Equity Pledge Agreement By and among The Shareholder of Beijing Ruijieao Bio- Technology Ltd. Beijing Ruijieao Bio-Technology Ltd. and NeoStem (China), Inc. June 1, 2009
Exhibit
10.6
By
and among
The
Shareholder of Beijing Ruijieao Bio-Technology Ltd.
Beijing
Ruijieao Bio-Technology Ltd.
and
NeoStem
(China), Inc.
June
1, 2009
THIS
EQUITY PLEDGE AGREEMENT (hereinafter referred to as “this Agreement”) is
executed by the following parties on June 1, 2009 in Qingdao City, People’s
Republic of China ( the “PRC”):
(1)
Sole shareholder of Beijing Ruijieao Bio-Technology Ltd.
(hereinafter
as “Party A” or “Pledgor”)
Name
of the
Shareholder
|
Shareholding
Ratio
(%)
|
ID
Card No.
|
Contact
Address
|
|||
Fu
Wenyuan
|
|
100
|
|
|
No.27
Shandabei Road, Licheng District, Ji’nan
City
|
(2)
NeoStem (China), Inc. (hereinafter as “Party B” or “Pledgee”)
Registered
Address: Xxxx 0000X, Xxxxxxxx X, Xx.0 XxxxxXxxxXxxxx Xxxx, Shinan District,
Qingdao City
Legal
Representative: Xxxxx Xxxxx
(3)
Beijing Ruijieao Bio-Technology Ltd. (hereinafter as “Party C” or the
“Company”)
Registered
Address: Room 2007 00/X, Xxxxxxxxxxxxxx Xxxxxxxx, Xx.0 Mantingfangyuan
Community, Xxxxxxx Xx, Haidian District, Beijing City
Legal
Representative: Fu Wenyuan
(Pledgor,
Pledgee and the Company may be collectively called the “Parties” and
individually as “Each Party”.)
WHEREAS,
1.
|
The
Company is a domestic company incorporated and validly existing under PRC
Laws, and its business license No. is
110108011860295
|
2.
|
The
Pledgor, the PRC citizen,legally
holds 100% Equity Interests in the
Company;
|
3.
|
The
Pledgee, as a wholly foreign-owned enterprise, was duly incorporated and
validly existing under the PRC
Laws;
|
1
4.
|
Party
B signed a consigned management and technology service agreement (the
“Consigned Management and Technology Service Agreement”) on June 1, 2009
with Party C and Party A, and Party A agrees to pledge all his equities in
Party C to Party B as a guaranty for the performance of the obligations
thereunder.
|
5.
|
The
Parties signed an exclusive purchase option agreement (the “Exclusive
Purchase Option Agreement”) on June 1, 2009, and the Parties thereto agree
that Party A shall pledge all his equities in Party C to Party B as a
guaranty of the performance of the obligations assumed by Party A and
Party C thereunder.
|
6.
|
Party
A and Party B signed a loan agreement (the “Loan Agreement”) on June 1,
2009, and the Party A agrees to pledge all his equities in Party C to
Party B as a guaranty of the performance of the obligations
thereunder.
|
NOW THEREFORE, the Parties,
through friendly negotiations, hereby enter into this Agreement with respect to
the equity pledge.
1.
|
Definitions and
Interpretation
|
Unless
otherwise provided in this Agreement, the following terms shall have the
following meanings:
1.1
|
“PRC”
refers to the People’s Republic of China, excluding the HongKong Special
Administrative Region, Macao Special Administrative Region and Taiwan
Province;
|
1.2
|
“PRC
Laws” refers to all PRC laws, administrative regulations and government
rules in effect;
|
1.3
|
“Pledged
Equity” refers to all the equity in the Company as provided in
Article2.1;
|
1.4
|
“Main
Agreements” refers to the Loan Agreement, Consigned Management and
Technology Service Agreement and Exclusive Purchase Option Agreement and
the Appendixes thereof (if
applicable);
|
1.5
|
“Right
of Pledge” refers to the right owned by the Pledgee to be first
compensated from the money converted from or the proceeds from the auction
or sale of the Pledged Equity by the Pledgor to the Pledgee in the event
of default of Pledgor and/or Party C, and such right shall cause the
Pledgee to be entitled to the bonus arising from Pledged
Equity;
|
1.6
|
“AICB”
refers to the competent Administration Bureau of Industry and Commerce
which is authorized in accordance with PRC Laws to register the Pledged
Equity hereunder;
|
2
1.7
|
“Event
of Default” refers to the event as defined in Article 8
hereunder.
|
1.8
|
“Business
Day” refers to any day except Saturday, Sunday and other public holidays
as permitted by PRC Laws;
|
2.
|
Equity
Pledge
|
2.1
|
The
Parties agree that Pledgor shall pledge all his Equities in the Company to
the Pledgee as a guaranty for the performance of the obligations assumed
by the Pledgor and/or the Company under each of the Main
Agreements.
|
2.2
|
In
case the Pledgor increase the registered capital in the Company during the
term of this Agreement, such increased capital shall be equally deemed as
the Pledged Equity.
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2.3
|
In
case any act conducted by the Pledgor or the Company may cause the Right
of Pledge damaged so as to harm the interests of the Pledgee, the Pledgee
is entitled to require the Pledged Equity to be auctioned or sold in
advance and the proceeds from such auction or sale shall be used to
discharge the debt secured by the Pledged Equity in
advance.
|
3.
|
Registration of
Pledge
|
3.1
|
Upon
the execution of this Agreement, the Pledgor shall cause the Company to
record the Right of Pledge in the register of shareholders and deliver it
with the common seal of the Company as well as the original of equity
contribution certificate of the Pledgor to the Pledgee for keeping. Within
the term of this Agreement, Party B shall return the register of
shareholders and equity contribution certificate to the Company for
modification registration with AICB, and the Company shall complete the
modification registration within 10 business days upon receipt
of the register of shareholders and equity contribution certificate, and
Party A together with the Company shall continue to deliver such modified
register of shareholders and equity contribution certificate to Party B
within 2 business days following the completion of the aforesaid
registration.
|
3.2
|
The
Parties agree that if AICB accept the registration with respect to the
equity pledge, he will promptly cause the Pledged Equity under this
Agreement to be recorded at AICB, and the Parties confirm that whether the
Pledged Equity is recorded as above or not shall not affect the validity
of this Agreement unless compulsorily required by PRC
Laws.
|
3
3.3
|
After
the signing of this Agreement, the Pledgor shall in accordance with the
Pledgee’s written request which may be made by the Pledgee from time to
time, together with the Pledgee, notarized this agreement as well as the
register of shareholders with the recorded Pledged Equity in a notary
public office as designated by the Pledgee, and Party A and the Company
shall give assistant with respect to the notarization following the
delivery of the notice with the request of notarization by Party
B.
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4.
|
Representations
and Warranties
|
4.1
|
Each
Party under this Agreement represents and warrants to other Parties
that:
|
(1) it
has relevant power, rights and authorizations for the execution hereof, and
performance of the obligations hereunder;
(2) the
execution and performance of this Agreement shall not violate or conflict with
any of the terms and conditions of other agreements signed between the
Parties.
4.2
|
The
Pledgor represent and warrant to the Pledgee
that:
|
(1) he is
the legal owner of the Pledged Equity, and have fulfilled the obligations of
capital contribution in the registered capital of the Company;
(2)
except for the Right of Pledge as setup hereunder, the Pledged Equity is not
subject to any pledge, guaranty or other form of encumbrances;
(3) he
does not or will not transfer the Pledged Equity to any third party or make any
agreements, whether oral or written, with respect to the transfer of Pledged
Equity.
4.3
|
The
Company agrees to undertake the joint liability with respect to the
representations and warrants made by the
Pledgor.
|
5.
|
Obligations of
Pledgor
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5.1
|
The
dividend and bonus arising from the Pledged Equity shall be deposited in
an escrow account for the supervision of the
Pledgee.
|
5.2
|
Apart
from the encumbrance set forth hereunder and under the Exclusive Purchase
Option Agreement, without the Pledgee’s prior written consent, the Pledgor
shall not sell, transfer, mortgage or otherwise dispose of the Pledged
Equity, nor shall place encumbrances on such Pledged
Equity;
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5.3
|
Without
the Pledgee’s prior written consent, the Pledgor shall not supplement or
amend the articles of association of the Company in any manner, nor shall
it increase or decrease the registered capital or change the shareholding
structure of the Company in any
manner;
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4
5.4
|
The
Pledgor shall not approve for the resolutions on the dissolution,
liquidation and change of legal form of the
Company;
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5.5
|
The
Pledgor shall not approve for any Profit Distribution Proposal, nor shall
accept such distributed dividend without the Pledgee’s prior written
consent; At the Pledgee’s request, it shall promptly approve for the
Profit Distribution Proposal, and accept such distributed
dividend;
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5.6
|
At
the Pledgee’s request, the Pledgor shall provide the Pledgee with all
information regarding the business operation and financial condition of
the Company;
|
5.7
|
The
Pledgor shall not incur or succeed to any debts or liabilities which may
adversely affect his equity interests in the Company without the Pledgee’s
prior written consent;
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5.8
|
The
Pledgor shall appoint, and appoint only, the candidates nominated by the
Pledgee to be the executive director of the Company, and shall not replace
such candidates without the Pledgee’s prior written
consent;
|
5.9
|
The
Pledgor shall not approve any acquisition of, any consolidation with, or
any investment in any third party without the Pledgee’s prior written
consent;
|
5.10
|
The
Pledgor shall promptly notify the Pledgee of any pending or threatened
lawsuit, arbitration or administrative dispute which involve the assets,
business or incomes of the Company, and take positive measures against
aforesaid lawsuits, arbitrations or administrative
dispute;
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5.11
|
The
Pledgor shall not commit any conducts or omissions that may adversely
affect the assets, business operation, the debts and liabilities of the
Company without the Pledgee’s prior written
consent;
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5.12
|
To
the extent permitted by the PRC laws and regulations, and at any time upon
Pledgee’s request, the Pledgor shall promptly and unconditionally transfer
his equity interests of the Company to Pledgee or its designated third
party in accordance with the Exclusive Purchase Option
Agreement;
|
5.13
|
The
Pledgor shall approve for the resolution in respect of the Equity Transfer
or Assets Transfer hereunder within the extent permitted by the PRC
laws;
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5.14
|
The
Pledgor shall make every efforts to cause the Company perform the
obligations of Article 6 hereunder;
|
5
5.15
|
The
Pledgor shall, to the extent permitted by applicable laws, cause the
business term of Party C (including the circumstance of change of business
terms) not shorter than that of Party B(including the circumstance of
change of business terms);
|
5.16
|
The
Pledgor shall strictly comply with the provisions of this Agreement, and
effectively perform its obligations hereunder, and shall be prohibited
from committing any act or omission which may affect the validity or
enforceability of this Agreement.
|
5.17
|
The
Pledgor hereby authorizes the Pledgee to exercise all the shareholder’s
rights as the Party C’s shareholder within the scope permitted by the PRC
laws and articles of association of Party C on behalf of the Pledgor,
including the voting right and decision right in Party
C.
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6.
|
Obligations
of the Company
|
6.1
|
Without
the Pledgee’s prior written consent, it shall not supplement or amend the
articles of association or rules of the Company in any manner, nor shall
it increase or decrease the registered capital or change the shareholding
structure of aforesaid entities in any
manner;
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6.2
|
It
shall prudently and effectively maintain its business operations according
to good financial and business standards so as to maintain or increase the
value of its assets;
|
6.3
|
Unless
as required necessary for the business operation of the Company or upon
the prior written consent by Party B , it shall not transfer, mortgage or
otherwise dispose of the lawful rights and interests to and in its assets
or incomes, nor shall it encumber its assets and income in any way that
would affect the Pledgee’s security interests
hereunder;
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6.4
|
It
shall not incur or succeed to any debts or liabilities unless as required
necessary for the business operation of the Company or upon the prior
written consent by Party B;
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6.5
|
Without
the Pledgee’s prior written consent, it shall not enter into or materially amend any
material contract (exceeding RMB100,000 in value), except for the routine
business contracts;
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6.6
|
Without
the Pledgee’s prior written consent, it shall not provide any loans or
guaranty to any third party;
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6.7
|
At
the Pledgee’s request, it shall provide the Pledgee with all information
regarding its business operation and financial
condition;
|
6
6.8
|
The
Company shall purchase insurance from insurance companies acceptable to
the Pledgee in such amounts and of such kinds as are customary in the
region among companies doing similar business and having similar
assets;
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6.9
|
Without
the Pledgee’s prior written consent, it shall not acquire or consolidate
with any third party, nor shall they invest in any third
party;
|
6.10
|
It
shall promptly notify the Pledgee of any pending or threatened lawsuit,
arbitration or administrative dispute which involve its assets, business
or incomes, and take positive measures against aforesaid lawsuits,
arbitrations or administrative
dispute;
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6.11
|
Without
the Pledgee’s prior written consent, it shall not distribute any dividends
to the Pledgor in any manner, and at the Pledgee’s request, it shall
promptly distribute all distributable dividends to the
Pledgor.
|
6.12
|
Without
the Pledgee’s prior written consent, it shall not commit any act or
omission that would materially affect its assets, business or
liabilities;
|
7.
|
Exercise of Right of
Pledge
|
7.1
|
The
Pledgee may exercise the Right of Pledge at any time following the
delivery of Notice of Default as provided in Article 8.2 to the
Pledgor.
|
7.2
|
The
Pledgee is entitled to be first compensated with the money converted from
or the proceeds from auction or sale of all or part of Pledged Equity in
accordance with legal proceedings unless the Pledgor has duly and
completely performed the obligations under Main
Agreements.
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7.3
|
Within
the term of this Agreement, If the Pledged Equity hereunder is subjected
to any compulsory measures implemented by a court or other departments due
to the Pledgor’ failing to repay the debts which fall due or violation of
PRC Laws or state policies etc., the Pledgor
shall,
|
(1)
notify the Pledgee in written form of such compulsory measures within three (3)
days following its occurrence;
(2) use
all efforts (including but not limited to provide other security to the court or
other government authorities), in order to dismiss the compulsory measures taken
by the court or other government authorities over the Pledged
Equity.
7.4
|
The
Pledgor shall not hinder the Pledgee from exercising the Right of Pledge
and shall give necessary assistance so that the Pledgee could realize its
Right of Pledge.
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7
Equity
Pledge Agreement
8.
|
Event of
Default
|
8.1
|
The
following events shall be regarded as the Events of
Default:
|
8.1.1
|
Any
Party breaches any of the representations or warranties
hereunder;
|
8.1.2
|
The
Pledgor and/or the Company breache(s) any of the representations or
warranties under the Main
Agreements;
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8.1.3
|
The
Pledgor and/or the Company fail(s) to duly and completely perform the
obligations hereunder;
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8.1.4
|
The
Pledgor and/or the Company fail(s) to duly and completely perform the
obligations under the Main
Agreements;
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8.1.5
|
Any
other external borrowing, guaranty, compensation or other liabilities of
the Pledgor: (1) is required for an early repayment or performance prior
to the scheduled date due to any breach by the Pledgor; or (2) is
duebut
can not be repaid or perform as scheduled, which , at the discretion of
the Pledgee, has an adverse effect on the Pledgor’ ability of performing
the obligations under this
Agreement;
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8.1.6
|
The
properties owned by Pledgor have significant adverse changes, which, at
the discretion of Pledgee, has an adverse effect on Pledgor’s ability of
performing the obligations under this
Agreement;
|
8.2
|
Unless
the Pledgor takes the action to Pledgee’s satisfaction to remedy the
defaults as listed in Article 8.1 hereof, the Pledgee may give a written
notice about default (“Notice of Default”) to the Pledgor when such
default occurs or at any time
thereafter.
|
9.
|
Taxes
and Expenses
|
9.1
|
The
Parties shall pay, in accordance with relevant PRC laws and regulations,
their respective taxes and expenses arising from the execution and
performance of this Agreement.
|
10.
|
Assignment
|
10.1
|
The
Pledgor shall not transfer part or all of the rights and obligations under
this Agreement without prior written consent from the
Pledgee.
|
8
Equity
Pledge Agreement
10.2
|
To
the extent being permitted by law, the Pledgee shall have the right to
transfer any or all of its rights and obligations under this Agreement to
any third party upon a six (6) –day written notice to the Pledgor or the
Company without its approval.
|
11.
|
Effectiveness
Modification and Cancellation
|
11.1
|
This
Agreement shall be executed on the date set forth in the first page and
shall become effective on the day on which the Pledged Equity is recorded
on the register of the
shareholders.
|
11.2
|
The
modification of this Agreement shall not be effective without written
agreement through negotiation. If the Parties could not reach an
agreement, this Agreement remains
effective.
|
11.3
|
This
Agreement shall not be discharged or canceled without written agreement
through negotiation.
|
12.
|
Confidentiality
|
12.1
|
Any
information, documents, data and all other materials (herein “Confidential
Information”) arising out of the negotiation, signing, and implement of
this Agreement, shall be kept in strict confidence by the Parties. Without
the written approval by the other Parties, any Party shall not disclose to
any third party any Confidential Information, but the following
circumstances shall be excluded:
|
a.
|
The
materials that is known by the Public (but not include the materials
disclosed by each Party receiving the Confidential
Information);
|
b.
|
The
materials required to be disclosed subject to the applicable laws or the
rules or provisions of stock exchange;
or
|
c.
|
The
materials disclosed by each Party to its legal or financial consultant
relating the transaction of this Agreement, and this legal or financial
consultant shall comply with the confidentiality set forth in this
Section. The disclosure of the Confidential Information by staff or
employed institution of any Party shall be deemed as the disclosure of
such Confidential Information by such Party, and such Party shall bear the
liabilities for breaching the
contract.
|
12.2
|
This
Clause shall survive whatever this Agreement is invalid, amended, revoked,
terminated or unable to implement by any
reason.
|
9
Equity
Pledge Agreement
13.
|
Force
Majeure
|
13.1
|
An
event of force majeure means an event that could not be foreseen, and
could not be avoided and overcome, which includes among other things, but
without limitation, acts of nature (such as earthquake, flood or fire),
government acts, strikes or riots;
|
13.2
|
If
an event of force majeure occurs, any of the Parties who is prevented from
performing its obligations under this Agreement by an event of force
majeure shall notify the other Parties without delay and within fifteen
(15) days of the event provide detailed information about and notarized
documents evidencing the event and take appropriate means to minimize or
remove the negative effects of force majeure on the other Parties, and
shall not assume the liabilities for breaching this Agreement. The Parties
shall keep on performing this Agreement after the event of force majeure
disappears.
|
14.
|
Applicable
Law and Dispute Resolution
|
14.1
|
The
execution, validity, construing and performance of this Agreement and the
disputes resolution under this Agreement shall be governed by the laws and
regulations of the PRC.
|
14.2
|
The
Parties shall strive to settle any dispute arising from or in connection
with this Agreement through friendly consultation. In case no settlement
can be reached through consultation within thirty (30) days after such
dispute is raised, each Party can submit such matter to Qingdao
Arbitration Commission for arbitration in accordance with its rules. The
arbitration award shall be final conclusive and binding upon the
Parties.
|
14.3
|
During
the process of dispute-resolution, the Parties shall continue to perform
other terms under this Agreement, except for provisions subject to the
dispute resolution.
|
15.
|
Miscellaneous
|
15.1
|
Entire
Agreement
|
The
Parties acknowledge that this Agreement constitutes the entire agreement of the
Parties with respect to the subject matters therein and supersedes and replaces
all prior or contemporaneous oral or written agreements and
understandings.
15.2
|
Successor
|
This
Agreement shall bind and benefit the successor of each Party and the transferee
permitted hereunder with the same rights and obligations as if the original
parties hereof.
10
Equity
Pledge Agreement
15.3
|
Notice
|
Any
notice required to be given or delivered to the Parties hereunder shall be in
writing and delivered to the address as indicated below or such other address or
as such party may designate, in writing, from time to time. All notices shall be
deemed to have been given or delivered upon by personal delivery, fax and
registered mail. It shall be deemed to be delivered upon: (1) registered air
mail: 5 business days after deposit in the mail; (2) personal delivery or
delivery by fax: the next business day after transmission. If the notice is
delivered by fax, it should be confirmed by original through registered air mail
or personal delivery.
Party
A
Contact
person: Fu
Wenyuan
Address:
Xx.00 Xxxxxxxxx Xxxx, Xxxxxxx
Xxxxxxxx, Ji’nan City
Tel:
Fax:
Party
B
Contact
person: Xxxxx Xxxxx
Address:
Tel:
Fax:
Party
C
Contact
person: Fu
Wenyuan
Address:
Room 2007 20/F, Qingyundangdai Building, Xx.0 Xxxxxxxxxxxxxxx Xxxxxxxxx, Xxxxxxx
Xx, Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxx
Tel:
Fax:
15.4
|
This
Agreement is executed in three (3) originals with each Party holding one
original, and each of the originals shall be equally valid and
authentic.
|
15.6
|
Whenever
the consent of the Pledgee is required under this Agreement, such consent
shall not be effective unless such consent is also provided by either the
sole shareholder, or the Executive Director, of the
Pledgee.
|
[Signature page
follows]
11
Equity
Pledge Agreement
IN WITNESS WHEREOF, each party
has caused this Agreement to be executed and delivered as of the date first
above written.
Party A The Shareholder of
Beijing Ruijieao Bio-Technology Ltd. (“Pledgor”)
Name
of the
Shareholder
|
Signature
|
|
Fu
Wenyuan
|
/s/
Fu
Wenyuan
|
Party B NeoStem
(China), Inc. (“Pledgee”)
Legal
Representative: Xxxxx Xxxxx
Signature
and Company Seal:
/s/ Xxxxx
Xxxxx
Party C Beijing
Ruijieao Bio-Technology Ltd. (“Company”)
Legal
Representative:
Signature
and Company seal:
/s/ Fu
Wenyuan
12