OPTION AGREEMENT
OPTION
AGREEMENT
This
Option Agreement (“Option
Agreement”)
is made
as of the date set out on the signature page hereof by and between ZGS
Corporation, a Delaware corporation (the “Purchaser”)
and
General Components, Inc, a Cayman Islands corporation (the “Seller”).
WHEREAS
the Seller is receiving shares of common stock of the Purchaser, amounting,
after issuance, to 30% of the Purchaser’s issued and outstanding common shares
(representing a 15% economic interest on a fully diluted basis) (the
“15%
Stake”)
as
partial consideration for certain assets being sold by Seller and its Chinese
subsidiary to the Purchaser pursuant to the terms of an Asset Purchase
Agreement
dated on or about the date hereof (the “APA”).
WHEREAS,
in further consideration of the Purchaser’s entering into the APA and other
consideration as set out below, the Seller has agreed to grant the Purchaser
an
option (the “Option”) to purchase all the shares in the Purchaser owned by the
Seller including but not limited to the 15% Stake on the terms
hereof.
NOW
THEREFORE, in consideration of the mutual covenants herein contained and
other
good and valuable consideration, the receipt and adequacy of which are
hereby
acknowledged, the parties agree as follows:
|
1.
|
Seller
hereby grants to Purchaser the Option exercisable at any time
before the
first anniversary of the date hereof to acquire all the shares
in the
Purchaser owned by the Seller including but not limited to the
15% Stake
held by the Seller at the time the Option is
exercised;
|
| 2. |
The
Option may be exercised in whole with respect to the entire 15%
Stake only
and not in part;
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| 3. |
The
Option is exercisable at one of the following exercise prices
(the
“Exercise Price”) depending on the date the option is
exercised:
|
| (a) |
If
exercised within 6 months of the date of this agreement, a price
of
$250,000.
|
| (b) |
If
exercised after 6 months but before 9 months of the date of this
agreement, a price of $375,000.
|
| (c) |
If
exercised after 9 months but before 12 months of the date of
this
agreement, a price of
$500,000.
|
| 4. |
In
consideration for the Option, Purchaser agrees to pay Seller
US$ 1,000
within 90 days after the date of this Agreement. Seller acknowledges
and
agrees that such payment, together with the Purchaser’s agreement to
purchase assets of the Seller for US$500,000 (less certain amounts)
on the
terms set out in the APA, constitutes good and valuable consideration
for
the Option;
|
| 5. |
Upon
exercise of the Option and payment of the Exercise Price described
in 3
above, Seller shall transfer to Purchaser all of the shares of
Purchaser
owned by the Seller. Seller undertakes that during the term of
the Option,
the Seller will not sell, transfer, or borrow against, create
a lien on,
pledge over or other security interest in or otherwise encumber
its shares
in the Purchaser (including the 15%
Stake);
|
| 6. |
The
Seller represents, warrants and covenants that it has full authority
to
enter into this Option Agreement; the Board of the Seller and
any party
whose approval would be needed for this Option Agreement to be
authorised
have been fully appraised of the terms of this Option Agreement
by the
Seller and approved it; and this Option Agreement is a binding
obligation
of the Seller enforceable against the Seller in accordance with
its terms.
The Seller hereby indemnifies the Purchaser and will hold the
Purchaser
harmless, against any claim against the Purchaser or the Purchaser’s
Subsidiary or any of their shareholders or affiliates arising
out of any
breach of the representations, warranties and covenants contained
herein;
|
| 7. |
The
Seller recognises and accepts that the delivery of the Exercise
Price to
the Seller by the Purchaser, upon exercise of the Option, by
wire transfer
or any other means will be good and full consideration under
this Option
Agreement and that, upon payment of such amount, Purchaser will
be
entitled to immediately cancel any shares in the Purchaser held
by the
Seller without requiring any notification, agreement or communication
by
or from the Seller. The Seller hereby consents to such cancellation
and
gives the Purchase the Seller’s full power of attorney to act in the
Seller’s name and stead for this
purpose;
|
| 8. |
Any
notices or payment of the Exercise Price to the Seller (if made
by cheque)
shall be sent to:
|
General
Components, Inc
000
Xxxx
Xxxxxx
00xx
Xxxxx
Xxx
Xxxx
XX
00000
Attention:
Simon Mu, President
with
any
facsimile to x0(000) 000 0000;
| 9. |
Any
notices to the Purchaser shall be sent
to:
|
ZGS
Corporation
0000
Xxxxx Xxxxx
Xxxxxxx,
XX 00000
with
any
facsimile to be sent to both x0(000) 000 0000 and x00 00 0000 0000;
| 10. |
This
Agreement cannot be assigned by either
party;
|
| 11. |
This
Agreement is made and entered into in Wilmington County, Delaware
and will
be governed and construed under the laws of the State of Delaware
without
giving effect to any conflict of law, rule or principle of that
State.
Venue for any actions in construction or enforcement of this
agreement
shall be in Wilmington County,
Delaware;
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2
| 12. |
This
Agreement constitutes the entire agreement between the parties
to this
agreement regarding the Option. No amendment of this Agreement
or waiver
of any provision of this Agreement shall arise from any action
or
inaction, except for an instrument in writing expressly amending
or
waiving the relevant provisions of this Agreement executed by
the parties
hereto;
|
| 13. |
This
Agreement may be executed in multiple counterparts, each of which
shall be
deemed an original, and each of which alone, and all of which
together,
shall constitute one and the same instrument. When each party
has executed
and delivered a counterpart of this Agreement, the Agreement
shall be
fully binding on and enforceable by the parties. In making proof
of this
Agreement it shall not be necessary to produce or account for
any
counterpart other than the counterpart signed by a party against
whom this
Agreement is to be enforced; and
|
| 14. |
If
any part, article, paragraph, sentence or clause of this Agreement
shall
be held to be indefinite, invalid or otherwise unenforceable
by a court of
competent jurisdiction or by an arbitration panel, the entire
Agreement
shall not fail on account thereof and the balance of the Agreement
shall
continue in full force and effect.
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SIGNATURE
PAGE FOLLOWS
3
In
witness whereof, each of the Parties has caused this Option Agreement to be
executed on its behalf by its duly authorised officers as of September 8,
2006.
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Seller:
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Purchaser:
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||
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General
Components, Inc
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ZGS
Corporation
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| By: | By: | ||
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Simon
Mu, President
|
Xxxxx
X. Xxxxxxxxx, President
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