EXHIBIT 10.10
Private and Confidential Execution Copy
Shanghai Newmargin Venture Capital Co., Ltd.
and
Feng Tao
and
T2CN Information Technology (Shanghai) Co., Ltd.
EQUITY PLEDGE AGREEMENT
Regarding
Shanghai T2 Entertainment Co., Ltd.
-------------------------------------------------------
November 4, 2004
FANGDA PARTNERS
Room 2202-2207, Kerry Center
1515 Nan Jing West Road
Shanghai 200040
Equity Pledge Agreement
This Equity Pledge Agreement (hereinafter this "Agreement") is entered into in
Shanghai of the People's Republic of China (hereinafter "PRC") as of November 4,
2004 by and between the following Parties:
(1) Shanghai Newmargin Venture Capital Co., Ltd. (hereinafter "Shanghai
Newmargin"), Registered Address: No. 99 Yinqiao Road, Pudong New District,
Shanghai Legal Representative: Dong Yeshun
(2) Feng Tao
Address: Building No. 3, Xingguo Hotel, No. 78 Xingguo Road, Shanghai
Identity Card Number: 310106670509323
(The above Parties hereinafter individually and collectively the "Pledgor(s)")
(3) T2CN Information Technology (Shanghai) Co., Ltd. (hereinafter the "Pledgee")
Registered Address: No. 498 Guo Shoujing Road, Pudong New District,
Shanghai
Legal Representative: Teng Jun-Tse
(Any single Party hereinafter a "Party" and all Parties collectively the
"Parties")
Whereas:
(1) Pledgors are the enrolled shareholders of Shanghai T2 Entertainment Co.,
Ltd. (with its registered address is at 5th Floor, No. 88, Qinjiang Road,
Xuhui District, Shanghai, with Feng Tao as its legal representative,
hereinafter the "Company"), legally holding all the equity of the Company
(hereinafter the "Company Equity"), and their contributions to and their
equity shares in the registered capital of the Company as of the date of
this Agreement are as set out in Appendix I hereto.
(2) Pursuant to the Shareholders' Voting Rights Proxy Agreement dated November
4, 2004 between the Pledgee, the Company and the Pledgors (hereinafter the
"Proxy Agreement"), Pledgors have already irrevocably entrusted Pledgee
with full power to exercise on their behalf all of their shareholders'
voting rights in the Company.
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(3) Pursuant to the Exclusive Technical Service and Consultancy Agreement dated
November 4, 2004 between the Pledgee and the Company (hereinafter the
"Service Agreement"), the Company has already engaged Pledgee exclusively
to provide it with relevant technical support services, and shall pay
Pledgee the corresponding service fees for such services.
(4) Pursuant to the Operation Agreement dated November 4, 2004 between the
Pledgee, the Company and the Pledgors (hereinafter the "Operation
Agreement"), the Company shall appoint or dismiss management staff and
conduct daily business activities as well as financial and personnel
management based on the Pledgee's instructions.
(5) As the guarantee by the Pledgors and the Company for their performance of
the Contract Obligations (as defined below) and repayment of the Guaranteed
Liabilities (as defined below), the Pledgors agree to pledge all of their
Company Equity to the Pledgee, and grant herewith to the Pledgee the right
of first priority.
Therefore, the Parties hereby have reached the following agreement upon mutual
consultations:
Article 1 - Definition
1.1 Except as otherwise construed in the context, the following terms in this
Agreement shall be interpreted to have the following meanings:
"Contract Obligations" shall mean all contractual obligations of the Pledgors
under the Proxy Agreement, the Operation Agreement and this Agreement; and all
contractual obligations of the Company under the Proxy Agreement, Service
Agreement and the Operation Agreement.
"Guaranteed Liabilities" shall mean all direct, indirect and derivative losses
and loss of foreseeable profits suffered by Pledgee due to any Breaching Event
(as defined below) of Pledgors and/or the Company, the amount of which shall be
determined by Pledgee in its absolute sole discretion, to which Pledgors shall
be subject; and all fees incurred by Pledgee for its enforcement of the
Contractual Obligations of Pledgors and/or the Company.
"Transaction Agreements" shall mean the Proxy Agreement, Service Agreement
and Operation Agreement.
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"Breaching Event" shall mean any breach by Pledgors of their Contract
Obligations under the Proxy Agreement, Operation Agreement or this Agreement and
any breach by the Company of its Contract Obligations under the Proxy Agreement,
Service Agreement or Operation Agreement.
"Pledged Property" shall mean all of Pledgors' the Company Equity legally owned
by Pledgors as of the effectiveness hereof, which Pledgors shall pledge to
Pledgee according to provisions hereof as the guarantee by them and the Company
for the performance of their Contractual Obligations, with the particular
pledged equity shares of each of Pledgors to be seen in Appendix I hereto; and
the increased contribution amounts and interests as according to Article 2.6 and
Article 2.7 hereof.
"PRC Law" shall mean the then valid laws, administrative regulations,
administrative rules, local regulations, judicial interpretations and other
binding regulatory documents of the People's Republic of China.
"Equity Pledge" shall have the meaning stipulated in Article 2.2 hereof.
"Party's Rights" shall have the meaning stipulated in Article 12.7 hereof.
"Power of Attorney" shall have the meaning stipulated in Article 12.12 hereof.
1.2 The references to any PRC Law herein shall be deemed:
(1) to include the references to the amendments, changes, supplements and
reenactments of such law, irrespective of whether they take effect
before or after the formation of this Agreement; and
(2) to include the references to other decisions, notices or regulations
enacted in accordance therewith or effective as a result thereof.
1.3 Except as otherwise stated in the context herein, all references to an
Article, clause, item or paragraph shall refer to the relevant part of this
Agreement.
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Article 2 - Equity Pledge
2.1 Pledgors hereby agree to pledge the Pledged Property, which they legally
own and have the right to dispose of, to Pledgee according to the
provisions hereof as the guarantee for the performance of the Contract
Obligations and the repayment of the Guaranteed Liabilities.
2.2 Pledgors hereby undertake that they will be responsible for, on the date
hereof, recording the arrangement of the equity pledge hereunder
(hereinafter the "Equity Pledge") on the shareholder register of the
Company, and doing their best endeavor to make registration with
Registration Authoritires of Industry and Commerce of the Company.
2.3 During the valid term of this Agreement, except for the willful material
negligence of Pledgee or such negligence is directly related as
cause/result to the consequence, Pledgee shall not be liable in any way to,
nor shall Pledgors have any right to claim in any way or propose any
demands on Pledgee, in respect of the reduction in value of the Pledged
Property.
2.4 Subject to compliance with the provision of 2.3 above, in case of any
possibility of obvious reduction in value of the Pledged Property which is
sufficient to jeopardize Pledgee's rights, Pledgee may at any time auction
or sell off the Pledged Property on behalf of Pledgors, and discuss with
Pledgors to use the proceeds from such auction or sale-off as pre-repayment
of the Guaranteed Liabilities, or may submit such proceeds to the local
notary institution where Pledgee is domiciled (any fees incurred in
relation thereto shall be borne by Pledgors).
2.5 In case of any Breaching Event, Pledgee shall have the right to dispose of
the Pledged Property in the way set out in Article 4 hereof.
2.6 Only upon prior consent by Pledgee shall Pledgors be able to increase their
capital contribution to the Company. Pledgors' increased capital amount in
the Company due to their increased capital contribution to the Company
shall also be part of the Pledged Property.
2.7 Only upon prior consent by Pledgee shall Pledgors be able to receive
dividends or share profits from the Pledged Property. The dividends or the
profits received by Pledgors from the Pledged Property shall be deposited
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into Pledgee's bank account designated by Pledgee, to be under the
supervision of Pledgee and used as the Pledged Property to repay in
priority the Guaranteed Liabilities.
2.8 Pledgee shall have the right, upon occurrence of the Breaching Event,
dispose of any Pledged Property of any of Pledgors in accordance with the
provisions hereof.
Article 3 - Release of Pledge
3.1 Upon full and complete performance by Pledgors and the Company of all
Contractual Obligations, Pledgee shall, at the request of Pledgors, release
the pledge under this Agreement, and shall cooperate with Pledgors to handle
the formalities to cancel the record of the Equity Pledge in the shareholder
register of the Company, with the reasonable fees to be incurred in
connection with the release of the pledge to be borne by Pledgee.
Article 4 - Disposal of the Pledged Property
4.1 Pledgors and Pledgee agree hereby that, in case of any Breaching Event,
Pledgee shall have the right to exercise, upon giving written notice to
Pledgors, all of its remedies and powers at breaching enjoyable by it under
the PRC Law, Transaction Agreements and the terms hereof, including but not
limited to repayment in priority with proceeds from auctions or sale-offs of
the Pledged Property. Pledgee shall not be liable for any loss as the result
of its reasonable exercise of such rights and powers.
4.2 Pledgee shall have the right to designate in writing its legal consultant or
other agents to exercise on its behalf any and all rights and powers set out
above, and Pledgors shall not oppose thereto.
4.3 The reasonable costs incurred by Pledgee in connection with its exercise of
any and all rights and powers set out above shall be borne by Pledgors, and
Pledgee shall have the right to deduct such costs in fact from the proceeds
it acquires from the exercise of the rights and powers.
4.4 The proceeds Pledgee acquires from the exercise of its rights and powers
shall be used in the priority order as follows:
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- First, to pay any cost incurred in connection with the disposal of the
Pledged Property and the exercise by Pledgee of its rights and powers
(including remuneration paid to its legal consultant and agents);
- Second, to pay any taxes payable for the disposal of the Pledged
Property; and
- Third, to repay Pledgee for the Guaranteed Liabilities.
In case of any balance after payment of the above amounts, Pledgee shall
return the same to Pledgors or other persons entitled thereto according to
the relevant laws and rules or submit the same to the local notary
institution where Pledgee is domiciled (any fees incurred in relation
thereto shall be borne by Pledgors).
4.5 Pledgee shall have the option to exercise, simultaneously or in certain
sequence, any of the remedies at breaching it is entitled to; Pledgee is not
obliged to exercise other remedies at breaching before its exercise of the
right to the auctions or sale-offs of the Pledged Property hereunder.
Article 5 - Fees and Costs
5.1 All actual costs in connection with the establishment of the Equity Pledge
hereunder, including but not limited to stamp duties, any other taxes, all
legal fees, etc shall be borne by Pledgee.
Article 6 - Continuity and No Waive
6.1 The Equity Pledge hereunder is a continuous guarantee, with its validity to
continue until the full performance of the Contractual Obligations or the
full repayment of the Guaranteed Liabilities. Neither exemption or grace
period granted by Pledgee to Pledgors in respect of their breach, nor delay
by Pledgee in exercising any of its rights under the Transaction Agreements
and this Agreement shall affect the rights of Pledgee under this Agreement,
relevant PRC Law and the Transaction Agreements, the rights of Pledgee to
demand at any time thereafter the strict performance of the Transaction
Agreements and this Agreement by Pledgors or the rights Pledgee may be
entitled to due to subsequent breach by Pledgors of the obligations under
the Transaction Agreements and/or this Agreement.
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Article 7 - Representations and Warranties
Each of Pledgors hereby individually and jointly and severally represents and
warrants to Pledgee as follows:
7.1 Feng Tao is a PRC citizen with full capacity of disposition; he has full
and independent legal status and capacity and has obtained due
authorization to execute, deliver and perform this Agreement and can
independently be one litigant party.
7.2 Shanghai Newmargin is a limited liability corporation duly incorporated and
validly existing under the PRC laws, it has independent status as a legal
person; it has full and independent legal status and capacity to execute,
deliver and perform this Agreement and can independently be one litigant
party.
7.3 They have full right and authorization to execute and deliver this
Agreement and other documents relating to the transaction as stipulated in
this Agreement and to be executed by them. They also have full right and
authorization to complete the transaction stipulated in this Agreement.
7.4 All reports, documents and information concerning Pledgors and all matters
as required by this Agreement which are provided by Pledgors to Pledgee
before this Agreement comes into effect are true and correct in all
material aspects as of the execution hereof.
7.5 All reports, documents and information concerning Pledgors and all matters
as required by this Agreement which are provided by Pledgors to Pledgee
after this Agreement comes into effect are true and correct in all material
aspects upon provision.
7.6 At the time of the effectiveness of this Agreement, Pledgors are the sole
legal owner of the Pledged Property, with no existing dispute whatever
concerning the ownership of the Pledged Property. Pledgors have the right
to dispose of the Pledged Property or any part thereof.
7.7 Except for the encumbrance set on the Pledged Property hereunder and the
rights set under the Transaction Agreements, there is no other encumbrance
or third party interest set on the Pledged Property.
7.8 The Pledged Property is capable of being pledged or transferred according
to the laws, and Pledgors have the full right and power to pledge the
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Pledged Property to Pledgee according to this Agreement.
7.9 This Agreement constitutes the legal, valid and binding obligations on
Pledgors when it is duly executed by Pledgors.
7.10 Any consent, permission, waive or authorization by any third person, or any
approval, permission or exemption by any government authority, or any
registration or filing formalities (if required by laws) with any
government authority to be handled or obtained in respect of the execution
and performance hereof and the Equity Pledge hereunder have already been
handled or obtained, and will be fully effective during the valid term of
this Agreement.
7.11 The execution and performance by Pledgors of this Agreement are not in
violation of or conflict with any laws applicable to them, or any agreement
to which they are a party or which has binding effect on their assets, any
court judgment, any arbitration award, or any administration authority
decision.
7.12 The pledge hereunder constitutes the encumbrance of first order in priority
on the Pledged Property.
7.13 All taxes and fees payable in connection with acquisition of the Pledged
Property have already been paid in full amount by Pledgors.
7.14 There is no pending or, to the knowledge of Pledgors, threatened
litigation, legal process or demand by any court or any arbitral tribunal
against Pledgors, or their property, or the Pledged Property, nor is there
any pending or, to the knowledge of Pledgors, threatened litigation, legal
process or demand by any government authority or any administration
authority against Pledgors, or their property, or the Pledged Property,
which is of material or detrimental effect on the economic status of
Pledgors or their capability to perform the obligations hereunder and the
Guaranteed Liabilities.
7.15 Pledgors hereby warrant to Pledgee that the above representations and
warranties will remain true and correct at any time and under any
circumstance before the Contractual Obligations are fully performed or the
Guaranteed Liabilities are fully repaid, and will be fully complied with.
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Article 8 - Undertakings by Pledgors
Each of Pledgors hereby individually undertakes to Pledgee as follows:
8.1 Without the prior written consent by Pledgee, Pledgors shall not establish
or permit to establish any new pledge or any other encumbrance on the
Pledged Property; pledge or any other encumbrance on the whole or part of
the Pledged Property established without the prior written consent by
Pledgee shall be null and void.
8.2 Without first giving written notice to Pledgee and having Pledgee's prior
written consent, Pledgors shall not transfer the Pledged Property, and any
attempt by Pledgors to transfer the Pledged Property shall be null and void.
The proceeds from transfer of the Pledged Property by Pledgors shall be used
to repay to Pledgee in advance the Guaranteed Liabilities or submit the same
to the third party agreed with Pledgee.
8.3 In case of any litigation, arbitration or other demand which may affect
detrimentally the interest of Pledgors or Pledgee under the Transaction
Agreements and hereunder or the Pledged Property, Pledgors undertake to
notify Pledgee thereof in writing as soon as possible and promptly and shall
take, at the reasonable request of Pledgee, all necessary measures to ensure
the pledge interest of Pledgee in the Pledged Property.
8.4 Pledgors shall not carry on or permit any act or action which may affect
detrimentally the interest of Pledgee under the Transaction Agreements and
hereunder or the Pledged Property.
8.5 Pledgors guarantee that they shall, at the reasonable request of Pledgee,
take all necessary measures and execute all necessary documents (including
but not limited to supplementary agreement hereof) as to ensure the pledge
interest of Pledgee in the Pledged Property and the exercise and realization
of the rights thereof.
8.6 In case of assignment of any Pledged Property as the result of the exercise
of the right to the pledge hereunder, Pledgors guarantee that they will take
all necessary measures to realize such assignment.
Article 9 - Change of Circumstances
9.1 As supplement and subject to compliance with other terms of the Transaction
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Agreements and this Agreement, in case that at any time the promulgation or
change of any PRC Law, regulations or rules, or change in interpretation or
application of such laws, regulations and rules, or the change of the
relevant registration procedures enables Pledgee to believe that it will be
illegal or in conflict with such laws, regulations or rules to further
maintain the effectiveness of this Agreement and/or dispose of the Pledged
Property in the way provided herein, Pledgors shall, at the written
direction of Pledgee and in accordance with the reasonable request of
Pledgee, promptly take actions and/or execute any agreement or other
document, in order to:
(1) keep this Agreement remain in effect;
(2) facilitate the disposal of the Pledged Property in the way provided
herein; and/or
(3) maintain or realize the intention or the guarantee established
hereunder.
Article 10 - Effectiveness and Term of This Agreement
10.1 This Agreement shall become effective upon the satisfaction of all of the
following conditions:
(1) this Agreement is duly executed by each of the Parties; and (2) the
Equity Pledge hereunder has been legally recorded in the
shareholders' register of the Company.
Pledgors shall provide the registration certification of the Equity Pledge
being recorded in the shareholders' register as mentioned above to Pledgee
in a way satisfactory to Pledgee.
10.2 This Agreement shall have its valid term until the full performance of the
Contractual Obligations or the full repayment of the Guaranteed Liabilities.
Article 11 - Notice
11.1 Any notice, request, demand and other correspondences made as required by
or in accordance with this Agreement shall be made in writing and delivered
to the relevant Party.
11.2 The abovementioned notice or other correspondences shall be deemed to have
been delivered when it is transmitted if transmitted by facsimile or telex;
it shall be deemed to have been delivered when it is delivered if delivered
in person; it shall be deemed to have been delivered five (5) days after
posting the same if posted by mail.
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Article 12 - Miscellaneous
12.1 Pledgee may, upon notice to Pledgors but not necessarily with Pledgors'
consent, assign Pledgee's rights and/or obligations hereunder to any third
party; provided that Pledgors may not, without Pledgee's prior written
consent, assign Pledgors' rights, obligations and/or liabilities hereunder
to any third party. Successors or permitted assignees (if any) of Pledgors
shall continue to perform the obligations of Pledgors under this Agreement.
12.2 The amount of the Guaranteed Liabilities decided by Pledgee at its sole
discretion in its exercise of the right of pledge to the Pledged Property
according to this Agreement shall be the conclusive evidence of the
Guaranteed Liabilities hereunder.
12.3 This Agreement shall be prepared in the Chinese language in three (3)
original copies, with each involved Party holding one (1) copy hereof.
Number of original copies may be increased accordingly for the purpose of
registration or filing (if necessary).
12.4 The formation, validity, execution, amendment, interpretation and
termination of this Agreement shall be subject to the PRC Laws.
12.5 Any disputes arising hereunder and in connection herewith shall be settled
through consultations among the Parties, and if the Parties cannot reach an
agreement regarding such disputes within thirty (30) days of their
occurrence, such disputes shall be submitted to China International
Economic and Trade Arbitration Commission Shanghai Branch for arbitration
in Shanghai in accordance with the arbitration rules of such Commission,
and the arbitration award shall be final and binding on all Parties.
12.6 Any rights, powers and remedies empowered to any Party by any provisions
herein shall not preclude any other rights, powers and remedies enjoyed by
such Party in accordance with laws and other provisions under this
Agreement, and the exercise of its rights, powers and remedies by a Party
shall not preclude its exercise of its other rights, powers and remedies by
such Party.
12.7 Any failure or delay by a Party in exercising any of its rights, powers and
remedies hereunder or in accordance with laws (hereinafter the "Party's
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Rights") shall not lead to a waiver of such rights, and the waiver of any
single or partial exercise of the Party's Rights shall not preclude such
Party from exercising such rights in any other way and exercising the
remaining part of the Party's Rights.
12.8 The titles of the Articles contained herein shall be for reference only,
and in no circumstances shall such titles be used in or affect the
interpretation of the provisions hereof.
12.9 Each provision contained herein shall be severable and independent from
each of other provisions, and if at any time any one or more articles
herein become invalid, illegal or unenforceable, the validity, legality or
enforceability of the remaining provisions herein shall not be affected as
a result thereof.
12.10 Any amendments or supplements to this Agreement shall be made in writing.
Except for assignment by Pledgee of its rights hereunder according to
Article 12.1 of this Agreement, the amendments or supplements to this
Agreement shall take effect only when properly signed by the Parties to
this Agreement.
12.11 This Agreement shall be binding on the legal successors of the Parties.
12.12 At the time of execution hereof, each of Pledgors shall sign respectively
a power of attorney (as set out in Appendix II hereto, hereinafter the
"Power of Attorney") to authorize any person designated by Pledgee to sign
on their behalf according to this Agreement any and all legal documents
necessary for the exercise by Pledgee of its rights hereunder. Such Power
of Attorney shall be delivered to Pledgee to keep in custody and, when
necessary, Pledgee may at any time submit the Power of Attorney to the
relevant government authority.
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(Execution Page)
IN WITNESS HEREOF, the following Parties have caused this Equity Pledge
Agreement to be executed as of the date and in the place first here above
mentioned.
Shanghai NewMargin Venture Capital Co., Ltd.
(Company chop)
Signature by : _____________
Name:
Position: Authorized Representative
Feng Tao
Signature by: ______________
T2CN Information Technology (Shanghai) Co., Ltd.
(Company chop)
Signature by : _____________
Name:
Position: Authorized Representative
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Appendix I:
Basic Information of the Company
Company Name: Shanghai T2 Entertainment Co., Ltd.
Registered Address: 5th Floor, No. 88, Qinjiang Road, Xuhui District,
Shanghai
Registered Capital: RMB1,000,000
Legal Representative: Feng Tao
Equity Structure:
Shareholder's Name Contribution (RMB) Equity Share
Shanghai NewMargin Venture RMB800,000 80%
Capital Co., Ltd.
Feng Tao RMB200,000 20%
Total RMB1,000,000 100%
Executive Director: Feng Tao
Manager: Wang Ji
Fiscal Year: January 1 to December 31 (Calendar Year)
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Appendix II:
Format of the Power of Attorney
I/The company, ____________, hereby irrevocably entrusts ____________, with
his/her identity card number ____________, to be my/the company's authorized
trustee to sign on my/the company's behalf all legal documents necessary or
desirous for T2CN Information Technology (Shanghai) Co., Ltd. to exercise its
rights under the Equity Pledge Agreement Regarding Shanghai T2 Entertainment
Co., Ltd. between it and myself/our company.
..
Signature: /s/ Jun-Tse Teng
--------------------
Date: ___________________
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