UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	SCHEDULE 13D/A

 

Under the Securities Exchange Act of 1934
(Amendment No. 6)*

 

(Name of Issuer)

 

(Title of Class of Securities)

 

(CUSIP Number)

 

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

(*)                                 This calculation is based upon a total of 57,300,713 shares outstanding as of November 9, 2012, as reported in the Quarterly Report on Form 10-Q of Synutra International, Inc., a Delaware corporation (the “Issuer”), filed with the U.S. Securities and Exchange Commission (the “Commission”) on November 9, 2012.

 

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(*)                                 This calculation is based upon a total of 57,300,713 shares outstanding as of November 9, 2012, as reported in the Quarterly Report on Form 10-Q of the Issuer, filed with the Commission on November 9, 2012.

 

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(*)                                 This calculation is based upon a total of 57,300,713 shares outstanding as of November 9, 2012, as reported in the Quarterly Report on Form 10-Q of the Issuer, filed with the Commission on November 9, 2012.

 

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(*)                                 This calculation is based upon a total of 57,300,713 shares outstanding as of November 9, 2012, as reported in the Quarterly Report on Form 10-Q of the Issuer, filed with the Commission on November 9, 2012.

 

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(*)                                 This calculation is based upon a total of 57,300,713 shares outstanding as of November 9, 2012, as reported in the Quarterly Report on Form 10-Q of the Issuer, filed with the Commission on November 9, 2012.

 

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(*)                                 This calculation is based upon a total of 57,300,713 shares outstanding as of November 9, 2012, as reported in the Quarterly Report on Form 10-Q of the Issuer, filed with the Commission on November 9, 2012.

 

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(*)                                 This calculation is based upon a total of 57,300,713 shares outstanding as of November 9, 2012, as reported in the Quarterly Report on Form 10-Q of the Issuer, filed with the Commission on November 9, 2012.

 

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This Amendment No. 6 (this “Amendment No. 6”) amends and supplements the Schedule 13D filed with the U.S. Securities and Exchange Commission (the “Commission”) on June 20, 2007, as amended by Amendment No. 1 thereto filed with the Commission on April 24, 2008 (“Amendment No. 1”), Amendment No. 2 thereto filed with the Commission on September 2, 2008 (“Amendment No. 2”), Amendment No. 3 thereto filed with the Commission on April 26, 2011 (“Amendment No. 3”), Amendment No. 4 thereto filed with the Commission on May 9, 2011 (“Amendment No. 4”) and Amendment No. 5 thereto filed with the Commission on August 11, 2011 (“Amendment No. 5” and together with Amendment No. 1, Amendment No. 2 and Amendment No. 3 and Amendment No. 4, the “Initial Schedule 13D”), and is being filed on behalf of Warburg Pincus Private Equity IX, L.P., a Delaware limited partnership (“WP IX”), Warburg Pincus IX LLC, a New York limited liability company and the sole general partner of WP IX (“WP IX LLC”), Warburg Pincus Partners LLC, a New York limited liability company and the sole member of WP IX LLC (“WPP LLC”), Warburg Pincus & Co., a New York general partnership and the managing member of WPP LLC (“WP”), Warburg Pincus LLC, a New York limited liability company that manages WP IX (“WP LLC”), and Messrs. Charles R. Kaye and Joseph P. Landy, each a Managing General Partner of WP and a Managing Member and Co-President of WP LLC, who may be deemed to control WP IX, WP IX LLC, WPP LLC, WP LLC and WP.  WP IX, WP IX LLC, WPP LLC, WP, WP LLC, Mr. Kaye and Mr. Landy are hereinafter referred to as the “Warburg Pincus Reporting Persons”.  The Initial Schedule 13D, as amended by this Amendment No. 6, is being referred to as the “Schedule 13D”. This Amendment No. 6 relates to the common stock, par value $0.0001 per share (the “Common Stock”), of Synutra International, Inc., a Delaware corporation (the “Issuer”).  All capitalized terms used herein that are not defined herein have the meanings for such terms set forth in the Initial Schedule 13D.

 

As disclosed in Amendment No. 4, effective as of the close of business on April 23, 2011, the maturity date of the Senior Exchangeable Note, Beams Power defaulted on its obligation to pay WP IX an aggregate of U.S. $58,593,750 pursuant to the Note (such default, the “Initial Specified Default”).  As disclosed in Amendment No. 5, WP IX entered into a Forbearance Agreement, dated August 10, 2011 (the “Initial Forbearance Agreement”), with Beams Power pursuant to which WP IX agreed, among other things, to forbear from exercising its contractual and legal rights and remedies with respect to the Initial Specified Default under certain circumstances, and agreed to extend the maturity date of the Senior Exchangeable Note to November 23, 2011 pursuant to a Restated Senior Exchangeable Note (the “Restated Note”).

 

Effective as of the close of business on November 23, 2011, the maturity date of the Restated Note, Beams Power defaulted on its obligation to pay WP IX pursuant to the Restated Note (the “Additional Specified Default” and together with the Initial Specified Default, the “Specified Defaults”).  The Warburg Pincus Reporting Persons are filing this Amendment No. 6 because WP IX and Beams Power entered into a Restated Forbearance Agreement, dated January 30, 2013, which amends and restates the Initial Forbearance Agreement in its entirety (the “Restated Forbearance Agreement”).  Pursuant to the Restated Forbearance Agreement, WP IX agreed, among other things, to forbear from exercising its contractual and legal rights and remedies with respect to the Specified Defaults under certain circumstances, and agreed to extend the maturity date of the Restated Note to January 30, 2014 pursuant to a Second Restated Senior Exchangeable Note (the “Second Restated Note”).  As additional consideration for WP IX entering into the Restated Forbearance Agreement, Beams Power paid U.S.$30,000,000 to WP IX under the Restated Note on January 30, 2013 (the “First Restated Note Payment”), and WP IX also entered into Amendment No. 1 to the Drag-Along Agreement, dated January 30, 2013 (the “Drag-Along Agreement Amendment”), pursuant to which Beams Power, among other things, agreed that, during the period commencing on the date of the occurrence of an event of default under the Second Restated Note and ending on the later to occur of the close of business on May 30, 2014 and the date that Beams Power satisfies its obligation under the Second Restated Note in full, WP IX, may, in its sole discretion in connection with a foreclosure on the pledged collateral under the Amended Share Pledge Agreement, require that Beams Power sell, transfer or otherwise dispose of up to all of the shares of the Issuer’s Common Stock and other equity interests of the Issuer beneficially owned by Beams Power.  The Drag-Along Agreement, as amended by the Drag-Along Agreement Amendment, is referred to herein as the “Amended Drag-Along Agreement”.

 

Item 4.                                      Purpose of Transaction

 

The disclosure added to Item 4 pursuant to Amendment No. 1, as amended and restated pursuant to Amendment No. 5, is hereby deleted in its entirety and replaced with the following:

 

The Warburg Pincus Reporting Persons may from time to time purchase shares of the Issuer’s Common Stock or other equity interests of the Issuer in open market or private transactions or otherwise. The timing and amount of any such purchases will depend on market conditions, business conditions affecting the Issuer and other factors. The Warburg Pincus Reporting Persons also reserve the right to reduce their interest in the Issuer from time to time by open market or private sales of the Issuer’s Common Stock or other equity interests of the Issuer.

 

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A copy of the Note Purchase Agreement is filed as Exhibit 7 to Amendment No. 1 and incorporated herein by reference. A copy of the Senior Exchangeable Note is filed as Exhibit 8 to Amendment No. 1 and incorporated herein by reference. A copy of the Share Pledge Agreement is filed as Exhibit 9 to Amendment No. 1 and incorporated herein by reference. A copy of the Additional Registration Rights Agreement is filed as Exhibit 10 to Amendment No. 1 (filed as Exhibit 4.1 to the Issuer’s Current Report on Form 8-K filed with the Commission on April 24, 2008) and incorporated herein by reference. A copy of the Additional ABN Consent Letter is filed as Exhibit 11 to Amendment No. 1 and incorporated herein by reference. A copy of the Initial Forbearance Agreement is filed as Exhibit 14 to Amendment No. 5 and incorporated herein by reference. A copy of the Restated Note is filed as Exhibit 15 to Amendment No. 5 and incorporated herein by reference. A copy of the First Share Pledge Amendment is filed as Exhibit 16 to Amendment No. 5 and incorporated herein by reference. A copy of the Second Share Pledge Amendment is filed as Exhibit 17 to Amendment No. 5 and incorporated herein by reference. A copy of the Additional RRA Amendment is filed as Exhibit 18 to Amendment No. 5 and incorporated herein by reference. A copy of the Drag-Along Agreement is filed as Exhibit 19 to Amendment No. 5 and incorporated herein by reference. A copy of the Restated Forbearance Agreement is filed as Exhibit 20 to Amendment No. 6 and is incorporated herein by reference. A copy of the Second Restated Note is filed as Exhibit 21 to Amendment No. 6 and is incorporated herein by reference. A copy of the Drag-Along Agreement Amendment is filed as Exhibit 22 to Amendment No. 6 and is incorporated herein by reference. Set forth below is a summary of the material terms of the Note Purchase Agreement, the Restated Forbearance Agreement, the Second Restated Note, the Amended Share Pledge Agreement, the Amended Additional RRA, the Amended Drag-Along Agreement, the Additional ABN Consent Letter and the Third ABN Consent Letter (together, the “Transaction Documents”).

 

Terms of the Note Purchase Agreement

 

Pursuant to the Note Purchase Agreement, WP IX purchased from Beams Power, and Beams Power sold and issued to WP IX, a exchangeable note in the aggregate principal amount of U.S. $30,000,000. Pursuant to the Note Purchase Agreement, Beams Power agreed to use its commercially reasonable efforts to cause the Issuer to, among other things, (i) file reports required to be filed by the Issuer with the Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and (ii) maintain listing of the shares issued or issuable to WP IX under the terms of the Note Purchase Agreement, the Second Restated Note and the Amended Share Pledge Agreement.

 

The foregoing description of the terms of the Note Purchase Agreement is qualified in its entirety by reference to the copy of the Note Purchase Agreement filed as Exhibit 7 to Amendment No. 1 and incorporated herein by reference.

 

Terms of the Restated Forbearance Agreement

 

As disclosed in Amendment No. 4, effective as of the close of business on April 23, 2011, the maturity date of the Senior Exchangeable Note, Beams Power defaulted on its obligation to pay WP IX an aggregate of U.S. $58,593,750 pursuant to the Senior Exchangeable Note. As disclosed in Amendment No. 5, pursuant to the Initial Forbearance Agreement, WP IX agreed, among other things, to forbear from exercising its contractual and legal rights and remedies with respect to the Initial Specified Default, and agreed to extend the maturity date of the Note to November 23, 2011 pursuant to the Restated Note.   Effective as of the close of business on November 23, 2011, the maturity date of the Restated Note, Beams Power defaulted on its obligation to pay WP IX pursuant to the Restated Note. Pursuant to the Restated Forbearance Agreement, WP IX agreed, among other things, to forbear from exercising its contractual and legal rights and remedies with respect to the Specified Defaults, and agreed to extend the maturity date of the Restated Note to January 30, 2014 pursuant to the Second Restated Note in exchange for, among other things, Beams Power paying the First Restated Note Payment to WP IX on January 30, 2013. The Restated Forbearance Agreement provides that the First Restated Note Payment shall be applied (1) first, against the accrued and unpaid expenses, (2) second, against the forbearance late charges, and (3) third, against the prior late charges.  As of January 30, 2013, the date of issuance of the Second Restated Note, after giving effect to the First Restated Note Payment, Beams Power owed WP IX an aggregate of approximately U.S. $62,587,966 pursuant to the Second Restated Note.

 

The foregoing description of the terms of the Restated Forbearance Agreement is qualified in its entirety by reference to the copy of the Restated Forbearance Agreement filed as Exhibit 20 to Amendment No. 6 and incorporated herein by reference.

 

Terms of the Second Restated Note

 

Pursuant to the Second Restated Note, as of January 30, 2013, the date of issuance of the Second Restated Note, and without giving effect to the First Restated Note Payment, Beams Power was obligated to pay WP IX an aggregate principal amount of U.S. $30,000,000, plus U.S. $28,593,750 in premium, plus U.S. $4,374,465 in prior late charges, plus U.S. $4,213,934 in forbearance late

 

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charges, plus $25,107,718 in additional late charges, plus approximately U.S. $298,099 in accrued and unpaid expenses.  The Restated Forbearance Agreement provides that the First Restated Note Payment shall be applied (1) first, against the accrued and unpaid expenses, (2) second, against the forbearance late charges, and (3) third, against the prior late charges.  After giving effect to the First Restated Note Payment, as of January 30, 2013, Beams Power was obligated to pay WP IX an aggregate principal amount of U.S. $30,000,000, plus U.S. $28,593,750 in premium, plus U.S. $3,913,117 in additional late charges, plus approximately U.S. $81,099 in accrued and unpaid expenses.  The foregoing amounts, plus any additional late charges and expenses accrued under the Second Restated Note or incurred by WP IX under the Transaction Documents, are collectively referred to herein as the “Obligation”.  The Second Restated Note will mature on January 30, 2014 (the “New Maturity Date”), subject to limited extension upon the occurrence of certain events as set forth in the Second Restated Note. Additional late charges will accrue under the Second Restated Note if any amount due under the Transaction Documents is not paid when due, at a compound annual rate of 25% per annum from the date such amount was due until paid in full.

 

The Second Restated Note provides that Beams Power may pay the Obligation before the New Maturity Date. Each $1.00 payment made against the Obligation by Beams Power from January 30, 2013 through July 30, 2013, each inclusive, shall reduce the amount of the Obligation by $1.60. Each $1.00 payment made against the Obligation by Beams Power from July 31, 2013 through the date immediately preceding the New Maturity Date, each inclusive, shall reduce the amount of the Obligation by approximately $1.48.  The Second Restated Notes provides that any payments made against the Obligation before the New Maturity Date shall be applied (1) first, against the accrued and unpaid expenses, (2) second, against the prior late charges, (3) third, against the premium, and (4) fourth, against the principal.

 

In addition, at any time and from time to time, WP IX has the ability to exchange some or all of the outstanding Obligation under the Second Restated Note into shares of the Issuer’s Common Stock held by Beams Power at an exchange price set forth in the Second Restated Note (the “Exchangeable Shares”).  Upon issuance of the Second Restated Note, the Obligation was exchangeable into shares of the Issuer’s Common Stock at an exchange rate of U.S. $5.64880 per share (the “New Initial Exchange Price”).  In the event of an exchange prior to the New Maturity Date, the Obligation shall be exchangeable at a price equal to the lesser of (i)  the New Initial Exchange Price and (ii) the amount equal to 90% of the weighted average trading price of the Issuer’s Common Stock for the 30-trading day period ending on the most recent trading day immediately preceding the date that WP IX delivers a notice of exchange with respect to some or all of the Obligation to Beams Power (an “Exchange Notice”).  Commencing at the New Maturity Date, in the event Beams Power has not paid the Obligation in full, the Obligation will become exchangeable at a price equal to the lesser of (i) the New Initial Exchange Price and (ii) an amount equal to 90% of the weighted average trading price of the Issuer’s Common Stock for the 30-trading day period ending on January 29, 2014 (the “Default Exchange Rate”).  In the event of an exchange at or after the New Maturity Date, the Obligation shall be exchangeable at a price equal to the lesser of (a) the New Initial Exchange Price, (b) the Default Exchange Rate, and (c) the amount equal to 90% of the weighted average trading price of the Issuer’s Common Stock for the 30-trading day period ending on the most recent trading day immediately preceding the date that WP IX delivers an Exchange Notice to Beams Power.  In each case, the exchange price is also subject to adjustment for stock dividends, stock splits, rights issuances and certain other events relating to the Issuer’s Common Stock.  In addition, upon the occurrence of an event of default under the terms of the Second Restated Note or certain corporate transactions of the Issuer or Beams Power, WP IX will have the right to require Beams Power to redeem all or any portion of the Second Restated Note.

 

The foregoing description of the terms of the Second Restated Note is qualified in its entirety by reference to the copy of the Second Restated Note filed as Exhibit 21 to Amendment No. 6 and incorporated herein by reference.

 

Terms of the Amended Share Pledge Agreement

 

Pursuant to the Amended Share Pledge Agreement, Beams Power has agreed to pledge an aggregate of 21,967,000 shares of the Issuer’s Common Stock (the “Pledged Shares”) as initial collateral for the loan evidenced by the Second Restated Note and any additional obligations owing by Beams Power to WP IX under the Note Purchase Agreement, the Restated Forbearance Agreement, the Second Restated Note and the other Transaction Documents that are incurred prior to the cancellation of the Second Restated Note.  In the event of a partial exchange of the Second Restated Note, Pledged Shares may be removed from the pledged collateral. In addition, the number of shares of the Issuer’s Common Stock included in the pledged collateral is subject to adjustment on each November 23rd and May 23rd during the term of the Second Restated Note depending on the then-market value of the Pledged Shares, in accordance with the formula set forth in the Amended Share Pledge Agreement.  The Amended Share Pledge Agreement shall terminate upon the cancellation of the Second Restated Note.

 

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In addition, the Amended Share Pledge Agreement provides that, upon the occurrence of an event of default under the Second Restated Note, WP IX, as collateral agent, shall have, among other things, all of the rights and remedies with respect to the Pledged Shares of a secured party under the Uniform Commercial Code as in effect in the State of New York (the “UCC”), including, without limitation, the ability to sell the Pledged Shares or to cause the Pledged Shares to be sold at any exchange, broker’s board or at a public or private sale, in one or more sales or lots, or in one lot as an entirety, at such price as WP IX, in its capacity as collateral agent or as the secured party, may deem best, for cash or on credit or for future delivery, without assumption of any credit risk, and the purchaser of any or all of the Pledged Shares so sold shall thereafter own the same, absolutely free from any claim, encumbrance or right of any kind whatsoever.  In addition, upon the occurrence of an event of default under the Second Restated Note, WP IX, in its capacity as collateral agent or as the secured party, may, in its own name, or in the name of a designee or nominee, buy the Pledged Shares at any public sale and, if permitted by applicable law, including the UCC, buy the Pledged Shares at any private sale.

 

The foregoing description of the terms of the Amended Share Pledge Agreement is qualified in its entirety by reference to the copies of the Share Pledge Agreement, the First Share Pledge Amendment and the Second Share Pledge Amendment filed as Exhibit 9 to Amendment No. 1, Exhibit 16 to Amendment No. 5 and Exhibit 17 to Amendment No. 5, respectively, each of which is incorporated herein by reference.

 

Terms of the Amended Additional RRA

 

Pursuant to the Amended Additional RRA, the Issuer has agreed, (i) as soon as practicable after Beams Power receives notice from WP IX demanding that Beams Power exchange any portion of the Obligation for Exchangeable Shares, to file with the Commission a registration statement for the resale of the Exchangeable Shares and the Pledged Shares (collectively, the “Registrable Securities”), (ii) to use commercially reasonable efforts to have the registration statement declared effective by the Commission as soon as practicable, and (iii) to maintain the effectiveness of the registration statement until the earlier to occur of (A) the date on which all Registrable Securities have been sold pursuant to the registration statement, (B) the date on which all Registrable Securities have been sold under Rule 144 under the Securities Act of 1933, as amended, (C) if the Second Restated Note has been cancelled in accordance with the terms thereof, the date that all Registrable Securities held of record by WP IX or its permitted assignees or transferees have been sold pursuant to the registration statement or pursuant to Rule 144, or (D) April 23, 2016 (the date set forth in the Additional RRA Amendment), and (iv) to grant WP IX or its permitted assignees or transferees the right to two demand registrations and unlimited piggyback registrations, subject to certain conditions; provided that in each case, Beams Power will pay all expenses associated with each registration.

 

The foregoing description of the terms of the Amended Additional RRA is qualified in its entirety by reference to the copies of the Additional Registration Rights Agreement and the Additional RRA Amendment filed as Exhibit 10 to Amendment No. 1 and Exhibit 18 to Amendment No. 5, respectively, each of which is incorporated herein by reference.

 

Terms of the Amended Drag-Along Agreement

 

Pursuant to the Amended Drag-Along Agreement, Beams Power, among other things, agreed that, during the period commencing on the date of the occurrence of an event of default under the Second Restated Note and ending on the later to occur of the close of business on May 30, 2014 and the date that Beams Power satisfies the Obligation in full, WP IX, may, in its sole discretion in connection with a foreclosure on the pledged collateral under the Amended Share Pledge Agreement, require that Beams Power sell, transfer or otherwise dispose of up to all of the shares of the Issuer’s Common Stock and other equity interests of the Issuer beneficially owned by Beams Power (collectively, the “Securities”) to one or more purchasers identified by a third party investment bank.  The procedure and prices at which the Securities must be sold are set forth in the Amended Drag-Along Agreement. Under the terms of the Amended Drag-Along Agreement, Beams Power also appointed WP IX as its attorney-in-fact and proxy to represent, vote and consent with respect to the Securities in the event that Beams Power fails to perform its obligations under the Amended Drag-Along Agreement.

 

The foregoing description of the terms of the Amended Drag-Along Agreement is qualified in its entirety by reference to the copy of the Drag-Along Agreement filed as Exhibit 19 to Amendment No. 5 and the copy of the Amendment to the Drag-Along Agreement, filed as Exhibit 22 to Amendment No. 6, each of which are incorporated herein by reference.

 

Terms of the Additional ABN Consent Letter

 

Under the ABN Registration Rights Agreement, the Issuer is prohibited from entering into any agreement granting any holder or prospective holder of any securities of the Issuer registration rights with priority of inclusion rights superior to or pari passu with the rights granted to ABN under the ABN Registration Rights Agreement without prior written consent from ABN.  Pursuant to the Additional ABN Consent Letter, ABN, among other things, consented to the Issuer entering into the Additional Registration Rights Agreement, as required under the ABN Registration Rights Agreement, to permit the Issuer to grant WP IX certain rights under the Additional Registration Rights Agreement.

 

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The foregoing description of the terms of the Additional ABN Consent Letter is qualified in its entirety by reference to the copy of the ABN Consent Letter filed as Exhibit 11 to Amendment No. 1 and incorporated herein by reference.

 

Terms of the Third ABN Consent Letter

 

Pursuant to the Initial Forbearance Agreement, Beams Power delivered to WP IX the Third ABN Consent Letter, pursuant to which ABN, among other things, consented to the Issuer entering into the Additional RRA Amendment, which extended the Issuer’s registration obligations with respect to the Registrable Securities from April 23, 2012 to April 23, 2016, subject to earlier termination as provided in the Additional Registration Rights Agreement.

 

Additional Disclosure

 

Except as described in the Purchase Agreement, the Registration Rights Agreement, the Voting Agreement, the ABN Consent Letter, the Note Purchase Agreement, the Restated Forbearance Agreement, the Second Restated Note, the Amended Share Pledge Agreement, the Amended Additional RRA, the Amended Drag-Along Agreement, the Additional ABN Waiver Letter, the Third ABN Waiver Letter and as otherwise set forth in this Schedule 13D, as amended, no Warburg Pincus Reporting Person has any present plans or proposals which relate to or would result in: (a) the acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) a sale or transfer of a material amount of assets of the Issuer or of any of its subsidiaries; (d) any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) any material change in the present capitalization or dividend policy of the Issuer; (f) any other material change in the Issuer’s business or corporate structure; (g) changes in the Issuer’s charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person; (h) causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (j) any action similar to any of those enumerated above.

 

Unless set forth below, all previous Items set forth in the Initial Schedule 13D are unchanged.

 

Item 5.                                  Interest in Securities of the Issuer

 

Items 5(a), (b) and (c) of the Initial Schedule 13D are hereby amended and restated in their entirety as follows:

 

(a)                                 As of January 30 2013, WP IX is deemed to beneficially own an aggregate of 15,079,869 shares of Common Stock of the Issuer, which represents approximately 26.3% of the outstanding shares of Common Stock of the Issuer, calculated in accordance with Rule 13d-3(d) promulgated under the Exchange Act. This percentage is based on 57,300,713 shares of Common Stock of the Issuer outstanding as of November 9, 2012, as disclosed in the Issuer’s Quarterly Report on Form 10-Q filed with the Commission on November 9, 2012 (the “Form 10-Q”), including 4,000,000 shares of Common Stock of the Issuer issued to WP IX pursuant to the Common Stock Purchase Agreement that are currently held by WP IX and 11,079,869 shares of Common Stock of the Issuer issuable to WP IX upon exchange of the Second Restated Note at the New Initial Exchange Price.

 

Due to their respective relationships with WP IX and each other, the Warburg Pincus Reporting Persons may be deemed to beneficially own, in the aggregate, 15,079,869 shares of Common Stock of the Issuer, which represented approximately 26.3% of the shares of Common Stock of the Issuer outstanding as of November 9, 2012, as disclosed in the Form 10-Q.

 

Each of WP IX LLC, WPP LLC, WP, WP LLC, Messrs. Charles R. Kaye and Joseph P. Landy disclaims beneficial ownership of the Issuer’s Common Stock.

 

(b)                                 Each of the Warburg Pincus Reporting Persons is deemed to share with WP IX the power to vote or to direct the vote of and to dispose or to direct the disposition of the 15,079,869 shares of Common Stock of the Issuer.

 

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(c)                                  Except for the transactions described in the Schedule 13D, no other transactions in shares of the Issuer’s Common Stock were effected by the Warburg Pincus Reporting Persons during the last sixty (60) days.

 

Item 7.                                      Material to be Filed as Exhibits

 

Item 7 of the Initial Schedule 13D is hereby amended and supplemented by adding the following exhibits thereto:

 

Exhibit 20:                                    Restated Forbearance Agreement, dated January 30, 2013, by and between Beams Power Investment Limited and Warburg Pincus Private Equity IX, L.P.

 

Exhibit 21:                                    Second Restated Senior Exchangeable Note, dated January 30, 2013, issued by Beams Power Investment Limited to Warburg Pincus Private Equity IX, L.P., in the aggregate original principal amount of U.S.$30,000,000.

 

Exhibit 22:                                    Amendment No. 1 to Drag-Along Agreement, dated January 30, 2013, by and between Beams Power Investment Limited and Warburg Pincus Private Equity IX, L.P.

 

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SIGNATURES

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

Dated: February 1, 2013

 

	WARBURG PINCUS PRIVATE EQUITY IX, L.P.
	By: Warburg Pincus IX LLC, its General Partner,
	By: Warburg Pincus Partners LLC, its Sole Member,
	By: Warburg Pincus & Co., its Managing Member
	By:	/s/ Timothy J. Curt
		Name: Timothy J. Curt
		Title: Partner
	WARBURG PINCUS IX LLC
	By: Warburg Pincus Partners LLC, its Sole Member,
	By: Warburg Pincus & Co., its Managing Member
	By:	/s/ Timothy J. Curt
		Name: Timothy J. Curt
		Title: Partner
	WARBURG PINCUS PARTNERS LLC
	By: Warburg Pincus & Co., its Managing Member
	By:	/s/ Timothy J. Curt
		Name: Timothy J. Curt
		Title: Partner
	WARBURG PINCUS & CO.
	By:	/s/ Timothy J. Curt
		Name: Timothy J. Curt
		Title: Partner

 

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	WARBURG PINCUS LLC
	By:	/s/ Timothy J. Curt
		Name: Timothy J. Curt
		Title: Managing Director
	CHARLES R. KAYE
	By:	/s/ Timothy J. Curt
		Name: Charles R. Kaye
		By: Timothy J. Curt, Attorney-in-Fact*
	JOSEPH P. LANDY
	By:	/s/ Timothy J. Curt
		Name: Joseph P. Landy
		By: Timothy J. Curt, Attorney-in-Fact**

 

* Power of Attorney given by Mr. Kaye was previously filed with the United States Securities and Exchange Commission (the “SEC”) on October 4, 2012, as an exhibit to Amendment No. 6 to the Schedule 13D filed by Warburg Pincus Private Equity X, L.P. and other reporting persons with respect to Primerica, Inc.

**Power of Attorney given by Mr. Landy was previously filed with the SEC on October 4, 2012, as an exhibit to Amendment No. 6 to the Schedule 13D filed by Warburg Pincus Private Equity X, L.P. and other reporting persons with respect to Primerica, Inc.

 

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Exhibit 20

 

RESTATED FORBEARANCE AGREEMENT

 

THIS RESTATED FORBEARANCE AGREEMENT (this “Agreement”) is made as of January 30, 2013, by and between Beams Power Investment Limited, a company with limited liability registered under the BVI Business Companies Act, 2004 (as amended) of the British Virgin Islands (“Borrower”), and Warburg Pincus Private Equity IX, L.P. (together with its registered assigns, “Lender”).

 

RECITALS:

 

WHEREAS, pursuant to that certain Note Purchase Agreement made as of April 23, 2008 by and between Borrower and Lender (as amended, restated, supplemented or otherwise modified from time to time, the “Note Purchase Agreement”), Borrower issued Lender that certain Senior Exchangeable Note, with an issuance date of April 23, 2008, in the aggregate principal amount of U.S.$30,000,000 (the “Initial Note”), which Initial Note was amended and restated as the Restated Senior Exchangeable Note, which represented, as of the date of issuance, an aggregate of U.S.$30,000,000 in principal, U.S.$28,593,750 in premium, U.S.$4,374,465 in prior late charges, U.S.$4,213,934 in forbearance late charges and U.S.$217,000 in accrued and unpaid expenses, plus such additional amounts provided therein which (the “Restated Senior Exchangeable Note”), which Restated Senior Exchangeable Note is being amended and restated concurrently with the execution and delivery of this Agreement as the Second Restated Senior Exchangeable Note, in the form of Exhibit A attached hereto, with an issuance date of even date herewith, which represents an aggregate of U.S.$30,000,000 in principal, U.S.$28,593,750 in premium, U.S.$33,696,117 in prior late charges, U.S.$298,099 in accrued and unpaid expenses, plus such forbearance late charges, additional late charges and additional amounts provided therein (together, and as further amended, restated, supplemented or otherwise modified from time to time, the “Note”);

 

WHEREAS, Borrower failed to pay Lender the obligation outstanding under the Initial Note as of the close of business on April 23, 2011, as required thereunder, which failure constituted and continues to constitute an Event of Default under the Note (the “Initial Specified Default”), which Initial Specified Default is continuing and has not been, and is not being, waived by Lender;

 

WHEREAS, following the Initial Specified Default, Lender and Borrower entered into that certain Forbearance Agreement made as of August 10, 2011 concurrently with the issuance of the Restated Senior Exchangeable Note, pursuant to which, among other things, Lender agreed to forbear from exercising its contractual and legal rights and remedies with respect to the Initial Specified Default until November 23, 2011 or such earlier time set forth in the agreement (the “Forbearance Agreement”);

 

WHEREAS, Borrower failed to pay Lender the obligation outstanding under the Restated Senior Exchangeable Note by November 23, 2011, as required thereunder, which failure constituted, and continues to constitute, an Event of Default under the Restated Senior Exchangeable Note (the “Additional Specified Default” and, together with the Initial Specified Default, the “Specified Defaults”), which Additional Specified Default is continuing and has not been, and is not being, waived by Lender;

 

 

WHEREAS, Borrower has (a) requested that Lender forbear from exercising its contractual and legal rights and remedies with respect to the Specified Defaults and (b) agreed to pay Lender an aggregate of U.S.$30,000,000 of the obligation outstanding under the Restated Senior Exchangeable Note (the “Payment”), which Payment shall be made by Borrower within two (2) Business Days from the date hereof and applied in the following order: (a) first, against the Expenses (as defined in the Restated Senior Exchangeable Note) until the amount of the Expenses equals zero; (b) second, against the Forbearance Late Charges (as defined in the Restated Senior Exchangeable Note) until the amount of the Forbearance Late Charges equals zero; and (c) third, against the Prior Late Charges (as defined in the Restated Senior Exchangeable Note);

 

WHEREAS, on and subject to the terms and conditions set forth herein, Lender has agreed to forbear after the Agreement Effective Date (as defined below) from exercising certain contractual and legal rights and remedies with respect to the Specified Defaults; and

 

WHEREAS, this agreement amends and restates the Forbearance Agreement in its entirety, effective as of the Agreement Effective Date.

 

NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and each intending to be bound hereby, the parties hereto agree as follows:

 

1.                                      Capitalized Terms.  Each capitalized term used but not defined herein shall have the meaning ascribed to such term in the Note Purchase Agreement or the Note (as defined below), as applicable.

 

2.                                      Affirmation of Recitals.  The Recitals set forth above are true and correct and are incorporated herein by this reference.

 

3.                                      Payment; Forbearance; Acknowledgment of Events of Default and other Acknowledgments; Reservation of Rights.

 

(a)                                 Borrower shall make the Payment to Lender, in cash by wire transfer in immediately available funds, within two (2) Business Days from the date hereof.

 

(b)                                 Borrower acknowledges and agrees that (i) the Specified Defaults have occurred and are continuing, and (ii) upon the Forbearance Termination Date (as defined below), the forbearance provided under this Section 3 shall terminate and Lender shall have the right to exercise any and all rights and remedies under the Note and that certain Share Pledge Agreement dated as of April 23, 2008, by and among Borrower, Lender, as secured party, and Lender, as collateral agent, as amended by Amendment No. 1 to Share Pledge Agreement dated as of December 4, 2008 (as amended, restated, supplemented or otherwise modified from time to time, including, without limitation, pursuant to the Pledge Agreement Amendment (as defined below) the “Pledge Agreement”), or otherwise under the Transaction Documents (as defined in the Note) (the “Transaction Documents”) or under applicable law or at equity due to the existence of such Specified Defaults.

 

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(c)                                  Lender hereby agrees as of the Agreement Effective Date to forbear from foreclosing on the Pledged Collateral (as defined in the Pledge Agreement) (the “Pledged Collateral”) solely as a result of the Specified Defaults, in each case until the date (the “Forbearance Termination Date”) that is the earliest to occur of (i) the occurrence of a breach or default under this Agreement or any other Transaction Document, (ii) the occurrence of an Event of Default (as defined in the Note) (each, an “Event of Default”) that does not constitute the Initial Specified Default or the Additional Specified Default, (iii) any representation or warranty made by Borrower under or in connection with this Agreement or any other Transaction Document shall prove to be false or misleading as of the date when made, or (iv) January 30, 2014 (the period beginning on the Agreement Effective Date and ending on the Forbearance Termination Date being referred to herein as the “Forbearance Period”).

 

The parties agree that neither the foregoing agreement by Lender nor the acceptance by Lender of any of the payments provided for in the Transaction Documents prior to the date hereof, nor any payment prior to the date hereof shall, however, (A) excuse any party from any of its obligations under the Transaction Documents, or (B) toll the running of any time periods applicable to any such rights and remedies, including, without limitation, any grace periods with respect to any Event of Default.  Borrower agrees that it will not assert laches, waiver or any other defense to the enforcement of any of the Transaction Documents based upon the foregoing agreement of Lender to forbear or the acceptance by Lender of any of the payments provided for in the Transaction Documents prior to the date hereof or any payment prior to the date hereof.

 

(d)                                 Borrower acknowledges and agrees that, if (i) any breach or default under this Agreement or any other Transaction Document occurs, (ii) an Event of Default that does not constitute the Initial Specified Default or the Additional Specified Default occurs, or (iii) any representation or warranty made by Borrower under or in connection with this Agreement or any other Transaction Document shall prove to be false or misleading as of the date when made, in each case after the date hereof, the Forbearance Termination Date shall be deemed to have occurred immediately prior thereto and this Agreement shall terminate and Lender shall be entitled to exercise immediately all of its rights (including the imposition of interest at the default rate on all of the Obligation (as defined in the Note) (the “Obligation”) retroactive to the date on which the Initial Specified Default first occurred or such later date as Lender may determine in its sole discretion) and remedies under the Transaction Documents and under applicable law or at equity.  Borrower hereby further acknowledges and agrees that from and after the Forbearance Termination Date, Lender shall be under no obligation of any kind whatsoever to forbear from exercising any remedies on account of either of the Specified Defaults or any other Event of Default (whether similar or dissimilar to either of the Specified Defaults).

 

Subject to the terms hereof and the terms of the Transaction Documents, Lender hereby reserves all of its rights, remedies and powers under the Note and the other Transaction Documents at law, in equity or otherwise, including, without limitation, the right to declare all of the Obligation immediately due and payable pursuant to the Note.

 

4.                                      Conditions Precedent to Effectiveness.  The satisfaction of each of the following shall constitute conditions precedent to the effectiveness of this Agreement and each and every provision hereof (such date being the “Agreement Effective Date”):

 

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(a)                                 Lender shall have received the Payment, which Payment shall have been applied in the following order: (a) first, against the Expenses (as defined in the Restated Senior Exchangeable Note) until the amount of the Expenses equals zero; (b) second, against the Forbearance Late Charges (as defined in the Restated Senior Exchangeable Note) until the amount of the Forbearance Late Charges equals zero; and (c) third, against the Prior Late Charges (as defined in the Restated Senior Exchangeable Note);

 

(b)                                 Lender shall have received a counterpart of this Agreement duly executed and delivered by Borrower;

 

(c)                                  Borrower shall have received a counterpart of this Agreement duly executed and delivered by Lender;

 

(d)                                 Lender shall have received the Second Restated Senior Exchangeable Note, in the form of Exhibit A attached hereto, duly executed and delivered by Borrower;

 

(e)                                  Lender shall have received a counterpart of Amendment No. 1 to that certain Drag-Along Agreement dated as of August 10, 2011, by and between Lender and Borrower, in the form of Exhibit B attached hereto (the “Drag-Along Agreement Amendment”), duly executed and delivered by Borrower;

 

(f)                                   Borrower shall have received a counterpart of the Drag-Along Agreement Amendment duly executed and delivered by Lender;

 

(g)                                  except for representations and warranties which would otherwise fail to be true and correct solely as a result of the occurrence and continuance of the Specified Defaults, the representations and warranties herein and in the Note and the other Transaction Documents shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or a Material Adverse Effect, which shall be true and correct in all respects) as of the date hereof, as though made on such date (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date), and Borrower shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Agreement Effective Date.  Lender shall have received a certificate from Borrower, executed by the director of Borrower and dated as of the Agreement Effective Date, to the foregoing effect in the form attached hereto as Exhibit C;

 

(h)                                 no Event of Default (other than the Specified Defaults) shall have occurred and be continuing on the date hereof, nor shall any Event of Default result from the consummation of the transactions contemplated herein;

 

(i)                                     Lender shall have received the opinion of Maples and Calder, Borrower’s outside British Virgin Islands counsel, dated as of the Agreement Effective Date, in substantially the form of Exhibit D attached hereto;

 

(j)                                    Lender shall have received the opinion of Davis Polk & Wardwell LLP, Borrower’s outside U.S. counsel, dated as of the Agreement Effective Date, in substantially the form of Exhibit E attached hereto;

 

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(k)                                 Borrower shall have delivered to Lender a certificate evidencing the good standing of Borrower in the British Virgin Islands dated as of a date within twenty (20) days prior to the Agreement Effective Date;

 

(l)                                     Borrower shall have delivered to Lender a certified copy of the Borrower Articles (as defined below), as certified by the Registrar of Companies of the British Virgin Islands dated as of a date within twenty (20) days prior to the Agreement Effective Date;

 

(m)                             Borrower shall have delivered to Lender a certificate, executed by a director of Borrower and dated as of the Agreement Effective Date, certifying the resolutions adopted by Borrower’s Board of Directors approving (i) this Agreement, (ii) the restatement of the Restated Senior Exchangeable Note, as contemplated in the Recitals, (iii) the Drag-Along Agreement Amendment, and (iv) the transactions contemplated by each of the foregoing, certifying the current versions of the Borrower Articles and certifying as to the signatures and authority of Persons signing the Transaction Documents and related documents on behalf of Borrower, such resolutions in the form of Exhibit C attached hereto;

 

(n)                                 Borrower shall have delivered to Lender a certificate, executed by the Secretary of the Company and dated as of the Agreement Effective Date, certifying the current versions of the Company’s Certificate of Incorporation and the Company’s Bylaws and certifying as to the signatures and authority of Persons signing the Transaction Documents and related documents on behalf of the Company, such resolutions in the form of Exhibit F attached hereto;

 

(o)                                 Borrower shall have delivered to Lender nine (9) stock powers, each with Medallion Guarantee, duly executed by Borrower in blank and in the form attached as Exhibit G hereto; and

 

(p)                                 No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated by this Agreement or the other Transaction Documents; and

 

(q)                                 Lender shall have received such other information, documents, instruments, approvals or legal matters as Lender or its counsel may reasonably require.

 

5.                                      Representations and Warranties.  Borrower hereby represents and warrants to Lender as follows (and such representations and warranties shall survive the execution and delivery of this Agreement):

 

(a)                                 Organization, Good Standing and Qualification.

 

i.                                          Borrower is a company duly organized, validly existing and in good standing under the laws of the British Virgin Islands and has all requisite corporate power and authority to carry on its business as now conducted and to own and lease its properties.  Borrower has furnished to Lender true and complete copies of Borrower’s Memorandum of Association and Articles of Association, each as amended and in effect as of the date hereof

 

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(collectively, the “Borrower Articles”).  Borrower is not in violation of any provision of the Borrower Articles.  Borrower is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification necessary, except where the failure to so qualify would not have a Material Adverse Effect.  To Borrower’s Knowledge (as defined below), no proceeding has been instituted in any jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail, such power and authority or qualification.  “Knowledge” means the knowledge, which Borrower would have if Borrower had made due and reasonable enquiries of the applicable matter(s).

 

ii.                                       The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted and to own and lease its properties.  The Company is not in violation of any provision of the Company’s Certificate of Incorporation, including any certificate of designations, or the Company’s Bylaws.  The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification necessary, except where the failure to so qualify would not have a Material Adverse Effect.  To Borrower’s Knowledge, no proceeding has been instituted in any jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail, such power and authority or qualification.

 

iii.                                    Each Company Subsidiary is duly formed, validly existing and in good standing under the laws of its jurisdiction of organization, with full power and authority to conduct its business as currently conducted and to own or lease its properties.  Borrower has, if requested, made available for Lender’s review, true and complete copies or the articles of incorporation and bylaws (or comparable organizational documents) of each Company Subsidiary.  To Borrower’s Knowledge, no Company Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each Company Subsidiary is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property makes such qualification necessary, except where the failure to so qualify would not have a Material Adverse Effect.  To Borrower’s Knowledge, no proceeding has been instituted in any jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail, such power and authority or qualification.

 

iv.                                   As of the date hereof, Borrower owns an aggregate of 36,000,000 fully paid and nonassessable shares of Common Stock free and clear of any and all liens, which shares of Common Stock are evidenced by the Common Stock certificates as described and set forth on Exhibit H attached hereto.  Borrower has good and valid title to all such shares, and all of the outstanding shares of capital stock of the Company are validly issued and are fully paid, nonassessable and free of any preemptive and similar rights.  Except as described in the reports, schedules, forms, statements and other documents filed by the Company with the SEC during the three (3) years prior to the date hereof pursuant to the reporting requirements of the Securities Act and the Exchange Act, all of which are available on the SEC’s EDGAR system, the Company owns all of the capital stock or member interests of each Company Subsidiary free and clear of any and all liens, security interest and any other encumbrances or restrictions, and all of

 

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the outstanding shares of capital stock or member interests of each Company Subsidiary are validly issued and are fully paid, nonassessable and free of any preemptive and similar rights.  The Company has no Subsidiaries except for the entities set forth on Exhibit I attached hereto.  Borrower has no subsidiaries other than the Company, the Company Subsidiaries and subsidiaries of the Company which are not Company Subsidiaries.

 

(b)                                 Authorization.  Each of the Company and Borrower has full corporate power and authority and has taken all requisite action necessary for (i) the authorization, execution and delivery of the Transaction Documents to which it is a party, and (ii) the authorization of the performance of its obligations hereunder or thereunder.  The Board of Directors of each of the Company and Borrower has duly authorized the execution and delivery of the Transaction Documents to which it is a party and its consummation of the transactions contemplated hereby and thereby, and such execution, delivery and consummation does not require (A) any further filing, consent or authorization by Borrower, the Company or the Board of Directors or shareholders of Borrower or the Company, or (B) any consent of, action by or in respect of, or filing, submission or registration with, or giving of any notice to, any Person, governmental body, agency or official.  Each of the Company and Borrower has duly executed and delivered the Transaction Documents to which it is a party and such Transaction Documents constitute the legal, valid and binding obligations of it, enforceable against it in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally, and to the unenforceability of indemnification provisions that may be against public policy.

 

(c)                                  Valid Issuance.  The Note has been duly and validly authorized and validly issued, and is and will be free and clear of all taxes, liens, claims, restrictions on transfer, preemptive rights, rights of first refusal or other encumbrances of any nature (other than those created by Lender pursuant to the Pledge Agreement), except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws.  The transfer of the Exchange Shares deliverable upon exchange of the Note in accordance with the terms thereof has been duly and validly authorized by Borrower’s Board of Directors and, upon transfer, such Exchange Shares will be validly issued, fully paid and nonassessable, and will be free and clear of all taxes, liens, claims, restrictions on transfer, preemptive rights, rights of first refusal or other encumbrances of any nature (other than those created by Lender pursuant to the Pledge Agreement), except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws.

 

(d)                                 Consents.  The execution, delivery and performance by Borrower of the Transaction Documents, and the execution, delivery and performance by the Company of the Registration Rights Agreement, as amended by the Registration Rights Agreement Amendment (together, and as amended, restated, supplemented or otherwise modified from time to time, the “Registration Rights Agreement”), and the transactions contemplated thereby requires no consent of, action by or in respect of, or filing, submission or registration with, or giving of any notice to, any Person, governmental body, agency, or official except (i) the filing with the SEC of a current report on Form 8-K, (ii) the filing with the SEC of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, and (iii) those that have been made or obtained prior to the date of this Agreement.  Borrower is unaware of any facts or circumstances that might prevent the Company or Borrower from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence.

 

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(e)                                  Absence of Material Changes.  Since September 30, 2012, there have not been any changes in the assets, liabilities, financial condition, business or results of operation of Borrower, the Company or to Borrower’s Knowledge, any Company Subsidiary, which has had or would reasonably be expected to have a Material Adverse Effect.

 

(f)                                   No Conflict, Breach, Violation or Default.  Neither the execution, delivery and performance of the Transaction Documents by the Company or Borrower nor the consummation of any of the transactions contemplated thereby will (i) conflict with or result in a violation of the Borrower Articles, or any certificate of incorporation, certificate of formation, any certificate of designations or other constituent documents of the Company or to Borrower’s Knowledge, any Company Subsidiary, the Company’s Bylaws or to Borrower’s Knowledge, the bylaws of any Company Subsidiary, (ii) give rise to the right to terminate, cancel, amend or accelerate the due date of any payment under (with or without notice, lapse or time or both), or conflict with or result in a breach of any term or provision of, or constitute a default (or any event which with notice or lapse of time or both would constitute a default) under, or require any consent or waiver under or result in the execution or imposition of any lien, charge or encumbrance upon the properties or assets of Borrower, the Company or to Borrower’s Knowledge, any Company Subsidiary pursuant to the terms of, any indenture, mortgage, deed of trust or other agreement or instrument to which Borrower, the Company or any Company Subsidiary is a party or by which the Company or any Company Subsidiary is bound or to which any of its assets or properties is subject, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority, or the bylaws and rules of Nasdaq to which Borrower, the Company or any Company Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of Borrower, the Company or any Company Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not reasonably be expected to have a Material Adverse Effect.  None of Borrower, the Company or to Borrower’s Knowledge, any Company Subsidiary, individually and on a consolidated basis, is as of the date hereof, and after giving effect to the transactions contemplated hereby, will be, Insolvent.  For purposes of this Section 5(f), “Insolvent” means, with respect to any Person, (A) the present fair saleable value of such Person’s assets is less than the amount required to pay such Person’s total Indebtedness, (B) such Person is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (C) such Person intends to incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature, or (D) such Person has unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted.

 

(g)                                  Absence of Litigation.  There are no pending or, to Borrower’s Knowledge, threatened actions, suits, proceedings, inquiries or investigations against or affecting Borrower, the Company, any Company Subsidiary or any of their respective properties or any of the officers and directors of Borrower, the Company or any Company Subsidiary in their capacities as such. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act.

 

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(h)                                 Bankruptcy.  None of Borrower, the Company or to Borrower’s Knowledge, any Company Subsidiary has taken any steps to seek protection pursuant to any bankruptcy law nor does Borrower have any knowledge or reason to believe that its creditors or the creditors of the Company or any Company Subsidiary intend to initiate involuntary bankruptcy proceedings or any knowledge of any fact that would reasonably lead a creditor to do so.

 

(i)                                     Compliance.  None of Borrower, the Company or to Borrower’s Knowledge, any Company Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by Borrower, the Company or a Company Subsidiary, as applicable, under), nor has Borrower, the Company or to Borrower’s Knowledge, any Company Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), except for the Specified Defaults, (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any law, statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as would not, have or reasonably be expected to result in a Material Adverse Effect.

 

(j)                                    Disclosure; No Undisclosed Events, Liabilities, Developments or Circumstances.  Borrower confirms that neither it, nor any other Person acting on its behalf, has provided Lender or its agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information regarding the Company.  All disclosure provided to Lender regarding Borrower and its business furnished by or on behalf of Borrower is true and correct as of the date hereof and as of the date hereof does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

 

(k)                                 Ranking of Note.  As of the date of this Agreement, except for the indebtedness under the Note, Borrower has no indebtedness for borrowed money.

 

(l)                                     Performance.  Except for the Specified Defaults, Borrower has performed in all material respects all agreements to be performed on its part on or before the date hereof as set forth in the Note and the other Transaction Documents.

 

(m)                             No Duress.  This Agreement has been entered into without force or duress, of the free will, and with full knowledge, of Borrower.  Borrower’s decision to enter into this Agreement is an informed decision and Borrower is aware of all legal and other ramifications of such decision.

 

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(n)                                 Comprehension and Advice of Counsel.  (i) Borrower has read and reviewed the terms and provisions of this Agreement in its full and final form and are familiar with same, (ii) the terms and provisions contained herein are understood by Borrower and have been consented to by Borrower, (iii) Borrower has had benefit and advice of counsel of its own selection, or the opportunity to obtain the benefit and advice of counsel of its own selection, in regard to understanding the terms, meaning and effect of this Agreement, and (iv) in executing this Agreement, Borrower is relying on no representations, either written or oral, express or implied, made to Borrower.  Borrower acknowledges that Lender’s agreements set forth in this Agreement are adequate and sufficient consideration for the agreements of Borrower set forth in this Agreement.

 

6.                                      Covenants.  Borrower hereby covenants and agrees with Lender as follows:

 

(a)                                 Compliance with the Transaction Documents.  Borrower shall strictly adhere to all the terms, conditions and covenants of the Transaction Documents, including terms requiring prompt payment of the Obligation when due.

 

(b)                                 Make Borrower Representatives Available.  Borrower shall, upon two (2) days’ notice from Lender, make each of its representatives available for meetings with Lender, as may be requested by Lender.  Borrower acknowledges and agrees that all fees, costs and expenses incurred or charged by Lender in connection with the analysis and review of Borrower’s affairs, financial conditions, assets and operations shall immediately constitute a part of the Obligation that will be secured by the Pledged Collateral and shall be payable by Borrower.

 

(c)                                  Cooperation.  Borrower shall cooperate fully with Lender in furnishing information and taking such other action as required or contemplated by this Agreement and the other Transaction Documents, including, without limitation, providing all information requested and providing Lender full access to its original books and records (and to permit Lender to make copies thereof (subject to a reasonable written confidentiality agreement)), property and assets wherever they may be located, which right of access shall include the right to inspect and appraise such property and assets.  Borrower authorizes Lender to meet or have discussions with Borrower from time to time to discuss any matters regarding Borrower’s assets, affairs, financial conditions and operations, and shall direct and authorize, and hereby directs and authorizes, Borrower’s representatives to fully disclose to Lender all information requested by the Lender regarding Borrower’s assets, affairs, financial condition and operations.

 

(d)                                 No Pledge or Lien.  Borrower shall not, and Borrower shall cause its Affiliates not to (i) pledge, or (ii) otherwise take any action, or fail to take any action, that would result in the creation or imposition of any lien on, in either case, any shares of Common Stock “beneficially owned” (as defined for purposes of Rule 13d-3 of the Exchange Act) by Borrower or any Affiliate of Borrower.

 

(e)                                  Full Disclosure.  Borrower shall make full and complete disclosure of all aspects of its assets, affairs, financial conditions and business operations as may be requested by Lender.

 

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(f)                                   Continued Performance.  Borrower shall continue to perform and observe all terms and conditions contained in the Transaction Documents that are not specifically mentioned in this Agreement as the Specified Defaults.

 

7.                                      Bankruptcy Matters.

 

(a)                                 Borrower represents and warrants to Lender that Borrower has not made a determination to file any voluntary petition under any chapter of the United States Bankruptcy Code (11 U.S.C. §101, et seq.) (the “Bankruptcy Code”), or to, directly or indirectly, cause Borrower to file any insolvency proceeding or to have any insolvency proceeding filed against Borrower, and that Borrower has no Knowledge that the Company has a present intent to file a voluntary petition under any chapter of the United States Bankruptcy Code.  Borrower represents and warrants to Lender that it has no actual knowledge of any intention by any party or creditor to file any insolvency proceeding against Borrower or the Company.  Borrower agrees to notify Lender immediately in the event Borrower has Knowledge that Borrower or the Company has a present intent to file a voluntary petition under any chapter of the United States Bankruptcy Code or that any party or creditor intends to file any insolvency proceeding against Borrower or the Company.

 

(b)                                 Borrower further acknowledges and agrees that, to the maximum extent permitted by applicable law, in the event Borrower shall ever become the subject of any insolvency proceeding, then Lender shall immediately become entitled, among other relief to which Lender may be entitled under the Transaction Documents, and at law or in equity, to obtain upon ex parte application therefor and without further notice or action of any kind, (i) an order from any court of competent jurisdiction (the “Court”) prohibiting the use by the trustee in bankruptcy, or by Borrower as debtor-in-possession, of Lender’s “cash collateral” (as such term is defined in Section 363 of the Bankruptcy Code) in connection with the Transaction Documents; (ii) an order from the Court granting immediate relief from the automatic stay pursuant to Section 362 of the Bankruptcy Code so as to permit Lender to exercise all of Lender’s rights and remedies pursuant to the Transaction Documents, and at law and in equity, and Borrower further acknowledges and agrees that (A) the occurrence or existence of any breach or default under this Agreement or any Event of Default shall, in and of itself, constitute “cause” for relief from the automatic stay pursuant to the provisions of Section 362(d)(1) of the Bankruptcy Code, and (B) in no event shall Borrower contest a motion to lift the automatic stay filed by Lender.

 

(c)                                  As additional consideration for Lender’s execution of this Agreement, Borrower agrees in the event any insolvency proceeding is filed by or against Borrower, Borrower shall not reject this Agreement, nor contest any claim or assertion by Lender that this Agreement is binding on the parties hereto, and that valuable consideration has been received by Borrower for this Agreement.

 

(d)                                 Borrower represents and warrants to Lender and agrees as follows:  (i) Borrower has assured Lender that if the consensual out-of-court restructuring contemplated by this Agreement cannot be carried out by Borrower in accordance with the terms of this Agreement, then, to the maximum extent permitted by applicable law, Borrower intends to allow Lender to foreclose and exercise all of Lender’s other rights and remedies as a secured creditor;

 

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(ii) Borrower has not made a determination to commence any insolvency proceeding and has no intention of seeking any non-consensual relief against Lender in any insolvency proceeding; (iii) any filing by Borrower of any insolvency proceeding or the exercise of like or similar rights by Borrower prior to satisfaction of the Obligation to Lender would be inconsistent with and contrary to the intentions of the parties hereto; (iv) Borrower cannot formulate or implement a successful plan of reorganization, restructuring or similar relief in any such insolvency proceeding that would adequately and sufficiently protect the rights of Lender or enable Borrower to satisfy Borrower’s obligations to Lender; (v) in light of the foregoing, if any insolvency proceeding is filed by or against Borrower, Lender shall have the right, among other things, to seek and obtain immediate relief from any stay as to the Pledged Collateral for the obligations secured thereby and to have the exclusivity period for the filing of any plan of reorganization terminated, and Borrower shall be estopped from objecting to or opposing in any manner the relief requested by Lender or the termination of any such exclusivity period in a bankruptcy proceeding; and (vi) Borrower will not solicit, assist or encourage any third party to file any insolvency proceeding petition against Borrower.  Lender is relying on, among other things, the representations and warranties contained in this Section 7 in entering into this Agreement.

 

8.                                      Other Acknowledgements.

 

(a)                                 Acknowledgement and Reaffirmation of Obligation.  Borrower hereby acknowledges, confirms and agrees that as of the close of business on January 30, 2013, prior to giving effect to the Payment, Borrower was indebted to Lender in the following amounts (each as defined in the Restated Senior Exchangeable Note):

 

Principal:		U.S.$	30,000,000
Premium:		U.S.$	28,593,750
Prior Late Charges:		U.S.$	4,374,465
Forbearance Late Charges:		U.S.$	4,213,934
Additional Late Charges:		U.S.$	25,107,718
Expenses		U.S.$	298,099
Total Obligation:		U.S.$	92,587,965

 

All such Obligation owing by Borrower, together with premium and late charges accrued and accruing thereon, and all fees, costs, expenses and other charges now or hereafter payable by Borrower to Lender, are unconditionally owing by Borrower to Lender, without offset, defense, withholding, counterclaim or deduction of any kind, nature or description whatsoever and shall be payable in accordance with the terms of the Note and the other Transaction Documents.

 

Borrower hereby acknowledges that the Transaction Documents and the Obligation constitute the valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms, and Borrower hereby reaffirms its obligations under the Transaction Documents.  Lender’s entry into this Agreement or any of the documents referenced herein, its negotiations with any party with respect to Borrower, its conduct of any analysis or investigation of any Pledged Collateral for the Obligation or any Transaction Document, its acceptance of any payment from Borrower or any other party of any payments made prior to the date hereof, or any other action or failure to act on the part of Lender shall not constitute (i) a modification of any Transaction Document, or (ii) a waiver of any Event of Default under the Note, including, without limitation, the Initial Specified Default or the Additional Specified Default, or a waiver of any term or provision of any Transaction Document.

 

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(b)                                 Acknowledgement of Security Interests.  Borrower hereby acknowledges, confirms and agrees that the Collateral Agent, for the benefit of Lender, has and shall continue to have valid, enforceable and perfected first-priority liens in the Pledged Collateral granted to the Collateral Agent, for the benefit of Lender, pursuant to the Transaction Documents or otherwise granted to or held by the Collateral Agent, for the benefit of Lender.

 

(c)                                  Acknowledgment of No Lender Obligations.  Borrower hereby acknowledges, confirms and agrees that as a result of the Specified Defaults, Lender has no obligation to make any loans or financial accommodations to Borrower.

 

(d)                                 Binding Effect of Documents.  Borrower hereby acknowledges, confirms and agrees that:  (i) each of the Transaction Documents to which it is a party has been duly executed and delivered to Lender by Borrower, and each is in full force and effect as of the date hereof, (ii) the agreements and obligations of Borrower contained in this Agreement and the other Transaction Documents constitute the legal, valid and binding obligations of Borrower and its successors and assigns, enforceable against Borrower and its successors and assigns in accordance with their respective terms, and Borrower and its successors and assigns have no valid defense to the enforcement of the Obligation and such guaranteed indebtedness, and (iii) Lender is and shall be entitled to the rights, remedies and benefits provided for in the Transaction Documents (as such rights, remedies and benefits may be limited by applicable laws and as set forth in this Agreement) and under applicable law or at equity.

 

(e)                                  No Disregard of Transaction Documents.  Borrower acknowledges that the parties hereto have not entered into a mutual disregard of the terms and provisions of the Note or the other Transaction Documents, or engaged in any course of dealing in variance with the terms and provisions of the Note or the other Transaction Documents, within the meaning of any applicable law of the State of New York, or otherwise.

 

(f)                                   Borrower Remains in Control.  Borrower acknowledges that it remains in control of its business and affairs and determines the business plan, for, and employment, management and operating directions and decisions for its business and affairs.

 

9.                                      Payment of Costs and Fees.  Borrower shall pay to Lender all reasonable costs, fees, expenses and charges of every kind in connection with the preparation, negotiation, execution and delivery of this Agreement and any documents and instruments relating hereto, including the other Transaction Documents (which costs will include the reasonable fees and expenses of attorneys retained by Lender).

 

10.                               Compromise Negotiations.  Other than the provisions of this Agreement explicitly set forth herein, any discussions between the parties hereto in reference to the drafting hereof (the “Negotiations”) shall not be utilized or admissible in any subsequent litigation between the parties hereto.  All such Negotiations shall be considered “compromise negotiations” pursuant to N.Y. C.P.L.R. 4547, Fed. R. Evid. 408 and any comparable provision of any other state or

 

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federal law which may now or in the future be deemed applicable to the Negotiations, and none of such Negotiations shall be considered “otherwise discoverable” or be permitted to be discoverable or admissible for any other purpose except to prove “bias, prejudice, interest of a witness or a party, negativing a contention of undue delay, or an effort to obstruct a criminal investigation or prosecution” as provided by N.Y. C.P.L.R. 4547, Fed. R. Evid. 408 and any comparable provision of any other state or federal law which may now or in the future be deemed applicable to the Negotiations.  For purposes of clarification, notwithstanding the foregoing, if a dispute arises out of this Agreement, the parties shall have the absolute right to resolve such dispute in the courts specified in Section 9(a) of the Note Purchase Agreement.

 

11.                               Waiver of Bond.  BORROWER WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF LENDER IN CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING OR TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE AGENTS OR ANY OTHER MEMBER OF LENDER OR TO ENFORCE BY SPECIFIC ENFORCEMENT, ANY TEMPORARY RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTIONS, OR THIS AGREEMENT.

 

12.                               Time of Essence.  Time is of the essence in the payment and performance of each portion of the Obligation and with respect to all covenants and conditions to be satisfied by Borrower in this Agreement, the other Transaction Documents and all other documents, acknowledgments and instruments delivered in connection herewith.

 

13.                               Release; Covenant Not to Sue.

 

(a)                                 Effective on the date hereof, Borrower, for itself and on behalf of its successors, assigns and officers, directors, employees, agents and attorneys, and any Person acting for or on behalf of, or claiming through it, hereby waives, releases, remises and forever discharges Lender, each of its Affiliates, and each of its successors in title, past, present and future officers, directors, employees, limited partners, general partners, investors, attorneys, assigns, subsidiaries, shareholders, trustees, agents and other professionals and all other persons and entities to whom Lender would be liable if such persons or entities were found to be liable to Borrower (each a “Releasee” and collectively, the “Releasees”), from any and all past and present claims, suits, liens, lawsuits, adverse consequences, amounts paid in settlement, debts, deficiencies, diminution in value, disbursements, demands, obligations, liabilities, causes of action, damages, losses, costs and expenses of any kind or character, whether based in equity, law, contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law (each a “Claim” and collectively, the “Claims”), whether known or unknown, fixed or contingent, direct, indirect or derivative, asserted or unasserted, matured or unmatured, foreseen or unforseen, past or present, liquidated or unliquidated, suspected or unsuspected, which Borrower ever had, or now has, against any such Releasee which relates, directly or indirectly to the Note, any other Transaction Document, or to any acts or omissions of any such Releasee with respect to the Note or any other Transaction Document, or to the lender-borrower relationship evidenced by the Transaction Documents, except for the duties and obligations set forth in this Agreement and the other Transaction Documents.  As to each and every Claim released hereunder, Borrower hereby represents that it has received the advice of legal counsel with regard to the releases contained herein.

 

As to each and every Claim released hereunder, Borrower also waives the benefit of each provision of applicable federal or state law (including, without limitation, the laws of the state of New York), if any, pertaining to general releases after having been advised by its legal counsel with respect thereto.

 

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Borrower acknowledges that it may hereafter discover facts different from or in addition to those now known or believed to be true with respect to such Claims and agrees that this instrument shall be and remain effective in all respects notwithstanding any such differences or additional facts.  Borrower agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above, which release shall remain in full force and effect after the execution date hereof.  This release shall remain in full force and effect notwithstanding the discovery by Borrower that any fact relied upon by it was incorrect.  Borrower understands, acknowledges and agrees that the release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.

 

(b)                                 Borrower, for itself and on behalf of its successors, assigns, and officers, directors, employees, agents and attorneys, and any Person acting for or on behalf of, or claiming through it, hereby absolutely, unconditionally and irrevocably, covenants and agrees with and in favor of each Releasee above that (i) none of the provisions of the above release shall be construed as or constitute an admission of any liability on the part of any Releasee; and (ii) it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Releasee on the basis of any Claim released, remised and discharged by such Person pursuant to this Section 13.  Borrower further agrees that it shall not dispute the validity or enforceability of the Note or any of the other Transaction Documents or any of its obligations thereunder, or the validity, priority, enforceability or the extent of the Collateral Agent’s liens on any item of Pledged Collateral under the Note or the other Transaction Documents.  If Borrower or any of its respective successors, assigns, or officers, directors, employees, agents or attorneys, or any Person acting for or on behalf of, or claiming through it violate the foregoing covenant, Borrower, for itself and its successors, assigns and legal representatives, agrees to pay, in addition to such other damages as any Releasee may sustain as a result of such violation, all reasonable attorneys’ fees and costs incurred by such Releasee as a result of such violation.  In agreeing to the foregoing release, Borrower expressly disclaims any reliance on any representations or warranties, acts or omissions by any of the Releasees and hereby agrees and acknowledges that the validity and effectiveness of the above release do not depend in any way on any such representations or warranties, acts or omissions or the accuracy, completeness or validity thereof.

 

(c)                                  The provisions of this Section 13 shall survive the termination of this Agreement and the other Transaction Documents and the payment in full of the Obligation.

 

(d)                                 Borrower acknowledges that the foregoing release is a material inducement to Lender’s decision to enter into this Agreement.

 

14.                               Specific Performance.  It is understood and agreed by each of the parties hereto that money damages would not be a sufficient remedy for any breach of this Agreement by any party and each non-breaching party shall be entitled to specific performance and injunctive or other equitable relief as a remedy of any such breach.

 

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15.                               Severability.  If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

16.                               Integration.  This Agreement, and the terms and provisions hereof, which terms shall be deemed to include the annexes, Exhibits and schedules hereto, together with the other Transaction Documents, and the other documents delivered pursuant hereto or thereto (each as amended, supplemented or otherwise modified from time to time), incorporate all negotiations of the parties hereto with respect to the subject matter hereof and set forth in full the terms of agreement between the parties and are intended as the full, complete and exclusive contracts governing the relationship between the parties with respect to the transactions contemplated herein, superseding all other discussions, promises, representations, agreement and understandings, whether express or implied, oral or written, between the parties with respect thereto.

 

17.                               Submission of Agreement.  The submission of this Agreement to the parties or their agents or attorneys for review or signature does not constitute a commitment by Lender to forbear from exercising any of its rights and remedies under the Transaction Documents, and this Agreement shall have no binding force or effect until all of the conditions to the effectiveness of this Agreement have been satisfied as set forth herein.

 

18.                               Modification and No Further Commitment.  This Agreement may not be amended, waived, supplemented or otherwise modified in any manner without the written consent of the party against whom the amendment, waiver, supplement or other modification is sought to be enforced.  Borrower acknowledges and agrees that (i) Lender has no obligation whatsoever to discuss, negotiate or to agree to any restructuring of the Obligation under the Note, or any modification, amendment, waiver, supplement, restructuring or reinstatement of the Transaction Documents, or to forbear from exercising Lender’s rights and remedies under the Transaction Documents, except as specifically provided in this Agreement, and (ii) if there are any future discussions among Lender and Borrower concerning any such modification, amendment, waiver, supplement, restructuring or reinstatement, then no modification, amendment, waiver, supplement, restructuring, reinstatement, compromise, settlement, agreement or understanding with respect to the loans or Obligation under the Note or the Transaction Documents shall constitute a legally binding agreement or contract or have any force or effect whatsoever unless and until reduced to writing and signed by authorized representatives of Lender, and none of the parties hereto shall assert or claim in any legal proceedings or otherwise that any such agreement exists except in accordance with the terms of this Section 18.

 

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19.                               Reaffirmation of Obligations.  Borrower hereby reaffirms its obligations under each Transaction Document to which it is a party.  Borrower hereby further ratifies and reaffirms the validity and enforceability of all of the liens heretofore granted, pursuant to and in connection with the Pledge Agreement or any other Transaction Document, to the Collateral Agent, on behalf and for the benefit of Lender, as collateral security for the obligations under the Transaction Documents in accordance with their respective terms, and acknowledges that all of such liens, and all Pledged Collateral heretofore pledged as security for such obligations, continues to be and remains the Pledged Collateral for such obligations from and after the date hereof.

 

20.                               Ratification.  Borrower hereby restates, ratifies and reaffirms each and every term and condition set forth in the Note and the Transaction Documents effective as of the date hereof and as amended or restated in connection herewith or hereby.

 

21.                               Effect on Transaction Documents.

 

(a)                                 The Note and each of the other Transaction Documents shall be and remain in full force and effect in accordance with their respective terms and are hereby ratified and confirmed in all respects.  The execution, delivery and performance of this Agreement shall not operate, except as expressly set forth herein, as a forbearance, waiver, consent or modification of any right, power or remedy of Lender under the Note or any other Transaction Document.  The forbearance, waivers, consents and modifications herein are limited to the specifics hereof (including facts or occurrences on which the same are based), shall not apply with respect to any facts or occurrences other than those on which the same are based, shall not excuse any non-compliance with the Transaction Documents and shall not operate as a consent to any matter under the Transaction Documents.  Except for the forbearance, waivers, consents and other modifications expressly set forth above, including the amendment and restatement of the Restated Senior Exchangeable Note as the Note and the amendment of the Drag-Along Agreement pursuant to the Drag-Along Agreement Amendment, the text of the Transaction Documents shall remain unchanged and in full force and effect and Lender expressly reserves the right to require strict compliance with the terms of the Note and the other Transaction Documents.  The execution, delivery and performance of this Agreement shall not operate as a waiver of or, except as expressly set forth herein, as an amendment or modification of, any right, power or remedy of Lender in effect prior to the date hereof.  The forbearance, waivers, consents and other modifications contained herein are limited to the precise terms hereof, shall not apply with respect to any facts or occurrences other than those on which the same are based, shall not (i) excuse future non-compliance with the Transaction Documents, (ii) operate as a consent to any further or other matter under the Transaction Documents, or (iii) operate as a waiver of any Event of Default.  Lender is not obligated to consider or consent to any additional request by Borrower for any other forbearance, waiver, consent or other modification with respect to the Note.  To the extent that any terms, conditions or provisions of this Agreement shall contradict or be in conflict with any terms, conditions or provisions of the Note or the other Transaction Documents, after giving effect to this Agreement, such terms, conditions and provisions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Note and the other Transaction Documents as modified or amended hereby.

 

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(b)                                 Upon and after the effectiveness of this Agreement, each reference in the Note to “this Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring to the Note, and each reference in the other Transaction Documents to “the Note”, “thereunder”, “therein”, “thereof” or words of like import referring to the Note, shall mean and be a reference to the Note as modified and amended hereby.

 

(c)                                  This Agreement is a Transaction Document.

 

(d)                                 Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, references to the masculine, feminine or neuter gender shall include each other, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”.

 

22.                               Survival.  All covenants, representations and warranties, indemnities and releases contained in this Agreement shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, regardless of any investigation made by Lender or on its behalf.

 

23.                               No Waiver; Cumulative Remedies.  No failure to exercise and no delay in exercising, on the part of Lender, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

 

24.                               Notices; Amendment to Note Purchase Agreement.  All notices, requests, and demands to or upon the respective parties hereto shall be given in accordance with Section 19(a) of the Note; provided that effective as of August 10, 2011, the reference to “466 Lexington Avenue” in Section 9(f) of the Note Purchase Agreement shall be deemed restated in its entirety as “450 Lexington Avenue”.

 

25.                               Counterparts.  This Agreement may be executed by one or more of the parties hereto on any number of separate counterparts, each of which when so executed and delivered, shall be deemed an original and all of which, when taken together, shall be deemed to constitute one and the same instrument.  Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic methods of transmission shall be as effective as delivery of a manually executed counterpart hereof.  Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability and binding effect of this Agreement.

 

26.                               Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

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27.                               Rights of Third Persons.  Each of the parties hereto agrees that no third Persons shall have any rights, interest or claims hereunder or be entitled to any benefits under or on account of this Agreement as a third-party beneficiary or otherwise.

 

28.                               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.  Borrower hereby appoints CT Corporation System, with offices located at 111 Eighth Avenue, New York, NY 10011, as its agent for service of process in New York.  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 TO, 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.

 

29.                               Construction.  This Agreement shall not be construed more strictly against Lender merely by virtue of the fact that the same has been prepared by Lender or its counsel, it being recognized that Borrower and Lender have contributed substantially and materially to the preparation of this Agreement, and each party acknowledges and waives any claim contesting the existence and the adequacy of the consideration given by any of the other parties hereto in entering into this Agreement.

 

30.                               Benefit.  This Agreement shall be binding upon and shall inure to the benefit of Borrower and Lender, and their respective successors and assigns; provided that Borrower shall have no right to assign any of its rights or duties under this Agreement.

 

31.                               Relationship of Borrower and Lender.  The relationship between Borrower and Lender is solely that of debtor and creditor, and Lender has no fiduciary or other special relationship with Borrower, and no term or condition of this Agreement or any other Transaction Document shall be construed so as to deem the relationship between Borrower and Lender to be other than that of debtor and creditor.

 

32.                               Lender Not Liable for Expenses.  Nothing in this Agreement shall be intended or construed to hold Lender liable or responsible for any expense, disbursement, liability or obligation of any kind or nature whatsoever, including, without limitation, wages, salaries, payroll taxes, deposits, withholding, benefits or other amounts payable to or on behalf of Borrower.

 

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33.                               Additional Waivers by Borrower.  Borrower waives:  (i) presentment, demand and protest and notice of presentment, protest, default, nonpayment, maturity, release, compromise, settlement, extension or renewal of any or all commercial paper accounts, contract rights, documents, instruments, chattel paper and guaranties at any time held by Lender on which Borrower may in any way be liable and hereby ratifies and confirms whatever Lender may do in this regard; (ii) notice prior to taking possession or control of the Pledged Collateral; (iii) the benefit of all valuation, appraisement and exemption laws; and (iv) notice of acceptance hereof.  Borrower acknowledges that the foregoing waivers are a material inducement to Lender entering into this Agreement and that Lender is relying upon the foregoing waivers in its future dealings with Borrower.  Borrower represents and warrants that it has fully reviewed and understands the foregoing waivers.

 

34.                               Currency.  Unless otherwise indicated, all dollar amounts referred to in this Agreement are in U.S. dollars.  All amounts owing under this Agreement shall be paid in U.S. dollars.  All amounts denominated in other currencies shall be converted into the U.S. dollar equivalent amount in accordance with the Exchange Rate on the date of calculation.  “Exchange Rate” means, in relation to any amount of currency to be converted into U.S. dollars pursuant to this Agreement, the U.S. dollar exchange rate as published in The Wall Street Journal on the relevant date of calculation.

 

35.                               Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

[SIGNATURE PAGE FOLLOWS]

 

20

 

IN WITNESS WHEREOF, Borrower and Lender have caused their respective signature page to this RESTATED FORBEARANCE AGREEMENT to be duly executed as of the date first written above.

 

	BORROWER:
	BEAMS POWER INVESTMENT LIMITED
	By:		/s/ Liang Zhang
			Name: Liang Zhang
			Title:  Authorized Signatory
	LENDER:
	WARBURG PINCUS PRIVATE EQUITY IX, L.P.
	By:			Warburg Pincus IX LLC, its general partner
		By:				Warburg Pincus Partners, LLC, its sole member
					By:		Warburg Pincus & Co., its managing member
	By:		/s/ Timothy J. Curt
			Name: Timothy J. Curt
			Title:  Partner

 

 

EXHIBITS

 

Exhibit A	Second Restated Senior Exchangeable Note
Exhibit B	Drag-Along Agreement Amendment
Exhibit C	Form of (Borrower) Director’s Certificate
Exhibit D	Form of Opinion of Outside British Virgin Islands Counsel to Borrower
Exhibit E	Form of Opinion of Outside U.S. Counsel to Borrower
Exhibit F	Form of (Company) Secretary’s Certificate
Exhibit G	Form of Stock Power
Exhibit H	Common Stock Certificates
Exhibit I	List of Subsidiaries

 

 

EXHIBIT A

 

SECOND RESTATED SENIOR EXCHANGEABLE NOTE

 

A-1

 

EXHIBIT B

 

DRAG-ALONG AGREEMENT AMENDMENT

 

B-1

 

EXHIBIT C

 

FORM OF (BORROWER) DIRECTOR’S CERTIFICATE

 

C-1

 

EXHIBIT D

 

FORM OF OPINION OF OUTSIDE BRITISH VIRGIN ISLANDS COUNSEL
TO BORROWER

 

D-1

 

3.1                               The Company is a company limited by shares registered under the Act, in good standing at the Registry of Corporate Affairs, duly incorporated and validly existing under the laws of the British Virgin Islands, and possesses the capacity to sue and be sued in its own name.

 

3.2                               The Company has full power and authority under its Memorandum and Articles of Association to enter into, execute and perform its obligations under the Transaction Documents.

 

3.3                               The execution and delivery of the Transaction Documents and the performance by the Company of its obligations thereunder do not conflict with or result in a breach of any of the terms or provisions of the Memorandum and Articles of Association of the Company or any law, public rule or regulation applicable to the Company in the British Virgin islands currently in force.

 

3.4                               The execution, delivery and performance of the Transaction Documents have been authorised by and on behalf of the Company and the Transaction Documents have been duly executed and delivered on behalf of the Company and constitute the legal, valid and binding obligations of the Company enforceable in accordance with their terms.

 

3.5                               No authorisations, consents, approvals, licences, validations or exemptions are required by law from any governmental authorities or agencies or other official bodies in the British Virgin Islands in connection with:

 

(a)                                 the creation, execution or delivery of the Transaction Documents by the Company;

 

(b)                                 enforcement of the Transaction Documents against the Company; or

 

(c)                                  the performance by the Company of its obligations under any of the Transaction Documents.

 

3.6                               With the exception of filing fees charged by the Registry of Corporate Affairs in respect of any optional filings made at the Registry of Corporate Affairs no taxes, fees or charges (including stamp duty) are payable (either by direct assessment or withholding) to the government or other taxing authority in the British Virgin Islands under the laws of the British Virgin Islands in respect of;

 

(a)                                 the execution or delivery of the Transaction Documents;

 

(b)                                 the enforcement of the Transaction Documents; or

 

(c)                                  payments made under, or pursuant to, the Transaction Documents.

 

Companies incorporated or registered under the Act are currently exempt from income and corporate tax. In addition, the British Virgin Islands currently does not levy capital gains tax on companies incorporated or registered under the Act. There is no applicable statutory usury or interest limitation law in the British Virgin Islands which would restrict the recovery of payments or the performance by the Company of its obligations under the Transaction Documents.

 

D-2

 

3.7                               The courts of the British Virgin Islands will observe and give effect to the choice of the laws of the State of New York as the governing law of the Transaction Documents.

 

3.8                               Based solely on our inspection of the High Court Registry from the date of incorporation of the Company there were no actions or petitions pending against the Company in the High Court of the British Virgin Islands as at the time of our searches on 4 August 2011.

 

3.9                               On the basis of our searches conducted at the Registry of Corporate Affairs and at the High Court Registry, no currently valid order or resolution for the winding-up of the Company and no current notice of appointment of a receiver over the Company, or any of its assets, appears on the records maintained in respect of the Company. It is a requirement that notice of appointment of a receiver made under section 118 of the Insolvency Act 2003 be registered with the Registry of Corporate Affairs under section 118 of the Insolvency Act 2003. However, it should be noted that there is no mechanism to file with the Registry of Corporate Affairs notice of an appointment of a receiver made under foreign legislation. In addition, we refer you to the Registered Agent’s Certificate that states that the registered agent is not aware that any liquidation, dissolution or insolvency proceedings have been commenced against the Company or that a receiver has been appointed over the Company or any of its assets.

 

3.10                        Our search at the Registry of Corporate Affairs revealed that charges created by the Company have been registered pursuant to section 163 of the Act, copies of which are attached as Annexure [C].

 

3.11                        The submission to the jurisdiction of the courts of the State of New York contained in the Transaction Documents is a valid one and will be upheld by the courts of the British Virgin Islands.

 

3.12                        Service of process in the British Virgin Islands on the Company may be effected by leaving at the registered office of the Company the relevant document to be served. On the basis of our search at the Registry of Corporate Affairs, the registered office of the Company is Akara Building, 24 De Castro Street, Wickhams Cay 1, Road Town, Tortola, British Virgin Islands.

 

3.13                        Any final and conclusive monetary judgment obtained against the Company in the courts of the State of New York in respect of the Transaction Documents, for a definite sum, may be treated by the courts of the British Virgin islands as a cause of action in itself so that no retrial of the issues would be necessary provided that in respect of the foreign judgment:

 

(a)                                 the foreign court issuing the judgment had jurisdiction in the matter and the Company either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with process;

 

(b)                                 the judgment given by the foreign court was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the Company;

 

(c)                                  in obtaining judgment there was no fraud on the part of the person in whose favour judgment was given or on the part of the court;

 

(d)                                 recognition or enforcement of the judgment in the British Virgin Islands would not be contrary to public policy; and

 

D-3

 

(e)                                  the proceedings pursuant to which judgment was obtained were not contrary to natural justice.

 

On the facts of this matter presented to us we know of no reason, at the date hereof, which would prevent or hinder the enforcement of such a final judgment in the British Virgin Islands.

 

3.14                        It is not necessary to be licensed, qualified or otherwise entitled to carry on business in, or otherwise registered with, any governmental or other authority of or in the British Virgin Islands in order to claim and enforce in the British Virgin Islands any right in the Transaction Documents.

 

3.15                        It is not necessary to ensure the legality, validity, enforceability or admissibility in evidence of the Transaction Documents that any document be filed, recorded or enrolled with any governmental authority or agency or any official body in the British Virgin Islands.

 

3.16                        The parties to the Transaction Documents (other than the Company) will not be deemed to be resident, domiciled or carrying on business in, or subject to, the laws of the British Virgin Islands by reason only of the execution, delivery, performance or enforcement of the Transaction Documents.

 

3.17                        The Company is subject to the jurisdiction of the courts of the British Virgin Islands and is not entitled to claim any immunity from suit or execution of any judgment on the grounds of sovereignty or otherwise.

 

3.18                        In relation to the Pledge:

 

(a)                                 the courts of the British Virgin Islands will recognise the security interest created by the Pledge;

 

(b)                                 no steps are required as a matter of British Virgin Islands law to perfect such security interest. However it is a requirement of the Act that the Company keep a register of all relevant charges created by the Company (the “Register”), either at the Company’s registered office, or at the office of the Company’s registered agent.

 

Details of the Pledge should therefore be entered into the Register. Furthermore, for the purposes of priority, an application should be made to the British Virgin islands Registrar of Corporate Affairs to register the charge created by the Pledge at the Registry of Corporate Affairs; and

 

(c)                                  subject to registration as detailed in paragraph 3.18(b) above, the security interest created by the Pledge will have priority over any claims by third parties (other than those preferred by law) including any liquidator or a creditor of the Company, subject in the case of a winding up of the Company in a jurisdiction other than the British Virgin Islands to any provisions of the laws of that jurisdiction as to priority of claims in a winding up.

 

D-4

 

EXHIBIT E

 

FORM OF OPINION OF OUTSIDE U.S. COUNSEL TO BORROWER

 

E-1

 

(1)	Each Forbearance and Amendment Document constitutes the legal, valid and binding obligation of the Borrower.
(2)	The execution and delivery by the Borrower of the Forbearance and Amendment Documents do not, and the Borrower’s performance of its obligations under such Transaction Documents will not, violate any Applicable Laws.
(3)	No order, consent, permit or approval of any New York or federal governmental authority pursuant to Applicable Laws that we have, in the exercise of customary professional diligence, recognized as applicable to the Borrower or to transactions of the type contemplated by the Forbearance and Amendment Documents is required on the part of the Borrower for the execution and delivery of, and performance of its obligations under, the Forbearance and Amendment Documents to which it is a party, except for such as have been made or obtained.
(4)	The Share Pledge Agreement is effective to create in favor of the Collateral Agent a security interest in the Borrower’s rights in the Pledged Collateral in which a security interest may be created under Article 9 of the NY UCC (such collateral being referred to herein as the “Article 9 Collateral”).
(5)	Assuming that the Borrower delivers “security certificates” (as defined in Section 8-102(a)(16) of the NY UCC) representing the Pledged Collateral listed on Schedule I attached hereto (the “Certificated Security Collateral”) to the Collateral Agent in the State of New York, duly endorsed to the Collateral Agent or in blank, and assuming that the security certificates are continuously held by the Collateral Agent in the State of New York at all times following such delivery, the security interest of the Collateral Agent in the Certificated Security Collateral will constitute a perfected security interest in such Certificated Security Collateral, and assuming that the Collateral Agent receives such security certificates without “notice of an adverse claim” (within the meaning of the Section 8-105 of the NY UCC), the Collateral Agent’s security interest in the Certificated Security Collateral will be free of adverse claims (as defined in Section 8-102(a)(1) of the NY UCC).
(6)	The filing of the UCC-1 Financing Statement with the Recorder of Deeds of the District of Columbia (the “Filing Office”), is effective to perfect the security interest of the Collateral Agent in the Borrower’s interest in the Article 9 Collateral to the extent a security interest therein can be perfected under Article 9 of the NY UCC and under the DC UCC by the filing of a financing statement in the Filing Office.

 

E-2

 

EXHIBIT F

 

FORM OF (COMPANY) SECRETARY’S CERTIFICATE

 

F-1

 

EXHIBIT G-1

 

FORM OF STOCK POWER [MUST BE MEDALLION GUARANTEED]

 

G-1

 

STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

 

For value received, the undersigned, Beams Power Investment Limited, an International Business Companies Act company re-registered as a BVI business company under the laws of the British Virgin Islands, hereby sells, assigns, transfers and delivers unto                                                                                    an aggregate of                                                                  (                    ) shares of the                          Stock,                          par value, of Synutra International, Inc., a Delaware corporation (the “Company”), standing in the name of the undersigned on the books of the Company represented by Certificate No(s).                                      herewith, and does hereby irrevocably constitute and appoint                                                      as its attorney to transfer such stock on the-books of the Company and to take all necessary and appropriate action to effect any such transfer, with full power of substitution in the premises.

 

Dated:
			BEAMS POWER INVESTMENT LIMITED
			By:
			Name:	Xiuqing Meng
			Title:	Sole Director

 

G-2

 

EXHIBIT H

 

COMMON STOCK CERTIFICATES

 

36,000,000 shares of common stock of the Company, par value U.S.$0.0001 per share, of Synutra International, Inc., evidenced as follows:

 

STOCK CERTIFICATE NUMBER		SHARES		STOCK CERTIFICATE DATE
SII-04592		1,000,000		April 17, 2008
SII-04593		1,000,000		April 17, 2008
SII-04594		1,000,000		April 17, 2008
SII-04595		1,000,000		April 17, 2008
SII-04596		1,000,000		April 17, 2008
SII-04597		967,000		April 17, 2008
SII-04599		2,516,500		April 18, 2008
SII-04600		2,516,500		April 18, 2008
SII-04621		3,000,000		November 24, 2008
SII-04622		3,000,000		November 24, 2008
SII-04623		3,000,000		November 24, 2008
SII-04624		2,000,000		November 24, 2008
SII-04625		2,000,000		November 24, 2008
SII-04626		2,000,000		November 24, 2008
SII-04627		2,000,000		November 24, 2008
SII-04628		2,000,000		November 24, 2008
SII-04629		1,000,000		November 24, 2008
SII-04630		1,000,000		November 24, 2008
SII-04631		1,000,000		November 24, 2008
SII-04632		1,000,000		November 24, 2008
SII-04633		1,000,000		November 24, 2008
SII-04634		1,000,000		November 24, 2008
TOTAL		36,000,000

 

H-1

 

EXHIBIT I

 

LIST OF SUBSIDIARIES

 

Subsidiaries of Synutra International, Inc.

 

Subsidiary		Jurisdiction
Synutra, Inc.		Illinois
Shengyuan Nutritional Food Co., Ltd.		China
Heilongjiang Mingshan Dairy Co., Ltd.		China
Zhangjiakou Chahaer Dairy Co., Ltd.		China
Inner Mongolia Huiliduo Food Co., Ltd.		China
Meitek Technology (Qingdao) Co., Ltd.		China
Heilongjiang Baoquanling Shengyuan Dairy Co., Ltd.		China
Inner Mongolia Mengyuan Food Co., Ltd.		China
Heilongjiang Baoquanling Shengyuan Dairy Cow Breeding Co., Ltd.		China
Beijing Shengyuan Huiliduo Food Technology Co., Ltd.		China
Heilongjiang Longshan Dairy Co., Ltd.		China
Unisono B.V.		Netherlands
Synutra International Company Limited		BVI
Synutra International (HK) Company Limited		Hong Kong
Beijing Shengyuan Meitek Technology Development Co., Ltd.		China
Global Food Trading (Shanghai) Co., Ltd.		China
Qingdao Shengyuan Nutritional Beverage Co., Ltd.		China

 

Variable Interest Entity (VIE) and its subsidiaries of Synutra International, Inc.

 

VIE/Subsidiary		Jurisdiction
Beijing Shengyuan Huimin Technology Service Co., Ltd.		China
Nanjing Shengyuan Huiren Clinical Examination Co., Ltd.		China
Taiyuan Shengyuan Huiren Clinical Examination Co., Ltd.		China
Shijiazhuang Shengyuan Huiren Clinical Examination Co., Ltd.		China
Heilongjiang Shengyuan Huiren Clinical Examination Co., Ltd.		China

 

I-1

Exhibit 21

 

THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES IN ACCORDANCE WITH THE TERMS AS SET FORTH HEREIN. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 2(c)(iii) AND 13 HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY, THE SECURITIES DELIVERABLE UPON EXCHANGE HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 2(c)(iii) OF THIS NOTE.

 

BEAMS POWER INVESTMENT LIMITED

 

SECOND RESTATED SENIOR EXCHANGEABLE NOTE

 

Issuance Date: January 30, 2013

Original Principal Amount: U.S.$30,000,000

 

FOR VALUE RECEIVED, Beams Power Investment Limited, a company with limited liability registered under the BVI Business Companies Act, 2004 (as amended) of the British Virgin Islands (the “Issuer”), hereby promises to pay to Warburg Pincus Private Equity IX, L.P. or its registered assigns (the “Holder”) the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, exchange or otherwise, the “Principal”), the Premium, the Prior Late Charges, the Forbearance Late Charges, the Expenses and any accrued and unpaid Additional Late Charges pursuant to the terms hereof when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms used herein are defined in Section 27 hereof.

 

1.                                      PAYMENTS OF PRINCIPAL, PREMIUM, PRIOR LATE CHARGES, FORBEARANCE LATE CHARGES, ADDITIONAL LATE CHARGES AND EXPENSES.

 

(a)                                 On the Maturity Date, the Issuer shall pay to the Holder an amount in cash representing the entire outstanding Obligation. The “Maturity Date” shall be January 30, 2014 as may be extended at the option of the Holder through the date that is ten (10) Business Days after the consummation of a Change of Control in the event that (a) a Change of Control is publicly announced, (b) the Company has entered into a definitive agreement regarding a Change of Control, or (c) a Corporate Transaction Notice (as defined in Section 4(a) hereof) with respect to such Change of Control is delivered prior to such time; provided that the Maturity Date as

 

 

extended should in no event be later than the day immediately preceding the consummation date of such Change of Control as long as the Holder has received written notice from the Issuer or has actual knowledge of such Change of Control at least fifteen (15) days prior to the consummation thereof. This Second Restated Senior Exchangeable Note (as may be amended, supplemented, restated or otherwise modified from time to time, the “Note”), shall not bear any interest (other than the Premium, the Prior Late Charges, the Forbearance Late Charges, the Additional Late Charges and the Expenses).

 

(b)                                 With respect to each payment against the Obligation actually made by the Issuer to the Holder in cash at or after this Note becomes effective on the Issuance Date (as defined in Section 13 hereof) and on or prior to 6 months from the Issuance Date (each, a “First Half Payment”): (I) first, the portion of the Obligation that constitutes the Forbearance Late Charges accrued and unpaid as of the date of such First Half Payment shall be reduced by the amount equal to “Y” divided by (1-37.5%); and (II) then, the remaining portion of the Obligation shall be reduced by the amount equal to “Z” divided by (1-37.5%); provided that, in the cause of this clause (II), the payment shall be applied against the portions of the Obligation in the following order: (a) first, against the Expenses until the amount of the Expenses equals zero; (b) second, against the Prior Late Charges until the amount of the Prior Late Charges equals zero; (c) third, against the Premium until the amount of the Premium equals zero; and (d) finally, against the Principal until the amount of the Principal equals zero.

 

Y =    P/(1+17.5%*D/365)*(17.5%*D/365)

 

Whereby:

 

P = the amount of the applicable First Half Payment;

 

D = the number of days between the date the applicable First Half Payment is actually received by the Holder and the Issuance Date, each inclusive; and

 

Z = (the amount of the applicable First Half Payment - Y)

 

For purposes of clarification, the Partial Payment (as defined in Section 28 hereof) shall not constitute or be deemed a First Half Payment.

 

(c)                                  With respect to each payment against the Obligation actually made by the Issuer to the Holder in cash after 6 months from the Issuance Date and on or prior to the Maturity Date (each, a “Second Half Payment”): (I) first, the portion of the Obligation that constitutes the Forbearance Late Charges accrued and unpaid as of the date of such Second Half Payment shall be reduced by the amount equal to “W” divided by (1-32.5%); and (II) then, the remaining portion of the Obligation shall be reduced by the amount equal to “X” divided by (1-32.5%); provided that, in the cause of this clause (II), the payment shall be applied against the portions of the Obligation in the following order: (a) first, against the Expenses until the amount of the Expenses equals zero; (b) second, against the Prior Late Charges until the amount of the Prior Late Charges equals zero; (c) third, against the Premium until the amount of the Premium equals zero; and (d) finally, against the Principal until the amount of the Principal equals zero.

 

W =    P/(1+17.5%*D/365)*(17.5%*D/365)

 

2

 

Whereby:

 

P = the amount of the applicable Second Half Payment;

 

D = the number of days between the date the applicable Second Half Payment is actually received by the Holder and the Issuance Date, each inclusive; and

 

X = (the amount of the applicable Second Half Payment - W)

 

(d)                                 With respect to each one dollar (U.S.$1.00) of the Obligation actually paid by the Issuer to the Holder in cash after the Maturity Date, the Obligation shall be reduced by an amount equal to one dollar (U.S.$1.00) (the “Post-Maturity Reduction”); provided that the Post-Maturity Reduction shall be applied against the portions of the Obligation in the following order: (a) first, against the Additional Late Charges until the amount of the Additional Late Charges equals zero; (b) second, against the Forbearance Late Charges until the amount of the Forbearance Late Charges equals zero; (c) third, against the Expenses until the amount of the Expenses equals zero; (d) fourth, against the Prior Late Charges until the amount of the Prior Late Charges equals zero; (e) fifth, against the Premium until the amount of the Premium equals zero; and (f) finally, against the Principal until the amount of the Principal equals zero. For purposes of clarification, with respect to each one dollar (U.S.$1.00) of the Obligation actually paid by the Issuer to the Holder after the Maturity Date, the Obligation shall be reduced by an amount equal to one dollar (U.S.$1.00) and shall be applied in the order set forth in the foregoing sentence.

 

2.                                      EXCHANGE OF NOTE. This Note shall be exchangeable for fully paid and non-assessable shares of common stock of Synutra International, Inc., a Delaware Corporation (the “Company”), par value U.S.$0.0001 per share (the “Common Stock”), held by the Issuer, on the terms and conditions set forth in this Section 2.

 

(a)                                 Exchange Right. At any time and from time to time, the Holder may surrender this Note, in whole or in part, for exchange at the Exchange Price (as defined in Section 2(b)(ii) hereof) then in effect.

 

(b)                                 Exchangeable Shares. The number of shares of Common Stock held by the Issuer transferable upon exchange of the Exchange Amount pursuant to Section 2(a) hereof shall be determined by dividing (x) such Exchange Amount by (y) the Exchange Price.

 

(i)                                     “Exchange Amount” means the portion of the Obligation (as defined below) to be exchanged or otherwise with respect to which this determination is being made.

 

(ii)                                  “Exchange Price” means (A) in the event the exchange right is being exercised prior to the Maturity Date, the lesser of (I) U.S.$5.64880 (the “Initial Exchange Price”), and (II) the amount equal to 90% of the Weighted Average Price of the Common Stock for the thirty (30)-Trading Day period ending on the most recent Trading Day immediately preceding the date that the Holder delivers the Exchange Notice (as defined below), in each case subject to the adjustments in accordance with

 

3

 

Section 6 hereof; or (B) in the event the exchange right is being exercised on or after the Maturity Date, the lesser of (x) the Initial Exchange Price, (y) the amount equal to 90% of the Weighted Average Price of the Common Stock for the thirty (30)-Trading Day period ending on the most recent Trading Day immediately preceding the date that the Holder delivers the Exchange Notice, and (z) the amount equal to 90% of the Weighted Average Price of the Common Stock for the thirty (30)-Trading Day period ending on the most recent Trading Day immediately preceding the Maturity Date, in each case subject to the adjustments in accordance with Section 6 hereof.

 

(c)                                  Mechanics of Exchange.

 

(i)                                     Optional Exchange. To exchange any Exchange Amount into shares of Common Stock held by the Issuer (the “Exchanged Shares”) on a date (an “Exchange Date”) in accordance with Section 2(a) hereof, the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of exchange in the form attached hereto as Exhibit I (the “Exchange Notice”) to the Issuer and (B) surrender this Note to a common carrier for delivery to the Issuer as soon as practicable on or following such date (or an indemnification undertaking with respect to this Note in the case of its loss, theft or destruction). On or before the third (3rd) Business Day following the date of receipt of an Exchange Notice and this Note, the Issuer shall transmit by facsimile a confirmation of receipt of such Exchange Notice, this Note and the Acknowledgment attached as Exhibit 1 to the Exchange Notice, duly executed by the Issuer, to the Holder and the Company’s transfer agent (the “Transfer Agent”) and the Collateral Agent (as defined below). The Issuer shall instruct the Transfer Agent and the Collateral Agent to effect the transfer to the Holder of the number of the Exchanged Shares to which the Holder shall be entitled upon exchange under Section 2(b) hereof, and to issue and deliver to the address as specified in the Exchange Notice, a certificate, registered in the name of the Holder or its designee, for the number of the Exchanged Shares to which the Holder shall be entitled upon exchange under Section 2(b) hereof, as soon as possible and, (I) if the Transfer Agent does not require an opinion of counsel, within seven (7) Business Days following the Issuer’s receipt of an Exchange Notice and (II) otherwise within ten (10) Business Days following the Issuer’s receipt of an Exchange Notice. In the event the Transfer Agent requires any opinion of counsel in connection with the delivery of the Exchanged Shares pursuant to this Section 2(c), the Issuer shall procure its counsel to promptly, but in any event by no later than five (5) Business Days following the date the Transfer Agent first requests an opinion of counsel, deliver an opinion to the Transfer Agent, in a form and substance required by the Transfer Agent in connection with such delivery, with a copy to the Holder. If the Exchange Amount is less than the outstanding Obligation, the Issuer shall as soon as practicable and in no event later than five (5) Business Days after receipt of this Note and at the Holder’s expense, issue and deliver to the Holder a new Note (in accordance with Section 13(d) hereof) representing the outstanding Obligation not exchanged. The Person or Persons entitled to receive the Exchanged Shares upon an exchange of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock on the Exchange Date. The Exchanged Shares shall be shares of Common Stock that do not constitute part of the Pledged Collateral (as defined in the Pledge Agreement) (the “Pledged Collateral”) as of immediately prior to the date the Exchange Notice for such shares is delivered by the Holder; provided that if such non-Pledged Collateral is insufficient to cover the full amount of the Exchanged Shares, the Exchanged Shares shall be issued, first, from non-Pledged Collateral and, second, from Pledged Collateral.

 

4

 

(ii)                                  Registration; Book-Entry. The Issuer shall maintain a register (the “Register”) for the recordation of the names and addresses of the Holder and the holders of each Other Note (as defined in Section 13(d) hereof) (each an “Other Holder,” collectively with the Holder, the “Holders”) and the principal amount of the Notes held by the Holder and Other Holders. The Issuer and the holders of the Notes shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes, including, without limitation, the right to receive payments of the Principal or other amounts due hereunder, notwithstanding notice to the contrary. A Note may be assigned or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a request to assign or sell all or any part of a Note by the Holder in accordance with Section 12 hereof, the Issuer shall record the information contained therein in the Register and issue one or more new Notes in the same aggregate principal amount as the principal amount of the surrendered Note to the permitted designated assignee or transferee pursuant to Section 13 hereof; provided that the Holder shall bear the reasonable expenses incurred by the Issuer in connection therewith.

 

(iii)                               Pro Rata Exchange. In the event that the Issuer receives an Exchange Notice from more than one holder of Notes on the same Exchange Date and the Issuer can exchange some, but not all, of such portions of the Notes submitted for exchange, the Issuer shall exchange from each holder of Notes electing to have Notes exchanged on such date a pro rata amount of such Holder’s portion of its Notes submitted for exchange based on the principal amount of Notes submitted for exchange on such date by such holder relative to the aggregate principal amount of all Notes submitted for exchange on such date.

 

(iv)                              Disputes. In the event of a dispute as to the number of the Exchanged Shares transferable to the Holder in connection with an exchange of this Note, the Issuer shall transfer to the Holder the number of the Exchanged Shares not in dispute and resolve such dispute in accordance with Section 18 hereof.

 

(v)                                 No Fractional Shares. Cash shall be paid by the Issuer in lieu of any fractional shares otherwise transferable upon exchange of this Note based upon the applicable Exchange Price relating to such exchange.

 

3.                                      RIGHTS UPON EVENT OF DEFAULT.

 

(a)                                 Event of Default. Each of the following events, occurring individually or together, shall constitute an “Event of Default”:

 

(i)                                     the suspension from trading or failure of the Common Stock to be listed on an Eligible Market for a period of ten (10) consecutive Trading Days or for more than an aggregate of twenty (20) Trading Days in any 365-day period;

 

5

 

(ii)                                  the Issuer’s failure to pay to the Holder any amount of the Obligation, or other amounts when and as due under this Note (including, without limitation, the Issuer’s failure to pay any redemption amounts hereunder) or failure to transfer any Exchanged Shares when and as required under this Note, except, in the case of a failure to (A) transfer the Exchanged Shares, only if such failure continues for a period of at least five (5) Business Days, and (B) pay Additional Late Charges when and as due, only if such failure continues for a period of at least ten (10) Business Days;

 

(iii)                               any default in the payment of amounts when due (including the passage of any applicable grace period) under, or acceleration prior to maturity of, any indebtedness for borrowed money in excess of U.S.$30,000,000 of the Issuer, or U.S.$50,000,000 of the Company or any Company Subsidiary;

 

(iv)                              the Issuer, the Company or any Company Subsidiary, pursuant to or within the meaning of Title 11, U.S. Code, or any similar Federal, foreign or state law for the relief of debtors (collectively, “Bankruptcy Law”), (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a receiver, trustee, assignee, liquidator or similar official (a “Custodian”), (D) makes a general assignment for the benefit of its creditors or (E) admits in writing that it is generally unable to pay its debts as they become due;

 

(v)                                 a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (A) is for relief against the Issuer, the Company or any Company Subsidiary in an involuntary case, (B) appoints a Custodian of the Issuer, the Company or any Company Subsidiary, or (C) orders the liquidation of the Issuer, the Company or any Company Subsidiary, and such event described in this clause (v) shall continue for sixty (60) days unless dismissed, bonded or discharged;

 

(vi)                              other than as specifically set forth in another clause of this Section 3(a), the breach or default by the Issuer in the observance or performance of any covenant or other obligation of any Transaction Document, which breach or default continues for a period of ten (10) Business Days after the Issuer has received from the Holders constituting at least the Required Holders written notice specifying such default and demanding such default be remedied; or

 

(vii)                           failure by the Issuer to give written notice to the Holders of the occurrence of an Event of Default in accordance with Section 3(b) hereof.

 

(b)                                 Event of Default Redemption. Upon the occurrence of an Event of Default with respect to this Note or an event that with notice or passage of time or both would constitute or otherwise result in an Event of Default, the Issuer shall within the earlier to occur of (i) five (5) Business Days of such Event of Default or other event, and (ii) two (2) Business Days after the Issuer has actual knowledge of such Event of Default or other event, deliver written notice thereof via facsimile and overnight courier to the Holder. At any time after an Event of Default, the Holder may require the Issuer to redeem all or any portion of this Note by delivering written notice thereof (the “Event of Default Redemption Notice”) to the Issuer, which Event of Default Redemption Notice shall indicate the portion of the outstanding Obligation the Holder is electing

 

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to require the Issuer to redeem (the “Redemption Amount”). Redemptions required by this Section 3(b) shall be made in accordance with the provisions of Section 8 hereof. To the extent redemptions required by this Section 3(b) are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Issuer, such redemptions shall be deemed to be voluntary prepayments with the Holder’s consent. The parties hereto agree that in the event of the Issuer’s redemption of any portion of this Note under this Section 3(b), the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any Redemption Amount due under this Section 3(b) are intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not a penalty. Notwithstanding the foregoing, the consent of the Required Holders shall be required for the issuance by any Holder of an Event of Default Redemption Notice triggered solely by an event under either Section 3(a)(i) hereof, Section 3(a)(iii) hereof, Section 3(a)(iv) hereof (only if such event relates solely to a subsidiary of the Company that is not a Company Subsidiary), Section 3(a)(v) hereof (only if such event relates solely to a subsidiary of the Company that is not a Company Subsidiary) or Section 3(a)(vi) hereof.

 

4.                                      REDEMPTION RIGHT UPON CHANGE OF CONTROL; CORPORATE TRANSACTION.

 

(a)                                 Corporate Transaction Redemption Right. No earlier than fifteen (15) days nor later than ten (10) days prior to the consummation of a Change of Control or Issuer Fundamental Transaction (either event, a “Corporate Transaction”), but in any event not prior to the public announcement of such Corporate Transaction, to the extent known by the Issuer, the Issuer shall deliver written notice thereof via facsimile and overnight courier to the Holder (a “Corporate Transaction Notice”). The Holder may require the Issuer to redeem all or any portion of this Note by delivering written notice thereof (“Corporate Transaction Redemption Notice”) to the Issuer by no later than the last to occur of (i) the Business Day prior to the consummation of the Corporate Transaction, and (ii) two (2) Business Days after Corporate Transaction Notice given by the Issuer to the Holders. The Corporate Transaction Redemption Notice shall indicate the Redemption Amount. Redemptions required by this Section 4(a) shall be made in accordance with the provisions of Section 8 hereof. To the extent redemptions required by this Section 4 are deemed or determined by a court of competent jurisdiction to be prepayments of this Note by the Issuer, such redemptions shall be deemed to be voluntary prepayments with the Holder’s consent. The parties hereto agree that in the event of the Issuer’s redemption of any portion of this Note under this Section 4, the Holder’s damages would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, the Redemption Amount due under this Section 4 is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment opportunity and not a penalty.

 

(b)                                 Assumption. The Issuer shall not enter into or be party to an Issuer Fundamental Transaction unless the Successor Entity assumes in writing all of the obligations of the Issuer under this Note and the other Transaction Documents in accordance with the provisions of this Section 4(b), including without limitation, the due and punctual payment of the Obligation when due, and the performance of each of the obligations of the Issuer under the Transaction Documents. Upon the occurrence of any Issuer Fundamental Transaction, the Successor Entity

 

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shall succeed to, and be substituted for (so that from and after the date of such Issuer Fundamental Transaction, the provisions of this Note referring to the “Issuer” shall refer instead to the Successor Entity), and may exercise every right and power of the Issuer and shall assume all of the obligations of the Issuer under this Note with the same effect as if such Successor Entity had been named as the Issuer herein. The provisions of this Section 4(b) shall apply similarly and equally to successive Issuer Fundamental Transactions.

 

5.                                      OTHER CORPORATE EVENTS. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Change of Control pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Issuer shall make appropriate provision to ensure that the Holder will enjoy and be entitled to receive the same securities and rights upon exchange of this Note as other holders of shares of Common Stock are entitled to, had the Holder exchanged this Note for the shares of Common Stock held by the Issuer immediately prior to the consummation of such Corporate Event (without taking into account any limitations or restrictions on the exchangeability of this Note). The provisions of this Section 5 shall apply similarly and equally to successive Corporate Events.

 

6.                                      EXCHANGE PRICE ADJUSTMENTS.

 

The Exchange Price shall be adjusted from time to time by the Issuer as follows:

 

(a)                                 Stock Dividend; Stock Split. In the event the Company shall issue shares of its Common Stock as a dividend or distribution on its Common Stock, then the Exchange Price shall be decreased by multiplying it by a fraction, (i) the numerator of which shall be the number of shares of Common Stock outstanding at the Close of Business on the Record Date for such dividend or distribution; and (ii) the denominator of which shall be the sum of (A) the number of shares of Common Stock outstanding at the Close of Business on such Record Date, plus (B) the total number of shares of Common Stock constituting such dividend or distribution. If any dividend or distribution of the type described above is declared but not so paid or made, the Exchange Price shall again be adjusted to the Exchange Price that would then be in effect if such dividend or distribution had not been paid. In case outstanding shares of Common Stock shall be subdivided or reclassified into a greater number of shares of Common Stock, the Exchange Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced; and conversely, in case outstanding shares of Common Stock shall be combined or reclassified into a smaller number of shares of Common Stock, the Exchange Price in effect at the opening of business on the day immediately following the day upon which such combination or reclassification becomes effective shall be proportionately increased, such reduction or increase, as the case may be, to become effective immediately after the opening of the first (1st) Business Day following the day upon which such subdivision or combination becomes effective. Any adjustment required to be made pursuant to this Section 6(a) shall be made successively whenever any such Common Stock dividend, distribution or stock split is made by the Company.

 

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(b)                                 Rights Issues. In case the Company shall issue rights, warrants or other securities to all or substantially all holders of its Common Stock entitling them for a period of not more than sixty (60) days to subscribe for or purchase shares of Common Stock at a price per share less than the Market Price for the seven (7) consecutive Trading Days period ending on the Record Date for such issuance (other than a distribution of rights pursuant to any shareholder rights plan), the Exchange Price, as in effect immediately prior to the Close of Business on such Record Date for the issuance of such rights, warrants or other securities, shall be decreased by multiplying it by a fraction of which (A) the numerator shall be the sum of (I) the number of shares of Common Stock outstanding (excluding shares held in the treasury of the Company) at the Close of Business on such Record Date plus (II) the number of shares of Common Stock which the aggregate exercise, conversion, exchange or other price at which the shares of Common Stock underlying all such issued rights, warrants or other securities (whether by exercise, conversion, exchange or otherwise) may be subscribed for or purchased pursuant to such rights, warrants or other securities would purchase at the Market Price for the seven (7) consecutive Trading Days period ending on the Record Date (the “Underlying Shares”); and (B) the denominator shall be the sum of (i) the number of shares of Common Stock outstanding at the Close of Business on such Record Date plus (ii) the aggregate number of Underlying Shares. Such decrease shall become effective immediately prior to the opening of business on the first (1st) Business Day following such Record Date. In no event shall the Exchange Price be increased pursuant to this Section 6(b). To the extent that all such rights, warrants or other securities expire or are redeemed without being exercised, the Exchange Price shall again be adjusted to be the Exchange Price which would then be in effect if such rights, warrants or other securities had not been issued. Any adjustment required to be made pursuant to this Section 6(b) shall be made successively whenever any such rights, warrants or other securities are issued by the Company.

 

(c)                                  In-Kind Distributions. In case the Company shall distribute to all or substantially all holders of its Common Stock any shares of capital stock of the Company, evidences of Indebtedness or other non-cash assets, or rights or warrants (excluding (i) dividends, distributions and rights or warrants referred to in Section 6(a) or 6(b) hereof, and (ii) distributions referred to in Section 6(e) hereof), the Exchange Price shall be decreased by multiplying it by a fraction of which (A) the numerator shall be an amount equal to (I) such Market Price less (II) the fair market value on such Ex Date (as determined in good faith by the Issuer’s Board of Directors, whose determination shall be conclusive evidence of such fair market value and which shall be evidenced by a resolution thereof and an executed certificate of an officer of the Issuer delivered to the Holder) of the portion of the capital stock, evidences of indebtedness or other non-cash assets so distributed or of such rights or warrants applicable to one share of Common Stock (determined on the basis of the number of shares of Common Stock outstanding at the Close of Business on the Record Date for such in-kind distribution); and (B) the denominator shall be the Market Price for the seven (7) consecutive Trading Days period ending on such Ex Date. In no event shall the Exchange Price be increased pursuant to this Section 6(c). Such adjustment (if any) shall be made successively whenever any such distribution is made and shall become effective immediately after the Record Date for such distribution.

 

(d)                                 Cash Dividends. In case the Company shall dividend or distribute cash to all holders of Common Stock (other than in connection with a liquidation, dissolution or winding up of the Company or a distribution requiring an adjustment to the Exchange Price pursuant to Section 6(e) below) at a per share amount greater than 2% of Market Price of one share of the Common Stock, for the seven (7) consecutive Trading Days period ending on the date immediately preceding the Ex Date for such cash dividend or distribution, the Exchange Price shall be decreased by multiplying it by a fraction (i) the numerator of which shall be an amount

 

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equal to (A) the Market Price of one share of the Common Stock for the seven (7) consecutive Trading Days period ending on the date immediately preceding the Ex Date for such cash dividend or distribution less (B) the amount per share of Common Stock of such cash dividend or distribution; and (ii) the denominator of which shall be such Market Price; provided that any adjustment which by reason of this Section 6(d) is not required to be made shall be carried forward and taken into account in subsequent adjustments. In no event shall the Exchange Price be increased pursuant to this Section 6(d). Any adjustment required to be made pursuant to this Section 6(d) shall be made successively whenever any such cash dividends or distributions are made by the Company.

 

(e)                                  Tender and Exchange Offers. In case the Company or any Company Subsidiary shall distribute cash or other consideration in respect of a tender offer or exchange offer made by the Company or any Company Subsidiary for all or any portion of the Common Stock where the sum of the aggregate amount of such cash distributed and the aggregate fair market value (as determined in good faith by the Issuer’s Board of Directors and an executed certificate of an officer of the Issuer delivered to the Holder, whose determination shall be conclusive and set forth in a resolution of the Issuer’s Board of Directors), as of the Expiration Date (as defined below), of such other consideration distributed (such sum, the “Aggregate Amount”) expressed as an amount per share of Common Stock validly tendered or exchanged, and accepted for purchase, pursuant to such tender offer or exchange offer as of the Expiration Time (as defined below) (such tendered or exchanged shares of Common Stock, the “Purchased Shares”) exceeds 102% of the Market Price for the seven (7) consecutive Trading Days period ending on the first (1st) Trading Day immediately following the last date (such last date, the “Expiration Date”) on which tenders or exchanges could have been made pursuant to such tender offer or exchange offer (as the same may be amended through the Expiration Time), then the Exchange Price shall be decreased by multiplying it by a fraction (i) the numerator of which is equal to the product of (A) the number of shares of Common Stock outstanding as of the last time at which tenders or exchanges could have been made pursuant to such tender offer or exchange offer (excluding Purchased Shares) (the “Expiration Time”) and (B) the Market Price for the seven (7) consecutive Trading Days period ending on the Expiration Date; and (ii) the denominator of which is equal to the sum of (I) the Aggregate Amount and (II) the product of (y) the Market Price per share for the seven (7) consecutive Trading Days period ending on the Expiration Date and (z) an amount equal to the number of shares of Common Stock outstanding as of the Expiration Time. A decrease, if any, to the Exchange Price pursuant to this Section 6(e) shall become effective immediately prior to the opening of business on the Expiration Date. In the event that the Company or any Company Subsidiary is obligated to purchase shares of Common Stock pursuant to any such tender offer or exchange offer, but the Company or such Company Subsidiary is permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then the Exchange Price shall again be adjusted to be the Exchange Price which would then be in effect if such tender offer or exchange offer had not been made. If the application of this Section 6(e) hereof to any tender offer or exchange offer would result in an increase in the Exchange Price, no adjustment shall be made for such tender offer or exchange offer under this Section 6(e) or otherwise.

 

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(f)                                   No Adjustment. No adjustment in the Exchange Price shall be required under this Section 6 unless the adjustment would result in a change in the Exchange Price of at least 0.5%; provided, however, that any adjustment which by reason of this Section 6(f) is not required to be made shall be carried forward and taken into account in subsequent adjustments and in connection with any exchange of this Note. All calculations under this Section 6 shall be made to the nearest 1/100th of a cent or to the nearest 1/100th of a share, as the case may be. No adjustment in the Exchange Price need be made for (i) the issuance of any shares of Common Stock or Options pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Company or any Company Subsidiary, or (ii) upon the issuance of any shares of Common Stock pursuant to any Options or Convertible Security outstanding as of the Closing Date.

 

(g)                                  Other Events. If any event occurs of the type and effect contemplated by the provisions of this Section 6 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features with diluting effect similar to those contemplated above), then the Issuer’s Board of Directors will make an appropriate adjustment in the Exchange Price as to protect the exchange right of the Holder without dilution under this Note; provided that no such adjustment will increase the Exchange Price as otherwise determined pursuant to this Section 6(g).

 

7.                                      NONCIRCUMVENTION. The Issuer hereby covenants and agrees that the Issuer will not, by amendment of its Memorandum of Association, Articles of Association or Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect the rights of the Holder of this Note.

 

8.                                      REDEMPTIONS.

 

(a)                                 Mechanics. If the Holder has submitted an Event of Default Redemption Notice in accordance with Section 3(b) hereof, the Redemption Amount of this Note shall be redeemed by the Issuer, within ten (10) Business Days after the Issuer’s receipt of the Holder’s Event of Default Redemption Notice, by delivery of cash at the applicable Redemption Amount. If the Holder has submitted a Corporate Transaction Redemption Notice in accordance with Section 4(a) hereof, the Redemption Amount of this Note shall be redeemed by the Issuer by delivery of cash at the applicable Redemption Amount deliverable (i) concurrently with the consummation of such Corporate Transaction if the Corporate Transaction Redemption Notice is received by the Issuer prior to the consummation of such Corporate Transaction and (ii) within ten (10) Business Days after the Issuer’s receipt of such notice otherwise. In the event of a redemption of less than the outstanding Obligation, the Issuer shall promptly cause to be issued and delivered to the Holder, at the Holder’s expense, a new Note (in accordance with Section 13(d) hereof) representing the outstanding Obligation that has not been redeemed. In the event that the Issuer does not pay the applicable Redemption Amount to the Holder within the time period required under this Section 8(a), at any time thereafter and until the Issuer pays such unpaid Redemption Amount in full, the Holder shall have the option, in lieu of redemption, to require the Issuer to promptly return to the Holder all or any portion of this Note representing the Redemption Amount that was submitted for redemption and for which the applicable Redemption Amount has not been paid by submitting a notice in writing to the Issuer (the “Redemption Rescission Notice”). Upon the Issuer’s receipt of such Redemption Rescission Notice, (x) the applicable Redemption Notice

 

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shall be null and void with respect to the Redemption Amount, (y) the Issuer shall immediately return all or any portion of this Note representing the Redemption Amount, and (z) the Exchange Price for the Redemption Amount of this Note shall be adjusted to the lesser of (A) the Exchange Price as in effect on the date on which the applicable Redemption Notice is voided and (B) the lowest Closing Sale Price of the Common Stock during the period beginning on and including the date on which the applicable Redemption Notice is delivered to the Issuer and ending on and including the date of the Redemption Rescission Notice. The Holder’s delivery of a Redemption Rescission Notice and exercise of its rights following such notice shall not affect the Issuer’s obligation to make any payments of Additional Late Charges which have accrued prior to the date of such notice with respect to the Redemption Amount subject to such notice.

 

(b)                                 Redemption by Other Holders. Upon the Issuer’s receipt of notice from any of the holders of the Other Notes for redemption or repayment as a result of an event or occurrence substantially similar to the events or occurrences described in Section 3, Section 4 or Section 8 hereof in accordance with the terms set forth therein (each, an “Other Redemption Notice”), the Issuer shall immediately, but by no later than one (1) Business Day of its receipt thereof, forward to the Holder by facsimile a copy of such notice. If the Issuer receives a Redemption Notice and one or more Other Redemption Notices, during the seven (7) Business Day period beginning on and including the date which is three (3) Business Days prior to the Issuer’s receipt of the Holder’s Redemption Notice and ending on and including the date which is three (3) Business Days after the Issuer’s receipt of the Holder’s Redemption Notice and the Issuer is unable to redeem all amounts designated in such Redemption Notice and such Other Redemption Notices received during such seven (7) Business Day period, then the Issuer shall redeem a pro rata amount from each holder of the Notes (including the Holder) based on the principal amount of the Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received by the Issuer during such seven (7) Business Day period.

 

9.                                      VOTING RIGHTS. The Holder shall have no voting rights solely as the holder of this Note, except as required by law, including, but not limited to, the General Corporation Law of the State of Delaware, and as expressly provided in this Note or the Pledge Agreement.

 

10.                               COVENANTS.

 

(a)                                 Rank.               The Issuer shall cause all payments due under this Note to rank (i) pari passu with all Other Notes and (ii) no less than pari passu with any unsecured creditors and any unsecured senior securities representing Indebtedness.

 

(b)                                 Incurrence of Indebtedness. So long as any amount due under this Note is outstanding, the Issuer and its Restricted Subsidiaries shall not incur or guarantee, assume or suffer to exist any Indebtedness other than (i) any Indebtedness existing as of the Closing Date, which has been disclosed by the Issuer to the Holder in writing and (ii) any Indebtedness incurred by the Issuer or its Restricted Subsidiaries that is subordinated to this Note in right of payment in respect of principal (or premium, if any) thereof or interest thereon.

 

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(c)                                  Existence of Liens. So long as this Note is outstanding, the Issuer and its Restricted Subsidiaries shall not allow or suffer to exist any mortgage, lien, pledge, charge, security interest or other encumbrance (collectively, “Liens”) upon or in any shares of Common Stock for which the Issuer (or any affiliate thereof) is the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), including, without limitation, any Pledged Collateral other than pursuant to the Pledge Agreement or this Note.

 

(d)                                 Restricted Payments. The Issuer and its Restricted Subsidiaries shall not redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part, whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness subordinated to this Note, whether by way of payment in respect of principal of (or premium, if any) or interest on such Indebtedness, if at the time such payment is due or is otherwise made or, after giving effect to such payment, an event constituting, or that with the passage of time, with or without notice, and without being cured, would constitute an Event of Default has occurred and is continuing.

 

(e)                                  Change in Nature of Business. The Issuer shall not engage in any transactions or activities not directly related to the holding of Common Stock or investments in other securities or interests in the Company or other entities; provided that any transaction not violating any other covenant contained in this Section 10 does not violate this clause 10(e).

 

(f)                                   Preservation of Existence, Etc. The Issuer shall maintain and preserve, and cause each of its Restricted Subsidiaries to maintain and preserve, its existence, rights and privileges, and become or remain, and cause each such Restricted Subsidiary to become or remain, duly qualified and in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary.

 

(g)                                  Additional Securities. So long as the Holder beneficially owns this Note, the Issuer shall not sell or otherwise transfer shares of Common Stock such that after giving effect to any such transfer, the Issuer would not own shares of Common Stock free and clear of encumbrances (other than the Lien of the Pledge Agreement) in a number sufficient to satisfy the then-existing exchange requirement under Section 2 hereof.

 

(h)                                 Conduct of Business. The business of the Issuer shall not be conducted in violation of any law, ordinance or regulation of any governmental entity, except where such violations would not result, either individually or in the aggregate, in a Material Adverse Effect (as defined in the Note Purchase Agreement).

 

11.                               VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The affirmative vote at a meeting duly called for such purpose or the written consent without a meeting of the Required Holders shall be required for any change or amendment to this Note or the Other Notes. No consideration shall be offered or paid to any holder of Notes to amend or consent to a waiver or modification of the Notes unless the same consideration also is offered to all holders of the Notes.

 

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12.                               TRANSFER. This Note shall be freely transferable; provided that (a) the transferee shall have delivered a representation letter to the Issuer regarding its accredited investor status in the form reasonably satisfactory to the Issuer, and an instrument of accession joining each of the Transaction Documents other than this Note as a party, assuming all the obligations and rights of the Holder with respect to the portion of this Note transferred, and (b) this Note may not be transferred to a Company Competitor.

 

13.                               REISSUANCE OF THIS NOTE.

 

(a)                                 Transfer. If this Note is to be transferred, the Holder shall surrender this Note to the Issuer, whereupon the Issuer will forthwith issue and deliver upon the order of the Holder (i) a new Note (in accordance with Section 13(d) hereof), registered as the Holder may request, representing the portion of the outstanding Obligation being transferred by the Holder and, (ii) if less than the entire outstanding Obligation is being transferred, a new Note (in accordance with Section 13(d) hereof) to the Holder representing the outstanding portion of the Obligation not being transferred; provided that the Holder shall bear all expenses (including reasonable legal fees) incurred by the Issuer in connection with the transfer. The Holder and any permitted assignee, by acceptance of this Note, acknowledge and agree that following the exchange or redemption of any portion of this Note, the outstanding Principal represented by this Note would be less than the Principal stated on the face of this Note.

 

(b)                                 Lost, Stolen or Mutilated Note. Upon receipt by the Issuer of evidence reasonably satisfactory to the Issuer of the loss, theft, destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of an indemnification undertaking by the Holder to the Issuer in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Issuer shall execute and deliver to the Holder a new Note (in accordance with Section 13(d) hereof) representing the outstanding Obligation, at the Holder’s expense.

 

(c)                                  Note Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Issuer, for a new Note or Notes (in accordance with Section 13(d) hereof and in principal amounts of at least U.S.$2,000,000) representing in the aggregate the outstanding Obligation, at the Holder’s expense, and each such new Note will represent such portion of such outstanding Obligation as is designated by the Holder at the time of such surrender.

 

(d)                                 Issuance of New Notes. Whenever the Issuer is required to issue a new note pursuant to the terms of this Note (each such new note, an “Other Note” and, collectively with the Note, the “Notes”), such Other Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Obligation remaining outstanding (or in the case of a new Note being issued pursuant to Section 13(a) hereof or Section 13(d) hereof, the Obligation designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Obligation remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, as indicated on the face of this Note (the “Issuance Date”), (iv) shall have the same rights and conditions as this Note, and (v) shall represent the Obligation on the amounts due under this Note, from the Issuance Date. The Holder shall bear all reasonable expenses (including reasonable legal fees) incurred by the Issuer in connection with or arising out of the issuance of such new Notes, including without limitation, the expenses in relation to the satisfaction of the notification requirements by the Issuer under the new Notes.

 

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14.                               REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Issuer to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments, exchanges and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Issuer (or the performance thereof). The Issuer acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Issuer therefore agrees that, in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

 

15.                               PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement or is collected or enforced through any legal proceeding and the Holder is awarded favorable relief under such legal proceedings, or (b) there occurs any bankruptcy, reorganization, receivership of the Issuer or other proceedings affecting the Issuer creditors’ rights and involving a claim under this Note, then the Issuer shall pay the documented costs directly incurred by the Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding, including, but not limited to, reasonable attorneys’ fees and disbursements.

 

16.                               CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by the Issuer and the Buyer and shall not be construed against any person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note.

 

17.                               FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

 

18.                               DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Market Price, the Closing Sale Price or the Weighted Average Price or the arithmetic calculation of the Exchange Price or any Redemption Amount, the Issuer shall submit the disputed determinations or arithmetic calculations via facsimile within ten (10) Business Days of receipt, or deemed receipt, of the Exchange Notice or Redemption Notice or other event giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Issuer are unable to agree upon such determination or calculation within ten (10) Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Issuer shall, within ten (10) Business Days thereafter, submit via facsimile (a) the disputed determination of the Market Price, the Closing Sale Price or the Weighted Average Price, as applicable, to an independent, reputable investment bank selected by mutual agreement of the Issuer and the Holder, or (b) the disputed

 

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arithmetic calculation of the Exchange Price or any Redemption Amount to an independent, outside accountant of national standing selected by mutual agreement of the Issuer and the Holder; provided that such accountant shall not be a current or a former accountant of the Company, any Company Subsidiary, the Issuer, any Issuer Subsidiary or the Holder or the affiliates of the Holder. The Issuer, at the Issuer’s expense, shall cause the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Issuer and the Holder of the results no later than five (5) Business Days from the time such investment bank or accountant, as applicable, receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error, willful misconduct or gross negligence.

 

19.                               NOTICES; PAYMENTS.

 

(a)                                 Notices. Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with Section 10(f) of the Note Purchase Agreement. The Issuer shall provide the Holder with prompt written notice of all actions taken pursuant to this Note, including in reasonable detail a description of such action and the reason therefor. Without limiting the generality of the foregoing, the Issuer will give written notice to the Holder (i) immediately upon any adjustment of the Exchange Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) to the extent known by the Issuer and if the Holder or a Holder Affiliate does not have a designee serving on the board of directors of the Company at such time, at least twenty (20) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the Common Stock, (B) with respect to any pro rata subscription offer to holders of Common Stock or (C) for determining rights to vote with respect to any Change of Control, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

 

(b)                                 Payments. Whenever any payment of cash is to be made by the Issuer to any Person pursuant to this Note, such payment shall be made in lawful money of the United States of America by a wire transfer in immediately available funds to such Person pursuant to written wire instructions provided to the Issuer by the Holder. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day. Subject to Section 1 hereof, any amount of Redemption Amount or other amounts due under the Transaction Documents which is not paid when due, including, without limitation, the Forbearance Late Charges, shall result in a late charge being incurred and payable by the Issuer in an amount equal to interest on such amount at the compound annual rate of 25% per annum (accrued daily) from the date such amount was due until the same is paid in full (the “Additional Late Charges”).

 

20.                               CANCELLATION. After the entire Note has been redeemed (with all Additional Late Charges having been fully paid by the Issuer, if any) or exchanged, in each case as provided hereunder, this Note shall automatically be deemed canceled, shall be surrendered to the Issuer for cancellation (if not previously surrendered) and shall not be reissued.

 

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21.                               WAIVER OF NOTICE. To the extent permitted by law, the Issuer hereby waives demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Note Purchase Agreement, except as expressly provided otherwise herein and therein.

 

22.                               GOVERNING LAW; JURISDICTION; JURY TRIAL. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Note 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. The Issuer 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. The Issuer hereby appoints CT Corporation System, with offices at 111 Eighth Avenue, New York, NY 10011, as its agent for service of process in New York. The Issuer 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 it set forth on the signature page hereto 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. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action against the Issuer in any other jurisdiction to collect on the Issuer’s obligations to the Holder, to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder. THE ISSUER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

23.                               CURRENCY; TAXES.

 

(a)                                 Currency. All principal, interest and other amounts owing under this Note or any Transaction Document that, in accordance with their terms, are paid in cash shall be paid in U.S. Dollars. All amounts denominated in other currencies shall be converted into the U.S. Dollar equivalent amount in accordance with the Currency Exchange Rate on the date of calculation.

 

(b)                                 Taxes.

 

(i)                                     If the Issuer shall be required to deduct any present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, imposed under any law, rule, code or regulation of the People’s Republic of China or any other non-U.S. governmental authority from or in respect of any sum payable hereunder to the Holder, (A) the sum payable shall be increased by the amount by which the sum payable would otherwise have to be increased (the “Gross-up Amount”) to ensure that after making all required deductions (including deductions applicable to the Gross-up

 

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Amount) the Holder would receive an amount equal to the sum it would have received had no such deductions been made, (B) the Issuer shall make such deductions and (C) the Issuer shall pay the full amount withheld or deducted to the applicable governmental authority within the time required under applicable law.

 

(ii)                                  The Holder shall pay to the relevant governmental authority in accordance with applicable law any present or future transfer, stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or in connection with the execution, delivery, registration or performance of, or otherwise with respect to, this Note, including the exchange of any portion thereof into shares of Common Stock; provided that the Issuer and the Holder shall each bear 50% of all documentary, stamp, stamp duty reserve, excise, transfer, sales, excise, use or other similar taxes (other than income or similar taxes) imposed or collected by any governmental or regulatory authority resulting from the sale and transfer of this Note by the Issuer to the Holder.

 

(iii)                               This Section 23 shall survive the termination of this Note and the payment of this Note and all other amounts payable hereunder.

 

24.                               JUDGMENT CURRENCY.

 

(a)                                 If for the purpose of obtaining or enforcing judgment against the Issuer in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 24 referred to as the “Judgment Currency”) an amount due in U.S. Dollars under this Note, the conversion shall be made at the Currency Exchange Rate prevailing on the Business Day immediately preceding:

 

(i)                                     the date actual payment of the amount is due, in the case of any proceeding in the courts of New York or in the courts of any other jurisdiction that will give effect to such conversion being made on such date; or

 

(ii)                                  the date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section 24(a)(ii) being hereinafter referred to as the “Judgment Exchange Date”).

 

(b)                                 If in the case of any proceeding in the court of any jurisdiction referred to in Section 24(a)(ii) above, there is a change in the Currency Exchange Rate prevailing between the Judgment Exchange Date and the date of actual payment of the amount due, the applicable party shall pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Currency Exchange Rate prevailing on the date of payment, will produce the amount of U.S. Dollars which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial order at the Currency Exchange Rate prevailing on the Judgment Exchange Date.

 

(c)                                  Any amount due from the Issuer under this provision shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Note.

 

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25.                               MAXIMUM INTEREST. Regardless of any provision contained in any of the Transaction Documents, the Holder shall never be entitled to receive, collect or apply as interest on the Principal any amount in excess of the Maximum Rate, and, in the event that the Holder ever receives, collects or applies as interest any such excess, the amount which would be excessive interest shall be deemed to be a partial prepayment of the outstanding Principal and treated hereunder as such; and, if the Principal is paid in full, any remaining excess shall forthwith be paid to the Issuer. In determining whether or not the interest paid or payable under any specific contingency exceeds the Maximum Rate, the Issuer and the Holder shall, to the maximum extent permitted under applicable law: (a) characterize any nonprincipal payment (including without limitation the Premium, the Prior Late Charges, the Forbearance Late Charges, the Expenses and any accrued and unpaid Additional Late Charges) as an expense, fee or premium rather than as interest; (b) exclude voluntary prepayments and the effects thereof; (c) amortize, prorate, allocate and spread, in equal parts, the total amount of interest throughout the entire contemplated term of the Principal so that the interest rate does not exceed the Maximum Rate; provided that if the Principal is paid and performed in full prior to the end of the full contemplated term thereof, and if the interest received for the actual period of existence thereof exceeds the Maximum Rate, the Holder shall refund to the Issuer the amount of such excess or credit the amount of such excess against the Principal and, in such event, the Holder shall not be subject to any penalties provided by any laws for contracting for, charging, taking, reserving or receiving interest in excess of the Maximum Rate. As used herein, the following terms shall have the following meanings: “applicable law” means the law in effect as of the date hereof; provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then the Transaction Documents shall be governed by such new law as of its effective date; and “Maximum Rate” means, on any day, the highest rate of interest (if any) permitted by applicable law on such day.

 

26.                               SEVERABILITY. If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

27.                               CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:

 

(a)                                 “Bloomberg” means Bloomberg Financial Markets.

 

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(b)                                 “Business Day” means any day other than Saturday, Sunday or any other day on which commercial banks in New York, U.S.A. or Hong Kong Special Administrative Region, People’s Republic of China are authorized or required by law to remain closed.

 

(c)                                  “Buyer” shall have the meaning set forth in the Note Purchase Agreement.

 

(d)                                 “Change of Control” means the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person or Persons, if the holders of the Company’s Voting Stock immediately prior to such consolidation or merger shall hold or have the right to direct the voting of less than 50% of the Company’s Voting Stock or such voting securities of such other surviving Person immediately following such transaction, (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of the Company’s Voting Stock, (iv) consummate a share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or plan or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of the Company’s Voting Stock, or (v) allow any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) to become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock, in each case other than (Y) any reorganization, recapitalization or reclassification of the Common Stock in which holders of the Company’s Voting Stock immediately prior to such reorganization, recapitalization or reclassification continue after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, the voting power of the surviving entity or entities necessary to elect a majority of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities, or (Z) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction of incorporation of the Company.

 

(e)                                  “Close of Business” means 5:00 pm Hong Kong Time.

 

(f)                                   “Closing Date” means April 23, 2008.

 

(g)                                  “Closing Sale Price” means, for any security as of any date, the last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York Time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average of the ask prices of any market makers for such security as reported on the OTCQX, OTCQB and OTC Pink by the OTC Markets Group Inc. If the Closing Sale Price cannot be calculated for a security

 

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on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Issuer and the Holder. If the Issuer and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 18 hereof. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction during the applicable calculation period.

 

(h)           “Company Competitor” shall have the meaning set forth in the Note Purchase Agreement.

 

(i)            “Company Subsidiary” means a “significant subsidiary” of the Company as such term is defined under Rule 1-02(w) of Regulation S-X promulgated under the rules and regulations of the SEC as in effect on the Closing Date, except for, if applicable, Qingdao Sheng Yuan Dairy Co., Ltd.

 

(j)            “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto; provided that indemnification provisions not otherwise constituting a guarantee shall not be deemed to be a “Contingent Obligation.”

 

(k)           “Convertible Securities” means any indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock.

 

(l)            “Currency Exchange Rate” means, in relation to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as published in The Wall Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to, or over, a period of time, the date of calculation shall be the final date of such period of time).

 

(m)          “Drag-Along Agreement” means that certain Drag-Along Agreement dated as of August 10, 2011 by and between the Issuer and the Buyer, as amended by that certain Amendment No. 1 to Drag-Along Agreement, dated January 30, 2013, by and between the Issuer and the Buyer, and as may be further amended, supplemented, restated or otherwise modified from time to time.

 

(n)           “Eligible Market” means the Principal Market, the  NYSE MKT LLC, The NASDAQ Global Market or The NASDAQ Capital Market.

 

(o)           “Ex Date” means, when used with respect to any dividend or distribution, the first date on which the Common Stock trades, regular way, on the relevant exchange or in the relevant market from which the Closing Sale Price was obtained without the right to receive such dividend or distribution.

 

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

 

(q)           “Expenses” means U.S.$298,099, plus any additional expenses incurred by or on behalf of the Buyer pursuant to the Pledge Agreement.

 

(r)            “Forbearance Agreement” means that certain Restated Forbearance Agreement dated as of January 30, 2013 by and between the Issuer and the Buyer, as may be amended, supplemented, restated or otherwise modified from time to time.

 

(s)            “Forbearance Late Charges” means  interest on the sum of the outstanding Principal, Premium, Prior Late Charges and Expenses, calculated at the compound annual rate of  17.5 % per annum (accrued daily) from January 31, 2013 through the Maturity Date, each inclusive.

 

(t)            “GAAP” means United States generally accepted accounting principles, consistently applied.

 

(u)           “Holder Affiliate” means any Person who directly controls, is directly controlled by or is under direct common control with, Warburg Pincus LLC, a New York limited liability company.

 

(v)           “Indebtedness” of any Person means, without duplication (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services, including (without limitation) “capital leases” which would be shown as a liability on a balance sheet in accordance with GAAP (other than trade payables entered into in the ordinary course of business), (iii) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (viii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.

 

(w)          “Instructions” means those certain Irrevocable Transfer Agent Instructions dated as of August 10, 2011 by and among the Issuer, the Buyer, the Company and Computershare, Inc., the Company’s transfer agent, as may be amended, supplemented, restated or otherwise modified from time to time.

 

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(x)           “Issuer Fundamental Transaction” means that the Issuer shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Issuer is the surviving corporation) another Person or Persons, if the holders of Issuer Voting Stock (not including any shares of the Issuer Voting Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such consolidation or merger) immediately prior to such consolidation or merger shall hold or have the right to direct the voting of less than 50% of the Issuer Voting Stock or such voting securities of such other surviving Person immediately following such transaction, (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Issuer to another Person, (iii) allow another Person to make a purchase, tender or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of Issuer Voting Stock (not including any shares of Issuer Voting Stock held by the Person or Persons making or party to, or associated or affiliated with the Persons making or party to, such purchase, tender or exchange offer), (iv) consummate a share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Issuer Voting Stock (not including any shares of Issuer Voting Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such share purchase agreement or other business combination), or (v) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock.

 

(y)           “Issuer Subsidiary” means a “significant subsidiary” of the Issuer as such term is defined under Rule 1-02(w) of Regulation S-X promulgated under the rules and regulations of the SEC as in effect on the Closing Date.

 

(z)           “Market Price” means the Weighted Average Price of the Common Stock for the seven (7) consecutive Trading Days period ending on the applicable date, but in no event greater than the Weighted Average Price of the Common Stock on the applicable date; provided, however, that such Market Price shall be appropriately adjusted by the parties, in their good faith determination, to account for any adjustment pursuant hereto (other than the adjustment requiring such computation) to the Exchange Price that shall become effective, or any event (other than the event requiring such computation) requiring, pursuant hereto, an adjustment to the Exchange Price where the Ex Date of such event occurs, at any time during such seven (7) consecutive Trading Days.

 

(aa)         “Note Purchase Agreement” means that certain Note Purchase Agreement dated as of April 23, 2008 by and among the Issuer and the initial holder of this Note pursuant to which the Issuer issued the Prior Note (as defined below), as may be amended, supplemented, restated or otherwise modified from time to time.

 

(bb)         “Obligation” means the outstanding (i) Principal, plus (ii) Premium, plus (iii) Prior Late Charges, plus (iv) Forbearance Late Charges, plus (v) accrued and unpaid Additional Late Charges plus (vi) accrued and unpaid Expenses.

 

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(cc)         “Options” means rights, options or warrants to subscribe for, purchase or otherwise acquire either shares of Common Stock or Convertible Securities.

 

(dd)         “Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

 

(ee)         “Pledge Agreement” means that certain Share Pledge Agreement dated as of April 23, 2008 by and among the Issuer, the Buyer and the collateral agent named therein (the “Collateral Agent”), as amended by that certain Amendment No. 1 to Share Pledge Agreement, dated December 4, 2008, by and among the Issuer, the Buyer and Collateral Agent and that certain Amendment No. 2 to Share Pledge Agreement, dated August 10, 2011, by and among the Issuer, the Buyer and Collateral Agent, and as may be further amended, supplemented, restated or otherwise modified from time to time.

 

(ff)          “Premium” means U.S.$28,593,750, which represents the annual return of twenty-five percent (25%), compounded annually on the Principal, that accrued daily from the period that commenced on the Closing Date and ended on April 23, 2011.

 

(gg)         “Principal Market” means The NASDAQ Global Select Market, or an Eligible Market upon which the shares of Common Stock, as of an applicable date, may then trade.

 

(hh)         “Prior Late Charges” means U.S.$33,696,117, which represents an aggregate of U.S.$8,588,399 in charges accrued under the Note from April 24, 2011 to November 23, 2011, each inclusive, and an aggregate of U.S.$25,107,718 in charges accrued under the Note from November 24, 2011 to January 30, 2013, each inclusive.

 

(ii)           “Record Date” shall mean with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of security holders entitled to receive such cash, securities or other property (whether such date is fixed by the Company’s Board of Directors or by statute, contract or otherwise).

 

(jj)           “Redemption Notices” means, collectively, the Event of Default Redemption Notices and the Corporate Transaction Redemption Notices (each of the foregoing, individually, a “Redemption Notice”).

 

(kk)         “Registration Rights Agreement” means that certain Registration Rights Agreement dated as of April 23, 2008 by and among the Issuer, the Company and the initial holder(s) of the Note(s) relating to, among other things, the registration of the resale of the Common Stock transferable to the Holder upon exchange of this Note, as amended by that certain Amendment No. 1 to Registration Rights Agreement, dated August 10, 2011, by and among the Issuer, the Company and the initial holder(s) of the Note(s), and as may be further amended, supplemented, restated or otherwise modified from time to time.

 

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(ll)           “Required Holders” means the holder or holders of Notes representing at least 80% of the aggregate principal amount of the Notes then outstanding.

 

(mm)      “Restricted Subsidiary” means a Subsidiary of the Issuer with assets of more than U.S.$1,000,000 except for the Company and any direct or indirect subsidiary (including joint ventures) of the Company.

 

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

 

(oo)         “Subsidiary” means with respect to a subject Person, any Person, an amount of 50% or more of the voting securities, other voting ownership or voting partnership interests of which is owned by such subject Person.

 

(pp)         “Successor Entity” means the Person formed by, resulting from or surviving any Issuer Fundamental Transaction or the Person with which such Issuer Fundamental Transaction shall have been made.

 

(qq)         “Trading Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded; provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00 p.m., New York Time).

 

(rr)           “Transaction Documents” means this Note, the Note Purchase Agreement, the Registration Rights Agreement, the Pledge Agreement, the Forbearance Agreement, the Drag-Along Agreement and the Instructions.

 

(ss)          “Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

 

(tt)           “Weighted Average Price” means, for any security as of any date, the dollar volume-weighted average per share price for such security on the Principal Market during the period beginning at 9:30:01 a.m., New York Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York Time (or such other time as the Principal Market publicly announces is the official close of trading) as reported by Bloomberg through its “Volume at Price” functions, or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York Time (or such other time as such market publicly announces is the official open of trading), and ending at 4:00 p.m., New York Time (or such other time as such market publicly announces is the official close of trading) as reported by Bloomberg, or, if no dollar

 

25

 

volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported on the OTCQX, OTCQB and OTC Pink by the OTC Markets Group Inc. If the Weighted Average Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined in good faith by the Issuer and the Holder. If the Issuer and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 18 hereof. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction during the applicable calculation period.

 

28.          AMENDMENT AND RESTATEMENT. This Note amends and restates in its entirety that certain Restated Senior Exchangeable Note dated August 10, 2011 in the original principal amount of U.S.$30,000,000 payable to the order of the Holder and executed by the Issuer (the “Prior Note”) and becomes effective upon the later to occur of (I) Issuer’s payment to the Holder of an aggregate of U.S.$30,000,000 in cash by wire transfer in immediately available funds in partial satisfaction of Issuer’s obligation owing under the Prior Note (the “Partial Payment”), and (II) the effectiveness of the Forbearance Agreement (in accordance with its terms); provided that such amendment and restatement does not and shall not extinguish, impair, novate or discharge the obligations under the Prior Note. As of the close of business on January 30, 2013,  after giving effect to the Partial Payment, the unpaid (a) principal balance under the Prior Note was U.S.$30,000,000, (b) premium balance under the Prior Note was U.S.$28,593,750, and (c) outstanding prior late charges under the Prior Note were U.S.$33,696,117, which principal, premium and prior late charges, together with the expenses incurred by Buyer pursuant to the Pledge Agreement and in connection with the Transaction Documents, is the principal owed under this Note as of the beginning of business on the Issuance Date. The Issuer agrees that the indebtedness previously evidenced by the Prior Note (and the Senior Exchangeable Note, dated April 23, 2008, amended and restated by the Prior Note) remains outstanding, but such indebtedness shall henceforth be evidenced by this Note, and the terms and conditions concerning the Issuer’s obligation to repay said indebtedness shall be governed by the provisions of this Note and the other Transaction Documents.

 

[SIGNATURE PAGE FOLLOWS]

 

26

 

IN WITNESS WHEREOF, the Issuer has caused this SECOND RESTATED SENIOR EXCHANGEABLE NOTE to be duly executed as of the Issuance Date set out above.

 

	BEAMS POWER INVESTMENT LIMITED
	By:	/s/ Liang Zhang
		Name: Liang Zhang
		Title:  Authorized Signatory

 

 

EXHIBIT I

 

BEAMS POWER INVESTMENT LIMITED

EXCHANGE NOTICE

 

Reference is made to the RESTATED SENIOR EXCHANGEABLE NOTE (the “Note”) issued to the undersigned by Beams Power Investment Limited, a British Virgin Islands company (the “Issuer”). In accordance with and pursuant to the Note, the undersigned hereby elects to exchange the Exchange Amount (as defined in the Note) of the Note indicated below for shares of Common Stock, par value U.S.$0.0001 per share (the “Common Stock”), of Synutra International, Inc., a Delaware corporation (“Synutra”), held by the Issuer, as of the date specified below.

 

By submission of this Exchange Notice, the undersigned represents and warrants to the Issuer that (i) the undersigned is an “accredited investor, “ as such term is defined under Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), (ii) the undersigned understands that the shares of Common Stock to be issued are characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Issuer in a transaction not involving a public offering, and (iii) the shares of Common Stock to be issued pursuant to this Exchange Notice are being acquired for the undersigned’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act.

 

 

	Date of Exchange:
	Aggregate Exchange Amount to be exchanged:
Please confirm the following information:
	Exchange Price (if applicable):
	Number of shares of Common Stock to be issued:
	Tax ID Number (if applicable):
	Number of shares of Pledged Stock to be removed from the Pledged Collateral:

 

 

Please issue the Common Stock for which the Note is being exchanged in the following name and to the following address:
	Issue to:
	Facsimile Number:
	Authorization:
	By:
	Title:
Dated:
	Account Number:
	(if electronic book entry transfer)
	Transaction Code Number:
	(if electronic book entry transfer)

 

 

EXHIBIT 1 TO THE BEAMS POWER INVESTMENT LIMITED

EXCHANGE NOTICE

 

ACKNOWLEDGMENT

 

The Issuer hereby acknowledges this Exchange Notice and hereby directs [Insert Name of Transfer Agent] to transfer the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated August 10, 2011 (as may be amended or restated from time to time) from the Issuer and Synutra and acknowledged and agreed to by [Insert Name of Transfer Agent].

 

 

	BEAMS POWER INVESTMENT LIMITED
	By:
		Name:
		Title:

 

 

Exhibit 22

 

AMENDMENT NO. 1 TO DRAG-ALONG AGREEMENT

 

THIS AMENDMENT NO. 1 (this “Amendment”) to the Drag-Along Agreement dated as of August 10, 2011 (the “Drag-Along Agreement”) by and between Beams Power Investment Limited, a company with limited liability registered under the BVI Business Companies Act, 2004 (as amended) of the British Virgin Islands (“Beams Power”), and Warburg Pincus Private Equity IX, L.P. (together with its Affiliates (as defined below) and assigns, “Warburg”), is made and entered into as of January 30, 2013 by and between Beams Power and Warburg.

 

WHEREAS, pursuant to that certain Note Purchase Agreement made as of April 23, 2008 by and between Beams Power and Warburg (as amended, restated, supplemented or otherwise modified from time to time, the “Note Purchase Agreement”), Beams Power issued Warburg that certain Restated Senior Exchangeable Note, with an issuance date of August 10, 2011, in the aggregate principal amount of U.S.$30,000,000 (the “Note”), which Note is being amended and restated concurrently with the execution and delivery of this Amendment as the Second Restated Senior Exchangeable Note, with an issuance date of even date herewith, which represents an aggregate of U.S.$30,000,000 in principal, U.S.$28,593,750 in premium, U.S.$33,696,117 in prior late charges, and U.S.$298,099 in accrued and unpaid expenses, plus forbearance late charges accrued thereunder and such additional amounts provided therein (as amended, restated, supplemented or otherwise modified from time to time, the “Restated Note”);

 

WHEREAS, the Issuer has defaulted under the Note and such defaults are continuing as of the date hereof;

 

WHEREAS, the Buyer has agreed to extend the maturity date of the Note pursuant to the Restated Note to January 30, 2014, in consideration for, among other things, Beams Power executing and delivering this Amendment; and

 

WHEREAS, in connection with the restatement of the Note as the Restated Note, the parties desire to amend the Drag-Along Agreement as set forth herein.

 

NOW, THEREFORE, the parties hereto agree as follows:

 

SECTION 1.  Unless otherwise specifically defined herein, all capitalized terms used but not defined herein shall have the meaning ascribed thereto under the Drag-Along Agreement. Each reference to “hereof”, “hereunder”, “herein” and “hereby” and each other similar reference and each reference to “this Agreement” and each other similar reference contained in the Drag-Along Agreement shall, upon effectiveness of this Amendment, refer to the Drag-Along Agreement as amended hereby.

 

SECTION 2.  Section 1(b)(ii) of the Drag-Along Agreement is hereby amended and restated in its entirety as follows:

 

“(ii)        “Drag-Along Period” means the period commencing on the date of the Additional Event of Default (as defined below) and ending on the later to occur of: (A) the close of business on May 30, 2014; and (B) the date Beams Power satisfies the Obligation in full.”

 

 

SECTION 3.  Section 3(c) of the Drag-Along Agreement is hereby amended to replace the reference to “U.S.$7.98165” in the first sentence thereof with “U.S.$5.64880”.

 

SECTION 4. All other terms of the Drag-Along Agreement shall remain in full force and effect in accordance with their respective terms.

 

SECTION 5. All questions concerning the construction, validity, enforcement and interpretation of this Amendment 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 Amendment and agrees that such service shall constitute good and sufficient service of process and notice thereof. Beams Power hereby appoints CT Corporation System, with offices located at 111 Eighth Avenue, New York, NY 10011, as its agent for service of process in New York. 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 TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AMENDMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

SECTION 6.  This Amendment 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 Amendment may also be executed via facsimile, which shall be deemed an original.

 

SECTION 7.  This Amendment shall become effective as of the date hereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS WHEREOF, Beams Power and Warburg have caused their respective signature page to this Amendment No. 1 to the Drag-Along Agreement to be duly executed as of the date first written above.

 

 

	BEAMS POWER INVESTMENT LIMITED
	By:			/s/ Liang Zhang
				Name: Liang Zhang
				Title:  Authorized Signatory
	WARBURG PINCUS PRIVATE EQUITY IX, L.P.
	By:	Warburg Pincus IX LLC, its general partner
	By:				Warburg Pincus Partners, LLC, its sole member
	By:					Warburg Pincus & Co., its managing member
	By:		/s/ Timothy J. Curt
			Name: Timothy J. Curt
			Title:   Partner

 

 [SIGNATURE PAGE TO AMENDMENT NO. 1 TO DRAG-ALONG AGREEMENT]