SUBLEASE
This Agreement is made this 24th day of April 1996, by and between
FAMILY HEALTH INTERNATIONAL, a North Carolina nonprofit corporation with
principal offices at 2222 Chapel Hill-Nelson Highway, Durham, North Carolina
(hereinafter called the "Sublessor"), and DIGITAL RECORDERS, INC., a North
Carolina corporation with offices at 4900 Prospectus Drive, Suite 1000, Durham,
North Carolina 27713 (hereinafter called the "Sublessee").
WHEREAS, Sublessor is presently a tenant in a building known as 4900
Prospectus Drive in Commercial Park West, Durham County, North Carolina,
occupying space commonly known as Suite 108 and comprising approximately 5,068
square feet of space;
WHEREAS, Sublessor occupies said space pursuant to that certain lease
dated 23 October 1989 (hereinafter called the "Overlease"), providing for the
lease of the space commonly known as Suite 108 comprising approximately 5,068
square feet of space, which Overlease is attached as Exhibit "A" annexed hereto
and made a part hereof; and
WHEREAS, Sublessor's Landlord and Sublessor amended the Overlease by
First Lease Amendment dated 11 May 1990 (hereinafter referred to as the
"Amendment"), a copy of which Amendment is attached as Exhibit "B" annexed
hereto and made a part hereof; and
WHEREAS, Sublessor's Landlord and Sublessor further amended the
Overlease by Lease Renewal Agreement dated 8 December 1994 (hereinafter referred
to as the "Renewal"), providing for the extension of the Lease Expiration Date
dated 30 April 2000 and establishing the Minimum Rent for the remainder of the
:ease term as extended therein, a copy of which Renewal is attached as Exhibit
"C" annexed hereto and made a part hereof.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions hereinafter set forth, it is mutually agreed as follows:
1. Sublet Premises: Sublessor hereby leases Suite 108 in 4900 Prospectus Drive
comprising approximately 5,068 square feet of space (hereinafter referred to as
the "Sublet Premises") to Sublessee, and Sublessee hereby leases the Sublet
Premises from Sublessor. Sublessee shall use the Sublet Premises for uses of
office space, light assembly, and warehouse, and no other uses without the
written consent of the Sublessor's landlord (hereinafter referred to as the
"overlandlord"). This Sublease shall not take effect until execution of this
Sublease by Overlandlord, evidencing Overlandlord's consent to this Sublease and
to the Sublessee's intended uses of the Sublet Premises.
2. Term: The initial term of this Sublease shall commence on the first day of
June, 1996 and shall continue up to and including 11:59 P.M. on the 30th day of
April, 2000.
3. Rental: Sublessee hereby agrees to pay to Sublessor an annual rental, payable
in equal monthly installments in advance on the first day of each month
according to the following schedule of rent:
Term Annual Rent Monthly Rent
- ---- ----------- ------------
6/1/96 - 4/30/97 $36,996.40 ($7.30 per sq. ft.) $3,083.03
5/1/97 - 4/30/98 $37,503.20 ($7.40 per sq. ft.) $3,125.27
5/1/98 - 4/30/99 $38,010.00 ($7.50 per sq.ft.) $3,167.50
5/1/99 - 4/30/2000 $38,516.80 ($7.60 per sq.ft.) $3,209.73
Any rent requirement to be paid pursuant to this Sublease shall be in addition
to other amounts by whatever name called with respect to the Sublet Premises
payable pursuant to the Overlease, Amendment or renewal, including without
limitation the Additional rent payable to the Overlandlord as provided in
Article 2 of the Overlease, provided that all such amounts payable (or overages
returnable) of Additional Rent shall be pro-rated for the year 1996, with
Sublessor responsible for 5/12ths of all such payments and Sublessee responsible
for 7/12ths of all such payments.
4. Representations: Sublessor hereby warrants and represents that it is now
leasing the Sublet Premises pursuant to the terms and provisions set forth in
the Overlease, amendment and Renewal; that the Overlease, Amendment and Renewal
are in full force and
effect; that Sublessor has a valid leasehold interest in the Sublet Premises
under the Overlease, Amendment and Renewal; that neither the Overlease,
Amendment nor Renewal nor any of the obligations, duties, and Responsibilities
of the Sublessor or of the Sublessor's landlord (hereinafter referred to as the
"Overlandlord") under the Overlease, Amendment and Renewal have been amended,
modified, or altered in any manner whatsoever unless as shown herein; and that
there exists no circumstance, condition, or act of default which would entitle
or permit the Overlandlord to terminate the Overlease, Amendment or Renewal or
to abridge any rights of Sublessor as Lessee thereunder. Sublessor covenants
that during the term of this Sublease it will not surrender the Overlease,
Amendment or renewal with respect to the Sublet Premises without the prior
written consent of Sublessee, and represents that it has full right, power and
authority under the Overlease, Amendment and renewal to otherwise to enter into
this Sublease. Sublessor hereby reserves the right to modify the Overlease,
Amendment and Renewal so long as such modification or sublease does not
materially affect the use and occupancy of the Sublet Premises by Sublessee.
5. Utilities: Beginning on the date of its access, June 1, 1996, Sublessee shall
be responsible for and will contract in its name for all utilities to service
the Sublet Premises including without limitation power, gas, telephone and
water.
6. Overlease, Amendment and Renewal:
A. All the obligations, rights and privileges contained in the
Overlease, Amendment and Renewal for the Sublet Premises conferred and imposed
upon Sublessor (as tenant therein) except as specifically modified and amended
by this Sublease are hereby conferred and imposed upon Sublessee. Sublessor
covenants and agrees it will make payment of the rentals payable under this
Agreement and the additional rentals payable under the Overlease as and when
due. Sublessee covenants and agrees to otherwise fully and faithfully perform
the terms and conditions of the Overlease, Amendment and Renewal with respect to
the Sublet Premises and the Sublease on its part o be performed. Sublessee shall
not do or cause to be done or suffer or permit any act to be done which would or
might cause the Overlease, Amendment or Renewal, or the rights of Sublessor as
tenant under the Overlease, Amendment or Renewal to be endangered, canceled,
terminated, forfeited or surrendered, or which would or might cause Sublessor to
be in default thereunder or liable for any damage, claim or penalty. Sublessee
agrees, as an express inducement for Sublessor executing this Sublease, that if
there is an conflict between the provisions of this Sublease and the provisions
of the Overlease, Amendment or Renewal which would permit Sublessee to do or
cause to be done or suffer or permit any act or thing to be done which is
prohibited by the Overlease, Amendment or Renewal then the provisions of the
Overlease, Amendment or renewal shall prevail.
B. Sublessee shall pay the monthly rentals and other amounts due to
Sublessor, within ten (10) days after demand therefore by Sublessor, including
any and all sums due pursuant to the Overlease, Amendment or renewal. Sublessor
shall not demand such payment prior to the date which is thirty (30) days before
the date any such sum shall be due and owing under the Overlease, Amendment or
Renewal. Notwithstanding the foregoing, in the absence of any demand, rents for
each calendar month shall be payable in advance on the first day such calendar
month.
C. Notwithstanding anything to the contrary herein contained, Sublessor
shall have no duty itself to perform any obligations of the Overlandlord, nor
shall such default of the Overlandlord affect this Sublease or waive or defer
the performance of any of Sublessee's obligations hereunder; provided,
nevertheless, that in the event of any such default or failure of performance by
Overlandlord, Sublessor agrees, upon notice from Sublessee, to make immediate
demand upon Overlandlord to perform its obligations under the Overlease,
Amendment and renewal, and if Overlandlord shall thereafter fail or refuse to
remedy such default or failure of performance within a period of thirty (30)
days following the notice given by Sublessor then Sublessee shall be entitled as
its sole remedy to terminate this Sublease.
7. Default:
A. If Sublessee defaults in the performance of any of its obligations
hereunder and such default continues for ten (10) days after the giving of
notice of such default with respect to the failure to pay any monies, or fifteen
(15) days after the giving of notice of default with respect to the failure to
perform or comply with any non-monetary obligations of Sublessee hereunder, then
Sublessor may cure any such default and add the cost thereof (including
reasonable attorneys' fees) to rent due under this Sublease or terminate this
Sublease upon giving three (3) days notice of termination to Sublessee.
Sublessee shall have reasonable additional time beyond fifteen (15) days to cure
a non-monetary default if Sublessee has commenced to cure same within said
fifteen (15) days and thereafter with due diligence to cure same.
B. Notwithstanding anything on the contrary contained herein, Sublessor
may terminate this Sublease on three (3) days notice of termination (without
having given prior notice of default) if in the reasonable apprehension of
Sublessor the act or omission of Sublessee would cause a default under the
Overlease such as would entitle the Overlandlord within said period to terminate
the Overlease, Amendment or Renewal.
C. In the event of termination hereunder Sublessee shall remain liable
for all rent and other sums due under this Sublease for the remainder of what
would have been the term (less the amount of any net rentals collected upon a
reletting for any part of such period), for all damages arising out of its
default and for all costs incurred in connection with any reletting of the
Sublet Premises . Sublessor shall have the right to re-enter and take possession
of the Sublet Premises in the event of a termination for default. In addition to
any and all remedies set forth herein Sublessor shall have all remedies
available at law or in equity and any and all remedies shall be cumulative and
non-exclusive.
8. No Representations: Sublessor makes no representations with respect to this
transaction or the Sublet Premises except as specifically set forth herein, and
Sublessee expressly acknowledges that no such representations have been made.
Sublessee takes the Sublet Premises in an "as is" condition, subject to
reasonable wear and tear. Sublessor warrants that the Premises shall at the time
of possession as delivered to Sublessee be in substantially the same condition
as the date of execution to this Sublease and Sublessor shall have leave the
Sublet Premises broom swept.
9. Mechanics Lien: Sublessee shall permit no mechanics liens to be placed
against the Premises or any portion thereof; provided Sublessee shall have the
right to contest the correctness or validity of any such lien if, immediately
upon demand by Sublessor, Sublessee procures and records a lien release bond in
form and substance sufficient under the General Statutes of North Carolina to
release the Premises or portion thereof from such lien.
10. Indemnity: Sublessee hereby agrees to defend, indemnify and hold Sublessor
harmless from and against any and all expense, including, but not limited to
reasonable attorneys' fees, loss, claims or liability for injury to person or
property arising out of its use and possession of the Sublet Premises, or for
its breach of the Sublease.
11. Restoration: Sublessee shall immediately prior to the expiration or sooner
termination of this Sublease restore the Sublet Premises to the condition that
Sublessor is required to surrender same under the Overlease. Sublessee shall
remove all of its fixtures, upfit and equipment prior to the expiration or
sooner termination of the term hereof and shall repair all damage caused by such
removal.
12. Notices: All notices, demands, submissions and consents required hereunder
shall be in writing and shall be deemed given if sent by certified mail, return
receipt requested postage prepaid (a) to Sublessee, at the address of Sublessee
as hereinabove set forth or such other address as Sublessee may designate by
notice to Sublessor, or (b) to Sublessor at the following address: Family Health
International, Attn: Robert W. Hughes, Post Office Box 13950, Research Triangle
Park, NC 27709, or such other address as Sublessor may designate by notice to
Sublessee.
13. Insurance:
A. Sublessee shall, during the term of this Sublease and at its sole
cost and expense, maintain and deliver to Sublessor fully paid public liability
and property damage insurance policies (or certificates thereof) with respect to
the Sublet Premises and any adjoining sidewalks, passageways, parking areas,
driveways or other Common areas (naming Sublessor as an additional insured) with
limits of at least $1,000,000.00 for injury or death to any one person,
$1,000,000.00 for injury or death in any one occurrence and $1,000,000.00 for
damage to property. Such policy or policies shall include a provision that at
least ten (10) days prior written notice of cancellation be given to Sublessor.
Such policies shall be carried by solvent and responsible insurance companies
licensed to do business in North Carolina. At least ten (10) days before the
expiration of any such policy, Sublessee shall provide Sublessor with a copy of
a fully paid renewal.
B. Sublessee shall, during the term of this Sublease and at its sole
cost and expense, maintain and deliver to Sublessor fully paid insurance
policies (or certificates thereof) upon its fixtures, trade fixtures, personal
property and any and all other property of Sublessee or of any third party which
may from time to time be stored or maintained in, on or around the Sublet
premises an amount necessary to cover the replacement cost thereof.
14. Waiver of Subrogation: Sublessor hereby releases Sublessee, but only to the
extent of Sublessor's insurance coverage, from any liability for loss or damage
caused by fire or any of the extended coverage perils included in Sublessor's
insurance policies covering the Demised Premises even if the insured peril shall
be brought about by default, negligence or other action of the Sublessee, its
tenants, employees or any of them; provided, this release shall be in effect
only with respect to an insured loss and only so long as Sublessor's policy
applicable to such loss shall contain a clause to the effect that this release
shall not affect the right of Sublessor to recover under such policy. Sublessor
does not waive and hereby reserves the right to secure compensation from
Sublessee for any uninsured loss, any amounts not paid because of deductibles
and other amounts not paid for any reason whatsoever.
Sublessee hereby releases Sublessor, but only to the extent of Sublessee's
insurance coverage, from any liability for loss or damage caused by fire or any
of the extended coverage perils included in Sublessee's insurance policies
covering any property of Sublessee stored at the Demised Premises even if the
insured peril shall be brought about by the default, negligence or other action
of the Sublessor, its agents, employees or any of them; provided, this release
shall be in effect only with respect to an insured loss and only so long as
Sublessee's policy applicable to such loss shall contain a clause to the effect
that this release shall not affect the right of Sublessee to recover under such
policy. Sublessee does not waive and hereby reserves the right to secure
compensation from Sublessor for any uninsured loss, any amounts not paid because
of deductibles and other amounts not paid for any reason whatsoever.
15. Alterations: Sublessee shall not make any alterations or additions to the
Sublet Premises without first obtaining Sublessor's consent, which shall not
unreasonably be withheld, and Overlandlord's consent as provided in the
Overlease.
16. Condemnation: If, during the term of this Sublease, any part or the whole of
the Sublet Premises shall be taken by any competent authority under the power of
eminent domain, Sublessor may execute such conveyances as may be required; and
this Lease shall be affected as follows:
A. If any portion of the Sublet Premises be taken, and if the remainder
of the Sublet Premises is not suitable for Sublessee's purposes, then in that
event Sublessee may elect to terminate this Sublease or may elect to continue
this Sublease, in which event the monthly rental payable shall be adjusted and
prorated in the ratio which the value of the Sublet Premises remaining after
such taking bears to the value of the Sublet Premises immediately preceding the
taking.
B. In the event that all or substantially all of the Premises shall be
taken, then in that event upon notice from any competent authority for such
taking, this Sublease may be canceled upon notice in writing by either party,
and this Sublease shall terminate on the date when title to the Sublet Premises
vests in the condemning authority.
C. Sublessee shall have no claim against Sublessor or the condemning
authority for any portion of the amount that may be awarded as damages as a
result of such taking or condemnation or for the value of any unexpired term of
this Sublease.
17. Destruction or Damage: In the event of damage by fire or other casualty to
the Sublet Premises or to the building in which the Sublet Premises are located
materially interfering with Sublessee's use of the Sublet Premises, Sublessor
may, at its sole option, repair said Sublet Premises to as good condition as
that existing immediately prior to said fire or other casualty, and this
Sublease shall not terminate except that the rent shall abate for the period
when, and to the extent that, the Sublet Premises were untenantable for the
purposes of this Sublease. In the event Sublessor does not elect to rebuild or
restore said Sublet Premises within thirty (30) days of the date of said
casualty, Sublessee shall have the right to terminate this Sublease as of the
date of said casualty. In the event that Sublessor timely elects to rebuild or
restore said Sublet Premises but shall not have completed such rebuilding or
restoration within ninety (90) days of said casualty, Sublessee shall have the
right to terminate this Sublease as of the date of said casualty, but shall so
notify Sublessor within one hundred and five (105) days of the date of said
casualty.
18. Assignment: Without the previous
consent of Sublessor, not unreasonably to be withheld, and the Overlandlord, as
may be required by the Overlease, neither Sublessee, nor Sublessee's legal
representatives or successors in interest by operation of law or otherwise,
shall assign or mortgage this Sublease, or sublet or license the whole or any
part of the Sublet Premises or permit the Sublet Premises or any part thereof to
be used or occupied by others. Any consent by Sublessor to any act of assignment
or subletting shall be held to apply only to the specific transaction thereby
authorized. Such consent shall not be construed as a waiver of duty of
Sublessee, or the legal representatives or assigns of Sublessee, to obtain from
Sublessor consent to any other or subsequent assignment or subletting, or as
modifying or limiting the rights of Sublessor under the foregoing covenant by
the Sublessee not to assign or sublet without such consent. Any violation of any
provision of this Sublease, whether by act or omission, by any assignee,
subtenant or undertenant or occupant, shall
be deemed a violation of such provisions of Sublease it being the intention and
meaning of the parties hereto that Sublessee shall assume and be liable to
Sublessor for any and all acts and omissions of any and all assignees,
subtenants, undertenants and occupants. If this lease is assigned, Sublessor may
and is hereby empowered to collect rent from the undertenant or occupant. In
either of such events, Sublessor may apply the net amount collected by it to the
rent herein reserved, and no such collection shall be deemed a waiver of the
covenant herein against assignment and underletting, or the acceptance of the
assignee, undertenant or occupant as Sublessee, or a release of Sublessee from
the further performance of the covenants herein contained on the part of
Sublessee.
19. Consents: With respect to any provision of this Sublease which provides, in
effect, that Sublessor shall not unreasonably withhold or unreasonably delay any
consent or any approval, Sublessee shall in no event be entitled to make, nor
shall Sublessee make, any claim for money damages based upon any claim or
assertion by Sublessee that Sublessor has unreasonably withheld or unreasonably
delayed any consent or approval. Sublessee hereby waives any claim for money
damages, whether by way of setoff, counterclaim, defense or otherwise which is
based upon any claim or assertion by Sublessee that Sublessor has unreasonably
withheld or unreasonably delayed any consent or approval; and Sublessee
acknowledges that its sole remedy shall be an action or proceeding to enforce
any such provisions, or for specific performance, injunction or declaratory
judgment. Notwithstanding any other provision of this Agreement, Sublessor's
failure to consent shall not be deemed to be unreasonable when such consent is
also required of Overlandlord by the Overlease, and such consent is not granted
by the Overlandlord.
20. Liability of Sublessor: In the event of a transfer of Sublessor's interest
in the Overlease, Amendment, Renewal or in this Sublease, it shall be deemed
without further agreement between the parties and such transferee that Sublessor
is released from further obligations and that the transferee has assumed and
agreed to observe and perform all obligations of the Sublessor hereunder.
Notwithstanding any such transfer, Sublessee shall be and remain liable to the
transferee for the observance and performance of all obligations of the
Sublessee hereunder, and for breach of any of the representations and warranties
made by Sublessee herein.
21. Waiver: One or more waivers of any covenant or condition by Sublessor shall
nit be construed as a waiver of s subsequent breach of the same or any other
covenant or condition, and the consent or approval by Sublessor to or of any act
by Sublessee requiring Sublessor's consent or approval shall not be construed to
waive or render unnecessary Sublessor's consent or approval to or of any
subsequent similar act by Sublessee.
22. Effect: This Agreement shall be binding upon the parties hereto, their
heirs, successors and permitted assigns, and may not be altered, amended,
terminated or modified except by written instrument executed by each of the
parties hereto.
23. Forum: This Agreement shall be governed by the laws of the State of North
Carolina.
IN WITNESS WHEREOF, the parties have hereunto affixed their hands and
seals the day and year first above written.
FAMILY HEALTH INTERNATIONAL DIGITAL RECORDERS, INC.
SUBLESSOR SUBLESSEE
By: /s/Robert W. Hughes By: /s/J. Phillips L. Johnston
Robert W. Hughes Name: J. Phillips L. Johnston
Senior Vice President Its: President & CEO
Attest: /s/ Marie F. Porter Attest: /s/ Michael J. Schierbeek
Marie F. Porter Assistant Secretary
Assistant Secretary
We consent to this Sublease, Sublessee's use of the Sublet Premises for office
space, light assembly and warehouse:
RESEARCH TRIANGLE INDUSTRIAL PARK WEST
ASSOCIATES JOINT VENTURE
Overlandlord
By: /s/ John M. Cambia, Jr.
Name: John M. Cambia, Jr.
Its: Asset Manager