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Exhibit 10.31
LEASE CONTRACT
Xxxxxxx Xxxxxx of legal age, married, Business Executive, with domicile in San
Xxxxx Sula, Cortes, Honduras, acting as General Manager and Legal Representative
of PARQUE INDUSTRIAL EL PORVENIR, S.A. (ZIP EL PORVENIR), with domicile in El
Progreso, Yoro, Honduras, duly authorized to develop, make use of and manage
Export Processing Zones (EPZ'S), through authorization number 001-93 issued by
the Ministry of Economy and Commerce of Honduras, on January 4, 1993 (date),
whom in this document will be accounted as "LESSOR", and CONFECCIONES EL
PORVENIR with nationality of Honduras with domicile in San Xxxxx Sula, whom in
this document will be accounted as "LESSEE", have agreed to celebrate, and by
this act do, a LEASE CONTRACT subject to EPZ law valid on this date and to the
terms and conditions specified in the next clauses:
1. DEMISE OF PREMISES
1.1. "LESSOR" declares that he is the actual and legitimate proprietor of a
piece of land and building identified with number 22 twenty two and 23 twenty
three on the plan attached hereto and incorporated herein as EXHIBIT A located
in the Export Processing Zone, ZIP EL PORVENIR situated in El Progreso,
Department of Yoro, Honduras "LESSOR" agrees to hand in a building (the
"building") on a certain portion of stage III and IV (such portion of stage III
and IV and the building are referred to together herein as the "Demised
Premises"). The plans and specification of the building are part of this
contract, which has been approved.
1.2. "LESSOR" continues declaring that the "building" is of approximately 73,000
square feet as per attached plan, to be leased by" LESSEE". The exact final
footage will be determine by our engineering department and we are going to
provide the LESSEE a blue print of the building for it's verification upon
delivery of the building.
1.3. "LESSOR" declares that by this act, he leases and has all rights, title and
authority to enter into such a lease, the leasehold consisting of the building
on lots known as numbers 22 twenty two and 23 twenty three and described in the
previous clause.
2. TERM OF THE CONTRACT
2.1. This contract will have a duration of 5 (five) "lease years" starting from
delivery date projected October 19th, 1998 (The "Commencement Day" that will be
notify by LESSOR to LESSEE in a separate letter) with another two five years
options. The term "lease Year" shall mean each successive twelve calendar month
period commencing October 19th of 1998.
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3. VALUE OF THE CONTRACT AND RENT
3.1. The annual rental rate shall be at US$4.65 (Rent) per square foot for the
first 60 months term, US$5.25 (Rent) per square foot for the next 60 months term
and US$ 5.75 (Rent) for the next 60 months term and shall be paid in equally
monthly installments on the first day of each month. The initial square footage
of the building shall be approximately 70,840.69 square feet with exact total
area to be determined as set forth above.
4. PAYMENTS
4.1. The agreed proportional installments will be paid by "LESSEE" to "LESSOR"
by check or wire transfer for immediately available funds to the following
address:
Xx. Xxxxx Xxxxx
Republic International Bank of New York
30th Floor, One Biscayne Tower
Miami, Fla. 33131
Act. No. 000-0000000 ABA 000000000
Tel. (000) 000-0000
A copy of all rent payments shall be sent by mail and fax to the address listed
below:
ZIP EL PORVENIR S.A.
X.X. Xxx #0000
Xxx Xxxxx Xxxx, Xxxxxxxx
Tel. (504) 69-1418, 69-1419, 69-1420.
Fax (504) 69-1421.
4.2. Both parties agree that this contract implies an international financial
transaction valued in the in the U.S.A. currency. According to the preceding,
both parties agree expressly and accept to make all payments related to this
contract in United States Dollars (US$).
4.3. The delay in the payment of the rent will cause a monthly interest charge
of Two percent (2%) over the payments due. After a 5-day written notice, this
interest charge must be calculated from the date the payment was due until the
date in which the payment is effectively canceled. Even though the interest
charges are paid delay to pay rent for a period of at least 60 days, will give
"LESSOR" the right to terminate the lease contract and exercise the
corresponding actions, having "LESSEE" to pay the due rent any ways.
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5. GUARANTEES
5.1. In guarantee of this lease Agreement, "LESSEE" will provide:
A. - A security deposit equivalent to 2 months rent at the time contract is
signed, which will be returned by "LESSOR" to "LESSEE".
B.- "LESSEE" is obligated to guarantee the amount of this lease contract with an
endorsement of GILDAN Corporation. "LESSOR" may execute this guarantee when
"LESSEE" does not comply within thirty days with any one of the obligations
contracted by means of this lease contract and collateral contract.
5.2. The security deposit will cause no interest at all. This amount responds
for any damage and/or modifications caused to the leasehold by "LESSEE". It also
responds to delay rent payments or any other pecuniary responsibility in favor
of "LESSOR". "LESSOR" will have the right to credit the payment of the amount
received as security deposit, but won't be obligated to apply that amount to
delayed payment. Therefore, the deposit won't obstruct discharge action or any
judicial action initiated in case of default. In case "LESSOR" applies this
deposit or part of this deposit to the payments of the obligation guaranteed by
it, as previously expressed, "LESSEE" will reimburse or restore the said deposit
within the next seven days following a written request from "LESSOR", to do so,
in order that the contract is guaranteed by the total of the said deposit at any
moment. If "LESSEE" does not reimburse or restore the required amount within the
stipulated period of time, "LESSOR" is expressly authorized to take any amount
that "LESSEE" pays as a rent as corresponding restoration, this way leaving the
next month payment incomplete.
6. GOVERNING LAWS. EFFECT.
6.1. "LESSEE" will utilize the leasehold for manufacturing products for export.
"THE LESSEE" obligates to use the leasehold according to the stipulations
established in the Decree No. 37-87, contained in the Export Processing Zones
Law of Honduras; this law's the rules and obligations issued by the Executive
Power and Municipality of El Progreso, Department of Yoro, Honduras, The Labor
Code of Honduras and the future by-laws governing the use of the industrial
buildings, maneuvering yard, areas and common services of EL PORVENIR INDUSTRIAL
PARK.
6.2. This lease shall be governed by and construed in accordance with the laws
of the county in which the leasehold are located and shall have the effect of a
sealed instrument. "LESSOR" will register this lease agreement following all
regulations and laws pertinent to such rent agreement. "LESSEE" agrees and
accepts to pay, at the time of registration, all such cost related to
translation into Spanish language, legal fees, stamps and registration-related
expenses. The amount to be paid by "LESSEE" will be no more than US$2,000.00.
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7. UTILITIES/"LESSOR" SERVICES
7.1. "LESSEE" shall pay, directly to the appropriate utility or "LESSOR" all
charges for gas, electricity, water for laundry or industrial use only, light,
heat, telephone, fax, power supplied, and purchased security supplied to or
consumed within the leasehold.
It is understood that "LESSOR" will provide to the "LESSEE" an amount of 15
gallons of water daily free of charge for each employee or the proportion of one
(1) gallon per nine (9) square feet, and the usage of water over that amount
will be paid by the Lessee, according to published rates in effect from time,
which rates should be base in markets rates available to preferred customers at
ZIP EL PORVENIR.
8. SERVICES
8.1. "LESSOR" responsibilities: "LESSOR" will supply "LESSEE" the perimeter
security services of the industrial complex, will provide the customs facilities
at the industrial park site, and Human Resource Prescreening and pre-selection,
lightning and maintenance of common areas, garbage collection and maintenance of
external sewage, pluvial water systems.
9. REPAIRS AND MAINTENANCE
9.1 "LESSEE" Responsibilities: "LESSEE" will keep in good shape and at all his
expenses the leasehold, making all the necessary leasehold improvements as well
as all the required operations for the good maintenance of the leasehold, in
order to keep in good shape the building, and in the same condition as the
building was in at the commencement of this lease, for this purpose "LESSEE"
will be in charge of (A) Exterior painting for the building no more than every
12 months. (B) Roof, if its damage is cause by "LESSEE". (C) Floors, doors,
window, sanitary and electric installation repairs, it is understood,
nevertheless, that "LESSOR" will be responsible for repairs of the damages
originated by hidden or structural defects of the rented building. (D) Normal
maintenance and operation of the air conditioning system, for this purpose
"LESSEE" agrees to have a service maintenance contract for all air condition
units in the rented building with a company provided by "LESSOR". "LESSOR" is
responsible to replace if necessary any part for each air conditioning unit at
LESSOR cost for the first 12 months. (E) "LESSEE" agrees that it will keep the
building (including interior portions of all walls, windows, doors and all other
glass in a neat, clean and sanitary condition). (F) All the above will be
revised monthly or as needed.
9.2 If "LESSEE" is to set a laundry facility or any other type of process that
will produce or generate chemical or toxic waste (solid or liquid waste) inside
the leasehold a written approval must be obtained from "LESSOR" clearly
specifying how such waste will be treated and disposed in accordance with the
laws of Honduras and general reasonable regulations of "LESSOR". All costs and
expenses related to such treatment and disposal of waste will be "LESSEE"
responsibility. Failure to comply with the above 30 days after a written
notification will allow "LESSOR" to terminate the lease agreement.
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9.3. "LESSEE" will be responsible for the loss and/or damage that the leasehold
may suffer other that normal wear and tear, as well as for damages caused to
third parties as a result of its operations and "LESSEE" will keep out "LESSOR"
of any liability regarding these concepts. Regarding this matter "LESSEE shall
obtain all necessary insurance in order to cover these risks.
10. RIGHT OF ENTRY.
10.1 "LESSOR" will have the right to periodically inspect the leasehold, with
reasonable notice, with qualified personnel to evaluate the physical and
operational conditions of the rented facilities, at any time he considers it
convenient, during "LESSEE'S" working hours, except in case of emergency, in
which all hours are considered as working hours. If as a result of such
inspections it is determined those repairs are required; "LESSEE" will be asked
to repair such damages. If "LESSEE" doesn't want to repair such damages, and
such repairs are required hereunder, "LESSOR" will carry on with work and will
charge "LESSEE" with the cost and the overhead expenses. It is understood,
nevertheless, that "LESSOR" will be responsible for the repairs of the damages
originated by hidden or structural defects of the rented building.
11. INDEMNIFICATIONS
11.1 "LESSEE" covenants to indemnity and save "LESSOR" harmless from and against
any and all claims actions, costs, expenses, liabilities, losses, damages,
suits, fines, penalties and demands due to "LESSEE'S" failure to comply with the
foregoing and "LESSEE" shall not look to "LESSOR" for any disbursement or outlay
whatsoever in connection therewith, and hereby discharges "LESSOR" of and form
any liability therefor.
12. FORCE MAJEURE
12.1 "LESSOR" will have no responsibility whatsoever for the damages caused by
fortuitous event of force major that either disrupt or not "LESSEE's" normal
operations, but will proceed immediately to the pertinent repairs. If the
damage's magnitude is so great that it causes the building substantial
alterations, provoking the suspension of work, "LESSOR" or "LESSEE" may
terminate this contract with a thirty-day notification. The thirty-day
notification will be calculated starting from the date of the damage. No rental
shall be due during any period in which the building is unusable for the
purposes intended hereunder.
12.2. "LESSEE" agrees to obey all laws and regulations imposed by the Export
Processing Zones, the government of Honduras of any of the obligations, and
"LESSOR" when applicable. "THE LESSEE" will have the obligation to follow
reasonable recommendations from "LESSOR" and provide "LESSOR" with all necessary
information requested by "LESSOR" in relation to labor relations according to
Honduras laws and customs. If "LESSEE" does not comply with Honduras laws and
customs (as specified by the Honduran Law) "LESSOR" will have the right to
cancel this lease contract immediately, and "LESSOR" will be liable for all
remedies according to this lease and the Honduran laws.
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13. ALTERATIONS
13.1. During the term of the contract, "LESSEE" may not introduce any structural
modifications or substantial alterations to the leasehold without prior written
authorization issued by "LESSOR", which authorization shall not unreasonably be
denied. "LESSEE" at its own cost and expense may make interior non-structural
renovations and decoration of the leasehold with the consent of "LESSOR". At the
end of the contract, "LESSEE" may remove any such improvements, at "LESSEE's"
cost, if such removal can be accomplished without damaging the leasehold.
Otherwise, those improvements will remain in "LESSOR" benefit, free of any cost.
14. COMMON AREAS
14.1 (A) The term " common areas" shall include, without limitation the parking
areas, lanes, drives, and driveways, entrances, all means of ingress and/ or
egress, curb cuts, roadways, loading, docks, packages pick up areas, ramps
sidewalks, landscaped and planted areas, retaining walls, lighting facilities
which are intended for or are available exclusively for land or buildings
comprising the Industrial Park (B) The common areas shall at all times be
subject to the exclusive control and management of "LESSOR" and "LESSOR" shall
have the right to establish, modify and enforce reasonable rules and regulations
with respect to all facilities and areas in the common areas.
15. INSURANCE
15.1. "LESSEE" shall maintain at sole cost and expense, for the benefit of "THE
LESSOR", insurance covering the leasehold against loss or damage by fire and
against loss caused by any other peril, vandalism or malicious mischief in
amounts not less than the full replacement cost of the leasehold.
15.2. "LESSEE" acknowledges that "LESSOR" will not carry insurance on "LESSEE's
furniture and/or furnishings or any fixtures or equipment, piece goods, trims,
cut work, finished garment improvements or appurtenance by "LESSEE" agrees that
"LESSOR" will not be obligated to repair any damage thereto or replace the same.
16. ASSIGNMENTS: SUBLETTING
16.1. "LESSEE" shall not assign or sublet all or any portion of the rights held
by over the leasehold and granted by this contract without "LESSOR" written
consent, which consent shall not be unreasonably withheld or delayed; provided
however, that "LESSEE" may assign all of its rights under this lease to an
affiliated party, if simultaneously with such; assignment the subsidiary assumes
all of "THE LESEE" obligations hereunder. In the event of such assignment,
"LESSEE" shall be relieved of all liability under this lease.
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17. NOTICES
17.1. Any notice, approval, request, demand, consent or other communication
under this lease shall be in writing and shall be considered effective when
faxed or when mailed by registered or certified mail, return, receipt,
requested, postage prepaid, the parties at the address indicated below (or at
such other address as the parties may specify by notice to the others pursuant
hereto).
If to "LESSOR"
Xxxxxxx Xxxxxx Xxxxxx
ZIP EL PORVENIR, S.A.
El Progreso, Yoro, Honduras.
Phone: (504) 69-1418, 69-1419, 69-1420
Fax: (504) 69-1421
If to "LESSEE"
Xxx Xxxxxxxx
Los Angeles San Xxxx
ZIP San Xxxx
San Xxxxx Sula, Cortes
Honduras, C.A.
And
Xxxx Xxxxxxxx
725 Xxxxxx xx Xxxxxx
Ville Saint-Laurent, QC
Canada H4T IP5
18. END OF TERM AND HOLDOVER
"LESSEE" shall, upon the expiration or other termination of the term of this
lease contract, peaceable vacate and surrender the leasehold and remove all
"LESSEE's goods and effects including "LESSEE" will return the leasehold object
of this contract in the same physical conditions he received it, except for the
damage, caused by normal wear and tear of it, excepting matters for which
"LESSOR" is responsible under clause number 8.1. herein.
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19. - REMEDIES
19.1 Any infraction to the stipulations of the present contract obligates the
infractor to repair the damage or give the right to the affected party to ask
for the termination of the contract; in both cases indemnification is applicable
for all the damages caused. The competent court to resolve any case dealing the
compliance of interpretation of this contract will be the Arbitration Board
designated by the Chamber of Commerce and Industry of San Xxxxx Sula, Department
of Cortes, Honduras, thus "LESSEE" renounces expressly to his domicile and both
parties subject themselves to the jurisdiction of the said Arbitration Board.
20.ACCEPTANCE
20.1 "LESSEE" declares that it accepts each and every one of the preceding
clauses and obligates itself to comply with the present contract. In faith of
the proceeding, we sign two originals of the present contract in El Progreso on
the nine days of the month of march of 1998.
PARQUE INDUSTRIAL EL PORVENIR, S.A.
BY: /s/ Xxxxxxx Xxxxxx Xxxxxx
NAME: Xxxxxxx Xxxxxx Xxxxxx
TITLE: General Manager
"CONFECCIONES EL PORVENIR"
BY: /s/ Xxx Xxxxxxxx
NAME: Xxx Xxxxxxxx
TITLE: General Manager
ENDORSEMENT: GILDAN ACTIVEWEAR INC.
BY: /s/ Xxxx Xxxxxxxx
NAME: Xxxx Xxxxxxxx
TITLE: Chairman & Chief Officer
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