LEASE AGREEMENT
between
FUJIAN FUFA COMPANY LIMITED
and
MAGNETEK FUZHOU GENERATOR COMPANY LIMITED
TABLE OF CONTENTS
CLAUSE NUMBER AND HEADING PAGE NO.
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 2
2. LEASE OF PREMISES . . . . . . . . . . . . . . . . . . . . 3
3. USES OF THE LEASED PREMISES . . . . . . . . . . . . . . . 4
4. TERM OF LEASE . . . . . . . . . . . . . . . . . . . . . . 4
5. PAYMENT OF RENT AND CHARGES . . . . . . . . . . . . . . . 5
6. SUBLEASE. . . . . . . . . . . . . . . . . . . . . . . . . 7
7. MAINTENANCE AND REPAIR. . . . . . . . . . . . . . . . . . 7
8. REPRESENTATIONS, WARRANTIES, AND UNDERTAKINGS . . . . . . 9
9. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . 12
10. EFFECTIVENESS . . . . . . . . . . . . . . . . . . . . . . 12
11. TERMINATION OF LEASE. . . . . . . . . . . . . . . . . . . 12
12. EFFECT OF EXPIRATION OR TERMINATION . . . . . . . . . . . 13
13. APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . 14
14. SETTLEMENT OF DISPUTE . . . . . . . . . . . . . . . . . . 14
15. QUIET POSSESSION. . . . . . . . . . . . . . . . . . . . . 14
16. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 14
17. LANGUAGES . . . . . . . . . . . . . . . . . . . . . . . . 15
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 15
___________________________________________________________________________
Exhibit I
LEASE AGREEMENT
This Lease Agreement (the "Agreement") is made and entered into on this
Monday, March 18, 1996 by and between:
(1) Fujian Fufa Company Limited, a company duly registered and established
under the laws of the People's Republic of China (hereinafter referred to
as "PRC"), having its legal address at 223 Gong Ye Road, Fuzhou, Fujian,
PRC (hereinafter referred to as "Party A"), and;
(2) MagneTek Fuzhou Generator Company Limited, a Company duly registered and
established under the laws of PRC and having its address at 223 Gong Ye
Road, Fuzhou, Fujian, PRC (hereinafter referred to as the "Company").
RECITALS
WHEREAS, the Company is a Sino-foreign equity joint venture limited liability
company established in accordance with the terms and conditions of the
Sino-American Equity Joint Venture Contract (hereinafter referred to as the
"Contract") between Party A and MagneTek, Inc. of the United States of
America (hereinafter referred to as "Party B").
WHEREAS, in accordance with the Contract, Party A shall lease to the Company
the site and facilities to be used by the Company for its manufacturing
operations.
WHEREAS, this Agreement sets out the terms and conditions subject to which
Party A will lease to the Company the production site and office space (as
defined in Clause 1 of this Agreement).
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, Party A and the Company, intending to
be legally bound, hereby agree as follows:
CLAUSE 1. DEFINITIONS
All terms used in this Agreement, unless otherwise defined herein, shall have
the same meanings as set forth in the Contract. In addition to other terms
defined elsewhere in this Agreement, the following words and expressions
shall have the meanings given to them below:
1.1 "Effective Date" means the date on which this Agreement becomes effective
in accordance with Clause 10 of this Agreement.
2
1.2 "Large Workshop" means the new workshop of Party A located at 223 Gong Ye
Road, Fuzhou. Fujian, PRC as shown on Exhibit I attached hereto.
1.3 "Leased Office Space" means the office space to be constructed on the roof
of the Large Workshop, with an area of approximately 1461 square meters, as
shown on Exhibit I attached hereto, which is leased to the Company pursuant
to this Agreement.
1.4 "Open Grounds" means the common roadways and entrance used by both parties,
and shown on Exhibit I attached hereto.
1.5 "Leased Premises" means the Leased Workshop, Leased Office Space, and
parking as negotiated by the parties, and shown on Exhibit I attached
hereto.
1.6 "Leased Workshop" means the part of the Large Workshop, with an area of
approximately 8316 square meters, as shown on Exhibit I attached hereto,
which is leased to the Company pursuant to this Agreement.
1.7 "Attached Greenbelts" means the greenbelts with an area of 712 square
meters which are affiliated with the Leased Workshop and Leased Office
Space, as shown on Exhibit I attached hereto.
1.8 "Registration of Lease" means the registration and filing with the Fuzhou
Real Estate Administration Bureau in connection with the execution,
modifications, and termination of this Agreement in accordance with the
relevant laws and regulations of the PRC.
1.9 "Rent" means the rent payable by the Company to Party A for the lease of
the Leased Premises, as specified in Clause 5 of this Agreement.
1.10 "Commencement Date" means the date the Company formally accepts possession
of the Leased Premises as the tenant and Party A becomes the landlord and
relinquishes possession of the Leased Premises to the Company. Rent due to
Party A by the Company shall begin accruing as of the Commencement Date.
1.11 The table of contents and headings to clauses and exhibits are inserted for
convenience of reference only, and shall not be definitive in the
interpretation of this Agreement.
CLAUSE 2. LEASE OF PREMISES
2.1 Party A agrees to lease to the Company, and the Company agrees to lease
from Party A, the Leased Premises for a term as specified in Clause 4
hereof and at the
3
Rents specified in Clause 5 and subject to other provisions of this
Agreement. The location and area of the Leased Premises are as shown in
Exhibit I attached hereto.
CLAUSE 3. USES OF THE LEASED PREMISES
3.1 The Company shall use the Leased Premises for its business operations,
including any associated research, development, warehousing, logistics,
distribution, or other related uses.
3.2 The Company shall use the Open Grounds as it sees necessary for conducting
activities relating to the use of the Leased Premises. However, the Company
shall not construct any structures on the Open Grounds without the prior
written approval of Party A.
3.3 The Company and Party A shall have reasonable access and use of each
other's roadways, gates, facilities and Open Grounds at all times, and at
no cost to the Company or Party A. Such facilities shall be used for
access, egress, and movement of people, goods, production-related
machinery, and vehicles, and such reasonable access shall exclude parking
or storage. Specific guidelines for this access shall be agreed upon
between Party A and the Company.
3.4 In the event of emergency which threatens or may threaten people, property,
or equipment, the party needing assistance (the "Requesting Party") shall
have free access and use of any and all facilities and equipment of the
other party (the "Responding Party") and the Responding Party shall render
all reasonable assistance to the Requesting Party in responding to the
emergency. The Requesting Party shall promptly reimburse the Responding
Party for all of the Responding Party' s direct expenses for the facilities
and/or equipment so rendered. For purposes of this Clause 3.4 the
Requesting Party or the Responding Party may be either Party A or the
Company, as the case may be.
CLAUSE 4. TERM OF LEASE
4.1 Beginning from the Effective Date, the term of this Agreement is for a
period of 20 years, with termination provisions as described in Clause 11
hereof. In addition, provided that the Company is current in regard to rent
and other payments provided in this Agreement, the Company may, at its
option, renew this Agreement for up to six additional periods of five years
each, following the end of the initial term of this Agreement.
4
CLAUSE 5. PAYMENT OF RENT AND CHARGES
5.1 As herein defined, the Commencement Date of this Agreement shall be
Tuesday, October 1, 1996. Beginning from the Commencement Date, the Company
shall pay monthly Rent to Party A on or before the last day of each and
every calendar month (rent in arrears) at the monthly rates noted in the
following Rental Escalation Table:
---------------------------------------------
RENTAL ESCALATION TABLE
---------------------------------------------
(RMB/Sq Mtr/Month) 10/1/96 1/1/97 7/1/97 10/1/99
- ----------------------------------------------------------------------
Leased Workshop 7.50 11.25 15.00 18.00
- ----------------------------------------------------------------------
Leased Office Space 3.75 5.63 7.50 9.00
- ----------------------------------------------------------------------
The final rates noted in the Rental Escalation Table will then remain
unchanging through September 30, 2001. Rental rates for subsequent five
year periods, beyond September 30, 2001, will be re-negotiated, at that
time, between the parties to this Agreement and be based upon a combination
of market rates at that time and the mutual agreement of Party A and the
Company.
5.2 By March 31, 1996, the Company shall provide Party A with the drawings and
specifications for the Leased Office Space to be constructed upon the roof
of the Leased Workshop.
5.3 Subject to Clause 5.2, herein, Party A shall pay for the cost of
constructing the Leased Office Space. The finished Leased Office Space
provided by Party A shall include plumbing, electric outlets, windows,
interior and exterior walls and doors and painting of the interior and
exterior surfaces, all as agreed upon between the Parties. The Company will
bear the costs of finishing the flooring and installing any heating,
venting, and air conditioning (HVAC) system. With the exception of the HVAC
system, permanent elements of the Leased Office Space shall become part of
the Leased Premises. Providing the Company provides Party A with the
drawings and specifications, as specified in Clause 5.2 herein, Party A
hereby agrees to complete construction of the Leased Office Space no later
than September 30, 1996 and allow the Company and its representatives free
access to the Leased Office Space during construction for the completion of
any necessary modifications and installations by the Company.
5.4 In the event Party A has not completed the Leased Office Space
construction as agreed upon between the Company and Party A, by the date
noted in Clause 5.3 hereof, the Commencement Date for the Leased Office
Space noted in Clause 5.1 hereof shall be delayed until the first day of
the month following completion of the Leased Office Space as agreed upon
between the Company and Party A. All subsequent escalation periods for the
Leased Office Space shall be delayed the same amount of time as the
construction delay.
5
5.5 The Company shall pay for its actual water and sewer consumption. Party A
shall send an invoice to the Company by no later than the 15th day of the
month for the Company's water and sewer consumption for the previous
calendar month. On or before the last day of the month in which the invoice
is received by the Company, the Company shall reimburse Party A for the
actual charge rate charged by the Fuzhou Water Company, for the Company's
water and sewer consumption for the period. Maintenance and administration
of the water supply and sewer facilities utilized by the Company will be
the responsibility of the Company and the Company shall bear all the costs
related thereto. In addition, the Company shall share the costs for the
administration and maintenance of the water supply and sewer facilities
commonly utilized by the Company and Party A. Detailed agreement in
connection with such share of costs will be agreed upon between the Company
and Party A.
5.6 The Company shall pay for its actual electricity consumption. Party A shall
send an invoice to the Company by no later than the 15th of the month for
the Company's electricity consumption for the previous calendar month. On
or before the last day of the month in which the invoice is received by the
Company, the Company shall reimburse Party A for the actual charge rate
charged by the Fuzhou Electricity Bureau, for the Company's electricity
consumption for the period. Maintenance, repair, administration (including
depreciation) and overhault of the electricity supply facilities provided
by Party A pursuant to Clause 5.7 and utilized by the Company will be the
responsibility of the Company and the Company shall bear all the costs
related thereto.
5.7 Party A agrees to provide the Company with a set of electricity
transmission facilities available for the electricity supply of l000KVA.
The Company, with the assistance from Party A, will apply to the Fuzhou
Electricity Bureau for this 1000KVA electricity supply provided by Party A,
and Party A will pay all costs associated with approvals_exended_ by the
Fuzhou Electricity Bureau. Ownership of this 1000KVA electricity supply
will remain with Party A. In the event that the Company requires any
electricity transmission facilities available for the electricity supply of
over 1000KVA, it shall apply to the Fuzhou Electricity Bureau for such
extra requirement at its own cost. Party A may provide assistance.
ownership of any electricity supply facilities provided by the company will
remain with the Company.
5.8 All the charges payable to the Fuzhou Real Estate Administration Bureau for
the registration of the lease shall be equally borne by the Company and
Party A. Such charges shall be strictly limited to the handling fee for
registration of this Agreement.
5.9 Subject to the provisions of Clause 7.5 hereof, taxes, charges and fees
listed as follows shall be paid by Party A:
6
(a) Fee for the use of the land occupied by the Leased Premises;
(b) Real estate and rental income tax for the Leased Premises;
(c) All maintenance and cleaning expenses for the Open Grounds;
(d) All electricity expenses for the lighting of the Open Grounds;
(e) All landscape expenses for the maintenance of the Attached Greenbelts;
(f) Any other taxes, charges, or fees required or imposed by the local,
municipal, provincial, or national government, which apply to the
Leased Premises.
5.10 Telecommunications and Datalines
(a) Party A and the Company shall mutually agree on necessary and
appropriate interplant telecommunication facilities and
infrastructure. Party A, at its sole expense, shall promptly install
such facilities and infrastructure. Party A and the Company agree to
discuss annually the quantity and quality of such telecommunications
facilities and infrastructure, and Party A will provide reasonable
upgrades, at its cost, as mutually agreed. If agreement cannot be
reached, the Company reserves the right to install facilities and
infrastructure it deems necessary, which facilities and infrastructure
may then, at the option of the Company, be designated either as the
sole property of the Company or as part of the Leased Premises.
(b) Party A will install, at its sole cost, telecommunication and data
lines throughout the Leased Premises, as agreed upon between the
Company and Party A.
(c) The Company will install, at its sole cost, telephone systems,
facsimile machines, computers, and other similar items that serve as
tertiary elements of the telecommunication system. All such items
shall remain the sole property of the Company.
5.11 All payments in this Lease shall be made in RMB.
CLAUSE 6. SUBLEASE AND ASSIGNMENT
6.1 The Company shall not sublease all or any part of the Leased Premises,
except to subsidiaries or affiliates of the Company, without the consent of
Party A, which consent shall not be unreasonably withheld or delayed. If
Party A has not responded within thirty (30) days following a request by
the Company, the request will be regarded as granted and the Company may
proceed with the sublease.
CLAUSE 7. MAINTENANCE AND REPAIR
7.1 Party A warrants that the Leased Premises are suitable for the leased
purposes defined in Clause 3 herein. As such, Party A agrees to undertake
any necessary
7
repairs to maintain the Leased Premises which are the property of Party A
in a safe, habitable. and fully operable condition. Said repairs include,
but are not limited to, foundations, exterior walls, windows, doors, roofs,
plumbing, electrical systems, drainage systems, floors, and all other
physical conditions other than routine maintenance. Because such repair
may be crucial to the Company's operation, and in order to protect the
Company's interest, the Company hereby retains the right to perform such
repairs itself if Party A has not performed such repairs within a period
of ten (10) calendar days following notice to Party A by the Company. The
Company shall deduct the cost of such repairs from the rent otherwise owed
to Party A at the next rental month. In the event of an emergency, as
determined by the General Manager or Deputy General Manager of the Company,
the Company may effect such repairs, and deduct the cost from rent
otherwise due to Party A, if Party A has not executed such repairs within
24 hours following written notification of the emergency situation. If the
cost of any such repairs paid by the Company exceeds the rent amount due to
Party A for the next 12 month period, Party A shall reimburse the Company
for such additional expenses no later than the end of 12 months following
the expenditure by the Company. Notwithstanding the above, if repairs are
necessitated by the negligence of the Company, the Company is solely
responsible for the direct costs of needed repairs.
7.2 Routine maintenance (but not repair or replacement) of the Leased Premises
is the responsibility of the Company, and the Company agrees to maintain
the Leased Premises in a clean and orderly condition.
7.3 Any repairs or modifications necessitated by changes in the law, building
codes, national, provincial, or local requirements, or any other similar
reasons shall be solely the responsibility of Party A. Party A shall take
action to promptly comply with all such new or modified requirements. If
Party A does not so comply, the Company reserves the right, but not the
obligation, to make such changes or modifications, and to deduct the cost
thereof from the rent otherwise owed to Party A. If the cost of any such
changes or modifications paid by the Company exceeds the rent amount due to
Party A for the next 12 month period, Party A shall reimburse the Company
for such additional expenses no later than the end of 12 months following
the expenditure by the Company.
7.4 The Company will cooperate in all reasonable ways with Party A in effecting
the provisions of this Clause.
7.5 The Company agrees to share the costs of maintaining the open Grounds and
Attached Greenbelts (referred to in 5.9(c) through 5.9(e)). As such, within
thirty days of receipt of notice by Party A, the Company shall reimburse
Party A for fifty percent of all invoiced expenses Party A pays for the
maintenance of the Open Grounds and Greenbelt Areas, providing the invoiced
amount does not exceed 10000 RMB per month. If the proposed maintenance or
expense is to
8
exceed 10000 RMB per month, both Party A and the Company must agree on the
maintenance or expense prior to incurrence thereof by Party A.
CLAUSE 8. REPRESENTATIONS, WARRANTIES, AND UNDERTAKINGS
8.1 Party A hereby covenants, represents and warrants to and undertakes with
the Company as follows:
(a) Party A is the owner of the Leased Premises and has the lawful right
to Lease the Leased Premises to the Company.
(b) The Leased Premises are suitable for the Company to carry out its
business activities as specified in the Contract and Clause 3 of this
Agreement.
(c) The Company is entitled to use the Leased Premises for carrying out
its business activities as specified in the Contract.
(d) The land use rights leased by Party A were originally injected by the
State for its subscription of shares of Party A, for which Party A is
not required to pay land use premiums, and which may be used by the
Company without any further payments to Fuzhou Real Estate
Administration Bureau or any other relevant land authorities in the
PRC, except for the charges for the registration of the lease as set
forth in Clause 5.8 of this Agreement. The Company shall not assume
any liability or obligation in connection with the lease of the land
use right from Party A, including, without limitation, the obligation
to pay any premium or fees to the Fuzhou Real Estate Administration
Bureau for the land use rights. Party A hereby indemnifies and holds
the Company and Party B harmless for any and all claims or demands for
payment of any premium or fees by any land authority.
(e) Party A represents and warrants to the Company that the Leased
Premises are environmentally acceptable, contamination free, and are
in full compliance with the relevant government authorities for land
administration, environmental protection, water and soil conservation
construction standards, fire prevention, and worker safety. Party A
hereby indemnifies and holds the Company and Party B harmless for any
and all claims, demands, liabilities, damages, costs and expenses that
arise out of, or in connection with, the lease and use of or
activities on the Leased Premises, or failure to meet the
representation and warranty or compliance standards set forth in this
provision. Party A further represents and warrants that to the best
of its knowledge no hazardous or toxic substances, contaminants, or
materials are or have been spilled, deposited, disposed, accumulated,
or released in, on, or under the Leased Premises. Further, Party A has
not received any notification from any party, and has no other
information, which indicates that there is environmental contamination
at the Leased Premises. Party A agrees to indemnify, defend and hold
harmless the liabilities or damages relating to the presence or
release, at, from, or to the Leased Premises, of any hazardous
substances or other environmental contamination other than any
contaminants that Party A demonstrates were
9
used and initially released at the Leased Premises by the Company.
The obligations of Party A under this indemnity shall not be affected
by any assignment of this Agreement or sale of the Leased Premises,
and shall survive the expiration or earlier termination of this
Agreement, unless Party A demonstrates that specific contamination
was caused by the Company, in which event the Company shall bear
responsibility for the specific contamination and indemnify Party A
regarding the specific contamination.
(f) After Party A has finalized the registration of ownership of the
Leased Premises, Party A shall, within 30 calendar days, together with
the Company, register the lease of the Leased Premises with Fuzhou
Real Estate Administration Bureau.
(g) Party A shall pay the fees, taxes and charges as set forth in Clause
5.9 herein.
(h) If Party A wishes to transfer, sell or lease all or any portion of the
land use rights or facilities that are in the 223 Gong Ye Road
industrial complex but are outside of the Leased Premises, during the
term of this Agreement, Party A shall first notify the Company of its
intention to do so sixty (60) calendar days prior to Party A entering
into any transfer, sale, or lease agreement of its interest in the
said portion of the land use rights or facilities. If the Company
determines that the offered transfer, sale or lease of the said
premises may be harmful to the Company's operations, the Company
reserves the right, at its sole discretion, for a period of 180 days
following the transfer, sale, or lease of the said land use rights or
facilities to declare this Agreement null and void and effect early
termination of this Agreement following the terms of Clause 12 hereof.
(i) If Party A wishes to sell or transfer its interest in the Leased
Premises, during the term of this Agreement, Party A shall first
provide written notice to the Company of its intention to do so at
least sixty (60) calendar days prior to said offer to sell or transfer
its interest and shall grant to the Company a right of first refusal
to purchase the Leased Premises at essentially the same price and
terms to be offered. The Company shall have sixty (60) calendar days
to notify Party A of its acceptance of the offer to purchase the
Leased Premises. Only in the event that the Company declines to
purchase the Leased Premises, upon the terms and during the time frame
specified above, will Party A be entitled to sell or transfer its
interest in the Leased Premises to a third party, provided that the
price and other conditions of sale are not more favorable to such
third party than those offered to the Company and provided further
that such third party shall assume all the rights and obligations of
Party A under this Agreement. Because the operation and success of the
Company depend to a large extent upon the performance of Party A,
the Company is entitled to review and comment upon the viability of
the proposed buyer, and of its ability to meet the obligations of this
Agreement. However, Party A is not to be bound by the review and
comments of the Company.
10
8.2 The Company hereby covenants to Party A as follows:
(a) The Company shall rent and use the Leased Premises in accordance with
the provisions of this Agreement and for the purpose of the Company as
set forth in the Contract;
(b) The Company shall pay Rent to Party A in accordance with Clause 5 of
this Agreement;
(c) Without prejudice to Clause 5.2 hereof, the Company shall obtain Party
A' s written consent, which consent shall not be unreasonably withheld
or delayed, for any major renovation or refurbishment of the Leased
Premises. "Major" in this section means costing more than US $75,000.
If Party A has not replied within 30 days following the Company's
submission of its request, the request may be deemed granted by Party
A, and the Company may proceed as it sees fit. Notwithstanding the
above, in its renovation or refurbishment of the Leased Premises the
Company shall not change or in any way endanger the structure of the
Leased Premises and shall not change the purposes of the Leased
Premises;
(d) The Company shall not intentionally use its machinery and equipment in
a manner which will intentionally damage the utilities affiliated to
the Leased Premises.
(e) During the term of this Agreement the production and business
activities of the Company shall comply with relevant and promulgated
laws and regulations of Fuzhou City and the PRC.
8.3 Each Party hereto acknowledges and agrees that it shall be responsible for
dealing with all actions, claims, suits and demands relating to
environmental pollution (including ground, water and air pollution) caused
at any time by that party in the Leased Premises regardless of when such
actions, claims, suits or demands are made or brought, and further
regardless of when the cause giving rise to any of such actions, claims,
suits or demands arose. Under no circumstances will one party be
responsible for any environmental pollution or breach of PRC laws and
regulations relating to environmental pollution caused by the other party,
or by third parties, in the Leased Premises. Each party hereto further
agrees to indemnify the other party hereto against all losses, liabilities,
claims, costs and expenses which may be suffered by the other party as a
direct or indirect result of any pollution of the environment (including
ground, water and air pollution) caused by the first mentioned party in the
Leased Premises at any time. Notwithstanding the above, the Company's
liability is limited to the requirements in effect only during the
Company's tenancy, and the Company's liability in any respect shall
expire upon cessation of this Agreement or cessation of the Company's
occupancy of the Leased Premises.
11
CLAUSE 9. INSURANCE
9.1 Throughout the entire term of this Agreement, the Company shall have in
effect insurance for the Leased Premises and for its own property and
assets installed or stored at the Leased Premises and pay the relevant
premiums for such insurance.
9.2 Throughout the entire term of this Agreement, Party A shall have in effect
liability insurance for the Leased Premises, of a type and in a quantity
satisfactory to the Company, for itself and its invitees, agents, and
activities.
CLAUSE 10. EFFECTIVENESS
10.1 This Agreement shall become effective on the date when it is signed and
dated by the representatives of Party A and the Company.
10.2 Party A shall deliver to the Company a copy of the certificate of lease
issued by the Fuzhou Real Estate Administration Bureau as soon as such
certificate is issued.
CLAUSE 11. TERMINATION OF LEASE
11.1 Either party to this Agreement may, by serving a written notice on the
other party, terminate this Agreement if any of the following events
happens:
(a) The other party ("Defaulting Party") fails to perform, observe, or
comply with any of the substantive terms and conditions in this
Agreement and the first mentioned party serves on the Defaulting Party
a written notice of default and after 60 days from the date of such
written notice the Defaulting Party has not rectified its non-
performance, non-observance or non-compliance to the satisfaction of
the first mentioned party or is not otherwise pursuing in good faith
resolution of the dispute.
(b) The other party becomes bankrupt or insolvent, or is dissolved or
liquidated.
(c) Should either of the parties be prevented from performing under this
Agreement by force majeure, including earthquake, typhoon, flood,
fire, war, civil unrest, labor disturbance, strikes, disruption of
transportation, disruption of communication systems or other
unforeseen events, and their happening and consequences are
unavoidable and beyond the control of the prevented party, such party
shall so notify the other party as soon as possible by the best means
reasonably available, and within 15 days thereafter provide detailed
information of the events. If requested by the other party, the
prevented party shall also provide verified documentary evidence
explaining the reason of its inability to execute, or of the delay in
execution of its performance. Both parties shall, through
consultations, decide whether
12
to terminate this Agreement, or to waive partial performance of the
Agreement, or to delay the execution of performance of the Agreement
according to the effects of the events on the performance of the
Agreement.
(d) Upon occurrence of the early termination of the Contract, as defined
in Chapter XIV of the Contract.
11.2 If either party serves a written notice on the other party informing the
other party of its intention to terminate this Agreement as a result of the
happening of any of the events described in Clause 11.1 above, the Company
and Party A shall, as soon as practicable, enter into friendly discussions
in order to agree on an equitable and satisfactory solution. If no such
solution is agreed within a period of 60 days from the date of the written
notice served pursuant to Clause 11.1, then this Agreement shall be
terminated forthwith, but without prejudice to the rights and obligations
of the parties which have accrued prior to such termination. Except as
provided in Clause 8.1(e) hereof, the Company's environmental obligations
shall be terminated.
11.3 The Company may terminate this Agreement at any time after two years
following the Effective Date of this Agreement by providing 180 days
written notice to Party A. If the Company so terminates this Agreement
within the first three years from the Effective Date, the Company agrees to
continue to pay to Party A the rent effective as of the date of such
termination for a period of six months following the actual date of
termination. If the Company terminates this Agreement in the period from
the end of the third year of the Effective Date through the end of the
fifth year after the Effective Date, the Company agrees to continue to pay
to Party A the rent effective as of the date of termination for a period of
three months following the actual termination date. If the Company elects
to terminate this Agreement following the end of the fifth year from the
Effective Date, there will be no further payments to Party A following the
actual termination date.
CLAUSE 12. EFFECT OF EXPIRATION OR TERMINATION
12.1 Upon the expiration of the term of this Agreement or upon early termination
of this Agreement, the Company shall deliver vacant possession of the
Leased Premises to Party A and shall remove from the Leased Premises all
moveable machinery, equipment, materials, goods and facilities belonging to
the Company, unless the Company agrees to sell the same to Party A at a
price to be agreed, based upon independent valuation and/or negotiation.
The Leased Premises shall be returned to Party A in the same condition as
at the Commencement Date, except for reasonable wear and tear.
12.2 The expiration of this Agreement at the end of its term, or the termination
of this Agreement by either party for whatever reason, shall not prejudice
any of the
13
preexisting rights and obligations of the Company and Party A hereunder.
In such event, the Company's environmental obligations shall be
terminated, except as provided in Clause 8.1 (e) hereof.
12.3 Without prejudice to each party's right to terminate this Agreement in
accordance with Clause 11.1 hereof, each party shall also indemnify the
other party against losses, damages, costs and liabilities which the other
party may suffer as a direct consequence of any breach of such party's
representations, warranties and undertakings under Clause 8 hereof, or as a
direct consequence of the failure of such party to duly perform, observe or
comply with any of the terms and conditions of this Agreement.
CLAUSE 13. APPLICABLE LAW
13.1 The formation of this Agreement, its validity, interpretation and
performance, and settlement of the disputes shall be governed by the
relevant promulgated and publicly available laws and regulations of the
PRC.
CLAUSE 14. SETTLEMENT OF DISPUTES
14.1 The parties shall initially attempt to settle any disputes arising from the
execution of, or in connection with, this Agreement, through friendly
consultations between the parties.
14.2 Any disputes arising from this Agreement or in connection herewith which
have not been resolved within sixty days from the date of first issuance of
a letter by either party indicating the nature of the disputed matter, and
in accordance with Clause 14.1 herein, shall be settled through the
Arbitration Commission based in the PRC cities of Beijing, Shanghai, or
Fuzhou at the choice of the party initiating the arbitration, in accordance
with and bound by the explicit provisions of this Agreement as well as the
relevant laws and regulations of the PRC.
14.3 During any arbitration proceeding, this Agreement shall be performed
continuously by both parties except for the matters in dispute.
CLAUSE 15. QUIET POSSESSION
15.1 So long as the Company pays the rent and abides by the other provisions of
this Agreement, the Company shall enjoy quiet possession of the Leased
Premises.
CLAUSE 16. NOTICES
16.1 All notices shall be sent by written notice or facsimile transmission.
Notices and correspondence between Party A and the Company shall be sent to
the appropriate address of each party specified below.
14
if to Party A: Fujian Fufa Company Limited
Attn.: General Manager
223 Gong Ye Road
Fuzhou, Fujian 350004
PRC
Fax No: 0591-3713706
if to the Company: MagneTek Fuzhou Generator Company, Limited
Attn.: General Manager
223 Gong Ye Road
Fuzhou, Fujian 350004
PRC
Fax No: 0591-3713706
16.2 Each party may, by written notice or facsimile notification to the other
party, change its address for the purposes of correspondence at any time.
16.3 Every notice or correspondence shall be deemed to have been received, in
the case of facsimile transmission, at the time of transmission and, in the
case of a written notice, when delivered personally or 5 days after the
same has been put into the post.
CLAUSE 17. LANGUAGES
17.1 This Agreement is written in an English version and in a Chinese version.
Both language versions are of equal validity and effect.
Executed in Fuzhou, Fujian, PRC by the legal or duly authorized representatives
of Party A and the Company on this Monday, March 18, 1996.
PARTY A THE COMPANY
Fujian Fufa Company Limited MagneTek Fuzhou Generator Company Limited
/s/ Chan Guo Xiang /s/ Gary Wolfe
- ------------------------- -----------------------------
Chen Guo Xiang Gary Wolfe
Legal Representative Legal Representative
15