PUT AGREEMENT
Exhibit
10.3
This
Put
Agreement (the “Agreement”)
is
entered into as of March 22, 2006 by and among China-Biotics, Inc., a Delaware
corporation (“China-Biotics”),
Sinosmart Group Inc., a British Virgin Islands corporation (the “Company”),
and
the persons and entities listed on the signature pages hereto (the “Shareholders”).
RECITALS
A. Pursuant
to a Subscription Agreement dated as of the date hereof (the “Subscription
Agreement”)
among
the Company and the Shareholders, the Shareholders have agreed to purchase,
and
the Company has agreed to issue to each Shareholder, Ordinary Shares of the
Company, $1.00 par value (the “Ordinary
Shares”),
for
aggregate consideration (the “Consideration”)
of
$5,067,700
(the
“Private
Placement”).
B.
At
the
closing of the Private Placement, which is occurring on the same date as the
execution and delivery of this Agreement, the Company is directing that a
portion of the Consideration be deposited into an escrow account to be released
in accordance with the terms that certain Escrow Agreement dated as of the
date
hereof (the “Escrow
Agreement”)
among
the Company, Chinamerica Fund, L.P. and Gateway National Bank, N.A., as escrow
agent (the “Escrow
Agent”).
C. Immediately
after the consummation of the Private Placement, the Company and the
Shareholders are entering into, and consummating the transactions contemplated
by, a Securities Exchange Agreement dated as of the date hereof with
China-Biotics, Inc. (“China-Biotics”)
and
the other persons and entities listed on the signature pages thereto, whereby
all of the shareholders of the Company are exchanging all of the Ordinary Shares
for shares of common stock of China-Biotics (the “Exchange”).
In
the Exchange, the Shareholders are receiving an aggregate of 1,870,000 shares
of
common stock of China-Biotics (the “Exchange
Shares”).
D. China-Biotics
is entering into a Registration Rights Agreement on the date hereof with the
Shareholders and certain other parties whereby it will be obligated to file
a
registration statement (the “Registration
Statement”)
with
the U.S. Securities and Exchange Commission (the “SEC”)
with
respect to the resale of the Exchange Shares and certain other shares owned
by
the Shareholders and such other parties.
INTENDING
TO BE LEGALLY BOUND, and in consideration of the premises and the mutual
representations, warranties, covenants, and agreements contained herein, the
parties hereto hereby agree as follows:
1. Put
Right.
a. Exercise
of Put Right.
If
China-Biotics does not file the Registration Statement with the SEC on or before
April 14, 2006, the Company shall become obligated to purchase all of the
Exchange Shares upon delivery of a written notice (the “Purchase
Notice”)
from
Chinamerica Fund, L.P. to the Escrow Agent in the form of Exhibit C to the
Escrow Agreement, with a copy to China-Biotics. The purchase price (the
“Purchase
Price”)
for
the Exchange Shares purchased pursuant to this Section 1 shall be $5,059,842.
b. Payment
of Purchase Price.
Upon
the valid delivery of a Purchase Notice hereunder (i) all voting rights and
other rights with respect the Exchange Shares shall transfer to China-Biotics,
(ii) Xxxxxxx Xxxxx & Xxxxx LLP will automatically be irrevocably authorized
to deliver any certificates representing the Exchange Shares in its possession
to China-Biotics and (iii) China-Biotics shall deliver to the Company any other
certificates representing the Exchange Shares not in the possession of Xxxxxxx
Xxxxx & Xxxxx LLP. As set forth in the Escrow Agreement, upon delivery to
the Escrow Agent of the Purchase Notice signed by Chinamerica Fund, L.P., the
Escrow Agent shall disburse cash to the persons set forth in the Purchase Notice
in an aggregate amount equal to the Purchase Price (or such lesser amount as
remains in the escrow account established pursuant thereto).
2. Delivery
of Purchase Notice.
Each
Shareholder agrees that Chinamerica Fund, L.P. is hereby authorized to deliver
a
Purchase Notice on its behalf to the Escrow Agent and China-Biotics exercising
the put right evidenced herein with respect to all of the Exchange Shares it
owns if China-Biotics does not file the Registration Statement with the SEC
on
or before April 14, 2006, and that China-Biotics may rely on any Purchase Notice
delivered by Chinamerica Fund, L.P. as evidence of such Shareholder’s desire and
intent to exercise such put right with respect to such Exchange
Shares.
3. Amendment
and Modification.
Subject
to applicable law, this Agreement may be amended, supplemented or modified
only
in a writing duly executed by all of the parties hereto.
4. Waiver
of Compliance; Consents.
Any
failure of a party to comply with any obligation, covenant, agreement or
condition herein may be expressly waived in writing by the Company and
China-Biotics, on the one hand, and the Shareholders, on the other, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. No single or partial exercise
of a right or remedy shall preclude any other or further exercise thereof or
of
any other right or remedy hereunder. Whenever this Agreement requires or permits
the consent by or on behalf of a party, such consent shall be given in writing
in the same manner as for waivers of compliance.
5. No
Third Party Beneficiaries.
Nothing
in this Agreement shall entitle any person or entity (other than a party hereto
and his, her or its respective successors and assigns permitted hereby) to
any
claim, cause of action, remedy or right of any kind.
6. Notices.
All
notices, requests, demands and other communications required or permitted
hereunder shall be made in writing pursuant to the notice provisions set forth
in Section 17 of the Subscription Agreement.
7. Assignment.
This
Agreement and all of the provisions hereof shall be binding upon and inure
to
the benefit of the parties hereto and their respective successors and permitted
assigns, but neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned (whether voluntarily, involuntarily,
by
operation of law or otherwise) by any of the parties hereto without the prior
written consent of the other parties.
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8. Governing
Law.
This
Agreement and the legal relations among the parties hereto shall be governed
by
and construed in accordance with the internal substantive laws of Delaware
(without regard to the laws of conflict that might otherwise apply) as to all
matters, including matters of validity, construction, effect, performance and
remedies.
9. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
10 Headings.
The
table of contents and the headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not constitute a part
hereof.
11 Entire
Agreement.
This
Agreement, the Escrow Agreement and any other writings referred to in this
Agreement together they embody the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated by this Agreement.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to the transaction or transactions contemplated by this
Agreement.
12 Severability.
The
provisions of this Agreement will be deemed severable and the invalidity or
unenforceability of any provision will not affect the validity or enforceability
of the other provisions hereof; provided that if any provision of this
Agreement, as applied to any party hereto or to any circumstance, is adjudged
by
an governmental authority, arbitrator, or mediator not to be enforceable in
accordance with its terms, the parties hereto agree that the governmental
authority, arbitrator, or mediator making such determination will have the
power
to modify the provision in a manner consistent with its objectives such that
it
is enforceable, and/or to delete specific words or phrases, and in its reduced
form, such provision will then be enforceable and will be enforced.
(remainder
of page left intentionally blank)
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
| SINOSMART GROUP INC. | CHINA-BIOTICS, INC. | ||
| /s/ Song Jinan | /s/ Song Jinan | ||
|
SONG
JINAN
|
Song Jinan |
||
| Title: Director | Chief Executive Officer and President |
| Chinamerica Fund, L.P. | Chinamerica Sino-biotics Acquisition, LLC | ||
|
By:
Chinamerica Partners, LP
Its
General Partner
By:
Chinamerica Holdings, LLC
Its
General Partner
|
By:
Chinamerica Holdings, LLC
Its
Manager
|
||
| /s/ Xxxx Xxxxxxx | /s/ Xxxx Xxxxxxx | ||
|
Name:
Xxxx Xxxxxxx
Title:
Manager
|
Name:
Xxxx Xxxxxxx
Title:
Manager
|
| Xxxx Investments LLC | Halter/Xxxx USX China Fund | ||
| Xxxx Asset Managment | |||
| /s/ Xxxxxxx X. Xxxxx | /s/ Xxxxxxx Xxxx | ||
|
Name:
Xxxxxxx X. Xxxxx
Title:
Member
|
Name:
Xxxxxxx Xxxx
Title: President
|
| BFS US Special Opportunities Trust PLC | Renaissance US Growth Investment Trust PLC | ||
|
By:
XXXX Capital Group, Inc.
Its Investment Advisor |
By:
XXXX Capital Group, Inc.
Its Investment Advisor |
||
| /s/ Xxxxxxx Xxxxxxxxx | /s/ Xxxxxxx Xxxxxxxxx | ||
|
Name:
Xxxxxxx Xxxxxxxxx
Title: President
|
Name:
Xxxxxxx Xxxxxxxxx
Title: President
|
| Xxxx Xxxxxx | |||
| /s/ Xxxx Xxxxxx | |||
|
|
