Exhibit 10.10
BUILDING #1
MANUFACTURING AREA
INDUSTRIAL
LEASE
THIS INDUSTRIAL LEASE (“ Lease
”) is entered into as of the 15 th day of January,
2006, 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 .
A.
The property hereby leased
to the Tenant is a portion of the manufacturing area in a building
“ Building No. 1 ” or “
Building ” which is a part of an industrial
development owned by the Landlord and located in Ladson, Charleston
County, South Carolina (“ Project ”). The term
“ Premises ” means and is comprised of the
following: (i) a portion of the Building outlined and marked
“Premises” on Exhibit A consisting of
approximately 26,180 square feet located at western end of Bay B of
Building No. 1 (the “ Leased Area ”),
(ii) the fixtures located therein, including the Paint Spray
Booth shown and marked on Exhibit A as “
Paint ,” the Sandblast Booth shown and marked on
Exhibit A as “ Blast ”, 100 HP
compressor and 75 HP compressor (the “ Compressors
”) and other machinery associated with the Paint Booth,
Sandblast Booth and Compressors as listed on
Exhibit A-1 , but excluding any overhead cranes located
above the Leased Area, and (iii) subject to Paragraph
5B(viii) hereof, the right to use in common with the Landlord
and other lessees and occupants of the Project, the “
Common Areas ” (hereinafter defined). (The terms Paint
Spray Booth and Sandblast Booth shall hereinafter be referenced as
the “ Booths .” The Booths, Compressors and
associated equipment listed on Exhibit A-1 may
hereinafter be referenced collectively as the “
Equipment .”) Notwithstanding the foregoing, the
Landlord reserves to itself and other occupants and users of
Building No. 1 the following: (a) the right of ingress
and egress across the Leased Area marked on Exhibit A as
“ Access Area ,” (b) access and exclusive
use of the stairs (marked “ Stairs ” on
Exhibit A leading from the Leased Area to the large
machine emplacement in Bay B (marked as “ Erection
Trench ” on Exhibit A )) and (c) access
to and nonexclusive use of the stairs leading to the mezzanine
bathrooms (marked “ Mezzanine Stairs ” on
Exhibit A ). For clarification and by way of
explanation, it is anticipated that the Access Area (a portion of
Bay B of Building No. 1) will be used by Landlord and others
to access Bays C and D to and from Bay A and to transport materials
to and from Bay A and Bays C and D. The Access Area shall not be
blocked by either party during the term of this Lease. The “
Wash Area ” marked on Exhibit A is included in
the Premises; however, while Tenant may use the Wash Area as an
area for storage, it is understood that the Tenant shall not
dispose of any liquids or any other substance into the drains
within the Wash Area and shall continuously throughout the Term (as
defined below) carefully cover these drains to prevent any
substances from falling into the drains.
B.
Tenant represents that
Tenant has examined the physical condition of the Premises and has
found them satisfactory for all purposes hereof and Tenant accepts
the Premises in their present condition, “AS
IS.”
2.
TERM – SUBJECT TO 90-DAY
RIGHT TO TERMINATE .
A.
The term of this Lease
shall commence as of January 15, 2006 (the “
Commencement Date ”) and expire on July 14, 2008
(“ Term ”); provided, that unless
notice in writing is given by one party to the other at least
ninety (90) days prior to the expiration date of July 14,
2008, the Term of this Lease shall automatically be extended on a
“month-to-month” basis until one party provides to the
other no less than ninety (90) days prior written notice of its
desire to terminate this Lease; provided, however, notwithstanding
any provision of this Lease to the contrary, it is agreed,
acknowledged and understood that the Landlord, without liability to
the Tenant, may terminate this Lease at any time during the Term of
this Lease by giving no less than ninety (90) days prior written
notice thereof to the Tenant. The initial Term and any extension
thereof as hereinabove provided shall be 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 measured from the first
day of the month next succeeding the Commencement Date. The first
Lease Year shall commence as of February 1, 2006 and end
January 31, 2007. Each subsequent Lease Year shall commence on
the anniversary of February 1.
C.
It is also understood and
acknowledged that notwithstanding any term or provision in this
Lease to the contrary, during the Term, the Landlord, Millennium
Metal Fabricators, Inc. (“ Millennium ”),
the former occupant of the Leased Area, and other tenants of the
Building may from time-to-time require the use of some or all of
the Equipment and, therefore, the Landlord reserves for itself and
for the benefit of Millennium and such other tenants and their
respective successors and assigns, the right from time-to-time to
share with the Tenant and utilize the Booths during no more than
twenty-five percent (25%) of the time, the Compressors (which
comprise an integral part of compressed air system for Building
No. 1) and other equipment listed on Exhibit A-1 .
During the period of such use of the Paint Spray Booth and/or the
Sandblast Booth and/or the Compressors, (a) the parties agree
to meet on a regular basis to coordinate among themselves in good
faith the details of such sharing arrangement including meeting to
coordinate fair, reasonable and equitable production schedules so
as to minimize inconvenience to all parties and not to unreasonably
interfere with the operations of the Tenant, and (b) the
amount of Base Rent, utilities and other costs associated with
leasing the Premises by the Tenant (as referenced in Sections 3, 4
and 5) shall be prorated based on the actual times during a
particular month the Paint Spray Booth and/or Sandblast Booth are
utilized and the actual portion of the Lease Area required during
the same monthly period by the Landlord, Millennium or other
tenants.
3.
BASE RENT .
A.
Beginning on the
Commencement Date, and for the remainder of the first Lease Year(1)
(but subject to the provisions of Section 2D above), the
Tenant agrees to pay to the
(1) For the first Lease
Year, Base Rent shall be based on an annualized rate as follows:
(a) for the Leased Area — $98,175.00 ($3.75 x 28,160 sq.
ft.); (b) for the Sandblast Booth and associated equipment
listed on Exhibit A-1 House - $35,700.00; (c) for the Paint
Spray Booth - $30,000.00; and (d) for the Compressors and
associated equipment listed on Exhibit A-1 (collectively the
“ Compressed Air System ”) -
$6,000.00.
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Landlord, without previous demand therefore,
and without setoff or deduction whatsoever, the following net
monthly rent (“ Base Rent ”):
(a)
For the Leased Area
–
(i)
Beginning on the
Commencement Date through March 31, 2006 – no Base Rent
shall be due.
(ii)
From April 1, 2006
through the remainder of the first Lease Year, the monthly Base
Rent shall be $8,181.25 per month.
(b)
For the Sandblast Booth
and associated equipment – beginning on the Commencement Date
and through the first Lease Year – the monthly Base Rent
shall be $2,975.00 per month.
(c)
For the Paint Spray Booth
– beginning on the Commencement Date and through the first
Lease Year – the monthly Base Rent shall be $2,500.00 per
month.
(d)
For the Compressed Air
System – beginning on the Commencement Date and through the
first Lease Year – the monthly Base Rent shall be $500.00 per
month.
If
a Term commences on a day other than the first day of the month,
Tenant shall pay monthly Base Rent prorated for such fractional
month on the basis of a 30-day calendar month. All monthly Base
Rent shall be due and payable on the first day of each calendar
month during the Term.
B.
Commencing with the first
day of the second Lease Year, to-wit: February 1, 2007
(“ First Adjustment Date ”) and on the first day
of each Lease Year thereafter (“ Subsequent Adjustment
Date ”) during the Term, 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
three percent (3%).
C.
All monthly Base Rent
payments and any other payments due Landlord under this Lease shall
be made without any setoff or deduction whatsoever and shall be
payable and delivered to:
Aerospace/Defense, Inc.
4383 Jenkins Avenue
North Charleston, SC 29405
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 point five percent (1.5%) 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.
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4.
UTILITIES .
A.
Commencing on the date
this Lease is fully executed by both parties, Landlord shall supply
gas, water, electricity, and sewer to the Premises for
Tenant’s operation at the Premises. 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 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. For clarification, it is
acknowledged that the other current occupants of Building
No. 1 do not use natural gas; therefore, unless another tenant
or occupant of Building No. 1 begins utilizing natural gas,
the Tenant shall be responsible for reimbursing Landlord for the
cost of all natural gas feeding into Building No. 1 as of the
Commencement Date.
(a)
Provided Tenant only
consumes water for personal use and normal maintenance and not for
any manufacturing 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 at the Premises and as its denominator the total number of
employees who work in all buildings in the Project.
(b)
Tenant’s pro rata
share of the county 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. 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.
(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 (including, in
particular, the Wash Area) or dispose any liquids or other
substances into the drains of the Wash Area.
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) days 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.
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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 fees 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 the Leased
Area in Building No. 1 (to wit: 26,180 sq. ft.) and as its
denominator the square footage of all buildings in the Project
(to-wit: 480,000 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 nonpayment thereof, Tenant’s pro rata share determined by
multiplying all the Impositions for the project by a fraction
having as its numerator the square footage of the Premises and as
its denominator the total square footage of all buildings in the
Project (such pro rata share being 5.45% as of the date of this Lease). [If
Building No. 1 and the area surrounding Building No. 1
are a separate tax parcel, the pro-rata share for the Leased Area
of any such tax bill shall be 11% - the approximate square footage
of the Leased Area to the entire square footage of Building
No. 1.]
(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.
(ii)
As used herein, 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 based
on the gross rents paid hereunder, improvement bond or bonds issued
after Commencement Date of this Lease and not associated with
improvements necessary for the initial construction of the
Premises, 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
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district thereof, as
against any legal or equitable interest of Landlord in the Premises
or in the real property of which the Premises is a part, as against
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, 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 incurred by Landlord for (i) grounds
maintenance (landscaping) and (ii) 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
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Project multiplied by a
fraction having as its numerator the square footage of the Premises
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, repainting of buildings and total repaving of the
parking areas, cost of roof repairs, cost of repairs covered by
insurance, cost of constructing leasehold improvements for any
other lessee of Project, legal or brokerage fees associated with
any 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, amounts expended in remediation of
Hazardous Substance contamination in the Common Areas, provided the
contamination cannot be attributed to Tenant or another occupant of
the Project, or the cost of compliance in the Common Areas with the
Americans with Disabilities Act, provided compliance is not related
to the use and occupancy of Tenant or another occupant of the
Project.
(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 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 will 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.
Tenant agrees to pay Tenant’s pro rata share of Common Area
Charges to Landlord within thirty (30) days after Tenant receives
the CAM Statement.
(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”.
(vi)
The term “ Common
Areas ” as used in this Lease means the most direct
pedestrian route from the door leading from the office area of
Building No. 1 which the Tenant leases from the Landlord to
the Leased Area, the Mezzanine Stairs and
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mezzanine bathrooms,
and the most direct vehicular route on the roadways of the Project
leading from Building No. 2 to the overhead doors on the
western end of the Leased Area. Landlord hereby grants to Tenant
and Tenant’s customers, invitees and employees for the entire
Term, the 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. Tenant will ensure that its employees and
invitees do not enter the manufacturing area of Building No. 1
(other than the Leased Area) except for using the Mezzanine Stairs
and mezzanine bathrooms and for the sole purpose of using the most
direct route from the door of the office area (leased by the
Tenant) to the Leased Area. 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 (especially, in particular, but without
limitation, the Common Areas within the Building). 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.
(viii)
Landlord shall have the
right, at Landlord’
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