Exhibit 10.29
200,000 sq ft.
LEASE AGREEMENT
LEASE AGREEMENT ENTERED INTO BY AND BETWEEN
BBVA BANCOMER SERVICIOS, S.A. AS TRUSTEE OF
“SUBMETRÓPOLI DE TIJUANA” TRUST, REPRESENTED
HEREIN BY MS. BERTHA LETICIA DEL RÍO MARTÍNEZ
(HEREINAFTER REFERRED TO AS “LESSOR” ), AND
DJ ORTHOPEDICS DE MÉXICO, S.A. DE C.V., REPRESENTED
HEREIN BY MR. JUAN JOSE LOPEZ BOJORQUEZ HEREINAFTER REFERRED TO AS
“LESSEE” ), PURSUANT TO THE FOLLOWING RECITALS
AND CLAUSES:
RECITALS:
1.
LESSOR, through its representative,
hereby states:
1.1.
That her principal is a Mexican
banking institution duly organized in accordance with the laws of
the United Mexican States.
1.2.
That under public instrument number
112,091 dated September 18, 1975, granted before
Mr. Mario Monroy Estrada, Notary Public Number 31 for Mexico
City, which was recorded at the Public Registry of Property and
Commerce for the city of Tijuana, Baja California, Mexico, under
record number 39,965 page 242 of Volume 123 of the First
Section, it was formalized in public instrument the Trust called
“Submetrópoli de Tijuana”.
1.3.
That under public instrument number
3,705 dated June 17, 1997, granted before Mr. Gabriel
Moreno Lozano, then Notary Public Number 7 for the city of Tijuana,
Baja California, Mexico, recorded at the Public Registry of
Property and Commerce of Tijuana, Baja California, Mexico, under
record number 5’110,624, Civil Section, dated July 7,
1997, it was granted the trustee substitution of
“Submetrópoli de Tijuana” Trust, under which
LESSOR was designated a trustee of aforementioned trust, and
received all the patrimony of the trust which included among others
the real estate property subject matter hereof.
1.4.
That it is duly represented herein
by Ms. Bertha Leticia Del Río Martínez, who has
full power and authority to execute this Agreement on its behalf,
as evidenced by the public instrument attached hereto as
Exhibit “A” . Furthermore, Ms. Bertha
Leticia Del Río Martínez hereby represents that such
authority has not been limited nor revoked in any manner
whatsoever.
1.5.
That under official letter number
SD-616/03 dated September 8, 2003, issued by the Direction of
Urban Administration of the City of Tijuana, which was recorded at
the Public Registry of Property and Commerce of Tijuana, under
record number 5’335,178, Civil Section, dated
September 1 st
, 2003, it was authorized the
subdivision of Lot 2-T3 of “Colonia El Florido” of the
city of Tijuana, Baja California, into several plots of land among
which the subject matter hereof was included.
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1.6.
That it wishes to enter into this
lease agreement subject to the terms and conditions herein set
forth in order to lease to LESSEE the LEASED PREMISES, as such term
is hereinafter defined, being part of such LEASED PREMISES the
following tracks of land that resulted from the subdivision of Lot
2-T3 of “Colonia El Florido” of the city of Tijuana,
Baja California:
1.6.1.
Fraction 2-TX of “Colonia El
Florido” of the city of Tijuana, Baja California, Mexico,
with a surface area of 14,918.565 square meters;
1.6.2.
Fraction 2-TY of “Colonia El
Florido” of the city of Tijuana, Baja California, Mexico,
with a surface area of 13,993.406 square meters; and
1.6.3.
Fraction 2-TZ of “Colonia El
Florido” of the city of Tijuana, Baja California, Mexico,
with a surface area of 14,055.144 square meters.
Above mentioned tracks of land will
be hereinafter jointly referred to as the
“Lots”. A drawing that describes the Lots and
their metes and bounds and the Expansion Area is attached hereto as
Exhibit “B”.
1.7.
That it intents to construct certain
improvements over the Lots, consisting of an industrial facility
with an approximate construction area of 200,000 (two hundred
thousand) square feet (hereinafter the “Industrial
Facility”). Such Industrial Facility and the Lots are
herein jointly referred to as the “LEASED
PREMISES”. The preliminary drawings, specifications and
work schedule of the Industrial Facility that will form part of the
“LEASED PREMISES” are attached hereto as
Exhibit “C”.
2.
LESSEE, through its representative,
hereby states:
2.1.
It is a corporation duly
incorporated under the laws of the United Mexican States, as
evidenced in public instrument number 4,565 of volume 65 dated
November 21 st
, 1994, granted before Notary Public
Number 2 for the city of Tecate, Baja California, Mexico, which was
recorded at the Public Registry of Property and Commerce of
Tijuana, Baja California, under record number 5017824, Commerce
Section.
2.2.
That it is duly represented herein
by Mr. Juan Jose Lopez Bojorquez, who has full power and
authority to execute this Agreement on its behalf, as evidenced by
the public instrument attached hereto as
Exhibit “D”. Furthermore, Juan Jose Lopez
Bojorquez hereby represents that such authority has not been
limited nor revoked in any manner whatsoever.
2.3.
That prior to the execution hereof
it invited LESSOR to participate in its request of an industrial
building made under Bid Number 90301-1.
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2.4.
That the winner of its request for
an industrial building made under Bid Number 90301-1, was LESSOR. A
copy of the Bid requirements is attached hereto as
Exhibit “E”.
2.5.
That it wishes to execute this
agreement in accordance with the terms and conditions herein set
forth.
Having stated the foregoing, the parties hereto
agree to the following:
C L A U S E S:
FIRST.
LEASE.
Subject to the terms and conditions herein set
forth, the LESSOR hereby leases to LESSEE and LESSEE hereby leases
from LESSOR the LEASED PREMISES, which are integrated by the plots
of land known as Fractions “2-TY”,
“2-TZ” and “2-TX” which resulted from
the subdivision of Lot 2-T3 of “Colonia El Florido” of
the city of Tijuana, Baja California, which are described in
Exhibit “B” hereof, and by the Industrial
Facility to be constructed thereon by LESSOR pursuant to this
Agreement.
SECOND.
QUIET
ENJOYMENT.
2.1.
Subject to the timely performance of
each and all of LESSEE’s obligations hereunder, LESSOR
guarantees that LESSEE shall have the quiet enjoyment of the LEASED
PREMISES without hindrance, ejection or molestation by
LESSOR.
2.2.
This lease shall survive any
foreclosure of any lien or any mortgage of LESSOR and any default
in payment of any such lien or mortgage shall in no way prejudice
the terms of this Lease or any extensions thereof.
2.3.
LESSEE acknowledges that a set of
protective covenants have been established as mandatory and legally
binding on all occupants and tenants of the development that the
LEASED PREMISES form part. Such restrictive covenants are attached
to this lease as Exhibit “F” and LESSEE
declares to know them and accept to their binding
nature.
THIRD.
PERMITS.
LESSOR agrees to obtain and pay for the
corresponding construction permits and licenses required to
construct the Industrial Facility and improvements which will form
part of the LEASED PREMISES, subject matter hereof.
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FOURTH.
IMPROVEMENTS.
4.1.
The LESSOR, at it’s own cost
and expense shall construct the LEASED PREMISES in compliance with
all general construction laws, ordinances, regulations and other
governmental authorizations applicable within the City of Tijuana,
Baja California, Mexico, and shall perform all work, furnish all
materials, and obtain all permits necessary to bring the LEASED
PREMISES into compliance with requirements of the Lease, in
accordance with the Final Drawings, Specifications, Schedule of
Work and Construction Terms to be prepared based on the preliminary
and general specifications attached hereto as
Exhibit “C” and LESSEE’s Bid 90301-1
requirements attached hereto as
Exhibit “E”.
4.2.
For the preparation of the Final
Drawings, Specifications, Schedule of Work and Construction Terms,
the parties, prior to the execution hereof, have begun to follow
this schedule:
4.2.1.
On January 19, 2004, an
initial draft of drawings and designs for construction of the
Industrial Facility (the “ Architectural Project
”), will be delivered to LESSEE;
4.2.2.
By January 27, 2004,
LESSEE shall review and, in its case, approve the Architectural
Project; within eight (8) calendar days after LESSEE receives such
final architectural project, informing LESSOR thereof.
4.3.
Once the Final Drawings,
Specifications, Schedule of Work and Construction Terms have been
completed and accepted by the parties, as set forth herein, all
documents relative thereto shall be included in
Exhibit “C” hereof, and shall form an
integral part of this Lease Agreement.
4.4.
As agreed by the parties and will be
established in the Final Specifications, Schedule of Work and
Construction Terms, LESSOR shall diligently complete the Industrial
Facility to be constructed on the LEASED PREMISES in order that
LESSEE may occupy such Industrial Facility pursuant to the
following preliminary schedule:
4.4.1.
Preferential Occupancy
. Understood as such date when
LESSOR advises LESSEE, that LESSEE may begin to initiate the
installation of machinery or equipment within the warehouse area of
the Industrial Facility, as defined in
Exhibit “C”. The parties agree that the
Industrial Facility will be ready for LESSEE’s Preferential
Occupancy on or before the expiration of a twenty eight (28)
week term as from the date on which LESSOR begins the
construction of the Industrial Facility after it has concluded the
grading, compaction and leveling of the Lots.
4.4.2.
Final Occupancy.
Understood as such date when LESSOR
advises LESSEE, that LESSEE commence to possess the LEASED PREMISES
as lessee subject only to punch list items which may be completed
by
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LESSOR within a fifteen (15)
calendar day term.The Industrial Facility will be ready for
LESSEE’s final occupancy on or before the expiration of a
thirty six (36) week term as from the date on which LESSOR
begins the construction of the Industrial Facility after it has
concluded the grading, compaction and leveling of the
Lots.
4.5.
LESSOR will proceed diligently with
construction and completion of the LEASED PREMISES and deliver
LESSEE the LEASED PREMISES for its Final Occupancy, no later than
August 14, 2004, (“Commencement Date”) as
the same may be extended pursuant to paragraphs 4.6, 4.8 of this
Clause and the other applicable provisions of this Lease and
its exhibits.
4.6.
If LESSEE requests any
change(s) in the Architectural Project and any such requested
changes are approved by LESSOR, which approval shall not be
unreasonably withheld, conditioned or delayed, LESSOR shall advise
LESSEE (prior to the commencement of any constructions changes to
the Architectural Project) of any costs and/or delays. LESSOR shall
not be obligated to carry out such requested changes unless it has
received in advance full payment of the cost of same.
4.7.
If LESSEE shall enter the LEASED
PREMISES during the Preferential Occupancy Period, LESSEE shall
obtain proper insurance against any potential risks and liabilities
for injury to its authorized personnel, employees or contractors
and damages to property or equipment installed by LESSEE, therefore
any ingress by LESSEE or its authorized personnel, employees or
contractors during the Preferential Occupancy Period shall be at
their own risk. LESSOR shall be responsible for any injury in
regards to its own personnel, employees or contractors or for any
loss or damage caused by any negligent act or omissions of LESSOR,
its contractors, licensees, agents, invitees or employees during
such Preferential Occupancy Period.
4.8.
The LESSOR during the Preferential
Occupancy Period it expressly waives any and all rights to receive
rents from LESSEE, therefore LESSEE will not be obligated to pay
rent as per this Lease Agreement during the Preferential Occupancy
Period.
4.9.
The parties agree that the Date of
Final Occupancy shall be extended for a term equivalent to delays
attributable to LESSEE or LESSEE’s contractors or
subcontractors, weather, acts of God or force majure. Delays
considered attributable to the weather shall be jointly determined
between the parties and duly recorded in the Construction Log.
Should a representative of LESSEE not be present when there is a
delay due to weather, then LESSOR’s Construction Supervisor
shall record the reason for such delay.
4.10.
The LESSEE, at its own expense and
with the prior written approval of the LESSOR, may add new
improvements and may alter, extend, improve or add to any of the
improvements and buildings now or hereafter on the
LEASED
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PREMISES, provided that such
alterations, extensions, improvements and additions do not
adversely affect the structural strength of the Industrial Facility
or improvements on the LEASED PREMISES, or reduce the fair market
value of the LEASED PREMISES immediately prior thereto; and
provided further that said alterations are effected with diligence,
in a good and workman-like manner, and in accordance with all
applicable laws, ordinances, regulations and governmental
practices. LESSOR’s written approval shall not be required in
the event any such improvements do not exceed the amount of
$25,000.00US Cy., (TWENTY FIVE THOUSAND DOLLARS 00/100 US Cy.),
provided the same do not affect the structure of the Industrial
Facility.
4.11.
Notwithstanding the foregoing and
unless otherwise agreed in writing by LESSOR, LESSEE at the
termination of this Lease shall return the Leased Premises in the
same conditions as received, except for normal ware and tear;
additionally LESSEE hereby expressly waives any right that it may
have to request LESSOR for the payment of any compensation for
LESSEE’s improvements specifically waiving LESSEE any and all
right that it might have under article 2297 of the Civil Code for
the State of Baja California.
4.12.
LESSEE shall indemnify and hold
harmless the LESSOR from all claims, liens, damages and costs
resulting from or arising out of the LESSEE’s acts, omissions
or lack of performance of any of its obligations filed or initiated
by LESSEE’s contractors, employees, workers, agents,
representatives or principals or by the “Instituto Mexicano
del Seguro Social (IMSS)”, Tax authorities, or the
“Fondo Nacional de la Vivienda para los Trabajadores
(INFONAVIT)”, resulting from any claim, demand or obligation
incurred by such personnel during the installation of improvements
and related activities at the LEASED PREMISES during the
Preferential Occupancy Period and up to the Commencement Date
hereof and in such other periods on which LESSEE carries out any
leasehold improvement, provided, however, LESSOR must notify LESSEE
in writing of any such claims, liens or demands, within 48 hours
from receipt thereof for this indemnity to apply, so that LESSEE
may file a defense in respect of any such claim, lien or
demand.
4.13.
The LESSOR shall indemnify and hold
harmless the LESSEE from all claims, liens, damages and costs
resulting from or arising out of the LESSOR’S acts, omissions
or lack of performance of any of its obligations filed or initiated
by LESSOR’S contractors, employees, workers, agents
representatives or principals or by the “Instituto Mexicano
del Seguro Social (“IMSS”), Tax Authorities, or the
Fondo Nacional de Vivienda para los Trabajadores
(“INFONAVIT”), resulting from any claim, demand or
obligation incurred by such personnel during the construction of
the LEASED PREMISES and up to the Commencement Date hereof,
provided, however, LESSEE must notify LESSOR in writing of any such
claims, liens or demands, within 48 hours from receipt thereof for
this indemnity to apply, so that LESSOR may file a defense in
respect of any such claim, lien or demand.
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FIFTH.
USE OF THE LEASED
PREMISES.
5.1.
The purpose for which the LESSEE
shall use the LEASED PREMISES shall be: general office, warehouse,
light manufacturing, storage, services, repair, engineering, sales,
product demonstration, training of customers and employees,
ancillary storage, parking of cars and all other uses incidental
and related to a manufacturing, warehouse and office facility, and
for no other purposes without the written consent of the LESSOR.
LESSEE may not use the LEASED PREMISES for any other purposes
without LESSOR’s prior written authorization.
5.2.
During the Term of this Lease, the
LESSEE shall not do or permit anything to be done in the LEASED
PREMISES which shall in any way conflict with any laws, statutes,
ordinances, Park Restrictions or governmental rules.
5.3.
The Park Restrictions are attached
hereto and incorporated into this Lease by reference as
Exhibit “F”.
5.4.
The LESSOR represents and warrants
that the LEASED PREMISES is located in an area authorized for light
industrial manufacturing purposes as evidenced with the
documentation attached hereto as
Exhibit “G”.
SIXTH.
LEASE TERM.
6.1.
Effectiveness.
This Lease will be in effect as of
its date of execution.
6.2.
Lease Term.
This Lease will remain in effect
until the expiration of a ten (10) year term (the
“Lease Term”, or the “Term of this
Lease”) as of the Final Occupancy Date, or
August 14, 2004, whichever happens first (hereinafter the
“Rent Commencement Date”).
6.3.
Renewal Options
. Subject to the terms and
conditions of Clause Twenty Fourth hereof, LESSEE shall have
an option to extend the Term of this Lease for two (2) terms
of five (5) years each.
SEVENTH.
RENTAL AND TERMS AND
CONDITIONS OF PAYMENT.
7.1.
For the first twelve months of the
Lease Term, and starting as from the Rent Commencement Date, the
LESSEE agrees to pay without demand and the LESSOR agrees to accept
as the full rental for the LEASED PREMISES, the amount of
U.S.$0.393 Dollars (point three nine three Dollars U.S. Cy.)
plus the corresponding Value Added Tax per square foot of the total
area of the Industrial Facility (200,000.00 square feet), per
month, for a total of US$78,600.00 Dollars (Seventy Eight
Thousand Six Hundred dollars 00/100 U.S. Cy.) plus the
corresponding Value Added Tax (hereinafter the “Initial
Rent”). The parties
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acknowledge that the total area may
vary, in which case, the monthly total of the rental price shall be
adjusted accordingly.
7.2.
The LESSEE shall pay the Value Added
Tax which may be applicable to the monthly lease payments, and the
LESSOR shall issue the corresponding invoice therefore, containing
all requirements of Fiscal Law.
7.3.
Such amount of the Initial Rent will
in effect for a term of twelve months as of the Rent Commencement
Date. The Initial Rent will be increase every twelve month period
as of the expiration of the twelfth month starting on the Rent
Commencement Date, and the increase will be of 3.0% (Three)
compounded for each twelve (12) month period.
7.4.
The above monthly installments may
be paid by the LESSEE in U.S. Dollars or in Mexican currency, at
the average rate of exchange in effect on the date of payment, for
the purchase of U.S. Dollars offered by BBVA Bancomer, S.A., in
Tijuana, Baja California, México. All lease payments shall
be made in advance during the first five days of each month during
the term hereof at LESSOR’s address, which is located at
Paseo de los Héroes #9188, Piso 5, Edificio Rodeo, Zona
Río, Tijuana, Baja California, Mexico, or at any other
address that from time to time the LESSOR indicates.
7.5.
If the Rent Commencement date of
this Lease is a day other than the first day of a calendar month,
the amount of the first monthly rental payment shall be that pro
rata portion of the monthly rental payment which is equal to the
pro rata portion of the first calendar month that the LEASED
PREMISES were occupied by the LESSEE; and the amount of the final
rental payment hereunder shall be that pro rata portion of the then
monthly rental payment which is equal to the pro rata portion of
the last calendar month during which this Lease shall be in
effect.
7.6.
In the event LESSEE does not pay the
rent within the five (5) day term as set forth above, LESSEE
shall pay LESSOR late payment interests at the rate of 2% (Two
Percent) monthly. Such interest shall continue to accrue until such
time payment has been effected by LESSEE.
7.7.
LESSEE hereby agrees not to withhold
nor compensate rental payments. Therefore LESSEE will timely pay
under the agreed terms all rental and other payments that
correspond to LESSOR as well as all other payments required to be
effected by LESSEE.
7.8.
As part of the consideration for the
execution hereof by LESSOR, LESSEE covenants and agrees to timely
and fully comply with each and all of its obligations
hereunder.
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EIGHTH.
TAXES AND
UTILITIES.
8.1.
LESSOR guarantees to LESSEE that the
connections and infrastructure required by the LESSEE to
con
