Document:

exh10-4.htm

Exhibit 10.4

PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT (as may be amended, restated or modified from time to time, this “Pledge Agreement”), dated as of July 30, 2014, is made by and between CD INTERNATIONAL ENTERPRISES, INC., a corporation incorporated under the laws of the State of Florida, as pledgor (the “Pledgor”), and TCA GLOBAL CREDIT MASTER FUND, LP, a limited partnership organized and existing under the laws of the Cayman Islands, as pledgee (the “Pledgee”).

W I T N E S S E T H:

 

WHEREAS, pursuant to that certain senior secured revolving credit facility agreement, dated as of the date hereof (the “Credit Agreement”), by and among the Pledgor, as borrower, certain subsidiaries of the Pledgor, as joint and several guarantors, and the Pledgee, as lender, the Pledgee has agreed to advance an aggregate principal amount of up to Five Million and No/100 United States Dollars (US$5,000,000) (the “Loan”) to the Pledgor, which Loan is further evidenced by revolving convertible promissory notes issued by the Pledgor in favor of the Pledgee (the “Notes”);

 

WHEREAS, as of the date hereof, the Pledgor is the registered and beneficial owner of One Hundred (100) issued and outstanding common shares (equal to 100% of the total issued and outstanding common shares) (the “Pledged Shares”) of CDI China, Inc. (in such capacity, the “Pledged Company”), and the Pledged Shares are represented by a certificate bearing certificate number 0001 (the “Certificate”);

 

WHEREAS, it is a condition precedent to the Pledgee making the Loan available to the Pledgor under the Credit Agreement that the Pledgor execute and deliver to the Pledgee, as security for the obligations of the Pledgor to the Pledgee, a pledge of all of the Pledgor’s right, title and interest in and to the Pledged Shares; and

 

NOW, THEREFORE, in consideration of the premises set forth above, the covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Pledgor and the Pledgee agree as set forth below:

 

SECTION 1.  Defined Terms.  Except as otherwise defined herein, terms defined in the Credit Agreement shall have the same meaning when used herein.

 

SECTION 2.  Grant of Security.  As security for the Obligations (as defined in the Credit Agreement), the Pledgor hereby pledges, assigns, transfers and delivers to the Pledgee the Pledged Shares and hereby grants to the Pledgee a first priority lien on and a first priority security interest in the following (collectively, the “Pledged Collateral”):

 

(i)           the Pledged Shares and all capital, revenue, profit, income, gain or other property or proceeds, return on contribution or otherwise with respect to the Pledged Shares;

 

  

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(ii)           all securities, moneys or property representing dividends or interest on any of the Pledged Shares, or representing a distribution in respect of the Pledged Shares, or resulting from a split-up, revision, reclassification or other like change of the Pledged Shares or otherwise received in exchange therefor, and any subscription warrants, rights or options issued to the holders of, or otherwise in respect of, the Pledged Shares (exclusive of any equity holder loan);

 

(iii)           all right, title and interest of Pledgor in, to and under any policy of insurance payable by reason of loss or damage to the Pledged Shares and any other Pledged Collateral;

 

(iv)           all other payments due or to become due to the Pledgor in respect of the Pledged Shares whether under any organizational document or otherwise, whether as contractual obligations, damages or otherwise;

 

(v)           all “accounts”, “general intangibles”, “instruments” and “investment property” (in each case as defined in the UCC constituting or relating to the foregoing;

 

(vi)           all Proceeds of any of the foregoing property of Pledgor (including, without limitation, any proceeds of insurance thereon, all “accounts”, “general intangibles”, “instruments” and “investment property”, in each case as defined in the UCC, constituting or relating to the foregoing); and

 

(vii)           all other property hereafter delivered in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such other property and all cash, securities, interest, dividends, rights 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.

 

SECTION 3.  Pledge Documents.  Concurrently with the execution of this Pledge Agreement and upon the circumstances described in Section 6 hereof, the Pledgor shall execute and deliver to the Pledgee an irrevocable proxy in favor of the Pledgee in respect of the Pledged Shares of the Pledged Company in the form set out in Exhibit A hereto (the “Irrevocable Proxy”) and shall deliver to the Pledgee the Certificate together with a signed, undated instrument of transfer in the form set out in Exhibit B hereto (an “Instrument of Transfer”) pertaining thereto duly executed in blank.

 

SECTION 4.  Representations and Warranties.  The Pledgor represents and warrants that:

 

(a)           it is the legal and beneficial owner of, and has good and marketable title to, the Pledged Collateral, subject to no pledge, lien, mortgage, hypothecation, security interest, charge, option or other encumbrance whatsoever, except the lien and security interest created and contemplated by this Pledge Agreement;

 

(b)           it has full power, authority and legal right to execute, deliver and perform its obligations under this Pledge Agreement and to create the lien and security interest contemplated by this Pledge Agreement;

 

(c)           the Pledged Shares of the Pledged Company (1) have been duly and validly created pursuant to the relevant organizational documents of the Pledged Company, (2) constitute 100% of the total issued and outstanding capital stock of the Pledged Company, and (3) are evidenced by the Certificate;

 

(d)           the Pledged Shares are “securities” governed by Article 8 of the UCC;

 

(e)           as of the date hereof, no Person has entered into any options, warrants or other agreements to acquire additional capital stock in the Pledged Company and there are no voting trusts or other member agreements or arrangements relating to any Pledged Collateral;

 

(f)           this Pledge Agreement constitutes a valid obligation of the Pledgor, legally binding upon it and enforceable in accordance with its terms;

 

  

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(g)           the pledge, hypothecation, assignment of the Pledged Collateral and the delivery of the Pledged Shares (together with the Instrument of Transfers) pursuant to and/or described in this Pledge Agreement create a valid and perfected first priority security interest in the Pledged Collateral;

 

(h)           no consent of any other party (including equity interest holders of the Pledgor) is required in connection with the execution, delivery, performance, validity, enforceability or enforcement of this Pledge Agreement, and no consent, license, approval or authorization of, or registration or declaration with, any governmental authority, bureau or agency is required in connection with the execution, delivery, performance, validity, enforceability or enforcement of this Pledge Agreement;

 

(i)           the execution, delivery and performance of this Pledge Agreement will not violate or contravene any provision of any existing law or regulation or decree of any court, governmental authority, bureau or agency having jurisdiction in the premises or of the organizational documents of the Pledgor or of any mortgage, indenture, security agreement, contract, undertaking or other agreement to which the Pledgor is a party or which purports to be binding upon it or any of its properties or assets and will not result in the creation or imposition of any lien, charge or encumbrance on, or security interest in, any of its properties or assets pursuant to the provisions of any such mortgage, indenture, security agreement, contract, undertaking or other agreement;

 

(j)           its chief executive office is located at 431 Fairway Drive, Suite 200, Deerfield Beach, FL 33441; and

 

(k)           the representations and warranties set forth in the Credit Agreement insofar as they relate to the Pledgor are true and complete and the Pledgor shall comply with each of the covenants set forth in the Credit Agreement which are applicable thereto.

 

SECTION 5.  Covenants.  The Pledgor hereby covenants that during the continuance of this Pledge Agreement:

 

(a)           it shall warrant and defend the right and title of the Pledgee conferred by this Pledge Agreement in and to the Pledged Collateral at the cost of the Pledgor against the claims and demands of all persons whomsoever;

 

(b)           it shall not sell, assign, transfer, charge, pledge or encumber in any manner any part of the Pledged Collateral or suffer to exist any encumbrance on the Pledged Collateral;

 

(c)           it shall not amend or modify any organizational document of the Pledged Company;

 

(d)           it shall not vote the Pledged Shares of the Pledged Company in favor of the consolidation, merger, dissolution, liquidation or any other corporate reorganization of the Pledged Company;

 

(e)           it shall not take from the Pledged Company any undertaking or security in respect of its liability hereunder or in respect of any other liability of the Pledged Company to the Pledgor and the Pledgor shall not prove nor have the right of proof, in competition with the Pledgee, for any monies whatsoever owing from the Pledged Company to the Pledgor, in any insolvency or liquidation, or analogous proceedings under any applicable law, of the Pledgor;

 

(f)           subject to the terms and conditions contained in the Credit Agreement, there shall not be issued any additional shares of capital stock in the Pledged Company nor any options, warrants or other agreements to do so issued or entered into, provided however that if such shares are issued, they shall immediately be pledged to the Pledgee hereunder;

 

(g)           it shall not release, transfer or otherwise dispose of any shares of capital stock held by the Pledged Company as treasury stock or otherwise;

 

  

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(h)           it shall furnish to Pledgee from time to time statements and schedules further identifying and describing the Pledged Collateral as Pledgee reasonably requests, all in reasonable detail;

 

(i)           it shall give at least ninety (90) days’ prior written notice to Pledgee of any (i) change of the location of Pledgor’s chief executive office from that specified in Section 4(j) hereof, (ii) change of Pledgor’s name, identity or structure or (iii) reorganization or reincorporation of Pledgor under the laws of another jurisdiction; and

 

(j)           it shall indemnify the Pledgee from, and hold it harmless against, any and all liabilities with respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Pledged Collateral or in connection with the transaction contemplated by this Pledge Agreement.

 

SECTION 6.  Delivery of Additional Collateral.  If the Pledgor shall become entitled to receive or shall receive any equity interests, option or rights, whether as an addition to, in substitution of, or in exchange for any of the Pledged Shares, the Pledgor agrees to accept the same as the agent of the Pledgee and to hold the same in trust for the benefit of the Pledgee and to deliver the same forthwith to the Pledgee in the exact form received, with the endorsement of the Pledgor when necessary and/or appropriate undated Instruments of Transfer duly executed in blank, and Irrevocable Proxies for any shares of capital stock so received, in substantially the forms attached hereto to be held by the Pledgee, subject to the terms hereof, as additional collateral security for the Obligations.

 

SECTION 7.  General Authority.  The Pledgor hereby consents that, without the necessity of any reservation of rights against the Pledgor, and without notice to or further assent by the Pledgor, any demand for payment of any of the Obligations made by the Pledgee may be rescinded by the Pledgee and any of the Obligations continued, and the Obligations, or the liability of the Pledgor and/or the Pledged Company upon or for any part thereof, or any other collateral security (including, without limitation, any collateral security held pursuant to any of the other Loan Documents) or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised, waived, surrendered, or released by the Pledgee, and the Loan Documents, any guarantees and any other collateral security documents executed and delivered by the Pledgor and/or the Pledged Company or any other obligors in respect of the Obligations may be amended, modified, supplemented or terminated, in whole or in part, as the Pledgee may deem advisable, from time to time, and any other collateral security at any time held by the Pledgee for the payment of the Obligations (including, without limitation, any collateral security held pursuant to any other collateral security document executed and delivered pursuant to the Loan Documents) may be sold, exchanged, waived, surrendered or released, all without notice to or further assent by the Pledgor or the Pledged Company, which shall remain bound hereunder, notwithstanding any such renewal, extension, modification, acceleration, compromise, amendment, supplement, termination, sale, exchange, waiver, surrender or release.  The Pledgor waives any and all notices of the creation, renewal, extension or accrual of any of the Obligations and notice of or proof of reliance by the Pledgee upon this Pledge Agreement, and the Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Pledge Agreement, and all dealings between the Pledged Company and the Pledgee shall likewise be conclusively presumed to have been had or consummated in reliance upon this Pledge Agreement.  The Pledgor waives diligence, presentment, protest, demand for payment and notice of default or non-payment to or upon the Pledgor or the Pledged Company with respect to the Obligations.

 

SECTION 8.  Voting Rights.  The Pledgee shall, as the Pledgee and as the holder of the Irrevocable Proxies, receive notice and have the right (but not the obligation) to vote the Pledged Shares at its own discretion at, any annual or special meeting, as the case may be, of the shareholders of the Pledged Company, provided, however, that the Pledgee shall not be entitled to receive notice, or to exercise such right to vote until the occurrence of an Event of Default or any of the security created by or pursuant to this Pledge Agreement shall be deemed imperiled or jeopardized in a manner by the Pledgee in its sole discretion.

 

  

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SECTION 9.  UCC Filings.  The Pledgor does hereby authorize the Pledgee to do all things the Pledgee may deem to be necessary or advisable in order to perfect or maintain the security interest granted by this Pledge Agreement including, but not limited to, filing any and all Uniform Commercial Code financing statements or renewals thereof.

 

SECTION 10.  Remedies.  At any time after the occurrence of an Event of Default or in the event any of the security created by or pursuant to this Pledge Agreement shall be imperiled or jeopardized in a manner deemed material by the Pledgee in its sole discretion, the Pledgee shall be entitled, without further notice to the Pledgor:

 

(a)           subject to the limitations of Sections 9-610 and 9-615 of the UCC (to the extent applicable), to sell, assign, transfer and deliver at any time the whole, or from time to time any part, of the Pledged Collateral or any rights or interests therein, at public or private sale or in any other manner, at such price or prices and on such terms as the Pledgee may deem appropriate, and either for cash, on credit, for other property or for future delivery, at the option of the Pledgee, upon not less than 10 days’ written notice (which 10 day notice is hereby acknowledged by the Pledgor to be reasonable) addressed to the Pledgor at its last address provided to the Pledgee pursuant to this Pledge Agreement, but without demand, advertisement or other notice of any kind (all of which are hereby expressly waived by the Pledgor).  If any of the Pledged Collateral or any rights or interests thereon are to be disposed of at a public sale, the Pledgee may, without notice or publication, adjourn any such sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, occur at the time and place identified in such announcement.  If any of the Pledged Collateral or any rights or interests therein shall be disposed of at a private sale, the Pledgee shall be relieved from all liability or claim for inadequacy of price.  At any such public sale the Pledgee may purchase the whole or any part of the Pledged Collateral or any rights or interests therein so sold.  Each purchaser, including the Pledgee should it acquire the Pledged Collateral, at any public or private sale, shall hold the property sold free from any claim or right of redemption, stay, appraisal or reclamation on the part of the Pledgor which are hereby expressly waived and released to the extent permitted by applicable law.  If any of the Pledged Collateral or any rights or interests therein shall be sold on credit or for future delivery, the Pledged Collateral or rights or interests so sold may be retained by the Pledgee until the selling price thereof shall be paid by the purchaser, but the Pledgee shall not incur any liability in case of failure of the purchaser to take up and pay for the Pledged Collateral or rights or interests therein so sold.  In case of any such failure, the Pledged Collateral or rights or interests therein may again be sold on not less than 10 days’ written notice as aforesaid; and

 

(b)           to exercise all voting and other equity interest rights at any meeting of any Pledged Company and exercise any and all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to the Pledged Shares of the Pledged Company as if it was the absolute owner thereof, including, without limitation, the right to exchange at its discretion, such Pledged Shares upon the merger, consolidation, reorganization, recapitalization or other readjustment of the Pledged Company or, upon the exercise by the Pledged Company or the Pledgee of any right, privilege or option pertaining to such Pledged Share, and in connection therewith, to deposit and deliver such Pledged Shares with any committee, depository, transfer agent, registrar or other designated agency upon such terms and conditions as it may determine, all without liability except to account for property actually received by it.

 

SECTION 11.  No Duty on Pledgee.  The Pledgee shall have no duty to exercise any of the aforesaid rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing.

 

SECTION 12.  Application of Proceeds.  All moneys collected or received by the Pledgee pursuant to this Pledge Agreement shall be applied as provided in the Credit Agreement.

 

  

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SECTION 13.  Miscellaneous.

 

13.1  Further Assurances.  The Pledgor agrees that if this Pledge Agreement shall, in the reasonable opinion of the Pledgee, at any time be deemed by the Pledgee, for any reason, insufficient in whole or in part to carry out the true intent and spirit hereof, it shall execute or cause to be executed such other documents or deliver or cause to be delivered such further assurances as in the opinion of the Pledgee may be required in order to more effectively accomplish the purposes of this Pledge Agreement including, without limitation, an alternative pledge or such other alternative security as the Pledgee shall require.

 

13.2  Remedies Cumulative and Not Exclusive; No Waiver.  Each and every right, power and remedy herein given to the Pledgee shall be cumulative and shall be in addition to every other right, power and remedy of the Pledgee now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy, whether herein given or otherwise existing, may be exercised from time to time, in whole or in part, and as often and in such order as may be deemed expedient by the Pledgee, and the exercise or the beginning of the exercise of any right, power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy.  No failure, delay or omission by the Pledgee in the exercise of any right or power or in the pursuance of any remedy accruing upon any breach or default by the Pledgor or any Credit Party shall impair any such right, power or remedy or be construed to be a waiver of any such right, power or remedy or to be an acquiescence therein; nor shall the acceptance by the Pledgee of any security or of any payment of or on account of any of the amounts due from the Pledgor or any Credit Party to the Pledgee and maturing after any breach or default or of any payment on account of any past breach or default be construed to be a waiver of any right with respect to any future breach or default or of any past breach or default not completely cured thereby.  In addition to the rights and remedies granted to it in this Pledge Agreement and in any other instrument or agreement securing, evidencing or relating to any of the Obligations, the Pledgee shall have rights and remedies of a secured party under the UCC.

 

13.3  Successors and Assigns. This Pledge Agreement and all obligations of the Pledgor hereunder shall be binding upon the successors and assigns of the Pledgor and shall, together with the rights and remedies of the Pledgee hereunder, inure to the benefit of the Pledgee, its respective successors and assigns.

 

13.4  Waiver; Amendment.  None of the terms and conditions of this Pledge Agreement may be changed, waived, modified or varied in any manner whatsoever unless in writing duly signed by the Pledgor and the Pledgee.

 

13.5  Invalidity.  If any provision of this Pledge Agreement shall at any time, for any reason, be declared invalid, void or otherwise inoperative by a court of competent jurisdiction, such declaration or decision shall not affect the validity of any other provision or provisions of this Pledge Agreement, or the validity of this Pledge Agreement as a whole and, to the fullest extent permitted by law, the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of the Pledgee in order to carry out the intentions of the parties hereto as nearly as may be possible.  The invalidity and unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction.

 

13.6  Notices.  Any notice, request or other communication to be given or made under this Pledge Agreement to the Pledgor or the Pledgee shall be in writing.  Such notice, request or other communication shall be deemed to have been duly given or made when it shall be delivered by hand, international courier (confirmed by facsimile), or facsimile (with a hard copy delivered within two (2) Business Days) to the Pledgor or the Pledgee to which it is required or permitted to be given or made at such party’s address specified below or at such other address as such party shall have designated by notice to the party given or making such notice, request or other communication, it being understood that the failure to deliver a copy of any notice, request or other communication to a party to whom copies are to be sent shall not affect the validity of any such notice, request or other communication or constitute a breach of this Pledge Agreement.

 

  

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If to the Pledgor:                         431 Fairway Drive, Suite 200

Deerfield Beach, FL 3341

Attention:  Yuejian (James) Wang

Facsimile: 954-363-7320

If to the Pledgee:

TCA Global Credit Master Fund, LP

2960 Howard Hughes Parkway, Suite 500

Las Vegas, NV 89169

Facsimile: (702) 990-3752

Attention: Robert Press

with a copy (which shall not constitute notice) to:

Lucosky Brookman LLP

101 Wood Avenue South, 5th Floor

Woodbridge, NJ 08830

Facsimile:  (732) 395-4401

Attention:  Seth A. Brookman, Esq.

 

13.7  Counterparts; Electronic Delivery.  This Pledge Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all such counterparts together shall constitute one and the same instrument.  Delivery of an executed counterpart of this Pledge Agreement by facsimile or electronic transmission shall be deemed as effective as delivery of an originally executed counterpart.  In the event that the Pledgor delivers an executed counterpart of this Pledge Agreement by facsimile or electronic transmission, the Pledgor shall also deliver an originally executed counterpart as soon as practicable, but the failure of the Pledgor to deliver an originally executed counterpart of this Pledge Agreement shall not affect the validity or effectiveness of this Pledge Agreement.

 

13.8  References.  References herein to Sections, Exhibits and Schedules are to be construed as references to sections of, exhibits to, and schedules to, this Pledge Agreement, unless the context otherwise requires.

 

13.9  Headings.  In this Pledge Agreement, Section headings are inserted for convenience of reference only and shall not be taken into account in the interpretation of this Pledge Agreement.

 

13.10  Termination.  When all of the Obligations shall have been fully satisfied, the Pledgee agrees that it shall forthwith release the Pledgor from its Obligations hereunder and the Pledgee, at the request and expense of the Pledgor, shall promptly execute and deliver to the Pledgor a proper instrument or instruments acknowledging the satisfaction and termination of this Pledge Agreement, and the Irrevocable Proxies shall terminate forthwith and be delivered to the Pledgor forthwith together with the other items furnished to the Pledgee pursuant to this Pledge Agreement.

 

SECTION 14.  Applicable Law, Jurisdiction and Waivers.

 

14.1  Governing Law.  Except in the case of the Mandatory Forum Selection clause set forth in Section 14.2 hereof, this Pledge Agreement shall be governed by and construed in accordance with the laws of the Nevada, without regard to principles of conflicts of laws thereof.

 

14.2  MANDATORY FORUM SELECTION.  ANY DISPUTE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH THE AGREEMENT OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THE AGREEMENT (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT OR TORT) SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED IN BROWARD COUNTY, FLORIDA.  THIS PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY AND INTERPRETED CONSISTENT WITH FLORIDA LAW.

 

  

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14.3  WAIVER OF IMMUNITY. TO THE EXTENT THAT THE PLEDGOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM SUIT, JURISDICTION OF ANY COURT OR ANY LEGAL PROCESS (WHETHER THROUGH ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OF A JUDGMENT, OR FROM ANY OTHER LEGAL PROCESS OR REMEDY) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE PLEDGOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS PLEDGE AGREEMENT.

 

14.4  WAIVER OF JURY TRIAL.  EACH OF THE PLEDGOR AND THE PLEDGEE HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO OR ANY BENEFICIARY HEREOF ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS PLEDGE AGREEMENT.

 

[-signature page follows-]

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be duly executed the day and year first above written.

 

PLEDGOR:

CD INTERNATIONAL ENTERPRISES, INC.

By:           ___________________________

Name:          

Title:          

PLEDGEE

TCA GLOBAL CREDIT MASTER FUND, LP

By:           TCA Global Credit Fund GP, Ltd.

Its:           General Partner

By:           ___________________________

Name:        

Title:          

[ signature page to Pledge Agreement ]

 

  

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EXHIBIT A

IRREVOCABLE PROXY

 

The undersigned, the registered and beneficial owner of the below described capital stock of CDI China, Inc., a corporation incorporated under the laws of the State of Florida (“CDI CHINA”), hereby makes, constitutes and appoints, TCA Global Credit Master Fund, LP, a limited partnership organized and existing under the laws of the Cayman Islands (the “Pledgee”), with full power to appoint a nominee or nominees to act hereunder from time to time, the true and lawful attorney and proxy of the undersigned to vote one hundred percent (100%) of the capital stock of CDI CHINA, at all annual and special meetings of the board of directors or take any action by written consent with the same force and effect as the undersigned might or could do, hereby ratifying and confirming all that the said attorney or its nominee or nominees shall do or cause to be done by virtue hereof.

 

The said capital stock has been pledged (the “Pledge”) to the Pledgee pursuant and subject to a Pledge Agreement, dated as of July 30, 2014, by and between the undersigned and the Pledgee.

 

This power and proxy is coupled with an interest and is irrevocable and shall remain irrevocable so long as the Pledge is outstanding and is in full force and effect.

 

IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly executed on July 30, 2014.

 

CD INTERNATIONAL ENTERPRISES, INC.

By:           ___________________________

Name:

Title:

  

  

  

EXHIBIT B

INSTRUMENT OF TRANSFER

	
FOR VALUE RECEIVED:

	  
	  
	  
	  	
PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OR ASSIGNEE

	  
	
hereby sells, assigns and transfers unto _____

	  	  	  	  
	  
	  
	  	  	
100% of the common stock

	
Of

	
CDI China, Inc.

	  	
standing in my (our) name(s)

	
on the books of said corporation represented by Certificate(s) No.(s).

	
0001

	
herewith, and do hereby irrevocably constitute and appoint

	  
	  	
attorney to transfer the

	
said stock on the books of said corporation with full power of substitution in the premises, This Instrument is given for collateral purposes only pursuant to  that certain Pledge Agreement between the undersigned and TCA Global Credit Master Fund, LP dated July 30, 2014.

	
Dated

	  	  
	  	  	  
	  	  	  	  	  
	
In presence of

	  	  	  	  
	  	  	
Name: 

Title:2014 Q2 - 10Q-Exhibit 10.1

August 7, 2014 
 

Robert Eastep
9190 Priority Way West Drive, Suite 300
Indianapolis, IN 46240
Re:    Letter Agreement 
Dear Mr. Eastep: 
This Letter Agreement (“Agreement”) is made and entered into as of August 7, 2014 (the “Effective Date”) by and between Stonegate Mortgage Corporation, an Ohio corporation (the “Company”), and Robert Eastep (“You”). The Agreement sets forth the terms of your employment with the Company as follows: 
1.        Employment. The Company hereby agrees to employ you, and you hereby accept such employment with the Company, in each case, on the following terms and conditions. Your employment will be “at-will”, meaning that either you or the Company may terminate your employment at any time for any or no reason, subject to the terms of this Agreement. Any contrary representations that may have been made to you will be superseded by this Agreement. 
2.        Position and Responsibilities. As of the date hereof, you will serve as the Company’s Chief Financial Officer (or such other position as may be assigned by the Chief Executive Officer of the Company (“CEO”) or the Board of Directors of the Company (the “Board”)). You will have the duties and authority as determined from time to time by the CEO or the Board. While employed by the Company, you will devote your full business time and best efforts to the performance of your duties hereunder and the business and affairs of the Company and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services to the Company, without the Board’s prior written consent. While employed by the Company, you will be expected to primarily work from the Company’s office in Indianapolis, Indiana. 
3.        Compensation. 
(a) Base Salary. Your base salary will be paid, in accordance with the Company’s normal payroll practices in effect from time to time, at an annual rate of $325,000, subject to annual redetermination by the Board (the rate in effect at any given time, the “Base Salary”). 
(b) Annual Bonus. During each calendar year, you will eligible to participate in the Company’s Discretionary Incentive Compensation Plan or similar annual bonus program whereby you will have the opportunity to earn compensation (the “Annual Bonus”) of up to 200% of Base Salary as determined by the Board in its sole discretion. The Annual Bonus may be payable in cash or grants of stock, as determined by the Board, and will be paid at the time or times provided by the applicable bonus program. 
(c) Discretionary Bonus.  During the 2014 calendar year, you will be eligible to earn a discretionary bonus equal to $25,000, less applicable taxes and withholding (the “Discretionary Bonus”), based on performance metrics as determined by the Board in its sole discretion.  If earned, the Discretionary Bonus will be paid in two equal installments, the first of which will be on (or within ten (10 days following) September 30, 2014, and the second of which will be on (or within 10 days following) December 31, 2014.
(d) Stock Options.  You will receive as a one-time grant a number of stock options under the Company’s 2013 Omnibus Plan with a grant date fair value equal to $175,000 as determined by the Company in its sole discretion. When granted, such stock options shall be subject in all respects to the terms and conditions (including, without limitation, vesting and forfeiture conditions, exercise rights and conditions, etc.) set forth in the 2013 Omnibus Plan and the underlying award agreement that will accompany such grant.

(e) Relocation Expenses.  You will be entitled to be reimbursed for up to $25,000 in expenses related to your relocation to Indianapolis, IN provided documented receipts are submitted to the Company in accordance with IRS rules.  In addition, in lieu of the Company paying car rental expenses for you prior to your relocation, you will be provided up to $1,000 per month for a car allowance paid by the Company for each of the 12 months from the date hereof.

(f) Benefits and Expenses. While employed by the Company, you will be eligible to participate in the Company’s employee benefit plans (including vacation policy) as in effect from time to time, on the same basis as those benefits are generally made available to other peer executives of the Company. You will be entitled to reimbursement, by the Company in accordance with then current Company policies applicable to other executives of the Company, of reasonable business expenses that you incur in the performance of your duties hereunder. 
4.        Termination. Your employment may be terminated by you or the Company at any time and for any or no reason, subject to the following terms. 
(a) Termination for Cause. Your employment may be terminated by the Company for Cause at any time upon delivery of written notice to you, in which case you will be entitled to receive only: (i) accrued but unpaid Base Salary; (ii) accrued but unreimbursed business expenses that were properly incurred in accordance with Company policy before your termination date; and (iii) any employee benefits which you may be entitled to under the employee benefit plans or policies of the Company according to their terms, all reduced by any amounts that you then owe the Company ((i), (ii) and (iii) above are collectively “Accrued Rights”). Following termination of your employment for Cause, you will have no further rights to any compensation or any other benefits under this Agreement or otherwise. “Cause” means the Company’s termination of your employment, as determined in the sole judgment of the Board, due to your: (i) continued failure to perform your material duties with respect to the Company or its affiliates for a period of more than 30 days after receipt of written notice of such failure; (ii) fraud, misappropriation, embezzlement or acts of similar dishonesty; (iii) conviction of a felony or any other crime involving moral turpitude; (iv) illegal use of drugs or excessive use of alcohol in the workplace; (v) misconduct that may subject the Company or its affiliates to criminal or civil liability; (vi) breach of your duty of loyalty, including the diversion or usurpation of corporate opportunities properly belonging to the Company; (vii) intentional disregard of the Company’s policies and procedures; (viii) breach of any of the terms of this Agreement or any other agreement between you and the Company; (ix) adjudication as guilty in a court of competent jurisdiction for, or a settlement is reached with respect to claims of, discrimination or harassment of any employee; or (x) insubordination or deliberate refusal to follow the reasonable instructions of the CEO and/or the Board. 
(b) Resignation. Your employment shall terminate automatically upon your resignation. If you provide written notice to the Company at least thirty (30) days before your resignation date, you will be entitled to receive only the Accrued Rights. However, if you resign for Good Reason (as defined below), provided you give notice of your resignation within 90 days of the condition for Good Reason first occurring, the Company does not cure the condition within 30 days of such notice and you resign within 30 days after the Company’s failure to cure, then no later than five days after your resignation for Good Reason the Company will deliver to you a general release of employment related claims in favor of the Company and its affiliates (the “Release”) and if you execute and deliver to the Company the Release within 21 days (or such other time as is required by law to make the Release effective and irrevocable) of delivery to you and do not revoke the Release during the seven day revocation period (or such other time as is required by law to make the Release effective and irrevocable), then you will receive a lump sum payment within ten (10) days following the Release effective date in an amount equal to the Severance Payment (as defined below). “Good Reason” shall mean, in each case without your consent: (i) a material diminution in your Base Salary (other than a similar diminution that impacts other similarly situated executives of the Company), (ii) any requirement that you report directly to any person other than the CEO in place as of immediately prior to a Change in Control (as defined below) and (iii) any other action or inaction by the Company constituting a material breach of this Agreement. Following a resignation for Good Reason, you shall have no further rights to any compensation or any other benefits. 
(c) Death or Disability. Your employment will terminate upon your death, and may be terminated by the Company as a result of your Disability, in which case you (or your estate) will be entitled to receive only the Accrued Rights. Following your termination of employment due to death or Disability, you will have no further 

rights to any compensation or any other benefits. “Disability” means the Board’s good faith determination that you are (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (ii) by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, you receive income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Company. 
(d) Termination Without Cause. Your employment may be terminated by the Company at any time without Cause (other than by reason of death or Disability), in which case you will be entitled to receive the Accrued Rights and any accrued but unpaid annual bonus for the year preceding the year in which the termination occurs. In addition, no later than five days after the date of termination without Cause, the Company shall deliver to you the Release and if you execute, deliver to the Company and do not revoke the Release within the timeframe described in Section 4(b) above then you will receive a lump sum payment within ten (10) days following the Release effective date in an amount equal to twelve (12) months of your then current Base Salary (the “Severance Payment”). Following your termination without Cause, you will have no further rights to any compensation or any other benefits under this Agreement. 
(e) Termination on Account of Change in Control.  If your employment with the Company is terminated,  within five months after a Change in Control (as defined in the Company’s 2013 Omnibus Incentive Compensation Plan) either by the Company for any reason other than Cause or by you for Good Reason, you will be entitled to receive  (1) the payments and benefits under Subsection (b) or (d) above, (2) any accrued but unpaid annual bonus for the year in which the termination occurs and the year preceding the year in which the termination occurs and (3) accelerated vesting of any then-outstanding, unvested Company equity incentive awards, which will become payable or exercisable in accordance with the terms of the applicable incentive plan and award agreement under which the awards were granted.  In order to receive such payments and benefits, you will be required to sign, deliver to the Company and not revoke the Release, as set forth in Section 4(b) above, within the timeframe described therein.  Such payments will be made within ten (10) days after the following the effective date of the Release (and such vesting will occur on the effective date of the Release).
(f) Board and Other Resignation. You agree that, upon termination of your employment with the Company for any reason, you will automatically be deemed to have resigned, as of the termination date, from any other employment, including service on the board of directors, with the Company or any of its affiliates, including any entity in which the Company or its affiliates have rights and any position in which you act as a representative of the Company. 
(g) Return of Materials. Upon any termination of your employment, you will (i) cease use of any Confidential Information (as defined below) or intellectual property owned or used by the Company or any of its affiliates; (ii) immediately destroy or return to the Company, at its option, all originals and copies of such Confidential Information, intellectual property, or other information related to the business of the Company or its affiliates in your possession or control; and (iii) notify and fully cooperate with the Company regarding the delivery or destruction of any other Confidential Information of which you become aware. 
5.        Confidentiality. You acknowledge that in the course of your employment you will acquire knowledge of the Company’s and its affiliates Confidential Information (as defined below). You also acknowledge that such Confidential Information is not known outside the business of the Company and its affiliates, is known only to a limited group of their top employees and directors, is protected by strict measures to preserve secrecy, is of great value to the Company and its affiliates, is the result of the expenditure of large sums of money, is difficult for an outsider to duplicate, and disclosure of which would be extremely detrimental to the Company and its affiliates. You acknowledge that all Confidential Information shall at all times remain the property of the Company, and the Company shall have free and unlimited access at all times to all materials containing Confidential Information and shall have the right to claim and take possession of such materials on demand. Except as required by your duties to the Company, you will not, at any time during or after your employment, directly or indirectly use, divulge or 

disseminate any Confidential Information without having first obtained written permission from the CEO. You will safeguard and maintain secret all Confidential Information and all materials that include or embody Confidential Information. You also acknowledge that the Company may receive confidential or proprietary information belonging to customers, or other third parties subject to the Company’s duty to not disclose said information. Accordingly, you agree to not disclose (except as authorized by the Company), publish, or use in competition with the Company, any such third party confidential and proprietary information. “Confidential Information” means any oral or written information disclosed to you or known by you as a consequence of your employment by the Company relating to the Company’s or any of its affiliate’s business, products, processes, or services, including, but not limited to, information relating to research, development, discoveries, concepts, and ideas, whether patentable or not including, but not limited to, apparatus, processes, methods, compositions of matter, techniques, and formulas, as well as related improvements or know-how, works of authorship fixed in a tangible medium of expression, products under development, manufacturing processes, formulas, strategic plans, purchasing, finance, accounting, revenues, costs or expenses, engineering, marketing, selling, suppliers, customer lists, customer requirements, trade secrets and the documentation thereof; provided, however, that Confidential Information shall not include information that was: (i) publicly known prior to the date of disclosure or is published or otherwise becomes publicly known after the date of disclosure through no fault of your own; or (ii) was rightfully in the possession of or independently derived by a party to whom such information was disclosed whether before or after your disclosure. If you are requested or are legally compelled to make any disclosure that is prohibited or constrained by this Agreement, you will provide the Company with prompt notice of the request so that it may seek an appropriate protective order or other remedy and you will only disclose so much of that Confidential Information as you are required to disclose by law. 
6.        Limited Restricted Covenants. During and after your employment it is important for the Company to protect its legitimate business interests. Therefore, the following non-competition and non-solicitation provisions are drafted narrowly to safeguard the Company’s legitimate business interests while not unreasonably interfering with your ability to obtain other employment. As a condition of your employment with the Company, you agree as follows: 
(a)        During Employment by the Company. During your employment with the Company, you will not, directly or indirectly, have any ownership interest in, work for, advise, consult with, or have any business connection with any person or entity that competes with the Company or that is planning to compete with the Company. Furthermore, you shall not take any actions with respect to competitors that could be detrimental to the Company. 
 
 (b)        During Post-Employment Period. For twenty-four (24) months following any termination of your employment with the Company, you will not (i) solicit or sell to any Customer (as defined below) any product or service that competes with the Company’s products or services; (ii) request or advise any Customer to curtail or cease business with the Company or its affiliates; (iii) disclose to any person or entity the identities of any Customers; or (iv) influence or attempt to influence any employee or contractor of the Company or any of its affiliates to separate from the Company. “Customer” means any person or entity who is a customer or prospective customer of the Company or any of its affiliates and that (i) you or any other officer of the Company solicited, serviced, or sold to within two (2) years of the termination of your employment with the Company or (ii) you learned of within two (2) years of the termination of your employment with the Company. 
7.        Additional Restricted Matters. The provisions of Sections 4 through 9 shall survive any termination of your employment. The restricted period of time in Sections 5 and 6 will be tolled during any periods of your non-compliance. If a final judicial determination is made by a court of competent jurisdiction that the time or territory or any other restriction contained in this Agreement is unenforceable, such provisions shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such maximum extent as such court may determine to be enforceable. 
8.        Injunctive Relief. You acknowledge that any restricted activity referred to in this Agreement may cause irreparable injury to the Company, and that the remedies at law for any breach by you may be inadequate, and that the Company may be entitled to institute and prosecute legal proceedings to obtain injunctive relief to enforce any provision without proof of actual injury or damage and without posting security. If the Company prevails in any litigation to enforce this Agreement, the Company is entitled to recover from you the Company’s costs and reasonable attorneys’ fees incurred in such enforcement. 

9.        Miscellaneous. 
(a) Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Indiana, without regard to conflicts of laws principles thereof. You and the Company agree that any claim of any type brought by you against the Company or any of its employees or agents must be maintained only in a court sitting in Marion County, Indiana or, if a federal court, the Southern District of Indiana. You specifically consent to personal jurisdiction in the State of Indiana. You waive any right to a jury trial, and agree that any claim hereunder will be tried without a jury. At the Company’s sole election, the Company may refer any litigation to arbitration through a mutually agreeable qualified arbitrator in Indiana 
(b) Compliance with Code Section 409A. This Agreement is intended to be exempt from the requirements of Internal Revenue Code Section 409A (“Code Section 409A”) and shall be interpreted and administered accordingly, provided that if any part of this Agreement is determined to be subject to Code Section 409A, then it is intended to comply with such requirements, and it shall be interpreted and administered to effect compliance. To effect such compliance, references to “termination of employment” and similar terms shall be deemed to mean “separation from service” within the meaning of Code Section 409A(a)(2)(A)(i). Notwithstanding anything herein to the contrary, to the extent that any payments of “nonqualified deferred compensation” that become payable pursuant to this Agreement as a result of a “separation from service” are required to be delayed because you are a “specified employee” within the meaning of Code Section 409A, such payments will be made at the earliest time permitted by Code Section 409A. 
 
 (c) Entire Agreement; Amendment. This Agreement contains the entire understanding of the parties with respect to your employment by the Company and supersedes all prior written and oral statements or agreements. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto. 
(d) Successors; Assignment. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees of the parties hereto. This Agreement and all of your rights and duties hereunder, shall not be assignable by you. Any purported assignment or delegation in violation of the foregoing shall be null and void ab initio and of no force or effect. 
(e) Set Off; No Mitigation. The Company’s obligation to pay you the amounts and to make the arrangements provided hereunder shall be subject to set-off, counterclaim or recoupment of amounts owed by you to the Company or its affiliates (subject to Section 9(b)); provided, however, that in no event shall you be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to you under Section 5 of this Agreement. 
(f) Notice. Notices and other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand, U.S. Mail or overnight courier, addressed, if to the Company, to Stonegate Mortgage Corporation, 9190 Priority Way West Drive, Suite 300, Indianapolis, IN 46240 Attn: CEO, and if to you, to the most recent address in the Company’s personnel records (or to such other address as either party may have furnished to the other in writing) which notice will be effective only upon receipt. 
(g) Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation. 
(h) Pre Suit Mediation. Prior to initiating litigation, you must first serve written notice to the Company within 90 days of the alleged loss setting forth in detail the nature of the alleged claim and an itemization of remedies sought. You must then submit to mediation in good faith, bearing 50% of the mediation expense. Failure to serve proper notice or to mediate in good faith shall serve as a waiver of any rights to pursue litigation. 
(i) Executive Acknowledgements. You acknowledge and agree that you have carefully read this entire Agreement and have been given sufficient opportunity to discuss this Agreement with the Company before signing and an adequate opportunity to consult with your lawyer, accountant, tax advisor, spouse and other persons you deem appropriate concerning this Agreement. 

(j) Subsequent Employers. After any termination of your employment with the Company, you agree not to enter into any agreement that conflicts with your obligations under this Agreement, and you will (and the Company may) inform any subsequent employers of your obligations under this Agreement. 
 
 (k) Other. A party’s failure to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. If any provision of this Agreement is determined to be unenforceable, the remaining provisions shall remain in full force and effect, and if any provision is susceptible to two or more constructions, one of which would render the provision unenforceable, then the provision shall be construed to have the meaning that renders it enforceable. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures were on the same instrument. 
 
If you agree with the preceding please sign and return this Agreement, which will become a binding agreement on our receipt. 
 
	
			
	 
	 
	 

	Very truly yours, 
 
STONEGATE MORTGAGE CORPORATION

	 
	 

	By:
	 
	   /s/ James J. Cutillo

	 

	James J. Cutillo, CEO

Accepted and agreed: 
    /s/ Robert Eastep                                       
Robert Eastep

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