Attached files
| file | filename |
|---|---|
| 8-K - China Energy Recovery, Inc. | v207669_8k.htm |
| EX-10.1 - China Energy Recovery, Inc. | v207669_ex10-1.htm |
Exhibit
10.2
COLLATERAL
AGREEMENT
This
Collateral Agreement dated as of the 31st day of December, 2010 (“Collateral
Agreement”), is entered into by Qinghuan Wu (“Guarantor”), China
Energy Recovery, Inc., a Delaware corporation ( “CER”), and Hold and
Opt Investments Limited, a Bahamas company (“Lender”). Golenbock
Eiseman Assor Bell & Peskoe LLP, a limited liability partnership ("Collateral Agent”)
shall enter into this Collateral Agreement not earlier than the date that the
Collateral (as herein defined) shall be free and clear of all encumbrances,
including the terms of that certain loan for US$4,000,000 for which the
Collateral is currently pledged.
RECITALS
WHEREAS,
CER is borrowing the principal sum of US$5,000,000 from the Lender for the
purpose of repaying a loan for an equal amount of principal entered into as of
May 21, 2009. As a condition to the loan agreement between the Lender
and CER (“Loan Agreement”), Mr. Wu, the Guarantor, will place with the
Collateral Agent, 8,000,006 shares (“Shares”) of common
stock of CER, which will be available as a guarantee of the repayment of all or
a portion of the amounts due to the Lender under the Loan Agreement, which
payment will depend on the market value, from time to time, of the
Shares.
WHEREAS,
this Collateral Agreement shall apply to the Shares, and any distributions of
additional shares or property in respect of the Shares (together being included
in the definition of the “Shares”). As part of the delivery of the
Shares, the Guarantor will also deliver stock powers signed in
blank.
WHEREAS,
the Shares are a limited guarantee of only the principal amount due under the
Loan Agreement, and is not a general guarantee by the Guarantor or a complete
guarantee of all the payments due under the Loan Agreement.
In
consideration of the promises and agreements of the parties and for other good
and valuable consideration, the receipt of which is acknowledged, the parties
agree as follows:
ARTICLE
1
DEPOSIT
OF COLLATERAL
1.01 Deposit. Guarantor,
promptly upon receipt of notice of signing of this Collateral Agreement by all
the parties thereto and prior to the funding of the Loan Agreement, shall
deposit the Shares and the stock powers executed in blank (signature guaranteed
as required by the CER transfer agent) with the Collateral
Agent. Collateral Agent hereby agrees to act as Collateral Agent and
to hold and disburse the Shares only pursuant to the terms and conditions
hereof. The Guarantor, upon request from the Collateral Agent, shall
provide additional stock powers executed in blank to the Collateral Agent, with
such forms of signature guarantee as may be required by the CER transfer agent,
time being of the essence. The Guarantor also will deposit under this
Collateral Agreement any distributions of property or shares made in respect of
the Shares then held hereunder that are made after the date of this Collateral
Agreement until the termination of this Collateral Agreement. For
purposes of determining any Shares to be distributed, the pro rata portion of
the distributions of property or shares made in respect of the Shares will be
distributed along with any Shares.
ARTICLE
2
2.01 Delivery of Shares to
Lender. The Lender may give written (electronic, fax or
otherwise) notice to the Collateral Agent that a sum is due and unpaid under the
Loan Agreement and request distribution of some or all the Shares, as provided
herein, to the Lender as specified in the notice. A copy of the
written notice shall simultaneously be sent to the Guarantor. If the
Guarantor objects either in whole or in part, to the specific distribution of
the Shares requested in the notice, then such objection shall be in writing to
the Lender and the Collateral Agent. If the Collateral Agent does not receive
any objection from the Guarantor to a distribution of the Shares within seven
business days of the date of the notice requesting distribution received from
the Lender, then the Collateral Agent shall deliver that number of the Shares
representing the market value equivalent of the amount stated in the notice as
due and unpaid under the Loan Agreement, using as the market value the closing
price of a Share on the last trading date on which a Share traded immediately
before the date of the notice from the Lender. If there is an
objection to a distribution made by the Guarantor, then the Collateral Agent
will not make any distribution of the Shares with respect to a notice being
contested until there is a resolution of whether or not a distribution shall be
made as to the amount of Shares and distributees, as agreed between the
Guarantor and the Lender, which is communicated jointly in writing to the
Collateral Agent.
2.02. Delivery of Shares to
Guarantor. The Guarantor, on or within 20 business days after the payment
of any principal amount, interest due on such principal amount or other sums
then due under the Loan Agreement may give notice (electronic, fax or otherwise)
to the Collateral Agent requesting that a portion of the Shares be returned to
the Guarantor, as provided herein. The portion of the Shares that may
be returned to the Guarantor is as follows: (a) if the principal paid
was the full amount due and all the other financial obligations then due are
paid in full under the terms of the Loan Agreement, then all the Shares shall be
returned to the Guarantor, and (b) if the principal paid was a prepayment
thereof but the principal is not paid in full, then the distribution of Shares
will be that number of Shares representing the market value of 50% of the
principal prepaid under the Loan Agreement, where the market value of the Shares
is measured by the closing price of a Share on the last trading date on which a
Share traded immediately before the date of the written notice for the release
of Shares is given by the Guarantor. A copy of the written notice
will simultaneously be sent to the Lender. If the Lender objects to a
distribution of the Shares, then such objection shall be in writing to the
Guarantor, and the Collateral Agent. If the Collateral Agent does not receive
any objection to a distribution of the Shares from the Lender within seven
business days of the date of the notice from the Guarantor, then the Collateral
Agent shall deliver that number of the Shares as requested by the Guarantor and
specified herein. If there is an objection to a distribution to the
Guarantor, then the Collateral Agent will not make any distribution until there
is a resolution of whether or not a distribution shall be made and the amount of
Shares to be distributed betweem the Guarantor and the Lender, of which the
Collateral Agent is notified in a joint writing.
2
2.04 Satisfaction of
Guarantee. Upon Collateral Agent's delivery of the Shares
after receipt of any notice pursuant to Section 2.01 above of this Collateral
Agreement, the Lender receiving the Shares hereby agrees that said portion of
the amounts due under the Loan Agreement will have been paid in full and all
guaranties and security therefore represented by the Shares shall have been
released without the necessity of further action by any
party. However, all parties hereto agree to cooperate, without cost
to the Lender or the Collateral Agent, to execute such other documents
reasonably requested by any other party hereto to effect the
foregoing.
2.05. Objections to Notices
Unique. For purposes of clarity, objection to a notice for a
distribution given hereunder by any party will not be considered an objection to
any other or subsequent notice for a distribution. Each notice will
be considered a separate procedure requiring its own objection and resolution in
the event of a controversy.
ARTICLE
3
DUTIES
AND OBLIGATIONS OF COLLATERAL AGENT
3.01 General
Duties and Obligations of Collateral Agent.
(a) This
Collateral Agreement expressly sets forth all the duties of Collateral Agent
with respect to any and all matters pertinent hereto. No implied duties or
obligations shall be read into this Collateral Agreement against Collateral
Agent.
(b) Collateral
Agent shall not be under any duty to give the Shares held by it hereunder any
greater degree of care than it gives similar property of its
clients.
(c) Collateral
Agent shall not be liable for actions or omissions hereunder, except for its own
gross negligence or willful misconduct and, except with respect to claims based
upon such gross negligence or willful misconduct that are successfully asserted
against Collateral Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless Collateral Agent (and any successor Collateral
Agent) from and against any and all losses, liabilities, claims, actions,
damages and expenses, including reasonable attorneys' fees and disbursements,
arising out of and in connection with this Collateral Agreement.
(d) In
the event of any doubt or uncertainty by Collateral Agent as to its duties or
rights hereunder, the Collateral Agent shall be entitled to tender the Shares
and stock powers into a court of competent jurisdiction for a determination of
the rights of interested parties, and shall be entitled to recover from the
Guarantor or the Lender, jointly and severally, its attorneys' fees and costs in
connection therewith.
(e) The
Collateral Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. The Collateral Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so.
Collateral Agent may conclusively presume that the undersigned representative of
any party hereto which is an entity other than a natural person has full power
and authority to instruct Collateral Agent on behalf of that party unless
written notice to the contrary is delivered to Collateral Agent.
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(f) Collateral
Agent may act pursuant to the advice of counsel with respect to any matter
relating to this Collateral Agreement and shall not be liable for any action
taken or omitted by it in good faith in accordance with such
advice.
(g) Collateral
Agent does not have any interest in the Shares deposited hereunder but is
serving as the holder of collateral for the benefit of the Lender only and has
only possession thereof.
(h) Collateral
Agent makes no representation as to the validity, value, genuineness or
collectability of any security or other document or instrument held by or
delivered to it.
(i) Collateral
Agent (and any successor Collateral Agent) may at any time resign as such by
delivering the Shares and stock powers to any successor Collateral Agent jointly
designated by the other parties hereto in writing, or to any court of competent
jurisdiction, whereupon Collateral Agent shall be discharged of and from any and
all further obligations arising in connection with this Collateral Agreement.
The resignation of Collateral Agent will take effect on the earlier of (i) the
appointment of a successor (including a court of competent jurisdiction) or (ii)
the day which is thirty (30) days after the date of delivery of its written
notice of resignation to the other parties hereto. If, at that time, Collateral
Agent has not received a designation of a successor Collateral Agent, Collateral
Agent's sole responsibility after that time shall be to retain and safeguard the
Shares and stock powers until receipt of a designation of successor Collateral
Agent or a joint written disposition instruction by the other parties hereto or
a final, non-appealable order of a court of competent jurisdiction.
(j) Collateral
Agent is not a party to and is not bound by or charged with notice of, and is
not responsible or liable in any manner whatsoever for the sufficiency,
correctness, genuineness or validity of, any agreement or document out of which
this Collateral Agreement may arise; nor is Collateral Agent liable in any
manner for the identity or authority of any person executing the Collateral
Agreement or any other document out of which this Collateral Agreement may
arise.
3.02 Collateral Agent’s
Representation of CER and Others. Guarantor, CER and the Lender are aware
or have been informed and acknowledge that the Collateral Agent is one of
several counsel for CER and its affiliated and subsidiary corporations and of
the Lender and its affiliates and agree that Collateral Agent may continue to
represent CER and its affiliated and subsidiary corporations and the Lender and
its affiliates after the date hereof in all matters notwithstanding the
performance of its duties and obligations hereunder, including, without
limitation, representation with respect to the this Collateral Agreement, the
Loan Agreement and the transactions contemplated hereunder and
thereunder. Guarantor, CER and the Lender each hereby waive any claim
of conflict of interest relating to Collateral Agent’s duties, obligations and
acts hereunder and waive any right or claim to object to such continued legal
representation by Collateral Agent of CER and its affiliated and subsidiary
corporations and of the Lender and its affiliates on or after the date
hereof.
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ARTICLE
4
MISCELLANEOUS
4.01 Successors and Assigns;
Survival. This Collateral Agreement shall be binding on and
inure to the benefit of the parties to this Collateral Agreement and their
respective heirs, executors, administrators, successors and permitted
assigns. Other than the specified third party beneficiaries, no other
persons shall have any rights under this Collateral Agreement. Any
and all rights of any Collateral Agent hereunder shall terminate upon the
termination of this Collateral Agreement, the distribution of the Shares or the
resignation of such Collateral Agent.
4.02 Third Party
Beneficiaries. This Collateral Agreement shall be for the
benefit of the Lender pursuant to the terms of the Loan Agreement with CER, and
the Lender shall have the right to enforce this Collateral Agreement for its
benefit pursuant to the terms of the Loan Agreement with CER.
4.03 Notices. All
notices, requests, demands, and other communications required or desired to be
given hereunder shall be in writing and shall be deemed to have been
given: (i) if personally delivered, upon such delivery; (ii) if
mailed by certified mail, return receipt requested, postage pre-paid, addressed
as follows (to the extent applicable for mailing), three (3) business days after
deposit in the mail as aforesaid; or (iii) if sent by regularly scheduled
overnight delivery service with delivery charges prepaid or an arrangement,
satisfactory with such service, made for the payment of such fees, addressed as
follows (to the extent applicable for overnight delivery), on the next business
day (as hereafter defined) after being so sent; upon confirmed receipt when sent
by telefax to the following numbers or by email or other electronic transmission
to the following addresses:
If to
Guarantor:
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Mr.
Qinghuan Wu
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c/o
7F, No. 267 Quyang Road, Hongkou District
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Shanghai,
China 200081
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Fax
Number: 86-21-6508-2138
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Telephone
Number: 86-21-5556-0020
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Email
Address:
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If to
CER:
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CER
Energy Recovery (Shanghai) Co., Ltd.
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7F,
No. 267 Quyang Road, Hongkou District
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Shanghai,
China 200081
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Fax
Number: 86-21-6508-2138
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Telephone
Number: 86-21-5556-0020
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Email
Address:
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If to Collateral Agent:
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Golenbock
Eiseman Assor Bell & Peskoe LLP
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Attn:
Andrew D. Hudders
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437
Madison Avenue
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New
York, NY 10022
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Telephone: (212)
907-7349
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Telefax: (212)
754-0330
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Email: ahudders@golenbock.com
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If to the Lender:
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Hold
and Opt Investments Limited
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Attn:
Timothy Fraser-Smith
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Deltec
House
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P.O.
Box N-3229
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Lyford
Cay
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Nassau,
New Providence, Bahamas
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Telephone:
(242) 302-4100
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Fax:
(242) 362-4623
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E-mail:
tis@deltec-bahamas.com
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or to any
other address that any party shall designate in writing to the other parties in
accordance with this provision.
4.03 Governing
Law. This Collateral Agreement shall be governed by and
construed in accordance with the laws of the State of New York without reference
to its conflict of laws principles.
4.04 Waiver. The
rights and remedies of the parties to this Collateral Agreement are cumulative
and not alternative. Neither the failure nor any delay by any party in
exercising any right, power or privilege under this Collateral Agreement or the
documents referred to in this Collateral Agreement will operate as a waiver of
such right, power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Collateral Agreement or the documents referred to in
this Collateral Agreement can be discharged by one party, in whole or in part,
by waiver or renunciation of the claim or right unless in writing signed by the
other party; (b) no waiver that may be given by a party will be applicable
except in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take further
action without notice or demand as provided in this Collateral Agreement or the
documents referred to in this Collateral Agreement.
6
4.05 Entire Agreement and
Modification. This Collateral Agreement supersedes all prior agreements
among the parties with respect to its subject matter and constitutes (along with
the documents referred to in this Collateral Agreement) a complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter. This Collateral Agreement may not be amended except by a written
agreement executed by all parties hereto.
4.06 Severability. If
any article, paragraph, section or portion of this Collateral Agreement shall be
determined to be unenforceable or invalid, it shall not affect the remainder of
this Collateral Agreement, which shall be and remain binding and effective as
against all parties hereto.
4.07 Execution in
Counterparts. This Collateral Agreement and any amendments
hereto may be executed in any number of counterparts, either by the parties
hereto and their successors, or their duly authorized attorneys-in-fact, with
the same effect as if all parties had signed the same document. All
counterparts shall be construed as and shall constitute one and the same
instrument. An executed copy of this Collateral Agreement may be
delivered by one or more parties hereto by facsimile or other electronic
transmission pursuant to which the signature of or on behalf of such party can
be seen, and such execution and delivery shall be considered valid, binding and
effective for all purposes. At the request of any party hereto, all
parties hereto agree to execute and deliver promptly an original of this
Collateral Agreement as well as any facsimile or other reproduction
hereof.
Signature
page follows:
7
The
parties to this Collateral Agreement have duly executed this Agreement as of the
date first written above.
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GUARANTOR:
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_____________________________________
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Wu
Qinghuan
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CHINA
ENERGY RECOVERY, INC.:
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By:__________________________________
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Wu
Qinghuan
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Chief
Financial Officer
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HOLD
AND OPT INVESTMENTS LIMITED:
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By:__________________________________
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Timothy
Fraser-Smith
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Authorized
Signatory
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COLLATERAL
AGENT:
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Golenbock
Eiseman Assor Bell & Peskoe LLP
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By:__________________________________
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Name:
_______________________________
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Title:
________________________________
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