EQUITY PLEDGE AGREEMENT (English Translation)
(English
Translation)
This
Equity Pledge Agreement (hereinafter this “Agreement”)
is
dated August 25, 2006, and is entered into in Xi’an between Shiming (Xi’an)
Enterprise Management & Consutling Co., Ltd. a company incorporated under
the laws of the People’s Republic of China, located at Xx. 0, 00xx
Xxxxx,
Xxxxxx 0xx
Xxxx,
Xxxxxxx Security Plaza, Xi’an High Tech and New Technology Development Zone,
Xi’an, Shaanxi Province, China 710075, (“Pledgee”),
and
each of the shareholders of Party B listed on the signature pages hereto
(collectively, the “Pledgors”),
and
Shaanxi Shiming Science & Technology Joint Stock Co., Ltd. a joint stock
limited liability organized under the laws of the PRC (“Party
B”
or
“Shaanxi
Shiming”),
with
a registered address at Xx. 0, 00xx
Xxxxx,
Xxxxxx 0xx
Xxxx,
Xxxxxxx Security Plaza, Xi’an High Tech and New Technology Development Zone,
Xi’an, Xxxxxxx Xxxxxxxx, Xxxxx 000000.
RECITALS
1.
The
Pledgee is a company incorporated in Xi’an, China under the laws of the People’s
Republic of China, which has the technological expertise in development and
sales of consumer electronics.
2. The
Pledgors is comprised of holders of substantially all of the issued and
outstanding shares of Shaanxi Shiming Science & Technology Joint Stock Co.,
Ltd. a joint stock limited liability organized under the laws of the
PRC.
3.
Pledgee
and Shaanxi Shiming executed a Consulting Services Agreement (hereinafter
“Consulting
Services Agreement”
or
“Services
Agreement”)
concurrently herewith. Based on this agreement, Shaanxi Shiming shall pay
technical consulting and service fees (hereinafter the “Consulting
Services Fees”
or
“Services
Fees”)
to
Pledgee for offering consulting and related services.
4.
In
order
to ensure that Shaanxi Shiming will perform its obligations under the Consulting
Services Agreement, and the Pledgee can normally collect the Consulting Services
Fees from Shaanxi Shiming, the Pledgors agree to pledge all their equity
interest in Shaanxi Shiming as security for the performance of the obligations
of Shaanxi Shiming under the Consulting Services Agreement and the payment
of
Consulting Services Fees under such agreement.
NOW
THEREFORE,
the
Pledgee, Shaanxi Shiming and the Pledgors through mutual negotiations hereby
enter into this Agreement based upon the following terms:
1.
Definitions
and Interpretation.
Unless
otherwise provided in this Agreement, the following terms shall have the
following meanings:
1.1 “Pledge”
refers
to the full content of Section 2 hereunder.
1.2 “Equity
Interest”
refers
to all the equity interest in Shaanxi Shiming legally held by the
Pledgors.
1.3 “Term
of Pledge”
refers
to the period provided for under Section 3.2 hereunder.
1.4 “Event
of Default”
refers
to any event in accordance with Section 7.1 hereunder.
1.5 “Notice
of Default”
refers
to the notice of default issued by the Pledgee in accordance with this
Agreement.
2.
Pledge.
The
Pledgors agree to pledge their equity interest in Shaanxi Shiming to the Pledgee
(“Pledged
Collateral”)
as a
security for the obligations of Shaanxi Shiming under the Consulting Services
Agreement. Pledge under this Agreement refers to the rights owned by the
Pledgee, who shall be entitled to a priority in receiving payment by the
evaluation or proceeds from the auction or sale of the equity interest pledged
by the Pledgors to the Pledgee.
3.
Term
of Pledge.
3.1
The
Pledge shall take effect as of the date when the Pledge of the equity interest
under this Agreement is recorded in the Register of Shareholder of Shaanxi
Shiming. The term of the Pledge shall last till the elapse of two (2) years
after the obligations under the Consulting Services Agreement will have been
fulfilled.
2
3.2
During
the term of the Pledge, the Pledgee shall be entitled to vote, control, sell,
or
dispose of the pledged assets in accordance with this Agreement in the event
that Pledgors do not perform their obligation under the Consulting Services
Agreement and Shaanxi Shiming fails to pay the Consulting Service Fees in
accordance with the Consulting Services Agreement.
3.3 During
the term of the Pledge, the Pledgee shall be entitled to collect the dividends
for the equity interest.
4. Pledge
Procedure and Registration
4.1 The
Pledge under this Agreement shall be recorded in the Register of Shareholders
of
Shaanxi Shiming. The Pledgor shall, within 10 days after the date of this
Agreement, process the registration procedures with Xi’an Administration for
Industry and Commerce concerning the Pledge.
5.
Representation
and Warranties of Pledgors.
5.1 The
Pledgors are the legal owners of the equity interest pledged.
5.2 The
Pledgors have not pledged the equity interest to any other party, and or the
equity interest is not encumbered to any other person except for the Pledgee.
6.
Covenants
of Pledgors.
6.1 During
the effective term of this Agreement, the Pledgors promise to the Pledgee for
its benefit that the Pledgors shall:
6.1.1 Not
transfer or assign the equity interest, create or permit to create any pledges
which may have an adverse effect on the rights or benefits of the Pledgee
without prior written consent from the Pledgee;
6.1.2 Comply
with and implement laws and regulations with respect to the pledge of rights;
present to the Pledgee the notices, orders or suggestions with respect to the
Pledge issued or made by the competent authority within five (5) days upon
receiving such notices, orders or suggestions; and comply with such notices,
orders or suggestions; or object to the foregoing matters at the reasonable
request of the Pledgee or with consent from the Pledgee;
6.1.3 Timely
notify the Pledgee of any events or any received notices which may affect the
Pledgor’s equity interest or any part of its right, and any events or any
received notices which may change the Pledgor’s any warranty and obligation
under this Agreement or affect the Pledgor’s performance of its obligations
under this Agreement.
3
6.2 The
Pledgors agree that the Pledgee’s right to the Pledge obtained from this
Agreement shall not be suspended or inhibited by any legal procedure launched
by
the Pledgor or any successors of the Pledgor or any person authorized by the
Pledgor or any such other person.
6.3 The
Pledgors promise to the Pledgee that in order to protect or perfect the security
for the payment of the Services Fees, the Pledgors shall execute in good faith
and cause other parties who have interests in the Pledge to execute all the
title certificates, contracts, and perform actions and cause other parties
who
have interests to take action, as required by the Pledgee; and make access
to
exercise the rights and authorization vested in the Pledgee under this
Agreement.
6.4 The
Pledgors promise to the Pledgee that they will execute all amendment documents
(if applicable and necessary) in connection with any registration of the Pledge
with the Pledgee or its designated person (natural person or a legal entity),
and provide the notice, order and decision to the Pledgee by who considers
to be
necessary within reasonable time.
6.5 The
Pledgors promise to the Pledgee that they will comply with and perform all
the
guarantees, covenants, warranties, representations and conditions for the
benefits of the Pledgee. The Pledgors shall compensate all the losses suffered
by the Pledgee for the reasons that the Pledgors do not perform or fully perform
their guarantees, covenants, warranties, representations and
conditions.
| 7. |
Events
Of Default.
|
| 7.1 |
The
following events shall be regarded as the events of
default:
|
| 7.1.1 |
This
Agreement is deemed illegal by a governing authority in the PRC,
or the
Pledgor is not capable of continuing to perform the obligations herein
due
to any reason except force majeure;
|
| 7.1.2 |
Shaanxi
Shiming fails to make full payment of the Services Fees as scheduled
under
the Service Agreement;
|
| 7.1.3 |
A
Pledgor makes any material misleading or mistaken representations
or
warranties under Section 5 herein, and/or the Pledgor breaches any
warranties under Section 5 herein;
|
4
| 7.1.4 |
A
Pledgor breaches the covenants under Section 6
herein;
|
| 7.1.5 |
A
Pledgor breaches the term or condition
herein;
|
| 7.1.6 |
A
Pledgor waives the pledged equity interest or transfers or assigns
the
pledged equity interest without prior written consent from the
Pledgee;
|
| 7.1.7 |
Shaanxi
Shiming is incapable of repaying the general debt or other
debt;
|
| 7.1.8 |
The
property of the Pledgor is adversely affected causing the Pledgee
to
believe that the capability of the Pledgor to perform the obligations
herein is adversely affected;
|
| 7.1.9 |
The
successors or agents of the Shaanxi Shiming are only able to perform
a
portion of or refuse to perform the payment obligations under the
Service
Agreement;
|
| 7.1.10 |
The
breach of the other terms by action or inaction under this agreement
by
the Pledgor.
|
| 7.2 |
The
Pledgor shall immediately give a written notice to the Pledgee if
the
Pledgor is aware of or discovers that any event under Section 7.1
herein
or any event that may result in the foregoing events has occurred
or is
likely to occur.
|
| 7.3 |
Unless
the event of default under Section 7.1 herein has been solved to
the
Pledgee’s satisfaction, the Pledgee, at any time when the event of default
occurs or thereafter, may give a written notice of default to the
Pledgor
and require the Pledgor to immediately make full payment of the
outstanding Service Fees under the Service Agreement and other payables
or
exercise other rights in accordance with Section 8
herein.
|
| 8. |
Exercise
of Remedies.
|
8.1 Authorized
Action by Secured Party.
The
Pledgors hereby irrevocably appoint Pledgee the attorney-in-fact of the Pledgors
for the purpose of carrying out the security provisions of this Agreement and
taking any action and executing any instrument that the Pledgee may deem
necessary or advisable to accomplish the purposes of this Agreement. If an
event
of default occurs, or is continuing, Pledgee shall have the right to exercise
the following rights and powers:
5
(a) Collect
by legal proceedings or otherwise and endorse, receive and receipt for all
payments, proceeds and other sums and property now or hereafter payable on
or on
account of the Pledged Collateral;
(b) Enter
into any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply other
property in exchange for the Pledged Collateral;
(c) Transfer
the Pledged Collateral to its own or its nominee’s name;
(d) Make
any
compromise or settlement, and take any action it deems advisable, with respect
to the Pledged Collateral;
(e) Notify
any obligor with respect to any Pledged Collateral to make payment directly
to
the Pledgee;
(f) All
rights of the Pledgors to exercise the voting and other consensual rights it
would otherwise be entitled to exercise without any action or the giving of
any
notice shall cease, and all such rights shall thereupon become vested in the
Pledgee;
(g) All
rights of the Pledgors to receive distributions with respect to the Pledged
Collateral which it would otherwise be authorized to receive and retain shall
cease and all such rights shall thereupon become vested in the Pledgee;
and
(h) The
Pledgors shall execute and deliver to the Pledgee appropriate instruments as
the
Pledgee may request in order to permit the Pledgee to exercise the voting and
other rights which it may be entitled to exercise and to receive all
distributions which it may be entitled to receive.
The
Pledgors hereby grant to Pledgee an exclusive, irrevocable power of attorney,
with full power and authority in the place and stead of the Pledgors to take
all
such action permitted under this Section
8.1.
Such
power of attorney shall be effective, automatically and without the necessity
of
any action (including any transfer of any Pledged Collateral) by any person,
upon the occurrence and continuance of an event of default. Pledgee shall not
have any duty to exercise any such right or to preserve the same and shall
not
be liable for any failure to do so or for any delay in doing so.
8.2 Event
of defaults; Remedies.
Upon
the occurrence of an event of default, Pledgee may, without notice to or demand
on the Pledgors and in addition to all rights and remedies available to Pledgee,
at law, in equity or otherwise, do any of the following:
6
(a) Require
the Pledgors to immediately pay all outstanding unpaid amounts due under the
Consulting Services Agreement;
(b) Foreclose
or otherwise enforce Pledgee’s security interest in any manner permitted by law
or provided for in this Agreement;
(c) Terminate
this Agreement pursuant to Section 11.
(d)
Exercise any and all rights as beneficial and legal owner of the Pledged
Collateral, including, without limitation, perfecting assignment of and
exercising any and all voting, consensual and other rights and powers with
respect to any Pledged Collateral; and
(e)
All
the rights and remedies of a secured party upon default under applicable
law.
8.3 The
Pledgee shall give a notice of default to the Pledgors when the Pledgee
exercises its remedies under this Agreement.
8.4 Subject
to Section 7.3, the Pledgee may exercise its remedies under this Agreement
at
any time after the Pledgee gives a notice of default in accordance with Section
7.3 or thereafter.
8.5 The
Pledgee is entitled to a priority in receiving payment by the evaluation or
proceeds from the auction or sale of whole or part of the equity interest
pledged herein in accordance with legal procedure until the unpaid Services
Fees
under the Services Agreement are repaid.
8.6 The
Pledgor shall not hinder the Pledgee from exercising its rights in accordance
with this Agreement and shall give necessary assistance so that the Pledgee
may
exercise its rights in full.
9.
Assignment.
9.1 The
Pledgors shall not donate or transfer rights and obligations herein without
prior consent from the Pledgee.
9.2 This
Agreement shall be binding upon each of the Pledgors and his, her or its
successors and be binding on the Pledgee and his each successor and
assignee.
7
9.3 The
Pledgee may transfer or assign his all or any rights and obligations under
the
Service Agreement to any individual specified by it (natural person or legal
entity) at any time. In this case, the assignee shall enjoy and undertake the
same rights and obligations herein of the Pledgee as if the assignee is a party
hereto. When the Pledgee transfers or assigns the rights and obligations under
the Service Agreement, and such transfer shall only be subject to a written
notice serviced to Pledgors, and at the request of the Pledgee, the Pledgors
shall execute the relevant agreements and/or documents with respect to such
transfer or assignment.
9.4 After
the
Pledgee’s change resulting from the transfer or assignment, the new parties to
the pledge shall execute a new pledge contract.
| 10. |
Formalities,
Fees and Other Charges.
|
10.1 The
Pledgors shall be responsible for all the fees and actual expenses in relation
to this Agreement including but not limited to legal fees, cost of production,
stamp tax and any other taxes and charges. If the Pledgee pays the relevant
taxes in accordance with the laws, the Pledgors shall fully indemnify the
Pledgee such taxes paid by the Pledgee.
10.2 The
Pledgors shall be responsible for all the fees (including but not limited to
any
taxes, formalities fees, management fees, litigation fees, attorney’s fees, and
various insurance premiums in connection with disposition of Pledge) incurred
by
the Pledgors for the reason that the Pledgors fail to pay any payable taxes,
fees or charges for other reasons which cause the Pledgee to recourse by any
means or ways.
| 11. |
Force
Majeure.
|
11.1 “Force
Majeure,” shall include but not be limited to acts of governments, acts of
nature, fire, explosion, typhoon, flood, earthquake, tide, lightning, war,
refers to any unforeseen events beyond the party’s reasonable control and cannot
be prevented with reasonable care. However, any shortage of credit, capital
or
finance shall not be regarded as an event beyond a Party’s reasonable control.
The affected party by Force Majeure shall notify the other party of such event
resulting in exemption promptly.
11.2 In
the
event that the affected party is delayed in or prevented from performing its
obligations under this Agreement by Force Majeure, only within the scope of
such
delay or prevention, the affected party will not be responsible for any damage
by reason of such a failure or delay of performance. The affected party shall
take appropriate means to minimize or remove the effects of Force Majeure and
attempt to resume performance of the obligations delayed or prevented by the
event of Force Majeure. After occurrence of an event of Force Majeure, when
such
event or condition ceases to exist, both parties agree to resume the performance
of this Agreement with their best efforts.
8
12.
Confidentiality.
The
parties of this agreement acknowledge and make sure that all the oral and
written materials exchanged relating to this contract are confidential. All
the
parties have to keep them confidential and can not disclose them to any other
third party without other parties’ prior written approval, unless: (a) the
public know and will know the materials (not because of the disclosure by any
contractual party); (b) the disclosed materials are required by laws or stock
exchange rules; or (c) materials relating to this transaction are disclosed
to
parties’ legal consultants or financial advisors, however, who have to keep them
confidential as well. Disclosure of confidential information by Employees or
hired institutions of the parties is deemed as the act by the parties,
therefore, subjecting them to liability.
13. Dispute
Resolution.
13.1 This
Agreement shall be governed by and construed in accordance with the PRC
law.
13.2 The
parties shall strive to settle any dispute arising from the interpretation
or
performance, or in connection with this Agreement through friendly consultation.
In case no settlement can be reached through consultation, each party can submit
such matter to China International Economic and Trade Arbitration Commission
(“CIETAC”) for arbitration. The arbitration shall follow the current rules of
CIETAC, and the arbitration proceedings shall be conducted in Chinese and shall
take place in Beijing. Any resulting arbitration award shall be final and
binding upon the parties.
14. Notices.
Any
notice which is given by the parties hereto for the purpose of performing the
rights and obligations hereunder shall be in writing. Where such notice is
delivered personally, the time of notice is the time when such notice actually
reaches the addressee; where such notice is transmitted by facsimile, the notice
time is the time when such notice is transmitted. If such notice does not reach
the addressee on business date or reaches the addressee after the business
time,
the next business day following such day is the date of notice. The delivery
place is the address first written above of the parties hereto or the address
advised in writing including via facsimile from time to time.
15. Entire
Contract.
All
Parties agree that this Agreement constitute the entire agreement of the Parties
with respect to the subject matter therein upon its effectiveness and supersedes
and replaces all prior oral and/or written agreements and understandings
relating to this Agreement.
16. Severability.
Any
provision of this Agreement which is invalid or unenforceable because of
inconsistent with the relevant laws shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability, without
affecting in any way the remaining provisions hereof.
9
17. Appendices.
The
appendices to this Agreement are entire and integral part of this
Agreement.
18. Amendment
or Supplement.
18.1 Parties
may amend and supply this Agreement with a written agreement, provided that
such
amendment shall be duly executed and signed by the Pledgee, Shaanxi Shiming,
and
holders of a majority of the shares of Shaanxi Shiming held by the Pledgors,
and
such amendment shall thereupon become a part of this Agreement and shall have
the same legal effect as this Agreement.
18.2 This
agreement and any amendments, modification, supplements, additions or changes
hereto shall be in writing and come into effect upon being executed and sealed
by the parties hereto.
19. Language
and Copies of the Agreement.
This
Agreement has both an English version and a Chinese version. Both versions
are
equally authentic. Where a comparison of the authentic texts of both versions
of
this Agreement discloses a difference in meaning, the meaning which best
reconciles the texts, having regard to the object and purpose of this Agreement
shall be adopted. This Agreement is executed by the Parties in counterparts,
each Party holds one counterpart, and each original has the same legal effect.
[SIGNATURE
PAGE FOLLOWS]
10
SIGNATURE
PAGE
IN
WITNESS WHEREOF
each
party hereto has caused this Agreement duly executed by itself or a duly
authorized representative on its behalf as of the date first written
above.
| PLEDGEE: | Shiming (Xi’an) Enterprise Management & Consulting Co., Ltd. | |
| /s/ Xxxxxxx Xxxx | ||
| Chairman | ||
| PARTY B: | Shaanxi Shiming Science & Technology Joint Stock Co., Ltd. | |
| /s/ Xxxxxxx Xxxx | ||
| President |
11
PLEDGOR
SIGNATURE PAGE
PLEDGORS:
| Shaanxi Meixian Shiming Non-Ferrous Metallurgy Co., Ltd. (“Meixian”) | ||
| Shares of Shiming Company owned by Meixian 38000000 | ||
| /s/ Xxxxxxx Xxxx | ||
| Chairman | ||
| /s/ Xxxxxxx Xxxx | ||
| Xxxxxxx Xxxx (PRC ID Card No.: 610326570221061) | ||
| Shares of Shiming Company owned by Xxxxxxx Xxxx: 12900000 | ||
| /s/ Nairang Liu | ||
|
Nairang
Liu (PRC ID Card No.: 610326631127043)
|
||
| Shares of Shiming Company owned by Nairang Liu: 3470000 | ||
| /s/ Liehua Wang | ||
| Liehua Wang (PRC ID Card No.: 610421541129002) | ||
| Shares of Shiming Company owned by Liehua Wang: 3408800 | ||
| /s/ Genyun Qu | ||
| Genyun Qu (PRC ID Card No.: 000000000000000) | ||
| Shares of Shiming Company owned by Genyun Qu: 2930000 | ||
| /s/ Xxx Xxxx | ||
| Xxx Xxxx (PRC ID Card No.: 000000000000000) | ||
| Shares of Shiming Company owned by Xxx Xxxx: 2720000 | ||
12
| /s/ Xxxxxx Xx | ||
| Xxxxxx Xx (PRC ID Card No.: 610102621205358) | ||
| Shares of Shiming Company owned by Xxxxxx Xx: 435000 | ||
| /s/ Xxx Xxx | ||
| Xxx Xxx (PRC ID Card No.: 51012619720106140X) | ||
| Shares of Shiming Company owned by Xxx Xxx: 435000 | ||
| /s/ Cunhu Yang | ||
| Cunhu Yang (PRC ID Card No.: 610104196210016177) | ||
| Shares of Shiming Company owned by Cunhu Yang: 362400 | ||
| /s/ Xxxxxx Xxx | ||
| Xxxxxx Xxx (PRC ID Card No.: 610124510805001) | ||
| Shares of Shiming Company owned by Xxxxxx Xxx: 271800 | ||
| Attorney-in-fact for certain shareholders of Party B: | ||
| Shiming (Xi’an) Enterprise Management & Consulting Co., Ltd. | ||
| /s/ Xxxxxxx Xxxx | ||
| By: Xxxxxxx Xxxx | ||
| As attorney-in-fact pursuant to that certain Power of Attorney, Shareholders’ Voting Rights, Proxy Agreement and Covenant Not to Xxx dated January 15, 2006 | ||
13
Appendix
1
RESOLUTIONS
OF THE GENERAL SHAREHOLDERS’
MEETING
OF SHAANXI SHIMING
WHEREAS,
that certain significant shareholders of Shaanxi Shiming have agreed to pledge
their shares of the company under an Equity Pledge Agreement dated December
__,
______; and
WHEREAS,
it is in the best interest of the Company for the shareholders to enter into
such Equity Pledge Agreement.
RESOLVED,
that the pledge of shares held by the shareholders of the company under the
Equity Pledge Agreement is hereby approved.
This
resolution was executed and submitted on December __, _____ by the undersigned
shareholders:
SHAREHOLDERS:
| Signature: ________________________ | ||
| Name: ___________________________ | ||
| Address: ________________________ | ||
| _____________________ | ||
| _____________________ | ||
| ID Card No.: ______________________ | ||
| Telephone: _______________________ | ||
| Facsimile: _______________________ |
14
