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Equity Pledge Agreement

 

 

By and among

 

The Shareholder of Shenzhen CCPower Corporation

(“Pledgor”)

 

Shenzhen CCPower Investment Consulting Co., Ltd.

(“Pledgee”)

and

 

Shenzhen CCPower Corporation

(“Company”)

 

August 22, 2011

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Equity Pledge Agreement Confidential

Equity Pledge Agreement

This Equity Pledge Agreement (hereinafter referred to as “this Agreement”) is
entered into on August 22, 2011 by and among the following parties:

(1)

Shareholder of Shenzhen CCPower Corporation (hereinafter called “Pledgor”), as
follows:

Name of the
Shareholder Shareholding
Ratio % Contribution
ID Card No.
Wang Xili 100% 10,000,000 420104196707150843

(2)

Shenzhen CCPower Investment Consulting Co., Ltd. (hereinafter called “Pledgee”),
a wholly foreign owned enterprise registered in China with its registered
address at Art 1109, 1st floor, Block One, .Meilinduoli Industrial Park, Meihua
Road, Futian District, Shenzhen, PRC. It’s legal representative is Renyan GE;
and

    (3)

Shenzhen CCPower Corporation (hereinafter called the “Company”), an enterprise
duly registered in Shenzhen, China, with its registered address at 706A, Block
B, Tianan Cyber Times Building, Chegongmiao Industrial Park, Shennanxi Road,
Futian District, Shenzhen.

(Pledgor, Pledgee and the Company are collectively called the “Parties” or “Each
Party” respectively hereunder.)

WHEREAS

1.

The Company is a domestic company incorporated and validly existing under PRC
Laws, and its business license No. is 440301103295389;

    2.

The Pledgor legally holds 100% of the outstanding equity interests (as defined
below) in the Company;

    3.

The Pledgee is a wholly foreign-owned enterprise incorporated under the PRC Laws
(as defined below);

    4.

Pledgor signed a loan agreement (the “Loan Agreement”) with Pledgee on the same
date of the execution of this Agreement. According to the Loan Agreement,
Pledgee will provide the loan to Pledgor, and Pledgor agrees to pledge all her
Equity Interests in the Company as a guaranty of the performance of the
obligations under the Loan Agreement;

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Equity Pledge Agreement Confidential

5.

Pledgee signed a entrusted management agreement (the “Entrusted Management
Service Agreement”) with the Company and Pledgor on the same date of the
execution of this Agreement, and Pledgor agrees to pledge all her equity
interests in the Company to Pledgee as a guaranty for the performance of her
obligations thereunder;

    6.

Pledgee signed a technical service agreement (the “Technical Service Agreement”)
with the Company and Pledgor on the same date of the execution of this
Agreement, and Pledgor agrees to pledge all her Equity Interests in the Company
to Pledgee as a guaranty for the performance of the obligations thereunder; and

    7.

Pledgee signed an exclusive purchase option agreement (the “Exclusive Purchase
Option Agreement”) with the Company and Pledgor on the same date of the
execution of this Agreement, and the Parties thereto agree that Pledgor shall
pledge all her Equity Interests in the Company to Pledgee as a guaranty of the
performance of the obligations assumed by Pledgor and the Company thereunder.

NOW THEREFORE, the Parties, through friendly negotiations, hereby enter into
this Agreement with respect to the equity pledge.

1.

Definitions and Interpretation

Unless otherwise provided in this Agreement, the following terms shall have the
following meanings:

1.1

“Business Day” refers to any calendar day except Saturday, Sunday and other
public holidays as permitted by PRC Laws;

    1.2

“Equity”, “Equities” or “Equity Interests” refers to all of the equity interests
in the Company, including the equity interests set forth on the table in Recital
1 on page 1;

    1.3

“Event of Default” refers to the event as defined in Article 8 hereunder;

    1.4

“Main Agreements” refers to the Loan Agreement, Entrusted Management Agreement,
Technical Service Agreement and Exclusive Purchase Option Agreement and the
appendixes or amendments thereof (if applicable);

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Equity Pledge Agreement Confidential

1.5

“Pledged Equity” refers to all the Pledgor’ Equity Interests in the Company as
provided in Article 2.1 which will be pledged to Pledgee;

    1.6

“PRC” refers to the People’s Republic of China, for the purpose of this
Agreement, excluding the Hong Kong Special Administrative Region, Macao Special
Administrative Region and Taiwan Province;

    1.7

“PRC Laws” refers to all PRC laws, administrative regulations and government
rules in effect; and

    1.8

“Right of Pledge” refers to the right owned by the Pledgee to be first
compensated from the money converted from or the proceeds from the auction or
sale of the Pledged Equity by the Pledgee in the event Pledgor and/or the
Company fail to fulfill in whole the obligations specified under the Main
Agreements, and such right shall cause the Pledgee to be entitled to the
dividends arising from Pledged Equity.

    2.

Equity Pledge

    2.1

The Parties agree that Pledgor shall pledge all her Equities in the Company to
the Pledgee as a guaranty for the performance of the obligations assumed by the
Pledgor and/or the Company under each of the Main Agreements.

    2.2

In case that the Pledgor increases or reduces her Equity Interests in the
Company during the term of this Agreement, the Pledged Equity shall be
automatically expanded or reduced to cover all of the Equity Interests owned by
the Pledgor after the increase or reduce is completed.

    2.3

The Pledgee shall be entitled to exercise its Right of Pledge pursuant to the
provisions set forth in Article 7 and Article 8 herein. The Parties agree that,
in case any act conducted by the Pledgor or the Company may adversely affect the
Pledgee’s Right of Pledge, the Pledgee shall be entitled to require the Pledged
Equity to be auctioned or sold in advance and the proceeds from such auction or
sale shall be used to settle the debt secured by the Pledged Equity in advance.
The Pledgor and the Company shall accept the request from Pledgee as provided
above and shall provide all the necessary assistances to the Pledgee for
enforcement of the above request. The Pledgor and the Company shall not prevent
the Pledgee from exercising the above rights.

    2.4

The Pledge shall become effective as of the date when the pledge of the Equity
Interest is recorded in the shareholder register of the Company (including both
the original and duplicate copies). The Pledge shall be continuously valid until
all payments due and all obligations under the Main Agreements have been
fulfilled by the Company and the Pledgor.

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3.

Registration of Pledge

      3.1

Upon the execution of this Agreement, the Pledgor shall cause the Company to
record the Right of Pledge in the Company’s shareholder list and deliver such
list affixed with the seal of the Company as well as the original of shareholder
capital contribution certificate of the Pledgor to the Pledgee or any third
party designated by the Pledgee for keeping. During the term of this Agreement,
if there are any changes to the Company’s shareholder list or the registered
capital contribution certificate which receive the prior consent from the
Pledgee, the Pledgee shall return the shareholder list and registered capital
contribution certificate to the Company for modification, and the Company shall
complete the modification and deliver such modified shareholder list and
registered capital contribution certificate to Pledgee.

      4.

Representations and Warranties

      4.1

Each Party under this Agreement represents and warrants to other Parties that:

      (1)

it has relevant power, rights and authorizations for the execution of this
Agreement hereof, and performance of the obligations hereunder;

(2)

it has obtained the written approval and authorization with respect to the
execution and implementation of this Agreement from each of the relevant third
parties, if any;

(3)

the execution and performance of this Agreement do not violate or conflict with
any of the terms and conditions of other agreements sighed between the Parties.

4.2

The Pledgor represents and warrants to the Pledgee that:

      (1)

the Pledgor is the legal owner of the Pledged Equity, and have fulfilled the
obligations of capital contribution in the registered capital of the Company;

(2)

except for the Right of Pledge as setup hereunder, the Pledged Equity is not
subject to any pledge, guaranty or other encumbrances;

(3)

except for the capital increase provided in the Loan Agreement, the Pledgor has
not and will not, increase the Company’s registered capital, transfer the Equity
to any third party or make any agreements, whether oral or written, with respect
to the transfer of Pledged Equity.

      4.3

The Company agrees to be jointly liable for all representations and warranties
made by the Pledgor hereunder.

      5.

Obligations of Pledgor

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5.1

The dividend and bonus, if any, arising from the Pledged Equity shall be
deposited in an escrow account under the supervision by the Pledgee;

    5.2

Apart from the encumbrance set forth hereunder and under the Exclusive Purchase
Option Agreement, without the Pledgee’s prior written consent, the Pledgor shall
not sell, transfer, mortgage or otherwise dispose of the Pledged Equity, nor
shall they place or allow any encumbrances on such Pledged Equity;

    5.3

Without Pledgee’s prior written consent, Pledgor shall not engage in any
business or operation which is in competition with the Company, the Company’s
owned or controlled subsidiaries and Pledgee, nor shall Pledgor invest in or
work for any company or entity which is in competition with the Company, the
Company’s owned or controlled subsidiaries, or Pledgee;

    5.4

Without the Pledgee’s prior written consent, the Pledgor shall not supplement or
amend the Articles of Association of the Company in any manner, nor shall they
take action to increase or decrease the registered capital or change the
shareholding structure of the Company in any manner;

    5.5

Without Pledgee’s prior written consent, the Pledgor shall guarantee that they
shall not approve resolutions related to the dissolution, liquidation and change
of legal form of the Company, or its owned or holding subsidiaries;

    5.6

The Pledgor shall guarantee that the shareholder’s meeting of the Company shall
not approve any profit distribution proposal, nor request or accept such
distributed dividend, without the Pledgee’s prior written consent; upon the
Pledgee’s request, the Pledgor shall promptly convene the shareholder’s meeting
for the purpose of allocating the Company’s profits, approve any profit
distribution proposal approved in writing by the Pledgee, and accept such
distributed dividend;

    5.7

Upon the Pledgee’s request, the Pledgor shall provide the Pledgee with all the
information regarding the business operation and financial condition of the
Company;

    5.8

The Pledgor shall not incur or succeed to any debts or liabilities which may
adversely affect her Equity Interests in the Company without the Pledgee’s prior
written consent;

    5.9

The Pledgor shall appoint, and appoint only, the candidates nominated by the
Pledgee to the board of directors and supervisor office of the Company, and
shall not replace such candidates without the Pledgee’s prior written consent;

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Equity Pledge Agreement Confidential

5.10

The Pledgor shall guarantee that the shareholder’s meeting of the Company and
the directors of the Company appointed by themselves will not approve any
acquisition by, any consolidation with, or any investment in any third party,
without the Pledgee’s prior written consent;

    5.11

The Pledgor shall promptly notify the Pledgee of any pending or threatened
lawsuit, arbitration or administrative dispute which involve the assets,
business or incomes of the Company, and take all positive measures against
aforesaid lawsuits, arbitrations or administrative dispute;

    5.12

The Pledgor shall not commit any conduct that may adversely affect the assets,
business operation, the debts and liabilities of the Company, without the
Pledgee’s prior written consent;

    5.13

To the extent permitted by the PRC laws and regulations, and at any time upon
Pledgee’s request, the Pledgor shall promptly and unconditionally transfer all
or part of her Equity Interests of the Company to Pledgee or its designated
third party in accordance with the Exclusive Purchase Option Agreement, and
waive her preemptive rights with respect to such transfer;

    5.14

The Pledgor shall guarantee that the shareholder’s meeting of the Company will
approve the resolution in respect of the Equity Transfer or Assets Transfer
under the Exclusive Purchase Option Agreement;

    5.15

The Pledgor shall make every efforts to guarantee that the Company performs its
obligations in Article 6 hereunder;

    5.16

The Pledgor shall, to the extent permitted by applicable laws, cause the
business term of the Company (including the circumstance of change of business
terms) to be no shorter than that of the Pledgee, which is approved by the
relevant authorities (including the circumstance of change of business terms);

    5.17

The Pledgor shall strictly comply with the provisions of this Agreement, and
effectively perform her obligations hereunder, and shall be prohibited from
committing any conduct which may affect the validity or enforceability of this
Agreement.

    6.

Obligations of the Company

    6.1

Without the Pledgee’s prior written consent, the Company shall not make any
supplement or amendment to the Articles of Association or rules of the Company,
the Company’s owned and controlled subsidiaries (the “Subsidiaries”) in any
manner, nor increase or decrease the registered capital or change the
shareholding structure of aforesaid entities in any manner;

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6.2

The Company shall prudently and effectively maintain its business operations
according to good financial and business standards so as to maintain or increase
the value of its assets;

    6.3

Unless as required for its business operation or upon the prior written consent
by Pledgee, the Company and Subsidiaries shall not transfer, mortgage or
otherwise dispose of the lawful rights and interests to and in their assets or
incomes, nor to encumber their assets and income in any way that would affect
the Pledgee’s security interests;

    6.4

The Company and Subsidiaries shall not incur or succeed to any debts or
liabilities unless as required for its business operation or upon the prior
written consent by Pledgee;

    6.5

Without the Pledgee’s prior written consent, the Company and Subsidiaries shall
not enter into any material contract (exceeding RMB 1,000,000 in value);

    6.6

Without the Pledgee’s prior written consent, the Company and Subsidiaries shall
not provide any loans or guaranty (exceeding RMB 1,000,000 in value) to or
receive borrowings (exceeding RMB 1,000,000 in value) from any third party;

    6.7

At the Pledgee’s request, the Company shall provide the Pledgee with all
information regarding its and the Subsidiaries’ business operation and financial
condition;

    6.8

The Company shall purchase insurance in such amounts and categories as customary
among the companies doing similar business and having similar assets;

    6.9

Without the Pledgee’s prior written consent, the Company and Subsidiaries shall
not establish new subsidiaries, acquire or consolidate with any third party, nor
invest in any third party;

    6.10

The Company shall promptly notify the Pledgee of any pending or threatened
lawsuit, arbitration or administrative disputes which involve its and
Subsidiaries’ assets, business or incomes, and take all positive measures
against aforesaid lawsuits, arbitrations or administrative dispute;

    6.11

Without the Pledgee’s prior written consent, the Company and Subsidiaries shall
not distribute any dividends to the Pledgor in any manner, and at the Pledgee’s
request, it shall promptly distribute all distributable dividends to the
Pledgor;

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6.12

Without the Pledgee’s prior written consent, the Company and Subsidiaries shall
not commit any conduct that would materially affect its assets, business or
liabilities.

      7.

Exercise of Right of Pledge

      7.1

The Pledgee may exercise the Right of Pledge at any time following the delivery
of Notice of Default as provided in Article 8.2 to the Pledgor.

      7.2

The Pledgee is entitled to cash from the Pledged Equity or be first compensated
with the money converted from or the proceeds from auction or sale of all or
part of Pledged Equity in accordance with legal procedures unless the Pledgor
has duly and completely performed the obligations under Main Agreements.

      7.3

Within the term of this Agreement, if the Pledged Equity hereunder is subjected
to any compulsory disposal taken by a court or other government authorities due
to the Pledgor’ failing to repay the debts or the Pledgor’s violation of PRC
laws or state policies, etc., the Pledgor shall,

      (1)

notify the Pledgee in writing of such compulsory disposals immediately following
its occurrence;

(2)

use all efforts (including but not limited to provide other security to the
court or other government authorities) to dismiss the compulsory disposal taken
by the court or other government authorities over the Pledged Equity.

7.4

The Pledgor shall not hinder the Pledgee from exercising the Right of Pledge and
shall give necessary assistance so that the Pledgee could realize its Right of
Pledge.

      8.

Events of Default

      8.1

The following events shall be regarded as the Events of Default under this
Agreement:

      8.1.1

Any Party breaches any of the representations or warranties hereunder;

8.1.2

The Pledgor and/or the Company breaches any of the representations or warranties
under any Main Agreements;

8.1.3

The Pledgor and/or the Company fail(s) to duly and completely perform any
obligation hereunder;

8.1.4

The Pledgor and/or the Company fail(s) to duly and completely perform the
obligations under the Main Agreements;

8.1.5

Any other borrowing, lending, guaranty, compensation or other liabilities of the
Pledgor with any third parties: (1) is required for an early repayment or
performance prior to the scheduled date due to any breach by the Pledgor; or (2)
is due but can not be repaid or performed by the Pledgor as scheduled, which, at
the sole discretion of the Pledgee, has an adverse effect on the Pledgor’
ability of performing the obligations under this Agreement and any Main
Agreements;

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  8.1.6

The Company fails to repay in full the debts which fall due;

  8.1.7

The properties owned by Pledgor have significant adverse changes, which, at the
sole discretion of Pledgee, has an adverse effect on Pledgor’ ability of
performing the obligations under this Agreement.

8.2

Unless the Pledgor takes the action to Pledgee’s satisfaction to remedy the
defaults as listed in Article 8.1 hereof, the Pledgee may give a written notice
about default (“Notice of Default”) to the Pledgor when such default occurs or
at any time thereafter.

    9.

Taxes and Expenses

The Parties shall pay, in accordance with relevant PRC laws and regulations,
their respective taxes and expenses arising from the execution and performance
of this Agreement.

10.

Assignment

    10.1

The Pledgor shall not transfer part or all of her rights and obligations under
this Agreement without prior written consent from the Pledgee.

    10.2

The Parties agree that, to the extent permitted by law, the Pledgee shall have
the right to transfer any or all of her rights and obligations under this
Agreement to any third party upon a five (5)–day written notice to the Pledgor
and the Company without her approval. The Pledgor and the Company shall sign the
relevant agreements and documents pursuant to the request from the Pledgee.

    11.

Effectiveness, Modification and Cancellation

    11.1

This Agreement shall be executed on the date set forth in the first page and
shall become effective on the date of execution.

    11.2

The modification of this Agreement shall not take effect unless a written
agreement is duly signed by the Parties.

    11.3

This Agreement shall not be terminated or canceled unless a written agreement is
duly signed by the Parties.

    12.

Confidentiality

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12.1

The negotiation, execution and articles of this Agreement and any information,
documents, data and all other materials (herein “Confidential Information”)
arising out of the implementation of this Agreement, shall be kept in strict
confidence by the Parties. Without the written approval by the other Parties,
none of the Parties shall disclose any Confidential Information to any third
party, but the following shall not be considered to be “Confidential
Information”:

      a.

The materials that is known or may be known by the Public (not including the
materials disclosed by each Party receiving the Confidential Information in
breach of this Agreement); or

      b.

The materials required to be disclosed according to the applicable laws or the
rules or provisions of stock exchange.

The materials may be disclosed by each Party to its legal or financial
consultant relating to the transaction of this Agreement, provided that this
legal or financial consultant shall comply with the confidentiality provisions
set forth in this Section. The disclosure of the Confidential Information by
staff or employed institution of any Party shall be deemed as the disclosure of
such Confidential Information by such Party, and such Party shall bear the
liabilities for breaching the Agreement.

    12.2

This Article shall survive even if this Agreement is found to be invalid,
amended, revoked, terminated or unable to implement by any reason.

    13.

Force Majeure

    13.1

An event of Force Majeure means an event that could not be foreseen, and could
not be avoided and overcome, which includes among other things, but without
limitation, acts of nature (such as earthquake, flood or fire), government acts,
strikes or riots.

    13.2

If an event of Force Majeure occurs, any of the Parties that is prevented from
performing its obligations under this Agreement by an event of Force Majeure
shall notify the other Parties without delay and within fifteen (15) days of the
event provide detailed information about and notarized documents evidencing the
event and take all reasonable means to minimize or remove the negative effects
of Force Majeure on the other Parties, and shall not assume the liabilities for
breaching this Agreement. While the Force Majeure is continuing, the Party
alleging breach may suspend its performance. The Parties shall keep on
performing this Agreement after the event of Force Majeure disappears.

    14.

Applicable Law and Dispute Resolution

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14.1

The execution, validity, construing and performance of this Agreement and the
disputes resolution under this Agreement shall be governed by the laws and
regulations of the PRC.

    14.2

The Parties shall strive to settle any dispute arising from or in connection
with this Agreement through friendly consultation. In case no settlement can be
reached through consultation within thirty (30) days after such dispute is
raised, each Party can submit such matter to China International Economic and
Trade Arbitration Commission in Beijing for arbitration in accordance with its
rules. The language of arbitration shall be English. The arbitration award shall
be final conclusive and binding upon the Parties.

    14.3

During the process of dispute-resolution, the Parties shall continue to perform
other terms under this Agreement, except for provision of dispute resolution.

    15.

Miscellaneous

    15.1

Entire Agreement. The Parties acknowledge that this Agreement constitutes the
entire agreement of the Parties with respect to the subject matters therein and
supersedes and replaces all prior or contemporaneous oral or written agreements
and understandings.

    15.2

Successor. This Agreement shall bind and benefit the successor of each Party and
the transferee permitted hereunder with the same rights and obligations as if
the original parties hereof.

    15.3

Notice. Any notice required to be given or delivered to the Parties hereunder
shall be in writing and delivered to the address as indicated below or such
other address or as such party may designate, in writing, from time to time. All
notices shall be deemed to have been given or delivered upon by personal
delivery, fax and registered mail. It shall be deemed to be delivered upon: (1)
registered air mail: five (5) business days after deposit in the mail; (2)
personal delivery or delivery by fax: two (2) business days after transmission.
If the notice is delivered by fax, it should be confirmed by original through
registered air mail or personal delivery.

Pledgor: Wang Xili
Address: 706A, Block B, Tianan Cyber Times Building,
Chegongmiao Industrial Park, Shennanxi Road, Futian
District, Shenzhen;
Tel: 0755-8348-7858
Fax: 0755-8348-7881

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Pledgee: Shenzhen CCPower Investment Consulting Co., Ltd.

Contact Person: Renyan GE
Address: Art 1109, 1st floor, Block One, .Meilinduoli
Industrial Park, Meihua Road, Futian District, Shenzhen,
PRC;
Tel: 136-3266-8228

The Company: Shenzhen CCPower Corporation
Contact person: Wang Xili
Address: 706A, Block B, Tianan Cyber Times Building,
Chegongmiao Industrial Park, Shennanxi Road, Futian
District, Shenzhen;
Tel: 0755-8348-7858
Fax: 0755-8348-7881

15.4

Severability. If any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
portions shall not in any way be affected or impaired thereby. In such event,
the parties shall use best efforts to negotiate, in good faith, a substitute,
valid and enforceable provision or agreement which effects the parties original
intention to the largest extent.

    15.5

Governing Language. This Agreement shall be executed in English and Chinese
language versions, each of which shall have equal validity. However, in the
event of any inconsistency between the two, the English language version shall
govern and control.

    15.6

Copies. This Agreement is executed in three (3) copies with each Party holding
one (1) copy. Each of the originals shall be equally valid and authentic.

[Signature page follows]

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IN WITNESS WHEREOF, each party has executed this Agreement and delivered as of
the date first above written.

Pledgor
Shareholder of Shenzhen CCPower Corporation

Wang Xili: /s/ Wang Xili                                       

 

Pledgee
Shenzhen CCPower Investment Consulting Co., Ltd.

Legal Representative: Renyan GE

Signature & Seal: /s/ Renyan Ge                         

 

The Company
Shenzhen CCPower Corporation

Legal Representative: Wang Xili

Signature and seal: /s/ Wang Xili                      

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