THIS LEASE
AGREEMENT is made and entered into as of the date set forth below
between Robert V. Teague Trust and/or Assigns, hereafter
referred to as “Landlord” and DAC Technology Group
International, Inc., hereafter collectively referred to as
“Tenant”:
1. LEASED
PREMISES: In consideration of the rents, terms, provisions, and
covenants of this Lease, Landlord hereby leases, lets and demises
to Tenant the following described premises (referred to as
“leased premises” or “premises” and
containing approximately 102,175 square feet) situated at
3700 Old Shackleford Road, Little Rock, Arkansas (sometimes
referred to as “the building,” “the
project” or “the premises”). The statement of
square footage contained in this Lease is made for reference
purposes only and is not a part of this agreement. Tenant states
that it is not relying on any Landlord representations relating to
square foot measurements.
2. LEASE
COMMENCEMENT: Subject to and upon the conditions set forth below,
the term of this Lease shall commence on November 15,
2006, (the “commencement date”) and shall terminate
November 14,2010 (48) months thereafter. Upon one
hundred and twenty (120) days prior written notice. Tenant
shall have the option to renew this lease for one period of four
(4) years.
3. RENT &
RENT COMMENCEMENT: (a) Tenant agrees to pay, as an initial
base rental during the term of this Lease, the sum of Nine
Thousand Three Hundred Sixty-Six and 08/100
($9,366.08) per month, which amount shall be payable to
Landlord at the address shown below on the first day of each month
without abatement, deduction or setoff. Monthly installment shall
be due and payable on or before the first day of each calendar
month succeeding the commencement date during the demised term;
provided, that if the commencement date should be a date other than
the first day of a calendar month, the monthly rental set forth
above shall be prorated to the end of that calendar month, and all
succeeding installments of rent shall be payable on or before the
first day of each succeeding calendar month during the demised
term. Tenant shall pay, as additional rental, all other sums due
under this Lease.
(b) The
monthly rental installments provided hereinabove shall be increased
annually by five cents ($.05) per square foot according to the rent
schedule below.
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$112,393
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($1.10/SF)
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$117,501
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($1.15/SF)
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3122,610
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($1.20/SF)
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$127,719
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($1.25/SF)
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$132,828
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($1.30/SF)
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$137,936
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(S1.35/SF)
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$143,045
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(S1.40/SF)
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$148,154
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($1.45/SF)
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(c) During the final three (3) months Year 8, if an
acceptable lease renewal has not been reached, Tenant shall have a
first right of refusal to lease the premises. If Landlord receives
an acceptable offer within the 3-month time period to lease from
another party, Landlord must give prompt notice to Tenant and
Tenant shall have forty-eight (48) hours from such notice to
match the offer. Tenant’s first right to lease shall expire
ten (10) days following the end of Year 4, or ten days
following Year 8 if extended.
In addition,
Tenant shall have the right of first offer to purchase the property
throughout the term of the lease and any extensions. Should
Landlord decide to place the property on the market for sale,
Tenant shall have the first right to purchase the property for
forty-eight (48) hours after written notice from Landlord.
Tenant’s right of first offer shall expire immediately at the
end of Year 8.
(d) On the
date of execution of this Lease by Tenant, there shall be due and
payable by Tenant a security deposit (“Security
Deposit”) in an amount of Ten Thousand and NO/100 Dollars
($10,000.00) to be held for the performance by Tenant of
Tenant’s covenants and obligations under this Lease, it being
expressly understood that the deposit shall not be considered an
advance payment of rental or a measure of Landlord’s damage
in case of default by Tenant. Upon the occurrence of any event of
default by Tenant or breach by Tenant of Tenant’s covenants
under this Lease, Landlord may, from time to time, without
prejudice to any other remedy, use the security deposit to the
extent necessary to make good any arrears of rent and/or any
damage, injury, expense or liability caused to Landlord by the
event of default or breach of covenant, any remaining balance of
the security deposit to be returned by Landlord to Tenant upon
termination of this Lease. If Landlord so uses any portion of the
Security Deposit, then it will restore the Security Deposit to its
original amount within five (5) days after written demand from
Landlord. Landlord will not be required to keep the Security
Deposit separate from its own funds and Tenant will not be entitled
to interest on the Security Deposit.
(e) All of
the terms and provisions of the Lease will be effective as of the
date of Lease execution with the exception of the obligation to pay
rent. The obligation to pay rent shall commence on the date
(“Rent Commencement Date”) which is the earlier of the
following dates: (a) the date on which Tenant opens the Premises
for business with the public; or (b) no later than
January 1, 2007. Tenant shall have access to the building upon
Lease execution to begin moving and complete its improvements, but
shall immediately be responsible for all utility costs.
(f) If any
increase in the fire insurance premiums paid by Landlord for the
building in which Tenant occupies space is caused by Tenant’s
use of the leased premises, or if Tenant vacates the leased
premises and causes an increase in such premiums, then Tenant shall
pay as additional rental the amount of such increase to
Landlord.
(g) Other
remedies for nonpayment of rent notwithstanding, if the monthly
rental payment is not received by Landlord on or before the tenth
(10th) day of the month for which rent is due, or if any other
payment due Landlord by Tenant is not received by Landlord on or
before the tenth day of the month next following the month in which
Tenant was invoiced, Landlord will incur unanticipated costs, the
exact amount of which are impractical or extremely difficult to
ascertain, and a service charge of ten percent (10%) of such past
due amount shall become due and payable in addition to such amounts
owed under this Lease. Any installment of rent which is not paid on
or before the tenth (10th) day of the month for which rent is due
shall also bear interest at the highest rate permitted by law from
the due date until paid.
(h) Tenant
shall not be responsible for payment of any real estate taxes or
property insurance, except if Tenant’s (1) improvements
increase the taxes or (2) use increases insurance
premiums.
4. SIGNS:
Tenant shall have the right to erect a sign in good taste only on
the front face of the Tenant’s premises in the building,
subject to all applicable laws, deed restrictions and regulations.
The composition and location of such sign shall be: (a) in
compliance with all municipal, city, and state codes, and
(b) installed by a licensed contractor. No signs or other
objects shall be erected which are attached to the roof of the
building and no signs shall be attached to the building or canopy
at right angles suspended by guy wires, but shall be attached flush
in a safe and secure manner. All such signs erected shall advertise
Tenant’s business only and no revenue producing advertising
shall be erected on the leased premises without specific written
permission of Landlord. Tenant shall not paint any signs directly
on the walls of the building or otherwise deface, damage or
overload the building. Tenant shall have the right to place an
additional sign at the Old Shackleford entrance gate; provided,
however, that the sign shall be subject to the approval of
Landlord. No other signs (mobile or stationary) shall be displayed
on the leased premises
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without the
prior written consent of Landlord. Tenant shall remove all signs at
the termination of this Lease at Tenant’s sole risk and
expense and shall in a workmanlike manner properly repair any
damage and close any holes caused by the removal of Tenant’s
signs.
5. USAGE:
Tenant warrants and represents to Landlord that the leased premises
shall be used and occupied only for the purposes of office and
warehouse and no other purpose. Tenant shall occupy the leased
premises, conduct its business and control its agents, employees,
invitees and visitors in such a way as is lawful, reputable and
will not create any nuisance or otherwise interfere with, annoy or
disturb any other tenant in its normal business operations or
Landlord in its management of the building. Tenant shall not
commit, or suffer to be committed, any waste on the leased
premises.
6. INSURANCE:
Tenant shall not permit the leased premises to be used in any way
which would be extra hazardous on account of fire or otherwise
which would in any way increase or render void the fire insurance
on leasehold improvements or contents in the building belonging to
other tenants in the building. If at any time during the term of
this Lease the State Board of Insurance or other insurance
authority disallows any of Landlord’s sprinkler credits or
imposes an additional penalty or surcharge in Landlord’s
insurance premiums because of Tenant’s original or subsequent
placement or use of storage racks or bins, method of storage or
nature of Tenant’s inventory or any other act of Tenant,
Tenant agrees to pay as additional rental the increase (between
fire walls) in Landlord’s insurance premiums. Tenant shall,
during the entire term hereof, keep in full force and effect a
policy of public liability with respect to the leased premises, and
the business operated by Tenant and any assignees or subtenants of
Tenant in the premises in which the limits of public liability for
personal and bodily injury shall be not less than $1,000,000 single
limit and in which the property damage liability shall be not less
than $100,000. The policy shall name both Landlord and Tenant as
insureds, and shall contain a clause that the insurer will not
cancel or change the insurance without first giving the Landlord
thirty (30) days prior written notice. The insurance shall be
carried with companies reasonably satisfactory to Landlord and a
copy of the policy or a certificate of insurance shall be delivered
to Landlord. Tenant acknowledges that it is solely responsible for
maintaining insurance on its personal property, fixtures,
improvements and alterations, now or hereinafter made to the leased
premises or the building.
7. UTILITY
SERVICE: Landlord shall provide the normal utility service
connections into the leased premises. Tenant shall pay the cost of
all utility services, including, but not limited to, initial
connection charges, all charges for gas, water and electricity used
on the leased premises, and for all electric light lamps or tubes.
However, in a multi-occupancy building, Landlord may provide water
to the leased premises, in which case Tenant agrees to pay to
Landlord Tenant’s Share of the cost of such water unless
Tenant’s usage of the leased premises exceeds normal domestic
water consumption, in which event the cost shall be estimated as
appropriate for such excess consumption. Tenant shall pay all costs
caused by Tenant introducing excessive pollutants or solids other
than ordinary human waste into the sanitary sewer system, including
permits, fees and charges levied by any governmental subdivision
for any such pollutants or solids. Tenant shall be responsible for
the installation and maintenance of any dilution tanks, holding
tanks, settling tanks, sewer sampling devices, sand traps, grease
traps or similar devices as may be required by any governmental
subdivision for Tenant’s use of the sanitary sewer system. If
the leased premises are in a multi-occupancy building, Tenant shall
pay all surcharges levied due to Tenant’s use of sanitary
sewer or waste removal services insofar as such surcharges affect
Landlord or other tenants in the building. Landlord” shall
not be required to pay for any utility services, supplies or upkeep
in connection with the leased premises. Tenant’s share of
utilities shall be determined by a mutually acceptable electrical
engineer or Landlord, at its option, may elect to separate the
utilities.
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8. REPAIRS
AND MAINTENANCE: (a) Unless otherwise expressly provided
herein, Landlord shall not be required to make any improvements,
replacement or repairs of any kind or character to the leased
premises during the term of this Lease except such repairs as are
set forth in this subparagraph. Landlord shall maintain the lawn
and other landscaping, exterior painting, the roof, foundation,
parking areas, and the structural soundness of the exterior walls
(excluding all windows, window glass, plate glass and all doors) of
the building in good repair and condition. Tenant shall repair and
pay for any damage caused by the negligence or default of Tenant or
Tenant’s agents and employees. Tenant shall immediately give
written notice to Landlord of the need for repairs, which repairs
shall be made by Landlord beginning not more than fifteen
(15) days after written notice by Tenant. All requests for
repairs or maintenance that are the responsibility of Landlord
pursuant to any provision of this Lease must be made in writing to
Landlord at the address set forth below.
(b) Tenant
shall, at its own cost and expense, maintain the interior of the
leased premises in good repair and condition, including overhead
doors, dock levelers, and heating and interior fans (including all
necessary replacements). Tenant shall take good care of all the
property and its fixtures. Should Tenant neglect to keep and
maintain the leased premises, then Landlord shall have the right,
but not the obligation, to have the work done and the cost therefor
shall be charged to Tenant as additional rental which shall become
payable by Tenant with the payment of the rental next due
hereunder.
(c) Tenant
shall not allow any damage to be committed on any portion of the
leased premises, and at the termination of this Lease, by lapse of
time or otherwise, Tenant shall deliver the leased premises to
Landlord in good condition as existed at the commencement date or
completion date of this Lease, ordinary wear and tear excepted. The
cost and expense of any repairs necessary to restore the condition
of the leased premises shall be borne by Tenant, and if Landlord
undertakes to restore the leased premises it shall have a right of
reimbursement against Tenant.
(d) Landlord
shall not be liable to Tenant, except as expressly provided in this
Lease, for any damage, interruption of Tenant’s business or
inconvenience, and Tenant shall not be entitled to any abatement or
reduction of rent by reason of any repairs, alterations or
additions made by Landlord under this Lease.
9. COMPLIANCE
WITH LAWS, RULES AND REGULATIONS: Tenant, at Tenant’s
expense, shall comply with all laws, ordinances, orders, rules and
regulations of state, federal, municipal or other agencies or
bodies having jurisdiction relating to the use, condition and
occupancy of the leased premises. Tenant will comply with the rules
of the building and/or project adopted by Landlord which are set
forth on Exhibit A attached to this Lease and made a part
hereof. Landlord shall have the right at all times to change the
rules and regulations of the building or to amend them in any
reasonable manner as may be deemed advisable for the safety, care
and cleanliness, and for the preservation of good order, of the
leased premises. All changes and amendments in the rules and
regulations of the building will be sent by Landlord to Tenant in
writing and shall thereafter be carried out and observed by
Tenant.
10. LANDLORD
WORK: Landlord shall complete the work outlined in Exhibit
“B.”
11. ALTERATIONS
AND IMPROVEMENTS: Tenant shall be permitted to make alterations and
physical additions in or to the leased premises, specifically the
proposed new office area, only upon written consent of Landlord,
which shall not be unreasonably withheld. Tenant shall submit
building plans of the proposed office area and Landlord shall
permit Tenant to maintain a break area, which shall include an
electric stove. Any alterations, physical additions or improvements
to the leased premises made by Tenant shall at’ once become
the property of Landlord and shall be surrendered to Landlord upon
the termination of this Lease. Landlord, at its option, may require
Tenant to remove any physical additions and/or repair any
alterations in order to restore the leased premises to the
condition existing at the time Tenant took possession, all costs of
removal and/or alterations to be borne by Tenant. This clause shall
not apply to moveable equipment or furniture owned by Tenant which
may be removed by Tenant at the end of
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the term of
this Lease if Tenant is not then in default and if such equipment
and furniture is not then subject to any other rights, liens and
interests of Landlord. Tenant further agrees to construct any
alterations or physical additions in strict compliance with all
applicable laws, rules, regulations, codes, and ordinances now or
hereafter in effect, including without limitations, the Americans
with Disabilities Act and lead-base paint requirements.
12. CONDEMNATION:
(a) If, during the term (or any extension or renewal) of this
Lease, all or a substantial part of the leased premises are taken
for any public or quasi-public use under any governmental law,
ordinance or regulation, or by right of eminent domain or by
purchase in lieu thereof, and the taking would prevent or
materially interfere with the use of the leased premises for the
purpose for which they are then being used, this Lease shall
terminate and the rent shall be abated during the unexpired portion
of this Lease effective on the date physical possession is taken by
the condemning authority. Tenant shall have no claim to the
condemnation award, less and except any separate award made
directly to Tenant as compensation for the Tenant’s leasehold
interest.
(b) In the
event a portion of the leased premises shall be taken for any
public or quasi-public use under any governmental law, ordinance or
regulation, or by right of eminent domain or by purchase in lieu
thereof, and this Lease is not terminated as provided in
subparagraph (a) above, Landlord may, at Landlord’s sole
risk and expense, restore and reconstruct the building and other
improvements on the leased premises to the extent necessary to make
it reasonably tenantable. The rent payable under this Lease during
the unexpired portion of the term shall be adjusted to such an
extent as may be fair and reasonable under
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