Exhibit 10.27
EXCLUSIVE OPTION AGREEMENT
This Exclusive Option Agreement (this "Agreement") is executed by and among
the following Parties as of February 3, 2011 in Beijing, the People's Republic
of China ("China" or the "PRC"):
Party A: America Arki (Fuxin) Network Management Co., Ltd., a wholly foreign
owned enterprise, organized and existing under the laws of the PRC,
with its address at Xx.0, Xxxxxxxxxxx Xxxxxxx, Xxxxxxx Xxxx, Xxxxxxx
Xxxxxxxx, Xxxxx;
Party B: Gao Fei, a Chinese citizen with Chinese Identification No.:
000000000000000000; and
Party C: America Arki Networkservice Beijing Co., Ltd., a limited liability
company organized and existing under the laws of the PRC, with its
address at Xx.00X&00, Xxxxx 00, Xx.00, Xxxxxxx Xxxx, Xxxxxxxx
District, Beijing.
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".
Whereas:
1. Party B became a shareholder of Party C and holds 50% of the equity
interest in Party C on August 26, 2010;
2. Party A, Party B and other related parties executed a Loan Agreement
on February 3, 2011 (the "Loan Agreement").
Now therefore, upon mutual discussion and negotiation, the Parties have
reached the following agreement:
1. SALE AND PURCHASE OF EQUITY INTEREST
1.1 Option Granted
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
Interest 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 Interest Purchase
Option to Party A. The term "person" as used herein shall refer to
individuals, corporations, partnerships, partners, enterprises, trusts or
non-corporate organizations.
<PAGE>
1.2 Steps for Exercise of Equity Interest Purchase Option
Subject to the provisions of the laws and regulations of China, Party A may
exercise the Equity Interest Purchase Option by issuing a written notice to
Party B (the "Equity Interest Purchase Option Notice"), specifying: (a)
Party A's decision to exercise the Equity Interest Purchase Option; (b) the
portion of equity interests to be purchased from Party B (the "Optioned
Interests"); and (c) the date for purchasing the Optioned Interests and/or
the date for transfer of the Optioned Interests.
1.3 Equity Interest Purchase Price
Unless an appraisal is required by the laws of China applicable to the
Equity Interest Purchase Option when exercised by Party A, the purchase
price of the Optioned Interests (the "Equity Interest Purchase Price")
shall be RMB1.00 or lowest price allowed by relevant laws and regulations.
If appraisal is required by the laws of China when Party A exercises the
Equity Interest Purchase Option, the Parties shall negotiate in good faith
and based on the appraisal result make necessary adjustment to the Equity
Interest Purchase Price so that it complies with any and all then
applicable laws of China.
1.4 Transfer of Optioned Interests
For each exercise of the Equity Interest Purchase Option:
1.4.1Party B shall cause Party C to promptly convene a shareholders'
meeting, at which a resolution shall be adopted approving Party B's
transfer of the Optioned Interests to Party A and/or the Designee(s);
1.4.2Party B shall obtain written statements from the other shareholders
of Party B giving consent to the transfer of the equity interest to
Party A and/or the Designee(s) and waiving any right of first refusal
related thereto.
1.4.3Party B shall execute a share transfer contract with respect to each
transfer with Party A and/or each Designee (whichever is applicable),
in accordance with the provisions of this Agreement and the Equity
Interest Purchase Option Notice regarding the Optioned Interests;
1.4.4The relevant Parties shall execute all other necessary contracts,
agreements or documents, obtain all necessary government licenses and
permits and take all necessary actions to transfer valid ownership of
the Optioned Interests to Party A and/or the Designee(s), unencumbered
by any security interests, and cause Party A and/or the Designee(s) to
become the registered owner(s) of the Optioned Interests. For the
purpose of this Section and this Agreement, "security interests" shall
include securities, mortgages, third party's rights or interests, any
stock options, acquisition right, right of first refusal, right to
offset, ownership retention or other security arrangements, but shall
be deemed to exclude any security interest created by this Agreement
2
<PAGE>
and Party B's Share Pledge Agreement. "Party B's Share Pledge
Agreement" as used in this Section and this Agreement shall refer to
the Share Pledge Agreement ("Share Pledge Agreement") executed by and
among Party A, Party B and Party C as of the date hereof, whereby
Party B pledges all of its equity interests in Party C to Party A, in
order to guarantee Party C's performance of its obligations under the
Exclusive Business Corporation Agreement executed by and between Party
C and Party A.
1.5 Payment of the Equity Interest Purchase Price
The Parties have agreed in the Loan Agreement that any proceeds obtained by
Party B through the transfer of its equity interests in Party C shall be
used for repayment of the loan provided by Party A in accordance with the
Loan Agreement. Accordingly, upon exercise of the Equity Interest Purchase
Option, Party A may elect to make payment of the Equity Interest Purchase
Price through cancellation of the outstanding amount of the loan owed by
Party B to Party A, in which case Party A shall not be required to pay any
additional Equity Interest Purchase Price to Party B.
2. COVENANTS
2.1 Covenants regarding Party C
Party B (as the shareholders of Party C) and Party C hereby covenant as
follows:
2.1.1Without the prior written consent of Party A, they shall not in any
manner supplement, change or amend the articles of association and
bylaws of Party C, increase or decrease its registered capital, or
change its structure of registered capital in other manners;
2.1.2They shall maintain Party C's corporate existence in accordance with
good financial and business standards and practices by prudently and
effectively operating its business and handling its affairs;
2.1.3Without the prior written consent of Party A, they shall not at any
time following the effective date hereof, sell, transfer, mortgage or
dispose of in any manner any assets of Party C or legal or beneficial
interest in the business or revenues of Party C, or allow the
encumbrance thereon of any security interest;
2.1.4Without the prior written consent of Party A, they shall not incur,
inherit, guarantee or suffer the existence of any debt, except for (i)
debts incurred in the ordinary course of business other than through
loans; and (ii) debts disclosed to Party A for which Party A's written
consent has been obtained;
3
<PAGE>
2.1.5They shall always operate all of Party C's businesses during the
ordinary course of business to maintain the asset value of Party C and
refrain from any action/omission that may affect Party C's operating
status and asset value;
2.1.6Without the prior written consent of Party A, they shall not cause
Party C to execute any major contract, except the contracts in the
ordinary course of business (for purpose of this subsection, a
contract with a value exceeding RMB 100,000 shall be deemed a major
contract);
2.1.7Without the prior written consent of Party A, they shall not cause
Party C to provide any person with any loan or credit;
2.1.8They shall provide Party A with information on Party C's business
operations and financial condition at Party A's request;
2.1.9Without the prior written consent of Party A, they shall not cause or
permit Party C to merge, consolidate with, acquire or invest in any
person;
2.1.10 They shall immediately notify Party A of the occurrence or possible
occurrence of any litigation, arbitration or administrative
proceedings relating to Party C's assets, business or revenue;
2.1.11 To maintain the ownership by Party C of all of its assets, they
shall execute all necessary or appropriate documents, take all
necessary or appropriate actions and file all necessary or appropriate
complaints or raise necessary and appropriate defenses against all
claims;
2.1.12 Without the prior written consent of Party A, they shall ensure that
Party C shall not in any manner distribute dividends to its
shareholders, provided that upon Party A's written request, Party C
shall immediately distribute all distributable profits to its
shareholders; and
2.1.13 At the request of Party A, they shall appoint any persons designated
by Party A as the executive director of Party C.
2.2 Covenants of Party B
Party B hereby covenants as follows:
2.2.1Without the prior written consent of Party A, Party B shall not sell,
transfer, mortgage or dispose of in any other manner any legal or
beneficial interest in the equity interests in Party C held by Party
B, or allow the encumbrance thereon of any security interest, except
for the pledge placed on these equity interests in accordance with
Party B's Share Pledge Agreement;
4
<PAGE>
2.2.2Party B shall cause the shareholders' meeting and/or the executive
director of Party C not to approve the sale, transfer, mortgage or
disposition in any other manner of any legal or beneficial interest in
the equity interests in Party C held by Party B, or allow the
encumbrance thereon of any security interest, without the prior
written consent of Party A, except for the pledge placed on these
equity interests in accordance with Party B's Share Pledge Agreement;
2.2.3Party B shall cause the shareholders' meeting or the executive
director of Party C not to approve the merger or consolidation
with any person, or the acquisition of or investment in any
person, without the prior written consent of Party A;
2.2.4Party B shall immediately notify Party A of the occurrence or
possible occurrence of any litigation, arbitration or
administrative proceedings relating to the equity interests in
Party C held by Party B;
2.2.5Party B shall cause the shareholders' meeting or the executive
director of Party C to vote their approval of the transfer of the
Optioned Interests as set forth in this Agreement and to take any
and all other actions that may be requested by Party A;
2.2.6To the extent necessary to maintain Party B's ownership in Party
C, Party B shall execute all necessary or appropriate documents,
take all necessary or appropriate actions and file all necessary
or appropriate complaints or raise necessary and appropriate
defenses against all claims;
2.2.7Party B shall appoint any designee of Party A as the executive
director of Party C, at the request of Party A;
2.2.8At the request of Party A at any time, Party B shall promptly
and unconditionally transfer its equity interests in Party C to
Party A's Designee(s) in accordance with the Equity Interest
Purchase Option under this Agreement, and Party B hereby waives
its right of first refusal to the respective share transfer by
the other existing shareholder of Party C (if any); and
2.2.9Party B shall strictly abide by the provisions of this Agreement
and other contracts jointly or separately executed by and among
Party B, Party C and Party A, perform the obligations hereunder
and thereunder, and refrain from any action/omission that may
affect the effectiveness and enforceability thereof. To the
extent that Party B has any remaining rights with respect to the
equity interests subject to this Agreement hereunder or under the
Share Pledge Agreement among the same parties hereto or under the
Power of Attorney granted in favor of Party A, Party B shall not
exercise such rights except in accordance with the written
instructions of Party A.
3. REPRESENTATIONS AND WARRANTIES
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 Contracts"), 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 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.
3.6 Party C has complied with all laws and regulations of China applicable to
asset acquisitions; and
3.7 There are no pending or threatened litigation, arbitration or
administrative proceedings relating to the equity interests in Party C,
assets of Party C or Party C.
5
<PAGE>
4. EFFECTIVE DATE
Once execution, this Agreement shall be deemed to become effective upon
November 26, 2010, and remain effective for a term of 10 years, and may be
renewed at Party A's election.
5. GOVERNING LAW AND RESOLUTION OF DISPUTES
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.
6. TAXES AND FEES
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.
7. NOTICES
7.1 All notices and other communications required or permitted to be given
pursuant to this Agreement shall be delivered personally or sent by
registered mail, postage prepaid, by a commercial courier service or by
facsimile transmission to the address of such Party set forth below. A
confirmation copy of each notice shall also be sent by email. The dates on
which notices shall be deemed to have been effectively given shall be
determined as follows:
6
<PAGE>
7.1.1Notices given by personal delivery, by courier service or by
registered mail, postage prepaid, shall be deemed effectively given on
the date of receipt or refusal at the address specified for notices.
7.1.2Notices given by facsimile transmission shall be deemed effectively
given on the date of successful transmission (as evidenced by an
automatically generated confirmation of transmission).
7.2 For the purpose of notices, the addresses of the Parties are as follows:
Party A: America Arki (Fuxin) Network Management Co., Ltd.
Address: Xx.0, Xxxxxxxxxxx Xxxxxxx, Xxxxxxx Xxxx, Xxxxxxx District, Fuxin;
Facsimile: 010-65305285
Party B: Gao Fei
Address: Xxxx 000, Xxxxxxxx Xx.00, Xxxxx Central Place, Xx.00, Xxxxxxx
Xxxx, Xxxxxxxx Xxxxxxxx, Xxxxxxx
Facsimile: 010-65305285
Party C: America Arki Networkservice Beijing Co., Ltd.
Address: 03B&05B, Floor 25, Xx.00, Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx, Xxxxxxx
Facsimile: 010-65305285
7.3 Any Party may at any time change its address for notices by a notice
delivered to the other Parties in accordance with the terms hereof.
8. CONFIDENTIALITY
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.
7
<PAGE>
9. FURTHER WARRANTIES
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. MISCELLANEOUS
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 supercede 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 Chinese and English language in three
copies, each Party having one copy with equal legal validity; in case there
is any conflict between the Chinese version and the English version, the
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.
8
<PAGE>
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.
10.8 Survival
10.8.1 Any obligations that occur or that are due as a result of this
Agreement upon the expiration or early termination of this Agreement
shall survive the expiration or early termination thereof.
10.8.2 The provisions of Sections 5, 7, 8 and this Section 10.8 shall
survive the termination of this Agreement.
10.9 Waivers
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.
10.10 Indemnification
10.10.1 Each Party agrees and acknowledges that any material breach or
material non-performance of any section by a shareholder of the
Company (the "Breaching Party") under this Agreement shall constitute
a breach of contract under this Agreement (the "Breach"), and Party A
shall be entitled to request the Breaching Party to cure such Breach
or adopt remedial steps within reasonable period. In the event the
Breaching Party fails to cure or to adopt remedial steps within the
reasonable period or within ten (10) days after written notice of
Breach to the Breaching Party by Party A, then Party A shall be
entitled to exercise any of the following remedial methods: (i) to
terminate this Agreement and request all liquidated damages; or (ii)
to enforce the Breaching Party to perform his obligations under this
Agreement and request all liquidated damages as well; or (iii) to
convert, auction or sell the pledged equity interests in accordance
with the share pledge agreement, and to be compensated on a
preferential basis with the conversion, auction or sales price of the
pledged equity interests, in addition to request the Breaching Party
to bear liquidated damages in connection with the Breach.
10.10.2 Both Parties agree and acknowledge that under no circumstances
shall the shareholders of the Company be entitled to terminate this
Agreement by any reasons.
9
<PAGE>
10.10.3 Any right and remedy under this Agreement is cumulative and shall
not restrict other rights and remedies under the law.
10.10.4 Notwithstanding other provisions under this Agreement, this Section
shall survive the suspension or termination of this Agreement.
10.11 Replacement
This Agreement constitutes the entire agreement between the Parties hereto,
and supersedes all prior discussions, negotiations and agreements among
them, with respect to the subject matter of this Agreement.
10
<PAGE>
IN WITNESS WHEREOF, the Parties have caused their authorized
representatives to execute this Exclusive Option Agreement as of the date first
above written.
Party A: America Arki (Fuxin) Network Management Co., Ltd.
By: /s/ Xxx Xxxxxxx
------------------------------
Name: Xxx Xxxxxxx
Title: Legal Representative
Party B: Gao Fei
By: /s/ Gao Fei
------------------------------
Party C: America Arki Networkservice Beijing Co., Ltd.
By: /s/ Gao Fei
------------------------------
Name: Gao Fei
Title: Legal Representative
11
