Document:

Exhibit 10.4

 

Service and Support Agreement

 

This
Service and Support Agreement (this “Agreement’) is made as of August 26, 2004,
in the People’s Republic of China (the “PRC”) by and between:

 

Party
A: Ocean Tian Di Communication
Technology Co. Ltd. (Guangzhou)

Address:                                , Guangzhou,
PRC

Legal
representative:  Jack Chin

 

and

 

Party
B:   Guangzhou Weida Communications Technology Limited

Address:                                , Guangzhou,
PRC

Legal
representative: Li Shunxing

 

In
this Agreement, Party A and Party B are collectively referred to as the
“Parties” and each as the “Party”.

 

WHEREAS:

 

(1)         Party A is a wholly foreign owned enterprise
(the “WOFE”), which is duly incorporated and validly existing under the PRC
laws and has the resources to provide certain business support and services;

 

(2)         Party B is a wholly domestically invested
company registered in the PRC which is licensed by relevant government
authorities to engage in the business of providing value-added telecommunication
services, and is not currently capable of internally providing such services as
are offered by Party A, and the receipt by it of such services is essential to
its business growth and development; and

 

(3)         The Parties intend that Party A will provide
various kinds of business support and services to Party B, and Party B will pay
fair and reasonable fees to Party A for such business support and services;

 

NOW
THEREFORE, after friendly negotiations, based on the principles of equality and
mutual benefit, and in consideration of the mutual covenants contained herein,
the Parties agree as follows:

 

1.      Business Support and Services

 

1.1 
Commencing September 1, 2004, Party A shall provide to Party B various
kinds of business support and services, including but not limited to the
following:  assistance in selection,

 

1

 

procurement
and financing of satellite communication and network infrastructure equipment,
outsourcing of employees, marketing research and consulting services, and
business promotion services:

 

a.                  Selection, Procurement and Financing of
Satellite Communication and other Equipment:

 

Party A shall assist in selecting and procuring the
satellite communication equipment which are leased by Party A to Party B;

 

b.                 Outsourcing of Employee:

 

Considering the principle of cost saving, Party B
may engage Party A to provide certain employees to work in certain departments
of Party B;

 

c.                  Market Research and Consulting:

 

Party A shall designate people to conduct market
research in accordance with Party B’s requirement, and shall submit periodic
written reports to Party B.  Party A
shall also provide related market consulting services in accordance with Party
B’s requirement from time to time;

 

d.                 Business Promotion:

 

Party A shall use its other company resources in
assisting Party B to expand the effect and scale of its business.

 

1.2   The
territory for the above-described services provided by Party A to Party B shall
be within the PRC.

 

2.  Covenants
of the Parties

 

2.1         Party B covenants that subsequent to the
execution of this Agreement, it shall not purchase any satellite communication
or network equipment (or lease any equipment from any third-party) for its
business, without the prior written consent of Party A.

 

2.2         Party B covenants that subsequent to the
execution of this Agreement, it shall not recruit, hire, or engage any new
employee or consultant, without the prior written consent of Party A.

 

2.3   Party B covenants that subsequent to the
execution of this Agreement, it shall not enter into any leases, contracts, or
service agreements, or other legally binding arrangements, which are similar to
or involve generally similar services as this Agreement, with any third-party,
without the prior written consent of Party A.

 

2.4   Party A covenants that during the term of
this Agreement, it shall be ready, willing, and able to provide all equipment
and business support services which Party B may reasonably need to operate its
business.

 

2

 

3.  Service and Support Fees

 

3.1           Commencing
September 1, 2004, for all of the services provided to Party B under this
Agreement, Party A will charge Party B 
fees as follows:

 

The service fees hereunder shall be
estimated and accrued monthly, and shall be 
at the rate of 51% of all monthly revenue, including the monthly
equipment sales revenue, equipment lease revenue, equipment maintenance
revenue, other service and support revenue, and subscription and transmission
revenue package fees paid by Party B’s customers and end users to Party B. The
exact amount shall be calculated and paid quarterly in arrears.

 

Both Parties agree that Party B is
exempt from payment of  the service fees
until Party B has net quarterly profits before taxes of at least RMB 500,000
for at least one full fiscal quarter, as reported on Party B’s regularly
prepared consolidated financial statements.

 

3.2           The
fees described above shall be billed quarterly (or as otherwise agreed by the
Parties), commencing with the first interim partial quarterly period from
September 1-30, 2004,  by Party A and
paid within 7 business days after the bill is rendered.

 

4.  Assistance

 

Party B shall make it best efforts to provide
to Party A any necessary assistance which is reasonably necessary for Party A
to perform its obligations to Party B under this Agreement.

 

5.  Confidentiality; Intellectual
Property Rights

 

5.1           Each
Party covenants to the other Party that it will not, at any time, directly or
indirectly, without the prior written consent of the other Party, divulge to
any person or entity whatsoever, any non-public information concerning the
financial, technical, or other business affairs of the other Party, which is
acquired during the negotiation or performance of this Agreement.

 

5.2           Party
A shall be the sole and exclusive owner of all intellectual property rights
arising from the performance of this Agreement, including, (but not limited to,
any copyrights, patent, know-how, commercial secrets and otherwise), whether
developed by Party A or Party B, and whether based on Party A’s or Party B’s
intellectual property rights.

 

6.  Term of this Agreement

 

The term of this Agreement shall continue for
10 years, unless sooner terminated by written agreement of both Parties. This Agreement
shall be automatically extended for another 10 years unless Party A gives its
written consent to the termination of this Agreement three months before the
expiration of the term.

 

3

 

7.  Assignment

 

Party A may freely transfer its rights or
obligations under this Agreement to ant other person, but shall give prompt
notice of such transfer to Party B.

 

Party B may not transfer any of its rights or
obligations under this Agreement without the prior written consent of Party A.

 

8.  Breach

 

If a part or all of any section(s) of this
Agreement is unable to be implemented because a Party is in any breach of its
obligations under this Agreement, or if there is a breach of any representation
or warranty by a Party, regardless of the good faith of such Party, then such
Party shall be deemed to be in breach of this Agreement.  A breaching Party shall be liable to the
other Party for all costs and losses incurred by reason of the Party’s breach
of this Agreement.

 

9.  Representations and Warranties

 

As
of the date on which this Agreement is signed, each Party represents and
warrants to the other Party the following matters:

 

a.              It is a duly
organized and legally existing entity, established under the laws of the PRC;

 

b.             It has full
legal authority and power to execute this Agreement and to perform all of its
obligations under this Agreement;

 

c.              Its
representative has been duly authorized to execute this Agreement on its
behalf, pursuant to a lawful power of attorney, a resolution of the Board of
Directors, or a resolution of the General Meeting; and

 

d.             Upon this
Agreement being signed by its authorized representative (and proper execution
by the other Party), this Agreement shall be effective and binding upon it and
enforceable against it in accordance with its terms.

 

e.              It will
cooperate in good faith with the other Party to take any and all actions, and
to execute any and all documents, as may be necessary or appropriate to fully
effectuate and implement this Agreement and the transactions contemplated
herein.

 

10.           Indemnity.

 

Party B shall indemnify and hold
harmless Party A from and against any loss, damage, obligation and cost arising
out of any litigation, claim or other legal process asserted against Party A resulting
from the contents of the services and support provided to Party B under this
Agreement.

 

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11.           Miscellaneous

 

11.1                           Any dispute
arising out of or in connection with this Agreement shall be settled amicably
through friendly negotiations between the Parties.  In the event that the Parties are unable to settle any dispute
within thirty (30) days after the dispute arises, then such dispute shall be
submitted to arbitration in Shanghai, under the CIETAC rules then in effect.

 

11.2                           This Agreement
shall become effective upon being signed by the duly authorized representatives
of both Parties.

 

11.3                           This Agreement
shall be executed in both English and Chinese versions; and both versions shall
be of equal effect.  Each version shall
be signed in two (2) originals, of which each Party shall keep one (1).

 

IN WITNESS WHEREOF, the Parties hereto have
caused this Agreement to be executed by their duly authorized representatives
as of the date first above written.

 

	
  Ocean Tian Di Communications Technology Co. Ltd.
  (Guangzhou)

  
	
   

  
	
  (Seal)

  
	
   

  
	
  Legal Representative (signature):

  	
  /s/ Jack Chin

  	
   

  
	
   

  
	
  Guangzhou Weida Communications Technology Co., Ltd.

  
	
   

  
	
  (Seal)

  
	
   

  
	
  Legal Representative (signature):

  	
  /s/ Li Shunxing

  	
   

  

 

5Exhibit 10.5

 

PLEDGE AGREEMENT

 

THIS PLEDGE AGREEMENT (this
“Pledge Agreement”) is made as of August 26, 2004, by and between

 

Ocean Tian
Di Communication Technology Co., Ltd. (Guangzhou), a wholly foreign-owned enterprise under the
laws of the People’s Republic of China (the “PRC”) (hereinafter referred to as
the “WOFE”);

 

and

 

Li Shun
Xing, a male PRC male
citizen, holding Identity Certificate number                 ;

Li Xiang
Ning, a male PRC
citizen, holding Identity Certificate number                 ;

Pang Da
Qing, a male PRC
citizen, holding Identity Certificate number                 ;

Xie Li, a female PRC citizen, holding Identity
Certificate number                 .

 

(Each of Li Shun Xing, Li
Xiang Ning, Pang Da Qing, and Xie Li, is a “Pledgor”, and collectively, they
are the “Pledgors”.)

 

(Each of Li Shun Xing, Li
Xiang Ning, Pang Da Qing, Xie Li, and the WOFE is a “Party”, and collectively,
they are the “Parties”.)

 

WHEREAS, the Pledgors hold
all of the shares (the “Pledged Shares”) of Weida Communications Technology
Company Limited (the “Company”), a PRC company which the Parties intend to
convert into a Sino-foreign Equity Joint Venture (the “EJV”) under the laws of
the PRC;

 

WHEREAS, on August 27, 2004,
the Company and the WOFE entered into a Service and Support Agreement dated as
of August 26, 2004 (the “Service Agreement”), under which the Company shall pay
certain fees to the WOFE as the compensation for services provided by the WOFE;

 

WHEREAS, the Pledgors agree
to secure the obligations the Company under the Service Agreement by a pledge
of the Pledged Shares, according to the terms and conditions hereof;

 

NOW THEREFORE, after
friendly negotiations based on the principles of equality and mutual benefit,
in consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:

 

1. Pledge
of Shares as Security

 

1.01       The Pledgors hereby pledge (the “Pledge”) the Pledged Shares and all
dividends, proceeds, rights, privileges, and interests pertaining thereto, as
of the date of signing this

 

1

 

Pledge Agreement, to the
WOFE, as security for the Company’s timely performance of all of the Company’s
obligations under the Service Agreement.

 

2.  Pledged Shares

 

2.01       The Pledged Shares shall include the following shares, together with
all of the dividends, proceeds, rights, privileges, and interests pertaining
thereto:

 

95% of the equity interest
in the Company, which 95% is presently held by Li Shun Xing,

2% of the equity interest in
the Company, which is presently held by Li Xiang Ning;

2% of the equity interest in
the Company, which is presently held by Pang Da Qing, and

1% of the equity interest in
the Company, which is presently held by Xie Li.

 

3. The Rights Secured

 

The obligations of the
Company, and the corresponding rights of the WOFE (the “Rights”), secured by
the Pledgors under this Pledge Agreement shall be all of the rights and interests
of the WOFE under the Service Agreement, including but not limited to any or
all rents, consulting fees, service fees, damages arising from breach, and
interest on any of the foregoing, to be collected by WOFE from the Company, and
any and all costs or expenditures incurred by the WOFE in exercising and
enforcing its rights under this Pledge Agreement.

 

4. Record

 

4.01       The Pledgors shall, immediately upon the execution of this Pledge
Agreement, cause the Company to record the Pledge hereunder in its stock
ledger, and deposit with the WOFE all the share certificates of the Pledged
Shares (or corresponding documentation of ownership of the registered capital
of the EJV), together with the related instruments of transfer, duly executed
by the Pledgors, for the purpose and intent that the WOFE may designate any
third-party, at any time of a default under the Service Agreement or this
Pledge Agreement, to present them for registration. The Parties shall also
comply expeditiously and in good faith with any other registration procedures
as may be required by applicable laws and regulations to effectuate and
implement this Pledge Agreement.

 

5. Effectiveness

 

5.01       The Pledge under this Pledge Agreement shall become effective as of the
date that the Pledge is recorded in the stock ledger of the Company, pursuant
to paragraph 4 hereof, and terminate at such time as the Company’s obligations
under the Service Agreement shall terminate.

 

6. Representation and
Warranties

 

6.01       Each of the Pledgors represents and warrants to the WOFE that:

 

2

 

a)                  they are the sole, absolute registered
holders of all the Pledged Shares, free from any Encumbrances (as defined
below) and will not create or attempt to create or permit to arise or exist any
Encumbrance (other than the Pledge under this Pledge Agreement, and such other
agreements or matters which shall have the prior written approval of the WOFE)
on or over the Pledged Shares; (The term “Encumbrances” means any mortgage, charge,
pledge, lien, assignment, security, interest, or trust arrangement or other
security arrangement or agreement or any right conferring a priority of
payment. In the event that the Pledgors are holding any of the Pledged Shares
in any trust or other arrangement, then the Pledgors represent and warrant that
they have obtained all approvals, consents, or authorizations necessary to
ensure the effectiveness of the Pledge hereunder.)

 

b)                 the Pledged Shares are and will at all times
be fully paid;

 

c)                  the Pledged Shares have been and will at all
times be duly authorized and validly issued and are and will at all time be
free from any restriction of transfer or rights of pre-emption;

 

d)                 this Pledge Agreement, as executed and
delivered, constitutes a legal, valid and binding obligation on the Pledgors,
enforceable in accordance with its terms;

 

e)                  the execution and delivery of, and the
performance of the provisions of this Pledge Agreement by the Pledgors do not,
and will not during the continuance of this Agreement:

i)                     contravene any existing applicable law; or

ii)                  contravene any contractual restriction
binding on the them or any of their assets;

 

f)                    if and at such time as the Company is
converted from a domestic PRC company into a Sino-foreign Equity Joint Venture,
then the Pledgors shall immediately do any and all acts, execute any and all
documents, and obtain any and all governmental approvals, as may be necessary
or appropriate to effectuate the purpose and intent of this Pledge Agreement,
namely, that the registered capital of the EJV held by the Pledgors shall be
entirely pledged to the WOFE as security for the full and timely performance of
the Service Agreement.

 

6.02                    Each of the Pledgors shall promptly inform
the WOFE of the occurrence of any event of which they become aware which might
adversely affect their ability to perform the Pledgor’s obligations under this
Pledge Agreement.

 

6.03                    The Pledgors covenant and undertake that
until the Service Agreement has expired, they will promptly provide to the WOFE
all financial information relating to the Company as the WOFE may from time to
time reasonably require.

 

6.04                    Without the prior written approval of WOFE,
the Pledgors shall not do or cause or

 

3

 

permit anything to be done
which might adversely affect the security created by this Pledge Agreement, or
which is a variation or abrogation of the rights attached to or conferred by
the Pledged Shares.

 

6.05                    The Pledgors hereby undertake with WOFE that
the Pledgors will procure the giving by the Directors of all consents,
approvals and directions which WOFE may require for perfecting the title of
WOFE to the Pledged Shares.

 

7. Exercising and Enforcing
this Pledge Agreement

 

7.01                    The Pledgors covenant that in the event that
the Company fails to pay any amount due under the Service Agreement or
otherwise fails to honor the WOFE’s Rights, then the WOFE shall be entitled to
designated any third- party/parties to acquire the Pledged Shares, or auction
or sell the Pledged Shares, with the WOFE being given preference as o the sales
proceeds.

 

7.02                    The WOFE shall pay the surplus of any such
sale or disposal of the Pledged Shares to the Pledgors.  The Company shall remain liable for any
shortfall or deficit between the amounts due under the Service Agreement and
the proceeds of the sale or disposal of the Pledged Shares.

 

8. Miscellaneous Provisions

8.01                    This Pledge Agreement shall be construed in
accordance with the laws of the PRC. 
Any unresolved dispute shall be submitted to arbitration in Hong Kong,
conducted by the Hong Kong International Arbitration Centre (the “HKIAC”),
under the rules of the HKIAC.

 

8.02                    The titles or captions to sections or
subsections of this Pledge Agreement have been inserted for reference purposes
only and shall not be used to construe or interpret this Pledge Agreement.

 

8.03                    If one or more provisions of this Pledge
Agreement are held to be unenforceable under applicable law, such provision(s)
shall be excluded from this Pledge Agreement and the balance of this Pledge
Agreement shall be interpreted as if such provision(s) were so excluded and
shall be enforceable in accordance with its terms.

 

8.04                    This Pledge Agreement shall not be amended or
waived, except with the written consent of the WOFE.

 

8.05                    No delay or omission in exercising any right,
power, or remedy under this Pledge Agreement shall impair any such right,
power, or remedy, nor shall it be construed to be a waiver of any breach,
default or noncompliance, or any acquiescence therein

 

8.06                    All remedies under this Pledge Agreement
shall be cumulative and not exclusive of any remedies provided by law.

 

4

 

8.07                    This Pledge Agreement may be executed by the
Parties in counterparts.

 

8.08                    This Pledge Agreement is being executed in
English and Chinese versions, with both versions being of equal standing.

 

IN WITNESS
WHEREOF, the Parties
have executed this Pledge Agreement as of the date first above written.

 

	
  The Pledgors:

  
	
   

  
	
   

  
	
  Li Shun Xing

  
	
  Signature:

  
	
   

  
	
  /s/  Li Shun Xing

  	 

	
   

  
	
  Li Xiang Ning

  
	
  Signature:

  
	
   

  
	
  /s/ Li Xiang Ning

  	 

	
   

  
	
  Pang Da Qing

  
	
  Signature:

  
	
   

  
	
  /s/ Pang Da Qing

  	 

	
   

  
	
  Xie Li

  
	
  Signature:

  
	
   

  
	
  /s/ Xie Li

  	 

	
   

  
	
   

  
	
  The WOFE:

  
	
   

  
	
  Ocean Tian Di Communication Technology Co., Ltd.
  (Guangzhou)

  
	
   

  
	
  By

  	
  /s/ Jack Chin

  	
   

  
	
  Name:  Jack Chin

  
	
  Title:  Legal Representative

  
			

 

5

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