EXHIBIT 10.31
STATE OF NORTH CAROLINA
COUNTY OF DURHAM FOURTH LEASE AMENDMENT
THIS FOURTH LEASE AMENDMENT (the "Amendment") is entered into and
effective this 8th day of September 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 19, 2003, and Third Lease Amendment dated August 21, 2003, between
Landlord, successor in interest to Prudential's interest as landlord (as
amended, the "Lease"), for approximately thirty-one thousand one hundred
seventy-two (31,172) rentable square feet of space (the "Existing Premises")
being twenty-six thousand four hundred eighty-four (26,484) rentable square feet
located in Suite 100 at the east end and four thousand six hundred eighty-eight
rentable square feet (4,688 r.s.f.) at the west 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 four hundred sixteen rentable square feet (4,416 r.s.f)
more or less, (the "Additional Space") adjacent to the portion
occupied by Tenant on the east 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-five thousand five hundred eighty-eight
rentable square feet (35,588 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
----- ----
September___, 2003 * - April 30, 2004 $2,189.60
May 1, 1004 - April 30, 2005 $2,255.84
May 1, 2006 - April 30, 2006 $2,322.08
May 1, 2006 - April 30, 2007 $2,392.00
May 1, 2007 - April 30, 2008 $2,465,60
May 1, 2008 - April 30, 2009 $2,539.20
* Monthly Base Rent for September 2003 will be prorated.
d. Any other sums calculated based on rentable square footage of
the Premises shall be recalculated based on 35,588 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 Fourth Lease
Amendment; the Lease shall expire as of April 30, 2009, unless
earlier terminated as set forth in the Lease.
4. The "Additional Space Commencement Date" shall mean the earlier of
(i) September _, 2003 or (ii) Tenant's occupancy of any or all of
the Additional Space.
5. Tenant has examined land inspected the Additional Space and accepts
the Additional Space in all respects "AS IS" and "WHERE IS" subject
to completion of the leasehold improvements as set forth on Exhibit
B."
6. Tenant understands and agrees that the services and utilities,
including but not limited to electrical, gas, water and sewer which
are provided to the 4,416 r.s,f. added by this Fourth Lease
Amendment are separately metered. Tenant shall contract directly
with the service provider for such services. Certain services or
utilities on the meter may actually include a larger area already
occupied by Tenant (for example under the First Lease Amendment or
Second Lease Amendment).
7. Landlord acknowledges that it currently holds $15,422.38 as a
Security Deposit pursuant to Paragraph 3(b) of the Lease. No
additional Security Deposit is being required as part of this Fourth
Lease Amendment.
8. Tenant acknowledges that its obligation to pay rent pursuant to the
Fourth Lease Amendment shall commence on the Additional Space
Commencement Date notwithstanding that the Landlord's Work set out
on Exhibit B has not been done.
9. Tenant acknowledges that any guaranty, letter of credit, or other
form of security which was intended to be applicable to the Existing
Premises or Lease pursuant to Paragraph 3 of EXHIBIT D to the Lease
shall also be applicable to the Additional Space and the Lease as
amended by this Fourth Lease Amendment. Tenant agrees to deliver
such documents or other items, signed by all appropriate parties as
may be requested by Landlord to evidence this agreement.
10. Tenant represents and warrants to Landlord that Tenant has not
entered into any agreements, nor will Tenant enter into any
agreement in the future whereby Landlord would be obligated to pay
any broker's commission or finder's fee in connection with Tenant's
execution of this Fourth Lease Amendment. Tenant agrees to indemnify
Landlord against, and to hold Landlord harmless from, all
liabilities arising from any such claim.
11. Capitalized terms not defined herein shall have the same meaning as
set forth in the Lease.
12. Except as specifically modified hereby, all the terms and provisions
of the Lease shall remain in full force and effect and are hereby
affirmed and ratified.
3
IN WITNESS WHEREOF, Landlord and Tenant have executed this Fourth Lease
Amendment in triplicate originals, all as of the day and year first above
written.
LANDLORD:
PROPERTY RESERVE, INC.,
a Utah corporation
By:____________________________
Name:__________________________
Title:_________________________
Date:__________________________
TENANT:
DIGITAL RECORDERS, INC.,
a North Carolina corporation
By:____________________________
Name:__________________________
Title:_________________________
Date:__________________________
SCHEDULE OF EXHIBITS
Exhibit A Diagram showing Additional Space in relation to its location
in the Building. Preferable to cross hatch Additional Space.
Exhibit B Leasehold Improvements Exhibit
EXHIBIT A
[FLOOR PLAN]
EXHIBIT B
Leasehold Improvements
Landlord shall, at Landlord's cost, perform the following work ("Landlord's
Work"):
(i)install a "1 hour" demising wall to separate the Premises from the adjacent
vacant space.
(ii) install a single door within the Premises to connect the portion of the
Premises originally leased to the space added by the First Lease Amendment,
the Second Lease Amendment and the Third Lease Amendment.
(iii) install 2,000 square feet of vinyl tile as agreed between Landlord and
Tenant.
Tenant acknowledges that the improvements (i) may be made in the Additional
Space and the Existing Premises on the east side of the Building as agreed by
Landlord and Tenant and (ii) will not be done as of the Additional Space
Commencement Date. Tenant grants, Landlord, its agents, employees and
contractors access to the Additional Space and the Existing Premises to perform
such work and shall not delay or hinder the performance of such work. Landlord's
work shall not constitute a nuisance or constructive eviction nor give Tenant
any right to abate or withhold rent. Landlord shall perform the work in a good
and workmanlike manner.