ESCROW AGREEMENT
THIS
ESCROW AGREEMENT (the “Escrow Agreement”) is made
as of December 23, 2007, by and between Kinglake Resources,
Inc. (the "KGLK" or "Party A"), a Nevada corporation; Orient
Come Holdings Limited, a British Virgin Islands company
("Party A Subsidiary" or "Orient"); and the Beijing K's Media
Advertising Ltd. Co., a limited liability company organized
under the laws of the PRC ("Chinese Advertisement Company" or
"Party B"); the persons listed on Schedule A hereto
("Party B Shareholders"); and Arnstein & Lehr LLP, a
law firm ("Escrow Agent) (each of the parties hereto is a
"Party" and, collectively, they are the
"Parties").
W I T N E S S E T H
WHEREAS,
on or about December 23, 2007, Party A Subsidiary and KGLK
entered into an Acquisition Agreement (the "Acquisition
Agreement");
WHEREAS,
on or about December 23, 2007, Party A Subsidiary, KGLK and
Party B and the Party B Shareholders entered into a Share
Exchange Agreement (the "Share Exchange
Agreement);
WHEREAS,
on or about December 23, 2007, Party A Subsidiary and Party B
entered into a Business Cooperation Agreement (the "Business
Cooperation"); and
WHEREAS,
as contemplated in the Share Exchange Agreement and Business
Cooperation Agreement, Party A Subsidiary, KGLK, Party B and
the Party B Shareholders intend that this Escrow Agreement
shall delineate the escrow arrangements between Party A and
the Party B Shareholders.
NOW,
THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, Party A and
Party B hereby agree as follows:
1.
Pursuant
to the provisions of the Share Exchange Agreement, the 10,500,000
new issued, but not outstanding restricted common shares of KGLK
(the "Escrowed Shares") will be deposited or held in an escrow
account with the Escrow Agent.
2.
The
10,500,000 new restricted common shares of KGLK will be distributed
to Party B Shareholders according to the following terms and
conditions:
(a)
Not
later than 90 days after the end of the first anniversary of this
Agreement, Party A will prepare and deliver to Party B and Escrow
Agent with calculations setting forth in sufficient detail Party
B's "RMB Before Tax Profit" for such one year period (the "One Year
Tax Profit Report"). Such Report shall be prepared in
accordance with generally accepted accounting principles applied on
a consistent basis. Party B shall have 15 days after
receipt of such Report (the "Pretax Profit Objection Statement"),
to provide Party A and Escrow Agent, in writing, with any
objections Party A shall have to the calculations set forth in the
One Year Tax Profit Report (the "Objections"). In the
event that Party A and Escrow Agent have not received any such
Objections within the objection period, the One Year Tax Profit
Report shall be considered final and conclusive. The
number of shares to be released shall be determined in accordance
with Appendix I.
In
the event the Escrow Agent and Party A receive one or more
Objections within the applicable time period and are unable to
resolve such Objections within twenty (20) days from the
receipt of such notice, Party A and Party B hereto shall
collectively agree upon an outside independent accounting firm
which shall then be engaged to compile the information
required to be included in the One Year Tax Profit
Report. Once complied, such Report shall be
conclusive, and any Escrowed Shares due thereunder shall be
paid by Escrow Agent to Party B on account of the Party B
Shareholders with 15 days of the day hereof. Any
costs associated with the engagement of an outside accounting
firm shall be shared equally by Party A and Party B
Shareholders.
(b)
Not
later than 90 days after the end of the second anniversary of this
Agreement, Party A will prepare and deliver to Party B and Escrow
Agent with calculations setting forth in sufficient detail Party
B's "RMB Before Tax Profit" for such two year period (the "Two Year
Tax Profit Report"). Such Report shall be prepared in
accordance with generally accepted accounting principles applied on
a consistent basis. Party B shall have 15 days after
receipt of such Report (the "Pretax Profit Objection Statement"),
to provide Party A and Escrow Agent, in writing, with any
objections Party A shall have to the calculations set forth in the
Two Year Tax Profit Report (the "Objections"). In the
event that Party A and Escrow Agent have not received any such
Objections within the objection period, the Two Year Tax Profit
Report shall be considered final and conclusive. The
number of shares to be released shall be determined in accordance
with Appendix I.
In
the event the Escrow Agent and Party A receive one or more
Objections within the applicable time period and are unable to
resolve such Objections within twenty (20) days from the
receipt of such notice, Party A and Party B hereto shall
collectively agree upon an outside independent accounting firm
which shall then be engaged to compile the information
required to be included in the Two Year Tax Profit
Report. Once complied, such Report shall be
conclusive, and any Escrowed Shares due thereunder shall be
paid by Escrow Agent to Party B on account of the Party B
Shareholders with 15 days of the day hereof. Any
costs associated with the engagement of an outside accounting
firm shall be shared equally by Party A and Party B
Shareholders.
(c)
Not
later than 90 days after the end of the third anniversary of this
Agreement, Party A will prepare and deliver to Party B and Escrow
Agent with calculations setting forth in sufficient detail Party
B's "RMB Before Tax Profit" for such three year period (the "Three
Year Tax Profit Report"). Such Report shall be prepared
in accordance with generally accepted accounting principles applied
on a consistent basis. Party B shall have 15 days after
receipt of such Report (the "Pretax Profit Objection Statement"),
to provide Party A and Escrow Agent, in writing, with any
objections Party A shall have to the calculations set forth in the
Three Year Tax Profit Report (the "Objections"). In the
event that Party A and Escrow Agent have not received any such
Objections within the objection period, the Three Year Tax Profit
Report shall be considered final and conclusive. The
number of shares to be released shall be determined in accordance
with Appendix I.
In
the event the Escrow Agent and Party A receive one or more
Objections within the applicable time period and are unable to
resolve such Objections within twenty (20) days from the
receipt of such notice, Party A and Party B hereto shall
collectively agree upon an outside independent accounting firm
which shall then be engaged to compile the information
required to be included in the Three Year Tax Profit
Report. Once complied, such Report shall be
conclusive, and any Escrowed Shares due thereunder shall be
paid by Escrow Agent to Party B on account of the Party B
Shareholders with 15 days of the day hereof. Any
costs associated with the engagement of an outside accounting
firm shall be shared equally by Party A and Party B
Shareholders.
3.
Each
Party shall use their best efforts to make available to the other
Party all work papers, and other financial materials used in
preparing the appropriate reports, and make such information
available to such Parties' accountants or representatives at such
reasonable times and upon reasonable notice at any time during the
preparation (a) by Party A of the applicable report, (b) the
review by Party B of the applicable report, and (c) the resolution
by the Parties of any objections thereto.
4.
Appointment of Escrow Agent . Parties hereby
appoint the Escrow Agent as escrow agent upon the terms and
conditions set forth herein, and the Escrow Agent hereby accepts
such appointment. This Escrow Agreement and the Escrow
Agent’s obligations hereunder shall commence on the date
first written above.
5.
Disbursement Into Court . At any time, the Escrow
Agent, in its sole discretion, may commence an action in the nature
of interpleader in any court it deems appropriate, to determine
ownership or disposition of the Escrowed Shares or it may deposit
the Escrowed Shares with the clerk of any appropriate court or it
may retain the Escrowed Shares pending receipt of a final,
non-appealable order of a court having jurisdiction over all of the
parties hereto directing to whom and under what circumstances the
Escrowed Shares are to be disbursed and
delivered. During the pendency of any such action, the
Escrow Agent may suspend the performance of any of its obligations
under this Escrow Agreement until such dispute or uncertainty shall
be resolved to the sole satisfaction of Escrow Agent or until a
successor Escrow Agent shall have been appointed (as the case may
be). The Escrow Agent shall have no liability to all
Parties or any other person with respect to any such suspension of
performance or disbursement into court, specifically including any
liability or claimed liability that may arise, or be alleged to
have arisen, out of or as a result of any delay in the disbursement
of the Escrowed Shares or any delay in or with respect to any other
action required or requested of Escrow Agent.
6.
Limitation of Responsibility and Liability and Duties of the Escrow
Agent . The acceptance by the Escrow Agent of its
duties as suc
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