Equity Pledge Agreement - Xinhua Finance Media Ltd.
EQUITY PLEDGE AGREEMENT
This Equity Pledge Agreement (the "AGREEMENT") is made and entered into as of
_____________, 2006 by and among
1. [NAME OF THE CONTRACTING SHAREHOLDER OF THE AFFILIATED ENTITY], a People's
Republic of China ("PRC") national and holder of PRC identity card number
[ID card no.] (the "SHAREHOLDER")
2. [NAME OF THE AFFILIATED ENTITY (THE WHOLLY-OWNED FOREIGN ENTERPRISE)], a
company incorporated under the laws of the PRC and having its principal
office located at [Address] ("WFOE")
3. [NAME OF THE PRC SUBSIDIARY], a limited liability company incorporated
under the laws of the PRC and having its registered office at [Address]
("XYZ")
WHEREAS:
A. By means of an Amended and Restated Loan Agreement (the "LOAN AGREEMENT")
made on [date] between the Shareholder and WFOE, the Shareholder borrowed
from WFOE a total sum of RMB[Amount], of which RMB[Amount] was borrowed on
[date] (the "INITIAL LOAN") and RMB[Amount] was borrowed in [date] (the
"SUBSEQUENT LOAN", together with the Initial Loan, the "INVESTMENT AMOUNT")
to acquire [__] percent ([__]%) of the total equity interest in XYZ;
B. By means of an equity pledge agreement (the "FIRST EQUITY PLEDGE
AGREEMENT") made on [date] among the Shareholder, WFOE and XYZ, the
Shareholder agreed to pledge all of the equity interest she then held in
XYZ in favour of WFOE for the Initial Loan;
C. By means of an Amended and Restated Exclusive Conditional Equity Purchase
Agreement (the "EXCLUSIVE CONDITIONAL EQUITY PURCHASE AGREEMENT") made on
___________________________, 2006 between the Shareholder and WFOE, the
Shareholder agrees to sell all or part of the equity interest in XYZ held
by the Shareholder (representing [__] percent ([__]%) of the total equity
interest in XYZ) to WFOE or its nominee at WFOE's sole discretion as and
when permitted by PRC law;
D. As at the date hereof, the Shareholder is the owner of [__] percent ([__]%)
of the total equity interest in XYZ and the Shareholder voluntarily agrees
to pledge all of the equity interest in XYZ held by the Shareholder
(representing [__] percent ([__]%) of the total equity interest in XYZ) to
WFOE, as security for (i) full payment and performance of the Shareholder's
obligations under the Loan Agreement, each and every obligation of the
Shareholder and under the Exclusive Conditional Equity Purchase Agreement
when due (collectively, the "OBLIGATIONS"), and (ii) compensation for any
direct or indirect losses arising in any Event of Default (defined below in
Section 8) by Shareholder and/or XYZ, including but not limited to
interest, penalty interest, other penalty under these abovementioned
agreements, the sum of compensation for losses, the profit obtainable after
the performance of these abovementioned agreements and any charges, costs
or
<PAGE>
expenses incurred by WFOE as and when enforcing Shareholder and/or XYZ to
perform their respective obligations thereof ((i) and (ii) collectively,
the "SECURED INDEBTEDNESS").
NOW, THEREFORE, in consideration of the mutual covenants set forth hereinafter
and for other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1. PLEDGE
1.1 To secure the payment and performance of the Secured Indebtedness, and as
security for WFOE, the Shareholder hereby pledges the Collateral (defined
below in Section 1.2), and grants a security interest in the Collateral, to
WFOE.
1.2 "COLLATERAL" means [__] percent ([__]%) of the total equity interest in XYZ
(the "PLEDGED EQUITY"), evidenced by a capital contribution certificate
(the "CERTIFICATE") in the form as attached at Exhibit A, signed by the
legal representative of XYZ and sealed by XYZ's common seal, together with
all property rights as may derive from or accrue to the same, including
without limitation, additional equity or replacement securities
representing interests in XYZ or an affiliate or successor in interest of
XYZ, and all dividends (whether in cash, equity or other forms) and other
income or proceeds derived therefrom or receivable or received on the sale,
exchange, collection or other disposition thereof, whether voluntary or
involuntary, and distributions with respect thereto. For purposes of this
Agreement, the term "PROCEEDS" includes whatever is receivable or received
when Collateral or proceeds is sold, collected, exchanged, or otherwise
disposed of, whether such disposition is voluntary or involuntary.
1.3 On or prior to the execution of this Agreement, Shareholder will have
delivered or will deliver the Certificate, to WFOE, which shall hold the
Pledged Equity for purposes of perfecting its security interest hereunder
and in accordance with the terms of this Agreement.
1.4 WFOE shall have the right to collect and hold any equity or securities of
any class or kind distributed on account of the Pledged Equity by reason of
any dividend, distribution, reclassification or other change in the capital
structure of XYZ, all of which shall be delivered by the Shareholder to
WFOE and held by WFOE in accordance with the terms of this Agreement.
ARTICLE 2. CARE OF COLLATERAL
2.1 WFOE will use reasonable care in the custody and preservation of the
Collateral in its possession.
ARTICLE 3. TERM OF PLEDGE AND RELEASE OF COLLATERAL
3.1 This Agreement shall commence on the Effective Date and expires pursuant to
Section 3.2 below.
<PAGE>
3.2 Provided (i) all Secured Indebtedness hereunder shall at the time have been
paid or performed in full or cancelled and (ii) there does not otherwise
exist any Event of Default under Section 8, the Pledged Equity, together
with any additional Collateral that may hereafter be pledged and deposited
hereunder, shall be released from pledge.
3.3 The Shareholder shall apply to the appropriate registration authorities to
complete the formalities of terminating the pledge after the dissolution of
the pledge relationship in accordance with relevant law (as applicable).
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER
For the benefit of WFOE, the Shareholder hereby represents and warrants that:
4.1 the Shareholder has obtained all capacity required to empower her to enter
into and to perform her obligations under this Agreement.
4.2 the execution, delivery and performance of this Agreement does not conflict
with any agreement or undertaking to which Shareholder is a party or by
which Shareholder is bound; and
4.3 except for the rights of Shareholder and WFOE, no other person will have
any right, title, claim or interest (by way of security interest or other
lien or charge or otherwise) in, against or to the Collateral.
ARTICLE 5. COVENANTS AND UNDERTAKINGS OF SHAREHOLDER
5.1 Prior to the payment and performance in full of the Obligations, the
Shareholder also undertakes to do as follows:
(a) from time to time promptly execute and deliver to WFOE all such
assignments, financing statements and other instruments or documents
as may be necessary in order to more fully evidence and perfect the
security interest of WFOE in the Collateral and promptly furnish WFOE
with any information or writings which WFOE may reasonably request
concerning the Collateral;
(b) advise WFOE of any requirement to pay taxes, administrative fees and
any other charges imposed on it by government departments concerned
with respect to the Collateral;
(c) take all necessary and adequate measures as may be requested by WFOE
at WFOE's cost to guarantee its legal ownership of Collateral, to
safeguard WFOE's legitimate rights and interests of Collateral
pursuant to this Contract; to take all measures and actions and sign
all relevant documents according to instructions of WFOE, in order to
enable WFOE to smoothly dispose rights of pledge;
(d) give notice to WFOE, with relevant details, within seven days' receipt
of any notice or administrative order concerning Collateral given by
any government departments, and to comply with any notice given; and,
in the meantime, to put forward or participate in putting forward
disputes
<PAGE>
concerning the aforesaid notice and provide assistance at the
reasonable request of WFOE;
(e) allow WFOE and its representative to examine at any reasonable time
all business licenses, corporate documents, minutes, and chops of XYZ;
(f) at WFOE's request and cost, appear in and defend any action or
proceeding which may affect its title to, or WFOE's interest in, the
Collateral and to give immediate notice to WFOE in the event that the
Collateral is involved in any proceedings, arbitration or dispute, and
all information or material concerning the proceedings, arbitration or
dispute shall also be made available to WFOE at the request of WFOE at
any time;
(g) hold the Collateral and perform corresponding management obligations
in a reasonable and prudential manner, and the Collateral shall
neither be used nor allowed to be used for purposes prohibited by any
law;
(h) collect in a timely manner any certificates concerning the Collateral
if not already held, and to submit them to WFOE for the record;
(i) provide materials concerning Collateral at the request of WFOE; and
(j) go through the formalities of registering the pledge with the relevant
registration authorities for the Collateral (including any part of it)
in a timely manner, at the request and cost of WFOE at any time, and
to provide to WFOE the pledge registration certificate for
safekeeping.
5.2 Prior to payment and performance of the Obligations in full, the
Shareholder undertakes not to do the following without the prior consent of
WFOE:
(a) waive or partially waive any interest in the Collateral, or to dispose
of the Collateral by means of sale, lease, transfer, donation, pledge,
mortgage, or any other manner;
(b) perform or allow to occur any acts that may result in an adverse
impact on WFOE's interest in the Collateral or hamper the enforcement
of WFOE's rights in the Collateral; or
(c) perform any act or allow to exist any omission, negligence that may
affect or reduce the value of the Collateral; or
(d) increase or decrease the register capital of XYZ as of the Effective
Date.
ARTICLE 6. RIGHTS OF WFOE
6.1 WFOE, upon ten days written notice to Shareholder if Shareholder fails to
perform any of its obligations hereunder, may, but shall not be required
to, perform such acts to preserve its rights and the value of the
Collateral. Shareholder hereby irrevocably appoints WFOE as its
attorney-in-fact (which appointment is coupled with an interest and,
therefore, irrevocable) to do any such act, and to exercise such rights and
powers as Shareholder might exercise with respect to the Collateral in
connection therewith. No failure to so act by WFOE
<PAGE>
will relieve Shareholder of Shareholder's duties under this Agreement or in
any way impair or discharge the obligations, and no such failure to act
will result in any liability to Shareholder or any third party on the part
of WFOE.
6.2 WFOE will have the right to reimbursement upon ten days written demand for
reasonable costs and expenses, including reasonable attorneys' fees,
incurred in connection with the custody, preservation and use of the
Collateral and the exercise of WFOE's rights hereunder arising from the
Shareholder's failure or refusal to fulfill its Obligations on a timely
basis when requested by WFOE, all of which costs and expenses are included
in the Obligations secured by the Collateral.
6.3 WFOE may do any other act which, in its discretion, it deems necessary or
appropriate in connection with the preservation of the Collateral and
WFOE's rights therein.
ARTICLE 7. NATURE OF PLEDGE
7.1 The pledge shall be an ongoing guarantee and security interest that expires
pursuant to Section 3.2 above.
7.2 The pledge shall be an independent and ongoing guarantee and security
interest, not subject to any other effect or substitution of other
guarantees provided by the Shareholder or other person to WFOE in the past,
present or in the future, or of any liability of the Shareholder under the
pledge. Prior to demanding payment of the debts by the Shareholder, it
shall not be necessary for WFOE to either demand such payment or to file
proceedings against any other person first, nor dispose of or enforce
compulsorily any other mortgage or guarantee.
7.3 The pledge shall be an independent guarantee and security interest. The
Agreement shall not be null and void or unenforceable even if and when each
or all of the Loan Agreement and the Exclusive Conditional Equity Purchase
Agreement is null and void or unenforceable.
ARTICLE 8. DEFAULT
8.1 An "EVENT OF DEFAULT" will have occurred if:
(a) There is an occurrence of an event of default under the Loan
Agreement; or
(b) Shareholder breaches any material provision of this Agreement and such
breach continues after written notice from WFOE for a period of ten
business days.
ARTICLE 9. DISPOSITION OF COLLATERAL
9.1 Upon the occurrence of an Event of Default, as defined in Section 8 above,
WFOE shall have the right to dispose of the Collateral, in accordance with
law, as follows and no the act taken by the WFOE hereunder will result in
any liability to Shareholder or any third party on the part of WFOE:
<PAGE>
(a) to dispose of all or part of the Collateral by means of public
auction, private agreement, public bidding, competitive bidding
(possibly a combination of the two forms) or in other ways permitted
by the laws of the PRC, at a price or under conditions deemed as
appropriate by WFOE. The acts and time of the disposition of
Collateral shall be decided by WFOE, and the disposition may be
carried out in the name of the Shareholder. The sum to be collected
from the disposition of Collateral may be paid in cash or other agreed
upon forms in a single payment or in installments;
(b) to sign documents, contracts concerning the Collateral or cancel such
transactions in the name of the Shareholder provided that the
Shareholder shall not be liable for any losses arising thereby; and
(c) to take such legal actions over the Collateral in the name of WFOE or
Shareholder, or to institute legal proceedings or defend proceedings
filed by others, or agree to any form of compromise relating solely to
the Collateral (including waiver of demanding reimbursement) in the
name of the Shareholder.
9.2 At any sale of the Collateral, WFOE shall have the right to purchase all or
any part of the Collateral. Shareholder further agrees that, to the extent
notice of sale shall be required by law, ten days' prior notice to
Shareholder shall constitute reasonable notice. WFOE shall not be obligated
to proceed with any sale of Collateral regardless of notice of sale having
been given. Nothing herein shall be deemed to limit or restrict WFOE in
disposing of the Collateral in other commercially reasonable ways.
9.3 No delay or omission to exercise any right or remedy of WFOE upon an Event
of Default by Shareholder or XYZ will waive any right or remedy of WFOE or
be construed as a waiver of any similar default which occurs later.
Shareholder waives any right to require WFOE to proceed against any other
person or to exhaust any Collateral or to pursue any other remedy in WFOE's
power.
9.4 The sum gained from the disposition of the Collateral shall apply in the
following order:
(a) to pay all cost and expenses of disposing of the Collateral;
(b) to withhold taxes payable imposed on Collateral and the disposition
thereof;
(c) to pay the debts evidenced under the Loan Agreement;
(d) to pay any other debts owed by Shareholder to WFOE; and
(e) to turn over any surplus proceeds to the Shareholder.
9.5 It is the intention of the parties that the grant of the security interest
and assignment and pledge of the Collateral to WFOE is to be, at the
discretion of the WFOE, a remedy of WFOE upon the occurrence of an Event of
Default.
<PAGE>
ARTICLE 10. TRANSFER
10.1 The Shareholder shall not transfer any of her rights under this Agreement.
10.2 WFOE may transfer all or part of its rights under this Agreement to any
person upon provision of written notice to the Shareholder; such transferee
shall have all rights and interests as held by WFOE hereunder.
ARTICLE 11. EFFECTIVENESS OF THIS CONTRACT
11.1 This Agreement shall become effective upon the signature and seal by the
Shareholder and XYZ and XYZ recording the pledge in the shareholders
register [Chineese Characters] of XYZ duly sealed with XYZ's common seal
(the "EFFECTIVE DATE") and in the form as attached at Exhibit B.
11.2 XYZ shall record the transfer of the title to the Collateral by the
exercise of the pledge as may be directed by WFOE from time to time.
ARTICLE 12. MISCELLANEOUS
12.1 The terms of this Agreement will inure to the benefit of and bind the
parties hereto and their respective successors, assigns, executors, heirs
and legal representatives.
12.2 This Agreement contains the entire pledge agreement between WFOE and
Shareholder with respect to the Pledged Equity and the Collateral and may
be modified only by a writing signed by WFOE, Shareholder and XYZ. If any
of the provisions of this Agreement are held invalid or unenforceable, this
Agreement will be construed as if not containing the invalid or
unenforceable provisions.
12.3 WFOE's waiver or delay in exercising any rights under this Agreement shall
not constitute or be regarded as a waiver of such powers generally or with
respect to any future right to such exercise.
12.4 This Agreement will be construed in accordance with and governed by the
laws of PRC.
12.5 If the parties hereto are unable to settle any dispute arising from the
provisions of this Contract through mediation, any party hereto can submit
the dispute for final and binding arbitration to the China International
Economic and Trade Arbitration Commission ("CIETAC") in Beijing for
arbitration before a panel of three (3) arbitrators pursuant to the
then-valid arbitration rules of CIETAC.
12.6 All notices, requests, demands and other communications to be given
pursuant to the terms of this Agreement shall be in writing and shall be
deemed effectively given upon personal delivery or upon deposit in the
government postal service or upon deposit for delivery by an
internationally recognized express mail courier service (for international
delivery of notice), with postage and fees prepaid, addressed to the other
party at its address as shown below, or to such other address as such party
may designate in writing from time to time to the other party.
12.7 Time is of the essence of each and every provision of this Agreement.
<PAGE>
12.8 This Agreement may be executed in any number of counterparts, and when so
executed shall have the same force and effect as though all signatures
appeared on one document.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Equity Pledge Agreement as of
the date and year first above written.
[NAME OF THE PRC SUBSIDIARY] [NAME OF THE CONTRACTING SHAREHOLDER
OF THE AFFILIATED ENTITY]
By:
------------------------------------
Name:
----------------------------------
Title: Legal Representative By: ----------------------------------
Address: Name: [Name of the contracting
------------------------------- shareholder of the affiliated
entity]
<PAGE>
[NAME OF THE AFFILIATED ENTITY (THE WOFE)]
By:
------------------------------------
Name:
-----------------------------------
Title: Legal Representative
Address:
-------------------------------
<PAGE>
Exhibit A: Form of Capital Contribution Certificate
Exhibit B: Form of Shareholders Register