**Exhibit10.7**

 

**LOAN AND INTEREST PLEDGE AGREEMENT**

 

This Loan and Interest Pledge Agreement (the“Agreement”) is made to be effective as of the 4th day of September,2003, by Zhang Wanquin (“Wanquin”), Li Min (“Min”) and INTAC International,Inc., a Nevada corporation (“INTAC”).

 

WHEREAS, INTAC desires to loan Ten Million Six HundredEighty Seven Thousand Five Hundred Hong Kong Dollars ($10,687,500.00) to twoindividuals, Wanquin and Min;

 

WHEREAS, Wanquin and Min desire to create an entity tobe called Tianjin Weilian (“Weilian”) and transfer such HKD $10,687,500.00 toWeilian;

 

WHEREAS, Wanquin and Min intend to cause Weilian touse this HKD $10,687,500.00 to purchase a forty-five percent (45%) ownershipshare (the “Interest”) in a joint venture called Beijing Intac PurunEducational Development Ltd. (“Beijing Joint Venture”);

 

WHEREAS, Wanquin and Min intend to transfer suchInterest to INTAC upon INTAC’s receipt of a nationwide  content provider license (“CP License”) forChina by the Chinese Ministry of Information Industry;

 

WHEREAS, Wanquin, Min and INTAC intend to secure theloan from INTAC to Wanquin and Min with a security interest in the Interest;and

 

WHEREAS, as an additional condition to in order forWanquin and Min to complete their obligations under this Agreement, INTAC shallprovide Seven Million One Hundred Twenty Five Thousand Hong Kong Dollars($7,125,000.00) to two individuals, Zou Biao (“Biao”) and Wu Fengshen(“Fengshen”) in order for Biao and Fengshen to create an entity called Tianjin YinFang, which entity shall use such HKD $7,125,000.00 to acquire a thirty percent(30%) interest in Beijing Joint Venture.

 

NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutualpromises herein, and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, Wanquin, Min and INTAC agree asfollows:

 

1.             AMOUNT AND REPAYMENTOF THE LOAN

 

1.1           LoanAmount.  INTAC agrees, subject tothe terms and conditions of this Agreement, to extend a loan to Wanquin and Minin a total amount of Ten Million Six Hundred Eighty Seven Thousand Five HundredHong Kong Dollars ($10,687,500.00) (the “Loan”).  The Loan shall be interest-free. The Loan amount shall be provided to Wanquin and Min on September 22,2003.

 

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1.2           Dateof Repayment.  The Loan, togetherwith any other monies owing under this Agreement by Wanquin and Min, shallbecome repayable upon the earliest to occur of any of the following events(each a “Repayment Date”):

 

1.2.1        in full, on the occurrenceof an Event of Default;

1.2.2        in full, in the event thatINTAC’s application for a CP License is not granted for any reason;

1.2.3        in full or in part, atINTAC’s sole discretion upon any date selected by INTAC.

 

1.3           LoanRepayment.  Without INTAC’s furtherwritten consent, repayment will be made only by means of assigning all rights,title and interest in the Interest to INTAC by execution of an Assignmentreasonably acceptable to INTAC.  Wanquinand Min hereby agree to assign and/or to cause Weilian to assign, all rights,title and interest in the Interest to INTAC immediately upon INTAC’s request asset forth below.

 

2.             REPRESENTATIONS ANDWARRANTIES OF WANQUIN AND MIN

 

2.1           Representations andWarranties.  Each of Wanquin and Minhereby represents and warrants to INTAC that:

 

2.1.1        the Loan will be usedsolely for the purpose of establishing Weilian and purchasing the Interest;

2.1.2        they have and shallmaintain the full power and authority to enter into this Agreement, to borrowthe Loan and to perform their obligations hereunder;

2.1.3        there are no civil orcriminal, claims, actions, suits, investigations or proceedings pending or, totheir knowledge, threatened against them;

2.1.4        there is no provision ofany agreement, enforceable judgment or order of any court binding on them oraffecting their property, which would in any way prevent or materiallyadversely affect their execution or performance of this agreement;

2.1.5        the execution andperformance of this Agreement and the realization of INTAC’S rights hereunderwill not violate any mortgage right, contract judgment, decree or law that isbinding upon it or its assets;

2.1.6        the Loan and/or transferof the Interest as contemplated herein will not result in the violation of anyterm or provision of the Beijing Joint Venture and will not violate any state,federal, international or other law;

2.1.7        they shall not, directlyor indirectly, engage in any business activities that compete with the BeijingJoint Venture for a period of two (2) years from the effective date of thisAgreement;

2.1.8        they will, at any time,defend the Interest against any third party claims;

2.1.9        without the consent ofINTAC, except as expressly permitted hereunder, they will not arrange orotherwise permit or cause the issuance of any new interests in the BeijingJoint Venture;

2.1.10      they shall do or cause to bedone all such acts, and execute or cause to be executed any necessary documentsand registrations, such that the conversion

 

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of the Loan, the InterestTransfer (defined below) and all other transactions contemplated hereunder areeffected in a legal and valid manner; and

2.1.11      they shall maintain asstrictly confidential the existence and provisions of this Agreement, as wellas of any correspondence, resolutions, ancillary agreements and any otherdocumentation associated herewith.

 

3.             COVENANTS

 

3.1           AffirmativeCovenants.  Each of Wanquin and Minhereby covenants that she will furnishtoINTAC, within 10 days after the end of each month after Weilian and BeijingJoint Venture have been established, with financial statements of such entitiesand such additional information as INTAC may from time to time reasonablyrequest.

 

3.2           Further Covenants.  Each of Wanquin and Min further covenantsthat, from the effective date hereof until full repayment of the Loan has beeneffected, she will not, directly or indirectly, and will ensure that BeijingJoint Venture does not, except with the prior written consent of INTAC:

 

3.2.1        incur or assume any debtthat is not due and payable in the ordinary course of its business;

3.2.2        incur or assume anymortgage, pledge or other encumbrance of any kind upon any assets of BeijingJoint Venture, whether now owned or hereafter acquired;

3.2.3        enter into any agreement,arrangement, commitment or understanding to, or actually, acquire all or partof the substantial assets of any third party;

3.2.4        enter into any agreement,arrangement, commitment or understanding to, or actually, sell, lease, orotherwise dispose of any assets of Beijing Joint Venture, except in theordinary course of business;

3.2.5        enter into any agreement,arrangement, commitment or understanding to, or actually, make loans oradvances to any third party;

3.2.6        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 orother entity; or

3.2.7        permit the Beijing JointVenture to conduct any business other than obtaining a nationwide contentprovider license for China from the Chinese Ministry of Information Industryand offering information services over mobile and internet networks pursuant tosuch license.

 

3.3           Rights of INTAC.  Wanquin and Min agree that they shall obtainINTAC’s written approval prior to undertaking any of the following, directly orindirectly:

 

3.3.1        appointing or removing thedirectors of the Beijing Joint Venture;

3.3.2        appointing or removing thegeneral manager of the Beijing Joint Venture;

3.3.3        approving the terms ofemployment of the Beijing Joint Venture;

3.3.4        appointing or removing anyof the senior management personnel and any key personnel of the Beijing JointVenture;

3.3.5        approving the terms ofemployment of the senior management personnel and key personnel of the BeijingJoint Venture; and/or

 

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3.3.6        approving or authorizingany other operations of the business conducted by the Beijing Joint Venture.

 

4.             INTERESTPLEDGE/ASSIGNMENT OF RIGHTS

 

4.1           Interest Pledge.  As security for the performance in full ofthe obligations of Wanquin and Min under this Agreement, Wanquin and Min eachhereby pledges to INTAC (and will cause Weilian to pledge to INTAC), andcreates (and will cause Weilian to create) in favor of INTAC or INTAC’sdesignee (as appropriate), a first priority security interest in all of therights, title and interest in and to:

 

4.1.1        the Interest; and

4.1.2        all of her incidentalrights with respect to the Interest, now or hereafter acquired.

 

Such security interestshall be perfected by such actions by Wanquin and Min, individually, or onbehalf of Weilian, as may be reasonably requested by INTAC from time to time.

 

4.2           Power of Attorney.  Each of Wanquin and Min hereby irrevocablygrants and will cause Weilian to grant to INTAC or its designee (asappropriate) full power of attorney for the purpose of carrying out theprovisions of this Agreement, as well as taking any action and executing any instrumentthat INTAC in good faith deems necessary to accomplish for purposes of thisAgreement.

 

4.3           Rights Assignment.  As of the Effective Date, and withoutactually assigning or transferring the Interest, Wanquin and Min agree toassign or agree to cause Weilian, as the case may be, to assign all of theirrespective rights whether economic, voting, operational or otherwise, in theBeijing Joint Venture to INTAC.

 

5.             EVENTS OF DEFAULT

 

5.1           The occurrence of anyof the following events shall constitute a default of the Loan hereunder and abreach of this Agreement by Wanquin and/or Min (as appropriate) (an “Event ofDefault”):

 

5.1.1        Interest Transfer (asdefined below) has not been effected within ten (10) working days after thecorresponding Conversion Date (as defined below) or such time as may otherwisebe agreed upon by the Parties;

5.1.2        either Wanquin or Min isin breach of any of the terms and conditions hereof, and such breach has notbeen cured within 10 days after receipt of INTAC’s written notice of suchbreach;

5.1.3        any representation orwarranty made by either Wanquin or Min herein shall prove to have been false ormisleading in any material respect;

5.1.4        Wanquin or Min makes anyarrangement with her respective creditors or takes or suffers any similaraction in consequence of debt; or

 

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5.1.5        Any judgment is made underany applicable law against Wanquin or Min that exceeds Fifty Thousand UnitedStates Dollars ($50,000.00).

 

6.             LOAN CONVERSION

 

6.1           Share Conversion.    Asof the Repayment Date, the Loan shall be convertible into the Interest on thebasis that 100 percent of the Loan amount equals 100 percent of the Interest.For the avoidance of doubt, if 10 percent of the Loan were repayable by Wanquinand/or Min, then such Party or Parties, as the case may be, would be requiredto transfer 10% of the Interest to INTAC. The Loan shall become repayable tosuch extent as INTAC may from time to time request, until the entire Loanamount has been repaid.**** INTAC shall request to convert all or a percentage of the Loan bymeans of a written notice to Wanquin and Min that specifies the percentage ofthe Loan to be converted into part of the Interest (“Conversion Notice”).

 

6.2**          **InterestTransfer.

 

6.2.1  Immediatelyupon receipt of a Conversion Notice (“Conversion****Date”), Wanquin and Minshall effect or cause Weilian to effect the transfer of the portion of theInterest designated in the Conversion Notice, either to INTAC directly or tothe designee specified by INTAC in the Conversion Notice (each an “InterestTransfer”).

 

6.2.2  Forthe avoidance of doubt, upon the completion of the conversion of the Loan andthe transfer of all of the Interest of Wanquin, Min and/or Weilian, asapplicable, (whether pursuant to this Article 6 or an Event of Default), INTACshall hold as much of the Interest as is permissible under any published andavailable laws and regulations of the People’s Republic of China (“PRC”), andthe remainder of the Interest (if applicable) shall be held by the designees ofINTAC, with Wanquin, Min and/or Weilian no longer holding any part of theInterest. At such time, this Agreement shall be deemed to have terminated, andthe obligations of Wanquin and Min hereunder to have been fulfilled (with theexception of those under 2.1.10 and 2.1.11).

 

6.3**  **Delay.    Wanquinand Min each agrees to notify INTAC immediately of any delay in effecting anInterest Transfer or completing the procedures described in Article 6.2 above,together with the reason for such delay and revised effective date of theInterest Transfer.

 

6.4**  **Repayment ofLoan.    The corresponding portion of the Loan shall bedeemed to have been repaid as of the effective date of each Interest Transfer.Once Wanquin, Min and/or Weilian have completed the Interest Transfers inaccordance with the provisions of this Article 6, the Loan shall be deemed tohave been repaid in full and Wanquin and Min shall be deemed to have performedtheir repayment obligations hereunder.

 

7.             MISCELLANEOUS

 

7.1**  **Notices andDelivery**.**    All notices and communications amongthe Parties shall be made in writing and in the English language by facsimiletransmission with confirmation of transmission, delivery in person (includingcourier service) or registered airmail letter to the appropriate correspondenceaddresses set forth below:

 

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| If to Wanquin: |   | Apt 2-6 Tiwei. No 14  Dong Feng Donglu |
|----------------|--------|----------------------------------------|
|           |   | Panlong Dist., Knaming,  P.R. China    |
|           |   |                                   |
| If to Min:     |   | No. 19 Bita Ln, Parlong  Dist.         |
|           |   | Knaming, P.R. China                    |
|           |   |                                   |
| If to INTAC:   |   | Unit 3-5, 17/F.,  Clifford Centre      |
|           |   | 778-784 Cheung Sha Wan  Road           |
|           |   | Kowloon, Hong Kong                     |

 

 7.2**  **Timing**.**    Thetime of receipt of the notice or communication shall be deemed to be:

 

7.2.1  Ifby facsimile transmission with confirmation of transmission, at the timedisplayed in the corresponding transmission record, unless such facsimile issent after 5:00 p.m. or on a non-business day in the place where it isreceived, in which case the date of receipt shall be deemed to be the followingbusiness day;

 

7.2.2  ifin person (including express mail), on the date that the receiving Party or aperson at the receiving Party’s address signs for the document; or

 

7.2.3  ifby registered mail, on the 10th day after the date that is printedon the receipt of the registered mail.

 

7.3**  **ForeignExchange**. **All amounts payableby Wanquin and Min hereunder, if paid in cash pursuant to the terms of thisAgreement, shall be paid in United States Dollars.  If, as a result of foreign exchange restrictions in the PRC, itbecomes illegal for either Wanquin or Min to make any payment to INTAC inUnited States Dollars, then she shall make that payment in any other currencypermitted for such purposes, as shall be stipulated by INTAC at its solediscretion.

 

7.4**  **Amendments**.**    Theprovisions of this Agreement may not be waived, modified or amended except byan instrument in writing signed by the Parties (which instrument shall beattached as an Appendix hereto).

 

7.5**  **No Waiver**.**    Failureor delay on the part of any Party to exercise any right under this Agreementshall not operate as a waiver thereof.

 

7.6**  **Severability**.**    Theinvalidity of any provision of this Agreement shall not affect the validity ofany other provision of this Agreement that is unrelated to that provision.

 

7.7**  **Survival**.**    Theconfidentiality obligations of the Parties hereunder shall remain in full forceand effect regardless of the termination of this Agreement for any reason.

 

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7.8**  **Successors**.**    ThisAgreement shall be binding upon the Parties and upon their respectivesuccessors and assigns (if any).

 

7.9**  **Assignment**.**    NeitherWanquin nor Min may assign or otherwise transfer her rights or obligationsunder this Agreement without the prior written consent of INTAC.

 

7.10**  **Governing Law**.**    Theexecution, validity, interpretation and implementation of this Agreement andthe settlement of disputes hereunder shall be governed by the laws of the Stateof Texas.  The parties herebyirrevocably consent to the jurisdiction of the state and federal courts locatedin Dallas, Texas, in any action arising out of or relating to this Agreement,and waive any other venue to which either party might be entitled by domicileor otherwise.

 

7.11**  **Arbitration**.**    Alldisputes arising out of or in connection with this Agreement shall be finallysettled under such arbitration rules as selected by INTAC in such location asselected by INTAC**by a sole arbitrator appointed in accordance with theselected rules conducted in the English language.

 

7.12**  **EntireAgreement**.**    This Agreement constitutes the entireagreement between the Parties and supersedes all prior discussions,negotiations and agreements.

 

7.13**  **Language**.    **This Agreement will be signed in 3 sets of originals in the Chineseand English language, with 1 original for each Party.  The two language versions shall have equal validity and thewording of each version shall be deemed to carry the same meaning.  In the event of any discrepancy between thewordings of the said two versions, such discrepancy shall be interpretedaccording to the purpose of this Agreement and based on the English text.

 

 

IN WITNESS WHEREOF, thisLoan and Interest Pledge Agreement is executed follows:

 

 
| PARTIES: | /s/ Zhang Wanquin             |   |
|----------|-------------------------------|--------|
|     | Zhang Wanquin                 |
|     |
|     | /s/ Li Min                    |   |
|     | Li Min                        |
|     |
|     |
|     | INTAC International,  Inc.    |
|     |
|     | By: /s/ Wei Zhou              |   |
|     | Its: Chief Executive  Officer |
|          |                               |        |  |

 

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