Exhibit 10.25
 
Facilities Lease Agreement
 
This Commercial Lease Agreement ("Lease") is made and effective December 11,
2009, by and between
 
(1) AgFeed Industries, Inc. (“AgFeed”) ("Landlord"); and
 
(2) Hypor Agfeed Breeding Company Inc. ("Tenant").
 
The Landlord has obtained a valid lease in respect of the collectively-owned
land (having an area of about 217.6 Mou (145139.2 square meters)) located in
Futian Village, Futian Township, China, and has built a pig breeding facility on
such land (“Leased Premises”).
 
The Landlord desires to lease the Leased Premises to the Tenant for the purposes
of operating a pig breeding facility and the Tenant desires to lease the Leased
Premises from Landlord for the term, at the rental and upon the covenants,
conditions and provisions herein set forth.
 
THEREFORE, in consideration of the mutual promises contained herein, and for
other good and valuable consideration, it is agreed:
 
1.
Term.

 
 
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The initial term (“Initial Term”) of the Lease shall be ten (10) years,
beginning on the date of registration of the Tenant as a Wholly-Owned Foreign
Entity with the appropriate Chinese authorities and ending on the tenth (10th)
anniversary of such date of registration.

 
 
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Tenant may renew the Lease:

 
 
o
Term and rent of the extended lease shall be determined at the time of renewal.

 
 
o
Tenant shall exercise such renewal option, if at all, by providing written
notice to Landlord not less than three (3) months prior to the expiration of the
Initial Term.

 
 
o
Unless otherwise agreed to by Landlord and Tenant at renewal, all other
covenants, conditions and provisions as contained in this Lease will not change.

 
2.
Rent and Other Payments.

 
 
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The Tenant shall pay to Landlord:  (1) a rental payment of 1,950,648 RMB per
year, payable in instalments of 162,554 RMB per month, such rental payment
subject to increase or decrease upon determination of Landlord’s final project
cost to construct and deliver the Leased Premises to Tenant; and (2) any such
additional amounts due and owing pursuant to Article 7 of this Lease for
Tenant’s portion of any lease and general real estate taxes and fees billed by
Landlord.

 

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Each rental instalment payment shall be due in advance on the first day of the
calendar month for each quarter during the Lease term to Landlord at the
following address:

 
 
o
Rm. A1001-1002, Tower 16, Hengmao Int’l Center

 
 
  333 S. Guangchang Rd.

 
 
  Nanchang, Jiangxi Province

 
 
  PRC 330003

 
 
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Late payment of the Lease is subject to an interest rate of 0.5% per month.

 
 
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Appendix 1 of this Lease is a site map illustrating the buildings and layout of
the Leased Premises at the time of signing of this Lease, as well as an
associated description of the buildings of the Leased Premises with key
contents.

 
 
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Appendix 2 of this Lease is a full list of all equipment included in this Lease.

 
3.
Termination

 
 
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The Landlord and the Tenant may mutually agree in writing to terminate the lease
agreement.

 
 
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Unless there is early termination, the lease agreement shall terminate upon the
date of expiration.

 
 
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Not due to the reasons attributable to the Landlord (except for occurrence of a
force majeure event), for early termination of this lease agreement by the
Tenant, the Tenant shall provide 1 (one) year written notice and 1 (one) quarter
penalty payment.

 
 
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Not due to the reasons attributable to the Tenant (except for occurrence of a
force majeure event), for early termination of this lease agreement by the
Landlord, the Landlord shall provide 1 (one) year written notice to the Tenant,
and the Landlord will be subject to a penalty payment equal to all losses
incurred by the Tenant caused by such early termination in addition to all
reasonable actual costs and expenses incurred thereby arising out of transfer of
its business to new location. Reconciliation and payment shall be made upon
receipts of the move.

 
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Both Landlord and Tenant may be excused from further performance under this
Lease in the event of any of the following:

 
 
o
The Leased Premises and/or the underlying land are so seriously damaged due to
an event of force majeure that further performance of this Lease is practically
impossible;

 
 
o
The underlying land is expropriated by governmental authorities; or

 
 
o
The Leased Premises is dismantled pursuant to an order by competent government
authorities or any restrictions on the rights and title in respect of the Leased
Premises or right to use the underlying land are imposed by any judicial or
administrative bodies according to law.

 
 
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At the time of early termination or termination upon expiry, all buildings and
equipment should be left in working order except for normal wear and tear.

 
4.
Maintenance and Repairs

 
 
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During the term of this Lease, the Landlord shall be responsible for all major
or structural maintenance and repairs (“Repairs”).  Major or structural Repairs
means deficiencies caused by faulty design and/or poor construction, including
subsidence due to insufficient compaction of fill dirt.

 
 
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If the Landlord fails to make such Repairs within fifteen (15) days of receipt
of a Repair notice from the Tenant, the Tenant shall have the right to make or
have made the necessary repairs for the account of the landlord and/or the right
to terminate this Lease by issuing a termination notice to the Landlord.

 
 
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Damage caused by intention or neglect shall be repaired at the expense of the
responsible party

 
 
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Unless otherwise provided under this Lease, minor Repairs shall be carried out
by the Tenant at its own expense. Minor Repairs mean routine maintenance and
repair of buildings and equipment as well as anything that can be maintained or
repaired by the Tenant’s staff.

 
5.
Technology Updates

 
 
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The Tenant shall have the right, upon obtaining Landlord's consent in writing,
such consent not unreasonably withheld, to remodel and make additions,
improvements and replacements to all or any part of the Leased Premises from
time to time as Tenant may deem desirable.

 
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The Tenant and the Landlord shall to come to an agreement in writing regarding
who is responsible for any technology updates, costs and construction and a
re-negotiation of the relevant terms and provisions of this Lease, if necessary
for such purpose.

 
 
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If during the term of the Lease the Tenant wishes to expand or increase the size
of the farm, the parties shall re-negotiate the relevant terms and provisions of
the Lease for such purpose.

 
6.
Representations and Warranties of AgFeed:

 
 
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AgFeed has a valid lease interest in the Leased Premises during the entire term
of this Lease, including any extension of this Lease.

 
 
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AgFeed has obtained or completed all necessary approval, registration or filing
with the competent land authorities in respect of its lease with the relevant
land owner.

 
 
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AgFeed has obtained all necessary permission or consent from the relevant land
owner to sublease the entire Leased Premises to the Tenant for pig breeding and
farming business.

 
 
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AgFeed has obtained all necessary governmental permission or consent regarding
the Leased Premises being used for operating a pig breeding business, including
but not limited to any environmental approval and/or farming construction and
operation permit.

 
 
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AgFeed has obtained the ownership to all its farm buildings and creates no
mortgage or any other security interest or restriction over such buildings in
favour of any entities or individuals.

 
 
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AgFeed’s right to use the land on which the Leased Premises is constructed is
free and clear of any mortgage, security interest, other third party’s rights or
restrictions in favour of any entities or individuals.

 
7.
Lease and General Real Estate Taxes.

 
 
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The Landlord shall pay, prior to delinquency, any and all lease and general real
estate taxes and fees levied by the competent government authorities in
connection with use of the Leased Premises (including owning and use of all the
farm buildings thereon), whether required or not at the signing of this lease
and newly instituted or coming due during the term of this Lease on the Leased
Premises. On an annual basis, at Landlord’s billing, Tenant shall promptly remit
to Landlord Tenant’s share of such lease and general real estate taxes and fees
related to the farm buildings thereon.

 
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8.
Insurance.

 
 
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The Landlord shall maintain Leasehold insurance covering all buildings and all
equipment for fire and natural disaster and any extended insurance coverage on
the building and any equipment in the Leased Premises in such amount as the
Landlord shall deem appropriate.

 
 
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The Tenant shall be responsible, at its expense, for fire and extended coverage
insurance on all of its personal property, including the movable devices for
business located in the Leased Premises.

 
 
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Tenant shall, at its own expense, maintain a policy or policies of comprehensive
general liability insurance with respect to the particular activities at the
Leased Premises, with the premiums thereon fully paid on or before due date.
Such insurance policy shall be issued by and binding upon an insurance company
approved by Landlord, and shall afford minimum protection of not less than
US$  500,000 for single limit coverage of bodily injury, property damage or
combination thereof.

 
9.
Utilities.

 
 
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The Tenant shall pay all charges for coal, electricity, telephone and other
services and utilities used by the Tenant on the Leased Premises during the term
of this Lease, unless otherwise expressly agreed to in writing by Landlord.

 
 
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At commencement of the Lease, Landlord shall deliver the Leased Premises to
Tenant with back-up electric generator, back-up water supply, and waste
treatment/disposal systems in place that are commercially reasonable for
Tenant’s activities on the Leased Premises that are contemplated by this Lease.

 
 
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As part of the Wuning farm’s waste management program, Tenant shall receive the
economic benefit of any methane energy produced, if any, by any Digester system
fuelled by farm hog effluent.

 
10.
Signs.

 
 
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The Tenant shall have the right to place on the Leased Premises, at locations
selected by the Tenant, any signs which are permitted by applicable zoning
ordinances and private restrictions.

 
11.
Entry.

 
 
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Upon the prior written notice, the Landlord shall have the right to enter upon
the Leased Premises at reasonable hours to inspect the same, provided the
Landlord shall not thereby unreasonably interfere with the Tenant's business on
the Leased Premises.

 
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The Landlord must adhere to the Tenants Bio Security Protocols regarding Pig
Freedom.  See Appendix 4 of this Lease–Bio Security Protocols of the Tenant.

 
12.
Damage and Destruction.

 
 
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If the Leased Premises or any part thereof is damaged by fire, casualty or
structural defects, such damage or defects not being the result of any act of
negligence by the Tenant or by any of the Tenant's agents, employees or
invitees, and the same cannot be used for the Tenant's purposes, then the Tenant
shall have the right within twenty four (24) hours following such damage to
elect by notice to Landlord to terminate this Lease as of the date of such
damage, without any surviving obligations to Tenant .

 
 
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In the event of minor damage caused by fire, casualty or structural defects,
such damage or defects not being the result of any act of negligence by the
Tenant or by any of the Tenant's agents, employees or invitees, to any part of
the Leased Premises, and if such damage does not render the Leased Premises
unusable for the Tenant's purposes, the Landlord shall promptly repair such
damage at the cost of the Landlord. The Landlord shall act within fifteen (15)
days following the repair request made by the Tenant. If the Landlord fails to
act within fifteen (15) days of the request by the Tenant, the Tenant may
conduct such repair but the cost of the repair shall be borne by the Landlord in
accordance with the provisions of Article 20 of this Lease.

 
 
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If during the term of this Lease the Leased Premises become inoperable for the
Tenants purposes, caused by the same as above, in whole or in part, then the
Tenant shall be relieved from paying all the rents and other charges during the
period that the Leased property is inoperable.

 
 
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Lease payments paid in advance for any such periods that the Lease property is
inoperable shall be credited on the next ensuing payments, if any.  If no
further payments are to be made, any such advance payments shall be refunded to
Tenant.

 
 
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The provisions of this paragraph extend not only to the matters aforesaid, but
also to any occurrence which is beyond the Tenant's reasonable control and which
renders the Leased Premises inoperable in whole or in part, for the Tenant's
purposes.

 
13.
Tenant’s Default.

 
 
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In the event of a default made by the Tenant in the payment of rent due to
Landlord, the Tenant shall have thirty (30) days after receipt of written notice
thereof to cure such default.

 
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In the event of a default made by the Tenant in any of the other covenants or
conditions to be kept, observed and performed by the Tenant, the Tenant shall
have forty-five (45) days after receipt of written notice thereof to cure such
default.

 
 
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In the event that the Tenant fails to cure any default within the time allowed
under this paragraph, the Landlord may declare the term of this Lease ended and
terminated by giving the Tenant written notice of such intention.

 
14.
Quiet Possession.

 
 
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The Landlord covenants and warrants that upon performance by the Tenant of its
obligations hereunder, the Landlord will keep and maintain the Tenant in
exclusive, quiet, peaceable and undisturbed and uninterrupted possession of the
Leased Premises during the term of this Lease.

 
15.
Notice.

 
 
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Any notice required or permitted under this Lease shall be deemed sufficiently
given or served if:

 
(1)          sent by certified mail, return receipt requested, addressed as
follows:
 
 
Landlord:

 
 
Rm. A1001-1002, Tower 16, Hengmao Int’l Center

 
 
333 S. Guangchang Rd.

 
 
Nanchang, Jiangxi Province

 
 
PRC 330003

 
 
Tenant:  Rm. A1001-1002, Tower 16, Hengmao Int’l Center

 
 
333 S. Guangchang Rd.

 
 
Nanchang, Jiangxi Province

 
 
PRC 330003

 
(2)          sent by courier, three (3) business days after posting it, to the
above address,
 
(3)          sent by fax, when a confirmation report of transmission is recorded
by the sender's facsimile machine.
 
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The Landlord and the Tenant shall each have the right from time to time to
change the place where notice is to be given under this paragraph by written
notice thereof to the other party.

 
16.
Waiver.

 
 
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No waiver of any default of the Landlord or the Tenant hereunder shall be
implied from any omission to take any action on account of such default if such
default persists or is repeated, and no express waiver shall affect any default
other than the default specified in the express waiver and that only for the
time and to the extent therein stated. One or more waivers by the Landlord or
the Tenant shall not be construed as a waiver of a subsequent breach of the same
covenant, term or condition.

 
17.
Successors.

 
 
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The provisions of this Lease shall extend to and be binding upon the Landlord
and the Tenant and their respective legal representatives, successors and
assigns.

 
18.
Consent.

 
 
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The Landlord shall not unreasonably withhold or delay its consent with respect
to any matter for which the Landlord's consent is required or desirable under
this Lease.

 
19. Return of the Farm and assets on termination
 
 
·
The tenant agrees to return the farm and all leased assets to the Landlord
within 15 days of the termination date and in normal operating condition.

 
20. Landlord’s Default.
 
 
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Unless otherwise provided under this Lease, if there is a default with respect
to any of the Landlord's covenants, warranties or representations under this
Lease, and if the default continues more than forty-five (45) days after notice
in writing from the Tenant to the Landlord specifying the default, the Tenant
may, at its option and without affecting any other remedy hereunder, cure such
default and deduct the cost thereof from the next accruing instalment or
instalments of rent payable hereunder until the Tenant shall have been fully
reimbursed for such expenditures, together with interest thereon at a rate equal
to the lesser of six percent (6%) per annum or the then highest lawful rate. If
this Lease terminates prior to the Tenant's receiving full reimbursement, the
Landlord shall pay the un-reimbursed balance plus accrued interest to the Tenant
on demand. Otherwise, the Tenant may, at its option, terminate the agreement and
the Landlord shall bear the liabilities for breach of this Lease.

 
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21.  Compliance with Law.
 
 
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The Tenant and the Landlord each shall comply with all laws, orders, ordinances
and other public requirements now or hereafter affecting the Leased Premises.

 
 
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Landlord shall be responsible for any cleanup costs, penalties and legal costs
associated with a violation of any environmental laws, ordinances, rules,
requirements or regulations relating to the preservation or regulation of the
public health, welfare or environment or the regulation or control of toxic or
hazardous substances or materials directly caused by the condition of the Leased
Premises as delivered to the Tenant or the improper installation of any systems
by the Landlord on or in the Leased Premises; provided however, Landlord shall
not be responsible in the event Tenant fails to comply with any effluent
handling procedures or any waste management system operation procedures
prescribed by the Landlord.

 
22. Final Agreement.
 
 
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This Lease terminates and supersedes all prior understandings or agreements on
the subject matter hereof. This Lease may be modified only by a further writing
that is duly executed by both parties.

 
23. This Lease conforms to all relevant clauses in the Shareholders Agreement of
Hypor Agfeed Breeding Company Inc. that will affect the performance of this
Lease by both parties.
 
24.  Registration
 
 
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Landlord shall complete the relevant registration or filing procedures in
respect of this Lease within thirty (30) days of execution of this Lease.

 
25. Counterparts and Language
 
 
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This agreement shall be signed in two (2) counterparts in both Chinese and
English languages.  Each party will hold one (1) copy.  In case of any dispute,
the English version will be followed.

 
[signature page follows]
 
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This Lease is entered into by the duly authorised representatives of the parties
on the date stated on the first page of this Lease.

Landlord: AgFeed Industries, Inc.
   
By:
/s/ Li Songyan
   
Name:
Li Songyan
   
Title:
Chairman
   
Date:
December 11, 2009
 
Tenant: Hypor Agfeed Breeding Company Inc.
   
By:
/s/ Li Songyan
   
Name:
Li Songyan
   
Title:
Authorized Signatory
   
Date:
December 11, 2009

 
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