Contract
STOCK
PLEDGE AGREEMENT
(this
“Agreement”),
dated
as of May 31, 2007, among China
Water and Drinks Inc., a Nevada corporation
(f/k/a/
Ugods, Inc.) (the “Company”),
Xu
Hong Bin (“Bin”),
Chen
Xing Hua (“Hua”
and
together with Bin, each a “Pledgor”
and
collectively, the “Pledgors”),
and
the pledgees signatory hereto and their respective endorsees, transferees and
assignees (individually, the “Pledgee”
and
collectively, the “Pledgees”).
Capitalized terms used and not otherwise defined herein that are defined in
the
Purchase Agreement (as defined below) will have the meanings given such terms
in
the Purchase Agreement.
WITNESSETH:
WHEREAS,
the Company and the Pledgees are parties to a Securities Purchase Agreement,
dated May 31, 2007 (the “Purchase
Agreement”),
pursuant to which the Company, concurrently with the execution hereof, issued
and sold to Pledgees in the aggregate 4,477,612 shares of its Series A
Convertible Preferred Stock (the “Preferred
Stock”);
and
WHEREAS,
each Pledgor is an affiliate of the Company (as defined in Rule 144 promulgated
under the Securities Act of 1933, as amended (the “Securities
Act”));
and
WHEREAS,
as a material inducement to the Pledgees purchase of the Preferred Stock, the
Pledgees have required and the Pledgors have agreed to grant to the Pledgees
a
security interest in 22,388,060 shares of Common Stock of the Company (the
“Shares”),
consisting of 13,611,940 shares of Common Stock currently owned by Bin (as
set
forth below such Pledgor’s name on the signature pages hereto) and 8,776,120
shares of Common Stock currently owned by Hua (as set forth below such Pledgor’s
name on the signature pages hereto), as full recourse and collateral security
for the timely and full satisfaction of the obligations of the Company under
Section 4.16 of the Purchase Agreement, (such obligations are collectively
the
“Obligations”).
NOW,
THEREFORE, in consideration of the foregoing recitals, and the mutual covenants
contained herein, the parties hereby agree as follows:
1. Security.
As
collateral security for the punctual performance, by the Company of the
Obligations, each of the Pledgors, hereby pledges with, hypothecates, transfers
and assigns to Pledgees, its successors and assigns, such number of the Shares
owned by such Pledgor, as set forth below such Pledgor’s name on the signature
pages hereto, and all proceeds, shares and other securities received, receivable
or otherwise distributed in respect of or in exchange for such Shares,
(collectively referred to as the “Collateral”).
Simultaneously herewith, each Pledgor shall deliver to The Pinnacle Fund, L.P.,
as agent for the Pledgees (the “Agent”)
the
certificate(s) representing such number of Shares owned by such Pledgor, as
set
forth below such Pledgor’s name on the signature pages hereto, stamped with a
bank medallion guarantee, along with a stock transfer power duly executed in
blank by such Pledgor, to be held by Agent for the benefit of the Pledgees
as
security. Any other Collateral received by each Pledgor shall also be delivered
to Agent together with any executed stock powers or other transfer documents
requested by a Pledgee, which request may be made at any time prior to the
date
when the Obligations shall have been paid and otherwise satisfied in full.
Each
Pledgee, by their execution hereof, appoints the Agent to act as their agent
for
the purposes contemplated herein. Each
of
the parties hereto, by their execution hereof, agrees to hold the Agent harmless
from and against any losses arising from Agent’s acceptance of its duties as
Agent hereunder or performance of its duties as Agent hereunder other than
as
arising from Agent’s willful misconduct.
2. Voting
Power, Dividends, Etc. and other Agreements.
(a) Unless
and until an Event of Default as set forth in Section 3 hereof has occurred,
each Pledgor shall be entitled to:
(i) exercise
all voting and/or consensual powers pertaining to the Shares or other Collateral
applicable to such Pledgor, or any part thereof, for all purposes;
(ii) receive
and retain dividends paid with respect to the Shares or other Collateral
applicable to such Pledgor; and
(iii) receive
the benefits of any income tax deductions available to such Pledgor as a
shareholder of the Company.
(b) Each
Pledgor agrees that it will not sell, assign, transfer, pledge, hypothecate,
encumber or otherwise dispose of the Shares applicable to such
Pledgor.
(c) Each
Pledgor and the Company jointly and severally agree to pay all costs including
all reasonable attorneys’ fees and disbursements incurred by Pledgees in
enforcing this Agreement in accordance with its terms.
3. Default
and Remedies.
(a) For
the
purposes of this Agreement “Event of Default” shall mean:
(i) a
default
in or under the Obligations;
(ii) the
failure of the Company to have filed the Certificate of Amendment amending
the
Articles of Incorporation of the Company to increase the authorized shares
of
Common Stock of the Company to not less than 150,000,000 shares with the
Secretary of State of the State of Nevada and deliver to the Pledgees a copy
date stamped by the Secretary of State of the State of Nevada indicating their
receipt and acceptance thereof by the forty-fifth (45th)
calendar day following the Closing; or
(iii) a
breach
in any material respect by a Pledgor or the Company of any of their respective
representations or warranties in this Agreement.
(b) Pledgees
representing a majority of the Shares purchased pursuant to the Purchase
Agreement (upon the written request to the Agent) shall have the following
rights upon any Event of Default and for so long as the Obligations are not
satisfied in full:
(i) the
rights and remedies provided by the Uniform Commercial Code as adopted by the
State of New York (as said law may at any time be amended);
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(ii) the
right
to receive and retain all dividends, payments and other distributions of any
kind upon any or all of the Shares or other Collateral; and
(iii) the
right
to cause the Shares and other Collateral to be transferred to their own names
or
to the name of their respective designees, in each case, on
a pro
rata basis (determined by dividing each Pledgee’s Investment Amount as of the
Closing Date by the aggregate of all Investment Amounts delivered to the Company
by the Pledgees pursuant to the Purchase Agreement)
and have
such transfer recorded in any place or places deemed appropriate by Pledgees;
provided however that, notwithstanding the foregoing, as of the date of the
transfer of any such Shares to any Pledgee, and as a condition to the
effectiveness of such transfer to such Pledgee, such Pledgee shall be required
to surrender to the Company for cancellation shares of Preferred Stock
corresponding to such number of Shares so transferred pursuant to this Section
3(b)(iii).
4. Representations
and Warranties.
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(a)
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Each
Pledgor severally hereby represents and warrants to Pledgees
that:
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(i) such
Pledgor has full power and authority and legal right to pledge the Shares
applicable to such Pledgor and any other Collateral to Pledgees pursuant to
this
Agreement and this Agreement constitutes a legal, valid and binding obligation
of such Pledgor enforceable against such Pledgor in accordance with its terms
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating
to,
or affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application;
(ii) the
execution, delivery and performance of this Agreement and other instruments
contemplated herein will not violate any provision of any order or decree of
any
court or governmental instrumentality or of any mortgage, indenture, contract
or
other agreement to which such Pledgor is a party or by which such Pledgor,
the
Shares applicable to such Pledgor and the Collateral may be bound, and will
not
result in the creation or imposition of any lien, charge or encumbrance on,
or
security interest in, any of such Pledgor’s properties pursuant to the
provisions of such mortgage, indenture, contract or other
agreement;
(iii) such
Pledgor is the sole record and beneficial owner of the number of Shares as
is
set forth below such Pledgor’s name on the signature pages hereto;
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(iv) such
Pledgor owns the Shares applicable to such Pledgor and other Collateral relating
thereto pledged by it hereunder free and clear of all Liens; and
(v) such
Pledgor is an Affiliate of the Company. Bin represents and warrants that he
acquired the Shares set forth under his name on the signature pages hereto
on
May 31, 2007. Hua represents and warrants that he acquired the Shares set forth
under his name on the signature pages hereto on May 31, 2007.
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(b)
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The
Company represents and warrants to the Pledgees
that:
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(i)
it
has no
knowledge that any of the representations or warranties of the Pledgors above
are incorrect or false in any material respect;
(ii)
all
of
the Shares were validly issued, fully paid and non-assessable; and
(iii)
each
Pledgor is the sole record and beneficial owner of the Shares set forth below
such Pledgor’s name on the signature pages hereto.
5. No
Waiver; No Election of Remedies.
No
failure on the part of any Pledgee to exercise, and no delay in exercising,
any
right, power or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise by such Pledgee of any right, power or remedy
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies herein provided are cumulative and are
not
exclusive of any remedies provided by law. In addition, the exercise of any
right or remedy of any Pledgee at law or equity or under this Agreement or
any
of the documents shall not be deemed to be an election of such Pledgee’s rights
or remedies under such documents or at law or equity.
6. Termination.
This
Agreement shall terminate on the earlier of (i) the date on which the
Company shall have filed the Certificate of Amendment amending the Articles
of
Incorporation of the Company to increase the authorized shares of Common Stock
of the Company to not less than 150,000,000 shares with the Secretary of State
of the State of Nevada and delivered to the Pledgees a copy date stamped by
the
Secretary of State of the State of Nevada indicating their receipt and
acceptance thereof, (ii) the date on which all Obligations have been
satisfied, paid or discharged in full or (iii) the written consent of the
Pledgors, Pledgees representing a majority of the Shares purchased pursuant
to
the Purchase Agreement and the Company.
7. Further
Assurances.
Each
Pledgor agrees that, from time to time upon the written request of Pledgees
representing a majority of the Shares purchased pursuant to the Purchase
Agreement, such Pledgor will execute and deliver such further documents and
do
such other acts and things as such Pledgee(s) may reasonably request in order
fully to effect the purposes of this Agreement.
8. Miscellaneous.
(a) Modification.
This
Agreement contains the entire understanding between the parties with respect
to
the subject matter hereof and specifically incorporates all prior oral and
written agreements relating to the subject matter hereof. No portion or
provision of this Agreement may be changed, modified, amended, waived,
supplemented, discharged, canceled or terminated orally or by any course of
dealing, or in any manner other than by an agreement in writing executed by
the
Pledgors, Pledgees representing a majority of the Shares purchased pursuant
to
the Purchase Agreement, the Agent and the Company.
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(b) Notice.
Any and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in this
Section prior to 6:30 p.m. (New York City time) on a Business Day, (ii) the
Business Day after the date of transmission, if such notice or communication
is
delivered via facsimile at the facsimile telephone number specified in this
Agreement later than 6:30 p.m. (New York City time) on any date and earlier
than
11:59 p.m. (New York City time) on such date, (iii) the Business Day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to
be
given. The address for such notices and communications shall be as
follows:
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If
to the Company:
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China
Water and Drinks Inc.
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0000
Xxxx Xxxxxx, Xxxxx 000-000
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Xxx
Xxxxx, XX 00000
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Facsimile:
x00 0000 0000 0000
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Attn.:
Chen Xing Hua
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With
copies to:
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Loeb
& Loeb LLP
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000
Xxxx Xxxxxx
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Xxx
Xxxx, XX 00000
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Facsimile:
(000) 000-0000
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Attn.:
Xxxxxxxx X. Xxxxxxxx, Esq.
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If
to Bin:
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17,
J Avenue Yijing Garden
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Aiguo
Road
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Louhu
District
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Shenzen
City, PRC
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If
to Hua:
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Hua
Qiao City
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Xxx
Xxx Apartments #202
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Xxx
Xxxx District
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Shenzen,
PRC 518000
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If
to the Pledgees:
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To
the address set forth under such Pledgee’s name on the signature pages
hereof.
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(c) Invalidity.
If any
part of this Agreement is contrary to, prohibited by, or deemed invalid under
applicable laws or regulations, such provision shall be inapplicable and deemed
omitted to the extent so contrary, prohibited or invalid, but the remainder
hereof shall not be invalidated thereby and shall be given effect so far as
possible.
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(d) Benefit
of Agreement.
This
Agreement shall be binding upon and inure to the parties hereto and their
respective successors and assigns.
(e) Mutual
Agreement.
This
Agreement embodies the arm’s length negotiation and mutual agreement between the
parties hereto and shall not be construed against either party as having been
drafted by it.
(f) New
York Law to Govern.
This
Agreement shall be governed by and construed and enforced in accordance with
the
internal laws of the State of New York without regard to the principles of
conflicts of law thereof. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and Federal courts sitting in the city of New York,
borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court or that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to
it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein
shall
be deemed to limit in any way any right to serve process in any manner permitted
by law.
(g) Counterparts.
This
Agreement may be executed in two or more counterparts, which will be effective
as original agreements of the parties hereto. Original signatures transmitted
by
facsimile will be effective to create counterparts.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOLLOWS]
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IN
WITNESS WHEREOF, the parties hereto have caused this Stock Pledge Agreement
to
be duly executed by their respective authorized persons as of the date first
indicated above.
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CHINA
WATER AND DRINKS INC.
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By:
Name:
Title:
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XU
HONG XXX
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Xx Hong Bin |
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Number of Shares and Date Acquired |
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CHEN
XING XXX
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Xxxx Xxxx Xxx |
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PLEDGEE:
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By:
Name:
Title:
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Address
for Notice:
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ACKNOWLEDGED
AND AGREED:
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THE
PINNACLE FUND, L.P., as
Agent
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By:
Name:
Title:
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