Translation of Exclusive Option Agreement

 

This Exclusive Option Agreement (this "Agreement") is executed by and among the following Parties as of May 1, 2012, in Shangrao, Jiangxi Province, the People’s Republic of China (“China” or the “PRC”):

Address: 8 Xing Yang road, Shangrao, Jiangxi Province

In this Agreement, each of Party A, Party B and Party C shall be referred to as a "Party" respectively, and they shall be collectively referred to as the "Parties".

 

 

1.1  Option Granted

In consideration of the payment by Party A, the receipt and adequacy of which is hereby acknowledged by Party B, Party B hereby irrevocably grants Party A an irrevocable and exclusive right to purchase, or designate one or more persons (each, a "Designee") to purchase the equity interests in Party C then held by Party B once or at multiple times at any time in part or in whole at Party A's sole and absolute discretion to the extent permitted by Chinese laws and at the price described in Section 1.3 herein (such right being the "Equity Interests Purchase Option"). Except for Party A and the Designee(s), no other person shall be entitled to the Equity Interest Purchase Option or other rights with respect to the equity interests of Party B. Party C hereby agrees to the grant by Party B of the Equity Interests Purchase Option to Party A.

In consideration of the payment by Party A, the receipt and adequacy of which is hereby acknowledged by Party C, Party C hereby irrevocably grants Party A an irrevocable and exclusive right to purchase, or designate one or more persons (each, a "Designee") to purchase the asset of Party C (including but not limited to fixed assets, current assets, intellectual property rights, ownership of equity interests in any person within or outside the PRC and the benefits under all contracts entered into by Party C once or at multiple times at any time in part or in whole at Party A's sole and absolute discretion to the extent permitted by Chinese laws and at the price described in Section 1.3 herein (such right being the "Assets Purchase Option"). Except for Party A and the Designee(s), no other person shall be entitled to the Asset Purchase Option or other rights with respect to the assets of Party C. Party B hereby agrees to the grant by Party C of the Assets Purchase Option to Party A.

1.2 Steps for Exercise of Purchase Option

Subject to the provisions of the laws and regulations of China, Party A may exercise the Purchase Option by issuing a written notice to Party B and/or Party C (the "Purchase Option Notice"), specifying: (a) Party A's decision to exercise the Purchase Option; (b) the portion of equity interests to be purchased from Party B and/or all or part of assets to be purchased from Party C ("Optioned Equity Interests and/or Assets"); and (c) the date for purchasing the Optioned Equity Interests and/or Assets, and the date for transfer of the Optioned Equity Interests and/or Assets.

 

 

1.3 Purchase Price

Unless an appraisal is required by the laws of China applicable to the Equity Interests Purchase Option and/or Assets Purchase Option when exercised by Party A, the purchase price of the Optioned Equity Interests and/or Assets  (the “Exercise Price”) shall be an amount equal to the lower of (i) the actual registered capital of Party C corresponding to the Optioned Equity Interests to be acquired and (ii) an amount equal to the product of (x) RMB 500,000 and (y) a fraction, the numerator of which is the number of Optioned Equity Interests being purchased upon such exercise from Party B and the denominator of which is the total number of outstanding equity interests of Party C as of the date of the Option Purchase Notice, provided that in the case of the purchase of a portion of the assets, the numerator shall be the fair market value of the assets acquired and the denominator shall be the net fair market value of all of the Party C’s assets as of the date of the Purchase Option Notice.

If the applicable laws of the PRC impose other restrictions on the purchase price of the Optioned Equity Interests or otherwise amends the applicable laws at the time when Party A exercises the Equity Purchase Option, all Parties agree that the Exercise Price shall be set at the lowest price permitted under applicable PRC laws.

 

1.4 Transfer of Optioned Interests and/or Assets

1.4.1  For each exercise of the Equity Interest Purchase Option:

2.1 Covenants regarding Party C

Party B (as the shareholders of Party C) and Party C hereby covenant as follows:

Party B hereby covenants as follows:

Party B and Party C hereby represent and warrant to Party A, jointly and severally, as of the date of this Agreement and each date of transfer of the Optioned Interests, that:

3.1

They have the authority to execute and deliver this Agreement and any share transfer contracts to which they are parties concerning the Optioned Interests to be transferred thereunder (each, a "Transfer Contract"), and to perform their obligations under this Agreement and any Transfer Contracts. Party B and Party C agree to enter into Transfer Contracts consistent with the terms of this Agreement upon Party A’s exercise of the Equity Interest Purchase Option. This Agreement and the Transfer Contracts to which they are parties constitute or will constitute their legal, valid and binding obligations and shall be enforceable against them in accordance with the provisions thereof;

3.2

The execution and delivery of this Agreement or any Transfer Contracts and the performance of the obligations under this Agreement or any Transfer Contracts shall not: (i) cause any violation of any applicable laws of China; (ii) be inconsistent with the articles of association, bylaws or other organizational documents of Party C; (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 either of them; or (v) cause the suspension or revocation of or imposition of additional conditions to any licenses or permits issued to either of them;

3.3

Party B has a good and merchantable title to the equity interests in Party C he holds. Except for Party B's Share Pledge Agreement, Party B has not placed any security interest on such equity interests;

3.4

Party C has a good and merchantable title to all of its assets, and has not placed any security interest on the aforementioned assets;

 
 

3.5

Party C does not have any outstanding debts, except for (i) debt incurred in the ordinary course of business; and (ii) debts disclosed to Party A for which Party A's written consent has been obtained.

 

 

3.7

There is no pending or threatened litigation, arbitration or administrative proceedings relating to the equity interests in Party C, assets of Party C or Party C.

4. Effective Date

This Agreement shall become effective upon the date hereof, and remain effective for a term of 30 years, and may be renewed at Party A's election.

5.1       Governing law

The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the formally published and publicly available laws of China. Matters not covered by formally published and publicly available laws of China shall be governed by international legal principles and practices.

5.2       Methods of Resolution of Disputes

In the event of any dispute with respect to the construction and performance of this Agreement, the Parties shall first resolve the dispute through friendly negotiations.  In the event the Parties fail to reach an agreement on the dispute within 30 days after either Party's request to the other Parties for resolution of the dispute through negotiations, either Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its Arbitration Rules. The arbitration shall be conducted in Beijing, and the language used in arbitration shall be Chinese. The arbitration award shall be final and binding on all Parties.

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 China 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.

 

 

The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties in connection with the preparation and performance this Agreement are regarded as confidential information. Each Party shall maintain confidentiality of all such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, investors, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, investors, legal counsels or financial advisors shall  be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the staff members or agencies hired by any Party shall be deemed disclosure of such confidential information by such Party, which Party shall be held liable for breach of this Agreement. This Section shall survive the termination of this Agreement for any reason.

 

 

The Parties agree to promptly execute documents that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement and take further actions that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement.

10.1 Amendment, change and supplement

Any amendment, change and supplement to this Agreement shall require the execution of a written agreement by all of the Parties.

10.2 Entire agreement

Except for the amendments, supplements or changes in writing 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 hereof, and shall take the place of all prior oral and written consultations, representations and contracts reached with respect to the subject matter of this Agreement.

10.3 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.

10.4 Language

This Agreement is written in both English and Chinese in three copies. Each of Party A,Party B and Party C has one copy. Each copy has equal legal validity. If any conflict exists between these two versions, Chinese version shall prevail.

10.5 Severability

In the event that one or several of the provisions of this Agreement are found to be 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 respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, 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.

 

 

10.6 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.

10.7 Survival

Any Party may waive the terms and conditions of this Agreement, provided that such a waiver must be provided in writing 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.

10.9 Indemnification

Party A: Shangrao Baihuazhou Green Resources Agriculture Technology Development Co., Ltd.

By (seal):   /s/ Liu Shuzhong______

 

(The signature of The Representative): Liu Shuzhong____

 

 

By (signature):  /s/Li Xiaoling____

 

By (seal):    /s/ Liu Shuzhong_____

(The signature of The Representative): Liu Shuzhong_____