Exhibit 10.6
GROUND
LEASE
THIS GROUND LEASE (“ Lease
”) is entered into as of the 1 st day of February,
2007, by and between AEROSPACE/DEFENSE, INC ., a South
Carolina corporation (“ Landlord ”), and
FORCE PROTECTION INDUSTRIES, INC ., a Nevada corporation and
FORCE PROTECTION, INC. , a Nevada corporation (collectively,
the “ Tenant ”).
Upon the terms and subject to the conditions
hereinafter set forth, the Landlord leases to the Tenant and the
Tenant leases from Landlord, the property hereinafter
described:
1.
THE PREMISES /THE BUILDING.
A.
The real property hereby leased to the Tenant contains
approximately 5.8 acres, and is part of an industrial development
owned by the Landlord and located in Ladson, Charleston County,
South Carolina (“ Project ”). The term
“ Premises ” or “ Leased Area
” means and is comprised of the following: (i) the
approximate 5.8 acres parcel outlined and marked “
Premises ” on Exhibit A , (the “
Parcel ”) (ii) the building and improvements to
be constructed by the Tenant on the Parcel (as referenced in
subsection C below) and (iii) subject to Paragraph 5B
(viii) hereof, the non-exclusive right to use in common with
the Landlord and other lessees and occupants of the Project, the
“ Common Areas ” (hereinafter defined).
B.
Tenant represents that Tenant has examined the condition of the
Parcel and has found it satisfactory for all purposes hereof and
Tenant accepts the Parcel in its present condition, “AS
IS.” The Tenant acknowledges that it has been given the
opportunity to inspect and has, in fact, inspected the Parcel, and
is accepting the Parcel in “AS IS” condition with all
faults. Landlord hereby disclaims any and all warranties as
to the Parcel, including, but not limited to, any warranty of
merchantability or fitness for a particular purpose.
Notwithstanding the foregoing, Landlord shall be responsible
for any and all obligations under this Lease, including but not
limited to Section 21 .
C.
The Tenant agrees to construct upon the Parcel a first-class
building (the “ Building ”) in a good
workmanlike manner, using first-grade materials, and in full
compliance with all the laws, rules, regulations and ordinances of
any governmental agency having jurisdiction of the Premises, the
Building and the construction of the Building. The new
Building to be constructed by the Tenant on the Parcel is briefly
described as follows:
Approximately 80,000 square feet of warehouse
2,500 square feet of offices and 8,000 square feet of a carpenter
shop as delineated and shown on Exhibits C and C-1 .
The Tenant agrees to commence construction of the Building together
with all improvements connected and associated therewith
(hereinafter collectively the “ Building ” or
“ Building No. 6 ”) within thirty (30) days
of the Commencement Date of this Lease and agrees that the Building
will be substantially completed within one hundred twenty (120)
days of the Commencement Date - - all without unreasonably
interfering with the other occupants and tenants of the
Project. In order to avoid having the Building interfere with
the future use of the railroad
tracks surrounding a portion of the Premises,
the Tenant agrees not to construct the Building closer than 25 feet
to the existing rail lines (subject to the right of the Tenant to
remove a portion of the railroad track crossing the Premises as
referenced in Section 22D of this Lease). Also, for the
safety of all tenants and users and invitees of the Project, the
Tenant agrees not to construct the Building within 50 feet of the
interior road (bordering the western side of the Parcel) so any
vehicle parking between the building and such road will not block
or interfere with the view of sight of those driving along the road
or those pedestrians walking to and from the Building. For
purposes of Section 10, the Building shall be considered an
“Alternation” as that term is defined in
Section 10.
Within thirty (30) days of the date hereof, the
Tenant shall deliver to the Landlord final plans and specifications
of the Building to be constructed on the Premises. The
Landlord shall have five (5) days after receipt to approve or
disapprove the plans and specifications. This Lease shall be
subject to and conditioned upon the Tenant’s approval of the
final plans and specifications. If the Landlord does not
approve the final plans and specifications for any reason within
the five-day period, this Lease shall be null and void.
Assuming approval of the final plans and
specifications for the construction of the Building, the Tenant
agrees that no substantial modification shall be made in the final
plans and specifications without the Landlord’s prior written
consent.
2.
TERM
A.
The term of this Lease shall commence as of February 1, 2007
and expire on July 14, 2008 (“ Initial Term
”). The Initial Term and any extension thereof are
hereinafter referred to collectively as the “ Term
.”
B.
For purposes of this Lease, the term “ Lease Year
” shall refer to a period of twelve (12) consecutive
months. The first Lease Year shall commence on
February 1, 2007 (“ Commencement Date ”)
and end July 14, 2008. Each subsequent Lease Year shall
commence on the anniversary of the Commencement Date.
C.
The Initial Term of this Lease and any extension thereof may be
extended at the option of the Tenant for three (3) separate
and successive periods of five (5) years each (each an
“Option Period”) commencing on the day following the
expiration date of the Initial Term or the last day of the
then-current Option Period, as the case may be. Tenant may
exercise the option by notice in writing to Landlord served at
least six (6) months and not more than twelve (12) months
prior to the end of the last year of the Initial Term or the
then-current Option Period, as the case may be. It shall be a
condition of the exercise of any option to renew that Tenant shall
not be in default in the performance of any terms, covenants, or
conditions of this Lease at the time Tenant gives any such notice
to renew this Lease. All terms and conditions of this Lease
shall be applicable to the Option Periods referred to in this
Section 2C.
D.
Notwithstanding the foregoing in this Section 2, the Term of
this Lease and the term of that certain Lease between the parties
dated as of July 13, 2004 covering Building No. 2 located
within the Project (the “ Building No. 2 Lease
”) shall be coterminous; that is, the Term of this Lease must
be the same as the term of the Building No. 2 Lease. For
clarification, for the Tenant to exercise its option to renew and
extend this Lease under Section 2C above, the Tenant shall
have also exercised its option to renew fro the same 5-year
period
2
pursuant to Section 2C of the Building
No. 2 Lease, and if the Building No. 2 Lease expires or
terminates, this Lease shall also expire and terminate at the same
time. (See also, cross-default provision in Section 20
of this Lease.)
3.
BASE RENT.
A.
Beginning on the Commencement Date, and for the remainder of the
first Lease Year, the Tenant agrees to pay to the Landlord, without
previous demand therefore, and without setoff or deduction
whatsoever, the following net monthly rent (“ Base
Rent ”):
(i)
Beginning on the Commencement Date through May 30, 2007 - no
Base Rent shall be due; and
(ii)
From June 1, 2007 through the remainder of the first Lease
Year, the monthly Base Rent shall be $7,500.00 per month.
B.
Commencing with the first day of the second Lease Year,
to-wit: February 1, 2008 (“ First Adjustment
Date ”) and on the first day of each Lease Year
thereafter (“ Subsequent Adjustment Date ”)
during the Initial Term and any Option Period, the amount of the
monthly Base Rent due under this Lease shall be adjusted to an
amount equal to the product of the then-current monthly Base Rent
multiplied by a fraction having as its numerator the Consumer Price
Index (hereinafter defined) published most recently prior to
applicable Adjustment Date and as its denominator the Consumer
Price Index published most recently prior to Commencement
Date. In the event the new Base Rate cannot be determined as
of the Adjustment Date, Tenant shall continue to pay the Base Rent
due during the prior Lease Year until Landlord notifies Tenant of
the Base Rent, and, within ten (10) days after deliver of such
notice, Tenant shall reimburse Landlord for any accrued but unpaid
increase. In no event shall the monthly Base Rent, as
adjusted on any Adjustment Date, be less than three percent (3%)
over the Base Rent payable during the prior Lease year, nor
increase by more than seven percent (7%) over the monthly Base Rent
payable during the prior Lease Year.
C.
As used herein, the term “ Consumer Price Index
” shall mean the bi-monthly Consumer Price Index published by
the Bureau of Labor Statistics of the U.S. Department of Labor,
using the index titled “Consumer Price Index - - All Items -
- All Urban Consumer (CPI-U) (1982-84=100)” for the Atlanta,
Georgia Standard Metropolitan Statistical Area. If the
Consumer Price Index shall no longer be published or cannot be
adjusted, then another index generally recognized as authoritative
shall be substituted therefore by Landlord, and the term
“Consumer Price Index” shall refer to such substituted
index.
D.
All monthly Base Rent payments and any other payments dues Landlord
under this lease shall be made without any setoff or deduction
whatsoever and without prior notice or demand and shall be payable
and delivered to:
Aerospace/Defense, Inc.
4838 Jenkins
Avenue
North Charleston, SC
29405
3
or
to such other place as may be designated by notice in writing from
Landlord to Tenant. Base Rent and other payments due Landlord
by the Tenant under this Lease received more than ten
(10) days after the due date of such payment shall be
subjected to a late penalty of one (1%) percent of the amount of
such payment for each month, or portion thereof, such payment is
late. No payment by Tenant or receipt by Landlord of any
lesser sum than the monthly Base Rent stipulated in this Lease
shall be deemed to waive the right of Landlord to receive in a
timely manner the full amount due and payable to the
Landlord.
4.
UTILITIES.
A.
It is understood that utility services at the Project of which the
Premises is a part are supplied at one point of delivery through
one meter. Subject to Subsections 4A (a), (b) and
(c) hereof, Tenant shall reimburse Landlord for
Landlord’s cost of providing utility services to the premises
on the basis of the Landlord’s reasonable determination of
Tenant’s usage of same. With respect to electricity,
the amount for which Landlord will be reimbursed includes both the
consumption factor and so-called “demand” or
“standby” factor, if the latter factor is employed for
billing purposes by the company providing electricity. Tenant
will also procure, or cause to be procured, without cost to
Landlord, any and all necessary permits, licenses, or other
authorizations required for the lawful and proper installation and
maintenance upon the Premises of wires, pipes, conduits, tubes, and
other equipment and appliances for use in supplying any of the
utility services to and upon the Building and Premises.
Landlord, upon request of Tenant, and at the sole expense and
liability of Tenant, will join with Tenant in any application
required for obtaining or continuing any of the foregoing services;
provided Landlord shall not be liable for the same.
(a)
Provided Tenant only consumes water for personal and normal
maintenance and not for any manufacturing or industrial process,
Tenant’s pro rata portion of the Project’s water and
sanitary sewer bill will be an amount equal to the product of
(1) the total water or sewer bill, as the case may be, for the
entire Project, multiplied by (2) a fraction having as its
numerator the total number of employees who work in all buildings
in the Project. If the Tenant consumes water for any
manufacturing or industrial process, the Tenant’s pro-rata
portion of the Project’s water and sanitary sewer bill will
increase on the basis of the Landlord’s reasonable
determination of the Tenant’s usage of same.
(b)
Tenant’s pro rata share of the country solid waste recycling
fee paid by the Project for solid waste hauled from the Project
shall be an amount equal to the product of (1) the total solid
waste recycling fee paid by the Project for the period in question,
multiplied by (2) a fraction having as its numerator the
volume of all trash dumpsters at the Premises picked up during the
period in question and as its denominator the volume of all trash
dumpsters at all buildings in the Project picked up during the same
time period; provided, however, if the County allocates a separate
and specific amount to the Tenant’s share of the solid waste
recycling fee under this subparagraph. For purposes of this
paragraph, the volume of a trash dumpster picked during a billing
period will be determined by multiplying the capacity of the trash
dumpster in cubic yards by the number of times such trash dumpster
is picked up during the billing period, whether or not such trash
dumpster was filled to capacity at the time it was picked up.
It is acknowledged by the parties that the Tenant shall provide the
Tenant’s own trash dumpsters and shall pay for the hauling of
trash therefrom.
4
(c)
Without the express prior written consent of the Landlord (pursuant
to any written amendment to this Lease signed by both parties), the
Tenant agrees that it will not wash machinery within the
Premises.
B.
Except to the extent such utilities are in the future separately
metered and billed to the Tenant directly, Landlord shall bill
Tenant as soon as practicable the monthly charges for the utilities
associated with the Leased Area and the use of the fixtures located
therein. All monthly utility charges paid more than Thirty
(30) day after receipt of an invoice from the Landlord shall be
subject to a late penalty of five percent (5%) of the amount of
such payment.
C.
If the parties are unable to agree upon Tenant’s usage of
utilities, Tenant shall have the option either (i) to install,
at Tenant’s expense, separate meters or submeters, or
(ii) to cause Landlord to employ (not more than once each
Lease Year) a mutually acceptable engineering firm, whose fess will
be equally shared by Landlord and Tenant, to determine
Tenant’s share of utilities consumed in the Project by usage
survey. Tenant will be responsible for the maintenance of
separate meters or sub-meters. Until any such engineering
firm determines Tenant’s share of any disputed utility
charges, the Tenant agrees to reimburse all amounts invoiced by the
Landlord based on the Landlord’s estimate of Tenant’s
share of utility charges.
D.
Landlord will cause the lawns in the Project to be cut
periodically. Tenant will reimburse Landlord for the portion
of the cost of cutting and trimming all lawns in the Project
attributable to the Premises. Tenant’s pro rata portion
of the cost of cutting and trimming all lawns in the Project shall
be an amount equal to the product of the total cost of cutting and
trimming all lawns in the Project multiplied by a fraction having
as its numerator the square footage of Building No. 6 and as
its denominator the square footage of all buildings in the Project
(to-wit: 570,000 square feet); provided, however, the
Tenant’s proportionate share of such cost of cutting and
trimming during any Lease Year will not increase by more than
twenty (20%) percent over the prior Lease Year.
5.
ADDITIONAL RENT/TAXES AND FEES.
A.
If the Premises are not a separate tax parcel, Landlord shall pay,
prior to delinquency, all “Impositions” (hereinafter
defined) which are levied, imposed, or assessed upon or against the
Premises and Project. Tenant covenants to pay to Landlord, as
additional rent, on or before the later to occur of (a) thirty
(30) days after receipt of an invoice therefore or (b) thirty
(30) days before the day a fine, penalty, interest or cost may be
added thereto for the non-payment thereof, Tenant’s pro rata
share determined by multiplying all the Impositions for the Project
by a fraction having as its numerator the same footage of the
Building and as its denominator the total square footage of all
buildings in the Project (such pro rata share being 15.86% as of
the date of the anticipated completion of the Building).
(i)
If the premises is separately assessed and billed, such impositions
shall be paid prior to delinquency by the Tenant directly to the
taxing authorities. Tenant shall furnish to Landlord,
promptly after payment of any Impositions paid directly to taxing
authorities, official receipts or other satisfactory proof
evidencing payment of such Imposition.
5
(ii)
As used here, the term “ Impositions ” shall
include any form of real estate tax or assessment, general,
special, ordinary or extraordinary, and any license fee, or
commercial rental tax base don the gross rents paid hereunder,
improvement bond or bonds issued by Commencement Date of this
Lease, levy or tax imposed on the Premises by any authority having
the direct or indirect power to tax, including any city, state or
federal government, or any school, agricultural, sanitary, fire,
street, drainage or to the improvement district thereof, as against
any legal or equitable interest of Landlord’s right to rent
therefrom (provided such tax is assessed on gross rents payable
hereunder), and as against Landlord’s business of leasing the
premises (provided such tax is assessed on gross rents payable
hereunder). With respect to any assessment which under the
laws then in force may be paid in installments, there will be
included within the meaning of the term “Impositions”
for any tax fiscal year only the current annual payment.
Impositions will not include (i) any franchise, gift, estate,
inheritance, conveyance, transfer, or other tax assessed against
Landlord or Landlord’s heirs, successors or assigns, or
(ii) any income excess profit or other tax, assessment, charge
or levy on the net rent payable by Tenant under this Lease.
(iii)
Tenant shall pay prior to delinquency all taxes assessed against
and levied upon trade fixtures, furnishings, equipment, machinery,
inventory and all other personal property of Tenant contained in
the Premises or elsewhere. When possible, Tenant shall cause such
trade fixtures, furnishings, equipment and other personal property
to be assessed and billed separately from the real property of
Landlord. If any of Tenant’s personal property shall be
assessed with Landlord’s real property, Tenant shall pay
Landlord the taxes attributable to Tenant within thirty (30) days
after receipt of a written statement setting forth the taxes
applicable to Tenant’s property, together with a copy of the
taxing authority’s billing to Landlord.
(iv)
All Impositions for the partial tax fiscal years falling within the
Term will be prorated by multiplying the amount of Impositions for
the partial tax fiscal year falling within the Term by a fraction
having as its numerator the number of days in such tax fiscal year
falling within the Term and having as its denominator the number
“365”.
(v)
Tenant will have the right to contest the amount or validity of
Impositions by appropriate administrative and legal proceedings
brought either in Tenant’s name, Landlord’s name or
jointly with Landlord, as Tenant may deem appropriate, by counsel
selected and engaged by Tenant. Landlord will execute and deliver
to Tenant whatever documents may be reasonable, necessary and
proper to permit Tenant to contest Impositions or which may be
reasonably necessary to secure payment of any refund which may
result from any such proceedings. Tenant agrees to reimburse
Landlord for any expenses or additional costs assessed to, or
incurred by, Landlord in the event Tenant contests the amount or
validity of Impositions. Any refund resulting from a proceeding
brought either by Tenant or Landlord or by them jointly will be
applied first to reimburse the party or parties who brought the
proceeding for the costs incurred with the proceeding (including
any reimbursement by Tenant to Landlord described above), with the
remainder being distributed, to Tenant if the Premises is a
separate tax parcel or on a pro-rata basis (determined in the
manner described in Subsection 5A above). to each of
tenants in the Project, if the Premises is not a separate tax
parcel.
B.
Tenant shall, in addition to the monthly Base Rent and pro rata
portion of Impositions referred to above, also be responsible for
Tenant’s pro rata portion of all expenses
6
incurred by Landlord for (i) grounds
maintenance (landscaping), (ii) twenty-four hour controlled
vehicular access (through the gate adjacent Building No. 4) to
the Project with on-site personnel, and (iii) other Common
Area maintenance and utility charges such as lighting and
maintenance for internal streets and parking facilities
(collectively, “Common Area Charges”).
Tenant’s pro rata portion of Common Area Charges shall be an
amount equal to the product of the total Common Area Charges for
the Project multiplied by a fraction having as its numerator the
square footage of the Building and as its denominator the square
footage of all buildings in the Project.
(i)
Common Area Charges will not include Impositions (unless the
Premises is a separate tax parcel), cost of capital improvements or
repairs (provided such repairs cannot be attributed to Tenant),
including, without limitation, cost of constructing leasehold
improvements for any other lessee of Project, legal or brokerage
fees associated with any other lease for space in Project, cost of
advertising by Landlord, management fees, whether payable to
Landlord or third parties, so-called “administrative
charges” or other add-ons to the total of Common Area
Charges, principal or interest on debt or amortization payments on
any mortgages or deeds of trust or any other debt for borrowed
money and amortization of improvements, depreciation of
Landlord’s original investment in Project, amounts paid by
Landlord to affiliates of Landlord for services in connection with
the Common Areas, but only to the extent that any such fees are in
excess of the ordinary and reasonable fees paid in arms’
length transactions. style
(ii)
Tenant’s pro rata share of Common Area Charges (on an
annualized basis) will not increase in any one calendar year after
the first full calendar year of the Term by more than six percent
(6%) of Tenant’s pro rata share of Common Area Charges for
the previous full calendar year.
(iii)
Tenant’s accountants will have the right upon reasonable
advance notice to inspect, at reasonable times and in a reasonable
manner, such of Landlord’s books of account and records as
pertain to Common Area Charges.
(iv)
Once each calendar year, Landlord shall deliver a statement
(“ CAM Statement ”) to Tenant showing: the
amount of actual Common Area Charges for the preceding calendar
year, with a breakdown of amounts by major categories of Common
Area Charges and Tenant’s pro rata share and the detail for
determining same. Within thirty (30) days of the receipt of the CAM
Statement, Tenant shall pay Landlord Tenant’s share of any
deficiency in payments made by the Tenant during the preceding
calendar year of Tenant’s proportionate share of the Common
Area Charges; the Tenant shall be entitled to a credit in the next
invoice for monthly Base Rent becoming due and payable following
the receipt of the CAM Statement for any excess payments of Common
Area Charges made by the Tenant during the preceding calendar
year.
(v)
If the Term commences other than on January 1, or ends other
than on December 31, Tenant’s obligations to pay amounts
toward Common Area Charges for such partial calendar years will be
prorated on the basis of the portion of such calendar years
included in the Term. Such proration shall be made by multiplying
the total Common Area Charges for the partial calendar year in
question by a fraction having as its numerator the number of days
of the Term within the partial calendar year, and as its
denominator “365”.
7
(vi)
The term “Common Areas” as used in this Lease
means the roadways of the Project (or any substitute therefore) and
the common parking areas - - all as shown on Exhibit B
. Landlord hereby grants to Tenant and Tenant’s customers,
invitees and employees for the entire Term, the non-exclusive right
to use, in common with Landlord, Landlord’s invitees and
employees and with the other lessees and occupants of Building and
their respective customers, invitees and employees, the Common
Areas for their intended purposes, subject to reasonable
rules and regulations (“ Rules and
Regulations ”) to be promulgated by Landlord for the
convenience and safety of all of the lessees, occupants and users
of the Building; provided, Tenant shall be solely responsible for,
and defend, hold harmless and indemnify the Landlord and its agents
and employees from, any damage for injury caused within the Common
Areas and anywhere else within the Project by any of Tenant’s
employees and invitees. Landlord will have the right to make
reasonable modifications and additions to the Rules and
Regulations from time to time. The Tenant shall cause its employees
and invitees using the Premises to park in the common area parking
lots designated in the Building No. 2 Lease.
(vii)
During the Term, the Landlord will maintain the Common Areas in
reasonable order; provided, however, the Tenant shall cause its
employees, customers, agents and invitees to keep the Common Areas
in neat, clean, trash free and orderly condition, ordinary wear and
tear excepted. If the necessity for repairs to or cleaning of any
Common Areas shall have arisen from or shall have been caused by
the negligence or willful acts of the Tenant, its agents,
concessionaires, officers, employees, licensees, invitees or
contractors, Landlord may make or cause the same to be made, but
shall not be obligated to do so, and Tenant agrees to pay to
Landlord promptly upon Landlord’s demand, the cost of such
repairs and/or cleaning, if made. In the event Landlord
elects not to make such repairs or cleaning, Landlord may require
Tenant perform such at Tenant’ s sole cost and expense.
Notwithstanding anything contained in this Lease to the contrary,
nothing contained in this Lease shall obligate the Landlord to
provide security to or within the Common Areas or to protect the
Tenant or its employees and invitees from acts and actions of
employees and invitees of other tenants within the Project or of
other third parties occurring within or upon the Project (of which
the Premises and the Common Areas are a part).
(viii)
Landlord shall have the right, at Landlord’s sole cost and
expense, to relocate, change, move or alter the Common Areas, so
long as 24-hour ingress to and egress from the Premises is not
materially disturbed.
6.
GENERAL ASSISTANCE .
The Tenant shall have the right (i) to seek tax,
utility and other abatements and economic development incentives
covering the Premises (such as, for example, fee in lieu of real
estate and personal property taxes, job development credits, grants
for improvements by the Tenant to the Premises) (collectively,
“ Abatements and Incentives ”), and (ii) to
contest the amount or validity of Impositions covering the Premises
by appropriate administrative and legal proceedings - - both
(i) and (ii) above, brought either in Tenant’s
name, Landlord’s name or jointly with Landlord, as Tenant may
deem appropriate, by counsel selected and engaged by Tenant.
Landlord will execute and deliver to Tenant whatever documents may
be reasonably requested by the Tenant to permit the Tenant to seek
such Abatements and Incentives and to
8
contest
Impositions or which may be necessary to secure payment of any
refund which may result from any such proceedings, and Landlord
hereby agrees to cooperate as reasonably requested by the Tenant in
such endeavors by executing such documents as reasonably requested
by the Tenant. Tenant agrees to pay to or promptly
reimbu
|
