Document:

Unassociated Document

    CONFIDENTIAL

    SHARE
      SUBSCRIPTION AGREEMENT

     

    by
      and
      between

     

    MOVEUP
      LIMITED 

    

    and

    

    AUSNUTRIA
      DAIRY INTERNATIONAL LTD.

    

    Dated:
      August 12, 2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SHARE
      SUBSCRIPTION AGREEMENT

     

    THIS
      SHARE SUBSCRIPTION AGREEMENT, dated as of August 12, 2007 (this “Agreement”),
      is
      entered into by and between:

     

    
      	
              (1)
                

            	
              Moveup
                Limited, a company incorporated under the laws of Samoa, as the issuer
                (the “Company”),
                and

            

    

     

    
      	(2)	
              Ausnutria
                Dairy International Ltd., a company incorporated under the laws of
                Cayman
                Islands, as the subscriber (the “Subscriber”) 

            

    

     

    Each
      of
      (1) and (2) shall be referred to as a “Party”,
      and
      collectively as the “Parties.”

     

    RECITALS

     

    WHEREAS,
      the Company is authorized to issue 1,000,000 one class and one series ordinary
      shares with par value of US$1.00, out of which 1 share has been issued and
      is
      currently outstanding;

    

    WHEREAS,
      the Company has entered into an Equity Purchase Agreement to purchase 100%
      of
      the equity interest in Ausnutria Dairy (Hunan) Company Ltd. (the “Target
      Company”),
      currently an equity joint venture established under the laws of the People’s
      Republic of China, from its current shareholders;

     

    WHEREAS,
      American Dairy, Inc. (“ADY”)
      has
      made a loan (the “Loan”)
      to the
      Company in the amount of $10 million under a Loan Agreement dated June 28,
      2007
      (the “Loan
      Agreement”)
      for
      the purposes of making a deposit or advance payment by the Company for the
      acquisition of the Target Company;

     

    WHEREAS,
      the Subscriber desires to invest in the Company, and the Company desires to
      accept the investment and issue certain number of its ordinary shares of capital
      to the Subscriber (the “New
      Shares”)
      pursuant to the terms and conditions set forth in this Agreement.

     

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

     

    1. DEFINITIONS

     

    1.1 Definitions.
      

     

    As
      used
      in this Agreement, and unless the context requires a different meaning, the
      capitalized terms not defined elsewhere in this Agreement have the following
      meanings:

     

    “Business
      Day”
means
      any day other than a Saturday, Sunday or other day on which commercial banks
      in
      the Cayman Islands, Samoa, New York and the PRC are authorized or required
      by
      law or executive order to close.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    “Charter
      Documents”
mean
      the Memorandum and Articles of Association of the Company.

     

    “Governmental
      Authority”
means
      the government of any nation, state, city, locality or other political
      subdivision thereof, any entity exercising executive, legislative, judicial,
      regulatory or administrative functions of or pertaining to government (including
      the government of the PRC and any other relevant jurisdiction).

     

    “Person”
means
      any individual, firm, corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, joint stock company, limited
      liability company, Governmental Authority or other entity of any kind, and
      shall
      include any successor (by merger or otherwise) of such entity.

     

    “PRC”
has
      the
      meaning set forth in the recitals of this Agreement, and for the purpose of
      this
      Agreement shall exclude Hong Kong, Taiwan and Macau.

     

    “US$”
means
      United States dollars.

     

    2. SUBSCRIPTION
      OF NEW SHARES

     

    2.1 Subscription
      and Issuance of Shares Subscriber
      hereby agrees to subscribe for, and the Company hereby agrees to issue to
      Subscriber as of the date hereof, the total number of 10,000 New Shares with
      par
      value of US$1.00 per share at the total purchase price of US$ 10 million (the
      “Subscription
      Price”).

    

    2.2 Payment  Subscriber
      will pay the Subscription Price by assuming all of the Company’s obligations
      under the Loan Agreement, including repayment of the Loan on behalf of the
      Company.

    

    2.3 Registration
      of Member  The
      Company shall, as promptly as practicable, register the Subscriber as holder
      of
      10,000 ordinary shares in its Register of Members. If requested by Subscriber,
      the Company shall deliver to Subscriber a share certificate issued in the name
      of Subscriber evidencing the 10,000 New Shares issued to Subscriber.

    

    3. REPRESENTATIONS
      AND WARRANTIES OF COMPANY

     

    The
      Company represents and warrants to the Subscriber as of the date hereof
      that:

     

    3.1 The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of Samoa and has all requisite corporate power and authority
      to
      carry on its business as now conducted and as proposed to be
      conducted.

     

    3.2 All
      corporate action required to be taken by the Company and its officers and
      directors necessary for the authorization, execution, delivery of this Agreement
      and to issue the New Shares hereunder, has been taken or will be taken as
      required under the Charter Documents or applicable law. This Agreement, when
      executed and delivered by the Company, shall constitute valid and legally
      binding obligations of the Company, enforceable against the Company in
      accordance with its terms except to the extent the enforceability thereof may
      be
      limited by bankruptcy laws, insolvency laws, reorganization laws or other laws
      affecting creditor’s rights generally or by general equitable principles.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    3.3 The
      authorized capital of the Company consists of 1, 000, 000 shares, 1 share of
      which has been issued and is outstanding prior to the execution of this
      Agreement. The sole outstanding share has been duly authorized and validly
      issued and was issued in compliance with the Charter Documents.
      

     

    3.4 The
      New
      Shares, when issued and subscribed in accordance with the terms and conditions
      set forth in this Agreement, will be validly issued and free of restrictions
      on
      transfer other than those under the Charter Documents and applicable
      laws.

     

    3.5 The
      execution, delivery and performance by the Company of this Agreement and the
      consummation of the transaction contemplated hereby or compliance by the Company
      with any of the provisions hereof will not result in, with or without the
      passage of time and giving of notice, (i) a violation of any provision of any
      laws applicable to the Company or to the transactions contemplated herein,
      (ii)
      a default under any such provision, instrument, judgment, order, writ, decree,
      contract or agreement or (iii) an event which results in the creation of any
      lien, charge or encumbrance upon any assets of the Company or the suspension,
      revocation, forfeiture, or non-renewal of any material permit or license
      applicable to the Company.

     

    4. REPRESENTATIONS
      AND WARRANTIES OF THE SUBSCRIBER

     

    The
      Subscriber represents and warrants to the Company as of the date hereof
      that:

     

    4.1 The
      Subscriber is a company duly organized, validly existing and in good standing
      under the laws of Cayman Islands, and has all requisite corporate power and
      legal capacity and authority to enter into this Agreement, and that this
      Agreement, when executed and delivered, will constitute its valid and legally
      binding obligation, enforceable against the Subscriber in accordance with its
      terms except to the extent the enforceability thereof may be limited by
      bankruptcy laws, insolvency laws, reorganization laws or other laws affecting
      creditor’s rights generally or by general equitable principles.

     

    4.2 The
      execution, delivery and performance by Subscriber of this Agreement, and the
      consummation of the contemplated transaction hereunder, do not and will not
      conflict with, contravene, result in violation or breach of or default (with
      or
      without the giving of notice or the lapse of time or both): (a) any law
      applicable to the Subscriber or any of its properties or assets; (b) any
      contract, agreement or other instrument to which the Subscriber is a party
      or by
      which its properties or assets may be bound, except for violations and defaults
      that, individually and in the aggregate, would not materially impair the ability
      of the Subscriber to perform its obligations hereunder. 

     

    4.3 The
      Subscriber hereby confirms, that the New Shares to be acquired by the Subscriber
      will be acquired for investment for the Subscriber’s own account, not as a
      nominee or agent, and not with a view to the resale or distribution of any
      part
      thereof, and that the Subscriber has no present intention of selling, granting
      any participation in, or otherwise distributing the same. 

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    4.4 The
      Subscriber acknowledges that all share certificates evidencing the New Shares
      subscribed hereunder shall bear (i) the following legend:

     

    “These
      securities have been acquired for investment and have not been registered under
      the US Securities Act of 1933 or the securities laws of any state and may not
      be
      sold, offered for sale, pledged or hypothecated in the absence of an effective
      registration statement as to the securities under said Act or an exemption
      therefrom.” and 

     

    (ii)
      any
      legend required by any applicable securities law.

     

    5. TERMINATION
      OF AGREEMENT

     

    5.1 Termination.
      

     

    (a) This
      Agreement may be terminated by mutual written consent of the Company and the
      Subscriber.

     

    6. MISCELLANEOUS

     

    6.1 Notices.
      

     

    All
      notices and other communications under this Agreement shall be in writing and
      shall be deemed given (i) when delivered personally by hand (with written
      confirmation of receipt), (ii) when sent by facsimile (with confirmation of
      transmission report) or (iii) one (1) Business Day following the day sent by
      any
      of the following reputable international courier: EMS, DHL or FEDEX or three
      (3)
      Business Days after such dispatch in the case of international deliveries,
      in
      each case at the following addresses and facsimile numbers:

     

    
      	
            	(a)	
              if
                to the Company:

            

    

     

    MOVEUP
      LIMITED

    Offshore
      Chambers

    PO
      Box
      217

    Apia
      Samoa

    

    with
      a
      copy to:

    Weil,
      Gotshal & Manges LLP

    38/F
      Tower 2 Plaza 66

    1366
      Nan
      Jing Road (W)

    Shanghai
      200040

    The
      People's Republic of China

    Fax:
      86-21-6288-3866

    Attention:
      Kevin Ban

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

    
      	
            	(b)	
              If
                to the Subscriber

            

    

     

    AUSNUTRIA
      DAIRY INTERNATIONAL LTD.

    c/o
      Corporate Filing Services Limited

    4th
      Floor, Harbour Centre, PO Box 613

    Grand
      Cayman KY1-1107, Cayman Islands

    Fax:__________________

    Attn:
      President

     

    with
      a
      copy to:

    AMERICAN
      DAIRY, INC.

    Star
      City
      Int'l Bldg., No. 10 Jiuxianqiao Rd., C-16th
      FL

    Chaoyang
      District 

    Beijing,
      China 100016

    Fax:
      86
      10
      8456 7768

     

    6.2 Successors
      and Assigns; Third Party Beneficiaries. 

     

    This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of the parties hereto. 

     

    6.3 Counterparts.
      

     

    This
      Agreement may be executed in any number of counterparts and by the parties
      hereto in separate counterparts, each of which when so executed shall be deemed
      to be an original and all of which taken together shall constitute one and
      the
      same agreement. Delivery of an executed counterpart of a signature page of
      this
      Agreement by a facsimile shall be as effective as delivery of a manually
      executed counterpart of a signature page of this Agreement.

     

    6.4 Headings.
      

     

    The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof:

     

    6.5 Governing
      Law. 

     

    THIS
      AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
      CAYMAN ISLANDS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW
      THEREOF.

     

    6.6 Arbitration.
      

     

    (a) Except
      as
      otherwise provided in this agreement, any dispute or claim arising out of or
      in
      connection with or relating to this agreement, or the breach, termination or
      invalidity hereof, shall be finally settled by arbitration at the Hong Kong
      International Arbitration Centre (the “HKIAC”)
      under
      the rules of the HKIAC (the “Rules”)
      as are
      in force at the date of the notice of arbitration commencing any such
      arbitration. The Company and the Subscriber shall each select one arbitrator,
      and the third arbitrator shall be selected by the chairman of HKIAC. The place
      of arbitration shall be in Hong Kong. All arbitration proceedings shall be
      conducted in the English language. The arbitrators shall decide any such dispute
      or claim strictly in accordance with the governing law specified in Section
      66.5
      .
      Judgment upon any arbitral award rendered hereunder may be entered in any court,
      and/or application may be made to any such court for a judicial acceptance
      of
      the award and/or an order of enforcement, as the case may be.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (b) Unless
      the arbitration tribunal shall determine or rule otherwise, the costs and
      expenses of the arbitration, including the fees of the attorneys shall be borne
      by the losing side.

     

    (c) Any
      award
      made by the arbitration tribunal shall be final and binding on each side to
      the
      dispute. The Parties expressly agree to waive the applicability of any laws
      and
      regulations that would otherwise give the right to appeal the decisions of
      the
      arbitration tribunal so that there shall be no appeal to any court of law from
      the award of the arbitration tribunal.

     

    (d) This
      Agreement and the rights and obligations of the parties shall remain in full
      force and effect pending the award in any arbitration proceeding
      hereunder.

     

    6.7 Severability.
      

     

    If
      any
      one or more of the provisions contained herein, or the application thereof
      in
      any circumstance, is held invalid, illegal or unenforceable in any respect
      for
      any reason, the validity, legality and enforceability of any such provision
      in
      every other respect and of the remaining provisions hereof shall not be in
      any
      way impaired, unless the provisions held invalid, illegal or unenforceable
      shall
      substantially impair the benefits of the remaining provisions
      hereof.

     

    6.8 Entire
      Agreement. 

     

    This
      Agreement, together with the exhibits and schedules hereto, is intended by
      the
      Parties as a final expression of their agreement and intended to be a complete
      and exclusive statement of the agreement and understanding of the Parties in
      respect of the subject matter contained herein and therein. There are no
      restrictions, promises, representations, warranties or undertakings, other
      than
      those set forth or referred to herein or therein. This Agreement, together
      with
      the exhibits hereto, supersede all prior agreements and understandings between
      the Parties with respect to such subject matter.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Parties have executed this Agreement on the date first above
      written.

    
       

    

    
      	 	 	 
	 	MOVEUP
              LIMITED
	 
 	 
 	 
 
	
            	By:  	/s/ Michael Tung
	 	
              
Name:
              Michael Tung
	 	Title:
              Director

    

     

    
      	 	 	 
	 	
              SUBSCRIBER:

            
	 	 
	 	
              AUSNUTRIA
                DAIRY INTERNATIONAL LTD.

            
	 
 	 
 	 
 
	
            	By:  	/s/ Michael Tung
	 	
              
Name:
              Michael Tung
	 	Title:
              DirectorUnassociated Document

    CONFIDENTIAL

    SHARE
      SUBSCRIPTION AGREEMENT

     

    by
      and
      between

     

    AUSNUTRIA
      DAIRY INTERNATIONAL LTD.

    

    and

    

    AMERICAN
      DAIRY, INC.

    

    Dated:
      August 12, 2007

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SHARE
      SUBSCRIPTION AGREEMENT

     

    THIS
      SHARE SUBSCRIPTION AGREEMENT, dated as of August __, 2007 (this “Agreement”),
      is
      entered into by and between:

     

    
      	
              (1)
                

            	
              Ausnutria
                Dairy International Ltd., a company incorporated under the laws of
                Cayman
                Islands, as the issuer (the “Company”),
                and

            

    

     

    
      	
              (2)

            	
              American
                Dairy, Inc.; a company incorporated under the laws of the State of
                Utah,
                of the United States of America, as the subscriber (the “Subscriber”)

            

    

     

    Each
      of
      (1) and (2) shall be referred to as a “Party”,
      and
      collectively as the “Parties.”

     

    RECITALS

     

    WHEREAS,
      the Company is a company incorporated under the laws of Cayman Islands, and
      is
      authorized to issue 5,000,000 shares of ordinary shares with par value of
      US$0.01, out of which 50 shares have been issued to Mr. Michael Tung and are
      currently outstanding;

    

    WHEREAS,
      the Company has subscribed to 10,000 shares of Moveup Limited, a company
      incorporated under the laws of Samoa (“Moveup”),
      the
      subscription price of which was paid by the Company’s assumption of Moveup’s
      obligation to repay the Loan as defined below;

     

    WHEREAS,
      Moveup has entered into an Equity Purchase Agreement to purchase 100% of the
      equity interest in Ausnutria Dairy (Hunan) Company Ltd. (the “Target
      Company”),
      currently an equity joint venture established under the laws of the People’s
      Republic of China, from its current shareholders;

     

    WHEREAS,
      the Subscriber has made a loan (the “Loan”)
      to
      Moveup in the amount of $10 million under a Loan Agreement dated June 28, 2007
      (the “Loan
      Agreement”)
      for
      the purposes of making a deposit or advance payment by Moveup for the
      acquisition of the Target Company (the “Acquisition”);
      and

     

    WHEREAS,
      the Subscriber desires to invest in the Company, and the Company desires to
      accept the investment and issue certain number of its ordinary shares of capital
      to the Subscriber (the “New
      Shares”)
      pursuant to the terms and conditions set forth in this Agreement.

     

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

     

    1. DEFINITIONS

     

    1.1 Definitions.
      

     

    As
      used
      in this Agreement, and unless otherwise defined in this Agreement, the
      capitalized terms have the following meanings:

     

    “Business
      Day”
means
      any day other than a Saturday, Sunday or other day on which commercial banks
      in
      the Cayman Islands, New York and the PRC are authorized or required by law
      or
      executive order to close.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Charter
      Documents”
mean
      the Memorandum and Articles of Association of the Company.

     

    “Governmental
      Authority”
means
      the government of any nation, state, city, locality or other political
      subdivision thereof, any entity exercising executive, legislative, judicial,
      regulatory or administrative functions of or pertaining to government (including
      the government of the PRC and any other relevant jurisdiction).

     

    “Person”
means
      any individual, firm, corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, joint stock company, limited
      liability company, Governmental Authority or other entity of any kind, and
      shall
      include any successor (by merger or otherwise) of such entity.

     

    “PRC”
has
      the
      meaning set forth in the recitals of this Agreement, and for the purpose of
      this
      Agreement shall exclude Hong Kong, Taiwan and Macau.

     

    “US$”
means
      United States dollars.

     

    2. Subscription
      of new shares

     

    2.1 Subscription
      and Issuance of SharesSubscriber
      hereby agrees to subscribe for, and the Company hereby agrees to issue to
      Subscriber as of the date hereof, the total number of 49 New Shares with par
      value of US$0.01 per share at the total purchase price of US$ 266.07 (the
“Subscription
      Price”).

    

    2.2 Payment The
      Subscription Price shall be made by the Subscriber by forgiving a portion of
      the
      Loan in the amount of US$ 266.07.

    

    2.3 Registration
      of Member The
      Company shall, as promptly as practicable, register the Subscriber as holder
      of
      49 ordinary shares in its Register of Members. If requested by Subscriber,
      the
      Company shall deliver to Subscriber a share certificate issued in the name
      of
      Subscriber evidencing the 49 New Shares issued to Subscriber. 

    

    3. REPRESENTATIONS
      AND WARRANTIES OF COMPANY

     

    The
      Company represents and warrants to the Subscriber as of the date hereof
      that:

     

    3.1 The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of Cayman Islands and has all requisite corporate power and
      authority to carry on its business as now conducted and as proposed to be
      conducted.

     

    3.2 All
      corporate action required to be taken by the Company and its officers and
      directors necessary for the authorization, execution, delivery of this Agreement
      and to issue the New Shares hereunder, has been taken or will be taken as
      required under the Charter Documents or applicable law. This Agreement, when
      executed and delivered by the Company, shall constitute valid and legally
      binding obligations of the Company, enforceable against the Company in
      accordance with its terms except to the extent the enforceability thereof may
      be
      limited by bankruptcy laws, insolvency laws, reorganization laws or other laws
      affecting creditor’s rights generally or by general equitable principles.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    3.3 The
      authorized capital of the Company consists of 5, 000, 000 shares, 50 shares
      of
      which have been issued and are outstanding prior to the execution of this
      Agreement. All of the outstanding shares have been duly authorized and validly
      issued and were issued in compliance with the Charter Documents.
      

     

    3.4 The
      New
      Shares, when issued and subscribed in accordance with the terms and conditions
      set forth in this Agreement, will be validly issued and free of restrictions
      on
      transfer other than those under the Charter Documents and applicable
      laws.

     

    3.5 The
      execution, delivery and performance by the Company of this Agreement and the
      consummation of the transaction contemplated hereby or compliance by the Company
      with any of the provisions hereof will not result in, with or without the
      passage of time and giving of notice, (i) a violation of any provision of any
      laws applicable to the Company or to the transactions contemplated herein,
      (ii)
      a default under any such provision, instrument, judgment, order, writ, decree,
      contract or agreement or (iii) an event which results in the creation of any
      lien, charge or encumbrance upon any assets of the Company or the suspension,
      revocation, forfeiture, or non-renewal of any material permit or license
      applicable to the Company.

     

    4. REPRESENTATIONS
      AND WARRANTIES OF THE SUBSCRIBER

     

    The
      Subscriber represents and warrants to the Company as of the date hereof
      that:

     

    4.1 The
      Subscriber is a company duly organized, validly existing and in good standing
      under the laws of the State of Utah, and has all requisite corporate power
      and
      legal capacity and authority to enter into this Agreement, and that this
      Agreement, when executed and delivered, will constitute its valid and legally
      binding obligation, enforceable against the Subscriber in accordance with its
      terms except to the extent the enforceability thereof may be limited by
      bankruptcy laws, insolvency laws, reorganization laws or other laws affecting
      creditor’s rights generally or by general equitable principles.

     

    4.2 The
      execution, delivery and performance by Subscriber of this Agreement, and the
      consummation of the contemplated transaction hereunder, do not and will not
      conflict with, contravene, result in violation or breach of or default (with
      or
      without the giving of notice or the lapse of time or both): (a) any law
      applicable to the Subscriber or any of its properties or assets; (b) any
      contract, agreement or other instrument to which the Subscriber is a party
      or by
      which its properties or assets may be bound, except for violations and defaults
      that, individually and in the aggregate, would not materially impair the ability
      of the Subscriber to perform its obligations hereunder. 

     

    4.3 The
      Subscriber hereby confirms, that the New Shares to be acquired by the Subscriber
      will be acquired for investment for the Subscriber’s own account, not as a
      nominee or agent, and not with a view to the resale or distribution of any
      part
      thereof, and that the Subscriber has no present intention of selling, granting
      any participation in, or otherwise distributing the same. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    4.4 The
      Subscriber acknowledges that all share certificates evidencing the New Shares
      subscribed hereunder shall bear (i) the following legend:

     

    “These
      securities have been acquired for investment and have not been registered under
      the US Securities Act of 1933 or the securities laws of any state and may not
      be
      sold, offered for sale, pledged or hypothecated in the absence of an effective
      registration statement as to the securities under said Act or an exemption
      therefrom.” and 

     

    (ii)
      any
      legend required by any applicable securities law.

     

    5. 
      CALL
      OPTION OF SUBSCRIBER

     

    5.1
      Call Option.
      

     

    In
      the
      event of a Trigger Event (as defined in Section 5.3 below), the Subscriber
      shall
      have the right (the “Call
      Option”)
      to
      subscribe, and the Company shall be obligated to issue to the Subscriber
      additional ordinary shares at the call price of US$ 5.43 per share, so that
      the
      total number of ordinary shares held by the Subscriber shall be not higher
      than
      49.22% of total number of ordinary shares outstanding.

     

    5.2 Exercise
      of Call Option.

     

    The
      exercise of the Call Option shall be effected by the Subscriber’s delivery to
      the Company of a written notice (the “Call
      Notice”)
      identifying the applicable Trigger Event, the number of the shares the
      Subscriber elects to prescribe pursuant to this Section 5 (the “Called
      Shares”)
      and
      the total call price determined pursuant to Section 5.1 above (the “Call
      Price”).
      The
      Subscriber and the Company hereby agree that any Call Price may be paid by
      the
      forgiveness of a portion of the Loan in the amount of such Call Price by the
      Subscriber, at the election of the Subscriber, or by other means mutually agreed
      by the Subscriber and the Company.

     

    5.3 Trigger
      Event.

     

    For
      purposes of this Agreement, a “Trigger
      Event”
shall
      mean the issuance by the Company of any new ordinary shares or any securities
      convertible to ordinary shares to any Person after the date hereof.

     

    5.4 Termination
      of the Call Option.

     

    The
      Call
      Option shall terminate and be of no further force and effect upon the earlier
      of
      (a) the expiration of the five (5) year period following the date hereof, or
      (b)
      the date on which the total number of ordinary shares of the Company held by
      the
      Subscriber through subscription from the Company (and not by way of purchase
      from other members of the Company) is equal to or higher than
      3,739.061.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    6. TERMINATION
      OF AGREEMENT

     

    This
      Agreement may be terminated by mutual written consent of the Company and the
      Subscriber.

     

    7. MISCELLANEOUS

     

    7.1 Notices.
      

     

    All
      notices and other communications under this Agreement shall be in writing and
      shall be deemed given (i) when delivered personally by hand (with written
      confirmation of receipt), (ii) when sent by facsimile (with confirmation of
      transmission report) or (iii) one (1) Business Day following the day sent by
      any
      of the following reputable international courier: EMS, DHL or FEDEX or three
      (3)
      Business Days after such dispatch in the case of international deliveries,
      in
      each case at the following addresses and facsimile numbers:

     

    (a) if
      to the
      Company:

     

    AUSNUTRIA
      DAIRY INTERNATIONAL LTD.

    c/o
      Corporate Filing Services Limited

    4th
      Floor, Harbour Centre, PO Box 613

    Grand
      Cayman KY1-1107, Cayman Islands

    Fax:__________________

    Attn:
      President

     

    with
      a
      copy to:

     

    Weil,
      Gotshal & Manges LLP

    38/F
      Tower 2 Plaza 66

    1366
      Nan
      Jing Road (W)

    Shanghai
      200040

    The
      People's Republic of China

    Fax:
      86-21-6288-3866

    Attention:
      Kevin Ban

    

    (b) If
      to the
      Subscriber

     

    AMERICAN
      DAIRY, INC.

    2275
      Huntington Drive, #278

    San
      Marino, California 91108

    Fax:
      1-626
      289
      0087

    Attn:
      Mr.
      Leng Youbin

     

    with
      a
      copy to:

     

    AMERICAN
      DAIRY, INC.

    Star
      City
      Int'l Bldg., No. 10 Jiuxianqiao Rd., C-16th
      FL

    Chaoyang
      District 

    Beijing,
      China 100016

    Fax:
      86
      10
      8456 7768

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    7.2 Successors
      and Assigns; Third Party Beneficiaries. 

     

    This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of the parties hereto. 

     

    7.3 Counterparts.
      

     

    This
      Agreement may be executed in any number of counterparts and by the parties
      hereto in separate counterparts, each of which when so executed shall be deemed
      to be an original and all of which taken together shall constitute one and
      the
      same agreement. Delivery of an executed counterpart of a signature page of
      this
      Agreement by a facsimile shall be as effective as delivery of a manually
      executed counterpart of a signature page of this Agreement.

     

    7.4 Headings.
      

     

    The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

     

    7.5 Governing
      Law. 

     

    THIS
      AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
      CAYMAN ISLANDS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW
      THEREOF.

     

    7.6 Arbitration.
      

     

    (a) Except
      as
      otherwise provided in this agreement, any dispute or claim arising out of or
      in
      connection with or relating to this agreement, or the breach, termination or
      invalidity hereof, shall be finally settled by arbitration at the Hong Kong
      International Arbitration Centre (the “HKIAC”)
      under
      the rules of the HKIAC (the “Rules”)
      as are
      in force at the date of the notice of arbitration commencing any such
      arbitration. The Company and the Subscriber shall each select one arbitrator,
      and the third arbitrator shall be selected by the chairman of HKIAC. The place
      of arbitration shall be in Hong Kong. All arbitration proceedings shall be
      conducted in the English language. The arbitrators shall decide any such dispute
      or claim strictly in accordance with the governing law specified in Section
      7.5
      . Judgment upon any arbitral award rendered hereunder may be entered in any
      court, and/or application may be made to any such court for a judicial
      acceptance of the award and/or an order of enforcement, as the case may
      be.

     

    (b) Unless
      the arbitration tribunal shall determine or rule otherwise, the costs and
      expenses of the arbitration, including the fees of the attorneys shall be borne
      by the losing side.

     

    (c) Any
      award
      made by the arbitration tribunal shall be final and binding on each side to
      the
      dispute. The Parties expressly agree to waive the applicability of any laws
      and
      regulations that would otherwise give the right to appeal the decisions of
      the
      arbitration tribunal so that there shall be no appeal to any court of law from
      the award of the arbitration tribunal.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (d) This
      Agreement and the rights and obligations of the parties shall remain in full
      force and effect pending the award in any arbitration proceeding
      hereunder.

     

    7.7 Severability.
      

     

    If
      any
      one or more of the provisions contained herein, or the application thereof
      in
      any circumstance, is held invalid, illegal or unenforceable in any respect
      for
      any reason, the validity, legality and enforceability of any such provision
      in
      every other respect and of the remaining provisions hereof shall not be in
      any
      way impaired, unless the provisions held invalid, illegal or unenforceable
      shall
      substantially impair the benefits of the remaining provisions
      hereof.

     

    7.8 Entire
      Agreement. 

     

    This
      Agreement, together with the exhibits and schedules hereto, is intended by
      the
      Parties as a final expression of their agreement and intended to be a complete
      and exclusive statement of the agreement and understanding of the Parties in
      respect of the subject matter contained herein and therein. There are no
      restrictions, promises, representations, warranties or undertakings, other
      than
      those set forth or referred to herein or therein. This Agreement, together
      with
      the exhibits hereto, supersede all prior agreements and understandings between
      the Parties with respect to such subject matter.

     

    7.9 Acknowledgement
      and Consent by Subscriber

     

    Subscriber
      hereby acknowledges that it has received request for consent from Moveup to
      assign Moveup’s obligations under the Loan Agreement to the Company, and hereby
      consents to such assignment.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      the
      Parties have executed this Agreement on the date first above
      written.

    
      	 	 	 
	 	
              AUNUTRIA
                DAIRY INTERNATIONAL LTD.

            
	 
 	 
 	 
 
	
            	By:  	/s/ Michael Tung
	 	
              

              Name:
                Michael Tung

              Title:
                Director 

            

    

    
       

    

    
      
        	 	 	 
	 	
                SUBSCRIBER:

                 

                
                  AMERICAN
                    DAIRY, INC.

                

              
	 
 	 
 	 
 
	
              	By:  	/s/ Leng You Bin
	 	
                

                Name:
                  Leng You Bin

                Title:
                  Chief Executive Officer

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