FIRST AMENDMENT AGREEMENT (all non-Group A Preferred Share Investor Shareholders)
(all
non-Group A Preferred Share Investor Shareholders)
This
FIRST
AMENDMENT AGREEMENT
(this
“Amendment”)
is
entered into as of this 4th day of October, 2007 by and among Omnia Luo Group
Limited, a British Virgin Islands company (the “Company”),
Luo
Zheng (PRC Identity Card No. 420102700621032) (the “Guarantor”),
and
certain holders of the Company’s Preferred Shares (as such term is defined
herein) who are signatories to this Amendment (each a “Shareholder”
and,
collectively, the “Shareholders”).
This
Amendment shall be effective upon the date and time (the “Effective
Time”)
which
is the last to occur of the consummation of the Reverse Acquisition and 2007
Private Placement (each as defined below). All defined terms used herein and
not
otherwise defined herein have their respective meanings as set forth in the
Original Agreements (as defined below). This Amendment shall terminate and
be of
no force and effect if the Reverse Acquisition and 2007 Private Placement (each
as defined below) shall not both have been consummated by December 31,
2007.
XXXX-XXXXXX
Greater China Investment Fund Limited, a Cayman Islands company (the
“Group
A Preferred Share Investor”
or
a
“Shareholder”),
the
lead investor in the Company’s Preferred Shares, and the holder of a majority of
the Company’s Preferred Shares, is a signatory to a parallel amendment to the
Original Agreements (as defined below) relating to the Group A Preferred Share
Investor’s special rights under the Original Agreements, which parallel
amendment, by reason of the Group A Preferred Share Investor’s rights under the
Original Agreements and in consideration of its agreement to waive or modify
them, provides the Group A Preferred Share Investor with certain additional
benefits.
The
holders of the Company’s Preferred Shares who are signatories to this Amendment,
and the Group A Preferred Share Investor are each referred to as a “Shareholder”
and,
collectively, as the “Shareholders.”
RECITALS
WHEREAS,
the Shareholders,
by
purchase transactions consummated pursuant to individual preferred stock
purchase agreements and a shareholders agreement dated as of December 15, 2006
and December 20, 2006 (the “Original
Agreements”),
are
the holders of an aggregate of 2,147 convertible preferred shares (the
“BVI
Preferred Shares”)
and
detachable warrants to purchase up to $365,940 in ordinary shares (the
“BVI
Warrants”),
of
the Company;
and
WHEREAS,
each
BVI
Preferred Share was to be automatically converted upon the later to occur of
a
“Qualified Listing” and “Qualified Offering”, and each of the BVI Warrants
issued in connection with the issuance of BVI Preferred Shares is exercisable,
at any time, commencing with the later to occur of a Qualified Listing and
Qualified Offering, for a two-year period, in cash for the purchase of the
Company’s ordinary shares, at a per share exercise price equal to the per share
price paid pursuant to the next equity financing round of the Company following
completion of the First Round Financing; and
WHEREAS,
the
issuance of the BVI Preferred Shares constituted a First Round Financing (as
defined in the Original Agreements); and
WHEREAS,
the Company and its shareholders propose to enter into a binding share exchange
agreement with Wentworth II, Inc., a Delaware corporation (the “Parent”)
which
when consummated, concurrently and conditional on the 2007 Private Placement(as
defined herein) will result in a reverse acquisition of the Parent by the
Company, in which the Company shall become a wholly-owned subsidiary of the
Parent, and shareholders of the Company will exchange all of their shares of
the
Company for shares representing 93.75% of the issued and outstanding shares
of
the Parent (the “Reverse
Acquisition”),
and
each of the BVI Warrants will be exchanged for new warrants to purchase common
stock of the Parent, exercisable at any time during a two-year period commencing
with the date on which there is an OTCBB quotation or NASDAQ listing of the
Parent’s common stock, at the price per share of Parent common stock paid by
investors in the 2007 Private Placement (as defined below), and otherwise
containing terms substantially identical to the terms of the BVI Warrants;
and
WHEREAS,
concurrently with and conditional on the consummation of the Reverse
Acquisition, the Parent will issue (i) not less than 3,200,000 shares and not
more than 4,920,000 shares of the Parent’s common stock, and (ii) warrants to
purchase an aggregate of not less than 3,200,000 shares and not more than
4,920,000 of the Parent’s common stock, for an aggregate purchase price of $4 to
$6.15 million, to several accredited investors in a private placement, with
resale registration rights (the “2007 Private Placement”); and
WHEREAS,
the consummation of the proposed 2007 Private Placement will constitute a
“Qualified Offering”;
and
WHEREAS,
the consummation of the Reverse Acquisition and 2007 Private Placement will
confer substantial benefits upon the Shareholders; and
WHEREAS,
it is a condition of the 2007 Private Placement and Reverse Acquisition that
all
BVI Preferred Shares shall have converted to ordinary shares immediately prior
to the consummation of the Reverse Acquisition and 2007 Private Placement;
and
WHEREAS,
the parties acknowledge and agree that although the Company and the Parent
will
have obtained at the time of the closing of the Reverse Acquisition and 2007
Private Placement a firm commitment of a registered market-maker who shall
undertake responsibilities for the quotation of the Parent’s shares on the OTC
Bulletin Board in the United States, and that such quotation shall extend to
shares of common stock of the Parent representing at least 10% of the Company
once such shares are registered for resale with the United States Securities
and
Exchange Commission or otherwise saleable under SEC Rule 144 or another
available exemption from registration, nonetheless, they have a bona fide
disagreement as to whether the Reverse Acquisition under such circumstances
would or would not constitute a “Qualified Listing” under the terms of the
Original Agreements, and wish to resolve such disagreement in a mutually
beneficial manner; and
WHEREAS,
in exchange for good and valuable consideration, the Company and each
Shareholder are willing to modify certain provisions of the Original Agreements
in order to facilitate mutually beneficial transactions.
AGREEMENT
NOW,
THEREFORE, in consideration of the promises and mutual covenants contained
herein, and in exchange for value received, the receipt and sufficiency of
which
is hereby acknowledged, the parties hereto hereby agree as follows, effective
as
of the Effective Time:
1. Amendment.
(a) Deemed
Qualified Listing and Qualified Exit.
The (i)
consummation of the Reverse Acquisition shall be deemed to constitute a
“Qualified Listing”
under
the Original Agreements,
notwithstanding
the absence of a public market price quotation for the common stock
of the
Parent immediately after the closing of such transactions, and (ii) the
concurrent consummation of the Reverse Acquisition and the 2007 Private
Placement shall be collectively
deemed to constitute the closing of a “Qualified Exit” under the Original
Agreements, except
that the provisions of Section 7.7 (Put Right) of the Shareholders Agreement
shall remain in effect, as modified hereby and by separate agreement of the
Company, the Guarantor and the Group A Preferred Share Investor.
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(b) New
Registration Rights.
In lieu
of and in substitution for all existing registration rights, each of the
Shareholders shall be granted registration rights with respect to the shares
of
common stock and the shares of common stock issuable upon exercise of the
warrants (collectively, the “Shareholder
Shares”),
to be
issued to them in the Reverse Acquisition substantially identical to those
to be
granted to, and pari
passu
with,
purchasers of the Parent’s common stock and warrants in the 2007 Private
Placement (including that any cutbacks due to SEC Rule 415 limits shall be
borne
pro
rata
among
all Shareholders and investors in the 2007 Private Placement based on the number
of shares sought to be registered), including
that the
initial registration statement covering the Shareholder Shares shall be filed
at
the expense of the Parent within 30 days following the closing of the 2007
Private Placement, and that if the initial registration
statement does not become effective by the Effectiveness Date, for any reason
other than by reason of SEC staff comments limiting the number of Shareholder
Shares to be registered for resale (as a result of Rule 415 or other reason),
or
if the Company fails to maintain the effectiveness of such initial registration
statement for any reason, the Company will be required to pay Shareholders
an
amount equal to 1% of the original purchase price of each BVI Preferred Share
represented by shares of common stock held by Shareholders on the Effectiveness
Date or the first day of such failure to maintain the effectiveness of the
initial registration statement, as the case may be, and for every 30 day period
(or part) after the relevant date, in each case until the initial registration
statement is declared effective or the failure to maintain the effectiveness
of
the initial registration statement is cured, up to a maximum of 10% (the
“Registration
Delay Payments”),
and in
the event that any Registration Delay Payments are not made on time, such
Registration Delay Payments shall bear interest at a rate of 1.5% per month
until paid in full. The Shareholders and the Parent shall enter into a
counterpart copy of the form of registration rights agreement between the Parent
and purchasers in the 2007 Private Placement (the “Registration
Rights Agreement”)
no
later than the closing of Reverse Acquisition, at which time such registration
rights agreement shall supersede the provisions of this subsection (c) of this
Amendment.
(c) Reporting
Obligations.
The
Registration Delay Payments shall also apply to any failure by the Parent to
comply with the reporting obligations of the US federal securities laws such
as
to make Rule 144 under the Securities Act (or any similar rule or rules then
in
effect) unavailable to a Shareholder, to the extent that a Shareholder’s
Shareholders Shares cannot be resold except in reliance on such
Rule.
(d) Amendment
of Put Right of Group A Preferred Share Investor.
Each
Shareholder acknowledges that Section 7.7 of the Shareholders Agreement, which
provides for certain Put rights solely to the Group A Preferred Share Investor,
is being amended as set forth in the separate parallel agreement between the
Group A Preferred Share Investor, the Company and the Guarantor, in part to
eliminate any Company Put obligation, and agrees to such amendment.
(f) Adjustments
for Group A Preferred Share Investor.
Each
Shareholder acknowledges that it is aware that the Group A Preferred Share
Investor has certain existing special rights pursuant to Section
7.7 of the Shareholders Agreement,
Clause
7A(i)(1) of Schedule 2 of the Preferred Stock Purchase Agreement or Clause
7A(i)
of the Memorandum, and pursuant to Clause 7A(j) of Schedule 2 of the Preferred
Stock Purchase Agreement or Clause 7A(j) of the Memorandum, and that it has
been
informed that the Group A Preferred Share Investor therefore (i) will receive
an
additional 149,884 shares of common stock of the Parent, as consideration for
releasing or modifying such rights, and (ii) may receive a retroactive
adjustment to its conversion ratio under certain conditions if there is an
issuance or transfer of shares of the Parent’s common stock pursuant to either
(a) Section 4.13 of the Securities Purchase Agreement relating to the 2007
Private Placement (the “SPA”),
or (b)
Section 4.11 of the SPA, the effect of which, had such issuances or transfers
occurred simultaneous with the closing of the 2007 Private Placement, would
have
caused the Actual Pre-Money Offering Valuation calculated pursuant to Sub-Clause
7A(i)(1) of Schedule 2 of the Preferred Stock Purchase Agreement or Clause
7A of
the Memorandum to be an amount less than US$22.4 million.
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(g) Termination
of Certain Shareholder Agreement Provisions.
All of
the terms and conditions of the Shareholder Agreement, other than Section 7.7
(Put Right) and Sections 10 and 11 as they may relate to Section 7.7, shall
be
terminated in all respects, including, without limitation, Sections 3.3
(Pre-emptive Rights), 5 (Governance), 6 (Information Rights), 7.2 (Rights of
First Offer), 7.3 (Tag-Along Rights), 7.4 (Company Sale Rights), 7.6 (Redemption
Right), and 8 (Registration Rights).
(h) Termination
of Certain Preferred Stock Purchase Agreement Provisions. The
following terms and provisions of each Preferred Stock Purchase Agreement shall
be terminated in all respects: Sections 4.2, 4.3 and 5.14.
2.
Implementation;
Assumption by Parent. Each
of
the Shareholders and the Company hereby agree (i) that upon the Effective Time,
the Shareholder shall be deemed to have consented to any amendment of the
Memorandum and Articles and its individual Purchase Agreement as of the closing
of the Reverse Acquisition required or appropriate to conform to and fully
reflect this Amendment, and (ii) to take such action and execute such
agreements, documents and filings as may be necessary under applicable law
or
regulation implement the foregoing, such that Memorandum and Articles and the
individual Share holder’s Purchase Agreement shall, to the extent required or
appropriate, conform to and fully reflect this Amendment. The Company further
agrees that it will not consummate the Reverse Acquisition unless the Parent
no
later than the closing of the Reverse Acquisition enters into an Assignment
and
Assumption Agreement substantially in the form attached hereto as Exhibit A
pursuant to which the Company will assign and transfer to the Parent, and the
Parent will assume, at the Effective Time, all of the obligations of the Company
under the Original Agreements, as modified by this Amendment.
3. Entry
into Exchange and Reverse Acquisition; Exchange of Warrants; Conversion
Notice.
(a) Each
Shareholder agrees
that it will enter into a definitive Share Exchange Agreement (the “SEA”)
effectuating the Reverse Acquisition in the form of the draft SEA attached
to
this Amendment, provided all other Shareholders enter into the SEA and the
terms
of the definitive SEA (i) do not adversely affect the terms of this Amendment,
and (ii) provide for (x) conversion of each BVI Preferred Share into ordinary
shares of the Company immediately prior to the closing of the Reverse
Acquisition without further action or consent of the Shareholder, and exchange
without further action or consent of the Shareholder of each such ordinary
share
of the Company into 319.8294 shares of common stock of the Parent, and (y)
exchange, in the closing of the Reverse Acquisition, without further action
or
consent of the Shareholder,
of
all
BVI Warrants issued to the Shareholder for warrants to purchase an aggregate
of
that number of shares of common stock of the Parent equal to the dollar amount
of the Shareholder’s BVI Warrants divided by $1.25, exercisable
at any time during a two-year period commencing with the date on which there
is
an OTCBB quotation or NASDAQ listing of the Parent’s common stock, at the price
per share of Parent common stock paid by investors in the 2007 Private
Placement.
(b) Each
Shareholder further
waives any other requirement of prior notice of conversion of its Preferred
Shares into the Company’s ordinary shares and agrees
that this Amendment and the SEA shall together constitute any required notice
or
agreement of conversion of its Preferred Shares into ordinary shares, provided,
however, that the Shareholder shall deliver such notice of conversion, not
inconsistent with this Amendment and the SEA, as may reasonably be required
by
the Company, its corporate service agent or its counsel to fully and properly
reflect such conversion on the books and records of the Company
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4. Counterparts.
This
Amendment may be executed in several counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
5. Governing
Law. This
Amendment shall be governed by and construed in accordance with the laws of
the
Hong Kong Special Administrative Region of the People’s Republic of China,
without giving effect to the conflicts of laws rules thereof.
[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, each of the undersigned has duly executed this Amendment as
of
the date first written above.
OMNIA
LUO GROUP LIMITED
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Name:
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Title:
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LUO
ZHENG
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Name:
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XXXXXX
XXXX XXXX
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Name:
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LAW
LAI PING XXXXX & XXXXX XXXX HUNG
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Name:
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XXXXXXX
X. XXXX
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Name:
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XXXXXX
X. XXXXXX
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Name:
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XXXXXXX
X. XXXXX
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Name:
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