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EXHIBIT 10.1
English Translation
Tianjin Shunli Enterprise Co., Ltd.
Henan Zhongpin Food Share Co., Ltd.
Assets Lease Agreement
6
th
of September, 2007
Lease Agreement
Party A (lessor): Tianjin
Shunli Enterprise Co., Ltd.
Address: Southern
Section of Chunxi Road, Economic Development Zone, Tianjin City,
Jinghai County
Legal Representative: Guo
Youli
Title :
Chairman of the Board
Party B (lessee) :
Henan Zhongpin Food Share Co., Ltd.
Address: 21
Changshe Road, Changge City, Henan Province
Legal Representative: Zhu
Xianfu
Title :
Chairman of the Board
Whereas
.
Through
holding a shareholder’s meeting on the 10
th of
August, 2007, Party A agreed to lease its assets to Party B under
this agreement. Party B held a Board of Directors meeting on
the10
th of
August, 2007 and agreed to lease Party A’s assets. In order
to use the production capacity of Party A’s equipment to
maximize the economic benefits for both parties and create a
win-win situation, Party A and Party B agreed to enter into this
agreement and carry it out as follows according to “The
Economic Contract Law of the People's Republic of China,” and
other related laws and regulations :
Section One Basic Conditions of
Lease
1.
Location of Lease:
The
facility is located at Southern Section of Chunxi Road,
Economic Development Zone, Tianjin City, Jinghai
County.
2.
Scope of Lease:
Party
A owns live pig slaughtering, cutting, refrigeration and cold
storage equipment and also has workshops, office buildings,
workshops for preparing food, dining-rooms, guard houses, and
some buildings that serve as both office buildings and
domicile. The equipment includes but is not limited to water
and electricity, a dirt-discharge facility, abattoir,
logistics, dwelling house, office building and other
establishments, manufacturing instruments, lands related to
the above lease, a boundary wall and so forth.
However,
the following assets: (1) The second floor for the office and
domicile and its office equipment is not included.(2) Since
the office building, which is not completed, has not been
leased, Party A shall not lease it . When Party B needs to use
it, Party A may retain the third-floor and Party A can use
other parts of the building free of charge. (3) The building
shall be available for use within three months after the
agreement has been entered into.
The
above assets are based on the “Lease List”
attached to this agreement.
1.
Function
and Purpose of Lease
Slaughter
and processing for pig purchase, refrigeration and
sales.
If
Party B needs to renovate and expand any part of the
facilities, such construction will be performed under the
premise of protecting the assets of Party A and improving its
efficiency; Party A shall cooperate and Party B shall assume
all expenses. If Party B needs to change the functionality in
use of any facility, it is necessary for Party A to agree to
any such changes. The expenses attributed to changing such
functionality will be assumed by Party B.
Section Two Delivery Standard of
Lease
1.
The
delivery standard of the lease means the standard with which
the lessor delivers the lease to the lessee.
2.
The manufacturing equipment shall operate as in its standard
condition without deformity and damage and the Lease List
shall have a clear indication of age, place of production,
brand and so forth.
3.
The buildings and equipment shall work well as in their
standard condition and the Lease List shall contain a clear
indication of quality, condition, year of purchase, place of
production, 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 the 19
th of
September, 2007 to the 18
th of
September, 2010.
2.
If Party B needs to continue leasing the assets after the
lease’s expiration, Party B shall give written notice to
Party A one month before such expiration. After receiving such
notice, Party A shall notify Party B in writing whether it
agrees to continue leasing the assets to Party B. Through
negotiation, the two parties can agree to renew the
contract.
3.
During the lease and after its expiration, if a third party
needs to lease or purchase the leased assets from Party A,
Party B shall have priority under the same
conditions.
Section Four Rent Terms and Payment
Methods
1.
Rent standard: Party B shall pay ¥
5,600,000 per year for leasing the assets of Party A and total
rent expenses for the three years shall be
¥16,800,000.
2
.
The
first rent payment due under the lease shall be prepaid, i.e.
¥2,000,000 shall be prepaid within 15 days after entering
into this agreement. Thereafter, the rent shall be paid once
quarterly at the beginning of the quarter, that is, within the
lease term, the next quarter’s rent of ¥1,400,000
shall be paid by the end of the last quarter of this fiscal
year. The rent shall be paid directly from the prepaid funds.
However, when the prepaid funds are not enough to pay the next
term’s rent, Party B shall pay according to the terms of
the agreement.
3
.
If
Party B pays the rent according to the agreement, Party A
shall send a normal invoice 7 days before such rent is due.
Party B shall telegraph money to the account(s) appointed by
Party A.
Section Five Delivery of Lease
1.
Within
10 days after entering into the agreement, Party A shall provide
the list of leased assets to 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 establish which items are subject to
quality problems so that Party B may repair or acquire them
within three days for the purpose of the lease
agreement.
3.
Within 15 days of entering into the agreement, Party A shall
deliver the leased assets to Party B for its use. If the date
does not disagree with the beginning date of the lease term,
this date shall be regarded as the beginning date of the lease
term. The end date of the lease term shall be adjusted
accordingly.
4.
When delivering the lease, both parties shall sign or seal
their names to the Lease List. At the time of delivery, the
time of delivery marks the dividing point between the use
occupied by lease management and related
responsibilities.
5.
If Party A delivers equipment with quality problems or flaws
to Party B, Party B can refuse to accept it and remove the
goods from the list. However, if such equipment influences
Party B in realizing the purpose of the agreement, Party A
shall be responsible to repair it to its normal standard for
use. If Party A delays in making such repair, Party B can
repair it by itself or ask a third-party to repair it to its
normal standard of use. The expenses caused by such repair
shall be assumed by Party A and directly deducted from the
outstanding rent.
Section Six Repair,
Maintenance and Management of the Leased
Assets
1.
Party B shall be responsible for repair, maintenance and
management of the lease daily, the management scope includes
the affiliated establishments and land related to lease; Party
B shall assume the management expenses while Party A has the
right to supervise and check it.
2.
Party B shall be responsible for discovering hidden problems
in time to prevent risks from occurring.
3.
Party A shall be responsible for any equipment repair and
acquirement which results from any normal deterioration of the
leased equipment, when such deterioration results in such
equipment needing to be replaced due to normal use and other
non man-made factors, including but not limited to earthquake
and so forth, and Party A shall assume such related
expenses.
4.
Party A shall be responsible for “Overhaul”
expenses during the lease. Overhaul expenses refer to repairs
of any one piece of equipment or building which requires in
excess of 10,000 yuan to repair. When estimated repair
expenses for any single piece of equipment or building are
more than 10,000 yuan, Party B shall notice Party A in writing
and both parties shall confirm the repair and maintenance
parts. However, Party A must not delay to repair them without
reason, otherwise, Party B can postpone the rent term in terms
of the delayed time or deduct related rent; Party B will
assume all maintenance expenses under 10,000
yuan.
5.
Party A shall be responsible for, and assume any related
expenses to, the annual survey and audit of the assets in
order to guarantee the normal use during the
lease.
6.
If during the lease, some low value articles, such as Iron
Box, or other articles without repair value, cannot be used
any more, Party B shall deliver them to Party A. Therefore,
Party A shall deal with related procedures and Party B shall
be no longer responsible for those items.
7.
During the lease, Party B shall be responsible for the safety
and management of lease assets of Party A except for
undelivered assets; some public establishments used by both
parties, such as roads, stairs and assembly room and so on,
which establishments shall be managed by the Party who
utilizes the space more than the other while the other party
shall cooperate. However, the managing party shall not refuse
to allow the other party use unreasonably.
Section Seven Management of Consumable Energy Sources,
Raw Materials, Low-Value Consumption Goods,
Work Tool, Parts and Accessories
1.
On the day when Party A delivers the 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 be responsible for the costs after
verification.
2.
Party B can purchase the present materials and low-value
consumption goods from Party A with a one-off payment
according to the current marketing prices; however Party A can
keep and deal with them if both parties cannot reach
agreement.
3.
When Party A hands over the work tools and parts and services
purchased by itself, it is necessary to give a clear
indication of place of production, names, brands, years used
and purchase prices; after rescission or termination of the
agreement, Party B shall return any destroyed and used
equipment in equal quality and quantity or compensate in terms
of the prices purchased by Party A.
4.
All accessories provided free of
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