Document:

Unassociated Document

 

EXECUTION VERSION

 

Option Agreement

 

This Option Agreement (this “Agreement”) is entered into by and among Guangzhou Kanghui Agricultural Technology Co., Ltd. (“Kanghui”), Guangzhou Tanke Industry Co., Ltd. (“Tanke”), and the undersigned shareholders of Tanke (collectively the “Shareholders”) as of January 3, 2011 in Guangzhou, the People’s Republic of China (the “PRC” or “China”). Kanghui, Tanke and the Shareholders are each referred to in this Agreement as a “Party” and collectively as the “Parties”.

 

RECITALS

 

a)           Tanke is a company incorporated in China, and is engaged in the business of development and research regarding technology of premixed additive feed and feed additive; distribution and retail, and import and export of goods and technology (the “Business”). Kanghui, a company incorporated in the PRC as a wholly foreign-owned enterprise, has the expertise in consultancy of agricultural technology and animal husbandry technology. Kanghui and Tanke has entered into a Consulting Services Agreement to provide Tanke with various consulting services in connection with the Business.

 

b)           Kanghui, a company incorporated in the PRC as a wholly owned foreign invested enterprise, has the expertise in consultancy of agricultural technology and animal husbandry technology.

 

c)           The Shareholders collectively holds 100% of the issued and outstanding equity interests of Tanke (collectively the “Equity Interest”).

 

d)           The Parties are entering into this Agreement in connection with the Consulting Services Agreement.

 

NOW, THEREFORE, the Parties to this Agreement hereby agree as follows:

 

1.           PURCHASE AND SALE OF EQUITY INTEREST

 

1.1   Grant of rights. The Shareholders hereby collectively and irrevocable grant to Kanghui or a designee of Kanghui (the “Designee”) an option to purchase at any time, to the extent permitted under PRC Law, all or a portion of the Equity Interest in accordance with such procedures as determined by Kanghui, at the price specified in Section 1.3 of this Agreement (the “Option”). No Option shall be granted to any party other than to Kanghui and/or a Designee. Tanke hereby agrees to the grant of the Option by the Shareholders to Kanghui and/or the Designee. As used herein, the Designee may be an individual person, a corporation, a joint venture, a partnership, an enterprise, a trust or an unincorporated organization.

 

 

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1.2   Exercise of rights.  Subject to the requirements of applicable PRC laws and regulations, Kanghui and/or the Designee may exercise the Option at any time by issuing a written notice (the “Exercise Notice”) to one or more of the Shareholders and specifying the amount of the Equity Interest to be purchased from such Shareholder(s) and the manner of purchase.

 

1.3   Purchase Price

 

1.3.1           The purchase price of the Equity Interest pursuant to an exercise of the Option shall be equal to the capital paid in by the Shareholders, adjusted pro rata for purchase of less than all of the Equity Interest, unless applicable PRC laws and regulations require an appraisal of the Equity Interest or stipulate other restrictions regarding the purchase price of the Equity Interest.

 

1.3.2           If the applicable PRC laws and regulations require an appraisal of the Equity Interest or stipulate other restrictions regarding the purchase price of the Equity Interest at the time Kanghui and/or the Designee exercises the Option, the Parties agree that the purchase price shall be set at the lowest price permissible under the applicable laws and regulations.

 

1.4   Transfer of Equity Interest. For each exercise of the Option under this Agreement, upon an Exercise Notice issued by Kanghui:

 

1.4.1           The Shareholders shall hold or cause to be held a meeting of shareholders of Tanke in order to adopt such resolutions as necessary in order to approve the transfer of the relevant Equity Interest (such Equity Interest is hereinafter referred to as the “Purchased Equity Interest”) to Kanghui and/or the Designee and each shall waive the respective right of first refusal;

 

1.4.2           The relevant Parties shall, enter into an Equity Interest Purchase Agreement, in a form reasonably acceptable to Kanghui, setting forth the terms and conditions for the sale and transfer of the Purchased Equity Interest;

 

1.4.3           The relevant Parties shall execute, without any Security Interest (as defined below), all other requisite contracts, agreements or documents, obtain all requisite approval and consent of the government, conduct all necessary actions, transfer the valid ownership of the Purchased Equity Interest to Kanghui and/or the Designee, and cause Kanghui and/or the Designee to be the registered owner of the Purchased Equity Interest. As used herein, the “Security Interest” means any mortgage, pledge, the right or interest of a 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, such term shall not include any Security Interest created under that certain Equity Pledge Agreement dated as of January 3, 2011 by and among the Parties (the “Pledge Agreement”).

 

 

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2.           REPRESENTATIONS RELATING TO EQUITY INTEREST

 

2.1   Tanke’s representations. Tanke hereby represents and warrants as follows:

 

2.1.1           Without Kanghui’s prior written consent, the articles of association of Tanke (the “AOA”) shall not be supplemented, changed or renewed in any way, Tanke’s registered capital shall not be increased or decreased, and the structure of the registered capital shall not be changed in any form;

 

2.1.2           To maintain the corporate existence of Tanke and to prudently and effectively operate the Business in accordance with customary fiduciary standards applicable to management with respect to corporations and their shareholders;

 

2.1.3           Without Kanghui’s prior written consent, upon the execution of this Agreement, to not sell, transfer, mortgage, create pledges, liens, or any other encumbrance on or dispose, in any other form, any asset, legitimate or beneficial interest of the Business or income, or encumber or approve any encumbrance or imposition of any Security Interest on Tanke’s assets;

 

2.1.4           Without Kanghui’s prior written consent, not to issue or provide any guarantee or permit the existence of any debt, other than (i) such debt that may arise from Tanke’s normal or daily business (except for a loan); and (ii) such debt which has been disclosed to Kanghui before this Agreement;

 

2.1.5           To operate and conduct all business operations in the ordinary course of business, without damaging Tanke’s business or the value of its assets;

 

2.1.6           Without Kanghui’s prior written consent, not to enter into any material agreements, other than agreements entered into in the ordinary course of business (for the purpose of this paragraph, if any agreement for an amount in excess of One Hundred Thousand Renminbi (RMB 100,000) shall be deemed a material agreement);

 

2.1.7           Without Kanghui’s prior written consent, not to provide loan or credit to any other party or organization;

 

2.1.8           To provide Kanghui with all relevant documents relating to its business operations and finance at the request of Kanghui;

 

2.1.9           To purchase and maintain general property insurance of the type and amount comparable to those held by companies in the same industry, with similar business operations and assets as Tanke, from an insurance company approved by Kanghui;

 

2.1.10           Without Kanghui’s prior written consent, not to enter into any merger, cooperation, acquisition or investment;

 

 

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2.1.11           To notify Kanghui of the occurrence or the potential occurrence of any litigation, arbitration or administrative procedure relating to Tanke’s assets, business operations and/or income;

 

2.1.12           In order to guarantee the ownership of Tanke’s assets, to execute all requisite or relevant documents, take all requisite or relevant actions, and make and pursue all relevant claims;

 

2.1.13           Without Kanghui’s prior written notice, not to assign the Equity Interest in any form; however, Tanke shall distribute dividends to the Shareholders upon the request of Kanghui; and

 

2.1.14           In accordance with Kanghui’s request, to appoint any person designated by Kanghui to be a management member of Tanke.

 

2.2   Shareholders’ representations. The Shareholders hereby represent and warrant as follows:

 

2.2.1           Without Kanghui’s prior written consent, upon the execution of this Agreement, not to sell, transfer, mortgage, create pledges, liens, or any other encumbrance on or dispose in any other form any legitimate or beneficial interest of the Equity Interest, or to approve any Security Interest, except as created pursuant to the Pledge Agreement;

 

2.2.2           Without Kanghui’s prior written notice, not to adopt or support or execute any shareholders resolution at an meeting of the shareholders of Tanke that seeks to approve any sale, transfer, mortgage or disposal of any legitimate or beneficial interest of the Equity Interest, or to allow any attachment of Security Interests, except as created pursuant to the Pledge Agreement;

 

2.2.3           Without Kanghui’s prior written notice, not to agree or support or execute any shareholders resolution at any meeting of the shareholders of Tanke that seeks to approve Tanke’s merger, cooperation, acquisition or investment;

 

2.2.4           To notify Kanghui the occurrence or the potential occurrence of any litigation, arbitration or administrative procedure relevant to the Equity Interest;

 

2.2.5           To cause the board of directors Tanke to approve the transfer of the Purchased Equity Interest pursuant to this Agreement;

 

2.2.6           In order to maintain the ownership of Equity Interest, to execute all requisite or relevant documents, conduct all requisite or relevant actions, and make all requisite or relevant claims, or make all requisite or relevant defenses against all claims of compensation;

 

2.2.7           Upon the request of Kanghui, to appoint any person designated by Kanghui to be a director of Tanke;

 

 

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2.2.8    Without Kanghui’s prior written consent, not to dispose or cause the management of Tanke to dispose any asset of Tanke (other than in the ordinary course of business); and

 

2.2.9           To prudently comply with the provisions of this Agreement and any other agreements entered into with Kanghui and Tanke in connection therewith, and to perform all obligations under all such agreements, without taking any action or nonfeasance that may affect the validity and enforceability of such agreements.

 

3.           REPRESENTATIONS AND WARRANTIES

 

As of the execution date of this Agreement and on each transfer of the Purchased Equity Interest pursuant to an exercise of the Option, Tanke and the Shareholders hereby represent and warrant as follows:

 

3.1   Such Parties shall have the power and ability to enter into and deliver this Agreement and to perform their respective obligations thereunder, and at each transfer of Purchased Equity Interest, the relevant Equity Interest Purchase Agreement and to perform their obligations thereunder. Upon execution, this Agreement and each Equity Interest Purchase Agreement will constitute legal, valid and binding obligations and be fully enforceable in accordance with their terms.

 

3.2   The execution and performance of this Agreement and any Equity Interest Purchase Agreement shall not: (i) violate any relevant laws and regulations of the PRC; (ii) conflict with the Articles of Association or other organizational documents of Tanke; (iii) cause to breach any agreement or instrument or having any binding obligation on it, or constitute a breach under any agreement or instrument or having any binding obligation on it; (iv) breach relevant authorization of any consent or approval and/or any effective conditions; or (v) cause any authorized consent or approval to be suspended, removed, or cause other added conditions;

 

3.3   The Equity Interest is transferable in whole and in part, and neither Tanke nor the Shareholders have permitted or caused any Security Interest to be imposed upon the Equity Interest other than pursuant to the Pledge Agreement;

 

3.4   Tanke does not have any unpaid debt, other than (i) such debt that may arise during the ordinary course of business; and (ii) debt either disclosed to Kanghui before this Agreement or incurred pursuant to Kanghui’s written consent;

 

3.5   Tanke has complied with all applicable PRC laws and regulations in connection with this Agreement;

 

3.6   There are no pending or ongoing litigation, arbitration or administrative procedures with respect to Tanke, its assets or the Equity Interest, and Tanke and the Shareholders have no knowledge of any pending or threatening claims to the best of their knowledge; and

 

 

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3.7   The Shareholders own the Equity Interest free and clear of encumbrances of any kind, other than the Security Interest pursuant to the Pledge Agreement.

 

4.           ASSIGNMENT OF AGREEMENT

 

4.1   Tanke and the Shareholders shall not transfer their rights and obligations under this Agreement to any third party without Kanghui’s prior written consent.

 

4.2   Tanke and the Shareholders hereby agrees that Kanghui shall be entitled to transfer all of its rights and obligations under this Agreement to any third party, and such transfer shall only be subject to a written notice of Kanghui to Tanke and the Shareholders without any further consent from Tanke or the Shareholders.

 

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 shall commence from the effective date and shall last for the maximum period of time permitted by law unless it is early terminated in accordance with this Agreement.

 

6.           APPLICABLE LAW AND DISPUTE RESOLUTION

 

6.1   Applicable law. The execution, validity, interpretation and performance of this Agreement and the dispute resolution under this Agreement shall be governed by the laws of the PRC.

 

6.2   Dispute resolution. The Parties agree that in the event a dispute shall arise from this Agreement, the Parties shall settle their dispute through amicable negotiations and/or arbitration in accordance with this Clause 10. If the Parties fail to reach a settlement within thirty (30) days following the negotiations, the dispute shall be submitted to be determined through arbitration by China International Economic and Trade Arbitration Commission (“CIETAC”), Shanghai Branch, in accordance with CIETAC arbitration rules. There shall be three (3) arbitrators. Kanghui, and all the Shareholders collectively as one side, shall each select one (1) arbitrator, and both arbitrators shall be selected within thirty (30) days after giving or receiving the demand for arbitration. The chairman of the CIETAC shall select the third arbitrator. If a Party fails to appoint an arbitrator within thirty (30) days after giving or receiving the demand for arbitration, the relevant appointment shall be made by the chairman of the CIETAC. The arbitration shall be conducted in Shanghai. The award of CIETAC is final and shall be conclusively binding upon the Parties and shall be enforceable in any court of competent jurisdiction. For avoidance of doubt, Tanke, who may or may not select arbitrator, shall be bound by the award of CIETAC.

 

 

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7.           TAXES AND EXPENSES

 

Each Party shall, in accordance with PRC laws, bear any and all registration taxes, costs and expenses for the transfer of Equity Interest arising from the preparation, execution and completion of this Agreement and all Equity Interest Purchase Agreement.

 

8.           NOTICE

 

Notice 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 by a recognized courier service or by facsimile transmission to the address of the relevant Party set forth below. 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 third (3rd) day after the date; and (c) a notice sent by facsimile transmission is deemed duly served upon the time shown on the transmission confirmation of relevant documents.

 

To Kanghui

	
  

	
Address:

	
No 281, Building 2, Changxing Road, Tianhe District, Guangzhou

	
  

	
Attn:

	
Chun Rui Wu

	
  

	
Fax:

	
+86-20-38859482

	
  

	
Tel:

	
+86-20-38859499

To Tanke

	
  

	
Address:

	
Room 2801, East Tower of Hui Hao Building, No. 519 Machang Road, Pearl River New City, Guangzhou, PR China 510627

	
  

	
Attn:

	
Guixiong Qiu

	
  

	
Fax:

	
+86-20-38859077

	
  

	
Tel:

	
+86-20-38859025

 

To the Shareholders

	
  

	
Address:

	
Room 2801, East Tower of Hui Hao Building, No. 519 Machang Road, Pearl River New City, Guangzhou, PR China 510627

	
  

	
Attn:

	
Guixiong Qiu

	
  

	
Fax:

	
+86-20-38859077

	
  

	
Tel:

	
+86-20-38859025

 

 

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9.           CONFIDENTIALITY

 

The Parties of this Agreement shall acknowledge and ensure the confidentiality of all oral and written materials exchanged relating to this Agreement. No Party shall disclose the confidential information to any other third party without the other Party’s prior written approval, unless: (a) it is already in the public domain at the time when it is communicated (unless it enters the public domain without the authorization of the disclosing Party); (b) the disclosure is in response to the relevant laws, regulations, or stock exchange rules; or (c) the disclosure is required by any of the Party’s legal counsel or financial consultant for the purpose of the transaction of this Agreement. However, such legal counsel and/or financial consultant shall also comply with the confidentiality as stated hereof. The disclosure of confidential information by employees of hired institutions of the disclosing Party is deemed to be an act of the disclosing Party, and such disclosing Party shall bear all liabilities of the breach of confidentiality. This provision shall survive even if certain clauses of this Agreement are subsequently amended, revoked, terminated or determined to be invalid or unable to implement for any reason.

 

10.           FURTHER WARRANTIES

 

The Parties agree to promptly execute such documents as required to perform the provisions of this Agreement, and to take such actions as may be reasonably required to perform the provisions of this Agreement.

 

11.           MISCELLANEOUS

 

11.1   Amendment, modification and supplement. Any amendments and supplements to this Agreement shall only take effect if executed by all Parties in writing.

 

11.2   Entire agreement. Notwithstanding Section 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 supersedes and replaces all prior agreements and understandings, whether oral or in writing.

 

11.3   Severability. If any provision of this Agreement is deemed invalid, illegal or non-enforceable according with relevant laws, such 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 reasonable negotiation, replace such invalid, illegal or non-enforceable provisions with valid provisions in order to bring similar economic effects of those replaced provisions.

 

11.4   Headings. The headings contained in this Agreement are for reference only and shall not affect the interpretation and explanation of the provisions in this Agreement.

 

11.5   Language and copies. This Agreement shall be executed in English in six (6) originals each of which shall have the same legal effect. Each Party shall hold one (1) original.

 

11.6   Successor. This Agreement shall be binding on the successors of each Party and the transferee allowed by each Party.

 

11.7              Survival. Each Party shall continue to perform its obligations notwithstanding the expiration or termination of this Agreement. Section 6, Section 8, Section 9 and Section 11.7 hereof shall continue to be in full force and effect after the termination of this Agreement.

 

 

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11.8   Waiver. Any Party may waive the terms and conditions of this Agreement in writing with the written approval of all the other Parties. Under certain circumstances, any waiver by a Party to the breach of other Parties shall not be construed as a waiver of any other breach by any other Parties under similar circumstances.

 

[No Text Below]

 

 

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Option Agreement

 

[Signature Page]

 

IN WITNESS THEREOF this Agreement is duly executed by each Party or its legal representatives on the date first set forth above.

 

 

Guangzhou Kanghui Agricultural Technology Co., Ltd.

 

 

	/s/ Chun Rui Wu	 

Name: Chun Rui Wu

Title:

 

 

Guangzhou Tanke Industry Co., Ltd.

 

 

	/s/ Guixiong Qiu	 

Name: Guixiong Qiu

Title: CEO and President

 

 

[Signature of Shareholders of Tanke]

 

 

	/s/ Guixiong Qiu	 

 

Qiu Guixiong

 

ID Card No.:

 

Owns 45% of the Equity Interest

 

 

Signature page to Option Agreement

 

 

 

 

 

[Signature Page continued]

 

 

	/s/ Gao Bi	 

 

Gao Bi

 

ID Card No.:

 

Owns 32% of the Equity Interest

 

 

	/s/ Liang Xiuzhen	 

 

Liang Xiuzhen

 

ID Card No.:

 

Owns 20% of the Equity Interest

 

	/s/ Teng Bing	 

 

Teng Bing

 

ID Card No.:

 

Owns 3% of the Equity Interest

 

 

Signature page to Option AgreementUnassociated Document

 

EXECUTION VERSION

 

Call Option Agreement

 

This Call Option Agreement (this “Agreement”) is entered into as of January 3rd, 2011 by and among:

 

	
(i)

	
Golden Genesis Limited (the “Golden Genesis” or “Grantor”), a British Virgin Islands company;

 

	
(ii)

	
Qiu Guixiong, Gao Bi, Liang Xiuzhen and Teng Bing, all Chinese nationals (collectively the “Grantees” or separately a “Grantee”); and

 

	
(iii)

	
Wong Kwai Ho (“Ms. Wong”), a Hong Kong resident.

 

The Grantor, the Grantees and Ms. Wong are each referred to in this Agreement as a “Party” and collectively as the “Parties”.

 

RECITALS

 

Whereas, Ms. Wong owns 100% of the issued and outstanding shares of the Grantor;

 

Whereas, the Grantor is the principal shareholder of China Flying Development Limited (“China Flying”), a Hong Kong company;

 

Whereas, China Flying intends to complete a transaction with Greyhound Commissary, Inc., a public shell company of the United States (the “U.S.”) whose common stock (the “Common Stock”) is traded on the OTCBB market (the “Public Company”), as a result of which China Flying will become a wholly-owned subsidiary of the Public Company and the Grantor will become a significant shareholder of the Public Company;

 

Whereas, the Grantor has agreed to grant to the Grantees, and the Grantees have agreed to accept from the Grantor, an option (the “Option”) to purchase certain number of shares of Common Stock of the Public Company (the "Option Shares") as set forth in Schedule A to this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

1.           DEFINITIONS

 

1.1.           Defined terms. In this Agreement (including the Recitals and the Schedules), unless the context otherwise requires, the following words and expressions shall have the following meanings:

 

"Business Day" means a day (other than Saturdays, Sundays and public holidays) on which banks are generally open for business in China;

 

"China" or "PRC" means the People's Republic of China, not including Hong Kong, Macau and Taiwan;

 

"Completion Date" means the date falling seven (7) Business Days after the service of the Exercise Notice by any or all of the Grantees on the Grantor;

 

"Completion" means the completion of the sale to and purchase by any or all of the Grantees of the Option Shares under this Agreement;

 

  

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"Distributions" means any cash proceeds arising from or in respect of, or in exchange for, or accruing to or in consequence of the Option Shares from the Effective Date to the Completion Date, including without limitation the Dividends.

 

"Dividends" means the dividends declared by the Public Company and accrued in respect of the Option Shares (whether or not such dividends shall have been paid and received by the Grantees);

 

"Effective Date" means the date of Share Exchange;

 

"Exercise" means the exercise by any or all of the Grantees or his/her Nominee(s) of the Option pursuant to the terms of this Agreement;

 

"Exercise Notice" means the notice substantially in the form set out in Part I of Schedule B;

 

"Exercise Price" means $0.01 per share paid by a Grantee of the Option Shares;

 

"Nominee" means such person nominated by a Grantee in the Transfer Notice to be the transferee of the Option or Option Shares;

 

“Option” means according to the context, the option that the Grantee has to purchase the Grantor’s Option Shares subject to the terms and conditions of this Agreement.

 

"Option Effective Date" has the meaning ascribed to it in Clause 2.3;

 

"RMB" means the lawful currency of China;

 

“Share Exchange” means the transaction, by means of one or more agreements, among the Grantor, on the one hand and the Public Company, on the other hand, by which the Grantor sells 100% of the equity of its entire shares of China Flying to the Public Company, and the Public Company issues stock to the Grantor, with the result that China Flying becomes a wholly-owned subsidiary of the Public Company and the Grantor holds 82.77% of the outstanding capital stock of the Public Company.

 

"Transfer Notice" means the notice substantially in the form set out in Part II of Schedule B;

 

"US$" or "United States Dollar" means the lawful currency of the United States of America.

 

1.2.           Interpretation. Except to the extent that the context requires otherwise:

 

           1.2.1           words denoting the singular shall include the plural and vice versa; words denoting any gender shall include all genders; words denoting persons shall include firms and corporations and vice versa;

 

           1.2.2           any reference to a statutory provision shall include such provision and any regulations made in pursuance thereof as from time to time modified or re-enacted whether before or after the date of this Agreement and (so far as liability thereunder may exist or can arise) shall include also any past statutory provisions or regulations (as from time to time modified or re-enacted) which such provisions or regulations have directly or indirectly replaced;

 

           1.2.3           the words "written" and "in writing" include any means of visible reproduction;

 

           1.2.4           any reference to "Clauses", "Recitals" and "Schedules" are to be construed as references to clauses and recitals of, and schedules to, this Agreement; and

 

           1.2.5           any reference to a time of day is a reference to China time unless provided otherwise.

 

  

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1.3.           Headings: The headings in this Agreement are inserted for convenience only and shall be ignored in construing this Agreement.

 

2.           OPTION

 

2.1.           Option. The Grantor hereby irrevocably and unconditionally grants to the Grantees an Option for the Grantees to acquire from the Grantor, at the Exercise Price, at any time during the Exercise Period (defined below), to the extent that the Option has vested, any or all of the Option Shares set forth opposite such Grantees’ respective names in Schedule A hereto, free from all claims, liens, charges, pledges, mortgages, trust, equities and other encumbrances, and with all rights attaching thereto on the Completion Date.

 

2.2.           Vesting schedule. Subject to the terms and conditions hereto, the Option may be exercised, in whole or in part, in accordance with the following schedule:

 

34% of the Option Shares subject to the Option shall vest and become exercisable on December 31, 2011, 33% of the Option Shares subject to the Option shall vest and become exercisable on  December 31, 2012 and 33% of the Option Shares subject to the Option shall vest and become exercisable on December 31, 2013.

 

2.3.           Exercise period. The Option shall vest and become effective and exercisable at each time commencing on the dates set forth in Section 2.3 (the “Option Effective Date”) and shall expire five (5) years from the date of the Option. The Option may be exercised by the Grantees (or his/her Nominee on behalf of the Grantees respectively), to the extent that the Option shall have vested, and only to that extent, at any time prior to five (5) years from the date of the Option (“Exercise Period”).

 

2.4.           Nominees. Each of Grantees may, at any time during the Exercise Period, at his/her sole discretion, nominate one or more persons (each a “Nominee”) to be the transferee(s) of whole or part of the shares subject to his/her Option, who shall hold and/or exercise the transferred Option on behalf of the Grantees respectively.

 

2.5.           Exercise Notice. The Option may be exercised by the Grantees or his/her respective Nominee(s), in whole or in part, at any time during the Exercise Period, by serving an Exercise Notice on the Grantor.

 

2.6.           Exercise. The Grantor agrees that it shall, upon receipt of the Exercise Notice, transfer to such Grantee (or his/her Nominee(s), as the case may be) any and all of the Option Shares specified in the Exercise Notice, free from all claims, liens, charges, pledges, mortgages, trust, equities and other encumbrances, and with all rights now or hereafter attaching thereto.  The Option shall be exercisable only in compliance with the laws and regulations of the PRC, the US and BVI, and such Grantee (or his/her Nominee(s), as the case may be) shall complete any and all approval or registration procedures regarding the exercise of his/her Option at PRC competent authorities in accordance with applicable PRC laws and regulations.

 

2.7.           Transfer Notice. In case that a Grantee transfers any or all of his/her Option to one or more Nominee(s) in accordance with Clause 2.4 above, such Grantee shall serve a Transfer Notice on the Grantor.

 

2.8           Voting.  The Grantor hereby agrees not to exercise any of its voting rights with respect to the Option Shares in accordance with the relevant by-laws and Certificate of Incorporations of the Public Company on behalf of the Grantees without the prior written consent of the Grantees, including but not limited to appointing and electing the directors of the Public Company and Tanke before all of the Grantor’s shares are transferred to the Grantee, provided, however, that the Grantee shall not be permitted to authorize or approve the Grantor selling, transferring, pledging, disposing or otherwise encumbering  the shares of the Public Company.

 

  

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2.9.           Transfer to Nominees. The Grantor agrees that it shall, upon receipt of the Transfer Notice, take all actions necessary to allow the Nominee(s) to be entitled to any or all of Option Shares specified in the Transfer Notice.

 

Upon exercise by any Nominee(s) of the transferred Option on behalf of such Grantee, the Grantee shall serve the Exercise Notice on the Grantor in his/her own name for the exercising Nominee(s).  Upon receipt of such Exercise Notice, the Grantor shall issue to such Nominee(s) any and all of the relevant Option Shares in the same manner as specified in Clause 2.6.

 

2.10.           Payment of Exercise Price. Upon Exercise of the Option in whole or in part, the Grantees (or his/her respective Nominee(s), as the case may be) shall pay the Exercise Price to the Grantor.

 

2.11.           The Grantor’s obligation upon Exercise. The Grantor agrees that upon the Exercise of any Option by a Grantee (or his/her Nominee(s)), it shall cause and procure the number of Option Shares provided in the Exercise Notice to be transferred to such Grantee (or his/her respective Nominee(s)) within seven (7) Business Days after the date of the Exercise Notice.

 

2.12           Set-off.  The Grantees shall be entitled to receive all of the Grantor’s shares subject to the exercise of the Option, and for the purpose of this Agreement, Grantor hereby waives, as against the Grantees or their respective Nominee(s), all rights of set-off or counterclaim that would or might otherwise be available to the Grantor.

 

2.13           Escrow of the Option Shares.

 

(a)           Upon execution of this Agreement, the Grantor shall deliver to the Grantee the stock certificate in the name of the Grantor representing the Option Shares. The stock certificates representing the Option Shares shall be held by the Grantee.

 

(b)           Upon receipt of the Exercise Notice, the Grantee shall promptly deliver the Option Shares being purchased pursuant to the Exercise Notice in accordance with the instructions set forth therein.

 

3.           INFORMATION, DISTRIBUTIONS AND ADJUSTMENTS

 

3.1.           Information. The Grantees shall be entitled to request from the Grantor at any time before the Completion, a copy of any information received from the Grantor which may be in the possession of the Grantor and, upon such request, the Grantor shall provide such information to the Grantees.

 

3.2.           Distributions. The Grantor agrees that the Grantees shall be entitled to all the Distributions in respect of its Option Shares.  In the event that any such Distributions have been received by the Grantor for any reason, the Grantor shall at the request of the Grantees pay an amount equivalent to the Distributions received to the Grantees.

 

3.3.           Adjustments. If, prior to the Completion, the Public Company shall effect any adjustment in its share capital (such as share split, share dividend, share combination or other similar acts), then the number of Option Shares shall be adjusted accordingly to take into account such adjustment.

 

4.           COMPLETION

 

4.1.           Time and venue. Completion of the sale and purchase of the Option Shares pursuant to the Exercise shall take place at such place decided by each Grantee on the Completion Date and reasonably acceptable to the Grantor. The Parties agree that Hong Kong is a reasonable and preferable place for the completion of the sale.

 

4.2.           Business at Completion. At Completion of each Exercise, all (but not part only) of the following shall be transacted:

 

  

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           4.2.1           the exercising Grantee shall pay the Exercise Price to the Grantor by wire transfer or such other method as shall be reasonably acceptable to the Grantor;

 

           4.2.2           the Grantor shall, and to the extent that any action on the part of other shareholders, the directors or other management is required, procure the then shareholders, directors or other management of the Public Company to, within seven (7) Business Days after the date of Exercise Notice, deliver to the exercising Grantee (or his/her respective Nominee(s), same below) the following documents and take all corporate actions necessary to give effect to such delivery:

 

           (a)           a share certificate or share certificates in respect of the number of the Option Shares exercised by such Grantee;

 

           (b)           a certified true copy of the register of members of the Public Company updated to show the entry of the Grantee as the holder of the Option Shares so exercised; and

 

           (c)           any other documents as such Grantee may reasonably believe necessary to give effect to the transfer of the exercised Option Shares.

 

5.           CONFIDENTIALITY

 

The transaction contemplated hereunder and any information exchanged between the Parties pursuant to this Agreement will be held in complete and strict confidence by the concerned Parties and their respective advisors, and will not be disclosed to any third party except: (i) to the Parties’ respective officers, directors, employees, agents, representatives, advisors, counsel and consultants that reasonably require such information and who agree to comply with the obligation of non-disclosure pursuant to this Agreement; (ii) with the express prior written consent of the source Party; or (iii) as may be required to comply with any applicable law, order, regulation or ruling, or an order, request or direction of a government agency; provided, however, that the foregoing shall not apply to information that: (i) is known to the receiving Party prior to its first receipt from the source Party; (ii) becomes a matter of public knowledge without the fault of the receiving Party; or (iii) is lawfully received by the Party from a third party with no restrictions on its further dissemination.

 

6.           REPRESENTATIONS AND WARRANTIES BY THE GRANTOR

 

The Grantor represents and warrants to the Grantees that:

 

(a)           Authorization; Enforcement.  The Grantor has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations thereunder.  The execution and delivery of this Agreement by the Grantor and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Grantor and no further action is required by the Grantor in connection therewith.  This Agreement has been (or upon delivery will have been) duly executed by the Grantor and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Grantor enforceable against the Grantor in accordance with its terms except: (i) as limited by applicable bankruptcy, insolvency,  fraudulent transfer, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, or other equitable remedies at law or equity.

 

  

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(b)           No Conflicts. Neither the execution or delivery of this Agreement by the Grantor nor the fulfillment or compliance by the Grantor with any of the terms hereof shall, with or without the giving of notice and/or the passage of time, (conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract or any judgment, decree or order to which Grantor is subject or by which the Grantor is bound. The execution, delivery and performance of this Agreement by the Grantor or compliance with the provisions hereof by the Grantor do not, and shall not, violate any provision of any law to which the Grantor is subject or by which it is bound.

 

(c)          No Actions. There are no lawsuits, actions or investigations, or to the best knowledge of the Grantor, claims or demands from any other third parry, or other proceedings pending or, to the best of the knowledge of the Grantor, threatened against the Grantor which, if resolved in a manner adverse to the Grantor, would adversely affect the right or ability of the Grantor to carry out its obligations set forth in this Agreement (the “Actions”) as of the execution of this Agreement. The Grantor further warrants and covenants that such actions will not occur after the execution of this Agreement.

 

(d)           Title. The Grantor owns the Option Shares free and clear of any claim, pledge, charge, lien, preemptive rights, restrictions on transfers, proxies, voting agreements and any other encumbrance whatsoever, except as contemplated by this Agreement. The Grantor has not entered into or is a party to any agreement that would cause the Grantor to not own such Option Shares free and clear of any encumbrance, except as contemplated by this Agreement

 

(e)           Exercise of Rights. Without first obtaining written instruction from the Grantees, the Grantor will not exercise any rights in connection with the Option Shares to which the Grantor is entitled as of the date of this Agreement, including but not limited to voting rights, share transfer right, dividends rights, preemptive right or any rights in connection with pledge, proxy, charge, lien. The Grantor further warrants and covenants that it will, unconditionally and immediately, exercise any rights in connection with the Option Shares in compliance with the Grantees’ written instruction upon its receipt of such written instruction.

 

7.           REPRESENTATIONS AND WARRANTIES BY GRANTEES

 

The Grantees represents and warrants to the Grantor that:

 

(a)           Authorization; Enforcement.  This Agreement has been (or upon delivery will have been) duly executed by the Grantees and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Grantees enforceable against the Grantees in accordance with its terms except: (i) as limited by applicable bankruptcy, insolvency,  fraudulent transfer, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, or other remedies at law or equity.

 

(b)          No Conflicts. Neither the execution nor delivery of this Agreement by the Grantees nor the fulfillment or compliance by the Grantees with any of the terms hereof shall, with or without the giving of notice and/or the passage of time, conflict with, or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract or any judgment, decree or order to which Grantees are subject or by which Grantees is bound. The execution, delivery and performance of this Agreement by the Grantees or compliance with the provisions hereof by the Grantees do not, and shall not, violate any provision of any law to which Grantees are subject or by which it is bound.

 

(c)          No Actions. There are no lawsuits, actions (or to the best knowledge of the Grantees, investigations), claims or demands or other proceedings pending or, to the best of the knowledge of the Grantees, threatened against the Grantees which, if resolved in a manner adverse to the Grantees, would adversely affect the right or ability of the Grantees to carry out his/her obligations set forth in this Agreement.

 

  

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8.           COVENANTS OF GRANTOR AND MS. WONG

 

8.1.           Undertakings of the Grantor. Without the prior written consent of the Grantees, other than the arrangements (such as placement and OCTBB listing) previously agreed by and among the Parties as well as other related parities demonstrated in the Confidential Private Placement Memorandum dated January 5, 2011, the Grantor shall not and shall cause the Public Company not to, (i) issue or create any new shares, equity, registered capital, ownership interest, or equity-linked securities, or any options or warrants that are directly convertible into, or exercisable or exchangeable for, shares, equity, registered capital, ownership interest, or equity-linked securities of the Public Company, or other similar equivalent arrangements, (ii) alter the shareholding structure of the Public Company (other than as a result of the transfer of existing shares pursuant to this Agreement), (iii) cancel or otherwise alter the Option Shares, (iv) amend the register of members or the memorandum and articles of association of the Public Company, (v) liquidate or wind up the Public Company, or (vi) act or omit to act in such a way that would be detrimental to the interest of the Grantees in the Option Shares.  The Grantor shall disclose to the Grantees true copies of all the financial, legal and commercial documents of the Public Company and the resolutions of the shareholders and the board of directors.

 

8.2.           Undertakings of Ms. Wong. Without the prior written consent of the Grantees, Ms. Wong shall not and shall cause the Grantor not to, (i) issue or create any new shares, equity, registered capital, ownership interest, or equity-linked securities, or any options or warrants that are directly convertible into, or exercisable or exchangeable for, shares, equity, registered capital, ownership interest, or equity-linked securities of the Grantor, or other similar equivalent arrangements, (ii) transfer any share of the Grantor owned by her or alter the shareholding structure of the Grantor (other than as a result of the transfer of existing shares pursuant to this Agreement), (iii) cause the Grantor to cancel or otherwise alter the Option Shares, (iv) amend the register of members or the memorandum and articles of association of the Company, (v) liquidate or wind up the Grantor, or (vi) act or omit to act in such a way that would be detrimental to the interest of the Grantees in the Option Shares. Ms. Wong shall disclose to the Grantees true copies of all the financial, legal and commercial documents of the Grantor and the resolutions of the shareholders and the board of directors.

 

8.3.           Ms. Wong shall guarantee the performance of all obligations by the Grantor under this Agreement in all respects.

 

9.           MISCELLANEOUS

 

9.1.           Indulgence, waiver and etc. No failure on the part of any Party to exercise and no delay on the part of such Party in exercising any right hereunder will operate as a release or waiver thereof, nor will any single or partial exercise of any right under this Agreement preclude any other or further exercise of it or any other right or remedy.

 

9.2.           Effective Date and continuing effect of this Agreement. This Agreement shall take effect from the Effective Date.  All provisions of this Agreement shall not, so far as they have not been performed at Completion, be in any respect extinguished or affected by Completion or by any other event or matter whatsoever and shall continue in full force and effect so far as they are capable of being performed or observed, except in respect of those matters then already performed.

 

9.3.           Successors and assignees. This Agreement shall be binding on and shall ensure for the benefit of each of the Parties’ respective successors and permitted assignees. Any reference in this Agreement to any of the Parties shall be construed accordingly.

 

9.4.           Further assurance. At any time after the date of this Agreement, each of the Parties shall, and shall use its best endeavors to procure that any necessary third party shall, execute such documents and do such acts and things as any other Party may reasonably require for the purpose of giving to such other Party the full benefit of all the provisions of this Agreement.

 

  

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9.5.           Remedies. No remedy conferred by any of the provisions of this Agreement is intended to be exclusive of any other remedy which is otherwise available at law, in equity, by statute or otherwise, and each and every other remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity, by statute or otherwise. The election of any one or more of such remedies by any Party shall not constitute a waiver by such Party of the right to pursue any other available remedies.

 

9.6.           Severability of provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable in whole or in part in any jurisdiction, this Agreement shall, as to such jurisdiction, continue to be valid as to its other provisions and the remainder of the affected provision; and the legality, validity and enforceability of such provision in any other jurisdiction shall not be affected.

 

9.7.           Governing law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware.

 

9.8.           Dispute resolution. In the event of any dispute, claim or difference (the “Dispute”) between any Parties arising out of or in connection with this Agreement, the Dispute shall be resolved in accordance with the following:

 

           (a)           Negotiation. The Parties agree to negotiate in good faith to resolve any Dispute. If the negotiations do not resolve the Dispute to the reasonable satisfaction of all Parties in dispute within thirty (30) days, Subsection (b) below shall apply.

 

            (b)           Arbitration.  In the event the Parties are unable to settle a Dispute in accordance with Subsection (a) above, such Dispute shall be referred to and finally settled by arbitration at American Arbitration Association in New York in accordance with the AAA Arbitration Rules (the “Rules”) in effect, which rules are deemed to be incorporated by reference into this Subsection (b).  The arbitration tribunal shall consist of three (3) arbitrators to be appointed according to the Rules.  The language of the arbitration shall be English.

 

9.9.           Notice 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 by a recognized courier service or by facsimile transmission to the address of the relevant Party set forth below. 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 third (3rd) day after the date; and (c) a notice sent by facsimile transmission is deemed duly served upon the time shown on the transmission confirmation of relevant documents.

 

To the Grantor

	
  

	
Address:

	
Suite 2108 Nan Fung Towe 173 Des Voex Road Central Hong Kong

	
  

	
Attn:

	
Wong Kwai Ho

	
  

	
Fax:

	
852-34268379

	
  

	
Tel:

	
852-34269739

 

To Qiu Guixiong

	
  

	
Address:

	
Room 2801, East Tower of Hui Hao Building, No. 519 Machang Road, Pearl River New City, Guangzhou, PR China 510627

	
  

	
Attn:

	
Guixiong Qiu

	
  

	
Fax:

	
+86-20-38859077

	
  

	
Tel:

	
+86-20-38859025

 

To Gao Bi

	
  

	
Address:

	
Room 704 , No 10 tianhe guanghe road, Guangzhou city Guangdong, P.R.China

	
  

	
Attn:

	
Bi Gao

	
  

	
Fax:

	
86-20-38859077

	
  

	
Tel:

	
86-20-38859025

 

  

8

  

 

To Liang Xiuzhen

	
  

	
Address:

	
Room 404, No 10 quan fu li fang cun qui, Guangzhou city Guangdong, P.R.China

	
  

	
Attn:

	
Liang Xiuzhen

	
  

	
Fax:

	
86-20-38859077

	
  

	
Tel:

	
86-20-38859025

 

To Teng Bing

	
  

	
Address:

	
Room 2801, East Tower of Hui Hao Building , No. 519 Machang Road , Pearl River New City , Guangzhou , PR China 510627

	
  

	
Attn:

	
Teng Bing

	
  

	
Fax:

	
86-20-38859077

	
  

	
Tel:

	
86-20-38859025

 

To Ms. Wong

	
  

	
Address:

	
Suite 2108 Nan Fung Tower 173 Des Voex Road Central Hong Kong

	
  

	
Attn:

	
Wong Kwai Ho

	
  

	
Fax:

	
852-34268379

	
  

	
Tel:

	
852-34269739

 

9.10.           Counterparts. This Agreement shall be executed in six (6) originals in English, each of which shall be equally valid. Each Party shall retain one (1) original.

 

[No Text Below]

 

  

9

  

 

[Signature Page]

 

IN WITNESS WHEREOF the Parties hereto have executed this Agreement on the date first written above.

 

 

Golden Genesis Limited

 

 

	/s/ Guixiong Qiu	 

Name: Guixiong Qiu

Title: CEO and President

 

 

	/s/ Guixiong Qiu	 

 

Qiu Guixiong

 

Passport No.:

 

 

	/s/ Gao Bi	 

 

Gao Bi

 

Passport No.:

 

 

	/s/ Liang Xiuzhen	 

 

Liang Xiuzhen

 

Passport No.:

 

 

Signature page to Call Option Agreement

 

  

  

  

 

[Signature Page continued]

 

 

	/s/ Teng Bing	 

 

Teng Bing

 

Passport No.:

 

 

	 
/s/ Wong Kwai Ho

	 

 

Wong Kwai Ho

 

Passport No.:

 

 

Signature page to Call Option Agreement

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