Document:

Fled by Bowne Pure Compliance

 

Exhibit 10.13

BUSINESS LOAN AGREEMENT

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Principal

$500,000.00
	 	Loan Date

11-01-2007
	 	Maturity

11-01-2008
	 	Loan No

6824
	 	Call/Coll
	 	Account
	 	Officer

BLD
	 	Initials

References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.
Any item above containing “***” has been omitted due to text length limitations.

	 	 	 	 	 	 	 
	Borrower:

	 	RBC Life Sciences, Inc.
	 	Lender:
	 	Independent Bank of Texas
	 

	 	2301 Crown Court
	 	 	 	P. O. Box 167099
	 

	 	Irving, TX 75038
	 	 	 	Irving, TX 75016-7099
	 

	 	 	 	 	 	(972) 870-9300

THIS BUSINESS LOAN AGREEMENT dated November 1. 2007, is made and executed between RBC Life
Sciences, Inc (“Borrower”) and Independent Bank of Texas (“Lender”) on the following terms and
conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a
commercial loan or loans or other financial accommodations, including those which may be described
on any exhibit or schedule attached to this Agreement (“Loan”). Borrower understands and agrees
that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrowers
representations, warranties, and agreements as set forth in this Agreement; (B) the granting,
renewing, or extending of any Loan by Lender at all times shall be subject to Lender’s sole
judgment end discretion; and (C) all such Loans shall be and remain subject to the terms and
conditions of this Agreement.

TERM. This Agreement shall be effective as of November 1, 2007, and shall continue in full force
and effect until such time as all of Borrower’s Loans in favor of Lender have been paid in full,
including principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, or
until November 1, 2008.

ADVANCE AUTHORITY. The following person or persons are authorized to request advances and authorize
payments under the line of credit until Lender receives from Borrower, at Lenders address shown
above, written notice of revocation of such authority: Steven E. Brown. Vice President, CFO of RBC
Life Sciences. Inc.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender’s obligation to make the initial Advance and each
subsequent Advance under this Agreement shall be subject to the fulfillment to Lender’s
satisfaction of all of the conditions set forth in this Agreement and in the Related Documents.

Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the
Note; (2) Security Agreements granting to Lender security interests in the Collateral; (3)
financing statements and all other documents perfecting Lender’s Security Interests; (4)
evidence of insurance as required below; (5) guaranties; (6) together with all such Related
Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender
and Lender’s counsel.

Borrower’s Authorization. Borrower shall have provided in form and substance satisfactory to
Lender properly certified resolutions, duly authorizing the execution and delivery of this
Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such
other resolutions, authorizations, documents and instruments as Lender or its counsel, may
require.

Payment of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other
expenses which are then due and payable as specified in this Agreement or any Related Document.

Representations and Warranties. The representations and warranties set forth in this Agreement,
in the Related Documents, and in any document or certificate delivered to Lender under this
Agreement are true and correct.

No Event of Default. There shall not exist at the time of any Advance a condition which would
constitute an Event of Default under this Agreement or under any Related Document.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this
Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal,
extension or modification of any Loan, and at all times any Indebtedness exists:

Organization. Borrower is a corporation for profit which is, and at all times shall be, duly
organized, validly existing, and in good standing under and by virtue of the laws of the State
of Nevada. Borrower is duly authorized to transact business in the State of Texas and all other
states in which Borrower is doing business, having obtained all necessary filings, governmental
licenses and approvals for each state in which Borrower is doing business. Specifically,
Borrower is, and at all times shall be, duly qualified as a foreign corporation in all states in
which the failure to so qualify would have a material adverse effect on its business or
financial condition. Borrower has the full power and authority to own its properties and to
transact the business in which it is presently engaged or presently proposes to engage. Borrower
maintains an office at 2301 Crown Court, Irving, TX 75038. Unless Borrower has designated
otherwise in writing, the principal office is the office at which Borrower keeps its books and
records including its records concerning the Collateral. Borrower will notify Lender prior to
any change in the location of Borrower’s state of organization or any change in Borrower’s name.
Borrower shall do all things necessary to preserve and to keep in full force and effect its
existence, rights and privileges, and shall comply with all regulations, rules, ordinances,
statutes, orders and decrees of any governmental or quasi-governmental authority or court
applicable to Borrower and Borrower’s business activities.

 

 

 

					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No: 6824
	 	(Continued)
	 	Page 2

Assumed Business Names. Borrower has filed or recorded all documents or filings required by law
relating to all assumed business names used by Borrower. Excluding the name of Borrower, the
following is a complete list of all assumed business names under which Borrower does business:
None.

Authorization. Borrower’s execution, delivery, and performance of this Agreement and all the
Related Documents have been duly authorized by all necessary action by Borrower and do not
conflict with, result in a violation of, or constitute a default under (1) any provision of (a)
Borrower’s articles of incorporation or organization, or bylaws, or (b) any agreement or other
instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order
applicable to Borrower or to Borrower’s properties.

Financial Information. Each of Borrower’s financial statements supplied to Lender truly and
completely disclosed Borrower’s financial condition as of the date of the statement, and there
has been no material adverse change in Borrower’s financial condition subsequent to the date of
the most recent financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.

Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required
to give under this Agreement when delivered will constitute legal, valid, and binding
obligations of Borrower enforceable against Borrower in accordance with their respective terms.

Properties. Except as contemplated by this Agreement or as previously disclosed in Borrower’s
financial statements or in writing to Lender and as accepted by Lender, and except for property
tax liens for taxes not presently due and payable, Borrower owns and has good title to all of
Borrower’s properties free and clear of all Security Interests, and has not executed any
security documents or financing statements relating to such properties. All of Borrower’s
properties are titled in Borrower’s legal name, and Borrower has not used or filed a financing
statement under any other name for at least the last five (5) years.

Hazardous Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower
represents and warrants that: (1) During the period of Borrower’s ownership of the Collateral,
there has been no use, generation, manufacture, storage, treatment, disposal, release or
threatened release of any Hazardous Substance by any person on, under, about or from any of the
Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any
breach or violation of any Environmental Laws; (b) any use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any Hazardous Substance on, under, about
or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any
actual or threatened litigation or claims of any kind by any person relating to such matters.
(3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the
Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous
Substance on, under, about or from any of the Collateral; and any such activity shall be
conducted in compliance with all applicable federal, state, and local laws, regulations, and
ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender and
its agents to enter upon the Collateral to make such inspections and tests as Lender may deem
appropriate to determine compliance of the Collateral with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes
only and shall not be construed to create any responsibility or liability on the part of Lender
to Borrower or to any other person. The representations and warranties contained herein are
based on Borrower’s due diligence in investigating the Collateral for hazardous waste and
Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender
for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs
under such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against all
claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or
indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal, release or threatened
release of a hazardous waste or substance on the Collateral. The provisions of this section of
the Agreement, including the obligation to indemnify and defend, shall survive the payment of
the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not
be affected by Lender’s acquisition of any interest in any of the Collateral, whether by
foreclosure or otherwise.

Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar
action (including those for unpaid taxes) against Borrower is pending or threatened, and no
other event has occurred which may materially adversely affect Borrower’s financial condition or
properties, other than litigation, claims, or other events, if any, that have been disclosed to
and acknowledged by Lender in writing.

Taxes. To the best of Borrower’s knowledge, all of Borrower’s tax returns and reports that are
or were required to be filed, have been filed, and all taxes, assessments and other governmental
charges have been paid in full, except those presently being or to be contested by Borrower in
good faith in the ordinary course of business and for which adequate reserves have been
provided.

Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not
entered into or granted any Security Agreements, or permitted the filing or attachment of any
Security Interests on or affecting any of the Collateral directly or indirectly securing
repayment of Borrower’s Loan and Note, that would be prior or that may in any way be superior to
Lender’s Security Interests and rights in and to such Collateral.

Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related
Documents are binding upon the signers thereof, as well as upon their successors,
representatives and assigns, and are legally enforceable in accordance with their respective
terms.

 

 

 

					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No: 6824
	 	(Continued)
	 	Page 3

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement
remains in effect, Borrower will:

Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse
changes in Borrower’s financial condition, and (2) all existing and all threatened litigation,
claims, investigations, administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of Borrower or the financial
condition of any Guarantor.

Financial Records. Maintain its books and records in accordance with GAAP, applied on a
consistent basis, and permit Lender to examine and audit Borrower’s books and records at all
reasonable times.

Financial Statements. Furnish Lender with the following:

Annual Statements. As soon as available, but in no event later than ninety (90) days after
the end of each fiscal year, Borrower’s balance sheet and income statement for the year
ended, prepared by Borrower.

Interim Statements. As soon as available, but in no event later than ninety (90) days after
the end of each fiscal quarter, Borrower’s balance sheet and profit and loss statement for
the period ended, prepared by Borrower.

Tax Returns. As soon as available, but in no event later than ninety (90) days after the
applicable filing date for the tax reporting period ended, Federal and other governmental
tax returns, prepared by Borrower.

Additional Requirements. Accounts Receivable Aging Report and Borrowing Base required
monthly. Inventory Listing required annually.

All financial reports required to be provided under this Agreement shall be prepared in
accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and
correct.

Additional Information. Furnish such additional information and statements, as Lender may
request from time to time.

Insurance. Maintain fire and other risk insurance, public liability insurance, and such other
insurance as Lender may require with respect to Borrower’s properties and operations, in form,
amounts, and coverages reasonably acceptable to Lender and by insurance companies authorized to
transact business in Texas. BORROWER MAY FURNISH THE INSURANCE REQUIRED BY THIS AGREEMENT
WHETHER THROUGH EXISTING POLICIES OWNED OR CONTROLLED BY BORROWER OR THROUGH EQUIVALENT COVERAGE
FROM ANY INSURANCE COMPANY AUTHORIZED TO TRANSACT BUSINESS IN TEXAS. Borrower, upon request of
Lender, will deliver to Lender from time to time the policies or certificates of insurance in
form satisfactory to Lender, including stipulations that coverages will not be cancelled or
diminished without at least thirty (30) days prior written notice to Lender. Each insurance
policy also shall include an endorsement providing that coverage in favor of Lender will not be
impaired in any way by any act, omission or default of Borrower or any other person. In
connection with all policies covering assets in which Lender holds or is offered a security
interest for the Loans, Borrower will provide Lender with such lender’s loss payable or other
endorsements as Lender may require.

Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance
policy showing such information as Lender may reasonably request, including without limitation
the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy;
(4) the properties insured; (5) the then current property values on the basis of which insurance
has been obtained, and the manner of determining those values; and (6) the expiration date of
the policy. In addition, upon request of Lender (however not more often than annually), Borrower
will have an independent appraiser satisfactory to Lender determine, as applicable, the actual
cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by
Borrower.

Guaranties. Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans
in favor of Lender, executed by the guarantor named below, on Lender’s forms, and in the amount
and under the conditions set forth in those guaranties.

	 	 	 
	Name of Guarantor
	 	Amount
	 
	 	 
	Clinton H. Howard
	 	Unlimited

Other Agreements. Comply with all terms and conditions of all other agreements, whether now or
hereafter existing, between Borrower and any other party and notify Lender immediately in
writing of any default in connection with any other such agreements.

Loan Proceeds. Use all Loan proceeds solely for Borrower’s business operations, unless
specifically consented to the contrary by Lender in writing.

Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations,
including without limitation all assessments, taxes, governmental charges, levies and liens, of
every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the
date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien
or charge upon any of Borrower’s properties, income, or profits.

Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions
set forth in this Agreement, in the Related Documents, and in all other instruments and
agreements between Borrower and Lender. Borrower shall notify Lender immediately in writing of
any default in connection with any agreement.

 

 

 

					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No: 6824
	 	(Continued)
	 	Page 4

Operations. Maintain executive and management personnel with substantially the same
qualifications and experience as the present executive and management personnel; provide written
notice to Lender of any change in executive and management personnel; conduct its business
affairs in a reasonable and prudent manner.

Environmental Studies. Promptly conduct and complete, at Borrower’s expense, all such
investigations, studies, samplings and testings as may be requested by Lender or any
governmental authority relative to any substance, or any waste or by-product of any substance
defined as toxic or a hazardous substance under applicable federal, state, or local law, rule,
regulation, order or directive, at or affecting any property or any facility owned, leased or
used by Borrower.

Compliance with Governmental Requirements. Comply with all laws, ordinances, and regulations,
now or hereafter in effect, of all governmental authorities applicable to the conduct of
Borrower’s properties, businesses and operations, and to the use or occupancy of the Collateral,
including without limitation, the Americans With Disabilities Act. Borrower may contest in good
faith any such law, ordinance, or regulation and withhold compliance during any proceeding,
including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing
so and so long as, in Lender’s sole opinion, Lender’s interests in the Collateral are not
jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably
satisfactory to Lender, to protect Lender’s interest.

Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all
Collateral for the Loan or Loans and Borrower’s other properties and to examine or audit
Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books,
accounts, and records. If Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer software programs for the
generation of such records) in the possession of a third party, Borrower, upon request of
Lender, shall notify such party to permit Lender free access to such records at all reasonable
times and to provide Lender with copies of any records it may request, all at Borrower’s
expense.

Compliance Certificates. Unless waived in writing by Lender, provide Lender at least annually,
with a certificate executed by Borrower’s chief financial officer, or other officer or person
acceptable to Lender, certifying that the representations and warranties set forth in this
Agreement are true and correct as of the date of the certificate and further certifying that, as
of the date of the certificate, no Event of Default exists under this Agreement.

Environmental Compliance and Reports. Borrower shall comply in all respects with any and all
Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional
action or omission on Borrower’s part or on the part of any third party, on property owned
and/or occupied by Borrower, any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to and in compliance with the
conditions of a permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within thirty (30) days after
receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other
communication from any governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower’s part in connection with any environmental
activity whether or not there is damage to the environment and/or other natural resources.

Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages,
deeds of trust, security agreements, assignments, financing statements, instruments, documents
and other agreements as Lender or its attorneys may reasonably request to evidence and secure
the Loans and to perfect all Security Interests.

LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect
Lender’s interest in the Collateral or if Borrower fails to comply with any provision of this
Agreement or any Related Documents, including but not limited to Borrower’s failure to
discharge or pay when due any amounts Borrower is required to discharge or pay under this
Agreement or any Related Documents, Lender on Borrower’s behalf may (but shall not be obligated
to) take any action that Lender deems appropriate, including but not limited to discharging or
paying all taxes, liens, security interests, encumbrances and other claims, at any time levied
or placed on any Collateral and paying all costs for insuring, maintaining and preserving any
Collateral. All such expenditures paid by Lender for such purposes will then bear interest at
the Note rate from the date paid by Lender to the date of repayment by Borrower. To the extent
permitted by applicable law, all such expenses will become a part of the Indebtedness and, at
Lender’s option, will (A) be payable on demand; (B) be added to the balance of the Note and be
apportioned among and be payable with any installment payments to become due during either (1)
the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note’s maturity.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in
effect, Borrower shall not, without the prior written consent of Lender:

Indebtedness and Liens. (1) Except for trade debt incurred in the normal course of business and
indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for
borrowed money, including capital leases, (2) sell, transfer, mortgage, assign, pledge, lease,
grant a security interest in, or encumber any of Borrower’s assets (except as allowed as
Permitted Liens), or (3) sell with recourse any of Borrower’s accounts, except to Lender.

 

 

 

					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No: 6824
	 	(Continued)
	 	Page 5

Continuity of Operations. (1) Engage in any business activities substantially different than
those in which Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer,
acquire or consolidate with any other entity, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower’s stock
(other than dividends payable in its stock), provided, however that notwithstanding the
foregoing, but only so long as no Event of Default has occurred and is
 continuing or would result from the payment of dividends, if Borrower is a “Subchapter S
Corporation” (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay
cash dividends on its stock to its shareholders from time to time in amounts necessary to enable
the shareholders to pay income taxes and make estimated income tax payments to satisfy their
liabilities under federal and state law which arise solely from their status as Shareholders of
a Subchapter S Corporation because of their ownership of shares of Borrower’s stock, or purchase
or retire any of Borrower’s outstanding shares or alter or amend Borrower’s capital structure.

Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money or assets to any other
person, enterprise or entity, (2) purchase, create or acquire any interest in any other
enterprise or entity, or (3) incur any obligation as surety or guarantor other than in the
ordinary course of business.

Agreements. Borrower will not enter into any agreement containing any provisions which would be
violated or breached by the performance of Borrower’s obligations under this Agreement or in
connection herewith.

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether
under this Agreement or under any other agreement, Lender shall have no obligation to make Loan
Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the
terms of this Agreement or any of the Related Documents or any other agreement that Borrower or
any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or
becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (C) there occurs a material adverse change in Borrower’s financial condition, in the
financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or
(D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor’s guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith
deems itself insecure, even though no Event of Default shall have occurred.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff
in all Borrower’s accounts with Lender (whether checking, savings, or some other account). This
includes all accounts Borrower holds jointly with someone else and all accounts Borrower may
open in the future. However, this does not include any IRA or Keogh accounts, or any trust
accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any
and all such accounts.

DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:

Payment Default. Borrower fails to make any payment when due under the Loan.

Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant
or condition contained in this Agreement or in any of the Related Documents or to comply with or
to perform any term, obligation, covenant or condition contained in any other agreement between
Lender and Borrower.

Default in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any
other creditor or person that may materially affect any of Borrower’s or any Grantor’s property
or Borrower’s or any Grantor’s ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related Documents.

False Statements. Any warranty, representation or statement made or furnished to Lender by
Borrower or on Borrower’s behalf under this Agreement or the Related Documents is false or
misleading in any material respect, either now or at the time made or furnished or becomes false
or misleading at any time thereafter.

Insolvency. The dissolution or termination of Borrower’s existence as a going business, the
insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any
assignment for the benefit of creditors, any type of creditor workout, or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against Borrower.

Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full
force and effect (including failure of any collateral document to create a valid and perfected
security interest or lien) at any time and for any reason.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings,
whether by judicial proceeding, self-help, repossession or any other method, by any creditor of
Borrower or by any governmental agency against any collateral securing the Loan. This includes a
garnishment of any Borrower’s accounts, including deposit accounts, with Lender. However, the
Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity
or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and
if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits
with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of
any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the
validity of, or liability under, any Guaranty of the Indebtedness. In the event of a death,
Lender, at its option, may, but shall not be required to, permit the Guarantor’s estate to
assume unconditionally the obligations arising under the guaranty in a manner satisfactory to
Lender, and, in doing so, cure any Event of Default.

Change in Ownership. Any change in ownership of twenty-five percent (25%) or more of the common
stock of Borrower.

 

 

 

					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No: 6824
	 	(Continued)
	 	Page 6

Adverse Change. A material adverse change occurs in Borrower’s financial condition, or Lender
believes the prospect of payment or performance of the Loan is impaired.

Insecurity. Lender in good faith believes itself insecure.

Right to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower
or Grantor, as the case may be, has not been given a notice of a similar default within the
preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after
receiving written notices from Lender demanding cure of such default: (1) cure the default
within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately
initiate steps which Lender deems in Lender’s sole discretion to be sufficient to cure the
default and therefore continue and complete all reasonable and necessary steps sufficient to
produce compliance as soon as reasonably practical.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise
provided in this Agreement or the Related Documents, all commitments and obligations of Lender
under this Agreement or the Related Documents or any other agreement immediately will terminate
(including any obligation to make further Loan Advances or disbursements), and, at Lender’s
option, all Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type described in the
“Insolvency” subsection above, such acceleration shall be automatic and not optional. In
addition, Lender shall have all the rights and remedies provided in the Related Documents or
available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all
of Lender’s rights and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an obligation of
Borrower or of any Grantor shall not affect Lender’s right to declare a default and to exercise
its rights and remedies.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement:

Amendments. This Agreement, together with any Related Documents, constitutes the entire
understanding and agreement of the parties as to the matters set forth in this Agreement. No
alteration of or amendment to this Agreement shall be effective unless given in writing and
signed by the party or parties sought to be charged or bound by the alteration or amendment.

Attorneys’ Fees; Expenses. Borrower agrees to pay upon demand all of Lender’s costs and
expenses, including Lender’s reasonable attorneys’ fees and Lender’s legal expenses, incurred in
connection with the enforcement of this Agreement. Lender may hire or pay someone else to help
enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs
and expenses include Lender’s reasonable attorneys’ fees and legal expenses whether or not there
is a lawsuit, including Lender’s reasonable attorneys’ fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals,
and any anticipated post-judgment collection services. Borrower also shall pay all court costs
and such additional fees as may be directed by the court.

Caption Headings. Caption headings in this Agreement are for convenience purposes only and are
not to be used to interpret or define the provisions of this Agreement.

Consent to Loan Participation. Borrower agrees and consents to Lender’s sale or transfer,
whether now or later, of one or more participation interests in the Loan to one or more
purchasers, whether related or unrelated to Lender, Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge
Lender may have about Borrower or about any other matter relating to the Loan, and Borrower
hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation interests, as well as all
notices of any repurchase of such participation interests. Borrower also agrees that the
purchasers of any such participation interests will be considered as the absolute owners of such
interests in the Loan and will have all the rights granted under the participation agreement or
agreements governing the sale of such participation interests. Borrower further waives all
rights of offset or counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees that either Lender or such
purchaser may enforce Borrower’s obligation under the Loan irrespective of the failure or
insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser
of any such participation interests may enforce its interests irrespective of any personal
claims or defenses that Borrower may have against Lender.

Governing Law. This Agreement will be governed by federal law applicable to Lender and, to the
extent not preempted by federal law, the laws of the State of Texas without regard to its
conflicts of law provisions. This Agreement has been accepted by Lender in the State of Texas.

Choice of Venue. If there is a lawsuit, and if the transaction evidenced by this Agreement
occurred in Dallas County, Borrower agrees upon Lender’s request to submit to the jurisdiction
of the courts of Dallas County, State of Texas.

No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement
unless such waiver is given in writing and signed by Lender. No delay or omission on the part of
Lender in exercising any right shall operate as a waiver of such right or any other right. A
waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of
Lender’s right otherwise to demand strict compliance with that provision or any other provision
of this Agreement, No prior waiver by Lender, nor any course of dealing between Lender and
Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender’s rights
or of any of Borrower’s or any Grantor’s obligations as to any future transactions. Whenever the
consent of Lender is required under this Agreement, the granting of such consent by Lender in
any instance shall not constitute continuing consent to subsequent instances where such consent is required and
in all cases such consent may be granted or withheld in the
sole discretion of Lender.

 

 

 

					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No: 6824
	 	(Continued)
	 	Page 7

Notices. Any notice required to be given under this Agreement shall be given in writing, and
shall be effective when actually delivered, when actually received by telefacsimile (unless
otherwise required by law), when deposited with a nationally recognized overnight courier, or,
if mailed, when deposited in the United States mail, as first class, certified or registered
mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any
party may change its address for notices under this Agreement by giving formal written notice to
the other parties, specifying that the purpose of the notice is to change the party’s address.
For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower’s current
address. Unless otherwise provided or required by law, if there is more than one Borrower, any
notice given by Lender to any Borrower is deemed to be notice given to all Borrowers.

Payment of Interest and Fees. Notwithstanding any other provision of this Agreement or any
provision of any Related Document, Borrower does not agree or intend to pay, and Lender does not
agree or intend to charge, collect, take, reserve or receive (collectively referred to herein as
”charge or collect”), any amount in the nature of interest or in the nature of a fee for the
Loan which would in any way or event (including demand, prepayment, or acceleration) cause
Lender to contract for, charge or collect more for the Loan than the maximum Lender would be
permitted to charge or collect by any applicable federal or Texas state law. Any such excess
interest or unauthorized fee will, instead of anything stated to the contrary, be applied first
to reduce the unpaid principal balance of the Loan, and when the principal has been paid in
full, be refunded to Borrower.

Severability. If a court of competent jurisdiction finds any provision of this Agreement to be
illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the
offending provision illegal, invalid, or unenforceable as to any other circumstance. If
feasible, the offending provision shall be considered modified so that it becomes legal, valid
and enforceable, If the offending provision cannot be so modified, it shall be considered
deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or
unenforceability of any provision of this Agreement shall not affect the legality, validity or
enforceability of any other provision of this Agreement.

Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this
Agreement makes it appropriate, including without limitation any representation, warranty or
covenant, the word “Borrower” as used in this Agreement shall include all of Borrower’s
subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall
this Agreement be construed to require Lender to make any Loan or other financial accommodation
to any of Borrower’s subsidiaries or affiliates.

Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in
this Agreement or any Related Documents shall bind Borrower’s successors and assigns and shall
inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have
the right to assign Borrower’s rights under this Agreement or any interest therein, without the
prior written consent of Lender.

Survival of Representations and Warranties. Borrower understands and agrees that in extending
Loan Advances, Lender is relying on all representations, warranties, and covenants made by
Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to
Lender under this Agreement or the Related Documents. Borrower further agrees that regardless
of any investigation made by Lender, all such representations, warranties and covenants will
survive the extension of Loan Advances and delivery to Lender of the Related Documents, shall be
continuing in nature, shall be deemed made and redated by Borrower at the time each Loan Advance
is made, and shall remain in full force and effect until such time as Borrower’s Indebtedness
shall be paid in full, or until this Agreement shall be terminated in the manner provided above,
whichever is the last to occur.

Time is of the Essence. Time is of the essence in the performance of this Agreement.

DEFINITIONS. The following capitalized words and terms shall have the following meanings when used
in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts
shall mean amounts in lawful money to the United States of America. Words and terms used in the
singular shall include the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the meanings
attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise
defined in this Agreement shall have the meanings assigned to them in accordance with generally
accepted accounting principles as in effect on the date of this Agreement:

Advance. The word “Advance” means a disbursement of Loan funds made, or to be made, to
Borrower or on Borrower’s behalf on a line of credit or multiple advance basis under the terms
and conditions of this Agreement.

Agreement. The word “Agreement” means this Business Loan Agreement, as this Business Loan
Agreement may be amended or modified from time to time, together with all exhibits and
schedules attached to this Business Loan Agreement from time to time.

Borrower. The word “Borrower” means RBC Life Sciences, Inc and includes all co-signers and
co-makers signing the Note and all their successors and assigns.

Collateral. The word “Collateral” means all property and assets granted as collateral security
for a Loan, whether real or personal property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the form of a security interest, mortgage,
collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale,
trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever, whether created by law,
contract, or otherwise.

 

 

 

					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No: 6824
	 	(Continued)
	 	Page 8

Environmental Laws. The words “Environmental Laws” mean any and all state, federal and local
statutes, regulations and ordinances relating to the protection of human health or the
environment, including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq. (“CERCLA”),
the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state or
federal laws, rules, or regulations adopted pursuant thereto.

Event of Default. The words “Event of Default” mean any of the events of default set forth in
this Agreement in the default section of this Agreement.

GAAP. The word “GAAP” means generally accepted accounting principles.

Grantor. The word “Grantor” means each and all of the persons or entities granting a Security
Interest in any Collateral for the Loan, including without limitation all Borrowers granting
such a Security Interest.

Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation party of any or
all of the Loan.

Guaranty. The word “Guaranty” means the guaranty from Guarantor to Lender, including without
limitation a guaranty of all or part of the Note.

Hazardous Substances. The words “Hazardous Substances” mean materials that, because of their
quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a
present or potential hazard to human health or the environment when improperly used, treated,
stored, disposed of, generated, manufactured, transported or otherwise handled. The words
“Hazardous Substances” are used in their very broadest sense and include without limitation any
and all hazardous or toxic substances, materials or waste as defined by or listed under the
Environmental Laws. The term “Hazardous Substances” also includes, without limitation, petroleum
and petroleum by-products or any fraction thereof and asbestos.

Indebtedness. The word “Indebtedness” means the indebtedness evidenced by the Note or Related
Documents, including all principal and interest together with all other indebtedness and costs
and expenses for which Borrower is responsible under this Agreement or under any of the Related
Documents.

Lender. The word “Lender” means Independent Bank of Texas, its successors and assigns.

Loan. The word “Loan” means any and all loans and financial accommodations from Lender to
Borrower whether now or hereafter existing, and however evidenced, including without limitation
those loans and financial accommodations described herein or described on any exhibit or
schedule attached to this Agreement from time to time.

Note. The word “Note” means the Note executed by RBC Life Sciences, Inc in the principal amount
of $500,000,00 dated November 1, 2007, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions for the note or credit
agreement.

Permitted Liens. The words “Permitted Liens” mean (1) liens and security interests securing
Indebtedness owed by Borrower to Lender; (2) liens for taxes, assessments, or similar charges
either not yet due or being contested in good faith; (3) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary course of business and
securing obligations which are not yet delinquent; (4) purchase money liens or purchase money
security interests upon or in any property acquired or held by Borrower in the ordinary course
of business to secure indebtedness outstanding on the date of this Agreement or permitted to be
incurred under the paragraph of this Agreement titled “Indebtedness and Liens”; (5) liens and
security interests which, as of the date of this Agreement, have been disclosed to and approved
by the Lender in writing; and (6) those liens and security interests which in the aggregate
constitute an immaterial and insignificant monetary amount with respect to the net value of
Borrower’s assets.

Related Documents. The words “Related Documents” mean all promissory notes, credit agreements,
loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, security deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with the Loan.

Security Agreement. The words “Security Agreement” mean and include without limitation any
agreements, promises, covenants, arrangements, understandings or other agreements, whether
created by law, contract, or otherwise, evidencing, governing, representing, or creating a
Security Interest.

Security Interest. The words “Security Interest” mean, without limitation, any and all types of
collateral security, present and future, whether in the form of a lien, charge, encumbrance,
mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale,
trust receipt, lien or title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever whether created by law, contract, or
otherwise.

 

 

 

					
	 
	 	BUSINESS LOAN AGREEMENT	 	 
	Loan No: 6824
	 	(Continued)
	 	Page 9

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER
AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED NOVEMBER 1, 2007.

BORROWER:

RBC LIFE SCIENCES, INC

	 	 	 	 	 
	By:

	 	/s/ Steven E. Brown
 

Steven E. Brown, Vice President,
 CFO of RBC Life Sciences, Inc
	 	 
	 

	 		 	 

LENDER:

INDEPENDENT BANK OF TEXAS

	 	 	 	 	 
	By:

	 	/s/ Brad L. Durham
 

Authorized Signerexhibit_10-5.htm

     

    
 

    Service
Agreement

    

    This
Agreement is made and entered into by and between Beijing Kaisixinzhong
Advertising Co., Ltd. (hereinafter referred to as “Party A”) and Beijing Shine
Multimedia Co., Ltd. (hereinafter referred to as “Party B”).

     

    Whereas,

     

    Party A
is a duly registered new media development entity focusing on entertainment
places and high end consumer base; and Party B is an integrated supplier of
songs and VOD systems for KTVs and night clubs.

     

    Party A
and Party B, in the spirit of equality and mutual benefits, cooperation for
win-win, and for the purpose of creating a stylish new entertainment culture
together, hereby reach an agreement with the terms and conditions set forth
below on the basis of voluntariness, equality and mutual benefit through
friendly negotiation with respect to developing advertisement carrier products,
including, but not limited to, video, advertisement carriers, on-the-spot
experiential marketing activities, and the sale of aforesaid products within
target entertainment places such as KTVs and night clubs.

     

    Party A
and Party B agree to enter into a 10-year exclusive service cooperation
agreement (“the Agreement”), and Party B shall be responsible to contact other
manufacturers who can provide video advertising platforms.

     

    
      	
              I.  

            	
              Party
      A’s Obligations

            

    

     

    
      	
              1.  

            	
              Party
      A shall invest liquid funds necessary for the project as set forth
      herein.

            

    

     

    
      	
              2.  

            	
              Party
      A shall make payments based on contract signing progress of the Transferee
      and agreements signed by the Transferee and KTVs/night clubs which meet
      the Company’s standards for contract
signing.

            

    

     

    
      	
              3.  

            	
              Monitor
      and inspect the work progress of Party B and pay contract signing fees to
      service providers.

            

    

     

    
      	
              4.  

            	
              Make
      decisions on cities where contracts are going to be signed and progress of
      contract signing, and solve any problem in connection with contract
      signing which need to be solved by the
Company.

            

    

     

    
      	
              5.  

            	
              After
      implementation of the work by the Company, if competitors are engaged in
      the business in the same manner with lower prices, the Company shall
      promptly adjust policies, in which case the Transferee’s equity rights
      shall not be affected if the Transferee fails to complete the tasks for
      share transfer in connection
therewith.

            

    

     

    
      	
              II.  

            	
              Party
      B’s Obligations

            

    

     

    
      	
              1.  

            	
              Responsible
      for the execution of exclusive agency contracts between the Company and
      KTVs/night clubs for playback of video advertisements on TV screens in
      each room, and looking for opportunities of cooperation with KTVs/night
      clubs in other forms of advertising such as graphic advertising, sample
      distribution and print ads. The contracts are for 5 years, and must be
      entered into directly between the Company and KTVs/night clubs. The
      contracts shall be prepared and confirmed by the Company, and constitute a
      uniform contract which will be performed by the Transferee. (See Appendix
      1 for the contract sample)

            

    

    
      	
              2.  

            	
              After
      execution of the contracts, responsible for installation and maintenance
      of ads playback related equipment in KTVs/night clubs as well as
      implementation and administration of ads in publications; also responsible
      for feedback of ads monitoring data in a timely
  manner.

            

    

    
      	
              3.  

            	
              In
      accordance with the Company’s contract signing costs for the work,
      coordinate the compensation for contract signing and earnings for service
      obligations for Beijing Shine Multimedia Co., Ltd. (See Appendix 2 for
      details)

            

    

    
      	
              4.  

            	
              Requirements
      for KTVs/night clubs: the Company maintains detailed policies for size,
      class, customer flow and location of KTVs/night clubs to be signed with,
      and the KTVs/night clubs signed by the Transferee shall meet the Company’s
      these requirements. See Appendix 2.

            

    

    
      	
              5.  

            	
              According
      to the Party A’s development plan, the total number of KTVs to be signed
      with by Party B in three years shall reach 1,800. For the first year,
      Party B shall complete signing 600 contracts with KTVs/night clubs
      accepted by the Company; for the second year, Party B shall complete
      signing 600 contracts with KTVs/night clubs accepted by the Company; and
      for the third year, Party B shall complete signing another 600 contracts
      with KTVs/night clubs accepted by the
Company.

            

    

     

    
      	
              III.  

            	
              Awards

            

    

     

    
      	
              1.  

            	
              For
      the part of KTVs/night clubs exceeding the required numbers set forth
      above, Party B shall be entitled to receive awards, which is USD 66.7 in
      cash for each additional contract (Note: all amounts herein are converted
      from RMB based on an exchange rate at 1 USD = 7.5
  RMB).

            

    

     

    
      	
              2.  

            	
              In
      case the costs for Party B to sign contracts, operate and maintain the
      same are lower than the budget, Party B shall be entitled to a Profit
      Making Award, and 50% of saved costs will be awarded to the contract
      signing team in the form of cash. For example, if the budget is USD
      666,666.7, while the Transferee only utilized USD 533,333.3 to complete
      the amount of contracts and maintain the contracts in good conditions, the
      Transferee will receive a bonus of USD
66,666.7.

            

    

     

    
      	
              IV.  

            	
              Violation

            

    

     

    
      	
              1.  

            	
              The
      Agreement will become null and void if Party A fails to provide the liquid
      funds reasonably required as set forth
herein.

            

    

     

    
      	
              2.  

            	
              Party
      B may discontinue the contract signing work if Party A fails to make
      payments to Party B for contracts signed in such a way that the number of
      contracts signed for which payments are delinquent reaches
    20.

            

    

     

    
      	
              3.  

            	
              Party
      A shall have the right to cancel the Agreement if Party B fails to sign
      contracts with 600 KTVs/night clubs approved by Party A or sign exclusive
      video media advertising agreements with 800 KTVs/night
    clubs.

            

    

     

    
      	
              V.  

            	
              The
      Agreement is executed in four copies, each transferor and transferee will
      hold one copy. For any issues not covered herein, the two parties shall
      otherwise negotiate. If not settlement is reached through negotiation,
      either party may submit the issue concerned to the People’s Court of
      Haidian District, Beijing.

            

    

     

     

    Party
A:                                       Party
B:

     

    Date:
_________, 2007

    
      
        
           

        

        
           

          
            

          

        

         

      

    

    

    Appendix
2:

     

    I. Target
Cities

     

    Party A
requires Party B to sign contracts with KTVs/night clubs first in cities of
Beijing, Shanghai and Guangzhou. Future target cities will be further determined
according to the customer base and business development of Beijing Shine
Multimedia Co., Ltd. in major cities across China.

     

    II.
Target KTVs/Night Clubs

     

    Target
KTVs/night clubs shall be mid- and high-class KTVs/night clubs and some
influential KTVs in target cities. Classes are subject to average consumption,
decoration, service quality and sources of customers of the KTVs. And the
full-year average occupancy of the target KTVs shall not be lower than
50%.

     

    III.
Contract-signing Costs

     

    
      	
              1.  

            	
              Party
      A will divide target KTVs into Classes A, B and C based on indicators such
      as their influences and consumption levels of customers. Contract-signing
      costs for Class A KTVs shall not be higher than USD 33.3/month * rooms;
      contract-signing costs for Class B KTVs shall not be higher than USD
      20/month * rooms; and contract-signing costs for Class B KTVs shall not be
      higher than USD 13.3/month * rooms. The Transferee shall assist the
      Company in signing exclusive advertising cooperation agreements with KTVs
      of the three classes above according to the sequence and quantity required
      by the Company. In case of special situations, investment of costs to sign
      contracts may be determined by Party A depending on the
      importance.

            

    

     

    
      	
              2.  

            	
              Party
      B undertakes to assist Party A in signing contracts as described in
      Appendix 1 with at least 50 target KTVs a month, and undertakes to assist
      Party A in signing contracts as described in Appendix 1 with at least 600
      target KTVs in a year or 800 target KTVs in 18
  months.

            

    

     

    IV.
Service Items

     

    
      	
              1.  

            	
              Party
      B undertakes to utilize the resources of Shine Multimedia to complete the
      following service items:

            

    

     

    
      	
              (1)  

            	
              Software
      interfaces for advertisement playing
systems;

            

    

     

    
      	
              (2)  

            	
              Complete
      advertisement publications for KTVs with which contracts have been signed
      as required by Party A;

            

    

     

    
      	
              (3)  

            	
              Collect
      and return advertisement monitoring data as required by Party
      A;

            

    

     

    
      	
              2.  

            	
              Monthly
      Report on Operation of Signed KTVs/Night
Clubs

            

    

     

    Party B
shall submit a report on operation of signed KTVs/night clubs every month, which
shall cover information including but not limited to operation/closure and
operation results of signed KTVs.

     

    V. Fees
and Expenses

     

    1.
Contract-signing Service Fee

     

    Contract-signing
service fee refers to rewards for signed service providers according to
agreements between Party A and signed service providers, which vary depending on
counter parties of signed service providers. This fee includes all and any
expenses in connection with signed service providers, and Party A will not make
any other payment therewith.

     

    Classification
of contract-signing service fees for target KTVs: USD 1,333.3 for Class A KTVS,
USD 1,066.7 for Class B KTVs, and USD 800 for Class B KTVs.

     

    Terms of
payment for the fee: Upon confirmation, the Company will deposit 50% of the
signing service fee into an account specified by a service provider within three
months after the contract is signed; the remaining fee will be paid averagely at
each year-end from the second to the fifth year within the contract term. The
Company will stop making payments with respect to unpaid service fee if the
signed KTV is closed down or refuses to perform the contract.

     

    2. Ads
Publication and Daily Maintenance Service Fee

     

    The
Company will pay a maintenance fee of USD 66.7 to the maintenance service
provider for each signed KTV in every month, and the maintenance service
provider shall provide maintenance service at least two times a month; for
emergency maintenance, a service fee of USD 66.7 shall be paid separately for
each time of maintenance. Party A shall pay this fee within three months upon
completion of each service. The maximum service term is three years, after
which, Party A and Party B shall otherwise negotiate to determine whether Party
B shall continue providing the service. Either party may choose to stop the
provision of maintenance service within the three year by giving a 30-day notice
to the other party.

     

    3. Costs
for interfaces of advertisement playing systems

     

    Based on
different software playing platforms and in accordance with advertisement
playing systems as required by Party A, Party A will sign exclusive interface
agreements on advertisement playback with original manufacturers of playback
platforms with respect to development of software, playback interfaces, data
statistics and data upload functions in order to implement the systems, and pay
interface and function development cost of USD 4,000, of which USD 1,333.3 will
be prepaid and the other USD 2,666.7 will be paid in two installments within six
months provided the systems fully meet the Company's criteria for advertisement
playback.

     

    VI.
Penalty for Breach of Contract

    
      	
              1.  

            	
              If
      the maintenance service provider falsely report times of maintenance,
      Party A will deduct the service fee of the month in which the falsely
      reported maintenance falls, and the Company may look for a new maintenance
      service provider.

            

    

    
      	
              2.  

            	
              If
      the maintenance service provider fails to complete the services required
      by Party A as set forth in the contract, Party A will deduct the service
      fee in 2 times of the amount involved in uncompleted
  tasks.

            

    

    
      	
              3.  

            	
              If
      the developer of software interface playback platform fails to finish the
      interface development as required by Party A, Party A shall have the right
      to recover the prepaid platform development fee of USD 13,333.3, and Party
      A shall have the right to refuse payment of the remaining development fee
      if the developer fails to meet Party A’s standards and fails to correct
      within an agreed
time.

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