AMENDMENT TO SUBSCRIPTION AGREEMENT
AMENDMENT TO SUBSCRIPTION
AGREEMENT
THIS AMENDMENT (this “Amendment”), is dated as of
March 5, 2010, by and between China Infrastructure Construction Corporation, a
Colorado corporation (the “Company”), and the subscribers
identified on the signature pages hereto (each a “Subscriber” and collectively,
the “Subscribers”) and
hereby amends the terms of the October 16, 2010 Subscription by and among the
Company and the Subscribers (the “Subscription
Agreement”). Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Subscription
Agreement.
RECITALS:
WHEREAS, on October 16, 2009,
the Company and certain investors consummated the sale under a Subscription
Agreement (the “Subscription
Agreement”) of approximately 2,564,103 shares of the Company’s common
stock, no par value (the “Common Stock”) for an
aggregate purchase price of approximately $10,000,000 (or $3.90 per Share) (the
“Prior Placement”);
and
WHEREAS, the Company is
currently seeking to engage in an underwritten public offering of its securities
in order to raise additional capital and grow its business which is anticipated
to close on or before December 31, 2010 (the “Public Offering”);
and
WHEREAS, in advance of the
Public Offering, the Company is seeking to consummate a private placement of up
to $5,000,000 of its Common Stock (the “Current Placement”);
and
WHEREAS, the Company and the
Subscribers have reached an agreement to amend the Subscription Agreement on the
terms set forth herein in order to allow the Company to proceed with the Public
Offering and Prior Placement in the most efficient manner;
NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement, the Company and the Subscriber hereby agree as follows:
1. Amendment to Section 8 of
the Subscription Agreement.The following shall be added as Section 8(y)
of the Subscription Agreement:
(y) Rule 144
Compliance. For
two (2) years after the Closing Date, the Company shall take all steps necessary
to ensure that Rule 144 under the 1933 Act is available for re-sales of the
Common Stock by the Subscribers upon Rule 144 becoming available pursuant to
Rule 144(i) under the 1933 Act.
2. Amendment to Section 8(t) of
the Subscription Agreement. Section 8(t) of the Subscription
Agreement shall be deleted in its entirety and replaced with the
following:
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(t) Investor Relations
Firm. Within one hundred eighty (180) days after the Closing Date, the
Company shall retain an investor relations firm for the Company’s investor
relations services. Such engagement shall be subject to approval by Trillion
Growth China General Partner, which approval shall not be unreasonably
withheld.
3. Amendment to Section
8(x)(iv) of the Subscription Agreement. Section 8(x)(iv) of
the Subscription Agreement shall be deleted in its entirety and replaced with
the following:
(iv) enter
into any new agreement or make any amendment to any existing agreement, which by
its terms would restrict the Company’s performance of its obligations to holders
of the Purchased Shares pursuant to this Agreement or any Transaction Documents
other than in connection with the Current Placement or the Public
Offering;
4. Amendment to Section 8(x)(v)
of the Subscription Agreement. Section 8(x)(v) of the
Subscription Agreement shall be deleted in its entirety and replaced with the
following:
(v) enter
into any agreement with any holder or prospective holder of any securities of
the Company, except for investors in the Current Placement and in connection
with the Public Offering, providing for the granting to such holder of
registration rights or protection against dilution;
5. Amendment to Section
8(x)(vi) of the Subscription Agreement. Section 8(x)(vi) of
the Subscription Agreement shall be deleted in its entirety and replaced with
the following:
(vi) enter
into any agreement, except for agreements in connection with the Current
Placement and Public Offering, resulting in the key shareholder owning less than
50% of the issued and outstanding shares of common stock of the
Company.
6. Amendment to Section 10(a)
of the Subscription Agreement. Section 10(a) of the
Subscription Agreement shall be deleted in its entirety and replaced with the
following:
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(a) Demand
Registration. If at anytime after December 31, 2010 (a) there
is no effective Registration Statement with respect to Registrable Shares and
(b) not all of the outstanding Registrable Shares may be sold without
registration pursuant to Rule 144 under the 1933 Act, then Holders that (A) as
of the date of this Agreement (directly or with their affiliates) held
Registrable Shares representing more than 50% of the Registrable Shares then
outstanding and (B) at the time of the written demand hold a number of shares of
Common Stock that is equal to at least the Floor Amount (as such term is
hereinafter defined) as of the date of such written demand (individually, a
“Demanding Holder” and
collectively, the “Demanding
Holders”), may make a written demand for registration (a “Demand Registration” and the
registration statement to be filed pursuant to such Demand Registration, the
“Demand Registration
Statement”) under the 1933 Act of the sale of all or part of its
Registrable Shares. Any request for a Demand Registration shall specify the
number of shares (or other amount) of Registrable Shares proposed to be sold and
the intended method(s) of distribution thereof (such written demand, the “Demand Notice”). The Company
will notify the Holders other than the Demanding Holder of the Demand
Registration (each such Holder including Shares of its Registrable Shares in
such registration, a “Participating Holder”) as soon
as practicable, and each such other Holder who wishes to include all or a
portion of its Registrable Shares of the type that are the subject of the Demand
Registration Statement proposed to be filed in such Demand Registration
Statement shall so notify the Company within fifteen (15) days after receipt of
such notice (the “Demanding
Holders’ Deadline”). The Company shall use its best efforts to
file such Demand Registration Statement within forty five (45) days (the “Required Filing Date”) after
receiving the Demand Notice, and use its best efforts to respond to any comments
to the Demand Registration Statement, received from the Commission, not later
than thirty (30) days after receipt of such comments (the “Required Response Date”). The
Company shall not be obligated to effect more than two (2) Demand Registrations
under this Section 10(a) in respect of Registrable Shares. “Floor Amount” means 5% of the
outstanding shares of Common Stock, provided that the Floor Amount shall be
calculated by dividing (x) the sum of the number of outstanding shares held by
the Demanding Holders and all shares issuable to such Demanding
Holders upon exercise or conversion of other securities of the Company held by
the Demanding Holders by (y) the number of shares outstanding; provided, that, the
number of shares outstanding referenced in the foregoing clause (y) shall not
include any shares (A) issued under employee benefit or compensation
arrangements approved by the Board of Directors, (B) issued to all shareholders
of the Company as dividends or in connection with stock splits or similar
transactions, (C) issued to persons unaffiliated with the Company as
consideration for the Company’s acquisition of assets or securities of such
persons or (D) issuable upon conversion or exercise of any options, warrants, or
other exchangeable securities.
7. Amendment to Section 10(b)
of the Subscription Agreement. Section 10(b) of the
Subscription Agreement shall be deleted in its entirety and replaced with the
following:
(b) Piggy-Back
Registration. If at any time after December 31, 2010, when there is not
an effective Registration Statement providing for the resale of all of the
Registrable Shares, and any of the Registrable Shares may not be sold pursuant
to Rule 144 under the 1033 Act, and the Company shall determine to prepare and
file with the Commission a Registration Statement relating to an offering for
its own account or the account of others under the Securities Act of any of its
equity securities (other than for an underwritten offering or on Form S-4 or
Form S-8, each as promulgated under the 1933 Act, or their then equivalents),
the Company shall send to each Holder of Registrable Shares written notice of
such determination. If within thirty (30) days after receipt of such
notice, or within such shorter period of time as may be specified by the Company
in such written notice as may be necessary for the Company to comply with its
obligations with respect to the timing of the filing of such Registration
Statement, any such Holder shall so request in writing, (which request shall
specify the Registrable Shares intended to be registered), the Company will use
commercially reasonable efforts to cause the registration under the 1933 Act of
all Registrable Shares which the Company has been so requested to register by
the Holder.
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8. Amendment to Section 11(a)
of the Subscription Agreement. Section 11(a) of the
Subscription Agreement shall be deleted in its entirety and replaced with the
following:
(a) Right of First
Refusal. During the period from the Closing Date through and
including the first anniversary of the Closing Date, the Subscribers shall be
given not less than ten business days prior written notice (the “Notice of Sale”) of any
proposed sale by the Company of its common stock or other securities or equity
linked debt obligations, except in connection with (i) full or partial
consideration in connection with a strategic merger, acquisition, consolidation
or purchase of substantially all of the securities or assets of corporation or
other entity which holders of such securities or debt are not at any time
granted registration rights, (ii) the Company’s issuance of securities in
connection with strategic license agreements and other partnering arrangements
so long as such issuances are not for the purpose of raising capital and which
holders of such securities or debt are not at any time granted registration
rights, (iii) the Company’s issuance of common stock or the issuances or grants
of options to purchase common stock to employees, directors, and consultants,
including the issuance of an undetermined amount of shares of common stock to
certain shareholders of the Company pursuant to that certain recapitalization of
the Company, (iv) securities upon the exercise or exchange of or conversion of
any securities exercisable or exchangeable for or convertible into shares of
common stock issued and outstanding on the date of this Agreement and described
on Schedule 4(d); and
(v) the Current Placement or Public Offering (collectively the
foregoing are “Excepted
Issuances”). The Subscribers shall have the right during the
ten business days following receipt of the Notice of Sale (the “Notice Period”) to purchase in
the aggregate such offered common stock, debt or other securities in accordance
with the terms and conditions set forth in the Notice of Sale in the same
proportion as that of the Subscriber’s Purchase Shares in the
Offering. In the event such terms and conditions are modified during
the Notice Period, the Subscribers shall be given prompt notice (the “Notice of Modification”) of
such modification and shall have the right during the ten business days
following the Notice of Modification to exercise such purchase
right.
9. Amendment to Section 11(d)
of the Subscription Agreement.Section 11(d) of the Subscription Agreement
shall be deleted in its entirety and replaced with the
following:
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(d) Other
Adjustments.
(i)
Other than in connection with Excepted Issuances listed in subparagraphs
(i) through (iv) in the definition of Excepted Issuances above, (x) if the
Company’s actual after tax net income under U.S. GAAP for the fiscal year ending
May 31, 2010 (“Actual 2010 Net
Income”) is less than $14,000,000 (“2010 Targeted Net Income”), or
(y) if the Company’s actual after tax net income under U.S. GAAP for the fiscal
year ending May 31, 2011 (“Actual 2011 Net Income”) is
less than the 2011 Target (as defined below) (“2011 Targeted Net Income”,
together with the 2010 Targeted Net Income, the “Targeted Net Income”), then
the Company shall issue, for each such occasion, to each Subscriber on a
pro-rata basis (determined by dividing each Subscriber’s Purchase Price by the
aggregate Purchase Price delivered to the Company by the Subscribers hereunder),
additional amount of shares of Common Stock (the “Adjustment Shares”) equal to
the percentage of variation of the Actual 2010 Net Income and Actual 2010 Net
Income from the 2010 Targeted Net Income and 2011 Targeted Net Income
respectively (the “Adjustment Percentage”) times the number of Purchased Shares
acquired by such Subscriber pursuant to this Agreement. For example, if the
Actual 2010 Net Income is $12,600,000, which is a variation of 10% of the 2010
Targeted Net Income, then the Company shall issue to each Subscriber, shares of
the Company’s Common Stock, equal to a total of 10% of the Purchased Shares
acquired by such Subscriber hereunder.
(ii)
The delivery to Subscriber of the Adjustment Shares
shall be not later than the third business day after the filing of a Form 10-K
with the Commission declaring the annual audited results.
(iii) Notwithstanding
anything to the contrary contained herein, in determining whether the Company
has achieved either the 2010 Targeted Net Income or 2011 Targeted Net Income,
the Company may disregard any non-cash charge or expense required to be
recognized by the Company under the United States generally accepted accounting
principles (the “GAAP”),
including but not limited to the non-cash charges listed below. In determining
whether the Company has achieved either the 2010 Targeted Net Income or the 2011
Targeted Net Income (as the case may be), (1) any liquidated damages payable
pursuant to the Transaction Documents and (2) any non-cash charges expensed by
the Company related to any Subsequent Financing Warrants issued pursuant to
Section 11(c) herein, in each case, shall not be included as expenses of the
Company. “Net Income”
shall mean the Company’s income after taxes for the fiscal year ending May 31,
2010 or May 31, 2011 (as the case may be) in each case determined in accordance
with GAAP as reported in the 2010 Annual Report or 2011 Annual Report (as the
case may be).
(iv) Actual
2010 and 2011 Net Income shall be measured at the date on which the Company
releases its Actual 2010 or 2011 Net Income in a Form 10-K filed with the
Commission (the “2010
Measurement Date” and “2011 Measurement
Date”). The “2011 Target,” shall mean
$19,800,000 in the event that the Company does not complete the Public Offering
on or before the 2011 Measurement Date and $18,000,000 in the event (x) the
Company completes an underwritten public offering on or before the 2011
Measurement Date or (y) the Company sells less than 1,282,052 shares in the
Current Placement.
10. Consideration for
Amendment. In
consideration of the foregoing amendments,
(a) each
Subscriber that is a signatory to this Amendment shall receive one half of one
warrant for each share of Common Stock purchased in the Prior Placement. The
warrants shall be in the form annexed hereto as Exhibit A; and
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(b) the
Company hereby agrees that the price of Common Stock sold in the Public Offering
will not be less than $5.20 per share; and
(c) Any
Subscriber which invested in the Prior Placement and has also invested in the
Current Placement, shall be entitled to the following right to receive shares of
Common Stock:
(i) Other
than in connection with Excepted Issuances, if the Company does not meet any
Targeted Net Income, then the Company shall issue, for each such occasion, to
each Subscriber on a pro-rata basis (determined by dividing each Subscriber’s
Purchase Price by the aggregate Purchase Price in the Prior Placement),
additional shares of Common Stock (the “Roll Forward Adjustment
Shares”), if any, equal to:
(A) the
Adjustment Percentage, times the number of shares of Common Stock acquired by
such Subscriber in the Current Placement, minus
(B) the
Adjustment Percentage times the number of Purchased Shares acquired
by the Subscriber in the Prior Offering which have been sold by the Subscriber
as of the 2010 or 2011 Measurement Date.
For
example, assume:
Actual
2010 Net Income is $12,600,000, which is an Adjustment Percentage of 10% of the
2010 Targeted Net Income;
Subscriber
A purchased 512,820 Purchased Shares in the Prior Offering;
Subscriber
A purchased 512,820 shares of Common Stock in the Current Placement;
and
Subscriber
A sold 50% of the Prior Offering Purchased Shares as of the Measurement Date,
then
the
Company shall issue to Subscriber A, the number of shares of Common
Stock, equal to:
(10% *
512,820) minus (512,820 * 50%)*10% = 25,641 shares of Common Stock
(ii) The
delivery to Subscriber of the Roll Forward Adjustment Shares shall be not later
than the third business day after the Measurement Date.
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11. Miscellaneous.
(a) Expenses. The
Company shall bear its own costs and expenses, including legal fees, incurred or
sustained in connection with the preparation of this Amendment and related
matters. The Company shall pay legal fees for Subscribers to one
legal counsel agreed upon by the Majority Holders in connection with
Subscribers’ review of this Amendment and with respect to Subscribers
participating in the Current Offering. Such legal fees shall be
capped at $5,000.
(b) Amendments and
Waivers. The provisions of this Amendment, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Majority
Holders.
(c) Notices. Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be delivered as set forth in the Subscription
Agreement.
(d) Successors and
Assigns. This Amendment shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the
parties
(e) Execution and
Counterparts. This Amendment may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission or by e-mail delivery of a
“.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.
(f) Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Amendment shall be determined in
accordance with the provisions of the Subscription Agreement.
(g) Severability. If
any term, provision, covenant or restriction of this Amendment is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(h) Headings. The
headings in this Amendment are for convenience only, do not constitute a part of
the Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
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[Signature
Pages Follow]
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SIGNATURE PAGE TO
AMENDMENT
Please
acknowledge your acceptance of the foregoing Amendment with China Infrastructure
Construction Corporation by signing and returning a copy to the Company
whereupon it shall become a binding agreement.
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Signature
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Signature
(if purchased jointly)
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Name
Typed or Printed
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Name
Typed or Printed
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Entity
Name
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Entity
Name
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Address
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Address
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City,
State and Zip Code
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City,
State and Zip Code
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Telephone
- Business
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Telephone
- Business
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Telephone
– Residence
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Telephone
– Residence
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Facsimile
– Business
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Facsimile
- Business
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Facsimile
– Residence
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Facsimile
– Residence
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Tax
ID # or Social Security #
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Tax
ID # or Social Security #
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Dated:
February __, 2010
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This
Amendment is agreed to and accepted as of February __, 2010.
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By:
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Name:
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Title:
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