EQUITY PLEDGE AGREEMENT
This
Equity Pledge Agreement (hereinafter this “Agreement”) is dated December 28,
2005, and entered into in Shanghai, China by and among Haie Hi-tech Engineering
(Hong Kong) Company Limited Harbin Mega Profit Management & Consultation
Co., Ltd., with a registered address at FLAT/RM B 20/F Public Bank Centre,
120
Des Voeux Road Central, HK, China (“Pledgee”), Shanghai Xin Ye Environmental
Protection Engineering Technology Co., Ltd. with a registered address at
0xx
Xxxxx,
Xx.000 Xx Xxxx Xxxx, Xxxxxxxx, Xxxxx (“Party B” or “Company”)ôand each of the
shareholders of Party B listed on the signature pages hereto (collectively,
the
“Pledgors”).
RECITALS
1.
The
Pledgee, a limited company incorporated under law of Hong Kong, has the
expertise in the business of Engineering and Investment.
2. The
Pledgors are shareholders of the Company. The Pledgors collectively own over
100%
of the
outstanding equity interests of the Company.
3.
Pledgee
and the Company have executed a Consulting Services Agreement (hereinafter
“Consulting
Services Agreement”
or
“Services
Agreement”)
concurrently herewith. Based on this agreement, The Company shall pay technical
consulting and service fees (hereinafter the “Consulting
Services Fees”
or
“Services
Fees”)
to
Pledgee for offering consulting and related services.
4.
In
order
to ensure that the Company 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 Fees from
the
Company, the Pledgors agree to pledge all their equity interest in the Company
as security for the performance of the obligations of the Company under the
Consulting Services Agreement and the payment of Consulting Services Fees under
such agreement.
NOW
THEREFORE,
the
Pledgee, the Company 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
1.1 “Pledge”
refers
to the full content of Section 2 hereunder.
1.2 “Equity
Interest”
refers
to all the equity interest in the Company legally held by the
Pledgors.
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.
Pledge.
The
Pledgors agree to pledge their equity interest in the Company to the Pledgee
(“Pledged
Collateral”)
as a
security for the obligations of the Company under the Consulting Services
Agreement. Pledge under this Agreement refers to the rights owned by the
Pledgee, who shall be entitled to a priority in receiving payment by the
evaluation or proceeds from the auction or sale of the equity interest pledged
by the Pledgors to the Pledgee.
3. Term
of Pledge.
3.1
The
Pledge shall take effect as of the date when the Pledge of the equity interest
under this Agreement is recorded in the Registration Books. The term of the
Pledge shall last until two (2) years after the obligations under the Consulting
Services Agreement are fulfilled.
3.2
During the term of the Pledge, the Pledgee shall be entitled to vote, control,
sell, or dispose of the pledged assets in accordance with this Agreement in
the
event that Pledgors do not perform their obligation under the Consulting
Services Agreement and the Company fails to pay the Consulting Service Fees
in
accordance with the Consulting Services Agreement.
3.3 During
the term of the Pledge, the Pledgee shall be entitled to collect any and all
dividends declared or paid in connection with the equity interest.
4.
Pledge Procedure and Registration
4.1 The
Pledge under this Agreement shall be recorded in the Register of Shareholders
of
the Company. The Pledgor shall, within 10 days after the date of this Agreement,
process the registration procedures with Administration for Industry and
Commerce concerning the Pledge.
2
5.
Representation
and Warranties of Pledgors.
5.1 The
Pledgors are the legal owners of the equity interest pledged.
5.2 The
Pledgors have not pledged the equity interest to any other party, and or the
equity interest is not encumbered to any other person except for the Pledgee.
6.
Covenants
of Pledgors.
6.1 During
the effective term of this Agreement, the Pledgors promise to the Pledgee for
its benefit that the Pledgors shall:
6.1.1 Not
transfer or assign the equity interest, create or permit to create any pledges
which may have an adverse effect on the rights or benefits of the Pledgee
without prior written consent from the Pledgee.
6.1.2 Comply
with and implement laws and regulations with respect to the pledge of rights;
present to the Pledgee the notices, orders or suggestions with respect to the
Pledge issued or made by the competent authority within five (5) days upon
receiving such notices, orders or suggestions; and comply with such notices,
orders or suggestions; or object to the foregoing matters at the reasonable
request of the Pledgee or with consent from the Pledgee.
6.1.3 Timely
notify the Pledgee of any events or any received notices which may affect the
Pledgor’s equity interest or any part of its right, and any events or any
received notices which may change the Pledgor’s any warranty and obligation
under this Agreement or affect the Pledgor’s performance of its obligations
under this Agreement.
6.2 The
Pledgors agree that the Pledgee’s right to the Pledge obtained from this
Agreement shall not be suspended or inhibited by any legal procedure launched
by
the Pledgor or any successors of the Pledgor or any person authorized by the
Pledgor or any such other person.
3
6.3 The
Pledgors promise to the Pledgee that in order to protect or perfect the security
for the payment of the Services Fees, the Pledgors shall execute in good faith
and cause other parties who have interests in the Pledge 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; and make access
to
exercise the rights and authorization vested in the Pledgee under this
Agreement.
6.4 The
Pledgors promise to the Pledgee that they will execute all amendment documents
(if applicable and necessary) in connection with any registration of the Pledge
with the Pledgee or its designated person (natural person or a legal entity),
and provide the notice, order and decision to the Pledgee as necessary, within
a
reasonable amount of time upon request.
6.5 The
Pledgors promise to the Pledgee that they will comply with and perform all
the
guarantees, covenants, warranties, representations and conditions for the
benefits of the Pledgee. The Pledgors shall compensate all the losses suffered
by the Pledgee as a result of the Pledgors failing perform or fully perform
their guarantees, covenants, warranties, representations and conditions.
7. Events
Of Default.
7.1
The
following events shall be regarded as the events of default:
| 7.1.1 |
This
Agreement is deemed illegal by a governing authority in the PRC,
or the
Pledgor is not capable of continuing to perform the obligations herein
due
to any reason except force
majeure;
|
| 7.1.2 |
The
Company fails to make full payment of the Services Fees as scheduled
under
the Service Agreement;
|
| 7.1.3 |
A
Pledgor makes any materially false or misleading representations
or
warranties under Section 5 herein, and/or the Pledgor breaches any
warranties under Section 5 herein;
|
4
| 7.1.4 |
A
Pledgor breaches the covenants under Section 6
herein;
|
| 7.1.5 |
A
Pledgor breaches the term or condition
herein;
|
| 7.1.6 |
A
Pledgor waives the pledged equity interest or transfers or assigns
the
pledged equity interest without prior written consent of the Pledgee;
|
| 7.1.7 |
The
Company is incapable of repaying the general debt or other debt;
|
| 7.1.8 |
The
property of the Pledgor is adversely affected causing the Pledgee
to
believe that the capability of the Pledgor to perform the obligations
herein is adversely affected;
|
| 7.1.9 |
The
successors or agents of the Company are only able to perform a portion
of
or refuse to perform the payment obligations under the Service Agreement;
|
| 7.1.10 |
The
breach of the other terms by action or inaction under this agreement
by
the Pledgor.
|
| 7.2 |
The
Pledgor shall immediately give a written notice to the Pledgee if
the
Pledgor is aware of or discovers that any event under Section 7.1
herein
or any event that may result in the foregoing events has occurred
or is
likely to occur.
|
| 7.3 |
Unless
the event of default under Section 7.1 herein has been solved to
the
Pledgee’s satisfaction, the Pledgee, at any time when the event of default
occurs or thereafter, may give a written notice of default to the
Pledgor
and require the Pledgor to immediately make full payment of the
outstanding Service Fees under the Service Agreement and other payables
or
exercise other rights in accordance with Section 8
herein.
|
5
8.
Exercise
of Remedies.
8.1 Authorized
Action by Secured Party.
The
Pledgors hereby irrevocably appoint Pledgee the attorney-in-fact of the Pledgors
for the purpose of carrying out the security provisions of this Agreement and
taking any action and executing any instrument that the Pledgee may deem
necessary or advisable to accomplish the purposes of this Agreement. If an
event
of default occurs, or is continuing, Pledgee shall have the right to exercise
the following rights and powers:
|
(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 to its own or its nominee’s
name;
|
|
(d)
|
Make
any compromise or settlement, and take any action it deems advisable,
with
respect to the Pledged Collateral;
|
|
(e)
|
Notify
any obligor with respect to any Pledged Collateral to make payment
directly to the Pledgee;
|
|
(f)
|
All
rights of the Pledgors to exercise the voting and other consensual
rights
it would otherwise be entitled to exercise without any action or
the
giving of any notice shall cease, and all such rights shall thereupon
become vested in the Pledgee;
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6
|
(g)
|
All
rights of the Pledgors to receive distributions with respect to
the
Pledged Collateral which it would otherwise be authorized to receive
and
retain shall cease and all such rights shall thereupon become vested
in
the Pledgee; and
|
|
(h)
|
The
Pledgors shall execute and deliver to the Pledgee appropriate instruments
as the Pledgee may request in order to permit the Pledgee to exercise
the
voting and other rights which it may be entitled to exercise and
to
receive all distributions which it may be entitled to
receive.
|
The
Pledgors hereby grant to Pledgee an exclusive, irrevocable power of attorney,
with full power and authority in the place and stead of the Pledgors to take
all
such action permitted under this Section
8.1.
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 and continuance of 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.
8.2 Event
of defaults; Remedies.
Upon
the occurrence of an event of default, Pledgee may, without notice to or demand
on the Pledgors and in addition to all rights and remedies available to Pledgee,
at law, in equity or otherwise, do 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 Pledgee’s security interest in any manner permitted
by law or provided for in this
Agreement;
|
| (c) |
Terminate
this Agreement pursuant to Section
11;
|
7
|
(d)
|
Exercise
any and all rights as beneficial and legal owner of the Pledged
Collateral, including, without limitation, perfecting assignment
of and
exercising any and all voting, consensual and other rights and powers
with
respect to any Pledged Collateral;
and
|
|
(e)
|
Exercise
any and all the rights and remedies of a secured party upon default
under
applicable law.
|
8.3 The
Pledgee shall give a notice of default to the Pledgors when the Pledgee
exercises its remedies under this Agreement.
8.4 Subject
to Section 7.3, the Pledgee may exercise its remedies under this Agreement
at
any time after the Pledgee gives a notice of default in accordance with Section
7.3 or thereafter.
8.5 The
Pledgee is entitled to priority in receiving payment by the evaluation or
proceeds from the auction or sale of whole or part of the equity interest
pledged herein in accordance with legal procedure until the unpaid Services
Fees
under the Services Agreement are repaid.
8.6 The
Pledgor 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 donate or transfer rights and obligations herein without
prior consent from the Pledgee.
9.2 This
Agreement shall be binding upon each of the Pledgors and his, her or its
successors and be binding on the Pledgee and his each successor and
assignee.
9.3 The
Pledgee may transfer or assign his all or any rights and obligations under
the
Service Agreement to any individual specified by it (natural person or legal
entity) at any time. In this case, the assignee shall enjoy and undertake the
same rights and obligations herein of the Pledgee as if the assignee is a party
hereto. When the Pledgee transfers or assigns the rights and obligations under
the Service Agreement, and such transfer shall only be subject to a written
notice serviced to Pledgors, and at the request of the Pledgee, the Pledgors
shall execute the relevant agreements and/or documents with respect to such
transfer or assignment.
8
9.4
In
the event of a change in control of the Pledgee’s resulting in the transfer or
assignment of this agreement, the successor parties to the pledge shall execute
a new pledge contract.
10. Formalities,
Fees and Other Charges.
10.1 The
Pledgors shall be responsible for all the fees and actual expenses in relation
to this Agreement including but not limited to legal fees, cost of production,
stamp tax and any other taxes and charges. If the Pledgee pays the relevant
taxes in accordance with applicable law, the Pledgors shall fully indemnify
the
Pledgee such taxes paid by the Pledgee.
10.2 The
Pledgors shall be responsible for all the fees (including but not limited to
any
taxes, formalities fees, management fees, litigation fees, attorney’s fees, and
various insurance premiums in connection with disposition of Pledge) incurred
by
the Pledgors for the reason that the Pledgors fail to pay any payable taxes,
fees or charges for other reasons which cause the Pledgee to recourse by any
means or ways.
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, refers to any
unforeseen events beyond the party’s reasonable control and 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. The affected
the Company Force
Majeure
shall
notify the other party of such event resulting in exemption
promptly.
11.2 In
the
event that the affected party is delayed in or prevented from performing its
obligations under this Agreement by Force
Majeure,
only
within the scope of such delay or prevention, the affected party will not be
responsible for any damage by reason of such a failure or delay of performance.
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 the
event of Force
Majeure.
After
occurrence of an event of Force
Majeure,
when
such event or condition ceases to exist, both parties agree to resume the
performance of this Agreement with their best efforts.
9
12.
Confidentiality.
The
parties of this agreement acknowledge and make sure that all the oral and
written materials exchanged relating to this contract are confidential. All
the
parties have to keep them confidential and can not disclose them to any other
third party without other parties’ prior written approval, unless: (a) the
public know and will know the materials (not because of the disclosure by any
contractual party); (b) the disclosed materials are required by laws or stock
exchange rules; or (c) materials relating to this transaction are disclosed
to
parties’ legal consultants or financial advisors, however, who have to keep them
confidential as well. Disclosure of confidential information by Employees or
hired institutions of the parties is deemed as the act by the parties,
therefore, subjecting them to liability.
13. Dispute
Resolution.
13.1 This
Agreement shall be governed by and construed in accordance with the PRC
law.
13.2 The
parties shall strive to settle any dispute arising from the interpretation
or
performance, or in connection with this Agreement through friendly consultation.
In case no settlement can be reached through consultation, each party can submit
such matter to China International Economic and Trade Arbitration Commission
(“CIETAC”) for arbitration. The arbitration shall follow the current rules of
CIETAC, and the arbitration proceedings shall be conducted in Chinese and shall
take place in Beijing. Any resulting arbitration award shall be final and
binding upon the parties.
14. Notices.
Any
notice which is given by the parties hereto for the purpose of performing the
rights and obligations hereunder shall be in writing. Where such notice is
delivered personally, the time of notice is the time when such notice actually
reaches the addressee; where such notice is transmitted by facsimile, the notice
time is the time when such notice is transmitted. If such notice does not reach
the addressee on business date or reaches the addressee after the business
time,
the next business day following such day is the date of notice. The delivery
place is the address first written above of the parties hereto or the address
advised in writing including via facsimile from time to time.
10
15.
Entire
Contract.
All
Parties agree that this Agreement constitute the entire agreement of the Parties
with respect to the subject matter therein upon its effectiveness and supersedes
and replaces all prior oral and/or written agreements and understandings
relating to this Agreement.
16.
Severability.
Any
provision of this Agreement which is invalid or unenforceable because of
inconsistent with the relevant laws shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability, without
affecting in any way the remaining provisions hereof.
17.
Appendices.
The
appendices to this Agreement are entire and integral part of this
Agreement.
18.
Amendment
or Supplement.
18.1 Parties
may amend and supply this Agreement with a written agreement, provided that
such
amendment shall be duly executed and signed by the Pledgee, The Company, and
holders of a majority of the shares of The Company held by the Pledgors, 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 sealed
by the parties hereto.
19.
Language
and Copies of the Agreement.
This
Agreement has been executed in four (4) duplicate originals in English, each
Party has received one (1) duplicate original, and all originals shall be
equally valid.
[SIGNATURE
PAGE FOLLOWS]
11
[Signature
Page]
IN
WITNESS WHEREOF
both
parties hereto have caused this Agreement to be duly executed by their legal
representatives and duly authorized representatives on their behalf as of the
date first set forth above.
|
PLEDGEE:
|
Haie
Hi-tech Engineering (Hong Kong) Company Limited
|
|
Legal/Authorized
Representative: /s/ WU
Qinghuan
|
|
|
Name:
WU Qinghuan
|
|
|
Title:
Director
|
|
|
THE
COMPANY:
|
Shanghai
Xin Ye Environmental Protection Engineering Technology Co., Ltd.
|
|
Legal/Authorized
Representative: /s/ WU
Qinghuan
|
|
|
Name:
WU Qinghuan
|
|
|
Title:
Executive Director
|
12
PLEDGORS:
SHAREHOLDERS
OF THE COMPANY:
/s/
WU
Qinghuan
By:
WU
Qinghuan
PRC
ID
Card No.: 320112194610111693
Shares
of
Shanghai Xin Ye Environmental Protection Engineering Technology Co., Ltd. owned
by WU Qinghuan: 100%
13
Appendix
1
RESOLUTIONS
OF THE GENERAL SHAREHOLDERS’
MEETING
OF THE COMPANY
WHEREAS,
that certain significant shareholders of Company have agreed to pledge their
shares of the company under an Equity Pledge Agreement dated December 28, 2005;
and
WHEREAS,
it is in the best interest of the Company for the shareholders to enter into
such Equity Pledge Agreement.
RESOLVED,
that the pledge of shares held by the shareholders of the company under the
Equity Pledge Agreement is hereby approved.
This
resolution was executed and submitted on December 28, 2005 by the undersigned
shareholders:
14
SHAREHOLDERS:
|
Signature:
|
/s/
WU Qinghuan
|
||
|
Name:
|
WU
Qinghuan
|
||
|
Address:
|
__________________________
|
||
|
__________________________
|
|||
|
__________________________
|
|||
|
ID
Card No.:
|
000000000000000000
|
||
|
Telephone:
|
_____________________________
|
||
|
Facsimile:
|
_____________________________
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15
