EXHIBIT 10.9
 
 
Conclusion Date: January 4, 2008
 
Receivable Pledge Agreement

Between

Zhengzhou Shenyang Technologies Co., Ltd., China, as Pledger

And

Austria Central Cooperation Bank Beijing Branch, as Pledgee
 

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Contents
     
Article 1 Definition and Explanation
 
Article 2 Pledge
 
Article 3 Scope of Security
 
Article 4 Registration of Pledge
 
Article 5 Performance of Sales Contract
 
Article 6 Monitoring of Accounts
 
Article 7 Representations and Warranties
 
Article 8 Commitments of the Pledger
 
Article 9 Nature and Validity
 
Article 10 Realization of the Pledge
 
Article 11 Expenses and Compensation
 
Article 12 Notification
 
Article 13 Effectuation, Amendment, and Termination of the Contract
 
Article 14 Applicable Laws and Dispute Settlement
 
Article 15 Miscellaneous
 
Signing page
 
Annex 1 Contract Form of Pledge Registration of Receivables
 

 
 

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The receivable pledge agreement, hereinafter referred to as “the Agreement”, is
signed on the forth day of January 2008, by and between the both parties of
1. Zhengzhou Shenyang Technology, Inc., China, as Pledger, hereinafter referred
to as “Pledger”, a limited company founded in accordance with the laws of the
People’s Republic of China, whose registration address is 170, Gongren Road,
Zhongyuan District, Zhengzhou, China
And
2. Austria Central Cooperation Bank Beijing Branch, as pledge, hereinafter
referred to as “Pledgee”.

WHEREAS
Zhengzhou Shenyang Technologies Co., Ltd. as a borrower and the pledge as a
lender has signed a “Letter of Quota” numbered 200801040012660001, hereinafter
referred to as “Letter of Quota”, on January 4, 2008, under which the lender
agreed to provide a quota of loan not exceeding RMB50,000,000 of loan principal,
hereinafter referred to as “loan”.
AND WHEREAS
The Pledger agrees to sign the agreement with the pledge and to establish a
security on the receivables, defined as bellow, with the pledge as beneficiary
to warrantee that the Pledger shall fully pay the debt owe to the Pledgee under
the Letter of Quota.

THEREFORE, it is agreed between both parties as follows:

Article 1 Definition and Explanation

1.1
Definition

The following terms defined in the Letter of Quota shall have the same meanings
in the Agreement except where the context otherwise clearly defined:

“Sales contract” means product sales contract signed either before or after
signing of the Agreement by and between the Pledger and one or more companies,
hereinafter referred to as “the Buyer”, recognized and accepted by the pledge.

“Agreement of accounts” means “the agreement of account pledge and monitoring”
signed on or before signing of the Agreement by and between the Pledger and
Pledgee.

“Monitoring accounts” means the accounts used for receiving the receivables
opened by the Pledger

“Registration authority” means the Credit Centre of the People’s Bank of China.

 
 

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“Receivable(s)” means any existing and future rights and interests enjoyed by
the Pledger under the sales contract over debtors, which includes but not is
limited to (1) all creditor’s right of the Pledger under the sales contract,
including any advance payment, installment payment, performance bond, and
debtor’s right for any other sum of payments; and (2) all rights enjoyed by the
Pledger under the sales contract to claim indemnification due to any breach of
the contract.

“Debtor” means the debtor obliged to pay the receivables to the Pledger under
the sales contract.

1.2
Explanation

(1)
The definition and explanation defined in the Letter of Quota shall be basically
applicable in the understanding and explanation of the Agreement.

(2)
The heading of each article and clause is only used for the convenience of
reading, and does not constitute any part of the article and clause and
condition. It cannot be applied in the explanation of the Agreement.

(3)
Any laws, rules and regulations, ordinance, or other like legal documents
mentioned in the Agreement shall all be interpreted as including the content of
timely amendments, expansion, reissuing or adjusting of such documents and any
other laws, rules and regulations, ordinance, or other legal documents based on
such documents.

(4)
“Such as”, “include”, “for example” or examples followed any other prepositions
are not to limit the plain or general meaning of the words before the
prepositions.

(5)
“Pledger” and “Pledgee” include their agents, successors, transferee, and any
other person being authorized, in case not in conflicting with the context.

Article 2 Pledge

2.1 To secure that all secured debts are timely and fully paid or discharged and
that the Pledger may timely and properly perform its obligations due on time,
due in acceleration, or other situations under the financing documents, the
Pledger agrees to pledge the receivables to the pledge.
2.2 In case the Pledger and pledge adjust the amount of the loans according to
the stipulations of the Letter of Quota, secured debts under the Agreement shall
be the amount of loans actual provided under the Letter of Quota.

Article 3 Scope of Security

3. 1 The scope of pledge under the Agreement includes:
(1) All existing and future loans and accumulated interest, including but not
limited to legal interests, agreed interests, overdue interests, and interests
of punishment, handling charge and other charges, breach of contract damages,
damages, expenses for realization of debtor’s rights, including but not limited
to litigation expenses, attorney fee, notary fee, and execution fee, and other
receivables, no matter they become receivables on expired date or under other
conditions, the Pledger should pay the pledge under the financing documents;

 
 

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(2) Any other items of payment the Pledger should pay the pledge due to or under
the financing documents;
(3) All fees and expenses incurred when the Pledger realizes its secured rights
and interests under the Agreement, including but not limited to the litigation
expenses, attorney fees, notary fees and execution expenses; and
(4) Breach of contract damages and any other payments the Pledger should pay the
pledge under the Agreement.

3.2 The certification issued by the Pledgee regarding any secured debt or
receivables under the Agreement shall be final and bind the Pledger, unless
there are any obvious errors.

Article 4 Registration of Pledge

4.1 The Pledgee and Pledger shall sign a Contract of Pledge Registration of
Receivables based on the form in Annex 1 “Contract Form of Pledge Registration
of Receivables” or any other form required or agreed upon by the pledge.

4.2 The Pledgee and Pledger agree the pledge registration of receivables shall
be handled by the Pledgee in the registration authority, where the fees and
expenses incurred shall be borne by the Pledger.

4.3 In case the Pledgee reasonably believes it is necessary to amend the pledge
registration already done, the Pledger shall take all reasonable steps to assist
the Pledgee to handle the amendment of pledge registration of receivables, where
the fees and expenses incurred shall be borne by the Pledger.

4.4 Whenever the Pledgee requires, the Pledger shall, at any time, take the
actions, including signing of any documents, acquiring any approvals and
fulfilling any registrations, filing or recording, reasonably required by the
Pledgee at his own charges to:
(1) Improve or protect the securities established under or according to the
Agreement; or
(2) Assist the Pledgee or any other assignee to realize the pledge or any part
of it established under the Agreement, or assist the Pledgee to exert any of his
rights, powers, or discretions according to the Agreement.

Article 5 Performance of Sales Contract

5.1 The Pledger is obliged to continue to perform all obligations under the
sales contract. The Pledgee has no responsibility or legal obligations to the
sales contract, and is not obliged to implement responsibility undertaken by the
Pledger to sales contract. The Pledgee has no responsibility to take actions
concerning accounts receivable. In condition not affecting rights of the Pledgee
under this agreement, the Pledger is not accountable or legally liable to any
other parties concerning accounts receivable.

 
 

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5.2 In spite of above regulations, if the Pledger and /debtor does not carry out
obligations under sales contract properly and has done harm to rights enjoyed by
the Pledgee under this agreement, the Pledgee has the right (but no obligations)
to implement it in the name of Pledger or lodge a suit against debtor, refer to
arbitration or take other measures. The Pledger agrees and authorizes the
Pledgee to take actions mentioned above and provide coordination necessary.
Expenses incurred as a result of any actions taken by Pledgee under this
regulation should be compensated by the Pledger wholly.

Article 6 Monitoring of Accounts

6.1 The Pledger shall open monitored account at the place of pledge and guide
debtor to deposit all accounts receivable into the account.

6.2 Without prior written consent of Pledgee, the Pledger is not allowed to
indicate debtor to deposit account receivable into any other account except
monitored account. If the Pledger, on any account, receives account receivable
from any other means, he should notify immediately Pledgee and transfer the
above sum of money into the monitored account.

Article 7 Representations and Warranties

7.1 The Pledger makes the following representations and warranties to the
Pledgee:
(1) The Pledger is a limited company established in accordance with laws of the
People’s Republic of China, and with independent legal person status. It has
effective business license and is able to bring a suit and respond to a charge.

(2) The Pledger has legal qualifications and necessary rights to sign this
agreement, to exercise rights and carry out obligations under this agreement.

(3) The sales contract is signed by the Pledger and debtor legally and
effectively, and is legally binding to both parties. Accounts receivable of the
Pledger in sales contract can be transferred according to relevant laws and
regulations and nature of the sales contract.

(4) At present the debtor has no right of offsetting or counterargument in terms
of the Pledger, which may affect guaranteed rights of the Pledgee under this
agreement

(5) The Pledger has the sole right to account receivable, except guarantee set
in this agreement, the Pledger does not have other guarantee of any nature in
terms of account receivable. The Pledger has undisputable right to account
receivable, and can be taken as the object of pledge security.

 
 

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(6) The Pledger has carefully read, wholly understand and accept content of this
agreement and document of financing, the Pledger signs and implements this
agreement of his own free will. What are expressed is true.

(7) Data and documents provided by the Pledger to the Pledgee about the Pledger
and account receivable are genuine and accurate, complete and effective, and
document in duplicate is in conformity with the original.

(8) All those which are necessary for the signing of this agreement and
guarantee by the Pledger under the agreement including approval, license,
consent, notary, registration, record by government and other local department
have been acquired and completed, which are legal and effective.

(9) The Pledger signs this agreement, implement its obligation under the
agreement, which is not against the regulations of the company, other documents
or any other agreement, and does not violate laws and regulations fit for the
Pledger.

(10) This agreement constitutes legal, effective and legally binding obligations
for the Pledger, and guarantee under it is unconditional, not limited by
preferential rights of any other persons.

(11) Under the sales contract, there is no violating incidents or potential
violating incidents by the Pledger and debtor.

(12) At present, there is no ongoing or possible arbitration, law suit or
administrative procedures which may involve the Pledger and constitute serious
unfavorable influence on financial condition, value of accounts receivable or
ability of the Pledger to perform its obligation according to this agreement.

(13) Debtor or his any asset and income has no right of immunity or privileged
in legal procedures such as offsetting, judgment, implementation, detaining.

7.2 The Pledger makes the representations and warranty under Article 7.1 above
to the Pledgee. The above representations and warranty are regarded as made
repeatedly everyday during the pledge period. When a representation and warranty
is made repeatedly, it should fit in with the circumstances of the time.

Article 8 Commitments of the Pledger

8.1 The Pledger makes the following commitments to the Pledgee:

 
 

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(1) The Pledger shall obey all legal and administrative laws relevant with the
agreement, and the sales contract, strictly carry out and obey duty and
obligations under this agreement and the sales contract, and take all necessary
measures to guarantee accounts receivable legal and effective, including but not
limited to legal and effective guarantee right to account receivable by the
Pledgee.

(2) If there is any significant law suits, arbitration or administrative
procedures involved with the Pledger or debtor, no matter it has begun or not,
the Pledger is required to inform the Pledgee the detail as soon as possible (in
not more than 3 work days).

(3) If any incidents of violations happened under this agreement, or incidents
which may affect ability of the Pledger to implement obligations under this
agreement, or incidents which may affect ability of debtor to implement
obligations under this agreement, the Pledger should promptly notify the Pledgee
in written form in detail.

(4) The Pledger shall acquire and handle all formalities necessary to make the
agreement lawful and effective including approval, notary, registration, and
record, and maintain they are lawful and effective and complete other necessary
matters.

(5) Without prior instruction or written consent of the Pledgee, the Pledger is
not allowed to agree, propose to amend or change in any other form sales
contract or make any other guarantee other than which under this agreement on
account receivable.

(6) Without prior consent of the Pledger, the Pledgee may transfer all or part
of rights under this agreement to a third party, the pledge should sign proper
and necessary documents and take proper and necessary measures, and complete
relevant legal procedures.

(7) If the Pledger receives account receivable in any other accounts other than
the controlled account, he should ,after receiving  payment of accounts
receivable, immediately transfer it to the monitored account according to
requirement of agreement.

(8) The Pledger is not allowed to take any measures which may change or harm the
right of the Pledgee in terms of account receivable under this agreement.

(9) The Pledger promises to the Pledgee to take all measures which are
beneficial to the guarantee under this agreement, and sign all necessary
documents including but not excluding contracts related with extension and
amendment of contract signed with the Pledger on registration of pledge of
account receivable and other data and documents reasonably required by the
Pledgee at any time.

 
 

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Article 9 Nature and Validity

9.1 Guarantee set in this agreement is a lasting one. The responsibility of
guarantee of the Pledger terminates until all guaranteed debts are paid off.
Validity of this agreement is not affected by liquidation, combination,
separation, acquisition, bankruptcy or other changes in organizational structure
or any other arrangement made to account receivable.

9.2 Guarantee set in this agreement is independent of any other guarantee
acquired by the Pledgee for debt guarantee. Before exercising right under this
agreement, the Pledger does not need to perform any other guarantee possessed by
him, nor is it necessary to first to take other measures of remedy. Under the
precondition of permission of applicable law, this agreement is independent of
quota letter. Invalidity wholly or in part of any other guarantee contract
prescribed under quota letter does not affect validity of this agreement or duty
and obligation of the Pledger under this agreement. Moreover, this agreement
shall not be invalid or cancelled because quota letter it has guaranteed is
invalid or be cancelled.

Article 10 Realization of the Pledge

10.1 Mortgage under this agreement will be executable once any case occurs as
follows:
(1) Any violations under credit line letters.
(2) The Pledger transfers, distributes receivables in other ways, sets any part
of receivables or attempts to set any guaranteed interests without the Pledgee’s
previously written permission.
(3) The Pledger or debtor suspends or stops its business and enters bankruptcy,
liquidation, shut-down, or something like this, or its business is forced to
stop or suspend by the management.
(4) Any happening like lawsuit, arbitration, or administrative procedures
concerning the Pledger or receivables occur, which by the Pledgee’s reasonable
judgments will have severely adverse effects on the financial positions of the
Pledgee, the value of receivables, and the pledger’s ability of coming to time
pursuant to the agreement.
(5) Any statement or pledge made by the Pledger under the terms of this
agreement is proven inaccurate, unreal or misleading.
(6) The Pledger agrees or proposes to alter sales contract so as to materially
affect or harm the Pledgee’s interests without the Pledgee’s previously written
permission.
(7) The Pledger or debtor violates any obligation under the terms of sales
contract, and the violation will by the Pledgee’s reasonable judgments harm
their guaranteed interests.
(8) The Pledger violates any other obligations under the terms of this agreement
or there occur other thing which the Pledgee thinks will affect its rights under
the terms of the agreement.

 
 

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10.2 Once anything that is listed in Section 10.1 occurs, the Pledgee itself can
decide on the proper time and way which it thinks is right to execute partial or
all guarantees and exercise any right given by the agreement or applicable law,
including but not limited to:
(1) Declaration that all the withdrawn loans expire and requiring the Pledger to
return loans with the capital, interest and other payable items.
(2) Declaration to cancel the withdrawn loan by credit line letters
(3) Direct deduction of the corresponding money form the monitoring account
(4) Replevying or collecting receivables or all the money concerning to
discharge the mortgage debts and present the valid receipt on behalf or the
Pledger
(5) Replacement of the Pledger and the exercise of the Pledger’s property rights
concerning receivables
(6) Undertaking or going through all the lawsuits or arbitration procedures
concerning all or any receivables in the way which the Pledger thinks is proper
by its own judgments and the practice, conciliation, removal or concession of
the rights propositions concerning all or any receivables.
(7) Conducting conciliation, arrangements of debts, concession of any issue or
dispute concerning receivables or caused by it or relevant to this agreement in
one way or another.
(8) Submitting to the arbitration concerning receivables or taking any legal
actions or launching a lawsuit.
(9) Signing the documents or taking relevant actions which the Pledgee
reasonably thinks are necessary and proper concerning the above-mentioned items.

10.3 Once the Pledgee requires, the Pledger should coordinate the Pledgee to
acquire all the necessary approval or agreement from the Pledgee to realize
their liens, or coordinate the Pledgee to handle all the other procedures.

10.4 The Pledgee distributes the acquired money form mortgaged receivables under
the terms of this agreement as the following order goes:
First, to cover all the expenses and fees produced from or caused by the
exercise of the Pledgee’s rights and distribution of receivables.
Second, to cover the tax money or governmental charge when the Pledgee
distributes receivables.
Third, to pay mortgaged debts.
The surplus after the deduction of the above items should be handed over to the
Pledger by the Pledgee.
If the Pledgee can not acquire enough money form receivables to pay off
mortgaged debts, they reserve the rights to ask the Pledger for more.

10.5 When the Pledgee legally exercises its rights by the agreement, it does not
need to take responsibility for the loss caused by the Pledger in the practice
except for its own deliberation or gross negligence.

 
 

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Article 11 Expenses and Compensation

11.1 The Pledger will pay the fees on the signing the agreement, handling
necessary registration or notarization procedures, fulfilling or forcibly
executing obligations (including but not limited to the Pledgee for the lawyers
or lawsuit fees, etc)
11.2 The Pledger will compensate the Pledgee for all the loss and expenses
caused by the Pledger’s failure to fulfill the prescribed obligations or
promises by the agreement.

Article 12 Notification

12.1
All notices, requests and other communications to the Pledger or to the Pledgee
hereunder shall be in writing, and shall be given to the addresses stated below.

If to the Pledger: Zhengzhou Shenyan Technologies Co., Ltd.
Address: 90, Gongren Road, Zhengzhou City, Henan Province
Postcode: 450007
Tel:  86 371 6797 9600
Fax No.: 86 371 6771 3121
Attention: Mr. Zhong Bo

If to the Pledgee: Austria Central Cooperation Bank Beijing Branch
Address: Beijing International Club, Rm. 200, 21 Jianguomenwai Street, Beijing
Postcode: 100020
Tel: 86 10 6532 3388 extension 356
Fax: 86 10 6532 5926
Attention: Monika Goluch

12.2 The notice and other communications required to be given by any party shall
be in written. if in person (including express mail), on the date that the
receiving Party or a person at the receiving Party’s address signs for the
document; if by registered mail, on the 3rd day after the date that is printed
on the receipt of the registered mail; telex and telegram shall be deemed
effectively with confirmation of transmission, at the time displayed in the
corresponding transmission record. But notice and other communications delivered
by the Pledger to the Pledgee are deemed received after the actual receipt of
the Pledgee.

Article 13 Effectuation, Amendment, and Termination of the Contract

13.1 This contract becomes effective after signed by the authorized
representatives of both parties.

13.2 The amendment, modification of the contract shall be made in written. Such
documents shall be regard as the appendices of this contract and integral part
of this Agreement.

 
 

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13.3 The Pledgee shall agree to discharge the collateral security under this
Agreement and handle the cancellation of registration after the full repayments
of the secured liabilities and performance in full of the obligations under this
agreement, and the hereunder fare and fees are at the Pledger’s expense. The
Pledgee should offer necessary assistance to the Pledger in the cancellation
process.

Article 14 Applicable Laws and Dispute Settlement

14.1 The conclusion, interpretation and dispute resolution shall be subject to
the Laws of the People's Republic of China.

14.2 The disputes arising from execution of this contract or relevant to this
contract shall be settled through friendly consultation by the parties. In case
no settlement can be reached 30 days after the written consultation proposal is
forwarded by one party, the dispute shall be submitted by either party to China
International Economic and Trade Arbitration Commission for judgment according
to the arbitration rules in effect. The verdict of arbitration is final and
conclusive, binding on both parties. The place of arbitration is Beijing, and
the arbitration conducted in the Chinese language. The out-of-pocket expense
(including but not limited to arbitration fees, attorney fees) of the winning
party should be paid by the party fails in the arbitration.

Article 15 Miscellaneous

15.1 No failure or delay by the Pledgee in exercising any right, power or remedy
hereunder shall impair such right, power or remedy or operate as a waiver
thereof, nor shall any single or partial exercise of the same preclude any
further exercise thereof or the exercise of any other right, power or remedy.
Any provision under this Agreement being illegal, ineffective or default shall
not affect its legality, effectiveness and feasibility under other clause, nor
affect the legality, effectiveness and feasibility of any other provision.

15.2 Any modification, waiver or other change of this agreement must be
confirmed and become effective after signed by all parties in writing.

15.3 The Pledgee shall have the right to transfer all of its rights hereunder to
another party without the consent of the Pledger. The Pledger shall not transfer
any of its rights and obligations hereunder.

15.4 This Contract is prepared in 3 original copies, all of which are equally
effective, with the Pledger and the Pledgee retaining one original copy each,
and one copy for registration in the registration bureau.

 
 

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IN WITNESS WHEREOF, the authorized representatives of the parties hereto have
caused this Agreement to be duly executed as of the date first written above.

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Signing page

The Pledger (official seal): Zhengzhou Shenyang Technologies Co., Ltd.
(Sealed)

Legal representative /Authorized signature (signature):
Zhong Bo (Signed)

The Pledgee (official seal): Austria Central Cooperation Bank Beijing Branch
(Sealed)

Authorized signature (signature): (Signed)

 
 

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Annex I Contract Form of Receivable Pledge Registration

Herein the Zhengzhou Shenyang Technologies Co., Ltd. (hereinafter referred to as
the “Pledger”) and the Austria Central Cooperation Bank Beijing Branch
(hereinafter referred to as the “Pledgee”) signed the Receivable Pledge
Agreement (hereto referred to as the “Pledge Agreement”) on January 4th, 2008,
the two parties have reached the following agreement concerning the registration
of the above-mentioned pledge receivable under the Receivable Pledge Agreement:

1.
The Pledgee should be responsible for the registration of the pledge receivable
under the Pledge Agreement, the out-of-pocket expense at the Pledgee’s expense;

2.
The Pledger should provide promptly the necessary documents and information,
including but not limited to the corporate legal registration name, registered
address, the name of the legal representative, certificate of organization code,
required by the Pledgee for the registration of the Pledge Agreement. The
Pledger should be responsible for the authenticity and accuracy of the documents
and information provided.

3.
This Agreement herein is for the registration of the Pledge Agreement, and
should not affect the meaning or interpretation of any provision hereof.

The Pledger (official seal): Zhengzhou Shenyang Technologies Co., Ltd.

Legal representative /Authorized signature (signature):

The Pledgee (official seal): Austria Central Cooperation Bank Beijing Branch

Authorized signature (signature):

 
 

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