Exhibit 10.46
The Sale and Leasing Agreement
This agreement is concluded between and by Shanghai Kai Hong Electronic Company
Ltd. with its legal residence being: Chenchun Road Xinqiao Town Songjiang County
Shanghai , China ("Party A") and Shanghai Ding Hong Electronic Company Ltd. with
its legal residence being: No 999 Xinqiao Town Songjiang County Shanghai , China
("Party B") on March 30, 2002,in the city of Shanghai.
Whereas,
1. Party A agrees to sell a three story building completed by itself on
(date)(hereinafter referred to as "original factory building"),and one
power distribution building both buildings set forth in Exhibit one and
two, hereinafter refereed to as " Building A") to Party B for the purpose
and on the terms and conditions of this agreement;
2. Party B agrees to let Building A to Party A after Party B purchases
Building A from Party A for the purpose and on the terms and conditions of
this agreement.
3. Party B agrees to let extended part of the original factory building as
well as the affiliated buildings and area (set forth in Exhibit three and
four, hereinafter referred to as " Building B") to Party A.
Now it is hereby agreed as follows,
1. Definitions and interpretation
Unless otherwise defined in this agreement, the terms used in this agreement
shall only have the meanings hereunder.
1.1 "Building A" shall have the following meanings,
a. The original factory building of three stories located in No. 375 land
of Song Jiang District, Shanghai;
b. The power distribution building located in No. 375 land of Song Jiang
District, Shanghai.
1.2 "Building B" shall have the following meanings,
a. The extended part of the original three story factory building and
b. Affiliated buildings and area set forth in Exhibit Four.
(the specific site and area is set forth in the Exhibit Map of the
completed building )
1.3 "Effective Date" shall mean the agreement will take effect after the legal
representatives or authorized representatives of both parties affix their
signatures and company seals on this agreement.
1.4 "Leasing Term" shall mean 15 years since the agreement takes effect.
1.5 "Free of Rental Term" shall mean the period that in accordance with article
3.4 Party A is entitled to use Building A without paying any rent fees since the
16th year after the agreement has taken effect for 15 years as long as Party A
maintains its lawful existence as a business entity.
2. The sale price of Building A and the method of payment
2.1 The sale price
a. Both parties agree to that the net value of the original factory
building is USD$ 242,090, and that the net value of power distribution
building is USD$; 32,916
b. Party B agrees to purchase Building A with the price mentioned above.
2.2 The method of payment
Both parties agree that Party B shall provide Party A with a lawful receipt of
real assets transfer, meanwhile to clarify the real assets value indicated in
Party A's account, the clearance balance shall be transferred into Party A's
long term credit--to collect from Party B. Party B will make 15 annual
installment payments after the agreement takes effect, in other words, to pay
off USD$ 275,006 within 15 years, and that every calendar year Party B shall pay
USD$ 18,334to the account as prescribed by Party A before January 31st.
3. Rent Term, Rent and Method of Payment
3.1 The period of lease
Both parties agree to that Party A is entitled to lease Building A for 15 years
after the agreement takes effect.
3.2 Rental: both parties agree to that the annual rental of Building A
shall be USD$ 19.251.
3.3 Method of payment: every calendar year Party A shall pay rental to the
account as prescribed by Party B before January 31st.
3.4 Term for free of rent
After Party A leases Building A for 15 years, thereby Party A is entitled to
continue to use Building A until 2024 with free of rent. If the operating period
of Party A is extended beyond 2024, and Party A still exists as a business
entity after 2024, thereby Party A is entitled to use Building with free of
rent.
4. Under the circumstances that Party A terminates the lease of Building A
before the lease term expires, then,
4.1 Under the circumstances that Party A terminates the lease relationship
prior to maturity of the lease term and where Party B is unable to let
Building A to a third party, Party A is still borne to pay the rent in
accordance with the agreement. Party B shall also pay installment to Party
A in accordance with the agreement.
4.2 Under the circumstances that Party A terminates the lease relationship
prior to maturity of the lease term and where Party B is able to let
Building A to a third party with the same rent, then Party A is not borne
to pay the rent and any penalties, Party B shall also pay installment to
Party A in accordance with the agreement.
4.3 Under the circumstances that Party B lets Building A or one of Building A
to a third party, however, the rent thereof is less than the installment
that Party B shall pay to Party A, then Party A shall pay the balance
between the annual rental prescribed in Article 3.2 and the actual rental
collected by Party B. Party B shall also pay installment to Party A in
accordance with the agreement.
4.4 Under the circumstances that Party B lets Building A to a third party, and
where the rent thereof is more than the installment Party B shall pay to
Party A, then Party B is entitled to just pay the consideration in
accordance with the amount on terms and conditions of this agreement.
4.5 Party B is not allowed to terminate the lease contract and the leasing
term for free of rental without the consent of Party A. Otherwise Party B
is liable to indemnify Party A all its losses including and without
limitation any and all reasonable profits, out-of-pocket costs, legal
fees, accounting fees and removal or relocation fees.
5. The leasing term, rental and the method of payment as to the leasing
term of Building B.
5.1 Leasing term: both parties agree that, Party A is entitled to lease
Building B for 15 years following the agreement takes effect. After the
expiry of the leasing term, in case Party A still rents Building A or
within the leasing term for free of rental, the leasing term of Building B
shall be extended automatically and accordingly.
5.2 Rental: both parties agree that the monthly rental of Building B shall
be USD $17,541. The rental can be adjusted where meeting mutual
agreement.
5.3 Method of payment: Party A shall pay the rental to the account as
nominated by Party B before 1st monthly.
5.4 Deposit: Party A shall pay Party B a deposit of USD$ 17,030 for leasing
Building B, This deposit should apply against the last month's rent due by
Party A to Party B
6. Termination of the agreement prior to the maturity of the leasing term
of Building B
6.1 Where Party A will terminate the agreement prior to the maturity of the
leasing term, Party A thereby shall compensate all losses, and damages
suffered by Party B. The amount of compensation shall be decided upon
negotiation between two parties.
6.2 Under the circumstances that Party A terminates the agreement prior to the
maturity of the leasing term of building A for free of rental, Party A
shall not be entitled to refund the deposit of USD$17,030.
7. Insurance and repair costs
7.1 During the Leasing Term and Free of rental period, Party A is liable
to purchase insurance for Building A and bear the repair costs as
well, If Party A can not obtain building insurance, then Party B will
be requested to obtain insurance and Party A will reimburse Party B
for the actual insurance cost
7.2 During the Leasing Term, Party B is liable to purchase insurance for
Building B and bear the repair costs as well.
7.3 Party B is entitled to inspect the utilization of buildings rented by
Party A and Party A should provide assistance.
8. Liability for breach of the agreement
Where Party B violates article 2.2 of the agreement for failing to pay
installment punctually, then Party B shall be liable to pay liquidate damages to
Party A at the rate of 0.21/ooof the installment for each day of delay.
8.1 Where Party A violates article 3.3 of the agreement for failing to pay
the rent, then Party A shall pay a penalty at the rate of 0.21/of the
rent for each day of delay.
8.2 Where Party B breach its warranties stipulated in article 6, Party B
shall compensate Party A's lost and damages if any.
8.3 Party A is not allowed to:
(1) sub-lease Building A and Building B or exchange the use of two
buildings with other parties without Party B's consent.
(2) In case Party A alters the structure of two building or damage
two buildings without Party B's consent, Party A is liable to
compensation.
(3) In case Party A changes the lease purpose prescribed in the
agreement and the subject of lease without Party B's consent,
Party A is liable to restoration and compensation.
9. Warranties
Party B hereby warrants that with the period of the lease and term for free of
rent Building A and Building B shall not be sold or mortgaged except for Party
A's prior approval in writing.
10. Force Majeure
10.1 The definition of Force Majeure
Force Majeure shall mean all events which are beyond the control of the Parties
to this agreement, and which are unforeseen, unavoidable and insurmountable, and
which arise after the Effective Date and which prevent total or partial
performance by either party. Such events shall include earthquakes, typhoons,
flood, fire, war, acts of government or public agencies, strikes and any other
event which can not be foreseen, prevented and controlled, including events
which are recognized as Force Majeure in general international commercial
practice.
10.2 Consequences of Force Majeure
a. If an event of Force Majeure occurs, a Party's contractual obligations
affected by such an event shall be suspended during the period of delay
caused by the Force Majeure and the period for performing such obligation
shall be extended, without penalty, for a period equal to such suspension.
b. The party claiming Force Majeure shall promptly inform the other party in
writing and shall furnish with in fifteen (15) days thereafter sufficient
proof of the occurrence and expected duration of such Force Majeure. The
party claiming Force Majeure shall also use all reasonable endeavors to
terminate the Force Majeure.
c. In the event of Force Majeure, the parties shall immediately consult
with each other in order to find an equitable solution and shall use all
reasonable endeavors to minimize the consequences of such Force Majeure
11. The effectiveness of this agreement
This agreement shall become effective after the legal representatives or
authorized representatives of both parties affix their signatures and company
seals on this agreement.
12. Language of the agreement
This agreement is made and executed in Chinese and English, both versions having
equal validity.
13. Settlement of disputes
13.1 Friendly consultations
In the event of any dispute, difference, controversy or claim arising out of or
relating to this agreement, including any regarding the breach, termination or
validity of this agreement, (a "Dispute") then upon one party giving the other
party notice in writing of the Dispute and regarding the commencement of
friendly consultations ("Notice of Dispute") the parties shall attempt to
resolve such Dispute through friendly consultation.
If the Dispute has not been resolved through friendly consultations with thirty
(30) days from the Notice of Dispute was given in respect of it, the Dispute
shall be resolved by arbitration in accordance with Article 10.2 such
arbitration may be initiated by either party.
13.2 Arbitration
The arbitration shall be conducted by Shanghai Arbitration Commission in
Shanghai in accordance with its procedure rules. The arbitration award shall be
final and binding on the parties. The costs of arbitration shall be borne by the
losing party except as may be otherwise determined by the arbitration tribunal.
13.3 Continuance of performance
Except for the specified matters in dispute, which are then currently being
arbitrated, the parties shall continue to perform their respective obligations
under this agreement during any friendly consultations or any arbitration
pursuant to this article 10.
13.4 Separability
The provisions of these articles 10 shall be separable from the other terms of
this agreement. Neither the termination nor the invalidity of this agreement
shall affect the validity of the provisions of this article 10.
14. Applicable law
The validity, interpretation and implementation of this agreement and the
settlement of disputes herein shall be governed by relevant PRC laws and
regulation which are officially promulgated and publicly available.
15. Miscellaneous
15.1 Anything not prescribed by the agreement shall be made as the
supplementary clauses by two parties' mutual agreement. The supplementary
clauses and exhibitions constitute the part of the entire agreement.
15.2 Both parties know their respective right, obligation, liability, very
clearly and will execute the agreement in accordance with the provisions
of the agreement. Where one party violates the agreement, the other party
is entitled to claim damages in accordance with the agreement.
15.3 Any notice or written communication provided for in this Contract from one
Party to the other Party shall be made in writing in Chinese and English
and sent by courier service delivered letter. The date of receipt of a
notice or communication hereunder shall be deemed to be seven (7) days
after the letter is given to the courier service provided it is evidenced
by a confirmation receipt. All notices and communications shall be sent to
the appropriate address set forth below, until the same is changed by
notice given in writing to the other Party.
To: Party A To: Party B
Address: Shanghai KaiHong Electronics, Ltd. Shanghai Ding Hong Electronic Co.,
Ltd.
Attn.: /s/ Joseph Liu, Attn.: /s/ J.Y. Xing
Joseph Liu, President J.Y. Xing, President
Date: March 30, 2002 Date: March 30, 2002