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COMMERCIAL LEASE AGREEMENT

Lease Agreement

COMMERCIAL LEASE AGREEMENT | Document Parties: ARGYLE SECURITY, INC. You are currently viewing:
This Lease Agreement involves

ARGYLE SECURITY, INC.

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Title: COMMERCIAL LEASE AGREEMENT
Date: 6/26/2008
Industry: Security Systems and Services     Sector: Services

COMMERCIAL LEASE AGREEMENT, Parties: argyle security  inc.
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Exhibit 10.69

 

STATE OF TEXAS

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COMMERCIAL LEASE AGREEMENT

COUNTY OF BEXAR

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12906 Flagship Drive

 

THIS COMMERCIAL LEASE AGREEMENT (the “Lease”) is made and entered into as of the effective date provided below, by and between Green Wing Management, Ltd. (“Lessor”), and ISI Security Group, Inc., a Delaware corporation d/b/a Argyle Security USA (“Lessee”).

 

1.                                     LEASED PREMISES.  For and in consideration of the rents, covenants, agreements, and stipulations herein contained, Lessor does hereby lease unto Lessee, and Lessee does hereby rent from Lessor for the term and upon the terms and conditions hereinafter set out, the following (the “Leased Premises”): the property located at 12906 Flagship Drive (commonly referred to collectively as “12906 Flagship Drive”), in the City of San Antonio, Bexar County, Texas, the land being described on Exhibit A attached hereto, and the improvements shown on the site plan which is attached hereto as Exhibit B.

 

A.                             Acceptance .  Taking possession of the Leased Premises by Lessee shall be deemed conclusively to establish that Lessee accepts the Leased Premises in its “as is” condition, and acknowledges that it is in good and satisfactory condition, as of the date when possession was so taken, except for any latent defects or matters which Lessee notifies Lessor in writing within six (6) months after occupancy, which latent defects and other matters, Lessor agrees to correct within a reasonable time after notification thereof.  Lessee acknowledges that Lessor has made no warranties or representations of any kind, neither express nor implied, and that Lessee has inspected the premises and has made all investigations as to its suitability for its particular purposes that it deems, in its sole opinion, necessary.  Lessee is not relying upon any representations by Lessor as to the suitability of the Premises for Lessee’s particular purpose.  Lessee accepts the Premises based on its own investigation and believes them to be suitable for Lessee’s intended commercial purpose.

 

2.                                      USE OF PREMISES.  The Leased Premises will be used and occupied by Lessee for a commercial enterprise engaged in the sale, installation, repair, and maintenance of: (i) detention equipment and systems; (ii) fire and security alarm systems and equipment; (iii) access control systems and equipment; (iv) commercial enterprises and light manufacturing reasonably suited for the Leased Premises and permissible under all applicable laws, rules, regulations and ordinances, and for other uses reasonably incident thereto, and Lessee shall not use the Leased Premises for any other purpose without the written consent of Lessor, which consent will not be unreasonably withheld.  Lessee shall not perform any acts or carry on any practices in its use of the Leased Premises which may damage the improvements situated thereon, or which may be a nuisance or menace to the general public or the tenants and owners of adjoining properties.  Lessee shall keep the Leased Premises and all sidewalks, driveways, and other areas of public access on the Leased Premises clean and free of all rubbish and debris at all times.  Lessee shall comply with all laws, ordinances, orders, rules and regulations of state, federal, municipal or other governmental agencies or bodies having jurisdiction relating to the use, condition and

 

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occupancy of the Leased Premises.  The operating hours of Lessee’s business shall be in Lessee’s sole discretion.

 

3.                                     TERM.  The term of this Lease will commence on June 1, 2008, (the “Effective Date”), and shall end on the last day of November, 2019 (the “Primary Term”), unless sooner terminated in accordance with the terms and conditions hereinafter set forth.  During the last year of the lease term, Lessor will have the right to enter and show the Leased Premises for the purpose of reletting said premises at reasonable times and on reasonable notice to the Lessee.

 

A.                             Option to Renew .  Lessee shall have one option to extend the term of this Lease for a period of five (5) years.  To exercise the option, Lessee must give written notice of its exercising the option to Lessor on or before two years prior to the expiration of the Primary Term.  Lessee may exercise this option to renew only if:  (1) Lessee is not in default in the performance of this Lease, which remains uncured, when Lessee gives notice of its exercising of the option; (2) Lessee and Lessor are able to agree, within the time frame set forth below, upon an amount for a monthly rental during the five (5) year term of the option (“Option Term”); (3) Lessee and Lessor shall make a good faith effort to agree upon a rental amount; and (4) Lessee remains in full compliance with the Lease until the Primary Term expires.  The monthly rental for the Option Term shall be negotiated between Lessor and Lessee at the time that Lessee exercises its option, subject to the requirement that each year’s rent shall be not less than the previous year’s rent paid by Lessee hereunder.  If Lessor and Lessee are unable to agree upon the amount of the monthly rental for the Option Term within two hundred and seventy (270) days of the expiration of the Primary Term, then this option to renew shall, without further action by Lessor, be deemed to be wholly and conclusively terminated, and Lessee shall vacate the Leased Premises by the end of the Primary Term.

 

4.                                    PARENT’S RIGHT TO PURCHASE/RIGHT OF FIRST REFUSAL.  At any time during the Primary Term, Argyle Security, Inc., a Delaware corporation (“Parent”) maintains the right, at Parent’s sole discretion, to purchase Lessor’s interest in the Leased Premises at fair market value to be determined by independent appraisal conducted contemporaneously with purchase and agreed to by both Parent and Lessor; provided, however, that such amount shall not be less than the appraisal amount set in connection with the execution of this Lease.  Should Lessor offer the Leased Premises for sale to any party at any time during the Primary Term, Parent is granted a right of first refusal to purchase the Leased Premises according to the terms of this section.  If Parent elects not to exercise its right of first refusal, then Lessor reserves the right to sell, mortgage or otherwise dispose of all or any part of Lessor’s interest in the Leased Premises to such party, provided that if the sale to such party is not consummated, Lessor shall once again be bound by the provision of this Section 4.  In the event of a sale by Lessor to such party, this Lease shall continue in full force and effect.  Any such sale shall operate to release Lessor from all obligations and liability under this Lease except for the return of any security deposit not transferred to the new owner.

 

5.                                     RENT.  Lessee agrees to pay Lessor at San Antonio, Bexar County, Texas, monthly rentals as provided below.

 

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A.                                Base Rental .  The base monthly rental for the Leased Premises is hereby agreed to be $17,105.83.  The base monthly rental shall be payable in advance and without demand, on the Effective Date and on the first day of each subsequent calendar month during the term hereof.

 

B.                                  Recalculation of Base Rental .  At the end of each three-year period of occupancy, an independent rent appraisal will be conducted to establish the new market rate and to determine the basis for setting the monthly base rental applicable to the ensuing three-year period.  This adjustment of base monthly rental will be calculated as follows: (i) if the new appraisal reflects a market rate greater than the market rate established at the most recent prior appraisal, then the base monthly rental will be set at ten percent (10%) less than the new market rate; or (ii) if the new appraisal reflects a market rate lower than the market rate established at the most recent prior appraisal, then the base monthly rental will (a) remain unchanged if the new market rate is less than ten percent (10%) below the previous market rate, or (b) equal the new market rate if the new market rate is more than ten percent (10%) below the previous market rate.

 

C.                                  Late Penalty .  If any monthly rental payment is not received by Lessor on or before the fifth (5th) day of the month, but is received on or before the fifth (5th) day thereafter, a late charge equal to five percent (5.0%) of the then due monthly rental payment shall be added to the rental due; if the monthly rental payment is received after the fifth (5th) day, but on or before the fifteenth (15th) day of the month it is due, a late charge equal to ten percent (10%) of such rental payment shall be added to the rental due.  The parties agree that any charge or collection of late fees pursuant to this subsection is to compensate for costs incurred as a consequence of late payments, and that such fees will not constitute contracting for, charging, or collecting interest.

 

D.                                 Taxes .

 

(1)                              Personal Property Taxes .  Lessee agrees that it will pay to the appropriate taxing authorities all taxes, assessments, or other charges levied by any governmental or quasi-governmental authority, which during the time of this Lease may be levied or assessed against its personal property.

 

(2)                              Ad Valorem Taxes .  Lessee shall also pay all ad valorem taxes and assessments levied against the Leased Premises including, but not limited to, the real property described on Exhibit A and the improvements described on Exhibit B.  Lessee will remit payment for the taxes owed by Lessee to Lessor no later than January 5 of each year; however, if the due date of such taxes is not February 1, then Lessee will remit payment to Lessor not later than twenty-five (25) days prior to the date of delinquency of such taxes.  In the event Lessee fails to pay for the taxes owed by Lessee as provided above, and fails to cure such failure within thirty (30) days after receipt of written notice from Lessor, then such failure shall constitute a default hereunder.  Taxes for any partial calendar year during the term of this Lease shall be prorated between Lessor and Lessee as follows: (i) Lessee shall pay to Lessor that amount equal to the product of the amount of taxes for such calendar year (determined as if this Lease had been in

 

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effect for the entire tax year), multiplied by a fraction, the numerator of which is the number of days during such year that Lessee occupied the Leased Premises under the terms of this Lease and the denominator of which is 365; and (ii) Lessor shall pay that amount equal to the tax assessment for such calendar year, less the amount paid by Lessee pursuant to (i) above.  In the event this Lease terminates or expires prior to Lessor’s receipt of the tax assessment for such calendar year, Lessee shall pay to Lessor an amount equal to Lessee’s pro rata share of one hundred twenty-five percent (125%) of the taxes for the previous calendar year.  Upon receipt of the assessment for such calendar year, Lessor shall calculate Lessee’s pro rata share of such taxes and send to Lessee a copy of such tax assessment together with either (i) a refund of any amounts paid by Lessee in excess of Lessee’s pro rata share of such taxes, or (ii) a request for payment of any amount still owed by Lessee to Lessor for Lessee’s pro rata share of taxes.  Lessee shall pay any such amount still owed to Lessor within thirty (30) days following receipt of the request for payment.

 

Notwithstanding the foregoing, Lessee may, upon notice to Lessor, at Lessee’s option and at Lessee’s sole cost and expense, protest, appeal, or institute such other proceedings as Lessee may deem appropriate to effect a reduction of ad valorem taxes or assessments against the Leased Premises and Lessor, without out-of-pocket cost or expense to Lessor, shall cooperate with Lessee in such protest, appeal, or other action to the extent required in order comply with all applicable state, federal and local laws and ordinances pertaining to the process of such protest, appeal or other action.  Lessee hereby agrees to indemnify, defend, and hold Lessor harmless from and against any claims, obligations, costs, expenses, fees, and liabilities against or incurred by Lessor in connection with such cooperation.

 

E.                                     Miscellaneous .  All payments shall be made in lawful money of the United States of America.  Lessee shall not be entitled to deduct from or offset any sums owing or claimed to be owing by Lessor to Lessee from any such amounts, and no conditions or circumstances shall entitle Lessee to an abatement of any such payment unless otherwise specifically provided herein.  All rent shall be due and payable without demand.  All past due rent shall bear interest at the annual rate of eighteen percent (18%) or the maximum legal rate, whichever is less, until paid.  If any payment is made by check and the check is not honored, then (i) Lessee shall pay all of Lessor’s costs, expenses, and fees resulting from the dishonor and an additional $50.00 for processing; and (ii) in the event two (2) checks are ever dishonored during this Lease, then Lessor may, at its option, require that all future rent payments be in the form of certified funds (money order, certified check, etc.).

 

F.                                     Place for Payment .  All rents are payable to Lessor at 12903 Delivery Drive, San Antonio, Texas 78247, or other place designated in writing by Lessor.

 

6.                                        SIGNS.  Lessee shall maintain signs, lettering, and advertising materials as may be placed on the exterior or in the exterior windows of the Leased Premises in good condition and

 

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repair at all times and in absolute compliance with all applicable governmental ordinances and regulations including, but not limited to, all applicable deed restrictions.

 

7.                                     RULES AND REGULATIONS.  No garbage, refuse or debris shall be deposited or stored by Lessee in any public area except as designated by Lessor, and then only in approved containers, and shall be handled in such a manner as to not be offensive nor create a nuisance.  The plumbing facilities and water fixtures shall not be used for any purpose other than those for which they were constructed.  In addition to Lessee’s duties of maintenance and repair as contained in the Lease, Lessee has the duty to repair the following conditions that may occur during the Lease Term, or any renewal or extension: (i) damage from wastewater stoppages caused by foreign or improper objects in lines; (ii) damage of any nature to doors, windows, screens, or signs; and (iii) damage from windows or doors left open.  Lessee will not allow any canvassing, soliciting, peddling, or panhandling within the Leased Premises.

 

8.                                        OBLIGATIONS FOR REPAIRS.  Except for Lessor’s obligation to repair latent defects and other matters referenced in Section 1 above, Lessee agrees to maintain and make all repairs and replacements to, at its own cost and expense, the interior and exterior of the Leased Premises, so as to return the Leased Premises to Lessor at the end of the Primary Term, and any renewal or extension thereof, in substantially the same condition as when originally leased, reasonable wear and tear excepted, including the maintenance, repair, and replacement of exterior walls, foundations, plumbing, HVAC, lighting systems, electrical, telephone, and data wiring, roof, gutters, and down spouts, including the performance of all maintenance replacements and repairs necessary or incidental thereto.  Lessee will accomplish such maintenance repairs and replacements promptly in a good and workmanlike manner, in compliance with all applicable laws of all governmental authorities, and in a style, character, and quality conforming to existing construction, and will provide Lessor with advance notice of intent to make such repairs and replacements; such repairs and replacements to include, but not be limited to, all necessary maintenance and repairs to and replacements of the construction materials forming the outer shell of the buildings, the water, sewage, gas, electrical, telephone, and data lines and installation servicing the buildings and the Leased Premises, the heating and air-conditioning system in the buildings, all repairs and restoration made necessary by fire or other casualty, and all necessary repairs and replacements of improvements to the Leased Premises originally constructed by Lessor.  Except as otherwise provided in this Lease, all maintenance, repairs, and replacements required to preserve the Leased Premises in the condition they exist on the day this Lease commences shall be the sole responsibility and obligation of Lessee, and not Lessor.  Except for latent defects and other matters referenced in Section 1 above, Lessee agrees to hold Lessor harmless, and to fully indemnify Lessor, for any damages occasioned by the physical condition or state of repair of the buildings or the Leased Premises.  Lessee shall have an annual pest and termite inspection performed at the Leased Premises on or before July 1 of each year and provide a copy of the inspection to Lessor.  The cost of such inspection and any repairs occasioned by pest and termite damage shall be paid by Lessee.  Except for latent defects and other matters referenced in Section 1 above, Lessor shall have no responsibility or obligation of any nature to maintain the Leased Premises or perform any repairs or replacements relating to the Leased Premises.

 

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A.                               In the event Lessee does not complete the maintenance, repairs, and replacements as required of Lessee herein, Lessor shall have the right, but not the obligation, to immediately perform such replacements, repairs, or maintenance as may be deemed an emergency by Lessor, and to charge the cost thereof to Lessee, said cost to be payable by Lessee on demand as additional rent hereunder.  An “emergency” shall mean a defect, or state of disrepair, that Lessor reasonably believes constitutes a dangerous condition to the physical safety or well-being of any person entering the Leased Premises or possibility of significant damage to premises.  Failure to pay said charge within fifteen (15) days of a demand by Lessor shall be a material default and breach of this Lease, and shall not be subject to the rights of remediation or cure set forth in Section 18 herein, or otherwise.

 

B.                                 In the event Lessor believes that the Leased Premises are not being properly repaired or maintained, but the defect is not of an emergency nature, then Lessor shall give Lessee notice of the defect.  If Lessee does not repair the defect within twenty (20) days after receiving the notice from Lessor, then Lessor shall have the right, but not the obligation, to perform such repairs or maintenance as may be necessary, and to charge the reasonable cost thereof to Lessee.  These costs of maintenance or repair shall be payable by Lessee on demand as additional rent.  Failure to pay said charge within fifteen (15) days of a demand by Lessor shall be a material default and breach of this Lease, and shall not be subject to the rights of remediation or cure set forth in Section 18 herein, or otherwise.

 

9.                                     UTILITIES.  Lessee shall pay all charges for water, gas, telephone, electricity, and all utilities used in the Leased Premises as well as waste disposal services and all janitorial services.  Lessee shall at its expense maintain, repair, and replace when necessary, all heating, air conditioning, plumbing, gas, electrical and mechanical appurtenances and fixtures in the Leased Premises.

 

10.                                SECURITY DEPOSIT.  Lessee shall deposit with Lessor as security for Lessee’s continued performance of this Lease a sum equal to three months’ rental hereunder.  Upon Lessee’s failure to pay any required payment hereunder, the deposit may, at Lessor’s option, be applied by Lessor to delinquent rental or to damages, and if so used, Lessee shall immediately pay to Lessor the amount so used.  Any Security Deposit remaining at the conclusion of the Primary Term, or any extension thereof, shall be returned to Lessee within sixty (60) days after the Lessee has vacated the Leased Premises, subject to the relevant provisions of the Texas Property Code.

 

11.                               INDEMNITY.  Lessor will not be liable to Lessee or any other person for injury, death, or damage to persons or property received on, related to, or incidental to the use of the Leased Premises or this Lease, except for such which is caused by the willful misconduct or gross negligence of Lessor.  Lessee further agrees to defend, at its own expense, and on behalf of Lessor and in the name of Lessor, any claim, demand, assertion, or litigation of every nature brought or made against Lessor in connection with, arising from, or relating to the Leased Premises or this Lease; and Lessee shall indemnify and save Lessor harmless from and against any loss, claim, cost, expense, fee, or liability of every nature in connection with, arising from, or relating to the Leased Premises or this Lease, save and except for claims arising solely from

 

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structural defects or building code non-compliance in the Leased Premises or acts of god, and except for such claims which are caused by the willful misconduct or gross negligence of Lessor.  Lessee irrevocably stipulates that this provision is conspicuous, as required by law, and Lessee specifically represents and warrants to Lessor, with the intent to induce Lessor to rely thereon, that Lessee has reviewed this provision and has full understanding and appreciation of the import of each of the terms of this provision.

 

12.                                ALTERATIONS.

 

A.                                    Lessee shall not make any additions, alterations, or changes in the Leased Premises without first obtaining Lessor’s written approval, which approval will not be unreasonably withheld.  Notwithstanding the foregoing, Lessee may install in the Leased Premises any and all equipment, trade fixtures, furnishings, furniture and other personal property used by Lessee in connection with its business (collectively, “Lessee’s Property”) without obtaining Lessor’s approval, unless such installation would affect or modify the structural integrity, foundation/slab, roof or exterior walls of the Leased Premises (a “Structural Modification”).  Upon termination or expiration of the Lease, Lessee shall remove all of Lessee’s Property and shall restore the Leased Premises to the condition in which it existed prior to installation of the Lessee’s Property.  In the event Lessee makes a permitted Structural Modification, Lessor shall have the option to elect whether such Structural Modification shall remain on the Leased Premises and become the property of Lessor or shall be removed by Lessee at Lessee’s expense.  Lessee shall furnish to Lessor, not less than 180 days prior to the expiration of the Lease term, a written list of all Structural Modifications; within thirty (30) days of receipt of this list, Lessor will furnish to Lessee a written list of all Structural Modifications to be removed by Lessee.  Notwithstanding any provision herein to the contrary, HVAC systems, plumbing lines and fixtures, electrical, telephone, and data wiring and fixtures, and other fixtures (i) which are integrally inco
















 
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