09:45 CHAODA MODERN<00682> - Announcement & Resumption (4) of the holders of the Notes, to pledge, or cause the initial Subsidiary Guarantor Pledgor to pledge, as the case may be, the Collateral no later than 30 April 2005 in order to secure the obligations of the Company under the Notes and the Indenture and of such initial Subsidiary Guarantor Pledgor under its Subsidiary Guarantee. The initial Subsidiary Guarantor Pledgor will be Timor Enterprise Limited, a wholly-owned subsidiary of the Company. None of the capital stock of the Company's significant current operating or other PRC Subsidiaries (as defined in the Indenture) will be pledged upon the issuance of the Notes or at any time in the future. In addition, none of the capital stock of any future Restricted Subsidiary organised under the laws of the PRC will be pledged at any time in the future. The Collateral securing the Notes and the Subsidiary Guarantees may be released or reduced in the event of certain asset sales and certain other circumstances. In addition, the Company and each Subsidiary Guarantor Pledgor may incur Permitted Pari Passu Secured Indebtedness (as defined in the Indenture) which would be secured by the Collateral on a pari passu basis with the Notes and the Subsidiary Guarantees. Optional redemption: At any time prior to 7 February 2008, the Company may redeem up to 35% of the principal amount of the Notes with the net cash proceeds of one or more sales of its common stock, or options, warrants or rights with respect to such common stock, in one or more equity offerings at a redemption price of 107.75% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to the date of redemption. Redemption for taxation reasons: Subject to certain exceptions prescribed under the Indenture, the Company may redeem the Notes, as a whole but not in part, at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date fixed by the Company for redemption, if the Company or a Subsidiary Guarantor would become obliged to pay certain additional amounts as a result of certain changes in specified tax law or certain other circumstances. Repurchase of Notes upon a change of control triggering event: Upon the occurrence of a Change of Control Triggering Event (as defined in the Indenture), the Company will make an offer to repurchase all Notes then outstanding at a purchase price equal to 101% of their principal amount plus accrued and unpaid interest, if any, to the redemption date. Covenants: The Notes, the Indenture and the Subsidiary Guarantees will, subject to certain qualifications and exceptions, limit the Company's ability and the ability of its Restricted Subsidiaries to, among other things, (i) incur additional indebtedness and issue disqualified or preferred stock; (ii) declare dividends on capital stock or purchase or redeem capital stock; (iii) make investments or other specified restricted payments; (iv) issue or sell capital stock of Restricted Subsidiaries; (v) guarantee Indebtedness (as defined in the Indenture); (vi) sell assets; (vii) create any Liens (as defined in the Indenture); (viii) enter into sale and leaseback transactions; (ix) enter into agreements that restrict the Restricted Subsidiaries' ability to pay dividends, transfer assets or make intercompany loans; (x) enter into transactions with equity holders or affiliates; or (xi) effect a consolidation or merger. Suspension of certain covenants: Under the Indenture, if on any date following the date of the Indenture, the Notes receive an Investment Grade (as defined in the Indenture) from both of the Rating Agencies (as defined in the Indenture) and no event of default under the Indenture is continuing, then, beginning on that day and continuing until such time, if any, at which the Notes cease to have an Investment Grade Rating from either of the Rating Agencies, certain of the covenants under the Indenture will cease to apply to the Company and the Restricted Subsidiaries. Events of default: The following, among others, will constitute an event of default: (i) default in the payment of principal, interest or additional amounts of the Notes when the same becomes due and payable at maturity, upon acceleration, redemption or otherwise; (ii) the Company or any Restricted Subsidiary defaults in the performance of or breaches any other covenant or agreement in the Indenture or under the Notes and such default or breach continues for a period of 30 consecutive days after written notice by the trustee or the holders of the Notes of 25% or more in aggregate principal amount of the Notes; and (iii) any Subsidiary Guarantor denies or disaffirms its obligations under its Subsidiary Guarantee or, except as permitted by the Indenture, any Subsidiary Guarantor is determined to be unenforceable or invalid or