Exhibit 10.12
Bridge Loan and Financing
Agreement
This Bridge
Financing Agreement (the “ Agreement ”) is
related to funding provided by Pope Asset, Ancora Greater China
Fund, LP and MMH Group LLC. (collectively, “ Investors
”) that will be utilized to complete the pre-reverse merger
activities for Korea Jinduren International Fashion Co. Ltd.
(“ vLov ”), a Chinese company based at No. 1
Building, West Xiangjiang Road, Shishi City, Fujian Province, China
which designs, manufactures, markets and sells branded contemporary
fashion clothing and accessories to the 15-34 age group (30% of the
PRC Population) through 650 points of sale which are located at
retail and department stores throughout the PRC. vLov
shall proceed through the process of reverse merger (“
RTO ”) to be listed as a public company in the United
States and to close a financing at the same time in the minimum
amount of $6,000,000 (the “ Financing ;”
collectively with the RTO, referred to herein as the “
APO ”).
A.
Parties to this Agreement:
|
(1)
|
Investors will provide a bridge loan
of US$550,000 towards covering the costs for pre-auditing, U.S.
auditing, China legal, US legal and other necessary professional
fees for vLov to complete the reverse merger process to obtain
public status in the US.
|
|
(2)
|
The investors
and their affiliates, have experience and knowledge in the reverse
merger process. The Company’s advisors shall
manage, the entire process including but not limited to, auditing,
legal, roadshow coordination, etc. necessary for vLov to become a
public company in the U.S. Investors will provide, but
are not obligated to provide assistance in this process.
|
|
(1)
|
Investors shall
provide a bridge Loan of US$550,000 to be held in an
escrow established by the Company’s US legal firm,
Richardson Patel (“ Richardson Patel LLP ”) to
cover the following:
|
|
|
|
Engagement and
payment through escrow to a Chinese accounting and legal firm, to
perform the required pre-audit and the legal due diligence, setting
up the off-shore structure, etc. for vLov.
|
|
|
|
Engagement of
and payment through escrow to a U.S. auditing firm (“
Moore Stephens ”) and Richardson Patel, which are
necessary to complete an SEC-approved audit and the required
reverse merger of vLov.
|
|
|
|
Investors will
have the right of first refusal to provide the capital for the
Financing. The specifics of the Financing proposal by the Investors
will be clearly delineated in a separate Letter of Intent or Term
Sheet which will be presented to the Company; provided, however,
that the minimum pre-money valuation for the Financing is US$52.5M
(based on 7X 2007 Net Profits of US$7.5M).
|
|
|
|
The investors
shall provide a public shell company quoted on the OTC Bulletin
Board suitable for the RTO that is acceptable to the
vLov.
|
|
|
|
Any extra
payments beyond $550,000 that are deemed necessary to complete the
reverse merger process for vLov, not including any cash component
necessary to acquire the shell, will be negotiated in good faith
with vLov directly and payment for such services being made at the
time the RTO/Funding is completed and as a portion for a use of
proceeds.
|
|
|
The
Company’s Financial Advisor/Consultant and the Company (where
necessitated) shall provide the following:
|
|
|
|
Assisting and
managing the process so Investors can complete further due
diligence of vLov.
|
|
|
|
Engagement with
Richardson Patel LLP to set up the escrow account and manage the
payment from the escrow account to various professionals engaged to
perform the necessary services required for the reverse
merger.
|
|
|
|
Coordinating
between Investors, consultants and vLov, in addition to investment
bankers (only if necessary), to ensure a smooth completion of the
reverse merger and funding process for vLov.
|
Commitment. Within seven (7) business days after all parties
execute this Agreement, Investors, on a prorata basis, shall
transfer US$250,000 of the required $550,000 to an escrow account
established by Richardson Patel LLP specifically for the use of
payment to designated service providers and consultants for vLov,
as set forth on Schedule A, attached hereto. Once the formal
agreements between Richardson Patel and Moore Stephens have been
established and provided for review, the Investors will contribute
the additional $300,000 on a prorate basis, by wire no less than
five (5) business days to the escrow account.
|
|
Repayment of
Bridge Loan and Entitlement of Pubco shares.
The parties agree that VLOV shall
have no obligation to repay the Bridge Loan prior to October 1,
2009, provided that VLOV shall be obligated to repay the Bridge
Loan in full on or after October 1, 2009 when the initial private
(or public) placement is completed. The Investors shall also
receive stock of Pubco (as defined below) upon the closing of the
APO equal to 1.0% of the total shares of common stock outstanding
after the RTO, but before the Financing, on a prorata basis per the
ownership percentages in Schedule A attached
hereto. These shares issued to the Investors, or its
nominees, shall be initially restricted 144
shares. After the completion of the Financi n g,
vLo
|
|
