Henan Zhongpin Food Share Co., Ltd. Assets Leasing Agreement
Jilin
Huazheng Agriculture & Animal Husbandry Development Co., Ltd.
Henan
Zhongpin Food Share Co., Ltd.
December
30, 2008
Party A
(lessor): Jilin Huazheng Agriculture & Animal Husbandry Development Co.,
Ltd.
Address:
Helong Economic Development Zone, Changchun City, Jilin Province
Party B
(lessee): Henan Zhongpin Food Share Co., Ltd.
Address:
00 Xxxxxxxx Xxxx, Xxxxxxx Xxxx, Xxxxx Province
Whereas.
Both
Party A and Party B signed an asset lease agreement on December 30,
2008. Both Parties have completed the related stipulations contained in the
letter of intent. Party A held a general meeting of shareholders on December 21,
2008 agreeing to lease out the assets to Party B according to the agreement;
Party B held a meeting of the board of directors on December 21, 2008, and
agreed to lease the assets of Party A. In order to utilize the production
capacity of Party A’s equipment to maximize the economic benefit for both
parties and gain a win-win situation, under the principles of honesty and trust,
equality and mutual benefit, and by friendly consultations, Party A and Party B
agree to enter into an agreement and carry it out as follows according to the
corresponding laws and regulations stated in “The Economic Contract Law of the
People's Republic of China”:
Section
One BASIC CONDITION OF LEASED ASSETS
1.
Location of Leased Assets:
Gongzhuling
City, Jilin Province
2. Scope
of Leased Assets:
Party A
owns equipment for live pig slaughtering, cutting, refrigeration and cold
storage and also has workshops, office buildings, dining-rooms, guard houses,
some buildings for official business and domicile and related equipment. The
equipment includes but is not limited to water and electricity, dirt-discharge, pig houses, logistics,
dwelling houses, office building and other facilities, manufacturing
instruments, lands related to the above leased properties (including greenbelt,
plants, flower and grass), roadways, bounding wall and so forth.
The above
mentioned assets are on the basis of assets listed in the agreement’s attachment
“Leased Assets List”.
3.
Function of Leased Assets
Hogs
purchasing, slaughtering & processing, refrigeration and storage,
sales.
If Party
B needs to reconstruct and expand construction for arts & crafts as well as
processes, Party A shall cooperate and bear all expenses inccurred under the
premise of keeping Party A’s assets intact or improving assets’ efficiency; If
Party B needs to change the function in use, it is necessary to get permission
in written form from Party A. The expenses attributed to a change in function
will be assumed by Party A.
Section
Two DELIVERY STANDARD OF LEASED ASSETS
1. The
delivery standard of leased assets means the approved current standard by both
once lessor delivers leased property to lessee.
2.
Manufacturing equipment shall be delivered in operating condition without
deformity or damage.
Assets detailed in the “Leased Assets List” shall be given a clear indication of
purchase year, production area, brand and so forth.
3.
Housing and equipment shall be delivered in working condition. The list shall be
give a clear indication of quality of condition, construction or purchase year,
fixed year of installation and use, production area, 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 December 30,2008.
2. If
Party B needs to continue the lease after its expiration, Party A shall be given
written notice of such intent one month before expiration. Within 10 days after
receiving the notice, Party A shall inform Party B in written form whether it
agrees to continue leasing or not. Otherwise, it shall be regarded as an
approval that both should execute the agreement. Or through another negotiation,
both sign the renewal of the contract.
3. During
the lease term and after expiration, if a third party proposes to purchase the
assets Party A leased to Party B, Party B shall have priority under the same
condition.
Section
Four RENTS, CASH DEPOSIT, PAYMENT TERM AND METHOD
1. Rents
standard: Party B shall pay ￥2,800,000 RMB per
year for leasing the assets contained in the “Leased Assets List” from Party A,
that is to say the standard annual rents is ￥2,800,000
RMB.
2. Rent
period, payment method: Prepayment method is adopted here, that is to say Party
B should pay quarterly rents every quarter to Party A. After entering into the
agreement, Party B should prepay the first quarter’s rent of ￥700,000 RMB within
15 days upon the execution of the agreement; quarterly rent
thereafter shall be paid within the last 15 days of each quarter until the rent
for the whole lease period has been paid. Party A shall provide Party
B with the bank account number for receiving rents through wire remittance.
Within 3 days upon receipt of rents, Party A should issue a formal
invoice.
3. Cash
Deposit: Within 15 days upon execution of the agreement, within 3 days before
Party A delivers the leased property to Party B, Party B shall deposit ￥300,000 RMB as a
cash deposit for lease assets into the bank account designated by Party A.
Within 3 days once receipt of money, Party A should issue receipt voucher for
Party B. When lease period is over, Party B shall complete Item 10 “the return
of lease property” stipulated in the agreement. Within 3 days after the
signature and approval by both sides on “Leased Assets List,” Party A shall
return the ￥300,000 RMB cash
deposit to Party B.
Section
Five DELIVERY OF LEASE
1. Within
10 days after entering into the agreement, Party A shall provide the list of
leased assets for 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 facilities with quality problems so that Party B can repair or acquire them
within five days for the purpose of the lease agreement.
3. When
leased assets are delivered, both parties will approve that there are no
equipments or facilities that don’t work, Party B may refuse to accept
them.
4. Within
15 days after the agreement, Party A shall deliver the leased property from the
list for Party B to use. If the date Party A delivers does not agree with the
beginning date of the lease term stipulated in the agreement, the end date of
the lease term shall be adjusted and be postponed accordingly (lease term is
three years).
5. When
delivering the assets, Party A shall deliver the “Leased Assets List.” Both
Parties should sign and seal the list to signify their approval.
6. The
date on which Party A delivers all the leased property contained on the list is
the dividing point between the management and use of the leased assets and
related responsibility stated by laws and regulations, and also the commencement
date on which to calculate rents.
Section
Six REPAIR, MAINTENANCE AND MANAGEMENT OF LEASE
1. Party
B shall be responsible for ordinary repairs, maintenance and management of the
leased assets. The management scope includes affiliated facilities and land
related to the leased assets; Party B shall assume management expenses while
Party A has the right to supervise and check up on the leased
assets.
2. Party
B shall be responsible for finding hidden problems in time to prevent
risk.
3. During
lease term, expenses generated by normal repair and overhaul from breakdown
should be assumed by Party B. Party B shall exempt from responsibilities for
loss or waste caused by force majeure.
4. Party
B shall be responsible for the annual survey and checkup and assume the related
expenses while Party A shall assist.
5. During
the lease term, Party B shall be responsible for the safety and management of
the leased assets, while Party B shall cooperate and cannot deny the other party
the use of them reasonably for management uses.
Section
Seven DISPOSAL ON CONSUMABLE ENERGY SOURCES, RAW MATERIALS, LOW-VALUE
CONSUMPTION GOODS, WORK TOOLS, PARTS AND ACCESSORIES
1. On the
day Party A delivers all lease assets to Party B, Party A shall verify and hand
over the consumable energy resources, including water, electricity and gasoline.
Party A shall be responsible for the expenses before verification while Party B
shall answer for the cost after verification.
2. Party
B can purchase the present materials and low-value consumption goods of Party A
with One-off payment according to current market price. However, Party A can
keep and dispose them if both parties will not reach to an
agreement.
3. When
Party A hands over the work tool and Parts &Service purchased by himself, it
is necessary for both to give clear indication of producing area, names, brands
and fixed year for use and purchased prices; after expiration or termination of
the agreement, Party B shall return on time all properties to Party A (Party B
shall complement the damaged and used equipments with equal quality and quantity
or compensate in terms of the prices purchased by Party A).
4. All
free accessories of leased equipment and facilities (including but not limited
to instruction, blueprint, work tool and Parts, etc.) shall be used for free by
Party B (copies). Party A delivers use certificates of special type facility and
metric utensils as well as other certificates to Party B and take one-off
hand-over registration, while Party A mustn’t hide and destroy them. Within 6
months, Party A should deliver sewage emission permits (opinion letter) to Party
B. During the term of un-delivery, Party B should make sure not to affect Party
B’s normal operation. After agreement’s expiration or termination, Party B shall
return all back to Party A.
Section
Eight CREDITOR’S RIGHTS AND LIABILITIES
1. Since
it is a lease agreement and Party A and B both are independent Company
Artificial Person, the former right and liability of credit from Party A shall
have nothing to do with Party B. Party B shall make sure that creditor’s rights
and liabilities would not affect Party B’s normal operation. In case Party A
violates the above assurance, Party B owns the right to dissolve the agreement
unilaterally. Party A shall compensate the lost related.
2. All
the rights and liabilities generated in operational activities when Party B uses
leased property, shall be taken by Party B. Party A has nothing to do with
it.
Section
Nine LABOR EMPLOYMENT
1. Since
the agreement is a lease contract and Party A and B all are independent Company
Artificial Person, 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 achievements and capabilities; 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 Party A’s
original employees. Party B shall not be responsible for that.
3. Party
B shall preside over safety of all employees, salaries, benefits and expenses
independently while Party A shall not be responsible for that.
Section
Ten RETURN OF LEASED ASSETS
1. After
the agreement is rescinded or terminated, Party B shall be responsible for the
right and duty caused by him during lease, settle all payable expenses and
return the lease within 20 days. Party B shall return all leased property and
assure that all leased assets maintains its original features and function and
functions normally the same as when Party A delivers them to Party
B.
2.
According to the “Leased Assets List,” Party B shall submit the return report to
Party A in written form within 3 days after rescission or termination of the
agreement. Party A shall verify the return lease within 7 days after it has been
returned. If the return lease is not verified by Party A in more than 7 days,
Party B shall be regarded to carry 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 5 days in order to guarantee the assets of Party A in good condition and
assure that all leased assets maintains its original features and function and
functions normally the same as when Party A delivers them to Party
B.
4. During
lease term, the assets purchased by Party B shall belong to Party B; after
rescission or termination of the agreement, Party B can make reasonable prices
for Party A or take them by himself. However, Party B shall remove the equipment
and establishment set up by himself under the premise of not influencing the
security or function of assets of Party A or not causing any damage or hidden
trouble and not affecting all equipment or facilities’ operation.
Section
11 LEASE COOPERATION
1. Party
A shall assist Party B to finish the registration before Party B sets up Jilin
Zhongpin Food Co., Ltd., located in Gongzhuling; this agreement shall be
implemented by Jilin Zhongpin Food Co., Ltd., which is operated by Party B in
Gongzhuling.
2. Jilin
Zhongpin Food Co., Ltd., which is invested by Party B, shall use the lease
objectives owned by Party A, and shall run its business formally. Party B shall
operate its business on its own, check accounts independently, and take on full
responsibility for the success of the business. As to the issue of the
establishment of Jilin Zhongpin Food Co., Ltd., Party B should make a pledge to
Party A that Jilin Zhongpin Food Co., Ltd. invested by Party B shall implement
the content prescribed in the agreement.
3. Party
B shall pay for the fees including the test fees, water, water quality testing
fees, sewage emission fees during the production and operation period, and also
pay for land tax (payment method suspends) of lease property as well as health
examination fees of all employees who conduct operation within lease term. The
rest shall be paid by Party A;
4. All
products (including but not limited to carcass meat) and red meat produced
within lease term shall be sold under Party B’s own brand of products; Products
like segmented meat shall be sold as Party B’s own brand of products. Party A
should assist Party B to alter its original slaughtering certificate in order to
assure Party B owns the qualification of fixed-point slaughtering.
5. During
the lease term, Party A is responsible to report, communicate and coordinate
with local government and governmental functional department to ensure Party A
to acquire the understanding and support from local government and all municipal
departments and sections.
6. During
the lease period, both Parties shall make efforts to get funding support from
the local government and functional department to put into related programs. In
principle, specific funds support should be used for specific programs and its
responsibility should be assumed by the user.
During
the lease cooperation term, as to any volunteer subsidy obtained, both sides
will negotiate on how to use them according to each specific
situation.
Section
12 PARTY A’S RIGHTS AND OBLIGATIONS
1. Party
A has the right to sign the contract and shall be obliged after the contract
goes into effect.
2. Party
A Shall have the right to demand that Party B pay rents according to the agreed
amount under the contract.
3. Party
A has full ownership of the leased property. Party A owns the right to supervise
the safe maintenance of assets, as well as their rights and interests during its
operational management.
4. Party
A pledges the leased property ownership belongs to Party A, and hasn’t rented
its use rights out to the third Party.
5. Party
A guarantee 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 not to intervene in Party B’s formal business and operations and its
normal use of the leased property.
7. Party
A shall assist Party B in petitioning the local government to strictly put into
place favorable policies, and coordinate and handle various social relationships
during the term of the contract in order to assure Party B enjoys equal
treatment in the region.
8. During
the lease term, Party A cannot engage in production of the same material as
Party B in the Gongzhuling administrative district.
9. Party
A pledges to assist Party B to conduct normal production and operations on the
date of entry.
Section
13 PARTY B’S RIGHTS AND OBLIGATIONS
1. Party
B has the right to sign the contract and shall be bound to the items and clauses
herein once the contract has taken effect.
2. Party
B shall pay for the rent to Party A as regulated; if any third party claims to
the leased property which prohibits Party B to use or get gains from the leased
property, Party B has the right to decrease rent or refuse to pay.
3. Party
B pledges not to engage the illegal activities with leased
property.
4. Party
B is responsible for the maintenance of the leased assets; after obtained the
consent from Party A, Party B can enhance the leased assets or add additional
assets, and conduct the technical improvements or craftwork adjustments,
accordingly, the newly added assets shall belong to Party B.
5. Party
B shall use leased property according to this agreement or the features of the
leased property, and Party B don’t take the compensation obligation for the fair
wear and tear.
6. During
lease term, Party B don’t have such rights, including but not limited to sell,
rent, transfer and give guarantee with the leased assets, or make the leased
assets as mortgages. In case any situations happens, Party A owns the right to
dissolve the agreement and don’t return the rents.
7. Party
B shall be responsible for financial or personal safety caused by using leased
property for its operational activities during lease period.
8. Under
the same condition, Party A owns the priority of products supply which produced
by Party B.
9. Party
B shall pay the taxes and expenses involved in normal operation during the
leased term.
10.
Within lease period, Party B should cherish and maintain the leased property and
make assure that it is under the normal operation until the end of the lease
term. Damages due to Party B’s improper use or other reasons, Party B shall be
responsible for repair (and assume repair expenses), or shall compensate with
same amount for Party A.
Section
14 MODIFICATIONS, RELEASE AND TERMINATION OF THE AGREEMENT
1.
Through friendly negotiation by Both Parties, the Agreement can be altered or
dissolved.
2. If the
Agreement has to be exempted ahead of the expiration date because of legal issue
or stipulated issue, neither Party shall undertake the default
obligation.
Section
15 BREACHING OBLIGATIONS
1. Both
Parties shall handover and takeover the lease assets according to the provisions
and clauses in the Agreement. 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 according to
the Agreement, the defaulting party shall pay ￥20,000 RMB to the
observant party per day for such delay.
2. Party
B shall pay rents according to the agreement’s stipulation. In the event that
Party B fails to pay rent during the lease period, Party B shall pay defaulting
penalty with the percentage of one two-thousandth of the rent due per day to
Party A since the due date. The default penalty shall be counted from the date
of delay until the day Party B pays enough rents; If the delay period is over 3
months, Party A has the right to dissolve the agreement unilaterally. At the
same time, Party B should pay defaulting penalty to Party A as above
mentioned.
3. Party
A shall provide leasing notes, otherwise Party B has the right to refuse to pay
rents; Party A shall assist Party B to acquire fixed-point slaughtering
qualification certificate according to the agreement’s stipulation, otherwise
Party B can dissolve the agreement unilaterally.
4. If
either Party dissolve the agreement unilaterally without the approval of the
opposite Party and without certain legal or stated events, the Party breaches
shall pay the breach penalty to the other side. The penalty sum is the total
rent for the period from the breaching date to the expired date of the
agreement.
5.
Because of Party A’s leased assets mortgage, remaining problems, civil disputes
that Party B suspend the agreement, Party A shall take suspend days as rents
date to compensate Party B’s lost; If the agreement can not be fulfilled, Party
A shall take unfulfilled days as rents date to compensate equal amount to Party
B.
Section
16 SETTLEMENT OF DISPUTES
Both
sides shall settle the disputes arising from performance of the contract through
consultation; should both parties fail to reach agreement, the parties shall
respond to Beijing Arbitration Committee for arbitration.
Section
17 FORCE MAJEURE
1. The
force majeure in this contract refers to any riot, civil strife, war,
adjustments to governmental policies, rules, or earthquake, visitation of
Providence or other unpredictable, unavoidable, unconquerable
reasons.
2. Should
either party that influenced by the force majeure and unable to perform the
liabilities under the contract, its liabilities and obligations shall be
discontinued during the period of force majueure, and the term for such
obligations shall be automatically extended until the breakup of the force
majeure and such party shall be exempted from the correlated liabilities causing
from the force majeure.
3. Either
Party that encounters force majeure shall notify the other Party in written form
immediately and provide evidences indicating the duration of the force majeure
within 30 days since the end of the accident.
4. In the
event of any force majeure, either party shall negotiate immediately for the
reasonable settlement and shall make all the reasonable and fair effort to
minimize the bad impact arising from the force majeure.
5. If the
duration of the force majeure exceeds 120 days and both Parties are unable to
get a reasonable settlement through negotiation, either Party can terminate the
contract without undertaking defaulting liabilities.
Section
18 EXCLUSIVEVALID ADDRESS OF BOTH PARTIES
1. All
notices that Party A delivers to Party B, shall be in accordance with the
following exclusive valid address of Party B:
Addressee:
Liu Chaoyang
Address:
00 Xxxxxxxx Xxxx, Xxxxxxx Xxxx, Xxxxx Xxxxxxxx
Postcode:
461500
Fax:
0000-0000000
Tel :
0000-0000000
2. All
notices that Party B delivers to Party A, shall be in accordance with the
following exclusive valid address of Party A:
Addressee:
Han Zhenfa
Address:
Xx.000, Xxxxxxxx Xxxx, Xxxxxxxxx Xxxx, Jilin Province
Postcode:
130051
Fax:
0000-00000000
Tel :
0000-00000000
Section
19 MISCHELLAEOUS
1. As an
indispensable part of this contract, the exhibits have the same legal effect as
the contract.
2.
Regarding the clauses not completely included in the contract, both parties
shall enter into a supplemental agreement in written form after
negotiation.
3. There
are six duplicates of the contract and each party shall hold three with the same
legal effect. The agreement shall be in effect upon the authoritative
representatives’ signatures with seals (signatures from legal representatives or
authoritative representatives ).
Party
A: Jilin Huazheng Agriculture & Animal Husbandry Development Co.,
Ltd.
Authorized
Representative: /s/ Xxxx Xxxxxxxx
Party
B: Henan Zhongpin Food Share Co., Ltd
Authorized
Representative: /s/ Liu Chaoyang
Signing
Date: 30 December 2008
