EXHIBIT 10.33
SECOND AMENDMENT
THIS SECOND AMENDMENT (the "amendment") is made and entered into as of the
17th day of September, 2004, by and between STERLING PLAZA LIMITED PARTNERSHIP,
a DELAWARE LIMITED PARTNERSHIP, doing business in Texas as DALLAS STERLING PLAZA
LIMITED PARTNERSHIP ("Landlord"), and DIGITAL RECORDERS, INC. a North Carolina
corporation ("Tenant").
RECITALS
A. Landlord and Tenant are parties to that certain lease dated March 15,
2000, which lease has been previously amended by instrument dated November
2, 2000 and that certain First Amendment dated August 25, 2003
(collectively, the "Lease"). Pursuant to the Lease, Landlord has leased to
Tenant space currently containing approximately 2,206 rentable square feet
(the "Original Premises") described as Suite No. 1050 on the 10th floor of
the building located at 5949 Sherry Lane, Dallas, Texas 75225, and
commonly known as Sterling Plaza (the "Building").
B. Tenant has requested that additional space containing approximately 939
rentable square feet described as Suite No. 1040 on the 10th floor of the
Building shown on Exhibit A hereto (the "Expansion Space") be added to the
Original Premises and that the Lease be appropriately amended and Landlord
is willing to do the same on the following terms and conditions.
NOW, THEREFORE, in consideration of the above recitals which by this
reference are incorporated herein, the mutual covenants and conditions contained
herein and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Landlord and Tenant agree as follows:
1. EXPANSION AND EFFECTIVE DATE. Effective as of the Expansion Effective Date
(defined below), the Premises, as defined in the Lease, is increased from
2,206 rentable square feet on the 10th floor to 3,145 rentable square feet
on the 10th floor by the addition of the Expansion Space, and from and
after the Expansion Effective Date, the Original Premises and the
Expansion Space, collectively, shall be deemed the Premises, as defined in
the Lease. The Term for the Expansion Space shall commence on the
Expansion Effective Date and end on the Extended Termination Date. The
Expansion Space is subject to all the terms and conditions of the Lease
except as expressly modified herein and except that Tenant shall not be
entitled to receive any allowances, abatements or other financial
concessions granted with respect to the Original Premises unless such
concessions are expressly provided for herein with respect to the
Expansion Space.
1.01. The "Expansion Effective Date" shall be the later to occur of (i)
October 1, 2004 ("Target Expansion Effective Date"), and (ii) the
date upon which the Landlord Work (as defined in the Work Letter
attached as EXHIBIT B hereto) in the Expansion Space has been
substantially completed; provided, however, that if Landlord shall
be delayed in substantially completing the Landlord Work in the
Expansion Space as a result of the occurrence of a Tenant Delay
(defined below), then, for purposes of determining the Expansion
Effective Date, the date of substantial completion shall be deemed
to be the day that said Landlord Work would have been substantially
completed absent any such Tenant Delay(s). A "Tenant Delay" means
any act or omission of Tenant or its agents, employees, vendors or
contractors that actually delays substantial completion of the
Landlord Work, including, without limitation, the following:
a. Tenant's failure to furnish information or approvals within
any time period specified in the Lease or this Amendment,
including the failure to prepare or approve preliminary or
final plans by any applicable due date;
b. Tenant's selection of equipment or materials that have long
lead times after first being informed by Landlord that the
selection may result in a delay;
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c. Changes requested or made by Tenant to previously approved
plans and specifications;
d. The performance of work in the Expansion Space by Tenant or
Tenant's contractor(s) during the performance of the Landlord
Work; or
e. If the performance of any portion of the Landlord Work depends
on the prior or simultaneous performance of work by Tenant, a
delay by Tenant or Tenant's contractor(s) in the completion of
such work.
The Expansion Space shall be deemed to be substantially completed on
the date that Landlord reasonably determines that all Landlord Work
has been performed (or would have been performed absent any Tenant
Delays), other than any details of construction, mechanical
adjustment or any other matter, the noncompletion of which does not
materially interfere with Tenant's use of the Expansion Space. The
adjustment of the Expansion Effective Date and, accordingly, the
postponement of Tenant's obligation to pay Rent on the Expansion
Space shall be Tenant's sole remedy and shall constitute full
settlement of all claims that Tenant might otherwise have against
Landlord by reason of the Expansion Space not being ready for
occupancy by Tenant on the Target Expansion Effective Date. The
actual Expansion Effective Date shall be set forth in a confirmation
letter to be prepared by Landlord.
1.02. In addition to the postponement, if any, of the Expansion Effective
Date as a result of the applicability of Section 1.01. of this
Amendment, the Expansion Effective Date shall be delayed to the
extent that Landlord fails to deliver possession of the Expansion
Space for any other reason (other than Tenant Delays by Tenant),
including but not limited to, holding over by prior occupants. Any
such delay in the Expansion Effective Date shall not subject
Landlord to any liability for any loss or damage resulting
therefrom. If the Expansion Effective Date is delayed, the
Termination Date under the Lease shall not be similarly extended.
2. BASE RENT. In addition to Tenant's obligation to pay Base Rent for the
Original Premises, Tenant shall pay Landlord Base Rent for the Expansion
Space as follows:
MONTHS OF TERM OR ANNUAL RATE PER SQUARE
PERIOD FOOT MONTHLY BASE RENT
- ------------------------ ---------------------- -----------------
Expansion Effective Date
- -April 30, 2008 $ 23.50 $ 1,838.88
All such Base Rent shall be payable by Tenant in accordance with the terms
of the Lease.
3. ADDITIONAL SECURITY DEPOSIT. Upon Tenant's execution hereof, Tenant shall
pay Landlord the sum of $1,838.88 which is added to and becomes part of
the Security Deposit, if any, held by Landlord as provided under Section
VI of the Lease as security for payment of Rent and the performance of the
other terms and conditions of the Lease by Tenant. Accordingly,
simultaneous with the execution hereof, the Security Deposit is increased
from $4,228.17 to $6,067.05.
4. TENANT'S PRO RATA SHARE. For the period commencing with the Expansion
Effective Date and ending on the Termination Date, Tenant's Pro Rata Share
for the Expansion Space is 0.3102%.
5. EXPENSES AND TAXES. For the period commencing with the Expansion Effective
Date and ending on the Termination Date, Tenant shall pay for Tenant's Pro
Rata Share of Expenses and Taxes applicable to the Expansion Space in
accordance with the terms of the Lease, provided, however, during such
period, the Base Year for the computation of Tenant's Pro Rata Share of
Expenses and Taxes applicable to the Expansion Space is 2004.
6. IMPROVEMENTS TO EXPANSION SPACE.
6.01. CONDITION OF EXPANSION SPACE. Tenant has inspected the Expansion
Space and agrees to accept the same "as is" without any agreements,
representations, understandings or obligations on the part of
Landlord to perform any alterations,
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repairs or improvements, except as may be expressly provided
otherwise in this Amendment.
6.02. RESPONSIBILITY FOR IMPROVEMENTS TO EXPANSION SPACE. Landlord shall
perform improvements to the Expansion Space in accordance with the
Work Letter attached hereto as Exhibit B.
7. EARLY ACCESS TO EXPANSION SPACE. If Tenant is permitted to take possession
of the Expansion Space before the Expansion Effective Date, such
possession shall be subject to the terms and conditions of the Lease and
this Amendment and Tenant shall pay Base Rent and Additional Rent
applicable to the Expansion Space to Landlord for each day of possession
prior to the Expansion Effective Date. However, except for the cost of
services requested by Tenant (e.g. freight elevator usage), Tenant shall
not be required to pay Rent for the Expansion Space for any days of
possession before the Expansion Effective Date during which Tenant, with
the approval of Landlord, is in possession of the Expansion Space for the
sole purpose of performing improvements or installing furniture, equipment
or other personal property.
8. OTHER PERTINENT PROVISIONS. Landlord and Tenant agree that, effective as
of the date of this Amendment (unless different effective date(s) is/are
specifically referenced in this Section), the Lease shall be amended in
the following additional respects:
8.01 Section A, of Article I, "Parking" of Exhibit E, "Additional
Provisions" of the Lease is hereby amended and modified by deleting
the phrase "six (6) parking permits" wherever it appears within the
section and inserting the following in lieu thereof: "nine (9)
parking permits".
9. MISCELLANEOUS.
9.01. This Amendment and the attached exhibits, which are hereby
incorporated into and made a part of this Amendment, set forth the
entire agreement between the parties with respect to the matters set
forth herein. There have been no additional oral or written
representations or agreements. Under no circumstances shall Tenant
be entitled to any Rent abatement, improvement allowance, leasehold
improvements, or other work to the Premises, or any similar economic
incentives that may have been provided Tenant in connection with
entering into the Lease, unless specifically set forth in this
Amendment. Tenant agrees that neither Tenant nor its agents or any
other parties acting on behalf of Tenant shall disclose any matters
set forth in this Amendment or disseminate or distribute any
information concerning the terms, details or conditions hereof to
any person, firm or entity without obtaining the express written
consent of Landlord.
9.02. Except as herein modified or amended, the provisions, conditions and
terms of the Lease shall remain unchanged and in full force and
effect.
9.03. In the case of any inconsistency between the provisions of the Lease
and this Amendment, the provisions of this Amendment shall govern
and control.
9.04. Submission of this Amendment by Landlord is not an offer to enter
into this Amendment but rather is a solicitation for such an offer
by Tenant. Landlord shall not be bound by this Amendment until
Landlord has executed and delivered the same to Tenant.
9.05. The capitalized terms used in this Amendment shall have the same
definitions as set forth in the Lease to the extent that such
capitalized terms are defined therein and not redefined in this
Amendment.
9.06. Tenant hereby represents to Landlord that Tenant has dealt with no
broker, other than Jon White ("Broker") in connection with this
Amendment. Tenant agrees to indemnify and hold Landlord, its
trustees, members, principals, beneficiaries, partners, officers,
directors, employees, mortgagee(s) and agents, and the respective
principals and members of any such agents (collectively, the
"Landlord Related Parties") harmless from all claims of any brokers,
other than Broker, claiming to have represented Tenant in connection
with this Amendment. Landlord hereby represents to Tenant that
Landlord has dealt with no broker in connection with this Amendment.
Landlord agrees to indemnify and hold Tenant, its trustees, members,
principals, beneficiaries, partners, officers, directors, employees,
and
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agents, and the respective principals and members of any such agents
(collectively, the "Tenant Related Parties") harmless from all
claims of any brokers claiming to have represented Landlord in
connection with this Amendment.
9.07. Each signatory of this Amendment represents hereby that he or she
has the authority to execute and deliver the same on behalf of the
party hereto for which such signatory is acting.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment
as of the day and year first above written.
LANDLORD:
STERLING PLAZA LIMITED PARTNERSHIP, A
DELAWARE LIMITED PARTNERSHIP, DOING
BUSINESS IN TEXAS AS DALLAS STERLING
PLAZA LIMITED PARTNERSHIP
By: TX-Sterling Plaza Limited Partnership,
a Delaware limited partnership, its
general partner
By: TX-Sterling Plaza GP, L.L.C., a
Delaware limited liability company,
its general partner
By: Equity Office Management,
L.L.C., a Delaware limited
liability company, its
non-member manager
By: /s/ Brad Fricks
---------------------------
Name: Brad Fricks
Title: Vice President - Leasing
TENANT:
DIGITAL RECORDERS, INC. A NORTH CAROLINA
CORPORATION
BY: /s/ David L. Turney
---------------------------------------
NAME: David L. Turney
TITLE: CEO
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EXHIBIT A
EXPANSION SPACE
[FLOOR PLAN]
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EXHIBIT B
WORK LETTER
This Exhibit is attached to and made a part of the Amendment by and
between STERLING PLAZA LIMITED PARTNERSHIP, a Delaware limited partnership,
doing business in Texas as DALLAS STERLING PLAZA LIMITED PARTNERSHIP
("Landlord"), and DIGITAL RECORDERS, INC. a North Carolina corporation
("Tenant") for space in the building located at 5949 Sherry Lane, Dallas, Texas
75225, and commonly known as Sterling Plaza (the "Building").
As used in this Work Letter, the "Premises" shall be deemed to mean the
Expansion Space, as defined in the attached Amendment.
1. This Work Letter shall set forth the obligations of Landlord and Tenant
with respect to the improvements to be performed in the Premises for
Tenant's use. All improvements described in this Work Letter to be
constructed in and upon the Premises by Landlord are hereinafter referred
to as the "Landlord Work." It is agreed that construction of the Landlord
Work and all costs associated with relocating the existing tenant from the
Premises will be completed at Tenant's sole cost and expense, subject to
the Allowance (as defined below). Landlord shall enter into a direct
contract for the Landlord Work with a general contractor selected by
Landlord. In addition, Landlord shall have the right to select and/or
approve of any subcontractors used in connection with the Landlord Work.
2. Tenant shall be solely responsible for the timely preparation and
submission to Landlord of the final architectural, electrical and
mechanical construction drawings, plans and specifications (called
"Plans") necessary to construct the Landlord Work, which plans shall be
subject to approval by Landlord and Landlord's architect and engineers and
shall comply with their requirements to avoid aesthetic or other conflicts
with the design and function of the balance of the Building. Tenant shall
be responsible for all elements of the design of Tenant's plans
(including, without limitation, compliance with law, functionality of
design, the structural integrity of the design, the configuration of the
Premises and the placement of Tenant's furniture, appliances and
equipment), and Landlord's approval of Tenant's plans shall in no event
relieve Tenant of the responsibility for such design. If requested by
Tenant, Landlord's architect will prepare the Plans necessary for such
construction at Tenant's cost. Whether or not the layout and Plans are
prepared with the help (in whole or in part) of Landlord's architect,
Tenant agrees to remain solely responsible for the timely preparation and
submission of the Plans and for all elements of the design of such Plans
and for all costs related thereto. Tenant has assured itself by direct
communication with the architect and engineers (Landlord's or its own, as
the case may be) that the final approved Plans can be delivered to
Landlord on or before September 10, 2004 (the "Plans Due Date"), provided
that Tenant promptly furnishes complete information concerning its
requirements to said architect and engineers as and when requested by
them. Tenant covenants and agrees to cause said final, approved Plans to
be delivered to Landlord on or before said Plans Due Date and to devote
such time as may be necessary in consultation with said architect and
engineers to enable them to complete and submit the Plans within the
required time limit. Time is of the essence in respect of preparation and
submission of Plans by Tenant. If the Plans are not fully completed and
approved by the Plans Due Date, Tenant shall be responsible for one day of
Tenant Delay (as defined in the Amendment to which this Exhibit is
attached) for each day during the period beginning on the day following
the Plans Due Date and ending on the date completed Plans are approved.
(The word "architect" as used in this Exhibit shall include an interior
designer or space planner.)
3. If Landlord's estimate and/or the actual cost of construction shall exceed
the Allowance, Landlord, prior to commencing any construction of Landlord
Work, shall submit to Tenant a written estimate setting forth the
anticipated cost of the Landlord Work, including but not limited to labor
and materials, contractor's fees and permit fees. Within 3 Business Days
thereafter, Tenant shall either notify Landlord in writing of its approval
of the cost estimate, or specify its objections thereto and any desired
changes to the proposed Landlord Work. If Tenant notifies Landlord of such
objections and desired changes, Tenant shall work with Landlord to reach a
mutually acceptable alternative cost estimate.
4. If Landlord's estimate and/or the actual cost of construction shall exceed
the Allowance,
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if any (such amounts exceeding the Allowance being herein referred to as
the "Excess Costs"), Tenant shall pay to Landlord such Excess Costs, plus
any applicable state sales or use tax thereon, upon demand. The statements
of costs submitted to Landlord by Landlord's contractors shall be
conclusive for purposes of determining the actual cost of the items
described therein. The amounts payable by Tenant hereunder constitute Rent
payable pursuant to the Lease, and the failure to timely pay same
constitutes an event of default under the Lease.
5. If Tenant shall request any change, addition or alteration in any of the
Plans after approval by Landlord, Landlord shall have such revisions to
the drawings prepared, and Tenant shall reimburse Landlord for the cost
thereof, plus any applicable state sales or use tax thereon, upon demand.
Promptly upon completion of the revisions, Landlord shall notify Tenant in
writing of the increased cost which will be chargeable to Tenant by reason
of such change, addition or deletion. Tenant, within one Business Day,
shall notify Landlord in writing whether it desires to proceed with such
change, addition or deletion. In the absence of such written
authorization, Landlord shall have the option to continue work on the
Premises disregarding the requested change, addition or alteration, or
Landlord may elect to discontinue work on the Premises until it receives
notice of Tenant's decision, in which event Tenant shall be responsible
for any Tenant Delay in completion of the Premises resulting therefrom. If
such revisions result in a higher estimate of the cost of construction
and/or higher actual construction costs which exceed the Allowance, such
increased estimate or costs shall be deemed Excess Costs pursuant to
Paragraph 4 hereof and Tenant shall pay such Excess Costs, plus any
applicable state sales or use tax thereon, upon demand.
6. Following approval of the Plans and the payment by Tenant of the required
portion of the Excess Costs, if any, Landlord shall cause the Landlord
Work to be constructed substantially in accordance with the approved
Plans. Landlord shall notify Tenant of substantial completion of the
Landlord Work.
7. Landlord, provided Tenant is not in default, agrees to provide Tenant with
an allowance (the "Allowance") in an amount not to exceed $7,042.50 (i.e.,
$7.50 per rentable square foot of the Premises) to be applied toward the
cost of the Landlord Work in the Premises. If the Allowance shall not be
sufficient to complete the Landlord Work, Tenant shall pay the Excess
Costs, plus any applicable state sales or use tax thereon, as prescribed
in Paragraph 4 above. Any portion of the Allowance which exceeds the cost
of the Landlord Work or is otherwise remaining after December 31, 2004,
shall accrue to the sole benefit of Landlord, it being agreed that Tenant
shall not be entitled to any credit, offset, abatement or payment with
respect thereto. Landlord shall be entitled to deduct from the Allowance a
construction management fee for Landlord's oversight of the Landlord Work
in an amount equal to 3% of the total cost of the Landlord Work.
8. Tenant acknowledges that the Landlord Work may be performed by Landlord in
the Premises during Building Service Hours. Landlord and Tenant agree to
cooperate with each other in order to enable the Landlord Work to be
performed in a timely manner and with as little inconvenience to the
operation of Tenant's business as is reasonably possible. Notwithstanding
anything herein to the contrary, any delay in the completion of the
Landlord Work or inconvenience suffered by Tenant during the performance
of the Landlord Work shall not subject Landlord to any liability for any
loss or damage resulting therefrom or entitle Tenant to any credit,
abatement or adjustment of Rent or other sums payable under the Lease.
9. This Exhibit shall not be deemed applicable to any additional space added
to the Premises at any time or from time to time, whether by any options
under the Lease or otherwise, or to any portion of the original Premises
or any additions to the Premises in the event of a renewal or extension of
the original Term of the Lease, whether by any options under the Lease or
otherwise, unless expressly so provided in the Lease or any amendment or
supplement to the Lease.
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