Document:

exhibit10_1cna.htm

CONFIDENTIAL SETTLEMENT AGREEMENT AND RELEASE

 

This Settlement Agreement and Release (“Agreement”) is made and entered as of the 23rd day of October 2012 (the “Effective Date”) by and between National Fire Insurance Company of Hartford (“National Fire”) and American Casualty Company of Reading, PA (“American Casualty”), on the one side, and OMP, Inc. and Obagi Medical Products, Inc., (collectively, “OMP”) on the other side. National Fire, American Casualty and OMP are collectively referred to as “the Parties.”

 

I.           DEFINITIONS

 

The following definitions are provided for purposes of this Agreement only. As the context requires, each defined term stated in a singular form shall include the plural form and vice versa. The Parties agree that the defined terms shall have the following meanings for purposes of this Agreement:

 

A.           “ZO Skin Health Lawsuit” means the lawsuit styled ZO Skin Health, Inc. v. OMP, Inc. et al., Los Angeles Superior Court Case No. BC 429414, filed on or about January 7, 2010 in the California Superior Court, County of Los Angeles.

 

B.           “Obagi Arbitration” means the Demand for Arbitration brought against OMP by Dr. Zein Obagi, Dr. Zein Obagi, M.D., Inc., Skin Health Properties, Inc., the Zein and Samar Obagi Family Trust and Samar Obagi, on or about January 7, 2010.

 

C.           “The Obagi Actions,” collectively, refers to the ZO Skin Health Lawsuit and the Obagi Arbitration.

  

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D.           “The Obagi Claims” means any and all claims, demands, causes of action, liabilities or obligations that were asserted or released against OMP in the Obagi Actions.

 

E.           “Defense Costs” means any and all attorneys’ fees, costs and expenses incurred and/or paid by OMP in connection with the defense of the Obagi Actions and/or Obagi Claims.

 

F.           “Settlement Costs” means any and all monies and/or other consideration paid, given or given up by or on behalf of OMP to settle the Obagi Actions and/or Obagi Claims.

 

G.           “Coverage Action” means the lawsuit styled National Fire Insurance Company of Hartford and American Casualty Company of Reading, PA v. OMP, Inc. and Obagi Medical Products, Inc.,, Case No. CV 11-04209 MWF (JCx), filed May 17, 2011 in the United States District Court for the Central District of California by National Fire and American Casualty, and the Counterclaim for Breach of Contract, Breach of the Covenant of Good Faith and Fair Dealing; and Declaratory Relief filed by OMP.

 

H.           “The Policies” means any and all policies of insurance that any Insurers (as defined below) issued to OMP, or that name OMP as an insured or additional insured. The Policies include but are not limited to National Fire policy number A 4013926279; American Casualty policy number A 4013926296; and Columbia Casualty Company policy number ADT 209115180.

 

I.           “The Insurers” means National Fire Insurance Company of Hartford, American Casualty Company of Reading, PA., Columbia Casualty Company and the 

 

 

  

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parents, subsidiaries, divisions, holding companies, merged companies, affiliated companies, acquired companies, predecessors-in-interest, successors-in-interest, assigns, attorneys, and affiliates of each of those companies, all solely in their capacities as such; and each of their directors, officers, shareholders, attorneys, agents and employees, all solely in their capacities as such.

 

II.           RECITALS

 

WHEREAS, OMP was advised of certain Obagi Claims in or about December 2009; the ZO Skin Health Lawsuit was filed on or about January 7, 2010, which lawsuit named OMP, Inc. and Obagi Medical Products, Inc. as defendants; and the Obagi Arbitration was served on OMP on or about January 7, 2010; and

 

WHEREAS, OMP first provided notice to The Insurers of The Obagi Claims in or about December 2009; and

 

WHEREAS, OMP first tendered The Obagi Actions to National Fire and American Casualty for defense and indemnity on or about January 8, 2010; and

 

WHEREAS, certain disputes have arisen between National Fire and American Casualty, on the one hand, and OMP on the other, regarding any duty on the part of National Fire and American Casualty to defend and/or indemnify OMP under the Policies for The Obagi Actions; and

 

WHEREAS, on or about May 17, 2011, National Fire and American Casualty filed their Complaint in the Coverage Action and, on or about July 7, 2011, OMP filed the Counterclaim for Breach of Contract, Breach of the Covenant of Good Faith and Fair Dealing, and Declaratory Relief in the Coverage Action; and

 

 

 

  

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WHEREAS, The Insurers and OMP, in order to avoid the expense of litigation and without any admission or concession of any liability or fault, desire to settle the claims and disputes that were or could have been the subject of the Coverage Action;

 

NOW, THEREFORE, in consideration of and reliance on the mutual agreements herein contained below and intending to be legally bound, the Parties agree as follows:

 

III.           PAYMENT

 

In consideration of the dismissal of the Coverage Action and the release by OMP in Article IV below, National Fire and American Casualty collectively will pay to OMP a total of $14.0 million (Fourteen Million Dollars) (“the Settlement Amount”). OMP acknowledges that National Fire has previously paid $2,725,597.00 (Two Million, Seven Hundred Twenty Five Thousand, Five Hundred Ninety Seven Dollars) to OMP. On or before October 25, 2012, National Fire and American Casualty will pay the balance of the Settlement Amount, totaling $11,274,403.00 (Eleven Million, Two Hundred Seventy Four Thousand, Four Hundred and Three Dollars) by wire transfer to “Abelson Herron LLP (Client Trust Account)” with the notation “OMP/ZO Skin” as follows:

 

	Bank:	 	 1st Century Bank	 
	 	 	 	 
	  Bank Address:	 	 1875 Century Park East, Suite 100	 
	 	 	 Los Angeles, California 90067	 
	 	 	 	 
	   ABA Routing Number:	 	122243761	 
	 	 	 	 
	ABA Bank Account No:	 	2100003223	 
	 	 	 	 
	  US Taxpayer ID:	 	32-0147297 (Abelson | Herron LLP)	 
	 	 	 	 
	Names on Account:	 	Abelson | Herron LLP (Client Trust Account)	 
	 	 	333 South Grand Avenue, Suite 1550	 
	 	 	Los Angeles, California 90071	 
	 	 	 	 

                    

  

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IV.           RELEASE AND OTHER AGREEMENTS

	
           A.

	
OMP, on the one side, and The Insurers, on the other side, each on its own behalf and on behalf of each of their respective parents, subsidiaries, divisions, holding companies, merged companies, affiliated companies, acquired companies, predecessors-in-interest, successors-in-interest, assigns, attorneys, and affiliates of each of those companies, all solely in their capacities as such; and each of their directors, officers, stockholders, attorneys, agents and employees, all solely in their capacities as such (collectively, the “Releasing Parties”), hereby releases each of the others’ respective Releasing Parties (and in the case of the Insurers, each of their respective Policies), of and from any claims and disputes based upon and/or arising out of The Obagi Actions and all matters released therein; The Obagi Claims, the ZO Skin Health Lawsuit, the Obagi Arbitration, the Defense Costs, the Settlement Costs and the Coverage Action, including, without limitation, any and all claims that were or could have been asserted in the Coverage Action.  For the avoidance of doubt, the foregoing release includes a release by OMP and its respective Releasing Parties, and each of them, of all claims that OMP did assert or could have asserted in the Coverage Action for breach of contract, breach of the covenant of good faith and fair dealing, unfair claims handling or settlement practice, fraud, misrepresentation, claims for attorneys’ fees (including “Brandt” fees) and costs, interest, statutory, code or regulatory violations, and punitive/exemplary damages and/or any other basis for any claim for damages, injury, other fees or costs arising out of, related to or connected with the Insurers’ evaluation and handling of The Obagi Actions, The 

 

 

  

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Obagi Claims and/or the filing of the Coverage Action, provided however, that the releases set forth in this Agreement do not release: (1) The Insurers, their respective released Parties, and/or any of their respective Policies of or for claims or matters other than those released by this Agreement (in other words, the foregoing release is a broad claim-release, not a policy release) and (2) any of the obligations established by this Agreement.

 

	     B.

      

	
National Fire and American Casualty will file a dismissal with prejudice of the Coverage Action, and OMP will file a dismissal with prejudice of the Counterclaim, within five (5) days of the receipt by counsel for OMP of the balance of the Settlement Amount set forth in Article III, the Parties to each bear their own costs, expenses and attorneys’ fees.

 

V.           OTHER PROVISIONS

 

A.           The Parties acknowledge that they have been advised by legal counsel about, and are familiar with the provisions of California Civil Code Section 1542, which states:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

 

The Parties expressly waive and relinquish any rights and benefits that they may have thereunder. The Parties acknowledge the significance of the comprehensive waiver of the rights and benefits under Section 1542 of the California Civil Code

 

  

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and also acknowledge their awareness that the facts and circumstances surrounding the transactions upon which the release in Section IV is being given may be discovered to be different from the facts and circumstances now known or suspected by such Party to be true. Such facts or circumstances may reveal damages, losses or defenses presently unknown or unsuspected by such Party. Each Party expressly assumes the risk that such new facts and new circumstances, damages, losses or defenses may be discovered and further agrees that in the event new facts and circumstances, damages, losses or defenses are discovered, the release in Section IV shall, in all respects, remain effective without modification despite the discovery of such new facts or circumstances, damages, losses or defenses. This Agreement constitutes a full and complete release of the matters released herein, regardless of whether those matters are presently known, unknown, foreseen or unforeseen.

 

B.           This Agreement shall be binding upon and inure to the benefit of OMP and The Insurers and their successors and assigns. This Agreement does not and is not intended to create any rights in any third parties.

 

C.           This Agreement reflects the joint drafting efforts of the Parties, each of which was assisted by experienced counsel. Accordingly, any rule of law (including without limitation California Civil Code Section 1654) or legal decision that would require interpretation of any ambiguities in this Agreement “against” the Party drafting it is not applicable and is waived. This Agreement constitutes the entire understanding between the Parties concerning the subject matter herein, superseding any and all prior agreements and understandings.

 

  

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D.           The Parties have reached this Agreement on a commercial basis under the unique circumstances of this case to avoid the cost of further negotiations and/or litigation among them. Nothing in this Agreement or any of the acts or omission related thereto is or shall be deemed to be precedential, an admission, concession or acknowledgement with regard to The Policies, coverage or liability. Rather, this Agreement has been entered into without any concession of liability or non-liability whatsoever. Because this Agreement is a pragmatic compromise agreed to under special circumstances solely to settle the disputes between the Parties and to avoid disputes in the future, this Agreement has no precedential or evidentiary value whatsoever. Accordingly, this Agreement and its provisions are not intended, nor shall they be cited, construed or represented in any litigation, dispute resolution proceeding, or otherwise, to reflect the positions of the Parties to this Agreement as to the existence and/or proper construction of The Policies.

 

E.           No amendment, modification, addendum or revision of this Agreement shall be valid unless it is in writing and signed by the Parties to be bound, in which event there need be no separate consideration therefor.

 

VI.           CONFIDENTIALITY

 

A.           This Agreement, all of the terms and information contained herein, all of the negotiations leading to it, all of the communications generated pursuant to it, and the implementation hereof (collectively, the “Confidential Settlement Information”), shall be kept strictly confidential, and shall not be disclosed to any person, corporation or other entity not a Party or counsel to a Party to this Agreement except: (i) in response to a subpoena that seeks or judicial order that 

 

  

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compels disclosure of Confidential Settlement Information. If any Party is served with a subpoena or a notice to produce documents that seeks disclosure of Confidential Settlement Information or a motion to compel disclosure of Confidential Settlement Information, the Party from which disclosure is sought will notify the other Party hereto, without delay, of any such subpoena or motion to compel disclosure, so as to afford the other Party the opportunity to oppose such subpoena, document production notice or motion. Although a Party shall give notice of such subpoena or motion without delay, in no event shall any Party provide fewer than five (5) calendar days’ notice of such subpoena or motion; (ii)  the Insurer’ reinsurers and retroinsurers;  (iii) the Insurers’ and OMP’s accountants, auditors, lenders, and tax advisors.  Notwithstanding the foregoing, either Party may at any time make disclosures required by law.

 

 VII.           ADDITIONAL REPRESENTATIONS OF THE PARTIES

 

A.           The Parties have entered into this Agreement in good faith.

 

B.           OMP represents and warrants that, as of the date of this Agreement, it has received no payment, other than from The Insurers, from any other person or entity to reimburse it for any Defense Costs or Settlement Costs.

 

C.           The Parties have taken all necessary corporate and legal actions to duly approve the making and performance of this Agreement and have all requisite power and authority to execute and deliver this Agreement such that no further corporate or partnership approval is necessary.

 

D.           The making and performance of this Agreement will not violate any provision of law or any provision of the Parties’ respective articles of incorporation or bylaws.

 

 

  

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E.           Each Party has received independent legal advice from its attorneys with respect to the advisability of making the settlement provided for herein.

 

F.           Each Party has made such investigation of the facts pertaining to this settlement and this Agreement and of all the matters pertaining thereto as it deems necessary or desirable.

 

G.           Each Party represents and warrants that it has not heretofore assigned, transferred, or otherwise disposed of any of the claims or rights being released as a part of this Agreement.

 

H.           This Agreement shall be governed by and construed in accordance with the substantive law of the State of California, irrespective of whether California’s conflicts of law principles would require the choice of a law of some jurisdiction other than California.

 

I.           This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.

 

J.           Any notice to the Parties required by this Agreement or that for any other reason is required should be addressed as follows:

 

 

For OMP:              Michael Bruce Abelson

Vincent H. Herron

ABELSON | HERRON LLP

333 South Grand Ave., Suite 1550

Los Angeles, CA 90071

 

Laura Hunter

Vice President & General Counsel

Obagi Medical Products, Inc.

3760 Kilroy Airport Way, 5th Floor

Long Beach, California 90806

For Insurers:         Christopher R. Carroll

David M. Kupfer

 

  

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CARROLL, McNULTY & KULL, LLC

120 Mountain View Boulevard

Basking Ridge, NJ 07920

Steven M. Crane

BERKES CRANE ROBINSON & SEAL LLP

515 S. Figueroa St., Suite 1500

Los Angeles, CA 90071

IN WITNESS WHEREOF, the Parties have executed this Agreement by their duly authorized representatives as of the date(s) set forth below:

 

	 	National Fire Insurance Company of Hartford	 
	 	 	 	 
	 	
By: 

	/s/ Timothy McDaniel	 
	 	Its	Claim Consultant	 
	 	Date:	10/23/12	 
	 	 	 	 

 

 

	 	
American Casualty Company of Reading, PA

	 
	 	 	 	 
	 	
By: 

	/s/ Timothy McDaniel	 
	 	Its	Claim Consultant	 
	 	Date:	10/23/12	 
	 	 	 	 

 

	 	OMP, Inc., and Obagi Medical Products, Inc.	 
	 	 	 	 
	 	
By: 

	/s/ Laura Hunter	 
	 	Its	 Vice President & General Counsel	 
	 	Date:	10/23/12	 
	 

 

95987.1

 

 

11ex10-1.htm

Exhibit 10.1

 

	Yidu Municipal People’s Government	 	SkyPeople Juice Group Company Limited

 

        Investment/Service Agreement

The Yidu Orange Comprehensive Deep Processing Zone (the “Zone”)

Party A: Yidu Municipal People’s Government   (hereinafter referred to as “Party A”)

Party B: SkyPeople Juice Group Company Limited  (hereinafter referred to as “Party B”)

Through multiple discussions and field studies, and based on the principles of equal consultation and mutual benefit, Yidu Municipal People’s Government and SkyPeople Juice Group Company Limited, with regard to the Yidu Orange Comprehensive Deep Processing Zone, have reached the following agreements (the “Agreement”) which shall be observed by both parties.

I. Name of the Project

 

Yidu Orange Comprehensive Deep Processing Zone (the specific name shall be subject to approval by the local authority of the National Development and Reform Commission).

II. Project Construction

 

The main scope of the Project includes the establishment of: one modern orange distribution and sales center; one research and development center for orange varietal improvement and engineering technology; one standardized orange plantation; one orange comprehensive utilization deep processing zone; one 45 ton/hour concentrated orange juice and byproduct deep processing production line; one bottled juice drink production line with a production capacity of 6,000 glass bottles per hour, as well as certain ancillary service facilities, including one storage freezer facility with a capacity to store 20,000 tons of concentrated orange juice, general purpose facilities within the Zone, office space, general research and development facilities, service area, living quarters and other ancillary support areas.

III. Investor and Total Investment

Party B will be responsible for the establishment and construction of the Project. The total amount of investment in fixed assets and the purchase of land use right for the Project Land (as defined in article IV) is expected to be RMB 300 million and Party B will be responsible for the financing of the Project. The construction period of the project starts from 2012 and ends in 2014. The concentrated orange juice and byproduct deep processing production line and bottled juice drink production line shall be set up and shall start operation within 18 months after the date of land delivery, which are expected to generate annual revenue of RMB 60 million and RMB 2 million of taxes payable to the local government, and create 80 new jobs. The modern orange distribution and sales center shall be set up and start operation within 18 months after the date of land delivery, which is expected to generate annual revenue of RMB 200 million and RMB 3 million of taxes payable to the local government and create 120 new jobs.

  

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IV. Project Site Selection

After the field studies and site selection by Party A and Party B, Party A agrees that the Project shall be built on a parcel of land approximately 280 mu in size located at Gaobazhou Town of Yidu City (the “Project Land”). The specific location of the Project Land shall be subject to the description set forth in the site selection approval issued by Yidu Municipal Bureau of City Planning and the actual size of the Project Land shall be subject to the red line map issued by the State Land Bureau in Yidu.

V. Project Land and Related Issues

1. The consideration for transferring the land use right for the Project Land shall be RMB 0.3 million per mu (including compensation for land acquisition, land occupancy charges for the new construction site, farmland reclamation fees, land management fees, demolition and resettlement compensation, land transferring fees and all other fees in connection with transferring the land use right for the Project Land (the “Land Grant Fee”)). The nature and term of the land use right of the Project Land shall be subject to the relevant state rules and regulations.

 

2. Party B shall pay RMB 80,000 per mu as a partial payment of the Land Grant Fee to Party A to a bank account designated by Party A within 15 business days following the execution of this Agreement. The remaining balance of the Land Grant Fee shall be paid in one lump sum within 5 days following the date a Notice of Payment for Land Grant Fee (“Payment Notice”) shall have been issued by the relevant government authority.

 

3. Party A shall authorize and instruct its Agricultural Bureau to locate the parcel of land to be used for the orange varietal improvement and engineering technology center; details related to the leasing of the parcel so located shall be negotiated by Party B and the leasor of the land.

 

4. Party A shall be responsible for all the demolition issues and all associated expenses within the Project Land, including but not limited to the demolition of buildings and electric power lines on the Project Land.

 

5. According to the actual condition of the Project Land, the scope of demolition shall be as follows: the buildings located on the land designated for the concentrated orange juice and byproducts deep processing production line and bottled juice drink production line shall be demolished gradually along the Yangtze River and buildings located along Yi Hua First Class Highway shall be demolished gradually (to ensure the construction of a 200-meter main gate for the Project), and all buildings on such land shall be demolished. The buildings on the land to be used for the modern distribution and sales center along Yi Hua First Class Highway shall be gradually demolished (to ensure the construction of a 200-meter main gate for the Project).  The land to be delivered by Party A to Party B shall be free and clear of any encumbrances or any disputes. If the residents remaining on the Project Land shall have affected the progress of the construction and production of Party B, Party A shall be responsible for coordinating and resolving any such matters.

 

6. Within 90 business days after receiving the partial payment of the Land Grant Fee of RMB 80,000 per mu from Party B, Party A shall complete the demolition work with respect to the land designated for phase I of Project, which includes the construction of the concentrated orange juice and byproduct deep processing production line and bottled juice drink production line, and deliver the land to Party B.  The demolition on and delivery of the rest of the Project Land shall be conducted stage-by-stage in accordance with the progress of the Project.

  

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7. Party A shall be responsible for the financing and construction of the basic infrastructure surrounding the Project Land, such as the main water supply, main water drainage, main power supply, main roads, natural gas provision and communications network. Prior to Party A’s commencement of the infrastructure construction, Party B shall provide Party A with the design specifications for the construction of the ancillary facilities. The infrastructure of the ancillary facilities constructed by Party A shall satisfy the requirements of Party B to ensure Party B’s normal construction and production with respect to the Project. Party B shall be responsible for the construction of other ancillary facilities.

 

8. Within one month after the signing of this Agreement, Party B shall organize a new company with independent legal existence in Yidu City, Hubei Province, and the newly organized company shall implement the Projects with the corresponding obligations, rights and interests.

VI. Application for Land Use Right Certificate and Related Building Ownership Certificate for the Project

1. Following the approval of the Project by the relevant government authority, upon issuance of the Payment Notice by the relevant authority responsible for the state land and resources administration in Yidu, Party B shall pay the remaining balance of Land Grant Fee, and submit related materials to the relevant authority for its inspection and acceptance. Within 12 months after Party B has commenced the construction of the Project, the land and resources administration department of Party A shall issue the land use right certificate for phase I of the Project to Party B; the land use right certificate for the rest of the Project Land shall be issued prior to commencement of operation at the Project. Before the commencement of construction by Party B, the land and resources administration of Party A shall have issued a preliminary approval for the use of the Project Land.

 

2. Application for Building Ownership Certificate of the Project: the real estate management department of Party A shall issue Building Ownership Certificates with respect to the buildings constructed by Party B for the Project within 30 days after such buildings have passed inspection upon submission of the relevant materials by Party B.

VII. Project Submission and Approval

1. Party A shall designate personnel to assist Party B with respect to the application of approval on various matters of the Project, including environment impact assessment, project review and acceptance, fire protection, safety and other examination matters of the Project.

 

2. Party A shall provide a list of documents and material required for the relevant applications, and Party B shall, according to the provisions of relevant laws and regulations, submit such documents and material to Party A. Party A shall designate personnel to assist Party B in the relevant examining and approval procedures.

VIII. Project Planning and Management

1. Once the nature and term of the land use right for the Project Land are determined in accordance with the relevant policies, Party B shall not change the use of the land so determined and all the construction plans shall satisfy the planning requirements and shall be submitted to Party A’s relevant department for examination, approval and record keeping.

  

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2. Party A shall permit Party B to recruit, through a bidding process, qualified construction teams for the Project according to the relevant rules; provided, that such construction teams shall be subject to the quality and safety supervision by the relevant authorities.

 

3. Before commencing construction of the Project, Part B shall pass the environmental impact assessment and safety production assessment. Upon completion of the Project, it shall pass the relevant inspection, and shall be subject to environmental and safety inspection and surveillance. Party B shall assume all responsibility with respect to any environmental and safety issues.

IX. Labor Employment for the Project

1. Party A shall permit Party B to independently recruit employees; provided any recruitment shall be in compliance with the labor laws and regulations of the People’s Republic of China. As compared with candidates with similar qualifications, residents whose land is acquired for the Project shall be given preference.

 

2. Party B shall protect the lawful rights of the employees according to law.

X. Projects Preferential Policies

1. The Project shall qualify for preferential treatment under Yidu Municipal Policy #7 [2011] promulgated for the purposes of attracting investment.

 

2. Party A agrees to provide financial support to Party B by providing Party B with 100% of the portion of the farmland occupancy tax and stamp duty retained by Party A based on the relevant rules and regulations within one month after Party B has paid such tax and duty when Party B initially applies for the land use right certificate and building ownership certificate.

 

3. Party A shall organize a special working group consisting of the relevant municipal-level leaders (including agricultural bureau leaders and Gaobazhou Town local leaders) to coordinate and assist on the Project. Gaobazhou local government shall be responsible for any tax collection and other related issues.

 

4. During the construction process of the Project and after it has commenced production, Party A shall support the local financial institutions in their providing commercial loans to Party B, and Party B shall enjoy all the interest discount policies according to the relevant rules and regulations.

 

5. During the construction process of the Project and after production has commenced, Party A shall assist Party B in applying for various state and local funding for the Project.

 

6. If new states policies are promulgated that are relevant to the Project, such new policies shall govern.

XI. Liabilities of Breaching the Agreement

1. Party A and Party B shall voluntarily perform this Agreement. Both parties shall seek solutions through friendly consultation with respect to any force majeure event that affects the performance of the Agreement.

  

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2. In the event that Party B fails to commence the construction of the Project within 6 months after Party A has delivered the land, Party A shall be entitled to reclaiming the portion of the land on which Party B has not commenced construction based on the original Land Grant Fee. In the event that the amount of Party B’s investment in the fixed assets of the Project fails to reach the amount provided in Article III, Party A shall have the right to disqualify Party B for the various preferential policies and request Party B to pay additional land grant fees based on the market price of land in similar locations as the Project Land. After commencing construction, in the event that Party B does not make sufficient investment or conduction operation in accordance with this Agreement, then Party A shall have the right to reclaim the portion of the Land that remains idle.

 

3. In the event that Party A delays delivering the Land for more than 3 months, Party B shall have the right to terminate this Agreement, and Party A shall, within 15 days after receiving the termination notice from Party B, refund the Land Grant Fee paid by Party B and shall pay Party B the interest that should have accrued on such Land Grant Fee so paid based on the interest set by law for the period starting from the date when Party A receives the Land Grant Fee to the date the Land Grant Fee is refunded to Party B.

 

4. In the event that Party B fails to pay the relevant portion of the Land Grant Fee within 15 business days in accordance with the Agreement, Party A has the right to terminate this Agreement.

 

5. Party A or Party B’s failure to perform, in whole or in part, the Agreement shall be considered a breach of the agreement, unless such failure is the result of any force majeure.

 

6. In the event any party hereto breaches the Agreement, which leads to a nonperformance of this Agreement, the breaching party shall bear the liabilities as a result of the breach of the Agreement and compensate the non-breaching party any direct economic losses.

XII. Dispute Resolution for the Project

1. In the event of any dispute during the performance of the Agreement, both parties shall attempt to resolve the dispute through friendly consultation.

 

2. In the event that any dispute is not able to be resolved through consultation between the parties hereto, it shall be submitted to a competent arbitration committee.

XIII. Miscellaneous

1. With respect to matters not covered by the Agreement, the parties hereto may enter into a supplementary agreement which shall have the same force and effect as the Agreement.

 

2. The Agreement shall be executed in 6 original copies, with each party hereto holding three original copies, which shall have equal force and effect.

 

3. The Agreement shall become effective when the legal representatives of both parties shall have affixed his/her signature and seals on the Agreement.

 

Party A: Yidu Municipal People’s Government

Legal Representative:  /s/ Lianfeng Luo

Party B: SkyPeople Juice Group Company Limited

Legal Representative:  /s/ Hongke Xue

October 29, 2012

 

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