EXHIBIT 10.30
STATE OF NORTH CAROLINA
COUNTY OF DURHAM THIRD LEASE AMENDMENT
THIS THIRD LEASE AMENDMENT (the "Amendment") is entered into and effective
this 21st day of August, 2003, by and between PROPERTY RESERVE, INC, a Utah
corporation (hereinafter "Landlord"), and DIGITAL RECORDERS, INC., a North
Carolina corporation (hereinafter, "Tenant").
RECITALS:
A. The Prudential Savings Bank, F.S.B., as Trustee ("Prudential") and
Tenant entered into a Lease Agreement dated December 18, 1998, as amended by
First Lease Amendment dated December 11, 2002, and Second Lease Amendment dated
June 18, 2003 between Landlord, successor in interest to Prudential's interest
as landlord (as amended, the "Lease"), for approximately twenty-six thousand
four hundred eighty-four (26,484) rentable square feet of space (the "Existing
Premises") located in Suite 100, being at the east end of that certain building
known as 4018 Patriot Drive, Durham, Durham County North Carolina 27709 (the
"Building"), being part of that development known as One Park Center.
B. Landlord and Tenant now desire to modify and amend the Lease pursuant
to the terms and conditions contained herein.
AGREEMENT:
NOW, THEREFORE, for valuable consideration and ONE AND NO/100 DOLLARS
($1.00) paid by Tenant to Landlord, Landlord and Tenant agree that the Lease is
modified and amended as follows:
1. Commencing on the Additional Space Commencement Date, as defined
herein, the Premises shall be expanded to include approximately Four
Thousand Six Hundred Eighty-eight rentable square feet (4,688
r.s.f.), more or less, (the "Additional Space") on the west end of
the Building, as shown on Exhibit A, attached hereto and
incorporated herein by reference. As of the Additional Space
Commencement Date, the Premises shall contain a total of Thirty-one
Thousand One Hundred Seventy-two rentable square feet (31,172
r.s.f).
2. As of the Additional Space Commencement Date:
a. Tenant's Pro Rata Share for operating expense pass throughs
and other purposes shall be recalculated based on the revised
square footage of the Premises; and
b. The Base Year Amount for determining operating expense pass
throughs attributable for the Additional Space incurred after
the Additional Space
Commencement Date shall be the operating expenses paid or
incurred by Landlord for calendar year 2003. The Base Year(s)
for the Existing Space Shall remain unchanged; and
c. In addition to the Base Rent on the Existing Premises, Tenant
shall pay Base Rent on the Additional Space as follows:
Installment of Monthly Base
Month Rent
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1 (beginning with the Additional Space $ 0.00
Commencement Date) (one month "free rent")
2-12 $2,715.13
13-24 $2,797.17
25-36 $2,879.21
37-48 $2,965.16
49-60 $3,055.01
61-66* $3,144.87
*66 month term assumes Additional Space Commencement Date is
November 1, 2003; Notwithstanding any assumed "lease term" it
is understood that the Lease term is not extended by this
Amendment and that the base rent for the Additional Space is
based on a rate of $6.95 per rentable square foot with 3%
annual escalations.
d. Any other sums calculated based on rentable square footage of
the Premises shall be recalculated based on 31,172 rentable
square feet. The provisions of Paragraph 3(h) of the Lease
limiting annual increases in Controllable Expenses shall not
limit increases arising from the increase in the rentable
square footage of the Premises.
e. Except as specifically modified hereby, all references to
"rent," "Base Rent," "operating expenses," and "additional
rent" shall be interpreted to apply as and to reflect the
revised square footage of the Premises.
3. The term of the Lease shall not be affected by this Third Amendment;
the Lease shall expire as of April 30, 2009, unless earlier
terminated as set forth in the Lease.
4. The "Addtional Space Commencement Date" shall mean the Scheduled
Additional Space Commencement Date as defined in Exhibit B subject
to adjustment as set out herein. Tenant agrees to execute a document
setting out the actual Additional Space Commencement Date upon
Landlord's request.
2
IN WITNESS WHEREOF, Landlord and Tenant have executed this Third Amendment
to Lease in triplicate originals, all as of the day and year first
above-written.
LANDLORD:
PROPERTY RESERVE, INC.,
a Utah corporation
By: /s/ Mark B. Gibbons,
-------------------------
Name: _______________________
Title: Mark B. Gibbons, President
Date: 8/27/03
TENANT:
DIGITAL RECORDERS, INC.,
a North Carolina corporation.
By: /s/ Lawrence A. Taylor
-------------------------
Name: LAWRENCE A. TAYLOR
Title: CFO & SECRETARY
Date: 8/21/03
3
EXHIBIT A
[MAP]
EXHIBIT B
POSSESSION AND LEASEHOLD IMPROVEMENTS
1. Landlord conveys and Tenant accepts the Additional Space in its current
"as is" condition and configuration, except that Landlord at Tenant's sole
cost (subject to the Tenant Allowance as described below) shall construct
the improvements shown on Exhibit B-1 attached hereto and incorporated
herein by reference. It is expressly understood and agreed that
Landlord's obligation with respect to the construction and finishing of
the Additional Space shall be limited to the scope of work described in
Exhibit B-1 ("Landlord's Work") and shall in no event include any work not
described in Exhibit B-1. All Landlord's Work shall constitute
improvements to the Demised Premises which shall, at Landlord's option,
become sole property of Landlord and shall remain at the Demised Premises
upon expiration of the Lease or termination of Tenant's right to
possession of the Demised Premises.
2. For purposes of this Amendment, the term "Scheduled Additional Space
Commencement Date" shall mean November 15, 2003. Landlord will proceed to
complete Landlord's Work. Landlord will deliver Landlord's Work and tender
possession of the Additional Space to Tenant when the Landlord's Work has
been completed to the extent that only minor construction details, which
would not materially interfere with Tenant's use and enjoyment of the
Additional Space, require completion or correction ("substantially
completed"). The "Additional Space Commencement Date" is the day Landlord
delivers Landlord's Work and tenders possession of the Additional Space
(subject to the terms of Paragraph 6 below), which will be the Scheduled
Additional Space Commencement Date, unless the Additional Space
Commencement Date is extended according to Paragraph 5 below. Tenant shall
accept the Landlord's Work and possession of the Additional Space when
Landlord tenders and delivers them, provided the Landlord's Work has been
substantially completed as set forth above, and provided further that
Tenant shall not be required to accept possession prior to the Scheduled
Additional Space Commencement Date.
3. Landlord and Tenant agree to execute a document after possession of the
Additional Space is delivered to Tenant specifying the Additional Space
Commencement Date.
4. In no event shall Tenant be required to occupy the Additional Space prior
to the Scheduled Additional Space Commencement Date. If Tenant, with
Landlord's consent, occupies the Additional Space or any part thereof
prior to the Scheduled Additional Space Commencement Date, then Tenant's
and Landlord's obligations as to the Additional Space, including the
payment of rent as set forth hereunder, shall commence as of such earlier
date, which shall be deemed the Additional Space Commencement Date for the
purposes of the Lease and this Third Lease Amendment.
5. If Landlord fails to (i) tender possession of the Additional Space to
Tenant; or (ii) deliver the Landlord's Work to Tenant on or before the
Scheduled Additional Space
Commencement Date, Landlord will not be in default or liable in damages to
Tenant, nor will the obligations of Tenant be affected, provided however,
that
(a) the Additional Space Commencement Date will be extended
automatically by one day for each day of the period after the
Scheduled Additional Space Commencement Date to the day on which
Landlord tender possession of the Demised Premises to Tenant, less
any portion of that period attributable to Tenant's delays as more
particularly described in Paragraph 6 below; and
(b) if Landlord does not (i) tender possession of the Additional Space
to Tenant and (ii) deliver the Landlord's Work to Tenant on or
before the date six (6) months after the Scheduled Additional Space
Commencement Date (plus any period of delay caused by Tenant's
delays described in Paragraph 6 below,) Tenant shall have the right
to terminate this Amendment, by delivering written notice of
termination to Landlord not more than ten (10) days after such
tender deadline date.
6. Notwithstanding anything contained herein to the contrary, the Additional
Space Commencement Date (and therefore Tenant's obligations for the
payment of rent with respect to the Additional Space) shall not be delayed
or extended if Landlord is delayed in substantially completing Landlord's
Work as a result of:
(a) any delays in Tenant providing information requested by Landlord or
approving plans, specifications, construction drawings in
connection with the Landlord's Work;
(b) Tenant's request for materials or installations as part of the
Landlord's Work that are other than Building standard materials or
installations.
(c) any change order or changes in any drawings, plans or specifications
requested by Tenant;
(d) Tenant's failure to review or approve in a timely manner any item
requiring Tenant's review or approval;
(e) performance of any additional Tenant Improvements or any failure to
complete or delay in completion of such work; or
(f) any other act or omission of Tenant, or Tenant's architects,
engineers, contractors or subcontractors (all of which will be
deemed to be delays caused by Tenant).
In such event, the Additional Space Commencement Date will only be
extended under Paragraph 5 above until the date on which Landlord would have
substantially completed the performance of such work but for such delays.
7. Notwithstanding anything contained herein or in the Lease to the contrary,
Landlord may withhold its approval to any work, plans, specifications or
drawings that require work which:
(a) exceeds or adversely affects the capacity or integrity of the
Building's structure or any of its heating, ventilating, air conditioning,
plumbing, mechanical, electrical, communications or other systems;
(b) is not approved by the holder of any mortgage, deed of trust or other
lender who has a security interest in the Building or the lessor of any
ground lease interest, if any;
(c) would not be approved by a prudent operator of property similar to the
Building;
(d) violates any agreement which affects the Building or binds Landlord;
(e) Landlord reasonably believes will increase the cost of operating or
maintaining any of the Building's systems;
(f) Landlord reasonably believes will reduce the market value of the
subject premises or the Building at the end of the term of the Lease;
(g) does not conform to applicable building codes or is not approved by
any governmental authority having jurisdiction over the subject premises;
(h) does not meet or exceed Building standard; or
(i) Landlord reasonably believes will infringe on the architectural or
historical integrity of the Building.
8. The cost to be paid for Landlord's Work shall cover the cost for installation
of these improvements set out on Exhibit B-1, including any required permits;
provided, however, in no event shall Landlord pay any costs for the above
referenced items in excess of an aggregate of $56,256.00 (the "Tenant Allowance"
being $12.00 per rentable square foot of the Additional Space). The Tenant
Allowance may not be used to purchase equipment, furniture or materials for
Tenant's business operations. The Tenant Allowance shall not be used to pay for
work which Tenant performs itself. Any costs for the Landlord's Work in excess
of the Tenant Allowance shall be paid to Landlord by Tenant prior to
commencement of construction. Additionally, if during the course of performing
Landlord's Work, Landlord reasonably determines that the cost of Landlord's Work
shall exceed the Tenant Allowance, Tenant will, upon Landlord's request, deposit
the amount of such excess with Landlord. Landlord's obligation to continue
performance of Landlord's Work is subject to receipt of any such excess and
delays caused by failure to deposit such excess shall constitute Tenant Delays.
Failure by Tenant to pay same in full within ten (10) business days after being
notified by Landlord shall constitute failure to pay Rent when due and shall
constitute an event of default by Tenant hereunder, giving rise to all remedies
available to Landlord under this Lease Agreement and at law or in equity for
nonpayment of Rent. At Tenant's election, such election to be made within 10
days of the Additional Space Commencement Date, the excess of the upfit costs
over the Tenant Allowance
for approved initial upfit items shall be amortized over the term of the Lease
at an interest rate of 8% per annum and Tenant shall pay such amortized cost
monthly as Additional Rent.
EXHIBIT B-1
[DIGITAL RECORDERS INC.- SPACE PLAN MAP]
EXHIBIT B-1
31-Jul-03
ADVANTIS CONSTRUCTION
ESTIMATE COVER SHEET
JOB: DAC
REF: CRAIG SCATES 4,800- TOTAL R.S.F.
AT: ONE PARK CENTER
EST: 0
DRWG: WATERTOWN 7/16/03
DIVISION SUMMARY
ALTERNATE
DIV 1000 - GENERAL COND./ SUPERVISION / CLEANING $ 7,812.00
DIV 2000 - DEMOLITION 5,700.00
DIV 3000 - CONCRETE 0.00
DIV 4000 - MASONRY 0.00
DIV 5000 - METALS 0.00
DIV 6000 - CASEWORK 4,800.00
DIV 7200 - THERMAL & MOISTURE PROTECTION 0.00
DIV 7500 - ROOFING 0.00
DIV 7900 - CAULKING 0.00
DIV 8000 - DOORS & HARDWARE 5,920.00
DIV 8800 - GLASS 840.00
DIV 9250 - FRAMING & DRYWALL REPAIR 13,325.00
DIV 9510 - ACOUSTICAL REPAIR 1,250.00
DIV 9310 - TILE 0.00
DIV 9600 - RESILIENT/CARPET(VCT IN ASSEMBLY AREA) 7,950.00
DIV 9900 - PAINT 4,790.00
DIV 10000 - HYDRAULIC DOCK LIFT(3000# CAPACITY) 0.00 $ 7,658.00
DIV 15400 - PLUMBING 1,650.00
DIV 15500 - SPRINKLER 5,750.00
DIV 15800 - H.V.A.C.(RELOCATE STATS DIFFUSER) 2,940.00
DIV 16000 - ELECTRICAL /FIRE ALARM 15,155.00
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SUB-TOTAL : 77,882.00
FEE : 7,788.20
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TOTAL COST: $85,670.20
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PER SQ.FT.: $ 17.85
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