EXHIBIT 4.14
Execution Copy
SHAREHOLDERS AGREEMENT
AMONG
TPG GROWTH AC LTD.
TPG BIOTECH II, LTD.
BROTHERS CAPITAL LIMITED
AND
AGRIA CORPORATION
JUNE 22, 2007
TABLE OF CONTENTS
1. Definitions............................................................. 1
2. Board of Directors; Preferred Protective Provisions..................... 1
2.1 Board of Directors................................................. 1
2.2 Preferred Protective Provisions.................................... 3
2.3 Additional Preferred Protective Provisions......................... 5
2.4 Limitation on the Rights of the Investors.......................... 6
2.5 Certain Dividends.................................................. 6
3. Restrictions on Transfer................................................ 6
3.1 General Provisions; Restrictions................................... 6
3.2 Rights of First Refusal............................................ 8
3.3 Co-Sale Rights..................................................... 9
3.4 Excluded Transactions.............................................. 11
3.5 Lock-up Agreements................................................. 11
4. Preemptive Rights....................................................... 12
4.1 Sale Notice........................................................ 12
4.2 Exercise of Preemptive Rights...................................... 12
4.3 Non-Exercise....................................................... 12
4.4 Excluded Transactions.............................................. 12
4.5 Limitations........................................................ 13
5. Redemption Rights....................................................... 13
5.1 Investors' Redemption Rights....................................... 13
6. Affirmative Covenants of the Company.................................... 14
6.1 Other Shareholders Agreements...................................... 14
6.2 Business Practices................................................. 14
6.3 Financial Information.............................................. 15
6.4 Access to Information.............................................. 15
6.5 Tax................................................................ 15
6.6 Stock Option Plans................................................. 16
6.7 No Public Disclosure............................................... 17
6.8 Further Actions.................................................... 17
6.9 Qualifying IPO..................................................... 17
6.10 Limitations........................................................ 17
6.11 Additional Covenants relating to Restructuring..................... 17
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7. Restrictive Legends and Stop-Transfer Orders............................ 18
7.1 Legend............................................................. 18
7.2 Stop Transfer Instructions......................................... 18
8. Representations, Warranties and Covenants............................... 19
8.1 Representations and Warranties of the Shareholders................. 19
8.2 Additional Representations, Warranties and Covenants of
Brothers Capital................................................... 19
9. General................................................................. 20
9.1 Amendments; Waivers................................................ 20
9.2 Commercially Reasonable Efforts; Further Assurances................ 21
9.3 Governing Law...................................................... 21
9.4 Dispute Resolution................................................. 21
9.5 Obligations of Transferees......................................... 22
9.6 Termination........................................................ 22
9.7 Titles and Subtitles; References................................... 23
9.8 Counterparts....................................................... 23
9.9 Parties in Interest................................................ 23
9.10 Notices............................................................ 23
9.11 Attorney's Fees.................................................... 24
9.12 Specific Performance............................................... 24
9.13 Severability....................................................... 24
9.14 Entire Agreement................................................... 24
9.15 No Presumption..................................................... 24
9.16 Aggregation of Stock............................................... 25
9.17 Interpretation..................................................... 25
Schedule 8.2 - List of Shareholder Agreements between Brothers Capital Limited
and third parties prior to the date of this Agreement
ii
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (this "Agreement") is made as of June 22,
2007 by and among Agria Corporation, an exempted company incorporated in the
Cayman Islands (the "Company"), Brothers Capital Limited, a company organized
and existing under the laws of the British Virgin Islands and a shareholder of
the Company ("Brothers Capital"), and the entities listed under the heading
"Investors" on Exhibit A (each an "Investor," and together the "Investors", and
together with Brothers Capital, the "Shareholders"). The Company, Brothers
Capital and the Investors are referred to herein as "Parties" collectively and a
"Party" individually.
RECITALS
A. The Company desires to sell Series A Preferred Shares and Brothers
Capital desires to sell Ordinary Shares to the Investors pursuant to that
certain share purchase agreement among the Company, the Investors and certain
other parties dated June 22, 2007 (the "Share Purchase Agreement");
B. The execution of this Agreement is a condition precedent under the
Share Purchase Agreement; and
C. The Shareholders desire to set forth certain agreements among
themselves as shareholders of the Company.
NOW THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants and conditions contained herein, the Parties hereto agree as
follows:
1. DEFINITIONS
Capitalized terms used in this Agreement but not otherwise defined
herein shall have the meanings ascribed to them in the Share Purchase Agreement.
2. BOARD OF DIRECTORS; PREFERRED PROTECTIVE PROVISIONS
2.1 Board of Directors.
(a) Election of Directors.
(i) Directors Nominated by Brothers Capital. Each Shareholder agrees
that it will vote, or cause to be voted, all Shares and other voting
securities of the Company now owned or hereafter acquired by it so as to
elect to the Board of Directors (as defined in the Restated M&A) five
designees (the "Brothers Capital Designees"), nominated by Brothers
Capital. To effectuate this Agreement, the Company shall not record any
vote contrary to the terms of this Section 2.1(a)(i) without the written
consent of Brothers Capital.
(ii) Director Nominated by the Investors. Each Shareholder agrees that
it will vote, or cause to be voted, all Shares and other voting securities
of the Company now
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owned or hereafter acquired by it so as to elect to the Board of Directors
one designee (the "Investor Designee") of the Investors, nominated by the
Investors. To effectuate this Agreement, the Company shall not record any
vote contrary to the terms of this Section 2.1(a)(ii) without the written
consent of all Investors.
(iii) Investors' Right to Nominate Independent Director. The Investors
shall have the right to nominate one independent director, subject to the
approval by the Board of Directors.
(b) Removal. If any of Brothers Capital or the Investors shall notify
the other Shareholders of its decision to remove its designated designee(s),
each Shareholder agrees that it will vote all of the Shares and other voting
securities of the Company owned or held of record by it so as to remove such
director. Except as provided in the immediately preceding sentence, no director
designated by any of Brothers Capital or the Investors shall be removed from the
Board of Directors unless the designating party of such director consents to
such removal.
(c) Successors. If a Brothers Capital Designee or the Investor
Designee shall cease to serve on the Board of Directors (whether by reason of
death, resignation, removal or otherwise), the party that designated such
director shall be entitled to designate a successor director, nominated in
accordance with Section 2.1(a), to fill the vacancy created thereby. Each
Shareholder agrees that it will vote all of the Shares and other voting
securities of the Company owned or held of record by it so as to elect such
designee as a director.
(d) Proxy. For so long as this Agreement is in effect, if any
Shareholder fails or refuses to vote that Shareholder's Shares as provided in
this Section 2.1, without further action by such Shareholder, such Shareholder
shall be deemed to have granted an irrevocable proxy to the Company to be
"present" at any meeting relating to such a vote and to vote the Shares owned by
such Shareholder in accordance with this Agreement, and each Shareholder hereby
grants to the Company such irrevocable proxy. The Company hereby agrees to vote
such proxy Shares in accordance to this Section 2.1.
(e) Board of Directors for Subsidiaries. The Company hereby agrees to
exercise its rights and to vote, to the extent applicable, its shares in each of
its Subsidiaries (as defined in the Restated M&A), except for Primalights III
Agriculture Development Co., with respect to the election of the members of the
board of directors of each Subsidiary in accordance with this Section 2 and
cause the composition of the board of directors of each Subsidiary to be
identical to that of the Company's Board of Directors, except as specifically
consented to by the majority vote of the Brothers Capital Designees and the
Investor Designee, voting together.
(f) Observer. One nominee of the Investors (the "Observer"), nominated
by the Investors shall be entitled to attend and observe, in a non-voting
capacity, all meetings of the Board of Directors and any committee thereof, and
shall receive notice of all such meetings as if the Observer were a Director of
the Company, or a member of such committee, as applicable.
(g) The Investors agree and shall hold in confidence and not use or
disclose, and shall cause the Observer (and his or her successors) and the
Investor Designee (and his or her respective successors) to hold in confidence
and not use or disclose, any confidential
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information provided to or acquired by any of the foregoing in connection with
the provisions of this Agreement, other than solely in respect of the Investors'
role as investors in the Company. Without limiting the foregoing, the Investors
shall not use or disclose any such confidential information in connection with
any investment by the Investors or any Affiliates or related parties of the
Investors in a competitor of the Company or any subsidiaries of such competitor.
(h) Liability Insurance and Indemnity.
(i) As soon as commercially reasonable, the Company shall purchase and
maintain a policy of directors and officers' liability insurance ("D&O
Insurance"), including employment practices liability coverage, with a
carrier and in an amount to be approved by the Board of Directors and
reasonably satisfactory to the Investors.
(ii) In the event of a merger or sale of the Company in which the
Company is not the survivor, the Company shall use its commercially
reasonable efforts to provide in the agreements in connection with such
merger or sale that the successor assumes the Company's obligations to
purchase and maintain the D&O Insurance pursuant to this Section 2.1(h).
2.2 Preferred Protective Provisions.
Subject to Section 2.4 and applicable laws, the Company shall not take
and shall prevent its Subsidiaries from taking, and each Shareholder shall take
all such action as a shareholder of the Company necessary to prevent the Company
and its Subsidiaries from taking, any of the following actions or any action
directly or indirectly in furtherance of any of the following actions, in each
case unless such action is approved by the Investors:
(a) any amendment of the memorandum of association, articles of
association, articles of incorporation, certificate of incorporation, bylaws and
any charter, partnership agreements, joint venture agreement or other
organizational documents (together, "Organizational Documents") of any of the
Company's Subsidiaries that will adversely affect the rights of the Investors,
any material change in the purposes of the establishment or business scope of
the Company or any of its Subsidiaries, or any change in the place of
incorporation of the Company or any of its Subsidiaries;
(b) any merger, consolidation, business combination, spin-off or
recapitalization of the Company or any of its Subsidiaries, or the sale or lease
of all or substantially all of the assets of the Company or any of its
Subsidiaries, in one transaction or a series of transactions;
(c) the liquidation, dissolution or winding up of, or the suspension
of payments or assignment to creditors by any of the Company's Subsidiaries;
(d) any filing of a voluntary petition in bankruptcy or commencement
of a voluntary legal procedure for reorganization, arrangement, adjustment,
relief or composition of indebtedness, the consent to the entry of an order for
relief in an involuntary case or the application for or consent to the
appointment of a receiver, liquidator, assignee, custodian or trustee or similar
official of any of the Subsidiaries of the Company;
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(e) any change in the capital stock of any of the Company's
Subsidiaries, or the authorization, issuance, sale or entering into of any
agreement related to the issuance of any equity or equity-linked securities (or
any instruments convertible into or exchangeable for any such securities, or any
options, rights or warrants to acquire any such securities or instruments) of
any of the Company's Subsidiaries, or the amendment of any term of any equity
securities of any of the Company's Subsidiaries;
(f) any sale, transfer, pledge or disposition, in one transaction or a
series of transactions, by the Company of any capital shares or other equity
interests of any of its Subsidiaries;
(g) any redemption, purchase or other acquisition by the Company or
any of its Subsidiaries of any of its securities;
(h) any payment or declaration of any distribution or dividend on or
with respect to any capital shares or other equity interests of the Company or
any of its Subsidiaries, except pursuant to Section 2.5 hereof;
(i) except for arrangements with Taiyuan Renlong Enterprise
Development Group Co., Ltd. (Chinese characters) relating to seedlings, any
transaction or a series of related transactions exceeding US$50,000 in any
12-month period between the Company or any of its Subsidiaries on the one hand,
and any employee, officer, director or equityholder of the Company or any of its
Subsidiaries, or any member of his or her immediate family, or any Affiliate (as
defined below) of an equityholder of the Company or any Subsidiary on the other,
except for compensatory transactions approved by the Board of Directors;
(j) any purchase by the Company or any of its Subsidiaries of the
capital stock of any corporation, the voting interest in any partnership, joint
venture or other entity, or material assets of another entity, or the making of
any loan or advance to any such entity, unless the total consideration
(including cash, equity issued and debt assumed) to be paid by the Company or
its Subsidiaries does not exceed US$3,000,000;
(k) other than in the ordinary course of business, any sale, transfer,
pledge or disposition of, in one transaction or a series of related
transactions, any assets of the Company or any of its Subsidiaries exceeding
US$1,000,000;
(l) other than in the ordinary course of business, any creation,
assumption or incurrence of any Encumbrance on the assets of the Company or any
of its Subsidiaries in one transaction or a series of related transactions with
a value in excess of US$1,000,000;
(m) any sale, transfer, assignment, pledge or disposition of, in one
transaction or a series of related transactions, any material permit or license
used in the businesses of the Company or any of its Subsidiaries;
(n) the incurrence, creation or guarantee or the entering into of any
agreement for the incurrence, creation or guarantee, in one transaction or a
series of related transactions, by the Company or any of its Subsidiaries of any
long-term or short-term indebtedness, obligations
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or liabilities (but excluding from the foregoing any trade debts) which
individually or in the aggregate exceeds US$1,000,000, or the entering into of
any off-balance sheet transaction by the Company or any of its Subsidiaries, or
the amendment of any material term of such indebtedness, obligations or
liabilities or off-balance sheet transactions in a manner adverse to the Company
or any of its Subsidiaries;
(o) any change in the Company's or any of its Subsidiaries' fiscal
year, accounting method or accounting practices, except such changes as are
necessary to comply with changes to the generally accepted accounting principles
adopted by the Company or such Subsidiary;
(p) the establishment of the annual budgets of the Company and any of
its Subsidiaries, which shall be presented to the Investors in accordance
Section 6.3(c), and any capital expenditure not provided for in such budgets in
excess of US$1,000,000;
(q) the selection or change of the Company's independent accountants
(which as of the date hereof is Ernst & Young); or
(r) any matter related to the Company's initial public offering,
including (i) the choice of the listing venue, provided that the Investors
hereby consent to the selection of the New York Stock Exchange or the Nasdaq
Stock Market as the listing venue, and (ii) the selection of underwriters, which
shall be made by the Company but which shall be reasonably acceptable to the
Investors.
2.3 Additional Preferred Protective Provisions.
Subject to Section 2.4 and applicable Laws, and notwithstanding
anything to the contrary in the Restated M&A, the Shareholders agree among
themselves (to the exclusion of the Company) that they shall each take all steps
necessary and within their power to ensure that the Company shall not adopt,
approve or carry out any of the following actions, unless approved by the
Investors:
(a) any amendment of the memorandum or articles of association of the
Company that will adversely affect the rights of the Investors, any material
change in the purposes of the establishment or business scope of the Company, or
any change in the place of incorporation of the Company;
(b) any filing of a voluntary petition in bankruptcy or commencement
of a voluntary legal procedure for reorganization, arrangement, adjustment,
relief or composition of indebtedness, the consent to the entry of an order for
relief in an involuntary case or the application for or consent to the
appointment of a receiver, liquidator, assignee, custodian or trustee or similar
official of the Company;
(c) the liquidation, dissolution or winding up of, or the suspension
of payments or assignment to creditors by the Company; or
(d) other than (i) the issuance of any securities or options to
acquire securities by the Company to its directors, officers, employees or
consultants pursuant to the 2007 Stock
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Option Plan or pursuant to the second sentence of Section 6.6 and (ii) the
issuance of any equity or equity-linked securities (or any instruments
convertible into or exchangeable for any such securities) not to exceed in the
aggregate 20% of the Ordinary Shares outstanding (on an as-converted basis), any
change in the capital stock of the Company, or the authorization, issuance, sale
or entering into of any agreement related to the issuance of any equity or
equity-linked securities (or any instruments convertible into or exchangeable
for any such securities, or any options, rights or warrants to acquire any such
securities or instruments) of the Company, or the amendment of any term of
equity securities of the Company.
2.4 Limitation on the Rights of the Investors.
The rights of the Investors provided in Sections 2.1, 2.2 and 2.3
shall terminate at the earlier of (i) the occurrence of a Qualifying IPO, or
(ii) when the Investors cease to own Shares representing, in the aggregate, at
least 50% of the Shares purchased by the Investors pursuant to the Share
Purchase Agreement provided that the obligations of the Investors set forth in
Section 2.1(g) shall continue until the later of (i) a Qualifying IPO, (ii) such
time as there shall no longer be the Investor Designee on the Board of Directors
or the board of directors of any Subsidiary and the Investors shall no longer be
entitled to appoint any Investor Designee to the Board of Directors or the board
of directors of any Subsidiary and (iii) such time as the Investors shall cease
to own at least 25% of the Shares purchased by the Investors pursuant to the
Share Purchase Agreement.
2.5 Certain Dividends.
(a) To the extent any Pre-Closing Retained Earnings (as defined below)
have not been distributed to the Eligible Ordinary Shareholders (as defined
below) as of the Closing Date ("Undistributed Pre-Closing Retained Earnings"),
the Company may, after the Closing, distribute such Undistributed Pre-Closing
Retained Earnings to the Eligible Ordinary Shareholders, by way of one or more
interim dividends or otherwise.
(b) The Investors agree that they shall not be entitled to participate
in, or approve or disapprove, the declaration and payment of any Undistributed
Pre-Closing Retained Earnings, irrespective of whether or not the Investors have
converted any or all of their Series A Preferred Shares to Ordinary Shares prior
to such declaration or payment.
(c) For purposes of this Agreement (i) "Eligible Ordinary
Shareholders" shall mean the entities or individuals that hold Ordinary Shares
of the Company both immediately prior to the Closing and as of the date of any
distribution of Pre-Closing Retained Earnings as described herein and (ii)
"Pre-Closing Retained Earnings" shall mean the retained earnings of the Company
as of the last day of the calendar month preceding the Closing. The amount of
the Pre-Closing Retained Earnings shall be determined by an interim review by
the Company's independent accountants.
3. RESTRICTIONS ON TRANSFER
3.1 General Provisions; Restrictions.
(a) Subject to any applicable laws and except as otherwise provided
in this
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Agreement or the Restated M&A, the Ordinary Shares and Series A Preferred Shares
shall be freely transferable, provided that any transferee provides the
registered office of the Company with know-your-client anti-money-laundering due
diligence documentation reasonably requested by it.
Notwithstanding any other provision of this Agreement, during the
period commencing on the Closing Date and ending on the closing of the
Qualifying IPO (the "Restricted Period"), Brothers Capital shall not (i) lend,
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of (whether with or without
consideration, directly or indirectly, voluntarily or involuntarily, by
operation of law or otherwise) any Shares now owned or hereafter acquired by it
to any person (whether such Shares or any such securities are then owned by such
person or are thereafter acquired), or (ii) enter into any swap, derivative or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of any Shares or such other securities,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Shares or such other securities, in cash or otherwise
(each such action described in clause (i) or (ii) above, a "Transfer"), other
than (i) a Transfer made pursuant to Section 3.2 or Section 3.3, (ii) a Transfer
to any individual that is a member of such Shareholder's (or, if such
Shareholder is not a natural person, the ultimate beneficial owner of such
Shareholder) immediate family (i.e., spouses, parents and children), any trust,
tax shelter or other entity established for bona fide estate or tax planning
purposes of such Shareholder (or, if such Shareholder is not a natural person,
the ultimate beneficial owner of such Shareholder) or any member of such
Shareholder's (or, if such Shareholder is not a natural person, the ultimate
beneficial owner of such Shareholder) immediate family, or any Affiliate, or
(iii) a Transfer to Xx. Xxxx Zhaohua or an entity wholly-owned by Xx. Xxxx
Zhaohua (each, a "Permitted Transferee"); provided, however, that any Permitted
Transferee, simultaneously with such Transfer, agrees in writing to be bound as
a Shareholder by all of the provisions of this Agreement in accordance with
Section 9.5, provided, further, that if any Permitted Transferee to whom any
Shares have been transferred ceases to be a Permitted Transferee of the
transferring Shareholder, such Shares shall be transferred back to the
transferring Shareholder immediately prior to the time such person ceases to be
a Permitted Transferee of such transferring Shareholder. In addition to any
Transfers pursuant to clauses (i), (ii) and (iii) of this paragraph, prior to a
Qualifying IPO, Brothers Capital may Transfer Ordinary Shares, not to exceed in
the aggregate 20% of the Ordinary Shares outstanding immediately following the
Closing, in one or more Transfers. Any Transfer or Transfers in accordance with
the preceding sentence may be made without complying with Section 3.2 or Section
3.3.
Prior to the end of the Restricted Period, no Investor shall Transfer
any Shares now owned or hereafter acquired by it to any person, other than (i) a
Transfer made pursuant to Section 3.2 or Section 3.3, (ii) a Transfer to a
Permitted Transferee or (iii) a Transfer made pursuant to Section 5.1.
Notwithstanding anything to the contrary in this Agreement, no Investor shall,
and each Investor shall cause any Permitted Transferee not to, Transfer any
Shares now owned or hereafter acquired by it to any direct or indirect
competitor of the Company or any of its Subsidiaries. The preceding sentence
shall survive the termination of this Agreement.
For purposes of this Agreement, "Affiliate" of any person shall mean
any person that, alone or together with any other person, directly or indirectly
through one or more
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intermediaries, controls or is controlled by, or is under common control with,
such person. For purposes of this definition, "control" means, when used with
respect to any person, the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
whether through the ownership of voting securities, by contract, or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
3.2 Rights of First Refusal.
(a) Brothers Capital hereby grants to each of the Investors, and each
of the Investors hereby grants to Brothers Capital, a right of first refusal
(the "Right of First Refusal") with respect to sales during the Restricted
Period by such granting Shareholder (an "Offering Shareholder") of Shares now
owned or hereafter acquired by it. During the Restricted Period, each time that
an Offering Shareholder proposes to Transfer all or part of its Shares to any
other person (the "Proposed Transferee"), such Offering Shareholder shall, prior
to consummating any such Transfer, give written notice (the "Offer Notice") to
each of the Shareholders entitled to the Right of First Refusal (the "Offeree
Shareholders") in accordance with the following provisions.
(b) The Offering Shareholder shall deliver an Offer Notice to each of
the Offeree Shareholders stating (i) that the Offering Shareholder has received
a binding offer from the Proposed Transferee(s), (ii) the number and description
of the Shares proposed to be transferred pursuant to the binding offer from the
Proposed Transferee(s), (iii) the proposed price and terms and conditions upon
which each Proposed Transferee offers to purchase such Shares, (iv) the name and
address of each Proposed Transferee, and (v) an offer to sell to the Offeree
Shareholders such Shares set forth in the Offer Notice at the same price per
Share and on the same terms and conditions as offered by the Proposed
Transferee(s). The Offer Notice shall also include a copy of any written
proposal, term sheet or letter of intent or other agreement relating to the
proposed Transfer.
(c) By delivering a written notification to the Offering Shareholder
within 15 calendar days after receipt of the Offer Notice (the "Exercise
Period"), each Offeree Shareholder may elect to purchase, at the price and on
the terms and conditions specified in the Offer Notice, up to its percentage
share of the total number of Shares proposed to be transferred as specified in
the Offer Notice, which shall be equal to the number of such Shares, multiplied
by a fraction, the numerator of which shall be the number of Shares (on an
as-converted basis) then owned by such Offeree Shareholder and the denominator
of which shall be the total number of Shares (on an as-converted basis) then
owned by all of the Offeree Shareholders. The Offering Shareholder shall
promptly, in writing, inform each Offeree Shareholder that elects to purchase
all the Shares available to it (a "Fully-Exercising Shareholder") of any other
Offeree Shareholder's failure to do likewise. During the five-day period
commencing after such information is given, each Fully-Exercising Shareholder
may elect to purchase up to its share of any unsubscribed Shares, which shall be
equal to the number of such unsubscribed Shares multiplied by a fraction, the
numerator of which shall be the number of Shares (on an as-converted basis) then
owned by such Fully-Exercising Shareholder and the denominator of which shall be
the total number of Shares (on an as-converted basis) then owned by all of the
Fully-Exercising Shareholders. The Offering Shareholder shall repeat the process
set forth in the immediately preceding two sentences until there remains either
(i) no unsubscribed Shares, or (ii) no Fully-Exercising Shareholder electing
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to purchase its proportionate share of the unsubscribed Shares during such
five-day period.
(d) If all Shares that the Offeree Shareholders are entitled to
purchase pursuant to this Section 3.2 are not elected to be purchased as
provided in Section 3.2(c), the Offering Shareholder may, subject to the Co-Sale
Rights (as defined below) provided in Section 3.3, during the 90-day period
following the expiration of the last offering period provided in Section 3.2(c),
sell the remaining unsubscribed portion of such Shares to the Proposed
Transferee(s) at a price not less than, and upon terms and conditions no more
favorable to the Proposed Transferee(s) than, those specified in the Offer
Notice. If the Offering Shareholder does not sell the Shares within such 90-day
period, the Right of First Refusal provided hereunder shall be deemed to be
revived and such Shares may not be offered unless first reoffered to the Offeree
Shareholders in accordance herewith.
(e) Valuation of Property.
(i) Should the purchase price offered by the Proposed Transferee(s) as
specified in the Offer Notice be payable in property other than cash or
cancellation of existing indebtedness, the Offeree Shareholders shall have
the right to pay the purchase price in cash, with such payment to be equal
in amount to the fair market value of such property.
(ii) If the Offering Shareholder and the Offeree Shareholders cannot
agree on the fair market value of such property within 10 days after the
receipt of the Offer Notice by the Offeree Shareholders, the valuation
shall be made by an appraiser of internationally recognized standing
jointly selected by the Offering Shareholder and the majority in interest
of the Offeree Shareholders, if any, exercising their Right of First
Refusal (voting together on an as-converted basis) within 15 days after the
receipt of the Offer Notice by the Offeree Shareholders, or, if they cannot
agree on an appraiser within 15 days after the receipt of the Offer Notice
by the Offeree Shareholders, each shall select an appraiser of
internationally recognized standing and the two appraisers shall designate
an additional appraiser of internationally recognized standing, who shall
make the valuation within 30 days after the receipt of the Offer Notice by
the Offeree Shareholders, and whose appraisal shall be determinative of
such value.
(iii) The cost of such appraisal shall be borne 50% by the Offering
Shareholder and 50% by the Offeree Shareholders, with that portion of the
cost borne by the Offeree Shareholders to be borne pro rata by each, based
on the number of offered Shares (on an as-converted basis) such Offeree
Shareholder has elected to purchase pursuant to this Section 3.2.
(iv) If the value of the purchase price offered by the Proposed
Transferee(s) and specified in the Offer Notice is not determined within
the Exercise Period specified in Section 3.2(c) above, the Exercise Period
shall be extended to the 10th day following the date the appraisal is made
pursuant to this Section 3.2(e).
3.3 Co-Sale Rights.
(a) Brothers Capital hereby grants to each of the Investors, and each
of the
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Investors hereby grants to Brothers Capital, a right of co-sale (the "Co-Sale
Right") with respect to sales during the Restricted Period by such granting
Shareholder (a "Proposed Transferor") of Shares now owned or hereafter acquired
by it. During the Restricted Period, if any Proposed Transferor proposes to
Transfer any Shares now owned or hereafter acquired by it to any Proposed
Transferee in any transaction after complying with Section 3.2, to the extent
the Offeree Shareholders do not exercise their Rights of First Refusal as to all
of the Shares offered pursuant to Section 3.2, each Shareholder entitled to the
Co-Sale Right (a "Co-Seller") shall have the right to sell to the Proposed
Transferee, at the same price per Share and upon the same terms and conditions
as the Transfer by the Proposed Transferor, up to the number of whole Shares
that is equal to the number derived by multiplying (i) the aggregate number of
Shares (on an as-converted basis) to be acquired by the Proposed Transferee in
the Transfer by (ii) a fraction, the numerator of which is the aggregate number
of Shares (on an as-converted basis) held by such Co-Seller, and the denominator
of which is the aggregate number of Shares (on an as-converted basis) held by
the Proposed Transferor plus the aggregate number of Shares (on an as-converted
basis) held by all Co-Sellers. The Proposed Transferor shall notify all
Co-Sellers in writing of each such proposed Transfer promptly following the
expiration of the last offering period provided in Section 3.2(c). Such notice
(the "Transfer Notice") shall set forth: (w) the description and number of
Shares proposed to be transferred, (x) the name and address of each Proposed
Transferee, (y) the proposed amount of consideration and terms and conditions
offered by each Proposed Transferee, and (z) that the Proposed Transferee has
been informed of the Co-Sale Right provided for in this Section 3.3 and has
agreed to purchase the Shares in accordance with the terms hereof. Each
Shareholder of then currently convertible, exchangeable or exercisable rights to
acquire Shares shall be given an opportunity to exercise such rights prior to
the consummation of any proposed Transfer subject to the terms of this Section
3.3 and participate in such Transfer as a Shareholder.
(b) The Co-Sale Right may be exercised by a Co-Seller by delivery of a
written notice to the Proposed Transferor (the "Co-Sale Notice") within 15 days
following its receipt of the Transfer Notice (the "Co-Sale Period"). The Co-Sale
Notice shall state the number and description of Shares that such Co-Seller
proposes to include in such Transfer to the Proposed Transferee determined as
aforesaid. If the Proposed Transferee does not purchase Shares from such
Co-Seller at the same price and on the same terms and conditions as purchases
from the Proposed Transferor, then the Proposed Transferor shall not be
permitted to Transfer any Shares to the Proposed Transferee in the proposed
Transfer unless and until, simultaneously with such Transfer, the Proposed
Transferor shall purchase from such Co-Seller such Shares that such Co-Seller
would otherwise be entitled to sell to the Proposed Transferee pursuant to its
Co-Sale Rights for the same consideration and on the same terms and conditions
as the Transfer described in the Transfer Notice.
(c) At the expiration of the Co-Sale Period, the Proposed Transferor
shall have the right to transfer to the Proposed Transferee(s) the number of
Shares proposed to be transferred, less the number of Shares to be sold by the
Co-Seller(s) pursuant to the Co-sale Notice(s), on terms and conditions no more
favorable to the Proposed Transferor than those stated in the Transfer Notice
specified in Section 3.3(a). If such Transfer is not consummated within the
90-day period provided in Section 3.2(d), any Shares that continue to be held by
the Proposed Transferor after such period shall again be subject to the
provisions of this Section 3.3.
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(d) The share certificate or certificates and instruments of transfer
of each participating Co-Seller shall be transferred to the Proposed Transferee
in consummation of the sale of the Shares pursuant to the terms and conditions
specified in the Transfer Notice and the agreement for the Transfer of the
Shares, and the Proposed Transferee shall concurrently therewith remit to each
such Co-Seller that portion of the sale proceeds to which such Co-Seller is
entitled by reason of its participation in such sale. The Company shall be
obliged to register the transfer upon delivery by the Proposed Transferee of the
relevant share certificate or certificates and instruments of transfer.
(e) Costs. All costs and expenses incurred by any seller (including
the Proposed Transferor) in connection with a Transfer under this Section 3.3,
including, without limitation, all attorneys' fees, costs and disbursements and
any finders' fees or brokerage commissions, shall be borne by such seller.
3.4 Excluded Transactions.
Anything to the contrary herein notwithstanding, the provisions of
Sections 3.2 and 3.3 shall not apply to (i) Transfers pursuant to a Qualifying
IPO, (ii) Transfers by any Shareholder to any of its Permitted Transferees that
agrees in writing to be bound as a Shareholder by all of the provisions of this
Agreement in accordance with Section 9.5, provided, however, that if any
Permitted Transferee to whom any Shares have been transferred ceases to be a
Permitted Transferee of the transferring Shareholder, such Shares shall be
transferred back to the transferring Shareholder immediately prior to the time
such person ceases to be a Permitted Transferee of such transferring
Shareholder, or (iii) in the case of the Investors, Transfers pursuant to the
Investors' exercise of their Redemption Rights under Section 5.1.
3.5 Lock-up Agreements.
Each Shareholder (including the Investors) hereby agrees that it will
not, for a period of 180 days following the date of the closing of the Company's
Qualifying IPO, Transfer any Shares now owned or hereafter acquired by it to any
person.
Each of the Company and the Shareholders hereby agrees that it will
comply with a reasonable lock-up period as may be determined in good faith by
the lead underwriter(s) in the Qualifying IPO.
This Section 3.5 shall not apply to (x) any Transfer by a Shareholder
to a Permitted Transferee of such Shareholder or (y) the sale of any Shares by
the Company or a Shareholder to an underwriter pursuant to an underwriting
agreement in connection with the Company's Qualifying IPO. In addition, this
Section 3.5 shall not apply to Transfers by the Company (A) in connection with
registrations on Form F-4 or S-8 or any successor or similar forms thereto, (B)
in connection with registrations for the offer and sale to employees pursuant to
any employee stock plan or other employee benefit plan arrangement as
unanimously approved by the Board of Directors and (C) of securities to be
issued solely in an acquisition or business combination. Any discretionary
waiver or termination of the restrictions of any or all of such agreements by
the Company or the underwriters for the Qualifying IPO shall apply to all
11
Shareholders subject to such agreements pro rata based on the number of Shares
subject to such agreements.
4. PREEMPTIVE RIGHTS
The Company hereby grants to the Investors a preemptive right (the
"Preemptive Right") with respect to future sales by the Company of its Shares or
other voting securities during the Restricted Period. Each time during the
Restricted Period that the Company proposes to offer any Shares or other voting
securities, the Company shall first make an offering of such Shares or other
securities to the Investors in accordance with the following provisions:
4.1 Sale Notice.
The Company shall deliver to the Investors a notice stating its bona
fide intention to offer such Shares or other voting securities, the description
and number of such Shares or other voting securities to be offered, the full
description thereof and the price and terms and conditions upon which it
proposes to offer such Shares or other voting securities (the "Sale Notice").
4.2 Exercise of Preemptive Rights.
Within 15 calendar days after receipt of the Sale Notice, by written
notification to the Company, each Investor may elect to purchase, at the price
and on the terms and conditions specified in the Sale Notice, up to such
electing Investor's share of the Shares or other voting securities offered,
which shall be equal to such number of Shares or other voting securities
multiplied by a fraction, the numerator of which shall be the number of Ordinary
Shares (on an as-converted basis) then owned by such electing Investor and the
denominator of which shall be the total number of Ordinary Shares (on an
as-converted basis) then issued and outstanding.
4.3 Non-Exercise.
If an Investor does not elect to obtain all Shares or other voting
securities that such Investor is entitled to obtain pursuant to Section 4.2, the
Company may, during the 90-day period following the expiration of the period
provided in Section 4.2, offer the remaining unsubscribed portion of such Shares
or other voting securities to any person at a price not less than, and upon
terms and conditions no more favorable to the offeree than those specified in
the Sale Notice. If the Company does not enter into an agreement for the sale of
such Shares or other voting securities within such period, or if such sale is
not consummated within 90 days of the execution of such agreement, the
Preemptive Right provided hereunder shall be deemed to be revived and such
Shares or other voting securities shall not be offered unless first reoffered to
the Investors in accordance with this Article 4.
4.4 Excluded Transactions.
The Preemptive Right in this Article 4 shall not be applicable to the
issuance of (i) securities issued pursuant to a Qualifying IPO; (ii) options to
purchase Ordinary Shares (and any Ordinary Shares issued upon the exercise
thereof), share appreciation rights, dividend equivalent rights, restricted
shares, restricted share units, share payments and deferred shares to
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officers, directors and employees of the Company, pursuant to share incentive
plans designated and approved by the Board of Directors; (iii) Ordinary Shares
issued as a dividend or distributed with respect to, or upon conversion of, the
Series A Preferred Shares; (iv) Ordinary Shares issued in connection with any
merger or acquisition transaction approved by the Board of Directors; (v) future
issuances in connection with the establishment of a strategic business
relationship approved by the Board of Directors; (vi) Series A Preferred Shares
issued pursuant to the Share Purchase Agreement and (vii) securities issued
pursuant to Section 2.3(d)(ii) hereof.
4.5 Limitations.
The Preemptive Right in this Article 4 shall terminate at the earlier
of (i) the occurrence of a Qualifying IPO, or (ii) when the Investors cease to
own Shares representing, in the aggregate, at least 25% of the Shares purchased
by the Investors pursuant to the Share Purchase Agreement.
5. REDEMPTION RIGHTS
5.1 Investors' Redemption Rights.
(a) If for any reason the Company has not completed a Qualifying IPO
on or prior to December 31, 2008, the Investors, acting jointly, shall have the
right (the "Redemption Right") at any time to require the Company and,
thereafter (if the Company fails to redeem the Redemption Shares (as hereafter
defined) in accordance with Section 5.1(e)), Brothers Capital, severally but not
jointly, to redeem or purchase all Shares purchased by the Investors pursuant to
the Share Purchase Agreement and any Ordinary Shares issued upon conversion of
the Series A Preferred Shares (collectively, the "Redemption Shares") by
delivering a written notice to the Company and, thereafter (if the Company fails
to redeem the Redemption Shares in accordance with Section 5.1(e)), Brothers
Capital, specifying their intention to exercise the Redemption Right (the
"Redemption Notice").
(b) The Investors' right to exercise the Redemption Right with respect
to Section 5.1(a) shall terminate 90 days following December 31, 2008. The
Redemption Right is solely for the benefit of the Investors in respect of the
Shares purchased pursuant to the Share Purchase Agreement (and Ordinary Shares
issued upon conversion of the Series A Preferred Shares). Other than in the case
of a Transfer to an Affiliate pursuant to Section 3.1 and in accordance with
Section 9.5, if the Investors Transfer any such shares to a third party (it
being understood and agreed that any such transfer is subject to the provisions
of Article 3 hereof) the Redemption Right will irrevocably terminate with
respect to such shares.
(c) Withdrawal of a Redemption Notice. Within 10 days after the
delivery of a Redemption Notice, the Investors may, upon written notice to the
Company or Brothers Capital, as the case may be, who have been delivered the
Redemption Notice, withdraw and rescind the Redemption Notice, whereupon the
Redemption Right shall be deemed not to have been exercised and neither the
Investors nor the Company nor Brothers Capital, shall be obligated to satisfy
their respective obligations under this Section 5.1.
(d) Redemption Price. The aggregate purchase price for all Redemption
Shares (the "Redemption Price") shall be equal to (i) 100% of the Purchase Price
plus (ii) an
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amount equal to all accrued but unpaid dividends on all such Redemption
Shares, provided that the Redemption Price shall be ratably reduced to take
account of any previous Transfers by the Investors in accordance with Article 3
of this Agreement.
(e) Redemption Closing. The Company shall redeem and the Investors
shall sell all Redemption Shares within 60 days after the delivery of the
Redemption Notice at a place designated by the Investors (the "Redemption
Closing"). At the Redemption Closing, the Company shall cause the Company's
registered office to make the corresponding entries in its register of members
and the Investors shall deliver to the Company original certificate(s)
representing the Redemption Shares redeemed by the Company and the Company shall
deliver to an account designated by the Investors the Redemption Price in U.S.
dollars in immediately available funds. If the Company fails to redeem any or
all of the Redemption Shares in accordance with this Section 5.1(e), the
Investors may require Brothers Capital to purchase such Redemption Shares and
the provisions of this Section 5.1(e) shall apply, mutatis mutandis, to such
purchase.
(f) Waiver by Brothers Capital. BROTHERS CAPITAL IRREVOCABLY WAIVES
ANY AND ALL RIGHTS THAT IT HAS OR MAY HAVE, UNDER APPLICABLE LAW OR OTHERWISE,
TO REQUIRE THE COMPANY OR ANY OTHER SHAREHOLDER TO REDEEM OR PURCHASE ANY SHARES
HELD BY IT IN CONNECTION WITH ANY EXERCISE BY THE INVESTORS OF THE REDEMPTION
RIGHT.
6. AFFIRMATIVE COVENANTS OF THE COMPANY
6.1 Other Shareholders Agreements.
The Company will not enter into any agreement relating to the holding,
voting, disposition or redemption of any capital stock of the Company.
6.2 Business Practices.
Neither the Company or any of its Subsidiaries nor any director,
officer, agent, employee, or representative of the Company or any of its
Subsidiaries, shall offer, promise, authorize or make, directly or indirectly,
(i) any unlawful payments or (ii) payments or other inducements (whether lawful
or unlawful) to any Government Official, with the intent or purpose of (w)
influencing any act or decision of such Government Official in his official
capacity, (x) inducing such Government Official to do or omit to do any act in
violation of the lawful duty of such Government Official, (y) securing any
improper advantage, or (z) inducing such Government Official to use his
influence with any government or instrumentality thereof, political party or
international organization to affect or influence any act or decision of such
government or instrumentality, political party or international organization, in
each case of (w), (x), (y) and (z) above, in order to assist the Company or any
of its Subsidiaries in obtaining or retaining business for or with, or directing
business to, any person.
Notwithstanding anything else in this Section 6.5, any facilitating or
expediting payment made to a Government Official for the purpose of expediting
or securing the
14
performance of a routine governmental action by a Government Official shall not
constitute a breach of the covenant made in this Section 6.5.
6.3 Financial Information.
The Company shall deliver to the Investors:
(a) as soon as practicable, but in any event within 180 days after the
end of each fiscal year of the Company, consolidated income statement and
statement of cash flows of the Company and its Subsidiaries for such fiscal year
and consolidated balance sheet of the Company and its Subsidiaries and statement
of shareholders' equity of the Company as of the end of such year, such year-end
financial reports to be all prepared in English and in accordance with the
generally accepted accounting principles of the United States ("US GAAP"), and
audited and certified by one of Deloitte Touche Tohmatsu, Ernst & Young, KPMG or
PricewaterhouseCoopers (collectively, the "Big Four Accounting Firms");
(b) as soon as practicable, but in any event within 60 days after the
end of each quarter of each fiscal year of the Company, an unaudited
consolidated income statement and a statement of cash flows of the Company and
its Subsidiaries for such fiscal quarter and an unaudited consolidated balance
sheet of the Company and its Subsidiaries and an unaudited statement of
shareholders' equity of the Company as of the end of such fiscal quarter, all
prepared in English and in accordance with US GAAP; and
(c) as soon as practicable, but in any event at least 30 days prior to
the end of each fiscal year, a budget and business plan for the next fiscal year
for the Company and its Subsidiaries, prepared on a monthly basis, including
income statements for such months.
(d) the final 2006 Audited Financial Statements promptly when such
final 2006 Audited Financial Statements become available.
The Company's obligation to provide the financial information pursuant
to Section 6.3(a) shall commence with respect to the fiscal year, ending
immediately following the Closing. The Company's obligation to provide the
financial information pursuant to Section 6.3(b) shall commence with respect to
the quarter following the quarter during which the Closing occurred.
6.4 Access to Information.
The Company shall permit, and shall cause each of its Subsidiaries to
permit, each Investor, by itself or through its authorized agent, reasonable
access, to visit and inspect the properties of the Company and any Subsidiary,
to examine the books of account and records of the Company and any Subsidiary,
and to discuss the affairs, finances and accounts of the Company and any
Subsidiary with the directors, officers, management employees and accountants of
such entities, upon reasonable notice during normal business hours.
6.5 Tax.
(a) The Company shall comply and shall cause each of its Subsidiaries
to
15
comply with the reasonable written request of the Investors regarding the
record-keeping and reporting requirements any of the Investors inform the
Company are necessary to enable the respective Investor to comply with any
applicable United States federal income tax law. The Company shall also provide
each Investor with the information reasonably requested in writing by such
Investor to enable such party to comply with any applicable U.S. federal income
tax law.
(b) Upon the reasonable written request of the Investors, the Company
shall provide the Investors with access to such information of the Company as
may be required by the Investors to determine the Company's status as a
controlled foreign corporation (a "CFC") as defined in the Code, to determine
whether each Investor is required to report its pro rata portion of the
Company's "Subpart F income" (as defined in the Code) on its United States
federal income tax return, or to allow the Investors to otherwise comply with
applicable United States federal income tax laws. In the event that the Company
is determined by counsel or accountants for the Investors to be a CFC with
respect to the shares held by any Investor, for so long as the relevant Investor
(or direct or indirect equityholder of the Investor) is a "United States
shareholder" as defined in the Code, the Company agrees to use reasonable
efforts to avoid generating, for any taxable year in which the Company is a CFC,
"Subpart F income," as such term is defined in Section 952 of the Code.
(c) The Company shall use reasonable efforts to ensure that the
Company will not be or become a "passive foreign investment company" (as defined
in section 1297 of the Code) (a "PFIC") for the current and any future taxable
year. After the end of each taxable year, upon the reasonable written request of
the Investors, the Company shall provide the Investors with the information of
the Company as may be reasonably necessary to allow the Investors to determine
the Company's status as a PFIC. To the extent the Company is a PFIC for a
taxable year, the Company will comply with the reasonable written request of the
Investors to provide the Investors the information as may be reasonably
necessary to allow the Investors to make a qualified electing fund election
pursuant to Section 1295 of the Code, and to make annual filings on the United
States federal income tax returns of the relevant Investors with respect to that
election. If any information to be provided pursuant to this Section 6.5(c) is
not readily available to the Company, and the Company incurs additional expense
in providing it to the Investors, the Investors shall reimburse the Company for
such expense.
(d) Except to the extent that a majority in interest of the Investors
elects to allow the Company not to comply with this provision, the Company shall
not make an election to be treated as a partnership for United States federal
income tax purposes without consulting the Investors in good faith beforehand.
6.6 Stock Option Plans.
All shares or options to be issued under the Company's employee stock
option plans, including the 2007 Stock Option Plan, shall not be at a price
lower than the Per Share Purchase Price for the Series A Preferred Shares (as
adjusted for any combinations or splits or similar events). After the Company's
2007 Stock Option Plan is fully granted to the employees, any additional
issuance of options under the Company's stock option plans shall not exceed in
16
the aggregate 5% of the fully diluted capital immediately following the Closing,
subject to approval by the Board of Directors.
6.7 No Public Disclosure.
The Company shall not, nor shall the Company permit any of its
Subsidiaries to, disclose the Investors' names or identify either Investor as a
holder of the Company's equity securities in (i) business transactions with
third parties, (ii) any press release or other public announcement, or (iii) any
document or other materials filed with any governmental entity, without the
prior written consent of the Investors, unless such disclosure is in the
reasonable judgment of counsel to the Company required by applicable law or by
an order of a court of competent jurisdiction, in which case, prior to making
such disclosure, the Company and any applicable Subsidiary shall to the extent
reasonably practicable (i) give written notice to the Investors, which notice
shall describe in reasonable detail the proposed content of such disclosure, and
(ii) permit the Investors to review and comment upon the form and substance of
such disclosure.
6.8 Further Actions.
Each party hereto agrees to promptly and duly execute and deliver such
documents and to take such further action that may be required under applicable
law in order to perform its obligations pursuant to this Agreement.
6.9 Qualifying IPO.
The Company agrees to use its commercially reasonable efforts, and
each of the other Parties hereto agrees to use its commercially reasonable
efforts, to cause the Company to complete a Qualifying IPO prior to the end of
2008. If a Qualifying IPO is not completed by the end of 2008, the Investors
shall have the right to demand that the Company takes, and the Company agrees to
use its commercially reasonable efforts to take, all necessary actions to effect
a Qualifying IPO as soon thereafter as practicable.
6.10 Limitations.
The rights in Sections 6.3 (Financial Information), 6.4 (Access to
Information), and 6.6 (Stock Option Plans) shall terminate at the earlier of (i)
the occurrence of a Qualifying IPO, or (ii) when the Investors cease to own
Shares representing, in the aggregate, at least 25% of the Shares purchased by
the Investors pursuant to the Share Purchase Agreement.
6.11 Additional Covenants relating to Restructuring.
The Company shall, or shall cause each of its Subsidiaries to (as the
case may be), prior to the earlier of (i) a Qualifying IPO and (ii) December 31,
2007.
(i) enter into express assignment contracts with their respective
employees, consultants and independent contractors (to the extent any such
employee, consultant or independent contract or has been involved in the
development of any Self Developed IP or other Company Intellectual Property),
pursuant to which (a) such employees, consultants and
17
independent contractors shall assign to the Company or its Subsidiaries such
Company Intellectual Property as they developed or own, and (b) each of such
Company Intellectual Properties constitutes "work made for hire" with the
Company being the person for whom the work was prepared.
(ii) establish confidentiality and protection procedures and maintain all
Company Intellectual Property that is material to the Company's or any of its
Subsidiaries' business in confidence in accordance with such procedures.
(iii) make in full any and all social security (including basic pension,
basic medical insurance, unemployment insurance, work-related injury insurance
and maternity insurance) and housing fund contributions for their respective
employees, provided such employees are still employed by the Company or such
Subsidiary at the time such contributions are to be made.
(iv) pay in the full amount of the registered capital for Aero Biotech
Science & Technology Co., Ltd.
7. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS
7.1 Legend.
Each Shareholder agrees that substantially the following legends shall
be placed on the certificates representing any Shares held by such Shareholder
(other than Shares that have previously been sold pursuant to a registration
statement under the Act or pursuant to Rule 144 under the Act):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, SUCH REGISTRATION REQUIREMENTS.
IN ADDITION, THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE RESTRICTIONS CONTAINED IN A SHAREHOLDERS AGREEMENT DATED AS OF
JUNE 22, 2007, AS AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY AND MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE COMPANY
AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY."
7.2 Stop Transfer Instructions.
In order to ensure compliance with the restrictions referred to
herein, each Shareholder agrees that the Company may issue appropriate "stop
transfer" certificates or instructions.
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8. REPRESENTATIONS, WARRANTIES AND COVENANTS
8.1 Representations and Warranties of the Shareholders.
Each Shareholder hereby represents, as of the date hereof or, if
different, as of the date of such Shareholder's execution of a counterpart of
this Agreement, as follows:
(a) If such Shareholder is an entity, that it is duly incorporated or
formed and validly existing in its jurisdiction of incorporation or formation,
with full power, authority and right to enter into this Agreement and perform
its obligations hereunder;
(b) Such Shareholder has duly authorized, validly executed and
delivered this Agreement, and this Agreement is valid, binding and enforceable
against such Shareholder in accordance with its terms, subject to the
Enforceability Exceptions;
(c) The execution, delivery and performance of this Agreement will not
(i) violate, conflict with or result in a breach of or default under any
provisions of any Organizational Document of such Shareholder, (ii) violate,
conflict with, constitute, with or without the passage of time and giving of
notice, a default under or result in the breach, acceleration or termination of,
or otherwise give any other contracting party the right to terminate, accelerate
or cancel any of the terms, provisions, or conditions of, any contract,
agreement, arrangement, understanding, commitment, instrument, mortgage or
indenture to which such Shareholder is a party or by which it or its assets are
bound, or result in the creation of any lien, charge or other Encumbrance upon
any assets of such Shareholder or the suspension, revocation or forfeiture of
any material permit, license or authorization applicable to such Shareholder,
its business or operations or any of its assets or properties, or (iii)
constitute a violation of any provision of any Law applicable to such
Shareholder, except, in each scenario described in subclauses (ii) and (iii) of
this Section 8.1(c), such as would not have a material adverse effect on the
business, financial condition, operations, assets, properties or liabilities of
such Shareholder or that would not have a material adverse effect on the ability
of such Shareholder to consummate the transactions contemplated under the
Transaction Documents (as defined in Section 9.14 hereof) to which it is a
party;
(d) Except as set forth in Schedule 8.1(d) of the Disclosure
Schedules, no Governmental Authorization on the part of such Shareholder is or
will be required in connection with the execution, delivery and performance by
such Shareholder of the Transaction Documents to which it is a party in order to
consummate the transactions contemplated by such Transaction Documents; and
(e) The execution, delivery and performance by such Shareholder of the
Transaction Documents to which it is a party does not and will not require any
consent, approval, authorization or other action by or notification to any third
party.
8.2 Additional Representations, Warranties and Covenants of Brothers
Capital.
Brothers Capital hereby represents, as of the date hereof or, if
different, as of the date of its execution of a counterpart of this Agreement,
as follows:
19
(a) Except as disclosed in Schedule 8.2 to this Agreement, it is not a
party to, nor will it enter into, any agreement relating to the holding, voting,
disposition or redemption of any capital stock of the Company without the
Investors' prior written consent;
(b) It is not and, for as long as it owns any Shares and for a period
of 12 months thereafter, will not be, without the written consent of the
Investors, (i) engaged in or otherwise employed by, (ii) acting as consultant or
lender to, (iii) serving as a director, officer, employee, principal or agent
of, (iv) owning in excess of 10% of the equity interests of, (v) permitting its
name to be used in connection with the activities of, (vi) obtaining any benefit
or receiving any promise, agreement, arrangement or understanding to receive any
benefit from, any other business or organization in the PRC which competes or
intends to compete with the business of the Company or any of its Subsidiaries;
(c) Neither Brothers Capital nor any of its director, officer, agent,
employee or representative, has offered, promised, authorized or made, nor shall
any of such persons offer, promise, authorize or make, directly or indirectly,
(i) any unlawful payments or (ii) payments or other inducements (whether lawful
or unlawful) to any Government Official, with the intent or purpose of (w)
influencing any act or decision of such Government Official in his official
capacity, (x) inducing such Government Official to do or omit to do any act in
violation of the lawful duty of such Government Official, (y) securing any
improper advantage, or (z) inducing such Government Official to use his
influence with any government or instrumentality thereof, political party or
international organization to affect or influence any act or decision of such
government or instrumentality, political party or international organization, in
each case of (w), (x), (y) and (z) above, in order to assist the Company or any
of its Subsidiaries in obtaining or retaining business for or with, or directing
business to, any person; provided, however, that, any facilitating or expediting
payment made to a Government Official for the purpose of expediting or securing
the performance of a routine governmental action by a Government Official shall
not constitute a breach of this Section 8.2; and
(d) It is not a "United States Shareholder" of the Company or its
Subsidiaries as this term is defined in section 951 of the Code. To the extent
it becomes a "United States Shareholder" it will promptly notify the Company and
the Investors.
9. GENERAL
9.1 Amendments; Waivers.
This Agreement may be amended and the observance of any term may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only by agreement in writing of (i) Brothers Capital, (ii) the
Investors, and (iii) the Company. No waiver of any provision nor consent to any
exception to the terms of this Agreement shall be effective unless in writing
and signed by the Party to be bound and then only to the specific purpose,
extent and instance so provided. Any amendment or waiver effected in accordance
with this Section 9.1 shall be binding upon each of the Parties hereto and their
successors and permitted assigns. Without limiting the foregoing, any
Shareholder may by writing waive any right that it individually holds hereunder
without seeking the prior consent of any other Party hereto.
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9.2 Commercially Reasonable Efforts; Further Assurances.
Each Party hereto shall use its commercially reasonable efforts to
perform and fulfill all obligations on its part to be performed and fulfilled
under this Agreement to the end that the transactions contemplated by this
Agreement shall be effected substantially in accordance with its terms. Each
Party shall deliver such further documents and take such other actions as may be
necessary to perform its obligations hereunder, provided that this Section 9.2
shall not require any party to incur any material expense.
9.3 Governing Law.
This Agreement and, to the fullest extent permitted by applicable law,
all matters arising out of or relating to this Agreement, shall be governed by
and construed in accordance with the law of the State of New York, United States
of America.
9.4 Dispute Resolution.
(a) Any dispute, controversy or claim (each, a "Dispute") arising out
of or relating to this Agreement, or the interpretation, breach, termination or
validity hereof, shall be resolved at the first instance through consultation
between the parties to such Dispute. Such consultation shall begin immediately
after any Party has delivered written notice to any other Party to the Dispute
requesting such consultation.
(b) If the Dispute is not resolved within 60 days following the date
on which such notice is given, the Dispute shall be submitted to arbitration
upon the request of any Party to the Dispute with notice to each other Party to
the Dispute (the "Arbitration Notice").
(c) The arbitration shall be conducted in Hong Kong Special
Administrative Region ("Hong Kong") under the auspices of the Hong Kong
International Arbitration Centre (the "Centre"). There shall be three
arbitrators. The claimants in the Dispute shall collectively choose one
arbitrator, and the respondents shall collectively choose one arbitrator. The
Secretary General of the Centre shall select the third arbitrator, who shall be
qualified to practice law in the State of New York. If any of the members of the
arbitral tribunal have not been appointed within 30 days after the Arbitration
Notice is given, the relevant appointment shall be made by the Secretary General
of the Centre.
(d) The arbitration proceedings shall be conducted in English. The
arbitration tribunal shall apply the Arbitration Rules of the United Nations
Commission on International Trade Law, as in effect at the time of the
arbitration, which rules shall be deemed to have been incorporated by reference
into this Section 9.4. However, if such rules are in conflict with the
provisions of this Section 9.4, including the provisions concerning the
appointment of arbitrator, the provisions of this Section 9.4 shall prevail.
(e) Each Party to the arbitration shall cooperate with each other
Party to the arbitration in making full disclosure of and providing complete
access to all information and documents requested by such other party in
connection with such arbitration proceedings, subject only to any
confidentiality obligations binding on such Party.
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(f) The award of the arbitration tribunal shall be final and binding
upon the Parties, and the prevailing Party may apply to a court of competent
jurisdiction for enforcement of such award.
(g) Any Party to the Dispute shall be entitled to seek preliminary
injunctive relief, if possible, from any court of competent jurisdiction pending
the constitution of the arbitral tribunal.
(h) During the course of the arbitration tribunal's adjudication of
the dispute, this Agreement shall continue to be performed except with respect
to the part in dispute and under adjudication.
(i) The cost of arbitration (including legal, accounting and other
professional fees and expenses reasonably incurred by any prevailing party with
respect to the investigation, collection, prosecution and/or defense of any
claim in the Dispute) shall be borne by the losing Party or Parties unless
otherwise determined by the arbitration award.
9.5 Obligations of Transferees.
(a) No party to this Agreement may assign any of its rights and
obligations under this Agreement, without the prior written consent of the other
parties, except that an Investor may assign any or all of its rights and
obligations to an Affiliate of such Investor, which shall agree in writing to
become bound by the terms hereof, provided that such Affiliate shall
automatically be so bound by the terms hereof, whether or not such Affiliate
shall have so agreed in writing. Any such assignment shall not relieve such
Investor of its obligations hereunder. Any attempted assignment in contravention
hereof shall be null and void.
(b) Subject to Section 9.5(a), if a Shareholder transfers any Shares
to any person other than pursuant to a Qualifying IPO (but otherwise in
accordance with this Agreement), it shall be a condition to such transfer that
such transferee agrees in writing to be bound as a Shareholder by all of the
terms and provisions of this Agreement; provided that any such transferee shall
automatically be so bound by the terms hereof, whether or not such transferee
shall have so agreed in writing.
(c) Neither this Agreement nor any rights or obligations under this
Agreement are assignable except as set forth in this Section 9.5.
9.6 Termination.
Unless any provision of this Agreement specifies a different time of
termination, the provisions of this Agreement shall terminate (i) in their
entirety on the earlier to occur of (A) the completion of a Qualifying IPO and
(B) the sale of an aggregate of at least a majority of the then outstanding
Shares of the Company or a sale of all or substantially all the assets of the
Company and (ii) as to any Shareholder if such Shareholder shall have disposed
of all of its Shares in accordance with the terms of this Agreement.
22
9.7 Titles and Subtitles; References.
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement, nor as evidence of the intention of the Parties hereto. Except where
otherwise indicated, all references in this Agreement to Articles, Sections or
Exhibits refer to Articles or Sections of or Exhibits to this Agreement.
9.8 Counterparts.
This Agreement and any amendment hereto or any other agreement (or
document) delivered pursuant hereto may be executed in any number of
counterparts, each of which shall be an original but all of such counterparts
together shall constitute one and the same instrument and shall become effective
(unless otherwise provided therein) when all counterparts have been signed by
all relevant parties and delivered to the other parties. Any counterpart or
other signature delivered by a Party by facsimile shall be deemed for all
purposes as being a good and valid execution and delivery of this Agreement by
that Party.
9.9 Parties in Interest.
Except as otherwise provided in this Agreement, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and permitted assigns of the Parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the Parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. Nothing in this
Agreement is intended to relieve or discharge the obligation of any third person
to any Party to this Agreement.
9.10 Notices.
Any and all notices required or permitted to be given to a Party
pursuant to the provisions of this Agreement will be in writing and will be
effective and deemed to provide such Party sufficient notice under this
Agreement on the earliest of the following: (i) at the time of personal
delivery, if delivery is in person; (ii) at the time of transmission by
facsimile, addressed to such Party at the facsimile number indicated for such
Party on the signature page of this Agreement (or hereafter modified by
subsequent notice to the Parties hereto), with confirmation of receipt made by
both telephone and printed confirmation sheet verifying successful transmission
of the facsimile; (iii) two business days after deposit with an express
overnight courier for deliveries within a country, or three business days after
such deposit for international deliveries or (iv) three business days after
deposit in mail by certified mail (return receipt requested) or equivalent for
deliveries within a country. For the purposes of this Section, a delivery
between the Hong Kong and any other point in the PRC shall be considered an
international delivery.
All notices for international delivery will be sent by facsimile or by
express courier. All notices not delivered personally or by facsimile will be
sent with postage and/or other charges prepaid and properly addressed to the
Party to be notified at the address or facsimile number indicated for such Party
on the signature page of this Agreement or at such
23
other address or facsimile number as such Party may designate by giving ten days
advance written notice by one of the indicated means of notice provided in this
Agreement to the other Parties hereto. Notices by facsimile shall be machine
verified as received.
Any Party hereto (and such Party's permitted assigns) may by notice so
given change its address for future notices under this Agreement. Notice shall
conclusively be deemed to have been given in the manner set forth above.
9.11 Attorney's Fees.
In the event of any action for the breach of this Agreement or
misrepresentation by any Party, the prevailing Party shall be entitled to
reasonable attorney's fees, costs and expenses incurred in connection with such
action.
9.12 Specific Performance.
Each of the Parties acknowledge that, in view of the transactions
contemplated by this Agreement, each Party would not have an adequate remedy at
law for money damages in the event that this Agreement has not been performed in
accordance with its terms, and therefore agrees that the non-breaching Parties
shall be entitled to specific enforcement of the terms hereof and injunctive and
other equitable relief in addition to any other remedy to which such
non-breaching Parties may be entitled at law or in equity.
9.13 Severability.
If any provisions of this Agreement shall be held to be unenforceable
under applicable law, such provisions shall be excluded from this Agreement and
the remaining provisions of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
9.14 Entire Agreement.
This Agreement, the Exhibits and Schedules to this Agreement, the
Share Purchase Agreement and the Registration Rights Agreement (collectively,
the "Transaction Documents") and all other documents referred to in this
Agreement (except for the letter agreement dated as of the date hereof, among
the Company, Brothers Capital and the Investors) constitute the entire agreement
and understanding among the Parties with respect to the subject matter hereof
and supersede any and all prior negotiations, correspondence, agreements,
understandings, duties or obligations among the Parties with respect to the
subject matter hereof and no Party shall be liable or bound to any other Party
in any manner by any warranties, representations, or covenants except as
specifically set forth herein or therein.
9.15 No Presumption.
The Parties acknowledge that any applicable law that would require
interpretation of any claimed ambiguities in this Agreement against the Party
that drafted it has no application and is expressly waived. If any claim is made
by a Party relating to any conflict, omission or ambiguity in the provisions of
this Agreement, no presumption or burden of proof or persuasion
24
will be implied because this Agreement was prepared by or at the request of any
Party or its counsel.
9.16 Aggregation of Stock.
All Shares held or acquired by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.
9.17 Interpretation.
Unless a provision hereof expressly provides otherwise: (i) the term
"or" is not exclusive; (ii) words in the singular include the plural, and words
in the plural include the singular; (iii) the terms "herein," "hereof," and
other similar words refer to this Agreement as a whole and not to any particular
section, subsection, paragraph, clause, or other subdivision; (iv) the term
"including" will be deemed to be followed by ", but not limited to,"; (v) the
masculine, feminine, and neuter genders will each be deemed to include the
others; (vi) the terms "shall," "will," and "agrees" are mandatory, and the term
"may" is permissive; (vii) the term "day" means "calendar day," and (viii) all
references to "dollars" are to currency of the United States of America.
[The remainder of this page has been intentionally left blank.]
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
AGRIA CORPORATION
By /s/ Xxx Xxxxxxxx
-------------------------------------
Name:
Title:
BROTHERS CAPITAL LIMITED
By /s/ Xxx Xxxxxxxx
-------------------------------------
Name:
Title:
INVESTORS:
TPG GROWTH AC LTD.
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Title: Vice President and Secretary
TPG BIOTECH II, LTD.
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Title: Vice President and Secretary
SIGNATURE PAGE TO AGRIA CORPORATION SHAREHOLDERS AGREEMENT
EXHIBIT A
Investors
TPG Growth AC Ltd.
TPG Biotech II, Ltd.
A-1
SCHEDULE 8.2
List of Shareholder Agreements between Brothers Capital Limited
and third parties
prior to the date of this Agreement
1
