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EXHIBIT
10.6
EXECUTION VERSION
PLEDGE AGREEMENT
THIS
PLEDGE AGREEMENT (this “ Agreement
”), effective as of December 24, 2007, is by and among
INDIA GLOBALIZATION CAPITAL, INC., a Maryland corporation
(“ Pledgor
”), and each of the other parties that is a signatory
hereto (each a “ Secured
Party ” and, collectively the “ Secured
Parties ”).
WHEREAS,
the Secured Parties have extended credit to Pledgor (the
“ Loan
”) and, in exchange therefor, Pledgor has executed and
delivered to each Secured Party a Promissory Note, dated as of
the date hereof (each a “ Note
” and, collectively the “ Notes
”), for the respective principal amount stated therein,
and the Secured Parties and Pledgor have executed and
delivered a Note Purchase Agreement, dated as of the date
hereof (the “ Purchase
Agreement ”), setting forth certain terms and
conditions relating to the Notes;
WHEREAS,
in accordance with the terms of the Purchase Agreement,
additional lenders may also extend credit to Pledgor from time
to time in the future, in which event each such additional
lender shall become party to this Pledge Agreement as an
additional “Secured Party” hereunder and
Schedule 1
hereto shall be revised in order to reflect such additional
Secured Party’s Percentage Interest in and to the
Collateral and the Obligations (each as hereinafter defined),
without any further action, signature, or consent by the
Secured Parties who are signatories hereto on the date
hereof;
WHEREAS,
it is in the best interests of Pledgor to execute this
Agreement, as Pledgor will derive substantial benefits from
the Loan made to Pledgor; and
WHEREAS,
any capitalized terms used in this Agreement not otherwise
defined herein are defined in the Note.
NOW,
THEREFORE, for valuable consideration, and to induce Secured
Party to make the Loan to Pledgor and to accept as evidence of
the Loan the Note, the parties hereto agree as
follows:
1.
Certain Definitions . The following terms shall
have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms
defined):
“
Collateral
” shall have the meaning specified in Section 2(a)
.
“
Event of
Default ” shall have the meaning specified in
Section 8
.
“
Governmental
Authority ” shall mean any federal, state, local,
foreign or other governmental or administrative (including
self-regulatory) body, instrumentality, department or agency
or any court, tribunal, administrative hearing body,
arbitration panel, commission, or other similar dispute
resolving panel or body.
“
Indemnitees
” shall have the meaning specified in Section 14(a)
.
“
Lien
” shall mean any mortgage, pledge, assignment, security
interest, encumbrance, lien or charge of any kind, any
conditional sale or other title retention agreement or any
lease in the nature thereof (including any agreement to give
any of the foregoing).
“
Note
” shall have the meaning specified in the recitals
hereto.
“
Obligations
” shall have the meaning specified in Section 5
.
“
Percentage
Interest ” shall mean, as to each Secured Party,
its percentage interest in and to the Collateral or of the
Obligations, as applicable, in the amount set forth on
Schedule
1 attached hereto.
“
Person
” shall mean and include any individual, partnership,
limited liability company, joint venture, firm, corporation,
association, trust or other enterprise or any Governmental
Authority.
“
Pledgor
” shall have the meaning specified in the preamble
hereto.
“
Proceeds
” shall have the meaning specified in the
UCC.
“
UCC
” shall mean the Uniform Commercial Code as in effect in
the State of Maryland from time to time.
“
Secured
Party ” shall have the meaning specified in the
preamble hereto.
“
Securities
Act ” shall mean the Securities Act of 1933, as
amended.
“
Securities
” shall have the meaning specified in Sections
2(a) and (b)
.
“
Third Party
Claims ” shall have the meaning specified in
Section 14(a)
.
2.
Grant of a Security Interest .
(a)
As
security for the prompt and complete payment and performance when
due of all the Obligations, Pledgor hereby pledges, assigns,
transfers and grants to each Secured Party, a continuing first
priority security interest in and to such Secured Party’s
Percentage Interest in Pledgor’s right, title and interest
in, to and under (i) the shares of capital stock of India
Globalization Capital, Mauritius, Limited, a Mauritius company,
held or owned by Pledgor (the “ Securities
”), (ii) all certificates evidencing such Securities
(the “ Certificates
”), and (iii) any and all Proceeds therefrom (the
foregoing collectively referred to as the “ Collateral
”). Pledgor shall deliver, simultaneously with the
execution of this Agreement, to each Secured Party the Certificate,
together with appropriate stock powers relating thereto, duly
endorsed in blank, to be held by Secured Party pursuant to the
terms of this Agreement.
(b)
The
term “ Securities
” as used herein shall also mean and include, without
limitation, any securities into which the Securities are converted
or for which they are exchanged, and any stock dividend and/or
distribution or exchange of stock in connection with any
reorganization, recapitalization, reclassification, or increase or
reduction of capital, if any, to which Pledgor shall become
entitled for any reason whatsoever as an addition to, in
substitution for, or in exchange for any portion of the aforesaid
securities.
3.
Payments; Distributions . Until payment in full
of the Obligations, all rights of the Pledgor to receive dividends,
payments and distributions as to the Collateral shall cease, and
Secured Parties shall have the exclusive right and authority to
receive those dividends, payments and distributions in accordance
with each Secured Party’s Percentage Interest in the
Collateral. In order to permit Secured Parties to
receive such dividends, payments and distributions, the Pledgor
shall, if necessary, upon the written request of any Secured Party,
execute and deliver to such Secured Party appropriate dividend
payment orders. Any and all money or other property paid
over to or received by any Secured Party pursuant to this
Section
3 shall be delivered to Secured Party as additional
Collateral hereunder and shall be applied in accordance with the
provisions hereof.
4.
Voting and Other Rights .
(a)
So
long as no Event of Default shall have occurred and be continuing,
the Pledgor may exercise all voting and other rights in respect of
the Collateral, provided that the Pledgor shall not exercise any of
such rights in a manner which would be inconsistent with any
provisions of this Pledge Agreement, or any other agreement,
document or instrument executed and delivered pursuant hereto, or
which would otherwise have the effect of impairing the value of the
Collateral. In order to facilitate the Pledgor’s
exercise of such voting and other rights, each Secured Party shall,
if necessary, upon the written request of the Pledgor, from time to
time execute and deliver to the Pledgor appropriate
proxies.
(b)
Upon
the occurrence of an Event of Default, all voting rights of the
Pledgor with respect to the Collateral shall cease and each Secured
Party shall have, without notice, the sole and exclusive right to
exercise all voting and other rights with respect to the
Collateral, on a pro rata basis (based on each Secured
Party’s Percentage Interest) as if such Secured Party was the
absolute owner thereof. In order to facilitate Secured
Parties’ exercise of such voting and other rights, the
Pledgor shall, if necessary, upon the written request of any
Secured Party, from time to time execute and deliver appropriate
proxies to each such Secured party.
5.
Obligations Secured Hereby . This Agreement
secures, and each Secured Party’s Percentage Interest in the
Collateral is collateral security for, the prompt payment and
performance in full when due, whether at stated maturity, by
acceleration or otherwise (including, without limitation, the
payment of interest and other amounts which would accrue and become
due but for the filing of a petition in bankruptcy or the operation
of the automatic stay under Section 362(a) of the Bankruptcy
Code) of all obligations of Pledgor now or hereafter arising under
or in respect of such Secured Party’s Note (collectively,
the “ Obligations
”).
6.
Pledgor’s Representations and Warranties
. Pledgor represents and warrants and, so long as this
Agreement is in effect, shall be deemed continuously to represent
and warrant that:
(a)
No Liens . Pledgor is and will be the owner of
all Collateral free from any Lien or other right, title or interest
of any Person, other than Secured Parties.
(b)
Authority; Enforceability . Pledgor has full
corporate power and authority and has taken all corporate action
necessary to execute, deliver and perform this Agreement and to
encumber and grant security interests in the
Collateral. This Agreement constitutes legal, valid and
binding obligations of Pledgor, enforceable against Pledgor in
accordance with its terms.
(c)
Other Financing Statements . There is no
financing statement (or similar statement or instrument of
registration under any jurisdiction) or any notice filed with any
Governmental Authority covering or purporting to cover any interest
of any kind in the Collateral, and so long as any of the
Obligations remain unpaid, Pledgor shall not execute or authorize
to be filed in any public office any financing statement (or
similar statement or instrument of registration under the law of
any jurisdiction) or statements relating to the Collateral, except
financing statements filed or to be filed in respect of and
covering the security interest granted hereby by
Pledgor.
(d)
Security Interest; Necessary Filings . This
Agreement creates a valid security interest for each Secured Party
in such Secured Party’s Percentage Interest in the Collateral
securing payment of such Secured Party’s Percentage Interest
in the Obligations. All filings, registrations and
recordings necessary, appropriate or reasonably requested by
Secured Parties to create, preserve, protect and perfect the
security interest granted by Pledgor to Secured Parties hereby in
respect of the Collateral have or will be made on or before the
date of this Agreement. The security interest granted to
each Secured Party pursuant to this Agreement in and to such
Secured Party’s Percentage Interest in the Collateral
constitutes and hereafter will constitute a perfected security
interest therein, superior and prior to the rights of all other
persons therein and subject to no other Liens.
(e)
No Consents, etc . No other consent of any other
Person (including, without limitation, stockholders or creditors of
Pledgor) and no consent, authorization, approval, or other action
by, and no notice to or filing with, any Governmental Authority
(other than a court in connection with the exercise of judicial
remedies by Secured Parties) or regulatory body is required either
(i) for the pledge by Pledgor of the Collateral pursuant to
this Agreement, or for the execution, delivery or performance of
this Agreement by Pledgor, or (ii) for the exercise by Secured
Parties of the rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this
Agreement.
(f)
Collateral . The Securities were validly issued
and are fully paid and nonassessable. Pledgor has
delivered or will deliver to Secured Parties the Certificates, each
duly endorsed in favor the of Secured Party to whom the Securities
evidence thereby are pledged hereunder. All information
set forth herein relating to the Collateral is accurate and
complete in all material respects.
7.
Pledgor’s Covenants . Pledgor agrees and
covenants for itself, its successors and permitted assigns
that:
(a)
Protection of Secured Parties’ Security
. Pledgor shall not take any action that impairs the
rights of any Secured Party in the such Secured Party’s
Percentage Interest in the Collateral. Pledgor will mark
all books and records to indicate the security
interests. Pledgor will defend the Collateral against
the claims and demands of all other parties against Pledgor or
Secured Parties; will keep the Collateral free from all Liens; and
will not sell, transfer, assign, deliver, pledge, hypothecate or
otherwise dispose of any Secured Party’s Percentage Interest
in the Collateral (or any interest therein) without the prior
written consent of such Secured Party.
(b)
Financing Statements . Pledgor shall, at no cost
to Secured Parties, execute, acknowledge and deliver all such other
documents, as Secured Parties reasonably deem necessary to create,
perfect and continue the security interest in the Collateral
contemplated hereby. Pledgor will pay all costs of title
searches and filing of financing statements, assignments and other
documents in all public offices reasonably requested by Secured
Parties, and will not, without the prior written consent of Secured
Parties, file or authorize or permit to be filed in any public
office any financing statement naming Pledgor as Pledgor and not
naming Secured Parties as secured parties.
(c)
Further Actions . Pledgor shall at any time and
from time to time take such steps as Secured Parties may reasonably
request to insure the continued perfection and priority of Secured
Parties’ security interest in any of the Collateral and of
the preservation of its rights therein in any
jurisdiction. Without limiting the foregoing, Pledgor
will deliver, at its own expense, to Secured Parties, upon demand,
all documents, instruments or other writings constituting,
representing or relating to the Collateral or any part
thereof.
(d)
After Acquired Collateral . Any and all
Collateral described or referred to in the granting clauses hereof
which is hereafter acquired shall, and without any further
conveyance, assignment or act on the part of Pledgor or Secured
Parties, become and be subject to the security interests herein
granted as fully and completely as though specifically described
herein.
8.
Events of Default . The occurrence of any of the
following events with respect to a Secured Party shall constitute
an “ Event of
Default ” under this Agreement as to such Secured
Party:
(a)
any
default in the performance, or any breach, of any representation,
warrant, covenant or agreement for the benefit of such Secured
Party contained in this Agreement;
(b)
any
default in the payment of the principal or interest on such Secured
Party’s Note, when and as the same shall become due and
payable; or
(c)
the
entry of a decree or order by a court of competent jur
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