Document:

Unassociated Document

    Exhibit 10.5

    ADMINISTRATIVE SERVICES AGREEMENT

     

    THIS
ADMINISTRATIVE SERVICES AGREEMENT (this “Agreement”), dated as
of October 1, 2010, is by and among AGFEED INDUSTRIES, INC., a Nevada
corporation (the “Parent”), AGFEED
ANIMAL NUTRITION HOLDINGS, INC., a British Virgin Island corporation (“AANI
Holdings”), and AGFEED ANIMAL NUTRITION, INC., a British Virgin Islands
corporation and a wholly-owned subsidiary AANI Holdings (AANI Holdings and AANI,
along with their subsidiaries, being collectively referred to herein as, the
“AANI
Group”).

     

    BACKGROUND

     

    WHEREAS,
AANI Holdings is a wholly-owned subsidiary of AgFeed Industries, Inc., a British
Virgin Island corporation and wholly-owned subsidiary of the Parent (the “AgFeed
BVI”);

     

    WHEREAS,
AgFeed BVI and AANI have entered into a Master Separation Agreement, dated
July 19, 2010 (the “Master Separation
Agreement”), pursuant to which the parties thereto have agreed to
consummate an internal reorganization to separate the animal nutrition business
of the Parent from its other businesses; and

     

    WHEREAS,
it is a covenant of AgFeed BVI pursuant to the Master Separation Agreement that
the Parent shall have executed and delivered this Agreement to
AANI.

     

    NOW,
THEREFORE, in consideration of the mutual agreements, provisions and covenants
contained in this Agreement and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereby agree
as follows:

     

    1.       Incorporation of Background;
Defined Terms.  The Background provisions to this Agreement are
incorporated herein by reference thereto as if fully set forth in this
Agreement.  Any capitalized terms used in this Agreement or the
Background provisions hereof which are not so defined, but which are defined in
the Master Separation Agreement, shall have the meanings given to those terms in
the Master Separation Agreement.

     

    2.       Administrative Services and
Fees.

     

    (a)         Administrative
Services.  The services to be rendered by the Parent to the
AANI Group under this Agreement following the consummation of the Separation are
set forth on Exhibit A
attached hereto and are hereinafter referred to as the “Administrative
Services.”  The Parent agrees to provide, or cause to be
provided, each of the Administrative Services for the period set forth on Exhibit A.

     

    (b)         Fees.  In
consideration of the Parent providing the Administrative Services to the AANI
Group, AANI Holdings shall pay to the Parent a fee for each calendar month
(prorated for any partial months) in an amount equal to the actual Direct Costs
and Indirect Costs of providing such services during the preceding calendar
month plus 0.5%.  The fees shall be paid monthly in arrears based on
invoices provided to AANI Holdings by the Parent.  Such invoices shall
be paid within fifteen (15) days after the Parent renders an invoice for
such services.  “Direct Costs” shall
include compensation and travel expenses attributable to employees, temporary
workers, and contractors directly engaged in performing the services as well as
materials and supplies consumed in performing the services. “Indirect Costs” shall
include occupancy, IT supervision and other overhead burden of the department
incurring the direct costs of providing the service.  For purposes of
this Section 2(b),
the term the “Parent” shall mean any member of the AgFeed Group.

     

    
      
         

      

      
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    (c)         Termination
Rights.  Notwithstanding the foregoing, or anything else set
forth in this Agreement to the contrary, (i) the Parent shall have the right to
terminate this Agreement as to any or all of the Administrative Services at any
time prior to the expiration of the term hereof, and from time to time prior to
the expiration of the term hereof in the event that AANI Holdings fails to pay
any fee when due under Section 2(b)
hereof and such failure continues for a period of ten (10) business days
following written notice thereof from the Parent to AANI Holdings, and
(ii) AANI Holdings may terminate its usage of all or any portion of the
Administrative Services at any time on ten (10) days’ prior written
notice to the Parent.

     

    3.       Termination.  The
term of the Agreement shall commence on the date of the consummation of the
Separation and shall terminate upon the discontinuation of all of the
Administrative Services, except for those provisions of this Agreement which, by
their terms, survive such termination.

     

    4.       Manner of Providing
Administrative Services; Limitation on Liability.

     

    (a)         Nature of Administrative
Services; Limited Warranty.  AANI Holdings and AANI acknowledge
that the AgFeed Group is not in the business of providing services such as the
Administrative Services to third parties not affiliated with the Parent, and
that the Parent is willing to provide, or cause to be provided, the
Administrative Services only on a transition basis as an accommodation to the
AANI Group.  Notwithstanding the foregoing, the Parent will use its
commercially reasonable efforts to provide, or cause to be provided, the
Administrative Services to the AANI Group in good faith and with due care,
consistent with the care that it exercises in the normal performance of similar
services for itself.  EXCEPT AS SET FORTH HEREIN, THERE ARE NO
WARRANTIES RELATING TO THE ADMINISTRATIVE SERVICES OF ANY KIND OR NATURE,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

     

    (b)         Limitation on the Parent’s
Liability.  Notwithstanding anything contained in this
Agreement or any other agreement, document or instrument to the contrary,
neither the Parent nor any of its affiliates will be liable (in contract, tort
or otherwise) to the AANI Group for any losses, liabilities, claims and expenses
including, without limitation, attorneys’ fees (collectively “Losses”) suffered by
the AANI Group arising out of or attributable, directly or indirectly, to the
performance or non-performance of any Administrative Services or otherwise
arising out of this Agreement with respect to the Administrative Services in
excess of the fees actually paid by AANI Holdings to the Parent pursuant to this
Agreement.

     

    5.       Access to Records;
Cooperation.

     

    (a)         During
the term of this Agreement, the AANI Group shall provide the Parent and its
authorized representatives reasonable access to the AANI Group’s records to the
extent they relate to the Administrative Services at reasonable times during
reasonable business hours upon prior written notice.

     

    
      
         

      

      
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    (b)         Each
party hereto agrees to cooperate with the other party in the provision of the
Administrative Services hereunder, and each party agrees to use reasonable
efforts in good faith to cooperate with the other party in all matters relating
to the provision and receipt of such Services.

     

    6.       Confidential
Information.  The Parent, AANI Holdings, and AANI acknowledge
that, by reason of their relationship pursuant to this Agreement, they each may
have access to certain proprietary information concerning the business,
operations and affairs of the other and their respective business and
operations, which information is of a confidential and proprietary nature
(collectively, the “Confidential
Information”), all of which Confidential Information is a valuable,
special and unique asset of the party hereto to whom it belongs (the “Disclosing Party”),
access to and knowledge of which are essential to the preservation of the
goodwill, going business value and proprietary rights of such Disclosing
Party.  In recognition of the highly competitive nature of the
business of the parties, the Parent, AANI Holdings, and AANI acknowledge that
all of the Confidential Information of a Disclosing Party shall be considered
confidential.  In recognition of this fact, any party hereto who, in
any way, receives any Confidential Information of a Disclosing Party (a “Recipient”) will not,
at any time, disclose, or permit or cause the disclosure of, any such
Confidential Information to any person for any reason or purpose whatsoever,
except to the extent necessary in the performance of its obligations under this
Agreement (provided that the Recipient shall require any person to whom such
Confidential Information may be disclosed in connection with the performance of
its obligations hereunder to execute a nondisclosure agreement in form and
substance acceptable to the Disclosing Party), nor shall such Recipient make use
of any of the Disclosing Party’s Confidential Information for its own purposes
or for the benefit of any other person under any circumstances at any time,
other than for the purpose of performing such party’s obligations under this
Agreement.  Notwithstanding the foregoing or anything contained herein
to the contrary, the term “Confidential
Information” shall not include information which:

     

    (a)         at
the time of receipt from or on behalf of the Disclosing Party is already in the
possession of the Recipient or its affiliates on a non-confidential
basis;

     

    (b)         becomes
generally available to the public other than as a result of a disclosure by the
Recipient or its representatives;

     

    (c)          becomes
available to the Recipient on a non-confidential basis from a source other than
the Disclosing Party, provided that such source is not known by the Recipient to
be bound by a confidentiality agreement with the Disclosing Party or another
party; or

     

    (d)         was
independently developed by the Recipient or its representatives without
reference to the Confidential Information.

     

    7.       Notices.  Any
notice, demand, request or consent permitted or required to be delivered
hereunder shall be so delivered in accordance with Section 8.01 of
the Master Separation Agreement.

     

    8.       Governing
Law.  This Agreement shall be governed by and interpreted and
enforced in accordance with the laws of the Commonwealth of Pennsylvania
(without giving effect to any conflicts of laws principles thereof or of any
other State).

     

    
      
         

      

      
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    9.       Miscellaneous.

     

    (a)         This
Agreement shall be binding upon and inure to the benefit of each party hereto,
its legal successors and permitted assigns, including, without limitation,
successors by merger or consolidation, provided, however, that neither
the Parent, on the one hand, nor AANI Holdings or AANI, together on the other
hand, shall have the right to assign this Agreement without the consent of the
other party, except that (i) upon at least ten (10) days’ prior
written notice to the Parent, AANI Holdings or AANI shall be permitted to assign
its rights under this Agreement in connection with a sale of the AANI Group’s
business, whether by sale of assets, sale of stock, merger, consolidation or
otherwise, and (ii) AANI Holdings and AANI shall be permitted to assign its
rights under this Agreement to its senior lender(s) for collateral purposes, so
long as neither assignment transaction described in clause (i) or
(ii) shall expand, increase or otherwise adversely impact the scope and
nature of the duties and obligations of the Parent hereunder.

     

    (b)         This
Agreement (together with the Master Separation Agreement) contains the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof.  It may not be amended, modified or supplemented, and
none of its provisions may be waived, except by an agreement in writing signed
by the parties hereto.

     

    (c)         If
any term, condition or provision of this Agreement shall be declared, to any
extent, invalid or unenforceable, the remainder of the Agreement, other than the
term, condition or provision held invalid or unenforceable, shall not be
affected thereby and shall be considered in full force and effect and shall be
valid and be enforced to the fullest extent permitted by law.

     

    (d)         The
headings set forth in this Agreement are used solely for convenience of
reference and shall not control or affect the meaning or interpretation of any
of the provisions.

     

    (e)         This
document may be translated into languages other than English.  If any
conflict between this Agreement and any translation into a language other than
English arises, the English version of this document shall control the meaning
or interpretation of any provisions.

     

    (f)         This
Agreement may be signed in any number of counterparts, each of which shall be
deemed an original and all of which, taken together, shall constitute one and
the same agreement. The exchange (by facsimile) of facsimile copies of executed
counterparts of this Agreement shall be deemed execution and delivery
thereof.

     

    (g)         Each
party agrees to execute such agreements and other documents and to take such
further actions as the other party may reasonably request in order to carry out
the provisions of this Agreement in accordance herewith.

     

    (h)         The
Parent and the AANI Group are each independent contractors.  This
Agreement does not in anyway create any fiduciary relationship between the
parties nor the relationship of principal and agent, franchise, joint venture or
partnership.  Neither party shall have any right, authority or power
to bind the other in any contract or to the performance of any obligation as to
any third party without the other party’s prior written
consent.  Neither party hereto shall act, attempt to act or represent
itself to others, as an agent of the other party or in any manner assume or
create any obligation on behalf of or in the name of the other
party.

     

    
      
         

      

      
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    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective officers, each of whom is duly authorized, all as
of the day and year first above written.

     

    
      
        
          
            
              	 
      	
                      AGFEED
      INDUSTRIES, INC.

                    
	 
      	 
      
	 
      	
                      By

                    	
                        

                    
	 
      	 
      	
                      Name:

                    	
                        

                    
	 
      	 
      	
                      Title:

                    	
                        

                    
	 
      	 
      	 
      
	 
      	
                      (The
      “Parent”)

                    
	 
      	 
      
	 
      	
                      AGFEED
      ANIMAL NUTRITION HOLDINGS, INC.

                    
	 
      	 
      	 
      
	 
      	
                      By

                    	
                        

                    
	 
      	 
      	
                      Name:

                    	
                        

                    
	 
      	 
      	
                      Title:

                    	
                        

                    
	 
      	 
      	 
      
	 
      	
                      (“AANI
      Holdings”)

                    
	 
      	 
      
	 
      	
                      AGFEED
      ANIMAL NUTRITION INC.

                    
	 
      	 
      	 
      
	 
      	
                      By

                    	
                        

                    
	 
      	 
      	
                      Name:

                    	
                        

                    
	 
      	 
      	
                      Title:

                    	
                        

                    
	 
      	 
      	 
      
	 
      	
                      (“AANI”)

                    

            

          

        

      

    

     

    
      
         

      

      
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    EXHIBIT
A

     

    The
Parent shall provide the following services and devote the personnel required to
perform such services in a manner consistent with that provided by the Parent to
the Business immediately prior to the reorganization and IPO:

     

    
      
        
          
            	
                    Service to be Provided

                  
	 
      	 
      
	
                    1.

                  	
                    Accounting
      and Financial Reporting Administration

                  
	 
      	 
      
	
                    2.

                  	
                    Human
      Resources Administration

                  
	 
      	 
      
	
                    3.

                  	
                    Information
      Technology Maintenance and Administration

                  
	 
      	 
      
	
                    4.

                  	
                    Legal
      and Compliance Administration

                  
	 
      	 
      
	
                    5.

                  	
                    Additional
      Services

                  

          

        

      

    

     

    
      
         

      

      
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    SCHEDULE
“A”

     

    SERVICES PROVIDED BY THE
PARENT

    
    

    Accounting
and Financial Reporting Administration

     

    The
Parent will provide the following accounting and financial reporting
administrative services on behalf of the AANI Group until the termination or
amendment of this Agreement:

     

    
      	
               
      

            	
              ·

            	
              ___________________________.

            

    

     

    
      	
               
      

            	
              ·

            	
              ___________________________.

            

    

     

    Human
Resources Administration

     

    The
Parent will provide the following human resources services on behalf of the AANI
Group until the termination or amendment of this Agreement:

     

    
      	
               
      

            	
              ·

            	
              ________________________.

            

    

     

    
      	
               
      

            	
              ·

            	
              ________________________.

            

    

     

    Information
Technology Maintenance and Administration

     

    The
Parent will provide the following information technology maintenance and
administrative services on behalf of the AANI Group until the termination or
amendment of this Agreement:

     

    
      	
               
      

            	
              ·

            	
              ___________________________.

            

    

     

    
      	
               
      

            	
              ·

            	
              ___________________________.

            

    

     

    Legal
and Compliance Administration

     

    The
Parent will provide the following legal services on behalf of the AANI Group
until the termination or amendment of this Agreement:

     

    
      	
               
      

            	
              ·

            	
              ________________________.

            

    

     

    
      	
               
      

            	
              ·

            	
              ________________________.

            

    

     

    Additional
Services

     

    The AANI
Group may request that the Parent provide additional services with respect to
management or administrative functions that are not set forth
above.

     

    
      
         

      

      
        7Unassociated Document

    Exhibit
10.7

    SECURITIES
PURCHASE AGREEMENT

     

    THIS SECURITIES PURCHASE
AGREEMENT (this “Agreement”) is made this 7th
day of July, 2010 by and between Nanchang Best Animal Husbandry Co., Ltd., a
corporation organized under the laws of the People’s Republic of China having
its principal place of business at 1095 Qinglan Avenue, Eco &
Technology Development Zone, Nanchang, Jiangxi Province (the “Seller”), and Shandong AgFeed
Agribusiness Co., Ltd., a corporation organized under the laws of the People’s
Republic of China having its principal place of business at No. 4 Chuangye
Street, East Development Zone, Tai’an City, Shandong Province (the “Purchaser”).  The
Purchaser and the Seller may collectively be referred to as the “Parties” and, individually,
as a “Party.”

     

    RECITALS:

     

    WHEREAS, the Seller is the
record holder of 100% of the issued and outstanding registered capital (the
“Purchased Securities”)
Hainan HopeJia Feed Co., Ltd., a corporation organized under the laws of the
People’s Republic of China (the “Company”); and

     

    WHEREAS, the Seller desires to
sell to the Purchaser, and the Purchaser desires to purchase from the Seller,
the Purchased Securities in accordance with the terms and conditions of this
Agreement.

     

    NOW, THEREFORE, in
consideration of the mutual promises and covenants stated below, the Parties
hereto agree as follows:

     

    Article
1.  Definitions.  Capitalized
terms used in this Agreement and not otherwise defined herein shall have the
meanings set forth below:

     

    “Affiliate” shall mean, with
respect to any Person, (i) any Person directly or indirectly controlling,
controlled by or under common control with, such Person; (ii) any Person
owning five percent (5%) or more of the outstanding stock of such Person; and
(iii) any Person who is a director, officer or key employee of such Person
or of any Person described in clause (i) above.  As used herein,
“control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.

     

    “Agreement” shall mean this
Securities Purchase Agreement, including all exhibits hereto, as the same may
hereafter be amended, modified or supplemented from time to time.

     

    “Approvals” shall mean any and
all permits, consents, acceptances of filings and reports, authorizations, and
other approvals from any relevant government authority or agency in China,
United States of America, or the British Virgin Islands.

     

    “Authority” shall mean any
governmental, legislative, executive, regulatory or administrative body, or any
court of judicial authority, whether international, national or local, or any
subdivision, agency, authority, board, bureau, commission, office or
instrumentality thereof.

     

    
      
         

      

      
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    “Business Day” shall mean any
day that is not a Saturday, Sunday or national holiday in China.

     

    “China” shall mean the
People’s Republic of China.

     

    “Closing” shall mean the
closing of the transactions under this Agreement.

     

    “Closing Date” shall mean the
date of the Closing to be mutually agreed by the Parties, which date shall be
July 7, 2010, or within three (3) Business Days after the satisfaction
or the waiver of the conditions precedent to the Parties’ obligations hereunder,
or at such other date, time and place as shall be mutually agreed by the
Parties.

     

    “Consideration” shall have the
meaning specified in Article 2.1
hereof.

     

    “Contract” shall mean a
contract or agreement to a Party is a party.

     

    “Final Purchase Price” shall
have the meaning specified in Article 2.1
hereof.

     

    “ICC” shall mean the
International Chamber of Commerce.

     

    “Indemnified Party” shall have
the meaning specified in Article 7.1
hereof.

     

    “Indemnifying Party” shall
have the meaning specified in Article 7.1
hereof.

     

    “Law” shall mean any law,
statute, regulation, ordinance, requirement, notification or other binding
action or requirement of any Authority, or any fiduciary duty or obligation
provided by the statutory laws.

     

    “Lien or Other Encumbrance”
shall mean any lien, pledge, mortgage, security interest, lease, charge,
conditional sales contract, option, restriction, reversionary interest, right of
first refusal or other transfer restriction, voting trust arrangement,
preemptive right, claim, easement or any other encumbrance, adverse claim or
right or demands of any nature whatsoever.

     

    “Losses” shall mean all
losses, liabilities, damages, deficiencies, suits, debts, obligations, interest,
penalties, expenses, judgments or settlements of any nature or kind, including
all costs and expenses related thereto, including without limitation reasonable
attorneys’ fees and disbursements, court costs, amounts paid in settlement and
expenses of investigation, whether at law or in equity, whether known or
unknown, foreseen or unforeseen, of any kind or nature.

     

    “Person” shall mean any
natural person, entity, corporation, company, association, joint venture, joint
stock company, partnership, trust, organization, individual, nation, state,
government (including agencies, departments, bureaus, boards, divisions and
instrumentalities thereof), trustee, receiver or liquidator.

     

    “Preliminary Purchase Price”
shall have the meaning specified in Article 2.1
hereof.

     

    
      
         

      

      
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    “RMB” shall mean Renminbi, the
official currency of China.

     

    Article
2.  Sale and Purchase of the
Shares.

     

    2.1  Sale and
Purchase.  Subject to the terms and conditions of this
Agreement, the Seller shall sell to the Purchaser, and the Purchaser shall buy
from the Seller, the Purchased Securities, for a purchase price equal to the sum
of the registered capital, additional paid-in capital and the cumulative profits
of the Company through July 31, 2010 less the cumulative
losses of the Company through July 31, 2010 (such sum, the “Consideration”),  which
purchase price shall be paid by the Seller by wire transfer of immediately
available funds to a bank account designated by the Purchaser, in writing in
accordance with the following paragraph.

     

    Prior to
July 31, 2010, Purchaser shall pay an amount equal to Twelve Million
Renminbi (RMB 12,000,000) (the “Preliminary Purchase
Price”).  Prior to September 15, 2010, Purchaser and
Seller shall jointly calculate the Consideration as of July 31, 2010
(the “Final Purchase
Price”).  Prior to September 30, 2010, to the extent the
Final Purchase Price exceeds the Preliminary Purchase Price, the Purchaser shall
pay the Seller an amount equal to such difference.  Prior to
September 30, 2010, to the extent the Preliminary Purchase Price exceeds
the Final Purchase Price, the Seller shall pay the Purchaser an amount equal to
such difference by wire transfer of immediately available funds to a bank
account designated by the Purchaser in writing.

     

    2.2  Closing.  Subject
to the satisfaction or, if permissible, waiver of the conditions set forth in
Article 5
of this Agreement, the Closing shall take place at the offices in Nanchang,
Jiangxi Province of the Seller, or such other location agreed upon by the
Parties, beginning at 11:00 A.M. local time on the Closing
Date.

     

    Article
3.  Closing
Deliveries.

     

    3.1  Deliveries by the
Seller.  At the Closing, the Seller shall deliver, or cause to
be delivered:

     

    (i)  All
outstanding certificates representing the Purchased Securities, duly endorsed in
blank, or accompanied by stock powers duly executed in blank, by Seller, with
all required stock transfer stamps, if any, affixed, free and clear of any Liens
or Other Encumbrances; and

     

    (ii)  Such
other documents as the Purchaser shall reasonably request in
writing.

     

    3.2  Deliveries by the
Purchaserg.  The Purchaser shall deliver, or cause to be
delivered:

     

    (i)  The
Preliminary Purchase Price by wire transfer to an account of the Seller
designated by written notice to the Purchaser on the dater hereof, in
immediately available funds, in accordance with Article 2.1;
and

     

    
      
         

      

      
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    (ii)  At
the Closing, such other documents as the Seller shall reasonably request in
writing.

     

    Article
4.  Representations and
Warranties.

     

    4.1  Representations and
Warranties of the Seller.  The Seller represents and warrants
to the Purchaser as of the date of this Agreement and as of the Closing Date
with the same force and effect as if made at and as of such time as set forth
below, and acknowledges that the Purchaser is relying upon the accuracy of each
of such representations and warranties in connection with the purchase of the
Shares and the completion of the other transactions contemplated
hereunder:

     

    (i)  Authority and
Enforceability.  The Seller has full power, authority and
capacity to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the purchase and sale of Shares contemplated
hereby.  The execution, delivery and performance of this Agreement by
the Seller and the consummation of the purchase and sale of Purchased Securities
contemplated hereby, have been duly authorized by all requisite corporate action
of the Seller.  The Seller has duly executed and delivered this
Agreement which constitutes the legal, valid and binding obligation of the
Seller enforceable against the Seller in accordance with its terms, subject, as
to enforceability, to bankruptcy, insolvency, reorganization and similar laws of
general applicability relating to or affecting creditors’ rights and to general
equity principles.  To ensure the legality, validity, enforceability
or admissibility into evidence in China of this Agreement, it is not necessary
that this Agreement be filed or recorded with any court or other authority in
China other than filing hereof as required under the Law of
China  (which filing does not affect the validity or enforceability of
this Agreement).

     

    (ii)  Ownership of
Shares.  The Seller owns all of the Purchased Securities, and
such Securities are fully paid and non-assessable, free and clear of any Lien or
Other Encumbrance.  Upon the delivery of and payment for the Purchased
Securities at the Closing as provided for in this Agreement, the Purchaser will
acquire good and valid title, free and clear of any Lien or Other Encumbrance,
to the Purchased Securities upon receipt of book transfer of the Purchased
Securities.  The Purchased Securities constitute all of the issued and
outstanding capital securities of the Company.

     

    (iii)  No
Violation.  The execution, delivery and performance of this
Agreement by the Seller, and the consummation of the purchase and sale of the
Purchased Securities contemplated hereby, do not and will not conflict with,
contravene, result in a violation or breach of or default under (with or without
the giving of notice or the lapse of time or both), create in any other Person a
right or claim of termination or amendment, or require modification,
acceleration or cancellation of, or result in the creation of any Lien or Other
Encumbrance (or any obligation to create any Lien or Other Encumbrance) upon any
of the properties or assets of the Seller under, (a) any Law of any
Authority having jurisdiction over the Seller or any of its properties or
assets, (b) any provision of any of the constituent documents of the
Seller, or (c) any Contract, or any other agreement or instrument to which
the Seller is a party or by which any of its properties or assets may be bound,
and with respect to each of (a), (b), and (c) above, there is no pending
action alleging any such violation.

     

    
      
         

      

      
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    (iv)  Due
Organization.  The Seller is an entity duly organized, validly
existing and, if applicable under the laws of its jurisdiction of organization,
in good standing under the laws of its jurisdiction of organization, and has
full power and authority to, conduct its business and to own or lease and to
operate its properties as and in the places where such business is conducted and
such properties are owned, leased or operated.

     

    (v)  Government
Approvals.  Except as set forth on Schedule 4.1(v)(1),
no Approval of any Chinese Authority is required for the sale of the Purchased
Shares or the consummation by the Seller of the transactions contemplated by
this Agreement.

     

    (vi)  Survival of Representations
and Warranties.  Each of the representations and warranties of
the Seller in this Agreement or in any schedule, instrument or other document
delivered pursuant to this Agreement shall survive the Closing Date and shall
continue in force thereafter.

     

    4.2  Representations and
Warranties of the Purchaser.  The Purchaser hereby represents
and warrants to the Seller as of the date of this Agreement and as of the
Closing Date with the same force and effect as if made at and as of such time as
follows, and confirms that the Seller is relying upon the accuracy of each of
such representations and warranties in connection with the sale of the Purchased
Securities and the completion of the other transactions contemplated
hereunder:

     

    (i)  Authority and
Enforceability.  The Purchaser has full power, authority and
capacity to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the purchase and sale of the Purchased Securities
contemplated hereby.  The execution, delivery and performance of this
Agreement by the Purchaser and the consummation of the purchase and sale of the
Purchased Securities contemplated hereby, have been duly authorized or will be
duly authorized prior to the Closing by all requisite corporate action of the
Purchaser.  The Purchaser has duly executed and delivered this
Agreement.  This Agreement constitutes the legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in accordance with
its terms in China, subject, as to enforceability, to bankruptcy, insolvency,
reorganization and similar laws of general applicability relating to or
affecting creditors’ rights and to general equity principles.

     

    (ii)  No
Violation.  The execution, delivery and performance of this
Agreement by the Purchaser, and the consummation of the purchase and sale of the
Purchased Securities contemplated hereby, do not and will not conflict with,
contravene, result in a violation or breach of or default under (with or without
the giving of notice or the lapse of time or both), create in any other Person a
right or claim of termination or amendment, or require modification,
acceleration or cancellation of, or result in the creation of any Lien or Other
Encumbrance (or any obligation to create any Lien or Other Encumbrance) upon any
of the properties or assets of the Purchaser under, (a) any Law of any
Authority having jurisdiction over the Purchaser or any of its properties or
assets, (b) any provision of any of the constituent documents of the
Purchaser, or (c) any Contract, or any other agreement or instrument to
which the Purchaser is a party or by which any of its properties or assets may
be bound, and with respect to each of (a), (b), and (c) above, there is no
pending action alleging any such violation.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (iii)  Due
Organization.  The Purchaser is an entity duly organized,
validly existing and, if applicable under the laws of its jurisdiction of
organization, in good standing under the laws of its jurisdiction of
organization, and has full power and authority to, conduct its business and to
own or lease and to operate its properties as and in the places where such
business is conducted and such properties are owned, leased or
operated.

     

    (iv)  Survival of Representations
and Warranties.  Each of the representations and warranties of
the Purchaser in this Agreement or in any schedule, instrument or other document
delivered pursuant to this Agreement shall survive the Closing Date and shall
continue in force thereafter.

     

    Article
5.  Conditions Precedent to
Closing.

     

    5.1  Conditions Precedent to
Obligations of the Seller.  The obligations of the Seller to
sell and deliver the Purchased Securities pursuant to Articles 2 and
3 hereof and to
consummate the transactions contemplated hereby shall be subject to the
fulfillment, or waiver by the Seller, on or prior to the Closing Date, of all of
the conditions set forth below:

     

    (i)  Representations and
Warranties.  All representations and warranties of the
Purchaser contained in Article 4.2
hereto were true when made and shall be true on and as of the Closing Date as if
made on such date.

     

    (ii)  Performance.  The
Purchaser shall have performed and complied with all agreements and covenants
required by this Agreement to be performed or complied with by the Purchaser on
or prior to the Closing Date.

     

    (iii)  Government
Approvals.  All necessary Approvals from the Authorities
applicable to the Purchaser, which are required to be obtained prior to the
Closing Date in connection with the transactions contemplated hereby shall have
been obtained within the period prescribed by the relevant statute.

     

    5.2  Conditions Precedent to
Obligations of the Purchaser.  The obligations of the Purchaser
to purchase the Purchased Securities pursuant to Articles 2 and
3 hereof and to
consummate the transactions contemplated hereby shall be subject to the
fulfillment, or waiver by the Purchaser, on or prior to the Closing Date, of all
of the conditions set forth below:

     

    (i)  Representations and
Warranties.  All representations and warranties of the Seller
contained in Article 4.1
hereto were true when made and shall be true on and as of the Closing Date as if
made on such date.

     

    (ii)  Performance.  The
Seller shall have performed and complied with all agreements and covenants
required by this Agreement to be performed or complied with by the Purchaser on
or prior to the Closing Date.

     

    (iii)  Government
Approvals.  All necessary Approvals from the Authorities
applicable to the Purchaser, which are required to be obtained prior to the
Closing Date in connection with the transactions contemplated hereby shall have
been obtained within the period prescribed by the relevant statute.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    Article
6.  Termination.

     

    6.1  Termination by Either
Party.  Either Party may terminate this Agreement (i) to
the extent that performance thereof is prohibited, enjoined or otherwise
materially restrained by any final, non-appealable judgment, ruling, order or
decree of any Authority, provided that the Party seeking to terminate its
obligations hereunder pursuant to this clause 6.1(i) shall have used its
best efforts to remove such prohibition, injunction, or restraint; or
(ii) by mutual written consent of the Parties.

     

    6.2  Effect of
Termination.  In the event of termination of this Agreement
under any provision of this Article 6, this
Agreement shall forthwith become null and void and neither Party shall have any
liability to the other Party.

     

    Article
7.  Indemnification.

     

    7.1  Indemnification.  Subject
to the following, each Party (the “Indemnifying Party”) shall
indemnify and hold the other Party (the “Indemnified Party” ) harmless
from and against any and all Losses that may be sustained, suffered or incurred
by the Indemnified Party arising out of or relating to any inaccuracy in or
breach or nonperformance of any of the representations, warranties, covenants or
agreements made by or any certificate given by the Indemnifying Party in or
pursuant to this Agreement.  The obligations under this Article 7 shall
survive any termination of this Agreement.

     

    7.2  No
Waiver.  No right of the Purchaser for indemnification under
this Article 7 shall
be affected by any examination made for or on behalf of the Purchaser, the
knowledge of any member of the Purchaser or the acceptance by the Purchaser of
any certificate or opinion.  No right of the Seller for
indemnification under this Article 7 shall
be affected by any examination made for or on behalf of the Seller, the
knowledge of any of the Seller or the acceptance by the Seller of any
certificate or opinion.

     

    Article
8.  Dispute
Resolution.

     

    8.1  Choice of
Forum.  The Parties agree that all disputes, differences,
controversies, claims or questions arising in connection with, occurring under,
or related to, the present Agreement shall be finally settled under the
Arbitration Rules of the ICC by an arbitral tribunal appointed in accordance
with said Rules.  The place of arbitration shall be Nanchang, Jiangxi
Province, China. The language of the arbitration shall be
English.  The Parties hereby exclude any right of appeal to any court
on the merits of the dispute.  Nothing contained in this Agreement
shall prevent either party from seeking interim measures of protection in the
form of pre-award attachment of assets, or from seeking injunctive relief to
enforce in courts of competent jurisdiction rights covered by this
Agreement.  In the event that any dispute arises under both this
Agreement, such disputes shall be resolved in a consolidated proceeding by a
single arbitral tribunal appointed by the ICC.

     

    8.2  Governing
Law.  The terms and conditions of this Agreement shall be
governed by and construed in accordance with the Laws of China that have been
promulgated and are available to the public, but if the promulgated and
available Laws of China have no application for the relevant matters of this
Agreement, the Parties shall consult the general international commercial
practice.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    Article
9.  Miscellaneous.

     

    9.1  Notices.  All
notices, consents, waivers, and other communications under this Agreement shall
be (i) in writing, (ii) delivered by hand-delivery, registered first
class mail (return receipt requested), facsimile, or air courier guaranteeing
overnight delivery, (iii) deemed to have been given on the date on which it
is received, and (iv) shall be addressed as follows:

     

    
      
        	
                If
      to the Purchaser:

              
	 
      
	
                Shandong
      AgFeed Agribusiness Co., Ltd.

                No. 4
      Chuangye Street

                East
      Development Zone

                Tai’an
      City, Shandong Province  330013, China

                 

              
	
                Phone:  +(86) 791-666903

                Facsimile:  +(86) 791-6669090

                Attention:  Mr.
      Junhong Xiong

              
	 
      
	
                If
      to the Seller:

              
	 
      
	
                Nanchang
      Best Animal Husbandry Co., Ltd.

                1095 Qinglan
      Avenue

                Eco &
      Tech. Development Zone

                Nanchang,
      Jiangxi Province  271000, China

              
	 
      
	
                Phone:  +(86) 791-666903

                Facsimile:  +(86) 791-6669090

                Attention:  Dr.
      Songyan Li

              

      

    

    

    9.2  Assignment.  Neither
this Agreement nor any right or obligation arising under this Agreement may be
assigned by the Seller, without the prior written consent of the Purchaser, or
by the Purchaser, without the prior written consent of the Seller, provided that
the Purchaser may assign this Agreement and/or its rights and obligations under
this Agreement to any of its Affiliates, provided, however, that in case
of any such assignment by the Purchaser, the Purchaser shall remain jointly
responsible for any and all obligations set out in this Agreement, including the
obligations to make any deposit or payments.

     

    9.3  No Third-Party
Beneficiaries.  This Agreement shall be binding upon, and inure
solely to the benefit of, the Purchaser and the Seller, and their respective
heirs, successors and assigns, and no other Person shall acquire or have any
right under or by virtue of this Agreement.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    9.4  Amendments.  This
Agreement may be amended only by written agreement between the Purchaser and the
Seller.

     

    9.5  Severability.  If
one of more provisions of this Agreement are held to be invalid or unenforceable
to any extent under applicable Law, such provision shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable Law, so as to effectuate the Parties’ intent to the maximum extent,
and the remainder of this Agreement shall be interpreted as if such provision
were excluded and shall be valid and enforceable in accordance with its terms to
the maximum extent permitted by applicable Law.

     

    9.6  Survival.  The
representations, warranties, covenants and agreements made herein shall survive
any investigation made by any party hereto and the closing of the transactions
contemplated hereby.  In addition, Articles 7,
8 and 9.6 hereof shall
survive the termination of this Agreement.

     

    9.7  Costs and
Expenses.  Each Party shall bear its own costs and expenses
incurred in connection with this Agreement, including, without limitation, the
fees and expenses of their respective accountants and legal
counsel.

     

    9.8  Governing
Language.  In the event of any conflict between the English
language version of this Agreement and any translation hereof, the English
language version shall prevail.

     

    9.9  Entire
Agreement.  This Agreement (including all exhibits and
schedules hereto) constitutes the entire agreement and understanding of the
Parties hereto with respect to the subject matter of such documents, and
supersedes all prior agreements and understandings, both written and oral, of
the Parties relating to the subject matter of such documents.

     

    9.10  Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, and all of which together shall constitute one and the
same document.

     

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REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]

     

    
      
         

      

      
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    IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by
their duly authorized representatives as of the date first above
written.

     

    
      	
              SHANDONG AGFEED

              AGRIBUSINESS CO., LTD.

            	 
      	
              NANCHANG BEST ANIMAL

              HUSBANDRY CO., LTD.

            
	 
      	 
      	 
      
	
              By:

            	
              Li Songyan

            	 
      	
              By:

            	
              Xiao Qiu Sheng

            
	 
      	
              Name:  Li
      Songyan

            	 
      	 
      	
              Name:  Xiao
      Qiu Sheng

            
	 
      	
              Title:  Chairman

            	 
      	 
      	
              Title:  General
      Manager

            

    

    

    [SIGNATURE
PAGE TO SECURITIES PURCHASE AGREEMENT]

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
 

    Schedule 4.1(v)(1)
– Governmental Approvals

     

    Approval
by the original Chinese Authority approving the establishment of the Company as
a wholly foreign owned enterprise is required.

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