Assets Leasing Agreement
Party A (lessor): Shenzhou Chenguang Meat Products Factory
Address: Chenshi Town, Chenshi County, Shenzhou City
Party B (lessee): Hengshui Zhongpin Food Co., Ltd.
Address:
Whereas.
Both
Party A and Party B signed assets leasing letter of intent on
, 2008. Both Parties have accomplished
related stipulation of the letter of intent. Party A agreed to lease out the
assets to Party B according to the agreement; Party B held Board of directors
and agreed to lease the assets of Party A. In order to exert the production
capacity of Party A’s equipments
to
maximize the economic benefit for both parties and gain win-win situation,
under
the principle of honesty and trust, equality and mutual benefit, and by friendly
consultations, Party A and Party B agree to enter into agreement and carry
it
out as follows according to 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:
Chenshi
Town, Chenshi County, Shenzhou City
2.
Scope of Leased Assets:
Party
A owns equipments for live pig slaughtering, cutting,
refrigeration and cold storage and also has workshops, office buildings,
dining-rooms, houses for guard, some buildings for official business and
domicile and fitting equipments. The equipments include but not limited to
water
and electricity, dirt-discharge, pig house, logistics, dwelling house, 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
listing”.
3.
Function of Leased Assets
Hogs
purchasing, slaughtering & processing, refrigeration and
storage, sales.
If
Party B needs to make reconstruction and expanded construction for
arts & crafts as well as process, Party A shall bear all expenses occurred
under the premise of keeping Party A’s assets
intact or
improving assets’ efficiency;
if
Party B needs to change the function, it is necessary to get permission in
written form from Party A. The expenses attributed to function transfer will
be
assumed by Party A.
Section
Two DELIVERY STANDARD OF LEASED ASSETS
1.
The delivery standard of leased assets means the required standard
that once lessor delivers leased property to lessee.
2.
Take manufacturing equipment operating well as its standard
without deformity or damage. Asset in “Leased
Assets
listing”
shall be given clear indication of purchase year, producing area and brands
and
so forth.
3.
Take house and equipment working well as its standard. The list
shall be given clear indication of quality condition, constructing or purchasing
year, fixed year of installation and use, producing area and brands 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 1st, December, 2008 to 30th, November, 2011.
2.
If Party B plans to continue leasing after the expiration date of
the agreement, Party A shall be given a written notice a month before
expiration. Within 10 days after receiving the notice, Party A shall inform
Party B in written form whether he 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 lease term and after expiration, if a third party makes an
offer to purchase the assets Party A leased to Party B, Party B shall have
priority under the same condition.
Section
Four RENTS, PAYMENT TERM AND METHOD
1.
Rent standard: Party B shall pay ¥1,800,000 RMB per year for
leasing assets of Party A, that is to say annual rents is ¥1,800,000
RMB.
2.
Payment method: Prepaid method is adopted here. The first rent for
six-month lease is paid within 15 days upon entering into the agreement. And
after the first payment and during the whole lease period, the rent is paid
by
quarter in a prepaid way, and quarterly rent shall be paid within the last
15
days of each quarter until the rent for the whole lease period has been
paid.
3.
Payment approach and condition: Party A shall render a formal
invoice 7 days before the date of rent payment by Party B and provide
Party A’s
rent receiving account number with Party A’s seal,
then Party
B shall pay the rent via bank remittance.
Section
Five DELIVERY OF LEASE
1.
Within 10 days after entering into the agreement, Party A shall
provide the list of lease assets to Party B, and two parties shall conduct
review and preliminary test to the leased assets.
2.
Party A shall repair or supplement the equipments and facilities
with quality problems that discovered in the preliminary test to make sure
of
the purpose of the lease agreement can be achieved.
3.
Within 15 days upon entering into the agreement, Party A shall
deliver the lease to Party B. If the delivery date is disagree with the
beginning date of the lease term, this delivery date shall be regarded as
beginning date of lease term. The expiration date of the lease term shall be
adjusted accordingly.
4.
Upon the lease being delivered, both parties shall sign or seal to
confirm in the list of leased asset. The delivery date is the dividing point
for
the two Parties to undertake corresponding responsibilities for the lease
assets, and the delivery date is also the beginning date when calculating the
rent.
5.
If Party A delivers equipment with quality problem or flaw to
Party B, Party B can refuse to accept it and remove the goods from the list.
However, to the equipment which influences Party B to realize the purpose of
the
agreement, Party A shall be responsible to repair it to normal standard for
use.
If Party A delays to mend it, Party B can repair it by himself or ask a
third-party to repair it to normal standard for use. The expenses caused by
it
shall be assumed by Party A.
Section
Six REPAIR, MAINTENANCE AND MANAGEMENT OF
LEASE
1.
Party B shall be responsible for ordinary repair, maintenance and
management of the leased assets. The management scope includes affiliated
facilities and land related to the lease assets; Party B shall assume the
management expenses while Party A has right to supervise and check up the
lease.
2.
Party B shall find out all kinds of hidden trouble in time to
prevent from risk.
3.
Party B shall be responsible for repairing or acquirement of major
equipments or large facilities, and assuming the relevant expenses.
4.
Party A shall bear responsibilities to the maintenance and
overhaul of the buildings (workshops, buildings and other houses) rented by
Party A and assume all relevant expenses.
5.
Party B shall be responsible for the annual survey and checkup in
order to guarantee the normal use for all lease assets and assume the related
expenses.
6.
During lease term, if some low-value consumption goods, such as
iron box, or other articles without repairing value, can't be used any more,
Party B shall deliver them to Party A. Therefore, Party A shall deal with
related procedures and Party B shall no longer be responsible for that.
7.
During lease term, Party B shall be responsible for the safety and
management of lease assets of Party A, while Party B shall cooperate, and can
not refuse other party to use them reasonably for management excuses.
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 sources, 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
&Servicepurchased by himself, it is necessary 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 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 (including but not limited to instruction,
blueprint, work tool and Parts, etc.) will be taken one-off hand over and
registration free of charge by Party A and mustn’t be hidden
and
destroyed.
5.
Party A shall install interfaces of energies like water,
electricity, gasoline or refrigeration to where Party B’s lease
properties
located so that Party B can use it directly and assure Party B can receive
equal
treatment or favorable treatment on using energy or resources under the
agreement period.
Section
Eight CREDITOR’S RIGHTS
AND
LIABILITIES
1.
Since it is a lease agreement and Party A and B both are
independent corporate entities, the former right and liability of credit of
both
shall have nothing to do with this assets lease. Party A and B shall not be
responsible for each other's creditor’s rights
and
liabilities.
2.
If the right and liability are caused by each party respectively
during the term of lease, they shall take their respective responsibilities
and
the other Party shall not take related responsibility and will not also assume
other duty due to termination of the agreement.
Section
Nine LABOR EMPLOYMENT
1.
Since the agreement is a lease and Party A and B all are
independent corporate entities, Party B shall not be responsible for the 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 the
transfer of its employees. Party
B shall not be responsible for that.
3.
Party B shall preside over the safety, salaries, benefits and
expenses of all employees independently while Party A shall not be responsible
for that.
Section
Ten RETURN OF LEASE 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.
2.
According to the “Lease Assets
Listing,”
Party B shall submit the return report to Party A in written form within seven
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 lease
is not verified by Party A more than seven days, Party B shall be regarded
to
carry out his duty in terms of the agreement.
3.
After 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 seven days in order to guarantee the assets of Party
A
in good condition.
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.
Section
11 LEASE COOPERATION
1.
Party A shall assist Party B to finish the registration of Party
B’s
wholly-owned subsidiary of Hengshui Zhongpin Food Co., Ltd before the
execution of the asset lease agreement, and this agreement shall be implemented
by Hengshui Zhongpin Food Co., Ltd.
2.
Hengshui Zhongpin Food Co., Ltd., which is owned by Party B, shall
use Party A’s
assets leased by Party B, and make Party B’s own management
decisions independently and take full responsibility for Party B's own profits
and losses.
3.
Party A shall assist Party B to apply for the certificate of
slaughtering hogs at specified spot for the operations of Hengshui Zhongpin
Food
Co., Ltd., located in Shenzhou, and Party B shall assure Party B can receive
it
before the lease begins.
4.
Party B shall pay for the fees including test fees, water fees,
water quality testing fees, pollution emission fees and all the official fees
during the production and operation period. Party A shall also pay for land
tax
and real estate tax during lease term.
5.
During the lease period, all products produced by Party B are to
be sold under Party B’s own brand;
Party
A shall assist to be responsible for purifying and managing the market to
prevent the appearances of fake products, in order to avoid events that might
influence both parties’ image
and
reputation.
6.
If both Parties get volunteer allowances from the government
during lease term, they shall share it at Party A 1: Party B 2, that is, Party
A
shares 1/3 while Party B shares 2/3. The division of such allowances is over
automatically when this policy terminates.
7.
Government allowance seek should be responsible by Party A with an
assistance from Party B. The fees incurred shall be taken by both Parties at
50%
for each, but shouldn’t be offset
by
allowance. Party A shall directly pay the amount of allowance that Party B
deserves on the second day upon getting allowance.
8.
During the lease term, Party A is responsible to report,
communicate and coordinate with local government and governmental functional
department to ensure Party A enjoys the favorable policies the same or higher
than Party B enjoys (include but not limited to examination fees); and ensure
Par B has good security and external environment.
9.
During the lease period, Party A shall make efforts to get funds
support from local government and functional department to put into related
program. In principle specific funds support should be used for specific program
and its responsibility should be take by user.
Section
12 PARTY A’S RIGHTS
AND
OBLIGATIONS
1.
Party A has right to sign the contract and shall be obliged after
the contract takes into effect.
2.
Party A Shall have the right to demand Party B to pay rents
according to the agreed amount under the contract.
3.
Party A has the all ownership of the lease property. Party A owns
the right to supervise assets safety maintenance, rights and interests during
its operational management, but should not effect Party B’s normal
operation.
4.
Party A pledges the leased property ownership belongs to Party A,
and hasn't rent its use rights out to the third Party, also hasn't conduct
a
mortgage guarantee for lease assets, corresponding land or accessories.
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 that in the lease term, Party A shall not make any
new guarantee or other limitations regarding on other rights.
7.
Party A pledges the dated as terminate date of this agreement, the
leased property are applicable to use.
8.
Party A pledges not to intervene Party B's formal
business and operation.
9.
Party A pledges and assures during Party B's lease term, roadways
and channels are unblocked and shall not charge fees on road and transportation
from Party B by any reason.
10.
Party A shall 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 in order to assure Party B enjoys
equal treatment in local spot.
11.
During lease term, Party A can't engage in production the same as
Party B in the Shenzhou administrative area.
12.
Party A pledges to assure sewage disposal facility, arts and
crafts shall meet the Emission Standard A, Level One of "Water Pollution
Emission Criteria For Meat Production Industry" GB13457-92. Problems during
operation shall be assumed by Party B.
13.
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 bounded 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 doesn’t take
the
compensation obligation for the fair wear and tear.
6.
During lease term, Party B doesn’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.
7.
Party B shall pay the taxes and expenses involved in normal
operation during the leased term.
Section
14 MODIFICATIONS, DISSOLUTION AND TERMINATION OF THE
AGREEMENT
1.
Since the execution, either Party shall not make bold to modify
the Agreement, if needed, both Parties shall negotiate and make modifications
in
written form with each Party’s consent.
2.
Either Party that has to release from the Agreement in advance of
the expiration date, it shall notify the other Party two months earlier and
with
the negotiation, the Agreement can be unchained.
3.
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.
4.
The Agreement shall be terminated automatically at the expiration
date of the contract.
Section
15 BREACHING OBLIGATIONS
1.
Both Parties shall hand over and take over 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.
In the event that Party B fails to pay rent during the leasing
period according to the Agreement, Party B shall pay defaulting penalty with
the
amount of 1% of the rent due per day to Party A since the due date, and the
default penalty shall be increased to the amount of 2% of the rent due if the
delayed days has passed 15 days since the due date of such rent fee.
3.
Party A shall ensure the normal use of the leased assets, if Party
B’s leasing
operation is impacted by litigation or arbitration, Party A shall pay the
penalty with the amount of 50,000 RMB to Party B; if any discontinuance of
the
Agreement is caused because of such litigation or arbitration, Party A shall
pay
the penalty as much as the rent fee for such suspension period; if termination
of the Agreement is caused because of such litigation or arbitration, Party
A
shall pay the penalty as much as the rent fee for the unexpired term.
4.
In the event of either Party breaches any liability, commitment,
guarantee or obligation of the Agreement, the defaulting Party shall undertake
the penalty of 50,000 RMB. If such penalty can not cover the other party’s losses
and
damages, the breaching party shall be responsible for the other party’s
losses.
5.
Party A shall be responsible for the renewal, installment,
maintenance, examination and repair on time to the leased assets as stipulated
in the Agreement and all the charges incur in this regard shall be undertaken
by
Party A and Party A shall not influence Party B’s normal
operation
because of such responsibility performance.
6.
If Party A breaches Item 5, 6 or 7 under Section 12 leading to
Party B’s
abnormal operations, Party A shall be responsible for the defaulting liability
and pay Party B the penalty as much as the total rent for the period from the
breaching date to the expired date of the Agreement.
7.
If either party changes the Agreement without the consent of the
other party and with the reasons unrelated with legal or stipulated issues,
this
Party shall undertake the default obligation to the other party and the default
penalty shall be as much as the amount of the rent fee for the period from
the
release date to the expiration date of the Agreement.
Section
16 GOVERNING LAWS
This
Agreement and all rights and obligation hereunder shall be
governed by the laws, rules of the People's Republic of China.
SECTION
17 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 the Beijing Arbitration Committee for
arbitration.
SECTION
18 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 be influenced by the force majeure and be
unable to perform its obligations and liabilities 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 discontinuance 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 evidence 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 efforts 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
19 MISCHELLAEOUS
1.
As an indispensable part of this contract, the exhibition has the
same legal effect.
2.
Regarding the clauses not completely inclusion in the contract,
both parties shall enter into a supplemental agreement in written form, which
shall be an inalienable part of the contract with the same legal
effect.
3.
The agreement shall be in effect upon the authoritative
representatives’ signatures
with
seal.
4.
There are six duplicates of the contract and each party shall hold
three with the same legal effect.
Exhibits:
Leasehold
List: facilities and equipments, buildings and affiliated
facilities list
Party
A: Shenzhou Chenguang Meat Products
Factory
Authorized Representative: (Seal) /s/ Gao Yusu
Authorized Representative: (Seal) /s/ Gao Yusu
Date:
November 26, 2008
Party
B: Hengshui Zhongpin Food Co., Ltd
Authorized
Representative: (Seal) /s/ Liu
Chaoyang
Date:
November 26, 2008
