Document:

Exhibit 10.9

 

FIRST AMENDMENT TO OFFICE LEASE

 

THIS FIRST AMENDMENT TO OFFICE LEASE (“Amendment”)
effective as of July 1, 2007 by and between Aerospace/Defense, Inc.,
a South Carolina corporation (hereinafter call the “Landlord”)
and Force Protection Industries, Inc.
and Force Protection, Inc., Nevada
corporations (collectively, the “Tenant”).

 

RECITALS

 

A.            By
Office Lease effective as of June 1, 2005 (the “Lease”),
the Landlord leased unto Tenant certain premises within Building No. 1
situated in an industrial project (the “Project”)
located in Ladson (Charleston County), South Carolina. By the execution of this
Amendment, the parties intend to amend the Lease according to the terms of Subsection 27K
of the Lease. Each capitalized term used and not otherwise defined or modified
herein shall have the meaning ascribed thereto in the Lease.

 

B.            The
Landlord and Tenant now wish to enter into this Amendment to amend the Lease
according to the terms, provisions and conditions hereinafter set forth.

 

NOW THEREFORE, in consideration of the mutual promises given one to the
other, the parties do hereby covenant and agree to amend and modify the Lease
as follows:

 

1.             All the recitals
set forth above in the “Recitals”
clauses are hereby made an integral part of this Agreement.

 

2.             Section 2C of
the Lease is modified to read as follows:

 

“2C. The
Initial Term of this Lease and any extension thereof may be extended at the
option of the Tenant for four (4) 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. Conditions to
exercising any option to renew this Lease shall be (i) Tenant shall not be
in default in the performance of any terms, covenants, or conditions of this
Lease, and (ii) Tenant shall have exercised its option to renew and extend
the term of that certain Industrial Lease between the parties hereto dated as
of July 13, 2004, covering premises known as Building No. 2 of the
Project (the “Building No. 2 Lease”) pursuant to Subsection 2C
therein. All terms and conditions of this Lease shall be applicable to the
Option Period referred to in this Subsection 2C. For clarification,
the Term of this Lease and the term of the Building No. 2 Lease shall be
coterminous: that is, the Term of this Lease shall be the same as the term of
the Building No. 2 Lease. For further 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 for the same 5-year
period pursuant to Section 2C of the Building No. 2 Lease, and if the
Building No. 2 Lease expires or terminates, this Lease shall also 

 

1

 

expire and terminate at the same time. (See also, cross-default
provision in Section 20 of the Lease.)”

 

3.             The Lease is
amended by adding a new Section 6A entitled “GENERAL
ASSISTANCE” immediately following Section 6 to read as follows:

 

“6A.        GENERAL ASSISTANCE.

 

The Tenant
shall have the right (i) to seek tax, utility and other abatements and
economic development incentives covering the Leased Area (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 Leased Area)
(collectively, “Abatements and Incentives”), and (ii) to
contest the amount or validity of Impositions covering the Leased Area 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 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 reimburse Landlord for any expenses
incurred by Landlord with regards to or in connection with assisting the Tenant
under this Section 6A in the event Tenant seeks Abatements and Incentives
and/or contest the amount of validity of the amount of Impositions covering the
Leased Area. Any refund of amounts previously paid by the Tenant to the
Landlord resulting from a proceeding brought by the Tenant under this Section 6A
(either in the name of Tenant or Landlord or in both names) will be applied
first to reimburse the party or parties who brought the proceedings for the
costs incurred with the proceeding (including any reimbursement for costs paid
by Tenant to Landlord described above), with the remainder being distributed to
the Tenant until the Tenant has been reimbursed in full for such amounts
previously paid by the Tenant, with the balance, if any, paid to the Landlord.”

 

4.             Section 12B(i) of
the Lease is modified to read as follows:

 

“B(i) Tenant,
at its expense, will maintain from and after the date of this Lease and
throughout the Term, comprehensive general liability insurance against claims
on account of bodily injury, death or property damage incurred upon or adjacent
any part of the Premises. Such insurance policy will have limits of not less
than Three Million and No/100 Dollars ($3,000,000) per occurrence in respect to
bodily injury or death and not less than One Million and No/100 Dollars
$1,000,000) per occurrence in respect to property damage and provide
contractual coverage of Tenant’s liability to Landlord assumed under the
indemnification provisions of this Lease. (Assuming the Tenant has exercised
its 

 

2

 

option to renew this Lease, five (5) years after the Effective
Date, the minimum coverages referenced in the previous sentence shall increase
to $6,000,000 per occurrence in respect to bodily injury or death and
$2,000,000 per occurrence in respect to property damage.) Landlord shall be
named as an additional insured  under the
insurance required under this Subsection 12B(i), and the Tenant
shall deliver to Landlord a certificate evidencing such insurance before the
Effective Date and thereafter upon reasonable request.”

 

5.             This Amendment may
be executed in several counterparts, each of which shall be deemed an original
and such counterparts shall constitute but one and the same instrument. No party
will be bound under this Amendment until all parties have duly executed this
instrument. If this Amendment or the signature page, as executed, is
transmitted by one party to the other by facsimile transmission or
electronically “pdf’ transmission, such transmission shall be deemed an
executed original of this Amendment and of such signature.

 

6.             Except as modified
by this Amendment, the Lease remains unchanged.

 

IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment under seal as of the day and year first above written.

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  AEROSPACE/DEFENSE,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ M. Jerry
  Garfinkle

  
	
   

  	
   

  
	
   

  	
  Its: 

  	
  Assistant
  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  FORCE
  PROTECTION INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Michael
  Durski

  
	
   

  	
   

  
	
   

  	
  Its: 

  	
  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FORCE PROTECTION,
  INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Raymond
  Pollard

  
	
   

  	
   

  
	
   

  	
  Its: 

  	
  COO

  

 

3Exhibit 10.10

 

BUILDING #1

MANUFACTURING AREA

 

INDUSTRIAL LEASE

 

THIS INDUSTRIAL LEASE (“Lease”) is entered into as of the 15th 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.

 

2

 

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.

 

3

 

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.

 

4

 

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 

 

5

 

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 

 

6

 

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 

 

7

 

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’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.                                       INTENTIONALLY OMITTED.

 

7.                                       USE.

 

A.            Tenant shall use the Premises for the
purpose of utilizing the Paint Booth and Blast Room and performing work
associated therewith. Outside storage, including without limitation, trucks and
other vehicles, is prohibited. Tenant shall at its own cost and expense obtain
any and all licenses and permits necessary for any such use. Tenant shall not
permit any objectionable or unpleasant odors, smoke, dust, noise or vibrations
to emanate from the Premises, nor take any other action that would constitute a
nuisance or would disturb or endanger the Landlord or any other tenants or
occupants of Building No. 1 or unreasonably interfere with their use of
Building No. 1. Without Landlord’s prior written consent, Tenant shall not
receive, 

 

8

 

store or otherwise handle any
product, material or merchandise which is explosive or highly flammable.

 

B.            Tenant shall not commit or suffer to be
committed any waste upon or about the Premises, the Common Areas, and the
Building.

 

8.                                       COMPLIANCE WITH LAWS AND GOVERNMENTAL REGULATIONS.

 

A.            Tenant shall at all times during the Term
be in full compliance with any and all federal, state and local governmental rules and
regulations, ordinances and similar provisions having the force and effect of
law (collectively, “Laws”) which are or would be applicable to
the business being conducted in the Premises. In particular, all
Equipment shall be used, maintained and operated by the Tenant in full
compliance with all laws, rules and regulations of the State of South
Carolina and the United States Federal Government and their respective
agencies. In addition and for clarification, the Tenant, at its sole cost and
expense, must obtain all necessary or required permits, authorizations, and
licenses from appropriate governmental agencies to operate the Booths and to
conduct its business within or about the Premises.

 

B.            Tenant shall be obligated to make any
alterations, repairs or improvements to the Common Areas that are necessary
because they relate primarily to the occupancy or use of Tenant or Tenant’s
business in the Premises.

 

9.                                       MAINTENANCE AND REPAIR.

 

A.            Landlord shall repair and maintain in
good order and condition the exterior and structure of Building No. 1,
including the roof, exterior walls and supporting members of the Building No. 1.
Tenant shall promptly report to the Landlord any damages to the Premises.

 

B.            Care and Maintenance of the Leased Area. Except as provided in Section 9A,
Section 13, and Section 14 hereof, Tenant shall
promptly throughout the Term at Tenants cost and expense, take good care of and
maintain the Premises in good order, operating condition and repair and in
neat, clean and safe condition. In meeting its obligations pursuant to this Section 9B,
Tenant may repair (rather than replace) any component of the Premises which
Tenant is required to maintain unless such component cannot be repaired, in
which event replacement shall be required. Tenant shall promptly, at Tenant’s
cost and expense, make all necessary replacements, restorations, renewals and
repairs to portions of the Premises Tenant is required to maintain. Repairs, restorations,
renewals and replacements shall, to the extent possible, be at least equivalent
in quality of the original work or the property replaced, as the case may be.

 

C.            Care and Maintenance of the Equipment. The Tenant, at its own cost and
expense, shall keep the Equipment in good repair, condition, and working order,
and shall furnish any and all parts and labor required for that purpose. The
Tenant shall clean and lubricate all Equipment on a periodic basis and
implement preventive maintenance thereon in a good, workmanlike manner
consistent with best industrial practices. The Tenant shall not make any
material alterations to or replacements of the Equipment without the prior
written consent of the 

 

9

 

Landlord. All Equipment,
accessories, parts, and replacements which are added to or become attached to
the Equipment shall immediately become the property of the Landlord and shall
be deemed incorporated in the Equipment and subject to the terms of this Lease
as if originally leased hereunder at no change in the rental due and payable
hereunder. The Equipment shall be used, maintained and operated by Tenant in
full compliance with required permits, authorizations and licenses and all
laws, rules and regulations of the State of South Carolina and the United
Stated Federal Government and their respective agencies. In addition to the
foregoing, the Tenant shall perform all requirements of the manufacturer of the
100 HP Compressor in order to maintain the manufacturer’s warranty thereon.
(See Exhibit A-1.)

 

10.                                 CHANGES, ALTERATIONS AND NEW CONSTRUCTION BY THE
TENANT.

 

A.            Tenant shall make no structural
alterations, changes, additions or improvements (collectively “Alterations”) in or to the Premises without Landlord’s prior written consent.
In the event of Landlord’s consent, any such Alteration(s) shall be subject to
the following:

 

(i)            Any Alteration shall be at the cost and
expense of Tenant and shall be made promptly, in a good workmanlike manner, and
in full compliance with all applicable permits, authorizations, building and
zoning laws, and any other applicable statute, rule or regulation of any
governmental agency or authority having jurisdiction there over.

 

(ii)           Any such Alteration shall at the expiration
of Term become the property of the Landlord.

 

B.            It is understood that Tenant intends to
install equipment and machinery within the Premises, which Tenant shall remove
at the termination of this Lease. Tenant shall repair any damage to the
Premises caused by the installation and/or removal of Tenant’s machinery,
fixtures and movables.

 

C.            At all times during the Term, Tenant will
not, directly or indirectly, create, incur, assume or suffer to exist any lien
on or with respect to the Premises or any portion of Project. Tenant will
promptly, at Tenant’s own expense, take such action as
may be necessary to
duly discharge, bond or eliminate any such lien in a manner satisfactory to
Landlord.

 

11.                                 INDEMNIFICATION.

 

Tenant
agrees, to the extent not expressly prohibited by law, to pay, and to protect,
defend, indemnify and save harmless Landlord from and against all liabilities,
damages, costs, expenses (including reasonable attorneys’ fees and expenses),
causes of action, suits, claims, demands or judgments (collectively, “Liabilities”)
of any nature whatsoever which may be imposed upon or incurred by or asserted
against Landlord by reason of (i) any accident, injury to or illness or
death of any person, or any damage to property occurring on the Premises during
the Term or while Tenant, Tenant’s agents, employees, invitees or contractors
or parties claiming through Tenant are in possession of or conducting any
activities on the Premises (except to the extent caused by the negligence or
willful misconduct of Landlord), (ii) any accident, injury to, illness or
death of any person, or any damage to property (excluding payments for
casualties 

 

10

 

made to Landlord under property
insurance maintained by Landlord under Section 12A, but including
deductible amounts under such insurance) arising out of the negligence or
willful misconduct of Tenant or Tenant’s agents, employees, invitees or
contractors in any portion of the Project outside the Premises during the Term,
and (iii) any failure by Tenant to perform or comply with any of the terms
of this Lease or of any contracts, agreements, restriction, or laws affecting
the Premises or any part thereof. The obligations and liabilities of the Tenant
under this Section shall survive the Term of this Lease and shall not be
limited or diminished by the minimum limits of insurance required by the Tenant
under Section 12.

 

12.                                 INSURANCE.

 

A.            Throughout the Term and at no cost to the
Tenant, the Landlord will maintain fire and casualty insurance over Building No. 1
in such amounts as it deems necessary.

 

B.            (i)            Tenant, at its expense, will maintain
from and after the date of this Lease and throughout the Term, comprehensive
general liability insurance against claims on account of bodily injury, death
or property damage incurred upon or adjacent any part of the Premises. Such
insurance policy will have limits of not less than Three Million and No/100
Dollars ($3,000,000) per occurrence in respect to bodily injury or death and
not less than One Million and No/100 Dollars $1,000,000) per
occurrence in respect to property damage and provide contractual coverage of
Tenant’s liability to Landlord assumed under the indemnification provisions of
this Lease. Landlord shall be named as an additional insured under the
insurance required under this Subsection 12B(i), and the Tenant
shall deliver to Landlord a certificate evidencing such insurance before the
Commencement Date and thereafter upon reasonable request.

 

(ii)           Tenant, at its expense, shall maintain
and provide throughout the Term insurance coverage against loss or damage by
fire or other risks provided by broad form extended coverage endorsement
covering all property and chattels belonging to or under the care, custody or
control of Tenant and located within or at the Premises and covering the Paint
Booth, Blast House and Compressors. Landlord shall not be liable for any damage
to or loss of such property and chattels, regardless of the cause of such
damage or loss.

 

C.            All insurance required by the Tenant
hereunder shall be primary and not excess with any insurance, coinsurance or
self insurance maintained by Landlord. Certificates of insurance evidencing the
insurance required hereunder shall be delivered to Landlord on or before the
Commencement Date and thereafter upon reasonable request.

 

D.            Each party hereto expressly waives any and every
claim which arises or may arise in such party’s favor against the other party
and such party’s shareholders, partners, officers, and employees during the
Term for any and all loss of or damage to any of such party’s property, located
within or upon or constituting a part of, the Premises or Project, which loss
or damage is caused by a peril required by this Lease to be covered by the
insurance of the party incurring the loss. Inasmuch as the mutual waivers in
this section will preclude the assignment of any claim by way of
subrogation (or otherwise) to an insurance company (or any other party), each
party hereby agrees to give immediately to each insurance company which has
issued to such party policies of property insurance, written notice of the
terms of the mutual waivers of 

 

11

 

subrogation and to have such
insurance policies properly endorsed, if necessary, to prevent the invalidation
of the insurance coverages by reason of such waivers.

 

E.             If, by reason of any act or omission of
Tenant, the rate of any insurance maintained by Landlord with respect to the
Common Areas or the Premises shall be increased, Tenant shall reimburse
Landlord for that portion of the premiums to be paid by Landlord due to such
act or omission as additional rent due hereunder. If, due to the manner of
Tenant’s use or occupancy of the Premises, any such insurance shall be canceled
or if cancellation thereof shall be threatened, Landlord shall give prompt
notice thereof to Tenant and, provided such manner of use shall not have been
made of the Premises by Landlord prior to the date hereof, then Tenant shall
indemnify Landlord against any liability that would have been covered by such
canceled insurance.

 

13.                                 DAMAGE AND DESTRUCTION.

 

A.            In case of any material damage to or destruction of
any portion of the Premises, Tenant shall promptly give written notice thereof
to Landlord. If any portion of the Premises shall be partially
damaged by fire or other casualty, then Landlord, except as otherwise provided
herein, shall proceed promptly and with due diligence to repair and restore the
damaged portion to substantially the same condition and quality as prior to such
damage. If any part of the Premises shall be damaged, but not such a
substantial portion thereof as to impair Tenant’s ability to conduct Tenant’s
business in Tenant’s normal course, then such portion thereof as has been
rendered untenantable by reason of such damage shall be repaired by Landlord
and until such repairs are completed, the Base Rent payable hereunder shall be
abated to the extent that such Base Rent for such portion relates to the total
space for the period from the date of such damage to the date when such portion
shall have been made tenantable. Tenant understands that Landlord will not
carry insurance of any kind on Tenant’s property, to wit: Tenants goods,
inventory, furniture or furnishings or any fixtures, equipment, or
improvements, and that Landlord shall not be obligated to repair any damage
thereto or replace the same.

 

B.            In the event the Premises is totally
destroyed or such portion thereof is damaged as will prevent Tenant from
conducting Tenant’s business in Tenant’s normal course, Landlord, at Landlord’s
sole expense, shall promptly and with due diligence repair and restore the
Premises or the damaged portion thereof to substantially the same condition and
quality as prior to such damage.

 

(i)            If in the reasonable opinion of a
licensed architect retained by Landlord, the Premises cannot be substantially
repaired or restored within one hundred (100) days from the date of damage or
destruction, the Lease and the leasehold interest herein granted may be terminated
by either party by written notice delivered to the other party within thirty
(30) days after the date of receipt of notice from Landlord’s architect setting
forth the projected repair period. Notice of termination by either party to the
other party will specify a date, not less than ten (10) days after the
date of such notice, for such termination. In the event of giving of such
notice of termination, this Lease shall expire as of the date specified in such
notice with the same effect as if such date where the date hereinbefore
specified for the expiration of the Term, and the Base Rent payable hereunder
shall be apportioned as of such date of such fire or other casualty, subject to
abatement, if any, as and to the extent provided in Section 13A
hereof.

 

12

 

(ii)           Notwithstanding the provisions of this Section 13A,
in the event the Premises is destroyed or damaged to the extent of thirty-three
percent (33%) or more of the replacement value thereof during the last two (2) years
of the Term or during the last two (2) years of any Option Period of the
Lease, then either Tenant or Landlord may elect to terminate this Lease as of
the date of such damage or destruction by giving written notice to the other
within sixty (60) days of such damage or destruction except Tenant can negate
Landlord’s termination if Tenant exercises the renewal option. If this Lease is
terminated as herein provided, then all prepaid rent and other charges paid in
advance by Tenant shall be refunded by Landlord to Tenant.

 

14.                                 CONDEMNATION.

 

A.            In the event that at any time during the Term, title
to the whole or materially all of the Premises shall be taken by the exercise
of the right of condemnation or eminent domain or by
agreement between the Landlord and those authorized to exercise such right,
this Lease shall terminate and expire on the date of such taking and the rent
provided to be paid by the Tenant shall be apportioned and paid to the date of
such taking.

 

B.            Tenant, at Tenant’s cost and expense,
shall be entitled to separately claim, in any condemnation proceeding, any
damages payable for movable trade fixtures and leasehold improvements paid for
and installed by Tenant without any contribution or reimbursement therefore by
Landlord, and for Tenant’s loss of business, and for Tenant’s relocation costs;
provided Landlords award is not reduced or otherwise adversely affected
thereby.

 

15.                                 SUBORDINATION; NONDISTURBANCE.

 

A.            Upon Landlord’s written request, Tenant
will execute and deliver to Landlord an agreement in recordable form
subordinating Tenant’s rights to the lien of any mortgage hereafter encumbering
the Premises. Tenant, however, will not be required to subordinate Tenant’s
rights hereunder to any mortgage unless and until the holder of such mortgage
executes and delivers to Tenant a written agreement providing in substance (i) that
so long as Tenant faithfully discharges Tenant’s obligations under this Lease,
Tenant’s right of possession to the Premises and other rights under this Lease
will not be affected by any default by Landlord under any instrument creating
or secured by such mortgage, and (ii) that in the event of foreclosure or
any other enforcement of such mortgage, the rights of Tenant hereunder will
expressly survive and this Lease will continue in full force and effect. If any
mortgage, trustee or ground lessor shall elect to have this Lease prior to the
lien of its mortgage, deed of trust or ground lease, and shall give written
notice thereof to Tenant, this Lease shall be deemed prior to such mortgage,
deed of trust, or ground lease, whether this Lease is dated prior or subsequent
to the date of said mortgage, deed of trust or ground lease or the date of
recording thereof.

 

B.            Landlord represents and warrants that no
lien encumbers the Premises on the date of this Lease.

 

16.                                 NONWAIVER.

 

Neither
a failure by either party to exercise any of its options hereunder, nor failure
to enforce its rights or seek its remedies upon any default, nor the acceptance
by the Landlord of 

 

13

 

any rent accruing before or
after any default, shall effect or constitute a waiver of such party’s right to
exercise such option, to enforce such right, or to seek such remedy with
respect to that default or to any prior or subsequent default.

 

17.                                 QUIET ENJOYMENT.

 

If
Tenant pays the rent Tenant is obligated hereunder to pay, and observes all
other terms, covenants and conditions hereof, Tenant may peaceably and quietly
have, hold and enjoy the Premises during the Term, subject, however, to all the
terms of this Lease.

 

18.                                 ASSIGNMENT AND SUBLETTING.

 

A.            Tenant shall not sublet the Premises, nor
any part thereof, nor assign, or otherwise dispose of this Lease or any
interest therein, or any part thereof, without Landlord’s prior written consent
in each of the foregoing cases, which consent shall not be unreasonably
withheld or delayed. Landlord’s disapproval of a proposed assignee or sublessee
will be considered reasonable if the proposed assignee or sublessee is not of a
generally comparable quality with Tenant, if the proposed use of the Premises
is not compatible with the Premises, or if the proposed assignee or sublessee
is not the same assignee or sublessee, as the case may be, of either Building No. 2
or Building No. 3, currently under lease to the Tenant.

 

B.            Notwithstanding the provisions of Section 18A
hereof, Tenant may assign or sublet the Premises, or any portion thereof,
without Landlord’s consent but with prior written notice to the Landlord, to
any corporation that controls, is controlled by or is under common control with
Tenant, or to any corporation resulting from the merger or consolidation with
Tenant, or to any person or entity that acquires all the assets of Tenant as a going concern of the business
that is being conducted on the Premises. Tenant and any guarantor of the
obligations of Tenant under this Lease shall remain liable despite any
assignment or sublease of this Lease by Tenant pursuant to this Section 18.

 

19.                                 ENTRY.

 

Landlord,
and any mortgagee, and their respective duly authorized representatives shall
have the right to enter the Premises at all reasonable times for the purposes
of inspecting the conditions of same, and making such repairs, alterations,
additions, or improvements thereto as may be necessary or desirable if Tenant
fails to do so as required hereunder (but the Landlord shall have no duty
whatsoever to make any such inspections, repairs, alterations, additions, or
improvements).

 

20.                                 DEFAULT.

 

A.            The following shall be defined and deemed as an “Event
of Default” by Tenant: (i) if Tenant shall default in the payment of the
Base Rent or any additional rent, utility charges (referenced in Section 4),
and charges referenced in Section 5, and in any other section of this
Lease, and if Tenant shall fail to cure said default within fifteen (15) days
after receipt of notice of such default from Landlord; or, (ii) if Tenant
shall default in the performance or observance of any other term, covenant or
condition to be performed or observed by Tenant under this Lease and if Tenant
shall fail to cure said default within thirty (30) days after receipt 

 

14

 

of notice of said default from
Landlord or if such default is of a nature which cannot be corrected in thirty
(30) days, if Tenant shall fail to commence to cure same within thirty (30)
days and thereafter diligently pursue such cure to completion, or (iii) if
an Event of Default (as that term is defined in each of the Leases referenced
in this subsentence (iii)) shall occur in either of the following Leases
between the Landlord and Tenant: Industrial Lease dated July 13, 2004
covering a portion of the building designated as “Building No. 2” located
within the Project or Industrial Lease dated as of September 2, 2003 covering the
building designated as “Building No. 3” located within the Project.

 

(i)            In case of any Event of Default
hereinbefore provided the Landlord shall have the immediate right of reentry
and may remove all persons and property from the Premises by summary
proceedings, force or otherwise. No such reentry or taking possession of the
Premises by Landlord shall be construed as
an election on Landlord’s part to terminate this Lease unless a written
notice of such intention to be given to Tenant or unless the termination
thereof be decreed by a court of competent jurisdiction.

 

(ii)           In addition, in the event of any Event of
Default (whether or not Landlord shall elect to re-enter or to take possession
pursuant to legal proceedings or pursuant to any notice provided for by laws),
Landlord shall have the right, at Landlord’s option,

 

1)             to terminate this Lease on not less than
two (2) days’ notice to Tenant and upon the giving of said notice, this
Lease and the term hereof shall cease and expire on the date set forth in said
notice as if said date where the expiration originally set forth herein, or

 

2)             to relet the Premises or any parts)
thereof for such term or terms (which may extend beyond the Term) and at such
rental(s) and upon such other terms and conditions as Landlord in Landlord’s
sole discretion may deem advisable. Landlord shall have the right from time to
time to make such alterations and repairs as may be reasonably necessary in
order to relet the Premises. Upon each such reletting all rentals received by
the Landlord from such reletting shall be applied, first, to the payment of any
indebtedness (other than rents due hereunder) of Tenant to Landlord, second, to
the payment of any costs and expenses of such reletting, including, without
limitation, reasonable attorneys’ fees and of the cost of such alterations and
repairs, third, to the payment of rents due and unpaid hereunder; and the
residue, if any, shall be held by Landlord arid applied in payment of future
rents and other payments required to be made by Tenant hereunder as the same
may become due and payable hereunder, with the right reserved to Landlord to
bring such action(s) or proceeding(s) for the recovery of any deficits
remaining unpaid without being obliged to await the end of the term for a final
determination of Tenant’s account, and the commencement or maintenance of any
one or more actions for further accruals pursuant to the provisions of this
Section. If such rentals to be paid during that month by Tenant hereunder,
Tenant shall pay any such deficiency to Landlord. Such deficiency shall be
calculated and paid monthly subject to Landlord’s right of action(s) or
proceeding(s) as aforesaid. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this Lease
for such previous breach.

 

(iii)          Should
Landlord at any time terminate this Lease for any breach, in addition to any
other remedies Landlord may have, Landlord may recover from Tenant 

 

15

 

all damages Landlord may incur
by reason of such breach as damages for loss of the bargain and not as a
penalty, including the cost of recovering the Premises, reasonable attorneys’
fees, and including the present value determined by using a discount rate of
eight percent (8%), at the time of such termination, of the excess if any, of
the amount of rental and charges equivalent to rental reserved in this Lease for the remainder of
the Term, over the aggregate rental value of the Premises for the remainder of
such term, all of which shall be immediately due and payable from Tenant to
Landlord. If any laws shall validly limit the amount of the damages provided
for in the immediately preceding sentence to less than the amount above agreed
upon, Landlord shall be entitled to the maximum amount allowable under such
laws.

 

B.            Landlord shall not be in default unless
Landlord fails to perform obligations required of Landlord within a reasonable
time, but in no event later than thirty (30) days after written notice by
Tenant to Landlord and to the holder of any first mortgage or deed of trust
covering the Premises whose name and address shall have theretofore been
furnished to Tenant in writing, specifying wherein Landlord has failed to
perform such obligation; provided, however, that if the nature of Landlord’s
obligation is such that more than thirty (30) days are required of performance
then Landlord shall not be in default if Landlord commences performance within
such 30-day period and thereafter diligently prosecutes the same to completion.
In the event Landlord fails to discharge any obligation set forth in this Lease
on or before the date such obligation or payment is due, Tenant may, at Tenant’s
option, discharge such obligation. Tenant shall use reasonable efforts to
mitigate its damages after a default by the Landlord. In the event Tenant
elects to discharge Landlord’s obligation(s), Landlord agrees to reimburse
Tenant on demand for the amount of expenses incurred by Tenant.

 

21.                                 ENVIRONMENTAL PROVISIONS.

 

A.            For the purposes of this Section 21,
the following shall have the respective meanings set forth below:

 

(i)            “Hazardous Material” means any substance,
material or waste which is regulated by any applicable governmental authority
of the United States or the State of South Carolina, including without
limitation, any material, substance or waste which is defined as “hazardous”, “hazardous
waste”, “hazardous material”, “hazardous substance”, “extremely hazardous waste”,
“restricted hazardous waste”, “pollutant”, “contaminant”, “toxic substance” or “toxic
waste” under any provision of any applicable Environmental Law, and includes,
but is not limited to, petroleum, petroleum products, asbestos, urea
formaldehyde and polychlorinated biphenyls.

 

(ii)           “Hazardous Materials Contamination” means
any disposal, transportation, storage, arranging of disposal, spillage,
discharge, emission, leakage, release or threatened release of any Hazardous
Materials at, in, on, under, from, about, or affecting the soil, air, water,
fixtures, personal property, animals or buildings.

 

(iii)          “Environmental Condition” means any
unlawful environmental condition, event or circumstance.

 

16

 

(iv)          “Damages”
means all demands, claims, actions, assessments, losses, damages, liabilities,
costs and expenses of every nature (including, without limitation, reasonable
attorneys’ fees, fines, penalties and costs of settlements of any kind), known
or unknown, foreseen or unforeseen, contingent or otherwise.

 

(v)           “Landlord-Related Party” means an
employee, agent, contractor, licensee, customer, invitee or affiliate of
Landlord, but specifically excludes Tenant and any other lessee or tenant of
the Project. “Tenant-Related Party” means an employee, agent, contractor,
licensee, customer, invitee or affiliate of Tenant but specifically excludes
Landlord.

 

B.            Landlord shall defend, indemnify, protect
and hold Tenant harmless against Damages resulting from or arising out of the
following Hazardous Materials Contamination or Environmental Conditions:

 

(i)            existing or occurring within the Premises
on or before Tenant takes occupancy of the Premises or after the expiration or
early termination of the Lease Term but only to the extent not caused by Tenant
or a Tenant-Related Party; or

 

(ii)           existing or occurring within the Premises
or any other portion of the Project and caused by Landlord or a
Landlord-Related Party.

 

C.            Tenant shall defend, indemnify, protect
and hold Landlord harmless against all Damages resulting from or arising out of
Hazardous Materials Contamination or Environmental Conditions existing or
occurring within the Premises or any other portion of the Project and caused by
Tenant or a Tenant-Related Party, but only to the extent not caused by Landlord
or a Landlord-Related Party.

 

D.            The Tenant shall store and handle
Hazardous Materials at the Premises or at the Project in strict compliance with
applicable laws, rules and regulations, and shall indemnify, defend and
save harmless the Landlord from all Damages arising out of or in any way
connected with Tenant or Tenant-Related Party’s storage or handling of
Hazardous Materials. In no event shall Tenant’s handling or storage of
Hazardous Materials in compliance with applicable laws make Tenant liable for
Hazardous Materials Contamination or Environmental Conditions in existence or
occurring on or before Tenant takes occupancy of the. Premises. In particular,
the Tenant shall take extra precaution not to allow Hazardous Materials or any
other material to wash into the drains of the Wash Area (which lead to the
oil/water separator system) except as specifically permitted under all required
permits and licenses and as intended for the Project’s oil/water separator system.

 

E.             The obligations and liabilities of both
parties under this Section 21 shall survive the Term of this Lease.

 

F.             The failure by either party to abide by
the terms of this Section 21 shall be restrainable by injunction.

 

17

 

22.                                 SURRENDER OF TENANT.

 

A.            Tenant will surrender possession of the
Premises and remove all goods and production equipment and other personal
property owned by Tenant at the end of the Term, or at such other time as
Landlord may be entitled to re-enter and take possession of the Premises
pursuant to any provision of this Lease, and Tenant shall leave the Premises
broom clean and in good order and condition, ordinary wear and tear excepted,
except in the event of termination due to fire or other casualty pursuant to Section 13
or termination due to condemnation pursuant to Section 14. Tenant
shall deliver to Landlord all keys, locks and other fixtures connected with the
Premises (such fixtures shall include, but are not limited to: cranes, Paint
Booth, Blast House, Compressors, roof fans, bus ducts and lights) in good
repair, order and condition. In default of such surrender of possession and
removal of goods and chattels at the time aforesaid, Tenant will pay to
Landlord the rent set forth in this Lease for such period as Tenant either holds over
possession of the Premises or allows Tenant’s goods and production equipment or
other personal property at such time to remain in the Premises, and in addition
thereto, statutory penalties and all other damages which Landlord shall suffer
by reason of Tenant’s holding over in violation of the terms and provisions of
this Lease, including, without limitation, all reasonable claims for damages
made by any succeeding tenant or purchase of the Premises against Landlord
which may be founded upon delay by Landlord in giving possession of the
Premises to such succeeding tenant or purchaser, so far as such damages are
occasioned by the unlawful holding over of Tenant.

 

B.            Tenant shall have the absolute right to
remove all of Tenant’s goods, production equipment, and other personal property
from the Premises at any time during the Term.

 

C.            Tenant shall be responsible for the
clean-up and removal of all raw materials, packaging, solid waste, unused and used
lubricants, oils, solvents and any hazardous wastes placed, abandoned or
located on the Premises and the area surrounding the Premises by Tenant (or any
of Tenant’s employees, agent, invitees or subcontractors) during the term
hereof.

 

D.            The liability and the obligations of
Tenant under this Section shall survive the termination of this Lease.

 

23.                                 FORCE MAJEURE.

 

In
the event that Landlord or Tenant shall be delayed or hindered in or prevented
from the performance or any act (other than either party’s monetary
obligations), by reason of strikes, lockouts, unavailability of materials,
failure of power, restrictive governmental laws or regulations, riots,
insurrections, war or other reason beyond its reasonable control, then
performance of such act shall be excused for the period of the delay and the
period for the performance of such act shall be extended for a period
equivalent to the actual period of such delay. Notwithstanding the foregoing,
lack of funds shall not be deemed to be a cause beyond the reasonable control
of either party.

 

24.                                 SECURITY DEPOSIT.

 

No
security deposit shall be required.

 

18

 

25.                                 COMMISSIONS.

 

Both
Landlord and Tenant acknowledge that no real estate broker is involved with
respect to this Lease and the negotiations thereof. Both parties agree to hold
each other harmless from any claims for commissions arising out of this Lease.

 

26.                                 ESTOPPEL CERTIFICATE.

 

At
any time and from time to time Landlord and Tenant each agree, upon request in
writing from the other, promptly to execute, acknowledge and deliver to the
other or to any person designated by the other a statement in writing
certifying that this Lease is unmodified and is in full force and effect, or if
there have been modifications, that the same is in full force and effect as
modified (stating the modifications), that the other party is not in default in
the performance of its covenants hereunder, or if there have been such
defaults, specifying the same, the dates to which the Rent and other charges
have been paid, and such other matters may be reasonably requested.

 

27.                                 MISCELLANEOUS PROVISIONS.

 

A.            All notices under this Lease shall be in
writing and shall be deemed given if delivered personally or by overnight
courier or if sent by confirmed facsimile transmitted during the regular
business hours of the recipient, or when mailed, postage prepaid, by registered
or certified mail, return receipt requested, addressed to the parties at their
addresses as set forth below
(or at such other address as a party may from time to time designate by written
notice given in accordance with this Section):

 

	
  TO TENANT:

  	
   

  	
  TO LANDLORD:

  
	
   

  	
   

  	
   

  
	
  Force
  Protection, Inc.

  Force Protection Industries, Inc.

  9801 Highway 78

  Ladson, SC 29456

  

  ATTN: Mr. Ted McQuinn

  Fax No: (843) 740-1973

  	
   

  	
  Aerospace/Defense, Inc.

  4838 Jenkins Avenue

  North Charleston, SC 29406

  

  ATTN: Jerry Zucker or Jerry Garfinkle

  Fax No: (843) 747-4092

  

 

B.            It is the intention of the parties hereto
to create the relationship of Landlord and Tenant, and no other relationship
whatsoever, and unless expressly otherwise provided herein nothing herein shall
be construed to make the parties hereto liable for any of the debts,
liabilities or obligations of the other party.

 

C.            This Lease shall be governed
exclusively under the laws of the State of South Carolina. Each of the parties (i) irrevocably
consents to the exclusive jurisdiction of any state or federal court located
within Charleston County, South Carolina, and (ii) waives trial by a jury.

 

D.            If any term or provision of this Lease or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this 

 

19

 

Lease, or 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 enforced to the fullest
extent permitted by law.

 

E.             Failure on the part of either party to
complain of any action or non-action on the part of the other party, no matter
how long the same may continue, shall never be deemed to be a waiver by either
party of any of its rights hereunder. Acceptance by Landlord of the Base Rent
or any other charges paid by Tenant hereunder shall not be or be deemed to be a
waiver by Landlord of any default by Tenant, whether or not Landlord knows of
such default. No waiver at any time of any of the provisions hereof by either
party shall be construed as a waiver of any of the other provisions hereunder
and a waiver at any time of any of the provisions hereof shall not be construed
as a waiver at any subsequent time of the same provisions.

 

F.             Tenant acknowledges and agrees that the
submission of this Lease to Tenant for its review and consideration shall not
and does not constitute an offer to lease the Premises. Tenant and Landlord
understand and agree that there can be no agreement for the lease of the
Premises until all parties hereto have signed, delivered and accepted this
Lease and any Security Deposit required pursuant to Section 24 has
been delivered and accepted.

 

G.            The captions of the several Sections and
Subsections of this Lease and any table of contents are not a part of the
context hereof and shall be ignored in construing this Lease. They are intended
only as aids in locating various provisions hereof.

 

H.            Nothing contained in this Lease shall be
construed so as to confer upon any other party the rights of a third party
beneficiary except the rights contained herein for the benefit of a mortgagee
of the Landlord and except as provided in the following Subsection (I).

 

I.              Except as expressly otherwise provided
herein, the terms, covenants and conditions hereof shall inure to the benefit
of and shall be binding upon Landlord and Landlord’s successors and assigns and
the terms, covenants and indentures hereof shall inure to the benefit of and
shall be binding upon Tenant and Tenant’s successors, legal representatives,
and permitted assigns.

 

J.             This constitutes the entire and complete
agreement between the parties with respect to its subject matter. This Lease
has been mutually negotiated by the parties and no rule of construction
shall be implied based upon the presumed drafter or author of this Lease.

 

K.            This Lease may only be amended by a
writing specifically referencing this Subsection 27K and duly
executed by authorized officers for both parties.

 

20

 

IN
WITNESS WHEREOF, the parties hereto have duly executed this instrument under
seal as of the day and year first above written.

 

	
  IN THE PRESENCE OF:

  	
   

  	
  Landlord:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AEROSPACE/DEFENSE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ M. Jerry Garfinkle

  
	
   

  	
   

  	
  Name:

  	
  M. Jerry Garfinkle

  
	
   

  	
   

  	
  Title:

  	
  Assistant Secretary 4/11/06

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  IN THE PRESENCE OF:

  	
   

  	
  Landlord:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FORCE PROTECTION INDUSTRIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gordon R. McGilton

  
	
   

  	
   

  	
  Name:

  	
  Gordon R. McGilton

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer 4/7/07

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  IN THE PRESENCE OF:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  FORCE PROTECTION, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gordon R. McGilton

  
	
   

  	
   

  	
  Name:

  	
  Gordon R. McGilton

  
	
   

  	
   

  	
  Title:

  	
  CEO 4/7/07

  
								

 

21

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