COVER SHEET TO DALIAN CHUMING
SLAUGHTER AND PACKAGING PORK CO., LTD.
EXCLUSIVE LONG-TERM HOG PROCUREMENT AGREEMENT IV

Dalian Chuming Slaughter and Packaging Pork Company Ltd.
 
Producer: Dalian Chuming Group Co., Ltd
No. 2026 Diamond Street
 
No. 9 Xin Yi Street
Wafangdian
 
Ganjingzi District
CHINA
 
CHINA

 
THIS DOCUMENT IS A LEGAL CONTRACT BETWEEN
DALIAN CHUMING SLAUGHTER AND PACKAGING PORK CO., LTD. AND YOU.
READ YOUR CONTRACT CAREFULLY. This cover sheet provides only a brief summary of
your contract. This is not the contract and only the terms of the actual
contract are legally binding. The contract itself sets forth, in detail, the
rights and obligations of both you and us. IT IS THEREFORE IMPORTANT THAT YOU
READ YOUR CONTRACT CAREFULLY.

 
MATERIAL RISK DISCLOSURE STATEMENT 
 
Please carefully consider the following risk factors in addition to your animal
husbandry skills, management skills, experience and knowledge before signing
this contract.

SWINE PRODUCTION RISKS
Ÿ
Raising swine for profit depends on many factors. Performance under the terms of
this contract does not ensure that you will make a profit. Your profitability is
affected by numerous factors. Such factors include, but are not limited to, your
own animal husbandry and management skills, herd health, adverse weather
conditions, and catastrophic loss of facilities or hogs on account of factors
beyond your control.

Ÿ
You bear all risks of production of market hogs until delivery to our plant and
acceptance of hogs by us. Such risks include, but are not limited to, poor
farrowing rates, diseased or injured hogs, death loss, poor feed conversion, and
sort loss.

Ÿ
You are required to comply with any change in the PRC Law of Food Hygiene and
the Administrative Measures for the Hygiene of Meat and Meat Products, and any
HACCP program established by us. The requirements of such programs may be more
stringent than the current requirements of the PRC Law and National Slaughtering
Authentication Center.

FINANCIAL RISKS 
Ÿ
This contract is not a “cost plus” contract. This means that you are not assured
of covering all of your costs of operation, or of earning a profit, by
performing in accordance with the contract terms.

Ÿ
This long-term contract requires you and us to agree to a specific supply
arrangement for the entire term of the contract. This may turn out not to be the
most beneficial way for you to market your hogs.

Ÿ
Financing of construction or operation of your swine facilities may exceed costs
anticipated by you.

Ÿ
Failure to make payments to repay a third-party lender that has financed
construction or operation of your swine facilities may cause your third-party
lender to foreclose on the facility or take other collection actions. Any
default by you under your financing agreement will also constitute a default
under this contract.

Ÿ
You are required to indemnify and hold us harmless from all liabilities,
damages, claims, judgments, costs and expenses arising out of your failure to
perform this contract.

 

--------------------------------------------------------------------------------

 
REGULATORY RISKS 
Ÿ
You are responsible for obtaining all necessary permits to legally construct and
operate your facilities. Failure to obtain such permits may result in
enforcement actions being taken against you by regulatory agencies.

Ÿ
You are responsible for properly storing, handling and disposing of manure from
your facilities. You are exposed to liability for any manure spills or
contamination caused by improper storage, handling or disposal.

Ÿ
Your hogs may be quarantined or destroyed by animal health or other regulatory
agencies if the hogs are found to be diseased.

Ÿ
You are responsible for disposal of all dead hogs. You could be exposed to
liability if you fail to properly dispose of all dead hogs.

PAYMENT RISKS 
Ÿ
If you are in default, we may pay you a lower price for your hogs for so long as
the default continues.

Ÿ
If you are in default, we may pay you less than amounts you are otherwise due
from us by offsetting amounts you owe us.

TERMINATION RISKS 

Ÿ
We may terminate this contract prior to expiration of the term of the contract
if you are in default.

Ÿ
We may terminate this contract prior to expiration of the term of the contract
if we stop slaughtering hogs at the plant to which your hogs are being delivered
and retain ownership of such plant.

Ÿ
If you are in default, we have the right to pursue any and all remedies
available to us at law or in equity. These remedies include any remedies granted
to us under this contract.

 
YOUR RIGHT TO REVIEW AND CANCEL THIS CONTRACT 
You may cancel this contract by mailing a written cancellation notice to us at
the address set forth above within three business days after you receive a copy
of the fully signed contract. The written notice of cancellation will be deemed
mailed on the date of the postmark on the envelope.
 
VOLUNTARY AGREEMENT; NO GUARANTEE OF PROFIT 
You acknowledge that: (1) you have voluntarily entered into this contract on
your own accord; (2) you have had adequate opportunity to consult with your own
attorney and accountant regarding all legal, accounting and tax consequences of
this contract; and (3) we and our employees and agents make no representations
or guarantees of any kind whatsoever regarding the consequences or profitability
of this contract to you.
 

 
Your Initials: 
 
 
Date: 
 

 
ii

--------------------------------------------------------------------------------

    
TABLE OF CONTENTS

Parties
Cover Page
Statement That This Document is a Legal Contract
Cover Page
Material Risk Disclosure Statement
Cover Page
Your Right to Review and Cancel This Contract
Cover Page
Voluntary Agreement; No Guarantee of Profit
Cover Page
Table of Contents
iii
Introductory Paragraph
1
   
Definition of “Agreement”
1
   
Definition of “you”
1
   
Definition of “we”, “us” and “our”
1
1.
Term and Quantity
1
2.
Price
1
 
 
Definition of “Contract Price”
1
 
 
Definition of “Market Base Price”
1
3.
Our Obligations
2
4.
Your Obligations
2
5.
Default; Termination
4
6.
Remedies
4
7.
Indemnity
4
8.
Right Of Offset
4
9.
No Security Interests or Liens in Hogs
5
10.
Force Majeure
5
11.
Assignment; Binding Effect
5
12.
Waiver
5
13.
Relationship of Parties
5
14.
Severability
5
15.
Survival of Provisions
5
16.
Entire Agreement; Amendment
6
17.
Governing Law
6
18.
Jurisdiction and Venue
6
19.
Mediation
6
20.
No Investment
6
21.
Authorization
6
Signatures of Parties 
6

 
iii

--------------------------------------------------------------------------------

 
This Dalian Chuming Slaughter and Packaging Pork Co., Ltd. Exclusive Long-Term
Hog Procurement Agreement IV (this "Agreement") is made effective December 17,
2007, by and between the undersigned producer of hogs (hereinafter referred to
as "you") and Dalian Chuming Slaughter and Packaging Pork Co., Ltd. (hereinafter
referred to as "we", "us" or "our").
 
(a) The term of this Agreement commences on the effective date set forth above
and expires on December 31, 2010 subject to termination pursuant to paragraph 5.

(b) You agree to exclusively supply the quantities of market hogs to us under
Section 1 of this Agreement.
 
1. TERM AND QUANTITY.

(a) For the calendar years from January 1 to December 31 you will supply:

 
(1)
750,000 hogs in calendar year 2008

 
(2)
800,000 hogs in calendar year 2009

 
(3)
800,000 hogs in calendar year 2010

(b) All hogs produced from your hog production operation, and not less than the
number of hogs per year specified in 1.(a) (1), (2), and (3) above.

(c) You acknowledge that our payment of the Contract Price as set forth in
paragraph 2 is made in reliance upon your promise to perform exclusively under
this Agreement for the entire term of the contract.

(d) You acknowledge that you will exclusively sell to us all of your
merchantable hog production that meets our purchase criteria as stipulated
below.

(e) You acknowledge that we retain the right to purchase hogs on the open market
at our discretion in order to meet required volumes above and beyond the
quantities you will supply us under this Agreement.

2. PRICE.

(a) The “Contract Price” to be paid to you for contracted hogs delivered to us
shall be determined by us as follows:

(1)
We will calculate the Market Base Price each week as set forth in paragraph
2(b).

(2)
The Contract Price will be equal to the lower of the Market Base Price or the
Spot Price.

(b) The "Market Base Price" shall be the average price per carcass cwt. of the
prior week's Dalian Chuming Meat Union Co., Ltd. plant delivered hog prices. If
we discontinue spot purchases of hogs and no longer establish such a plant
delivered hog price, then the Market Base Price shall be equal to a rolling
average of spot hog prices reported by the Dalian industry as the fair market
price uniformly used in our long-term hog procurement program (The “Spot
Price”). The reference price for Dalian industry shall be that published on the
Liaoning Province Government website at http://www.lnprice.gov.cn/priceList .
 
1

--------------------------------------------------------------------------------

(c) The hogs supplied under this Agreement shall be sold F.O.B. destination and
title to hogs and risk of loss of hogs pass from you to us.

3. OUR OBLIGATIONS.

(a) We agree to pay you for contracted hogs within sixty (60) days of the last
day of the month we take delivery of your hogs at our plant, at the price as set
forth in paragraph 2, for the entire term of this Agreement.

(b) We will inspect, sort and weigh hogs at the delivery location or the plant.

(c)  We will keep all necessary records with respect to the receipt, weighing
and payment of all hogs in accordance with our regular record retention and
destruction schedule. We currently retain all scale tickets and checks for two
(2) years. Upon giving us reasonable notice, you may inspect such records during
normal business hours at locations designated by us. We will supply at your
expense copies of such records as you reasonably request.

4. YOUR OBLIGATIONS.

(a)  You are solely responsible for the operation and management of your hog
production operation. You are solely responsible for compliance of your hog
production operation with all applicable PRC, provincial and local laws and
regulations. Examples include laws and regulations relating to permits to
operate your facilities, handling and disposal of manure, and disposal of dead
hogs.

(b) We must approve the following aspects of your hog production operation at
the commencement of this Agreement and any changes you make to these aspects:
 
(1) A genetic program capable of producing lean, uniform sorted hogs that
consistently meet our requirements;

(2)  Facilities to farrow and finish hogs year round and/or sources of weanling
and feeder pigs;

(3) A feeding program, using exclusively pre-mix, concentrated or full-price
feed provided by Chuming Animal Feed Co., Ltd.; and

(4) A cost and recordkeeping system.

(c) All hogs delivered by you under this Agreement must be as follows:

(1)  Top quality, healthy and wholesome, castrated, free of foreign objects
(e.g., needles) and weigh between 93 and 100 kilograms;

(2)  Not crippled, lame, sick, overfilled or otherwise unmerchantable at time of
delivery; free of drugs or other additives banned by the PRC;
 
2

--------------------------------------------------------------------------------

(3) Three-way cross-breeding self-raised hogs or other commercial grade pigs and
sources, recognized by the purchaser, uniform in size and numbers, white in
color, and derived from approved facilities;
 
(4) Handled by you and transporters in such a manner so as to optimize meat
quality; and

(5) Vaccinated, supervised by a licensed veterinarian and in compliance with any
applicable drug use requirements and withdrawal procedures calling for
suspension of vaccinations 30 days prior to delivery to our plant.

(d) You agree to deliver hogs under this Agreement by:

(1)  Arranging transportation and incurring freight costs to deliver the hogs to
our nearest slaughter plant;

(2)  Delivering the hogs to any other slaughter plant designated by us, in which
case we will pay you for additional freight costs incurred by such delivery
pursuant to our then current standard livestock freight schedule; and

(3)  Arranging delivery with our Hog Procurement personnel by Thursday of the
week prior to delivery, with specific delivery days and times to be determined
by us (early, late, Sunday and holiday deliveries may be required). Time is of
the essence in the delivery of hogs under this Agreement.

(e)  You agree to the following:

(1)  To maintain certification at the top Level of the PRC Law and National
Slaughtering Authentication Center, a HACCP Program, or the highest Level of
such PRC Program established in the future within six months of the Program
change establishing such Level;

(2)  To comply with any HACCP program established by us, and any change in such
a program, within six months of the establishment of the program or the change;

(3)  To allow us to inspect your hogs and facilities during normal business
hours on reasonable notice to you;

(4)  To demonstrate to us at all times the ability to produce hogs in the
quantity and of the quality required during the term of this Agreement;
 
(5)  To demonstrate your financial soundness to us at all times and provide us
evidence thereof upon our request;

(6)  To allow us to inspect all of your cost and financial records relating to
this Agreement during normal business hours on reasonable notice to you; and

(7) To provide us a complete set of your or your U.S. listed parent company’s
financial statements or other similar data and production information on an
annual basis and at any time upon our demand.

3

--------------------------------------------------------------------------------

 
5. DEFAULT; TERMINATION.
 
(a) For purposes of this Agreement, a party is in default if such party:

(1)  Breaches this Agreement and such breach remains uncured twenty (20) days
after receipt from the non-defaulting party of a written notice specifying the
alleged breach;

(2)  Manifests an intention not to perform any material obligation under this
Agreement (for example, delivering hogs or accepting hogs) or manifests an
intention not to cure a material breach of this Agreement;

(3) Becomes insolvent, suspends or discontinues business operations, makes an
assignment for the benefit of creditors, commences voluntary or has commenced
against them involuntary bankruptcy proceedings, or voluntarily appoints or
involuntarily has appointed a receiver or trustee of all or any part of their
property; or

(4) Is in default in the performance of any loan agreement with its lender(s)
(for example, noncompliance with financial covenants), regardless of whether
such default is declared by the lender(s). Each party agrees to promptly provide
the other party written notice of any such default by it. Each party agrees to
immediately provide the other party a copy of any notice of default such party
receives from its lender(s). Any such notice of default by a party given by its
lender(s) shall be conclusive evidence of such a default.

(b)  If the other party is in default, the non-defaulting party may terminate
this Agreement by written notice to the defaulting party. Upon delivery of such
a written notice of termination this Agreement shall immediately terminate.

(c)  If we discontinue slaughtering hogs at the plant to which your hogs are
being delivered and retain ownership of such plant, then we shall at our option
(1) terminate this Agreement by written notice to you, or (2) notify you that
you must deliver the hogs to our then nearest slaughter plant. We will pay you
for additional freight costs incurred by such delivery pursuant to our then
current standard livestock freight schedule.

(d) If we do not complete the intended public listing and related financing for
our parent company, Dalian Chuming Precious Sheen Investments Consulting Co.,
Ltd., the previous arrangements between us will continue and this Agreement will
terminate without further notice.

6. REMEDIES. If the other party is in default, the non-defaulting party shall
have the right to pursue any and all remedies available at law or in equity,
including without limitation any remedies granted by this Agreement. The
remedies shall be considered cumulative, with the pursuit of any one or more
remedies not preventing the pursuit of any other remedies that may be available.

7. INDEMNITY. Each party shall indemnify and hold the other party harmless for
any and all liabilities, damages, claims, judgments, costs and expenses
(including without limitation reasonable attorneys’ fees) incurred by the other
party in connection with such party’s actual or alleged breach of this
Agreement.

8. RIGHT OF OFFSET. If you are in default, we may offset any amounts owed to us
under paragraph 7 against any amounts due and owing to you under this Agreement
and any other agreement or transaction between you and us until all such amounts
owed to us have been satisfied.
 
4

--------------------------------------------------------------------------------

9. NO SECURITY INTERESTS OR LIENS IN HOGS. You represent to us that all hogs
delivered under this Agreement are free and clear of all security interests and
liens of any kind whatsoever, except as specifically provided in a written
notice received by us at least thirty (30) days prior to delivery. If hogs
delivered under this Agreement are subject to any security interest or lien, we
may make payments jointly to you and the secured party or lien holder.

10. FORCE MAJEURE. Neither party shall be liable for damages due to delay or
failure to perform any obligation under this Agreement that results directly or
indirectly from any cause beyond the reasonable control of such party. Examples
of such causes are disease which could not be reasonably foreseen or prevented
by adherence to accepted industry practices, strike or other labor difficulties,
breakdown or damage to facilities, acts of war, civil commotions, acts of any
governmental authority, interference in telephone or electronic communications,
fire, flood, windstorms, and other acts of God. If hogs are not delivered or
accepted due to such causes, we may at our option accept hogs in excess of the
contracted quantities when you are able to deliver them or we are able to accept
them.

11. ASSIGNMENT; BINDING EFFECT. You do not have the right to assign this
Agreement or any of your rights hereunder without our prior written consent,
which consent shall not be unreasonably withheld. Provided that you may assign
this Agreement or any of your rights hereunder to your lender(s) as collateral
security for any loan. If you desire to sell all or substantially all the assets
constituting your hog production operation, then in addition to obtaining our
consent, you shall cause the purchaser to expressly assume, in a writing
acceptable to us, all of your obligations under this Agreement. If we sell the
slaughter plant to which your hogs are being delivered, then we shall at our
option (a) cause the purchaser to expressly assume all of our obligations under
this Agreement, or (b) notify you that you must deliver the hogs to our then
nearest slaughter plant. We will pay you for additional freight costs incurred
by such delivery pursuant to our then current standard livestock freight
schedule. This Agreement shall be binding on your successors and permitted
assigns and on our successors and assigns.

12. WAIVER. Any breach of this Agreement or any right provided by this Agreement
may be waived only in a writing signed by the waiving party. Any such waiver
shall not affect the validity of this Agreement, or the right of either party to
thereafter enforce every provision of this Agreement.

13. RELATIONSHIP OF PARTIES. The parties are independent contractors, with
neither party in any way the legal representative nor agent of the other party.
Neither party has any right or authority to act for or bind the other party in
any manner.

14. SEVERABILITY. If any term or provision of this Agreement is held to be
illegal or in conflict with any PRC, provincial or local law or regulation, the
validity of the remainder of this Agreement shall not be affected. The rights
and obligations of the parties shall be construed and enforced as if this
Agreement did not contain the particular term or provision held to be invalid.

15. SURVIVAL OF PROVISIONS. Any provisions of this Agreement that by their terms
have or may have application after the expiration or termination of this
Agreement shall be deemed to the extent of such application to survive the
expiration or termination of this Agreement. Examples of such provisions are
paragraphs 6-8.
 
5

--------------------------------------------------------------------------------

16. ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire agreement
between you and us with respect to the subject matter of this Agreement. This
Agreement supersedes any prior or contemporaneous oral or written agreement
between you and us relating to the hog production operation supplying hogs under
this Agreement. This Agreement may be amended or supplemented only in writing by
you and us, and not by any course of dealing or prior performance.

17. GOVERNING LAW. This Agreement and the rights of the parties hereunder shall
be governed by and interpreted in accordance with the laws of the PRC, in Dalian
City, Liaoning Province, without regard to conflict of laws principles.

18. JURISDICTION AND VENUE. All judicial proceedings and actions arising out of
or relating to this Agreement shall be venued in the courts of the PRC, in
Dalian City, Liaoning Province. The parties consent to the personal jurisdiction
of said courts and waive any argument that such forums are not convenient.

19. MEDIATION. The parties agree to the use of mediation to attempt to resolve
any dispute between the parties arising out of or relating to this Agreement.
The mediator shall have no authority to impose a settlement of any such dispute.
Mediation shall be conducted pursuant to the statutes of the International
Arbitration Association.

20. NO INVESTMENT. Nothing in this Agreement requires you to make a capital
investment in buildings or equipment that cost RMB1,000,000 or more and have a
useful life of five or more years.

21. AUTHORIZATION. You represent and warrant that you have taken all necessary
action to duly authorize the execution, delivery and performance of this
Agreement. The individual signing this Agreement on your behalf certifies that
he/she is duly authorized to execute this Agreement on behalf of you.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their
duly authorized representatives effective the date written on the top of page 1.

DALIAN CHUMING GROUP CO., LTD
    DALIAN CHUMING SLAUGHTER AND        
PACKAGING PORK CO., LTD.
             
(“You”)
   
(“we”, “us” or “our”)
                             
By:
 
   
By:
 
                             
Its:
 
   
Its:
                 
    (Title)       (Title)  

 
6

--------------------------------------------------------------------------------