Unassociated Document


     

    
        Confidential                            serial number::YGXX(2010)6

      


      


      Yangling
Agricultural High-tech Industries Demonstration Zone

      


      District
Entrance Project Agreement

      


      Governing
Committee of the Yangling Agricultural High-tech Industries

      Demonstration
Zone

      Best
Design Holdings Ltd.

      


      August
12, 2010

      


       District
Entrance Project Agreement

      


       Party
A: Governing Committee of the Yangling Agricultural High-tech Industries
Demonstration Zone (hereinafter referred to as Party A) 

      


       Party
B: Best Design Holdings Ltd. (hereinafter referred to as Party B)

      


       In
conformity with the principles of equality, free will, honesty and
trustworthiness, pursuant to The Contract Law of the People's Republic of China,
Land Administration Law of the People’s Republic of China, Urban and Rural
Planning Law of the People’s Republic of China and other laws and regulations,
both parties have reached the following agreement regarding the investment
project by Party B:

      


      


       Article One: Contents of the
Project

       

      Party B
is to invest in and construct a facility for the production of probiotics for
animal feed in Yangling Demonstration Zone.The total investment of the project
is estimated to be RMB 395.56 million (Fixed asset investment of RMB373.7820
million). The
investment scale is no less than RMB 1 million per Mu, and the construction
period is 2 years.  The
content of construction includes a workshop with the capability of producing 50
thousand tons of bacillus powder per year, a workshop with the capability of
producing one-thousand tons of lactobacillus powder per year, a workshop with
the capability of producing 10 thousand tons of saccharomycete powder per year,
a workshop with the capability of producing 100 thousand tons of protein feed
per year, an enzyme preparation workshop with a 20 thousand ton capacity, a
power center, a testing & inspection center, an R&D building, a
warehouse, a comprehensive office tower, a wastewater treatment plant, roads and
greenbelt in the factory, and fire control systems. The concrete content as
approved by the government in the Feasibility Study Report and the Preliminary
Design and Construction Blueprints shall prevail.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Upon
completion of the Project, and once the facility has commenced full scale
production, the estimated production value of the Project is expected to reach
RMB 3,130 million per year, the estimated tax revenue from the Project is
expected to be RMB 186 million, and the number of employees is expected to be
500 people.

      


      


      Article Two: Main Body of the
Project

       

      Within 15
days of the signing of this agreement, party B should complete the commercial
registration and tax registration of the new entity.  The
registered capital of the new entity should not be less than US$50
million.  The newly registered entity shall become the project’s legal
person, and the rights and obligations of Party B provided in this agreement
shall be inherited by the new entity.

      


      


      Article
Three: Land Use Rights of the Project

       

      
        	
                1.  

              	
                The
      pre-selected site of the project is on the south of Chengnan Road and east
      of LIDESUOKE company (subject to the written proposal of site selection
      signed by Planning and Construction Bureau). The total area of the
      proposed site is 126 mu (subject to the surveying and mapping results), of
      which the first stage of the construction land is 105 mu and the
      confiscated land is 21 mu. 

              


      

       

      
        	
                2.  

              	
                The
      land use right is restricted to industrial purposes, and the transfer
      period of the land is 50 years.

              


      

      
         

        
          	
                  3.  

                	
                        
                    The
      usage rights of State-owned land for the project should be obtained in
      accordance with relative government regulations.  The
      land price of the project is RMB 96,000 per mu, and the starting price is
      RMB 96,000 per mu if the land should be acquired through Bid Invitation,
      Listing and Auction according to relative government
      regulations.

                  

                


        

      

      


      


      Article Four: Payment of Land Use
Consideration

       

      Within 30
days of the signing of this agreement, Party B should pay to Party A a
performance bond (the performance bond should not be less than RMB 20,000 per
mu) of RMB 3 million.  Party
B is qualified to participate in either a bidding or allotment process. For the
former, Party B obtains the land use rights through Bid Invitation, Listing and
Auction, and signing the State-owned Land Use Rights Transfer Contracts with
Land Resources Bureau in the demonstration area. If party B obtains the land use
rights through the allotment process, the Land Resources Bureau of the
demonstration area will issue the State-owned Land Allocation Decisions.
Pursuant to the State-owned Land Use Right Transfer Contracts and the
State-owned Land Allocation Decisions, Party B is required to remit the land
transfer payment and the balance of the land use payment in addition to the
performance bond to a special account designated for land transfer payment held
by Party A.  If
Party B does not obtain the land use right within 270 days of payment of the
performance deposit, the Agreement will terminate automatically and the
performance deposit will be fully refunded to Party B.

      


      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        
          


          Article
Five: Responsibilities and Obligations of Party A

           

          
            	
                    1.

                  	
                    Within
      60 days of signing of the State-owned Land Use Right Transfer Contracts
      and the issue of the State-owned Land Allocation Decisions, the Land
      Resources Bureau of the demonstration area will transfer the land on an
      “as-is” basis to Party B.  The
      Investment Service Bureau serves as the initiator of the land transfer,
      and the Land Resources Bureau, the Planning & Construction Bureau, and
      the Municipal Administration Bureau are responsible for the land allotment
      and building line checking based on their own
  functions.

                  


          

           

          
            	
                    2.

                  	
                    Party
      A will assist Party B with the implementation of the Investment project,
      the project registration, initiation, planning and construction and
      related procedures,  as well
      as in solving relative difficulties and problems arising during the
      implementation of the
project.  

                  


          

           

          
            	
                    3.

                  	
                    Party
      A will assist Party B with construction electricity issues.  Party A
      is responsible for the connection of 10kv high-voltage lines to the
      nearest feeder pillar or connection node of the power networks of the city
      in which the project is located.  Party B
      is responsible for the circuit and equipment costs other than the feeder
      pillar or connection node. The expense for construction of the dedicated
      line is at Party B’s cost if the power consumption is over
      20000kw.

                  


          

           

          
            	
                    4.

                  	
                    Party
      A will assist Party B with the issue of water-supply, rainwater and sewage
      discharge and heating during the project construction.  Party A
      is responsible for connection of water supply line to the nearest valve
      well of the assigned land parcel.  All of
      the other expenses are at party B’s cost. Party A is responsible for
      connection of a heat supply pipeline to the nearest fixed trestle of the
      assigned land parcel. All of the other expenses are at party B’s
      cost.

                  


          

           

          
            	
                    5.

                  	
                    Party
      A should ensure unimpeded traffic for the project’s implementation and
      supplementary construction of urban roads to Party B’s construction site
      according to Urban Planning & Construction regulations. The road from
      the urban road to the project construction site should be constructed by
      Party B according to the Planning
Requirements.

                  


          

           

          
            
               

            

            
               

              
                

              

            

            
               

            

          

           

          
            	
                    6.

                  	
                    Party
      A will assist Party B with procedures for installation of natural gas,
      telephone system, and cable television, all of which are at Party B’s
      cost. 

                  


          

           

          
            	
                    7.

                  	
                    Party
      A will assist Party B in competing for the industry support fund and
      preferential policies from central and provincial governments taking
      advantage of the Joint Construction system by Provinces and the
      Ministry.

                  


          

           

          
            	
                    8.

                  	
                    Party
      A will assist Party B with the resettlement procedures of full-time staff
      and their family members in Yangling.  Employees
      from Party B who can meet relative requirements can enjoy the preferential
      policies issued by Party A in application for purchasing of economically
      affordable housing, and their children can enjoy the same education as the
      resident population of the city.

                  


          

           

          Article
Six: Responsibilities and Obligations of Party B

           

          
            	
                    1.

                  	
                    The
      development and construction of the project by party B should be in line
      with relative laws and regulations of the state. Party B
      should go through planning and construction formalities according to
      relative procedures, regulate construction practices in accordance with
      the relevant provisions, and execute Environmental Impact Assessment and
      “Three-synchronous Requirement” in environmental protection, the emission
      of industrial “three wastes” should be up to standard, and production
      safety, municipal administration, fire control, sanitation and labor
      security should be in compliance with relevant state provisions (subject
      to approval or issue of acceptance certificates of relevant responsible
      authorities).

                  


          

           

          
            	
                    2.

                  	
                    Party
      B is required to commence construction of the Project within 60 days of
      delivery of the land. The construction of the Project (subject to receipt
      of acceptance certificate upon completion of the project issued by
      relevant responsible authorities) should be in line with the Planning
      Permit on Land for Construction Use and the Planning Permit on
      Construction Works, and should be completed and put into production on
      schedule.

                  


          

           

          
            	
                    3.

                  	
                    Under
      conditions of failing to meet the deadline of commencement under Article
      6(2), Party B should file an application for postponement of commencement
      to Party A 30 days before the expiration of the above-mentioned period,
      the postponement of period should not be more than three months, and under
      conditions of failing to complete the project construction within the
      above-mentioned period, Party B should file an application for extension
      of construction period to Party A 30 days before the expiration of the
      above-mentioned period, the extension should not be more than three
      months.

                  


          

           

          
            	
                    4.

                  	
                    Party
      B should pay all taxes & fees in accordance with relevant state laws,
      regulations, and normative
documents.

                  


          

           

          
            
               

            

            
               

              
                

              

            

            
               

            

          

           

          
            	
                    5.

                  	
                    Within
      60 days of the date of commencement of production, Party B is required to
      provide a fixed asset value assessment report issued by a qualified
      intermediary as a condition precedent to Party B’s application to Party A
      for any financial assistance related to the
  Project.

                  


          

           

          Article
Seven: Special Agreements by Both Parties

           

          
            	
                    1.

                  	
                    After
      execution of the Agreement and completion of the matters relating to land
      use, Party A is required to provide financial assistance by way of
      industry development funds to Party B in the sum of RMB4.5
      million.

                  


          

           

          
            	
                    2.

                  	
                    Thereafter,
      Party A will support Party B’s business by making incentive payments to
      Party B equal to (i) 100% of the tax paid by Party B and retained by the
      local government for the first three years after the Project commencement
      date, and (ii) 50% of the tax paid by Party B and retained by the local
      government for the fourth year after the Project commencement
      date.

                  


          

           

          
            	
                    3.

                  	
                    Party
      A will actively assist Party B in applying for various policy support such
      as support on national agriculture comprehensive exploitation projects,
      demonstration projects for the industrialization of Hi-Tech research
      outcomes, recycling economy projects, discounts on technological
      renovation projects, and international market development funds.  Party A
      will also provide support and assistance to Party B in reorganization
      according to modern corporate system and listing on an
      exchange.

                  


          

           

          
            	
                    4.

                  	
                    Party
      B promises that no less than 40% of the new entity’s registered capital be
      remitted into a capital account within two days of the opening of the
      account, and the remaining balance to be injected in accordance with the
      progress of the Project, with the full amount to be injected within 24
      months.

                  


          

           

          
            	
                    5.

                  	
                    Party
      B estimates that construction of the new facility will be completed within
      24 months and the investment will be completed in accordance with the
      agreement.  

                  


          

           

          
            	
                    6.

                  	
                    Party
      B promises that it will comply with state laws and regulations, operate
      with integrity, and pay tax in accordance with law.  Party
      B will strictly adhere to the rules and regulations formulated by the
      management committee of Yangling Demonstration Area, actively maintain the
      investment environment of the area, fulfill this agreement and the rights
      and obligations provided in the agreement earnestly, ensure project funds
      are in place on time and the construction process is in line with the
      agreement, and make sure that the project can be implemented at an early
      date.  

                  


          

           

          Article
Eight: Responsibility for Default

           

          
            	
                    1.

                  	
                    In
      the event that the land for construction is not transferred to Party B on
      the date stipulated in Article 5(1) of this agreement, if there is (i)
      over 30 days delay, Party A should pay liquidated damages equal to 0.3% of
      the total land transfer payment per day of delay, or (ii) over 90 days
      delay, Party B has the right to cancel the contract and Party A shall be
      liable for economic losses directly arising from the delay in land
      transfer.  

                  


          

           

          
            
               

            

            
               

              
                

              

            

            
               

            

          

           

          
            	
                    2.

                  	
                    In
      the event that the performance bond, the transfer payment, or land
      allotment payment is not transferred to Party A on the date stipulated in
      Article 4 of this agreement, if there is (i) over 30 days delay, Party B
      should pay liquidated damages equal to 0.3% of the total land transfer
      payment every day, or (ii) over 90 days delay, Party A has the right to
      cancel the contract and Party B shall be liable for economic losses
      directly arising from the delay in land
  transfer.

                  


          

           

          
            	
                    3.

                  	
                    All
      of the preferential policies are subject to the amount of investment and
      tax contributions of Party B provided in the agreement If the actual
      investment in fixed assets and tax contribution of Party B fails to meet
      the standard specified in Article one, Party A will adjust and reduce the
      supporting funds and preferential policies on the portion of Party B’s
      actual investment in fixed assets and tax contribution as defined in this
      agreement.  

                  


          

           

          
            	
                    4.

                  	
                    Under
      conditions of failing to complete construction and put into operation
      (unless as a result of force majeure) according to the Feasibility Study
      Report approved by the government, (i) within 180 days delay, Party B
      should pay liquidated damages equal to 1% of the total amount of land
      transfer payment or land allocation payment per day of delay, (ii) if over
      180 days delay, Party B should pay liquidated damages equal to 2% of the
      total amount of land transfer payment or land allocation payment per day
      of delay.  In the
      event that the actual amount of the investment falls short of 25% of the
      total investment amount, and as a result the land development becomes
      idle, (i) if the land has been left idle for one year, Party A shall
      charge a fee for idle land, (ii) If the land has been left idle for two
      years, Party A has the right to cancel the contract and withdraw the right
      to the use of the land without compensation. 

                  


          

           

          
            	
                    5.

                  	
                    In
      the event that Party B gives up the implementation of the project
      according to this District Entrance agreement, the land transfer payment
      or land allotment payment will be fully refunded to Party B at the
      original contract price.  Party B
      is obliged to dismantle the surface buildings and attachments thereto, and
      to restore the original appearance of the land. Thereafter Party A will
      withdraw the land. 

                  


          

           

          Article
Nine: Force Majeure

           

          
            	
                    1.

                  	
                    Should
      force majeure lead to a situation in which the agreement cannot be carried
      out either in part or in whole, neither of the parties shall assume any
      obligations.  Both
      parties, however, should take all necessary remedial measures to minimize
      loss or damage caused by force majeure, or shall bear the loss for not
      taking remedial measures.  Under
      conditions that the loss caused by force majeure happens after the
      dilatory fulfillment of the agreement, both parties hereto shall be exempt
      from their obligations.   

                  


          

           

          
            
               

            

            
               

              
                

              

            

            
               

            

          

           

          
            	
                    2.

                  	
                    The
      Party suffering loss caused by force majeure shall notify the counterpart
      of the circumstances of the event in written form within 48 hours, and
      state in writing the reason that the agreement cannot be carried out
      either in part or in whole, or needs to be delayed, within 3 working
      days.

                  


          

           

          Article
Ten: Dispute Resolution

           

          
            	
                    1.

                  	
                    The
      conclusions, validity, interpretation, and performance of this agreement
      and the settlement of disputes in connection herewith shall be governed by
      the laws of the People’s Republic of
China.

                  


          

           

          
            	
                    2.

                  	
                    Disputes
      arising from the performance of this agreement shall be settled through
      consultation between the parties, and in case such consultation fails,
      each party may start legal proceedings with the local People’s Court in
      the jurisdiction in which the project is
  located.

                  


          

           

          Article
Eleven: Others Provisions

           

          
            	
                    1.

                  	
                    Parties
      hereto who change their correspondence address or contact details shall
      notify the counterpart within 15 days, and the party at fault shall bear
      the loss arising from for any delay in
  notification.

                  


          

           

          
            	
                    2.

                  	
                    Parties
      hereto shall comply with laws, rules, regulations, and other normative
      documents that have provisions of matters not mentioned herein, or may
      settle through consultation and supplemental agreement.  Supplementary
      agreements shall have the same legal effect as this agreement. 

                  


          

           

          
            	
                    3.

                  	
                    The
      sealed and stamped Chinese language version of this agreement shall
      prevail in the event of a dispute.

                  


          

           

          
            	
                    4.

                  	
                    Details
      of provisions on land use of the project can be found in the State-owned
      Land Use Rights Transfer Contracts and the State-owned Land Allocation
      Decisions. 

                  


          

           

          
            	
                    5.

                  	
                    This
      agreement shall be held in six copies of the same form. Each party shall
      preserve two copies and the other two copies shall be held by Party B
      temporarily for filing with relevant government
    departments.

                  


          

          


          
            
              	
                      Party
      A(SEAL)

                    	
                      Party
      B(SEAL)

                    
	 
      	 
      
	
                      Residential
      Address

                    	
                      Residential
      Address

                    
	
                      Legal
      representative

                    	
                      Legal
      representative

                    
	
                      Agent:

                    	
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                      Telephone

                    	
                      Telephone:

                    
	
                      Fax

                    	
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                      Telegram:

                    	
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                      Opening
      bank

                    	
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      bank

                    
	
                      Account
      No.:

                    	
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                      Zip
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                      month,
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                      month,
      day, 2010