CONVERTIBLE LOAN AGREEMENT

 

This CONVERTIBLE LOAN AGREEMENT (the “Agreement”) is made as of the 25th day of
February 2013 (the "Effective Date") between USA XO TOURS INC., a California
corporation, with an address at 9368 Rosemead Blvd., No. 103, Rosemead, CA 91770
(the "Company") and SAN LOTUS HOLDING INC., a Nevada corporation, with an
address at 3F B302C, No. 185 Kewang Road, Longtan Township, Taoyuan County 325,
Taiwan (R.O.C.) (the "Lender").

 

Recitals

 

A. The Company has borrowed from the Lender, and the Lender has provided to the
Company, certain funds (defined herein as the "Loan"), which the parties have
agreed to make subject to the terms and conditions set forth herein;

 

B. The Loan is convertible (the "Conversion") into securities of the Company
consisting of common shares of the Company, par value of $1, (the "Shares") upon
the terms and conditions set forth herein; and

 

C. The Lender understands and acknowledges to the Company that this Agreement is
being made pursuant to an exemption (the "Exemption") from registration provided
by Section 4(2) of the United States Securities Act of 1933, as amended, (the
"Securities Act") and Rule 506 of Regulation D of the Securities Act for the
private offering of securities.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the receipt of which is hereby acknowledged by each of the parties
hereto, the parties hereto covenant and agree as follows:

 

1. Representations and Warranties of the Lender

 

(a)           The Lender represents, warrants to and agrees with the Company
that:

 

(i) the Lender makes the Loan to the Company and acquires the Conversion Right
(as defined herein) in reliance upon the Exemption from registration provided by
Section 4(2) of the Securities Act and Rule 506 of Regulation D of the
Securities Act for the private offering of securities;

 

(ii) the Lender is eligible to make the Loan to the Company and acquire the
Conversion Right in the Shares under Regulation D; further, all information,
representations and warranties contained in this Agreement, or that have been
otherwise given to the Company, are correct and complete as of the date hereof,
and may be relied upon by the Company;

 

 

 

 

(iii) the Lender is aware of the significant economic and other risks involved
in making the Loan to the Company and in acquiring and/or exercising the
Conversion Right;

 

(iv) no federal or state agency has passed upon or made any finding or
determination as to the fairness of this investment and no federal or state
agency has recommended or endorsed the investment made hereunder;

 

(v) the Lender acknowledges that:

 

A. there are substantial restrictions on the sale and transferability of any
Shares acquired upon exercise of the Conversion Right and the Lender understands
that upon exercising the Conversion Right it will receive unregistered
securities; and

 

B. the Lender may not be able to liquidate this investment in the event of any
financial emergency and may be required to bear the economic risk of this
investment for a lengthy or even indefinite period of time;

 

(vi) the Lender, alone or with its advisor, has enough knowledge and experience
in financial and business matters to make it capable of evaluating the merits
and risks of investing in the Company;

 

(vii) the Lender makes the Loan to the Company and acquires the Conversion Right
as principal for its own account and not for the benefit of any other person;

 

(viii) the Lender understands that any certificates representing the Shares
acquired by the Lender upon exercise of the Conversion Right will have a resale
legend on them that will read substantially as follows:

 

THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (i) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER THE ACT (OR
ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(iii) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER SUCH ACT.

 

(ix) the Lender has good and sufficient right and authority to enter into this
Agreement and to carry out the transactions contemplated by this Agreement on
the terms and conditions contained herein.

 

(b)         The representations, warranties, covenants and agreements of and by
the Lender contained in, or delivered pursuant to, this Agreement shall be true
at and as of the Effective Date and shall remain in full force and effect
throughout the term of this Agreement.

 

 

 

 

 

2. The Loan

 

(a) Subject to the terms of this Agreement, the Lender hereby agrees to loan to
the Company, and the Company hereby agrees to borrow from the Lender, the
principal sum of US$100,000 (the "Loan"), which Loan was advanced to the Company
on January 30, 2012 (the "Advancement Date).

 

(b) The Loan shall be repaid by the Company by converting the Loan into shares
of common stock (the “Share Conversion”) in the Company once the Company’s net
asset value (“N.A.V.”) has been accurately determined, to the satisfaction of
the Lender, by a full and complete audit (the “Audit”) by a U.S. certified
public accountant. At such time, the Shares shall be calculated and distributed
to the Lender based on the Company’s N.A.V. Such Share Conversion shall occur
automatically after completion of the Audit and the Company will deliver the
Shares to the Lender within a reasonable time after completion of the Audit.

 

(c) Should the Company be unable to complete the Audit within six months from
the Advancement Date, the Company shall be required to repay the entire face
value of the Loan to the Lender within seven (7) days after receiving written
notice (the "Notice") from the Lender.

 

3. Covenants and Agreements of the Lender

 

(a) The Lender covenants and agrees with the Company that the Lender shall not
make demand for payment of the Loan prior to the completion of the Audit, or six
months after the Advancement Date, whichever occurs sooner, unless the Loan has
otherwise become due and payable in accordance with the provisions of this
Agreement.

 

4. Default

 

(a) If one or more of the following events shall occur, namely:

 

(i) the Company fails to distribute the Shares or repay the Loan in accordance
with Section 2 above;

 

(ii) the Company makes an assignment for the benefit of its creditors or files a
petition in bankruptcy or is adjudicated insolvent or bankrupt or petitions or
applies to any tribunal for any receiver, receiver manager, trustee, liquidator
or sequestrator of or for the Company or any of the Company's assets or
undertaking, or the Company makes a proposal or compromise with its creditors or
if an application or a petition similar to any of the foregoing is made by a
third party creditor and such application or petition remains unstayed or
undismissed for a period of thirty (30) days;

 

 

 

 

(iii) the Company fails to observe and comply with any material term, condition
or provision of this Agreement or any other agreement or document delivered
hereunder, and such failure continues unremedied for a period of thirty (30)
days;

 

(iv) any representations, warranties, covenants or agreements contained in this
Agreement or any document delivered to the Lender hereunder are found to be
untrue or incorrect as at the date thereof; or

 

(v) the holder (including the Lender) of any mortgage, charge or encumbrance on
any of the Company's assets and undertaking does anything to enforce or realize
on such mortgage, charge or encumbrance;

 

then the Loan to the date of such default shall, at the option of the Lender,
immediately become due and payable without presentment, protest or notice of any
kind, all of which are waived by the Company.

 

5. General

 

(a) The parties hereto shall execute and deliver all such further documents and
instruments and do all such acts and things as may either before or after the
execution of this Agreement be reasonably required to carry out the full intent
and meaning of this Agreement.

 

(b) This Agreement shall be construed in accordance with the laws of the State
of Nevada.

 

(c) This Agreement may be assigned by the Lender subject to any assignee making
requisite representations to meet applicable securities law exemptions; this
Agreement may not be assigned by the Company.

 

(d) This Agreement may be signed by the parties in as many counterparts as may
be deemed necessary, each of which so signed shall be deemed to be an original,
and all such counterparts together shall constitute one and the same instrument.

 

(e) All notices, requests, demands or other communications hereunder shall be in
writing and shall be "deemed delivered" to a party on the date it is hand
delivered, or delivered by express or certified mail, to such party's address
first above written, or to such other address as may be given in writing by the
parties hereto.

 

 

 

 

IN WITNESS WHEREOF the parties have hereunto set their hands effective as of the
date first above written.

 

USA XO TOURS INC.

 

 

By: /s/ Chen Tseng Chih Ying

Chen Tseng Chih Ying, CEO

USA XO Tours Inc.

 

 

SAN LOTUS HOLDING INC.

 

 

By: /s/ Chen Tseng Chih Ying

Chen Tseng Chih Ying

San Lotus Holding Inc.