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Exhibit 10.9(m)
ENGLISH VERSION OF THE LEASE AGREEMENT TO BE EXECUTED BY AND
BETWEEN COMPONENT FOOTWEAR DOMINICANA, S. A. AND PARQUE
INDUSTRIAL SANTIAGO NORTE, S. A. (PISANO) FOR THE LEASE OF
BUILDING NO. 4 AT ZONA FRANCA INDUSTRIAL SANTIAGO NAVARRETE.
BETWEEN:
SANTIAGO NORTE, S. A. (PISANO) INDUSTRIAL PARK, a corporation
organized and existing under Dominican laws, with main offices at
the section of Ingenio Abajo, Santiago, duly represented herein
by Engineer Federico Idelfonso Dominguez Aristy, a Dominican, of
legal age, marital status married, an agricultural engineer,
domiciled and residing in Santiago de los Caballeros, bearer of
Personal ID Card No. 108239 Series 31, duly renewed, in his
capacity as Chairman of the Board of Directors, to be referred to
hereinafter as "PISANO", Party of the First Part; and
COMPONENT FOOTWEAR DOMINICANA, S. A., a company duly organized
under the laws of the Dominican Republic, with offices at No. 52
Mustafa Kemal Ataturk Street in the city of Santo Domingo,
National District, duly represented herein by Mister Edmund
John Feeley, an American, of legal age, marital status married,
bearer of U.S. Passport No. 012601897, and Mr. David Brett
Gunn, an American, of legal age, marital status married, bearer
of U.S. Passport No. 130418425 in virtue of Resolution passed by
the Board of Directors of the Corporation on November 29, 1993,
to be referred to hereinafter as "LESSEE", Party of the Second Part.
Before formulating the lease herein, the parties state the
following:
a. PISANO is in charge of the technical and operational
management of a Free Exportation Zone at Km. 7 1/2 of the
Santiago-Navarrete Highway which operates under the name of "Zona
Franca Santiago-Navarrete", and is ruled by the provisions of Law
8-90 of January 15, l990 to promote the establishment of new free
zones and the growth of existing ones, the organization of which
was duly approved by virtue of Executive Decree No. 27-92 of
January 17, l992; and ratified by virtue of an agreement executed
with the Dominican State on December 17, l992.
b. LESSEE has requested PISANO before the corresponding
proceeding the lease of an additional building to expand business
operations in the Santiago Norte Industrial Park (to be referred
to hereinafter as THE PARK), all of which shall be ruled by the
provisions of Law 8-90 above cited, by the provisions herein and
the Regulations that are attached hereto as Schedule A to be
deemed as an integral part hereof;
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Therefore, and in the understanding that the above preamble is to
be deemed an integral part hereof,
THE FOLLOWING HAS BEEN AGREED AND ENTERED INTO:
FIRST: PISANO leases LESSEE hereby, and LESSEE agrees to lease
the real estate described below for the price, term and under the
conditions provided hereunder:
A one story type A-1 building marked as number 4 located on LotNo. 60
- -REF-A-12 of Cadaster District No. 161 in the Munici-pality of Santiago,
having a height of 20 feet on the sides and 25 feet in the center,
concrete block walls, reinforced concrete flooring to bear a strength of
up to 15 PSI (feet per square inch) a steel frame supported by reinforced
concrete columns, gauge 26 aluzinc sheet roofing, aluminum windows, a pinewood
and glass door at the entrance , and a loading and unloading ramp in the
front of the building, which building includes the following inner areas,
according to the blueprints attached hereto as Schedule B to be deemed as
an integral part hereof, to wit:
Work Area : 13,893.82 square feet
Rest Rooms Area : 380.30 square feet
Office Area : 1,328.86 square feet
Emergency Plant Housing : 376.60 square feet
Mess room Area : 1883.00 square feet
TOTAL : 17,862.60 Square feet
Paragraph: The parties herein agree hereby that formal delivery
and reception of premises shall take place on November 15, 1993.
The sixty (60) day period of grace that has been given to LESSEE
to set up the equipment and machinery , a period during which
LESSEE shall pay no rent at all, but the maintenance fees
indicated herein above, shall begin to count as of the date of
said delivery; During the 60 day period of grace above stated,
PISANO shall by mutual agreement with the LESSEE carry out any
additional works requested according to its needs as indicated in
Exhibit C of the agreement. Furthermore, any construction details
which could not be completed before delivery due to their being
directly or indirectly related to the above mentioned additional
works shall then be completed.
Consequently, the first payment on account of monthly rent is to
be made on January 15, 1994, according to the provisions of
Article Third hereinbelow. Therefore, all payments of rent and
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maintenance fees shall be made every fifteenth day of each month.
Furthermore, the parties herein agree hereby that during the
first three (3) years of this lease, LESSEE shall pay no rent at
all on account of the area provided for the construction of a
mezzanine allowing for the expansion of the manufacturing
operations in the leased premises.
In the event LESSEE decided to expand business operations to the
mezzanine area during the term hereof, LESSEE shall effect PISANO
an additional rental payment equal to seventy percent (70%) of
the basic initial rental paid for the productive area, which
measures 13,893.82 square feet.
SECOND: The lease herein shall be for a term of three (3) years
as of the date of the satisfactory delivery to LESSEE of the
building leased hereunder, which is to take place on November 15,
1993, and shall end automatically on November 15, 1996, LESSEE
undertaking hereby to pay the monthly rental price until delivery
of premises to PISANO, were said delivery to take place after the
term agreed hereunder.
Notwithstanding the above stated, LESSEE may renew the lease
herein for an additional two (2) year period, provided however,
that a) in the event LESSEE had not expanded operations to the
mezzanine area during the initial term of amount equal to thirty
percent (30%) of the monthly rental price paid by the enterprise
for the productive area, measuring 13,893.82 square feet; and b)
LESSEE shall advise PISANO its desire to renew the lease at least
one hundred and eighty (180) days before the expiration of the
three (3) year period above stated. In such a case the amout of
the monthly rent shall be determined following the procedure
provided in Article Third herein below".
In the eventual case LESSEE were compelled to terminate the
agreement thorugh no fault of PISANO's before the expiration of
the term agreed on, a penalty amounting to six (6) months' rental
price shall be paid to PISANO. Sixty (60) days' advance notice
of any such termination shall be given to PISANO. In any such
case the provisions in article fourth herein shall be applied to
the guarantee deposit.
It is expressly agreed by the parties that LESSEE may not assign
or sub-lease in whole or in part its rights over the rented
premises as provided hereunder without the prior and written
consent of PISANO, except when assignee or sub-lessee were an
affiliate or subsidiary of the parent company of LESSEE, in which
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case LESSEE shall advise PISANO its intent to assign the lease and shall
submit pisano all relevant documentation evidencing the affiliate or subsidiary
character of any such new lessee. PISANO shall, if appropriate, execute
within a term not to exceed thirty (30) days a new lease with the new
lessee under the same terms and conditions herein and for the remaining
period of its term.
Respecting the assignment of the rights of LESSEE hereunder and
except in the event above foreseen concerning an assignee or sub-
lessee which were an affiliate or subsidiary of the parent
company of LESSEE prior due authorization by PISANO, the terms
and conditions of the new lease shall be those applicable to
new lessees at the time of the execution of the new lease.
Likewise, in the event the LESSEE transfers a substantial part of
its assets to a new entity authorized by PISANO to be a
transferee of LESSEE's rights under this Lease, the terms and
conditions of the new lease shall be those applicable to new
lessees at the time of the execution of the new lease. Any
assignees shall be duly authorized to operate at the Santiago
Norte Industrial Park and must have been rated accordingly under
Law No. 8-90 on free zones. In no case shall LESSEE claim to be
entitled to any rights acquired over the building or on account
of any goodwill gained.
THIRD: The basic price agreed on under this lease is of US$0.23
(twenty-three cents of a dollar) per square foot per month, that
is to say, a monthly rental price of FOUR THOUSAND ONE HUNDRED
EIGHT U. S. DOLLARS AND FOURTY CENTS (U$4,108.40) to be paid in
advance at the offices of PISANO with no need of any prior
requirement at all.
It is hereby agreed, however, that said basic price shall remain
subject to an annual increase conmensurate with the rate of
inflation in the United States of America on the basis of each
calendar year, i.e., from January to December each year as of the
year l994, using the official report of the Department of
Commerce of the United States as source for the determination of
said inflation rate.
Therefore, in order to enforce the above stated increase, every
month of January of each year, the contract's lease price will be
increased in advance taking a four percent (4%) as the annual
increase average on the inflation rate, and such percentage will
be adjusted when the Department of Commerce of the United States
officially informs the inflation rate of that country in the
former year. The adjustments can be positive or negative. In the
first case, the resulting surplus will be inmediately demandable
by PISANO to LESSEE, in the event the adjustment were negative,
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PISANO shall credit THE LESSE's account for the amount
overcharged.
In order to precisely determine the adjustment increase above
stated and its application hereto, an illustrative example is
given in the Internal Regulations.
PISANO accepts, states and acknowledges that LESSEE, in its
capacity as free zone enterprise is under the obligation to
exchange foreign currency through commercial banks to cover the
price of the lease and the cost of services, PISANO thus
undertaking to exchange any considerations paid in dollars of the
United States of America (US$) that were received through
commercial banks hereunder, and to deliver LESSEE such documents
as evidence that any such exchange has been made on behalf of
LESSEE within a term not to exceed thirty (30) days as of the
date each payment were made. The parties herein agree hereby
that were Law 8-90 of l990 and law 26l of l964 to be amended so
as to allow payment in United States dollars (US$) and free zone
enterprises were relased from their dollar exchange obligation,
the provisions herein shall remain without effect.
Paragraph. In case of failure to effect a monthly rental payment
on the date provided herein or were any other monetary
obligations to become overdue, interest shall accrue thereon at
the rate of one percent (l%) per month and/or fraction thereof,
such interest to be charged to LESSEE automatically and without
need of any prior advice thereof.
FOURTH: LESSEE shall deliver PISANO a guarantee deposit
amounting to three (3) months' rental payment, or TWELVE
THOUSAND, THREE HUNDRED AND TWENTY FIVE U.S. DOLLARS AND TWENTY
CENTS (US$12,325.20) to be delivered to PISANO in U.S. dollars
at the execution hereof.
The exchange obligation foreseen in article third hereinabove
shall apply to such considerations as were delivered as deposit;
thus, LESSEE expressly acknowledges hereby that any eventual
reimbursement of any considerations delivered as deposit, if
appropriate, shall be necessarily made in Dominican pesos for
such amounts as were evidenced by the appropriate exchange
receipts delivered on account of the two installments provided in
this article.
Such deposit as is provided herein shall be returned to LESSEE as
above stated not later than sixty (60) days as of delivery by
PISANO and reception by LESSEE of the leased premises, except for
any deductions that may be applied to said deposit, which would
be the following:
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A. Any maintenance repairs that had not been made by LESSEE
during the term hereof or any repairs that needed to be made
because of damages to the rented premises resulting from the
fault of LESSEE.
B. Any considerations owed by LESSEE on account of any of the
services listed in article fifth hereof.
C. Any interest accruing over any considerations owed.
It is understood that LESSEE shall not be entitled to offset any
amounts given in deposit against any rental payments owed by
LESSEE and any such considerations or fractions thereof shall
remain for the benefit of PISANO in the event LESSEE did not
begin its business operations within the term of one hundred and
twenty (120) days following its solicitude before the National
Council of Free Zones for the ampliation of is Free Zone License
as stated in article sixth hereof, except in case of force
majeure duly verified by the parties or for causes which were not
the fault of LESSEE, in which event the above term shall be
suspended but in no case shall LESSEE be released from complying
with each and every one of its obligations hereunder, specially
as to the monthly payment of the rental and the maintenance fees.
It is further understood that the deposit obligation provided in
article fourth hereinabove is not to be deemed as a limitation of
the liability of LESSEE and that, consequently, in the event of
default by LESSEE damages may be claimed by PISANO for
a consideration in excess of said deposit, PISANO being entitled
to claim any additional values that may considered appropriate as
a fair compensation of any direct or indirect damages that may
have been caused by LESSEE.
FIFTH: PISANO shall provide LESSEE the direct and indirect
services listed below:
Direct services
a. Admission Control
b. Garbage collection
c. Water supply
d. Van parking.
e. Sewer and drainage.
Indirect services:
a. Street lighting
b. Health Clinic
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c. Cafeteria- Messroom.
d. Firemen Service.
e. Audio and data communications network; and
f. Electric Power networks.
g. Security Facilities Service
LESSEE acknowledges hereby respecting the above basic services
that same shall be provided as stated in the Regulations ruling
leases in the PARK which are attached hereto as an integral part
hereof.
Paragraph I. It is expressly agreed that PISANO shall make
LESSEE a monthly charge which LESSEE accepts, amounting to ten
(10%) of the monthly rental price of the lease as provided in
article third hereinabove, on account of providing the direct
services of Admission Control, garbage collection, street
lighting, sewer and drainage and the payment of the personnel
working as firemen, PISANO undertaking hereby to pay the above
services on a monthly basis with no delay whatever, in the
understanding that such rates as shall rule these services may be
subject to revision by mutual agreement whenever there were
financial reasons justifying any such revision. Direct water
supply and container parking services shall be collected as
provided in Section IV-A, letters c) and d) of the attached
Internal Regulations".
Paragraph II. Any considerations due and remaining unpaid on
account of the above services shall accrue interest at the rate
of one (l%) percent per month and/or fraction thereof,and any
such amounts overdue shall be deemed to be a breach hereto.
SIXTH: LESSEE herein shall be solely authorized to set up and
operate in the PARK such business as were provided in its Free
Zone License or in the ammendments to such License, and that
industrial operations shall be started within a term not to
exceed one hundred and twenty (120) days as of securing said Free
Zone License or in its ammendments, except in the event of force
majeure duly verified or for causes that were not the fault of
LESSEE, in which event such a term shall be suspended; however,
LESSEE shall in no event be released from compliance with each
and every one of its obligations hereunder, specifically the
obligation to pay the monthly rental and maintenance fees.
Paragraph I. In the event LESSEE were unable to secure within a
term of one hundred and twenty (120) days as of the date of
delivery of the leased premises its rating as free zone
enterprise due to force majeure or without fault, the lease
herein shall be automatically terminated with no liability for
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the parties, and LESSEE shall effect delivery of the premises
within a term of thirty (30) days. The parties herein
acknowledge hereby that in the event foreseen in this paragraph
LESSEE shall pay PISANO such rental price and manintenance fees,
as shall cover the time during which LESSEE shall have
effectively occupied such premises, while PISANO shall effect
delivery of the deposit amount provided in article fourth
hereinabove after duly effecting whatever deductions were
appropriate.
Paragraph II. It is expressly agreed that were LESSEE to be
cancelled its free zone rating under Law 8-90 due to its fault
duly proven, LESSEE shall be under the obligation to vacate and
deliver PISANO the rented premises within a term of ninety (90)
days as of the date of any such cancellation, LESSEE therefore
losing its right to reimbursement of the guarantee deposit
provided in article 4 hereinabove and being compelled to pay the
penalty foreseen in article second hereinabove, as well as the
monthly rental price up until the time it were to actually and
effectively vacate and deliver the rented premises, without
prejudice of any other damages as appropriate.
Paragraph III. It is understood by the parties that LESSEE shall
as soon as possible deposit in the offices of PISANO a copy of
such documentation as was used in support of its free zone rating
application, or its solicitude for the ammendement of its Free
Zone License intended to enlarge its operations and a copy of the
Resolution by the National Free Exportation Council within a term
of thirty (30) days as of the date of said Resolution.
SEVENTH: LESSEE hereing shall be entitled to withdraw at the
expiration hereof, all and any machinery and equipment,
electrical installations in general, air conditioners, furniture,
and in general, any goods of any kind which were owned by LESSEE
and had been installed by LESSEE in the rented premises prior due
authorization by the General Customs Directorate, provided
however, the premises were left in the same condition they were
found. However, any improvements thereto shall remain for the
benefit of PISANO with no compensation whatever; this will
include any additional doors, windows or bathrooms, air
extractors, inside partitions, any annexities constructed after
due prior approval, any alterations to the structure of the roof,
etc.
EIGHTH: LESSEE shall at its own expense maintain the rented
premises in good state of upkeep, thus undertaking all such
maintenance repairs as were required therefor, as well as such as
were necessary to repair any damages resulting from the fault of
LESSEE.
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It is understood that LESSEE shall not be responsible for
repairing any damages resulting from hidden or structural defects
in the rented premises.
Twelve (12) months after delivery of the premises, all
expenditures on account of disrepairs to floorings, doors and
windows shall be covered by LESSEE.
NINTH: LESSEE undertakes to secure insurance policies and
maintain them in force so as to cover the rented premises against
risks, such policies to name PISANO as beneficiary, securing as
well third party liability insurance covering both individuals
and property inside the premises as provided in the
Regulations attached hereto.
LESSEE further acknowledges the convenience for its business of
securing insurance against any risk or losses involving
machinery, equipment, raw materials, finished goods and other
items making up the assets of the business.
TENTH: Except for the two (2) year renewal option provided in
Article Second (2) hereinabove, the parties herein agree hereby
that this lease may not be tacitly extended. In the event LESSEE
desired to renew the lease after its agreed three (3) year term
of duration and the two (2) year extension provided
hereinabaove, PISANO shall be given written advice thereof one
hundred and eighty (180) days before the time of said expiration.
Any such renewal shall be approved through an agreement signed by
both parties herein.
ELEVENTH: It is expressly agreed that the working conditions
prevailing in the leased premises shall abide by all such
regulations and rules on health, industrial safety and others as
have been provided by the Departments of Labor, Public Health and
other interested agencies.
TWELFTH: It is expressly agreed hereunder that the business
operations of LESSEE shall be of a continuous nature; therefore,
any temporary suspension of business in excess of seven (7)
working days shall be advised in writing to PISANO within the
next twenty-four (24) hours after any such suspension. In such
cases, LESSEE shall comply with all local labor provisions
currently in force in the Dominican Republic. Likewise, the
parties herein agree that closing of LESEES operations due to
collective vacations shall not be previously notified by LESSEE
to PISANO.
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LESSEE herein acknowledges hereby that in the event of any
suspension of business as above stated in no case shall LESSEE be
released from complying with each and every one of its
obligations hereunder. Similarly, LESSEE herein acknowledges that
the basic aim of Law 8-90 on industrial free zones under which
terms it is operating in the Dominican Republic is the creation
of permanent sources of work. In the event of any suspension
lasting for more than six (6) months in a given calendar year,
PISANO will be entitled to file for the termination hereof.
THIRTEENTH: In the event of incompliance with any of the
obligations of LESSEE hereunder, PISANO shall advise LESSEE of
any such incompliance through certified letter return
receipt
requested or through bailiff's notice, therein giving LESSEE a
thirty (30) day term to remedy any such incompliance.
Were LESSEE to ignore any such communication, PISANO shall be
entitled to demand the termination hereof further claiming such
damages as might result from any such incompliance.
FOURTEENTH: LESSEE shall repay PISANO all administrative
expenditures incurred in drawing, executing and notarizing the
lease herein, such expenses amounting to ONE THOUSAND, TWO
HUNDRED AND FIFTY UNITED STATES DOLLARS (US$1,250.00).
Paragraph. In the event PISANO had to retain the professional
services of an office of attorneys due to incompliance by LESSEE
with any of its obligations hereunder, LESSEE shall reimburse
PISANO all expenses and reasonable attorneys' fees incurred.
FIFTEENTH: The parties herein expressly agree hereby that in the
event of any disagreements or lawsuits respecting the lease
herein, same shall be submitted to Dominican courts, waivering
their right to resort to any other courts that may be empowered
to hear said disagreements or lawsuits. Furthermore, it is
agreed that for anything not specially contemplated herein, the
parties shall abide by the provisions of Dominican laws.
SIXTEENTH: For all the purposes and consequences hereof the
parties elect their domiciles as follows: PISANO, at its main
offices at Parque Industrial Santiago Norte, and LESSEE, at the
law offices of PEREYRA & BIAGGI, located at 52 Mustafa
Kemal Ataturk St. in the city of Santo Domingo, National
District, Dominican Republic, where LESSEE shall be served any
legal or extra legal documents concerning the execution hereof.
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SEVENTEENTH: The parties herein agree hereby to adscribe
territorial jurisdiction to any of the following courts in the
event of any differences between then:
A) For any matters falling under the jurisdiction or
ratione materiae of a court of peace, to the Court of Peace of
the Third Circumscription of the Municipality of Santiago.
B) For any matters falling under the jurisdiction or
ratione materiae of a Court of First Instance, to the Civil and
Commercial Chamber of the Second Circumscription of the Court
of First Instance of the Judicial District of Santiago.
EIGHTEENTH: This agreement has been executed in both the
Spanish and English languages. The parties herein expressly
agree that in case of any interpretation controversy, the Spanish
version will prevail.
Executed and signed in two originals having the same tenor and
effect, one for each one of the parties, in the city of Santiago
de los Caballeros, Dominican Republic, on the
thirtieth (30) day of the month of November, nineteen hundred and
ninety-three (l993).
/s/ Federico Idelfonso Dominguez
PARQUE INDUSTRIAL SANTIAGO NORTE, S. A. (PISANO)
(by) Eng. Federico Ildefonso Dominguez Aristy
Chairman of the Board of Directors
/s/ Edmund J. Feeley /s/ David Brett Gunn
COMPONENT FOOTWEAR DOMINICANA, S. A.
(by) Edmund J. Feeley (by) David Brett Gunn