Document:

Equity Pledge Agreement

By and among

The Shareholders of Zhejiang Joinan Lighting Co., Ltd.

 

(“Pledgors”)

Jiangshan Greenworld Photoelectricity Consulting Co., Ltd.

 

(“Pledgee”)

 

and

Zhejiang Joinan Lighting Co., Ltd.

 

(“Company”)

 

May 6, 2011

 

  

  

  

 

	
Equity Pledge Agreement

	
Confidential

 

Equity Pledge Agreement

This Equity Pledge Agreement (hereinafter referred to as “this Agreement”) is entered into on May 6, 2011 by and among the following parties:

	
(1)

	
All shareholders of Zhejiang Joinan Lighting Co., Ltd. (hereinafter collectively called “Pledgors”), as follows:

	
Name of the

Shareholders

	 	
Shareholding

Ratio %

	 	 	
Contribution

	 	 	
ID Card No.

	 	
Contact

Address

	
Lixia Wang

	 	 	45	%	 	 	1,350,000	 	 	360424197404070010	 	  
	
Jiangtu Zhu

	 	 	27	%	 	 	810,000	 	 	320311196611111277	 	  
	
Huanyong Wang

	 	 	20	%	 	 	600,000	 	 	332624196308020032	 	  
	
Tianhui Liu

	 	 	8	%	 	 	240,000	 	 	362133197612023333	 	  

	
(2)

	
Jiangshan Greenworld Photoelectricity Consulting Co., Ltd. (hereinafter  called “Pledgee”), a wholly foreign owned enterprise registered in China with its registered address at 18-3, Xing Gong Seventh Road, Shangyu, Jiangshan. It’s legal representative is Liu Chuanling; and

	
(3)

	
Zhejiang Joinan Lighting Co., Ltd. (hereinafter  called the “Company”), an enterprise duly registered in Zhejiang Province, China, with its registered address at 18, Xing Gong Seventh Road, Shangyu, Jiangshan.

 

(Pledgors, 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 330881000007827;

	
  

	 

	
2.

	
The Pledgors legally hold 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);

 

  

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Equity Pledge Agreement

	
Confidential

	
4.

	
Pledgors 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 Pledgors, and Pledgors agree to pledge all their Equity Interests in the Company as a guaranty of the performance of the obligations under the Loan Agreement;

	
5.

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

	
6.

	
Pledgee signed a technical service agreement (the “Technical Service Agreement”) with the Company and Pledgors on the same date of the execution of this Agreement, and Pledgors agree to pledge all their 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 Pledgors on the same date of the execution of this Agreement, and the Parties thereto agree that Pledgors shall pledge all their Equity Interests in the Company to Pledgee as a guaranty of the performance of the obligations assumed by Pledgors 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;

 

  

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Equity Pledge Agreement

	
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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);

	
1.5

	
“Pledged Equity” refers to all the Pledgors’ 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 Pledgors 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 Pledgors shall pledge all their Equities in the Company to the Pledgee as a guaranty for the performance of the obligations assumed by the Pledgors and/or the Company under each of the Main Agreements.

	
2.2

	
In case that the Pledgors increase or reduce their 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 Pledgors 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 Pledgors 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 Pledgors 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 Pledgors and the Company shall not prevent the Pledgee from exercising the above rights.

 

  

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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 Pledgors.

	
3.

	
Registration of Pledge

	
3.1

	
Upon the execution of this Agreement, the Pledgors shall cause the Company to record the Right of Pledge in the Company’s shareholders list and deliver such list affixed with the seal of the Company as well as the original of shareholder capital contribution certificate of the Pledgors 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 shareholders list or the registered capital contribution certificate which receive the prior consent from the Pledgee, the Pledgee shall return the shareholders list and registered capital contribution certificate to the Company for modification, and the Company shall complete the modification and deliver such modified shareholders 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 Pledgors represent and warrant to the Pledgee that:

	
  

	
(1)

	
the Pledgors are the legal owners 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 Pledgors have 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.

 

  

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4.3

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

	
5.

	
Obligations of Pledgors

	
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 Pledgors 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, Pledgors 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 Pledgors 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 Pledgors 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 Pledgors 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 Pledgors 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 Pledgors 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 Pledgors shall provide the Pledgee with all the information regarding the business operation and financial condition of the Company;

	
  

	 

	
5.8

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

 

  

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Equity Pledge Agreement

	
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5.9

	
The Pledgors 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;

	
5.10

	
The Pledgors 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 Pledgors 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 Pledgors 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 Pledgors shall promptly and unconditionally transfer all or part of their Equity Interests of the Company to Pledgee or its designated third party in accordance with the Exclusive Purchase Option Agreement, and waive their preemptive rights with respect to such transfer;

	
5.14

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

	
5.16

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

 

  

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Equity Pledge Agreement

	
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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;

	
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;

 

  

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Equity Pledge Agreement

	
Confidential

	
6.11

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

	
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 Pledgors.

	
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 Pledgors have 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 Pledgors’ failing to repay the debts or the Pledgor’s violation of PRC laws or state policies, etc., the Pledgors 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 Pledgors 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 Pledgors and/or the Company breaches any of the representations or warranties under any Main Agreements;

	
  

	
8.1.3

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

 

  

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Equity Pledge Agreement

	
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8.1.4

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

	
  

	
8.1.6

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

	
  

	
8.1.7

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

	
8.2

	
Unless the Pledgors take 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 Pledgors 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 Pledgors shall not transfer part or all of their 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 its rights and obligations under this Agreement to any third party upon a five (5)–day written notice to the Pledgors and the Company without their approval. The Pledgors 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.

 

  

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11.3

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

	
12.

	
Confidentiality

	
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.

 

  

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Equity Pledge Agreement

	
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14.

	
Applicable Law and Dispute Resolution

	
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.

 

The Representative designated by Pledgors

Contact person: Liu Tianhui

Address: 18, Xing Gong Seventh Road, Shangyu, Jiangshan

Tel: 0570-4352001

Fax: 0570-4352000

 

  

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Equity Pledge Agreement

	
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Pledgee

Contact Person: Liu Chuanling

Address:18-3, Xing Gong Seventh Road, Shangyu, Jiangshan

Tel:

Fax:

The Company

Contact person: Yang Xiaowen

Address: 18, Xing Gong Seventh Road, Shangyu, Jiangshan

Tel:

Fax:

	
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 six (6) 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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Equity Pledge Agreement

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

Pledgors 

Shareholders of Zhejiang Joinan Lighting Co., Ltd.

Wang Lixia: ______________________

Zhu Jiangtu: ______________________

Wang Huanyong: ______________________

Liu Tianhui: ______________________

Pledgee

Jiangshan Greenworld Photoelectricity Consulting Co., Ltd.

Legal Representative: Liu Chuanling

Signature & Seal: ______________________

The Company 

Zhejiang Joinan Lighting Co., Ltd.

Legal Representative: Zhu Jiangtu

Signature and seal: ______________________

  

13TRUST AGREEMENT

 

This TRUST AGREEMENT is entered into effective May 9, 2011 by and between Theresa Krystofiak as trustee ("Trustee"), and Transit Management Holding Corp., a Colorado corporation ("Transit Management Holding Corp.").

 

WITNESSETH

 

WHEREAS, Transit Management Holding Corp. has formed and organized as a wholly owned subsidiary Transit Management, Inc., a Colorado corporation("Transit Management, Inc. " or the "Company"); and

 

WHEREAS, Transit Management Holding Corp. was and is the beneficial owner of an aggregate of 2,222,520 shares of Transit Management, Inc. common stock (the "Transit Management, Inc. Shares"), which Transit Management, Inc. Shares correspond on a 1-for-10 basis with the total number of issued and outstanding shares of common stock of Transit Management Holding Corp.; and

 

WHEREAS, Transit Management Holding Corp. has agreed to effect a pro rata distribution in the nature of a stock dividend of the Transit Management, Inc. Shares to all shareholders of record of Transit Management Holding Corp. on May 9, 2011 (the "Shareholders" and the "Record Date," respectively); and

 

WHEREAS, in order to effect the distribution of the Transit Management, Inc. Shares to the Shareholders (the "Distribution"), Transit Management Holding Corp. has agreed to transfer the Transit Management, Inc. Shares to be held, in trust, for the benefit of the Shareholders.

 

NOW THEREFORE, in consideration of the premises and the covenants and agreements herein below set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.           Transfer of Stock to Trustee.

 

a)           Transit Management Holding Corp. shall transfer and assign to the Trustee the Transit Management, Inc. Shares which shares shall remain un-certificated. On receipt by the Trustee of the Shares and their transfer into the name of the Trustee, the Trustee shall hold them subject to the terms of this Agreement. The effective date of the transfer of the Transit Management, Inc. Shares to the Trustee shall be May 9, 2011. Certificates for stock of the Company transferred and delivered to the Trustee pursuant to this Agreement shall be surrendered by the Trustee to the Company and cancelled, and new certificates therefore shall be issued to and held by the Trustee in the name of "Theresa Krystofiak as Trustee."

 

b)           Trustee shall hold the Transit Management, Inc. Shares for the benefit of the Shareholders, pro rata; each of whose interest in the Transit Management, Inc. Shares shall hereafter be referred to as a "Trust Interest."

 

2.           Trust Certificates.

 

The pro rata interest of each Shareholder in and to the Transit Management, Inc. Shares held by the Trustee hereunder (the "Trust Interest") shall not be evidenced by a certificate but shall remain un-certificated.

 

  

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3.           Failure of Distribution.

 

(a)           If for any reason the Distribution has not been consummated in accordance with all applicable legal requirements within 24 months of the date of this Agreement, then and in such event the Trustee shall be authorized to sell the Transit Management, Inc. Shares in any manner that the Trustee may determined, in his sole judgment, to be commercially reasonable. Disposition of the Transit Management, Inc. Shares may be made by public or private proceedings and may be made by way of one or more contracts. Sale or other disposition of the Transit Management, Inc. Shares may be made as a unit or in divisional interests in such shares. In each event, the method, manner, time, place and terms of such sale or other disposition shall be determined by the Trustee. In no event shall the Trustee be personally liable for any action taken or omitted to be taken under this Agreement provided that such commission or omission does not constitute willful misconduct or gross negligence.

 

(b)           From the proceeds of the sale, the Trustee shall pay the reasonable expenses of selling the Transit Management, Inc. Shares. The remaining proceeds of sale shall then be distributed to the registered holders of Trust Certificates, on the date of such distribution, or to the registered certificate holders at the close of business on the date fixed by the Trustee for the taking of a record to determine the certificate holders entitled to such distribution, in such manner as to distribute such net proceeds to the certificate holders ratably in accordance with the number of shares represented by their respective trust certificates,

 

4.           Term and Termination.

 

This Agreement shall terminate upon the earlier of (i) the completion by the Trustee of the Distribution of the Transit Management, Inc. Shares to the Transit Management Holding Corp. Shareholders, pro rata, in accordance with the filing of a registration statement under the Securities Act of 1933, as amended, or (ii) the completion by the Trustee of the sale or other disposition of the Transit Management, Inc. Shares in accordance with paragraph 4 and the distribution of the net proceeds derived from such sale to the Transit Management Holding Corp. Shareholders, pro rata,.

 

5.           Termination Procedure.

 

(a)           Upon the termination of this Agreement at any time, as hereinafter provided, the   Trustee, at such time as he/it may choose during the period commencing 20 days before and ending 20 days after such termination, shall mail written notice of such termination to the registered owners of the Trust Interests, at the addresses appearing on the Trustee's transfer books. After the date specified in any such notice (which date shall be fixed by the Trustee), the Trust Interests shall cease to have any effect, and their holders shall have no further rights under this Agreement other than to receive certificates for Transit Management, Inc. Shares or other property distributable under the terms hereof and upon the surrender of Trust Certificates, if issued.

 

(b)           Within 30 days after the termination of this Agreement, the Trustee shall deliver, to the registered holders of all Trust Interests, (1) certificates for the number of Transit Management, Inc. Shares represented thereby, upon the surrender thereof properly endorsed, such delivery to be made in each case at the Trustee's office; or (ii) payment in an amount equal to the registered holder' pro rata share of the net proceeds payable from the sale of the Transit Management, Inc. Shares.

 

(c)           At any time subsequent to 30 days after the termination of this Agreement, the Trustee may deposit with the Company stock certificates representing the number of Transit Management, Inc. Shares represented by the Trust interests then outstanding, with authority in writing to the Company to deliver such stock certificates in exchange for Trust Interests representing a like number of Transit Management, Inc. Shares. Upon such deposit all further liability of the Trustee for the delivery of such stock certificates and the delivery or payment of dividends shall cease, and the Trustee shall not be required to take any further action hereunder.

 

  

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6.           Dividends.

 

(a)           Prior to the termination of this Agreement, the holder of each Trust Interest shall be entitled to receive payments equal to the cash dividends, if any, received by the Trustee upon a like number and class of shares of the Company's capital stock as is called for by each such Trust Interest. If any dividend in respect of the stock deposited with the Trustee is paid, in whole or in part, in the Company's stock having general voting powers, the Trustee shall likewise hold, subject to the terms of this Agreement, the certificates for stock which are received by him on account of such dividend. The holder of each Trust interest representing stock on which such stock dividend has been paid shall be entitled to receive a Trust Interest issued under this Agreement for the number of shares and class of stock received as such dividend with respect to the shares represented by such Trust Interest. Holders entitled to receive the dividends described above shall be those registered as such on the Trustee's transfer books at the close of business on the day fixed by the Company for the taking of a record to determine those holders of its stock entitled to receive such dividends, or if the Trustee has fixed a date, as hereinafter in this paragraph provided; for the purpose of determining the holders of Trust Interests entitled to receive such payment or distribution., then registered as such at the close of business on the date so fixed by the Trustee.

 

(b)           If any dividend in respect of the stock deposited with the Trustee is paid other than in cash or in capital stock having general voting powers, then the Trustee shall distribute the same among the holders of Trust Interests registered as such at the close of business on the day fixed by the Trustee for taking a record to determine the holders of Trust Interests entitled to receive such distribution. Such distribution shall be made to such holders of Trust Interests ratably, in accordance with the number of shares represented by their respective Trust Interests.

 

(c)           The Trustee may temporarily close its transfer books for a period not exceeding 20 days prec6ding the date fixed for the payment or distribution of dividends or the distribution of assets or rights, or at any other time in the Trustee's discretion. In lieu of providing for the closing of the books against the transfer of Trust Interests, the Trustee may fix a date not exceeding 20 days preceding any date fixed by the Company for the payment or distribution of dividends, or for the distribution of assets or rights, as a record date for the determination of the holders of Trust Interests entitled to receive such payment or distribution. The holders of Trust Interests of record at the close of business on such date shall exclusively be entitled to participate in such payments or distribution.

 

(d)           In lieu of receiving cash dividends upon the capital stock of the Company and paying the same to the holders of Trust Interests pursuant to the provisions of this Agreement, the Trustee may  instruct the Company in writing to pay such dividends' to the holders of the Trust Interests. Upon receipt of such written instructions, the Company shall pay such dividends directly to the holders of the Trust Interests. Upon such instructions being given by the Trustee to the Company, and until revoked by the Trustee, all liability of the Trustee with respect to such dividends shall cease. The Trustee may at any time revoke such instructions and by written notice to the Company direct it to make dividend payments to the Trustee.

 

  

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7.          Subscription Rights.

 

If any stock or other securities of the Company are offered for subscription to the holders of its capital stock deposited hereunder, the Trustee, promptly upon receipt of notice of such offer, shall mail a copy thereof to each holder of the Trust Interests, Upon receipt by the Trustee, at least five days prior to the last day fixed by the Company for subscription and payment, of a request from any such registered holder of Trust Interests to subscribe in his behalf, accompanied with the sum of money required to pay for such stock or securities (not in excess of the amount subject to subscription in respect of the shares represented by the Trust Interest held by such certificate holder), the Trustee shall make such subscription and payment. Upon, receiving from the Company the certificates for shares or securities so subscribed for, the Trustee shall issue to such holder a Trust Interest in respect thereof if the shares or securities received have general voting powers. If, however, the shares or securities do not have general voting powers, the Trustee shall mail or deliver such securities to the certificate holder in whose behalf the subscription was made, or may instruct the Company to make delivery directly to the certificate holder entitled thereto.

 

8.   .       Dissolution of Company

 

In the event of the dissolution or total or partial liquidation of the Company, whether voluntary or involuntary, the Trustee shall receive the moneys, securities, rights, or property to which the holders of the Company's capital stock deposited hereunder are entitled, and shall distribute the same among the registered holders of Trust Interests in proportion to their interests, as shown by the books of the Trustee. Alternatively, the Trustee may in his discretion deposit such moneys, securities, rights, or property with any Federally insured bank or trust company doing business in Colorado, with authority and instructions to distribute the same as above provided, and upon such deposit all further obligations or liabilities of the Trustee in respect of such moneys, securities, rights, or property so deposited shall cease.

 

9.          Reorganization of Company.

 

If the Company is merged into or consolidated with another corporation, or all or substantially all of its assets are transferred to another corporation, then in connection with such transfer the term "Company" for all purposes of this Agreement shall be deemed to include such successor corporation, and the Trustee shall receive and hold under this Agreement any stock of such successor corporation received on account of the ownership, as Trustee hereunder, of the stock held hereunder prior to such merger, consolidation, and transfer. Trust Certificates issued and outstanding under this Agreement at the time of such merger, consolidation, or transfer may remain outstanding, or the Trustee may, in his discretion., substitute for such Trust Certificates new Trust Certificates in appropriate form, and the terms "stock" and "capital stock" as used herein shall be taken to include any stock which may be received by the Trustee in lieu of all or any part of the Company's capital stock,

 

10.         Powers of Trustee

 

(a)           Until the actual delivery to the holders of Trust Interests issued hereunder of stock certificates in exchange therefore, and until the surrender of any issued and outstanding Trust Certificates for cancellation, the Trustee shall have the right, subject to the provisions of this paragraph hereinafter set forth, to exercise, in person or by his nominees or proxies, all stockholders' voting rights and powers in respect of all stock deposited hereunder, and to take part in or consent to any corporate or stockholders' action of any kind whatsoever, The right to vote shall include the right to vote for the election of directors, and in favor of or against any resolution or proposed action of any character whatsoever, which may be presented at any meeting or require the consent of the Company's stockholders. Without limiting such general right, it is understood that such action or proceeding may include, upon terms satisfactory to the Trustee or to his nominees or proxies thereto appointed by him, mortgaging, creating a security interest ire and pledging of all or any part of the Company's property, the lease or sale of all or any part of its property, for cash, securities, or other property, and the dissolution of the Company, or its consolidation, merger, reorganization, or recapitalization.

 

  

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(b)           In voting the stock held by him hereunder either in person or by his nominees or proxies, the Trustee shall exercise his best judgment to select suitable directors of the Company, and shall otherwise, insofar as he/it may as a stockholder of the Company, take such part or action in respect to the management of its affairs as he/it may deem necessary so as to be kept advised on the affairs of the Company and its management. In voting upon any matter that may come before him at any stockholders' meeting, the Trustee shall exercise like judgment. The Trustee, however, shall not be personally liable for any action taken pursuant to his vote or any act committed or omitted to be done under this Agreement, provided that such commission or omission does not amount to willful misconduct on his part and that he/it at all times exercises good faith in such. matters.

 

11.         Transfer of Trust Shares.

 

The Trust Interests of the Shareholders may not be sold, transferred or assigned by the holder thereof; except by operation of law.

 

12.         Liability of Trustee.

 

It is the intention of the parties that the Trustee has unfettered discretion to vote the Trust Shares as he or she deems appropriate. No Trustee shall be liable to Shareholder or any other person for any loss arising out of or in connection with his or her voting of any of the Trust Shares or any other action or inaction as Trustee hereunder, unless such loss was caused by his or her gross negligence or willful misconduct The Trustee may consult with counsel of his or her choice, and shall have full and complete authorization and protection for any action taken or suffered by the Trustee under this Agreement in food faith and in accordance with the opinion of such counsel.

 

13.         Resignation of Trustee.

 

(a)           The Trustee shall have the right to resign as Trustee hereunder at any time by notice to the Trust Interest holders, such resignation to be effective at such time as a successor Trustee accepts this Agreement pursuant to Section 13 (c).

 

(b)           In the event of the resignation or inability of the Trustee to serve for any reason, the successor to the Trustee shall be the person appointed by the Trustee to serve as successor to the Trustee. Should the Trustee cease to serve without having appointed a successor, the holders of Trust Interests shall hold a meeting within sixty (60) days after the death of the Trustee for the purpose of electing a successor, or as soon thereafter as practicable. Notice of such meeting shall be delivered to each Trust Interest holder not less than ten (10) days prior thereto. The successor to the Trustee shall be the person appointed by the affirmative vote of the holders of a majority of the then outstanding Trust Interests.

 

(c)           Any person appointed as a successor Trustee hereunder shall become a Trustee only upon written acceptance of this Agreement and the rights, powers, duties and obligations of the Trustee hereunder, and the delivery of such acceptance to the preceding Trustee (if then living) and the Trust Interest holders. Each successor Trustee shall have the same rights, powers, duties and obligations as the Trustee whom such successor succeeds.

 

14.         Compensation and Reimbursement of Trustee.

 

The Trustee shall serve without compensation. The Trustee shall have the right to incur and pay such reasonable expenses and charges, to employ and pay such agents. attorneys, and counsel as he/it may deem necessary and proper to effectuate this Agreement. All such expenses or charges incurred by and due to the Trustee may be deducted from the dividends or other moneys or property received by him on the stock deposited hereunder. Nothing herein contained shall disqualify the Trustee or successor Trustees, or incapacitate him or them from serving the Company or any of its subsidiaries as officer or director, or in any other capacity, and in any such capacity receiving compensation.

 

  

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15.         Notice.

 

(a)           Unless otherwise specifically provided herein, any notice to or communication with the holders of the Trust Interests hereunder shall be deemed to be sufficiently given or made if enclosed in postpaid envelopes (regular not registered mail) addressed to such holders at their respective addresses appearing on the Trustee's transfer books, and deposited in any post office or post office box. The addresses of the holders of Trust Interests, as shown on the Trustee's transfer books, shall in all cases be deemed to be the addresses of Trust Interest holders for all purposes under this Agreement, without regard to what other or different addresses the Trustee may have for any Trust Interest holder on any other books or records of the Trustee. Every notice so given shall be effective, whether or not received, and the date of mailing shall be the date such notice is deemed given for all purposes.

 

(b)           Any notice to the Company hereunder shall be sufficient if enclosed in a postpaid envelope and sent by registered mail to the Company at such other address as the Company may designate by notice in writing to the Trustee.

 

(c)           Any notice to the Trustee hereunder may be enclosed in a postpaid envelope and sent by registered mail to the Trustee, addressed to him at such addresses as he/it may from time to time furnish in writing to the Company, and if no such address has been so furnished by the Trustee, then to him in care of the Company.

 

(d)           All distributions of cash, securities, or other property hereunder by the Trustee to the holders of Trust Interests may be made, in the Trustee's discretion, by mail (regular or registered mail, as the Trustee may deem advisable), in the same manner as hereinabove provided for the giving of notices to the holders of Trust Interests.

 

16.         Entire Agreement.

 

This Agreement supersedes all prior agreements between the parties relating to its subject matter. There are no other understandings or agreements between them concerning the subject matter. This Agreement may be amended or modified only in writing signed by all of the parties hereto.

 

17.         Non-Waiver.

 

No delay or failure by a party to exercise any right under this Agreement, and no partial or single exercise of that right, shall constitute a waiver of that or any other right, unless otherwise expressly provided herein.

 

18.         Headings.

 

Headings in this Agreement are for convenience only and shall not be used to interpret or construe its provisions.

 

17.         Governing Law.

 

This Agreement shall be construed in accordance with the laws of the State of Colorado.

 

  

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18.         Fax/Counterparts.

 

This Agreement may be executed by telex, telecopy or other facsimile transmission, and may be executed in counterparts, each of which shall be deemed an original, but all of which shall together constitute one agreement.

 

19.         Binding Effect.

 

The provisions of this Agreement shall be binding upon and inure to the benefit of each of the parties and their respective legal representatives, successors and assigns.

 

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.

	 	TRUSTEE: 
	 	 
	
 

	  
	  	
Theresa Krystofiak

	  	  
	  	
TRANSIT MANAGEMENT

	  	
HOLDING CORP.

	  	  
	  	
By: 

	
  

	  	
Chris Zueger, President

  

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