Assets Lease Agreement
EXHIBIT
10.1
English
Translation
Tianjin
Shunli Enterprise Co., Ltd.
Henan
Zhongpin Food Share Co., Ltd.
6th
of September, 2007
Lease
Agreement
Party
A (lessor): Tianjin
Shunli Enterprise Co., Ltd.
Address:
Southern
Section of Chunxi Road, Economic Development Zone, Tianjin City, Jinghai
County
Legal
Representative:
Xxx
Xxxxx
Title:
Chairman of the Board
Party
B (lessee):
Henan
Zhongpin Food Share Co., Ltd.
Address:
00
Xxxxxxxx Xxxx, Xxxxxxx Xxxx, Xxxxx Province
Legal
Representative:
Zhu
Xianfu
Title:
Chairman of the Board
Whereas.
Through
holding a shareholder’s meeting on the 10th
of
August, 2007, Party A agreed to lease its assets to Party B under this
agreement. Party B held a Board of Directors meeting on the10th
of
August, 2007 and agreed to lease Party A’s assets. In order to use the
production capacity of Party A’s equipment to maximize the economic benefits for
both parties and create a win-win situation, Party A and Party B agreed to
enter
into this agreement and carry it out as follows according to “The Economic
Contract Law of the People's Republic of China,” and other related laws and
regulations :
Section
One Basic Conditions of Lease
1.
Location of Lease:
The
facility is located at Southern Section of Chunxi Road, Economic Development
Zone, Tianjin City, Jinghai County.
2.
Scope
of Lease:
Party
A
owns live pig slaughtering, cutting, refrigeration and cold storage equipment
and also has workshops, office buildings, workshops for preparing food,
dining-rooms, guard houses, and some buildings that serve as both office
buildings and domicile. The equipment includes but is not limited to water
and
electricity, a dirt-discharge facility, abattoir, logistics, dwelling house,
office building and other establishments, manufacturing instruments, lands
related to the above lease, a boundary wall and so forth.
However,
the following assets: (1) The second floor for the office and domicile and
its
office equipment is not included.(2) Since the office building, which is not
completed, has not been leased, Party A shall not lease it . When Party B needs
to use it, Party A may retain the third-floor and Party A can use other parts
of
the building free of charge. (3) The building shall be available for use within
three months after the agreement has been entered into.
The
above
assets are based on the “Lease List” attached to this agreement.
1.
Function
and Purpose of Lease
Xxxxxxxxx
and processing for pig purchase, refrigeration and sales.
If
Party
B needs to renovate and expand any part of the facilities, such construction
will be performed under the premise of protecting the assets of Party A and
improving its efficiency; Party A shall cooperate and Party B shall assume
all
expenses. If Party B needs to change the functionality in use of any facility,
it is necessary for Party A to agree to any such changes. The expenses
attributed to changing such functionality will be assumed by Party
B.
Section
Two Delivery Standard of Lease
1.The
delivery standard of the lease means the standard with which the lessor
delivers
the lease to the lessee.
2.
The
manufacturing equipment shall operate as in its standard condition without
deformity and damage and the Lease List shall have a clear indication of age,
place of production, brand and so forth.
3.
The
buildings and equipment shall work well as in their standard condition and
the
Lease List shall contain a clear indication of quality, condition, year of
purchase, place of production, brand and so on.
Section
Three Lease Term
1.
Both
Party A and Party B agree that the term for the above lease will be three years
from the 19th
of
September, 2007 to the 18th
of
September, 2010.
2.
If
Party B needs to continue leasing the assets after the lease’s expiration, Party
B shall give written notice to Party A one month before such expiration. After
receiving such notice, Party A shall notify Party B in writing whether it agrees
to continue leasing the assets to Party B. Through negotiation, the two parties
can agree to renew the contract.
3.
During
the lease and after its expiration, if a third party needs to lease or purchase
the leased assets from Party A, Party B shall have priority under the same
conditions.
Section
Four Rent Terms and Payment Methods
1.
Rent
standard: Party B shall pay ¥5,600,000
per year
for leasing the assets of Party A and total rent expenses for the three years
shall be ¥16,800,000.
2.
The
first
rent payment due under the lease shall be prepaid, i.e. ¥2,000,000 shall be
prepaid within 15 days after entering into this agreement. Thereafter, the
rent
shall be paid once quarterly at the beginning of the quarter, that is, within
the lease term, the next quarter’s rent of ¥1,400,000 shall be paid by the end
of the last quarter of this fiscal year. The rent shall be paid directly from
the prepaid funds. However, when the prepaid funds are not enough to pay the
next term’s rent, Party B shall pay according to the terms of the
agreement.
3.
If
Party
B pays the rent according to the agreement, Party A shall send a normal invoice
7 days before such rent is due. Party B shall telegraph money to the account(s)
appointed by Party A.
Section
Five Delivery of Lease
1.
Within
10 days after entering into the agreement, Party A shall provide the list of
leased assets to Party B and the two parties shall approve the first test of
the
leased assets.
2.
After
the first test of the leased assets, Party A shall bring forward the equipment
and establish which items are subject to quality problems so that Party B may
repair or acquire them within three days for the purpose of the lease
agreement.
3.
Within
15 days of entering into the agreement, Party A shall deliver the leased assets
to Party B for its use. If the date does not disagree with the beginning date
of
the lease term, this date shall be regarded as the beginning date of the lease
term. The end date of the lease term shall be adjusted accordingly.
4.
When
delivering the lease, both parties shall sign or seal their names to the Lease
List. At the time of delivery, the time of delivery marks the dividing point
between the use occupied by lease management and related
responsibilities.
5.
If
Party A delivers equipment with quality problems or flaws to Party B, Party
B
can refuse to accept it and remove the goods from the list. However, if such
equipment influences Party B in realizing the purpose of the agreement, Party
A
shall be responsible to repair it to its normal standard for use. If Party
A
delays in making such repair, Party B can repair it by itself or ask a
third-party to repair it to its normal standard of use. The expenses caused
by
such repair shall be assumed by Party A and directly deducted from the
outstanding rent.
Section
Six Repair, Maintenance
and Management of the Leased Assets
1.
Party
B shall be responsible for repair, maintenance and management of the lease
daily, the management scope includes the affiliated establishments and land
related to lease; Party B shall assume the management expenses while Party
A has
the right to supervise and check it.
2.
Party
B shall be responsible for discovering hidden problems in time to prevent risks
from occurring.
3.
Party
A shall be responsible for any equipment repair and acquirement which results
from any normal deterioration of the leased equipment, when such deterioration
results in such equipment needing to be replaced due to normal use and other
non
man-made factors, including but not limited to earthquake and so forth, and
Party A shall assume such related expenses.
4.
Party
A shall be responsible for “Overhaul” expenses during the lease. Overhaul
expenses refer to repairs of any one piece of equipment or building which
requires in excess of 10,000 yuan to repair. When estimated repair expenses
for
any single piece of equipment or building are more than 10,000 yuan, Party
B
shall notice Party A in writing and both parties shall confirm the repair and
maintenance parts. However, Party A must not delay to repair them without
reason, otherwise, Party B can postpone the rent term in terms of the delayed
time or deduct related rent; Party B will assume all maintenance expenses under
10,000 yuan.
5.
Party
A shall be responsible for, and assume any related expenses to, the annual
survey and audit of the assets in order to guarantee the normal use during
the
lease.
6.
If
during the lease, some low value articles, such as Iron Box, or other articles
without repair value, cannot be used any more, Party B shall deliver them to
Party A. Therefore, Party A shall deal with related procedures and Party B
shall
be no longer responsible for those items.
7.
During
the lease, Party B shall be responsible for the safety and management of lease
assets of Party A except for undelivered assets; some public establishments
used
by both parties, such as roads, stairs and assembly room and so on, which
establishments shall be managed by the Party who utilizes the space more than
the other while the other party shall cooperate. However, the managing party
shall not refuse to allow the other party use unreasonably.
Section
Seven Management of Consumable Energy Sources, Raw Materials,
Low-Value Consumption Goods, Work
Tool, Parts and Accessories
1.
On the
day when Party A delivers the lease assets to Party B, Party A shall verify
and
hand over the consumable energy sources, including water, electricity and
gasoline. Party A shall be responsible for the expenses before verification
while Party B shall be responsible for the costs after verification.
2.
Party
B can purchase the present materials and low-value consumption goods from Party
A with a one-off payment according to the current marketing prices; however
Party A can keep and deal with them if both parties cannot reach
agreement.
3.
When
Party A hands over the work tools and parts and services purchased by itself,
it
is necessary to give a clear indication of place of production, names, brands,
years used and purchase prices; after rescission or termination of the
agreement, Party B shall return any destroyed and used equipment in equal
quality and quantity or compensate in terms of the prices purchased by Party
A.
4.
All
accessories provided free of charge, including but not limited to instruction,
blueprints, work tools, parts and so forth will be taken handed over at one
time
and any registration free of charge by Party A must not be hidden or destroyed.
Section
Eight Creditor’s Rights and Liabilities
1.
Since
it is a lease agreement and Party A and B both are independent companies, the
rights and liabilities of both parties at the time of contract shall have no
relation to the lease of assets and Party A and B shall not be responsible
for
each other’s creditor’s rights and liabilities.
2.
If
any
rights and liabilities are assumed by either party during the term of lease,
each shall take their respective responsibilities and the other Party shall
not
take related responsibility and will not also assume any additional duties
due
to the termination of the agreement.
Section
Nine Labor Employment
1.
Since
the agreement is a lease and Party A and B are both independent companies,
Party B shall not be responsible for former employees of Party A; Party B can
hire new employees publicly in terms of national laws and regulations, however,
under the same condition, the former employees can be chosen according to their
achievement and capability; after former employees are hired by Party B, their
salaries and benefits will be consistent to those of other employees hired
publicly.
2.
Party
A shall take charge to deal with any problem before transfer of the employees.
Party B shall not be responsible for that.
3.
Party
B shall preside over the safety of all employees, salaries, benefits and
expenses independently while Party A shall have no responsibility for those
items.
Section
Ten Return of Lease
1.
After
the agreement is rescinded or terminated, Party B shall be responsible for
the
rights and duties caused by him during the lease, settle all payable expenses
and return the lease within 20 days.
2.
According to the “Lease List,” Party B shall submit the return report to Party A
in writing within three days after rescission or termination of the agreement.
Party A shall verify the return lease within seven days after it has been
returned. If the return of the lease is not verified by Party A after more
than
seven days, Party B shall be considered to have carried out his duty in terms
of
the agreement.
3.
After
the
lease assets are verified by both parties, Party B shall repair or purchase
the
lost and destroyed equipment and establishment brought forward by Party A within
three days in order to guarantee the assets of Party A are in good
condition.
4.
During
the lease, the assets purchased by Party B shall belong to Party B. After
rescission or termination of the agreement; Party B can may offer the items
at
reasonable prices to Party A or take them for itself. However, Party B shall
remove any of its own equipment or structures which it set up on the premise
so
long as it does not influence the security, function or cause any damage from
such removal.
Section
11 Lease cooperation
1.
Party
A shall assist Party B in completing registration before Party B sets up Tianjin
Zhongpin Food Co., Ltd.; this agreement shall be implemented by Tianjin Zhongpin
Food Co., Ltd. which is wholly-owned by Party B.
2.
Tianjin Zhongpin Food Co., Ltd., which is wholly-owned by Party B, shall
use Party A’s lease objectives, and shall run its business
accordingly. Party B shall operate its business independently, check accounts
independently, and take on full responsibility for the success of its
business.
3.
Party
A shall freely provide records containing the provisions of all of the current
raw materials and subsidiary materials with its customers and with some other
public relations which are good for Party B’s business and
operations.
4.
Party
A shall pay for fees including test fees, water, water quality testing fees
and
all other official fees and various taxes incurred during the production and
operation period; Party B shall also pay for the physical examination fees
of
its staff during the cooperation period; During the lease period, pollution
discharge fees shall be paid by Party A assuming the amount owed is 8,000 RMB
or
less per quarter, but Party B shall pay for the fees which exceed 8,000 RMB
per
quarter.
5.
During
the lease period, the carcass meat and red meat produced by Party B shall be
sold under the “Xxxx Xx” brand owned by Party A, while the cut meat can be sold
under Party B’s brand; Party A shall be responsible for maintaining market order
and management. The carcass meat, red meat and cutting meat are sold in the
northeast and Tianjin area.
6.
Party
A can authorize Party B to use the “Xxxx Xx” brand freely with 7 days after
signing the contract and registering with the business administration. The
authorized term is the same as the lease term and Party B shall use equipment
and facilities owned by Party A to produce carcass meat.
7.
The
packaged carcass meat is sold under the “Xxxx Xx” brand is designed, produced
and the package fees paid by Party B.
8.
If
both Parties get governmental allowance, such allowance shall be shared at
the
ration of Party A 1: Party B 2, that is, Party A shares 1/3 while Party B shares
2/3. The share distribution automatically terminates when this policy
terminates.
9.
Obtaining government allowance is the responsibility of Party A with assistance
provided by Party B. The fees incurred shall be taken by Party A, but shouldn’t
be offset by the allowance. Party A shall pay the allowance to Party B directly
on the second day of obtaining the allowance, not including any offset of rent
approved by Party B.
10.
During the lease term, Party A is responsible for reporting, communicating
and
coordinating with the local government and governmental functional departments
to ensure Party A enjoys the same or better favorable policies than Party B
enjoys (including but not limited to examination fees); and ensure that Par
B
has good security and external environment.
11.
During the lease period, Party A shall make efforts to get funds support from
local government and functional departments to put into related
programs.
Section
12 Party A’s Rights and Obligations
1.
Party
A has the right to sign the contract and shall be bound by it after the contract
takes effect.
2.
Party
A shall have the right to demand Party B to pay rent according to the agreed
amount and mode
3.
Party
A shall maintain all ownership rights in the leased property. Party A shall
ensure Party B’s integrity and security of the leased property.
4.
Party
A pledges the leased property ownership belongs to Party A and that
it of hasn’t rented its use rights out to a third Party.
5.
Party
A guarantees there is no disagreement on ownership and shall not affect Party
B's normal production and operation activities due to Party A’s
reasons.
6.
Party
A pledges that in the lease term, Party A shall not place any new
limitations regarding other rights.
7.
Party
A pledges, in the lease terms, it won’t affect Party B’s business due to being
an original holder of the leased property or exercise its mortgage
right or use arbitration or other enforcement rights.
8.
Party
A pledges the dated of the termination date of this agreement, the
leased property shall be available for use.
9.
Party
A pledges not to intervene in Party B’s formal business and
operation.
10.
Assist Party B in petitioning the local government to strictly put favorable
policies, coordinate and handle various social relationships during the term
of
the contract.
11.
Party
A agrees that Party B can use Party A’s registration number for exportation
and product certifications, and assistant manage products exportation
procedures, Party B pays the fees incurred during the procedures of products
exportation; Party B shall guarantee production and business management are
operated according to the standard requirements.
12.
During the lease term, Party A can’t engage in the same production as Party B in
the Tianjin administrative area.
13.
Assist
Party B conduct normal production and operations on the date of
entry.
Section
13 Party B’s Rights and Obligations
1.
Party
A has right to sign the contract and shall be obliged after the contract takes
effect.
2.
Party
B shall pay for the rent to Party A timely; if a third party controls the
leased property that results in Party B being unable to use or
get proceeds from the leased property, Party B has right to lessen rent or
refuse to pay.
3.
Party
B pledges not to engage in illegal activities on
the leased property.
4.
Party
B is responsible for the maintainance and protection of the leased
property; After gaining the consent of Party A, Party B could change or add
other property, and conduct the technical changes or production line
adjustments, but the added property shall belong to Party B.
5.
Party
B shall use the leased property according to this agreement, and as the leased
property incurs normal deterioration, Party B shall not responsible for such
deterioration.
6.
During
lease terms, Party B shall not be able to sell, rent, and give guarantee,
or mortgage leased property.
7.
If
Party B engages in business activities which may result in property and
health damage, Party B shall assume liability.
8.
The
products produced by Party B shall be offered to Party A with priority
at the same market price.
9.
Party
B shall pay the taxes which are involved in the business.
10.
Party
B shall protect the property well during the lease, Party B shall pay the repair
fees in the event of damage Party A’s property.
Section
14 Breaching Obligations
1.
In the
event that Party A fails to deliver the lease to Party B or Party B fails to
return the lease to Party A during the leasing period according to the
Agreement, the defaulting party shall pay 50,000 yuan to the observant party
per
day for such delay.
2.
In the
event that Party B fails to pay rent during the leasing period according to
the
Agreement, Party B shall pay a defaulting penalty in the amount of 1.5‰ of
the part of the deferred rent per day.
3.
Once
the mortgagee of the leasehold exercises the lien that affects Party B’s normal
operation resulting from litigation or arbitration, Party A shall pay the
penalty with the amount between 50,000 to 100,000 yuan to Party B; Party A
shall
pay the penalty as much as twice of the rent for the discontinuance period
resulting from the discontinuance of the leasing agreement; for the result
of
the discontinuance of the leasehold agreement, Party A shall pay as much as
twice of the rent for the unexpired term to Party B.
4.
In the
event that either Party breaches any liability, commitment, guarantee or
obligation under the Agreement, the defaulting Party shall pay the other party
a
penalty of 100,000 yuan. If such penalty does not cover the other party’s losses
and damages, the breaching party shall be responsible for the other party’s
losses.
5.
Should
Party A fail to perform its obligations of replacing, maintenance, examination
and repair stipulated in the Agreement which failure adversely impacts Party
B’s
normal operations, Party B may maintain, examine and repair by itself with
all
expenses incurred from such repair deducted from the rent expenses. Nonetheless,
Party B shall not decrease the amount of rent due in the correlated invoice.
In
addition, Party B shall deliver the invoices for such repairing expenses to
Party A.
6.
Should
either Party terminate the Agreement in advance, it shall notify the other
party
at least two months prior to such termination; in the event such termination
has
been initiated by either party with no legal or stipulated reason, it shall
be
responsible paying a breaching penalty equal to the amount of rent due for
the
period from the date of termination to the date on which the Agreement
expires.
7.
Should
Party A breach the agreement under Item 5, 6 or 7 under Section 11 interrupting
Party B’s normal operations, Party A shall be responsible for the defaulting
liability and pay Party B a penalty equal to the total rent for the period
from
the breaching date to the expiration date of the Agreement.
SECTION
15 GOVERNING LAWS
This
Agreement and all rights and obligation hereunder shall be governed
according to the laws and rules of the People’s Republic of China.
SECTION
16 SETTLEMENT OF DISPUTES
Both
sides shall settle the disputes arising from carrying out this agreement through
consultation; should both parties fail to reach agreement, the parties shall
report to the Tianjin Intermediate People's Court for arbitration.
SECTION
17 FORCE MAJEURE
1.
Force
majeure under this contract refers to any riot, civil strife, war, adjustments
to governmental policies, rules, or earthquake, Act of God or other
unpredictable, unavoidable or uncontrollable reason.
2.
Should
either party be influenced by an act of force majeure and be unable to perform
its obligations under the contract, its liabilities and obligations shall be
discontinued during the period of force majeure, and the term for such
obligations shall be automatically extended until the end of the act of force
majeure and such party shall be exempted from any related liabilities caused
by
the force majeure.
3.
Either
party that encounters force majeure shall be notify the other party in writing
immediately and provide evidence indicating the duration of the force majeure
within 30 days after the end of the accident.
4.
In the
events of any force majeure, either party shall negotiate immediately for the
reasonable settlement and shall make all reasonable and fair effort to
minimize the bad implications arising from the force majeure.
5.
If the
duration of the force majeure exceeds 120 days and neither party reaches a
reasonable settlement, either party can terminate the contract without
undertaking defaulting liabilities.
SECTION
18 MISCELLAEOUS
1.
The
contract shall not be revised or cancelled by either party unilaterally, and
shall be revised or cancelled on the basis of negotiation and signing agreement
in written form by both parties.
2.
As an
indispensable part of this contract, the exhibits have the same legal
effect.
3.
Regarding the clauses not mentioned in the contract, both parties shall enter
into a supplemental agreement, which shall be an inalienable part of the
contract with the same legal effect.
4.
The
agreement shall be in effect upon the authoritative representatives’ signatures
with seal.
5.
There
are six duplicates of the contract and each party shall hold three with the
same
legal effect.
Exhibits.
1.
Leasehold List: facilities and equipments, buildings and affiliated facilities
list
2.
A
duplication of Party A’s Business Registration Certificate
3.
A
duplication of Party B’s Business Registration Certificate
4.
A
duplication of Party A’s Land Certificate
5.
Blueprint of Party A’s Buildings
Party
A: Tianjin Shunli Enterprise Co., Ltd.
Party
B: Henan Zhongpin Food Share Co., Ltd.
Authorized
Representative: /s/ Xxx Xx (Seal)
Authorized
Representative: /s/ Xxxxxx Xxx (Seal)
Date:
September 6, 2007
