EQUITY PLEDGE AGREEMENT
Exhibit 99.5
This Equity Pledge Agreement (hereinafter this “Agreement”) is dated November 10, 2010, and
is entered into in Yun County, Hubei Province, People’s Republic of China (“PRC” or “China”) by and
among Great Mountain Information Consulting Co., Ltd. (“Pledgee”), and each of the
shareholders listed on the signature pages hereto (each a “Pledgor” and collectively, the
“Pledgors”) of Hubei Jinlong Cement Co., Ltd. (“Jinlong”). Jinlong is made a party to this
Agreement for the purpose of acknowledging the Agreement.
RECITALS
1. The Pledgee incorporated in the PRC as a foreign investment enterprise and specializes in
consulting for International economic, technological and environmental information; developing the
saving energy technology; the development and application of resource recycling machine utilization
technology and the production of emissions re-use technology.
2. Jinlong is engaged in the manufacturing and sales of the cement; the car freight (limited to
branch operations); retail of auto parts and lubricants; mining and sales of limestone
(collectively the “Business”).
3. The Pledgors are shareholders of Jinlong, each legally holding such amount of equity interest of
Jinlong as set forth on the signature page of this Agreement and collectively holding 100% of the
equity interests of Jinlong (collectively the “Equity Interest”).
4. The Pledgee and Jinlong have executed a Consulting Services Agreement dated November 10, 2010
(the “Consulting Services Agreement”) concurrently herewith, pursuant to which Jinlong
shall pay consulting and service fees (the “Consulting Services Fee”) to the Pledgee for
consulting and related services in connection with the Business.
5. In order to ensure that Jinlong will perform its obligations under the Consulting Services
Agreement, and in order to provide an additional mechanism for the Pledgee to enforce its rights to
collect the Consulting Services Fee from Jinlong, the Pledgors agree to pledge all their equity
interests in Jinlong as security for the performance of the obligations of Jinlong under the
Consulting Services Agreement, including payment of the Consulting Services Fee.
NOW THEREFORE, the Pledgee and the Pledgors through mutual negotiations hereby enter into this
Agreement based upon the following terms:
1. Definitions and Interpretation. Unless otherwise provided in this Agreement, the
following terms shall have the following meanings:
1.1 “Pledge” refers to the full content of Section 2 hereunder.
1.2 “Equity Interest” refers to all the equity interests in Jinlong legally held by
the Pledgors.
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1.3 “Term of Pledge” refers to the period provided for under Section 3.2 hereunder.
1.4 “Event of Default” refers to any event in accordance with Section 7.1 hereunder.
1.5 “Notice of Default” refers to the notice of default issued by the Pledgee in
accordance with this Agreement.
2. The Pledge. The Pledgors hereby pledge the Equity Interest to the Pledgee as a security
for the obligations of Jinlong under the Consulting Services Agreement (the “Pledge”).
Pursuant thereto, the Pledgee shall have priority in receiving payments from the evaluation or the
proceeds from the auction or sale of the Equity Interest. The Equity Interest shall hereinafter be
referred to as the “Pledged Collateral”.
3. Term of Pledge.
3.1 The Pledge shall take effect as of the date when the Pledge is ‘registered at the
administration department for industry and commerce, and shall expire two (2) years from Jinlong’s
satisfaction of all its obligations under the Consulting Services Agreement (the “Term”).
3.2 During the Term, the Pledgee shall be entitled to vote, control, sell, or dispose of the
Pledged Collateral in accordance with this Agreement in the event that Jinlong does not perform its
obligations under the Consulting Services Agreement, including without limitations any failures to
pay the Consulting Services Fee.
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3.3 During the Term, the Pledgee shall be entitled to collect any and all dividends declared
or paid in connection with the Pledged Collateral.
4. Pledge Procedure and Registration.
4.1 The Pledge shall be recorded in Jinlong’s Register of Shareholders. The Pledgors shall,
within ten (10) days after the date of this Agreement, process the registration procedures with the
Administration for Industry and Commerce concerning the Pledge.
5. Representation and Warranties of Pledgors.
5.1 The Pledgors are the legal owners of the Pledged Collateral.
5.2 Other than to the Pledgee, the Pledgors have not pledged the Pledged Collateral to any
other party, and the Pledged Collateral is not encumbered to any other party.
6. Covenants of Pledgors.
6.1 During the Term, the Pledgors represent and warrant to the Pledgee for the Pledgee’s
benefit that the Pledgors shall:
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6.1.1 Not transfer or assign the Pledged Collateral, nor create or permit to create any pledge
or encumbrance to the Pledged Collateral which may adversely affect the rights and/or benefits of
the Pledgee without the Pledgee’s prior written consent.
6.1.2 Comply with the laws and regulations with respect to the Pledge; present to Pledgee any
notices, orders or advisements with respect to the Pledge that may be issued or made by a competent
PRC authority within five (5) days upon receiving such notices, orders or advisements; comply with
such notices, orders or advisements; or object to the foregoing matters upon the reasonable request
of the Pledgee or with consent from the Pledgee.
6.1.3 Timely notify the Pledgee of any events which may affect the Pledged Collateral or the
Pledgors’ rights thereto, or which may change any of the Pledgors’ warranties or affect the
Pledgor’s performance of their obligations under this Agreement.
6.2 The Pledgors agree that the Pledgee’s right to the Pledge pursuant to this Agreement shall
not be suspended or inhibited by any legal proceedings initiated by the Pledgors, jointly or
separately, or by any successor of or any person authorized by the Pledgors.
6.3 The Pledgors represent and warrant to the Pledgee that in order to protect and perfect the
security for the payment of the Consulting Services Fee, the Pledgors shall execute in good faith
and cause other parties who have interests in the Pledged Collateral to execute all the title
certificates, contracts, and perform actions and cause other parties who have interests to take
action, as required by the Pledgee.
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6.4 The Pledgors represent and warrant to the Pledgee or its appointed representative (whether
a natural person or a legal entity) that they will execute all applicable and required amendments
in connection with the registration of the Pledge, and within a reasonable amount of time upon
request, provide the relevant notice, order and decision regarding such registration to the
Pledgee.
6.5 The Pledgors represent and warrant to the Pledgee that they will abide by and perform all
relevant guarantees, covenants, warranties, representations and conditions necessary to insure the
rights of the Pledgee under this Agreement. The Pledgors shall compensate all the losses suffered
by the Pledgee as a result of the Pledgors’ failure to perform any such guarantees, covenants,
warranties, representations or conditions.
7. Events of Default.
7.1 The occurrence of any one of the following events shall be regarded as an
“Event of Default”:
7.1.1 This Agreement is deemed illegal by a governing authority of the PRC, or the Pledgor is
incapable of continuing to perform the obligations herein due to any reason except force majeure;
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7.1.2 Jinlong fails to timely pay the Consulting Services Fee in full as required under the
Consulting Services Agreement;
7.1.3 A Pledgor makes any materially false or misleading representations or warranties under
Section 5 herein, or breaches any warranties under Section 5 herein;
7.1.4 A Pledgor breaches the covenants under Section 6 herein;
7.1.5 A Pledgor breaches any terms and conditions of this Agreement;
7.1.6 A Pledgor transfers or assigns, cause to be transferred or assigned, or otherwise
abandons the Pledged Collateral without the prior written consent of the Pledgee;
7.1.7 Jinlong is incapable of repaying debt;
7.1.8 The assets of a Pledgor are adversely affected so as to cause the Pledgee to believe
that such Pledgor’s ability to perform the obligations herein is adversely affected;
7.1.9 The successors or agents of Jinlong refuse, or are only partly able, to perform the
payment obligations under the Consulting Services Agreement;
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7.2 A Pledgor shall immediately give a written notice to the Pledgee if such Pledgor is aware
of or discovers that any event under Section 7.1 herein, or any event that may result in any one of
the foregoing events, has occurred or is likely to occur.
7.3 Unless an Event of Default has been resolved to the Pledgee’s satisfaction within 15 days
of its occurrence (the “Cure Period”), the Pledgee may, at any time thereafter, give a
written default notice (the “Default Notice”) to the Pledgor and require the Pledgors to
immediately make full payment of the then outstanding Consulting Services Fee and any other
outstanding payables in accordance with Section 8 herein.
8. Exercise of Remedies.
8.1 Authorized Action by Secured Party. The Pledgors hereby irrevocably appoint
Pledgee as the attorney-in-fact of the Pledgors for the purpose of carrying out the security
provisions of this Agreement and to take any action and execute any instrument that the Pledgee may
deem necessary or advisable to accomplish the purpose of this Agreement. Such power of attorney
shall be effective, automatically and without the necessity of any action (including any transfer
of any Pledged Collateral) by any person, upon the occurrence an Event of Default. Pledgee shall
not have any duty to exercise any such right or to preserve the same and shall not be liable for
any failure to do so or for any delay in doing so.
If an Event of Default occurs, or is already proceeding, Pledgee shall have the right to
exercise the following rights:
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(a) Collect by legal proceedings or otherwise, and endorse and/or receive all payments,
proceeds and other sums and property now or hereafter payable on or on account of the Pledged
Collateral;
(b) Enter into any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply other property in exchange
for the Pledged Collateral;
(c) Transfer the Pledged Collateral under the Pledgee’s name or under an appointed nominee;
(d) Make any compromise or settlement, and take any action the Pledgee deems advisable, with
respect to the Pledged Collateral;
(e) Notify any obligor with respect to the Pledged Collateral to make payment directly to the
Pledgee;
(f) All rights of the Pledgors that they would otherwise be entitled to enjoy or exercise with
respect to the Pledged Collateral, including without limitations the rights to vote and to receive
distributions, shall cease without any further action by or notice, and all such rights shall
thereupon become vested in the Pledgee; and
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(g) The Pledgors shall execute and deliver to the Pledgee such other instruments as the
Pledgee may request in order to permit the Pledgee to exercise the rights set forth herein.
8.2 Other Remedies. Upon the expiration of the Cure Period, the Pledgee, in addition
to the remedies set forth in Section 8.1 or such other rights in law, equity or otherwise, may,
without notice or demand on the Pledgors, elect any of the following:
(a) Require the Pledgors to immediately pay all outstanding unpaid amounts due under the
Consulting Services Agreement;
(b) Foreclose or otherwise enforce the Pledgee’s security interest to the Pledged Collateral
in any manner permitted by law or provided under this Agreement;
(c) Terminate this Agreement pursuant to Section 11;
(d) Exercise any and all rights as the beneficial and legal owner of the Pledged Collateral,
including, without limitation, the transfer and exercise of voting and any other rights to the
Pledged Collateral; and
(e) Exercise any and all rights and remedies of a secured party under applicable laws.
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8.3 The Pledgee has priority in the receipt of payments from the proceeds of auction or sale
of the Pledged Collateral, in part or in whole, in accordance with legal procedures, until all
payment obligations under the Consulting Services Agreement are satisfied.
8.4 The Pledgors shall not hinder the Pledgee from exercising its rights in accordance with
this Agreement and shall give necessary assistance so that the Pledgee may exercise its rights in
full.
9. Assignment.
9.1 The Pledgors shall not assign or otherwise transfer the rights and obligations herein
without the Pledgee’s prior written consent.
9.2 This Agreement shall be binding upon each of the Pledgors and their respective successors,
and shall be binding on the Pledgee and each of its successor and assignee.
9.3 Upon the transfer or assignment by the Pledgee of any or all of its rights and obligations
under the Consulting Services Agreement, the Pledgee’s transferee or assignee shall enjoy and
undertake the same rights and obligations as the Pledgee under this Agreement. The Pledgors shall
be notified of any such transfer or assignment by written notice and at the request of the Pledgee,
the Pledgors shall execute such relevant agreements and/or documents with respect to such transfer
or assignment.
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9.4 In the event of the Pledgee’s change in control resulting in the transfer or assignment of
this Agreement, the successor to the Pledgee and the Pledgors shall execute a new equity pledge
agreement.
10. Formalities, Fees and Other Charges.
10.1 The Pledgors shall be responsible for all the fees and expenses in relation to this
Agreement, including, but not limited, to legal fees, cost of production, stamp tax and any other
taxes and charges. If the Pledgee pays the relevant taxes in accordance with applicable law, the
Pledgors shall fully reimburse the Pledgee of such taxes.
10.2 The Pledgors shall be responsible for all expenses (including, but not limited to, any
taxes, application fees, management fees, litigation costs, attorney’s fees, and various insurance
premiums in connection with the disposition of the Pledge) incurred by the Pledgee in its recourse
to collect from the Pledgors arising from the Pledgors’ failure to pay any relevant taxes and fees.
11. Force Majeure.
11.1 “Force Majeure” shall include, but not be limited, to acts of governments, acts of
nature, fire, explosion, typhoon, flood, earthquake, tide, lightning, war, and any unforeseen
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events beyond a Party’s reasonable control or which cannot be prevented with reasonable care.
However, any shortage of credit, capital or finance shall not be regarded as an event beyond a
Party’s reasonable control. A Party affected by Force Majeure shall promptly notify the other
Parties of such event in order to be exempted from such Party’s obligations under this Agreement.
11.2 In the event that the affected Party is delayed or prevented from performing its
obligations under this Agreement due to Force Majeure, the affected Party shall not be responsible
for any damage caused by the delay or prevention of such performance, as long as such damage is
within the scope of such delay or prevention. The affected Party shall take appropriate means to
minimize or remove the effects of Force Majeure and attempt to resume performance of the
obligations delayed or prevented by Force Majeure. When such Force Majeure ceases to exist, both
Parties covenant and agree to resume the performance of this Agreement with their best efforts.
12. Confidentiality. The Parties hereby acknowledge and agree to ensure the confidentiality
of all oral and written materials exchanged relating to this Agreement. No Party shall disclose
any confidential information to any other third party without the other Parties’ prior written
approval, unless: (a) such information was in the public domain at the time it was communicated
(unless it entered the public domain without the authorization of the disclosing Party); (b) the
disclosure was in response to the relevant laws, regulations, or stock exchange rules; or (c) the
disclosure was required by any of the Party’s legal counsel or financial consultant for the purpose
of the transaction underlying this Agreement. However, such legal counsel and/or financial
consultant shall also comply with the confidentiality as stated hereof. The disclosure of
confidential information by employees or agents of the disclosing Party is deemed to be an act of
the disclosing Party, and such disclosing Party shall bear all liabilities for any breach of
confidentiality.
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13. Dispute Resolution.
13.1 This Agreement shall be governed by and construed in accordance with the laws of the PRC.
13.2 The Parties shall strive to resolve any disputes arising from the interpretation or
performance of this Agreement through amicable negotiations. If a dispute cannot be settled, any
Party may submit such dispute to China International Economic and Trade Arbitration Commission
(“CIETAC”) for arbitration. The arbitration shall abide by the then current rules of CIETAC, and
the arbitration proceedings shall be conducted in Shanghai, China in Chinese. The decision of
CIETA shall be final and binding upon the parties.
14. Notices. Any notice given by the parties hereto for the purpose of performing the
rights and obligations hereunder shall be in writing. If such notice is delivered by messenger,
the time of receipt is the time when such notice is received by the addressee; if such notice is
transmitted by facsimile, the time of receipt is the time when such notice is transmitted. If the
notice does not reach the addressee by the end of the business day, the following business day
shall be the date of receipt. The place of delivery is the Party’s address as set forth in the
signature pages hereto or the address advised in writing including via facsimile.
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15. Entire Contract. The Parties agree that this Agreement constitutes the entire
agreement of the Parties upon its effectiveness and supersedes all prior oral and/or written
agreements and understandings relating to this Agreement.
16. Severability. If any provision or provisions of this Agreement shall be held by a
proper authority to be invalid, illegal, unenforceable or in conflict with the laws and regulations
of the PRC, the validity, legality and enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
17. Appendices. The appendices to this Agreement are incorporated into and are a part of
this Agreement.
18. Amendment or Supplement.
18.1 The Parties may amend this Agreement in writing, provided that such amendment shall be
duly executed and signed by the Pledgee and such Pledgors collectively holding a majority of the
Equity Interests, and such amendment shall thereupon become a part of this Agreement and shall have
the same legal effect as this Agreement.
18.2 This Agreement and any amendments, modification, supplements, additions or changes hereto
shall be in writing and come into effect upon being executed and stamped by the parties hereto.
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19. Language and Copies of the Agreement. This Agreement shall be executed in English in
six (6) original copies. Each Party shall receive one (1) original copy, all of which shall be
equally valid and enforceable.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE]
IN WITNESS WHEREOF this Agreement is duly executed by each Party or its legal representatives
as of the date first set forth above.
PLEDGEE: Great Mountain Information Consulting Co., Ltd.
Legal/Authorized Representative: /s/ XXXX Xxxxxxx
Name: XXXX Xxxxxxx
Title: Director and Legal Representative
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PLEDGOR SIGNATURE PAGE
PLEDGORS:
/s/ XXXX Xxxxxxx
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ID Card No.: ________________
________________
Owns 91% of Hubei Jinlong Cement Co., Ltd.
________________Owns 91% of Hubei Jinlong Cement Co., Ltd.
/s/ XX Xxxxxxx
|
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 |
ID Card No.: ________________
Owns 4.5% of Hubei Jinlong Cement Co., Ltd.
Owns 4.5% of Hubei Jinlong Cement Co., Ltd.
/s/ CHEN Xxxxxx
|
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 |
ID Card No.: ________________
________________
Owns 4.5% of Hubei Jinlong Cement Co., Ltd.
________________Owns 4.5% of Hubei Jinlong Cement Co., Ltd.
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ACKNOWLEDGED BY:
Hubei Jinlong Cement Co., Ltd.
Legal/Authorized Representative: /s/ XXXX Xxxxxxx
Name: XXXX Xxxxxxx
Title: Director and Legal Representative
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Appendix 1
RESOLUTIONS OF THE SHAREHOLDERS
OF
OF
HUBEI JINLONG CEMENT CO., LTD.
WHEREAS, Hubei Jinlong Cement Co., Ltd. (“Jinlong”) has entered into a Consulting Services
Agreement with Great Mountain Information Consulting Co., Ltd. a wholly foreign-owned enterprise
under laws of China (the “WFOE”), pursuant to which Jinlong is obligated to pay certain fees in
exchange for WFOE’s consultation and related services;
WHEREAS, the undersigned shareholders of Jinlong (the “Shareholders”) collectively hold 100% of the
equity interests of Jinlong (the “Equity Interest”), and have been requested by Jinlong to pledge
the Equity Interest to WFOE pursuant to an Equity Pledge Agreement in order to secure Jinlong’s
payment obligations under the Consulting Services Agreement; and
WHEREAS, it is in the best interest of Jinlong and the Shareholders to enter into the Pledge
Agreement;
RESOLVED, that the Shareholders shall pledge the Equity Interest to WFOE pursuant to the Equity
Pledge Agreement, the terms and conditions of which are hereby approved.
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These resolutions were executed and submitted on November 10, 2010 by the undersigned shareholders:
SHAREHOLDERS:
/s/ XXXX Xxxxxxx
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ID Card No.: ________________
________________
Owns 91% of Hubei Jinlong Cement Co., Ltd.
________________Owns 91% of Hubei Jinlong Cement Co., Ltd.
/s/ XX Xxxxxxx
|
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 |
ID Card No.: ________________
:________________
Owns 4.5% of Hubei Jinlong Cement Co., Ltd.
:________________Owns 4.5% of Hubei Jinlong Cement Co., Ltd.
/s/ CHEN Xxxxxx
|
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 |
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ID Card No.: ________________
:________________
Owns 4.5% of Hubei Jinlong Cement Co., Ltd.
:________________Owns 4.5% of Hubei Jinlong Cement Co., Ltd.
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