exv10w39






Exhibit 10.39




Standard Factory Building

Leasing Contract




Wuxi New District

&

Keystone Technology Ltd (HK)




1









 





This lease is made by and between




LESSOR: Wuxi New District (WND)



Registered address for Lessor: No.5 HanJian Road, Wuxi New District, Jiangsu Province, China



LESSEE: Keystone Technology Ltd (HK)



Registered address for Lesser: 3705 Bank of America Tower 12 Harcourt Road Central Hong Kong



This contract was stipulated after adequate negotiation and mutual agreements, both the Lessor and
the Lessee are willing to conclude and observe the following terms:





	1)	 	The Lessor agrees to lease the standard factory building to the Lessee, which is
located in J3-4 Wuxi Export Processing Zone with the total construction area of
7600 square meter (the detailed area subject to Municipal Land Bureau measurement). The Lessor
agrees to install two 2-ton cargo lifts, a 3.5m x 3.5m standard entrance on the 2nd floor for large equipment, power step down from
1200KVA to 380V and connect water supply. The task for the Lessor will be
completed in two stages: the 1st stage is to complete all the Lessor’s tasks except
the installation of the 2nd cargo lift, which should be completed by
15th Oct-2005. The task for 2nd stage is to install the 2nd cargo lift, which should be
completed by 1st Dec-2005. The Lessor has inspected the standard factory building and is
willing to let it out to the Lessee who would like to obey the contract.
	 
	2)	 	The rental fee for the standard factory building is RMB18/sq.m.per calendar




2









 






	 	 	month (including maintenance fee). This contract is valid for 5 years, the exact
period is from 1st Sept-2005 (start of the lease) to 31st Aug-2010 (early
days of the lease). After 5 years time, the Lessee can extend the contract on monthly basis for
another 5 years period. The rental fee will be fixed in the early days of the lease. The Lessee can terminate the contract in 3 years time or after that, but at least 90
days notice in writing is required, the deposit (equal to 3 months rental fee) will
not be refunded and no penalty payable. The Lessee can transfer the lease to a third party when it is agreed by the Lessor.
	 
	 	 	The Lessee is entitled for 3 months rental free to renovate the factory building from the date of commencement of the contract. The lease payments begin on 1st Dec-2005.
	 
	 	 	The rental fee shall be quarterly and should be paid at the first working day of the first month of each calendar quarter. The payment method can be by check or
bank transfer. A 3-month rental fee should be paid to the Lessor as deposit within 60 days of the signing of this contract. The rental fee must be paid in RMB, below
are the payment details:
	 
	 	 	Beneficial bank: ZhongXin ShiYie Bank, Wuxi Branch
	 
	 	 	Account No: 7352310182600002857
	 
	 	 	Beneficiary: Wuxi New District
	 
	 	 	Only the amount credited into Lessor’s account, the receipt of payment can be considered. Any change of the bank information should be notified in writing to
Lessee within 30 days.




3









 












	3)	 	The Lessor guarantees that the factory building legally belongs to the Lessor, the
ownership for the workshop is clear, the Lessor has the right to let the factory
building to the Lessee. The Lessor should make sure the Lessee securely using
the workshop during the contract period. If the Lessor contravenes the above
declaration, the loss could be charged to Lessor. The Lessee agrees to use the
factory building for the purpose of production and business within the business
scope designated by its business license only.
	 
	4)	 	During the contract period, the Lessor will be responsible for the following
details:






	 	i.	 	The factory building is properly available to be used by the Lessee.
	 
	 	ii.	 	The Lessor is responsible for the fixed maintenance expense and reasonable maintenance
expense of the factory building and its attachment (the cargo lifts and Lessee’s
establishment are not included). The Lessor shall indemnify the Lessee for any loss caused
by delay of repair of the factory building.
	 
	 	iii.	 	When the property is intended to be sold or mortgaged,
3 months advance notice should be
given to the Lessee. The right of the Lessee cannot be influenced by the Lessor or the buyer
or the entitlement of mortgage.
	 
	 	iv.	 	If the Lessor intends to sell the factory building, the Lessee has the privilege to buy
the building and the land. The Lessor should inform the Lessee in writing of the
intension of selling the building and land, all the detailed terms should be stated in the
suggestion letter. The Lessee can choose to take or




4









 






	 	 	 	give up the privilege right within 20 days. As soon as the Lessee decides to give up the privilege
right in writing, the Lessor can sell the building and land to other buyers which have been
mentioned in the suggestion letter and the selling terms cannot be favourable than what is in the
suggestion letter. If the privilege business cannot be completed in 3 months time, the Lessee will
get back the privilege right. Meanwhile, if the selling of the building is not completed, the Lessee
has the privilege right than any other buyers in the suggestion letter. If the Lessee choose to
take the right, the Lessee need to follow up the terms in the suggestion letter and general terms
in other similar business to buy the building at a mutual agreed place and time, and no later than
90 days of the suggestion letter.






	5)	 	The Lessee has the obligation for the following things during the contract:






	 	i.	 	Any refit to the building or add facilities to the factory, the Lessee must
get approval from the Lessor in writing.
	 
	 	ii.	 	Any damage to the factory or its facilities caused by the Lessee operating
mistake or other man-made mistake, the Lessee has the obligation for the
compensation and repairing costs.
	 
	 	iii.	 	All plants and other public utilities outside the building, the Lessee
should to keep it neat. Any facilities intended to be set up outside the
building must be approved by the relevant administrative department.
Any loss caused by the unapproved construction, the Lessee has the
obligation for the compensation.




5









 












	 	iv.	 	The Lessee should return the leased building to the Lessor when the contract
expires. The building must be in good order (except the nature spoilage) when
returned. If the damage is caused by the Lessee, the Lessee should pay for the repair
costs. If the Lessee intends to continue the lease, the Lessee should negotiate with
the Lessor not less than 3 month prior to the expiration of the contract.






	6)	 	Obligation for breaking contract: If either the Lessor or the Lessee cannot fulfil
the terms on the contract or violates the relevant State or Local real estate lease
regulations, and no action is taken within 30 days in the receipt of notice in
writing, the other party has the right to terminate the contract. The defaulting
party is responsible for losses caused by the defaults. Any overdue payment will
be charged on the rate of 2.5% of rental fee per day. If it is not paid for 30 days
or more, the Lessor has the right to terminate the contract.
	 
	7)	 	If the damage to the factory and its facilities is due to a force majeure event, no
obligation for both parties.
	 
	8)	 	If there is any dispute arises, the Lessor and the Lessee shall first resolved by
amicable negotiation. When the negotiation does not work, either party can apply
for arbitration from Wuxi Real Estate Arbitration Commission.
	 
	9)	 	All the taxable items must be payable by the Lessor and the Lessee separately
according to the local and state rules and regulations.






	 	i.	 	Property certification fee: RMB300 for each party
	 
	 	ii.	 	Stamp tax: 0.05% of the total lease amount for each party




6









 












	10)	 	This contract needs the signature and stamp by legal representatives of both parties and will be valid from the execute date.
	 
	11)	 	The intension for renting this building by the Lessee is to set up Keystone
Electronics Wuxi Co., Ltd. (temporary named, new factory). The Lessee signs
the contract on behalf of Wuxi new factory. As soon as Wuxi new factory sets
up, all the obligation and right in the contract will be automatically applied to
Wuxi new factory.
	 
	12)	 	If the registered capital cannot be injected as per investment project by 1st
Dec-2005, such a case will require a new lease or amendment defining a new
timetable relative to the initiation of the rental free period and beginning of lease
payments. If the Lessee chooses not to proceed with the lease, the deposit of 3
months rental shall be forfeited.
	 
	13)	 	This contract is written in both Chinese and English and five copies of each
language. Both parties shall retain 2 copies, the other one will be submitted to the
Wuxi Real Estate Management Bureau for registration. If there is any
discrepancy between the two versions, the Chinese version shall prevail.






7