San Lotus Holding Inc.


3F B302C, No. 185 Kewang Road


Longtan Township, Taoyuan County 325


Taiwan (R.O.C.)


 


 


 


January 20, 2013


 


 


 


Lok Yee Holiday Limited


Attn: Tseng Chih Ying Chen


Shop No. 12, G/F, Tai On Court,


62-74 Shau Kei Wan Street East,


Shau Kei Wan, Hong Kong SAR


 


 


Re: Acquisition of Lok Yee Holiday
Limited Letter of Intent


 


 


Dear Mrs. Chen:


 


This non-binding letter
of intent (the “LOI”) sets forth our understanding of the mutual intentions of the below parties regarding the
proposed acquisition of Lok Yee Holiday Limited, a Hong Kong corporation (“Lok Yee Holiday”), by San Lotus Holding
Inc., a Nevada corporation (“San Lotus”) (San Lotus and Lok Yee Holiday may be referred to hereinafter individually
as a “Party” and collectively as the “Parties”).


 


1. Transaction Structure. San Lotus is a Securities
and Exchange Commission reporting company traded on the over-the-counter bulletin board under the ticker symbol SLOT. The planned
acquisition will be accomplished by San Lotus acquiring a 100 percent ownership interest in Lok Yee Holiday (the “Acquisition”)
from Lok Yee Holiday’s shareholders, thereby making Lok Yee Holiday a wholly owned subsidiary of San Lotus, in accordance
with the terms of an executed definitive stock purchase agreement (the “Stock Purchase Agreement”) to be negotiated
by the Parties. The Parties will jointly determine the optimum tax structure for the transaction in order to best satisfy tax planning,
regulatory and other considerations.


 


2. Transaction Closing.  The Parties shall use their
commercially best efforts to close the Acquisition (the “Closing”) within 180 days of execution by both Parties
executing the LOI. Should the Parties be unable to close the transaction within that time period, the timeline for Closing may
be extended upon the written agreement of both Parties.


 


3. Definitive Agreements.  The Parties shall commence
preparation of the Stock Purchase Agreement and any other necessary documents (together, the “Definitive Agreements”)
that will define the terms and other commitments contemplated by the parties. The Definitive Agreements will contain the general
provisions outlined above in addition to the usual and customary representations and warranties, covenants, conditions and indemnifications
for a transaction of this kind, including, but not limited to, tax and securities filings, and state and local corporate filings.
 


 






    	 



    	 	



    
 


4. Due Diligence.  For a period of 180 days following
execution of this LOI (the “Due Diligence Period”), the Parties must comply with all reasonable requests to
review relevant information concerning themselves and any business entities they are affiliated with, insofar as such requests
are reasonably related to the completion of the Acquisition. Upon the execution of this LOI by all Parties, and subsequent request
to or by a Party, the Parties shall mutually exchange the following:


 


·all Financial Statements;


·history of financings and related
documents;


·all employment contracts and
consulting agreements;


·a list of all officers, key
employees, directors, and advisors, with related bios;


·a list and description of all
assets;


·a list of all known liabilities
and claims;


·a list of all licenses and
certifications;


·Certificate of Incorporation
(with any amendments thereto);


·all board minutes;


·bylaws (with any amendments
thereto); and


·current shareholder list.


 


5. Audit Requirement. As a condition to entering into
the Stock Purchase Agreement, Lok Yee Holiday shall provide San Lotus with (i) fully audited financial statements and accounts
and (ii) demonstrate that the accounting procedures in place at Lok Yee Holiday are in full conformity with the expectations and
requirements of San Lotus. Should either the audit report or the accounting procedures or both fail to meet the expectations and
requirements of San Lotus, San Lotus shall be under no obligation to proceed with the Acquisition.


 


6. Transaction Document Expenses.  Each Party shall
be solely responsible for all fees and expenses of the Parties’ agents, advisors, attorneys and accountants with respect
to the negotiation of this LOI, the negotiation and drafting of the Definitive Agreements and, if the Definitive Agreements are
executed, the closing of the Transaction.


 


7. No Shop.  Until the closing of the Acquisition,
or termination of negotiations related to the Acquisition, Lok Yee Holiday may not enter into any transaction or agreement related
to the sale of Lok Yee Holiday or any of its assets, or otherwise encumber or enter into an agreement that would encumber any of
the foregoing, or enter into any agreement outside of the ordinary course of business or that would otherwise hinder the Parties’
rights or intentions under this LOI.  


 


8. Confidentiality, Non-Disclosure and Subsequent Public
Announcement. Neither Party shall disclose to any other person (other than such party’s employees, representatives
and agents who are bound by confidentiality agreements or other confidentiality obligations) the terms or conditions hereof or
the fact that the Acquisition is being contemplated by the Parties. Following the execution of this LOI, San Lotus shall release
a Form 8-K with the Securities and Exchange Commission and a related press release regarding the LOI and the proposed Acquisition.
With the exception of the Form 8-K and press release described in this section, the Parties agree not to issue any further press
releases or make any further public announcement regarding the Acquisition prior to the Closing without prior written mutual consent
of all Parties, except where a public announcement is otherwise required by law. In addition, each of the Parties hereto shall
keep confidential each of the provision of this LOI and the agreements referenced or contemplated herein and all information each
party obtains regarding the other party (collectively, the “Confidential Information”), except if (a) the information
is already a matter of public record or knowledge; (b) the information may be necessary to a Party’s financial or legal advisor(s)
(subject to such party agreeing to be bound to the non-disclosure covenants contained in this paragraph); or (c) such disclosure
is required by law. This covenant regarding Confidential Information shall indefinitely survive the termination of this LOI or
any Definitive Agreements.


 






    	 



    	 	



    
 


9. Acknowledgments and Assent. The Parties acknowledge
that they were advised to consult with an independent attorney prior to signing this LOI and that they have in fact consulted with
counsel of their own choosing prior to executing this LOI. The Parties agree that they have read this LOI and understand the content
herein and freely and voluntarily assent to all of the terms herein.  


 


10. Entire Agreement; Amendment; Counterparts. This LOI
represents the entire understanding of the Parties with respect to the terms of San Lotus’s proposed acquisition of Lok Yee
Holiday and supersedes all prior and/or contemporaneous agreements, representations and understandings, whether written or oral.
This LOI may only be amended, modified or extended by a written agreement signed by both Parties hereto. This LOI may not be assigned
without the other Party’s written consent. This LOI may be signed in two or more counterparts, any one of which need not
contain the signature of more than one Party, but all such counterparts will constitute one and the same agreement.


 


We trust that these terms accurately reflect
our understanding. If there are any questions or comments regarding the same, please feel to contact me at your convenience. Otherwise
kindly execute this LOI acknowledging your agreement to the terms outlined above.


 


 


 


 


Agreed and accepted by:


	 	 
	
        San Lotus Holding Inc.

        a Nevada corporation

         

         

         

        By:  /s/ Tseng Chih Ying Chen             

        Name: Tseng Chih Ying Chen

        Title: Chief Executive Officer
	
        Lok Yee Holiday Limited

        a Hong Kong corporation

         

         

         

        By:  /s/ Tseng Chih Ying Chen             

        Name: Tseng Chih Ying Chen

        Title: Chief Executive Officer