OPTION AGREEMENT (English Translation)
Exhibit
99.5
(English
Translation)
This
Option Agreement (this “Agreement”)is
entered into as of August 18,2006 between and among Hangson Limited, a
corporation organized under the laws of the British Virgin Islands
(“Party
A”),
and
Shaanxi Suo’ang Biological Science & Technology Co., Ltd., a company with
joint stock limited liability organized under the laws of the People’s Republic
of China (“Party
B”),
with
a registered address at 22F, Suite A, Zhengxin Building, No.5, Gaoxin 1st Road,
Xi’an Hi-tech Industries Development Zone, Xi’an, Shaanxi Province, People’s
Republic of China 710075, Xx. Xxxxxx Xxx, chairman and a shareholder of Party
B
(“Chairman”), and each of the shareholders of Party B listed on Appendix 1 of
this Agreement (the “Shareholders”).
In
this Agreement, Party A, Party B, the Chairman and the Shareholders are referred
to collectively in this Agreement as the “Parties”
and
each of them is referred to as a “Party”.
RECITALS
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A.
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Party
A is a business company incorporated under the laws of the British
Virgin
Islands has technological expertise in both the production and sale
of
coal-polymer (“COPO”) resin products and also in clean coal and coal water
mixture energy technology and
products.
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B.
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Party
B is a company duly incorporated in Xi’an, People’s Republic of China
(“PRC”), and is engaged in both the production and sale of COPO resin
products and also the production and sale of a coal-water mixture
for use
in energy production.
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C.
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The
Chairman and the Shareholders are the shareholders of Party B. The
Chairman and the Shareholders collectively own more than 50% of the
outstanding equity interest in Party B (each, an “Equity
Interest”
and collectively the “Equity
Interests”)
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D.
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A
series of agreements such as the Consulting Services Agreement (the
“Service
Agreement”)
have been entered into by Party A and Party B concurrently with this
Agreement;
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E.
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An
Equity Pledge Agreement (the “Pledge
Agreement”)
has been entered into by the Parties concurrently
herewith;
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F.
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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. Option
Grant.
1.1 Grant
of Rights.
The
Chairman and the Shareholders (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 by Transferor to any third party other than Party A
and/or the Designated Persons. Party B hereby agrees to the granting of the
Option by the Transferor to Party A and/or the Designated Persons. The “person”
set forth in this clause and this Agreement means an individual, corporation,
joint venture, partnership, enterprise, trust or a non-corporation
organization.
1.2 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.
1.3 Purchase
Price.
1.3.1 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.
1.3.2 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.
1.4 Transfer
of the Purchased Equity Interest.
Upon
each exercise of the Option rights under this Agreement:
1.4.1 Party
B
shall convene a shareholders’ meeting upon request by the Transferor, and
Transferor agrees to call such 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;
1.4.2 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);
2
1.4.3 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.
1.5 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.
2. Promises
Relating to Equity Interest.
2.1 Promises
Related to Party B.
Party
B, the Chairman and the Shareholders hereby promise:
2.1.1 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;
2.1.2 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;
2.1.3 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;
2.1.4 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;
2.1.5 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;
2.1.6 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 Without
prior written consent by Party A, not to provide loan or credit loan to any
others;
2.1.8 Upon
the
request of Party A, to provide all materials of operation and finance relevant
to Party B to the extent that they are in possession of such
materials;
2.1.9 To
purchase and hold the insurance from an 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;
2.1.10 Without
prior written consent by Party A, not to cause Party B to merge or associate
with any person, or acquire or invest in any person;
2.1.11 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;
2.1.12 To
cause
Party B to maintain and preserve all its assets, and 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;
2.1.13 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;
2.1.14 According
to the request of Party A, to appoint any person designated by Party A to be
the
directors of Party B.
2.2 Promises
Related to Transferor.
The
Chairman and the Shareholders hereby promise:
2.2.1 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;
2.2.2 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 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;
2.2.4 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;
2.2.5 To
cause
the Board of Directors of Party B to approve the transfer of the Purchased
Equity Interest subject to this Agreement;
2.2.6 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;
2.2.7 Upon
the
request of Party A, to appoint any person designated by Party A to be the
directors of Party B;
2.2.8 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;
2.2.9 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;
3. Representations
and Warranties.
As of
the execution date of this Agreement and every transferring date, Party B and
the Chairman and the Shareholders hereby jointly and severally represent and
warrant collectively and respectively to Party A as follows:
3.1 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;
3.2 To
its
knowledge and without independent verification, 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 a
violation of any relevant laws and regulations of PRC; (ii) conflict with its
Articles of Association or other organizational documents (if an entity); (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 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.
3.4 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;
3.5 Party
B
has complied with all PRC laws and regulations applicable to the acquisition
of
assets and securities in connection with this Agreement;
3.6 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;
3.7 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.
4. Assignment
of Agreement.
4.1 Party
B,
the Chairman and the Shareholders shall not transfer their rights and
obligations under this Agreement to any third party without the prior written
consent of the Party A.
4.2 Party
B,
the Chairman and the Shareholders hereby agree 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, the Chairman and the Shareholders by Party A, and no
any
further consent from Party B, the Chairman or the Shareholders will be
required.
5. Effective
Date and Term.
5.1 This
Agreement shall be effective as of the date first set forth above.
5.2 The
term
of this Agreement is ten (10) 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 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.
6. Applicable
Law and Dispute Resolution.
6.1 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.
6.2 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 Beijing and the
proceedings shall be conducted in Chinese. Any resulting arbitration award
shall
be final conclusive and binding upon both parties.
7. 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.
8. 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.
| Party A: | Hangson Limited |
|
Address: 0xx
Xxxxx, Xxxxxx Xxxxxxxx, Xxxx Xxxx, Xxxxxxx, Xxxxxxx Xxxxxx
Xxxxxxx
Fax:
(000)
0000-0000
Phone:
(000)
0000-0000
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| Party B: | Shaanxi Suo’ang Biological Science & Technology Co., Ltd. |
|
Address: 22F,
Suite A, Zhengxin Building, No.5, Gaoxin 1st Road,
Xi’an Hi-tech Industries Development Zone,
Xi’an, Shaanxi Province, People’s Republic of China 710075
Fax:
(000)
0000-0000
Phone:
(000)
0000-0000
|
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| Chairman: | To the address printed on the Signature Page hereto. |
| Party B Shareholders: | To the respective addresses printed on the Signature Page hereto. |
9. 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 (except that written approval of the
Shareholders shall not be required), any Party shall not disclose to any third
party any relevant materials, but the following circumstances shall be
excluded:
9.1 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);
9.2 The
materials are required to be disclosed subject to the applicable laws or the
rules or provisions of stock exchange; or
9.3 The
materials are 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.
10. 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.
11.
Miscellaneous.
11.1 Amendment,
Modification and Supplement.
Any
amendment and supplement to this Agreement shall only be effective is made
by
the Parties in writing.
11.2 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 supersede and replace all prior or
contemporaneous agreements and understandings in verb or/and in
writing.
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11.3 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.
11.4 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.
11.5 Language
and Copies.
This
Agreement has been executed in Chinese in duplicate originals; each Party holds
one (1) original and each duplicate original shall have the same legal effect.
This Agreement may also be executed in two or more counterparts, which together
shall constitute a single agreement. This Agreement and any documents relating
to it may also be executed and transmitted to any other party by facsimile,
which facsimile shall be deemed to be, and utilized in all respects as, an
original, wet-inked document and with the same legal effect as an
original.
11.6 Successor.
This
Agreement shall bind and benefit the successor of each Party and the transferee
allowed by each Party.
11.7 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.
11.8 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.
[SIGNATURE
PAGE FOLLOWS]
9
SIGNATURE
PAGE
IN
WITNESS WHEREOF,
the
parties hereof have caused this Option Agreement to be executed by their duly
authorized representatives as of the date first written above.
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PARTY
A:
|
HANGSON
LIMITED
|
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| |
|
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| By: | /s/ Baowen Ren | |
|
Name:
Baowen
Ren
Title:
President
|
||
|
PARTY
B:
|
SHAANXI
SUO’ANG BIOLOGICAL SCIENCE &
TECHNOLOGY
CO., LTD.
|
|
| |
|
|
| By: | /s/ Baowen Ren | |
|
Name:
Baowen
Ren
Title:
President
|
||
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CHAIRMAN:
|
/s/ Baowen Ren | |
|
Baowen
Ren
Address:
Xx.
0 Xxxxxxxx Xxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxxxxx Xxxx, Xxxxxxx Province,
People’s Republic of China
Tel: 8629-8406
7376
Fax:
0000-0000
0000
|
||
[SIGNATURE
PAGE CONTINUES ON THE FOLLOWING PAGE]
10
SIGNATURE
PAGE FOR SHAREHOLDERS
SHAANXI
SUO’ANG BIOLOGICAL SCIENCE & TECHNOLOGY CO., LTD.
SHAREHOLDERS:
/s/
Shaanxi Hangzhong Lanchao Garment Group Co., Ltd.
By:
Shaanxi
Hangzhong Lanchao Garment Group Co., Ltd.
(PRC
ID
Card No.: 6123002000570)
Shares
of
Shaanxi Suo’ang Biological Science & Technology Co., Ltd. owned by
Shaanxi
Hangzhong Lanchao Garment Group Co., Ltd.: RMB16,000,000
(22.86%)
/s/
Baowen Ren
By:
Baowen
Ren
(PRC
ID
Card No.: 612301700515001)
Shares
of
Shaanxi Suo’ang Biological Science & Technology Co., Ltd. owned by
Baowen
Ren:
RMB15,150,000 (21.64%)
/s/
Fuxiu Qu
By:
Fuxiu
Qu
(PRC
ID
Card No.: 612301440413042)
Shares
of
Shaanxi Suo’ang Biological Science & Technology Co., Ltd. owned
by
Fuxiu
Qu:
RMB780,000 (1.11%)
/s/
Yuan Lei
By:
Yuan
Lei
(PRC
ID
Card No.: 612301600209062)
Shares
of
Shaanxi Suo’ang Biological Science & Technology Co., Ltd. owned by
Yuan
Lei:
RMB750,000 (1.07%)
/s/
Shanqing Yong
By:
Shanqing Yong
(PRC
ID
Card No.: 612323570512001)
Shares
of
Shaanxi Suo’ang Biological Science & Technology Co., Ltd. owned by
Shanqing
Yong:
RMB750,000 (1.07%)
11
/s/
Xxxx Xxxx
By:
Xxxx
Xxxx
(PRC
ID
Card No.: 612321651228003)
Shares
of
Shaanxi Suo’ang Biological Science & Technology Co., Ltd. owned by
Xxxx
Xxxx:
RMB7,720,000 (11.03%)
/s/
Wenxia Ren
By:
Wenxia
Ren
(PRC
ID
Card No.: 612323640824222)
Shares
of
Shaanxi Suo’ang Biological Science & Technology Co., Ltd. owned by
Wenxia
Ren:
RMB650,00 (0.93%)
/s/
Xxxxxxxxx Xxx
By:
Xxxxxxxxx
Xxx
(PRC
ID
Card No.: 612301410820041)
Shares
of
Shaanxi Suo’ang Biological Science & Technology Co., Ltd. owned by
Xxxxxxxxx
Xxx:
RMB6,620,000 (9.46%)
/s/
Xxxx Xxxxx
By:
Xxxx
Xxxxx
(PRC
ID
Card No.: 612301197110190520)
Shares
of
Shaanxi Suo’ang Biological Science & Technology Co., Ltd. owned
by
Xxxx
Xxxxx:
RMB600,000 (0.86%)
/s/
Xx
Xxxx
By:
Xx
Xxxx
(PRC
ID
Card No.: 612301196510270429)
Shares
of
Shaanxi Suo’ang Biological Science & Technology Co., Ltd. owned by
Xx
Xxxx:
RMB550,000 (0.79%)
/s/
Xxxxxx Xxxx
By:
Xxxxxx
Xxxx
(PRC
ID
Card No.: 612321691226023)
Shares
of
Shaanxi Suo’ang Biological Science & Technology Co., Ltd. owned by
Xxxxxx
Xxxx:
RMB450,000 (0.64%)
12
/s/
Xxxxxx Xxxxx
By:
Xxxxxx
Xxxxx
(PRC
ID
Card No.: 000000000000000)
Shares
of
Shaanxi Suo’ang Biological Science & Technology Co., Ltd. owned
by
Xxxxxx
Xxxxx:
RMB11,480,000 (16.40%)
/s/
Xxxxxx Xxx
By:
Xxxxxx
Xxx
(PRC
ID
Card No.: 612301780220091)
Shares
of
Shaanxi Suo’ang Biological Science & Technology Co., Ltd. owned by
Xxxxxx
Xxx:
RMB8,500,000 (12.14%)
13
