Cayman Islands | 0115 | Not Applicable | ||
(State or other jurisdiction of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
Z. Julie Gao, Esq.
Latham & Watkins LLP 41st Floor, One Exchange Square 8 Connaught Place, Central Hong Kong (852) 2522-7886 |
Jonathan Stone, Esq.
Skadden, Arps, Slate, Meagher & Flom 42nd Floor, Edinburgh Tower The Landmark 15 Queens Road Central Hong Kong (852) 3740-4700 |
Title of Each Class of
|
Proposed Maximum Aggregate
|
Amount of
|
||||
Securities to be Registered | Offering Price(1) | Registration Fee | ||||
Ordinary shares, par value $0.0000001 per share (2)(3)
|
$175,000,000 | $5,373 | ||||
(1) | Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(o) under the Securities Act of 1933. | |
(2) | Includes ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public, and also includes ordinary shares that may be purchased by the underwriters pursuant to an over-allotment option. These ordinary shares are not being registered for the purpose of sales outside the United States. | |
(3) | American depositary shares issuable upon deposit of the ordinary shares registered hereby will be registered under a separate registration statement on Form F-6 (Registration No. 333- ). Each American depositary share represents ordinary shares. |
The
information in this prospectus is not complete and may be
changed. Neither we nor the selling shareholders may sell these
securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and we are not
soliciting offers to buy these securities in any jurisdiction
where the offer or sale is not permitted.
|
Proceeds,
|
||||||||||||||||
Underwriting
|
Before
|
[Proceeds,
Before
|
||||||||||||||
Price to
|
Discounts and
|
Expenses,
|
Expenses, to
the
|
|||||||||||||
Public | Commissions | to Agria | Selling Shareholders] | |||||||||||||
Per ADS
|
$ | $ | $ | $ | ||||||||||||
Total
|
$ | $ | $ | $ |
HSBC | Piper Jaffray | CIBC World Markets |
i
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1
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rapid growth as a provider of upstream agricultural products in
China;
a diversified portfolio of commercially successful products;
operations in strategic locations where we have an extensive
local knowledge and experience;
strong marketing and customer support and extensive distribution
network;
effective operations management and quality control system;
2
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strong research and development capabilities; and
an experienced management team and skilled staff.
increase our product sales in existing and new geographic
markets;
increase the variety of our products within each of our business
segments;
expand our research and development capabilities; and
selectively pursue strategic acquisitions and alliances and
expand into new agricultural sectors.
natural or man-made disasters could damage our seed production,
which would cause us to suffer production losses and a material
reduction of our revenues;
outbreaks of disease in livestock
and/or
food
scares in China would materially and adversely affect our sheep
breeding business;
we primarily rely on arrangements with village collectives to
produce our corn seed products, and if we are unable to continue
these arrangements or enter into new arrangements with other
village collectives to increase our production, our total land
acreage devoted to corn seed production may decrease and our
growth may be inhibited;
our growth prospects may be materially and adversely affected if
we are unable to continue to develop or acquire products to meet
the demands of Chinese farmers or to produce our existing
products in sufficient quantities;
one or more of our distributors may engage in activities that
are harmful to our brand and to our business; and
our limited operating history makes it difficult to evaluate our
future prospects and results of operations.
3
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4
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exercise effective control over P3A;
receive substantially all of the earnings and other economic
benefits from P3A to the extent permissible under PRC law in
consideration for the services provided by Agria China; and
have an exclusive option to purchase all or part of the equity
interests in P3A in each case when and to the extent permitted
by PRC law.
5
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6
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no exercise by the underwriters of their option to purchase up
to additional ADSs
representing ordinary shares;
conversion of all outstanding preferred shares into ordinary
shares immediately prior to the closing of this
offering; and
all share and per share data have been adjusted to reflect a
10,000-for-1 share split of our ordinary shares and our
preferred shares that became effective on August 15, 2007.
we, us, our company,
our and Agria refer to Agria
Corporation, a Cayman Islands company, and its predecessor
entities, subsidiaries and consolidated affiliated entity;
P3A refers to our consolidated affiliated entity,
Primalights III Agriculture Development Co., Ltd., which is
a limited liability company established in China;
China or PRC refers to the Peoples
Republic of China, excluding, for purposes of this prospectus,
Taiwan, Hong Kong and Macau;
shares or ordinary shares refers to our
ordinary shares, and preferred shares refers to our
series A redeemable convertible preferred shares;
ADSs refers to our American depositary shares, each
of which represents ordinary
shares, and ADRs refers to the American depositary
receipts that evidence our ADSs;
all references to RMB or Renminbi are to
the legal currency of China; all references to $,
dollars and U.S. dollars are to the
legal currency of the United States;
breeder sheep refers to pure breed sheep that are
used primarily in rapid reproduction or artificial reproduction
methods to spread desired genes widely in a flock and have
received official variety recognition in China or another
country; and
upstream refers to the production and sale of
agricultural products (e.g., seeds, sheep semen and sheep
embryos) to be used by other participants in the agricultural
industry to produce other agricultural products, such as corn
and sheep, which in turn are used to manufacture products, such
as animal feed, mutton and wool.
7
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We currently estimate that the initial public offering price
will be between $ and
$ per ADS.
ADSs
ADSs
ADSs
shares
Each ADS
represents ordinary
shares, par value $0.0000001 per share.
To better understand the terms of the ADSs, you should carefully
read the Description of American Depositary Shares
section of this prospectus. You should also read the deposit
agreement, which is filed as an exhibit to the registration
statement that includes this prospectus.
We and the selling shareholders have granted to the underwriters
options, which are exercisable within 30 days from the date
of this prospectus, to purchase up to an
additional ADSs.
Our net proceeds from this offering are expected to be
approximately
$ million, assuming an
initial public offering price per ADS of
$ , which is the midpoint of
the estimated public offering price range. We plan to use the
net proceeds we receive from this offering to fund capital
expenditures and expansion of our business, expand our research
and development capability and for other general corporate
purposes, including funding potential strategic acquisitions.
See Use of Proceeds for additional information.
We will not receive any of the proceeds from the sale of ADSs by
the selling shareholders.
8
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We have agreed with the underwriters to a
lock-up
of
shares for a period of 180 days after the date of this
prospectus. In addition, our executive officers, directors and
existing shareholders have also agreed with the underwriters to
a
lock-up
of
shares for a period of 180 days after the date of this
prospectus. See Shares Eligible For Future Sale and
Underwriting.
We have applied to have the ADSs listed on the New York Stock
Exchange under the symbol GRO. Our ADSs and shares
will not be listed on any other exchange or traded on any other
automated quotation system.
At our request, the underwriters have reserved for sale, at the
initial public offering price, up to an aggregate
of ADSs to our
directors, officers, employees, business associates and related
persons through a directed share program.
See Risk Factors and other information included in
this prospectus for a discussion of risks you should carefully
consider before investing in our ADSs.
The Bank of New York
assumes the conversion of all outstanding preferred shares into
2,400,000 ordinary shares immediately prior to the completion of
this offering;
assumes the underwriters over-allotment option is not
exercised;
excludes 7,500,000 ordinary shares issuable upon exercise of
options outstanding as of the date of this prospectus, at a
weighted average exercise price of US$2.912 per
share; and
excludes ordinary shares reserved for future issuances under our
2007 share incentive plan.
9
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11
For the Year Ended December 31,
For the Six Months Ended June 30,
2004
2005
2006
2006
2007
RMB
RMB
RMB
$
RMB
RMB
$
(In thousands, except share, per share and per ADS
data)
48,560
245,601
245,634
32,269
142,126
133,853
17,584
92,904
119,468
193,054
25,362
97,518
110,599
14,530
10,820
19,020
51,015
6,702
29,594
34,955
4,592
152,284
384,089
489,703
64,333
269,238
279,407
36,706
(33,311
)
(147,723
)
(144,730
)
(19,013
)
(81,378
)
(80,395
)
(10,562
)
(31,196
)
(37,716
)
(52,287
)
(6,869
)
(26,629
)
(30,543
)
(4,012
)
(9,053
)
(5,932
)
(10,357
)
(1,361
)
(4,212
)
(10,679
)
(1,403
)
(73,560
)
(191,371
)
(207,374
)
(27,243
)
(112,219
)
(121,617
)
(15,977
)
78,724
192,718
282,329
37,090
157,019
157,790
20,729
(16,635
)
(18,372
)
(25,169
)
(3,306
)
(13,610
)
(12,524
)
(1,646
)
62,089
174,346
257,160
33,784
143,409
145,266
19,083
57,772
169,080
253,903
33,356
142,110
143,351
18,832
57,772
169,080
253,903
33,356
142,110
143,351
18,832
0.58
1.69
2.54
0.33
1.42
1.43
0.19
0.58
1.69
2.54
0.33
1.42
1.43
0.19
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,119,337
100,119,337
RMB2.48
US$0.33
RMB1.40
US$0.18
10
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For the Year Ended December 31,
For the Six Months Ended June 30,
2004
2005
2006
2006
2007
RMB
RMB
RMB
$
RMB
RMB
$
(In thousands, except share, per share and per ADS
data)
102,400,000
102,400,000
102,400,000
102,400,000
(1)
Each ADS represents ordinary
shares.
(2)
The pro forma earnings per share are calculated based on an
assumption that the conversion of 2,400,000 Series A
convertible redeemable preferred shares outstanding as of
June 30, 2007 into the same number of ordinary shares had
occurred on January 1, 2006 and 2007.
As of December 31,
As of June 30,
2006
2007
RMB
$
RMB
$
(In thousands)
42,782
5,620
325,562
42,770
156,440
20,552
166,954
21,933
490,476
64,434
871,500
114,490
127,344
16,729
344,636
45,275
65,111
8,555
155,928
20,484
354,136
46,523
296,829
38,994
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maintain our competitive position in China and compete in each
of our business segments with Chinese and international
companies, many of which have longer operating histories and
greater financial resources than us;
continue to offer commercially successful products to attract
and retain a larger base of direct customers and ultimate users;
retain access to the farmland we currently use for production of
our products and obtain access to additional farmland for
expansion;
continue our existing arrangements with village collectives that
grow our corn seed products and enter into new arrangements with
additional village collectives;
maintain effective control of our costs and expenses; and
retain our management and skilled technical staff and recruit
additional key employees.
12
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13
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14
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15
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16
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17
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18
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19
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20
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21
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revoking P3As business and operating licenses;
confiscating relevant income and imposing fines and other
penalties;
discontinuing or restricting P3As operations in China;
requiring us or P3A to restructure P3As ownership
structure or operations;
restricting or prohibiting our use of the proceeds of this
offering to finance our businesses and operations in
China; or
imposing conditions or requirements with which we or our
subsidiary or P3A may not be able to comply.
22
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23
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24
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25
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26
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27
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announcements of technological or competitive developments;
regulatory developments in our target markets affecting us, our
customers or our competitors;
actual or anticipated fluctuations in our quarterly operating
results;
changes in financial estimates by securities research analysts;
changes in the economic performance or market valuations of
other corn seed, sheep products or seedling companies;
additions or departures of our executive officers and key
personnel;
fluctuations in the exchange rates between the U.S. dollar
and RMB;
release or expiration of
lock-up
or
other transfer restrictions on our outstanding ADSs; and
sales or perceived sales of additional ADSs.
28
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29
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30
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Our board of directors has the authority to establish from time
to time one or more series of preferred shares without action by
our shareholders and to determine, with respect to any series of
preferred shares, the terms and rights of that series, including
the designation of the series; the number of shares of the
series; the dividend rights, dividend rates, conversion rights,
voting rights; and the rights and terms of redemption and
liquidation preferences.
Our board of directors may issue a series of preferred shares
without action by our shareholders to the extent of available
authorized but unissued preferred shares. Accordingly, the
issuance of preferred shares may adversely affect the rights of
the holders of the ordinary shares. Issuance of preference
shares may dilute the voting power of holders of ordinary shares.
Subject to applicable regulatory requirements, our board of
directors may issue additional ordinary shares or rights to
acquire ordinary shares without action by our shareholders to
the extent of available authorized but unissued shares.
31
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our anticipated growth strategies, including expanding sales
into new regions, increasing the farmland to which we have
access, and expanding our product offerings;
our strategy to expand our research and development capability;
the growth in demand in China for high-quality corn seeds, sheep
and seedlings;
our future business development, results of operations and
financial condition;
changes in our revenues, cost and expense items;
our ability to attract customers and end users and enhance our
brand recognition;
future changes in government regulations affecting our business,
including regulation of genetically modified corn; and
trends and competition in the corn seed, sheep breeding and
seedling industries.
32
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approximately $50 million to fund expansion of our
production capacity through leasing of additional land and
acquisitions of new facilities and equipment;
approximately $15 million to fund establishment of our
research and development center and expansion of our research
and development capability;
approximately $27 million to repay the shareholders
loan;
approximately $3.5 million to repay all of our bank
loans; and
the remainder for general corporate purposes, including funding
potential strategic acquisitions, although we have not entered
into any agreement with respect to any acquisition.
33
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34
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on an actual basis;
on a pro forma basis to reflect the automatic conversion of all
of our outstanding preferred shares into 2,400,000 ordinary
shares and the cessation of the redeemable ordinary shares
redemption rights immediately upon the closing of this offering;
and
on a pro forma as adjusted basis to reflect the automatic
conversion of all of our outstanding preferred shares into
2,400,000 ordinary shares and the cessation of the
redeemable ordinary shares redemption rights immediately upon
the closing of this offering, and the sale
of ordinary shares in the
form of ADSs by us in this offering at an assumed initial public
offering price of per share,
after deducting the underwriting discounts and commissions and
estimated offering expenses payable by us.
As of June 30, 2007
Pro Forma
Pro Forma
Actual
Actual
Pro Forma
Pro Forma
As Adjusted(1)
As Adjusted(1)
RMB
$
RMB
$
RMB
$
(In thousands, except share and per share data)
65,111
8,555
155,928
20,484
85,253
11,200
76,953
10,109
76,953
10,109
219,876
28,885
355,662
46,724
296,829
38,994
517,868
68,033
517,868
68,033
517,868
68,033
(1)
The pro forma as adjusted information discussed above is
illustrative only. Our additional paid-in capital, total
shareholders equity (deficit) and total capitalization
following the completion of this offering are subject to
adjustment based on the actual initial public offering price and
other terms of this offering determined at pricing.
(2)
Assuming the number of ADSs offered by us as set forth on the
cover page of this prospectus remains the same, and after
deduction of underwriting discounts and commissions and the
estimated offering expenses payable by us, a $1.00 increase
(decrease) in the assumed initial public offering price of
$ per ADS would increase
(decrease) each of additional paid-in capital, total
shareholders equity and total capitalization by
$ million.
35
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$
$
$
$
Ordinary Shares Purchased*
Total Consideration
Average Price per
Average Price per
Number
Percent
Amount
Percent
Ordinary Share
ADS
%
$
%
$
$
%
$
%
*
The number of ordinary shares
purchased by existing shareholders takes into account the
conversion of all of our preferred shares into 2,400,000
ordinary shares and the cessation of the redeemable ordinary
shares redemption rights immediately upon the closing of this
offering.
36
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Noon Buying Rate
Period End
Average(1)
Low
High
(RMB per $1.00)
8.2800
8.2772
8.2800
8.2700
8.2767
8.2771
8.2800
8.2765
8.2765
8.2768
8.2774
8.2764
8.0702
8.1826
8.2765
8.0702
7.8041
7.9579
8.0702
7.8041
7.6120
7.7014
7.8127
7.6120
7.7090
7.7247
7.7345
7.7090
7.6516
7.6773
7.7065
7.6463
7.6120
7.6333
7.6680
7.6120
7.5720
7.5757
7.6055
7.5580
7.5462
7.5734
7.6181
7.5420
7.4928
7.5196
7.5540
7.4928
7.5156
7.5099
7.5158
7.5000
(1)
Annual averages are calculated from month-end rates. Monthly
averages are calculated using the average of the daily rates
during the relevant period.
37
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political and economic stability;
an effective judicial system;
a favorable tax system;
the absence of exchange control or currency
restrictions; and
the availability of professional and support services.
the Cayman Islands has a less-developed body of securities laws
as compared to the United States and these securities laws
provide significantly less protection to investors; and
Cayman Islands companies may not have the standing to sue before
the federal courts of the United States.
recognize or enforce judgments of United States courts obtained
against us or our directors or officers predicated upon the
civil liability provisions of the securities laws of the United
States or any state in the United States; or
entertain original actions brought in each respective
jurisdiction against us or our directors or officers predicated
upon the securities laws of the United States or any state in
the United States.
38
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39
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exercise effective control over P3A;
receive substantially all of the earnings and other economic
benefits from P3A to the extent permissible under PRC law in
consideration for the services provided by Agria China; and
40
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have an exclusive option to purchase all or part of the equity
interests in P3A in each case when and to the extent permitted
by PRC law.
41
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our shareholding structures, both currently and immediately
after giving effect to this offering, are in compliance with
existing PRC laws and regulations;
the contractual arrangements among Agria China and P3A and its
shareholders governed by PRC law as described under
Corporate History and Structure in this prospectus
are valid, binding and enforceable, and will not result in any
violation of PRC laws or regulations currently in
effect; and
the business operations of Agria China and P3A, as described in
this prospectus, are in compliance with existing PRC laws and
regulations in all material respects.
42
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43
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45
For the Year Ended December 31,
For the Six Months Ended June 30,
2004
2005
2006
2006
2007
RMB
RMB
RMB
$
RMB
RMB
$
(In thousands, except share, per share and per ADS data)
48,560
245,601
245,634
32,269
142,126
133,853
17,584
92,904
119,468
193,054
25,362
97,518
110,599
14,530
10,820
19,020
51,015
6,702
29,594
34,955
4,592
152,284
384,089
489,703
64,333
269,238
279,407
36,706
(33,311
)
(147,723
)
(144,730
)
(19,013
)
(81,378
)
(80,395
)
(10,562
)
(31,196
)
(37,716
)
(52,287
)
(6,869
)
(26,629
)
(30,543
)
(4,012
)
(9,053
)
(5,932
)
(10,357
)
(1,361
)
(4,212
)
(10,679
)
(1,403
)
(73,560
)
(191,371
)
(207,374
)
(27,243
)
(112,219
)
(121,617
)
(15,977
)
78,724
192,718
282,329
37,090
157,019
157,790
20,729
(4,874
)
(11,349
)
(14,031
)
(1,843
)
(7,542
)
(7,937
)
(1,043
)
(6,015
)
(4,199
)
(7,472
)
(982
)
(3,445
)
(3,562
)
(468
)
(7,203
)
(2,974
)
(3,746
)
(492
)
(2,623
)
(1,025
)
(135
)
1,457
150
80
11
(16,635
)
(18,372
)
(25,169
)
(3,306
)
(13,610
)
(12,524
)
(1,646
)
62,089
174,346
257,160
33,784
143,409
145,266
19,083
115
218
280
37
150
150
20
(4,731
)
(5,537
)
(4,923
)
(647
)
(2,414
)
(2,239
)
(294
)
(37
)
(7
)
336
60
1,386
182
965
174
23
44
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For the Year Ended December 31,
For the Six Months Ended June 30,
2004
2005
2006
2006
2007
RMB
RMB
RMB
$
RMB
RMB
$
(In thousands, except share, per share and per ADS data)
57,772
169,080
253,903
33,356
142,110
143,351
18,832
57,772
169,080
253,903
33,356
142,110
143,351
18,832
RMB0.58
RMB1.69
RMB2.54
US$0.33
RMB1.42
RMB1.43
US$0.19
RMB0.58
RMB1.69
RMB2.54
US$0.33
RMB1.42
RMB1.43
US$0.19
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,000,000
100,119,337
100,119,337
RMB2.48
US$0.33
RMB1.40
US$0.18
102,400,000
102,400,000
102,400,000
102,400,000
(1)
Each ADS represents [] ordinary shares.
(2)
The pro forma earnings per share are calculated based on an
assumption that the conversion of 2,400,000 Series A
convertible redeemable preferred shares outstanding as of
June 30, 2007 into the same number of ordinary shares of
the Company had occurred on January 1, 2006 and 2007.
As of December 31,
As of June 30,
2005
2006
2007
RMB
RMB
$
RMB
$
(In thousands)
29,477
42,782
5,620
325,562
42,770
67,200
156,440
20,552
166,954
21,933
351,866
490,476
64,434
871,500
114,490
141,532
127,344
16,729
344,636
45,275
65,111
8,555
155,928
20,484
6,262
8,098
1,064
208,834
354,136
46,523
296,829
38,994
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46
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47
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48
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49
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For the Six Months Ended June 30,
2004
2005
2006
2006
2007
% of
% of
% of
% of
% of
Corn
% of
Corn
% of
Corn
% of
Corn
% of
Corn
% of
Seed
Total
Seed
Total
Seed
Total
Seed
Total
Seed
Total
RMB
Revenues
Revenues
RMB
Revenues
Revenues
RMB
$
Revenues
Revenues
RMB
Revenues
Revenues
RMB
$
Revenues
Revenues
(In thousands except percentages)
13,822
28.5
%
9.1
%
136,534
55.6
%
35.5
%
137,062
18,006
55.8
%
28.0
%
74,197
52.2
%
27.6
%
86,421
11,353
64.6
%
30.9
%
34,738
71.5
22.8
109,067
44.4
28.4
108,572
14,263
44.2
22.2
67,929
47.8
25.2
47,432
6,231
35.4
17.0
48,560
100.0
%
31.9
%
245,601
100.0
%
63.9
%
245,634
32,269
100.0
%
50.2
%
142,126
100.0
%
52.8
%
133,853
17,584
100.0
%
47.9
%
50
Table of Contents
For the Six Months Ended June 30,
2004
2005
2006
2006
2007
% of
% of
% of
% of
% of
Sheep
% of
Sheep
% of
Sheep
% of
Sheep
% of
Sheep
% of
Breeding
Total
Breeding
Total
Breeding
Total
Breeding
Total
Breeding
Total
RMB
Revenues
Revenues
RMB
Revenues
Revenues
RMB
$
Revenues
Revenues
RMB
Revenues
Revenues
RMB
$
Revenues
Revenues
(In thousands except percentages)
52,427
56.4
%
34.4
%
67,359
56.4
%
17.6
%
120,395
15,817
62.4
%
24.6
%
60,214
61.7
%
22.3
%
70,807
9,302
64.0
%
25.3
%
12,601
13.6
8.3
5,133
4.3
1.3
9,366
1,230
4.8
1.9
5,252
5.4
2.0
5,481
720
5.0
2.0
26,262
28.3
17.3
27,669
23.2
7.2
18,909
2,484
9.8
3.9
10,235
10.5
3.8
10,660
1,401
9.6
3.8
1,614
1.7
1.0
19,307
16.1
5.0
44,384
5,831
23.0
9.0
21,817
22.4
8.1
23,651
3,107
21.4
8.5
92,904
100.0
%
61.0
%
119,468
100.0
%
31.1
%
193,054
25,362
100.0
%
39.4
%
97,518
100.0
%
36.2
%
110,599
14,530
100.0
%
39.6
%
51
Table of Contents
52
Table of Contents
For the Years Ended December 31,
For the Six Months Ended June 30,
2004
2005
2006
2006
2007
RMB
%
RMB
%
RMB
$
%
RMB
%
RMB
$
%
(In thousands except percentages)
(4,874
)
(29.3
)%
(11,349
)
(61.8
)%
(14,031
)
(1,843
)
(55.7
)%
(7,542
)
(55.4
)%
(7,937
)
(1,043
)
(63.4
)%
(6,015
)
(36.2
)
(4,199
)
(22.8
)
(7,472
)
(982
)
(29.7
)
(3,445
)
(25.3
)
(3,562
)
(468
)
(28.4
)
(7,203
)
(43.3
)
(2,974
)
(16.2
)
(3,746
)
(492
)
(14.9
)
(2,623
)
(19.3
)
(1,025
)
(135
)
(8.2
)
1,457
8.8
150
0.8
80
11
0.3
(16,635
)
(100.0
)%
(18,372
)
(100.0
)%
(25,169
)
(3,306
)
(100.0
)%
(13,610
)
(100.0
)%
(12,524
)
(1,646
)
(100.0
)%
53
Table of Contents
the nature of our business and the contracts and agreements
relating to our business;
our financial conditions;
the economic outlook in general and the specific economic and
competitive elements affecting our business;
the growth of our operations; and
our financial and business risks.
Weighted average costs of capital, or WACC: WACC of 15.86% as at
July 4, 2007 was used. This was the combined result of the
changes in risk-free rate and industry average beta and our
company-specific risks.
Weighted average costs of capital, or WACC: WACC of 15.83% was
used as at July 19, 2007. This was the combined result of
the changes in risk-free rate and industry average beta and our
company-specific risks.
54
Table of Contents
55
Table of Contents
For the Three Months Ended
September 30,
December 31,
March 31,
June 30,
September 30,
December 31,
March 31,
June 30,
2005
2005
2006
2006
2006
2006
2007
2007
(in RMB thousands)
1,355
90,541
85,330
56,796
6,137
97,371
92,986
40,867
29,164
29,721
25,444
72,074
52,868
42,668
19,748
90,851
3,194
3,283
9,332
20,262
12,254
9,167
5,960
28,995
33,713
123,545
120,106
149,132
71,259
149,206
118,694
160,713
(1,560
)
(41,325
)
(45,806
)
(35,572
)
(5,489
)
(57,863
)
(53,257
)
(27,138
)
(9,727
)
(9,553
)
(8,311
)
(18,318
)
(13,054
)
(12,604
)
(6,336
)
(24,207
)
(811
)
(870
)
(328
)
(3,884
)
(2,995
)
(3,150
)
(1,153
)
(9,526
)
(12,098
)
(51,748
)
(54,445
)
(57,774
)
(21,538
)
(73,617
)
(60,746
)
(60,871
)
21,615
71,797
65,661
91,358
49,721
75,589
57,948
99,842
(1,699
)
(3,311
)
(3,510
)
(4,032
)
(2,402
)
(4,087
)
(3,560
)
(4,377
)
(453
)
(1,104
)
(1,356
)
(2,089
)
(1,243
)
(2,784
)
(1,645
)
(1,917
)
(368
)
(368
)
(1,310
)
(1,313
)
(562
)
(561
)
(513
)
(512
)
150
80
(2,520
)
(4,633
)
(6,176
)
(7,434
)
(4,127
)
(7,432
)
(5,718
)
(6,806
)
19,095
67,164
59,485
83,924
45,594
68,157
52,230
93,036
74
76
60
90
63
67
79
71
(1,443
)
(1,290
)
(1,059
)
(1,355
)
(1,345
)
(1,164
)
(1,400
)
(839
)
5
54
66
899
79
342
174
17,731
66,004
58,552
83,558
44,391
67,402
50,909
92,442
17,731
66,004
58,552
83,558
44,391
67,402
50,909
92,442
56
Table of Contents
For the Years Ended December 31,
For the Six Months Ended June 30,
2004
2005
2006
2006
2007
% of
% of
% of
% of
% of
RMB
Revenues
RMB
Revenues
RMB
$
Revenues
RMB
Revenues
RMB
$
Revenues
(In thousands except percentages)
48,560
31.9
%
245,601
63.9
%
245,634
32,269
50.2
%
142,126
52.8
%
133,853
17,584
47.9
%
92,904
61.0
119,468
31.1
193,054
25,362
39.4
97,518
36.2
110,599
14,530
39.6
10,820
7.1
19,020
5.0
51,015
6,702
10.4
29,594
11.0
34,955
4,592
12.5
152,284
100.0
%
384,089
100.0
%
489,703
64,333
100.0
%
269,238
100.0
%
279,407
36,706
100.0
%
(33,311
)
(21.9
)%
(147,723
)
(38.5
)%
(144,730
)
(19,013
)
(29.5
)%
(81,378
)
(30.2
)%
(80,395
)
(10,562
)
(28.8
)%
(31,196
)
(20.5
)
(37,716
)
(9.8
)
(52,287
)
(6,869
)
(10.7
)
(26,629
)
(9.9
)
(30,543
)
(4,012
)
(10.9
)
(9,053
)
(5.9
)
(5,932
)
(1.5
)
(10,357
)
(1,361
)
(2.1
)
(4,212
)
(1.6
)
(10,679
)
(1,403
)
(3.8
)
(73,560
)
(48.3
)%
(191,371
)
(49.8
)%
(207,374
)
(27,243
)
(42.3
)%
(112,219
)
(41.7
)%
(121,617
)
(15,977
)
(43.5
)%
78,724
51.7
%
192,718
50.2
%
282,329
37,090
57.7
%
157,019
58.3
%
157,790
20,729
56.5
%
(4,874
)
(3.2
)%
(11,349
)
(3.0
)%
(14,031
)
(1,843
)
(2.9
)%
(7,542
)
(2.8
)%
(7,937
)
(1,043
)
(2.8
)%
(6,015
)
(4.0
)
(4,199
)
(1.0
)
(7,472
)
(982
)
(1.5
)
(3,445
)
(1.3
)
(3,562
)
(468
)
(1.3
)
(7,203
)
(4.7
)
(2,974
)
(0.8
)
(3,746
)
(492
)
(0.8
)
(2,623
)
(1.0
)
(1,025
)
(135
)
(0.4
)
1,457
0.9
150
0.0
80
11
0.0
(16,635
)
(11.0
)%
(18,372
)
(4.8
)%
(25,169
)
(3,306
)
(5.2
)%
(13,610
)
(5.1
)%
(12,524
)
(1,646
)
(4.5
)%
62,089
40.7
%
174,346
45.4
%
257,160
33,784
52.5
%
143,409
53.2
%
145,266
19,083
52.0
%
115
0.1
218
0.1
280
37
0.1
150
0.1
150
20
0.0
(4,731
)
(3.1
)
(5,537
)
(1.5
)
(4,923
)
(647
)
(1.1
)
(2,414
)
(0.9
)
(2,239
)
(294
)
(0.8
)
299
0.2
53
0.0
1,386
182
0.3
965
0.4
174
23
0.1
57,772
37.9
%
169,080
44.0
%
253,903
33,356
51.8
%
142,110
52.8
%
143,351
18,832
51.3
%
57,772
37.9
%
169,080
44.0
%
253,903
33,356
51.8
%
142,110
52.8
%
143,351
18,832
51.3
%
57
Table of Contents
58
Table of Contents
59
Table of Contents
60
Table of Contents
61
Table of Contents
62
Table of Contents
For the Year Ended December 31,
For the Six Months Ended June 30,
2004
2005
2006
2006
2007
RMB
RMB
RMB
$
RMB
RMB
$
(In thousands)
58,062
140,447
162,051
21,289
73,316
94,234
12,380
(51,197
)
(99,130
)
(51,309
)
(6,741
)
(15,318
)
(27,134
)
(3,565
)
(1,160
)
(32,849
)
(97,437
)
(12,800
)
(39,095
)
215,680
28,335
5,705
8,468
13,305
1,748
18,903
282,780
37,150
15,304
21,009
29,477
3,872
29,477
42,782
5,620
21,009
29,477
42,782
5,620
48,380
325,562
42,770
add-back of non-cash expenses including depreciation of fixed
assets and other assets of RMB4.8 million
($0.6 million) and amortization of intangible assets of
RMB2.6 million ($0.3 million), respectively, and
(3) an add-back of imputed interest on ultimate controlling
shareholders loan of RMB1.0 million
($0.1 million). The foregoing effects were offset in part
by (1) an increase in prepayments and other current assets
of RMB54.1 million ($7.1 million) primarily due to the
increase in advances to village collectives; (2) an
increase in accounts receivable of RMB9.3 million
($1.2 million) due to an increase in our sales and the
longer credit terms provided to selected customers in order to
attract larger orders from them and (3) a
63
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64
Table of Contents
Payment Due by December 31,
Total
2007
2008
2009
2010
Thereafter
(in RMB thousands)
39,311
39,311
40,591
4,217
4,231
2,891
499
28,753
338,482
32,138
30,974
30,974
30,974
213,422
8,996
204
204
204
8,384
427,380
75,666
35,409
34,069
31,677
250,559
Payment Due
Six
months
ending
December 31,
Year ending December 31,
Total
2007
2008
2009
2010
Thereafter
(in RMB thousands)
8,881
8,881
157,698
35,057
46,435
45,095
1,366
29,745
446,738
20,854
41,708
41,708
41,708
300,760
8,996
204
204
204
8,384
622,313
64,792
88,347
87,007
43,278
338,889
(1)
Includes short term borrowings,
current portion of long-term debt and future interest
obligations.
(2)
Includes lease obligations for our
office premises and buildings under non-cancelable leases.
65
Table of Contents
(3)
Represents commitments for the
purchase of corn seeds, property, plant and equipment and
acquired intangible assets and payments for research and
development services. These commitments are not recorded on our
balance sheet as of December 31, 2006 or June 30,
2007, as we have not received related goods or services or taken
title to the properties.
66
Table of Contents
67
Table of Contents
68
Table of Contents
69
Table of Contents
Production Volume
Corn Consumption
Annual Production Volume
Annual Yield
CAGR (from 2000 to 2005)
per Capita (2005)
(Million tonnes)
(Kg/hectare)
(g/capita/day)
1
USA
280.2
9,316
2.0
%
158
2
China
131.1
5,001
4.3
%
29
3
Brazil
34.9
3,040
1.7
%
78
4
Mexico
20.5
2,563
1.8
%
326
5
Argentina
19.5
7,117
4.0
%
36
70
Table of Contents
2000
2001
2002
2003
2004
2005
60.4
63.5
67.9
71.3
75.5
78.8
47.7
49.8
52.9
55.2
58.1
60.3
2000
2001
2002
2003
2004
2005
2006
10.5
6.0
11.7
16.4
2.3
8.6
3.1
0.3
36.0
6.3
0.1
2.3
3.9
65.1
71
Table of Contents
CAGR
2000
2001
2002
2003
2004
2005
(2000-2005)
106.0
114.1
121.3
115.8
130.3
131.1
4.3
%
23.1
24.3
24.6
24.1
25.4
26.4
2.7
%
CBT Price
Source:
CBT - No. 2 Yellow Corn SPOT Price
72
Table of Contents
Goat Flock of Top 10 Countries (2005)
(goats in millions)
Source:
FAOSTAT
Total Mutton
Consumption
(000 tonnes)
5,074
696
545
525
384
355
306
293
249
238
Source:
FAOSTAT
Total Wool
Consumption
(000 tonnes)
425
260
85
18
14
447
1,249
Source:
International Wool Trade
Organization; Economist Intelligence Unit
*
Year ended June 30, 2006
73
Table of Contents
74
Table of Contents
75
Table of Contents
We produce four types of proprietary corn seed products with one
or more of the following special characteristics: high yield,
disease resistance; drought resistance; high starch content; and
stress tolerance. We are developing more varieties of corn seeds
with these characteristics, as well as seeds for corn with a
high oil content and pest resistance corn.
We produce sheep breeding products from various well-recognized
foreign pure breeds including Poll Dorset, Suffolk, Texel,
Merino and Dorper, as well as domestic pure breed sheep. Our
sheep breeding business consists primarily of the production and
sale of frozen semen, embryos, purebred breeder sheep and our
Primalights hybrid III sheep.
We produce a selected variety of seedlings including raspberry,
blackberry, date and white bark pine, using advanced techniques
such as tissue culture technologies for date, raspberry and
blackberry seedlings, nutritional technologies for pine, and
branch grafting for date seedlings.
76
Table of Contents
We have multiple growth areas within each of our three
agribusiness segments.
The diversity of our products may mitigate risks arising from
one particular segment of our agribusiness.
We share management, marketing and research and development
resources across our product lines, including working with
academic and research institutions that engage in research
across different agricultural product lines.
We have dedicated teams that provide marketing and customer
service at the pre-sales, sales and post-sales stages. We
organize site visits and field demonstrations to educate farmers
and distributors. Our customer service at the sales stage
includes assisting customers in selecting the products suitable
for their particular needs. When sales are carried out by
distributors, we work to ensure that the distributors have a
solid knowledge of our products, the needs of our end customers,
and how our products serve those needs. Our customer service at
the post-sales stage includes continued consultation and site
visits to both farmers and distributors.
We also have an extensive third-party distribution network for
our corn seeds, consisting of over 110 local and regional
distributors in 12 provinces. Similarly, we distribute our
sheep breeding products through an extensive network of breed
improvement and reproductive stations, plant cultivation
companies and government operated entities within Shanxi that
serve farmers directly. We sell our seedling products through
different distribution channels for each of our seedling
products. Our distribution network for our three business
segments covers 15 provinces throughout China.
77
Table of Contents
We currently offer corn seed products that are suited to four
corn growing regions in China, namely, the North, the Northwest,
the Southwest and the Yellow-Huai River Valley regions. We have
produced seed types with different traits, such as high-yield,
disease-resistant corn, drought-resistant corn and high-starch,
and severe stress-tolerant corn. We plan to develop corn seeds
that are suitable for the remaining two corn growing regions in
China, namely, the Southern Mountain and the Plateau of Qinghai
and Tibet regions, to cover all major corn plantation areas in
China. Within each of the regions, we plan to further enhance
the existing characteristics of our products by developing
additional attributes such as a high-yield of oil and
pest-resistance, as well as improving the existing traits we
have developed.
We plan to expand our breeding business to cultivate cashmere
breeder goats for semen and embryo production, as well as to
grow flocks of cashmere goats for the production of super-fine
cashmere.
We plan to grow herb seedlings for use in healthcare-related
products and to produce a new type of date tree that is expected
to have an extended lifespan.
78
Table of Contents
have access to more land resources in different climate zones to
broaden our geographic presence;
add additional or complementary product varieties;
add additional or complementary business lines;
add expanded distribution capabilities to enhance our sales or
increase our market penetration; and
have access to more advanced agricultural technologies.
79
Table of Contents
High starch, resistant to severe weather, geographically
adaptable corn
Anhui, Gansu, Guizhou, Hebei, Heilongjiang, Henan, Hubei, Hunan,
Inner Mongolia, Jiangxi, Jilin, Liaoning, Ningxia, Shaanxi,
Shandong, Shanxi, Sichuan, Yunnan
Drought-resistant corn
Hebei, Heilongjiang, Inner Mongolia, Jilin, Liaoning, Qinghai,
Shanxi, Tibet
High-yielding, disease-resistant corn
Anhui, Guizhou, Hebei, Heilongjiang, Henan, Hubei, Hunan, Inner
Mongolia, Jiangxi, Jilin, Liaoning, Shaanxi, Shandong, Shanxi,
Sichuan, Yunnan
High-yielding corn
Anhui, Guizhou, Hebei, Heilongjiang, Henan, Hubei, Hunan, Inner
Mongolia, Jiangxi, Jilin, Liaoning, Shaanxi, Shandong, Shanxi,
Sichuan, Yunnan
80
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81
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82
Table of Contents
Identification of appropriate parental
genes.
We identify the desired genetic
characteristics in existing corn varieties and use those seeds
as the parent or grandparent generation in developing crosses of
corn varieties. We currently have approximately 6,700 varieties
of potential parent or grandparent genes.
Development of inbreds from the parental
populations.
We often use second cycle inbreeding
and backcross inbreeding to establish the parent lines and
molecular marker techniques to select the lines with desired
attributes.
Evaluation of inbreds in experimental hybrid
combinations.
We cross the parental corn genes by
growing both varieties (a mother gene corn and a
father gene corn) together in one field. We repeat
this process many times in various combinations, examining which
crosses produce the most likely commercially viable corn seeds.
We have produced approximately 21,000 crosses.
Identification of superior hybrid
combinations.
We use molecular-marker-assisted
selection to identify a few combinations that we consider to be
superior hybrids and which have the likeliest commercial value.
We have identified approximately 290 combinations that we
believe may have commercial value.
Multi-location testing of the pre-commercial
hybrids.
We develop those varieties that we
believe are superior and test them in various locations and
conditions to study their traits and determine their commercial
viability, including for which regions and conditions they are
most suited.
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Cleaning and sterilization.
The extraction
process begins with our workers cleaning and disinfecting
themselves, the sheep and sterilizing the equipment used.
Semen extraction.
Semen is collected with a
collection receptacle and examined for contaminants. It is also
analyzed for sperm density and motility at the same laboratory.
If the sperm collected does not attain the required standard of
vivacity, it is immediately discarded.
Dilution.
Collected sperm which meets the
required standards is diluted or extended with a
specially-formulated solution in order to enhance the sperm
survival rate and extend the life of the sperm during the
cooling process. This process also helps to increase the volume
and efficiency of the extracted semen.
Tubing and storage.
After the dilution
process, the sheep semen is cooled, frozen and packed for
storage. Generally, the diluted sheep semen is stored in plastic
straws, each containing over 100 million sperm. These
plastic straws are then placed into a freezing machine that is
cooled by liquid nitrogen. The temperature is progressively
reduced to approximately negative 35°C to negative
40°C, for the purpose of deactivating sperm cells to
prevent damage by the second stage of the freezing process. The
temperature of the diluted sheep semen is then further reduced
to approximately negative 197°C, in preparation for
long-term storage.
Cleaning and sterilization.
Prior to each
collection, workers must disinfect themselves and put on special
garments. All surgical equipment are sterilized and the sheep
are sprayed with sanitizing fluid.
Superovulation.
We use hormone treatments to
stimulate the ovulation in ewes to increase the production of
eggs and to better manage the timing of estrus in the ewes. The
recognition of estrus by the operator during this period of
superovulation, which lasts for approximately seven days, is
critical because insemination must be carried out during this
period to achieve successful fertilization of the eggs at the
stage of ovulation.
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Artificial insemination.
Plastic straws
containing semen are fitted into an insemination gun which is
used to introduce semen beyond the cervix of the donor ewe.
Usually, the insemination of the superovulated ewe will be
carried out within 12 to 24 hours after the beginning of
estrus.
Surgery and flushing.
This is the most
important process for embryo collection. A two-way catheter is
inserted into the donor ewe, for flushing fluid to be introduced
into the uterine horn or fallopian tube to flush out the embryos
of the donor ewe. At this stage, special care is taken to ensure
that all flushing fluid is recovered and that the donor ewe is
subject to minimum stress and trauma. The fertilized embryos are
subsequently flushed out with this fluid.
Processing and evaluation.
After the flushing
fluid is collected, it is then taken to a laboratory for
inspection of the embryos under a microscope. The fertilized
embryos collected are evaluated for their quality and classified
by grades based on the potential likelihood of viability if
transplanted to a recipient ewe.
Freezing and storage.
Embryos can be
transferred immediately upon recovery and evaluation or cooled,
frozen and packed for storage by procedures similar to those
used for sheep semen. Generally, one embryo is contained in each
plastic straw. The frozen and dormant embryos kept in liquid
nitrogen can be stored without significant impairment for an
indefinite period and can be ready for use by thawing the
plastic straw in warm water for a few seconds.
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Local and regional distributors
Farmers
Breed Improvement and Reproductive Stations, or BIRS; Veterinary
stations; Breeding companies; Large sheep farms
Other breeding companies; Farmers; Sheep farms
Breeding companies; Large sheep farms
Other breeding companies; Sheep farms
Foreign pure-bred breeder sheep; Primalights III hybrid
sheep
Government poverty alleviation and good-breed promotion
projects; Husbandry Bureaus; Breeding companies; Large sheep
farms
Breeding companies; Sheep farms; Farmers
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Number of Full-time
Percentage of
Employees
Total Employees
109
32.7
%
113
34.0
46
13.8
65
19.5
333
100.0
%
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F-21
F-22
43
Chairman of the Board/Co-Chief Executive Officer
40
Director
45
Director/Chief Operating Officer
41
Director/Chief Financial Officer
48
Director
63
Independent Director Appointee
57
Independent Director Appointee
45
Independent Director Appointee
45
Co-Chief Executive Officer
31
Chief Technology Officer
44
Chief Strategy Officer
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selecting the independent auditors and pre-approving all
auditing and non-auditing services permitted to be performed by
the independent auditors;
reviewing with the independent auditors any audit problems or
difficulties and managements response;
reviewing and approving all proposed related party transactions,
as defined in Item 404 of
Regulation S-K
under the Securities Act;
discussing the annual audited financial statements with
management and the independent auditors;
reviewing major issues as to the adequacy of our internal
controls and any special audit steps adopted in light of
material control deficiencies;
annually reviewing and reassessing the adequacy of our audit
committee charter;
meeting separately and periodically with management and the
independent auditors; and
reporting regularly to the board of directors.
reviewing and recommending total compensation packages to the
board for our three most senior executives;
approving and overseeing the total compensation packages for our
other executives other than the three most senior executives;
reviewing and recommending director compensation to the
board; and
periodically reviewing and approving any long-term incentive
compensation or equity plans, programs or similar arrangements,
annual bonuses, employee pension and welfare benefit plans.
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selecting and recommending nominees for election or re-election
to the board or appointments to fill any vacancy;
annually reviewing with the board the current composition of the
board with regards to characteristics such as independence, age,
skills, experience and availability of service to us;
selecting and recommending to the names of directors the board
to serve as members of the audit committee, the compensation
committee, and the corporate governance and nominating committee;
periodically advising the board with regard to significant
developments in the law and practice of corporate governance as
well as our compliance with applicable laws and regulations, and
making recommendations to the board on all matters of corporate
governance and on any remedial action to be taken; and
monitoring compliance with our code of business conduct and
ethics, including reviewing the adequacy and effectiveness of
our procedures to ensure proper compliance.
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Ordinary Shares
Underlying
Exercise Price
Date of
Options Awarded
($/Share)
Date of Grant
Expiration
600,000
2.40
July 4, 2007
July 4, 2017
600,000
2.40
July 19, 2007
July 19, 2017
600,000
2.40
July 19, 2007
July 19, 2017
600,000
2.40
July 4, 2007
July 4, 2017
600,000
2.40
July 19, 2007
July 19, 2017
400,000
2.40
July 19, 2007
July 19, 2017
2,500,000
2.40
July 19, 2007
July 19, 2017
1,600,000
4.80
July 19, 2007
July 19, 2017
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each of our directors and executive officers;
each person known to us to own beneficially more than 5.0% of
our ordinary shares; and
each selling shareholder.
Ordinary Shares
Beneficially Owned
Prior to
Ordinary Shares Being
Shares Beneficially Owned
This Offering
Sold in This Offering
After This Offering(1)
Number(2)
%(3)
Number
%
Number
%
86,630,000
84.6
86,630,000
84.6
86,630,000
84.6
86,630,000
84.6
8,650,000
8.4
8,650,000
6,600,000
6.4
6,600,000
(1)
Assumes that the underwriters do not exercise the over-allotment
option and no other change to the number of ADSs offered by us
as set forth on the cover page of this prospectus.
(2)
Beneficial ownership is determined in accordance with
Rule 13d-3
of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, and includes voting or
investment power with respect to the securities.
(3)
For each person and group included in this table, percentage
ownership is calculated by dividing the number of shares
beneficially owned by such person or group by the sum of
102,400,000, being the number of ordinary shares outstanding as
of this prospectus, and the number of ordinary shares underlying
share options held by such person or group that are exercisable
within 60 days after the date of this prospectus, if any.
Percentage ownership after this offering is calculated by
dividing the number of shares beneficially owned by such person
or group by the sum
of ,
being the number of ordinary shares outstanding immediately
after the completion of this offering, and the number of
ordinary shares underlying share options held by such person or
group that are exercisable within 60 days after the date of
this prospectus, if any, assuming that underwriters will not
exercise their option to purchase additional ADSs in the
offering.
(4)
Includes 86,630,000 ordinary shares owned by Brothers Capital
Limited, a British Virgin Islands company of which Mr. Lai
is a director. The business address of Mr. Lai is
Room 706, 7/F, Huantai Building, No. 12A, South Street
Zhongguancw Haidian District, Beijing 100081, Peoples
Republic of China.
(5)
Includes 86,630,000 ordinary shares held by Brothers Capital
Limited of which Mr. Qian is a director and the president.
Mr. Qian disclaims beneficial ownership of these shares.
The business address of Mr. Qian is Room 706, 7/F,
Huantai Building, No. 12A, South Street Zhongguancw Haidian
District, Beijing 100081, Peoples Republic of China.
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(6)
Certain directors and executive officers have been granted
options pursuant to our 2007 Share Incentive Plan. No such
options are exercisable within 60 days after the date of
the prospectus. See Management Share
Incentives.
(7)
Brothers Capital Limited is a company incorporated in the
British Virgin Islands with two directors, Guanglin Lai and
Zhaohua Qian. The registered address of Brothers Capital Limited
is Palm Grove House, P.O. Box 438, Road Town, Tortola,
British Virgin Islands.
(8)
Includes 4,170,000 ordinary shares and 1,600,000 ordinary shares
convertible from series A preferred shares held by TPG
Growth AC Ltd. and 2,080,000 ordinary shares and 800,000
ordinary shares convertible from series A preferred shares
held by TPG Biotech II, Ltd. TPG Biotech II, Ltd. is a
company incorporated in the Cayman Islands, whose sole
shareholder is TPG Biotechnology Partners II, L.P., a
Delaware limited partnership, which is managed by its general
partner, TPG Biotechnology GenPar II, L.P., a Delaware
limited partnership, which is managed by its general partner,
TPG Biotech Advisors II, LLC, a Delaware limited liability
company, whose sole member is TPG Ventures Holdings, LLC, a
Delaware limited liability company, whose managing member is TPG
Ventures Partners, L.P., a Delaware limited partnership, which
is managed by its general partner, TPG Ventures Professionals,
L.P., a Delaware limited partnership, which is managed by its
general partner, Tarrant Advisors, Inc., a Texas company, whose
sole shareholder is Tarrant Capital Advisors, Inc., a Delaware
company, whose shareholders are David Bonderman and James
Coulter. TPG Growth AC Ltd. is a company incorporated in the
Cayman Islands, whose sole shareholder is TPG Star, L.P., a
Delaware limited partnership, which is managed by its general
partner, TPG Star GenPar, L.P., a Delaware limited partnership,
which is managed by its general partner, TPG Star Advisors, LLC,
a Delaware limited liability company, whose sole member is TPG
Ventures Holdings, LLC, whose managing member is TPG Ventures
Partners, L.P., which is managed by its general partner, TPG
Ventures Professionals, L.P., which is managed by its general
partner, Tarrant Advisors, Inc., whose sole shareholder is
Tarrant Capital Advisors, Inc., whose shareholders are David
Bonderman and James Coulter. The registered address for both of
these companies is c/o M&C Corporate Services Limited,
PO Box 309GT, Ugland House, South Church Street,
George Town, Grand Cayman, Cayman Islands.
(9)
Dubai Investment Group L.L.C. is a company incorporated in
United Arab Emirates and controlled by Saud Ahmad Abdulrahman
Baalawi. The address for Dubai Investment Group L.L.C. is
Level 38, Emirates Towers (Offices),
P.O. Box 73311 Sheikh Zayed Road, Dubai, United Arab
Emirates.
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the statutory provisions as to majority vote have been met;
the shareholders have been fairly represented at the meeting in
question;
the arrangement is such that a businessman would reasonably
approve; and
the arrangement is not one that would more properly be
sanctioned under some other provision of the Companies Law.
a company is acting or proposing to act illegally or ultra vires;
the act complained of, although not ultra vires, could be
effected duly if authorized by more than a special resolution
that vote which has not been obtained; and
those who control the company are perpetrating a fraud on
the minority.
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Cash.
The depositary will convert any cash
dividend or other cash distribution we pay on the shares into
U.S. dollars, if it can do so on a reasonable basis and can
transfer the U.S. dollars to the United States. If that is
not possible or if any government approval is needed and cannot
be obtained, the deposit agreement allows the depositary to
distribute the foreign currency only to those ADR holders to
whom it is possible to do so. It will hold the foreign currency
it cannot convert for the account of the ADS holders who have
not been paid. It will not invest the foreign currency and it
will not be liable for any interest.
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Shares.
The depositary may distribute
additional ADSs representing any shares we distribute as a
dividend or free distribution. The depositary will only
distribute whole ADSs. It will sell shares which would require
it to deliver a fractional ADS and distribute the net proceeds
in the same way as it does with cash. If the depositary does not
distribute additional ADSs, the outstanding ADSs will also
represent the new shares.
Rights to purchase additional shares.
If we
offer holders of our securities any rights to subscribe for
additional shares or any other rights, the depositary may make
these rights available to you. If the depositary decides it is
not lawful and feasible to make the rights available but that it
is practical to sell the rights, the depositary may sell the
rights and distribute the proceeds in the same way as it does
with cash. The depositary will allow rights that are not
distributed or sold to lapse.
In that case, you will receive
no value for them.
Other Distributions.
The depositary will send
to you anything else we distribute on deposited securities by
any means it thinks is equitable and practical. If it cannot
make the distribution in that way, the depositary has a choice.
It may decide to sell what we distributed and distribute the net
proceeds, in the same way as it does with cash. Or, it may
decide to hold what we distributed, in which case ADSs will also
represent the newly distributed property. However, the
depositary is not required to distribute any securities (other
than ADSs) to you unless it receives satisfactory evidence from
us that it is legal to make that distribution.
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Persons depositing or withdrawing shares must pay
:
For
:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
$0.02 (or less) per ADS
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A fee equivalent to the fee that would be payable if securities
distributed to you had been shares and the shares had been
deposited for issuance of ADSs
$0.02 (or less) per ADSs per calendar year
Registration or transfer fees
Expenses of the depositary
Taxes and other governmental charges the depositary or the
custodian have to pay on any ADS or share underlying an ADS, for
example, stock transfer taxes, stamp duty or withholding taxes
Any charges incurred by the depositary or its agents for
servicing the deposited securities
If we:
Then:
The cash, shares or other securities received by the depositary
will become deposited securities. Each
ADS will automatically represent its equal share of the new
deposited securities.
The depositary may, and will if we ask it to, distribute some or
all of the cash, shares or other securities it received. It may
also deliver new ADSs or ask you to surrender your outstanding
ADSs in
exchange for new ADSs identifying the new deposited securities.
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are only obligated to take the actions specifically set forth in
the deposit agreement without negligence or bad faith;
are not liable if either of us is prevented or delayed by law or
circumstances beyond our control from performing our obligations
under the deposit agreement;
are not liable if either of us exercises discretion permitted
under the deposit agreement;
have no obligation to become involved in a lawsuit or other
proceeding related to the ADSs or the deposit agreement on your
behalf or on behalf of any other party;
may rely upon any documents we believe in good faith to be
genuine and to have been signed or presented by the proper party.
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payment of stock transfer or other taxes or other governmental
charges and transfer or registration fees charged by third
parties for the transfer of any shares or other deposited
securities;
satisfactory proof of the identity and genuineness of any
signature or other information it deems necessary; and
compliance with regulations it may establish, from time to time,
consistent with the deposit agreement, including presentation of
transfer documents.
When temporary delays arise because: (i) the depositary has
closed its transfer books or we have closed our transfer books;
(ii) the transfer of shares is blocked to permit voting at
a shareholders meeting; or (iii) we are paying a
dividend on our shares.
When you or other ADS holders seeking to withdraw shares owe
money to pay fees, taxes and similar charges.
When it is necessary to prohibit withdrawals in order to comply
with any laws or governmental regulations that apply to ADSs or
to the withdrawal of shares or other deposited securities.
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1% of the then outstanding ordinary shares, in the form of ADSs
or otherwise, which will equal
approximately ordinary
shares immediately after this offering; or
the average weekly trading volume of our ordinary shares in the
form of ADSs or otherwise, during the four calendar weeks
preceding the date on which notice of the sale is filed with the
Securities and Exchange Commission.
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120
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certain financial institutions;
insurance companies;
broker dealers;
traders that elect to mark to market;
tax-exempt entities;
persons liable for alternative minimum tax;
persons holding an ADS or ordinary share as part of a straddle,
hedging, conversion or integrated transaction;
persons that actually or constructively own 10% or more of our
voting stock;
persons who acquired ADSs or ordinary shares pursuant to the
exercise of any employee stock options or otherwise as
compensation; or
persons holding ADSs or ordinary shares through partnerships or
other pass-through entities.
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an individual who is a citizen or resident of the United States;
a corporation (or other entity taxable as a corporation for U.S.
federal income tax purposes) organized under the laws of the
United States, any state or the District of Columbia;
an estate whose income is subject to U.S. federal income
taxation regardless of its source; or
a trust that (1) is subject to the primary supervision of a
court within the United States and the control of one or more
U.S. persons or (2) has a valid election in effect under
applicable U.S. Treasury regulations to be treated as a U.S.
person.
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at least 75% of its gross income is passive income, or
at least 50% of the value of its assets (based on an average of
the quarterly values of the assets during a taxable year) is
attributable to assets that produce or are held for the
production of passive income (the asset test).
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the excess distribution or gain will be allocated ratably over
your holding period for the ADSs or ordinary shares,
the amount allocated to the current taxable year, and any
taxable year prior to the first taxable year in which we were a
PFIC, will be treated as ordinary income, and
the amount allocated to each other year will be subject to the
highest tax rate in effect for that year and the interest charge
generally applicable to underpayments of tax will be imposed on
the resulting tax attributable to each such year.
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Number of
ADSs
Per ADS
Total
Without
With
Without
With
Over-Allotment
Over-Allotment
Over-Allotment
Over-Allotment
$
$
$
$
$
$
$
$
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Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a
specified maximum.
Over-allotment involves sales by the underwriters in excess of
the number of ADSs the underwriters are obligated to purchase,
which creates a syndicate short position. The short position may
be either a covered short position or a naked short position. In
a covered short position, the number of ADSs over-allotted by
the underwriters is not greater than the number of ADSs that
they may purchase in the over-allotment option. In a naked short
position, the number of ADSs involved is greater than the number
of ADSs in the over-allotment option. The underwriters may close
out any covered short position by either exercising their
over-allotment option
and/or
purchasing ADSs in the open market.
Syndicate covering transactions involve purchases of the ADSs in
the open market after the distribution has been completed in
order to cover syndicate short positions. In determining the
source of ADSs to close out the short position, the underwriters
will consider, among other things, the price of ADSs
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available for purchase in the open market as compared to the
price at which they may purchase ADSs through the over-allotment
option. If the underwriters sell more ADSs than could be covered
by the over-allotment option, a naked short position, the
position can only be closed out by buying ADSs in the open
market. A naked short position is more likely to be created if
the underwriters are concerned that there could be downward
pressure on the price of the ADSs in the open market after
pricing that could adversely affect investors who purchase in
the offering.
Penalty bids permit the representative to reclaim a selling
concession from a syndicate member when the ADSs originally sold
by the syndicate member is purchased in a stabilizing or
syndicate covering transaction to cover syndicate short
positions.
the history of and prospects for the industry in which, and the
companies with which, we compete generally;
an assessment of our management;
our present operations;
our historical results of operations;
the trend of our revenues and earnings; and
our earnings prospects.
128
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129
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130
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$
$
131
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132
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133
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134
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Page
F-2
F-3
F-4
F-5
F-6
F-7
F-29
F-30
F-32
F-33
F-34
F-1
Table of Contents
Agria Corporation
F-2
Table of Contents
CONSOLIDATED BALANCE SHEETS
As of December 31, 2005 and 2006
(Amounts in thousands of Renminbi (RMB) and U.S.
dollar (US$),
except for number of shares)
F-3
Table of Contents
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31, 2004, 2005 and 2006
(Amounts in thousands of Renminbi (RMB) and U.S.
dollar (US$),
except for number of shares and per share data)
Note
2004
2005
2006
2006
(RMB)
(RMB)
(RMB)
(US$)
48,560
245,601
245,634
32,269
92,904
119,468
193,054
25,362
10,820
19,020
51,015
6,702
152,284
384,089
489,703
64,333
(33,311
)
(147,723
)
(144,730
)
(19,013
)
(31,196
)
(37,716
)
(52,287
)
(6,869
)
(9,053
)
(5,932
)
(10,357
)
(1,361
)
(73,560
)
(191,371
)
(207,374
)
(27,243
)
78,724
192,718
282,329
37,090
(4,874
)
(11,349
)
(14,031
)
(1,843
)
(6,015
)
(4,199
)
(7,472
)
(982
)
(7,203
)
(2,974
)
(3,746
)
(492
)
1,457
150
80
11
(16,635
)
(18,372
)
(25,169
)
(3,306
)
62,089
174,346
257,160
33,784
115
218
280
37
(4,731
)
(5,537
)
(4,923
)
(647
)
(37
)
(7
)
336
60
1,386
182
57,772
169,080
253,903
33,356
13
57,772
169,080
253,903
33,356
14
RMB 0.58
RMB 1.69
RMB 2.54
US$
0.33
14
100,000,000
100,000,000
100,000,000
100,000,000
RMB2.48
US$
0.33
102,400,000
102,400,000
F-4
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CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2004, 2005 and 2006
(Amounts in thousands of Renminbi (RMB) and U.S.
dollar (US$))
2004
2005
2006
2006
(RMB)
(RMB)
(RMB)
(US$)
57,772
169,080
253,903
33,356
42
21
(185
)
(24
)
5,133
8,091
8,855
1,163
338
3,293
4,535
596
200
1,469
1,546
203
1,893
1,674
1,674
1,836
241
2,419
2,443
675
89
2,914
(2,000
)
492
1,508
198
(10,980
)
(50,672
)
(90,786
)
(11,927
)
(2,492
)
(39,992
)
24,651
3,238
(11,825
)
4,635
(14,471
)
(1,901
)
489
(1,589
)
1,446
190
9,175
38,747
(29,233
)
(3,840
)
3,245
2,760
950
125
3
(13
)
62
8
(3,179
)
(418
)
58,062
140,447
162,051
21,289
(49,527
)
(37,357
)
(43,699
)
(5,741
)
(1,670
)
(61,773
)
(16,180
)
(2,126
)
9,470
1,244
(900
)
(118
)
(51,197
)
(99,130
)
(51,309
)
(6,741
)
15,900
26,500
45,300
5,951
(11,000
)
(23,300
)
(21,300
)
(2,798
)
3,500
(1,000
)
(1,000
)
(131
)
(24,269
)
(110,437
)
(14,508
)
(9,560
)
(10,780
)
(10,000
)
(1,314
)
(1,160
)
(32,849
)
(97,437
)
(12,800
)
5,705
8,468
13,305
1,748
15,304
21,009
29,477
3,872
21,009
29,477
42,782
5,620
115
218
280
37
641
1,288
2,284
300
37,161
5,947
31,168
4,095
F-5
Table of Contents
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS
EQUITY
For the years ended December 31, 2004, 2005 and 2006
(Amounts in thousands of Renminbi (RMB) except for
number of shares)
Number of
Additional
Retained
Total
Ordinary
Ordinary
Paid-in
Statutory
Earnings/
Shareholders
Note
Shares
Shares
Capital
Reserves
(Deficit)
Equity
(RMB)
(RMB)
(RMB)
(RMB)
(RMB)
100,000,000
(11
)
(11
)
1,674
1,674
57,772
57,772
12,142
(12,142
)
100,000,000
1,674
12,142
45,619
59,435
16
2,914
2,914
1,674
1,674
169,080
169,080
26,553
(26,553
)
(24,269
)
(24,269
)
100,000,000
6,262
38,695
163,877
208,834
1,836
1,836
253,903
253,903
38,258
(38,258
)
(110,437
)
(110,437
)
100,000,000
8,098
76,953
269,085
354,136
1,064
10,109
35,350
46,523
F-6
Table of Contents
1.
Organization
and Basis of Presentation
F-7
Table of Contents
Date of
Place of
Percentage of
incorporation
incorporation
shareholdings
Principal Activities
July 6, 2005
BVI
100
%
Investment holding
September 19, 2003
Hong Kong
100
%
Investment holding
Date of
Place of
incorporation
incorporation
Principal Activities
April 20, 2000
PRC
Development, production and sale of
corn seeds, sheep breeding products
and seedlings
2.
Summary
of Significant Accounting Policies
F-8
Table of Contents
20 years
5-10 years
5 years
6 years
F-9
Table of Contents
5 years
30-46 years
F-10
Table of Contents
F-11
Table of Contents
F-12
Table of Contents
F-13
Table of Contents
3.
Accounts
receivable
2005
2006
2006
(RMB000)
(RMB000)
(US$000)
69,121
159,907
21,007
(1,921
)
(3,467
)
(455
)
67,200
156,440
20,552
2004
2005
2006
2006
(RMB000)
(RMB000)
(RMB000)
(US$000)
(252
)
(452
)
(1,921
)
(252
)
(200
)
(1,469
)
(1,546
)
(203
)
(452
)
(1,921
)
(3,467
)
(455
)
4.
Inventories
2005
2006
2006
(RMB000)
(RMB000)
(US$000)
5,680
8,707
1,144
11,997
9,348
1,228
64,982
39,952
5,248
82,659
58,007
7,620
5.
Prepayments
and other current assets
2005
2006
2006
(RMB000)
(RMB000)
(US$000)
5,637
16,352
2,148
1,957
4,070
535
519
2,162
284
8,113
22,584
2,967
F-14
Table of Contents
6.
Property,
plant and equipment, net
2005
2006
2006
(RMB000)
(RMB000)
(US$000)
32,559
32,559
4,277
8,033
6,908
907
997
1,004
132
1,554
1,554
204
4,708
5,038
662
47,851
47,063
6,182
(4,886
)
(6,937
)
(911
)
42,965
40,126
5,271
7.
Intangible
assets, net
Gross Carrying
Accumulated
Net Carrying
Value
Amortization
Value
(RMB000)
(RMB000)
(RMB000)
55,934
(1,925
)
54,009
10,931
(2,147
)
8,784
66,865
(4,072
)
62,793
Gross Carrying
Accumulated
Net Carrying
Net Carrying
Value
Amortization
Value
Value
(RMB000)
(RMB000)
(RMB000)
(US$000)
67,874
(4,102
)
63,772
8,378
15,171
(4,506
)
10,665
1,401
83,045
(8,608
)
74,437
9,779
F-15
Table of Contents
(RMB000)
(US$000)
5,012
659
4,787
629
4,291
564
2,925
384
2,210
290
55,212
7,253
74,437
9,779
8.
Other
assets, net
2005
2006
2006
(RMB000)
(RMB000)
(US$000)
26,531
10,892
1,431
38,212
91,012
11,956
64,743
101,904
13,387
(9,402
)
(7,068
)
(928
)
55,341
94,836
12,459
9.
Bank
borrowings
2005
2006
2006
(RMB000)
(RMB000)
(US$000)
15,400
38,400
5,045
12,900
36,900
4,848
1,000
1,500
197
13,900
38,400
5,045
1,500
15,400
38,400
5,045
F-16
Table of Contents
10.
Accrued
expenses and other liabilities
2005
2006
2006
(RMB000)
(RMB000)
(US$000)
3,000
2,400
4,037
530
2,936
6,105
802
1,286
1,286
169
1,527
856
113
931
420
55
566
572
75
838
1,631
214
13,484
14,907
1,958
(a)
Note payable was issued to purchase corn seeds. The note was
non-interest bearing and secured with a pledge in restricted
cash. The note was repaid and the pledge was released in 2006.
11.
Ordinary
shares
2005
2006
2006
(RMB000)
(RMB000)
(US$000)
F-17
Table of Contents
12.
Statutory
reserves
(i)
Statutory common reserve fund
(ii)
Statutory common welfare fund
13.
Income
taxes
F-18
Table of Contents
2004
2005
2006
2006
(RMB000)
(RMB000)
(RMB000)
(US$000)
57,772
169,080
253,903
33,356
8,666
25,362
38,085
5,003
3,182
3,073
2,813
370
(11,848
)
(28,435
)
(40,898
)
(5,373
)
2004
2005
2006
2006
(RMB)
(RMB)
(RMB)
(US$)
0.12
0.28
0.41
0.05
14.
Earnings
per Share
2004
2005
2006
2006
(RMB)
(RMB)
(RMB)
(US$)
(Amounts in thousands except for number of shares and per
share data)
57,772
169,080
253,903
33,356
100,000,000
100,000,000
100,000,000
100,000,000
RMB0.58
RMB1.69
RMB2.54
US$
0.33
F-19
Table of Contents
2006
2006
(RMB)
(US$)
(Amounts in thousands except for number of shares and per
share data)
253,903
33,356
100,000,000
100,000,000
2,400,000
2,400,000
102,400,000
102,400,000
RMB2.48
US$0.33
15.
Related
Party Transactions
A company owned by a director of P3A
A subsidiary of Taiyuan Relord
(Taiyuan Baojia)
A subsidiary of Taiyuan Relord
A director of P3A
A director of P3A
A director of P3A
A director of P3A
2004
2005
2006
2006
(RMB000)
(RMB000)
(RMB000)
(US$000)
2,183
2,980
391
52,800
6,936
38,212
38,212
52,800
6,936
520
F-20
Table of Contents
2004
2005
2006
2006
(RMB000)
(RMB000)
(RMB000)
(US$000)
2,560
5,430
4,000
525
1,000
640
4,000
525
6,000
4,710
2,000
263
9,560
10,780
10,000
1,313
900
118
2005
2006
2006
(RMB000)
(RMB000)
(US$000)
1,590
900
118
52
7
53
7
39
5
15
15
2
1,605
1,059
139
810
1,332
175
16,884
2,218
14,061
3,919
3,900
1,884
23,764
16,884
2,218
35,154
20,324
2,670
Table of Contents
2005
2006
2006
(RMB000)
(RMB000)
(US$000)
8,996
1,182
4,498
591
29,992
29,992
3,940
29,992
29,992
3,940
16.
Contribution
from controlling shareholder
17.
Employee
defined contribution plan
Table of Contents
18.
Commitments
and contingencies
(RMB000)
(US$000)
4,217
554
4,231
556
2,891
380
499
66
430
56
28,323
3,721
40,591
5,333
(RMB000)
(US$000)
30,974
4,069
30,974
4,069
30,974
4,069
30,974
4,069
30,191
3,966
183,231
24,072
337,318
44,314
F-23
Table of Contents
F-24
Table of Contents
19.
Segment
reporting
Sheep
Breeding
Corn Seeds
Products
Seedlings
Consolidated
(RMB000)
(RMB000)
(RMB000)
(RMB000)
48,560
92,904
10,820
152,284
(33,311
)
(31,196
)
(9,053
)
(73,560
)
15,249
61,708
1,767
78,724
(16,635
)
(4,317
)
57,772
Sheep
Corn Seeds
Breeding
Seedlings
Consolidated
(RMB000)
(RMB000)
(RMB000)
(RMB000)
245,601
119,468
19,020
384,089
(147,723
)
(37,716
)
(5,932
)
(191,371
)
97,878
81,752
13,088
192,718
(18,372
)
(5,266
)
169,080
F-25
Table of Contents
Sheep
Corn Seeds
Breeding
Seedlings
Consolidated
(RMB000)
(RMB000)
(RMB000)
(RMB000)
245,634
193,054
51,015
489,703
(144,730
)
(52,287
)
(10,357
)
(207,374
)
100,904
140,767
40,658
282,329
(25,169
)
(3,257
)
253,903
Sheep
Corn Seeds
Breeding
Seedlings
Consolidated
(US$000)
(US$000)
(US$000)
(US$000)
32,269
25,362
6,702
64,333
(19,013
)
(6,869
)
(1,361
)
(27,243
)
13,256
18,493
5,341
37,090
(3,306
)
(428
)
33,356
20.
Subsequent
Events
a)
Impact
of the new tax law in the PRC
b)
Convertible
preferred shares issuance
F-26
Table of Contents
c)
Share
Option Plan
20.
Subsequent
Events (continued)
d)
Establishment
of a new subsidiary
e)
Loan
from the controlling shareholder
21.
Condensed
Financial Information of the Company
F-27
Table of Contents
2004
2005
2006
2006
(RMB000)
(RMB000)
(RMB000)
(US$000)
57,772
169,080
253,903
33,356
57,772
169,080
253,903
33,356
57,772
169,080
253,903
33,356
57,772
169,080
253,903
33,356
2005
2006
2006
(RMB000)
(RMB000)
(US$000)
208,834
354,136
46,523
6,262
8,098
1,064
202,572
346,038
45,459
208,834
354,136
46,523
(a)
Basis
of presentation
F-28
Table of Contents
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of December 31, 2006 and June 30, 2007
(Amounts in thousands of Renminbi (RMB) and U.S.
dollar (US$),
except for number of shares)
F-29
Table of Contents
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
For the six months ended June 30, 2006 and 2007
(Amounts in thousands of Renminbi (RMB) and U.S.
dollar (US$),
except for number of shares and per share data)
Six Months Ended June 30
Note
2006
2007
2007
(RMB)
(RMB)
(US$)
(unaudited)
(unaudited)
(unaudited)
142,126
133,853
17,584
97,518
110,599
14,530
29,594
34,955
4,592
269,238
279,407
36,706
(81,378
)
(80,395
)
(10,562
)
(26,629
)
(30,543
)
(4,012
)
(4,212
)
(10,679
)
(1,403
)
(112,219
)
(121,617
)
(15,977
)
157,019
157,790
20,729
(7,542
)
(7,937
)
(1,043
)
(3,445
)
(3,562
)
(468
)
(2,623
)
(1,025
)
(135
)
(13,610
)
(12,524
)
(1,646
)
143,409
145,266
19,083
150
150
20
(2,414
)
(2,239
)
(294
)
965
174
23
142,110
143,351
18,832
15
142,110
143,351
18,832
16
RMB1.42
RMB1.43
US$0.19
RMB1.42
RMB1.43
US$0.19
16
100,000,000
100,000,000
100,000,000
100,000,000
100,119,337
100,119,337
F-30
Table of Contents
Six Months Ended June 30
Note
2006
2007
2007
(RMB)
(RMB)
(US$)
(unaudited)
(unaudited)
(unaudited)
16
RMB1.40
US$0.18
16
102,400,000
102,400,000
F-31
Table of Contents
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
For the six months ended June 30, 2006 and 2007
(Amounts in thousands of Renminbi (RMB) and U.S.
dollar (US$))
Six Months Ended June 30
2006
2007
2007
(RMB)
(RMB)
(US$)
(unaudited)
(unaudited)
(unaudited)
142,110
143,351
18,832
4,580
4,756
625
2,112
2,600
342
515
(1,241
)
(195
)
918
1,000
131
519
314
41
1,508
(60,254
)
(9,273
)
(1,186
)
42,036
4,737
622
(30,738
)
(54,088
)
(7,105
)
586
(8
)
(1
)
(28,848
)
(6,177
)
(811
)
(1,889
)
4,836
635
3,366
442
161
61
8
73,316
94,234
12,380
(3,478
)
(16,274
)
(2,138
)
(10,940
)
(11,760
)
(1,545
)
(900
)
900
118
(15,318
)
(27,134
)
(3,565
)
76,155
10,005
(2,377
)
(312
)
36,900
8,400
1,104
(12,900
)
(36,900
)
(4,848
)
(1,500
)
(197
)
(53,095
)
(50,470
)
(6,630
)
222,372
29,213
(10,000
)
(39,095
)
215,680
28,335
18,903
282,780
37,150
29,477
42,782
5,620
48,380
325,562
42,770
914
799
105
900
5,568
731
F-32
Table of Contents
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN
SHAREHOLDERS EQUITY
For the six months ended June 30, 2006 and 2007
(Amounts in thousands of Renminbi (RMB) except for
number of shares)
Number of
Additional
Total
Ordinary
Ordinary
Paid-in
Statutory
Retained
Shareholders
Shares
Shares
Capital
Reserves
Earnings
Equity
(unaudited)
(RMB)
(RMB)
(RMB)
(RMB)
(RMB)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(unaudited)
100,000,000
6,262
38,695
163,877
208,834
918
918
142,110
142,110
(53,095
)
(53,095
)
100,000,000
7,180
38,695
252,892
298,767
100,000,000
8,098
76,953
269,085
354,136
1,000
1,000
143,351
143,351
7,426
7,426
3,618
3,618
(6,250,000
)
(20,142
)
(135,786
)
(155,928
)
(56,774
)
(56,774
)
93,750,000
76,953
219,876
296,829
10,109
28,885
38,994
F-33
Table of Contents
1.
The
Company and Basis of Presentation
Date of
Place of
Percentage of
Incorporation
Incorporation
Shareholdings
Principal Activities
March 29, 2007
PRC
100
%
Research and development
July 6, 2005
BVI
100
%
Investment holding
September 19, 2003
Hong Kong
100
%
Investment holding
Date of
Place of
Incorporation
Incorporation
Principal Activities
Development Co., Ltd. (P3A)
April 20, 2000
PRC
Development, production and sale of
corn seeds, sheep breeding products
and seedlings
2.
Summary
of Significant Accounting Policies
F-34
Table of Contents
F-35
Table of Contents
3.
Accounts
receivable
December 31
June 30
June 30
2006
2007
2007
(RMB000)
(RMB000)
(US$000)
159,907
168,934
22,193
(3,467
)
(1,980
)
(260
)
156,440
166,954
21,933
December 31
June 30
June 30
2006
2007
2007
(RMB000)
(RMB000)
(US$000)
(1,921
)
(3,467
)
(455
)
(1,546
)
1,241
163
246
32
(3,467
)
(1,980
)
(260
)
4.
Inventories
December 31
June 30
June 30
2006
2007
2007
(RMB000)
(RMB000)
(US$000)
8,707
7,071
929
9,348
13,329
1,751
39,952
32,870
4,318
58,007
53,270
6,998
F-36
Table of Contents
5.
Prepayments
and other current assets
December 31
June 30
June 30
2006
2007
2007
(RMB000)
(RMB000)
(US$000)
16,352
69,414
9,120
4,070
5,286
694
2,162
1,972
258
22,584
76,672
10,072
6.
Property,
plant and equipment, net
December 31
June 30
June 30
2006
2007
2007
(RMB000)
(RMB000)
(US$000)
32,559
32,559
4,277
6,908
6,908
908
1,004
1,612
212
1,554
2,210
290
5,038
5,223
686
47,063
48,512
6,373
(6,937
)
(8,366
)
(1,099
)
40,126
40,146
5,274
7.
Intangible
assets, net
Gross
Accumulated
Net Carrying
Carrying Value
Amortization
Value
(RMB000)
(RMB000)
(RMB000)
67,874
(4,102
)
63,772
15,171
(4,506
)
10,665
83,045
(8,608
)
74,437
F-37
Table of Contents
Gross
Accumulated
Net Carrying
Net Carrying
Carrying Value
Amortization
Value
Value
(RMB000)
(RMB000)
(RMB000)
(US$000)
76,274
(5,190
)
71,084
9,339
20,771
(6,017
)
14,754
1,938
97,045
(11,207
)
85,838
11,277
(RMB000)
(US$000)
4,263
560
10,422
1,369
9,310
1,223
4,643
610
3,928
516
53,272
6,999
85,838
11,277
8.
Deferred
share issuance cost
9.
Other
assets, net
December 31
June 30
June 30
2006
2007
2007
(RMB000)
(RMB000)
(US$000)
10,892
27,765
3,648
91,012
91,012
11,956
101,904
118,777
15,604
(7,068
)
(10,395
)
(1,366
)
94,836
108,382
14,238
F-38
Table of Contents
10.
Bank
borrowings
December 31
June 30
June 30
2006
2007
2007
(RMB000)
(RMB000)
(US$000)
38,400
8,400
1,104
36,900
8,400
1,104
1,500
38,400
8,400
1,104
38,400
8,400
1,104
11.
Accrued
expenses and other liabilities
December 31
June 30
June 30
2006
2007
2007
(RMB000)
(RMB000)
(US$000)
4,037
5,032
661
6,105
7,952
1,045
1,286
2,044
269
856
856
112
572
575
75
420
11,927
1,567
1,631
3,284
431
14,907
31,670
4,160
12.
Series A
Redeemable convertible preferred shares
F-39
Table of Contents
13.
Redeemable
ordinary shares
F-40
Table of Contents
14.
Ordinary
shares
15.
Income
taxes
Six Months Ended June 30
2006
2007
2007
(RMB000)
(RMB000)
(US$000)
142,110
143,351
18,832
21,317
21,503
2,825
1,855
2,344
308
(23,172
)
(23,847
)
(3,133
)
Six Months Ended June 30
2006
2007
2007
(RMB)
(RMB)
(US$)
0.23
0.24
0.03
F-41
Table of Contents
16.
Earnings
per Share
Six Months Ended June 30
2006
2007
2007
(RMB)
(RMB)
(US$)
(Amounts in thousands except for number of shares and per
share data)
142,110
143,351
18,832
100,000,000
100,000,000
100,000,000
119,337
119,337
100,000,000
100,119,337
100,119,337
RMB1.42
RMB1.43
US$0.19
RMB1.42
RMB1.43
US$0.19
Six Months Ended June 30,2007
(RMB)
(US$)
(Amounts in thousands except for number of shares and per
share data)
143,351
18,832
100,000,000
100,000,000
2,400,000
2,400,000
102,400,000
102,400,000
RMB 1.40
US$0.18
F-42
Table of Contents
17.
Related
Party Transactions
A company owned by a director of P3A
A subsidiary of Taiyuan Relord
A subsidiary of Taiyuan Relord
A director of P3A
A director of P3A
A director of P3A (note (i))
A director of P3A (note (i))
Employee of Aero Biotech Science & Technology Co., Ltd.
(1)
The Company had the following significant related party
transactions during the periods presented:
Six Months Ended June 30
2006
2007
2007
(RMB000)
(RMB000)
(US$000)
3,300
433
4,000
4,000
2,000
10,000
900
900
118
F-43
Table of Contents
(2)
The Company had the following related party balances at the end
of the period:
December 31
June 30
June 30
2006
2007
2007
(RMB000)
(RMB000)
(US$000)
900
52
71
9
53
53
7
39
28
4
15
15
2
1,059
167
22
16,884
14,181
1,863
1,799
236
16,884
15,980
2,099
8,996
8,996
1,182
29,992
255,730
33,596
18.
Employee
defined contribution plan
F-44
Table of Contents
19.
Commitments
and contingencies
(RMB000)
(US$000)
35,057
4,606
46,435
6,100
45,095
5,924
1,366
180
1,144
150
28,601
3,757
157,698
20,717
F-45
Table of Contents
F-46
Table of Contents
20.
Segment
reporting
Sheep
Breeding
Corn Seeds
Products
Seedlings
Consolidated
(RMB000)
(RMB000)
(RMB000)
(RMB000)
142,126
97,518
29,594
269,238
(81,378
)
(26,629
)
(4,212
)
(112,219
)
60,748
70,889
25,382
157,019
(13,610
)
(1,299
)
142,110
F-47
Table of Contents
Sheep
Breeding
Corn Seeds
Products
Seedlings
Consolidated
(RMB000)
(RMB000)
(RMB000)
(RMB000)
133,853
110,599
34,955
279,407
(80,395
)
(30,543
)
(10,679
)
(121,617
)
53,458
80,056
24,276
157,790
(12,524
)
(1,915
)
143,351
Sheep
Breeding
Corn Seeds
Products
Seedlings
Consolidated
(US$000)
(US$000)
(US$000)
(US$000)
17,584
14,530
4,592
36,706
(10,562
)
(4,012
)
(1,403
)
(15,977
)
7,022
10,518
3,189
20,729
(1,646
)
(251
)
18,832
21.
Subsequent
Events
a)
Share
Option Plan
F-48
Table of Contents
F-49
Table of Contents
Table of Contents
Table of Contents
ITEM 6.
INDEMNIFICATION
OF DIRECTORS AND OFFICERS.
ITEM 7.
RECENT
SALES OF UNREGISTERED SECURITIES.
Underwriting
Date of Sale or
Number of
Consideration
Discount and
Issuance
Securities*
(US$)
Commission
June 13, 2007
10,000 ordinary shares
0.001
Not applicable
June 21, 2007
76,740,000 ordinary shares
7.675
Not applicable
June 22, 2007
1,600,000 preferred shares
6,666,667
Not applicable
June 22, 2007
800,000 preferred shares
3,333,333
Not applicable
July 19, 2007
**
Options to purchase
5,900,000 ordinary shares
2.40 per share
Not applicable
Options to purchase
1,600,000 ordinary shares
4.80 per share
Not applicable
*
The share numbers have been adjusted to reflect a 10,000-for-1
share split of our ordinary shares and our preferred shares that
became effective on August 15, 2007.
**
Our board of directors initially granted options on July 4,
2007 and amended the material terms of the options on
July 19, 2007.
II-1
Table of Contents
ITEM 8.
EXHIBITS AND
FINANCIAL STATEMENT SCHEDULES.
ITEM 9.
UNDERTAKINGS.
II-2
Table of Contents
By:
Title:
Chairman of the Board and Co-Chief Executive Officer
Chairman of the Board and
Co-Chief Executive Officer
(principal executive officer)
October 18, 2007
Co-Chief Executive Officer
October 18, 2007
Chief Financial Officer
(principal financial and accounting officer) and Director
October 18, 2007
Director
October 18, 2007
II-3
Table of Contents
Director and Chief Operating Officer
October 18, 2007
Director
October 18, 2007
Title: Manager, Law Debenture Corporate Services Inc.
Authorized U.S.
Representative
October 18, 2007
II-4
Table of Contents
Exhibit
1
.1
Form of Underwriting Agreement.
3
.1
Memorandum and Articles of Association of the Registrant, as
currently in effect.
3
.2
Amended and Restated Memorandum and Articles of Association of
the Registrant.
4
.1
Registrants Specimen American Depositary Receipt (included
in Exhibit 4.3).
4
.2
Registrants Specimen Certificate for Ordinary Shares.
4
.3
Form of Deposit Agreement among the Registrant, the Depositary
and [Owners and Holders] of the American Depositary Shares.
4
.4
English translation of Exclusive Technology Development,
Technology Support and Technology Services Agreement, dated
June 8, 2007.
4
.5
English translation of Exclusive Consultancy Service Agreement,
dated June 8, 2007.
4
.6
English translation of Proprietary Technology License Agreement,
dated June 8, 2007.
4
.7
English translation of Power of Attorney, dated June 8,
2007.
4
.8
English translation of Equity Pledge Agreement, dated
June 8, 2007.
4
.9
English translation of Exclusive Call Option Agreement, dated
June 8, 2007.
4
.10
English translation of Agreement on Equity Interest of
Primalights III Agriculture Development Co., Ltd., dated
June 8, 2007.
4
.11
English translation of Letter of Undertaking, dated
July 13, 2007.
4
.12
English translation of Spouse Statement, dated July 13,
2007.
4
.13
Share Purchase Agreement, dated June 22, 2007, in respect
of the sale of shares of the Registrant.
4
.14
Shareholders Agreement, dated June 22, 2007.
4
.15
Registration Rights Agreement, dated June 22, 2007.
4
.16
Undertaking Letter, dated June 22, 2007.
4
.17
Deed of Adherence, dated August 30, 2007
4
.18
English translation of Lease of Land between P3A and Taiyuan
Relord, dated October 25, 2006.
5
.1
Opinion of Maples and Calder regarding the validity of the
Ordinary Shares being registered.
8
.1
Opinion of Latham & Watkins LLP regarding certain U.S.
tax matters.
10
.1
2007 Share Incentive Plan.
10
.2
Form of Indemnification Agreement with the Registrants
Directors.
10
.3
Form of Employment Agreement.
21
.1
Subsidiaries of the Registrant.
23
.1
Consent of Ernst & Young Hua Ming, Independent
Registered Public Accounting Firm.
23
.2
Consent of Maples and Calder (included in Exhibit 5.1).
23
.3
Consent of Latham & Watkins LLP (included in
Exhibit 8.1).
23
.4
Consent of Commerce & Finance Law Offices (included in
Exhibit 99.2).
23
.5
Consent of Sallmanns (Far East) Ltd.
23
.6
Consent of Terry McCarthy.
23
.7
Consent of Shangzhong Xu.
23
.8
Consent of Jiuran Zhao.
24
.1
Powers of Attorney (included on signature page).
99
.1
Code of Business Conduct and Ethics of the Registrant.
99
.2
Opinion of Commerce & Finance Law Offices.
To be filed by amendment
II-5
EXHIBIT 3.1
THE COMPANIES LAW (2004 REVISION)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
SECOND AMENDED AND RESTATED MEMORANDUM AND ARTICLES
OF
ASSOCIATION
OF
AGRIA CORPORATION
(Adopted by Special Resolution dated June 22, 2007)
THE COMPANIES LAW (2004 REVISION)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
SECOND AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION
OF
AGRIA CORPORATION
(Adopted by Special Resolution on June 22, 2007)
1 The name of the Company is AGRIA CORPORATION.
2 The registered office of the Company shall be at the offices of M&C Corporate Services Limited, PO Box 309GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, or at such other place as the Directors may from time to time decide.
3 The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the Companies Law (2004 Revision) or as the same may be revised from time to time, or any other law of the Cayman Islands.
4 The liability of each Member is limited to the amount from time to time unpaid on such Member's shares.
5 The share capital of the Company is US$50,000 divided into 49,990,000 Ordinary Shares of a par value of US$0.001 each and 10,000 Preferred Shares of a par value of US$0.001 each.
6 The Company has power to register by way of continuation as a body corporate limited by shares under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.
7 Capitalised terms that are not defined in this Memorandum of Association bear the same meaning as those given in the Amended and Restated Articles of Association of the Company, as amended from time to time.
THE COMPANIES LAW (2004 REVISION)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
SECOND AMENDED AND RESTATED ARTICLES OF ASSOCIATION
OF
AGRIA CORPORATION
(Adopted by Special Resolution on June 22, 2007)
INTERPRETATION
1 In these Articles Table A in the First Schedule to the Statute does not apply and, unless there is something in the subject or context inconsistent therewith:
"ADDITIONAL SHARES" means all Ordinary Shares or other shares issued by the Company after the Closing Date other than the issuance of (i) Ordinary Shares issued or issuable at any time upon conversion of Preferred Shares; (ii) securities or options to acquire securities to officers, directors, and employees of, and consultants to, the Company, pursuant to share purchase or share option plans or arrangements or other incentive share arrangements as approved by the Board of Directors, including the 2007 Stock Option Plan; (iii) Ordinary Shares as a dividend or distribution with respect to the Preferred Shares; (iv) Ordinary Shares issued pursuant to a Qualified Public Offering; (v) equity securities issued in an acquisition in accordance with Article 27.1.10; (vi) 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) immediately following the Closing and (vii) as described in Article 22.3 ("Adjustments for Dividends, Splits, Subdivisions, Combinations, or Consolidation of Ordinary Shares"). "AFFILIATE" means, with respect to any person, any person that, alone or together with any other person, directly or indirectly through one or more 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. "ARTICLES" means these articles of association of the Company as originally registered or as from time to time amended by Special Resolution. "AUDITOR" means the person for the time being performing the duties of auditor of the Company (if any). "BOARD OF DIRECTORS" means the board of directors of the Company. "CLOSING" means the date on which the Investors pay for certain Preferred Shares and Ordinary Shares and became Members of the Company pursuant to the Share Purchase Agreement. "COMPANY" means the above named company. "DIRECTORS" means the directors for the time being of the Company. "DIVIDEND" includes an interim dividend. "ELECTRONIC RECORD" has the same meaning as in the Electronic Transactions Law (2003 Revision). "ELIGIBLE ORDINARY means the entities or individuals that hold SHAREHOLDERS" Ordinary Shares both immediately prior to the Closing and as of the date of any distribution of Pre-Closing Retained Earnings. "ENCUMBRANCE" means any claim, charge, easement, encumbrance, lease, covenant, security, deed of trust, lien, pledge, rights of others, security interest or restriction (whether on voting, sale, transfer, disposition, or otherwise), whether imposed by contract, agreement, understanding, law, equity or otherwise "INVESTORS" means, collectively, TPG Growth AC Ltd. and TPG Biotech II, Ltd. "LIQUIDATION EVENT" (i) any liquidation, dissolution, or winding up of the Company, whether voluntary or not, (ii) a sale, transfer or lease of all or substantially all of the assets of the Company (or any series of related transactions resulting in such sale, transfer or lease of all or substantially all of the assets of the Company), (iii) a consolidation, corporate reorganization, merger, amalgamation, scheme of arrangement, tender offer or share purchase of the Company (except for a merger exclusively to reincorporate the Company in another jurisdiction), unless the shareholders of the Company immediately prior to any such transaction are holders of |
a majority of the voting power of the surviving corporation or acquiring corporation immediately thereafter, and (iv) the transfer (whether by merger, consolidation, amalgamation, scheme of arrangement or otherwise) in one transaction or a series of related transactions to a person or group of affiliated persons (other than an underwriter of the Company's securities) of the Company's securities if after such transfer such person or group of affiliated persons would hold a majority of the Company's outstanding voting stock. "MEMBER" has the same meaning as in the Statute. "MEMORANDUM" means the memorandum of association of the Company. "ORDINARY RESOLUTION" means a resolution passed by a simple majority of the Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a general meeting, and includes a unanimous written resolution. In computing the majority when a poll is demanded regard shall be had to the number of votes to which each Member is entitled by the Articles. "ORDINARY SHARE" means each ordinary share of the Company, par value of US$0.001 per share. "PER NEW SHARE PURCHASE PRICE" means the price per Series A Preferred Share paid by the Investors and is equal to US$41,667. "PER OLD SHARE PURCHASE PRICE" means the price the Investors paid to Brothers Capital for each Ordinary Share. "PRE-CLOSING RETAINED means the retained earnings of the Company as EARNINGS" of the last day of the calendar month preceding the Closing, as determined by an interim review by the Company's independent accountants. "PREFERRED SHARE" means each Series A Preferred Share of the Company, par value of US$0.001 per share. "QUALIFYING IPO" means a firm commitment underwritten public offering pursuant to an effective registration statement on Form F-1 under the United States Securities Act of 1933, as amended, or a similar public offering of Ordinary Shares in a jurisdiction and on a recognized securities exchange outside of the United States, provided, that such public offering in terms of price, offering proceeds and regulatory approval is in the Board of Directors' opinion, reasonably equivalent to the aforementioned public offering in the United States covering the offer and sale of Ordinary Shares for the account of the Company to the public, and such public offering (whether in the United States or in a jurisdiction outside the |
United States) would result in aggregate proceeds to the Company in excess of US$75 million (before deduction for underwriters commissions and expenses) at a minimum pre-money valuation (calculated on an issued and outstanding share basis) of: (i) US$320 million, if the closing of such offering occurs on or prior to January 1, 2008 or (ii) US$350 million, if the closing of such offering occurs after January 1, 2008. "REGISTER OF MEMBERS" means the register maintained in accordance with the Statute and includes (except where otherwise stated) any duplicate Register of Members. "REGISTERED OFFICE" means the registered office for the time being of the Company. "SEAL" means the common seal of the Company and includes every duplicate seal. "SHARE" and "SHARES" means a share or shares in the Company and includes a fraction of a share. "SHAREHOLDERS AGREEMENT" means the shareholders agreement to be entered into among Brothers Capital, the Investors and the Company, which provides certain rights and obligations of the Company and the other parties thereto. "SHARE PURCHASE AGREEMENT" means the share purchase agreement to be entered into among Brothers Capital, the Investors, China Victory International Holdings Limited, Aero Biotech Science & Technology Co., Ltd., Primalights III Agriculture Development Co., Ltd. and the Company, pursuant to which the Company will issue Preferred Shares and Brothers Capital will sell Ordinary Shares to the Investors. "SPECIAL RESOLUTION" has the same meaning as in the Statute, and includes a unanimous written resolution. "STATUTE" means the Companies Law (2004 Revision) of the Cayman Islands. "SUBSIDIARY" means, with respect to any given entity, any company, partnership or other entity (a) where more than 50% of the shares or other interests entitled to vote in the election of directors thereof are held, directly or indirectly, by the given entity, (b) in respect of which more than a 50% interest in the profits or capital thereof are owned or controlled directly or indirectly by the given entity or through one or more Subsidiaries of the given entity, (c) in respect of which the power to direct the management and policies thereof, whether directly or indirectly, through the ownership of voting |
securities, by contract or otherwise, is held by the given entity, or (d) whose assets, or any portion thereof, are consolidated with the net earnings of the Company and are recorded on the books of the Company for financial reporting purposes in accordance with generally accepted accounting principles in the United States. |
2 In the Articles:
2.1 words importing the singular number include the plural number and vice versa;
2.2 words importing the masculine gender include the feminine gender;
2.3 words importing persons include corporations;
2.4 "written" and "in writing" include all modes of representing or reproducing words in visible form, including in the form of an Electronic Record;
2.5 references to provisions of any law or regulation shall be construed as references to those provisions as amended, modified, re-enacted or replaced from time to time;
2.6 any phrase introduced by the terms "including", "include", "in particular" or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms;
2.7 headings are inserted for reference only and shall be ignored in construing these Articles; and
2.8 in these Articles Section 8 of the Electronic Transactions Law (2003 Revision) shall not apply.
COMMENCEMENT OF BUSINESS
3 The business of the Company may be commenced as soon after incorporation as the Directors shall see fit.
4 The Directors may pay, out of the capital or any other monies of the Company, all expenses incurred in or about the formation and establishment of the Company, including the expenses of registration.
ISSUE OF SHARES
5 Subject to the provisions, if any, in the Memorandum (and to any direction that may be given by the Company in general meeting) and without prejudice to any rights attached to any existing Shares, the Directors may allot, issue, grant options over or otherwise dispose of Shares (including fractions of a Share) with or without preferred, deferred or other rights or restrictions, whether in regard to Dividend, voting, return of capital or otherwise and to such persons, at such times and on such other terms as they think proper.
6 The Company shall not issue Shares to bearer.
REGISTER OF MEMBERS
7 The Company shall maintain or cause to be maintained the Register of Members in accordance with the Statute.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
8 For the purpose of determining Members entitled to notice of, or to vote at any meeting of Members or any adjournment thereof, or Members entitled to receive payment of any Dividend, or in order to make a determination of Members for any other purpose, the Directors may provide that the Register of Members shall be closed for transfers for a stated period which shall not in any case exceed forty days. If the Register of Members shall be closed for the purpose of determining Members entitled to notice of, or to vote at, a meeting of Members the Register of Members shall be closed for at least ten days immediately preceding the meeting.
9 In lieu of, or apart from, closing the Register of Members, the Directors may fix in advance or arrears a date as the record date for any such determination of Members entitled to notice of, or to vote at any meeting of the Members or any adjournment thereof, or for the purpose of determining the Members entitled to receive payment of any Dividend or in order to make a determination of Members for any other purpose.
10 If the Register of Members is not so closed and no record date is fixed for the determination of Members entitled to notice of, or to vote at, a meeting of Members or Members entitled to receive payment of a Dividend, the date on which notice of the meeting is sent or the date on which the resolution of the Directors declaring such Dividend is adopted, as the case may be, shall be the record date for such determination of Members. When a determination of Members entitled to vote at any meeting of Members has been made as provided in this Article, such determination shall apply to any adjournment thereof.
CERTIFICATES FOR SHARES
11 A Member shall only be entitled to a share certificate if the Directors resolve that share certificates shall be issued. Share certificates representing Shares, if any, shall be in such form as the Directors may determine. Share certificates shall be signed by one or more Directors or other person authorised by the Directors. The Directors may authorise certificates to be issued with the authorised signature(s) affixed by mechanical process. All certificates for Shares shall be consecutively numbered or otherwise identified and shall specify the Shares to which they relate. All certificates surrendered to the Company for transfer shall be cancelled and subject to these Articles no new certificate shall be issued until the former certificate representing a like number of relevant Shares shall have been surrendered and cancelled.
12 The Company shall not be bound to issue more than one certificate for Shares held jointly by more than one person and delivery of a certificate to one joint holder shall be a sufficient delivery to all of them.
13 If a share certificate is defaced, worn out, lost or destroyed, it may be renewed on such terms (if any) as to evidence and indemnity and on the payment of such expenses reasonably incurred by the Company in investigating evidence, as the Directors may prescribe, and (in the case of defacement or wearing out) upon delivery of the old certificate.
TRANSFER OF SHARES
14 Subject to Article 16, Shares are transferable, and the Directors may decline to register any transfer of Shares, including any transfer that is not made in accordance with Article 16. If the Directors refuse to register a transfer they shall notify the transferee within two weeks of such refusal.
15 The instrument of transfer of any Share shall be in writing and shall be executed by or on behalf of the transferor (and if the Directors so require, signed by the transferee). The transferor shall be deemed to remain the holder of a Share until the name of the transferee is entered in the Register of Members.
16 Restrictions on Transfers.
16.1 General restrictions.
16.1.1 During the period commencing from the Closing 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 Articles 16.2 or 16.3, (ii) a Transfer to any individual that is a member of such Member's (or, if such Member is not a natural person, the ultimate beneficial owner of such Member) 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 Member (or, if such Member is not a natural person, the ultimate beneficial owner of such Member) or any member of such Member's (or, if such Member is not a natural person, the ultimate beneficial owner of such Member) immediate family, or any Affiliate, or (iii) a Transfer to Mr. Qian Zhaohua or an entity wholly-owned by Mr. Qian Zhaohua (each, a "Permitted Transferee"); provided, however, that any Permitted Transferee, simultaneously with such Transfer, agrees in writing to be bound as a Member by all of the provisions
of these Articles, provided, further, that if any Permitted Transferee
to whom any Shares have been transferred ceases to be a Permitted
Transferee of the transferring Member, such Shares shall be
transferred back to the transferring Member immediately prior to the
time such person ceases to be a Permitted Transferee of such
transferring Member. In addition to any Transfers pursuant to clauses
(i), (ii) and (iii) of this Article 16.1.1, 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 Articles 16.2 or 16.3.
16.1.2 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 Article 16.2 or 16.3, (ii) a Transfer to a Permitted Transferee or (iii) a Transfer made pursuant to Article 26 ("Mandatory Redemption"). Notwithstanding anything to the contrary in these Articles, 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.
16.2 Rights of First Refusal.
16.2.1 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 Member (an "Offering Member") of Shares now owned or hereafter acquired by it. During the Restricted Period, each time that an Offering Member proposes to Transfer all or part of its Shares to any other person (the "Proposed Transferee"), such Offering Member shall, prior to consummating any such Transfer, give written notice (the "Offer Notice") to each of the Members entitled to the Right of First Refusal (the "Offeree Members") in accordance with the following provisions.
16.2.2 The Offering Member shall deliver an Offer Notice to each of the Offeree Members stating (i) that the Offering Member 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 Members 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.
16.2.3 By delivering a written notification to the Offering Member within 15 calendar days after receipt of the Offer Notice (the "Exercise Period"), each Offeree Member 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 Member and the denominator of which shall be the total number of Shares (on an as-converted basis) then owned by all of the Offeree Members. The Offering Member shall promptly, in writing, inform each Offeree Member that elects to purchase all the Shares available to it (a "Fully-Exercising Member") of any other Offeree Member's failure to do likewise. During the five-day period commencing after such information is given, each Fully-Exercising Member 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 Member 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 Members. The Offering Member 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 Member electing to purchase its proportionate share of the unsubscribed Shares during such five-day period.
16.2.4 If all Shares that the Offeree Members are entitled to purchase pursuant to this Article 16.2 are not elected to be purchased as provided in Article 16.2.3, the Offering Member may, subject to the Co-Sale Rights (as defined below) provided in Article 16.3, during the 90-day period following the expiration of the last offering period provided in Article 16.2.3, 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 Member 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 Members in accordance herewith.
16.2.5 Valuation of Property.
(a) 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 Members 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.
(b) If the Offering Member and the Offeree Members cannot agree on the fair market value of such property within 10 days after the receipt of the Offer Notice by the Offeree Members, the valuation shall be made by an appraiser of internationally recognized standing jointly selected by the Offering Member and the majority in interest of the Offeree Members, 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 Members, or, if they cannot agree on an appraiser within 15 days after the receipt of the Offer Notice by the Offeree Members, 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 Members, and whose appraisal shall be determinative of such value.
(c) The cost of such appraisal shall be borne 50% by the Offering Member and 50% by the Offeree Members, with that portion of the cost borne by the Offeree Members to be borne pro rata by each, based on the number of offered Shares (on an as-converted basis) such Offeree Member has elected to purchase pursuant to this Article 16.2.
(d) 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 Article 16.2.3, the Exercise Period shall be extended to the 10th day following the date the appraisal is made pursuant to this Article 16.2.
16.3 Co-Sale Rights.
16.3.1 Brothers Capital hereby grants to each of the Investors, and each of
the 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 Member (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 Article 16.2, to the extent the Offeree Members
do not exercise their Rights of First Refusal as to all of the Shares
offered pursuant to Article 16.2, each Member 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 Article 16.2.3. 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 Article 16.3 and has agreed to purchase the Shares in accordance with the terms hereof. Each Member 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 Article 16.3 and participate in such Transfer as a Member.
16.3.2 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.
16.3.3 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 Article 16.3.1. If such Transfer is not consummated within the 90-day period provided in Article 16.2.4, any Shares that continue to be held by the Proposed Transferor after such period shall again be subject to the provisions of this Article 16.3.
16.3.4 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.
16.4 Excluded Transactions.
16.4.1 Anything to the contrary herein notwithstanding, the provisions of Articles 16.2 and 16.3 shall not apply to (i) Transfers pursuant to a Qualifying IPO, (ii) Transfers by any Member to any of its Permitted Transferees that agrees in writing to be bound as a Member by all of the provisions of these Articles, provided, however, that if any Permitted Transferee to whom any Shares have been transferred ceases to be a Permitted Transferee of the transferring Member, such Shares shall be transferred back to the transferring Member immediately prior to the time such person ceases to be a Permitted Transferee of such transferring Member, or (iii) in the case of the Investors, Transfers pursuant to the Investors' exercise of their Redemption Rights under Article 26 ("Mandatory Redemption").
16.5 Lock-up Agreements.
16.5.1 Each Member (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.
16.5.2 Each of the Company and the Members 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.
16.5.3 This Article 16.5 shall not apply to (x) any Transfer by a Member to a Permitted Transferee of such Member or (y) the sale of any Shares by the Company or a Member to an underwriter pursuant to an underwriting agreement in connection with the Company's Qualifying IPO. In addition, this Article 16.5 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 Members subject to such agreements pro rata based on the number of Shares subject to such agreements.
16.6 Preemptive Rights.
16.6.1 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:
(a) 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").
(b) 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.
(c) 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 Article paragraph (b) above, the Company may, during the 90-day period following the expiration of the period provided in paragraph (b) above, 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 16.6.
(d) Excluded Transactions. The Preemptive Right in this Article 16.6 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 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 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) Preferred Shares issued pursuant to the Share Purchase Agreement and (vii) 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) immediately following the Closing.
(e) Limitations. The Preemptive Right in this Article 16.6 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.
AUTHORIZED CAPITAL
17 The authorized capital of the Company is US$50,000, divided into 49,990,000 Ordinary Shares of par value of US$0.001 each and 10,000 Preferred Shares of par value of US$0.001 each.
CLASS AND NUMBER OF SHARES
18 The share capital of the Company is made up of two classes of shares, divided into 49,990,000 Ordinary Shares, and 10,000 Preferred Shares.
PREFERENCES OF THE PREFERRED SHARES
19 Preference Dividend.
19.1 The holders of each Preferred Share shall be entitled to receive cumulative dividends, out of any assets legally available therefor, prior and in preference to any declaration or payment of any dividend (whether in cash, in property or in shares of the capital of the Company) on the Ordinary Shares other than a dividend pursuant to Article 130 ("Certain Dividends"), at the rate of 8% of the Per New Share Purchase Price (as adjusted for any share dividends, combinations or splits with respect to such shares) per annum payable in U.S. dollars no later than March 31 of the year following the calendar year that such dividends accrue, provided, that if a Qualifying IPO occurs before July 31, 2008, then such Preferred Shares shall not be entitled to such 8% annual dividend. If a Qualifying IPO occurs after July 31, 2008 then such Preferred Shares shall entitled to such 8% annual dividend from and after such date. No dividend, whether in cash, in property or in shares of the capital of the Company, other than a dividend pursuant to Article 130 ("Certain Dividends"), shall be declared or paid on any Ordinary Shares unless and until all accrued dividends have been paid in full on the Preferred Shares.
20 Liquidation.
20.1 Upon the occurrence of a Liquidation Event, redemption payments or liquidation distributions to the Members of the Company shall be made in the following manner to the extent permitted by Cayman Islands law:
20.1.1 Each holder of Preferred Shares shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of the Ordinary Shares, an amount per Preferred Share then held by such holder equal to (i) the Per New Share Purchase Price (as adjusted for share dividends, splits, combinations and recapitalizations), plus (ii) an amount equal to all accrued but unpaid dividends on such Shares.
20.1.2 After payments described in 20.1.1 have been made to the holders of the Preferred Shares in full, the remaining assets and funds of the Company available for distribution to Members shall be distributed ratably among all of the holders of Ordinary Shares.
21 Voting Rights.
21.1 At any general meeting of the Company, the holder of each Preferred Share shall be entitled to the number of votes, in respect of such Share, equal to the number of Ordinary Shares into which such Preferred Share could be converted at the record date for determination of the Members entitled to vote at such general meeting, or, if no such record date is established, at the date such vote is taken or any written consent of Members is solicited.
22 Conversion.
22.1 Right to Convert. Immediately after the Closing and subject to Articles 22.3 and 22.4, each Preferred Share shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Company or any transfer agent for such Preferred Share, into one fully-paid and non-assessable Ordinary Share.
22.2 Automatic Conversion. Each Preferred Share shall automatically be converted into one fully-paid and non-assessable Ordinary Share upon a Qualifying IPO, subject to the adjustment provided in Articles 22.3 and 22.4. Conversion of the Preferred Shares under this Article shall be effected in such manner as the Directors of the Company shall from time to time determine. Without prejudice to the generality of the foregoing, any of the Preferred Shares to be converted under this Article may be effected by redemption or repurchase of such Preferred Shares out of (A) the capital paid up on such Preferred Shares or (B) the funds of the Company which would otherwise be available for dividend or distribution or (C) the proceeds of a fresh issue of shares made for the purpose, or any combination of (A), (B) and/or (C), with the proceeds of redemption or repurchase thereof applied as payment in full for the subscription of the relevant number of Ordinary Shares.
22.3 Adjustments for Dividends, Splits, Subdivisions, Combinations, or Consolidation of Ordinary Shares. In the event the number of outstanding Ordinary Shares shall be increased by a share dividend payable in Ordinary Shares, subdivision, or other similar
transaction occurring after the Closing, into a greater number of Ordinary Shares, the Ordinary Shares issuable upon conversion of Preferred Shares then in effect shall, concurrently with the effectiveness of such event, be increased in proportion to the percentage increase in the outstanding number of Ordinary Shares. In the event the number of outstanding Ordinary Shares shall be decreased by a combination, consolidation, or other similar transaction occurring after the Closing into a lesser number of Ordinary Shares, the Ordinary Shares issuable upon conversion of Preferred Shares then in effect shall, concurrently with the effectiveness of such event, be decreased in proportion to the percentage decrease in the outstanding number of Ordinary Shares.
22.4 Adjustments on Issuance of Additional Shares. Notwithstanding the foregoing and without prejudice to the generality of Article 27 ("Protective Provisions"), if the Company shall issue any Additional Shares at a subscription price per Ordinary Share (on an as-converted basis) less than the Preferred Share Conversion Price (such Preferred Share Conversion Price is initially equal to the Per New Share Purchase Price, thereafter, as adjusted from time to time), in effect on the date of and immediately prior to such issuance, the Preferred Share Conversion Price, shall be reduced, concurrently with such issuance, to a price (calculated to the nearest cent) to be determined as set forth below. The mathematical formula for determining the adjusted Preferred Share Conversion Price is as follows and is subject to the more detailed textual description set forth thereafter:
AP = OP * (OS + (NP/OP))/(OS + NS)
WHERE:
AP = adjusted Preferred Share Conversion Price
OP = old Preferred Share Conversion Price
OS = the number of outstanding Ordinary Shares immediately before the Additional Shares are issued or sold
NP = the total consideration received for the issuance or sale of Additional Shares
NS = the number of Additional Shares issued or sold
The newly adjusted Preferred Share Conversion Price shall be an amount equal to the price determined by multiplying the old Preferred Share Conversion Price, by a fraction:
(i) the numerator of which shall be the number of Ordinary Shares outstanding immediately prior to such issuance plus the number of Ordinary Shares that the aggregate consideration received by the Company for the total number of Additional Shares would purchase at the old Preferred Share Conversion Price; and
(ii) the denominator of which shall be the sum of the number of Ordinary Shares outstanding immediately prior to such issuance plus the number of such Additional Shares so issued;
REDEMPTION AND REPURCHASE OF SHARES
23 Subject to the provisions of the Statute the Company may issue Shares that are to be redeemed or are liable to be redeemed at the option of the Member or the Company. The redemption of such Shares shall be effected in such manner as the Company may, by Special Resolution, determine before the issue of the Shares.
24 Subject to the provisions of the Statute, the Company may purchase its own Shares (including any redeemable Shares) provided that the Members shall have approved the manner of purchase by Ordinary Resolution.
25 The Company may make a payment in respect of the redemption or purchase of its own Shares in any manner permitted by the Statute, including out of capital.
26 Mandatory Redemption.
26.1 If for any reason the Company has not completed a Qualifying IPO on or prior to December 31, 2008, the Investors (and/or any of its Affiliates who acquired the Shares from the Investors after the Closing in accordance with the Shareholders Agreement), acting jointly, shall have the right at any time to require the Company to redeem all of the Shares the Investor subscribed for and purchased pursuant to the Share Purchase Agreement and any Ordinary Shares issued upon conversion of the Preferred Shares by delivering a written notice to the Company.
26.2 The Investors' right to exercise the redemption right with respect to this Article 26 shall terminate 90 days following December 31, 2008. Within 10 days after the delivery of the notice described above, the Investors may, upon written notice to the Company, withdraw and rescind such notice, whereupon the Investors' and/or their Affiliates' redemption right described above shall be deemed not to have been exercised.
26.3 The aggregate redemption purchase price shall be equal to (i) 100% of the purchase price paid by the Investors to both the Company and Brothers Capital pursuant to the Share Purchase Agreement plus (ii) an amount equal to all accrued but unpaid dividends on all such Shares, provided that the redemption price shall be ratably reduced to take account of any previous transfers by the Investors in accordance with Articles 14, 15 and 16 hereof.
COVENANTS
27 Protective Provisions.
27.1 Subject to Article 27.2 and applicable laws, the Company shall not take and shall prevent its Subsidiaries from taking, and each Member 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:
27.1.1 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;
27.1.2 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;
27.1.3 the liquidation, dissolution or winding up of, or the suspension of payments or assignment to creditors by any of the Company's Subsidiaries;
27.1.4 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 or any of its Subsidiaries;
27.1.5 any change in the share capital 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;
27.1.6 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;
27.1.7 any redemption, purchase or other acquisition by the Company or any of its Subsidiaries of any of its securities;
27.1.8 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 Article 130 ("Certain Dividends");
27.1.9 except for arrangements with Taiyuan Relord Enterprise Development Group Co., Ltd. (chinese characters) relating to seedlings, any transaction or a series of related transactions 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 of an equityholder of the Company or any Subsidiary on the other, except for compensatory transactions approved by the Board of Directors;
27.1.10 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;
27.1.11 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;
27.1.12 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;
27.1.13 the 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;
27.1.14 any 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 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;
27.1.15 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;
27.1.16 the establishment of the annual budgets of the Company and any of its Subsidiaries, and any capital expenditure not provided for in such budgets in excess of US$1,000,000;
27.1.17 the selection or change of the Company's independent accountants; or
27.1.18 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.
27.2 The rights of the Investors provided in Articles 27 and 97 ("Appointment and Removal of Directors") and 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.
VARIATION OF RIGHTS OF SHARES
28 If at any time the share capital of the Company is divided into different classes of Shares, the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class) may, subject to the provisions of Article 27 ("Protective Provisions"), whether or not the Company is being wound up, be varied with the consent in writing of the holders of three-quarters of the issued Shares of that class, or with the sanction of a Special Resolution passed at a general meeting of the holders of the Shares of that class.
29 The provisions of these Articles relating to general meetings shall apply to every class meeting of the holders of one class of Shares except that the necessary quorum shall be one person holding or representing by proxy at least one third of the issued Shares of the class and that any holder of Shares of the class present in person or by proxy may demand a poll.
30 The rights conferred upon the holders of the Shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the Shares of that class, be deemed to be varied by the creation or issue of further Shares ranking pari passu therewith.
COMMISSION ON SALE OF SHARES
31 The Company may, in so far as the Statute permits, pay a commission to any person in consideration of his subscribing or agreeing to subscribe whether absolutely or conditionally for any Shares of the Company. Such commissions may be satisfied by the payment of cash and/or the issue of fully or partly paid-up Shares. The Company may also on any issue of Shares pay such brokerage as may be lawful.
NON RECOGNITION OF TRUSTS
32 The Company shall not be bound by or compelled to recognise in any way (even when notified) any equitable, contingent, future or partial interest in any Share, or (except only as is otherwise provided by these Articles or the Statute) any other rights in respect of any Share other than an absolute right to the entirety thereof in the registered holder.
LIEN ON SHARES
33 The Company shall have a first and paramount lien on all Shares (whether fully paid-up or not) registered in the name of a Member (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not) by such Member or his estate, either alone or jointly with any other person, whether a Member or not, but the Directors may at any time declare any Share to be wholly or in part exempt from the provisions of this Article. The registration of a transfer of any such Share shall operate as a waiver of the Company's lien thereon. The Company's lien on a Share shall also extend to any amount payable in respect of that Share.
34 The Company may sell, in such manner as the Directors think fit, any Shares on which the Company has a lien, if a sum in respect of which the lien exists is presently payable, and is not paid within fourteen clear days after notice has been given to the holder of the Shares, or to the person entitled to it in consequence of the death or bankruptcy of the holder, demanding payment and stating that if the notice is not complied with the Shares may be sold.
35 To give effect to any such sale the Directors may authorise any person to execute an instrument of transfer of the Shares sold to, or in accordance with the directions of, the purchaser. The purchaser or his nominee shall be registered as the holder of the Shares comprised in any such transfer, and he shall not be bound to see to the application of the purchase money, nor shall his title to the Shares be affected by any irregularity or invalidity in the sale or the exercise of the Company's power of sale under these Articles.
36 The net proceeds of such sale after payment of costs, shall be applied in payment of such part of the amount in respect of which the lien exists as is presently payable and any residue shall (subject to a like lien for sums not presently payable as existed upon the Shares before the sale) be paid to the person entitled to the Shares at the date of the sale.
CALL ON SHARES
37 Subject to the terms of the allotment the Directors may from time to time make calls upon the Members in respect of any monies unpaid on their Shares (whether in respect of par value or premium), and each Member shall (subject to receiving at least fourteen days notice specifying the time or times of payment) pay to the Company at the time or times so specified the amount called on the Shares. A call may be revoked or postponed as the Directors may determine. A call may be required to be paid by instalments. A person upon whom a call is made shall remain liable for calls made upon him notwithstanding the subsequent transfer of the Shares in respect of which the call was made.
38 A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed.
39 The joint holders of a Share shall be jointly and severally liable to pay all calls in respect thereof.
40 If a call remains unpaid after it has become due and payable, the person from whom it is due shall pay interest on the amount unpaid from the day it became due and payable until it is paid at such rate as the Directors may determine, but the Directors may waive payment of the interest wholly or in part.
41 An amount payable in respect of a Share on allotment or at any fixed date, whether on account of the par value of the Share or premium or otherwise, shall be deemed to be a call and if it is not paid all the provisions of these Articles shall apply as if that amount had become due and payable by virtue of a call.
42 The Directors may issue Shares with different terms as to the amount and times of payment of calls, or the interest to be paid.
43 The Directors may, if they think fit, receive an amount from any Member willing to advance all or any part of the monies uncalled and unpaid upon any Shares held by him, and may (until the amount would otherwise become payable) pay interest at such rate as may be agreed upon between the Directors and the Member paying such amount in advance.
44 No such amount paid in advance of calls shall entitle the Member paying such amount to any portion of a Dividend declared in respect of any period prior to the date upon which such amount would, but for such payment, become payable.
FORFEITURE OF SHARES
45 If a call remains unpaid after it has become due and payable the Directors may give to the person from whom it is due not less than fourteen clear days notice requiring payment of the amount unpaid together with any interest, which may have accrued. The notice shall specify where payment is to be made and shall state that if the notice is not complied with the Shares in respect of which the call was made will be liable to be forfeited.
46 If the notice is not complied with any Share in respect of which it was given may, before the payment required by the notice has been made, be forfeited by a resolution of the Directors. Such forfeiture shall include all Dividends or other monies declared payable in respect of the forfeited Share and not paid before the forfeiture.
47 A forfeited Share may be sold, re-allotted or otherwise disposed of on such terms and in such manner as the Directors think fit and at any time before a sale, re-allotment or disposition the forfeiture may be cancelled on such terms as the Directors think fit. Where for the purposes of its disposal a forfeited Share is to be transferred to any person the Directors may authorise some person to execute an instrument of transfer of the Share in favour of that person.
48 A person any of whose Shares have been forfeited shall cease to be a Member in respect of them and shall surrender to the Company for cancellation the certificate for the Shares forfeited and shall remain liable to pay to the Company all monies which at the date of forfeiture were payable by him to the Company in respect of those Shares together with interest, but his liability shall cease if and when the Company shall have received payment in full of all monies due and payable by him in respect of those Shares.
49 A certificate in writing under the hand of one Director or officer of the Company that a Share has been forfeited on a specified date shall be conclusive evidence of the fact as against all persons claiming to be entitled to the Share. The certificate shall (subject to the execution of an instrument of transfer) constitute a good title to the Share and the person to whom the Share is disposed of shall not be bound to see to the application of the purchase money, if any, nor shall his title to the Share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the Share.
50 The provisions of these Articles as to forfeiture shall apply in the case of non payment of any sum which, by the terms of issue of a Share, becomes payable at a fixed time, whether on account of the par value of the Share or by way of premium as if it had been payable by virtue of a call duly made and notified.
TRANSMISSION OF SHARES
51 If a Member dies the survivor or survivors where he was a joint holder, and his legal personal representatives where he was a sole holder, shall be the only persons recognised by the Company as having any title to his interest. The estate of a deceased Member is not thereby released from any liability in respect of any Share, which had been jointly held by him.
52 Any person becoming entitled to a Share in consequence of the death or bankruptcy or liquidation or dissolution of a Member (or in any other way than by transfer) may, upon such evidence being produced as may from time to time be required by the Directors, elect either to become the holder of the Share or to have some person nominated by him as the transferee. If he elects to become the holder he shall give notice to the Company to that effect, but the Directors shall, in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the Share by that Member before his death or bankruptcy, as the case may be.
53 If the person so becoming entitled shall elect to be registered himself as holder he shall deliver or send to the Company a notice in writing signed by him stating that he so elects.
54 A person becoming entitled to a Share by reason of the death or bankruptcy or liquidation or dissolution of the holder (or in any other case than by transfer) shall be entitled to the same Dividends and other advantages to which he would be entitled if he were the registered holder of the Share. However, he shall not, before being registered as a Member in respect of the Share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company and the Directors may at any time give notice requiring any such person to elect either to be registered himself or to transfer
the Share. If the notice is not complied with within ninety days the Directors may thereafter withhold payment of all Dividends, bonuses or other monies payable in respect of the Share until the requirements of the notice have been complied with.
AMENDMENTS OF MEMORANDUM AND ARTICLES OF ASSOCIATION AND ALTERATION OF CAPITAL
55 Subject to Article 27 ("Protective Provisions"), the Company may by Ordinary Resolution:
55.1 increase the share capital by such sum as the resolution shall prescribe and with such rights, priorities and privileges annexed thereto, as the Company in general meeting may determine;
55.2 consolidate and divide all or any of its share capital into Shares of larger amount than its existing Shares;
55.3 by subdivision of its existing Shares or any of them divide the whole or any part of its share capital into Shares of smaller amount than is fixed by the Memorandum or into Shares without par value; and
55.4 cancel any Shares that at the date of the passing of the resolution have not been taken or agreed to be taken by any person.
56 All new Shares created in accordance with the provisions of the preceding Article shall be subject to the same provisions of the Articles with reference to the payment of calls, liens, transfer, transmission, forfeiture and otherwise as the Shares in the original share capital.
57 Subject to the provisions of the Statute, and the provisions of these Articles as regards the matters to be dealt with by Ordinary Resolution, the Company may by Special Resolution:
57.1 change its name;
57.2 alter or add to these Articles;
57.3 alter or add to the Memorandum with respect to any objects, powers or other matters specified therein; and
57.4 reduce its share capital and any capital redemption reserve fund.
REGISTERED OFFICE
58 Subject to the provisions of the Statute, the Company may by resolution of the Directors change the location of its Registered Office.
GENERAL MEETINGS
59 All general meetings other than annual general meetings shall be called extraordinary general meetings.
60 The Company shall, if required by the Statute, in each year hold a general meeting as its annual general meeting, and shall specify the meeting as such in the notices calling it. The annual general meeting shall be held at such time and place as the Directors shall appoint and if no other time and place is prescribed by them, it shall be held at the Registered Office on the second Wednesday in December of each year at ten o'clock in the morning. At these meetings the report of the Directors (if any) shall be presented.
61 The Company may hold an annual general meeting, but shall not (unless required by Statute) be obliged to hold an annual general meeting.
62 The Directors may call general meetings, and they shall on a Members requisition forthwith proceed to convene an extraordinary general meeting of the Company.
63 A Members requisition is a requisition of Members of the Company holding at the date of deposit of the requisition not less than ten per cent. in par value of the capital of the Company which as at that date carries the right of voting at general meetings of the Company.
64 The requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the Registered Office, and may consist of several documents in like form each signed by one or more requisitionists.
65 If the Directors do not within twenty-one days from the date of the deposit of the requisition duly proceed to convene a general meeting to be held within a further twenty-one days, the requisitionists, or any of them representing more than one-half of the total voting rights of all of them, may themselves convene a general meeting, but any meeting so convened shall not be held after the expiration of three months after the expiration of the said twenty-one days.
66 A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by Directors.
NOTICE OF GENERAL MEETINGS
67 At least five days' notice shall be given of any general meeting. Every notice shall be exclusive of the day on which it is given or deemed to be given and of the day for which it is given and shall specify the place, the day and the hour of the meeting and the general nature of the business and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in this regulation has been given and whether or not the provisions of the Articles regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed:
67.1 in the case of an annual general meeting, by all the Members (or their proxies) entitled to attend and vote thereat; and
67.2 in the case of an extraordinary general meeting, by a majority in number of the Members (or their proxies) having a right to attend and vote at the meeting, being a majority together holding not less than ninety five per cent. in par value of the Shares giving that right.
68 The accidental omission to give notice of a general meeting to, or the non receipt of notice of a meeting by, any person entitled to receive notice shall not invalidate the proceedings of that meeting.
PROCEEDINGS AT GENERAL MEETINGS
69 No business shall be transacted at any general meeting unless a quorum is present. Two Members being individuals present in person or by proxy or if a corporation or other non-natural person by its duly authorised representative or proxy shall be a quorum unless the Company has only one Member entitled to vote at such general meeting in which case the quorum shall be that one Member present in person or by proxy or (in the case of a corporation or other non-natural person) by a duly authorised representative or proxy.
70 A person may participate at a general meeting by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other. Participation by a person in a general meeting in this manner is treated as presence in person at that meeting.
71 A resolution (including a Special Resolution) in writing (in one or more counterparts) signed by all Members for the time being entitled to receive notice of and to attend and vote at general meetings (or, being corporations, signed by their duly authorised representatives) shall be as valid and effective as if the resolution had been passed at a general meeting of the Company duly convened and held.
72 If a quorum is not present within half an hour from the time appointed for the meeting or if during such a meeting a quorum ceases to be present, the meeting, if convened upon the requisition of Members, shall be dissolved and in any other case it shall stand adjourned to the same day in the next week at the same time and place or to such other day, time or such other place as the Directors may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting the Members present shall be a quorum.
73 The chairman, if any, of the board of Directors shall preside as chairman at every general meeting of the Company, or if there is no such chairman, or if he shall not be present within fifteen minutes after the time appointed for the holding of the meeting, or is unwilling to act, the Directors present shall elect one of their number to be chairman of the meeting.
74 If no Director is willing to act as chairman or if no Director is present within fifteen minutes after the time appointed for holding the meeting, the Members present shall choose one of their number to be chairman of the meeting.
75 The chairman may, with the consent of a meeting at which a quorum is present, (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a general meeting is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. Otherwise it shall not be necessary to give any such notice.
76 A resolution put to the vote of the meeting shall be decided on a poll.
77 A poll shall be taken as the chairman directs, and the result of the poll shall be deemed to be the resolution of the general meeting at which the poll was demanded.
78 Subject to Article 27 ("Protective Provisions"), in the case of an equality of votes, whether on a show of hands or on a poll, the chairman shall be entitled to a second or casting vote.
VOTES OF MEMBERS
79 Subject to Article 21 ("Voting Rights"), on a poll every Member shall have one vote for every Share of which he is the holder.
80 In the case of joint holders of record the vote of the senior holder who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and seniority shall be determined by the order in which the names of the holders stand in the Register of Members.
81 A Member of unsound mind, or in respect of whom an order has been made by any court, having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, receiver, curator bonis, or other person on such Member's behalf appointed by that court, and any such committee, receiver, curator bonis or other person may vote by proxy.
82 No person shall be entitled to vote at any general meeting or at any separate meeting of the holders of a class of Shares unless he is registered as a Member on the record date for such meeting nor unless all calls or other monies then payable by him in respect of Shares have been paid.
83 No objection shall be raised to the qualification of any voter except at the general meeting or adjourned general meeting at which the vote objected to is given or tendered and every vote not disallowed at the meeting shall be valid. Any objection made in due time shall be referred to the chairman whose decision shall be final and conclusive.
84 Votes may be cast either personally or by proxy. A Member may appoint more than one proxy or the same proxy under one or more instruments to attend and vote at a meeting. Where a Member appoints more than one proxy the instrument of proxy shall state which proxy is entitled to vote on a show of hands.
85 A Member holding more than one Share need not cast the votes in respect of his Shares in the same way on any resolution and therefore may vote a Share or some or all such Shares either for or against a resolution and/or abstain from voting a Share or some or all of the Shares and, subject to the terms of the instrument appointing him, a proxy appointed under one or more instruments may vote a Share or some or all of the Shares in respect of which he is appointed either for or against a resolution and/or abstain from voting.
PROXIES
86 The instrument appointing a proxy shall be in writing, be executed under the hand of the appointor or of his attorney duly authorised in writing, or, if the appointor is a corporation under the hand of an officer or attorney duly authorised for that purpose. A proxy need not be a Member of the Company.
87 The instrument appointing a proxy shall be deposited at the Registered Office or at such other place as is specified for that purpose in the notice convening the meeting, or in any instrument of proxy sent out by the Company
87.1 not less than 48 hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote; or
87.2 in the case of a poll taken more than 48 hours after it is demanded, be deposited as aforesaid after the poll has been demanded and not less than 24 hours before the time appointed for the taking of the poll; or
87.3 where the poll is not taken forthwith but is taken not more than 48 hours after it was demanded be delivered at the meeting at which the poll was demanded to the chairman or to the secretary or to any director;
provided that the Directors may in the notice convening the meeting, or in an instrument of proxy sent out by the Company, direct that the instrument appointing a proxy may be deposited (no later than the time for holding the meeting or adjourned meeting) at the Registered Office or at such other place as is specified for that purpose in the notice convening the meeting, or in any instrument of proxy sent out by the Company. The chairman may in any event at his discretion direct that an instrument of proxy shall be deemed to have been duly deposited. An instrument of proxy that is not deposited in the manner permitted shall be invalid.
88 The instrument appointing a proxy may be in any usual or common form and may be expressed to be for a particular meeting or any adjournment thereof or generally until revoked. An instrument appointing a proxy shall be deemed to include the power to demand or join or concur in demanding a poll.
89 Votes given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executed, or the transfer of the Share in respect of which the proxy is given unless notice in writing of such death, insanity, revocation or transfer was received by the Company at the Registered Office before the commencement of the general meeting, or adjourned meeting at which it is sought to use the proxy.
CORPORATE MEMBERS
90 Any corporation or other non-natural person which is a Member may in accordance with its constitutional documents, or in the absence of such provision by resolution of its directors or other governing body, authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members, and the person so authorised shall be entitled to exercise the same powers on behalf of the corporation which he represents as the corporation could exercise if it were an individual Member.
SHARES THAT MAY NOT BE VOTED
91 Shares in the Company that are beneficially owned by the Company shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding Shares at any given time.
DIRECTORS
92 There shall be a board of Directors consisting of seven Directors (exclusive of alternate Directors)and, subject to Article 97 ("Appointment and Removal of Directors"), the Company may from time to time by Ordinary Resolution increase or reduce the limits in the number of Directors.
POWERS OF DIRECTORS
93 Subject to the provisions of the Statute, the Memorandum and the Articles and to any directions given by Special Resolution, the business of the Company shall be managed by the Directors who may exercise all the powers of the Company. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior act of the Directors which would have been valid if that alteration had not been made or that direction had not been given. A duly convened meeting of Directors at which a quorum is present may exercise all powers exercisable by the Directors.
94 All cheques, promissory notes, drafts, bills of exchange and other negotiable instruments and all receipts for monies paid to the Company shall be signed, drawn, accepted, endorsed or otherwise executed as the case may be in such manner as the Directors shall determine by resolution.
95 The Directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any Director who has held any other salaried office or place of profit with the Company or to his widow or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.
96 Subject to Article 27 ("Protective Provisions"), the Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and other such securities whether outright or as security for any debt, liability or obligation of the Company or of any third party.
APPOINTMENT AND REMOVAL OF DIRECTORS
97 Appointment and Removal of Directors.
97.1 Each Member 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 five designees nominated by Brothers Capital, and one designee nominated by the Investors. The Investors shall also have the right to nominate one independent director, subject to the approval by the Board of Directors.
97.2 If any of Brothers Capital or the Investors shall notify the other Members of its decision to remove one or more of its designated designees, each Member shall 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 or Directors. 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.
97.3 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 this Article, to fill the vacancy created thereby. Each Member shall 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.
97.4 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.
VACATION OF OFFICE OF DIRECTOR
98 The office of a Director shall be vacated if:
98.1 he gives notice in writing to the Company that he resigns the office of Director; or
98.2 if he absents himself (without being represented by proxy or an alternate Director appointed by him) from three consecutive meetings of the board of Directors without special leave of absence from the Directors, and they pass a resolution that he has by reason of such absence vacated office; or
98.3 if he dies, becomes bankrupt or makes any arrangement or composition with his creditors generally; or
98.4 if he is found to be or becomes of unsound mind; or
98.5 if all the other Directors of the Company (being not less than two in number) resolve that he should be removed as a Director.
PROCEEDINGS OF DIRECTORS
99 The quorum for the transaction of the business of the Directors may be fixed by the Directors, and unless so fixed shall be four if there are four or more Directors, three if there are three or more Directors, two if there are two or more Directors, and shall be one if there is only one Director. A person who holds office as an alternate Director shall, if his appointor is not present, be counted in the quorum. A Director who also acts as an alternate Director shall, if his appointor is not present, count twice towards the quorum.
100 Subject to the provisions of the Articles, the Directors may regulate their proceedings as they think fit. Questions arising at any meeting shall be decided by a majority of votes. In the case of an equality of votes, the chairman shall have a second or casting vote. A Director who is also an alternate Director shall be entitled in the absence of his appointor to a separate vote on behalf of his appointor in addition to his own vote.
101 A person may participate in a meeting of the Directors or committee of Directors by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other at the same time. Participation by a person in a meeting in this manner is treated as presence in person at that meeting. Unless otherwise determined by the Directors the meeting shall be deemed to be held at the place where the chairman is at the start of the meeting.
102 A resolution in writing (in one or more counterparts) signed by all the Directors or all the members of a committee of Directors (an alternate Director being entitled to sign such a resolution on behalf of his appointor) shall be as valid and effectual as if it had been passed at a meeting of the Directors, or committee of Directors as the case may be, duly convened and held.
103 A Director or alternate Director may, or other officer of the Company on the requisition of a Director or alternate Director shall, call a meeting of the Directors by at least two days' notice in writing to every Director and alternate Director which notice shall set forth the general nature of the business to be considered unless notice is waived by all the Directors (or their alternates) either at, before or after the meeting is held.
104 The continuing Directors may act notwithstanding any vacancy in their body, but if and so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors the continuing Directors or Director may act for the purpose of increasing the number of Directors to that number, or of summoning a general meeting of the Company, but for no other purpose.
105 The Directors may elect a chairman of their board and determine the period for which he is to hold office; but if no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the Directors present may choose one of their number to be chairman of the meeting.
106 All acts done by any meeting of the Directors or of a committee of Directors (including any person acting as an alternate Director) shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any Director or alternate Director, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and qualified to be a Director or alternate Director as the case may be.
107 A Director but not an alternate Director may be represented at any meetings of the board of Directors by a proxy appointed in writing by him. The proxy shall count towards the quorum and the vote of the proxy shall for all purposes be deemed to be that of the appointing Director.
PRESUMPTION OF ASSENT
108 A Director of the Company who is present at a meeting of the board of Directors at which action on any Company matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent from such action with the person acting as the chairman or secretary of the meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favour of such action.
DIRECTORS' INTERESTS
109 A Director may hold any other office or place of profit under the Company (other than the office of Auditor) in conjunction with his office of Director for such period and on such terms as to remuneration and otherwise as the Directors may determine.
110 A Director may act by himself or his firm in a professional capacity for the Company and he or his firm shall be entitled to remuneration for professional services as if he were not a Director or alternate Director.
111 A Director or alternate Director of the Company may be or become a director or other officer of or otherwise interested in any company promoted by the Company or in which the Company may be interested as shareholder or otherwise, and no such Director or alternate Director shall be accountable to the Company for any remuneration or other benefits received by him as a director or officer of, or from his interest in, such other company.
112 In addition to further restrictions set forth in these Articles (including but not limited to Article 97 ("Appointment and Removal of Directors")), no person shall be disqualified from the office of Director or alternate Director or prevented by such office from contracting with the Company, either as vendor, purchaser or otherwise, nor shall any such contract or any contract or transaction entered into by or on behalf of the Company
in which any Director or alternate Director shall be in any way interested be or be liable to be avoided, nor shall any Director or alternate Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or transaction by reason of such Director holding office or of the fiduciary relation thereby established. A Director (or his alternate Director in his absence) shall be at liberty to vote in respect of any contract or transaction in which he is interested provided that the nature of the interest of any Director or alternate Director in any such contract or transaction shall be disclosed by him at or prior to its consideration and any vote thereon.
113 A general notice that a Director or alternate Director is a shareholder, director, officer or employee of any specified firm or company and is to be regarded as interested in any transaction with such firm or company shall be sufficient disclosure for the purposes of voting on a resolution in respect of a contract or transaction in which he has an interest, and after such general notice it shall not be necessary to give special notice relating to any particular transaction.
MINUTES
114 The Directors shall cause minutes to be made in books kept for the purpose of all appointments of officers made by the Directors, all proceedings at meetings of the Company or the holders of any class of Shares and of the Directors, and of committees of Directors including the names of the Directors or alternate Directors present at each meeting.
DELEGATION OF DIRECTORS' POWERS
115 The Directors may delegate any of their powers to any committee consisting of one or more Directors. They may also delegate to any managing director or any Director holding any other executive office such of their powers as they consider desirable to be exercised by him provided that an alternate Director may not act as managing director and the appointment of a managing director shall be revoked forthwith if he ceases to be a Director. Any such delegation may be made subject to any conditions the Directors may impose, and either collaterally with or to the exclusion of their own powers and may be revoked or altered. Subject to any such conditions, the proceedings of a committee of Directors shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying.
116 The Directors may establish any committees, local boards or agencies or appoint any person to be a manager or agent for managing the affairs of the Company and may appoint any person to be a member of such committees or local boards. Any such appointment may be made subject to any conditions the Directors may impose, and either collaterally with or to the exclusion of their own powers and may be revoked or altered. Subject to any such conditions, the proceedings of any such committee, local board or agency shall be governed by the Articles regulating the proceedings of Directors, so far as they are capable of applying.
117 The Directors may by power of attorney or otherwise appoint any person to be the agent of the Company on such conditions as the Directors may determine, provided that the delegation is not to the exclusion of their own powers and may be revoked by the Directors at any time.
118 The Directors may by power of attorney or otherwise appoint any company, firm, person or body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or authorised signatory of the Company for such purpose and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such powers of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such attorneys or authorised signatories as the Directors may think fit and may also authorise any such attorney or authorised signatory to delegate all or any of the powers, authorities and discretions vested in him.
119 The Directors may appoint such officers as they consider necessary on such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the Directors may think fit. Unless otherwise specified in the terms of his appointment an officer may be removed by resolution of the Directors or Members.
ALTERNATE DIRECTORS
120 Any Director (other than an alternate Director) may by writing appoint any other Director, or any other person willing to act, to be an alternate Director and by writing may remove from office an alternate Director so appointed by him.
121 An alternate Director shall be entitled to receive notice of all meetings of Directors and of all meetings of committees of Directors of which his appointor is a member, to attend and vote at every such meeting at which the Director appointing him is not personally present, and generally to perform all the functions of his appointor as a Director in his absence.
122 An alternate Director shall cease to be an alternate Director if his appointor ceases to be a Director.
123 Any appointment or removal of an alternate Director shall be by notice to the Company signed by the Director making or revoking the appointment or in any other manner approved by the Directors.
124 An alternate Director shall be deemed for all purposes to be a Director and shall alone be responsible for his own acts and defaults and shall not be deemed to be the agent of the Director appointing him.
NO MINIMUM SHAREHOLDING
125 No Directors are required to hold Shares.
REMUNERATION OF DIRECTORS
126 The remuneration to be paid to the Directors, if any, shall be such remuneration as the Directors shall determine. The Directors shall also be entitled to be paid all travelling, hotel and other expenses properly incurred by them in connection with their attendance at meetings of Directors or committees of Directors, or general meetings of the Company, or separate meetings of the holders of any class of Shares or debentures of the Company, or otherwise in connection with the business of the Company, or to receive a fixed allowance in respect thereof as may be determined by the Directors, or a combination partly of one such method and partly the other.
127 The Directors may by resolution approve additional remuneration to any Director for any services other than his ordinary routine work as a Director. Any fees paid to a Director who is also counsel or solicitor to the Company, or otherwise serves it in a professional capacity shall be in addition to his remuneration as a Director.
SEAL
128 The Company may, if the Directors so determine, have a Seal. The Seal shall only be used by the authority of the Directors or of a committee of the Directors authorised by the Directors. Every instrument to which the Seal has been affixed shall be signed by at least one person who shall be either a Director or some officer or other person appointed by the Directors for the purpose.
129 The Company may have for use in any place or places outside the Cayman Islands a duplicate Seal or Seals each of which shall be a facsimile of the common Seal of the Company and, if the Directors so determine, with the addition on its face of the name of every place where it is to be used.
130 A Director or officer, representative or attorney of the Company may without further authority of the Directors affix the Seal over his signature alone to any document of the Company required to be authenticated by him under seal or to be filed with the Registrar of Companies in the Cayman Islands or elsewhere wheresoever.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
131 Subject to the Statute and Articles 19 ("Preference Dividend") and 27 ("Protective Provisions"), the Directors may declare Dividends and distributions on Shares in issue and authorise payment of the Dividends or distributions out of the funds of the Company lawfully available therefor. No Dividend or distribution shall be paid except out of the realised or unrealised profits of the Company, or out of the share premium account or as otherwise permitted by the Statute.
132 Subject to Articles 19 ("Preference Dividend") and 133 ("Certain Dividends"), the holders of Ordinary Shares and Preferred Shares shall be entitled to receive dividends when and as declared by the Board of Directors.
133 Certain Dividends.
133.1 To the extent any Pre-Closing Retained Earnings have not been distributed to the Eligible Ordinary Shareholders as of the Closing, 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.
133.2 The Investors 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 Preferred Shares to Ordinary Shares prior to such declaration or payment.
134 Subject to Article 132, if any Share is issued on terms providing that it shall rank for Dividend as from a particular date, that Share shall rank for Dividend accordingly.
135 The Directors may deduct from any Dividend or distribution payable to any Member all sums of money (if any) then payable by him to the Company on account of calls or otherwise.
136 The Directors may declare that any Dividend or distribution be paid wholly or partly by the distribution of specific assets and in particular of shares, debentures, or securities of any other company or in any one or more of such ways and where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional Shares and fix the value for distribution of such specific assets or any part thereof and may determine that cash payments shall be made to any Members upon the basis of the value so fixed in order to adjust the rights of all Members and may vest any such specific assets in trustees as may seem expedient to the Directors.
137 Any Dividend, distribution, interest or other monies payable in cash in respect of Shares may be paid by wire transfer to the holder or by cheque or warrant sent through the post directed to the registered address of the holder or, in the case of joint holders, to the registered address of the holder who is first named on the Register of Members or to such person and to such address as such holder or joint holders may in writing direct. Every such cheque or warrant shall be made payable to the order of the person to whom it is sent. Any one of two or more joint holders may give effectual receipts for any Dividends, bonuses, or other monies payable in respect of the Share held by them as joint holders.
138 No Dividend or distribution shall bear interest against the Company.
139 Any Dividend which cannot be paid to a Member and/or which remains unclaimed after six months from the date of declaration of such Dividend may, in the discretion of the Directors, be paid into a separate account in the Company's name, provided that the Company shall not be constituted as a trustee in respect of that account and the Dividend shall remain as a debt due to the Member. Any Dividend which remains unclaimed after a period of six years from the date of declaration of such Dividend shall be forfeited and shall revert to the Company.
CAPITALISATION
140 The Directors may capitalise any sum standing to the credit of any of the Company's reserve accounts (including share premium account and capital redemption reserve fund) or any sum standing to the credit of profit and loss account or otherwise available for distribution and to appropriate such sum to Members in the proportions in which such sum would have been divisible amongst them had the same been a distribution of profits by way of Dividend and to apply such sum on their behalf in paying up in full unissued Shares for allotment and distribution credited as fully paid-up to and amongst them in the proportion aforesaid. In such event the Directors shall do all acts and things required to give effect to such capitalisation, with full power to the Directors to make such provisions as they think fit for the case of Shares becoming distributable in fractions (including provisions whereby the benefit of fractional entitlements accrue to the Company rather than to the Members concerned). The Directors may authorise any person to enter on behalf of all of the Members interested into an agreement with the Company providing for such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
141 The Directors shall cause proper books of account to be kept with respect to all sums of money received and expended by the Company and the matters in respect of which the receipt or expenditure takes place, all sales and purchases of goods by the Company and the assets and liabilities of the Company. Proper books shall not be deemed to be kept if there are not kept such books of account as are necessary to give a true and fair view of the state of the Company's affairs and to explain its transactions.
142 The Directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors and no Member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by Statute or authorised by the Directors or by the Company in general meeting.
143 The Directors may from time to time cause to be prepared and to be laid before the Company in general meeting profit and loss accounts, balance sheets, group accounts (if any) and such other reports and accounts as may be required by law.
AUDIT
144 The Directors may appoint an Auditor of the Company who shall hold office until removed from office by a resolution of the Directors, and may fix his or their remuneration.
145 Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the Directors and officers of the Company such information and explanation as may be necessary for the performance of the duties of the Auditor.
146 Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next annual general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an ordinary company, and at the next extraordinary general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an exempted company, and at any other time during their term of office, upon request of the Directors or any general meeting of the Members.
NOTICES
147 Notices shall be in writing and may be given by the Company to any Member either personally or by sending it by courier, post, cable, telex, fax or e-mail to him or to his address as shown in the Register of Members (or where the notice is given by e-mail by sending it to the e-mail address provided by such Member). Any notice, if posted from one country to another, is to be sent airmail.
148 Where a notice is sent by courier, service of the notice shall be deemed to be effected by delivery of the notice to a courier company, and shall be deemed to have been received on the third day (not including Saturdays or Sundays or public holidays) following the day on which the notice was delivered to the courier. Where a notice is sent by post, service of the notice shall be deemed to be effected by properly addressing, pre paying and posting a letter containing the notice, and shall be deemed to have been received on the fifth day (not including Saturdays or Sundays or public holidays) following the day on which the notice was posted. Where a notice is sent by cable, telex or fax, service of the notice shall be deemed to be effected by properly addressing and sending such notice and shall be deemed to have been received on the same day that it was transmitted. Where a notice is given by e-mail service shall be deemed to be effected by transmitting the e-mail to the e-mail address provided by the intended recipient and shall be deemed to have been received on the same day that it was sent, and it shall not be necessary for the receipt of the e-mail to be acknowledged by the recipient.
149 A notice may be given by the Company to the person or persons which the Company has been advised are entitled to a Share or Shares in consequence of the death or bankruptcy of a Member in the same manner as other notices which are required to be given under these Articles and shall be addressed to them by name, or by the title of representatives of the deceased, or trustee of the bankrupt, or by any like description at the address supplied for that purpose by the persons claiming to be so entitled, or at the option of the Company by giving the notice in any manner in which the same might have been given if the death or bankruptcy had not occurred.
150 Notice of every general meeting shall be given in any manner hereinbefore authorised to every person shown as a Member in the Register of Members on the record date for such meeting except that in the case of joint holders the notice shall be sufficient if given to the joint holder first named in the Register of Members and every person upon whom the ownership of a Share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a Member of record where the Member of record but for his death or bankruptcy would be entitled to receive notice of the meeting, and no other person shall be entitled to receive notices of general meetings.
WINDING UP
151 If the Company shall be wound up, and the assets available for distribution amongst the Members shall be insufficient to repay the whole of the share capital, such assets shall be distributed so that, as nearly as may be, the losses shall be borne by the Members in proportion to the par value of the Shares held by them. If in a winding up the assets available for distribution amongst the Members shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst the Members in proportion to the par value of the Shares held by them at the commencement of the winding up subject to a deduction from those Shares in respect of which there are monies due, of all monies payable to the Company for unpaid calls or otherwise. This Article is without prejudice to the rights of the holders of Shares issued upon special terms and conditions.
152 If the Company shall be wound up the liquidator may, with the sanction of a Special Resolution of the Company and any other sanction required by the Statute, divide amongst the Members in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for that purpose value any assets and determine how the division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the Members as the liquidator, with the like sanction, shall think fit, but so that no Member shall be compelled to accept any asset upon which there is a liability.
INDEMNITY
153 Every Director or officer of the Company shall be indemnified out of the assets of the Company against any liability incurred by him as a result of any act or failure to act in carrying out his functions other than such liability (if any) that he may incur by his own actual fraud or wilful default. No such Director or officer shall be liable to the Company for any loss or damage in carrying out his functions unless that liability arises through the actual fraud or wilful default of such Director or officer. References in this Article to actual fraud or wilful default mean a finding to such effect by a competent court in relation to the conduct of the relevant party.
FINANCIAL YEAR
154 Unless the Directors otherwise prescribe, the financial year of the Company shall end on 31st December in each year and, following the year of incorporation, shall begin on 1st January in each year.
TRANSFER BY WAY OF CONTINUATION
155 If the Company is exempted as defined in the Statute, it shall, subject to the provisions of the Statute and with the approval of a Special Resolution, have the power to register by way of continuation as a body corporate under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.
Exhibit 3.2
THE COMPANIES LAW (2007 REVISION)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
AMENDED AND RESTATED MEMORANDUM OF ASSOCIATION
OF
AGRIA CORPORATION
Adopted by Special Resolution
passed on 5 October 2007 and
effective immediately prior to completion of the Company's initial public offering of ordinary shares represented by American Depositary Shares
1. The name of the Company is AGRIA CORPORATION.
2. The Registered Office of the Company shall be at the offices of M&C Corporate Services Limited, P.O. Box 309 GT, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, or at such other place as the Directors may from time to time decide.
3. The objects for which the Company is established are unrestricted and the Company shall have full power and authority to carry out any object not prohibited by the Companies Law (2007 Revision) or as the same may be revised from time to time, or any other law of the Cayman Islands.
4. The liability of each Member is limited to the amount from time to time unpaid on such Member's shares.
5. The authorized share capital of the Company is US$50,000 divided into 500,000,000,000 shares of a nominal or par value of US$0.0000001 each. The Company has the power to redeem or purchase any of its shares and to increase or reduce the said capital subject to the provisions of the Companies Law (2007 Revision) and the Articles of Association and to issue any part of its capital, whether original, redeemed or increased with or without any preference, priority or special privilege or subject to any postponement of rights or to any conditions or restrictions and so that unless the conditions of issue shall otherwise expressly declare every issue of shares whether declared to be preference or otherwise shall be subject to the powers hereinbefore contained.
6. The Company has the power to register by way of continuation as a body corporate limited by shares under the laws of any jurisdiction outside the Cayman Islands and to be deregistered in the Cayman Islands.
7. Capitalized terms that are not defined in this Amended and Restated Memorandum of Association bear the same meaning as those given in the Amended and Restated Articles of Association of the Company adopted by Special Resolution passed on 5 October 2007 and effective immediately prior to completion of the Company's initial public offering of ordinary shares represented by American Depositary Shares.
THE COMPANIES LAW (2007 REVISION)
OF THE CAYMAN ISLANDS
COMPANY LIMITED BY SHARES
AMENDED AND RESTATED ARTICLES OF ASSOCIATION
OF
AGRIA CORPORATION
Adopted by Special Resolution
passed on 5 October 2007 and
effective immediately prior to completion of the Company's initial public offering of ordinary shares represented by American Depositary Shares
INTERPRETATION
1. In these Articles, unless otherwise defined, the defined terms shall have the meanings assigned to them as follows:
"ARTICLES"
the Amended and Restated Articles of Association adopted by Special Resolution on 5 October 2007 and effective immediately prior to completion of the Company's initial public offering of ordinary shares represented by American Depositary Shares, as from time to time altered or added to in accordance with the Statutes and these Articles;
"BOARD"
the board of Directors of the Company;
"BUSINESS DAY"
a day (excluding Saturdays or Sundays), on which banks in Hong Kong, Beijing and New York are open for general banking business throughout their normal business hours;
"COMMISSION"
Securities and Exchange Commission of the United States of America or any other federal agency for the time being administering the Securities Act;
"COMPANIES LAW"
the Companies Law (2007 Revision) of the Cayman Islands and any statutory amendment or re-enactment thereof. Where any provision of the Companies Law is referred to, the reference is to that provision as amended by any law for the time being in force;
"COMPANY"
Agria Corporation, a Cayman Islands company limited by shares;
"COMPANY'S WEBSITE"
the website of the Company, the address or domain name of which has been notified to Members;
"DIRECTORS" AND "BOARD OF DIRECTORS" AND "BOARD"
the directors of the Company for the time being, or as the case may be, the Directors assembled as a Board or as a committee thereof;
"ELECTRONIC"
the meaning given to it in the Electronic Transactions Law (2003 Revision) of the Cayman Islands and any amendment thereto or re-enactments thereof for the time being in force and includes every other law incorporated therewith or substituted therefore;
"ELECTRONIC COMMUNICATION"
electronic posting to the Company's Website, transmission to any number, address or internet website or other electronic delivery methods as otherwise decided and approved by not less than two-thirds of the vote of the Board;
"IN WRITING"
includes writing, printing, lithograph, photograph, type-writing and every other mode of representing words or figures in a legible and non-transitory form and, only where used in connection with a notice served by the Company on Members or other persons entitled to receive notices hereunder, shall also include a record maintained in an electronic medium which is accessible in visible form so as to be useable for subsequent reference;
"MEMBER"
a person whose name is entered in the Register of Members as the holder of a share or shares;
"MEMORANDUM OF ASSOCIATION"
the Memorandum of Association of the Company, as amended and re-stated from time to time;
"MONTH"
calendar month;
"ORDINARY RESOLUTION"
a resolution:
(a) passed by a simple majority of votes cast by such Members as, being entitled to do so, vote in person or, in the case of any Member being an organization, by its duly authorized representative or, where proxies are allowed, by proxy at a general meeting of the Company; or
(b) approved in writing by all of the Members entitled to vote at a general meeting of the Company in one or more instruments each signed by one or more of the Members and the effective date of the resolution so adopted shall be the date on which the instrument, or the last of such instruments if more than one, is executed;
"ORDINARY SHARES"
shares of par value of US$0.0000001 each in the capital of the Company with the rights set out in these Articles;
"PAID UP"
paid up as to the par value and any premium payable in respect of the issue of any shares and includes credited as paid up;
"REGISTER OF MEMBERS"
the register to be kept by the Company in accordance with Section 40 of the Companies Law;
"SEAL"
the Common Seal of the Company including any facsimile thereof;
"SECURITIES ACT"
the Securities Act of 1933 of the United States of America, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time;
"SHARE"
any share in the capital of the Company, including the Ordinary Shares and shares of other classes;
"SIGNED"
includes a signature or representation of a signature affixed by mechanical means or an electronic symbol or process attached to or logically associated with an electronic communication and executed or adopted by a person with the intent to sign the electronic communication;
"SPECIAL RESOLUTION"
a resolution passed in accordance with Section 60 of the Companies Law and includes an unanimous written resolution expressly passed as a special resolution;
"STATUTES"
the Companies Law and every other laws and regulations of the Cayman Islands for the time being in force concerning companies and affecting the Company;
"YEAR"
calendar year.
2. In these Articles, save where the context requires otherwise:
(a) words importing the singular number shall include the plural number and vice versa;
(b) words importing the masculine gender only shall include the feminine gender;
(c) words importing persons only shall include companies or associations or bodies of persons, whether corporate or not;
(d) "MAY" shall be construed as permissive and "SHALL" shall be construed as imperative;
(e) a reference to a dollar or dollars (or $) is a reference to dollars of the United States;
(f) references to a statutory enactment shall include reference to any amendment or re-enactment thereof for the time being in force;
(g) any phrase introduced by the terms "including", "include", "in particular" or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms; and
(h) Section 8 of the Electronic Transactions Law (2003 Revision) shall not reply.
3. Subject to the last two preceding Articles, any words defined in the Companies Law shall, if not inconsistent with the subject or context, bear the same meaning in these Articles.
PRELIMINARY
4. The business of the Company may be commenced as soon after incorporation as the Directors see fit, notwithstanding that only part of the shares may have been allotted or issued.
5. The registered office of the Company shall be at such address in the Cayman Islands as the Directors shall from time to time determine. The Company may in addition
establish and maintain such other offices and places of business and agencies in such places as the Directors may from time to time determine.
SHARE CAPITAL
6. The authorized share capital of the Company at the date of adoption of these Articles is US$50,000 divided into 450,000,000,000 ordinary shares of a nominal or par value of US$0.0000001 each and 50,000,000,000 preferred shares of a nominal or par value of US$0.0000001 each with power for the Company insofar as is permitted by law, to redeem or purchase any of its shares and to increase or reduce the said capital subject to the provisions of the Companies Law and these Articles and to issue any part of its capital, whether original, redeemed or increased with or without any preference, priority or special privilege or subject to any postponement of rights or to any conditions or restrictions and so that unless the conditions of issue shall otherwise expressly declare every issue of shares whether declared to be preference or otherwise shall be subject to the powers hereinbefore contained.
7. The Directors from time to time may, in their absolute discretion and without approval of Members, cause the Company to issue such amounts of preferred shares or other similar securities in one or more series as they deem necessary and appropriate and determine designations, powers, preferences, privileges and other rights, including dividend rights, conversion rights, terms of redemption and liquidation preferences, any or all of which may be greater than the powers and rights associated with the Ordinary Shares.
8. Subject to applicable regulatory requirements, the Directors from time to time may, in their absolute discretion and without approval of Members, cause the Company to issue additional ordinary shares without action by the Members to the extent of available authorized but unissued shares.
ISSUE OF SHARES
9. Subject to the provisions, if any, in the Articles and to any direction that may be given by the Company in a general meeting, the Directors may, in their absolute discretion and without approval of the holders of Ordinary Shares, cause the Company to issue such amounts of Ordinary Shares and/or preferred shares, grant rights over existing shares or issue other securities in one or more series as they deem necessary and appropriate and determine designations, powers, preferences, privileges and other rights, including dividend rights, conversion rights, terms of redemption and liquidation preferences, any or all of which may be greater than the powers and rights associated with the Ordinary Shares, at such times and on such other terms as they think proper. The Company shall not issue shares in bearer form.
REGISTER OF MEMBERS AND SHARE CERTIFICATES
10. The Company shall maintain a Register of its Members and every person whose name is entered as a Member in the Register of Members may, without payment, be entitled to a certificate after allotment or lodgement of transfer (or within such other period as the conditions of issue shall provide) in the form determined by the Directors if such person requests a certificate. All certificates shall specify the share or shares held by that person and the amount paid up thereon, provided that in respect of a share or
shares held jointly by several persons the Company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several joint holders shall be sufficient delivery to all. All certificates for shares shall be delivered personally or sent through the post addressed to the member entitled thereto at the Member's registered address as appearing in the register.
11. Every share certificate of the Company shall bear legends required under the applicable laws, including the Securities Act.
12. Any two or more certificates representing shares of any one class held by any Member may at the Member's request be cancelled and a single new certificate for all such shares may be issued in lieu of the cancelled certificates.
13. If a share certificate shall be damaged or defaced or alleged to have been lost, stolen or destroyed, a new certificate representing the same shares may be issued to the relevant member upon request subject to delivery up of the old certificate or (if alleged to have been lost, stolen or destroyed) compliance with such conditions as to evidence and indemnity and the payment of out-of-pocket expenses of the Company in connection with the request as the Directors may think fit.
14. In the event that shares are held jointly by several persons, any request may be made by any one of the joint holders and if so made shall be binding on all of the joint holders.
TRANSFER OF SHARES
15. The instrument of transfer of any share shall be in writing and shall be executed by or on behalf of the transferor and the transferor shall be deemed to remain the holder of a share until the name of the transferee is entered in the register in respect thereof.
16. The Directors may, in their absolute discretion (except with respect to a transfer from a Member to its Affiliate(s)), decline to register any transfer of shares without assigning any reason therefor. If the Directors refuse to register a transfer they shall notify the transferee within two months of such refusal. Notwithstanding the foregoing, if a transfer complies with the holder's transfer obligations and restrictions set forth under applicable law (including but not limited to U.S. securities law provisions related to insider trading) and these Articles, Directors shall promptly register such transfer. Further, any Director is authorized to confirm in writing addressed to the registered office to authorize a share transfer and to instruct that the register of members be updated accordingly, provided that the transfer complies with the holder's transfer obligations and restrictions set forth under applicable law and these Articles and such holder is not the Director who authorizes the transfer or an entity affiliated with such Director. Any Director is authorized to execute a share certificate in respect of such shares for and on behalf of the Company
17. The registration of transfers may be suspended at such time and for such periods as the Directors may from time to time determine, provided always that such registration shall not be suspended for more than forty-five days in any year.
REDEMPTION AND PURCHASE OF OWN SHARES
18. Subject to the provisions of the Statutes and these Articles, the Company may:
(a) issue shares on terms that they are to be redeemed or are liable to be redeemed at the option of the Company on such terms and in such manner as the Company may determine;
(b) purchase its own shares (including any redeemable shares) on such terms and in such manner as the Directors may determine; and
(c) make a payment in respect of the redemption or purchase of its own shares otherwise than out of profits or the proceeds of a fresh issue of shares.
19. Any share in respect of which notice of redemption has been given shall not be entitled to participate in the profits of the Company in respect of the period after the date specified as the date of redemption in the notice of redemption.
20. The redemption or purchase of any share shall not be deemed to give rise to the redemption or purchase of any other share.
21. The Directors may when making payments in respect of redemption or purchase of shares, if authorized by the terms of issue of the shares being redeemed or purchased or with the agreement of the holder of such shares, make such payment in any form of consideration permitted by the Statutes.
VARIATION OF RIGHTS ATTACHING TO SHARES
22. If at any time the share capital is divided into different classes of shares, the rights attaching to any class (unless otherwise provided by the terms of issue of the shares of that class) may, subject to these Articles, be varied or abrogated with the consent in writing of the holders of a majority of the issued shares of that class or with the sanction of a Special Resolution passed at a general meeting of the holders of the shares of that class.
23. The provisions of these Articles relating to general meetings shall apply to every such general meeting of the holders of one class of shares except that the necessary quorum shall be one person holding or representing by proxy at least one-third of the issued shares of the class and that any holder of shares of the class present in person or by proxy may demand a poll.
24. Notwithstanding Articles 22 and 23 above, the rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking in priority to or pari passu therewith. Further, notwithstanding Articles 22 and 23 above, the rights of the holders of ordinary shares shall not be deemed varied by the creation or issue of shares with preferred or other rights, which may be effected by the Directors as provided in these Articles without any vote or consent of the holders of ordinary shares.
COMMISSION ON SALE OF SHARES
25. The Company may in so far as the Statutes from time to time permit pay a commission to any person in consideration of his subscribing or agreeing to subscribe
whether absolutely or conditionally for any shares of the Company. Such commissions may be satisfied by the payment of cash or the lodgement of fully or partly paid-up shares or partly in one way and partly in the other. The Company may also on any issue of shares pay such brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
26. No person shall be recognised by the Company as holding any share upon any trust and the Company shall not be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future, or partial interest in any share, or any interest in any fractional part of a share, or (except only as is otherwise provided by these Articles or the Statutes) any other rights in respect of any share except an absolute right to the entirety thereof in the registered holder.
LIEN ON SHARES
27. The Company shall have a first and paramount lien and charge on all shares (whether fully paid-up or not) registered in the name of a Member (whether solely or jointly with others) for all debts, liabilities or engagements to or with the Company (whether presently payable or not) by such Member or his estate, either alone or jointly with any other person, whether a Member or not, but the Directors may at any time declare any share to be wholly or in part exempt from the provisions of this Article. The registration of a transfer of any such share shall operate as a waiver of the Company's lien (if any) thereon. The Company's lien (if any) on a share shall extend to all dividends or other monies payable in respect thereof.
28. The Company may sell, in such manner as the Directors think fit, any shares on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of 14 calendar days after a notice in writing, stating and demanding payment of such part of the amount in respect of which the lien exists as is presently payable, has been given to the registered holder for the time being of the share, or the persons entitled thereto by reason of his death or bankruptcy.
29. For giving effect to any such sale the Directors may authorise some person to transfer the shares sold to the purchaser thereof. The purchaser shall be registered as the holder of the shares comprised in any such transfer and he shall not be bound to see to the application of the purchase money, nor shall his title to the shares be affected by any irregularity or invalidity in the proceedings in reference to the sale.
30. The proceeds of the sale shall be received by the Company and applied in payment of such part of the amount in respect of which the lien exists as is presently payable, and the residue shall (subject to a like lien for sums not presently payable as existed upon the shares prior to the sale) be paid to the person entitled to the shares at the date of the sale.
CALLS ON SHARES
31. The Directors may from time to time make calls upon the Members in respect of any money unpaid on their shares, and each member shall (subject to receiving at least 14 calendar days notice specifying the time or times of payment) pay to the Company at
the time or times so specified the amount called on his shares. A call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed.
32. The joint holders of a share shall be jointly and severally liable to pay calls in respect thereof.
33. If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest upon the sum at the rate of eight percent per annum from the day appointed for the payment thereof to the time of the actual payment, but the Directors shall be at liberty to waive payment of that interest wholly or in part.
34. The provisions of these Articles as to the liability of joint holders and as to payment of interest shall apply in the case of non-payment of any sum which, by the terms of issue of a share, becomes payable at a fixed time, whether on account of the amount of the share, or by way of premium, as if the same had become payable by virtue of a call duly made and notified.
35. The Directors may make arrangements on the issue of shares for a difference between the Members, or the particular shares, in the amount of calls to be paid and in the times of payment.
36. The Directors may, if they think fit, receive from any member willing to advance the same all or any part of the moneys uncalled and unpaid upon any shares held by him, and upon all or any of the moneys so advanced may (until the same would, but for such advance, become presently payable) pay interest at such rate (not exceeding without the sanction of an Ordinary Resolution, eight percent. per annum) as may be agreed upon between the Member paying the sum in advance and the Directors. No such sum paid in advance of calls shall entitle the member paying such sum to any portion of a dividend declared in respect of any period prior to the date upon which such sum would, but for such payment, become presently payable.
FORFEITURE OF SHARES
37. If a Member fails to pay any call or installment of a call on the day appointed for payment thereof, the Directors may, at any time thereafter during such time as any part of such call or installment remains unpaid, serve a notice on him requiring payment of such much of the call or installment as is unpaid, together with any interest which may have accrued.
38. The notice shall name a further day (not earlier than the expiration of 14 calendar days from the date of the notice) on or before which the payment required by the notice is to be made, and shall state that in the event of non-payment at or before the time appointed the shares in respect of which the call was made will be liable to be forfeited.
39. If the requirements of any such notice as aforesaid are not complied with, any share in respect of which the notice has been given may at any time thereafter, before the payment required by notice has been made, be forfeited by a resolution of the Directors to that effect.
40. A forfeited share may be sold or otherwise disposed of on such terms and in such manner as the Directors think fit, and at any time before a sale or disposition the forfeiture may be cancelled on such terms as the Directors think fit.
41. A person whose shares have been forfeited shall cease to be a Member in respect of the forfeited shares, but shall, notwithstanding, remain liable to pay to the Company all moneys which at the date of forfeiture were payable by him to the Company in respect of the shares, but his liability shall cease if and when the Company receives payment in full of the fully paid up amount of the shares.
42. A statutory declaration in writing that the declarant is a Director of the Company, and that a share in the Company has been duly forfeited on a date stated in the declaration, shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. The Company may receive the consideration, if any, given for the share or any sale or disposition thereof and may execute a transfer of the share in favour of the person to whom the share is sold or disposed of and he shall thereupon be registered as the holder of the share, and shall not be bound to see to the application of the purchase money, if any, nor shall his title to the share be affected by any irregularity or invalidity in the proceedings in reference to the forfeiture, sale or disposal of the share.
43. The provisions of these Articles as to forfeiture shall apply in the case of non-payment of any sum which by the terms of issue of a share becomes due and payable, whether on account of the amount of the share, or by way of premium, as if the same had been payable by virtue of a call duly made and notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
44. The Company shall be entitled to charge a fee not exceeding one dollar (US$1.00) on the registration of every probate, letters of administration, certificate of death or marriage, power of attorney, notice in lieu of distringas, or other instrument.
TRANSMISSION OF SHARES
45. The legal personal representative of a deceased sole holder of a share shall be the only person recognised by the Company as having any title to the share. In the case of a share registered in the name of two or more holders, the survivors or survivor, or the legal personal representatives of the deceased survivor, shall be the only person recognised by the Company as having any title to the share.
46. Any person becoming entitled to a share in consequence of the death or bankruptcy of a Member shall upon such evidence being produced as may from time to time be properly required by the Directors, have the right either to be registered as a member in respect of the share or, instead of being registered himself, to make such transfer of the share as the deceased or bankrupt person could have made. If the person so becoming entitled shall elect to be registered himself as holder he shall deliver or send to the Company a notice in writing signed by him stating that he so elects.
47. A person becoming entitled to a share by reason of the death or bankruptcy of the holder shall be entitled to the same dividends and other advantages to which he would be entitled if he were the registered holder of the share, except that he shall not, before
being registered as a Member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the Company, provided however, that the Directors may at any time give notice requiring any such person to elect either to be registered himself or to transfer the share, and if the notice is not complied with within 90 calendar days, the Directors may thereafter withhold payment of all dividends, bonuses or other monies payable in respect of the share until the requirements of the notice have been complied with.
ALTERATION OF CAPITAL
48. Subject to these Articles, the Company may from time to time by Ordinary Resolution increase the share capital by such sum, to be divided into shares of such classes and amount, as the resolution shall prescribe.
49. Subject to these Articles, the Company may by Ordinary Resolution:
(a) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;
(b) sub-divide its existing shares, or any of them into shares of a smaller amount provided that in the subdivision the proportion between the amount paid and the amount, if any unpaid on each reduced share shall be the same as it was in case of the share from which the reduced share is derived;
(c) cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so cancelled.
50. The Company may by Special Resolution reduce its share capital and any capital redemption reserve in any manner authorized by law.
51. All new shares created hereunder shall be subject to the same provisions with reference to the payment of calls, liens, transfer, transmission, forfeiture and otherwise as the shares in the original share capital.
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE
52. For the purpose of determining those Members that are entitled to receive notice of, attend or vote at any meeting of Members or any adjournment thereof, or those Members that are entitled to receive payment of any dividend, or in order to make a determination as to who is a Member for any other purpose, the Directors may provide that the Register of Members shall be closed for transfers for a stated period but not to exceed in any case 30 calendar days. If the Register of Members shall be so closed for the purpose of determining those Members that are entitled to receive notice of, attend or vote at a meeting of Members such register shall be so closed for at least 10 calendar days immediately preceding such meeting and the record date for such determination shall be the date of the closure of the Register of Members.
53. In lieu of or apart from closing the Register of Members, the Directors may fix in advance a date as the record date for any such determination of those Members that are entitled to receive notice of, attend or vote at a meeting of the Members and for the purpose of determining those Members that are entitled to receive payment of any
dividend, the Directors may, at or within 30calendar days prior to the date of declaration of such dividend fix a subsequent date as the record date of such determination.
54. If the Register of Members is not so closed and no record date is fixed for the determination of those Members entitled to receive notice of, attend or vote at a meeting of Members or those Members that are entitled to receive payment of a dividend, the date on which notice of the meeting is posted or the date on which the resolution of the Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Members. When a determination of those Members that are entitled to receive notice of, attend or vote at a meeting of Members has been made as provided in this section, such determination shall apply to any adjournment thereof.
GENERAL MEETINGS
55. All general meetings of the Company other than annual general meetings shall be called extraordinary general meetings.
56. (a) The Company may hold an annual general meeting but shall not (unless required by the Companies Law) be obliged to hold an annual general meeting. (b) At these meetings the report of the Directors (if any) shall be presented. 57. (a) The Directors may call general meetings, and they shall on a Members requisition forthwith proceed to convene an extraordinary general meeting of the Company. (b) A Members requisition is a requisition of Members of the Company holding at the date of deposit of the requisition not less than one-third of the share capital of the Company as at that date carries the right of voting at general meetings of the Company. (c) The requisition must state the objects of the meeting and must be signed by the requisitionists and deposited at the Registered Office, and may consist of several documents in like form each signed by one or more requisitionists. (d) If the Directors do not within 21 calendar days from the date of the deposit of the requisition duly proceed to convene a general meeting to be held within a further 21 calendar days, the requisitionists, or any of them representing more than one half of the total voting rights of all of them, may themselves convene a general meeting, but any meeting so convened shall not be held after the expiration of three months after the expiration of the second said 21 calendar days. (e) A general meeting convened as aforesaid by requisitionists shall be convened in the same manner as nearly as possible as that in which general meetings are to be convened by Directors. |
NOTICE OF GENERAL MEETINGS
58. At least 7 calendar days' notice shall be given for any general meeting. Every notice shall be exclusive of the day on which it is given or deemed to be given and of the day for which it is given and shall specify the place, the day and the hour of the meeting and the general nature of the business and shall be given in the manner hereinafter mentioned or in such other manner if any as may be prescribed by the Company, provided that a general meeting of the Company shall, whether or not the notice specified in this regulation has been given and whether or not the provisions of Articles regarding general meetings have been complied with, be deemed to have been duly convened if it is so agreed:
(a) in the case of an annual general meeting by all the Members (or their proxies) entitled to attend and vote thereat; and
(b) in the case of an extraordinary general meeting by a majority in number of the Members (or their proxies) having a right to attend and vote at the meeting, being a majority together holding not less than seventy five (75%) per cent in par value of the shares giving that right.
59. The accidental omission to give notice of a meeting to or the non-receipt of a notice of a meeting by any Member shall not invalidate the proceedings at any meeting.
PROCEEDINGS AT GENERAL MEETINGS
60. No business shall be transacted at any general meeting unless a quorum of Members is present at the time when the meeting proceeds to business. Members holding not less than an aggregate of one-third of all voting share capital of the Company in issue present in person or by proxy and entitled to vote shall be a quorum for all purposes. A person may participate at a general meeting by conference telephone or other communications equipment by means of which all the persons participating in the meeting can communicate with each other. Participation by a person in a general meeting in this manner is treated as presence in person at that meeting.
61. If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of Members, shall be dissolved. In any other case it shall stand adjourned to the same day in the next week, at the same time and place, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting, the meeting shall be dissolved.
62. The Chairman of the Board of Directors shall preside as chairman at every general meeting of the Company.
63. If at any meeting the Chairman of the Board of Directors is not present within fifteen minutes after the time appointed for holding the meeting or is unwilling to act as chairman, the Members present shall choose a chairman of the meeting.
64. The Chairman may with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting) adjourn a meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place. When a meeting is adjourned for 10 calendar days or more, not less than seven Business Days' notice of the adjourned meeting shall be given as in the case of an
original meeting. Save as aforesaid it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.
65. At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands, unless a poll is (before or on the declaration of the result of the show of hands) demanded by one or more Members present in person or by proxy entitled to vote and who together hold not less than 10 per cent of the paid up voting share capital of the Company, and unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book of the proceedings of the Company, shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, that resolution.
66. If a poll is duly demanded it shall be taken in such manner as the chairman directs, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The demand for a poll may be withdrawn.
67. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded, shall not be entitled to a second or casting vote.
68. A poll demanded on the election of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken at such time as the chairman of the meeting directs.
VOTES OF MEMBERS
69. Subject to any rights and restrictions for the time being attached to any class or classes of shares, every Member present in person and every person representing a Member by proxy at a general meeting of the Company shall have one vote for each share registered in his name in the Register of Members.
70. In the case of joint holders the vote of the senior who tenders a vote whether in person or by proxy shall be accepted to the exclusion of the votes of the joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register of Members.
71. A Member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by his committee, or other person in the nature of a committee appointed by that court, and any such committee or other person, may on a poll, vote by proxy.
72. No Member shall be entitled to vote at any general meeting unless all calls or other sums presently payable by him in respect of shares in the Company have been paid.
73. On a poll, votes may be given either personally or by proxy.
74. The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under seal or under the hand of an officer or attorney duly authorized. A proxy need not be a Member of the Company.
75. An instrument appointing a proxy may be in any usual or common form or such other form as the Directors may approve.
76. The instrument appointing a proxy shall be deemed to confer authority to demand or join in demanding a poll.
77. A resolution in writing signed by all the Members for the time being entitled to receive notice of and to attend and vote at general meetings (or being corporations by their duly authorized representatives) shall be as valid and effective as if the same had been passed at a general meeting of the Company duly convened and held.
CORPORATIONS ACTING BY REPRESENTATIVES AT MEETING
78. Any corporation which is a Member or a Director may by resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at any meeting of the Company or of any class of Members or of the Board of Directors or of a committee of Directors, and the person so authorized shall be entitled to exercise the same powers on behalf of the corporation which he represents as that corporation could exercise if it were an individual Member or Director.
CLEARING HOUSES
79. If a clearing house (or its nominee) is a member of the Company it may, by resolution of its directors or other governing body or by power of attorney, authorise such person or persons as it thinks fit to act as its representative or representatives at any general meeting of the Company or at any general meeting of any class of members of the Company provided that, if more than one person is so authorized, the authorisation shall specify the number and class of shares in respect of which each such person is so authorized. A person so authorized pursuant to this provision shall be entitled to exercise the same powers on behalf of the clearing house (or its nominee) which he represents as that clearing house (or its nominee) could exercise if it were an individual member of the Company holding the number and class of shares specified in such authorisation.
DIRECTORS
80. (A) Unless otherwise determined by the Company in general meeting, the number of Directors shall not be less than three Directors. The Directors shall be elected or appointed in the first place by the subscribers to the Memorandum of Association or by a majority of them and thereafter by the Members at general meeting or by the Directors as provided in Articles 80 (E) below. (B) Each Director shall hold office until the expiration of his term and until his successor shall have been elected and qualified. (C) The Board of Directors shall have a Chairman of the Board of Directors (the "Chairman") elected and appointed by a majority of the Directors then in office. The Directors may also elect a Co-Chairman or a Vice-Chairman of the Board of Directors (the "Co-Chairman"). The Chairman shall preside as chairman at every meeting of the Board of Directors. To the extent the Chairman is not present at a meeting of the Board of Directors, the 15 |
Co-Chairman, or in his absence, the attending Directors may choose one Director to be the chairman of the meeting. The Chairman's voting right as to the matters to be decided by the Board of Directors shall be the same as other Directors. (D) Subject to these Articles and the Companies Law, the Company may by Ordinary Resolution elect any person to be a Director either to fill a casual vacancy on the Board or as an addition to the existing Board. (E) The Directors by the affirmative vote of a simple majority of the remaining Directors present and voting at a Board meeting, or the sole remaining Director, shall have the power from time to time and at any time to appoint any person as a Director to fill a casual vacancy on the Board or as an addition to the existing Board, subject to the Company's compliance with director nomination procedures required under applicable NYSE corporate governance rules, as long as the Company's securities are trading on the New York Stock Exchange. |
81. Subject to Article 80, a Director may be removed from office by Special Resolution at any time before the expiration of his term notwithstanding anything in these Articles or in any agreement between the Company and such Director (but without prejudice to any claim for damages under such agreement).
82. A vacancy on the Board created by the removal of a Director under the provisions of Article 81 above may be filled by the election or appointment by Ordinary Resolution at the meeting at which such Director is removed or by the affirmative vote of a simple majority of the remaining Directors present and voting at a Board meeting.
83. The Board may, from time to time, and except as required by applicable law or the listing rules of the recognized stock exchange or automated quotation system where the Company's securities are traded, adopt, institute, amend, modify or revoke the corporate governance policies or initiatives, which shall be intended to set forth the policies of the Company and the Board on various corporate governance related matters as the Board shall determine by resolution from time to time.
84. A Director shall not be required to hold any shares in the Company by way of qualification. A Director who is not a member of the Company shall nevertheless be entitled to receive notice of and to attend and speak at general meetings of the Company and all classes of shares of the Company.
DIRECTORS' FEES AND EXPENSES
85. The Directors may receive such remuneration as the Board may from time to time determine. The Directors may be entitled to be repaid all travelling, hotel and incidental expenses reasonably incurred or expected to be incurred by him in attending meetings of the Board or committees of the Board or general meetings or separate meetings of any class of shares or of debentures of the Company or otherwise in connection with the discharge of his duties as a Director.
86. Any Director who, by request, goes or resides abroad for any purpose of the Company or who performs services which in the opinion of the Board go beyond the ordinary
duties of a Director may be paid such extra remuneration (whether by way of salary, commission, participation in profits or otherwise) as the Board may determine and such extra remuneration shall be in addition to or in substitution for any ordinary remuneration provided for by or pursuant to any other Article.
ALTERNATE DIRECTOR
87. Any Director may in writing appoint another person to be his alternate to act in his place at any meeting of the Directors at which he is unable to be present. Every such alternate shall be entitled to notice of meetings of the Directors and to attend and vote thereat as a Director when the person appointing him is not personally present and where he is a Director to have a separate vote on behalf of the Director he is representing in addition to his own vote. A Director may at any time in writing revoke the appointment of an alternate appointed by him. Such alternate shall not be an officer of the Company and shall be deemed to be the agent of the Director appointing him.
88. Any Director may appoint any person, whether or not a Director, to be the proxy of that Director to attend and vote on his behalf, in accordance with instructions given by that Director, or in the absence of such instructions at the discretion of the proxy, at a meeting or meetings of the Directors which that Director is unable to attend personally. The instrument appointing the proxy shall be in writing under the hand of the appointing Director and shall be in any usual or common form or such other form as the Directors may approve, and must be lodged with the chairman of the meeting of the Directors at which such proxy is to be used, or first used, prior to the commencement of the meeting.
POWERS AND DUTIES OF DIRECTORS
89. Subject to the provisions of the Companies Law, these Articles and to any resolutions made in a general meeting, the business of the Company shall be managed by the Directors, who may pay all expenses incurred in setting up and registering the Company and may exercise all powers of the Company. No resolution made by the Company in a general meeting shall invalidate any prior act of the Directors that would have been valid if that resolution had not been made.
90. Subject to these Articles, the Directors may from time to time appoint any person, whether or not a director of the Company to hold such office in the Company as the Directors may think necessary for the administration of the Company, including without prejudice to the foregoing generality, the office of the Chief Executive Officer, one or more Vice Presidents, Chief Financial Officer, Manager or Controller, and for such term and at such remuneration (whether by way of salary or commission or participation in profits or partly in one way and partly in another), and with such powers and duties as the Directors may think fit. The Directors may also appoint one or more of their number to the office of Managing Director upon like terms, but any such appointment shall ipso facto determine if any Managing Director ceases from any cause to be a Director, or if the Company by Ordinary Resolution resolves that his tenure of office be terminated.
91. The Directors may delegate any of their powers to committees consisting of such member or members of their body as they think fit; any committee so formed shall in
the exercise of the powers so delegated conform to any regulations that may be imposed on it by the Directors.
92. The Directors may from time to time and at any time by power of attorney appoint any company, firm or person or body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretion (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such power of attorney may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Directors may think fit, and may also authorise any such attorney to delegate all or any of the powers, authorities and discretion vested in him.
93. The Directors may from time to time provide for the management of the affairs of the Company in such manner as they shall think fit and the provisions contained in the following paragraphs shall be without prejudice to the general powers conferred by this paragraph.
94. The Directors from time to time and at any time may establish any committees, local boards or agencies for managing any of the affairs of the Company and may appoint any persons to be members of such committees or local boards and may appoint any managers or agents of the Company and may fix the remuneration of any of the aforesaid.
95. The Directors from time to time and at any time may delegate to any such committee, local board, manager or agent any of the powers, authorities and discretions for the time being vested in the Directors and may authorise the members for the time being of any such local board, or any of them to fill up any vacancies therein and to act notwithstanding vacancies and any such appointment or delegation may be made on such terms and subject to such conditions as the Directors may think fit and the Directors may at any time remove any person so appointed and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby.
96. Any such delegates as aforesaid may be authorized by the Directors to subdelegate all or any of the powers, authorities, and discretions for the time being vested to them.
97. The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof, to issue debentures, debenture stock and other securities whenever money is borrowed or as security for any debt, liability or obligation of the Company or of any third party.
DISQUALIFICATION OF DIRECTORS
98. Subject to Article 80, the office of Director shall be vacated, if the Director:
(a) becomes bankrupt or makes any arrangement or composition with his creditors;
(b) is found to be or becomes of unsound mind;
(c) resigns his office by notice in writing to the Company;
(d) without special leave of absence from the Board, is absent from meetings of the Board for six consecutive months and the Board resolves that his office be vacated; or
(e) if he or she shall be removed from office pursuant to these Articles or the Statutes.
PROCEEDINGS OF DIRECTORS
99. Subject to Article 80, the Directors may meet together (whether within or outside the Cayman Islands) for the dispatch of business, adjourn, and otherwise regulate their meetings and proceedings as they think fit. Questions arising at any meeting of the Directors shall be decided by a majority of votes. In case of an equality of votes the chairman shall not have a second or casting vote. A Director may at any time summon a meeting of the Directors by at least three Business Days' notice to every other Director and alternate Director.
100. A Director or Directors may participate in any meeting of the Board of Directors, or of any committee appointed by the Board of Directors of which such Director or Directors are members, by means of telephone or similar communication equipment by way of which all persons participating in such meeting can hear each other and such participation shall be deemed to constitute presence in person at the meeting.
101. The quorum necessary for the transaction of the business of the Directors may be fixed by the Directors and unless so fixed shall be a majority of the Directors then in office, provided that a Director and his appointed alternate Director shall be considered only one person for this purpose. A meeting of the Directors at which a quorum is present when the meeting proceeds to business shall be competent to exercise all powers and discretions for the time being exercisable by the Directors. A meeting of the Directors may be held by means of telephone or teleconferencing or any other telecommunications facility provided that all participants are thereby able to communicate immediately by voice with all other participants.
102. Subject to Article 80, a Director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with the Company shall declare the nature of his interest at a meeting of the Directors. A general notice given to the Directors by any Director to the effect that he is a member of any specified company or firm and is to be regarded as interested in any contract which may thereafter be made with that company or firm shall be deemed a sufficient declaration of interest in regard to any contract so made. A Director may vote in respect of any contract or proposed contract or arrangement notwithstanding that he may be interested therein and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of the Directors at which any such contract or proposed contract or arrangement shall come before the meeting for consideration.
103. A Director may hold any other office or place of profit under the Company (other than the office of auditor) in conjunction with his office of Director for such period and on such terms (as to remuneration and otherwise) as the Directors may determine and no Director or intending Director shall be disqualified by his office from contracting with the Company either with regard to his tenure of any such other office or place of profit or as vendor, purchaser or otherwise, nor shall any such contract or arrangement
entered into by or on behalf of the Company in which any Director is in any way interested, be liable to be avoided, nor shall any Director so contracting or being so interested be liable to account to the Company for any profit realised by any such contract or arrangement by reason of such Director holding that office or of the fiduciary relation thereby established. A Director, notwithstanding his interest, may be counted in the quorum present at any meeting whereat he or any other Director is appointed to hold any such office or place of profit under the Company or whereat the terms of any such appointment are arranged and he may vote on any such appointment or arrangement.
104. Any Director may act by himself or his firm in a professional capacity for the Company, and he or his firm shall be entitled to remuneration for professional services as if he were not a Director; provided that nothing herein contained shall authorise a Director or his firm to act as auditor to the Company.
105. The Directors shall cause minutes to be made in books or loose-leaf folders provided for the purpose of recording:
(a) all appointments of officers made by the Directors;
(b) the names of the Directors present at each meeting of the Directors and of any committee of the Directors; and
(c) all resolutions and proceedings at all meetings of the Company, and of the Directors and of committees of Directors.
106. When the chairman of a meeting of the Directors signs the minutes of such meeting the same shall be deemed to have been duly held notwithstanding that all the Directors have not actually come together or that there may have been a technical defect in the proceedings.
107. A resolution signed by all the Directors shall be as valid and effectual as if it had been passed at a meeting of the Directors duly called and constituted. When signed a resolution may consist of several documents each signed by one or more of the Directors.
108. The continuing Directors may act notwithstanding any vacancy in their body but if and so long as their number is reduced below the number fixed by or pursuant to these Articles as the necessary quorum of Directors, the continuing Directors may act for the purpose of increasing the number, or of summoning a general meeting of the Company, but for no other purpose.
109. The Directors shall elect a chairman of their meetings and determine the period for which he is to hold office but if at any meeting the chairman is not present within fifteen minutes after the time appointed for holding the same, the Directors present may choose one of their number to be chairman of the meeting.
110. A committee appointed by the Directors may elect a chairman of its meetings. If no such chairman is elected, or if at any meeting the chairman is not present within five minutes after the time appointed for holding the same, the members present may choose one of their number to be chairman of the meeting.
111. A committee appointed by the Directors may meet and adjourn as it thinks proper. Questions arising at any meeting shall be determined by a majority of votes of the committee members present and in case of an equality of votes the chairman shall have a second or casting vote.
112. All acts done by any meeting of the Directors or of a committee of Directors, or by any person acting as a Director, shall notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such Director or person acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a Director.
PRESUMPTION OF ASSENT
113. A Director of the Company who is present at a meeting of the Board of Directors at which action on any Company matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the Minutes of the meeting or unless he shall file his written dissent from such action with the person acting as the Chairman or Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered post to such person immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favour of such action.
DIVIDENDS, DISTRIBUTIONS AND RESERVE
114. Subject to any rights and restrictions for the time being attached to any class or classes of shares and these Articles, the Directors may from time to time declare dividends (including interim dividends) and other distributions on shares in issue and authorise payment of the same out of the funds of the Company lawfully available therefor.
115. Subject to any rights and restrictions for the time being attached to any class or classes of shares and these Articles, the Company by Ordinary Resolution may declare dividends, but no dividend shall exceed the amount recommended by the Directors.
116. The Directors may, before recommending or declaring any dividend, set aside out of the funds legally available for distribution such sums as they think proper as a reserve or reserves which shall, at the discretion of the Directors be applicable for meeting contingencies, or for equalising dividends or for any other purpose to which those funds be properly applied and pending such application may, at the like discretion, either be employed in the business of the Company or be invested in such investments (other than shares of the Company) as the Directors may from time to time think fit.
117. Any dividend may be paid by cheque or wire transfer to the registered address of the Member or person entitled thereto, or in the case of joint holders, to any one of such joint holders at his registered address or to such person and such address as the Member or person entitled, or such joint holders as the case may be, may direct. Every such cheque shall be made payable to the order of the person to whom it is sent or to the order of such other person as the Member or person entitled, or such joint holders as the case may be, may direct.
118. The Directors when paying dividends to the Members in accordance with the foregoing provisions may make such payment either in cash or in specie.
119. No dividend shall be paid otherwise than out of profits or, subject to the restrictions of the Companies Law, the share premium account.
120. Subject to the rights of persons, if any, entitled to shares with special rights as to dividends, all dividends shall be declared and paid according to the amounts paid or credited as fully paid on the shares, but if and so long as nothing is paid up on any of the shares in the Company dividends may be declared and paid according to the amounts of the shares. No amount paid on a share in advance of calls shall, while carrying interest, be treated for the purposes of this Article as paid on the share.
121. If several persons are registered as joint holders of any share, any of them may give effectual receipts for any dividend or other moneys payable on or in respect of the share.
122. No dividend shall bear interest against the Company.
BOOK OF ACCOUNTS
123. The books of account relating to the Company's affairs shall be kept in such manner as may be determined from time to time by the Directors.
124. The books of account shall be kept at such place or places as the Directors think fit, and shall always be open to the inspection of the Directors.
125. The Directors shall from time to time determine whether and to what extent and at what times and places and under what conditions or regulations the accounts and books of the Company or any of them shall be open to the inspection of Members not being Directors, and no Member (not being a Director) shall have any right of inspecting any account or book or document of the Company except as conferred by law or authorized by the Directors or by the Company by Ordinary Resolution.
126. The accounts relating to the Company's affairs shall be audited in such manner and with such financial year end as may be determined from time to time by the Company by Ordinary Resolution or failing any such determination by the Directors or failing any determination as aforesaid shall not be audited.
ANNUAL RETURNS AND FILINGS
127. The Board shall make the requisite annual returns and any other requisite filings in accordance with the Companies Law.
AUDIT
128. The Directors may appoint an Auditor of the Company who shall hold office until removed from office by a resolution of the Directors and may fix his or their remuneration.
129. Every Auditor of the Company shall have a right of access at all times to the books and accounts and vouchers of the Company and shall be entitled to require from the
Directors and Officers of the Company such information and explanation as may be necessary for the performance of the duties of the auditors.
130. Auditors shall, if so required by the Directors, make a report on the accounts of the Company during their tenure of office at the next annual general meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an ordinary company, and at the next special meeting following their appointment in the case of a company which is registered with the Registrar of Companies as an exempted company, and at any time during their term of office, upon request of the Directors or any general meeting of the Members.
THE SEAL
131. The Seal of the Company shall not be affixed to any instrument except by the authority of a resolution of the Board of Directors provided always that such authority may be given prior to or after the affixing of the Seal and if given after may be in general form confirming a number of affixings of the Seal. The Seal shall be affixed in the presence of any one or more persons as the Directors may appoint for the purpose and every person as aforesaid shall sign every instrument to which the Seal of the Company is so affixed in their presence.
132. The Company may maintain a facsimile of its Seal in such countries or places as the Directors may appoint and such facsimile Seal shall not be affixed to any instrument except by the authority of a resolution of the Board of Directors provided always that such authority may be given prior to or after the affixing of such facsimile Seal and if given after may be in general form confirming a number of affixings of such facsimile Seal. The facsimile Seal shall be affixed in the presence of such person or persons as the Directors shall for this purpose appoint and such person or persons as aforesaid shall sign every instrument to which the facsimile Seal of the Company is so affixed in their presence of and the instrument signed by a Director or the Secretary (or an Assistant Secretary) of the Company or in the presence of any one or more persons as the Directors may appoint for the purpose.
133. Notwithstanding the foregoing, a Director shall have the authority to affix the Seal, or the facsimile Seal, to any instrument for the purposes of attesting authenticity of the matter contained therein but which does not create any obligation binding on the Company.
OFFICERS
134. Subject to Article 90, the Company may have a Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, one or more Vice Presidents, Manager or Controller, appointed by the Directors. The Directors may also from time to time appoint such other officers as they consider necessary, all for such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the Directors from time to time subscribe.
CAPITALISATION OF PROFITS
135. Subject to the Statutes and these Articles, the Board may, with the authority of an Ordinary Resolution:
(a) resolve to capitalise an amount standing to the credit of reserves (including a share premium account, capital redemption reserve and profit and loss account), whether or not available for distribution;
(b) appropriate the sum resolved to be capitalised to the Members in proportion to the nominal amount of shares (whether or not fully paid) held by them respectively and apply that sum on their behalf in or towards:
(i) paying up the amounts (if any) for the time being unpaid on shares held by them respectively; or
(ii) paying up in full unissued shares or debentures of a nominal amount equal to that sum,
and allot the shares or debentures, credited as fully paid, to the Members (or as they may direct) in those proportions, or partly in one way and partly in the other, but the share premium account, the capital redemption reserved and profits which are not available for distribution may, for the purposes of this Article, only be applied in paying up unissued shares to be allotted to Members credited as fully paid;
(c) make any arrangements it thinks fit to resolve a difficulty arising in the distribution of a capitalised reserve and in particular, without limitation, where shares or debentures become distributable in fractions the Board may deal with the fractions as it thinks fit;
(d) authorise a person to enter (on behalf of all the Members concerned) an agreement with the Company providing for either:
(i) the allotment to the Members respectively, credited as fully paid, of shares or debentures to which they may be entitled on the capitalisation, or
(ii) the payment by the Company on behalf of the Members (by the application of their respective operations of the reserves resolved to be capitalised) of the amounts or part of the amounts remaining unpaid on their existing shares,
an agreement made under the authority being effective and binding on all those Members; and
(e) generally do all acts and things required to give effect to the resolution.
NOTICES
136. Except as otherwise provided in these Articles, any notice or document may be served by the Company or by the person entitled to give notice to any Member either personally, by facsimile or by sending it through the post in a prepaid letter or via a recognised courier service, fees prepaid, addressed to the Member at his address as appearing in the Register of Members or, to the extent permitted by all applicable laws and regulations, by electronic means by transmitting it to any electronic number or address or website supplied by the member to the Company or by placing it on the
Company's Website. In the case of joint holders of a share, all notices shall be given to that one of the joint holders whose name stands first in the Register of Members in respect of the joint holding, and notice so given shall be sufficient notice to all the joint holders.
137. Notices posted to addresses outside the Cayman Islands shall be forwarded by prepaid airmail.
138. Any Member present, either personally or by proxy, at any meeting of the Company shall for all purposes be deemed to have received due notice of such meeting and, where requisite, of the purposes for which such meeting was convened.
139. Any notice or other document, if served by (a) post, shall be deemed to have been served five calendar days after the time when the letter containing the same is posted and if served by courier, shall be deemed to have been served five calendar days after the time when the letter containing the same is delivered to the courier (in proving such service it shall be sufficient to prove that the letter containing the notice or document was properly addressed and duly posted or delivered to the courier), or (b) facsimile, shall be deemed to have been served upon confirmation of receipt, or (c) recognised delivery service, shall be deemed to have been served 48 hours after the time when the letter containing the same is delivered to the courier service and in proving such service it shall be sufficient to provide that the letter containing the notice or documents was properly addressed and duly posted or delivered to the courier or (d) electronic means as provided herein shall be deemed to have been served and delivered on the day following that on which it is successfully transmitted or at such later time as may be prescribed by any applicable laws or regulations.
140. Any notice or document delivered or sent to any Member in accordance with the terms of these Articles shall notwithstanding that such Member be then dead or bankrupt, and whether or not the Company has notice of his death or bankruptcy, be deemed to have been duly served in respect of any share registered in the name of such Member as sole or joint holder, unless his name shall at the time of the service of the notice or document, have been removed from the Register of Members as the holder of the share, and such service shall for all purposes be deemed a sufficient service of such notice or document on all persons interested (whether jointly with or as claiming through or under him) in the share.
141. Notice of every general meeting shall be given to:
(a) all Members who have supplied to the Company an address for the giving of notices to them;
(b) every person entitled to a share in consequence of the death or bankruptcy of a Member, who but for his death or bankruptcy would be entitled to receive notice of the meeting; and
(c) each Director and Alternate Director.
No other person shall be entitled to receive notices of general meetings.
INFORMATION
142. No Member shall be entitled to require discovery of any information in respect of any detail of the Company's trading or any information which is or may be in the nature of a trade secret or secret process which may relate to the conduct of the business of the Company and which in the opinion of the Board would not be in the interests of the members of the Company to communicate to the public.
143. The Board shall be entitled to release or disclose any information in its possession, custody or control regarding the Company or its affairs to any of its members including, without limitation, information contained in the Register of Members and transfer books of the Company.
INDEMNITY
144. Every Director (including for the purposes of this Article any Alternate Director appointed pursuant to the provisions of these Articles) and officer of the Company for the time being and from time to time shall be indemnified and secured harmless out of the assets and funds of the Company against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by him in connection with the execution or discharge of his duties, powers, authorities or discretions as a Director or officer of the Company, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by him in defending (whether successfully or otherwise) any civil proceedings concerning the Company or its affairs in any court whether in the Cayman Islands or elsewhere.
145. No such Director or officer of the Company shall be liable to the Company for any loss or damage unless such liability arises through the willful neglect or default of such Director or officer.
FINANCIAL YEAR
146. Unless the Directors otherwise prescribe, the financial year of the Company shall end on December 31st in each year and shall begin on January 1st in each year.
WINDING UP
147. Subject to these Articles, if the Company shall be wound up the liquidator may, with the sanction of an Ordinary Resolution of the Company divide amongst the Members in specie or kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may, for such purpose set such value as he deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the Members or different classes of Members. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trusts for the benefit of the contributories as the liquidator, with the like sanction shall think fit, but so that no Member shall be compelled to accept any shares or other securities whereon there is any liability.
AMENDMENT OF MEMORANDUM AND ARTICLES OF ASSOCIATION AND NAME OF COMPANY
148. Subject to the Companies Law and these Articles, the Company may at any time and from time to time by Special Resolution alter or amend these Articles or the
Memorandum of Association of the Company, in whole or in part, or change the name of the Company.
REGISTRATION BY WAY OF CONTINUATION
149. Subject to these Articles, the Company may by Special Resolution resolve to be registered by way of continuation in a jurisdiction outside the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing. In furtherance of a resolution adopted pursuant to this Article, the Directors may cause an application to be made to the Registrar of Companies to deregister the Company in the Cayman Islands or such other jurisdiction in which it is for the time being incorporated, registered or existing and may cause all such further steps as they consider appropriate to be taken to effect the transfer by way of continuation of the Company.
.
.
.
EXHIBIT 4.2
Name of Company: AGRIA CORPORATION AGRIA CORPORATION (Incorporated under the laws of the Cayman Islands) Number: Number Ordinary Shares Ordinary Shares: [ ] -[ ]- -[ ]- US$50,000 Share Capital divided into 500,000,000,000 Ordinary Shares of a nominal or par value of US$0.0000001 each Issued to: [ ] THIS IS TO CERTIFY THAT------------------[ ]------------------is the registered holder of----------------------------------------[ ]-------------------- Ordinary Shares in the Dated above-named Company subject to the memorandum and articles of association thereof. [ ] GIVEN UNDER the common seal of the said Company on 2007. Transferred from: THE COMMON SEAL of the said Company was hereunto affixed in the presence of: DIRECTOR _________________________________________ |
TRANSFER I (the Transferor) for the value received DO HEREBY transfer to (the Transferee) the shares standing in my name in the undertaking called AGRIA CORPORATION To hold the same unto the Transferee Dated Signed by the Transferor in the presence of: ------------------------------------ ------------------------------------ Witness Transferor |
EXHIBIT 4.4
TRANSLATED FOR REFERENCE ONLY.
EXCLUSIVE TECHNOLOGY DEVELOPMENT, TECHNOLOGY SUPPORT AND
TECHNOLOGY SERVICES AGREEMENT
This "Exclusive Technology Development, Technology Support and Technology Services Agreement" (hereinafter referred to as "this Agreement") is signed by the following parties on 8 June 2007 in Beijing:
Party A: Aero-Biotech Science & Technology Co., Ltd.
Domicile: A333, 6th Floor, Golden Resources Shopping Mall, No. 1 Yuanda Road,
Haidian District, Beijing
Party B: Primalights III Agriculture Development Co., Ltd.
Domicile: Middle Area of Highway 73, Zhuang Er Shang Village, Huanglingxiang
Upper Village, Xiaodian District, Taiyuan City
WHEREAS,
(1) Party A is a wholly foreign owned enterprise duly established and registered
according to the laws of People's Republic of China (hereinafter referred to as
"China", in this Agreement, excluding Hong Kong Special Administrative Region,
Macao Special Administrative Regions and Taiwan), its scope of business include:
research and development of biotechnology in seed growing, provide technology
transfer, technical consulting, technical service and technical training in seed
growing, possessing the professional staff who specialized in agricultural seed
growing development technology with practical experience.
(2) Party B is a limited liability company established and registered in accordance with Chinese law in Taiyuan City, Shanxi Province, China. Its business scope includes automation control greenhouse construction; yield farmland development; demonstration plots; corn seed production; crop seeds wholesale and retail; seedling seed production and wholesale and retail; livestock; processing and marketing of agricultural side products.
(3) Party A agrees to provide exclusive technology development and related services to Party B. Party B agrees to accept such services from Party A.
NOW, THEREFORE, the parties to this Agreement, by consensus, reached this Agreement as follows:
1. EXCLUSIVE CONSULTANCY AND SERVICES; MONOPOLIZED AND EXCLUSIVE INTERESTS
1.1 During the term of this Agreement, Party A agrees to act as the exclusive technology development, consulting and services provider, pursuant to the terms and condition under this Agreement, to the extent permitted under Chinese laws, to provide Party B the technology development, technical support and the related technical services, including but not limited to :
(1) conduct research and development in biotechnology of seed growing deputed by Party B;
(2) provide technical support to Party B as required;
(3) provide regular or ad hoc technology consulting services to Party B (including but not limited to provide feasibility discussion session, technology forecast, specific technology investigation, analysis evaluation report);
(4) conduct technical training for Party B's personnel;
(5) provide on-site technology guidance to Party B when Party B needs to hire relevant technology personnel;
(6) assist Party B to carry out technology promotion, etc.
1.2 Party B agrees to accept the technology development, technical support and related technical services provided by Party A, and Party B further agrees that, unless with prior written consent of Party A, in this Agreement period, Party B shall not accept any or part of the technology development, technical support and services in connection with the abovementioned business provided by any third party.
1.3 Party B should promptly provide to Party A the plans and arrangement required for technology development, technical support or technical service.
2. CALCULATION, PAYMENT AND SECURITY OF TECHNOLOGY DEVELOPMENT AND SERVICE FEES
(HEREINAFTER REFERRED TO AS "TECHNOLOGY SERVICES FEES")
2.1 Both parties agree to calculate and pay the technical services fee under this Agreement in accordance with the calculation formula and payment method listed in Annex 1 hereto.
2.2 Both parties shall be responsible to pay their respective taxes payable in accordance with the laws for signing or performing this Agreement. Party B, at the request of Party A, shall make every effort to assist Party A to acquire the sales tax exemption treatment in connection with all or part of the technical service income under this Agreement, including but not limited to, the provision of relevant documents and written agreements, in the format complied with the requirements of the relevant science and technology authority department, entered by Party A from time to time in connection with the scope of certain services hereunder, but the execution of such documents shall be subjected to the following conditions : (1) the provisions of such written agreement shall be consistent with this Agreement in principle, and that it shall not contradict with the provisions of this Agreement; and (2) the signing of such documents shall not in violation of the laws and regulations.
2.3 The Technology Service Fees payable under this Agreement shall be secured by the shareholders of Party B pledging its equity shares in Party B.
3. INTELLECTUAL PROPERTY
3.1 Except it is otherwise stipulated by the laws and regulations in China, the technology and the information developed and prepared by Party A for Party B during the course of providing technical development and technical services, and the intellectual property rights and any derivatives of the rights that Party A acquired under the performance of this Agreement and / or other jointly signed contract for the research and development shall be exclusively owned by Party A. These rights include, but are not limited to the right of patent application, ownership of proprietary technology, technical documentation and technical information of copyright or other intellectual property rights, rights to given license to others to use such intellectual property rights or to transfer such intellectual property rights.
3.2 During the course of performing this Agreement, if Party B needs to use proprietary technologies of Party A, both parties shall enter into another contract to stipulate the scope, manner and license fees of using the related exclusive technology license.
4. REPRESENTATION AND WARRANTY
4.1 Party A hereby represent and warrants as follows:
4.1.1 Party A is a wholly foreign-owned enterprises legitimately registered, established and validly existing in accordance with Chinese laws;
4.1.2 Party A executes and performs this Agreement within the power and business scope of the company, with the necessary and appropriate corporate action and authorization, and obtained the necessary consent and approval of the government and third-party, and that it is not in violation of the restrictions or limitations under the laws and contracts binding or influential to it;
4.1.3 Once this Agreement is signed, it constitutes legal, valid, binding and enforceable obligations to Party A under the provisions of this Agreement.
4.2 Party B represents and warrants as follows:
4.2.1 Party B is a limited liability company legitimately registered, established and validly existing in accordance with Chinese laws. Its main business is agricultural forestry species development and production;
4.2.2 Party B executes and performs this Agreement within the power and business scope of the company, with the necessary and appropriate corporate action and duly authorization, and obtained the necessary consent and approval of the government and third-party, and that it is not in violation of the restrictions or limitations under the laws and contracts binding or influential to it;
4.2.3 Once this Agreement is signed, it constitutes legal, valid, binding and enforceable obligations to Party B under the provisions of this Agreement.
5. CONFIDENTIALITY
5.1 Party B agrees to make every effort to adopt all reasonable measures to protect Party A's confidential material and information (hereinafter referred to as "Confidential Information") that are known to or accessible by Party B because of the acceptance of the exclusive technology development, technology support and technology services by Party B; without the prior written consent of Party A, Party B shall not disclose, give or transfer such Confidential Information to any third party. Once this Agreement is terminated, Party B shall, at the request of Party A, return or destroy any document, information or software containing Confidential Information and delete any Confidential Information from all relevant memory device. Party B shall stop using such Confidential Information.
5.2 The parties acknowledge and confirm that any oral or written information exchanged between the parties in connection with this Agreement is confidential information. Without the written consent of the other party, both parties shall keep confidential all such information, a party shall not disclose any relevant information to any third parties, except under the following circumstances : (a) the public knows or will know such information (which is not disclosed by the information receiving party without authorization); (b) the disclosure of the information is required by the applicable laws or stock exchange rules or regulations; or (c) disclosure to the legal or financial advisors of either party in connection with the transaction described in this Agreement, and such legal or financial advisors shall comply with the similar duty of confidentiality as this provision. Any confidential information disclosed by the employees of either party or by an organization engaged by either party shall be deemed as the disclosure of such party. Such party shall assume the default responsibilities in accordance with this Agreement.
5.3 Both parties agree that regardless of whether this Agreement is invalid, modified, cancelled, terminated or non-operational, this Article 5 shall remain in effect.
6. INDEMNIFICATION
Party B should indemnify Party A for any loss, damages, obligations and costs arising from any legal action, claim or other requests as a result of Party B's consulting request and content of services, and Party B shall keep Party A harmless.
7. EFFECTIVENESS AND TERM
7.1 This Agreement shall be effective on the date written on the first page.
7.2 This Agreement shall remain effective within the operating period of Party B unless it is early terminated by the provisions of another relevant contract entered separately by both parties or by this Agreement.
8. TERMINATION
8.1 EARLY TERMINATION. During the effective term of this Agreement, unless Party A commits gross negligence, fraud, other violations of law or bankruptcy, Party B shall not early terminate this Agreement. Notwithstanding the aforesaid covenant, Party A shall have the right to terminate this Agreement at any time by giving a thirty (30) days prior written notice to Party B. During the term of this Agreement, if Party B violates this Agreement and fails to remedy such default within fourteen (14) days after receiving a written notice of default from Party A, Party A can terminate this Agreement by serving a written notice to Party B.
8.2 PROVISIONS AFTER TERMINATION. After the termination of this Agreement, the rights and obligations of both parties provided in Articles 5, 10 and 12 under this Agreement shall remain in effect.
9. GOVERNING LAW
The validity, performance, interpretation and enforceability of this Agreement shall be governed by Chinese laws.
10. DISPUTE RESOLUTION
When any dispute arises in connection with the interpretation and performance of
the provisions under this Agreement, both parties shall resolve the dispute
through friendly consultation. If resolution cannot be reached within thirty
(30) days after the request to resolve the dispute is made by a party, eithery
party may submit such dispute to China International Economic and Trade
Arbitration Commission for arbitration in accordance with its then effective
arbitration rules. The arbitration venue shall be in Beijing; the language to
conduct the arbitration is Chinese. The arbitral award shall be final and
binding upon both parties.
11. FORCE MAJEURE
11.1 "Force majeure" refers to any event that is beyond the reasonable control of a party, it is unavoidable even under reasonable attention of the affected party, including but not limited to, acts of government, acts of nature, fire, explosion, typhoon, flood, earthquake, tidal, lightning or war. However, credit, capital or financing shortage shall not be deemed as matters beyond the party's reasonable control. The party, affected by "force majeure", seeks to be exempted from performing its responsibilities under this Agreement, shall promptly notify the other party regarding such responsibilities exemption matter and let the other party know the steps required in order to complete its performance.
11.2 When the performance of this Agreement is delayed or prevented due to the aforementioned definition of the "force majeure", the affected party shall not assume any responsibility under this Agreement to the extent that it is within the scope of the delay or prevention. The affected party shall take appropriate measures to minimize or eliminate the impact of "force majeure" and take the effort to resume performance of the obligation delayed or prevented by the event of "force majeure". Once the event of "force majeure" is removed, both parties agree to resume the performance of this Agreement with their greatest efforts.
12. NOTICE
Notices or other communications required to be given by either party under this
Agreement shall be written in English or Chinese and shall be delivered by hand
delivery, registered mail, postage prepaid mail, or recognized courier service
or facsimile to the following address of the relevant party or parties or to the
other address notified by one party to the other party from time to time or to
the address of another person it designated. The actual date when a notice is
deemed delivered shall be determined in accordance with the following method:
(a) notice delivered by hand delivery, the date when the hand delivery is made;
(b) if the notice is sent by mail, on the tenth (10th) day after the date of
posting (as indicated by postmark) of air registered mail (postage prepaid) or
if it is send by courier service, on the fourth (4th) day after it is being
delivered to an internationally recognized courier service; and (c) if a notice
is sent by facsimile, the receiving time as shown on the transmission
confirmation of the relevant documents is regarded as the actual time delivered.
Party A: Aero-Biotech Science & Technology Co., Ltd.
Address: A333, 6th Floor, Golden Resources Shopping Mall, No. 1 Yuanda Road,
Haidian District, Beijing
Attention: Qian Zhaohua
Fax: 010-62109899
Tel: 010 - 62109288
Postal code: 100081
Party B: Primalights III Agriculture Development Co., Ltd.
Address: Middle Area of Highway 73, Zhuang Er Shang Village, Huanglingxiang
Upper Village, Xiaodian District, Taiyuan City
Attention: Han Zhonglin
Fax: 0351-7123671
Tel: 0351 - 7870123
Postal Code: 030031
13. ASSIGNMENT
13.1 Party B shall not transfer its rights and undertaking of obligations under this Agreement to any third party without Party A's prior written consent.
13.2 Party B hereby agrees, under permission of Chinese law, Party A may transfer its rights and obligations under this Agreement to other third party when necessary. Party A just needs to notify Party B by written notice when the transfer occurs, no need to ask Party B's consent on such transfers.
14. INTEGRITY
Both parties confirm, once this Agreement becomes effective, it shall constitute the entire agreement and understanding between the parties regarding the contents of this Agreement. It shall supersede all prior oral and / or written agreements and understanding reached by the parties related to the content of this Agreement.
15. SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable due to the inconsistency with the relevant law, then such provision shall be deemed invalid only to the extent within the scope of the related jurisdiction and that it shall not affect the legal effect of the other provisions in this Agreement.
16. AMENDMENT AND SUPPLEMENT
Both parties shall amend and supplement this Agreement by the form of a written contract. Through the proper execution of the relevant amendment agreement and supplemental agreement by the parties, such amendment and supplement agreement shall become an integral part of this Agreement with the same legal effect as this Agreement.
17. COUNTERPART
There are two original copies of this Agreement, each party hold one original copy, each original copy shall have the same legal effect.
IN WITNESS WHEREOF, the parties have caused their legal representatives, or their authorized representatives to sign this Agreement on the date first above written.
[No text in this page.]
Party A : Aero-Biotech Science & Technology Co., Ltd.
Legal Representative / Authorized Representatives: /s/ Qian Zhaohua ----------------------------- Common seal : [Seal: Aero-Biotech Science & Technology Co., Ltd.] |
Party B : Primalights III Agriculture Development Co., Ltd.
Legal Representative / Authorized Representatives: /s/ Zhang Mingshe ----------------------------- Common seal : [Seal: Primalights III Agriculture Development Co., Ltd.] |
Annex 1 : The calculation and payment method of technical services fee
1. Formula for calculation
Both parties agree that Party B shall pay 20% after-tax profits of each fiscal year as the annual Technology Service Fee.
If Party A's last year technical services period is less than one year, technical services fee shall be calculated in accordance with the following formula:
Annual fee for last year's technical services = The annual after-tax profit of such year x number of months of Party A's technical services / 12
In spite of the above, both parties agree the technical services fee for the year of 2007 shall be 20% of the after-tax profits of the second half of the year 2007.
2. Payment method
Every fiscal year Party A shall issue a settlement statement to Party B, according to the content of the services provided to Party B, and submit to Party B in writing for verification and confirmation. Party B shall pay the Technology Service Fees to Party A's designated account before April 30 annually. After the payable amount is transmitted, Party B shall facsimile or mail a copy of the remittance voucher to Party A.
3. Adjustment mechanism
If Party A deems that the pricing mechanism stipulated herein is inapplicable for some reason and that the pricing mechanism needs to be adjusted. Party A should negotiate with Party B actively and in good faith to determine a new standard or mechanism of charges, within [7] working days after Party A's written request for such adjustment.
EXHIBIT 4.5
TRANSLATED FOR REFERENCE ONLY.
EXCLUSIVE CONSULTANCY SERVICE AGREEMENT
This "Exclusive Consultancy Service Agreement" (hereinafter referred to as "this Agreement") is entered into by and between the following parties on June 8, 2007 in Beijing:
Party A: Aero-Biotech Science & Technology Co., Ltd.
Domicile: Unit A333, 6th /Floor, Golden Resources Shopping Mall, No. 1 Yuanda Road, Haidian District, Beijing
Party B: Primalights III Agriculture Development Co., Ltd.
Domicile: Middle Area of Highway 73, Zhuangershang Upper Village, Huangling Rural, Xiaodian District, Taiyuan City
WHEREAS:
(1) Party A is a wholly foreign owned enterprise established and registered in Beijing in accordance with laws of the People's Republic of China (hereinafter referred to as "China", in this Agreement, excluding Hong Kong Special Administrative Region, Macao Special Administrative Regions and Taiwan).
(2) Party B is a limited liability company established and registered in Taiyuan City, Shanxi Province of China under Chinese laws. Its scope of business includes automation control greenhouse construction, yield farmland development; demonstration plots set up, corn seed production; crop seeds wholesale and retail, seedling seed production, wholesale and retail, livestock, processing and marketing of agricultural and sideline products.
(3) Party A agrees to provide under this Agreement consulting services to Party B and Party B agrees to accept such consulting services from Party A.
NOW, THEREFORE, the parties to the Agreement, by consensus, reached this Agreement as follows:
1. EXCLUSIVE CONSULTANCY AND SERVICES; MONOPOLIZED AND EXCLUSIVE INTERESTS
1.1 During the term of this Agreement, Party A agrees, in accordance with the terms and conditions of this Agreement, to provide to Party B the exclusive consultancy services in the aspect of management, marketing promotion and sales, including, but not limited to:
(1) assist Party B to formulate the management model and operational plan of the company;
(2) assist Party B to formulate the marketing development plan;
(3) provide marketing and client resources information to Party B;
(4) conduct specific marketing research and survey;
(5) assist Party B to establish a sales and marketing network.
1.2 Party B agreed to accept the consulting services rendered by Party A. Party B further agrees that unless with a prior written consent of Party A, during the term of this Agreement, Party B shall not accept professional consulting and services provided by any third party.
2. CALCULATION, PAYMENT AND SECURITY OF CONSULTING SERVICE
2.1 Both parties agree to calculate and pay the consulting service fee under this Agreement according to Annex 1.
2.2 Both parties shall be responsible to pay their respective taxes for executing and performing this Agreement as legally required.
2.3 The fee of consulting services under this Agreement is secured by the shareholders of Party B pledging its equity held in Party B.
3. REPRESENTATION AND WARRANTY
3.1 Party A hereby represents and warrants as follows:
3.1.1 Party A is a wholly foreign-owned enterprises legitimately registered, established and validly existing in accordance with Chinese laws ;
3.1.2 Party A executes and performs this Agreement within the power and business scope of the company, with the necessary and appropriate corporate action and authorization, and obtained the necessary approval and consent of the government and third-party, and that this Agreement is not in violation of the restrictions or limitation under the laws and contracts binding or influential to it;
3.1.3 Once this Agreement is signed, it constitutes legal, valid, binding and enforceable obligations to Party A under the provisions of this Agreement.
3.2 Party B hereby represents and warrants as follows:
3.2.1 Party B is a limited liability company legitimately registered, established and validly existing in accordance with Chinese laws;
3.2.2 Party B performs and executes this Agreement within the power and business scope of the company, with the necessary and appropriate corporate action and authorization, and obtained the necessary approval and consent of the government and third-party, and that it is not in violation of the restriction and limitations under the laws and contracts binding or influential to it;
3.2.3 Once this Agreement is signed, it constitutes legal, valid, binding and enforceable obligations to Party B under the provisions of this Agreement.
4. CONFIDENTIALITY
Both parties hereto acknowledge and confirm that any oral or written information exchanged between the parties in connection with this Agreement are confidential information. Both parties shall keep confidential all such information, and without the prior written consent of the other party, a party shall not disclose any relevant information to any third party, except in the following circumstances: (a) the public knows or will know such information (which is not disclosed by the information receiving party without authorization); (b) the disclosure of the information is required by the applicable laws or stock exchange rules or regulations; or (c) disclosure to the legal or financial advisors of either party in connection with the transaction described in this Agreement, and such legal and financial advisors shall comply with the similar duty of confidentiality. Any confidential information disclosed by the employees of either party or by an organization engaged by either party shall be deemed as the disclosure made by such party. Such party shall be responsible for the default responsibilities in accordance with this Agreement.
5. EFFECTIVENESS AND TERM
5.1 This Agreement shall be effective on the date it is signed.
5.2 This Agreement shall remain effective within the operating term of Party B, unless it is early terminated by the provisions of another relevant contract entered separately by both parties or by the provisions of this Agreement.
6. TERMINATION
6.1 EARLY TERMINATION. During the effective term of this Agreement, unless Party A commits gross negligence, fraud, other violations of law or bankruptcy, Party B shall not early terminate this Agreement. Notwithstanding the aforesaid covenant, Party A is entitled to terminate this Agreement by giving a written notice thirty (30) days in advance to Party B at any time. During the term of this Agreement, if Party B violates this Agreement and fails to remedy such default within fourteen (14) days after receiving a written notice of default from Party A, Party A can terminate this Agreement by giving a written notice to Party B.
6.2 PROVISIONS AFTER TERMINATION. After the termination of this Agreement, the rights and obligations of both parties under Articles 4, 7 and 8 herein shall remain in effect.
7. GOVERNING LAW
The validity, performance, interpretation and enforceability of this Agreement shall be governed by Chinese laws.
8. DISPUTE RESOLUTION
When disputes arose between the parties in connection with the interpretation performance of the provisions under this Agreement, both parties shall resolve the dispute through friendly consultation. If resolution cannot be reached within thirty (30) days after the request to resolve the disputes is made by a party, either party may submit the dispute to the China International Economic and Trade Arbitration Commission to resolve the disputes, in accordance with its then effective arbitration rules. The venue of arbitration shall be in Beijing; the arbitration language shall be Chinese. The arbitral award shall be final and binding upon both sides.
9. FORCE MAJEURE
9.1 "Force majeure" refers to any event that is beyond the reasonable control of a party, it is unavoidable even the affected party has given reasonable attention to it, including but not limited to, the acts of government, acts of nature, fire, explosion, typhoon, flood, earthquake, tidal, lightning or war. However, credit, capital or financing shortage shall not be considered as matters beyond the party's reasonable control. The party, affected by the "force majeure" and seeking to remove its responsibilities of this Agreement, shall promptly notify the other party regarding such responsibilities exemption matter and let to the other party know the steps to be taken to fulfill it.
9.2 When the performance of this Agreement is delayed or prevented due to the aforementioned definition of the "force majeure", the affected party shall not assume any responsibility under this Agreement to the extent it is within the scope of the delay or prevention. The affected party shall take appropriate measures to reduce or eliminate the impact of "force majeure" and take effort to resume the performance of the obligation delayed
or prevented by the event of "force majeure ". Once the event of "force majeure" is removed, both parties agree to resume the performance of this Agreement with their greatest efforts.
10. NOTICE
Notices or other communication required to be given by either party under this Agreement shall be written in English or Chinese, and shall be delivered by hand delivery, registered mail, postage prepaid mail, or recognized courier service or facsimile to the following addresses of the relevant party or parties or to the other addresses notified by one party to the other party from time to time or to the address of another person it designated. The actual date when a notice is deemed delivered shall be determined as follows : for (a) hand delivery, the date when the hand delivery is made; (b) a notice that is sent by mail, on the tenth (10th) day after the date of posting (as indicated by the postmark) of air registered mail (postage prepaid) or if it is sent by courier service, on the fourth (4th) day after it is being delivered to an internationally recognized courier service; and (c) a notice that is sent by facsimile, the received time shown on the transmission confirmation of the relevant documents is regarded as the actual time delivered.
Party A: Aero-Biotech Science & Technology Co., Ltd.
Address: Unit A333, 6th Floor, Golden Resources Shopping Mall, No. 1
Yuanda Road, Haidian District, Beijing
Recipient: Qian Zhaohua
Fax: 010-62109899
Tel: 010-62109288
Zip code: 100081
Party B: Primalights III Agriculture Development Co., Ltd.
Residence: Middle Area of Highway 73, Zhuangershang Upper Village, Huangling
Rural, Xiaodian District, Taiyuan City
Recipient: Han Zhonglin
Fax: 0351-7123671
Tel: 0351-7870123
Zip: 030031
11. ENTIRE AGREEMENT
Both parties confirm, once this Agreement becomes effective, it shall constitute the entire agreement and understanding between the parties regarding the contents of this Agreement. It shall supersede all prior oral and / or written agreements and understanding in connection with the content of this Agreement that the parties reached before the execution of this Agreement.
12. SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable due to the inconsistency with the relevant law, then such provision shall be deemed invalid only to the extent within the scope of such related jurisdiction and it shall not affect the legal effect of the other provisions in this Agreement.
13. AMENDMENTS AND SUPPLEMENTS
Both parties shall amend and supplement this Agreement by the form of a written contract. Through the proper execution of the relevant amendment agreement and supplemental
agreement by the parties herein, such amendment agreement and supplemental agreement shall become an integral party of this Agreement and shall have the same legal effect as this Agreement.
14. COUNTERPART
There are two original copies of this Agreement, each party holds one original copy, and each original copy shall have the same legal effect.
IN WITNESS WHEREOF, both parties have caused their legal representatives, or their authorized representatives to sign this Agreement on the date mentioned in the first page.
[This page without the text.]
PARTY A : Aero-Biotech Science & Technology Co., Ltd.
Legal representative / authorized representatives : /s/ Qian Zhaohua ---------------------------- Common seals : [Seal: Aero-Biotech Science & Technology Co., Ltd.] |
PARTY B : Primalights III Agriculture Development Co., Ltd.
Legal representative / authorized representatives : /s/ Zhang Mingshe ---------------------------- Common seals : [Seal: Primalights III Agriculture Development Co., Ltd.] |
Annex 1: The calculation and payment method of consulting services fee
1. Formula for calculation
Party B shall pay RMB 3 million consulting service fee every year to Party A.
2. Payment method
i. Every fiscal year Party A will issue a settlement statement to Party B, according to the content of the services provided to Party B, and submit to Party B in writing for verification and confirmation.
ii. Party B shall pay the consulting service fee to Party A's designated account within the due date as indicated in the settlement statement provided by Party A. Party B should facsimile or mail the copy of remittance voucher to Party A.
3. Adjustment mechanism
If Party A deems that the pricing mechanism stipulated in this agreement is inapplicable for some reason that the pricing mechanism needs to be adjusted. Party A should negotiate with Party B actively and in good faith to determine a new standard or mechanism of charges, within [7] working days after Party A's written request for such adjustment.
EXHIBIT 4.6
TRANSLATED FOR REFERENCE ONLY.
PROPRIETARY TECHNOLOGY LICENSE AGREEMENT
This Proprietary Technology License Agreement (hereinafter referred to as "this Agreement") is entered into by the following parties on June 8, 2007 in Beijing:
Party A: Aero-Biotech Science & Technology Co., Ltd.
Residence: Unit A333, 6th Floor, Golden Resources Shopping Mall, No. 1 Yuanda
Road, Haidian District, Beijing
Party B: Primalights III Agriculture Development Co., Ltd.
Residence: Middle Area of Highway 73, Zhuangershang Upper Village, Huangling
Rural, Xiaodian District, Taiyuan City
WHEREAS:
(1) in accordance with the laws of the People's Republic of China (hereinafter referred to as "China", in this contract does not include the Hong Kong Special Administrative Region, Macao Special Administrative Regions and Taiwan) Party A is a wholly foreign-owned enterprise registered and established in Beijing, China, who owns non-patent technologies listed in Annex I (such technologies and related information, manual, handbook, files, etc. hereinafter referred to as "Proprietary Technology");
(2) Party B is a limited liability company registered and established in Taiyuan City, Shanxi Province of China under Chinese laws, the main businesses are development and production of agricultural seeds, tree seeds and seedlings breed;
(3) Party A agrees to grant to Party B the exclusive right to use the Proprietary Technology under this Agreement in accordance with the terms and conditions of this Agreement, and Party B agrees to accept such license in accordance with the same terms and conditions.
NOW, THEREFORE, both parties, through consultation, unanimously reach the agreements as follows:
1. PERMISSION GRANT
1.1 Proprietary Technology
1.1.1 Party A agrees, according to the terms and conditions under this Agreement, to grant to Party B, and Party B agrees to accept the right to use the Proprietary Technology in China according to the same terms and conditions. The license under this Agreement is exclusive, except with the written consent of Party A, Party B shall not transfer the Proprietary Technology to any third party, nor shall jointly share, use, develop, improve or innovate the Proprietary Technology with any third party.
1.1.2 Agreed by both parties, should there be any improvement or innovation technological achievements resulted during the course of using the Proprietary Technology by Party B, the relevant rights and ownership shall be exclusively vested
in Party A unless it is otherwise provided by Chinese laws and regulations or mutually agreed by both parties. Party B shall not hold any rights and interests.
1.2 Scope
1.2.1 The Proprietary Technology granted to Party B herein shall only be used on Party B's business in development and production of stock breeding. Unless it is otherwise stated herein, without written consent of Party A, Party B shall not use the Proprietary Technology in other purpose or re-license for the use of any third party, whether for normal application, training or commercial sharing.
1.2.2 The right granted to Party B to use the Proprietary Technology herein shall be effective only in China. Party B agrees not to use such Proprietary Technology, whether directly or indirectly, in other geographical areas.
2. PAYMENT METHOD
Party B agrees to pay the Proprietary Technology license fee (hereinafter referred to as "License Fee") to Party A. The standard License Fee shall be RMB2.72 million per year. Party B shall pay the Proprietary Technology License Fee for the current year to Party A's designated account before December 31 of each year.
The License Fee payable hereunder by Party B shall be secured by the shareholders of Party B by pledging their respective shareholding in Party B.
Both parties shall bear their respective tax liabilities in relation to this Agreement in accordance with the stipulations of laws.
3. PARTY A'S RIGHTS AND PROTECTION
3.1 In the effective term of this Agreement and thereafter, Party B agrees not to challenge or question the validity of the proprietary right and this Agreement in connection with the aforesaid Proprietary Technology; and not to perform any acts that Party A believes it will impair Party A's rights and license.
3.2 Party B agrees to provide the necessary assistance to protect Party A's rights on the Proprietary Technology. Should any third party bring an infringement claim against Party A's Proprietary Technology, at Party A's discretion, Party A may respond to such compensation litigation in its own name, in Party B's name or in both parties name. In the event any third party commits any infringement behavior in connection with such Proprietary Technology, Party B shall notify Party A immediately within its scope of knowledge; only Party A is entitled to decide whether to take action against such infringement behavior.
3.3 Party B agrees to use the Proprietary Technology only in the manner as provided in this Agreement and shall not use the Proprietary Technology in any manner which Party A deems as deceptive, misleading or other manner that may impair the Proprietary Technology or Party A's reputation.
4. CONFIDENTIALITY PROVISIONS
4.1 Party A's confidential material and information (hereinafter "Confidential Information") being understood or accessed by Party B as a result of accepting the Proprietary Technology license, Party B shall keep confidential; and at the time this Agreement terminates, Party B shall, at Party A's request, return to Party A any documents and materials marked Confidential Information or destroy such Confidential Information, and delete any Confidential Information from any relevant memory device, and shall discontinue using such Confidential Information. Without the written consent of Party A, Party B shall not disclose to any third party, give or transfer such Confidential Information.
4.2 Both parties agree that this Article 4 shall remain valid regardless of whether this Agreement shall become invalid, alter, discharge, terminate or unenforceable.
5. REPRESENTATION AND WARRANTY
5.1 Party A represents and warrants as follows:
5.1.1 Party A is a validly existing wholly foreign-owned enterprise legally registered in accordance with the Chinese laws.
5.1.2 Party A signs and perform this Agreement within the power and business scope of the company; adopted all necessary corporate action, duly authorized, and obtained the consent and approvals (as required) of third party or government; and not in violation of the legal and company restrictions binding or affecting upon it.
5.1.3 This Agreement, once executed, shall constitute legitimate, valid, binding and enforceable obligations on Party A under the conditions of this Agreement.
5.1.4 Party A shall hold full and complete rights towards the Proprietary Technology.
5.2 Party B represents and warrants as follows:
5.2.1 Party B is a validly existing limited liability company legally registered in accordance with the Chinese laws.
5.2.2 Party B signs and perform this Agreement within the power and business scope of the company; adopted all necessary corporate action, duly authorized, and obtained the consent and approvals (as required) of third party or government; and not in violation of the legal and company restrictions binding or affecting upon it.
5.2.3 This Agreement, once executed, shall constitute legitimate, valid, binding and enforceable obligations on Party B under the conditions of this Agreement.
6. EFFECTIVENESS AND TERM
6.1 This Agreement shall be effective when it is executed on the date written on the first page of this Agreement. Unless it is early terminated according to this Agreement, this Agreement shall remain effective during the operation term of Party B.
6.2 On written consent by both parties, this Agreement is renewable upon expiry and the renewal term shall be determined by both parties through consultation.
7. DEFAULT RESPONSIBILITY AND TERMINATION
7.1 Default Responsibility
If Party B fails to pay the License Fee as scheduled in accordance with the provision hereunder, Party A is entitled to issue a written reminder to remind Party B to pay the outstanding License Fee, and Party B is entitled to collect a 3% of the relevant outstanding License Fee as the default fine. Except as otherwise provided in this Agreement, either party of this Agreement fails to perform the obligations under this Agreement or fails to perform the obligations in comply with the relevant provisions of this Agreement, shall, at the request of the non-defaulting party, to continue perform, or to adopt remedy measure and to compensate the actual loss caused to the non-defaulting party.
7.2 Discharge and Termination
During the effective term of this Agreement, Party A may, at any time, by giving a thirty (30) day prior written notice to Party B, terminate this Agreement; unless as otherwise expressly provided herein, without a reason written consent of Party A, Party B shall not terminate or discharge this Agreement unilaterally.
7.3 Results of Termination or Expiration
After this Agreement terminates or expires, Party B shall no longer enjoy all the rights granted to it under this Agreement. Party B shall not, directly or indirectly, use the Proprietary Technology.
8. FORCE MAJEURE
8.1 "Event of Force Majeure" refers any event that is beyond the reasonable control of a party, and it is unavoidable even under the reasonable care of the affected party, such events shall include but not limited to: acts of government, forces of nature, fire, explosion, typhoon, floods, earthquakes, tidal, lightning or war. However, credit, capital or financing shortage shall not be considered as matters beyond a party's reasonable control. The party, affected by "Event of Force Majeure", seeks exemption from performing its responsibilities under this Agreement or under any provision of this Agreement, shall notify the other party as soon as possible regarding such matter of exemption.
8.2 When the performance of this Agreement is delayed or prevented due to the aforementioned definition of "Event of Force Majeure", the affected party shall not assume any responsibility under this Agreement provided that the affected party has endeavored its reasonable effort to perform the agreement and to the extent of the part of the performance being delayed or prevented. Once the cause of such liability exemption is redressed or remedied, both parties agree to resume the performance of this Agreement with their best effort. If the influence of force majeure has rendered the performance of this Agreement becomes impossible, both parties agree, at the request of Party A, to use their greatest efforts to adopt other resolutions to realize the purposes of this Agreement.
9. DISPUTE RESOLUTION
In the event dispute in relation to the interpretation and performance of this Agreement arises, both parties shall resolve such dispute through friendly consultation. Should resolution cannot be reached within thirty (30) days after the request to resolve the dispute is made by a party, either party may submit such dispute to China International Economic and Trade Arbitration Commission for arbitration in accordance with the then effective arbitration rules. The arbitration shall take place in Beijing and the language to conduct the arbitration shall be in Chinese. The arbitral award shall be final and binding upon both parties.
10. NOTICE
Notices or other communications required to be given by either party under this Agreement shall be written in English or Chinese, and shall be delivered by hand delivery, registered mail, postage prepaid mail, or a recognized courier service or facsimile to the following addresses of the relevant party or both parties or to the other address notified by one party to the other party from time to time or to the address of the other person it specified. Notice is deemed delivered based on the following criteria: (a) on the same date when hand delivery; (b) on the tenth (10th) day after the date of posting (as indicated by postmark) of air registered mail (postage preprepaid) or if it is sent by courier service, on the fourth (4th) day after it is being delivered to an internationally recognized courier service center; and (c) a notice sent by facsimile, the receiving time as shown on the transmission confirmation of the relevant documents is regarded as the actual time delivered.
Party A: Aero-Biotech Science & Technology Co., Ltd.
Address: Unit A333, 6th Floor, Golden Resources Shopping Mall, No. 1 Yuanda
Road, Haidian District, Beijing
Attention: Zhaohua Qian
Fax: 010-62109899
Tel: 010 - 62109288
Postal code: 100081
Party B: Primalights III Agriculture Development Co., Ltd.
Address: Middle Area of Highway 73, Zhuangershang Upper Village, Huangling
Rural, Xiaodian District, Taiyuan City
Attention: Zhonglin Han
Fax: 0351-7123671
Tel: 0351 - 7870123
Postal code: 030031
11. RETRANSFER, SUBLICENSE
Without the prior written consent of Party A, Party B shall not transfer, pledge or sublicense the rights and obligations of and under this Agreement.
12. GOVERNING LAW
The validity, performance and interpretation of this Agreement shall be governed by laws of China.
13. AMENDMENT AND SUPPLEMENT
Amendments and supplements to this Agreement shall be made in the form of a written instrument. The relevant amendment agreement and supplemental agreement to this Agreement, duly signed by both parties, shall be an integral part of this Agreement and shall have the same legal effect as this Agreement.
14. SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable due to the inconsistency with the relevant laws, then such provision shall be deemed invalid only within the scope of the related jurisdiction and that it shall not affect the legality of the other provisions under this Agreement.
15. ANNEX
Any annex of this Agreement is an integral part of this Agreement, and it shall have the same legal effect.
IN WITNESS WHEREOF, both parties have caused their legal representative or authorized representative to execute this Agreement on the date first above written.
16. COUNTERPART
This Agreement is signed in duplicate, each party holds one original and each original shall have the same legal force and effect.
[No text below.]
[No text in this page.]
PARTY A: Aero-Biotech Science & Technology Co., Ltd.
Legal representative / authorized representative: /s/ Qian Zhaohua ------------------------------ Common seal: [Seal: Aero-Biotech Science & Technology Co., Ltd.] |
PARTY B : Primalights III Agriculture Development Co., Ltd.
Legal representative / authorized representative: /s/ Zhang Mingshe ------------------------------ Common seal: [Seal: Primalights III Agriculture Development Co., Ltd.] |
ANNEX I: LIST OF PROPRIETARY TECHNOLOGY
EXHIBIT 4.7
TRANSLATED FOR REFERENCE ONLY.
POWER OF ATTORNEY
I, Li Juan, a citizen of the People's Republic of China (hereinafter referred to as "China"), Chinese identity card number 420983197609010023, am a shareholder of Primalights III Agriculture Development Co., Ltd. (hereinafter referred to as "P3A") holding 40% of the equity interest in P3A. I hereby irrevocably authorize Mr. Qian Zhaohua to exercise the following rights within the valid term of this Power of Attorney:
I authorize Mr. Qian Zhaohua (China identity card number: 130224670510033) to represent myself with full power to exercise the shareholder's rights including voting rights at the shareholders' meeting of P3A in accordance with Chinese laws and Articles of Association of P3A, including but not limited to: execute the relevant legal documents with respect to the sale or transfer of all or part of my equity interest held in P3A; and to act as my authorized representative at the shareholders' meeting of P3A to designate and appoint a general manager of P3A.
Such authorization and designation have a prerequisite condition that Mr. Qian Zhaohua is a Chinese citizen, and that he is an employee of Aero-Biotech Science & Technology Co., Ltd. (hereinafter referred to as "Aero-Biotech") and that Aero-Biotech agrees to such authorization and designation. Once Mr. Qian Zhaohua leaves Aero-Biotech or Aero-Biotech notifies me to terminate the aforesaid authorization and designation, I will immediately recover the authorization and designation granted herein, and I will designate/ authorize another personnel nominated by Aero-Biotech and exercise all my shareholder rights including voting rights at a shareholders' meeting of P3A as a shareholder should enjoy.
In the validly existing period of P3A, unless for any reason an early termination of the "Exclusive Call Option Agreement" which is jointly signed by me, Aero-Biotech and P3A, this Power of Attorney shall remain effective throughout the operating period of P3A from the date this Power of Attorney is signed.
/s/ Li Juan ------------------------------------- June 8, 2007 |
POWER OF ATTORNEY
I, Xue Zhi Xin, a citizen of the People's Republic of China (hereinafter referred to as "China"), Chinese identity card number 140102621023081, am a shareholder of Primalights III Agriculture Development Co., Ltd. (hereinafter referred to as "P3A") holding 25% of the equity interest in P3A. I hereby irrevocably authorized Mr. Qian Zhaohua to exercise the following rights within the valid term of this Power of Attorney:
I authorize Mr. Qian Zhaohua (China identity card number: 130224670510033) to represent myself with full power to exercise the shareholder's right including vote right at the shareholders' meeting of P3A in accordance with Chinese law and Articles of Association of P3A, including but not limited to: to execute the relevant legal documents with respect to the sale or transfer of all or part of my equity interest held in P3A; and to act as my authorized representative at the shareholders' meeting of P3A to designate and appoint a general manager of P3A.
Such authorization and designation have a prerequisite condition that Mr. Qian Zhaohua is a Chinese citizen, and that he is an employee of Aero-Biotech Science & Technology Co., Ltd. (hereinafter referred to as "Aero-Biotech") and that Aero-Biotech agrees to such authorization and designation. Once Mr. Qian Zhaohua leaves Aero-Biotech or Aero-Biotech notifies me to terminate the aforesaid authorization and designation, I will immediately recover the authorization and designation granted herein, and I will designate/ authorize another personnel nominated by Aero-Biotech and exercise all my shareholder's rights including voting rights at a shareholders' meeting of P3A as a shareholder should enjoy.
In the validly existing period of P3A, unless for any reason an early termination of the "Exclusive Call Option Agreement" which is jointly signed by me, Aero-Biotech and P3A, this Power of Attorney shall remain effective throughout the operating period of P3A from the date this Power of Attorney is signed.
/s/ Xue Zhi Xin --------------- June 8, 2007 |
POWER OF ATTORNEY
I, Zhang Ming She, a citizen of the People's Republic of China (hereinafter referred to as "China"), Chinese identity card number 140104710212037, am a shareholder of Primalights III Agriculture Development Co., Ltd. (hereinafter referred to as "P3A") holding 5% of the equity interest in P3A. I hereby irrevocably authorized Mr. Qian Zhaohua to exercise the following rights within the valid term of this Power of Attorney:
I authorize Mr. Qian Zhaohua (China identity card number: 130224670510033) to represent me with full power to exercise the shareholder's right including voting right at the shareholders' meeting of P3A in accordance with Chinese law and Articles of Association of P3A, including but not limited to: to execute the relevant legal documents with respect to the sale or transfer of all or part of my equity interest held in P3A; and to act as my authorized representative at the shareholders' meeting of P3A to designate and appoint a general manager of P3A.
Such authorization and designation have a prerequisite condition that Mr. Qian Zhaohua is a Chinese citizen, and that he is an employee of Aero-Biotech Science and Technology Company Limited (hereinafter referred to as "Aero-Biotech") and that Aero-Biotech agrees to such authorization and designation. Once Mr. Qian Zhaohua leaves Aero-Biotech or Aero-Biotech notifies me to the terminate the aforesaid authorization and designation, I will immediately recover the authorization and designation granted herein, and I will designate / authorize another personnel nominated by Aero-Biotech and exercise all my shareholder's rights including voting rights at a shareholders' meeting of P3A as a shareholder should enjoy.
In the validly existing period of P3A, unless for any reason an early termination of the "Exclusive Call Option Agreement" which is jointly signed by me, Aero-Biotech and P3A, this power of attorney shall remain effective throughout the operating period of P3A from the date this Power of Attorney is signed.
/s/ Zhang Ming She ------------------------------------- June 8, 2007 |
EXHIBIT 4.8
TRANSLATED FOR REFERENCE ONLY.
EQUITY PLEDGE AGREEMENT
This Equity Pledege Agreement (this "Agreement") is entered into by and among the following parties on June 8, 2007 in Beijing:
Party A: Aero-Biotech Science & Technology Co., Ltd.
Domicile: A333, 6th Floor, Golden Resources Shopping Mall, No. 1 Yuanda Road,
Haidian District, Beijing (the "Pledgee");
Party B: Li Juan, a Chinese citizen, identity card number: 420983197609010023;
Party C: Qian Zhaohua, a Chinese citizen, identity card number: 130224670510033;
Party D: Xue Zhixin, a Chinese citizen, identity card number: 140102621023081;
Party E: Zhang Mingshe, a Chinese citizen, identity card number:
140104710212037;
(Parties B, C, D and E above individually or collectively referred to as the "Pledgor(s)")
Party F: Primalights III Agriculture Development Co., Ltd.
Domicile: Middle Area of Highway 73, Zhuang Er Shang Village, Huang Ling Rural
Area, Xiaodian District, Taiyuan City (hereinafter referred to as "P3A").
WHEREAS:
1. P3A, i.e. Party F, is a limited liability company registered, established and validly existing in Taiyuan City, Shanxi Province, PRC under the laws of the People's Republic of China (hereinafter referred to as "China", excluding Hong Kong Special Administrative Region, Macao Special Administrative Regions and Taiwan in this Agreement);
2. The Pledgors are the legal and valid shareholders of P3A and hold all the equity interest in P3A legally whereby Parties B, C, D and E own 40%, 30%, 25% and 5% of the equity interest, respectively;
3. The Pledgee is a wholly foreign owned enterprise legally established and validly existing under the laws of China. It provides technical support, technology consulting and related services to P3A. It has become a major cooperative partner of P3A;
4. On June 8, 2007, the Pledgee and P3A have entered into the "Exclusive Technology Development, Technology Support and Technology Service Agreement", "Proprietary Technology License Agreement" and "Exclusive Consultancy Service Agreement". The Pledgors agree to pledge their equity interest in P3A as a security for the performance of all P3A's obligations under the aforementioned agreements;
5. On June 8, 2007, the Pledgee and the Pledgors and P3A have signed the "Exclusive Call Option Agreement". The Pledgors agree to pledge their equity interest in P3A as a security for the performance of all the obligations of P3A and themselves under such "Exclusive Call Option Agreement";
NOW, THEREFORE, the Pledgee and the Pledgors, through friendly consultation, reach the agreement as follows.
ARTICLE 1 DEFINITIONS
Except as otherwise stipulated herein, the following terms shall mean:
1.1 "Pledge" refers to the full content of Article 2 hereunder.
1.2 "Equity " means the entire equity interest in P3A which legally held by the Pledgors.
1.3 "Main Contract" includes "Proprietary Technology License Agreement", "Exclusive Technology Development, Technology Support and Technology Service Agreement", "Exclusive Consultancy Service Agreement", "Exclusive Call Option Agreement" and any amendment and supplement thereof.
1.4 "Secured Party" refers to other contract party under each Main Contract except the Pledgee.
1.5 "Secured Debt" means all contractual obligations under each Main Contract, including (but not limited to) interest, default fine, compensation, expenses incurred by the Pledgee in realizing the debt.
1.6 "Event of Default" refers to any event specified in Article 7.1 hereof.
1.7 "Notice of Default" means the notice of default to be issued by the Pledgee pursuant to this Agreement.
ARTICLE 2 PLEDGE
The Pledgors hereby pledges all equity interest it owns in P3A to the Pledgee as a security for the performance of the Secured Debt under Main Contract by the Secured Party. Accordingly, the Pledgee enjoys the Pledge of all the Equity of the Pledgor in P3A. "Pledge" refers to the rights owned by the Pledgee, who is entitled to a priority in receiving payment by the evaluation or proceeds from the auction or sale of the Equity pledged by the Pledgor to the Pledgee.
ARTICLE 3 REGISTRATION OF PLEDGE
3.1 Within one (1) week after the signing of this Agreement, P3A shall, and the Pledgor shall cause P3A, to record the Pledge specified in Article 2 above, on the Register of Shareholders of P3A, and deliver the copy of the Register of
Shareholders chopped with the official seal of P3A and the original of equity contribution certificate of P3A to the Pledgee for custody.
3.2 After the signing of this Agreement, the Pledgors shall, in accordance with the Pledgee's written request which may be made by the Pledgee from time to time, together with the Pledgee, notarize this Agreement as well as the Pledgee's Pledage Right recorded in the Register of Shareholders and equity contribution certificate as set forth in Article 3.1 hereof at a local notary public office where P3A is domiciled.
3.3 The parties agree to take it best effort to cause the pledge under this Agreement to be registered at the industrial and commercial administrative departments where P3A is registered. The parties confirm that, unless the registration in the industrial and commercial administrative of the pledge is mandatory in law, the effectiveness and validity of the Pledge stipulate in Article 2 above shall not be affected after all parties signed this Agreement, even if the Pledge under this Agreement cannot be registered at the industry and commerce administration departments where P3A is registered.
ARTICLE 4 RIGHTS OF THE PLEDGEE
4.1 When the Secured Party does not perform any obligation under the Main Contract, the Pledgee is entitled to be first compensated from money converted from or the proceeds from the auction or sale of the pledged Equity of P3A.
4.2 The Pledgee is entitled to receive the dividends and other property distribution arising from the pledged Equity.
ARTICLE 5 REPRESENTATION AND WARRANTY OF PLEDGORS
5.1 Pledgors are the legitimate owners of the Equity;
5.2 Pledgors fully understands the contents of the Main Contract. The signing and the performance of this Agreement are voluntary, and it is expressing true meaning. The Pledgors are legally authorized to sign;
5.3 All documents, information, statements and other evidence which Pledgors provided to the Pledgee are accurate and true, complete and valid;
5.4 Pledgors admit that the Pledgee has the right to dispose and transfer the Pledge, according to the method stipulated in this Agreement and within the scope of the legal restrictions in China;
5.5 Except for the interest of the Pledgee, Pledgors have not placed other pledge, any other kinds of rights or any third party right on the Equity;
5.6 Every Pledgor has already obtained the consent of the other shareholders of P3A to pledge the Equity. And all the shareholders have unanimously consent
that,
when Pledgee exercises the right of the Pledge, the shareholders will not interfere by any means, and that they will not exercise the pre-emptive right.
ARTICLE 6 UNDERTAKING OF PLEDGORS
In addition to the obligations specified in this Agreement, the Pledgor undertakes as follows:
6.1 During the duration of this Agreement, the Pledgors' promise to the Pledgee for its benefit that the Pledgors shall:
6.1.1 Except for transferring the Equity to the Pledgee, without the prior written consent of Pledgee, Pledgors cannot transfer the Equity, cannot create or permit the existence of any pledge which may affect the rights and interests of Pledgee, or cause the shareholders meeting of P3A to pass any resolution to sell / transfer / pledge or by means of other way to dispose any Equity of the company, or to allow the creation of any other security interests; unless prior written consent of the Pledgee, Pledgors shall vote / cause his nominated P3A Directors to vote at P3A's board meeting and/or by other means to object P3A to sell / transfer / pledge or by other way of disposing of any major assets, including (but not limited to) any intellectual property rights.
6.1.2 If the pledged Equity under this Agreement is subjected to any compulsory measures implemented by a court or other departments for any reason, the Pledgors shall use all efforts, including (but not limited to) provide other security or adopt other measure to the court, in order to dismiss the compulsory measures taken by the Court or other departments over the pledged Equity.
6.1.3 The Pledgors shall comply with and implement all relevant laws and regulations regarding the rights for pledge. Within five (5) days upon receipt of any competent authority's notice, order or suggestion about the Pledge, the Pledgors shall deliver such notice, order or suggestion to the Pledgee, and comply with such notice, order or suggestion, or raised objections and representations in accordance with the Pledgee's reasonable request or the consent on the foregoing matters.
6.1.4 The Pledgors shall timely notify the Pledgee of any event or received notice which may affect the Pledgor's Equity or any part of its right, and any event or any received notice which may change any of the Pledgor's warranty and obligation under this Agreement.
6.2 The Pledgors agree that, when the Pledgee exercises its rights on the Pledge in accordance with the provisions under this Agreement and within the scope permitted by the Chinese laws, the Pledgee's right shall not be suspended or inhibited by any legal procedure launched by the Pledgors or any successors of the Pledgors or any person authorized by the Pledgors or any other person.
6.3 The Pledgors promise to the Pledgee that, in order to protect or perfect the security for the Secured Debt, the Pledgors shall execute in good faith and cause
other parties who have interests in the Pledge to sign all the title certificates, contracts, and / or perform and cause other parties who have interest to take action as required by the Pledgee; and provide convenient access to exercise the rights and authorization vested in the Pledgee under this Agreement.
6.4 The Pledgors promise to the Pledgee that they will execute all amendment documents (if applicable and necessary) in connection to the Certificate of Equity with the Pledgee or its designated person (natural person/legal person) and provide all the notice, order or decision related to the Pledge to the Pledgee by who considers to be necessary within a reasonable time.
6.5 The Pledgors promise to the Pledgee to comply with and perform all the guarantees, undertakings, contracts, representations and conditions for the benefits of the Pledgee. If the Pledgors do not perform or do not fully perform its guarantees, undertakings, contracts, representations and conditions, the Pledgors shall compensate the Pledgee for all the losses suffered by the Pledgee.
ARTICLE 7 EVENT OF DEFAULT
7.1 The following events are regarded as events of default:
7.1.1 The Secured Party fails to perform as due, fully perform any one of the Secured Debt Failure under the Main Contract;
7.1.2 The statements or guarantees made by the Pledgors, specified in Article 5, contain any material misleading or false information, and/or the Pledgor's breach of the any waranties set forth in Article 5;
7.1.3 The Pledgor's breach of the undertakings specified in Article 6;
7.1.4 The Pledgor's breach of any other provisions herein;
7.1.5 The Pledgor waives the pledged Equity or transfer the pledged Equity without Pledgee's prior written consent;
7.1.6 Any other external borrowing, warrant, compensation, undertakings or other liabilities of the Pledgors: (1) is required for an early repayment or performance prior to the scheduled date due to any breach; or (2) is due but can not be repaid or perform as scheduled, which causes the Pledgee to believe that the Pledgors' capacity to perform the obligations under this Agreement is affected;
7.1.7 P3A is incapable to repay the general debts unsecured or other debts;
7.1.8 This Agreement becomes illegal or the Pledgor fails to continue perform its obligations under this Agreement due to any reason with the exception of force majeure;
7.1.9 An adverse change occurs to the property owned by the Pledgor, which causes the Pledgee to believe that the Pledgor's capability to perform the obligations under this Agreement is affected;
7.1.10 A material adverse change occurs to the assets, operation result or finance of P3A;
7.1.11 The successor or agent of P3A can only perform part of the Main Contract or refuse to perform the Main Contract;
7.1.12 The Pledgor breaches other provisions of this Agreement through any act or omission of act.
7.2 If the Pledgor knows or is aware of any events set forth in Article 7.1 herein or any events which may result in the foregoing events has happened or is going on, the Pledgor shall give written notice to the Pledgee immediately.
7.3 Unless the events of default set forth in Article 7.1 herein have been resolved to the Pledgee's satisfaction, the Pledgee may give written notice of default to the Pledgor at any time after the occurrence of such events of default and require the Pledgor to repay the debts or other payables under the Main Contract immediately or exercise its Pledge as specified in Article 8 herein.
ARTICLE 8 EXERCISE OF THE PLEDGE
8.1 Subject to the stipulation set forth in Article 6.1.1 herein, before the Secured Party has fully performed its obligation under the Main Contract, the Pledgor shall not transfer the pledged Equity without the Pledgee's written consent.
8.2 The Pledgee shall give notice of default to the Pledgor when the Pledgee exercises the right of Pledge.
8.3 Subject to Article 7.3 herein, the Pledgee may exercise its right of disposal of the Pledge at the time or at any time after the notice of default is issued in accordance of Article 7.3.
8.4 The Pledgee is entitled to a priority in receiving payment by the evaluation or proceeds from the auction or sale of whole or part of the Equity pledged herein in accordance with legal procedure until the outstanding debt and all other payables of the Pledgor under the Main Contract are repaid.
8.5 The Pledgor shall not hinder any obstacle when the Pledgee execute his disposal right hereunder. The Pledgor shall provide necessary assistance so that the Pledgee could realize his Pledge.
ARTICLE 9 ASSIGNMENT OF CONTRACT
9.1 The Pledgor or P3A shall not transfer any right and obligation under this Agreement, unless agreed by the Pledgee in advance.
9.2 This Agreement shall be binding upon the Pledgor and its successors, and this Agreement shall also be binding upon the Pledgee and each of its successor and permitted assignee.
9.3 The Pledgee may transfer all or any rights and obligations hereunder to designated assigners (natural person/ legal person) with the permit by applicable law, in which case the assignee shall enjoy and undertake the same rights and obligations herein of the Pledgee as if the rights and obligations shall be enjoyed and born by any party of this Agreement. When the Pledgee transfers the rights and obligations under the Main Contract, and such transfer shall only need to serve a written notice to the Pledgor, and the Pledgor shall sign the relevant contracts and/or documents as requested by the Pledgee.
9.4 A new pledge contract shall be signed between the new parties to the pledge after the change of Pledgee caused by the pledge transfer.
ARTICLE 10 EFFECTIVENESS
This Agreement is signed on the date set forth in the first page and shall become effective on the day on which the Pledge is recorded on the Register of Shareholder of P3A.
ARTICLE 11 TERMINATION
This Agreement terminates when the Secured Debt under the Main Contract has been repaid and the Pledgor will not undertake any obligations under the Main Contract. The Pledgee shall provide necessary assistance in dealing with the formalities for releasing the Pledge on the Equity within the earliest reasonable and practicable time.
ARTICLE 12 FORMALITIES FEES AND OTHER CHARGES
12.1 All the fees and actual expenses incurred due to the conclusion and performance of this Agreement, including but not limited to, legal fee, cost of production, stamp duty, and any other taxes and charges, etc shall be payable and borne by the Pledgor. If the Pledgee pays the relevant taxes in accordance with laws, the Pledgor shall fully indemnify the Pledgee such taxes paid by the Pledgee.
12.2 The Pledgee may seek recourse against the Pledgor by any means or any ways if the Pledgor fails to pay any payable taxes, expenses or charges for other reasons in accordance with this Agreement. The Pledgor shall be responsible for all the fees incurred, including but not limited to, all kinds of taxes, formalities fees, management fees, litigation fees, attorney's fees and various insurance premiums in connection with the disposition of the Pledge, etc., by the Pledgor.
ARTICLE 13 FORCE MAJEURE
13.1 "Force majeure" means any event beyond the reasonable control of the party and cannot be prevented with reasonable care of the affected party, such event of Force Majeure includes, but is not limited to, acts of government, acts of nature, fire, explosion, typhoon, floods, earthquake, tidal wave, lightning or war. Nevertheless, lack of credit, capital or finance shall not be considered as an event beyond a party's reasonable control. The affected party shall notify the other parties of such event resulting in exemption without any delay.
13.2 Shall either party hereto be delayed or prevented from performing its obligations hereunder due to Force Majeure events as defined in Article 13.1, the affected party may be exempted from performing its obligation hereunder to the extent delayed or prevented by Force Majeure events. The affected party shall take reasonable endeavors to minimize or remove the effects of the events of Force Majeure and attempt to resume performance of the obligations delayed or prevented by the events of Force Majeure. The parties agree to use reasonable efforts to resume the performance of the obligation whenever and to the extent the causes are removed.
ARTICLE 14 CONFIDENTIALITY
Undersigned hereby acknowledge and confirm that any oral or written materials exchanged hereto are confidential information. The parties shall keep all confidential information in confidence and shall not disclose any item of confidential information to any third party, without other party's prior written consent, however, either of the following cases shall be excepted: (a) the information is already or to be make known to the public (the disclosure is not made by the recipient without authorization; (b) the information is disclosed as required by applicable laws or rules and regulations of stock exchange; or (c) the information disclosed by any party to its legal consultant or financial advisors in connection with or in the execution of this Agreement. It is also necessary for the legal consultant and financial advisors to undertake confidentiality obligations and liabilities. The breach of confidentiality of any party's employees, agents or advisers shall be deemed as the act of the party; therefore, it shall be liable for the breaching responsibilities in accordance with this Agreement.
ARTICLE 15 DISPUTE RESOLUTION
15.1 This Agreement shall be construed and governed by the laws and regulations of the People's Republic of China.
15.2 All the disputes in connection with or in the execution of this Agreement shall be settled by the parties through friendly consultations. In case no settlement to the disputes can be reached by the parties through such consultations, the disputes shall be submitted to China International Economic and Trade Arbitration Commission for arbitration. The arbitration shall take place in Beijing, China, and be conducted in Chinese according to the provisional procedures and rules of
the China International Economic and Trade Arbitration Commission. The arbitration award shall be final and binding on the parties.
ARTICLE 16 NOTICE
Notices required to be given by the parties for the purpose of performing the rights and obligations pursuant to this Agreement shall be in writing, including facsimile transmission. The dates of receipt of such notices shall be determined as follows:
(a) Notices sent by personal delivery shall be deemed effectively delivered on the date of personal delivery;
(b) Notices sent by facsimile transmission shall be deemed effectively delivered when dispatched on its transmittal or on the first business day following the date of transmission when it is not a business day or received after the business hours.
Address for notices is the address set forth in the first page or other address may be designated through notification to the other parties.
Party A: Aero-Biotech Science & Technology Co., Ltd.
Address: A333, 6th Floor, Golden Resources Shopping Mall, No. 1 Yuanda Road,
Haidian District Fax: 010-6210 9899 Tel: 010-6210 9288 Party B: Li Juan Address: Units 1& 8, 17th Floor, Duty-free Business Building, No.6 Fu Hua First Road, Futian District, Shenzhen City Fax 0755-8276 6965 Tel: 0755-8276 6980 Party C: Qian Zhaohua Address: Room 716, Huan Tai Building, South Street, Zhong Guan Cun, Haidian District, Beijing Fax: 010-62109298 Tel: 010-62109299 Party D: Xue Zhixin Address: 25th Floor, Jin Gang Hotel, No.91 Bing Zhou North Road, Taiyuan City, Shanxi Province Fax: 0351-4727112 Tel: 0351-4727118 Party E: Zhang Mingshe Address: 25th Floor, Jin Gang Hotel, No.91 Bing Zhou North Road, Taiyuan City, Shanxi Province Fax: 0351-472 7111 Tel: 0351-472 7111 Party F: Primalights III Agriculture Development Co., Ltd. |
Address: Middle of Highway 73, Zhuang Er Shang Village, Huang Ling Rural Area, Xiaodian District, Taiyuan City Fax 0351-712 3671 Tel: 0351-787 0123 |
ARTICLE 17 INTEGRATION OF CONTRACT
Notwithstanding Article 10, the parties agree that this Agreement constitute the entire agreement and understanding of the parties, superseding any and all prior written and oral representations, understandings, agreements and arrangements related thereto.
ARTICLE 18 SEVERABILITY
If and to the extent any provision of this Agreement is held invalid or unenforceable under applicable law, such provision thereof shall be ineffective as to the jurisdiction in which it is invalid or unenforceable. The invalidity or unenforceability of such provision in that jurisdiction shall not in any way affect the validity or enforceability of any other provision in any jurisdiction.
ARTICLE 19 AMENDMENT AND SUPPLEMENT
19.1 Parties may amend and supplement this Agreement with a written agreement. The amendment and supplement duly executed and signed by the parties shall be part of this Agreement and shall have the same legal effect as this Agreement.
19.2 This Agreement together with any amendments, supplements or modifications to this Agreement shall be in written form and become effective on the date when stamped and signed by the parties.
ARTICLE 20 COUNTERPARTS
This Agreement is executed by Chinese in nine copies, each of which has the same legal effect. The Pledgee, each Pledgor and P3A shall hold one copy and the remaining three copies shall be provided to relevant government departments.
IN WITNESS WHEREOF, the Parties executed this Agreement on the date first above written.
(No text below)
Party A: Aero-Biotech Science & Technology Co., Ltd.
Legal representative/authorized representative: /s/ Qian Zhaohua -------------------------------- Seals: [Seal: Aero-Biotech Science & Technology Co., Ltd.] |
Party B: Li Juan
Signature: /s/ Li Juan --------------------------- |
Party C: Qian Zhaohua
Signature: /s/ Qian Zhaohua --------------------------- |
Party D: Xue Zhixin
Signature: /s/ Xue Zhixin --------------------------- |
Party E: Zhang Mingshe
Signature: /s/ Zhang Mingshe --------------------------- |
Party F: Primalights III Agriculture Development Co., Ltd.
Legal representative/authorized representative: /s/ -------------------------------- Seals: [Seal: Primalights III Agriculture Development Co., Ltd.] |
EXHIBIT 4.9
TRANSLATED FOR REFERENCE ONLY.
EXCLUSIVE CALL OPTION AGREEMENT
This "Exclusive Call Option Agreement" (hereinafter referred to as "this Agreement") was signed by the following parties on June 8, 2007 in Beijing:
Party A: Aero-Biotech Science & Technology Co., Ltd.
Domicile: No. A333 Sixth Floor, Golden Resources Shopping Mall, No. 1
Yuanda Road, Haidian District, Beijing
Party B: Li Juan, the ID card number : 420983197609010023;
Party C: Qian Zhao Hua, the ID card number : 130224670510033;
Party D: Xue Zhi Xin, the ID card number: 140102621023081;
Party E: Zhang Ming She, the ID card number: 140104710212037;
(Parties B, C, D, E above individually or collectively referred to as "the Shareholder(s)")
Party F: Primalights III Agricultural Development Co. Ltd. (hereinafter referred
to as "P3A")
Domicile: Middle Area of Highway 73, Zhuang Er Shang Village, Huang
Ling Rural Area, Xiao Dian District , Taiyuan City
WHEREAS:
1. Party A is a wholly foreign owned enterprise registered and established in China in accordance with the laws of the People's Republic of China (hereinafter referred to as "China". In this Agreement, it does not include the Hong Kong Special Administration Region, Macao Special Administration Region and Taiwan Region);
2. P3A is a limited liability company duly registered and established and validly existing in Taiyuan City, Shanxi Province of China;
3. Parties B, C, D, and E are Chinese citizens, who hold 40%, 30%, 25% and 5%, respectively, of equity interest in P3A;
4. The Shareholders intend to grant an exclusive purchase option to Party A so that Party A may request the Shareholders to sell their equity interest to it upon certain conditions are satisfied.
NOW, THEREFORE, the parties to this Agreement, through unanimous agreement, hereby agree as follows:
CHAPTER 1: PURCHASE AND SALE OF EQUITY
1.1 Granting of Rights
The Shareholder hereby irrevocably grants to Party A an option to purchase or causes any person or persons designated by Party A (hereinafter the "Designee") to purchase from the Shareholders at any time, to the extent permitted by the laws of China and according to the steps determined by Party A at its own discretion, all or part of the equity interests in P3A (hereinafter the "Call Option"), at the price specified in Article 1.3 of this Agreement. Except for Party A and/or the Designee, the Shareholder shall not sell, offer to sell, transfer, donate equity, pledge any equity interest of P3A to any other third party. P3A hereby agrees the Shareholders to grant Party A and/or the Designee the Call Option. The "person" sets forth in this clause and this Agreement includes an individual, corporation, joint venture, partnership, enterprise, trust or non-corporation organization.
1.2 Exercise Steps
Subject to PRC laws and regulations, Party A and/or the Designee may exercise Call Option by issuing a written notice (hereinafter referred to as "Equity Purchase Notice") to the Shareholders and specifying the amount of equity interest to be purchased (the "Purchased Equity") from the Shareholder(s) and the manner of purchase.
1.3 Purchase Price
1.3.1 When Party A exercises the Call Option, unless the applicable Chinese laws and regulations require an appraisal of the equity interest or have other restriction on the equity price, Party A shall pay RMB100,000 to the Shareholders of P3A as the purchase price ("Purchase Price") for all the equity interest.
1.3.2 If the applicable PRC laws and regulations require appraisal of the equity interests or have other restrictions on the purchase price of the equity interests at the time Party A exercises the Call Option, the Parties agree that the Purchase Price shall be the lowest price allowed by the applicable laws.
1.3.3 If Party A chooses to purchase part of the equity interests, the purchase price should be adjusted according to the ratio of the Purchased Equity to the whole equity interests of P3A.
1.4 Transfer of the Purchased Equity
At each exercise of Call Option:
1.4.1 Shareholders shall cause P3A to hold the shareholders' meeting in a timely manner. The meeting should pass a resolution to approve the transfer of equity interest from Shareholders to Party A and/or the Designee, and cause other shareholders to waive pre-emptive right on the Purchased Equity in writing;
1.4.2 Shareholders and Party A and/or the Designee (as applicable) should enter into an equity transfer contract each time the share is transferred in accordance with
the stipulations of this Agreement and the Equity Purchase Notice related to the Purchased Equity;
1.4.3 The related parties should sign all other requisite contracts, agreements or documents, obtain all requisite government approvals and consents, and take all necessary actions, without any security interests, grant the valid ownership of the Purchased Equity to Party A and/or the Designee and cause Party A and/or the Designee to be the registered owner of the Purchased Equity. In this clause and in this Agreement, "security interests" includes guarantees, mortgages, pledges, the third-party rights or interests, any share option, right of acquisition, right of first refusal, right of offset, ownership detainment or other security arrangements. But it does not include the security interest arising from the Equity Pledge Agreement signed on June 8, 2007 by Party A, Shareholders and P3A (hereinafter "Equity Pledge Agreement").
1.5 Payment
The Purchase Price and the payment method shall be negotiated and decided by Party A and/or the Designee and the Shareholders according to the prevailing laws at the time the Call Option is exercised.
CHAPTER 2: UNDERTAKING RELATING TO EQUITY
2.1 Undertaking relating to P3A
The Shareholders and P3A hereby jointly undertake as follows:
2.1.1 Without the prior written consent of Party A, the articles of association of P3A should not be added, revised or modified in any forms; or the paid-in capital should not be increased or decreased; or the capital structure should not be changed in any way;
2.1.2 P3A should keep good financial and commercial standards and practices to maintain the existence of the company, operate its business and handle affairs prudently and effectively, try its best to keep all necessary permits, licenses and certificate valid and ensure that such permits, licenses and forth will not be canceled, and do its best to maintain the existing company structure, senior management staff, and relationship with the customers so that after the delivery of shares, there will not be material adverse effect on the goodwill and business of P3A;
2.1.3 Without the prior written consent of Party A, P3A should not sell, transfer, pledge or by other means dispose any assets, business and revenue of the company, or allow the settlement of any other security interests on it at any time after this Agreement is signed;
2.1.4 Without the prior written consent of Party A, P3A will not inherit,
guarantee or permit the existence of any debt, except: (i) debts arising
from normal or ordinary course of business operation except for loans; and
(ii) debts that have been disclosed to and obtained written consent from
Party A;
2.1.5 P3A will keep all existing business under normal operation to maintain the asset value of the company. Action or omission that will affect its business operation and asset value is not allowed;
2.1.6 Without the prior written consent of Party A, P3A shall not enter into any material contract, other than the agreements in the normal course of business (for the purposes of this paragraph, if a contract value is more than RMB 1 million, such contract will be deemed material);
2.1.7 Without the prior written consent of Party A, P3A should not provide any loans or credit to anyone;
2.1.8 At the request of Party A, P3A should provide related operational and financial information;
2.1.9 P3A should purchase and maintain the insurance from a insurance company which is recognized by Party A. The amount and type of insurance should be the same as those of the insurance normally procured by other companies in the same region, engaged in similar business or possessing similar property or assets;
2.1.10 Without the prior written consent of Party A, P3A shall not merge or consolidate with anyone, or shall not acquire or invest in anyone;
2.1.11 P3A should inform Party A immediately any pending or threatened lawsuits, arbitration or administrative proceedings relating to the assets, business and revenue of P3A;
2.1.12 In order to maintain its ownership over all the assets, P3A should sign all necessary or appropriate documents, take all necessary or appropriate actions, bring forward all necessary or appropriate claims, or make all necessary and appropriate defenses against all claims;
2.1.13 Without the prior written consent of Party A, P3A shall not distribute dividends to its shareholders in any form. However, at the request of Party A, all or part of the distributable profits shall be immediately distributed to its Shareholders.
2.1.14 During the valid term of this Agreement, all business shall comply with all applicable Chinese laws and regulations, administrative rules and regulations, and shall not impose any material adverse impact on the business or asset structure due to the violation of any above rules;
2.1.15 If Party A choose to exercise the Call Option according to the condition of this Agreement, P3A shall procure its best effort to obtain all necessary governmental approvals and other consent (if applicable) as soon as possible to complete the transfer of the equity ownership;
2.1.16 At the request of Party A, appoint the person nominated by Party A as the director of P3A.
2.2 Undertakings relating to Shareholders
Shareholders hereby undertake:
2.2.1 Without the prior written consent of Party A, Shareholders shall not sell, transfer, pledge or by other means dispose of any legitimate or beneficial interest of equity interest, or allow any other security interests to be created on at any time after this Agreement is signed, with the exception of the pledge under "Equity Pledge Agreement";
2.2.2 Without the prior written consent of Party A, Shareholders shall not cause any shareholder resolutions at the shareholders' meeting to approve the sale, transfer, pledge or otherwise dispose of any shares or benefit from the legitimate rights or beneficial interests, or to allow the establishment of any other security interest, but this is not applicable when the subject is Party A or its designee;
2.2.3 Without the prior written consent of Party A, Shareholders shall not vote to agree or support or sign any shareholder resolutions at the shareholders' meeting to approve P3A to merge or consolidate with anyone, or acquire or invest in anyone;
2.2.4 Notify Party A immediately of any litigation, arbitration or administrative proceedings pending or threatening against its equity;
2.2.5 To cause the shareholders' meeting to vote and approve the transfer of the Purchased Equity under this Agreement;
2.2.6 In order to maintain its ownership over the equity interest, Shareholders shall sign all necessary or appropriate documents, take all necessary or appropriate actions, bring forward all necessary or appropriate claims, or make all necessary and appropriate defenses against all claims;
2.2.7 At the request of Party A, appoint the person nominated by Party A as the director of P3A;
2.2.8 At request of Party A from time to time, Shareholders should transfer their shares to Party A and/or the Designee unconditionally and immediately, and waive the pre-emptive right toward other transferred equity;
2.2.9 Shareholders shall strictly comply with the provisions of this Agreement and other contracts which are jointly or individually signed by the Shareholders, P3A and Party A, effectively perform the obligations under these agreements, and do not do any act/omission that will affect the validity and enforceability of these agreements.
CHAPTER 3: REPRESENTATION AND WARRANTIES
Shareholders and P3A hereby represent and warrant the followings to Party A on the day this Agreement is signed and on each transferring day:
3.1 They have the rights to sign and deliver this Agreement and any equity share-transferring contracts ("Transfer Agreement") according to this Agreement, of which we are one party. And we have the right to perform the obligations under this Agreement and any Transfer Agreement. Once this Agreement and any Transfer Agreement, of which we are one party, are signed, this Agreement will become legal, valid and binding obligations and it can be enforceable in accordance with its terms.
3.2 Either the execution and delivery of this Agreement or any Transfer
Agreement or carrying out of the obligations under this Agreement or any
Transfer Agreement will not: (i) violate any relevant Chinese laws and
regulations; (ii) conflict with the articles of association or other
organizational documents; (iii) violate or default under any contract or
instrument to which it is a party or that binds upon it; (iv) violate any
approval or permit granted to it a and/or condition remaining in force; or
(v) cause any permit or approval granted to it to be suspended, cancelled
or attached with additional conditions;
3.3 P3A holds good and salable ownership over all assets. P3A has not set any security interest on the said assets;
3.4 P3A has no outstanding debts except (i) debts arising from its normal course of business; and (ii) debts that have been disclosed to and approved by Party A in writing;
3.5 P3A shall comply with all Chinese Laws and regulations applicable to the acquisition of assets;
3.6 There is no existing, pending or threatening litigation, arbitration or administrative proceedings relating to equity and assets of P3A; and
3.7 Shareholders hold good and salable ownership over all its equity and complete and valid disposition right (except for restriction under Chinese laws and regulations) over the equity interest. Apart from the security interest defined in Equity Pledge Agreement, no other security interest on such equity has been created, and it is free from any third party claims.
CHAPTER 4: TRANSFER OF AGREEMENT
4.1 Shareholders and P3A shall not transfer their rights and obligations under this Agreement to any third party unless prior written consent is obtained from Party A.
4.2 Shareholders and P3A hereby agree that Party A is entitled to transfer all its rights and obligations under this Agreement to a third party if it considers it is necessary.
If such transfer happens, Party A only needs to notify Shareholders and P3A in writing and do not need to seek consent of Shareholders and P3A.
CHAPTER 5: EFFECTIVE DATE AND TERM
5.1 This Agreement shall become effective on the date first above written.
5.2 This Agreement shall be terminated automatically only when Party A exercises its purchase right over all equities of P3A according to the provisions of this Agreement, unless it is early terminated in accordance with the provisions of this Agreement or other related agreements signed by the parties.
5.3 If the operation term of Party A or P3A expire or Party A or P3A terminates due to other reasons during the period defined in Article 5.2 above, this Agreement will be terminated accordingly, except that Party A has transferred its rights and obligations according to Article 4.2.
CHAPTER 6: APPLICABLE LAW, DISPUTE RESOLUTION AND DEFAULT LIABILITIES
6.1 Applicable Law
The formation, validity, interpretation, performance of this Agreement and dispute resolution under this Agreement shall be governed by Chinese laws.
6.2 Dispute Resolution
If dispute over the interpretation and performance of the provisions under this Agreement arises, all parties shall resolve the dispute in good faith through amicable negotiations. If the dispute cannot be resolved within thirty (30) days after the request to solve the dispute is raised, any party may submit the dispute to China International Economic and Trade Arbitration Commission for arbitration according to the then effective arbitration rules. The arbitration venue shall be in Beijing and the applicable language shall be in Chinese. The arbitral award shall be final and binding upon all parties.
6.3 Default Liabilities
If any party of this Agreement violates the provisions of this Agreement, fails to fully perform this Agreement, or provides any false, significant omission and misstatement on any undertakings and statement and guarantee, refuses to perform the undertakings, statement and guarantee, these will constitute a default. The Defaulting Party shall bear all legal responsibility correspondingly.
CHAPTER 7: TAXES AND EXPENSES
Each party shall bear any and all transfer and registration taxes and expenses occurring to or levied on it with respect to the preparation and execution of this Agreement and each Transfer Agreement and its consummation of the transaction contemplated hereunder and each Transfer Agreement in accordance with Chinese laws.
CHAPTER 8: NOTICES
Notices or other communications required to be given by any party pursuant to this Agreement shall be written in English or Chinese and delivered by hand delivery or sent by mail or by facsimile transmission to the address of each relevant party set forth below or to other specified address of each relevant party notified by such party from time to time. The date when the notice is deemed to be duly served shall be determined as follows: (a) a notice delivered by hand is deemed duly received upon the date of delivery; (b) a notice sent by mail is deemed duly received on the tenth (10th) day after the date when the air registered mail with postage prepaid has been sent out (as indicated on the postmark), or the fourth (4th) day after the delivery date to an internationally recognized courier service; and (c) a notice sent by facsimile transmission is deemed duly received upon the receiving time as indicated on the transmission confirmation of relevant documents.
Party A: Aero-Biotech Science & Technology Co., Ltd.
Address: No. A333 Sixth Floor, Golden Resources Shopping Mall, No. 1 Yuanda
Road, Haidian District, Beijing
Fax: 010-62109899
Tel: 010-62109288
Party B: Li Juan
Address: Unit 1 & 8, 17th Floor, Duty-free Business Building, No.6 Fu Hua 1st
Road, Futian District, Shenzhen City
Fax: 0755-82766965
Tel: 0755-82766980
Party C: Qian Zhaohua
Address: Room 716, Huan Tai Building, South Street, Zhong Guan Cun, Haidian
District, Beijing
Fax: 010-62109298
Tel: 010-62109299
Party D: Xue Zhixin
Address: 25th Floor, Jin Gang Hotel, No.91 Bing Zhou North Road, Taiyuan City,
Shanxi Province
Fax: 0351-4727112
Tel: 0351-4727118
Party E: Zhang Mingshe
Address: 25th Floor, Jin Gang Hotel, No.91 Bing Zhou North Road, Taiyuan City,
Shanxi Province
Fax: 0351-4727111
Tel: 0351-4727111
Party F: Primalights III Agricultural Development Co, Ltd.
Address: Middle Area of Highway 73, Zhuang Er Shang Village, Huang Ling Rural
Area, Xiao Dian District Taiyuan City
Fax: 0351-7123671
Tel: 0351-7870123
CHAPTER 9: CONFIDENTIALITY
The parties acknowledge and confirm that any oral and written materials
exchanged pursuant to this Agreement are confidential information. The parties
shall keep confidential all such information and shall not disclose any such
information to any third party without prior written consent from the other
parties except under the following circumstances: (a) the public knows or will
know such information (provided that it is not disclosed without permission by
any party who received the information); (b) applicable laws or related stock
exchange rules or regulations that require the disclosure of the information; or
(c) if any party need to consult the transaction with its legal or financial
consultant, the consultant shall also comply with the responsibility on
confidentiality similar to those as stated here. Disclosure of information from
either the staff or the consulting firm engaged by it shall be deemed as a
breach by such party and such party shall bear all defaulting liabilities under
this Agreement. This provision shall survive even if this Agreement becomes
invalid, cancel, terminate or unenforceable for any reason.
CHAPTER 10: FURTHER WARRANTIES
The parties agree to promptly execute all necessary and favorable documents for the purpose of performing this Agreement, and take further necessary and favorable actions for the purpose of performing this Agreement.
CHAPTER 11: MISCELLANEOUS
11.1 Amendment, Modification and Supplement
The parties may amend and supplement this Agreement by a written instrument. Amendment and supplement will become an integral part of this Agreement after proper execution by the parties and have same legal effect as this Agreement.
11.2 Integrity of this Agreement
The parties hereby confirm that once this Agreement becomes effective, it shall constitute the entire agreement and understanding on all contents of this Agreement. And this Agreement supersedes all prior oral and/or written agreements and understanding reached by the parties with respect to the subject matter hereof.
11.3 Severability
If any provision or provisions of this Agreement is held invalid, illegal or unenforceable in any respect by applicable laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or impaired in any respect. The parties shall, through amicable negotiations, replace those invalid, illegal or unenforceable provision or provisions with valid provision or provisions for the purpose of obtaining similar economic effect to those from the invalid, illegal or unenforceable provisions.
11.4 Headings
The headings of this Agreement are to facilitate the reading of this Agreement and shall not be used for interpreting, illustrating or influencing in any other way the meaning of the provisions of this Agreement.
11.5 Language and Counterparts
This Agreement is written in Chinese. There are nine original copies and each copy shall have same legal effect. Each party shall hold one copy and the remaining three copies shall be provided to relevant government departments.
11.6 Successor
This Agreement shall bind on and inure to the benefit of each party's successor or the permitted transferee of the parties.
11.7 Survival
Any accrued or outstanding obligations arising from this Agreement before the expiration or early termination of this Agreement shall survive such expiration or early termination of this Agreement. The provisions in Chapter 6, Chapter 8, Chapter 9 and Article 11.7 shall survive after the termination of this Agreement.
11.8 Waiver
Any party may waiver the terms and conditions of this Agreement by a written instrument signed by the parties. No waiver by a party of the breach by the other parties in a specific case shall operate as a waiver by such party of any similar breach by the other parties in other cases.
IN WITNESS WHEREOF, the parties have signed this Agreement on the date first above written.
[No text below.]
[No text on this page.]
Party A: Aero-Biotech Science & Technology Co., Ltd.
Legal representative / authorized representative: /s/ Qian Zhaohua ------------------------------ Common Seal: [Seal: Aero-Biotech Science & Technology Co., Ltd.] |
Party B: Li Juan
Signature /s/ Li Juan ------------------------------- |
Party C: Qian Zhaohua
Signature: /s/ Qian Zhaohua ------------------------------- |
Party D: Xue Zhixin
Signature: /s/ Xue Zhixin ------------------------------- |
Party E: Zhang Mingshe
Signature: /s/ Zhang Mingshe ------------------------------- Party F: Primalights III Agricultural Development Co. Ltd. Legal representative / authorized representative: /s/ Zhang Mingshe ------------------------------- Common Seal: [Seal: Primalights III Agricultural Development Co. Ltd.] |
EXHIBIT 4.10
TRANSLATED FOR REFERENCE ONLY.
AGREEMENT ON EQUITY INTEREST OF PRIMALIGHTS III
AGRICULTURE DEVELOPMENT CO., LTD.
This "Agreement on Equity Interest of Primalights III Agriculture Development Co., Ltd." (hereinafter referred as" this Agreement ") is signed by the following parties on June 8, 2007 in Beijing :
PARTY A : China Victory International Holdings Limited (Chinese Characters), is a comPANY Incorporated under the laws of Hong Kong Special Administrative Region. Its registered address is Room B, 12th Floor, Ritz Plaza, 122 Austin Road, Tsimshatsui, Kowloon, Hong Kong;
PARTY B : Primalights III Agriculture Development Co., Ltd. (hereinafter may be referred to as "P3A"), is a company established under the laws of People's Republic of China (hereinafter referred to as "China"). Its registered address is Middle Area of Highway 73, Zhuangershang Upper Village, Huangling Rural, Xiaodian District, Taiyuan, Shanxi Province;
PARTY C : Taiyuan Relord Enterprise Development Group Co., Ltd. (Chinese Characters), is A company established under the laws of China. Its registered address is 142 Garden West Street, Yingze District, Taiyuan City;
PARTY D : Shanxi Chuanglong Technology Investment Co., Ltd. (Chinese Characters), is a company registered under the laws of China. Its registered address is 5th Floor, West Building, 142 Changzhi Road, High-tech Zone, Taiyuan City;
PARTY E : Zhang Mingshe, a Chinese citizen, ID card number: 140104710212037;
PARTY F : Yan Lv, a Chinese citizen, ID card number : 140102196405264837;
PARTY G : Liu Jinbin, a Chinese citizen, ID card number: 140104196809082290;
PARTY H : Qian Zhaohua, a Chinese citizen, ID card number: 130224670510033;
PARTY I : Xue Zhixin, a Chinese citizen, ID card number: 140102621023081; and
PARTY J : Li Juan, a Chinese citizen, ID card number: 420983197609010023.
WHEREAS :
1. Party A and Party B (hereinafter referred to as "P3A") signed a "Purchase Agreement" ( hereinafter referred to as the "Purchase Agreement ") on October 2, 2003;
2. At the time the "Purchase Agreement" is signed, Parties C, D, E, F and G were P3A's shareholders, together holding 100% shares of P3A;
Now, the parties, by friendly consultations, have reached unanimity regarding the equity shares of P3A as follows:
I. Party A, P3A, Parties C, D, E, F and G jointly state, represent and confirm that:
i. Parties C, D, E, F and G (hereinafter collectively as the "Original Shareholders"), according to the request of Party A, signed the share transfer agreement with Parties E, H, I and J (Parties E, H, I and J hereinafter may be referred to as the "Designee"), and completed the procedures of change of business registration. The Designees have become the legal equity owners of P3A, in which, Party E holds 5%, Party H holds 30%, Party I holds 25%, Party J holds 40%.
ii. From January 1, 2004 to the completion of the aforesaid share transfer, Original Shareholders of each party, when exercising its related equity right of P3A's equity (including, but not limited to, voting in the shareholders meeting of P3A regarding the appointment of P3A directors, etc.), have sought for and executed under Party A's instructions. Each Original Shareholders, after receiving the allocated dividends or other distributions from P3A, have transferred all such dividends and other distributions to Party A voluntarily; and
iii. Party A has already performed the obligations under any agreements entered by and among Party A and any party or parties of the Original Shareholders regarding P3A's equity; including but not limited to, the Original Shareholders have already received all the equity transfer fee involving the sale of 100% of P3A's equity shares. The Original Shareholders further confirm that, if Party A owes any obligations to the Original Shareholders under any related agreements that Party A requires to perform but have not performed or have not completely performed, the Original Shareholders have already exempted Party A from such obligations and waived any and all related rights. Since October 2, 2003, no event of default or expected event of default has occurred among the parties;
iv. Party A and Party B confirm that the obligations under the "Purchase Agreement" have either been performed or exempted by the other side until the date that this Agreement is signed for any pending or performed obligations under the "Purchase Agreement" (except otherwise specified herein). From October 2, 2003 until now, no event of default or expected event of default has occurred among the parties.
II. Parties E, H, I and J shall elect and cause the candidate nominated by Aero-Biotech Science and Technology Co., Ltd. ("Aero-Biotech"), Party A's wholly-owned subsidiary, to be appointed as the director of P3A, and grant the shareholder voting rights in the shareholders meeting to the designated persons designated by Aero-Biotech for execution. Meanwhile, without the prior written consent of Party A, Parties E, H, I and J shall not engage in the following activities:
i. Sell or transfer his equity share in P3A;
ii. Create a pledge, other security interest or other third party rights over P3A's equity;
iii. Dispose P3A's equity in any other way.
III. Within the permitted scope and extent of Chinese laws and with reference to the normal arrangements of similar transactions of this kind, Parties E, H, I and J shall, at the request of Aero-Biotech, enter with Aero-Biotech and cause P3A and Aero-Biotech to enter into a service agreement, equity pledge agreement, exclusive call option agreement, etc. satisfactory to Aero-Biotech. For example, Parties E, H, I, J and P3A should undertake the following undertakings in the relevant agreements:
Except for the contracts entered during the normal course of business, P3A shall not enter into any material contracts without the prior written consent of Aero-Biotech;
P3A shall not distribute dividends in any form to its shareholders without the prior written consent of Aero-Biotech; Parties E, H, I and J shall appoint the person nominated by Aero-Biotech as a director of P3A.
IV. This Agreement shall become effective immediately after the signing by each parties. After it becomes effective, it shall supersede all P3A-related oral or written agreements, understandings or arrangements reached by any party or parties of Party A and P3A, Original Shareholders or the Designee, including, but not limited to the "Purchase Agreement".
V. This Agreement shall be governed and construed by Chinese laws.
VI. In the event any disputes arising out of this Agreement, each party shall resolve such dispute through amicable consultation. Should the relevant resolution cannot be reached, the parties may submit the case to China International Economic and Trade Arbitration Commission, in accordance with its then effective arbitration rules, for arbitration. The venue of the arbitration shall be in Beijing. The arbitral award shall be final and binding upon all parties.
(No text below.)
IN WITNESS WHEREOF, this Agreement is executed by all parties or their legal representative or authorized representative on the date first above written.
Party A : China Victory International Holdings Limited
Signed /s/ ---------------------------------------- [Seal: China Victory International Holdings Limited] Name : Title : |
Party B : Primalights III Agriculture Development Co., Ltd.
Signed /s/ ---------------------------------------- [Seal: Primalights III Agriculture Development Co., Ltd.] Name : Title : |
Party C : Taiyuan Relord Enterprise Development Group Co., Ltd.
Signed /s/ ---------------------------------------- [Seal: Taiyuan Relord Enterprise Development Group Co., Ltd.] Name : Title : |
Party D : Shanxi Chuanglong Technology Investment Co., Ltd.
Signed /s/ ---------------------------------------- [Seal: Shanxi Chuanglong Technology Investment Co., Ltd.] Name : Title : |
Party E : Zhang Mingshe
/s/ Zhang Mingshe ---------------------------------------- |
Party F : Yan Lv
/s/ Yan Lv ---------------------------------------- |
Party G : Liu Jinbin
/s/ Liu Jinbin ---------------------------------------- |
Party H : Qian Zhaohua
/s/ Qian Zhaohua ---------------------------------------- |
Party I : Xue Zhixin
/s/ Xue Zhixin ---------------------------------------- |
Party J : Li Juan
/s/ Li Juan ---------------------------------------- |
EXHIBIT 4.11
TRANSLATED FOR REFERENCE ONLY.
LETTER OF UNDERTAKING
Li Juan, Citizen of The People's Republic of China (hereinafter called "China"), with Chinese ID card number 420983197609010023, and is holding 40% equity shares of Primalights III Agriculture Development Co., Ltd. (hereinafter called "P3A").
Qian Zhaohua, Citizen of China, with Chinese ID card number 130224670510033, is holding 30% equity shares of P3A.
Xue Zhixin, Citizen of China, with Chinese ID card number 140102621023081, is holding 25% equity shares of P3A.
Zhang Mingshe, Citizen of China, with Chinese ID card number 140104710212037, is holding 5% equity shares of P3A.
All the above mentioned shareholders hereby irrevocably undertake the following promise to Aero-Biotech Science & Technology Co., Ltd (herein after called "Aero-Biotech"):
If, as a shareholder of P3A, I receive any dividends, interests or other distributions from P3A, unless restricted by laws, regulations or legal procedures, I will remit all such income to Aero-Biotech without compensation after paying the corresponding income tax.
Signature:
/s/ Li Juan ------------------------------- /s/ Qian Zhaohua ------------------------------- /s/ Xue Zhixin ------------------------------- /s/ Zhang Mingshe ------------------------------- Date: 2007-07-13 |
EXHIBIT 4.12
TRANSLATED FOR REFERENCE ONLY.
THE STATEMENT OF SPOUSE
Name: Lai Guanglin
ID Number/Passport Number: S2630389C
This is to confirm that I, as the spouse of Li Juan, hereby unconditionally and irrevocably consent to Primalights III Agriculture Development Co., Ltd. and Aero-Biotech Science & Technology Co., Ltd. as follows:
The equity shares hold by Li Juan in Primalights III Agriculture Development Co., Ltd., and any dividends, interests or other distributions derived from such shares, are Li Juan's personal property, and shall not be the husband-and-wife common property of Li Juan and myself at any time.
Signature: /s/ Lai Guanglin ----------------------------- Date: 2007.07.13 |
EXHIBIT 4.12
TRANSLATED FOR REFERENCE ONLY.
THE STATEMENT OF SPOUSE
Name: Xue Wei
ID Number/Passport Number: 110103197102201527
This is to confirm that I, as the spouse of Qian Zhaohua, hereby unconditionally and irrevocably consent to Primalights III Agriculture Development Co., Ltd. and Aero-Biotech Science & Technology Co., Ltd. as follows:
The equity shares hold by Qian Zhaohua in Primalights III Agriculture Development Co., Ltd., and any dividends, interests or other distributions derived from such shares, are Qian Zhaohua's personal property, and shall not be the husband-and-wife common property of Qian Zhaohua and myself at any time.
Signature: /s/ Xue Wei ----------------------------- Date: 2007.07.13 |
EXHIBIT 4.12
TRANSLATED FOR REFERENCE ONLY.
THE STATEMENT OF SPOUSE
Name: Sun Liqun
ID Number/Passport Number: 14010319700515332X
This is to confirm that I, as the spouse of Xue Zhixin, hereby unconditionally and irrevocably consent to Primalights III Agriculture Development Co., Ltd. and Aero-Biotech Science & Technology Co., Ltd. as follows:
The equity shares hold by Xue Zhixin in Primalights III Agriculture Development Co., Ltd., and any dividends, interests or other distributions derived from such shares, are Xue Zhixin's personal property, and shall not be the husband-and-wife common property of Xue Zhixin and myself at any time.
Signature: /s/ Sun Liqun ----------------------------- Date: 2007.07.13 |
EXHIBIT 4.12
TRANSLATED FOR REFERENCE ONLY.
THE STATEMENT OF SPOUSE
Name: Meng Jiangping
ID Number/Passport Number: 140102196211083245
This is to confirm that I, as the spouse of Zhang Mingshe, hereby unconditionally and irrevocably consent to Primalights III Agriculture Development Co., Ltd. and Aero-Biotech Science and Technology Co., Ltd. as follows:
The equity shares hold by Zhang Mingshe in Primalights III Agriculture Development Co., Ltd., and any dividends, interests or other distributions derived from such shares, are Zhang Mingshe's personal property, and shall not be the husband-and-wife common property of Zhang Mingshe and myself at any time.
Signature: /s/ Meng Jiangping ----------------------------- Date: 2007.07.13 |
EXHIBIT 4.13
EXECUTION COPY
SHARE PURCHASE AGREEMENT
AMONG
TPG GROWTH AC LTD.
TPG BIOTECH II, LTD.
AGRIA CORPORATION
CHINA VICTORY INTERNATIONAL HOLDINGS LIMITED
AERO BIOTECH SCIENCE & TECHNOLOGY CO., LTD. (Chinese Characters)
PRIMALIGHTS III AGRICULTURE DEVELOPMENT CO., LTD. (Chinese Characters)
AND
BROTHERS CAPITAL LIMITED
JUNE 22, 2007
TABLE OF CONTENTS
1. PURCHASE AND SALE OF SHARES............................................. 1 1.1 SALE AND ISSUANCE OF SERIES A PREFERRED SHARES AND ORDINARY SHARES............................................................. 1 1.2 CLOSING............................................................ 1 1.3 OWNERSHIP ADJUSTMENT............................................... 2 2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDER............... 3 2.1 TITLE TO THE SHARES................................................ 3 2.2 AUTHORIZATION...................................................... 3 2.3 NO VIOLATIONS...................................................... 3 2.4 CONSENTS AND APPROVALS............................................. 4 2.5 LITIGATION......................................................... 4 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE COMPANY WARRANTORS.............................................................. 4 3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION...................... 4 3.2 CAPITALIZATION AND VOTING RIGHTS................................... 5 3.3 SUBSIDIARIES....................................................... 5 3.4 AUTHORIZATION...................................................... 6 3.5 VALID ISSUANCE OF SECURITIES....................................... 6 3.6 GOVERNMENTAL APPROVALS............................................. 7 3.7 CONSENTS........................................................... 7 3.8 PRODUCT LIABILITY.................................................. 7 3.9 LITIGATION......................................................... 7 3.10 KEY EMPLOYEES...................................................... 8 3.11 INTELLECTUAL PROPERTY.............................................. 8 3.12 COMPLIANCE WITH ORGANIZATIONAL DOCUMENTS AND WITH APPLICABLE LAWS.. 9 3.13 AGREEMENTS; ACTION................................................. 10 3.14 RELATED-PARTY TRANSACTIONS......................................... 11 3.15 LICENSES........................................................... 11 3.16 MANUFACTURING AND MARKETING RIGHTS................................. 11 3.17 REGISTRATION RIGHTS AND OTHER SHAREHOLDER RIGHTS................... 12 3.18 REAL PROPERTY...................................................... 12 3.19 PERSONAL PROPERTY.................................................. 13 3.20 STATE ASSETS....................................................... 13 3.21 FINANCIAL STATEMENTS............................................... 13 3.22 EMPLOYEE BENEFIT PLANS............................................. 14 3.23 TAX RETURNS, PAYMENTS AND ELECTIONS................................ 14 3.24 MINUTE BOOKS....................................................... 15 3.25 LABOR AGREEMENTS AND ACTIONS; EMPLOYEE COMPENSATION................ 15 3.26 NON-US SUBSIDIARIES AND AFFILIATES................................. 16 3.27 BROKERS............................................................ 16 3.28 SIGNIFICANT CUSTOMERS AND SUPPLIERS................................ 16 3.29 CHANGES............................................................ 16 3.30 BOOKS AND RECORDS.................................................. 17 3.31 ENTIRE BUSINESS.................................................... 18 3.32 AVAILABILITY AND TRANSFER OF FOREIGN CURRENCY...................... 18 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS........................ 17 4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION...................... 17 4.2 AUTHORIZATION...................................................... 17 4.3 COMPLIANCE WITH OTHER INSTRUMENTS AND APPLICABLE LAW............... 18 |
TABLE OF CONTENTS
4.4 EXPERIENCE......................................................... 18 4.5 LEGENDS............................................................ 18 5. CONDITIONS AT THE CLOSING OF THE SALE AND ISSUANCE OF THE SHARES........ 19 5.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS............................. 19 5.2 CONDITIONS OF PURCHASERS' OBLIGATIONS.............................. 20 5.3 CONDITIONS OF SELLERS' OBLIGATIONS................................. 21 6. INDEMNIFICATION......................................................... 22 6.1 INDEMNIFICATION.................................................... 22 6.2 INDEMNIFICATION PROCEDURES......................................... 22 6.3 LIMITATION ON LIABILITY............................................ 24 6.4 CALCULATION OF LOSSES.............................................. 24 6.5 CERTAIN DAMAGES.................................................... 24 6.6 TAX TREATMENT...................................................... 24 7. MISCELLANEOUS........................................................... 25 7.1 SURVIVAL OF WARRANTIES............................................. 25 7.2 SUCCESSORS AND ASSIGNS............................................. 25 7.3 GOVERNING LAW...................................................... 25 7.4 DISPUTE RESOLUTION................................................. 25 7.5 COUNTERPARTS AND FACSIMILE EXECUTION............................... 26 7.6 TITLES AND SUBTITLES; REFERENCES................................... 26 7.7 NOTICES............................................................ 27 7.8 AMENDMENTS AND WAIVERS............................................. 27 7.9 SEVERABILITY....................................................... 27 7.10 ENTIRE AGREEMENT................................................... 27 7.11 EXPENSES AND TRANSFER TAXES........................................ 28 7.12 EXCLUSIVITY........................................................ 28 7.13 CONFIDENTIALITY.................................................... 28 7.14 FURTHER ASSURANCES................................................. 29 7.15 INTERPRETATION..................................................... 29 7.16 NO PRESUMPTION..................................................... 29 7.17 SPECIFIC PERFORMANCE............................................... 29 7.18 EXCULPATION AMONG PURCHASERS....................................... 29 |
Schedule 1.1 Company Warrantors
Schedule 1.2 List of Purchasers and Purchase Amount
Exhibit A Amended and Restated Memorandum and Articles of Association Exhibit B Shareholders Agreement Exhibit C Registration Rights Agreement Exhibit D Post-Closing Shareholding Structure Exhibit E Disclosure Schedules Exhibit F Existing Equityholders Exhibit G Financial Statements Exhibit H PRC Opinion Exhibit H-1 Cayman Opinion Exhibit I VIE Contracts Exhibit J Mr. Lai Guanglin's Undertaking |
SHARE PURCHASE AGREEMENT
This SHARE PURCHASE 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"), each of the parties set forth in Schedule 1.1 (each, a "Company Warrantor" and collectively, the "Company Warrantors"), Brothers Capital Limited, a company organized and existing under the laws of the British Virgin Islands and a shareholder of the Company, in its capacity as a selling shareholder (the "Selling Shareholder," together with the Company, the "Sellers," and each, a "Seller") and each party listed as a "Purchaser" in Schedule 1.2 (collectively, the "Purchasers"). The Company, each Company Warrantor, the Selling Shareholder and each Purchaser are referred to herein as "Parties" collectively and a "Party" individually.
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF SHARES
1.1 SALE AND ISSUANCE OF SERIES A PREFERRED SHARES AND SALE OF THE ORDINARY SHARES
(a) Subject to the terms and conditions of this Agreement, at the Closing (as defined below), the Purchasers agree, severally and not jointly, to purchase from the Company, and the Company agrees to sell and issue to such Purchasers, 240 Series A Preferred Shares (as defined below), representing approximately 2.344% of the Company's total equity interests on a fully-diluted, as converted basis, at a purchase price of US$41,667 per share (the "Per New Share Purchase Price"); and the Purchasers agree, severally and not jointly, to purchase from the Selling Shareholder, and the Selling Shareholder agrees to sell to the Purchasers, 625 ordinary shares of the Company, par value US$0.001 per share (the "Ordinary Shares"), representing approximately 6.104% of the Company's total equity interests on a fully-diluted basis, at a purchase price to be mutually agreed by the Selling Shareholder and the Purchasers (the "Per Old Share Purchase Price"). The Series A Preferred Shares to be issued and sold pursuant to this Agreement shall be referred to collectively as the "New Shares." The total consideration payable by the Purchasers to the Company in respect of the New Shares shall be US$10,000,000 (the "New Shares Purchase Price"). The total consideration payable by the Purchasers to the Selling Shareholder in respect of the Old Shares is hereinafter referred to as the "Old Shares Purchase Price" and, together with the New Shares Purchase Price, the "Purchase Price". The Ordinary Shares to be sold by the Selling Shareholder pursuant to this Agreement shall be referred to collectively as the "Old Shares", and the Old Shares, together with the New Shares shall be referred to collectively as the "Shares."
(b) On or prior to the Closing Date (as defined below), the Company shall have authorized the sale and issuance of (i) the New Shares, and (ii) 240 Ordinary Shares to be issued upon conversion of the New Shares (the "Conversion Shares"). The New Shares and the Conversion Shares shall have the rights, preferences, privileges and restrictions set forth in the Amended and Restated Memorandum and Articles of Association, adopted and filed by the Company with the Registrar of Companies of the Cayman Islands on or before the Closing Date in the form attached as Exhibit A (the "Restated M&A"), including the right of each New Share to an annual dividend in the amount of 8% of the Per New Share Purchase Price prior to the occurrence of a Qualifying IPO (as defined in the Restated M&A), provided, that if a Qualifying IPO occurs before July 31, 2008, then such New Shares shall not be entitled to receive such 8% annual dividend. If a Qualifying IPO does not occur
before July 31, 2008, then such New Shares shall be entitled to receive such 8% annual dividend from and after July 31, 2008.
1.2 CLOSING
(a) Subject to the terms and conditions of this Agreement, the closing of the purchase and sale of the Shares (the "Closing") shall be held at the offices of Cleary Gottlieb Steen & Hamilton LLP, 39/F, Bank of China Tower, 1 Garden Road, Hong Kong, at 9:00pm (local time) on June 22, 2007 (the "Closing Date"), or at such other time and place as the Sellers and the Purchasers may mutually agree upon. At the Closing, each Purchaser shall purchase the number of Shares designated opposite such Purchaser's name on Schedule 1.2 for the aggregate purchase price set forth opposite such Purchaser's name on Schedule 1.2.
(b) At the Closing, the Company shall deliver to the Purchasers certificates representing the New Shares being purchased by the Purchasers in the amounts set forth for each Purchaser in Schedule 1.2 against delivery to the Company by such Purchasers at the Closing of (i) an executed counterpart of this Agreement, the shareholders agreement substantially in the form attached as Exhibit B dated as of the date hereof (the "Shareholders Agreement") and the registration rights agreement in substantially the form attached as Exhibit C dated as of the date hereof (the "Registration Rights Agreement" and, together with this Agreement and the Shareholders Agreement, the "Transaction Documents") and (ii) the New Shares Purchase Price and the Reimbursement Amount in the form of a wire transfer of immediately available funds.
(c) At the Closing, the Selling Shareholder shall deliver to the Purchasers certificates representing the Old Shares being purchased by the Purchasers in the amounts set forth for each Purchaser in Schedule 1.2 against delivery to the Selling Shareholder by such Purchasers at the Closing of (i) an executed counterpart of this Agreement and the Shareholders Agreement and (ii) the Old Shares Purchase Price in the form of a wire transfer of immediately available funds.
(d) Exhibit D sets forth the shareholding structure of the Company and its Subsidiaries (as defined in the Restated M&A) immediately following the Closing.
1.3 OWNERSHIP ADJUSTMENT
(a) As soon as practicable following the Closing Date, the Parties shall cause audited financial statements of the Company as of and for the year ended December 31, 2006 to be prepared in accordance with the generally accepted accounting principles of the United States ("US GAAP") and audited by one of Deloitte Touche Tohmatsu, Ernst & Young, KPMG or PricewaterhouseCoopers (collectively, the "Big Four Accounting Firms") (the "2006 Audited Financial Statements"). The 2006 Audited Financial Statements shall be delivered to the Purchasers in draft form and the Purchasers shall have an opportunity to review and comment on the draft prior to its finalization. Any comments provided by the Purchasers shall be considered in good faith by the Company. The final 2006 Audited Financial Statements shall be promptly delivered to the Parties when such final 2006 Audited Financial Statements become available. The cost of preparation of the 2006 Audited Financial Statements and of such audit shall be borne by the Company.
(b) If the Company's consolidated net income for the year ended December 31, 2006 as set forth in the 2006 Audited Financial Statements, excluding the effect of (i) extraordinary recurring gains and losses, and (ii) share-based compensation charges, if any
(the "2006 Reference Earnings"), is less than US$32,000,000 (the "2006 Expected Earnings"), the Per New Share Purchase Price shall be adjusted downward, such that the Per New Share Purchase Price following such adjustment shall be equal to (i) the Per New Share Purchase Price, multiplied by (ii) a fraction, the numerator of which shall be the 2006 Reference Earnings, and the denominator of which shall be the 2006 Expected Earnings. If the 2006 Reference Earnings are less than the 2006 Expected Earnings, the Company shall, within 10 days of the delivery of the 2006 Audited Financial Statements, pay to the Purchasers the adjustment amounts resulting from the adjustment specified in the preceding sentence in the form of a wire transfer of immediately available funds. If the final 2006 Audited Financial Statements are not available within 30 days after the Closing Date, the Company shall promptly deliver to the Purchasers an updated draft of the 2006 Audited Financial Statements, and the Purchasers shall be entitled to an interim adjustment to the Per New Share Purchase Price in accordance with the formula provided above and such updated draft, provided that when and if the final 2006 Audited Financial Statements are available, the interim adjustment shall be further adjusted in accordance with such final 2006 Audited Financial Statements.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDER
The Selling Shareholder represents and warrants to the Purchasers, as specified in this Article 2, as of the date hereof and as of the Closing Date, except to the extent any representation or warranty below expressly refers to another time or period. For purposes of this Article 2 and Article 3, where any statement in the representations and warranties under this Agreement is expressed to be given or made to a Party's "knowledge," "knowledge" shall mean the actual knowledge of such Party after due inquiry of such Party's officers (including chief executive officer, chief financial officer, chief technology officer and chief operating officer) and directors reasonably believed to have knowledge of the matter in question, prior to the date hereof and prior to the Closing, according to the context.
2.1 TITLE TO THE SHARES
The Selling Shareholder has the unrestricted right to sell, transfer and deliver to the Purchasers and the Purchasers will acquire at the Closing good, valid and marketable title to the Old Shares, free and clear of any Encumbrances (as defined below) other than those contemplated under the Transaction Documents and applicable Law (as defined below).
2.2 AUTHORIZATION
All corporate action on the part of the Selling Shareholder, its officers, directors and equityholders necessary for the authorization, execution and delivery of this Agreement and the performance of all obligations of the Selling Shareholder under this Agreement have been taken or will be taken prior to the Closing Date, the Selling Shareholder has duly and validly executed and delivered this Agreement, and this Agreement constitutes a valid and legally binding obligation of the Selling Shareholder, enforceable in accordance with its terms, subject to the Enforceability Exceptions (as defined below).
2.3 NO VIOLATIONS
Assuming that all consents, approvals, orders, authorizations, registrations, qualifications, notifications or filings listed under Schedule 2.3 of the Disclosure Schedules (as defined below) have been obtained or made, the execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby will not (i)
result in any violation of any provision of the Organizational Documents (as
defined below) of the Selling Shareholder, (ii) result in any violation of or be
in conflict with or constitute, with or without the passage of time and giving
of notice, a default under, or otherwise give any other contracting party the
right to terminate, accelerate or cancel, any provision under any contracts,
agreements, commitments, instruments, mortgages, indentures to which the Selling
Shareholder is a party or by which it is bound, or result in the creation of any
lien, charge or other Encumbrance upon any assets or properties of the Selling
Shareholder or the suspension, revocation, forfeiture or cancellation of any
material permit, license, authorization or approval applicable to the Selling
Shareholder, its business or operations or any of its assets or properties, or
(iii) result in a violation of any applicable Law except, in the case of clauses
(ii) and (iii), as would not, individually or in the aggregate, have a Material
Adverse Effect (as defined below).
2.4 CONSENTS AND APPROVALS
Except as set forth in Schedule 2.4 of the Disclosure Schedules, the execution, delivery and performance of this Agreement by the Selling Shareholder does not and will not, require any Governmental Authorization (as defined below) or consent, approval, authorization or other action by or notification to any third party.
2.5 LITIGATION
There is no action, suit, proceeding, claim, arbitration or investigation (civil, criminal, regulatory or otherwise) pending before any Governmental Authority (as defined below) or, to the knowledge of the Selling Shareholder, currently threatened, against the Selling Shareholder or its activities, properties or assets that, individually or in the aggregate, would have a Material Adverse Effect, or would affect the legality, validity or enforceability of this Agreement or the consummation of the transactions contemplated hereby. The Selling Shareholder is not a party or subject to the provisions of any judgment, order, writ, decree or injunction of any Governmental Authority.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE COMPANY WARRANTORS
Except as set forth in the Disclosure Schedules attached to this Agreement as Exhibit E (the "Disclosure Schedules"), the Company and each of the Company Warrantors hereby jointly and severally represent and warrant to each of the Purchasers, as specified in this Article 3, as of the date hereof and as of the Closing Date, except to the extent any representation or warranty below expressly refers to another time or period.
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION
The Company is an exempted company duly incorporated and organized, validly existing and in good standing under the laws of the Cayman Islands and each Company Warrantor is duly incorporated and organized, validly existing and in good standing under the laws of the jurisdiction where it purports to exist. The Company and each of the Company Warrantors have all requisite power, corporate or otherwise, and authority to own, lease and operate their properties and assets and to carry on their respective business as now being conducted, to execute and deliver the Transaction Documents, and to perform their obligations under the Transaction Documents. The Company and each of the Company Warrantors are duly qualified to transact business and are in good standing in each jurisdiction in which the properties or assets owned, leased or operated by them or the nature of the business conducted by them makes such qualification necessary, unless the failure to
so qualify or to be in good standing, individually or in the aggregate, would not have a Material Adverse Effect. Exhibit A contains a true, complete and accurate copy of the Restated M&A, as amended as of the date hereof.
3.2 CAPITALIZATION AND VOTING RIGHTS
Immediately prior to the Closing Date, the authorized capital of the Company will consist of:
(a) Series A Preferred Shares. 10,000 Series A Preferred Shares, par value US$0.001 per share (the "Series A Preferred Shares"), none of which are issued and outstanding prior to the Closing Date. The rights, privileges and preferences of the Series A Preferred Shares are as stated in the Restated M&A. From and after the Closing Date, each Series A Preferred Share is convertible into one Ordinary Share, subject to the Restated M&A.
(b) Ordinary Shares. 49,990,000 Ordinary Shares, of which 10,000 shares are issued and outstanding, 1,500 shares are authorized for issuance under the Company's stock option plan to be implemented following the Closing (the "2007 Stock Option Plan") and 10,000 Conversion Shares. The rights, privileges and preferences of the Ordinary Shares are as stated in the Restated M&A.
(c) The outstanding Ordinary Shares are owned by the shareholders and in the numbers specified in Exhibit F.
(d) Other than the shares authorized for issuance under the 2007 Stock Option Plan and the Conversion Shares, all outstanding Ordinary Shares are duly and validly authorized and issued, fully paid and nonassessable, and have been approved by all requisite shareholder action.
(e) Except as set forth in Schedule 3.2(e) of the Disclosure Schedules, there are no outstanding options, securities, warrants, rights (including conversion or preemptive rights, rights of first refusal or similar rights) or agreements obligating the Company or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, any shares of its capital stock or any securities convertible into or ultimately exchangeable or exercisable for the capital stock. Except for the Transaction Documents and as set forth in Schedule 3.2(e) of the Disclosure Schedules, there is no agreement, arrangement or obligation of any kind obligating the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares of its capital stock or any securities convertible into or ultimately exchangeable or exercisable for the capital stock. Except as set forth in Schedule 3.2(e) of the Disclosure Schedules, neither the Company nor any of its Subsidiaries is a party or subject to any agreement or understanding, and, to the knowledge of the Company and the Company Warrantors, there is no agreement or understanding between any persons and/or entities, that affects or relates to the holding, transfer, voting or giving of written consents with respect to any security of the Company or any of its Subsidiaries or by a director of the Company or any of its Subsidiaries.
3.3 SUBSIDIARIES
(a) The Company has the power to direct the management, operations and policies of its Subsidiaries, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. Schedule 3.3(a) of the Disclosure Schedules lists each Subsidiary,
and correctly sets forth the capitalization of such Subsidiary, the Company's ownership interest therein, the ownership interest of any other person or entity therein, the nature of legal entity that the Subsidiary constitutes and the jurisdiction in which the Subsidiary was organized and exists. Except as set forth in Schedule 3.3(a) of the Disclosure Schedules, each Subsidiary (A) is duly organized and validly existing under the laws of the People's Republic of China (the "PRC", and each such Subsidiary, a "PRC Subsidiary") and (B) possesses all requisite power and authority (corporate or otherwise), and has obtained all material Governmental Authorizations, including business licenses, production, operation and distribution certificates necessary to carry on its business as now conducted.
(b) Other than the Subsidiaries, none of the Company or the Subsidiaries has any subsidiaries, nor does it presently own or control, directly or indirectly, any interest in any other corporation, association, trust, or other entity. Except as set forth in Schedule 3.3(b) of the Disclosure Schedules, none of the Company or the Subsidiaries is a participant in any joint venture, partnership or similar arrangement. Except as set forth in Schedule 3.3(b) of the Disclosure Schedules, none of the Company or the Subsidiaries maintains any offices or any branches.
(c) In respect of any ownership interest held in a Subsidiary (if any) by the Company or another Subsidiary, (i) the Company or such other Subsidiary holds good and valid title to such ownership interest free and clear of all restrictions on transfer or other Encumbrances, other than those restrictions on transfer or other Encumbrances created by the Transaction Documents or the constitutive documents of that entity and (ii) there are no outstanding options or rights for the purchase or acquisition from the Company or such other Subsidiary of such ownership interest.
For purposes of this Agreement, "Encumbrance" means any claim, charge, easement, encumbrance, lease, covenant, security, deed of trust, lien, pledge, rights of others, security interest or restriction (whether on voting, sale, transfer, disposition, or otherwise), whether imposed by contract, agreement, understanding, law, equity or otherwise.
3.4 AUTHORIZATION
All corporate action on the part of each of the Company and the Company Warrantors, their respective officers, directors and equityholders necessary for the authorization, execution and delivery of the Transaction Documents and the performance of all obligations of each of the Company and the Company Warrantors under the Transaction Documents has been taken or will be taken prior to the Closing Date, each of the Company and the Company Warrantors has duly and validly executed and delivered each Transaction Document to which it is a party, and the Transaction Documents constitute valid and legally binding obligations of each of the Company and the Company Warrantors, enforceable in accordance with their terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting enforcement of creditors' rights generally and (ii) as limited by general principles of equity (whether considered in a proceeding in equity or at law) ((i) and (ii), the "Enforceability Exceptions") .
3.5 VALID ISSUANCE OF SECURITIES
The Shares that are being purchased by the Purchasers under this Agreement, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly authorized and validly issued, fully paid, and nonassessable, and will be free of any Encumbrances other than those contemplated under the
Transaction Documents and applicable Laws. The Conversion Shares have been duly and validly authorized for issuance and upon issuance in accordance with the terms of this Agreement and the Restated M&A, will be duly authorized and validly issued, fully paid, and nonassessable and will be free of any Encumbrances other than those contemplated under the Transaction Documents and applicable Laws.
3.6 GOVERNMENTAL APPROVALS
No license from, consent, approval, order or authorization of, or
registration, qualification, notification or filing with, any court,
governmental agency, regulatory authority or political subdivision thereof, or
any other administrative authority (the "Governmental Authority" and such
matters, "Governmental Authorizations") on the part of the Company, any of its
Subsidiaries or any Company Warrantor is and will be required in connection with
the execution, delivery and performance by the Company and any of the Company
Warrantors of the Transaction Documents to which it is a party in order to
consummate the transactions contemplated by the Transaction Documents, except
(i) as set forth in Schedule 3.6 of the Disclosure Schedules, (ii) the filing of
the Restated M&A, and (iii) filings required by the securities laws of those
jurisdictions in which the Purchasers reside, if any.
3.7 CONSENTS
Except as set forth in Schedule 3.7 of the Disclosure Schedules, the execution, delivery and performance by the Company and any of the Company Warrantors of the Transaction Documents to which it is a party in order to consummate the transactions contemplated by the Transaction Documents does not and will not require any consent, approval, authorization or other action by or notification to any third party.
3.8 PRODUCT LIABILITY
Except as set forth in Schedule 3.8 of the Disclosure Schedules, during the
three-year period before Closing, neither the Company nor any of its
Subsidiaries has had any liability and there is no basis for any present, or to
the knowledge of the Company, future action, suit, claim or complaint against
the Company or any of its Subsidiaries concerning its products and/or services
that, in each case, individually or in aggregate, would have a material adverse
effect on the business, financial condition, operations, assets, properties or
liabilities of the Company and its Subsidiaries, taken as a whole (a "Material
Adverse Effect"; it being agreed that for purposes of the Transaction Documents
"Material Adverse Effect" shall be deemed not to include the impact of (i) the
public disclosure of the transactions contemplated hereby, (ii) changes in Laws,
(iii) changes in accounting principles generally applicable to comparable
companies, (iv) changes in the agricultural industry in the PRC, or (v) changes
in general economic and market conditions).
3.9 LITIGATION
Except as set forth in Schedule 3.9 of the Disclosure Schedules, there is no action, suit, proceeding, claim, arbitration or investigation (civil, criminal, regulatory or otherwise) pending before any Governmental Authority or, to the knowledge of either the Company or the Company Warrantors, currently threatened, against the Company or any of its Subsidiaries or their respective activities, properties or assets that, individually or in the aggregate, would have a Material Adverse Effect, or would affect the legality, validity or enforceability of this Agreement or any other Transaction Document or the consummation of the transactions contemplated hereby or thereby. Neither the Company nor any of its
Subsidiaries is a party or subject to the provisions of any judgment, order, writ, decree or injunction of any Governmental Authority. There is no material action, suit, proceeding, claim, arbitration or investigation (civil, criminal, regulatory or otherwise) by the Company or a Subsidiary currently pending or that the Company or any of its Subsidiaries intends to initiate.
3.10 KEY EMPLOYEES
Each person listed in Schedule 3.10 of the Disclosure Schedules has executed (or will have executed, prior to the earlier of (i) a Qualifying IPO and (ii) December 31, 2007) an employment agreement with the Company or the Subsidiary listed in Schedule 3.10 that contains non-disclosure and non-competition PROVISIONS.
3.11 INTELLECTUAL PROPERTY
(a) Schedule 3.11(a) of the Disclosure Schedules contains a true, correct and complete list of all material patents, patent applications, trademarks, service marks, trade names, plant variety rights, URLs, domain names, copyrights, trade secrets, proprietary rights, processes and other items of intangible property (such rights are collectively referred to herein as the "Intellectual Property") that are used for the business of the Company and its Subsidiaries as currently conducted (the "Company Intellectual Property").
(A) Schedule 3.11(a)(A) of the Disclosure Schedules contains a true, correct and complete list of all Company Intellectual Property that was developed by the Company or the Company's Subsidiaries or Affiliates or Shanxi Primalights III Biotech Engineer Academy (Chinese Characters) (the "Self Developed IP") To the knowledge of the Company and the Company Warrantors, neither the development nor the use of the Self Developed IP conflicts with or infringes on the rights of others. To the knowledge of the Company and Company Warrantors, none of the Self Developed IP has expired, been cancelled or abandoned or is the subject of any opposition, cancellation, reissue, re-examination, interference or equivalent proceeding.
(B) Schedule 3.11(a)(B) of the Disclosure Schedules contains a true, correct and complete list of all Company Intellectual Property that was collaboratively developed by the Company or the Company's Subsidiaries with third parties (the "Collaborative IP") and includes the identification of each such third party in respect of each item of the Collaborative IP. Each of the collaborative development contracts with respect to the Collaborative IP has been provided to the Purchasers or their legal advisors prior to the date hereof, or will be provided within 15 days of the date hereof, and constitutes valid and legally binding obligations of the Company or its Subsidiaries and, to the knowledge of the Company and the Company Warrantors, the other parties thereto, enforceable against the Company or the Company's Subsidiaries (and, to the knowledge of the Company and the Company Warrantors, the other parties thereto) in accordance with its terms, subject to the Enforceability Exceptions. Each of the Company and its Subsidiaries listed in Schedule 3.11(a)(B) has a good and valid contractual right under such collaborative development contracts to use the Collaborative IP in accordance with the terms of such collaborative development contract (such right, the "Commercialization Right"). To the knowledge of the Company and the Company Warrantors, any exercise of any such Commercialization Right of any the Collaborative IP by the Company or its Subsidiaries has not and will not result in any conflict with or infringement of the rights of others.
(C) Schedule 3.11(a)(C) of the Disclosure Schedules contains a true, correct and complete list of all Company Intellectual Property that was purchased by the Company or the Company's Subsidiaries from third parties (such Intellectual Property, the "Purchased IP"). Each of the purchase contracts with respect to the Purchased IP has been provided to the Purchasers or their legal advisors prior to the date hereof, or will be provided within 15 days of the date hereof. Each of such purchase contracts pursuant to which the Company or its Subsidiaries purchased the Purchased IP constitutes valid and legally binding obligations of the Company or its Subsidiaries, (and, to the knowledge of the Company and the Company Warrantors, the other parties thereto), enforceable against the Company or the Company's Subsidiaries (and, to the knowledge of the Company and the Company Warrantors, the other parties thereto) in accordance with its terms (subject to the Enforceability Exceptions), and to the knowledge of the Company and the Company Warrantors, the Company or one of its Subsidiaries can exercise its rights under such purchase contracts without any conflict with or infringement of the rights of others.
(b) Schedule 3.11(b) of the Disclosure Schedules contains a true, correct and complete list of each agreement pursuant to which the Company or any of its Subsidiaries uses any Company Intellectual Property owned by a third party, or pursuant to which a third party uses any Intellectual Property owned by the Company or any of its Subsidiaries. None of the Company or any of its Subsidiaries is party to an agreement that materially restricts or limits the use by the Company and its Subsidiaries of any Company Intellectual Property (except where such restriction is imposed pursuant to an agreement or license as disclosed in Schedule 3.11(b) of the Disclosure Schedules).
(c) To the knowledge of the Company and the Company Warrantors, none of the rights of the Company and its Subsidiaries with respect to the Company Intellectual Property is being infringed by third parties. No action, suit, proceeding, claim or arbitration is pending before any Governmental Authority or, to the knowledge of the Company and the Company Warrantors, threatened against the Company or any of its Subsidiaries by any person with respect to the ownership, validity, enforceability, effectiveness or use of any Company Intellectual Property. Neither the Company nor any of its Subsidiaries has received any written notice that the Company or any of its Subsidiaries has violated or is violating any of the Intellectual Property of any other person.
(d) To the knowledge of the Company and the Company Warrantors, none of the Company's or any Subsidiary's key employees is obligated under any contract or commitment, or subject to any judgment, order, writ, decree or injunction of any court or administrative agency, that would interfere with the performance of his or her employment obligations to the Company or such Subsidiary.
3.12 COMPLIANCE WITH OTHER INSTRUMENTS AND APPLICABLE LAW
(a) Except as set forth in Schedule 3.12(a) of the Disclosure Schedules, neither the Company nor any of its Subsidiaries is in violation or default (i) of any provision of its respective certificate of incorporation, memorandum and articles of association or bylaws or similar documents in the jurisdiction of its incorporation (collectively, the "Organizational Documents"), or (ii) in any material respect of any Material Contract (as defined below), or (iii) of any provision of any national, provincial, federal, state or local law, statute, rule, regulation, judgment, order, writ, decree or injunction in each case as in effect as of the date hereof (the "Law") applicable to the Company or any of its Subsidiaries or any of their respective properties or assets, except, in the case of clauses (ii) and (iii), such violations or
defaults that, individually or in the aggregate, would not have a Material Adverse Effect; provided that this exception for violations of Law that would not have a Material Adverse Effect shall not apply to any Law applicable to the Company or its Subsidiaries in respect of improper or illegal payments to government or political party officials.
(b) Assuming that (i) all consents, approvals, orders, authorizations, registrations, qualifications, notifications or filings listed under Schedule 3.6 of the Disclosure Schedules have been obtained or made, and (ii) all consents, approvals, authorizations or other actions or notifications listed under Schedule 3.7 of the Disclosure Schedules have been obtained, the execution, delivery and performance of this Agreement and the other Transaction Documents, and the consummation of the transactions contemplated hereby or thereby will not (i) result in any violation of any provision of the Organizational Documents of the Company or any of its Subsidiaries, (ii) result in any violation of or be in conflict with or constitute, with or without the passage of time and giving of notice, a default under, or otherwise give any other contracting party the right to terminate, accelerate, modify or cancel, any provision under any contracts, agreements, commitments, instruments, mortgages, indentures to which the Company or any of its Subsidiaries is a party or by which it is bound, or result in the creation of any lien, charge or other Encumbrance upon any assets or properties of the Company or any of its Subsidiaries or the suspension, revocation, forfeiture or cancellation of any material permit, license, authorization or approval applicable to the Company or any of its Subsidiaries, their respective business or operations or any of their respective assets or properties, or (iii) result in a violation of any Law applicable to the Company or any of its Subsidiaries except, in the case of clauses (ii) and (iii) as would not, individually or in the aggregate, have a Material Adverse Effect.
3.13 AGREEMENTS; ACTION
(a) Except for agreements described in Schedule 3.13(a) of the Disclosure Schedules and the VIE Contracts (as defined below), there are no contracts, agreements, commitments, instruments, mortgages or indentures, written or oral, to which the Company or a Subsidiary is a party or by which it is bound that may involve (i) indebtedness for money borrowed or assumed by the Company or any of its Subsidiaries in excess of US$50,000 individually or US$200,000 in the aggregate, (ii) other obligations (contingent or otherwise) of the Company or a Subsidiary involving annual expenditures or liabilities in excess of US$200,000, or that extend for more than one year beyond the date hereof and that are not cancelable without material penalty with 90 days, (iii) the lending of money by the Company or any of its Subsidiaries, whether as lender or guarantor, in excess of US$50,000 individually or US$200,000 in the aggregate, (iv) indemnification by the Company or a Subsidiary with respect to infringements of proprietary rights, (v) the grant of a power of attorney, (vi) transactions outside the ordinary course of business, or (vii) any restriction on the Company's or any of its Subsidiaries' ability to compete or operate at any location (each instrument described under clauses (i) through (vii), a "Material Contract").
(b) True and complete copies of all written Material Contracts, including any amendments or supplements thereto, have been made available for review by each of the Purchasers or their legal advisors prior to the date hereof, or will be provided within 15 days of the date hereof.
(c) None of the Company or any of its Subsidiaries is, or has received any notice of or has any knowledge that any other party is, in breach or default in any material respect under any Material Contract, and, to the knowledge of the Company and the Company Warrantors, there has not occurred any event which would (with the passage of time, notice
or both) constitute such a breach or default under any of the Material Contracts by the Company or any of its Subsidiaries, as the case may be, or any other party with respect thereto.
3.14 RELATED-PARTY TRANSACTIONS
Except as set forth in Schedule 3.14 of the Disclosure Schedules and the VIE Contracts, neither the Company nor any of its Subsidiaries is a party to any contract, agreement, arrangement or understanding with any Affiliate (as defined below), officer, Director or any person in which any Affiliate, shareholder, officer or director of the Company or any of its Subsidiaries, or any member of the immediate family of any of the foregoing, has an interest that exceeds 5% of the equity of such person (each, a "Related Party"). To the knowledge of the Company and the Company Warrantors and except as disclosed in Schedule 3.14 of the Disclosure Schedules and the VIE Contracts, all the transactions with Related Parties were made on terms and conditions as favorable to the Company or such Subsidiary as would have been obtainable by it at the time in a comparable arm's-length transaction with an unrelated party.
To the knowledge of the Company and the Company Warrantors, no Related Party has any ownership interest in any firm or corporation with which the Company or any of its Subsidiaries has a material business relationship, or any firm or corporation that competes with the Company or any of its Subsidiaries.
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 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.
3.15 LICENSES
Except as set forth in Schedule 3.15 of the Disclosure Schedules, each of the Company and its Subsidiaries has obtained all material franchises, permits, licenses, exemptions, registrations, approvals and any similar authority necessary for the conduct of its business as now being conducted by it (the "Licenses"), except as would not have, individually or in the aggregate, a Material Adverse Effect. Copies of all such Licenses have been provided to the Purchasers or their legal advisors prior to the date hereof or will be provided within 15 days of the date hereof. Except as set forth in Schedule 3.15 of the Disclosure Schedules, the Licenses are in full force and effect and neither the Company nor any of its Subsidiaries is in default in any material respect under any of its Licenses or has received any written notice relating to the suspension, alleged breach or revocation of any such Licenses.
3.16 MANUFACTURING AND MARKETING RIGHTS
Neither the Company nor any of its Subsidiaries is bound by any agreement that affects its right to develop, manufacture, assemble, license, distribute, market or sell its products or services.
3.17 REGISTRATION RIGHTS AND OTHER SHAREHOLDER RIGHTS
Except as set forth in Schedule 3.17 of the Disclosure Schedules, neither the Company nor any of its Subsidiaries has granted or agreed to grant or been under any obligation to grant any registration rights, including demand or "piggyback" rights other than such registration rights as granted in the Registration Rights Agreement.
3.18 REAL PROPERTY
(a) Schedule 3.18(a) of the Disclosure Schedules contains a true, correct and complete list of the street address and area of each parcel of real property in which the Company or any of its Subsidiaries holds land use rights (the "Land Use Rights").
(A) Except as set forth in Schedule 3.18(a)(A) of the Disclosure Schedules, the Company or a Subsidiary holds good and valid title to such Land Use Rights free and clear of all Encumbrances, except for Permitted Encumbrances.
(B) Except as set forth in Schedule 3.18(a)(B) of the Disclosure Schedules, the Company or a Subsidiary has paid in full any and all of the land grant premium required under applicable Laws in connection with securing such Land Use Rights.
(C) Except as set forth in Schedule 3.18(a)(C) of the Disclosure Schedules, none of the land with respect to which the Land Use Rights relate constitutes "arable land" (as defined under Chinese law) that has been converted to other uses.
(b) Schedule 3.18(b) of the Disclosure Schedules contains a true, correct and complete list of each leasehold interest pursuant to which the Company or any of its Subsidiaries holds any real property (each, a "Lease"). Each of the Leases listed in Schedule 3.18(b) has been provided to the Purchasers or their legal advisors prior to the date hereof or will be provided within 15 days of the date hereof. Each Lease constitutes the entire agreement to which the Company or any of its Subsidiaries is party with respect to the property leased thereunder. Each of the Company and its Subsidiaries has performed all of their respective obligations in all material respects under such Leases. Except as set forth in Schedule 3.18(b), there is no pending, or to the knowledge of the Company and the Company Warrantors, threatened action, suit, proceeding or claim before any Governmental Authority by others against the Company's or the Company's Subsidiaries' use of the land under such Leases.
(c) Except as set forth in Schedule 3.18(c) of the Disclosure Schedules, none of the Company or its Subsidiaries uses any material real property in the conduct of its business except insofar as it holds valid Land Use Rights or has executed a Lease with respect thereto.
(d) Except as set forth in Schedule 3.18(d) of the Disclosure Schedules,
each of the Company and the Subsidiaries has obtained property ownership
certification for the material plants, buildings and improvements located on all
land with respect to which it holds Land Use Rights (collectively, the
"Improvements") and holds good and valid title to such Improvements free and
clear of all Encumbrances, except for Permitted Encumbrances. Except as set
forth in Schedule 3.18(d) of the Disclosure Schedules, the Improvements do not
(i) contravene any applicable Law relating to zoning or building or (ii) violate
any restrictive covenant, in the case of either (i) or (ii), the effect of which
would materially interfere with or prevent the continued use of such
Improvements for the purposes for which they are now being used. All of the
Improvements are in reasonable operating condition and in a state of
reasonable maintenance and repair (except for ordinary wear and tear) and are adequate for the purposes for which they are currently being used.
(e) A true and complete copy of each of the agreements relating to the Encumbrances identified in Schedule 3.18(c) and Schedule 3.18(d) of the Disclosure Schedules (the "Mortgages") has been made available for review by each of the Purchasers or their legal advisors prior to the date hereof.
(f) No event that, with the giving of notice or passage of time or both, would constitute a default or event of default of a material nature by the Company or any Subsidiary or, to the knowledge of the Company and the Subsidiaries, by any other party, has occurred and is continuing unremedied or unwaived under the terms of any of the Land Use Rights, the Leases or Mortgages. There exists no pending or, to the knowledge of the Company and Company Warrantors, threatened condemnation, confiscation, dispute, claim, demand or similar proceeding before any Governmental Authority with respect to, or that could materially and adversely affect, the continued use and enjoyment of any Land Use Right, Lease or Improvement.
For purposes of this Agreement, "Permitted Encumbrances" means (a)
Encumbrances reflected or reserved against in the most recent balance sheet
delivered to the Purchasers pursuant to Section 3.21, (b) Encumbrances for Taxes
not in default and payable without penalty and interest, (c) mechanics',
materialmen's, carriers', workers', repairers', landlords' and similar
Encumbrances arising out of or incurred in the ordinary course of business, and
(d) other Encumbrances which do not materially interfere with the Company's and
any of its Subsidiaries' use of the applicable property or asset.
3.19 PERSONAL PROPERTY
All personal property and assets of each of the Company and the Subsidiaries that are reflected in the most recent balance sheet delivered to the Purchasers under Section 3.21 or that have been acquired by the Company or any of its Subsidiaries since the date of such balance sheet and that have not been disposed of in the ordinary course of the Company's or such Subsidiary's business are owned by the Company or such Subsidiary free and clear of any Encumbrances except for Permitted Encumbrances. All assets, machinery, tools and equipment of the Company or any of its Subsidiaries currently in use and necessary for the operation of the business are in a state of reasonable maintenance and repair (except for ordinary wear and tear).
3.20 STATE ASSETS
Except as set forth in Schedule 3.20 of the Disclosure Schedules, none of the assets owned or leased by the Company or any of the Subsidiaries constitute state-owned assets and are not and were not required to undergo any form of valuation under applicable Laws of the PRC. In respect of the state-owned assets leased or otherwise used by the Company or any of its Subsidiaries as set forth in Schedule 3.20 of the Disclosure Schedules, the Company and such Subsidiary have undergone all valuation procedures required under application Laws of the PRC and/or relevant Governmental Authority and obtained all necessary Governmental Authorizations to lease and use such assets.
3.21 FINANCIAL STATEMENTS
Exhibit G (the "Financial Statements") contains in substantially completed (to the knowledge of the Company and the Company Warrantors) draft form (i) the audited consolidated balance sheet of the Company as of December 31, 2006 (the "Balance Sheet Date") and the related audited consolidated income statement and audited consolidated cash flow statement for the year ended the Balance Sheet Date, and (ii) the audited consolidated balance sheet of the Company as of December 31, 2005 and the related audited consolidated income statement and audited consolidated cash flow statement for the year ended December 31, 2005 audited by one of the Big Four Accounting Firms, together with the notes to such financial statements. Except as set forth in the Financial Statements or in the notes to the Financial Statements, the Financial Statements have been prepared in conformity with US GAAP consistently applied, and present fairly the financial position and results of operations and cash flow of the Company as of their respective dates and for the respective periods covered thereby. Except as set forth in the Financial Statements, neither the Company nor any of its Subsidiaries has any material liabilities, contingent or otherwise which would be required to be recorded or reflected on a balance sheet or in the notes thereto under US GAAP, other than liabilities incurred in the ordinary course of business since the Balance Sheet Date and that have not had and would not have, individually or in the aggregate, a Material Adverse Effect.
3.22 EMPLOYEE BENEFIT PLANS
Except as set forth in Schedule 3.22 of the Disclosure Schedules, none of the Company or any of its Subsidiaries has any employee benefit plans.
3.23 TAX RETURNS, PAYMENTS AND ELECTIONS
(a) For purposes of this Agreement,
(A) "Tax" or "Taxes" shall mean any national, provincial, federal, state, local, foreign or other taxes (including income (net or gross), gross receipts, profits, alternative or add-on minimum, franchise, license, capital, capital stock, intangible, services, premium, mining, transfer, sales, use, ad valorem, payroll, wage, severance, employment, occupation, property (real or personal), windfall profits, social security, import, excise, value-added, custom, stamp, withholding or estimated taxes), fees, duties, assessments, withholdings or governmental charges in the nature of taxes of any kind whatsoever (including interest, penalties or additions to tax with respect to such items); and
(B) "Returns" shall mean all returns, declarations, reports, estimates, information returns and statements of any nature regarding Taxes required to be filed by the Company or any of its Subsidiaries;
Except as set forth in Schedule 3.23(a) of the Disclosure Schedules, the Company and each of its Subsidiaries have filed on a timely basis all material Returns as required by law to be filed by it. These Returns were correct and complete in all material respects. The Company and each of its Subsidiaries have timely paid all material Taxes due, except those contested by it in good faith that are listed in Schedule 3.23(a) of the Disclosure Schedules and for which an appropriate reserve has been established on the Financial Statements in accordance with US GAAP.
(b) Neither the Company nor any of its Subsidiaries has made an entity classification election for United States federal income tax purposes.
(c) Neither the Company nor any of its Subsidiaries has ever had any material Tax deficiency assessed in writing against it or, to the knowledge of the Company, proposed, or executed any waiver of any statute of limitations on the assessment or collection of any Tax or governmental charges.
(d) None of the Returns of the Company or its Subsidiaries have ever been audited by any Governmental Authorities nor has the Company or any of its Subsidiaries received any written notice in respect thereof, for the assessment or the proposed assessment or for the collection of any Taxes. No claim has ever been made in writing by any appropriate Governmental Authority in a jurisdiction where neither the Company nor any of its Subsidiaries filed or was obligated to file Tax returns that it is or may be subject to taxation by that jurisdiction.
(e) Neither the Company nor any Subsidiary is a party to any agreement providing for the allocation or sharing of Taxes.
(f) There are no liens for material Taxes that are due and unpaid on any of the properties or assets of the Company or any of its Subsidiaries.
(g) Schedule 3.23(g) lists each jurisdiction in which the Company or any of its Subsidiaries benefits from (i) exemptions from taxation, Tax holidays, reduction in Tax rate or similar forms of Tax relief and (ii) other material financial grants, subsidies or similar incentives granted by a governmental entity, whether or not relating to Taxes (together with the Tax incentives described in subclause (i), the "Incentives") and describes the details of such Incentives. The Company and its Subsidiaries are in compliance in all material respects with all terms and conditions of any agreement or order relating to such Incentives in such jurisdictions where such Incentives are available, and have received no written notice from any Governmental Authority claiming that such Incentives were not, or will not in the future be, available.
(h) Neither the Company nor any of its Subsidiaries has, to the knowledge of the Company, engaged in a transaction which is reportable, within the meaning of Section 6111 of the Internal Revenue Code of 1986, as amended (the "Code") and Treasury Regulations promulgated thereunder, or which is required to be disclosed to any appropriate Governmental Authority under similar legislation pursuant to applicable Law.
3.24 MINUTE BOOKS
Copies of the minute books of the Company and its Subsidiaries have been provided to the Purchasers or their legal advisors prior to the date hereof, or will be provided within 15 days of the date hereof, and are true, correct and complete copies.
3.25 LABOR AGREEMENTS AND ACTIONS; EMPLOYEE COMPENSATION
(a) Except as set forth in Schedule 3.25(a) of the Disclosure Schedules, neither the Company nor any of its Subsidiaries is bound by or subject to any collective bargaining or similar agreement with any labor union, and no collective bargaining agreement is currently being negotiated by the Company or its Subsidiaries. There is no strike or other labor dispute involving the Company or any of its Subsidiaries pending nor, to the knowledge of the Company and the Company Warrantors, threatened, that would have a Material Adverse Effect.
(b) Except as set forth in Schedule 3.25(b) of the Disclosure Schedules, there are no employment, consulting, severance or other employee compensation agreements or plans providing for payment in excess of RMB1,000,000 in the aggregate. Neither the execution, delivery and performance of this Agreement or any other Transaction Document, nor the consummation of the transactions contemplated hereby or thereby will result in any payment (whether of severance pay or otherwise) becoming due from the Company or any of its Subsidiaries to any director, officer, employee or shareholder thereof.
(c) Except as set forth in Schedule 3.25(c) of the Disclosure Schedules, subsequent to December 31, 2006 no senior executive officer or key employee of the Company or any of its Subsidiaries has terminated, nor has the Company or any of its Subsidiaries received any written notice that any such officer or employee is intending to terminate, his or her employment with the Company or such Subsidiary.
(d) Except as set forth in Schedule 3.25(d) of the Disclosure Schedules, each of the Company and its Subsidiaries has complied in all material respects with all applicable national, provincial, federal, state, local and foreign equal employment opportunity and other laws related to employment, except as would not have, individually or in the aggregate, a Material Adverse Effect. Except as set forth in Schedule 3.25(d) of the Disclosure Schedules, each Subsidiary has obtained the Social Security Registration Certificate issued by the relevant local labor bureau in the PRC.
3.26 NON-US SUBSIDIARIES AND AFFILIATES
None of the Company or its Subsidiaries is, nor will become as a result of the sale of Shares to the Purchasers contemplated by this Agreement, a controlled foreign corporation (as defined in the Code). The Company does not expect that it will be treated as a "passive foreign investment company" ("PFIC") (as defined in the Code) for its current taxable year, and the Company does not expect to conduct its business in a manner that would reasonably be expected to result in the Company becoming a PFIC in the foreseeable future under current law.
3.27 BROKERS
Neither the Company nor any of its Subsidiaries has any contract, agreement, arrangement or understanding with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement or the other Transaction Agreements.
3.28 SIGNIFICANT CUSTOMERS AND SUPPLIERS
No customer of the Company or its Subsidiaries that comprised 10% or more of the Company's consolidated net sales during each of the years covered by the Financial Statements, and no supplier that comprised 10% or more of the Company's or any Subsidiary's consolidated purchases for each of the years covered by the Financial Statements, has since December 31, 2006 terminated, materially reduced or threatened to terminate or materially reduce its purchases from or provision of products or services to the Company or any of its Subsidiaries, as the case may be.
3.29 CHANGES
Since the Balance Sheet Date, there has not been:
(a) any change, condition, circumstance or occurrence or nonoccurrence of any event that, individually and in the aggregate, has had or would have a Material Adverse Effect; or
(b) any declaration or payment or other distribution in respect of any of the Company's or any of its Subsidiaries' capital stock, or any redemption, purchase or other acquisition of any of such stock by the Company or any of its Subsidiaries.
3.30 BOOKS AND RECORDS
(a) A certified copy of the true and correct Memorandum of Association and Articles of Association of the Company as in effect immediately prior to the Closing Date is attached as Schedule 3.30(A) of the Disclosure Schedules. A copy of the true and correct register of members of the Company as in effect immediately prior to the Closing Date is attached as Schedule 3.30(B) of the Disclosure Schedules.
(b) The Company and its Subsidiaries have maintained in all material respects the books and records required to be maintained pursuant to applicable Law.
3.31 ENTIRE BUSINESS
Except as set forth in Schedule 3.31 of the Disclosure Schedules, there are no material facilities, services, assets or properties shared (i) by the Company with any other person or entity that is not a Subsidiary or (ii) by any of its Subsidiaries with any other person or entity that is not the Company or another Subsidiary.
3.32 AVAILABILITY AND TRANSFER OF FOREIGN CURRENCY
Except as set forth in Schedule 3.32 of the Disclosure Schedules, all requisite foreign exchange control approvals and other authorizations, if any, by any Governmental Authority have been validly obtained and are in full force and effect to assure the ability of the Company to make any and all payments (x) to the Purchasers for dividend payments on either the Shares or the Conversion Shares as and when declared by the Board of Directors (as defined in the Restated M&A) or (y) to any other party in order to conduct its business as now conducted. The Company shall use commercially reasonable efforts to promptly obtain all the required SAFE Registrations listed on Schedule 3.32 of the Disclosure Schedules.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants severally to the Company and the Selling Shareholder, as of the date hereof and as of the Closing Date, except to the extent any representation or warranty below expressly refers to another time or period, as follows:
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION
Such Purchaser is duly incorporated and validly existing and in good standing under the laws of its jurisdiction of its incorporation. Such Purchaser has all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as currently conducted, and to execute, deliver and perform its obligations under the Transaction Documents.
4.2 AUTHORIZATION
All corporate action on the part of such Purchaser, its officers, directors, and equityholders necessary for the authorization, execution and delivery of the Transaction Documents and the performance of all obligations of such Purchaser under the Transaction Documents has been taken or will be taken prior to the Closing Date, and the Transaction Documents constitute valid and legally binding obligations of such Purchaser, enforceable in accordance with their terms, subject to the Enforceability Exceptions.
4.3 COMPLIANCE WITH OTHER INSTRUMENTS AND APPLICABLE LAW
The execution, delivery and performance of this Agreement and the other Transaction Documents, and the consummation of the transactions contemplated hereby or thereby will not (i) result in any violation of any provision of the Organizational Documents of such Purchaser, (ii) result in any violation of or be in conflict with or constitute, with or without the passage of time and giving of notice, a default under, or otherwise give any other contracting party the right to terminate, accelerate or cancel, any provision under any contracts, agreements, arrangement, understandings, commitments, instruments, mortgages, indentures to which such Purchaser is a party or by which it is bound, or result in the creation of any lien, charge or other Encumbrance upon any assets or properties of such Purchaser or the suspension, revocation or cancellation of any material permit, license, authorization or approval applicable to such Purchaser, its business or operations or any of its assets or properties, or (iii) result in a violation of any Law applicable to such Purchaser, except, in the case of clauses (ii) and (iii), such violations or defaults that, individually or in the aggregate, would not have a Material Adverse Effect; provided that this exception for violations of Law that would not have a Material Adverse Effect shall not apply to any Law applicable to such Purchaser in respect of improper or illegal payments to government or political party officials.
4.4 EXPERIENCE
(a) Such Purchaser has sufficient knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its prospective investment in the Company. It has the ability to bear the economic risks of its prospective investment. The foregoing, however, does not limit or modify the representations and warranties of the Selling Shareholder, the Company and Company Warrantors in Articles 2 and 3 of this Agreement or the right of such Purchaser to rely thereon.
(b) At the time such Purchaser was offered the Shares that it is purchasing pursuant to this Agreement, it was, and it is, an "accredited investor" as defined in Rule 501(a)(1), (a)(2), (a)(3) (a)(7) or (a)(8) of the Securities Act or 1933, as amended (the "Securities Act").
(c) Such Purchaser has no direct or indirect arrangement, or understanding with any other persons to distribute, or regarding the distribution of the Shares, in violation of the Securities Act or any other applicable state securities law.
(d) Such Purchaser acknowledges that the Shares have not been registered under the Securities Act or any applicable state securities law.
4.5 LEGENDS
Such Purchaser understands that the certificates evidencing the securities issued pursuant to this Agreement will bear the following legend:
"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 AMONG CERTAIN SHAREHOLDERS OF AGRIA CORPORATION 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."
5. CONDITIONS AT THE CLOSING OF THE SALE AND ISSUANCE OF THE SHARES
5.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS
The respective obligations of each Party to effect the transactions to be effected by it at the Closing are subject to the fulfillment or waiver (which shall be in writing), on or before the Closing Date, of each of the following conditions:
(a) The Company, its Subsidiaries and the Company Warrantors shall have received all Governmental Authorizations set forth in Schedule 3.6 of the Disclosure Schedules, and all consents, approvals, authorizations or other actions by or notification to any non-governmental third party as forth in Schedule 3.7 of the Disclosure Schedules, which are required in connection with the execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated by the Transaction Documents, except where the failure to obtain such license, consent, approval, order, authorization, registration, qualification, notification, filing or other action would not have a Material Adverse Effect or materially affect the ability of any of the Parties to effect the transactions contemplated by the Transaction Documents. The Selling Shareholder shall have received all Governmental Authorizations and all consents, approvals, authorizations or other actions by or notification to any non-governmental third party set forth in Schedule 2.4 of the Disclosure Schedules, which are required in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated by this Agreement, except where the failure to obtain such consent, approval, authorization, notification, or other action would not have a Material Adverse Effect or materially affect the ability of any of the Selling Shareholder or the Purchasers to effect the transactions contemplated by the Transaction Documents.
(b) There shall not be in effect any Law that makes illegal or enjoins or prevents the consummation of the transactions contemplated under the Transaction Documents, and no action, suit, proceeding, claim, arbitration or investigation (civil, criminal, regulatory or otherwise) shall be pending or threatened which seeks any of the foregoing results.
(c) The Shareholders Agreement shall have been entered into among the Company, the Selling Shareholder and the Purchasers, and the Registration Rights Agreement shall have been entered into among the Company and the Purchasers.
(d) The Restated M&A shall have been adopted and shall remain in full force and effect.
(e) The Company shall have produced a business plan and budget (the "Business Plan") that shall be mutually agreed by the Purchasers and the Company.
5.2 CONDITIONS OF PURCHASERS' OBLIGATIONS
The obligations of each Purchaser to purchase the Shares pursuant to this Agreement are subject to the fulfillment or waiver, on or before the Closing Date, of each of the following conditions, the waiver of which shall be in writing and shall not be effective against any Purchaser who does not consent to such waiver, which consent must be given in writing:
(a) The representations and warranties of the Company and the Company Warrantors contained in Article 3 which are qualified as to materiality shall be true and correct, and each such representation and warranty that is not so qualified shall be true and correct, in all material respects, in each case, on and as of the Closing Date as if made on and as of the Closing Date (except for such representations and warranties expressly stated herein to be applicable solely as to a specified date which were true and correct as of such date). The representations and warranties of the Selling Shareholder contained in Article 2 which are qualified as to materiality shall be true and correct, and each such representation and warranty that is not so qualified shall be true and correct, in all material respects, in each case, on and as of the Closing Date as if made on and as of the Closing Date (except for such representations and warranties expressly stated herein to be applicable solely as to a specified date which were true and correct as of such date).
(b) Each of the Company, the Selling Shareholder and the Company Warrantors shall have performed and complied with, in all material respects, all agreements, obligations and conditions contained in the Transaction Documents that are required to be performed or complied with by it on or before the Closing Date.
(c) The Company shall have delivered to the Purchasers (i) a certificate of an officer of the Company regarding the Restated M&A and Board of Directors and shareholders resolutions relating to the transactions contemplated under the Transaction Documents, and (ii) good standing certificates of the Company and its Subsidiaries (to the extent applicable). The Selling Shareholder shall have delivered to the Purchasers (i) a certificate of an officer or director of the Selling Shareholder regarding the board of directors and shareholders resolutions relating to the transactions contemplated under this Agreement and the Shareholders Agreement, and (ii) a good standing certificate of the Selling Shareholder (to the extent applicable).
(d) The Chief Executive Officer of the Company and an officer or a director of each Company Warrantor shall have delivered to the Purchasers at the Closing, a certificate dated the Closing Date stating that the conditions specified in Sections 5.2(a) and 5.2(b) above (insofar as such conditions pertain to the Company and the Company Warrantors) have been fulfilled. An officer or director of the Selling Shareholder shall have delivered to the Purchasers at the Closing a certificate dated the Closing Date stating that the conditions specified in Sections 5.2(a) and 5.2(b) above (insofar as such conditions pertain to the Selling Shareholder) have been fulfilled.
(e) The Purchasers shall have received from PRC counsel to the Company, an opinion dated as of the Closing Date (the "PRC Opinion") and from Cayman Islands counsel to the Sellers, an opinion dated as of the Closing Date (the "Caymans Opinion"). Each of the PRC Opinion and the Caymans Opinion shall be in substantially the form attached hereto as Exhibit H and Exhibit H-1, respectively.
(f) To the extent applicable, the requisite number of shareholders of the Company shall have executed and delivered a written consent and waiver as of the Closing Date, in form and substance reasonably satisfactory to the Purchasers, on behalf of all shareholders of the Company, approving the transactions contemplated under the Transaction Documents and waiving all rights any such shareholder may have to receipt of notice of the transactions contemplated under the Transaction Documents and any applicable rights of consent, pre-emptive or participation rights, rights of first offer, rights of first refusal, co-sale rights or other similar rights any such shareholder may have with respect to the transactions contemplated under the Transaction Documents.
(g) All agreements in connection with the restructuring by the Company (the "Restructuring") including, without limitation, those listed in Exhibit I (each such an agreement, a "VIE Contract", and collectively, the "VIE Contracts"), shall have been duly executed and delivered by the parties thereto and shall remain in full force and effect.
(h) The Company shall have provided the Investors with (A) substantially completed (to the knowledge of the Company and the Company's Warrantors) drafts of the audited financial statements of the Company as of and for the years ended December 31, 2006 and 2005, to be prepared in accordance with US GAAP and audited by one of the Big Four Accounting Firms, and (B) unaudited management accounts for each subsequent quarter up to the Closing.
(i) The Purchasers shall have completed their business, legal and financial due diligence to their reasonable satisfaction.
(j) Mr. Lai Guanglin shall have duly signed and delivered an undertaking substantially in the form attached hereto as Exhibit J.
5.3 CONDITIONS OF SELLERS' OBLIGATIONS
The obligations of each Seller to each Purchaser at the Closing Date under this Agreement are subject to the fulfillment or waiver (which shall be in writing) on or before the Closing Date of each of the following conditions:
(a) The representations and warranties of such Purchaser contained in Article 4 which are qualified as to materiality shall be true and correct, and each such representation that is not so qualified shall be true and correct, in all material respects, in each case on and as of the Closing Date as if made on and as of the Closing Date (except for such representations and warranties expressly stated herein to be applicable solely as to a specified date which were true and correct as of such date).
(b) Such Purchaser shall have performed and complied with, in all material respects, all agreements, obligations and conditions contained in the Transaction Documents that are required to be performed or complied with by it on or before the Closing.
(c) Such Purchaser shall have delivered the Old Shares Purchase Price and the New Shares Purchase Price for the Old Shares and the New Shares (as applicable) being purchased by it at the Closing and the reimbursement to the Company of the fees and disbursements not to exceed US$50,000 (the "Reimbursement Amount") of its PRC counsel and Caymans counsel related to the preparation of the PRC Opinion and the Caymans Opinion referenced in Section 5.2(e).
6. INDEMNIFICATION
6.1 INDEMNIFICATION
(a) The Company and each Company Warrantor, jointly and severally, shall indemnify and hold harmless the Purchasers and their respective equityholders, subsidiaries, Affiliates, officers, directors, employees, agents and authorized representatives and each of their successors and assigns (each, a "Purchaser Indemnified Party") against any and all liabilities, obligations, losses, damages, penalties, claims, actions, costs and expenses (including reasonable legal fees) of whatever kind and nature ("Losses"), which are actually incurred by any Purchaser Indemnified Party arising out of the Company's or any Company Warrantor's breach of any of its warranties or representations in Article 3 of this Agreement.
(b) The Selling Shareholder shall indemnify and hold harmless the Purchaser Indemnified Parties against any and all Losses which are actually incurred by any Purchaser Indemnified Party arising out of the Selling Shareholder's breach of any of its warranties or representations in Article 2 of this Agreement.
(c) Each Purchaser, severally but not jointly, shall indemnify and hold harmless the Company, the Company Warrantors and their respective equityholders, subsidiaries, Affiliates, officers, directors, employees, agents and representatives and each of their successors and assigns (each, a "Company Indemnified Party") against any and all Losses which are actually incurred by any Company Indemnified Party arising out of such Purchaser's breach of any of its warranties or representations in Article 4 of this Agreement.
(d) Each Purchaser, severally but not jointly, shall indemnify and hold harmless the Selling Shareholder and its equityholders, subsidiaries, Affiliates, officers, directors, employees, agents and representatives and each of their successors and assigns (each, a "Selling Shareholder Indemnified Party") against any and all Losses which are actually incurred by any Selling Shareholder Indemnified Party arising out of such Purchaser's breach of any of its warranties or representations in Article 4 of this Agreement.
6.2 INDEMNIFICATION PROCEDURES
(a) Promptly after receipt by an indemnified party (an "Indemnified Party") under this Article 6 of notice of the commencement of any action or proceeding by any third party (including any Governmental Authority) (a "Third Party Claim"), such Indemnified Party will, if a claim in respect thereof is to be made against any indemnifying party under this Article 6, deliver to the indemnifying party a written notice of the commencement of such Third Party Claim containing reasonable detail of the Third Party Claim (a "Claim Notice") and transmit to the indemnifying party a copy of all notices and documents received by the Indemnified Party pursuant to the Third Party Claim; provided that the failure to deliver a Claim Notice or the failure to transmit a copy of such notices and documents to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Party under this
Article 6, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. If the indemnifying party notifies the Indemnified Party that the indemnifying party elects to assume the defense of the Third Party Claim, the indemnifying party shall have the right, jointly with any other indemnifying party similarly noticed, to assume the defense of such Third Party Claim at its own expense with counsel reasonably satisfactory to the Indemnified Party; provided, however, that an Indemnified Party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable fees and expenses to be paid by the indemnifying party, if in the written opinion of counsel to the Indemnified Party there is a reasonable likelihood of a conflict of interest between the indemnifying party and the Indemnified Party. The indemnifying party shall have full control of such defense and proceedings, including any compromise or settlement thereof, provided that the indemnifying party shall not consent to the entry of a judgment or enter into any settlement with respect to the matter without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed. If requested by the indemnifying party, the Indemnified Party agrees, at the sole cost and expense of the indemnifying party, to cooperate with the indemnifying party and its counsel in contesting any Third Party Claim which the indemnifying party elects to contest, including the making of any related counterclaim against the Person asserting the Third Party Claim or any cross complaint against any Person.
(b) If the indemnifying party fails to notify the Indemnified Party within
30 days after receipt of any Claim Notice that the indemnifying party elects to
defend the Third Party Claim pursuant to Section 6.2(a), or if the indemnifying
party elects to defend the Third Party Claim pursuant to Section 6.2(a) but
fails to diligently defend such claim, then the Indemnified Party shall have the
right to defend, at the sole cost and expense of the indemnifying party, the
Third Party Claim by all appropriate proceedings. The Indemnified Party shall
have full control over such defense and proceedings; provided, however, that the
Indemnified Party shall not consent to the entry of any judgment or enter into
any settlement in any Third Party Claim with respect to which indemnification is
to be sought hereunder from an indemnifying party without the written consent of
such indemnifying party, which consent shall not be unreasonably withheld or
delayed. An indemnifying party may participate in, but may not control, any
defense or settlement controlled by the Indemnified Party pursuant to this
Section 6.2(b), and the indemnifying party shall bear its own costs and expenses
with respect to such participation.
(c) In the event that any Indemnified Party should have a claim against any indemnifying party under this Article 6 that does not involve a Third Party Claim, the Indemnified Party will promptly deliver to the indemnifying party a written notice containing reasonable detail of nature of the claim (an "Indemnification Notice"); provided that the failure to deliver an Indemnification Notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Party under this Article 6, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. If the indemnifying party does not notify the Indemnified Party within 30 days from its receipt of the Indemnification Notice that the indemnifying party disputes such claim, the indemnifying party shall be deemed to have accepted and agreed with such claim. If the indemnifying party has disputed such claim, the indemnifying party and the Indemnified Party shall proceed in good faith to resolve such dispute and, if such dispute cannot be resolved in 30 days after delivery of the Indemnification Notice, the parties may pursue remedies in accordance with Section 7.4.
6.3 LIMITATION ON LIABILITY
(a) Notwithstanding anything to the contrary in this Agreement, in the
absence of fraud, (i) (x) the Company and the Company Warrantors shall not be
obligated to indemnify a Purchaser Indemnified Party under Section 6.1(a) and
the Selling Shareholder shall not be obligated to indemnify a Purchaser
Indemnified Party under Section 6.1(b) and (y) the Purchasers shall not be
obligated to indemnify a Company Indemnified Party under Section 6.1(c) or a
Selling Shareholder Indemnified Party under Section 6.1(d), except if and to the
extent that the aggregate amount of Losses incurred by such Indemnified Party
that would otherwise be subject to indemnification under Section 6.1(a) and
Section 6.1(b) on the one hand, or Section 6.1(c) and Section 6.1(d), on the
other hand, exceeds 5% of the Purchase Price (the "Basket Amount"), and then
such Indemnified Party shall be entitled to indemnification for all of its
Losses in excess of the Basket Amount, and (ii) neither the aggregate liability
of the Company, the Company Warrantors and the Selling Shareholder to the
Purchaser Indemnified Parties, nor the aggregate liability of the Purchasers to
the Company Indemnified Parties and the Selling Shareholder Indemnified Parties,
for indemnification under this Article 6 shall exceed 110% of the Purchase
Price. Notwithstanding the foregoing, none of the limitations on liability set
forth in this Section 6.3(a) shall in any way limit any claim for (A) fraud
arising under or relating to the transactions contemplated by any Transaction
Document, and (B) any indemnification for Losses related to or as a result of
the breach of any representation or warranty of the Company or any Company
Warrantor under Sections 3.23 and 3.26.
(b) Except as otherwise provided in Section 7.17 of this Agreement, the indemnification provisions of this Article 6 shall be the sole and exclusive remedy with respect to any and all claims relating to this Agreement and shall preclude assertion by an Indemnified Party of any other remedies against an indemnifying party for claims relating to this Agreement.
6.4 CALCULATION OF LOSSES
In calculating the amount of Losses to any Indemnified Party under this Article 6, the amount of any Loss shall be net of (i) any amounts actually recovered by the Indemnified Party from any third Party (including insurance proceeds) as a result of the facts or circumstances giving rise to the Losses, and (ii) any Tax benefits or Tax losses that are actually realized by the Indemnified Party as a result of the incurrence of the Losses for which indemnification is sought. An Indemnified Party's right to indemnification pursuant to this Article 6 shall not be conditioned upon the payment of amounts by such Indemnified Party.
6.5 CERTAIN DAMAGES
In no event shall the indemnification obligations under this Agreement (including under this Article 6) or the term "Losses" cover or include consequential, incidental, special, indirect or punitive damages or lost profits suffered by an Indemnified Party, whether based on statute, contract, tort or otherwise, and whether or not arising from the indemnifying party's sole, joint or concurrent negligence, strict liability or other fault.
6.6 TAX TREATMENT
The Parties hereto agree to treat all payments made by a Seller or a Company Warrantor to or for the benefit of an indemnified Party under this Article 6 as adjustments to
the Old Shares Purchase Price or the New Shares Purchase Price (as the case may be) for Tax purposes and that such treatment shall govern for purposes hereof.
7. MISCELLANEOUS
7.1 SURVIVAL OF WARRANTIES
The representations and warranties of the Parties contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall survive for 12 months after the Closing Date, except that the representations and warranties under Sections 3.23 and 3.26 shall survive the Closing Date until 30 days after the expiration of the applicable statute of limitations (giving effect to any waiver, mitigation or extension thereof) on assessment of the relevant Tax. If a notice of a claim with respect to a breach of a representation or warranty is asserted in writing and delivered prior to the applicable time set forth above, then such representation or warranty shall survive in connection with such claim until such time as such claim is resolved in accordance with this Agreement.
7.2 SUCCESSORS AND ASSIGNS
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. Each Purchaser may assign or transfer any of its rights and obligations under this Agreement to any direct or indirect subsidiary or Affiliate of such Purchaser, including any fund managed by a subsidiary of the Purchaser, which assignee shall agree in writing to be bound by the terms hereof, with prior written notice being provided to the Company and the Selling Shareholder, but no such assignment shall relieve such Purchaser of its obligations under this Agreement. Any attempted assignment in contravention hereof shall be null and void.
7.3 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.
7.4 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 7.4. However, if such rules are in conflict with the provisions of this Section 7.4, including the provisions concerning the appointment of arbitrator, the provisions of this Section 7.4 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.
(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.
7.5 COUNTERPARTS AND FACSIMILE EXECUTION
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.
7.6 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 Schedules, Exhibits, Articles or Sections refer to Schedules or Exhibits to or Articles or Sections of this Agreement.
7.7 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; (ii) 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 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 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.
7.8 AMENDMENTS AND WAIVERS
Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by the written consent of the Parties. 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 7.8 shall be binding upon each of the Parties hereto and their successors and permitted assigns.
7.9 SEVERABILITY
If any provision of this Agreement shall be held to be unenforceable under applicable Law, such provision 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.
7.10 ENTIRE AGREEMENT
This Agreement, the Exhibits and Schedules to this Agreement, the other Transaction Documents and all other documents referred to in this Agreement (except for the letter
agreement dated as of the date hereof, among the Sellers and the Purchasers) 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 between 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.
7.11 EXPENSES AND TRANSFER TAXES
Irrespective of whether the Closing is effected, the Company shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of the Transaction Documents, except as otherwise provided in this Agreement.
The Sellers shall pay, or reimburse the Purchasers on demand for, all sales, use, real property transfer, transfer, stamp, registration, documentary, recording, filing or similar Taxes, if any, together with any interest thereon, penalties, fines, costs, fees, additions to Tax or additional amounts with respect thereto (collectively, "Transfer Taxes") incurred in connection with the issuance and sale of the Shares pursuant to this Agreement. The Sellers shall be responsible for preparing and timely filing any Returns required with respect to any such Transfer Taxes.
If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing Party shall be entitled to be reimbursed by the other Parties for reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such Party may be entitled.
7.12 EXCLUSIVITY
From the date hereof until the earlier of (i) the Closing Date, and (ii) the termination of this Agreement, other than the transactions contemplated under the Transaction Documents, none of the Company nor any Company Warrantor, nor their respective Affiliates or representatives shall, directly or indirectly, (A) solicit, initiate or encourage any inquiry, discussion or proposal for, (B) propose, continue or participate in any discussions or negotiations regarding, (C) furnish to any person any information with respect to, or take any other action to facilitate any inquiries or the making of any offer or proposal with respect to, or (D) authorize, engage in, or enter into any agreement or understanding with respect to, any issuance or sale of any equity or equity-linked securities of the Company or any of it Subsidiaries or any transaction that would preclude or materially restrict or delay the transactions contemplated under the Transaction Documents.
7.13 CONFIDENTIALITY
None of the Parties (and their respective officers, directors, employees and agents) will disclose any information about the Transaction Documents or the transactions contemplated by the Transaction Documents other than that which is within the public domain (through no fault of such Party) to any outside party other than their respective employees, approved legal and other relevant consultants who are bound by confidentiality obligations and also as required by applicable statutory requirements, court orders or decrees after providing notice thereof to the other Parties. No announcements regarding any Purchaser's investment in the Company may be made by any Party hereto in any press conference, professional or trade publication, marketing materials, references on or links to
websites or otherwise disclosing such Purchaser's investment in the Company to the public in any manner without the prior written consent of such Purchaser.
7.14 FURTHER ASSURANCES
From and after the date of this Agreement, upon the reasonable request of any Purchaser, the Selling Shareholder or the Company, the Company, the Selling Shareholder and the Purchasers (as the case may be) shall execute and deliver such instruments, documents or other writings to satisfy their obligations hereunder.
7.15 INTERPRETATION
Unless a provision in this Agreement 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 "$" and "dollars" are to currency of the United States of
America.
7.16 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 will be implied because this Agreement was prepared by or at the request of any Party or its counsel.
7.17 SPECIFIC PERFORMANCE
Each of the Parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other Party to sustain damage for which it would not have an adequate remedy at law for money damages, and therefore each of the Parties hereto agrees that in the event of any such breach the aggrieved Party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity.
7.18 EXCULPATION AMONG PURCHASERS
Each Purchaser acknowledges and agrees that it has, independently and without reliance on any other Purchaser, made its own evaluation and decision to purchase the Shares. Each Purchaser further acknowledges that it is not relying upon any other Purchaser in making its investment or decision to invest in the Company.
7.19 TERM
This Agreement is effective upon the Company's receipt of the New Shares Purchase Price and the Reimbursement Amount from the Purchasers and the Selling Shareholder's
receipt of the Old Shares Purchase Price from the Purchasers, in accordance with
Section 1.1 hereof.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.
THE COMPANY: AGRIA CORPORATION
By: /s/ Lai Guanglin --------------------------------------- Name: Title: |
COMPANY WARRANTORS:
CHINA VICTORY INTERNATIONAL HOLDINGS
LIMITED
By: /s/ Lai Guanglin --------------------------------------- Name: Title: |
AERO BIOTECH SCIENCE & TECHNOLOGY CO., LTD.
(Chinese Characters)
By: /s/ Qian Zhaohua --------------------------------------- Name: Title: |
PRIMALIGHTS III AGRICULTURE DEVELOPMENT
CO., LTD. (Chinese Characters)
By: /s/ Qian Zhaohua --------------------------------------- Name: Title: |
BROTHERS CAPITAL LIMITED
By: /s/ Lai Guanglin --------------------------------------- Name: Title: |
SIGNATURE PAGE TO AGRIA CORPORATION SHARE PURCHASE AGREEMENT
SELLING SHAREHOLDER:
BROTHERS CAPITAL LIMITED
By: /s/ Lai Guanglin --------------------------------------- Name: Title: |
PURCHASERS:
TPG GROWTH AC LTD.
By: /s/ Clive Bode --------------------------------------- Name: Clive Bode Title: Vice President and Secretary |
TPG BIOTECH II, LTD.
By: /s/ Clive Bode --------------------------------------- Name: Clive Bode Title: Vice President and Secretary |
SIGNATURE PAGE TO AGRIA CORPORATION SHARE PURCHASE AGREEMENT
SCHEDULE 1.1
COMPANY WARRANTORS
1. China Victory International Holding Limited ("China Victory"), a limited liability company organized and existing under the laws of the Hong Kong.
2. Aero Biotech Science & Technology Co., Ltd. (Chinese Characters) ("Beijing Aero"), a wholly foreign-owned enterprise with limited liability organized and existing under the laws of the PRC.
3. Primalights III Agriculture Development Co., Ltd. (Chinese Characters) ("P3A"), a domestically-funded limited liability company organized and existing under the laws of the PRC.
4. Brothers Capital Limited, a BVI Business Company incorporated and existing under the laws of the British Virgin Islands.
SCHEDULE 1.2
LIST OF PURCHASERS AND PURCHASE AMOUNT
PURCHASERS NUMBER OF SHARES PURCHASED ---------- -------------------------- TPG Growth AC Ltd. 160 Preferred Shares and 417 Ordinary Shares TPG Biotech II, Ltd. 80 Preferred Shares and 208 Ordinary Shares |
EXHIBIT A
AMENDED AND RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATION
EXHIBIT B
SHAREHOLDERS AGREEMENT
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
EXHIBIT D
POST-CLOSING SHAREHOLDING STRUCTURE
EXHIBIT E
DISCLOSURE SCHEDULES
EXHIBIT F
EXISTING EQUITYHOLDERS
EQUITYHOLDER PENCENTAGE OF ORDINARY SHARES HELD ------------ ---------------------------------- Brothers Capital Limited 72.88% Morgan Finanz Capital Limited 10% Ariya Capital Partners Limited 10% Dubai Investment Group 6.60% Planetcorp Group Limited 0.52% |
EXHIBIT G
FINANCIAL STATEMENTS
EXHIBIT H
PRC OPINION
LETTERHEAD OF COMMERCE & FINANCE
To:
TPG Biotech II, Ltd.
TPG Growth AC Ltd.
Dear Sirs:
We are qualified lawyers of the People's Republic of China ("PRC") and are qualified to issue an opinion on the laws and regulations of the PRC.
We have acted as PRC counsel for China Victory International Holding Limited.(the "COMPANY"), a company incorporated under the laws of Hong Kong. We have been requested to give this opinion on, inter alia, the legal ownership structure of Primalights III Agriculture Development Co., Ltd. ("P3A") and Aero Biotech Science & Technology Co., Ltd. ("BEIJING AERO"), the legality and validity of the arrangements under the relevant agreements referenced in Exhibit A hereinafter (the "VIE CONTRACT").
In so acting, we have examined the originals or copies certified or otherwise identified to our satisfaction, of documents provided to us by the Company and such other documents, corporate records, certificates issued by governmental authorities in the PRC and officers of the Company and other instruments as we have deemed necessary or advisable for the purposes of rendering this opinion.
In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with authentic original documents submitted to us as copies. We have also assumed the documents as they were presented to us up to the date of this legal opinion and that none of the documents has been revoked, amended, varied or supplemented. We have further assumed the accuracy and completeness of all factual statements in the documents. Where important facts were not independently established to us, we have relied upon certificates issued by governmental agents and representatives of the Company with proper authority and upon representations.
The following terms as used in this opinion are defined as follows:
(a) "GOVERNMENTAL AGENCIES" mean any court, governmental agency or body or any stock exchange authorities of the PRC;
(b) "GOVERNMENTAL AUTHORIZATIONS" mean all approvals, consents, waivers, sanctions, authorizations, filings, registrations, exemptions, permissions, endorsements, annual inspections, qualifications and licenses required by Governmental Agencies;
(c) "MATERIAL ADVERSE EFFECT" means any material adverse change, in or affecting the general affairs, management, business, financial position, shareholders' equity, results of operation, or prospects of the Company and its Subsidiaries taken as a whole;
(d) "PRC LAWS" mean all laws, regulations, statutes, orders, decrees, guidelines, notices, judicial interpretations, sub-ordinary legislations of the PRC which are publicly available (other than the laws of the Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Province);
Other capitalized terms used herein but not defined shall have the same meaning as given to them in the share purchase agreement dated [_], 2007, among TPG Growth AC Ltd., TPG Biotech II, Ltd., Agria Corporation, the Company, Beijing Aero and P3A (the "Share Purchase Agreement").
Based on the foregoing, we are of the opinion that:
(a) Beijing Aero has been incorporated and exists as a wholly foreign owned enterprise with limited liability under PRC Laws; the Company has not paid up any of the registered capital of Beijing Aero it is obligated to pay for under Bejing Aero's articles of association. According to Beijing Aero's articles of association, the Company should pay USD29,200,000 to Beijing Aero before June 29, 2007. Upon the completion of the capital contribution and relevant registration procedures in respect of such contribution, all of the registered capital fully paid up into Beijing Aero will be owned by the Company. The articles of association and business license of Beijing Aero comply with the requirements of applicable PRC Laws and are in full force and effect;
(b) P3A has been duly incorporated and is validly existing as a limited liability company under PRC Laws; 40%, 30%, 25% and 5% of the equity interests of P3A are owned by Li Juan, Qian Zhaohua, Xue Zhixin and Zhang Mingshe (the "P3A Shareholders"), respectively, and, to the best of our knowledge, except for the Exclusive Call Option Agreement, dated June 8, 2007, among Beijing Aero, the P3A Shareholders and P3A, the Equity Pledge Agreement, dated June 8, 2007, among Beijing Aero, the P3A Shareholders and P3A, and the Proxies, each dated June 8, 2007 and issued by each of the P3A Shareholders (except for Mr. Qian Zhaohua himself is a P3A Shareholder), such equity interests are free and clear of all liens, encumbrances, security interest, mortgage, pledge, equities or claims or any third-party right; each of the P3A Shareholders is a PRC citizen; all of the registered capital of P3A has been fully paid; the articles of association and business license of P3A comply with the requirements of applicable PRC Laws and are in full force and effect; except as described in the Disclosure Schedule of the Share Purchase Agreement, P3A has full power and authority (corporate and other) to own, lease and operate its properties and assets and to conduct its business within its scope of business;
(c) To the best of our knowledge after due inquiry, and except as described in the Disclosure Schedule of the Share Purchase Agreement, Beijing Aero is not(i) in violation of its articles of association, business license or any other organizational document, (ii) in violation or contravention of any PRC Law, or (iii) in violation of or in default under any contracts, agreements, arrangement, understandings, commitments, instruments, mortgage, indentures which are governed by PRC Law and to which it is a party or by which it is bound, except, in the case of clause (ii) or (iii), where such violation or default would not, individually or in the aggregate, to the reasonably expected extent, have a Material Adverse Effect;
(d) Subject to that [all direct and indirect shareholders of the Company who are qualified PRC residents should duly make foreign exchange registration of foreign investment under the SAFE's Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Financing and Inbound Investment via Overseas Special Purpose Vehicles[Hui Fa (2005) 75] (Chinese Characters)] and that the Company has fully paid up Beijing Aero's registered capital, in accordance with applicable PRC laws, all dividends and other distributions paid to China Victory from Beijing Aero may under the law and regulations of the PRC be exchanged into foreign currency and may be freely transferred out of the PRC by Beijing Aero to China Victory without the necessity of obtaining any Governmental Authorization in the PRC;
(e) To the best of our knowledge after due inquiry, there are no legal or governmental proceedings pending before any Governmental Authority in the PRC to which the Company, Beijing Aero or P3A is a party or of which any property of the Company or any of its Subsidiaries is the subject which, if determined adversely to the Company or any of its Subsidiaries, individually or in the aggregate, would have a Material Adverse Effect;
(f) To the best of our knowledge after due inquiry, neither Beijing Aero nor P3A has taken any action nor have any steps been taken or legal or administrative proceedings been commenced or threatened for the winding up, dissolution or liquidation of Beijing Aero or P3A, or the suspension, revocation, withdrawal or adverse modification of the business license of Beijing Aero or P3A;
(g) Neither Beijing Aero nor P3A is entitled to any immunity from any legal proceedings or other legal process or from enforcement, execution or attachment in respect of their obligations under any VIE contract;
(h) The choice of New York law as the governing law of each Transaction Document will be recognized by PRC courts; each of the PRC Subsidiaries can sue and be sued in its own name under the laws of the PRC.
(i) PRC courts may recognize and enforce arbitration awards of the Hong Kong International Arbitration Centre in accordance with the requirements of PRC Civil Procedures Law based on arrangements between China and Hong Kong.
(j) The ownership structure of Beijing Aero and P3A as set forth in Exhibit B hereinafter, each element individually and in the aggregate, complies with, and immediately after the Closing will comply with PRC Laws;
(k) Beijing Aero and P3A has the corporate power to enter into and perform its obligations under each of the VIE contract to which it is a party and has taken all necessary corporate action to authorize the execution, delivery and performance of each such VIE contract;
(l) Each VIE contract has been duly authorized, executed and delivered by the parties thereto, and constitutes a valid and binding agreement of the parties thereto;
(m) The execution and delivery of each VIE contract by the parties thereto and the performance by such parties of their obligations thereunder, and the consummation of the transactions contemplated by the VIE contract do not, and will not, (i) conflict with, or result in a breach or violation of, any provision of the Organizational Documents of Beijing Aero and P3A, (ii) to the best of our knowledge, result in any violation of or be in conflict with any material obligation, indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness governed by PRC laws or any material obligation, license, lease, contract or other agreement or instrument governed by PRC laws, or (iii) result in a violation of any PRC Law;
(n) Each VIE contract is, and all of the VIE contract taken as a whole are, legal, valid and admissible as evidence under PRC Laws; except that the Equity Pledge Agreement has not been filed with the bureau of industrial and commerce, each VIE contract is in proper legal form under PRC Laws for the enforcement thereof against the parties thereto in the PRC without further action by any of the parties thereto; and to ensure the legality, validity, enforceability or admissibility in evidence of each VIE contract in the PRC, all required filings and recordings in respect of any VIE contract with any Governmental Authority have been performed;
(o) Except that the Equity Pledge Agreement has not been filed with the bureau of industrial and commerce, all Governmental Authorizations in the PRC and all consents, approvals, authorizations or other actions by or notification to any non-governmental third party required in connection with the transactions contemplated by the VIE contract (such Governmental Authorizations and third-party consents, the "Restructuring Consents") have been duly obtained and are in full force and effect, except that failure to obtain Restructuring Consents will not reasonably cause Material Adverse Effect. No Restructuring Consent has been suspended, revoked, withdrawn or adversely modified or is subject to any condition precedent which has not been fulfilled or performed and, to the best of our knowledge after due inquiry, no circumstance exists which might lead to the suspension, revocation, withdrawal or adverse modification of any such Governmental Authorization;
(p) The Restructuring ("the performance of all agreements listed in Exhibit A by the Company and/or its subsidiary and/or P3A) has been effected in compliance with all applicable PRC laws. To the extent governed by PRC laws, the Restructuring constitutes binding transactions completed by the parties to each VIE contract;
(q) To the best of our knowledge after due inquiry, neither Beijing Aero nor P3A has been notified any action, suit, proceeding, claim, arbitration or investigation (civil, criminal, regulatory or otherwise) pending before or by any Governmental Authority of the PRC or, currently threatened, against the Company or any of its Subsidiaries or their respective activities, properties or assets challenging the effectiveness or validity of any VIE contract.
(r) Assuming that each signature on behalf of each party to the collaborative development contracts with respect to the Collaborative IP is that of a person authorized to execute the same, and each of such collaborative development contracts has been duly authorized, executed and delivered, each of such collaborative development contracts with respect to the Collaborative IP constitutes valid and
legally binding obligations of the parties thereto, enforceable in accordance with its terms, subject to the Enforceability Exceptions. Each of the Company and its Subsidiaries listed in Schedule 3.11(a)(B) has a good and valid Commercialization Right under each such contract with respect to each such item of Collaborative IP. To the best of our knowledge, any exercise of any such Commercialization Right in respect of any of the Collaborative IP by the Company or its Subsidiaries has not and will not result in any conflict with or infringement of the rights of others.
(s) Assuming that each signature on behalf of each party to purchase contracts with respect to the Purchased IP is that of a person authorized to execute the same, and each of such purchase contracts has been duly authorized, executed and delivered, each of such purchase contracts with respect to the Purchased IP constitutes valid and legally binding obligations of the contractual counterparty, enforceable in accordance with its terms (subject to the Enforceability Exceptions), and to the best of our knowledge, the Company or one of its Subsidiaries can exercise its rights under such purchase contracts without any conflict with or infringement of the rights of others.
This opinion relates to the PRC Laws in effect on the date hereof.
This opinion is given solely for the benefit of the Company despite that the persons to whom it is addressed, upon the request by and in the capacity as the PRC legal counsel for the Company, include the persons other than the Company. It may not, except with the prior permit from the Company's and our prior written permission, be relied upon by anyone except for the Company in connection with this opinion or used for any other purpose.
Yours sincerely,
Commerce & Finance Law Offices
EXHIBIT A
VIE CONTRACTS
1. Agreement Related to the Shares of P3A, dated June 8, 2007, among the Company, P3A, Taiyuan Renlong Enterprise Group Co., Ltd., Shanxi Chuanglong Technology Investment Co., Ltd., Yan Lv, Liu Jinbin, Zhang Minshe, Qian Zhaohua, Xue Zhixin and Li Jian.
2. 7 share transfer agreements among Taiyuan Renlong Enterprise Group Co., Ltd., Shanxi Chuanglong Technology Investment Co., Ltd., Yan Lv, Liu Jinbin, Zhang Minshe, Qian Zhaohua, Xue Zhixin and Li Jian, each dated April 7, 2007
3. Proxy, dated June 8, 2007, issued by Li Juan
4. Proxy, dated June 8, 2007, issued by Xue Zhixin
5. Proxy, dated June 8, 2007, issued by Zhang Mingshe
6. Technology Transfer Agreement, dated June 8, 2007, between P3A and Beijing Aero
7. Technology License Agreement, dated June 8, 2007, between Beijing Aero and P3A
8. Exclusive Consultancy Service Agreement, dated June 8, 2007, between Beijing Aero and P3A
9. Exclusive Technology Development, Technical Support and Service Agreement, dated June 8, 2007, between Beijing Aero and P3A
10. Equity Pledge Agreement, dated June 8, 2007, among Beijing Aero, Li Juan, Qian Zhaohua, Xue Zhixin, Zhang Mingshe and P3A
11. Exclusive Call Option Agreement, dated June 8, 2007, among Beijing Aero, Li Juan, Qian Zhaohua, Xue Zhixin, Zhang Mingshe and P3A
12. Technology Transfer Agreement, dated June 8, 2007, between P3A and Shanxi Primalights Bioengineering Research Institute
EXHIBIT B
EXHIBIT H-1
CAYMAN OPINION
Our ref RJT/630408/2060499/v3 Your ref Subject to review and amendment TPG Growth AC Ltd. Direct: +852 2971 3007 TPG Biotech II, Ltd. Mobile: +852 9020 8007 E-mail: richard.thorp@maplesandcalder.com [_] June 2007 |
Dear Sir
AGRIA CORPORATION (the "COMPANY")
We have acted as counsel as to Cayman Islands law to the Company, and have been asked to provide you with the opinions set out herein.
1 DOCUMENTS REVIEWED
We have reviewed originals, copies, drafts or conformed copies of the following documents:
1.1 the certificate of incorporation of the Company dated 14 May 2007[, the memorandum and articles of association of the Company registered on 14 May 2007] and the amended and restated memorandum and articles of association of the Company (the "RESTATED M&A") as [conditionally] adopted by Special Resolution passed on [__] June 2007;
1.2 the written resolutions of the board of directors of the Company dated [__] June 2007;
1.3 the written resolutions of the shareholders dated [__] June 2007 and the corporate records and statutory registers maintained at the registered office in the Cayman Islands;
1.4 the Certificate of Good Standing in relation to the Company issued by the Registrar of Companies;
1.5 a certificate from a director of the Company, a copy of which is attached hereto (the "DIRECTOR'S CERTIFICATE"); and
1.6 the transaction documents entered into or to be entered into by the Company and listed in the First Schedule (the "TRANSACTION DOCUMENTS").
2 ASSUMPTIONS
The following opinion is given only as to, and based on, circumstances and matters of fact existing and known to us on the date of this opinion. This opinion only relates to the laws of the Cayman Islands which are in force at the date of this opinion. In giving this opinion, we have relied (without further verification) upon the accuracy of the Director's Certificate and
the Certificate of Good Standing. We have relied upon the following assumptions, which we have not independently verified:
2.1 the Transaction Documents have been or, as the case may be, will be authorised and duly executed and delivered by or on behalf of all relevant parties in accordance with all relevant laws (other than, with respect to the Company, the laws of the Cayman Islands);
2.2 the Transaction Documents are, or will be legal, valid, binding and enforceable against all relevant parties in accordance with their terms under the law of the State of New York ("NEW YORK LAW") and all other relevant laws (other than the laws of the Cayman Islands);
2.3 the choice of New York law as the governing law of the Transaction Documents has been made in good faith and would be regarded as a valid and binding selection which will be upheld by the courts of the State of New York as a matter of New York law and all other relevant laws (other than the laws of the Cayman Islands);
2.4 copy documents, conformed copies or drafts of documents provided to us are true and complete copies of, or in the final forms of, the originals;
2.5 all signatures, initials and seals are genuine;
2.6 the power, authority and legal right of all parties under all relevant laws and regulations (other than, as a matter of Cayman Islands law, the Company) to enter into, execute, deliver and perform their respective obligations under the Transaction Documents; and
2.7 there is nothing under any law (other than the laws of the Cayman Islands) which would or might affect the opinions hereinafter appearing. Specifically, we have made no independent investigation of New York law.
3 OPINIONS
Based upon, and subject to, the foregoing and the qualifications set out below, and having regard to such legal considerations as we deem relevant, we are of the opinion that:
3.1 The Company has been duly incorporated as an exempted company with limited liability for an unlimited duration and is validly existing and in good standing under the laws of the Cayman Islands.
3.2 The Company has full power and authority under its Memorandum and Articles of Association to enter into, execute and perform its obligations under the Transaction Documents.
3.3 The execution and delivery of the Transaction Documents and the performance by the Company of its obligations thereunder does not conflict with or result in a breach of any of the terms or provisions of the Memorandum and Articles of Association of the Company or any law, public rule or regulation applicable to the Company in the Cayman Islands currently in force.
3.4 The execution, delivery and performance of the Transaction Documents has been authorised by and on behalf of the Company and, assuming the Transaction Documents have been executed and delivered by [NAME PERSON AUTHORISED TO EXECUTE TRANSACTION DOCUMENTS IN THE RESOLUTIONS], the Transaction Documents have been duly executed and delivered on behalf of the Company and constitute the legal, valid and binding obligations of the Company enforceable in accordance with their terms.
3.5 Other than the shares reserved for the 2007 Stock Option Plan (as defined in the Transaction Documents) and the Conversion Shares (as defined in the Transaction Documents), all outstanding Ordinary Shares (as defined in the Transaction Documents) are duly and validly authorized and issued as fully paid and nonassessable.
3.6 The Ordinary Shares and Preferred Shares (as defined in the Transaction Documents) that are being purchased by the TPG Growth AC Ltd. and TPG Biotech II, Ltd. under the Transaction Documents, when issued, sold and delivered in accordance with the terms of thereof for the consideration expressed therein, will be duly authorized and validly issued as fully paid and nonassessable. The Conversion Shares have been duly and validly authorised for issuance and upon issuance in accordance with the terms of the Transaction Documents and the Restated M&A, will be duly authorized and validly issued as fully paid and nonassessable.
3.7 No authorisations, consents, approvals, licenses, validations or exemptions are required by law from any governmental authorities or agencies or other official bodies in the Cayman Islands in connection with:
3.7.1 the creation, execution or delivery of the Transaction Documents by the Company;
3.7.2 subject to the payment of the appropriate stamp duty, enforcement of the Transaction Documents against the Company; or
3.7.3 the performance by the Company of its obligations under any of the Transaction Documents.
3.8 No taxes, fees or charges (other than stamp duty) are payable (either by direct assessment or withholding) to the government or other taxing authority in the Cayman Islands under the laws of the Cayman Islands in respect of:
3.8.1 the execution or delivery of the Transaction Documents;
3.8.2 the enforcement of the Transaction Documents; or
3.8.3 payments made under, or pursuant to, the Transaction Documents.
The Cayman Islands currently have no form of income, corporate or capital gains tax and no estate duty, inheritance tax or gift tax.
3.9 The courts of the Cayman Islands will observe and give effect to the choice of New York law as the governing law of the Transaction Documents.
3.10 Based solely on our inspection on [__] June 2007 of the Register of Writs and Other Originating Process in the Grand Court of the Cayman Islands, there were no actions or petitions pending against the Company in the Grand Court of the Cayman Islands.
3.11 Although there is no statutory enforcement in the Cayman Islands of foreign judgments in Hong Kong, the courts of the Cayman Islands will recognise a foreign judgment as the basis for a claim at common law in the Cayman Islands provided such judgment:
3.11.1 is given by a competent foreign court;
3.11.2 imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given;
3.11.3 is final;
3.11.4 is not in respect of taxes, a fine or a penalty; and
3.11.5 was not obtained in a manner and is not of a kind the enforcement of which is contrary to the public policy of the Cayman Islands.
4 QUALIFICATIONS
The opinions expressed above are subject to the following qualifications:
4.1 The term "enforceable" as used above means that the obligations assumed by the Company under the Transaction Documents are of a type which the courts of the Cayman Islands will enforce. It does not mean that those obligations will necessarily be enforced in all circumstances in accordance with their terms. In particular:
4.1.1 enforcement may be limited by bankruptcy, insolvency, liquidation, reorganisation, readjustment of debts or moratorium or other laws of general application relating to or affecting the rights of creditors;
4.1.2 enforcement may be limited by general principles of equity. For example, equitable remedies such as specific performance may not be available, inter alia, where damages are considered to be an adequate remedy;
4.1.3 some claims may become barred under the statutes of limitation or may be or become subject to defences of set off, counterclaim, estoppel and similar defences;
4.1.4 where obligations are to be performed in a jurisdiction outside the Cayman Islands, they may not be enforceable in the Cayman Islands to the extent that performance would be illegal under the laws of that jurisdiction;
4.1.5 the Cayman Islands court has jurisdiction to give judgment in the currency of the relevant obligation and statutory rates of interest payable upon judgments will vary according to the currency of the judgment. If the Company becomes insolvent and is made subject to a liquidation proceeding, the Cayman Islands court will require all debts to be proved in a common currency, which is likely to be the "functional currency" of the Company determined in accordance with
applicable accounting principles. Currency indemnity provisions have not been tested, so far as we are aware, in the courts of the Cayman Islands;
4.1.6 obligations to make payments that may be regarded as penalties will not be enforceable; and
4.1.7 the courts of the Cayman Islands may decline to exercise jurisdiction in relation to substantive proceedings brought under or in relation to the Transaction Documents in matters where they determine that such proceedings may be tried in a more appropriate forum.
4.2 Cayman Islands stamp duty may be payable if the original Transaction Documents are brought to or executed in the Cayman Islands.
4.3 To maintain the Company in good standing under the laws of the Cayman Islands, annual filing fees must be paid and returns made to the Registrar of Companies.
4.4 The obligations of the Company may be subject to restrictions pursuant to United Nations sanctions as implemented under the laws of the Cayman Islands.
4.5 A certificate, determination, calculation or designation of any party to the Transaction Documents as to any matter provided therein might be held by a Cayman Islands court not to be conclusive final and binding if, for example, it could be shown to have an unreasonable or arbitrary basis, or in the event of manifest error.
4.6 In principle a Cayman Islands court will award costs and disbursements in litigation in accordance with the relevant contractual provisions but there remains some uncertainty as to the way in which the rules of the Grand Court will be applied in practice. Whilst it is clear that costs incurred prior to judgment can be recovered in accordance with the contract, it is likely that post-judgment costs (to the extent recoverable at all) will be subject to taxation in accordance with Grand court Rules Order 62.
4.7 We reserve our opinion as to the extent to which a Cayman Islands court would, in the event of any relevant illegality, sever the offending provisions and enforce the remainder of the transaction of which such provisions form a part, notwithstanding any express provisions in this regard.
4.8 We make no comment with regard to the references to foreign statutes in the Transaction Documents.
4.9 We express no view as to the commercial terms of the Transaction Documents or whether such terms represent the intentions of the parties, and make no comment with regard to the representations which may be made by the Company.
This opinion is addressed to and for the benefit solely of the addressees and may not be relied upon by any other person for any purpose, nor may it be transmitted or disclosed to any other person without our prior written consent.
Yours faithfully
MAPLES and CALDER
FIRST SCHEDULE
1. A share purchase agreement among TPG Growth AC Ltd., TPG Biotech II, Ltd., the Company, China Victory International Holdings Limited, Aero Biotech Science & Technology Co., Ltd., Primalights III Agriculture Development Co., Ltd. and Brothers Capital Limited to be dated on or about [__] June 2007.
2. A shareholders agreement among TPG Growth AC Ltd., TPG Biotech II, Ltd., the Company and Brothers Capital Limited to be dated on or about [__] June 2007.
3. A registration rights agreement among TPG Growth AC Ltd., TPG Biotech II, Ltd. and the Company to be dated on or about [__] June 2007.
AGRIA CORPORATION
PO Box 309GT, Ugland House
South Church Street, George Town
Grand Cayman, Cayman Islands
[__] June 2007
To: Maples and Calder
1504 One International Finance Centre
1 Harbour View Street
Hong Kong
Dear Sirs
AGRIA CORPORATION (the "COMPANY")
I, [__________], being a director of the Company, am aware that you are being asked to provide a legal opinion (the "OPINION") in relation to certain aspects of Cayman Islands law. Capitalised terms used in this certificate have the meaning given to them in the Opinion. I hereby certify that:
1 The Memorandum and Articles of Association of the Company as adopted or registered on [__________] 2007 remain in full force and effect and are unamended [save for the amendments [conditionally] made by special resolution passed on [__] June 2007].
5 The written resolutions (the "RESOLUTIONS") of the board of directors dated
[DATE] were signed by all the directors in the manner prescribed in the
Articles of Association of the Company.
6 The shareholders of the Company have not restricted or limited the powers of the directors in any way. There is no contractual or other prohibition (other than as arising under Cayman Islands law) binding on the Company prohibiting it from entering into and performing its obligations under the Transaction Documents.
7 The Resolutions were duly adopted, are in full force and effect at the date hereof and have not been amended, varied or revoked in any respect.
8 The directors of the Company at the date of Resolutions and at the date hereof were and are as follows:
[__________]
[__________]
[__________]
9 [Other than the shares reserved for the 2007 Stock Option Plan (as defined in the Transaction Documents) and the Conversion Shares (as defined in the Transaction Documents), all outstanding Ordinary Shares (as defined in the Transaction Documents) are free and clear of any Encumbrances (as defined in the Transaction Documents). The Ordinary Shares and Preferred Shares (as defined in the Transaction Documents) that are being purchased by the TPG Growth AC Ltd. and TPG Biotech II, Ltd. under the Transaction Documents, when issued, sold and
delivered in accordance with the terms of thereof for the consideration expressed therein, will be free and clear of any Encumbrances other than those contemplated under the Transaction Documents and applicable laws. The Conversion Shares, upon issuance in accordance with the terms of the Transaction Documents and the Restated M&A, will be free of any Encumbrances other than those contemplated under the Transaction Documents and applicable laws.]
10 The minute book and corporate records of the Company as maintained at its registered office in the Cayman Islands and made available to you are complete and accurate in all material respects, and all minutes and resolutions filed therein represent a complete and accurate record of all meetings of the shareholders and directors (or any committee thereof) (duly convened in accordance with the Articles of Association of the Company) and all resolutions passed at the meetings, or passed by written consent as the case may be.
11 Each director considers the transactions contemplated by the Transaction Documents to be of commercial benefit to the Company and has acted bona fide in the best interests of the Company, and for a proper purpose of the Company, in relation to the transactions the subject of the Opinion.
12 To the best of my knowledge and belief, having made due inquiry, the Company is not the subject of legal, arbitral, administrative or other proceedings in any jurisdiction. Nor have the directors or shareholders taken any steps to have the Company struck off or placed in liquidation, nor have any steps been taken to wind up the Company. Nor has any receiver been appointed over any of the Company's property or assets.
13 The Company is not a central bank, monetary authority or other sovereign entity of any state.
I confirm that you may continue to rely on this Certificate as being true and correct on the day that you issue the Opinion unless I shall have previously notified you personally (Attn: Mr. Richard Thorp) to the contrary.
EXHIBIT I
VIE CONTRACTS
1. Agreement Related to the Shares of P3A, dated June 8, 2007, among the Company, P3A, Taiyuan Renlong Enterprise Group Co., Ltd., Shanxi Chuanglong Technology Investment Co., Ltd., Yan Lu, Liu Jinbin, Zhang Mingshe, Qian Zhaohua, Xue Zhixin and Li Juan, which amended the Share Acquisition Agreement, dated October 2, 2003, between the Company and P3A
2. 7 share transfer agreements among Taiyuan Renlong Enterprise Group Co., Ltd., Shanxi Chuanglong Technology Investment Co., Ltd., Yan Lv, Liu Jinbin, Zhang Minshe, Qian Zhaohua, Xue Zhixin and Li Jian, each dated April 7, 2007
3. Proxy, dated June 8, 2007, issued by Li Juan
4. Proxy, dated June 8, 2007, issued by Xue Zhixin
5. Proxy, dated June 8, 2007, issued by Zhang Mingshe
6. Technology Transfer Agreement, dated June 8, 2007, between P3A and Beijing Aero
7. Proprietary Technology License Agreement, dated June 8, 2007, between Beijing Aero and P3A
8. Exclusive Consultancy Service Agreement, dated June 8, 2007, between Beijing Aero and P3A
9. Exclusive Technology Development, Technology Support and Service Agreement, dated June 8, 2007, between Beijing Aero and P3A
10. Equity Pledge Agreement, dated June 8, 2007, among Beijing Aero, Li Juan, Qian Zhaohua, Xue Zhixin, Zhang Mingshe and P3A
11. Exclusive Call Option Agreement, dated June 8, 2007, among Beijing Aero, Li Juan, Qian Zhaohua, Xue Zhixin, Zhang Mingshe and P3A
12. Technology Transfer Agreement, dated June 8, 2007, between P3A and Shanxi Primalights Bioengineering Research Institute
EXHIBIT J
MR. LAI'S UNDERTAKING
June [_], 2007
To TPG Growth AC Ltd. and TPG Biotech II, Ltd.:
This undertaking (the "Undertaking") is made in connection with the investment by TPG Growth AC Ltd. and TPG Biotech II, Ltd. (collectively, the "Investors") in Agria Corporation (the "Company"), and constitutes the legal, valid, binding and enforceable obligation of the undersigned, subject to the Enforceability Exceptions. All the terms used herein and not defined shall have the meanings assigned to them in the Share Purchase Agreement, dated June [_], 2007, among the Company, Brothers Capital Limited ("Brothers Capital") and the Investors (the "Share Purchase Agreement").
I hereby irrevocably and unconditionally undertake, agree and covenant that:
1. I will cause Brothers Capital and the Company to honor their respective obligations set forth in the Transaction Documents (it being understood and agreed that in doing so I shall not be personally obligated to assume any financial or other obligation of Brothers Capital or the Company);
2. I will own not less than [50]% of the ownership interests of Brothers Capital; and
3. I will not relinquish the actual and continued effective control of Brothers Capital, and I will not engage in any conduct which would result, or could be reasonably expected to result in, the loss of my actual effective control of Brothers Capital.
All of my obligations under this Undertaking shall immediately terminate at the earlier of (i) 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 or (ii) the occurrence of a Qualifying IPO.
This Undertaking and, to the fullest extent permitted by applicable Law, all matters arising out of or relating to this Undertaking, shall be governed by and construed in accordance with the law of the State of New York, United States of America.
Very truly yours,
Lai Guanglin
ACKNOWLEDGED AND AGREED TO:
TPG Growth AC Ltd.
TPG Biotech II, Ltd.
Signature Page to Mr. Lai's Undertaking
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 |
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
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
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
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;
(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
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
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
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 Mr. Qian Zhaohua or an entity wholly-owned by Mr. Qian
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
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
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
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.
(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
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
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
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
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
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
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
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.
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:
(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.
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.
(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.
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
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
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.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.
AGRIA CORPORATION
By /s/ Lai Guanglin ------------------------------------- Name: Title: |
BROTHERS CAPITAL LIMITED
By /s/ Lai Guanglin ------------------------------------- Name: Title: |
INVESTORS:
TPG GROWTH AC LTD.
By: /s/ Clive Bode ------------------------------------ Name: Clive Bode Title: Vice President and Secretary |
TPG BIOTECH II, LTD.
By: /s/ Clive Bode ------------------------------------ Name: Clive Bode Title: Vice President and Secretary |
SIGNATURE PAGE TO AGRIA CORPORATION SHAREHOLDERS AGREEMENT
EXHIBIT A
Investors
TPG Growth AC Ltd.
TPG Biotech II, Ltd.
SCHEDULE 8.2
List of Shareholder Agreements between Brothers Capital Limited and third parties prior to the date of this Agreement
EXHIBIT 4.15
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
AMONG
TPG GROWTH AC LTD.
TPG BIOTECH II, LTD.
AND
AGRIA CORPORATION
JUNE 22, 2007
TABLE OF CONTENTS
1. INTERPRETATION ........................................................ 1 1.1 Certain Definitions .............................................. 1 1.2 Interpretation ................................................... 3 1.3 Public Offering Jurisdiction ..................................... 3 2. RESTRICTIVE LEGEND .................................................... 3 3. PIGGYBACK REGISTRATION ................................................ 4 3.1 Notice ........................................................... 4 3.2 Underwriting ..................................................... 5 3.3 Not a Demand Registration ........................................ 6 4. DEMAND REGISTRATION ................................................... 6 4.1 Request for Registration ......................................... 6 4.2 Underwriting ..................................................... 6 4.3 Limitations on Demand Registration ............................... 7 5. REGISTRATION PROCEDURES ............................................... 8 5.1 Procedures ....................................................... 8 5.2 Restriction on Filing ............................................ 11 5.3 Reference to Holders ............................................. 11 6. EXPENSES OF REGISTRATION .............................................. 12 7. INDEMNIFICATION ....................................................... 12 7.1 Indemnification by the Company ................................... 12 7.2 Indemnification by the Holders ................................... 13 7.3 Indemnification Procedures ....................................... 13 7.4 Contribution ..................................................... 14 7.5 Survival ......................................................... 14 8. COMPANY UNDERTAKINGS .................................................. 14 8.1 No Inconsistent Agreements ....................................... 15 8.2 Rules 144 and 144A ............................................... 15 9. MISCELLANEOUS ......................................................... 15 9.1 Term ............................................................. 15 9.2 Successors and Assigns ........................................... 15 9.3 Governing Law .................................................... 16 9.4 Dispute Resolution ............................................... 16 9.5 Counterparts and Facsimile Execution ............................. 17 9.6 Titles and Subtitles; References ................................. 17 9.7 Notices .......................................................... 17 |
9.8 Attorney's Fees .................................................. 18 9.9 Amendments and Waivers ........................................... 18 9.10 Severability ..................................................... 18 9.11 Entire Agreement ................................................. 18 9.12 Interpretation ................................................... 19 9.13 No Presumption ................................................... 19 9.14 Specific Performance ............................................. 19 9.15 Aggregation of Stock ............................................. 19 |
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of June 22, 2007, by and among Agria Corporaiton, an exempted company incorporated in the Cayman Islands (the "Company"), and the investors listed on the signature pages hereto (collectively, the "Investors"). The Company and the Investors are referred to herein as "Parties" collectively and a "Party" individually.
RECITALS
WHEREAS, the Company desires to issue Series A Preferred Shares, par value US$0.001 per share (the "Preferred Shares"), and Brothers Capital Limited, an exempted company incorporated in the British Virgin Islands and a shareholder of the Company, desires to sell ordinary shares of the Company, par value US$0.001 per share (the "Ordinary Shares"), to the Investors pursuant to the Share Purchase Agreement (the "Share Purchase Agreement") dated as of June 22, 2007 by and among the Company, the Company Warrantors set forth in Schedule 1.1 to the Share Purchase Agreement and the Investors; and
WHEREAS, in connection with the purchase and sale of the Investor Shares pursuant to the Share Purchase Agreement, the Company and the Investors desire to enter into this Registration Rights Agreement.
NOW, THEREFORE, in consideration of the mutual promises herein contained, and other good and valuable consideration, the receipt and adequacy of which hereby is acknowledged, the parties hereto agree as follows:
1. INTERPRETATION
1.1 Certain Definitions.
As used in this Agreement, the following terms shall have the following respective meanings:
(a) "Adverse Disclosure" shall mean public disclosure of material
non-public information that in the good faith judgment of a majority of the
Board of Directors of the Company, after consultation with outside counsel to
the Company, (i) would be required to be made in any registration statement
filed by the Company so that such registration statement would be not false or
misleading in any material respect, (ii) would not be required to be made at
such time but for the filing or publication of such registration statement, and
(iii) the Company has a bona fide business purpose for not disclosing publicly.
(b) "Affiliate" of any person shall mean any person that, alone or together with any other person, directly or indirectly through one or more 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.
(c) "Exchange Act" shall mean the United States Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.
(d) "Form S-3/F-3" shall mean Form F-3 or Form S-3, as applicable, promulgated by the SEC under the Securities Act or any successor form or substantially similar form then in effect.
(e) "Free Writing Prospectus" shall mean any free writing prospectus (as defined in Rule 405 under the Securities Act) prepared by or on behalf of the Company or used or referred to by the Company in connection with any registrations pursuant to this Agreement.
(f) "Holders" shall mean the Investors and other holders of the Registrable Securities in accordance with this Agreement.
(g) "Initiating Holders" shall mean the Holders who are the holders of at least 30% of the then outstanding Registrable Securities.
(h) "Investor Shares" shall mean the Preferred Shares and the Ordinary Shares, each as purchased by the Investors in accordance with the Share Purchase Agreement.
(i) The terms "register", "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act (or other applicable non-U.S. securities laws and regulations, as the case may be), and the declaration or ordering of the effectiveness of that registration statement.
(j) "Registrable Securities" shall mean (i) the Ordinary Shares acquired by the Investors pursuant to the Share Purchase Agreement and any Ordinary Shares hereafter acquired by any Investor prior to the initial public offering of the Ordinary Shares of the Company pursuant to an effective registration statement filed under the Securities Act, including any Ordinary Shares issuable or issued upon conversion of the Preferred Shares, and (ii) any Ordinary Shares issued as (or issuable upon the conversion or exercise of any warrant, right or other security that is issued as) a dividend or other distribution with respect to, or by way of stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise with respect to, or in exchange for, or in replacement of, the securities referenced in (i) above. For purposes of this Agreement, Registrable Securities will cease to be Registrable Securities when; (A) they have been sold pursuant to a registration statement with respect to the sale of securities which shall have become effective under the Securities Act or other applicable non-U.S. securities laws and regulations, (B) they have been otherwise sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act so that (x) all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale and (y) subsequent disposition of such securities shall not require registration or qualification under the Securities Act or other applicable non-U.S. securities laws and regulations or similar state law or (C) with respect to a single Holder, in the opinion of counsel reasonably satisfactory to the Company and such Holder, there is no limitation as to the volume of the Registrable Securities owned by such single Holder that may be sold in a single sale pursuant to Rule 144 under the Securities Act.
(k) "Shareholders Agreement" shall mean the shareholders agreement dated June 22, 2007, among Brothers Capital Limited, the Investors and the Company.
(l) "Securities Act" shall mean the United States Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder, all as the same shall be in effect at the time.
(m) "SEC" shall mean the United States Securities and Exchange Commission.
1.2 Interpretation.
For all purposes of this Agreement, except as otherwise expressly provided, the terms defined in Section 1.1 shall have the meanings assigned to them in this Section 1 and capitalized terms used in this Agreement but not otherwise defined herein shall have the meanings ascribed to them in the Share Purchase Agreement.
1.3 Public Offering Jurisdiction.
The terms of this Agreement are drafted primarily in contemplation of an offering of Ordinary Shares in the United States of America. The parties recognize, however, the possibility that securities may be qualified or registered in a jurisdiction other than the United States of America for offering to the public or that the Company might seek to effect an offering in the United States of America in the form of American Depositary Receipts or American Depositary Shares. Accordingly,
(a) It is their intention that, whenever this Agreement refers to a law or institution of the United States of America but the parties wish to effectuate qualification or Registration in a different jurisdiction, reference in this Agreement to the laws or institutions of the United States shall be read as referring, mutatis mutandis, to the comparable laws or institutions of the jurisdiction in question; and
(b) It is agreed that the Company will not undertake any listing of American Depositary Receipts, American Depositary Shares or any other security derivative of the Ordinary Shares unless arrangements have been made reasonably satisfactory to the Investors to ensure that the effect of this Agreement will be realized and that the Company is committed to take such actions as are necessary such that the Investors will enjoy rights corresponding to the rights hereunder to sell their Registrable Securities in a public offering in the United States of America as if the Company had listed Ordinary Shares in lieu of such derivative securities.
2. RESTRICTIVE LEGEND
Hereinafter, each certificate representing (i) the Investor Shares,
(ii) the Registrable Securities, and (iii) any other securities issued in
respect of the Investor Shares or the Registrable Securities upon any stock
split, stock dividend, combination of shares, recapitalization, merger,
consolidation or similar event, shall (unless otherwise permitted below or
unless the securities evidenced by such certificate shall have been registered
under the Securities Act) be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend required under
applicable state securities laws):
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.
Upon request of a holder of such a certificate, the Company shall
remove the foregoing legend from the certificate or issue to such holder a new
certificate therefor free of any transfer legend, if, with such request, the
Company shall have received either (i) a written opinion of legal counsel to the
holder, addressed to the Company and reasonably satisfactory in form and
substance to the Company's counsel, to the effect that the proposed transfer of
such securities may be effected without registration under the Securities Act or
(ii) a "no-action" letter from the SEC to the effect that the distribution of
such securities without registration will not result in a recommendation by the
staff of the SEC that action be taken with respect thereto, except that any such
transfer legend shall be removed in a transfer pursuant to Rule 144 or an
effective registration statement, in which case no such legal opinion or
"no-action" letter shall be required.
3. PIGGYBACK REGISTRATION
3.1 Notice.
If the Company at any time proposes to register (including for this
purpose a registration effected by the Company for holders of its securities
other than the Holders) any of its securities under the Securities Act or other
applicable non-U.S. securities laws and regulations, as the case may be (other
than (x) a registration relating solely to the sale of securities to
participants in a Company stock plan or other employee benefit plan arrangement,
(y) a registration relating to a corporate reorganization or other transaction
under Rule 145 of the Securities Act or (z) a registration on Form S-8 or any
successor form to such form), the Company shall promptly, but in no event less
than 30 days prior to filing any registration statement, give each Holder
written notice of its intention to undertake such registration and of such
Holder's rights under this Section 3.1. Upon the written request of any Holder
given within 10 days after receipt of such notice, the Company shall, subject to
the provisions of Section 3.2, effect the registration under the Securities Act
(or other applicable non-U.S. securities laws and regulations, as the case may
be) of all of the Registrable Securities that each such Holder has requested to
be registered, by inclusion of such Registrable Securities in the registration
statement that covers the securities that the Company proposes to register (an
"Incidental Registration"). If, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine
for any reason either not to register or to delay registration of such securities, the Company may, at its election, give written notice of such determination to each Holder and, (i) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses in connection therewith), and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities, for the same period as the delay in registering such other securities, provided, however, that in each case of (i) and (ii), if and when the Company shall restart or resume such registration process, each Holder shall continue to be entitled to exercise its piggyback registration rights in accordance with this Section 3 in such resumed or delayed registration of such other securities.
3.2 Underwriting.
(a) In connection with any offering involving an underwriting of the Company's securities, the Company shall not be required under this Section 3 to include any Registrable Securities of a Holder in such underwriting unless such Holder enters into an underwriting agreement in customary form with an underwriter or underwriters selected by the Company, on terms and conditions approved by the Company; provided, that such underwriting agreement shall not impair the indemnification rights of the Holders granted under Section 7; and provided further, that no Holder shall be required to make any representations or warranties to, or agreements with, the Company or any underwriter in a registration other than customary representations, warranties and agreements relating to information regarding such Holder contained in a writing furnished by such Holder to the Company expressly for use in the related registration statement or prospectus, such Holder's title to the Registrable Securities and authority to enter into the underwriting agreement, such Holder's intended method of distribution and any other representations required by applicable law.
(b) If the total amount or kind of securities, including Registrable Securities, requested by security holders to be included in such offering exceeds the amount or kind of securities that the underwriters (or, in the case of an Incidental Registration not being underwritten, the Company) determine in good faith can be sold in the offering, then the Company shall be required to include in the offering only that number or kind of securities that the underwriters (or, in the case of an Incidental Registration not being underwritten, the Company) determine in good faith will not have a material adverse effect on the price, timing or distribution of the securities to be offered. The securities of each class to be included in such registration shall be allocated as follows: (i) first, 100% of the securities that the Company has proposed to sell shall be included therein; and (ii) second, and only if all the securities referenced in clause (i) have been included, the number of Registrable Securities of such class and other securities of such class held by other persons that have a contractual right to participate in such registration that, in the opinion of such underwriters (or, in the case of an Incidental Registration not being underwritten, the Company), can be sold without having a material adverse effect on such registration shall be included therein, with such number to be allocated pro rata among the Holders and such other persons which have requested participation in the Incidental Registration (based, for each such Holder or person on the percentage derived by dividing (x) the number of Registrable Securities of such class (and other securities of such class) which such Holder (or person) has requested to include in such Incidental Registration by (y) the aggregate number of Registrable Securities of such class and other securities of such class which all such Holders and other persons have requested to include.
(c) If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriters, delivered at least 10 days prior to the effective date of the registration statement, provided that, the Company shall be entitled to reimbursement from the Holder of such withdrawn Registrable Securities for any SEC registration fees incurred by the Company in connection with the registration of such Registrable Securities.
3.3 Not a Demand Registration.
No registration effected under this Section 3 shall relieve the Company of its obligation to effect any registration upon request under Article 4, nor shall any such registration under this Article 3 be deemed to have been effected pursuant to Section 4. There shall be no limit on the number of times the Holders may request registration of Registrable Securities under this Article 3.
4. DEMAND REGISTRATION
4.1 Request for Registration.
Subject to the conditions of this Section 4, if the Company shall receive at any time after 180 days following the date of the closing of the Company's Qualifying IPO (or such shorter period as is agreed to by the Company through a waiver of the lock-up agreement contained in Section 3.5 of the Shareholders Agreement), a written request from the Initiating Holders that the Company file a registration statement under the Securities Act (or other applicable non-U.S. securities laws and regulations, as the case may be) covering the registration of all or part of such Initiating Holders' Registrable Securities (provided the Registrable Securities to be so registered (i) have an estimated market value of at least $20 million in the aggregate or (ii) represent all of the then outstanding Registrable Securities (provided such outstanding Registrable Securities have an estimated market value of at least $10 million in the aggregate), then the Company shall promptly give written notice of such request to all Holders, and subject to the limitations of this Article 4, use its reasonable best efforts to effect, as soon as practicable, the registration under the Securities Act (or other applicable non-U.S. securities laws and regulations, as the case may be) of all the Registrable Securities that the Initiating Holders have requested to be registered and all Registrable Securities that the other Holders request to be registered in a written request received by the Company within 45 days of the receipt of the Company's notice pursuant to this Section 4.1. The Company may also elect to include in such registration additional securities, including securities to be sold for the Company's own account or for the account of persons who are not holders of Registrable Securities.
4.2 Underwriting.
(a) If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwritten offering, they shall so advise the Company as part of their request made pursuant to Section 4.1 and the Company shall include such information in the written notice to all Holders referred to in Section 4.1. In such event the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwritten offering and the inclusion of such Holder's Registrable Securities in such underwritten offering (unless otherwise mutually agreed by a majority in interest of the Registrable Securities held by the Initiating Holders and by such Holder).
The Company and all Holders proposing to distribute their securities through such underwritten offering shall enter into an underwriting agreement in customary form (including customary commercial terms) with the underwriter or underwriters selected by the Initiating Holders representing a majority in interest of the Registrable Securities held by the Initiating Holders after consulting with the Company (which underwriter or underwriters shall be reasonably acceptable to the Company). The Company shall provide such representations, warranties and other agreements as are generally prevailing in agreements of this type; provided that such underwriting agreement shall not impair the indemnification rights of the Holders granted under Section 7; and provided further, that no Holder shall be required to make any representations or warranties to, or agreements with, any underwriter(s) in a registration other than customary representations, warranties and agreements relating to information regarding such Holder contained in a writing furnished by such Holder to the Company expressly for use in the related registration statement or prospectus, such Holder's title to the Registrable Securities and authority to enter into the underwriting agreement, such Holder's intended method of distribution and any other representations required by applicable law.
(b) Notwithstanding any other provision of this Section 4, if the managing underwriter(s) advises the Company that in its opinion, the number of securities of the class requested to be included in the registration statement (including securities of the Company for its own account or for the account of other persons who are not holders of the Registrable Securities) exceeds the number which can be sold in such offering without being likely to have a significant adverse effect on the price, timing or distribution of the class of securities to be offered, then the Company shall so advise all Holders of Registrable Securities that would otherwise be underwritten pursuant hereto, and the number of securities that may be included in the underwritten offering shall be reduced as required by the managing underwriter(s) and the Company will include in such registration (i) first, the maximum number of Registrable Securities requested to be included therein, pro rata among the respective Holders thereof on the basis of the amount of Registrable Securities requested to be included in such registration by each such Holder, and (ii) second, the maximum amount of other securities requested to be included therein (including any by the Company), pro rata among the holders of such other securities and the Company, if applicable, on the basis of the amount of securities requested to be included in such registration by each such holder and the Company, if applicable.
Any Registrable Securities excluded or withdrawn from such underwritten offering shall be withdrawn from the registration. If the managing underwriter(s) has not limited the number of Registrable Securities or other securities to be underwritten, the Company and other persons which are not holders of Registrable Securities may sell securities in such registered underwritten offering if the managing underwriter(s) so agrees and if the number of Registrable Securities and other securities which would otherwise have been included in such registration and underwriting will not thereby be limited.
4.3 Limitations on Demand Registration.
The Company shall not be required to effect a registration pursuant to this Section 4:
(a) after the Company has effected two registrations pursuant to this Article 4 (excluding registrations on Form F-3 (or any successor form under the Securities Act), any similar short form registration statement under applicable non-U.S. securities laws
or regulations or registrations pursuant to Article 3 herein, which shall have no such limit), and (A) the registration statements with respect thereto have been declared or ordered effective and remain effective for not less than 180 days (or such shorter period as will terminate when all Registrable Securities covered by such registration statement have been sold or withdrawn), or, if such registration statement relates to an underwritten offering, such period as, in the opinion of counsel for the underwriter or underwriters, is required by law for the delivery of a prospectus in connection with the sale of Registrable Securities provided that a registration which does not become effective after the Company has filed a registration statement with respect thereto solely by reason of the refusal to proceed of the Initiating Holders (other than a refusal to proceed based upon the advice of counsel relating to a matter relating primarily to the Company) shall be deemed to have been effected by the Company at the request of such Initiating Holders unless the Initiating Holders shall have elected to pay all Registration Expenses in connection with such registration, (B) such registration statements are not subject to any stop order, injunction or other order or requirement of the SEC or appropriate non-U.S. governing body for any reason, and (C) the conditions to closing specified in the underwriting agreement or purchase agreement entered into in connection with each such registration are satisfied; or
(b) if the Company shall furnish to Holders requesting a registration statement pursuant to this Article 4, a resolution of the Board of Directors stating that in the good faith judgment of the Board of Directors of the Company, effecting a registration at such time would require the Company to make an Adverse Disclosure, in which event the Company shall have the right to defer such filing for a period of not more than 40 days after receipt of the request of the Initiating Holders, provided that the Company shall not be permitted to do so more than three times in any 24-month period, with each such exercise of this right to be separated by no less than 90 days, and provided further, that during such 40 day period the Company shall not file a registration statement with respect to the public offering of securities of the Company.
5. REGISTRATION PROCEDURES
5.1 Procedures.
If and whenever the Company is required by the provisions of Articles 3 or 4 to effect the registration of any Registrable Securities under the Securities Act (or other applicable non-U.S. securities laws and regulations, as the case may be), the Company will, as expeditiously as possible:
(a) prepare and file with the SEC (or such other appropriate non-U.S. governing bodies, as the case may be) a registration statement with respect to such Registrable Securities (in the case of a registration pursuant to Article 4, such filing to be made within 60 days after the initial request of one or more Initiating Holders of Registrable Securities or such longer period agreed to in writing by the Initiating Holders representing a majority in interest of the Registrable Securities held by the Initiating Holders) and use its reasonable best efforts to cause such registration statement to become effective, and keep such registration statement effective for such period as is required by this Agreement, provided that the Company may discontinue any registration of its securities that are not Registrable Securities (and, under the circumstances specified in Section 3.1 herein, its securities that are Registrable Securities), provided, further that before filing such registration statement or any amendments or supplements thereto, the Company will furnish to counsel selected by the Holders of Registrable Securities that are to be included in such registration
copies of all such documents proposed to be filed, which documents will be subject to the prior review and comment of such counsel;
(b) prepare and file with the SEC (or such other appropriate non-U.S. governing bodies, as the case may be) such amendments and supplements to such registration statement and the prospectus and all Free Writing Prospectus, if any, used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act (or other applicable non-U.S. securities laws and regulations, as the case may be) with respect to the disposition of all securities covered by such registration statement;
(c) furnish to the Holders of Registrable Securities included in such registration and each underwriter, if any, of the securities being sold by such Holders, such number of conformed copies of such registration statement and of each amendment and supplement thereto (in each case including all schedules and exhibits), copies of the prospectus, including a preliminary prospectus, and any Free Writing Prospectus related to such registration statement, in conformity with the requirements of the Securities Act (or other applicable non-U.S. securities laws and regulations, as the case may be);
(d) use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested in writing by the Holders of the Registrable Securities included in such registration statement and any underwriter of such securities, and take any other action which may be reasonably necessary or advisable to keep such registration or qualification in effect so as to enable such selling Holders and underwriters to consummate the disposition in such jurisdictions of the securities owned by such selling Holder, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify generally to do business as a foreign corporation or to file a general consent to service of process in any such jurisdictions or to take any action which would subject it to taxation in any such jurisdiction where it is not then so subject;
(e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement with the managing underwriter of such offering;
(f) furnish:
(i) to each Holder of Registrable Securities included in such registration statement a signed counterpart, addressed to such selling Holders and the underwriters, if any, of an opinion or opinions of counsel for the Company, dated the effective date of such registration statement (or, if such registration includes an underwritten public offering, an opinion or opinions dated the date of the closing under the underwriting agreement), reasonably satisfactory in form and substance to a majority of such selling Holders and underwriters, if any, covering such matters as are customarily covered in opinions of issuer's counsel; and
(ii) to the underwriters, if any, a signed counterpart (with copies to the Holders of the Registrable Securities included in such registration statement) of a "comfort" letter (or, in the case of any such person which does not satisfy the conditions for receipt of a "comfort" letter specified in Statement on Auditing Standards No. 72, as amended, an "agreed upon procedures" letter), dated the effective date of such registration statement and a "bring-down" letter of like kind dated the date of the closing under the
underwriting agreement, signed by the independent public accountants who have certified the Company's financial statements included in such registration statement, covering substantially the same matters with respect to such registration statement (and the prospectus included therein and any Free Writing Prospectus related to such registration statement) and with respect to events subsequent to the date of such financial statements, as are customarily covered in accountants' letters delivered to the underwriters in underwritten public offerings of securities (with, in the case of an "agreed upon procedures" letter, such modifications or deletions as may be required under Statement on Auditing Standards No. 35, as amended);
(g) notify the Holders of Registrable Securities included in such registration statement and each underwriter, if any, promptly and confirm such advice in writing promptly thereafter:
(i) when the registration statement, any prospectus or any Free Writing Prospectus related thereto or post-effective amendment to the registration statement has been filed, and, with respect to the registration statement or any post-effective amendment thereto, when the same has become effective;
(ii) of any request by the SEC or appropriate non-U.S. governing bodies for amendments or supplements to the registration statement or the prospectus or any Free Writing Prospectus or for additional information;
(iii) of the issuance by the SEC or appropriate non-U.S. governing authority of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings by any person for that purpose;
(iv) if at any time the representations and warranties of the Company made as contemplated by Section 3.2(a) or 4.2(a) cease to be true and correct; or
(v) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or blue sky laws of any jurisdiction or the initiation or threat of any proceeding for such purpose;
(h) notify each Holder of Registrable Securities included in such registration statement and each underwriter at any time when a prospectus relating thereto is required to be delivered under the Securities Act (or other applicable non-U.S. securities laws and regulations, as the case may be) upon the Company's discovery that, or upon the happening of any event as a result of which, the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the request of each such Holder or underwriter prepare and furnish to such Holder and underwriter a reasonable number of copies of a supplement to or amendment of such prospectus or a Free Writing Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state of material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;
(i) otherwise use its reasonable best efforts to comply with all applicable rules and regulations of the SEC or appropriate non-U.S. governing bodies, and make
available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least 12 months, beginning with the first full calendar month after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder or any other applicable non-U.S. securities laws and regulations, and will furnish to each selling Holder at least five business days prior to the filing thereof a copy of any such earnings statement and shall not make available to security holders any such earnings statement to which Holders of at least a majority of the Registrable Securities included in such registration statement shall have reasonably objected on the grounds that such earnings statement does not comply in all material respects with the requirements of the Securities Act or other applicable non-U.S. securities laws or regulations;
(j) make available, upon reasonable advance notice and at reasonable times, for inspection by a representative appointed by the Holders of a majority of the Registrable Securities, any managing underwriter(s) participating in any disposition pursuant to the registration statement and any attorney or accountant retained by such selling Holders or managing underwriter(s), all financial and other records, pertinent corporate documents and properties of the Company and cause the Company's officers, directors and employees to supply all information reasonably requested by any such person in connection with such registration as shall be necessary to permit a reasonable investigation within the meaning of Section 11 of the Securities Act (subject to the entry by each party referred to in this clause (j) into customary confidentiality agreements in a form reasonably acceptable to the Company);
(k) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of the registration statement at the earliest possible moment;
(l) use its reasonable best efforts to cause all such Registrable Securities registered under such registration statement to be listed and quoted on each securities exchange and each inter-dealer quotation system on which similar securities issued by the Company are then listed; and
(m) provide and maintain a transfer agent and registrar for all Registrable Securities registered under the registration statement and use its reasonable best efforts to provide a Committee on Uniform Security Identification Procedures number for all such Registrable Securities, in each case from and after a date no later than the effective date of such registration statement.
5.2 Restriction on Filing.
The Company will not file any registration statement pursuant to Article 4 or amendment thereto or any prospectus or Free Writing Prospectus (including such documents incorporated by reference and proposed to be filed after the initial filing of the registration statement) to which the Holders of at least a majority of the Registrable Securities included in such registration statement or the underwriter or underwriters, if any, shall reasonably object, provided that the Company may file such document in a form required by applicable law or upon the advice of its counsel.
5.3 Reference to Holders.
If any such registration statement refers to any Holder of Registrable Securities by name or otherwise as the holder of any securities of the Company, then such Holder shall have the right to require (i) the insertion therein of language, in form and substance satisfactory to such Holder, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company's securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company, or (ii) in the event that such reference to such Holder by name or otherwise is not required by the Securities Act or other applicable non-U.S. securities laws or regulations then in force, the deletion of the reference to such Holder.
6. EXPENSES OF REGISTRATION
The Company shall pay all expenses (other than underwriting discounts and commissions) incurred in connection with registrations of Registrable Securities pursuant to this Agreement and set forth in this paragraph ("Registration Expenses"). Such expenses are: all registration and filing fees, all stock exchange listing fees, all fees associated with filings required to be made with the National Association of Securities Dealers, Inc., all fees and expenses of complying with state securities or blue sky laws, printers' fees, fees and disbursement of the independent public accountants for the Company (including the expenses of any comfort letters required by the Company's performance of and compliance with its obligations under this Agreement) and fees and disbursements of counsel for the Company.
7. INDEMNIFICATION
7.1 Indemnification by the Company.
The Company will indemnify and hold harmless each Holder of
Registrable Securities covered by any registration provided in this Agreement,
subsidiaries, Affiliates, officers, directors, employees, agents and
representatives of each such Holder and each person, if any, who controls such
Holder within the meaning of the Securities Act or the Exchange Act, against any
and all liabilities, obligations, losses, damages, penalties, claims (or actions
or proceedings in respect thereof), costs and expenses (including reasonable
legal fees) ("Losses"), arising out of or based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities Act
or other applicable non-U.S. securities laws, any preliminary prospectus
contained therein, or any Free Writing Prospectus with respect to any securities
that are subject to any such registration statement or any "issuer information"
filed or required to be filed pursuant to Rule 433(d) under the Securities Act
or (ii) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company shall not be liable in any such
case for any such Loss to the extent that it arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in a registration statement or prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information furnished by
such Holder expressly for use therein. Such indemnity shall survive the transfer
by such Holder of the securities it holds in the Company in accordance with
Section 9.2 and the other provisions of this Agreement.
7.2 Indemnification by the Holders.
To the full extent permitted by law, each Holder selling Registrable
Securities pursuant to a registration provided in this Agreement, severally and
not jointly, will indemnify and hold harmless the Company, its subsidiaries, its
Affiliates, each of its directors, each of its officers, employees, agents and
representatives, any underwriter retained by the Company and each person, if
any, who controls the Company or such underwriter within the meaning of the
Securities Act or the Exchange Act, any other Holder selling securities pursuant
to such registration and any of such other Holder's subsidiaries, Affiliates,
officers, directors, employees, agents and representatives and each of their
successors and assigns and each person, if any, who controls such other Holder
within the meaning of the Securities Act or the Exchange Act, against any Losses
which are imposed on, incurred by or asserted against any such indemnified party
under the Securities Act, the Exchange Act or any securities laws or other laws
of any jurisdiction, common law or otherwise, in connection with the
registration of securities provided in this Agreement, in each case to the
extent (and only to the extent) that such Losses arise out of or are based upon
an untrue statement or alleged untrue statement in, or omission or alleged
omission from, a registration statement or prospectus or any amendment or
supplement thereto, or any Free Writing Prospectus with respect thereto, in
conformity with written information furnished by such Holder expressly for use
therein; provided, however, that in no event shall any indemnity under this
Section 7.2, together with any amounts payable under Section 7.3, exceed the net
proceeds received by such indemnifying Holder from the offering out of which
such Losses arise.
7.3 Indemnification Procedures.
Promptly after receipt by an indemnified party under this Article 7 of notice of the commencement of any action or proceeding by any third party (including any governmental action or proceeding) (a "Third Party Claim"), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Article 7, deliver to the indemnifying party a written notice of the commencement of such Third Party Claim containing reasonable detail of the Third Party Claim (a "Claim Notice") and transmit to the indemnifying party a copy of all notices and documents received by the indemnified party pursuant to the Third Party Claim; provided that the failure to deliver a Claim Notice or the failure to transmit a copy of such notices and documents to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the indemnified party under this Article 7, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice. The indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense of such Third Party Claim at its own expense with counsel selected by the indemnifying party and reasonably satisfactory to the indemnified parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate, based on the advice of counsel to the indemnified party, due to a conflict of interest between such indemnified party and the indemnifying party. No indemnifying party shall, without the written consent of the indemnified party (which shall not be unreasonably withheld), consent to the entry of any judgment or enter into any settlement of any Third Party Claim (whether or not the indemnified party is an actual or potential party to such action or claim) if such judgment or settlement includes a statement as to an admission of fault, culpability or a
failure to act on behalf of any indemnified party. No indemnifying party shall consent to entry of any judgment or enter into any settlement which does not include an unconditional release of each indemnified party from all liability in respect to such Third Party Claim. No indemnified party shall consent to the entry of any judgment or enter into any settlement in any Third Party Claim, the defense of which has been assumed by an indemnifying party, without the written consent of such indemnifying party.
7.4 Contribution.
If the indemnification provided for in this Section 7 is unavailable to or insufficient to hold harmless an indemnified party referred to in Section 7.1 or 7.2 with respect to any Loss referred to therein, then each indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative benefits received by the indemnifying party on the one hand and by the indemnified party on the other from the offering out of which the Losses arise. If the allocation provided by the immediately preceding sentence is unavailable with respect to any Loss for any reason, the indemnifying party and the indemnified party severally shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the indemnifying party on the one hand and the indemnified party on the other in connection with the Losses, as well as any other relevant equitable considerations. Relative benefits received by a party shall be deemed to be in the same proportion as the net proceeds from the offering (before deducting expenses) received by such party bear to the aggregate public offering price of the securities offered in the offering. Relative fault shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the indemnifying party on the one hand or the indemnified party on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Parties agree that it would not be just and equitable if contribution were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or any other method of allocation that does not take account of the equitable considerations referred to above. The amount paid or payable by an indemnified party as a result of any Loss shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding any other provisions of this Section 7.4, no Holder will be required to contribute under this Article 7 any amount in excess of the amount by which the net proceeds received by such Holder in the offering exceed the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue statement or alleged untrue statement or omission or alleged omission; and (b) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentations.
7.5 Survival.
The obligations of the Company and Holders under this Section 7 shall survive the completion of any offering of Registrable Securities in a registration statement under this Agreement, and otherwise.
8. COMPANY UNDERTAKINGS
8.1 No Inconsistent Agreements.
The Company shall not enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders of the Registrable Securities in this Agreement.
8.2 Rules 144 and 144A.
(a) So long as the Company shall not have filed a registration statement pursuant to Section 12 of the Exchange Act or a registration statement pursuant to the requirements of the Securities Act, the Company shall, at any time and from time to time, upon the request of any Holder of Registrable Securities, furnish in writing to such Holder, a statement as of a date not earlier than 12 months prior to the date of such request of the nature of the business of the Company and the products and services it offers and copies of the Company's most recent balance sheet and profit and loss and retained earnings statements, together with similar financial statements for such part of the two preceding fiscal years as the Company shall have been in operation, all such financial statements to be audited to the extent audited statements are reasonably available, provided that, in any event the most recent financial statements so furnished shall include a balance sheet as of a date less than 12 months prior to the date of such request, statements of profit and loss and retained earnings for the 12 months preceding the date of such balance sheet, and, if such balance sheet is not as of a date less than 6 months prior to the date of such request, additional statements of profit and loss and retained earnings for the period from the date of such balance sheet to a date less than 6 months prior to the date of such request.
(b) If the Company shall have filed a registration statement pursuant to the requirements of Section 12 of the Exchange Act or a registration statement pursuant to the requirements of the Securities Act, the Company shall timely file the reports required to be filed by it under the Securities Act and the Exchange Act (including but not limited to the reports under sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c) of Rule 144) and the rules and regulations adopted by the SEC thereunder (or, if the Company is not required to file such reports, will, upon the request of any Holder of Registrable Securities, make publicly available other information except for such material non-public information as the Company has a valid business purpose for not disclosing publicly) and will take such further action as any Holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144, Rule 144A or Regulation S, or (b) any similar rule or regulation hereafter adopted by the SEC.
9. MISCELLANEOUS
9.1 Term
This Agreement shall terminate upon the earlier of (i) the date as of which all of the Registrable Securities have been sold pursuant to a registration statement or (ii) when the Holders are permitted to sell their Registrable Securities under Rule 144(k) under the Securities Act (or any similar provision then in force permitting the sale of restricted securities without limitation on the amount of securities sold or the manner of sale).
9.2 Successors and Assigns.
(a) The registration rights of any Holder under this Agreement with respect to any Registrable Securities may be transferred and assigned, provided, however that no such assignment shall be binding upon or obligate the Company with respect to any such assignee unless and until (i) the Company shall have received notice of such assignment as herein provided and a written agreement of such assignee to be bound by the provisions of this Agreement and (ii) such assignee acquires Registrable Securities with an estimated aggregate market value of $10 million or more.
(b) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the Parties hereto and their respective successors and assigns.
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.
(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 Counterparts and Facsimile Execution.
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.
9.6 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 or Sections refer to Articles or Sections of this Agreement,
9.7 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, or, in the case of a subsequent Holder of any Restristrable Securities, at the facsimile number furnished by such subsequent Holder to the Company and the other Holders in writing), with confirmation of receipt made by both telephone and printed confirmation sheet verifying successful transmission of the facsimile; (ii) two business day 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 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, or, in the case of a subsequent Holder of any Registrable Securities, at the address or facsimile number furnished by such subsequent Holder to the Company and the other Holders in writing. 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.
9.8 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.
9.9 Amendments and Waivers.
Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only by the written consent of the Parties and each subsequent Holder of any Registrable Securities. No delay or omission to exercise any right, power, or remedy accruing to any Party, upon any breach, default or noncompliance by another Party under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. 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 9.9 shall be binding upon each of the Parties hereto and their successors and permitted assigns. All remedies, either under this Agreement, by law, or otherwise afforded to any Party shall be cumulative and not alternative.
9.10 Severability.
If any provisions of this Agreement shall be held to be unenforceable under applicable law, such provision 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.
9.11 Entire Agreement.
This Agreement, the other 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 Limited and the Investors) constitute the entire agreement and understanding among the Parties with respect to the subject matter hereof and supersedes any and all prior negotiations, correspondence, agreements, understandings, duties
or obligations between 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.
9.12 Interpretation.
Unless a provision in this Agreement 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.
9.13 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 will be implied because this Agreement was prepared by or at the request of any Party or its counsel.
9.14 Specific Performance.
Each of the Parties hereto recognizes and acknowledges that a breach by it of any covenants or agreements contained in this Agreement will cause the other Party to sustain damage for which it would not have an adequate remedy at law for money damages, and therefore each of the Parties hereto agrees that in the event of any such breach the aggrieved Party shall be entitled to the remedy of specific performance of such covenants and agreements and injunctive and other equitable relief in addition to any other remedy to which it may be entitled, at law or in equity.
9.15 Aggregation of Stock.
All Registrable Securities 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.
[The remainder of this page has been intentionally left blank.]
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed by its duly authorized officers as of the day and year first above written.
AGRIA CORPORATION
By /s/ Lai Guanglin ------------------------------------- Name: Title: |
TPG GROWTH AC LTD.
By /s/ Clive Bode ------------------------------------- Name: Clive Bode Title: Vice President and Secretary |
TPG BIOTECH II, LTD.
By /s/ Clive Bode ------------------------------------- Name: Clive Bode Title: Vice President and Secretary |
SIGNATURE PAGE TO THE REGISTRATION RIGHTS AGREEMENT
EXHIBIT 4.16
EXECUTION COPY
June 22, 2007
UNDERTAKING LETTER
To:
Brothers Capital Limited
TPG Growth AC Ltd.
TPG Biotech II, Ltd.
This letter agreement is being delivered by the undersigned in connection with your investment in Agria Corporation (the "Company").
We hereby agree to the following:
1. Each signatory will use reasonable best efforts to, and the Company will
use its reasonable best efforts to cause each shareholder of the Company
(including TPG Growth AC Ltd., TPG Biotech II, Ltd. and Dubai Investment Group)
to, enter into a new agreement regarding share transfers, the memorandum and
articles of association of the Company (the "M&A") and a new registration rights
agreement, in each case, that supplements prior similar agreements or the
relevant provisions of each such agreements to which such shareholder is a
party, as soon as possible but no later than the public filing date of the
Company's Registration Statement on Form F-1 with the United States Securities
and Exchange Commission (or the public filing date of the Company's offering
circulars in other jurisdictions). The parties intend that the agreement
regarding share transfers and the M&A will grant each shareholder of the Company
substantially similar co-sale rights, rights of first refusal and pre-emptive
rights and will impose on each shareholder of the Company substantially similar
restrictions on transfer of its shares as well as (to the extent applicable to
such shareholder) clarify the relationship between the M&A and the investment
agreements of certain of the shareholders. The parties intend that the
registration rights agreement will grant each shareholder of the Company
equivalent piggyback and demand registration rights (to the extent such
shareholder currently enjoys demand registration rights). The rights of TPG
Growth AC Ltd. and TPG Biotech II, Ltd as holders of the preferred shares of the
Company will not be changed. Each party's put right (or redemption right) and
rights with respect to the Company's corporate governance will not be changed.
2. This letter agreement and, to the fullest extent permitted by applicable law, all matters arising out of or relating to this letter agreement, shall be governed by and construed in accordance with the law of the State of New York, United States of America.
3. Any dispute, controversy or claim (each, a "Dispute") arising out of or relating to this letter 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. 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"). The arbitration shall be conducted in 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. 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. However, if such rules are in conflict with the provisions of this section, including the provisions concerning the appointment of arbitrator, the provisions of this section shall prevail. 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. 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. 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. During the course of the arbitration tribunal's adjudication of the dispute, this letter agreement shall continue to be performed except with respect to the part in dispute and under adjudication. 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.
Please indicate your acceptance of the provisions hereof by signing the enclosed copy of this letter agreement and returning to the Company.
[Signature page to follow]
Very truly yours,
Agria Corporation
By: /s/ ------------------------------------ Name: Title: Date |
ACKNOWLEDGED AND AGREED TO:
Brothers Capital Limited
By: /s/ --------------------------------- Name: Title: |
TPG Growth AC Ltd.
By: /s/ Clive Bode --------------------------------- Name: Clive Bode Title: Vice President and Secretary |
TPG Biotech II, Ltd.
By: /s/ Clive Bode --------------------------------- Name: Clive Bode Title: Vice President and Secretary |
Signature Page to the Undertaking Letter
EXHIBIT 4.17
EXECUTION COPY
DEED OF ADHERENCE
THIS DEED OF ADHERENCE (this "Agreement") dated as of August 30, 2007 is made by and between Dubai Investment Group L.L.C, a company incorporated in the Cayman Islands with its registered office at c/o Paget Brown Trust Company Ltd, West Wind Building, Harbour Drive, P.O. Box 1111, George Town, Grand Cayman, British West Indies ("DIG"), and Agria Corporation, an exempted company incorporated in the Cayman Islands (the "Company").
WHEREAS, the Company, TPG Growth AC Ltd. and TPG Biotech II, Ltd. have entered into that certain registration rights agreement dated as of June 22, 2007 (the "Registration Rights Agreement").
WHEREAS, TPG Growth AC Ltd. and TPG Biotech II, Ltd. (together, "TPG"), the Company and DIG have agreed that DIG shall execute this Agreement confirming its agreement to be bound by the provisions of the Registration Rights Agreement, with all of the rights and obligations of a Holder of Registrable Securities thereunder (as such terms are defined in the Registration Rights Agreement).
NOW IT IS AGREED AS FOLLOWS:
Section 1. Adherence to Registration Rights Agreement. DIG hereby agrees with each party to the Registration Rights Agreement that it will comply with and be bound by all of the provisions of the Registration Rights Agreement (a copy of which has been delivered to DIG and which has been initialed by DIG and is attached hereto for identification) in all respects as if DIG were a party to the Registration Rights Agreement and were named therein as a party, and on the basis that references therein to "Holder(s)" shall include a separate reference to DIG, and the ordinary shares (and any other shares of capital stock) held by DIG shall constitute "Registrable Securities" as defined therein.
Section 2. Entire Agreement. This Agreement sets forth the entire understanding and agreement of DIG and the Company with respect to the transactions contemplated hereby and supersedes and replaces any prior understanding, agreement or statement of intent, in each case written or oral, of any kind and every nature with respect hereto (including, without limitation, the provisions relating to registration rights contained in: (i) that certain placement agreement dated as of June 22, 2007 among Brothers Capital Limited, DIG and the Company, (ii) that certain investment agreement dated as of March 7, 2007 between Brothers Capital Limited and DIG and (iii) that certain supplemental agreement dated as of June 21, 2007 among Brothers Capital Limited, DIG and the Company. Any provision of this Agreement can only be amended or modified in whole or in part by an agreement in writing executed by the Company, TPG and DIG.
Section 3. Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS UNDER IT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF DIG has executed this Agreement as of the date first above written.
DUBAI INVESTMENT GROUP L.L.C.
By: /s/ ------------------------------------ Name: Title: |
AGRIA CORPORATION
By: /s/ Lai Guanglin ------------------------------------ Name: Lai Guanglin Title: Chairman |
Agreed to and Accepted:
TPG GROWTH AC LTD.
By /s/ Clive Bode ---------------------------------- Name: Clive Bode Title: Vice President and Secretary |
TPG BIOTECH II, LTD.
By /s/ Clive Bode ---------------------------------- Name: Clive Bode Title: Vice President and Secretary |
EXHIBIT 4.18
TRANSLATED FOR REFERENCE ONLY.
ENCLOSURE 12.5 (I)
LEASE OF LAND
Party A (Transferor): Taiyuan Relord Enterprise Development Group Co., Ltd.
Party B (Transferee): Primalights III Agriculture Development Co., Ltd.
Taiyuan Relord Enterprise Development Group Co., Ltd. (hereinafter referred to as "Party A") and Primalights III Agriculture Development Co., Ltd. (hereinafter referred to as "Party B") in compliance with the relevant laws and regulations of the People's Republic of China, through negotiation with the principle of mutual benefit and equality, in connection with the matters in transferring the forest ownership of Party A to Party B in red dates economic forest located at Shihou Village, Jiaochen County, entered into this agreement as follows:
(1) Location and Boundary
The forest land is located at Shihou Village, Jiaochen County, which includes four pieces of red date tree economic land with the total of 1,001 acres.
The size of first piece of land Huanchangdi is 260 acres, with boundary north to Jiabannian, south to Jianandi, west to Weizhedi and east to Jiaochendao.
The second piece of land Jianandi has total size of 260 acres, with boundary north to Huanlundi, south to Laopidi, west to Weizhedi, and east to Jiaochendao.
The third piece of land Laopidi has a total size of 332 acres, with boundary north to Jianandi, south to Ershisimudi, west to Weizhedi, and east to Jiaochendao.
The fourth piece of land Weizhedi has a total size of 149 acres, with boundary north to Jiabannian, south to Qianduozhe, west to Wayaohe and east to Jianandi.
(2) Transfer Fee and Payment
1. Ownership of the Forest.
Party A has already planted and grown a total of 200,200 date tress on the forest including 81,600 Junzao date trees and 118,600 pear date trees, whereby Party A managed to obtain the relevant ownership right certificate and holds full property right. Now, Party A transfers the ownership right of such forest that worth the full amount of RMB 43.6 million to Party B. Party B shall pay 50% of the total amount (i.e. RMB 21.8 million) to Party A within three months after the contact becomes effective. The remaining 50% of the total amount shall be paid off within half year after the contract becomes effective.
2. Fixed Assets and Land Lease Fee
Party B shall pay Party A the fixed assets and land rental fee of Shihou forest in the amount of RMB 1.2 million for the then current year before 13 November of each year starting from year 2007.
(3) Closing Time
The closing date of the transfer is 13 November 2006.
(4) Responsibilities, Rights and Obligations
1. Responsibilities and Obligations
a. Party A is obliged to assist Party B with relevant legal procedures and administer this transfer;
b. Party B is obliged to pay the transfer fee and rental fee as scheduled and in full amount.
2. Rights
a. Party A is entitled to receive the full amount of the transfer fee and rental fee;
b. Party B is entitled to the overall planning and development of the forest
(5) Default
Both parties must be abided by this Agreement. The defaulting party shall compensate the non-defaulting party for all losses thus incurred.
(6) Dispute and Resolution
All disputes arises during the execution period thereof shall be settled by friendly consultation. If no settlement can be reached through consultation, both parties shall resolve the case through legal proceedings in the judicial authority of Taiyuan, Shanxi Province.
(7) This Agreement is signed in quadruplicates, and each party hereto shall hold two copies. This Agreement shall be effective after it is sighed and sealed by both parties.
Taiyuan Relord Enterprise Development Group Co., Ltd.
Signature: /s/ Primalights III Agriculture Development Co., Ltd. Signature: /s/ Zhang Mingshe October 25, 2006 |
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Exhibit 5.1
Our ref RJT\630408\2177971v7
Your ref
Agria Corporation Direct: +852 2971 3007 Room 706, 7/F, Huantai Building, No. 12A Mobile: +852 9020 8007 South Street Zhongguancun E-mail: richard.thorp@maplesandcalder.com Haidian District, Beijing 100081 People's Republic of China |
18 October 2007
Dear Sirs
AGRIA CORPORATION
We have acted as Cayman Islands legal advisers to Agria Corporation (the "COMPANY") in connection with the Company's registration statement on Form F-1, including all amendments or supplements thereto (the "REGISTRATION STATEMENT"), confidentially submitted with the Securities and Exchange Commission under the U.S. Securities Act of 1933 on 16 July 2007 and as amended on 31 August 2007 and 4 October 2007, relating to the offering by the Company and the sale by the selling shareholders (the "SELLING SHAREHOLDERS") of certain American Depositary Shares representing the Company's Ordinary Shares of par value US$0.0000001 each (the "ORDINARY SHARES"). We are furnishing this opinion as Exhibit 5.1 to the Registration Statement.
1 DOCUMENTS REVIEWED
For the purposes of this opinion, we have reviewed only originals, copies or final drafts of the following documents:
1.1 the Certificate of Incorporation dated 14 May 2007, the Amended and Restated Memorandum and Articles of Association of the Company as adopted by a special resolution passed on 22 June 2007, as amended on by an ordinary resolution passed on 15 August 2007 and the Amended and Restated Memorandum and Articles of Association of the Company as conditionally adopted by special resolution passed on 5 October 2007 (the "MEMORANDUM AND ARTICLES OF ASSOCIATION");
1.2 the register of members of the Company;
1.3 the written resolutions of the board of Directors dated 29 September 2007;
1.4 a certificate from a Director of the Company addressed to this firm dated 9 October 2007, a copy of which is attached hereto (the "DIRECTOR'S CERTIFICATE"); and
1.5 the Registration Statement.
2 ASSUMPTIONS
Save as aforesaid we have not been instructed to undertake and have not undertaken any further enquiry or due diligence in relation to the transaction the subject of this opinion. The following opinions are given only as to and based on circumstances and matters of fact existing at the date hereof and of which we are aware consequent upon the instructions we have received in relation to the matter the subject of this opinion and as to the laws of the Cayman Islands as the same are in force at the date hereof. In giving this opinion, we have relied upon the completeness and accuracy (and assumed the continuing completeness and accuracy as at the date hereof) of the Director's Certificate as to matters of fact without further verification and have relied upon the following assumptions, which we have not independently verified:
(i) Copy documents or drafts of documents provided to us are true and complete copies of, or in the final forms of, the originals.
(ii) The genuineness of all signatures and seals.
3 OPINION
The following opinions are given only as to matters of Cayman Islands law and we have assumed that there is nothing under any other law that would affect or vary the following opinions.
Based upon the foregoing and subject to the qualifications set out below and having regard to such legal considerations as we deem relevant, we are of the opinion that:
3.1 The Company has been duly incorporated as an exempted company with limited liability for an unlimited duration and is validly existing under the laws of the Cayman Islands.
3.2 The authorised share capital of the Company is US$50,000 divided into (i) 499,900,000,000 ordinary shares of par value US$0.0000001 each and (ii) 100,000,000 preferred shares of par value US$0.0000001 each.
3.3 The issue and allotment of the Ordinary Shares has been duly authorised. When allotted, issued and paid for as contemplated in the Registration Statement and registered in the register of members (shareholders), the Ordinary Shares will be legally issued and allotted, fully paid and non-assessable.
3.4 Ordinary Shares to be sold by the Selling Shareholders have been legally and validly issued as fully paid and non-assessable.
3.5 The statements under the caption "Taxation" in the prospectus forming part of the Registration Statement, to the extent that they constitute statements of Cayman Islands law, are accurate in all material respects and that such statements constitute our opinion.
4 QUALIFICATIONS
Except as specifically stated herein, we make no comment with respect to any representations and warranties which may be made by or with respect to the Company in the Registration Statement or otherwise with respect to the commercial terms of the transactions the subject of this opinion.
We hereby consent to the use of this opinion in, and the filing hereof as an Exhibit to, the Registration Statement and to the reference to our name under the headings "Enforceability of Civil Liabilities", "Taxation" and "Legal Matters" and elsewhere in the prospectus included in the Registration Statement. In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the U.S. Securities Act of 1933, as amended, or the Rules and Regulations of the Commission thereunder.
Yours faithfully
/s/ MAPLES and CALDER MAPLES AND CALDER |
AGRIA CORPORATION
PO Box 309GT, Ugland House
South Church Street, George Town,
Grand Cayman, Cayman Islands
Maples and Calder
1504 One International Finance Centre
1 Harbour View Street
Hong Kong
9 October 2007
Dear Sirs
AGRIA CORPORATION (THE "COMPANY")
I, Gary Kim Ting Yeung, being a director of the Company, am aware that you are being asked to provide a legal opinion (the "OPINION") in relation to certain aspects of Cayman Islands law. Capitalized terms used in this certificate have the meaning given to them in the Opinion. I hereby certify that:
1 The amended and restated memorandum and articles of association of the Company as adopted by a special resolution passed on 22 June 2007, as amended by ordinary resolutions passed on 15 August 2007 and the further amended and restated memorandum and articles of association as adopted conditionally on the IPO by a special resolution passed on 5 October 2007 remain in full force and effect and are otherwise unamended.
2 The written resolutions of Directors dated 29 September 2007 (the "DIRECTORS' RESOLUTIONS") were signed by all the Directors in the manner prescribed in the Articles of Association of the Company.
3 The written resolutions of the shareholders of the Company dated 5 October 2007 (this together with the Directors' Resolutions are referred to as "RESOLUTIONS") were signed by all the shareholders in the manner prescribed in the Articles of Association of the Company.
4 The shareholders of the Company have not restricted or limited the powers of the directors in any way. There is no contractual or other prohibition (other than as arising under Cayman Islands law binding on the Company prohibiting it from entering into and performing its obligations under the Agreements.
5 The resolutions passed in the Resolutions were duly adopted, are in full force and effect at the date hereof and have not been amended, varied or revoked in any respect.
6 The ordinary shares held by the Selling Shareholders have been issued as fully paid.
Signature: /s/ Gary Kim Ting Yeung --------------------------- Director |
EXHIBIT 8.1
53rd at Third
885 Third Avenue
New York, New York 10022-4834
Tel: (212) 906-1200
Fax: (212) 751-4864
www.lw.com
(LATHAM & WATKINS LLP LOGO) FIRM / AFFILIATE OFFICES
Barcelona New Jersey Brussels New York Chicago Northern Virginia October 18, 2007 Frankfurt Orange County Hamburg Paris Hong Kong San Diego London San Francisco Agria Corporation Los Angeles Shanghai Room 706, 7/F, Huantai Building, No. 12A Madrid Silicon Valley South Street Zhongguancun Milan Singapore Haidian District, Beijing 100081 Moscow Tokyo People's Republic of China Munich Washington, D.C. |
Re: American Depositary Shares of Agria Corporation (the "Company")
Ladies and Gentlemen:
In connection with the public offering of American Depositary Shares ("ADSs") representing ordinary shares (the "Ordinary Shares") of the Company pursuant to the registration statement on Form F-1 under the Securities Act of 1933, as amended (the "Act"), originally filed by the Company with the Securities and Exchange Commission (the "Commission") on October 18, 2007 (the "Registration Statement"), you have requested our opinion concerning the statements in the Registration Statement under the caption "Taxation--United States Federal Income Taxation."
The facts, as we understand them, and upon which with your permission we rely in rendering the opinion herein, are set forth in the Registration Statement and the Company's responses to our examinations and inquiries.
In our capacity as counsel to the Company, we have made such legal and factual examinations and inquiries, including an examination of originals or copies certified or otherwise identified to our satisfaction of such documents, corporate records and other instruments as we have deemed necessary or appropriate for purposes of this opinion. In our examination, we have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures thereon, the legal capacity of natural persons executing such documents and the conformity to authentic original documents of all documents submitted to us as copies. For the purpose of our opinion, we have not made an independent investigation, or audit of the facts set forth in the above-referenced documents.
We are opining herein as to the effect on the subject transaction only of the federal income tax laws of the United States and we express no opinion with respect to the applicability thereto, or the effect thereon, of other federal laws, the laws of any state or any
October 18, 2007
(LATHAM & WATKINS LLP LOGO)
other jurisdiction or as to any matters of municipal law or the laws of any other local agencies within any state.
Based on such facts and subject to the limitations set forth in the Registration Statement, the statements of law or legal conclusions in the Registration Statement under the caption "Taxation--United States Federal Income Taxation" constitute the opinion of Latham & Watkins LLP as to the material United States federal income tax consequences of an investment in the ADSs or the Ordinary Shares.
No opinion is expressed as to any matter not discussed herein.
This opinion is rendered to you as of the date of this letter, and we undertake no obligation to update this opinion subsequent to the date hereof. This opinion is based on various statutory provisions, regulations promulgated thereunder and interpretations thereof by the Internal Revenue Service and the courts having jurisdiction over such matters, all of which are subject to change either prospectively or retroactively. Also, any variation or difference in the facts from those set forth in the Registration Statement may affect the conclusions stated herein.
This opinion is furnished to you, and is for your use in connection with the transactions set forth in the Registration Statement. This opinion may not be relied upon by you for any other purpose. However, this opinion may be relied upon by persons entitled to rely on it pursuant to applicable provisions of federal securities law.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name under the captions "Legal Matters" and "Taxation" in the Registration Statement. In giving such consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Act or the rules or regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ Latham & Watkins LLP Latham & Watkins LLP |
EXHIBIT 10.1
AGRIA CORPORATION
2007 SHARE INCENTIVE PLAN
ARTICLE 1
PURPOSE
The purpose of this 2007 Share Incentive Plan (the "Plan") is to promote the success and enhance the value of Agria Corporation, a company formed under the laws of the Cayman Islands (the "Company") by linking the personal interests of the members of the Board, Employees, and Consultants to those of the Company shareholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to the Company shareholders. The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of members of the Board, Employees, and Consultants upon whose judgment, interest, and special effort the successful conduct of the Company's operation is largely dependent.
ARTICLE 2
DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the context so indicates.
2.1 "Applicable Laws" means the legal requirements relating to the Plan and the Awards under applicable provisions of the corporate, securities, tax and other laws, rules, regulations and government orders, and the rules of any applicable Share exchange or national market system, of any jurisdiction applicable to Awards granted to residents therein.
2.2 "Award" means an Option, a Restricted Share award, a Share Appreciation Right award, a Dividend Equivalents award, a Share Payment award, a Deferred Share award, or a Restricted Share Unit award granted to a Participant pursuant to the Plan.
2.3 "Award Agreement" means any written agreement, contract, or other instrument or document evidencing an Award, including through electronic medium.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Change in Control" means a change in ownership or control of the Company effected through either of the following transactions:
(a) the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3
of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's shareholders which a majority of the Incumbent Board (as defined below) who are not affiliates or associates of the offeror under Rule 12b-2 promulgated under the Exchange Act do not recommend such shareholders accept, or
(b) the individuals who, as of the Effective Date, are members of the Board (the "Incumbent Board"), cease for any reason to constitute at least fifty percent (50%) of the Board; provided that if the election, or nomination for election by the Company's shareholders, of any new member of the Board is approved by a vote of at least fifty percent (50%) of the Incumbent Board, such new member of the Board shall be considered as a member of the Incumbent Board.
2.6 "Code" means the Internal Revenue Code of 1986 of the United States, as amended.
2.7 "Committee" means the committee of the Board described in Article 11.
2.8 "Consultant" means any consultant or adviser if: (a) the consultant or adviser renders bona fide services to a Service Recipient; (b) the services rendered by the consultant or adviser are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities; and (c) the consultant or adviser is a natural person who has contracted directly with the Service Recipient to render such services.
2.9 "Corporate Transaction" means any of the following transactions, provided, however, that the Committee shall determine under (d) and (e) whether multiple transactions are related, and its determination shall be final, binding and conclusive:
(a) an amalgamation, arrangement or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the jurisdiction in which the Company is incorporated;
(b) the sale, transfer or other disposition of all or substantially all of the assets of the Company;
(c) the complete liquidation or dissolution of the Company;
(d) any reverse takeover or series of related transactions culminating in a reverse takeover (including, but not limited to, a tender offer followed by a reverse takeover) in which the Company is the surviving entity but (A) the Ordinary Shares outstanding immediately prior to such takeover are converted or exchanged by virtue of the takeover into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such takeover or the initial transaction culminating in such takeover, but excluding any such transaction or series of related transactions that the Committee determines shall not be a Corporate Transaction; or
(e) acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities but excluding any such transaction or series of related transactions that the Committee determines shall not be a Corporate Transaction.
2.10 "Deferred Share" means a right to receive a specified number of Shares during specified time periods pursuant to Article 8.
2.11 "Disability" means that the Participant qualifies to receive long-term disability payments under the Service Recipient's long-term disability insurance program, as it may be amended from time to time, to which the Participant provides services regardless of whether the Participant is covered by such policy. If the Service Recipient to which the Participant provides service does not have a long-term disability plan in place, "Disability" means that a Participant is unable to carry out the responsibilities and functions of the position held by the Participant by reason of any medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days. A Participant will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Committee in its discretion.
2.12 "Dividend Equivalents" means a right granted to a Participant pursuant to Article 8 to receive the equivalent value (in cash or Share) of dividends paid on Share.
2.13 "Effective Date" shall have the meaning set forth in Section 12.1.
2.14 "Employee" means any person, including an officer or member of the Board of the Company, any Parent or Subsidiary of the Company, who is in the employ of a Service Recipient, subject to the control and direction of the Service Recipient as to both the work to be performed and the manner and method of performance. The payment of a director's fee by a Service Recipient shall not be sufficient to constitute "employment" by the Service Recipient.
2.15 "Exchange Act" means the Securities Exchange Act of 1934 of the United States, as amended.
2.16 "Fair Market Value" means, as of any date, the value of Shares determined as follows:
(a) If the Shares are listed on one or more established Share exchanges or national market systems, including without limitation, The New York Stock Exchange, The Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Share Market, its Fair Market Value shall be the closing sales price for such shares (or the closing bid, if no sales were reported) as quoted on the principal exchange or system on which the Shares are listed (as determined by the Committee) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable;
(b) If the Shares are regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, its Fair Market Value shall be the closing sales price for such shares as quoted on such system or by such securities dealer on the date of determination, but if selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for the Shares on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Committee deems reliable; or
(c) In the absence of an established market for the Shares of the type described in (i) and (ii), above, the Fair Market Value thereof shall be determined by the Committee in good faith by reference to the placing price of the latest private placement of the Shares and the development of the Company's business operations and the general economic and market conditions since such latest private placement.
2.17 "Incentive Share Option" means an Option that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.
2.18 "Independent Director" means a member of the Board who is not an Employee of the Company.
2.19 "Non-Employee Director" means a member of the Board who qualifies as a "Non-Employee Director" as defined in Rule 16b-3(b)(3) of the Exchange Act, or any successor definition adopted by the Board.
2.20 "Non-Qualified Share Option" means an Option that is not intended to be an Incentive Share Option.
2.21 "Option" means a right granted to a Participant pursuant to Article 5 of the Plan to purchase a specified number of Shares at a specified price during specified time periods. An Option may be either an Incentive Share Option or a Non-Qualified Share Option.
2.22 "Participant" means a person who, as a member of the Board, Consultant or Employee, has been granted an Award pursuant to the Plan.
2.23 "Parent" means a parent corporation under Section 424(e) of the Code.
2.24 "Plan" means this Agria Corporation Share Incentive Plan, as it may be amended from time to time.
2.25 "PRC" means the People's Republic of China.
2.26 "Related Entity" means any business, corporation, partnership, limited liability company or other entity in which the Company, a Parent or Subsidiary of the Company holds a substantial ownership interest, directly or indirectly but which is not a Subsidiary and which the Board designates as a Related Entity for purposes of the Plan.
2.27 "Restricted Share" means a Share awarded to a Participant pursuant to Article 6 that is subject to certain restrictions and may be subject to risk of forfeiture.
2.28 "Restricted Share Unit" means an Award granted pursuant to Section 8.6.
2.29 "Securities Act" means the Securities Act of 1933 of the United States, as amended.
2.30 "Service Recipient" means the Company, any Parent or Subsidiary of the Company and any Related Entity to which a Participant provides services as an Employee, Consultant or as a Director.
2.31 "Share" means the ordinary share capital of the Company, par value $0.001 per share, and such other securities of the Company that may be substituted for Shares pursuant to Article 10.
2.32 "Share Appreciation Right" or "SAR" means a right granted pursuant to Article 7 to receive a payment equal to the excess of the Fair Market Value of a specified number of Shares on the date the SAR is exercised over the Fair Market Value on the date the SAR was granted as set forth in the applicable Award Agreement.
2.33 "Share Payment" means (a) a payment in the form of Shares, or (b) an option or other right to purchase Shares, as part of any bonus, deferred compensation or other arrangement, made in lieu of all or any portion of the compensation, granted pursuant to Article 8.
2.34 "Subsidiary" means any corporation or other entity of which a majority of the outstanding voting shares or voting power is beneficially owned directly or indirectly by the Company.
2.35 "Trading Date" means the closing of the first sale to the general public of the Shares pursuant to a registration statement filed with and declared effective by the U.S. Securities and Exchange Commission under the Securities Act.
ARTICLE 3
SHARES SUBJECT TO THE PLAN
3.1 Number of Shares.
(a) Subject to the provisions of Article 10 and Section 3.1(b), the maximum aggregate number of Shares which may be issued pursuant to all Awards is 1,500 Shares (the "Initial Pool"), plus an increase of 500 Shares when and if the Initial Pool has been fully used pursuant to the Awards granted under the Plan and the Board approves such increase.
(b) To the extent that an Award terminates, expires, or lapses for any reason, any Shares subject to the Award shall again be available for the grant of an Award pursuant to the Plan. To the extent permitted by Applicable Law, Shares issued in assumption of, or in
substitution for, any outstanding awards of any entity acquired in any form or
combination by the Company or any Parent or Subsidiary of the Company shall not
be counted against Shares available for grant pursuant to the Plan. Shares
delivered by the Participant or withheld by the Company upon the exercise of any
Award under the Plan, in payment of the exercise price thereof or tax
withholding thereon, may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 3.1(a), If any Restricted Shares are
forfeited by the Participant or repurchased by the Company, such Shares may
again be optioned, granted or awarded hereunder, subject to the limitations of
Section 3.1(a). Notwithstanding the provisions of this Section 3.1(b), no Shares
may again be optioned, granted or awarded if such action would cause an
Incentive Share Option to fail to qualify as an incentive share option under
Section 422 of the Code.
3.2 Shares Distributed. Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares, treasury or Shares purchased on the open market. Additionally, in the discretion of the Committee, American Depository Shares in an amount equal to the number of Shares which otherwise would be distributed pursuant to an Award may be distributed in lieu of Shares in settlement of any Award. If the number of Shares represented by an American Depository Share is other than on a one-to-one basis, the limitations of Section 3.1 shall be adjusted to reflect the distribution of American Depository Shares in lieu of Shares.
ARTICLE 4
ELIGIBILITY AND PARTICIPATION
4.1 Eligibility. Persons eligible to participate in this Plan include Employees, Consultants and all members of the Board, as determined by the Committee.
4.2 Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select from among all eligible individuals, those to whom Awards shall be granted and shall determine the nature and amount of each Award. No individual shall have any right to be granted an Award pursuant to this Plan.
4.3 Jurisdictions. In order to assure the viability of Awards granted to Participants employed in various jurisdictions, the Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom applicable in the jurisdiction in which the Participant resides or is employed. Moreover, the Committee may approve such supplements to, or amendments, restatements, or alternative versions of, the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan as in effect for any other purpose; provided, however, that no such supplements, amendments, restatements, or alternative versions shall increase the share limitations contained in Section 3.1 of the Plan. Notwithstanding the foregoing, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate any Applicable Laws.
ARTICLE 5
OPTIONS
5.1 General. The Committee is authorized to grant Options to Participants on the following terms and conditions:
(a) Exercise Price. The exercise price per Share subject to an Option shall be determined by the Committee and set forth in the Award Agreement which may be a fixed or variable price related to the Fair Market Value of the Shares; provided, however, that no Option may be granted to an individual subject to taxation in the United States at less than the Fair Market Value on the date of grant.
(b) Time and Conditions of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part, including exercise prior to vesting; provided that the term of any Option granted under the Plan shall not exceed ten years, except as provided in Section 12.2. The Committee shall also determine any conditions, if any, that must be satisfied before all or part of an Option may be exercised. Upon exercise of an Option pursuant to the terms of this Plan and the related Award Agreement, only Shares but not any other form of securities or consideration may be issued or given to a Participant.
(c) Payment. The Committee shall determine the methods by which the exercise price of an Option may be paid, the form of payment, including, without limitation (i) cash or check denominated in U.S. Dollars, (ii) cash or check in Chinese Renminbi, (iii) cash or check denominated in any other local currency as approved by the Committee, (iv) Shares held for such period of time as may be required by the Committee in order to avoid adverse financial accounting consequences and having a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof, (v) after the Trading Date the delivery of a notice that the Participant has placed a market sell order with a broker with respect to Shares then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price; provided that payment of such proceeds is then made to the Company upon settlement of such sale), and the methods by which Shares shall be delivered or deemed to be delivered to Participants (vi) other property acceptable to the Committee with a Fair Market Value equal to the exercise price, or (vii) any combination of the foregoing. Notwithstanding any other provision of the Plan to the contrary, no Participant who is a member of the Board or an "executive officer" of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to pay the exercise price of an Option in any method which would violate Section 13(k) of the Exchange Act.
(d) Evidence of Grant. All Options shall be evidenced by an Award Agreement between the Company and the Participant. The Award Agreement shall include such additional provisions as may be specified by the Committee.
5.2 Incentive Share Options. Incentive Share Options shall be granted only to Employees of the Company, a Parent or Subsidiary of the Company. Incentive Share Options may not be granted to Employees of a Related Entity. The terms of any Incentive Share Options
granted pursuant to the Plan, in addition to the requirements of Section 5.1, must comply with the following additional provisions of this Section 5.2:
(a) Expiration of Option. An Incentive Share Option may not be exercised to any extent by anyone after the first to occur of the following events:
(i) Ten years from the date it is granted, unless an earlier time is set in the Award Agreement;
(ii) Three months after the Participant's termination of employment as an Employee; and
(iii) One year after the date of the Participant's termination of employment or service on account of Disability or death. Upon the Participant's Disability or death, any Incentive Share Options exercisable at the Participant's Disability or death may be exercised by the Participant's legal representative or representatives, by the person or persons entitled to do so pursuant to the Participant's last will and testament, or, if the Participant fails to make testamentary disposition of such Incentive Share Option or dies intestate, by the person or persons entitled to receive the Incentive Share Option pursuant to the applicable laws of descent and distribution.
(b) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the time the Option is granted) of all Shares with respect to
which Incentive Share Options are first exercisable by a Participant in any
calendar year may not exceed $100,000 or such other limitation as imposed by
Section 422(d) of the Code, or any successor provision. To the extent that
Incentive Share Options are first exercisable by a Participant in excess of such
limitation, the excess shall be considered Non-Qualified Share Options.
(c) Ten Percent Owners. An Incentive Share Option shall be granted to any individual who, at the date of grant, owns Shares possessing more than ten percent of the total combined voting power of all classes of shares of the Company only if such Option is granted at a price that is not less than 110% of Fair Market Value on the date of grant and the Option is exercisable for no more than five years from the date of grant.
(d) Transfer Restriction. The Participant shall give the Company prompt notice of any disposition of Shares acquired by exercise of an Incentive Share Option within (i) two years from the date of grant of such Incentive Share Option or (ii) one year after the transfer of such Shares to the Participant.
(e) Expiration of Incentive Share Options. No Award of an Incentive Share Option may be made pursuant to this Plan after the tenth anniversary of the Effective Date.
(f) Right to Exercise. During a Participant's lifetime, an Incentive Share Option may be exercised only by the Participant.
ARTICLE 6
RESTRICTED SHARES
6.1 Grant of Restricted Shares. The Committee is authorized to make Awards of Restricted Shares to any Participant selected by the Committee in such amounts and subject to such terms and conditions as determined by the Committee. All Awards of Restricted Shares shall be evidenced by an Award Agreement.
6.2 Issuance and Restrictions. Restricted Shares shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Shares or the right to receive dividends on the Restricted Share). These restrictions may lapse separately or in combination at such times, pursuant to such circumstances, in such installments, or otherwise, as the Committee determines at the time of the grant of the Award or thereafter.
6.3 Forfeiture. Except as otherwise determined by the Committee at the time of the grant of the Award or thereafter, upon termination of employment or service during the applicable restriction period, Restricted Shares that are at that time subject to restrictions shall be forfeited; provided, however, the Committee may (a) provide in any Restricted Share Award Agreement that restrictions or forfeiture conditions relating to Restricted Shares will be waived in whole or in part in the event of terminations resulting from specified causes, and (b) in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted Shares.
6.4 Certificates for Restricted Shares. Restricted Shares granted pursuant to the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Shares are registered in the name of the Participant, certificates must bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Shares, and the Company may, at its discretion, retain physical possession of the certificate until such time as all applicable restrictions lapse.
ARTICLE 7
SHARE APPRECIATION RIGHTS
7.1 Grant of Share Appreciation Rights.
(a) A Share Appreciation Right may be granted to any Participant selected by the Committee. A Share Appreciation Right shall be subject to such terms and conditions not inconsistent with the Plan as the Committee shall impose and shall be evidenced by an Award Agreement.
(b) A Share Appreciation Right shall entitle the Participant (or other person entitled to exercise the Share Appreciation Right pursuant to the Plan) to exercise all or a specified portion of the Share Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price per share of the Share Appreciation Right from the Fair Market Value of a Share on the date of exercise of the Share Appreciation Right by the
number of Shares with respect to which the Share Appreciation Right shall have been exercised, subject to any limitations the Committee may impose.
7.2 Payment and Limitations on Exercise.
(a) Payment of the amounts determined under Section 7.1(b) above shall be in cash, in Shares (based on its Fair Market Value as of the date the Share Appreciation Right is exercised) or a combination of both, as determined by the Committee in the Award Agreement.
(b) To the extent any payment under Section 7.1(b) is effected in Shares it shall be made subject to satisfaction of all provisions of Article 5 above pertaining to Options.
ARTICLE 8
OTHER TYPES OF AWARDS
8.1 Dividend Equivalents. Any Participant selected by the Committee may be granted Dividend Equivalents based on the dividends declared on the Shares that are subject to any Award, to be credited as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, vests or expires, as determined by the Committee. Such Dividend Equivalents shall be converted to cash or additional Shares by such formula and at such time and subject to such limitations as may be determined by the Committee.
8.2 Share Payments. Any Participant selected by the Committee may receive Share Payments in the manner determined from time to time by the Committee; provided, that unless otherwise determined by the Committee such Share Payments shall be made in lieu of base salary, bonus, or other cash compensation otherwise payable to such Participant. The number of shares shall be determined by the Committee and may be based upon the Performance Criteria or other specific criteria determined appropriate by the Committee, determined on the date such Share Payment is made or on any date thereafter.
8.3 Deferred Shares. Any Participant selected by the Committee may be granted an award of Deferred Shares in the manner determined from time to time by the Committee. The number of shares of Deferred Shares shall be determined by the Committee and may be linked to such specific criteria determined to be appropriate by the Committee, in each case on a specified date or dates or over any period or periods determined by the Committee. Shares underlying a Deferred Share award will not be issued until the Deferred Share award has vested, pursuant to a vesting schedule or criteria set by the Committee. Unless otherwise provided by the Committee, a Participant awarded Deferred Shares shall have no rights as a Company shareholder with respect to such Deferred Shares until such time as the Deferred Share Award has vested and the Shares underlying the Deferred Share Award has been issued.
8.4 Restricted Share Units. The Committee is authorized to make Awards of Restricted Share Units to any Participant selected by the Committee in such amounts and subject to such terms and conditions as determined by the Committee. At the time of grant, the Committee shall specify the date or dates on which the Restricted Share Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate.
At the time of grant, the Committee shall specify the maturity date applicable to each grant of Restricted Share Units which shall be no earlier than the vesting date or dates of the Award and may be determined at the election of the grantee. On the maturity date, the Company shall transfer to the Participant one unrestricted, fully transferable Share for each Restricted Share Unit scheduled to be paid out on such date and not previously forfeited. The Committee shall specify the purchase price, if any, to be paid by the grantee to the Company for such Shares.
8.5 Term. Except as otherwise provided herein, the term of any Award of Dividend Equivalents, Share Payments, Deferred Share, or Restricted Share Units shall be set by the Committee in its discretion.
8.6 Exercise or Purchase Price. The Committee may establish the exercise or purchase price, if any, of any Award of Deferred Share, Share Payments or Restricted Share Units; provided, however, that such price shall not be less than the par value of a Share, unless otherwise permitted by Applicable Law.
8.7 Exercise Upon Termination of Employment or Service. An Award of Dividend Equivalents, Deferred Share, Share Payments, and Restricted Share Units shall only be exercisable or payable while the Participant is an Employee, Consultant or a member of the Board, as applicable; provided, however, that the Committee in its sole and absolute discretion may provide that an Award of Dividend Equivalents, Share Payments, Deferred Share, or Restricted Share Units may be exercised or paid subsequent to a termination of employment or service, as applicable, or following a Change of Control of the Company, or because of the Participant's retirement, death or Disability, or otherwise.
8.8 Form of Payment. Payments with respect to any Awards granted under this Article 8 shall be made in cash, in Shares or a combination of both, as determined by the Committee.
8.9 Award Agreement. All Awards under this Article 8 shall be subject to such additional terms and conditions as determined by the Committee and shall be evidenced by an Award Agreement.
ARTICLE 9
PROVISIONS APPLICABLE TO AWARDS
9.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in the discretion of the Committee, be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.
9.2 Award Agreement. Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions and limitations for each Award which may include the term of an Award, the provisions applicable in the event the Participant's employment or service terminates, and the Company's authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award.
9.3 Limits on Transfer. No right or interest of a Participant in any Award may be pledged, encumbered, or hypothecated to or in favor of any party other than the Company or a Subsidiary, or shall be subject to any lien, obligation, or liability of such Participant to any other party other than the Company or a Subsidiary. Except as otherwise provided by the Committee, no Award shall be assigned, transferred, or otherwise disposed of by a Participant other than by will or the laws of descent and distribution. The Committee by express provision in the Award or an amendment thereto may permit an Award (other than an Incentive Share Option) to be transferred to, exercised by and paid to certain persons or entities related to the Participant, including but not limited to members of the Participant's family, charitable institutions, or trusts or other entities whose beneficiaries or beneficial owners are members of the Participant's family and/or charitable institutions, or to such other persons or entities as may be expressly approved by the Committee, pursuant to such conditions and procedures as the Committee may establish. Any permitted transfer shall be subject to the condition that the Committee receive evidence satisfactory to it that the transfer is being made for estate and/or tax planning purposes (or to a "blind trust" in connection with the Participant's termination of employment or service with the Company or a Subsidiary to assume a position with a governmental, charitable, educational or similar non-profit institution) and on a basis consistent with the Company's lawful issue of securities.
9.4 Beneficiaries. Notwithstanding Section 9.3, a Participant may, in the manner determined by the Committee, designate a beneficiary to exercise the rights of the Participant and to receive any distribution with respect to any Award upon the Participant's death. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Award Agreement applicable to the Participant, except to the extent the Plan and Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If the Participant is married and resides in a community property state, a designation of a person other than the Participant's spouse as his or her beneficiary with respect to more than 50% of the Participant's interest in the Award shall not be effective without the prior written consent of the Participant's spouse. If no beneficiary has been designated or survives the Participant, payment shall be made to the person entitled thereto pursuant to the Participant's will or the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Participant at any time provided the change or revocation is filed with the Committee.
9.5 Share Certificates. Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing shares of Share pursuant to the exercise of any Award, unless and until the Board has determined, with advice of counsel, that the issuance and delivery of such certificates is in compliance with all Applicable Laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the Shares are listed or traded. All Share certificates delivered pursuant to the Plan are subject to any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal, state, or foreign jurisdiction, securities or other laws, rules and regulations and the rules of any national securities exchange or automated quotation system on which the Shares are listed, quoted, or traded. The Committee may place legends on any Share certificate to reference restrictions applicable to the Share. In addition to the terms and conditions provided herein, the Board may require that a Participant make such reasonable covenants, agreements, and representations as the Board, in its discretion, deems advisable in
order to comply with any such laws, regulations, or requirements. The Committee shall have the right to require any Participant to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Committee.
9.6 Paperless Administration. Subject to Applicable Laws, the Committee may make Awards, provide applicable disclosure and procedures for exercise of Awards by an internet website or interactive voice response system for the paperless administration of Awards.
9.7 Foreign Currency. A Participant may be required to provide evidence that any currency used to pay the exercise price of any Award was acquired and taken out of the jurisdiction in which the Participant resides in accordance with Applicable Laws, including foreign exchange control laws and regulations. In the event the exercise price for an Award is paid in Chinese Renminbi or other foreign currency, as permitted by the Committee, the amount payable will be determined by conversion from U.S. dollars at the official rate promulgated by the People's Bank of China for Chinese Renminbi, or for jurisdictions other than the PRC, the exchange rate as selected by the Committee on the date of exercise.
ARTICLE 10
CHANGES IN CAPITAL STRUCTURE
10.1 Adjustments. In the event of any dividend, share split, combination or exchange of Shares, amalgamation, arrangement or consolidation, spin-off, recapitalization or other distribution (other than normal cash dividends) of Company assets to its shareholders, or any other change affecting the shares of Shares or the share price of a Share, the Committee shall make such proportionate and equity adjustments, if any, as the Committee in its discretion may deem appropriate to reflect such change with respect to (a) the aggregate number and type of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1); (b) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (c) the grant or exercise price per share for any outstanding Awards under the Plan.
10.2 Acceleration upon a Change of Control. Except as may otherwise be provided in any Award Agreement or any other written agreement entered into by and between the Company and a Participant, if a Change of Control occurs and a Participant's Options, Restricted Share or Share Appreciation Rights settled in Shares are not converted, assumed, or replaced by a successor, such Awards shall become fully exercisable and all forfeiture restrictions on such Awards shall lapse. Upon, or in anticipation of, a Change of Control, the Committee may in its sole discretion provide for (i) any and all Awards outstanding hereunder to terminate at a specific time in the future and shall give each Participant the right to exercise such Awards during a period of time as the Committee shall determine, (ii) either the purchase of any Award for an amount of cash equal to the amount that could have been attained upon the exercise of such Award or realization of the Participant's rights had such Award been currently exercisable or payable or fully vested (and, for the avoidance of doubt, if as of such date the Committee determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant' s rights, then such Award may be terminated by
the Company without payment), (iii) the replacement of such Award with other rights or property selected by the Committee in its sole discretion the assumption of or substitution of such Award by the successor or surviving corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of Shares and prices, or (iv) provide for payment of Awards in cash based on the value of Shares on the date of the Change of Control plus reasonable interest on the Award through the date such Award would otherwise be vested or have been paid in accordance with its original terms, if necessary to comply with Section 409A of the Code.
10.3 Outstanding Awards - Corporate Transactions. In the event of a Corporate Transaction, each Award will terminate upon the consummation of the Corporate Transaction, unless the Award is assumed by the successor entity or Parent thereof in connection with the Corporate Transaction. . Except as provided otherwise in an individual Award Agreement, in the event of a Corporate Transaction and:
(a) the Award either is (x) assumed by the successor entity or Parent
thereof or replaced with a comparable Award (as determined by the Committee)
with respect to shares of the capital stock of the successor entity or Parent
thereof or (y) replaced with a cash incentive program of the successor entity
which preserves the compensation element of such Award existing at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such Award, then such Award (if
assumed), the replacement Award (if replaced), or the cash incentive program
automatically shall become fully vested, exercisable and payable and be released
from any restrictions on transfer (other than transfer restrictions applicable
to Options) and repurchase or forfeiture rights, immediately upon termination of
the Participant's employment or service with all Service Recipient within twelve
(12) months of the Corporate Transaction without cause; and
(b) For each Award that is neither assumed nor replaced, such portion of the Award shall automatically become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair Market Value) for all of the Shares at the time represented by such portion of the Award, immediately prior to the specified effective date of such Corporate Transaction, provided that the Participant remains an Employee, Consultant or Director on the effective date of the Corporate Transaction.
10.4 Outstanding Awards - Other Changes. In the event of any other change in the capitalization of the Company or corporate change other than those specifically referred to in this Article 10, the Committee may, in its absolute discretion, make such adjustments in the number and class of shares subject to Awards outstanding on the date on which such change occurs and in the per share grant or exercise price of each Award as the Committee may consider appropriate to prevent dilution or enlargement of rights.
10.5 No Other Rights. Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of Shares of any class, the payment of any dividend, any increase or decrease in the number of shares of any class or any dissolution, liquidation, merger, or consolidation of the Company or any other corporation. Except as expressly provided in the Plan or pursuant to action of the Committee under the Plan, no issuance by the Company of shares of any class, or securities convertible into shares of any
class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares subject to an Award or the grant or exercise price of any Award.
ARTICLE 11
ADMINISTRATION
11.1 Committee. The Plan shall be administered by the Compensation Committee of the Board; provided, however that the Compensation Committee may delegate to a committee of one or more members of the Board the authority to grant or amend Awards to Participants other than Independent Directors and executive officers of the Company (such committee being the "Committee"). The Committee shall consist of at least two individuals, each of whom qualifies as a Non-Employee Director. Reference to the Committee shall refer to the Board if the Compensation Committee does not yet exist or ceases to exist and the Board does not appoint a successor Committee. Notwithstanding the foregoing, the full Board, acting by majority of its members in office shall conduct the general administration of the Plan if required by Applicable Law, if the Board has not established a Compensation Committee and with respect to Awards granted to Independent Directors and for purposes of such Awards the term "Committee" as used in the Plan shall be deemed to refer to the Board.
11.2 Action by the Committee. A majority of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by a majority of the Committee in lieu of a meeting, shall be deemed the acts of the Committee. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Subsidiary, the Company's independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.
11.3 Authority of Committee. Subject to any specific designation in the Plan, the Committee has the exclusive power, authority and discretion to:
(a) Designate Participants to receive Awards;
(b) Determine the type or types of Awards to be granted to each Participant;
(c) Determine the number of Awards to be granted and the number of Shares to which an Award will relate;
(d) Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, or purchase price, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Committee in its sole discretion determines;
(e) Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in, cash, Shares, other
Awards, or other property, or an Award may be canceled, forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need not be identical for each Participant;
(g) Decide all other matters that must be determined in connection with an Award;
(h) Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;
(i) Interpret the terms of, and any matter arising pursuant to, the Plan or any Award Agreement; and
(j) Make all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems necessary or advisable to administer the Plan.
11.4 Decisions Binding. The Committee's interpretation of the Plan, any Awards granted pursuant to the Plan, any Award Agreement and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties.
ARTICLE 12
EFFECTIVE AND EXPIRATION DATE
12.1 Effective Date. The Plan is effective as of the date the Plan is approved by the Company's shareholders (the "Effective Date"). The Plan will be deemed to be approved by the shareholders if it receives the affirmative vote of the holders of a majority of the share capital of the Company present or represented and entitled to vote at a meeting duly held in accordance with the applicable provisions of the Company's Memorandum of Association and Articles of Association.
12.2 Expiration Date. The Plan will expire on, and no Award may be granted pursuant to the Plan after, the tenth anniversary of the Effective Date. Any Awards that are outstanding on the tenth anniversary of the Effective Date shall remain in force according to the terms of the Plan and the applicable Award Agreement.
ARTICLE 13
AMENDMENT, MODIFICATION, AND TERMINATION
13.1 Amendment, Modification, And Termination. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan; provided, however, that (a) to the extent necessary and
desirable to comply with any applicable law, regulation, or stock exchange rule,
the Company shall obtain shareholder approval of any Plan amendment in such a
manner and to such a degree as required, and (b) shareholder approval is
required for any amendment to the Plan that (i) increases the number of Shares
available under the Plan (other than any adjustment as provided by Article 10),
(ii) permits the Committee to
grant Options with an exercise price that is below Fair Market Value on the date of grant, (iii) permits the Committee to extend the exercise period for an Option beyond ten years from the date of grant, or (iv) results in a material increase in benefits or a change in eligibility requirements.
13.2 Awards Previously Granted. Except with respect to amendments made pursuant to Section 13.1, no termination, amendment, or modification of the Plan shall adversely affect in any material way any Award previously granted pursuant to the Plan without the prior written consent of the Participant.
ARTICLE 14
GENERAL PROVISIONS
14.1 No Rights to Awards. No Participant, employee, or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Committee is obligated to treat Participants, employees, and other persons uniformly.
14.2 No Shareholders Rights. No Award gives the Participant any of the rights of a Shareholder of the Company unless and until Shares are in fact issued to such person in connection with such Award.
14.3 Taxes. No Shares shall be delivered under the Plan to any Participant until such Participant has made arrangements acceptable to the Committee for the satisfaction of any income and employment tax withholding obligations under Applicable Laws. The Company or any Subsidiary shall have the authority and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Participant's payroll tax obligations) required by law to be withheld with respect to any taxable event concerning a Participant arising as a result of this Plan. The Committee may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect to have the Company withhold Shares otherwise issuable under an Award (or allow the return of Shares) having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number of Shares which may be withheld with respect to the issuance, vesting, exercise or payment of any Award (or which may be repurchased from the Participant of such Award after such Shares were acquired by the Participant from the Company) in order to satisfy the Participant's federal, state, local and foreign income and payroll tax liabilities with respect to the issuance, vesting, exercise or payment of the Award shall, unless specifically approved by the Committee, be limited to the number of Shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income.
14.4 No Right to Employment or Services. Nothing in the Plan or any Award Agreement shall interfere with or limit in any way the right of the Service Recipient to terminate any Participant's employment or services at any time, nor confer upon any Participant any right to continue in the employ or service of any Service Recipient.
14.5 Unfunded Status of Awards. The Plan is intended to be an "unfunded" plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give the Participant any rights that are greater than those of a general creditor of the Company or any Subsidiary.
14.6 Indemnification. To the extent allowable pursuant to applicable law, each member of the Committee or of the Board shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company's Memorandum of Association and Articles of Association,, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
14.7 Relationship to other Benefits. No payment pursuant to the Plan shall be taken into account in determining any benefits pursuant to any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.
14.8 Expenses. The expenses of administering the Plan shall be borne by the Company and its Subsidiaries.
14.9 Titles and Headings. The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.
14.10 Fractional Shares. No fractional shares of Share shall be issued and the Committee shall determine, in its discretion, whether cash shall be given in lieu of fractional shares or whether such fractional shares shall be eliminated by rounding up or down as appropriate.
14.11 Government and Other Regulations. The obligation of the Company to make payment of awards in Share or otherwise shall be subject to all Applicable Laws, rules, and regulations, and to such approvals by government agencies as may be required. The Company shall be under no obligation to register any of the Shares paid pursuant to the Plan under the Securities Act or any other similar law in any applicable jurisdiction. If the Shares paid pursuant to the Plan may in certain circumstances be exempt from registration pursuant to the Securities Actor other Applicable Laws the Company may restrict the transfer of such shares in such manner as it deems advisable to ensure the availability of any such exemption.
14.12 Governing Law. The Plan and all Award Agreements shall be construed in
accordance with and governed by the laws of the Cayman Islands.
14.13 Section 409A. To the extent that the Committee determines that any Award granted under the Plan is or may become subject to Section 409A of the Code, the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code. To the extent applicable, the Plan and the Award Agreements shall be interpreted in accordance with Section 409A of the Code and the U.S. Department of Treasury regulations and other interpretative guidance issued thereunder, including without limitation any such regulation r or other guidance that may be issued after the Effective Date. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Committee determines that any Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Effective Date), the Committee may adopt such amendments to the Plan and the applicable Award agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Committee determines is necessary or appropriate to (a) exempt the Award from Section 409A of the Code and /or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related U.S. Department of Treasury guidance.
14.14 Appendices. The Committee may approve such supplements, amendments or appendices to the Plan as it may consider necessary or appropriate for purposes of compliance with applicable laws or otherwise and such supplements, amendments or appendices shall be considered a part of the Plan; provided, however, that no such supplements shall increase the share limitations contained in Sections 3.1 and 3.3 of the Plan.
* * * * *
I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Agria Corporation on _______________, 2007.
* * * * *
I hereby certify that the foregoing Plan was approved by the shareholders of Agria Corporation on _______________, 2007.
Executed on ________________, 2007.
EXHIBIT 10.2
INDEMNIFICATION AGREEMENT
This Indemnification Agreement (the "Agreement") is entered into as of __________, 2007 by and between Agria Corporation, a British Virgin Islands company (the "Company") and the undersigned, a director and/or an officer of the Company ("Indemnitee").
RECITALS
1. The Company recognizes that highly competent persons are becoming more reluctant to serve corporations as directors or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against risks of claims and actions against them arising out of their services to the corporation.
2. The Board of Directors of the Company (the "Board") has determined that the inability to attract and retain highly competent persons to serve the Company is detrimental to the best interests of the Company and its shareholders and that it is reasonable and necessary for the Company to provide adequate protection to such persons against risks of claims and actions against them arising out of their services to the corporation.
3. The Indemnitee does not regard the indemnities available under the Company's current memorandum and articles of association (the "Articles of Association") as adequate to protect him against the risks associated with his service to the Company.
4. The Company is willing to indemnify Indemnitee to the fullest extent permitted by applicable law, and Indemnitee is willing to serve and continue to serve the Company on the condition that he be so indemnified.
AGREEMENT
In consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:
A. DEFINITIONS
The following terms shall have the meanings defined below:
Expenses shall include damages, judgments, fines, penalties, settlements and costs, attorneys' fees and disbursements and costs of attachment or similar bond, investigations, and any expenses paid or incurred in connection with investigating, defending, being a witness in, participating in (including on appeal), or preparing for any of the foregoing in, any Proceeding.
Indemnifiable Event means any event or occurrence that takes place either before or after the execution of this Agreement, related to the fact that Indemnitee is or was a director or an officer of the Company or any of its subsidiaries, or is or was serving at the request of the Company as a director or officer of another corporation, partnership, joint venture or other entity, or related to anything done or not done by Indemnitee in any such capacity.
Participant means a person who is a party to, or witness or participant (including on appeal) in, a Proceeding.
Proceeding means any threatened, pending, or completed action, suit or proceeding, or any inquiry, hearing or investigation, whether civil, criminal, administrative, investigative or other, in which Indemnitee may be or may have been involved as a party or otherwise by reason of an Indemnifiable Event, including, without limitation, any threatened, pending, or completed action, suit or proceeding by or in the right of the Company.
B. AGREEMENT TO INDEMNIFY
1. General Agreement. In the event Indemnitee was, is, or becomes a Participant in, or is threatened to be made a Participant in, a Proceeding, the Company shall indemnify the Indemnitee from and against any and all Expenses which Indemnitee incurs or becomes obligated to incur in connection with such Proceeding, to the fullest extent permitted by applicable law.
2. Indemnification of Expenses of Successful Party. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits in defense of any Proceeding or in defense of any claim, issue or matter in such Proceeding, Indemnitee shall be indemnified against all Expenses incurred in connection with such Proceeding or such claim, issue or matter, as the case may be, offset by the amount of cash, if any, received by the Indemnitee resulting from his/her success therein.
3. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of Expenses, but not for the total amount of Expenses, the Company shall indemnify the Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
4. Exclusions. Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification under this Agreement:
(a) to the extent that payment is actually made to Indemnitee under a valid, enforceable and collectible insurance policy;
(b) to the extent that Indemnitee is indemnified and actually paid other than pursuant to this Agreement;
(c) in connection with a judicial action by or in the right of the Company, in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudicated by final judgment in a court of law to be liable for gross negligence or misconduct in the performance of his duty to the Company unless and only to the extent that any court in which such action was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as such court shall deem proper;
(d) in connection with any Proceeding initiated by Indemnitee against the Company, any director or officer of the Company or any other party, and not by way of defense, unless (i) the Company has joined in or the Reviewing Party (as hereinafter defined) has consented to the initiation of such Proceeding; or (ii) the Proceeding is one to enforce indemnification rights under this Agreement or any applicable law;
(e) for a disgorgement of profits made from the purchase and sale by the Indemnitee of securities pursuant to Section 16(b) of the Exchange Act or similar provisions of any applicable U.S. state statutory law or common law;
(f) brought about by the dishonesty or fraud of the Indemnitee seeking payment hereunder; provided, however, that the Indemnitee shall be protected under this Agreement as to any claims upon which suit may be brought against him by reason of any alleged dishonesty on his part, unless a judgment or other final adjudication thereof adverse to the Indemnitee establishes that he committed (i) acts of active and deliberate dishonesty, (ii) with actual dishonest purpose and intent, and (iii) which acts were material to the cause of action so adjudicated;
(g) for any judgment, fine or penalty which the Company is prohibited by applicable law from paying as indemnity;
(h) arising out of Indemnitee's personal tax matter; or
(i) arising out of Indemnitee's breach of an employment agreement with the Company (if any) or any other agreement with the Company or any of its subsidiaries.
5. No Employment Rights. Nothing in this Agreement is intended to create in Indemnitee any right to continued employment with the Company.
6. Contribution. If the indemnification provided in this Agreement is
unavailable and may not be paid to Indemnitee for any reason other than those
set forth in Section 4, then the Company shall contribute to the amount of
Expenses paid in settlement actually and reasonably incurred and paid or payable
by Indemnitee in such proportion as is appropriate to reflect (i) the relative
benefits received by the Company on the one hand and by the Indemnitee on the
other hand from the transaction from which such Proceeding arose, and (ii) the
relative fault of the Company on the one hand and of the Indemnitee on the other
hand in connection with the events which resulted in such Expenses, as well as
any other relevant equitable considerations. The relative fault of the Company
on the one hand and of the Indemnitee on the other hand shall be determined by
reference to, among other things, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent the circumstances
resulting in such Expenses, judgments, fines or settlement amounts. The Company
agrees that it would not be just and equitable if contribution pursuant to this
Section 6 were determined by pro rata allocation or any other method of
allocation which does not take account of the foregoing equitable
considerations.
C. INDEMNIFICATION PROCESS
1. Notice and Cooperation By Indemnitee. Indemnitee shall, as a condition precedent to his right to be indemnified under this Agreement, give the Company notice in writing as soon as practicable of any claim made against Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be given in accordance with Section F.7 below. In addition, Indemnitee shall give the Company such information and cooperation as the Company may reasonably request.
2. Indemnification Payment.
(a) Advancement of Expenses. Indemnitee may submit a written request with reasonable particulars to the Company requesting that the Company advance to Indemnitee all Expenses that may be reasonably incurred by Indemnitee in connection with a Proceeding. The Company shall, within ten (10) business days of receiving such a written request by Indemnitee, advance all requested Expenses to Indemnitee. Any excess of the advanced Expenses over the actual Expenses will be repaid to the Company.
(b) Reimbursement of Expenses. To the extent Indemnitee has not requested any advanced payment of Expenses from the Company, Indemnitee shall be entitled to receive reimbursement for the Expenses incurred in connection with a Proceeding from the Company as soon as practicable after Indemnitee makes a written request to the Company for reimbursement.
(c) Determination by the Reviewing Party. Notwithstanding anything foregoing to the contrary, in the event the Reviewing Party informs the Company that Indemnitee is not entitled to indemnification in connection with a Proceeding under this Agreement or applicable law, the Company shall be entitled to be reimbursed by Indemnitee for all the Expenses previously advanced or otherwise paid to Indemnitee in connection with such Proceeding; provided, however, that Indemnitee may bring a suit to enforce his indemnification right in accordance with Section C.3 below.
3. Suit to Enforce Rights. Regardless of any action by the Reviewing Party, if Indemnitee has not received full indemnification within 30 days after making a written demand in accordance with Section C.2 above, Indemnitee shall have the right to enforce its indemnification rights under this Agreement by commencing litigation in any court of competent jurisdiction seeking a determination by the court or challenging any determination by the Reviewing Party or any breach in any aspect of this Agreement. Any determination by the Reviewing Party not challenged by Indemnitee and any judgment entered by the court shall be binding on the Company and Indemnitee.
4. Assumption of Defense. In the event the Company is obligated under this
Agreement to advance or bear any Expenses for any Proceeding against Indemnitee,
the Company shall be entitled to assume the defense of such Proceeding, with
counsel approved by Indemnitee, upon delivery to Indemnitee of written notice of
its election to do so. After delivery of such notice, approval of such counsel
by Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to Indemnitee under this Agreement for any fees of counsel
subsequently incurred by Indemnitee with respect to the same Proceeding, unless
(i) the employment of counsel by Indemnitee has been previously authorized by
the Company, (ii) Indemnitee shall have reasonably concluded, based on written
advice of counsel, that there may be a conflict of interest of such counsel
retained by the Company between the Company and Indemnitee in the conduct of any
such defense, or (iii) the Company ceases or terminates the employment of such
counsel with respect to the defense of such Proceeding, in any of which events
the fees and expenses of Indemnitee's counsel shall be at the expense of the
Company. At all times, Indemnitee shall have the right to employ counsel in any
Proceeding at Indemnitee's expense.
5. Defense to Indemnification, Burden of Proof and Presumptions. It shall be a defense to any action brought by Indemnitee against the Company to enforce this Agreement that it is not permissible under this Agreement or applicable law for the Company to indemnify the Indemnitee for the amount claimed. In connection with any such action or any
determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified under this Agreement, the burden of proving such a defense or determination shall be on the Company. Neither the failure of the Reviewing Party or the Company to have made a determination prior to the commencement of such action by Indemnitee that indemnification is proper under the circumstances because Indemnitee has met the standard of conduct set forth in applicable law, nor an actual determination by the Reviewing Party or the Company that Indemnitee had not met such applicable standard of conduct shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.
6. No Settlement Without Consent. Neither party to this Agreement shall settle any Proceeding in any manner that would impose any damage, loss, penalty or limitation on Indemnitee without the other party's written consent. Neither the Company nor Indemnitee shall unreasonably withhold its consent to any proposed settlement.
7. Company Participation. Subject to Section B.6, the Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial action if the Company was not given a reasonable and timely opportunity, at its expense, to participate in the defense, conduct and/or settlement of such action.
8. Reviewing Party.
(a) For purposes of this Agreement, the Reviewing Party with respect to each indemnification request of Indemnitee shall be (A) the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), or (B) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, said Disinterested Directors so direct, Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; and, if it is determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel or member of the Board of Directors shall act reasonably and in good faith in making a determination under this Agreement of the Indemnitee's entitlement to indemnification. Any reasonable costs or expenses (including reasonable attorneys' fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee's entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom to the extent as aforesaid. "Disinterested Director" means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.
(b) If the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected as provided in this Section 8(b). The Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors, in which event the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors shall
select), and Indemnitee shall give written notice to the Company advising it of
the identity of the Independent Counsel so selected. In either event, Indemnitee
or the Company, as the case may be, may, within 10 days after such written
notice of selection shall have been given, deliver to the Company or to
Indemnitee, as the case may be, a written objection to such selection; provided,
however, that such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of "Independent
Counsel" as defined in Section 8(d) of this Agreement, and the objection shall
set forth with particularity the factual basis of such assertion. Absent a
proper and timely objection, the person so selected shall act as Independent
Counsel. If a written objection is made and substantiated, the Independent
Counsel selected may not serve as Independent Counsel unless and until such
objection is withdrawn or a court has determined that such objection is without
merit. If the determination of entitlement to indemnification is to be made by
Independent Counsel, but within 20 days after submission by Indemnitee of a
written request for indemnification, no Independent Counsel shall have been
selected and not objected to, then the Board of Directors by a majority vote
shall select the Independent Counsel. The Company shall pay any and all
reasonable fees and expenses of Independent Counsel incurred by such Independent
Counsel in connection with acting under this Agreement, and the Company shall
pay all reasonable fees and expenses incident to the procedures of this Section
8(b), regardless of the manner in which such Independent Counsel was selected or
appointed.
(c) In making a determination with respect to entitlement to indemnification hereunder, the Reviewing Party shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement (with or without court approval), conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his conduct was unlawful. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee's action is based on the records or books of account of the Company and any other corporation, partnership, joint venture or other entity of which Indemnitee is or was serving at the written request of the Company as a director, officer, employee, agent or fiduciary, including financial statements, or on information supplied to Indemnitee by the officers and directors of the Company or such other corporation, partnership, joint venture or other entity in the course of their duties, or on the advice of legal counsel for the Company or such other corporation, partnership, joint venture or other entity or on information or records given or reports made to the Company or such other corporation, partnership, joint venture or other entity by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Company or such other corporation, partnership, joint venture or other entity. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or such other corporation, partnership, joint venture or other entity shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. The provisions of this Section 8(c) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the
Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.
(d) "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above.
D. DIRECTOR AND OFFICER LIABILITY INSURANCE
1. Good Faith Determination. The Company shall from time to time make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the officers and directors of the Company with coverage for losses incurred in connection with their services to the Company or to ensure the Company's performance of its indemnification obligations under this Agreement.
2. Coverage of Indemnitee. To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any of the Company's directors or officers.
3. No Obligation. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain any director and officer insurance policy if the Company determines in good faith that such insurance is not reasonably available in the case that (i) premium costs for such insurance are disproportionate to the amount of coverage provided, (ii) the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or (iii) Indemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company.
E. NON-EXCLUSIVITY; FEDERAL PREEMPTION; TERM
1. Non-Exclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Articles of Association, applicable law or any written agreement between Indemnitee and the Company (including its subsidiaries and affiliates). The indemnification provided under this Agreement shall continue to be available to Indemnitee for any action taken or not taken while serving in an indemnified capacity even though he may have ceased to serve in any such capacity at the time of any Proceeding.
2. Federal Preemption. Notwithstanding the foregoing, both the Company and Indemnitee acknowledge that in certain instances, U.S. federal law or public policy may override applicable law and prohibit the Company from indemnifying its directors and
officers under this Agreement or otherwise. Such instances include, but are not limited to, the U.S. Securities and Exchange Commission's prohibition on indemnification for liabilities arising under certain U.S. federal securities laws. Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the SEC to submit the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy to indemnify Indemnitee.
3. Duration of Agreement. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer and/or a director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding by reason of his former or current capacity at the Company or any other enterprise at the Company's request, whether or not he is acting or serving in any such capacity at the time any Expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer and/or a director of the Company or any other enterprise at the Company's request.
F. MISCELLANEOUS
1. Amendment of this Agreement. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement shall operate as a waiver of any other provisions (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided in this Agreement, no failure to exercise or any delay in exercising any right or remedy shall constitute a waiver.
2. Subrogation. In the event of payment to Indemnitee by the Company under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company to bring suit to enforce such rights.
3. Assignment; Binding Effect. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by either party hereto without the prior written consent of the other party; except that the Company may, without such consent, assign all such rights and obligations to a successor in interest to the Company which assumes all obligations of the Company under this Agreement. Notwithstanding the foregoing, this Agreement shall be binding upon and inure to the benefit of and be enforceable by and against the parties hereto and the Company's successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company) and assigns, as well as Indemnitee's spouses, heirs, and personal and legal representatives.
4. Severability and Construction. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company's inability, pursuant to a court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. In addition, if any portion of this Agreement shall be held by a court of competent jurisdiction to be
invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by applicable law. The parties hereto acknowledge that they each have opportunities to have their respective counsels review this Agreement. Accordingly, this Agreement shall be deemed to be the product of both of the parties hereto, and no ambiguity shall be construed in favor of or against either of the parties hereto.
5. Counterparts. This Agreement may be executed in two counterparts, both of which taken together shall constitute one instrument.
6. Governing Law. This agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, U.S.A., without giving effect to conflicts of law provisions thereof.
7. Notices. All notices, demands, and other communications required or permitted under this Agreement shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed, postage prepaid, certified or registered mail, return receipt requested, and addressed to the Company at:
Agria Corporation
Room 706, 7/F, Huantai Building
No. 12A, South Street Zhongguancun
Haidian District, Beijing 100081
People's Republic of China
Attention: Guanglin Lai
and to Indemnitee at his or her address last known to the Company.
8. Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject matter hereof.
(Signature page follows)
IN WITNESS WHEREOF, the parties hereto execute this Agreement as of the date first written above.
COMPANY
AGRIA CORPORATION
INDEMNITEE
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), is entered into as of ____________, 2007 by and between Agria Corporation, a company incorporated and existing under the laws of the Cayman Islands (the "Company"), and ____________, an individual (the "Executive"). Except with respect to the direct employment of the Executive by the Company, the term "Company" as used herein with respect to all obligations of the Executive hereunder shall be deemed to include the Company and all of its direct or indirect parent companies, subsidiaries, affiliates, or subsidiaries or affiliates (collectively, the "Group").
RECITALS
A. The Company desires to employ the Executive as its ____________________ and to assure itself of the services of the Executive during the term of Employment (as defined below).
B. The Executive desires to be employed by the Company as its ___________________ during the term of Employment and upon the terms and conditions of this Agreement.
AGREEMENT
The parties hereto agree as follows:
1. POSITION
The Executive hereby accepts a position of ____________________ of the Company (the "Employment").
2. TERM
Subject to the terms and conditions of this Agreement, the initial term of the Employment shall be three years, commencing on ________________, 2007 (the "Effective Date"), until ____________________, 2010, unless terminated earlier pursuant to the terms of this Agreement. Upon expiration of the initial three-year term, the Employment shall be automatically extended for successive one-year terms unless either party gives the other party hereto a one-month prior written notice to terminate the Employment prior to the expiration of such one-year term or unless terminated earlier pursuant to the terms of this Agreement.
3. LOCATION
The Executive acknowledges that the Company's principal executive offices are currently located in Room 706, 7/F, Huantai Building, No. 12A, South Street Zhongguancun, Haidian District, Beijing 100081, Peoples' Republic of China. The Executive's principal place of employment shall be the Company's principal executive offices. The Executive agrees that he will be regularly present at the Company's principal executive offices. The Executive acknowledges that he may be required to travel from time to time in the course of performing his duties for the Company.
4. PROBATION
No probationary period.
5. DUTIES AND RESPONSIBILITIES
The Executive's duties at the Company will include all jobs assigned by the Company's Board of Directors (the "Board") of the Company.
The Executive shall devote all of his working time, attention and skills to the performance of his duties at the Company and shall faithfully and diligently serve the Company in accordance with this Agreement, the Memorandum and Articles of Association of the Company (the "Articles of Association"), and the guidelines, policies and procedures of the Company approved from time to time by the Board.
The Executive shall use his best efforts to perform his duties hereunder. The Executive shall not hold any other employment, and shall not be concerned or interested in any business or entity that directly or indirectly competes with the Group (any such business or entity, a "Competitor"), provided that nothing in this clause shall preclude the Executive from holding up to 5% of shares or other securities of any Competitor that is listed on any securities exchange or recognized securities market anywhere, provided however, that the Executive shall notify the Company in writing prior to his obtaining a proposed interest in such shares or securities in a timely manner and with such details and particulars as the Company may reasonably require. The Company shall have the right to require the Executive to resign from any board or similar body which he may then serve if the Board reasonably determines in writing that the Executive's service on such board or body interferes with the effective discharge of the Executive's duties and responsibilities to the Company or that any business related to such service is then in competition with any Business (as defined below under Section 12) of the Company or any of its subsidiaries or affiliates.
6. NO BREACH OF CONTRACT
The Executive hereby represents to the Company that: (i) the execution and
delivery of this Agreement by the Executive and the performance by the
Executive of the Executive's duties hereunder shall not constitute a breach
of, or otherwise contravene, the terms of any other agreement or policy to
which the Executive is a party or otherwise bound, except for agreements
that are required to be entered into by and between the Executive and any
member of the Group pursuant to applicable law of the jurisdiction where
the Executive is based, if any; (ii) that the Executive has no information
(including, without limitation, confidential information and trade secrets)
relating to any other person or entity which would prevent, or be violated
by, the Executive entering into this Agreement or carrying out his duties
hereunder; (iii) that the Executive is not bound by any confidentiality,
trade secret or similar agreement (other than this) with any other person
or entity except for other member(s) of the Group, as the case may be.
7. COMPENSATION AND BENEFITS
(a) Cash Compensation. The Executive's salary shall be provided by the Company pursuant to Schedule A hereto, subject to annual review and adjustment by the Company.
(b) Equity Incentives. Once the Board and the shareholders of the Company adopt a share incentive plan of the Company, the Executive will be eligible for receiving awards under the share incentive plan and upon such terms as determined by the Board.
(c) Benefits. The Executive is eligible for participation in any standard employee benefit plan of the Company that currently exists or may be adopted by the Company in the future, including, but not limited to, any retirement plan, life insurance plan, health insurance plan and travel/holiday plan.
8. TERMINATION OF THE AGREEMENT
(a) By the Company. The Company may terminate the Employment for cause, at any time, without notice or remuneration, if (1) the Executive is convicted or pleads guilty to a crime which the Board reasonably believes has had or will have a detrimental effect on the Company's reputation or business, (2) the Executive has been negligent or acted dishonestly to the detriment of the Company, (3) the Executive has engaged in actions amounting to misconduct or failed to perform his duties hereunder and such failure continues after the Executive is afforded a reasonable opportunity to cure such failure, (4) the Executive has died, or (5) the Executive has a disability which shall mean a physical or mental impairment which, as reasonably determined by the Board, renders the Executive unable to perform the essential functions of his employment with the Company, even with reasonable accommodation that does not impose an undue hardship on the Company, for more than 180 days in any 12-month period, unless a longer period is required by applicable law, in which case that longer period would apply. In addition, the Company may terminate the Employment without cause, at any time, upon one month written notice, and upon termination without cause, the Company shall provide compensation to the Executive only to the minimum extent expressly required by applicable law of the jurisdiction where the Executive is based.
(b) By the Executive. The Executive may terminate the Employment at any time with a one-month prior written notice to the Company, if (1) there is a material reduction in the Executive's authority, duties and responsibilities, or (2) there is a material reduction in the Executive's annual salary before the next annual salary review. In addition, the Executive may resign prior to the expiration of the Agreement if such resignation or an alternative arrangement with respect to the Employment is approved by the Board.
(c) Notice of Termination. Any termination of the Executive's employment under this Agreement shall be communicated by written notice of termination from the terminating party to the other party. The notice of termination shall indicate the specific provision(s) of this Agreement relied upon in effecting the termination.
9. CONFIDENTIALITY AND NONDISCLOSURE
(a) Confidentiality and Non-disclosure.The Executive hereby agrees at all times during the term of his employment and after termination, to hold in the strictest confidence, and not to use, except for the benefit of the Group, or to disclose to any person, corporation or other entity without written consent of the Company, any Confidential Information. The Executive understands that "Confidential Information" means any proprietary or confidential information of the Group, its affiliates, their clients, customers or partners, and the Group's licensors, including, without limitation, technical data, trade secrets, research and development information, product plans, services, customer lists and customers (including, but not limited to, customers of the Group on whom the Executive called or with whom the Executive became acquainted during the term of his employment), supplier lists and suppliers, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, personnel information, marketing, finances, information about the suppliers, joint ventures, licensors, licensees, distributors and other persons with whom the Group does business, information regarding the skills and compensation of other employees of the Group or other business information disclosed to the Executive by or obtained by the Executive from the Group, its affiliates, or their clients, customers or partners either directly or indirectly in writing, orally or by drawings or observation of parts or equipment, if specifically indicated to be confidential or reasonably expected to be confidential. Notwithstanding the foregoing, Confidential Information shall not include information that is generally available and known to the public through no fault of the Executive.
(b) Company Property. The Executive understands that all documents (including computer records, facsimile and e-mail) and materials created, received or transmitted in connection with his work or using the facilities of the Group are property of the Group and subject to inspection by the Group, at any time. Upon termination of the Executive's employment with the Company (or at any other time when requested by the Company), the Executive will promptly deliver to the Company all documents and materials of any nature pertaining to his work with the Company and will provide written certification of his compliance with this Agreement. Under no circumstances will the Executive have, following his termination, in his possession any property of the Group, or any documents or materials or copies thereof containing any Confidential Information.
(c) Former Employer Information. The Executive agrees that he has not and will not, during the term of his employment, (i) improperly use or disclose any proprietary information or trade secrets of any former employer or other person or entity with which the Executive has an agreement or duty to keep in confidence information acquired by Executive, if any, or (ii) bring into the premises of the Group any document or confidential or proprietary information belonging to such former employer, person or entity unless consented to in writing by such former employer, person or entity. The Executive will indemnify the Group and hold it harmless from and against all
claims, liabilities, damages and expenses, including reasonable attorneys' fees and costs of suit, arising out of or in connection with any violation of the foregoing.
(d) Third Party Information. The Executive recognizes that the Group may have received, and in the future may receive, from third parties their confidential or proprietary information subject to a duty on the Group's part to maintain the confidentiality of such information and to use it only for certain limited purposes. The Executive agrees that the Executive owes the Group and such third parties, during the Executive's employment by the Company and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person or firm and to use it in a manner consistent with, and for the limited purposes permitted by, the Group's agreement with such third party.
This Section 9 shall survive the termination of this Agreement for any reason. In the event the Executive breaches this Section 9, the Company shall have right to seek remedies permissible under applicable law.
10. INVENTIONS
(a) Inventions Retained and Licensed. The Executive has attached hereto,
as Schedule B, a list describing all inventions, ideas, improvements,
designs and discoveries, whether or not patentable and whether or not
reduced to practice, original works of authorship and trade secrets
made or conceived by or belonging to the Executive (whether made
solely by the Executive or jointly with others) that (i) were
developed by Executive prior to the Executive's employment by the
Company (collectively, "Prior Inventions"), (ii) relate to the Group's
actual or proposed business, products or research and development, and
(iii) are not assigned to the Group hereunder; or, if no such list is
attached, the Executive represents that there are no such Prior
Inventions. Except to the extent set forth in Schedule B, the
Executive hereby acknowledges and represents that, if in the course of
his service for the Group, the Executive incorporates into a Group
product, process or machine a Prior Invention owned by the Executive
or in which he has an interest, (a) the Group is hereby granted and
shall have a nonexclusive, royalty-free, irrevocable, perpetual,
worldwide right and license (which may be freely transferred by the
Group to any other person or entity) to make, have made, modify, use,
sell, sublicense and otherwise distribute such Prior Invention as part
of or in connection with such product, process or machine, and (b) he
has all necessary rights, powers and authorization to use such Prior
Invention in the manner it is used and such use will not infringe any
right of any company, entity or person. The Executive hereby agrees to
indemnify the Group and hold it harmless from all claims, liabilities,
damages and expenses, including reasonable legal fees and costs for
resolving disputes arising out of or in connection with any violation
or claimed violation of a third party's rights resulting from any use,
sub-licensing, modification, transfer or sale by the Group of such
Prior Invention.
(b) Disclosure and Assignment of Inventions. The Executive understands that the Company engages in research and development and other activities in
connection with its business and that, as an essential part of the Employment, the Executive is expected to make new contributions to and create inventions of value for the Company.
From and after the Effective Date, the Executive shall make full written disclosure in confidence to the Company all inventions, improvements, designs, original works of authorship, formulas, processes, compositions of matter, computer software programs, databases, mask works, concepts and trade secrets, whether or not patentable or registrable under patent, copyright, circuit layout design or similar laws in China or anywhere else in the world, which the Executive may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or developed or reduced to practice, during the period of the Executive's Employment at the Company (whether or not during business hours) that are either related to the scope of his Employment at the Company or make use, in any manner, of the resources of the Group (collectively, the "Inventions")The Executive hereby acknowledges that the Company or the Group shall be the sole owner of all rights, title and interest in the Inventions created hereunder. In the event the foregoing assignment of Inventions to the Company or the Group is ineffective for any reason, each member of the Group is hereby granted and shall have a royalty-free, sub-licensable, transferable, irrevocable, perpetual, worldwide license to make, have made, modify, use, and sell such Inventions as part of or in connection with any product, process or machine. Such exclusive license shall continue in effect for the maximum term as may now or hereafter be permissible under applicable law. Upon expiration, such license, without further consent or action on the Executive's part, shall automatically be renewed for the maximum term as is then permissible under applicable law, unless, within the six-month period prior to such expiration, the Company and the Executive have agreed that such license will not be renewed. The Executive also hereby forever waives and agrees never to assert any and all rights he may have in or with respect to any Inventions even after termination of his employment with the Company. The Executive hereby further acknowledges that all Inventions created by him (solely or jointly with others) are, to the extent permitted by applicable law, "works made for hire" or "inventions made for hire," as those terms are defined in the People's Republic of China ("PRC") Copyright Law, the PRC Patent Law and the Regulations on Computer Software Protection, respectively, and all titles, rights and interests in or to such Inventions are or shall be vested in the Company.
(c) Patent and Copyright Registration. The Executive agrees to assist the Company or its designees in every proper way to obtain for the Company and enforce patents, copyrights, mask work rights, trade secret rights, and other legal protection for the Inventions in any and all countries. The Executive will execute any documents that the Company may reasonably request for use in obtaining or enforcing such patents, copyrights, mask work rights, trade secrets and other legal protections. The Executive's obligations under this paragraph will continue beyond the termination of the Employment with the Company, provided that the Company will reasonably compensate the Executive after such termination for time or expenses actually spent by the Executive at the Company's request on such assistance. The Executive
appoints the Company and its duly authorized officers and agents as the Executive's attorney-in-fact to execute documents on the Executive's behalf for this purpose.
(d) Remuneration. The Executive hereby agrees that the remuneration received by the Executive pursuant to this Agreement with the Company includes any remuneration which the Executive may be entitled to under applicable PRC law for any "works made for hire," "inventions made for hire" or other Inventions assigned to the Company pursuant to this Agreement.
(e) Return of Confidential Material. In the event of the Executive's termination of employment with the Company for any reason whatsoever, Executive agrees promptly to surrender and deliver to the Company all records, materials, equipment, drawings, documents and data of any nature pertaining to any confidential information or to his employment, and Executive will not retain or take with him any tangible materials or electronically stored data, containing or pertaining to any confidential information that Executive may produce, acquire or obtain access to during the course of his employment.
This Section 10 shall survive the termination of this Agreement for any reason. In the event the Executive breaches this Section 10, the Company shall have right to seek remedies permissible under applicable law.
11. CONFLICTING EMPLOYMENT.
The Executive hereby agrees that, during the term of his employment with the Company, he will not engage in any other employment, occupation, consulting or other business activity related to the business in which the Group is now involved or becomes involved during the term of the Executive's employment, nor will the Executive engage in any other activities that conflict with his obligations to the Company without the prior written consent of the Company.
12. NON-COMPETITION AND NON-SOLICITATION
In consideration of the salary paid to the Executive by the Company, the Executive undertakes that for a period of two (2) years after he ceases to be employed by the Company, he will not, without the prior written consent of the Company:
(a) in the territory of the PRC (for the purpose of this Section 12, the PRC shall include Hong Kong, Macau and Taiwan) (the "Territory"), either on his own account or through any of his affiliates, or in conjunction with or on behalf of any other person, carry on or be engaged, concerned or interested directly or indirectly whether as shareholder, director, employee, partner, agent or otherwise carry on any business in direct competition with the business of the Group (the "Business");
For purpose of this Agreement, "Business" shall mean the following business that the Group conducts, i.e., research and development, production and distribution of corn seeds, sheep breeding products including breeder sheep, sheep semen and embryos, and blackberry, raspberry, date and white bark pine tree seedlings.
(b) either on his own account or through any of his affiliates or in
conjunction with or on behalf of any other person, solicit or entice
away or attempt to solicit or entice away from the Group, any person,
firm, company or organization who is or shall at any time within two
(2) years prior to such cessation have been a customer, client,
representative or agent of the Group or in the habit of dealing with
the Group;
(c) either on his own account or through any of his affiliates or in conjunction with or on behalf of any other person, employ, solicit or entice away or attempt to employ, solicit or entice away from the Group any person who is or shall have been at the date of or within twelve (12) months prior to such cessation of employment an officer, manager, consultant or employee of any such the Group whether or not such person would commit a breach of contract by reason of leaving such employment; or
(d) either on his own account or through any of his affiliates or in conjunction with or on behalf of any other person, in relation to any trade, business or company use a name including the words "Agria", "AeroBiotech", "Primalights" or any other words hereafter used by the Group in its name or in the name of any of its products, services or their derivative terms, or the Chinese or English equivalent or any similar word in such a way as to be capable of or likely to be confused with the name of the Group or the product or services or any other products or services of the Group, and shall use all reasonable endeavors to procure that no such name shall be used by any of his affiliates or otherwise by any person with which he is connected.
Each and every obligation under Section 12 shall be treated as a separate obligation and shall be severally enforceable as such and in the event of any obligation or obligations being or becoming unenforceable in whole or in part, such part or parts which are unenforceable shall be deleted from such section and any such deletion shall not affect the enforceability of the remainder parts of such section.
The Executive agrees that in light of the circumstances, the restrictive covenants contained in Section 12 are reasonable and necessary for the protection of the Group, and further agrees that having regard to those circumstances the said covenants and are not excessive or unduly onerous upon the Executive. However, it is recognized that restrictions of the nature in question may fail for technical reasons currently unforeseen and accordingly it is hereby agreed and declared that if any of such restrictions shall be adjudged to be void as going beyond what is reasonable, in light of the circumstances, for the protection of the Group, but would be valid if part of the wording thereof were deleted or the periods thereof reduced or the range of activities or area dealt with thereby reduced in scope, the said restriction shall apply with such modification as may be necessary to make it valid and effective.
This Section 12 shall survive the termination of this Agreement for any reason. In the event the Executive breaches this Section 12, the Executive acknowledges that there will be no adequate remedy at law, and the Company shall be entitled to injunctive relief and/or a decree for specific performance, and such other relief as may be proper (including monetary damages if appropriate). In any event, the Company shall have right to seek all remedies permissible under applicable law.
13. WITHHOLDING TAXES
Notwithstanding anything else herein to the contrary, the Company may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such national, provincial, local or any other income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.
14. NOTIFICATION OF NEW EMPLOYER
In the event that the Executive leaves the employ of the Company, the Executive hereby grants consent to notification by the Company to his or her new employer about his or her rights and obligations under this Agreement.
15. ASSIGNMENT
This Agreement is personal in its nature and neither of the parties hereto shall, without the consent of the other, assign or transfer this Agreement or any rights or obligations hereunder; provided, however, that (i) the Company may assign or transfer this Agreement or any rights or obligations hereunder to any member of the Group without such consent, and (ii) in the event of a merger, consolidation, or transfer or sale of all or substantially all of the assets of the company with or to any other individual(s) or entity, this Agreement shall, subject to the provisions hereof, be binding upon and inure to the benefit of such successor and such successor shall discharge and perform all the promises, covenants, duties, and obligations of the Company hereunder.
15. SEVERABILITY
If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.
16. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement and understanding between the Executive and the Company regarding the terms of the Employment and supersedes all prior or contemporaneous oral or written agreements concerning such subject matter. The Executive acknowledges that he has not entered into this Agreement in reliance upon any representation, warranty or undertaking which is not set forth in this Agreement. Any amendment to this Agreement must be in writing and signed by the Executive and the Company.
17. REPRESENTATIONS
The Executive hereby agrees to execute any proper oath or verify any proper document required to carry out the terms of this Agreement. The Executive hereby represents that the Executive's performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by the Executive in confidence or in trust prior to his or her employment by the
Company. The Executive has not entered into, and hereby agrees that he or she will not enter into, any oral or written agreement in conflict with this Section 17.
18. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the law of the State of New York, USA.
19. AMENDMENT
This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.
20. WAIVER
Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
21. NOTICES
All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given and made if (i) delivered by hand, (ii) otherwise delivered against receipt therefor, or (iii) sent by a recognized courier with next-day or second-day delivery to the last known address of the other party.
22. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.
23. NO INTERPRETATION AGAINST DRAFTER
Each party recognizes that this Agreement is a legally binding contract and acknowledges that it, he has had the opportunity to consult with legal counsel of choice. In any construction of the terms of this Agreement, the same shall not be construed against either party on the basis of that party being the drafter of such terms. The Executive agrees and acknowledges that he has read and understands this
Agreement, is entering into it freely and voluntarily, and has been advised to seek counsel prior to entering into this Agreement and has ample opportunity to do so.
[Remainder of this page intentionally has been intentionally left blank.]
IN WITNESS WHEREOF, this Agreement has been executed as of the date first written above.
AGRIA CORPORATION
Title:
EXECUTIVE
Schedule A
CASH COMPENSATION
AMOUNT PAY PERIOD ------ ---------- SALARY RMB _______________ Monthly annually |
Schedule B
LIST OF PRIOR INVENTIONS
IDENTIFYING NUMBER TITLE DATE OR BRIEF DESCRIPTION ----- ---- -------------------- |
______ No inventions or improvements
______ Additional Sheets Attached
.
.
.
EXHIBIT 21.1
LIST OF SUBSIDIARIES
Wholly-Owned Subsidiaries
PLACE OF INCORPORATION ---------------------- 1. Aero-Biotech Group Limited British Virgin Islands 2. China Victory International Holdings Limited Hong Kong 3. Aero-Biotech Science & Technology Co., Ltd. PRC |
Consolidated Variable Interest Entity
Primalights III, Agriculture Development Co., Ltd. PRC
EXHIBIT 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the captions "Our Summary Consolidated Financial Data", "Selected Consolidated Financial Data" and "Experts" and to the use of our report dated July 15, 2007, in the Registration Statement (Form F-1) and related Prospectus of Agria Corporation dated October 18, 2007.
/s/ Ernst & Young Hua Ming Shenzhen, People's Republic of China October 18, 2007 |
EXHIBIT 23.5
October 18, 2007
Mr. Gary Yeung
Chief Financial Officer
Agria Corporation
17/F, Dutyfree Business Building,
Fuhua First Road,
CBD, Futian District, Shenzhen, China
SUBJECT: WRITTEN CONSENT TO REFERENCE SALLMANNS (FAR EAST) LIMITED IN SEC FILINGS OF AGRIA CORPORATION
Dear Mr.Yeung,
We hereby consent to the references to our name, valuation methodologies, assumptions and value conclusions for accounting purposes, with respect to our appraisal reports addressed to the board of Agria Corporation (the "Company") in the Company's Registration Statement on Form F-1 (together with any amendments thereto, the "Registration Statement") to be filed with the U.S. Securities and Exchange Commission.
In the preparation of our valuation reports, we relied on the accuracy and completeness of the financial information and other data related to the Company provided to us by the Company and its representatives. We did not audit or independently verify such financial information or other data relating to the Company and take no responsibility for the accuracy of such information. The responsibility for determining fair value rests solely with the Company and our valuation reports were only used as part of the Company's analysis in reaching their conclusion of value.
Yours sincerely,
For and on behalf of
SALLMANNS (FAR EAST) LIMITED
/s/ Simon M.K. Chan ---------------------------- Simon M.K. Chan Director |
EXHIBIT 23.6
October 10, 2007
Agria Corporation
Room 706, 7/F, Huantai Building, No. 12A
South Street Zhongguancun
Haidian District, Beijing 100081
People's Republic of China
Ladies and Gentlemen:
Pursuant to Rule 438 under the Securities Act of 1933, as amended, I hereby consent to the reference of my name as an independent director appointee of Agria Corporation (the "Company"), effective immediately after the completion of the initial public offering of the Company's ordinary shares represented by American depositary shares.
Sincerely yours,
/s/ Terry McCarthy ------------------ Terry McCarthy |
EXHIBIT 23.7
October 18, 2007
Agria Corporation
Room 706, 7/F, Huantai Building, No. 12A
South Street Zhongguancun
Haidian District, Beijing 100081
People's Republic of China
Ladies and Gentlemen:
Pursuant to Rule 438 under the Securities Act of 1933, as amended, I hereby consent to the reference of my name as an independent director appointee of Agria Corporation (the "Company"), effective immediately upon the effectiveness of the Company's registration statement on Form F-1 originally filed by the Company on October 18, 2007 with the Securities and Exchange Commission.
Sincerely yours,
/s/ Shangzhong Xu ---------------------------------- Shangzhong Xu |
Exhibit 23.8
October 18, 2007
Agria Corporation
Room 706, 7/F, Huantai Building, No. 12A
South Street Zhongguancun
Haidian District, Beijing 100081
People's Republic of China
Ladies and Gentlemen:
Pursuant to Rule 438 under the Securities Act of 1933, as amended, I hereby consent to the reference of my name as an independent director appointee of Agria Corporation (the "Company"), effective immediately upon the effectiveness of the Company's registration statement on Form F-1 originally filed by the Company on October 18, 2007 with the Securities and Exchange Commission.
Sincerely yours,
/s/ Jiuran Zhao --------------------------- Jiuran Zhao |
EXHIBIT 99.1
AGRIA CORPORATION
CODE OF BUSINESS CONDUCT AND ETHICS
PURPOSE
This Code of Business Conduct and Ethics (the "Code") contains general guidelines for conducting the business of Agria Corporation (the "Company") consistent with the highest standards of business ethics, and is intended to qualify as a "code of ethics" within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. To the extent this Code requires a higher standard than required by commercial practice or applicable laws, rules or regulations, we adhere to these higher standards. The Company shall include all the subsidiaries consolidated into the Company's financial statement prepared in accordance with generally accepted accounting principles in the U.S. ("U.S. GAAP"), including but not limited to, its subsidiaries.
This Code is designed to deter wrongdoing and to promote:
- honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
- full, fair, accurate, timely, and understandable disclosure in reports and documents that the Company will file with, or submit to, the U.S. Securities and Exchange Commission (the "SEC") and in other public communications made by the Company;
- compliance with applicable laws, rules and regulations;
- prompt internal reporting of violations of the Code; and
- accountability for adherence to the Code.
APPLICABILITY
This Code applies to all of the directors, officers, employees, consultants and advisors of the Company, whether they work for the Company on a full-time, part-time, consultative, or temporary basis (each an "employee" and collectively, the "employees"). Certain provisions of the Code apply specifically to our chief executive officer, chief financial officer, controller, vice presidents and any other persons who perform similar functions for the Company (each, a "senior officer," and collectively, "senior officers").
The Board of Directors of the Company (the "Board") has appointed Gary Kim Ting Yeung, chief financial officer, as the Compliance Officer for the Company. If you have any questions regarding the Code or would like to report any violation of the Code, please call the Compliance Officer at (86-10) 6210 9288 or e-mail him at gary.yeung@agriacorp.com.
This Code was adopted by the Board on September 29, 2007. The Code shall become effective (the "Effective Time") concurrently with the Company's first public filing of a registration statement on Form F-1 with the SEC relating to the Company's initial public offering (the "IPO").
COMPETITION AND FAIR DEALING
The Company seeks to outperform its competitors fairly and honestly, through superior performance but not through unethical or illegal business practices. Infringement upon third-parties' intellectual property rights, including copyrights, trademarks, trade names and trade secrets, or inducing or encouraging such infringement activities by past or present employees of other companies are strictly prohibited. Every employee of the Company shall endeavor to respect the rights of and deal fairly with the Company's customers, suppliers and competitors. No employee shall take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other illegal trade practice.
CONFLICTS OF INTEREST
IDENTIFYING CONFLICTS OF INTEREST
A conflict of interest occurs when an employee's private interest interferes, or appears to interfere, in any way with the interests of the Company as a whole. You should actively avoid any private interest that may influence your ability to act in the interests of the Company or that may make it difficult to perform your work objectively and effectively. In general, the following should be considered conflicts of interest:
- Competing Business. No employee may be concurrently employed by a business that competes with the Company or deprives it of any business.
- Corporate Opportunity. No employee should use corporate property, information or his or her position with the Company to secure a business opportunity that would otherwise be available to the Company. If you discover a business opportunity that is in the Company's line of business, through the use of the Company's property, information or position, you must first present the business opportunity to the Company before pursuing the opportunity in your individual capacity.
- Financial Interests.
(i) No employee may have any financial interest (ownership or otherwise), either directly or indirectly through a spouse or other family member, in any other business entity if such financial interest adversely affects the employee's performance of duties or responsibilities to the Company, or requires the employee to devote certain time during such employee's working hours at the Company;
(ii) No employee may hold any ownership interest in a privately-held company that is in competition with the Company;
(iii) An employee may hold up to but no more than 5% ownership interest in a publicly traded company that is in competition with the Company;
(iv) No employee may hold any ownership interest in a company that has a business relationship with the Company if such employee's duties at the Company include managing or supervising the Company's business relations with that company
If an employee's ownership interest in a business entity described in clause (iii) above increases to more than 5%, the employee must immediately report such ownership to the Compliance Officer.
- Loans or Other Financial Transactions. No employee may obtain loans or guarantees of personal obligations from, or enter into any other personal financial transaction with, any company that is a material customer, supplier or competitor of the Company. This guideline does not prohibit arms-length transactions with recognized banks or other financial institutions.
- Service on Boards and Committees. No employee should serve on a board of directors or trustees or on a committee of any entity (whether profit or not-for-profit) whose interests reasonably could be expected to conflict with those of the Company. Employees must obtain prior approval from the Board before accepting any such board or committee position. The Company may revisit its approval of any such position at any time to determine whether service in such position is still appropriate.
It is difficult to list all of the ways in which a conflict of interest may arise, and we have provided only a few, limited examples. If you are faced with a difficult business decision that is not addressed above, ask yourself the following questions:
- Is it legal?
- Is it honest and fair?
- Is it in the best interests of the Company?
DISCLOSURE OF CONFLICTS OF INTEREST
The Company requires that employees fully disclose any situations that reasonably could be expected to give rise to a conflict of interest. If you suspect that you have a conflict of interest, or something that others could reasonably perceive as a conflict of interest, you must report it immediately to the Compliance Officer. Conflicts of interest may only be waived by the Board, or the appropriate committee of the Board, and will be promptly disclosed to the public to the extent required by law.
FAMILY MEMBERS AND WORK
The actions of family members outside the workplace may also give rise to conflicts of interest because they may influence an employee's objectivity in making decisions on behalf of the Company. If a member of an employee's family is interested in doing business with the Company, the criteria as to whether to enter into or continue the business relationship, and the terms and conditions of the relationship, must be no less favorable to the Company compared with those that would apply to a non-relative seeking to do business with the Company under similar circumstances.
Employees should report any situation involving family members that could reasonably be expected to give rise to a conflict of interest to their supervisor or the Compliance Officer. For purposes of this Code, "family members" or "members of your family" include your spouse, brothers, sisters and parents, in-laws and children.
GIFTS AND ENTERTAINMENT
The giving and receiving of gifts is common business practice. Appropriate business gifts and entertainment are welcome courtesies designed to build relationships and understanding among business partners. However, gifts and entertainment should never compromise, or appear to compromise, your ability to make objective and fair business decisions.
It is the responsibility of employees to use good judgment in this area. As a general rule, employees may give or receive gifts or entertainment to or from customers or suppliers only if the gift or entertainment could not be viewed as an inducement to any particular business decision. All gifts and entertainment expenses made on behalf of the Company must be properly accounted for on expense reports.
Employees may only accept appropriate gifts. We encourage employees to submit gifts received to the Company. While it is not mandatory to submit small gifts, gifts of over RMB200 must be submitted immediately to the administration department of the Company.
The Company's business conduct is founded on the principle of "fair transaction." Therefore, no employee may receive kickbacks, bribe others, or secretly receive commissions or any other personal benefits.
FCPA COMPLIANCE
The U.S. Foreign Corrupt Practices Act ("FCPA") prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. A violation of FCPA no only violates the Company's policy but is also a civil or criminal offense under FCPA which the Company is subject to after the Effective Time. No employee shall give or authorize directly or indirectly any illegal payments to government officials of any country. While the FCPA does, in certain limited circumstances, allow nominal "facilitating payments" to be made, any such payment must be discussed with and approved by your supervisor in advance before it can be made.
PROTECTION AND USE OF COMPANY ASSETS
Employees should protect the Company's assets and ensure their efficient use for legitimate business purposes only. Theft, carelessness and waste have a direct impact on the Company's profitability. The use of the funds or assets of the Company, whether for personal gain or not, for any unlawful or improper purpose is strictly prohibited.
To ensure the protection and proper use of the Company's assets, each employee should:
- Exercise reasonable care to prevent theft, damage or misuse of Company property;
- Promptly report the actual or suspected theft, damage or misuse of Company property;
- Safeguard all electronic programs, data, communications and written materials from inadvertent access by others; and
- Use Company property only for legitimate business purposes.
Except as approved in advance by the Chief Executive Officer or Chief Financial Officer of the Company, the Company prohibits political contributions (directly or through trade associations) by any employee on behalf of the Company. Prohibited political contribution activities include:
- any contributions of Company funds or other assets for political purposes,
- encouraging individual employees to make any such contribution;
- reimbursing an employee for any political contribution.
INTELLECTUAL PROPERTY AND CONFIDENTIALITY
- All inventions, creative works, computer software, and technical or trade secrets developed by an employee in the course of performing the employee's duties or primarily through the use of the Company's materials and technical resources while working at the Company, shall be the property of the Company.
- The Company maintains a strict confidentiality policy. During an employee's term of employment, the employee shall comply with any and all written or unwritten rules and policies concerning confidentiality and shall fulfill the duties and responsibilities concerning confidentiality applicable to the employee.
- In addition to fulfilling the responsibilities associated with his position in the Company, an employee shall not, without first obtaining approval from the Company, disclose, announce or publish trade secrets or other confidential business information of the Company, nor shall an employee use such confidential information outside the course of his duties to the Company.
- Even outside the work environment, an employee must maintain vigilance and refrain from disclosing important information regarding the Company or its business, customers or employees.
- An employee's duty of confidentiality with respect to the confidential information of the Company survives the termination of such employee's employment with the Company for any reason until such time as the Company discloses such information publicly or the information otherwise becomes available in the public sphere through no fault of the employee.
- Upon termination of employment, or at such time as the Company requests, an employee must return to the Company all of its property without exception, including all forms of medium containing confidential information, and may not retain duplicate materials.
ACCURACY OF FINANCIAL REPORTS AND OTHER PUBLIC COMMUNICATIONS
Upon the completion of the IPO, the Company will be required to report its financial results and other material information about its business to the public and the SEC. It is the Company's policy to promptly disclose accurate and complete information regarding its business, financial condition and results of operations. Employees must strictly comply with all applicable standards, laws, regulations and policies for accounting and financial reporting of transactions, estimates and forecasts. Inaccurate,
incomplete or untimely reporting will not be tolerated and can severely damage the Company and result in legal liability.
Employees should be on guard for, and promptly report, any possibility of inaccurate or incomplete financial reporting. Particular attention should be paid to:
- Financial results that seem inconsistent with the performance of the underlying business;
- Transactions that do not seem to have an obvious business purpose; and
- Requests to circumvent ordinary review and approval procedures.
The Company's senior financial officers and other employees working in the Finance Department have a special responsibility to ensure that all of the Company's financial disclosures are full, fair, accurate, timely and understandable. Any practice or situation that might undermine this objective should be reported to the Compliance Officer.
Employees are prohibited from directly or indirectly taking any action to coerce, manipulate, mislead or fraudulently influence the Company's independent auditors for the purpose of rendering the financial statements of the Company materially misleading. Prohibited actions include but are not limited to those actions taken to coerce, manipulate, mislead or fraudulently influence an auditor:
- to issue or reissue a report on the Company's financial statements that is not warranted in the circumstances (due to material violations of U.S. GAAP, generally accepted auditing standards or other professional or regulatory standards);
- not to perform audit, review or other procedures required by generally accepted auditing standards or other professional standards;
- not to withdraw an issued report; or
- not to communicate matters to the Company's Audit Committee.
COMPANY RECORDS
Accurate and reliable records are crucial to the Company's business and form the basis of its earnings statements, financial reports and other disclosures to the public. The Company's records are the source of essential data that guides business decision-making and strategic planning. Company records include, but are not limited to, booking information, payroll, timecards, travel and expense reports, e-mails, accounting and financial data, measurement and performance records, electronic data files and all other records maintained in the ordinary course of our business.
All Company records must be complete, accurate and reliable in all material respects. There is never an acceptable reason to make false or misleading entries. Undisclosed or unrecorded funds, payments or receipts are strictly prohibited. You are responsible for understanding and complying with the Company's record keeping policy. Contact the Compliance Officer if you have any questions regarding the record keeping policy.
COMPLIANCE WITH LAWS AND REGULATIONS
Each employee has an obligation to comply with the laws of the cities, provinces, regions and countries in which the Company operates. This includes, without limitation, laws covering commercial bribery and kickbacks, copyrights, trademarks and trade secrets, information privacy, insider trading, offering or receiving gratuities, employment harassment, environmental protection, occupational health and safety, false or misleading financial information, misuse of corporate assets and foreign currency exchange activities. Employees are expected to understand and comply with all laws, rules and regulations that apply to your position at the Company. If any doubt exists about whether a course of action is lawful, you should seek advice immediately from the Compliance Officer.
MISCELLANEOUS
DISCRIMINATION AND HARASSMENT
The Company is firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination or harassment based on race, ethnicity, religion, gender, age, national origin or any other protected class. For further information, you should consult the Compliance Officer.
HEALTH AND SAFETY
The Company strives to provide employees with a safe and healthy work environment. Each employee has responsibility for maintaining a safe and healthy workplace for other employees by following environmental, safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions. Violence and threatening behavior are not permitted.
Each employee is expected to perform his or her duty to the Company in a safe manner, free of the influences of alcohol, illegal drugs or other controlled substances. The use of illegal drugs or other controlled substances in the workplace is prohibited.
VIOLATIONS OF THE CODE
All employees have a duty to report any known or suspected violation of this Code, including any violation of laws, rules, regulations or policies that apply to the Company. Reporting a known or suspected violation of this Code by others will not be considered an act of disloyalty, but an action to safeguard the reputation and integrity of the Company and its employees.
If you know of or suspect a violation of this Code, it is your responsibility to immediately report the violation to the Compliance Officer, who will work with you to investigate your concern. All questions and reports of known or suspected violations of this Code will be treated with sensitivity and discretion. The Compliance Officer and the Company will protect your confidentiality to the extent possible, consistent with the law and the Company's need to investigate your concern.
It is the Company's policy that any employee who violates this Code will be subject to appropriate discipline, including termination of employment, based upon the facts and circumstances of each particular situation. Your conduct as an employee of the Company, if it does not comply with the law or with this Code, can result in serious consequences for both you and the Company.
The Company strictly prohibits retaliation against an employee who, in good faith, seeks help or reports known or suspected violations. An employee inflicting reprisal or retaliation against another
employee for reporting a known or suspected violation will be subject to disciplinary action up to and including termination of employment.
WAIVERS OF THE CODE
Waivers of this Code will be granted on a case-by-case basis and only in extraordinary circumstances. Waivers of this Code may be made only by the Board, or the appropriate committee of the Board, and will be promptly disclosed to the public.
CONCLUSION
This Code contains general guidelines for conducting the business of the Company consistent with the highest standards of business ethics. If you have any questions about these guidelines, please contact the Compliance Officer. We expect all employees to adhere to these standards. Each employee is separately responsible for his or her actions. Conduct that violates the law or this Code cannot be justified by claiming that it was ordered by a supervisor or someone in higher management. If you engage in conduct prohibited by the law or this Code, you will be deemed to have acted outside the scope of your employment. Such conduct will subject you to disciplinary action, including termination of employment.
* * * * * * * * * * * * *
EXHIBIT 99.2
[LETTERHEAD OF COMMERCE & FINANCE]
October 18, 2007
Agria Corporation
M&C, Corporation Services Limited
PO Box 309GT, Ugland House,
South Church Street, George Town, Grand
Cayman, Cayman Islands
Dear Sirs,
We are qualified lawyers of the People's Republic of China (the 'PRC") and are qualified to issue opinions on the laws and regulations of the PRC.
We have acted as PRC counsel for Agria Corporation, a company incorporated under the laws of the Cayman Islands (the "Company"), in connection with (i) the Company's registration statement on Form F-1, including all amendments or supplements thereto (the "Registration Statement"), originally filed with the Securities and Exchange Commission (the "SEC"), under the U.S. Securities Act of 1933, as amended (the "Securities Act"), on October 18, 2007, relating to the offering by the Company of American Depositary Shares ("ADSs") representing ordinary shares of the Company (together with the ADSs, the "Offered Securities") and (ii) the Company's proposed listing of the ADSs on the New York Stock Exchange.
In rendering this opinion, we have examined the originals, or copies certified or otherwise identified to our satisfaction, of documents provided to us by the Company and such other documents, corporate records, certificates issued by governmental authorities in the PRC and officers of the Company and other instruments as we have deemed necessary or advisable for the purposes of rendering this opinion.
In rendering this opinion, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity with authentic original documents submitted to us as copies and the completeness of the documents provided to us. We have also assumed that no amendments, revisions, modifications or other changes have been made with respect to any of the documents after they were submitted to us for purposes of this opinion. We have further assumed the accuracy and completeness of all factual statements in the documents.
As used herein, (a) "PRC LAWS" means all laws, regulations, statutes, orders, decrees, guidelines, notices, judicial interpretations, subordinary legislations of the PRC which are publicly available(other than the laws of the Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Province); (b) "GOVERNMENTAL AGENCIES" means any court, governmental agency or body or any stock exchange authorities of the PRC (other than the Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan Province); (c) "GOVERNMENTAL APPROVALS" means all approvals, consents, waivers, sanctions, authorizations, declarations, filings, registrations, exemptions, permissions, endorsements, annual inspections, qualifications, licenses, certificates and permits required by Governmental Agencies; (d) "MATERIAL ADVERSE EFFECT" means a material adverse effect on the condition (financial or other), business, properties, results of operations or prospects of the Company and the PRC Companies (as defined
herein below) taken as a whole; and (e) "PROSPECTUS" means the prospectus, including all amendments or supplements thereto, that forms part of the Registration Statement.
1. On August 8, 2006, six PRC regulatory agencies, namely, the PRC Ministry of Commerce ("MOFCOM"), the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, the China Securities Regulatory Commission ("CSRC"), and the State Administration of Foreign Exchange, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the "NEW M&A RULE"), which became effective on September 8, 2006. The New M&A Rule purports, among other things, to require offshore special purpose vehicles, or SPVS, formed for overseas listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies or individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange. On September 21, 2006, pursuant to the New M&A Rule and other PRC laws and regulations, the CSRC, in its official website, promulgated relevant guidance with respect to the issues of listing and trading of domestic enterprises' securities on overseas stock exchanges, including a list of application materials with respect to the listing on overseas stock exchanges by SPVs. Based on our understanding of current PRC Laws, we believe that the New M&A Rule does not require the Company, which is not a special purpose vehicle formed or controlled by PRC companies or PRC individuals and established its PRC subsidiary by means of direct investment other than merger and acquisition of PRC domestic companies, to obtain the MOFCOM approval for (1) its establishment of Aero Biotech Science & Technology Co., Ltd. ("AGRIA CHINA"), (2)Agria China's entering into and consummation of contractual arrangements with Primalights III Agricultural Development Co., Ltd. ("P3A") and P3A's shareholders as described in the Section "Corporate History and Structure" of the Registration Statement, or (3)require the Company to obtain the CSRC approval in connection with this Offering. No other Governmental Approval is required for this offering.
2. The ownership structures of the Agria China and P3A, both currently and immediately after giving effect to the Offering, are in compliance with the PRC laws; the contractual arrangements among Agria China, P3A and P3A's shareholders governed by PRC law as described in the Registration Statement are valid, binding and enforceable, and will not result in any violation of PRC Laws; and the business operations of Agria China and P3A, as described in the Registration Statement, are in compliance with existing PRC laws and regulations in all material respects.
This opinion relates to the PRC Laws in effect on the date hereof.
We hereby consent to the use of this opinion in, and the filing hereof as an exhibit to, the above-mentioned Registration Statement and to the reference to our firm's name under the sections of the Prospectus entitled "Risk Factors", "Enforceability of Civil Liabilities", "Regulation", and "Legal Matters" included in the Registration Statement. In giving such consent, we do not thereby admit that we fall within the category of the person whose consent is required under Section 7 of the U.S. Securities Act of 1933, as amended, or the regulations promulgated thereunder.
Yours sincerely,
/s/ Commerce & Finance Law Offices Commerce & Finance Law Offices |