Asset Purchase
Agreement
between
Heilongjiang Wondersun Dairy Co.,
Ltd
and
Heilongjiang Baoquanling Sheng
Yuan
Dairy Co., Ltd
September 9, 2009
Content
Article
2 Scope of Asset Purchase
Article
3 Total Price of Asset Purchase
Article
5 Acceptance of New Plant
Article
6 Commissioning of New Plant
Article
9 Test Run of New Plant
Article 11
Fourth Payment
Article 12
Prompt Execution of the Obligation of Debt
Article 14
Credit and Debt Commitments
Article 15
Representation, Commitment and Promise of Sheng Yuan
Dairy
Article 16
Other Obligations of Sheng Yuan Dairy
Article 17
Representation, Commitment and Promise of Wondersun
Dairy
Article 18
Invoicing and Tax Obligation
Article 19
Modification and Termination of Agreement
Article 20
Liability for Breach of Contract
Article 21
Confidentiality
Article 24
Settlement of Disputes
Article 26
Other Stipulations
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Report of
Asset Evaluation
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Appendix
4
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Detailed
Procedures of Acceptance of the New Plant Provided by Sheng Yuan
Dairy
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Commissioning Plan Confirmed by Both
Parties
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Appendix
6
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Asset
Ownership, Documents and Other Documentation List Provided by Sheng
Yuan Dairy before the Second Payment
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Appendix
7
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Test Run
Plan Confirmed by Both Parties
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Appendix
8
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Contracts
and Cost Confirmation in Relation to Unfinished Items of
Construction in Progress
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Appendix
9
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Requirements
on Invoicing Provided by Sheng Yuan Dairy and Detailed Taxes Borne
by Sheng Yuan Dairy and Wondersun Dairy
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Appendix
10
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Resolution of Consent of Signing the Agreement
hereof Reached by Board of Shareholders or Board of Directors of
Both Parties in Conformity with the Law
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The agreement,
dated September 9, 2009, is signed in Harbin by the following two
parties:
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Heilongjiang
Wondersun Dairy Co., Ltd, a company founded and in conformity with
the law of People’s Republic of China, locating on 386
Changjiang Road, Nangang District, Harbin City, Heilongjiang
Province (hereinafter referred to as “Wondersun
Dairy”).
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Heilongjiang
Baoquanling Sheng Yuan Dairy Co., Ltd, a company founded and in
conformity with the law of People’s Republic of China,
locating in Junchuan Ranch, Luobei County, Heilongjiang Province,
and Heilongjiang Baoquanling Sheng Yuan Cow Breeding Co., Ltd, a
company founded and in conformity with the law of People’s
Republic of China, locating in Junchuan Ranch, Luobei County,
Heilongjiang Province (hereinafter collectively referred to as
“Sheng Yuan Dairy”).
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Each
individually referred to as “Party”, the other as
“the Other Party” and collectively as
“Parties”.
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Heilongjiang
Baoquanling Sheng Yuan Cow Breeding Co., Ltd has agreed to sell to
Wondersun Dairy its cow breeding ranches that include one that has
been put into production and operation and others that are newly
established, yet not accepted or put into production and operation
(hereinafter referred to as “Cow Breeding Ranches”) and
has issued a Letter of Authority ( see Appendix 1 ),
authorizing Heilongjiang Baoquanling Sheng Yuan Dairy Co., Ltd to
sign an asset purchase agreement with Wondersun Dairy (hereinafter
referred to as “this Agreement”).
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The Parties
have reached an agreement to carry out a transaction whereby
Heilongjiang Baoquanling Sheng Yuan Dairy Co., Ltd and Heilongjiang
Baoquanling Sheng Yuan Cow Breeding Co., Ltd’s shall sell to
Wondersun Dairy its plants and cow breeding ranches.
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Pursuant to the
Contract Law of the People’s Republic of China , the
Company Law of the People’s Republic of China and
other corresponding rules and regulations and through amicable
consultation, the Parties have herein agreed on the
following:
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Unless
otherwise specified, in this Agreement, Supplemental Agreement,
Letter of Commitment and Memorandum:
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“This
Agreement” means the Asset Purchase Agreement, including the
Appendixes.
“Supplement or Modification” means
the Supplemental Agreement or Letter of Commitment signed by both
Parties or other documents stamped by both Parties after signing
this Agreement.
“The
Parties” means Wondersun Dairy and Sheng Yuan
Dairy.
“The
Assets” means the underlying assets, the valid assets sold by
Sheng Yuan Dairy to Wondersun Dairy.
“Valid
Assets” means houses and buildings, structures and other
fixed assets such as auxiliary facilities, machinery equipments,
civil engineering projects in progress, equipment installation in
progress, lawns and trees, and land using rights as listed in the
Asset List , Appendix 2 of this Agreement.
“The
Plants” means the plant that has been put into production and
operation (hereinafter referred to as “Old Plant”) and
plant that was newly established yet not accepted or put into
production and operation (hereinafter referred to as “New
Plant”) of Heilongjiang Baoquanling Sheng Yuan Dairy Co.,
Ltd.
“The Cow
Breeding Ranches” means the cow breeding ranches invested and
established by Heilongjiang Baoquanling Sheng Yuan Cow Breeding
Co., Ltd, including the cow breeding ranch that has been put into
production and operation (hereinafter referred to as “Old
Ranch”) and that was newly established yet not accepted or
put into production and operation (hereinafter referred to as
“New Ranch”).
“Acceptance” means all
project-related inspection and acceptances in relation to the
completion, quality supervision, planning, fire control, hygiene,
environmental protection and safety of the New Plant and the
provision to Wondersun Dairy of complete original copies regarding
the procedures.
“Commissioning” means carrying out
tests on and making adjustments to individual asset like individual
equipment, a series of equipments as well as production systems and
auxiliary production systems in order to achieve estimated product
quality and comprehensive production capacity according to the
Commissioning Plan confirmed by both Parties (see Appendix)
upon the installation of the equipments in the new
plant.
“Qualified Products” means the
qualified products that are produced in accordance with the
commissioning methods stipulated in the confirmed Commissioning
Plan and confirmed by both Parties.
“Test
Run” means, in accordance with the Test Run Plan (see
Appendix), carrying out a performance test on assets such as
machinery equipments in the new plant and initial production after
infrastructure and utilities have been set up and raw materials
have been put into the new plant.
“Causes
by Sheng Yuan Dairy” means, in accordance with this
Agreement, causes resulted in production problems and product loss
related to industrial buildings and equipments but are not caused
by Wondersun Dairy’s human operational errors. Should the
Parties have any disputes, both Parties shall resolve through
negotiation. Should the negotiation fail, it shall refer to the
qualified certifying organization agreed by both Parties or
assigned by the court.
“Staff” means management team and
other employees who signed labor contracts with Sheng Yuan Dairy
pursuant to the law.
“Debt” includes liabilities and
contingent liabilities.
“Evaluation Price” means the price
stipulated in Appendix 3, the Report of Asset Evaluation in
this Agreement.
“Affiliated Party” means the Party
that has affiliations with Sheng Yuan Dairy. The establishment of
affiliations is pursuant to the rules stipulated in Clause 4,
Article 217 of the Company Law of the People’s Republic of
China .
“Losses” means the losses caused by
one Party’s breach of this Agreement, and the amount of the
losses is to be determined through mutual negotiation. Should the
negotiation fail, it shall refer to the qualified certifying
organization agreed by both Parties or assigned by the
court.
“Liabilities” means consequences
like compensation of the losses and paying fees which are resulted
by one Party’s not fulfilling its obligations of compensation
of the losses, payments or other obligations.
“Serious
problems that affect Wondersun Dairy’s rights and
interests” means individual loss caused by equipments
exceeding two million yuan or civil engineering structure problems
as well as other circumstances that causing Wondersun Dairy to loss
more than two million yuan.
“Civil
engineering structures” means infrastructure projects,
foundation engineering and skeleton structural projects of housing
construction.
“Production safety accidents” means
the accident happened in the oil-melting room in District C of the
co-production plant in Sheng Yuan Dairy at the noon of Jan 6,
2009.
“Unable
to achieve normal production” means the equipments and
facilities in the plant are unable to function, or even if they can
work, the product quality is unable to meet the production
requirements of continuance and stability (meaning producing 60
tons of Wondersun powdered milk that meets the national standard
per day for a consecutive 15 days).
“Obligations stipulated in this
Agreement” means obligations stipulated in this Agreement or
by the law, including but not limited to obligations, commitments,
statements or guaranteed obligations, obligations of
confidentiality and other obligations stipulated in this Agreement.
Sheng Yuan Daity shall continue to carry out its commitments,
statements and guarantees and other obligations stipulated in this
Agreement after the payment made by Wondesun Dairy.
“Force
Majeure” means the events that cannot be foreseen by the
Parties upon signature of this Agreement, cannot be overcome during
the execution of this Agreement and hinder the Parties to
completely or partially exercise this Agreement.
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All the amounts
of currency mentioned in this Agreement are referred to as
“yuan” or “RMB”.
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“Confirmation” in this Agreement is
referred to as written confirmation.
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The articles,
clauses and items mentioned in this Agreement are referred to as
articles, clauses and items of this Agreement.
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When this
Agreement is referred to, this Agreement which has been modified or
supplemented according to this Agreement is included.
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Article 2
Scope of Asset Purchase
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Wondersun Dairy
purchases the valid assets of Sheng Yuan Dairy through asset
purchase. The assets include:
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Two plants of
Heilongjiang Baoquanling Sheng Yuan Dairy Co., Ltd, which are
located in Junchuan Ranch, Luobei County. The two plants cover an
area of 99,834 square meters-- the old plant is about 32,664 square
meters and the new plant 67,170 square meters. The assets of the
two plants include valid assets including land using rights, houses
and buildings, structures as well as other auxiliary facilities and
machinery equipments;
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Three cow
breeding ranches of Heilongjiang Baoquanling Sheng Yuan Cow
Breeding Co., Ltd, which are located in Junchuan Ranch, Luobei
County. The three ranches cover an area of 597,000 square meters--
the old ranch is about 70,000 square meters and the two new ranches
527,000 square meters. The assets of the two plants include valid
assets including land using rights, houses and buildings,
structures as well as other auxiliary facilities and machinery
equipments.
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The assets to
be purchased do not include the five milk trucks (total value of 1,
654, 200 yuan) and five milk canes (total value of 973, 800 yuan)
listed in the Report of Asset Evaluation in the
Appendix.
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The detailed
information of the names, quantities, areas, models and
specifications, manufacturers, acquisition year, performance,
evaluated values, status of the valid assets at the plants and cow
breeding ranches to be purchased are listed in Appendix 2
Asset List, of this Agreement .
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Article 3
Total Price of Asset Purchase
The total price
of asset purchase, 197, 372, 000 yuan, is based on Article 2 of the
Agreement—Scope of Asset Purchase, and is subject to the
total amount specified in the No. XX Report of Asset
Evaluation ( see Appendix 3 ) issued by Harbin Xinhe
Asset Evaluation Co., Ltd (hereinafter referred to as “Asset
Evaluation Organization”). Actual total price (hereinafter
referred to as P
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