EXCLUSIVE OPTION AGREEMENT
This
Exclusive Option Agreement (this "Agreement") is executed by and among the
parties below as of December 15th,
2006:
PARTY
A: JILIN CITY HAITIAN BUSINESS CONSULTING CO., LTD.
LEGAL
ADDRESS: Province Xx.0-0 Xxxxx-xxxxxxx Xxxxxx, Xxxxxxx Economic Development
Zone, Jilin City, China
PARTY
B: JILIN HAITIAN INDUSTRIAL COMPANY, LTD.
LEGAL
ADDRESS: Province Xx.0-0 Xxxxx-xxxxxxx Xxxxxx, Xxxxxxx Economic Development
Zone, Jilin City, China
PARTY
C: Wang Xitian
ADDRESS:
c/o Jilin Haitian Industrial Company, Ltd., Xx.0-0 Xxxxx-xxxxxxx Xxxxxx, Xxxxxxx
Economic Development Zone, Jilin City, China
PARTY
D: JILIN PROVINCE HUIZHENG VENTURE CAPITAL CO.
ADDRESS:
c/o Jilin Haitian Industrial Company, Ltd., Xx.0-0 Xxxxx-xxxxxxx Xxxxxx, Xxxxxxx
Economic Development Zone, Jilin City, China
PARTIES
E: ALL THE PERSONS EXECUTING THIS AGREEMENT UNDER THE CAPTION PARTIES E ON
THE
SIGNATURE PAGE HEREOF.
ADDRESS:
c/o Jilin Haitian Industrial Company, Ltd., Xx.0-0 Xxxxx-xxxxxxx Xxxxxx, Xxxxxxx
Economic Development Zone, Jilin City, China
In
this
Agreement, each Party A, Party B, Party C Party D and E shall be referred to
individually as a “Party”, and they shall be collectively referred to as the
“Parties”.
WHEREAS,
Party A
is a wholly foreign owned enterprise registered in The People's Republic of
China (the "PRC") under the laws of the PRC;
WHEREAS,
Advancetech Global Limited (“AGL”), an International Business Company
incorporated in the British Virgin Islands, owns all of the registered capital
of Party A;
WHEREAS,
Party B
is a domestic company with exclusively domestic capital registered in the PRC
and is engaged in the business of manufacturing fine chemicals
(“Business”);
WHEREAS,
Party A
has established a business relationship with Party B by entering into an
Exclusive Business Consulting Agreement dated as of the same date hereof
(“Consulting Agreement”), an Operating Agreement dated as of the same date
hereof, and a Technology Consulting Services Agreement dated as of the same
date
hereof (“Technology Agreement”) (collectively the foregoing agreements are
hereinafter referred to as the “Affiliation Agreements”);
WHEREAS,
Party B
is an affiliated Chinese entity of Party A;
WHEREAS,
pursuant to the Affiliation Agreements between Party A and Party B, Party B
shall pay Party A certain fees as set forth in the Affiliation Agreements,
and
Party B’s daily operations will have a material effect on its ability to pay the
fees payable to Party A;
WHEREAS,
Party C
presently owns 25.89% of the registered capital of Party B;
WHEREAS,
Party D
presently owns 45.45% of the registered capital of Party B; and
WHEREAS,
the
Persons constituting Parties E collectively own 28.66% of the registered capital
of Party B; and
WHEREAS,
Party
A, Party B, Party C, Party D and Parties E agree to further clarify matters
relating to the operation of Party B and its Business and the transfer of any
registered capital of Party B pursuant to provisions of this
Agreement.
NOW
THEREFORE,
Party
A, Party B, Party C, Party D and Parties E through negotiations hereby agree
as
follows:
1. Stock
Option Grant and Procedures
1.1. Stock
Option Grant
Party
C,
Party D and Parties E hereby irrevocably grant to Party A an irrevocable right
to purchase, or designate one or more persons (each, a "Designee") to purchase,
all of the registered capital of Party B now or hereafter owned and held by
Party C, Party D and Parties E at any time, in part or in whole, at Party A's
sole and absolute discretion to the extent permitted by the laws of The People’s
Republic of China (the “PRC”) and at the price described in Section 1.3 herein
(such rights being the "Stock Option"). Except for Party A and any Designee
of
Party A, no other person shall be entitled to such Stock Option. Party B hereby
agrees to the grant by Party C, Party D and Parties E of the Stock Option to
Party A. The term "person" as used herein shall refer to individuals,
corporations, partnerships, partners, enterprises, trusts or non-corporate
organizations.
1.2. Exercise
Procedures
Subject
to the provisions of the laws of the PRC, Party A may exercise the Stock Option
by issuing a written notice to Party C and/or Party D and/or Parties E (the
"Stock Option Notice") and specifying the portion of the registered capital
of
Party B to be purchased from Party C and/or Party D and/or Parties E (the
"Option Shares").
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1.3. Stock
Option Price
Unless
an
appraisal is required by the laws of the PRC applicable to the Stock Option
exercised by Party A, the purchase price of the Option Shares (the "Stock Option
Price") shall equal the actual capital contributions paid in by Party C and/or
Party D and/or Parties E for their respective purchase of the Option Shares
at
the time of original issuance of the registered capital by Party B. As of the
date of this Agreement, the total registered and invested capital of Party
B is
RMB55,000,000. Notwithstanding the foregoing, the Stock Option Price shall
be
the lowest price permitted to be paid by Party A to Party C, Party D and Parties
E under the applicable laws of the PRC at the time the Stock Option is
exercised. On exercise of the Stock Option hereunder, on receipt of the Stock
Option price, Party C and/or Party D and/or Parties E, as the case(s) may be,
shall promptly transfer an amount equal to the Stock Option price received
by
such Party(ies) to AGL or its designee without any consideration.
1.4. Transfer
of Option Shares
For
each
exercise of the Stock Option:
(a) Party
C,
Party D and Parties E shall cause to promptly convene a meeting of the owners
of
Party B’s registered capital, at which a resolution shall be adopted approving
Party C's and/or Party D’s and/or Parties E transfer of Option Shares to Party A
and/or any Designee;
(b) Party
C,Party D and Parties E shall execute a share transfer contract with respect
to
each transfer of Option Shares to Party A and/or any Designee (whichever is
applicable), in accordance with the provisions of this Agreement and the Stock
Option.
(c) The
relevant Parties shall take any and all necessary action and execute all other
necessary contracts, agreements or documents, obtain all necessary government
licenses and permits and take all necessary actions, to give valid ownership
of
the Option Shares to Party A and/or any Designee unencumbered by any security
interest or other encumbrance and cause Party A and/or any Designee to become
the registered owner of the Option Shares.
1.5. Payment
for the Stock Option Price
The
Stock
Option Price shall be paid in such installments as mutually agreed to by the
parties and as permitted by the laws of the PRC.
2. Covenants
by the Parties
2.1. Covenants
regarding Party B
Without
Party A’s prior written consent, Party B, Party C,Party D and Parties E hereby
covenant and agree to:
(a) Not
in
any manner supplement, change or amend the articles and bylaws or other
organizational documents of Party B, increase or decrease its registered
capital, change its structure of registered capital in any other manner, or
issue any registered capital or ownership interests of any kind in Party B
to
any persons including employees;
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(b) Maintain
Party B's corporate existence in accordance with good financial and business
standards and practices by prudently and effectively operating its business
and
handling its affairs;
(c) Not
at
any time following the date of execution hereof, sell, transfer, mortgage or
dispose of in any other manner any assets of Party B or legal or beneficial
interest in the profits, cash flow or revenues of Party B or the Business,
or
allow any encumbrance thereon of any security interest in Party B or its assets,
other than in the ordinary course of business;
(d) Not
incur, inherit, assume or undertake any debt on behalf of Party B , except
for
(i) debt incurred in the ordinary course of business; and (ii) debt already
disclosed to Party A for which Party A's written consent has been
obtained;
(e) Operate
the Business in the ordinary course of business, maintain the asset values
of
Party B and refrain from any action or omission sufficient to affect Party
B's
operating status and asset value;
(f) Not
execute or enter into any contracts or guarantees of the debt of others on
behalf of Party B, except for contracts in the ordinary course of business
(for
purpose of this subsection, a contract whose value exceeds RMB1,000,000 shall
be
deemed outside the ordinary course of business);
(g) Not
provide any person with any loan or credit made by Party B;
(h) Provide
Party A with information on Party B's business operations and financial
condition at Party A's request;
(i) At
Party
A’s request, procure and maintain insurance from an insurance carrier acceptable
to Party A, and the amount and types of coverage maintained shall be identical
to the amount and types of coverage usually maintained by companies that operate
similar businesses and hold similar properties or assets in the same area where
Party B is located;
(j) Not
cause
Party B to be merged or be consolidated with any person, or acquire any person
or make investments in any person;
(k) Immediately
notify Party A of the occurrence or possible occurrence of any litigation,
arbitration or other administrative proceedings, or governmental action relating
to Party B's assets, Business or revenue;
(l) To
maintain the ownership by Party B of all of its assets, execute all necessary
or
appropriate documents, take all necessary or appropriate actions and file all
necessary or appropriate complaints or raise necessary and appropriate defenses
against all claims;
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(m) Not
in
any manner make or declare any cash, property or stock dividends or
distributions to the shareholders of Party B;
(n) Appoint
such persons as designated by Party A to act as the directors, officers and
managers of Party B, and not declare any bonuses or increase the compensation
of
any director , officer or manager of Party B.
2.2. Covenants
regarding Party C, Party D and Parties E
Without
Party A’s prior written consent of Party B, Party C and Parties E hereby
covenant and agree to:
(a) Not
at
any time following the date of execution hereof sell, transfer, mortgage or
dispose of in any other manner any legal or beneficial interest in the
registered capital or ownership interests of Party B now or hereafter owned
and
held by Party C,Party D and/or Parties E, or allow any encumbrance on or create
any security interest in the registered capital or ownership interests of Party
B now or hereafter owned and held by Party C, Party D and/or Parties
E;
(b) Cause
the
directors of Party B not to approve the sale, transfer, mortgage or disposition
in any other manner any legal or beneficial interest in the registered capital
or ownership interests of Party B now or hereafter owned and held by Party
C,
Party D or Parties E, or allow any encumbrance on or the creation of any
security interest in the equity interests of Party B owned and held by Party
C,
Party D and/or Parties E;
(c) Cause
the
directors or managers of Party B not to approve the merger or consolidation
with
any person, or the acquisition of or investment in any person;
(d) Immediately
notify Party A of the occurrence or possible occurrence of any litigation,
arbitration or administrative proceedings relating to the equity interests
of
Party B owned and held by Party C, by Party D or Parties E;
(e) Cause
the
directors or managers of Party B to vote their approval of the transfer of
the
Option Shares as set forth in this Agreement;
(f) To
maintain Party C’s, Party D’s and Parties E ownership of registered capital or
ownership interests in Party B, execute all necessary or appropriate documents,
take all necessary or appropriate actions and file all necessary or appropriate
complaints or raise necessary and appropriate defenses against all
claims;
(g) Appoint
any designee of Party A as director or manager of Party B, at the request of
Party A;
(h) At
the
request of Party A at any time, promptly and unconditionally transfer its
registered capital or ownership interests in Party B to Party A or any Designee
at any time, and waive any right of first refusal to such transfer by any other
existing holder of Party B’s equity interests; and
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(i) Strictly
abide by the provisions of this Agreement and other contracts jointly or
separately executed by and among Party A, Party B, Party C, Party D and Parties
E, effectively perform the obligations thereunder, and refrain from any action
or omission sufficient to affect the effectiveness and enforceability
thereof.
3. Representations
and Warranties by Party B, Party C,Party D and Parties E.
Party
B,
Party C, Party D and Parties E hereby jointly and severally represent and
warrant to Party A, as of the date of execution of this Agreement and each
date
of transfer of the Option Shares, that:
(a) Each
of
them has the authority to execute and deliver this Agreement and any share
transfer contracts to which they are a Party concerning the Option Shares to
be
transferred hereunder (each, a "Transfer Contract"), and to perform their
obligations under this Agreement and any Transfer Contracts, and the execution
of this Agreement and the Transfer Contracts to which they are a Party shall
constitute their legal, valid and binding obligations and shall be enforceable
against them in accordance with the provisions thereof under the laws of the
PRC
and any other jurisdiction;
(b) The
execution and delivery of this Agreement or any Transfer Contract and the
obligations under this Agreement or any Transfer Contract shall not: (i) cause
any violation of any applicable the laws of the PRC; (ii) be inconsistent with
the articles, bylaws or other organizational documents of any Party hereto
or
any other relevant person; (iii) cause the violation of any contracts or
instruments to which they are a party or which are binding on them, or
constitute any breach under any contracts or instruments to which they are
a
party or which are binding on them; (iv) cause any violation of any condition
for the grant and/or continued effectiveness of any licenses or permits issued
to or granted by any of them; or (v) cause the suspension or revocation of
or
imposition of additional conditions to any licenses or permits issued to any
of
them;
(c) Party
B
has a good and merchantable title to all of its assets, and Party B has not
placed any encumbrances on or created any security interests in the
aforementioned assets;
(d) Party
B
does not have any outstanding debt, except for (i) debt incurred in the ordinary
course of business; and (ii) debt already disclosed to Party A for which Party
A's written consent has been obtained;
(e) Party
B
has complied with all laws and regulations of the PRC applicable to
it;
(f) There
are
no pending or possible litigation, arbitration or administrative proceedings
relating to the equity interests in Party B or the assets of Party B;
6
(g) Party
C
has good and merchantable title to 25.89% of the registered capital of Party
B,
free and clear of all encumbrances and security interests, and there are no
preemptive rights held by any person with respect to such registered
capital;
(h) Party
D
has good and merchantable title to 45.45% of the registered capital of Party
B,
free and clear of all encumbrances and security interests, and there are no
preemptive rights held by any person with respect to such registered capital;
and
(i) Parties
E
have good and merchantable title to 28.66% of the registered capital of Party
B,
free and clear of all encumbrances and security interests, and there are no
preemptive rights held by any person with respect to such registered
capital.
4. Effective
Date
This
Agreement shall take effect upon the date of execution of this Agreement and
remain effective for a term of 10 years, and shall be automatically renewed at
Party A’ election for an additional 10 year period after the initial term or on
unlimited number of 10 year periods after any renewal term. During the term
of
this Agreement or any renewal term, Party B, Party C, Party D and Parties E
shall not terminate this Agreement. Notwithstanding the above stipulation,
Party
A shall have the right to terminate this Agreement at any time by issuing a
thirty days prior written notice to Party B, Party C, Party D and Parties
E.
5. Applicable
Laws; Resolution of Disputes
5.1. Applicable
Laws
The
execution, effectiveness, construction and performance of this Agreement and
the
resolution of disputes hereunder shall be subject to the protection and
jurisdiction of formally published and publicly available laws of the PRC.
Matters not covered by formally published and publicly available laws of the
PRC
shall be governed by international legal principles and practices.
5.2. Methods
of resolution of disputes
The
parties shall strive to settle any dispute arising from the interpretation
or
performance, or in connection with this Agreement through friendly negotiation.
In case no settlement can be reached through negotiation, either party may
submit such dispute to China International Economic and Trade Arbitration
Commission ("CIETAC") for arbitration in accordance with the current rules
of
CIETAC. The arbitration proceedings shall take place in Hong Kong and shall
be
conducted in English. The arbitration award shall be final and binding upon
the
parties.
6. Taxes
and
Fees
Each
Party shall pay any and all transfer and registration tax, expenses and fees
incurred thereby or levied thereon in accordance with the laws of the PRC in
connection with the preparation and execution of this Agreement and the Transfer
Contracts, as well as the consummation of the transactions contemplated under
this Agreement and the Transfer Contracts.
7
7. Notices
Any
notice which is given by any of the parties hereto for the purpose of performing
the rights, duties and obligations hereunder shall be in writing in English.
Where such notice is delivered personally, the time of notice is the time when
such notice actually reaches the addressee; where such notice is transmitted
by
telex or facsimile, the notice time is the time when such notice is transmitted.
If such notice does not reach the addressee on a business day or reaches the
addressee after normal business hours, the next business day following such
day
is the date of notice. The delivery place is the address first written above
of
the parties hereto or the address advised in writing from time to time. The
writing form includes facsimile and telex.
8. Confidentiality
The
Parties acknowledge that any oral or written information exchanged among them
with respect to this Agreement is confidential information. Each Party shall
maintain the confidentiality of all such information, and without obtaining
the
written consent of other Parties, shall not disclose any relevant information
to
any third parties, except in the following circumstances: (a) such information
is or will be in the public domain (provided that this is not the result of
a
public disclosure by the receiving party); (b) information disclosed as required
by applicable laws or rules or regulation of any stock exchange; or (c)
information required to be disclosed by any Party to its legal counsel or
financial advisor regarding the transaction contemplated hereunder, and such
legal counsel or financial advisor are also required to be bound by
confidentiality duties similar to the duties in this section. Disclosure of
a
secret by the staff members or agents hired by any Party shall be deemed
disclosure of a secret by such a Party, which shall be held liable for breach
of
this Agreement. This section shall survive the termination of this Agreement
for
any reason.
9. Further
Assurances
The
Parties agree to promptly execute documents that are reasonably required for
the
implementation of the provisions and purposes of this Agreement or that are
conducive thereto, and take further actions that are reasonably required for
the
implementation of the provisions and purposes of this Agreement or that are
conducive thereto.
10. Miscellaneous
10.1. Amendments,
Changes and Supplements
Any
amendments, changes and supplements to this Agreement shall require the
execution of a written agreement in English by all of the Parties.
8
10.2. Compliance
with Laws
Each
of
the Parties shall comply with all formally published and publicly available
laws
and regulations of the PRC and ensure that the operations of each of the Parties
are in compliance with all formally published and publicly available laws and
regulations of the PRC.
10.3. Entire
Agreement
Except
for any written amendments, supplements or changes executed after the execution
of this Agreement, this Agreement shall constitute the entire agreement reached
by and among the Parties hereto with respect to the subject matter thereof,
and
shall supercede all prior oral and written consultations, representations and
contracts reached with respect to the subject matter of this
Agreement.
10.4. Headings
The
headings of this Agreement are for convenience only, and shall not be used
to
interpret, explain or otherwise affect the meanings of the provisions of this
Agreement.
10.5. Languages
This
Agreement is executed in English only, and the executed English language
Agreement shall prevail in all cases. This Agreement may be executed in one
or
more counterparts, each of which shall constitute one and the same agreement,
and by facsimile or electronic signature.
10.6. Severability
In
the
event that one or several of the provisions of this Agreement are ruled invalid,
illegal or unenforceable in any aspect in accordance with any laws or
regulations, the validity, legality or enforceability of the remaining
provisions of this Agreement shall not be affected or compromised in any aspect.
The Parties shall strive in good faith to replace such invalid, illegal or
unenforceable provisions with effective provisions, and the economic effect
of
such effective provisions shall be as close as possible to the economic effect
of those invalid, illegal or unenforceable provisions.
10.7. Successors
This
Agreement shall be binding on and shall inure to the interest of the respective
successors of the Parties and the permitted assigns of such Parties.
10.8. Survival
(a) Any
obligations that occur or that are due as a result of this Agreement upon the
expiration or early termination of this Agreement shall survive the expiration
or early termination thereof.
(b) The
provisions of Articles 5 and 8 and this Section 10.8 shall survive the
termination of this Agreement.
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10.9. Waivers
Any
Party
may waive the terms and conditions of this Agreement, provided that such a
waiver must be provided in writing in English and shall require the signatures
of the Parties. No waiver by any Party in certain circumstances with respect
to
a breach by other Parties shall operate as a waiver by such a Party with respect
to any similar breach in other circumstances.
[Remainder
of this page intentionally left blank.]
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IN
WITNESS WHEREOF, the Parties have caused their respective duly authorized
representatives to execute this Agreement as of the date first above
written.
PARTY
A: JILIN CITY HAITIAN BUSINESS CONSULTING CO., LTD
| By: /s/ Wang Xxxxxx | |||
|
Xxxx
Xitian, Chairman and CEO
|
PARTY
B: JILIN HAITIAN INDUSTRIAL COMPANY, LTD.
| By: /s/ Wang Xxxxxx | |||
|
Xxxx
Xitian, Chairman and CEO
|
PARTY
C:
| /s/ Wang Xxxxxx | |||
|
Xxxx
Xitian
|
PARTY
D: JILIN
PROVINCE HUIZHENG VENTURE CAPITAL CO.
| By: /s/ Wang Xxxxxx | |||
|
Xxxx Xitian, Chairman
|
PARTIES
E:
Jilin
Province Huizheng Venture Capital Co., Ltd
| By: /s/ Wang Xxxxxx | |||
|
Xxxx
Xitian, Chairman
|
| /s/ Wang Xxxxxx | |||
|
Xxxx
Xitian
|
| /s/ Xxx Xxxxxxx | |||
|
Xxx Xxxxxxx |
11
| /s/ Cui Xxxxxx | |||
|
Xxx Youzhi |
|
/s/
Jin Yuanjie
|
|||
|
Jin
Yuanjie
|
| /s/ Song Xxxxxx | |||
|
Song
Xxxxxx
|
| /s/ Xxxx Xxxxx | |||
|
Xxxx Xxxxx |
| /s/ Xxx Xxxx | |||
|
Xxx Xxxx |
| /s/ Cui Qingchun | |||
|
Cui Qingchun |
| /s/ Wang Xxxxxxx | |||
|
Xxxx Zhenyun |
| /s/ Zhang Xxxxx | |||
|
Xxxxx Lijun |
|
/s/
Sha Li
|
|||
|
Sha
Li
|
| /s/ Guo Xxxxxx | |||
|
Xxx
Guizhi
|
| /s/ Xxx Xxxxxxx | |||
|
Xxx
Xxxxxxx
|
12
| /s/ Wang Xxxxx | |||
|
Xxxx Decai |
| /s/ Xxxx Xxxxxxx | |||
|
Xxxx Xxxxxxx |
| /s/ Xxxx Xxxxxx | |||
|
Xxxx Xxxxxx |
| /s/ Wang Xxxxx | |||
|
Xxxx Xijun |
| /s/ Xxxx Xxxxxxx | |||
|
Xxxx
Xxxxxxx
|
| /s/ Xxxx Xxxxxx | |||
|
Xxxx Kaixia |
| /s/ Xxx Xxxxxx | |||
|
Xxx Xxxxxx |
| /s/ Zou Changkai | |||
|
Zou Changkai |
| /s/ Xxx Xxxxxx | |||
|
Xxx Xxxxxx |
| /s/ Lv Nali | |||
|
Lv Nali |
| /s/ Gao Xxxxxxx | |||
|
Xxx Meixian |
| /s/ Xxxx Xxxxxx | |||
|
Xxxx Xxxxxx |
13
| /s/ Xxxx Xxxxxx | |||
|
Xxxx Xxxxxx |
| /s/ Xxx Xxxxxx | |||
|
Xxx Xxxxxx |
| /s/ Zhang Dianhuai | |||
|
Zhang Dianhuai |
| /s/ Xxxx Xxxxxx | |||
|
Xxxx Xxxxxx |
| /s/ Song Xinhua | |||
|
Song Xinhua |
|
/s/
Xxxx
Xxxxxxxx
|
|||
|
Xxxx Xxxxxxxx |
| /s/ Xxxx Xxxxx | |||
|
Xxxx Xxxxx |
| /s/ Sun Yanhong | |||
|
Sun Yanhong |
| /s/ Jin Yushu | |||
|
Jin Yushu |
| /s/ Liu Xxxxx | |||
|
Xxx Zhong |
| /s/ Xxx Xxxxxxx | |||
|
Xxx Xxxxxxx |
14
| /s/ Xxxx Xxxxx | |||
|
Xxxx Xxxxx |
| /s/ Xxx Xxxxxxx | |||
|
Xxx Zhenjin |
| /s/ Gao Meishun | |||
|
Gao Meishun |
| /s/ Ren Fengqin | |||
|
Ren Fengqin |
| /s/ Zhou Yaquan | |||
|
Zhou Yaquan |
| /s/ Xxxx Xxxx | |||
|
Xxxx Xxxx |
| /s/ Xxxx Xxxxxxxx | |||
|
Xxxx Xxxxxxxx |
| /s/ Xxxxx Xxxxx | |||
|
Xxxxx Xxxxx |
| /s/ Zhang Xxxxxx | |||
|
Xxxxx Yitang |
| /s/ Xxxx Xx | |||
|
Xxxx Xx |
15
