OPTION AGREEMENT
Exhibit
10.4
This
Option Agreement (this “Agreement”) is entered into, as of January 1, 2009, in
Harbin, China between Harbin Mega Profit Management & Consultation Co.,
Ltd., with a registered address at Suite.3, 16th Floor, Hong Yang Complex
Building, No. 000 Xxxxxxxxxx Xxxx, Xxxxxxx Xx Xxxxx District, Harbin Develop
Zone, Heilongjiang, China (“Party A”), and Qinggang Mega Profit Agriculture Co.,
Ltd., with a registered address at 1st Floor, Hongbo Community Houdong, Mingzhu
Street, Qinggang County, China (“Party B”) and each of the shareholders of Party
B listed on the signature pages hereto (collectively, the “Party C”), Party A,
Party B and Party C are referred to collectively in this Agreement as the
“Parties.”
R
E C I T A L S
1.
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Party
A, a wholly foreign owned limited company incorporated under law of China,
has the expertise in the business of Enterprise Management, Enterprise
Development Designing and Economic Information
Consultation;
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2.
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Party
B is a limited company incorporated in China, and is engaged in planting
pasture grass, breeding cows and selling milk (the
“Business”);
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3.
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Party
C is the shareholders of Party B. Party C has the ownership of 100% equity
interest in Party B.(each, an “Equity Interest” and collectively the
“Equity Interest”) 4.A series agreements such as the Consulting Services
Agreement (the “Service Agreement”) have been entered into the Parties on
January 1, 2009;
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1
4.
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A
series agreements such as the Consulting Services Agreement (the “Service
Agreement”) have been entered into the Parties on January 1,
2009;
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5.
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An
Equity Pledge Agreement (the “Equity Pledge Agreement”) has been entered
into by the Parties on January 1,
2009;
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6.
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The
Parties are entering into this Option Agreement in conjunction with the
Pledge Agreement, Consulting Services Agreement and related
agreements.
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NOW, THEREFORE, the Parties to
this Agreement hereby agree as follows:
1.
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Purchase
and Sale of Equity Interest
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1.1
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Grant
of Rights. Party C (hereafter collectively the “Transferor”) hereby
irrevocably grants to Party A an option to purchase or cause any person
designated by Party A (“Designated Persons”) to purchase, to the extent
permitted under PRC Law, according to the steps determined by Party A, at
the price specified in Section 1.3 of this Agreement, at any time from the
Transferor a portion or all of the equity interests held by Transferor in
Party B (the “Option”). No Option shall be granted to any third party
other than Party A and/or the Designated Persons. Party B hereby agrees to
the granting of the Option by Party C to Party A and/or the Designated
Persons. The “person” set forth in this clause and this Agreement means an
individual person, corporation, joint venture, partnership, enterprise,
trust or a non-corporation
organization.
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2
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1.2
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Exercise
of Rights. According to the stipulations of PRC laws and regulation, Party
A and/or the Designated Persons may exercise Option by issuing a written
notice (the “Notice”) to the Transferor and specifying the equity interest
purchased from Transferor (the “Purchased Equity Interest”) and the manner
of purchase.
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1.3
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Purchase
Price.
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1.3.1
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For
Party A to exercise the Option, the purchase price of the Purchased Equity
Interest (“Purchase Price”) shall be equal to the original paid-in price
of the Purchased Equity Interest by the Transferor, unless the applicable
PRC laws and regulations require appraisal of the equity interests or
stipulate other restrictions on the purchase price of equity
interests.
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1.3.2
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If
the applicable PRC laws require appraisal of the equity interests or
stipulates other restrictions on the purchase price of the Equity Interest
at the time that Party A exercise the Option, the Parties agree that the
Purchase Price shall be set at the lowest price permissible under the
applicable laws.
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1.4
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Transfer
of the Purchased Equity Interest. Up[on each exercise of the Option rights
under this Agreement:
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1.4.1
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The
Transferor shall ask Party C to convene a shareholders’ meeting. During
the meeting, the resolutions shall be proposed, approving the transfer of
the appropriate Equity Interest to Party A and/or the Designated
Persons;
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1.4.2
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The
Transferor shall, upon the terms and conditions of this Agreement and the
Notice related to the Purchased Equity Interest, enter into Equity
Interest purchase agreement in a form reasonably acceptable to Party A,
with Party A and/or the Designated Persons (as
applicable);
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1.4.3
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The
related parties shall execute all other requisite contracts, agreements or
documents, obtain all requisite approval and consent of the government,
conduct all necessary actions, without any security interest, transfer the
valid ownership of the Purchased Equity Interest to Party A and/or the
Designated Persons, and cause Party A and/or the Designated Persons to be
the registered owner of the Purchased Equity Interest. In this clause and
this Agreement, “Security Interest” means any mortgage, pledge, the right
or interest of the third party, any purchase right of equity interest,
right of acquisition, right of first refusal, right of set-off, ownership
detainment or other security arrangements, however, it does not include
any security interest created under the Equity Pledge
Agreement.
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1.5
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Payment.
The payment of the Purchase Price shall be determined by the consultation
of Party A and/or the Designated Persons with the Transferor according to
the applicable laws at the time of exercise of the
Option.
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2.
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Promises
Relating Equity Interest.
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2.1
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Promises
Related to Party B. Party B, Party C hereby
promise:
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2.1.1
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Without
prior written consent by Party A, not, in any form, to supplement, change
or renew the Articles of Association of Party B, to increase or decrease
registered capital of the corporation, or to change the structure of the
registered capital in any other
forms;
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2.1.2
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According
to customary fiduciary standards applicable to managers with respect to
corporations and their shareholders, to maintain the existence of the
corporation, prudently and effectively operate the
business;
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2.1.3
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Without
prior written consent by Party A, not, upon the execution of this
Agreement, to sell, transfer, mortgage or dispose, in any other form, any
asset, legitimate or beneficial interest of business or income of Party B,
or encumber or approve any encumbrance or imposition of any security
interest on Party A’s assets;
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2.1.4
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Without
prior written notice by Party A, not issue or provide any guarantee or
permit the existence of any debt, other than (i) the debt arising from
normal or daily business but not from borrowing; and (ii) the debt
disclosed to Party A and obtained the written consent from Party A;
2.1.5To normally operate all business to maintain the asset value of Party
B, without taking any action or failing to take any action that would
result in a material adverse effect on the business or asset value of
Party B;
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2.1.5
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To
normally operate all business to maintain the asset value of Party B,
without taking any action or failing to take any action that would result
in a material adverse effect on the business or asset value of Party
B;
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2.1.6
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Without
prior written consent by Party A, not to enter into any material
agreement, other than agreements in the ordinary course of business (for
purposes of this paragraph, if the amount of the Agreement involves an
amount that exceeds a hundred thousand Yuan (RMB 100,000) the agreement
shall be deemed material);
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2.1.7
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Without
prior written consent by Party A, not to provide loan or credit loan to
any others;
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2.1.8
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Upon
the request of Party A, to provide all materials of operation and finance
relevant to Party B;
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2.1.9
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Purchases
and holds the insurance from the insurance company accepted by Party A,
the insurance amount and category shall be the same with those held by the
companies in the same industry or field, operating the similar business
and owning the similar properties and assets as Party
B;
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2.1.10
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Without
prior written consent by Party A, not to merge or associate with any
person, or acquire or invest in any
person;
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2.1.11
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To
notify Party A of the occurrence or the potential occurrence of the
litigation, arbitration or administrative procedure related to the assets,
business and income of Party B;
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2.1.12
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In
order to keep the ownership of Party B to all its assets, to execute all
requisite or appropriate documents, take all requisite or appropriate
actions, and pursue all appropriate claims, or make requisite or
appropriate pleas for all claims;
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2.1.13
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Without
prior written notice by Party A, not to assign equity interests to
shareholders in any form; however, Party A shall distribute all or part of
its distributable profits to their own shareholders upon request by Party
A;
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2.1.14
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According
to the request of Party A, to appoint any person designated by Party A to
be the directors of Party B.
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2.2
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Promises
Related to Transferor. Party C hereby
promise:
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2.2.1
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Without
prior written consent by Party A, not, upon the execution of this
Agreement, to sell, transfer, mortgage or dispose in any other form any
legitimate or beneficial interest of equity interest, or to approve any
other security interest set on it, with the exception of the pledge set on
the equity interest of the Transferor subject to Equity Pledge
Agreement;
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2.2.2
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Without
the prior written notice by Party A, not to decide or support or execute
any shareholder resolution at any shareholder meeting of Party B that
approves any sale, transfer, mortgage or dispose of any legitimate or
beneficial interest of equity interest, or allows any other security
interest set on it, other than the pledge on the equity interests of
Transferor pursuant to Equity Pledge
Agreement;
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2.2.3
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Without
prior written notice by Party A, the Parties shall not agree or support or
execute any shareholders resolution at any shareholder meeting of Party B
that approves Party B’s merger or association with any person, acquisition
of any person or investment in any
person;
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2.2.4
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To
notify Party A the occurrence or the potential occurrence of the
litigation, arbitration or administrative procedure related to the equity
interest owned by them;
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2.2.5
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To
cause the Board of Directors of Party B to approve the transfer of the
Purchased Equity Interest subject to this
Agreement;
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2.2.6
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In
order to keep its ownership of the equity interest, to execute all
requisite or appropriate documents, conduct all requisite or appropriate
actions, and make all requisite or appropriate claims, or make requisite
or appropriate defend against fall claims of
compensation;
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2.2.7
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Upon
the request of Party A, to appoint any person designated by Party A to be
the directors of Party B;
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2.2.8
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Upon
the request of Party A at any time, to transfer its Equity Interest
immediately to the representative designated by Party A unconditionally at
any time and abandon its prior right of first refusal of such equity
interest transferring to another available
shareholder;
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2.2.9
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To
prudently comply with the provisions of this Agreement and other
Agreements entered into collectively or respectively by the Transferor,
Party B and Party A and perform all obligations under these Agreements,
without taking any action or any nonfeasance that sufficiently affects the
validity and enforceability of these
Agreements;
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3.
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Representations
and Warranties. As of the execution date of this Agreement and every
transferring date, Party B, Party C hereby represent and warrant
collectively and respectively to Party A as
follows:
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3.1
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It
has the power and ability to enter into and deliver this Agreement, and
any equity interest transferring Agreement (“Transferring Agreement,”
respectively) having it as a party, for every single transfer of the
Purchased Equity Interest according to this Agreement, and to perform its
obligations under this Agreement and any Transferring Agreement. Upon
execution, this Agreement and the Transferring Agreements having it as a
party will constitute a legal, valid and binding obligation of it
enforceable against it in accordance with its
terms;
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3.2
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The
execution, delivery of this Agreement and any Transferring Agreement and
performance of the obligations under this Agreement and any Transferring
Agreement will not: (i) cause to violate any relevant laws and regulations
of PRC; (ii) constitute a conflict with its Articles of Association or
other organizational documents; (iii) cause to breach any Agreement or
instruments to which it is a party or having binding obligation on it, or
constitute the breach under any Agreement or instruments to which it is a
party or having binding obligation on it; (iv) cause to violate relevant
authorization of any consent or approval to it and/or any continuing valid
condition; or (v) cause any consent or approval authorized to it to be
suspended, removed, or into which other requests be
added;
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3.3
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The
shares of Party B are transferable, and Party B has not permitted or
caused any security interest to be imposed upon the shares of Party
B.
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3.4
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Party
B does not have any unpaid debt, other than (i) debt arising from its
normal business; and (ii) debt disclosed to Party A and obtained by
written consent of Party A;
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3.5
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Party
B has complied with all PRC laws and regulations applicable to the
acquisition of assets and securities in connection with this
Agreement;
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3.6
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No
litigation, arbitration or administrative procedure relevant to the Equity
Interests and assets of Party B or Party B itself is in process or to be
settled and the Parties have no knowledge of any pending or threatened
claim;
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3.7
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The
Transferor bears the fair and salable ownership of its Equity Interest
free of encumbrances of any kind, other than the security interest
pursuant to the Equity Pledge
Agreement.
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4.
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Assignment
of Agreement
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4.1
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Party
B and Party C shall not transfer their rights and obligations under this
Agreement to any third party without the prior written consent of the
Party A.
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4.2
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Party
B and Party C hereby agrees that Party A shall be able to transfer all of
its rights and obligation under this Agreement to any third party with its
needs, and such transfer shall only be subject to a written notice sent to
Party B, Party C by Party A, and no any further consent from Party B and
Party C will be required.
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5.
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Effective
Date and Term
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5.1
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This
Agreement shall be effective as of the date first set forth
above.
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5.2
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The
term of this Agreement is twenty (20) years unless the early termination
in accordance with this Agreement or other terms of the relevant
agreements stipulated by the Parties. This Agreement may be extended
according to the written consent of Party A before the expiration of this
Agreement. The term of extension will be decided unanimously through
mutual agreement of the
Parties.
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5.3
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If
Party A or Party B terminates by the expiration of its operating period
(including any extended period) or other causes in the term set forth in
Section 5.2, this Agreement shall be terminated simultaneously, except
Party A has transferred its rights and obligations in accordance with
Section 4.2 of this Agreement.
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6.
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Applicable
Law and Dispute Resolution
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6.1
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Applicable
Law. The execution, validity, construing and performance of this Agreement
and the resolution of disputes under this Agreement shall be governed by
the laws of PRC.
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6.2
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Dispute
Resolution. The parties shall strive to settle any dispute arising from
the interpretation or performance 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 (the “CIETAC”) in accordance with its rules.
Arbitration shall take place in Shanghai and the proceedings shall be
conducted in Chinese. Any resulting arbitration award shall be final
conclusive and binding upon both
parties.
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7.
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Taxes
and Expenses. Each Party shall, according to the PRC laws, bear any and
all registering taxes, costs and expenses for equity transfer arising from
the preparation and execution of this Agreement and all Transferring
Agreements, and the completion of the transactions under this Agreement
and all Transferring Agreements.
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8.
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Notices.
Notices or other communications required to be given by any party pursuant
to this Agreement shall be written in English and Chinese and delivered
personally or sent by registered mail or postage prepaid mail or by a
recognized courier service or by facsimile transmission to the address of
relevant each party or both parties set forth below or other address of
the party or of the other addressees specified by such party from time to
time. The date when the notice is deemed to be duly served shall be
determined as the follows: (a) a notice delivered personally is deemed
duly served upon the delivery; (b) a notice sent by mail is deemed duly
served the tenth (10th) day after the date when the air registered mail
with postage prepaid has been sent out (as is shown on the postmark), or
the fourth (4th) day after the delivery date to the internationally
recognized courier service agency; and (c) a notice sent by facsimile
transmission is deemed duly served upon the receipt time as is shown on
the transmission confirmation of relevant
documents.
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Party
A
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Harbin
Mega Profit Management & Consultation Co., Ltd.
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Address:
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Attn:
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Fax:
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Tel:
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Party
B:
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Qinggang
Mega Profit Agriculture Co., Ltd.
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Address:
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Attn:
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Fax:
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Tel:
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Party
C:
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Party
C1
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XXXX
Xxxxxx
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1
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Address:
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Tel:
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Fax:
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Party
C2
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WANG
Xuelong
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2
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Address:
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Tel:
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Fax:
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9.
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Confidentiality.
The Parties acknowledge and confirm any oral or written materials
exchanged by the Parties in connection with this Agreement are
confidential. The Parties shall maintain the secrecy and confidentiality
of all such materials. Without the written approval by the other Parties,
any Party shall not disclose to any third party any relevant materials,
but the following circumstances shall be
excluded:
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a.
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The
materials that is known or may be known by the general public (but not
include the materials disclosed by each party receiving the
materials);
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b.
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The
materials required to be disclosed subject to the applicable laws or the
rules or provisions of stock exchange;
or
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c.
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The
materials disclosed by each Party to its legal or financial consultant
relating the transaction of this Agreement, and this legal or financial
consultant shall comply with the confidentiality set forth in this
Section. The disclosure of the confidential materials by staff or employed
institution of any Party shall be deemed as the disclosure of such
materials by such Party, and such Party shall bear the liabilities for
breaching the contract. This clause shall survive whatever this Agreement
is invalid, amended, revoked, terminated or unable to implement by any
reason.
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10.
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Further
Warranties. The Parties agree to promptly execute documents reasonably
required to perform the provisions and the aim of this Agreement or
documents beneficial to it, and to take actions reasonably required to
perform the provisions and the aim of this Agreement or actions beneficial
to it.
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11.
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Miscellaneous.
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11.1
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Amendment,
Modification and Supplement. Any amendment and supplement to this
Agreement shall only be effective is made by the Parties in
writing.
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11.2
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Entire
Agreement. Notwithstanding the Article 5 of this Agreement, the Parties
acknowledge that this Agreement constitutes the entire agreement of the
Parties with respect to the subject matters therein and supercede and
replace all prior or contemporaneous agreements and understandings in verb
or/and in writing.
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11.3
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Severability.
If any provision of this Agreement is judged as invalid or non-enforceable
according to relevant Laws, the provision shall be deemed invalid only
within the applicable laws and regulations of the PRC, and the validity,
legality and enforceability of the other provisions hereof shall not be
affected or impaired in any way. The Parties shall, through fairly
consultation, replace those invalid, illegal or non-enforceable provisions
with valid provisions that may bring the similar economic effects with the
effects caused by those invalid, illegal or non-enforceable
provisions.
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11.4
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Headings.
The headings contained in this Agreement are for the convenience of
reference only and shall not affect the interpretation, explanation or in
any other way the meaning of the provisions of this
Agreement.
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11.5
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Language
and Copies. This Agreement has been executed in English in four (4)
duplicate originals; each Party holds one (1) original and each duplicate
original shall have the same legal
effect.
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11.6
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Successor.
This Agreement shall bind and benefit the successor of each Party and the
transferee allowed by each Party.
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11.7
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Survival.
Any obligation taking place or at term hereof prior to the end or
termination ahead of the end of this Agreement shall continue in force and
effect notwithstanding the occurrence of the end or termination ahead of
the end of the Agreement. Article 6, Article 8, Article 9 and Section 11.7
hereof shall continue in force and effect after the termination of this
Agreement.
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11.8
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Waiver.
Any Party may waive the terms and conditions of this Agreement in writing
with the signature of the Parties. Any waiver by a Party to the breach by
other Parties within certain situation shall not be construed as a waiver
to any similar breach by other Parties within other
situations.
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[SIGNATURE
PAGE FOLLOWS]
19
[Signature
Page]
IN WITNESS WHEREOF both
parties hereto have caused this Agreement to be duly executed by their legal
representatives and duly authorized representatives on their behalf as of the
date first set forth above.
PARTY
A:
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Harbin
Mega Profit Management & Consultation Co., Ltd.
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Legal/Authorized
Representative:
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/s/ XXXXX Xxx
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Name:
XXXXX Xxx
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Title:
Executive Director
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PARTY
B:
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Qinggang
Mega Profit Agriculture Co., Ltd.
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Legal/Authorized
Representative:
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/s/ XXXXX Xxx
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Name:
XXXXX Xxx
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Title:
Executive Director
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SIGNATURE PAGE FOR
SHAREHOLDERS OF PARTY B
SHAREHOLDERS
OF PARTY B:
/s/
XXXX Xxxxxx
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By:
XXXX Xxxxxx
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PRC
ID Card No.:
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Shares
of Qinggang Mega Profit Agriculture Co., Ltd. owned by XXXX
Xxxxxx: 85%
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/s/
WANG Xuelong
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By:
WANG Xuelong
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PRC
ID Card No.:
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Shares
of Qinggang Mega Profit Agriculture Co., Ltd. owned by WANG Xuelong:
15%.
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