BUSINESS COOPERATION AGREEMENT
This
Business Cooperation Agreement (this “Agreement”) is dated
December 23, 2007, and is entered into in Beijing, China between Orient Come
Holdings Limited, a company incorporated under British Virgin Islands, located
at Xxxx 000, Xxxxx X0, Xxxxxxxx Xxxxx, Xx. 0 XxxxxXx Xxxxxx, Xxxxxxx, Xxxxx
100738 (“Party
A”), Kinglake Resources, Inc., a Nevada corporation and the Parent
Company of Party A, and Beijing K's Media Advertising Ltd. Co., a limited
liability company organized under the laws of the PRC (“Party B”), with a
registered address at Xxxx 000, Xx. 00 XxxXx Xxxxxx, XxxXx Economic Xxxx,
XxxxXxx Xxxxxxxx, Xxxxxxx, Xxxxx. Party A and Party B are referred to
collectively in this Agreement as the”Parties.”
RECITALS
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(1)
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Party
A is a company incorporated under the laws of the British Virgin
Islands,
which has the expertise in the business of media and media placements.
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(2)
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Party
B is a company incorporated in Beijing, China, and is an emerging
outdoor
media company, which will place advertisements that contain premium
bands
in KTV nightclubs. Potential audiences are higher than average income
consumers (the “Business”);
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(3)
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Party
A desires to provide technical support, business support and related
consulting services and relevant services to Party B, for compensation,
and Party B agrees to accept such consulting services.
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(4)
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The
Parties are entering into this Agreement to set forth the terms and
conditions under which Party A shall provide services to Party B.
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NOW
THEREFORE, the Parties
agree as follows:
1. DEFINITIONS
1.1 In
this Agreement the following terms shall have the following
meanings:
“Affiliate,”
with
respect to any Person, shall mean any other Person that directly or indirectly
controls, or is under common control with, or is controlled by, such Person.
As
used in this definition, “control” shall mean possession, directly or
indirectly, of power to direct or cause the direction of management or policies
(whether ownership of securities or partnership or other ownership interests,
by
contract or otherwise).
“Consulting
Services
Fee” shall be as defined in Clause 3.1.
“Indebtedness”
shall
mean, as to any Person, without duplication, (i) all indebtedness (including
principal, interest, fees and charges) of such Person for borrowed money for
the
deferred purchase price of property or services, (ii) the face amount of all
letters of credit issued for the amount of such Person and all drafts drawn
thereunder, (iii) all liabilities secured by any Lien on any property owned
by
such person, whether or not such liabilities have been assumed by such Person,
(iv) the aggregate amount required to be capitalized under leases under which
such Person is the lessee and (v) all contingent obligations (including, without
limitation, all guarantees to third parties) of such Person.
“Lien”
shall
mean any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), preference, priority or other security agreement
of
any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any financing or similar statement
or
notice filed under recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
“Person”
shall
mean
any individual, corporation, company, voluntary association, partnership, joint
venture, trust, unincorporated organization, entity or other organization or
any
government body.
“PRC”
means
the
People’s Republic of China.
“Quarterly
Date” shall
mean the last day of March, June, September and December in each year, the
first
of which shall be the first such day following the date of this Agreement;
provided that if any such day is not a business day in the PRC, then such
Quarterly Date shall be the next succeeding business day in the PRC.
“Services”
means
the
services to be provided under the Agreement by Party A to Party B, as more
specifically described in Clause 2; in this Agreement a reference to a Clause,
unless the context otherwise requires, is a reference to a clause of this
Agreement.
1.2 The
headings in this Agreement shall not affect the interpretation of this
Agreement.
2. RETENTION
AND SCOPE OF SERVICES
2.1 Party
B hereby agrees to retain the services of Party A, and Party A accepts such
appointment, to provide to Party B services in relation to the current and
proposed operations of Party B’s business in the PRC upon the terms and
conditions of this Agreement. The services subject to this Agreement shall
include, without limitation:
(a) General
Business
Operation. Advice and assistance relating to development of technology
and provision of consultancy services, particularly as related to the
Business.
(b) Human
Resources.
(i) Advice
and assistance in relation to the staffing of Party B, including assistance
in
the recruitment, employment and secondment of management personnel,
administrative personnel and staff of Party B;
(ii) Training
of management, staff and administrative personnel;
(iii) Assistance
in the development of sound payroll administrative controls in Party
B;
(iv) Advice
and assistance in the relocation of management and staff of Party
B;
(v) Marketing
and other related advice;
(c) Research
and
Development.
(i) Advice
and assistance in relation to research and development of Party B;
(ii) Advice
and assistance in strategic planning;
(d) Guaranty. Kinglake
shall take such action as may be reasonably required to guaranty up to RM 10
million ($1.3 million U.S.) of Party B's financial obligations; and
(e) Other. Such
other advice and assistance as may be agreed upon by the Parties.
2.2 Exclusive
Services
Provider. During the term of this Agreement, Party A shall be the
exclusive provider of the Services. Party B shall not seek or accept similar
services from other providers unless the prior written approval is obtained
from
Party A.
2.3 Intellectual
Properties Related to the Services. Party A shall own all intellectual
property rights developed or discovered through research and development, in
the
course of providing Services, or derived from the provision of the Services.
Such intellectual property rights shall include patents, trademarks, trade
names, copyrights, patent application rights, copyright and trademark
application rights, research and technical documents and materials, and other
related intellectual property rights including the right to license or transfer
such intellectual properties. If Party B must utilize any intellectual property,
Party A agrees to grant an appropriate license to Party B on terms and
conditions to be set forth in a separate agreement.
2.4 Pledge.
Party B
shall permit and cause Party B’s shareholders to pledge the equity interests of
Party B to Party A for securing the Fee that should be paid by Party B pursuant
to this Agreement.
3. PAYMENT
3.1 General.
(a) In
consideration of the Services provided by Party A hereunder, Party B shall
pay
to Party A during the term of this Agreement a consulting services fee, equal
to
80% of the quarterly revenues after deduction of direct operating costs,
expenses and taxes (the “Consulting Services Fee”). Party B shall pay the
Consulting Services Fee based on the quarterly financial statements provided
under Clause 5.1 below. Such quarterly payment shall be made within 15 days
after receipt by Party A of the financial statements referenced
above.
(b) Party
B will permit, from time to time during regular business hours as reasonably
requested by Party A, or its agents or representatives (including independent
public accountants, which may be Party B’s independent public accountants), (i)
to conduct periodic audits of books and records of Party B, (ii) to examine
and
make copies of and abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession or under the
control of Party B (iii) to visit the offices and properties of Party B for
the
purpose of examining such materials described in clause (ii) above, and (iv)
to
discuss matters relating to the performance by Party B hereunder with any of
the
officers or employees of Party B having knowledge of such matters. Party A
may
exercise the audit rights provided in the preceding sentence at any time,
provided that Party A provides ten (10) days written notice to Party B
specifying the scope, purpose and duration of such audit. All such audits shall
be conducted in such a manner as not to interfere with Party B’s normal
operations.
3.2 Party
B shall not be entitled to set off any amount it may claim is owed to it by
Party A against any Consulting Services Fee payable by Party B to Party A unless
Party B first obtains Party A’s written consent.
3.3 The
Consulting Services Fee shall be paid in RMB by wire transfer to a bank account
or accounts specified by Party A, as may be specified in writing from time
to
time.
3.4 Should
Party B fail to pay all or any part of the Consulting Service’s Fee due to Party
A in RMB under this Clause 3 within the time limits stipulated, Party B shall
pay to Party A interest in RMB on the amount overdue based on the three (3)
month lending rate for RMB announced by the Bank of China on the relevant due
date.
3.5 All
payments to be made by Party B hereunder shall be made free and clear of and
without deduction for or on account of tax, unless Party B is required to make
such payment subject to the deduction or withholding of tax.
4. FURTHER
TERMS OF COOPERATION
4.1 All
business revenue of Party B shall be directed in full by Party B into a bank
account(s) directed by Party A.
5. UNDERTAKINGS
OF PARTY B
Party
B hereby agrees that, during the term of the Agreement:
5.1 Information
Covenants. Party B will furnish to Party A:
5.1.1 Preliminary
Monthly
Reports. Within five (5) days after the end of each calendar month the
preliminary income statements, balance sheet and results of operations of Party
B made up to and as at the end of such calendar month, in each case prepared
in
accordance with the PRC generally accepted accounting principles, consistently
applied.
5.1.2 Final
Monthly
Reports. Within ten (10) days after the end of each calendar month, a
final report from Party Bon the financial situation such as income statements,
balance sheet and results of operations of Party B made up to and as at the
end
of such calendar month and for the elapsed portion of the relevant financial
year, setting forth in each case in comparative form figures for the
corresponding period in the preceding financial year, in each case prepared
in
accordance with the PRC generally accepted accounting principles, consistently
applied.
5.1.3 Quarterly
Reports. As soon as available and in any event within thirty (30) days
after each Quarterly Date (as defined below), unaudited consolidated balance
sheet, consolidated statements of operations, statements of cash flows and
changes in financial situation of the Party B and its subsidiaries, if any,
for
such quarterly period and for the period from the beginning of the relevant
fiscal year to such Quarterly Date, setting forth in each case actual versus
budgeted comparisons and in comparative form the corresponding consolidated
figures for the corresponding period in the preceding fiscal year, accompanied
by a certificate of the chief financial officer of the Party B, which
certificate shall state that said financial statements fairly present the
consolidated financial condition and results of operations, as the case may
be,
of the Party B and its subsidiaries, if any, in accordance with U.S. general
accepted accounting principles applied on a consistent basis as at the end
of,
and for, such period (subject to normal year-end audit adjustments and the
preparation of notes for the audited financial statements).
5.1.4 Annual
Audited
Accounts. Within six (6) weeks of the end of the financial year, the
annual audited accounts of Party B to which they relate (setting forth in each
case in comparative form the corresponding figures for the preceding financial
year), in each case prepared in accordance with, among others, the U.S.
generally accepted accounting principles, consistently applied.
5.1.5 Budgets.
At
least 45 days before the first day of each financial year of Party B, a budget
in form satisfactory to Party A (including budgeted statements of income and
sources and uses of cash and balance sheets) prepared by Party B for each of
the
four financial quarters of such financial year accompanied by the statement
of
the chief financial officer of Party B to the effect that, to the best of his
knowledge, the budget is a reasonable estimate for the period covered
thereby.
5.1.6 Notice
of
Litigation. Promptly, and in any event within one (1) business day after
an officer of Party B obtains knowledge thereof, notice of (i) any litigation
or
governmental proceeding pending against Party B which could materially adversely
affect the business, operations, property, assets, condition (financial or
otherwise) or prospects of Party B and (ii) any other event which is likely
to
materially adversely affect the business, operations, property, assets,
condition (financial or otherwise) or prospects of Party B.
5.1.7 Other
Information. From time to time, such other information or documents
(financial or otherwise) as Party A may reasonably request.
5.2 Books,
Records and
Inspections. Party B will keep proper books of record and account in
which full, true and correct entries in conformity with generally accepted
accounting principles in the PRC, provided however, that such books and records
shall also meet the requirements of US generally accepted accounting principles
to the extent necessary to prepare the reports described above in Sections
5.1.3
and 5.1.4. Party B will permit officers and designated representatives of Party
A to visit and inspect, under guidance of officers of Party B, any of the
properties of Party B, and to examine the books of record and account of Party
B
and discuss the matters, finances and accounts of Party B with, and be advised
as to the same by, its and their officers, all at such reasonable times and
intervals and to such reasonable extent as Party A may request.
5.3 Corporate
Franchises. Party B will do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises and licenses.
5.4 Compliance
with
Statutes, etc. Party B will comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, in respect of the conduct of its business and the ownership
of its property, including without limitation, maintenance of valid and proper
government approvals and licenses necessary to provide the services, except
that
such noncompliances could not, in the aggregate, have a material adverse effect
on the business, operations, property, assets, condition (financial or
otherwise) or prospects of Party B.
6. NEGATIVE
COVENANTS
Party
B covenants and agrees that, during the term of this Agreement, without the
prior written consent of Party A.
6.1 Equity.
Party B
will not issue, purchase or redeem any equity or debt securities of Party
B.
6.2 Liens.
Party B
will not create, incur, assume or suffer to exist any Lien upon or with respect
to any property or assets (real or personal, tangible or intangible) of Party
B
whether now owned or hereafter acquired, provided that the provisions of this
Clause 6.2 shall not prevent the creation, incurrence, assumption or existence
of:
6.2.1 Liens
for taxes not yet due, or Liens for taxes being contested in good faith and
by
appropriate proceedings for which adequate reserves have been established;
and
6.2.2 Liens
in respect of property or assets of Party B imposed by law, which were incurred
in the ordinary course of business, and (x) which do not in the aggregate
materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of Party B or (y) which
are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing the forfeiture or sale of the property of assets
subject to any such Lien.
6.3 Consolidation,
Merger,
Sale of Assets, etc. Party B will not wind up, liquidate or dissolve its
affairs or enter into any transaction of merger or consolidation, or convey,
sell, lease or otherwise dispose of (or agree to do any of the foregoing at
any
future time) all or any part of its property or assets, or purchase or otherwise
acquire (in one or a series of related transactions) any part of the property
or
assets (other than purchases or other acquisitions of inventory, materials
and
equipment in the ordinary course of business) of any Person, except that (i)
Party B may make sales of inventory in the ordinary course of business and
(ii)
Party B may, in the ordinary course of business, sell equipment which is
uneconomic or obsolete.
6.4 Dividends.
Party B will not declare or pay any dividends, or return any capital, to its
shareholders or authorize or make any other distribution, payment or delivery
of
property or cash to its shareholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for a consideration, any shares
of
any class of its capital stock now or hereafter outstanding (or any options
or
warrants issued by Party B with respect to its capital stock), or set aside
any
funds for any of the foregoing purposes.
6.5 Leases.
Party B
will not permit the aggregate payments (including, without limitation, any
property taxes paid as additional rent or lease payments) by Party B under
agreements to rent or lease any real or personal property to exceed US $120,000
in any fiscal year of Party B.
6.6 Indebtedness.
Party B will not contract, create, incur, assume or suffer to exist any
indebtedness, except accrued expenses and current trade accounts payable
incurred in the ordinary course of business, and obligations under trade letters
of credit incurred by Party B in the ordinary course of business, which are
to
be repaid in full not more than one (1) year after the date on which such
indebtedness is originally incurred to finance the purchase of goods by Party
B.
6.7 Advances,
Investment
and Loans. Party B will not lend money or credit or make advances to any
Person, or purchase or acquire any stock, obligations or securities of, or
any
other interest in, or make any capital contribution to, any other Person, except
that Party A may acquire and hold receivables owing to it, if created or
acquired in the ordinary course of business and payable or dischargeable in
accordance with customary trade terms.
6.8 Transactions
with
Affiliates. Party B will not enter into any transaction or series of
related transactions, whether or not in the ordinary course of business, with
any Affiliate of Party B, other than on terms and conditions substantially
as
favorable to Party B as would be obtainable by Party B at the time in a
comparable arm’s-length transaction with a Person other than an Affiliate and
with the prior written consent of Party A.
6.9 Capital
Expenditures. Party B will not make any expenditure for fixed or capital
assets (including, without limitation, expenditures for maintenance and repairs
which should be capitalized in accordance with generally accepted accounting
principles in the PRC or in the United States) in excess of US $5,000, without
the prior written consent of Party A.
6.10 Modifications
to Debt
Arrangements, Agreements or Articles of Association. Party B will not (i)
make any voluntary or optional payment or prepayment on or redemption or
acquisition for value of (including, without limitation, by way of depositing
with the trustee with respect thereto money or securities before due for the
purpose of paying when due) any existing Indebtedness or (ii) amend or modify,
or permit the amendment or modification of, any provision of any existing
Indebtedness or of any agreement (including, without limitation, any purchase
agreement, indenture, loan agreement or security agreement) relating to any
of
the foregoing or (iii) amend, modify or change its Articles of Association
or
Business License, or any agreement entered into by it, with respect to its
capital stock, or enter into any new agreement with respect to its capital
stock.
6.11 Line
of
Business. Party B will not engage (directly or indirectly) in any
business other than those types of Business except with the prior written
consent of Party A.
7. TERM
AND TERMINATION
7.1 This
Agreement shall take effect on the date of execution of this Agreement and
shall
remain in full force and effect unless terminated pursuant to Clause 7.2 for
a
period of 20 years.
7.2 This
Agreement may be terminated:
7.2.1 by
either Party giving written notice to the other Party if the other Party has
committed a material breach of this Agreement (including but not limited to the
failure by Party B to pay the Consulting Services Fee) and such breach, if
capable of remedy, has not been so remedied within, in the case of breach of
a
non-financial obligation, 30 days, following receipt of such written
notice;
7.2.2 either
Party giving written notice to the other Party if the other Party becomes
bankrupt or is the subject of proceedings or arrangements for liquidation or
dissolution or ceases to carry on business or becomes unable to pay its debts
as
they come due;
7.2.3 by
either Party giving written notice to the other Party if, for any reason, the
operations of Party A are terminated;
7.2.4 by
either Party giving written notice to the other Party if the business license
or
any other license or approval material for the business operations of Party
B is
terminated, cancelled or revoked; or
7.2.5 by
election of Party A with or without reason.
7.3 Any
Party electing properly to terminate this Agreement pursuant to Clause 7.2
shall
have no liability to the other Party for indemnity, compensation or damages
arising solely from the exercise of such right. The expiration or termination
of
this Agreement shall not affect the continuing liability of Party B to pay
any
Consulting Services Fees already accrued or due and payable to Party A. Upon
expiration or termination of this Agreement, all amounts then due and unpaid
to
Party A by Party B hereunder, as well as all other amounts accrued but not
yet
payable to Party A by Party B, shall forthwith become due and payable by Party
B
to Party A.
8. PARTY
A’S REMEDY UPON PARTY B’S BREACH
In
addition to the remedies provided elsewhere under this Agreement, Party A shall
be entitled to remedies permitted under PRC laws, including without limitation,
compensation for any direct and indirect losses arising from the breach and
legal fees incurred to recover losses from such breach.
9. AGENCY
The
Parties are independent contractors, and nothing in this Agreement shall be
construed to constitute either Party to be the agent, Partner, legal
representative, attorney or employee of the other for any purpose whatsoever.
Neither Party shall have the power or authority to bind the other except as
specifically set out in this Agreement.
10. GOVERNING
LAW AND JURISDICTION
10.1 Governing
Law.
This Agreement shall be governed by, and construed in accordance with, the
laws
of the PRC.
10.2 Arbitration.
10.2.1 Any
dispute arising from, out of or in connection with this Agreement shall be
settled through friendly consultations between the Parties. Such consultations
shall begin immediately after one Party has delivered to the other Party a
written request for such consultation. If within ninety (90) days following
the
date on which such notice is given, the dispute cannot be settled through
consultations, the dispute shall, upon the request of any Shareholder with
notice to the other Party, be submitted to arbitration in China under the
auspices of China International Economic and Trade Arbitration Commission (the
“CIETAC”). The
Parties shall jointly appoint a qualified interpreter for the arbitration
proceedings and shall be responsible for sharing in equal portions the expenses
incurred by such appointment.
10.2.2 Number
and Selection
ofArbitrators.
There
shall be three (3) arbitrators. Party B shall select one (1) arbitrator and
Party A shall select one (1) arbitrator, and both arbitrators shall be selected
within thirty (30) days after giving or receiving the demand for arbitration.
Such arbitrators shall be freely selected, and the Parties shall not be limited
in their selection to any prescribed list. The chairman of the CIETAC shall
select the third arbitrator. If a Party does not appoint an arbitrator who
has
consented to participate within thirty (30) days after the selection of the
first arbitrator, the relevant appointment shall be made by the chairman of
the
CIETAC.
10.2.3 Language.
Unless otherwise provided by the arbitration rules of CIETAC, the arbitration
proceeding shall be conducted in English. The arbitration tribunal shall apply
the arbitration rules of the CIETAC in effect on the date of the signing of
this
Agreement. However, if such rules are in conflict with the provisions of this
Clause, including the provisions concerning the appointment of arbitrators,
the
provisions of this Clause shall prevail.
10.3 Cooperation
Disclosure. Each Party shall cooperate with the other Party in making
full disclosure of and providing complete access to all information and
documents requested by the other Party in connection with such proceedings,
subject only to any confidentiality obligations binding on such
Parties.
10.4 Jurisdiction
of the
Arbitration Award Enforcement. The arbitration award shall be final and
binding upon all parties. It may be entered into by any court having
jurisdiction, or application may be made to such court for a judicial
recognition of the award or any order of enforcement thereof.
10.5 Continuing
Obligations. During the period when a dispute is being resolved, the
Parties shall in all other respects continue their implementation of this
Agreement.
11. ASSIGNMENT
No
part of this Agreement shall be assigned or transferred by Party B without
the
prior written consent of Party A. Any such assignment or transfer shall be
void.
Party A, however, may assign its rights and obligations.
12. NOTICES
Notices
or other communications required to be given by any party pursuant to this
Agreement shall be written in English and Chinese and delivered personally
or
sent by registered mail or postage prepaid mail or by a recognized courier
service or by facsimile transmission to the address of each relevant party
or
both parties set forth below or other address of the party or of the other
addressees specified by such party from time to time. The date when the notice
is deemed to be duly served shall be determined as follows: (a) a notice
delivered personally is deemed duly served upon the delivery; (b) a notice
sent
by mail is deemed duly served the tenth (10th)
day
after the date when the air registered mail with postage prepaid has been sent
out (as is shown on the postmark), or the fourth (4th)
day
after the delivery date to the internationally recognized courier service
agency; and (c) a notice sent by facsimile transmission is deemed duly served
upon the receipt time as is shown on the transmission confirmation of relevant
documents.
Party
A:
Orient Come Holdings Limited
|
Address:
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Xxxx
000, XxxxxX0, Xxxxxxxx Xxxxx,
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|
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Xx.
0 XxxxxXx Xxxxxx
|
|
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Xxxxxxx,
Xxxxx 100738
|
Party
B:
Beijing K's Media Advertising Ltd. Co.
Address:
Xxxx 000, Xx. 00 XxxXx Xxxxxx
YanXi
Economic Xxxx, Xxxx Xxx
Xxxxxxxx
Xxxxxxx,
Xxxxx
13. GENERAL
13.1 The
failure to exercise or delay in exercising a right or remedy under this
Agreement shall not constitute a waiver of the right or remedy or waiver of
any
other rights or remedies and no single or partial exercise of any right or
remedy under this Agreement shall prevent any further exercise of the right
or
remedy or the exercise of any other right or remedy.
13.2 Should
any clause or any part of any Clause contained in this Agreement be declared
invalid or unenforceable for any reason whatsoever, all other clauses or parts
of clauses contained in this Agreement shall remain in full force and
effect.
13.3 This
Agreement constitutes the entire agreement between the Parties relating to
the
subject matter of this Agreement and supersedes all previous
agreements.
13.4 No
amendment or variation of this Agreement shall be valid unless it is in writing
and signed by or on behalf of each of the Parties.
13.5 This
Agreement shall be executed in two originals in Chinese. This Agreement has
both
an English version and a Chinese version. Both versions are equally authentic.
Where a comparison of the authentic texts of both versions of this Agreement
renders a difference in meaning, the meaning which best reconciles the texts,
having regard to the object and purpose of this Agreement shall be
adopted.
SIGNATURE
PAGE
IN
WITNESS WHEREOF, both
parties hereto have caused this Business Cooperation Agreement to be duly
executed by their legal representatives and duly authorized representatives
on
their behalf as of the date first set forth above.
PARTY
A:
Orient Come Holdings Limited
By:/s/
Xx
Xxxx
Name:
Xx Xxxx
Title:
President
PARTY
B:
Beijing K's Media Advertising Ltd. Co.
By:/s/
Kun (Xxxxx)
Wei
Name:
Kun (Xxxxx) Wei
Title:
President
