CHINA FUNDAMENTAL ACQUISITON CORPORATION earn-out agreement
CHINA FUNDAMENTAL
ACQUISITON CORPORATION
earn-out agreement
This EARN-OUT AGREEMENT (the "Agreement"),
is entered into as of February 18, 2010 by and between CHINA FUNDAMENTAL ACQUISITION
CORPORATION, a public company in the United States (“Party A”, or the "Company") and REALINK GROUP LIMITED (“Party B”) , a British Virgin Islands
company. Party A and Party B are sometimes referred to collectively as the "Parties" and individually the “Party”.
RECITALS
A. The
Parties are parties to a Share Purchase Agreement dated November 30, 2009
("Purchase Agreement")
B. Pursuant
to the Purchase Agreement, the Company will acquire all of the outstanding
shares of Giant Nova Holdings Limited, a British Virgin Islands company, and
Authentic Genius Limited, a Hong Kong company, from Party B and other
Sellers.
C.
Pursuant to Section 2.6 of the Purchase Agreement, the Company
agrees to provide for the issuance of additional Buyer
Ordinary Shares (as defined in the Purchase Agreement) ("Earn-Out
Shares") to Party B subject to performance targets outlined in this Agreement
(“Performance Targets”) following the Closing (as defined in the Purchase
Agreement).
D.
Capitalized terms not otherwise defined herein shall have the meaning defined
under the Purchase Agreement.
Now, therefore, the Parties agree as follows:
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1.
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Performance
Targets
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(1)
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200,000
Buyer Ordinary Shares shall be issued to Party B in the event the closing
per share price (or the closing bid, if no sales are reported) of the
Buyer Ordinary Shares traded on the OTC Bulletin Board or any national
securities exchange where the Buyer Ordinary Shares are traded is at or
above US$10.00 for 180 days (such 180 days may be calculated on a
non-consecutive basis) out of 360 days during the period from the Closing
Date to the second anniversary of the Closing
Date.
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(2)
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200,000
Buyer Ordinary Shares shall be issued to Party B in the event the closing
per share price (or the closing bid, if no sales are reported) of the
Buyer Ordinary Shares traded on the OTC Bulletin Board or any national
securities exchange where the Buyer Ordinary Shares are traded is at or
above US$13.80 for 180 days (such 180 days may be calculated on a
non-consecutive basis) out of 360 days during the period from the Closing
Date to the third anniversary of the Closing
Date.
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(3)
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100,000
Buyer Ordinary Shares shall be issued to Party B in the event the average
daily trading volume of Buyer Ordinary Shares on the OTC Bulletin Board or
any national securities exchange where the Buyer Ordinary Shares are
traded, according to xxx.xxxxxxx.xxxxx.xxx, is no less than 200,000 shares
for 3 consecutive months during the period from the Closing Date to the
second anniversary of the Closing
Date.
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1
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2.
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Issuance
of the Earn-Out Shares
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Upon the achievement of each Performance Target, Party B shall present its request in writing, along with documents evidencing the achievement of such Performance Target, in the form and substance satisfactory
to the Board of
Directors of the Company for its review. The Earn-Out Shares shall be issued within 15 working days following the adoption of board resolution that the Board of Directors of the Company has acknowledged
and confirmed the achievement of the Performance Target.
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3.
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Condition
Precedent to the Receipt of Earn-Out
Shares
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In order
for Party B to receive the Earn-Out Shares, the major shareholders of Party B,
namely, Xx. Xxx Yabin and Xx. Xxxxx Fude, must be continuously
employed by the Company or a member of the Company Group during the term (as
extended) of their respective employment agreement with the Company, as agreed
in the Purchase Agreement, unless terminated without cause by the
Company. For the purpose of this Agreement, “cause” shall have the
meaning defined under the relevant employment agreement.
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4.
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Governing
Law
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This Agreement shall be governed by and construed in accordance with the laws of the State of New York (excluding any
provision regarding conflicts of laws).
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5.
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Dispute
Resolution
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(a) Any
dispute, controversy or claim arising out of or relating to this Agreement, or
the interpretation, breach, termination or validity hereof, shall be resolved
through consultation. Such consultation shall begin within 7 days
after one Party hereto has delivered to the other Party hereto a written request
for such consultation. If within thirty (30) days following the date
on which such notice is given the dispute cannot be resolved, the dispute shall
be submitted to arbitration at any time following such thirty (30) day period
upon the request of any Party with notice to the others.
(b) The
arbitration shall be conducted in Hong Kong by the Hong Kong International
Arbitration Center in accordance with its arbitration rules then in
effect. The arbitration proceedings shall be conducted in
Chinese.
(c) The
award of the arbitration tribunal shall be final and binding upon the disputing
Parties, and any Party may apply to a court of competent jurisdiction for
enforcement of such award.
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6.
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Successor
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The
Parties acknowledge that the Company will be renamed Wowjoint Holdings Limited
after the Closing (“Successor”). This Agreement shall be binding upon
the Successor.
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7.
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Counterparts
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This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original of this Agreement, but all of which together shall constitute
one and the same instrument.
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8.
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Language
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This
Agreement is written in English.
(The reminder of the page is
intentionally left blank)
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The Parties have duly executed this Agreement
as of the date first written above.
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PARTY
A:
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By:
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/s/ Xxxx Xx Hao
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Name:
Xxxx Xx Hao
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Title:
Chief Executive Officer
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PARTY
B
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REALINK
GROUP LIMITED
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By:
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/s/ Liu Ya Bin
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Name:
Liu Ya Bin
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Title:
President
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SIGNATURE
PAGE
