7.1 |
Amendments
in Writing
|
None
of
the terms or provisions of this Agreement may be waived, amended, supplemented
or otherwise modified except in accordance with the Indenture.
| Section 7.2 |
Notices
|
All
notices, requests and demands to or upon the Collateral Agent or the Grantor
hereunder shall be effected in the manner provided for in the Indenture.
| Section 7.3 |
No
Waiver by Course of Conduct; Cumulative
Remedies
|
Neither
the Collateral Agent nor any other Secured Party shall by any act (except by
a
written instrument pursuant to Section 7.1
(Amendments
in Writing)),
delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default. No failure
to exercise, nor any delay in exercising, on the part of the Collateral Agent
or
any other Secured Party, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or
the
exercise of any other right, power or privilege. A waiver by the Collateral
Agent or any other Secured Party of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy that the
Collateral Agent or such other Secured Party would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights
or
remedies provided by law.
| Section 7.4 |
Successors
and Assigns
|
This
Agreement shall be binding upon the successors and assigns of the Grantor and
shall inure to the benefit of the Collateral Agent and each other Secured Party
and their successors and assigns; provided,
however,
that
the Grantor may not assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Collateral Agent.
| Section 7.5 |
Counterparts
|
This
Agreement may be executed by one or more of the parties to this Agreement on
any
number of separate counterparts (including by telecopy), each of which when
so
executed shall be deemed to be an original and all of which taken together
shall
constitute one and the same agreement. Signature pages may be detached from
multiple counterparts and attached to a single counterpart so that all signature
pages are attached to the same document. Delivery of an executed counterpart
by
telecopy shall be effective as delivery of a manually executed
counterpart.
12
| Section 7.6 |
Severability
|
Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any
other jurisdiction.
| Section 7.7 |
Section
Headings
|
The
Article and Section titles contained in this Agreement are, and shall be,
without substantive meaning or content of any kind whatsoever and are not part
of the agreement of the parties hereto.
| Section 7.8 |
Entire
Agreement
|
This
Agreement together with the Indenture represents the entire agreement of the
parties and supersedes all prior agreements and understandings relating to
the
subject matter hereof.
| Section 7.9 |
Governing
Law
|
This
Agreement and the rights and obligations of the parties hereto shall be governed
by, and construed and interpreted in accordance with, the law of the State
of
New York.
| Section 7.10 |
Consent
to Jurisdiction and Service of Process; Waiver of
Immunities.
|
(a) The
Grantor irrevocably consents to the jurisdiction of the courts of the State
of
New York and the courts of the United States of America located in the Borough
of Manhattan, City and State of New York over any suit, action or proceeding
with respect to this Indenture or the transactions contemplated hereby. The
Grantor waives any objection that it may have to the venue of any suit, action
or proceeding with respect to this Agreement or the transactions contemplated
hereby in the courts of the State of New York or the courts of the United States
of America, in each case, located in the Borough of Manhattan, City and State
of
New York, or that such suit, action or proceeding brought in the courts of
the
State of New York or the United States of America, in each case, located in
the
Borough of Manhattan, City and State of New York was brought in an inconvenient
court and agrees not to plead or claim the same.
(b) The
extent that the Grantor has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process (whether through service
of
notice, attachment prior to judgment, attachment in aid of execution or
otherwise) with respect to itself or its property, the Grantor hereby
irrevocably waives such immunity in respect of its Obligations under this
Agreement, to the extent permitted by law.
13
| Section 7.11 |
Release
of Collateral
|
(a) At
the
time provided in the Indenture, the Collateral shall be released from the Lien
created hereby and this Agreement and all obligations (other than those
expressly stated to survive such termination) of the Collateral Agent and the
Grantor hereunder shall terminate, all without delivery of any instrument or
performance of any act by any party, and all rights to the Collateral shall
revert to the Grantor. At the request and sole expense of the Grantor following
any such termination, the Collateral Agent shall deliver to the Grantor any
Collateral of the Grantor held by the Collateral Agent hereunder and execute
and
deliver to the Grantor such documents as the Grantor shall reasonably request
to
evidence such termination.
(b) If
the
Collateral Agent shall be directed or permitted pursuant to the Indenture to
release any Lien created hereby upon any Collateral (including any Collateral
sold or disposed of by the Grantor in a transaction permitted by the Indenture),
such Collateral shall be released from the Lien created hereby to the extent
provided under, and subject to the terms and conditions set forth in the
Indenture. In connection therewith, the Collateral Agent, at the request and
sole expense of the Grantor, shall execute and deliver to the Grantor all
releases or other documents, including, without limitation, UCC termination
statements, reasonably necessary or desirable for the release of the Lien
created hereby on such Collateral.
| Section 7.12 |
Reinstatement
|
The
Grantor further agrees that, if any payment made by the Grantor or other Person
and applied to the Note Obligations is at any time annulled, avoided, set aside,
rescinded, invalidated, declared to be fraudulent or preferential or otherwise
required to be refunded or repaid, or the proceeds of Collateral are required
to
be returned by any Secured Party to the Grantor, its estate, trustee, receiver
or any other party, including the Grantor, under any bankruptcy law, state
or
federal law, common law or equitable cause, then, to the extent of such payment
or repayment, any Lien or other Collateral securing such liability shall be
and
remain in full force and effect, as fully as if such payment had never been
made
or, if prior thereto the Lien granted hereby or other Collateral securing such
liability hereunder shall have been released or terminated by virtue of such
cancellation or surrender), such Lien or other Collateral shall be reinstated
in
full force and effect, and such prior cancellation or surrender shall not
diminish, release, discharge, impair or otherwise affect any Lien or other
Collateral securing the obligations of the Grantor in respect of the amount
of
such payment.
[SIGNATURE
PAGES FOLLOW]
14
IN
WITNESS WHEREOF,
each of
the undersigned has caused this Pledge and Security Agreement to be duly
executed and delivered as of the date first above written.
|
as
Grantor
|
||
|
|
||
|
By:
|
/s/
Qinan Ji
|
|
|
|
Name:
|
|
|
|
Title:
|
|
|
ACCEPTED
AND AGREED
|
||
|
as
of the date first above written:
|
||
|
|
||
|
DB
TRUSTEES (HONG KONG) LIMITED,
|
||
|
as
Collateral Agent
|
||
|
|
||
|
By:
|
/s/
▇▇▇▇ ▇▇▇-▇▇▇▇▇▇▇
|
|
|
Name: ▇▇▇▇
▇▇▇-▇▇▇▇▇▇▇
|
||
|
Title:
Director
|
||
|
By:
|
/s/
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
|
|
|
Name: ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
|
||
|
Title:
Authorized
Signatory
|
||
[SIGNATURE
PAGE TO ACCOUNT PLEDGE AND SECURITY AGREEMENT]
Schedule
1
Jurisdiction
of Organization; Chief Executive Office
Jurisdiction
of Organization: Delaware
Current
Principal Executive Office:
▇▇▇▇
▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇.
▇▇
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇
Xi’an
710065, Shaanxi
People’s
Republic of China
Current
Principal Executive Office in the United States:
▇▇
▇▇▇▇
▇▇▇ ▇▇▇▇▇# ▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
Prior
Address of Principal Executive Office:
Tang
Xing
Shu Ma Building, Suite 418
Tang
Xing
Road
Xi’an
High Tech Area
Xi’an,
Shaanxi
People’s
Republic of China
Annex
A
[Please
see the attached Deposit Account Control Agreement]
TABLE
OF CONTENTS
(continued)
|
ARTICLE
I DEFINED TERMS
|
2
|
||
|
Section 1.1
|
Definitions
|
2
|
|
|
Section 1.2
|
Certain
Other Terms
|
3
|
|
|
ARTICLE
II GRANT OF SECURITY INTEREST
|
3
|
||
|
Section 2.1
|
Collateral
|
3
|
|
|
Section 2.2
|
Grant
of Security Interest in Collateral
|
4
|
|
|
Section 2.3
|
Cash
Collateral Account
|
4
|
|
|
ARTICLE
III REPRESENTATIONS AND WARRANTIES
|
4
|
||
|
Section 3.1
|
Title;
No Other Liens
|
4
|
|
|
Section 3.2
|
Perfection
and Priority
|
4
|
|
|
Section 3.3
|
Jurisdiction
of Organization; Chief Executive Office
|
4
|
|
|
Section 3.4
|
Deposit
Account
|
5
|
|
|
ARTICLE
IV COVENANTS
|
5
|
||
|
Section 4.1
|
Generally
|
5
|
|
|
Section 4.2
|
Maintenance
of Perfected Security Interest; Further Documentation
|
5
|
|
|
Section 4.3
|
Changes
in Locations, Name, Etc
|
6
|
|
|
Section 4.4
|
Pledged
Collateral
|
6
|
|
|
Section 4.5
|
Accounts
|
6
|
|
|
Section 4.6
|
Payment
of Obligations
|
7
|
|
|
ARTICLE
V REMEDIAL PROVISIONS
|
7
|
||
|
Section 5.1
|
Code
and Other Remedies
|
7
|
|
|
Section 5.2
|
Pledged
Collateral
|
7
|
|
|
Section 5.3
|
Proceeds
to be Turned Over To Collateral Agent
|
8
|
|
|
Section 5.4
|
Deficiency
|
8
|
|
|
ARTICLE
VI THE COLLATERAL AGENT
|
8
|
||
|
Section 6.1
|
Collateral
Agent’s Appointment as Attorney-in-Fact
|
8
|
|
|
Section 6.2
|
Duty
of Collateral Agent
|
9
|
|
|
Section 6.3
|
Authority
of Collateral Agent
|
10
|
|
|
Section 6.4
|
Filing
of Financing Statements
|
10
|
|
|
Section 6.5
|
Indemnity
|
10
|
|
|
Section 6.6
|
No
Implicit Duties
|
11
|
|
|
Section 6.7
|
Illegality
|
11
|
|
|
Section 6.8
|
Not
Liable for Action
|
11
|
|
|
Section 6.9
|
Delegations
and Expert Advice
|
11
|
|
|
Section 6.10
|
Successor
|
11
|
|
|
Section 6.11
|
Retirement
of Collateral Agent
|
12
|
|
|
ARTICLE
VII MISCELLANEOUS
|
12
|
||
|
Section 7.1
|
Amendments
in Writing
|
12
|
|
|
Section 7.2
|
Notices
|
12
|
|
|
Section 7.3
|
No
Waiver by Course of Conduct; Cumulative Remedies
|
12
|
|
|
Section 7.4
|
Successors
and Assigns
|
12
|
|
|
Section 7.5
|
Counterparts
|
12
|
|
|
Section 7.6
|
Severability
|
13
|
|
|
Section 7.7
|
Section
Headings
|
13
|
|
|
Section 7.8
|
Entire
Agreement
|
13
|
|
|
Section 7.9
|
Governing
Law
|
13
|
|
|
Section 7.10
|
Consent
to Jurisdiction and Service of Process; Waiver of
Immunities
|
13
|
|
|
Section 7.11
|
Release
of Collateral
|
14
|
|
|
Section 7.12
|
Reinstatement
|
14
|