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 Room 810, Block C2, Oriental
Plaza, No. 1 ChangAn Street, Beijing, China 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 Room 211, No. 31 YanXi
Street, YanXi Economic Zone, HuaiRou District, Beijing, China.
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
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