EXHIBIT 10.17
OPTION AGREEMENT
THIS OPTION AGREEMENT ("Agreement") is made on this 31st day of March
2004 in Beijing, People's Republic of China ("PRC")
among
(1) KONGZHONG INFORMATION TECHNOLOGY (BEIJING) CO., LTD. (Chinese
Characters) ("KongZhong Beijing")
(2) ZHOU, YUNFAN, a PRC citizen whose PRC identification number is
110102197411102374, and whose residential address is 13A, No. 9
Building, Xxxxx Xxxxx South Garden, Ma Xxxx, Beijing, PRC("Zhou")
and
(3) XXXXX, XXXX, a PRC citizen whose PRC identification number is
610104780219162, and whose residential address is 00X, Xx. 0 Xxxxxxxx,
Xxxxx Xxxxx Xxxxx Xxxxxx, Xx Xxxx, Beijing, PRC ("Xxxxx")
(Each of Zhou and Xxxxx is hereinafter referred to as a "Grantor" and
collectively the "Grantors")
WHEREAS
A. KongZhong Beijing is a wholly foreign-owned enterprise, duly
established and registered in Beijing under the laws of the PRC.
X. Xxxx and Xxxxx established Beijing Boya Wuji Technology Co., Ltd.
("Beijing Boyawuji"), a limited liability company, with a registered
capital of RMB 1,000,000, on March 29th, 2004 in accordance with PRC
law.
X. Xxxx and Xxxxx together hold 100% of the registered capital of Beijing
Boyawuji (the "Equity Interests") and respectively, Zhou holds 50% and
Xxxxx holds 50%.
D. Grantors have agreed to grant exclusively to KongZhong Beijing an
option to purchase the Equity Interests, subject to the terms and
conditions set forth below.
THE PARTIES THEREFORE AGREE AS FOLLOWS:
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ARTICLE 1: GRANT OF THE OPTION
1.1 Purchase Option
Each of Zhou and Xxxxx hereby grants to KongZhong Beijing an option
(each and "Option" and collectively the "Options") to Purchase their
respective Equity Interests at the purchase price of RMB ten thousand
(10,000) per one (1) percent of the registered capital of Beijing
Boyawuji, each of such option shall become vested as of the date of
this Agreement.
1.2 Term
This Agreement shall take effect as of the date of signing by the
parties hereto and shall remain in full force and effect until the
earlier of (1) the date on which all of the Equity Interests have been
purchased by KongZhong Beijing and (2) the tenth anniversary of the
date hereof.
ARTICLE 2: EXERCISE OF THE OPTION AND ITS CLOSING
2.1 Timing of Exercise
2.1.1 Each of the Grantors agrees that KongZhong Beijing in its sole
discretion may at any time, and from time to time after the
date hereof, exercise the Options, in whole or in part, to
acquire all or any portion of their respective Equity
Interests, subject only to applicable laws of the PRC,
including any restrictions on foreign investment.
2.1.2 For the avoidance of doubt, each of the holders hereby agrees
that KongZhong Beijing shall be entitled to exercise the
Option for an unlimited number of times, until all of the
Equity Interests have been acquired by KongZhong Beijing.
2.1.3 The Grantors agree that KongZhong Beijing may designate in its
sole discretion any third party to exercise the Options on its
behalf, in which case KongZhong Beijing shall provide written
notice to the Grantor at the time the Option granted by such
Grantor is exercised.
2.2 Transfer
The Grantors agree that the Option shall be freely transferable, in
whole or in part, by KongZhong Beijing to any third party, and that,
upon such transfer, the Option may be exercised by such third party
upon the terms and conditions set forth herein, as if such third party
were a party to this Agreement, and that such
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third party shall assume the rights and obligations of KongZhong
Beijing hereunder.
2.3 Notice Requirement
2.3.1 To exercise an Option, KongZhong Beijing shall send an written
notice to the Grantor such Option is to be exercised by no
later than ten (10) days prior to each Closing Date (as
defined below),specifying therein:
2.3.1.1 The date of the effective closing of such purchase (a
"Closing Date");
2.3.1.2 the name of the person in which the Equity Interests
shall be registered;
2.3.1.3 the amount of Equity Interests to be purchased from
such Grantor;
2.3.1.4 the type of payment; and
2.3.1.5 a letter of authorization, where a third party has
been designated to exercise the Option.
2.3.2 For the avoidance of doubt, it is expressly agreed among the
parties that KongZhong Beijing shall have the right to
exercise the Options and elect to register the Equity
Interests in the name of another person as it may designates
from time to time.
2.4 Closing
On each Closing Date, KongZhong Beijing shall pay to the relevant
Grantor the applicable purchase price for the Equity Interests to be
purchased on such Closing Date as provided in Article 1 above.
ARTICLE 3: COMPLETION
3.1 Assignment Agreement
Concurrently with the execution and delivery of this Agreement, and
from time to time upon the request of KongZhong Beijing, each of the
Grantors shall execute and deliver one or more assignments, each in the
form and content substantially satisfactory to KongZhong Beijing (each
an "Assignment") together with any other documents necessary to give
effect to the transfer to
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KongZhong Beijing or its designated party of all or any part of the
Equity Interests upon an exercise of an Option by KongZhong Beijing
(the " Ancillary Documents"). Each Assignment and the Ancillary
Documents are to be held in KongZhong Beijing.
3.2 Board Resolution
Notwithstanding Section 3.1 above, concurrently with the execution and
delivery of this Agreement, and from time to time upon the request of
KongZhong Beijing, each of Grantors shall execute and deliver one or
more resolutions of the board of directors and/or shareholders of
Beijing Boyawuji, approving the following:
3.2.1 The transfer by the Grantor of all or part of the Equity
Interests to KongZhong Beijing or its designated party; and
3.2.2 any other matters as KongZhong Beijing may reasonably request.
Each Resolution is to be held in KongZhong Beijing.
ARTICLE 4: REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties
Each of Grantors severally represents and warrants to KongZhong Beijing
that:
4.1.1 it has the full power and authority to enter into, and perform
under, this Agreement;
4.1.2 its signing of this Agreement or fulfilling of any its
obligations hereunder does not violate any laws, regulations
and contracts to which it is bound, or require any government
authorization or approval;
4.1.3 there is no lawsuit, arbitration or other legal or government
procedures pending which, based on its knowledge, shall
materially and adversely affect this Agreement and the
performance thereof;
4.1.4 it has disclosed to KongZhong Beijing all documents issued by
any government department that might cause a material adverse
effect on the performance of its obligations under this
Agreement;
4.1.5 it has not been declared bankrupt by a count of competent
jurisdiction;
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4.1.6 its equity shareholding will remain free and clear from all
liens, encumbrances and third party rights; it will not
transfer, donate, pledge, or otherwise dispose of its equity
shareholdings in any way unless otherwise agreed by KongZhong
Beijing;
4.1.7 the Option granted to KongZhong Beijing shall be exclusive,
and neither Grantor shall grant the Option or any similar
rights to a third party by any means whatsoever.
Zhou further represents and warrants to KongZhong Beijing that it owns
50% of the Equity Interests of Beijing Boya Wuji and Xxxxx further
represents and warrants to KongZhong Beijing that it owns 50% of the
Equity Interests of Beijing Beijing Boya Wuji. The Parties hereby agree
that representations and warranties set forth in Sections 4.1.1, 4.1.2,
4.1.3, 4.1.4, 4.1.5,4.1.6 and 4.1.7 shall be deemed to be repeated as
of each Closing Date as if such representations and warrants were make
on and as of such Closing Date.
4.2 Covenants and Undertaking
Each of Grantors covenants and undertakes to KongZhong Beijing that:
4.2.1 he/she will bear all costs arising from executing each
Assignment, the Ancillary Documents and any other relevant
documents required therefore, and will complete all such
formalities as are necessary to make KongZhong Beijing or its
designated party a full and proper shareholder of Beijing Boya
Wuji. Such formalities include, but are not limited to,
assisting KongZhong Beijing with the obtaining of necessary
approvals of the equity transfer from relevant government
authorities (if any), the submission of the Assignment to the
relevant administrative department of industry and commerce
for the purpose of amending the Articles of Association,
changing the list of shareholders and undertaking any other
changes.
4.2.2 he/she will, upon request by KongZhong Beijing, establish a
domestic entity to hold the interests in Beijing Boya Wuji as
a Chinese party in case Beijing Boya Wuji is restructured to
an FIE.
ARTICLE 5: TAXES
Each of the Parties undertakes to pay its portion of any taxes and duties that
might arise from the execution and performance of this Agreement.
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ARTICLE 6: BREACH
In the event of a breach by any Party of its respective representations,
warranties, covenants or obligations under this Agreement, the breaching Party
shall compensate the non-breaching Parties for any actual losses arising
therefrom.
ARTICLE 7: GOVERNING LAW AND DISPUTE SETTLEMENT
7.1 Governing Law
The execution, effectiveness, interpretation and performance of this
Agreement shall be governed by the laws of the PRC.
7.2 Friendly Consultation
If a dispute arises in connection with the interpretation or
performance of this Agreement, the Parties shall attempt to resolve
such dispute through friendly consultations between them or mediation
by a neutral third party. If the dispute cannot be resolved in the
aforesaid manner within thirty (30) days after the commencement of such
discussions, either Party may submit the dispute to arbitration.
7.3 Arbitration
Any dispute arising in connection with this Agreement shall be
submitted to the China International Economic and Trade Arbitration
Commission in Beijing for arbitration in accordance with its rules. The
arbitral award shall be final and binding upon the Parties.
ARTICLE 8: CONFIDENTIALITY
8.1 Confidential Information
The contents of this Agreement and the Annexes hereof (if any) shall be
kept confidential. No Party shall disclose any such information to any
third party (except for the purpose described in Article 2.2 and by a
prior written agreement among the Parties). Each Party's obligations
under this clause shall survive after the termination of this
Agreement.
8.2 Exceptions
If a disclosure is explicitly required by law, any courts, arbitration
tribunals, or
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administrative authorities, such a disclosure by any Party shall not be
deemed a violation of Article 8.1 above.
ARTICLE 9: MISCELLANEOUS
9.1 Extension
Unless KongZhong send a written termination notice three (3) months
prior to the expiration, this Agreement shall be extended with a term
of ten (10) years.
9.2 Entire Agreement
9.2.1 This Agreement constitutes the entire agreement and
understanding among the Parties in respect of the subject
matter hereof and supersedes all prior discussions,
negotiations and agreements among them. This Agreement shall
only be amended by a written instrument signed by all the
Parties.
9.2.2 The Annexes attached hereto shall constitute an integral part
of this Agreement and shall have the same legal effect as this
Agreement.
9.3 Notices
9.3.1 Unless otherwise designate by the other Party, any notices or
other correspondences among the Parties in connection with the
Performance of this Agreement shall be delivered in person, by
express mail, e-mail, facsimile or registered mail to the
following correspondence addresses and fax numbers:
KongZhong Beijing : KongZhong Information Technology
(Beijing) Co., Ltd.
Address : Xxxx 000, Tower A, Xx. 0 Xxxxxx
Xxxxx Xxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxxx, Xxxxx
Zip code : 100045
Telephone : (00 00) 00000000
Facsimile : (00 00) 00000000
Contact : Chief Executive Officer
Person
Zhou, Yunfan : Zhou, Yunfan
Address : 00X, Xx. 0 Xxxxxxxx, Xxxxx Xxxxx
Xxxxx Xxxxxx,Xx Xxxx,
Xxxxxxx, Xxxxx
Zip code : 100088
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Telephone : (00 00) 00000000
Facsimile : (00 00) 00000000
Xxxxx, Xxxx : Xxxxx, Xxxx
Address : 00X, Xx. 0 Xxxxxxxx, Xxxxx Xxxxx
Xxxxx Xxxxxx, Xx Xxxx,
Xxxxxxx, Xxxxx
Zip Code : 100088
Telephone : (00 00) 00000000
Facsimile : (00 00) 00000000
9.3.2 Notices and correspondences shall be deemed to have been
effectively delivered:
9.3.2.1 at the exact time displayed in the corresponding
transmission record, if delivered by facsimile,
unless such facsimile is sent after 5:00 pm or on a
non-business day in the place where it is received,
in which case the date of receipt shall be deemed to
be the following business day;
9.3.2.2 on the date that the receiving Party signs for the
document, if delivered in person (including express
mail);
9.3.2.3 on the fifteenth (15th) day after the date shown on
the registered mail receipt, if sent by registered
mail;
9.3.2.4 on the successful printing by the sender of a
transmission report evidencing the delivery of the
relevant e-mail, if sent by e-mail.
9.4 Binding Effect
This Agreement shall be binding on the Parties and their successors and
assigns.
9.5 Language and Counterparts
This Agreement shall be executed in Three (3) originals in English,
with one (1) original for KongZhong Beijing, one (1) original each for
Grantors.
9.6 Days and Business Day
A reference to a day herein is to a calendar day. A reference to a
business day herein is to a day on which commercial banks are open for
business in the PRC.
9.7 Headings
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The headings contained herein are inserted for reference purposes only
and shall not affect the meaning or interpretation of any part of this
Agreement.
9.8 Singular and Plural
Where appropriate, the plural includes the singular and vice versa.
9.9 Unspecified Matter
Any matter not specified in this Agreement shall be handled through
discussions among the Parties and resolved in accordance with PRC law.
9.10 Survival of Representations, Warranties, covenants and Obligations
The respective representations, warranties, covenants and obligations
of the Parties, as set forth in this Agreement or made by or on behalf
of them, respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as
to the results thereof) made by or on behalf of any Party, and shall
survive the delivery and payment for the Equity Interests.
This Agreement has been signed by the Parties or their duly authorized
representatives on the date first specified above.
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KONGZHONG INFORMATION TECHNOLOGY (BEIJING) CO., LTD. (SEAL)
(Chinese Characters)
By: /s/ Xxxx Xxxx
----------------------------
Signature:
ZHOU, YUNFAN
Signature: /s/ Xxxxxx Xxxx
----------------------------
XXXXX, XXXX
Signature: /s/ Xxxx Xxxxx
----------------------------
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