Supplementary Agreement to Lease Agreement dated on 28th June 2004 —— 0701-01
to
Lease Agreement dated on 28th June 2004 —— 0701-01
This
Supplementary Agreement (hereinafter referred to as "the Supplementary
Agreement") is entered into on December 31, 2007, in the city of Shanghai,
by
and between Shanghai Kai Hong Technology Co., Ltd. (hereinafter referred to
as
"Party A") with
its
registered office at Xx.0,
Xxxx 00, XxxXxxxxx Xxxx Xxxxxxxxx
Export Processing Zone Shanghai, China
and
Shanghai Yuan Hao Electronic Co., Ltd. (hereinafter referred to as "Party B")
with its registered office at Xx.0,
Xxxx 00, XxxXxxxxx Xxxx Xxxxxxxxx
Export Processing Zone, Shanghai, China.
Party
A
and Party B are collectively referred to as the “Parties” and each as a
“Party”.
WHEREAS,
|
1.
|
Party
A and Party B, on June 28th, 2004, entered into the Lease Agreement
(hereinafter referred to as “the Lease Agreement”) of the First Floor and
Second Floor of the building located at Xx.0
Xxxx 00, XxxXxxxxx Xxxx Xxxxxxxxx Export Processing Xxxx, Xxxxxxxx,
Xxxxx
(“New Building”)
that Party B is the owner representative and has the legal right
for
leasing the New Building and relevant facilities, including Distribution
building, Power Building, Lobby (hereinafter referred to as “the Original
Lease Areas”)
|
|
2.
|
Now
through amicable discussion, Party B agrees to lease out and Party
A
agrees to lease in the Fourth and Fifth Floor of the New Building
and
relevant facilities, including Power Building and Lobby (see attachment)
(hereinafter referred to as “the New Lease Areas”).
|
The
Parties enter into the Supplementary Agreement as follows:
1.
Gross Area of the New Lease Areas
1.1
The
gross area of the Fourth Floor of the New Building (“Fourth Floor”)
is
3,243.4 square
meters.
1.2
The
gross area of the Fifth Floor of the New Building (“Fifth Floor”) is
3,243.4 square
meters.
1.3
The
gross area of the Lobby of the New Building (“Lobby”) is 128
square
meters, and Party A will share 40% of the Lobby, which is 51.2
square
meters as a consequence of leasing the new area. The total gross area of the
lease area (“Total Lease Area”) is 6,538
square
meters.
1.4
The
gross area of the three-story Power Building that will be built to support
the
Fourth and Fifth Floor of the New Building is 960
square
meters with 320 square meters for each story. Party A will lease the three-story
Power Building with a total area of 960
square
meters.
1.5
Party
B shall locate an empty land lot outside the New Building and appoint a
construction operator with relevant qualification to build the Power Building
and shall deliver the said Power Building to Party A for Party A’s use
subsequent to the completion of such construction.
1.6
Party
B agrees to install a new elevator for the New Building at its own
expenses.
2.
Lease Term
For
the
above New Lease Areas, the initial lease term is hereby from the date of 1
March
2007 to the date of 28 February 2012. The lease term shall be automatically
renewed for successive five (5) year terms when the initial lease term expires
unless Party A gives termination notice not less than 30 days before the
expiration of any lease term. In its operating period, Party A has the priority
to the New Lease Areas defined in this Supplementary Agreement and Party B
shall
not terminate this Supplementary Agreement without reasonable cause and Party
A's consent in writing.
For
the
renewal period, the items relating to the rental stipulated in Section 3 of
the
Supplementary Agreement shall be adjusted on the basis of the market price
at
that renewal time.
3. Rental
and Other Fees
Party
A
agrees to pay Party B rental fee, Building Management Fee and Ground Lease
Fee
as follows:
3.1
Rental
The
Parties agree that the monthly rental fee of the above New Lease Areas shall
be
as follows:
|
(1)
|
The
gross area of the Fourth and Fifth floor of the New Building is
6,486.80
square meters, monthly rental fee is US$3.15
per square meter and the total monthly rental fee shall be US$20,433.42.
|
-1-
|
(2)
|
The
gross area of the Lobby of the New Building is 128
square meters, and Party A will share 40% of which is 51.2
square
meters as a consequence of leasing the new area, monthly rental fee
is
US$3.15
per square meter and the total monthly rental fee shall be US$
161.28.
|
| (3) |
The
gross area of the Power Building of the New Building for the Fourth
and
Fifth Floor is
960 square
meters, monthly rental fee is US$3.15
per square meter and the total monthly rental fee shall be US$3,024.
|
| (4) |
The
total rental fee for the lease area shall be US$23,618.70
.
|
3.2
Building Management Fee
Party
A
agrees to pay Party B the Building Management Fee based on 5%
of the
monthly rental fee (US$23,618.70)
referred in above Section 3.1. The total monthly Building Management Fee
is
US$1,180.94.
Party
B
shall provide Party A the management service as below:
|
(1)
|
the
Guard service for the public area outside of the Original Lease Areas
and
the New Lease Areas.
|
|
(2)
|
the
maintenance and repairs of the buildings and facilities of the lease
area.
|
|
(3)
|
the
maintenance and repairs of the public facilities of the public factory
area and buildings.
|
|
(4)
|
the
cleanliness and sanitation of the lease area and public area.
|
|
(5)
|
the
landscaping of the lease area and public area, including the planting
and
maintenance.
|
|
(6)
|
other
building management service to be provided by Party B.
|
3.3
Ground Lease Fee
As
the
ground outside of the New Building is reduced to 5,906.5
square
meters due to the construction of the Power Building for the Fourth and Fifth
Floor as set forth in the Sections 1.4 of this Supplementary Agreement, both
Parties agree to modify the Section 4.3 of the Lease Agreement regarding the
Ground Lease Fee upon the execution of this Supplementary Agreement into “Party
A agrees to pay Ground Lease Fee on the 100%
of the
gross area of 5,906.5
square
meters as of 1 May 2007 (i.e. calculated at US$0.5
per
square meter, Party A shall pay monthly Ground Lease Fee of US$2,953.25,
for
Party A pays a monthly Ground Lease Fee of US$ 1,867.95
under
the
Lease Agreement dated 1 March 2006, so the incremental Ground Lease Fee is
US$
1,085.30).”
3.4
Subject to the above figures in Section 1 and Section 3, Party A shall pay
a
total monthly fee of US$25,884.94
to Party
B under this Supplementary Agreement from 1 March 2007.
3.5
Rental-free Period
3.5.1
In
consideration of Party A’s decoration projects for the Fourth and Fifth Floor of
the New Building, Party B hereby grants Party A and Party A is entitled to
a
60-days rental-free period subsequent to Party B’s delivery of the Fourth and
Fifth Floor of the New Building (i.e. from the date of 1 March 2007 to the
date
of 30 April 2007). During the above-said period, Party A shall not pay monthly
rental fee or related Building Management Fee for the Fourth
and Fifth Floor of the New Building to Party B.
In case
that Party B delays in delivery of the Fourth and Fifth Floor of the New
Building to Party A, the above-said rental-free period shall be put off
accordingly
3.5.2
Considering that it takes Party B certain time to build the Power Building
for
the Fourth and Fifth Floor of the New Building and Party B shall inspect and
accept the work at its own expenses upon completion of construction before
delivery to Party A for inspection and acceptance. The two Parties agree that
Party B should deliver the Power Building to Party A for inspection and
acceptance before 30 March 2007. Party B hereby grants Party A and Party A
is
entitled to a 30-days rental-free period subsequent to Party B’s delivery of the
Power Building (i.e. from the date of 1 April 2007 to the date of 30 April
2007). During the above-said period, Party A shall not pay monthly rental fee
or
related Building Management Fee for the Power Building to Party B. Party A
should pay monthly rental fee or related Building Management Fee for the Power
Building to Party B commencing from 1 May 2007. In case that Party B delays
in
delivery of the Power Building to Party A, the above-mentioned period shall
be
put off accordingly.
4.
Method of Payment
Party
A
shall pay the rental fee in RMB to Party B before the first day of every month.
Each month’s Rental fee in RMB shall be calculated according to the currency
exchange rate formula as described in Exhibit A, attached hereto and made a
part
of this Supplementary Agreement. Monthly Rental fee prior to January 2008 shall
be calculated based on the currency exchange rate data as described in Exhibit
B, attached hereto and made a part of this Supplementary Agreement, using the
currency exchange rate formula as described in Exhibit A.
-2-
5.
Deposit
For
the
lease of the above lease area, Party A shall pay Party B a deposit amounting
to
US$24,704 within 10 days of the effective date of the Supplementary
Agreement. Party A shall pay the Deposit in RMB (Yuan) according to the Median
Rate of Exchanges published by the Bank of China on the day of payment to the
RMB account as prescribed by Party B.
6.
Guarantees
6.1
Party
B hereby guarantees that if part of or all of the New Building (including
Original Lease Areas and New Lease Areas) are sold to any third party during
the
lease term period or the period of renewal, Party B shall notify Party A in
writing 12 months before such sales and Party A shall have the first right
of
refusal for such sales subject to the same terms and conditions. If Party A
has
received such notice from Party B and Party A does not exercise its first right
of refusal within 30 days upon receipt of the notice and has so replied to
Party
B, Party B may sell part of or all of the New Building (including Original
Lease
Areas and New Lease Areas) to the third party after 11 months of notification.
However, Party B shall guarantee that the third party will continue the
performance of the Lease Agreement and the Supplementary Agreement. In case
that
the third party fails to perform the Lease Agreement and the Supplementary
Agreement, Party B shall compensate Party A for all of Party A’s losses and
damages. Compensation should include, but not limited to, relocation fees and
business operation losses.
6.2
In
case that Party B mortgages part of or all of the New Building (including
Original Lease Areas and New Lease Areas) to a third party, Party B shall notify
Party A 30 days in advance. Any loss suffered by Party A for such mortgage
shall
be indemnified by Party B in full. Compensation should include, but not limited
to, relocation fees and business operation losses.
6.3
Party
B guarantees that before any part of the New Building beyond the Original Lease
Areas and the New Lease Areas is leased to any third party, Party B shall notify
Party A 30 days in advance and Party A shall have the first right of refusal
with respect to such lease subject to the same terms and conditions. If Party
A
has received such notice and does not exercise its first right of refusal within
30 days upon receipt of the notice and has so replied to Party B, Party B should
disclose related information about the third party and lease such part of the
New Building to the third party after getting Party A’s consent. If Party A does
not consent to such a lease, Party B may lease such part of the New Building
beyond the Original Lease Areas and New Lease Areas to the third party after
12
months of notification. However, Party B shall guarantee that such lease will
not affect Party A’ s proper use of the Original Lease Areas and New Lease
Areas. Party B shall indemnify Party A for any Party A’s damages or losses
caused by such lease. Compensation should include but not limited to relocation
fees and business operation losses.
7.
Entire
Agreement
This
Supplementary Agreement comprises the entire understanding between the Parties
with respect to its subject matters and supersedes any previous or
contemporaneous communications, representations, or agreements, whether oral
or
written. For purposes of construction, this Supplementary Agreement will be
deemed to have been drafted by both Parties. No modification of this
Supplementary Agreement will be binding on either Party unless in writing and
signed by an authorized representative of each Party.
8.
The
Effective Date of the Supplementary Agreement
The
Supplementary Agreement shall become effective after the legal representatives
or authorized representatives of both Parties affix their signatures and company
seals on the Supplementary Agreement. The Supplementary Agreement forms an
integral part of the Lease Agreement. If there is any discrepancy between the
Lease Agreement and the Supplementary Agreement, this Supplementary Agreement
shall prevail.
|
By:
Party A
|
By:
Party B
|
|
Address:
|
Address:
|
|
Attn.:
|
Attn.:
|
|
Party
A:
|
Party
B:
|
|
Representative:
|
Representative:
|
|
Date:
|
Date:
|
-3-
Exhibit
A
Currency
Exchange Rate Formula
Each
month’s Rental fee shall be calculated and converted into an amount of Rental
fee in RMB (“Rental fee in RMB”) for Party A to pay to Party B.
Beginning
from March 2007 until the termination month of the Lease Agreement, both Parties
may each be responsible for fifty percent (50%) of any increase or decrease
in
Rental fee in RMB as a result of the fluctuation in the monthly currency
exchange rate between US Dollars and RMB over a certain percentage as defined
by
the currency exchange rate formula below based on the Median Rate of Exchange
published by the Bank of China (“US/RMB Exchange Rate”) on the first day of each
month.
The
currency exchange rate formula is as follows:
|
a)
|
“Adjusted
US/RMB Exchange Rate”
is defined as the currency exchange rate calculated based on Section
(c)(i) below that will be used to calculate Party A’s monthly Rental fee
in RMB to Party B.
|
|
b)
|
The
“initial
US/RMB Exchange Rate”
is defined as the US/RMB Exchange Rate of 1 U.S. Dollar to 8.277
RMB.
|
|
c)
|
The
Adjusted US/RMB Exchange Rate is calculated first by comparing the
US/RMB
Exchange Rate on the first day of each month with the Adjusted US/RMB
Exchange Rate on the first day of the previous month (or the initial
US/RMB Exchange Rate for calculating the US/RMB Exchange Rate for
the
month of March 2007):
|
|
i)
|
If
the US/RMB Exchange Rate on the first day of a given month (“x”) is at
least five percent (5%) less or more than the Adjusted US/RMB Exchange
Rate on the first day of the previous month (or the initial US/RMB
Exchange Rate for calculating the US/RMB Exchange Rate for the month
of
March 2007) (“y”), then both exchange rate numbers, x and y, shall be
combined together and divided by 2 to produce a new Adjusted US/RMB
Exchange Rate as the Adjusted US/RMB Exchange Rate that both Parties
should use that month to calculate the correct Rental fee in
RMB.
|
|
ii)
|
If
the US/RMB Exchange Rate on the first day of a given month (“x”) is not at
least five percent (5%) less or more than the Adjusted US/RMB Exchange
Rate on the first day of the previous month (or the initial US/RMB
Exchange Rate for calculating the US/RMB Exchange Rate for the month
of
March 2007) (“y”), then the previous month’s Adjusted US/RMB Exchange Rate
(or the initial US/RMB Exchange Rate for calculating the Rental fee
for
March 2007), y, should continue be used to calculate the correct
Rental
fee in RMB that Party A should pay to Party B to satisfy that particular
month’s Rental fee.
|
-4-
Exhibit
B
Historical
Data of the US/RMB Exchange Rate
from
April 2007 to December 2007
|
USD/RMB
|
Adjusted
USD/RMB
|
|||||||
|
Rent
Fee-USD
|
1St
of Mth
|
Contract
Rate
|
Exchange
% Act vs Contract
|
Rent
fee - RMB
|
||||
|
8.277
|
||||||||
|
Mar
|
25,884.94
|
7.7472
|
8.0121
|
Free
of charge
|
||||
|
Apr
|
25,884.94
|
7.7306
|
8.0121
|
Free
of charge
|
||||
|
May
|
25,884.94
|
7.7055
|
8.0121
|
207,392.73
|
||||
|
Jun
|
25,884.94
|
7.6497
|
8.0121
|
207,392.73
|
||||
|
Jul
|
25,884.94
|
7.6075
|
7.8098
|
-5.05
|
202,156.20
|
|||
|
Aug
|
25,884.94
|
7.5660
|
7.8098
|
202,156.20
|
||||
|
Sep
|
25,884.94
|
7.5546
|
7.8098
|
202,156.20
|
||||
|
Oct
|
25,884.94
|
7.5108
|
7.8098
|
202,156.20
|
||||
|
Nov
|
25,884.94
|
7.4552
|
7.8098
|
202,156.20
|
||||
|
Dec
|
25,884.94
|
7.4143
|
7.6121
|
-5.06
|
197,037.46
|
|||
|
Y07
Total
|
258,849.40
|
1,622,603.94
|
||||||
-5-
