Jinhao Motor Company - Exhibit 10.4 - Filed by newsfilecorp.com






Exhibit 10.4

PLEDGE AGREEMENT

          THIS
PLEDGE AGREEMENT (this “Agreement”), made as of September 2, 2010,
is between Tsoi Chak Shing (the “Pledgor”) and the secured parties
identified on the signature pages hereto (each a “Secured Party”
and, collectively, the “Secured Parties”). 

RECITALS

          A.      This
Agreement is being delivered pursuant to the Securities Purchase Agreement,
dated August 11, 2010, among Jinhao Motor Company, a Nevada corporation (the
“Company”), the Secured Parties, the Pledgor, Jinhao Power
Holdings Ltd., and certain of its subsidiaries (the “Purchase
Agreement”). Capitalized terms used herein but defined shall have the
meaning given to such terms in the Purchase Agreement. 

          B.      The
Pledgor is the legal and beneficial owner of the shares of common stock of the
Company described on Exhibit A hereto, as may be amended by any Pledge
Amendment (the “Pledged Shares”). 

          C.     
In order to secure the obligations of the Warrantors (other than the Pledgor)
under the Transaction Documents, the Pledgor has agreed to pledge to the Secured
Parties all his present and future rights, title and interest in, to and under
the Pledged Shares in accordance with the term of this Agreement. 

          D.      Concurrent
with the execution of this Agreement, the Company will be entering into with
and/or delivering to the Secured Parties the Transaction Documents. 

AGREEMENT

          NOW,
THEREFORE, in consideration of the premises contained herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Pledgor hereby agrees with the Secured Parties as follows:


          1.      Defined
Terms. Terms defined in the UCC (defined below) that are not otherwise
defined in this Agreement or in the Purchase Agreement are used in this
Agreement as defined in the UCC. The following terms shall have the meanings
specified below: 

          “Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 144 promulgated by
the United States Securities and Exchange Commission pursuant to the Securities
Act of 1933. 

          “Agent”
has the meaning ascribed to the term in Section 11.

          “Agreement”
has the meaning ascribed to the term in the in introductory paragraph of this
Agreement. 




          “Business
Day” means any day except Saturday, Sunday and any day which shall be a
United States federal legal holiday or a day on which banking institutions in
the State of New York, Hong Kong, Singapore or the PRC are authorized or
required by law or other governmental action to close. 

          “Cash
Distributions” has the meaning ascribed to such term in Section
5(b).

          “Closing
Date” has the meaning ascribed to such term defined in Section 2.1 of
the Purchase Agreement. 

          “Code”
means the 2000 Official Text of the Uniform Commercial Code or, with respect to
any Collateral outside of the United States, the equivalent body of laws in such
non-U.S. jurisdiction that provides rights substantially comparable to
the terms contained herein regarding the perfection of the Secured Parties’
Liens on the Collateral in the U.S. 

          “Collateral”
means the (i) Pledged Shares and (ii) all dividends, interest and other sums
which are or may become payable in respect of the Pledged Shares to any Person
in its capacity as shareholder of, or holder of any equity interest in, such
shares, including without limitation the right to receive any and all such sums
and all claims in respect of any default in paying such sums, and all forms of
remittance of such sums. 

          “Company”
has the meaning set forth in paragraph A of the recitals herein. 

          “Enforcement
Action” has the meaning ascribed to such term in Section 11(a).

          “Enforcement
Event” means any failure by the Company to fully pay or perform any
Secured Obligation when due. 

          “Escrow
Account” has the meaning ascribed to such term in Section 5(b).

          “GAAP”
means U.S. generally accepted accounting principles. 

          “Holder”
has the meaning ascribed to such term in Section 9(c). 

          “Investment
Amount” means with respect to each Secured Party, the Investment Amount
indicated on such Secured Party’s signature page and set forth opposite such
Secured Party’s name on Exhibit A to the Purchase Agreement.

          “Lien”
means any lien, charge, encumbrance, security interest, right of first refusal
or other restrictions of any kind. 

          “Majority
Secured Parties” has the meaning ascribed to the term in Section 11.

          “Material
Adverse Effect” means a material adverse effect on (a) the financial
condition of Pledgor (b) the ability of Pledgor to perform its obligations under
this Agreement, (c) the ability of the Secured Parties to enforce any material
obligations of Pledgor under thisAgreement; or (d) the validity or priority of the Secured
Parties' security interests in and Liens on the Collateral and the continued
effectiveness and enforceability thereof. 

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          “New
York Courts” has the meaning ascribed to such term in Section 12(g).

          
“Person” means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind. 

          “Pledge
Amendment” has the meaning ascribed to such term in Section 5(a). 

          “Pledge
Shares” has the meaning set forth in paragraph B of the recitals
herein.

          “Pledgor”
has the meaning ascribed to the term in the in introductory paragraph of this
Agreement. 

          “PRC”
  means the People’s Republic of China.

          “Proceeding”
means an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened. 

          “Purchase
Agreement” has the meaning set forth in paragraph A of the recitals
herein.

          “Qualified
Trading Market” means whichever of the New York Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital
Market. 

          “Representatives”
has the meaning ascribed to such term in Section 11. 

          “Secured
Obligations” has the meaning ascribed to such term in Section 3.

          “Secured
Party” and “Secured Parties” have the meanings ascribed to
such terms in the introductory paragraph of this Agreement. 

          “Securities
Distributions” has the meaning ascribed to such term in Section
5(a).

          “UCC”
means the Uniform Commercial Code as in effect from time to time in the state of
New York or in any other jurisdiction as the context may require. 

          2.     
[Intentionally Omitted].

          3.     
Pledge. As collateral security for the prompt and complete payment and
performance when due of all of the Pledgor’s obligations to indemnify the
Secured Parties pursuant to section 4 of the Purchase Agreement in connection
with any Taxes (or the non-payment thereof) of any Group Company that become due
and payable pursuant to the notices of the relevant government authorities for
all taxable periods ending on or before the Closing Date and the portion through the end of the Closing Date for any
taxable period that includes (but does not end on) the Closing Date (the
“Secured Obligations”), the Pledgor hereby pledges, assigns,
hypothecates, transfers, delivers and grants to the Secured Parties a lien on
and security interest in all of his present and future rights, title and
interest in and to, whether now existing or hereafter coming into existence, the
Collateral for the Pledge Term. For purpose of this Agreement, the term
“Pledge Term” shall mean anytime before the expiration of 6 months
following the lock-up period set forth in the lock-up agreement to be entered
into between the Company and the Secured Parties in connection with a Qualified
IPO (as defined in the Investors’ Rights Agreement). 

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          4.      Representations
and Warranties of the Pledgors. The Pledgor represents and warrants to the
Secured Parties that: 

          (a)      The
Pledgor is and will remain the record and beneficial owner of, and has and will
have good and marketable title to, the Pledged Shares and such interests are and
will remain free and clear of all Liens, except those created by this Agreement.


          (b)      The
Pledgor (i) has all requisite power and authority (A) to own his property and
assets and (B) to execute this Agreement and to pledge the Collateral to the
Secured Parties; and (ii) has duly executed and delivered this Agreement.


          (c)     
This Agreement is a legal, valid and binding obligation of the Pledgor
enforceable against the Pledgor in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, moratorium, reorganization and other
similar laws affecting the enforcement of creditors’ rights generally and by
general equitable principles (whether enforcement is sought by proceedings at
law or in equity). 

          (d)      The
Pledgor holds no options, warrants or other agreements with respect to the
Pledged Shares and there are no outstanding options, warrants or other
agreements with respect to the Pledged Shares other than as provided in the
Transaction Documents. 

          (e)     Except
for the filing of UCC financing statements, no consent, approval or
authorization of or designation or filing with any federal, state or other
governmental authority or regulatory body on the part of the Pledgor is required
in connection with the execution, delivery and performance of this Agreement or
the granting of Liens in the Collateral by the Pledgor, for the benefit of the
Secured Parties, or for the exercise by the Secured Parties of the rights
provided for in this Agreement.

          (f)     
The execution, delivery and performance of this Agreement by the Pledgor will
not violate any material provision of (i) any applicable law or regulation
binding on the Pledgor, (ii) any order, judgment, writ, award or decree of any
court, arbitrator or governmental authority, domestic or foreign binding on the
Pledgor, (iii) the organizational documents of the Company, (iv) any securities
issued by the Company, or (v) any mortgage, indenture, lease, contract, or other
agreement, instrument or undertaking to which the Pledgor is a party or that
purports to be binding upon the Pledgor or upon any of its assets, and will not
result in the creation or imposition of any Lien on any of the assets of the Pledgor
except as contemplated by this Agreement. 

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          (g)      The
pledge, assignment and delivery of the Collateral pursuant to this Agreement
creates a valid Lien on the Collateral in favor of the Secured Parties, subject
to no other Liens nor to any agreement purporting to grant to any third party
any Liens in the property or assets of the Pledgor that would include the
Collateral. The Pledgor covenants and agrees that he will defend all of the
right, title and interest of the Secured Parties in and to the Collateral, for
the benefit of the Secured Parties, against the claims and demands of all
Persons whomsoever. 

          5.      Dividends,
Distributions, etc.

          (a)
If, while this Agreement is in effect, the Pledgor shall become entitled to
receive or shall receive any certificate representing the Pledged Shares
(including, without limitation, any certificate representing a distribution in
connection with any reclassification, increase or reduction of capital, or
issued in connection with any reorganization, merger or consolidation), or any
warrants, options or rights, whether as an addition to, in substitution for, or
in exchange for the Pledged Shares (the “Securities
Distributions”), the Pledgor agrees to accept the same as the Secured
Parties’ agent and to hold the same in trust for the Secured Parties, and to
deliver the same forthwith to the Secured Parties in the exact form received,
with the endorsement of the Pledgor when necessary, to be held by the Secured
Parties as additional collateral security for the Secured Obligations. The
Pledgor shall promptly deliver to the Secured Parties (i) a pledge amendment,
duly executed by the Pledgors, in substantially the form of Exhibit B
hereto (a “Pledge Amendment”) with respect to any Securities
Distributions, and (ii) any financing statements and control agreements (or
amendments thereto) as reasonably requested by the Secured Parties. The Pledgor
hereby authorizes the Secured Parties to attach each Pledge Amendment to this
Agreement. 

          (b)      All
sums of money and property so paid or distributed in respect of the Pledged
Shares (the “Cash Distributions”) that are received by the Pledgor
shall, until paid or delivered to the Escrow Account (defined below) or the
Secured Parties directly, be held by the Pledgor in trust as additional
collateral security for the Secured Obligations. 

          (c)      The
Pledgor shall promptly deposit such Cash Distributions into an escrow account
(the “Escrow Account”) pursuant to the terms of an escrow
agreement to be entered into among the Pledgor, the Secured Parties and an
escrow agent. 

          6.      Voting
Rights in the Pledged Shares.

          (a)
The Pledgor shall be entitled, subject to the other provisions hereof, so long
as no

Enforcement Event has occurred and is continuing, to vote or
consent with respect to the Pledged Shares and to otherwise exercise the
incidents of ownership thereof in any manner not inconsistent with this
Agreement or the Transaction Documents. 

          (b)
Subject to Section 12(e) hereof, any or all of the Collateral held by the
Secured Parties hereunder may, if an Enforcement Event has occurred and is
continuing, be registered in the name of the Secured Parties or their nominee,
and the Secured Parties or their nominee may during the continuation of such Enforcement Event and without
notice exercise all voting and corporate rights at any meeting with respect to
the Pledged Shares and exercise any and all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining to any of the
Pledged Shares, for the benefit of the Secured Parties, as if the Secured
Parties or their nominee were the absolute owner thereof, including, without
limitation the right (i) to vote in favor of, and to exchange at their
reasonable discretion any and all of the Collateral upon the merger,
consolidation, reorganization, recapitalization or other adjustment with respect
to the Company or (ii) upon the exercise by the Company or the Secured Parties,
of any right, privilege or option pertaining to any of the Collateral, and in
connection therewith, to deposit and deliver any and all of the Collateral with
any committee, depositary, transfer agent, registrar or other designated agency
upon such terms and conditions as the Secured Parties may determine, all without
liability except to account for property actually received by the Secured
Parties, but the Secured Parties shall have no duty to exercise any of the
aforesaid rights, privileges or options and shall not be responsible for any
failure to do so or delay in so doing unless due to their gross negligence or
willful misconduct. 

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          (c)      In
furtherance of the foregoing, in connection with the delivery of the
certificates evidencing the Pledged Shares, the Pledgor shall execute and
deliver to the Secured Parties an executed irrevocable stock power in the form
of Exhibit C hereto with respect to such certificates which stock power
shall be exercisable immediately upon the occurrence and during the continuance
of an Enforcement Event. After the occurrence and during the continuance of an
Enforcement Event and upon the reasonable request of the Secured Parties, the
Pledgor agrees to deliver to the Secured Parties such further evidence of such
irrevocable proxy or such further irrevocable proxies to vote the Pledged Shares
as the Secured Parties may reasonably request. 

          7.      Remedies.

          (a)      Upon
the occurrence and during the continuance of an Enforcement Event, the Secured
Parties, without demand of performance or other demand or advertisement of any
kind (except the notice specified below of time and place of public or private
sale and except as otherwise required by applicable law) to or upon the Pledgor
or any other Person (all and each of which demands and/or advertisements are
hereby expressly waived), may, at their own discretion take one or more of the
following actions: 

          (i)      collect,
receive, appropriate and realize upon the Collateral, or any part thereof; 

          (ii)     demand,
sue for, collect or receive any money or property at any time payable to or
receivable by the Pledgor on account of all or any part of the Collateral; 

          (iii)    cause
any action at law or suit in equity or other proceeding to be instituted and
prosecuted to collect or enforce any Secured Obligations or rights hereunder or
included in the Collateral, including specific enforcement of any covenant or
agreement contained herein or in the Transaction Documents, or foreclose or
enforce the security interest in all or any part of the Collateral granted
herein, or to enforce any other legal or equitable right vested in it by this
Agreement or by law, and/or may forthwith incur expenses, including reasonable
attorneys’ fees, consultants’ fees, and other costs appropriate to the exercise
of any right or power under this Agreement; 

6 




          (iv)     sell,
assign, give an option or options to purchase, contract to sell or otherwise
dispose of and deliver the Collateral, or any part thereof, in one or more
portions at public or private sale or sales or transactions, at any exchange,
broker’s board or at any of the Secured Parties’ offices or elsewhere upon such
terms and conditions as the Secured Parties may reasonably deem advisable and at
such prices as it may reasonably deem best, for any combination of cash and/or
securities or other property or on credit or for future delivery without
assumption of any credit risk, with the right to the Secured Parties upon any
such sale or sales, public or private, to purchase, the whole or any part of the
Collateral so sold free of any claim or right of any kind whatsoever. 

          (b)      The
Secured Parties shall apply the net proceeds of any collection, recovery,
receipt, appropriation, realization, sale or disposition, after deducting all
costs and expenses of every kind incurred therein or incidental to the
safekeeping of any and all of the Collateral, including reasonable attorneys’
fees and expenses, to the payment, in whole or in part, of the Secured
Obligations in such order (unless a court of competent jurisdiction shall
otherwise direct) as the Secured Parties may elect. Only after so paying over
such net proceeds and after the payment by the Secured Parties of any other
amount required by any provision of applicable law, including, without
limitation, Section 12-504(1)(c) of the UCC, need the Secured Parties account
for the surplus, if any, to the Pledgor. 

          (c)      The
Secured Parties agree to give Pledgor at least 15 days’ notice of the time and
place of any public sale and that such notice shall constitute commercially
reasonable notification of such matter. If a private sale or other intended
disposition is to take place after a public sale, then such sale or disposition
may not occur unless the Secured Parties shall have provided the Pledgor with
notice of such intended sale or disposition (“Private Sale
Notice”) and the Pledgor shall have the right, exercisable within 15
days after receipt of the Private Sale Notice, of first refusal to purchase the
Collateral being sold or disposed of. The Pledgor hereby acknowledges that the
price at which the Collateral may have been sold at a private sale may be less
than the price that might have been obtained at a public sale or may be less
than the aggregate amount of the Secured Obligations, even if the Secured
Parties accepts the first offer received and does not offer the Collateral to
more than one offeree. 

          (d)     
In addition to the rights and remedies granted to the Secured Parties in this
Agreement, the Secured Parties shall have all the rights and remedies of secured
parties under the UCC. 

          (e)      Any
action or proceeding to enforce this Agreement may be taken by the Secured
Parties either in the Pledgor’s name or in the Secured Parties' name, as the
Secured Parties may deem necessary. To the fullest extent permitted by
applicable law, the Pledgor hereby agrees that he shall not invoke any law
relating to the marshalling of Collateral which might cause delay in or impede
the enforcement of Secured Parties' rights under this Agreement or under any
other instrument creating or evidencing any of the Secured Obligations or under
which any of the Secured Obligations are outstanding or by which any of the
Secured Obligations is secured or payment thereof is otherwise assured, and, to the fullest
extent permitted by applicable law, the Pledgor hereby irrevocably waives the
benefits of all such laws (including any right to a marshalling of assets or a
sale or inverse order of alienation). 

7 




          8.     
No Disposition, Liens, Appointment of Attorney-in-Fact, etc. 

          (a)      Without
the prior written consent of the Secured Parties, the Pledgor agrees that he
will not sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, any of the Collateral, nor shall he create, incur or
permit to exist any Lien on any of the Collateral, or any interest therein, or
any proceeds thereof, except for the Liens granted pursuant to this Agreement.


          (b)      The
Pledgor shall not (i) file or suffer to be on file, or authorize or permit to be
filed or to be on file, in any jurisdiction, any financing statement or like
instrument with respect to any of the Collateral in which the Secured Parties
are not named as the secured party, or (ii) cause or permit any Person other
than the Secured Parties to have “control” (as defined in Sections 8-104 and
8-106 of the UCC) over any part of the Collateral. 

          (c)      The
Pledgor shall pay his indebtedness and obligations promptly and in accordance
with their terms and pay and discharge promptly when due, all taxes, assessments
and governmental charges or levies imposed upon his income or profits or in
respect of his property, before the same shall become delinquent or in default,
as well as all lawful claims for labor, materials and supplies or otherwise
that, if unpaid, might give rise to a Lien upon such properties or any part
thereof; provided that such payment and discharge shall not be required with
respect to any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings and such contest operates to suspend collection of the contested
obligation, tax, assessment or charge and enforcement of a Lien. 

          (d)      Without
prior written consent of the Secured Parties, the Pledgor shall not agree to or
authorize any modification of the terms of any item of Collateral that would
result in a change thereof from one UCC category to another category (such as
from a general intangible to investment property), if the effect thereof would
be to result in a loss of perfection of, or diminution of priority for, the
security interests created hereunder in such item of Collateral, or the loss of
control (within the meaning of Sections 8-104 and 8-106 of the UCC) over such
item of Collateral. 

          (e)      Without
the prior written consent of the Secured Parties, the Pledgor agrees that he
will not vote to enable, and will not otherwise permit the Company to (i) issue
any securities in exchange or substitution for the Pledged Shares other than to
the Pledgor, or (ii) dissolve, liquidate or retire any of the Pledged Shares.


          (f)      The
Pledgor shall perform and comply with all obligations and conditions on its part
to be performed under this Agreement, the other Transaction Documents and with
respect to the Collateral. 

8 




          (g)     
The Pledgor hereby appoints the Lead Investor its attorney-in-fact, with full
authority, in the name of the Pledgor or otherwise, after the occurrence and
during the continuation of an Enforcement Event, from time to time in the Lead
Investor’s sole discretion, to take any action and to execute any instrument
which the Lead Investor may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, to receive, endorse
and collect all instruments made payable to the Pledgor representing any
dividend or other distribution in respect of the Collateral or any part thereof
and to give full discharge for the same and to arrange for the transfer of all
or any part of the Collateral on the books of the Company to the name of the
Secured Parties or their nominee. 

          9.     
Further Assurances. 

          (a)      Concurrently
with the execution herewith, the Pledgor shall deliver or cause to be delivered
to the Secured Parties all certificates or instruments evidencing the Pledged
Shares, and the Secured Parties shall have sole possession and control of such
certificates and instruments until this Agreement is terminated. All such
certificates or instruments shall be in suitable form for transfer by delivery,
or shall be accompanied by duly executed instruments of transfer or assignment
in blank, all in form and substance acceptable to the Secured Parties. 

          (b)      The
Pledgor shall, from time to time, at its expense, promptly execute and deliver
all further instruments and documents, and take all further action, that may be
reasonably necessary or desirable, or that the Secured Parties may reasonably
request, in order to perfect and protect the assignment and security interest
granted or intended to be granted hereby or to enable the Secured Parties to
exercise and enforce their rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, the Pledgor shall:
(i) deliver any additional Collateral or any part thereof to the Secured Parties
as the Secured Parties may request and (ii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments,
endorsements or notices, as may be necessary or desirable or as the Secured
Parties may reasonably request, in order to perfect and preserve the assignments
and security interests granted or purported to be granted hereby. 

          (c)      If,
at any time and from time to time, any Collateral (including any certificate or
instrument representing or evidencing any Collateral) is in the possession of a
Person other than the Secured Parties (a “Holder”), then the
Pledgor shall immediately, at the Secured Parties' option, either cause such
Collateral to be delivered into the Secured Parties' possession, or cause such
Holder to enter into a control agreement, in form and substance satisfactory to
the Secured Parties, and take all other steps deemed necessary by the Secured
Parties to perfect the security interest of the Secured Parties in such
Collateral, all pursuant to Section 12-106 and Section 12-313 of the UCC or
other applicable law governing the perfection of the Secured Parties' security
interest in the Collateral in the possession of such Holder. 

          (d)      The
Pledgor shall cause the Pledged Shares to be evidenced by and remain
“certificated securities” as defined in Article 8 of the UCC.

          (e)      The
Pledgor agrees that, as promptly as possible after the date hereof but no later
than thirty (30) days after the closing of the financing contemplated in the
Purchase Agreement, it will cause the Liens created hereunder to be duly perfected
as to all Collateral and provide the Lead Investor with the following: 

9 




          (i)     
appropriately completed copies, which have been duly authorized for filing by
the appropriate Person, of Uniform Commercial Code financing statements naming
each Pledgor as a debtor and the Collateral Agent as the secured party, or other
similar instruments or documents to be filed in the State of Nevada in order to
perfect the security interests of the Collateral Agent for the benefit of the
Secured Parties pursuant to this Agreement; or 

          (ii)     certified
copies of Uniform Commercial Code Requests for Information or Copies (Form UCC
11), or a similar search report certified by a party acceptable to the Lead
Investor, dated a date reasonably near to the date hereof, listing all effective
financing statements of record in the State of Nevada which name the Pledgor
(under its present name and any previous names) as the debtor, together with
copies of such financing statements.

          (f)      The
Pledgor shall pay all filing, registration and recording fees and all re-filing,
re-registration and re-recording fees, and all reasonable expenses incident to
the execution and acknowledgment of this Agreement, any assurance, and all
federal, state, county and municipal stamp taxes and other taxes, duties,
imports, assessments and charges arising out of or in connection with the
execution and delivery of this Agreement, any agreement supplemental hereto, any
financing statements, and any reasonable instruments of further assurance. 

          (g)     
Release and Termination. This Agreement as well as the Liens granted
hereunder shall terminate, and the Collateral shall be returned upon the
effectiveness of the release of this Agreement as a Security Document upon the
expiration of the Pledge Term. Upon such termination and release, the Secured
Parties shall deliver the documents and take such further actions to evidence
and otherwise give effect to such termination and release and, subject to any
sale or other disposition by the Secured Parties of the Collateral or other
property pursuant to this Agreement, shall return to the Pledgor the Collateral
and any other property then held pursuant to this Agreement as part of the
collateral security for the Secured Obligations, except to the extent required
under the UCC and other applicable law. 

          (h)     
Survival of Representations. All representations and warranties of the
Pledgor contained in this Agreement shall survive the execution and delivery of
this Agreement. 

          (i)      Expenses.
The Pledgor shall upon demand pay to the Secured Parties all reasonable
expenses, including the reasonable fees and expenses of attorneys, accountants,
consultants or other experts and agents that the Secured Parties may retain in
connection with (i) the custody, preservation or sale of, collection from, or
other realization upon, any of the Collateral, (ii) the exercise or enforcement
of any of the rights and remedies of the Secured Parties hereunder or (iii) the
failure of the Pledgor to perform or observe any of the provisions hereof. 

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          10.    
Limitation on Duty in Respect of Collateral. Beyond the exercise of
reasonable care in the custody and preservation thereof, the Secured Parties
shall have no duty as to any Collateral in their possession or control or in the
possession or control of any agent or bailee or any income therefrom or as to
the preservation of rights against prior parties or any other rights pertaining
thereto. The Secured Parties shall be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in their possession or control
if such Collateral is accorded treatment substantially equal to that which it
accords their own property, and shall not be liable or responsible for any loss
or damage to any Collateral, or for any diminution in the value thereof, by
reason of any act or omission of any agent or bailee selected by the Secured
Parties in good faith, except to the extent that such liability arises from the
Secured Parties’ gross negligence or willful misconduct.

          11.    
Agents and Representatives. The remedies provided in Section 7 herein
shall only be exercised or otherwise enforced with the written consent of
Secured Parties holding at least 66-2/3% of the outstanding aggregate principal
amount of the Investment Amount under the Purchase Agreement (“Majority
Secured Parties”). The Majority Secured Parties may appoint an agent
(the “Agent”) that, at the direction of Majority Secured Parties,
shall have the right to exercise any right or remedy of the Secured Parties, on
behalf of all Secured Parties, under this Agreement, including, without
limitation, all rights and remedies of a secured party under the Code. If an
Agent is so appointed: 

          
(a)      At the direction of the Majority Secured
Parties, the Agent shall proceed with the enforcement of the Secured Parties'
rights against the Collateral for the benefit of the Secured Parties. Any
repossession, sale or distribution of proceeds of Collateral shall be
accomplished as required by this Agreement, the other Transaction Documents and
applicable law. The Agent is authorized to exercise all rights and remedies of
the Secured Parties under the Transaction Documents, provided that, absent
exigent circumstances where action is determined by the Agent to be necessary to
protect Collateral, the Agent shall not proceed to enforce the Secured Parties'
rights and remedies against the Collateral or the Pledgor by foreclosure,
judicial action or the like (“Enforcement Action”), unless and
until directed to do so by the Majority Secured Parties. Unless the Agent shall
request further guidance or consents, any direction by the Majority Secured
Parties to begin Enforcement Action may merely state that the Agent shall begin
enforcement, and need not specify the manner in which enforcement should
proceed. Once the Agent receives an enforcement direction from the Majority
Secured Parties, all decisions as to how to proceed to enforce the Secured
Parties' rights and remedies, including, without limitation, the methods and
timing of proceeding, may be made by the Agent in its good faith business
judgment, with such consultation with the Secured Parties as the Agent in its
sole discretion deems reasonable under the circumstances. In the event of one or
more foreclosure sales, the Agent shall have the right to bid in the claim of
each Secured Party on behalf of each Secured Party in respect of its investment
in the Company.

        
(b)      Unless consented to by all of the Secured
Parties, no Secured Party shall, except through the Agent, collect, take
possession of, foreclose upon, or exercise any rights or remedies with respect
to the Collateral or the Pledgor, judicially or non-judicially, in order to
satisfy or collect any Secured Obligations or attempt to do any of the
foregoing.

11




          
(c)      If the Collateral is acquired by the Agent by
foreclosure sale or otherwise, at the option of the Agent, title may be taken in
the name of the Agent or in the name of a corporation affiliated with the Agent
or other nominee designated by the Agent, in any case, for the ratable benefit
of the Secured Parties subject to the terms of this Agreement. Although the
Agent shall consult with the Secured Parties as to the general operation and
disposition of any Collateral for which title has been acquired through
foreclosure or otherwise, the consent of the Secured Parties shall not be
required for matters and decisions by the Agent relating to the management,
operation, or repair of the Collateral so acquired.

          
(d)      The costs of repossession, sale,
possession and management (including, without limitation, any costs of holding
any Collateral the title to which is acquired by the Agent on behalf of the
Secured Parties), and distribution pursuant to Section 7 herein shall be an
obligation of the Pledgor, and to the extent the Pledgor does not cover such
costs, shall be borne Pro Rata by the Secured Parties until repaid by the
Pledgor. Each Secured Party shall reimburse the Agent for its Pro Rata share of
all such costs promptly upon demand. Without limiting any obligations of any
Secured Party to reimburse the Agent as contained herein, in the event of the
Pledgor’s failure to pay taxes, assessments, insurance premiums, claims against
the Collateral or any other amount required to be paid by the Pledgor pursuant
to any Transaction Documents, the Agent may (but shall not be obligated to)
advance amounts necessary to pay the same, and each Secured Party agrees to
reimburse the Agent promptly upon demand for its Pro Rata share of any such
payments, provided Agent has advanced such amounts with the approval of the
Majority Secured Parties. “Pro Rata” means, as to any Secured
Party at any time, (a) with respect to the Secured Obligations, the percentage
equivalent at such time of (i) such Secured Party's Investment Amount, divided
by (ii) the combined aggregate Investment Amount of all Secured Parties.

          12.     Miscellaneous.

         (a)      Entire
Agreement. The Transaction Documents, together with the Exhibits and
Schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules. 

          (b)      Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section prior to 5:00 p.m. (Central time) on a Business Day, (ii) the next
Business Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section on a
day that is not a Business Day or later than 5:00 p.m. (Central time) on any
date and earlier than 11:59 p.m. (Central time) on such date, (iii) the Business
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and communications
shall be as follows: 

12





	If to the Pledgor: 	To the address set forth under
      the Pledgor’s name on the signature pages 
	  	hereof; 
	  	  
	with a copy (for 	Pillsbury Winthrop Shaw Pittman
      LLP 
	informational 	50 Fremont 
	purposes only) to: 	San Francisco, CA 94105-2228
  
	  	Facsimile: (415)983-1200 
	  	Attn.: Scott Kline, Esq. 
	  	  
	If to the Secured 	To the address set forth under
      the Secured Parties’ names on the signature 
	Parties: 	pages hereof; 
	  	  
	with a copy (for 	Simpson Thacher& Bartlett LLP
    
	informational 	3119 China World Tower One 
	purposes only) to: 	1 Jianguomenwai Avenue 
	  	Beijing 100004, China 
	  	Facsimile: (+8610) 5965-2988
  
	  	Attn.: Shaolin Luo, Esq.
  


or such other address as may be designated in writing
hereafter, in the same manner, by such Person. 

         (c)     
Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed by the Pledgor and the Secured
Parties. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such
right. 

          (d)      Construction.
The headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. This Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction Documents. 

          (e)     
Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. Each
party hereto may assign any or all of their rights and obligations under this
Agreement provided such assignee agrees in writing to be bound, with respect to
the provisions hereof that apply to such party. 

          (f)      No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by, any other Person
except as expressly provided herein. 

13




          (g)      Governing
Law. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof that would apply any other law. Each
party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement (whether brought
against a party hereto or its respective Affiliates, employees or agents) may be
commenced in the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”). Each party hereto
hereby irrevocably submits to the non-exclusive jurisdiction of the New York
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any such New York Court, or
that such Proceeding has been commenced in an improper or inconvenient forum.
Each party hereto hereby irrevocably waives personal service of process and
consents to process being served in any such Proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated
hereby. 

          (h)      Survival.
The representations, warranties, agreements and covenants contained herein shall
survive the execution and delivery of this Agreement. 

          (i)     
Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or electronic transmission of portable document format
(pdf), such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such facsimile signature page or signature electronically
transmitted in pdf were an original thereof. 

          (j)      Severability.
If any provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the
parties will attempt to agree upon a valid and enforceable provision that is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement. 

14




          IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered on the date first above written. 

PLEDGOR:


 

By:/s/ Tsoi Chak
Shing                    

        Tsoi Chak Shing 


Address for Notice: 
Dawang
Industrial Park 
Zhaoqing Hi-Tech Exploit Area
Guangdong Province, PRC



[SIGNATURE PAGE FOR SECURED PARTIES ON NEXT PAGE]

Jinhao Motor Company – Series A - Signature Page to Pledge
Agreement




SECURED PARTIES:



   

DBS Nominees (Private)
Limited



   

By: /s/ Stanley
Leung           
Name:
Stanley Leung 
Title: Senior Vice President

Address for Notice: 
6
Shenton Way, #30-01
DBS Building Tower One 
Singapore 068809 


[SIGNATURE PAGE OF SECURED PARTIES CONTINUES ON NEXT
PAGE]

Jinhao Motor Company – Series A - Signature Page to Pledge
Agreement




SECURED PARTIES:



   

THE ISLAMIC BANK OF ASIA
LIMITED

 

By: /s/ Tan Jeh
Wuan
Name: Tan Jeh Wuan 
Title: Managing Director

Address for Notice: 
6
Shenton Way 
#01-01/02
DBS Building Tower 1 
Singapore 068809



 

[SIGNATURE PAGE OF SECURED PARTIES CONTINUES ON NEXT
PAGE]

Jinhao Motor Company – Series A - Signature Page to Pledge
Agreement




SECURED PARTIES:

 

PROFIT TONE GLOBAL
INVESTMENTS

 

By: /s/Liu,
Hao               

Name: Liu, Hao 
Title: Sole Owner 

Address for Notice: 
Suites
3702-04. 37/F, Tower 6, The 
Gateway, Harbour City, TST, Kowloon
Hong
Kong, China 


 

 

 

Jinhao Motor Company – Series A - Signature Page to Pledge
Agreement




EXHIBIT A 
DESCRIPTION OF PLEDGED SHARES



	Issuer 

	Pledgor 

	No. of Shares of the 
Company’s
      Common 
Stock 	Secured Party 


	Jinhao Motor Company 	Tsoi Chak Shing 	3,474,317 	DBS Nominees (Private) Limited 
	Jinhao Motor Company 	Tsoi Chak Shing 	914,294 	The Islamic Bank of Asia Limited 
	Jinhao Motor Company 	Tsoi Chak Shing 	1,097,153 	Profit Tone Global Investments 
	Total 	  	5,485,764 	  







EXHIBIT B


[FORM OF] 

  PLEDGE AMENDMENT

          This
Pledge Amendment, dated as of ___________________ is delivered pursuant to
Section 5 of the Pledge Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Guaranty and Pledge
Agreement, dated as of August __, 2010, between the undersigned and
______________ (the “Pledge Agreement”; capitalized terms defined
therein being used herein as therein defined) and that the common stock listed
on this Pledge Amendment shall be deemed to be part of the Collateral and shall
secure all Secured Obligations. 


	Issuer 
	Pledgor 
	No. of Shares of 
Common
      Stock 
	 	 	 
	 	 	 



_________________________ 

 

By: 
__________________________________
Title:
_________________________________





EXHIBIT C

FORM OF 

IRREVOCABLE STOCK POWER 

          FOR
VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto DBS
Nominees (Private) Limited, 3,474,317 shares of Common Stock, par value $0.001,
of Jinhao Motor Company, a Nevada corporation (the “Company”), represented by
Certificate(s) No.: _____________, and hereby irrevocably constitutes and
appoints as attorney any duly authorized officer or other authorized person of
the Company to transfer the said stock on the books of the Company with full
power of substitution in the premises.

Date: ________________________ 

By:  
_________________________________
Tsoi Chak Shing 





IRREVOCABLE STOCK POWER 

          FOR
VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto The
Islamic Bank of Asia Limited, 914,294 shares of Common Stock, par value $0.001,
of Jinhao Motor Company, a Nevada corporation (the “Company”), represented by
Certificate(s) No.: _____________, and hereby irrevocably constitutes and
appoints as attorney any duly authorized officer or other authorized person of
the Company to transfer the said stock on the books of the Company with full
power of substitution in the premises.

Date: ________________________ 

 

By: 
_________________________________
Tsoi Chak Shing 





IRREVOCABLE STOCK POWER 

          FOR
VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto Profit
Tone Global Investments, 1,097,153 shares of Common Stock, par value $0.001, of
Jinhao Motor Company, a Nevada corporation (the “Company”), represented by
Certificate(s) No.: _____________, and hereby irrevocably constitutes and
appoints as attorney any duly authorized officer or other authorized person of
the Company to transfer the said stock on the books of the Company with full
power of substitution in the premises.

Date: ________________________ 

By:  _________________________________

  Tsoi Chak Shing