Growing State Ltd. and Shanghai Qingpu Industrial Park District Development (Group) Company Limited Investment Agreement
For
reference only. In case there is any discrepancy in the contents between the
English
and the Chinese versions, the Chinese version shall
prevail.
Growing
State Ltd.
and
Shanghai
Qingpu Industrial Park District Development (Group) Company
Limited
21
March 2006
For
reference only. In case there is any discrepancy in the contents between the
English
and the Chinese versions, the Chinese version shall
prevail.
The
parties to this Agreement are:
|
Party
A
|
:
|
Shanghai
Qingpu Industrial Park District Development (Group) Company
Limited
|
|
|
Name
of the legal representative
|
:
|
Yu
Hai Ping (于海平)
|
|
|
Business
license no.
|
:
|
29000001199903260055
|
|
|
Address
|
:
|
Xx.
0000, Xxx Xxxx Xxxxx Xxxxxxx, Xxxxxx, Xxxxxxxx
|
|
|
Party
B
|
:
|
Growing
State Limited
|
|
|
Name
of legal representative
|
:
|
Xx
Xxxx Fa (易永发)
|
|
|
Business
license no. (Business registration no.).
|
:
|
688308
|
|
|
Address
|
:
|
00/X,
Xxxxxx Xxxxx, 000 Xxxxxxxxxx Xxxx, Xxxxxxx, Xxxx
Xxxx
|
|
In
order
to facilitate the development of the enterprise and the boost the local economy,
the parties agree to enter into this agreement in accordance with the
application laws and regulations so both parties will benefit from this
arrangement.
Article
1 - Investment Background
The
parent company of this project is Growing State Limited. The parent company
was
established and funded by several companies such as the U.S. Chinamerica Fund.
This
Agreement was entered into based on the above background information, unless
otherwise agreed by Party A in writing. Party B shall provide proof of corporate
structure of Chinamerica Fund and Growing State Limited and documents evidencing
the relationships between the two entities to Party A within one month from
the
date of signing of this Agreement.
Article
2 - Investment
| (i) |
investment
project: Manufacturing of products which contain probiotics in powder
form.
|
| (ii) |
Party
B shall establish a wholly foreign owned enterprise for this investment,
the first installment of registered capital of the new wholly foreign
owned enterprise shall be US$18,000,000 and the total investment shall
be
US$29,800,000. The place of registration of the new enterprise shall
be in
the Shanghai Qingpu Industrial Park District. Party B shall commence
the
application process for establishment of the new wholly foreign owned
enterprise within one month from the date of signing of this agreement.
|
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
| (iii) |
user
of land
|
| (1) |
this
investment project involves a grant of lease of a piece of land with
a
usable area of 53,437 square meters (approximately 80.1 hectares) and
an
area of 19,700 square meters (approximately 29.6 hectares) for river
line
planning and green urban road planning purposes. The total area of
the
land is 73,157 square meters (approximately 109.7 hectares). (the actual
area as shown in the plans certified by the Building and Lands Bureau
shall prevail)
|
| (2) |
the
coordinates of the land are: to the north of Sin Qu Road and to the
west
of Xi Men Zi, please refer to Appendix
1
for the boundaries of the land.
|
| (3) |
the
land shall be use for industrial purposes and Party B shall use the
piece
of land for the said permitted purpose only. If there is a genuine
need
for Party B to amend the user of land during the term of this agreement,
Party B shall, subject to a consent from Party A, go through the necessary
procedures to change the user of land.
|
| (4) |
construction
and building management - the proposed volume of construction shall
be
≥0.8,
≤1.5;
the building density shall be ≥35%,
≤51%;
and the green rates shall be ≥20%.
(the actual figures to be confirmed by the Planning Administration
Bureau)
|
| (5) |
fees
and payment
|
| (a) |
the
land transfer fee shall be US$35 per square meter, totaling US$1,870,995
(United States Dollars one million eight hundred seventy thousand nine
hundred and ninety-five). (the actual amount to be determined based
on the
area of the land certified by the Building and Lands Bureau) Party
B shall
pay the land transfer fee to Party A immediately before the issue of
the
approval documents for the land by the Qingpu People’s
Government.
|
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
| (b) |
land
acquisition compensation fee shall be US$35 per square meter, totaling
US$689,500 (United States Dollars six hundred eighty-nine thousand
and
five hundred). (the actual amount to be determined based on the area
of
the land certified by the Building and Lands Bureau). Party B shall
pay
one-third of the land acquisition compensation fee, totaling US$229,833
(United States Dollars two hundred twenty nine thousand eight hundred
and
thirty-three) to Party A immediately before the issue of the approval
documents for the land by the Qingpu People’s
Government.
|
The
total
land leasing fees above is US$2,100,828 (United States Dollars two million
one
hundred thousand eight hundred and twenty-eight). (the actual amount to be
determined based on the area of the land certified by the Building and Lands
Bureau). Party B shall pay an amount equal to 10% of the land leasing fees,
that
is, US$210,083 (United States Dollars two hundred ten thousand and eighty-three)
to Party A within 15 days from the date of signing of this Agreement, i.e.
April
5, 2006 as deposit (the deposit may be paid in Renminbi). Upon payment in full
of the land transfer fee and the land acquisition compensation fee by Party
B or
by the new enterprise established by Party B for this investment project, Party
A shall refund the said deposit to Party B in full.
Party
A
shall procure the Building and Land Administration Bureau to sign the State
Owned Land Transfer Agreement within 30 days from the date Party B obtains
the
land approvals and the date of receipt of the said land fees. In addition,
Party
A also agree to assist Party B to complete the application process for the
Land
Title Certificate within 3 months from the date of signing of the State Owned
Land Transfer Agreement provided that Party B shall furnish all necessary
information to Party A.
Article
3 - Progress of the investment project
Party
B
irrevocably represents and warrants to Party A that:
| (i) |
Investment
proposal of this project as set out in Appendix
2
to
this Agreement - Party B represents and warrants that Party B shall
seek
Party A’s consent before Party B or the enterprise established by Party B
makes any amendments or alterations to the investment
proposal.
|
| (ii) |
The
investment proposal shall be implemented according to plan, the target
dates of each stages of the proposal are as
follows:
|
| • |
The
date of commencement of the construction works shall not be later than
Jan
25, 2007;
|
| • |
The
date of completion of the construction works shall not be later than
Nov
25, 2007; and
|
| • |
The
date of commencement of production shall not be later than Jan 25,
2008.
|
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
| (iii) |
Benchmarks
for measuring the progress of the investment
proposal
|
| (1) |
date
of commencement of the construction works: when the percentage of
completion of the construction works reached 10% (the status of
construction works must be certified by the main contractor for the
construction works, the governing and management unit and the
subcontractors for the construction works by signing and affixing the
official seal in a certificate).
|
| (2) |
date
of completion of the construction works: the date when the premises
has
passed the inspection in accordance with the Central Construction and
Engineering Standard. (based on the date of the “Shanghai City
Construction and Engineering Quality Inspection Certificate issued
by the
inspection authority).
|
| (3) |
date
of commencement production: the first batch of products are formally
launched in the market for sale (based on the date of issue of the
value
added tax invoices for the first batch of
products)
|
| (iv) |
for
the purpose of determining the exact benchmark date of each stage of
the
investment proposal, both Party A and Party B shall cooperate with
each
other and fulfill its obligations. Party B shall cause Party B’s investor
to affix the official seal to the original certificate received pursuant
to sub-clause (iii)(2) of this Article 3 and shall deliver the said
certificate to Party A within 3 business days from the date of receipt
of
the said original certificate. Party A shall return the said certificate
to Party B when Party A completed the verification process. If Party
B
fails to deliver the said to Party A as agreed, this would constitute
a
breach of this term by Party B.
|
Article
4 - Construction of structural facilities and construction of municipal
facilities
| (i) |
Party
A should provide a flat piece of land [to Party B], if there exists
on the
land fish ponds and/or river lines which clearly falls below the standard
height of the piece of land then Party A shall be responsible for the
costs for filling the fish pond and/or river lines to the extent that
the
fish ponds and/or river lines will be filled up to “Wu Song Standard
Height” of 3.1 meter. Party A is responsible for the filling up works. The
contractor to be engaged for carrying out the filling up works should
be
approved by both Party A and Party B and the parties hereto shall also
appoint a surveyor who is an independent third party to verify the
relevant data and information. The amount of compensation payments
payable
by Party A to Party B for filling up works shall be limited to $25
per
square meter.
|
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
| (ii) |
Party
A shall be responsible to connect the following municipal facilities
to
the red line marked by Party B. The costs associated with this connection
and the fees for the increase in capacity shall be paid for by Party
B to
be calculated based on the prescribed rates set out in Appendix
3
hereto.
|
| (1) |
Party
A shall be responsible to install or extend the water pipelines to
the
land occupied by Party B to the common network near the red line marked
by
Party B within 90 working days from the effective date of this Agreement
and upon receipt of the formal application from party B. Party A shall
be
responsible to design, confirm and implement the details the installation
of the water pipelines. Costs for the installation and connection of
the
water pipelines beyond the red line marked by Party B shall be borne
by
Party B absolutely.
|
| (2) |
Party
A shall be responsible to install or extend the storm water pipelines
to
the land occupied by Party B to the common network near the red line
marked by Party B within 90 working days from the effective date of
this
Agreement and upon receipt of the formal application from party B.
Party A
shall be responsible to design, confirm and implement the details the
installation of the storm water pipelines. Costs for the installation
and
connection of the storm water pipelines beyond the red line marked
by
Party B shall be borne by Party B
absolutely.
|
| (3) |
Party
A shall be responsible to install or extend the sewage pipelines to
the
land occupied by Party B to the common network near the red line marked
by
Party B within 90 working days from the effective date of this Agreement
and upon receipt of the formal application from party B. Party A shall
be
responsible to design, confirm and implement the details the installation
of the sewage pipelines. Costs for the installation and connection
of the
sewage pipelines beyond the red line marked by Party B shall be borne
by
Party B absolutely.
|
| (4) |
Party
A shall be responsible to install or extend the electricity cables
for use
in the production process to the land occupied by Party B to the common
network near the red line marked by Party B within 180 working days
from
the effective date of this Agreement and upon receipt of the formal
application from party B. Party A shall be responsible to design, confirm
and implement the details the installation of the electricity cables.
Costs for the installation and connection of the electricity cables
beyond
the red line marked by Party B shall be borne by Party B absolutely.
In
addition, Party B uses more than 1000KVA of electricity and new
electricity cables are required to be installed, Party B shall pay
50% of
the costs of such external electricity
cables.
|
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
| (5) |
Party
A shall be responsible to install telecommunication and network cables
to
the land occupied by Party B to the common network near the red line
marked by Party B within 90 working days from the effective date of
this
Agreement and upon receipt of the formal application from party B.
Party A
shall be responsible to design, confirm and implement the details the
installation of the telecommunication and network cables. Costs for
the
installation and connection of the telecommunication and network cables
beyond the red line marked by Party B shall be borne by Party B
absolutely.
|
| (6) |
Party
A shall be responsible to install or extend the heat pipelines for
use in
the production process to the land occupied by Party B to the common
network near the red line marked by Party B within 180 working days
from
the effective date of this Agreement and upon receipt of the formal
application from party B. Party A shall be responsible to design, confirm
and implement the details the installation of the heat pipelines. Costs
for the installation and connection of the heat pipelines beyond the
red
line marked by Party B shall be borne by Party B absolutely.
|
Article
5 - Relevant laws and regulations
| (i) |
the
enterprise should adhere to the National Laws and Regulations for policies
regarding tax collection.
|
| (ii) |
the
enterprise should pay the relevant fees and to fulfill its obligations
pursuant to the National Laws and
Regulations.
|
| (iii) |
if
there are any subsequent changes to the applicable laws and regulations
in
the future which affects the terms and conditions of this Agreement,
such
terms and conditions shall be amended accordingly to ensure compliance
with the changes in applicable laws and
regulations.
|
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
| (iv) |
Party
A agrees to grant a special incentive plan to Party B, the details
of
which are set out in
Appendix 4
hereto.
|
Article
6 - Human resources
In
accordance with the applicable laws and regulations of the Country, the Shanghai
city and the Qingpu district.
Article
7 - Force Majeure
| (i) |
A
party shall not be deemed to be in breach of this Agreement, or otherwise
be liable to the other party, for any delay in performance or the
non-performance of any of its obligations under this Agreement (including
payment obligations), to the extent that the delay or non-performance
is
due to any event of force majeure of which it has notified the other
party, and the time for performance of that obligation shall be extended
accordingly (if applicable).
|
| (ii) |
An
event of force majeure referred to in this Agreement means any event,
foreseeable or unforeseeable, the consequences of which are reasonably
unavoidable or beyond the reasonable control of a party, and which
prevents total or partial performance of a non-payment obligation under
this Agreement by such party including, but not limited to, earthquake,
hurricane, fire, war, but shall not include any financial hardship
suffered by a party to this Agreement.
|
| (iii) |
The
party who is affected by an event of force majeure shall notify the
other
party within 7 days from the date of occurrence of the event of force
majeure.
|
Article
8 - Others
| (i) |
Upon
the request of Party B, Party A shall act as Party B’s authorised agent to
handle the application process for all the necessary permits and approvals
that are required to implement this investment project. Party B shall
enter into an agency agreement and shall pay for all costs and expenses
incurred for such applications.
|
| (ii) |
any
unauthorized use of public roads, river and land are prohibited, if
any
authorities demands a right of way to pass through the land occupied
by
Party B, Party B shall unconditionally grant such right of
way.
|
| (iii) |
The
land leasing fees set out in this Agreement includes land transfer
fees,
land acquisition resettlement fee payable by the Buildings and Lands
Bureau and a portion of the costs for the facilities payable to Party
A.
Party B hereby appoints Party A as its agent to handle the payment
procedures for the land leasing fees and that Party B hereby represents
and warrants that it will fulfill its contractual obligations to make
payments. Failure for Party B to make any payments in accordance with
this
Agreement shall constitute a breach of this
Agreement.
|
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
Article
9 - Breach of contract
| (i) |
If
Party A breaches Article 4(ii) of this Agreement, Party B may demand
Party
A to fulfill its obligations and Party A shall be liable to Party B
for
penalty payments for delay in fulfilling its obligations. The penalty
payments for each day of delay shall be determined based on
3/10,000th
of
the total amount of land leasing fees paid by Party
B.
|
| (ii) |
If
Party A breaches Article 2[(iii)(5)] of this Agreement regarding its
obligations to procure Party B to enter into the State Owned Land Transfer
Agreement with the Building and Land Administration Bureau and to assist
Party B to complete the application process for the Land Title
Certificate, if the foregoing is not completed when due, Party A shall
be
liable to Party B for penalty payments. The amount of penalty payments
for
each day shall be determined based on 3/10,000th of the land leasing
fees
already paid by Party B. If Party A’s aforesaid obligations are not
completed within three (3) months after the due date, Party B has the
right to terminate this Agreement. Party A shall return an amount equals
to two times the deposit paid by Party B, except if such said delay
is
caused by Party B’s inaction or other reasons of Party
B.
|
| (iii) |
If
Party B breaches Article 1 of this Agreement or if it breaches Article
2(iii)(5) of this Agreement and failed to pay the deposit to Party
A,
Party A shall have the right to terminate this
Agreement.
|
| (iv) |
If
Party B breaches Article 2(iii)(4) of this Agreement, or if Party B
fails
to comply with the requisite volume of constructions, building density
and
green rates, Party A shall have the right to reduce the area of the
land,
if the variances are material, Party A shall have the right to terminate
this Agreement.
|
| (v) |
If
Party B breaches Article 2(iii)(5) of this Agreement and failures to
pay
the balance of land leasing fees to Party A on or before the specified
date, Party A shall have a right to demand Party B to make such payments,
and Party B shall be liable to Party A for late payment penalties.
The
amount of late payment penalty for each day of delay shall be determined
based on 3/10,000th
of
the unpaid balance of the land leasing fees. If Party B fails to make
payments within 30 days, Party A shall have a right to terminate this
agreement and forfeit the deposit.
|
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
| (vi) |
If
Party B breaches Article 3(i)(2) of this Agreement, Party A shall have
the
right to demand Party B to fulfill its obligations, and Party B shall
be
liable to Party A for penalty payments. The amount of penalty payments
for
each day shall be determined based on 3/10,000th
of
the land leasing fees and such penalty payments are in addition to
all
other penalty payments which Party B is already liable
for.
|
If
the
benchmark date of each stage of the investment project was delayed for a period
of 120 days, Party A shall have a right to terminate this Agreement. Party
B
shall, in addition to paying the penalty payments, agree to vacate Shanghai
Qingpu Industrial Park unconditionally and to abandon the investment project.
All assets which relate to this investment project shall be at the disposal
of
Party A. The parties hereto shall enter into a separate agreement regarding
the
share of proceeds from realization of such assets.
If
the
delay in construction works is caused by Party A or the approval process of
the
government authorities, then such benchmark dates will be postponed
accordingly.
| (vii) |
If
this Agreement was terminated as a result of breach of any obligations
by
Party B, Party A shall not be liable for any losses or damages suffered
by
Party B (whether directly or indirectly).
|
Article
10
- The
parties may enter into supplemental agreements for matters that are not referred
to in this Agreement.
Article
11
-
Appendix 1 - Boundaries of the land; Appendix 2 - Investment proposal prepared
by Party B; Appendix 3 - Schedule for fees in relation to connection of
municipal facilities; and Appendix 4 - Terms of the special incentive plan
form
part
of this Agreement and shall have the same force and effect as if expressly
set
out in the body of this Agreement.
This
Agreement, its Appendices and supplemental agreements shall be governed and
construed in accordance with the laws of the People’s Republic of
China.
This
Agreement, its Appendices and supplemental agreements shall be executed in
Chinese and any translations are provided for reference only. The Chinese
version shall prevail in the event of any inconsistencies.
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
Article
12
- Party
A and Party B shall resolve any disputes in relation to this Agreement by
negotiations. If the parties failed to settle the dispute through negotiations,
either party may initiate legal proceedings in the People’s Court.
Article
13
- This
Agreement shall become effective when both parties have signed and affixed
their
respective official seal.
Article
14
- This
Agreement including its Appendices have 11 pages and 4 copies of this Agreement
shall be executed. Each party shall keep 2 execution copy of this Agreement
and
all of the execution copy shall be the same legal effect.
Article
15
- This
Agreement was executed on March 21, 2006 in Qingpu Industrial
District.
[Remainder
of this page is left blank]
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
Party
A:
Shanghai Qingpu Industrial Park District Development (Group) Company
Limited
Legal
Representative: (S.d.)
or
authorised representative (chop):
Signing
date: 21 March 2006
Party
B:
Growing
State Limited
Legal
Representative: (S.d.)
Or
authorised representative (chop):
Signing
date: 21 March 2006
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
Appendix
1 - the boundaries of the land
Attached
plan showing the location and boundaries of the land.
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
Appendix
2 - Investment proposal prepared by Party B
Attached
plan illustrating the buildings proposed to be constructed on the land, their
respective proposed use and area.
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
Appendix
3 - Schedule
for fees in relation to connection of municipal facilities
|
1.
|
Water
supplies
|
Fee
for increase in capacity
|
:
|
Free
|
|
Usage
fees
|
:
|
Use
in production: RMB1.5 per ton
|
||
|
Water
resources fees: RMB0.03 per ton
|
||||
|
Sewage
facility fees: RMB0.45 per ton
|
||||
|
2.
|
Natural
gas
|
Fee
for increase in capacity
|
:
|
Free
|
|
Usage
fees
|
:
|
In
accordance with the standard fee schedule adopted by the Shanghai
Fuel and
Gas Company Limited
|
||
|
3.
|
Sewage
|
Fee
for increase in capacity
|
:
|
Free
|
|
Usage
fees
|
:
|
RMB0.90
per ton
|
||
|
4.
|
Electricity
|
Fee
for increase in capacity
|
:
|
Free
(if
the enterprise uses over 1,000KVA of electricity, and that the Electricity
Supply Bureau needs to install 10KV external electricity cable for
that
enterprise, then the costs of those new 10KV external cables will
be borne
by the Industrial Park and the enterprise in question in equal shares
and
other fees and expenses shall be borne by the user
absolutely)
|
|
Usage
fees
|
:
|
In
accordance with the standard fee schedule adopted by the Huadong
Electricity Authority
|
||
|
5.
|
Telecommunication
|
Fee
for increase in capacity
|
:
|
Free
(according
to the rules governing telecommunications, additional connection
fees will
be payable by the enterprise, the exact amount of the fees shall
be
calculated by the relevant authorities)
|
|
Usage
fees
|
:
|
Based
on actual usage
|
||
|
6.
|
Steam
|
Fee
for increase in capacity
|
:
|
If
the rate of usage is below 2 tonnes per hour: RMB28 per
ton
|
|
If
the rate of usage is 2-6 tonnes per hour: RMB25 per ton
|
||||
|
If
the rate of usage exceeds 6 tonnes per hour: RMB22 per
ton
|
||||
|
Usage
fees
|
:
|
RMB166.67
per tonne
(plus
a sewage cost of 6% of the usage fees)
|
||
|
Network
fees
|
:
|
Free
|
Note:
If
there are any adjustments to the standard fee schedules, the above fees will
be
adjusted accordingly.
For
reference only. In case there is any discrepancy in the contents between
the
English
and the Chinese versions, the Chinese version shall
prevail.
Appendix
4 - Terms
of the special incentive plan
Qingpu
Industrial district agrees to grant a tax incentive plan in respective of
enterprise income tax and the portion of value added tax which is collectible
by
the Industrial Park authority (less the portion of export tax payable by the
local government) to the new company invested and established by Party B for
a
period of 5 years from the date of which the new company obtained a business
license in the Qingpu District. The ratios of the incentive plan are set out
below:
| (a) |
If
the enterprise income tax, value added tax payable by the enterprise
(less
the portion of export tax payable by the local government) in any
particular year is less than RMB3,000,000, there shall be no incentive
payment.
|
| (b) |
if
the enterprise income tax, value added tax payable by the enterprise
(less
the portion of export tax payable by the local government) in any
particular year exceeds RMB3,000,000 (including the RMB3,000,000) and
less
than RMB5,000,000, the incentive ratio shall be 20% of the actual payable
amount.
|
| (c) |
if
the enterprise income tax, value added tax and business tax payable
by the
enterprise (less the portion of export tax payable by the local
government) in any particular year exceeds RMB5,000,000 (including
the
RMB5,000,000) and less than RMB10,000,00, the incentive ratio shall
be
30%.
|
| (d) |
if
the enterprise income tax, value added tax and business tax payable
by the
enterprise (less the portion of export tax payable by the local
government) in any particular year exceeds RMB10,000,000 (including
the
RMB10,000,000), for the first RMB5,000,000, the incentive payment ratio
shall be determined in accordance with the first section above, for
the
amount of RMB5,000,000 to RM10,000,000, the incentive payment ratio
shall
be determined in accordance with the second section above, and for
any
amount exceeding RMB10,000,000, the incentive ratio shall be
40%.
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