EXHIBIT 10.2
Lease Agreement
Lessor: Panyu Tian Le Electrical Appliance Manufacturing
Co., Ltd. (Tian Le)
Legal Address: Nan De Highway, South side, Zhi Village, Dashi
Village, Dashi town, Panyu Municipality, Guangdong
Province
Legal Representative: Mr Su Xxx Xxxx
Lessee: Panyu D.V.S. Electrical Appliances Manufacturing
Co., Ltd. (DVS)
Legal Address: Nan De Highway, South side, Zhi Village, Dashi
Village, Dashi town, Panyu Municipality, Guangdong
Province
Legal Representative: Dr Edmund Sun
In accordance with "the Economic Contracts of the People's Republic of China,"
and other related regulations, for the purpose of securing the rights and
obligations of Lessor and Lessee, through consultations, it is mutually agreed
to execute this agreement.
1. Name and quantity of lease property
(1) The site (referred to Appendix I of Joint Venture Agreement's)
(2) All of the buildings and other situations located on the site including
the Video CD and amplifier factory buildings, two dormitory buildings
and a power transformer station.
(3) Machinery, equipment, facilities (referred to Joint Venture Agreement
and attachment list to be confirmed afterwards)
2. Lease term
This lease if for two years, commencing December 1st, 1997 to November 30th,
1999.
3. Base rent and lease payment's time schedule.
(1) The monthly rent is RMB650,000, payable before 10th of each month. The
Lessee can not use excuse to delay the payment.
(2) Within 10 days when signing this agreement, Lessee shall pay RMB
1,950,000 to Lessor as security deposit which will be returned to
Lessee after completion of the lease without interest.
(3) During the term of said lease Lessor is responsible for all rent,
property, occupancy and other taxes that are assessed based on the
Joint Venture's leased property. Local government's fees, water and
electricity bills shall be paid by Lessee.
4. The maintenance and repairs during term of lease
Lessee is responsible to pay for repairs & maintenance of machineries and
equipments. Lessor is responsible to pay for the normal repairs &
maintenance of the leased property, the site, all of the buildings, and
other structures located on the site, including without limitation the
Video CD and amplifier factory buildings, two dormitory building and a
power transformer station except that Lessee must reasonably use said
property and will be responsible for damages due to its failure to not
reasonable use said property.
5. Other agreed matters
(1) Lessee's all activities being conducted by using the leased property
must comply with the rules and regulations of the government, Lessee
must not engage in any illegal business on the premises.
(2) Lessee shall not sell the leased property, shall not use the leased
property, for mortgage and for other party's guaranty.
(3) Without Lessor's approval, Lessee may not sublet or letting any third
party to use more than 50% of the leased property. However, Lessor
without good reason shall not withhold the sublease, written consent
shall be given to Lessee.
(4) Lessee may not disassemble and reconstruct the leased property without
Lessor's approval.
(5) During the lease, Lessor must insure the leased property from the
insurance company, the insurance premium must be paid by Lessor.
According to the actual conditions, except normal wearing and tearing.
Lessee shall be responsible for damages are caused by the improper use
of the leased property.
(6) Lessee and Joint Venture
By providing the appropriate documentation describing the transaction
is provided to Tian Le. The lease may be assigned by Lessee to any
company acquiring or merging with the Joint Venture, or any
corporation owning or controlling DVS or owned or controlled by DVS.
(7) During the lease term, with advance notice and under reasonable
situation, Lessor accompanied by Lessee may enter the premises to
inspect the conditions of the properties and for related business
purposes.
(8) During the lease, both parties are not responsible for any Acts of
God, natural disaster where damages caused by themselves force majeure
and uncontrollable Government's condemnation proceeding, thus the
lease can not be carried on.
6. Obligation for breach of lease by Lessor and Lessee
(1) In the event Lessor contravenes Article 2 of this agreement, unable to
lease the properties to Lessee for use within 30 days, Lessor needs to
pay 3% of month rent per day to Lessee as penalty. Lessee will reserve
the rights to terminate the lease agreement and Lessor shall refund
all rental deposits and rentals already received together with
interest rate currently charged by the bank for the intervening
period, from the date the captioned money paid to the Lessor and the
date money refunded to Lessee at last.
(2) In the event Lessor involuntarily loses the ownership of or right to
lease the leased property, Lessor shall pay Lessee a termination fee
of three months rent under the lease if Lessee has at least one year's
notice before it loses possession of the leased property or six months
rent under the lease of the Joint Venture has less than one-year's
notice before it loses possession of the leased property.
(3) Lessor agrees to pledge all its leased machineries, equipments to
Lessee as collateral granting Lessee the right to forfeit the above-
stated properties on the premises as soon as Lessor breaches the terms
and conditions of this lease agreement after the judgment from the
court. Any money in excess of the amount owed to the Lessee and
damages will be returned to Lessor. Both parties agree to register
this collateral (mortgage) at the Industrial & Commercial Bureau after
signing this agreement. Lessor represents no current liens or pledges
of subject machineries and equipments to any 3rd party.
(4) Lessee shall pay rent late charges in the amount of 3% of this month
rent per day upon written notice via registered mail to Lessee to the
attention of Mr. Edmund Sun but without immediate rectification from
Lessee. If Lessee does not pay rental after 20 days overdue, or
intentionally pay monthly rental 20 days after the due date for three
consecutive months, Lessor is entitled to forfeit three month security
deposit and may terminate the lease.
7. The leasehold shall be for a two-year term and may be renewed by Lessee for
successive additional one-year term at the option of Lessee and upon six
month's written notice prior to expiration of the current term. Lessor
shall not refuse Lessee's option for renewal. However, Lessor may cancel
the lease at any time after the initial two-year term by giving Lessee one
year's notice and paying it a calculated based on the rent for final month
of the lease for three-month rent. The rent for renewal periods shall be
650,000 RMB per month.
8. Indemnification
Lessor guarantees that it has the authority to lease "the leased property"
to Lessee without obtaining the approval of any governmental agency or
other third party and that it has no reason to believe that possession and
use of the leased property by the Lessee will be disturbed, interrupted or
interfered with during the initial two-year term also guarantees that
Lessor, except those assets already mortgaged or under liens and details to
be furnished to Lessee prior to signing this agreement, shall not use "the
leased property" to secure mortgages or to create any liens, encumbrances
against "the leased property" without notice to Lessee and written approval
should be obtained from Lessee in amount of liens and/or charges exceeding
RMB650,000 whilst Lessee shall not refuse without reasonable reasons such
as affecting the status of the Lessee Agreement. In case if Lessor defaults
in any mortgage, liens or encumbrances and Lessee paid on his behalf, such
amount should be deducted in the rental payment payable by Lessee to
Lessor. In addition to any other remedies that Lessee may have, Lessee may
offset the amount of any indemnification under this agreement or for any
other breach of any representation or warranty made by Lessor in this
agreement against the next payments then still outstanding under the lease.
9. Noncompetition
The Noncompetition Agreement set forth in Appendix 3 to the Joint Venture
Agreement shall continue in effect during the entire term of the lease and
for a period of ten (10) years from the purchase of the leased property by
Lessee and shall apply to all of the current and proposed business of the
Joint Venture as described in Article 8 of the Joint Venture Agreement as
well as the amplifier business being transferred to the Joint Venture.
10. After signing this agreement, this agreement will be automatically invalid
if not
approved by any required government agency or in the event Lessor
involuntarily loses the ownership of or right to lease the leased property.
Lessor shall return its security deposit and prepaid rental to Lessee
with interest and based on the bank's loan interest rate calculating from
the date received security deposit until the date return the security
deposit and prepaid rental to Lessee. In the event that Lessee does not
obtain and transfer the necessary manufacturing license and product safety
license from the Minister of Electronic Industry so as to avoid any
interruption in the continuation of the Lessee's operations during the
lease term, Lessee may immediately terminate the lease without further
obligation to Lessor. Lessee will be responsible for the normal fees
including travelling expenses related for the transfer of above licenses to
Lessee. And after the expire of the Lease Agreement, Lessee will assist to
transfer the above license back to Lessor and Lessor will be responsible
for all the related cost.
11. Within ten (10) days after the lease expires, Lessee shall pay cleaning
fees and return the property to Lessor keeping the normal conditions, hold
over will be paid as rent under the lease calculated based on the last
rent, if the leased property can not be repaired or incurred damages to
Lessor's leased property, Lessee shall be responsible to pay the actual
cost.
12. During the leasehold, Lessee may exercise the option either to purchase
part of, or the entire leased property, the purchase price shall be based
on the acceptable appraisal report agreed upon by both parties, then the
separate purchase contract shall be signed.
13. This agreement is executed in both Chinese and English versions shall be
equally binding. Both parties agree to sign Chinese version first, the
English version shall be signed thereafter, during the leasehold, if
disputes arising between both parties, the Chinese and English versions to
be referred.
14. All uncovered areas, shall be resolved through friendly negotiations
between the parties. If negotiations are unsuccessful, the dispute shall be
submitted to the China International Economic and Trade Arbitration
Commission for arbitration, according to its provisional rules of
arbitration procedure. The arbitration award shall be final and binding on
both parties. The required costs shall be borne by the losing party. During
the arbitration proceeding, this agreement shall continue to be performed
except for the portion which is subject to the dispute under arbitration.
15. This agreement shall apply the rule of laws of China.
16. This agreement is binding upon signing both Chinese and English versions,
when the security deposit and rent are received by Lessor. This agreement
pertaining both Chinese and English version, there are four (4) original
copies of each version, licensor and licensee keep one set, the rest shall
be submitted to the proper government authority for records.
Lessor: Panyu Tian Le Electrical Lessee: Panyu D.V.S. Electrical
Appliance Manufacturing Appliance Manufacturing
Co., Ltd.
[SEAL] [SEAL]
By: /s/ Su Xxx Xxxx By: /s/ Dr. Edmund Sun
-------------------------------- --------------------------------
Legal Representative: Mr. Su Xxx Xxxx Legal Representative: Dr. Edmund Sun
December 27, 1997
