Document:

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Exhibit 10.1

PLEDGE AGREEMENT

among

BEIJING COL NETWORK TECHNOLOGY CO., LTD.

as Pledgor

SHENZHEN ZHONGXUN TENGINVESTMENT DEVELOPMENT CO., LTD.

as Pledgor

TIBET TIANTAI INVESTMENT MANAGEMENT CO., LTD.

as Pledgor

and

 CHINACAST CO., LTD.

and

CHINACAST TECHNOLOGY (SHANGHAI) LIMITED

as Pledgee and Secured Party

Dated as of November 15, 2000

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	ARTICLE I.

	 	DEFINITIONS AND INTERPRETATION	 	 	1	 
	 
	 	 	 	 	 	 
	ARTICLE II.

	 	ASSIGNMENT AND PLEDGE	 	 	4	 
	 
	 	 	 	 	 	 
	ARTICLE III.

	 	PERFECTION OF SECURITY	 	 	4	 
	 
	 	 	 	 	 	 
	ARTICLE IV.

	 	REPRESENTATIONS AND WARRANTIES
	 	 	6	 
	 
	 	 	 	 	 	 
	ARTICLE V.

	 	COVENANTS
	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE VI.

	 	SURETYSHIP PROVISIONS
	 	 	12	 
	 
	 	 	 	 	 	 
	ARTICLE VII.

	 	RIGHTS AND REMEDIES
	 	 	15	 
	 
	 	 	 	 	 	 
	ARTICLE VIII.

	 	GENERAL PROVISIONS
	 	 	19	 
	 
	 	 	 	 	 	 
	EXHIBIT A

	 	CAPITAL CONTRIBUTION VERIFICATION REPORT	 	 	 	 
	EXHIBIT B

	 	 ARTICLES OF ASSOCIATION OF CCL	 	 	 	 
	EXHIBIT C

	 	INSTRUMENTS OF OWNERSHIP	 	 	 	 

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PLEDGE AGREEMENT

     This PLEDGE AGREEMENT (the “Agreement”) is entered into as of November 15, 2000, by and
among BEIJING COL NETWORK TECHNOLOGY CO., LTD, a limited liability company organized and existing
under the laws of the People’s Republic of China (“PRC”), (“Beijing Col”); SHENZHEN ZHONGXUN TENG
INVESTMENT DEVELOPMENT CO., LTD., a limited liability company organized and existing under the
laws of the PRC (“Shenzhen Zhongxun”); TIBET TIANTAI INVESTMENT MANAGEMENT CO., LTD., a limited
liability company organized and existing under the laws of the PRC (“Tibet Tiantai”) (Beijing Col,
Shenzhen Zhongxun and Tibet Tiantai are referred to collectively as
the “Pledgors”); ChinaCast
Co., Ltd., a limited liability company organized and existing under the laws of the PRC
(hereinafter “CCL”), and ChinaCast Technology (Shanghai) Limited, a wholly foreign-owned limited
liability enterprise organized and existing under the laws of the PRC as pledgee and secured party
(hereinafter “CCT Shanghai”).

RECITALS

     WHEREAS, Beijing Col, Shenzhen Zhongxun, and Tibet Tiantai own respective ownership interests
of 29.8%, 0.2% and 70%, representing one hundred percent (100%) of the total registered capital
equity shares of CCL

     WHEREAS, the Pledgors have made full payment of their subscribed contribution to the
registered capital of CCL, as evidenced by Capital Contribution Verification Reports (as defined
below), a copy of which is attached hereto as Exhibit A;

     WHEREAS, CCT Shanghai and CCL have entered into the Technical Services Agreement, pursuant to
which CCT Shanghai will provide certain Services and Equipment (each as hereinafter defined) to
CCL;

     WHEREAS, to support its Secured Obligations (as hereinafter defined) with respect to the
Technical Services Agreement pursuant to which CCT Shanghai has agreed to provide, from time to
time, Services and/or Equipment to CCL; and,

     WHEREAS, it is a condition precedent to the provision of Services and ancillary Equipment by
CCT Shanghai under the Technical Services Agreement that the Pledgors shall have made the pledge
and assignment contemplated by this Agreement.

     NOW THEREFORE, in consideration of the foregoing recitals which form a part of this Agreement,
and the mutual promises, covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged,
the Pledgors and CCT Shanghai
hereby agree as follows:

ARTICLE I. DEFINITIONS AND INTERPRETATION

     1.1
Certain Defined Terms. As used in this Agreement, the following terms shall
have the following meanings (such meanings to be equally applicable to both the singular and
plural forms of the terms defined):

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     “Affiliate” means, with respect to any Person (other than an individual), any
corporation, company, partnership, association or other business entity (i) that is controlled by
such Person, (ii) that controls such Person or (iii) is under common control with such Person. For
purposes of this Agreement, “control” means ownership of more than 50% of the voting securities or
interests in another Person, or the ability to direct the management or policies of such Person,
whether by contract or otherwise.

     “Articles of Association” means the Articles of Association of CCL dated March, 1999, as
executed by the Pledgors, a copy of which is attached as Exhibit B hereto.

     “Capital Contribution Verification Reports” means, collectively, all capital contribution
verification reports issued by an independent certified public accountant registered in the PRC
and acceptable to CCT Shanghai, as well as all reports or instruments that may be issued in
replacement of, or as an addition to, any of the foregoing.

     “Equipment” means all of the equipment, auxiliary equipment, spare parts and associated
software and technical documentation, necessary to set up the Turbo 163 and DDN platforms for CCL
and its end-users as more fully set forth in Appendix A to the Technical Services Agreement.

     “Equipment Return Default” means an “Equipment Return Default” as defined in the Technical
Services Agreement.

     “Foreclosure” means any foreclosure and exercise of legal rights with respect to the Pledged
Collateral by the Pledgee upon an Equipment Return Default.

     “Governmental Authority” means any national, central, provincial, state or local government
and any political subdivision thereof and any other governmental, quasi governmental,
administrative, judicial, public or statutory body, ministry, department, instrumentality, agency,
authority, board, bureau, corporation or commission.

     “Instruments of Ownership” means all documents, corporate record books, corporate seals which
are listed in Exhibit C, including without limitation the zhengben of CCL’s business license as
duly issued by the SAIC.

     “Investment Certificates” means collectively, all investment certificates issued by CCL to
the Pledgors, and all other similar instruments representing the Pledgors’ Ownership Rights in
CCL, as well as all certificates or instruments that may be issued in replacement of, or as an
addition to, any of the foregoing.

     “Material Adverse Effect” means a material adverse effect on (i) the business, operations,
affairs, financial condition, assets, properties, or prospects of CCL or any of the Pledgors, or
(ii) the ability of CCL to perform its obligations under the Technical Services Agreement, or
(iii) the validity or enforceability of this Agreement or the Technical Services Agreement.

     “Ownership Rights” means the ownership interests (whether existing now or hereafter created)
of a Pledgor in CCL, including the right to receive dividends or other distributions, voting rights
and all other rights and benefits attaching thereto pursuant to the Articles of Association or
under applicable PRC law.

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     “Person” means an individual, partnership, corporation (including a business trust), joint
stock company, trust, unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency hereof.

     “Pledgee” means the CCT Shanghai in its capacity as Pledgee.

     “Pledged Collateral” has the meaning set forth in Section 2.1.

     “Pledgor” has the meaning set out in the first paragraph of this Agreement.

     “Pledge Documents” means this Agreement and the Technical Services Agreement.

     “Pledgor Required Registrations” has the meaning set forth in Section 3.1.

     “PRC” means the People’s Republic of China.

     “Pre-Default Distributions” has the meaning set forth in Section 2.1.

     “Relinquishment” means the relinquishment of Investment Certificates by the Pledgors and the
corresponding termination of CCT Shanghai’s security interest or a portion thereof in the Pledged
Collateral pursuant to Section 2.3 of the Technical Services Agreement and the transfer of such
Investment Certificates to WFOE, which shall occur either upon the election and notice by CCT
Shanghai pursuant to the terms of the Technical Services Agreement, or upon the termination of
this Agreement.

     “Relinquishment Date” means any date on which CCT Shanghai gives a written notice of
relinquishment to CCL pursuant Section 2.3 of the Technical Services Agreement.

     “Renminbi” or “RMB” means the lawful currency of the PRC.

     “SAIC” means the State Administration of Industry and Commerce of the PRC.

     “Secured Obligations” has the meaning set out in Section 2.1.

     “Secured Party” means the CCT Shanghai in its capacity as Pledgee or its designated Affiliate
or third party, as the case may be.

     “Services” means those technical and other related services to be provided by CCT Shanghai to
CCL as more fully set forth in Appendix A of the Technical Services Agreement.

     “Technical Services Agreement” means that certain Technical Services Agreement between CCT
Shanghai and ChinaCast Co., Ltd., dated as of even date herewith.

     “Transferred Equipment” has the meaning given to such term under Section 2.3 of the Technical
Services Agreement.

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ARTICLE II. ASSIGNMENT AND PLEDGE

     2.1
Pledge; Grant of Security Interest. As collateral security for the prompt and
complete performance of the obligation of CCL under Section 1.3 of the Technical Services Agreement
(the “Secured Obligations”), and to induce CCT Shanghai to extend Services and use of Equipment
pursuant to such Services at no additional charge, each Pledgor assigns, conveys, mortgages,
pledges and transfers to CCT Shanghai as a continuing pledge of and security interest in all of its
right, title and interest in and to the following, (collectively, the “Pledged Collateral”):

	 	(a)	 	the Ownership Rights;
	 
	 	(b)	 	all Investment Certificates and all rights and options to purchase or receive
interests in CCL in which a Pledgor at any time may have or obtain any right, title or
interest;
	 
	 	(c)	 	all dividends, interest, revenues, income, distributions and proceeds of any
kind, whether cash, instruments, securities or other property, received by or
distributable to a Pledgor in respect of, or in exchange for, the Investment
Certificates or any other Pledged Collateral; and
	 
	 	(d)	 	Instruments of Ownership and any other interest that a Pledgor may have or
obtain in respect of CCL.

provided that, notwithstanding anything to the contrary in this Section 2.1, any dividends or
other distributions properly paid to a Pledgor prior to the occurrence an Equipment Return Default
and in compliance with the terms of the Pledge Documents, applicable law and the constituent
documents of CCL shall not be subject to the security interest created by this Agreement and shall
not constitute Pledged Collateral (collectively, “Pre-Default Distributions”).

     2.2 Continuing Security Interest. It is the intent of the Pledgors that this
Agreement create a continuing first priority security interest in the Pledged Collateral. This
Agreement will remain in full force and effect until the Final Release Date. This Agreement will
continue to be effective or will be reinstated, if necessary, if at any time any amount received by
CCT Shanghai in respect of the Secured Obligations is rescinded or must otherwise be restored or
returned by CCT Shanghai for any reason, including the insolvency, bankruptcy, dissolution,
liquidation or reorganization of CCL, or the appointment of any intervenor or conservator of, or
similar official for CCL, or any of its properties.

ARTICLE III. PERFECTION OF SECURITY

     3.1 Approvals and Registrations of this Agreement. The Pledgors will promptly complete
all registrations and other formalities which may be required in order to create and perfect a
continuing first priority security interest in the Pledged Collateral in favor of CCT Shanghai
prior and superior to all other security interests, mortgages, liens and other interests to the
extent possible under PRC law. Such registrations and other formalities shall include but not be
limited to (i) filing and recordation of this Agreement with the appropriate SAIC

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office; (ii) recording such pledge of Ownership Rights in CCL’s shareholders’ register; and
(iii) obtaining notarization of this Agreement with a local PRC notary public, (collectively, the
“Pledgor Required Registrations”).

     3.2 Delivery of Certificates. Each Pledgor will deliver to CCT Shanghai,
immediately upon execution of this Agreement, all Investment Certificates and Instruments of
Ownership, copies of all Capital Contribution Verification Reports and evidence of the applicable
filings and registrations from relevant PRC Governmental Authorities. CCT Shanghai will hold all
such Investment Certificates until the termination of the pledge and security interest created on
the applicable Pledged Collateral and the corresponding Relinquishment of Investment Certificates.

	 	3.3	 	Pledgors Remain Liable to Perform.
	 
	 	(a)	 	Each Pledgor will at all times remain liable to observe and perform all the
obligations assumed by it in respect of the Pledged Collateral and the Pledge
Documents to which it is a party and otherwise in respect of the Ownership Rights to
the same extent as if this Agreement had not been executed, and the exercise by CCT
Shanghai of any rights assigned under this Agreement will not release any Pledgor from
any of such obligations, except upon the Final Release of the Pledged Collateral (in
which case the Pledgors shall be released only with respect to obligations arising
after completion of the Final Release). Unless CCT Shanghai elects to do so in
writing in accordance with its rights under this Agreement, (i) CCT Shanghai will have
no obligation or liability under the Pledge Documents or the Pledged Collateral or
otherwise by reason of this Agreement and (ii) CCT Shanghai will not be obliged to
perform any of the obligations of any Pledger thereunder or to make any payment or to
supervise or make any inquiry as to the due performance of or take any other action to
collect or enforce any claim or right in respect of the obligations of any party under
the Pledge Documents or the Pledged Collateral. Except as expressly set forth herein,
CCT Shanghai will have no obligation or liability towards a Pledgor or CCL by reason
of this Agreement.
	 
	 	(b)	 	If CCL fails to perform any of its obligations under the Technical Services
Agreement, CCT Shanghai may, but will not be obliged to, procure the performance of
such obligation. Any costs or expenses incurred by CCT Shanghai in connection with
the foregoing shall be governed by the Technical Services Agreement and constitute
Secured Obligations hereunder.
	 
	 	(c)	 	CCT Shanghai shall have no obligation to enforce any contractual obligation
or claim with respect to the Pledged Collateral, or to take any other action with
respect to the Pledged Collateral, except as expressly set forth in this Agreement.
	 
	 	(d)	 	Each Pledgor authorizes CCT Shanghai, in its own name, at any time and from
time to time:

     (i) to give notice to any Person of CCT Shanghai’s security interest
that may be necessary in order to create, perfect, maintain, protect or
enforce CCT Shanghai’s security interest; and

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     (ii) to communicate with CCL with regard to any matter
relating to any Pledged Collateral.

     3.4 Acknowledgment by CCL. By the signature of its duly authorized representative
hereto, CCL is party to this Agreement and acknowledges and consents to the pledge and assignment
by the Pledgors contained in this Agreement. CCL further agrees that it will from time to time do
or permit to be done every act or thing which CCT Shanghai requires for the purpose of enforcing
the rights contained in this Agreement.

ARTICLE IV. REPRESENTATIONS AND WARRANTIES

     4.1 Representations and Warranties. Each Pledgor severally and not jointly
represents and warrants to the Secured Party as follows:

	 	(a)	 	Due Authorization; Agreements Binding. It has full power and authority
to execute, deliver and perform this Agreement, and to conduct its business as
currently conducted and as proposed to be conducted. Except for completing any
registration or filing formalities, it has taken all necessary action to execute,
deliver and perform this Agreement, and this Agreement has been duly executed and
delivered by it and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, except as enforceability may be limited (a) by
applicable bankruptcy, insolvency or other similar laws of general application
relating to or affecting the enforcement of creditors’ rights and (b) by the
application of general equitable principles (regardless of whether considered in a
proceeding in equity or at law). It further represents and warrants that it has caused
the directors of CCL to vote in favor of the pledge of the Pledged Collateral to
Pledgee and to duly issue a formal resolution to this effect.
	 
	 	(b)	 	Capitalization of CCL. As of June 30, 2000:

	 	(i)	 	CCL’s paid-in registered capital is [Two Hundred
Million Renminbi (RMB200,000,000),] which is owned by the Pledgors as follows:

	 	 	 	 	 	 	 	 	 
	 	 	Percentage of	 	 	Aggregate Capital	 
	 	 	Ownership Rights	 	 	Contribution Amounts	 
	Beijing Col
	 	 	29.8	%	 	RMB 59,600,000	 
	Shenzhen Zhongxun
	 	 	0.2	%	 	RMB 400,000	 
	Tibet Tiantai
	 	 	70	%	 	RMB 140,000,000	 

	 	(ii)	 	All of CCL’s registered capital required under PRC law to be contributed
on or prior to the date on which this representation is made has been
contributed by the Pledgors; and

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	 	(iii)	 	Except as described in the Pledge Documents, there are no outstanding rights
or obligations of any kind for any Person to contribute additional registered capital to,
or to acquire ownership interests in, CCL.
	 
	 	(c)	 	Contracts.

     (i) Its rights in respect of CCL are as set out in the Articles of Association, and
the Articles of Association constitutes its legal, valid, binding and enforceable
obligation, except as enforceability may be limited (a) by applicable bankruptcy,
insolvency or other similar laws of general application relating to or affecting the
enforcement of creditors’ rights and (b) by the application of general equitable
principles (regardless of whether considered in a proceeding in equity or at law); and

     (ii) It is not in violation of or in default under the Articles of Association,
other than such defaults which would not be reasonably likely to have a Material Adverse
Effect.

(d) Pledged Collateral. The Ownership Rights and Instruments of Ownership pledged by
it under this Agreement are validly issued and duly owned and held. Such Ownership Rights and
Instruments of Ownership constitute all of the ownership interests in CCL owned by such Pledgor,
and there are no other ownership interests in CCL or options or other rights to acquire or
subscribe for any such interests or instruments convertible into or exchangeable or exercisable for
any such interests.

(e) Certificates. It has obtained its Investment Certificates, and CCL has obtained all
Capital Contribution Verification Reports, with respect to the capital contributed as of the date
hereof.

(f)
Name, Address and Records.

     (i) The Pledgors’ names set forth in Section 8.4 are true, correct and complete.
Their registered addresses, the address of each Pledgor’s principal place of business and
chief executive office and its mailing address are set forth below its name in Section
8.4. Each Pledgor shall keep all records and documents relating to the Pledged Collateral
at the address of its principal place of business and chief executive office; and

     (ii) The name of CCL set forth in Section 8.4 is the true, correct and complete name
of CCL. The address of the principal place of business and chief executive office of CCL
is Suites 2505-2507, 145 Pujian Raod, Pudong New District, Shanghai, People’s Republic of
China. Such principal place of business has been duly registered with SAIC. CCL keeps all
of its corporate records, stock ledger (or its equivalent) and all records and documents
relating to the Pledged Collateral only at the address indicated in Section 8.4 or such
address

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in Shanghai as may be notified in writing by Pledgors to CCT Shanghai.

	 	(g)	 	No Violations, Defaults or Liens.

     (i) Neither a Pledgor nor CCL (A) is in violation of any applicable law, (B) is in
violation of or default under any of its constituent documents or (C) is in violation of
or default under any Pledge Documents or any other contractual obligation to which it is
a party, other than, with respect to (A) and (C), such violations or defaults which would
not have, or are not reasonably likely to have, a Material Adverse Effect on the
enforceability or priority of CCT Shanghai’s security interest or such Pledgor’s ability
to perform its Secured Obligations under this Agreement;

     (ii) It is the legal and beneficial owner of, and has good and valid title to, the
Pledged Collateral indicated opposite its name in Section 4.1(b)(i), and it has not
created or agreed (conditionally or unconditionally) to create, nor is there otherwise
existing, any encumbrance over all or any of such Pledged Collateral other than CCT
Shanghai’s security interest, and statutory liens which do not have or would not
individually or in the aggregate reasonably be expected to have a Material Adverse
Effect; and

     (iii) The execution, delivery and performance of this Agreement and the grant of CCT
Shanghai’s security interest by it does not and will not (A) violate any applicable law,
(B) violate, or result in a default under, any of its constituent documents, (C) violate,
or result in a default under, any Pledge Documents to which it is a party or any other of
its material contractual Secured Obligations, or (D) result in or require the creation or
imposition of any encumbrance on the Pledged Collateral other than CCT Shanghai’s
security interest.

(h) Pledgor Required Registrations. Except for completing Pledgor Required Registrations as
described in Section 3.1 as required for the execution, delivery and performance of this Agreement
on the date hereof and the creation, perfection, priority and enforcement of CCT Shanghai’s
security interest, there is no reason to believe that any of the Pledgor Required Registrations not
yet required cannot or will not be obtained as and when required. CCT Shanghai has been provided
with a true, correct and complete copy of each Pledgor Required Registration obtained. The Pledgor
Required Registrations that have been obtained are in full force and effect. No proceeding or other
action is pending or, to the best of its knowledge, threatened with respect to any Pledgor Required
Registrations and, to the best of its knowledge, all information set forth in each application and
all other written material submitted by it to obtain each Pledgor Required Registration was on the
date provided true, correct and complete. CCT Shanghai will be entitled, without undue expense or
delay, to the benefit of each Pledgor Required Registration upon the exercise of its remedies under
this Agreement,

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subject only to obtaining at the time of such exercise any required consent of the
Governmental Authority issuing such Pledgor Required Registration.

	 	(i)	 	Validity and Priority of Security Interests.

     (i) The description of the Pledged Collateral contained in Section
2.1 is true, correct and complete and is sufficient to describe such
Pledged Collateral for the purpose of creating and perfecting CCT
Shanghai’s security interest; and

     (ii) To its reasonable knowledge, (A) this Agreement, together with
(i) filing this Agreement with the appropriate SAIC office; (ii) recording
such pledge of Ownership Rights in CCL’s shareholders’ register; and, (iii)
obtaining notarization of this Agreement with a local PRC notary public,
creates a continuing pledge of and valid and enforceable security interest
in such Pledged Collateral, in favor of CCT Shanghai securing payment for
the Secured Obligations; (B) to the extent that the provisions of Section
5.1(b) are complied with, and CCT Shanghai maintains possession of the
Investment Certificates throughout the full term of the Agreement and to
the extent that possession is required for perfection, such pledge and
security interest shall at all times on and after the Initial Funding Date
constitute a valid and perfected continuing first priority security
interest over such Pledged Collateral in favor of CCT Shanghaisecuring
payment of the Secured Obligations; and (C) other than the actions
described in clauses (i) and (ii) and (iii) above, all actions necessary to
create and perfect a continuing first priority security interest with
respect to such Pledged Collateral and the transfer of the Investment
Certificates to CCT Shanghai have been duly taken or made. There is no
effective mortgage, deed of trust, financing statement, security agreement
or other instrument similar in effect executed or authorized by it, or to
its reasonable knowledge, by any other Person, covering all or any portion
of the Pledged Collateral on file or of record in any recording office or
other office of any Governmental Authority, except as have been filed
pursuant to this Agreement.

     (j) Ownership of Pledgors. It is not a state-owned company or
business entity as defined under PRC law.

     4.2 Survival. The representations and warranties of each Pledgor contained in
this Agreement will survive the execution hereof until the Release Date.

ARTICLE V. COVENANTS

     5.1 Certain Affirmative Covenants. Each Pledgor severally and not jointly agrees
to perform and observe each of the following covenants:

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(a) Compliance with laws, Approvals and Secured Obligations. It will
comply with all applicable laws and will perform its Secured Obligations under all
Pledge Documents to which it is a party and all other contractual Secured
Obligations by which it is bound, except where failure to do so would not have a
Material Adverse Effect on CCT Shanghai’s security interest, the Pledged Collateral
or such Pledgor’s ability to perform its Secured Obligations under this Agreement.
It will obtain and maintain in full force and effect, and comply with, all Pledger
Required Registrations applicable to it required from time to time and at any time
for the execution, delivery, performance, admission into evidence and enforcement of
the Pledge Documents or for the creation, perfection, maintenance, protection and
enforcement of CCT Shanghai’s security interest, except where failure to do so
would not have a Material Adverse Effect on CCT Shanghai’s security interest, the
Pledged Collateral or such Pledgor’s ability to perform its Secured Obligations
under this Agreement. It will furnish CCT Shanghai with true, correct and complete
copies of all Pledgor Required Registrations applicable to it promptly after receipt
thereof to the extent not otherwise provided to CCT Shanghaiby such Pledgor.

(b)
Pledged Collateral; Contracts.

     (i) It will maintain good and valid title to the Pledged Collateral
indicated opposite its name in Section 4.1(b)(i) and will at all times
warrant and defend its title to, and CCT Shanghai’s first priority
security interest in, such Pledged Collateral against all claims other
than the CCT Shanghai’s security interest. It will also take any and all
steps necessary to ensure that the Articles of Association remain in full
force and effect; and

     (ii) It will complete all registration and filing formalities, and
take all action that may be reasonably requested by CCT Shanghai, to ensure
that CCT Shanghai has and continues to have in all relevant jurisdictions a
continuing first priority security interest in the Pledged Collateral. It
will deliver possession of any Pledged Collateral to CCT Shanghai or its
designated agent, promptly upon acquiring rights therein, to the extent CCT
Shanghai is required to perfect its interest in such Pledged Collateral by
taking possession thereof.

(c) Notice Requirements. It will give CCT Shanghai prompt notice upon
becoming aware of the occurrence of any event or circumstance which has or could
reasonably be expected to have a Material Adverse Effect on CCT Shanghai’s security
interest, the Pledged Collateral or such Pledgor’s ability to perform its Secured
Obligations under this Agreement.

(d) Performance by CCL. It will cause CCL to perform its obligations and
adhere to all terms and conditions and requirements set forth in the Technical
Services Agreement.

     5.2 Certain Negative Covenants. Each Pledgor severally and not jointly agrees to
perform and observe each of the following covenants:

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(a) Mergers and Sales of Assets. It will not, nor will it permit CCL to, merge or
consolidate with any Person, or liquidate or dissolve, or sell, assign, lease, or otherwise
dispose of (whether in one transaction or in a series of transactions), all or a
substantial portion of its assets (including receivables), whether now owned or hereafter
acquired.

(b) No Amendments of the Contracts. It will not, and will not permit CCL to, amend
the Articles of Association in any material respects.

(c)
No Security Interests, Encumbrances. It will not sell, transfer or otherwise
dispose of any right or interest, legal or equitable, in, or grant, create or permit to
arise or exist any encumbrance over or affecting, any of the shares of CCL held by it,
except for:

(i) the security interest created by this Agreement; and

(ii) statutory liens which do not have or would not individually or in the
aggregate reasonably be expected to have a Material Adverse Effect.

(d) Distributions. It will not permit CCL to make, declare or pay any
distribution, dividend or return of capital, or purchase, redeem or otherwise acquire for
value any ownership interest in CCL now or hereafter outstanding, or make any distribution
of assets or property to the Pledgors, except as permitted by CCT Shanghai’s express
consent.

(e) Rights under the Pledge Documents. It will not transfer, relinquish or
otherwise dispose of any of its rights and interests under the Pledge Documents or make or
agree to any material amendment, modification or variation to, or waive or grant any
indulgence with respect to any material right under, or make or agree to any suspension,
termination or cancellation of, any of the Pledge Documents, or make or agree to any claim
that any of the Pledge Documents has been frustrated.

5.3 Ownership Rights and Changes in Capitalization.

(a) Changes in Shares. Each Pledgor agrees that it will not permit CCL
to:

(i) cancel or change the terms of the Ownership Rights; or

(ii) authorize, create, or issue any additional ownership interests in CCL except
as permitted by the Technical Services Agreement and subject to compliance with
Sections 5.3(b) and 5.3(c) below.

(b) No Transfers. Each Pledgor agrees that it will not approve or consent to the
sale, conveyance, exchange, disposition, assignment, transfer, pledge, or encumbrance of
any ownership interest in CCL by any Person, provided that such ownership interest is
simultaneously pledged to CCT Shanghai in full compliance with Section 5.3(c).

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(c) Additional Ownership Rights. If a Pledgor or any of its Affiliates
acquires Ownership Rights in CCL that are not subject to the security interests
created by this Agreement, that Pledgor will (i) ensure that such Ownership Rights
are pledged, or cause such Affiliate to pledge such Ownership Rights, in favor of
CCT Shanghai as security for the Secured Obligations pursuant to an agreement
substantially in the form of this Agreement and otherwise in form and substance
reasonably satisfactory to the CCT Shanghai, and (ii) obtain all approvals and
complete all registrations and other formalities which may be required in order to
create and perfect a continuing first priority security interest in such Ownership
Rights in favor of CCT Shanghai prior and superior to all other encumbrances and
interests to the extent possible under PRC law.

ARTICLE VI.       SURETYSHIP PROVISIONS

     6.1 Nature of Pledgor’s Secured Obligations. The obligations of each Pledgor
hereunder will be absolute and unconditional under any and all circumstances. Each Pledgor’s
obligations under this Agreement are independent of any obligation of the other Pledgors, and a
separate action or actions may be brought and prosecuted against a Pledgor whether or not such
action or actions are brought or prosecuted against the other Pledgor(s) or any other Person and
whether or not the other Pledgors or any other Person is joined in any such action or actions. To
the extent not prohibited by PRC law, upon the occurrence and during the continuance of an
Equipment Return Default, CCT Shanghai may proceed directly and at once, without notice, against
the Pledged Collateral to collect and recover the full amount or any portion of the Secured
Obligations so due and payable, without first proceeding against the other Pledgor(s) or any other
Person or against any other security or collateral provided by Pledgors or any other Person with
respect to the Secured Obligations. Each Pledgor’s obligations hereunder are independent of, and
not in consideration of or contingent upon, the existence of any other guaranty of any or all of
the Secured Obligations, and the release or cancellation of any other guaranty will not affect a
Pledgor’s obligations hereunder.

     6.2 Security Interest Absolute. To the extent not prohibited by PRC law, all rights of
CCT Shanghai and the pledge and security interests created under this Agreement in favor of CCT
Shanghai, and all Secured Obligations of the CCL under the Pledge Documents, shall be absolute and
independent irrespective of:

(a) approval or consent to any amendment, renewal, restatement,
termination, modification or revision of any Pledge Documents;

(b) modification, amendment, supplement or waiver of any provision of any Pledge
Documents, including changing the terms and conditions of disbursement of credit
proceeds, renewing, compromising, extending or accelerating, or otherwise changing
the time for payment of, or increasing or decreasing the rate of interest on the
credits or any part thereof;

(c) any Advance of additional funds, extension of additional credit or affording
other financial accommodations to or for CCL;

12

 

(d) CCT Shanghai’s acceleration or postponement of the time for
performance of, or other modification, amendment, supplement or waiver of, any of
the Secured Obligations, or granting a forbearance with respect thereto;

(e) the taking and holding of other security for the performance of any Secured
Obligations, accepting additional or substituted security for the same, and
exchanging, enforcing, waiving, releasing, compromising, failing to perfect and
selling or otherwise disposing of any such security;

(f) the application of any security for the performance of any Secured Obligations
and directing the order or manner of sale thereof as CCT Shanghai may determine;

(g) the Release or discharge of Pledgors; and

(h) accepting, adding, settling, compromising with, releasing or substituting of
endorsers, guarantors or other obligors of or with respect to the Secured
Obligations.

     Each Pledgor agrees that CCT Shanghai may, at any time and from time to time, without notice
to or demand upon the Pledgors, irrespective of any change in the financial condition of the
Pledgors or CCL, perform or not perform any or all of the foregoing acts without affecting the
Secured Obligations of such Pledgors hereunder. Each Pledgor agrees that its Secured Obligations
hereunder will not be impaired or affected in any way by the performance or non-performance by CCT
Shanghai of any of the foregoing acts and that such Pledgor will not be released by any act or
event which might otherwise be deemed a legal or equitable discharge of a guarantor or a surety.

     6.3 Waivers. To the extent not prohibited by applicable law, each Pledgor
unconditionally and irrevocably waives:

(a) any right to require the CCT Shanghai to proceed against CCL or any other
Person, to proceed against or exhaust any security held by CCT Shanghai or to pursue
any other remedy in CCT Shanghai’s power before proceeding against the Pledged
Collateral or such Pledgor or exercising CCT Shanghai’s rights and remedies under
this Agreement;

(b) any defense arising by reason of any disability or other similar defense of
Pledgors, CCL or any other Person, or by reason of any invalidity, ineffectiveness
or unenforceability of any or all of the Secured Obligations or any Pledge
Documents;

(c) diligence,
presentment, demand for performance, notice of nonperformance, protest, notice of protest, notice of dishonor, notice of the
creation or incurring of new or additional indebtedness of CCL, notice of acceptance
of this Agreement and notices of any other kind whatsoever (other that notices
expressly required under this Agreement);

13

 

(d) the filing of any claim with any court in the event of a receivership
or bankruptcy;

(e) the benefit of any statute of limitations affecting such Pledgor’s
Secured Obligations under this Agreement or the enforcement thereof;

(f) any defense based upon any taking, modification, impairment or release
of any collateral or guaranty for any Secured Obligations, or any failure
to perfect any security interest in or any other act or omission with
respect to any collateral or guaranty securing payment or performance of
any Secured Obligations;

(g) any defenses or benefits that may be derived from or afforded by law
which limit the disability of or exonerate guarantors or sureties or which
may conflict with the terms of this Agreement; and

(h) any offset or counterclaim or other right, defense or claim based on,
or in the nature of, any obligation now or hereafter owed to such Pledgor
by CCL, or CCT Shanghai.

     6.4 Election of Remedies. Each Pledgor understands that the exercise by CCT
Shanghai of certain rights and remedies contained in the Pledge Documents may affect or
eliminate its right of subrogation and reimbursement against CCL and that it may
therefore incur a partially or totally nonreimbursable liability hereunder. Each Pledgor
(a) expressly authorizes CCT Shanghai to pursue its rights and remedies with respect to
the Secured Obligations in any order or fashion it deems appropriate and (b) waives any
defense arising out of the absence, impairment or loss of any or all rights of recourse,
reimbursement, contribution or subrogation or any other rights or remedies of such
Pledgor against CCL, any other Person or any security, whether resulting from an election
by CCT Shanghai to foreclose on any Pledged Collateral by CCT Shanghai’s sale rather than
judicial foreclosure, or from any other election of rights or remedies by CCT Shanghai,
or otherwise.

     6.5 Information Concerning CCL. Each Pledgor severally and not jointly
represents and warrants to CCT Shanghai that such Pledgor is affiliated with CCL and that it
has, independently and without reliance on any Secured Party and based on such documents
and information as it has deemed appropriate, made its own credit decision and analysis
and decision to enter into this Agreement. Each Pledgor is in a position to have
continuing access to any and all relevant information bearing upon the creditworthiness
of CCL. Each Pledgor waives any requirement that CCT Shanghai advise such Pledgor of
information known to CCT Shanghai regarding the financial condition or business of CCL or
a Pledgor, or any other circumstance bearing upon the risk of non-performance of the
Secured Obligations, and each Pledgor assumes sole responsibility for keeping informed of
each such condition and circumstance. Each Pledgor confirms that none of the Secured
Party has made any representation or warranty or assumed any responsibility with respect
to the enforceability of any of the Pledge Documents or the creditworthiness of CCL.

     6.6 No Subrogation. Each Pledgor irrevocably waives, and agrees that it will
not exercise or assert, any right of subrogation, reimbursement, indemnity, exoneration
or contribution or any other claim which it may now or hereafter have against CCL or any
other Person directly or indirectly liable for the Secured Obligations, or against or
with respect to

14

 

CCL’s property, and which arise from the existence, performance or enforcement of the security
interest and pledge created hereunder, this Agreement or any of the other Pledge Documents. CCT
Shanghai may use, sell or dispose of any Pledged Collateral as it sees fit without regard to any
subrogation rights a Pledgor may have, and upon any disposition, sale, or any rights of
subrogation a Pledgor may have will terminate. If any amount is paid to a Pledgor on account of
such subrogation rights at any time when all the Secured Obligations have not been indefeasibly
paid in full, such amount will be held in trust for the benefit of CCT Shanghai and will forthwith
be paid to CCT Shanghai to be applied to the Secured Obligations in accordance with the terms of
the Pledge Documents.

ARTICLE VII. RIGHTS AND REMEDIES

     7.1 Dividend and Voting Rights.

(a) So long as no Equipment Return Default has occurred and is continuing, the
Pledgors will be entitled to exercise any and all voting and other consensual rights
with respect to its Ownership Rights for any purpose not inconsistent with the terms
of the Pledge Documents and to receive and retain any and all dividends and other
payments in respect of its Ownership Rights.

(b) To the extent not prohibited by PRC law, upon the occurrence and during the
continuance of an Equipment Return Default, all rights of the Pledgors to exercise
voting and other consensual rights with respect to the Ownership Rights and to
receive dividends and other payments in respect of the Ownership Rights will cease,
and all such rights will immediately become vested solely in CCT Shanghai or its
nominees. After the occurrence and during the continuance of an Equipment Return
Default, any dividends and other payments in respect of the Ownership Rights
received by a Pledgor will be held in trust for CCT Shanghai, and such Pledgor will
keep all such amounts separate and apart from all other funds and property so as to
be capable of identification as the property of CCT Shanghai and will deliver such
amounts to CCT Shanghai at such time as CCT Shanghai may request in the identical
form received, properly endorsed or assigned when required to enable CCT Shanghai to
complete collection thereof.

     7.2 CCT Shanghai’s Rights Upon Default.To the extent not prohibited by applicable
law, upon the occurrence and during the continuance of an Equipment Return Default, CCT Shanghai
may take any or all of the following actions, in each case without prior notice to the Pledgors
except as required under applicable law:

(a) give notice of the Equipment Return Default to any Person, collect dividends
and other amounts constituting or payable in respect of Pledged Collateral and
enforce all rights of CCT Shanghai in respect of the Pledged Collateral;

(b) take possession and ownership of any or all of the Pledged Collateral, wherever
it may be found and hold, store and manage the same;

15

 

(c) foreclose its security interest upon any or all of the Pledged Collateral;

(d) pledge or otherwise encumber any or all of the Pledged Collateral; and

(e) exercise any or all other rights or remedies available to CCT Shanghai under
applicable law, the other Pledge Documents or any other agreement between the
parties.

     If an Equipment Return Default shall have occurred and be continuing, CCT Shanghai may, at
its sole discretion, exercise the foregoing rights and remedies at such times and in such manner
as it deems necessary. In such Equipment Return Default, WFOE may execute and deliver to the
Pledgors all documents and instruments (which will be prepared by CCT Shanghai and the Pledgors
shall promptly take all actions to execute such instruments) necessary to initiate and complete
all proceedings and procedures required enforce and its rights and remedies, including initiating
and implementing all legal proceeding under PRC Law required to transfer ownership of the
Investment Certificates.

     7.3 Right to Cause Relinquishment. Pursuant to Section 2.3 of the Technical Service
Agreement, WFOE may elect to deny the return of certain Transferred Equipment and cause
Relinquishment. Upon receipt of notice of Relinquishment, the Pledgors shall assign, transfer and
deliver to CCT Shanghai, or its designated Affiliate or third party, free from any interest of
Pledgors all of its right, title and interest in and to the corresponding amount of Investment
Certificates to be transferred set forth in the notice of Relinquishment. The Pledgors shall
promptly take all actions to execute any documents or instruments necessary to initiate and
complete all proceedings and procedures required to transfer its Ownership Rights.

     7.4 Other Rights of CCT Shanghai. CCT Shanghai may at any time and from time to time
release any right, remedy or security interest it has with respect to a particular item of Pledged
Collateral without thereby releasing or in any way affecting its rights, remedies or security
interest with respect to any other item of Pledged Collateral.

     7.5 Disposition of Pledged Collateral. To the extent not prohibited by applicable law,
after the occurrence and during the continuance of an Equipment Return Default or an election by
CCT Shanghai under Section 2.3 of the Technical Services Agreement,

(a) Upon the written request of CCT Shanghai, each Pledgor shall promptly and at its
own expense assemble any or all of the Pledged Collateral owned by it and not in the
possession of such Pledgor, and make it available to CCT Shanghai, at any place
designated in writing by CCT Shanghai which is reasonably convenient to such Pledgor
and CCT Shanghai.

(b) CCT Shanghai may retain ownership in or will be entitled to sell the Pledged
Collateral at public or private sale with or without having any or all of the
Pledged Collateral at the place of sale, upon terms, in such manner, at such time or
times, and at such place or places as CCT Shanghai may determine to be commercially
reasonable, and each Pledgor agrees that a private sale or a sale on extended
payment terms, or in exchange for property, stock or other consideration will not
for such reason alone be deemed to be commercially unreasonable. The Pledged
Collateral may be sold in one lot as an entirety or

16

 

in separate parcels. Pledgors are expressly authorized to grant, with or without
compensation, options to purchase or acquire rights in the Pledged Collateral. CCT
Shanghai may purchase any or all of the Pledged Collateral sold at any public sale and, to
the extent not prohibited by applicable law, may purchase any or all of the Pledged
Collateral sold at any private sale, including by a credit bid. Each Pledgor and CCL
irrevocably consent to the sale of any or all of the Pledged Collateral by CCT Shanghai.

(c) CCT Shanghai may, in its sole discretion, restrict the prospective bidders or
purchasers at any sale as to their number, nature of business, financial or business
expertise, net worth or financial resources and investment intention or on the basis of any
other factors CCT Shanghai deems advisable. Any sale of the Pledged Collateral may be
subject to the requirement that any purchase of all or any part of the Pledged Collateral
must be for the purpose of investment and without any intention to make a distribution
thereof.

(d) CCT Shanghai expressly agrees that it shall give at least ten days’ notice to the
Pledgors of the time and place of any public sale of Pledged Collateral or of the time
after which a private sale of Pledged Collateral may take place, and that such notice will
constitute reasonable notice under all circumstances, except to the extent that mandatory
non-waivable requirements of applicable law require a longer notice period. CCT Shanghai
will not be obligated to hold any sale pursuant to any such notice and may, without notice
or publication, adjourn any public or private sale by announcement at the time and place
fixed for such sale, and a subsequent sale may be held at the time and place designated in
such announcement without further notice or publication. To the extent not prohibited by
applicable law, each Pledgor irrevocably waives any right it may have to demand of
performance or other demand, advertisement, judicial hearing or notice to it (other than as
set forth in this Section 7.5) or any other Person in connection with the collection, sale
or other disposition of, or realization upon, the Pledged Collateral.

(e) Secured Party may settle, pay or discharge any or all taxes, liens, claims and other
charges with respect to the Pledged Collateral, and may procure or continue insurance with
respect to the Pledged Collateral. All sums expended by the Pledgors pursuant to this
Section 7.5(e) will constitute Secured Obligations secured by Pledgor. CCT Shanghai will
have no duty to take any action authorized by this Section 7.5(e), and no sale of the
Pledged Collateral will be deemed to have been commercially unreasonable by reason of CCT
Shanghai’s decision not to take any action.

     7.6 No Marshalling or Right of Redemption.

(a) Except to the extent required by applicable law, CCT Shanghai will not be required to
marshall any Pledged Collateral or any guaranties of the Secured Obligations or to resort
to any item of Pledged Collateral or any guaranty in any particular order, and CCT
Shanghai’s rights with respect to the Pledged Collateral and any guaranties will be
cumulative and in addition to all other rights, however existing or arising. To the extent
not prohibited by applicable law, each Pledgor irrevocably waives, and agrees that it will
not

17

 

invoke or assert, any law requiring or relating to the marshalling of collateral
or any other law which might cause a delay in or impede the enforcement of CCT
Shanghai’s rights under this Agreement.

(b) Except as set forth herein, to the extent not prohibited by applicable law,
each Pledgor irrevocably waives, and agrees that it will not invoke or assert, any
rights to equity of redemption or other rights of redemption, appraisement,
valuation, stay, extension or moratorium that it may have in equity, at law or
otherwise with respect to any Pledged Collateral. The sale or other transfer
pursuant to this Agreement of any right, title or interest of a Pledgor in any item
of Pledged Collateral will operate to permanently divest that Pledgor and all
Persons claiming under or through that Pledgor of such right, title or interest,
and will be a perpetual bar, both at law and in equity, to any and all claims by
that Pledgor or any such Person with respect to such item of Pledged Collateral.

     7.7 Application of Proceeds. Any cash held by Pledgors as Pledged Collateral and all
cash proceeds received by Pledgors from any realization upon Pledged Collateral shall, in the sole
discretion of CCT Shanghai be applied by CCT Shanghai in accordance with the terms of the Pledge
Documents.

     7.8 CCT Shanghai’s Duties.

(a) The grant to CCT Shanghai under this Agreement of any right or power does not
impose upon CCT Shanghai any duty to exercise such right or power. CCT Shanghai
will have no obligation to take any steps to preserve any claim or other right
against any Person or with respect to any Pledged Collateral.

(b) To the extent not prohibited by applicable law, each Pledgor waives all claims
against CCT Shanghai or its respective agents arising out of the repossession,
taking, retention, storage, operation or sale of the Pledged Collateral in
accordance with the terms of this Agreement. Each Pledgor waives any claim it may
have based on the allegation or fact that the price obtained for Pledged Collateral
sold at a private sale was less than could have been obtained for the same Pledged
Collateral at a public sale. All risk of loss, damage, diminution in value or
destruction of the Pledged Collateral will be borne by the Pledgors. CCT Shanghai
will have no responsibility for any act or omission of any carrier, warehouseman,
bailee, forwarding agency, broker, operator or any other Person.

(c) CCT Shanghai does not and will not make any express or implied representations
or warranties with respect to any Pledged Collateral or other property Released to a
Pledgor or its successors and assigns.

(d) CCT Shanghai will be accountable only for such proceeds as CCT Shanghai actually
receives as a result of the exercise of its rights under this Agreement, and
delivery or other accounting of the application of such proceeds or the Pledged
Collateral in accordance with the Pledge Documents

18

 

by CCT Shanghai to the Pledgors will discharge CCT Shanghai of all liability
therefor.

(e) Except as set forth in this Agreement or as required under applicable law, CCT
Shanghai will have no duties or Secured Obligations under this Agreement or with
respect to the Pledged Collateral.

(f) Notwithstanding any other provision of this Section 7.8, CCT Shanghai will
have no responsibility to the Pledgors for any act or omission of CCT Shanghai,
except to the extent such act or failure to act constitutes gross negligence or
willful misconduct by CCT Shanghai or its agents or attorneys-in-fact.

     7.9 General. CCT Shanghai shall exercise its rights under this Article 7 in
accordance with the Pledge Documents. An Equipment Return Default shall not be deemed to exist if
an Equipment Return Default is waived by the CCT Shanghai.

ARTICLE VIII. GENERAL PROVISIONS

     8.1 Governing Law.This Agreement will be governed by, and construed in
accordance with, the laws of the PRC.

     8.2 Dispute Resolution. The Parties shall use their best efforts to resolve all
disputes arising in connection with this Agreement promptly through
friendly negotiations. In the
event that no settlement can be reached within thirty days following the occurrence of such
dispute, the case will be referred to and finally resolved by arbitration in Beijing at the China
International Economic and Trade Arbitration Commission (“CIETAC”) in accordance with its Rules
then in effect (which Rules are deemed to be incorporated by reference into this section). Such
arbitration shall be conducted in the English and Chinese languages by a panel of three
arbitrators. One arbitrator will be appointed by the Pledgors, one arbitrator will be appointed by
CCT Shanghai, and the third will be a Person mutually agreed upon by the Pledgors and CCT Shanghai.
If they fail to agree within 20 days, the third arbitrator will be appointed by CIETAC pursuant to
its Rules within 30 days from the date of receipt of notice to make such appointment. If selected
pursuant to the immediately preceding sentence, the third arbitrator must be chosen from among the
CIETAC panel of arbitrators from one of the following countries: Australia, Canada, Germany,
Japan, Singapore, Sweden, Switzerland and the United States. The arbitrators will decide in their
award the allocation of costs, including the arbitrators’ fees and all other costs to which the
dispute may give rise. The award of the arbitrators will be final and without appeal. Any competent
court may enforce such award.

     8.3 Waiver of Immunity. To the extent that a Pledgor or any of its properties has or
hereafter may acquire any right to immunity from 

set-off, jurisdiction, process, legal proceedings,
attachment prior to judgment, other attachment or execution or enforcement of judgment on the
grounds of sovereignty or other grounds, that Pledgor, to the maximum extent permitted by
applicable law, irrevocably waives such rights to immunity in respect of its Secured Obligations
arising under or relating to this Agreement.

19

 

     8.4 Notices. All notices and other communications required or permitted hereunder
shall he in the English language, in writing and shall be (i) mailed by registered or certified
mail, postage prepaid; (ii) sent by facsimile or electronic mail with electronic confirmation of
receipt; or (iii) delivered by hand or by an internationally-recognized overnight courier with
written confirmation of receipt, addressed (a) if to a party hereto, at such Party’s address set
forth below, or at such other address as such Party shall have furnished to the other Parties in
writing:

	 	 	 	 	 	 	 
	 	 	If to Beijing Col:
	 
	 	 	 	 	 	 
	 
	 	 	 	Address:	 	Unit B, 15/F., China Merchants Tower
	 
	 	 	 	 	 	No. 2 Dong Huan Nan Lu, Chaoyang District
	 
	 	 	 	 	 	Beijing,100022, PRC
	 
	 	 	 	Attn:	 	Lu Ruifeng
	 
	 	 	 	Tel:	 	(86 10) 6566-7788
	 
	 	 	 	Fax:	 	(8610)6566-9374
	 
	 	 	 	E-mail:	 	rf.lu@direct163.com
	 
	 	 	 	 	 	 
	 	 	If to Shenzhen Zhongxun:
	 
	 	 	 	 	 	 
	 
	 	 	 	Address:	 	Unit B, 15/F., China Merchants Tower
	 
	 	 	 	 	 	No. 2 Dong Huan Nan Lu, Chaoyang District
	 
	 	 	 	 	 	Beijing, 100022, PRC
	 
	 	 	 	Attn:	 	Lu Ruifeng
	 
	 	 	 	Tel:	 	(86 10) 6566-7788
	 
	 	 	 	Fax:	 	(86 10) 6566-9374
	 
	 	 	 	E-mail:	 	rf.lu@direct163.com
	 
	 	 	 	 	 	 
	 	 	If to Tibet Tiantai Investment:
	 
	 	 	 	 	 	 
	 
	 	 	 	Address:	 	Unit B, 15/F., China Merchants Tower
	 
	 	 	 	 	 	No. 2 Dong Huan Nan Lu, Chaoyang District
	 
	 	 	 	 	 	Beijing,100022, PRC
	 
	 	 	 	Attn:	 	Lu Ruifeng
	 
	 	 	 	Tel:	 	(86 10) 6566-7788
	 
	 	 	 	Fax:	 	(86 10)6566-9374
	 
	 	 	 	E-mail:	 	rf.lu@direct163.com
	 
	 	 	 	 	 	 
	 	 	If to ChinaCast Technology (Shanghai) Limited:
	 
	 	 	 	 	 	 
	 
	 	 	 	Address:	 	c/o ChinaCast Technology (BVI) Limited
	 
	 	 	 	 	 	Room 1401, Stanhope House
	 
	 	 	 	 	 	734-738 King’s Road, Hong Kong
	 
	 	 	 	Attn:	 	Chief Executive Officer
	 
	 	 	 	Tel:	 	(852)2811 2389
	 
	 	 	 	Fax:	 	(852)2811 2973
	 
	 	 	 	E-mail:	 	ronchan@direct163.com

20

 

	 	 	 	 	 	 	 
	 	 	If to CCL:
	 
	 	 	 	 	 	 
	 
	 	 	 	Address:	 	Unit B, 15/F., China Merchants Tower
	 
	 	 	 	 	 	No. 2 Dong Huan Nan Lu, Chaoyang District
	 
	 	 	 	 	 	Beijing,100022, PRC
	 
	 	 	 	Attn:	 	Lu Ruifeng
	 
	 	 	 	Tel:	 	(86 10)6566-7788
	 
	 	 	 	Fax:	 	(86 10) 6566-9374
	 
	 	 	 	E-mail:	 	rf.lu@direct163.com

     Each such notice or other communication shall for all purposes of this Agreement be
treated as effective or having been given (x) in the case of personal delivery or delivery by
facsimile or by electronic mail, on the date of such delivery, (y) in the case of an
internationally-recognized overnight courier, on the fifth business day after the date when sent
and (z) in the case of mailing, on the tenth business day following that on which the piece of
mail containing such communication has been deposited in a regularly maintained receptacle for the
deposit of mail, addressed and mailed as aforesaid; provided, however, that any notice to CCT
Shanghai shall only be effective on receipt.

     8.5 Foreign Corrupt Practices Act. Each of the Pledgors and CCL is aware of and
understands the provisions of the United States Foreign Corrupt Practices Act of 1977, as amended,
and its purposes, and is also aware of and familiar with the laws, rules and regulations of the
People’s Republic of China, Hong Kong the United States [and any other Relevant Government]
relating to or dealing with Government Officials. No equityholder, officer, director or
representative of a Pledgor or CCL is a candidate for political office, or an employee, officer or
representative of any government, or of any political party. In connection with any activities
conducted pursuant to this Agreement or any Transaction Agreement, or in connection with the
business of the Pledgor or CCL as conducted prior to the date hereof, no management personnel of a
Pledgor or CCL (and to the best knowledge of the Pledgor or CCL, no employee or agent of a Pledgor
or CCL) has directly or indirectly, offered, given or promised, and after the date hereof with
respect to a Pledgor or CCL and the Transaction, no such management personnel will directly or
indirectly offer, give or promise, money or anything of value to any Government Official for the
purposes of: (i) influencing any act or decision of such Government Official or political party in
his, her or its official capacity; (ii) inducing such Government Official or political party to do
or omit to do any act in violation of the lawful duty of such Government Official or political
party; or, (iii) inducing such Government Official or political party to use his, her or its
influence with any Governmental Body to effect or influence any act or decision of such
Governmental Body; in order to assist a Pledgor or CCL in obtaining any governmental authorization
or permission from, obtaining or retaining business for or with, or directing business to, any
Person or Entity. Without limiting the foregoing, it is the intent of the Parties that no payments
or transfers of value shall be made which have the purpose or effect of public or commercial
bribery, acceptance or acquiescence in extortion, kickbacks or other unlawful or improper means of
obtaining business.

     8.6 Export Control.

	 	(a)	 	The Pledgors and CCL have not performed and will not perform any act, the
occurrence of which would result in a violation of United States export control laws.

21

 

	 	(b)	 	Any activities of the Pledgors or CCL which are or may become subject to the
export control laws of the United States shall not be undertaken by or with the
participation of Foreign Nationals (as defined by the relevant United States export
control laws), including but not limited to citizens or nationals of the People’s
Republic of China, without first obtaining any and all necessary authorization or
other prior permission from the relevant United States Government authorities. The
Pledgors and CCL shall exercise best efforts to ensure that Hughes Electronics
Corporation, its divisions, subsidiaries and affiliates (collectively, “Hughes”) is
provided all necessary information concerning the activities of the Pledgors or CCL so
as to permit Hughes to determine in advance whether such activities require such
authorization or other prior permission.

     8.7 Access to Information. The Pledgors and CCL shall provide or otherwise make
accessible to Hughes any information which may be necessary to permit Hughes to comply or verify
its compliance with United States laws, rules and regulations.

     8.8 No Activities with Armed Forces. None of the activities of the Pledgors and CCL
shall involve or otherwise relate to activities pursued by or involving the armed forces of the
People’s Republic of China, including but not limited to the People’s Liberation Army.

     8.9 Successors and Assigns. This Agreement will be binding upon and inure to the
benefit of the respective successors and permitted assigns of the parties hereto, except that no
Pledgor may assign or otherwise transfer all or any part of its rights or Secured Obligations under
this Agreement without the prior written consent of CCT Shanghai. CCT Shanghai may assign, transfer
or grant participations in respect of any or all of its rights and Secured Obligations under this
Agreement in connection with an assignment, transfer or participation effected in compliance with
the applicable provisions of the Pledge Documents. Upon any transfer, assignment or participation
by a third party permitted under the terms of such Pledge Documents, the transferee, assignee or
participant shall be entitled, to the extent of the interest transferred, to the benefit of the
indemnities, tax reimbursements, rights of set-off and other rights of CCT Shanghai pursuant to the
provisions of this Agreement. The acts of CCT Shanghai or the failure of CCT Shanghai to act
hereunder shall be conclusive and binding on any transferee, assignee or participant of CCT
Shanghai’s interest under this Agreement.

     8.10 Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and all of which together will constitute one and the same
agreement.

     8.11
Severability. In the event that any provision of this Agreement becomes or is
declared by a competent authority to be illegal, unenforceable or void, this Agreement shall
continue in full force and effect without said provision, and the Parties shall promptly negotiate
in good faith (such negotiations to be subject to the arbitration clauses of this Agreement) a
legal and enforceable replacement provision which as nearly as possible puts the Parties in the
position in which they would have been were such provision not declared illegal, unenforceable or
void.

     8.12 Amendment or Waiver. This Agreement and its provisions may be amended, changed,
waived, discharged or terminated only by a writing signed by each of the parties

22

 

hereto. CCT Shanghai may, but shall not be obligated to, enter into any such amendment, change,
waiver, discharge or termination which affects its own rights, duties, immunities and liabilities
under this Agreement or otherwise.

     8.13 No Third Party Beneficiaries. Except as otherwise expressly stated herein, this
Agreement is intended to be solely for the benefit of the parties hereto and their respective
successors and permitted assigns and is not intended to and will not confer any rights or benefits
on any third party.

     8.14 Language of Agreement. This Agreement is written and executed in both the English
and Chinese languages, each of which will be of equal force and effect.

     8.15 Further Assurances. At any time and from time to time upon the request of CCT
Shanghai, the Pledgors will execute and deliver such further documents and instruments and do such
other acts as CCT Shanghai may reasonably request in order to effect fully the purposes of this
Agreement, to create, perfect, maintain and preserve the security interest in the Pledged
Collateral in favor of CCT Shanghai, and to provide for the payment of the Secured Obligations and
the other Secured Obligations of CCL to CCT Shanghai in accordance with the terms of the Pledge
Documents.

     8.16 Term. This Agreement shall terminate six months following termination of the
Technical Services Agreement.

23

 

     IN WITNESS WHEREOF, the parties, intending to be legally bound, have caused this Agreement to
be signed on the date first above written.

	 	 	 	 	 	 	 	 	 
	 	 	BEIJING COL NETWORK TECHNOLOGY CO., LTD.
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Lu Ruifeng	 	 
	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	Lu Ruifeng	 	 
	 

	 	Title:
	 	 	 	Authorized Signatory	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SHENZHEN ZHONGXUN TENG INVESTMENT DEVELOPMENT CO., LTD
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Lu Ruifeng	 	 
	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	Lu Ruifeng	 	 
	 

	 	Title:
	 	 	 	Authorized Signatory	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	TIBET TIANTAI INVESTMENT MANAGEMENT CO., LTD.
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Lu Ruifeng	 	 
	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	Lu Ruifeng	 	 
	 

	 	Title:
	 	 	 	Authorized Signatory	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CHINACAST TECHNOLOGY (SHANGHAI) LIMITED
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Terence Luk	 	 
	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	Terence Luk	 	 
	 

	 	Title:
	 	 	 	Chairman of the Board	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CHINACAST CO., LTD.
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Lu Ruifeng	 	 
	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	Lu Ruifeng	 	 
	 

	 	Title:
	 	 	 	Authorized Signatory	 	 

 

 

EXHIBIT
A 

CAPITAL
CONTRIBUTION VERIFICATION REPORT

 

 

EXHIBIT
B 

ARTICLES
OF ASSOCIATION

 

 

EXHIBIT C 

INSTRUMENTS OF OWNERSHIP

Corporate Record Books

Corporate Seal
 Zhengben of CCL’s Business Licenseexv10w2

 

Exhibit
10.2

EXECUTION COPY

PLEDGE AGREEMENT

among

CHINACAST CO., LTD.

as Pledgor

LI WEI

as Pledgor

and

CHINACAST LI XIANG CO LTD

CHINACAST TECHNOLOGY (SHANGHAI) LIMITED

as Pledgee and Secured Party

Dated as of 11th August 2003

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	ARTICLE I.
	 	DEFINITIONS AND INTERPRETATION	 	 	1	 
	 
	 	 	 	 	 	 
	ARTICLE II.
	 	ASSIGNMENT AND PLEDGE	 	 	4	 
	 
	 	 	 	 	 	 
	ARTICLE III.
	 	PERFECTION OF SECURITY	 	 	5	 
	 
	 	 	 	 	 	 
	ARTICLE IV.
	 	REPRESENTATIONS AND WARRANTIES	 	 	6	 
	 
	 	 	 	 	 	 
	ARTICLE V.
	 	COVENANTS	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE VI.
	 	SURETYSHIP PROVISIONS	 	 	12	 
	 
	 	 	 	 	 	 
	ARTICLE VII.
	 	RIGHTS AND REMEDIES	 	 	14	 
	 
	 	 	 	 	 	 
	ARTICLE VIII.
	 	GENERAL PROVISIONS	 	 	18	 
	 
	 	 	 	 	 	 
	EXHIBIT A
	 	CAPITAL CONTRIBUTION VERIFICATION REPORT	 	 	 	 
	 
	 	 	 	 	 	 
	EXHIBIT B
	 	ARTICLES OF ASSOCIATION OF CCLX	 	 	 	 
	 
	 	 	 	 	 	 
	EXHIBIT C
	 	INSTRUMENTS OF OWNERSHIP	 	 	 	 
	 
	 	 	 	 	 	 
	EXHIBIT D
	 	FORM OF INVESTMENT CERTIFICATE	 	 	 	 

 i

 

 

PLEDGE AGREEMENT

     This PLEDGE AGREEMENT (the “Agreement”) is entered into as of 11th August 2003, by and among
CHINACAST CO., LTD, a limited liability company organized and existing under the laws of the PRC,
(“CCL”); LI WEI, an individual and citizen of the PRC, (“LW”) (CCL and LW are referred to
collectively as the “Pledgors”); ChinaCast Li Xiang Co Ltd, a limited liability company organized
and existing under the laws of the PRC (hereinafter “CCLX”), and ChinaCast Technology (Shanghai)
Limited, a wholly foreign-owned limited liability enterprise organized and existing under the laws
of the PRC as pledgee and secured party (hereinafter “CCT Shanghai”).

RECITALS

WHEREAS, CCL and LW own respective ownership interests of 90% and 10%, representing one hundred
percent (100%) of the total registered capital equity shares of CCLX;

WHEREAS, the Pledgors have made full payment of their subscribed contribution to the registered
capital of CCLX, as evidenced by Capital Contribution Verification Reports (as defined below), a
copy of which is attached hereto as Exhibit A;

WHEREAS, CCT Shanghai, the Pledgors and CCLX have entered into the CCLX Technical Services
Agreement (as hereinafter defined), pursuant to which CCT Shanghai will provide certain Services
and CCLX Equipment (each as hereinafter defined) to CCLX;

“WHEREAS, CCT Shanghai, CCL and the shareholders of CCL have entered into a technical services
agreement on 15 November 2000 pursuant to which CCT Shanghai agreed to provide certain Services and
CCL Equipment (as hereinafter defined) to CCL. This technical services agreement was subsequently
novated pursuant to a novation agreement of even date whereby CCLX assumed, all of CCL’s rights,
title and interests in and to, and CCL’s obligations under, the original technical services
agreement (collectively, the “CCL Technical Services Agreement”);

WHEREAS, to support its Secured Obligations (as hereinafter defined) with respect to each of the
CCL Technical Services Agreement and the CCLX Technical Services Agreement (collectively, the
“Technical Services Agreements”) pursuant to which CCT Shanghai has agreed to provide, from time to
time, Services and/or Equipment (as hereinafter defined) to CCLX; and

WHEREAS, it is a condition precedent to the provision of Services and ancillary Equipment by CCT
Shanghai under each of the Technical Services Agreements that the Pledgors shall have made the
pledge and assignment contemplated by this Agreement.

NOW THEREFORE, in consideration of the foregoing recitals which form a part of this Agreement, and
the mutual promises, covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the Pledgors and CCT Shanghai
hereby agree as follows:

1

 

ARTICLE I. DEFINITIONS AND INTERPRETATION

     1.1 Certain Defined Terms. As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular and plural forms of
the terms defined):

     “Affiliate” means, with respect to any Person (other than an individual), any corporation, company,
partnership, association or other business entity (i) that is controlled by such Person, (ii) that
controls such Person or (iii) is under common control with such Person. For purposes of this
Agreement, “control” means ownership of more than 50% of the voting securities or interests in
another Person, or the ability to direct the management or policies of such Person, whether by
contract or otherwise.

     “Articles of Association” means the Articles of Association of CCLX dated April 30, 2003, as
executed by the Pledgors (together with the amendment dated June 26, 2003), a copy of which is
attached as Exhibit B hereto.

     “Capital Contribution Verification Reports” means, collectively, all capital contribution
verification reports issued by an independent certified public accountant registered in the PRC who
is acceptable to CCT Shanghai, as well as all reports or instruments that may be issued in
replacement of, or as an addition to, any of the foregoing.

     “CCL Equipment” means all of the equipment together with associated software and technical
documentation set forth in Appendix A to the CCL Technical Services Agreement.

     “CCLX Equipment” means all of the equipment together with associated software and technical
documentation set forth in Appendix B to the CCLX Technical Services Agreement.

     “CCLX Technical Services Agreement” means the technical services agreement of even date between CCT
Shanghai, CCL, Li Wei and CCLX.

     “Equipment” means the CCL Equipment and the CCLX Equipment (as the case may be).

     “Equipment Return Default” means an “Equipment Return Default” as defined in each of the Technical
Services Agreements.

     “Final Release” means the date upon which CCLX becomes the wholly-owned subsidiary of any one of
ChinaCast Communication Network Company Ltd, ChinaCast Technology (BVI) Limited or CCT Shanghai.

     “Foreclosure” means any foreclosure and exercise of legal rights with respect to the Pledged
Collateral by the Pledgee upon an Equipment Return Default.

     “Governmental Authority” means any national, central, provincial, state or local government and any
political subdivision thereof and any other governmental, quasi governmental, administrative,
judicial, public or statutory body, ministry, department, instrumentality, agency, authority,
board, bureau, corporation or commission.

2

 

     “Initial Funding Date” means the date upon which ChinaCast Communication Network Company Ltd
receives all the consideration payable to it pursuant to the Series B Investment Agreement entered
into between ChinaCast Communication Network Company Ltd and certain Series B investors as of July
16, 2003.

     “Instruments of Ownership” means all documents, corporate record books, corporate seals which are
listed in Exhibit C.

     “Investment Certificates” means the investment certificates issued by CCLX to the Pledgors, in the
form set out in Exhibit D, as well as all certificates or instruments that may be issued in
replacement of, or as an addition to, any of the foregoing.

     “Material Adverse Effect” means a material adverse effect on (i) the business, operations, affairs,
financial condition, assets, properties, or prospects of CCLX or any of the Pledgors, or (ii) the
ability of CCLX to perform its obligations under each of the Technical Services Agreements, or
(iii) the validity or enforceability of this Agreement or any of the Technical Services Agreements.

     “Ownership Rights” means the ownership interests (whether existing now or hereafter created) of a
Pledgor in CCLX, including the right to receive dividends or other distributions, voting rights and
all other rights and benefits attaching thereto pursuant to the Articles of Association or under
applicable PRC law.

     “Person” means an individual, partnership, corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture or other entity, or a government or any
political subdivision or agency hereof.

     “Pledgee” means the CCT Shanghai in its capacity as Pledgee.

     “Pledged Collateral” has the meaning set forth in Section 2.1.

     “Pledgor”
has the meaning set out in the first paragraph of this Agreement.

     “Pledge Documents” means this Agreement and each of the Technical Services Agreements.

     “Pledgor Required Registrations” has the meaning set forth in Section 3.1.

     “PRC” means the People’s Republic of China.

     “Pre-Default Distributions” has the meaning set forth in Section 2.1.

     “Relinquishment” means the relinquishment of Ownership Rights by the Pledgors and the corresponding
termination of CCT Shanghai’s security interest or a portion thereof in the Pledged Collateral
pursuant to Section 2.3 of each of the Technical Services Agreements and the transfer of such
Investment Certificates to CCT Shanghai, which shall occur either upon the election and notice by
CCT Shanghai pursuant to the terms of each of the Technical Services Agreements, or upon the
termination of this Agreement.

3

 

     “Relinquishment Date” means any date on which CCT Shanghai gives a written notice of relinquishment
to CCLX pursuant Section 2.3 of each of the Technical Services Agreements.

     “Renminbi” or “RMB” means the lawful currency of the PRC.

     “SAIC” means the State Administration of Industry and Commerce of the PRC.

     “Secured Obligations” has the meaning set out in Section 2.1.

     “Secured Party” means the CCT Shanghai in its capacity as Pledgee or its designated Affiliate or
third party, as the case may be.

     “Services” means those technical and other related services to be provided by CCT Shanghai to CCLX
as more fully set forth in Appendix A of each of the Technical Services Agreements.

     “Transferred Equipment” has the meaning given to such term under Section 2.3 of each of the
Technical Services Agreements.

ARTICLE II. ASSIGNMENT AND PLEDGE

     2.1
Pledge; Grant of Security Interest. As collateral security for the prompt and complete
performance of the obligation of CCLX under Section 1.3 of each of the Technical Services
Agreements (the “Secured Obligations”), and to induce CCT Shanghai to extend Services and use of
Equipment pursuant to such Services at no additional charge, each Pledgor assigns, conveys,
mortgages, pledges and transfers to CCT Shanghai as a continuing pledge of and security interest in
all of its right, title and interest in and to the following, (collectively, the “Pledged
Collateral”):

     (a) the Ownership Rights;

     (b) all Investment Certificates and all rights and options to purchase or receive interests in
CCLX in which a Pledgor at any time may have or obtain any right, title or interest;

     (c) all dividends, interest, revenues, income, distributions and proceeds of any kind,
whether cash, instruments, securities or other property, received by or distributable to a Pledgor
in respect of, or in exchange for, the Investment Certificates or any other Pledged Collateral; and

     (d) Instruments of Ownership and any other interest that a Pledgor may have or obtain in
respect of CCLX.

     provided that, notwithstanding anything to the contrary in this Section 2.1, any dividends or other
distributions properly paid to a Pledgor prior to the occurrence an Equipment Return Default and in
compliance with the terms of the Pledge Documents, applicable law and the constituent documents of
CCLX shall not be subject to the security

4

 

interest created by this Agreement and shall not constitute Pledged Collateral (collectively,
“Pre-Default Distributions”).

     2.2
Continuing Security Interest. It is the intent of the Pledgors that this Agreement
creates a continuing first priority security interest in the Pledged Collateral. This Agreement
will remain in full force and effect until the date of Final Release. This Agreement will continue
to be effective or will be reinstated, if necessary, if at any time any amount received by CCT
Shanghai in respect of the Secured Obligations is rescinded or must otherwise be restored or
returned by CCT Shanghai for any reason, including the insolvency, bankruptcy, dissolution,
liquidation or reorganization of CCLX, or the appointment of any intervenor or conservator of, or
similar official for CCLX, or any of its properties.

ARTICLE III. PERFECTION OF SECURITY

     3.1
Approvals and Formalisation of this Agreement. The Pledgors will, on the date
hereof (except for the Pledgor Required Formality set out in paragraph (iv) below which shall be
completed no later than seven (7) days from the date hereof), complete all formalities which may be
required in order to create and perfect a continuing first priority security interest in the
Pledged Collateral in favor of CCT Shanghai prior and superior to all other security interests,
mortgages, liens and other interests to the extent possible under PRC law (collectively, the
“Relevant Formalities”). Such formalities shall include but not be limited to (i) recording such
pledge of Ownership Rights in CCLX’s shareholders’ register; (ii) obtaining notarization of CCLX’s
shareholders’ register as recorded pursuant to paragraph (i) above with a local PRC notary public,
(iii) obtaining notarization of this Agreement and the Investment Certificates with a local PRC
notary public and (iv) filing and recordation of CCLX’s shareholders’ register as recorded
pursuant to paragraph (i) above with the appropriate SAIC (collectively, the “Pledgor Required
Formalities”).

     3.2
Delivery of Certificates. Each Pledgor will deliver to CCT Shanghai,
immediately upon execution of this Agreement, all Investment Certificates and Instruments of
Ownership, copies of all Capital Contribution Verification Reports affixed with company chop and
signed by the legal representative of CCLX and a notarial certificate evidencing the due
notarization of all Investment Certificates and CCLX’s shareholders’ register as recorded pursuant
to Clause 3.1(i) and this Agreement with a local PRC notary public. CCT Shanghai will hold all
such Investment Certificates and Instruments of Ownership until the termination of the pledge and
security interest created on the applicable Pledged Collateral and the corresponding Relinquishment
of Ownership Rights.

     3.3 Pledgors Remain Liable to Perform.

     (a) Each Pledgor will at all times remain liable to observe and. perform all the obligations
assumed by it in respect of the Pledged Collateral and the Pledge Documents to which it is a party
and otherwise in respect of the Ownership Rights to the same extent as if this Agreement had not
been executed, and the exercise by CCT Shanghai of any rights assigned under this Agreement will
not release any Pledgor from any of such obligations, except upon the Final Release of the Pledged
Collateral (in which case the Pledgors shall be released only with respect to obligations arising
after completion of the Final Release). Unless CCT Shanghai elects to do so in writing in
accordance with its rights under this Agreement, (i) CCT Shanghai will have no obligation or
liability under the Pledge

5

 

Documents or the Pledged Collateral or otherwise by reason of this Agreement and (ii) CCT Shanghai
will not be obliged to perform any of the obligations of any Pledgor thereunder or to make any
payment or to supervise or make any inquiry as to the due performance of or take any other action
to collect or enforce any claim or right in respect of the obligations of any party under the
Pledge Documents or the Pledged Collateral. Except as expressly set forth herein, CCT Shanghai will
have no obligation or liability towards a Pledger or CCLX by reason of this Agreement.

     (b) If CCLX fails to perform any of its obligations under each of the Technical Services
Agreements, CCT Shanghai may, but will not be obliged to, procure the performance of such
obligation. Any costs or expenses incurred by CCT Shanghai in connection with the foregoing
shall be governed by the Technical Services Agreements and constitute Secured Obligations
hereunder.

     (c) CCT Shanghai shall have no obligation to enforce any contractual obligation or claim
with respect to the Pledged Collateral, or to take any other action with respect to the Pledged
Collateral, except as expressly set forth in this Agreement.

     (d) Each Pledgor authorizes CCT Shanghai, in its own name, at any time and from time to
time:

     (i) to give notice to any Person of CCT Shanghai’s security interest that may be necessary in order
to create, perfect, maintain, protect or enforce CCT Shanghai’s security interest; and

     (ii) to communicate with CCLX with regard to any matter relating to any Pledged Collateral.

     3.4
Acknowledgment by CCLX. By the signature of its duly authorized representative hereto,
CCLX is party to this Agreement and acknowledges and consents to the pledge and assignment by the
Pledgors contained in this Agreement. CCLX further agrees that it will from time to time do or
permit to be done every act or thing which CCT Shanghai requires for the purpose of enforcing the
rights contained in this Agreement.

ARTICLE IV. REPRESENTATIONS AND WARRANTIES

     4.1
Representations and Warranties. Each Pledgor severally and not jointly represents and
warrants to the Secured Party as follows:

     (a) Due
Authorization: Agreements Binding. It has full power and authority to execute,
deliver and perform this Agreement, and to conduct its business as currently conducted and as
proposed to be conducted. Except for completing any registration or filing formalities, it has
taken all necessary action to execute, deliver and perform this Agreement, and this Agreement has
been duly executed and delivered by it and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, except as enforceability may be limited (a) by
applicable bankruptcy, insolvency or other similar laws of general application relating to or
affecting the enforcement of creditors’ rights and (b) by the application of general equitable
principles (regardless of whether considered in a proceeding in equity or at law). It further
represents and warrants that it has caused the

6

 

directors of CCLX to vote in favor of the pledge of the Pledged Collateral to Pledgee and to duly
issue a formal resolution to this effect.

     (b) Capitalization of CCLX. As of the date hereof:

     (i) CCLX’s paid-in registered capital is Thirty Million Renminbi
(RMB30,000,000), which is owned by the Pledgors as follows:

	 	 	 	 	 	 	 	 	 
	 	 	Percentage of	 	Aggregate Capital
	 	 	Ownership Rights	 	Contribution Amounts
	CCL
	 	 	90%	 	 	RMB 27,000,000
	LW
	 	 	10%	 	 	RMB 3,000,000

     (ii) All of CCLX’s registered capital required under PRC law to be contributed on or prior to the
date on which this representation is made has been contributed by the Pledgors; and

     (iii) Except as described in the Pledge Documents, there are no outstanding rights or obligations
of any kind for any Person to contribute additional registered capital to, or to acquire ownership
interests in, CCLX.

     (c) Contracts.

     (i) Its rights in respect of CCLX are as set out in the Articles of Association, and the Articles
of Association constitutes its legal, valid, binding and enforceable obligation, except as
enforceability may be limited (a) by applicable bankruptcy, insolvency or other similar laws of
general application relating to or affecting the enforcement of creditors’ rights and (b) by the
application of general equitable principles (regardless of whether considered in a proceeding in
equity or at law); and

     (ii) It is not in violation of or in default under the Articles of Association, other than such
defaults which would not be reasonably likely to have a Material Adverse Effect.

     (d) Pledged Collateral. The Ownership Rights and Instruments of Ownership pledged
by it under this Agreement are validly issued and duly owned and held. Such Ownership Rights and
Instruments of Ownership constitute all of the ownership interests in CCLX owned by such Pledgor,
and there are no other ownership interests in CCLX or options or other rights to acquire or
subscribe for any such interests or instruments convertible into or exchangeable or exercisable for
any such interests.

     (e) Certificates. It has obtained its Investment Certificates, and CCLX has
obtained all Capital Contribution Verification Reports, with respect to the capital contributed as
of the date hereof.

     (f) Name, Address and Records.

7

 

     (i) The Pledgors’ names set forth in Section 8.4 are true, correct and complete. Their registered
addresses, the address of each Pledgor’s principal place of business and chief executive office and
its mailing address are set forth below its name in Section 8.4. Each Pledgor shall keep all
records and documents relating to the Pledged Collateral at the address of its principal place of
business and chief executive office; and

     (ii) The name of CCLX set forth in Section 8.4 is the true, correct and complete name of CCLX. The
legal address of CCLX is [CHINESE CHARACTERS]. The address of the principal place of business and chief executive office
of CCLX is as set forth in Section 8.4 or as otherwise notified in writing by Pledgors to CCT
Shanghai. Such principal place of business has been duly registered with SAIC. CCLX keeps all of
its corporate records, stock ledger (or its equivalent) and all records and documents relating to
the Pledged Collateral only at the address indicated in Section 8.4 or such address in Shanghai as
may be notified in writing by Pledgors to CCT Shanghai.

     (g) No Violations, Defaults or Liens.

     (i) Neither a Pledgor nor CCLX (A) is in violation of any applicable law, (B) is in violation of or
default under any of its constituent documents or (C) is in violation of or default under any
Pledge Documents or any other contractual obligation to which it is a party, other than, with
respect to (A) and (C), such violations or defaults which would not have, or are not reasonably
likely to have, a Material Adverse Effect on the enforceability or priority of CCT Shanghai’s
security interest or such Pledgor’s ability to perform its Secured Obligations under this
Agreement;

     (ii) It is the legal and beneficial owner of, and has good and valid title to, the Pledged
Collateral indicated opposite its name in Section 4.1(b)(i), and it has not created or agreed
(conditionally or unconditionally) to create, nor is there otherwise existing, any encumbrance over
all or any of such Pledged Collateral other than CCT Shanghai’s security interest, and statutory
liens which do not have or would not individually or in the aggregate reasonably be expected to
have a Material Adverse Effect; and

     (iii) The execution, delivery and performance of this Agreement and the grant of CCT Shanghai’s
security interest by it does not and will not (A) violate any applicable law, (B) violate, or
result in a default under, any of its constituent documents, (C) violate, or result in a default
under, any Pledge Documents to which it is a party or any other of its material contractual Secured
Obligations, or (D) result in or require the creation or imposition of any encumbrance on the
Pledged Collateral other than CCT Shanghai’s security interest.

     (h) Pledgor
Required Formalities. Except for completing Pledgor Required Formalities as
described in Section 3.1 as required for the execution, delivery and performance of this Agreement
on the date hereof and the creation, perfection, priority and enforcement of CCT Shanghai’s
security interest, there is no reason to believe that any of the Relevant Formalities not yet
required cannot or will not be obtained as and when required. The Pledgor Required Formalities that
have been performed are in full force and effect and

8

 

the Relevant Formalities that will be performed will be in full force and effect when performed. No
proceeding or other action is pending or, to the best of its
knowledge, threatened with respect to
any Relevant Formalities and, to the best of its knowledge, all information set forth in each
application and all other written material submitted by it in respect of each of the Pledgor
Required Formalities was on the date provided true, correct and complete. To the extent possible
under PRC law, CCT Shanghai will be entitled, without undue expense or delay, to the benefit of
each of the Relevant Formalities upon the exercise of its remedies under this Agreement

     (i) Validity and Priority of Security Interests.

     (i) The description of the Pledged Collateral contained in Section 2.1 is true, correct and
complete and is sufficient to describe such Pledged Collateral for the purpose of creating and
perfecting CCT Shanghai’s security interest; and

     (ii) To its reasonable knowledge, (A) this Agreement, together with completion of the Pledgor
Required Formalities, creates a continuing pledge of and valid and enforceable security interest in
such Pledged Collateral, in favor of CCT Shanghai securing payment for the Secured Obligations; (B)
to the extent that the provisions of Section 5.1(b) are complied with and CCT Shanghai maintains in
possession of the Investment Certificates throughout the full term of the Agreement and to the
extent that possession is required for perfection, such pledge and security interest shall at all
times on and after the Initial Funding Date constitute a valid and perfected continuing first
priority security interest over such Pledged Collateral in favor of CCT Shanghai securing payment
of the Secured Obligations; and (C) other than the Pledgor Required Formalities, all actions
necessary to create and perfect a continuing first priority security interest with respect to such
Pledged Collateral and the transfer of the Investment Certificates to CCT Shanghai have been duly
taken or made. There is no effective mortgage, deed of trust, financing statement, security
agreement or other instrument similar in effect executed or authorized by it, or to its reasonable
knowledge, by any other Person, covering all or any portion of the Pledged Collateral on file or of
record in any recording office or other office of any Governmental Authority, except as have been
filed pursuant to this Agreement.

     (j) Ownership
of Pledgors. It is not a state-owned company or business entity as
defined under PRC law.

     4.2
Survival. The representations and warranties of each Pledgor contained in this
Agreement will survive the execution hereof until the date of Final Release.

ARTICLE V. COVENANTS

     5.1
Certain Affirmative Covenants. Each Pledgor severally and not jointly agrees to
perform and observe each of the following covenants:

     (a) Compliance
with laws, Approvals and Secured Obligations. It will comply with all
applicable laws and will perform its Secured Obligations under all Pledge Documents to which it is
a party and all other contractual Secured Obligations by which it is
bound, except where failure to
do so would not have a Material Adverse Effect on CCT Shanghai’s

9

 

security interest, the Pledged Collateral or such Pledgor’s ability to perform its Secured
Obligations under this Agreement. It will obtain and maintain in full force and effect, and comply
with, all Pledgor Required Registrations applicable to it required from time to time and at any
time for the execution, delivery, performance, admission into evidence and enforcement of the
Pledge Documents or for the creation, perfection, maintenance, protection and enforcement of CCT
Shanghai’s security interest, except where failure to do so would not have a Material Adverse
Effect on CCT Shanghai’s security interest, the Pledged Collateral or such Pledgor’s ability to
perform its Secured Obligations under this Agreement. It will furnish CCT Shanghai with true,
correct and complete copies of all Pledgor Required Registrations applicable to it promptly after
receipt thereof to the extent not otherwise provided to CCT Shanghai by such Pledgor.

     (b) Pledged Collateral; Contracts.

     (i) It will maintain good and valid title to the Pledged Collateral indicated opposite its name in
Section 4.1(b)(i) and will at all times warrant and defend its title to, and CCT Shanghai’s first
priority security interest in, such Pledged Collateral against all claims other than the CCT
Shanghai’s security interest. It will also take any and all steps necessary to ensure that the
Articles of Association remain in full force and effect; and

     (ii) It will complete all registration and filing formalities, and take all action that may be
reasonably requested by CCT Shanghai, to ensure that CCT Shanghai has and continues to have in all
relevant jurisdictions a continuing first priority security interest in the Pledged Collateral. It
will deliver possession of any Pledged Collateral to CCT Shanghai or its designated agent, promptly
upon acquiring rights therein, to the extent CCT Shanghai is required to perfect its interest in
such Pledged Collateral by taking possession thereof.

     (c) Notice
Requirements. It will give CCT Shanghai prompt notice upon becoming
aware of the occurrence of any event or circumstance which has or could reasonably be expected to
have a Material Adverse Effect on CCT Shanghai’s security interest, the Pledged Collateral or such
Pledgor’s ability to perform its Secured Obligations under this
Agreement.

     (d) Performance
by CCLX. It will cause CCLX to perform its obligations and
adhere to all terms and conditions and requirements set forth in each of the Technical Services
Agreements.

     5.2
Certain Negative Covenants. Each Pledgor severally and not jointly agrees to
perform and observe each of the following covenants:

     (a) Mergers
and Sales of Assets. It will not, nor will it permit CCLX to, merge or
consolidate with any Person, or liquidate or dissolve, or sell, assign, lease, or otherwise dispose
of (whether in one transaction or in a series of transactions), all or a substantial portion of its
assets (including receivables), whether now owned or hereafter acquired.

	 	(b)	 	No Amendments of the Contracts. It will not, and will not permit CCLX to,
amend the Articles of Association in any material respects.

10

 

     (c) No
Security Interests, Encumbrances. It will not sell, transfer or otherwise
dispose of any right or interest, legal or equitable, in, or grant, create or permit to arise or
exist any encumbrance over or affecting, any of the shares of CCLX held by it, except for:

     (i) the security interest created by this Agreement; and

     (ii) statutory liens which do not have or would not individually or in the aggregate reasonably be
expected to have a Material Adverse Effect.

     (d) Distributions. It will not permit CCLX to make, declare or pay any
distribution, dividend or return of capital, or purchase, redeem or otherwise acquire for value any
ownership interest in CCLX now or hereafter outstanding, or make any distribution of assets or
property to the Pledgors, except as permitted by CCT Shanghai’s express consent.

     (e) Rights
under the Pledge Documents. It will not transfer, relinquish or
otherwise dispose of any of its rights and interests under the Pledge Documents or make or agree
to any material amendment, modification or variation to, or waive or grant any indulgence with
respect to any material right under, or make or agree to any suspension, termination or
cancellation of, any of the Pledge Documents, or make or agree to any claim that any of the Pledge
Documents has been frustrated.

     5.3
Ownership Rights and Changes in Capitalization.

     (a) Changes
in Shares. Each Pledgor agrees that it will not permit CCLX to:

     (i) cancel or change the terms of the Ownership Rights; or

     (ii) authorize, create, or issue any additional ownership interests in CCLX except as permitted by
each of the Technical Services Agreements and subject to compliance with Sections 5.3(b) and 5.3(c)
below.

     (b) No
Transfers. Each Pledgor agrees that it will not approve or consent to the
sale, conveyance, exchange, disposition, assignment, transfer, pledge, or encumbrance of any
ownership interest in CCLX by any Person, unless such ownership interest is simultaneously pledged
to CCT Shanghai in full compliance with Section 5.3(c).

     (c) Additional
Ownership Rights. If a Pledgor or any of its Affiliates acquires
Ownership Rights in CCLX that are not subject to the security interests created by this Agreement,
that Pledgor will (i) ensure that such Ownership Rights are pledged, or cause such Affiliate to
pledge such Ownership Rights, in favor of CCT Shanghai as security for the Secured Obligations
pursuant to an agreement substantially in the form of this Agreement and otherwise in form and
substance reasonably satisfactory to the CCT Shanghai, and (ii) obtain all approvals and complete
all registrations and other formalities which may be required in order to create and perfect a
continuing first priority security interest in such Ownership Rights in favor of CCT Shanghai prior
and superior to all other encumbrances and interests to the extent possible under PRC law.

11

 

ARTICLE VI. SURETYSHIP PROVISIONS

          6.1      Nature of Pledgor’s Secured Obligations. The obligations of each Pledgor hereunder will be
absolute and unconditional under any and all circumstances. Each Pledgor’s obligations under this
Agreement are independent of any obligation of the other Pledgors, and a separate action or actions
may be brought and prosecuted against a Pledgor whether or not such action or actions are brought
or prosecuted against the other Pledgor(s) or any other Person and whether or not the other
Pledgors or any other Person is joined in any such action or actions. To the extent not prohibited
by PRC law, upon the occurrence and during the continuance of an Equipment Return Default, CCT
Shanghai may proceed directly and at once, without notice, against the Pledged Collateral to
collect and recover the full amount or any portion of the Secured Obligations so due and payable,
without first proceeding against the other Pledgor(s) or any other Person or against any other
security or collateral provided by Pledgors or any other Person with respect to the Secured
Obligations. Each Pledgor’s obligations hereunder are independent of, and not in consideration of
or contingent upon, the existence of any other guaranty of any or all of the Secured Obligations,
and the release or cancellation of any other guaranty will not affect a Pledgor’s obligations
hereunder.

          6.2      Security Interest Absolute. To the extent not prohibited by PRC law, all rights of CCT
Shanghai and the pledge and security interests created under this Agreement in favor of CCT
Shanghai, and all Secured Obligations of the CCLX under the Pledge Documents, shall be absolute and
independent irrespective of:

          (a)      approval or consent to any amendment, renewal, restatement, termination, modification or
revision of any Pledge Documents;

          (b)      modification, amendment, supplement or waiver of any provision of any Pledge Documents,
including changing the terms and conditions of disbursement of credit proceeds, renewing,
compromising, extending or accelerating, or otherwise changing the time for payment of, or
increasing or decreasing the rate of interest on the credits or any part thereof;

          (c)      any Advance of additional funds, extension of additional credit or affording other
financial accommodations to or for CCLX;

          (d)      CCT Shanghai’s acceleration or postponement of the time for performance of, or other
modification, amendment, supplement or waiver of, any of the Secured Obligations, or granting a
forbearance with respect thereto;

          (e)      the taking and holding of other security for the performance of any Secured Obligations,
accepting additional or substituted security for the same, and exchanging, enforcing, waiving,
releasing, compromising, failing to perfect and selling or otherwise disposing of any such
security;

          (f)      the application of any security for the performance of any Secured Obligations and
directing the order or manner of sale thereof as CCT Shanghai may determine;

          (g)      the release or discharge of Pledgors; and

12

 

          (h)      accepting, adding, settling, compromising with, releasing or substituting of endorsers,
guarantors or other obligors of or with respect to the Secured Obligations.

          Each Pledgor agrees that CCT Shanghai may, at any time and from time to time, without notice
to or demand upon the Pledgors, irrespective of any change in the financial condition of the
Pledgors or CCLX, perform or not perform any or all of the foregoing acts without affecting the
Secured Obligations of such Pledgors hereunder. Each Pledgor agrees that its Secured Obligations
hereunder will not be impaired or affected in any way by the performance or non-performance by CCT
Shanghai of any of the foregoing acts and that such Pledgor will not be released by any act or
event which might otherwise be deemed a legal or equitable discharge of a guarantor or a surety.

          6.3      Waivers. To the extent not prohibited by applicable law, each Pledgor unconditionally and
irrevocably waives:

          (a)      any right to require the CCT Shanghai to proceed against CCLX or any other Person, to
proceed against or exhaust any security held by CCT Shanghai or to pursue any other remedy in CCT
Shanghai’s power before proceeding against the Pledged Collateral or such Pledgor or exercising CCT
Shanghai’s rights and remedies under this Agreement;

          (b)      any defense arising by reason of any disability or other similar defense of Pledgors, CCLX
or any other Person, or by reason of any invalidity, ineffectiveness or unenforceability of any or
all of the Secured Obligations or any Pledge Documents;

          (c)      diligence, presentment, demand for performance, notice of nonperformance, protest, notice
of protest, notice of dishonor, notice of the creation or incurring of new or additional
indebtedness of CCLX, notice of acceptance of this Agreement and notices of any other kind
whatsoever (other that notices expressly required under this Agreement);

          (d)      the filing of any claim with any court in the event of a receivership or bankruptcy;

          (e)      the benefit of any statute of limitations affecting such Pledgor’s Secured Obligations
under this Agreement or the enforcement thereof;

          (f)      any defense based upon any taking, modification, impairment or release of any collateral
or guaranty for any Secured Obligations, or any failure to perfect any security interest in or any
other act or omission with respect to any collateral or guaranty securing payment or performance of
any Secured Obligations;

          (g)      any defenses or benefits that may be derived from or afforded by law which limit the
disability of or exonerate guarantors or sureties or which may conflict with the terms of this
Agreement; and

          (h)      any offset or counterclaim or other right, defense or claim based on, or in the nature of,
any obligation now or hereafter owed to such Pledgor by CCLX, or CCT Shanghai.

          6.4      Election of Remedies. Each Pledgor understands that the exercise by CCT Shanghai of
certain rights and remedies contained in the Pledge Documents may affect or eliminate its right of
subrogation and reimbursement against CCLX and that it may therefore

13

 

incur a partially or totally
nonreimbursable liability hereunder. Each Pledgor (a) expressly authorizes CCT Shanghai to pursue
its rights and remedies with respect to the Secured Obligations in any order or fashion it deems
appropriate and (b) waives any defense arising out of the absence, impairment or loss of any or all
rights of recourse, reimbursement, contribution or subrogation or any other rights or remedies of
such Pledgor against CCLX, any other Person or any security, whether resulting from an election by
CCT Shanghai to foreclose on any Pledged Collateral by CCT Shanghai’s sale rather than judicial
foreclosure, or from any other election of rights or remedies by CCT Shanghai, or otherwise.

          6.5      Information Concerning CCLX. Each Pledgor severally and not jointly represents and
warrants to CCT Shanghai that such Pledgor is affiliated with CCLX and that it has, independently
and without reliance on any Secured Party and based on such documents and information as it has
deemed appropriate, made its own credit decision and analysis and decision to enter into this
Agreement. Each Pledgor is in a position to have continuing access to any and all relevant
information bearing upon the creditworthiness of CCLX. Each Pledgor waives any requirement that CCT
Shanghai advise such Pledgor of information known to CCT Shanghai regarding the financial condition
or business of CCLX or a Pledgor, or any other circumstance bearing upon the risk of
non-performance of the Secured Obligations, and each Pledgor assumes sole responsibility for
keeping informed of each such condition and circumstance. Each Pledgor confirms that none of the
Secured Party has made any representation or warranty or assumed any responsibility with respect to
the enforceability of any of the Pledge Documents’ or the creditworthiness of CCLX.

          6.6      No Subrogation. Each Pledgor irrevocably waives, and agrees that it will not exercise or
assert, any right of subrogation, reimbursement, indemnity, exoneration or contribution or any
other claim which it may now or hereafter have against CCLX or any other Person directly or
indirectly liable for the Secured Obligations, or against or with respect to CCLX’s property, and
which arise from the existence, performance or enforcement of the security interest and pledge
created hereunder, this Agreement or any of the other Pledge Documents. CCT Shanghai may use, sell
or dispose of any Pledged Collateral as it sees fit without regard to any subrogation rights a
Pledgor may have, and upon any disposition, sale, or any rights of subrogation a Pledgor may have
will terminate. If any amount is paid to a Pledgor on account of such subrogation rights at any
time when all the Secured Obligations have not been indefeasibly paid in full, such amount will be
held in trust for the benefit of CCT Shanghai and will forthwith be paid to CCT Shanghai to be
applied to the Secured Obligations in accordance with the terms of the Pledge Documents.

ARTICLE VII. RIGHTS AND REMEDIES

          7.1       Dividend and Voting Rights.

          (a)      So long as no Equipment Return Default has occurred and is continuing, the Pledgors will
be entitled to exercise any and all voting and other consensual rights with respect to its
Ownership Rights for any purpose not inconsistent with the terms of the Pledge Documents and to
receive and retain any and all dividends and other payments in respect of its Ownership Rights.

          (b)      To the extent not prohibited by PRC law, upon the occurrence and during the continuance of
an Equipment Return Default, all rights of the Pledgors to exercise voting and

14

 

other consensual
rights with respect to the Ownership Rights and to receive dividends and other payments in respect
of the Ownership Rights will cease, and all such rights will immediately become vested solely in
CCT Shanghai or its nominees. After the occurrence and during the continuance of an Equipment
Return Default, any dividends and other payments in respect of the Ownership Rights received by a
Pledgor will be held in trust for CCT Shanghai, and such Pledgor will keep all such amounts
separate and apart from all other funds and property so as to be capable of identification as the
property of CCT Shanghai and will deliver such amounts to CCT Shanghai at such time as CCT Shanghai
may request in the identical form received, properly endorsed or assigned when required to enable
CCT Shanghai to complete collection thereof.

          7.2      CCT Shanghai’s Rights Upon Default. To the extent not prohibited by applicable law, upon
the occurrence and during the continuance of an Equipment Return Default, CCT Shanghai may take any
or all of the following actions, in each case without prior notice to the Pledgors except as
required under applicable law:

          (a)      give notice of the Equipment Return Default to any Person, collect dividends and other
amounts constituting or payable in respect of Pledged Collateral and enforce all rights of CCT
Shanghai in respect of the Pledged Collateral;

          (b)      take possession and ownership of any or all of the Pledged Collateral, wherever it may be
found and hold, store and manage the same;

          (c)      foreclose its security interest upon any or all of the Pledged Collateral;

          (d)      pledge or otherwise encumber any or all of the Pledged Collateral; and

          (e)      exercise any or all other rights or remedies available to CCT Shanghai under applicable
law, the other Pledge Documents or any other agreement between the parties.

If an Equipment Return Default shall have occurred and be continuing, CCT Shanghai may, at its
sole discretion, exercise the foregoing rights and remedies at such times and in such manner as it
deems necessary. In such Equipment Return Default, CCT Shanghai may execute and deliver to the
Pledgors all
documents and instruments (which will be prepared by CCT Shanghai and the Pledgors shall promptly
take all actions to execute such instruments) necessary to initiate and complete all proceedings
and procedures required enforce and its rights and remedies, including initiating and implementing
all legal proceeding under PRC Law required to transfer ownership of the Investment Certificates.

          7.3      Right to Cause Relinquishment. Pursuant to Section 2.3 of the Technical Service Agreement,
CCT Shanghai may elect to decline the return of certain Transferred Equipment and cause
Relinquishment. Upon receipt of notice of Relinquishment, the Pledgors shall assign, transfer and
deliver to CCT Shanghai, or its designated Affiliate or third party, free from any interest of
Pledgors all of its right, title and interest in and to the corresponding amount of Investment
Certificates to be transferred set forth in the notice of Relinquishment. The Pledgors shall
promptly take all actions to execute any documents or instruments necessary to initiate and
complete all proceedings and procedures required to transfer its Ownership Rights.

15

 

          7.4      Other Rights of CCT Shanghai. CCT Shanghai may at any time and from time to time release
any right, remedy or security interest it has with respect to a particular item of Pledged
Collateral without thereby releasing or in any way affecting its rights, remedies or security
interest with respect to any other item of Pledged Collateral.

          7.5      Disposition of Pledged Collateral. To the extent not prohibited by applicable law, after
the occurrence and during the continuance of an Equipment Return Default or an election by CCT
Shanghai under Section 2.3 of each of the Technical Services Agreements,

          (a)      Upon the written request of CCT Shanghai, each Pledgor shall promptly and at its own
expense assemble any or all of the Pledged Collateral owned by it and not in the possession of such
Pledgor, and make it available to CCT Shanghai, at any place designated in writing by CCT Shanghai
which is reasonably convenient to such Pledgor and CCT Shanghai.

          (b)      CCT Shanghai may retain ownership in or will be entitled to sell the Pledged Collateral at
public or private sale with or without having any or all of the Pledged Collateral at the place of
sale, upon terms, in such manner, at such time or times, and at such place or places as CCT
Shanghai may determine to be commercially reasonable, and each Pledgor agrees that a private sale
or a sale on extended payment terms, or in exchange for property, stock or other consideration will
not for such reason alone be deemed to be commercially unreasonable. The Pledged Collateral may be
sold in one lot as an entirety or in separate parcels. Pledgors are expressly authorized to grant,
with or without compensation, options to purchase or acquire rights in the Pledged Collateral. CCT
Shanghai may purchase any or all of the Pledged Collateral sold at any public sale and, to the
extent not prohibited by applicable law, may purchase any or all of the Pledged Collateral sold at
any private sale, including by a credit bid. Each Pledgor and CCLX irrevocably consent to the sale
of any or all of the Pledged Collateral by CCT Shanghai.

          (c)      CCT Shanghai may, in its sole discretion, restrict the prospective bidders or purchasers
at any sale as to their number, nature of business, financial or business expertise, net worth or
financial resources and investment intention or on the basis of any other factors CCT Shanghai
deems advisable. Any sale of the Pledged Collateral may be subject to the requirement that any
purchase of all or any part of the Pledged Collateral must be for the purpose of investment and
without any intention to make a distribution thereof.

          (d)      CCT Shanghai expressly agrees that it shall give at least ten days’ notice to the Pledgors
of the time and place of any public sale of Pledged Collateral or of the time after which a private
sale of Pledged Collateral may take place, and that such notice will constitute reasonable notice
under all circumstances, except to the extent that mandatory non-waivable requirements of
applicable law require a longer notice period. CCT Shanghai will not be obligated to hold any sale
pursuant to any such notice and may, without notice or publication, adjourn any public or private
sale by announcement at the time and place fixed for such sale, and a subsequent sale may be held
at the time and place designated in such announcement without further notice or publication. To the
extent not prohibited by applicable law, each Pledgor irrevocably waives any right it may have to
demand of performance or other demand,
advertisement, judicial hearing or notice to it (other than as set forth in this Section 7.5)
or any other Person in connection with the collection, sale or other disposition of, or realization
upon, the Pledged Collateral.

16

 

          (e)      Secured Party may settle, pay or discharge any or all taxes, liens, claims and other
charges with respect to the Pledged Collateral, and may procure or continue insurance with respect
to the Pledged Collateral. All sums expended by the Pledgors pursuant
to this Section 7.5(e) will
constitute Secured Obligations secured by Pledgor. CCT Shanghai will have no duty to take any
action authorized by this Section 7.5(e), and no sale of the Pledged Collateral will be deemed to
have been commercially unreasonable by reason of CCT Shanghai’s decision not to take any action.

          7.6      No Marshalling or Right of Redemption.

          (a)      Except to the extent required by applicable law, CCT Shanghai will not be required to
marshall any Pledged Collateral or any guaranties of the Secured Obligations or to resort to any
item of Pledged Collateral or any guaranty in any particular order, and CCT Shanghai’s rights with
respect to the Pledged Collateral and any guaranties will be cumulative and in addition to all
other rights, however existing or arising. To the extent not prohibited by applicable law, each
Pledgor irrevocably waives, and agrees that it will not invoke or assert, any law requiring or
relating to the marshalling of collateral or any other law which might cause a delay in or impede
the enforcement of CCT Shanghai’s rights under this Agreement.

          (b)      Except as set forth herein, to the extent not prohibited by applicable law, each Pledgor
irrevocably waives, and agrees that it will not invoke or assert, any rights to equity of
redemption or other rights of redemption, appraisement, valuation, stay, extension or moratorium
that it may have in equity, at law or otherwise with respect to any Pledged Collateral. The sale or
other transfer pursuant to this Agreement of any right, title or interest of a Pledgor in any item
of Pledged Collateral will operate to permanently divest that Pledgor and all Persons claiming
under or through that Pledgor of such right, title or interest, and will be a perpetual bar, both
at law and in equity, to any and all claims by that Pledgor or any such Person with respect to
such item of Pledged Collateral.

          7.7      Application of Proceeds. Any cash held by Pledgors as Pledged Collateral and all cash
proceeds received by Pledgors from any realization upon Pledged Collateral shall, in the sole
discretion of CCT Shanghai be applied by CCT Shanghai in accordance with the terms of the Pledge
Documents.

          7.8      CCT Shanghai’s Duties.

          (a)      The grant to CCT Shanghai under this Agreement of any right or power does not impose upon
CCT Shanghai any duty to exercise such right or power. CCT Shanghai will have no obligation to take
any steps to preserve any claim or other right against any Person or with respect to any Pledged
Collateral.

          (b)      To the extent not prohibited by applicable law, each Pledgor waives all claims against CCT
Shanghai or its respective agents arising out of the repossession, taking, retention, storage,
operation or sale of the Pledged Collateral in accordance with the terms of this Agreement. Each
Pledgor waives any claim it may have based on the allegation or fact that the price obtained for
Pledged Collateral sold at a private sale was less than could have been obtained for the same
Pledged Collateral at a public sale. All risk of loss, damage, diminution in value or destruction
of the Pledged Collateral will be borne by the Pledgors.

17

 

CCT Shanghai will have no responsibility for any act or omission of any carrier, warehouseman,
bailee, forwarding agency, broker, operator or any other Person.

          (c)      CCT Shanghai does not and will not make any express or implied representations or
warranties with respect to any Pledged Collateral or other property released to a Pledgor or its
successors and assigns.

          (d)      CCT Shanghai will be accountable only for such proceeds as CCT Shanghai actually
receives as a result of the exercise of its rights under this Agreement, and delivery or other
accounting of the application of such proceeds or the Pledged Collateral in accordance with the
Pledge Documents by CCT Shanghai to the Pledgors will discharge CCT Shanghai of all liability
therefor.

          (e)      Except as set forth in this Agreement or as required under applicable law, CCT Shanghai
will have no duties or Secured Obligations under this Agreement or with respect to the Pledged
Collateral.

          (f)      Notwithstanding any other provision of this Section 7.8, CCT Shanghai will have no
responsibility to the Pledgors for any act or omission of CCT Shanghai, except to the extent such
act or failure to act constitutes gross negligence or willful misconduct by CCT Shanghai or its
agents or attorneys-in-fact.

          7.9      General. CCT Shanghai shall exercise its rights under this Article 7 in accordance with
the Pledge Documents. An Equipment Return Default shall not be deemed to exist if an Equipment
Return Default is waived by the CCT Shanghai.

ARTICLE VIII. GENERAL PROVISIONS

          8.1      Governing Law. This Agreement will be governed by, and construed in accordance with, the
laws of the PRC.

          8.2      Dispute Resolution. The Parties shall use their best efforts to resolve all disputes
arising in connection with this Agreement promptly through friendly negotiations. In the event that
no settlement can be reached within 30 days following the occurrence of such dispute, the case will
be referred to and finally resolved by arbitration in Beijing at the China International Economic
and Trade Arbitration Commission (“CIETAC”) in accordance with its Rules then in effect (which
Rules are deemed to be incorporated by reference into this section). Such arbitration shall be
conducted in the English and Chinese languages by a panel of three arbitrators. One arbitrator will
be appointed by the Pledgors, one arbitrator will be appointed by CCT Shanghai, and the third will
be a Person mutually agreed upon by the Pledgors and CCT Shanghai. If they fail to agree within 20
days, the third arbitrator will be appointed by CIETAC pursuant to its Rules within 30 days from
the date of receipt of notice to make such appointment. If selected pursuant to the immediately
preceding sentence, the third arbitrator must be chosen from among the CIETAC panel of arbitrators
from one of the following countries: Australia, Canada, Germany, Japan, Singapore, Sweden,
Switzerland and the United States. The arbitrators will decide in their award the allocation of
costs, including the arbitrators’ fees and all other costs to which the dispute may give rise. The
award of the arbitrators will be final and without appeal. Any competent court may enforce such
award.

18

 

          8.3      Waiver of Immunity. To the extent that a Pledgor or any of its properties has or hereafter
may acquire any right to immunity from set-off, jurisdiction, process, legal proceedings,
attachment prior to judgment, other attachment or execution or enforcement of judgment on the
grounds of sovereignty or other grounds, that Pledgor, to the maximum extent permitted by
applicable law, irrevocably waives such rights to immunity in respect of its Secured Obligations
arising under or relating to this Agreement.

          8.4      Notices. All notices and other communications required or permitted hereunder shall be in
the English language, in writing and shall be (i) mailed by registered or certified mail, postage
prepaid; (ii) sent by facsimile or electronic mail with electronic confirmation of receipt; or
(iii) delivered by hand or by an internationally-recognized overnight courier with written
confirmation of receipt, addressed (a) if to a party hereto, at such Party’s address set forth
below, or (b) at such other address as such Party shall have furnished to the other Parties in
writing:

	 	 	 	 	 	 	 
	If to CCL:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Address:	 	15th Ruoy Chai International Building
	 	 	 	 	No. 8 Yong An Dong Li
	 	 	 	 	Jian Guo Men Wai Avenue
	 	 	 	 	Beijing 100022 
PRC
	 
	 	 	 	Attn:	 	Mr Yin Jian Ping
	 
	 	 	 	Tel:	 	86 10 6566 778
	 
	 	 	 	Fax:	 	86 10 8528 8366
	 
	 	 	 	E-mail:	 	yinjp@chinacast.com.cn
	 
	 	 	 	 	 	 
	If to LW:	 	 	 	 
	 	 	Address:	 	15th Floor, Ruoy Chai International Building
	 	 	 	 	No. 8 Yong An Dong Li
	 	 	 	 	Jian Guo Men Wai Avenue
	 	 	 	 	Beijing 100022
	 	 	 	 	PRC
	 
	 	 	 	Tel:	 	86 10 65667788
	 
	 	 	 	Fax:	 	(86) 10-8528 8366
	 
	 	 	 	E-mail:	 	wei.li@chinacast.com.cn
	 
	 	 	 	 	 	 
	If to CCLX:	 	 	 	 
	 	 	Address:	 	15th Ruoy Chai International Building
	 	 	 	 	No. 8 Yong An Dong Li
	 	 	 	 	Jian Guo Men Wai Avenue
	 	 	 	 	Beijing 100022
	 	 	 	 	PRC
	 
	 	 	 	Attn:	 	Mr Yin Jian Ping
	 
	 	 	 	Tel:	 	86 10 6566 778
	 
	 	 	 	Fax:	 	86 10 8528 8366
	 
	 	 	 	E-mail:	 	yinjp@chinacast.com.cn

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	If to CCT Shanghai:	 	 	 	 
	 
	 	Address:	 	8th Floor, Tianjin Building
	 	 	 	 	167 Connaught Road West
	 	 	 	 	Hong Kong
	 
	 	 	 	Attn:	 	Mr Ron Chan
	 
	 	 	 	Tel:	 	852 2811 2389
	 
	 	 	 	Fax:	 	852 2811 2973
	 
	 	 	 	E-mail:	 	ronchan@chinacast.com.cn

          Each such notice or other communication shall for all purposes of this Agreement be treated as
effective or having been given (x) in the case of personal delivery or delivery by facsimile or by
electronic mail, on the date of such delivery, (y) in the case of an internationally-recognized
overnight courier, on the fifth business day after the date when sent and (z) in the case of
mailing, on the tenth business day following that on which the piece of mail containing such
communication has been deposited in a regularly maintained receptacle for the deposit of mail,
addressed and mailed as aforesaid; provided, however, that any notice to CCT Shanghai shall only be
effective on receipt.

          8.5     
Foreign Corrupt Practices Act. Each of the Pledgors and CCLX is aware of and understands
the provisions of the United States Foreign Corrupt Practices Act of 1977, as amended, and its
purposes, and is also aware of and familiar with the laws, rules and regulations of the PRC, Hong
Kong the United States and any other relevant government relating to or dealing with government
officials. No equityholder, officer, director or representative of a Pledgor or CCLX is a candidate
for political office, or an employee, officer or representative of any government, or of any
political party. In connection with any activities conducted pursuant to this Agreement, or in
connection with the business of the Pledgor or CCLX as conducted prior to the date hereof, no
management personnel of a Pledgor or CCLX (and to the best knowledge of the Pledgor or CCLX, no
employee or agent of a Pledgor or CCLX) has directly or indirectly, offered, given or promised, and
after the date hereof with respect to a Pledgor or CCLX and the Transaction, no such management
personnel will directly or indirectly offer, give or promise, money or anything of value to any
government official for the purposes of: (i) influencing any act or decision of such government
official or political party in his, her or its official capacity; (ii) inducing such government
official or political party to do or omit to do any act in violation of the lawful duty of such
government official or political party; or, (iii) inducing such government official or political
party to use his, her or its influence with any governmental body to effect or influence any act or
decision of such governmental body; in order to assist a Pledgor or CCLX in obtaining any
governmental authorization or permission from, obtaining or retaining business for or with, or
directing business to, any Person or entity. Without limiting the foregoing, it is the intent of
the Parties that no payments or transfers of value shall be . made which have the purpose or effect
of public or commercial bribery, acceptance or acquiescence in extortion, kickbacks or other
unlawful or improper means of obtaining business.

          8.6      Export Control.

The Pledgors and CCLX have not performed and will not perform any act, the occurrence of which
would result in a violation of United States export control laws.

Any activities of the Pledgors or CCLX which are or may become subject to the export control laws
of the United States shall not be undertaken by or with the participation of

20

 

Foreign Nationals (as
defined by the relevant United States export control laws), including but not limited to citizens
or nationals of the People’s Republic of China, without first obtaining any and all necessary
authorization or other prior permission from the relevant United States Government authorities. The
Pledgors and CCLX shall exercise best efforts to ensure that Hughes Electronics Corporation, its
divisions, subsidiaries and Affiliates (collectively, “Hughes”) is provided all necessary
information concerning the activities of the Pledgors or CCLX so as to permit Hughes to determine
in advance whether such activities require such authorization or other prior permission.

          8.7     
Access to Information. The Pledgors and CCLX shall provide or otherwise make accessible to
Hughes any information which may be necessary to permit Hughes to comply or verify its compliance
with United States laws, rules and regulations.

          8.8     No
Activities with Armed Forces. None of the activities of the Pledgors and CCLX shall
involve or otherwise relate to activities pursued by or involving the armed forces of the
People’s Republic of China, including but not limited to the People’s Liberation Army or the
Ministry of State Security.

          8.9
     Successors and Assigns. This Agreement will be binding upon and inure to the benefit of
the respective successors and permitted assigns of the parties hereto, except that no Pledgor may
assign or otherwise transfer all or any part of its rights or Secured Obligations under this
Agreement without the prior written consent of CCT Shanghai. CCT Shanghai may assign, transfer or
grant participations in respect of any or all of its rights and Secured Obligations under this
Agreement in connection with an assignment, transfer or participation effected in compliance with
the applicable provisions of the Pledge Documents. Upon any transfer, assignment or participation
by a third party permitted under the terms of such Pledge Documents, the transferee, assignee or
participant shall be entitled, to the extent of the interest transferred, to the benefit of the
indemnities, tax reimbursements, rights of set-off and other rights of CCT Shanghai pursuant to the
provisions of this Agreement. The acts of CCT Shanghai or the failure of CCT Shanghai to act
hereunder shall be conclusive and binding on any transferee, assignee or participant of CCT
Shanghai’s interest under this Agreement.

          8.10
     Counterparts. This Agreement may be executed in several counterparts, each of which shall
be deemed an original, and all of which together will constitute one and the same agreement.

          8.11     
Severability. In the event that any provision of this Agreement becomes or is declared by
a competent authority to be illegal, unenforceable or void, this Agreement shall continue in full
force and effect without said provision, and the Parties shall promptly negotiate in good faith
(such negotiations to be subject to the arbitration clauses of this Agreement) a legal and
enforceable replacement provision which as nearly as possible puts the Parties in the position in
which they would have been were such provision not declared illegal, unenforceable or void.

          8.12     
Amendment or Waiver. This Agreement and its provisions may be amended, changed, waived,
discharged or terminated only by a writing signed by each of the parties hereto. CCT Shanghai may,
but shall not be obligated to, enter into any such amendment, change, waiver, discharge or
termination which affects its own rights, duties, immunities and liabilities under this Agreement
or otherwise.

21

 

          8.13     
No Third Party Beneficiaries. Except as otherwise expressly stated herein, this Agreement
is intended to be solely for the benefit of the parties hereto and their respective successors and
permitted assigns and is not intended to and will not confer any rights or benefits on any third
party.

          8.14
     Language of Agreement. This Agreement is written and executed in both the English and
Chinese languages, each of which will be of equal force and effect.

          8.15     
Further Assurances. At any time and from time to time upon the request of CCT Shanghai,
the Pledgors will execute and deliver such further documents and instruments and do such other acts
as CCT Shanghai may reasonably request in order to effect fully the purposes of this Agreement, to
create, perfect, maintain and preserve the security interest in the Pledged Collateral in favor of
CCT Shanghai, and to provide for the payment of the Secured Obligations and the other Secured
Obligations of CCLX to CCT Shanghai in accordance with the terms of the Pledge Documents.

          8.16     
Term. This Agreement shall terminate six months following termination of the CCL
Technical Services Agreement or the CCLX Technical Services Agreement, whichever is later.

22

 

IN WITNESS WHEREOF, the parties, intending to be legally bound, have caused this Agreement to be signed on the date first above written.

	 	 	 
	CHINACAST CO., LTD.
	 
	 	 
	By:

	 	/s/ Yin Jian Ping
	 

	 	 
	Name:

	 	Yin Jian Ping
	Title:

	 	Director

	 	 	 
	LI WEI
	 	 
	 
	 	 
	/s/
(SIGNATURE)
 

	 	 
	 
	 	 

	 	 	 
	CHINACAST TECHNOLOGY (SHANGHAI) LIMITED
	 
	 	 
	By:

	 	/s/ Chan Tye Ngou
	 

	 	 
	Name:

	 	Chan Tye Ngou
	Title:

	 	Director

	 	 	 
	CHINACAST LI XIANG CO LTD
	 
	 	 
	By:

	 	/s/ Yin Jian Ping
	 

	 	 
	Name:

	 	Yin Jian Ping
	Title:

	 	Director

23

 

EXHIBIT A

CAPITAL CONTRIBUTION VERIFICATION REPORT

24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT B

ARTICLES OF ASSOCIATION OF CCLX

25

 

 

 

 

 

 

 

 

EXHIBIT C

INSTRUMENTS OF OWNERSHIP

Corporate Record Books

Corporate Seal

Zhengben of CCLX’S Business Licence

26

 

EXHIBIT D

FORM OF INVESTMENT CERTIFICATE

27

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