Document:

exh103.htm

 

Exhibit 10.3

 

Lease Contract

 

Lessor (hereinafter referred to as Party A): Xuezheng Yuan

Lessee (hereinafter referred to as Party B): China Unitech Group, Inc.

 

Party A and B have reached an agreement through friendly consultation to conclude the following contract.

 

1. Location of the premises

Party A will lease to Party B the premises and attached facilities owned by itself which is located at and in good condition for No. 1 Xinxin Garden, Fangjicun,
Xudong Road, Wuchang, Wuhan, Hubei Province, China 430062 .

 

2. Size of the premises

The registered size of the leased premises is   300  square meters (Gross size).

 

3. Lease term

The lease term will be from   Nov. 1, 2008   to   Nov. 1, 2009   .

 

4. Rental

Amount: the rental will be $10,000.  The installment will be paid before  Nov. 1, 2008  .

In case the rental is more than 30 working days overdue, Party B will pay 0.3 percent of monthly rental as overdue fine every day, if the rental be paid 60 days overdue, Party B will be deemed to have withdrawn from the premises and breached the contract. In this situation, Party A has the right to take back the premises and take actions against
party B’s breach.

 

5. Obligations of Party A

Party A will provide the premises and attached facilities to Party B for using.

In case the premise and attached facilities are damaged by quality problems, natural damages or accidents, Party A will be responsible to repair and pay the relevant expenses. If Party A can’t repair the damaged facilities in two weeks, so that Party B can’t use the facilities normally, Party B has the right to terminate the contract.

Party A will guarantee the lease right of the premises. In case of occurrence of ownership transfer in whole or in part and other accidents affecting the right of lease by party B, party A shall guarantee that the new owner, and other associated, third parties shall be bound by the terms of this contract. Otherwise, Party A will be

 

 

 

 

 

 

 

responsible to compensate party B’s losses.

 

6. Obligations of Party B

Party B will pay the rental on time.

Party B may add new facilities with Party A’s approval. When this contract expires, Party B may take away the added facilities without changing the good conditions of the premises for normal use.

Party B will not transfer the lease of the premises or sublet it without Party A’s approval and should take good care of the premises. Otherwise, Party B will be responsible to compensate any damages of the premises and attached facilities caused by its fault and negligence. 

Party B will use the premises lawfully according to this contract without changing the nature of the premises and storing hazardous materials in it. Otherwise, Party B will be responsible for the damages caused by it.

Party B will bear the cost of utilities such as telephone communications, water, electricity, cable television and gas on time during the lease term.

 

7. Termination and dissolution of the contract

Within one month before the contract expires, Party B will notify Party A if it intends to extend the lease. In this situation, two parties will discuss matters over the extension. Under the same terms Party B  has the priority to lease the premises.

When the lease term expires, Party B will return the premises and attached facilities to Party A within 10 days. Any belongings left in it without Party A’s previous understanding will be deemed to be abandoned by Party B. In this situation, Party A has the right to dispose of it and Party A will raise no objection.

This contract will be effective after being signed by both parties. Any party has no right to terminate this contract without another party’s agreement. Anything not covered in this contract will be discussed separately by both parties.

 

8. Breach of the contract

During the lease term, any party who fails to fulfill any article of this contract without the other party’s understanding will be deemed to breach the contract. Both parties agree that the default fine will be $500. In case the default fine is not sufficient to cover the loss suffered by the faultless party, the party in breach should pay
additional compensation to the other party.

Both parties will solve the disputes arising from execution of the contract or in connection with the contract through friendly consultation. In case the agreement cannot be reached, any party may summit the dispute to the court that has the jurisdiction over the

 

 

 

 

matter.

 

9. Miscellaneous

Any annex is the integral part of this contract. The annex and this contract are equally valid.

There are 2 originals of this contract. Each party will hold 1 original.

 

Other special terms will be listed bellows:

 

	
Party A:
	  	
Part B:

	
Xuezheng Yuan
	  	
China Unitech Group, Inc.

	 	 	 
	 	 	 
	
    XUEZHENG YUAN
	  	
     XUEZHENG YUAN

	
Xuezheng Yuan
	  	
Representative: Xuezheng Yuan

	 	 	 
	
Date:   August 31, 2008
	  	
Date:    August 31, 2008Exhibit 10.2

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

CALIFORNIA DEPARTMENT OF
FINANCIAL INSTITUTIONS

SAN FRANCISCO, CALIFORNIA

	
  

 	
  

 	
  

 	
  

 
	 

 	
  

 	
  

 	
  

 
	
  

 	
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 In the
 Matter of

 	
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 )

 	
  

 	
 ORDER TO CEASE AND DESIST

 
	
 TAMALPAIS
 BANK

 	
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 SAN RAFAEL,
 CALIFORNIA

 	
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 FDIC-09-363b

 
	
  

 	
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 (INSURED STATE NONMEMBER BANK)

 	
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          Tamalpais
Bank, San Rafael, California (“Bank”), having been advised of its right to a NOTICE OF CHARGES AND OF HEARING detailing the
unsafe or unsound banking practices alleged to have been committed by
the Bank and of its right to a hearing on the alleged charges under section
8(b)(1) of the Federal Deposit Insurance Act (“Act”), 12 U.S.C. § 1818(b)(1),
and Section 1912 of the California Financial Code, and having waived those
rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO
CEASE AND DESIST (“CONSENT AGREEMENT”) with counsel for the Federal Deposit
Insurance Corporation (“FDIC”), and with counsel for the California Department
of Financial Institutions (“CDFI”), dated September 14, 2009, whereby solely
for the purpose of this proceeding and without admitting or denying the alleged
charges of unsafe or unsound banking practices and violations of law and/or
regulations, the Bank consented to the issuance of an ORDER TO CEASE AND DESIST
(“ORDER”) by the FDIC and the CDFI.

          The FDIC
and the CDFI considered the matter and determined that they had reason to believe
that the Bank had engaged in unsafe or unsound banking practices. The FDIC and
the CDFI, therefore, accepted the CONSENT AGREEMENT and issued the following:

- 2 -

ORDER TO CEASE AND DESIST

          IT
IS HEREBY ORDERED, that the Bank, its institution-affiliated parties, as that
term is defined in section 3(u) of the Act,
12 U.S.C. § 1813(u), and its successors and assigns, cease and desist
from the following unsafe and unsound banking practices, as more fully set
forth in the FDIC Report of Examination dated May 11, 2009 (“ROE”):

          (a)     operating with management whose policies and
practices are detrimental to the Bank and jeopardize the safety of its
deposits;

          (b)     operating with a board of directors whose
supervision and direction to management is inadequate;

          (c)     operating with inadequate capital in relation to
the kind and quality of assets held by the Bank;

          (d)     operating
with an inadequate loan valuation reserve;

          (e)     operating
with a large volume of poor quality loans;

          (f)     engaging in
unsatisfactory lending and collection practices; and

          (g)     operating with inadequate provisions for
liquidity.

          IT IS
FURTHER ORDERED, that the Bank, its institution-affiliated parties, and its successors
and assigns, take affirmative action as follows:

          1.     The
Bank shall have and retain qualified management.

                  (a)     Each
member of management shall have qualifications and experience commensurate with
his or her duties and responsibilities at the Bank. Management shall include the following: (i) a chief executive officer with
proven ability in managing a bank of comparable size, and experience in
upgrading a low quality loan portfolio, improving earnings, and other matters needing particular attention; (ii) a
chief financial officer with proven ability in all aspects of financial
management; and (iii) a chief credit officer with significant appropriate
lending, collection, and loan supervision experience and experience in
upgrading a low quality loan portfolio. Each member of management shall be
provided appropriate written authority from the Bank’s Board to implement the
provisions of this ORDER.

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                  (b)     The qualifications of management shall be
assessed on its ability to:

                            (i)     comply
with the requirements of this ORDER;

                            (ii)    operate
the Bank in a safe and sound manner;

                            (iii)   comply
with applicable laws and regulations; and

                            (iv)    restore all aspects of the Bank to a safe and
sound condition,

including
asset quality, capital adequacy, earnings, management effectiveness, liquidity,
and sensitivity to market risk.

                  (c)     During
the life of this ORDER, the Bank shall notify the Regional Director of the
FDIC’s San Francisco Regional Office (“Regional Director”) and the Commissioner
of the California Department of Financial Institutions (“Commissioner”) in writing when it proposes to add any individual to
the Bank’s Board or employ any individual as a senior executive officer.
The notification must be received at least 30 days before such addition or
employment is intended to become effective and should include a description of
the background and experience of the individual or individuals to be added or
employed.

                  (d)     Within
90 days after the effective date of this ORDER, the Bank’s Board shall obtain
an independent study of the management and personnel structure of the Bank to
determine whether additional personnel are needed for the safe and profitable operation
of the Bank. Such a study shall include, at a minimum, a review of the duties,
responsibilities, qualifications, and remuneration of the Bank’s officers. The
Bank shall formulate and a plan to implement the recommendations of the study.
The plan shall be acceptable to the Regional Director and the Commissioner as
determined at subsequent examinations and/or visitations.

- 4 -

          2.     (a)     The
Bank’s Board shall increase its participation in the affairs of the Bank,
assuming full responsibility for the approval of sound policies and objectives
and for the supervision of all of the Bank’s activities, consistent with the
role and expertise commonly expected for directors of banks of comparable size.
The Bank’s Board minutes shall document these reviews and approvals, including
the names of any dissenting directors.

          3.     (a)     By
December 31, 2009, the Bank shall increase and thereafter maintain Tier 1
capital in such an amount as to equal or exceed 9 percent of the Bank’s total
assets; and increase and thereafter
maintain its total risk-based capital ratio in such an amount as to equal or exceed
12 percent.

                  (b)     Within
60 days from the effective date of this ORDER, the Bank shall develop and adopt
a written capital plan to meet and thereafter maintain the minimum requirements
in Paragraph 3(a) with due consideration to the ongoing condition of the Bank.
The plan shall be in a form and manner acceptable to the Regional Director and
the Commissioner. The capital plan must include a contingency plan in the event
the Bank, (i) fails to maintain the minimum capital ratios required by
subparagraph 3(a); (ii) fails to submit an acceptable
capital plan as required by this subparagraph; or (iii) fails to implement or
adhere to a capital plan to which the Regional Director and the
Commissioner have taken no written objection pursuant to this subparagraph. The
contingency plan shall include a plan to sell or merge the Bank. The Bank shall
implement the contingency plan upon written notice from the Regional Director
and the Commissioner.

                  (c)     The level of Tier 1 capital to be maintained
during the life of this ORDER pursuant to Subparagraph 3(a) shall be in
addition to a fully funded allowance for loan and lease losses, the
adequacy of which shall be satisfactory to the Regional Director and the
Commissioner as determined at subsequent examinations and/or visitations.

- 5 -

                  (d)     Any
increase in Tier 1 capital necessary to meet the requirements of Paragraph 3 of
this ORDER may be accomplished by the following:

                            (i)     the
sale of common stock; or

                            (ii)    any
other means acceptable to the Regional Director and the Commissioner.

Any increase in Tier 1 capital necessary to meet the requirements of
Paragraph 3 of this ORDER may not be accomplished through a
deduction from the Bank’s allowance for loan and lease losses.

                  (e)     For the purposes of this ORDER, the terms “Tier 1
capital”, “total risk-based capital”, and “total assets” shall have, the
meanings ascribed to them in Part 325 of the FDIC’s Rules and
Regulations, 12 C.F.R. §§ 325.2(v) and 325.2(x).

          4.     (a)     Effective
immediately from the date of this ORDER, the Bank shall thereafter maintain a
fully funded allowance for loan and lease losses.

                  (b)     The
appropriateness of the allowance shall be determined after the charge-off
of loans or other items classified “Loss”. The allowance shall be reviewed at least
once each calendar quarter. Said review shall be completed in order that the
findings may be properly reported in the quarterly Reports of Condition and
Income. The review shall focus on the results of the Bank’s internal loan
review, loan loss experience, trends of delinquent and non-accrual loans, an
estimate of potential loss exposure of significant credits, concentrations of
credit, and present and prospective economic conditions. A deficiency in the
allowance shall be remedied in the calendar quarter it is discovered, prior to
submitting the Report of Condition, by a charge to current operating earnings.
The minutes of the Bank’s Board meeting at which such review is undertaken
shall indicate the results of the review. Upon completion of the review, the
Bank shall increase and maintain its
allowance for loan and lease losses consistent with the findings of the
review. The Bank’s allowance shall be satisfactory to the Regional Director and
the Commissioner as determined at subsequent examinations and/or visitations.

- 6 -

          5.     (a)
     Effective immediately from the date of this
ORDER, the Bank shall eliminate from its
books, by charge-off or collection, all assets classified “Loss” in the ROE
that have not been previously collected or charged off. Elimination of
these assets through proceeds of other loans made by the Bank is not considered
collection for the purpose of this paragraph.

                  (b)     Within
180 days from the effective date of this
ORDER, the Bank shall have reduced the assets classified “Substandard”
in the ROE that have not previously been charged off to not more than 100
percent of capital.

                  (c)     Within
270 days from the effective date of this
ORDER, the Bank shall have reduced the assets classified as “Substandard” in
the ROE that have not previously been charged off to not more than 50
percent of capital.

                  (d)     The
requirements of Subparagraphs 5(a), 5(b), and 5(c) of this ORDER are not to be
construed as standards for future operations and, in addition to the foregoing,
the Bank shall eventually reduce the total of all adversely classified assets.
Reduction of these assets through proceeds
of other loans made by the Bank is not considered collection for the purpose of
this paragraph. As used in Subparagraphs 5(b), 5(c), and 5(d) the word
“reduce” means:

                            (i)     to
collect;

                            (ii)    to
charge-off; or

                            (iii)   to
sufficiently improve the quality of assets adversely classified to warrant removing any adverse classification, as
determined by the FDIC and the Commissioner.

                  (e)     Within
60 days from the effective date of this
ORDER, the Bank shall develop written asset disposition plans for each
classified asset greater than $1,000,000. The plans shall be reviewed and
approved by the Bank’s Board and acceptable to the Regional Director and the Commissioner as determined at
subsequent examinations and/or visitations.

- 7 -

          6.     (a)     Beginning
with the effective date of this ORDER, the Bank shall not extend, directly or
indirectly, any additional credit to, or for the benefit of, any borrower who
has a loan or other extension of credit
from the Bank that has been charged off or classified, in whole or in
part, “Loss” and is uncollected. Subparagraph 6(a) of this ORDER shall not
prohibit the Bank from renewing or extending the maturity of any credit in
accordance with the Financial Accounting Standards Board Statement Number 15
(“FASB 15”).

                  (b)     Beginning
with the effective date of this ORDER, the Bank shall not extend, directly or
indirectly, any additional credit to, or for the benefit of, any borrower who
has a loan or other extension of credit from the Bank in excess of $500,000
that has been classified, in whole or part, “Substandard” or “Doubtful” without
the prior approval of a majority of the Bank’s Board or the loan committee of
the Bank.

                  (c)     The
loan
committee or Bank’s Board shall not approve any extension of credit, or additional credit to a borrower in
Paragraphs (b) above without first collecting in cash all past due
interest.

          7.     (a)     Within
60 days from the effective date of this ORDER, the Bank shall revise, adopt,
and implement written lending and collection policies to provide effective
guidance and control over the Bank’s lending function, which policies shall
include specific guidelines for placing
loans on a non-accrual basis. The Bank
shall obtain adequate and current documentation for all loans in the
Bank’s loan portfolio. In addition, the Board’s loan approval process shall be
enhanced to expand the participation of the Board of Directors. Such policies,
standards, and their implementation shall be in a form and manner acceptable to
the Regional Director and the Commissioner as determined at subsequent
examinations and/or visitations.

- 8 -

                  (b)     The
Bank’s loan
policy shall be revised and enhanced to: (i) have clear and measurable
underwriting standards which include but are not limited to loan-to-value
limits, cash flow, and debt service coverage minimums; (ii) have
complete loan documentation including current and ongoing borrower financial
statements; (iii) prohibit concentrations of credit to any borrower or
borrower’s related interest; (iv) specify the circumstances and conditions
under which updated real estate appraisals will be obtained; (v) improve
internal loan grading and ongoing credit monitoring; (vi) develop specific
action plans on all loans in excess of $500,000 which are on the “watch list, including monthly reporting to the Board;
and (vii) provide monthly monitoring of compliance with the revised and
enhanced loan policy to the Board which shall be reflected in the minutes of
the Board. Such revised and enhanced
polices and their implementation shall be in a form and manner acceptable to
the Regional Director and the Commissioner as determined at subsequent
examinations and/or visitations.

          8.     Within 90
days from the effective date of this ORDER, the Bank shall develop a written
plan, approved by its Board and acceptable to the Regional Director and the
Commissioner for systematically reducing the amount of loans or other
extensions of credit advanced, directly or indirectly, to or for the benefit
of, any borrowers in the “Commercial Real Estate Loans” Concentrations, as more
fully set forth in the ROE. No new loans or other extensions of credit shall be
granted to or for the benefit of, any borrower in the “Commercial Real Estate
Loans” Concentrations with the exception of loans or extensions of credit to individuals which are for first lien single
family residential real estate financing or for household, family, or other
consumer expenditures and which have received the prior written approval of the
Bank’s Board as reflected in its recorded minutes and are otherwise in
conformance with all laws and regulations.

- 9 -

           9.     Within 60 days from the
effective date of this
ORDER, the Bank shall eliminate and/or correct all violations of law, as
more fully set forth in the ROE. In addition, the Bank shall take all necessary
steps to ensure future compliance with all applicable laws and regulations.

          10.     Within 60 days from the
effective date of this
ORDER, the Bank shall develop or revise, adopt, and implement a written
liquidity and funds management policy. Such policy and its implementation shall
be in a form and manner acceptable to the Regional Director and the Commissioner
as determined at subsequent examinations and/or visitation.

          11.     (a)     During
the life of this ORDER, the Bank shall not accept, renew or roll over any brokered deposits unless it has applied
for and been granted a waiver of this prohibition
by the FDIC in accordance with the provisions of section 337.6 of the
FDIC’s Rules and
Regulations 12 C.F.R. § 337.6.

                    (b)     Within
10 days of the effective date of this
ORDER, the Bank shall submit to the Regional Director and the
Commissioner a written plan for eliminating its reliance on brokered deposits.
The plan should contain details as to the current composition of brokered
deposits by maturity and explain the means by which such deposits will be paid
or rolled over. For purposes of this ORDER, brokered deposits are defined as
described in section 337.6(a)(2) of the FDIC’s Rules and Regulations to include
any deposits funded by third party agents or nominees for depositors, including
deposits managed by a trustee or custodian when each individual beneficial
interest is entitled to or asserts a right to federal deposit insurance.

          12.     The Bank shall not pay
cash dividends without the
prior written consent of the Regional Director and the Commissioner.

          13.     The Bank shall not
engage in any expansionary
activities, including opening any branches, without the prior written
consent of the Regional Director and the Commissioner.

- 10 -

          14.     The Bank shall notify
the Regional Director and
the Commissioner in advance of making any public announcement or
notification.

          15.     Within 30
days of the end of the first quarter, following the effective date of this
ORDER, and within 30 days of the end of each quarter thereafter, the Bank shall
furnish written progress reports to the Regional Director and the Commissioner
detailing the form and manner of any actions taken to secure compliance with
this ORDER and the results thereof. Such reports may be discontinued when the corrections required by this ORDER have
been accomplished and the Regional Director and the Commissioner have
released the Bank in writing from making further reports.

          This
ORDER will become effective upon its issuance by the FDIC and the CDFI. The provisions of this ORDER shall remain effective
and enforceable except to the extent that, and until such time as, any
provisions of this ORDER shall have been modified, terminated, suspended, or
set aside by the FDIC and the CDFI.

          Pursuant
to delegated authority.

          Dated
at San Francisco, California, this 15th day of September, 2009.

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 

 
	
  

 	
  

 	 

 
	
  

 	
  

 	
 J. George
 Doerr

 Deputy Regional Director

 Risk Management

 Division of Supervision and
 Consumer Protection

 San Francisco Region

 Federal Deposit Insurance Corporation

 
	
  

 	
  

 	
  

 
	
  

 	
 By

 	
 

 
	
  

 	
  

 	 

 
	
  

 	
  

 	
 William S.
 Haraf

 
	
  

 	
  

 	
 Commissioner

 
	
  

 	
  

 	
 California Department of Financial Institutions

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