Exhibit 10.4
OPTION AGREEMENT
This Option Agreement (this "Agreement") is entered into, as of November 1,
2005, in Zhejiang China by Capital Future Development Limited, incorporated
under law of British Virgin Islands ("Party A"), Zhejiang Yong Xin Digital
Technology Co., Ltd., duly established under law of People's Republic of China,
with a registered address at Xx. 000 Xx Xxx Xxx Xx, Xxxx Xx Xxxxxxxx, Xxxxxxxx,
Xxxxx ("Party B") and each of the shareholders of Party B listed on the
signature pages hereto (collectively, the "Party C"), Party A, Party B and Party
C are referred to collectively in this Agreement as the "Parties."
RECITALS
1. (1) Party A, a company duly incorporated under law of British Islands, has
the expertise in the business of digital products;
2. (1) Party B is a limited company incorporated in China, and is engaged in
the selling, circulation and modern logistics of 3C products (communication
products, information technology ("IT") products and digital products) in
China (the "Business");
3. Party C is the shareholders of Party B. Party C has the ownership of [100%]
equity interest in Party B.(each, an "Equity Interest" and collectively the
"Equity Interest")
4. A series agreements such as the Consulting Services Agreement (the "Service
Agreement") have been entered into the Parties on November 1, 2005;
5. An Equity Pledge Agreement (the "Equity Pledge Agreement") has been entered
into by the Parties as of November 1, 2005;
6. The Parties are entering into this Option Agreement in conjunction with the
Pledge Agreement, Consulting Services Agreement and related agreements.
NOW, THEREFORE, the Parties to this Agreement hereby agree as follows:
1. Purchase and Sale of Equity Interest
1.1 Grant of Rights. Party C (hereafter collectively the "Transferor")
hereby irrevocably grants to Party A an option to purchase or cause
any person designated by Party A ("Designated Persons") to purchase,
to the extent permitted under PRC Law, according to the steps
determined by Party A, at the price specified in Section 1.3 of this
Agreement, at any time from the Transferor a portion or all of the
equity interests held by Transferor in Party B (the "Option"). No
Option shall be granted to any third party other than Party A and/or
the Designated Persons. Party B hereby agrees to the granting of the
Option by Party C to Party A and/or the Designated Persons. The
"person" set forth in this clause and this Agreement means an
individual person, corporation, joint venture, partnership,
enterprise, trust or a non-corporation organization.
1.2 Exercise of Rights. According to the stipulations of PRC laws and
regulation, Party A and/or the Designated Persons may exercise Option
by issuing a written notice (the "Notice") to the Transferor and
specifying the equity interest purchased from Transferor (the
"Purchased Equity Interest") and the manner of purchase.
1.3 Purchase Price.
1.3.1 For Party A to exercise the Option, the purchase price of the
Purchased Equity Interest ("Purchase Price") shall be equal to
the original paid-in price of the Purchased Equity Interest by
the Transferor, unless the applicable PRC laws and regulations
require appraisal of the equity interests or stipulate other
restrictions on the purchase price of equity interests.
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1.3.2 If the applicable PRC laws require appraisal of the equity
interests or stipulates other restrictions on the purchase
price of the Equity Interest at the time that Party A exercise
the Option, the Parties agree that the Purchase Price shall be
set at the lowest price permissible under the applicable laws.
1.4 Transfer of the Purchased Equity Interest. Up[on each exercise of the
Option rights under this Agreement:
1.4.1 The Transferor shall ask Party C to convene a shareholders'
meeting. During the meeting, the resolutions shall be proposed,
approving the transfer of the appropriate Equity Interest to
Party A and/or the Designated Persons;
1.4.2 The Transferor shall, upon the terms and conditions of this
Agreement and the Notice related to the Purchased Equity
Interest, enter into Equity Interest purchase agreement in a
form reasonably acceptable to Party A, with Party A and/or the
Designated Persons (as applicable);
1.4.3 The related parties shall execute all other requisite
contracts, agreements or documents, obtain all requisite
approval and consent of the government, conduct all necessary
actions, without any security interest, transfer the valid
ownership of the Purchased Equity Interest to Party A and/or
the Designated Persons, and cause Party A and/or the Designated
Persons to be the registered owner of the Purchased Equity
Interest. In this clause and this Agreement, "Security
Interest" means any mortgage, pledge, the right or interest of
the 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,
it does not include any security interest created under the
Equity Pledge Agreement.
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1.5 Payment. The payment of the Purchase Price shall be determined by the
consultation of Party A and/or the Designated Persons with the
Transferor according to the applicable laws at the time of exercise of
the Option.
2. Promises Relating Equity Interest.
2.1 Promises Related to Party B. Party B, Party C hereby promise:
2.1.1 Without prior written consent by Party A, not, in any form, to
supplement, change or renew the Articles of Association of
Party B, to increase or decrease registered capital of the
corporation, or to change the structure of the registered
capital in any other forms;
2.1.2 According to customary fiduciary standards applicable to
managers with respect to corporations and their shareholders,
to maintain the existence of the corporation, prudently and
effectively operate the business;
2.1.3 Without prior written consent by Party A, not, upon the
execution of this Agreement, to sell, transfer, mortgage or
dispose, in any other form, any asset, legitimate or beneficial
interest of business or income of Party B, or encumber or
approve any encumbrance or imposition of any security interest
on Party A's assets;
2.1.4 Without prior written notice by Party A, not issue or provide
any guarantee or permit the existence of any debt, other than
(i) the debt arising from normal or daily business but not from
borrowing; and (ii) the debt disclosed to Party A and obtained
the written consent from Party A;
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2.1.5 To normally operate all business to maintain the asset value of
Party B, without taking any action or failing to take any
action that would result in a material adverse effect on the
business or asset value of Party B;
2.1.6 Without prior written consent by Party A, not to enter into any
material agreement, other than agreements in the ordinary
course of business (for purposes of this paragraph, if the
amount of the Agreement involves an amount that exceeds a
hundred thousand Yuan (RMB 100,000) the agreement shall be
deemed material);
2.1.7 Without prior written consent by Party A, not to provide loan
or credit loan to any others;
2.1.8 Upon the request of Party A, to provide all materials of
operation and finance relevant to Party B;
2.1.9 Purchases and holds the insurance from the insurance company
accepted by Party A, the insurance amount and category shall be
the same with those held by the companies in the same industry
or field, operating the similar business and owning the similar
properties and assets as Party B;
2.1.10 Without prior written consent by Party A, not to merge or
associate with any person, or acquire or invest in any person;
2.1.11 To notify Party A of the occurrence or the potential occurrence
of the litigation, arbitration or administrative procedure
related to the assets, business and income of Party B;
2.1.12 In order to keep the ownership of Party B to all its assets, to
execute all requisite or appropriate documents, take all
requisite or appropriate actions, and pursue all appropriate
claims, or make requisite or appropriate pleas for all claims;
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2.1.13 Without prior written notice by Party A, not to assign equity
interests to shareholders in any form; however, Party A shall
distribute all or part of its distributable profits to their
own shareholders upon request by Party A;
2.1.14 According to the request of Party A, to appoint any person
designated by Party A to be the directors of Party B.
2.2 Promises Related to Transferor. Party C hereby promise:
2.2.1 Without prior written consent by Party A, not, upon the
execution of this Agreement, to sell, transfer, mortgage or
dispose in any other form any legitimate or beneficial interest
of equity interest, or to approve any other security interest
set on it, with the exception of the pledge set on the equity
interest of the Transferor subject to Equity Pledge Agreement;
2.2.2 Without the prior written notice by Party A, not to decide or
support or execute any shareholder resolution at any
shareholder meeting of Party B that approves any sale,
transfer, mortgage or dispose of any legitimate or beneficial
interest of equity interest, or allows any other security
interest set on it, other than the pledge on the equity
interests of Transferor pursuant to Equity Pledge Agreement;
2.2.3 Without prior written notice by Party A, the Parties shall not
agree or support or execute any shareholders resolution at any
shareholder meeting of Party B that approves Party B's merger
or association with any person, acquisition of any person or
investment in any person;
2.2.4 To notify Party A the occurrence or the potential occurrence of
the litigation, arbitration or administrative procedure related
to the equity interest owned by them;
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2.2.5 To cause the Board of Directors of Party B to approve the
transfer of the Purchased Equity Interest subject to this
Agreement;
2.2.6 In order to keep its ownership of the equity interest, to
execute all requisite or appropriate documents, conduct all
requisite or appropriate actions, and make all requisite or
appropriate claims, or make requisite or appropriate defend
against fall claims of compensation;
2.2.7 Upon the request of Party A, to appoint any person designated
by Party A to be the directors of Party B;
2.2.8 Upon the request of Party A at any time, to transfer its Equity
Interest immediately to the representative designated by Party
A unconditionally at any time and abandon its prior right of
first refusal of such equity interest transferring to another
available shareholder;
2.2.9 To prudently comply with the provisions of this Agreement and
other Agreements entered into collectively or respectively by
the Transferor, Party B and Party A and perform all obligations
under these Agreements, without taking any action or any
nonfeasance that sufficiently affects the validity and
enforceability of these Agreements;
3. Representations and Warranties. As of the execution date of this Agreement
and every transferring date, Party B, Party C hereby represent and warrant
collectively and respectively to Party A as follows:
3.1 It has the power and ability to enter into and deliver this Agreement,
and any equity interest transferring Agreement ("Transferring
Agreement," respectively) having it as a party, for every single
transfer of the Purchased Equity Interest according to this Agreement,
and to perform its obligations under this Agreement and any
Transferring Agreement. Upon execution, this Agreement and the
Transferring Agreements having it as a party will constitute a legal,
valid and binding obligation of it enforceable against it in
accordance with its terms;
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3.2 The execution, delivery of this Agreement and any Transferring
Agreement and performance of the obligations under this Agreement and
any Transferring Agreement will not: (i) cause to violate any relevant
laws and regulations of PRC; (ii) constitute a conflict with its
Articles of Association or other organizational documents; (iii) cause
to breach any Agreement or instruments to which it is a party or
having binding obligation on it, or constitute the breach under any
Agreement or instruments to which it is a party or having binding
obligation on it; (iv) cause to violate relevant authorization of any
consent or approval to it and/or any continuing valid condition; or
(v) cause any consent or approval authorized to it to be suspended,
removed, or into which other requests be added;
3.3 The shares of Party B are transferable, and Party B has not permitted
or caused any security interest to be imposed upon the shares of Party
B.
3.4 Party B does not have any unpaid debt, other than (i) debt arising
from its normal business; and (ii) debt disclosed to Party A and
obtained by written consent of Party A;
3.5 Party B has complied with all PRC laws and regulations applicable to
the acquisition of assets and securities in connection with this
Agreement;
3.6 No litigation, arbitration or administrative procedure relevant to the
Equity Interests and assets of Party B or Party B itself is in process
or to be settled and the Parties have no knowledge of any pending or
threatened claim;
3.7 The Transferor bears the fair and salable ownership of its Equity
Interest free of encumbrances of any kind, other than the security
interest pursuant to the Equity Pledge Agreement.
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4. Assignment of Agreement
4.1 Party B and Party C shall not transfer their rights and obligations
under this Agreement to any third party without the prior written
consent of the Party A.
4.2 Party B and Party C hereby agrees that Party A shall be able to
transfer all of its rights and obligation under this Agreement to any
third party with its needs, and such transfer shall only be subject to
a written notice sent to Party B, Party C by Party A, and no any
further consent from Party B and Party C will be required.
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 is ten (10) years unless the early
termination in accordance with this Agreement or other terms of the
relevant agreements stipulated by the Parties. This Agreement may be
extended according to the written consent of Party A before the
expiration of this Agreement. The term of extension will be decided
unanimously through mutual agreement of the Parties.
5.3 If Party A or Party B terminates by the expiration of its operating
period (including any extended period) or other causes in the term set
forth in Section 5.2, this Agreement shall be terminated
simultaneously, except Party A has transferred its rights and
obligations in accordance with Section 4.2 of this Agreement.
6. Applicable Law and Dispute Resolution
6.1 Applicable Law. The execution, validity, construing and performance of
this Agreement and the resolution of disputes under this Agreement
shall be governed by the laws of PRC.
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6.2 Dispute Resolution. The parties shall strive to settle any dispute
arising from the interpretation or performance in connection with this
Agreement through friendly consultation. In case no settlement can be
reached through consultation within thirty (30) days after such
dispute is raised, each party can submit such matter to China
International Economic and Trade Arbitration Commission (the "CIETAC")
in accordance with its rules. Arbitration shall take place in Beijing
and the proceedings shall be conducted in Chinese. Any resulting
arbitration award shall be final conclusive and binding upon both
parties.
7. Taxes and Expenses. Each Party shall, according to the PRC laws, bear any
and all registering taxes, costs and expenses for equity transfer arising
from the preparation and execution of this Agreement and all Transferring
Agreements, and the completion of the transactions under this Agreement and
all Transferring Agreements.
8. Notices. Notices 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 postage prepaid mail or
by a recognized courier service or by facsimile transmission to the address
of relevant each party or both parties set forth below or other address of
the party or of the other addressees specified by such party from time to
time. 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 tenth (10th) day after the date when the air registered mail with
postage prepaid has been sent out (as is shown on the postmark), or the
fourth (4th) day after the delivery date to the internationally recognized
courier service agency; and (c) a notice sent by facsimile transmission is
deemed duly served upon the receipt time as is shown on the transmission
confirmation of relevant documents.
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PARTY A Capital Future Development Limited
Address:
Attn:
Fax:
Tel:
PARTY B: Zhejiang Yong Xin Digital Technology Co., Ltd.
Address: Xx. 000 Xx Xxx Xxx Xx, Xxxx Xx Xxxxxxxx, Xxxxxxxx, Xxxxx
Attn:
Fax:
Tel:
PARTY C: Details in Signature Pages
9. Confidentiality. The Parties acknowledge and confirm any oral or written
materials exchanged by the Parties in connection with this Agreement are
confidential. The Parties shall maintain the secrecy and confidentiality of
all such materials. Without the written approval by the other Parties, any
Party shall not disclose to any third party any relevant materials, but the
following circumstances shall be excluded:
a. The materials that is known or may be known by the general public (but
not include the materials disclosed by each party receiving the
materials);
b. The materials required to be disclosed subject to the applicable laws
or the rules or provisions of stock exchange; or
c. The materials disclosed by each Party to its legal or financial
consultant relating the transaction of this Agreement, and this legal
or financial consultant shall comply with the confidentiality set
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forth in this Section. The disclosure of the confidential materials by
staff or employed institution of any Party shall be deemed as the
disclosure of such materials by such Party, and such Party shall bear
the liabilities for breaching the contract. This clause shall survive
whatever this Agreement is invalid, amended, revoked, terminated or
unable to implement by any reason.
10. Further Warranties. The Parties agree to promptly execute documents
reasonably required to perform the provisions and the aim of this Agreement
or documents beneficial to it, and to take actions reasonably required to
perform the provisions and the aim of this Agreement or actions beneficial
to it.
11. Miscellaneous.
11.1 Amendment, Modification and Supplement. Any amendment and supplement
to this Agreement shall only be effective is made by the Parties in
writing.
11.2 Entire Agreement. Notwithstanding the Article 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 supercede and replace all prior or contemporaneous agreements and
understandings in verb or/and in writing.
11.3 Severability. If any provision of this Agreement is judged as invalid
or non-enforceable according to relevant Laws, the 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 fairly consultation, replace those invalid,
illegal or non-enforceable provisions with valid provisions that may
bring the similar economic effects with the effects caused by those
invalid, illegal or non-enforceable provisions.
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11.4 Headings. The headings contained in this Agreement are for the
convenience of reference only and shall not affect the interpretation,
explanation or in any other way the meaning of the provisions of this
Agreement.
11.5 Language and Copies. This Agreement has been executed in English in
four (4) duplicate originals; each Party holds one (1) original and
each duplicate original shall have the same legal effect.
11.6 Successor. This Agreement shall bind and benefit the successor of each
Party and the transferee allowed by each Party.
11.7 Survival. Any obligation taking place or at term hereof prior to the
end or termination ahead of the end of this Agreement shall continue
in force and effect notwithstanding the occurrence of the end or
termination ahead of the end of the Agreement. Article 6, Article 8,
Article 9 and Section 11.7 hereof shall continue in force and effect
after the termination of this Agreement.
11.8 Waiver. Any Party may waive the terms and conditions of this Agreement
in writing with the signature of the Parties. Any waiver by a Party to
the breach by other Parties within certain situation shall not be
construed as a waiver to any similar breach by other Parties within
other situations.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties hereof have caused this Agreement to be executed
by their duly authorized representatives as of the date first written above.
PARTY A: Capital Future Development Limited
Capital Future Development Limited
Legal/Authorized Representative: /s/
----------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
PARTY B: Zhejiang Yong Xin Digital Technology Co., Ltd
Legal/Authorized Representative: /s/
----------------------------
Name:
-------------------------------------------------------
Title:
------------------------------------------------------
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PARTY C:
/s/ WANG Zhenggang
---------------------------------
By: WANG Zhenggang;
(PRC ID Card No.: 330725196811015038);
Shares of. Zhejiang Yong Xin Digital Technology Co., Ltd. owned
by WANG Zhenggang: 35%;
Home Address:No7, South block 0, Xxx Xxx Xxx, Xxxx, Xxxxxxxx, Xxxxx;
/s/ Xxxxx Xxxxx
---------------------------------
By: Xxxxx Xxxxx
(PRC ID Card No.: 420106196706282812)
Shares of Zhejiang Yong Xin Digital Technology Co., Ltd owned by
XXXXX Xxxxx: 20%;
Home Address: No 13 Block 00 Xxxxxxxx Xx Xxxx, Xxxx Xxxxx Xxxxxx,
Xxxx, Xxxxxxxx, Xxxxx
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/s/ LV Huiyi
---------------------------------
By: LV Huiyi
(PRC ID Card No.: 440111197109154838)
Shares of Zhejiang Yong Xin Digital Technology Co., Ltd owned by
XXXXX Xxxxx: 20%;
Home Address: Xxxxx 000, Xx.00, 000 Xxxxx Xxxx Xxxx Road, Guangdong,
China
/s/ XXXX Xxxxxxxx
---------------------------------
By: XXXX Xxxxxxxx
(PRC ID Card No.: 330723780207004)
Shares of Zhejiang Yong Xin Digital Technology Co., Ltd owned by
XXXXX Xxxxx: 15%;
Home Address: Xx. 00, Xxxxxx Xxxx, Xxxxxx Xxxx, Xxxx Xxxxxxxx,
Xxxxxxxx, Xxxxx
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/s/ BAO Zhongsheng
---------------------------------
By: BAO Zhongsheng
(PRC ID Card No.: 330725197805030818)
Shares of Zhejiang Yong Xin Digital Technology Co., Ltd owned by
XXXXX Xxxxx: 10%;
Home Address: Xx 00 Xxxxx 00 Xxxxxxxx Xx Xxxx, Xxxx Xxxxx Street,
Yiwu, Zhengjiang
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