Document:

Exhibit 10.16

 

SHARE PLEDGE AGREEMENT

 

This SHARE PLEDGE AGREEMENT (this “Agreement”) is dated as of December 31, 2010 and entered into by and among:

 

(1)        Trilogic Investments Limited, a limited company duly organized and validly existing under the laws of British Virgin Islands with its registered office at OMC Chambers, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands (the “Pledgor”); and

 

(2)        CMHJ Technology Fund II, L.P., an exempted limited partnership duly organized and validly existing under the laws of Cayman Islands with its registered office at P.O. Box 2636 GT, Strathvale House, 90 North Church Street, Grand Cayman, Cayman Islands (“CMHJ”);

 

(3)        Natixis Ventech China AB, a private limited liability company duly organized and validly existing under the laws of Sweden with its registered office at Drottninggatan 25, PO.Box 16285 103 92 Stockholm (“Ventech”); and

 

(4)        Wang Yongchao, a citizen of the People’s Republic of China, (PRC ID Number: 440823197306096917)

 

For purposes of this Agreement, CMHJ and Ventech are hereinafter collectively referred to as the “Pledgees” and individually as a “Pledgee”; and the Pledgor and Pledgees are hereinafter collectively referred to as the “Parties” and individually as a “Party”.

 

R E C I T A L S

 

WHEREAS:

 

1.                                    Pursuant to a Share Purchase Agreement dated December 29, 2010 (the “Share Purchase Agreement”) by and among the parties hereto and Action King Limited (including its successors, assigns or designees, the “Purchaser”), the Purchaser has agreed to purchase from the Parties   70% of the issued shares of 3GUU Mobile Entertainment Industrial Co., Ltd (the “Company”), including all Preferred Shares (as defined in the Share Purchase Agreement) upon the terms and subject to the conditions set out in the Share Purchase Agreement.

 

2.                                    Pursuant to the Share Purchase Agreement, the Pledgees have agreed to assign all 代价股份  paid    to them by the Purchaser to the Pledgor in exchange for being paid all in cash in the amount of US$ 9,000,000.

 

3.                                    Pursuant to the Share Purchase Agreement, the Purchaser has agreed to make a payment of US$   4,500,000 in cash to the Pledgees on behalf of the Pledgor, and the Pledgor owes a debt of US$4,500,000 to the Pledgees.

 

WITNESSETH

 

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:

 

 

SECTION 1         Definitions.          Capitalized terms used in this Agreement but not otherwise defined herein shall have the meanings set forth in the Share Purchase Agreement.

 

SECTION 2         Payment of Debt.

 

2.1.         Subject to the Closing, the Pledgor shall make payments to the Pledgees in proportion to the number of the Preferred Shares held by them, by wire transfer of immediately available funds to the bank account designated by the Pledgee in writing, in the following amounts and based on the following schedule.

 

	
Payment time
    	
 
    	
Contributee
    	
 
    	
Amount
    	
 
    
	
T+ 60 days
    	
 
    	
CMHJ
    	
 
    	
US$
    	
1,000,000
    	
 
    
	
 
    	
 
    	
Ventech
    	
 
    	
US$
    	
500,000
    	
 
    
	
T + 90 days
    	
 
    	
CMHJ
    	
 
    	
US$
    	
1,000,000
    	
 
    
	
 
    	
 
    	
Ventech
    	
 
    	
US$
    	
500,000
    	
 
    
	
T + 120 days
    	
 
    	
CMHJ
    	
 
    	
US$
    	
1,000,000
    	
 
    
	
 
    	
 
    	
Ventech
    	
 
    	
US$
    	
500,000
    	
 
    

 

* T means the Closing Date.

 

2.2.         All payments under this Agreement are net from any reduction to reflect applicable withholding taxes and other deductions required by law.

 

SECTION 3         Pledge.

 

3.1.         To ensure all payments due by the Pledgor hereunder are fully paid in a timely manner (the “Secured Obligations”), subject to the Closing, the Pledgor agrees to pledge to the benefit of the Pledgees in the aggregate 19,745,000 代价股份  paid by the Purchaser to it (“Pledged Shares”) as security for the payments hereunder (the “Pledge”).

 

3.2.         Where the Pledgor is unable to timely make the payment due to the Pledgees according to the schedule set forth in Section 2 above, for each tranche of payment due, subject to Section 4.8 of the Share Purchase Agreement, the Pledgees shall have the right to sell, transfer or otherwise dispose of such number of Pledged Shares with a market value equal to the payment due and shall be entitled to receive the proceeds from the disposition of such Pledged Shares.

 

3.3.         At any time (i) before the first tranche of payment has been made to the Pledgees, in case the aggregate of market value of the Pledged Shares and the cash in the relevant securities account for the Pledged Shares (“Account”) drops down to US$4,800,000, within 24 hours after receipt of the notice given by the Pledgees, the Pledgor shall deposit such amount cash in the Account, or pledge such additional number of 代价股份, as shall result in the aggregate of market value of

 

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the Pledged Shares and the cash in the Account being more than US$4,800,000; (ii) before the second tranche of payment has been made to the Pledgees, in case the aggregate of market value of the Pledged Shares and the cash in the Account drops down to US$3,300,000, within 24 hours after receipt of the notice given by the Pledgees, the Pledgor shall deposit such amount cash in the Account, or pledge such additional number of 代价股份, as shall result in the aggregate of market value of the Pledged Shares and the cash in the Account being more than US$3,300,000; (iii) before the third tranche of payment has been made to the Pledgees, in case the aggregate of market value of the Pledged Shares and the cash in the Account drops down to US$1,800,000, within 24 hours after receipt of the notice given by the Pledgees, the Pledgor shall deposit such amount cash in the Accoount, or pledge such additional number of 代价股份, as shall result in the aggregate of market value of the Pledged Shares and the cash in the Account being more than US$1,800,000; If the Pledgor fails to do so, subject to Section 4.8 of the Share Purchase Agreement, the Pledgees shall have the right to sell, transfer or otherwise dispose of all the Pledged Shares and shall be entitled to receive from the proceeds an amount equal to the remaining debt owed by the Pledgor. The Pledgor shall be entitled to keep the proceeds exceeding the amount owed to the Pledgees. In case the proceeds from the disposition of all the Pledged Shares falls short of the remaining debt owed to the Pledgees, the Pledgor shall pay the Pledgees an amount equal to the difference between the remaining debt and the proceeds from the disposition of all the Pledged Shares.

 

3.4.         On any stock transaction day before the expiration of each payment time set forth in Section 2 above, subject to Section 4.8 of the Share Purchase Agreement, the Pledgor is entitled to instruct the Pledgees to sell part or whole of the pledged shares in the stock market at a price specified by it, and the Pledgees are obligated to follow such instructions. The proceeds from the selling of the pledged shares as instructed by the Pledgor shall be used for payment of each tranche of debt due or of all of the debts. Where part of the pledged shares with a market value exceeding the amount of a tranche of debt due to the pledges is sold as instructed by the Pledgor and the Pledgor decides that the proceeds from such selling is used for payment of the tranche of debt due, the remaining proceeds from such selling shall be deposited in the Account and shall not be released to the Pledgor until all debts are fully paid to the Pledgees by the Pledgor.

 

3.5.         The Pledge shall be continuously valid until all payments due hereunder have been fulfilled by the Pledgor. The parties agree that the Pledgor and the Pledgees shall record the Pledge in the register of members of Vodone on the date of the Closing of the Share Purchase Agreement with a notation that the Pledgor has pledged the Pledged Shares in favor of the Pledgees pursuant to the terms and conditions set forth in the Share Purchase Agreement dated December 29, 2010 and this Agreement.

 

3.6.         The Pledgor is obligated to cause Vodone to assist the Pledgees in completing the share pledge registration procedures and enforcing the share pledge rights as provided herein when necessary.

 

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SECTION 4         Deposit of Documents and Other Deliverables.  To enable the Pledgees to exercise their rights under this Agreement, the Pledgor undertakes forthwith upon being issued the 代价股份  in accordance with the Share Purchase Agreement to deposit with a representative jointly designated by the Pledgees (the “Pledgee Representative”) the following documents (Sections 4.1 and 4.2 below are collectively referred to as the “Security Documents”):

 

4.1.         the original share certificates in respect of the Pledged Shares together with an undated instrument of transfer in respect thereof in the form set forth in Exhibit 1, and an undated sold and bought note in respect thereof in the form set forth in Exhibit 2 duly executed by the Pledgor but otherwise in blank in respect of the Pledged Shares;

 

4.2.         a copy of Vodone’s register of members with a notation that the Pledgor has pledged the Pledged Shares in favor of the Pledgees pursuant to the terms and conditions of this Agreement.

 

4.3.         a signed Power of Attorney in the form set forth in Exhibit 3 to authorize the Pledgees to dispose of the Pledged Shares in accordance with the provisions in this Agreement.

 

4.4.         The Pledgor is entitled to pay, prior to maturity, the debts secured herein. The Pledges shall return the Pledgor the pledged shares and other documents herein delivered by the Pledgor immediately after the debts are paid.

 

SECTION 5         Perfection and other Assurances

 

5.1.         The Pledgor must take, at its own expense, promptly, and in any event within any applicable time limit:

 

(a) whatever action is necessary or desirable; and

 

(b)  any action which the Pledgees may reasonably require,

 

to ensure that the security when intended to be created under this Agreement is, and will continue to be until all payments due hereunder are fully paid, a validly created, attached, enforceable and perfected first priority continuing security interest in the Pledged Shares, in all relevant jurisdictions, securing payment and performance of the Secured Obligations.

 

This includes the giving of any notice, order or direction, the making of any filing or registration, the passing of any resolution and the execution and delivery of any documents or agreements which the Pledgees may think expedient.

 

5.2.         The Pledgor must take, at its own expense, promptly, and in any event within any applicable time limit, whatever action the Pledgees may reasonably require and

 

pursuant to its direction for:

 

(a)          creating, attaching, perfecting and protecting, and maintaining the priority of, any security interest intended to be created by this Agreement;

 

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(b)          facilitating the enforcement of the security created under this Agreement or the exercise of any right, power or discretion exercisable by the Pledgees or any of its delegates or sub-delegates in respect of any of the Pledged Shares; and

 

(c)           obtaining possession and control of any Pledged Shares.

 

This includes the commencement of any proceedings against Vodone with respect to the issuance of the 代价股份. The Pledgor irrevocably constitutes and appoints each of the Pledgees, with full power of substitution, as the Pledgor’s true and lawful attorneys-in-fact, in the Pledgor’s name or in each Pledgee’s name or otherwise, and at the Pledgor’s expense, to take any of the actions referred to in paragraph (a), (b) or (c) above without notice to or the consent of the Pledgor. This power of attorney is a power coupled with an interest and cannot be revoked. The Pledgor ratifies and confirms all lawful actions taken by the Pledgees or its agents under this power of attorney.

 

SECTION 6         Expenses and Stamp Duty.  The Pledgor shall pay:-

 

6.1.         Enforcement Expenses: on demand, all costs and expenses (including taxes thereon and legal fees) reasonably incurred by the Pledgees in the administration of, or in protecting or enforcing or exercising any of their rights under this Agreement, and/or any such amendment or waiver (including internal costs and attributable overheads); and

 

6.2.         Stamp Duty: promptly, and in any event before any penalty becomes payable, any stamp, documentary, registration or similar tax or government fees payable in connection with the entry into, registration, performance, enforcement or admissibility in evidence of this Agreement, and/or any such amendment or waiver, and shall indemnify the Pledgees against any liability with respect to or resulting from any delay in paying or omission to pay any such tax orgovernment fees.

 

SECTION 7         Representations and Warranties of the Pledgor. The Pledgor and Wang Yongchao , jointly and severally, hereby represents and warrants to each of the Pledgees that:

 

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7.1.         subject to this Agreement, the Pledgor is the sole legal and beneficial owner of the Pledged Shares registered in its name and has good and marketable title thereto and the Pledged Shares held by the Pledgor as at the Closing are fully paid up and free from any security interest other than the security interest created hereunder;

 

7.2.         the Pledgor has not granted in favor of any other person any encumbrance, interest in or any option or other rights in respect of any of the Pledged Shares and the ability of the Pledgor to procure disposal of the Pledged Shares is unfettered;

 

7.3.         there are no duplicate copies of the certificates in respect of the Pledged Shares or other certificates representing the Pledged Shares;

 

7.4.         the Pledgor has power to execute, deliver and perform its obligations under this Agreement and has taken and/or will take all necessary actions required to create the security expressed to be created under this Agreement and to authorise the execution, delivery and performance of this Agreement;

 

7.5.         this Agreement constitutes valid and legally binding obligations of the Pledgor enforceable in accordance with its terms and confers and will confer, as the case may be, a valid security interest over the Pledged Shares;

 

7.6.         the execution and delivery of, the performance of its obligations under, and compliance with the provisions of, this Agreement by the Pledgor will not contravene any existing applicable law, statute, rule or regulation or any judgment, decree, agreement or permit to which the Pledgor is subject; and

 

7.7.         at the date hereof the Pledgor is able to pay and discharge all its indebtedness, debts and liabilities as and when they fall due and is solvent.

 

7.8.         Continuing Representation and Warranty. The Pledgor also represents and warrants to and undertakes with each of the Pledgees that the foregoing representations and warranties will be true and accurate throughout the continuance of this Agreement with reference to the facts and circumstances subsisting from time to time. To the extent that the foregoing representations and warranties become untrue or inaccurate, the Pledgor shall as soon as practicable notify each Pledgee and provide all information reasonably requested by any Pledgee in relation to such clauses becoming untrue or inaccurate and notice thereof shall be without prejudice to such Pledgee ‘s rights hereunder.

 

7.9.         Wang Yongchao represents and warrants to and undertakes with each of the Pledgees that he will be jointly liable for any and all obligations of the Pledgor under this Agreement.

 

SECTION 8         Continuing Security.  It is declared and agreed that:-

 

8.1.         the Pledge shall be held by the Pledgees as continuing security for the due and punctual performance of the Secured Obligations;

 

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8.2.         the security so created shall not be satisfied by satisfaction of any part of the Secured Obligations and shall be in addition to and shall not in any way be prejudiced or affected by any collateral or other security now or hereafter held by the Pledgees for all or any part of the Secured Obligations and/or for the due and punctual performance of all the Secured Obligations of the Pledgor; and

 

8.3.         every power and remedy given to the Pledgees hereunder shall be in addition to and not a limitation of any and every other power or remedy vested in the Pledge under any other documents evidencig any collateral or other security for the due and punctual performance of the Secured Obligations of the Pledgor.

 

SECTION 9         Liability of Pledgees.  Each of the Pledgees shall not in any circumstances (either by reason of taking possession of any portion of all of the Pledge Shares or for any other reason whatsoever and whether as mortgagee in possession or on any other basis whatsoever):-

 

9.1.         be liable to account to the Pledgor or any other person for any thing except such Pledgee ‘s own actual receipts, if any, to which the Pledgor is entitled and which have not been distributed or paid to the Pledgor or the persons entitled or at the time of payment believed by such Pledgee to be entitled thereto; or

 

9.2.         be liable to the Pledgor or any other person for any costs, charges, losses, liabilities or expenses arising from or connected with any realisation by such Pledgee of the Pledged Shares or from any exercise or non-exercise by such Pledgee of any right exercisable by them under this Agreement; and

 

9.3.         nothing in this Agreement shall be construed as placing the Pledgees any liability whatsoever in respect of any calls, installments or other payments relating to any of the Pledge Shares and the Pledgor agrees to indemnify each Pledgee on demand in respect of all calls, installments, or other payments relating to any of the Pledged Shares.

 

SECTION 10       Liability for Breach of Contract. Either party that fails to perform its obligations under this Agreement or fails to perform them as agreed shall bear the liability for breach of contract by compensating for losses.

 

SECTION 11       Confidentiality. Each of the parties hereto undertakes to the other parties hereto that he or it shall hold, and shall cause its directors, officers, employees, agents, consultants and professional advisors (“Representatives”) to hold in confidence and treat as strictly confidential all information received or obtained by them as a result of entering into or performing this Agreement, including information relating to the provisions of this Agreement, the negotiations leading up to this Agreement, the subject matter of this Agreement or the existence of this Agreement (collectively, “Confidential  Information”) and that they shall not at any time hereafter make use of or disclose or divulge to any person any such Confidential Information and shall use their best endeavors to prevent the publication or disclosure of any such Confidential Information. Notwithstanding the foregoing and anything to the contrary in this Section 11, the restrictions contained in this Section 11 shall not apply so as to prevent any party from making any disclosure of Confidential Information required by law or by any securities exchange or supervisory or regulatory or governmental body pursuant to rules to which such party is subject or pursuant to any legal proceedings in which such party or any affiliate of such party is involved

 

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(provided that it has taken all reasonable practicable legal steps to prevent or limit such disclosure if requested to do so by another party) or from making any disclosure to any of such party’s affiliates, such party’s and such party’s affiliates’ Representatives (provided always that such party shall ensure that all such Representatives to whom such party discloses Confidential Information comply with the provisions of this Section 11 in relation to, the use or disclosure by such Representatives of the information provided to him, her or it) nor shall the restrictions apply in respect of any information which comes into the public domain otherwise than by a breach of this Section 11 by any party.

 

SECTION 12       Termination. If the Share Purchase Agreement is terminated and, as a result, the Closing does not occur, this Agreement shall, as of the date of such termination, terminate and be of no force or effect, and the rights and obligations of the parties hereto shall remain as such rights and obligations were prior to the execution of this Agreement.

 

SECTION 13       Amendments. Except as otherwise permitted herein, this Agreement and its provisions may be amended, changed, waived, discharged or terminated only by a writing signed by each of the Shareholders.

 

SECTION 14       Successor and Assigns. This Agreement shall be binding upon each party hereto and its respective successors and assigns and shall inure to the benefit of the parties hereto and their respective successors and assigns.

 

SECTION 15       Authorization. Ventech hereby authorize CMHJ to act for and on its behalf to exercise any and all rights Ventech is entitled to under this Agreement, including without limitation, the right to dispose of the Pledged Shares.

 

SECTION 16       Choice of Law. This Agreement shall be governed by, and shall be construed and enforced in accordance with, the internal laws of the Hong Kong Special Administrative Region of the People’s Republic of China without regard to principles of conflicts of law.

 

SECTION 17       Counterparts. This Agreement, and any modifications or amendments hereto, may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original for all purposes, but all such counterparts shall constitute but one and the same instrument.

 

SECTION 18       Severability. If at any time, any provision of this Agreement is or becomes illegal, invalid or unenforceable in any respect under the laws of any jurisdiction, the legality, validity and enforceability of such provision under the law of any other jurisdiction, and of the remaining provisions of this Agreement, shall not be affected or impaired thereby.

 

SECTION 19       Effective Date. This Agreement shall become effective upon the deposit of the Pledged Shares pursuant to Section 4.1.

 

[The remainder of this page has been left intentionally blank.]

 

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IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to be duly executed as of the day and year first written above.

 

 

	
PLEDGOR:
    	
Executed as Deed
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TRILOGIC INVESTMENTS   LIMITED
    
	
 
    	
 
    
	
 
    	
 
    	
For and on behalf of
    
	
 
    	
 
    	
Trilogic Investments Limited
    
	
 
    	
 
    
	
 
    	
 
    	
(Sd.) Wang   Yongchao
    
	
 
    	
 
    	
Authorised Signatures
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name :
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
Wang Yongchao
    	
 
    
	
 
    	
 
    
	
(Sd.) Wang   Yongchao
    	
 
    
				

 

SIGNATURE PAGE

 

 

	
PLEDGEES:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CMHJ TECHNOLOGY FUND II,   L.P.,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
(Sd.)
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
NATIXIS VENTECH   CHINA AB
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
(Sd.)
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

SIGNATURE PAGE

 

 

EXHIBIT 1

 

INSTRUMENT OF TRANSFER

 

 

VODONE LIMITED

 

 

I/We, Trilogic Investments Limited

of of OMC Chambers, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands in consideration of the sum of HK$1.00

paid to me/us by (name)

(occupation)

of (address)

(hereinafter “the said Transferee”)

do hereby transfer to the said Transferee the                                                                                                                      share(s)

numbered

standing in my/our name in the register of:-

 

VODONE LIMITED

 

to hold unto the said Transferee his Executors, Administrators or Assigns, subject to the several conditions upon which I/we hold the same at the time of execution hereof. And I/we, the said Transferee do hereby agree to take the said share(s) subject to the same conditions.

 

Witness our hands the

 

	
Witness   to the signature(s) of the Transferor - 
    	
)
    	
For and on behalf of
    
	
 
    	
)
    	
Trilogic Investments Limited
    
	
/s/   [ILLEGIBLE]
    	
)
    	
 
    
	
Witness’s   name and address:
    	
)
    	
 
    
	
 
    	
)
    	
/s/ [ILLEGIBLE]
    
	
 
    	
)
    	
Authorized Signature(s)
    
	
 
    	
)
    	
Trilogic   Investments Limited
    
	
 
    	
 
    	
 
    
	
Witness   to the signature(s) of the Transferee-
    	
)
    	
 
    
	
 
    	
)
    	
 
    
	
 
    	
)
    	
 
    
	
Witness’s   name and address:
    	
)
    	
 
    
	
 
    	
)
    	
 
    
	
 
    	
)
    	
 
    

 

 

EXHIBIT 2

 

SOLD NOTE

 

Name of Purchaser (Transferee):

 

Address:

 

Name of Company in which the shares to be transferred: VODONE LIMITED

 

Number of shares:                                      of HK$                                      each

 

Consideration received: Hong Kong Dollars

 

(HK$                         )

 

	
 
    	
For and on behalf of
    
	
 
    	
Trilogic Investments Limited
    
	
 
    	
Trilogic Investments Limited
    
	
 
    	
(Transferor)
    
	
 
    	
 
    
	
 
    	
/s/ [ILLEGIBLE]
    
	
 
    	
Authorized Signature(s)
    

 

Hong Kong Dated:

 

BOUGHT NOTE

 

Name of Seller (Transferor): Trilogic Investments Limited

 

Address: OMC Chambers Wickhams Cay 1, Road Town, Tortola, British Virgin Islands

 

Name of Company in which the shares to be transferred: VODONE LIMITED

 

Number of shares:                                      of HK$                        each

 

Consideration received: Hong Kong Dollars

 

(HK$                                 )

 

	
 
    	
 
    
	
 
    	
(Transferee)
    

 

Hong Kong Dated:

 

 

EXHIBIT 3

 

Power of Attoney

 

Know all men by these presents, that Trilogic Investments Limited, a limited company duly organized and validly existing under the laws of British Virgin Islands with its registered office at OMC Chambers, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands (“Trilogic”) hereby authorizes CMHJ Technology Fund [], L.P., an exempted limited partnership duly organized and validly existing under the laws of Cayman Islands with its registered office at P.O. Box 2636 GT, Strathvale House, 90 North Church Street, Grand Cayman, Cayman Islands (“CMHJ”) to act for and on its behalf as a true and lawful agent and attorney of Trilogic for, and in the name, place, and stead of Trilogic, from this date, in Hong Kong either in writing, electronically, or by other authorized means to act as authorized agent for purpose of disposing of the Pledged shares in accordance with the Share Pledge Agreement dated December 29, 2010, and perform any other act that may be required by law or regulation in connection with the disposition of such Pledged Shares.

 

This power of attorney is to remain in full force and effect until revocation in writing is duly given by Trilogic and received by CMHJ.

 

IN WITNESS WHEREOF, Trilogic Investment Limited Caused these presents to be sealed and signed:

 

	
 
    	
 
    	
For and behalf of
    
	
 
    	
 
    	
Trilogic Investments Limited
    

 

	
Witness:   
    	
/s/   [ILLEGIBLE]
    	
 
    	
Signature:   
    	
/s/ [ILLEGIBLE]
    
	
 
    	
 
    	
 
    	
Title:
    	
Authorized Signature(s)
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Date:   December    , 2010Exhibit 10.17

 

English Translation

 

GUANGZHOU YITONGTIANXIA SOFTWARE DEVELOPMENT CO., LTD.                 Business Contract:

 

TECHNOLOGY SERVICES AGREEMENT

 

PARTY A: GUANGZHOU YITONGTIANXIA SOFTWARE DEVELOPMENT CO., LTD.

 

Tel: 020-85613659

 

Contact person: Liu Xieshu

 

PARTY B: GUANGZHOU YINGZHENG INFORMATION TECHNOLOGY CO., LTD.

 

Tel: 020-85643432

 

Contact person: Wang Yongchao

 

WHEREAS,

 

(1)         Party A is a high-technology enterprise specialized in development and consultancy of communication technologies, integration of computer system, development of network technology, computer hardware and software, and development of telecommunication and internet value-added applications around the world;

 

(2)         Party B is a company engaging in the businesses of telecommunication information value-added service and computer information network in China, including engineering of internet and computer information service network, and development of applications and games, etc.;

 

(3)         In light of the trend and vision in the development of telecommunication and internet, Party A has developed a series of products and services to operate the telecommunication and internet value-added businesses, particularly the mobile phone network game engine software. This technology is a general kernel oriented to the game development, which integrates the most common, conventional and critical functions in the design of game programs into an all-purpose game platform integrated environment from the programming aspect. It is a platform to process the game underlying technology infrastructure. Through this game engine, the game developers may process the certain underlying technologies, such as system structure and graphic processing, without to many efforts, and may directly use the API provided by this engine to develop games. Therefore, it can dramatically shorten the cycle of game development, reduce the development cost and rapidly achieve the economic benefits.

 

NOW, THEREFORE, Party A and Party B hereby enter into this Technology Services Agreement regarding the cooperation and utilization of Party A’s mobile phone network game engine software to develop games and promote game products, based on the principles of mutual benefit, mutual development, serving customers, equality and free will and through friendly negotiations.

 

1.     BUSINESS COOPERATION

 

1.1       Party B hereby acknowledges and understands that Party A has developed a series of products and services relating to the operation of telecommunications and internet value-added businesses through long-term efforts.

 

1.2       Party B intends to use Party A’s mobile phone network game engine software to develop the mobile

 

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phone network games and promote the game products, and Party A agrees so.

 

1.3       Both Parties will jointly apply the mobile phone network game engine software and promote the relevant game products. As the business operator and on the basis of market development, operation and promotion and communications with subscribers, Party B will promote more subscribers to use the game products and services developed through the mobile phone network game engine software.

 

1.4       For provision of the critical technical support hereunder, Party A will take its advantage of technology and capital to provide the computer software, hardware (including interface, system and network infrastructure) required for development of games through the mobile phone network game engine software, and will maintain and improve such equipments, and will develop the technology services (excluding operation of website businesses, unless it is permitted by the laws and regulations of China) required for the operation of mobile phone network games upon request of Party B, so as to fully assist and enhance the game products and services developed through the mobile phone network game engine software. Party B will communicate and cooperate with the telecommunication network carriers, promote the businesses and customer services, prepare and implement marketing plans. The costs of advertisements and promotions shall be borne by both Parties.

 

1.5       Product Copyright: The intellectual property rights in the mobile phone network game engine software jointly operated by both Parties (including but not limited to the programs, codes, algorithm, words, graphs and sounds contained therein) are the properties of Party A. Without the prior written consent of Party A, Party B may not assign or otherwise dispose of such intellectual property rights in whatever forms.

 

1.6       In respect of the game subscribers, the information and materials of such subscribers are the property of both Parties.

 

2.     TERM

 

2.1       The term of this Contract shall be as from August 6, 2010 to August 5, 2013. The term of this Contract shall be 36 months.

 

2.2       Upon expiration of this Agreement, this Agreement shall be renewed automatically unless either Party disagrees. If either Party intends to amend or modify the term of this Agreement, it shall give a written notice to the other Party within 15 days prior to expiration of this Agreement.

 

3.     RIGHTS AND OBLIGATIONS OF PARTY A

 

3.1       The intellectual property rights in Party A’s mobile phone network game engine software (including but not limited to the programs, codes, algorithm, words, graphs and sounds contained therein) shall belong to Party A.

 

3.2       Party A must ensure the lawfulness of all contents of the mobile phone network game engine software. Party A shall be solely and fully responsible for its mobile phone network game engine software, including but not limited to the intellectual property rights, contents and nature, etc.

 

3.3       Party A must provide the services such as updating, replacement and technical upgrading, as per the needs in the development of market for game products and services.

 

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3.4       Party A shall be responsible for the routine maintenance of the product and service system of the mobile phone network game engine software. In case of any failure in the product or service system, Party A must recover the system from failure within 4 hours upon receipt of a notice from Party B.

 

3.5       Party A shall cooperate with Party B, and provide Party B with the introduction, marketing plan and advertising materials relating to the products and services.

 

3.6       Party A shall provide the product and service system of the mobile phone network game engine software, and shall install, commission, maintain and update the product and service system.

 

3.7       Party A and Party B shall share the incomes from the operations of the game products developed through the mobile phone network game engine software, and timely and fully remit the incomes receivable by Party B to Party B’s account on a monthly basis.

 

4.     RIGHTS AND OBLIGATIONS OF PARTY B

 

4.1       Party B shall maintain its qualification of business operation in mobile phone network games, and provide Party A with the photocopies of the valid qualification certificate and business license.

 

4.2      Party B shall provide customers with the game products and services developed through the mobile phone network game engine software, and shall at its own discretion expand the market and develop customers. During the distribution of the game products and services, Party B shall protect the good reputation and integrity of Party A and the software products and services, and may not use the mobile phone network game engine software or any content thereof to carry out any activity irrelevant to this Agreement.

 

4.3       Party B shall appropriately open the business operation and management interface to Party A, so that Party A’s personnel may view the business development status and get the necessary statistical data on a real-time basis.

 

4.4       Party B shall make daily billing check and settlement with customers, and regularly provide Party A with a statement of business statistical data in each month.

 

4.5       Prior to the termination of this Agreement, Party B may conduct certain experimental operation of the mobile phone network game engine software from time to time, to determine the final direction of cooperation.

 

5.     INCOME OF TECHNOLOGY SERVICES; DISTRIBUTION

 

5.1       Principles of Distribution: The distribution shall be accepted by both Parties, and the income and settlement shall be transparent.

 

5.2       Source of Incomes: the incomes from use of the game products developed from the mobile phone network game engine software in the cooperation between Party B and the telecommunication carriers, and the incomes from sales of game products developed through the software. The proportion of distribution between both Parties and calculation method:

 

5.3       Base of Distribution: the incomes generated from the business cooperation, deducting the sale tax or business tax payable (excluding the business income tax payable by Party A), and deducting the reasonable costs and expenses of Party B’s personnel, such as salary, traveling, marketing, equipment hosting, and deducting the commissions paid to the carriers.

 

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5.4       Proportion of Distribution: the incomes shall be distributed between both Parties at 4:6, i.e. 40% belongs to Party A and 60% belongs to Party B. Party A shall remit Party B’s portion to the account designated by Party B, and Party B shall issue an invoice of the received income to Party A.

 

5.5       The compensation of technology services hereunder shall be settled in each month based on the technology services provided by Party A to Party B, and both Parties shall check the accounts upon request of either Party.

 

5.6       Party B shall settle the compensation receivables of technology services  of the previous month with Party A on or before the 15th day of each month.

 

5.7       In case of any emergency, both Parties shall negotiate on good faith and reciprocity.

 

6.     BUSINESS OPERATION AND CUSTOMER SERVICE

 

6.1       Market promotion includes:

 

6.1.1         Network Promotion: both Parties may promote the business by various lawful online promotion methods.

 

6.1.2         Media Promotion: including advertisements on periodicals, advertisement manuals, posters, gifts, etc.

 

6.1.3         Other Promotion: including promotion in the cooperation with telecommunication network carriers and other vendors, door-to-door visit, participation in trade shows and interview with customers, etc.

 

6.2 Both Parties shall establish a quick and joint business operation and communication system, including:

 

6.2.1         establish technology consultancy business (including telephone, fax, internet, email, etc.), to provide real-time consulting service to the counterparties and end-users;

 

6.2.2         regular arrangement of relevant materials and provide the materials to the other Party;

 

6.2.3         timely feedback and communication of information, including the business contact with the telecommunication network carriers, customer services, etc.

 

6.3       Customer Service

 

6.3.1         Both Parties shall make close cooperation and joint efforts to provide the subscribers with the game products and services developed through the mobile phone network game engine software.

 

6.3.2         Before a subscriber accepts the services provided by Party B, Party B shall ensure that the subscriber has fully understood the price, content and form of such services.

 

6.3.3         In addition to the customer services provided by the telecommunication network carriers, Party B may appoint special persons to process the questions, bill inquiries, messages and complaints of the subscribers regarding the corresponding application or content, and provide a service hotline to all subscribers.

 

6.3.4         In case of any customer complaint during the term of this Agreement, Party A shall be

 

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responsible for settling the complaint and help Party B’s customer service department to solve the problem.

 

7.     CONFIDENTIALITY

 

7.1       Confidential Information: All technical information and business information of each Party, whether public or non-public, including but not limited to product plan, marketing plan, incentive policy, customer information and financial information, and non-patented technology, design, process, technical data, approach and source of information, shall be deemed as the confidential information of the Party.

 

7.2       Confidentiality: Each Party shall keep confidentiality of all confidential information received from the other Party during the performance of this Agreement, and may not disclose such information to any third party without the written approval of the other Party. If either Party violates this Article 7, it shall fully indemnify the other Party against all direct and indirect damages and losses resulting therefrom.

 

7.3       Both parties shall still comply with the obligation of confidentiality hereunder after the termination of this Agreement.

 

8.     LIABILITIES FOR BREACH OF CONTRACT

 

8.1       Where the business hereunder is unable to be operated or the business objective hereunder is unable to be achieved due to the fact that either Party fails to fulfill its obligations hereunder or materially breaches this Agreement, it shall be deemed that the breaching party has unilaterally terminated this Agreement. In addition to a claim against the breaching party, the non-breaching party may also terminate this Agreement in accordance with the statutory procedures. If both Parties agree to continue cooperation, the breaching party shall indemnify the non-breaching party against all economic losses and damages.

 

8.2       If this Agreement and its appendices or any part hereof or thereof are unable to be fulfilled owing to any fault of either Party, the breaching party shall be subject to the liabilities according. If such non-performance is attributable to both Parties, each Party shall bear its liabilities to the extent of its fault respectively.

 

8.3       Party A shall ensure the normal work of the technologies and equipments provided hereunder. If there is any defect therein, which causes any damage or loss to the consumers, Party A shall be subject to the liabilities accordingly.

 

8.4       If the performance of any service is frustrated or delayed due to any force majeure, or there is any information delay or unsuccessful transmission of information due to any failure in the gateway of the telecommunication network carriers, neither Party is liable for the damages and losses suffered by the consumers resulting from the consumers’ misunderstanding.

 

8.5       Force Majeure: In case of any direct influence on the performance of this Agreement or failure of performance according to the terms and conditions hereof due to any event of force majeure, such as earthquake, typhoon, fire, war or any other unforeseeable, unpreventable and inevitable event, the influenced party shall notify the other party without delay and within fifteen (15) days upon occurrence of the event, shall provide the other party with the details of such event together with a

 

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valid certificate stating the reason for its inability to perform this Agreement or any part hereof, or for the proposed delay in the performance of this Agreement. Both Parties may decide to terminate this Agreement or release the performance of any part of this Agreement or postpone the performance of this Agreement through negotiations and depending on the extent of influence of such event upon the performance of this Agreement.

 

8.6       If either party breaches this Agreement, it shall be subject to the liabilities for breach of contract in accordance with the Contract Law of the People’s Republic of China.

 

9.     DISPUTE RESOLUTION

 

9.1       All disputes arising from or in connection with this Agreement shall be settled by both Parties through friendly negotiation. If no settlement can be reached, the dispute shall be submitted to Guangzhou Arbitration Commission for arbitration in accordance with the Arbitration Law of the People’s Republic of China.

 

9.2       If either Party fails to perform the award, the other Party may enforce the award through the competent people’s court where the dispute arises.

 

9.3       The arbitration costs shall be borne by the losing party, unless it is otherwise decided in the award.

 

9.4       During the course of arbitration, both Parties shall continue to perform all terms and conditions hereunder, other than those involved in the arbitration.

 

9.5       Any issue absent hereof shall be governed by the Contract Law of the People’s Republic of China and other relevant laws and regulations.

 

10.  EFFECTIVENESS, TERMINATION AND MISCELLANEOUS

 

10.1 This Agreement shall become effective as of the date when it is duly signed and sealed by the authorized representatives of both Parties. If either Party intends to terminate this Agreement during the term hereof, it shall give a two-month written notice to the other Party. If the other Party agrees to terminate this Agreement, the termination of this Agreement shall become effective two months after the other Party signs the written notice for confirmation.

 

10.2 All attachments accepted by both Parties in written are the integral parts of this Agreement, and shall have the same legal force as this Agreement. Any amendment to this Agreement shall be made in written.

 

10.3 If Party A introduces any new telecommunication network value-added business to the market similar to the business described herein, both Parties may jointly carry out such business by entering into a supplementary agreement.

 

10.4 This Agreement and all appendices hereto shall be made and executed in duplicate, one for each party hereto and both being of equal authenticity.

 

10.5 Any amendment or supplementation hereto shall be made in written forms, and shall become an integral part of this Agreement after the same is duly executed by the authorized representatives of both Parties.

 

10.6 If both Parties will not continue the cooperation upon expiration of this Agreement, both Parties

 

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shall hand over the business materials and financial accounts to each other within three months after the termination of this Agreement, including but not limited to settlement of accounts and delivery of receipts and vouchers. During the process of handover, both Parties must ensure the normal operation of the system and services.

 

10.7 Any issue absent hereof shall be settled by both Parties through friendly negotiation.

 

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PARTY A: GUANGZHOU YITONGTIANXIA
    	
PARTY B: GUANGZHOU YINGZHENG
    
	
SOFTWARE DEVELOPMENT CO., LTD.
    	
INFORMATION TECHNOLOGY CO., LTD.
    
	
(Common Seal)
    	
(Common Seal)
    
	
 
    	
 
    
	
(affixed   with common seal)
    	
(affixed   with common seal)
    
	
 
    	
 
    
	
Authorized Representative (Signature):
    	
Authorized Representative (Signature):
    
	
 
    	
 
    
	
Executed as of August 6, 2010 in Guangzhou
    	
 
    

 

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