Lease Agreement
Exhibit
10.6
Party A:
Dalian Wanbao Industrial Co.,LTD (the “Lessor”)
Party B:
Dalian Befut Wire & Cable Manufacturing Co., LTD (“Lessee”)
Under the
principles of equal rights and mutual benefit, lessor and lessee enter into a
lease agreement whereby lessor leases to lessee a plant site that was originally
owned by Dalian Grain Drying Co., Ltd. The lease terms are as
follow:
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I．
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Lessor
leases to lessee the plant site with properties that was originally owned
by Dalian Baolihang Grain Drying Co., LTD for the purpose of lessee
establishing a cable manufacturing plant. The said land with properties
are located in Qipan Village with valid land use certificate. Details of
the land and properties are as
follows:
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1. An
office building of 170 square meters
2. A
boiler room of 450 square meters
3. An
employee dormitory of 300 square meters
4. Power
facilities with power load of 400KW
5. Water
supply facilities
6. A
guard post
7. A
land area of 15 thousand square meters (All hardened surface)
8. Surrounding
walls
II. The
lease is valid for 50 years starting from October 1, 2001 through October 1,
2051.
III. Lease
amount and payment method: Total lease amount is RMB 2.5 million
Payment
method: A security deposit of RMB 100 thousand will be paid within five days of
the execution of the lease agreement; another RBM 900 thousand will
be paid when approvals for design and construction are secured. The remaining
balance of RMB1.5 million will be paid evenly over three years starting from the
third year of the lease. Payments should be made by November 30 of each
year.
IV. Responsibilities
and Obligations of Each Party
1. Lessor
bears the responsibility and cost for securing land use certificate and land
planning and construction permits.
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2. With
lessor’s assistance, lessee bears the responsibility and cost for securing
construction design and construction permit. Both lessor and lessee share the
responsibility but lessee bears the cost for obtaining certificate of
building.
3. With
lessor’s active assistance, lessee bears the responsibility and cost for
securing permits needed for operations, such as business license , environmental
protection certificate and fire safety certificate.
4. Lessor
bears the responsibility but lessee bears the cost for securing governmental
approvals in the event that lessee needs to increase electricity load. Lessee is
responsible for expenditures needed for increasing electricity load. Lessee also
pays electricity bills based on actual consumption.
5. Lessee
has the right to use the existing water facilities for free, but bears the
responsibility for securing water index. In the event that lessee needs to use
underground water, lessor has the responsibility to provide water source or
water delivery, but lessee pays for water use.
6. During
the lease term, lessee pays directly to governmental authorities for land use
fees and land use tax. Lessor cannot charge extra such fees and
tax.
7. During
the lease term, without lessor’s consent, lessee cannot transfer the land or use
it for collateral purpose. Lessee has the right to use the land for 50 years but
must consult first with lessor if it desires to transfer the land or use it for
collaterial purpose.
Lessee
must register the newly established cable manufacturing plant with Ganjingzi
Trade and Industry Bureau and pays taxes to Tax authorities of Gezhenbao
District. If the local tax authorities provide tax breaks, lessor should
actively assist lessee to obtain them.
V. In the
event that the State retakes the land, lessee is entitled to the State
compensation for properties and lessor is entitled to the State compensation for
land. Lessor is obligated to return to lessee the paid lease amount that covers
the remaining balance of the lease term. Lessor has the option, however, either
to pay back to lessee 50,000 RMB per year or locate for lessee a land of similar
size and under similar terms to the current lease.
VI. Lessee should
give lessor the first right to refuse for construction contracts as long as
lessor can meet the requirements..
VII. Lessee should
give priority employment opportunities to the residents of Qipan Village as long
as such residents meet lessee’s employment requirements.
VIII. Lessee is free
of any debts that were owed by Dalian Baolihang Grain Drying Co.,Ltd. Lessor is
responsible for any debt claims that are related to Baolihang Grain Drying
Co.,Ltd.
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IX. Liability for
breach of contract
1. The
lease agreement become legally valid once executed by both parties. Each party
is obligated to comply with the terms herein without breach of
contract..
2. Lessee
will be charged a .3% late payment penalty if it fails to make timely payment.
In the event that lessee defaults on lease payment for consecutive six months,
the lease is considered to terminate the lease and lessor has the right to
retake the land and all properties on it and the lease becomes automatically
void..
3. Lessor
must return to lessee the 100,000 RMB security deposit if lessor fails to secure
the planning and construction permit. Lessor shall not return to lessee any
security deposit if lessee fails to secure permits needed for
operations..
X. In
the case of disputes, both parties agree to try to resolve such disputes through
consultation. If consultation fails, both parties agree to submit such disputes
to the People’s court..
XI. Each
party holds one copy of the executed lease agreements, both copies are legally
binding..
Party A
:Dalian Wanbao Industry Co., Ltd
Legal
representative’s signature and Party A’s company seal affixed
Party B:
Dalian Befut Wire & Cable Manufacturing Co., Ltd
Legal
representative’s signature and Party A’s company seal affixed
March 10,
2001
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