LOAN AND TRANSACTION EXPENSES AGREEMENT
This
LOAN
AND TRANSACTION EXPENSES AGREEMENT (the “Agreement”)
is
entered into by and between Shanghai Hai Lu Kun Lun Hi-tech Engineering Co.,
Ltd., a company incorporated in the People’s Republic of China (“HAIE
Company”),
on
the one hand, and RMK Emerging Markets, LLC, a Delaware limited liability
company (“RMK”),
on
the other hand, as of December 18, 2007.
WHEREAS,
in order to fund HAIE Company’s fees and expenses in connection with the
Transaction until the Initial Financing and Merger are completed, HAIE Company
wishes to borrow from RMK as a short term bridge loan the amount set forth
on
the signature page, but collectively, an amount up to and not to exceed $600,000
(“Bridge
Loan”).
The
Bridge Loan must be paid back at 1.75x its principle value at the time of the
event of HAIE Company’s sale, next financing or going public event of $5 million
USD or more, as long as such a sale/financing/going public event involves a
party that is not a 100% domestic company in China.
The
Bridge
Loan funds will be deposited in escrow with RMK Investment Partners, the Escrow
Agent.
HAIE
Company is currently in the process of entering into service agreements
(Service
Agreements”)
for
the payment, retainer and/or fee agreements with legal, accounting, consultant,
and other service providers (each service provider is hereinafter the
“Service
Provider”)
for
services needed by HAIE Company in connection with and to consummate the
transaction.
RMK
shall
recommend the Service Providers to HAIE Company, which will review and execute
these Service Agreements. HAIE Company authorizes RMK to promptly authorize
the
Escrow Agent to release funds from the escrowed Bridge Loan and pay all of
HAIE
Company’s required payments under and in accordance with the payment terms set
forth in the approved Service Agreement to the Service Providers.
If
the
intended transaction is not consummated for any reason, RMK shall notify HAIE
Company and the Service Providers to terminate the Service Agreements
immediately. It is RMK’s responsibility to settle the unpaid bills with the
Service Providers, even though these Service Agreements are signed by HAIE
Company.
Both
Parties understand the transaction is based on HAIE Company receiving $9 million
USD for 30% of HAIE Company with an additional 6% put into escrow at close
and
going to the investors if the HAIE Company fails to meet agreed upon 2008
financial targets of 150 mm RMB of Revenue and 30 mm RMB of EBITDA.
Additionally, both Parties agree that $500,000 of the proceeds from the
financing will be used to settle pre-existing tax liabilities and $500,000
will
be allocated to Investor Relations programs as dictated by RMK.
This
Note
shall be governed in all respects by the laws of the State of California as
applied to agreements entered into and performed entirely within the State
of
California by residents thereof, without regard to any provisions thereof
relating to conflicts of laws among different jurisdictions.
Any
term
of this Note may be amended, waived or modified only with the written consent
of
both HAIE Company and RMK.
IN
WITNESS WHEREOF, the Parties hereto have executed this AGREEMENT as of date
first written above.
SHANGHAI
HAI LU KUN LUN HI-TECH ENGINEERING, CO., LTD.
By: | /s/ WU Qinghuan |
WU Qinghuan | |
Executive Director and President |
RMK
EMERING MARKETS, LLC
By: |
/s/
Xxxx X. Xxxxxxx
|
Xxxx
X. Xxxxxxx
|
|
Chief Executive Officer |