Premises Leaseback Agreement
Exhibit
10.7
This
Premises Lease Agreement
(the “Agreement”)
is entered into as of August 26, 2008 by and among the following
parties:
Party A
(the Lessor): Henan Kaifeng High Pressure Valve Co., Ltd (河南开封高压阀门有限公司)
Domicile:
Xx. 00, Xxxx Xxx Xxxx Xxxx, Xxxxxxx Xxxx, Xxxxx Province
Legal
Representative: Fang, Siping
Facsimile:
0378-2913714
Party B
(the Lessee): Kaifeng High Pressure Valve Steel Casting Limited Liabilities
Company (开封高压阀门铸钢有限责任公司)
Domicile:
Xx. 00, Xxxx Xxx Xxxx Xxxx, Xxxxxxx Xxxx, Xxxxx Province
Legal
Representative: Zhang, Peizhuang
Facsimile:
0378-2995646
Party A
and Party B are referred to herein as the "Parties" collectively and as a
"Party"
individually.
Whereas,
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1
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Party
A is a duly established foreign invested enterprise. It owns
the land use right to the land lot located at Xx. 00, Xxx Xxxx Xxxx,
Xxxxxxx Xxxx, Xxxxx and the titles to the buildings
thereon. This land lot has been granted by the state for the
purpose of industrial use.
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2
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Party
B is a limited liability company established by two natural persons (Zhang
Peizhuang and Fang Binjie).
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3
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Now,
the Parties have agreed that Party A will lease parts of Factory Premises
on the aforesaid land to Party B.
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According
to the Contract Law of the People's Republic of
China and other relevant laws and regulations, and by the principle of
equality, mutual consent, mutual benefits and good faith, the Parties have,
after mutual negotiation, entered into this Agreement as to Party B’s lease from
Party A of Factory Premises that are duly authorized to be leased.
Article
1 Status of
the Factory Premises to be Leased
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1.1
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The
Factory Premises to be leased by Party A to Party B are located at Xx. 00,
Xxx Xxxx Xxxx, Xxxxxxx Xxxx, Xxxxx with total construction area of 27,451
m2. Reference
is made to Appendix I to this Agreement for the numbers of the building
title certificates for the Factory Premises to be leased to Party B (the
Factory Premises to be leased to Party B by Party A would hereinafter be
referred to as the “Factory
Premises”).
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1
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1.2
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Party
A hereby enters into this lease with Party B as the owner of titles to the
Factory Premises. Before entering into this Agreement, Party A
has demonstrated to Party B the Agreement for Transfer of Land Use Right
and Housing Titles under which Party A obtained titles to The Factory
Premises
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Article
2 The
Nature of the Lease and For Purpose of Production
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2.1
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Party
A has examined the business license or the contemplated business scope of
Party B. Party B warrants to Party A that Party B will use The
Factory Premises strictly in accordance with its approved business scope
during Party B’s lease thereof.
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2.2
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Party
B warrants that Party B will not, unless having been approved in writing
by Party A or by competent regulatory authorities (including work safety
authority, fire control authority, etc.) according to relevant
regulations, conduct in the Factory Premises any production activities
other than those set forth in Article
2.1.
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Article
3 Delivery
Date and Lease Term
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3.1
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Party
A will deliver The Factory Premises to Party B immediately after Party A
acquires title to the Factory Premises pursuant to the Agreement for Transfer of Land
Use Right and Housing Titles entered into between Party A and Party
B on August 26, 2008. The term of this lease will start on the
date of such delivery and lasts for one whole
year.
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3.2
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Upon
expiration of this lease, Party B will return The Factory Premises on a
timely basis. If Party B intends to extend the lease, it will
inform Party A in writing of its intent for extension of the lease three
months prior to the expiration to the lease. If Party A so
agrees, both Parties will sign a new Factory Premises Lease
Agreement.
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Article
4 Rental,
Method and Time limit of Payment
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4.1
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The
annual total rental for The Factory Premises will be the RMB equivalent of
US$ 80,000 (the applicable conversion rate will be the foreign exchange
rate quoted by the People’s Bank of China for Renminbi on the date of the
execution of this Agreement).
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4.2
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Party
B will pay each annual rental prior to December 31 each
year. Party B will wire transfer the payment to the below bank
account designated by Party A, or pay the amount in other methods as
agreed upon in writing by the
Parties:
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Account-Opening Bank: Chengdong sub-branch, Kaifeng Branch, Industrial and
Commercial Bank of China
Account number: 1703020209048023684
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In case
of any overdue payment, Party B will pay 0.3% of the annual rental as liquidated
damages for each day on which its rental is overdue.
Article
5 Xxxxxxx
Money and Other Fees
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5.1
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At
the delivery of The Factory Premises, Party B will pay no xxxxxxx money
for the lease of The Factory
Premises.
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5.2
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During
the term of this lease, Party B will be responsible for payment of fees
relating to tap water, electricity, gas, telecommunication, facilities,
property management, etc.
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5.3
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During
the term of this lease, Party A is responsible to secure property
insurance for The Factory Premises, and Party B is responsible to secure
property insurance for Party B’s assets in The Factory
Premises.
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Article
6 Requirement
on the Use of The Factory Premises
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6.1
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During
the term of this lease, Party B shall be responsible for reasonable
maintenance of the equipment and other assets inside the building; Party A
will, at its own cost, be responsible to maintain and repair for damages
during ordinary use of the Factory Premises unless such damages are caused
by Party B’s fault or negligence. Party A will repair within
three working days after the receipt of Party B’s notice. If
Party A fails to repair within the aforesaid time limit, Party B could
repair such damages itself, and then promptly inform Party A of such
repair and present to Party A relevant invoices for the expense incurred,
and Party A will bear expenses reasonably incurred in connection with
Party B’s repair.
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6.2
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During
the term of this lease, Party B will reasonably use and take care of The
Factory Premises and relevant facilities. Party B will bear
maintenance costs relating to damages to the Factory Premises arising out
of Party B’s improper or unreasonable use
thereof.
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6.3
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During
the term of this lease, both Parties will coordinate with each other in
good faith, and ensure the Factory Premises in usable and safe
condition. When Party A examines the Factory Premises for its
duty of safety administration, Party B will coordinate with Party
A. Upon discovering hidden work safety risks with Party B,
Party A has the right to inform Party B in writing and require it to
rectify.
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6.4
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If
Party B is to add equipment or decorations in the Factory Premises, it
shall obtain Party A’s written consent in
advance.
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Article
7 The
Status of the Factory Premises Upon Return
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7.1
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Unless
Party A has agreed to the extension of this Agreement, Party B will return
the Factory Premises within ten days from the expiration of this
lease.
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7.2
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The
Factory Premises so returned by Party B will be maintained in such
condition as after normal use.
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Article
8 Sub-lease,
Transfer and Exchange
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8.1
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During
the term of this lease, Party B will obtain Party A’s consent in writing
before it sub-leases any part or the whole of the Factory Premises to any
third party.
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8.2
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During
the term of this lease, Party B will obtain Party A’s consent in writing
before Party B delegates its lease of the Factory Premises to a third
party or exchanges its lease of the Factory Premises with a third
party. After such delegation or exchange, the third party which
has entered into the delegation or exchange of the lease of the Factory
Premises will enter into a agreement with Party A for a change in the
lessee and proceeds to perform this
Agreement.
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8.3
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During
the term of this lease, if Party A intends to sell or pledge the Factory
Premises, it will inform Party B three months in advance. When
Party A is to sell The Factory Premises or the mortgagee is to foreclose
on the Factory Premises, Party B has the right of first refusal to acquire
the Factory Premises on the same
terms.
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Article
9 Termination
Conditions
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9.1
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During
the term of this lease, upon any of the below circumstances, the Agreement
will terminate and neither Party will be liable to the
other:
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A
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The
land use right to the land covered by the Factory Premises is duly taken
back by the State ahead of
schedule.
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B
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The
Factory Premises are duly requisitioned for public
interests.
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C
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For
purpose of urban planning, the Factory Premises are duly listed among
properties required to be demolished and
relocated.
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D
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During
the term of this lease, the Factory Premises are identified as hazardous
Factory Premises, or are demolished or lost due to force
majeure.
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E
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Other
circumstances under which the lease may be terminated, as agreed upon by
the Parties in writing.
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9.2
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Under
any of the below circumstances, either Party may inform the other to
terminate the Agreement. If such breach of the Agreement by one
Party has caused damages to the other Party, the breaching Party will
indemnify the non-breaching Party for all the direct damages incurred by
the non-breaching Party:
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A
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Party
A fails to deliver the Factory Premises within the time limit, and fails
again to do so thirty days after Party B’s
notice.
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B
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The
Factory Premises delivered by Party A do not conform to the provisions of
the Agreement, thus frustrating the purpose of this lease; or the Factory
Premises delivered by Party A pose danger to workplace safety or contain
defect in fire-control rating.
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4
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C
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Party
A discovers workplace safety problems in Party B, and informs Party B in
writing and requires it to remedy the Factory Premises, but Party B fails
or refuses to remedy.
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D
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Without
Party A’s consent in writing and approvals from competent regulatory
authorities, Party B changes the Factory Premises’ intended or planned
production use and conducts production activities other than those set
forth in Article 2.1.
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E
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Without
Party A’s consent in writing or approvals from competent regulatory
authorities (including work safety authority, fire control authority,
etc.), Party B adds new facilities, modify internal designs, or produces,
operates, transports, stores and uses hazardous materials or disposes of
hazardous chemicals.
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F
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Without
Party A’s consent in writing, Party B sub-leases the Factory Premises,
transfers the lease to a third party, or exchanges the lease with a third
party.
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G
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Party
B has been in default on the rental payment for an aggregate of twelve
months.
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H
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The
Factory Premises suffer damages due to Party B’s improper use thereof or
any other negligence.
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I
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Other
circumstances under which this lease may be terminated, as agreed on by
the Parties in writing.
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Article
10 Breach
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10.1
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If
The Factory Premises contain defects when delivered, Party A will repair
such defects within ten days from the delivery. If Party A
fails to repair within such time limit, the rental that Party A
is entitled to will be reduced and relevant provisions relating to the
rental will be amended.
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10.2
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Party
A will indemnify Party B for any damages Party B has suffered due to the
fact that Party A fails to inform Party B of the existence on Factory
Premises of any mortgage or of any restriction on alienation of its
title.
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10.3
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If
Party B changes the construction structure of the Factory Premises, or
violates relevant technical standards or provisions on fire control and
safety without Party A’s consent in writing, or exceeds the scope of Party
A’s consent in writing, Party A is entitled to Party B’s restoration of
the Factory Premises and payment for
damages.
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Article
11 Disputes
Resolutions
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11.1
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This
agreement is governed by the laws and regulations of the People’s Republic
of China.
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11.2
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If
any dispute arises during the performance of this agreement, it will be
resolved by the Parties through negotiation. If no resolution
could be made through negotiation, the dispute will be resolved through
arbitration. The Parties mutually agree that the dispute will
be submitted to Shanghai sub-commission of the China International
Economic and Trade Arbitration Commission, and will be arbitrated
according to its arbitration rules. The arbitration award is
final and binding on both Parties.
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Article
12 Miscellaneous
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12.1
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Nothing
contained in this Agreement will constitute or create between either Party
and any of its officers, directors, employees or agents, an agency or
representative relationship or a partnership, nor will this Agreement
create any express or implied right, power or authority of Party B to
enter into any agreement, or to incur any liability or obligation, on
behalf of Party A. Party A will not be held liable under any
circumstances under this Agreement to Party B or any third party for any
act or omission by Party B that takes place before or after the execution
of this Agreement.
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12.2
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Under no circumstances will Party A be held liable under this Agreement
for any obligations, commitments or liabilities that existed, exist or
will exist with respect to any social insurance contribution, employee
welfare plan, pension plan, severance payment, workers compensation,
redundancy cost, or any other mandatory or optional welfare plan, for the
benefit of, or relating to, any present or former employee (including any
beneficiary of any such employee) of Party B or its
predecessors.
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12.3
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During
the term of this lease, if Party A is to mortgage a part or the whole of
the Factory Premises, it will inform Party B in writing and warrants to
Party B: if relevant parties are to dispose of The Factory Premises by
sale thereof, Party A will, 10 days in advance to such disposal, inquire
Party B in writing if Party B will exercise its right of first refusal
with respect to the Factory
Premises.
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12.4
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This
agreement will take effective after both Parties have signed and attached
their official seals to it. After the effectiveness of the
Agreement, Party A will be responsible to register it according to
relevant regulations and obtain the registration certificate for the lease
agreement.
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12.5
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After
the registration of this agreement, if this agreement is revised or
terminated, Party A will be responsible to go through formalities for
alternation or termination registration with the original registration
authority within fifteen days from such alternation or
termination.
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12.6
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The
Parties may negotiate with each other and reach mutual consent on any
matter not covered in this agreement and then enter into supplemental
articles. The supplemental articles and the appendix to this
agreement are indivisible parts of this agreement, and any handwritten or
printed word filled in any blank in this agreement, its supplemental
articles or its appendix will have the same effect as the main body of
this agreement.
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12.7
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This
Agreement and its appendix will be executed in three
originals. Party A and Party B will each hold one original, and
another original should be filed with Kaifeng real estate administrative
authority. Each of the three originals should have equal legal
effect.
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6
Party A
[Official
Seal]
Legal
representative of Party A: /s/ Fang
Siping
Xx. Xxxx
Siping
Date of
Execution: August 26, 2008
Location
of Execution: Kaifeng City, Henan Province, China
Party B
[Official
Seal]
Legal
representative of Party B: /s/
Zhang Peizhuang
Xx.
Xxxxx Peizhuang
Date of
Execution: August 26, 2008
Location
of Execution: Kaifeng City, Henan Province, China
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