REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) dated August 26th, 2009,
is made and entered into by and among American Dairy, Inc. (the “Company”), a
company incorporated in the State of Utah in the United States, and Sequoia
Capital China Growth Fund I, L.P. and its affiliates as set forth on the
signature page (collectively, the “Purchasers” and individually, an
“Purchaser”).  The Company and the Purchasers are referred to herein
collectively as the “Parties” and individually as a “Party.” Capitalized terms
used herein but not otherwise defined herein shall have the respective meanings
set forth in the Subscription Agreement (as defined below).

WITNESSETH:

WHEREAS, pursuant to the Subscription Agreement dated August 11th, 2009 (the
“Subscription Agreement”) among the Company and the Purchasers, the Company has
agreed to issue and sell to the Purchasers, and the Purchasers have agreed to
purchase, 2,100,000 shares of Common Stock of the Company;

WHEREAS, as set forth in Section 8 of the Subscription Agreement, the Company
may issue additional shares of Common Stock to the Purchasers; and

WHEREAS, to induce the Purchasers to execute and deliver the Subscription
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act (as defined below), and applicable state securities laws,
with respect to the shares of the Company’s Common Stock issued and issuable to
the Purchasers.

NOW, THEREFORE, in consideration of the premises set forth above, the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Parties hereto hereby agree as follows:

1. Certain Definitions.

As used in this Agreement, the following terms shall have the following
meanings:

“2009 Notes Registration Rights Agreement” means the Registration Rights
Agreement, dated October 2, 2006, by and between the Company and the investors
that are parties thereto, as amended or restated from time to time.

“2012 Notes Registration Rights Agreement” means the Registration Rights
Agreement, dated June 1, 2007, by and between the Company, Citadel Equity Fund
Ltd. and other parties thereto, as amended or restated from time to time.

“Affiliate” means, with respect to any Person, any other Person which directly
or indirectly controls, is controlled by, or is under common control with, such
Person.

“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

“Closing Date” has the meaning ascribed to it in the Subscription Agreement.

“Effectiveness Date” means the date on which the Registration Statement is
declared effective by the SEC.

“Effectiveness Period” means a period that will terminate upon the earlier of
(i) the date on which all Registrable Securities have been sold pursuant to the
Registration Statement, as amended from time to time, (ii) the date on which all
Registrable Securities covered by such Registration Statement are eligible to be
sold pursuant to Rule 144 without limitations as to volume, or (iii) three (3)
years from the Closing Date as defined in the Subscription Agreement.

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“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“Filing Date” means the date on which the Registration Statement is first filed
with the SEC.

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.

“Prospectus” shall mean the prospectus included in any Registration Statement,
as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Registrable Securities covered by
such Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.

“Register,” “registered” and “registration” refer to a registration made by
preparing and filing a Registration Statement or similar document in compliance
with the Securities Act (as defined below), and the declaration or ordering of
effectiveness of such Registration Statement or document.

“Registrable Securities” shall mean (i) the Shares, (ii) the Performance
Adjustment Shares, if any, (iii) the Participation Shares, if any, (each of them
has the meaning ascribed to it in the Subscription Agreement) and (iv) any other
securities issued or issuable with respect to or in exchange for any of (i),
(ii) or (iii) above, including shares issued in replacement therefor, whether
upon any stock split, stock dividend, recapitalization, subdivision or similar
event or otherwise, provided, however, that a security shall cease to be a
Registrable Security upon sale pursuant to a Registration Statement or upon
eligibility for resale without volume limitations pursuant to Rule 144 under the
Securities Act.

“Registration Statement” shall mean any registration statement of the Company
filed under the Securities Act that covers the resale of any of the Registrable
Securities pursuant to the provisions of this Agreement, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.

“SEC” means the United States Securities and Exchange Commission.

 “Securities Act” means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.

2. Registration.

(a) Mandatory Registration.

(i) The Company agrees to file under the Securities Act with the SEC as promptly
as practicable but in any event within 15 days after the Closing Date (the
“Filing Deadline”) a Registration Statement on Form S-3 or, in the event the
Company is not eligible to use Form S-3, on Form S-1, covering the resale of the
Registrable Securities issued or issuable pursuant to the Subscription
Agreement. For the avoidance of doubt, the Registration Statement shall also
cover the Performance Adjustment Shares as may become issuable pursuant to
Section 8.5 of the Subscription Agreement. Accordingly, the number of shares of
Common Stock initially included in such Registration Statement shall be no less
than 2,625,000, consisting of (i) 2,100,000 shares immediately issuable pursuant
to the Subscription Agreement and (ii) 525,000 shares, which represents the
maximum number of Performance Adjustment Shares issuable pursuant to the
Subscription Agreement. Such Registration Statement (and each amendment or
supplement thereto, and each request for acceleration of effectiveness thereof)
shall be provided in accordance with Section 4(c) below to the Purchasers and
their counsel prior to its filing or other submission.

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(ii) The Company agrees to cause the Registration Statement to become effective
as soon as practicable but in any event no later than the date (the
“Effectiveness Deadline”) of the earlier of (x) the 90th calendar day following
the Closing Date, provided that if the SEC reviews and has written comments to
the filed Registration Statement that would require the filing of a
pre-effective amendment thereto with the SEC, then Effectiveness Deadline shall
be the 120th calendar day following the Closing Date, or (y) the 5th trading day
following the date that the Company is notified by the SEC that the initial
Registration Statement will not be reviewed or it is no longer subject to review
and comments. The date on which the Registration Statement is actually declared
effective by the SEC shall be referred to herein as the “Effectiveness Date.”
The Company shall notify the Purchasers by facsimile or e-mail as promptly as
practicable, and in any event, within one (1) Business Day, after any such
Registration Statement is declared effective and shall provide the Purchasers
with copies of any related Prospectus to be used in connection with the sale or
other disposition of the securities covered thereby. The Company shall keep the
Registration Statement continuously effective during the Effectiveness Period.

(iii) In the event of (x) the Registration Statement is not filed with the SEC
on or prior to the Filing Deadline,  or (y) the Registration Statement is not
declared effective by the SEC on or prior to the Effectiveness Deadline, the
Company shall make a monthly payment in an amount of US$[0.945 million], which
represents 1.5% of the Aggregate Purchase Price (as defined in the Subscription
Agreement), to the Purchasers as the exclusive remedy (at law or equity) for the
damages to the Purchasers by reason of any such delay in or reduction of their
ability to sell the Registrable Securities, until the filing or effectiveness,
as applicable. Such payments shall be paid in U.S. dollar in immediately
available funds at the end of each month during which any of (x) or (y) above
remains outstanding.

(b) Demand Registration Rights.

(i) Generally. Subject to the conditions set forth in this Section 2(b), if, at
any time after the Filing Deadline and prior to the expiration of the
Effectiveness Period, (x) (I) additional Registrable Securities which have not
been included in the Registration Statement of the Company pursuant to Section
2(a) above, including without limitation the Participation Shares, are issued or
issuable to the Purchasers or (II) a Registration Statement covering the sale of
all of the Registrable Securities is not then effective and available for sales
thereof by the Purchasers, and (y) the Company receives from the Purchasers a
written request (the “Demand Request”) requesting that the Company effect a
registration with respect to all or a part of the Registrable Securities (which
request shall state the number of shares of Registrable Securities to be
disposed of and the intended methods of disposition of such shares by the
Purchasers), the Company shall as soon as practicable, file and use commercially
reasonable efforts to effect such registration (including, without limitation,
filing post-effective amendments, appropriate qualifications under applicable
U.S. blue sky or other state securities laws, and appropriate compliance with
the Securities Act) and to permit or facilitate the sale and distribution of all
or such portion of such Registrable Securities as are specified in the Demand
Request.

(ii) Limitations. The Company shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to this Section 2(b):

(A) If the Purchasers, together with the holders of any other securities of the
Company entitled to inclusion in such registration statement (the “Other
Holders”), propose to sell Registrable Securities and such other securities (if
any) at an aggregate offering price (after deduction of underwriters’ discounts
and expenses related to issuance) of less than U.S.$10,000,000;

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(B) After the Company has initiated one (1) such registrations pursuant to this
Section 2(b) (counting for these purposes only (I) registrations which have been
declared or ordered effective, and (II) a demand registration right under this
Section 2(b) that the Purchasers have affirmatively forfeited); or

(C) During the period starting with the date sixty (60) days prior to the
Company’s good faith estimate of the date of filing of, and ending on a date one
hundred eighty (180) days after the effective date of, a Company-initiated
registration; provided that the Company is actively employing commercially
reasonable efforts to cause such registration statement to become effective.

(iii) Deferral. If (A) in the good faith judgment of the Board of Directors of
the Company (excluding any interested directors), the filing of a registration
statement under this Section 2(b) covering the Registrable Securities would be
materially detrimental to the Company and the Board of Directors of the Company
(excluding any interested directors) concludes, as a result, that it is in the
best interests of the Company to defer the filing of such registration statement
at such time, and (B) the Company shall furnish to such Purchasers a certificate
signed by the Chief Executive Officer or the Chief Financial Officer of the
Company stating that in the good faith judgment of the Board of Directors of the
Company (excluding any interested directors), it would be materially detrimental
to the Company for such registration statement to be filed in the near future
and that it is, therefore, in the best interests of the Company to defer the
filing of such registration statement, then (in addition to the limitations set
forth in Section 2(b)(ii) above) the Company shall have the right to defer such
filing for a period of not more than one hundred twenty (120) days after receipt
of the request of the Purchasers, and, provided further, that the Company shall
not defer its obligation in this manner more than twice in any twelve (12) month
period.

(iv) Underwriting.

(A) If the Purchasers intend to distribute the Registrable Securities covered by
their Demand Request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to this Section 2(b). In such
event, the right of the Purchasers to include all or any portion of their
Registrable Securities in such registration pursuant to this Section 2(b) shall
be conditioned upon the Purchasers’ participation in such underwriting and the
inclusion of the Purchasers’ Registrable Securities to the extent provided
herein. If the Company shall request inclusion in any registration pursuant to
this Section 2(b) of securities being sold for its own account, or if Other
Holders shall request inclusion in any registration pursuant to this Section
2(b), the Purchasers shall offer to include such securities in the underwriting
and such offer shall be conditioned upon the participation of the Company or
such Other Holders in such underwriting and the inclusion of the Company’s and
such Other Holders’ other securities of the Company and their acceptance of the
further applicable provisions of this Section 2. The Company shall (together
with the Purchasers and Other Holders proposing to distribute their securities
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters selected for
such underwriting by the Company.

(B) Notwithstanding any other provision of this Section 2(b), if the
underwriters advise the Purchasers in writing that marketing factors require a
limitation on the number of shares to be underwritten, the number of Registrable
Securities and the securities held by Other Holders that may be so included
shall be allocated as follows: (I) first, to the Purchasers; (II) second, to
Other Holders electing to register shares in connection with such registration;
and (III) third, to the Company, which the Company may allocate, at its
discretion, for its own account, or for the account of others designated by the
Company.

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(C) If a person who has requested inclusion in a registration pursuant to this
Section 2(b) does not agree to the terms of any underwriting in accordance with
this Section 2(b)(iv), such person shall be excluded from the underwriting by
written notice from the Company, the underwriters or the Purchasers. The
securities so excluded shall also be withdrawn from registration. If shares are
so withdrawn from the registration and if the number of shares to be included in
such registration was previously reduced as a result of marketing factors
pursuant to Section 2(b)(iv)(B) above, then the Company shall then offer to the
Purchasers and Other Holders who have elected to include and retained rights to
include securities in the registration the right to include additional
Registrable Securities or the securities held by Other Holders, as applicable,
in the registration in an aggregate amount equal to the number of shares so
withdrawn, with such shares to be allocated among such Investors and Other
Holders requesting additional inclusion, in order of priority as set forth in
Section 2(b)(iv)(B) above.

(c) Piggyback Registration Rights.

(i) Generally. If, at any time after the Filing Deadline and prior to the
expiration of the Effectiveness Period, (A) the Company proposes to register
shares of Common Stock under the Securities Act in connection with the public
offering of such shares for cash other than a registration statement on Form S-8
or Form S-4 or any successor or other forms promulgated for similar purposes (a
“Proposed Registration”) and (B) a Registration Statement covering the sale of
all of the Registrable Securities is not then effective and available for sales
thereof by the Purchasers, the Company shall, at such time, promptly give the
Purchasers a written notice of such Proposed Registration. The Purchasers shall
have ten (10) Business Days from their receipt of such notice to deliver to the
Company a written request specifying the amount of Registrable Securities that
the Purchasers intend to sell and the Purchasers’ intended method of
distribution. Upon receipt of such request, the Company shall use commercially
reasonable efforts to cause all Registrable Securities which the Company has
been requested to register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition in accordance with
the intended methods of distribution specified in the request of the Purchasers;
provided, however, that the Company shall have the right to postpone or withdraw
any registration effected pursuant to this Section 2(c) without obligation to
the Purchasers.

(ii) Underwriting.

(A) If the Registration of which the Company gives notice is for a registered
public offering involving an underwriting, the Company shall so advise the
Purchasers as part of the written notice given pursuant to Section 2(c)(i). In
such event, the right of the Purchasers to include all or any portion of their
Registrable Securities in such registration pursuant to this Section 2(c) shall
be conditioned upon the Purchasers’ participation in such underwriting and the
inclusion of the Purchasers’ Registrable Securities to the extent provided
herein. If the Purchasers shall request inclusion in any registration pursuant
to this Section 2(c) of their Registrable Securities, the Company shall offer to
include such securities in the underwriting and such offer shall be conditioned
upon the participation of the Purchasers and the inclusion of the Purchasers’
Registrable Securities and their acceptance of the further applicable provisions
of this Section 2(c). The Purchasers whose shares are to be included in such
Registration shall (together with Other Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or underwriters
selected for such underwriting by the Company.

(B) Notwithstanding any other provision of this Section 2(c), if the
underwriters advise the Company in writing that marketing factors require a
limitation on the number of shares to be underwritten, the Company shall be
obligated to include in the registration statement only such limited portion of
the Registrable Securities with respect to which the Purchasers have requested
inclusion hereunder as such underwriters shall permit. The Company shall not
exclude any Registrable Securities unless the Company has first excluded all
outstanding securities, the holders of which are not entitled to inclusion of
such securities in the registration statement or are not entitled to pro rata
inclusion with the Registrable Securities; and any exclusion of Registrable
Securities shall be made pro rata with holders of other securities that are
entitled to pro rata inclusion with the Registrable Securities, who have elected
to include such securities in the registration statement.

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(C) If a person who has requested inclusion in a registration pursuant to this
Section 2(c) does not agree to the terms of any underwriting in accordance with
this Section 2(c)(ii), such person shall be excluded from the underwriting by
written notice from the Company or the underwriter. The securities so excluded
shall also be withdrawn from registration. If shares are so withdrawn from the
registration and if the number of shares to be included in such registration was
previously reduced as a result of marketing factors pursuant to Section
2(c)(ii)(B) above, then the Company shall then offer to the Purchasers and Other
Holders who have elected to include and retained rights to include securities in
the registration the right to include additional Registrable Securities or the
securities held by Other Holders, as applicable, in the registration in an
aggregate amount equal to the number of shares so withdrawn, with such shares to
be allocated among the Purchasers and Other Holders requesting additional
inclusion, in order of priority as set forth in Section 2(c)(ii)(B) above.

(d) Expenses.

The Company will pay all expenses associated with each registration, including
filing and printing fees, the Company’s counsel and accounting fees and
expenses, costs associated with clearing the Registrable Securities for sale
under applicable state securities laws and listing fees, but excluding fees and
expenses of counsel to the Purchasers, discounts, commissions, fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Registrable Securities being sold, provided
that the Company shall pay the reasonable fees and expenses of one counsel for
the Purchasers not to exceed U.S.$5,000.

3. Suspension.

(a) Subject to Section 3(b) below, in the event: (i) of any request by the SEC
or any other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to the
Registration Statement or related prospectus or for additional information so
that the Registration Statement will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or otherwise fail to
comply with the applicable rules and regulations of the federal securities laws;
(ii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose; (iii) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for resale in any jurisdiction or the initiation of any proceeding
for such purpose, provided that, considering the advice of counsel, the Company
reasonably believes that it must qualify in such jurisdiction; (iv) of any event
or circumstance that, considering the advice of counsel, the Company reasonably
believes necessitates the making of any changes in the Registration Statement or
related prospectus, or any document incorporated or deemed to be incorporated
therein by reference, so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or any omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of a related prospectus,
it will not contain any untrue statement of a material fact or any omission to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; or (v) that the Company reasonably believes, considering
the advice of counsel, that the Company may, in the absence of a suspension
described hereunder, be required under state or federal securities laws to
disclose any corporate development, the disclosure of which could reasonably be
expected to have a material adverse effect upon the Company, its shareholders, a
potentially material transaction or event involving the Company, or any
negotiations, discussions or proposals directly relating thereto; then the
Company shall deliver a certificate in writing (the “Suspension Notice”) to each
holder of Registrable Securities (the “Holder”) to the effect of the foregoing
(but in no event, without the prior written consent of the Purchasers, shall the
Company disclose to the Purchasers any of the facts or circumstances regarding
any material nonpublic information) and, upon receipt of such Suspension Notice,
the Holder will refrain from selling any Registrable Securities pursuant to the
Registration Statement (a “Suspension”) until the Holder’s receipt of copies of
a supplemented or amended prospectus prepared and filed by the Company or until
the Holder is advised in writing by the Company that the current prospectus may
be used and the Holder has received copies of any additional or supplemental
filings that are incorporated or deemed incorporated by reference in any such
prospectus.

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(b) Notwithstanding the foregoing, the Company shall not suspend any
Registration Statement or related prospectus for more than sixty (60)
consecutive days or for a total of more than one hundred twenty (120) days in
any twelve (12) month period.

(c) The Company will use commercially reasonable efforts to terminate a
Suspension as promptly as practicable after delivery of a Suspension Notice to
the Holders.

4. Company Obligations.

The Company will use commercially reasonable efforts to effect the registration
of the Registrable Securities in accordance with the terms hereof, and pursuant
thereto the Company will, at the expense of the Company:

(a) use commercially reasonable efforts to cause such Registration Statement to
become effective and to remain continuously effective for the Effectiveness
Period and advise the Purchasers in writing when the Effectiveness Period has
expired;

(b) prepare and file with the SEC such amendments and post-effective amendments
to the Registration Statement and such supplements to the Prospectus as may be
necessary to keep the Registration Statement effective for the period specified
in Section 4(a) and to comply with the provisions of the Securities Act and the
Exchange Act with respect to the distribution of all of the Registrable
Securities covered thereby;

(c) provide copies to and permit counsel designated by the Purchasers, if any,
to review the Registration Statement and any amendments or supplements thereto
and any comments made by the staff of the SEC and the Company’s responses
thereto a reasonable period of time prior to its filing with the SEC or its
receipt from the SEC as applicable and shall duly consider comments made by such
counsel thereon;

(d) furnish to the Purchasers and their legal counsel (i) promptly after any
Registration Statement is prepared and publicly distributed, filed with the SEC,
or received by the Company (but not later than two (2) Business Days after the
filing date, receipt date or sending date, as the case may be) an electronic
copy of any Registration Statement and any amendment thereto, each preliminary
prospectus and Prospectus and each amendment or supplement thereto, and each
letter written by or on behalf of the Company to the SEC or the staff of the
SEC, and each item of correspondence from the SEC or the staff of the SEC, in
each case relating to such Registration Statement (other than any portion of any
thereof which contains information for which the Company has sought confidential
treatment), and (ii) an electronic copy of a Prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents
as each Purchaser may reasonably request in connection with the disposition of
the Registrable Securities owned by such Purchaser that are covered by the
related Registration Statement;

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(e) use commercially reasonable efforts to (i) prevent the issuance of any stop
order or other suspension of effectiveness and, (ii) if such order is issued,
obtain the withdrawal of any such order at the earliest practicable time and to
notify the Purchasers of the issuance of such an order and the resolution
thereof;

(f) prior to any public offering of Registrable Securities, use commercially
reasonable efforts to register or qualify or cooperate with the Purchasers and
their counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or blue sky laws
of such jurisdictions requested by the Purchasers and do any and all other
reasonable acts or things necessary or advisable to enable the distribution in
such jurisdictions of the Registrable Securities covered by the Registration
Statement; provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (i) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 4(f), (ii) subject itself to general taxation in any jurisdiction
where it would not otherwise be so subject but for this Section 4(f), or (iii)
file a general consent to service of process in any such jurisdiction;

(g) use commercially reasonable efforts to cause all Registrable Securities
covered by a Registration Statement to be listed on the primary securities
exchange, interdealer quotation system or other market on which similar
securities issued by the Company are then listed;

(h) as soon as practicable notify the Purchasers, at any time when a Prospectus
relating to Registrable Securities is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event as a
result of which, the Prospectus included in a Registration Statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and at the
request of any such holder, as soon as practicable, and subject to the Company’s
right to delay or refrain from filing as contemplated herein, prepare and
furnish to such holder an electronic copy of a supplement to or an amendment of
such 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 a 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 commercially reasonable efforts to comply with all applicable
rules and regulations of the SEC under the Securities Act and the Exchange Act,
take such other actions as may be necessary to facilitate the registration of
the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability
Date (as defined below), an earnings statement covering a period of at least
twelve (12) months, beginning after the effective date of each Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, including Rule 158 promulgated thereunder (for the
purpose of this subsection 4(i), “Availability Date” means the 45th day
following the end of the fourth fiscal quarter that includes the effective date
of such Registration Statement, except that, if such fourth fiscal quarter is
the last quarter of the Company’s fiscal year, “Availability Date” means the
90th day after the end of such fourth fiscal quarter);

(j) with a view to making available to the Purchasers the benefits of Rule 144
(or its successor rule) and any other rule or regulation of the SEC that may at
any time permit the Purchasers to sell shares of Common Stock to the public
without registration, the Company covenants and agrees to: (i) make and keep
adequate current public information available, as those terms are understood and
defined in Rule 144, during the Effectiveness Period; (ii) file with the SEC in
a timely manner all reports and other documents required of the Company under
the Exchange Act; and (iii) furnish to the Purchasers upon request, as long as
the Purchasers own any Registrable Securities, (A) a written statement by the
Company that it has complied with the reporting requirements of the Exchange
Act, (B) a copy of the Company’s most recent Annual Report on Form 10-K or
Quarterly Report on Form 10-Q, and (C) such other information as may be
reasonably requested in order to avail the Purchasers of any rule or regulation
of the SEC that permits the selling of any such Registrable Securities without
registration;

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(k) hold in confidence and not make any disclosure of information concerning the
Purchasers provided to the Company if at the time such information is provided
the Company is notified of the confidential nature of such information unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement that
includes the Purchasers’ Registrable Securities, (iii) the release of such
information is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction, (iv) such information has been made
generally available to the public other than by disclosure in violation of this
or any other agreement, or (v) the Purchasers consent to the form and content of
any such disclosure, which consent shall not be unreasonably withheld or
delayed. The Company shall, upon learning that disclosure of any information
concerning the Purchasers is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt notice to the
Purchasers;

(l) provide a transfer agent and registrar, which may be a single entity, for
the Registrable Securities not later than the Effectiveness Date of the
Registration Statement;

(m) if, after the Closing Date, any Purchaser believes, based upon the written
opinion of its legal counsel, that it could reasonably be deemed to be an
underwriter of Registrable Securities, or if any Purchaser intends to distribute
the Registrable Securities covered by means of an underwriting, at the request
of such Purchaser, the Company shall (i) cause to be prepared and shall furnish
to such Purchaser or underwriters, on the date of the effectiveness of a
Registration Statement and thereafter from time to time on such dated as such
Purchaser or underwriter may reasonably request (A) a customary “comfort
letter,” dated as of such date, from the Company’s independent certified public
accountants to underwriters in an underwritten public offering, addressed to
such Purchaser or underwriters, and (B) an opinion, dated as of such date, of
legal counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to such Purchaser or underwriters, (ii)
make available by such Purchaser or underwriters, their legal counsel and one
firm of accountants or other agents retained by such Purchaser or underwriters
(collectively, the “Inspectors”) during regular business hours and upon
reasonable notice, all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the “Records”),
as shall be reasonably deemed necessary or appropriate by each Inspector, and
cause the Company’s officers, directors and employees to supply all information
which any Inspector may reasonably request; provided, however, that each
Inspector shall agree to hold in strict confidence and shall not make any
disclosure (except to such Purchaser or underwriters and the other Inspectors)
or use of any Record or other information which the Company determines in good
faith to be confidential, and of which determination the Inspectors are so
notified, unless (x) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise
required under the Securities Act, (y) ordered by a court of competent
jurisdiction or (z) the information in such Records has been made generally
available to the public other than by disclosure in violation of this Agreement,
and (iii) in the event of an underwritten offering, enter into an underwriting
agreement in customary form with the representative of the underwriter. Nothing
herein (or in any other confidentiality agreement between the Company and any
Purchaser) shall be deemed to limit any Purchaser’s ability to sell Registrable
Securities in a manner which is otherwise consistent with applicable laws and
regulations; and

(n) if requested by the Purchasers, the Company shall, as soon as practicable
(i) incorporate in a prospectus supplement or post-effective amendment such
information as the Purchasers reasonably requests to be included therein
relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being offered or sold, the purchase price being paid therefor and any
other terms of the offering of the Registrable Securities to be sold in such
offering, (ii) make all required filings of such prospectus supplement or
post-effective amendment and (iii) supplement or make amendments to any
Registration Statement if reasonably requested by the Purchasers holding any
Registrable Securities.

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5. Obligations of the Purchasers.

(a) Each Purchaser shall furnish in writing to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it, as shall be required to
effect the registration of such Registrable Securities and as shall be necessary
so that the Registration Statement, the Prospectus or any preliminary prospectus
or similar offering document shall not include any untrue statement or alleged
untrue statement of a material fact or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall promptly notify the Company if any such
previously provided information shall contain or omit any such information. Each
Purchaser shall also execute such documents in connection with such registration
as the Company may reasonably request. At least five (5) Business Days prior to
the first anticipated filing date of any Registration Statement, the Company
shall notify each Purchaser of the information the Company requires from such
Purchaser if such Purchaser elects to have any of the Registrable Securities
included in the Registration Statement. A Purchaser shall provide such
information to the Company at least two (2) Business Days prior to the first
anticipated filing date of such Registration Statement if such Purchaser elects
to have any of the Registrable Securities included in the Registration
Statement.

(b) Each Purchaser, by its acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of a Registration Statement hereunder, unless
such Purchaser has notified the Company in writing of its election to exclude
all of its Registrable Securities from such Registration Statement.

(c) Each Purchaser agrees that, upon receipt of any notice from the Company of
the commencement of a Suspension pursuant to Section 3, such Purchaser will
immediately discontinue disposition of Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities, until the
Purchaser’s receipt of the supplemented or amended prospectus filed with the SEC
and until any related post-effective amendment is declared effective and, if so
directed by the Company, the Purchaser shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Purchaser’s possession of the Prospectus covering
the Registrable Securities current at the time of receipt of such notice.

6. Indemnification.

(a) Indemnification by the Company.

The Company agrees to indemnify and hold harmless, to the fullest extent
permitted by law, the Purchasers and their respective directors, managers,
officers, employees, stockholders, members, and each Person who controls any
Purchaser (within the meaning of the Securities Act) against any losses, claims,
damages, judgments, amounts paid in settlement, liabilities and expenses
(including, without limitation, reasonable attorneys’ fees) resulting from or
which arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact in any Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other “blue sky” laws of any jurisdiction
in which Registrable Securities are offered (“Blue Sky Filing”) or the omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement or contained in the final prospectus (as amended or supplemented) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in the light of the circumstances under which
the statements therein were made, not misleading (any of the foregoing, a
“Violation”), and will reimburse each Purchaser and their respective directors,
managers, members, officers, employees, stockholders or controlling Persons for
any legal and other expenses reasonably incurred as such expenses are reasonably
incurred by such Person in connection with investigating, defending, settling,
compromising or paying any such Violation; provided, however, that the Company
will not be liable in any such case if and to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information furnished in writing by a Purchaser specifically for use in
such Registration Statement or Prospectus or any other offering document.

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(b) Indemnification by the Purchasers.

Each Purchaser agrees, severally and jointly, to indemnify and hold harmless, to
the fullest extent permitted by law, the Company, its directors, officers,
employees, shareholders and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, judgments,
amounts paid in settlement, liabilities and expenses (including, without
limitation, reasonable attorneys’ fees) resulting from or which arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission of a material fact required to
be stated in the Registration Statement or Prospectus or preliminary prospectus
or amendment or supplement thereto or necessary to make the statements therein
not misleading, to the extent, but only to the extent that such untrue statement
or omission or alleged statement or omission is contained in any information
furnished in writing by such Purchaser to the Company specifically for inclusion
in such Registration Statement or Prospectus or amendment or supplement thereto,
and (ii) any inaccuracy in the representations and warranties of the Purchaser
contained in this Agreement, and will reimburse the Company, and its directors,
officers, employees, shareholders or controlling Persons for any legal and other
expenses reasonably incurred as such expenses are reasonably incurred by such
Person in connection with investigating, defending, settling, compromising or
paying any such loss, claim, damage, liability, expense or action. In no event
shall the liability of a Purchaser be greater in amount than the dollar amount
of the proceeds (net of all expenses paid by such Purchaser in connection with
any claim relating to this Section 6 and the amount of any damages such
Purchaser has otherwise been required to pay by reason of such untrue statement
or omission or alleged untrue statement or omission) received by such Purchaser
upon the sale of the Registrable Securities included in the Registration
Statement giving rise to such indemnification obligation.

(c) Conduct of Indemnification Proceedings.

Any Person entitled to indemnification hereunder shall (i) give prompt notice to
the indemnifying party of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided that any Person entitled to indemnification hereunder shall have the
right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of such
Person unless (a) the indemnifying party has agreed to pay such fees or
expenses, or (b) the indemnifying party shall have failed to assume the defense
of such claim within five (5) Business Days after written notice thereof and
employ counsel reasonably satisfactory to such Person or (c) a conflict of
interest exists between such Person and the indemnifying party with respect to
such claims (in which case, if the Person notifies the indemnifying party in
writing that such Person elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such claim on behalf of such Person); and provided, further, that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more than
one additional firm of attorneys at any time for all such indemnified parties.
No indemnifying party will, except with the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect of such
claim or litigation.

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(d) Contribution.

If for any reason the indemnification provided for in the preceding paragraphs
(a) and (b) is unavailable to an indemnified party or insufficient to hold it
harmless, other than as expressly specified therein, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative fault of the indemnified party and the
indemnifying party, as well as any other relevant equitable considerations. No
Person guilty of fraudulent misrepresentation within the meaning of Section
11(f) of the Securities Act shall be entitled to contribution from any Person
not guilty of such fraudulent misrepresentation. In no event shall the
contribution obligation of a Purchaser be greater in amount than the dollar
amount of the proceeds (net of all expense paid by such Purchaser in connection
with any claim relating to this Section 6 and the amount of any damages such
Purchaser has otherwise been required to pay by reason of such untrue statement
or omission or alleged untrue statement or omission) received by such Purchaser
upon the sale of the Registrable Securities included in the Registration
Statement giving rise to such contribution obligation.

7. Miscellaneous.

(a) Amendments and Waivers. This Agreement may be amended only by a writing
signed by the Company and the Purchasers. The Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company shall have obtained the written consent to such amendment,
action or omission to act, of the Purchasers.

(b) Notices. All notices and other communications provided for or permitted
hereunder shall be made as set forth in Section 10.6 of the Subscription
Agreement.

(c) Assignments and Transfers by Purchasers. The provisions of this Agreement
shall be binding upon and inure to the benefit of the Purchasers and their
respective successors and permitted assigns. A Purchaser may transfer or assign,
in whole or from time to time in part, to one or more Persons its rights
hereunder to whom such Purchaser transfers the Registrable Securities in
compliance with Section 10.13 of the Subscription Agreement, provided that such
Purchaser complies with all laws applicable thereto and provides written notice
of assignment to the Company promptly after such assignment is effected.

(d) Assignments and Transfers by the Company. This Agreement may not be assigned
by the Company without the prior written consent of the Purchasers, provided,
however, that the Company may assign their respective rights and delegate their
respective duties hereunder to any surviving or successor corporation in
connection with a merger or consolidation of the Company, as applicable, with
another corporation, or a sale, transfer or other disposition of all or
substantially all of the Company’s assets, as applicable, to another
corporation, without the prior written consent of the Purchasers, after notice
duly given by the Company, as applicable, to each Purchaser.

(e) Benefits of the Agreement. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective permitted successors
and 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 assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

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(f) Counterparts; Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed and delivered via facsimile or other electronic transmission, which
shall be deemed due execution and delivery for all purposes.

(g) Titles and Subtitles. 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.

(h) Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the Parties hereby waive any provision of law which
renders any provisions hereof prohibited or unenforceable in any respect.

(i) Further Assurances. The Parties shall execute and deliver all such further
instruments and documents and take all such other actions as may reasonably be
required to carry out the transactions contemplated hereby and to evidence the
fulfillment of the agreements herein contained.

(j) No Inconsistent Agreements. The Company represents, warrants and agrees that
(i) it has not entered into, and shall not, on or after the date of this
Agreement, enter into any agreement that is inconsistent with the rights granted
to the Purchasers in this Agreement or otherwise conflicts with the provisions
hereof, and (ii) except for the 2009 Notes Registration Rights Agreement and the
2012 Notes Registration Rights Agreement, it has not previously entered into any
agreement which remains in effect granting any registration rights with respect
to any of its securities to any person.

(k) Entire Agreement. This Agreement, together with the Subscription Agreement,
is intended by the Parties as a final expression of their agreement and intended
to be a complete and exclusive statement of the agreement and understanding of
the Parties hereto in respect of the subject matter contained herein. This
Agreement, together with the Subscription Agreement, supersedes all prior
agreements and understandings between the Parties with respect to such subject
matter.

(l) Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each Party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each Party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

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(m) Termination. This Agreement, and all rights and obligations hereunder, shall
terminate and be of no further force and effect on the third anniversary of the
Closing Date as defined in the Subscription Agreement.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed
and delivered on the date and year first above written.
 
 

 

The Company:
American Dairy, Inc.

By: /s/ Leng
You-Bin                                                                           
Name: Leng You-Bin
Title: Chairman and Chief Executive Officer

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The Purchasers:
SEQUOIA CAPITAL CHINA I, L.P.
SEQUOIA CAPITAL CHINA PARTNERS FUND I, L.P.
SEQUOIA CAPITAL CHINA PRINCIPALS FUND I, L.P.

By: Sequoia Capital China Management I, L.P.
       A Cayman Islands Exempted Limited partnership
       General Partner of Each

By: SC China Holding Limited
       A Cayman Islands limited liability company
       Its General Partner

 
 
/s/ Jimmy
Wong                                                                       
Name:  Jimmy Wong
Title:    Authorized Signatory

SEQUOIA CAPITAL CHINA GROWTH FUND I, L.P.
SEQUOIA CAPITAL CHINA GROWTH PARTNERS FUND I, L.P.
SEQUOIA CAPITAL CHINA GF PRINCIPALS FUND I, L.P.
   
By: Sequoia Capital China Growth Fund Management I, L.P.
       A Cayman Islands exempted limited partnership
       General Partner of Each

By: SC China Holding Limited
       A Cayman Islands limited liability company
       Its General Partner

 
 
/s/ Jimmy
Wong                                                                       
Name:  Jimmy Wong
Authorized Signatory

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SEQUOIA CAPITAL U.S. GROWTH FUND IV, L.P.

By:  /s/                                                                           
Name:
Title:

 
 

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