**EXHIBIT 10.1**
**FACTORY PREMISES AND QUARTERS LEASE AGREEMENT**
Party A: Xin He Economic Development Company, Fu Yong Town, Bao An District,               Shenzhen City;               Xin He Village, No. 5 Villagers Team, No. 6 Villagers TeamAgents: Chen Huo Ming, Fan Jia Fu     Tel: 13509682933, 13808852255
Party B: Hypercom Electronics Manufacturing (Shenzhen) Co., Ltd.   Agents: Tel:
After friendly negotiation and under the principle of equality and mutualbenefits, Party A and Party B have reached the following agreement in respectof the lease of factory premises and quarters:
1) Lease address and area:
Party A agrees to lease to Party B the following denominations of the XinQing Industrial Complex (district 2) situated at Xin He Village, Fu HaiRoad (please refer to the drawings for details):
 A) Block A3 (4 floors) of the factory premises with an area of 6,800sq. m. approximately;  B) Block B5 (5 floors) of quarters with an area of 1,420 sq. m.approximately  C) Fifth floor of Block B2 quarters with an area of 800 sq. m.approximately
The total area of the factory premises and quarters is approximately 9,020sq. m.(the actual area shall be subject to the projected area of the buildings)and the structure shall be framework.. The leased premises shall be forParty B’s use.
2) Contractual Period:
The contractual period for this agreement shall be six years, i.e. fromOctober 1, 2004 to September 30, 2010.
3) Delivery of the factory premises for use and period of decoration:
(I) The delivery date of the factory premises shall be thedate on which the decoration of the main structural body and ofthe internal/external walls have been completed and the water,electricity (transformer),
 

 

  doors and windows have been installed. (II) Date of delivery: The factory premises and quartersshall be delivered on August 30 for use and the period ofdecoration shall be one month (the decoration period shall berent-free) (III) Upon completion of the decoration work, Party A shallnotify Party B in writing, and if there is no response from PartyB within five days, it shall be deemed that the delivery issatisfactorily passed. (IV) Commencement of rent: Rent shall commence to count witheffect from October 1, 2004.
4) The unit rental price of the factory premises and the amplitude ofincrease:
(I) The rental unit in respect of the factory premises andquarters shall be Renminbi Twelve Dollars per square meter permonth (Party B shall be responsible for payment of rental tax,and management fee ). (II) Since the delivery date of each block of factorypremises and quarters, the rent shall remain unchanged for thefirst five years and thereafter, be increased once every fiveyears and the amplitude of increase shall be 5%. If both partiesrenews the contract upon the maturity, the rent shall be furtherincreased by 5% every five years.
5) Terms of Payment:
(I) Upon signing of this agreement, Party B shall pay PartyA a deposit of Renminbi Two Hundred Thousand Yuan, and uponsatisfactory inspection of delivery by Party A, Party B shall payParty A the first monthly rent of RMB108240. (II) The date of payment shall be before the 10th of everymonth. Payment by Party B shall be settled in cash or by check.Party A shall issue the tax invoices and Party B shall beresponsible for payment of tax accordingly. Overdue rent shallbe subject to a penalty payment of 3% per day.
6) Party A’s responsibilities:
(I) Party A shall be responsible for the installation of a315KVA transformer (including a low voltage power distributingcabinet), and one water main meter, one electricity main metershall be installed in
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  the factory premises and quarter. (II) Party A shall be responsible for the expenses for watersupply equipment in the factory premises and quarter. (III) Party A shall provide for one set of two-ton cargolift for Party B’s use. During the contractual period, Party Bshall be responsible for the maintenance/repair expenses andpayment of relevant expenses. (IV) Party A shall register the Contract with the houselease registration management authority and obtain the leaseregistration certificate. (V) After the expiry of the contractual period and underequality conditions, Party B shall have the priority to renewthis agreement and sign a new agreement. (VI) Party A shall be responsible for building upsurrounding walls and the satisfactory compliance of fireprevention inspection of the premises. (VII) In case of any of the following circumstances, Party Bshall have the right to terminate the Contract at any time andParty A shall return to Party B the deposit RMB 200,000 alreadypaid by Party B.
1) Party A cannot hand over to Party B thedecorated factory building and quarters before October 12004. 2) Party A is involved in any dispute over theownership of the factory building and the use right of theland under the factory building, or Party A cannot legallylease the factory building for industrial purposes. 3) The factory building and quarters or relatedfacilities provided by Party A are damaged not because ofParty B’s fault and Party A cannot recover the damages withinthe acceptable time period (excluding force majeure). 4) Party A cannot provide Building ProjectCompletion Acceptance Report.
7) Party B’s responsibilities:
(I) Party B shall effect on-time payment of rent,water/electricity charges, cleaning expenses, etc. to relevantauthorities. (II) Party B shall maintain Party A’s property and thepublic equipment in good order. Party B shall be responsible formanagement of public security with Party A’s assistance. Ifthere is damage to the property caused by Party B, Party B shallbe responsible for the repair. (III) Party B shall be responsible for the compensation ifthere is damage
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  to the building structure due to the improper use by Party B. (IV) Party B shall not sublet the factory premises orquarters to a third party or other organization and shall notalter the original structure of the factory premises. Ifalteration is required for production, , Party B shall seekconsent from Party A, provided that the general structure of thebuilding remain intact. If Party B deliberately makesalteration, thereby causing problems to the structure of thefactory premises, Party B shall assume all the responsibility andbear all the expenses incurred. (V) Party B shall strictly comply with the relevant fireprevention regulations of the state, and shall carry out theproduction safety work for fire prevention and electricityconsumption. In case of disasters caused by Party B, allresponsibility and economic losses shall be borne by Party B. (VI) Party B shall carry out production and discharge ofsewage in accordance with the standards set up by the localenvironmental protection bureau to which Party B shall pay asewage fee. (VII) Party B shall be responsible to pay the rental tax andmanagement fee within the lease period. (VIII) Party B shall effect on-time payment of salary to the employeesin accordance with the requirements of the Labor Ordinance. Ifpayment of rent and salary be delayed for more than two months,Party A shall be entitled to notify the Labor ManagementDepartment to carry out inspection of wages and to stop thedelivery of goods from the factory until the employers’ salariesand rent have been fully paid. (IX) If Party B withdraws from this agreement during theterm of this Agreement, all the remaining rent, whether or notParty B continues to rent the premise, shall be paid, and thedeposit shall not be refunded. (X) Party B shall be responsible for building the securityroom and the main door. (XI) Party B shall pay a monthly management fee of RMB1800to the Management Office.
8) Other terms and conditions:
(I) Upon the expiry of this agreement and under equalconditions, Party
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  B shall have the priority to renew the agreement. If Party Bdoes not continue to rent the factory premises, two months’notice shall be served to Party A in advance. The fixtureinside the factory premises invested by Party B shall belong toParty A, and Party B shall in accordance with Party A’srequirement repair damaged facilities inside or outside thepremises, but excluding natural losses and wearing. Upon thesatisfaction inspection thereof by Party A, formalities forterminating this agreement shall be arranged, and the depositof RMB 200,000 shall be returned to Party B. (II) Under the equal conditions, the recycling of Party B’sindustrial waste shall be managed by Party A.
9) If during the contractual period of this agreement any one of thefollowing circumstances happens, this agreement shall be automaticallyterminated:
(I) Occurrence of force majeure or accidents which preventthe performance of this agreement. (II) Dismantlement of the leased premises due torepossession of land by the government.
10) All matters not accounted for herein may be incorporated by negotiationof both parties. After signing this agreement, neither party herein shallbe in breach and both parties are required to abide thereby.
11) This agreement is executed in quadruplicate with Party A and Party Bholding one copy each which shall have equal legal effect. This agreementshall become effective upon signing by the representative of both partiesherein.
Party A:
Xin He Village Economic Development Company, Fu Yong Town, Bao An District,Shenzhen City(Xin He Village, No. 5 Villagers Team, No. 6 Villagers Team)