Unofficial Translation Leasing and Operation Agreement
Unofficial
Translation
WHEREAS
1.
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the
Subsidiary of Shanghai Si Fang Boiler Factory, Shanghai Si Fang
Boiler
Factory Container Branch Factory (“Container Factory”) possesses the
trademark “Sifang”, Permission of Class III Pressure Vessel and the
advantages in processing, while Shanghai Hai Lu Kun Lun Hi-tech
Engineering Co., Ltd has its advantages in technologies, services
and
market shares of the products in Petroleum & Chemical and Metal
Industry.
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2.
|
Shanghai
Si Fang Boiler Factory Container Branch Factory suffered a long-term
loss
which can only be solved by speeding up the re-structure adjustment
and
arrangement;
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3.
|
Shanghai
Hai Lu Kun Lun Hi-tech Engineering Co., Ltd is willing to participate
in
the revolutionary adjustment in respect of Shanghai Si Fang Boiler
Factory
Container Branch Factory and has entered into primary agreement
with
Shanghai Si Fang Boiler Factory.
|
NOW,
THEREFORE,
after
negotiation, the parties, intending to be legally bound, hereby agree to
enter
into Leasing and Operation Agreement (the “Agreement”) with clauses as
follows:
Article
One General Principal
1.1
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Executing
Parties
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Leasee:
Shanghai Si Fang Boiler Factory (hereinafter referred as “Party
A”)
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Xxxxxx:
Shanghai Hai Lu Kun Lun Hi-tech Engineering Co., Ltd (hereinafter
referred
as “Party B”)
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1.2
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General
Description of the Enterprise to be leased
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1.2.1
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Property:
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1)
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Fixed
Assets, to be received and administrated by Party B based on actual
delivery. Please see exhibit 1
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2)
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The
usable materials such as raw materials, semi-final products(clear
after
completion of the products)and related inventories will be purchased
by
Party B. Please see exhibit 2(Party B will pay Party A according
to
payment agreement)
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3)
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Special
materials such as stainless steel, forging model and filler rods
will be
custody and administrated by Party B based on actual delivery and
to be
used with priority and clear by actual consumption. Please see
exhibit
3
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4)
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Scale
tools, material with low consumption and stationary will be received
and
administrated by actual delivery (to be solved after consultation).
See
exhibit 4
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1.2.2
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Employees
see exhibit 2
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Article
Two Leasing Period and Rent
2.1
Term
The
Leasing Period is 8 months, commencing on May 1, 2004 until December 31,
2004.
2.2
Rent
The
annual rent for leasing is RMB 2,100,000 payable Quarterly, which is RMB
525,000
per Quarter.
Article
Three the Rights and Obligations of Party B
3.1
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Rights
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3.1.1
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The
legal representative of Party B may exercise any right granted
by the
legal representative of Container Factory.
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3.1.2
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Party
B is entitled to use all tangible and intangible assets including
without
limitation the property of Container Factory, trademark “Sifang” (the
scope of licensing will be decided by Party A), Permission of Pressure
Vessel, and other equipments, stationary and
facilities.
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3.1.3
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Party
B is entitled to operate independently (based on the scope granted
by
Party A)
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3.1.4
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Party
B has following rights for administration and operation of Container
Factory
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3.1.4.1
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Rights
of establishment of organization (filed with Party A for
records)
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3.1.4.2
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Rights
of the administration of Human Resource (except the position required
to
be consent by Party A)
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3.1.4.3
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Rights
of appointment of professionals or technicians (filed with Party
A for
records)
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3.1.4.4
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Recruitment
and dismissal of the employees (Party A’s employees
exclusive)
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3.1.4.5
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Definition
of the salary standard and distribution of bonus independently
(no less
than salary standard upon the date of this Agreement and stipulated
by
relevant authorities, continuing execution of the bonus to the
technicians
of Container Factory)
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3.1.5
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Any
Investment rendered by Party B shall be owned by it, which could
be
disposed of freely by Party B upon the termination of lease.
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3.1.6
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The
profit after tax shall be enjoyed or disposed of by the Party
B.
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3.2
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Obligations
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3.2.1
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Party
B shall pay rent on time in the first month of each Quarter. This
lease
can not be sub-leased or transferred to any third
party.
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3.2.2
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Party
B shall pay the salary and social welfares(house purchasing reserve,
pension insurance, medical insurance and un-employment issuance)
monthly
for the employees, where the amount of social welfares of factory
employees shall be delivered to Party A for contribution and the
social
welfares of xxxxxx employees shall be paid to such employee in
January
annually.
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3.2.3
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Party
B must lawfully operate the business, secure the benefits of the
employees
and improve the work conditions and welfares based on the improvement
of
business efficiency.
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3.2.4
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Party
B shall maintain and repair the leased factory hall, office buildings
and
equipments to remain the leased fixed assets in good
condition.
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3.2.5
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Party
B shall strictly maintain the system of after-sale services and
is obliged
to maintain the after-sale service for the products made Container
Factory
before this Agreement.
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3.2.6
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In
the course of Party B’s operation, Party B can not damage Party B’s
goodwill and benefits. Otherwise, the Party B may terminate this
Agreement
and claim the breach of the Agreement.
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3.2.7
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In
the course of Party B’s operation, Party B shall strictly maintain the
Safe Production, Environmental Hygiene System, Security and Stability
and
be responsible for the internal and external economic obligations
and
corporation duties.
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3.2.8
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In
the course of Party B’s operation, Party B shall be subject to the
administration, instrument and supervision of local authority and
liable
for any of relevant economic obligations and
duties.
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2
Article
Four the Rights and Obligations of Party A
4.1
Rights
4.1.1
Party A has right to supervise the qualities of the Container Factory’s
products.
4.1.2
Party A has right to check if the leased property remains intact.
4.1.3.
Party A is entitled to access to the information in respect of business
operation of Container Factory and request Party B to solve existing
problems.
4.1.4
Party A has rights to supervise Party B’s Safe Production, Environmental
Protection, Security and Stability. Party A shall assist Party B to complete
relevant aforesaid work.
4.2
Obligations
4.2.1
Party A shall maintain the trademark, permission and quality check system
of
boiler and pressure vessel produced within Container Factory.
4.2.2
Party A shall provide necessary assistance in respect of the operation,
production, staffs and advertising.
4.2.3
Party B is responsible for provision of all materials for boilers’ quality check
system and training (Party B shall pay the fees for training)
4.2.4
Party A shall issue power of attorney in respect of trademark and boiler
manufacture permission.
4.2.5
When the products of boilers and pressure vessels are manufactured and inspected
within Container Factor according to quality check procedure, Party A shall
issue Qualification Certificate after all materials are arranged according
to
quality check system and submitted to Party A.(Party B shall pay inspection
fees
to boiler check authority for the products manufactured in Container Factory
)
4.2.6
After the raw materials purchased by Party B for boiler manufacture is restored
in the warehouse of Container Factory, Party A shall issue re-examination
report
when the Party B get sample for Party A’s re-examination according to
requirement for boiler quality check system. (Party B shall pay Party A relevant
fees according to payment rules of Container Factory before this
Agreement).
4.2.7
Party A may not violate this Agreement, intervene the Party B’s operation and
move any Container Factory’s equipment and material confirmation which is
confirmed after sort and check without Party B’s consent.
Article
Five Amendment, Discharge and Termination of the contract
5.1
Upon
the effectiveness, each of the parties is bound by this Agreement which can
not
be amended, discharged or terminated unless a three month prior notification
is
given.
3
5.2
If
the Party B is unable to continue operating or enjoy lawful income due to
Party
A’s breach or intervention of Party B’s operation, the Party B is entitled to
discharge the Agreement and claim all damages incurred.
5.3
If
the Agreement is not able to be performed due to
force majeure,
the
parties may amend or discharge the Agreement after consultation.
5.4
Both
parties may agree to renew the lease period in 3 months before the expiration
of
lease. Otherwise the lease will be terminated upon the expiration of leasing
period.
Article
Six Liabilities in Breach
6.1
Both
parties shall perform this agreement completely. Non-performance and partial
performance constitute a breach. The breaching party shall be liable any
loss or
damage caused by such breach.
6.2
Any
dispute between both parties shall be solved by consultation and meditation
based on the principal of mutual understanding.
Article
Seven Others
7.1
The
bank account of Container Factory for clearing-up used before this agreement
will be used by Party B. Party B, however, shall be complied with relevant
laws
and regulations and may not lend this bank account (The creation of new bank
account shall be filed with Party A for records)
7.2
all
the financial statements and materials from the operation of new bank account
under the name of Container Factory shall be delivered to Party A for financial
administration.
7.3
The
business license, tax registration certificate, permission for opening bank
account, company seal and other legal certificate of the Container Factory
shall
be under the custody of legal representative and can not be provided for
investment, security, pledge or alike.
7.4
Any
dismissal and penalty for the employees of the Container Factory before this
Agreement shall be agreed by Party A.
7.5
The
bank loan of RMB 2,800,000 borrowed by Container Factory before this Agreement
shall be born by both Party B and Container Factory. Party B shall assist
to
assign such bank loan and keep necessary cash flow.
7.6
Any
unfinished products of Container Factory shall be completed by Party B. After
the sale of products, Party A will pay Party B fees according to the working
hours expensed.
7.7
All
uncompleted contract entered by Container Factory before this Agreement will
be
assigned to Party B who will be liable for further performance.
4
7.8
In
the course of leasing period, any information concerning about products and
contracts shall be delivered to Party B. Party A is entitled to service fees
proportionately.
7.9
In
the course of leasing period, both parties shall use the best efforts to
re-structure the Container Factory. Once the Container Factory is satisfied
with
condition for re-structure, the Party B has pre-emptive right to participate
in
such re-structure.
7.10.
Both Parties may enter into additional agreement for leasing the real estate,
equipments and management agreements.
7.11
To
speed up the process of cooperation, both parties agreed to conduct relevant
auditing, evaluation, filing and other legal procedure after two months
following the commence of leasing period to establish a new Joint Venture
Company within leasing period.
Article
Eight Effectiveness of the Agreement
8.
1 This
Agreement is effective on execution of both parties.
8.2
The
exhibits of this Agreement is a part of this Agreement,
8.3
Both
parties may enter into supplemental agreements to deal with unsolved matters.
Upon the agreement of both parties, the supplemental agreements shall constitute
a part of this Agreement, equal effective as this Agreement.
8.5
The
late agreement will prevail when there is any conflict among the several
agreements.
8.6
This
Agreement is executed in four counterparts. Each party holds two
counterparts.
Shanghai Si Fang Boiler Factory (Seal)
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/s/ BAI Zhaoxing
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Shanghai Hai Lu Kun Lun Hi-tech Engineering Co., Ltd
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/s/ WU Qinghuan
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Representative: BAI Zhaoxing
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(Signature)
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Representative
WU Qinghuan
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(Signature)
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Date: April 22, 2004
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Date: April 22, 2004
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5
Cooperative
supplementary agreement with Shanghai HAIE Hi-Tech Engineering Co.
Ltd.
Vessel
branch of Shanghai Sifang Boiler plant (hereinafter called Party A) and
Shanghai
HAIE Hi-Tech Engineering Co. Ltd. (hereinafter
called Party B) signed a cooperative agreement on December 15, 2004. With
the
favorable factors made by the two parties during one year cooperation, the
company runs very well. Regarding to the application report from party A,
party
B decides to perform the original agreement with the spirit of friendly
cooperation. But, with the consideration of the situations which are the
transformation and reform of party A, the pessimistic sales situation of
party B
in next year, the following supplementary provisions are made by friendly
consultation:
1.
|
There
is one more year of validity of the agreement. But the agreement
will be
unconditioned terminated if the following situations
happen:
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(1)
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If
the transformation or the joint venture is successful, the cooperation
approach needs to be rearranged.
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(2)
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If
the rent place (Jiangqiao) of vessel branch has to be relocated,
the
cooperation approach needs to be
rearranged.
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2.
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Party
A should take consideration of the job (project) taken by party
B during
the cooperation. To guarantee the client’s benefit, party A will inform
party B to stop the cooperation in 3 months advanced. If the job
(project)
is not finished before the termination of the cooperation, the
job (only
refers to product) should be transferred to party A or the third
party
until it is finished.
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3.
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With
regard to the production cost going up and the macro-control effectiveness
on sales situation next year, both agree to reduce the trademark
fee to
800,000 per year. Other fees and payment remains
unchanged.
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4.
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The
supplementary provisions cover the related provisions in the original
agreement; other affairs will be further
negotiated.
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5.
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There
are 5 copies of this supplementary agreement (both party A and
party B
have two copies, the Vessel branch has one
copy).
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/s/ BAI Zhaoxing
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/s/ WU Qinghuan
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Party
A: Shanghai
Sifang Boiler Plant
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Party
B: Shanghai HAIE Hi-Tech Engineering Co. Ltd.
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Director:
BAI Zhaoxing
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General
Manager: WU Qinghuan
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Sign
date: November 21, 2005
6
Cooperative
re-supplementary
agreement with Shanghai HAIE Hi-Tech Engineering Co. Ltd.
Shanghai
Sifang Boiler plant (hereinafter called Party A) and Shanghai
HAIE Hi-Tech Engineering Co. Ltd. (hereinafter
called Party B) signed rent agreement of Vessel branch and cooperative agreement
with its supplementary agreement. With the favorable factors made by the
two
parties during three years and eight months’ cooperation, the company runs very
well. Regarding to the application report from party A, party B decides to
perform the original agreement with the spirit of friendly cooperation. But,
with the consideration of the situations which are the transformation and
reform
of party A, the pessimistic sales situation of party B in next year, the
following re-supplementary provisions are made by friendly
consultation:
1.
|
There
is one more year of validity of the agreement (from January 1,
2007 to
December 31, 2007). But the agreement will be unconditioned terminated
if
the one of the following situation
happens:
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(1)
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If
the transformation or the joint venture is successful and its business
changed.
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(2)
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If
the rent agreement between party A and Shanghai Jiangqiao Assets
Management Ltd. relieves or rent place (Jiangqiao) of vessel branch
has to
be relocated.
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2.
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Party
A should take consideration of the job (project) taken by party
B during
the cooperation. To guarantee the client’s benefit, party A will inform
party B to stop the cooperation in 3 months advanced if the above
situation happens. If the job (project) is not finished before
the
termination of the cooperation, the job (only refers to product)
should be
transferred to party A until it is
finished.
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3.
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Party
A is now actively negotiating the rent fee (from 2004 till now)
with
Shanghai Jiangqiao Assets Management Ltd. once the price is settled,
party
B should pay the rent fee to party A by seasons according to fee
in 2007,
meantime, party B should pay the balance from 2004 to 2006 one-off.
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4.
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As
the vessel industry recovering, party B should pay party A integrated
management fee (equipment rent, quality guarantee, trademark, etc.)
by
seasons, that is 900,000 per year.
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5.
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The
vessel branch has been put into the 2007 transformation plan; both
parties
should take full consideration of the transformation work of the
vessel
branch. Meantime, party B is liable for the products sent after
May, 2003,
including debtor-creditor relationship.
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7
6.
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The
original provisions which are not involved in this supplementary
agreement
will go on into effect; other affairs will be further
negotiated.
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7.
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To
meet three press vessel certification changing, party B should
follow the
provisions of the rent agreement and cooperative agreement for
running the
company to guarantee everything works well. Attached is the management
measures made by party A aiming at the weakness appeared during
the past 3
years, party B should follow it
strictly.
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8.
|
There
are 5 copies of this supplementary agreement (both party A and
party B
have two copies, the Vessel branch has one
copy).
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/s/ BAI Zhaoxing
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/s/ WU Qinghuan
|
Party
A: Shanghai Sifang Boiler Plant
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Party
B: Shanghai HAIE Hi-Tech Engineering Co. Ltd.
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Director: BAI Zhaoxing
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General
Manager: WU Qinghuan
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Sign
date: December 28, 2006
8
Agreement
on
two
more years’ cooperation with Shanghai HAIE Hi-Tech Engineering Co.
Ltd.
Shanghai
Sifang Boiler plant (hereinafter called Party A) and Shanghai
HAIE Hi-Tech Engineering Co. Ltd. (hereinafter
called Party B) have been cooperated for four years and had beneficial economic
cycle. With the recovery of vessel industry, the business starts to get busy.
The production capacity, related production process and key equipments have
become unsuitable for the production. So, party B plans to invest fund to
reform
and buy related equipments. Considering about the investment payback period
and
the mutual benefit of both parties, the agreement on two more years’ cooperation
is signed after friendly negotiation. The provisions are as
follows:
1.
|
Cooperation
period
|
With
the
confirmation from Shanghai Electricity and Gas Asset Management Ltd. III
department and the consideration about the validity and continuity of class
3
stress vessel design certification of Shanghai Sifang Boiler plant, the
agreement sets forth 2 more years’ cooperation, which is from January 1, 2008 to
December 31, 2009. Any important reformation or location changing happens
during
this period, the cooperation period will be changed again.
2.
|
With
confirmation from Shanghai Electricity and Gas Asset Management
Ltd. on
two more years’ cooperation, party A requires charge more integrated
management fee to protect Sifang trademark and trade name. Therefore,
1,200,000 RMB will be charged as integrated management fee per
year, in
which 200,000 RMB will be used on tax fee left by vessel branch,
loan,
loan interest and daily expenses to reduce the production cost.
Party B
should pay 100,000 RMB cash check every year on January 1, and
July 1 to
party A, other should be paid by seasons.
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3.
|
Rent
fee
|
Once
the
rent fee is settled with Shanghai Hongqiao Asset Management Ltd., party B
should
pay to party A. Shanghai Hongqiao Asset Management Ltd. sets forth tax
territorial jurisdiction with consideration of firming the rent fee. Therefore,
party A sets forth about 50% of gross sales as proportion of the tax of
cooperative enterprise, and increase with year.
4.
|
taking
care of related goods
|
with
regard to used or unused goods like stainless steel forgeable piece, welding
rod, measure, low priced and easily worn articles, office staffs, etc. which
are
involved in the original agreement, part B should pay one-off to party A
according to the settled price.
5.
|
The
original provisions which are not involved in this supplementary
agreement
will go on into effect; other affairs will be further
negotiated.
|
9
6.
|
There
are 5 copies of this supplementary agreement (both party A and
party B
have two copies, the Vessel branch has one
copy).
|
/s/
Bai Zhaoxing
|
/s/
Wu Qinghuan
|
Party
A: Shanghai Sifang Boiler Plant
|
Party
B: Shanghai HAIE Hi-Tech Engineering Co. Ltd.
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Director:
BAI Zhaoxing
|
General
Manager: Xx. XX
|
Sign
date: June 25, 2007
10