Exhibit 10.7
LEASE AGREEMENT entered into by and between PARQUE INDUSTRIAL MEXICALI, S.A. DE
C.V., (hereinafter referred to as PIMSA), herein represented by ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Party of the First Part, and by COASTCAST CORPORATION,
S.A., (hereinafter referred to as COMPANY), herein represented by ▇▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Party of the Second Part, pursuant to the following RECITALS
and CLAUSES:
R E C I T A L S
I. PIMSA hereby declares that:
A. It is a company organized and existing under the Mexican General
Corporation Law, as per Public Instrument Number 20,032, executed before
attorney ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, Notary Public Number 4 of the City of Mexicali,
Baja California, Mexico.
B. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is its attorney-in-fact, as it
appears in Public Instrument Number 31,019, Volume 569, executed on November 26,
1997, before attorney ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, Notary Public Number 4 of the
City of Mexicali, Baja California, Mexico.
C. PIMSA's registration number at the Federal Registry of Taxpayers is:
PIM-790807-D96.
D. The address at which it has its principal place of business is ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇-▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ I, Mexicali, Baja California,
Mexico.
E. PIMSA has developed the Mexicali Industrial Park I and the Mexicali
Industrial Park II, and is developing the Mexicali Industrial Park III and the
Mexicali Industrial Park IV. The Mexicali Industrial Park I, hereinafter
referred to as the Industrial Park, is more specifically shown and described on
EXHIBIT "A", which is attached hereto and made a part hereof.
F. The parties desire to enter into a Lease of ▇▇▇▇ ▇, ▇, ▇, ▇, ▇ ▇▇▇ ▇
▇▇ ▇▇▇▇▇ 5, located in the Mexicali Industrial Park I, at Avenida Galaxia Number
50, and of certain improvements constructed on the land. The land and PIMSA's
Improvements together shall hereinafter be referred to as the Leased Property.
G. That it has previously applied for and obtained financial loans
through Mexican and Foreign Banking and Lending Institutions, with which funds,
buildings and improvements located in the Industrial Parks have been, are being
and will be constructed.
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II. COMPANY hereby declares that:
A. It is a company organized under the Mexican General Corporation Law
as per Public Instrument Number 28,658, Volume 478, executed on January 26,
1994, before attorney ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, Notary Public Number 4 of the
City of Mexicali, Baja California, Mexico.
B. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ verifies his capacity as General
Director of Operations and General Manager of COMPANY as per Public
Instrument Number 31,457, Volume 577, executed on November 09, 1998, before
attorney ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, Notary Public Number 4 of the City of
Mexicali, Baja California, Mexico.
C. COMPANY's registration number at the Federal Registry of Taxpayers
is: CCO-821123-QA1.
D. The address at which it has its principal place of business is Calle
Mercurio Number 70, Mexicali Industrial Park I, Mexicali, Baja California,
Mexico.
Pursuant to the above, the parties agree as follows:
C L A U S E S
I. SCOPE OF LEASE AGREEMENT.
On the express terms and conditions set forth hereinafter, the scope of
this Lease Agreement is as follows: PIMSA hereby leases to COMPANY and COMPANY
hereby leases from PIMSA the land in the Industrial Park as described on EXHIBIT
"B", which is attached hereto and made a part hereof, and PIMSA's Improvements
as more specifically described hereinafter in this Lease Agreement.
II. CONSTRUCTION BY PIMSA.
A. PIMSA has, at its expense, constructed on the land certain
improvements which shall hereinafter be referred to as PIMSA's Improvements.
Said PIMSA's Improvements have been constructed in accordance with plans and
specifications which have been approved by PIMSA and COMPANY and such approval
is hereby acknowledged by the parties.
B. PIMSA has constructed all PIMSA's Improvements in accordance with all
laws, ordinances, regulations, and orders of governmental authorities, and
Industrial Park Regulations which are attached hereto as EXHIBIT "C". The term
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"Improvements" shall, depending on the context, refer to either "PIMSA's
Improvements", "COMPANY's Improvements" or both. The term "COMPANY's
Improvements" shall refer to those improvements identified in Paragraph III.A.
below.
C. The Leased Property is considered Ready For Occupancy.
D. Upon prior written consent of PIMSA, COMPANY may at any time prior to
the commencement of the term hereof, at its sole risk, enter upon and install
such trade fixtures and equipment in the Leased Property as it may elect;
provided, however that, (I) COMPANY shall provide evidence of insurance
satisfactory to PIMSA.
III. INSTALLATIONS BY COMPANY.
A. COMPANY may, at its expense, install on the Leased Property, such
trade fixtures, equipment and furniture as it may deem necessary; provided
that such items are installed and are removable without damage to the
structural integrity of PIMSA's Improvements. Said trade fixtures, equipment
and furniture shall remain COMPANY's property and unless COMPANY is in
default hereunder, shall be removed by COMPANY on or before the expiration
date of the term hereof. COMPANY may also install temporary improvements in
the interior of PIMSA's Improvements upon the Leased Property provided that
such COMPANY's Improvements are installed and are removable without damage to
the structure of the PIMSA's Improvements. Such COMPANY's Improvements shall
remain property of COMPANY and, unless COMPANY is in default hereunder, shall
be removed by COMPANY upon expiration of the term hereof or earlier
termination of this Lease. COMPANY shall repair, at its sole expense, all
damage caused by the installation or removal of trade fixtures, equipment,
furniture or temporary COMPANY's Improvements, reasonable wear and tear
excepted.
B. COMPANY shall perform all installations in accordance with all laws,
ordinances, regulations, orders of governmental authorities, and the Industrial
Park Regulations which are attached hereto as EXHIBIT "C".
IV. LEASE TERM AND COMMENCEMENT DATE.
A. LEASE AGREEMENT. This Lease Agreement shall be effective from the
Commencement Date until the same is terminated as provided hereinafter, the
complete period of tenancy being referred to herein as the "Lease Term".
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B. INITIAL LEASE TERM. The initial term of this Lease ("Initial Term")
shall commence on January 01, 1999, ("Commencement Date") and shall end on the
last day of the fifth (5th) consecutive full Lease Year, as said term is
hereinafter defined.
C. LEASE YEAR. The term "Lease Year" as used herein, shall mean a period
of twelve (12) consecutive full calendar months. The First Lease Year shall
begin on the Commencement Date of the term hereof, if the Commencement Date of
the term hereof shall occur on the first (1st) day of a calendar month; if not
then the First Lease Year shall commence upon the first (1st) day of the
calendar month next following the Commencement Date of the term hereof. Each
succeeding Lease Year shall commence upon the anniversary date of the First
Lease Year.
D. OPTION TO RENEW. COMPANY shall have the right to extend the term of
this Lease Agreement upon the terms, conditions and rentals set forth herein,
for one (1) additional period of five (5) years, ("Renewal Terms"), by giving
written notice to PIMSA not less than six (6) months prior to the expiration of
the Initial Term of this Lease Agreement, so long as COMPANY is not then in
default hereunder.
V. RENT.
A. INITIAL TERM. As minimum monthly rent for the Lease of the Leased
Property during the Lease Term hereof, COMPANY shall pay to PIMSA at the address
of PIMSA stated above, the monthly sum in Pesos, Mexican Currency, equal to the
monthly payments in Dollars, United States Currency, payable as follows:
1. $32,871.00 Dollars, United States Currency, (Thirty Two Thousand
Eight Hundred Seventy One Dollars 00/100, United States Currency), upon the
execution of this contract which sum shall be applied to the last three (3)
months of the Initial Term.
2. Fifty Seven (57) equal monthly payments of $10,957.00 Dollars
(Ten Thousand Nine Hundred Fifty Seven Dollars 00/100, United States Currency),
each payable in advance on the first (1st) day of each month during the Initial
Term, commencing on the first (1st) month of the Initial Term.
3. Increase of Monthly Rent For the Second, Third, Fourth and Fifth
Lease Years. On the first (1st) day of the Second, Third, Fourth and Fifth
Lease Years the
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monthly rent for such Lease Years shall be increased by an amount which is equal
to the product of:
a. The monthly rent then being paid for the immediately
preceding Lease Year, in accordance to Clause V.A.2., hereinabove, multiplied by
b. The percentage increase in the Index (as hereinafter
defined) during the immediately preceding Lease Year.
1) Maximum Rent Increase; No Decrease. Notwithstanding
anything herein contained to the contrary, the monthly rent for the Second,
Third, Fourth and Fifth Lease Years shall not be increased by an amount greater
than ten percent (10%) of the rent for the immediately preceding Lease Year. In
no event shall the monthly rent for the Second, Third, Fourth and Fifth Lease
Years be decreased below the monthly rent for the immediately preceding Lease
Year.
2) Index Defined. The term "Index" shall mean the United
States Bureau of Labor Statistics Consumer Price Index for all Urban Consumers
(all items, Los Angeles-Anaheim-Riverside area, 1982-1984=100).
If the compilation or publication of the Index is
transferred to any other department, bureau or agency of the United States
government or is discontinued, then the index most similar to the Index shall be
used to calculate the rent increases provided for herein. If PIMSA and COMPANY
cannot agree on a similar alternate index, then the matter shall be submitted
for decision to the American Arbitration Association in accordance with the then
rules of such association, and the decision of the arbitrators shall be binding
upon the parties. The cost of such arbitration shall be divided equally between
PIMSA and COMPANY.
B. ADDITIONAL RENT. With the exception of income tax imposed upon PIMSA,
and any tax associated with the Sale or Transfer of the Leased Property or
PIMSA's Improvements, which shall be borne by PIMSA, COMPANY will pay to PIMSA,
as additional rent, an amount equal to the sum of all taxes and assessments of
every kind which are or may be at any time during the Lease Term, levied against
the Leased Property or the Lease Agreement, including but not limited to gross
sales tax, value added tax or stamp tax, property tax and all such taxes and
assessments, levied by any federal, state or municipal government, or any
governmental authority. All such taxes and assessments shall be paid by PIMSA
and reimbursed by COMPANY within ten (10) days after the receipt showing the
payment thereof is presented to COMPANY by PIMSA.
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In calculating the amount of COMPANY's reimbursement, all taxes which
shall become due for the first and last years of the Lease Term shall be
apportioned prorata between PIMSA and COMPANY in accordance with the respective
number of months during which each party shall be in possession of the Leased
Property.
C. RENEWAL TERMS.
1. GRANT OF OPTION AND MANNER OF EXERCISE. COMPANY shall have the
option to extend the term of this Lease for one (1) period of five (5) years,
(the "Extended Term"). COMPANY shall given written notice to PIMSA not less
than six (6) months prior to the expiration of the initial term, if COMPANY
elects to exercise the option to extend granted herein.
2. RENT. The monthly rent for each Lease Year of the Extended Term
shall be equal to the monthly rent for the immediately preceding Lease Year,
plus an amount which is equal to the product of:
a. The monthly rent paid by COMPANY during the immediately
preceding Lease Year, multiplied by
b. The percentage increase in the Index (as hereinabove
defined) during the immediately preceding Lease Year.
Notwithstanding anything herein contained to the contrary, the monthly
rent for each Lease Year of the Extended Term shall not be increased by an
amount greater than ten percent (10%) of the monthly rent for the immediately
preceding Lease Year. In no event shall the monthly rent for any Lease Year of
the Extended Term be decreased below the monthly rent for the immediately
preceding Lease Year.
D. COMPANY will pay the rent provided for in the above Paragraph A. in
Pesos, Mexican Currency, at the rate of exchange effective in the free foreign
market on the date such sums are paid, or in Dollars, United States Currency, as
law and Foreign Exchange Rules allow, as PIMSA may elect.
The foregoing will not be considered to impede or hinder PIMSA's
possibilities and rights under Clause XII to negotiate or assign this agreement
to Mexican, United States or other Foreign Banking or Lending Institutions.
E. PRORATION. The rent for any partial month shall be prorated.
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F. LIQUIDATED DAMAGES. In the event this Lease Agreement is terminated
by PIMSA due to a default of COMPANY prior to or during the first (1st) six (6)
months of the Lease Term, PIMSA shall be entitled to keep and retain as
liquidated damages all sums paid or deposited by COMPANY, as prepaid rent or as
a security deposit, in addition to any other rights of PIMSA provided for
herein.
G. SETOFF. The payment of any rent due under this Lease shall not be
withheld or reduced for any reason whatsoever, and COMPANY agrees to assert any
claim, demand, or other right against PIMSA only by an independent proceeding.
VI. USE.
The Leased Property shall be used and occupied for any lawful industrial
purpose not in violation of the Industrial Park Regulations attached hereto as
EXHIBIT "C". COMPANY shall promptly and adequately comply with all laws,
ordinances and orders of all governmental authorities affecting the Leased
Property, and its cleanliness, safety and labor facilities applicable to the
COMPANY's use of the Leased Property. COMPANY shall not perform or omit any
acts that may damage the Leased Property, or be a nuisance, or menace to other
occupants of the Industrial Park.
VII. INSURANCE.
A. COMPREHENSIVE LIABILITY INSURANCE. During the Lease Term, COMPANY
shall, at its own expense, obtain and maintain in full force a policy of
comprehensive liability insurance including property damage, that insures
COMPANY and PIMSA (and such other agents or employees of PIMSA, PIMSA's
subsidiaries or affiliates, or PIMSA's assignees or any nominee of PIMSA holding
any interest in the Leased Property, including without limitation, the holder of
any mortgage encumbering the Leased Property) against liability for injury to
persons and property and for death of any persons occurring in or about the
Leased Property. The liability to such insurance shall be in the amount of
$100,000.00 Dollars (One Hundred Thousand Dollars 00/100, United States
Currency).
B. FIRE AND OTHER INSURANCE. During the Lease Term, COMPANY at its sole
expense, shall obtain and maintain in full force, in the amount of $1,045,000.00
Dollars (One Million Forty Five Thousand Dollars 00/100, United States
Currency), or as modified herein, a policy or policies of insurance for fire,
lightning, explosion, falling aircraft, smoke, windstorm, earthquake, hail,
vehicle damage, volcanic
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eruption, strikes, civil commotion, vandalism, riots, malicious mischief, debris
removal, steam boiler or pressure object or machinery breakage if applicable,
and flood insurance, on all the Leased Property, including but not limited to
the shell building and interior fit-up. COMPANY shall also obtain and maintain
annual rental insurance in the amount of the annual rent provided for herein in
favor of PIMSA. COMPANY shall be responsible for maintaining insurance on all
of COMPANY's own property. Except for insurance upon COMPANY's property, PIMSA
or its appointee shall be named the COMPANY's beneficiary of any and all
proceeds from any such policy or policies, as their interests may appear.
C. FORM AND DELIVERY OF POLICIES. Each insurance policy referred to in
the preceding paragraphs shall be in a form approved by the Department of
Finance and Public Credit and written with one or more companies licensed to do
insurance in Mexicali, Baja California, Mexico, and shall provide that it shall
not be subject to cancellation or change except after at least thirty (30) days
prior written notice to PIMSA. The policies, or duly executed certificates for
them, together with copies of receipts for payment of the premiums thereof,
shall be delivered to PIMSA prior to the Commencement Date of the Lease Term, as
provided in Clause IV hereof; all documents verifying the renewal of such
policies shall be delivered to PIMSA at least thirty (30) days prior to the
expiration of the term of such coverage. Prior to the Commencement Date of the
Lease Term, each party shall procure and maintain such insurance covering its
own liability and property as each deems appropriate.
D. ADDITIONAL INSURANCE. COMPANY shall obtain and maintain in full force
and effect such additional amounts of insurance as may be required by PIMSA,
from time to time, in accordance with the provisions of this Clause VII, and in
order to adequately and properly insure PIMSA of and for the then current
replacement value of the Leased Property.
E. WAIVER OF SUBROGATION. The parties release each other, and their
respective authorized representatives, from any claims for damage to any person
or to the premises and to the fixtures, personal property, tenant's
improvements, and alterations of either PIMSA or COMPANY in or on the premises
that are caused by or result from risks insured against under any insurance
policies carried by the parties and in force at the time of any such damage. If
either party purchases insurance, the policy shall provide that the insurance
company waives all right of recovery by way of subrogation against either party
in connection with any damage covered by any
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policy. If a party hereto cannot obtain such waiver of subrogation through
reasonable efforts, it shall obtain insurance naming the other party as a
coinsured under its policy in order to accomplish the intent of this provision.
VIII. TAXES AND ASSESSMENTS.
COMPANY agrees to pay all taxes and assessments of every kind levied upon
any and all personal property of COMPANY, its successors and assigns, whether
same shall be or may become a lien upon the Leased Property. All such taxes and
assessments shall be paid by COMPANY before the same become delinquent. In the
event that this contract is recorded at the Public Registry of Property, COMPANY
shall pay all costs of such recordation, including, but not limited to, notary
fees, charges, taxes and stamps required in connection therewith.
IX. REPAIRS, ALTERATIONS AND IMPROVEMENTS.
A. PIMSA.
1. After receipt of written notice from COMPANY, PIMSA at its
expense, shall with the minimum interference with COMPANY's normal use of the
Leased Property, diligently proceed to repair any structural defects in the roof
or exterior bearing walls, excepting normal use, wear and damage. PIMSA shall
not be liable for any damages, and shall not be obligated to make any repairs,
caused by any negligent act or omissions of COMPANY, its employees, agents,
invitees, or contractors. PIMSA shall have no other obligation to maintain or
repair any other portion of the Leased Property. PIMSA shall not be liable to
COMPANY for any damage resulting from PIMSA's failure to make any repairs,
unless COMPANY has notified PIMSA of the need for such repairs, and PIMSA has
failed to commence such repairs within ten (10) days after said notice has been
given and failed to complete the same in a diligent manner.
2. If PIMSA fails to make the repairs described in Clause IX.A.,
COMPANY may, but shall not be required to, make or cause such repairs, to be
made, and PIMSA shall, on demand, immediately pay to COMPANY the actual cost of
the repairs.
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B. COMPANY.
1. COMPANY, at its expense, shall keep and maintain in good order
and repair, except for normal use and wear, all of the Leased Property,
except for those obligations of PIMSA stated in Paragraph A.1., of this
Clause, including but not limited to, all plumbing, sewage and other utility
facilities that are within the Leased Property, as well as fixtures,
partitions, walls (interior and exterior, including painting as often as
necessary, floors, ceilings, signs, all air conditioning, heating and similar
equipment, doors, window, plate glass and all other repairs of every kind and
character to the Leased Property. COMPANY at its expense, shall repair all
leaks except those caused by structural defects. The plumbing facilities
shall not be used for any other purpose than that for which they were
constructed. The expense of any breakage, stoppage or damage resulting from a
violation of this provision, shall be borne by COMPANY. COMPANY shall store
all trash only temporarily within the Leased Property, and shall arrange for
the regular pick up of trash at COMPANY's expense. COMPANY shall not burn
any trash of any kind in or about the Leased Property or the Industrial Park.
2. COMPANY shall require written consent to make any alteration,
improvement or addition to the exterior walls and roof of the Leased Property
with a cost exceeding $5,000.00 Dollars (Five Thousand Dollars 00/100, United
States Currency); and COMPANY shall not damage any floors, walls, ceilings,
partitions, or any wood, stone or ironwork on or about the Leased Property.
3. COMPANY shall keep the Leased Property free and clear of all
encumbrances and liens arising out of acts or omissions of COMPANY, including
those arising out of acts or construction done or ordered by COMPANY. However,
if by reason of any work performed, materials furnished or obligations incurred
by COMPANY with any third party, or any other act or omission by COMPANY, PIMSA
is made liable or involved in litigation, COMPANY shall hold harmless and
indemnify PIMSA including any costs and expenses, and attorneys' fees incurred
by reason thereof. Should COMPANY fail fully to discharge any such encumbrances
or liens within thirty (30) days after the date it has been instituted, or fail
to provide a bond acceptable to PIMSA in the event of contest, PIMSA, at its
option, may pay all or any part thereof. If PIMSA pays any such lien or
encumbrances or any part thereof, COMPANY shall, on demand, immediately pay
PIMSA the amount so paid, together with interest at the rate of twenty percent
(20%) per annum from the date of payment. No
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lien or encumbrance of any character whatsoever created by an act or omission by
COMPANY shall in any way attach or affect the rights of PIMSA on the Leased
Property.
X. UTILITY SERVICES.
During the term of this Lease Agreement, COMPANY shall promptly pay for any
and all public and other utilities and related services furnished to the Leased
Property, including but not limited to, water, gas, electricity and telephone
charges.
XI. RIGHT-OF-WAY.
PIMSA is hereby granted a right-of-way upon, across, over and under the
Leased Property for ingress, egress, installations, replacing, repairing and
maintaining all utilities, including but not limited to water, gas, telephones
and all electricity and any television or radio antenna system serving the
Leased Property. By virtue of this right-of-way it shall be expressly
permissible for the providing electrical and/or telephone company to erect and
maintain the necessary poles and other necessary equipment on the Leased
Property; provided that in exercising any right PIMSA may have under this Clause
XI, PIMSA agrees to cause only a minimum interference with COMPANY's use and
possession of the Leased Property.
XII. ASSIGNMENT AND SUBLETTING.
A. COMPANY shall have the right, upon prior written notice to PIMSA, to
assign or transfer this Lease Agreement, or any interest therein, or permit the
use of the Leased Property by any individual, corporation, or entity, or
sublease all or part of the Leased Property, provided, however, that in the
event of any such assignment, transfer or sublease, COMPANY and its Guarantor
shall remain liable for all its obligations under this Lease Agreement.
B. PIMSA shall have the right to assign and reassign, from time to time,
any or all of the rights and obligations of PIMSA in this Lease Agreement, or
any interest therein, without COMPANY's consent, provided that no such
assignment or reassignment shall impair any of the rights of COMPANY herein, and
provided further, that PIMSA shall remain liable for all of its obligations
under this Lease Agreement. In the event of an assignment or reassignment,
COMPANY shall not diminish or withhold any of the rents payable hereunder by
asserting against such assignee any defense, setoff, or counterclaims which
COMPANY may have against PIMSA or any
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other person. COMPANY hereby specifically waives, with respect to withholding
of rent, any preventative measures to guarantee payment of a claim, as provided
by the Code of Civil Procedure.
XIII. SUBORDINATION.
During the term of this Lease Agreement, PIMSA shall have the right to
encumber its interest in the Leased Property or in this Lease Agreement for any
purpose it deems convenient, and COMPANY shall and hereby does subordinate its
interest in this Lease Agreement and in the Leased Property to such encumbrance.
However, in the event such encumbrance is foreclosed or judicially enforced, the
one who holds the encumbrance shall agree to honor this Lease Agreement and
accept the performance by COMPANY of its obligations hereunder. COMPANY shall
execute any agreement which may be required by PIMSA in confirmation of such
subordination and submit whatever public financial data may normally be
requested by any trust, insurance company, bank or other recognized lending
institution.
Once that PIMSA shall have notified COMPANY in writing that it has assigned
its interest in this Lease Agreement to any lending institution as security for
a debt or other obligation of PIMSA, PIMSA shall not have the power to amend
this Lease Agreement so as to reduce the rent, decrease the term or modify or
negate any substantial obligation of COMPANY hereunder, or to accept a
rescission of this contract, without the written consent of such lending
institution. Such obligation shall continue until the lending institution shall
have notified COMPANY in writing that such assignment has been terminated, on
the understanding that if PIMSA fails to obtain such lending institution's
approval to carry out the foregoing, the amendment of the term above mentioned
shall have no effect whatsoever as against such lending institution.
In addition, if the lending institution should notify COMPANY in writing
requiring the payment of rents hereunder directly to such lending institution or
its representative, then COMPANY shall be obligated to pay to such lending
institution or its representative each subsequent monthly rental coming due
under this Lease Agreement (together with any unpaid rent then past due), until
the date on which such lending institution notifies COMPANY authorizing payment
of rent to PIMSA or other party entitled thereto. COMPANY understands and
agrees that except for the advanced rental payments provided for in Paragraph
A.1. of Clause V of this Lease Agreement, PIMSA may not collect any rent more
than one
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(1) month in advance and COMPANY, at the request of PIMSA, shall provide a
statement that no such advanced payment has been made; such document shall be
binding upon COMPANY as against the lending institution to which this Lease
Agreement may be assigned. In addition, the lending institution shall not be
bound to recognize those payments made to PIMSA after the COMPANY has received
notice requiring payments to be made to such lending institutions.
XIV. ACCESS TO LEASED PROPERTY.
Without undue interference to COMPANY's operation, PIMSA or its authorized
representative shall have the right to enter the Leased Property during all
COMPANY business hours, and in emergencies at all times, to inspect the Leased
Property and to make repairs, additions, or alterations to the Leased Property.
For a period commencing ninety (90) days prior to the termination of this Lease
Agreement, PIMSA shall have access to the Leased Property for the purpose of
exhibiting it to prospective clients and may post usual for sale or for lease
signs upon the Leased Property. Except in case of emergency, PIMSA shall give
notice to COMPANY before entering the Leased Property, and COMPANY shall have
the right to accompany any representatives of PIMSA and prospective clients.
XV. DAMAGE OR DESTRUCTION.
A. TOTAL. In the event that the whole or a substantial part of the
Leased Property is damaged or destroyed by fire, act of nature, or any other
cause, so as to make COMPANY unable to continue the operation of its business,
PIMSA shall, within fifteen (15) days from such destruction, determine whether
the Leased Property can be restored within six (6) months, and notify COMPANY of
said determination. If PIMSA determines that the Leased Property cannot be
restored within six (6) months, either PIMSA or COMPANY shall have the right and
option to immediately terminate this Lease Agreement, by advising the other
thereof by written notice. If PIMSA determines that the Leased Property can be
restored within said six (6) months, PIMSA shall, at its own expense, to the
extent of the funds awarded to PIMSA from the proceeds of the insurance required
under Clause VII hereinabove, proceed diligently to reconstruct PIMSA's
Improvements, and in such event, PIMSA shall accept in lieu of rent during the
period when COMPANY is substantially deprived of the use of the Leased Property
any rental insurance proceeds which may be payable pursuant to rental insurance
provided for hereinabove.
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B. PARTIAL. In the event the said damage caused to the Leased Property
does not prevent COMPANY from continuing the normal operation of its business on
the Leased Property, PIMSA and COMPANY shall repair said damage, each party
reconstructing that portion of the building and interior installations for which
it was responsible during the original construction; provided that excluding
damage or destruction to the parking lot during the period required for such
repair work of PIMSA's Improvements or the improvements, rental payable
hereunder by COMPANY shall be equitably prorated to the proportioned
interference with COMPANY's use and possession of the Leased Property occasioned
by such damage and repair, and in such event, PIMSA shall accept in lieu of the
equitably prorated rent payable hereunder, during the period when COMPANY is
partially deprived of the use and possession of the Leased Property, any rental
insurance proceeds attributable to rent which may be payable pursuant to said
insurance provided for hereinabove.
XVI. LIMITATION OF LIABILITY.
Except for intentional or negligent acts or omissions of PIMSA, its agents
or employees, PIMSA shall not be liable to COMPANY or to any other person
whatsoever for any loss or damage of any kind or nature caused by the
intentional or negligent acts or omissions of COMPANY or other occupants of the
Industrial Park or of adjacent property, or the public, or other causes beyond
the control of PIMSA, including but not limited to, any failure to furnish, or
any interruption of any utility or other services in or about the Leased
Property. COMPANY recognizes that additions, replacements, and repairs to the
Industrial Park will be made from time to time, provided that the same shall not
substantially interfere with COMPANY's use and enjoyment of the Leased Property.
XVII. INDEMNIFICATION.
COMPANY agrees to indemnify and save PIMSA harmless from any and all claims
for damages or losses of any nature whatsoever, arising from negligent act or
omission of COMPANY or its contractors, licensees, agents, invitees, or
employees, or arising from any accident, injury or damage whatsoever caused to
any person or property occurring in or about the Leased Property, or the areas
adjoining the Leased Property and from and against all costs and expenses,
including attorneys' fees, incurred thereby.
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PIMSA indemnifies and holds COMPANY harmless from any injury or damage to
COMPANY or its agents or employees and from any and all liability for injury to
third persons or damage to the property of third persons while lawfully upon the
Leased Property occurring by reason of any negligent act or omission of PIMSA,
its contractors, licensees, invitees, agents or employees.
XVIII. NOTICES.
All notices under this Lease Agreement shall be forwarded to the addresses
mentioned in the Recitals above, with a copy to the Guarantor of this Lease
Agreement, or such other addresses as may from time to time be furnished by the
parties hereto. Said notices shall be in writing and if mailed, shall be deemed
given ten (10) days after the date of mailing thereof. Duplicate notices shall
be sent by certified airmail, postage prepaid, to such additional addresses as
may from time to time be requested in writing by the parties hereto.
XIX. COMPANY'S DEFAULT.
A. Each of the following shall be a default of COMPANY.
1. Vacation or abandonment of Leased Property.
2. Failure to pay any installment of rent due and payable hereunder
upon the date when said payment is due, said failure continuing for a period of
ten (10) days.
3. Default in the performance of any of COMPANY's covenants,
agreements or obligations hereunder, said default, except default in the payment
of any installment of rent, continuing for fifteen (15) days after written
notice thereof is given from PIMSA to COMPANY;
4. A general assignment by COMPANY for the benefit of creditors;
5. The filing of a voluntary petition in bankruptcy by COMPANY or
the filing of an involuntary petition by COMPANY's creditors, said petition
remaining undischarged for a period of ninety (90) days.
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6. The appointment of a Receiver to take possession of substantially
all of COMPANY's assets or of this leasehold, said receivership remaining
undischarged for a period of ninety (90) days.
7. Attachment, execution or other judicial seizure of substantially
all of COMPANY's assets or this leasehold, such attachment, execution or other
seizure remaining undismissed or undischarged for a period of ninety (90) days
after the levy hereof.
B. In addition to the above, each of the following shall be considered a
default of the COMPANY, if there is in respect to Guarantor:
1. A general assignment by Guarantor for the benefit of creditors;
2. The filing of a voluntary petition in bankruptcy by Guarantor or
the filing of an involuntary petition by Guarantor's creditors, said petition
remaining undischarged for a period of ninety (90) days;
3. The appointment of a Receiver to take possession of substantially
all of Guarantor's assets or of this leasehold, said receivership remaining
undissolved for a period of ninety (90) days or;
4. Attachment, execution or other judicial seizure of substantially
all of Guarantor's assets or this leasehold, such attachment, execution or other
seizure remaining undismissed or undischarged for a period of ninety (90) days
after the levy thereof.
C. Upon occurrence of any one of the foregoing defaults, PIMSA shall have
the right, at its option, and in addition to other rights or remedies granted by
law, including the right to claim damage, to do either of the following:
1. Immediately rescind this Lease Agreement and eject COMPANY from
the Leased Property.
2. Claim Specific Performance. In the case of default as specified
above, PIMSA shall, in addition to all other remedies, have the right to declare
the entire unpaid balance of rent to the end of the five (5) year Lease Term
then in effect, and all other sums due to PIMSA, immediately due and payable,
plus interest at the rate of twenty percent (20%) per annum of said sums from
the date of such declaration until payment in full, provided that PIMSA shall
diligently proceed to lease the Leased Property to another tenant or
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otherwise make beneficial use thereof in mitigation of damages, rent and all
other sums due or payable to PIMSA.
In the event the Leased Property is leased to another tenant
during the aforesaid five (5) year Lease Term or otherwise used in a beneficial
manner:
a. PIMSA shall promptly refund to COMPANY that portion of rent
and interest paid by COMPANY pursuant to this Paragraph 2. which is allocable to
the period of the Lease Term during which the Leased Property was leased to
another
tenant or otherwise used in a beneficial manner as well as any other allocable
sums paid by COMPANY to PIMSA, less any loss or damage incurred by PIMSA as a
result of COMPANY's default, or;
b. If such rent or other sums have not been paid by COMPANY to
PIMSA, PIMSA shall credit such amount(s) to COMPANY.
XX. RIGHT TO CURE DEFAULTS.
In the event of COMPANY's breach or default of any term or provision
herein, PIMSA may, without any obligation to do so, at any time after ten
(10) days written notice, cure such breach or default, or make repairs to the
Leased Property, for the account and at the expense of COMPANY. If PIMSA, by
reason of such breach or default, pays any money, or is compelled to incur
any expense, including attorneys' fees, the sums so paid or incurred by PIMSA
with all interest, costs, and damages, shall be paid by COMPANY to PIMSA on
the first (1st) day of the month following the incurring of such expenses.
If any installment of rent or any other payment is not promptly paid when
due, it shall bear interest of twenty percent (20%) per annum from the date
on which it becomes due until paid; but this provision is not intended to
relieve the COMPANY from fulfilling its obligations hereunder in the time and
in the manner specified in this agreement. The foregoing interest, expenses
and damages shall be recoverable from COMPANY by exercise of PIMSA's remedies
hereinabove set forth. Efforts by PIMSA to mitigate the damages caused by
COMPANY's breach of this Lease shall not be construed to be a waiver of
PIMSA's right to recover damages under this Clause XX. Nothing in this
Clause XX affects the right of PIMSA to indemnification by COMPANY in
accordance with Clause XVII hereinabove for liability arising prior to the
termination of this Lease for personal injuries or property damage.
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XXI. WAIVER.
In the event PIMSA or COMPANY does not compel the other to comply with any
of the obligations hereunder, such action or omission shall not be construed as
a waiver of a subsequent breach of the same or any other provision. Any consent
or approval shall not be deemed to waive or render unnecessary the consent or
approval of any subsequent or similar act by COMPANY or PIMSA.
XXII. CERTIFICATES.
COMPANY shall, within ten (10) days of receipt of a written request made by
PIMSA, deliver to PIMSA a statement in writing certifying that this Lease
Agreement is unmodified and in full force and effect (or if there have been
modifications, that the same are in full force and effect as modified); the
dates to which the rent and any other charges have been paid in advance, and
that PIMSA's Improvements have been satisfactorily completed. It is intended
that any such statement may be relied upon by any person, prospective purchaser,
or lending institution interested in the Leased Property.
XXIII. HOLDING OVER
If COMPANY should remain in possession of the Leased Property after the
expiration of this Lease, COMPANY shall pay a minimum monthly rent equal to
twice the then minimum monthly rent then paid in the month immediately
preceding the month in which the holdover period began until COMPANY has
delivered to PIMSA the Leased Property, or executed a new Lease Agreement.
This provision shall not be construed as granting any right to COMPANY to
remain in possession of the Leased Property after the expiration of the Lease
Term. COMPANY shall indemnify PIMSA against any loss or liability resulting
from delay by COMPANY in surrendering the Leased Property, if such loss or
liability is founded on said delay, less any amounts paid pursuant to this
clause. The parties agree that COMPANY shall quit and surrender the Leased
Property at the expiration of this Lease Agreement, waiving the right
provided by law.
XXIV. SURRENDER.
A. On the last day of the term of this Lease Agreement, or the sooner
termination thereof pursuant to other provisions hereof, COMPANY shall quit and
surrender the Leased Property in the same conditions as received by COMPANY, and
restore the premises to a clean and good condition (normal
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wear and tear excepted) together with PIMSA's Improvements that may have been
made in the same. Prior to termination of this Lease Agreement, COMPANY shall
have removed all of its property in accordance with Clause III hereof and all
property not removed shall be deemed abandoned by COMPANY. COMPANY shall repair
and restore the Leased Property to a good and clean condition, normal wear and
tear excepted, while removing the COMPANY's property.
XXV. QUIET ENJOYMENT.
PIMSA agrees that COMPANY, upon paying the rent and all other charges
provided for herein and upon complying with all of the terms and provisions of
this Lease Agreement, shall lawfully and quietly occupy and enjoy the Leased
Property during the Lease Term.
XXVI. ATTORNMENT.
COMPANY shall, in the event any proceedings are brought for the
foreclosure of, or in the event of exercise of the power of sale under, any
mortgage or deed of trust made by PIMSA, its successors or assigns,
encumbering the Leased Property, or any part thereof, if so requested, attorn
to the purchaser upon such foreclosure or sale and recognize such purchaser
as the lessor under this Lease.
XXVII. ENVIRONMENTAL PROTECTION LAW.
PIMSA hereby states that the Leased Property, its soil and underground are
free and clear of any hazardous materials, wastes or contaminants.
Nevertheless, PIMSA shall indemnify and save the COMPANY harmless from and
against losses, demands, claims, payments, suits, actions and judgments of any
nature and description brought against it by reason of the fact that
contaminants existed on the Leased Property, soil and/or underground, or were
deposited there, prior to date of signature of this Agreement. The COMPANY will
be responsible for any losses, damages or injuries caused by the contaminants
which are deposited on the Leased Property, soil or underground after date of
signature of this Agreement.
It will be the sole responsibility of the COMPANY to comply with all
Federal State or Municipal environmental laws, rules and dispositions, which
must be complied with by the COMPANY pursuant with the industrial activities it
will perform in the Leased Property and therefore, must obtain the required
licenses, authorizations, permits and any other document that it must possess
pursuant with the aforestated environmental rules.
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Furthermore, the COMPANY will be solely and exclusively responsible for any
demand, claim, or proceeding initiated against PIMSA, and which results from
acts or omissions by the COMPANY, regarding the handling of hazardous or toxic
materials or wastes located in or moved to, from or through the Leased Property.
The COMPANY in these cases, shall indemnify and save PIMSA harmless from and
against losses, demands, claims, payments, suits, actions and judgments of any
competent environmental authority.
XXVIII. MISCELLANEOUS.
A. This document contains all of the agreements and conditions made
between the parties, and may not be modified orally in any manner other than by
a written agreement signed by the authorized representative of the parties.
B. If any term, covenant, condition or provision of this Lease
Agreement, or the application thereof to any person or circumstance, shall to
any extent be held by a court of competent jurisdiction, to be invalid, void or
unenforceable, the remainder of the terms, covenants, conditions or provisions
of this Lease Agreement, or the application thereof to any person or
circumstance, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
C. In the event that either party should bring an action against the
other party for the possession of the Leased Property, or for the recovery of
any sum due hereunder, or because of the breach or default of any covenant in
this Lease Agreement, the prevailing party shall have the right to collect from
the other party its costs and expense, including attorneys' fees.
D. Every payment and performance required by this Lease Agreement, shall
be paid and performed precisely on the date specified for such payment or
performance and no delay or extension thereof shall be permitted.
E. The titles and subtitles in these clauses of this document shall have
no effect on the interpretation of the terms and provisions contained in this
Lease Agreement.
F. The parties agree that this Lease Agreement be governed by the Laws of
the State of Baja California. For everything pertaining to the interpretation
and compliance of this Lease Agreement the parties thereby expressly submit to
the jurisdiction of the Civil Courts of the City of Mexicali, State of Baja
California, waiving any other jurisdiction which
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might be applicable by reason of their present or future domiciles or otherwise.
G. This Lease Agreement shall be executed in Spanish and English.
However, in the event a dispute or other inconsistency should arise regarding
interpretation or meaning of this Lease Agreement, the English version shall
control.
H. Whenever the prior consent of either party, written or otherwise, is
required as a condition for any act by the other party under this Lease
Agreement, such party agrees not to arbitrarily or unreasonably withhold such
consent.
I. Each party shall execute such further documents as shall be requested
by the other party, but only to the extent that the effect of said documents is
to give legal effect to rights set forth in the Lease Agreement.
J. COMPANY hereby covenants to PIMSA, and PIMSA relies upon said covenant
as a material inducement to enter into this Lease, that COMPANY will deliver to
PIMSA, concurrently with the execution and delivery hereof a Guaranty of this
Lease in the form attached hereto as EXHIBIT "D", executed by, COASTCAST
CORPORATION, or by such other Guarantor as may be acceptable to PIMSA.
K. Submission of this instrument for examination or signature by COMPANY
does not constitute a reservation of or option to Lease, and it is not effective
as a Lease or otherwise until execution and delivery by both PIMSA and COMPANY.
L. This Lease and each of its covenants and conditions shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns, subject to the provisions hereof. Whenever in this
Lease Agreement a reference is made to PIMSA, such reference shall be deemed to
refer to the person in whom the interest of the lessor hereunder shall be
vested. Any successor or assignee of COMPANY who accepts an assignment or the
benefit of this Lease Agreement and enters into possession or enjoyment
hereunder shall thereby assume and agree to perform and be bound by the
covenants and conditions thereof.
M. In the event the Government of Mexico or any subdivision thereof
appropriates, forcibly buys or in any other way takes over the assets or
business of the lessee, and without due cause by COMPANY prevents COMPANY from
doing
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business in Mexico, the COMPANY may upon written notice to PIMSA terminate this
Lease Agreement without liability or penalty for such termination and without
further liability for rental payments due under this Lease Agreement but without
prejudice to the rights of PIMSA and COMPANY to claim from the corresponding
authority the damages caused.
XXIX. Rider number I, PIMSA's Improvements, is attached hereto and by this
reference made a part hereof.
IN WITNESS WHEREOF, the parties have executed this Lease Agreement as of the
16th day of December, nineteen hundred ninety eight.
"PIMSA" "COMPANY"
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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PARQUE INDUSTRIAL MEXICALI, COASTCAST CORPORATION, S.A.
S.A. DE C.V. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ General Director of Operations
▇▇▇▇▇▇▇▇ and General Manager
Executive Vice President
W I T N E S S E S
- - - - - - - - -
/s/ [Illegible] /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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