EXCLUSIVE OPTION AGREEMENT


Exhibit 10.11







EXCLUSIVE OPTION AGREEMENT




AMONG




XI’AN PHARMACEUTICALS DEVELOPMENT CO., LTD




AND




THE SIXTEEN PERSONS INCLUDING WANG GUOZHU




XI’AN QINBA PHARMACEUTICALS CO., LTD

 

28, October, 2008

CHINA




 

 































 




EXCLUSIVE OPTION AGREEMENT




This Exclusive Option Agreement (the “Agreement”) is entered into as of 【】 October, 2007 between the following parties.

 

			
	Party A:

	 

	Xi’an  Pharmaceuticals Development Co., Ltd. 


	 

	 

	Registered Address: Room C901, 16 Gaoxin 1 Rd., Xi’an High-Tech Zone, Xi’an, Shaanxi ,

Legal Representative: Chen Ying




 

			
	Party B:

	 

	1. Wang Guozho, a citizen of PRC with ID Card number 【[220182196302120058]

 

2. Zang Guiping, a citizen of PRC with ID Card number 【[370111196606022016]

 

3. Yan Weidong, a citizen of PRC with ID Card number 【[370104196812022910]

 

4. Zhang Yong, a citizen of PRC with ID Card number 【●[610404196907211075]

 

5. Xing Xiu’e, a citizen of PRC with ID Card number 【●[23102719440726502X]

 

6. Xu Yong, a citizen of PRC with ID Card number 【●】 [610104197007086115]

 

7. Wang Wei, a citizen of PRC with ID Card number 【●[152101196808080618]

 

8. Gao Xiling, a citizen of PRC with ID Card number 【●[610402195703122700]

 

9. Guo Chenglin, a citizen of PRC with ID Card number 【●[610403197110230058]

 

10. Wu Weiping, a citizen of PRC with ID Card number 【●[610403198202050067]

 

11. Bai Rong, a citizen of PRC with ID Card number 【●[62050319790316422X]

 

12. Wu Jin, a citizen of PRC with ID Card number 【●[610125198301140529]

 

13. Ding Zhibo, a citizen of PRC with ID Card number 【●[2310271972041055018]

 

14. Pu Feng, a citizen of PRC with ID Card number 【●[61040419700726052X]




15. Guan Zheng, a citizen of PRC an ID Car number  【●[9370111196701102030]




16 Yaing Airfang, a citizen of PRC and ID Car number 【[612621194610101027]




 

 

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	Party C:

	 

	Xi’an Qinba Pharmaceuticals Co. Ltd.


	 

	 

	Registered Address: Jingwei 10 Rd., Xi’an Economy Technology Development Zone, Xi’an, Shaanxi 

Legal Representative: Wang Guozhu







In this Agreement, Party A, Party B and Party C are called collectively as the “Parties” and each of them is called as the “Party”.




WHEREAS:




		
	1.

	Party A is a wholly foreign-owned enterprise incorporated under the laws of the People’s Republic of China (the “PRC”);







		
	2.

 

	Party C is a limited liability company incorporated in Shaanxi and with business license issued by the Shaanxi

 Municipal Administration for Industry and Commerce;







		
	3 .

	As of the date of this Agreement Party B are shareholders of Xi’an Qinba Pharmaceutical Co. Ltd. 

(hereinafter referred to as “Xi’an Pharmaceutical”) and collectively legally hold all of the equity interest of 

Xi’an Pharmaceutical. Under this Agreement, Party B, The Sixteen Persons including Wang Guozhu

 have acted collectively as one party to this Agreement;




 

NOW, THEREFORE , the Parties through mutual negotiations hereby enter into this Agreement according to the following terms and conditions:

 

		
	1.

	THE GRANT AND EXERCISE OF PURCHASE OPTION




 

    Grant: Party B hereby grant Party A an irrevocable exclusive purchase option. Party A has right to purchase all or part of the shares of Party C currently owned by any of Party B, or to purchase all or part of the assets of Party C, in each case in accordance with Article 1.3 of this contract. This purchase option is irrevocable and shall be exercised only by Party A (or the qualified persons appointed by Party A). The term “person” used herein shall include any entity, corporation, partnership, joint venture and non-corporate organizations.

 

 

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    Exercise Procedures:




    Party A shall notify Parties B in writing prior to exercising its option (the “Option Notice” hereinafter).




    The next day upon receipt of the Option Notice, Parties B and C, together with party A (or the qualified person appointed by Party A), shall promptly compile a whole set of documents (the “Transfer Documents”) to be submitted to the government bodies for approving the shares or assets transfer in connection with the Option exercise so that the shares or assets transfer can be transferred, in whole or in part.




    Upon the completion of the compilation of all the Transfer Documents and the Transfer Documents being confirmed by Party A, Parties B and C shall promptly and unconditionally obtain, together with Party A (or the qualified person appointed by Party A), all approvals, permissions, registrations, documents and other necessary approvals to effectuate the transfer of the shares and remaining assets of Party C in connection with the Option exercise.

 

Exercise Condition: Party A may immediately exercise the option of acquiring the equity interests in or remaining assets of Party C whenever Party A considers it necessary to acquire Party C and it is doable in accordance with PRC laws and regulations.

 

		
	2.

	Price of Acquisition




 

Party A and Party B shall enter into relevant agreements regarding the price of acquisition based on the circumstances of the exercise of option. Party A has the discretion to decide the time and arrangement of the acquisition, provided that the acquisition will not violate any PRC laws or regulations then in effect.




		
	3 .

	REPRESENTATIONS AND WARRANTIES







			
	 

	3.1

	Each party hereto represents to the other parties that: (1) it has all the necessary rights, powers and 

authorizations to enter into this Agreement and perform its duties and obligations hereunder; and (2) the execution or performance of this Agreement shall not violate any significant contract or agreement to which it is a 

party or by which it or its assets are bounded.




 

 

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	3.2

	Party B hereto represents to Party A that: (1) they are legally registered shareholders of Party C and have 

paid Party C the full amount of their respective portions of Party C's registered capital required under the 

PRC laws; (2) except Share Pledge Agreement, Party B has not mortgaged or pledged his shares of Party C, nor has either of them granted any security interest or borrow against his shares of Party C in any form; and (3) Party B has 

not sold or will not sell to any third party its equity interests in Party C.







			
	 

	3.3

	Party C hereto represents to Party A that: (1) it is a limited liability company duly registered and validly 

existing under the PRC law; and (2) its business operations are in compliance with applicable laws of the 

PRC in all material aspects.







		
	4 .

	COVENANTS


	 

	 


	 

	The Parties further agree as follows:




 

			
	 

	4.1

	Before Party A has acquired all the equity/assets of Party C by exercising the purchase option provided hereunder, Party C shall not:







			
	 

	4.1.1

	sell, assign, mortgage or otherwise dispose of, or create any encumbrance on, any of its assets, 

operations or any legal or beneficiary interests with respect to its revenues (unless such sale, 

assignment, mortgage, disposal or encumbrance is relating to its daily operation or has been 

disclosed to and agreed upon by Party A in writing);







			
	 

	4.1.2

	enter into any transaction which may materially affect its assets, liability, operation, 

shareholders’ equity or other legal rights (unless such transaction is relating to its 

daily operation or has been disclosed to and agreed upon by Party A in writing); and







			
	 

	4.1.3

	distribute any dividend to its shareholders in any manner.







			
	 

	4.2

	Before Party A has acquired all the equity/assets of Party C by exercising the purchase option 

provided hereunder, Party B and/or Party C shall not individually or collectively:







			
	 

	4.2.1

	supplement, alter or amend the articles of association of Party C in any manner to the 

extent that such supplement, alteration or amendment may have a material effect on 

Party C's assets, liability, operation, shareholders’ equity or other legal rights;




 

 

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	4.2.2

	cause Party C to enter into any transaction to the extent such transaction may have a material 

effect on Party C's assets, liability, operation, shareholders’ equity or other legal rights (unless such 

transaction is relating to Party C's daily operation or has been disclosed to and agreed upon by Party A 

in writing); and




 

			
	 

	4.3

	Party B shall entrust Party A to manage Party C in accordance with Entrusted Management Agreement.







		
	5 .

	ASSIGNMENT OF AGREEMENT







			
	 

	5.1

	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 Party A.







			
	 

	5.2

	Each of Party B and Party C hereby agrees that Party A shall have the right to transfer all of its rights and 

obligation under this Agreement to any third party whenever it desires. Any such transfer shall only be 

subject to a written notice sent to Party B and Party C by Party A, and no any further consent from Party B 

and Party C will be required.







		
	6 .

	CONFIDENTIALITY


	 

	 


	 

	The Parties acknowledge and confirm that 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:




 

		
	a.

	The materials is known by the public (except for any materials disclosed to the public by the Party who receives such materials) or the materials is already known by the disclosing Party or acquired by the disclosing Party from a third party lawfully in possession thereof with no obligation of confidentiality;







		
	b.

	The materials are required to be disclosed under the applicable laws or the rules or provisions of stock exchange; or







		
	c.

	The materials disclosed by each Party to its legal or financial consultant relate to the transaction contemplated under this Agreement, and such legal or financial consultant shall comply with the confidentiality set forth in this Section. The disclosure of the confidential materials by an employee of any Party shall be deemed disclosure of such materials by such Party, and such Party shall be liable for breaching the contract. This Article 6 shall survive this Agreement even if this Agreement is invalid, amended, revoked, terminated or unenforceable by any reason.




 

 

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	7 .

	BREACH OF CONTRACT







		
	 

	Any violation of any provision hereof, any incomplete or mistaken performance of any obligation 

provided hereunder, any misrepresentation made hereunder, any material nondisclosure or omission of 

any material fact, or any failure to perform any covenants provided hereunder by any Party shall 

constitute a breach of this Agreement. The breaching Party shall be liable for any such breach pursuant 

to the applicable laws.







		
	8 .

	APPLICABLE LAW AND DISPUTE RESOLUTION







			
	 

	8.1

	Applicable Law


	 

	 

	 


	 

	 

	The execution, validity, interpretation and performance of this Agreement and the disputes resolution 

under this Agreement shall be governed by the laws of PRC.




 

			
	 

	8.2

	Dispute Resolution


	 

	 

	 


	 

	 

	The parties shall strive to settle any dispute arising from the interpretation or performance of 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 shall have the right to submit such matter 

to China International Economic and Trade Arbitration Commission (the “CIETAC”) in Beijing in 

accordance with its rules. The arbitration shall take place in Beijing. The arbitration award shall be 

final, conclusive and binding upon both parties.




 

		
	9.

	EFFECTIVENESS AND TERMINATION







			
	 

	9.1

	This Agreement shall be effective upon the execution hereof by all Parties hereto and shall remain effective 

thereafter.







			
	 

	9.2

	This Agreement may not be terminated without the unanimous consent of all the Parties except that 

Party A may, by giving a thirty (30) days prior notice to the other Parties hereto, terminate this Agreement.




 

 

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	1 0.

	MISCELLANEOUS







			
	 

	10.1

	Amendment, Modification and Supplement


	 

	 

	 


	 

	 

	Any amendment and supplement to this Agreement shall be made by the Parties in writing. The amendment 

and supplement duly executed by each Party shall be deemed an integral part of this Agreement and shall 

have the same legal effect as this Agreement.




 

			
	 

	10.2

	Entire Agreement


	 

	 

	 


	 

	 

	The Parties acknowledge that this Agreement constitutes the entire agreement of the Parties with respect to 

the subject matters therein and supersedes and replaces all prior or contemporaneous agreements and 

understandings in oral or written form.




 

			
	 

	10.3

	Severability


	 

	 

	 


	 

	 

	If any provision of this Agreement is adjudicated to be invalid or non-enforceable according to relevant 

PRC laws of the PRC, such a provision shall be deemed invalid only to the extent the PRC laws are applicable 

in China, and the validity, legality and enforceability of the other provisions hereof shall not be affected or 

impaired in any way. The Parties shall, through consultation based on the principal of fairness, replace such 

invalid, illegal or non-enforceable provision with valid provision so that any substituted provision may 

bring the similar economic effects as those intended by the invalid, illegal or non-enforceable provision.




 

			
	 

	10.4

	Headings


	 

	 

	 


	 

	 

	The headings contained in this Agreement are for the convenience of reference only and shall not in 

any other way affect the interpretation, explanation or the meaning of the provisions of this Agreement.




  

			
	 

	10.6

	Successor


	 

	 

	 


	 

	 

	This Agreement shall bind and benefit the successor or the transferee of each Party.







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IN WITNESS THEREFORE , the parties hereof have caused this Agreement to be executed by their duly authorized representatives as of the date first written above.




PARTY A: Xi’an Pharmaceuticals Development Co., Ltd.  

(Seal)




Legal Representative/Authtorized Representative(Signature):      




PARTY B:







				
	/s/ Wang Guozhu 

	 
	/s/ Zhang Guiping  

	 

	Wang Guozhu 

	 
	Zhang Guiping 

	 

	 
	 
	 
	 

	/s/ Yan Weidong

	 
	/s/ Zhang Yong                  

	 

	Yan Weidong

	 
	Zhang Yong

	 

	 
	 
	 
	 

	/s/ Xing Xiu’e       

	 
	/s/ Xu Yong   

	 

	Xing Xiu’e

	 
	Xu Yong

	 

	 
	 
	 
	 

	/s/ Wang Wei   

	 
	/s/ Gao Xiling   

	 

	Wang Wei

	 
	Gao Xiling

	 

	 
	 
	 
	 

	/s/ Guo Chenglin

	 
	/s/ Wu Weiping    

	 

	Guo Chenglin

	 
	Wu Weiping

	 

	 
	 
	 
	 

	/s/ Bai Ron

	 
	/s/ Wu Jin

	 

	Bai Rong

	 
	Wu Jin

	 

	 
	 
	 
	 

	/s/ Ding Zhibo

	 
	/s/ Guan Zheng

	 

	Ding Zhibo 

	 
	Guan Zheng

	 

	 
	 
	 
	 

	/s/ Pu Feng    

	 
	/s/ Yang Aifang      

	 

	Pu Feng

	 
	Yang Aifang

	 



 




 

PARTY C: Xi’an Qinba Pharmaceuticals Co. Ltd. 

 

(seal)

 

Legal Representative/Authorized Representative(Signature):