Exhibit
10.4


 


PLEDGE AGREEMENT


 


THIS PLEDGE AGREEMENT (this “Agreement”) is made on August 28, 2009
in Beijing:


 


BETWEEN


 


	
  Pledgee:

  	
  Xuecheng Century (Beijing) Information Technology
  Co., Ltd.

  
	
   

  	
   

  
	
   

  	
  Registered Address: Room 172, Building
  No. 1, 3 Xijing Road, Badachu High Technology Park, Shijingshan
  District, Beijing

  



 


	
  Pledgors:

  	
  Jin
  Xin

  	
  ID
  No.: 110105197702260013;

  
	
   

  	
  Li Rubin

  	
  ID
  No.:  372831197709070053;

  
	
   

  	
  Yao Jinbo

  	
  ID
  No.:
  432321197610190959;

  
	
   

  	
  Zhu Changyong

  	
  ID
  No.: 342101197008140010;

  
	
   

  	
  Deng Qiang

  	
  ID
  No.: 110102196711032318;

  
	
   

  	
  Piao Junhong

  	
  ID
  No.: 220204197704073320;

  
	
   

  	
  Wang
  Yafei

  	
  ID
  No.: 610103195504123620;

  
	
   

  	
  Chai
  Chaoming

  	
  ID
  No.: 310110196911148013;

  
	
   

  	
  Song
  Junbo

  	
  ID
  No.: 140502197512043016.

  



 


WHEREAS:


 


The Pledgors collectively own 100% of the equity
interest of Beijing Xueda Information Technology Co., Ltd., a limited
liability company registered in Beijing, China (the “Company”), among which:


 


	
  (1)

  	
  Jin Xin owns 27.03968%;

  
	
  (2)

  	
  Li Rubin owns 23.48493%;

  
	
  (3)

  	
  Yao Jinbo owns 15.66018%;

  
	
  (4)

  	
  Zhu Changyong owns 2.85022%;

  
	
  (5)

  	
  Deng Qiang owns 2.13499%;

  
	
  (6)

  	
  Piao Junhong owns 20.03308%;

  
	
  (7)

  	
  Wang Yafei owns 3.51877%;

  
	
  (8)

  	
  Chai Chaoming owns 2.26258%;

  
	
  (9)

  	
  Song Junbo owns 3.01557%.

  



 


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The Pledgee is a wholly foreign-owned company
registered in Beijing, China. The Pledgee has entered into the Exclusive
Technology Consulting and Management Service Agreement (the “Service Agreement”)
with the Company on August 28, 2009.


 


In order to ensure that the Pledgee will be
able to collect the consulting service fees normally from the Company pursuant
to the Service Agreement, the Pledgors hereby pledge all their equity interest
in the Company as security for the consulting service fees under the Service
Agreement.


 


NOW THEREFORE, the Pledgors and the
Pledgee through mutual negotiations hereby enter into this Agreement based upon
the following terms:


 


1.             DEFINITIONS


 


1.1           “Pledge” refers to the full content
of Section 2 hereof.


 


1.2           “Equity
Interest” refers to the equity interest in the Company held by the Pledgors as
follows: 27.03968% by Jin Xin, 23.48493% by Li Rubin, 15.66018% by Yao Jinbo, 2.85022%
by Zhu Changyong, 2.13499% by Deng Qiang, 20.03308% by Piao Junhong, 3.51877%
by Wang Yafei,  2.26258% by Chai
Chaoming, and 3.01557% by Song Junbo, totaling 100% of the equity interest of
the Company.


 


1.3           “Term of Pledge” refers to the period set forth in Section 3
hereof.


 


1.4           “Service Agreement” refers to the Exclusive Technology Consulting and Management Service Agreement
entered into by the Company and the Pledgee on August 28, 2009.


 


1.5           “Event of Default” refers to any event set forth in Section 7
hereof.


 


1.6           “Notice of Default” refers to the notice of default
issued by the Pledgee in accordance with this Agreement.


 


2.             Pledge


 


2.1           The Pledgors hereby pledge all their equity Interest
in the Company to the Pledgee as security for the collection of the consulting
services fees by the Pledgee under the Service Agreement.


 


2.2           Pledge hereunder refers to the rights owned by the
Pledgee, who shall be entitled to a priority in receiving payment by the
evaluation or proceeds from the auction or sale of the equity interest pledged
by the Pledgors to the Pledgee.


 


3.             Term of Pledge


 


3.1           The Pledge shall be created upon registration with the relevant
administration for industry and commerce. The Pledgors and the Pledgee shall,
in accordance with the Property Law of the People’s
Republic of 


 


2

















 


China, the Measures for the Registration of Equity Pledge
with the Administrative Authority for Industry and Commerce and the
relevant laws and regulations of the People’s Republic of China (the PRC),
submit the pledge registration application to the relevant administration for
industry and commerce within ten (10) days from the date on which this
Agreement has been executed. The Term of Pledge shall be ten (10) years.
In the event of any extension of the term of the master contract secured by the
Pledge, the effective term of the Pledge hereunder shall be extended
accordingly.


 


3.2           During the Term of Pledge, the Pledgee shall be entitled to dispose of
the Pledge pursuant to this Agreement and the relevant laws and regulations of
the PRC in the event that the Company fails to pay the consulting service fees
in accordance with the Service Agreement.


 


4.             Maintenance of the Pledge Certificates


 


4.1           During the Term of Pledge hereunder, the Pledgors shall execute, or
cause the Company to execute, the Capital Contribution Certificate and
Shareholder Register, and deliver such formally executed documents to the
Pledgee for it to maintain such documents during the Term of Pledge hereunder.


 


4.2           The Pledgee shall be entitled to
collect all cash income and non-cash income, such as all dividends, generated
by the Equity Interest from the execution date of this Agreement.


 


5.             Representations and Warranties of the
Pledgors


 


5.1           Pledgors are the legal owners of the Equity Interest.


 


5.2           Any exercise by the Pledgee of its rights under this Agreement shall not
be interfered by any other party at any time.


 


5.3           The Pledgee shall have the right to dispose of and transfer the Equity
Interest in any manner set forth in this Agreement.


 


5.4           The Pledgors have not created any
other pledge on the Equity Interest or encumbered the Equity Interest to any
other party except for the Pledge.


 


6.             Covenants of the Pledgors


 


6.1           The Pledgors hereby covenant to the Pledgee that, during the term of
this Agreement, the Pledgors shall:


 


6.1.1        not
transfer the equity interest, create or permit the existence of any pledge or
other form of security thereon that may have an impact on the rights or interests of
the Pledgee, without the prior written consent of the
Pledgee, except for the transfer of equity interest to the Pledgee or a person
designated by the Pledgee pursuant to the 


 


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Exclusive Purchase Right Contract entered into by the
Pledgors, Pledgee and the
Company on August 28, 2009;


 


6.1.2        comply
with the provisions of all laws and regulations applicable to the pledge of
rights, and within five (5) days of receipt of any notice, order or
recommendation issued or prepared by the relevant competent authorities
regarding the Pledge, shall present such notice, order or recommendation to the
Pledgee, and shall comply with such notice, order or recommendation or submit
objections and representations with respect to the aforementioned matters upon
the Pledgee’s reasonable request or with the consent of the Pledgee;


 


6.1.3        promptly
notify the Pledgee of any event or notice received thereby that may have an
impact on the Pledgors’ equity interest or any portion thereof, as well as any
event or notice received thereby that may change any warranty and other
obligation of the Pledgors hereunder or affect the Pledgors’ performance of their obligations
hereunder.


 


6.2          The Pledgors agree that the rights acquired by the Pledgee in accordance
with this Agreement with respect to the Pledge shall not be interrupted or
harmed by the Pledgors or any successors thereof or any person authorized
thereby or any other person through any legal
proceeding.


 


6.3           To protect or perfect the security hereunder for payment of the
consulting service fees under the Service Agreement, the Pledgors hereby
undertakes to the Pledgee that it shall execute in good faith and cause other
parties who have an interest in the Pledge to execute all title certificates
and deeds and/or take and cause other parties who have an interest in the Pledge to  take action as required by the Pledgee,
facilitate the exercise by the Pledgee of the rights and authority granted
thereto by this Agreement, enter into all relevant documents regarding
ownership of equity interest with the Pledgee or its designee(s) (natural
person/legal person), and provide the Pledgee within a reasonable time with all
notices, orders and decisions regarding the Pledge as deemed necessary by the
Pledgee.


 


6.4           The Pledgors hereby undertake to the Pledgee that the Pledgors shall
comply with and perform all warranties, covenants, agreements, representations
and conditions for the benefit of the Pledgee. In
the event of any failure to perform or any partial performance of such
warranties, covenants, agreements, representations and conditions, the Pledgors
shall indemnify for all losses suffered by the Pledgee resulting therefrom.


 


6.5           The Pledgors hereby undertakes to the Pledgee that the Pledgors shall be
jointly and severally liable for the obligations hereunder.


 


6.6           The Pledgors hereby irrevocably agree to waive any right of first
refusal to any transfer of equity interest resulting from the Pledgee’s
exercise of the Pledge with respect to the Equity Interest pledged as security
by any other shareholders of the Company to the Pledgee.


 


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7.             Events of Default


 


7.1           The following events shall be deemed as the events of default:


 


7.1.1        The
Company fails to make full payment of the consulting service fees as scheduled
under the Service Agreement;


 


7.1.2        The
Pledgors make any materially false or misleading representations or warranties
under Section 5 hereof, and/or the Pledgors breach the representations or
warranties under Section 5 hereof;


 


7.1.3        The
Pledgors breach the covenants under Section 6 hereof;


 


7.1.4        The
Pledgors breach any provision hereof;


 


7.1.5        The
Pledgors waive the pledged equity interest or transfer the pledged equity
interest without the prior written consent of the Pledgee except as provided in
Section 6.1.1 hereof;


 


7.1.6        Any
borrowing, guarantee, indemnification, commitment or other debt service
liability of the Pledgors (i) has been required to be payable or performed
prior to maturity as a result of any breach; or (ii) has become due but cannot
be paid or performed in a timely manner, causing the Pledgee to believe that
the ability of the Pledgors to perform the obligations hereunder has been
affected;


 


7.1.7        The
Pledgors are incapable of repaying the general debt or other debt;


 


7.1.8        Due
to the promulgation of the relevant laws, this Agreement becomes illegal, or
the Pledgors are not capable of continuing to perform the obligations hereof;


 


7.1.9        All
government consents, permits, approvals or authorizations necessary for the
enforcement or effectiveness of this Agreement have been revoked, suspended,
invalidated or materially changed;


 


7.1.10      The
property of the Pledgors is adversely affected, causing the Pledgee to believe
that the ability of the Pledgors to perform the obligations hereof has been
adversely affected;


 


7.1.11      The
successors or agents of the Pledgors are only able to perform a portion of or
refuse to perform the payment obligations under the Service Agreement;


 


7.1.12      Any
other circumstance in which the Pledgee cannot exercise its right of disposal
with respect to the Pledge as required by the relevant laws.


 


7.2         The
Pledgors shall immediately give a written notice to the Pledgee if


 


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the Pledgors are aware of or discover that any event
described in Section 7.1 hereof or any event that may result in the
foregoing events has occurred.


 


7.3           Unless
the event of default under Section 7.1 hereof has been solved to the
Pledgee’s satisfaction, the Pledgee, at any time when the event of default by
the Pledgors occurs or thereafter, may give a written notice of default to the Pledgors
and require the Pledgors to immediately make full payment of the outstanding
fees under the Service Agreement and other payables or dispose of the Pledge in
accordance with Section 8 hereof.


 


8.             Exercise of Pledge


 


8.1           Prior to full payment of the consulting service fees under the Service
Agreement, the Pledgors shall not transfer the Pledge without the prior written
consent of the Pledgee.


 


8.2           Upon exercise of the Pledge, the Pledgee shall give a notice of default
to the Pledgors.


 


8.3           Subject to Section 7.3, the Pledgee, at any time
when or after giving a notice of default pursuant to Section 7.3, may
exercise its right of disposal with respect to the Pledge.


 


8.4           The Pledgee shall be entitled to
priority in receiving payment by the evaluation or proceeds from the auction or
sale of whole or part of the equity interest set forth herein in accordance
with legal procedure, until the outstanding consulting
service fees under the Service Agreement and other payables are repaid.


 


8.5           The Pledgors shall not hinder the Pledgee from disposing of the Pledge
hereunder, and shall provide necessary assistance so that the Pledgee may
realize its Pledge.


 


9.             Assignment


 


9.1           The Pledgors
shall not donate or transfer its rights and obligations hereunder without the
prior consent of the Pledgee.


 


9.2           This Agreement shall be binding upon
the Pledgors and their successors and be binding on the Pledgee and each of its
successors and assignees.


 


9.3           The Pledgee may transfer any or all
of its rights and obligations under the Service Agreement to its designee(s) (natural
person or legal entity) at any time. In this case, the assignee shall enjoy and
undertake the same rights and obligations of the Pledgee hereunder, as if the
assignee is a party hereto. When the Pledgee transfers the rights and
obligations under the Service Agreement, at the request of the Pledgee, the
Pledgors shall


 


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execute the
relevant agreements and/or documents with respect to such transfer.


 


9.4           In the event of a change of the Pledgee resulting from
the transfer, the successor parties to the pledge shall execute a new pledge
contract.


 


10.          Termination


 


Upon payment of the consulting service fees under the
Service Agreement and release of the Company’s obligations thereunder, this
Agreement shall terminate, and the Pledgee shall, as soon as reasonably
practicable, cancel or discharge this Agreement.


 


11.          Formality Fees and Other
Expenses


 


11.1         The Pledgors shall be responsible
for all fees and actual expenses in relation to this Agreement, including, but
not limited to, legal fees, cost of production, stamp tax and any other taxes
and expenses. If the Pledgee pays the relevant taxes as required by law, the
Pledgors shall fully indemnify the Pledgee for the taxes and expenses paid by
the Pledgee.


 


11.2         The
Pledgors shall be responsible for all fees (including, but not limited to, any
taxes, formality fees, administration fees, litigation fees, attorney’s fees
and various insurance premiums in connection with the disposal of the Pledge)
incurred in connection with any failure by the Pledgors to pay any taxes or
expenses payable hereunder or any other reason which cause the Pledgee to
recourse by any means or ways.


 


12.          Force Majeure


 


12.1         If the performance of this Agreement is delayed or prevented by any “force
majeure event”, the party affected by such force majeure event shall be
relieved from any liability hereunder only to the extent of such delay or
prevention. A “force majeure” event means any event which is beyond the
reasonable control of a party and which remains unavoidable despite reasonable
care on the part of such affected party, including without limitation acts of
government, acts of God, fire, explosion, geographic change, storm, flood,
earthquake, tide, lightening or war. Any inadequacy in creditworthiness,
capital or financing shall not be deemed an event beyond the reasonable control
of a party. The party affected by a force majeure event seeking to be excused
from performance of its obligations under this Agreement or any provision
hereof shall notify the other party of such excusing event as well as the steps
to be taken by it for the purpose of performance of such obligations.


 


12.2         The
party affected by a force majeure event shall be relieved from any liability
hereunder with respect thereto, provided that the party seeking to be excused
from performance of obligations shall only be relieved from such liability to
the extent that such affected party use its reasonable and practicable efforts
to perform the Agreement and only within the scope of such delay or prevention. The parties agree to use their best efforts to


 


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resume the performance hereunder immediately after the
event resulting in such excuse from liability has been cured and remedied.


 


13.          Dispute Resolution


 


13.1         This Agreement shall be governed by,
and construed in accordance with, the laws of the PRC.


 


13.2         Any
dispute between the parties hereto in connection with the interpretation or
performance of the provisions hereof shall be resolved in good faith by the
parties through consultations. If the parties fail to resolve any dispute
within thirty (30) days of receipt of a written notice served by one party on
the other party requesting such consultations, either party may submit the
dispute to China International Economic and Trade Arbitration Commission for
arbitration in accordance with the then effective arbitration rules of
such commission. The place of arbitration shall be Beijing. The language of
arbitration shall be Chinese. The arbitration award shall be final and shall be
binding upon both parties.


 


14.          Exhibits


 


The Exhibits attached to this Agreement shall
constitute an integral part of this Agreement.


 


15.          Severability


 


If any provision hereof is found invalid or
unenforceable due to any inconsistency with relevant laws, such provision shall
be invalid or unenforceable only to the extent of the scope of application of
such laws and shall not affect the legal validity of any other provision of
this Agreement.


 


16.          Effectiveness


 


16.1         This Agreement and any amendments,
supplements or changes hereto shall be in writing and come into effect after
being executed and sealed by the parties.


 


16.2         This
Agreement is made in Chinese in eleven (11) originals with equal legal
validity.


 


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SIGNATURE PAGE (WITH NO TEXT)


 


 


	
  Pledgee:

  	
  Xuecheng Century (Beijing) Information Technology
  Co., Ltd. (Seal)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Authorized Representative:

  	
    /s/ HSU WILLIAM SHANG WI

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  HSU WILLIAM SHANG WI

  
					



 


 


Pledgors:


 


 


	
  Jin Xin

  	
   

  	
   

  	
  Li Rubin

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
    /s/ Jin Xin

  	
   

  	
  Signature:

  	
    /s/ Li Rubin

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Yao Jinbo

  	
   

  	
   

  	
  Zhu Changyong

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
    /s/ Yao Jinbo

  	
   

  	
  Signature:

  	
    /s/ Zhu Changyong

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Deng Qiang

  	
   

  	
   

  	
  Piao Junhong

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
    /s/ Deng Qiang

  	
   

  	
  Signature:

  	
    /s/ Piao Junhong

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Wang Yafei

  	
   

  	
   

  	
  Chai Chaoming

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
    /s/ Wang Yafei

  	
   

  	
  Signature:

  	
    /s/ Chai Chaoming

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Song Junbo

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature:

  	
    /s/ Song Junbo

  	
   

  	
   

  	
   

  



 


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