EXHIBIT 10.35
 
Contract No.: (2005) Guan Chang Zi No. 015

Factory Lease Agreement

Party A (Lessor): Shenzhen Wanyinglong Investment Co., Ltd.
Party B (Lessee): Winner Industries (Shenzhen) Co., Ltd.

Party A and Party B have reached the following agreement concerning the lease of
the factory in Silicon Valley Power & Automobile Electronic Pioneer Park through
friendly negotiation:

I.
Location of Factory

1.
Party A agrees to lease the factory (“Factory”) located at 3nd and 4th floor,
Building A6, Silicon Valley Power & Automobile Electronic Pioneer Park
(“Industrial Park”), Zhangqi Road, Guanlan, Bao’an to Party B for production and
management purpose.

II.
Area of Factory

2.
The constructed area of the Factory is 3176 square meters.

III.
Lease Term and Delivery Day

3.
The lease term is from August 12th 2005 to August 11th 2008.

4.
The delivery date for the Factory is August 12th 2005.

IV.
Rental and Increase Rate

5.
The rental is calculated according to the constructed area and is collectable
from September 11th 2005.

6.
Rental and Increase Rate

6.1
The rental is RMB 12.8 yuan/m2 per month. The total rental is RMB 40,652.8 yuan
per month. Party B shall pay the rental for the first month upon signing this
Agreement.

6.2
The monthly rental will be increased by 5% per year from August 12th 2006.

6.3
The rental shall be paid monthly before the 5th day of each month.

V.
Deposit

7.
Party B shall pay the deposit equivalent to rental for two months which is RMB
81,305.6 yuan and deposit for electricity and water fee which is RMB 10,000 yuan
upon signing this Agreement. The deposit will be returned to Party A upon
termination of this Agreement without interest.

 
 
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VI.
Realty Management and Realty Management Services Fee

8.
The Factory will be managed by Party A or the realty management company
appointed by Party A. Party B shall pay the realty management services fee at
RMB 1.5 yuan/m2 per month. The realty service covers: maintenance and repair of
the property and facilities, cleaning, fire prevention, garbage collection,
security etc.

9.
Party B shall pay the service fee for two months which is RMB 9,528 yuan as
service fee deposit and the service fee for the first month of RMB 4,764 yuan.
The service fee deposit will be returned to Party B upon termination of this
Agreement without interest.

10.
The service fee shall be paid by Party B monthly at the 5th day of each month,
together with the rental, electricity and water fee etc.

VII.
Other Fees

11.
Party B shall pay the electricity and water fee in time.

12.
Party B shall bear the cost for decoration of the Factory, including the
connection and use fee for electricity, water, fire prevention facility,
communication, elevator, air conditioning, sewage etc.

13.
Party B shall pay the electricity and water fee in accordance with the municipal
standard.

 

14.
Party B shall pay RMB 2000 yuan per month for the use of the elevator equipped
by Party A, which is collectable from August 12th 2005 and together with the
rental.

 

VIII.
Delivery of Factory

15.
Party A shall connect the Factory with the 200 KVA transformer, water and fire
prevention facility. Party B shall be responsible for the internal electricity,
water, fire prevention facility, communication, elevator, air conditioning,
sewage of the Factory.

16.
The rental-free decoration period is 30 days from August 12th 2005 to September
10th 2005.

17.
Party B shall pay the realty management service fee, electricity and water fee
for the rental-free decoration period.

18.
Party B shall submit the blueprint and other materials for the decoration to
Party A 5 days before the decoration work. The written approval by Party A and
necessary authorities shall be obtained for the decoration.

19.
The written approval by Party A and the realty management company shall be
obtained for the decoration affecting the outside billboard or the connection
port of the electricity, water and other facilities of the Factory.

20.
Party A, the realty management company and necessary authority shall examine the
decoration for acceptance after completion of the decoration work.

 
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IX.
Rights and Obligations of Party A

21.
Party A shall deliver the Factory to Party B in accordance with this Agreement
and shall be responsible for the maintenance of the main structure of the
Factory.

22.
Party A is entitled to rename the Industrial Park at any time without any
compensation to Party B but Party A shall inform Party B in advance.

23.
Party A or the realty management company is in charge of the administration of
the Industrial Park.

24.
Party A or the realty management company is entitled to enter into the Factory
to supervise the use of the Factory by Party B provided prior written
notification is served and no hindrance is caused to the normal operation of
Party B.

25.
Party A is entitled to introduce other potential lessee to inspect the Factory
within 3 months before the expiry of the lease provided prior notification is
served.

26.
Party A shall handle the complaint by Party B concerning the realty services.

27.
Party A shall not interfere with the normal and lawful operation by Party B.

28.
Party A is entitled to add new pipe or other facilities to the Factory provided
a 7 day prior notification is served. In case that such newly-added facility has
negative impact on Party B, Party B’s consent shall be obtained.

29.
In case of transfer of ownership of the Factory, Party A shall notify Party B in
advance. Party A shall be responsible for any negative impact on Party B due to
such transfer.

X.
Rights and Obligations of Party B

30.
Party B has the full right to use the Factory in accordance with this Agreement,
Realty Management Service Agreement and Rules of the Industrial Park.

31.
Party B shall pay special attention to fire prevention work and shall bear the
relevant responsibility for negligence.

32.
Party B shall use the Factory and accessory facilities properly and shall repair
any damage caused by improper use.

33.
Party B shall not open its own refectory in the Industrial Park. Party B may use
the refectory service provided by Party A or other company appointed by Party A.

34.
The industrial waste shall be collected / purchased by the company appointed by
Party A.

35.
Party B shall apply in writing for renew of the lease 3 months before the expiry
of the lease term. Party A shall give written response to Party B’s application
within 15 days. The new lease agreement shall be signed within 2 months before
the expiry of this Agreement.

36.
Party B shall not transfer, donate, sublease or mortgage the use right of the
Factory without the written approval by Party A otherwise Party A is entitled to
terminate this Agreement or double the rental.

37.
Party B shall not store the hazardous materials in the Factory.

38.
Party B shall purchase the insurance for the property within the Factory at its
own cost.

 
 
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XI.
Responsibilities of Party A

39.
Party A undertakes it has ownership of and the right to lease the Factory and
deliver the Factory in time.

40.
Party A shall repair any damage to the main structure of the Factory due to
natural reasons or Party A’s fault. If Party B is forced to cease its operation
during the repair period, Party A shall not charge the rental and property
service fee.

41.
Party A shall assist Party B in obtaining all necessary license and permit.

42.
Party B has the priority to lease the Factory upon expiry of lease term under
the same conditions.

XII.
Responsibilities of Party B

43.
Party B shall provide Party A with all lawful materials for its production and
operation upon signing of this Agreement. Party B shall obtain all other
necessary documentations concerning the fire prevention, environment protection
and sanitary requirement within 1 year.

44.
All disputes arising from the business of Party B shall be settled by Party B.
Party B shall not mortgage or pledge the Factory.

45.
Party B shall be responsible for the decoration to the Factory at its own cost
and shall be responsible for the relevant fire prevention and environment
protection issues.

46.
Party B shall report any damages to the Factory and its facilities to the realty
management company and Party A. Party B shall be responsible for any loss due to
improper repair or usage or delay in report.

47.
Party B may lease the dormitory from Party A according to its own need. The
expiry date of the lease of the dormitory shall be the same of the expiry date
of the lease under this Agreement.

XIII.
Breach of Contract

48.
In case of termination of this Agreement by Party A in accordance with Article
55, Party B shall be liable for breach of contract and shall pay the
compensation equivalent to the deposit and compensate for all other losses of
Party A. All decorations shall belong to Party A under such circumstances.

49.
Party B shall pay a late fee equivalent to 0.5% of the overdue rental or other
payables each day.

50.
In case of breach of contract by Party B, Party A may authorize the realty
management company to impose punishments upon Party B such as demand to correct
its action, claim for compensation etc. In case that Party B fails to pay the
rental until 15th day of the month, Party A is entitled to cut out all services
such as electricity and water etc.

51.
In case that Party B intends to terminate this Agreement before expiry and fails
to give 3-month prior notification to Party A, the deposit will not be returned.

XIV.
Force Majeure

52.
In case that the Factory cannot be delivered to Party B due to force majeure,
the delivery day will be postponed accordingly. In case of damage or loss of the
Factory due to force majeure, each Party shall be responsible for its own loss
and this Agreement will not be extended.

XV.
Amendment and Termination

53.
Any amendment, supplement or revise to this Agreement shall be agreed by both
Parties in writing.

54.
This Agreement may be terminated by both Parties. In case of damage or loss of
the Factory which cannot be used for over 6 months due to force majeure, any
Party is entitled to terminate this Agreement. Party A shall return the deposit
(free of interest) to Party B and neither Party shall pay any compensation under
such circumstance.

55.
This Agreement may be terminated through friendly consultation by both Parties
provided a 3-month prior written notification shall be served to the other
Party.

 
 
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56.
Party A is entitled to terminate this Agreement in case that:

56.1
Party B fails to accept the Factory upon delivery;

56.2
Party B fails to pay the deposit upon delivery;

56.3
Party B moves out of the Factory without proper procedures;

56.4
Party B transfers, donates, subleases or mortgages the usage right of the
Factory without the written approval by Party A;

56.5
Party B violates the Property Management Rules, fire prevention rules or
national laws and regulations and refuses to correct.

56.6
Party B delays the payment of rental and fails to pay the rental within the
period specified by Party A, or fails to pay the rental and other fees until
15th day of the month.

56.7
Party B stores hazardous materials in the Factory;

56.8
Party B damages the main structure of the Factory.

Party A shall give one month prior notification to Party B in case of
termination of this Agreement in accordance with this clause.

57.
Party B is entitled to terminate this Agreement in case that:

57.1
Party A fails to deliver the Factory 3 months after the agreed delivery date
without justifiable reasons.

57.2
The Factory cannot be used for over 3 months due to damages caused by natural
reasons or Party A’s fault and Party A refuses to repair.

Party B shall give one month prior notification to Party A in case of
termination of this Agreement in accordance with this clause.

57.
Both Parties shall sign the written agreement to terminate this Agreement, or
the Party intends to terminate this Agreement unilaterally shall notify the
other Party in writing.

XVI.
Termination

59.
This Agreement shall be terminated once the lease term expires or it is
terminated by the Party.

60.
Party B shall clean the Factory and ask Party A to examine and accept the
Factory upon the termination of this Agreement.

61.
Party A may dispose of the property of Party B which is left in the Factory
after termination of the lease term if Party B fails to move out of the Factory
in time.

XVII.
Dispute Settlement

62.
Any dispute arising from this Agreement shall be submitted to Shenzhen
Arbitration Commission for arbitration. The arbitration award is final.

XVIII.
Notification

63.
Notification under this Agreement shall be done in writing.

64.
Any change of address shall be notified to the other Party within 10 days.

65.
The notification sent by Party A to Party B can also be carried out by means of
notice put up at the place of Factory.

XIX.
Miscellaneous

66.
Both Parties shall not disclose this Agreement to the public.

67.
The justifiable reasons for delay in delivery of Factory by Party A include
force majeure, delay in provision of accessory equipments, governmental act etc.

68.
The attachments and supplementary agreements are integral parts to this
Agreement.

69.
This Agreement becomes effective once it is signed by both Parties. This
Agreement has 2 originals and each Party shall retain 1 original.

 
Party A (official seal): Shenzhen Wanyinglong Investment Co., Ltd.
Legal Representative (Authorized Representative): Xiaolu Liang
August 12th 2005
 
Party B (official seal): Winner Industries (Shenzhen) Co., Ltd.
Legal Representative: Jianquan Li

               
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