Unassociated Document


    Exhibit
10.1

     

    


     

     

    Equity
Purchase Agreement

     

    by and
among

     

    Heilongjiang Feihe Dairy Co., Limited
and

    Jinyan
Ma

    (collectively, “Sellers”)

     

    and

     

    Haerbin
City Ruixinda Investment Company Ltd.

    (“Purchaser”)

     

    in
relation to

     

    Heilongjiang Feihe Kedong Feedlots
Co., Limited and

    Heilongjiang
Feihe Gannan Feedlots Co., Limited

    (collectively,
“Companies”)

     

    


    


    


    


    


    
 

    August
1, 2011


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    CONTENTS

     

    
      
        	
                Article
      I Definitions

              	
                3

              
	 
      	 
      
	
                Article
      II Sale and Purchase of Equity Interest, Consideration;
      Closing

              	
                5

              
	 
      	 
      
	
                Article
      III Seller’s Representations and Warranties relating to
      Sellers

              	
                6

              
	 
      	 
      
	
                Article
      IV Seller’s Statements and Warranties about Companies

              	
                7

              
	 
      	 
      
	
                Article
      V Purchaser’s Representations and Warranties

              	
                8

              
	 
      	 
      
	
                Article
      VI Covenants

              	
                9

              
	 
      	 
      
	
                Article
      VII Closing Conditions

              	
                11

              
	 
      	 
      
	
                Article
      VIII Indemnification

              	
                12

              
	 
      	 
      
	
                Article
      IX Termination

              	
                13

              
	 
      	 
      
	
                Article
      X Miscellaneous

              	
                14

              
	 
      	 
      
	
                Appendix
      1:Raw
      Milk Exclusive Supply Agreement

              	
                20

              
	 
      	 
      
	
                Appendix
      2:Asset
      Mortgage Agreement

              	
                21

              


      



      
        
           


        

        
          1

          
            

          

        

        
           


        

      



    EQUITY
PURCHASE AGREEMENT

     

     

    This
EQUITY PURCHASE
AGREEMENT (the “Agreement”) is entered into as
of August 1, 2011 by and among:

     

    Heilongjiang Feihe Dairy Co.,
Limited, a wholly foreign owned enterprise duly organized and existing
under the Laws of the People’s Republic of China (the “PRC” or “China”) with the registered
address at Kedong County, Qiqihaer City, Heilongjiang Province, China, and Leng
Youbin as its legal representative (“Feihe”);

     

    Jinyan Ma, a PRC Citizen with
the PRC identification card number 232602196306223619 and residence at group 8,
Wei 1,Qingxiang Street, Kedong town, Kedong Country, Heilongjiang Province,
PRC  (Jinyan Ma and Feihe are hereinafter collectively referred to as
“ Sellers”);

     

    Haerbin City Ruixinda Investment
Company Ltd., a limited liability company duly organized and existing
under the Laws of the PRC, with its registered address at Room B505,3#
Kegongmao, Yellow River Road, Nangang District, Haerbin, registration number is
230100100046085(1-1) and its legal representative is Shuxia Li (“Purchaser”);

     

    Heilongjiang Feihe Kedong Feedlots
Co., Limited, a limited liability company duly organized and existing
under the Laws of the PRC, with its registered Capital being RMB76,520,000
(capital contribution by Feihe is RMB74,620,000; capital contribution by Jinyan
Ma is RMB1,900,000), registered address at Qingxiang Street, Kedong town, Kedong
country, Heilingjiang Province, registration number being 230230100000170 and
Jinyan Ma as its legal representative (“Feihe Kedong”)

     

    Heilongjiang Feihe Gannan Feedlots
Co., Limited, a limited liability company duly organized and existing
under the Laws of the PRC with its registered Capital being RMB38,000,000
(capital contribution by Feihe is RMB36,100,000; capital contribution by Jinyan
Ma is RMB1,900,000), registered address at Fanrong Street, Gannan country,
Heilingjiang Province, registration number being 230225100005848 and Jinyan Ma
as its legal representative (“Feihe Gannan”, Feihe Gannan
and Feihe Kedong are hereinafter collectively referred to as “Companies”).

     

    Each of
Purchaser, Sellers and the Companies is referred to herein individually as a
“Party”, and
collectively as the “Parties”.

     

    RECITALS

     

    WHEREAS, Sellers collectively own
legally and beneficially all of the outstanding share capital of the Companies
as more specifically set forth in Schedule I attached
hereto (“Equity
Interests”);

     


    
      
         


      

      
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    WHEREAS, Sellers desire to
sell to Purchaser, and Purchaser desires to purchase from Sellers, 100% of the
outstanding Equity Interests of the Companies for the Cash Consideration and
upon the terms and conditions set forth herein.

     

    NOW, THEREFORE, in consideration of
the premises and the mutual covenants and agreements hereinafter contained and
other good and valuable consideration, the adequacy of which is hereby
acknowledged, the Parties hereby agree as follows:

     

    ARTICLE
I

    DEFINITIONS

    


    1.1           Certain definitions.
For purposes of this Agreement, the following terms shall have the meanings
specified in this Article 1.1:

     

    “Affiliate” means, with respect
to any Person, any other Person that, directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such Person, and the term “control” (including the terms
“controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities, by contract or otherwise.

     

    “AIC” means the State
Administration for Industry and Commerce of the PRC and its local
counterparts.

     

    “Beijing Arbitration
Commission” means the Arbitration Commission of Beijing (“北京市仲裁委员会”).

     

    “Business Day” means any day of
the year on which national banking institutions in China are open to the public
for conducting business and are not required or authorized to
close.

     

    “Closing” has the meaning
ascribed to it in Article 2.2.

     

    “Closing Date” has the meaning
ascribed to it in Article 2.2.

     

    “Contract” means any written
contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease,
or license.

     

    “Company Contracts” means any
written contract, agreement, indenture, note, bond, mortgage, loan, instrument,
lease, or license relating to the Companies under this Agreement.

     

    “Governmental Body” means any
government or governmental or regulatory body thereof, or political subdivision
thereof, whether central, provincial, local or foreign, or any agency,
instrumentality or authority thereof, or any court or arbitrator (public or
private).

     


    
      
         


      

      
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    “Liability” means any debt,
liability or obligation (whether direct or indirect, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, or due or to become due) and
including all costs and expenses relating thereto.

     

    “Law” means any foreign,
central government, provincial government or local law, statute, code,
ordinance, rule or regulation.

     

    “Lien” means any lien,
encumbrance, pledge, mortgage, deed of trust, security interest, claim, lease,
charge, option, right of first refusal, easement, servitude or transfer
restriction.

     

    “Order” means any order,
injunction, judgment, decree, ruling, writ, assessment or arbitration award of a
Governmental Body.

     

    “Ordinary Course of Business”
means the ordinary and usual course of normal day-to-day operations of the
Companies and their Subsidiaries.

     

    “Permits” means any approvals,
authorizations, consents, licenses, permits or certificates of a Governmental
Body.

     

    “Person” means any individual,
corporation, partnership, limited liability company, firm, joint venture,
association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.

     

    “PRC” means the People’s
Republic of China, which for purposes of this Agreement does not include the
Hong Kong Special Administrative Region, Macao Special Administrative Region or
Taiwan.

     

    “Purchaser Documents” means any written
contract, agreement, indenture, note, bond, mortgage, loan, instrument, lease,
or license relating to Purchaser under this Agreement.

     

    “Seller Documents” means any
written contract, agreement, indenture, note, bond, mortgage, loan, instrument,
lease, or license relating to Sellers under this Agreement.

     

    1.2           Other Definitional and
Interpretive Matters.  Unless otherwise expressly provided, for
purposes of this Agreement, the following rules of interpretation shall
apply:

     

    (a)           Calculation of Time
Period.  When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating such period
shall be excluded.  If the last day of such period is a non-Business
Day, the period in question shall end on the next succeeding Business
Day.

     

    (b)           Currency.  Any
reference in this Agreement to RMB shall mean the lawful currency of the
PRC.  Any reference in this Agreement to US$ or Dollar shall mean the
lawful currency of the United States of America.

     


    
      
         


      

      
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    (c)           Exhibits/Schedules.  The
Exhibits and Schedules to this Agreement are hereby incorporated and made a part
hereof and are an integral part of this Agreement.  All Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein.  If the
terms are used but not otherwise defined in any Exhibit and Schedule, such terms
shall be interpreted according to the definitions herein.

     

    1.3           The
Parties have participated jointly in the negotiation and drafting of this
Agreement and, in the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as jointly drafted by the Parties and
no presumption or burden of proof shall arise favoring or disfavoring any Party
by virtue of the authorship of any provision of this Agreement.

     

    ARTICLE
II

    SALE
AND PURCHASE OF EQUITY INTERESTS, CONSIDERATION; CLOSING

    


    2.1           Sale and Purchase of Equity
Interests.  Upon the terms and subject to the conditions
contained herein, Sellers agree to sell to Purchaser, free and clear of any and
all Liens, and Purchaser agrees to purchase from Sellers, the Equity
Interests.

     

    2.2           Cash
consideration.  The aggregate consideration to be paid by
Purchaser to Sellers for the Equity Interests shall be RMB849,025,724.57 payable
in cash (the “Cash
Consideration”).  Calculation of Cash Consideration has taken
into account of (i) the sum of the registered capital of Companies being
RMB114,520,000; (ii) debts the Companies owed to Feihe at the amount of
RMB734,505,724.57.  The Parties agree that Purchaser shall pay the
Cash Consideration in the following manner:

     

    (a)           Upon
the earlier of: (i) completion by Purchaser of due diligence on the Companies or
(ii) the date that is sixty (60) days upon execution of this Agreement,
Purchaser shall pay RMB114,520,000 (“Initial Payment”) to
Sellers.  The Initial Payment that Feihe and Jinyan Ma are entitled to
receive are calculated in accordance with the proportion of their respective
equity in the Companies as set forth in Schedule 1
(RMB110,720,000 shall be paid to Feihe, and RMB3800,000 shall be paid to Jinyan
Ma).

     

    (b)           Within
three (3) Business Days after Purchaser makes the Initial Payment to Sellers,
Purchase and Sellers shall submit application to amend the registration with AIC
in Kedong County and Gannan Tietan Autonomous Region respectively in relation to
the sale and purchase of Equity Interests contemplated hereunder (“Closing”, the date for
completion of the registration amendment above is considered as “Closing Date”).

     

    (c)           The
Parties agreed that the remaining payment of RMB734,505,724.57 (“Second Payment”) is considered
as a loan extended to Purchaser by Feihe; unless the payment obligations of the
Companies have been fulfilled in accordance with Article 2.2(d), otherwise the
loan, after deducting any amount has been paid to Feihe by the Companies, shall
be paid back by the Purchaser by the end of the 18th month after the Closing
Date, together with a compounded 5% annual interest starting from the date of
any breach of the Second Payment obligation.  The repayment of the
loan to Feihe under this Article 2.2(c) is in addition to any other remedy that
Feihe may have under this Agreement.

     


    
      
         


      

      
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    (d)           The
Sellers and Companies hereby agree that Purchaser transfers its obligation of
the Second Payment to the Companies immediately after the Closing Date; and
Purchaser shall procure the Companies to provide Feihe raw milk valued at
RMB122,417,620.76 each quarter (for Feihe Gannan, raw milk valued at
RMB72,066,908 per quarter; for Feihe Kedong, raw milk valued at RMB50,350,712.76
per quarter) in the following 18 months immediately after the Closing
Date.  If the value of the raw milk provided by the Companies each
quarter is less than RMB122,417,620.76, the Companies shall severally and
jointly make up the shortfall to Feihe in cash immediately
thereafter.

     

    (e)           Sellers’
bank account information are as follows:

    


    Feihe:

    Account
holder: Heilongjiang Feihe Diary Co., Ltd.

    Name of
bank: China Construction Bank, Keshan Branch

    Account
number: [___]

    


    Jinyan
Ma:

    Account
holder: [___]

    Name of
bank: [___]

    Account
number: [___]

    


    (f)           By
the time the Parties apply for the registration amendment of sale and purchase
of Equity Interests with AIC, the Parties shall sign applicable equity purchase
agreements in a format as requested by the AIC.  However, such
agreements should be in accordance with the intention of this Agreement and this
Agreement shall prevail among the Parties.

     

    2.3           Payment of the cash
consideration.

     

    (a)           Purchaser
shall pay Sellers the Initial Payment and the Second Payment in accordance with
Article 2.2.

     

    (b)           Sellers
shall provide bank details to Purchaser after this Agreement is signed, so that
the Purchaser can manage the Initial Payment to Sellers in accordance with
Article 2.2(a).  Immediately following the receipt of the Initial
Payment, Sellers shall on the even date issue a letter of confirmation to
Purchaser (“Initial Payment
Confirmation”).

     

    (c)           Feihe
shall at each quarter issue a letter of confirmation to Purchaser (“Second Payment Installment
Confirmation”) on the even date of receiving the raw milk valued at
RMB122,417,620.76 from the Companies.

     


    
      
         


      

      
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    (d)           Initial
Payment Confirmation and Second Payment Installment Confirmation shall be the
final and conclusive evidence that the Purchaser has fulfilled its payment
obligation hereunder.

     

     ARTICLE III

    SELLERS’ REPRESENTATIONS AND WARRANTIES
RELATING TO SELLERS

    


    Sellers
hereby jointly and severally represent to Purchaser that:

     

    3.1           Organization and Good
Standing.  Feihe is a limited liability company duly organized,
validly existing and in good standing under the laws of PRC, and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business.  Jinyan Ma is a natural person with full civil
rights and civil capacity under laws of PRC.

    


    3.2           Execution, Authorization and
Validity.  Each of the Sellers has full legal power and
authorization to execute and deliver this Agreement and each other agreement,
document, or instrument or certificate to be delivered by such Seller as
contemplated by this Agreement or to be executed by such Seller in connection
with the consummation of the transactions contemplated by this Agreement
(the “Seller
Documents”), to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby.  This
Agreement and the Seller Documents have been duly and validly executed and
delivered by each of the Sellers and, assuming due authorization, execution and
delivery by the Purchaser, constitute a legal, valid and binding obligation of
such Seller, enforceable against it in accordance with its terms.

     

    3.3           Conflicts; Consents of Third
Parties.

     

    (a)           None
of the execution and delivery by either of the Sellers of this Agreement or
Seller Documents, the consummation of the transactions contemplated hereby or
thereby, or compliance by such Seller with any of the provisions hereof or
thereof will conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination or cancellation under any provision of (i) articles of
association of Sellers, or any similar organization files (ii) any Contract, or
Permit to which such Seller is a party or by which any of the properties or
assets of such Seller are bound; (iii) any Order of any Governmental Body
applicable to such Seller or by which any of the properties or assets of such
Seller are bound; or (iv) any applicable Law, except in each case where such
Contracts, Orders or applicable Law are adopted or otherwise take effect after
the Closing or where such violation or default arises from actions or omissions
by any Person other than such Seller.

     

    (b)           No
consent, waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any Person or Governmental Body is
required on the part of either of the Sellers in connection with the execution
and delivery of this Agreement, the Seller Documents, the compliance by such
Seller with any of the provisions hereof or thereof, or the consummation of the
transactions contemplated hereby or thereby.

     


    
      
         


      

      
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    3.4           Ownership and Transfer of
Equity Interests.  Sellers are the true and lawful owners of
the Equity Interests, free and clear of any Liens.  Sellers have the
right and capacity to sell, transfer, assign and deliver such Equity Interests
as provided in this Agreement, and such delivery will convey to Purchaser the
good and marketable Equity Interests, free and clear of any Liens.

     

    ARTICLE
IV

    SELLERS’ REPRESENTATIONS AND WARRANTIES
RELATING TO THE COMPANIES

    


    Sellers
hereby jointly and severally represent to Purchaser that:

     

    4.1           Organization and Good
Standing.  The Companies both are limited liability companies
duly organized in substance and procedure in accordance with the laws of the
PRC, validly existing and in good standing under the laws of the PRC and have
all requisite power and authority to own, lease and operate their properties and
to carry on their business as now conducted and as currently proposed to be
conducted.

     

    4.2           Authorization of
Agreement.  The Companies have all requisite power, authority
and legal capacity to execute and deliver this Agreement and each agreement,
document, or instrument or certificate to be delivered by the Companies as
contemplated by this Agreement or to be executed by the Companies in connection
with the transactions contemplated by this Agreement (the “Company Documents”), to
perform their obligations under this Agreement and the Company Documents and to
consummate the transactions contemplated hereby and thereby.  The
Companies have taken all required actions to authorize and approve the
execution, delivery and performance of this Agreement and each of the Company
Documents and the consummation of the transactions contemplated hereby and
thereby.

     

    4.3           Conflicts; Consents of Third
Parties.  None of the execution and delivery by the Companies
of this Agreement or the Company Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by the Companies with any of the
provisions hereof or thereof will conflict with, or result in any violation or
breach of, conflict with or default (with or without notice or lapse of time, or
both) of (i) the articles of association; (ii) any Contract, or Permit
to which each of the Companies is a party or by which any of the properties or
assets of such Company is bound; (iii) any Order applicable to the Companies or
any of their properties or assets; or (iv) any applicable Law.

     

    4.4           Capitalization.  The
registered capitals with respect to all of the Equity Interests in the Companies
have been fully paid up.  Such Equity Interests were issued to Sellers
not in violation of any purchase or call option, right of first refusal,
subscription right, preemptive right or any similar rights.  All of
the Equity Interests in the Companies are owned of record by
Sellers.

     


    
      
         


      

      
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    4.5           Corporate
Records.  The Companies have delivered to Purchaser true,
correct, current and complete copies of their business licenses and articles of
association or comparable organizational documents of the Companies or any of
their Subsidiaries in each case as amended and in effect on the due date hereof,
including all amendments thereto.

     

    ARTICLE
V

    REPRESENTATIONS
AND WARRANTIES OF PURCHASER

    


    Purchaser
hereby makes to Sellers the representations and warranties as
follows:

    


    5.1           Organization and Good
Standing.  Purchaser is a company duly established, validly
existing and in good standing under the RPC laws and has all requisite corporate
power and authority to own, lease and operate properties and carry on its
business.

     

    5.2           Authorization of
Agreement.  Purchaser has full requisite power, authority and
legal capability to execute and deliver this Agreement, and each other
agreement, document, instrument or certificate to be delivered by Purchaser as
contemplated by this Agreement or to be executed by Purchaser in connection with
the consummation of the transactions contemplated hereby and thereby (the “Purchaser Documents”), and to
consummate the transactions contemplated hereby and
thereby.  Purchaser has taken all requisite actions to duly authorize
and approve the execution, delivery and performance by Purchaser of this
Agreement, and each Purchaser Documents and the consummation of the transactions
contemplated hereby and thereby.  This Agreement and the Purchaser
Documents have been duly and validly executed and delivered by Purchaser and,
assuming due authorization, execution and delivery by the Companies and Sellers,
constitutes a legal, valid and binding obligation of Purchaser, enforceable
against it in accordance with their respective terms.

     

    5.3           Conflicts; Consents of Third
Parties.

     

    (a)           None
of the execution and delivery by Purchaser of this Agreement and the Purchaser
Documents, the consummation of the transactions contemplated hereby or thereby,
or the compliance by Purchaser with any of the provisions hereof or thereof will
conflict with, or result in violation of or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination or
cancellation under any provision of (i) the articles of association or
comparable organizational documents of Purchaser; (ii) any Contract or
Permit to which Purchaser is a party or by which any of the properties or assets
of Purchaser is bound; (iii) any Order of any PRC or foreign Governmental Body
applicable to Purchaser or by which any of the properties or assets of Purchaser
is bound; or (iv) any applicable Law, except in each case where such
organizational documents, Contracts, Permits, Orders or applicable Law are
adopted or otherwise take effect after the Closing or where such violation or
default arises from actions or omissions by any Person other than
Purchaser.

     

    (b)           No
consent, waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any Person or Governmental Body is required on
the part of Purchaser in connection with the execution and delivery of this
Agreement or the Purchaser Documents or the compliance by Purchaser with any of
the provisions hereof or thereof.

     


    
      
         


      

      
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    ARTICLE
VI

    COVENANTS

    


    6.1           Conduct of the Business
Prior to the Closing.

     

    Prior to
the Closing, except as otherwise contemplated by this Agreement or with the
prior written consent of Purchaser (which consent shall not be unreasonably
withheld, delayed or conditioned), the Companies shall (and shall cause its
Subsidiaries to):

     

    (a)           conduct
the respective businesses of the Companies and their Subsidiaries only in the
Ordinary Course of Business;

     

    (b)           use
their commercially reasonable efforts to (A) preserve the present business
operations, organization and goodwill of the Companies and their Subsidiaries,
and (B) preserve the present relationships with customers and suppliers of the
Companies and their Subsidiaries;

     

    (c)           maintain
all of the assets and properties of, or used by, the Companies and their
Subsidiaries in their current condition, ordinary wear and tear
excepted;

     

    (d)           comply
with all material respects with all applicable Laws, including regulation of
quality control and safety instructions; and

     

    (e)           not
transfer, issue, sell or dispose of any shares of capital stock or other
securities of the Companies.

     

    6.2           Conduct of Business after
the Closing

     

    After the
Closing, except with the prior written consent of Feihe, the Companies shall
(and shall cause their Subsidiaries to):

     

    (a)           conduct
the respective businesses of the Companies and their Subsidiaries only in the
Ordinary Course of Business;

     

    (b)           maintain
the Companies conduct their ordinary business, organization and
reputation;

     

    (c)           maintain
the existing relationship between the clients and suppliers of the Companies, in
order to fulfill obligations to provide raw milk to Feihe according to this
Agreement;

     

    (d)           maintain
all of the assets and properties of, or used by, the Companies and their
Subsidiaries in their current condition, ordinary wear and tear
excepted;

     


    
      
         


      

      
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    (e)           comply
with all material respects with all applicable Laws, including regulation of
quality control and safety instructions; and

     

    (f)           the
Companies shall not transfer, issue, sell or dispose of any shares of capital
stock or other securities of the Companies.

     

    6.3           PRC Governmental Consents
and Approvals.  Unless otherwise provided herein, the Parties
shall each use their best efforts to obtain at the earliest practical date such
consents, waivers, approvals, Orders, Permits, authorizations and declarations
from, make all filings with, and provide all notices to, all Governmental Bodies
which are required to consummate, or are required in connection with, the
transactions contemplated by this Agreement.

     

    6.4           Financial
supervision.  Mr. Shenghui Liu shall be appointed as the
Companies’ financial supervisor immediately after the Closing Date; Mr. Shenghui
Liu shall have all the right to review and to inspect the financial statements
as well as any other financial matters of the Companies.  Sellers
shall have the right to replace Mr. Shenghui Liu and make new appointment of
this position.  Purchaser and the Companies shall consent and
cooperate without any conditions.

     

    6.5           Directors.  Sellers
have the right to reserve one director in each of the Companies (“Supervision
Director”).  Mr. Hua Liu shall be appointed as Supervision
Director of each of the Companies.  Sellers have the exclusive right
to remove this Supervision Director.  Purchaser and the Companies
shall consent and coordinate the relevant documentations without any
conditions.  The Companies shall need approval of the Supervision
Director with respect to the following matters:

     

    (a)           each
of the Companies’ assets disposition, external investment, loans, deposit,
warranty and guarantees over the amount of RMB 100,000;

     

    (b)           contracts
above the amount of RMB 100,000 each of the Companies will conclude;
and

     

    (c)           any
other matters may influence the Companies to fulfill their payment and exclusive
raw milk supply obligations under this Agreement.

     

    6.6           During
the period before the Closing Date and the full receipt of the equity purchase,
Mr. Shenghui Liu shall have the right to keep the following subjects, the usage
of which will need the signature of Mr. Shenghui Liu:

     

    (a)           the
companies’ stamps including but not limited to seal, financial seal, contract
seal;

     

    (b)           bank
accounts’ signature cards, internet login passwords of the
Companies;

     

    (c)           the
Companies’ important documentations including but not limited to Tax
Registration Certificates, bank accounts opening permits, organization code
certificates and credit cards; and

     

    (d)           financial
and accounting books and other books of the Companies.

     


    
      
         


      

      
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    ARTICLE
VII

    CONDITIONS
TO CLOSING

    


    7.1           Conditions Precedent to
Obligations of Purchaser.  The obligation of Purchaser to
consummate the transactions contemplated by this Agreement is subject to the
fulfillment, on or prior to the Closing Date, of each of the conditions
precedent (any or all of which may be waived by Purchaser in whole or in part to
the extent permitted by applicable law):

     

    (a)           the
representations and warranties of the other Parties set forth hereunder in
Articles III and IV shall be true and correct in all material respects as of the
date hereof; and

     

    (b)           there
shall not be in effect any Order by a Governmental Body of competent
jurisdiction restraining, enjoining or otherwise prohibiting the consummation of
the transactions contemplated hereby.

     

    7.2           Conditions Precedent to
Obligations of Sellers.  The obligations of Sellers to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the conditions
precedent (any or all of which may be waived by Sellers in whole or in part to
the extent permitted by applicable Law);

     

    (a)           this
Agreement has been duly signed by the Parties;

     

    (b)           Purchaser
shall have paid the Initial Payment;

     

    (c)           in
order to fulfill the Second Payment, the Companies and Sellers shall have signed
the Raw Milk Exclusive Supply Agreement (attached hereto as Appendix
1); Purchaser and the Companies shall have signed the Asset Mortgage
Agreement (attached hereto as Appendix 2) in respect of their respectively owned
assets with Feihe; and the related  mortgage registration shall have
been completed;

     

    (d)           the
representations and warranties of Purchaser hereunder in Article V shall be true
and correct as of the Closing Date;

     

    (e)           the
other Parties have performed and complied with all obligations and agreements
required hereunder to be performed or complied with by them on or prior to the
Closing Date; and

     

    (f)           no
legal proceedings shall have been instituted or threatened or claim or demand
made against any Party or any of her/his/its Affiliates, seeking to restrain or
prohibit, or to obtain substantial damages with respect to, the consummation of
the transactions contemplated hereby, and there shall not be in effect any Order
by a Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated
hereby.

     


    
      
         


      

      
        12

        
          

        

      

      
         


      

    


     

    ARTICLE
VIII

    INDEMNIFICATION
FOR BREACH OF CONTRACT

     

    8.1           Survival of Representations
and Warranties.  The representations and warranties of the
Parties contained in this Agreement, any certificate delivered pursuant hereto
or any Seller Documents, Company Documents or Purchaser Documents shall survive
one (1) year after the Closing Date.

     

    8.2           Indemnification.

     

    The
Parties hereby agree to indemnify and hold each other harmless from and against
any of the following losses:

     

    (a)           losses
based upon, attributable to or arising from the failure of any of the
representations or warranties made by one Party in this Agreement to be true and
correct in all respects at and as of the date hereof and at and as of the
Closing Date; and

     

    (b)           losses
based upon, attributable to or resulting from the breach of any covenant or
other agreement on the part of one Party under this Agreement.

     

    8.3           If
Purchaser fails to make the Initial Payment (RMB114,520,000) to Sellers in
accordance with Article 2.2(a), in addition to any other remedies available to
Sellers, Sellers shall have the right to charge liquidated damages of 5‰ of the
amount unpaid on a daily basis, and Sellers shall have the right to terminate
this Agreement at any time.

     

    8.4           According
to Article 2.2(c), the Companies shall make each installment of the Second
Payment before the last day of each quarter.  If the Companies failed
to pay any installment of the Second Payment on time, Feihe shall be entitled to
charge liquidated damages of 5‰ of the amount unpaid on a daily
basis.  The liquidated damages shall not affect the Sellers’ rights
under the Asset Mortgage Agreement.

     

    ARTICLE
IX

    TERMINATION

    


    9.1           Termination of
Agreement.  This Agreement shall be terminated prior to the
Closing under any of the following circumstances and conditions:

     

    (a)           if
Sellers have not received the Initial Payment within sixty (60) days upon
execution of this Agreement, then the Sellers shall have the right to terminate
this Agreement;

     

    (b)           by
written consent of each Party;

     


    
      
         


      

      
        13

        
          

        

      

      
         


      

    


     

    (c)           by
any Party if there shall be in effect a final non-appealable Order of a
Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby;
or

     

    (d)           by
Purchaser or Sellers if the other Parties shall have breached or failed to
perform any of their respective representations, warranties, covenants or
agreements set forth in this Agreement in any material aspect, or if any
representation or warranty of such other Parties shall have become untrue in any
material aspect, and such breach is incapable of being cured within thirty (15)
days following receipt of a notice sent by the non-breaching Party.

     

    9.2           Procedure Upon
Termination.  In the event of termination, written notice
thereof shall forthwith be given to the other Party or Parties, and this
Agreement shall terminate upon arrival of such notice to the other Party or
Parties, and the purchase of the Equity Interests hereunder shall be abandoned,
without further action by Purchaser, the Companies or Sellers; if the
application of registration amendment has not been filed with the AIC, the
Parties shall terminate such application; if the application of registration
amendment has been filed with AIC, the Parties shall withdraw the application of
registration amendment in written form; if the local registration amendment with
AIC has been fulfilled, then the equity should restore to the status before the
agreement is signed.

     

    9.3           Effect of
Termination.

     

    In the
event that this Agreement is validly terminated, each of the Parties shall be
relieved of their duties and obligations arising under this Agreement after the
date of such termination (other than any indemnification liability arising from
Article VIII hereof); provided, however, that the
obligations of the Parties set forth in Article VIII, Article 9.3 and Article X
hereof shall survive any such termination and shall be enforceable
hereunder.

     

    ARTICLE
X

    MISCELLANEOUS

    


    10.1           Effectiveness.  This
Agreement shall come into effect and be binding on the Parties upon execution of
this Agreement by the Parties.

     

    10.2           Expenses.  Except
as otherwise provided in this Agreement, Sellers and Purchaser shall each bear
its own expenses incurred in connection with the negotiation and execution of
this Agreement and each other agreement, document and instrument contemplated by
this Agreement and the consummation of the transactions contemplated hereby and
thereby, it being understood that in no event shall the Companies bear any of
such costs and expenses.

     

    10.3           Dispute
Resolution.

     

    (a)           Except
as otherwise expressly provided herein, any dispute, controversy or claim
arising out of or in relation to this Agreement, including the validity,
invalidity, breach or termination thereof, shall be submitted to Beijing
Arbitration Commission in accordance with the Arbitration Administration
Procedures and the Arbitration Rules of Beijing Arbitration Commission in force
on the date when the notice of arbitration is submitted.  The
arbitration panel shall consist of three (3) arbitrators.  Purchaser
and Sellers shall each select one (1) arbitrator, and a third arbitrator shall
be jointly selected by Purchaser and Sellers through mutual
agreement.  If no agreement is reached, the third arbitrator shall be
appointed by Beijing Arbitration Commission.  Each arbitrator shall be
impartial and independent of the Parties and shall have more than ten (10)
years’ legal practice experience.  The place of the arbitration shall
be in Beijing.  If a translator is needed during the arbitration
procedure, Parties shall appoint an impartial official translator that is
accepted by Beijing Arbitration Commission.  If Parties can not reach
agreement on the appointment of such official translator, Beijing Arbitration
Commission shall make such appointment.

     


    
      
         


      

      
        14

        
          

        

      

      
         


      

    


     

    (b)           The
arbitration award shall be final and binding on the Parties, and the Parties
agree to be bound thereby and to act accordingly.  The costs of
arbitration and the costs of enforcing the arbitral award (including witness
expenses, attorneys’ fees and the cost of the translator appointed in accordance
with Article 10.3(a) above) shall be borne by the losing party, unless otherwise
determined by the arbitral award.

     

    (c)           When
any dispute occurs and when any dispute is under arbitration, except for the
matters under dispute, the Parties shall continue to fulfill their respective
obligations (and shall be entitled to exercise their rights) under this
Agreement。

     

    10.4           Entire Agreement; Amendments
and Waivers.  This Agreement (including the schedules and
exhibits hereto) represent the entire understanding and agreement between the
Parties hereto with respect to the subject matter hereof (including the Raw Milk
Exclusive Supply Agreement and the Asset Mortgage Agreement) and can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the Party
against whom enforcement of any such amendment, supplement, modification or
waiver is sought.

     

    10.5           Applicable
Law.  This Agreement shall be governed by and construed in
accordance with the Laws of the PRC.

     

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

     

    If to
Sellers, to:

     

    Heilongjiang
Feihe Diary Co., Ltd.

    16/F,
Tower C, Star City International Plaza,

    No. 10,
Jiu Xian Qiao Road,

    Chaoyang
District, Beijing, 100016, China

    Telephone
No:  8610-8457-4688

    Fax:
8610-6431-1050

    Attention:
Hua Liu


    
      
         


      

      
        15

        
          

        

      

      
         


      

    


    


    Jinyan
Ma

    16/F,
Tower C, Star City International Plaza,

    No. 10,
Jiu Xian Qiao Road,

    Chaoyang
District, Beijing, 100016, China

    Telephone
No:  8610-8457-4688

    Fax:
8610-6431-1050

    Attention:
Jinyan Ma

    


    If to the
Companies, to:

    


    Heilongjiang
Feihe Kedong Feedlots Co., Limited

    Qingxiang
Street

    Kedong
Town

    Heilongjiang
Province

    Telephone:

    Fax:

    Attention:

    


    Heilongjiang
Gannan Feedlots Co., Limited

    Fanrong
Street

    Gannan
Town

    Heilingjiang
Province

    Telephone:

    Fax:

    Attention:

    


    If to
Purchaser, to:

    


    Haerbin
City Ruixinda Investment Company Ltd.

    Address:

    Telephone:

    Fax:

    Attention:

    


    Deliveries
between PRC (excluding Hong Kong, Macao and Taiwan) and Hong Kong shall be
deemed as international deliveries.

    


    10.7           Severability.  If
any term or other provision of this Agreement is invalid, illegal, or incapable
of being enforced by any law or public policy, all other terms or provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any Party.  Upon such
determination that any term or other provision is invalid, illegal, or incapable
of being enforced, the Parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.

     


    
      
         


      

      
        16

        
          

        

      

      
         


      

    


     

    10.8           Binding Effect;
Assignment.  Unless this Agreement is otherwise terminated
pursuant to Article 9.1, the obligations of the Sellers and Purchaser under this
Agreement shall not be rescinded.  This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors and
permitted assigns.  Except as otherwise provided in this Agreement,
this Agreement shall not create or deemed to create any third party benefit for
any individual or entity who is not a Party hereto.  No assignment of
this Agreement or of any rights or obligations hereunder may be made by either
Sellers or Purchaser (by operation of law or otherwise) without the prior
written consent of the other Parties hereto and any attempted assignment without
the required consents shall be void.

     

    10.9           Counterparts.  This
Agreement is written and executed in Chinese and English.  This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.

     

    **
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK**

     


    
      
         


      

      
        17

        
          

        

      

      
         


      

    


    


     

    IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by
their respective officers thereunto duly authorized as of August 1,
2011.

     

    
      
        	
                Purchaser:

              	 	 	 	 
	 	 	 	 	 	 
	
                

                  Haerbin
      City Ruixinda Investment Company Ltd.

                

              	 	 	 	 
	 	 	 	 	 	 
	By:  	
                /s/

              	 	 	 	 
	 	
                 

              	 	 	 	 
	
                Name:

              	 	 	 	 	 
	 	 	 	 	 	 
	
                Title:

              	
                 

              	 	 	 	 


      

    

     

    
      
        
          	
                  
                    Sellers:

                  

                	 	 	 	 
	 	 	 	 	 	 
	
                  
                    Heilongjiang
      Feihe Dairy Co., Limited

                  

                	 	 	 	 
	 	 	 	 	 	 
	By:  	
                  /s/

                	 	 	 	 
	 	
                   

                	 	 	 	 
	
                  Name:

                	 	 	 	 	 
	 	 	 	 	 	 
	
                  Title:

                	
                   

                	 	 	 	 


        

      

      
         

        
          
            
              	
                      
                        
                          Jinyan
      Ma

                        

                      

                    	 	 	 	 
	 	 	 	 	 	 
	 	
                      /s/

                    	 	 	 	 
	 	
                       

                    	 	 	 	 


            

          

        

      

    

    
       

      
        
          
            	
                    
                      
                        Companies:

                      

                    

                  	 	 	 	 
	 	 	 	 	 	 
	
                    
                      
                        Heilongjiang
      Feihe Kedong Feedlots Co.,
      Limited

                      

                    

                  	 	 	 	 
	 	 	 	 	 	 
	By:  	
                    /s/

                  	 	 	 	 
	 	
                     

                  	 	 	 	 
	
                    Name:

                  	 	 	 	 	 
	 	 	 	 	 	 
	
                    Title:

                  	
                     

                  	 	 	 	 


          

        

        
          
            
               

              
                
                  
                    	
                            
                              
                                
                                  Heilongjiang
      Feihe Gannan Feedlots Co.,
      Limited

                                

                              

                            

                          	 	 	 	 
	 	 	 	 	 	 
	By:  	
                            /s/

                          	 	 	 	 
	 	
                             

                          	 	 	 	 
	
                            Name:

                          	 	 	 	 	 
	 	 	 	 	 	 
	
                            Title:

                          	
                             

                          	 	 	 	 


                  

                

                
                   

                

              

            

          

        

      

    

    
      
         


      

      
        18

        
          

        

      

      
         


      

    


    


     

    Schedule
1

     

     

    


     

    EQUITY
INTERESTS

     

     

    
      
        	
                Company

              	
                Seller

              	
                Shareholder
      Percentage

              
	
                Heilongjiang
      Feihe Kedong Feedlots Co., Limited

                 

              	
                Heilongjiang
      Feihe Diary Co., Ltd.

                 

              	
                97%

                 

              
	
                Jinyan
      Ma

                 

              	
                3%

                 

              
	
                Heilongjiang
      Feihe Gannan Feedlots Co., Limited

                 

              	
                Heilongjiang
      Feihe Diary Co., Ltd.

                 

              	
                95%

                 

              
	
                Jinyan
      Ma

                 

              	
                5%

                 

              


      




    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    Appendix
1

    


    
 

    Raw
Milk Exclusive Supply Agreement

    


    


    by and
among

    


    


    Heilongjiang Feihe Kedong Feedlots
Co., Limited and

    Heilongjiang
Feihe Gannan Feedlots Co., Limited

    (collectively,
as “Suppliers”)

    


    and

    


    Haerbin
City Ruixinda Investment Company Ltd.

    (as
“Suppliers Equity
Holder”)

    


    and

    


    Heilongjiang
Feihe Dairy Co., Limited

    (as
“Receiver”)

    


    


    


    


    


    
 

    


    _______,
2011

    


    
      
        
           


        

        
           


          
            

          

        

        
           


        

      

    

    


    CONTENTS

    
      
        	
                Article
      I Definitions

              	
                2

              
	
                Article
      II Obligation Transfer

              	
                2

              
	
                Article
      III Obligations of Suppliers

              	
                2

              
	
                Article
      IV Obligations of Receiver

              	
                3

              
	
                Article
      V Responsibilities of Suppliers as Equity Holder

              	
                3

              
	
                Article
      VI Liabilities for Breach of Agreement

              	
                3

              
	
                ArticleVII
      Validity

              	
                4

              
	
                Article
      VIII Miscellaneous

              	
                4

              


      



    


    

      
        
           


        

        
           


          
            

          

        

        
           


        

      



    RAW
MILK EXCLUSIVE SUPPLY AGREEMENT

    


    This
Raw Milk Exclusive Supply
Agreement (the “Agreement”) is entered into as
of ___, 2011 by and among:

    


    Heilongjiang Feihe Kedong Feedlots
Co., Limited, a limited liability company duly organized and existing
under the Laws of the People’s Republic of China (the “PRC” or “China”) with its registered
address at Qingxiang Street, Kedong town, Kedong country, Heilingjiang Province,
and its register capital being RMB76,520,000 (Capital contribution by Feihe is
RMB74,620,000; Capital contribution by Jinyan Ma is RMB1,900,000), its
registration number is 230230100000170 and its legal representative is Jinyan Ma
(“Feihe
Kedong”);

    


    Heilongjiang Feihe Gannan Feedlots
Co., Limited, a limited liability company duly organized and existing
under the Laws of the PRC with its registered address at Fanrong Street, Gannan
country, Heilingjiang Province, and its register capital being
RMB38,000,000(Capital contribution by Feihe is RMB36,100,000; Capital
contribution by Jinyan Ma is RMB1,900,000), its registration number is
230225100005848 and its legal representative is Jinyan Ma (“Feihe Gannan”, and Feihe
Kedong are hereinafter collectively referred to as “Suppliers” or “Companies”);

    


    Heilongjiang Feihe Dairy Co.,
Limited,a wholly foreign
owned enterprise duly organized and existing under the Laws of the PRC with the
registered address at Kedong County, Qiqihaer City, Heilongjiang Province, and
its legal representative is Leng Youbin (“Feihe” or “Receiver”);

    


    Haerbin City Ruixinda Investment
Company Ltd., a limited liability company duly organized and existing
under the Laws of the PRC, with its registered address at Room B505, 3#
Kegongmao, Yellow River Road, Nangang District, Haerbin, registration number is
230100100046085(1-1) and its legal representative is Shuxia Li (“Suppliers Equity Holder” or
“Purchaser”).

    


    Each of
Suppliers, Receiver and Suppliers Equity Holder is referred to herein
individually as a “Party”, and collectively as
the “Parties”.

    


    RECITALS

    


    WHEREAS, Suppliers, Receiver
and Suppliers Equity Holder reached an Equity Purchase Agreement on
August 1, 2011.

    


    WHEREAS, under the Equity
Purchase Agreement and with the consent of Suppliers and Receiver, Suppliers
Equity Holder’s payment obligation (being RMB734,505,724.57) is transferred to
Suppliers.  Suppliers have the obligation to provide raw milk valued
at RMB122,417,620.76 to Receiver at the beginning of each quarter for a period
of 18 months (“Supplying
Period”) immediately after the Closing Date.

    


    
      
        
           


        

        
          1

          
            

          

        

        
           


        

      

    

    
 

    NOW, THEREFORE, in consideration of
the premises and the mutual covenants and agreements hereinafter contained and
other good and valuable consideration, the adequacy of which is hereby
acknowledged, the Parties hereby agree as follows:

    


    
      	
              ARTICLE
      I

            


    

    
      	
              DEFINITIONS

            


    

    


    For
purposes of this Agreement, the following terms shall have the meanings
specified in this Section 1.1:

    


    “Equity Purchase Agreement”
refers to the Equity Purchase Agreement entered into by and among the Receiver,
and Suppliers Equity Holder, the Suppliers on August 1, 2011.

    


    “Receiver” has the meaning
ascribed to it in the Preamble.

    


    “Suppliers” has the meaning
ascribed to it in the Preamble.

    


    “Suppliers Equity Holder” has
the meaning ascribed to it in the Preamble.

     

    “Supplying Period” has the
meaning ascribed to it in the Recitals.

    


    Capitalized
terms used and not defined under this Agreement shall have the meaning defined
under the Equity Purchase Agreement.

    


    “Suppliers”
and “Receiver”, in the context of this Agreement, shall include their own
agents, heirs, approved legal assignees and a person gets legal
approval from those agents, heirs, approved legal assignees.

    


    
      	
              ARTICLE
      II

            


    

    
      	
              OBLIGATION
      TRANSFER

            


    

    


    2.1           In
accordance with the Equity Purchase Agreement and upon mutual agreement among
Suppliers and Receiver, Suppliers Equity Holder’s payment obligation, being the
amount of RMB734,505,724.57, shall be transferred to Suppliers.

    


    2.2           Suppliers
shall have the obligation to provide raw milk valued at RMB122,417,620.76 (for
Feihe Gannan, raw milk valued at RMB72,066,908 per quarter; for Feihe Kedong,
raw milk valued at RMB50,350,712.76 per quarter) to Receiver at the beginning of
each quarter for a period of 18 months immediately after the Closing
Date.

     

    ARTICLE
III

    OBLIGATIONS
OF SUPPLIERS

    


    3.1           Guarantee of Raw Milk
Value.  Suppliers shall ensure that the value of its quarterly
productivity during the Supplying Period shall not be below
RMB122,417,620.76.  The value of raw milk should be adjusted based
upon monthly market price of raw milk and the floating price of raw milk quality
in the place of delivery.

    


    
      
        
           


        

        
          2

          
            

          

        

        
           


        

      

    

    


    


    3.2           Exclusive
Supply.  During the Supplying Period, Suppliers shall not
provide raw milk to any third party other than Receiver, unless they have
reached the target delivery of raw milk valued at RMB122,417,620.76 to
Receiver.  After Suppliers have fulfilled their raw milk supply
obligation to Receiver under this Agreement, Suppliers shall still have the
obligation to exclusively supply raw milk to Receiver so long as Receiver
requires supply of raw milk from Suppliers; the exclusive supply of raw milk by
the Suppliers to Receiver shall be at the then fair market price for an
unlimited time period.

     

    3.3           Raw Milk Quality
Assurance.  Raw milk supplied by Suppliers to Receiver should
meet the standard of State and the standard provided by relevant laws,
regulations and normative documents (“Standard”), and Suppliers
shall provide inspection reports or certificates of approval from relevant
national functional departments.  Suppliers shall bear all
responsibilities for the quality of the supplied raw milk.

    


    3.4           Expenses.  Suppliers
shall bear its own expenses incurred in connection with providing raw milk to
Receiver, including the transportation expenses.

    


    ARTICLE
IV

    OBLIGATIONS
OF RECEIVER

    


    4.1           Receiver
shall arrange raw milk tests within three days upon receiving raw milk supplied
by Suppliers.  In the event that the raw milk does not meet the
requirements of Receiver, Receiver shall notify Suppliers within three days
after Receiver have received the test results.  Suppliers shall
arrange adjustments or re-supply the same amount raw milk within three days
thereafter.

    


    ARTICLE
V

    RESPONSIBILITIES
OF SUPPLIERS AS EQUITY HOLDER

    


    5.1           Procurement
Obligation.  Suppliers
Equity Holder shall take all reasonable actions necessary to procure Suppliers
to fulfill their respective raw milk exclusive supplying obligations under this
Agreement.

    


    ARTICLE
VI

    LIABILITIES
FOR BREACH OF AGREEMENT

    


    6.1           If
the supply of raw milk from Suppliers during the Supplying Period valued below
RMB 122,417,620.76, Suppliers shall pay cash to Receiver in RMB for the
shortfall.

     

     

    
      
        
           


        

        
          3

          
            

          

        

        
           


        

      

    

    


    


    6.2           In
the event that Suppliers failed to supply the raw milk in accordance with
Article 2.2, Feihe shall be entitled to charge on the Suppliers a penalty of 5‰
of the amount unpaid on a daily basis.  This penalty shall not affect
the Sellers’ rights under the Assets Mortgage Agreement.

    


    6.3           If
the testing result from Receiver shows that the raw milk Suppliers provided does
not meet the requirements of Receiver, Receiver shall have the right to return
raw milk to Suppliers and to require Suppliers to renew the supply; Suppliers
shall have no right of objection.  Suppliers shall collect the
returned raw milk within 2 days from the notice of the
Receiver.  Suppliers shall compensate Receiver all expenses and losses
incurred if Suppliers fail to deliver the raw milk within the agreed
period.

    


    6.4           Suppliers
shall bear all legal responsibilities for the quality of raw milk supplied to
Receiver, and shall compensate Receiver for all the losses incurred by such
quality issues.

    


    ARTICLE
VII

    VALIDITY

    


    This
Agreement shall take effect on the date of execution.  This Agreement
is an attachment to the Equity Purchase
Agreement, if the Equity Purchase Agreement fails to be signed or is invalid,
then this Agreement shall have no legal validity from the very
beginning.

    


    ARTICLE
VIII

    MISCELLANEOUS

    


    8.1           Transfer.  Suppliers
shall not transfer any of their rights or obligations under this Agreement to
any other party.

    


    8.2           Dispute
Resolution.

    


    (a)           Except
as otherwise expressly provided herein, any dispute, controversy or claim
arising out of or in relation to this Agreement, including the validity,
invalidity, breach or termination thereof, shall be submitted to Beijing
Arbitration Commission in accordance with the Arbitration Administration
Procedures and the Arbitration Rules of Beijing Arbitration Commission in force
on the date when the notice of arbitration is submitted.  The
arbitration panel shall consist of three (3) arbitrators.  Suppliers
and Receiver shall each select one (1) arbitrator, and the third arbitrator
shall be jointly selected by Suppliers and Receiver through mutual
agreement.  If no agreement is reached, the third arbitrator shall be
appointed by Beijing Arbitration Commission.  Each arbitrator shall be
impartial and independent of the Parties and shall have more than ten (10)
years’ legal practice experience.  The place of the arbitration shall
be in Beijing.  If a translator is needed during the arbitration
procedure, Parties shall appoint an impartial official translator that is
accepted by Beijing Arbitration Commission.  If Parties can not reach
agreement on the appointment of such official translator, Beijing Arbitration
Commission shall make such appointment.

    


    
      
        
           


        

        
          4

          
            

          

        

        
           


        

      

    

    


     

    (b)           The
arbitration award shall be final and binding on the Parties, and the Parties
agree to be bound thereby and to act accordingly.  The costs of
arbitration and the costs of enforcing the arbitral award (including witness
expenses, attorneys’ fees and the cost of the translator appointed in accordance
with Section 8.2(a) above) shall be borne by the losing party, unless otherwise
determined by the arbitral award.

     

    (c)           When
any dispute occurs and when any dispute is under arbitration, except for the
matters under dispute, the Parties shall continue to fulfill their respective
obligations (and shall be entitled to exercise their rights) under this
Agreement.

     

    8.3           Applicable
Law.  This Agreement shall be governed by and construed in
accordance with the Laws of the People’s Republic of China.

    


    **
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          5

          
            

          

        

        
           


        

      

    

    


    IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by
their respective officers thereunto duly authorized as of ______,
2011.

    
       

      
        
          
            
              	
                      
                        
                          
                            Supplier:

                          

                        

                      

                    	 	 	 	 
	 	 	 	 	 	 
	
                      
                        
                          Heilongjiang
      Feihe Kedong Feedlots Co.,
      Limited

                        

                      

                    	 	 	 	 
	 	 	 	 	 	 
	By:  	 	 	 	 	 
	 	
                       

                    	 	 	 	 


            

          

          
            
              
                 

                
                  
                    
                      	
                              Supplier:

                            	 	 	 	 
	 	 	 	 	 
	
                              
                                
                                  
                                    Heilongjiang
      Feihe Gannan Feedlots Co.,
      Limited

                                  

                                

                              

                            	 	 	 	 
	 	 	 	 	 	 
	By:  	 	 	 	 	 
	 	
                               

                            	 	 	 	 


                    

                  

                  
                    
                       

                      
                        
                          
                            	
                                    
                                      Receiver:

                                    

                                  	 	 	 	 
	 	 	 	 	 
	
                                    
                                      
                                        
                                          
                                            Heilongjiang
      Feihe Dairy Co.,
      Limited

                                          

                                        

                                      

                                    

                                  	 	 	 	 
	 	 	 	 	 	 
	By:  	 	 	 	 	 
	 	
                                     

                                  	 	 	 	 


                          

                        

                      

                    

                  

                

              

            

          

        

      

      
        
           

          
            
              
                	
                        
                          
                            Suppliers Equity
      Holder:

                          

                        

                      	 	 	 	 
	 	 	 	 	 
	
                        
                          
                            
                              
                                
                                  Haerbin
      City Ruixinda Investment Company
      Ltd.

                                

                              

                            

                          

                        

                      	 	 	 	 
	 	 	 	 	 	 
	By:  	 	 	 	 	 
	 	
                         

                      	 	 	 	 


              

               

              


              
                
                  
                     


                  

                  
                     


                    
                      

                    

                  

                  
                     


                  

                

              

              


            

          

        

      

    

    Appendix
2

     

    


     

    ASSET
MORTGAGE AGREEMENT

     

     

    by and
among

     

     

    Heilongjiang
Feihe Kedong Feedlots Co., Ltd.

    Heilongjiang
Feihe Gannan Feedlots Co., Ltd.

    (Collectively
as “Mortgagers”)

     

     

    and

     

     

    Heilongjiang
Feihe Dairy Co., Ltd.

    (as
“Mortgagee”)

     

    


     

    


     

    


     

    


     

     

    ________,
2011

     

    


    
      
        
          
          

           


        

        
          1

          
            

          

        

        
           


        

      

    

    


    Catalogue

    
      
        	
                Article I
      Definition

              	
                3

              
	
                Article II
      Collateral

              	
                4

              
	
                Article III
      Mortgage

              	
                4

              
	
                Article IV Principal Claim and
      the Term for Mortgagers to Perform the Obligation

              	
                4

              
	
                Article V Scope of
      Mortgage

              	
                4

              
	
                Article VI Time Limit for
      Mortgage

              	
                4

              
	
                Article VII Register of
      Mortgage

              	
                4

              
	
                Article VIII Representation and
      Warranty of Mortgagers

              	
                5

              
	
                Article IX Obligation of
      Mortgagers

              	
                5

              
	
                Article X Obligation of
      Mortgagee

              	
                6

              
	
                Article XI
      Insurance

              	
                6

              
	
                Article XII Realization of
      Mortgage

              	
                6

              
	
                Article XIII Breach of Contract
      and Liability

              	
                7

              
	
                Article XIV Amendment and
      Termination

              	
                7

              
	
                Article XV
      Assignment

              	
                7

              
	
                Article XVI Effectiveness and
      Termination

              	
                8

              
	
                Article XVII Dispute Resolution
      and Governing Law

              	
                8

              
	
                Appendix 1 List of
      Collateral

              	
                10

              


      



    


    
      
        
          
          

           


        

        
          2

          
            

          

        

        
           


        

      

    

     

    


    ASSET
MORTGAGE AGREEMENT

     

    This
ASSET MORTGAGE AGREEMENT
(the “Agreement”)
is entered into as of _______, 2011 by and among:

     

    Mortgager: Heilongjiang Feihe Kedong
Feedlots Co., Ltd., a limited liability company duly organized and
existing under the Laws of the People’s Republic of China (the “PRC” or “China”) with its registered
address at Qingxiang Street, Kedong town, Kedong country, Heilingjiang Province,
its registration number being 230230100000170 and its legal representative being
Jinyan Ma (“Feihe
Kedong”).

    


    Mortgager: Heilongjiang Feihe Gannan
Feedlots Co., Ltd., a limited liability company duly organized and
existing under the Laws of the PRC with its registered address at Fanrong Street, Gannan
country, Heilingjiang Province, its registration number being 230225100005848
and its legal representative being Jinyan Ma (“Feihe Gannan”, and together
with Feihe Kedong, hereinafter collectively referred to as the “Companies” or “Mortgagers”).

    


    Mortgagee: Heilongjiang Feihe Dairy
Co., Ltd.,a wholly foreign
owned enterprise duly organized and existing under the Laws of the PRC with the
registered address at Kedong County, Qiqihaer City, Heilongjiang Province, and
its legal representative being Leng Youbin (“Feihe” or “Mortgagee”).

    


    The
Mortgagee and Mortgagers shall be collectively referred to as “Parties” and individually as a
“Party”.

    RECITALS

     

    Whereas, Mortgagers, Mortgagee
and certain other parties entered into an Equity Purchase Agreement on
August 1, 2011.

    


    Whereas, to ensure the full
performance of the obligations of the Mortgagers under the Equity Purchase
Agreement, mortgagers hereby mortgage its assets to Mortgagee.

    


    NOW THEREFORE, the Parties
have reached agreements as follows:

     

    Article
I Definition

     

    1.1           Unless
otherwise provided in this Agreement, the terms shall have the following
meanings:

     

    “Equity Purchase Agreement”
shall refer to the Equity Purchase Agreement entered into by the Mortgagers,
Mortgagee and certain other parties on August 1, 2011.

     

    “Mortgagee” shall refer to the
creditor under the Equity Purchase Agreement, which is Feihe.

     

       
“Mortgagers” shall refer
to the debtors under the Equity Purchase Agreement, which are Feihe Kedong and
Feihe Gannan.

     

    


    
      
        
          
          

           


        

        
          3

          
            

          

        

        
           


        

      

    

    


     

    “Collateral” shall refer to the
properties and assets listed on the Appendix 1 of this Agreement.

     

    “Value of Collateral” shall
refer to the book value of the Collateral at the time of such Collateral being
sold.

     

    “Breach of Contract” shall
refer to any or all of the events and actions set forth in Article XIII of this
Agreement.

     

    1.2              Unless
otherwise defined under this Agreement, capitalized terms in this Agreement
shall have the meaning ascribed to them in the Equity Purchase
Agreement.

     

    Article
II Collateral

     

    “Collateral” shall refer to the
properties and assets listed in Appendix 1 of this Agreement.

     

    Article
III Mortgage

     

    Mortgagers
hereby agree to provide to Mortgagee a first priority security on the
Collateral.

     

    Article
IV Principal Claim and the Term for Mortgagers to Perform the
Obligation

     

    4.1              “Principal Claim” refers to the
Second Payment under the Equity Purchase Agreement; the total value of the
Principal Claim is RMB734,505,724.57.

     

    4.2              The
term for Mortgagers to perform their obligation of the Second Payment is 18
months immediately after the Closing Date under the Equity Purchase
Agreement.  The repayment shall be that Mortgagers provide to
Mortgagee raw milk valued at RMB122,417,620.76 each quarter for the 18
months.

     

    Article
V Scope of Mortgage

     

    The scope
of mortgage shall cover all the debts of Mortgagers under the Equity Purchase
Agreement, including but not limited to the Principal Claim, interest,
liquidated damage, indemnification, and other fees (if any) under the Equity
Purchase Agreements (collectively, “Secured Debt”).

     

    Article
VI Time Limit for Mortgage

     

    The
rights of Mortgagee under this Agreement shall survive 2 years after the
expiration of the litigation time period for the Secured Debt.

     

    Article
VII Register of Mortgage

     

    7.1         Mortgagers
shall complete the registration of mortgage in accordance with the relevant laws
and regulations prior to the Closing Date under the Equity Purchase
Agreement.

     

    


    
      
        
          
          

           


        

        
          4

          
            

          

        

        
           


        

      

    

    


    


     

    7.2         After
paying back the Secured Debt, Mortgagers shall together with Mortgagee cancel
the mortgage registration with the competent authority.

     

    Article
VIII Representation and Warranty of Mortgagers

     

    8.1           Each
of the Mortgagers is duly organized, validly existing and in good standing under
the laws of PRC, and has all requisite power and authority to own, lease and
operate its properties and to carry on its business;

     

    8.2           Each
of Mortgagers is the sole legal and beneficial holder of the
Collateral.  Mortgagers have the right to dispose the Collateral
respectively without objection from any third party.  The Collateral
are not subject to any attachment, detention or any other condition that may
affect the rights of the Mortgagee;

     

    8.3           The
asset mortgage under this Agreement is not subject to any other third party
priority imposed on the Collateral (except as otherwise required by applicable
legislation or administrative regulation);

     

    8.4           There
is no litigation, arbitration or any other kind of unfavorable administrative
process related to the Collateral;

     

    8.5           Mortgagers
shall inform Mortgagee by written notice within 3 days in case there is any
change of their representations and warranties set forth under this
Agreement.

     

    Article
IX Obligation of Mortgagers

     

    9.1           Mortgagers
shall obey all the laws and regulations in relation to this
Agreement.  Mortgagers are obliged to use their best efforts to ensure
their property rights in the Collateral.

     

    9.2           Mortgagers
are obliged to legally and promptly complete the mortgage
registration.  Before the Closing Date under the Equity Purchase
Agreement, Mortgagers shall deliver the respective certificate or document of
the Collateral to Mortgagee.

     

    9.3           Without
the written consent of Mortgagee, Mortgagers shall not dispose any of the
Collateral, including but not limited to creating other mortgage on the
Collateral after execution of this Agreement.

     

    9.4           Mortgagers
are obliged to inform Mortgagee by written notice within 3 days if Mortgagers
knows or should have known the occurrence of any litigation, arbitration or
administrative process in relation to Mortgagers or the Collateral.

     

    9.5           Mortgagers
are obliged to use their best efforts to ensure the security of and to prevent
damages on the Collateral.  Mortgagers are also obliged to cooperate
with Mortgagee in respect of the review and inspection by the representative
appointed by Mortgagee.

     

    


    
      
        
          
          

           


        

        
          5

          
            

          

        

        
           


        

      

    

    


     

    9.6           Mortgagers
shall promptly inform Mortgagee of any event or accident, which may affect the
value of Collateral (including but not limited to any impairment and loss of the
Collateral).  At any time the Mortgagee reasonably believes that the
Collateral is insufficient to secure the Secured Debt, Mortgagers shall offer
equivalent new property or equity to Mortgagee as Collateral within 10 days upon
written requirement of Mortgagee.

     

    Article
X Obligation of Mortgagee

     

    10.1           Mortgagee
is obliged to cooperate with the mortgage registration together with
Mortgagers.

     

    10.2           Within
30 days after paying off the Secured Debt by the Mortgagers, Mortgagee is
obliged to deliver certificate, insurance policy and other documents of
Collateral under its custody back to Mortgagers and cooperate with Mortgagers in
cancelling the registration.  Mortgagers shall be responsible for the
fees related thereto.

     

    10.3           Mortgagee
is obliged to notify Mortgagers promptly by written notice when the Principle
Claim is transferred to a third Party.

     

    Article
XI Insurance

     

    11.1           Mortgagers
shall purchase insurance for the Collateral based on its appraised value, and
the beneficiary of insurance shall be Mortgagee.  Mortgagers shall
keep paying insurance expenses until the Secured Debt is paid off.

     

    11.2           
Mortgagers shall inform Mortgagee by written notice within 5 days if Mortgagers
knew or should have known the occurrence of any insurance
accident.  Mortgagers shall be in charge of settlement of the
insurance claim.

     

    Article
XII Realization of Mortgage

     

    12.1           
Upon
happening any of the following events:

     

    (a)              Mortgagers
failed to perform their repayment obligations under the Equity Purchase
Agreement,

     

    (b)              Any
of the Mortgagers was legally announced bankruptcy, winding up or
dissolution,

     

    (c)              Any
breach of the Equity Purchase Agreement or this Agreement by the Mortgagers,
or

     

    (d)              The
Equity Purchase Agreement is terminated due to reason attributable to
Mortgagers,

     

    


    
      
        
          
          

           


        

        
          6

          
            

          

        

        
           


        

      

    

    


     

    Mortgagers
shall pay the Principal Claim within 10 days upon requirement of
Mortgagee.  Otherwise, Mortgagee shall have the right to realizing the
mortgage in any legal method.

     

    12.2              The
income in realization of mortgage under this Agreement shall offset the fees for
realization of mortgage, and then shall pay off the Secured Debt; the remaining
portion will be returned to Mortgagers or other beneficiaries.

     

    Article
XIII Breach of Contract and Liability

     

    13.1                 Any
of the conditions below shall be deemed as a Breach of Contract by
Mortgagers:

     

    (a)         Any
breach of the Equity Purchase Agreement by Mortgagers;

     

    (b)         Value
of the Collateral decreased due to the fault of any of the
Mortgagers;

     

    (c)         Mortgagers’
insurance obligations under Article X were not fulfilled; or

     

    (d)         Mortgagers
disposed or set up mortgage on the Collateral without written consent of
Mortgagee.

     

    13.2           
Upon the occurrence of any of Breach of Contract set forth in this Agreement,
Mortgagee shall be entitled to (not as an obligation), one or more remedies set
forth below as indemnification:

     

    
      	
               
      

            	
              (a)

            	
              Requiring
      Mortgagers to provide guarantees equivalent to the decreased value of the
      Collateral;

            


    

     

    
      	
               
      

            	
              (b)

            	
              Requiring
      Mortgagers to pay all the Secured
Debt;

            


    

     

    
      	
               
      

            	
              (c)

            	
              Realizing
      the mortgage under this Agreement;

            


    

     

    
      	
               
      

            	
              (d)

            	
              Requiring
      Mortgagers to indemnify the damages of Mortgagee directly caused by its
      Breach of Contract.

            


    

     

    Article
XIV Amendment and Termination

     

    14.1                 
Amendment and Termination of this Agreement shall be by mutual written
agreements of the Parties.

     

    Article
XV Assignment

     

    15.1                This
Agreement shall be binding and inure to the benefit of the Mortgagee’s
successors and assignees.

     

    


    
      
        
          
          

           


        

        
          7

          
            

          

        

        
           


        

      

    

    


     

    15.2                 Mortgagers
shall not assign any of their obligations under this Agreement to a third party
without the consent of Mortgagee.

     

    15.3                 Partial
of or all the rights of Mortgagee hereunder may be assigned in connection with
the assignment of Mortgagee’s rights under the Equity Purchase Agreement;
Mortgagers are obliged to amend the registration of Collateral
accordingly.  Mortgagee shall notify Mortgagers in writing when
exercising its rights under this Article 15.3.

     

    Article
XVI Effectiveness and Termination

     

    16.1              This
Agreement shall come into effect upon execution by the Parties.

     

    16.2             
This
Agreement shall been binding on Parties until the Secured Debt is paid
off.

     

    Article
XVII Dispute Resolution and Governing Law

     

    17.1              The
execution, effectiveness, construction, performance, and the resolution of
disputes hereunder shall be governed by the PRC laws.

     

    17.2              In
the event of any dispute with respect to the construction and performance of the
provisions of this Agreement, the Parties shall negotiate in good faith to
resolve the dispute.  In the event the Parties fail to reach an
agreement on the resolution of such a dispute within 30 days after any Party’s
request for resolution of the dispute through negotiations, any Party may file a
lawsuit with a PRC court that has the jurisdiction.

     

    


     

    IN WITNESS WHEREOF, the
Parties hereto have caused this Agreement to be executed on __________, 2011, in
________(City):

    


     

    Mortgager::Heilongjiang Feihe
Kedong Feedlots Co., Ltd.

     

    Legal
Representative:

     

    (Signature)

     

     

    Mortgager:
Heilongjiang Feihe Gannan Feedlots Co., Ltd.

     

    Legal
Representative:

     

    (Signature)

     

     

    Mortgagee:
Heilongjiang Feihe Dairy Co., Ltd.

     

    Legal
Representative:

     

    (Signature)

     

    


    
      
        
          
            -  -

          

           


        

        
          8

          
            

          

        

        
           


        

      

    

    


    Appendix
1

     

    List of
Collateral

     

     

    Real
Estate:

     

     

    
      	
              1.

            	
              Location:
      [_____________]

            


    

     

     

    
      	
              2.

            	
              Ownership:[_____________]

            


    

     

     

    
      	
              3.

            	
              Time
      limit for Land: [_____]

            


    

     

    
      	
              Location
      of Real Estate

            	
              Construction
      Area (square meter)

            	
              Appraised
      Value (RMB)

            	
              Date
      of Appraisal

            	
              Certificate
      Number

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      


    

     

    
      	
              4.

            	
              Details:

            


    

     

    


     

    Details
of other Collateral:

     

    
      	
              Name
      of property or equity

            	
              Appraised
      Value (RMB)

            	
              Date
      of Appraisal

            
	 
      	 
      	 
      
	 
      	 
      	 
      


    

    


     

    


    
      
        
          
          

           


        

        
          9

          
            

          

        

        
           


        

      

    

    


    This
Appendix shall be deemed as an integral part of this Agreement.

     

    


     

    10