AMENDMENT NO. 1 TO SPONSOR AGREEMENT
Exhibit 10.17
AMENDMENT
NO. 1
TO
This Amendment No. 1 to Sponsor
Agreement (“Amendment”) is made
as of the 11th day of
March 2010, by and among Sun Zone Investments Limited, a company organized under
the laws of the British Virgin Islands (“Sun Zone”), and Sze
Kit Ting (collectively with Sun Zone, the “Sellers”) and certain
holders of securities of Xxxxxxxxx Asia Acquisition Corp., a Cayman Islands
company (the “Company”), who
execute a counterpart signature page hereto (each a “Sponsor” and
collectively, the “Sponsors”) and amends
the Sponsor Agreement (“Sponsor Agreement”),
dated as of February 12, 2010, by and among the Sellers, the Company and the
Sponsors. Capitalized terms not otherwise defined in this Amendment
have the same meaning as such capitalized terms have in the Sponsor
Agreement.
WHEREAS, the Company and the Sponsors
have notified the Sellers that the Company may not be able to meet the minimum
Net Trust Proceeds condition to the Sellers’ obligation to close the
Transactions, and the Sellers have agreed to lower the minimum on the terms and
conditions set forth in this Amendment and Amendment No. 1 to the Share Exchange
Agreement (as defined below); and
WHEREAS, to induce the Sellers to amend
the Share Exchange Agreement (“Exchange Agreement”),
dated as of February 12, 2010, between the Sellers, Honesty Group Holdings
Limited and the Company and to enter into Amendment No. 1 to the Share Exchange
Agreement (“Amendment
to Exchange Agreement”) of even date herewith, the Sponsors have, among
other things, agreed to surrender to the Company for cancellation the Sponsor
Warrants at Closing and to escrow additional the Company Shares held by them
subject to certain additional conditions;
NOW,
THEREFORE, in consideration of the foregoing and the covenants and
agreement of the parties set forth below and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties agree as
follows:
1. A new
subsection D is hereby added to Section I to the Sponsor Agreement to read in
its entirety as follows:
D.
Notwithstanding the achievement of an Earn-Out Milestone, all of Sponsor’s
Earn-Out Shares shall remain in escrow until the Conditions (as defined below)
set forth in Section I-1 have been satisfied prior to the Measurement Date (as
defined below) provided, that if the Conditions are not satisfied prior to the
Measurement Date, the Sponsor’s Earn-Out Shares shall be forfeited and return to
the Company for cancelation to the same extent, proportionately, as the
Sponsors’ Conditional Shares (as defined below).
2. A new
Section I-1 is hereby added to the Sponsor Agreement immediately following
Section I to read in its entirety as follows:
I-1 Sponsors’ Conditional
Shares.
A. Each
Sponsor agrees that the number of HMAUF Shares owned by such Sponsor and set
forth opposite such Sponsor’s name in the column captioned “Conditional Shares”
on Exhibit A-1 to the Sponsor Agreement (the “Conditional Shares”)
shall be forfeited to the Company and cancelled unless on or before December 31,
2011 or, in the event the First Earn-Out Milestone is not met, December 31,
2012, or such earlier date as the conditions set forth in clauses (2) and (3)
below are met (the “Measurement Date”),
each following conditions shall have been met (collectively, the “Conditions”), provided, however, in the event
the Conditions set forth in clauses (1) and (2) have been met but less than $15
million in gross proceeds of equity has been raised, the Conditional Shares
shall not be forfeited to the extent of the equity raised from the efforts of
Sponsor Representatives, on a pro rata basis (e.g., in the event $12 million of
gross proceeds is raised, only 20% of the Conditional Shares shall be
forfeited):
(1) from
the Closing Date until the Measurement Date, Xxxxxx Eu and Xxxx Xxxx (together,
the “Sponsor Representatives”) shall have provided to the Company without
compensation to the Sponsor Representatives or their Affiliates (other than the
reimbursement of reasonable business expenses, upon presentation of appropriate
documentation for financial reporting and tax purposes of the incurrence of such
expenses on behalf of the Company), at the Company’s request, the following
services for no fewer than 30 hours per month in the aggregate (it being
understood that if the Company does not request services, the Sponsors shall not
be required to provide services):
· Investor and
public relations services (including the drafting/review of press releases and
assisting with road shows, including appearing at road shows with members of
management);
· Assisting with the
coordination of other advisors;
· Assisting the
Company with listing on the Nasdaq Global Market or the Nasdaq Global Select
market (or, if the Nasdaq Global Market or Global Select Market does not
continue to exist, the global market closest in scope and qualifications to the
Nasdaq Global Market on the date hereof); and
· Introducing
investors and service providers to the Company;
The
Sponsor Representatives shall perform the foregoing actions in cooperation with
the Company’s other designated advisors.
(2) the
Company being listed on the Nasdaq Global Market or the Nasdaq Global Select
Market (or, if the Nasdaq Global Market does not continue to exist, the global
market closest in scope and qualifications to the Nasdaq Global Market on the
date hereof), provided that the Company acts in good faith to have its ordinary
shares listed promptly after meeting the qualifications of either such market
(which shall include the obligation of the Company to promptly submit an
application and respond to any requests for information from Nasdaq);
and
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(3) the
Sponsor Representatives shall have made available to the Company the opportunity
(evidenced by non-binding commitments of investors financially capable of
consummating the transactions) to sell additional common equity with gross
proceeds of at least U.S. $15 million via a public offering at a time when both
the Company and the Sponsor Representatives believe to be advantageous to raise
money at the highest price possible, with pricing determined in accordance with
the pricing model described on Exhibit B hereto . To
the extent that the Sponsor Representatives are in compliance with clause (1)
above, all equity capital raised by the Company prior to the Determination Date,
including any amounts received by the Company: (x) upon exercise of the Sponsor
Warrants transferred as provided in Section II-1 below and (y) upon exercise of
any IPO Warrants outstanding after the consummation of the Transactions, will be
included in the calculation of the U.S. $15 million to be raised. If
the Company determines not to accept the offering price determined as provided
herein, the Condition shall be deemed satisfied to the extent of the equity
capital which would have been raised if the offering had been consummated at
such price.
B. At the
Closing, each Sponsor whose HMAUF Shares are not held by the IPO Escrow Agent
shall transfer and deliver to the Escrow Agent under the Escrow Agreement such
Sponsor’s Conditional Shares. At the Closing, each Sponsor whose
HMAUF Shares are held by the IPO Escrow Agent shall deliver irrevocable
instructions to the IPO Escrow Agent to deliver to the Escrow Agent such
Sponsor’s Conditional Shares at the time such Conditional Shares would otherwise
be delivered to such Sponsor under the IPO Escrow Agreement. At the
Closing, each Sponsor shall deliver to the Escrow Agent all stock powers,
assignments and related documents as may be necessary to effect the transfer to
the Company and cancellation of such Sponsor’s Conditional Shares.
C. If the
Conditions are met on or before the Measurement Date, each Sponsor shall be
entitled to receive such Sponsor’s Conditional Shares within 10 business days
after the Measurement Date. If the Conditions are not met by the
latest Measurement Date, all of the Conditional Shares shall be forfeited to the
Company and cancelled. The Earn-Out Shares shall be released to the
Sponsors or the Company at the times and in the manner provided in the Escrow
Agreement.
D. The
Company agrees to use reasonable business efforts to cooperate with the Sponsors
and act in good faith to take such actions as may be reasonably required in the
best interests of the Company to satisfy the Conditions.
3. A new
Section II-1 is hereby added to the Sponsor Agreement immediately following
Section I to read in its entirety as follows:
II-1
Forfeited
Warrants. Each Sponsor agrees all of the Sponsor Warrants
owned beneficially or of record by such Sponsor shall be forfeited
and cancelled effective as of the Closing, other than Sponsor Warrants to
purchase 250,000 in ordinary shares will be transferred as of the Closing Date,
without charge, to an investor [Xxxx Investments II, LLC], as directed by the
Company. At the Closing, each Sponsor shall deliver to the Company
all stock powers, assignments and related documents as may be necessary to
effect the transfer to the Company and cancellation of such Sponsor’s Sponsor
Warrants.
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4. The
following shall be added to the Sponsor Agreement immediately following the last
sentence of Section XI:
The parties hereto agree that any action, proceeding or claim arising out of or
relating in any way Section I-1 of this Agreement which is not resolved within
30 days by negotiations between the parties shall, on written notice given to
the other parties by either Sponsor or the Company (any such notice, a Notice of
Arbitration”), be resolved through final and biding arbitration conducted in the
City of New York, State of New York in accordance with the rules and regulations
of the American Arbitration Association (AAA), by a panel of three arbitrators
selected from the AAA Commercial Disputes Panel instead of any jury trial and
that the arbitrator panel’s decision shall be final and binding to the fullest
extent permitted by law and enforceable by any court having jurisdiction
thereof. The selection of the arbitrators shall be made within 30
days after the Notice of Arbitration, one by the Sponsors and one by the
Company, and those two shall select a third arbitrator to serve as the chairman
of the panel. The cost of such arbitrators and arbitration services,
together with the prevailing party’s reasonable legal fees of a single law firm
and expenses, shall be borne by the non-prevailing party or as determined by the
equities of the matter by the arbitrators.
5.
Exhibit A to the Sponsor Agreement is hereby replaced in its entirety by Exhibit
A-1 to this Amendment.
6. If any
term or other provision of this Amendment is invalid, illegal or incapable of
being enforced by any Law, or public policy, all other conditions and provisions
of this Amendment shall nevertheless remain in full force and effect so long as
the economic or legal substance of the Transactions is not affected in any
manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties shall negotiate in good faith to modify this Amendment so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that Transactions are fulfilled to the extent
possible.
7. This Amendment may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other
parties. Execution and delivery of this Amendment by facsimile or
other electronic transmission evidencing a manual signature is legal, valid and
binding for all purposes.
8. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York regardless
of the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
9. Except
as amended hereby, the Sponsor Agreement continues in full force and effect as
written.
IN
WITNESS WHEREOF, intending to be legally bound, the parties have executed this
Amendment on the dates set forth opposite their signatures below to be effective
as of the date first above written.
[SIGNATURE
PAGES FOLLOW]
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SIGNATURE
PAGE TO
AMENDMENT
No. 1 TO SPONSOR AGREEMENT
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and
year first above written.
XXXXXXXXX
ASIA ACQUISITION CORP.
By: /s/
Xxxx Xxxx
Name:
Xxxx Xxxx
Title:
CEO
Address:
00/X Xxxxx 0
Xxx Xxxxx
tower
00 Xxxxxx
Xxxx Xxxxxxx
Xxxx
Xxxx
SIGNATURE
PAGE TO
AMENDMENT
No. 1 TO SPONSOR AGREEMENT
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and
year first above written.
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SUN
ZONE INVESTMENTS LIMITED
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By:
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/s/ Or Tin Man
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Name:
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Tin
Man Or
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Title:
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Owner
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Address:
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||
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c/o
Guanke (Fujian) Electron
Technological
Industry Co. Ltd.
SGOCO
Xxxxxxxxxx Xxxx
Xxxxxxx,
Xxxxxxxx Xxxx
Xxxxxx,
Xxxxx 00000
Attn: Xxxxxxxx
Or, President
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/s/ Xxxx Xxx Kit
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SZE
KIT TING
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Address:
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Xxxx
0000, 00/X., Xxxxx X
Healthy
Gardens, Xx. 000 Xxxx’x Xxxx
Xxxxx
Xxxxx, Xxxx Xxxx
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SIGNATURE
PAGE TO
AMENDMENT
No. 1 TO SPONSOR AGREEMENT
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and
year first above written.
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For individual Sponsors:
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For Sponsors other than individuals:
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| Xxxxxx Family Irrevocable Trust | |||
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/s/ Xxxx Xxxx
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|||
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Xxxx
Xxxx
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By:
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/s/ Xxxxxxx X.
Xxxxxx
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Name:
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Xxxxxxx
X. Xxxxxx
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/s/ Xxxxxx
Eu
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Title:
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Trustee
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Xxxxxx
Eu
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| AEX Enterprises Limited | |||
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Address
(for all Sponsors):
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|||
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By:
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/s/ Xxxxxx
Eu
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Address:
13/F Tower 2
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Name: |
Xxxxxx
Eu
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New
World tower
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00
Xxxxxx Xxxx Xxxxxxx
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XX Xxxxxxxxx + Co., LLC | ||
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Hong
Kong
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By:
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/s/ X.X.
Xxxxxxxxx
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Name:
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X.X.
Xxxxxxxxx
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Title:
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| Xxxxxxxxx 1980 Revocable Trust | |||
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By:
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/s/ X.X.
Xxxxxxxxx
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Name:
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X.X.
Xxxxxxxxx
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| Title: Trustee | |||
| Xxxx Ventures LLC | |||
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By:
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/s/Xxxxxx X.
Xxxxx
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| Name: Xxxxxx X. Xxxxx | |||
| Title: Vice President | |||
| Marbella Capital Partners Ltd. | |||
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By:
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/s/
Xxxx
Xxxx
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| Name: Xxxx Xxxx | |||
| Title: Director | |||
Exhibit
A-1
To
Amendment
No. 1 to Sponsor Agreement
and
to
Escrow
Agreement
Dated as
of March 11, 2010
Sponsor
Affiliates & Beneficiaries
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PRESENT
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Forfeited
Shares
|
Share
Ownership
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Earn-Out
Escrow
|
Conditional
Share Escrow
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||||
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Beneficiaries
|
Share
Ownership
|
Warrants
Ownership/Forfeit
|
Total
Sponsor Shares After Forfeit
|
Forfeited
Shares
|
Shares
not subject to Earn-Out or Conditions
|
Earn-Out
Shares Ownership
|
Conditional
Shares Ownership
|
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Xxxxxx
Eu
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173,275
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16.3%
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152,881
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20,394
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16,349
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101,920
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136,532
|
|
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X.X.
Xxxxxxxxx + Co, LLC
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178,275
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16.8%
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25,000
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157,293
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20,982
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16,821
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52,431
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140,472
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Xxxxxxxxx
1980 Revocable Trust
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88,333
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8.3%
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441,667
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77,937
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10,396
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8,335
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25,979
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69,602
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AEX
Enterprises Limited1
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88,333
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8.3%
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441,6672
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77,937
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10,396
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8,335
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25,979
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69,602
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Xxxx
Xxxx
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230,000
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21.7%
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0
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202,930
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27,070
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21,702
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67,643
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181,228
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Marbella
Capital Partners Ltd
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40,000
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3.8%
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200,000
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35,292
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4,708
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3,774
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11,764
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31,518
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Xxxxxx
Family Irrevocable Trust
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173,275
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16.3%
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0
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152,881
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20,394
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84,615
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0
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68,266
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Xxxx
Ventures, LLC
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88,333
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8.3%
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441,667
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77,937
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10,396
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8,335
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25,979
|
69,602
|
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TOTALS
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1,059,825
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100.0%
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1,550,000
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935,089
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124,736
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168,266
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311,696
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1 AEX
Capital LLC holds warrants while AEX Enterprises holds Sponsor
Shares
2 Of these
Warrants, Warrants to purchase 250,000 ordinary shares will be transferred to an
investor. [Xxxx Investments II, LLC] at the direction of the
Company.
Exhibit
B
To
Amendment
No. 1 to Sponsor Agreement
Dated
as of March 11, 2010
For
purposes of Section I-1.A.(3), the offering price for the Company’s ordinary
shares shall be determined using the following methodology:
The
offering price for the public offering will ultimately be determined
by negotiation between the underwriters and the Company, with the
assistance of the Sponsor Representatives, in an auction process after the
auction closes and does not necessarily bear any direct relationship to the
Company’s assets, current earnings or book value or to any other established
criteria of value, although these factors are considered in establishing the
initial public offering price. The principal factor in establishing
the public offering price is the clearing price resulting from the auction,
although other factors are considered as described below. The
clearing price will be used by the underwriters and the Company as the principal
benchmark, among other considerations described below, for purposes of
determining if the condition set forth in Section I-1.A(3) has been
met.
The
clearing price is the highest price at which all of the shares offered may be
sold to potential investors, based on the valid bids at the time the auction is
closed. Depending on the public offering price and the amount of the
increase or decrease, an increase or decrease in the number of shares to be sold
in the offering could affect the clearing price and result in either more or
less dilution to potential investors in this offering.
Depending
on the outcome of negotiations between the underwriters and the Company, the
offering price may be lower, but will not be higher, than the clearing
price. The bids received in the auction and the resulting clearing
price are the principal factors used to determine the public offering price of
the stock in the offering. The public offering price may be lower
than the clearing price depending on a number of additional factors, including
general market trends or conditions, the underwriters’ assessment of the
Company’s management, operating results, capital structure and business
potential and the demand and price of similar securities of comparable
companies.
