CALL OPTION AGREEMENT
BETWEEN
WANG CHEN
AND
LI SHAOQING
Date: June 9, 2008
THIS OPTION AGREEMENT (this "Agreement") is made on June 9, 2008 by and
among Li Shaoqing (the "Transferor") and Wang Chen (the "Transferee").
The Transferor and the Transferee are collectively referred to as the
"Parties" and each of them as a "Party".
Whereas, the Transferor is the majority shareholder of Long Sunny Limited
(the "Company"), a British Virgin Islands Company, which is one of the
registered shareholders of Shen Kun International Limited, a British Virgin
Islands Company, which intends to complete a reverse merger with Southern Sauce
Company, Inc., a public shell company, traded on the Over the Counter Bulletin
Board (the "Listed Company"), holding 30,000 shares of Ordinary Shares in the
Company as of the date of this Agreement.
Whereas, the Transferee is to have a substantial role in the growth of
business of Southern Sauce Company, Inc., its subsidiaries, Shengkai (Tianjin)
Ceramic Valves Co., Ltd. ("WFOE") and Tianjin Shengkai Industrial Technology
Development Co., Ltd. ("Shengkai") (collectively with the Company and Shengkai
as the "Group"). In consideration of the Transferee's anticipated contributions
to the Group, the Transferor has agreed to grant to the Transferee, and the
Transferee has agreed to accept from the Transferor, an option (the "Option") to
purchase all of the ordinary shares of the Company currently held by the
Transferor (the "Option Shares") on the terms and subject to the conditions set
out in 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, Exhibits and
Schedules), unless the context otherwise requires, the following words and
expressions shall have the following meanings:
"Alternate Exercise Price" means an exercise price of $0.01 per share to
be paid by the Transferee or his nominee to the Transferor in respect of
the Option Shares issued to the Transferee or his nominee in the event
that the Performance Targets (as defined herein) have not been met by the
Group;
"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;
"Completion" means the completion of the sale to and purchase by the
Transferee of the Option Shares under this Agreement;
"Completion Date" means the date falling seven (7) Business Days after the
service of the Exercise Notice by the Transferee to the Transferor;
"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 Company and accrued in
respect of the Option Shares (whether or not such dividends shall have
been paid and received by the Transferee or his nominee);
"Effective Date" means the date of this Agreement;
"Exercise" means the exercise by the Transferee or his Nominee of the
Option pursuant to the terms of this Agreement;
"Exercise Notice" means the notice substantially in the form set out in
Schedule A;
"Exercise Price" means an exercise price of $0.001 per share of the Option
Shares to be paid by the Transferee to the Transferor in respect of the
Option Shares issued to such Transferee if the Group achieves the
Performance Targets;
"Nominee" means such person nominated by the Transferee in the Transfer
Notice to be the transferee of the Option or Option Shares;
"Option Effective Dates" has the meaning set forth in Clause 2.3;
"Performance Targets" has the meaning set forth in Clause 3;
"Performance Period" has the meaning set forth in Exhibit A to the
Agreement;
"Reverse Merger" means the transaction wherein the Listed Company will
acquire 100% equity interest of Shen Kun International Limited and its
subsidiaries and affiliates;
"RMB" means the lawful currency of China;
"Transfer Notice" means the notice substantially in the form set out in
Schedule B;
"US$" 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;