EXHIBIT 10.1
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LEASING CONTRACT
Party A (Lessor): Heilongjiang Gongzhun Meat Food Co., Ltd.
Party B (Lessee): Henan Zhongpin Food Share Co., Ltd.
In accordance with "The Company Law of People's Republic of China,"
"Contract Law" and other relevant laws and regulations, both parties concluded
the following agreement on November 6, 2006 through friendly consultation,
regarding the matter of Party B leasing Party A's property.
I. The Scope of Lease
Party A voluntarily leases the following assets in the factory area of
"Heilongjiang Gongzhun Meat Food Co., Ltd." located in Hailun City, Heilongjiang
Province to Party B, including live pig slaughtering, cutting, and refrigeration
facilities, railway lines and water, electricity, sewage, barns, logistics,
lodging, offices and sales outlets and other slaughtering-related facilities,
equipment and manufacturing instruments and other related items. The real
property is leased on the basis of Addendum I to the signed contract.
II. Term
The term of leasing is three years, from November 6, 2006 to November 6,
2009. Should Party B desire to continue to lease the property after the
expiration of the lease, both parties shall draw up the terms and reach a new
leasing agreement. If a third party desires to lease or acquire the property
that has been leased to Party B after the contract's expiration, Party B shall
have the right of first refusal.
III. Production Operations after the Completion of Lease
After Party A has leased the property to Party B, Party B has the right
to conduct independent management of staff, capital, materials, production,
supplies and marketing. Party A
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and any third party must ensure not to intervene in Party B's normal production
and operation activities.
IV. Rent and Payment
The total amount of rent for the first year is 1,900,000 yuan, rent for
the second and third year is 2,100,000 yuan per year. All the expenses arising
from the production and operation activities involved in animal quarantine
inspection, environmental assessment, water, security checks, sewage, and
technical supervision fees that will be handed in to external and functional
departments are included in the rent and Party B shall not undertake any of the
fees listed above.
The rent is annualized and shall be paid by quarter and four times per
year. For the first year's rent, Party B shall pay 500,000 yuan for each of the
first three quarters and 400,000 yuan for the fourth quarter. As for the rent
for the second year, Party B shall pay 600,000 yuan for the first quarter and
500,000 yuan for each of the last three quarters. The payment of rent for the
third year is the same as that for the second year. The initial rent payment
shall be paid to Party A within 10 days after the execution of the contract
(before November 16, 2006). Beginning in 2007, the rent payable for the each
quarter shall be paid before the 10th day of the first month of each quarter.
It is agreed in the contract or otherwise specified that Party A shall
have the right to unilaterally deduct certain charges from the rent payable to
Party A without constituting a breach.
V. Credit and Debt
Both parties are independent corporations and Party B shall only perform
the lessee's obligations in the contract and shall bear no responsibility for
any of the creditors and debtors of Party A before and after the contract has
become effective. Party A shall independently and
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properly handle all the matters regarding its creditors and assurance both
before and after Party B's lease term so that it will have no affect on Party
B's normal production and operation activities. If not, Party A shall be
obligated to compensate Party B for any damages so incurred and also shall
assume the related compensation obligations for Party B's losses created by
Party A's creditors, related parties and dispute parties. Party B has the right
to unilaterally terminate the contract for any consequences arising therefrom
without breach. Party A shall only perform the lessor's obligations in the
contract and is unrelated to all the creditors and debtors of Party B before and
after the contract has become effective.
Upon the contract's expiration, Party B shall assume all the creditors
and debtors arising from Party A's operational activities during the term of the
contract.
VI. Recruitment and Use of Labor
Party B's act of leasing Party A's property shall have no affect on
Party A's existence or Party A's qualification as a corporation. Party B has the
right to select laborers based on best performance from among all of Party A's
employees, each of whom shall retain their status as Party A's staff. When the
staff from either side cause damage to the other side's production and
operations, the damaging party shall be charged with compensating the other
party for damages.
Party B has no obligation to utilize Party A's staff in the contract,
and when Party B recruits new employees according to the "Labor Law" and other
related labor management policies, however, Party A's staff shall be given
priority for consideration. Upon hiring, Party A shall educate and train the
employees independently and push forward the contract system, labor working
system and payment system by self-determination. Retirement insurance,
unemployment insurance, medical treatment insurance and other forms of social
insurance charges will be calculated separately and calculated in the total pay
to the staff who shall hand in
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the charges by themselves in compliance with the laws. For the employment system
established by Party A, Party B shall be responsible for obtaining confirmation
and approval from the local administrative department.
VII. Party A's Rights and Obligations
A. Party A's Rights
1. Shall have the right to demand Party B to pay rent according to the
agreed amount and mode.
2. Shall be entitled to require Party B to utilize the leased property
correctly.
3. Shall have the right to keep Party B from using Party A's property
for any form of security interest.
4. Shall be entitled to ask Party B to ensure the integrity and security
of the leased property.
5. Other rights specified in the contract.
B. Party A's Obligations
1. Assist Party B in petitioning the local government to strictly put
favorable policies into effect as stipulated in the tenth clause of the
contract.
2. To guarantee the security and utility of the leased property before
the contract becomes effective and to guarantee Party B can conduct normal
production and operations on the date of entry.
3. Be responsible in assisting Party B to coordinate and handle various
social relationships during the term of the contract.
4. Assist Party B in organizing the live pig resources needed for Party
B's normal production on the precondition that the price of live pigs is no
higher than that of the adjacent areas.
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5. Help Party B to deal with the commodity exchange vouchers needed to
export products and the related expenses generated shall be assumed by Party B.
6. To fully share both parties' resources, when Party A's distribution
channels are in demand for products, including fresh food and prepared food,
Party A shall order Party B's products on a priority basis based on the same
prices.
7. All the expenses generated from Party A's newly built prepared food
processing factory, such as refrigeration, steam, water, electricity and heat,
shall be the responsibility of Party A. The energy distribution from Party A's
current production capacity shall not affect Party B's normal production and
operation activities.
8. Shall provide normal reimbursement invoices after Party B's payment
of the rent.
9. Other obligations stipulated in the contract.
VIII. Party B's Rights and Obligations
A. Party B's Rights
1. Be entitled to conduct normal production and operation activities by
self-determination.
2. Has the right to request Party A to ensure the security and utility
of the leased property.
3. Has the right to self-determine the labor working system and payment
system and ask for the assistance from Party A to carry out and perform these
systems.
4. Other rights stipulated in the contract.
B. Party B's Obligations
1. Be responsible for paying the rent to Party A according to the agreed
amount and mode.
2. Be obligated to utilize the leased property correctly.
3. To ensure not to use the leased property for any kind of mortgage,
security interest or assurance.
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4. To guarantee the security and integrity of the leased property.
5. To provide the processed products to Party A on priority on the basis
of the same market price.
6. Other obligations stipulated in the contract.
IX. Property Transfer and Return
After the contract has become effective, both parties shall conduct the
job of property transfer within the agreed period of time and the transfer list
the two parties confirmed by signing shall serve as proof of the property
returning.
During the term of the contract, Party B is entitled to utilize the
leased property by self-determination and Party A shall not collect any
additional charges. Heavy repair expenses generated from the leased property
during the term of the lease shall be paid by Party A. The heavy repair expenses
mentioned above shall refer to any repair charges in excess of 20,000 yuan for
each time for repairing a single facility, production line or building. The
daily repair charges shall be the responsibility of Party B. After the
expiration and when the contract is not to be renewed, Party B shall return the
property in accordance with the transfer list.
After the expiration and when the contract is not to be renewed, Party B
shall independently dispose of the property added during the contract's life by
Party B or take them away, or shall be reimbursed by Party A through converting
the costs of the goods into money after consultation regarding those goods that
cannot be taken away.
Before the expiration of the lease, when business conditions are poor
and there are other special occasions, Party B has the right to terminate the
contract upon three months' prior written notice without committing a breach.
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X. Favorable Policies
1. During the contract life of the lease, Party A shall ensure Party B
enjoys all the favorable policies that existed before Party B's leasing.
2. Should Party B desire to register a corporation, Party A shall be
responsible for coordinating with the related departments to ensure the
registration is successful and to ensure Party B can enjoy the favorable
policies associated with corporate registration.
3. Assist Party B in striving for related favorable policies that fall
within the scope of local government, including but not limited to the duration
of all kinds of tax expenses, the assurance of the price of water, electricity
and the environment within the scope of local government and ask the local
government to confirm such policies in writing so as to ensure Party B's
convenient performance.
XI. Termination of Leasing Contract
After expiration, Party B has disposition rights and earnings rights to
all the property except the leased property and has the self-determination
rights regarding creditors and debtors. Whether Party B desires to renew the
contract or not, Party B shall notify Party A in the form of written notice one
month in advance of its expiration. If the contract is not renewed, the lease
property transfer shall be completed within one month after the contract's
expiration, upon which time the lease contract shall immediately terminate.
XII. Breaching Obligations
In the event either party breaches, the defaulting party shall
compensate the observant party for any damages. Once either party breaches, both
parties shall first conduct negotiations. In the event negotiation fails, the
observant party shall have the right to terminate the contract. If both
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parties commit mistakes or breach the contract, each shall undertake its
respective responsibilities and terminate the contract.
Should Party A fail to perform its obligations stipulated in each
clause, Party B is entitled to terminate the contract; should Party B elect not
to terminate the contract, Party A shall reimburse Party B for the losses caused
by Party A's breach.
Both sides shall settle the disputes arising from carrying out the
contract through consultation; should both parties fail to reach agreement, the
parties shall respond to the signing location's local people's court.
XIII. The Conditions of the Force of The Contract
This contract takes effect as of the date both parties sign with seals
and the transferring of assets shall be taken as the starting symbol.
XIV. Other Clauses
1. Regarding the clauses not mentioned in the contract, both parties
shall enter into a supplemental agreement, which shall be an inalienable part of
the contract with the same legal effect.
2. There are six duplicates of the contract and each party shall hold
two and the other two duplicates shall be filed with the related departments
with the same legal effect.
3. This contract will be entered into at Changge City, Henan Province.
Party A (Seal) Party B (Seal)
/s/ Yiwen Han /s/ Chaoyang Liu
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Authorized Representative Authorized Representative
November 6, 2006 November 6, 2006
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