Exhibit 10.3
Third Floor of the Accommodation Building
Lease Agreement
This Third Floor of the Accommodation Building Lease Agreement (the “Lease
Agreement”) is entered into as of April 12, 2010 (“Effective Date”) in the city
of Shanghai, by and between SHANGHAI KAI HONG TECHNOLOGY CO., LTD. (hereinafter
referred to as “DSH”) with its registered office at No.1 Lane 18 San Zhuang
Road, Songjiang Export Processing Zone, Shanghai, P.R.China and SHANGHAI DING
HONG ELECTRONIC CO., LTD. (hereinafter referred to as “Ding Hong”) with its
registered office at No.999 Chenchun Road, Xinqiao Town, Songjiang, Shanghai,
P.R.China.
DSH and Ding Hong are collectively referred to as the “Parties” and individually
as a “Party”.
WHEREAS,
The Parties agree on the lease of the third floor of the Accommodation Building
(as defined below). Ding Hong represents that it is the lawful owner of the
Accommodation Building.
1. Definitions
Unless otherwise defined in this Lease Agreement, the terms used herein shall
have the following meanings:

1.1  
“Accommodation Building” shall mean a five-story dormitory building located on
the lot 375 of Song Jiang, Shanghai.
  1.2  
“Lease Area A” shall mean those ten (10) rooms, a recreational room and a
laundry room on the third floor of the Accommodation Building with a total area
of 668 square meters.
  1.3  
“Lease Area B” shall mean those other ten (10) rooms, a recreational room and a
laundry room on the third floor of the Accommodation Building with a total area
of 668 square meters.
  1.4  
“Lease Period” shall mean that based on the terms of this Lease Agreement, the
lease period in which DSH has the right to use Lease Area A and Lease Area B,
and Ding Hong is entitled to receive rents from DSH for DSH’s use of Lease Area
A and Lease Area B.
  1.5  
“Third Floor” shall mean the third floor of the Accommodation Building of both
Lease Area A and Lease Area B, which include twenty (20) rooms, two recreational
rooms and two laundry rooms with a total area of 1,336 square meters. A floor
layout of the Third Floor is attached with this Lease Agreement as Exhibit A.

2. The Facilities of the Accommodation Building

2.1  
Third Floor of the Accommodation Building shall be delivered to DSH in full
compliance with the requirements of Exhibit B of the Lease Agreement for
building repair, decoration and facilities maintenance requirements. Ding Hong
agrees that the

 

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building repair cost, decoration cost and the facilities maintenance cost for
the Third Floor of the Accommodation Building shall be paid at Ding Hong’s own
expenses.
  2.2  
Ding Hong promises that the construction and building quality of the
Accommodation Building shall be in compliance with all the relevant quality
standards. Ding Hong shall obtain from all necessary government authority
checked and accepted inspection certificates. Ding Hong guarantees the quality
of the facilities of the Accommodation Building and the quality of the
equipments in each room. Ding Hong further guarantees the quality of the
materials used in making the facilities in the Accommodation Building shall meet
DSH’s and relevant inspection’s requirements.

3. Lease Term

3.1  
For Lease Area A, the Parties agree that the Lease Period shall be 5 (five)
years, commencing on January 25, 2010 until January 24, 2015; for Lease Area B,
the Parties agree that the Lease Period shall be from March 25, 2010 until
January 24, 2015.
  3.2  
The Parties agree that the Lease Periods for Lease Area A and Lease Area B shall
be automatically renewed unless DSH gives prior written notice of termination
not less than thirty (30) days before the expiration of each Lease Period for
either Lease Area A or Lease Area B, but the Lease Period for both Lease Area A
and Lease Area B must be renegotiated and adjust accordingly. During the Lease
Period or any renewal period, Ding Hong shall not terminate this Lease Agreement
without DSH’s written approval. For the renewed lease period, the lease price
per square meter for the Third Floor as set forth in Article 4 of the Lease
Agreement shall be adjusted on the basis of the market price at the time of
renewal and after consultation between the Parties.
  3.3  
If during the Lease Period or the renewed lease period, Ding Hong receives from
a third party a bona fide, legally binding offer to lease the portion of the
Third Floor not already leased by DSH, Ding Hong shall notify DSH of this fact.
The notice shall specify all the terms of the bona fide third party offer. DSH
shall then have thirty (30) days to lease that portion of the Third Floor
specified in the third party’s bona fide offer for the rent and related details
set forth in this Lease Agreement. Ding Hong shall not lease any portion of the
Third Floor to any third party until the thirty (30) days has expired without
DSH exercising its right of first refusal. Any other terms not specified in this
Lease Agreement regarding the Third Floor, both Parties shall negotiate and sign
a supplemental agreement for these unspecified terms. Such signed supplemental
agreement shall constitute a part of the entire Lease Agreement and shall have
the same effectiveness as the entire Lease Agreement.

4. Lease Price

4.1  
For the Third Floor, the Parties agree that the monthly lease price for the
Third Floor shall be Renminbi (“RMB”) 29.80 per square meter. Lease Area A’s
monthly lease shall be RMB 19906.40, and Lease Area B’s monthly lease shall also
be RMB 19906.40.

 

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5. Security Deposit

5.1  
DSH shall pay Ding Hong a security deposit amount of RMB 39,812.80 within thirty
(30) days of the Effective Date of the Lease Agreement.

6. Method of Payment

6.1  
For the Third Floor, DSH shall pay the Rental in RMB to the RMB bank account as
designated by Ding Hong before the first day of every month.

7. Termination of the Lease Agreement

7.1  
If either Party terminates the Lease Agreement prior to the expiration of the
Lease Periods without the consent from the other Party, the Party that
terminates the Lease Agreement shall pay damages to the other Party to
compensate for such Party’s actual loss. The amount of damages shall include,
but not be limited to, the reasonable profits, out-of-pocket costs, legal
service fees, Court fees, arbitration fees, accounting fees and removal or
relocation fees.

8. Insurance and Repair Costs

8.1  
During the term of the Lease Agreement, Ding Hong shall purchase and maintain
insurance coverage to cover any and all casualty damage to the Accommodation
Building, and shall be responsible for repairing all structural damages to the
Accommodation Building that are not the result of improper use by DSH. DSH shall
be responsible for all repair costs arising from improper building usage by DSH.
If Ding Hong cannot obtain building insurance, DSH will need to obtain insurance
for the Third Floor, and Ding Hong will reimburse DSH for all costs of such
insurance coverage.
  8.2  
Ding Hong shall be entitled to inspect the Accommodation Building at reasonable
intervals and upon reasonable notice to DSH. DSH shall provide assistance to
allow such inspections.

9. Liability for Breach of the Lease Agreement

9.1  
If Ding Hong breaches Articles 2, 3, 10 and any of its warranties set forth in
this Lease Agreement, Ding Hong shall compensate DSH for all of DSH’s losses and
damages including consequential, special, punitive and incidental damages.
  9.2  
DSH shall not:

  (1)  
sub-lease the Third Floor or exchange the use of the Third Floor with any third
party without Ding Hong’s prior written consent.
    (2)  
alter the structure of the Third Floor or damage the Accommodation Building
without Ding Hong’s prior written consent.

 

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(3)  
change the lease purpose stipulated by the competent authorities without Ding
Hong’s consent.

10. Warranties

10.1  
Ding Hong hereby warrants that if the Accommodation Building is sold to any
third party during the Lease Period or any renewed lease period, such third
party shall be required to fulfill all obligations of Ding Hong under the Lease
Agreement. If said third party fails to carry out the Lease Agreement, Ding Hong
shall compensate DSH for all of DSH’s losses and damages including
consequential, special, punitive and incidental damages.
  10.2  
In case Ding Hong mortgages the Accommodation Building to the third party, any
loss suffered by DSH shall be paid by Ding Hong.

11. Force Majeure

11.1.  
The definition of Force Majeure

Force Majeure shall mean any event, which arises after the Effective Date that
is beyond the control of the Parties, and is unforeseen, unavoidable and
insurmountable, and which prevents total or partial performance by either Party.
Such events shall include earthquakes, typhoons, flood, fire, war, acts of
government or public agencies, strikes and ay other event which cannot be
foreseen, prevented and controlled, including events which are recognized as
Force Majeure in general international commercial practice.

11.2.  
Consequences of Force Majeure

a. If an event of Force Majeure occurs, the contractual obligation of a Party
affected by such an event shall be suspended during the period of delay and the
time for performing such obligation shall be extended, without penalty, for a
period equal to such suspension.
b. The Party claiming Force Majeure shall give prompt notice to the other Party
in writing and shall furnish, within 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 efforts to mitigate or
eliminate the effects of the Force Majeure. c. If an event of Force Majeure
occurs, the Parties shall immediately consult with each other in order to find
an equitable solution and shall use all reasonable efforts to minimize the
consequences of such Force Majeure.

 

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12. Effective Date of the Lease Agreement

12.1  
The Lease Agreement shall become effective after the legal representatives or
authorized representatives of both Parties affix their signatures and company
seals on the Lease Agreement.

13. Language of the Lease Agreement

13.1  
The Lease Agreement is made and executed in Chinese and English, both versions
having equal validity except as prohibited by law.

14. Settlement of Dispute

14.1  
Friendly consultations

a. In the event of any dispute, difference, controversy or claim arising out of
or related to the Lease Agreement, including, but not limited to, any breach,
termination or validity of the Lease Agreement, (the “Dispute”) then upon one
Party giving the other Party notice in writing of the Dispute (the “Notice of
Dispute”), the Parties shall attempt to resolve such Dispute through friendly
consultation.
b. If the Dispute has not been resolved through friendly consultations with
thirty (30) days from the Notice of Dispute, the Dispute shall be resolved by
arbitration in accordance with Article 14.2 of this Lease Agreement. Such
arbitration may be initiated by either Party.

14.2  
Arbitration

The arbitration shall be conducted by the Chinese International Economic and
Trade Arbitration Commission (GROUP) [d72833d7283303.gif] in Shanghai, China in
accordance with its procedure and 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.

14.3  
Continuance of performance

Except for the matter in Dispute, the Parties shall continue to perform their
respective obligations under the Lease Agreement during any friendly
consultations or any arbitration pursuant to this Article 14.

14.4  
Separability

 

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The provisions of this Article 14 shall be separable from the other terms of the
Lease Agreement. Neither the terminated nor the invalidity of the Lease
Agreement shall affect the validity of the provisions of this Article 14.
15. Applicable Law

15.1  
The validity, interpretation and implementation of the Lease Agreement and the
settlement of Disputes shall be governed by relevant laws of the People’s
Republic of China and regulations that are officially promulgated and publicly
available.

16. Compliance with the Foreign Corrupt Practices Act

16.1  
Ding Hong acknowledges that DSH is a corporation with substantial presence and
affiliation in the United States and, as such, is subject to the provisions of
the Foreign Corrupt Practices Act of 1977 of the United States of America, 15
U.S.C. §§ 78dd-1, et seq., which prohibits the making of corrupt payments (the
“FCPA”). Under the FCPA, it is unlawful to pay or to offer to pay anything of
value to foreign government officials, or employees, or political parties or
candidates, or to persons or entities who will offer or give such payments to
any of the foregoing in order to obtain or retain business or to secure an
improper commercial advantage.
  16.2  
Ding Hong further acknowledges that it is familiar with the provisions of the
FCPA and hereby agrees that Ding Hong shall take or permit no action which will
either constitute a violation under, or cause DSH to be in violation of, the
provisions of the FCPA.

17. Miscellaneous

17.1  
Any amendment to this Lease Agreement shall be in writing and duly signed by
both Parties. Such amendment shall constitute a part of the entire Lease
Agreement.
  17.2  
Both Parties acknowledge that they are aware of their respective rights,
obligations and liabilities and will perform their obligations under the Lease
Agreement in accordance with the provisions of the Lease Agreement. If one Party
violates the Lease Agreement, the other Party shall be entitled to claim damages
in accordance with the Lease Agreement.
  17.3  
Any notice or written communication requited or permitted by this Lease
Agreement shall be made in writing in Chinese and English and sent by courier
service. The date of receipt of a notice or communication shall be deemed to be
seven (7) days after the letter is deposited with the courier service provided
the deposit is evidenced by a confirmation receipt. All notice 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: DSH
Address: No.1 Lane 18 San Zhuang Road, Songjiang Export Processing Zone,
Shanghai, P.R.China
Attn.: Shanghai Kai Hong Technology Co., Ltd.

 

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To: Ding Hong
Address: No.999 Chenchun Road, Xinqiao Town, Songjiang, Shanghai, P.R.China
Attn.: Shanghai Ding Hong Electronic Co., Ltd.

17.4  
This Lease 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 Lease Agreement will be deemed to have been
drafted by both Parties. No modification of this Lease Agreement will be binding
on either Party unless in writing and signed by an authorized representative of
each Party.

                  Shanghai Kai Hong Technology Co., Ltd.   Shanghai Ding Hong
Electronic Co., Ltd.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
 
/s/ Justin Kong
 
By:
 
/s/ Jian Ya Xing
 
 
 
 
 
 
 
 
 
 
 
    Authorized Representative       Authorized Representative  
 
 
 
Date:
   
 
Date: