Document:

Exhibit 10.8

PLEDGE AGREEMENT

PLEDGE AGREEMENT (this “Agreement”), dated this 31st day of August, 2011, by and among Yang Yong Shan, a resident of the People’s Republic of China (the “Pledgor”), Emerald Dairy Inc., a Nevada corporation (the “Company”), Legend Merchant Group, Inc., a __________ corporation, as Pledge Agent (the “Pledge Agent”), and JAG Multi Investment, LLC, a New York limited liability company (the “Pledgee”).

RECITALS

WHEREAS, the Pledgee is the holder of a promissory note, in the principal amount of $1,716,411, with an interest rate of 15% per annum (the “Note”), originally issued to the Pledgee by the Company pursuant to a Securities Purchase Agreement, dated as of June 12, 2008 (the “Purchase Agreement”), as amended on December 31, 2009, December 31, 2010 and as of even date herewith; and

WHEREAS, as a condition precedent to the Pledgee’s agreement to extend the maturity date of the Note, as of December 31, 2009, the Pledgor made a pledge in favor of the Pledgee of 2,104,950 shares of Common Stock of the Company held by the Pledgor, which as of the date hereof shall be increased to 4,000,000 shares of Common Stock held by the Pledgor (the “Pledged Shares”), to secure the prompt payment, performance and discharge in full of all of Company’s obligations under the Note; and

WHEREAS, as a condition precedent to the Pledgee’s agreement to enter into a third amendment to the Purchase Agreement, as of even date herewith (the “Third Amendment”), the parties have agreed to execute this Agreement, to set forth the specific terms and conditions of the Pledgor’s pledge of the Pledged Shares.

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereto agree as follows:

1.           Pledge.  As collateral security for the due and punctual payment and performance by the Company of the Note (all said obligations and all amounts payable hereunder hereinafter collectively called the “Obligations”), the Pledgor hereby collaterally pledges, hypothecates, assigns and grants to the Pledgee a security interest in the following (collectively, the “Pledged Collateral”):

(a)           the Pledged Shares, the certificates representing the Pledged Shares and the proceeds thereof, including, without limitation, all cash, securities, dividends and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Pledged Shares; and

  

 

  

(b)           all securities hereafter delivered to the Pledge Agent in substitution for or in addition to any of the foregoing (pursuant to Section 5(b) of this Agreement), and all certificates and instruments representing or evidencing such securities and all cash, securities, dividends and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all thereof.

2.           Pledge Absolute.  The Pledgor hereby agrees that this Agreement shall be binding upon the Pledgor and that the pledge of the Pledged Collateral hereunder shall be irrevocable and unconditional, irrespective of the validity, legality or enforceability of the Note, or the Obligations, the absence of any action to enforce the same, or any waiver or consent by the Pledgee with respect to any provisions thereof.

3.           Representatives and Warranties.

(a)          The Pledgor hereby represents and warrants as follows:

(i)           Authority. The Pledgor has full power, authority, capacity and legal right to enter into this Agreement, to pledge the Pledged Collateral pursuant hereto and to incur and perform the Obligations provided for herein.

(ii)          Binding Agreement. This Agreement constitutes the legal, valid and binding obligation of the Pledgor, enforceable in accordance with its terms.

(iii)         No Conflicts; Governmental Approvals. There is no statute, regulation, rule, order or judgment, and no provision of any mortgage, indenture, contract or agreement binding upon the Pledgor or affecting the Pledgor’s property, which would prohibit, conflict with, or in any way prevent the execution, delivery or performance of the terms of this Agreement and the pledge of the Pledged Collateral pursuant hereto.  The execution, delivery and performance by the Pledgor of the terms of this Agreement and the pledge of the Pledged Collateral pursuant hereto does not require any filing with, or the consent or approval of, any governmental agency or regulatory authority.

(iv)         Title to Pledged Collateral. When any item of Pledged Collateral is pledged hereunder, the Pledgor will be the owner of such item of Pledged Collateral free and clear of all liens, security interests, charges and encumbrances of every kind and nature (other than those created hereunder); each share of stock comprising such item of Pledged Collateral will be fully paid and non-assessable; the Pledgor will have legal title to such Pledged Collateral and the Pledgor will have good and lawful authority to pledge, assign and deliver such item of Pledged Collateral in the manner hereby contemplated; and no consent or approval of any governmental body or regulatory authority, or of any securities exchange, will be necessary to the validity of the rights created hereunder. All action has been taken by the Pledgor to create and perfect a security interest in the Pledged Collateral, and the Pledgee has, or will have upon delivery of the Pledged Collateral, acquired a first and prior perfected security interest therein.

  

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(v)           Valid Consideration.  The Pledgor acknowledges, and represents, that he will realize significant benefits by granting the pledge of the Pledged Collateral hereunder, including in his capacity as a shareholder and officer of the Company.

4.           Appointment of Pledge Agent; Delivery of Pledged Shares.

(a)           The Pledgee hereby appoints Pledge Agent as the agent of the Pledgee.  The Pledge Agent hereby accepts such appointment, and agrees to perform its obligations set forth herein.

(b)           Within thirty (30) days after the execution of this Agreement, the Pledgor shall deliver to the Pledge Agent the original stock certificate representing the Pledged Shares, together with a stock power signed in blank by the Pledgor, bearing a medallion signature guarantee, or other signature guarantee acceptable to the Company’s transfer agent, for the purpose of retaining physical possession of the certificates representing or evidencing the Pledged Shares.  The Pledge Agent shall hold the Pledged Shares on behalf of and as agent for the Pledgee.  Upon such delivery, the Pledge Agent will execute and deliver to the Pledgee a Receipt and Acknowledgment in the form attached hereto as Exhibit A.  The Pledgee may, from time to time after there shall have occurred and during the continuation of any Event of Default (as defined in Section 3.1 of the Note), at the Pledgee’s sole discretion and without notice to or consent of the Pledgor, take any or all of the following actions: (a) transfer all or any part of the Pledged Shares into the names of its nominee, with or without disclosing that the Pledged Shares are subject to the lien and security interest hereunder; (b) take control of any proceeds of any of the Pledged Shares; (c) exchange certificates or instruments representing or evidencing Pledged Shares for certificates or instruments of smaller or larger denominations for any purpose not inconsistent with its rights under this Agreement; and/or (d) direct the Pledge Agent to deliver possession of the Pledged Collateral in its possession to the Pledgee.

(c)           The Pledge Agent agrees that upon receipt of the written notice set forth as Exhibit B hereto, executed by the Pledgee and delivered in accordance with the terms set forth in Section 6(a) hereof, the Pledge Agent will deliver the Pledged Shares in its possession to the Pledgee.  The Pledge Agent will do so notwithstanding any direction or statement of the Pledgor to the contrary.

(d)           The Pledge Agent agrees that it will not release the Pledged Collateral in its possession to the Pledgor until and unless it has received written notice from the Pledgee of the payment or satisfaction in full of the Obligations, such written notice not be unreasonably withheld and to be promptly delivered.

5.           Voting Rights; Dividends; Replacement of Collateral, Etc.

(a)           So long as there shall not have occurred and be a continuing Event of Default (as defined in Section 3.1 of the Note), the Pledgor shall be entitled to exercise any and all voting rights and powers relating or pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement.

  

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(b)           So long as there shall not have occurred and be a continuing Event of Default (as defined in Section 3.1 of the Note), the Pledgor shall receive and be entitled to retain any and all cash dividends, if any, paid on the Pledged Collateral.  Any and all stock and/or liquidating dividends, distributions in property, redemptions or other distributions made on or in respect of the Pledged Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock of any issuer or received in exchange for Pledged Collateral or any part thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which any issuer may be a party or otherwise, and any and all cash and other property received in payment of the principal of or in redemption of or in exchange for any Pledged Collateral (either at maturity, upon acceleration or call for redemption, or otherwise), shall become part of the Pledged Collateral and, if received by the Pledgor, shall be held in trust for the benefit of the Pledgee and shall forthwith be delivered to the Pledge Agent (accompanied by proper instruments of assignment and/or stock powers executed by the Pledgor in accordance with the Pledgee’s instructions) to be held subject to the terms of this Agreement.

(c)           Upon the occurrence of an Event of Default (as defined in Section 3.1 of the Note) and so long as such Event of Default shall be continuing, at the option of the Pledgee, (i) all rights of the Pledgor to exercise the voting rights and powers which the Pledgor is entitled to exercise pursuant to Section 5(a) hereof shall cease, and all such rights shall thereupon become vested in the Pledgee, and the Pledgee shall have the exclusive right and authority to exercise such voting and/or consensual rights and powers; and (ii) the Pledgee shall receive and be entitled to retain any and all cash dividends, if any, paid on the Pledged Collateral.  Any and all money and other property paid over to or received by the Pledgee pursuant to the provisions of Section 5(b) above shall be retained by the Pledgee as part of the Pledged Collateral and shall be applied in accordance with the provisions hereof.

6.           Remedies upon Events of Default.

(a)           During the continuation of an Event of Default (as defined in Section 3.1 of the Note) then, in addition to having all the rights and remedies of a secured party under the Uniform Commercial Code in effect in the State of New York (the “UCC”), the Pledgee may, without being required to give any notice to the Pledgor, take any or all of the following actions: (i) apply the cash (if any) then held by it hereunder pursuant hereto to the payment in full of the Obligations, (ii) deliver to the Pledge Agent the written notice  set forth in, and in the form of, Exhibit B hereto, take possession of the Pledged Collateral, and, at any time following the Pledgor’s written consent pursuant to Section 9-620 of the UCC, take ownership of such amount of the Pledged Collateral which represents an amount equal to the unsatisfied Obligations, and (iii) sell the Pledged Collateral as described below.

  

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(b)           In the event that the Pledgee elects to sell the Pledged Collateral, the Pledgee agrees to use reasonable efforts to sell only such number of shares thereof, the anticipated proceeds of which most nearly approximate the amount of the Obligations then owing to the Pledgee.  Without limiting the foregoing, but subject to the terms of paragraph (e) below, in the event that the Pledgee elects to sell the Pledged Collateral it receives pursuant to this Agreement, the Pledgee shall have the power and right in connection with any such sale, exercisable at its option and in its absolute discretion, to sell, assign, and deliver the whole or any part of the Pledged Collateral it receives pursuant to this Agreement at a private or public sale for cash, on credit or for future delivery and at such price as the Pledgee deems to be satisfactory.  Notice of any public sale shall be sufficient if it describes the Pledged Collateral to be sold in general terms, and is published at least once in any newspaper then being circulated in New York, New York not less than seven (7) days prior to the date of sale.  All requirements of reasonable notice under this Section 6 shall be met if such notice is mailed, postage prepaid at least ten (10) days before the time of such sale or disposition, to the Pledgor at his address hereinafter set forth in Section 11 hereof.  The Pledgee may, in its sole descretion, postpone or adjourn any sale of the Pledged Collateral it receives pursuant to this Agreement from time to time by an announcement at the time and place of the sale to be so postponed or adjourned without being required to give a new notice of sale.

(c)           Because federal and state securities laws may restrict the methods of disposition of the Pledged Collateral which are readily available to the Pledgee, and specifically because a public sale thereof may be impossible or impracticable by reason of certain restrictions under the Securities Act of 1933, as amended, or under applicable Blue Sky or other state securities laws as now or hereafter in effect, the Pledgor agrees that the Pledgee may from time to time attempt to sell the Pledged Collateral by means of a private placement restricting the offering or sale to a limited number of prospective purchasers who meet suitability standards the Pledgee deems appropriate and who agree that they are purchasing for their own accounts for investment and not with a view to distribution, and the Pledgee’s acceptance of the highest offer obtained therefrom shall be deemed to be a commercially reasonable disposition of the Pledged Collateral; it being understood that the Pledgee is not obligated to accept the highest offer, and instead may accept the best offer in its commercially reasonable judgment, taking into account such things as the offeror’s ability to perform.  The Pledgee or its assigns may purchase all or any part of the Pledged Collateral and any purchaser thereof shall thereafter hold the same absolutely free from any right or claim of any kind.  To the fullest extent permitted by law, the Pledgee shall not be obligated to make any sale pursuant to notice (other than notice to the Pledgor in the manner described in the penultimate sentence of Section 6(b) hereof) and may, without notice or publication, adjourn any public or private sale by an adjournment at the time and place fixed for the sale, and such sale may be held at any time or place to which the same may be adjourned.  If any of the Pledged Collateral is sold by the Pledgee upon credit or for future delivery, the Pledgee shall not be liable for the failure of the purchaser to pay for the same and, in such event, the Pledgee may resell such Pledged Collateral and the Pledgor shall continue to be liable to the Pledgee for the full amount of the Obligations to the extent the Pledgee does not receive full and final payment in cash therefor.

  

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(d)           Notwithstanding anything in this Agreement to the contrary, upon the occurrence of an Event of Default (as defined in Section 3.1 of the Note) and so long as such Event of Default shall be continuing, the Pledgee may include in the written notice it delivers to the Pledge Agent pursuant to Section 4(c) hereof instructions that it will only take possession of such number of Pledged Shares at any time, which, together with the number of shares of Common Stock beneficially owned by the Pledgee and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unexercised Amended June 2008 Warrants and Amended December 2009 Warrants, as defined in Sections 2.2 and 2.3 of the Third Amendment, respectively, and the unexercised or unconverted portion of any other securities of the Company (subject to a limitation on conversion or exercise analogous to the limitation contained herein)) would result in beneficial ownership by the Pledgee and its affiliates of not more than 9.9% of the outstanding shares of the Company’s Common Stock.  This notice shall not be deemed to be a waiver of the Pledgee’s right to receive additional Pledged Shares so long as such Event of Default shall be continuing.  For purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13D-G thereunder, except as otherwise provided in clause (i) of the preceding sentence. This limitation may thereafter be waived by such Pledgee in its sole discretion; provided, however, such waiver may not be effective less than sixty-one (61) days from the date thereof.

(e)           Notwithstanding anything to the contrary contained in this Agreement, the Purchase Agreement, the Third Amendment, or any document, instrument or agreement executed or delivered in connection herewith or therewith, with respect to the proceeds arising from any sale, transfer, assignment or other disposition of the Pledged Collateral by or for the benefit of the Pledgee pursuant to the Pledgee’s exercise of rights and remedies in accordance with the terms of this Section 6, such proceeds shall be applied as follows:

first to the payment of all reasonable and documented out-of-pocket costs and expenses (including reasonable attorney’s fees) of the Pledgee in connection with the enforcement of the rights and remedies of the Pledgee under this Agreement;

second to the payment of the Obligations consisting of accrued interest owing to the Pledgee;

third to the payment of the Obligations consisting of principal owing to the Pledgee; and

finally to the payment to the Pledgor of the surplus, if any, of such proceeds.

For avoidance of doubt, in no event may such Pledgee retain, or be entitled to retain, for its own account or use, any such proceeds except in accordance with and to the extent set forth in the payment distribution described above in this Section 6(e).

  

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7.           Pledgee Appointed Attorney-in-Fact. During the continuation of an Event of Default (as defined in Section 3.1 of the Note), the Pledgor hereby appoints the Pledgee as the Pledgor's attorneys-in-fact for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Pledgee may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest.  Without limiting the generality of the foregoing, the Pledgee shall have the right and power to receive, endorse and collect all checks and other orders for the payment or other distribution payable or distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same.

8.           Limitation on Pledgee’s Duty with Respect to Collateral. The Pledgee shall have no duty with respect to the Pledged Collateral in their possession or control or in the possession or control of the Pledge Agent, or with respect to any income thereon or to the preservation of rights pertaining thereto, other than the duty of reasonable care in the custody and preservation of the Pledged Collateral in the Pledge Agent’s possession or control.  The Pledgee shall be deemed to have exercised reasonable care in the custody and preservation of the Pledged Collateral in their possession or control if the Pledged Collateral is accorded treatment substantially equivalent to that which the Pledgee accords its own property consisting of securities.

9.           No Waiver. No failure on the part of a Pledgee to exercise, and not delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy by a Pledgee preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  Whether to waive any right, power or remedy hereunder shall be determined in the Pledgee’s sole discretion.  All remedies hereunder are cumulative and not exclusive of any other remedies provided by law.

10.         Termination. This Agreement shall terminate when the Obligations have been paid in full at which time the Pledgee shall reassign and redeliver to the Pledgor, without recourse or warranty (other than a warranty that the Pledgee has not assigned or transferred the Pledged Collateral so reassigned and redelivered or its respective security interests therein), and at the sole cost and expense of the Pledgor, against receipt, such of the Pledged Collateral (if any) as shall not have been sold or transferred to satisfy all or any portion of the Obligations pursuant to the terms hereof and is then still held by it hereunder, together with appropriate instruments for reassignment and release.

11.         Addresses for Notices, Etc. Any notice, election, demand or other communication hereunder shall be in a signed writing and shall be deemed given or made when actually received by personal delivery or by facsimile transmission followed immediately by First Class mail, or two business days following the date when mailed by certified mail, postage prepaid, return receipt requested, to the appropriate party or parties, at the following addresses:

If to the Pledgor:

Mr. Yang Yong Shan

c/o Emerald Dairy Inc.

11990 Market Street, Suite 205

Reston, VA 20190

Fax:  (678) 868-0633

  

  

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If to a Pledgee, to:

JAG Multi Investments, LLC

163 Washington Valley Road, Suite 103

Warren, NJ 07059

Attn.: Alexander Goren

Fax:____________________

If to the Pledge Agent, to:

Legend Merchant Group, Inc.

201 Mission Street, 2nd Floor

San Francisco, CA 94105

Attn.: Chip Unsworth

Fax:____________________

If to the Company, to:

Emerald Dairy Inc.

11990 Market Street, Suite 205

Reston, VA 20190

Attn.: Shu Kaneko, Chief Financial Officer

Fax:  (678) 868-0633

With a copy to:

Blank Rome LLP

405 Lexington Ave.

New York, NY 10174

Attn: Jeffrey A. Rinde, Esq.

Fax: (917) 332-3009

or, in each case, to such other address as the parties may hereinafter designate by like notice.

12.         Indemnity and Expenses. The Pledgor agrees to and hereby indemnifies the Pledgee from and against any and all claims, damages, losses, liabilities and expenses arising out of, or in connection with, or resulting from, this Agreement (including, without limitation, enforcement of this Agreement), including reasonable attorney’s fees and expenses.  The Pledgor will be responsible for paying all fees and expenses of the Pledge Agent.

  

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13.         Further Assurances. The Pledgor agrees to do such further reasonable acts and to execute and deliver such additional conveyances, assignments, agreements and instruments, as Pledgee may at any time reasonably request in connection with the administration or enforcement of this Agreement (including, without limitation, to aid the Pledgee in the sale of all or any part of the Pledged Collateral) or related to the Pledged Collateral or any part thereof or in order better to assure and confirm unto the Pledgee its rights, powers and remedies hereunder.  Each of the Pledgor and the Company agrees to use its best efforts to assist the Pledgee in effecting a sale of the Pledged Collateral pursuant to Rule 144 or other available exemption under the Securities Act of 1933, as amended, upon the Company’s default under the Note, including without limitation by delivering an opinion of counsel regarding securities laws matters if required, or providing a letter to the Company’s transfer agent acknowledging that it may rely on an opinion provided by Pledgee’s counsel.  The Pledgor hereby consents and agrees that the Pledgor or any registrar or transfer agent for any of the Pledged Collateral shall be entitled to accept the provisions hereof as conclusive evidence of the right of the Pledgee to effect any transfer pursuant to the terms hereof, notwithstanding any other notice or direction to the contrary heretofore or hereafter given by the Pledgor or any other person or to any registrar or transfer agent.

14.         Binding Agreement; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective executors, administrators, successors and assigns, except that the Pledgor shall not assign this Agreement or any interest herein, or in the Pledged Collateral, or any part thereof, or otherwise pledge, encumber or grant any option with respect to the Pledged Collateral, or any part thereof, or any cash or property held by the Pledgee as Pledged Collateral under this Agreement, without the prior written consent of the Pledgee.

15.         Governing Law; Amendments.      This Agreement shall in all respects be construed in accordance with and governed by the laws of the State of New York, without giving effect to its conflict of laws rules.  No provision of this Agreement may be amended, waived or modified, nor may any of the Pledged Collateral be released, unless specifically provided for herein, except in a writing signed by the Pledgee.

16.         Expenses. The Pledgor hereby agrees to pay on demand all costs and expenses (including, without limitation, all reasonable fees and disbursements of counsel) incurred by the Pledgee in connection with the enforcement of the Pledgee's rights under this Agreement and the safekeeping of any realization upon the Pledged Collateral.

  

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17.         Submission to Jurisdiction.

(a)           The Pledgor hereby irrevocably submits to the nonexclusive jurisdiction of any federal or state court sitting in the State of New York in any action or proceeding arising out of or relating to this Agreement, and the Pledgor hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in any such court.  The Pledgor irrevocably consents to the service of any and all process in any such action by proceeding by the mailing via registered or certified mail of copies of such process to the Pledgor at his address specified herein.

(b)           The Pledgor hereby irrevocably waives any objection which he may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement brought in any federal or state court sitting in the State of New York and hereby further irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in any inconvenient forum.

(c)           Notwithstanding the foregoing, the Pledgee may sue the Pledgor in any jurisdiction where the Pledgor or any of his assets may be found and may serve legal process upon the Pledgor in any other manner permitted by law.

19.         Headings. Section headings used herein are for convenience only and shall not affect the construction of this Agreement.

20.         Execution of Counterparts. This Agreement may be executed in any number of copies and by different parties on separate counterparts, all of which when taken together shall constitute but one and the same agreement.

[The remainder of this page is left blank intentionally. Signature page follows.]

  

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.

	
PLEDGOR:

	  	
PLEDGE AGENT:

	  	  	  
	  	  	
LEGEND MERCHANT GROUP, INC.

	
/s/ Yang Yong Shan

	  	  
	
Yang Yong Shan

	  	  
	  	  	
By:

	
  /s/ D.W. Unsworth Jr.

	  	  	
Name: D.W. Unsworth Jr.

	
PLEDGEE:

	  	
Title: CEO

	  	  	  
	
JAG MULTI INVESTMENTS, LLC

	  	  
	  	  	
COMPANY:

	  	  	  
	
By:

	
  /s/ Alexander M. Goren

	  	
EMERALD DAIRY INC.

	
Name: Alexander M. Goren

	  	  
	
Title: Managing Member

	  	  
	  	  	
By:

	
  /s/ Yang Yong Shan

	  	  	
Name:

	  	  	
Title:

  

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EXHIBIT A

 (Form of Pledge Agent’s Receipt and Acknowledgement)

[date]

	
Mr. Yang Yong Shan

	
Emerald Dairy Inc.

	
c/o Emerald Dairy Inc.

	
11990 Market Street, Suite 205

	
11990 Market Street, Suite 205

	
Reston, VA 20190

	
Reston, VA 20190

	
Attn.: Shu Kaneko, Chief Financial Officer

	
Pledgee:

	  
	
____________________

	  
	
____________________

	  
	
____________________

	  
	
Attention: ___________

	  

 

	
  

	
Re:

	
Pledge Agreement, dated __________ __, 2011, by and among Yang Yong Shan, a resident of the People’s Republic of China (the “Pledgor”), Legend Merchant Group, Inc., as Pledge Agent (the “Pledge Agent”) on behalf of JAG Multi Investments, LLC (the “Pledgee”), and the Pledgee.

 

Ladies and Gentlemen:

 

In accordance with Section 4 of the Pledge Agreement, the undersigned, as Pledge Agent, hereby acknowledges that it has received the Pledged Collateral in the form of certificates representing or evidencing the Pledged Collateral.  The Pledge Agent will retain physical possession of the certificates described below on behalf of and as agent for the Pledgee in accordance with the terms of the Pledge Agreement.

 

Certificate Nos. [                         ]

 

Capitalized words and phrases used herein and not otherwise defined shall have the respective meanings assigned to them in the Pledge Agreement.

 

	  	
____________________________________,

	  
	  	
as Pledge Agent

	  
	  	  	  	  
	  	  	  	  
	  	
By:

	  	  
	  	  	
Name:

	  
	  	  	
Title:

	  

  

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EXHIBIT B

 (Form of Written Notice to Pledge Agent)

 

[date] 

 

	
Pledge Agent:

	  
	  	  
	  	  
	  	  
	  	  

 

	 	
Re:

	
Pledged Collateral – Certificate Nos. [                      ]

 

Dear ____________,

 

Reference is made to the Pledge Agreement dated __________ __, 2011, by and among Yang Yong Shan, a resident of the People’s Republic of China (the “Pledgor”), Legend Merchant Group, Inc., as Pledge Agent (the “Pledge Agent”) on behalf of JAG Multi Investments, LLC (the “Pledgee”), and the Pledgee, concerning the Pledged Collateral described above.  Please be advised that an Event of default (as defined in the Pledge Agreement) has occurred and is continuing.

 

Accordingly, pursuant to the terms contained in Section 4(c) of the Pledge Agreement, this letter shall serve as the written notice described in such Section, and delivered in accordance with Section 6(a) of the Pledge Agreement.  You are hereby instructed to deliver the Pledged Collateral to the Pledgee at its address set forth below:

 

[address]

	  	
[Pledgee]

	 
	  	
By:

	  	 
	  	  	
Name:

	 
	  	  	
Title:

	 

  

13Unassociated Document

 

Consulting Services • www.tigaenergy.com  •  +1 512 687 3451

 

Eduardo Perez

Chairman

Liberty Circle Energy

P.O. Box 1666

Sabana Hoyos, Arecibo

Puerto Rico 00688

August 29, 2011

Re:  Letter Agreement for Strategic Development

Dear Mr. Perez

Tiga Energy Services, Inc. welcomes the opportunity to partner with Liberty Circle Energy in providing dedicated design services to assist in the development of LCE’s Wind Energy Management Platform (WEMP) and incorporating essential functionality to support the WEMP into our TigaNET core platform.

Subject to the terms and conditions of the enclosed agreement, Tiga agrees to support LCE in the following:

	
·  

	
Wind Energy Management Platform (WEMP) Communications Archtiecture and Design

	
o  

	
TigaNET interface & integration for wind turbine controls

	
o  

	
IP based communication platform vendor recommendations/selection

	
o  

	
Specification of wind energy management system

	
§  

	
Design specification and/or vendor recommendation

	
§  

	 

	
·  

	
Core TigaNET integration for WEMP

	
o  

	
Parameter level control and information access

	
§  

	
For WEMP and third party O&M service access

	
o  

	
WEMP interface

	
o  

	
Real Time  Carbon & Energy Trading platform services

	
§  

	
Meter data authentication

	
§  

	
Trading Platform vendor recommendation/selection

	
·  

	
TigaNET integration into trading

Best Regards,

Michael Hathaway

CEO, Tiga Energy Services, Inc.

 

TES Energy Services • Consulting Services • 401 Congress Ave. • Suite 1540 • Austin, TX, 78701

  

© 2011, Tiga Energy Services, Proprietary & Confidential

 

 

Our Understanding

 

LCE desires to engage TES to assist in the development of its WEMP and accelerate the development of TES’s core TigaNET communication service to support a secure communications and remote accessibility to LCE wind assets.

This agreement defines work performed based on a Non-recurring Engineering (NRE) fee, in which LCE will have the option to convert to equity in TES common stock.

 

Scope and Approach for WEMP Project

 

TES will assist LCE with the following activities:

Initial Network Design and Architecture for the Project campus to support:

 

Activities and Deliverables

 

TES will be accountable for the following Activities and Deliverables:

	
Activities

	
Deliverables

	
WEMP Requirements Specification:

 

Working with LCE wind energy engineering resources TES will jointly generate a requirement specification for the LCE WEMP.

 

	
 

1. Control infrastructure requirements

2. Network communications requirements.

3. Carbon and energy trading platform requirements

 

 

	
WEMP Communications Platform Scope:

 

TES will scope the architecture and design tasks for the communications infrastructure for the LCE WEMP.

 

	
 

1. System capabilities

2. Development cost

3. Deployment costs

4. Development timeline

	
TigaNET Core Integration of WEMP

 

TES accelerate the development of TigaNET core functionality to support LCE’s WEMP

 

	
 

1. Platform parameter definitions

2. Remote access requirements for O&M and trading

3. Trading platform requirements

 

 

TES’s Performance Terms

 

TES will perform the work specified in this Letter Agreement, subject to the assumptions in this document and in accordance with the terms and conditions contained in this Letter Agreement.

 

  

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© 2011, Tiga Energy Services, Proprietary & Confidential

 

Estimated Costs and Payment Terms

 

	
1.  

	
TES will receive a one-time NRE fee of one million dollars ($1,000,000 USD) on or before September 9, 2011 to commence the development efforts defined in this agreement.

	
2.  

	
Specific work outside the scope of this agreement will be identified by TES and LCE and negotiated separately.

	
3.  

	
Assuming LCE proceeds with a strategic investment in TES with a minimum investment of $5MM, this NRE can be converted to TES common stock under the same terms of conversion of LCE’s initial investment.

 

LCE’s Responsibilities

 

The performance of this effort is dependent upon LCE’s completion of the following responsibilities.

	
1.  

	
LCE will assign a Project Manager who will be responsible for attending status meetings, signing off on Deliverables as required, and acting as a single point of contact for the TES team.

	
2.  

	
The LCE Project Manager will assign key LCE personnel to provide business and technical information as it relates to the analysis effort.

	
3.  

	
Upon written request by TES, LCE agrees to permit TES to contact and meet with LCE’s contractors, affiliates, and planners to determine requirement needs and coordinate to ensure compatibility of standards and interfaces in design specifications;

	
4.  

	
Upon written request by TES, LCE agrees to permit TES to negotiate on LCE’s behalf with vendors; provided, however, TES shall not represent that it have the right to enter into any enforceable contracts with or otherwise contractually bind LCE.

 

Assumptions

 

	
1.  

	
Business and technical experts (both TES and LCE) will be available, as needed, within 24-hour advance notice.

	
2.  

	
Joint status meetings will be held periodically with the TES Project Lead and LCE Project Sponsor to discuss progress, issues and planned activities.  A final meeting will be held at the conclusion of the project to discuss the Final Status Report.

	
3.  

	
The Scope will be agreed to and supported by LCE Executives.  All deviations from the project Scope will be evaluated using a change control process that includes:  logging the change request, investigating and assessing the impact and obtaining the appropriate approvals from the Project Sponsor through execution of a Change Request.

	
4.  

	
TES assumes no responsibility or liability for project resources (human, tangible or intangible), schedule, product quality, management, or costs that are not within TES’s sole and direct control.

	
5.  

	
TES personnel will develop deliverables for this project based in input from LCE staff.

 

  

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© 2011, Tiga Energy Services, Proprietary & Confidential

 

 

Additional Terms

 

Confidentiality

 

TES acknowledges that LCE and its affiliates have trade secrets, confidential information and proprietary property, having great commercial value to LCE. LCE acknowledges that TES’s property includes trade secrets, confidential information and proprietary property of TES, having great commercial value to TES, and that the development and design of TES’s property has involved and will involve the expenditure by TES of substantial amounts of time and money.

All items of TES’s property are being provided to LCE on a strictly confidential basis and only for in-house use by LCE.  Each party's confidential information shall be held in strict confidence by the other party, using the same standard of care as it uses to protect its own confidential information, and shall not be used or disclosed by the other party for any purpose except as specifically set forth in this Letter Agreement.

 

Intellectual Property

 

LCE and its affiliates shall retain sole and exclusive ownership to any and all of the Property owned by LCE and its Affiliates before, during, and after this engagement.  TES shall retain sole and exclusive ownership to any and all software, toolkits, documentation, methods, concepts, ideas, trade secrets and materials owned by TES prior to this engagement (TES’s Property) and any derivative works and improvements made to TES’s Property through the performance of this engagement or otherwise.

Any control or remote access interfaces specific to LCE or its affiliates systems remain the property of LCE within the guidelines of the open standards that TES implements, except to the extent of any TES Property contained therein (including any modifications or derivative works made to any TES Property) for which TES grants to LCE a perpetual, non-exclusive, irrevocable, worldwide, royalty-free license to use the TES Property only in the ordinary course of LCE’s business operations and for LCE’s own business purposes, provided that LCE may not sell, license or distribute these deliverables in any manner competitive with TES’s  business.  LCE may copy the deliverables for inactive back up and disaster recovery purposes.

LCE acknowledges that TES is in the business of providing consulting services and for developing software for a variety of clients, and agrees that TES may perform work substantially similar to the services performed under this Letter Agreement for other parties, and use, distribute, sell, license, modify or enhance the deliverables or any portion of the deliverables for use by such other parties.

  

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© 2011, Tiga Energy Services, Proprietary & Confidential

 

Liability

 

Each party shall be liable for its own breach of contract and other negligent and intentional acts and omissions, and those of its employees and agents, in connection with this Agreement, and shall indemnify and hold harmless the other party against any claims, actions, damages, losses or liabilities arising from any such breach of contract or other negligent or intentional acts or omissions.

TES’s total liability under this Letter Agreement will under no circumstances exceed the total of all service fees actually paid by LCE to TES under this Letter Agreement. Under no circumstances shall TES be liable to LCE or to any third party for lost revenues, lost profits, loss of business, or consequential or special damages of any nature, whether or not foreseeable.

 

Non-Hire of Employees

 

Without prior written consent of the other party, during the term of this Letter Agreement and for a period of 1 year after its termination or expiration, neither LCE nor TES will hire or engage any person who becomes known to it through the performance of this Letter Agreement.

 

Termination

 

If either party breaches any of its obligations under this Letter Agreement in any material respect and the breach is not substantially cured within thirty (30) days after the breaching party receives written notice describing the breach from the other party, then the other party may terminate this Letter Agreement, without penalty, by giving written notice to the breaching party at any time before the breach is substantially cured.  Termination of this Letter Agreement for any reason will not relieve LCE of liability for, and LCE will promptly pay when due, all amounts owed to TES for services rendered and items delivered to LCE up to the date of termination.  The paragraphs under the heading “Additional Terms” shall survive termination of this Letter Agreement.

 

Force Majeure

 

Neither party shall be liable for, nor shall either party be considered in breach of this Agreement due to any failure to perform its obligations under this Letter Agreement as a result of a cause beyond its control, including without limitation any Act of God, terror, or a public enemy, act of any military, civil or regulatory authority, change in any law or regulation, fire, flood, earthquake, storm or other like event, disruption or outage of communications, power or other utility, or other cause which could not have been prevented with reasonable care.

  

5

  

 

Miscellaneous

 

This Letter Agreement represents the entire agreement among the parties superseding any prior proposals or offers.  LCE may not assign this Letter Agreement without the prior written consent of TES.  Texas law shall govern this Letter Agreement.

 

 

 

TES looks forward to continuing our relationship with LCE.  We are excited about your prospects and look forward to providing our services to you.  If you have any questions, please feel free to contact me at 1 512 687 3451.

Very truly yours,

Michael Hathaway

Chief Executive Officer

Tiga Energy Services, Inc.

 

Signatures

 

Intending to be legally bound, the parties have agreed to and accepted all of the terms and conditions of this Letter Agreement.

	
LIBERTY CIRCLE ENERGY

	 	
TIGA ENERGY SERVICES, Inc

	  	  	 	  	  
	
By:

	
/s/ Eduardo Perez

	 	
By:

	
/s/ Michael Hathaway

	
Printed Name:

	
Eduardo Perez

	 	
Printed Name:

	
Michael Hathaway

	
Title:

	
Chairman of the Board

	 	
Title:

	
Chief Executive Officer

	
Date:

	  	 	
Date:

	  

  

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