EXHIBIT 10.14
GOVERNMENT OF PUERTO RICO
PUERTO RICO INDUSTRIAL DEVELOPMENT COMPANY
X.X. XXX 000000 XXX XXXX,
XXXXXX XXXX 00000-0000
LEASE AGREEMENT (BASIC PLANT)
BETWEEN
PUERTO RICO INDUSTRIAL DEVELOPMENT COMPANY
AS LANDLORD
AND
LIFESTYLE FOOTWEAR, INC.
AS TENANT
PROJECT NO.: T-1236-0-87
LOCATION: MOCA, PUERTO RICO
INDEX
ARTICLE
Article I. Basic: Terms of Lease
1.01 Landlord .
1.02 (a) Landlord's Postal Address
(b) Landlord's Physical Address
1.03 (a) Tenant
(b) Tenant's Trade Name
1.04 (a) Tenant's Postal Address
(b) Tenant's Physical Address
1.05 Tenant's Employer Identification Number
1.06 Leased Premises
Additional Parcel
1.07 Permitted Use
1.08 Capitalization, Investment and Employment Levels
1.09 Lease Term
1.10 Definition of "Year"
1.11 Date of Delivery of Possession
1.12 Rent Commencement Date
1.13 Basic Rent
1.14 Security Deposit
1.15 Guarantor
1.16 Effect of Recurrence to Defined Term in Article I
1.17 Attachments
ARTICLE II. TITLE, AUTHORITY AND DEMISE
2.01 Title and Authority
2.02 Demise
ARTICLE III. LEASE TERM; POSSESSION
3.01 Term
3.02 Delivery of Possession of Leased Premises
ARTICLE IV. USE OF LEASED PREMISES, RESTRICTIONS AND OPERATIONAL REQUIREMENTS
4.01 Use of Leased Premises
(a) Authorized Use
(b) Restrictions
4.02 Ongoing Operation; Levels of Capitalization, Investment and Employment
(a) Purpose
(b) Interruption of Operations
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(c) Level of Capitalization, Investment and Employment
ARTICLE V. RENT
5.01 Basic Rent
5.02 Additional Rent
5.03 Payment Method
ARTICLE VI. SECURITY DEPOSIT
6.01 Security Deposit
6.02 Use of Security Deposit
6.03 Surrender of Security Deposit
6.04 Transfer of Security Deposit
ARTICLE VII. ALTERATIONS AND IMPROVEMENTS
7.01 General Provisions
7.02 Alterations and Improvements
7.03 Air Conditioning; Electric Power Generator
7.04 Sprinkler System
7.05 Floor Load
7.06 Liens and Encumbrances
7.07 Ownership of Improvements; Surrender
7.08 Plans and Specifications
ARTICLE VIII. MAINTENANCE AND REPAIRS
8.01 Tenant's Duties and Responsibilities
8.02 Landlord's Duties and Responsibilities
8.03 Roof Care and Maintenance
ARTICLE IX. PUBLIC UTILITIES
9.01 Tenant's Duties and Responsibilities
9.02 Service Interruption
9.03 Electricity
(a) Electric Power
(b) Electrical Substation
(c) Additional Equipment
9.04 Water Supply
ARTICLE X. QUIET ENJOYMENT
10.01 Quiet Enjoyment
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ARTICLE XI. TAXES, ASSESSMENTS AND DUTIES
11.01 Taxes, Assessments and Duties
ARTICLE XII. ENVIRONMENTAL
12.01 Governmental Regulations and Environmental Protection
ARTICLE XIII. DESTRUCTION OF PREMISES
13.01 Notice of Event
13.02 Landlord's Duty to Repair
13.03 Lease Agreement Termination
13.04 Restoration
13.05 Rent Adjustment
13.06 Damage Report
ARTICLE XIV. WAIVER OF CLAIMS; INDEMNIFICATION
14.01 Indemnification
14.02 Waiver of Claims
14.03 Tenant Responsible for Personal Property
ARTICLE XV. INSURANCE
15.01 Insurance
15.02 Insurance During Construction
15.03 Insurance Policy Increase
15.04 General Requirements
15.05 Insurance Certificates
15.06 Evidence of Payment; Renewal of Policies
15.07 Claims
15.08 Periodic Reviews
15.09 Penalties
15.10 Waiver of Subrogation
ARTICLE XVI. LANDLORD'S RIGHTS
16.01 Access to Leased Premises
ARTICLE XVII. TENANT BANKRUPTCY
17.01 Lease Agreement Assumption Requirements
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ARTICLE XVII. TERMINATION BY BREACH
18.01 Breach by Tenant as Cause for Termination
18.02 Other Causes for Termination
18.03 Abandonment
18.04 Termination by Tenant
18.05 Landlord's Options
18.06 Damages
18.07 Right to Relet
ARTICLE XIX. RETURN OF LEASED PREMISES
19.01 Surrender of Possession
19.02 Holding Over
19.03 Inspection of Leased Premises
19.04 Equipment, Machinery and other Furniture Not Removed
19.05 Tenant's Liabilities
ARTICLE XX. LEGAL REQUIREMENTS
20.01 Legal and Insurance Compliance
ARTICLE XXI. ASSIGNMENT AND SUBLEASE
21.01 Assignment and Sublease
21.02 Change of Control
21.03 Permitted Assignments and Subleases
ARTICLE XXII. GENERAL PROVISIONS
22.01 Signs and Advertising
22.02 Parking
22.03 Attorneys' Fees
22.04 Successors and Assignees
22.05 Landlord's Obligation to Lease
22.06 Definition of the Term "Tenant"
22.07 Headings
22.08 Late Charges
22.09 Lease Guaranty
22.10 Performance
22.11 Entire Agreement
22.12 Force Majeure
22.13 Safety Programs
22.14 Estoppel Certificate
22.15 Tenant's Duties; Landlord's Rights
22.16 Relationship Between the Parties
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22.17 Nullity or Partial Invalidity
22.18 Accord and Satisfaction
22.19 Applicable Law
22.20 Jurisdiction and Competency
22.21 Net Lease
22.22 Notices
22.23 Non-Waiver
22.24 Cumulative Remedies
22.25 Brokers
22.26 Cross Default
22.27 Representations
22.28 Financial Statements
22.29 Additional Documents
22.30 Fiscal Liabilities
22.31 Debt Certification
22.32 No-Conflict Certification
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ARTICLE I
BASIC TERMS OF LEASE
The following sections set forth basic information referred to in this
Lease Agreement and, where appropriate. constitute definitions of the terms
hereinafter listed.
1.01 LANDLORD: Puerto Rico Industrial Development Company (PRIDCO).
1.02 (a) LANDLORD'S POSTAL ADDRESS: P.O. Box 362350
San Xxxx, P.R. 00936-2350
Attn.: Real Estate Office
(b) LANDLORD'S PHYSICAL ADDRESS: 000 X.X. Xxxxxxxxx Xxxxxx
Xxxx Xxx, Xxxxxx Xxxx 00000
Telephone: (000) 000-0000
Fax: (000)000-0000
1.03 (a) TENANT: LIFESTYLE FOOTWEAR, INC.
(b) TENANT'S TRADE NAME: LIFESTYLE FOOTWEAR, INC.
1.04 (a) TENANT'S POSTAL ADDRESS: X.X. XXX 000, XXXXX, XXXXXX XXXX
00000, Phone: (000) 000-0000.
(b) TENANT'S HEADQUARTERS ADDRESS: ROCKY SHOES & BOOTS
000, Xxxxxx Xx., Xxxxxxxxxxx, Xxxx.
1.05 TENANT'S EMPLOYER IDENTIFICATION NO. 00-0000000
1.06 LEASED PREMISES: Project No. T-1236-0-87; as described in Attachment A to
this Lease Agreement, consisting of a parcel of land and a building
thereon having a gross construction area of 44.977.75 sq. ft. (the
"Building'") located in Moca, Puerto Rico. The Leased Premises include the
special facilities, if any, described in Attachment A. For purposes of
this Lease Agreement, the Building's gross construction area includes,
without limitation, bathrooms, ramps, access stairs, loading docks,
exterior shelters, corridors between buildings or structures and other
roofed structures on the parcel of land, as described in Attachment A.
1.07 PERMITTED USE: The Leased Premises shall be used exclusively for: the
manufacture of leather footwear and boots. SIC Number: 03143
1.08 CAPITALIZATION, INVESTMENT AND EMPLOYMENT LEVELS: The maximum level of
Capitalization, Investment and number of Employees that Tenant is required
to
have for its operations at the Leased Premises, u defined in Section
4.02(e) of this Lease Agreement. Tenant will be required to maintain the
following levels:
(a) Capital $3,500.000.00
(b) Machinery and Equipment $ 958,000.00
(c) Employees 97
As used in this Lease Agreement, the term "capitalization" includes the
stream of total value ("equity") of the owner (preferred stock, common
stock and surplus) plus long-term debt Amortization of the long-term debt
will not reduce the amount originally established as the minimum
capitalization amount.
1.09 LEASE TERM: Ten (10) Years beginning on the Date of Delivery of Possession
(the "Initial Term'"), plus one (1) additional renewal period of Ten (10)
Years each. Renewals shall take effect automatically upon the expiration
of the them in force, unless one of the parties hereto, no later than one
hundred eighty (180) days before the expiration of such term, notifies the
other party of its intention to terminate the lease upon conclusion of the
term then in force.
1.10 YEAR: "Year" shall mean 365 consecutive days unless the year in question
is a leap year, in such case the term "Year" shall mean 366 consecutive
days.
1.11 DATE OF DELIVERY OF POSSESSION: The date Landlord delivers the keys to the
Leased Premises to the Tenant, which date shall be acknowledged by the
parties by way ora Certificate of Delivery of Keys (as defined in Section
3.02, see Attachment F).
1.12 RENT COMMENCEMENT DATE: The date on which Tenant's obligation to pay Basic
Rent commences. Tenant's obligation to pay Basic Rent hereunder shall
commence on the Date of Delivery of Possession.
1.13 BASIC RENT: The Basic Rent to be paid to Landlord shall be based on the
gross construction area of the Building as ,follows:
YEAR RENT PER SO. FT. ANNUAL BASIC RENT MONTHLY BASIC RENT
------- ---------------- ----------------- ------------------
1 to 5 $2.20 $ 98.951.05 $ 8.245.92
6 to 10 $2.75 $123.688.81 $10.307.40
Renewal The Basic Rent for a renewal period shall be the prevailing lease
rate charged by Landlord at the time of the renewal for similar
properties in the zone in which the Leased Premises arc located.
Tenant's obligation to pay Basic Rent shall commence on the date set forth in
Section 1.12 of this Lease Agreement.
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1.14 SECURITY DEPOSIT: A sum equivalent to the aggregate of (i) the payment(s),
below identified as "Reservation Payment", made by Tenant prior to the
execution of this Lease Agreement to reserve the Leased Premises and (ii)
the amount below identified as the "Security Deposit Balance", which
amount is the remaining balance to complete the security deposit required
under Section 6.01 of this Lease Agreement.
Total Security Deposit $11,874.13
The Security Deposit Balance payment shall be made with a manager's or
official bank check and delivered by Tenant together with this Lease
Agreement.
1.15 GUARANTOR: N/A
1.16 EFFECT OF REFERENCE TO A DEFINED TERM IN ARTICLE I. Each of the defined
terms used in Article I shall be construed in conjunction with the
definition thereof contained in this Lease Agreement. In the event of any
conflict between the defined term and the balance of the Lease Agreement,
the latter shall prevail.
1.17 ATTACHMENTS. The following marked attachments are incorporated in this
Lease Agreement by reference as if set forth at length herein and form an
integral part hereof:
[X] Attachment A - Description of Leased Premises and premises's deficiencies
[ ] Attachment B - Lease of Additional Parcel
[ ] Attachment C - Certificate of Delivery of Leased Parcel (Form BRN"()23A)
[ ] Attachment D - Work to be Performed by Tenant
[ ] Attachment E - Notice of Delivery of Possession
[X] Attachment F - Certificate of Delivery of Keys (Form - BRN-033)
ARTICLE II
TITLE, AUTHORITY AND DEMISE
2.01 Title and Authority. Landlord is the owner of the property descried in
Attachment A hereto and, in such capacity, has full right and lawful
authority to lease said property to Tenant and to grant to Tenant all the
rights pertaining thereto, subject to the liens, encumbrances and
restrictions which may affect it, if any, and the terms and conditions of
this Lease Agreement and of its attachments.
2.02 Demise. Subject to the terms, covenants and conditions of this Lease
Agreement, Landlord leases the property described in Attachment A (the
"Leased Premises" to Tenant, and Tenant accepts same.
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ARTICLE III
LEASE TERM AND POSSESSION
3.01 Term. The term of this Lease Agreement (hereinafter the "Term" shall
commence on the Date of Delivery of Possession (as defined in Section
1.11) and shall expire on the last day of the last Year of the term
(including any possible extension as per Section 1.09), unless earlier
terminated in accordance with the provisions of Article XVIII hereof.
3.02 Delivery of Possession of Leased Premises. The exact date on which the
Leased Premises shall be delivered to Tenant shall either be set forth in
Section 1.11 of this Lease Agreement or attested to in writing by Landlord
and Tenant in a document in form substantially similar to Attachment F of
this Lease Agreement (the "Certificate of Delivery of Keys").
ARTICLE IV
USE OF THE LEASED PREMISES, RESTRICTIONS
AND OPERATIONAL REQUIREMENTS
4.01 Use of Leased Premises. (a) Authorized Use. Tenant shall use and occupy
the Leased Premises solely and exclusively as authorized in Section 01.07
of this Lease Agreement. Any change in the authorized use must be
previously approved in writing by Landlord.
(b) Restrictions. Landlord reserves exclusively to itself the air rights
over any building or structure forming part of Leased Premises, for
any purpose.
4.02 Ongoing Operation: Levels of Capitalization. Investment and Employment.
(a) Tenant acknowledges that this Lease Agreement is entered into in
furtherance of the Government of Puerto Rico's economic and
industrial development plan. Accordingly, strict compliance with the
provisions of this Section 4.02 is a paramount and indispensable
requirement of this Lease Agreement.
(b) Interruption of Operations. In accordance with the previous
paragraph, Tenant shall make every effort necessary to maintain
uninterrupted its operations at the Leased Premises. However,
nothing contained in this section shall be deemed to require Tenant
to conduct its operations in any other way than in compliance with
sound business principles. The temporary shutdown or interruption of
operations for reasonable cause shall not constitute a breach of
this Lease Agreement if Tenant has satisfied the following
conditions:
(i) Tenant shall notify Landlord in writing of any interruption or
temporary shutdown of operations at least thirty (30) days
prior to the scheduled occurrence thereof, except in the event
of an emergency interruption or
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shut down, in which case notice shall be given as quickly as
possible but not later than the next business day;
(ii) the interruption or temporary shutdown of operations shall not
last for more than three (3) consecutive months; and
(iii) during the period of interruption or temporary shutdown of
operations, Tenant shall observe and comply with all the
terms, conditions and obligations of this Lease Agreement,
including. but not limited to, the payment of Rent (Basic and
Additional) and the maintenance of the Leased Premises.
(c) Levels of Capitalization. Investment and Employment. Tenant pledges
to have on the Date of Delivery of Possession, and maintain during
the Term, a minimum level of capitalization equivalent to the sum
indicated in item (a) of Section 1.08, which sum shall be verified
by audited financial statements at the end of every calendar year.
In the same manner and in a period of six (6) months after the Date
of Delivery of Possession, Tenant pledges to install manufacturing
equipment and machinery (either owned or leased) in the Leased
Premises, whose value shall represent an investment of no less than
the sum indicated in item (b) of Section 1.08 (this value shall not
include the cost of transportation and installation of the equipment
and/or machinery, nor its ordinary depreciation after installation).
Eighteen (18) months after the Date of Delivery of Possession,
Tenant shall have in its employment at least the number of persons
indicated in item (c) of Section 1.08 to accomplish the operation of
its business at the Leased Premises. Tenant shall maintain the
minimum required levels of capitalization, investment and employment
set forth in Section 1.08 during the Term of this Lease Agreement
including any extensions thereof.
ARTICLE V
RENT
5.01 Basic Rent. As of the Rent Commencement Date set forth in Section 1.12
hereof; Tenant shall pay to Landlord the Basic Rent specified in Section
1.13 of this Lease Agreement. The Basic Rent for any renewal period shall
be the prevailing lease rate charged by Landlord at the time of the
renewal period for similar properties in the zone in which the Leased
Premises arc located; provided, however, that the Basic Rent for a renewal
period shall not be less than that of the preceding lease period. Tenant
shall pay the Basic Rent in monthly installments in the amount indicated
in Section 1.13 in advance on or before the first day of each calendar
month (the "Monthly Rent"); provided, however, that if the Rent
Commencement Date does not fall on the first day of a calendar. month. the
rent for the initial partial month shall be prorated based on a 30 day
month and included with the first payment of Monthly Rent due the first
day of the first full calendar month following the Rent Commencement Date.
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5.02 Additional Rent. Any amount Tenant is obligated to payor reimburse
Landlord under this Lease Agreement that is not Basic Rent shall be
considered to be Additional Rent.
5.03 Payment Method. The Basic Rent and the Additional Rent (hereinafter
collectively, the "Rent") shall be paid in legal currency of the United
States of America. Any payment or charge identified in this Lease
Agreement as Additional Rent shall be made on or before the first day of
the month following the date the request for payment was sent by Landlord
to Tenant. All Rent shall be remitted to Landlord, delivered either
personally or by mail to the address indicated in Section 1.02 of this
Lease Agreement, or to any other address that Landlord may from tin)e to
time notify to Tenant, it being Tenant's duty to take the necessary
measures and precautions to ensure that the Rent is received by Landlord
on or before its due date. The payment of Rent is separate from any other
agreement or obligation contained in this Lease Agreement, and shall be
paid without the need of previous request or notice by Landlord. without
set off. adjustment or abatement of any kind, except as otherwise provided
for herein. Landlord may demand at any time that Rent payments be made by
a Manager's or official bank check.
ARTICLE VI
SECURITY DEPOSIT
6.01 Security Deposit. Simultaneously with the execution of this Lease
Agreement, Tenant shall deliver to Landlord a manager's or official bank
check, for the amount specified in Section 1.14 of this Lease Agreement
(the "Security Deposit"), to guarantee the faithful performance of each
and every one of Tenant's obligations, including, but not limited to, the
payment of all the Basic Rent, any other expenditure Tenant is responsible
for hereunder, and the surrender of the Leased Premises upon expiration of
the Term, or at the termination of this Lease Agreement, in the condition
and good order required by Article XIX of this Lease Agreement. Tenant
shall not have the right to receive interest on the Security Deposit.
6.02 Use of Security Deposit. Landlord may use all or part of the Security
Deposit at any time to cover any payment (including Rent) or expense that,
according to the terms and conditions of this Lease Agreement, is Tenant's
responsibility. Should it become necessary for Landlord to use the
Security Deposit as a result of a default or violation of the Lease
Agreement by Tenant, Tenant must replace the amount used by Landlord
within fifteen (15) days of a written demand therefor by Landlord.
6.03 Surrender of Security Deposit. Upon termination of this Lease Agreement,
Tenant shall request' in writing the Security Deposit (or the remaining
balance after use by Landlord to cover any payment (including Rent) or
other: allowable expense under this Lease Agreement) after Landlord (i)
has inspected the Leased Premises; (ii) confirms that the Leased Premises
have been surrendered according to Article XIX and the other pertinent
terms and conditions of this Lease Agreement; and (iii) determines that no
environmental deficiencies exist which are attributable to or a
consequence of the operations of Tenant at the Leased Premises.
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6.04 Transfer of Security Deposit. In the event of sale, assignment or transfer
of the Leased Premises by Landlord to a third party, Landlord shall be
entitled to transfer the Security Deposit to its successor, who shall
thereafter be solely and exclusively liable for the return of the Security
Deposit, and Landlord shall be released upon said transfer from any claim
or liability towards Tenant regarding the Security Deposit or its return
upon termination of this Lease Agreement.
ARTICLE VII
ALTERATIONS AND IMPROVEMENTS
7.01 General Provisions. Except for the repairs and improvements, if any,
Tenant is to make to the Leased Premises according to Attachment D hereto,
Tenant takes possession of the Leased Premises, and the special facilities
described in Attachment A, if any, in their present "as is" condition and
acknowledges that said property is in good state of repair.
7.02 Alterations and Improvements. Except for the work described in Attachment
D, if any, for which Landlord has agreed to reimburse Tenant, all
alterations, changes, additions or improvements necessary for the Leased
Premises to be used for the purposes set forth in Section 1.07 of this
Lease Agreement, shall be paid for by Tenant. Tenant shall make no
alterations, changes, additions or improvements without Landlord's prior
written consent except for the work described in Attachment D, if any,
which Landlord expressly authorizes Tenant to undertake.
7.03 Air Conditioning Electric Power Generator. Tenant may, at its own expense,
install an air conditioning system and/or an electric power generator at
the Leased Premises, subject to Landlord's previous written approval. Any
installations of such equipment shall be made in coordination with
Landlord.
7.04 Sprinkler System. Tenant shall implement the necessary security measures
to avoid or reduce the risk of fire due to the storage of flammable
materials or products. If required by law, Tenant shall install a
sprinkler system at its own cost and expense. It shall be Tenant's
obligation to obtain the necessary endorsements and/or approvals of the
Puerto Rico Fire Department for such installation.
7.05 Floor Load. Tenant acknowledges having been informed by Landlord that the
Building's maximum sustainable floor load is one hundred and fifty (150)
pounds per square foot. In the event that the type of machinery and/or
equipment to be installed, stored and/or utilized by Tenant for its
operations in the Building exceeds said maximum floor load limit, Tenant
shall, at its own expense, make the necessary improvements to the Building
which will allow the Building floor to sustain the maximum load required
by Tenant's operations without affecting or damaging the strength or
stability of the Building.
7.06 Liens and Encumbrances. (a) Tenant may not create nor allow the filing of
any lien against the Leased Premises.
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(b) Tenant certifies and guarantees that all materials used in or for
any construction or work in the Leased Premises shall be free of
liens and encumbrances at the time said materials are incorporated
into the Leased Premises. At the time the construction or work
begins, Tenant shall certify to Landlord that the materials to be
used are free of liens and encumbrances.
(c) Tenant shall immediately notify Landlord regarding any lien or
attachment on materials or supplies used in construction or work at
the Leased Premises which become incorporated into the Lease
Premises. Should an attachment be placed upon the Leased Premises or
any other type of lien be created that may directly or indirectly
affect the Leased Premises, Tenant will quickly take any action,
including payment of the amount claimed, necessary to cancel said
attachment or lien and release the Leased Premises from the lien in
a term not greater than thirty (30) days from the date that the lien
is filed. Should the lien Dot be canceled within the period provided
above in addition to any other rights or remedies available to
Landlord, Landlord may, but is not obligated to, obtain the
cancellation of the lien by making payment of the amount claimed, by
posting of a bond for the amount of the lien, or by any other
procedure that Landlord deems appropriate; and any expense incurred
in said effort, including attorneys' fees incurred by Landlord,
shall be paid by Tenant as Additional Rent.
7.07 Ownership or Improvements: Surrender. (a) Upon termination of the Lease
Agreement, all alterations, changes, additions, or improvements made by
Tenant to the Leased Premises with incentives, credits, or other economic
assistance from Landlord shall be deemed incorporated into the Leased
Premises and therefore property of Landlord, with no rights of Tenant to
any compensation or reimbursement therefor by Landlord. Landlord may
require Tenant to remove, at Tenant's expense, any or all such
alterations, changes, additions, or improvements upon termination of the
Lease Agreement.
(b) Upon termination of the Lease Agreement, Tenant, unless specifically
permitted by Landlord, shall remove, at Tenant's expense, those
improvements (i) installed by Tenant in the Leased Premises at
Tenant's cost and expense, or (ii) installed by a prior tenant and
ownership hereof was accepted by Tenant, or (iii) not identified as
special facilities on Attachment A.
(c) Tenant, after removal of any alterations, changes, additions or
improvements, shall restore the Leased Premises to a condition
reasonably similar to their condition when delivered to Tenant.
7.08 Plans and Specifications. Should Tenant request the consent of Landlord to
effect any alteration, change, addition, or improvement, Landlord may, at
its option and in its discretion, require Tenant to submit to Landlord for
approval plans and specifications for the proposed work, including such
work, if any, as described in Attachment D. Said plans and specifications
must be submitted and approved by the pertinent governmental entities
prior to Tenant's commencement of any work.
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ARTICLE VIII
MAINTENANCE AND REPAIRS
8.01 Tenant's Duties and Responsibilities. (a) Except for those repairs that
according to Section 8.02 are Landlord's responsibility, Tenant shall
maintain in good condition, at its own cost and expense, the Leased
Premises, with all improvements including, but not limited to, the
exterior premises, the Building, the special facilities, stairs,
elevators, ramps, sidewalks, curbs, roads, landscaping, the ground and
underground of the Leased Premises, and the pipes, lines, cables or ducts
and other utility connections that service the Leased Premises. Any repair
to the Leased Premises is Tenant's responsibility, unless said repair is
necessary as a consequence of the negligence or some intentional act of
Landlord, its agents, employees or contractors. As appropriate, Tenant
shall (i) repair or replace doors, windows and their frames; the
electrical system; the air conditioning and/or ventilation system; the
plumbing, sanitary and sewage systems as well as the equipment, machinery,
facilities or objects within the Leased Premises or that form part of the
Leased Premises with the same type and quality; and (ii) paint the
interior and exterior of the Building.
(b) Tenant shall also maintain the Leased Premises and its surroundings
free of insects, rodents and pests; (ii) free of garbage, refuse,
debris and any other solid waste; and (iii) free from unpleasant or
offensive odors. Moreover, Tenant shall maintain the drainage and
sewer systems of the Leased Premises free from obstructions.
(c) If Tenant fails to make any repair or if any repair is performed in
an unsatisfactory manner, or if equipment is not replaced when
necessary, Landlord may, but is not obligated to, undertake any such
repair or replacement. Tenant shall reimburse Landlord for all costs
incurred in any such repair or replacement plus an additional thirty
percent (30%) of the cost of any such repair or replacement in order
to cover Landlord's administrative costs. Any such costs reimbursed
by Tenant including the additional percentage charge established
above shall be considered Additional Rent, and as such, shall be
paid within the period provided in Article V of this Lease
Agreement. Tenant shall bold Landlord harmless from any damage or
inconvenience suffered by Tenant as a consequence of any repairs
performed by Landlord as provided in this paragraph, and Tenant
shall have no rights of adjustment or reduction in Rent in
connection therewith.
(d) Tenant shall perform all maintenance work necessary to ensure that
all its equipment and operations fully comply with the applicable
fire prevention standards and environmental requirements, legal or
regulatory.
(e) The provisions of this Section 8.01 shall not be applicable in. the
case of damage or destruction resulting from fire or any other event
covered by Article XIII of this Lease Agreement.
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8.02 Landlord's Duties and Responsibilities. Landlord shall be solely and
exclusively responsible for any necessary repairs or restorations due to
defects in the design of the Building or construction defects thereof, not
apparent at the moment Tenant inspected the Leased Premises prior to
occupancy. Except as provided in this Section 8.02, Landlord shall not be
responsible for any repair, replacement or improvement to the Leased
Premises or to equipment, machinery, facilities, furniture or any other
object within the Leased Premises, all of which shall be the
responsibility of Tenant as provided in Section 8.01 of this Lease
Agreement.
8.03 Roof Care and Maintenance. Tenant shall not, without the previous written
consent of Landlord: (i) place any fixture, equipment or other load on the
roof of the Building; (ii) perforate the Building's roof; or (iii) use the
roof of the Building for storage. Tenant shall take all necessary measures
to maintain the roofs drainage system free from obstructions and in good
and working condition at all times. Prior to undertaking any repairs to
the Building's roof, Tenant shall submit in writing to Landlord a detailed
description of the work to be performed and provide any other pertinent
information related to said repairs Landlord may request.
ARTICLE IX
PUBLIC UTILITIES
9.01 Tenant's Duties and Responsibilities. Tenant shall pay for the cost of
electricity, water, gas, telephone and any other utility service to the
Leased Premises during the term of this Lease Agreement, including the
period of time, if any, between the Date of Delivery of Possession and the
Rent Commencement Date. Tenant shall request and coordinate the
installation of metering devices and other mechanisms or systems necessary
to obtain the various utility services for the Leased Premises, and shall
be liable for any deposit and/or installation charge required by the
corresponding agency or utility company.
9.02 Service Interruption. Tenant shall not make adjustments to the Rent nor
hold Landlord liable for any utility service interruption to the Leased
Premises or for damages suffered as a consequence of any interruption.
9.03 Electricity. (a) Electric Power. In the event that the Leased Premises are
not connected to the electrical service lines of the Puerto Rico Electric
Power Authority (hereinafter "PREPA"), said connection shall be made at
the expense of Tenant and in coordination with Landlord, including as to
the purchase and installation of any equipment necessary to make the
connection, which equipment must meet PREPA's requirements.
(b) Electrical Substation. Tenant, at its own cost and expense and
without any right to reimbursement from Landlord, may build or
install in coordination with Landlord an electric energy Substation
on the Leased Premises and connect it to PREPA's distribution lines,
subject to compliance with PREPA's requirements. Under no
circumstances shall Tenant install an electrical substation without
10
Landlord's prior approval as to the capacity and power of said
substation, its location within the Leased Premises, and the routing
path of the power lines.
(c) Additional Equipment. The Leased Premises are equipped with a basic
electrical power system for general lighting and wall outlets
connected to a 200 amp meter box designated for a secondary voltage
of 120-208 volts. Tenant covenants not to install or use any
equipment that will exceed or which reasonably could exceed the
capacity of the Leased Premises power lines without Landlord's prior
consent. Tenant, at its cost and expense, will upgrade the
electrical service lines in accordance with the plans and
specifications previously approved in writing by Landlord should
Tenant's operations require greater electrical service line
capacity.
9.04 Water Supply. (a) Should Tenant require water volume and/or water pressure
greater than that existing in the area of the Leased Premises, the
construction and/or installation of any improvements (including
structures), that are necessary. convenient or required by the Puerto Rico
Aqueduct and Sewer Authority (hereinafter "PRASA") to increase said volume
and/or pressure, shall be made at Tenant's own expense and coordinated
with Landlord, but without any right to reimbursement from Landlord for
any such improvements.
(b) Should PRASA require improvements to the Leased Premises' water main
connection, Tenant shall perform the corresponding improvements at
its own expense, and only after written approval has been given by
Landlord.
ARTICLE X
QUIET ENJOYMENT
10.01 Quiet Enjoyment. Upon Tenant's payment of Rent and observance of all other
terms, covenants and conditions of this Lease Agreement that arc to be
observed and performed by Tenant, Landlord covenants that Tenant may
peaceably and quietly enjoy the Leased Premises, during the Term, or until
the termination of the Lease Agreement in accordance with Article XVIII.
ARTICLE XI
TAXES, ASSESSMENTS AND DUTIES
11.01 Taxes, Assessments and Duties. Tenant shall be liable for the payment of
all taxes, assessments, duties or any other tax levied by any government
entity having taxing authority over real property, personal property
and/or the activities directly or indirectly related to Tenant's
operations at the Leased Premises, including. but not limited to, personal
property taxes on equipment and machinery located at the Leased Premises.
Tenant shall pay these taxes, assessments, and duties before their due
date.
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ARTICLE XII
ENVIRONMENTAL
12.01 Governmental Regulations and Environmental Protection. Tenant shall comply
with all laws, roles, regulations, executive orders. administrative orders
and requirements of local and federal governmental agencies having
jurisdiction over Tenant's operations at the Leased Premises. Upon request
by Landlord. Tenant shall submit evidence of said compliance and if any
permits, and agency endorsements such as, but not limited to:
(i) the Puerto Rico Fire Department;
(ii) the Puerto Rico Department of Health;
(ii) the U.S. Food and Drug Administration (FDA);
(iii) the Puerto Rico' Occupational Safety and Health Office
(PROSHO);
(v) the Puerto Rico Environmental Quality Board (EQB);
(vi) the U.S. Environmental Protection Agency (EPA);
(vii) the Puerto Rico Aqueduct and Sewer Authority (PRASA);
(viii) the Puerto Rico Natural and Environmental Resources
Department ("DNER")
(ix) the Regulations and Permits Administration ("ARPE");
(x) the Puerto Rico Planning Board;
(xi) the Solid Waste Administration;
(xii) the pertinent Municipal Government.
Tenant shall maintain the Leased Premises and conduct its operations
thereat in compliance with the tenus, conditions, and requirements
specified in (i) the Environmental Impact Statement, or any other document
prepared for the evaluation of environmental aspects of its operations at
the Leased Premises; and (ii) the permits issued by the governmental
agencies with jurisdiction over the operations at the Leased Premises.
Tenant, at its own cost and expense, shall install on the Leased Premises
the necessary equipment to prevent its operations from affecting adversely
the environmental integrity of the Leased Premises, or causing any
disturbance to the adjacent properties or to the community in general.
Any improvements or installation of equipment for pollution controls
required by any agency or governmental entity having jurisdiction thereof
shall be at Tenant's expense and subject to Article VII of this Lease
Agreement. Tenant shall also comply with the following permits and
regulations, without limitation of any other applicable environmental
requirements:
(a) Xxxxx. Landlord will not allow the drilling of a water well at the
Leased Premises unless Tenant's operations at the Leased Premises
require a volume of water greater than that which PRASA can supply.
In such case Tenant will obtain a construction permit and a
franchise from the Department of Natural and Environmental Resources
to drill such well and to extract water therefrom. For
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any other type of well (i.e., monitoring. injection, etc.) Tenant
shall obtain the necessary permits and Landlord's written consent.
(b) Noise. Tenant shall not exceed the maximum noise levels allowed by
the Noise Pollution Control Regulation of the Puerto Rico
Environmental Quality Board.
(c) Air Emissions. Tenant shall obtain all the necessary construction
and operational permits necessary to construct, install, and operate
any air emissions source or atmospheric pollution source, as.
defined by the Regulation for the Control of Atmospheric Pollution
Sources of the Environmental Quality Board and the Federal
Regulations. This includes, but is not limited to (i) ventilation
systems to disperse atmospheric emissions resulting from Tenant's
operations; (ii) electric power generators for emergency use; (iii)
storage tanks for flammable gases with a capacity greater than five
hundred (500) gallons; and (iv) fuel. storage tanks (gasoline,
diesel. kerosene, acetone, alcohol and others) having a capacity of
more than ten thousand (10,000 gallons). Tenant, at its own cost and
expense, shall establish the necessary measures and shall install
the equipment required to maintain the air quality standards
established by the existing laws and regulations and any amendments
thereto as required by the permits issued by the Environmental
Protection Agency and the Environmental Quality Board.
(d) Gas Storage Tanks. Tenant shall obtain a permit from the Public
Service Commission to install and/or store flammable gases in
aboveground storage tanks.
(e) Underground Storage Tanks. Tenant shall not install underground
tanks to store fuels, raw materials or chemical substances. In the
event that any such tanks have been previously installed at the
Leased Premises and removal thereof would constitute a risk to the
Leased Premises or to Tenant's operations, such tanks shall be used
only if they comply with federal and state regulations for
underground storage tanks.
(f) Aboveground Storage Tanks. Tenant shall prepare and implement a
Spill Prevention, Control and Countermeasure Plan ("SPCC Plan") as
applicable and required by 40 CPR 112 and the Water Quality
Standards Regulation of the Environmental Quality Board for the
installation and operation of aboveground storage tanks.
(g) Chemicals. Storage of any chemical substance shall be undertaken in
full observance of the, applicable safety measures required by the
governmental agencies having jurisdiction thereof so as to prevent
any leakage or spillage that may contaminate the Leased Premises or
adjacent properties.
(h) QSHA. Tenant shall strictly comply with the rules established by the
Occupational Safety and Health Administration ("OSHA") for the
storage of dangerous materials (29 CFR 1910.101 to 1910.106) as well
as with the Puerto Rico Fire Department Regulations for Fire
Prevention.
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(i) Industrial and Sanitary Effluents. Tenant shall not discharge
its sanitary or industrial effluents into the sewer system nor
into any other place until Tenant has obtained the necessary
authorization to do so, be it from the Puerto Rico Aqueduct
and Sewer Authority, from the Environmental Quality Board, or
the Environmental Protection Agency ("EPA"), as applicable.
Tenant shall request and obtain the necessary permits and/or
endorsements from the Environmental Quality Board or any other
local or federal agency with jurisdiction in order to install
and operate any treatment or pretreatment plant or system for
said effluents. Tenant must obtain Landlord's endorsement and
approval to install a treatment or pretreatment plant or
system prior to any request for the permits and endorsements
of the other pertinent government agencies with jurisdiction.
Tenant shall treat its effluents as required prior to
discharge, as required by the pertinent governmental agency
having jurisdiction.
(j) Septic Tanks and Systems. Should the Leased Premises have a
septic tank or system, such facility can be only to discharge
sanitary effluents. Therefore, Tenant shall not discharge
industrial effluents nor any substance nor material other than
sanitary effluent into the septic tank or system. Moreover,
Tenant must obtain from the Environmental Quality Board a
permit to operate said septic tank or system. Any industrial.
effluent that may be generated and that is not discharged into
the Aqueduct and Sewer Authority sewer system or through a
discharge permit from the National Pollutant Discharge
Elimination System ("NPDES"), shall be disposed of by
transporting it to an Aqueduct and Sewer Authority treatment
plant, with previous authorization, or to another entity
authorized to handle such effluents.
(k) NPDES Permit. Tenant shall not discharge any industrial
effluent into the ground. Tenant shall obtain an NPDES permit
to discharge stormwater or other effluents into a body of
water. Tenant shall obtain an NPDES permit, if stormwater
run-off is exposed to raw materials, unfinished or finished
products, waste, by-products. industrial machinery or
equipment, a materials handling area or a process area. Tenant
shall obtain, when applicable, the pertinent industrial
discharge permit or pre-treatment permit required by PRASA.
(l) Hazardous Substances. Tenant win not treat, store or dispose
of any hazardous substance at the Leased Premises, unless
Tenant possesses the necessary permits from the agencies with
jurisdiction and such activities are performed in compliance
with applicable regulations and the terms and conditions of
the permit. Tenant will not generate or store. any hazardous
substance or waste at the Leased Premises without first
obtaining the necessary permits from the local and federal
agencies with jurisdiction. The generation and storage of
hazardous substances shall be conducted in compliance with
applicable environmental laws, regulations and permits. Also,
Tenant shall not store hazardous waste at the Leased Premises,
without fm giving notice to Landlord of the location of the
storage area and providing evidence of compliance with state
and federal
14
regulations as well with the measures Landlord considers necessary
to protect the Leased Premises. At no time shall Tenant dispose of
any hazardous substances or waste at the Leased Premises.
(m) Non-hazardous Solid Waste. Non-hazardous solid waste generated from
the operations at the Leased Premises shall be stored, handled,
transported and disposed of in accordance with the Environmental
Quality Board's Hazardous and Non-hazardous Waste Control
Regulations. Tenant must obtain a permit from the Environmental
Quality Board for a Non-hazardous Waste Generating Activity (DS-3),
when it generates more than fifteen (15) cubic yards of
non-hazardous solid waste weekly during construction activities.
Tenant, at its own cost and expense, shall keep the grounds clean
and tree of solid wastes, rubbish, garbage and debris.
(n) Equipment or Materials Containing Polychlorinated Biphenyls ("PCB").
Tenant shall not install or introduce equipment or materials
containing PCB's at the Leased Premises.
(o) Reports to Landlord. In addition to any other information or
document that may be required hereunder, Tenant shall provide
Landlord with the following:
1. Written notice, within forty-eight (48) hours, of any event
that requires verbal or written notice to the Environmental
Protection Agency, the Environmental Quality Board or any
entity designated by them, together with, a copy of any order,
communication or report regarding the event. This includes,
but is not limited to, any notice required under the
provisions of the "Emergency Planning and Community Right to
Know Act."
2. Written notice within forty-eight (48) hours of any change to
the hazardous materials handled at the Leased Premises, or if
Tenant observes or has any knowledge of an environmental
problem at the Leased Premises even if such problem is not a
result of Tenant's activities.
3. A copy of all the permits mentioned in this Article XII.
(p) Audits and Access to the Property. Landlord reserves the right to
inspect the Leased Premises, from time to time, during the Term of
this Lease Agreement as deemed necessary, for the purpose of
evaluating the environmental condition of the Leased Premises, and
as to Tenant's compliance with federal and state environmental
regulations and the provisions of this Article XII. Tenant, for this
purpose, win provide Landlord with access to all areas or structures
on the Leased Premises. Tenant shall provide access to all the
books, registers, documents or instruments that Landlord deems
necessary to determine the environmental condition of the Leased
Premises, or compliance with environmental regulations.
15
In the event that Landlord believes, based upon any inspection performed
on the Leased Premises, that Tenant is in material violation of a federal
or local environmental law or regulation, Landlord shall request Tenant to
perform, at Tenant's cost, the environmental site assessments necessary to
determine the existence and extent of contamination at the Leased
Premises, if any and all activities of removal, mitigation and remediation
needed to correct any environmental problem caused by the Tenant at the
Leased Premises. Tenant, upon Landlord's request, at the termination of
this Lease Agreement, shall submit an environmental site assessment, Phase
I and/or Phase II, of the environmental condition of the Leased Premises
prepared by an environmental consultant of proven experience. The
assessment shall determine whether the activities performed by Tenant
affected the conditions of the Building and the lot. The assessment shall
be performed following the standards established for preparing such
reports by the scientific community ("ASTM"). The assessments shall be
signed and certified by an engineer or chemist licensed to practice in
Puerto Rico.
In the event that an environmental audit or inspection reveals an
environmental deficiency or condition at the Leased Premises, Tenant shall
submit an action plan to remedy such situation together with a bond or
guarantee to secure payment of the remediation. The plan shall be reviewed
and its execution coordinated with Landlord.
(q) Emergency Remediation Response Action. In the event of any hazardous
substance spill, leak, or escape or any other occurrence which
requires the removal of hazardous substances or environmental
remediation, Tenant shall be responsible to remedy it immediately.
Tenant shall be responsible for hiring. at its own expense, those
companies with proven experience and reputation to perform said'
removal activities and/or environmental remediation and shall carry
out all the necessary negotiations to accomplish .aid removal and/or
remediation. Prior to the formation of any contractual agreement
with any company or consultant for the removal and/or, remediation,
the company or consultant must be approved by Landlord. The scope of
work prepared by the Landlord authorized company shall be submitted
to Landlord for its approval. In the event of any violation or
contamination of the Leased Premises, Landlord may request Tenant to
remain in the Leased Premises and' to continue paying Rent until the
Leased Premises are in compliance with local and federal
regulations. At all times, Tenant shall be obligated to immediately
notify Landlord in writing upon occurrence of any event that
requires removal of contaminants or environmental remediation and
shall coordinate with Landlord any clean-up, contamination removal,
or environmental remediation before commencement thereof provided
that if the event which requires removal of contaminants or
environmental remediation should occur during non-working periods,
in which case (such weekends or holidays) Tenant shall immediately
notify Landlord the next working day. The notice to Landlord by
Tenant in the event of a spill, leak or escape does not release
Tenant of its obligation to notify the pertinent governmental
agencies as required by law, regulation, municipal ordinance,
judicial order, executive order, administrative order or by any
other legal requirement.
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Should any environmental mishap occur, such as, but not limited to, a
spill, release or leak that poses an imminent danger to human health or to
the environment, in addition to taking all such protective measures,
responses and notifications as are required by environmental laws,
regulations, and permits, Tenant shall cease its operations if Tenant's
operations are the direct cause of said environmental mishap until said
mishap is controlled and all risk to human life or to the environment is
suppressed.
(r) Environmental Conditions Liability. Tenant shall be liable for any
environmental damage and the necessary or `remedial action as
results from Tenant's operations. Tenant shall indemnify Landlord
for any lawsuit, civil or criminal action, administrative action,
fine. claim, remedial action and/or clean-up and/or pollutant
removal action, toxic or hazardous substance or waste as deemed in
local and federal xxxx and regulations, that may arise as a result
of Tenant's operations or during Tenant's occupation of the Leased
Premises. The term contaminant includes petroleum and its
derivatives, asbestos, and PCB. Tenant shall also be liable and
shall indemnify Landlord for any complaint, civil or criminal
action, administrative action, fine or claim that arises as a result
of any violation of any law, regulation, rule, Administrative Order,
Executive Order or environmental requirement of any local or federal
governmental entity that arises as a result of Tenant's operations
.or during the term Tenant occupied the Leased Premises. Tenant's
liability toward Landlord and its obligation to indemnify Landlord
shall survive the termination of this Lease Agreement.
ARTICLE XIII
DESTRUCTION OF PREMISES
13.01 Notice of Event. Tenant shall immediately notify Landlord after any fire,
explosion, spill of hazardous wastes or pollutants (except as otherwise
provided in Article XII and Section 13.06 herein) or any other kind of
accident or extraordinary event which causes or threatens damage to the
Leased Premises.
13.02 Landlord's Duty to Repair. Should the Leased Premises be damaged by fire,
explosion or any other casualty covered by the insurance policies as
required by this Lease Agreement, Landlord shall repair or restore the
Leased Premises to a condition substantially similar to that before the
accident or event, provided that:
(i) Landlord has received the corresponding insurance proceeds from the
insurance company; and
(ii) the accident or event causing the damage is not attributable to or
did not occur as a consequence of negligence, an omission, or
intentional act of Tenant or any of its employees, agents, visitors
or representative,;; nor as a result of acts by any of them in
violation of a federal, state, or municipal law regulation, order,
ordinance, or breach of any obligation or condition under this Lease
Agreement.
17
Tenant recognizes that Landlord's duty to repair damage or destruction to
the Leased Premises is limited to those repairs made possible by the
proceeds received as a result of the insurance policies required
hereunder, and that. Tenant shall be responsible for the deductibles or
the amount in excess of the insurance proceeds necessary to cover the
costs to repair, reconstruct, or replace the Leased Premises.
13.03 Lease Agreement Termination. Notwithstanding the provisions of Section
13.02, Landlord shall have the option to terminate this Lease Agreement in
any of the following circumstances:
(i) should the insurance policy as required by this Lease
Agreement not provide coverage for the accident or event which
damages the Leased Premises;
(ii) the damage suffered by the Leased Premises is such that it
exceeds the cost of replacement; or
(iii) if the Building and other structures of the Leased Premises,
in the opinion of Landlord, cannot be repaired in a period of
one hundred twenty (120) days from the day the accident or
event occurred;
(iv) should the damage to the Building be so extensive that
Landlord decides to demolish it; or
(v) should the accident or event occur at any time during the last
two (2) years of the term of this Lease Agreement.
In any of the above circumstances Landlord may terminate this Lease
Agreement by written notice to Tenant within ninety (90) days from the
date the accident or event occurred, in which case both parties are
released of any further liability under this Lease Agreement as of the
effective. date of termination except for those that survive termination
pursuant to Article XII hereof.
13.04 Restoration. Should Landlord have the obligation to repair or restore the
Leased premises according to Section 13.02, or should Landlord not
terminate this Lease Agreement as provided in Section 13.03, and proceeds
to repair or restore the Lease Premises, Tenant shall hold Landlord
harmless for the loss of any equipment, machinery or any other property
that Tenant had placed, joined, built-in or installed, or kept at the
Leased Premises.
13.05 Rent Adjustment. Should the Leased Premises be damaged or destroyed and
Landlord elects to. repair (provided that the cause of the fire or
accident is not the result of any negligence, omission or any intentional
act of Tenant, its employees, agents, guests or representatives, nor the
violation by any of them of any federal, state, or municipal law,
regulation, order, ordinance, nor the failure to comply with any
obligation or condition
18
under this Lease Agreement), Tenant shall have a right to adjust the Basic
Rent in proportion to the total area of the Leased Premises that becomes
untenantable during the repair period (i.e., from the date of the accident
or event until the date Landlord finishes the repair work). Should
Landlord terminate this Lease Agreement due to any of the causes set forth
in Section 13.03, the Rent shall be due until the date of the casualty or
destruction.
13.06 Damage Report. In the event of a casualty or disaster, Tenant shall
complete and deliver to Landlord the form "Disaster Impact Quantification
(CD1001)" (Attachment G hereto) within eighteen (18) hours after the
occurrence of the event.
ARTICLE XIV
WAIVER OF CLAIMS; INDEMNIFICATION
14.01 Indemnification. Tenant shall defend, `indemnify and hold harmless
Landlord, its directors, officers, employees, invitees, representatives,
successors and assignees of liability from any loss, claim, fine, penalty,
attachment, action or complaint of any type or kind, including any
incidental expense or cost (including, but not limited to, defense costs,
settlement and attorney fees) in relation to or as a consequence of any
damage to a third party (including death), or any damage, loss or
destruction of any third party's property, (a) in or around the Leased
Premises due to any act or omission of the Tenant or any of its employees
(whether or not said act is within the scope of employee's job), agents,
authorized persons, visitors, successors or assignees, or caused wholly or
in part by any act or omission of any of the former or (b) due to the use
or occupation of the Leased Premises by Tenant, its agents, employees,
invitees, or visitors; (ii) violation of any federal or state law or
regulation, or municipal ordinance, or of any judicial or administrative
order, as a direct indirect consequence of the use or occupation of the
Leased Premises by Tenant; (iii) or due to breach of any of the
obligations under this Lease Agreement. The provisions of this Article XIV
shall survive and remain in full force after the expiration of the Term or
the termination of this Lease Agreement.
14.02 Waiver of Claims. Landlord shall not be liable, and Tenant releases
Landlord and waives any claim against Landlord, for any damage to or loss
of any property located at the Leased Premises which belongs to Landlord
and/or its agents, employees, invitees and/or visitors, and for any other
damage or loss suffered by Tenant, or any damage or loss to Tenant which
arises from fire, steam, or smoke; short circuit; water, electricity, gas
or other utility failure; rain, storms, hurricanes or other weather
conditions; flood or leakage; defects in pipes, cables, appliances,
plumbing and/or air conditioning systems, regardless if such damage or
inconvenience is the result of the condition or working order of the
Leased Premises, or any part of it. Landlord shall not be liable for any
damage or loss suffered by Tenant and/or its agents, employees, invitees
and visitors as a result of criminal conduct, intentional acts, and/or
negligent or intentional acts of a third party or of Tenant, its agents,
employees, invitees and/or visitors. Tenant waives and shall be barred
from filing any claim against Landlord for any damage or loss at the
Leased
19
Premises or to any person or property within the Leased Premises for any
cause other than gross negligence by Landlord.
14.03 Tenant Responsible For Personal Property. Tenant recognizes that Landlord
shall not be liable and waives any claim for any damage to personal
property in the Leased Premises that belongs to Tenant, or for the theft
or misappropriation thereof. Tenant bears all risk for any damage or loss
of any personal property of Tenant.
ARTICLE XV
INSURANCE
15.01 Insurance. During the Tenn of this Lease Agreement, Tenant shall maintain
in force the following insurance policies:
(a) public liability, including, contractual liability, with limits of
not less than $1,000,000 for bodily injury (including death) and
$1,000,000 for property damage, per occurrence, which will insure
Tenant against any claim for accidents in or around the Leased
Premises due to use or occupation of the Leased Premises by Tenant.
This insurance shall include Landlord and its agents, officers,
directors and employees as additional insureds, and said policy
shall include a "fire legal liability" endorsement;
(b) property insurance with "All Risk" coverage, for one hundred percent
(100%) real property replacement cost, including foundations, with
an extended coverage endorsement, which names Landlord as
beneficiary in case of 1088. This insurance shall include coverage
for fire, hurricanes, floods, earthquakes. and other events of a
similar nature, vandalism and malicious mischief, boilers and
machinery (if applicable) in building format and content, including
all changes, alterations, extensions and improvements made by Tenant
to the Leased Premises;
(c) pollution liability if required by Landlord because of the type of
the operations carried on by Tenant; and,
(d) any other insurance over the Leased Premises which provides adequate
coverage for those insurable risks that are common for property
similar to the Leased Premises.
The deductibles of the insurance policies herein required shall be
Tenant's responsibility and should Landlord undertake any repairs after
any loss or damage to the Leased Premises, Tenant shall reimburse Landlord
the deductible payable under the insurance policy, together with any
amount paid by any insurance provider.
15.02 Insurance During Construction. During any construction period at the
Leased Premises, including the work to be performed by Tenant described in
Attachment D, if any, Tenant must have in force the following insurance
policies:
20
(i) "builders risk" insurance which provides coverage for all
improvements that arc being constructed, equivalent to one
hundred percent (100%) of their replacement value;
(ii) if the estimated cost of construction is over five thousand
dollars ($5,000), Tenant must, at Tenant's own cost and
expense, provide Landlord with a performance bond from a
surety company recognized and approved by Landlord, of other
satisfactory guarantee acceptable to Landlord, in a sum equal
to the estimated cost of said construction to guarantee
completion of any construction within a reasonable time. At
Landlord's option, instead of Tenant's obtention of a separate
bond or guarantee for each project that may be in process at
any given time, Tenant shall provide Landlord with one bond or
guarantee that covers all alterations, changes, additions or
improvements and other construction occurring at the same
time; and,
(iii) Workers' Compensation from the State Insurance Fund
Corporation in such coverage amounts as required by law.
15.03 Insurance Policy Increase. Tenant will pay any premium increase required
by an insurance company to cover additional risks resulting from any
alteration, change, addition or improvement made by Tenant to the Leased
Premises.
15.04 General Requirements. All insurance policies required of Ten ant under
this Article XV must comply in form and substance to Landlord's
requirements, and must provide the following: (i) that the insurance
coverage may not be reduced, canceled or not renewed by the insurance
company without written notice to Landlord and Tenant at least sixty (60)
days in advance (unless said cancellation is due to failure to pay
premium, in which case notice must be sent at least thirty (30) days in
advance); and (ii) that the policy shall be immediately renewed by Tenant
on or before its expiration date. Tenant must obtain said policies from
insurance companies duly authorized to do business in Puerto Rico, and
acceptable to Landlord. Said insurance companies shall have a
classification of not less than "A" and a financial rating of "IV" or
better, as rated by A.M. Best and Company.
15.05 Insurance Certificates. Before the Date of Delivery of Possession Tenant
shall submit to Landlord the policies (or certified copies) of same
required under this Article XV with all the mentioned endorsements, and
certificates of insurance which evidence the required coverage by Sections
15.01 and 15.02 of this Lease Agreement. Tenant expressly recognizes.
Landlord's right not to deliver the Leased Premises to Tenant until two
(2) days after the policies (or certified copies) and the insurance
certificate. have been submitted to Landlord, as required in this section.
15.06 Evidence of Payment; Renewal of Policies. Tenant must deliver to Landlord
satisfactory evidence of payment of the insurance premiums within fifteen
(15) days of the respective
21
renewal dates of the respective policies and at the same time submit the
corresponding insurance certificate or certified copy of each renewed
policy.
15.07 Claims. Tenant shall cooperate with Landlord in the collection of claims
against the corresponding insurance companies in those cases where
Landlord handles such claims, including the preparation of damage reports
and other documents required to process the claim. In the event Tenent
does not provide said documents, Landlord, as Tenant's agent, and
attorney-in-fact, shall, in addition to any other remedy available to
Landlord, execute and submit any evidence of loss and/or any other
document necessary for collection of the claim.
15.08 Periodic Review. Landlord reserves the right to review and demand
periodically increases in the limits of the coverages required in this
Lease Agreement as results from the effects of inflation.
15.09 Penalties. Notwithstanding the provisions of Section 22.08, and without
affecting the general terms of the matters stipulated therein, should
Tenant breach its duty to obtain any of the policies required in Article
XV, which as a result renders it necessary for Landlord to obtain said
policies, in addition to reimbursement for the premium paid for said
policies, Tenant shall pay Landlord a sum equal to twelve percent (12%) of
the cost of the policies obtained by Landlord to cover Landlord's
administrative costs.
15.10 Waiver of Subrogation. (a) Landlord and Tenant agree that all fire and
extended coverage and other property damage insurance carried by either of
them in relation to the Leased Premises shall be endorsed with a clause
providing that any release from liability or waiver of claim for recovery
from the other party entered into in writing by the insured thereunder
prior to any loss or damage shall not affect the validity of said policy
or the right of the insured to recover thereunder, provided that the
insurer waives all rights of subrogation which such insurer might have
against the other party. Any release or any waiver of claim shall not be
operative in any case where the effect of such release or waiver is to
invalidate any insurance coverage or invalidate the right of the insured
to recover thereunder. Should any waiver of subrogation result in a
premium increase, Tenant shall, within ten (10) days of notice, pay said
increase in order to maintain the effectiveness said release or waiver.
(b) Neither Landlord nor Tenant shall be liable to the other or the
insurance company that provided the coverage for any loss or damage
to any building or structure of the leased Premises for the loss of
income either through subrogation or any other form, regardless if
such loss or damage be, in whole or in part, caused by a negligent
act or omission of the other party, its agents, officers, directors
or employees, to the extent that such loss or damage is covered by
insurance policy in favor of the affected party.
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ARTICLE XVI
LANDLORD'S RIGHTS
16.01 Access to Leased Premises. Landlord shall be entitled to enter the Leased
Premises for the purposes of inspection to perform any repairs or work
required pursuant to the provisions of this Lease Agreement, or for those
repairs or work which Tenant has failed to do despite being responsible
therefor under this Lease Agreement, or to show the Leased Premises to
persons interested to lease or acquire the same. This right to access is
subject to the following conditions: (a) if due to any emergency
situation, which Landlord shall determine at its discretion, Landlord
shall have full access to the Leased Premises at any time; (b) under any
other circumstances Landlord shall have access to the Leased Premises
during normal business hours; and (c) Landlord must maintain at a minimum
any interruption to Tenant's operations during any exercise of its rights
under this Article.
ARTICLE XVII
TENANT BANKRUPTCY
17.01 Lease Agreement Assumption Requirements. The following provisions shall
apply upon commencement of a voluntary or involuntary case under Xxxxx 00,
Xxxxxx Xxxxxx Code, wherein Tenant is a debtor under 11 U.S.C. Sections.
101 et seq. (the "Bankruptcy Code"), and only insofar as the Bankruptcy
Code applies or affects the provisions of this Lease Agreement.
(a) Should the trustee or "debtor in possession" not elect to assume
this Lease Agreement within a period of sixty (60) days from the
commencement of proceedings under the Bankruptcy Code, this Lease
Agreement shall be deemed rejected and terminated as provided under
Article XVIII of this Lease Agreement (including any provisions as
to damages) giving Landlord the immediate right to repossess the
Leased Premises.
(b) Any assumption and/or assignment of this Lease shall not take effect
unless there is compliance with the following:
(i) all Tenant's defaults have been cured and Landlord has been
provided with adequate and reasonably satisfactory assurances
of Tenant's future performance; if the Lease Agreement is
assigned, Tenant shall provide (1) any guarantee and/or
deposit reasonably required, and (2) any other reasonable
assurance that there will be sufficient funds and personnel
available to operate the Leased Premises in strict compliance
with the provisions of this Lease Agreement;
(ii) neither the assumption of this Lease Agreement nor the
operation of the Leased Premises after this Lease Agreement
has been assumed or assigned, in the reasonable opinion of
Landlord, win cause or result in breach or violation of any of
its provisions or of any other applicable contract with
Landlord;
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(iii) the assumption, and if applicable, the assignment of this
Lease Agreement fully complies with the provisions of the
Bankruptcy Code, including, but not limited to Sections
365(b)(1) and (3) and 365(t)(1) and (2) thereof; and
(iv) the assumption and/or assignment has been ratified and
approved through an or~ of the Bankruptcy Court or any other
court having jurisdiction.
(c) No assignment of this Lease Agreement by the trustee or the "debtor
in possession" shall be valid unless the proposed assignee has also
satisfied the conditions provided in paragraphs (b) (i), (ii), (iii)
and (iv) of this section, and all other requirements established in
this Lease Agreement which further Landlord's public policy of
promoting employment and the industrial development of Puerto Rico
which is accomplished by observing the capitalization, investment
and employment levels stated in Section 1.08 and the continuance of
operational requirements set forth in Section 4.02 of this Lease
Agreement.
(d) Whenever a "debtor in possession" is required under the Bankruptcy
Code to comply with its obligations as Tenant under this Lease
Agreement, the Basic Rent and the other charges identified in this
Lease Agreement as Additional Rent shall not be subject to
adjustment and must be paid in full as provided in the pertinent
sections of this Lease Agreement.
(e) Pursuant to Section 22.01 of this Lease Agreement, except where the
provisions of the Bankruptcy Code mandates otherwise. the assignment
of this Lease Agreement is prohibited.
(f) Unless agreed to by Landlord, under no circumstances will this Lease
Agreement be renewed if the Term has expired or the Lease Agreement
has terminated according to its provisions. No bankruptcy procedure
shall annul, postpone or affect the expiration or termination of the
Term of this Lease Agreement as provided in Article XVII, or prevent
Landlord from recovering possession of the Leased Premises at the
expiration of the Term or upon earlier termination of this Lease
Agreement.
ARTICLE XVIII
TERMINATION BY BREACH
18.01 Breach by Tenant as Cause for Termination. In addition to, and separate
from, any other cause for termination set forth in this Lease Agreement or
available under applicable law, each of the following events or acts shall
be considered a breach and constitute cause for termination, which
termination will be effective upon written notice to Tenant:
(a) Tenant's failure to pay the Rent to Landlord within the term provided in
Section 5.01 of this Lease Agreement, or upon failure to pay any other sum
required to be paid hereunder within ten (10) days after its due date;
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(b) Tenant's failure to pay the Rent to Landlord on or before the first
day of the month, or failure to pay any other amount when due, on
two or more occasions within any consecutive twelve (12) month
period;
(c) Tenant's abandonment of the Leased Premises (as defined in Section
18.03 of this Lease Agreement), upon certification of such
abandonment by the procedure provided in clause (b) of Section
18.03;
(d) if Tenant encumbers; assigns or transfers this Lease Agreement, in
whole or in part, except as otherwise provided in this Lease
Agreement;
(e) if Tenant makes a general assignment of its assets in benefit of its
creditors;
(f) if Tenant fails to take physical possession of the Leased Premises
within ten (10) days following the Date of Delivery of Possession;
18.02 Other Causes for Termination. In addition to the causes for termination
set forth in Section 18.01, Landlord may terminate this Lease Agreement if
Tenant fails to comply with any of Tenant's principal obligations
hereunder within fifteen (15) days of receipt of written notice from
Landlord requesting performance of any principal obligation. However, if
Tenant shall have begun efforts toward performance within said fifteen
(15) day period and continues to act diligently and makes every reasonable
effort to perform, said period of fifteen (15) days may be extended by
Landlord for a maximum period of sixty (60) days, as necessary for
Tenant's performance of any principal obligation. Principal obligations
under this Lease Agreement include, but are not limited to, the following:
(i) Tenant's compliance with the levels of capitalization,
investment, and employment as set forth in Section 1.08 of
this Lease Agreement;
(ii) the duty of Tenant to not interrupt operations at the Leased
Premises without prior notice to Landlord as provided in
Section 4.02(b) of this Lease Agreement and that such
interruption will not last for a period in excess of that
period notified to Landlord. No interruption shall exceed
three (3) months;
(iii) the obligation of Tenant, when required hereunder, to submit
any plans for Landlord's approval or any other information in
connection with improvements and alterations to be made by
Tenant to the Leased Premises;
(iv) the compliance by Tenant of the environmental provisions of
Article XII of this Lease Agreement; and
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(v) the prohibition to use or allow the Leased Premises or any
part thereof to be used for illegal purposes or for a use that
is not permitted by Section 1.07.
18.03 Abandonment. Tenant acknowledges that the Puerto Rico Industrial
Development Company was established with the public purpose of promoting
the creation of jobs and the continuous industrial development of Puerto
Rico; that the capitalization, investment and employment levels, as
detailed in Section 1.08, and the requirement of continued operations at
the Leased Premises, in compliance with the provisions of Section 4.02,
serve to that public purpose. In order to continuously and consistently
comply with said public purpose, Landlord must maintain as available
inventory the largest possible number of industrial facilities for the
development of new projects or industries. Acts such as those described in
clause (a) below, of this Section 18.03, defeat the purpose of this Lease
Agreement, diminish the powers of the Landlord to maintain the largest
number of industrial facilities in operation and in turn, impair
Landlord's ability to pursue its established purpose. Therefore, Tenant
recognizes that the delivery to Landlord of the keys to the Leased
Premises constitutes conclusive proof of Tenant's intention to abandon the
Leased Premises and any equipment, machinery, furniture or other property
found within. Tenant also recognizes the fact that the voluntary
abandonment of property at the Leased Premises through the delivery of the
keys is incontrovertible evidence of Tenant's decision to forsake such
property and renounce ownership thereat giving Landlord the absolute right
to dispose of said property, as established in clause (b)(ii) below.
(a) For the purposes of this Lease Agreement Tenant has abandoned the
Leased Premises upon the occurrence of any of the following events:
(i) should the Tenant deliver to Landlord the keys to the Leased
Premises;
(ii) should the Tenant cease operations and close. down the Leased
Premises, notwithstanding that equipment, machinery, furniture
or other property remain thereat; and/or
(iii) if Tenant removes or transfers its operations, personnel or
equipment at the Leased Premises to another location, without
the consent of Landlord.
(b) The following procedure is adopted by the parties hereto to confirm
the act of "abandonment" by Tenant under clause (a) of this Section
18.03:
(i) If Tenant has incurred in any act of abandonment described in
Section 18.03(a), Landlord will send Tenant, by certified
mail, return receipt requested, a notice which will describe
the act of abandonment committed by Tenant. From the date of
said notice, Tenant shall have fifteen (15) days to
discontinue the abandonment or to dispute in writing the
information contained in Landlord's notice. Should the act of
abandonment notified by Landlord continue for more than the
fifteen (15)
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days provided. herein, Landlord shall send a second notice to
reconfirm the act of abandonment, which notice will be
effective at the time the notice is sent.
(ii) Once the act of abandonment is reconfirmed as provided in
clause (b)(i) above, Landlord may declare this Lease Agreement
terminated by notice to Tenant and such termination shall be
effective as of the date mailed. The notice will contain a
request to Tenant to remove within ten (10) days all
equipment, machinery furniture or other property remaining at
the Leased Premises, and contain a warning to Tenant that if
such property is not removed in that time period, Landlord may
either remove and store said property, at its own discretion,
at the expense and cost of Tenant, or dispose freely of said
property as it deems convenient and Tenant will have no right
to claim or be compensated for the value of the abandoned
property or for any damage or loss caused by such removal by
Landlord.
(c) Subject to the performance of the procedure previously described,
Tenant waives any claim and releases and holds Landlord harmless
from any damage or loss that Tenant may suffer as a consequence of
the removal and disposal of the property that Tenant has abandoned
at the Leased Premises.
18.04 Termination by Tenant. Tenant may terminate this Lease Agreement, without
penalty, should any of the following events occur:
(a) Tenant moves its operations to another of Landlord's premises having
greater capacity, for the purpose of augmenting its operations in
terms of capitalization, investment, or employment, if at such time
Tenant is in compliance with the terms and conditions of this Lease
Agreement; provided, however, that all expenses related to or
resulting from said relocation shall be Tenant's responsibility; or
(b) should Tenant be denied a tax exemption for the production of one or
more eligible manufactured products under the Puerto Rico Industrial
Incentives Act, after having applied for said exemption with the
Office of Industrial Tax Exemption; provided that the right to
termination for this cause may only be exercised within thirty (30)
days from the date of notice of denial. No Tenant whose
manufacturing process was determined to be non-eligible for a tax
exemption prior to entering into this Lease Agreement is eligible to
terminate the Lease under this section.
18.05 Landlord's Options. (a) Landlord may terminate this Lease Agreement upon
Tenant's breach of any of its obligations hereunder, or upon occurrence of
any of the events of termination set forth in Sections 18.01 and 18.02
hereof. Said notice shall be given by certified mail with return receipt
requested. The termination of this Lease shall become effective on the
date indicated in said notice.
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(b) Notwithstanding subsection (a), Landlord may always compel specific
performance of the terms and conditions of this Lease Agreement and
demand and protect its rights under this Lease Agreement through
legal proceedings in law or equity to obtain the faithful
performance of the covenants and obligations hereunder, including
the payment of all amounts due under this Lease Agreement.
(c) Should any cause for termination arise, Landlord shall have
available all the rights and remedies provided herein, which are
separate and independent. Landlord's resort to any particular right
and/or remedy will not deprive Landlord of any other right or remedy
available at law or in equity.
(d) In the event Landlord terminates this Lease Agreement, Tenant's
economic and environmental obligations and any other obligations of
Tenant hereunder shall survive the termination and remain in effect
until they are complied with to Landlord's satisfaction.
18.06 Damages. If Landlord elects to terminate this Lease Agreement in
accordance with Section 18.05 hereof Tenant shall be responsible for
payment of the following:
(i) all Rent due and unpaid up to the date of termination;
(ii) all losses, damages and costs incurred by Landlord as a
consequence of the early termination of this Lease Agreement
including, but not limited to expenses related to any notices
by Landlord to terminate this Lease Agreement; collection
costs; attorneys' fees during the termination process; and the
costs of court proceedings, if any; the costs to repair the
Leased Premises in order to restore them to the condition in
which Tenant would have been obligated to deliver the premises
bad an early termination not been effected; and expenses
incurred by Landlord to relet the Leased Premises in
accordance with Section 18.07 of this Lease Agreement; and
(iii) damages equivalent to the total amount of Basic Rent
corresponding to the unexpired portion of the Term (i.e., the
Basic Rent for the period between the date of termination and
the expiration date of the Term in accordance with Sections
1.09 and 3.01), that Landlord would have received had the
Lease Agreement not been terminated.
18.07 Right to Relet. (a) At any time after Landlord recovers possession of the
Leased Premises or any portion thereof, whether or not this Lease
Agreement is terminated pursuant to Section 18.05, Landlord may, but is
not obligated to, relet the Leased Premises or part thereof, in Tenant's
name (as a sublease) or in Landlord's own name, as Landlord deems it
convenient. The reletting of the Leased Premises, or part thereof, shall
be for a term and under conditions as Landlord, in its own discretion,
determines advisable; including that the term of any relet may be for a
period longer or shorter than the remaining balance of the
28
Term hereunder. Any relet may include special provisions, such as rent
credits, a rent lower than that fixed under this Lease Agreement, or no
rent. Tenant acknowledges that the damages formula under Section 18.06 is
not subject to adjustments should Landlord elect not to relet the Leased
Premises or because the Leased Premises or part thereof is leased to a
third party at a rent lower than that of this Lease Agreement.
ARTICLE XIX
RETURN OF LEASED PREMISES
19.01 Surrender of Possession. Upon termination of this Lease Agreement, at the
expiration of the Term or otherwise, Tenant must vacate and surrender the
Leased Premises to Landlord in good condition, reasonable wear and tear
excepted, including all improvements, changes, or alterations made thereto
with Landlord's consent and which Landlord does not require to be removed.
19.02 Holding Over. Should Tenant remain in possession of the Leased Premises
after the expiration of the Term and does not execute a new lease
agreement with Landlord. Landlord at its option may consider the tenancy
of the Leased Premises to be on a month-to-month basis, with a Rent equal
to one hundred fifty percent (150%) of the last Monthly Rent amount under
the Lease Agreement, subject to all other terms and conditions of this
Lease Agreement. consistent with a month-to-month term. Tenant shall
indemnify Landlord for, and hold Landlord harmless from and against any
damages, liabilities or expenses (including attorneys' fees) which result
from Tenant's delay in surrendering the Leased Premises, including,
without limitation, any claims made by succeeding tenants or third parties
with Landlord bad committed the Leased Premises, or part thereof.
Acceptance of Rent after termination of this Lease Agreement shall not
constitute in itself a renewal or novation of this Lease Agreement None of
the foregoing shall be deemed to constitute a waiver by Landlord of its
right to recover the Leased Premises or any other right or remedy that
Landlord may have under law, equity, or under this Lease Agreement.
19.03 Inspection of Leased Premises. Upon expiration of the Term or termination
of this Lease Agreement and prior to Landlord's acceptance of possession,
the Leased Premises shall be inspected by Landlord, who shall certify in
an inspection report the physical and environmental condition of the
Leased Premises. The inspection report shall identify any deficient
physical or environmental condition(s) of the Leased Premises that must be
corrected, remedied, or repaired at Tenant's cost as a condition precedent
to Landlord's acceptance of possession .of the Leased Premises. Should
Tenant fail take the corrective action required by the deficient condition
of the Leased Premises as indicated in the inspection report within a
reasonable time, Landlord may, but is not obligated to, perform the same,
and Tenant shall reimburse Landlord for the cost of the corrective action.
19.04 Equipment, Machinery, and Furniture Not Removed. Any equipment, machinery.
furniture or other property of Tenant remaining at the Lease Premises
after termination of
29
the Term or the termination of this Lease Agreement may be removed by
Landlord and stored in another location, and Tenant will be responsible
for the removal and storage costs. In no event shall Landlord be liable
for the value, preservation, or care of said property. Any sum that
Landlord must payor spend for removal and storage of the property shall be
reimbursed by Tenant. Any equipment, machinery, furniture or other
property not claimed within a term of thirty (30) days after the
expiration or termination of this Lease Agreement, shall be deemed
abandoned by Tenant. At Landlord's option, the property deemed abandoned
by Tenant shall be transferred to Landlord without any other formality or
document, and Landlord shall be entitled to freely dispose of the same
without Tenant having any right or claim to any payment or consideration
for said property.
19.05 Tenant's Liabilities. Neither the expiration or termination of this Lease
Agreement, nor the repossession of the Leased Premises or part thereof,
nor the reletting of the Leased Premises or any part thereof, pursuant to
the provisions hereof, shall release the Tenant of its financial or other
obligations under this Lease Agreement, which obligations shall survive
the expiration or termination of this Lease Agreement, as well as
repossession or reletting of the Leased Premises.
ARTICLE XX
LEGAL REQUIREMENTS
20.01 Legal and Insurance Compliance. (a) Tenant, at its own cost and expense,
shall observe and comply with (i) any requirement or condition under any
federal, state or municipal law or regulation (including any executive
order or municipal ordinance) applicable now or in the future to the
Leased Premises, or to the use of the Leased Premises (including but not
limited to any federal, state or local law, regulation or ordinance
applicable to air and water quality, toxic or hazardous materials or
substances. waste disposal. emissions or any other environmental matter);
(ii) all requirements or conditions to obtain, maintain, and when
appropriate, renew all permits and endorsements necessary to use the
Leased Premises for the purposes allowed by this Lease Agreement and by
the use permit issued by ARPE for the Leased Premises; (iii) the
requirements of the insurance companies having issued policies .for the
Leased Premises as provided by Article XV of this Lease Agreement; (iv)
any real estate condition, lien or encumbrance affecting the Leased
Premises; (v) all zoning and land use requirements; and (vi) any other
requirement imposed by law that compels any duty or obligation with
respect to the use or occupation of the Leased Premises.
(b) Tenant's compliance with any requirement described above shall be at
Tenant's cost and expense, including, but not limited to. any other
expense related to improvements or installations required by any
agency or government instrumentality with jurisdiction, as a
condition to the issuance or renewal of a permit or endorsement for
the operations that Tenant is to carry out at the Leased Premises.
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(c) Tenant, upon request of Landlord. shall submit evidence of its
compliance with the above requirements or of the validity of permits
and endorsements of the administrative agencies Tenant requires for
its operations at the Lease Premises.
ARTICLE XXI
ASSIGNMENT AND SUBLEASE
21.01 Assignment and Sublease. Tenant shall not (i) assign this Lease Agreement,
sublet the Leased Premises or any part thereof, mortgage its leasehold
right over the Leased Premises or otherwise place a lien upon its right or
any interest in this Lease Agreement in favor of any person or entity;
(ii) allow by operation of law the constitution of any lien over Tenant's
leasehold right over the Leased Premises or the transfer of Tenant's
leasehold right over the Leased Premises to a third party; (iii) allow the
use or occupation of the Leased Premises, or part thereof, by any person
or entity that is not Tenant, its agents or employees. Except as provided
in Article XVII of this Lease Agreement, under no circumstances may this
Lease Agreement be assigned in a voluntary or involuntary bankruptcy
proceeding, and under no circumstances shall this Lease Agreement or the
rights or privileges granted to Tenant herein constitute an asset of
Tenant under a bankruptcy, insolvency or reorganization proceeding.
21.02 Change of Control. The transfer of Tenant's voting stock, a change of
control in Tenant or change in the persons or entities having a direct or
indirect interest in a tenant that is not a corporation (any of the
foregoing hereinafter a "change of control"), shall be considered as an
assignment for purposes of this Article XXI. Nevertheless, the above shall
not apply to transfers of shares of voting stock traded in a nationally
recognized stock exchange or reported through a national quotation system,
provided that those shares transferred remain outstanding in said market
or quotation system after the transfer. For purposes of this Section
21.02, a change of control of a corporation shall be deemed to have
occurred at any time and as frequently as the persons who hold the
majority of voting stock of said corporation as of the date of this Lease
Agreement, or who immediately after the date on which any change of
control occurs, cease to be owners of the majority of said stock. be it in
one or a series of transactions. The term "voting stock" means the stock
of a corporation regularly having voting rights in the election of
corporate directors. In the case of a partnership, a change of control
shall be deemed to have occurred at any time that a change in any of the
managing partners of said partnership occurs.
21.03 Permitted Assignments and Subleases. As an exception to the general rule
established in Section 21.01 of this Lease Agreement, and subject to
Landlord's prior consent, Tenant may assign its rights under this Lease
Agreement, or sublease the Leased Premises or a part thereof, to any
parent, affiliate, or subsidiary whose operations are compatible with
those of Tenant. Landlord's consent to the assignment or sublease will
require Tenant to be in full compliance with its obligations under this
Lease Agreement, including the payment or Rent.
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ARTICLE XXII
GENERAL PROVISIONS
22.01 Signs and Advertisements. Tenant shall not install or permit to be
installed or erected any poster, sign or structure of any kind on the roof
or exterior walls of the Building or in any other part of the Leased
Premises without previous written consent of Landlord.
21.02 Parking. Should the number of parking spaces available at the Leased
Premises not satisfy Tenant's requirements, Landlord shall not be
responsible for Tenant's parking requirements, and Tenant hereby releases
Landlord of any duty or responsibility with respect to parking.
22.03 Attorneys' Fees. Tenant shall pay all of Landlord's charges and expenses,
including court costs and attorneys' fees in any action (8) commenced by
Landlord in order to obtain Tenant's compliance with any of its
obligations and commitments under this Lease Agreement, or said charges
and expenses incurred by Landlord in any action filed by Tenant in which
Landlord prevails. Tenant shall pay all charges and expenses including
court costs and attorneys' fees incurred by Landlord in any litigation,
negotiation, or transaction in which Tenant requires Landlord's
intervention or participation, where no fault or negligence is claimed
against Landlord.
22.04 Successors and Assignees. This Lease Agreement shall bind and inure to the
benefit of each of the parties, in their respective capacities as Landlord
and Tenant, and their respective successors and assigns; provided,
however, should title to the Leased Premises be transferred either
voluntarily or by operation of law, the entity or natural person acquiring
title shall take title free of all liability to perform this Lease
Agreement, unless the entity or natural person expressly assumes and
accepts the obligations as Landlord under this Lease Agreement by means of
a written instrument in which the new titleholder and Tenant appear.
22.05 Landlord's Obligations to Lease. (a) The mere delivery to Tenant of an
unsigned draft of this Lease Agreement for Tenant's review and
consideration does not create in Tenant a right of option nor does it bind
Landlord in any way to lease the Leased Premises to Tenant. Landlord's
obligation to lease under this Lease Agreement shall not be binding until
Landlord has executed same upon approval by Landlord's Board of Directors
or Landlord's Executive Director, as the case may be.
(b) Tenant shall have thirty (30) days after receipt of the final lease
agreement prepared for the Leased Premises to execute same. Should
Tenant not execute and return the lease agreement to Landlord within
thirty (30) days after receipt, Landlord shall have no obligation to
lease, and any rights Tenant possessed in and to the Leased Premises
shall be extinguished.
22.06 Definition of the Term "Tenant". The term "Tenant" as used in this Lease
Agreement shall be construed as plural if there be more than one person or
entity appearing and
32
executing this Lease Agreement as Tenant. All changes and grammatical
adjustments required to make the provisions of this Lease Agreement apply
equally to corporations, partnerships or other entities, or individuals
shall, in all instances, be construed as incorporated into the text of the
document. Whenever Tenant consists of two or more persons or entities
each shall be jointly and severally ("solidariamente") bound hereunder.
22.07 Headings. The headings of the articles and sections of this Lease
Agreement are for convenience only and do not limit, expand, or define the
contents of the articles and sections hereof.
22.08 Late Charges. (a) All payments that Tenant is obligated to make under this
Lease Agreement, including without limitation, the Deposit, the Basic
Rent, the Additional Rent, and any adjustment thereto, shall bear interest
from its due date until payment in full, at a rate of one percent (1%)
over the prime rate charged by the principal commercial banks in the city
of New York as of the date the payment is due. Should the interest be held
as usurious, then interest shall be deemed to have accrued at and continue
to accrue at accrue the maximum rate of interest permissible, as
established by the Interest Rate and Finance Charges Regulatory Board
created by Act No. 1, of October 15, 1973, as amended (P.R. Xxxx Xxx. Tit
10, sec. 998), or any future law or regulation.
(b) Should Tenant fail to make a Rent payment within ten (10) days after
its due date, then Tenant shall also pay to Landlord a penalty to
recover Landlord, administrative expenses and collection costs equal
to (i) one hundred dollars ($100.00) per day, or (ii) for each day
the amount owed is past due, one half of one percent (0.05%) of the
overdue amount, whichever is greater. Anything contained in this
section regarding the payment of overdue amounts shall not
constitute an extension of the due date of any amount Tenant is
obligated to pay under this Lease Agreement, nor or shall it
constitute a waiver of Tenant's obligation to pay such amounts as
provided in this Lease Agreement.
22.09 Lease Guaranty. Simultaneously with the execution and delivery of this
Lease Agreement, if required by Landlord, Tenant shall deliver the Lease
Guaranty to Landlord duly executed by the Guarantor identified in Section
1.15, if any, which Lease Guaranty shall be in form substantially similar
to Attachment G hereto.
22.10 Performance. Whenever a requirement, obligation, or liability is imposed
upon one of the parties hereto, the concerned party shall comply with or
satisfy said requirement, obligation or liability at its own expense,
unless specifically provided to the contrary.
22.11 Entire Agreement. This Lease Agreement, along with its attachments
contains all the terms, conditions, agreements and covenants between the
parties with respect. to the Leased Premises; it substitutes and
nullities. any other lease agreement or other agreement, oral or written,
between the parties regarding the occupation and use of the Leased
Premises by Tenant, including any letter of agreement that governed the
relationship between the parties prior to and during the negotiation of
this Lease
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Agreement. This Lease Agreement shall only be modified, amended, altered,
or canceled by a written document subscribed by both parties.
22.12 Force Majeure. In the event that Landlord shall be hindered or delayed in
the performance of any of its obligations or commitments under this Lease
Agreement by reason of force majeure, the performance of such act shall be
excused for the period of time which it is reasonably understood that said
act or event hinders its performance. Force majeure is understood as any
incident or occurrence beyond Landlord's control, including, but not
limited to, lock-outs, strikes, shut downs or labor disputes; inability to
obtain necessary materials; riots, acts of war and insubordination; fires,
explosions, accidents and acts of sabotage; lack of electricity or fuel;
floods, earthquakes, torrential rains and hurricanes; administrative,
governmental or court orders or injunctions; federal, state or municipal
laws and regulations; the revocation, modification or suspension of a
permit, license or other necessary authorization; matters of national
security; acts or occurrences directly or indirectly caused by Tenant (its
agents, employees, contractors, or invitees); or any other situation or
event reasonably beyond Landlord's control. In said situation, the period
of time for Landlord to comply with any obligation or commitment shall
automatically be extended for a period equivalent to the period of
duration of such force majeure.
22.13 Safety Programs. Tenant agrees to cooperate, assist and participate in any
program Landlord develops or adopts to address any emergency or occurrence
constituting force majeure.
22.14 Estoppel Certificate. Tenant, upon Landlord's request, shall provide
Landlord with an Estoppel Certificate wherein Tenant certifies that (i)
this Lease Agreement is unmodified and in full force and effect (or if any
modifications, Tenant will specify such modifications and certify that
this Lease Agreement as modified is in full force and effect); (ii) the
date upon which Tenant began paying Basic Rent and the dates in which all
Rent payments were made; (iii) that Landlord is not in default under any
provision of this Lease Agreement; (iv) that the work by Landlord to the
Leased Premises, was completed as agreed and that Tenant is in possession
of the Leased Premises, (iv) Tenant has no claims against Landlord under
this Lease Agreement, and (vi) that there is no petition, whether
voluntary or otherwise, pending as to Tenant under the bankruptcy laws of
the United States.
22.15 Tenant's Duties: Landlord's Rights. All obligations and agreements which
Tenant is to perform or carry out under the tenus of this Lease Agreement,
shall be done exclusively at Tenant's expense, and without a right to
set-off or adjustment against Rent. Should Tenant breach or fail to
perform any of the obligations under this Lease Agreement, and said
default persists for more than ten (10) days from the delivery by hand or
the U.S. Mail of Landlord's notice demanding performance thereof, Landlord
shall be entitled, but shall not be obligated, to act as required to
remedy said situation, without waiving or releasing Tenant from its
liability with respect to said obligation. Any sum paid or expense
incurred by Landlord in said efforts shall accrue interest pursuant to the
provisions of Section 22.08 and must be paid by Tenant to Landlord upon
demand.
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22.16 Relationship Between the Parties. The relationship existing between the
parties hereto is that Landlord and Tenant exclusively, and nothing
provided for in this Lease Agreement shall be interpreted as creating a
partnership, joint venture, principal and agent relationship or any other
type of relationship between parties.
21.17 Nullity or Partial Invalidity. If any term, clause, section or article of
this Lease Agreement, or the application or enforceability thereof, be
declared null, invalid or unenforceable by a final order or judgment from
a court having jurisdiction, the remainder of the Lease Agreement, or the
application of said term, clause, section or article to persons or
circumstances other than those against whom the nullity, invalidity or
unenforceability was declared, shall not be affected by said order or
judgment, and each term and condition in this Lease Agreement shall be
valid and enforceable to the extent permitted by law and consistent with
said order or judgement.
22.18 Accord and Satisfaction. No payment by Tenant, or the acceptance by
Landlord of an amount less than the Rent herein stipulated shall be deemed
to be other than a payment toward the stipulated Rent, nor shall any
endorsement or statement on any check or any letter or other communication
accompanying any check or payment as Rent be deemed an accord and
satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such Rent or
pursue any other remedy provided in this Lease Agreement or at law or
equity.
22.19 Applicable Law. This Lease Agreement is executed, and its terms and
conditions shall be construed and enforced, in accordance with the laws of
the Commonwealth of Puerto Rico.
22.20 Jurisdiction and Competency. The parties agree that any action,
proceeding, claim, counterclaim or any other kind of judicial. action that
either of the parties initiates against the other regarding (i) any matter
that arises out of or related to this Lease Agreement; (ii) the legal
relationship existing between Landlord and Tenant; (iii) the use or
occupation of the Leased premises by Tenant; (iv) any claim for damages;
and/or (v) any statutory remedy, shall be filed and litigated before the
Court of First Review of Puerto Rico.
22.21 Net Lease. Tenant recognizes and admits, without limiting the meaning of
any other terms and conditions of this Lease Agreement, and as otherwise
provided in this Lease Agreement, that the intentions of the parties in
this Lease Agreement are that all Rent to be paid by Tenant to Landlord
under this Lease Agreement, must be paid to Landlord, without deduction or
setoff of any kind, and that any and all expenses incurred regarding the
Leased Premises, or regarding Tenant's operations in the Leased Premises,
including any assessments, taxes, municipal operating licenses, charges.
special license and permit fees, insurance premiums, electricity, water,
gas, telephone bills and other similar services, cost of repair,
maintenance and operation of the Leased Premises or Property, together
with all such fixtures that are placed on, attached to, installed or
contained in the Leased Premises, shall be paid by Tenant.
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22.22 Notices. All notices, claims or communications between the parties
referred to or required by this Lease Agreement shall be in writing and
sent by certified mail. return receipt requested, or personally delivered,
to the addresses of the parties set forth in Sections 1.02 and 1.04 of
this Lease Agreement. Any address change shall be notified to the other
party in writing not less than thirty (30) days before the effective date
of said change.
22.23 Non-Waiver. The failure of either party to demand strict performance of
any of the provisions of this Lease Agreement upon default of any
provision by the other party shall not constitute nor may it be construed
as a waiver of said party's right to demand performance of any provision
in the future if the default continues, or if the other party should later
repeat the default with respect to the same provision. The receipt or
acceptance by Landlord of the Rent or any other amount payable by Tenant
under this Lease Agreement, with or without knowledge of Tenant's default
on any obligation or condition under this Lease Agreement, shall not be
deemed as release by Landlord in favor of Tenant from compliance with said
obligation or condition, nor waiver of Landlord's rights or remedies under
this Lease Agreement with regard to said default. The consent or approval
given by Landlord for any act by Tenant which requires said consent or
approval, is solely and exclusively limited to the act or event for which
said consent or approval was given, and should not be understood as a
waiver of any requirement for prior consent or approval for a similar act
by Tenant in the future.
22.24 Cumulative Remedies. The rights and remedies of each of the parties in
this Lease Agreement are independent, separate and cumulative. The
exercise, or failure to exercise any right or remedy, shall not be
interpreted or deemed to exclude or bar the exercise of any other right or
remedy of either party under this Lease Agreement or under any law or
regulation.
22.25 Brokers. Each party represents and warrants to the other party that it bas
not engaged nor used the services of areal estate broker or agent in
connection with this lease, and that no real estate agent has participated
at any time in the negotiation of this Lease Agreement. Notwithstanding
the foregoing, the liability for the payment of any commission or
compensation claimed by any real estate professional who may have rendered
services to any party with respect to this Lease Agreement shall be borne
by the party that engaged said real estate professional, and furthermore
said party shall indemnify the other against any damages, liability,
expenses and/or attorney's fees, arising from any claim or lawsuit of any
real estate professional for any commission allegedly owed for any service
rendered.
22.26 Cross Default. Any default by Tenant under any other agreement with
Landlord shall be considered a default under this Lease Agreement.
22.27 Representations. Tenant expressly represents that neither Landlord nor its
directors, officers, agents, employees or representatives has made any
representations or promises with respect to the Leased Premises, except as
expressly provided in this Lease Agreement.
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22.28 Financial Statements. Upon request of Landlord, Tenant must to submit to
Landlord, within ninety (90) days after the expiration of Tenant's fiscal
year, a certified financial statement issued by an authorized certified
public accountant. The certified financial statement will include: (a)
Tenant's capital; (b) Tenant's long-term debts and capitalization; (c)
Tenant's investment in machinery and its ability to provide employment;
(d) taxes paid by Tenant, including Social Security payments; and (e) any
other information that is required by this Lease Agreement. Should Tenant
fail to deliver the certified financial statement, Landlord shall obtain
this information at Tenant's cost and Tenant shall permit Landlord access
to Tenant's books and records at Tenant's main offices in Puerto Rico for
this purpose.
22.29 Additional Documents. If Tenant is a corporation, Tenant agrees to submit
to Landlord contemporaneously with the execution and delivery of this
Lease Agreement (a) evidence of Tenant's registration with the State
Department of the Commonwealth of Puerto Rico, including the name and
address of its resident agent; and (b) a certificate of corporate
resolution of Tenant's Board of Directors which authorizes or ratifies the
execution of this Lease Agreement. If Tenant is a partnership, Tenant
represents and warrants that this Lease Agreement has been subscribed by
all managing partners or administrators representing Tenant. and that the
same constitutes a valid and enforceable agreement for the partnership and
each and every one of the partners, and also, that each and every one of
Tenant's present and future partners are now and shall remain at all times
jointly and severally liable under this Lease Agreement Tenant represents
and warrants that the death, resignation or retirement of any partner
shall not release said partner from its liability under the terms of this
Lease Agreement without Landlord's consent in writing.
22.30 Fiscal Liabilities. (a) Tenant represents and warrants that, at the time
of execution of this Lease Agreement (i) it has filed tax returns for the
last five (5) years; (ii) that Tenant has no outstanding tax debt with the
Government of Puerto Rico nor with the United States Government (if
applicable) that is not subject to a payment plan which is current as of
the date of execution of this Lease Agreement; (iii) and bas paid its
unemployment taxes, disability and social security taxes (as applicable),
or is in compliance with a payment plan therefor and in compliance with
the terms and conditions thereof.
(b) Tenant expressly recognizes that the compliance with the provisions
of this Section 22.30 is an essential condition of this Lease
Agreement, and if any representation or warranty is not accurate, in
whole or in part, the same shall constitute cause for Landlord to
terminate this Lease Agreement.
22.31 Debt Certification. Tenant warrants to Landlord that neither Tenant nor
its partners (or if Tenant is a corporation, its directors, officers or
stockholders) owe any amount to Landlord or to any agency or
instrumentality of the Government of Puerto Rico, either personally or
under this or any other corporate or partnership name.
22.32 Non-Conflict Certification. Tenant represents and warrants to Landlord
that there is no conflict of interest, neither actual or potential,
between Landlord and any of Tenant's
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directors, officers, employees, partners and agents, as a result of
business, labor, economic, or family relationships, or for any other
reason. Tenant hereby covenants that upon Landlord's request Tenant shall
deliver to Landlord a sworn statement from any of its directors, officers,
employees, and/or agents that will confirm the veracity of Tenant's
representation and warranty contained in this provision.
IN WITNESS WHEREOF, the parties subscribe this Lease Agreement on the
dates below stated.
LANDLORD: TENANT:
PUERTO RICO INDUSTRIAL LIFESTYLE FOOTWEAR INC.
DEVELOPMENT COMPANY
By: _________________________________ By: /s/ Xxxxx Xxxxxxxxx
-------------------
Name: _______________________________ Name: Xxxxx Xxxxxxxxx
Title: ______________________________ Title: EVP and CFO
Date: _______________________________ Date: 12/16/99
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ATTACHMENT A
DESCRIPTION OF LEASED PREMISES
DESCRIPTION OF BUILDING NO. T-1236-0-87
IN MOCA. PUERTO RICO
This is a pitched roof type building consisting of reinforced concrete
foundation, steel columns and girders and 30 feet long steel joists which in
turn support 22 gauge standard steel deck covered by one (1) fiberglass
insulation and a three (3) plies built-up roofing. Roof ventilators are
provided.
The building has a main floor 240'-6" x 180'-6" out to out dimensions with an
area of 43,410.25 sq. ft. of manufacturing space; two (2) lean to's provided for
sanitary facilities, one of 60'-6" x 12'-6" with an area of 756.25 sq. ft. and
the other of 60'-6" x 10'-6" for an area of 635.25 sq. ft. an entrance porch of
22'-0" x 8'-0" with an area of 176 sq. ft. This amounts to a total area of
covered floor space of 44,977.75 sq. ft.
The floor consists of a 4" thick reinforced concrete slab with monolithic cement
finish, floor slab is designed for a load capacity of 150 pounds p.s.f. Exterior
walls arc of concrete blocks plastered and painted on both sides. Interior walls
at lean to are plastered and painted. Ceiling is rubbed and painted throughout
the building. Windows are miami aluminum louvers throughout the building.
Interior doors are made of plywood, and exterior ones are industrial type metal
ones. Rolling doors at leading area arc provided. Clearance in the manufacturing
area from finish floor to lowest part of beams at the side's xxxxx is
12'-2-1/2".
DESCRIPTION OF LAND, LOTS NO. 2, 4 AND 6 (GROUPED). LOCATED AT MOCA INDUSTRIAL
AREA MOCAPUERTO RICO SITE OF PROJECT: T-1236-0-78
GENERAL:
Parcel or land, Lot. No. 2,4, and 6 (grouped), located at Moca West Industrial
Area ID Moca. PR.
It bounds: by the North, with Xxxxx Xxxx XX 000; by the South; with Lot No. 8 if
the same industrial area; by the East, with access street of the same industrial
area; and by the West, with land owned by Xxx Xxxxx Xxxxxxx xx Xxxxxx.
It has a surface of 17,878.83 square meters equivalent of 4.5489 cuerdas.
It is affected by the following rights of ways:
1) A 5'-0" feet wide strip in favor of PREPA, running along the Northern
boundary.
2) A 25' -0" feet wide strip in favor of PREPA, running parallel to its
Eastern boundary and at an approximate distance of 25 meter from it.
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CIVIL SPECIAL FACILITIES OF PROJECT T-1236-0-78 & Ext.
1. Security House
2. Lean-to structure 52T-0" x 63'-0" + 24"-0" x 52'-0" for cafeteria
3. Tool room
4. Warehouse structure
5. Electrical generator structure
6. Paved parking
7. Automatic sprinkler system
8. 200,000 gallons water tank for sprinkler system
9. Electrical substation and emergency power plant
10. Mezzanine at manufacturing area
ELECTRICAL SPECIAL FACILITIES OF PROJECT T-1236-0-78 & 1-78
1) Electrical line of 38 KV
DEFICIENCIES OF THE PREMISES:
Tenant hereby agrees to assume the following deficiencies of the former Tenant
of the Premises:
1) Above ground tanks for fuel storage
2) Compressor and suction pumps located outside the building
3) Full chemical containers storage outside the building
4) Electrical transformer
5) Floor vinyl tiles
6) Block wall structure
7) Concrete floor
8) Gypsum board walls
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