AMENDMENT NO. 2 TO AMENDED AND RESTATED STOCK PURCHASE AGREEMENT

1.  

           Section 1.2(i) of the Purchase Agreement is hereby amended by deleting such provision in its entirety and replacing in lieu thereof the following:

 

“(i)

certificates representing 19,834,417 of CNC’s common shares, par value $0.0001 per share (“CNC Common Stock”), to be delivered to the Stockholders.”

2.  

 The first paragraph and following two tables contained in Section 1.3 of the Purchase Agreement are hereby amended by deleting such paragraph and tables in their entirety and replacing in lieu thereof the following:

3.  

Section 1.4(i)b. and Section 1.4(ii) of the Purchase Agreement are hereby deleted in their entirety.

4.  

Sub-paragraphs (ii) and (iii) of Section 5.2(a) are hereby amended by deleting each such provision in its entirety and replacing in lieu thereof the following:

(ii)  

As of the Closing, the authorized capital stock of CNC will include 100,000,000 common shares and 25,000,000 shares of preferred stock, of which 100 common shares will be issued and outstanding and held by IAG, and no shares of preferred stock will be issued and outstanding.  As of the Closing, there will be no options, warrants or rights (other than as contemplated by this Agreement, including the options and warrants of IAG assumed by CNC in the IAG Merger) to acquire any capital stock of CNC

(iii)  

Upon the merger of IAG with and into CNC, for the purpose of re-domestication into the BVI, (i) the 7,055,850 outstanding shares of IAG common stock (after giving effect to 55,850 management warrants to purchase IAG common stock for $0.01 per share), will be converted into  6,250,000 CNC Class A Preferred Shares and 1,305,850 CNC common shares, (ii) the 100 shares of CNC common stock to be issued and outstanding as of the IAG Merger will be extinguished as a contribution to capital, and (iii) there will be assumed the obligation to issue CNC Class A Preferred shares upon exercise of the currently outstanding IAG warrants having an exercise price of $5.00, provided that no more than 5,750,000 of such warrants remain outstanding at closing.

5.  

Section 6.21 is hereby deleted in its entirety.

6.  

Sub-paragraphs (d), (e) and (i) of Section 7.1 are hereby amended by deleting each such provision in its entirety and replacing in lieu thereof the following:

 

(d)

except for issuance of the CNC Class A Preferred Shares as required pursuant to the provisions of Section 5.2(a) and the exchange offer to Sing Kung Class A Preferred Shareholders, or to reorganize for the purpose of redomestication or upon exercise of options, not issue any shares of capital stock of IAG and CNC (when established) or any other class of securities, whether debt (other than debt incurred in the ordinary course of business and consistent with past practice) or equity, of IAG and CNC (when established) or any options therefore or any securities convertible into or exchangeable for capital stock of IAG and CNC (when established) or enter into any agreements in respect of the ownership or control of such capital stock;

 

(e)

except for a dividend of up to $4.85 per share payable upon or shortly following Closing (the “Closing Dividend”) to the shareholders of IAG who (x) do not exercise their conversion rights, or (y) do not receive their pro rata portion of the trust account (approximately $7.85 per share) as a result of a Permitted Repurchase (as defined in Section 7.1(i) below), and subject to the provision that the IAG founding shareholders holding 1,250,000 IAG common shares and options to purchase an additional 55,850 IAG common shares shall have waived their rights to such Closing Dividend, not declare any dividend or make any distribution in cash, securities or otherwise on the outstanding shares of capital stock of IAG and CNC  or directly or indirectly redeem, purchase or in any other manner whatsoever advance, transfer (other than in payment for goods received or services rendered in the ordinary course of business), or distribute to any of their affiliates (other than to pay previously agreed administrative fees as disclosed in IAG’s prospectus and to reimburse IAG’s officers and directors for reasonable out-of-pocket expenses incurred in the ordinary course of business) or otherwise withdraw cash or cash equivalents in any manner inconsistent with established cash management practices, except to pay existing indebtedness of IAG and CNC (when established);

except for share repurchases from IAG shareholders at or promptly following the Closing (or other agreements and commitments having a similar economic purpose) that are in furtherance of the objective of effecting the Closing (a “Permitted Repurchase”), not to make any payments or commitments to make outside the ordinary course of business; and

9.  

A new Section 9.4(n) shall be added to the Purchase Agreement as follows:

10.  

The defined term “CC Adjustment Shares” contained in Section 12.1 of the Purchase Agreement shall be deleted.

11.  

The defined term “Class A Preferred Share” shall be added to Section 12.1 of the Purchase Agreement and it means one share of CNC Class A Cumulative Convertible Preferred Stock of CNC having the rights and designations set forth in the term sheet attached hereto as Amendment No. 2 – Exhibit 1 and in final form satisfactory to IAG.”

13.  

Except as expressly amended by this Amendment, the parties agree that all other provisions of the Purchase Agreement remain unchanged and that the Purchase Agreement remains in full force and effect.

14.  

This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

 

 

 

 

Liquidation Preference Value is the IAG Net Price plus the value of all accrued and unpaid dividends.

 

 

 

Dividends on Class A Preferred shares will accrue quarterly and, if payment is declared by the CNC Board of Directors, shall be paid in cash within 10 business days following the end of each calendar quarter beginning December 31, 2009. Dividends shall be cumulative, and any accrued but unpaid dividends shall add to the liquidation preference value.

 

The annual dividend rate is initially established at 7 % of the Liquidation Preference Value, with the adjustments in the rate indexed to changes in the $US-RMB exchange rate in effect on the last U.S. business day of the quarter.  Base exchange rate = RMB 6.8340/$1.00.  Other than adjustments to reflect exchange rate changes, stock splits and reverse splits and similar occurrences, the quarterly dividend will not change.

 

 

If cash dividends are not paid for any reason, whether or not such payment would have been lawful, the unpaid dividend amount will accrue and be added to the Liquidation Preference.

 

 

 

 

Holders of Class A Preferred Shares may convert some or all of such shares to CNC common shares at any time by giving notice to the company.  The conversion ratio will be one CNC common share for each Class A Preferred Share.  At the time of conversion, any accrued but unpaid dividends outstanding on the converted shares must be applied to purchase additional CNC common shares at the then-current market price of CNC common shares, such price to be determined by averaging the closing price of CNC common shares on the 10 trading days preceding the date of conversion.

 

Conversion of the Class A Preferred Shares to common shares will be automatic upon the earlier to occur of (i) the date on which the CNC common shares have traded for 10 out of any 20 consecutive trading days at or above the IAG Net Price plus $2.00 per share on average daily volume of 3% of the outstanding common shares or (ii) following the delivery of US GAAP audited financial statements demonstrating that the Company has achieved a net operating income of $25,000,000 for any fiscal year beginning with fiscal year 2009.

 

The Class A Preferred Shares will be subject to customary anti-dilution provisions, including adjustment of the conversion price for stock splits, reverse splits and other such occurrences.  The Class A Preferred Shares will also have the same protections from Dilutive Issuances (as defined in the Sing Kung Memorandum and Articles of Association) as the Sing Kung Memorandum and Articles of Association currently provide to Sing Kung’s  preferred shareholders.