SHARE SUBSCRIPTION AGREEMENT by and between AUSNUTRIA DAIRY INTERNATIONAL LTD. and AMERICAN DAIRY, INC. Dated: August 12, 2007
CONFIDENTIAL
by
and
between
AUSNUTRIA
DAIRY INTERNATIONAL LTD.
and
AMERICAN
DAIRY, INC.
Dated:
August 12, 2007
THIS
SHARE SUBSCRIPTION AGREEMENT, dated as of August __, 2007 (this “Agreement”),
is
entered into by and between:
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(1)
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Ausnutria
Dairy International Ltd., a company incorporated under the laws of
Cayman
Islands, as the issuer (the “Company”),
and
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(2)
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American
Dairy, Inc.; a company incorporated under the laws of the State of
Utah,
of the United States of America, as the subscriber (the “Subscriber”)
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Each
of
(1) and (2) shall be referred to as a “Party”,
and
collectively as the “Parties.”
RECITALS
WHEREAS,
the Company is a company incorporated under the laws of Cayman Islands, and
is
authorized to issue 5,000,000 shares of ordinary shares with par value of
US$0.01, out of which 50 shares have been issued to Xx. Xxxxxxx Xxxx and are
currently outstanding;
WHEREAS,
the Company has subscribed to 10,000 shares of Moveup Limited, a company
incorporated under the laws of Samoa (“Moveup”),
the
subscription price of which was paid by the Company’s assumption of Moveup’s
obligation to repay the Loan as defined below;
WHEREAS,
Moveup has entered into an Equity Purchase Agreement to purchase 100% of the
equity interest in Ausnutria Dairy (Hunan) Company Ltd. (the “Target
Company”),
currently an equity joint venture established under the laws of the People’s
Republic of China, from its current shareholders;
WHEREAS,
the Subscriber has made a loan (the “Loan”)
to
Moveup in the amount of $10 million under a Loan Agreement dated June 28, 2007
(the “Loan
Agreement”)
for
the purposes of making a deposit or advance payment by Moveup for the
acquisition of the Target Company (the “Acquisition”);
and
WHEREAS,
the Subscriber desires to invest in the Company, and the Company desires to
accept the investment and issue certain number of its ordinary shares of capital
to the Subscriber (the “New
Shares”)
pursuant to the terms and conditions set forth in this Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS
1.1 Definitions.
As
used
in this Agreement, and unless otherwise defined in this Agreement, the
capitalized terms have the following meanings:
“Business
Day”
means
any day other than a Saturday, Sunday or other day on which commercial banks
in
the Cayman Islands, New York and the PRC are authorized or required by law
or
executive order to close.
“Charter
Documents”
mean
the Memorandum and Articles of Association of the Company.
“Governmental
Authority”
means
the government of any nation, state, city, locality or other political
subdivision thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government (including
the government of the PRC and any other relevant jurisdiction).
“Person”
means
any individual, firm, corporation, partnership, trust, incorporated or
unincorporated association, joint venture, joint stock company, limited
liability company, Governmental Authority or other entity of any kind, and
shall
include any successor (by merger or otherwise) of such entity.
“PRC”
has
the
meaning set forth in the recitals of this Agreement, and for the purpose of
this
Agreement shall exclude Hong Kong, Taiwan and Macau.
“US$”
means
United States dollars.
2. Subscription
of new shares
2.1 Subscription
and Issuance of SharesSubscriber
hereby agrees to subscribe for, and the Company hereby agrees to issue to
Subscriber as of the date hereof, the total number of 49 New Shares with par
value of US$0.01 per share at the total purchase price of US$ 266.07 (the
“Subscription
Price”).
2.2 Payment The
Subscription Price shall be made by the Subscriber by forgiving a portion of
the
Loan in the amount of US$ 266.07.
2.3 Registration
of Member The
Company shall, as promptly as practicable, register the Subscriber as holder
of
49 ordinary shares in its Register of Members. If requested by Subscriber,
the
Company shall deliver to Subscriber a share certificate issued in the name
of
Subscriber evidencing the 49 New Shares issued to Subscriber.
3. REPRESENTATIONS
AND WARRANTIES OF COMPANY
The
Company represents and warrants to the Subscriber as of the date hereof
that:
3.1 The
Company is a corporation duly organized, validly existing and in good standing
under the laws of Cayman Islands and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted.
3.2 All
corporate action required to be taken by the Company and its officers and
directors necessary for the authorization, execution, delivery of this Agreement
and to issue the New Shares hereunder, has been taken or will be taken as
required under the Charter Documents or applicable law. This Agreement, when
executed and delivered by the Company, shall constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with its terms except to the extent the enforceability thereof may
be
limited by bankruptcy laws, insolvency laws, reorganization laws or other laws
affecting creditor’s rights generally or by general equitable principles.
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3.3 The
authorized capital of the Company consists of 5, 000, 000 shares, 50 shares
of
which have been issued and are outstanding prior to the execution of this
Agreement. All of the outstanding shares have been duly authorized and validly
issued and were issued in compliance with the Charter Documents.
3.4 The
New
Shares, when issued and subscribed in accordance with the terms and conditions
set forth in this Agreement, will be validly issued and free of restrictions
on
transfer other than those under the Charter Documents and applicable
laws.
3.5 The
execution, delivery and performance by the Company of this Agreement and the
consummation of the transaction contemplated hereby or compliance by the Company
with any of the provisions hereof will not result in, with or without the
passage of time and giving of notice, (i) a violation of any provision of any
laws applicable to the Company or to the transactions contemplated herein,
(ii)
a default under any such provision, instrument, judgment, order, writ, decree,
contract or agreement or (iii) an event which results in the creation of any
lien, charge or encumbrance upon any assets of the Company or the suspension,
revocation, forfeiture, or non-renewal of any material permit or license
applicable to the Company.
4. REPRESENTATIONS
AND WARRANTIES OF THE SUBSCRIBER
The
Subscriber represents and warrants to the Company as of the date hereof
that:
4.1 The
Subscriber is a company duly organized, validly existing and in good standing
under the laws of the State of Utah, and has all requisite corporate power
and
legal capacity and authority to enter into this Agreement, and that this
Agreement, when executed and delivered, will constitute its valid and legally
binding obligation, enforceable against the Subscriber in accordance with its
terms except to the extent the enforceability thereof may be limited by
bankruptcy laws, insolvency laws, reorganization laws or other laws affecting
creditor’s rights generally or by general equitable principles.
4.2 The
execution, delivery and performance by Subscriber of this Agreement, and the
consummation of the contemplated transaction hereunder, do not and will not
conflict with, contravene, result in violation or breach of or default (with
or
without the giving of notice or the lapse of time or both): (a) any law
applicable to the Subscriber or any of its properties or assets; (b) any
contract, agreement or other instrument to which the Subscriber is a party
or by
which its properties or assets may be bound, except for violations and defaults
that, individually and in the aggregate, would not materially impair the ability
of the Subscriber to perform its obligations hereunder.
4.3 The
Subscriber hereby confirms, that the New Shares to be acquired by the Subscriber
will be acquired for investment for the Subscriber’s own account, not as a
nominee or agent, and not with a view to the resale or distribution of any
part
thereof, and that the Subscriber has no present intention of selling, granting
any participation in, or otherwise distributing the same.
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4.4 The
Subscriber acknowledges that all share certificates evidencing the New Shares
subscribed hereunder shall bear (i) the following legend:
“These
securities have been acquired for investment and have not been registered under
the US Securities Act of 1933 or the securities laws of any state and may not
be
sold, offered for sale, pledged or hypothecated in the absence of an effective
registration statement as to the securities under said Act or an exemption
therefrom.” and
(ii)
any
legend required by any applicable securities law.
5.
CALL
OPTION OF SUBSCRIBER
5.1
Call Option.
In
the
event of a Trigger Event (as defined in Section 5.3 below), the Subscriber
shall
have the right (the “Call
Option”)
to
subscribe, and the Company shall be obligated to issue to the Subscriber
additional ordinary shares at the call price of US$ 5.43 per share, so that
the
total number of ordinary shares held by the Subscriber shall be not higher
than
49.22% of total number of ordinary shares outstanding.
5.2 Exercise
of Call Option.
The
exercise of the Call Option shall be effected by the Subscriber’s delivery to
the Company of a written notice (the “Call
Notice”)
identifying the applicable Trigger Event, the number of the shares the
Subscriber elects to prescribe pursuant to this Section 5 (the “Called
Shares”)
and
the total call price determined pursuant to Section 5.1 above (the “Call
Price”).
The
Subscriber and the Company hereby agree that any Call Price may be paid by
the
forgiveness of a portion of the Loan in the amount of such Call Price by the
Subscriber, at the election of the Subscriber, or by other means mutually agreed
by the Subscriber and the Company.
5.3 Trigger
Event.
For
purposes of this Agreement, a “Trigger
Event”
shall
mean the issuance by the Company of any new ordinary shares or any securities
convertible to ordinary shares to any Person after the date hereof.
5.4 Termination
of the Call Option.
The
Call
Option shall terminate and be of no further force and effect upon the earlier
of
(a) the expiration of the five (5) year period following the date hereof, or
(b)
the date on which the total number of ordinary shares of the Company held by
the
Subscriber through subscription from the Company (and not by way of purchase
from other members of the Company) is equal to or higher than
3,739.061.
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6. TERMINATION
OF AGREEMENT
This
Agreement may be terminated by mutual written consent of the Company and the
Subscriber.
7. MISCELLANEOUS
7.1 Notices.
All
notices and other communications under this Agreement shall be in writing and
shall be deemed given (i) when delivered personally by hand (with written
confirmation of receipt), (ii) when sent by facsimile (with confirmation of
transmission report) or (iii) one (1) Business Day following the day sent by
any
of the following reputable international courier: EMS, DHL or FEDEX or three
(3)
Business Days after such dispatch in the case of international deliveries,
in
each case at the following addresses and facsimile numbers:
(a) if
to the
Company:
AUSNUTRIA
DAIRY INTERNATIONAL LTD.
c/o
Corporate Filing Services Limited
0xx
Xxxxx, Xxxxxxx Xxxxxx, XX Xxx 000
Xxxxx
Xxxxxx XX0-0000, Cayman Islands
Fax:__________________
Attn:
President
with
a
copy to:
Weil,
Gotshal & Xxxxxx LLP
38/F
Tower 2 Plaza 66
1366
Xxx
Xxxx Road (W)
Shanghai
200040
The
People's Republic of China
Fax:
00-00-0000-0000
Attention:
Xxxxx Xxx
(b) If
to the
Subscriber
AMERICAN
DAIRY, INC.
0000
Xxxxxxxxxx Xxxxx, #000
Xxx
Xxxxxx, Xxxxxxxxxx 00000
Fax:
0-000
000
0000
Attn:
Xx.
Xxxx Youbin
with
a
copy to:
AMERICAN
DAIRY, INC.
Star
City
Int'l Bldg., No. 10 Jiuxianqiao Rd., C-16th
FL
Xxxxxxxx
Xxxxxxxx
Xxxxxxx,
Xxxxx 000000
Fax:
00
00
0000 0000
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7.2 Successors
and Assigns; Third Party Beneficiaries.
This
Agreement shall inure to the benefit of and be binding upon the successors
and
permitted assigns of the parties hereto.
7.3 Counterparts.
This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and
the
same agreement. Delivery of an executed counterpart of a signature page of
this
Agreement by a facsimile shall be as effective as delivery of a manually
executed counterpart of a signature page of this Agreement.
7.4 Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or otherwise affect the meaning hereof.
7.5 Governing
Law.
THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
CAYMAN ISLANDS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW
THEREOF.
7.6 Arbitration.
(a) Except
as
otherwise provided in this agreement, any dispute or claim arising out of or
in
connection with or relating to this agreement, or the breach, termination or
invalidity hereof, shall be finally settled by arbitration at the Hong Kong
International Arbitration Centre (the “HKIAC”)
under
the rules of the HKIAC (the “Rules”)
as are
in force at the date of the notice of arbitration commencing any such
arbitration. The Company and the Subscriber shall each select one arbitrator,
and the third arbitrator shall be selected by the chairman of HKIAC. The place
of arbitration shall be in Hong Kong. All arbitration proceedings shall be
conducted in the English language. The arbitrators shall decide any such dispute
or claim strictly in accordance with the governing law specified in Section
7.5
. Judgment upon any arbitral award rendered hereunder may be entered in any
court, and/or application may be made to any such court for a judicial
acceptance of the award and/or an order of enforcement, as the case may
be.
(b) Unless
the arbitration tribunal shall determine or rule otherwise, the costs and
expenses of the arbitration, including the fees of the attorneys shall be borne
by the losing side.
(c) Any
award
made by the arbitration tribunal shall be final and binding on each side to
the
dispute. The Parties expressly agree to waive the applicability of any laws
and
regulations that would otherwise give the right to appeal the decisions of
the
arbitration tribunal so that there shall be no appeal to any court of law from
the award of the arbitration tribunal.
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(d) This
Agreement and the rights and obligations of the parties shall remain in full
force and effect pending the award in any arbitration proceeding
hereunder.
7.7 Severability.
If
any
one or more of the provisions contained herein, or the application thereof
in
any circumstance, is held invalid, illegal or unenforceable in any respect
for
any reason, the validity, legality and enforceability of any such provision
in
every other respect and of the remaining provisions hereof shall not be in
any
way impaired, unless the provisions held invalid, illegal or unenforceable
shall
substantially impair the benefits of the remaining provisions
hereof.
7.8 Entire
Agreement.
This
Agreement, together with the exhibits and schedules hereto, is intended by
the
Parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the Parties in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, representations, warranties or undertakings, other
than
those set forth or referred to herein or therein. This Agreement, together
with
the exhibits hereto, supersede all prior agreements and understandings between
the Parties with respect to such subject matter.
7.9 Acknowledgement
and Consent by Subscriber
Subscriber
hereby acknowledges that it has received request for consent from Moveup to
assign Moveup’s obligations under the Loan Agreement to the Company, and hereby
consents to such assignment.
7
IN
WITNESS WHEREOF,
the
Parties have executed this Agreement on the date first above
written.
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AUNUTRIA
DAIRY INTERNATIONAL LTD.
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| By: | /s/ Xxxxxxx Xxxx | |
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Name:
Xxxxxxx Xxxx
Title:
Director
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SUBSCRIBER:
AMERICAN
DAIRY, INC.
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| By: | /s/ Leng You Bin | |
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Name:
Leng You Bin
Title:
Chief Executive Officer
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