RESTATED PLEDGE AND CONVERSION RIGHT AGREEMENT
Exhibit
99.5
AGREEMENT
made this 23th day of October, 2008, by and between ▇▇▇▇▇▇▇ ▇▇, whose address
is
▇/▇ ▇▇▇▇▇ Wind Systems, Inc., No. 9 Yanyu Middle Road, Qianzhou Village,
Huishan
District, Wuxi City, Jiangsu Province, People’s Republic of China (“WU”),
and Eos Holdings LLC, whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇ (“Eos”).
W
I T N E
S S E T H:
WHEREAS,
pursuant to a purchase agreement (the “Purchase Agreement”) dated the date of
this Agreement between Eos and China Wind Systems, Inc., a Delaware corporation
(the “Company”), of which WU is the chief executive office and principal
stockholder, Eos purchased the Company’s 17.4% Subordinated Note due April 22,
2009 in the principal amount of $575,000; and
WHEREAS,
in connection with the Note, WU has agreed to permit Eos to convert the Note
as
provided in this Agreement, and, to provide for such conversion, WU has
delivered 1,437,500 shares of the Company’s common stock (the “Pledged Shares”)
owned by him pursuant to an escrow agreement as hereinafter provided;
and
WHEREAS,
the Pledged Shares, together with a stock power, are to be held in escrow,
but
shall remain in the name of WU; and
WHEREAS,
this Agreement shall amend and restate in its entirety the Pledge and Conversion
Right Agreement executed on October 17, 2008;
WHEREFORE,
the parties do hereby agree as follows:
1. Grant
of Conversion Right.
(a) WU
hereby
grants to Eos the right to convert any or all of the principal amount of
the
Note into Pledged Shares at any time or from time to time until the Note
shall
be paid in full or until Eos shall have exercised the conversion right in
full.
(b) Eos
shall
have the right to convert all or any portion of the principal amount of the
Note
into Pledged Shares at a conversion price of $0.40 per share (the “Conversion
Price”). The number of Pledged Shares to be delivered shall be determined by
dividing the principal amount of the Note being converted by the Conversion
Price, with any fractional shares being rounded up if the fraction is ½ share or
more and rounded down if the fraction is less than ½ share.
(c) The
Pledged Shares shall be held in escrow with Sichenzia ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LLP,
as escrow agent (the “Escrow Agent”), pursuant to an escrow agreement between
WU, Eos and the Escrow Agent. WU and Eos understand that the Escrow Agent
is
counsel for the Company. The parties agree that the escrow agreement is hereby
amended to increase the number of shares to be held in escrow to 1,437,500
shares.
(d) The
number of Pledged Shares and the conversion price per share shall be subject
to
adjustment in the event of any stock split, dividend or distribution or any
reverse split or combination of shares or any recapitalization.
2. Representations
and Warranties of WU.
WU
hereby represents and warrants that the Pledged Shares are duly and validly
authorized and issued, fully paid and non-assessable; WU has good and marketable
title to all of the Pledged Shares free and clear of all liens and encumbrances
other than as provided in this Agreement, and WU has full legal right, power
and
authority to pledge the Pledged Shares; the execution, delivery and performance
by WU of this Agreement and the pledge of the Pledged Shares do not and will
not
result in any violation of any material agreement, indenture or other
instrument, license, judgment, decree, order, law, statute, ordinance or
other
governmental rule or regulation applicable to WU nor the performance with
its
obligations hereunder will make WU insolvent.
3. Voting
Rights; Rights to Dividends and Distributions.
All
dividends and distributions payable or paid by the Company (other than dividends
and distributions paid in shares of capital stock of the Company which shall
be
held in the same manner as the Pledged Shares with respect to which such
shares
are issued), excluding any liquidating distributions shall be paid to, and
retained by WU, and WU shall have the right to vote the Pledged
Shares.
4. Exercise
of Conversion Right.
Eos may
exercise its conversion right pursuant to this Agreement by notice to WU
and the
Escrow Agent stating that the conversion right is being exercised as to some
or
all of the principal amount of the Note and setting forth the principal amount
being converted.
5. Delivery
of Pledged Shares to WU on Termination of this Agreement.
This
Agreement shall terminate when Note has been converted pursuant to this
Agreement or when Eos shall have exercised its rights under this Agreement.
Upon
termination of this Agreement, all Pledged Shares remaining in escrow shall
be
delivered to WU.
6. Miscellaneous.
(a) This
Agreement shall in all respects be construed and interpreted in accordance
with,
and the rights of the parties shall be governed by, the laws of the State
of New
York applicable to contracts executed and to be performed wholly within such
State. The parties consent to the exclusive jurisdiction of the United States
District Court for the Southern District of New York and Supreme Court of
the
State of New York in the County of New York in any action relating to or
arising
out of, this Agreement. Each party agrees that any process in any action
commenced in such court under this Agreement may be served upon it personally,
by certified or registered mail, return receipt requested, or by messenger
or
overnight courier service which obtains evidence of delivery or attempted
delivery, with the same full force and effect as if personally served upon
WU in
New York City or Suffolk County, as the case may be. Each party hereby waives
any claim that the jurisdiction of any such tribunal is not a convenient
forum
for any such action and any defense of lack of in personam
jurisdiction with respect thereto.
(b) This
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties.
(c) Each
party hereby agrees, at its own expense, to execute and deliver, from time
to
time, any and all further, or other instruments, and to perform such acts,
as
the other party may reasonably request to effect the purposes of this Agreement
and to secure to Eos the benefits conferred upon Eos by the terms of this
Agreement.
(d) All
requests, notices and other communications provided for in this Agreement
shall
be in writing signed by the party giving such notice, and delivered personally
or sent by overnight courier or messenger service which obtains evidence
of
delivery or attempted delivery or sent by registered or certified mail (air
mail
if overseas), return receipt requested, or by facsimile transmission or similar
means of communication if receipt is acknowledged or transmission is confirmed
by mail as provided in this Paragraph 6(d). Notices shall be deemed to have
been
received on the date of personal delivery, or if sent by certified or registered
mail, return receipt requested, shall be deemed to be delivered on the third
business day after the date of mailing. Notices shall be sent to the parties
at
their addresses set forth in the beginning of this Agreement, or, if by
telecopier, to WU at ( ) - , and to Eos at (▇▇▇) ▇▇▇-▇▇▇▇, or to such other
address or telecopier number as either party shall designate in the manner
provided in this Paragraph 6(d).
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(e) This
Agreement constitutes the entire agreement of the parties as to the subject
matter hereof, superseding any and all prior or contemporaneous oral or prior
written agreements, letters of intent or understandings. This Agreement may
not
be amended or modified nor may any provision of this Agreement be waived
except
by an instrument which is designated as an amendment, modification or waiver
hereof, refers to this Agreement and is signed by both parties in the case
of an
amendment or modification, and by the party granting the waiver in the case
of a
waiver.
(f) This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original, and it shall not be necessary in making
proof
of this Agreement to produce or account for more than one such
counterpart.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first written.
| /s/ ▇▇▇▇▇▇▇ ▇▇ | ||
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▇▇▇▇▇▇▇ ▇▇
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| EOS HOLDINGS LLC | ||
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| By: | /s/ ▇▇▇ ▇▇▇▇▇▇ | |
|
▇▇▇ ▇▇▇▇▇▇, Managing Member |
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