THIRD AMENDMENT TO LEASE AGREEMENT
This Third Amendment to Lease Agreement (this "Third Amendment") is entered
into by and between CIIF ASSOCIATES II LIMITED PARTNERSHIP, a Delaware limited
partnership (hereinafter called "Landlord") and SOFTWARE SPECTRUM, INC., a Texas
corporation formerly known as The Software Store, Inc. (hereinafter called
"Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into that certain Lease Agreement
dated May 1, 1990 (the "Original Lease"), wherein Landlord leased to Tenant
approximately fifty-one thousand one hundred forty-five (51,145) square feet of
rentable area in the building known as 2140 Merritt Drive, Garland, Texas (the
"Building"), all as more fully described in the Lease (the "Premises"); and
WHEREAS, Landlord and Tenant amended the Original Lease pursuant to the
terms and provisions of that certain First Amendment to Lease Agreement dated
March 31, 1995 (the "First Amendment") executed by Landlord and Tenant; and
WHEREAS, Landlord and Tenant further amended the Original Lease pursuant to
the terms and provisions of that certain First Addendum to Lease Agreement dated
July 31, 1996 (the "Second Amendment") executed by Landlord and Tenant (the
Original Lease, as amended by the First Amendment and the Second Amendment, is
herein referred to as the "Lease"); and
WHEREAS, desire to further amend the Lease in accordance with the terms and
conditions set forth below;
NOW, THEREFORE, for and in consideration, of the sum of Ten and No/100
Dollars ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree
as follows (capitalized terms used herein having the meanings ascribed to them
in the Lease unless specifically defined herein):
1. The term of the Lease is hereby extended to expire on March 31, 2007.
Tenant has no further options to renew or extend the term of the Lease.
2. Effective as of April 1, 1998, the monthly installments of Base Rent
due and payable under the Lease shall be as follows:
(a) from April 1, 1998 through March 31, 2000, the monthly Base
Rental shall equal Seventeen Thousand Six Hundred Two and 40/100 Dollars
($17,602.40);
(b) from April 1, 2000 through March 31, 2004, the monthly Base
Rental shall equal Twenty-One Thousand Ninety-Seven and 31/100 Dollars
($21,097.31); and
(c) from April 1, 2004 through March 31, 2007, the monthly Base
Rental shall equal Twenty-two Thousand Eight Hundred Two and 15/100 Dollars
($22,802.15).
3. The parking area for the Premises is hereby increased to include the
area described on EXHIBIT A attached hereto (the "Leased Parking Area"). From
and after May 1, 1998, in addition to the Base Rent due under Paragraph 2.A. of
the Lease, Tenant shall pay to Landlord monthly as Additional Rent due under the
Lease, One Thousand Five Hundred Nineteen and 41/100 Dollars ($1,519.41) per
month. Landlord and Tenant hereby acknowledge that the parties have estimated
that the Leased Parking Area will include approximately 77,587 square feet of
parking area. Upon completion by Tenant of the Additional Parking Improvements
(as hereinafter defined), the parties agree that they shall determine the actual
square footage of parking area included in the Leased Parking Area. If the
parties determine that the Leased Parking Area contains more than 77,587 square
feet of parking area, then such monthly additional parking rent shall be
increased by an amount equal to 1/12th of the product of $0.235 multiplied by
the number of square feet of parking area actually utilized by Tenant which is
in excess of 77,587 square feet. Tenant shall not be entitled to a decrease in
the monthly additional parking rent if the Leased Parking Area contains less
than 77,587 square feet of parking area. Tenant's use of the Leased Parking Area
shall be subject to the following terms and conditions:
(a) After Tenant's completion of the Additional Parking Improvements,
Tenant shall maintain the Leased Parking Area in good condition.
(b) Tenant shall pay all Taxes, utility costs, insurance costs, and
maintenance costs regarding the Leased Parking Area; accordingly, Tenant's
proportionate share for purposes of calculating Tenant's obligations under
Paragraph 2.C under the Lease as to the Leased Parking Area shall be 100%.
(c) Tenant shall defend, indemnify, and hold Landlord harmless from
and against all liabilities, claims, and expenses (including, without
limitation, reasonable attorney's fees and expenses) arising as a result of
Tenant's use of the Leased Parking Area, except for those arising from
Landlord's negligence or wilful misconduct.
(d) Tenant may not construct any alteration or place any signs on the
Leased Parking Area without Landlord's prior written consent, which consent
shall not be unreasonably withheld; provided, however, Tenant may install
signage on the Leased Parking Area to the extent such signage is reasonably
necessary to identify Tenant's use of the Leased Parking Area and provided
such signage is approved by Landlord and complies with all applicable laws,
ordinances and restrictions affecting the Leased Parking Area.
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(e) The Leased Parking Area shall only be used for the parking of
motor vehicles by Tenant, Tenant's employees, customers and visitors. In no
event will any boat, camper, trailer, truck larger than a one-ton pickup or
any other vehicle be parked or stored on the Leased Parking Area. The
Leased Parking Area shall not be used for the repair or restoration of any
motor vehicle, boat, camper, trailer or other vehicle, except for emergency
repairs, and then only to the extent necessary to enable is movement to a
proper repair facility. Tenant's use of the Leased Parking Area shall
comply at all times with all deed restrictions, zoning ordinances and other
laws applicable to Tenant's use of the Leased Parking Area.
(f) Tenant may not assign its right to use the Leased Parking Area or
assign its rights under this Paragraph 3, other than in connection with an
assignment of the entire Lease.
4. Landlord shall provide Tenant with an allowance (the "Improvement
Allowance") in an amount of One Hundred Fifty-Three Thousand Four Hundred
Thirty-Five and No/100 Dollars ($153,435.00) to be applied to the reimbursement
of the cost of constructing additional parking improvements (the "Additional
Parking Improvements") in the Leased Parking Area. The Additional Parking
Improvements shall include, without limitation, increasing the number of parking
spaces on the Leased Parking Area by a minimum of 160 parking spaces and paving
at least 60,000 square feet of additional parking area in the Leased Parking
Area. The Additional Parking Improvements shall be constructed of materials
that are substantially similar to the materials used in constructing the
existing parking improvements currently utilized by Tenant. The Additional
Parking Improvements shall be completed on or before December 31, 1998. Landlord
shall advance the Improvement Allowance to Tenant for reimbursements of the
Additional Parking Improvements constructed by Tenant within thirty (30) days
following delivery by Tenant to Landlord of sufficient documentation and lien
releases to evidence payment in full of all work related to such Additional
Parking Improvements. All such improvements shall be constructed by Tenant in
accordance with the terms and provisions of the Lease. In addition, Tenant shall
pay Landlord a construction management fee equal to five percent (5%) of the
cost of the Additional Parking Improvements. In the event the Improvement
Allowance is not fully advanced by Landlord by January 31, 1999, any unadvanced
portion of the Improvement Allowance may be utilized by Tenant to reimburse
Tenant for actual costs and expenses incurred in connection with the completion
of any leasehold improvements installed by Tenant in the Premises by Tenant, but
only to the extent such leasehold improvements are approved by Landlord.
5. Except for Tenant's preferential right to lease additional space in
the Building as set forth on EXHIBIT B attached hereto, Landlord has no further
rights to lease additional space in the Building.
6. Tenant shall have the right to lease additional parking area in
accordance with the terms and conditions of EXHIBIT C attached hereto.
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7. By its execution of this Third Amendment, Tenant acknowledges and
agrees that all leasehold improvements and tenant finish in the Premises are in
good and satisfactory condition acceptable to Tenant. Tenant acknowledges that
it accepts the Premises in their present condition, i.e. "AS IS" and "WITH ALL
FAULTS," subject to any latent defects of which Tenant is unaware as of the date
of Tenant's execution of this Third Amendment. Notwithstanding the foregoing,
Landlord shall remain responsible for any subsequent repairs required to
portions of the Building for which Landlord is responsible under the terms of
the Lease.
8. Landlord agrees to pay to The Industrial Group ("Landlord's Broker") a
real estate brokerage commission as set forth in a separate listing agreement
between Landlord and Landlords' Broker and agrees to pay The Staubach Company
("Tenant's Broker") a real estate brokerage commission as set forth in a
separate commission agreement between Landlord and Tenant's Broker. Tenant
hereby represents and warrants to Landlord that it has not employed any other
agents, brokers or other such parties in connection with the extension of the
lease term pursuant to the terms and conditions of this Third Amendment, and
Tenant agrees that it shall hold Landlord harmless from and against any and all
claims of all agents, brokers or other such parties claiming by, through or
under Tenant.
9. The Lease, as amended by this Third Amendment, is hereby ratified and
affirmed and, except as expressly amended hereby, all other items and provisions
of the Lease remain unchanged and continue to be in full force and effect. The
terms of this Third Amendment shall control over any conflicts between the terms
of the Lease and the terms of this Third Amendment.
10. The Lease, as amended by this Third Amendment, constitutes the entire
agreement and understanding between the parties hereto relating to the subject
matter hereof and all prior agreements, proposals, negotiations, understandings
and correspondence between the parties in this regard, whether written or oral,
are hereby superseded and merged herewith.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, this Third Amendment may be executed by the parties
hereto on separate multiple counterparts, each of which shall be deemed to be an
original, executed to be effective as of the 20th day of April, 1998.
"Landlord"
CIIF ASSOCIATES II LIMITED PARTNERSHIP,
a Delaware limited partnership
By: AEW Advisors, Inc., a Massachusetts corporation,
its managing general partner
By: /s/ Mark A. Albertson
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Name: Mark A. Albertson
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Title: Vice President
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"Tenant"
SOFTWARE SPECTRUM, INC.,
a Texas corporation
By: /s/ Robert D. Graham
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Name: Robert D. Graham
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Title: Vice President & General Counsel
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EXHIBIT A
DESCRIPTION OF LEASED PARKING AREA
A-1
EXHIBIT "A"
LEASING PARKING AREA
SOFTWARE SPECTRUM, INC.
[PARKING AREA LAYOUT]
EXHIBIT B
TENANT'S PREFERENTIAL RIGHT TO LEASE
1. Subject to the preferential rights of other tenants in the Building
which are included in any lease executed hereafter as to which Tenant fails or
elects not to exercise its Preferential Rights under this EXHIBIT B, during the
term of the Lease, and subject to the terms and conditions set forth below,
Tenant shall have a right of first opportunity (the "Preferential Right") to
lease that certain space identified on EXHIBIT B-1 attached hereto ("Additional
Space"), prior to the Additional Space being leased to any third party other
than Coats Aloe. Landlord shall deliver written notice (the "Offer Notice") to
Tenant when Landlord enters or intends to enter serious negotiations with a
third party to lease all or any portion of the Additional Space (and Landlord's
good faith determination of whether serious negotiations have been entered or
are about to be entered shall be conclusive and binding upon the parties). The
Offer Notice shall include a floor plan of the subject Additional Space, and
shall state the date on which the Additional Space shall be included in the
Premises, the Base Rental Rate for such space, and the other basic terms and
conditions upon which Landlord is willing to lease such space (including,
without limitation, the term, renewal and expansion options, and other
preferential rights, the number of parking spaces and rates therefor, the basis
upon which operating expenses will be charged to the tenant, and if Tenant's
right to the subject Additional Space will be subject to expansion or renewal
rights held by other tenants). The Preferential Right shall apply only with
respect to the entire Additional Space offered by Landlord to Tenant, and may
not be exercised with respect to only a portion thereof. Tenant shall notify
Landlord in writing whether Tenant elects to lease the entire Additional Space,
within ten days after Landlord delivers to Tenant the Offer Notice. If Tenant
timely elects to lease the Additional Space, then Landlord and Tenant shall
execute an amendment to the Lease, effective as of the date the Additional Space
is to be included in the Premises including the Additional Space in the
Premises, on the same terms as the Lease except that:
(a) the monthly Base Rent for such space shall be the monthly Base
Rent identified in the Offer Notice; and
(b) the lease term for the Additional Space shall be for the lease
term identified in the Offer Notice.
If Tenant fails or is unable to timely exercise its right hereunder, then such
right shall lapse, time being of the essence with respect to the exercise
thereof, and Landlord shall have a period of one hundred eighty (180) days after
delivery of the Offer Notice to lease the Additional Space to third parties on
such terms as Landlord may elect, in its sole and absolute discretion, except
that in no event shall the effective rental rate (taking into consideration all
amounts to be paid by Tenant to Landlord thereunder, such as annual Base Rent
and additional, together with all allowances and monetary concessions (such as
tenant improvement allowance and free rent) to be provided by Landlord to
Tenant) in such lease be less than ninety-five percent (95%) of the effective
rental rate
B-1
offered to Tenant in the Offer Notice, and the foregoing preferential right
shall be of no further force or effect with respect to such portion of the
Additional Space until such lease and any renewal or extension rights thereunder
expire or are terminated. If Landlord does not enter into such a lease of the
Additional Space within said one hundred eighty (180) day period, then Tenant
shall again have a Preferential Right as set forth in this EXHIBIT B. If
Landlord enters into a lease with a third party for the Additional Space, then
the parking spaces designated as the "New Tenant Parking" on the second page of
this EXHIBIT B shall be available for the exclusive use of such third party, and
Tenant shall no longer have any rights to use such parking spaces.
2. The Preferential Right of Tenant to lease the Additional Space as
provided for herein can be exercised only if, at the time of such exercise of
the Preferential Right and upon the date the portion of the Additional Space
referenced in the Offer Notice is to be included in the Premises, (a) Tenant is
not in default under the Lease beyond any applicable grace period and (b) Tenant
is in possession of the entire Premises. In the event that either of such
conditions is not satisfied and is not waived by Landlord in its sole and
absolute discretion, Tenant's Preferential Right shall be terminated and of no
further force and effect. Tenant's Preferential Right shall terminate if (1) the
Lease or Tenant's right to possession of the Premises is terminated or (2)
Tenant assigns any of its interest in the Lease or sublets any portion of the
Premises.
3. Notwithstanding the foregoing, Tenant's preferential right under this
EXHIBIT B shall be subject and subordinate to any renewal or extension of the
occupancy of the existing tenant of the Additional Space, Coats Aloe.
B-2
EXHIBIT C
EXPANSION PARKING OPTION
1. Subject to the terms and conditions of this EXHIBIT C, Tenant shall
have the additional option ("Expansion Parking Option"), by providing written
notice thereof to Landlord (the "Expansion Parking Election Notice"), at any
time on or before October 1, 2006, to include under the Lease all or any portion
of the land identified on EXHIBIT C-1 attached hereto (the "Expansion Parking
Area"). The amount of the Expansion Parking Area to be included under the Lease
pursuant to the Expansion Parking Option shall be identified by Tenant in the
Expansion Parking Election Notice. The actual portion of the EXHIBIT C-1 land to
be included under the Lease pursuant to the Expansion Parking Option shall be
designated by Landlord, provided, however, it shall have access to Merritt Drive
and shall have a reasonable configuration (the "Expansion Parking Space"). If
Tenant timely delivers the Expansion Parking Election Notice, then (a) Landlord
shall promptly pave the Expansion Parking Area so that it may be used for the
parking of motor vehicles and (b) Tenant and Landlord shall execute an amendment
to the Lease acknowledging Tenant's leasing of the Expansion Parking Area on the
terms and conditions of the Lease, except as follows:
(a) the monthly Base Rent for the Expansion Parking Space shall equal
the sum of (1) the product of the number of square feet in the Expansion
Parking Space and 235 divided by 12 and (2) the amount of the monthly
installment of principal and interest that would be payable on a
hypothetical loan whose principal balance equaled all hard and soft costs
incurred by Landlord in paving the Expansion Parking Space (including,
without limitation, geotechnical studies, survey costs, and consultant
costs), whose interest rate is 12%, and which is payable in equal monthly
installments for purposes of making such calculation, the number monthly
installments of the hypothetical loan shall equal the number of full
calendar months remaining in the Term after the Expansion Parking Space
Commencement Date (as hereinafter defined). Tenant's obligation to commence
paying monthly Base Rent on such Expansion Parking Space shall commence
upon substantial completion of Landlord's paving of the Expansion Parking
Space (the "Expansion Parking Space Commencement Date").
(b) After completion of the paving to the Expansion Parking Space,
Landlord shall maintain the Expansion Parking Space in good condition;
however Landlord shall have no obligation to make any repairs with respect
to the Expansion Parking Space unless and until Tenant has delivered to
Landlord notice of the need therefor.
(c) Tenant shall pay all Taxes, utility costs, insurance costs, and
maintenance costs regarding the Expansion Parking Space; accordingly,
Tenant's proportionate share for
C-1
purposes of calculating Tenant's obligations under Paragraph 2.C under the
Lease as to the Expansion Parking Space shall be 100%.
(d) Tenant shall defend, indemnify, and hold Landlord harmless from
and against all liabilities, claims, and expenses (including, without
limitation, reasonable attorney's fees and expenses), except for those
arising from Landlord's negligence or wilful misconduct.
(e) Tenant may not construct any alteration or place any signs on the
Expansion Parking Space without Landlord's prior written consent, which
consent shall not be unreasonably withheld; provided, however, Tenant may
install signage on the portion of the Expansion Parking Space then being
leased by Tenant to the extent such signage is reasonably necessary to
identify Tenant's use of such Expansion Parking Space and provided such
signage is approved by Landlord and complies with all applicable laws,
ordinances and restrictions affecting the Expansion Parking Space.
(f) The Expansion Parking Space shall only be used for the parking of
motor vehicles by Tenant, Tenant's employees, customers and visitors. In no
event will any boat, camper, trailer, truck larger than a one-ton pickup or
any other vehicle be parked or stored on the Expansion Parking Spaces. The
Expansion Parking Space shall not be used for the repair or restoration of
any motor vehicle, boat, camper, trailer or other vehicle, except for
emergency repairs, and then only to the extent necessary to enable is
movement to a proper repair facility. Tenant's use of the Expansion Parking
Space shall comply at all times with all deed restrictions, zoning
ordinances and other laws applicable to Tenant's use of the Expansion
Parking Space.
(g) The term for the Expansion Parking Space shall be coterminous
with the Term.
(h) Tenant may not assign its right to use the Expansion Parking
Space or assign its rights under this Exhibit, other than in connection
with an assignment of the entire Lease.
2. The Expansion Parking Option of Tenant as provided for herein can be
exercised only if, at the time of such exercise of the Expansion Parking Option,
Tenant is not in default under the Lease beyond any applicable grace period. In
the event that such condition is not satisfied and is not waived by Landlord in
its sole and absolute discretion, Tenant's Expansion Option shall be terminated
and of no further force and effect. Tenant's Expansion Option shall terminate if
(a) the Lease or Tenant's right to possession of the Premises is terminated, or
(b) Tenant fails to timely exercise its Expansion Parking Option under this
EXHIBIT C, time being of the essence with respect to Tenant's exercise thereof.
Tenant shall not have the right to assign its Expansion Parking Option to any
sublessee of the Premises, nor may any such sublessee exercise such Expansion
Parking Option.
C-2
3. Tenant may exercise its Expansion Parking Option on one or more
occasions, provided that any Expansion Parking Election Notice must be delivered
to Landlord on or before October 1, 2006. Each exercise of Tenant's Expansion
Parking Option shall be treated independently of any previous exercise by Tenant
of the Expansion Parking Option for all purposes hereunder, including, without
limitation, the determination of the monthly Base Rent and the Expansion Parking
Space Commencement Date attributable to the portion of the Expansion Parking
Area identified in the Expansion Parking Election Notice.
C-3
EXHIBIT "C"
EXPANSION PARKING AREA
SOFTWARE SPECTRUM, INC.
[PARKING AREA LAYOUT]