AGFEED INDUSTRIES, INC. SUBSCRIPTION AGREEMENT
This
Subscription Agreement pertains to the offering by AgFeed Industries, Inc.
(the
"Company")
of
Seven Hundred Fifty Thousand (750,000) units (the "Units"),
with
each Unit consisting of one (1) share of the Company’s common stock (the
"Shares")
and
warrants to purchase twenty-five percent (25%) of one (1) share of the Company’s
common stock at an exercise price of Five Dollars and Sixty Cents ($5.60) per
share (the "Warrants"),
at a
purchase price of Four Dollars ($4.00) per Unit (the "Offering").
The
undersigned, intending to be legally bound, hereby offers to pur-chase from
the
Company and the Company hereby agrees to sell to the undersigned 750,000 Units
for an aggregate purchase price of $3,000,000 (the “Purchase
Price”).
The
Company shall execute the Receipt and Acceptance attached to this Subscription
Agreement concurrently with the undersigned’s execution of this Subscription
Agreement and will thereby be deemed to have accepted this offer and be bound
by
all representations, warranties, covenants and other terms and conditions
contained herein.
1. Definitions.
In
addition to the terms defined elsewhere in this Subscription Agreement, for
all
purposes of this Subscription Agreement, the following terms shall have the
meanings indicated in this Section 1:
"Affiliate"
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144.
"Commission"
means
the Securities and Exchange Commission.
"Exchange
Act"
means
the Securities Exchange Act of 1934, as amended.
“GAAP”
means
U.S. generally accepted accounting principles.
“New
York Courts”
means
the state and federal courts sitting in the City of New York, Borough of
Manhattan.
"Person"
means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
"Securities
Act"
means
the Securities Act of 1933, as amended.
"Transaction
Documents"
means
this Subscription Agreement, the Warrants, the Registration Rights Agreement
and
any other documents or agreements executed in connection with the transactions
contemplated hereunder.
"Warrant
Shares" means
the
shares of Common Stock issuable upon exercise of the Warrants.
2. Verification
of Investor Suitability under Regulation D. The
undersigned understands that in order to subscribe for the Units in this
Offering, the undersigned must be an "accredited investor" as defined in Section
501 of Regulation D under the Securities Act and the undersigned hereby
represents and warrants that it is an “accredited investor” as such term is
defined in Rule 501(a) promulgated under the Securities Act.
3. Amount
and Method of Payment.
Concurrently with the execution of this Subscription Agreement, the Purchase
Price shall be paid by tender of a check made payable to AgFeed Industries,
Inc.
or wire transfer of immediately available funds to the account set forth on
the
last page hereof under the caption “Wire Transfer Instructions” in the amount of
Three Million Dollars ($3,000,000).
4. Registration
Rights.
Concurrently
with the execution of this Subscription Agreement, the Company and the
undersigned have entered into a Registration Rights Agreement regarding the
Shares, the Warrants and the Warrant Shares.
5. Restrictions
on Resale or Transfer.
(a) The
Units, Shares, Warrants and Warrant Shares have not been registered under the
Securities Act or any state securities laws, and may not be sold or transferred
unless (i) such sale or transfer is subsequently registered thereunder;
(ii) the undersigned shall have delivered to the Company an opinion of
counsel (the substance of which shall be reasonably acceptable to the Company)
to the effect that the securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; (iii) the
securities are sold pursuant to Rule 144 promulgated under the Securities
Act (or a successor rule); or (iv) such sale or transfer is to an Affiliate
of
the undersigned.
(b) The
certificate(s) representing the Shares and the Warrant Shares and the Warrants
shall each bear restrictive legends in substantially the following form (and
a
stop-transfer order may be placed against transfer of the certificates for
such
securities to the extent such transfer does not comply with the provisions
set
forth in Section 6(a) above):
"The
securities represented by this certificate have not been registered under the
Securities Act of 1933, as amended (the "Securities
Act"),
or
applicable state securities laws, and accordingly may not be offered for sale,
sold or otherwise transferred in the absence of an effective registration
statement for the securities under the Securities Act or in a transaction not
subject to the registration requirements of the Securities Act, in each case
in
accordance with applicable state securities laws and in the case of a
transaction exempt from registration, the Company has received an opinion of
counsel, in substance reasonably acceptable to the Company, that registration
is
not required under the Securities Act or unless sold pursuant to Rule 144 under
the Securities Act."
(c) The
restrictive legend set forth in Section 5(b) shall be removed upon (i) a sale
or
transfer pursuant to an effective registration statement, (ii) a sale or
transfer pursuant to an exemption from registration, (iii) a sale or transfer
pursuant to Rule 144, or (iv) once eligible for resale under Rule
144(k).
6. Delivery
of the Stock Certificate and Warrants.
The
Company will execute and deliver certificate(s) representing the Shares and
Warrants to the subscriber within five (5) business days after the date
hereof.
7. Representations
and Warranties of the Undersigned. The
undersigned hereby acknowledges, represents and warrants to, and agrees with,
the Company as follows:
(a) The
undersigned understands that the offering and sale of the Units by the Company
to the undersigned is intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Rule 506 of Regulation D promulgated thereunder and, in accordance
therewith and in furtherance thereof, the undersigned represents and warrants
to
and agrees with the Company as follows:
(i) The
undersigned is acquiring the Shares and the Warrants for the undersigned’s own
account as principal, for investment purposes only, and not with a view to,
or
for, resale or distribution of all or any part of the Shares, the Warrants,
or
the Warrant Shares and no other person has a direct or indirect beneficial
interest in such Warrants, Shares or Warrant Shares;
(ii) Neither
the undersigned nor the undersigned’s investment advisors, if any, have been
furnished any offering literature other than this Subscription Agreement and
the
exhibits attached hereto;
(iii) The
undersigned acknowledges that it has conducted its own independent evaluation
of
the Company and has analyzed the risks associated with an investment in the
Units and has based its decision to invest in the Units on the results of this
evaluation and analysis;
(iv) The
undersigned (A) has such knowledge of, and experience in, business and financial
matters so as to enable it to utilize the information made available to it
in
connection with the offering of the Units in order to evaluate the merits and
risks of an investment in the Units and to make an informed investment decision
with respect thereto, and (B) the undersigned has evaluated the risks of
investing;
(v) The
undersigned understands that the certificate(s) evidencing ownership of the
Shares and the Warrant Shares and the Warrants will each bear a restrictive
legend and have not been registered under the Securities Act or any state
securities laws, and may not be sold or transferred unless (i) such sale or
transfer is subsequently registered thereunder; (ii) the undersigned shall
have delivered to the Company an opinion of counsel (the substance of which
shall be reasonably acceptable to the Company) to the effect that the securities
to be sold or transferred may be sold or transferred pursuant to an exemption
from such registration; (iii) the securities are sold pursuant to
Rule 144 promulgated under the Securities Act (or a successor rule); or
(iv) such sale or transfer is to an Affiliate of the undersigned;
and
(vi) Any
information provided by the undersigned to the Company with respect to the
undersigned’s financial position and business experience is true and correct and
the undersigned understands that the Company is relying upon such information in
connection with the purchase of the Units by the undersigned.
(b) The
undersigned understands that no federal or state agency has passed upon the
Units or made any finding or determination as to the fairness of this investment
in the Units.
(c) The
undersigned acknowledges and agrees that the Company intends to pay commissions
to Four Tong Investments, Ltd. These commissions will consist of (i) cash equal
to eight percent (8%) of the gross proceeds received by the Company from such
sales, plus (ii) a warrant to purchase that number of shares of common stock
equal to eight percent (8%) of the aggregate Units sold in the Offering at
an
exercise price per share equal to$5.60. The warrant described in subsection
(ii)
shall be in the form attached as Exhibit "A" hereto.
8. Representations
and Warranties of the Company.
The
Company hereby acknowledges, represents and warrants to, and agrees with, the
undersigned as follows:
(a) Organization
and Qualification.
The
Company is duly incorporated or otherwise organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
The
Company is not in violation of any of the provisions of its certificate or
articles of incorporation, bylaws or other organizational or charter documents.
The Company is duly qualified to conduct its business and is in good standing
as
a foreign corporation or other entity in each jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary.
(b) Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company in connection therewith. Each Transaction
Document has been (or upon delivery will have been) duly executed by the Company
and, when delivered in accordance with the terms hereof, will constitute the
valid and binding obligation of the Company enforceable against the Company
in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application.
(c) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated thereby
do
not and will not (i) conflict with or violate any provision of the Company's
certificate or articles of incorporation, bylaws or other organizational or
charter documents, or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company debt or otherwise)
or
other understanding to which the Company is a party or by which any property
or
asset of the Company is bound or affected, or (iii) result in a violation of
any
law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which the Company is subject
(including federal and state securities laws and regulations), or by which
any
property or asset of the Company is bound or affected.
(d) Filings,
Consents and Approvals.
The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court
or
other federal, state, local, foreign or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company
of the Transaction Documents, other than (i) the filing with the Commission
of
one or more Registration Statements in accordance with the requirements of
the
Registration Rights Agreement, (ii) filings required by state securities laws,
(iii) the filing of a Notice of Sale of Securities on Form D with the Commission
under Regulation D of the Securities Act, (iv) the filings required in
accordance with Section 4.5 and (v) those that have been made or obtained prior
to the date of this Subscription Agreement.
(e) Issuance
of the Units.
The
Units have been duly authorized and, when issued and paid for in accordance
with
the Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all liens and encumbrances. The Company has
reserved from its duly authorized capital stock the shares of Common Stock
issuable pursuant to this Agreement and the Warrants in order to issue the
Shares and the Warrant Shares.
(f) SEC
Reports; Financial Statements.
The
Company has filed all reports required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
since November 1, 2006 (the foregoing materials being collectively referred
to
herein as the “SEC
Reports”)
on a
timely basis or has timely filed a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension.
As
of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have
been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material respects
the
financial position of the Company as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in
the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
(g) Capitalization.
The
number of shares and type of all authorized, issued and outstanding capital
stock of the Company, and all shares of Common Stock reserved for issuance
under
the Company’s various option and incentive plans, is specified in the SEC
Reports. Except as specified in the SEC Reports, no securities of the Company
are entitled to preemptive or similar rights, and no Person has any right of
first refusal, preemptive right, right of participation, or any similar right
to
participate in the transactions contemplated by the Transaction Documents.
Except as specified in the SEC Reports, there are no outstanding options,
warrants, scrip rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations convertible into
or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or exchangeable
into
shares of Common Stock. The issue and sale of the Securities will not,
immediately or with the passage of time, obligate the Company to issue shares
of
Common Stock or other securities to any Person (other than the undersigned)
and
will not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under such
securities.
(g) Material
Changes.
Since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in the SEC Reports, there has been
no
event, occurrence or development that has had or that could reasonably be
expected to result in a material adverse effect on the Company, (ii) the Company
has not incurred any liabilities (contingent or otherwise) other than (A) trade
payables, accrued expenses and other liabilities incurred in the ordinary course
of business consistent with past practice and (B) liabilities not required
to be
reflected in the Company's financial statements pursuant to GAAP or required
to
be disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting or the identity of its auditors, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements
to
purchase or redeem any shares of its capital stock, and (v) the Company has
not
issued any equity securities to any officer, director or affiliate, except
pursuant to existing Company stock option or restricted stock plans. The Company
does not have pending before the Commission any request for confidential
treatment of information.
8. Indemnification.
The
undersigned agrees to indemnify and hold harmless the Company and the officers
and directors thereof and each other person, if any, who controls the Company,
within the meaning of Section 15 of the Securities Act, against any and all
loss, liability, claim, damage and expense whatsoever (including, but not
limited to, any and all expenses reasonably incurred in investigating, preparing
or defending against any litigation commenced or threatened or any claim
whatsoever) arising out of or based upon any false representations or warranty
or breach or failure by the undersigned to comply with any covenant or agreement
made by the undersigned herein or in any other document furnished by the
undersigned to the Company in connection with this transaction.
9. Modification.
Neither
this Subscription Agreement nor any provisions hereof shall be waived, modified,
discharged or terminated except by an instrument in writing signed by the party
against whom any such waiver, modification, discharge or termination is
sought.
10. Notices.
Any
notice, demand or other communication that any party hereto may be required,
or
may elect, to give to any other party hereunder shall be sufficiently given
if
(a) deposited, postage prepaid, in a United States mail box, stamped, registered
or certified mail, return receipt requested, addressed to such address as may
be
listed on the books of the Company, or (b) delivered personally at such
address.
11. Counterparts.
This
Subscription Agreement may be executed through the use of separate signature
pages or in any number of counterparts, and each of such counterparts shall,
for
all purposes, constitute one agreement binding on all parties, notwithstanding
that all parties are not signatories to the same counterpart. This Subscription
Agreement may be executed and delivered via electronic facsimile transmission
with the same force and effect as if it were executed and delivered by the
parties simultaneously in the presence of one another.
12. Entire
Agreement.
This
Subscription Agreement, including the exhibits attached hereto, contains the
entire agreement of the parties with respect to the subject matter hereof and
there are no representations, covenants or other agreements except as stated
or
referred to herein.
13. Severability.
Each
provision of this Subscription Agreement is intended to be severable from every
other provision, and the invalidity or illegality of any provision shall not
affect the validity or legality of the remaining provisions.
14. Assignability.
This
Subscription Agreement is not transferable or assignable by the
undersigned.
15. Applicable
Law.
This
Subscription Agreement shall be governed by and construed in accordance with
the
laws of the State of New York as applied to residents of that jurisdiction
executing contracts wholly to be performed therein.
16. Choice
of Jurisdiction.
The
undersigned agrees that any action or proceeding directly or indirectly relating
to or arising out of this Subscription Agreement, any breach hereof, or any
transaction covered hereby shall be resolved, whether by arbitration or
otherwise, within the State of New York. Accordingly, the parties consent and
submit to the jurisdiction of the New York Courts. The parties further agree
that any such relief whatsoever in connection with this Subscription Agreement
shall be commenced by such party exclusively in the New York
Courts.
17. Reimbursement.
If any
action or other proceeding is brought for the enforcement of this Subscription
Agreement or because of an alleged dispute, breach, default or misrepresentation
in connection with any of the provisions of this Subscription Agreement, the
suc-cessful or prevailing party or parties shall be entitled to recover
reasonable attorney’s fees and other costs incurred in such action or proceeding
in addition to any other relief to which they may be entitled.
18. Further
Assurances.
Each of
the parties shall execute said documents and other instruments and take such
further actions as maybe reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
APOLLO
ASIA OPPORTUNITY MASTER FUND, L.P.
By:
Apollo Asia Management, L.P.
By:
Apollo Asia Management GP, LLC
By:__________________________________
Name:
Xxxxxx Xxxxxx
Title:
Vice President
THIS
PORTION NOT TO BE COMPLETED BY SUBSCRIBER
RECEIPT
AND ACCEPTANCE
CASH
OR
CHECK AND SUBSCRIPTION AGREEMENT RECEIVED ON____________,
2007.
By:____________________________
SUBSCRIPTION
ACCEPTED ON________,
2007.
By:_____________________________
| Name: | |
| Title : |
WIRE
TRANSFER INSTRUCTIONS
If
Subscriber wishes to wire transfer the purchase price of his Units, he or she
shall wire transfer immediately available funds in the amount of the Purchase
Price subscribed for hereunder, as follows:
| Bank Name: | XXXXXXX | |
| Bank ABA #: | XXXXXXX | |
| Beneficiary: | XXXXXXX | |
| Account No.: | XXXXXXX | |
| For Further Credit: | XXXXXXX | |
| Account Name: | XXXXXXX | |
EXHIBIT
A
FORM
OF STOCK PURCHASE WARRANT
