CONTRACT OF LEASE
This Contract of Lease is made and entered into by and between:
TECHNOLOGY ELECTRONIC ASSEMBLY AND MANAGEMENT (T.E.A.M.) PACIFIC
CORPORATION, a corporation duly organized and existing under Philippine law with
its address at Electronics Avenue, FTI Complex, Taguig, Metro Manila
(hereinafter referred to as the "LESSOR").
-and-
THREE-FIVE SYSTEMS PACIFIC, INC., a corporation duly organized and
existing under Philippine law with its address at Electronics Avenue, FTI
Complex, Taguig, Metro Manila (hereinafter referred to as the "LESSEE").
- WITNESSETH: That-
WHEREAS, LESSOR is the sole and absolute owner of the two story factory building
on leased land located at Electronics Avenue, FTI Complex, Taguig, Metro Manila,
of which a portion covering an area of 3,888 sq. meters or 41,851 sq. ft. on the
second floor indicated in the floor plan attached herewith as Exhibit "A" is
available for lease (hereinafter referred to as "leased premises"):
WHEREAS, LESSEE has offered to lease the described leased premises from LESSOR
and LESSOR has agreed to lease the described leased premises to LESSEE under the
terms and conditions herein set forth.
NOW, THEREFORE, the LESSOR hereby leases to LESSEE the leased premises described
above, and the LESSEE accepts the same under lease subject to the following
terms and conditions:
1. TERM
This Contract of Lease shall begin on March 1, 1995 and shall expire on
December 31, 1999, renewable under such terms and conditions as the parties
hereto may mutually agree upon. If such renewal is agreed upon, then this
Contract of Lease shall automatically expire at the end of the stipulated period
without necessity of notice to the LESSEE and other persons claiming under it
shall immediately vacate the leased premises upon such termination of Contract
of Lease.
This Contract of Lease shall automatically be extended for an
additional twelve (12) months provided that both Three-Five (as defined in
Section 3 below) and LESSOR shall have the right to terminate the twelve (12)
month extension at any time by giving one hundred eighty (180) days written
notice.
2. RENTALS
The monthly rental for the leased premises shall be US$21,384.00
(US$5.50 per square meter). The monthly rental shall be payable in advance on or
before the first day of each and every month at the office of the LESSOR without
necessity of notice or demand. The LESSEE shall be allowed to withhold from the
rentals and remit to the Bureau of Internal Revenue (BIR) the applicable
creditable withholding tax on rentals as required by law and the BIR
Regulations. Payment shall be made by bank wire or by a check drawn on a
Philippine bank account. The rent is payable in U.S. dollars or its Philippine
Peso equivalent on the date of payment.
3. PURPOSE AND USE
The leased premises shall be used solely to house assembly lines
dedicated exclusively to the assembly and testing of products for LESSEE and
Three-Five Systems, Inc. (hereinafter "Three-Five"), an affiliate of the LESSEE.
For this purpose., LESSEE shall locate in the leased premises, all consigned
equipment and tools belonging to LESSEE which may be necessary for these captive
assembly lines. In this regard, LESSOR hereby disclaims and waives any
statutory, common law, or other lien, claim or interest, including any so-called
"landlord's lien" it may have against the furniture, fixtures, machinery, and/or
equipment of LESSEE or Three-Five located within the leased premises. The LESSEE
shall have a right to allow the use of the leased premises to any company which
has a valid assembly or sub-assembly contract with Three-Five for the assembly
and testing of products for Three-Five.
4. IMPROVEMENTS
The LESSEE shall secure the prior written approval of the LESSOR, which
shall not be unreasonably withheld, for any renovation or improvement in the
existing structures, layout of machinery and equipment or improvements, in the
leased premises, complying with all laws, ordinances, rules, and regulations
applicable thereto with the LESSEE shouldering all costs in connection
therewith. Said improvements shall exclusively belong to the LESSOR after the
expiration of this Contract of Lease without reimbursement for all expenses
incurred therefor. It is understood that the LESSEE cannot remove any or all
permanent parts and materials related to the building.
5. TRANSFERABILITY
The LESSEE shall secure the prior written approval of the LESSOR which
shall not be unreasonably withheld to sub-lease, transfer, sell, assign,
mortgage, alienate or dispose of a portion or whole of the leased premises and
any rights under this Contract of Lease.
6. DILIGENCE
The LESSEE shall take care of the leased premises as if it were its
own. It shall be responsible for the cleanliness, ordinary repairs to and the
day-to-day maintenance of the leased premises. LESSOR shall be responsible for
any extraordinary or structural repairs to the leased premises not made
necessary by the neglect or default of LESSEE and LESSOR shall repair and
maintain the building in which the leased premises is situate in good condition
and repair. The LESSEE also binds itself not to store explosive/combustible
materials, or dump garbage, rubbish or waste on any vacant space within or
outside the leased premises that may adversely affect the LESSOR and neighbors
of the leased premises.
7. COMPLIANCE WITH LAWS AND REGULATIONS
The LESSEE shall be responsible for all acts and omissions done by its
agents, employees, guests and all the other persons entering the leased premises
with its knowledge or consent. It shall comply with all existing laws and
regulations regarding safety, sanitation, cleanliness and beautification of the
government. If any future law or regulation requires structural or extraordinary
modifications to the leased premises solely as a result of the particular use of
the leased premises by LESSEE, LESSEE shall perform such structural or
extraordinary repairs and modifications. If, however, such future law or
regulation is applicable to premises generally, LESSOR shall make such
extraordinary repair or structural modification. The LESSEE shall strictly
comply with all uniformly imposed non-discriminatory rules and regulations
provided by the LESSOR concerning security, safety and sanitation as may be
updated or modified by the LESSOR at its sole discretion; provided, however, no
such rule or regulation shall abrogate any right granted to LESSEE or to
Three-Five in this Contract of Lease. The LESSEE is solely responsible and
liable for the non-compliance or violation of all laws, ordinances or
regulations with regard to its business, obligating itself not to use the leased
premises for any illegal or immoral purposes, and should such unauthorized acts
be committed by the LESSEE in violation of such law or ordinances, it shall hold
the LESSOR free and harmless from any and all liabilities or responsibilities,
whether civil or criminal or for any claim for damages or other causes of
actions, or for that matter any inconvenience, investigation, arrest or
interrogation regarding any matters concerning said business, the LESSEE being
solely answerable therefor.
8. UTILITIES
During the period of lease, LESSEE may at its expense apply for
telephone connections for the leased premises. The LESSEE may provide at its own
expense a separate meter device which shall accurately register the actual
electrical consumption in the leased premises.
LESSOR represents that it will pay all utility bills when due.
9. CANTEEN
LESSEE and its employees, agents and guests shall have access to the
canteen of the LESSOR and the LESSOR agrees to maintain services at least at the
present level.
10. SECURITY
LESSEE's personnel, officers, agents and guests, including the
personnel, officers, agents and guests of the company with a valid assembly or
sub-assembly contract with-Three-Five referred to in the last sentence of
Section 3 above, shall be listed and screened by LESSOR, however, they shall not
be denied access to the leased premises after such security check. The LESSOR
shall have a right to exclude or prevent the entry of any person who may in good
faith and for good reason be considered a security risk to the LESSOR or its
personnel or properties, provided that this right shall not be used to defeat
the purpose of this Contract of Lease.
11. TERMINATION
In the event that either party has committed a material breach of this
Contract of Lease, the other party shall have the right to terminate this
Contract of Lease; provided that neither party shall terminate this Contract of
Lease on the grounds of a material breach without giving a ninety (90) day
written notice of termination, specifying any alleged material breach or
breaches, such termination to become effective at the end of said period unless
during said period all material breaches specified have been remedied or waived.
Except for material breaches as provided in this paragraph, this Contract of
Lease shall not be terminated during the term of the assembly or sub-assembly
contract with Three-Five referred to in the last sentence of Section 3 above
provided that such assembly or sub-assembly contract is with the LESSOR. A
material breach shall have occurred if LESSEE fails to pay any rental, electric
xxxx and other reimbursable expenses when due.
12. VENUE
In case of court action due to any violation of this Contract of Lease,
the losing party shall pay all necessary expenses incurred for attorney's fees
and litigation expenses which in no case shall be less than TWENTY THOUSAND
PESOS (P20,000.00). It is hereby agreed that the venue of litigation shall be in
the proper courts of Pasig, Metro Manila.
13. NO WAIVER
The failure of a party to insist upon a strict performance of any of
the terms, conditions, covenants hereof shall not be deemed a relinquishment or
waiver of any right or remedy that said party may have, nor shall it be
construed as waiver of any subsequent breach or default of the terms, conditions
and covenants herein contained, which shall be deemed in full force and effect.
No waiver by a party shall be deemed to have been made unless expressed in
writing and signed by such party.
14. REAL PROPERTY TAX
The LESSOR shall be responsible for payment of the real property tax on
the leased premises. The LESSEE shall be responsible for any taxes on the
equipment used in the leased premises.
15. GROUND LEASE
The LESSOR shall be responsible for payment of the land lease. By its
signature below, Food Terminal Inc., the landlord under the referenced land
lease (hereinafter, the "Master Landlord") agrees that notwithstanding any
breach or default by LESSOR under the land lease, and notwithstanding any
termination of the land lease as result of such breach or default, provided that
LESSEE is not in material breach of this Contract of Lease, Master Landlord
shall honor this Contract of Lease, shall not disturb LESSEE'S (and
Three-Five's) possession of the leased premises, and shall hold LESSEE in quiet
enjoyment of the leased premises. In addition, Master Landlord consents to the
option to prepay rent contained in Section 2 above and the option to purchase
contained in Section 19 below, and represents and warrants to LESSEE that Master
Landlord's interest in the land upon which the building is situated is free and
clear of all liens and encumbrances.
16. SUCCESSOR-IN-INTEREST
This Contract of Lease shall be valid and binding on the LESSOR and
LESSEE and all their assigns and successors-in-interest.
17. INSURANCE
LESSOR shall maintain a policy or policies of casualty insurance on the
building in which the leased premises are located in an amount of not less than
the full replacement cost thereof. Concurrently with the execution of this
Contract of Lease, LESSOR shall deliver to LESSEE certificates evidencing the
existence of such insurance. In the event of any damage to or destruction of the
leased premises or the building in which the leased premises is located by fire
or other casualty, LESSOR shall, with all reasonable dispatch, repair and
reconstruct the leased premises and/or the building, as the case may be, to the
condition existing immediately prior to the occurrence of such fire or other
casualty.
18. QUIET ENJOYMENT
LESSOR covenants with LESSEE that upon LESSEE performing and observing
the agreements and conditions on its part to be performed and observed under
this Contract of Lease, LESSEE shall and may peaceably and quietly have, hold,
and enjoy the leased premises and all rights of the LESSEE hereunder without any
manner of hindrance or molestation by LESSOR or any persons claiming by,
through, or LESSOR. Notwithstanding the foregoing, LESSOR and LESSEE
acknowledge that until April 30, 1995, LESSOR may continue to occupy the
administrative offices identified as such on the floor plan attached as Exhibit
"A". LESSOR shall, however, vacate such administrative offices on or before
April 30, 1995, and shall deliver the same to LESSEE broom clean, and in good
condition and repair.
19. OPTION TO PURCHASE
LESSEE shall have and LESSOR hereby grants to LESSEE the option to
purchase the building within the leased premises is located, including the
interest of the tenant under the referenced land lease. If LESSEE wishes to
exercise this option, it shall do so by giving written notice to LESSOR on or
before October 31, 1999. The purchase price for the building in which the leased
premises is located and the tenant's interest under the land lease shall be
eighty-five percent (85%) of the fair market value of the building and the
tenant's interest under the land lease. Fair market value shall be determined by
the mutual agreement of LESSOR and LESSEE. The closing of the purchase pursuant
to this option shall take place on, or at, LESSEE's election, before December
31, 1999. At the closing, LESSEE shall pay to LESSOR the purchase price, and
LESSOR shall deliver to LESSEE a warranty deed and xxxx of sale to the building
in which the leased premises is located, a warranty assignment of the tenant's
interest under the land lease, together with the consent of the master landlord.
IN WITNESS WHEREOF, the parties hereto have executed this Contract of Lease this
22nd day of February, 1995, at Taguig, Metro Manila.
TECHNOLOGY ELECTRONICS THREE-FIVE SYSTEMS
ASSEMBLY MANAGEMENT PACIFIC, INC.
(T.E.A.M.) PACIFIC CORPORATION (LESSEE)
(LESSOR)
BY: /s/ Xxxxxxxx X. Xxxxxxxx BY: /s/ Xxxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxxxxx Xxxxxx X. Xxxxxx
ITS: Senior Vice President ITS: Chief Financial Officer
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FOOD TERMINAL INC.
(Master Landlord)
BY:
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ITS:
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We have read the above Contract of Lease and agree, for ourselves and for our
assigns and/or successors-in-interest in the Contract of Lease that
notwithstanding any breach or default by the LESSOR under any loans made by us
to LESSOR and notwithstanding any foreclosure by us of the liens and security
interests securing repayment of the loans made by us to LESSOR, we shall honor
this Contract of Lease, not disturb LESSEE'S (or Three-Five's) occupancy of the
leased premises, and shall hold LESSEE in peaceful and quiet enjoyment of the
leased premises. In addition, we consent to the to purchase described in Section
19 of the Contract of Lease, and, if necessary, will release our liens and
security interests encumbering the building in which the leased premises are
located and the tenant's interests under the land lease in exchange for payment
of the purchase price described in Section 19 of the Contract of Lease.
RIZAL COMMERCIAL BANKING CHINA BANKING
CORPORATION CORPORATION
BY: BY:
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ITS: ITS:
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