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EQUIPMENT LEASE AGREEMENT

Equipment Lease Agreement

EQUIPMENT LEASE AGREEMENT | Document Parties: THREE FIVE SYSTEMS INC | UNICO TECHNOLOGY BERHAD You are currently viewing:
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THREE FIVE SYSTEMS INC | UNICO TECHNOLOGY BERHAD

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Title: EQUIPMENT LEASE AGREEMENT
Date: 3/15/2004
Industry: Electronic Instr. and Controls    

EQUIPMENT LEASE AGREEMENT, Parties: three five systems inc , unico technology berhad
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<PAGE>

 

                                                                   EXHIBIT 10.24

 

                        DATED THIS 1ST DAY OF APRIL, 2003

 

                                     BETWEEN

 

                             UNICO TECHNOLOGY BERHAD

 

                                        AND

 

                           MATTLINE INDUSTRIES SDN BHD

 

                       ------------------------------------

 

                            EQUIPMENT LEASE AGREEMENT

 

                       ------------------------------------

 

                                 WONG & PARTNERS

                             ADVOCATES & SOLICITORS

                                Level 41, Suite A

                                Menara Maxis KLCC

                               50088 Kuala Lumpur

                           Telephone: (603) 2055 1888

                           Facsimile: (603) 2161 2919

 

<PAGE>

 

                                    CONTENTS

 

<TABLE>

<CAPTION>

NO. CLAUSE HEADING                                                                                 PAGE

------------------                                                                                ----

<S>                                                                                               <C>

1.        DEFINITIONS AND CONSTRUCTION....................................................           1

                                                                                                  

         1.1.      Definitions............................................................           1

         1.2.      Construction...........................................................           3

                                                                                                  

2.        THE LEASE AND CONDITIONS PRECEDENT..............................................           3

                                                                                                  

3.        DELIVERY AND ACCEPTANCE.........................................................           4

                                                                                                  

4.        LEASE PERIOD....................................................................           4

                                                                                                   

5.        RENT AND PAYMENTS...............................................................           5

                                                                                                   

6.        REPRESENTATIONS AND WARRANTIES..................................................           7

                                                                                                  

7.        GENERAL UNDERTAKINGS............................................................           8

                                                                                                  

8.        OPERATIONAL UNDERTAKINGS........................................................           9

                                                                                                  

9.        TITLE AND REGISTRATION.........................................................           11

                                                                                                   

10.       INSURANCES.....................................................................           11

                                                                                                  

11.        LOSS AND DAMAGE................................................................           11

                                                                                                  

12.       TERMINATION EVENTS.............................................................           12

                                                                                                  

13.       OPTION TO PURCHASE EQUIPMENT...................................................           14

                                                                                                   

14.       REDELIVERY.....................................................................           14

                                                                                                   

15.       INDEMNITIES....................................................................           15

                                                                                                  

16.       MISCELLANEOUS PROVISIONS.......................................................           15

                                                                                                  

         16.1.     Benefit of Agreement..................................................           15

         16.2.     Further Assurances....................................................           15

         16.3.     Rights Cumulative, Waivers............................................           16

         16.4.     Delegation............................................................           16

         16.5.     Notices...............................................................           16

         16.6.     Costs and Taxes.......................................................           17

         16.7.     Invalidity of any Provision...........................................           17

         16.8.     Intervention by Lessee................................................           17

                                                                                                   

17.       GOVERNING LAW..................................................................           17

</TABLE>

 

<PAGE>

 

THIS EQUIPMENT LEASE AGREEMENT is made on the 1st day of April, 2003

 

BETWEEN:

 

(1)       UNICO TECHNOLOGY BERHAD (Company No. 189742-K) company incorporated

         under the laws of Malaysia with its registered office at 8th Floor,

         Menara BGI, Plaza Berjaya, 12 Jalan Imbi, 55100, Kuala Lumpur, Malaysia

         (the "LESSOR"); and

 

(2)       MATTLINE INDUSTRIES SDN. BHD. (Company No. 606069-A) a company

         incorporated in Malaysia under the laws of Malaysia with its registered

         office at Level 41-B, Menara Maxis, Kuala Lumpur City Centre, 50088

         Kuala Lumpur (the "LESSEE").

 

WHEREAS the Lessor has agreed to lease certain equipment to the Lessee upon and

subject to the terms and conditions of this Agreement

 

NOW IT IS HEREBY AGREED as follows:

 

1.        DEFINITIONS AND CONSTRUCTION

 

1.1.      Definitions

 

         In this Agreement, unless the context otherwise requires:

 

         "BUSINESS"                     means the business carried on by the

                                       Lessor as at the date hereof, including

                                        the electronic manufacturing services

                                       business;

 

          "BUSINESS                     DAY" means a day (excluding Saturday) on

                                       which banks are open in Penang, Malaysia

                                        for the transaction of business of the

                                       nature required by this Agreement;

 

         "COMPLETION DATE"              means the date of completion of the Joint

                                        Venture Agreement;

 

         "DELIVERY DATE"                the later of 1 May 2003 or the Completion

                                       Date;

 

         "DESIGNATED ACCOUNT"           means the account held and maintained

                                        under the name of the Lessor or its

                                       nominees in accordance with Clause 5.4

                                       and having the particulars specified in

                                       SCHEDULE 2;

 

         "EQUIPMENT"                    means any and all equipment specified in

                                       SCHEDULE 1 hereto and all substitutions,

                                       renewals and replacements made in or to

                                        that equipment, and any other equipment

                                       as determined by the Lessor from time to

                                       time in the Lessor's absolute discretion;

 

                                        1

 

<PAGE>

 

         "FINANCIERS"                   means the banks, financial institutions

                                       and other entities specified in APPENDIX

                                       1 which have provided credit facilities

                                       to the Lessor to acquire possession of

                                       the Equipment;

 

         "FINANCIERS' AGENT"            means the agent collectively appointed or

                                        consented to by the Financiers;

 

         "FINANCING DOCUMENTS"          means the documents specified in APPENDIX

                                       2 pursuant to which the Financiers have

                                       financed the Lessor's acquisition of

                                       possession of the Equipment;

 

         "FINANCIERS' INTEREST"         means the rights, title and interest of

                                       the Financiers in the Equipment pursuant

                                        to the Financing Documents;

 

         "FINANCIERS' UNDERTAKING"      means the undertaking, the form of which

                                       is set out in APPENDIX 3;

 

         "INSPECTION"                   means the inspection that may be carried

                                       out by the Lessee or its authorized

                                       representatives or agents on the

                                       Equipment prior to the Delivery Date;

 

         "INTEL CORPORATION"            means Intel Corporation, a corporation

                                       incorporated in the United States of

                                       America or any of its subsidiaries,

                                        related corporations, associated

                                       companies or affiliates;

 

         "JOINT VENTURE AGREEMENT"      means the joint venture agreement between

                                       TFS International, Ltd., TFS

                                       International, II Ltd., Unico Systems Sdn

                                       Bhd, Unico Holdings Berhad and the Lessor

                                       dated April 1, 2003;

 

          "LEASE PERIOD"                 means the period specified as such in

                                       SCHEDULE 2;

 

         "PROPOSED DELIVERY DATE"       means the date on which falls five (5)

                                       Business Days (or such shorter time as

                                        may be mutually agreed between the Lessor

                                       and the Lessee) prior to the Delivery

                                       Day;

 

          "RENTAL"                      means all and any amounts payable to the

                                       Lessor by the Lessee pursuant to Clause 5

                                       of this Agreement;

 

         "RM" and "RINGGIT"             means the lawful currency from time to

                                        time of Malaysia;

 

         "RENTAL PAYMENT DATE"          means the date on which the Rental is due

                                       to be paid in accordance with Clause 5.2;

 

         "SECURITY INTEREST"            means any mortgage, charge, pledge, lien,

                                       right of set-off (excluding any right of

                                       set-off arising in favor of a banker by

                                       operation of law) or other security

                                       interest whatsoever, howsoever created or

                                       arising;

 

                                       2

 

<PAGE>

 

         "SELLER"                       means any person from whom the Lessor had

                                       purchased the Equipment; and

 

         "TERMINATION EVENT"            means any of the events or circumstances

                                       specified in Clause 12 as constituting a

                                        Termination Event; and "PROSPECTIVE

                                       TERMINATION EVENT" means any event or

                                       circumstance which with the giving of

                                        notice and/or the lapse of time and/or

                                       the fulfillment of any other condition

                                       would be a Termination Event.

 

1.2.      Construction

 

         In this Agreement, unless the context requires otherwise, any reference

to:

 

         (a)       an "AGENCY" of a state or government includes any ministry,

                  agency, board, bureau, commission, department, authority,

                  statutory corporation (whether autonomous or not) or other

                  instrumentality of or any corporation or other entity owned or

                  controlled by such state or government;

 

         (b)       an "AUTHORIZATION" includes any and all approvals, consents,

                  licenses, permits, franchises, permissions, registrations,

                  declarations, reductions or exemptions;

 

         (c)       a "MONT" means a calendar month;

 

         (d)       a "PERSON" includes any individual, juridical person, company,

                   body corporate or unincorporate, partnership, firm, joint

                  venture or trust or any federation, state or subdivision

                  thereof or any government or agency of any thereof; and

 

         (e)       "TAX" includes any tax, levy, duty, charge, compulsory loan,

                  impost, fee, deduction or withholding of any nature now or

                  hereafter imposed, levied, collected, withheld or assessed and

                  "TAXATION" shall be construed accordingly.

 

1.3.      In this Agreement, unless the context requires otherwise, words

         importing the singular include the plural and vice versa and words

         importing a gender include every gender; references herein to Clauses

         and Schedules are to clauses of and schedules to this Agreement;

         references to this Agreement or any other document shall be construed

         as references to such document as the same may be amended or

         supplemented from time to time.

 

2.        THE LEASE AND CONDITIONS PRECEDENT

 

2.1.      The Lessor agrees to lease, and the Lessee agrees to take on lease, the

         Equipment upon the terms and conditions set out in this Agreement.

 

2.2.      The Lessee shall not be obliged to take the lease of all or any

         Equipment from the Lessor, unless the Lessee shall have received in

         form and substance satisfactory to it:

 

         (a)       a copy certified by an authorized director of the Lessor as

                  being a true, complete and up-to-date copy of each of the

                  following:

 

                  (i)       the constituent documents of the Lessor; and

 

                                       3

<PAGE>

 

                  (ii)      the business license and/or registration certificate

                           of the Lessor;

 

         (b)       evidence that the execution of this Agreement has been duly

                  authorized by the Lessor;

 

         (c)       documentary evidence that all authorizations necessary in

                   connection with the execution and performance of this

                  Agreement and all other documents referred to herein or to be

                  executed in connection herewith have been obtained; and

 

         (d)       such other documents relating to any of the matters

                  contemplated herein as the Lessee may reasonably request.

 

2.3.      (a)       On the Delivery Date, the Lessee shall pay to the Lessor the

                  sum of Ringgit Malaysia Nine Hundred and Fifty Thousand

                  (RM950,000) being equivalent to one month Rental as security

                  deposit for the observance and performance by the Lessee of

                  the terms and conditions of this Agreement ("SECURITY

                  DEPOSIT").

 

         (b)       The Security Deposit shall not be treated as payment of the

                  Rental or any part thereof and the Security Deposit shall be

                  returned to the Lessee free of interest on the termination of

                   the lease or the expiry of the Lease Period (whichever the

                  earlier to occur) provided that if the Lessee has incurred any

                  liability to the Lessor under this Agreement the Lessor shall

                  be at liberty and shall have absolute right and power to apply

                  the Security Deposit in reduction or discharge of the Lessee's

                  liability to the Lessor.

 

3.        DELIVERY AND ACCEPTANCE

 

3.1.      On the Delivery Date:

 

         (a)       the Lessor will deliver to the Lessee the Equipment under this

                  Agreement;

 

         (b)       the Lessor will deliver to the Lessee the Financiers'

                  Undertaking duly executed by each of the Financiers; and

 

          (c)       the Lessee shall thereupon take delivery of such Equipment

                  from the Lessor.

 

3.2.      The Lessor shall extend to the Lessee the benefit of any guarantee,

         condition or warranty which may have been given to the Lessor by the

         manufacturer of the Equipment or the Seller in so far as the same is

         capable of being assigned to the Lessee.

 

3.3.      Subject to the terms of this Agreement, the Lessor will do nothing to

         disturb the quiet possession and use of the Equipment by the Lessee

         during the Lease Period.

 

4.        LEASE PERIOD

 

4.1.      The leasing of any Equipment under this Agreement shall commence on the

         Delivery Date and shall, subject to this Clause 4 and the provisions of

          this Agreement relating to earlier termination, end on the last day of

         the Lease Period.

 

                                       4

 

<PAGE>

 

4.2.      (a)       At any time between the Proposed Delivery Date and the

                  Delivery Date, the Lessee shall be entitled (but not

                  obligated) to conduct the Inspection.

 

         (b)       Notwithstanding any remedy which may be available to the

                  Lessee under this Agreement, if, following the Inspection, the

                  Lessee considers that the Equipment or any part thereof is in

                  an unsatisfactory condition or suffers from any defect, the

                  Lessee may require the Lessor to either:

 

                  (i)       rectify the unsatisfactory condition or defect

                           ("RECTIFICATION"); or

 

                  (ii)      replace the Equipment or the part thereof that is

                           unsatisfactory or suffers from the defect

                            ("REPLACEMENT").

 

         (c)       the Lessor shall undertake the Rectification or Replacement

                  prior to the Delivery Date so that the Equipment, when

                  delivered on the Delivery Date shall not be in an

                   unsatisfactory condition or suffer from any defect.

 

4.3.      Following the Inspection, no defect or unsatisfactory condition of the

         Equipment or any failure of the Equipment to comply with the warranties

         or representations of the Seller or the manufacturer in relation

         thereto, and no loss, theft, damage or destruction of the Equipment or

         any part thereof, nor any other event, change in law or circumstances

         of any nature whatsoever, shall impair any obligation of the Lessee

         under this Agreement (including without limitation as to the payment of

         Rentals or other sums), so that all such obligations shall, except as

         provided in Clause 12, continue in full force and effect.

 

5.        RENT AND PAYMENTS

 

5.1.      The Lessee shall pay to the Lessor, Rentals during the Lease Period in

         accordance with the provisions of this Clause 5. The total value of

         Rentals is Ringgit Malaysia Forty Five Million Six Hundred Thousand

          (RM45,600,000) representing 48 payments of RM950,000. The Rental to be

         paid by the Lessee to the Lessor on each Rental Payment Date is the sum

         of RM950,000.

 

5.2.      Subject to Clause 5.3, the Lessee shall pay to the Lessor the Rental on

         the day of the month on which the Delivery Date falls. For the

         avoidance of doubt, if the first Rental Payment Date falls on the 15th

         day of the month, all subsequent Rental Payment Dates shall be the 15th

         day of the month. The first Rental Payment Date shall be the Delivery

         Date.

 

5.3.      All payments to be made by the Lessee under this Agreement, whether of

         Rentals or otherwise, shall unless otherwise provided be made in

         Malaysian Ringgit to the Designated Account not later than 10:00 a.m.

         (local time in the place for payment) on the due date for payment and

         for value on that date and in all cases under telefax advice to the

         Lessor.

 

5.4.      (a)       The Lessor acknowledges and undertakes to procure that:

 

                  (i)       the Designated Account shall be used solely for the

                           purpose of receiving Rentals due from the Lessee

                           under this Agreement;

 

                                        5

 

<PAGE>

 

                  (ii)      the Rentals paid into the Designated Account shall be

                           applied as follows:

 

                           (aa)      firstly, in paying all amounts due from the

                                     Lessor to the Financiers;

 

                           (bb)      secondly, all expenses incurred in

                                    connection with the performance of the

                                    Lessor's obligations under this Agreement;

                                    and

 

                           (cc)      thirdly, the balance (if any), shall be for

                                    the account of the Lessor.

 

         (b)       In furtherance of this Clause 5.4, the Lessor agrees to

                  procure the appointment of the Financiers' Agent as authorized

                  signatory of the Designated Account on terms and with

                  authority limits acceptable to the Financiers.

 

5.5.      If any payment would otherwise be due on a day which is not a Business

         Day, it shall be due on the preceding Business Day.

 

5.6.      The Lessee will pay interest at the rate of eight per centum (8%) per

         annum, on any outstanding Rental which is due and payable under this

         Agreement.

 

5.7.      (a)       Subject as hereinafter provided, the Lessee may on any Rental

                  Payment Date prepay all or any of the installments of the

                  Rentals to become due in inverse order of maturity provided

                  that:

 

                  (i)       the Lessee shall have given to the Lessor not less

                           than six (6) months' prior written notice of its

                           intention to make the prepayment, specifying the

                           amount thereof and the date on which it is to be

                           made, together with evidence satisfactory to the

                           Lessor that the Lessee has received, or will receive

                           before the intended date of prepayment, any necessary

                           authorization for such prepayment;

 

                  (ii)      the Lessee may not prepay part only but must pay the

                            whole of an installment of the Rentals; and

 

                  (iii)     any prepayment pursuant to this Sub-clause shall be

                           made together with all accrued interest on the

                           Rentals to the date of prepayment and all other sums

                           then payable pursuant to this Agreement.

 

         (b)       Any notice of intended prepayment given by the Lessee under

                  Sub-clause 5.7(a)(i) shall be irrevocable and the Lessee shall

                  be bound to make a prepayment in accordance therewith.

 

5.8.      The Lessee may not prepay the Rentals or any one installment thereof

         otherwise than in accordance with the express terms of this Agreement.

         Prepayment of the Rentals or any one installment thereof shall not

         affect or limit in any way the liability of the Lessee with regard to

         any other payment due or to become due to the Lessor pursuant to this

         Agreement.

 

                                        6

 

<PAGE>

 

6.        REPRESENTATIONS AND WARRANTIES

 

6.1.      The Lessor acknowledges that the Lessee has entered into this Agreement

         in full reliance on the following representations by the Lessor and the

         Lessor now warrants to the Lessee as follows:

 

         (a)       the Lessor is validly existing as a legal entity under the

                  laws of Malaysia, has full power and authority to enter into

                  and perform its obligations under this Agreement and to

                  consummate the transactions contemplated hereby and is duly

                  qualified to do business in each jurisdiction where failure to

                  qualify would have material effects on the business or

                  operations of the Lessor;

 

         (b)       the execution, delivery and performance of this Agreement and

                  the consummation of the transactions contemplated hereby have

                  been duly authorized by all necessary action on the part of

                  the Lessor, and do not require the consent or approval of, the

                  giving of notice to, or the registration with, or the taking

                  of any other action in respect of, any governmental, fiscal,

                   exchange control or regulatory body or agency to which the

                  Lessor is subject or any other person, except the

                  authorizations evidence of which has been or will be delivered

                  to the Lessee pursuant to Clause 2; and do not contravene any

                  law or regulation or order binding on the Lessor or the

                  Lessor's constituent documents or contravene the provisions

                  of, or constitute a default under, any other agreement or

                  instrument by which the Lessor is bound or result in the

                  creation of any Security Interest upon the property of the

                  Lessor;

 

         (c)       this Agreement constitutes the legal, valid and binding

                  obligations of the Lessor enforceable in accordance with its

                  terms;

 

         (d)       the Lessor's obligations under this Agreement are direct,

                  general and unconditional obligations of the Lessor and rank

                  at least pari passu in all respects with all its other present

                  and future unsecured and unsubordinated obligations (including

                  contingent obligations) with the exception of obligations

                   mandatorily preferred by law and not by contract;

 

         (e)       save and except for proceedings be


 
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