Exhibit
10.5


 


FORM OF
INDEMNIFICATION AGREEMENT


 


This Indemnification Agreement (this “Agreement”)
is entered into as of
                    
by and between China New Borun Corporation, a Cayman Islands company (the “Company”)
and the undersigned, a [director][officer] of the Company (“Indemnitee”).


 


RECITALS


 


1. The Company recognizes that highly competent
persons are becoming more reluctant to serve corporations as directors or in
other capacities unless they are provided with adequate protection through insurance
or adequate indemnification against risks of claims and actions against them
arising out of their services to the Company.


 


2. The Board of Directors of the Company (the “Board”)
has determined that the inability to attract and retain highly competent
persons to serve the Company is detrimental to the best interests of the
Company and its shareholders and that it is reasonable and necessary for the
Company to provide adequate protection to such persons against risks of claims
and actions against them arising out of their services to the Company.


 


3. The Company and Indemnitee do not regard the
indemnities available under the Company’s current memorandum and articles of
association (the “Articles of Association”) as adequate to protect
Indemnitee against the risks associated with his or her service to the Company.


 


4. The Company is willing to indemnify Indemnitee to
the fullest extent permitted by applicable law, and Indemnitee is willing to
serve and continue to serve the Company on the condition that he or she be so
indemnified.


 


AGREEMENT


 


In consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:


 


I.                      Definitions



 


The following terms shall have the meanings defined
below:


 


Disinterested Director means a
director of the Company who is not and was not a party to the Proceeding in
respect of which indemnification is sought by Indemnitee.


 


Change in Control shall be
deemed to have occurred if, on or after the date of this Agreement, (i) any
“person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other
than (a) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company acting in such capacity; (b) a corporation
owned directly or indirectly by the shareholders of the Company in
substantially the same proportions as their ownership of ordinary shares of the
Company; or (c) any current beneficial shareholder or group, as defined by
Rule 13d-5 of the Exchange Act, including the heirs, assigns and
successors thereof, of beneficial ownership, within the meaning of Rule 13d-3
of the Exchange Act, of securities possessing more than 50% of the total
combined voting power of the Company’s outstanding securities; hereafter
becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing more than 20% of the total combined voting power represented by
the Company’s then outstanding ordinary shares, (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Board and any new director whose election by the Board or
nomination for election by the Company’s shareholders was approved by a vote of
at least two thirds


 

















 


(2/3) of
the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or (iii) the
shareholders of the Company approve a merger or consolidation of the Company
with any other corporation other than a merger or consolidation which would
result in the ordinary shares of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into ordinary shares of the surviving entity) at least 80% of the
total voting power represented by the ordinary shares of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or the
shareholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of (in one
transaction or a series of related transactions) all or substantially all of
the Company’s assets.


 


Expenses shall include
damages, judgments, fines, penalties, settlements and costs, attorneys’ fees
and disbursements and costs of attachment or similar bond, investigations, liabilities,
losses, taxes, any expenses paid or incurred in connection with investigating,
defending, being a witness in, participating in (including on appeal), or
preparing for any of the foregoing in, any Proceeding, and any taxes,
interests, assessments or other charges imposed as a result of the actual or
deemed receipt of any payments under this Agreement.


 


Indemnifiable Event means any
event or occurrence that takes place [either before or] after the execution of
this Agreement, related to the fact that Indemnitee is or was a director or an
officer of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other entity, including services with respect to employee
benefit plans, or was a director or officer of an entity that was a predecessor
of the Company or another entity at the request of such predecessor entity, or
related to anything done or not done by Indemnitee in any such capacity.


 


Independent Counsel means a law
firm, or a member of a law firm, that is experienced in matters of corporation
law and neither presently is, nor in the past five years has been, retained to
represent (i) the Company or Indemnitee in any matter material to either
such party (other than with respect to matters concerning the Indemnitee under
this Agreement, or of other indemnitees under similar indemnification
agreements), or (ii) any other party to the Proceeding giving rise to a
claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent
Counsel” shall not include any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement.


 


Participant means a person
who is a party to, or witness or participant (including on appeal) in, a
Proceeding.


 


Proceeding means any
threatened, pending, or completed action, suit or proceeding, or any inquiry,
hearing or investigation, whether civil, criminal, administrative,
investigative or other, including any appeal thereof, in which Indemnitee may
be or may have been involved as a party or otherwise by reason of an
Indemnifiable Event, including, without limitation, any threatened, pending, or
completed action, suit or proceeding by or in the right of the Company.


 


Reviewing Party means (A) the
Board by a majority vote of a quorum consisting of Disinterested Directors, or (B) if
a quorum of the Board consisting of Disinterested Directors is not obtainable
or, even if obtainable, said Disinterested Directors so direct, Independent
Counsel in a written opinion to the Board, a copy of which shall be delivered
to Indemnitee.


 


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II.                  Agreement
To Indemnify


 


1. General Agreement. In the event Indemnitee
was, is, or becomes a Participant in, or is threatened to be made a Participant
in, a Proceeding, the Company shall indemnify the Indemnitee from and against
any and all Expenses which Indemnitee incurs or becomes obligated to incur in
connection with such Proceeding, to the fullest extent permitted by applicable
law.


 


2. Partial Indemnification. If Indemnitee is
entitled under any provision of this Agreement to indemnification by the
Company for a portion of Expenses, but not for the total amount of Expenses,
the Company shall indemnify the Indemnitee for the portion of such Expenses to
which Indemnitee is entitled.


 


3. Exclusions. Notwithstanding anything in
this Agreement to the contrary, Indemnitee shall not be entitled to
indemnification under this Agreement:


 


(a) to the extent that payment is actually made
to Indemnitee under a valid, enforceable and collectible insurance policy;


 


(b) to the extent that Indemnitee is
indemnified and actually paid other than pursuant to this Agreement;


 


(c) in connection with any Proceeding initiated
by Indemnitee against the Company, any director or officer of the Company or
any other party, and not by way of defense, unless (i) the Company has
joined in or the Reviewing Party (as hereinafter defined) has consented to the
initiation of such Proceeding; or (ii) the Proceeding is one to enforce
indemnification rights under this Agreement or any applicable law;


 


(d) for a disgorgement of profits made from the
purchase and sale by the Indemnitee of securities pursuant to Section 16(b) of
the Exchange Act or similar provisions of any applicable U.S. state statutory
law or common law;


 


(e) for Expenses that have been finally
judicially determined to have resulted from fraud, gross negligence, willful
misconduct or a violation of fiduciary duty of the Indemnitee;


 


(f) for any judgment, fine or penalty which the
Company is prohibited by applicable law from paying as indemnity;


 


(g) arising out of Indemnitee’s personal tax
matter; or


 


(h) arising out of Indemnitee’s breach of an
employment agreement with the Company (if any) or any other agreement with the
Company or any of its subsidiaries.


 


4. No Employment Rights. Nothing in this
Agreement is intended to create in Indemnitee any right to continued employment
with the Company.


 


5. Contribution. If the indemnification
provided in this Agreement is unavailable and may not be paid to Indemnitee for
any reason other than those set forth in Section II. 3, then the Company
shall contribute to the amount of Expenses paid in settlement actually and
reasonably incurred and paid or payable by Indemnitee in such proportion as is
appropriate to reflect (i) the relative benefits received by the Company
on the one hand and by the Indemnitee on the other hand from the transaction
from which such Proceeding arose, and (ii) the relative fault of the
Company on the one hand and of the Indemnitee on the other hand in connection
with the events which resulted in such Expenses, as well as any other relevant
equitable considerations. The relative fault of the Company on the one hand and
of the Indemnitee on the other hand shall be determined by reference to, among
other things, the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent the circumstances resulting in such
Expenses, judgments, fines or settlement amounts. The Company agrees that it
would not be just and equitable if contribution pursuant to this Section II.
5 were determined by pro rata allocation or any other method of allocation
which does not take account of the foregoing equitable considerations.


 


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III.              Indemnification Process


 


1. Notice and Cooperation By Indemnitee.
Indemnitee shall give the Company notice in writing as soon as practicable of
any claim made against Indemnitee for which indemnification will or could be
sought under this Agreement. Notice to the Company shall be given in accordance
with Section VI.7 below. In addition, Indemnitee shall give the Company
such information and cooperation as the Company may reasonably request.


 


2. Indemnification Payment.


 


(a) Advancement
of Expenses. Indemnitee may submit a written request with reasonable
particulars to the Company requesting that the Company advance to Indemnitee
all Expenses that may be reasonably incurred in advance by Indemnitee in
connection with a Proceeding. The Company shall, within 20 business days
of receiving such a written request by Indemnitee, advance all requested
Expenses to Indemnitee. Any excess of the advanced Expenses over the actual
Expenses will be repaid to the Company.


 


(b) Reimbursement
of Expenses. To the extent Indemnitee has not requested any advanced
payment of Expenses from the Company, Indemnitee shall be entitled to receive
reimbursement for the Expenses incurred in connection with a Proceeding from
the Company as soon as practicable after Indemnitee makes a written request to
the Company for reimbursement.


 


(c) Determination
by the Reviewing Party. Notwithstanding the foregoing, (i) the
obligations of the Company under Section II.1 shall be subject to the
condition that the Reviewing Party shall not have determined (in a written
opinion, in any case in which the Independent Counsel referred to in Section III.2(e) hereof
is involved) that Indemnitee would not be permitted to be indemnified under
applicable law or the Company’s Articles of Association, and (ii) the
obligation of the Company to make an advance payment of Expenses to Indemnitee
pursuant to Section III. 2(a) shall be subject to the condition that,
if, when and to the extent that the Reviewing Party determines that Indemnitee
would not be permitted to be so indemnified under applicable law or the Company’s
Articles of Association, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all such amounts
theretofore paid; provided, however, that if Indemnitee has commenced or
thereafter commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee should be indemnified under applicable
law, any determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any advanced
Expenses until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or lapsed). The
Indemnitee’s obligation to reimburse the Company for any advanced Expenses
shall be unsecured and no interest shall be charged thereon. If there has not
been a Change in Control, the Reviewing Party shall be selected by the Board,
and if there has been such a Change in Control (other than a Change in Control
which has been approved by a majority of the Company’s Board who were directors
immediately prior to such Change in Control), the Reviewing Party shall be the
Independent Counsel referred to in Section III. 2(e) hereof.


 


(d) Enforcement
of Indemnification Rights. If there has been no determination by the
Reviewing Party or if the Reviewing Party determines that Indemnitee
substantively would not be permitted to be indemnified in whole or in part
under applicable law, or if Indemnitee has not otherwise been paid in full
within 30 days after a written demand has been received by the Company,
Indemnitee shall have the right to commence litigation in any court having
subject matter jurisdiction thereof and in which venue is proper to recover the
unpaid amount of the demand (an “Enforcement Proceeding”) and, if
successful in whole or in part, Indemnitee shall be entitled to be paid any and
all Expenses in connection with such Enforcement Proceeding. The Company hereby
consents to service of process and to appear in any such proceeding.


 


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(e) Change
in Control. The Company agrees that if there is a Change in Control
of the Company (other than a Change in Control which has been approved by a
majority of the Company’s Board who were directors immediately prior to such
Change in Control) then, with respect to all matters thereafter arising
concerning the rights of Indemnitees to payments of Expenses under this
Agreement or any other agreement or under the Company’s Articles of Association
as now or hereafter in effect, Independent Counsel shall be selected by the
Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld). Such counsel, among other things, shall render its
written opinion to the Company and Indemnitee as to whether and to what extent
Indemnitee would be permitted to be indemnified under applicable law, and the
Company agrees to abide by such opinion. The Company agrees to pay the
reasonable fees of the Independent Counsel referred to above and to fully
indemnify such counsel against any and all expenses (including attorneys’
fees), claims, liabilities and damages arising out of or relating to this
Agreement or its engagement pursuant hereto.


 


3. Assumption of Defense. In the event the
Company is obligated under this Agreement to advance or bear any Expenses for
any Proceeding against Indemnitee, the Company shall be entitled to assume the
defense of such Proceeding, with counsel approved by Indemnitee, upon delivery
to Indemnitee of written notice of its election to do so. After delivery of
such notice, approval of such counsel by Indemnitee in writing and the
retention of such counsel by the Company, the Company will not be liable to
Indemnitee under this Agreement for any fees of counsel subsequently incurred
by Indemnitee with respect to the same Proceeding, unless (i) the
employment of counsel by Indemnitee has been previously authorized by the
Company, (ii) Indemnitee shall have reasonably concluded that, based on
written advice of counsel, there may be a conflict of interest of such counsel
retained by the Company between the Company and Indemnitee in the conduct of
any such defense, or that counsel selected by the Company may not be adequately
representing Indemnitee, or (iii) the Company ceases or terminates the
employment of such counsel with respect to the defense of such Proceeding, in
any of which events the fees and expenses of Indemnitee’s counsel shall be at
the expense of the Company. At all times, Indemnitee shall have the right to
employ counsel in any Proceeding at Indemnitee’s expense.


 


4. Defense to Indemnification, Burden of Proof
and Presumptions. It shall be a defense to any action brought by Indemnitee
against the Company to enforce this Agreement that it is not permissible under
this Agreement or applicable law for the Company to indemnify the Indemnitee
for the amount claimed. In connection with any such action or any determination
by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be
indemnified under this Agreement, the burden of proving such a defense or
determination shall be on the Company. Neither the failure of the Reviewing
Party or the Company to have made a determination prior to the commencement of
such action by Indemnitee that indemnification is proper under the
circumstances because Indemnitee has met the standard of conduct set forth in
applicable law, nor an actual determination by the Reviewing Party or the
Company that Indemnitee had not met such applicable standard of conduct shall
be a defense to the action or create a presumption that Indemnitee has not met
the applicable standard of conduct.


 


5. No Settlement Without Consent. Neither
party to this Agreement shall settle any Proceeding in any manner that would
impose any damage, loss, penalty or limitation on Indemnitee without the other
party’s written consent. Neither the Company nor Indemnitee shall unreasonably
withhold its consent to any proposed settlement.


 


6. Company Participation. Subject to Section II.5,
the Company shall not be liable to indemnify the Indemnitee under this
Agreement with regard to any judicial action if the Company was not given a
reasonable and timely opportunity, at its expense, to participate in the
defense, conduct and/or settlement of such action.


 


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IV.             Director and Officer
Liability Insurance


 


1. Liability Insurance. The Company shall
obtain and maintain a policy or policies of insurance with reputable insurance
companies providing the officers and directors of the Company with coverage for
losses incurred in connection with their services to the Company or to ensure
the Company’s performance of its indemnification obligations under this
Agreement. To the extent the Company determines that it is no longer
practicable for the Company to maintain such insurances, it shall notify
promptly its directors and officers before it terminates such insurances and
such termination must be approved by the majority of the Company’s directors.


 


2. Coverage of Indemnitee. To the extent the
Company maintains an insurance policy or policies providing directors’ and
officers’ liability insurance, Indemnitee shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent of the
coverage available for any of the Company’s directors or officers.


 


3. No Obligation. Notwithstanding the
foregoing, the Company shall have no obligation to obtain or maintain any
director and officer insurance policy if a majority of the Company’s directors
determines in good faith that such insurance is not reasonably available in the
case that (i) premium costs for such insurance are disproportionate to the
amount of coverage provided, (ii) the coverage provided by such insurance
is limited by exclusions so as to provide an insufficient benefit, or (iii) Indemnitee
is covered by similar insurance maintained by a parent or subsidiary of the
Company.


 


V.                 Non-Exclusivity;
Federal Preemption; Term


 


1. Non-Exclusivity. The indemnification
provided by this Agreement shall not be deemed exclusive of any rights to which
Indemnitee may be entitled under the Articles of Association, any vote of
shareholders or directors, applicable law or any written agreement between
Indemnitee and the Company (including its subsidiaries and affiliates). The
indemnification provided under this Agreement shall continue to be available to
Indemnitee for any action taken or not taken while serving in an indemnified
capacity even though he or she may have ceased to serve in any such capacity at
the time of any Proceeding.


 


2. Federal Preemption. Notwithstanding the
foregoing, both the Company and Indemnitee acknowledge that in certain
instances, U.S. federal law or public policy may override applicable law and
prohibit the Company from indemnifying its directors and officers under this
Agreement or otherwise. Such instances include, but are not limited to, the
U.S. Securities and Exchange Commission’s prohibition on indemnification for
liabilities arising under certain U.S. federal securities laws. Indemnitee
understands and acknowledges that the Company has undertaken or may be required
in the future to undertake with the SEC to submit the question of indemnification
to a court in certain circumstances for a determination of the Company’s right
under public policy to indemnify Indemnitee.


 


3. Duration of Agreement. All agreements and
obligations of the Company contained herein shall continue during the period
Indemnitee is an officer and/or a director of the Company (or is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise) and
shall continue thereafter so long as Indemnitee shall be subject to any
Proceeding by reason of his or her former or current capacity at the Company or
any other enterprise, including service with respect to employee benefit plans)
at the Company’s request, whether or not he or she is acting or serving in any
such capacity at the time any Expense is incurred for which indemnification can
be provided under this Agreement. This Agreement shall continue in effect
regardless of whether Indemnitee continues to serve as an officer and/or a
director of the Company or any other enterprise at the Company’s request.


 


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VI.             Miscellaneous


 


1. Amendment of this Agreement. No
supplement, modification, or amendment of this Agreement shall be binding
unless executed in writing by the parties hereto. No waiver of any of the
provisions of this Agreement shall operate as a waiver of any other provisions
(whether or not similar), nor shall such waiver constitute a continuing waiver.
Except as specifically provided in this Agreement, no failure to exercise or
any delay in exercising any right or remedy shall constitute a waiver.


 


2. Subrogation. In the event of payment to
Indemnitee by the Company under this Agreement, the Company shall be subrogated
to the extent of such payment to all of the rights of recovery of Indemnitee,
who shall execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such documents
necessary to enable the Company to bring suit to enforce such rights.


 


3. Assignment; Binding Effect. Neither this
Agreement nor any of the rights or obligations hereunder may be assigned by
either party hereto without the prior written consent of the other party;
except that the Company may, without such consent, assign all such rights and
obligations to a successor in interest to the Company which assumes all
obligations of the Company under this Agreement in a written agreement in form
and substance satisfactory to Indemnitee. Notwithstanding the foregoing, this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by and against the parties hereto and the Company’s successors (including any
direct or indirect successor by purchase, merger, consolidation, or otherwise
to all or substantially all of the business and/or assets of the Company) and
assigns, as well as Indemnitee’s spouses, heirs, and personal and legal
representatives.


 


4. Severability and Construction. Nothing in
this Agreement is intended to require or shall be construed as requiring the
Company to do or fail to do any act in violation of applicable law. The Company’s
inability, pursuant to a court order, to perform its obligations under this
Agreement shall not constitute a breach of this Agreement. In addition, if any
portion of this Agreement shall be held by a court of competent jurisdiction to
be invalid, void, or otherwise unenforceable, the remaining provisions shall
remain enforceable to the fullest extent permitted by applicable law. The
parties hereto acknowledge that they each have opportunities to have their
respective counsels review this Agreement. Accordingly, this Agreement shall be
deemed to be the product of both of the parties hereto, and no ambiguity shall
be construed in favor of or against either of the parties hereto.


 


5. Counterparts. This Agreement may be
executed in two counterparts, both of which taken together shall constitute one
instrument.


 


6. Governing Law. This agreement and all acts
and transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of New York, U.S.A., without giving effect to conflicts of law
provisions thereof.


 


7. Notices. All notices, demands, and other
communications required or permitted under this Agreement shall be made in
writing and shall be deemed to have been duly given if delivered by hand,
against receipt, on the date of delivery, or mailed, on the third business day
after mailing, postage prepaid, certified or registered mail, return receipt
requested, and addressed to the Company at:


 


China New Borun Corporation


Bohai Industrial Park (Yangkou Town)


Shouguang, Shandong 262715, PR China


Attention: Mr. Jinmiao Wang


 


and to Indemnitee at:


 


[Name]


[Address]


 


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[Address]


[Address]


 


Notice of change of address shall be effective only
when done in accordance with this Section.


 


8. Certain Relationships. The obligations and
rights created under this Agreement shall not be affected by any amendment to
the Company’s Articles of Association or any other agreement or instrument to
which Indemnitee is not a party, and shall not diminish any other rights which
Indemnitee now or in the future has against the Company or any other person or
entity.


 


9. Acknowledgment. The Company expressly
acknowledges that it has entered into this Agreement and assumed the
obligations imposed on the Company under this Agreement in order to induce
Indemnitee to serve or to continue to serve as a director or officer and
acknowledges that Indemnitee is relying on this Agreement in serving or
continuing to serve in such capacity. The Company further agrees to stipulate
in any court proceeding that the Company is bound by all of the provisions of
this Agreement.


 


10. Period of Limitations. No legal action
shall be brought and no cause of action shall be asserted by or in the right of
the Company against Indemnitee, or Indemnitee’s estate, heirs, executors,
administrators or personal or legal representatives after the expiration of two
years from the date of accrual of such cause of action, and any claim or cause
of action of the Company shall be extinguished and deemed released unless
asserted by the timely filing of a legal action within such two-year period;
provided, however, that if any shorter period of limitations is otherwise
applicable to any such cause of action, such shorter period shall govern.


 


11. Entire Agreement. This Agreement
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.


 


(Signature page follows)


 


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IN
WITNESS WHEREOF, the parties hereto execute this Agreement as of the date first
written above.


 


COMPANY


 


CHINA
NEW BORUN CORPORATION


 


 


	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
   

  
	
  INDEMNITEE

  
	
   

  
	
   

  
	
   

  
	
  Name:

  



 


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