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EXHIBIT 10.20a
March 3, 1998
Xx. Xxxxxx Xxxxxx
Tekgraf, Inc.
0000 Xxxxxxxx #000
Xxxxxxx, XX 00000
Re: Second Amendment to Lease Agreement at 0000
Xxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx
Dear Martyn:
In regard to the Lease Agreement dated April 14, 1994 ("Lease
Agreement") entered into between Tekgraf, Inc., a Texas Corporation ("Tenant"),
and Connecticut General Life Insurance Company, a Connecticut Corporation
("Landlord"), for the 5,495 square foot premises at 0000 Xxxxxxxx, Xxxxx 000,
Xxxxxxx, Xxxxx, it is agreed the Lease Agreement shall be amended and modified
to the following terms and conditions:
1. It is acknowledged and agreed by the parties hereto that the Landlord
shall be Transwestern CG Partners I, L.P. (hereinafter referred to as
"Landlord").
2. The Term as described in paragraph 1 of the Lease Agreement shall be
renewed and extended for twelve (12) months, commencing March 1, 1998
and expiring at midnight on February 28, 1999.
3. The Base Rent described in paragraph 2 of the Lease Agreement shall be
as follows:
Months 1 - 12 $3,205.00 per month
4. Paragraph 4, Operating Expense Stop of the Lease Agreement shall be
deleted and of no further force and effect and replaced with the
following paragraph:
TENANT'S PRO RATA SHARE OF BUILDING COSTS
Subject to all of the provisions of this Lease relevant hereto, Tenant
promises and agrees to pay, as additional rent hereunder and as provided herein,
at the office of the Landlord or at such other place designated by Landlord,
without any prior demand therefor and without any deduction or set-off
throughout the term of this Lease, Tenant's Pro Rata Share of certain Building
expenditures made by Landlord, as follows:
(1) Real Estate Taxes, as defined in Article (a);
(2) Common Area Maintenance Costs, as defined in Article (b); and
(3) Building Insurance Costs, as defined in Article (c).
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(4) Management Fees, as defined in Article (b).
The amounts due from Tenant as Tenant's Pro Rata Share of Real Estate Taxes,
Common Area Maintenance Costs and Insurance shall be estimated by Landlord for
each calendar year and paid by Tenant in equal installments of one-twelfth
(1/12) of such estimated amount, monthly in advance, upon the first day of each
calendar month provided, however, if the term shall commence upon a day other
than the first day of the calendar month, Tenant shall pay upon the commencement
date of this Lease a portion of Tenant's Pro Rata Share of said expenses
calculated on a per diem basis with respect to the fractional month preceding
the commencement of the first full calendar month of the term of this Lease.
Said amounts shall be adjusted between Landlord and Tenant annually and at the
expiration or earlier termination of this Lease, and payment shall be made to,
or refund made by, Landlord, as the case may be, and Landlord shall receive the
precise amount due as Tenant's Pro Rata Share of the actual cost of said Real
Estate Taxes, Common Area Maintenance Costs and Insurance for the preceding
calendar year or any fractional calendar year.
Tenant will pay Landlord the sum of the following per month, in advance, payable
at the same time and place as the minimum rent is payable, as estimated charges
for Tenant's Pro Rata Share of Real Estate Taxes, Common Area Maintenance Costs
and Insurance Costs:
(1) Real Estate Taxes $ 494.00
(2) Common Area Maintenance Costs $ 343.00
(3) Insurance Costs $ 23.00
(4) Management Fees $ 146.00
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Total $ 1,006.00
The estimated charges as set out above are subject to changes from time
to time throughout the Lease term. Failure to pay any one or all of Tenant's Pro
Rata Share of Building Costs shall constitute an event of default hereunder.
(A) TAXES
(1) "Tax Year" means the calendar and/or fiscal year
basis upon which taxes and/or special assessments are
assessed upon the Building throughout the term of
this Lease.
(2) "Real Estate Taxes" means the amount (in dollars) of
taxes and/or special assessments levied or assessed
against the land and improvements of the Building,
said taxes to be either ad valorem taxes or a
substitution therefor which may be designated as
appropriate by applicable governing authorities, in
any tax year or fractional part thereof. Excluded are
all estate or death, succession, income or franchise
taxes.
(3) "Tenant's Pro Rata Share of Real Estate Taxes" means
that amount obtained by multiplying the Real Estate
Taxes by a fraction, the
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numerator of which is the square foot area of the
Leased Premises and the denominator of which is the
gross leasable area of the Building.
(4) "Building" means all of the real estate and the
buildings and other improvements actually constructed
thereon, including common areas, as more specifically
shown on the Site Plan attached as Exhibit "B".
Landlord's Payment. Subject to the limitations, conditions and
agreements contained in this Article, Landlord shall pay annually, all Real
Estate Taxes. On or before one hundred eighty (180) days after the end of the
Tax Year, Landlord shall render a statement showing the total of Tenant's
Estimated Tax Payments made in advance during the preceding Tax Year, and the
balance, if any, then due from Tenant. At the time of rendering the statement,
Landlord shall submit to Tenant a true copy of the tax bills. Taxes and/or
special assessments for a fractional year, if any, shall be prorated. Landlord's
failure to provide the statements shall not relieve Tenant of any liability
hereunder.
Tenant's Liability. Tenant promises and agrees to pay Tenant's
Estimated Pro Rata Share of Real estate Taxes, monthly in advance, on the first
day of each calendar month, in an amount estimated by Landlord as provided
above.
Annual Adjustment. Within ten (10) days after the receipt of Landlord's
statement showing the total amount paid in advance by Tenant and a copy of the
paid tax bills showing the actual taxes paid or to be paid by Landlord, there
shall be an adjustment between Landlord and Tenant. Tenant shall pay to landlord
on demand the difference between the amount paid by Tenant and the actual amount
due. If the total amount paid by Tenant hereunder for any such calendar year
shall exceed such actual amount due from Tenant for such calendar year, the
excess shall be credited by Landlord against any amounts then due and owing by
Tenant to Landlord, and any remaining net surplus shall then be refunded by
Landlord to Tenant. Failure of Tenant to pay Tenant's Pro Rata Share of Real
Estate Taxes in the manner and time provided herein shall constitute an event of
default hereunder.
(B) COMMON AREA MAINTENANCE
Landlord agrees to maintain and repair throughout the term hereof the
common areas and facilities of the Building, including, without limitation, the
automobile entrances, exits, driveways, parking areas, pedestrian walks,
landscaped areas, public toilets, meeting rooms, lighting facilities, service
areas and Building signs not otherwise the responsibility of Tenant as set out
in this Lease (said areas hereinafter called the "Common Area"). Landlord's
maintenance and repairs shall include all repairs and replacements and the
supplies and materials therefor, which in Landlord's reasonable judgment are
necessary to preserve the utility of the Common Area and facilities in the
condition same were in at the time of completion, reasonable wear and tear only
excepted.
As used herein, the term "Common Area Maintenance Costs" shall mean all
costs and expenses of every kind paid or incurred during the term of this Lease
in connection with the
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operation and upkeep of the Common Area and facilities within the Building, and
where necessary, the cost of replacing any of said common facilities and the
cost of policing and protecting same. In addition to the foregoing, the Common
Area Maintenance Costs may include a reserve fund of ten percent (10%) of the
aggregate Common Area Maintenance Costs, which reserve fund will be put into an
escrow account and accrue interest until such time as a major repair such as
resurfacing the parking lot or major concrete drive replacement, where it shall
be applied against such "Major Repair Cost". Also, in addition to the foregoing,
the Common Area Maintenance Costs shall include, but not limited to, maintenance
and repair costs, management fees, wages and fringe benefits payable to
employees of Landlord whose duties are connected with the operation and
maintenance of the Building and common areas, all services, supplies, repairs,
replacements or other expenses for maintaining and operating the Building.
Tenant's Pro Rata Share of the Common Area Maintenance Costs means that amount
obtained by multiplying said Costs by a fraction, the numerator of which is the
square foot area of the Leased Premises and the denominator of which is the
gross leasable area of the Building. Tenant promises to pay Tenant's Pro Rata
Share of Common Area Maintenance Costs monthly in advance, on the first day of
each calendar month in an amount estimated by Landlord as provided above.
Landlord's failure to provide the statements shall not relieve Tenant of any
liability hereunder.
Annual Adjustment. Within ten (10) days after the receipt of Landlord's
statement showing the total amount paid in advance by Tenant and a copy of the
paid tax bills showing the actual taxes paid or to be paid by Landlord, there
shall be an adjustment between Landlord and Tenant. Tenant shall pay to Landlord
on demand the difference between the amount paid by Tenant and the actual amount
due. If the total amount paid by Tenant hereunder for any such calendar year
shall exceed such actual amount due from Tenant for such calendar year, the
excess shall be credited by Landlord against any amounts then due and owing by
Tenant to Landlord, and any remaining net surplus shall then be refunded by
Landlord to Tenant, Failure of Tenant to pay Tenant's Pro Rata Share of Real
Estate Taxes in the manner and time provided herein shall constitute an event of
default hereunder.
(C) INSURANCE
Tenant's Liability Insurance. Tenant agrees, at Tenant's sole cost, to
maintain in force during the term of this Lease a policy or policies of
comprehensive public liability insurance, including property damage, written by
one or more responsible insurance companies approved by Landlord and licensed to
do business in Texas, which insurance companies shall be rated not less than
A-13 by Best Guide Rating, insuring Tenant and naming, as additional named
insured, Landlord and such other person, firms or corporations as are designated
by Landlord and acceptable to said insurance companies, insuring against loss of
life, bodily injury and/or property damage with respect to the Leased Premises
and the business operated by Tenant and any subtenant, licensee, concessionaire
or assignee of Tenant in the Leased Premises or Building, in which the limit of
public liability shall not be less than ONE MILLION AND NO/100 DOLLARS
($1,000,000) single limit bodily injury and in which the limit of property
damage liability shall be not less than FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($500,000.00). Additionally, Tenant shall maintain at Tenant's sole cost, plate
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glass insurance on the windows and door or doors of the Leased Premises. Each
such policy shall be noncancellable for any cause without first giving Landlord
thirty (30) days prior written notice. Subject to all of the foregoing, the
insurance coverage required to be furnished by Tenant pursuant to this Section B
may be in a blanket policy covering all of Tenant's operations. A copy of such
policy, or a certificate of such insurance together with a receipt showing all
premiums paid thereon for at least one (1) year in advance, shall be delivered
to Landlord upon the commencement of the term of this Lease and annually
thereafter upon the first day of such lease year throughout the term hereof.
Landlord's Liability Insurance. Landlord agrees to maintain in force
during the term of this Lease a policy or policies of comprehensive public
liability insurance, including property damage, written by one or more
responsible insurance companies approved by Landlord and licensed to do business
in Texas insuring Landlord against loss of life, bodily injury and/or property
damage with respect to the common areas of the Building and the operation of the
Building, in which the limit of public liability shall be not less than FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) single limit bodily injury and
in which the limit of property damage liability shall be not less than ONE
HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00). In addition, Landlord may
maintain in force such umbrella policy or policies of public liability insurance
as Landlord, in its sole discretion, may deem appropriate.
Landlord's Fire and Extended Coverage Insurance. Landlord agrees to
procure and keep in effect during the terms of this Lease a policy or policies
of fire and extended coverage insurance covering the Building, or separate fire
rating division as determined by the State Board of Insurance which includes the
leased Premises, including rent abatement, vandalism and malicious mischief
coverage, written by an insurance company authorized to do business within the
State of Texas, and in an amount equal to not less than eighty percent (80%) of
the replacement cost of the premises covered. Such insurance shall provide
protection against losses so insured against for the benefits of Landlord and
any first mortgage of Landlord, subject to the terms and provisions of this
Lease and any first mortgage; provided, however, that all proceeds payable by
any insurance company under such policy or policies shall be payable to such
mortgagee, if any, and shall be applied in accordance with the terms of such
mortgage; or, if there is no mortgage, the full amount of such proceeds shall be
payable to Landlord, and Tenant shall not be entitled to, and shall have no
interest in, such proceeds or any part thereof. Such policy or policies shall
contain a provision or endorsement with respect to mutual waiver of right of
subrogation. The premium on said insurance shall be paid at least one (1) year
in advance, and Landlord shall, upon request, furnish Tenant proof of such
Insurance.
Tenant's Liability for Building Insurance Costs. At the commencement of
the term of this Lease and within one hundred eighty (180) days after the
commencement of each calendar year (or partial calendar year) thereafter,
Landlord shall furnish Tenant a statement, together with a true copy of the
premium statement, showing the Building Insurance Costs for the calendar year in
which the term commences or the applicable calendar year thereafter and any
deductible amount incurred in any loss. Landlord's failure to provide the
statement shall not
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relieve Tenant of any liability hereunder. As used herein, the term "Building
Insurance Costs" shall mean the actual premium costs of public liability and
fire and extended coverage insurance, including rent abatement insurance
required by this Lease to be maintained by Landlord and any deductible incurred
in any loss. Tenant's Pro Rata Share of public liability insurance shall be
determined by multiplying the total cost of such insurance by a fraction, the
numerator of which is the square foot area of the Leased Premises and the
denominator of which is the gross leasable area of the Building. Tenant's Pro
Rata Share of fire and extended coverage insurance shall be determined by
multiplying said total cost of such insurance by a fraction, the numerator of
which is the square foot area of the Leased Premises and the denominator of
which is the gross leasable area of the Building. Tenant's Pro Rata Share of
Building Insurance Costs shall be paid as provided above.
Annual Adjustments. Within ten (10) days after the receipt of
Landlord's statement showing the total amount paid in advance by Tenant and a
copy of the insurance bills showing the actual monies paid or to be paid by
Landlord, there shall be an adjustment between Landlord and Tenant. Tenant shall
pay to Landlord on demand the difference between the amount paid by Tenant and
the actual amount due. If the total amount paid by Tenant hereunder for any such
calendar year shall exceed such actual amount due from Tenant for such calendar
year, the excess shall be credited by Landlord against any amounts then due and
owing by Tenant to Landlord and any remaining net surplus shall then be refunded
by Landlord to Tenant. Failure of Tenant to pay Tenant's Insurance Costs in the
manner and time provided herein shall constitute an event of default hereunder.
5. Tenant agrees to accept the premises in it "as is", "where is"
condition.
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Except as provided herein, all terms and conditions of the Lease
Agreement shall remain in full force and effect.
LANDLORD: TENANT:
Transwestern CG Partners I, L.P. Tekgraf, Inc., a Texas
By: Transwestern CP GP I, L.L.C., its sole Corporation
general partner By: /s/ Xxxxxx Xxxxxx
By: Houston Properties, L.L.C., its --------------------
managing member Name: Xxxxxx Xxxxxx
By: Connecticut General Life ------------------
Insurance Company, its sole
managing member Its: Director
By: Cigna Investments, Inc., --------------------
its authorized signatory
By:
---------------------------
Name:
-------------------------
Its:
--------------------------
By: Transwestern CP GP I, L.L.C., its
managing member
By: Transwestern Investment
Company, L.L.C., its authorized
signatory
By: /s/ Xxxxxx Xxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxx
------------------------
Its: Managing Director
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