Document:

ART’S-WAY
MANUFACTURING CO., INC.

    Form
of Non-Qualified Stock Option Agreement

    For
Awards Granted Under The

    2007
Non-Employee Directors’ Stock Option Plan

    And

    2007
Employee Stock Option Plan

    

    STOCK
OPTION AGREEMENT

     

      
        

      

    

     

    OPTIONEE:

     

    GRANT
DATE:

     

    VESTING
DATE:

     

    NUMBER OF
SHARES:                                      _____
Shares

     

    EXERCISE PRICE PER
SHARE:                      _____
per Share

     

    EXPIRATION
DATE:

     

    OPTION
NO.:                                                       200_-___

     

    
      
        

      

       

    

    THIS AGREEMENT is made as of
the Grant Date set forth above by and between Art’s-Way Manufacturing Co., Inc.,
a Delaware corporation (the “Company”), and the Optionee named above, who is
[a Non-Employee Director/an
Employee] of the Company.

    

    The Company desires, by affording the
Optionee an opportunity to purchase its Common Stock (the “Shares”), to carry
out the purpose of the [2007
Non-Employee Directors’ Stock Option Plan/2007 Employee Stock Option
Plan] (the “Option Plan”).

    

    NOW, THEREFORE, in
consideration of the mutual covenants hereinafter set forth, and for other good
and valuable consideration, the parties hereby agree as follows:

    

    1.           Option Plan.  The
terms, provisions and definitions of the Option Plan are incorporated
herein.  Any capitalized term used herein that is not expressly
defined herein shall have the meaning ascribed to it in the Option Plan, a copy
of which has been made available to the Optionee.  This Agreement is
in all respects subject to and governed by all of the provisions of the Option
Plan.

    

    2.           Grant of
Option.  Company hereby grants to the Optionee the right and
option (the “Option”) to purchase all or any part of the aggregate number of
Shares set forth above (the “Option Shares”) (such number being subject to
adjustment as provided in the Option Plan) on the terms and subject to the
conditions set forth in this Agreement.  This Option is not intended
to qualify as an “Incentive Stock Option” within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    

    3.           Purchase Price.  The
per share purchase price of the Option Shares shall be the Exercise Price Per
Share set forth above (such Exercise Price Per Share being determined under and
subject to adjustment as provided in the Option Plan).

    

    4.           Term,
Vesting, Non-transferability and Exercise of Option.

    

    (a)           Term.  The
term of this Option shall commence on the Grant Date set forth above and shall
continue until the Expiration Date set forth above, which shall be five (5)
years from the Grant Date unless earlier terminated as provided in the Option
Plan.

    

    (b)           Vesting.  If
this Option is automatically granted to Optionee as provided in the Option Plan,
the Option Shares shall vest and become first exercisable immediately upon the
Grant Date provided above.  If this Option was granted pursuant to the
Board of Director’s discretion, the Option Shares shall vest as provided by the
Board of Directors on the Vesting Date provided above.  The failure of
Option Shares to vest for any reason whatsoever shall cause the Option to expire
and be of no further force or effect.

    

    (c)           Non-transferability.  This
Option shall not be transferable by the Optionee otherwise than by will or by
the laws of descent and distribution, and shall be exercisable during the
lifetime of the Optionee only by him or her, or by his or her guardian or legal
representative, and after death of the Optionee pursuant to will or applicable
law provided, however, that any exercise after death of the Optionee shall occur
within one (1) year of the date of death or prior to the Expiration Date,
whichever is sooner.  This Option or any interest herein may not be
transferred, assigned, pledged or hypothecated by the Optionee during his or her
lifetime whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.

    

    (d)           Exercise.  Payment
for the Option Shares to be received upon exercise of this Option may be made in
cash, in Shares (determined with reference to their Fair Market Value on the
date of exercise) or any combination thereof.  To exercise this
Option, the Optionee shall (i) deliver written notice to the Company at its
principal office prior to the Expiration Date, which written notice must be in
the form of attached Exhibit A to this
Agreement, and (ii) deliver payment in full for the Option Shares with respect
to which this Option is then being exercised.  Notwithstanding the
foregoing, this Option shall be subject to termination, adjustment, restrictive
covenants and all other provisions of the Option Plan.

    

    5.           Restrictive Stock
Legend.  The Optionee hereby acknowledges that the Option
Shares to be received upon exercise of this Option will be subject to transfer
restrictions in accordance with federal and state securities
laws.  Optionee hereby represents and warrants to the Company that the
Optionee’s acquisition of the Option Shares upon exercise of this Option will be
made as principal for such Optionee’s own account and not for resale or
distribution of such Option Shares.  The Optionee further hereby
agrees that the following legend may be placed upon any counterpart of this
Agreement, the stock certificate, or any other document or instrument evidencing
ownership of Option Shares:

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    THE
TRANSFERABILITY OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED.  SUCH SHARES MAY NOT BE SOLD, ASSIGNED, OR TRANSFERRED,
NOR WILL ANY ASSIGNEE, VENDEE, TRANSFEREE, OR ENDORSEE THEREOF BE RECOGNIZED AS
HAVING ACQUIRED ANY SUCH SHARES FOR ANY PURPOSES, UNLESS AND TO THE EXTENT SUCH
SALE, TRANSFER, HYPOTHECATION, OR ASSIGNMENT IS PERMITTED BY, AND IS COMPLETED
IN STRICT ACCORDANCE WITH, APPLICABLE STATE AND FEDERAL LAW AND TERMS OF THE
COMPANY’S BYLAWS AND ANY SHAREHOLDERS’ AGREEMENTS CURRENTLY IN
EFFECT.

    

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, OFFERED FOR SALE, OR
TRANSFERRED IN THE ABSENCE OF EITHER AN EFFECTIVE REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND UNDER APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION IS
EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER
APPLICABLE STATE SECURITIES LAWS.

    

    IN WITNESS WHEREOF, the
Company has caused this Stock Option Agreement to be executed in its corporate
name by its duly authorized officer as of the Grant Date set forth
above.

    

    
      
        
          
            
              
                
                  	
                          COMPANY:

                        	
                          ART’S-WAY
      MANUFACTURING CO., INC.

                        
	 
      	 
      
	 
      	 
      
	 
      	
                          By:

                        
	 
      	
                          Its:

                        
	 
      	 
      
	
                          OPTIONEE:

                        	 
      
	 
      	
                          Signature
      of Optionee

                        
	 	 
	 
      	 
      
	 
      	
                          Name
      of Optionee Typed or Printed

                        
	 
      	 
      
	 
      	
                          Address:

                        
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
                          SS#
      _____-____-_____

                        

                

              

            

          

        

      

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    Exhibit
A

    NOTICE OF
EXERCISE OF

    OPTION

    

    TO:                      Art’s-Way
Manufacturing Co., Inc.

    

    FROM:

    

    DATE:

    

    RE:                      Exercise
of Stock Option

    

    I hereby exercise my option to purchase
______ Shares at $_______ per share (total exercise price of $___________)
(“Option”).  This notice is given in accordance with the terms of my
Stock Option Agreement (“Agreement”) dated _____________.  The option
price and vested amount is in accordance with Sections 3 and 4 of the
Agreement.

    

    I hereby represent that I am exercising
the Option and acquiring the Shares for my own account, for long term investment
and without the intention of reselling or redistributing the
Shares.  I understand that the shares are subject to the Company’s
articles of incorporation, bylaws and any shareholder agreements in
effect.  I understand that the transfer of shares received upon
exercise of the Option is restricted by federal and state securities laws, and
that a legend to this effect will be placed upon stock certificates evidencing
the Shares in accordance with the Agreement.

    

    Check
one:

    

    
      	
              ____

            	
              Enclosed
      is cash or a cashier’s or certified check payable to Art’s-Way
      Manufacturing Co., Inc. for the total exercise price of the shares being
      purchased.

            

    

    

    
      	
              ____

            	
              Attached
      is a certificate(s) for _____________ shares duly endorsed in blank and
      surrendered for the exercise price of the Option Shares being
      purchased.

            

    

    

    Please prepare the certificate for the
Shares in the following name(s):

    

    
      
        
          
            	
                    Sincerely,

                  
	 
      
	 
      
	
                    (Signature)

                  
	 
      
	 
      
	
                    (Print
      or Type Name)

                  
	 
      
	
                    Letter
      and consideration

                  
	
                    received on _______________

                  
	
                    (effective
      date of
exercise)Exhibit
10.18

    

    EMPLOYMENT
AGREEMENT

     

    THIS
EMPLOYMENT AGREEMENT (this "Agreement") is
entered into as of the 25th day of
June, 2009, by and between Nanchang Best Animal Husbandry Co., Ltd., a
corporation organized under the laws of the People's Republic of China (the
"Company"), and
Songyan Li (the "Executive").

     

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

     

    WHEREAS,
the Executive is the Chairman of the Board of Directors of the Company and its
parent, AgFeed Industries, Inc. ("AgFeed")

     

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

     

    1.           Employment.  The
Company hereby agrees to employ the Executive, and the Executive hereby agrees
to serve the Company, on the terms and conditions set forth
herein.  So long as Executive is employed by the Company, Executive
shall devote substantially all of his business time and energy and his best
efforts to the performance of his duties as an employee of the
Company.

     

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

     

    3.           Position and
Duties.  Subject to the ultimate control of the Company, the
Executive shall serve as the Chief Technology Officer of the Company and its
parent, AgFeed, and shall handle such responsibilities and duties as are
normally associated with this position and as may be delegated by the Chairman
of AgFeed from time to time, including, but not limited to overseeing and
managing the Company's feed and hog production formula
technology.  The Executive shall report directly to the Board of
Directors of AgFeed; provided, however, if the Executive is no longer the
Chairman of AgFeed's Board of Directors for any reason, the Executive shall
report directly to the Chief Executive Officer of the Company.

     

    4.           Compensation and Related
Matters.

     

    (a)           Base
Salary.  During the Executive's employment with the Company,
the Company shall pay to the Executive a base salary at a rate of Forty Two
Thousand Dollars ($42,000) per annum (Three Thousand Five Hundred Dollars
($3,500 per month), commencing on the
Effective Date.  The Board of Directors of AgFeed, together with
AgFeed's Compensation Committee, shall review the Executive's performance and
base salary no less than annually and shall decide whether to grant any increase
or decrease in the Executive's base salary and, if so, the amount of such
increase or decrease based upon such review; provided, however, if the Executive
is no longer the Chairman of AgFeed's Board of Directors for any reason, such
review shall be conducted by the Chief Executive Officer of the Company,
together with AgFeed's Compensation Committee.

     

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

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

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

     

    (d)           Expenses.  During
the Term, the Executive shall be entitled to receive prompt reimbursement for
all pre-approved expenses incurred by the Executive in performing services
hereunder, including all expenses of travel and lodging while on business at the
request of and in the service of the Company, provided that such expenses are
incurred and accounted for in accordance with the policies and procedures
established by the Company.

     

    (e)           Benefits.  The
Company shall provide the Executive with welfare benefits in accordance with the
Company's employee manual.

     

    (f)           Vacation.  The
Executive will be entitled to receive vacations as specified in the Company's
employee manual.

     

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

     

    6.           Termination.

     

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

     

    (b)           In
the event of termination by the Company without Cause, or in the event of the
Executive's death or disability or a Constructive Termination (as defined
below), the Company shall pay the Executive a lump sum severance amount equal to
Two Hundred and Fifty Thousand Dollars ($250,000).  In the event of
termination by the Company with Cause, or if the Executive voluntarily
terminates his employment, then the Executive shall not be entitled to the
severance payment described in Section 6(b).

     

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

     

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

     

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

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

    8.           Non-Solicitation
and Non-Compete

     

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

     

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

     

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

     

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

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

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

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    COMPANY:

                                  
	 
      	 
      
	
                                    NANCHANG
      BEST ANIMAL HUSBANDRY CO., LTD.,

                                  
	 
      	 
      
	
                                    By:

                                  	
                                    /s/ Gerard Daignault

                                  
	Name: 
      Gerard
      Daignault
	Title: 
      Chief
      Operating Officer
	 
      	 
      
	
                                    EXECUTIVE:

                                  
	 
      	 
      
	
                                    /s/ Songyan Li

                                  
	
                                    Songyan
      Li

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