Exhibit 10.1

 

 

PUERTO RICO INDUSTRIAL DEVELOPMENT COMPANY

PO BOX 362350

SAN JUAN, PUERTO RICO 00936-2350

 

LEASE CONTRACT

 

PROJECT NO.:S-1501-0-97 (132,127.18 sq.ft.)

LOCATION: JUANA DIAZ, PUERTO RICO

 

THIS AGREEMENT ENTERED into on November 6, 2003 by: AS “LANDLORD”, THE PUERTO
RICO INDUSTRIAL DEVELOPMENT COMPANY, AND OCULAR SCIENCES PUERTO RICO, INC. AS
“TENANT”,

 

WITNESSETH

 

WHEREAS, LANDLORD is the owner of certain landsite and building, identified in
the Epigraph, hereinafter referred to as the Premises.

 

WHEREAS, LANDLORD has agreed to lease to TENANT, and TENANT has agreed to hire
from LANDLORD the Premises.

 

NOW THEREFORE, in consideration of the foregoing premises, the parties herein
agree on this Lease subject to the following:

 

TERMS AND CONDITIONS

 

ONE: LANDLORD hereby demises and lets unto TENANT, and TENANT hereby leases from
LANDLORD the Premises which are fully described in Annex “A” hereto annexed and
made a part hereof.

 

The Premises are subject to the encumbrances, liens and/or restrictions, if any,
that may appear from said Annex “A”. Furthermore, the air rights of the
Premises, are excepted and reserved to LANDLORD.

 

TWO: Premises shall be used and occupied exclusively in the manufacture on SOFT
CONTACT LENSES AND RELATED PRODUCTS (SIC. #3851).

 

THREE: TENANT shall hold the Premises for a period of ten (10) years, commencing
March 1, 2001.

 

FOUR: Commencing on March 1, 2001, TENANT shall pay to LANDLORD an annual rental
as follows:

 

  a. $3.70 per square feet a year, for the one hundred twenty (120) months
period, equivalent to $40,739.21 monthly and $488,870.52 annually.

 

The monthly installments for rent specified herein, shall be paid in advance on
the first day of each month at LANDLORD’S office, or at any other place that
LANDLORD may notify. In the event that the date of commencement does not fall on
the first of the month, TENANT further agrees to pay the first partial monthly
installments, prior to, or on the date of commencement.

 

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FIVE: The deposit of $58,720.00 required under the provisions of this Lease
shall be complied with by TENANT as herein after specified:

 

a) The Tenant previously deposited the amount of $58,720.00 (CR#142195 of
6-29-98) to cover the deposit required for the lease of project S-1501-0-97.

 

b) No additional deposit is required.

 

This deposit shall guarantee the compliance by TENANT of its obligations, under
this Contract, particularly, but not limited to, the payment of rent, the
compliance of the environmental clauses herein included and the return of the
Premises in proper condition at the termination of this Lease. On said
termination, if TENANT is not in default of any of the terms and conditions of
this Contract, LANDLORD will return to TENANT the sum of money, if any, held
pursuant to this provision, after LANDLORD’s Environmental Office certifies that
there are no environmental deficiencies as a result of TENANT’s manufacturing
operation on the demised Premises.

 

SIX: TENANT agrees to have on the date of commencement of the term of this Lease
a minimum capitalization of $5,100,000.00.

 

Likewise TENANT agrees to have from the same date, manufacturing machinery and
equipment with a value of at least $5,100,000.00.

 

This shall not include the cost of transportation and installation thereof, nor
its ordinary depreciation after installation; and to employ a minimum of five
hundred (500) production workers. The aforementioned levels shall, be maintained
throughout the term of this Lease or any extension thereof.

 

SEVEN: All notices, demands, approvals, consents and/or communications herein
required or permitted shall be in writing. If by mail should be certified and to
the following addresses, to: P. O. BOX 362350, SAN JUAN, PUERTO RICO 00936-2350.
To TENANT: Ocular Sciences Puerto Rico, Inc., Mr. Fernando J. Torre, 500 Road
584, Amuelas Industrial Park, Juana Diaz, Puerto Rico 00795; Phone: (787)
260-0555.

 

EIGHT: Net Lease - This Lease shall be interpreted as a net lease; it being the
exclusive responsibility of TENANT to pay for all operating expenses, utilities,
maintenance, expenses, insurance, taxes or any other costs, expenses or charges
of any nature not specifically assumed by LANDLORD hereunder.

 

NINE: Warranty as to use - LANDLORD does hereby warrant that at the time of the
commencement of the term of this Lease, the Premises may be used by TENANT for
the manufacturing purposes herein intended which are deemed consistent with the
design and construction in accordance with the corresponding plans and
specifications.

 

TEN: Alterations - TENANT shall make no alterations, additions or improvements
to the Premises without the prior consent of LANDLORD and all such alterations,
additions or improvements made by or for

 

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TENANT, shall be at TENANT’S own cost and expenses and shall, when made, be the
property of LANDLORD without additional consideration and shall remain upon and
be surrendered with the Premises as a part thereof at the expiration or earlier
termination of this Lease, subject to any right of LANDLORD to require removal
or to remove as provided for hereinafter.

 

In the event TENANT asks for LANDLORD’S consent for any alteration; LANDLORD may
at its option, require from TENANT to submit plans and specifications for said
alteration. Before commencing any such work, said plans and specifications, if
required, shall be filed with and approved by all governmental agencies having
jurisdiction thereof, and the consent of any mortgagee having any interest in or
lien upon this Lease shall be procured by TENANT and delivered to LANDLORD if
required by the term of the mortgage.

 

Before commencing any such work, TENANT shall at TENANT’S own cost and expense,
deliver to LANDLORD a General Accident Liability Policy more particularly
described in Article THIRTY (30) hereof, but said policy shall recite and refer
to such work, and in addition thereto, if the estimated cost of such work is
more than FIVE THOUSAND DOLLARS ($5,000.00), TENANT shall, at TENANT’S own cost
and expense, deliver to LANDLORD a surety bond, or a performance bond from a
company acceptable to LANDLORD, or a similar bond or other security satisfactory
to LANDLORD, in an amount equal to the estimated cost of such work, guaranteeing
the completion of such work within a reasonable time, due regard being had to
conditions, free and clear of materialmen liens, mechanics liens or any other
kind of lien, encumbrances, chattel mortgages and conditional bills of sale and
in accordance with said plans and specifications submitted to and approved by
LANDLORD. At LANDLORD’S option TENANT shall provide a blanket written guarantee
in an amount sufficient to satisfy LANDLORD as to all alterations, changes,
additions and improvements to the Premises in lieu of separate guarantee for
each such project.

 

TENANT shall pay the increased premium, if any, charged by the insurance
companies carrying insurance policies on said building, to cover the additional
risk during the course of such work.

 

ELEVEN: Power Substation - If required by TENANT’S operations, TENANT shall, at
its own cost and expense, construct and/or install a power substation and
connect it to the PUERTO RICO ELECTRICAL POWER AUTHORITY (PREPA) distribution
lines, for voltages up to 13.2 KV; and to PREPA transmission lines for voltages
of 38 KV, all in conformity to PREPA’S requirements. Such construction shall, in
no event, be undertaken by TENANT until after LANDLORD has approved the location
thereof, as well as the routing of the power line extension.

 

TWELVE: Repairs and Maintenance - TENANT shall, at its own cost and expense,
put, keep and maintain in thorough repair and good order and safe condition the
building and improvements standing upon the Premises at the commencement of the
term hereon or thereafter erected upon the premises, or forming part of the
Premises, and their full equipment and appurtenances, the sidewalk areas,
sidewalk hoists, railings, gutters, curbs

 

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and the like in front of or adjacent to the Premises, and each and every part
thereof, both inside and outside, extraordinary and ordinary, and shall repair
the whole and each and every part thereof in order to keep the same at all times
during the term hereof in through repair and good order and safe conditions,
whenever the necessity or desirability therefor may occur, and whether or not
the same shall occur, in whole or in part, by wear, tear, obsolescence or
defects, and shall use all reasonable precautions to prevent waste, damage or
injury, except as provided hereinafter.

 

LANDLORD and not TENANT, shall be responsible for and shall promptly correct any
defects in the building on the Premises which are due to faulty design, or to
errors of construction not apparent at the time the Premises were inspected by
TENANT for purposes of occupancy by TENANT; this shall not be interpreted to
relieve TENANT of any responsibility or liability herein otherwise provided,
including among others, for structural failure due to the fault or negligence of
TENANT.

 

TENANT shall also, at TENANT’S own cost and expense, maintain the landsite in
thoroughly clean condition; free from solid waste (which includes liquid and
gaseous as defined by the Resource Conservation and Recovery Act), and the
Regulation on Hazardous and Non-Hazardous Waste of the Environmental Quality
Board, as amended, rubbish, garbage and other obstructions. Specifically, TENANT
shall not use said landsite, nor permit it to be used, as a deposit or as a dump
for raw materials, waste materials, hazardous, toxic or non-toxic substances, or
substances of whichever nature. TENANT shall neither make any excavation for the
purpose of storing, putting away and/or concealing raw materials or waste
materials of any kind. Underground storage of hazardous and/or toxic substances
is specifically prohibited.

 

TENANT shall not do or cause to be done, nor permit on the Premises anything
deemed extra hazardous, nor shall it store in the Premises flammable or toxic
products of any class or kind without taking the proper precautions and
complying with applicable federal and Commonwealth laws and regulations.

 

In case TENANT needs to store in the landsite raw materials of a hazardous
and/or toxic nature or hazardous and/or toxic wastes, TENANT shall notify
LANDLORD and secure its prior authorization. LANDLORD shall be furnished with a
copy of any permit issued for such storage.

 

Although it is not intended that TENANT shall be responsible for any decrease in
value of the Premises due to the mere passing of time, or for ordinary wear and
tear of surfaces and other structural members of the building, nevertheless
TENANT shall: (i) replace, with like kind and quality, doors, windows;
electrical, sanitary and plumbing, fixtures; building equipment and/or other
facilities or fixtures in the Premises which through TENANT’S use, fault or
negligence, become too worn out to repair during the life of this Lease, (ii)
paint the property inside and outside as required.

 

In addition to the foregoing, TENANT shall indemnify and save harmless LANDLORD
from and against any and all cost, expenses, claims, losses, damages, or
penalties, including counsel fees, because of or due to TENANT’S failure to
comply with the foregoing, and TENANT shall not call upon LANDLORD for any
disbursement or outlay of money

 

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whatsoever, and hereby expressly releases and discharges LANDLORD of and from
any liability or responsibility whatsoever in connection therewith.

 

THIRTEEN: Roof Care - TENANT, without the prior consent of LANDLORD, shall not:
(i) erect or cause to be erected on the roof any bill board, aerial sign, or
structure of any kind, (ii) place any fixture, equipment or any other load over
the roof, (iii) drill any hole on the roof for whichever purpose, (iv) use the
roof for storage, nor (v) correct any leaks whatsoever, this being LANDLORD’S
sole responsibility. Furthermore, TENANT shall take all reasonable precautions
to insure that the drainage facilities of the roof are not clogged and are in
good and operable conditions at all times.

 

FOURTEEN: Floor Loads - TENANT hereby acknowledges that it has been informed by
LANDLORD that the maximum floor load of the Premises herein demised is 150
pounds per sq. ft. Therefore, TENANT hereby agrees that in the event the load of
the machinery and equipment to be installed thereat exceeds such maximum load,
it shall, at its own cost and expense, carry out any improvements to the floor
of the Premises which may be necessary to support such additional load; it being
further agreed and understood that construction and/or installation of such
improvements shall not be commenced until after LANDLORD’S approval of the plans
to be prepared therefor by TENANT and thereafter, after completion of
construction and/or installation of said facilities, they shall be deemed
covered by and subject to the applicable provisions of this Contract; it being
further specifically agreed and understood that upon termination of this Lease,
such facilities shall be removed by TENANT, at its own cost and expense, or in
the alternative, and upon request by LANDLORD, they shall remain as part of the
Premises with no right whatsoever on the part of TENANT to be reimbursed and/or
compensated therefor.

 

FIFTEEN: Fixtures - TENANT shall not affix to the ceiling, nor to its supporting
joists or columns, nor to any of its walls, any air conditioning unit, nor any
other fixture, without the prior consent of LANDLORD, which shall not be
unreasonably withheld or delayed.

 

SIXTEEN: Environmental Protection and Compliance - TENANT agrees, as a condition
hereof, that it will not discharge its solid, liquid or gaseous industrial
and/or sanitary effluent or discharges, either into the sewer system and/or into
any other place until after required authorizations therefor has been obtained
from the Puerto Rico Aqueduct and Sewer Authority, and/or the Department of
Health of Puerto Rico and/or Environmental Quality Board, and/or any other
governmental agency having jurisdiction thereof and TENANT further agrees and
undertakes to pre-treat any such effluent, prior to discharge thereof as
required by the said Authority, Department and/or governmental agency with
jurisdiction, and/or to install any equipment or system required, and to fully
abide by and comply with any and all requisites imposed thereby, and upon
request by LANDLORD to submit evidence of such compliance; it being agreed that
non-compliance thereof by TENANT for a period of ninety (90) days after notice,
shall be deemed an additional event of default under the provisions hereof.
Provided, that no construction and/or installation shall be made until LANDLORD
has approved of it.

 

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TENANT shall also, at TENANT’S own cost and expense, construct and maintain
Premises, processes and/or operating procedures in compliance with the terms,
conditions and commitments specified in any Environmental Impact Statement,
Environmental Assessment or any other analogous document produced by the
Commonwealth of Puerto Rico, Economic Development Administration /LANDLORD as
lead agency/ or by any other governmental agency in connection with the approval
or operation of the project.

 

TENANT shall also serve LANDLORD with a copy of any lawsuit, notice of
violation, order to show cause or any other regulatory or legal action against
TENANT in any environmental-related case or issue.

 

TENANT shall also serve LANDLORD with a copy of any permit granted to TENANT for
air emissions, water discharge, solid waste generation, storage, treatment
and/or disposal, and for any hazardous and/or toxic waste raw materials or
by-products used or generated, stored, treated and/or disposed or any other
endorsement, authorization or permit required to be obtained by TENANT.

 

TENANT shall also serve LANDLORD with a copy of any filing or notification to be
filed by TENANT with any regulatory agency or any environmentally related case
or issue, especially in any situation involving underground or surface water
pollution, hazardous and/or toxic waste spillage and ground contamination. The
notification to LANDLORD shall take place not later than the actual filing of
the pertinent documents with the regulatory agency.

 

SEVENTEEN: Improper Use - TENANT, during the term of this Lease and of any
renewal or extension thereof, agrees not to use or keep or allow the leased
Premises or any portion thereof to be used or occupied for any unlawful purpose
or in violation of this Lease or of any certificate of occupancy or certificate
of compliance covering or affecting the use of the Premises or any portion
thereof, and will not suffer any act to be done or any condition to exist on the
Premises or any portion thereof, or any article to be brought thereon, which may
be dangerous, unless safeguarded as required by law, or which may in law,
constitute a nuisance, public or private, or which may make void or voidable any
insurance then in force on the leased Premises.

 

EIGHTEEN: Government Regulations - TENANT agrees and undertakes to abide by and
comply with any and all rules, regulations and requirements of the Planning
Board of Puerto Rico, the Department of Health, the Environmental Quality Board,
the Environmental Protection Agency (EPA), where applicable and/or of any other
governmental agency, having jurisdiction thereon applicable to TENANT’S
operations at the Premises and/or products to be manufactured thereat, and if
requested by LANDLORD, TENANT shall submit evidence of such compliance; it being
agreed and understood that noncompliance with any and all such rules,
regulations and requisites shall be deemed an additional event of default under
the provisions of this Contract, unless remedied within thirty (30) days after
receipt of notice thereof.

 

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Any and all improvements to the Premises required by any governmental agency,
having jurisdiction thereon so as to carry TENANT’S operations in accordance
with the regulations and requisites thereof, shall be at TENANT’S own cost and
expense, except for any improvements that may be required as a result of any
violation by LANDLORD that may exist at the effective date hereof other than
violations caused by TENANT or TENANT’S agents.

 

TENANT further agrees and undertakes to install in the Premises, at its own
costs and expense, such devices as may be necessary to prevent any hazard, which
may be caused or created by its operations from affecting the environmental
integrity of the landsite or causing any nuisance to adjacent TENANTS and/or the
community in general; it being agreed and understood that creating or causing
any such nuisance, shall be deemed an additional event of default under the
provisions of this Contract.

 

TENANT further agrees and undertakes to abide by and comply with any and all
rules, regulations and requisites of the Fire Department relative to the use and
storage of raw materials, finished products and/or inflammable materials, and/or
of any other governmental agency, having jurisdiction thereon applicable to
TENANT’S operations at the Premises, and if requested by LANDLORD, TENANT shall
submit evidence of such compliance; it being agreed and understood that
noncompliance by TENANT with any of the aforementioned rules, regulations and
requisites shall be deemed, in each of such cases, an additional event of
default under the provisions of this Contract, unless remedied within thirty
(30) days after receipt of notice thereof.

 

If as a consequence of the foregoing dispositions, TENANT needs to make
alterations to the Premises, the same shall be done subject to the dispositions
of Article TEN hereof.

 

NINETEEN: Use Permit - TENANT agrees to abide by and comply with any and all
conditions and requisites included in the Use Permit which may be issued by the
Puerto Rico Permits and Regulations Administration (ARPE), and if requested by
LANDLORD, shall submit evidence of such compliance; it being agreed and
understood that noncompliance by TENANT with any and all such conditions and
requisites and/or the cancellation of the said Use Permit shall, in each of such
cases, be deemed an additional event of default under the provisions of this
Contract.

 

TWENTY: Inspection - TENANT shall permit LANDLORD or LANDLORD’S agents to enter
the Premises at all reasonable time for the purpose of inspecting the same, or
of making repairs that TENANT has neglected or refused to make as required by
the terms, covenants and conditions of this Lease, and also for the purpose of
showing the Premises to persons wishing to purchase the same, and during the
year next preceding the expiration of this Lease, shall permit inspection
thereof by or on behalf of prospective TENANTS. If, at a reasonable time,
admission to the Premises for the purposes aforesaid cannot be obtained, or if
at any time an entry shall be deemed necessary for the inspection or protection
of the property, or for making any repairs, whether for the benefit of TENANT or
LANDLORD, LANDLORD’S agents or representatives may enter the Premises by force,
or otherwise, without rendering LANDLORD, or LANDLORD’S agents or representative
liable to any claim or cause of action or damage by reason thereof, and
accomplish such purpose.

 

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The provisions contained in this Article are not to be construed as an increase
of LANDLORD’S obligations under this Lease; it being expressly agreed that the
right and authority hereby reserved does not impose, nor does LANDLORD assume,
by reason thereof, any responsibility or liability whatsoever for the repair,
care or supervision of the Premises, or any building, equipment or appurtenance
on the Premises.

 

TWENTY ONE: LANDLORD’S entry for repairs and alterations - LANDLORD reserves the
right to make such repairs, changes alterations, additions or improvements in or
to any portion of the building and the fixtures and equipment which are reputed
part thereof as it may deem necessary or desirable and for the purpose of making
the same, to use the street entrances, halls, stairs and elevators of the
building provided that there be no unnecessary obstruction of TENANT’S right of
entry to and peaceful enjoyment of the Premises, and TENANT shall make no claim
for rent abatement compensation or damages against LANDLORD by reason of any
inconvenience or annoyance arising therefrom.

 

TWENTY TWO: LANDLORD excused in certain instances - If, by reason of inability
to obtain and utilize labor, materials or supplies, or by reason of
circumstances directly or indirectly the result of any state of war, or of
emergency duly proclaimed by the corresponding governmental authority, or by
reason of any laws, rules orders, regulations or requirements of any
governmental authority now or hereafter in force or by reason of strikes or
riots, or by reason of accidents, in damage to or the making of repairs,
replacements or improvements to the building or any of the equipment thereof, or
by reason of any other cause reasonably beyond the control of LANDLORD, LANDLORD
shall be unable to perform or shall be delayed in the performance of any
covenant to supply any service, such non-performance or delay in performance
shall not be ground to any claim against LANDLORD for damages or constitute a
total or partial eviction, constructive or otherwise. It is agreed and
understood that the time for completion of any such construction, shall be
extended for a period of time equal to the number of days of any such delay.

 

TWENTY THREE: Quiet Enjoyment - TENANT on paying the full rent and keeping and
performing the conditions and covenants herein contained, shall and may
peaceably and quietly enjoy the Premises for the term aforesaid, subject,
however, to the terms of this Lease and to the mortgages hereinafter mentioned.

 

TWENTY FOUR: Leasehold Improvements - If leasehold improvements made by or for
the benefit of TENANT in the Premises at his request or other personal property
to TENANT are assessable or taxable and a tax liability is imposed to TENANT or
LANDLORD, it is understood that it shall be the sole responsibility of TENANT to
pay such taxes and in no event shall such taxes be the liability of or be
transferable to LANDLORD. In the event that by operation of law, such taxes
became a liability of LANDLORD, TENANT shall pay such taxes as they become due
and payable and shall promptly reimburse LANDLORD for any payments or expenses
incurred or disbursed by LANDLORD by

 

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reasons of any such assessment. Said amount shall be due and payable, as
additional rent, with the next installment of rent. In the event that TENANT
fails to make this payment when due, it shall be subject to the dispositions of
Article THIRTY SEVEN hereof.

 

TWENTY FIVE: Stoppage of Operations - It is understood by the parties hereto
that this Lease is made by LANDLORD in furtherance of the industrialization
plans of the Commonwealth of Puerto Rico, and it is accordingly understood that
TENANT will use all reasonable efforts while this Lease is in effect to maintain
a manufacturing operation upon the Premises, but nothing contained in this
paragraph shall be deemed to require TENANT to maintain such an operation
otherwise than in accordance with sound principles of business management, or
(without limiting the generality of the foregoing) to prevent TENANT from
curtailing such operation or from shutting it down, whenever and as often as
TENANT may, in the exercise of sound business judgment, deem such action
advisable. However, TENANT shall give to LANDLORD notice of any necessary or
convenient curtailment and/or shut-down, at least seven (7) days prior to the
date fixed therefor except in cases of an emergency shut-down, in which case
such notice shall be given at the earliest possible time. No curtailment of
operations or shut-down in accordance with the provisions of this paragraph
shall constitute a default under the provisions of this Contract which will
enable LANDLORD to terminate it, unless such plants shall have been shut-down
for a period of six (6) consecutive months. A shut-down on account of
unforeseeable event or events which although foreseeable could not be prevented,
shall not constitute a breach of this agreement. Nothing in this paragraph
contained shall relieve TENANT from the payment of rent during the period of any
shut-down or curtailment of operations.

 

TWENTY SIX: Assignment and Subletting - TENANT shall not assign, this Lease nor
let or sublet the Premises or any part thereof except to its parent company, to
a wholly owned subsidiary, to an affiliate of TENANT, wholly owned by TENANT’S
Parent Company whether directly or indirectly or to a corporation to be
organized by TENANT. In any of these cases, TENANT shall promptly notify
LANDLORD of said assignment or subletting, it being agreed and understood that
no such assignment or subletting shall: (i) reduce or, in any way, affect the
obligations of TENANT under this Lease, nor (ii) release TENANT from liability
under this Lease.

 

TWENTY SEVEN: Successors in Interest - This Lease Contract and every provision
thereof, shall bind and inure to the benefit of the legal representatives,
successors and assigns of the parties. However, the term “LANDLORD”, as used in
this Contract, so far as any covenants or obligations on the part of LANDLORD
under this Lease are concerned, shall be limited to mean and include only the
owner or lessor, at the time in question, of the Premises, so that in the event
hereafter of a transfer of the title to the Premises, whether any such transfer
be voluntary or by operation of law or otherwise, the person, natural or
juridical, by whom any such transfer is made, shall be and hereby is entirely
freed and relieved of all personal liability as respects the performance of the
covenants and obligations of LANDLORD under this Lease from and after the date
of such transfer.

 

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TWENTY EIGHT: No Representation by LANDLORD - LANDLORD, LANDLORD’S agents,
executives or employees, have made no representations or promises with respect
to the Premises except as herein expressly set forth and no rights, easements or
licenses are acquired by TENANT by implication or otherwise except as expressly
set forth in the provisions of this Contract. The taking possession of the
Premises by TENANT, shall be conclusive evidence, as against TENANT, that TENANT
accepts same “AS IS” and that said Premises, particularly the building which
forms a part of the same, were in good and satisfactory conditions at the time
such possession was so taken.

 

TWENTY NINE: Damages - LANDLORD shall not be responsible for any latent defect
or change of conditions in the Premises resulting in damage to the same, or the
property or person therein, except to the extent of LANDLORD’S gross negligence,
and provided such claims or loss is not covered by insurances herein required
from TENANT. TENANT shall promptly notify LANDLORD of any damage to or defects
in the Premises, particularly in any part of the building’s sanitary,
electrical, air conditioning or other systems located in/or passing through the
Premises, and the damage or defective conditions, subject to the provisions of
Article TWENTY ONE (21) hereof, shall be remedied by LANDLORD with reasonable
diligence.

 

THIRTY: General Liability Insurance - TENANT shall indemnify, save harmless and
defend LANDLORD and agents, servants and employees of LANDLORD against and from
any and all liability, fines, suits, claims, demands, expenses, including
attorneys’ fees, and actions of any kind or nature arising by reason of injury
to person or property including the loss of use resulting thereof or, violation
of law occurring in the Premises occasioned in whole or in part by any negligent
act or omission on the part of TENANT or an employee (whether or not acting
within the scope of his employment), servant, agent, licensee, visitor, assignor
or undertenant of TENANT, or by any neglectful use or occupancy of the Premises
or any breach, violation or non-performance of any covenant in this Lease on the
part of TENANT to be observed or performed.

 

Pursuant to the foregoing, TENANT shall maintain during the term of this lease,
at its own cost and expense, a Comprehensive General Liability Policy. Said
policy shall: (i) be for a combined single limit of no less than $1,000,000.00
per accident, (ii) hold LANDLORD harmless against any and all liability as
hereinbefore stated, and (iii) the care, custody & control exclusion shall be
deleted from this coverage. LANDLORD may require additional reasonable limits of
public liability insurance and coverages, when changing circumstances so
require.

 

THIRTY ONE: Property Insurance - TENANT recognizes that the rent provided for
herein does not include any element to indemnify, repair, replace or make whole
TENANT, his employees, servants, agents, licensees, visitors, assignees, or
undertenant for any loss or damage to any property or injury to any person in
the Premises.

 

Accordingly, during the term of this Lease, TENANT shall keep the building
standing upon the Premises at the commencement of the term hereof or thereafter
erected upon the

 

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Premises, including all equipment appurtenant to the Premises and all
alterations, changes, additions and improvements, insured for the benefit of
LANDLORD and TENANT, as their respective interest may appear, in an amount at
least equal to the percentages stated below (as LANDLORD may from time to time
determine). The basis of the Property Insurance shall be Replacement Cost and
the coverage an “All Risks” Property Insurance Policy. Coverages included in the
All Risks Form:

 

  1. Fire - “Building & Contents Form”

 

  (a) Building - 100% of insurable value exclusive of foundations

 

  (b) Contents - All equipment appurtenant to the Premises (State value of
Policy)

 

  2. Additional Coverages under the Fire Policy

 

  (a) Extended Coverage Endorsement - 100% of insurable value exclusive of
foundations

 

  (b) Earthquake - 100% of insurable value including foundations

 

  (c) Vandalism and Malicious Mischief Endorsement

 

  (d) Improvements and Betterments - For all alterations, changes, additions and
improvements

 

  3. Landsite and Flood whenever applicable and/or necessary

 

  4. Boiler and Machinery (if any) - 100% of insurable value

 

  5. Pollution Liability Policy - if necessary.

 

THIRTY TWO: Multifactory Building Specific Dispositions - In the event that the
Premises constitute a section or sections of an industrial building and landsite
in which other operations are conducted by other TENANTS: (i) the insurance
coverage herein required, shall be acquired by LANDLORD for the whole of the
industrial building and TENANT shall reimburse LANDLORD, for its proportionate
share in the total cost of said policies, (ii) if, because of anything done,
caused or permitted to be done, permitted or omitted by TENANT, the premium rate
for any kind of insurance affecting the Premises shall be increased, TENANT
shall pay to LANDLORD the additional amount which LANDLORD may be thereby
obligated to pay for such insurance, and if LANDLORD shall demand that TENANT
remedy the condition which cause the increase in the insurance premiums rate,
TENANT will remedy such conditions within five (5) days after such demand, and
(iii) the insurance policies required in the preceding Articles THIRTY (30) &
THIRTY ONE (31) shall be endorsed to include a waiver of subrogation against
TENANT. All amounts to be reimbursed by TENANT under this Article, shall be due
and payable, as additional rent, with the next installment of rent. In the event
that TENANT fails to make this payment, when due, it shall be subject to the
dispositions of Article THIRTY SEVEN (37) hereof.

 

THIRTY THREE: Additional Dispositions about Insurance - All the Insurance
policies herein required from TENANT, shall be taken in form and substance
acceptable to LANDLORD with insurance companies duly authorized to do business
in Puerto Rico,

 

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having a “A” and a higher financial rating according to Best’s Insurance Report;
and shall include LANDLORD as an additional insured. TENANT shall instruct the
corresponding insurer to deliver such policies or certified copies of
Certificates of Insurance, in lieu thereof, directly to LANDLORD. LANDLORD
reserves the right not to deliver possession of the Premises to TENANT, unless,
and until two (2) days after such original policies, or certified copies or
certificates have been deposited with LANDLORD.

 

Furthermore, said policies, shall: (i) provide that they may not be cancelled by
the insurer for nonpayment of premium or otherwise, until at least thirty (30)
days after service of notice by registered or certified mail of the proposed
cancellation upon LANDLORD, and (ii) be promptly renewed by TENANT upon
expiration and TENANT shall, within thirty (30) days after such renewal, deliver
to LANDLORD adequate evidence of the payment of premiums thereon. If such
premiums or any of them shall not be so paid, LANDLORD may procure the same in
the manner set forth for governmental agencies, and TENANT shall reimburse
LANDLORD any amount so paid, this reimbursement being due and payable with the
next installment of rent. In the event that TENANT fails to make this payment
when due, it shall be subject to the dispositions of Article THIRTY SEVEN (37)
hereof. It is expressly agreed and understood, that payment by LANDLORD of any
such premiums shall not be deemed to waive or release the default in the payment
thereof by TENANT nor the right of LANDLORD to take such action as may be
available hereunder as in the case of default in the payment of rent.

 

Upon the commencement of the term hereof, TENANT shall pay to LANDLORD the
apportioned unearned premiums on all such policies of insurance then carried by
LANDLORD in respect of the Premises in the event TENANT continues with the
insurance policies placed by LANDLORD.

 

TENANT shall not violate nor permit to be violated any of the conditions or
provisions of any of said policies, and TENANT shall so perform and satisfy the
requirements of the companies writing such policies that at all times companies
of good standing and acceptable to LANDLORD shall be willing to write and
continue such insurance.

 

TENANT shall cooperate with LANDLORD in connection with the collection of any
insurance monies that may be due in the event of loss and shall execute and
deliver to LANDLORD such proofs of loss and other instruments that may be
required for the purpose of facilitating the recovery of any such insurance
monies, and in the event that TENANT shall fail or neglect so to cooperate or to
execute, acknowledge and deliver any such instrument, LANDLORD, in addition to
any other remedies, may as the agent or attorney-in fact of TENANT, execute and
deliver any proof of loss or any other instruments as may seem desirable to
LANDLORD and any mortgagee for the collection of such insurance monies. This
shall not be interpreted as any waiver of the obligations of TENANT under
Articles THIRTY, THIRTY ONE, THIRTY TWO and THIRTY THREE hereof or exclusively
in favor of LANDLORD under Article THIRTY NINE hereof.

 

THIRTY FOUR: Waivers - The receipt by LANDLORD of the rent, additional rent, or
any other sum or charges payable by TENANT with or without knowledge of the
breach of

 

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any covenant of this Contract, shall not be deemed a waiver of such breach. No
act or omission of LANDLORD or its agent during the term of this Lease shall be
deemed an acceptance of a surrender of the Premises and no agreement to accept a
surrender of the Premises shall be valid unless it be made in writing and
subscribed by LANDLORD. This Contract contains all the agreements and conditions
made between the parties hereto with respect to the Premises and it cannot be
changed orally. Any additions to, or charges in this Lease must be in writing,
signed by the party to be charged.

 

Failure on the part of LANDLORD to act or complain of any action or nonaction on
the part of TENANT shall not be deemed to be a waiver of any of its respective
rights hereunder nor constitute a waiver at any subsequent time of the same
provision. The consent or approval by LANDLORD to, or of any action by the other
requiring consent or approval, shall not be deemed to waive or render
unnecessary the consent or approval by LANDLORD of any subsequent similar act.

 

THIRTY FIVE: Reinstatement - No receipt of monies by LANDLORD for TENANT after
the termination or cancellation hereof in any lawful manner shall reinstate,
continue or extend the term hereof, or affect any notice theretofore given to
TENANT, or operate as a waiver of the right of LANDLORD to enforce the payment
of rent, additional rent, or other charges then due or thereafter falling due,
or operate as a waiver of the right of LANDLORD to recover possession of the
Premises by proper suit, action, proceeding or remedy; it being agreed that,
after the service of notice to terminate or cancel this Lease, and the
expiration of the time therein specified, if the default has not been cured in
the meantime, or after the commencement of suit, action or summary proceedings
or of any other remedy, or after a final order, warrant of judgment of the
possession of the Premises, LANDLORD may demand, receive and collect any monies
then due, or thereafter becoming due, without in any manner affecting such
notice, proceeding, suit, action, order, warrant or judgment; and any and all
such monies so collected shall be deemed to be payments for the use and
occupation of the Premises, or at the election of LANDLORD, on account of
TENANT’S liability hereunder. Delivery or acceptance of the keys to the
Premises, or any similar act, by the LANDLORD, or its agents or employees,
during the term hereof, shall not be deemed to be a delivery or an acceptance of
a surrender of the Premises unless LANDLORD shall explicitly consent to it, in
the manner set forth hereinbefore.

 

THIRTY SIX: Subordination and Attornment - This Lease is and shall be subject
and subordinate to all liens, or mortgages which may now or hereafter affect the
Premises and to all renewals, modifications, consolidations, replacements and
extensions thereof and, although this subordination provision shall be deemed
for all purposes to be automatic and effective without any further instrument on
the part of TENANT, TENANT shall execute any further instrument requested by
LANDLORD to confirm such subordination.

 

TENANT further covenants and agrees that if by reason of a default upon the part
of LANDLORD of any mortgage affecting the Premises, the mortgage is terminated
or foreclosed by summary proceedings or otherwise, TENANT will attorn to the
mortgagee or

 

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the purchaser in foreclosure proceedings, as the case may be, and will recognize
such mortgage or purchaser, as the TENANT’S landlord under this Lease. TENANT
agrees to execute and deliver, at any time and from time to time, upon the
request of LANDLORD or of the mortgagee or the purchaser in foreclosure
proceedings, as the case may be, any reasonable instrument which may be
necessary or appropriate to evidence such attornment. TENANT further waives the
provision of any statute or rule of law now or hereafter in effect which may
give or purport to give TENANT any right of election to terminate this lease or
to surrender possession of the Premises demised hereby in the event any such
proceeding is brought by the holder of any such mortgage, and TENANT’S
obligations hereunder shall not be affected in any way whatsoever by any such
proceeding.

 

TENANT, covenants and agrees, upon demand of the holder of any mortgage duly
recorded or recordable in the corresponding Registry of the Property or of any
receiver duly appointed by the foreclose any such mortgage, to pay to the holder
of any such mortgage or to such receiver, as the case may be, all rent becoming
due under this Lease after such demand, provided such holder of any such
mortgage or any such receiver complies with the obligations of LANDLORD under
this Lease.

 

TENANT, upon request of LANDLORD or any holder of any mortgage or lien affecting
the Premises, shall from time to time, deliver or cause to be delivered to
LANDLORD or such lien holder or mortgagee, within ten (10) working days from
date of demand a certificate duly executed and acknowledged in form for
recording, without charges, certifying, if true, or to extent true, that this
Lease is valid and subsisting and in full force and effect and LANDLORD is not
in default under any of the terms of this Lease.

 

THIRTY SEVEN: Late Payments and Payment by LANDLORD - In the event that (i)
TENANT makes late payment, or fails to make payments to LANDLORD, in whole or in
part, of the rent, or of the additional rent, or of any of the other payments of
money required to be paid by TENANT to LANDLORD, as stipulated in this Lease,
when and as due and payable; or if (ii) LANDLORD, without assuming any
obligation to do so, after any notice or grace period provided hereunder,
performs or causes to be performed, at the cost and expense of TENANT, any of
the acts or obligations agreed to be performed by TENANT, as stipulated in this
Lease, and TENANT fails to refund LANDLORD any amounts of money paid or incurred
by LANDLORD in performing or causing the performance of such acts or
obligations, when and as due and payable, TENANT undertakes and agrees to pay
LANDLORD as additional rent, interest on such lately paid or unpaid rents,
additional rent, and/or on such other payments of money required to be paid,
and/or on any such amounts of money required to be refunded, from and after the
date when payment thereof matured or became due and payable, until full payment,
at the rate of twelve (12%) per cent per annum, or if such 12% interest, is
unlawful, then and in such event, at the highest maximum prevailing rate of
interest on commercial unsecured loans as fixed by the Board of Regulatory Rates
of Interest and Financial Charges, created under Law #1, approved October 15,
1973 (10 LPRA 998), as amended, or by any successor statute or regulation
thereof.

 

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THIRTY EIGHT: Abatement - If any substantial service or facility to be provided
by LANDLORD is unavailable for a period exceeding thirty (30) days and LANDLORD
has been notified of the same, should time unavailability of such service render
all or any portion of the Premises untenable, TENANT after the aforesaid thirty
(30) days, shall be entitled to an abatement of a portion of the rent that shall
reflect that portion of the Premises which is untenable, provided the damage to
the service or facility is not attributable to the act or neglect of TENANT or
the employees, servants, licensees, visitors, assigns or undertenants of TENANT.

 

THIRTY NINE: Fire or other Casualty - If before or during the term of this
Lease, the Premises shall be damaged by fire or other casualty, LANDLORD after
written notice thereof is given by TENANT, shall repair the same with reasonable
dispatch after notice to it of the damage, due allowances being made for any
delay due to causes beyond the LANDLORD’S reasonable control, provided, however,
that LANDLORD shall not be required to repair or replace any furniture,
furnishings or other personal property which TENANT may have placed or installed
or which it may be entitled or required to remove from the Premises. LANDLORD
shall proceed with due diligence to obtain the corresponding insurance
adjustment of the loss and TENANT shall fully cooperate with LANDLORD and assist
in the adjustment of the loss. Until such repairs are completed, and provided
such damage or other casualty is not attributable to the act or neglect of
TENANT or the employees, servants, licensees, visitors, assigns or undertenants
of TENANT, the rent required to be paid pursuant to Article FOUR hereof, shall
be abated in proportion to the part of the Premises which are untenable. If the
building, be so damaged that LANDLORD shall decide to demolish and/or to
reconstruct the building, in whole or in part, LANDLORD may terminate this Lease
by notifying TENANT within a reasonable time after such damage of LANDLORD’S
election to terminate this Lease, such termination to be effective immediately
if the term shall not have commenced or on a date to be specified in such notice
if given during the term. In the event of the giving of such notice during the
term of this Lease, the rent shall be apportioned and paid up to the time of
such fire or other casualty if the Premises are damaged, or up to the specified
date of termination if the Premises are not damaged and LANDLORD shall not be
otherwise liable to TENANT for the value of the unexpired term of this Lease.

 

FORTY: Default Provisions - If, during the term of this Lease, TENANT shall: (i)
apply for or consent in writing to, the appointment of a receiver, trustee or
liquidator of TENANT or of all or substantially all of its assets or (ii) seek
relief under the Bankruptcy Act, or admit in writing its inability to pay its
debts as they become due, or (iii) make a general assignment for the benefit of
this creditors, or (iv) file a petition case or an answer seeking relief (other
than a reorganization not involving the liabilities of TENANT) or arrangement
with creditors, or take advantage of any insolvency law, or (v) file an answer
admitting the material allegations of a case filed against it in any bankruptcy,
reorganization or insolvency proceeding or, if an order, judgment or decree
shall be entered by any court of competent jurisdiction on the application of
TENANT or creditor adjudicating TENANT a bankrupt or

 

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insolvent, or approving a petition seeking reorganization of TENANT (other than
a reorganization not involving the liabilities of TENANT) or appointment of a
receiver, trustee or liquidator of TENANT, or of all or substantially all its
assets, and such order, judgment or decree, shall continue stayed and in effect
for any period of sixty (60) consecutive days, the term of this Lease and all
right, title and interest of TENANT hereunder shall expire as fully and
completely as if that day were the date herein specifically fixed for the
expiration of the term, and TENANT will then, quit and surrender the Premises to
LANDLORD, but TENANT shall remain liable as hereinafter provided.

 

If, during the term of this Lease: (i) TENANT shall default in fulfilling any of
the covenants of this Lease (other than the covenants for the payment of rent or
additional rent), or of any other standing contract with LANDLORD or (ii) if,
during the term of this Lease TENANT shall abandon, vacate, or remove from the
Premises the major portion of the goods, wares, equipment, or furnishings
usually kept on said premises, or (iii) this Lease, without the prior consent of
LANDLORD, shall be encumbered, assigned or transferred in any manner in whole or
in part or shall, by operation of law, pass to or devolve upon any third party,
except as herein provided, or (iv) if TENANT is in violation of laws, rules and
regulations regarding minimum wages of its employees, or of any other law, rules
and regulations applicable to his operations, but which have not been
specifically mentioned in this Lease, LANDLORD may give to TENANT notice of any
such default or the happening of any event referred to above and if at the
expiration of thirty (30) days after the service of such a notice the default or
event upon which said notice was based shall continue to exist, or in the case
of a default which cannot with due diligence be cured within a period of thirty
(30) days, if TENANT fails to proceed promptly after the service of such notice
and with all due diligence to cure the same and thereafter to prosecute the
curing of such default with all due diligence (it being intended that in
connection with a default not susceptible of being cured with due diligence
within thirty (30) days that the time of TENANT within which to cure the same
shall be extended for such period as may be necessary to complete the same with
all due diligence), LANDLORD may give to TENANT a notice of expiration of the
term of this Lease as of the date of the service of such second notice, and upon
the giving of said notice of expiration the term of this Lease and all right,
title and interest of TENANT hereunder shall expire as fully and completely as
if that day were the date herein specifically fixed for the expiration of the
term, and TENANT or any party holding under it will then quit and surrender the
Premises to LANDLORD, but TENANT shall remain liable as hereinafter provided.

 

If, (i) TENANT shall default in the payment of the rent, the additional rent, or
of any other payment as required under this Lease and such default shall
continue for ten (10) working days after notice thereof by LANDLORD, or (ii) if
the default of the payment of the rent, continues for thirty (30) days from the
date any such payment became due and payable (AUTOMATIC DEFAULT TERMINATION), or
(iii) if this Lease shall terminate as in Paragraph one and two of this Article
provided, this Lease shall terminate and TENANT will then quit and surrender the
Premises to LANDLORD, but TENANT shall remain liable as hereinafter provided,
LANDLORD or LANDLORD’s agents and servants may immediately or

 

16

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at any time thereafter re-enter the Premises and remove all persons and all or
any property therefrom, whether by summary dispossess proceedings or by any
suitable action or proceeding at law, or with the license and permission of
TENANT, which shall under this Contract be deemed given upon expiration of the
strict thirty (30) days notice period of subdivision of paragraph Two of this
Article, without LANDLORD being liable to indictment, prosecution or damages
therefor and repossess and enjoy the Premises with all additions, alterations
and improvements.

 

If TENANT shall fail to take possession of the Premises within ten (10) days
after the commencement of the term of this Lease, or if TENANT shall vacate and
abandon the Premises, LANDLORD shall have the right, at LANDLORD’S option, to
terminate this Lease and the term hereof, as well as all the right, title and
interest of TENANT hereunder, by giving TENANT five (5) days notice in writing
of such intention, and upon the expiration of the time fixed in such latter
notice, if such default be not cured prior thereto, this lease and the term
hereof, as well as all the right, title and interest of TENANT hereunder, shall
wholly cease and expire in the same manner and with the same force and effect
(except as to TENANT’S liability) as if the date fixed by such latter notice
were the expiration of the term herein originally granted; and TENANT shall
immediately quit and surrender to LANDLORD the Premises and each and every part
thereof and LANDLORD may enter into or repossess the Premises, either by force,
summary proceedings or otherwise. The right granted to LANDLORD in this Article
or any other Article of this Lease to terminate this Lease, shall apply to any
extension or renewal of the term hereby granted, and the exercise of any such
right by LANDLORD during the term hereby granted, shall terminate any extension
or renewal of the term hereby granted and any right on the part of TENANT
thereto.

 

Upon the termination of this Lease by reason of any of the foregoing events, or
in the event of the termination of this Lease by summary dispossess proceedings
or under any provisions of law, now or at any time hereafter, in force by reason
of, or based upon, or arising out of a default under or breach of this Lease on
the part of TENANT, or upon LANDLORD recovering possession of the Premises in
the manner or in any of the circumstances hereinbefore mentioned, or in any
other manner or circumstances whatsoever, whether with or without legal
proceedings, by reason of, or based upon, or arising out of a default under or
breach of this Lease on the part of TENANT, LANDLORD, at its option, but without
assuming any obligation to do so in any case, may at any time, and from time to
time, relet the Premises or any part or parts thereof for the account of TENANT
or otherwise on such terms as LANDLORD may elect, including the granting of
concessions, and receive and collect the rents therefor, applying the same at a
rental not higher than the one stipulated in this Contract, first to the payment
of such reasonable expenses as LANDLORD may have incurred in recovering
possession of the Premises, including reasonable legal expenses, and for putting
the same into good order or condition or preparing or altering the same for
re-rental, and expenses, commissions and charges paid, assumed, or incurred by
LANDLORD in and about the reletting of the Premises or any portion thereof and
then to the fulfillment of the covenants of TENANT hereunder. Any such reletting
herein provided for, may be for the remainder of the term of this Lease or for a

 

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longer or shorter period or at a higher or lower rental. In any such case,
whether or not, the Premises or any part thereof be relet, TENANT shall pay to
LANDLORD the rent required to be paid by TENANT up to the time of such
termination of this Lease, and/or the full rent provided for in the agreement
for any holdover of such period after termination and up to the surrender or
recovery of possession of the Premises by LANDLORD, as the case may be, and
thereafter TENANT covenants and agrees, to pay to LANDLORD until the end of the
term of this Lease as originally demised the equivalent of any deficiency amount
of all the rent reserved herein, less the net avails of reletting, if any, as
specified hereinabove in this Article and the same shall be due and payable by
TENANT to LANDLORD as provided herein, that is to say, TENANT shall pay to
LANDLORD the amount of any deficiency then existing.

 

FORTY ONE: LANDLORD’S Remedies - In the event TENANT shall default in the
performance of any of the terms, covenants or provisions herein contained,
LANDLORD may, but without the obligation to do so, perform the same for the
account of TENANT and any amount paid or expense incurred by LANDLORD in the
performance of the same shall be repaid by TENANT on demand. In the event of a
breach or threatened breach by TENANT or any subtenant or other person holding
or claiming under TENANT of any of the covenants, conditions or provisions
hereof, LANDLORD shall have the right of injunction to restrain the same, and
the right to invoke any remedy allowed by law or in equity as if specific
remedies, indemnity or reimbursement were not herein provided for. The rights
and remedies given to LANDLORD in this Lease are distinct, separate and
cumulative, and no one of them, whether or not exercised by LANDLORD, shall be
deemed to be a waiver, or an exclusion of any of the others.

 

FORTY TWO: Notice of Default - Anything in this Lease to the contrary
notwithstanding, it is specifically agreed that there shall be no enforceable
default against LANDLORD under any provisions of this Lease, unless notice of
such default be given by TENANT to LANDLORD in which TENANT shall specify the
default or omission complained of, and LANDLORD shall have thirty (30) days
after receipt of such notice in which to remedy such default, or if said default
or omission shall be of such a nature that the same cannot be cured within said
period, then the same shall not be an enforceable default if LANDLORD shall have
commenced taking the necessary steps to cure or remedy said default within the
said thirty (30) days and diligently proceeds with the correction thereof.

 

FORTY THREE: Capitalization - For the purpose of this Contract, specifically of
Article SIX, Capitalization includes the total of owner’s equity sources
(preferred stock, common stock and surplus accounts) plus long-term debts, it
being agreed and understood that the amortization of any such debt shall in no
way diminish the amount originally determined as capitalization.

 

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FORTY FOUR: Disclosure of Information - TENANT agrees to furnish to LANDLORD
within ninety (90) days after the expiration of each fiscal year of TENANT, an
annual statement certified by an independent Certified Public Accountant showing
as of the end of each such fiscal year: (i) TENANT’S paid-in capital, (ii)
long-term debts and capitalization as required by Articles SIX and FORTY THREE
hereof, (iii) investment in machinery and its capacity to provide employment,
(iv) taxes (including Social Security taxes) paid, and (v) any other information
as required by this Lease.

 

In the event such statement is not filed with LANDLORD as herein provided,
LANDLORD may obtain such information from TENANT at TENANT’S expense, and for
such purpose TENANT shall make available to LANDLORD’S designated
representatives, its books of accounts and other necessary data and facilities,
all of which shall be provided and made available at TENANT’S principal office
in Puerto Rico.

 

FORTY FIVE: Automatic Renewal - In the event TENANT does not vacate the Premises
in the manner and under the conditions hereinbefore provided, within ninety (90)
days after the normal expiration of the term hereof, LANDLORD shall have the
option to be exercised at any time thereafter, to notify TENANT that the lease
herein has been renewed for an additional term of ten (10) years from the date
of the last normal expiration of the term hereof and, in such event, the parties
agree that this Contract shall be held to have been renewed and to continue in
full force and effect for such additional term of ten (10) years upon the mere
mailing of such notice by LANDLORD to TENANT. This provision shall in no way
prejudice, affect or deny any right which LANDLORD may otherwise have because,
or at the time, of any such termination of the term hereof, particularly
whenever LANDLORD does not exercise such option; it being agreed and understood
that such renewal shall be upon the same terms and conditions contained herein
except that the rental rate to be charged shall be the rate then currently being
charged by LANDLORD for similar building in the area, but in no event shall it
be less than the rate herein stipulated.

 

FORTY SIX: Partial Invalidity and Applicable Law - If any term or provisions of
this Lease or the application thereof to any person or circumstances shall, to
any extent, be invalid or unenforceable, the remainder of this Lease and the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Lease shall be valid and be
enforceable to the fullest extent permitted by law. This Contract is entered
into and shall be interpreted in accordance with the laws of the Commonwealth of
Puerto Rico.

 

FORTY SEVEN: Lease Termination and Holding Over - Upon the expiration or
termination of this Lease:

 

(i) TENANT shall inform LANDLORD in writing of TENANT’S activities affecting
each or any environmental area of concern during the period of TENANT’S
operation, including a description from an environmental standpoint of the
physical conditions of the premises and landsite. TENANT shall also inform to
LANDLORD in writing of any environmental

 

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regulatory violations, compliance plans, permits, closure plans, clean-up
actions or any other regulatory procedures related to the operation. In the
event that the information reveals TENANT’S noncompliance of any of the above,
or in the event that a physical inspection of the Premises and adjacent areas by
LANDLORD, or any other source of information reveal the possibility of
contamination, in that event, TENANT shall, at LANDLORD’S request submit a plan
of action with the appropriate financial provisions to execute it. LANDLORD
shall hold TENANT responsible for any and all environmental damage, or any
damage to third parties as a result of any environmental damage, or any remedial
action (including monitoring) to be performed at landsite or otherwise as a
result of TENANT’S operations after termination of Lease and until such a time
as complete remediation or fulfillment of TENANT’S obligations is effected. In
case TENANT fails to comply with the foregoing provisions, LANDLORD may elect to
effect them at TENANT’S expense and responsibility.

 

(ii) TENANT shall remove all hazardous and toxic substances belonging to TENANT
or to a third party. TENANT shall also remove all other property of TENANT and
that of any third party and failing so to do, TENANT hereby appoints LANDLORD
its agent so that LANDLORD may cause all of the said property to be removed at
the expense and risk of TENANT. TENANT covenants and agrees to give full and
timely observance and compliance to this covenant to remove all its property and
surrender the Premises broom clean. TENANT hereby agrees to pay all reasonable
necessary cost and expenses thereby incurred by LANDLORD. If, as the sole result
of the removal of TENANT’S property any portion of the Additional Premises or of
the building of which they are a part, are damaged, TENANT shall pay to LANDLORD
the reasonable cost of repairing such damages unless due to the gross negligence
of LANDLORD, its agents, servants, employees and contractors. TENANT’S
obligation to observe or perform this covenant shall survive the expiration or
other termination of the term of this Lease.

 

FORTY EIGHT: Change of Address - TENANT shall promptly notify LANDLORD of any
change in the addresses other than those required from it in Article SEVEN
hereof.

 

FORTY NINE: TENANT will indemnify LANDLORD for any and all liability, loss,
damages, expenses, penalties and/or fines, and any additional expenses including
any attorney fees LANDLORD may suffer as a result of claims, lawsuits, demands,
administrative orders, costs, resolutions or judgements against it arising out
of negligence and/or failure of TENANT or those acting under TENANT to conform
to the statutes, ordinances, or other regulations or requirements of any
governmental authority, be it Federal, of the Commonwealth of Puerto Rico, its
instrumentalities or public corporations, in connection with the performance of
this Lease.

 

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FIFTY: Inasmuch as TENANT is presently in possession of the demised premises
pursuant to a certain Lease Contract executed between the parties hereto, TENANT
hereby accepts the premises in their present condition.

 

FIFTY ONE: Anything contained in this Contract to the contrary notwithstanding,
in the event that TENANT requires additional volume of water and/or pressure as
is now available within the area wherein the demised premises are located, it
shall be at its own cost and expense the construction and/or installation of
such improvements and/or facilities as may be necessary to or convenient and/or
required by the Puerto Rico Aqueduct and Sewer Authority to increase such volume
and/or pressure; it being agreed and understood, however, that such construction
and/or installation shall in no event be commenced until after LANDLORD’S
written approval has first been requested and obtained.

 

FIFTY TWO: It is hereby agreed and understood that TENANT, at its own cost and
expense, shall install an air conditioning system in the demised premises, in
the event TENANT needs to use and/or install it in his process. Such air
conditioning system shall be considered as a special facility from LANDLORD, and
it shall be installed in coordination with LANDLORD’S Engineering and
Construction Division and Conservation Division.

 

FIFTY THREE: TENANT hereby acknowledges that in the industrial park there are
other industries; therefore TENANT hereby specifically agrees and undertakes to
take such steps and install such equipment as may be necessary to prevent that
any hazard and/or noise which may be created by its operations may in any way or
manner unduly affect the operations of the other industries and therefore TENANT
hereby releases and saves LANDLORD harmless from any and all claims or demands
arising therefrom or in connection therewith.

 

FIFTY FOUR: TENANT shall, at its own cost and expense, install a fire protection
system and shall obtain the endorsement and approval from said Fire Department
for such installation. TENANT must also provide security measures to prevent or
reduce fire hazard due to the storage of inflammable materials and products.

 

FIFTY FIVE: TENANT shall procure and obtain a permit for the operation of a
solid waste emission source from the Environmental Quality Board and
authorization for the Office of Solid Waste and/or from the Municipality of
JUANA DIAZ for the final disposition of wastes.

 

FIFTY SIX: TENANT, at its own cost and expense, shall implement the necessary
measures and install the control equipment to maintain the atmospheric air
quality levels in compliance with the environmental laws and regulations of the
Environmental Quality Board and the Environmental Protection Agency, as
promulgated by any succeeding law or regulations.

 

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FIFTY SEVEN: It is hereby agreed and understood that TENANT shall take the
necessary steps to comply with the regulations and law requirements of the
PUERTO RICO OCCUPATIONAL SAFETY AND HEALTH OFFICE (PROSHO).

 

FIFTY EIGHT: TENANT shall, at its own cost and expense, construct and/or install
all necessary equipment required to connect the building’s electrical system to
the Puerto Rico Electrical Power Authority’s electrical distribution lines, such
connection to be made in compliance with the requirement of PREPA.

 

FIFTY NINE: TENANT must comply with the rules and regulations of pre-treatment
established by the Puerto Rico Aqueduct and Sewer Authority, the Environmental
Quality Board and the Environmental Protection Agency related to the effluent
industrial discharge in the sanitary sewer system and their final disposition.
Also, any improvement necessary to provide pre-treatment facilities for the
above mentioned effluents shall be at TENANT’S own cost and expense and in
coordination and with the approval of LANDLORD’s Engineering and Construction
Division.

 

SIXTY: TENANT certifies and guarantees that at the date of subscribing this
Contract it has submitted the Corporate Tax Returns Forms during the last five
(5) years and does not have any tax debt pending with the Commonwealth of Puerto
Rico, or is complying with the terms of a payment plan duly approved.

 

TENANT also certifies and guarantees that at the date of execution of this
contract it has paid unemployment insurance compensation, temporary disability
insurance, and the driver’s social security (as applicable); or is complying
with a payment plan duly approved.

 

TENANT acknowledges that this is an essential condition of the Contract and if
the above certification is incorrect in any of its parts, LANDLORD may cancel
this contract.

 

SIXTY ONE: LANDLORD reserves the right to audit the leased premises from time to
time during the term of this contract, as LANDLORD may deem necessary, in order
to assess all aspects of the environmental condition of said premises and
TENANT’s compliance with all environmental legislation and regulations, under
Commonwealth and federal law; TENANT hereby agrees to provide access to all
areas and structures of the premises for these purposes, upon LANDLORD’s
request, and to also provide access to all books, records, documents and
instruments which LANDLORD may deem necessary in order to fully audit the
premises as herein stated.

 

SIXTY TWO: This Contract is subject to the endorsement of the Puerto Rico
Aqueduct and Sewer Authority (PRASA). This endorsement was previously requested
by LANDLORD and is under evaluation by PRASA.

 

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SIXTY THREE: TENANT shall furnish to LANDLORD, in addition to any other
information, documents or instruments that may be required in this contract:

 

  a) Prompt written notice of the occurrence of any event that by law or
regulation would require any oral, telephonic or written notice or communication
to the US Environmental Protection Agency and/or to the Puerto Rico
Environmental Quality Board, or any successor agency, and copies of all orders,
notices or other communications and reports received, made or given in
connection with any such event, and any enforcement action taken against TENANT
or against any property owned, occupied or used by TENANT;

 

  b) Quarterly certifications subscribed by an authorized representative
designated by TENANT, as to the environmental condition of the leased premises,
containing the information required by LANDLORD, which is specified in the form
included as Schedule “B” of this contract, or any subsequent modification
thereto;

 

  c) Any other information and documents relating to TENANT’s compliance with
environmental legislation and regulations under federal and commonwealth laws.

 

SIXTY FOUR: TENANT hereby guarantees to LANDLORD that, neither he, or any of its
stockholders, in case of a corporation, owes any money to LANDLORD under its
corporate name or any other corporate name and/or person.

 

SIXTY FIVE: TENANT shall not transfer, lease, burden or dispose of in any way of
the equipment used on its operations without the previous written notice of
LANDLORD.

 

SIXTY SIX: TENANT shall not sell, lease or transfer in any way its operations to
any other tenant without the previous written consent of LANDLORD.

 

SIXTY SEVEN: TENANT must strictly comply with the rules established in “OSHA
Standards for General Industry” regulations, in specific, sections 1910.104,
1910.106 and 1910.110 and with any other local applicable regulation in relation
to the localization, accessibility, spillage and escapes, elevations, dams,
distances between tanks, design, construction, security equipment, operation and
maintenance of the propane and oxygen tanks to be installed. As a desirable
security measure a minimum distance of 25 feet between the exterior diameter of
the tanks and the closest industrial building is suggested when and if the
physical conditions of the lot so permits. Under no circumstances will distances
smaller than those established in the hereinabove mentioned regulations be
permitted.

 

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SIXTY EIGHT: TENANT agrees to submit to LANDLORD within thirty (30) days from
the date of execution of this Contract: (a) evidence of its registration in the
Department of State of the Commonwealth of Puerto Rico and the name and address
of its resident agent; and (b) a certificate of a resolution of its Board of
Directors either authorizing or ratifying the execution of this Contract.

 

IN WITNESS WHEREOF, LANDLORD and TENANT have respectively signed upon proper
authority this Lease, this 6 day of November 2003.

 

PUERTO RICO INDUSTRIAL DEVELOPMENT COMPANY

SSP: #66-0292871

BY:   LOGO [g28701img1.jpg]

OCULAR SCIENCES PUERTO RICO, INC.

SSP: #66-0610667

BY:   LOGO [g28701img2.jpg]

 

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SCHEDULE “A”

 

DESCRIPTION OF LANDSITE AND BUILDING

LOCATED AT JUANA DIAZ, PUERTO RICO

PROJECT NO. S-1501-0-97

 

This is a pitched roof type building consisting of reinforced concrete
foundations, structural steel columns and girders supporting 40 feet long steel
joists, which in turn support gauge #22 standard galvanized steel deck covered
by 1.3”rigid board insulation and three (3) plies built-up roofing. Twenty (20)
roof ventilators are provided.

 

The structure consists of a basic main floor 321.84 x 321.84, out to out
dimensions and areas, with an area of 105,304.60 sq. ft. offices and stairs
17,022.58 sq. ft. for an area of 122,327.18 sq. ft.

 

Mechanical Mezzanine area 9,800 sq.ft.,: for a total area of 132,127.18 sq.ft.

 

The floor consists of a 5” thick reinforced concrete slab with a monolithic
cement finish. Floor slab designed for a live load of 150 pounds per square
feet. Exterior walls are reinforced concrete. Interior walls are gypsum board
and concrete blocks plastered, both sides painted. Metal deck ceiling is
partially painted. The west exterior wall has Miami aluminum windows. Exterior
door are industrial metal types. The lobby’s areas (ground and mezzanine) are
about 1600 S.F.; the loading and unloading area (1,320 S.F.) is covered and with
two (2) metal rolling doors 10’-0”x 10’-0”.

 

Clearance in the manufacturing area from finished floor to lowest part of beams
is 23’-3”.

 

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