SHARE PURCHASE AGREEMENT
THIS
AGREEMENT is
effective the20thday
of
December, 2006 AMONG:
AGFEED
INDUSTRIES INC.,
(“AgFeed”) a
corporation formed pursuant to the laws of the State of Nevada and having
an
office
for business located at 0000
Xxxx
Xxx Xxxxxx,
Xxxxxxxx and Technical Development Zone, Xxx Xxxxx City,
Jiangxi Province, China 330013
AND:
GUANGXI
HUIJIE SCI. & TECH. FEED CO, LTD.,
("Guangxi Huijie") a company formed pursuant to the laws of the People’s
Republic of China and having an office for business located at South Zone,
Coastal Industrial Park, Liangqing District, Nanning, Guangxi Province,
China
AND:
The
shareholders of Guangxi Huijie, the name of each of whom is set forth on
the
signature page of this Agreement (the “Guangxi Huijie Shareholders”)
FACTS:
A. The
Guangxi Huijie Shareholders own 3,000,000 registered shares of Guangxi
Huijie,
constituting
100% of the presently issued and outstanding Guangxi Huijie Shares;
B. AgFeed
is
a reporting company whose common stock is quoted on the NASD
“Bulletin Board”; and
C. The
respective Boards of Directors of AgFeed, and Guangxi Xxxxxx xxxx it advisable
and in the best interests of AgFeed and Guangxi Huijie that Guangxi Huijie
become a wholly-owned subsidiary of AgFeed (the "Acquisition") pursuant
to this
Agreement.
NOW
THEREFORE in
consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and
other
good and valuable consideration, the receipt and sufficiency of which is
hereby
acknowledged, the parties hereto hereby agree as follows:
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ARTICLE
1.
|
DEFINITIONS
AND INTERPRETATION:
|
|
1.1.
|
In
this Agreement the following terms will have the following
meanings:
|
1.1.1. “Acquisition”
means
the
Acquisition, at the Closing, of Guangxi Huijie by AgFeed
pursuant to this Agreement;
1.1.2. “Agreement”
means
this share purchase agreement among AgFeed,
Guangxi
Huijie and the Guangxi Huijie Shareholders;
1.1.3. “Closing”
means
the
completion, on the Closing Date, of the transactions contemplated
hereby in accordance with ARTICLE 14 hereof;
1.1.4. “Closing
Date” means
the
day on which all conditions precedent to the completion
of the transaction as contemplated hereby have been satisfied or
waived;
1.1.5. “Guangxi
Huijie Accounts Payable and Liabilities” means
all
accounts payable and
liabilities of Guangxi Huijie, due and owing or otherwise constituting
a binding
obligation
of Guangxi Huijie (other than a Guangxi Huijie Material Contract) as of
September 30, 2006 as set forth in Schedule 1.1.5 hereto;
1.1.6. “Guangxi
Huijie Accounts Receivable” means
all
accounts receivable and other debts owing to Guangxi Huijie as of September
30,
2006 as set forth in Schedule 1.1.6 hereto;
1.1.7. “Guangxi
Huijie Assets” means
all
the property and assets of the Guangxi Huijie Business of every kind and
description wheresoever situated including, without limitation, Guangxi
Huijie
Equipment, Guangxi Huijie Inventory, Guangxi Huijie Material Contracts,
Guangxi
Huijie Accounts Receivable, Guangxi Huijie Cash, Guangxi Huijie Intangible
Assets and Guangxi Huijie Goodwill, and all credit cards, charge cards
and
banking cards issued to Guangxi Huijie;
1.1.8. “Guangxi
Huijie Bank Accounts” means
all
of the bank accounts, lock boxes and
safety deposit boxes of Guangxi Huijie or relating to the Guangxi Huijie
Business
as set forth in Schedule 1.1.8 hereto;
1.1.9. “Guangxi
Huijie Business” means
all
aspects of the business conducted by Guangxi Huijie;
1.1.10. “Guangxi
Huijie Cash” means
all
cash on hand or on deposit to the credit of Guangxi Huijie on the Closing
Date;
1.1.11. “Guangxi
Huijie Debt to Related Parties” means
the
debts owed by Guangxi Huijie to the Guangxi Huijie Shareholders or to any
family
member thereof, or to any affiliate, director or officer of Guangxi Huijie
or
the Guangxi Huijie Shareholders as described in Schedule 1.1.11;
1.1.12. “Guangxi
Huijie Equipment” means
all
machinery, equipment, furniture, and furnishings used in the Guangxi Huijie
Business, including, without limitation, the items more particularly described
in Schedule 1.1.12 hereto;
Page
2 of
19
1.1.13. “Guangxi
Huijie Financial Statements” means,
collectively, the audited financial
statements of Guangxi Huijie for the two year period ended December 31,
2005,
together with the reviewed financial statements for the nine month period
ended
September 30, 2006, true copies of which are attached as Schedule 1.1.13
hereto;
1.1.14. “Guangxi
Huijie Goodwill” means
the
goodwill of the Guangxi Huijie Business together
with the exclusive right of AgFeed to represent itself as carrying on
the
Guangxi Huijie Business in succession of Guangxi Huijie subject to the
terms
hereof,
and the right to use any words indicating that the Guangxi Huijie Business
is
so
carried on including the right to use the name “Guangxi Huijie” or “Guangxi
Huijie Sci. & Tech. Feed Co, Ltd.”
or
any
variation thereof as part of the name of or in connection with the Guangxi
Huijie Business or any part thereof carried on or to be carried on by Guangxi
Huijie, the right to all corporate, operating and trade names associated
with
the Guangxi Huijie Business, or any variations of such names as part of
or in
connection with the Guangxi Huijie Business, all telephone listings and
telephone advertising contracts, all lists of customers, books and records
and
other information relating to the Guangxi Huijie Business, all necessary
licenses and authorizations
and any other rights used in connection with the Guangxi Huijie Business;
1.1.15. “Guangxi
Huijie Insurance Policies” means
the
public liability insurance and insurance against loss or damage to Guangxi
Huijie Assets and the Guangxi Huijie Business as described in Schedule
1.1.15
hereto;
1.1.16. “Guangxi
Huijie Intangible Assets” means
all
of the intangible assets of Guangxi Huijie, including, without limitation,
Guangxi Huijie Goodwill, all trademarks,
logos, copyrights, designs, and other intellectual and industrial property
of
Guangxi Huijie;
1.1.17. “Guangxi
Huijie Inventory” means
all
inventory and supplies of the Guangxi Huijie Business as of September 30,
2006
as set forth in Schedule 1.1.17 hereto;
1.1.18. “Guangxi
Huijie Material Contracts” means
the
burden and benefit of and the right,
title and interest of Guangxi Huijie in, to and under all trade and non-trade
contracts,
engagements or commitments, whether written or oral, to which including,
without limitation Guangxi Huijie is entitled in connection with the
Guangxi
Huijie Business whereunder Guangxi Huijie is obligated to pay or entitled
to
receive the sum of $10,000 or more including, without limitation, any pension
plans,
profit sharing plans, bonus plans, loan agreements, security agreements,
indemnities and guarantees, any agreements with employees, lessees, licensees,
managers,
accountants, suppliers, agents, distributors, officers, directors, attorneys
or
others
which cannot be terminated without liability on not more than one month's
notice, and, including without limitation, those contracts listed in Schedule
1.1.18 hereto;
1.1.19. “Guangxi
Huijie Related Party Debts” means
the
debts owed by the Guangxi Huijie Shareholders or by any family member thereof,
or by any affiliate, director or officer of Guangxi Huijie or the Guangxi
Huijie
Shareholders, to Guangxi Huijie as described in Schedule
1.1.19
hereto;
1.1.20. “Guangxi
Huijie Shares” means
all
of the issued and outstanding shares of Guangxi
Huijie's equity stock.
Page
3 of
19
1.1.21. “Place
of Closing” means
the
offices of AgFeed at 0000
Xxxx
Xxx Xxxxxx,
Xxxxxxxx and Technical Development Zone, Xxx Xxxxx City,
Jiangxi Province, China 330013,
or
such
other place as AgFeed and Guangxi Huijie may mutually agree upon;
Page
4 of
19
1.1.22. “Other
Terms” Any
other
terms defined within the text of this Agreement will have the meanings
so
ascribed to them.
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1.2.
|
Captions
and Section Numbers: The
headings and section references in this Agreement
are for convenience of reference only and do not form a part
of this
Agreement
and are not intended to interpret, define or limit the scope,
extent or
intent of this
Agreement or any provision thereof.
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1.3.
|
Section
References and Schedules:
Any reference to a particular “Article”, “section”, “paragraph”, “clause”
or other subdivision is to the particular Article, section, clause
or
other subdivision of this Agreement and any reference to a Schedule
by
letter will mean the
appropriate Schedule attached to this Agreement and by such reference
the
appropriate
Schedule is incorporated into and made part of this Agreement.
The
Schedules
to this Agreement are as follows:
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|
Schedule
1.1.5
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Guangxi
Huijie Accounts Payable and Liabilities
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Schedule
1.1.6
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Guangxi
Huijie Accounts Receivable
|
|
Schedule
1.1.8
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Guangxi
Huijie Bank Accounts
|
|
Schedule
1.1.11
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Guangxi
Huijie Debt to Related Parties
|
|
Schedule
1.1.12
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Guangxi
Huijie Equipment
|
|
Schedule
1.1.13
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Guangxi
Huijie Financial Statements
|
|
Schedule
1.1.15
|
Guangxi
Huijie Insurance Policies
|
|
Schedule
1.1.17
|
Guangxi
Huijie Inventory
|
|
Schedule
1.1.18
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Guangxi
Huijie Material Contracts
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|
Schedule
1.1.19
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Guangxi
Huijie Related Party Debt
|
|
1.4.
|
Severability
of Clauses If
any part of this Agreement is declared or held to be invalid
for
any reason, such invalidity will not affect the validity of the
remainder
which will continue
in full force and effect and be construed as if this Agreement
had been
executed without the invalid portion, and it is hereby declared
the
intention of the parties that this Agreement
would have been executed without reference to any portion which
may, for
any
reason, be hereafter declared or held to be
invalid.
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ARTICLE
2.
|
THE
ACQUISITION
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2.1.
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Sale
of Shares - Purchase Price:
Each of the Guangxi Huijie Shareholders hereby agrees to sell to
AgFeed
the Guangxi Huijie Shares owned by such Shareholder in exchange
for a
proportionate share of ¥8,600,000.00
RMB to be delivered on the Closing Dateby Agfeed and to transfer
to AgFeed
on the Closing Date a 100% undivided interest in and to such Guangxi
Huijie Shares free from all liens, mortgages, charges, pledges,
encumbrances or other burdens with all rights now or thereafter
attached
thereto.
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2.2.
|
Allocation
of Consideration:
The Purchase Price shall be allocated to the Guanghai Huijie Shareholders,
as set forth on Schedule 2.1 attached hereto and made a part
hereof.
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Page
5 of
19
ARTICLE
3. REPRESENTATIONS
AND WARRANTIES OF AGFEED: AgFeed
hereby
represents and warrants
to Guangxi Huijie and the Guangxi Huijie Shareholders, with the intent
that
Guangxi Huijie and the Guangxi Huijie Shareholders will rely thereon
in
entering
into this Agreement and in approving and completing the transactions
contemplated hereby,
that:
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3.1.
|
Incorporation.
AgFeed is a corporation duly incorporated and validly subsisting
under the laws of the State of Nevada, and is in good standing
with the
office
of the Secretary of State for the State of
Nevada;
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|
3.2.
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Corporate
Capacity:
AgFeed has the corporate power, capacity and authority
to own the AgFeed Assets and to enter into and carry out the terms
of this Agreement;
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|
3.3.
|
Execution
and Performance of Agreement: The
execution and delivery of this Agreement by
AgFeed and the completion of the transactions contemplated hereby,
have
been duly and validly authorized by all necessary corporate action
on the
part of
AgFeed.
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|
ARTICLE
4.
|
REPRESENTATIONS
AND WARRANTIES OF THE GUANGXI HUIJIE SHAREHOLDERS:
The
Guangxi Huijie Shareholders hereby jointly and severally represent
and warrant to AgFeed, with
the intent that it will rely thereon in entering into this Agreement
and
in approving
and completing the transactions contemplated hereby,
that:
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4.1.
|
Guangxi
Huijie- Company Status and
Capacity
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4.1.1. Formation.
Guangxi
Huijie is a company duly formed and validly subsisting under the
laws
of the People’s Republic of China;
4.1.2. Carrying
on Business. Guangxi
Huijie carries on the Guangxi Huijie Business primarily
in the People’s Republic of China and does not carry on any material
business
activity in any other jurisdiction. Guangxi Huijie is duly authorized to
carry
on
the
Guangxi Huijie Business in the People’s Republic of China. The nature of
the
Guangxi Huijie Business does not require Guangxi Huijieto register or otherwise
be
qualified to carry on business in any other jurisdiction;
4.1.3. Legal
Capacity. Guangxi
Huijie has the legal power, capacity and authority to enter into
and
complete this Agreement;
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4.2.
|
Guangxi
Huijie- Capitalization
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4.2.1. Authorized
Capital. The
authorized capital of Guangxi Huijie is as stated in its formation
documents;
4.2.2. Ownership
of Guangxi Huijie Shares.
The
registered, issued and outstanding share capital of Guangxi Huijie on Closing
shall be validly issued and outstanding as fully paid and non-assessable
shares.
The Guangxi Huijie Shareholders will be at Closing the registered and beneficial
owners of 100% of the outstanding Guangxi Huijie Shares. The Guangxi Huijie
Shares owned by the Guangxi Huijie Shareholders will on Closing be free and
clear of any and all liens, charges, pledges, encumbrances, restrictions
on
transfer and adverse claims whatsoever.
4.2.3. No
Option, Warrant or Other Right. No
person, firm or corporation has any agreement,
option, warrant, preemptive right or any other right capable of becoming
an
agreement, option, warrant or right for the acquisition of Guangxi Huijie
Shares
held
by
the Guangxi Huijie Shareholders or for the purchase, subscription or
issuance
of any of the unissued shares in the capital of Guangxi Huijie;
Page
6 of
19
4.2.4. No
Restrictions. There
are
no restrictions on the transfer, sale or other disposition of
Guangxi Huijie Shares contained in the charter documents of Guangxi Huijie
or
under
any
agreement.
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4.3.
|
Guangxi
Huijie- Records and Financial
Statements
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4.3.1. Charter
Documents. The
charter documents of Guangxi Huijie have not been altered
since its formation date, except as filed in the record books of Guangxi
Huijie
4.3.2. Minute
Books. The
minute books of Guangxi Huijie are complete and each of the minutes
contained therein accurately reflect the actions that were taken at a duly
called
and held meeting or by consent without a meeting. All actions by Guangxi
Huijie
which
required director or shareholder approval are reflected in the corporate
minute
books of Guangxi Huijie. Guangxi Huijieis not in violation or breach of,
or in
default with respect to, any term of its Certificate of Incorporation (or
other
charter
documents) or by-laws.
4.3.3. Guangxi
Huijie Financial Statements. The
Guangxi Huijie Financial Statements present fairly, in all material respects,
the assets and liabilities (whether accrued, absolute,
contingent or otherwise) of Guangxi Huijie as of the date thereof, and the
sales
and
earnings of the Guangxi Huijie Business during the periods covered thereby,
and have been prepared in conformity with generally accepted accounting
principles consistently applied;
4.3.4. Guangxi
Huijie Accounts Payable and Liabilities. There
are
no liabilities, contingent
or otherwise, of Guangxi Huijie which are not disclosed in Schedule
1.1.5
hereto
or reflected in the Guangxi Huijie Financial Statements except those
incurred
in the ordinary course of business since the date of the said
schedule,
and
Guangxi Huijie has not guaranteed or agreed to guarantee any debt, liability
or
other obligation of any person, firm or corporation.
Without limiting the generality of the foregoing, all accounts payable
and
liabilities of Guangxi Huijie as of September 30, 2006 are described in Schedule
1.1.5 hereto;
4.3.5. Guangxi
Huijie Accounts Receivable. All
the
Guangxi Huijie Accounts Receivable
result from bona fide business transactions and services actually rendered
without, to the knowledge and belief of the Guangxi Huijie Shareholders,
any
claim
by the obligor for set-off or counterclaim. Without limiting the generality
of
the
foregoing, all accounts receivable of Guangxi Huijie as of September 30,
2006,
are described in Schedule 1.1.6 hereto;
4.3.6. Guangxi
Huijie Bank Accounts. All
of
the Guangxi Huijie Bank Accounts, their location,
numbers and the authorized signatories thereto are as set forth in Schedule
1.1.8
hereto;
4.3.7. No
Debt to Related Parties. Except
as
disclosed in Schedule 1.1.11 hereto, Guangxi
Huijie is not and on Closing will not be, indebted to the Guangxi Huijie
Shareholders
nor to any family member thereof, nor to any affiliate, director or officer
of Guangxi Huijie or the Guangxi Huijie Shareholders except accounts
payable
on account of bona fide business transactions of Guangxi Huijie incurred
in
the
normal course of Guangxi Huijie Business, including employment agreements
with
the Guangxi Huijie Shareholders, none of which are more than 30 days in
arrears;
Page
7 of
19
4.3.8. No
Related Party Debt to Guangxi Huijie. Except
as
set forth on Schedule 1.1.19 hereto,
no Guangxi Huijie Shareholder nor any director, officer or affiliate of Guangxi
Huijie is now indebted to or under any financial obligation to Guangxi Huijie
on
any
account whatsoever, except for advances on account of travel and other expenses
not exceeding $5,000 in total;
4.3.9. No
Dividends. No
dividends or other distributions on any shares in the capital of Guangxi
Huijie have been made, declared or authorized since the date of the Guangxi
Huijie Financial Statements;
4.3.10. No
Payments. No
payments of any kind have been made or authorized since the date
of
the Guangxi Huijie Financial Statements to or on behalf of the Guangxi
Huijie
Shareholders or to or on behalf of officers, directors, shareholders or
employees
of Guangxi Huijie nor under any management agreements with Guangxi
Huijie,
except
payments made in the ordinary course of business and at the regular rates
of
salary or other remuneration payable to them;
4.3.11. No
Pension Plans. There
are
no pension, profit sharing, group insurance or similar plans
or
other deferred compensation plans affecting Guangxi Huijie, except as set
forth
in the Guangxi Huijie Financial Statements;
4.3.12. No
Adverse Events. Since
the
date of the Guangxi Huijie Financial Statements:
4.3.12.1. there
has
not been any material adverse change in the financial position or condition
of
Guangxi Huijie, its liabilities or the Guangxi Huijie Assets or any damage,
loss or other change in circumstances materially and adversely affecting
Guangxi Huijie, the Guangxi Huijie Business or the Guangxi Huijie Assets
or
Guangxi Huijie’s right to carry on the Guangxi Huijie Business, other than
changes in the ordinary course of business,
4.3.12.2.
there
has not been any damage, destruction, loss or other event (whether or not
covered by insurance) materially and adversely affecting Guangxi Huijie,
the
Guangxi Huijie Business or the Guangxi Huijie Assets,
4.3.12.3.
there
has not been any material increase in the compensation payable or to
become
payable by Guangxi Huijie to the Guangxi Huijie Shareholders or to any of
Guangxi Huijie's officers, employees or agents or any bonus, payment
or
arrangement made to or with any of them,
4.3.12.4. the
Guangxi Huijie Business has been and continues to be carried on in the ordinary
course,
4.3.12.5. Guangxi
Huijie has not waived or surrendered any right of material value,
4.3.12.6. Guangxi
Huijie has not discharged or satisfied or paid any lien or encumbrance
or obligation or liability other than current liabilities in the ordinary
course of business, and
4.3.12.7. no
capital expenditures in excess of $10,000 individually or $30,000 in
total
have been authorized or made;
Page
8 of
19
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4.4.
|
.
Guangxi
Huijie- Income Tax Matters
|
4.4.1. Tax
Returns. All
tax
returns and reports of Guangxi Huijie required by law to be filed
have been filed and are true, complete and correct, and any taxes payable
in
accordance with any return filed by Guangxi Huijie or in accordance with
any
notice of assessment or reassessment issued by any taxing authority have
been so
paid;
4.4.2. Current
Taxes. Adequate
provisions have been made for taxes payable for the current
period for which tax returns are not yet required to be filed and there are
no
agreements,
waivers, or other arrangements providing for an extension of time with
respect
to the filing of any tax return by, or payment of, any tax, governmental
charge
or
deficiency by Guangxi Huijie. Guangxi Huijie is not aware of any contingent
tax liabilities or any grounds which would prompt a reassessment including
aggressive treatment of income and expenses in filing earlier tax
returns;
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4.5.
|
.
Guangxi
Huijie- Applicable Laws and Legal
Matters
|
4.5.1. Licenses.
Guangxi
Huijie holds all licenses and permits as may be requisite for carrying
on the Guangxi Huijie Business in the manner in which it has heretofore
been
carried on, which licenses and permits have been maintained and continue
to
be
in
good standing except where the failure to obtain or maintain such licenses
or
permits would not have a material adverse effect on the Guangxi Huijie
Business;
4.5.2. Applicable
Laws. Guangxi
Huijie has not been charged with or received notice of breach of any laws,
ordinances, statutes, regulations, by-laws, orders or decrees to which
it
is subject or which applies to it the violation of which would have a
material
adverse effect on the Guangxi Huijie Business, and, to the knowledge of the
Guangxi
Huijie Shareholders, Guangxi Huijie is not in breach of any laws, ordinances,
statutes, regulations, by-laws, orders or decrees the contravention of
which
would result in a material adverse effect on the Guangxi Huijie
Business;
4.5.3. Pending
or Threatened Litigation. There
is
no material litigation or administrative or
governmental proceeding pending or threatened against or relating to Guangxi
Huijie,
the
Guangxi Huijie Business, or any of the Guangxi Huijie Assets, nor do the
Guangxi
Huijie Shareholders have any knowledge of any act or omission of Guangxi
Huijie that would form any basis for any such action or proceeding;
4.5.4. No
Bankruptcy. Guangxi
Huijie has not made any voluntary assignment or proposal
under applicable laws relating to insolvency and bankruptcy and no bankruptcy
petition has been filed or presented against Guangxi Huijie and no order
has
been
made or a resolution passed for the winding-up, dissolution or liquidation
of
Guangxi Huijie;
4.5.5. Labor
Matters. Guangxi
Huijie is not party to any collective agreement relating to the
Guangxi Huijie Business with any labor union or other association of employees
and
no
part of the Guangxi Huijie Business has been certified as a unit appropriate
for
collective bargaining or, to the knowledge of the Guangxi Huijie Shareholders,
has
made
any attempt in that regard;
4.5.6. Environmental
Compliance. Guangxi
Huijie has at all times had and now has all environmental
approvals, consents, licenses, permits and orders required to conduct
the
businesses in which it has been or is now engaged. Guangxi Huijie has at
all
times
been and is now in compliance in all material respects with all applicable
environmental
laws. There are no claims, actions, suits or proceedings pending or,
to
Guangxi Huijie’s Knowledge, threatened against or involving Guangxi Huijie, or
any
assets of Guangxi Huijie, under any of the environmental laws (whether by
reason
of
any failure to comply with any of the environmental laws or otherwise).
No
decree, judgment or order of any kind under any of the environmental laws
has
been
entered against Guangxi Huijie. There are no facts, conditions or situations,
whether now or heretofore existing, that could form the basis for any claim
against, or
result
in any liability of, Guangxi Huijie under any of the environmental laws;
and
Page
9 of
19
4.5.7. Finder's
Fees. Guangxi
Huijie is not a party to any agreement which provides for the
payment of finder's fees, brokerage fees, commissions or other fees or amounts
which
are
or may become payable to any third party in connection with the execution
and delivery of this Agreement and the transactions contemplated
herein.
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4.6.
|
Execution
and Performance of
Agreement
|
4.6.1. Authorization
and Enforceability.
The
execution and delivery of this Agreement by Guangxi Huijie and the completion
of
the transactions contemplated hereby, have been duly and validly authorized
by
all necessary corporate action on the part of Guangxi Huijie;
4.6.2. No
Violation or Breach. The
execution and performance of this Agreement will not:
4.6.2.1. violate
the charter documents of Guangxi Huijie or result in any breach of, or default
under, any loan agreement, mortgage, deed of trust, or any other agreement
to
which Guangxi Huijie is a party,
4.6.2.2. give
any
person any right to terminate or cancel any agreement including, without
limitation, Guangxi Huijie Material Contracts, or any right or rights enjoyed
by
Guangxi Huijie,
4.6.2.3. result
in
any alteration of Guangxi Huijie's obligations under any agreement to
which
Guangxi Huijie is a party including, without limitation, the Guangxi Huijie
Material Contracts,
4.6.2.4. result
in
the creation or imposition of any lien, encumbrance or restriction of
any
nature whatsoever in favor of a third party upon or against the Guangxi Huijie
Assets,
4.6.2.5. result
in
the imposition of any tax liability to Guangxi Huijie relating to Guangxi
Huijie
Assets or the Guangxi Huijie Shares, or
4.6.2.6. violate
any court order or decree to which Guangxi Huijie is subject.
|
4.7.
|
Guangxi
Huijie Assets - Ownership and
Condition
|
4.7.1. Business
Assets.
The
Guangxi Huijie Assets comprise all of the property and assets of the Guangxi
Huijie Business, and neither the Guangxi Huijie Shareholders nor any other
person, firm or corporation owns any assets used by Guangxi Huijie in operating
the Guangxi Huijie Business, whether under a lease, rental agreement or other
arrangement, other than as disclosed in Schedules 1.1.12 or 1.1.18
hereto;
Page
10 of
19
4.7.2. Title.
Guangxi
Huijie is the legal and beneficial owner of the Guangxi Huijie Assets,
free and clear of all mortgages, liens, charges, pledges, security interests,
encumbrances
or other claims whatsoever, save and except as disclosed in Schedules
1.1.12 or 1.1.18 hereto;
4.7.3. No
Option. No
person, firm or corporation has any agreement or option or a right capable
of
becoming an agreement for the purchase of any of the Guangxi Huijie
Assets;
4.7.4. Guangxi
Huijie Insurance Policies. Guangxi
Huijie maintains the public liability insurance
and insurance against loss or damage to the Guangxi Huijie Assets and the
Guangxi
Huijie Business as described in Schedule 1.1.15 hereto;
4.7.5.Guangxi
Huijie Material Contracts. The
Guangxi Huijie Material Contracts listed in
Schedule 1.1.18 constitute all of the material contracts of Guangxi
Huijie;
4.7.6. No
Default. There
has
not been any default in any material obligation of Guangxi Huijie to be
performed under any of Guangxi Huijie Material Contracts, each
of
which is in good standing and in full force and effect and unamended (except
as
disclosed in Schedule 1.1.18), and Guangxi Huijie is not aware of any default
in
the obligations of any other party to any of the Guangxi Huijie Material
Contracts;
4.7.7. No
Compensation on Termination. There
are
no agreements, commitments or understandings
relating to severance pay or separation allowances on termination of
employment
of any employee of Guangxi Huijie. Guangxi Huijie is not obliged to pay
benefits or share profits with any employee after termination of employment
except as required by law;
|
4.8.
|
Guangxi
Huijie Assets - Guangxi Huijie Equipment: The
Guangxi Huijie Equipment has
been maintained in a manner consistent with that of a reasonably
prudent
owner and such
equipment is in good working
condition;
|
4.9. Guangxi
Huijie Assets - Guangxi Huijie Goodwill and Other Assets: Guangxi
Huijie carries on the Guangxi Huijie Business only under the name “Guangxi
Huijie Sci. & Tech. Feed Co,
Ltd."
and variations thereof and under no other business or trade names. The
Guangxi Huijie Shareholders do not have any knowledge of any infringement
by
Guangxi Huijie of any patent, trademark, copyright or trade secret;
4.10. The
Business of Guangxi Huijie:
4.10.1. Maintenance
of Business. Since
the
date of the Guangxi Huijie Financial Statements,
the Guangxi Huijie Business has been carried on in the ordinary course
and
Guangxi Huijie has not entered into any material agreement or commitment
except
in the ordinary course; and
4.10.2. Subsidiaries.
Guangxi
Huijie does not have any subsidiaries and does not otherwise
own, directly or indirectly, any shares or interest in any other corporation,
partnership,
limited liability company, joint venture or firm.
Page
11 of
19
ARTICLE
5. NON-MERGER
AND SURVIVAL: The
representations and warranties of the Guangxi
Huijie Shareholders contained herein will be true at and as of Closing
in all
material respects
as though such representations and warranties were made as of such time.
Notwithstanding
the completion of the transactions contemplated hereby, the waiver of
any
condition
contained herein (unless such waiver expressly releases a party from
any such
representation
or warranty) or any investigation made by AgFeed, the representations
and warranties of the Guangxi Huijie Shareholders shall survive the
Closing.
ARTICLE
6. INDEMNITY:
The
Guangxi Huijie Shareholders agree to indemnify and save harmless AgFeed
from and
against any and all claims, demands, actions, suits, proceedings, assessments,
judgments, damages, costs, losses and expenses, including any payment
made in
good faith in settlement of any claim (subject to the right of the Guangxi
Huijie Shareholders
to defend any such claim), resulting from the breach by any of them of
any
representation
or warranty of such party made under this Agreement or from any
misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by Guangxi Huijie or the Guangxi Huijie
Shareholders to AgFeed hereunder, including, without limitation, the
existence
or assertion against AgFeed of claims for liabilities of Guangxi Huijie
not
disclosed in Schedule1.1.5 hereto or set forth in the Guangxi Huijie
Financial
Statements.
|
ARTICLE
7.
|
COVENANTS
OF GUANGXI HUIJIE AND THE GUANGXI HUIJIE
SHAREHOLDERS
|
|
7.1.
|
Covenants:
Guangxi
Huijie and the Guangxi Huijie Shareholders covenant and agree with
AgFeed that they will:
|
7.1.1. Conduct
of Business. Until
the
Closing, conduct the Guangxi Huijie Business diligently
and in the ordinary course consistent with the manner in which the Guangxi
Huijie Business generally has been operated up to the date of execution of
this
Agreement;
7.1.2. Preservation
of Business. Until
the
Closing, use their best efforts to preserve the Guangxi
Huijie Business and the Guangxi Huijie Assets and, without limitation,
preserve
for AgFeed Guangxi Huijie’s relationships with their suppliers, customers and
others having business relations with them;
7.1.3. Access.
Until
the
Closing, give AgFeed and its representatives full access
to
all of the properties, books, contracts, commitments and records of Guangxi
Huijie relating to Guangxi Huijie, the Guangxi Huijie Business and the Guangxi
Huijie Assets, and furnish to AgFeed and its representatives all such
information as they may reasonably request; and
7.1.4. Procure
Consents. Until
the
Closing, take all reasonable steps required to obtain, prior
to
Closing, any and all third party consents required to permit the Acquisition
and
to
preserve and maintain the Guangxi Huijie Assets, including the Guangxi Huijie
Material
Contracts, notwithstanding the change in control of Guangxi Huijie arising
from
the Acquisition.
|
7.2.
|
Authorization:
Guangxi
Huijie hereby agrees to authorize and direct any and all federal,
state, municipal, foreign and international governments and regulatory
authorities
having jurisdiction respecting Guangxi Huijie to release any and
all
information
in their possession respecting Guangxi Huijie to AgFeed. Guangxi
Huijie shall promptly execute and deliver to AgFeed any and all
consents
to the release of information and specific authorizations which
AgFeed
reasonably require to gain access to any and all such information.
Guangxi
Huijie Shareholders
hereby authorize Xx. Xxx Deyuan to execute all certificates or
other
representations
required to complete the transactions contemplated by this
Agreement.
|
Page
12 of
19
|
7.3.
|
Survival:
The
covenants set forth in this Article shall survive the Closing for
the
benefit of
AgFeed.
|
ARTICLE
8. CONDITIONS
PRECEDENT IN FAVOR OF AGFEED
|
8.1.
|
Conditions
Precedent to Closing: The
obligations of AgFeed to
carry out the transactions contemplated hereby
are subject to the fulfillment of each of the following conditions
precedent on or before the Closing:
|
8.1.1. all
documents or copies of documents required to be executed and delivered to
AgFeed
hereunder will have been so executed and delivered;
8.1.2. all
of
the terms, covenants and conditions of this Agreement to be complied with
or
performed by Guangxi Huijie or the Guangxi Huijie Shareholders at or prior
to
the
Closing will have been complied with or performed;
8.1.3. title
to
the Guangxi Huijie Shares held by the Guangxi Huijie Shareholders and to
the
Guangxi Huijie Assets will be free and clear of all mortgages, liens, charges,
pledges,
security interests, encumbrances or other claims whatsoever, save and
except
as
disclosed herein, and the Guangxi Huijie Shares shall be duly transferred
to
AgFeed;
8.1.4. subject
to ARTICLE 9 hereof, there will not have occurred
8.1.4.1. any
material adverse change in the financial position or condition of Guangxi
Huijie, its liabilities or the Guangxi Huijie Assets or any damage, loss
or
other
change in circumstances materially and adversely affecting Guangxi Huijie,
the
Guangxi Huijie Business or the Guangxi Huijie Assets or Guangxi Huijie's
right
to carry on the Guangxi Huijie Business, other than changes in the ordinary
course of business, none of which has been materially adverse, or
8.1.4.1.1. any
damage, destruction, loss or other event, including changes to any lawsor
statutes applicable to Guangxi Huijieor the Guangxi Huijie Business(whether
or
not covered by insurance) materially and adversely affecting Guangxi Huijie,
the
Guangxi Huijie Business or the Guangxi Huijie Assets; and
8.1.4.1.2. the
transactions contemplated hereby shall have been approved by all regulatory
authorities having jurisdiction over the subject matter hereof, if
any.
|
8.2.
|
Waiver
by AgFeed: The
conditions precedent set out in the preceding section are inserted
for the
exclusive benefit of AgFeed and
any such condition may be waived in whole or in part
by AgFeed at or prior to
the Closing by delivering to Guangxi Huijie a written waiver to
that
effect signed by AgFeed.
In the event that the
conditions precedent set out in the preceding section are not satisfied
on
or before the Closing,
AgFeed shall be released
from all obligations under this
Agreement.
|
Page
13 of
19
ARTICLE
9. CONDITIONS
PRECEDENT IN FAVOR OF GUANGXI HUIJIE AND THE
GUANGXI HUIJIE SHAREHOLDERS:
|
9.1.
|
Conditions
Precedent to Closing: The
obligations of Guangxi Huijie and the Guangxi
Huijie Shareholders to carry out the transactions contemplated
hereby are
subject
to the fulfillment of each of the following conditions precedent
on or
before the Closing:
|
9.1.1. all
documents or copies of documents required to be executed and delivered to
Guangxi
Huijie hereunder will have been so executed and delivered;
9.1.2. all
of
the terms, covenants and conditions of this Agreement to be complied with
or
performed by AgFeed
at or
prior to the Closing will have been complied with or performed;
9.1.3. the
transactions contemplated hereby shall have been approved by all regulatory
authorities having jurisdiction over the subject matter hereof, if any;
and
|
9.2.
|
Waiver
by Guangxi Huijie and the Guangxi Huijie Shareholders:
The
conditions precedent set out in the preceding section are inserted
for the
exclusive benefit of Guangxi
Huijie and the Guangxi Huijie Shareholders and any such condition
may be
waived
in whole or in part by Guangxi Huijie or the Guangxi Huijie Shareholders
at or prior
to the Closing by delivering to AgFeed a written waiver to that
effect
signed by Guangxi Huijie and the Guangxi Huijie Shareholders. In
the event
that the conditions precedent set out in the preceding section
are not
satisfied on or before the Closing, Guangxi Huijie and the Guangxi
Huijie Shareholders shall be released from all obligations under
this
Agreement.
|
ARTICLE
10. NATURE
OF CONDITIONS PRECEDENT: The
conditions precedent set forth
in
this Agreement are conditions of completion of the transactions contemplated
by
this Agreement
and are not conditions precedent to the existence of a binding
agreement.
ARTICLE
11. TERMINATION:
Notwithstanding
any provision herein to the contrary, if the Closing
does not occur on or before January 31, 2007, this Agreement will be
at an end
and will have no further force or effect, unless otherwise agreed upon
by the
parties in writing.
ARTICLE
12. CONFIDENTIALITY:
Notwithstanding
any provision herein to the contrary, the
parties hereto agree that the existence and terms of this Agreement are
confidential and that
if
this Agreement is terminated pursuant to the preceding section the parties
agree
to return
to
one another any and all financial, technical and business documents delivered
to
the other party or parties in connection with the negotiation and execution
of
this Agreement and shall
keep the terms of this Agreement and all information and documents received
from
Guangxi
Huijie and AgFeed and the contents thereof confidential and not utilize
nor
reveal or release same, provided, however, that AgFeed will be required
to
issue
a
news release regarding the execution and consummation of this Agreement
and file
a Current Report on Form 8-K with the Securities and Exchange Commission
respecting the proposed
Acquisition contemplated hereby together with such other documents as
are
required
to maintain the currency of AgFeed’s filings with the Securities and
Exchange
Commission.
Page
14 of
19
ARTICLE
13. Material
Change in the Business of Guangxi Huijie: If
any
material loss or damage to
the
Guangxi Huijie Business occurs prior to Closing and such loss or damage,
in
AgFeed'
reasonable opinion, cannot be substantially repaired or replaced within
sixty (60) days, AgFeed shall, within two (2) days following any such
loss
or
damage, by notice in writing to Guangxi Huijie, at its option,
either:
|
13.1.
|
terminate
this Agreement, in which case no party will be under any further
obligation
to any other party; or
|
|
13.2.
|
elect
to complete the Acquisition and the other transactions contemplated
hereby, in
which case the proceeds and the rights to receive the proceeds
of all
insurance covering
such loss or damage will, as a condition precedent to AgFeed's
obligations
to carry out the transactions contemplated hereby, be vested in
Guangxi
Huijie or otherwise adequately secured to the satisfaction of
AgFeed
on
or before the Closing Date.
|
ARTICLE
14. CLOSING
|
14.1.
|
Closing:
The
Acquisition and the other transactions contemplated by this Agreement
will
be closed at the Place of Closing in accordance with the closing
procedure
set out in this
Article.
|
|
14.2.
|
Documents
to be Delivered by Guangxi Huijie: On
or before the Closing, Guangxi Huijie
and the Guangxi Huijie Shareholders will deliver or cause to be
delivered
to AgFeed
:
|
14.2.1. the
original or certified copies of the charter documents of Guangxi Huijie and
all
corporate
records documents and instruments of Guangxi Huijie, the corporate seal
of
Guangxi Huijie and all books and accounts of Guangxi Huijie;
14.2.2. all
reasonable consents or approvals required to be obtained by Guangxi Huijie
for
the
purposes of completing the Acquisition and preserving and maintaining the
interests
of Guangxi Huijie under any and all Guangxi Huijie Material Contracts and
in
relation to Guangxi Huijie Assets;
14.2.3. certified
copies of such resolutions of the shareholders and directors of Guangxi Huijie
as are required to be passed to authorize the execution, delivery and
implementation of this Agreement;
14.2.4.
an
acknowledgement from Guangxi Huijie and the Guangxi Huijie Shareholders
of
the
satisfaction of the conditions precedent set forth in section 7.1
hereof;
14.2.5. the
certificates or other evidence of ownership of the Guangxi Huijie Shares,
together
with such other documents or instruments required to effect transfer of
ownership of the Guangxi Huijie Shares to AgFeed; and
14.2.6. such
other documents as AgFeed may reasonably require to give effect to
the
terms and intention of this Agreement.
|
14.3.
|
Documents
to be Delivered by AgFeed: On
or before the Closing, AgFeed shall
deliver or cause to be delivered to Guangxi Huijie and
the Guangxi Huijie Shareholders:
|
14.3.1. the
Purchase Price;
Page
15 of
19
14.3.2. certified
copies of such resolutions of the directors of AgFeed as are required
to be passed to authorize the execution, delivery and implementation of this
Agreement;
14.3.3. an
acknowledgement from AgFeed of the satisfaction of the conditions precedent
set forth in section 8.1 hereof; and
14.3.4. such
other documents as Guangxi Huijie and the Guangxi Huijie Shareholders may
reasonably require to give effect to the
terms
and intention of this Agreement.
ARTICLE
15. GENERAL
PROVISIONS
|
15.1.
|
Notice
|
15.1.1. Method
of Delivery: Any
notice required or permitted to be given by any party will
be
deemed to be given when in writing and delivered to the address for notice
of
the
intended recipient by personal delivery, prepaid single certified or registered
mail,
or
telecopier. Any notice delivered by mail shall be deemed to have been received
on the fourth business day after and excluding the date of mailing, except
in
the
event of a disruption in regular postal service in which event such notice
shall
be
deemed
to be delivered on the actual date of receipt. Any notice delivered personally
or by telecopier shall be deemed to have been received on the actual date
of
delivery.
15.1.2. Addresses
for Service: The
address for service of notice of each of the parties hereto is as
follows:
AgFeed:
AgFeed
Industries Inc.
0000
Xxxx
Xxx Xxxxxx, Xxxxxxxx and Technical Zone Xxx
Xxxxx
City, Jiangxi Province
Attn:
Xx.
Xx Songyan
Phone:
00-000-0000000
Telecopier:
00-000-0000000
Guangxi
Huijie
Guangxi
Huijie Sci. & Tech. Feed Co, Ltd
South
Zone
Coastal
Industrial Park
Liangqing
District, Nanning, Guangxi Province
China
Attn:
Xx.
Xxx Deyuan
Phone:00-000-0000000
Telecopier:
00-000-0000000
15.1.3. Change
of Address: Any
party
may, by notice to the other parties change its address
for notice to some other address and will so change its address for notice
whenever
the existing address or notice ceases to be adequate for delivery by hand.
A
post
office box may not be used as an address for service.
Page
16 of
19
|
15.2.
|
Further
Assurances: Each
of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any
other
party may reasonably
require to carry out and give effect to the terms and intention
of this
Agreement.
|
|
15.3.
|
Time
of the Essence: Time
is expressly declared to be the essence of this
Agreement.
|
|
15.4.
|
Entire
Agreement: The
provisions contained herein constitute the entire agreement among
Guangxi
Huijie, the Guangxi Huijie Shareholders, and AgFeed respecting
the subject
matter hereof and supersede
all previous communications, representations and agreements, whether
verbal or
written, among Guangxi Huijie, the Guangxi Huijie Shareholders
and
AgFeed with respect to the subject matter hereof.
|
|
15.5.
|
Binding
Effect and Benefit: This
Agreement will enure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors,
administrators, successors and permitted
assigns.
|
|
15.6.
|
Assignment:
This
Agreement is not assignable without the prior written consent of
the
parties
hereto.
|
|
15.7.
|
Counterparts:
This
Agreement may be executed in counterparts, each of which when executed
by
any party will be deemed to be an original and all of which counterparts
will together
constitute one and the same Agreement. Delivery of executed copies
of this
Agreement
by telecopier will constitute proper delivery, provided that originally
executed
counterparts are delivered to the parties within a reasonable time
thereafter.
|
|
15.8.
|
Applicable
Law: This
Agreement is subject to the laws of the People’s Republic of
China.
|
[Remainder
of page intentionally left blank.]
Page
17 of
19
IN
WITNESS WHEREOF
the
parties have executed this Agreement effective as of the day and year first
above written.
|
By:
/s/ Li Songyan
Li
Songyan, Chairman
|
GUANGXI
HUIJIE SCI. & TECH. FEED CO, LTD.
By:/s/ Lin
Xxxxxx
Xxx
Deyuan, Chairman
|
Page
18 of
19
Schedule
2.1
SHAREHOLDERS
OF GUANGXI HUIJIE SCI. & TECH. FEED CO, LTD.
|
Name
and Signature
|
Number
of Shares
|
Portion
of Purchase Price to be received
|
|
Xiao
Penghua
/s/
Xiao
Penghua
|
1,515,000
|
RMB4,343,000
|
|
Lin
Deyuan
/s/
Lin
Deyuan
|
495,000
|
RMB1,419,000
|
|
Su
Hong
/s/
Su
Hong
|
495,000
|
RMB1,419,000
|
|
Xxxx
Xxxx
/s/
Xxxx
Xxxx
|
495,000
|
RMB1,419,000
|
|
_________________________________
|
||
|
________________________________
|
||
|
________________________________
|
||
|
________________________________
|
Page
19 of
19
SCHEDULES
|
Schedule
1.1.5
|
Guangxi
Huijie Accounts Payable and Liabilities
|
|
Schedule
1.1.6
|
Guangxi
Huijie Accounts Receivable
|
|
Schedule
1.1.8
|
Guangxi
Huijie Bank Accounts
|
|
Schedule
1.1.11
|
Guangxi
Huijie Debt to Related Parties
|
|
Schedule
1.1.12
|
Guangxi
Huijie Equipment
|
|
Schedule
1.1.13
|
Guangxi
Huijie Financial Statements
|
|
Schedule
1.1.15
|
Guangxi
Huijie Insurance Policies
|
|
Schedule
1.1.17
|
Guangxi
Huijie Inventory
|
|
Schedule
1.1.18
|
Guangxi
Huijie Material Contracts
|
|
Schedule
1.1.19
|
Guangxi
Huijie Related Party Debt
|
