Unassociated Document


    Exhibit
      10.16

    


    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT
      (this
      "Agreement")
      is
      entered into as of the 19th
      day of
      August, 2008, by and between Nanchang
      Best Animal Husbandry Co., Ltd.,
      a
      corporation organized under the laws of the People's Republic of China (the
      "Company"),
      and
Gerard
      Daignault (the
      "Executive").
      

     

    WHEREAS,
      the Company desires to set forth the nature and terms upon which the Company
      will employ Executive, including the amount of compensation and other benefits
      to be provided to Executive and any of the rights of the Executive in the event
      of the Executive's termination of employment with the Company. The Executive
      is
      willing to commit to serve the Company on the terms and conditions herein
      provided. 

     

    NOW,
      THEREFORE, in consideration of the promises and the respective covenants and
      agreements of the parties herein contained, and intending to be legally bound
      hereby, the parties hereto agree as follows:

     

    1. Employment.
      The
      Company hereby agrees to employ the Executive, and the Executive hereby agrees
      to serve the Company, on the terms and conditions set forth herein. So long
      as
      Executive is employed by the Company, Executive shall devote such business
      time
      and energy to the business of the Company as the Company reasonably determines.
      The Executive shall spend no less than five (5) months per annum in the People's
      Republic of China ("PRC") on behalf of the Company, unless the Chairman and
      Chief Executive Officer of AgFeed Industries, Inc. ("AgFeed") otherwise agree
      that the Executive may spend less time in the PRC. 

     

    2. Term.
      The
      term ("Term") of Executive's employment under Section 1 will commence on the
      date hereof (the "Effective Date") and shall continue until the third
      anniversary of the Effective Date, subject to renewal or earlier termination
      as
      may be set forth in this Agreement.

     

    3. Position
      and Duties.
      Subject
      to the ultimate control of the Company, the Executive shall serve as the Chief
      Operating Officer of the Company and its parent, AgFeed, and shall handle such
      responsibilities and duties as are normally associated with this position and
      as
      may be delegated by the Chief Executive Officer and Chairman of AgFeed from
      time
      to time, including, but not limited to: (i) providing operational and strategic
      development guidance to the Company and its affiliates, including its parent,
      AgFeed; (ii) growing and increasing the profitability of AgFeed's hog production
      and breeding business; and (iii) communicating with investors, possible
      strategic partners, financial advisors and other professionals regarding
      AgFeed's business. The Executive shall report directly to the Chief Executive
      Officer and Chairman of AgFeed.

     

    4. Compensation
      and Related Matters.

     

    (a) Base
      Salary.
      During
      the Executive's employment with the Company, the Company shall pay to the
      Executive a base salary at a rate of Two Hundred Sixteen Thousand Dollars
      (US$216,000) per annum (Eighteen Thousand Dollars (US$18,000) per
      month), commencing
      on the Effective Date. The Chairman and Chief Executive Officer of AgFeed,
      together with AgFeed's Compensation Committee, shall review the Executive's
      performance and base salary no less than annually and shall decide whether
      to
      grant any increase or decrease in the Executive's base salary and, if so, the
      amount of such increase or decrease based upon such review. 

     

    (b) Payment
      of Base Salary.
      The
      base salary (as determined in accordance with Section 4(a)) shall be to the
      Executive in immediately available funds by wire transfer as directed by the
      Executive no less frequently than monthly in arrears.


    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c) Bonuses.
      The
      Executive shall be eligible for and may receive bonuses. The amount, if any,
      and
      timing of any bonuses, shall be solely within the discretion of the
      Company.

     

    (d) Expenses.
      During
      the Term, the Executive shall be entitled to receive prompt reimbursement for
      all pre-approved expenses incurred by the Executive in performing services
      hereunder, including all expenses of travel and living while away from the
      Executive's home in the United States of America, on business at the request
      of
      and in the service of the Company, provided that such expenses are incurred
      and
      accounted for in accordance with the policies and procedures established by
      the
      Company. The Executive understands and agrees that he shall be reimbursed for
      domestic and international travel only to the cost of coach class flight
      tickets. 

     

    (e) Benefits.
      The
      Company shall not be required to provide the Executive with any health and
      welfare benefits.

     

    (f) Vacation.
      The
      Executive will be entitled to receive two (2) weeks vacation per year and shall
      be entitled to receive the same paid holidays as are observed by all of the
      members of AgFeed's senior management team.

     

    (g) Stock
      Options.
      On the
      Effective Date, subject to appropriate approvals, including approval of the
      Compensation Committee of AgFeed's Board of Directors, the Executive shall
      be
      granted a stock option (the “Option”)
      to
      acquire 100,000 shares of the Company's common stock, par value $0.001 per
      share, under the Company's 2008 Long-Term Incentive Plan (the "Plan"). The
      Option will be subject to the terms and conditions set forth in the Plan,
      including but not limited to, determination of the exercise price of the Option
      and the expiration date of the Option. Unless otherwise expressed herein, the
      Option will vest in two installments: 66,667 shares vesting on the second
      anniversary and 33,333 shares vesting on the third anniversary of the date
      of
      the grant provided that the Executive is employed by the Company on such vesting
      dates. In the event that the Executive ceased to be employed by the Company
      or
      AgFeed prior to the initial vesting date, the Option shall be forfeited and
      deemed void and of no effect. 

     

    5. Directors
      and Officers Liability Insurance. During the term of this Agreement, AgFeed
      shall have in force and effect (at its own cost) Directors and Officers
      Liability Insurance, with coverage in such amounts as may be deemed appropriate
      by AgFeed’s Board of Directors. The Executive shall be a covered employee under
      such insurance.

     

    6. Termination.

     

    (a) The
      Executive's employment under this Agreement may be terminated by the Executive
      or the Company at any time, with or without Cause (as defined
      below).

     

    (b) In
      the
      event of termination by the Company without Cause, or in the event of the
      Executive's death or disability or a Constructive Termination (as defined
      below), the Company shall pay the Executive a lump sum severance amount equal
      to: 

     

    (i)  $36,000,
      if such termination or Constructive Termination occurs on or before the first
      anniversary of the Effective Date; 

     

    (ii)  $60,000,
      if such termination or Constructive Termination occurs after the first
      anniversary but on or before the second anniversary of the Effective Date;
      or

     

    (iii)  $100,000,
      if such termination or Constructive Termination occurs on or after the second
      anniversary of the Effective Date. 

     

    In
      the
      event of termination by the Company with Cause, or if the Executive voluntarily
      terminates his employment, then the Executive shall not be entitled to the
      severance payment described in Section 6(b).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    


    (c) In
      the
      event of termination by the Company without Cause, or in the event of the
      Executive's death or disability or a Constructive Termination, any options
      granted to the Executive (including the Option) shall vest immediately and
      may
      be exercised in full or in part within one (1) year from the date of
      termination, the Executive's death or disability, or Constructive Termination.
      The effect of any other termination of the Executive's employment on options
      granted to the Executive shall be the immediate cancellation and forfeiture
      of
      any unexercised portion of the Option (whether or not vested).

     

    (d) For
      the
      purposes of this Agreement, "Cause" shall mean (1) a refusal, failure, or
      inability to perform any reasonable assigned duties; (2) a material breach
      or
      violation of this Agreement; (3) conduct
      by the Executive that constitutes gross negligence or wilful
      misconduct;
      (4)
      material failure to follow AgFeed's or the Company's policies, directives,
      or
      orders applicable to AgFeed or Company employees holding comparable positions;
      (5) intentional destruction or theft of AgFeed or Company property or
      falsifications of AgFeed or Company documents; (6) conviction of a felony or
      any
      crime involving moral turpitude or a misdemeanor where imprisonment in excess
      of
      fifteen (15) days is imposed; or (7) violation of AgFeed's Code of Conduct.
      

     

    (e) For
      the
      purposes of this Agreement, "Constructive Termination" shall mean: (1) material
      reduction by the Company of the scope of the Executive's duties for forty (40)
      consecutive Business Days, (2) a material reduction in the Executive's base
      salary, or (3) the continued assignment to the Executive of any duties
      materially inconsistent with the level of his position with the Company;
      provided that none of the foregoing events shall be deemed to result in a
      Constructive Termination if the Executive consents to such events or if such
      events are the result of actions of the Company or its Board of Directors that
      are applicable to all officers of the Company.

     

    (f) The
      Company may extend the Term of this Agreement for successive two year terms
      so
      long as the Company provides the Executive at least sixty (60) calendar days
      advance written notice prior to the expiration of the Term. 

     

    (g) A
      “Business
      Day”
means
      any day other than (1) a Saturday, Sunday or legal holiday, or (2) a day on
      which commercial banks in Beijing, PRC are authorized or required by law to
      close.

     

    7. Confidential
      Information. In the course of the Executive’s employment with the Company, the
      Executive may become aware of confidential information including, without
      limitation, computer system and software designs, customer lists, market
      research, strategic plans, and other non-public or similar information that
      relates to the business of AgFeed, the Company and their affiliates, investors,
      business partners, customers and/or clients. The Executive will not use or
      disclose any such confidential information of AgFeed, the Company and their
      affiliates, investors, business partners, customers or clients except in the
      course of his duties to AgFeed or the Company or unless ordered to do so by
      a
      court of competent jurisdiction (in which latter case the Executive will
      promptly inform AgFeed or the Company of such order). The Executive will comply
      with AgFeed’s or the Company's policies and procedures for the protection of
      confidential information. Further, the Executive’s obligation not to disclose or
      use such confidential information will continue after the termination of the
      Executive’s employment for whatever reason. Confidential information excludes
      any information which was not obtained from AgFeed or the Company (or a
      director, officer, employee or agent of AgFeed or the Company) or which is
      or
      becomes known by the public or in AgFeed’s or the Company's industry other than
      by a breach by the Executive of a confidentiality obligation to AgFeed and
      the
      Company.

     

    8. Non-Solicitation
      and Non-Compete

     

    (a) The
      Company and the Executive agree that until the Termination Date, the Executive
      shall devote substantially all of his working time to the business and affairs
      of AgFeed and the Company.

     

    (b) The
      Executive agrees that for a period of twelve (12) months following the date
      of
      termination of the Executive’s employment with the Company for any reason (the
“Termination
      Date”),
      the
      Executive will not, and will not assist anyone else to, directly or indirectly
      solicit or induce any of AgFeed or the Company’s employees to terminate their
      employment with AgFeed or the Company or divert, interfere with or take away
      from AgFeed or the Company any person, company or entity which, within the
      six
      month period immediately preceding the Termination Date, was an investor,
      customer, client, supplier, business partner, prime contractor, subcontractor,
      employee or independent contractor of AgFeed or the Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (c) From
      the
      Termination Date and for a period of twelve (12) months thereafter, the
      Executive agrees that he will not, directly or indirectly, as an equity owner,
      director, employee, consultant, lender, agent or in any other capacity, (1)
      engage or participate in, or have any interest in any corporation, entity or
      other person that engages or participates in any actual, contemplated, or
      proposed business or activity engaged or participated in by AgFeed or the
      Company or their subsidiaries on the Termination Date, or (2) engage or
      participate in, or have an interest in any corporation, entity or other person
      that participates in a merger, acquisition or consolidation with AgFeed or
      the
      Company or any of their subsidiaries. 

     

    (d) For
      purposes of Section 8(c), the Executive will be deemed directly or indirectly
      to
      be engaged or participating in the operation of such a business or activity,
      or
      to have an interest in a corporation, entity or other person, if he is a
      proprietor, partner, joint venturer, shareholder, director, officer, lender,
      manager, employee, consultant, advisor or agent or if he, directly or indirectly
      (including as a member of a group), controls all or any part thereof; provided,
      that nothing in Section 8(c) shall prohibit the Executive from holding less
      than
      five percent (5%) of a class of an entity's outstanding securities that are
      listed on a national securities exchange or traded in the over-the-counter
      market.

     

    9. Strategic
      Advisory Consultant. Notwithstanding anything to the contrary contained herein,
      the Company and the Executive agree that the Executive shall not be prohibited
      from accepting a position as a strategic advisory consultant with M2P2, LLC,
      a
      Delaware limited liability company headquartered in Iowa ("M2P2"), which is
      engaged in the pork production industry, whether during or following the
      expiration of the Term of this Agreement. The Company understands and
      acknowledges that, in connection with such strategic advisory position, the
      Executive may become aware of confidential information relating to M2P2 or
      be
      subject to an obligation of confidentiality. The Executive is under no
      obligation to disclose any such confidential information of M2P2 to the Company,
      AgFeed or any of their affiliates, officers, directors, consultants or advisors.
      

     

    10. Binding
      Agreement. This Agreement and all rights of the Executive hereunder shall inure
      to the benefit of and be enforceable by the Executive's personal or legal
      representatives, executors, administrators, successors, heirs, distributes,
      devisees and legatees. If the Executive should die while any amounts would
      still
      be payable to the Executive hereunder if the Executive had continued to live,
      all such amounts, unless otherwise provided herein, shall be paid in accordance
      with the terms of this Agreement to the Executive's devisee, legatee, or other
      designee or, if there be no such designee, to the Executive's estate. This
      Agreement and all rights of the Company hereunder shall inure to the benefit
      of
      and be enforceable to the Company, and its successors and assigns. 

     

    11. Notice.
      For the purposes of this Agreement, notices, demands and all other
      communications provided for in the Agreement shall be in writing and shall
      be
      deemed to have been duly given when delivered or (unless otherwise specified)
      mailed by United States registered mail, return receipt requested, postage
      prepaid, addressed, in the case of the Company, to its principal office, and,
      in
      the case of the Executive, to the Executive's address as shown on the Company's
      records or to such other address as any party may have furnished to the other
      in
      writing in accordance herewith, except that notices of change of address shall
      be effective only upon receipt.

     

    12. Prior
      Agreements. All prior agreements between the Company and the Executive with
      respect to the employment of the Executive are hereby superseded and terminated
      effective as of the date hereof and shall be without further force or effect.
      

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    


    13. Miscellaneous.
      No provisions of this Agreement may be modified, waived or discharged unless
      such waiver, modification or discharge is agreed to in a writing signed by
      the
      Executive and a duly authorized officer of the Company. No waiver by either
      party hereto at any time of any breach by the other party hereto of, or
      compliance with, any condition or provision of this Agreement to be performed
      by
      such other party shall be deemed a waiver of similar or dissimilar provisions
      or
      conditions at the same or at any prior or subsequent time. No agreements or
      representations, oral or otherwise, express or implied, with respect to the
      subject matter hereof have been made by either party which are not set forth
      expressly in this Agreement. 

     

    14. Governing
      Law/Venue. This Agreement shall be governed by and construed under the laws
      of
      the PRC, without regard to that country's conflicts of laws principles.


     

    15. Validity.
      The invalidity or unenforceability of any provision or provisions of this
      Agreement shall not affect the validity or enforceability of any other provision
      of this Agreement, which shall remain in full force and effect. 

     

    16. Severability;
      Headings. If any portion of this Agreement is held invalid or inoperative,
      the
      other portions of this Agreement shall be deemed valid and operative and, so
      far
      as is reasonable and possible, effect shall be given to the intent manifested
      by
      the portion held invalid or inoperative. The paragraph headings herein are
      for
      reference purposes only and are not intended in any way to describe, interpret,
      define or limit the extent of intent of the Agreement or of any part
      hereof.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF,
      the
      parties have executed this Employment Agreement on the date and year first
      above
      written.

     

    COMPANY:

    


    NANCHANG
      BEST ANIMAL HUSBANDRY CO., LTD.,


    


    


    By: /s/
      Songyan Li           

    Name:
      Songyan Li

    Title:
      Chairman

    


    EXECUTIVE:


    


    


    /s/
      Gerard Daignault          

    GERARD
      DAIGNAULT