Exhibit 10.9.2
EQUITY PLEDGE AGREEMENT
This Equity Pledge Agreement (hereinafter referred to as this "Agreement") is
entered into by and between the following parties on June 22, 2007 in Shenzhen:
PLEDGEE:
Party A: Shenzhen Nepstar Pharmaceutical Co., Ltd.
Registered address: Neptunus Building ▇-▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇
PLEDGORS:
Party B: Feng Tu
ID No.: 320828196810190013
Party C: ▇▇▇▇▇▇ ▇▇▇▇
ID No.: 310104196310262825
(Party B and Party C are hereinafter collectively referred to as "Pledgors")
Whereas:
1. Party A is a limited liability company incorporated and registered in
Shenzhen in accordance with law of People's Republic of China ("PRC") to
engage in pharmaceutical wholesale, computer network technology development
and technology consulting and service in accordance with law as approved by
relevant governmental authorities of PRC.
2. Party B and Party C are PRC residents. Party B holds 100% equity interest
of Shenzhen Nepstar Management Consulting Co., Ltd., while Party C holds
100% equity interest of Shenzhen Nepstar Information Technology Service
Co., Ltd.
3. Shenzhen Nepstar Management Consulting Co., Ltd. (Nepstar ▇▇▇▇▇▇▇▇ ▇-▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇) and Shenzhen Nepstar Information
Technology Service Co., Ltd. (Neptunus ▇▇▇▇▇▇▇▇ ▇-▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇) are limited liability companies incorporated
and registered in Shenzhen in accordance with PRC law and together hold 51%
equity interest of each Regional Chain Company.
4. Party A entered into a Loan Agreement with Shenzhen Nepstar Management
Consulting Co., Ltd. and Shenzhen Nepstar Information Technology Service
Co., Ltd. on June 13, 2007 under which Party A will, through Shenzhen Ba
Gua Ling Branch of Industrial Bank Co., Ltd., extend a loan in aggregate
amount of Renminbi36,000,000 to Shenzhen Nepstar Management Consulting Co.,
Ltd. and Shenzhen Nepstar Information Technology Service Co., Ltd.
5. Party A entered into Product Supply Agreement, Trade Name License Agreement
and Logistics Service and Information Technology Support Agreement with
each Regional Chain Company on April 28, 2007.
Therefore, to guarantee the repayment by the borrower of the loan under the Loan
Agreement and ensure each Regional Chain Company with the borrowers as the
shareholders to perform its obligation under the Product Supply Agreement, Trade
Name License Agreement and Logistics Service and Information Technology Support
Agreement, through friendly discussion, the Pledgee and Pledgors enter into this
Agreement in accordance with the following provisions:
1. DEFINITIONS
Unless otherwise provided by this Agreement, the following terms shall have
the following meaning:
1.1 "Pledge" means the whole content as set forth in Article 2 hereof.
1.2 "Equity" means all equity interest owned by Party B in Shenzhen
Nepstar Management Consulting Co., Ltd. and all equity interest owned
by Party C in Shenzhen Nepstar Information Technology Service Co.,
Ltd.
1.3 "Borrowers" means the Shenzhen Nepstar Management Consulting Co., Ltd
wholly owned by Party B and the Shenzhen Nepstar Information
Technology Service Co., Ltd. wholly owned by Party C.
1.4 "Regional Chain Companies" means the limited liability companies
jointly owned by the Pledgee and the Borrowers engaging in
pharmaceutical wholesale and resale inside China as set forth in Annex
I hereof.
1.5 "Term of Pledge" means the period provided in Article 3.2 hereof.
1.6 "Principal Agreements" means the Loan Agreement, Product Supply
Agreement, Trade Name License Agreement and Logistics Service and
Information Technology Support Agreement.
1.7 "Breach Event" means any event as set forth in Article 7.1 hereof.
1.8 "Breach Notice" means the notice sent by the Pledgee to notify
existence of any Breach Event in accordance with this Agreement.
2. PLEDGE
The Pledgors pledge all of their Equity in the Borrowers to the Pledgee as
security for (i) the Borrower's obligations under the Loan Agreement and
(ii) the obligations of Regional Chain Companies under the Product Supply
Agreement, Trade Name License Agreement and Logistics Service and IT
Support Agreement. The Pledge of Equity refers to the right of the Pledgee
to get preferential repayment with the value of Equity directly or from the
proceeds from auction or sale of the Equity pledged by the Pledgors to the
Pledgee.
3. SCOPE OF SECURITY AND TERM OF PLEDGE
3.1 Scope of Security
The scope includes obligations of each Borrower under the Loan
Agreement and/or of each Regional Chain Company under Principal
Agreements, including without limitation, the principal and interest
(if any) of the loan, all payables, liquidated damage, all losses
incurred by the Pledgee due to breach of the Borrowers and/or Regional
Chain Companies and all expenses arising in exercise of Pledge by the
Pledgee.
3.2 Term of Pledge
3.2.1 The Pledge under this Agreement shall become effective on the
date when the pledge is recorded on the shareholders register of
each Borrower with a term of twelve (12) years. Meanwhile, each
party shall use its best effort to cause the Pledge hereunder to
go through pledge registration procedures with competent industry
and commerce administrations of the Borrowers.
3.2.2 During the term of pledge, if the Borrowers fail to perform its
obligation under the Loan Agreement or any Regional Chain Company
fails to perform its contractual obligation fully in accordance
with the Principal Agreements, the Pledgee shall have the right
to dispose of the Pledge in accordance with this Agreement.
4. REGISTRATION OF PLEDGE RIGHT
4.1 In five (5) working days after the execution of this Agreement, the
Pledgors and Pledgee shall assist with recording the Pledge hereunder
onto shareholder
list of each Borrower and meanwhile go through pledge registration
procedures with competent industry and commerce administration of each
Borrower (if practicable).
5. REPRESENTATION AND WARRANTY OF THE PLEDGORS
5.1 The Pledgors are the legal owner of the Pledge Right.
5.2 Except the Pledge created hereunder for the benefit of the Pledgee,
the Pledgors have not created any other pledge or other encumbrance on
the Equity.
6. UNDERTAKINGS OF THE PLEDGORS
6.1 During the term of this Agreement, the Pledgors undertake to the
Pledgee for the benefit of the Pledgee:
6.1.1 that the Pledgors will maintain legal existence of the Borrowers
and without prior written consent of the Pledgee, neither cause
any change to the ownership of the Borrowers nor suspend or cease
the operation of or cancel the registration of the Borrowers;
6.1.2 that other than holding equity interest in the Regional Chain
Companies, without prior written consent of the Pledgee, neither
Borrower may engage in any lending, operation and/or investment
activity or make any increase or decrease of registered capital;
6.1.3 that without prior written consent of the Pledgee, the Pledgors
may not transfer the Equity, nor create or permit any pledge on
the Equity that may affect the right and interest of the Pledgee;
6.1.4 that without prior written consent of the Pledgee, the Borrowers
may not transfer their equity interest in the Regional Chain
Companies to any third party, nor create or permit any pledge on
such equity interest that may affect the right and interest of
the Pledgee;
6.1.5 that the Pledgee shall be responsible for causing the Borrowers
to first deposit any distribution or proceeds from the Regional
Chain Companies (including dividends distributed to the equity
interest held by the Borrowers in the Regional Companies) into a
designated account and may not distribute such funds without
consent of the Pledgee. Upon request of the Pledgee, such funds
shall first be paid to the Pledgee as repayment of the loan;
6.1.6 that the Pledgee has the right, as it considers to be necessary,
to request the Pledgors to transfer all or part of the Equity to
any third party designated by the Pledgee which satisfies the
requirements of PRC laws and regulations. The price of such
equity transfer shall be equal to the amount of registered
capital represented by such equity, unless then applicable PRC
laws and regulations require evaluation of the equity or have
other restriction with respect to the price. If the PRC laws and
regulations applicable at the time when the Pledgee raises such
equity transfer request in accordance with this Article require
evaluation of the equity or have other restriction with respect
to the price, the parties agree that the price for the equity to
be transferred shall be the lowest as permitted by applicable
law. When the Pledgee requests such equity transfer in accordance
with this article, the Pledgors shall transfer their equity to
such third party, execute all documents necessary for such
transfer and assist to accomplish all procedures necessary for
such transfer according to the request of the Pledgee. The price
for equity transfer under this Article obtained by the Pledgors
shall first be deposited into certain account as security fund
for the loan and may not be used without written consent of the
Pledgee. Upon request of the Pledgee, such price of equity
transfer may first be used to repay the loan of the Borrowers
under the Loan Agreement;
6.1.7 that in the extent as permitted by PRC law, the Pledgee has the
right to request the Borrowers to sell all or part of their
equity interest in the Regional Chain Companies to the Pledgee or
any third party designated by the Pledgee which satisfies the
requirements of PRC laws. The price for the equity interest to be
transferred shall be equal to the purchase price initially paid
by the Borrowers, unless then applicable PRC laws and regulations
require evaluation of the equity interest or have other
restriction with respect to the price. If the PRC laws and
regulations, applicable at the time when the Pledgee raises the
request of equity interest transfer, require evaluation of the
equity interest or have other restriction with respect to the
price, the parties agree that the price for the equity interest
to be transferred shall be the lowest as permitted by applicable
law. When the Pledgee raises such equity interest transfer
request in accordance with this article, the Pledgors shall cause
the Borrowers to transfer such equity interest in the Regional
Chain Companies, assist to accomplish relevant procedures for
such transfer according to the request of Party A and execute
relevant documents, as well as cause the Borrowers to use the
price for sale of such equity interest first to repay the Pledgee
the loan under the Loan Agreement;
6.1.8 that if any Regional Chain Company is liquidated, the Pledgors
shall cause the Borrowers to sell their assets distributed from
such Regional
Chain Company in liquidation to the Pledgee in the price no
higher than the purchase price for its equity in such Regional
Chain Company, to offset debt of the Borrowers under the Loan
Agreement at the same amount. If the asset distributed is cash,
the Pledgors shall cause the Borrowers to first use such cash to
repay the debt of the Borrowers under the Loan Agreement;
6.1.9 that the Pledgors shall cause the Borrowers to grant their
voting right in the shareholders' meeting of each Regional Chain
Company to the Pledgee. Meanwhile, the Pledgors shall cause the
Borrowers to grant the voting rights of the directors appointed
by them in each Regional Chain Company to the directors appointed
by the Pledgee in such Regional Chain Company.
6.1.10 that the Pledgors will comply with and implement all provisions
of laws and regulations concerning pledge on right, when
receiving any notice, order or advice from relevant supervising
authorities in connection with the Pledge Right, show such
notice, order or advice in five (5) days to the Pledgee and
comply with such notice, order or advice, or present objection
and representation with respect to above matter upon reasonable
request of the Pledgee or under consent of the Pledgee; and
6.1.11 that the Pledgors will promptly notify the Pledgee of any event
or notice received that may affect the Pledgors' Equity or any
part of rights, as well as any event or notice received that may
change or affect any warranty or obligation of the Pledgors under
this Agreement.
6.2 The Pledgors agree the right of the Pledgee to exercise the rights as
a pledgee in accordance with this Agreement shall not be interrupted
or deterred by the Pledgors or any successor or consigner of the
Pledgors or any other preson through legal proceedings.
6.3 The Pledgors undertakes to the Pledgee that to protect or perfect
security of this Agreement for repayment of loan and performance of
obligations under the Principal Agreements, the Pledgors faithfully
enter into and cause other parties involved in connection with the
Pledge Right to enter into all right certificates, agreements required
by the Pledgee and/or take and cause other parties involved to take
the actions required by the Pledgee and provide convenience for the
Pledgee to exercise its rights and authorities granted by this
Agreement.
6.4 The Pledgors undertakes to the Pledgee that for the benefit of the
Pledgee, the pledgors will comply with and implement all warranties,
undertakings, agreements, representations and conditions. In case that
the Pledgors fail to
implement or fail to fully implement any of its warranties,
undertakings, agreements, representations and conditions, the Pledgors
shall indemnify all losses caused to the Pledgee.
7. BREACH EVENT
7.1 The following events shall be deemed as Breach Events:
7.1.1 that the Borrowers fail to perform all or part of their
obligations under the Loan Agreement;
7.1.2 that any Regional Chain Company fail to or refuse to perform all
or party of their obligations under the Product Supply Agreement,
Trade Name License Agreement and/or Logistics Service and IT
Support Agreement in accordance with such agreements;
7.1.3 that there is material misleading information or mistake with
any representation or warranty of the Pledgors under Article 5 of
this Agreement and/or that either Pledgor is in breach of any
warranty under Article 5 of this Agreement;
7.1.4 that either Pledgor is in breach of any undertakings under
Article 6 of this Agreement;
7.1.5 that either Pledgor is in breach of any other provision of this
Agreement;
7.1.6 that the Pledgors waive the Equity pledged or transfer the
Equity pledged without written consent of the Pledgee;
7.1.7 that any external borrowing, security, compensation,
undertakings or other repaying liability of either Pledgor (i) is
required to be repaid or performed ahead of expiry due to breach
of agreement; or (ii) has been due but cannot be repaid or
performed as scheduled which make the Pledgee considers that the
ability of the Pledgor to perform its obligation hereunder has
been affected;
7.1.8 that this Agreement is held to be illegal or either Pledgor is
unable to continue with performance of its obligations hereunder
due to any reason other than force majeure; or
7.1.9 that there is adverse change with property of the Pledgors which
make the Pledgee considers that the ability of the Pledgor to
perform its obligation hereunder has been affected.
7.2 When knowing or discovering existence of any event set forth in
Article 7.1 or occurrence of any event that may result in any of above
events, the Pledgors shall notify the Pledgee in writing immediately.
7.3 Unless the Breach Event set forth in Article 7.1 has been resolved to
the satisfaction of the Pledgee, the Pledgee may provide the Pledgors
and the Borrowers a Breach Notice in writing at any time when or after
such Breach Event occurs, requiring the Borrowers to repay any amount
payable under the Loan Agreement and the Regional Chain Companies to
pay any amount payable under the Product Supply Agreement, Trade Name
License Agreement and Logistics Service and IT Support Agreement and
perform obligations under such Agreements, or may dispose of the
Pledge in accordance with Article 8 hereof.
8. EXERCISE OF PLEDGE RIGHT
8.1 To exercise the Pledge Right, the Pledgee shall provide the Pledgors a
Breach Notice.
8.2 Subject to Article 7.3 hereof, the Pledgee may dispose of the Pledge
Right at the time or any time after sending the Breach Notice
according to Article 7.3.
8.3 The Pledgee shall be entitled to convert all or part of the Equity
hereunder into money to offset the debts or get repayment with
priority from the proceeds of auction or sale of such Equity through
legal procedures, until the fees to be paid by the Regional chain
Companies under the Product Supply Agreement, Trade Name License
Agreement and Logistics Service and IT Support Agreement and the loan
of the Borrowers under the Loan Agreement and any other payable
amounts have been paid up.
8.4 When the Pledgee dispose of its Pledge in accordance with this
Agreement, the Pledors shall not make any hindrance but shall provide
assistance as necessary to ensure the Pledgee's implementation of its
Pledge Right.
9. ASSIGNMENT OF AGREEMENT
9.1 Without prior written consent of the Pledgee, the Pledgors are not
entitled to confer or transfer any part or all of its rights and
obligations hereunder.
9.2 This Agreement is binding on the Pledgors and their respective
successors or inheritors and is valid to the Pledgee and each
successor, inheritor or assignee as permitted by the Pledgee.
9.3 The Pledgee may, at any time, subject to the permission of laws,
transfer all or
any of its rights or obligations under the Loan Agreement, Product
Supply Agreement, Trade Name License Agreement and Logistics Service
and IT Support Agreement to any person (natural person/legal person)
designated by it. In such case, the assignee shall have and assume the
rights and obligations of the Pledgee under this Agreement as it is a
party hereto. To transfer its rights and obligations under the Loan
Agreement, Product Supply Agreement, Trade Name License Agreement and
Logistics Service and Information Technology Support Agreement, the
Pledgee will only need to provide the Pledgors a written notice and
the Pledgors shall enter into agreements and/or documents relevant
with such assignment as required by the Pledgee.
9.4 In case of change of the Pledgee due to assignment, the new parties to
the pledge shall enter into a new pledge agreement.
10. EFFECTIVENESS AND TERM
This Agreement is executed on the date as set forth above and becomes
effective on the date when the authorized representatives of the parties
sign this Agreement respectively. This Agreement shall be binding on the
Parties upon effectiveness.
11. TERMINATION
11.1 After the loan under the Loan Agreement and relevant amounts under the
Product Supply Agreement, Trade Name License Agreement and Logistics
Service and IT Support Agreement have been paid up and the Borrowers
do not assume any obligation under the Loan Agreement any more and the
Regional Chain Companies do not assume any obligation under the
Product Supply Agreement, Trade Name License Agreement and Logistics
Service and IT Support Agreement, this Agreement shall expire and the
Pledgee shall cancel or terminate this Agreement within the earliest
reasonable practical time.
11.2 After this Agreement terminates, the rights and obligations of the
parties under Articles 14 and 15 hereunder shall continue to be valid.
12. COMMISSION AND OTHER EXPENSES
12.1 All fees and out-of-pocket expenses related to this Agreement,
including without limitation, legal expenses, document costs, stamp
tax and any other taxes and expenses shall all be born by the Pledgee.
If it is required by law for the Pledgors to pay relevant taxes and
fees, the Pledgee shall reimburse all taxes and fees paid by the
Pledgors.
13. FORCE MAJEURE
13.1 "Force Majeure" means any event that is beyond the reasonable control
of one party and is not avoidable even under reasonable attention of
the affected party, including without limitation, governmental act,
natural power, fire, explosion, storm, flood, earthquake, tide,
lightening and war, provided that, the deficiency of credit, capital
or fund-raising shall not be deemed as an event out of reasonable
control of one party. The party affected by Force Majeure shall notify
such exemption event to the other party.
13.2 In the event of delay or suspension of implementation of this
Agreement due to any Force Majeure as defined above, the party
affected by such Force Majeure will not be required to assume any
liability under this Agreement in the extent of delay or suspension.
The affected party shall take appropriate measures to diminish or
eliminate the influence of such Force Majeure and shall try to resume
with performance of obligation delayed or suspended by such Force
Majeure. Upon elimination of Force Majeure, the parties agree to
resume performance under this Agreement at its best effort.
14. CONFIDENTIAL RESPONSIBILITY
The parties to this Agreement acknowledge and confirm that any oral or
written materials exchanged with each other concerning this Agreement are
confidential. All parties shall keep all of such materials in
confidentiality and may not disclose to any third party any relevant
material without written consent of other parties, except (a) materials
that have been or will be known by the public (only if it is not disclosed
by the receiving party to the public without permission); (b) materials
disclosed as required by applicable law or rules or regulations of any
stock exchange; or (c) materials disclosed to the legal or financial
advisor of any party in connection with the transaction as involved herein,
provided that such legal or financial advisor shall assume similar
confidential responsibility as that under this provision. The disclosure by
any employee or engaged entity of either party will be deemed as disclosure
of such party and such party shall be liable for its breach in accordance
with this Agreement.
15. RESOLUTION OF DISPUTE
15.1 This Agreement shall be governed by and interpreted according to PRC
law.
15.2 In event of any dispute arising among the parties concerning the
interpretation and implementation of any provision under this
Agreement, the parties shall resolve such dispute through discussion
in good faith. In case of failure to discuss, any party may submit
relevant dispute to China International Economic and Trade Arbitration
Commission for arbitration in accordance
with its then valid arbitration rules. The place of arbitration shall
be Shenzhen and the language to be used in such arbitration shall be
Chinese. The arbitration award shall be final and binding on the
parties.
16. NOTICE
Any notice sent by any party hereto for exercise or performance of its
right or obligation under this Agreement shall be made in writing. In case
of personal delivery, the notice will deemed to be delivered at the time
when delivered; in case of tele-fax or facsimile, at the time of
transmission. If the delivery date is not a business day or the delivery is
made after business time, the next following business day of such date will
be the delivery date. The delivery place refers to the addresses of the
parties hereto on the first page of this Agreement or other addresses
notified at any time in writing. In writing includes in facsimile and
telefax.
17. ENTIRENESS OF AGREEMENT
The parties confirm that upon effectiveness, this Agreement constitutes the
entire agreement and understanding of the parties hereto with respect to
the subject matter of this Agreement and completely supersedes all prior
oral or/and written agreement and understanding among the parties before
this Agreement with respect to the subject matter hereof.
18. SEVERALTY OF AGREEMENT
If any provision under this Agreement is held to be invalid or
unenforceable due to conflict with relevant law, then such provision shall
be deemed to be invalid only in the extent of jurisdiction of relevant law
and may not affect the legal effect of other provisions hereof.
19. ANNEXES OF AGREEMENT
The annexes attached to this Agreement are part of the Agreement.
20. AMENDMENT AND SUPPLEMENT TO AGREEMENT
20.1 The parties may make amendment and supplement to this Agreement
through written agreement. With appropriate signature of the parties,
such amendment agreement and supplementary agreement related to this
Agreement shall be a component part of this Agreement. In case that
there is any conflict between any amendment agreement or supplementary
agreement entered into by the parties after this Agreement and this
Agreement, such amendment agreement or supplementary agreement made
later shall prevail.
20.2 This Agreement as well as any amendment, supplement or modification
hereto shall be made in writing and shall become effective after
signed and sealed by the parties.
21. COPIES OF AGREEMENT
This Agreement is made in Chinese with six originals. Each of Party A,
Party B and Party C has one original, with the rest used for registration
and filing. Each original shall have the same legal effect.
IN WITNESS WHEREOF, the parties have caused their respective legal
representative or authorized representative to sign on this Agreement on the
date set forth above as proof of credit.
[No context below]
PLEDGEE: SHENZHEN NEPSTAR PHARMACEUTICAL CO., LTD.
Legal Representative/ authorized representative: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Seal: /s/ Shenzhen Nepstar Pharmaceutical Co., Ltd.
PLEDGOR: FENG TU
Signature: /s/ Feng Tu
PLEDGOR: ▇▇▇▇▇▇ ▇▇▇▇
Signature: /s/ ▇▇▇▇▇▇ ▇▇▇▇
Annex I Regional Chain Companies
1. Shenzhen Nepstar Chain Co., Ltd.
2. Dalian Nepstar Chain Co., Ltd.
3. Guangzhou Nepstar Chain Co., Ltd.
4. Jiangsu Nepstar Chain Co., Ltd.
5. Shandong Nepstar Chain Co., Ltd.
6. Shanghai Nepstar Chain Co., Ltd.
7. Sichuan Nepstar Chain Co., Ltd.
8. Hangzhou Nepstar Chain Co., Ltd.
9. Ningbo Nepstar Chain Co., Ltd.
10. Tianjin Nepstar Chain Co., Ltd.
11. Qingdao Nepstar Chain Co., Ltd.