LEASE CONTRACT ("CONTRACT") entered into by and between COMPLEJO
INDUSTRIAL FUENTES, S.A. DE C.V. represented herein by its
Chairman of the Board of Directors, Mr. Eduardo Fuentes Varela,
(hereinafter referred to as the "LANDLORD"), and by S.T.B. DE
MEXICO, represented herein by its Sole Administrator, Randall Don
Eisenbach, (hereinafter referred to as the "TENANT"), in
accordance with the following Recitals and Clauses:
RECITALS
I. The LANDLORD, hereby states that:
(a) It is a corporation duly incorporated and existing pursuant
to the laws of the Mexican United States, with its principal
place of business in Ciudad Juarez, Chihuahua, Mexico.
(b) It is the owner of a parcel of land with an area of
approximately 28,848.54 square meters (310,522.80 square feet
approximately), and a building to be constructed on it, with an
area of approximately 11,942.09 square meters (128,543.46 square
feet approximately), with address on Fuentes Sur Avenue without a
number, and located at Lot 7 and Lot 8 of Block E of Complejo
Industrial Fuentes in Ciudad Juarez, Chihuahua, Mexico, same
which is described in the blueprint attached to this CONTRACT as
Exhibit "A", which is considered as incorporated by reference
herein and becomes a part hereof, and which real property will
hereinafter be referred to as the "BUILDING" and the "LEASED
PROPERTY", indistinctly. For purposes of this CONTRACT, the terms
"BUILDING" and/or "LEASED PROPERTY" shall, in addition to those
descriptions set forth herein, include all improvements
constructed upon the LEASED PROPERTY, together with all of the
LANDLORD's rights, interests and appurtenances thereto belonging
or in any way incident or appertaining to the LEASED PROPERTY,
including all structures, fixtures, equipment and other
personalty of any nature now or hereafter situated, placed,
constructed or installed on the LEASED PROPERTY.
1
(c) Studies relative to the evaluation and environmental impact
for construction will be performed on the LEASED PROPERTY, to the
satisfaction of the Secretaria del Medio Ambiente, Recursos
Naturales y Pesca (Ministry of the Environment, Natural Resources
and Fishery), the Procuraduria Federal de Proteccion al Ambiente
(Federal Agency for Protection of the Environment), and other
pertinent Mexican agencies, through which it has been established
that the LEASED PROPERTY falls within the allowable and
obligatory ecological criteria applicable to the installation and
use for which it is intended (MAQUILADORA INDUSTRY).
(d) It desires to lease the LEASED PROPERTY to the TENANT, under
the terms and conditions hereinafter set forth.
II. The TENANT states that:
(a) It is a corporation duly incorporated and existing pursuant
to the laws of the Mexican United States, as per deed Number
21,250, Volume 450, granted on the 9th day of the month of
November of 1988, before Mr. Carlos Bernanrdo Silveyra Sayto, in
Representation of Mr. Jose Reyes Estrada Aguirre,Notary Public
Number 18, in the Bravos Judicial District, State of Chihuahua,
Mexico.
(b) It wishes to lease the BUILDING under the terms of the
Protective Covenants and Restrictions attached to this CONTRACT
and made a part hereof as Exhibit "B", and under the terms and
conditions of this CONTRACT.
(c) Mr. Randall Don Eisenbach proves his personality by means of
deed Number 5949, Volume 136, granted on the 13th day of the
month of November of 1995, before Mr. Edmundo Castillo Acuna
Notary Public Number 16, in the Bravos Judicial District, State
of Chihuahua, Mexico.
III. Both parties declare that in the execution hereof there has
been no error, violence, bad faith nor duress amongst them, and
that their respective representatives have sufficient authority
to execute this CONTRACT, same authority which has not been
revoked, diminished or limited in any way.
2
HAVING STATED THE ABOVE THE PARTIES AGREE ON THE FOLLOWING:
CLAUSES:
FIRST.- THE LEASED PROPERTY.
The LANDLORD will deliver to the TENANT the temporary use and
possession of the LEASED PROPERTY which has been described in
Recital I, paragraph (b) of this contract, within a period of 12
months following the signing of this CONTRACT.
SECOND.- USE AND ENJOYMENT OF THE LEASED PROPERTY.
The LANDLORD represents that it has clear and complete rights
over the LEASED PROPERTY, and warrants that the TENANT shall have
the peacefUl use and quiet enjoyment of same.
THIRD.- DELIVERY OF THE LEASED PROPERTY.
The LANDLORD will deliver the LEASED PROPERTY to the TENANT,
complete and ready for occupancy, precisely on the date
stipulated for the commencement of the Initial Term of this
CONTRACT, presenting the studies relative to the evaluation and
environmental impact, as well as the one for soil use, for the
construction to which reference is made in paragraph (c) of
Recital (I) of this document. The construction shall be
completed by LANDLORD in good and workmanlike manner, in
substantial compliance with the general specifications reviewed
and approved by TENANT, and which are made a part of this
CONTRACT hereof as Exhibit "C". LANDLORD agrees to cause the
issuance of all certificates of occupancy, notices of completion,
permits and approvals, or their equivalent, as they are required
to be issued by the applicable governmental authorities relating
to the LEASED PROPERTY and the occupancy of same by TENANT, as
soon as legally permitted, following completion of construction.
The construction of the BUILDING by LANDLORD shall be considered
completed when (a) the work called for by the approved plans and
specifications has been completed in strict compliance therewith;
(b) all BUILDING facilities necessary for the use thereof by
TENANT as
3
contemplated under this CONTRACT shall have been installed and ready
for occupancy and for their intended use; (c) all finishes and coatings
has been completed; (d) all equipment and property provided under the
plans and specifications has been installed or placed in or on the
BUILDING and is in good working condition; (e) all waste materials have
been removed, and all glass and other surfaces have been cleansed; (f)
all utilities to be used in the operation of the BUILDING be available
for contract and be susceptible for its use throughout the BUILDING;
and (g) certification and approval of the construction and BUILDING has
been given by the architect appointed by the TENANT and all other
required or necessary third persons.
Upon commencement of occupancy of the LEASED PROPERTY by TENANT, TENANT
shall be deemed to have accepted the same as suitable for the purposes
herein intended and to have acknowledged that the same complies Fully
with LANDLORD's covenants and obligations of construction herein except
for (a) any written exceptions or "punch list" items disclosed and
delivered to LANDLORD by TENANT within thirty (30) calendar days
following TENANT's assumption of occupancy in the LEASED PROPERTY, and
(b) any latent defects with respect to the BUILDING and construction,
all of the foregoing of which LANDLORD hereby agrees to cure and repair
within a period of time agreed by both parts immediately following
receipt of notice thereof LANDLORD agrees to permit TENANT at all
reasonable times and upon reasonable advance notice to inspect the
construction and improvements described above.
FOURTH.- CONTINGENCY FOR PAYMENT OF CONSTRUCTION.
In the event that for any cause imputable only and exclusively to
the TENANT, the BUILDING is not received by the TENANT all cost
and expense made by the LANDLORD on the planning, construction
and equipping of the BUILDING to be leased by the TENANT, based
on the advance of the construction, and until completion of the
BUILDING, shall be completely covered by the TENANT and/or the
Jointly Responsible S.T.B. Systems, Inc., plus a 15% ( Fifteen
percent) of the total amount generated until the day of the
notice thereof This Clause will cease from its legal effect until
the moment when the TENANT receives the LEASED PROPERTY under the
terms of Clauses Third and Twelfth of this instrument.
4
FIFTH.- USE OF THE LEASED PROPERTY.
The TENANT shall use the LEASED PROPERTY for light industry
operations, warehousing and offices, and shall comply with the
Protective Covenants and Restrictions attached hereto as Exhibit
"B", as well as with all laws and regulations to provide for the
peaceful use thereof.
SIXTH.- LEASE PRICE AND GUARANTEE.
The TENANT shall pay during the first two years of the Initial
Term of this CONTRACT, as rent for the use and possession of the
LEASED PROPERTY, the net base amount of US $5.55 (FIVE DOLLARS
55/100), legal currency of the United States of America, per
square foot of construction per year, in twelve equal monthly
installments.
Starting the third year of the Initial Term, the rent to be paid
to the LANDLORD during the rest of this CONTRACT will be
increased annually by applying to the basic rate of $5.55 (FIVE
DOLLARS 55/100) legal currency of the United States of America,
an increase equal to the Consumer Price Index (CPI), All Urban
Consumer, U.S. City Average, published by the Department of Labor
of the United States of America, expressed as the percentage
increase occurred during the period of the 24 (twenty four)
months immediately preceding.
Thereafter the rent to be paid to the LANDLORD during the rest of
this CONTRACT will be increased on a yearly basis by applying, to
the basic rate (the one in effect at the time), a percentage
equal to the increase in the Consumer Price Index (CPI), All
Urban Consumer, U.S. City Average, published by the Department of
Labor of the United States of America, expressed as the
percentage increase occurred during the period of the 12 (twelve)
months immediately preceding.
The rental payments described herein will be made in advance on
the first day of each month, at the address of the LANDLORD, Ave.
Vicente Guerrero No. 6965, Cd. Juarez, Chihuahua, Mexico, at the
Accounting Department, without notice or demand or in the place
and to the person designated by LANDLORD in writing.
5
Notwithstanding that the rental price is determined in Dollars,
currency of the United States of America, payment thereof may be
made in Pesos, Mexican currency, at the election of the TENANT,
provided the rate of exchange applied is equal to the Dollar sell
rate quoted by the Bank of Mexico through the information
published daily in the official Gazette of the Federation (Diario
Oficial de la Federacion) at the day of payment.
Should punctual payment of the rent as provided for in this
CONTRACT be defaulted, and should such default be continuing for
five (5) calendar days or more, interest will be caused over
those defaulted rental payments, calculated on a daily basis for
each day the full rental payment is past due and remains unpaid,
at an annual rate of five (5) percentual points over the Prime
Rate, as published on the Wall Street Journal, on the day payment
of the corresponding rental is made.
Under no circumstance can the TENANT hold back or deduct from the
rent amounts, be it for judicial or other reasons, and in no case
shall deductions be made for improvements or repairs to the
LEASED PROPERTY, but shall be paid in total in the manner and
terms agreed herein.
It is agreed by the TENANT that S.T.B. Systems, Inc., on 1651
North Glenville, P.O. Box 850957, Richardson, Texas, Zip Code
75085--0957, will be jointly liable and responsible, and at this
time they do hereby waive all benefits of order and exemption
provided by law, for the Fulfillment and compliance of all the
covenants, agreements and obligations assumed by TENANT herein,
in accordance with the terms of the Guarantee Agreement attached
to this CONTRACT as Exhibit "D", same which is incorporated by
reference hereto and forms a part hereof.
SEVENTH.- TAXES AND UTILITIES.
Starting on the date of the commencement of the LEASE under the
terms of the Third Clause of this CONTRACT, and during the effect
of it, THE TENANT shall be responsible of the corresponding
payments for the Value Added Tax and the Property Tax. Also, the
parties agree that in the future event a tax is levied on the
present CONTRACT or on the LEASED PROPERTY, such tax shall be
paid by THE TENANT.
6
The parties, at their expense, as the case may be, may contest by
appropriate legal proceedings conducted in good faith and with
due diligence, the amount, validity or application, in whole or
in part, of any tax, assessment or charge which any other parties
are obligated to pay hereunder, provided that: (a) the
commencement of such proceeding shall suspend the collection
thereof\ (b) neither the LEASED PROPERTY nor any rent therefrom
nor any part thereof or interest therein, would be in any danger
of being sold, forfeited, attached or lost; and (c) if such
contest be finally resolved against the party which may
correspond, such party shall promptly pay the amount required to
be paid, together with all interest and penalties accrued
thereon. The parties shall cooperate with each other with respect
to any such contest.
The TENANT shall also directly contract and pay for all use of
utilities that it may require in its occupancy of the LEASED
PROPERTY. The LANDLORD represents that all necessary utilities,
including electricity, water, sewage, gas and telephone lines,
are available at the LEASED PROPERTY, but the parties agree that
the TENANT will be responsible for the hook-up and payment of
contract of all such utilities of which it will be the user
excluding the payment to the Junta Municipal de Agua y
Saneamiento for the right of usage, payment which shall be made
by the LANDLORD. LANDLORD agrees to do nothing which would
willfUlly and/or wrongfUlly stop or interrupt or cause stoppage
or interruption of the above-specified utility services.
EIGHTH.- MAINTENANCE AND PROTECTIVE COVENANTS.
During the Term of this lease, responsibility for maintenance,
repair and replacement for the LEASED PROPERTY shall be governed
by the "Protective Covenants and Restrictions" (Exhibit "B")
applicable to the Industrial Park in which the LEASED PROPERTY is
located, legally binding and enforceable upon all tenants and by
the following:
1. In addition to the construction and improvements referred to
in Clause THIRD hereof, the LANDLORD warrants and guarantees that
prior to the execution of this CONTRACT, it has performed all
repairs and installations to the BUILDING necessary to place it
in a condition suitable for their intended use by the TENANT, and
in consideration of such performance by LANDLORD, TENANT
represents that by occupancy of the BUILDING it has accepted the
7
BUILDING and all installations in good and operable condition,
and in Full compliance with this Clause, except latent defects
and except as otherwise set forth in Clause THIRD of this
CONTRACT.
2. The LANDLORD shall at all times during the Lease Term or
during any extension thereof and at its own cost and expense,
effect all structural repairs that are not derived from the
negligence or bad faith of the TENANT and shall maintain the
BUILDING foundations, the structure of the floor slab, the
structure of exterior walls and the structure of the roof and the
complete roofing system in a watertight condition.
3. The TENANT shall maintain and effect, at its own cost and
expense, all non-structural repairs including the interior of the
BUILDING, the interior and exterior paint thereof, and all
electrical, water, gas, sewage, heating, ventilation and air
conditioning systems from their point of hook-up for access by
TENANT, as well as all landscaping, as of the date of
commencement of occupancy, except the guarantees including
equipment, installations and coverings only during the first year
of this CONTRACT; even in the event of the need for such repairs
has not arisen from the negligence or bad faith of the LANDLORD.
If the need for such repairs has arisen from the negligence or
bad faith of the LANDLORD, then the LANDLORD shall perform such
repairs at LANDLORD's own expense and immediately following
receipt of notice or request thereof.
4. The LANDLORD will transfer any and all warranties and
guarantees that apply to the LEASED PROPERTY, if available.
NINTH.- ALTERATIONS.
The TENANT may not change the basic structure, the external
appearance or utility services of the BUILDING, nor make any
major alterations thereto, without the express written
authorization of the LANDLORD. The TENANT is hereby authorized to
make minor alterations or modifications to the BUILDING, at its
own risk and expense, so long as they do not alter or impair the
structure of the BUILDING and shall give prior written notice to
the LANDLORD thereof. Minor alterations and modifications are
understood to be those that do not have an
8
estimated cost in excess of 10% of the agreed monthly rent. Works that
have a cost in excess of the above value must abide by the rules
stipulated in the Eleventh Clause of the Protective Covenants and
Restrictions. All fixtures and/or equipment of whatsoever nature
installed in the LEASED PROPERTY by the TENANT during the Lease Term,
whether permanently affixed thereto or otherwise, shall continue to be
the property of the TENANT, and shall be removed by the TENANT at the
expiration or termination of this CONTRACT or any renewal or extension
thereto, unless the TENANT receives the written permission of the
LANDLORD, in advance, and in each specific case, that the improvements
may remain on said property upon the expiration of this CONTRACT
provided, however, that the TENANT neatly caps, cuts, covers over and
leaves in the walls or floors any wiring, piping, or conduit associated
with any improvements which the TENANT removes or the LANDLORD so
directs be removed. Should any wiring, piping or conduit be
incorporated to the walls or floors, TENANT will provide LANDLORD with
blueprints detailing the locations of said wiring, piping or conduit.
TENTH.- RESPONSIBILITY OF THE PARTIES.
1. The LANDLORD or the TENANT, respectively, shall be liable for
damages to the LEASED PROPERTY caused by their own fault or
negligence, or that of their agents, employees or visitors.
2. In the event that the TENANT is prevented by any cause
attributable to the LANDLORD, whether partially or completely,
from the use of the BUILDING, and said impediment of use can be
corrected in less than ninety (90) days from the date of its
occurrence, this CONTRACT will continue and the rent shall be
reduced by an amount which represents the unusable percentage of
the LEASED PROPERTY.
3. If the LEASED PROPERTY is damaged or destroyed by any cause
not attributable to the TENANT, the LANDLORD agrees to restore it
and put it in proper condition for the TENANT to use it for the
purposes agreed upon in this CONTRACT. However, if such
destruction is total, or exceeds fifty percent (50%) of the Full
value of the BUILDING and is originated by acts of God or force
majeure, or if it is reasonably expected that the
9
destruction cannot be corrected within ninety (90) days from the date
of the occurrence, the TENANT shall have the right to terminate this
CONTRACT or request the LANDLORD, in writing, to rebuild the BUILDING.
However, the LANDLORD will have the right to refuse to rebuild the
BUILDING in this case, and in such event, this CONTRACT will terminate
without any liability or responsibility to either party hereto. If the
TENANT decides to terminate this CONTRACT under the circumstances above
described, the CONTRACT shall terminate and the TENANT shall be
released from any Further obligation hereunder. If the TENANT continues
to lease hereunder, the rent payable under this CONTRACT shall be
reduced by an amount which represents the unusable percentage of the
LEASED PROPERTY, as above mentioned, and the original amount of the
rent payable shall be restored to the LANDLORD in the same proportion
that the use of all the square footage leased is restored to the TENANT.
4. If the TENANT is prevented, by a cause attributable to the LANDLORD,
from using all or part of the LEASED PROPERTY, so that, in the TENANT's
opinion, the TENANT may not use the BUILDING for the purposes stated
herein, and the impediment to the TENANT's use of the LEASED PROPERTY
reasonably can be expected to continue for ninety (90) days or more,
TENANT shall have the right either to terminate this CONTRACT upon
written notice delivered to the LANDLORD, or require the LANDLORD in
writing to rebuild the damaged or destroyed portion of the LEASED
PROPERTY expeditiously at the LANDLORD's expense, or, if applicable, to
remove, on account and cost to the LANDLORD the impediment of use of
the BUILDING as requested by the TENANT. The LANDLORD shall indemnify
the TENANT in the amount of the damages caused to the TENANT, if the
impediment of use was caused due to the fault or negligence of the
LANDLORD.
ELEVENTH.- INSURANCE.
The parties to this CONTRACT specifically agree that:
1. During the Term of this LEASE, the TENANT, at its own expense,
shall obtain and keep in force insurance policies on behalf of
the parties hereto upon the LEASED PROPERTY, of the type and in
the amounts described below.
10
(A) Insurance, which beneficiary shall be the LANDLORD, covering
any loss or damage to the LEASED PROPERTY caused by fire,
lightning, explosion, hurricane and hail, airplanes, vehicles,
smoke, earthquake, volcanic eruption, snow, flooding, strikes,
riots, vandalism and any other risks now or hereafter embraced by
the so-called "Extended Coverage" rider in Mexico, including
glass insurance, in amounts sufficient to prevent the LANDLORD or
the TENANT from becoming co-insurers under the terms of the
applicable policies, and in any event, and at all times, in an
amount not less than one hundred percent of the "Full insurable
value" of the BUILDING, which for purpose of this CONTRACT shall
be deemed to be the cost of replacing the BUILDING in dollars,
legal currency of the United States of America, plus excavations,
rubble removal, foundations and footings, and without any
deductions for physical depreciation of the BUILDING.
Such "full insurable value" shall be determined from time to time
but not more frequently than once every twelve months, following
any of the procedures described below, at the discretion of the
TENANT:
(i) through an appraisal carried out by an authorized
Mexican Bank or Insurance Company appointed by the TENANT,
which appraisal shall be paid for by the TENANT;
or
(ii) through an appraisal carried out by the LANDLORD
at LANDLORD's expense.
The TENANT is not obligated to maintain insurance coverage for an
amount greater than the Full insurable value of the LEASED
PROPERTY most recently determined pursuant to the provisions
hereof
(B) General public liability insurance, covering claims for
bodily injuries or death and/or property damage up to the maximum
amount of $ 250,000 (TWO HUNDRED FIFTY THOUSAND DOLLARS AND
00/100), legal currency of the United States of America, per
occurrence,
11
(C) Insurance against loss or damage caused by:
(i) Boiler, compressor, or electric transformer
malfUnction; or
(ii) Internal explosion of any equipment installed in
the BUILDING which is part of the LEASED PROPERTY, in
such amounts as the LANDLORD, from time to time, may
reasonably require.
(D) Rental interruption insurance, on behalf of the LANDLORD,
for an amount equivalent to one (1) year of rentals, plus the
respective Value Added Tax.
2. All insurance provided for in this Clause shall be effected
under valid and enforceable policies issued by insurers
authorized to do business in Mexico.
3. All policies of insurance herein provided for shall name the
LANDLORD and the TENANT as the insured, to the extent of their
interests in the LEASED PROPERTY and to the extent that the
LANDLORD shall request.
4. Each insurance policy issued by the insurer shall contain an
agreement by the insurer that such policy shall not be canceled
without at least thirty (30) days prior notice to the LANDLORD
and to the TENANT and that any loss payable to the LANDLORD under
any such policy shall be so payable notwithstanding any act or
negligence of the TENANT.
5. In case of a casualty to the LEASED PROPERTY resulting in
damage or destruction to the BUILDING, the TENANT will promptly
give written notice thereof to the LANDLORD, and promptly shall
begin adjustment proceedings.
6. All insurance money paid on account of such damage or
destruction, less the actual cost, fees and expenses, if any,
incurred in connection with adjustment of the loss, shall be paid
to the LANDLORD or the TENANT, as their respective interests
shall appear under this CONTRACT, in order to restore the LEASED
PROPERTY, to its value, condition and character existing
immediately prior to such damage or destruction.
12
7. In effecting the replacement or rebuilding of the damaged or destroyed
BUILDING, the parties hereto shall look first to the proceeds of the
insurance covering such replacement or rebuilding, but if the amount
established in the policy should not cover the Full cost of rebuilding or
replacement of the BUILDING, the TENANT shall be responsible for the payment
of the difference, provided that the damage or destruction of the BUILDING is
caused by the negligent or willfUl misconduct of the TENANT, its employees,
suppliers, clients or visitors, and in no case the TENANT will pay the
difference in the event the damage is caused by nature.
TWELFTH.- TERM.
1. The initial term of this CONTRACT shall be for a period often (10) years,
binding upon both parties (the "Initial Term"), commencing on the date the
LEASED PROPERTY is delivered by the LANDLORD and received by the TENANT in
agreement (Initiation Date), with the understanding that the delivery date
for the LEASED PROPERTY shall not exceed twelve (12) months from the date
this CONTRACT is signed.
Should the LANDLORD complete and deliver the BUILDING to the TENANT before or
after the date previously established, the term of this CONTRACT shall be
considered as starting on the date of actual completion.
Notwithstanding the provisions hereof, in order to facilitate TENANT's
partial occupation of the LEASED PROPERTY in its areas of production,
restrooms, docks, compressor room, maintenance room, cafeteria, switchboard
room and substation, in order for the TENANT to proceed with the installation
of machinery and equipment and begin with the production operations at the
LEASED PROPERTY, being the beneficial occupancy the area described in Exhibit
"E" of this CONTRACT.
THE LANDLORD commits itself to deliver the beneficial area described before
to THE TENANT, 30 (thirty) calendar days before the formal delivery and
reception of the LEASED PROPERTY, regarding this 30 days, THE TENANT is freed
of any rent payment.
13
Should the LANDLORD be delayed in delivering the BUILDING to the
TENANT, the LANDLORD shall pay the TENANT as compensation the
amount of US $400.00 (FOUR HUNDRED DOLLARS 00/100), for each day
of delay, provided that such delay is not attributable to the
TENANT, to acts of nature, or to causes beyond control of the
LANDLORD.
2. The TENANT shall have four (4) consecutive options to extend
the Initial Term of this CONTRACT for a period of five (5) years
each one. Such extension periods will begin on the day following
the expiration of the Initial Term, or any of the then current
extensions thereof, and if the TENANT desires to exercise such
option, it must do so by notifying the LANDLORD in writing at
least ninety (90) calendar days prior to the expiration of the
Initial Term or any of the then current extensions thereof
Should any of the options to extend the Initial Term of this
CONTRACT be exercised by the TENANT, the monthly rentals payable
by the TENANT to the LANDLORD pursuant to this CONTRACT, will
increase by a percentage equal to the increase of the CPI for the
previous year, on a yearly basis, as provided for in Clause Sixth
hereof, for each and every of the extension of the Initial Term
of this CONTRACT.
3. In the event the TENANT decides to end this CONTRACT prior to
the termination date of the lease, or any of the extension
periods as the case may be, due to causes not attributable to the
LANDLORD, the TENANT shall inform the LANDLORD in writing, with
at least 90 (ninety) days advance notice, with the TENANT
agreeing to pay the LANDLORD, as hereby established for
compensation and retribution, the amount required to complete the
total value of the lease to its termination date (Initial Term),
or that of the current extension period, except as provided in
the following paragraph.
4. THE LANDLORD is in conformity and authorizes the TENANT the
option to advance the termination of this contract within the
last two years of the Initial Term. In the Event that the TENANT
executes this option, THE TENANT is obligated to pay to the
LANDLORD as a conventional penalty in lieu of all other rents
otherwise owing to LANDLORD pursuant to this
14
LEASE, the amount of US $0.05 per square foot per month of the BUILDING that
is being leased, from the time Notice thereof is made, until completion of
the Initial Term, with the written notice of the TENANT to the LANDLORD with
at least 90 days advance.
THIRTEENTH.- SUBLEASING.
The TENANT may not sublease the LEASED PROPERTY or assign this CONTRACT,
unless it obtains the prior written authorization from LANDLORD, and which
shall not be irrationally denied and provided the TENANT and its guarantor
remain responsible for the Fulfillment and compliance of all of its
obligations assumed herein before the LANDLORD.
In the event authorization to sublease is requested by TENANT and granted by
LANDLORD, such sublease arrangement shall in no case extend beyond the date
of termination of the Initial Term or the current extension thereof
Notwithstanding the provisions hereof, the parties agree that the TENANT may
sublease the Leased Property or assign this CONTRACT to any affiliate or
subsidiary of S.T.B. Systems, Inc. and that in such case it will notify the
LANDLORD, without the need or requiring any Further authorization from the
LANDLORD, in which case the provisions regarding guaranty and rental payments
referred to in the preceding paragraphs shall survive.
FOURTEENTH.- ASSIGNMENT OF RENT.
LANDLORD may assign the rentals derived herefrom to the financial
institutions of its choice for the purposes of securing Funds and the TENANT
and its guarantors who shall sign the notification and they also hereby agree
to cooperate with any and all reasonable requests for financial information
to comply with the needs to assess the financial strength of the TENANT and
its guarantor. Such procedures to process this information will be done so
under standard banking practices, with the highest practical level of
confidentiality being observed.
15
FIFTEENTH.- SURRENDER OF THE LEASED PROPERTY.
The TENANT shall, on the last day of the Lease Term or any extension thereof,
or upon earlier termination, surrender and deliver the LEASED PROPERTY into
the possession and use of the LANDLORD, without delay, in good order,
condition and adequate maintenance, normal wear and tear excepted. All
signs, inscriptions, canopies and installations of like nature made by the
TENANT shall be removed at the time of the expiration of the Lease Term.
Both parties agree that prior to vacating the BUILDING, and with the purpose
of Fully satisfying the requirements for delivery of the LEASED PROPERTY, the
TENANT will inform the LANDLORD in writing, with 90 (ninety) days advance
notice, of the date of surrender and delivery, so that the LANDLORD may give
notice to the Secretaria del Medio Ambiente, Recursos Naturales y Pezca
(Ministry of the Environment, Natural Resources and Fishery), and the
Procuraduria Federal de Proteccion al Ambiente (Federal Agency for Protection
of the Environment), and order studies and evaluation be made for soil and
environmental impact, by technicians authorized by said institutions, with
the object of determining the degree of contamination found on the LEASED
PROPERTY relative to the soil and the environment, as a result of the
installations and use of the LEASED PROPERTY by the TENANT, with the
understanding that the expenditures generated by such studies will be borne
by the latter, and that the LEASED PROPERTY will only be accepted by the
LANDLORD once a letter of compliance is delivered in favor of the TENANT by
the aforementioned institutions, through which it is established that the
LEASED PROPERTY falls within the allowable and obligatory ecological criteria
applicable to the installation and use for which it is intended, Maquiladora
Industry.
All furniture, trade fixtures, machinery and business equipment installed by
the TENANT shall remain the property of the TENANT, unless otherwise agreed
upon by the parties in writing, and shall be removed by the TENANT at any
time during or at the end of the Lease Term, and the TENANT shall, at its own
expense, repair all damage beyond ordinary wear and tear resulting from the
installation or removal thereof.
16
If at the expiration of the term of this lease or any then current extension
thereof, the TENANT does not vacate and delivers the use and possession of
the LEASED PROPERTY to the LANDLORD, the TENANT shall pay as new rent, the
amount of rent currently paid at such time, under the terms and conditions
established in Clause Sixth, plus an increase of 50% (FIFTY PERCENT) for each
month it continues to occupy the LEASED PROPERTY, and until it vacates and
yields the possession and use thereof to the LANDLORD.
The provisions of this Clause will not be considered as a waiver by the
LANDLORD of its right to repossess the LEASED PROPERTY as provided for
herein, nor will it be considered that the receipt of such payments or part
thereof, or any other act in apparent confirmation of tenancy will operate as
a waiver of the right of the LANDLORD to recuperate the LEASED PROPERTY.
Any personal property which remains in the LEASED PROPERTY after the
termination of this CONTRACT may, at the option of flu LANDLORD, be deemed to
have been abandoned and either may be retained by the LANDLORD as its
property or be disposed of without accountability, in such manner as the
LANDLORD may desire.
SIXTEENTH.- LANDLORD'S RIGHT TO PERFORM TENANT'S COVENANTS.
If the TENANT, at any time during the Term of this CONTRACT or its extension,
shall fail to perform any of its agreements made in this CONTRACT, the
LANDLORD, after ten (10) days following the delivery to the TENANT of written
notice of said failure (or without notice in case of emergency), and without
waiving or releasing the TENANT from any obligation of the TENANT contained
in this CONTRACT, may, but shall be under no obligation to perform any act
which the TENANT is required to perform under the terms of this CONTRACT, and
may enter upon the LEASED PROPERTY for that purpose and take all such actions
thereon as may be necessary therefor. All sums paid by the LANDLORD, and all
costs and expenses incurred by the LANDLORD in connection with the
performance of any such obligation of the TENANT shall be payable by the
TENANT to the LANDLORD on demand.
17
SEVENTEENTH.- TENANT'S RIGHT TO PERFORM LANDLORD'S COVENANTS.
If the LANDLORD, at any time during the Term of this CONTRACT or its
extension, shall fail to perform any of its agreements made in this CONTRACT,
the TENANT, after ten (10) days following the delivery to the LANDLORD of
written notice of said failure (or without notice in the case of emergency),
and without waiving or releasing the LANDLORD from any obligation of the
LANDLORD contained in this CONTRACT, may, but shall be under no obligation to
perform any act which the LANDLORD is required to perform under this
CONTRACT, and may take all such actions on the BUILDING as may be necessary
therefor. All sums paid by the TENANT, and all reasonable costs and expenses
incurred by the TENANT in connection with the performance of any such
obligation of the LANDLORD, shall be payable by the LANDLORD to the TENANT on
demand.
EIGHTEENTH.- ENTRY ON LEASED PROPERTY BY LANDLORD.
The TENANT shall permit the LANDLORD and its authorized representatives to
enter the LEASED PROPERTY at all reasonable times during normal business
hours, upon reasonable advance notice of at least 24 hours, for the purpose
of inspecting the same and performing any work therein that may be required.
The LANDLORD shall exercise its authority under this provision in such a way
so as not to interfere with the business operations of the TENANT.
NINETEENTH.- HOLD HARMLESS.
The LANDLORD agrees to save, defend and hold TENANT harmless against any and
all liabilities, including penalties and interest, which TENANT is required
to pay due to any act or omission of LANDLORD, which directly or indirectly
results in such liability, penalty and/or interest. Furthermore, LANDLORD
covenants and agrees not to sue TENANT in the Future, provided TENANT duly
and timely meets its obligations hereunder.
The TENANT agrees to save, defend and hold LANDLORD harmless against any and
all liabilities, including penalties and interest, which LANDLORD is required
to pay due to any act or omission of TENANT, which directly or indirectly
results in such liability, penalty and/or interest.
18
Furthermore, TENANT covenants and agrees not to sue LANDLORD in the future,
provided LANDLORD duly and timely meets its obligation hereunder.
TWENTIETH.- OPTION ON ADJACENT LAND.
LANDLORD will keep adjacent to the LEASE PROPERTY, a plot of land with an
area of approximately 19,672.00 square meters (approximately 211,756.000
square feet) as described herein in the blueprint attached hereto as Exhibit
"F" free from any liens and encumbrances, for the purpose of constructing an
expansion to the BUILDING, as provided herein. For the term of two (2) years
from the date of commencement of the Initial Term of this Agreement, the
TENANT shall have the right to exercise an option to lease for a minimum term
equal to the remaining period or an;y of the extensions of the CONTRACT, an
expanded production area up to 8,361.00 square meters (approximately
90,000.00 square feet) to be constructed by LANDLORD at LANDLORD's expense.
This option should be exercise in writing. Construction shall start at the
time this option is exercised and shall be completed in a term of twelve (12)
months. The characteristics and specifications of such expansion, will be the
same as those of the Leased Property, and the expansion shall be occupied by
the TENANT upon completion and acceptance of construction work. Said
expansion, once completed, will become part of the LEASED PROPERTY and
subject to all the terms hereof.
Once the term established in the preceding paragraph has expired, and until
completion of the tenth year of the Initial Term of this CONTRACT, the
LANDLORD grants the TENANT the right to preferential use of the land, right
which shall be executed within 30 calendar days after having received
notification from the LANDLORD (of its desire to construct a building on the
aforementioned adjacent land), in which case, construction of the expansion
shall be started upon execution of this option.
In order to establish the solid intention of the parties regarding the Option
to the Adjacent Land entered in this Clause, THE TENANT, by signing his
instrument, will pay as a deposit the amount of $55,000.00 (FIFTY FIVE
THOUSAND DOLLARS 00/100) legal currency of the United States of America, to
THE LANDLORD being the present Clause the most efficient legal way to
19
give faith of delivery. With the understanding that the deposit of the amount
will be made in favor of the LANDLORD in a final manner in the event that the
TENANT does not exercise the Option to the Adjacent Land under the terms
stated in this Clause; if the TENANT exercises its Option to the Adjacent
Land, the amount of the deposit will be taken by the LANDLORD for rent
hereunder as part of the first payment generated once the construction of the
expansion is concluded, the aforementioned payment will include both
constructions, the new one and the existent one.
TWENTY-FIRST.- MODIFICATIONS TO CONTRACTUAL DOCUMENT.
Except as otherwise provided herein, no modification, release or discharge of
this CONTRACT, or waiver of any of the provisions hereof, shall be of any
force or effect except by an amendment hereto in writing signed by the
LANDLORD and the TENANT.
TWENTY-SECOND.- SOLE CONTRACTUAL DOCUMENT.
The parties agree that this CONTRACT contains all the covenants and
agreements between them, and therefore, this CONTRACT is the sole contractual
document executed by the parties, and supersedes any other contract or
agreement entered into by the parties hereto.
TWENTY-THIRD.- APPLICABLE LAW AND JURISDICTION.
This CONTRACT shall be interpreted in accordance with, and be
subject to the provisions of the Civil Code for the State of
Chihuahua, and both parties hereto submit to the jurisdiction of
the Courts of Ciudad Juarez, State of Chihuahua, Mexico,
expressly waiving any other jurisdiction that may correspond to
them due to their present or Future domiciles or due to any other
reason whatsoever.
TWENTY-FOURTH.- SUBORDINATION.
The TENANT agrees, at the request of the LANDLORD to subordinate this
CONTRACT (including any extension hereto) to any mortgage placed upon
the LEASED PROPERTY, provided that the mortgage holder agrees to
recognize the TENANT's rights under this CONTRACT, and provided further
that the mortgage holder agrees not to disturb the possession
20
and other rights of the TENANT under this CONTRACT, so long as the TENANT
continues to perform its obligations hereunder. In the event the mortgage
holder acquires title to the LEASED PROPERTY through foreclosure proceedings
or otherwise, the mortgage holder agrees to accept the TENANT as tenant under
this CONTRACT, and to perform the LANDLORD's obligations hereunder (but only
while being owner of the LEASED PROPERTY), and the TENANT agrees to recognize
as LANDLORD such mortgage holder or any other person acquiring title to the
LEASED PROPERTY. The TENANT and the LANDLORD agree to execute and deliver all
appropriate instruments required to carry out the agreements contained herein.
TWENTY-FIFTH.- NOTICES.
All notices, demands and requests required under this CONTRACT and its
exhibits shall be in writing, and shall be deemed to have been properly given
if served personally or if sent by registered or certified mail, return
receipt requested, addressed to the LANDLORD or the TENANT, as the case may
be at their respective address last designated by notice to the other party
to this CONTRACT for that purpose. Until the LANDLORD and the TENANT shall
designate other addresses, their addresses shall be as follows:
LANDLORD: Complejo Industrial Fuentes, S.A. de C.V.
Ave. Vicente Guerrero # 6965
Ciudad Juarez, Chih.
Mexico C.P. 32320
TENANT: S.T.B. de Mexico, S.A. de C.V.
Vicente Guerrero Ave. No. 7470
Cd. Juarez, Chih., Mexico
C.P. 32320
21
TWENTY-SIXTH.- TRANSLATION.
This CONTRACT is executed in two counterparts: one in the English language
and the other in Spanish language. In case of any discrepancy between the two
texts, the Spanish version shall prevail.
The parties hereto execute this CONTRACT in Ciudad Juarez, Chihuahua, on the
4th day of October 1996.
"THE LANDLORD" "THE TENANT"
COMPLEJO INDUSTRIAL FUENTES, S.T.B. DE MEXICO, S.A. DE C.V.
S.A. DE C.V.
BY: /s/ EDUARDO FUENTES VARELA BY: /s/ RANDALL DON EISENBACH
-------------------------- -------------------------
Mr. Eduardo Fuentes Varela Mr. Randall Don Eisenbach
Chairman of the Board of Sole Administrator
Directors
WITNESS: WITNESS:
/s/ FERNANDO RIOS /s/ JESUS TRILLO
----------------------- ------------------------
MR. FERNANDO RIOS MR. JESUS TRILLO
22