EXHIBIT (1)
AGREEMENT
Party A: Lanbo Financial Investment Company Group Limited
Party B: Aidi Financial Investment Co., Ltd.
Party A: Lanbo Financial Investment Company Group Limited, a company
incorporated under the laws of British Virgin Islands ("Lanbo").
Party B: Aidi Financial Investment Co., Ltd., a company incorporated under the
laws of British Virgin Islands ("Aidi BVI").
Party A has retained Party B as its financial advisor to assist Party A in a
reverse merger transaction and to obtain a public company listing in the United
States.
Party A entered into an agreement with Aidi Financial Investment, LLC, a U.S.
company ("Aidi"), dated October 15, 2003 ("Aidi Agreement"). Xian Xinxing Real
Estate Development Co. Ltd ("Xinxing"), a subsidiary of Party A, entered into an
agreement with Du Yaru, as a representative of Party B ("Yaru"), dated Xxxxx 0,
0000 ("Xxxx Agreement"). Party A and Party B acknowledge that the Aidi Agreement
and the Yaru Agreement both relate to services to be rendered for the benefit of
Party A, and compensation to be paid, in connection with a reverse merger
transaction and obtaining a public company listing in the United States.
Accordingly, the parties hereto desire to set forth in a single agreement the
services to be rendered and the compensation to be paid in connection with the
reverse merger transaction involving Party A.
It is agreed by the parties hereto: (i) that the Aidi Agreement and the Yaru
Agreement are hereby terminated and shall no further force and effect, and (ii)
no party under the Yaru Agreement or Aidi Agreement shall have any liability or
obligation to the other party whatsoever.
I. Aidi BVI Scope of Services:
Aidi BVI, as the financial advisor, will assist Lanbo to execute the
business of financial investment services, which includes leading role in the
advisory services of merger and acquisition. In order to aggressively expand
the business of Lanbo, Aidi BVI will help Lanbo to become a listed company in
the U.S.A by reverse merger. Aidi BVI will assist Lanbo to render its services
as the followings:
Consulting Services
1. Strategic planning and analysis;
2. Craft the business model and assist to write the business plan for
Lanbo;
3. Identify and recommend US, Chinese and BVI legal counsel, US
auditor and funding sources for Lanbo as well as assist Lanbo
familiarize with current financial rules and regulations in the U.S.A.
4. Advisory on industry analysis and identifying acquisition target
companies in China and training on M & A operation including vertical
integration of the targeted industry;
5. Advisory on assisting to build up the mid-management for the potential
investment portfolio companies and Staff training before going public.
Reverse Merger
1. Identifying and introducing eligible shell company ("Shell Company");
2. Negotiation of reverse merger transaction;
3. Coordinating all parties involved in the transaction, including
business advises on related reverse merger transaction;
4. Upon closing, Aidi BVI will assure Lanbo has absolute controlling
interest of the Shell Company and become listed company in the U.S.A.
Lanbo's share ownership in the Shell Company following the reverse
merger will not be less than 54%.
Financing:
1. Strategy planning of capital raising in the capital market and its
schedule;
2. Valuation analysis of private placement or public offering and related
time frame;
3. Recommendation on Lanbo's and Shell Company's initial capitalization
structure;
4. Recommend and locate several sources of capital raising and methods,
assisting in analyzing the capital markets of the U.S.A., advising on
short-term and/or long-term financing strategy.
M & A
1. Industry analysis and work out acquisition strategy, plan and
criteria;
2. Identify potential acquisition target companies and strategy for each
acquisition, including negotiation, coordination, valuation and
detailed execution plan for the potential investment portfolio
companies;
3. Assist to conduct the market analysis of industry trend, due
diligence of the potential target acquisition companies. Work out
M&A plan and its scheduling including the execution of the plan on
schedule;
4. Assist to build the platform for mid-management of acquired
investment portfolio companies in terms of consolidated financial
statements and vertical integration of the sector the industry
involved.
5. Staff training for business personnel and guide them through the
process to build up their ability and qualification to operate
independently.
II. Obligations and Responsibilities of Lanbo
Lanbo, as the candidate company for the public listing in the US and
beneficiary of listing and financing, Lanbo should assume its responsibilities
and obligation as followings:
(i) Respond promptly to the business proposal put forwarded by Aidi
BVI and make decision accordingly in a timely manner;
(ii) Once the decision has been made, Lanbo should execute it
effectively according to the time table;
(iii) Bear the expenses incurred related to purchasing of the shell;
(iv) Bear the up-front expenses before listing;
(v). Responsible for providing accurate material information during
the process of auditing and legal due diligence;
(vi) Ensure Aidi BVI or its designees can independently use 46%
equity interest of the Shell Company's stock (including the
reservation of 7% equity interests for former shareholders of the
Shell Company and other service providers designated by Aidi BVI);
(vii) Pay Aidi BVI's expense at cost incurred in the process of
Lanbo's reverse merger, private placement and any related business
activities related with Aidi BVI's responsibilities and obligations
under item I in this agreement.
(viii)During the effective period of the agreement, Lanbo cannot
retain any other financial consultants without Aidi BVI's prior
consent, except for Xxxxxxx Securities, LLC ("Xxxxxxx"). The parties
hereto acknowledge and agree that Xxxxxxx shall be the exclusive
placement agent for the Shell Company and Lanbo pursuant to a
financial advisory agreement between the Shell Company and Xxxxxxx
to be executed on or before the closing of the reverse merger.
III. Compensation:
Consultant fees for listing: Lanbo will pay Aidi BVI a total sum of RMB 1.6
million.
Commission: As Lanbo's financial consultant, Lanbo will pay 2% of total amount
of funds raised by Lanbo during the term of this Agreement.
In order to expand Lanbo's business through M & A, reduce the expenses before
going public, aggressively build up Lanbo's asset and its market capitalization,
meanwhile, leave more development fund for Lanbo, the Parties agree that Lanbo
will have controlling interest of the Shell Company which is no less than 54%
equity interest, and Aidi will receive and/or have the right of disposition of
the rest of 46% equity interest in the Shell Company (excluding the 7% equity
interest in Shell Company retained by the former shareholders of Shell Company)
as compensation for services rendered by Aidi BVI hereunder or other service
providers. The parties hereto agree that the 39% equity interest in Shell
Company received by Aidi BVI hereunder shall be disposed to the following
persons in the following amounts immediately following the closing of the
reverse merger involving the Shell Company and Lanbo:
Equity Interest in Shell Company
--------------------------------
Du Yaru 8%
Xxxx Xxxx 4%
To Xxx Xxxxx 8%
Du Qing Song 4%
Xxxx Xxxx 3%
Xxx Xxxxx 2%
Xxxxx Xxx 8%
Xxxxxxx Xxxxxxxxx LLP 2%
IV. Default:
Aidi BVI's Responsibilities:
(i) As the financial advisor of Lanbo, should Aidi BVI make wrong
doings, misguide, result in failure of reserve merger, then Aidi BVI
will assume all losses of Lanbo;
(ii) In the process of capital raising, should Aidi BVI make wrong
doings, misguide, result in failure of capital raising, then Aidi BVI
will assume all losses of Lanbo.
Lanbo's Responsibilities:
(i) As the issuer and beneficiary of capital raising in this reserve
merger transaction, Lanbo should be responsible for Aidi BVI's all
economic losses without responding to all Aidi BVI's proposals in a
timely manner after Lanbo's agreement and commitment of the business
proposals.
V. Dispute Resolution
This Agreement is governed by and construed in accordance with the laws of
China and BVI in line with sincerity, trustworthy and credibility. All disputes,
controversies or claims arising out of or relating to this Agreement shall in
the first instance be the subject of a meeting between the representatives of
each party who has decision-making authority with respect to the matter in
question. Should the meeting do not result in a resolution of the dispute
following notice of the dispute to the other party, then the dispute shall be
resolved in a court proceeding to be held in place where dispute takes place.
VI. The Text Effect
This Agreement is written in Chinese and English, and text comes under
protection and domination of the laws of the People Republic of China and
British Virgin Island. The Chinese version has the priority to any other version
of translation
VII. Others
If any other related matters and details are not included in this
Agreement, the Parties will sign supplemental Agreement attached to this
Agreement. The supplemental Agreement is indispensable part of this contract,
and it has the equal legal effect.
VIII. Effectiveness
This agreement will be effective upon the signing of the Parties. The period of
validity and term of this Agreement is 2 years from the date hereof. The
originals are quadruplicating (includes supplemental Agreement ). The Parties
will have two copies of each. After the Parties sign and stamp the seal on the
documents, those 4 documents have the equal legal effects.
[Signature page follows.]
Dated this 27th day of September, 2004
Party A: Lanbo Financial Investment Company Group Limited ("Lanbo")
By /s/ Lu Pingji
--------------------
Title: Chairman
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Party B: Aidi Financial Investment Co., Ltd. ("Aidi BVI")
By /s/ Du Yaru
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Title: Authorized Signatory
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Accepted and Agreed to:
Aidi Financial Investment, LLC ("Aidi")
By /s/ Du Qing Song
--------------------
Title: Authorized Signatory
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Xian Xinxing Real Estate Development Co. Ltd ("Xinxing")
By /s/ Lu Pingji
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Title: Authorized Signatory
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/s/ Du Yaru
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Du Yaru
