Document:

Equity Pledge Agreement

                       Equity Pledge Agreement

                         (English Version)

This Equity Pledge Agreement (the "Agreement") is entered into as of 

December 20, 2006, among the following three parties:

 

PARTY A: Longdan International Inc.

Legal Address: Renaissance Trust Ltd, Solomon Building, P. O. Box 636, 

Main Street, Charlestown, Nevis.  

PARTY B: Hubei Longdan Biological Medicine Technology Co. Ltd.

Legal Address: Floor 21, Jiangtian Building, No. 586 Wuluo Road, 

Wuchang District, Wuhan, Hubei, China, 430070                  

PARTY C: Zhilin Zhang, Chairman and an authorized person to represent  

shareholders of Party B, who collectively own more than 50% of the 

outstanding equity interests in Party B.

Legal Address: No.1, 2nd Floor, 308 Qing Tai Road, Hanyang, Wuhan, 

Hubei China

                

WHEREAS, Party A, ( the Pledgee ) is a business company incorporated 

under the laws of Nevis, and has entered a series of agreement, 

collectively the "Main Agreements" , which include "Exclusive Consult 

and Services Agreement", "Operating Agreement" and "Exclusive Option 

Agreement", and "Proxy Agreement", with Part B, or Part B and Part B's 

shareholders together, concurrently with this Agreement.

  

WHEREAS, Party B is a company with exclusively domestic capital 

registered in the People's Republic of China, and is engaged in the 

business of Chinese medicine development, manufacturing, sale, and 

pharmacy management distribution network;

WHEREAS, Party C ( the Pledgor ) represents more than 50% equity 

interest of Party B, and agrees to provide security of pledge over the 

equity interests for the performance of payment obligations of Party B 

under the "Exclusive Consult and Services Agreement", and Party A 

agrees to accept such security of pledge.

WHEREAS,  "Agreement Letter for Equity Pledge Agreement" as showed in 

the appendix is an integral part of this Agreement and has the same 

legal effects as the other parts of the Agreement. Part C will legally 

represent any shareholder of Part B, who signs the "Agreement Letter 

for Equity Pledge Agreement", in this Agreement.

NOW THEREFORE, Party A, Part B and Part C through negotiations hereby 

agree as follows through mutual negotiations:

         

1.   Pledge     

     

     1.1 In order to ensure that Part B will perform its payment to 

Part A under Exclusive Consult and Services Agreement and other 

obligation under the Main Agreements, Party C (the Pledgors) agrees to 

provide security of pledge over 100% of the equity interests it holds 

in Party B ("Pledged Equity Interests") to Party A (the Pledgee). 

Pledge under this Agreement refers to the rights owned by the Pledgee, 

who shall be entitled to a priority in receiving payment by the 

evaluation or proceeds from the auction or sale of the equity interests 

pledged by the Pledgors to the Pledgee. 

     1.2 The Parties confirm that all members in Party C undertake the 

obligations under the security pledge independently. Such members shall 

not be jointly and severally liable for such obligations.  

2.   Term of Pledge     

     

     2.1 This Agreement shall be effective from the date when all 

parties sign the Agreement and the said equity interests pledges are 

recorded in the register of shareholders of Party B and the term is two 

(2) years until all the obligations of Party B under Main Agreements 

(including all amendments and supplementary contracts to Main 

Agreements) are fulfilled. 

     2.2 During the term of pledge, in the event that Party B fails to 

perform any obligations under Main Agreements, Party A shall have the 

right to sell or dispose of the pledged assets in accordance with 

relevant laws. 

3.   Registration

     3.1 Party C guarantees to Party A that its implementation of its 

obligations under this Agreement have been formally approved and/or 

will be formally approved by the shareholders meeting of Party B. 

     3.2 After this Agreement effective, Party C will register equity 

interests pledge hereof with the shareholder register of Party B. 

     

     3.3 Party C shall deliver to Party A Party C's physical possession 

of their investment certificates in Party B and shareholders register 

of Party B. 

     

     3.4 The Party A shall be entitled to collect any and all dividends 

for declared or paid in connection with the equity interests.

4.   Party C's Representation 

     4.1  Party C is the legal owner of the equity interests pledged.

     4.2  Party C has not placed any other pledge on the pledged equity 

interests, except for the pledge provided hereunder.

     

5.   Party C's Warrants and Undertakings

     In the term of this Agreement, Party C guarantees to Party A that 

the Pledgors will:

     

     5.1 Not transfer the pledged equity interests, or establish or 

permit the creation of any guaranty on the pledged equity interests, 

unless otherwise agreed by both Parties, or with Party A's prior 

written consent;

     5.2 Comply with and implement all the People's Republic of China's 

Laws and regulations concerning the pledge of rights, and in the case 

of receiving any notice, order or suggestion made by the governmental 

authority, provide to Party A within 5 calendar days upon receiving 

them, and pursuant to Party A's reasonable requests or with Party A's 

consent comply with, or suggest arguments and representations against 

such notice, order or suggestion.

     5.3 Upon Party A's request, honestly sign, and urge other persons 

with interests to the pledge to sign, all certificates of rights, 

agreements and covenants in connection with the performance of this 

Agreement, and encourage other persons with interests to the pledge to 

take any action in relation to the enforcement of this Agreement and 

facilitate Party A's exercising of its rights under this Agreement. 

     5.4 Perform all the guarantees, covenants, and warranties as 

specified in Main Agreements, for the benefits of the Part A. The Part 

C shall compensate all the losses suffered by the Part A for the 

reasons that the Part C does not fully perform the guarantees, 

covenants, and warranties as specified in Main Agreements.

     

6.   Transfer

     6.1 Party B shall not have the right to donate or transfer any 

rights and obligations under this Agreement unless with Party A's prior 

written consent.

     6.2 This Agreement shall be binding upon Party C and its 

successors, and also binding upon Party A and its successors.

     6.3 Party A, at any time, may assign all or any of its rights and 

obligations under this Agreement, to a designated person, or persons. 

Where Party A transfers its rights and obligations under this Agreement, 

Party B and Part C shall, upon Party A's request, execute agreements 

concerning said transfer.

     

7.   Confidentiality

     The Agreement itself and relevant materials of this Agreement 

shall be held confidential by all the Parties and shall not be 

disclosed to any third party excluding senior officers, directors, 

shareholders, agents and professional consultants. If any Party is 

required by People's Republic of China Laws or other jurisdictional 

laws to disclose any information in connection with this Agreement to 

the public, or to file this Agreement with the regulatory authorities 

involved, that Party shall not be subject to this Article. 

    

     This Article shall survive any amendment, supplementary or 

termination of this Agreement

     

8.   Language

     This Agreement is written in both Chinese and English, and 

executed in Chinese only, and the executed Chinese language Agreement 

shall prevail in all cases. This Agreement is executed in three 

originals and each Party holds one original. Each original has the same 

legal effect. 

9.   Amendments and Supplementary Agreements 

     Parties may negotiate and enter any amendments of this Agreement, 

or supplementary agreements on matters not agreed upon herein. Any 

amendments of this Agreement, or supplementary agreements shall be 

valid only when made in writing and signed by all parties. Any 

amendments of this Agreement, or supplementary contracts have equal 

effect as this Agreement.

 

10.  This Agreement shall be governed by, and construed in 

accordance with the laws of the People's Republic of China.

11.  Settlement of Dispute

   

     The parties shall strive to settle any dispute arising from, out 

of or in connection with the interpretation or performance of this 

Agreement through friendly negotiation. In case no settlement can be 

reached through negotiation within six months, each party can submit 

such matter to China International Economic and Trade Arbitration 

Commission (the "CIETAC"). The arbitration shall follow the current 

rules of CIETAC. The arbitration award shall be final and binding upon 

the parties and shall be enforceable in accordance with its terms.

12.  Force Majeure

     Force Majeure means any event that is beyond the party's 

reasonable control and cannot be prevented with reasonable care, such 

as the acts of nature: earthquake, flood, typhoon, fire, explosion, and 

acts of governments, war, and acts of terrorism or other civil unrest 

means. If a Force Majeure event exists and affects the performance of 

this Agreement, the affected party shall immediately notify the other 

parties by means of telegraph, e-mail or other electronic forms, and 

shall furnish sufficient evidence in writing of the occurrence of the 

Force Majeure event within twenty (20) calendar days thereafter. 

According to the impact of the Force Majeure on the performance of this 

Agreement, the Parties determine whether to release this Agreement. 

After the event of Force Majeure is removed, all parties agree to 

resume performance of this Agreement with their best efforts.  

13.  Capable of Severing 

     Any of the provisions of this Agreement will be deemed as capable 

of severing in the jurisdiction where it conflicts with the laws in 

such jurisdiction. The invalid or unenforceable effect of such 

provision in one jurisdiction should not be affected that in other 

jurisdictions.

           (A Signature Page Follows)

               

                 Signature Page

IN WITNESS WHEREOF the Part A, Part B and Part C hereto have caused 

this Agreement to be duly executed on their behalf by a duly authorized 

representative as of the date first written above.

Party A (Pledgee):  Longdan International Inc.

          

By: /s/ Zhilin Zhang

Zhilin Zhang

Chairman

Party B:  Hubei Longdan Biological Medicine Technology Co. Ltd.

          

By: /s/ Zhilin Zhang 

Zhilin Zhang

Chairman

Party C (Pledgors):  Shareholders of Part B

By: /s/ Zhilin Zhang 

Zhilin Zhang

An authorized representative of the majority shareholders

 

                   (An Appendix Page Follows) 

Appendix: Form of Agreement Letter for Equity Pledge Agreement

             

             Agreement Letter for Equity Pledge Agreement

               ( English Version, for Reference only )

To:

 Hubei Longdan Biological Medicine Technology Co. Ltd. and Longdan 

International Inc.

     I, as the shareholder of Hubei Longdan Biological Medicine 

Technology Co. Ltd., hereby agree and confirm as follows: 

 

    I have read the full text of Equity Pledge Agreement, and I fully 

agree to all contents of this agreement.

     I assign Zhilin Zhang, Chairman of Hubei Longdan Biological 

Medicine Technology Co. Ltd. to represent me with the Common stock 

shares specified at the bottom of this agreement, together with Hubei 

Longdan Biological Medicine Technology Co. Ltd. to sign the Equity 

Pledge Agreement with Longdan International Inc.

     I agree to sign or provide necessary documents to perform the 

Equity Pledge Agreement.

Signature:                          

Print Name:

Identity Card Number:

Information of Possession of Common Stocks of Hubei Longdan Biological 

Medicine Technology Co. Ltd. :

Class of Common Stocks:                  Number of Shares:

Percentage of Voting Power:

Date: December 20, 2006Exclusive Option Agreement

                        Exclusive Option Agreement

                          (English Version)

This Exclusive Option Agreement (the "Agreement") is entered into as of 

December 20, 2006, among the following three parties:

PARTY A: Longdan International Inc.

Legal Address: Renaissance Trust Ltd, Solomon Building, P. O. Box 636, 

Main Street, Charlestown, Nevis.  

PARTY B: Hubei Longdan Biological Medicine Technology Co. Ltd.

Legal Address: Floor 21, Jiangtian Building, No. 586 Wuluo Road, 

Wuchang District, Wuhan, Hubei, China, 430070                  

PARTY C: Zhilin Zhang, Chairman and an authorized person to represent  

shareholders of Party B, who collectively own more than 50% of the 

outstanding equity interests in Party B.

Legal Address: No.1, 2nd Floor, 308 Qing Tai Road, Hanyang, Wuhan, 

Hubei China

 

WHEREAS, Party A is a business company incorporated under the laws of 

Nevis;

  

WHEREAS, Party B is a company with exclusively domestic capital 

registered in the People's Republic of China, and is engaged in the 

business of Chinese medicine development, manufacturing, sale and 

pharmacy management distribution network;

WHEREAS, Part A has entered a series of agreements, collectively the 

"Main Agreements", which include "Exclusive Consult and Services 

Agreement", "Operating Agreement" and "Equity Pledge Agreement", and 

"Proxy Agreement", with Part B, or Part B and Part B's shareholders 

together, concurrently with this Agreement;

 

WHEREAS, Party C represents more than 50% equity interest of Party B 

and agrees to provide security of pledge over the equity interests for 

the performance of payment obligations of Party B under the Main 

Agreements, and Party A agrees to accept such security of pledge, as 

specified in an Equity Pledge Agreement;

WHEREAS,  "Agreement Letter for Exclusive Option Agreement" as showed in 

the appendix is an integral part of this Agreement and has the same 

legal effects as the other parts of the Agreement. Part C will legally 

represent any shareholder of Part B, who signs the "Agreement Letter 

for Exclusive Option Agreement", in this Agreement.

NOW THEREFORE, Party A, Part B and Part C through negotiations hereby 

agree as follows through mutual negotiations:

1.    Stock Option Grant

   

      Part C hereby irrevocably grant to Party A, or one or more 

persons (each, a "Designee") designated by Part A, an option (the 

"Stock Option") to purchase, up to the maximum permitted by the laws of 

The People's Republic of China (the "PRC"), all of the registered 

capital of Party B now or hereafter owned and held by Party C at any 

time, in part or in whole, at Party A's sole instruction and at the 

price described in Article 3 herein. Such Stock Option shall not be 

entitled to any other person except for Party A and its Designee. Party 

B hereby agrees to the grant by Party C of the Stock Option to Party A. 

All the rights of the Stock Option of Party A under this Agreement 

shall be exclusive and irrevocable.

  

2.   Exercise Stock Option 

     2.1 When signing this Agreement, Party B and Part C shall also 

execute the "Agreement Letter for Exclusive Option Agreement" according 

to Appendix attached hereto, and submits all signed documents to Party 

A for safekeeping.

     2.2 If Party A decides to exercise the Stock Option pursuant to 

Article 1 hereinabove, it shall send written notice to Party B, which 

specifies the quantity of the registered capital of Part B to be 

acquired and identifies the transferee. Party B and Party C shall 

furnish all materials and documents necessary for the registration of 

said registered capital transfer within 10 business days after the date 

of Party A's notice.

3.   Price

     The total purchasing price for the Stock Option shall be the 

lowest price allowable under the PRC Laws at the time of said 

purchasing. All the taxes, and other expenses arising from the excising 

of the Stock Option shall be the sole responsibility of the Party in 

accordance with the PRC Laws 

4.   Confidentiality

      

     The Agreement itself and relevant materials of this Agreement shall 

be held confidential by all the Parties and shall not be disclosed to any 

third party excluding senior officers, directors, shareholders, agents 

and professional consultants. If any Party is required by PRC Laws or 

other jurisdictional laws to disclose any information in connection with 

this Agreement to the public or shareholders, or to file this Agreement 

with the regulatory authorities involved, that Party shall not be subject 

to this Article. 

     

     This Article shall survive any amendment, supplementary or 

termination of this Agreement.

5.    Effective Date And Term

   

      This Agreement shall come into effect as of the date first present 

above. The term of this Agreement is ten (10) years, and shall be 

automatically renewed for additional ten (10) year period upon the 

initial expiration of the initial term hereof or any renewal term, except 

earlier termination happens any time as set forth in Article 6 of this 

Agreement.

 

6.

Termination

     

      During the initial or any renewal term of this Agreement, Party B 

and Part C shall not elect to terminate this Agreement. Notwithstanding 

the above stipulation, Party A shall have the right to terminate this 

Agreement with or without any reason at any time by definitely giving 

Party B and Part C a written notice thirty days prior to the termination.

7.    Transfer

      7.1 Party B and Part C shall not have the right to transfer any 

rights and obligations to any third party under this Agreement unless 

with Party A's prior written consent;

      7.2 This Agreement shall be binding upon Party C and its successors, 

and also binding upon Party A and its successors.

      7.3 Party A, at any time, may assign all or any of its rights and 

obligations under this Agreement, to any third party. Where Party A 

transfers its rights and obligations under the this Agreement, Party B 

and Part C shall, upon Party A's request, execute agreements concerning 

said transfer.

8.    Language

      This Agreement is written in both Chinese and English, and executed 

in Chinese only, and the executed Chinese language Agreement shall 

prevail in all cases. This Agreement is executed in three originals and 

each Party holds one original. Each original has the same legal effect. 

9.    Amendments and Supplementary Agreements 

      Parties may negotiate and enter any amendments of this Agreement, or 

supplementary agreements on matters not agreed upon herein. Any 

amendments of this Agreement, or supplementary agreements shall be valid 

only when made in writing and signed by all parties. Any amendments of 

this Agreement, or supplementary contracts have equal effect as this 

Agreement.

 

10.   This Agreement shall be governed by, and construed in accordance 

with the laws of the People's Republic of China.

11.   Settlement of Dispute

   

      The parties shall strive to settle any dispute arising from, out of 

or in connection with the interpretation or performance of this Agreement 

through friendly negotiation. In case no settlement can be reached 

through negotiation within six months, each party can submit such matter 

to China International Economic and Trade Arbitration Commission (the 

"CIETAC"). The arbitration shall follow the current rules of CIETAC. The 

arbitration award shall be final and binding upon the parties and shall 

be enforceable in accordance with its terms.

12.   Force Majeure

 

      Force Majeure means any event that is beyond the party's reasonable 

control and cannot be prevented with reasonable care, such as the acts of 

nature: earthquake, flood, typhoon, fire, explosion, and acts of 

governments, war, and acts of terrorism or other civil unrest means. If a 

Force Majeure event exists and affects the performance of this Agreement, 

the affected party shall immediately notify the other party by means of 

telegraph, e-mail or other electronic forms, and shall furnish sufficient 

evidence in writing of the occurrence of the Force Majeure event within 

twenty (20) calendar days thereafter. According to the impact of the 

Force Majeure on the performance of this Agreement, the Parties determine 

whether to release this Agreement. After the event of Force Majeure is 

removed, both parties agree to resume performance of this Agreement with 

their best efforts.  

13.   Capable of Severing 

Any of the provisions of this Agreement will be deemed as capable of 

severing in the jurisdiction where it conflicts with the laws in such 

jurisdiction. The invalid or unenforceable effect of such provision in 

one jurisdiction should not be affected that in other jurisdictions.

                  

             

                        (A Signature Page Follows)

               

                 Signature Page

IN WITNESS WHEREOF the Part A, Part B and Part C hereto have caused this 

Agreement to be duly executed on their behalf by a duly authorized 

representative as of the date first written above.

Party A:  Longdan International Inc.

          

By: /s/ Zhilin Zhang 

Zhilin Zhang

Chairman

Party B:  Hubei Longdan Biological Medicine Technology Co. Ltd.

          

By: /s/ Zhilin Zhang 

Zhilin Zhang

Chairman

Party C:  Shareholders of Part B

By: /s/ Zhilin Zhang 

Zhilin Zhang

An authorized representative of the majority shareholders

              (An Appendix Page Follows)

Appendix: Form of Agreement Letter for Exclusive Option Agreement

             

              Agreement Letter for Exclusive Option Agreement

                ( English Version, for Reference only )

 

To:

 Hubei Longdan Biological Medicine Technology Co. Ltd. and Longdan 

International Inc.

     I, as the shareholder of Hubei Longdan Biological Medicine 

 Technology Co. Ltd., hereby agree and confirm as follows: 

     

     1. I have read the full text of Option Agreement, and I fully 

agree to all contents of this agreement.

     2. I assign Zhilin Zhang, Chairman of Hubei Longdan Biological 

Medicine Technology Co. Ltd. to represent me with the Common stock 

shares specified at the bottom of this agreement, together with Hubei 

Longdan Biological Medicine Technology Co. Ltd. to sign the Exclusive 

Option Agreement with Longdan International Inc.

     3. I agree that other shareholders of Hubei Longdan Biological 

Medicine Technology Co. Ltd. ("other shareholders") transfer equity 

interests of Hubei Longdan Biological Medicine Technology Co. Ltd. held 

by them to Longdan International Inc. or the third party prescribed by 

Longdan International Inc. 

     4. I agree to waive my preemptive right when the other 

shareholders transfer their equity interests to Longdan International 

Inc. or a third party designated by Longdan International Inc. 

     5. I agree to sign or provide necessary documents for the purpose 

of going through the registration of said transfer when the other 

shareholders transfer their equity interests to Longdan International 

Inc. or the third party prescribed by Longdan International Inc. 

This Agreement Letter shall be effective from the signing date. 

Signature:                          

Print Name:

Identity Card Number:

Information of Possession of Common Stocks of Hubei Longdan Biological 

Medicine Technology Co. Ltd. :

Class of Common Stocks:                  Number of Shares:

Percentage of Voting Power:

Date: December 20, 2006

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