EXHIBIT 4.38
OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement") is entered into by and among the
following parties (the "Parties") in Beijing, People's Republic of China ("PRC")
on November 21, 2005.
PARTY A: KONGZHONG INFORMATION TECHNOLOGIES (BEIJING) CO., LTD.
Address: Tengda Xxxxx, Xx.000 Xxxxx Xxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxxx
Legal Representative: Xxxx Xxxxxx
PARTY B: XX XXXX
Address: Xx. 00 Xxxxx Xxxx Xx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx
PARTY C: XX XXXXXX
Address:
PARTY D: WUHAN CHENGXITONG INFORMATION & TECHNOLOGY CO. LTD.
Address:
Legal Representative: Wang Guijun
WHEREAS
1. Party A is a wholly foreign-owned enterprise registered in the PRC.
2. Party D is a limited liability company registered in the PRC and licensed
by relevant government authorities to hold a Telecommunications Value-added
Service Operation Permit, which qualifies it to engage in
telecommunications value-added service. Party B and Party C are
shareholders of Party D.
Party B and Party C (the "Authorizing Party" or the "Shareholders of Party D")
are the shareholders of Party D and own 90% and 10% equity interest in Party D
respectively. Party B and Party C have signed Share Transfer Agreements with the
original shareholders of Party D who transferred their respective equity
interest in Party D on 17 February 2005. The amount for the transfer of equity
interest was paid by Party A.
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THE PARTIES THEREFORE AGREE AS FOLLOWS:
1. GRANT OF THE OPTION
1.1 Grant
The Authorizing Party hereby grant to Party A an option to purchase all
their respective equity interests in Party D at the lower price between the
lowest price permitted by PRC laws or the audited net asset value of Party
D once or several times by Party A or its designated third party.
1.2 Term
This Agreement shall take effect as of the date of execution by the parties
hereto and shall remain in full force and effect until all of the equity
interests held by the Shareholders of Party D in Party D have been
purchased by Party A with the permission of PRC laws.
2. EXERCISE OF THE OPTION AND ITS CLOSING
2.1 Timing of Exercise
2.1.1 The Authorizing Party agree unanimously that with the permission of
PRC laws and regulations, Party A may exercise part or full option
anytime during the term of this Agreement.
2.1.2 The Authorizing Party agree unanimously that there is no limitation
on the times for Party A to exercise its option, unless Party A has
purchased all of the equity interests in Party D.
2.1.3 The Authorizing Party agree unanimously that Party A may designate in
its sole discretion any third party to exercise the options on its
behalf, in which case Party A shall provide a prior written notice to
the Authorizing Party.
2.2 Presentation of the amount for the options
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The Authorizing Party agree unanimously that Party A will present all the
amount by exercising the options by Party A or its designated third party
to Party D free of charge.
2.3 Transfer
The Authorizing Party agree unanimously that the options of Party A under
this Agreement may be transferred to a third party, which shall be deemed
as a party to this Agreement and is entitled to exercise the options under
terms of this Agreement, to enjoy the rights assume the obligations of
Party A under this Agreement.
2.4 Notice Requirement
To exercise an Option, Party A shall send an written notice to the
Authorizing Party of such Option is to be exercised 10 days prior to each
closing date (as defined below), specifying the following:
2.4.1 The date of the effective closing of such purchase (a "Closing
Date"), that is, the date when formally filing an application for
registration of equity interests change with the commercial and
industrial administrative authorities;
2.4.2 the name of the person in which the Equity Interests shall be
registered;
2.4.3 the amount of Equity Interests to be purchased from such Authorizing
Party;
2.4.4 means of payment; and
2.4.5 a power of attorney. (applicable if a third party has been designated
to exercise the Option)
The Authorizing Party agree unanimously that Party A is entitled to
exercise the Options and elect to register the Equity Interests in the name
of a third party as it may designates from time to time. The Authorizing
Party agree that as long as Party A or its designated third Party forward
the request to exercise the options, the Authorizing Party shall execute
the equity
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interests transfer agreement and other relevant documents in accordance
with the notice and this Agreement within 10 work days upon receipt such
notice.
2.5 Closing
On each Closing Date, Party A shall pay to the relevant Authorizing Party
the applicable purchase price for the Equity Interests to be purchased on
such Closing Date as provided in Article 1 above. Party A and the
Authorizing Party shall provide necessary assistance to Party D with
respect to the processing the registration for change of equity interests
with the commercial and industrial administrative authorities.
3. REPRESENTATIONS AND WARRANTIES
3.1 The Authorizing Party hereby present and warrant as follows:
3.1.1 They have the full power and authority to enter into and perform this
Agreement.
3.1.2 The fulfilling of the obligations hereunder does not violate any
applicable laws, regulations and contracts, or require any government
authorization or approval.
3.1.3 There is no lawsuit, arbitration or other legal or administrative
procedures pending which, based on its knowledge, will possibly have
material and adverse affects on the performance of this Agreement.
3.1.4 The Authorizing Party will not set pledge, debt or other third party
rights on the equity interests in Party D and will not dispose the
same to any third party by transferring, presenting, pledging or any
other means.
3.1.5 There is no any pledge, debt or other third party right on the equity
interests in Party D held by the Authorizing Party.
3.1.6 The options granted to Party A are exclusive, and the Authorizing
Party shall not grant options or similar right to other parties in any
ways.
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3.2 Undertaking
Considering that Party A or its designated third party will present all the
amounts gained from exercising the options to Party D, Party D hereby
undertakes to Party A that it will bear all costs arising from executing
each Assignment, process all formalities needed for Party A or its
designated third party to be the shareholders of Party D, the Ancillary
Documents and any other relevant documents required therefore, and will
complete all such formalities as are necessary to make Party A or its
designated party a full and proper shareholder of Party D. Such formalities
include, but are not limited to, assisting Party A 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. TAXES
All taxes arising from the performance of this Agreement will be paid by
Party D.
5. BREACH OF AGREEMENT
5.1 Unless otherwise provided by this Agreement, a party is deemed as in breach
of this Agreement if it fails to fully perform or suspends performing its
obligations under this Agreement, and does not correct its wrongdoings
within 30 days upon receipt of the notice by the other party, or its
representations and warranties are unreal.
5.2 If one party violates this Agreement of its representations and warranties
in this Agreement, the abiding party may notify the default party in
writing requesting it to correct its wrongdoings within 10 days of
receiving the notice, take corresponding measures to effectively and timely
avoid the damages and to resume performing this Agreement. If there are
damages, the default party shall compensate the abiding party, causing the
abiding party to obtain all receivable rights and interests from the
performance of the Agreement.
5.3 If either party breaches this Agreement, which causes the other party to
bear any expenses, liabilities or suffer any losses (including not limited
to the profit losses of the company), the
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default party shall compensate the abiding party with respect to such
expenses, liabilities or losses (including but not limited to the interests
lost or paid due to the breach and attorney fees). The amount of the
compensation shall equal the losses due to the breach. The compensation
includes the receivable interests by the abiding party from performance of
this Agreement, but shall not exceed reasonable expectations of the
Parties.
5.4 In case all Parties breach this Agreement, the amounts of compensation
shall be determined in accordance with the severity of their respective
breaches.
6. GOVERNING LAW AND DISPUTE SETTLEMENT
6.1 Governing Laws
This Agreement shall be governed by the laws of the PRC, including but not
limited to the execution, performance, effect and interpretation of this
Agreement.
6.2 Friendly Consultation
The Parties shall settle the dispute regarding the interpretation or
performance of this Agreement through friendly consultation or mediation by
a third party. Any dispute that failing such consultation or mediation
shall be submitted to the arbitration authority for arbitration within 30
days after the commencement of such discussions.
6.3 Arbitration
Any dispute in connection with this Agreement shall submitted to China
International Trade Arbitration Committee for arbitration in accordance
with its arbitration rules. The arbitration award shall be final and
binding on all Parties to this Agreement.
7. CONFIDENTIALITY
7.1 Confidential Information
The contents of this Agreement and the Annexes hereof shall be kept
confidential. No Party
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shall disclose any such information to any third party (except for the part
agreed upon by the Parties with a prior written agreement). Each Party's
obligations under this clause shall survive after the termination of this
Agreement.
7.2 Exceptions
If a disclosure is explicitly required by law, any courts, arbitration
tribunals, or administrative authorities, such a disclosure by any Party
shall not be deemed a violation of Article 7.1 above.
8. MISCELLANEOUS
8.1 Entire agreement
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. The
Annexes attached hereto shall constitute an integral part of this Agreement
and shall have the same legal effect as this Agreement.
8.2 Notices
Any notices or other correspondences among the Parties in connection with
the Performance of this Agreement shall be in writing and be delivered in
person, by registered mail, prepaid mail, recognized express mail or
facsimile to the following correspondence addresses:
PARTY A: KONG ZHONG XXX XXXX INFORMATION TECHNOLOGY LIMITED (BEIJING)
Address: Tengda Xxxxx, Xx.000 Xxxxx Xxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx
Fax: ________________
Tele: ________________
Addressee: Xxxx Xxxxxxx
PARTY B: XX XXXX
Address: ________________
Fax: ________________
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Tele: ________________
Addressee: ________________
PARTY C: XX XXXXXX
Address: ________________
Fax: ________________
Tele: ________________
PARTY D: WUHAN CHENGXITONG INFORMATION & TECHNOLOGY CO. LTD.
Address: ________________
Fax: ________________
Tele: ________________
Addressee: Wang Guijun
8.2.1 Notices and correspondences shall be deemed to have been effectively
delivered:
8.2.2.1 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;
8.2.2.2 on the date that the receiving Party signs for the document,
if delivered in person (including express mail);
8.2.2.3 on the fifteenth (15th ) day after the date shown on the
registered mail receipt, if sent by registered mail;
8.2.3 Binding Force
This Agreement shall be binding on the Parties.
8.3 Language and Counterparts
This Agreement shall be executed in 5 originals in Chinese, with each party
holding one copy.
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8.4 Days and Business Day
A reference to a day herein is to a calendar day. A reference to a business
day herein is to any day from Monday through Friday in a week.
8.5 Headings
The headings contained herein are inserted for reference purposes only and
shall not affect the meaning or interpretation of any part of this
Agreement.
8.6 Unspecified Matters
Any matter not specified in this Agreement shall be handled through
discussions among the Parties and resolved in accordance with PRC laws.
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(No text on this page, signatory page of Option Agreement)
PARTY A: KONG ZHONG XXX XXXX INFORMATION TECHNOLOGY LIMITED (BEIJING)
Authorized Representative:
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PARTY B: XX XXXX
Signature:
--------------------------
PARTY C: XX XXXXXX
Signature:
--------------------------
PARTY D: WUHAN CHENGXITONG INFORMATION & TECHNOLOGY CO. LTD.
Authorized Representative:
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