Exhibit 10.69
STATE OF TEXAS
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COMMERCIAL
LEASE AGREEMENT
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COUNTY OF BEXAR
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12906 Flagship Drive
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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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