EXHIBIT 10.07
OPTION TO LEASE
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THIS AGREEMENT, made this 4th day of May 1993, by and between TECHNOLOGY
PARK/ATLANTA, INC., a Georgia corporation (herein called "Lessor"), and FIREARMS
TRAINING SYSTEMS, INC., a Delaware corporation (herein called "Lessee");
W I T N E S S E T H: That,
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WHEREAS, contemporaneously herewith Lessor and Lessee entered that certain
Lease Agreement (herein called the "Other Lease") under which Lessee leased
approximately 85,000 square feet of space in a building (herein called the
"Other Building") to be constructed by Lessor on land lying adjacent to the Land
(as hereinafter defined); and
WHEREAS, Lessor owns that certain tract of real property containing
approximately 9.20 acres and described on Exhibit "A", attached hereto and by
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this reference incorporated herein and made a part hereof (herein called the
"Land"); and
WHEREAS, on the terms and conditions hereinafter set forth, Lessee desires
to acquire, and Lessor is willing to grant, an option to lease the Land and
certain improvements to be built thereon in accordance with this Agreement;
NOW THEREFORE, for and in consideration of TEN AND NO/100 DOLLARS ($10.00)
in hand paid by Lessee to Lessor and the mutual promises contained herein, the
receipt, adequacy and sufficiency of which are hereby acknowledged, Lessee and
Lessor hereby agree as follows:
1. Definitions. As used herein, the following terms shall have the
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meanings set forth in this Section 1:
1.1 "Annual Square Foot Rental Rate" shall mean the annual base
rental per rentable square foot of the Building (as hereinafter defined) and
shall be calculated in accordance with the following formula:
[Total Cost of Premises
(including the Fair Market
Value of the Land)] x Yield Rate
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Gross Square Feet within the Building
1.2 "Construction Cost" shall mean the amount Lessor would expect to
pay a contractor to construct the Premises substantially in accordance with the
Plans, which shall be determined by Lessor by soliciting bids from three (3)
contractors selected by Lessor and reasonably acceptable to Lessee. The
Construction Cost shall include the cost of all
tenant improvement work within the Building which shall not exceed Twelve
Dollars ($12.00) per rentable square foot of the Building, the cost of any
insurance premiums which are required to be maintained with respect to the
Premises, the cost of sales or use taxes on materials provided to the Premises,
the cost of all permitting fees, the cost of utility tap and service fees and
the cost of administrative, overhead and profit allowances charged by the
contractor. All other factors being equal, Lessor will choose the contractor
that submits the lowest bid. The cost set forth in the bid submitted by such
chosen contractor shall be deemed to be the Construction Cost.
1.3 "Fair Market Value of the Land" shall mean the fair market value of
the Land as may be agreed to by Lessor and Lessee within fourteen (14) days
after Lessee's exercise of the Option (as hereinafter defined) or as determined
by the following procedure:
1.3.1 Lessor shall submit to Lessee a list of five (5) real
estate appraisers, each of which (i) is a member of the American Institute of
Real Estate Appraisers (or any successor association or body of comparable
standing if such institute is not then in existence), (ii) shall have at least
ten (10) years experience in the appraisal of real estate, (iii) shall be
familiar with property values in the metropolitan Atlanta, Georgia area and (iv)
shall have reasonable experience in the appraisal of land values. Within
fourteen (14) days after Lessee's receipt of such list of appraisers, Lessee
shall choose two (2) appraisers from such list to determine the Fair Market
Value of the Land. Each of the two (2) appraisers so designated by Lessee shall
appraise the Fair Market Value of the Land, independent of one another. The Fair
Market Value of the Land shall be the price on the date Lessee exercises the
Option which a seller, willing but not obligated to sell, would accept for the
Land, and which a buyer, willing but not obligated to buy, would pay therefore
in an arm's length transaction. The appraisers shall assume that the Land would
be sold free and clear of any and all encumbrances not of public record in an
"all cash" transaction. The average of the two (2) appraisers' values shall be
deemed to be the Fair Market Value of the Land for purposes of determining the
Annual Square Foot Rental under Section 1.1 hereof and shall be binding on the
parties hereto.
1.4 "Premises" shall mean the Building and the Land, together with all
easements benefitting the Land which arise under the Protective Covenants (as
defined in the Other Lease).
1.5 "Plans" shall mean those final plans and specifications of the
construction of the Premises, prepared by Lessor for the mutual approval of
Lessor and Lessee and as approved by Lessor and Lessee which Plans shall not
allocate more than Twelve Dollars ($12.00) per rentable square foot of the
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Building towards the construction of interior tenant improvements.
1.6 "Substantially Complete" shall mean with respect to the Premises,
(i) completed substantially in accordance with the Plans with all utilities
including telephone conduit, other than telephone operations, being made
available in accordance with Section 6.1 of the Other Lease, to the extent that
such Premises can be occupied by Lessee, (ii) that Lessor provides Lessee with a
temporary certificate of occupancy for the Premises (and Lessor diligently
pursues issuance of a final certificate of occupancy), and (iii) that Lessor
provides Lessee with a certificate from Lessor's architect certifying that the
Premises have been substantially completed substantially in accordance with the
Plans, it being understood that minor punch list items, final clean up and
landscaping and similar items shall not be considered an obstruction to the
Premises being deemed Substantially Complete.
1.7 "Total Cost of Premises" shall mean the sum of all costs and
expenses incurred and to be incurred by Lessor in the construction of the
Premises in accordance with the Plans, including, without limitation, the
Construction Cost, fees and expenses of architects, engineers, accountants,
attorneys and surveyors in connection with the Premises, Lessor's overhead and
profit with respect to the Premises, costs of purchasing, designing and
installing the landscaping, costs of grading the Land which costs shall be
consistent with the costs of grading the land on which the Other Building is
situated and the Fair Market Value of the Land.
1.8 "Yield Rate" shall mean the sum of (i) the yield per annum
determined by Lessor as of the date on which such lease agreement referenced in
Section 2.4 hereof is executed (herein called the "Lease Execution Date") to be
the yield in the secondary market on U.S. Government Treasury Notes on amounts
comparable to the Total Cost of Premises (including the Fair Market Value of the
Land) with a maturity that is nearest to ten (10) years (such determination to
be based on annual yields published in The Wall Street Journal, and if such
annual yields are not published in The Wall Street Journal, such determination
shall be based upon annual yields obtained from the Federal Reserve Statistical
Release H.15, published by the Board of Governors or the Federal Reserve System
of the United States), plus (ii) 4.81% (representing the difference of 11.00%
minus. 6.19%, which 6.19% is the yield per annum as of April 7, 1993 in the
secondary market on U.S. Government Treasury Notes with a maturity date nearest
to April 7, 2003 as published in The Wall Street Journal on April 7, 1993),
which Yield Rate shall be subject to Lessor's ability to permanently finance the
Building on terms reasonably acceptable to Lessor.
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2. Grant of Option to Lease. Lessor hereby grants to Lessee the right and
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option (herein called the "Option") to lease from Lessor a maximum aggregate
amount of approximately 114,000 rentable square feet (herein called the "Maximum
Expansion Amount") of space in a building (herein called the "Building") to be
constructed by Lessor on the Land of a quality and type consistent with the
Other Building in accordance with the terms and conditions set forth herein.
Lessor hereby represents and warrants to Lessee that Lessor owns fee simple
title to the Land and that there exists no mortgage, deed to secure debt or
ground lease encumbering the Land other than that certain deed to secure debt
held by Lloyds Bank Plc. Lessor shall provide Lessee with a non-disturbance
agreement from Lloyds Bank Plc meeting the requirements set forth in the other
Lease, on or before the date that is thirty (30) days after such non-disturbance
agreement has been delivered to Lloyds Bank Plc.
2.1 On or before the date (herein called the "Option Exercise Deadline")
that is four and one-half (4 1/2) years after the Commencement Date (as defined
in the other Lease), and provided that (i) Lessee is not in default under the
terms of the Other Lease at the time of Lessee's exercise of the Option, (ii)
Lessee is in possession of the "Premises" (as defined in the Other Lease), (iii)
the Other Lease is then in full force and effect and (iv) Lessee has exercised
the Option to Extend (as defined in the Other Lease) if so required under the
terms of Section 2.5 hereof, Lessee shall have right to exercise the Option, on
one or more occasions, by delivering written notice to Lessor of such exercise
together with a specification of the amount of space Lessee desires to lease,
which shall be in increments of at least 30,000 rentable square feet and shall
be of such a configuration and design so that the remainder of the Land is, in
Lessor's reasonable judgment, marketable for sale to third parties.
2.2 Lessor shall as quickly as reasonably possible after receipt of
Lessee's notice of its exercise of the Option in accordance with Section 2.1
hereof, prepare preliminary drawings, plans, and specifications of the Building
and the Premises, including, without limitation, landscaping. Lessor and Lessee
shall cooperate in good faith to resolve any reasonable objections Lessee may
have to such preliminary plans and specifications and to cause final Plans
acceptable to Lessor and Lessee to be created within a reasonable period of time
after Lessee's exercise of the Option.
2.3 As soon as practicable after Lessor and Lessee agree upon final
Plans, Lessor shall determine the Annual Square Foot Rental Rate. Lessor shall
submit the Annual Square Foot Rental Rate as determined in accordance with
Section 1.1 hereof and an itemization of all factors considered in determining
the Annual Square Foot Rental Rate, and Lessee shall on or before the date that
is thirty (30) days after Lessee's receipt of the
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Annual Square Foot Rental Rate (herein called the "Response Date") either
approve or disapprove such Annual Square Foot Rental Rate. if Lessee fails to
respond to Lessor on or before the Response Date, then Lessee shall be deemed to
have rescinded its exercise of the Option.
2.4 In the event that Lessee approves the Annual Square Foot Rental
Rate, then promptly upon such approval the parties shall enter into a definitive
and binding lease agreement which obligates Lessor to construct the Building
substantially in accordance with the Plans and which is substantially in the
form of the Other Lease, except as provided in Section 2.5 hereof, and Lessor
shall cause the Premises to be completed substantially in accordance with final
Plans within a reasonable period of time. In the event that Lessor fails to
substantially complete construction of the Premises within a reasonable period
of time, then Lessee shall have the right to terminate the exercise of the
Option, together with any and all other remedies for a default by Lessor
provided hereunder or at law or in equity.
2.5 The definitive lease agreement entered in accordance with Section
2.4 hereof shall be substantially in the form of the Other Lease, except that
(i) the "Annual Base Rental" shall be calculated based on the Annual Square Foot
Rental Rate, (ii) the term of such lease agreement shall commence upon Lessor's
substantial completion of the improvements to the Premises and shall expire
either (A) in the event that such lease agreement commences on or before the
date that is two and one-half (2 1/2) years after the Commencement Date (as
defined in the Other Lease), on the date that is ten and one-half (10 1/2) years
after the Commencement Date (as defined in the other Lease) or (B) in the event
that such lease agreement commences after the date that is two and one-half (2
1/2) years after the Commencement Date (as defined in the Other Lease), on the
date that is eight (8) years after such lease agreement commences, provided that
in the event that such lease agreement commences after the date that is two and
one-half (2 1/2) years after the Commencement Date (as defined in the Other
Lease) then Lessee's right to exercise the Option shall be subject to and
conditioned upon Lessee's prior exercise of the Option to Extend (as defined in
the Other Lease) so as to extend the term of the Other Lease to such a date so
that the Lease and the Other Lease shall terminate on the same date, (iii) in
the event Lessee exercises the Second Option to Extend (as defined in the Other
Lease) Lessee shall have the option to extend the term of such lease agreement
on the same terms and conditions as provided in the Second Option to Extend
under the Other Lease, (iv) Lessee shall have no rights to renew, expand or
purchase the Premises and (v) Lessor shall have no obligations to provide any
allowance or improve the Premises except as expressly provided herein and Lessor
shall not be liable for any delays in the substantial completion of the
Premises.
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3. Right of First Offer. After the date that is four and one-half (4 1/2)
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years after the Commencement Date (as defined in the Other Lease) and until the
termination or other expiration of the Lease Term (as defined in the Other
Lease) and provided Lessee is not in default under the Other Lease, Lessee shall
have a right of first offer to purchase or lease the Premises or any portion
thereof as hereinafter set forth (herein called the "Right of First Offer").
3.1 Except with respect to an entity having the power of eminent domain
in connection with condemnation proceedings or an entity to whom a security
interest in the Premises is granted, neither the Premises, nor any portion
thereof, nor any interest therein shall be sold, leased or otherwise transferred
unless and until Lessor shall have first offered to sell or lease the Premises
to Lessee and Lessee shall have waived, in writing or as otherwise provided
herein, its right to purchase or lease the Premises or has agreed to purchase or
lease the Premises on the terms set forth in this Section 3. If Lessor at any
time desires to sell or lease the Premises, or any portion thereof or interest
therein, to a third party, Lessor shall first deliver to Lessee notice of such
intention, together with the terms on which Lessor would sell or lease the
Premises (herein called the "Notice Letter"). Within ten (10) business days
after receipt of such Notice Letter, Lessee, if it chooses to exercise its Right
of First Offer, must deliver to Lessor an agreement to purchase or an agreement
to lease, as appropriate, the Premises at the price or rental and under the same
terms and conditions as provided in the Notice Letter, except that if the Notice
Letter contemplates a sale, the sale shall be closed on the later of the date
for closing specified in the Notice Letter or ninety (90) days after Lessee
delivers to Lessor the executed agreement to purchase. In the event that Lessee
fails to close the purchase of the Premises within the later of the date for
closing specified in the Notice Letter or ninety (90) days as specified in the
preceding sentence, or in the event of a lease agreement Lessee fails to execute
a definitive Lease Agreement reasonably acceptable to Lessor within ninety (90)
days after exercise of its Right of First Offer, through no fault of Lessor,
then Lessee's right to purchase the Premises pursuant to this Section 3 hereof
shall automatically terminate and lapse.
3.2 If Lessee shall elect to waive its Right of First Offer or shall
fail to exercise said right within ten (10) business days of receipt by Lessee
of the Notice Letter in accordance with Section 3.1 hereof, then Lessee's Right
of First Offer shall lapse and terminate and Lessor shall be entitled to
consummate the sale or lease of the Premises or any portion thereof to any third
party free of any right of Lessee.
3.3 If Lessor fails to consummate the sale or lease of the Premises to a
third party at the same price or rental as set forth in the Notice Letter on or
before the date that is one
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hundred eighty (180) days after the Right of First Offer lapses in accordance
with Section 3.2 hereof, then Lessee's Right of First Offer shall be reinstated
and Lessee may thereafter elect to exercise its rights under this Section 3.
3.4 Lessee's Right of First Offer shall completely terminate, lapse and
be of no further force and effect upon Lessee's waiver or deemed waiver of the
Right of First Offer in accordance with Section 3.2 hereof or upon Lessor's
consummation of the sale or lease of the Premises or any portion thereof to a
third party.
4. Termination. In the event Lessee fails to exercise the Option in
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accordance with Section 2 hereof and the Right of First Offer in accordance with
Section 3 hereof, Lessee's rights hereunder shall terminate, lapse and be of no
further force and effect.
5. Miscellaneous.
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5.1 Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular number shall be
held to include the plural unless the context otherwise requires.
5.2 The captions are inserted in this Agreement for convenience only,
and in no way define, limit, or describe the scope or intent of this Agreement,
or of any provision hereof, nor in any way affect the interpretation of this
Agreement.
5.3 This Agreement is made and delivered in the State of Georgia and
shall be governed by and construed in accordance with the laws of the State of
Georgia.
5.4 This Agreement may be executed in one or more original counterparts
each of which shall be considered an original for all purposes.
5.5 All notices and other communications hereunder shall be in writing
and shall be deemed to have been given when delivered in person or three (3)
days after depositing the same in the United States Mail, return receipt
requested, addressed to the parties at the respective addresses set out below:
If to Lessee: Firearms Training Systems, Inc.
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000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
If to Lessor: Technology Park/Atlanta, Inc.
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Xxxxx 000
00 Xxxxxxxxxx Xxxx/Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
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or to such other addresses as the parties may direct from time to time by thirty
(30) days' written notice. However, the time period in which a response to any
notice, demand, or request must be given, if any, shall commence to run from the
date of receipt of the notice, demand, or request by the addressee thereof.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given shall be deemed to be receipt of
the notice, demand, or request sent.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals the day and year first above written.
LESSOR:
Signed, sealed and delivered TECHNOLOGY PARK/ATLANTA, INC.,
in the presence of: a Georgia corporation
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxxx X. X'Xxxxx
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Witness Xxxxxxx X. X'Xxxxx
Executive Vice President
Xxxxx X. Xxxxxx Attest: /s/ Xxxxx X. Xxxxxxxxxx
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Notary Public Xxxxx X. Xxxxxxxxxx
Assistant Secretary
My Commission Expires: 8/24/95
(NOTARY SEAL) (CORPORATE SEAL)
LESSEE:
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Signed, sealed and delivered FIREARMS TRAINING SYSTEMS,
in the presence of: INC., a Delaware corporation
____________________________ By: /s/ Xxxx Xxxxxxxxx
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Witness Its: President
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Xxxxxxx Xxxxxx Attest: /s/ Xxxxx Xxxxxx
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Notary Public Its: Corporate Secretary
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My Commission Expires: 1/17/93 [CORPORATE SEAL]
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TRACT #3
EXHIBIT A
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ALL THAT TRACT OR PARCEL OF LAND lying and being in Land Xxx 000, xxx Xxxxxxxx,
xxx Xxxxxxx, Xxxxxxx Xxxxxx, Xxxxxxx, and being more particularly described as
follows:
TO FIND THE TRUE POINT OF BEGINNING, commence at a point which marks the
southern end of a mitered corner of the intersection of the southeastern right-
of-way line of Lakefield Drive and the northeastern right-of-way line of
XxXxxxxx Ferry Road (80 foot right-of-way); run thence in a southeasterly
direction along the northeastern right-of-way line of XxXxxxxx Ferry Road south
58 degrees 05 minutes 00 seconds east 904.47 feet to a point; thence leaving
said right-of-way line run north 24 degrees 30 minutes 00 seconds east 109.21
feet to a point; run thence along an arc of a curve to the right (Chord: north
32 degrees 31 minutes 51 seconds east 148.09 feet; Radius: 530.00 feet) an arc
distance of 148.58 feet to a point; run thence along an arc of a curve to the
right (Chord: north 59 degrees 08 minutes 47 seconds east 82-86 feet; Radius:
130.00 feet) an arc distance of 84.33 feet to a point; run thence north 39
degrees 20 minutes 00 seconds west 30.00 feet to a point and the TRUE POINT OF
BEGINNING; from the TRUE POINT OF BEGINNING as thus established run thence north
39 degrees 20 minutes 00 seconds west 301.11 feet to a point; run thence north
31 degrees 55 minutes 00 seconds east 507.00 feet to a point; run thence north
88 degrees 55 minutes 40 seconds east 767.51 feet to a point located on the
western right-of-way line of proposed Xxxxxx-Xxxxxxxx Access Road (proposed 100
foot right-of-way); run thence in a southerly direction along said right-of-way
south 00 degrees 29 minutes 11 seconds west 412.24 feet to a point; thence
leaving said right-of-way line run thence north 88 degrees 30 minutes 00 seconds
west 692.94 feet to a point; run thence south 27 degrees 37 minutes 16 seconds
west 320.01 feet to a point and the TRUE POINT OF BEGINNING.
The above-described property contains 9.1724 acres, and is shown on, and
described according to, that certain survey for Technology Park/Atlanta, Inc. by
Xxxxxx, Xxxxx & Xxxxxxx, Surveyors and Engineers, Inc. (Miles X. Xxxxxx, Georgia
Registered Land Surveyor No. 1528), dated April 27, 1993, last revised April 29,
1993, which survey is incorporated herein and by this reference made a part of
this description.
