EXHIBIT 10.15
LEASE AGREEMENT ENTERED INTO BY AND BETWEEN FREDERICK CLARKE SANDERS, Jr.,
FREDERICK SANDERS FLOURIE, MONIQUE SANDERS FLOURIE, SCOTT MICHAEL SANDERS
FLOURIE, AND CARLO E. MUZQUIZ DAVILA (HEREINAFTER JOINTLY REFERRED TO AS "THE
LESSOR"), AND COASTCAST TIJUANA, S DE R.L. DE C.V. (HEREINAFTER REFERRED TO AS
THE "LESSEE"), REPRESENTED HEREIN BY MR. RAMON IBARRA FRANCO, PURSUANT TO THE
FOLLOWING RECITALS AND CLAUSES:
R E C I T A L S
1. THE LESSOR hereby declares that:
a) It is a fideicommissary with powers to lease and perform
improvements regarding the land identified as Lots F1 and F2, located at
PASEO DEL CUCAPAH, FRACCIONAMIENTO EL LAGO, in the city of Tijuana, Baja
California, as proven by public deed annexed herein as Attachment "A", with
30,614.15 square meters of surface (hereinafter referred to as the "Land",
together with a plan stating the exact location of it, as well as its
description under attached "A-1", which jointly constitute the present
agreement.
b) It is currently arranging to obtain official documentation on the
part of the competent authorities that so define the industrial use of the
Land.
c) The Land has access to water, drainage, electricity, and
electrical capabilities to provide services to the improvements, as defined
hereinbelow, according to the requirements and specifications detailed in
Attachment "B" herein, as well as to the Expansion Improvements, a term which
is also defined hereinbelow.
d) For the purposes of this Lease Agreement, the address at which it
has its principal place of business is: BOULEVARD PACIFICO NO. 14533, PARQUE
INDUSTRIAL PACIFICO, TIJUANA, BAJA CALIFORNIA.
e) It has agreed to perform certain improvements to the Land, which
are defined in Clause 2, as follows, and to lease said Land and the Lessor
Improvements to the Lessee (hereinafter jointly referred to as "Leased
Property")
f) The land is free from any encumbrances and other ownership
limitations, with the exception of easements, agreements, park regulations
(as such term is defined hereinafter), along with other service constraints
or easements, referred to as the "Permitted Easements").
g) They have the powers to enter into this agreement as accredited
in the deed, as pertinent, with public deeds annexed hereof as Attachment
"A", and ratified herein by Bancrecer, S.A. Said powers have not been
revoked nor constrained.
h) Is currently undertaking the organization of an association of
tenants and owners of real estate and improvements in the PARQUE INDUSTRIAL
EL LAGO (the "Park Association"), which shall operate according to its own
statutes and the regulations of the PARQUE INDUSTRIAL EL LAGO (hereinafter
the "Park Regulations"), annexed hereof as Attachment "C".
i) For purposes of collection of rents and any additional rights
derived hereof, they appoint Mr. Frederick Clarke Sanders as trustee of all
individuals that form the LESSOR.
II. Mr. Ramon Ibarra Franco hereby declares that:
a) Coastcast Tijuana, S. de R.L. de C.V. is a duly organized company
under the Mexican General Corporation Law, pursuant to public deed number
28155, volume 585, dated the 16th day of December, 1997, and granted before
the faith of Notary Public Number Eight (8) for the City of Mexicali, Victor
Ibanez Bracamontes, Attorney at Law, copy of which is annexed herein as
Attachment "D".
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b) It possesses sufficient powers to represent the Lessor, which
have not been revoked nor constrained in any way, as accredited in the public
deed referred to in the preceding paragraph.
c) The address of its constituent shall be precisely that of the
Leased Property. However, for purposes of previous notices to the Lessee
prior to Final Occupancy, as this term is defined hereinafter, the address of
the Lessee shall be as described in Clause 21.
d) Its constituent wishes to enter into this lease with the Lessor
regarding the Leased Property, according to the following terms and
conditions.
Pursuant to the above, both parties agree as follows:
C L A U S E S:
I.- LEASE AND DELIVERY
The LESSOR hereby leases to LESSEE and LESSEE hereby leases from LESSOR the
Leased Property described in Attachments "A" and "A1" hereof.
II.- INDUSTRIAL INSTALLATIONS.
2.1 The LESSOR shall, at its expense, perform all works, provide all the
necessary labor and all new items, and shall obtain all the necessary
certificates and permits to build an industrial shell with a surface
of 185,907 sq. feet on the Leased Property (hereinafter the
"Industrial Installations"), in compliance with the preliminary
plans, specifications, construction schedule, and construction terms
so established by both parties, and which are annexed herein as
Attachment "A1".
2.2 Through the approval of the plans and specifications, the LESSEE
shall not assume technical accountability for the terms stated in
Attachment "A1" herein. Approval on the part of the LESSEE is of a
general nature, unless agreed upon otherwise, and does not exonerate
the LESSOR of its accountability for the design, construction, and
building of the Industrial Installations under the terms so required.
2.3 The LESSOR shall carry out all constructions regarding the LESSOR
Improvements, in compliance with all laws, ordinances, regulations,
orders of governmental authorities, as well as with the Park
Regulations, which are annexed herein as Attachment "C". The term
"LESSEE Improvements" shall refer to all those improvements so
described in Clause 4 hereinbelow.
The LESSOR shall compensate and exonerate the LESSEE from any and all
claims or charges filed by contractors that perform the Industrial
Installations, or by the authorities that in a declarative but not
limitative manner include: payments to the INSTITUTO MEXICANO DEL
SEGURO SOCIAL (Mexican Social Security Institute, or IMSS), the FONDO
NACIONAL PARA LA VIVIENDA DE LOS TRABAJADORES (National Fund for
Workers Housing, or INFONAVIT), and the fiscal authorities, as well
as damages and fees that result, or may originate from the lack of
compliance of the obligations on the part of the LESSOR due to the
construction of the Industrial Installations and equipment for the
Leased Property, according to the requirements of applicable laws and
ordinances.
2.4 The LESSOR acknowledges and is in agreement with the LESSEE that the
latter may request modifications regarding the design and
specifications of the LESSOR Improvements, provided said
modifications do not affect their cost or the works in accordance
with the construction schedule pertaining to the latter. In the
event that said changes affect the costs of the LESSOR Improvements,
or the works in accordance with the construction schedule, the LESSOR
and the LESSEE shall jointly determine the effect of those changes on
the costs, as well as any extension to the construction schedule. If
such were the case, where both parties were not able to reach an
agreement regarding the costs and time in order to carry out said
requested modifications, and also in the event that they
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could not reach an agreement that resolves the dispute at issue in a
satisfactorily manner, both parties agree to solve said controversy
through Arbitration in accordance with what is provided in Clause
23.5 herein. The LESSOR agrees to provide the LESSEE with a copy of
the request for modifications addressed to the constructor showing
the costs and construction schedule, in order to obtain authorization
on the part of the LESSEE for such purposes.
2.5 The LESSOR shall diligently complete the LESSOR Improvements in the
Leased Property according to the plans and specifications, so that
the LESSEE may utilize and occupy said Improvements in accordance
with the following schedule:
a) Beneficial Occupancy of the Leased Property: February 15, 1998.
b) Final Occupancy of the Leased Property: March 15, 1998.
For the purposes of this clause, Beneficial Occupancy and Final
Occupancy are defined as follows:
BENEFICIAL OCCUPANCY: Shall be defined as delivery to the LESSEE of
the industrial area of the LESSOR Improvements, including walls,
roofs, doors, floors, floor coverings, platforms and interior paint
jobs, the entire production area (the "Initial Improvements"), so
that the LESSEE may install its equipment within the Leased Property
and begin the construction of certain improvements on the part of the
LESSEE to the Leased Property, so that all such fixtures, equipment
and any other improvements carried out on the part of the LESSEE are
sale and may not be damaged by climate conditions or the construction
process.
FINAL OCCUPANCY: Shall be defined as the substantial completion of
all works and finishes of the interior part of the industrial area
and office area, as well as all the exterior parts and infrastructure
of the LESSOR Improvements, in order to allow the LESSEE to make use
of the Leased Property to commence normal unfolding of its operations
unhindered, excluding non functional aesthetical issues or the punch
list, without exceeding the amount of $66,000.00 Dollars, legal
currency of the United States of America, regarding the construction
costs of the LESSOR Improvements, in compliance with what is stated
in Attachment "B" herein. In the event the cost for the construction
of what is stated in the punch list exceeds the amount of $66,000.00
Dollars, legal currency of the United States of America, the date of
the Final Occupancy shall be deferred in accordance with what is
stated in Clause 2.10. The LESSOR agrees to conclude pending issues
appearing in the punch list within a period of thirty (30) of the
Date of Final Occupancy.
By virtue of the aforesaid, the Date of Final Occupancy shall
be that in which the LESSEE acknowledges the completion of the LESSOR
Improvements, with the exception of the aforementioned punch list, as
the result of an inspection carried through within the Leased
Property by the representatives of the LESSEE and the LESSOR.
Notwithstanding the aforementioned, in the event that a difference of
opinions arises between the LESSEE and the LESSOR regarding the Date
of Final Occupancy, both parties agree to perform to the best of
their ability in order to amicably resolve the difference. If the
difference still remains after a period of thirty (30) days following
the notice of completion of the LESSOR Improvements, said difference
shall have to be resolved through arbitration according to what is
stated hereinbelow.
2.6 At all times, and upon signature of this agreement, the LESSEE and/or
its representative, shall have the right to enter the Leased Property
to inspect progress on construction of the LESSOR Improvements, and
the LESSOR shall have readily available for the LESSEE and/or its
representative, the construction log and any other construction
report that is available so that the LESSEE and/or its
representative, may continually assess the construction of the LESSOR
Improvements. If so required by the LESSEE, the LESSOR shall make
arrangements for the English translation of said reports for the
LESSEE, and the LESSEE agrees to reimburse the LESSOR for any expense
disbursed pertaining to said translations.
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2.7 The LESSOR agrees to contract the services of a reputable laboratory
approved by the LESSEE, and to provide the LESSEE with a copy of all
results of tests done by the LESSOR or its contractors relating to
the Leased Property or the construction of the LESSOR Improvements,
and the LESSEE shall have the right to carry out independent tests in
any part of the Leased Property, LESSOR Improvements, construction
materials and fixtures. Such verification shall be at its own
expense to determine if whether the Industrial installations are
built in compliance with Attachment "B" hereof. Said independent
tests carried out by the LESSEE shall exonerate the LESSOR of any
obligation to build the LESSOR Improvements in compliance with
Attachment "B" hereof.
2.8 In the event the results of any of the tests indicate the existence
of a substantial deviation regarding the completion and
specifications of the Lessor Improvements, the LESSEE shall notify
the LESSOR of said deviation, and shall require an immediate
correction of it, for which the LESSOR agrees to swiftly comply with
said requirement.
2.9 In the event the LESSOR does not complete the construction of the
LESSOR Improvements so that the LESSEE may occupy the Leased Property
on the date of the Beneficial Occupancy stated hereinabove, the
LESSEE shall have the right to receive a contractual penalty due to
damages, which consists in the reduction of a day of rent for each
calendar day of delay in the completion of the Initial LESSOR
Improvements in compliance with Attachment "B" and with Clause 2.5
hereof, which defines the improvements to be completed at said date.
The aforesaid reduction shall be applied to the first month and, when
pertinent, to the subsequent months beginning on the month when the
LESSEE commences payment of rents, as is stated herein.
Notwithstanding the aforementioned, not the aforesaid penalty nor the
rent reduction shall extend the date of the Final Occupancy, nor
shall it diminish the compensation for damages the LESSEE has the
right to receive in the event the LESSOR fails to comply in the
delivery to the LESSEE of the Final Occupancy on the date stated in
Clause 2.5 hereinbefore.
2.10 In addition, when the LESSOR fails to comply with the completion of
the construction of the LESSOR Improvements, in compliance with
Attachment "B", during or before the date of the Final Occupancy of
the Leased Property, the LESSEE shall have the right to receive as
compensation for damages, and in addition to the reduction of the
rent stated in the preceding clause, an amount equivalent to two (2)
days of rent for each calendar day of delay of the projected dates
for the Final Occupancy. Also, and in the event said delay exceeds a
period of thirty (30) days following the date of the Final Occupancy,
the penalty for damages shall double, beginning on the thirty-first
day of delay after said date of the Final Occupancy, for an amount
equivalent to four (4) days of rent for each day of delay, with the
understanding, notwithstanding, that (i) in case said delay continues
for thirty (30) days after the date of the Final Occupancy as stated
hereinabove, or (ii) in case the construction of the installations is
stopped or suspended due to the lack of permits or due authorizations
from the competent authorities for a period of thirty (30) or more
consecutive days (except due to Acts of Nature or Force Majeure),
then, in any of said cases, the LESSEE, at its own choice, shall
terminate this agreement, for which the LESSEE shall have a right to
immediately receive from the LESSOR the reimbursement of every rent
deposit and/for advance that the LESSEE may have paid to the LESSOR
to date according to what is stated hereto for, to continue with the
accumulation of liquid damages. Any rent deduction granted according
to this clause shall be applied to the first months, and in the event
it is applicable to the months following the ones when the LESSEE
begins rent payments, as is stated herein. The parties acknowledge
and agree that the date of the Final Occupancy shall be extended for
a period equivalent to the delays attributable to the LESSEE, or to
its contractors or subcontractors, or due to an Act of Nature or
Force Majeure.
2.11 Notwithstanding what is stated in paragraph 2.5 hereinbefore, the
LESSOR expressly acknowledges and agrees that the LESSEE may go
inside the Leased Property at any given moment during the
construction of the LESSOR Improvements, in order to carry out the
initial installations of the LESSOR Improvements in accordance with
the construction schedule, and with the understanding that said
installations shall not interfere with the construction of the LESSOR
Improvements. Also, it
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is understood that the entry of the LESSEE to the Leased Property at
any given moment prior to the completion of the construction of the
LESSOR Improvements, shall not be understood as the completion of the
construction of the LESSOR Improvements in their entirety, or in
part, as is stated herein.
III. OCCUPANCY BY LESSEE
The LESSEE shall use the Leased Property for manufacturing and storage
activities, as well as for any other activity with industrial purposes as
permitted by the Law, and that do not breach what is stated in the Park
Regulations.
3.1 The LESSEE may, at its own risk and expense, install in the Leased
Property, all those improvements, fixtures, equipment and furniture
it deems necessary, which at every given moment shall be considered
as exclusive property of the LESSEE, provided such goods are
installed and removed without any substantial damage to the Leased
Property.
3.2 The LESSEE shall repair the damages caused to the Leased Property
during the installation or removal of the improvements, fixtures,
equipment, and furniture stated in the preceding paragraph.
3.3 The LESSEE shall comply with the installation and removal of fixtures
and equipment in accordance with all applicable laws, ordinances and
regulations, assuming liability for any violation hereof.
3.4 The LESSEE agrees to withdraw said improvements, equipment and/or
furniture it may have installed in the Leased Property before the
date of the term of the lease, in order to leave the Leased Property
in its normal conditions, with the understanding that the LESSOR
Improvements include the piercing of roofs of the Leased Property.
After having removed said improvements, the LESSEE shall repair the
damaged area, and shall have to install a new roof section made up of
corrugated steel. In the event the LESSEE fails to comply in
removing said improvements, fixtures, equipment, and/or furniture
from the Leased Property according to the terms provided hereinabove,
the LESSOR shall have the right whether to remove said improvements,
fixtures, equipment, and furniture from the Leased Property at the
expense of the LESSEE, or to consider that said improvements,
fixtures, equipment, and/or furniture have been gratuitously
abandoned in the Leased Property by the LESSEE in favor of the LESSOR.
3.5 The LESSEE may not modify the basic structure, facade, and the
essential public utilities of the Leased Property, and may not
perform works or modifications resulting in a value exceeding
$50,000.00 dollars (Fifty Thousand Dollars, 00/100, legal tender of
the United States of America), without prior consent and in written
form from the LESSOR, which shall not be denied without sufficient
grounds.
IV.- LESSEE IMPROVEMENTS
4.1 The LESSEE, at its expense, may install and build certain additional
improvements, and it may also perform certain modifications,
expansions, or additions to any of the LESSOR Improvements, provided
said alterations, expansions, improvements and additions do not
affect in an adverse manner the structural support of said LESSOR
Improvements, or reduce the just market value of the Leased Property
to a value below the value the Leased Property would have before
their completion, provided said alterations are performed in a
diligent manner, following working standards in compliance with all
applicable laws, ordinances, regulations, and orders of governmental
authorities.
4.2 The LESSOR acknowledges and agrees that said Lessor Improvements
shall be the exclusive property of the LESSEE, and may be removed, at
LESSEE'S choice, from the Leased Property in compliance with
provisions stated in Clause 3 hereof.
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4.3 The LESSEE shall compensate and exonerate the LESOR from any demand,
claim due to furnishing of materials, claims on the part of the
governmental authorities that in a declarative but not limitative
manner include the INSTITUTO MEXICANO DE SEGURO SOCIAL (Mexican
Institute for Social Security, or IMSS), the FONDO NACIONAL DE LA
VIVIENDA PARA LOS TRABAJADORES (National Fund for Worker Housing, or
INFONAVIT), and fiscal authorities; as well as any damage and expense
resulting from the noncompliance on the part of the LESSEE of any of
its obligations for the construction of the structures and Lessee
Improvements, installations, machinery and equipment, repairs of the
Leased Property when so required, in compliance with this agreement.
V.- USE OF LEASED PROPERTY AND THE ENVIRONMENT
5.1 The LESSOR expressly acknowledges that the LESSEE intends to make use
of the Leased Property as installations for warehouse and factory,
and therefore expressly authorizes use of the Leased Property on the
part of the LESSEE as general offices, warehouse, factory,
storehouse, repair services, engineering services, sales,
demonstration of products and training of clients and employees, and
as secondary purposes as warehouse, vehicles parking spaces, and all
other uses deemed incidental and in relation with manufacturing,
storage and installation of offices with a legitimate intent. During
the term of this lease the LESSEE shall not perform or permit any act
within the Leased Property that violates the laws, ordinances,
regulations, Park restrictions, or orders of governmental authorities.
5.2 The LESSOR guarantees that the Leased Property has not been
previously used for an industrial or commercial purpose, and that it
is free from any hazardous or toxic substances as these terms are
defined in the current legislation. The LESSOR agrees to compensate
and quickly exonerate the LESSEE from any claim or liability that may
result with regards to the preceding item. Also, the LESSOR shall
have to make the arrangements so that any lessee or owner of
properties adjacent to the Leased Property complies with all the laws
and regulations pertaining to hazardous or toxic residues or
substances, and agrees to exonerate the LESSEE from any claim or
liability derived from such item.
5.3 The LESSOR shall not be liable for any pollution caused by the LESSEE
to the Leased Property during the term hereof, or any extension of
it. The LESSEE agrees to compensate and exonerate the LESSOR from
any liability that may result with regards to the use of the Leased
Property on the part of the LESSEE, except when caused by a
noncompliance on the part of the LESSOR.
VI.- RENT
6.1 Beginning on the date of the Commencement of the Lease (as such term
is defined hereinbelow), and during the initial effective term
hereof, the LESSEE shall pay the LESSOR, at its domicile, or at any
other domicile so indicated by the LESSOR, and within the first ten
(10) days of each month, a monthly rent amounting to $57,631.00
(Fifty Seven Thousand Six Hundred and Thirty One and 00/100) Dollars,
currency of the United States of America, or its equivalent in Pesos,
Mexican Currency. Notwithstanding the aforementioned, during the
first year of the lease as of the Date of Commencement of the Lease,
as said term is defined in clause 7.2 hereof, the amount of
$15,717.55 Dollars, U.S. currency, shall have to be credited each
month towards the rent payments concerning the first eleven (11)
monthly rent payments in compliance with what is stated in clause
19.1 hereof.
6.2 The monthly rent stated hereinabove shall be increased on an annual
basis by two percent (2%), as of the second year, and said increase
shall remain effective during and until the eighth (8th) year of the
lease, thereby remaining without an increase on the ninth (9th) and
tenth (10th) year of this lease.
6.3 In order to calculate the monthly rent, if paid in Pesos, Mexican
Currency, the parties shall use the highest effective exchange rate
currently in the sales market as used by the BANCO NACIONAL DE
MEXICO, BANCOMER, and BANCA SERFIN, on the day of payment, or on the
immediately preceding
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business day, when the payment day is a nonworking day for bank
institutions.
6.4 In the event the LESSEE decides to exercise the lease option stated
in clause 7.4 hereof, the parties agree that the initial monthly rent
with reference to said extension period, shall have to be equal to
the rent corresponding to the fifth (5th) year of the original period
of this lease. Subsequently, and during the extension periods, the
monthly rent shall be increased at an annual rate of two percent
(2%), during each anniversary of the new Date of Commencement of the
Lease.
6.5 In the event of a delay, the LESSEE agrees to pay the LESSOR for
damages, a monthly rate of five percent (5%) on the unpaid amounts,
as of the tenth (10th) day elapsed once said notice of delay has been
notified.
VII. EFFECT OF LEASE AND DELIVERY OF THE LEASED PROPERTY
7.1 The life of the agreement shall be for a period of ten (10)
compulsory years for the parties, unless it is extended in accordance
with the provisions hereof, (hereinafter the "Period of Lease" or
"Term of this Agreement"). The Term of this Agreement shall commence
as of the date of Final Occupancy, the date when the LESSOR
Improvements have been completed (hereinafter "the date of
Commencement of the Lease").
7.2 Date of Commencement of Rent: The first month of rent shall have to
be paid in thirty days following the date of Final Occupancy. All
adjustments to the rent, as stated in Clause 6.2 and 6.4 hereinabove,
shall come into effect on the anniversary of the Date of Commencement
of the Lease.
7.3 Notwithstanding the aforementioned, it is agreed upon that the LESSEE
shall have access to the Leased Property in order to install the
LESSEE Improvements as of the 15th day of January, 1998.
7.4 The LESSEE shall have the option of renewing the "Period of the
Lease" for two (2) additional periods or terms of five (5) years each
(hereinafter the "Period of Extension") by means of a simple notice
furnished to the LESSOR upon expiration of the initial period of the
lease or any of its extensions.
VIII. INSURANCE
8.1 As of the Date of Commencement of the Lease, and during the life of
this agreement, the LESSEE agrees to obtain an insurance policy
covering the Leased Property against fire, Act of God or Force
Majeure, explosion, and any other risk covered by the policy known as
"Comprehensive Coverage Extension". The corresponding insurance
policy shall be obtained for an amount enough to cover the
replacement cost of $3,000,000.00 (Three Million 00/100 Dollars,
legal tender of the United States of America), with said amount being
payable to the LESSOR or its transferee.
8.2 Also, and from the Date of Commencement of the Lease, and during the
term of this agreement, the LESSEE is obligated to obtain, at its
expense, a civil liability insurance policy protecting the LESSEE and
the LESSOR against any demand, claim or action due to injuries or
death of any person, or for any liability arising from damages to
foreign property regarding the use of the Leased Property by the
LESSEE. The liability limit of the corresponding insurance shall be
at least $150,000.00 (One Hundred and Fifty Thousand 00/100) Dollars,
currency of the United States of America.
8.2 The policies referred to in paragraphs 8.1 and 8.2 hereinabove shall
have to be obtained with an insurance company authorized to issue
insurance in Mexico, to the satisfaction of the LESSOR. Furthermore,
within the clauses of said policies, it shall have to be stated that
the latter may not undergo any modification whatsoever with regards
to its coverage without prior consent and in written form on the part
of the LESSOR. The LESSEE shall have to notify the LESSOR with at
least thirty (30) days in advance of its intention to change
insurance companies, so that the LESSOR may review and analyze the
authorization of the new insurance company. Such authorization may
not be denied
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without proper justification. Also, the corresponding policies shall
establish in their clauses that, when pertinent, the LESSOR shall be
notified with thirty (30) days in advance of its intention to
terminate any such policies during the term hereof. A certified copy
of the policies, as well as of the corresponding payment receipts,
shall have to be delivered to the LESSOR, in its domicile, within
fifteen (15) following the Date of Beneficial Occupancy. A certified
copy of the documents of renewal of policies shall have to be
delivered to the LESSOR with at least thirty (30) days before the
date of completion of the policies.
8.4 Reciprocal Release. Both parties, as well as their authorized
representatives, agree to remain mutually free from any claim for
damages to any person, or to the Leased Property and its
improvements, personal property, the LESSEE improvements, as well as
the modifications both of the LESSOR and of the LESSEE, on or with
regards to the Leased Property under the insurance policies
contracted by the parties, and in effect when such damages occur.
IX.- TAXES AND COSTS
9.1 The LESSOR shall be liable for the payment of the Income Tax and the
Tax on Assets under the term of its obligations. On the other hand,
the LESSEE shall be liable for the payment or reimbursement of the
Property Tax to the LESSOR or for any other tax that could be
stipulated on the Leased Property, and that may be derived thereof,
or by the use of the latter on the part of the LESSOR, and to which
the LESSEE is liable by law, including the Value Added Tax, and
maintenance fees of the Industrial Park Association.
X.- REPAIRS AND MAINTENANCE
10.1 LESSOR
10.1.1 During the entire term hereof, as well as any extension of
it, and after having notified the LESSEE in written form, the LESSOR
shall have to proceed with the repairs of any structural defect of
the Leased Property arising sa a consequence of normal wear and tear
of the latter, including exterior walls, foundations, floors,
structural plumbing, cistern and ceiling. The LESSOR shall also have
to provide maintenance to the parking areas, drainage, and paved
areas where damages exceed the amount of $5,000.00 Dollars (Five
Thousand Dollars 00/100, legal currency of the United States of
America), due to disaster, occurring as a consequence of underground
earth movements. On the other hand, the LESSEE agrees to make its
best effort to timely notify the LESSOR on the existence of any
structural defect. Notwithstanding the aforementioned, in the event
the LESSEE Improvements require the piercing of roofs in order to
install equipment and fixtures, then the maintenance and repair of
the roof areas that were affected by any of the LESSEE Improvements
shall be the exclusive responsibility of the LESSEE. In addition,
both parties agree that the repair of said structural deficiencies
shall be deemed as the sole repair by which the LESSOR shall be
liable hereunder. The LESSEE agrees to make its greatest effort in
notifying the LESSOR on a timely basis on the existence of any
structural defect. The LESSOR shall then proceed diligently to carry
out the repairs as soon as practically possible, and to continue with
them until they are thoroughly concluded.
Furthermore, the LESSOR accepts every and any obligation to
immediately maintain a repair, at its expense, and with minimum
interference to the operations of the LESSEE, any superficial or
structural defect or damage, as well as the damages caused by
underground movements, with no restrictions of cost applicable due to
a disaster, of an area of the Leased Property so described in
Attachment "E" of this agreement identified as the "Excluded Area."
10.1.2. The LESSOR shall not be liable, nor shall be obligated to
repair the damages caused due to negligence of the part of the
LESSEE, or of its workers, clients, contractors, or guests.
10.2 LESSEE
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10.2.1 THE LESSEE shall be deemed liable for the repairs that should
be performed due to damages to the Leased Property, other than those
referred to in clause 10.1 hereinabove. The damages referred to in
this clause including in a declarative but not limitative manner, the
maintenance that should be performed on the plumbing systems, sewer,
telephone, gas, and to the equipment and fixtures, interior walls,
inferior and exterior paint jobs, floor tiles, modular ceilings,
ventilation and A/C systems and fixtures, heating, doors and windows,
glass, shipment and loading ramps and docks, lighting, electrical
system, and so on, of the Leased Property, and in general, everything
not deemed a structural repair as stated in clause 10.1.1
hereinbefore. All repairs performed by the LESSEE shall have to be
of an equal quality to that of the originals. All expenses as a
result of carelessness and negligence of the part of the LESSEE, as
stated hereof, shall have to covered by the LESSEE.
10.2.2 The LESSEE shall have to keep the Leased Property, along with
its improvements, free from any encumbrance or lien. With regards to
the entirety of the parts of the Leased Property, the LESSEE shall
have to care for them as to keep them clean and properly ordered,
free from garbage, debris and forbidden materials.
XI.- COMPENSATION
11.1 The LESSEE agrees to compensate and exonerate the LESSOR from any
claim for damages and losses of any nature derived from negligence or
omission on the part of the LESSEE, or of its contractors, licensees,
agents, guests, employees, or derived from any accident, injury or any
other damage caused to any person or property in or around the
Leased Property, or in areas adjacent to the Leased Property, as well
as against any and all fees and expenses, including legal fees, that
should arise from such claims.
11.2 The LESSOR agrees to compensate and exonerate the LESSEE from any claim
for damages or losses of any nature derived from negligence or
omission on the part of the LESSOR, or of its contractors, licensees,
agents, guests, or employees, or derived from any accident, injury or
any other damage caused to any person or property in or around the
Leased Property, or in areas adjacent to the Leased Property, as well
as against any and all fees and expenses, including legal fees, that
should arise from such claims.
XII.- SERVICES
12.1 The LESSEE agrees to request directly from the renderers of the
corresponding services, the public services the LESSEE may need to
obtain from said renderers and shall immediately pay for any charge
related with said services furnished to the LESSEE in the Leased
Property including in declarative but not limitative manner, water,
gas, electrical power and telephone service fees.
12.2 The LESSOR shall install or shall make arrangements for the
installation, before the Date of Final Occupancy, of the
infrastructure related with water and drainage services, fire
hydrants, electrical power, and telephone lines, as are defined
hereinbelow for the supply of water, drainage, fire hydrants,
electrical power, and telephone service to the Leased Property in
compliance with federal, state, and local regulations, and shall make
all arrangements for the approval and acceptance of said
infrastructure on the part of the authorities, whether they be
federal, state, or local, that have jurisdiction over the streets
adjacent to the Leased Property. In the event any charge, whether
special or of any type, is filed against the Leased Property or the
LESSEE, (other than rights of use), due to any of the aforesaid
items, or by noncompliance on the part of LESSOR with any of its
obligations as a developer, the LESSOR, at its expense, shall pay
said charges and shall settle and close the matter.
12.3 The LESSOR guarantees that the Leased Property shall have at least 8000
Kva of 13,200 volts
9
available within the boundaries of the industrial shell. Consequently
the LESSEE may contract the electrical power up to said capacity only
upon payment of the rights of connection and contract.
12.4 The LESSOR guarantees that the Leased Property has or shall have
twenty (20) telephone lines available at the time of the completion
of the Industrial Installations; the LESSEE shall have the right of
exclusive use regarding said lines. Consequently, the LESSEE shall
be able to contract up to twenty (20) telephone lines through the
payment of the "contract rights" to the telephone company.
12.5 The LESSOR guarantees that the Leased Property shall have the
drainage system, fire hydrant, and water works completed before or on
the date of the Final Occupancy, as stated in Attachment "A1" hereof,
so that it may be able to perform the industrial activities it has
planned by the use of the appropriate pipeline system and water
system that provide services to the Leased Property. The LESSEE
shall contract the water supply up to said capacity from the COMISION
NACIONAL DE AGUAS (National Water Commission, or CNA), by means of
the payment of rights for measuring equipment and rights of
connection.
12.6 In the event the LESSOR is not willing to provide the infrastructure
for the public utilities guaranteed by the LESSOR as of the date of
the Final Occupancy, or when LESSEE is not able to contract said
services due to causes not attributable to the LESSEE, the LESSOR
shall directly provide the LESSEE with said services at its exclusive
expense, until the LESSEE is able to contract said services, and the
LESSOR shall pay the difference between the cost the LESSEE would
normally pay if said services were furnished by the public utilities
companies, and the cost of the LESSOR when providing said services.
It is agreed upon that LESSOR'S liability according to this clause
shall end once the LESSEE has contracted the services referred to in
this clause, and the supply of said services has been initiated.
12.7 Furthermore, in the event that after sixty (60) days of the Final
Occupancy there is a lack of availability of these services so that
the LESSEE'S operations may not be adequately performed, LESSEE may
proceed to immediately terminate this agreement, with no obligation
whatsoever, and LESSOR shall promptly reimburse all amounts paid by
LESSEE hereunder, including in declarative but not limitative manner,
the amounts regarding guarantee deposit and advance rents.
12.8 The LESSEE agrees to contract all public utilities with the
corresponding suppliers, at least sixty (60) days before the date of
the Beneficial Occupancy in order to insure a timely supply of said
utilities to the Leased Property. The LESSOR agrees to furnish
timely support to said contractings, and to provide all the
appropriate information required to date by said suppliers. Also,
the LESSOR agrees to make the necessary corrections as required by
the companies providing said utilities, and by any LESSOR
Improvement, in order to facilitate and allow for the rendering of
said services.
XIII.- CESSION AND SUBLEASE
13.1 The LESSEE may not cede nor sublease its rights and obligations
hereunder, unless it obtains prior consent in written form on the
part of the LESSOR, which may not be denied without proper
justification. Such consent may not be deemed necessary when the
LESSEE cedes or subleases in favor of an affiliate or subsidiary
provided the LESSEE and the Guarantor are jointly liable for the
obligations of the transferee and/or sublessor, whichever the case.
13.2 The LESSOR shall have the right to cede, in whole or in part, its
rights and obligations hereunder. Consequently, the LESSEE herein
authorizes the LESSOR, so that the latter may formalize the cessions
it deems necessary. Also, the LESSOR shall have the express right of
guaranteeing any of its present or future obligations with its rights
hereunder.
XIV.- WITHHOLDING OF RENT
10
The LESSEE herein waives any right to withhold the rent payments, except as
stated in clause 16.2 hereof. Consequently the LESSEE shall pay in a timely
manner, and under the terms agreed upon herein, all rent payments the LESSEE has
a right to.
XV.- ACCESS TO LEASED PROPERTY
15.1 Upon prior notice, and without undue interference to LESSEE'S
operations, the LESSOR, or its authorized representatives, shall have
the right to enter the Leased Property during all LESSEE'S business
hours, and at all times in the event of an emergency, to perform
repairs, modifications, or alterations to the Leased Property for
which it is authorized or obligated in accordance with this agreement.
15.2 The LESSOR shall have the right to show the Leased Property to any
prospect client within six (6) months prior to the term of this
lease, provided the LESSEE has not notified the LESSOR as is stated
in clause 7.4 hereinbefore. Prior to any demonstration, the LESSOR
shall communicate the identity of said client to the LESSEE, and in
the event the prospect client is a competitor of the LESSEE, the
latter shall have the right to deny such Demonstration. By the same
token, during said period of six (6) months, the LESSOR shall have
the right to post signs its deems appropriate on the facade of the
Leased Property in order to promote the leasing of it.
15.3 Except in the event of emergencies, the LESSOR shall notify the
LESSEE before the former enters the Leased Property, and the LESSEE
shall have the right to accompany the representatives of the LESSOR,
as well as the prospect clients.
XVI.- RIGHT OF PARTIES TO COMPLY WITH THEIR OBLIGATIONS
16.1 If at any given moment the LESSEE, fails to comply with one or more
of the obligations at its expense, in compliance with this lease, the
LESSOR, ten (10) days after it notified the LESSEE in written form
(or without notice in the event of an emergency), without waiver or
exonerating the LESSEE from compliance of any of its obligations in
compliance with the LEASE, shall be able, without any obligation
whatsoever, to enter the Leased Property in order to take all
necessary measures required to comply with the obligations of the
LESSEE hereunder. All amounts paid by the LESSOR, and all costs and
expenses incurred upon by the LESSOR with respect to the compliance
of any obligations of the LESSEE shall be paid by the LESSEE to the
LESSOR when the latter so requires it.
16.2 If at any given moment the LESSOR fails to comply with its
obligations regarding the completion of the Industrial Installations,
including the aforementioned punch list on or before the 15th of
April, of 1998, five (5) days after it notified the LESSOR in written
form, without waiver or exonerating the LESSOR from compliance of any
of its obligations in compliance with the LEASE, shall be able,
without any obligation whatsoever, to carry out any act in the
interest of the LESSOR in compliance with the obligations of building
and completing the Industrial Installations hereunder. All amounts
paid by the LESSEE, as well as all the costs and expenses incurred upon
by the LESSEE with regards to compliance of any of said obligations
of the LESSOR, shall be paid by the LESSOR to the LESSEE when the
latter so requires it, or in the event they are not paid within a
period of thirty (30) days, said amounts shall be discounted from the
payment of future rents.
XVII.- DAMAGE OR DESTRUCTION
17.1 The LESSOR and the LESSEE, respectively, shall be liable for damages
to the Leased Property caused by their own fault or negligence, or
that of their representatives, employees or visitors.
17.2 In the event the LESSEE is hindered, whether completely or partially,
with regards to the use of the Leased Property due to damages caused
by fire, Act of God or Force Majeure, or due to any other cause that
leads to the hindrance of its business operations, the rent shall be
reduced in proportion
11
to the part of the Leased Property where use is hindered. If the
LESSEE was hindered from using the Leased Property in its entirety,
the rent shall not be paid during such period in which the LESSOR
Improvements may not be used. In such case, and within a period of
20 days following the catastrophe, the LESSOR shall swiftly proceed,
at its expense, and with funds coming from the insurance stated in
clause eight (8) hereinbefore, to begin repairs, restoration or
reconstruction of said LESSOR Improvements to the extent it is deemed
necessary to provide the LESSEE with a property of equal quality,
design, materials and construction than the one existing prior to the
occurrence of damages, within a period that shall be agreed upon by
both parties, and which should not exceed a period of three (3)
months.
17.3 Notwithstanding the aforementioned, in the event such damages or
destruction are total, or exceed 75% of the total insurable value of
the LESSOR Improvements, and the LESSOR and LESSEE determine, within
a period of ten (10) days following the damage or destruction, that
the repairs, restoration or reconstruction may not be performed
within a period of ninety (90) days following the damage or
destruction, then the LESSEE shall have the right in any of these
causes, and at its choice, to terminate this agreement through
written notice furnished to the LESSOR within thirty (30) days
following the date of damages with no responsibility whatsoever. In
the event this agreement is terminated according to the provisions
stated in this clause, the rent payable by the LESSEE in compliance
with this agreement shall no longer be demandable in its entirety on
the date of damages or destruction, and the LESSOR shall reimburse
LESSEE with any amount received as advance payment for rent or
guarantee deposit.
17.4 The percentage of the insurable value referred to in the preceding
paragraph shall be determined by an insurance adjuster and the
insurance company with which the insurance provided in clause eight
(8) hereof was contracted.
17.5 If all obstacles to use the LESSOR Improvements are imputable to the
LESSEE, its representatives, employees, and visitors, the LESSEE
shall continue to pay the rent as if it were still making use of said
shell.
XVIII.- PARK OBLIGATIONS AND RESTRICTIONS
18.1 The LESSEE agrees to comply in their entirety with the Covenants and
Restrictions of the Park, which are annexed and are integrated herein
as Attachment "B", and to pay $0.50 cents (Fifty cents 50/100, legal
tender of the United States of America) for each square meter of the
land of the Leased Property per year (hereinafter the "Maintenance
Fee", to be apportioned according to the date of the Final Occupancy
during the first year), for street maintenance, common landscaping,
common areas, and so on, of the Industrial Park. Said Maintenance
Fee shall no longer be demandable in accordance with a case of
catastrophe as defined in clause 17 hereof.
XIX.- GUARANTIES
19.1 The LESSOR acknowledges receiving from the LESSEE herein, the amount
of $230,524.00 (Two Hundred and Thirty Thousand Five Hundred and
Twenty Four Dollars, 00/100, legal tender of the United States of
America). From said amount the LESSOR shall apply the amount of
$57,631.00 (Fifty Seven Thousand Six Hundred and Thirty One, 00/100
Dollars, legal tender of the United States of America) as guarantee
deposit, which shall be reimbursed to the LESSEE upon termination of
this agreement, without interests, and after the LESSOR verifies,
through an inspector, that the Leased Property is in good condition,
clean, except for normal wear and tear, unless agreed upon otherwise
by both parties in written form. The balance of said deposit, that
is, the amount of $172,893.00 (One Hundred and Seventy Two Thousand
Eight Hundred and Ninety Three, 00/100, Dollars, legal tender of the
United States of America) shall be applied to the payment of rents
during the first year of the Term of Agreement, by proportionally
amortizing said amount during the second (2nd) through twelfth (12th)
months of the first year of rent.
12
19.2 In the event of anticipated termination of this agreement due to
causes attributable to LESSEE, LESSOR shall have the right to
withhold every amount delivered to LESSOR as rent payment, whether
anticipated or deposit, aside from any other right pertaining to
LESSOR.
XX.- NOTICES
20.1 Any notice that should be done to the parties in compliance with the
terms hereof shall be remitted to the addresses stated hereinbelow,
or to any other addresses provided from time to time by the parties.
Said notices shall have to be in written form and shall be delivered
in person. If remitted by mail, said notices shall be considered as
carried through upon ten (10) days following their deposit at the
postal service. If remitted via facsimile, said notices shall have
to be sent to the addresses and telephone numbers mentioned
hereinbelow. Should the notices be sent by mail or via facsimile, a
duplicate of said notices should be remitted by certified mail,
freight prepaid, with acknowledgment of receipt to the domiciles
mentioned hereinbelow, or to the additional domiciles provided by the
parties from time to time in written form.
TO THE LESSOR: Avenida Pacifico No. 14533
Parque Industrial Pacifico
Tijuana, Baja California,
RE: Mr. Frederick Clarke Sanders
Telephone number: (66) 81-1211
Facsimile number: (66) 81-1346
TO THE LESSEE: COASTCAST TIJUANA, S. DE R.L. DE C.V.
Paseo del Cucapah s/n
Delegacion de la Presa
Tijuana, Baja California 22500
Telephone number: (66) 27-9164
Facsimile number: (66) 27-9168
COASTCAST CORPORATION: 3025 E. Victoria Street
Rancho Dominguez, California 90224
United States of America
Telephone number: (310) 638-0595
Facsimile number: (310) 631-2884
XXI.- ANTICIPATED TERMINATION
The LESSOR may terminate this agreement by any of the following causes:
21.1 In the event of termination of period stipulated in clause seven (7).
21.2 Noncompliance on the part of the LESSEE to pay the monthly rent,
demandable by means of written notice given to the LESSEE according
to the terms of clause 6.5 hereof, when said noncompliance persists
for a period of ten (10) days following the receipt of said notice on
the part of the LESSEE.
21.3 Noncompliance on the part of the LESSEE on any of the covenants,
agreements and obligations stipulated herein when such noncompliance
continues for a period of ten (10) days following receipt of written
notice on the part of the LESSEE from the LESSOR stating such
circumstance. In the event the noncompliance requires, with proper
justification, of a period longer than the aforementioned thirty (30)
days required to compensate, said term shall be extended accordingly.
21.4 A file for bankruptcy against the LESSEE or the Guarantor, if such
action is not cancelled within ninety
13
(90) days following notice to LESSOR regarding the existence of such a
request.
21.5 In the event of an injunction, execution, or any other measure
derived from a judicial decision that engages a substantial part of
the assets of the LESSEE or the Guarantor, said injunction,
execution, or measure derived from a judicial decision that remains
without being released or acquitted for a period of sixty (60) days
following the execution of said resolutions or injunctions.
21.6 In the event of appointment of a beneficiary or depositary in order
to take possession of all or a substantial part of the assets
belonging to the LESSEE or the Guarantor.
21.7 In the event both parties are unable to reach an agreement in
compliance with clause 23.7 hereof, referring to the manner in which
to mitigate any negative effect of the current price of the dollar in
relation to the rent, which derives from the coming into force of a
new legislation, or due to Force Majeure or Act of God occurring
within a period of sixty (60) days following the coming into effect
of said legislation or Force Majeure. In the event the LESSOR
initiates any action to terminate or rescind this agreement against
the LESSEE for causes stipulated herein, the LESSEE shall reimburse
the LESSOR with any cost related with the vacancy of the Leased
Property on the part of the LESSEE, (i) if the LESSEE does not vacate
the Leased Property, (ii) said action is resolved in favor of the
LESSOR by the competent courts where the issue was cleared up, and
(iii) retroactive as of the date in which the corresponding action
was filed, the LESSEE shall pay the LESSOR as contract penalty a
monthly amount equal to two (2) times the monthly effective rent on
the date in which said action was initiated, or the effective rent
prior to the termination of the agreement. The LESSEE acknowledges
that this clause shall not be interpreted as an authorization to
occupy the Leased Property after the effective period hereof.
XXII.- RENT OPTION
22.1 The LESSOR herein grants in favor of the LESSEE an irrevocable option
of leasing approximately 20,000 square meters of land adjacent to the
Leased Property and indicated for reference in the plan annexed
herein as Attachment "A-2" (hereinafter the "Adjacent Land or
Option") for which the LESSOR agrees to carry out the construction of
a building, on the basis of the specifications agreed upon by the
LESSOR and the LESSEE. The rent Option of the Adjacent Land shall be
in effect during the first five (5) years of the initial term hereof
and may be exercised in two phases by the LESSEE, each one for
approximately 10,000 square meters of land, marked for reference in
the plan that is annexed herein as Attachment "A-2", and also marked
in the same plan as Phase 1 and Phase 2 (hereinafter referred to as
"Phase 1", and "Phase 2", respectively).
The option granted herein shall be subject to the following terms:
22.1.1 The rent option of Phase 1 for the future construction of an
expansion to the Leased Property shall be granted without any
counterclaim for an initial term of two (2) years, beginning on the
Date of Commencement of the Lease.
22.1.2 Upon termination of the second year of the Date of Commencement of
the Lease, the LESSEE, at its choice, shall extend the term for the
rent option of Phase 1 without performing any construction whatsoever
of an industrial shell for an additional period of three (3) years,
against payment to the LESSOR of the amount of $5,380.00 Monthly
Dollars; said amount shall increase annually on every anniversary
date of the Date of Commencement of the Lease, at the annual rate of
two percent (2%).
22.1.3 The option to lease Phase 2, the Adjacent Land (or Option) for the
eventual construction of an expansion of the Leased Property shall be
granted with no consideration whatsoever for an initial term of three
(3) years beginning on the Date of Commencement of the Lease. At its
own choice, the LESSEE may extend the term of the option with respect
to Phase 2 after said date, and for the remainder of the Initial Term
of the Lease with without any need to perform any construction
whatsoever, by paying LESSOR the amount of $5,380.00 Monthly Dollars,
additional to the amount
14
stipulated in the preceding paragraph, and whose sum shall be
increased at an annual basis on the same dates and percentages as
those stated in paragraph 22.1.2 hereinbefore.
22.1.4 It is agreed upon that in the event the option to build an expansion
to the industrial building in Phase 1 of the Adjacent Land is not
exercised, the option to sublease Phase 2 of the Adjacent Land shall
be automatically cancelled. In case the LESSEE exercises its option
for expansion during the term stated in paragraphs 22.1.1 and 22.1.3
hereinbefore, there shall be no "option" rent for the land during the
construction period.
22.1.5 Once the LESSEE has received notice from the LESSOR, by means of
which the latter informs the former of the exercise of these Options,
the LESSOR agrees to perform in a timely manner the preparation of
the preliminary plans for the construction schedule (collectively
referred to as the "Preliminary Expansion Plans", and said
Preliminary Expansion Plans shall be prepared in accordance with the
instructions on the part of the LESSEE, or as agreed upon by both
parties. The Expansion Improvements in Phases 1 and 2, whichever the
case, shall have to be completed in a period of six (6) months as of
the date in which the LESSEE notifies the LESSOR of the former's
approval of the Expansion Plans. The price for the lease shall be
based on the cost of the land and the construction divided by eighty
(80), with the understanding that said Expansion Improvements shall
be built by the LESSOR or by an affiliate of the LESSOR at LESSOR'S
expense; or otherwise, the parties shall carry out mutual
negotiations regarding the rent for the use of the Adjacent Land (or
Option), to be paid by the LESSEE. After said period, the initial
rent for the Adjacent Land and/or the Improvements, whichever the
case, shall be increased at an annual rate of two percent (2%). The
remaining terms and conditions related to said Adjacent Land and/or
Additional Adjacent Land and/or Improvements shall be subject to the
provisions hereof, when applicable, including those that relate to
contract penalties, rent increases, guarantee deposit, term of lease,
etc. On the basis of the aforesaid, the terms related to each phase
must be reflected in a modification to this agreement, to be entered
into by and between the parties in accordance with the acceptance of
the LESSEE in relation to the Expansion Plans that correspond to each
of said phases.
22.1.5.A For purposes of calculating the rent of the Expansion, the Adjacent
Land shall have a value of $50.00 (Fifty Dollars, 00/100, currency of
the United States of America) per square meter as of the Date of
Commencement of the Lease, which shall be increased at an annual rate
of two percent (2%).
22.1.5.B The term of the lease for the Leased Property shall be coextensive
with the expansion of the lease.
XXIII.- MISCELLANEOUS
23.1 In the event each of the parties exercise any action against the
other in order to protect certain rights hereunder, said
noncompliance shall not be interpreted as a waiver to any right
derived hereof.
23.2 This agreement may only be modified by written accord signed by the
authorized representatives of the parties.
23.3 In the event any part exercises an action against the other to demand
compliance of this agreement, the party obtaining favorable
resolution shall have a right to the expenses and costs and
reasonable legal fees.
23.4 In compliance to what is provisioned by article 2869, paragraph III
of the Civil Code for the State of Baja California, both parties
agree to register this agreement, at LESSEE'S expense, in the
REGISTRO PUBLICO DE LA PROPIEDAD (Public Registry of the Property),
in the city of Tijuana, B.C., in the understanding that both parties
agree to carry out all acts, ratifications, and certifications
required for such purposes.
23.5 In the event of controversy due to the interpretation and compliance
hereof, the parties expressly submit to the settlement of their
controversies in arbitration in accordance with the terms stipulated
15
in the Code of Commerce currently in effect in Mexico, for which both
parties agree that the arbitration decision should be carried out in
the Spanish language, with one sole arbitrator, who shall be an
expert of matters of leasing of industrial shells, with domicile in
Tijuana, Baja California, and said arbitrator shall be designated by
mutual accord of the parties, and in the event of not reaching an
agreement, the arbitrator shall be designated at the request of any
of the parts by the Professional Association of Civil Engineers of
the city of Tijuana, Baja California. Each party shall be responsible
for its own costs and fees derived from the arbitration decision, and
said costs and fees shall have to be eventually divided into equal
parts between the parties. The arbitration decision shall be
considered final and not subject to appeal.
Notwithstanding the aforementioned, the parties agree that in any
matter related with the noncompliance or termination of this
agreement, they shall expressly submit to the jurisdiction of the
Civil Courts of the city of Tijuana, Baja California, thereby waiving
any other jurisdiction which might be applicable by reason of their
present of future domiciles o otherwise.
23.6 In the event any provision hereof is by any one reason or another
forbidden or not demandable in any aspect, this Agreement shall have
to be interpreted as if said provision was never included within said
agreement.
23.7 In view of the fact that is the intention of the parties under the
terms hereof, that the LESSOR receives the Total Value of the Dollar
with regards to the rents during the entire term of this agreement
and its extensions, and that the LESSEE may make use of the Leased
Property during said periods, both parties agree that in the event a
new legislation comes into effect in the future, or that by an Act of
God or Force Majeure, the effects deriving with regarding to this,
provided they are exercised by the LESSEE, are those referring to the
current price of the dollar as it undergoes a substantial reduction
with respect to the payment of rent to the LESSOR, the LESSEE agrees
not to exercise any of said rights that may derive in such decrease,
unless such rights are a consequence of the Law. Notwithstanding the
aforementioned and in order to be able to mitigate any negative
effect on the value of the Dollar with regards to the rent, and so
that the LESSOR may comply with its financial commitments contracted
by the construction of the LESSOR Improvements, the LESSOR and LESSEE
agree to carry out a diligent and comprehensive search for an
equitable and law-abiding solution at that moment, so that the LESSOR
may continue to receive the total value of the dollar with regards to
the rent payments, and the LESSEE continues to enjoy and occupy the
Leased Property.
XXIV.- CORPORATE GUARANTEE
24.1 The LESSEE hereby delivers a guarantee from COASTCAST CORPORATION
(for purposes of this agreement, the "Guarantor") to the LESSOR,
under the Document of Guarantee, which is annexed herein as
Attachment "D". Moreover, COASTCAST CORPORATION agrees to guarantee
all and each one of the obligations of the LESSEE hereunder. Also,
COASTCAST CORPORATION shall have to provide the LESSOR with the
information audited on annual basis regarding its financial situation
during the entire term of this agreement.
IN WITNESS WHEREOF, the parties enter into this Lease Agreement in the places
and dates indicated as follows:
16
THE LESSOR THE LESSEE
MR. FREDERICK CLARKEE SANDERS COASTCAST TIJUANA,
S. DE R.L. DE C.V.
- ------------------------------ -----------------------------------
(SIGNED) Name: Ramon Ibarra Franco
Place: San Diego, California (SIGNED)
Date: January 5, 1998 Place:
-----------------------------
Date: January 5, 1998
MR. FREDERICK CLARKE SANDERS
FLOURIE
- ---------------------------------
(SIGNED)
Place: San Diego, California
Date: January 5, 1998
MS. MONIQUE SANDERS FLOURIE
- ---------------------------------
(SIGNED)
Place: San Diego, California
Date: January 5, 1998
MR. SCOTT MICHAEL SANDERS FLOURIE
- ---------------------------------
(SIGNED)
Place: San Diego, California
Date: January 5, 1998
17
MR. CARLO MUZQUIZ DAVILA
- ---------------------------------
(SIGNED)
Place: San Diego, California
THE GUARANTOR
COASTCAST CORPORATION
--------------------------------
(SIGNED)
Name: Dick W. Mora
Place: (RANCHO DOMINGUEZ, CA.)
--------------------------
Date: January 5, 1998
BANCRECER, S.A. WITNESS
INSTITUCION DE BANCA MULTIPLE
GRUPO FINANCIERO BANCRECER
DIVISION FIDUCIARIA
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(SIGNED) (SIGNED)
(ILLEGIBLE NAME OF REVIEWER) Name: MR. ANGEL ORTEGA
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