OPTION AGREEMENT
This
Option Agreement (this “Agreement”) is entered into, as of December 28, 2005, in
Shanghai, China by and among Haie Hi-tech Engineering (Hong Kong) Company
Limited, with a registered address at FLAT/RM B 20/F Public Bank Centre,
120 Des
Voeux Road Central, HK, China (“Party A”), Shanghai Xin Ye Environmental
Protection Engineering Technology Co., Ltd. with a registered address at,
0xx
Xxxxx, Xx.000 Xx Xxxx Xxxx, Xxxxxxxx, Xxxxx (“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.”
RECITALS
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1.
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Party
A, a limited company incorporated under law of Hong Kong, has the
expertise in the business of Engineering and Investment;
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2.
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Party
B is a limited company incorporated in China, and is engaged in
technical
services and business consultation in specific areas of energy
resources,
environmental protection facilities and computer science, the sale
of
chemical raw materials and products øhazardous substance exclusively÷(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”)
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4.
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A
series agreements such as the Consulting Services Agreement (the
“Service
Agreement”) have been entered into the Parties on March 7, 2008;
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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 March 7, 2008;
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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:
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1.
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Purchase
and Sale of Equity Interest
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1
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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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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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2
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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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3
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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;
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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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4
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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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5
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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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7
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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 execution.
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5.2
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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
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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 Beijing 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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9
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Party
A:
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Haie
Hi-tech Engineering (Hong Kong) Company Limited
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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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Shanghai
Xin Ye Environmental Protection Engineering Technology 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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WU
Qinghuan
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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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ZHOU
Jialing
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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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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
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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]
12
[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.
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PARTY
A:
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Haie
Hi-tech Engineering (Hong Kong) Company Limited
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Legal/Authorized
Representative: /s/ WU
Qinghuan
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Name:
WU Qinghuan
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Title:
Director
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PARTY
B:
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Shanghai
Xin Ye Environmental Protection Engineering Technology Co., Ltd.
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Legal/Authorized
Representative: /s/ WU
Qinghuan
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Name:
WU Qinghuan
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Title:
Executive Director
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13
SIGNATURE
PAGE FOR SHAREHOLDERS OF PARTY B
PARTY
C:
SHAREHOLDERS
OF PARTY B:
/s/
WU
Qinghuan
By:
WU
Qinghuan
PRC
ID
Card No.: 320112194610111693
Shares
of
Shanghai Xin
Ye
Environmental Protection Engineering Technology
Co.,
Ltd. owned by WU Qinghuan: 100%
14
