EXHIBIT 10.1
THER LOAN AND SHARE PLEDGE AGREEMENT (their "Agreement") is entered into on
their 23th day of January 2002 in Beijing, People's Republic of China ("PRC")
among
(1) Xxxx.xxx, Inc., a U.S. corporation, of Delaware, U.S. ("Party A"),
and
(2) Xx Xxx, a PRC citizen whose PRC identity card number is 110108721201576
("Party B"),
(Individually a "Party" and together the "Parties").
RECITALS
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A. Party B and Beijing Century High-Tech Investment Limited Liability Company
wish to establish a domestic limited liability company in Beijing, PRC
("Domestic Company"), in which party B will hold 20% equity.
B. The Domestic Company will be established to engage mainly in the business
of providing internet access service, and other lawful business permitted
by China relevant government authorities.
C. Party B wishes to borrow the amount specified in Article 2.1 below (the
"Loan") from Party A, and Party A has agreed to provide the Loan to Party
B on an interest free basis, for the sole purpose of establishing the
Domestic Company and developing the Domestic Company's business, which
shall specifically include the entering into of a series of agreements
with Party A and its Affiliates (as defined below).
D. As security for the Loan and her performance of their Agreement, Party B
has agreed to pledge her equity interests in the Domestic Company (the
"Shares") to Party A.
NOW, THEREFORE, the Parties agree as follows:
1. DEFINITIONS AND INTERPRETATIONS
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1.1 Definitions. Unless otherwise indicated, the following
terms in their Agreement shall have the meanings set forth
below:
"Affiliate" any affiliate entity or business associate
of Party A, including without limitation
the WFOE - Sohu ITC Information Technology
(Beijing) Co., Ltd.
"Certificate" as defined in Article 3.1.9;
"Conversion Date" As defined in Article 7.2.1;
"Conversion Notice" As defined in Article 7.1;
"Designee" an individual, corporation or other
appropriate entity designated by Party A to
be the recipient of a Share Transfer;
"Event of Default" As defined in Article 6;
"Loan Date" with respect to Party B, the date on which
the portion of the Loan amount borrowed by
such Party is paid into her
designated bank account;
"PRC Law" any published and available laws and
regulations of the PRC;
"Repayment Date" as defined in Article 2.3;
"RMB" Renminbi, the lawful currency of the PRC;
"Share Transfer" as defined in Article 7.2.1;
"USD" United States Dollar, the lawful currency
of the United States of America.
"WFOE" A wholly-owned subsidiary established by
Party A in the PRC.
1.2 Interpretations. The headings herein are for reference purposes only
and do not affect the meaning or interpretation of any provision hereof. Any
reference herein to an Article or Appendix is to an article or appendix of their
Agreement. The use of the plural shall include the use of the singular, and vice
versa. Unless otherwise indicated, a reference herein to a day, month or year is
to a calendar day, month or year. A reference to a business day is to a day on
which commercial banks are open for business in both the PRC and the U.S. The
use of the masculine shall include the use of the feminine, and vice versa.
2. AMOUNT AND REPAYMENT OF THE LOAN
--------------------------------
2.1 Loan Amount. Party A agrees, subject to the terms and conditions
of their Agreement, to extend the Loan to Party B in a total
amount of USD0.24 million that is equivalent to RMB 2,000,000.
The Loan shall be interest-free.
2.2 Provision of Loan. The Loan shall be deemed to have been provided
to Party B on the Loan Date.
2.3 Date of Repayment. The Loan, together with any other moneys owing
under their Agreement by Party B, shall become repayable upon the
earliest to occur of any of the following events (each a
"Repayment Date"):
2.3.1 in full, on the occurrence of an Event of Default;
2.3.2 in full, on the resignation or removal of Party B from
the position of director, general manager, supervisor of
the Domestic Company;
2.3.3 in full, with respect to Party B, the date on which such
Party's employment relationship with Party A or any
Affiliate terminates for any reason;
2.3.4 In full, where Party A intends to replace their
Agreement with another agreement, the date of the
written notice from Party A to Party B confirming such
intention; or
2.3.5 In full or in part, at Party A's sole discretion upon
any date selected by Party A after the first anniversary
of the date of signing of their Agreement.
2.4 Method of Repayment. Repayment will be made only by means of
converting the Loan into Shares, as described in Article 7 below,
with the final amount of the Loan being due and repayable on the
final Conversion Date. The Loan may not be repaid prior to the
Repayment Date or by any means not specifically permitted in
their Article 2.4 without the express written consent of Party A.
3. UNDERTAKINGS AND WARRANTIES OF PARTY B
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3.1 Undertakings and Warranties. Party B hereby undertakes and
warrants to Party A that:
3.1.1 the Loan will be used solely for the purpose of
establishing the Domestic Company and developing its
business activities;
3.1.2 she shall use the proceeds from the Loan solely for the
purpose of contributing her amount of the registered
capital in the Domestic Company;
3.1.3 she has and shall maintain the full power and authority to
enter into their Agreement, to borrow the Loan and to
perform her obligations hereunder;
3.1.4 there are no civil or criminal, claims, actions, suits,
investigations or proceedings pending or, to her
knowledge, threatened against her;
3.1.5 there is no provision of any Agreement, enforceable
judgment or order of any court binding on her or affecting
her property, which would in any way prevent or materially
adversely affect her execution or performance of their
Agreement;
3.1.6 the execution and performance of their Agreement and the
realization of Party A's rights hereunder will not violate
any mortgage right, contract, judgment, decree or law
which is binding upon her or her assets;
3.1.7 upon her investment in the Domestic Company, she shall be
the sole legal and beneficial owner of her Shares, free
and clear of all pledges and encumbrances other than the
security interest created by their Agreement;
3.1.8 she shall cause the pledge of her Shares to Party A to be
recorded on the Domestic Company's register of
shareholders;
3.1.9 upon the establishment of the Domestic Company, she shall
provide to Party A a certificate from the Domestic Company
evidencing her ownership of the Shares (a "Certificate")
together with an Assignment Agreement, substantially in
the form attached hereto as an Appendix;
3.1.10 for duration of their Agreement, she will not cause the
Domestic Company, without the written consent of Party A,
to engage directly or indirectly in any business
activities which compete with those of Party A other than
those described in Recital B above;
3.1.11 she will, at any time and at Party A's expense, defend the
Shares against any third party claims;
3.1.12 without the consent of Party A, except as expressly
permitted hereunder, she will not arrange for or otherwise
permit or cause the issuance of any new shares of capital
stock of the Domestic Company;
3.1.13 she shall do or cause to be done all such acts, and
execute or cause to be executed any necessary documents
and registrations, such that the conversion of the Loan,
the Share Transfers and all other transactions
contemplated hereunder are effected in a legal and valid
manner; and
3.1.14 she shall maintain as strictly confidential the existence
and provisions of their Agreement, as well as of any
correspondence, resolutions, ancillary agreements and any
other documentation associated herewith.
4. COVENANTS
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4.1 Affirmative Covenants. Party B hereby covenants that she will
furnish to Party A, within 10 days after the end of each month
after the Domestic Company has been established, with financial
statements of the Domestic Company and such additional information
as Party A may from time to time reasonably request.
4.2 Further Covenants. Party B further covenants that, from the date
hereof until full repayment of the Loan has been effected, she
will not, and will ensure that the Domestic Company does not,
except with the prior written consent of Party A:
4.2.1 incur or assume any debt that is not due and payable in
the ordinary course of its business (except indebtedness
to Party A hereunder or as otherwise specifically
permitted hereunder);
4.2.2 incur or assume any mortgage, pledge or other
encumbrance of any kind upon any assets of the Domestic
Company, whether now owned or hereafter acquired;
4.2.3 enter into any agreement, arrangement, commitment or
understanding to, or actually acquire all or part of the
substantial assets of any third party;
4.2.4 enter into any agreement, arrangement, commitment or
understanding to, or actually sell, lease, or otherwise
dispose of any assets of the Domestic Company except in
the ordinary course of business;
4.2.5 enter into any agreement, arrangement, commitment or
understanding to, or actually, make loans or advances to
any third party;
4.2.6 enter into any agreement, arrangement, commitment or
understanding to, or actually, assume, guarantee,
endorse or otherwise become liable for the obligation of
any third party or other entity; or
4.2.7 permit the Domestic Company to conduct any business not
expressly described in Recital B of their Agreement.
4.3 Rights of Party A.
4.3.1 Party B agrees that she shall obtain Party A's written
approval prior to undertaking any of the following,
namely:
4.3.1.1 appointing and removing the directors of the
Domestic Company;
4.3.1.2 appointing and removing the general manager
of the Domestic Company; and
4.3.1.3 approving the terms of employment of the
general manager.
4.3.2 Party B agrees that she shall obtain Party A's written
approval prior to undertaking any of the following,
namely:
4.3.2.1 appointing and removing of the senior
management personnel and any key personnel of
the Domestic Company; and
4.3.2.2 approving the terms of employment of the
senior management personnel and key personnel
of the Domestic Company.
5. SHARE PLEDGE
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5.1 Share Pledge. As security for the performance in full of the
obligations of Party B under their Agreement, Party B hereby
pledges to Party A, and creates in favor of Party A or the
Designee (as appropriate), a first priority security interest in
all of the rights, title and interest in and to:
5.1.1 the Shares; and
5.1.2 all of her incidental rights with respect to the Shares,
now or hereafter acquired.
Such security interest to be perfected by compliance by Party B
with Article 3.1.9 of their Agreement.
5.2 Power of Attorney. Party B hereby irrevocably grants to Party A
or the Designee (as appropriate) full power of attorney for the
purpose of carrying out the provisions of their Agreement, as
well as taking any action and executing any instrument which
Party A in good xxxxx xxxxx necessary to accomplish for purposes
of their Agreement.
6. EVENTS OF DEFAULT
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The occurrence of any of the following events shall constitute a
default of the Loan hereunder and a breach of their Agreement by Party
B (as appropriate) (an "Event of Default"):
6.1 a Share Transfer has not been effected by Party B within 20
working days after the corresponding Conversion Date or such time
as may otherwise be agreed upon by the Parties;
6.2 Party B is in breach of any of the terms and conditions hereof,
and such breach has not been rectified for a period of 10 days
after receipt of Party A's written notice requesting such
rectified;
6.3 any undertaking or warranty made by Party B herein shall prove to
have been false or misleading in any material respect;
6.4 Party B makes any arrangement with her respective creditors or
takes or suffers any similar action in consequence of debt; or
6.5 any judgment is made under any applicable law against Party B
which exceeds USD 50,000.
7. LOAN CONVERSION
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7.1 Share Conversion. As of the Repayment Date, the Loan shall be
convertible into Shares on the basis that 100 percent of the Loan
amount equals 100 percent of the Shares. For the avoidance of
doubt, if 10 percent of the Loan were repayable by Party B, then
such Party, as the case may be, would be required to transfer 10%
of the total number of the Shares to Party A. The Loan shall
become repayable to such extent as Party A may from time to time
request, until the entire Loan amount has been repaid. Party A
shall request to convert all or a percentage of the Loan by means
of a written notice to Party B that specifies the percentage of
the Loan to be converted into Shares ("Conversion Notice").
7.2 Share Transfer.
7.2.1 Within 20 working days after receipt of a Conversion
Notice ("Conversion Date"), Party B shall effect the
transfer of the portion of the Shares designated in the
Conversion Notice, either to Party A directly or to the
Designee specified by Party A in the Conversion Notice
(each a "Share Transfer").
7.2.2 For the avoidance of doubt, upon the completion of the
conversion of the Loan and the transfer of all of the
Shares of Party B (whether pursuant to their Article 7 or
an Event of Default), Party A shall hold as many of the
Shares as is permissible under PRC Law, and the remainder
of the Shares (if applicable) shall be held by the
Designees, with Party B no longer holding any Shares. At
such time, their Agreement shall be deemed to have
terminated, and the obligations of Party B hereunder to
have been fulfilled (with the exception of those under
3.1.13 and 3.1.14).
7.3 Delay. Party B undertakes to notify Party A immediately of any
delay in effecting a Share Transfer or completing the procedures
described in Article 7.2 above, together with the reason for such
delay and revised effective date of the Share Transfer.
7.4 Repayment of Loan. The corresponding portion of the Loan shall be
deemed to have been repaid as of the effective date of each Share
Transfer. Once Party B have completed the Share Transfers in
accordance with the provisions of their Article 7, the Loan shall
be deemed to have been repaid in full and Party B shall be deemed
to have performed her repayment obligations hereunder.
8. MISCELLANEOUS
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8.1 Notices and Delivery. All notices and communications among the
Parties shall be made in writing and in the English language by
facsimile transmission with confirmation of transmission,
delivery in person (including courier service) or registered
airmail letter to the appropriate correspondence addresses set
forth below:
Party A
-------
Xxxx.xxx, Inc.
00/X, Xxxxx 0, Xxxxxx Xxxxx Xxxxx Xx Xxxxxxxx, 0 Xxxxxxxxxx Xxx
Xxxxxx, Xxxxxxx 000000
Tel : 8610-6510-2160
Fax : 0000-0000-0000
Party B
-------
Xx Xxx
Tel : 8610-6510-2160
8.2 Timing. The time of receipt of the notice or communication shall
be deemed to be:
8.2.1 If by facsimile transmission with confirmation of
transmission, at the time displayed in the corresponding
transmission record, unless such facsimile is sent after
5:00 p.m. or on a non-business day in the place where it
is received, in which case the date of receipt shall be
deemed to be the following business day;
8.2.2 if in person (including express mail), on the date that
the receiving Party or a person at the receiving Party's
address signs for the document; or
8.2.3 if by registered mail, on the 10th day after the date
that is printed on the receipt of the registered mail.
8.3 Foreign Exchange. All amounts payable by Party B hereunder shall
be paid in USD. If, as a result of foreign exchange restrictions
in the PRC, it becomes illegal for Party B to make any payment to
Party A in USD, then she shall make that payment in any other
currency permitted for such purposes, as shall be stipulated by
Party A at its sole discretion. In such an event, the amount of
the payment shall be calculated at the rate published by the Bank
of China on the relevant payment date, and shall be free and
clear of all expenses, withholding taxes and commissions.
8.4 Amendments. The provisions of their Agreement may not be waived,
modified or amended except by an instrument in writing signed by
the Parties (which instrument shall be attached as an Appendix
hereto).
8.5 No Waiver. Failure or delay on the part of any Party to exercise
any right under their Agreement shall not operate as a waiver
thereof.
8.6 Severability. The invalidity of any provision of their Agreement
shall not affect the validity of any other provision of their
Agreement which is unrelated to that provision.
8.7 Survival. The confidentiality obligations of the Parties
hereunder shall remain in full force and effect regardless of the
termination of their Agreement for any reason.
8.8 Taxes and Duties. Party A shall be responsible for all stamp
duties and other governmental fees, taxes and reasonable
out-of-pocket expenses (including reasonable legal fees) incurred
by the Parties in connection with the conversion of the Loan and
each Share Transfer made hereunder and in the preparation of
their Agreement.
8.9 Successors. Their Agreement shall be binding upon the Parties and
upon their respective successors and assigns (if any).
8.10 Assignment. Party B cannot assign or otherwise transfer her
rights or obligations under their Agreement without the prior
written consent of Party A.
8.11 Governing Law. The execution, validity, interpretation and
implementation of their Agreement and the settlement of disputes
thereunder shall be governed by PRC Law.
8.12 Arbitration. All disputes arising out of or in connection with
their Agreement shall be finally settled under the Rules of
Arbitration of the International Chamber of Commerce as
administered by the International Court of Arbitration of the
International Chamber of Commerce in Hong Kong by a sole
arbitrator appointed in accordance with the said Rules conducted
in the English language.
8.13 Entire Agreement. Their Agreement and the Appendix hereto
constitute the entire agreement between the Parties and supersede
all prior discussions, negotiations and agreements. The Appendix
form an integral part hereof and have the same legal effect as
their Agreement. If there is any inconsistency between the
provisions of their Agreement and any of the Appendixes, the
provisions of their Agreement shall prevail to the extent of such
inconsistency.
8.14 Language. Their Agreement will be signed in 2 sets of originals
in English language, with 1 original for each Party.
IN WITNESS WHEREOF, the Parties hereto have executed or caused their Agreement
to be executed by their duly authorized representatives (as the case may be) as
of the date first indicated above.
For and on behalf of Xxxx.xxx, Inc.
By __________________________
Name:
Title:
By Xx Xxx
_____________________________
