Clearly this was put in to satisfy the NYSE and shareholders that the stunt Zhang pulled in regards to the bond will not happen again:
"Equity Pledge Agreement
Under DGC's Equity Pledge Agreement with FAB Media and its respective registered shareholders, the registered shareholders of FAB Media pledged all of their respective equity interests in FAB Media to DGC to secure the performance of the registered shareholders', FAB Media's obligations under the various VIE agreements, including the Exclusive Service Agreement and other agreements described above.
If FAB Media or any of its respective registered shareholders breaches any of their respective contractual obligations under these agreements, DGC, as pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests.
The registered shareholders of FAB Media agreed not to transfer, sell, pledge, dispose of or otherwise create any new encumbrance on their respective equity interests in FAB Media, as the case may be, without DGC's prior written consent. Unless terminated at DGC's sole discretion, each Equity Pledge Agreement has a term of ten years and will be automatically renewed upon the expiration of the term. "
I know of no other companies that have this in their bylaws. It means management can't use their shares for collateral to secure personal loans/bonds.
=I know of no other companies that have this in their bylaws.
It isn't in their by-laws. It is standard language in the VIE agreements. I am the one that told you a long time ago that Zhang was not allowed to collateralize his shares and the BOD should use this as a reason not to issue the share tranches. Well guess what... they did exactly that.
To all of the delusional here and the manipulators trying to say I am not posting in the interests of SHAREHOLDERS... how do you reconcile that? Instead of you being diluted down to where Zhang owns 78% of the common shares, I pointed out one of the means where the BOD could refuse to issue his shares.
My post from March 25, 2014:
"It may not have been proper for Zhang to use his shares as collateral for the bond. I would have to see how many were pledged and whether that would have included lock-up shares that he agreed could not be pledged at the time of the bond.
Also, "so long as a majority of the Company’s Board of Directors has made a good faith determination that such piggyback registration will not significantly prejudice the Company’s ability to raise capital."
The board could declare the converted shares from the preferred shares are not to be registered as they are not in the best interests of the company and would prejudice their ability to raise capital. Duh. More ammo for the BOD if they have, indeed, been duped by Zhang."
The shares were never issued. The most important question right now is whether or not Zhang is on board with that. If not... you are toast. He has the ability to declare the VIE agreements void and the law is on his side and you have zero recourse.
This is exactly the language from the 10K regarding the bond:
"The bonds are secured by a PLEDGE of shares in a company that does business with the Company, a certain real estate asset owned by a third party and are guaranteed by the Company’s Chairman. Interest is paid annually on the anniversary of the bond. The bond is due in full upon maturity on April 25, 2016. "
This was newly added to the 10K this year:
"The registered shareholders of FAB Media agreed not to transfer, sell, PLEDGE, dispose of or otherwise create any new encumbrance on their respective equity interests in FAB Media, as the case may be, without DGC's prior written consent. "
So FAB addressed this issue directly, where as before clearly Zhang thought he had the right to raise funds by PLEDGING his shares as collateral (or he wouldn't have done it)."
Why would they add it if it was so clear already what Zhang did was Illegal or unethical?
Bottom line is the shorts who believed the bond was their golden ticket to riches (proving FAB was fraud) are now stuck. The idiots like yourself, who fell for the Carnes Scam, were always stuck. Now you just have a lot more company.
And like I said, I know of no other company that has language like this in their bylaws or anywhere else.