Exhibit 10.4
LEASE CONTRACT ("THE CONTRACT")
Lessor: Jiangxi Province Nanchang Organic Fertilizer Factory ("Party A")
Lessee: Jiangxi Fenglin Chemical Industry Company Ltd ("Party B")
Parties A and B based on sincere co-operation in order to operate a
successful joint-venture corporation-- Jiangxi Fenglin Chemical Industry
Company Ltd, enter this lease Contract in related to the lease of Party A's
industrial land, plants, equipment with the following terms:
ARTICLE ONE LEASED AREA AND CONTENTS
Party A owns industrial production land area ("Leased Area") within the
walls, plants and equipment, these include organic compound fertilizer
production line of annual capacity of 25,000 tons together with material and
finished products warehouses, repair workshop and tools, laboratory and
tools; Methyl Vinyl Silicon Rubber production line of annual capacity of 100
tons, Hydroxyl Methyl Silicon oil production line of annual capacity of 25
tons and production line for Methyl Vinyl Cyclohexane of annual capacity of 3
tons together with material and finished products warehouses, boiler and
boiler room, laboratory and equipment; and water supply & drainage, power
supply transformer, offices and related equipment.
ARTICLE TWO LEASED PERIOD, RENT AND TERMS OF PAYMENT
Leased for a period of five (5) years, effective from the date of this
Contract. Annual rent is RMB One Hundred Eighty Thousand (RMB180,000),
payable by two installments per year, each in half year's time of 50% each,
payable by Party B to Party A at the first month of each of the half year
period of the leasing years. If payment is in arrears, 1% interest per month
will be added for the first three months; after 3 months but less then half
year penalty will be added, based on 5% on the overdue rent amount; over half
year, Party A has the right to terminate The Contract and demand for
compensation.
ARTICLE THREE LEASED ITEMS AND USAGE
Within one month from the effective dates of this Contract and the
Joint-venture contract of Jiangxi Fenglin Chemical Industrial Company Ltd,
both Parties shall appoint representatives to carry out inventory counts and
prepare record book ("The Record"), and sign up memorandum in related to the
status of fixed assets; Fenglin Chemical Industry Company Ltd will purchase
and take over the existing material, finished products and parts based on
prevailing market price after inventory check; on completion of the above
procedure and on completion of capital and cash injection to the
joint-venture company, hand-over procedure should be carried out. Party A
also owns some other idle production facilities within the Leased Area. Party
A is allowed to dispose these facilities gradually within six months and it
may be extended to one year if it would not affect the operations of the
Lessee.
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ARTICLE FOUR MAINTENANCE, RENOVATION AND RE-SELL OF LEASED ITEMS
Party B should make proper use of the facilities so leased in accordance with
their designed capacities and methodology, maintain these facilities, carry
out normal repairs, not to overload, nor work against the methodology. If the
leased items were damaged as a result of this it will be the responsibility
of Party B to compensate.
On or before the expiration of this Contract, the Lessee, due to the
requirement of production and expansion, may carry out renovation or
dismantling of the plants and facilities. This requires the consent of Party
A and valuation by expert is needed to determine the residue values. Fenglin
Chemical Industry Company Ltd is required to purchase the items before
renovation or dismantle.
ARTICLE FIVE RETURN & INSPECTION OF LEASED ITEMS AFTER CONTRACT EXPIRED
Lessee is required to return the leased items to Lessor in accordance with
The Record prepared as per Article Three above for completeness. Hand-over
procedure should carried out by representatives from both Parties.
ARTICLE SIX TERMINATION AND EXTENSION OF LEASE & RESPONSIBITY ON BREACH
OF CONTRACT
Except caused by force majeure, any cause of for termination of this Contract
should be responsible by the Party who so causes and the Party should be
responsible for the compensation for the loss due to the termination of The
Contract.
On expiration of this Contract, any Party may request to extend and being
accepted by the other Party, both Parties should make joint consultation and
enter into contract accordingly.
ARTICLE SEVEN SETTLEMENT OF DISPUTES
From the effective date of this Contract, both Parties shall act accordingly.
Due to the breach of one Party, the other Party has the right to demand for
compensation for the loss due to the breach.
Any disputes arising from the execution of the Contract shall be settled
through friendly consultations between both Parties. In case no settlement
can be reached, the disputes shall be submitted to the Foreign Economic and
Trade Arbitration Commission of China Council for the Promotion of
International Trade for arbitration in accordance with its rules of
procedures. The arbitrated award is final and binding upon both Parties.
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ARTICLE EIGHT THE EFFECTIVENESS OF THE CONTRACT
The Contract shall be written in Chinese version with four printed true
copies, each Party holds two copies and became effective after both Parties
have signed.
Party A: Jiangxi Province Nanchang Organic Fertilizer Factory
Representative: Factory Manager
SIGNED
Party B: Jiangxi Fenglin Chemical Industry Company Ltd.
Representative: Director
SIGNED
October 18, 1996
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