Exhibit 10.20

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STANDARD MULTI-TENANT OFFICE LEASE - GROSS

AIR COMMERCIAL REAL ESTATE ASSOCIATION

1. Basic Provisions (“Basic Provisions”).

1.1 Parties: This Lease (“Lease”), dated for reference purposes only May 21,
2010, is made by and between GSR II, LLC and LM Swan Way, LLC (Please see
Exhibit A for Lessor description) (“Lessor”) and Higher One Payments, Inc.
(“Lessee”), (collectively the “Parties”, or individually a “Party”).

1.2(a) Premises: That certain portion of the Project (as defined below), known
as Suite Numbers(s) suite 200 and 201, 2nd floor(s), consisting of approximately
11,760 rentable square feet and approximately                      useable
square feet (“Premises”). The Premises are located at: 80 Swan Way, in the City
of Oakland, County of Alameda, State of California, with zip code
                    . Suite 200 of the Premises consists of approximately 9,360
rentable square feet and Is referred to herein as the “Suite 200 Premises”.
Suite 201 of the Premises consists of approximately 2400 rentable square feet
and is referred to herein as the “Suite 201 Premises”. In addition to Lessee’s
rights to use and occupy the Premises as hereinafter specified, Lessee shall
have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7
below) as hereinafter specified, but shall not have any rights to the roof, the
exterior walls, the area above the dropped ceilings, or the utility raceways of
the building containing the Premises (“Building”) or to any other buildings in
the Project. The Premises, the Building, the Common Areas, the land upon which
they are located, along with all other buildings and improvements thereon, are
herein collectively referred to as the “Project.” The Project consists of
approximately 52,000 rentable square feet. (See also Paragraph 2)

1.2(b) Parking: 3.4:1000 unreserved and                      reserved vehicle
parking spaces at a monthly cost of $                     per unreserved space
and $                     per reserved space. (See Paragraph 2.6)

1.3 Term: 5 years and 6 months (“Original Term”) commencing August 1, 2010
(“Commencement Date”) and ending January 31, 2016 (“Expiration Date”). (See also
Paragraph 3)

1.4 Early Possession: N/A. If the Premises are available Lessee may have non
exclusive possession of the Premises commencing                      (“Early
Possession Date”). (See also Paragraphs 3.2 and 3.3)

1.5 Base Rent: $ See Addendum per month (“Base Rent)”, payable on the 1st day of
each month commencing See Addendum. (See also Paragraph 4)

¨ If this box is checked, there are provisions in this Lease for the Base Rent
to be adjusted. See Paragraph                     

1.6 Lessee’s Share of Operating Expense Increase: twenty three percent ( 23%)
(“Lessee’s Share”). In the event that that size of the Premises and/or the
Project are modified during the term of this Lease, Lessor shall recalculate
Lessee’s Share to reflect such modification.

1.7 Base Rent and Other Monies Paid Upon Execution:

(a) Base Rent: $ See Addendum for the period See Addendum.

(b) Security Deposit: $15,904.00 (“Security Deposit”). (See also Paragraph 5)

(c) Parking: $                     for the period                     .

(d) Other: $284,944.80 for Tenant Improvements.

(e) Total Due Upon Execution of this Lease: $300,848.80.

1.8 Agreed Use: General Office Use.

 

 

   

 

 

   

 

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(See also Paragraph 6)

1.9 Base Year; Insuring Party. The Base Year is 2011. Lessor is the “Insuring
Party”. (See also Paragraphs 4.2 and 8)

1.10 Real Estate Brokers: (See also Paragraph 15)

(a) Representation: The following real estate brokers (the “Brokers”) and
brokerage relationships exist in this transaction (check applicable boxes):

¨                      represents Lessor exclusively (“Lessor’s Broker”);

¨                      represents Lessee exclusively (“Lessee’s Broker”); or

x Equistone Partners, Inc. represents both Lessor and Lessee (“Dual Agency”).

(b) Payment to Brokers: Upon execution and delivery of this Lease by both
Parties, Lessor shall pay to the Brokers for the brokerage services rendered by
the Brokers the fee agreed to in the attached separate written agreement or if
no such agreement is attached, the sum of                      or
                    % of the total Base Rent payable for the Original Term, the
sum of                      or                      of the total Base Rent
payable during any period of time that the Lessee occupies the Premises
subsequent to the Original Term, and/or the sum of per separate agreement or
                    % of the purchase price in the event that the Lessee or
anyone affiliated with Lessee acquires from Lessor any rights to the Premises.

1.11 Guarantor. The obligations of the Lessee under this Lease shall be
guaranteed by                      (“Guarantor”). (See also Paragraph 37)

1.12 Business Hours for the Building: 8 a.m. to 6 p.m., Mondays through Fridays
(except Building Holidays) and                      a.m. to                     
p.m. on Saturdays (except Building Holidays). “Building Holidays” shall mean the
dates of observation of New Year’s Day, President’s Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day, and N/A.

1.13 Lessor Supplied Services. Notwithstanding the provisions of Paragraph 11.1,
Lessor is NOT obligated to provide the following within the Premises:

¨ Janitorial services

¨ Electricity

¨ Other (specify):                     

1.14 Attachments. Attached hereto are the following, all of which constitute a
part of this Lease:

¨ an Addendum consisting of Paragraphs                      through
                    ;

¨ a plot plan depicting the Premises;

¨ a current set of the Rules and Regulations;

¨ a Work Letter;

¨ a janitorial schedule;

¨ other (specify): Exhibit A; Option(s) to Extend; Rent Adjustment (s) ;
Addendum to Lease; Work Letter.

2. Premises.

2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from
Lessor, the Premises, for the term, at the rental, and upon all of the terms,
covenants and conditions set forth in this Lease. While the approximate square
footage of the Premises may have been used in the marketing of the Premises for
purposes of comparison, the Base Rent stated herein is NOT tied to square
footage and is not subject to adjustment should the actual size be determined to
be different. Note: Lessee is advised to verify the actual size prior to
executing this Lease.

2.2 Condition. Lessor shall deliver the Premises to Lessee in a clean condition
on the Commencement Date or the Early Possession Date, whichever first occurs
(“Start Date”), and warrants that the existing electrical, plumbing, fire
sprinkler, lighting, heating, ventilating and air conditioning systems (“HVAC”),
and all other items which the Lessor is obligated to construct pursuant to the
Work Letter attached hereto, if any, other than those constructed by Lessee,
shall be in good operating condition on said date, that the structural elements
of the roof, bearing walls and foundation of the Unit shall be free of material
defects, and that the Premises do not contain hazardous levels of any mold or
fungi defined as toxic under applicable state or federal law.

2.3 Compliance. Lessor warrants to the best of its knowledge that the
improvements comprising the Premises and the Common Areas comply with the
building codes that were in effect at the time that each such improvement, or
portion thereof, was constructed, and also with all applicable laws, covenants
or restrictions of record, regulations, and ordinances (“Applicable
Requirements”) in effect on the Start Date. Said warranty does not apply to the
use to which Lessee will put the Premises, modifications which may be required
by the Americans with Disabilities Act or any similar laws as a result of
Lessee’s use (see Paragraph 49), or to any Alterations or Utility Installations
(as defined in Paragraph 7.3(a)) made or to be made by Lessee. NOTE: Lessee is
responsible for determining whether or not the zoning and other Applicable
Requirements are appropriate for Lessee’s intended use, and acknowledges that
past uses of the Premises may no longer be allowed. If the Premises do not
comply with said warranty, Lessor shall, except as otherwise provided, promptly
after receipt of written notice from Lessee setting forth with specificity the
nature and extent of such non-compliance, rectify the same. If the Applicable
Requirements are hereafter changed so as to require during the term of this
Lease the construction of an addition to or an alteration of the Premises, the
remediation of any Hazardous Substance, or the reinforcement or other physical
modification of the Premises (“Capital Expenditure”), Lessor and Lessee shall
allocate the cost of such work as follows:

(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required
as a result of the specific and unique use of the Premises by Lessee as compared
with uses by tenants in general, Lessee shall be fully responsible for the cost
thereof, provided, however that if such

 

 

   

 

 

   

 

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Capital Expenditure is required during the last 2 years of this Lease and the
cost thereof exceeds 6 months’ Base Rent, Lessee may instead terminate this
Lease unless Lessor notifies Lessee, in writing, within 10 days after receipt of
Lessee’s termination notice that Lessor has elected to pay the difference
between the actual cost thereof and the amount equal to 6 months’ Base Rent. If
Lessee elects termination, Lessee shall immediately cease the use of the
Premises which requires such Capital Expenditure and deliver to Lessor written
notice specifying a termination date at least 90 days thereafter. Such
termination date shall, however, in no event be earlier than the last day that
Lessee could legally utilize the Premises without commencing such Capital
Expenditure.

(b) If such Capital Expenditure is not the result of the specific and unique use
of the Premises by Lessee (such as, governmentally mandated seismic
modifications), then Lessor shall pay for such Capital Expenditure and Lessee
shall only be obligated to pay, each month during the remainder of the term of
this Lease or any extension thereof, on the date that on which the Base Rent is
due, an amount equal to 1/144th of the portion of such costs reasonably
attributable to the Premises. Lessee shall pay Interest on the balance but may
prepay its obligation at any time. If, however, such Capital Expenditure is
required during the last 2 years of this Lease or if Lessor reasonably
determines that it is not economically feasible to pay its share thereof, Lessor
shall have the option to terminate this Lease upon 90 days prior written notice
to Lessee unless Lessee notifies Lessor, in writing, within 10 days after
receipt of Lessor’s termination notice that Lessee will pay for such Capital
Expenditure. If Lessor does not elect to terminate, and fails to tender its
share of any such Capital Expenditure, Lessee may advance such funds and deduct
same, with Interest, from Rent until Lessor’s share of such costs have been
fully paid. If Lessee is unable to finance Lessor’s share, or if the balance of
the Rent due and payable for the remainder of this Lease is not sufficient to
fully reimburse Lessee on an offset basis, Lessee shall have the right to
terminate this Lease upon 30 days written notice to Lessor.

(c) Notwithstanding the above, the provisions concerning Capital Expenditures
are intended to apply only to nonvoluntary, unexpected, and new Applicable
Requirements. If the Capital Expenditures are instead triggered by Lessee as a
result of an actual or proposed change in use, change in intensity of use, or
modification to the Premises then, and in that event, Lessee shall either:
(i) immediately cease such changed use or intensity of use and/or take such
other steps as may be necessary to eliminate the requirement for such Capital
Expenditure, or (ii) complete such Capital Expenditure at its own expense.
Lessee shall not have any right to terminate this Lease.

2.4 Acknowledgements. Lessee acknowledges that: (a) it has been given an
opportunity to inspect and measure the Premises, (b) Lessee has been advised by
Lessor and/or Brokers to satisfy itself with respect to the size and condition
of the Premises (including but not limited to the electrical, HVAC and fire
sprinkler systems, security, environmental aspects, and compliance with
Applicable Requirements), and their suitability for Lessee’s intended use,
(c) Lessee has made such investigation as it deems necessary with reference to
such matters and assumes all responsibility therefor as the same relate to its
occupancy of the Premises, (d) it is not relying on any representation as to the
size of the Premises made by Brokers or Lessor, (e) the square footage of the
Premises was not material to Lessee’s decision to lease the Premises and pay the
Rent stated herein, and (f) neither Lessor, Lessor’s agents, nor Brokers have
made any oral or written representations or warranties with respect to said
matters other than as set forth in this Lease. In addition, Lessor acknowledges
that: (i) Brokers have made no representations, promises or warranties
concerning Lessee’s ability to honor the Lease or suitability to occupy the
Premises, and (ii) it is Lessor’s sole responsibility to investigate the
financial capability and/or suitability of all proposed tenants.

2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2
shall be of no force or effect if immediately prior to the Start Date, Lessee
was the owner or occupant of the Premises. In such event, Lessee shall be
responsible for any necessary corrective work.

2.6 Vehicle Parking. So long as Lessee is not in default, and subject to the
Rules and Regulations attached hereto, and as established by Lessor from time to
time, Lessee shall be entitled to rent and use the number of parking spaces
specified in Paragraph 1.2(b). at the rental rate applicable from time to time
for monthly parking as set by Lessor and/or its licensee.

(a) If Lessee commits, permits or allows any of the prohibited activities
described in the Lease or the rules then in effect, then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it may
have, to remove or tow away the vehicle involved and charge the cost to Lessee,
which cost shall be immediately payable upon demand by Lessor.

(b) The monthly rent per parking space specified in Paragraph 1.2(b) is subject
to change upon 30 days prior written notice to Lessee. The rent for the parking
is payable one month in advance prior to the first day of each calendar month.

2.7 Common Areas - Definition. The term “Common Areas” is defined as all areas
and facilities outside the Premises and within the exterior boundary line of the
Project and interior utility raceways and installations within the Premises that
are provided and designated by the Lessor from time to time for the general
nonexclusive use of Lessor, Lessee and other tenants of the Project and their
respective employees, suppliers, shippers, customers, contractors and invitees,
including, but not limited to, common entrances, lobbies, corridors, stairwells,
public restrooms, elevators, parking areas, loading and unloading areas, trash
areas, roadways, walkways, driveways and landscaped areas.

2.8 Common Areas - Lessee’s Rights. Lessor grants to Lessee, for the benefit of
Lessee and its employees, suppliers, shippers, contractors, customers and
invitees, during the term of this Lease, the nonexclusive right to use, in
common with others entitled to such use, the Common Areas as they exist from
time to time, subject to any rights, powers, and privileges reserved by Lessor
under the terms hereof or under the terms of any rules and regulations or
restrictions governing the use of the Project. Under no circumstances shall the
right herein granted to use the Common Areas be deemed to include the right to
store any property, temporarily or permanently, in the Common Areas. Any such
storage shall be permitted only by the prior written consent of Lessor or
Lessor’s designated agent, which consent may be revoked at any time. In the
event that any unauthorized storage shall occur then Lessor shall have the
right, without notice, in addition to such other rights and remedies that it may
have, to remove the property and charge the cost to Lessee, which cost shall be
immediately payable upon demand by Lessor.

2.9 Common Areas - Rules and Regulations. Lessor or such other person(s) as
Lessor may appoint shall have the exclusive control and management of the Common
Areas and shall have the right, from time to time, to adopt, modify, amend and
enforce reasonable rules and regulations (“Rules and Regulations”) for the
management, safety, care, and cleanliness of the grounds, the parking and
unloading of vehicles and the preservation of good order, as well as for the
convenience of other occupants or tenants of the Building and the Project and
their invitees. The Lessee agrees to abide by and conform to all such Rules and
Regulations, and shall use its best efforts to cause its employees, suppliers,
shippers, customers, contractors and invitees to so abide and conform. Lessor
shall not be responsible to Lessee for the noncompliance with said Rules and
Regulations by other tenants of the Project.

2.10 Common Areas - Changes. Lessor shall have the right, in Lessor’s sole
discretion, from time to time:

(a) To make changes to the Common Areas, including, without limitation, changes
in the location, size, shape and number of the lobbies, windows, stairways, air
shafts, elevators, escalators, restrooms, driveways, entrances, parking spaces,
parking areas, loading and unloading areas, ingress, egress, direction of
traffic, landscaped areas, walkways and utility raceways;

(b) To close temporarily any of the Common Areas for maintenance purposes so
long as reasonable access to the Premises remains available;

(c) To designate other land outside the boundaries of the Project to be a part
of the Common Areas;

(d) To add additional buildings and improvements to the Common Areas;

 

 

   

 

 

   

 

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(e) To use the Common Areas while engaged in making additional improvements,
repairs or alterations to the Project, or any portion thereof; and

(f) To do and perform such other acts and make such other changes in, to or with
respect to the Common Areas and Project as Lessor may, in the exercise of sound
business judgment, deem to be appropriate.

3. Term.

3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease
are as specified in Paragraph 1.3.

3.2 Early Possession. Any provision herein granting Lessee Early Possession of
the Premises is subject to and conditioned upon the Premises being available for
such possession prior to the Commencement Date. Any grant of Early Possession
only conveys a non-exclusive right to occupy the Premises. If Lessee totally or
partially occupies the Premises prior to the Commencement Date, the obligation
to pay Base Rent shall be abated for the period of such Early Possession. All
other terms of this Lease (including but not limited to the obligations to pay
Lessee’s Share of the Operating Expense Increase) shall be in effect during such
period. Any such Early Possession shall not affect the Expiration Date.

3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable
efforts to deliver possession of the Premises to Lessee by the Commencement
Date. If, despite said efforts, Lessor is unable to deliver possession by such
date, Lessor shall not be subject to any liability therefor, nor shall such
failure affect the validity of this Lease. Lessee shall not, however, be
obligated to pay Rent or perform its other obligations until Lessor delivers
possession of the Premises and any period of rent abatement that Lessee would
otherwise have enjoyed shall run from the date of delivery of possession and
continue for a period equal to what Lessee would otherwise have enjoyed under
the terms hereof, but minus any days of delay caused by the acts or omissions of
Lessee. If possession is not delivered within 60 days after the Commencement
Date, as the same may be extended under the terms of any Work Letter executed by
Parties, Lessee may, at its option, by notice in writing within 10 days after
the end of such 60 day period, cancel this Lease, in which event the Parties
shall be discharged from all obligations hereunder. If such written notice is
not received by Lessor within said 10 day period, Lessee’s right to cancel shall
terminate. If possession of the Premises is not delivered within 120 days after
the Commencement Date, this Lease shall terminate unless other agreements are
reached between Lessor and Lessee, in writing.

[SEE ADDENDUM PARAGRAPH 3.3(a)]

3.4 Lessee Compliance. Lessor shall not be required to deliver possession of the
Premises to Lessee until Lessee complies with its obligation to provide evidence
of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall be
required to perform all of its obligations under this Lease from and after the
Start Date, including the payment of Rent, notwithstanding Lessor’s election to
withhold possession pending receipt of such evidence of insurance. Further, if
Lessee is required to perform any other conditions prior to or concurrent with
the Start Date, the Start Date shall occur but Lessor may elect to withhold
possession until such conditions are satisfied.

4. Rent.

4.1. Rent Defined. All monetary obligations of Lessee to Lessor under the terms
of this Lease (except for the Security Deposit) are deemed to be rent (“Rent”).

4.2 Operating Expense Increase. Lessee shall pay to Lessor during the term
hereof, in addition to the Base Rent, Lessee’s Share of the amount by which all
Operating Expenses for each Comparison Year exceeds the amount of all Operating
Expenses for the Base Year, such excess being hereinafter referred to as the
“Operating Expense Increase”, in accordance with the following provisions:

(a) “Base Year” is as specified in Paragraph 1.9.

(b) “Comparison Year” is defined as each calendar year during the term of this
Lease subsequent to the Base Year; provided, however, Lessee shall have no
obligation to pay a share of the Operating Expense Increase applicable to the
first 12 months of the Lease Term (other than such as are mandated by a
governmental authority, as to which government mandated expenses Lessee shall
pay Lessee’s Share, notwithstanding they occur during the first twelve
(12) months). Lessee’s Share of the Operating Expense Increase for the first and
last Comparison Years of the Lease Term shall be prorated according to that
portion of such Comparison Year as to which Lessee is responsible for a share of
such increase.

(c) The following costs relating to the ownership and operation of the Project,
calculated as if the Project was at least 95% occupied, are defined as
“Operating Expenses”:

(i) Costs relating to the operation, repair, and maintenance in neat, clean,
safe, good order and condition, but not the replacement (see subparagraph (g)),
of the following:

(aa) The Common Areas, including their surfaces, coverings, decorative items,
carpets, drapes and window coverings, and including parking areas, loading and
unloading areas, trash areas, roadways, sidewalks, walkways, stairways,
parkways, driveways, landscaped areas, striping, bumpers, irrigation systems,
Common Area lighting facilities, building exteriors and roofs, fences and gates;

(bb) All heating, air conditioning, plumbing, electrical systems, life safety
equipment, communication systems and other equipment used in common by, or for
the benefit of, tenants or occupants of the Project, including elevators and
escalators, tenant directories, fire detection systems including sprinkler
system maintenance and repair.

(cc) All other areas and improvements that are within the exterior boundaries of
the Project but outside of the Premises and/or any other space occupied by a
tenant.

(ii) The cost of trash disposal, janitorial and security services, pest control
services, and the costs of any environmental inspections;

(iii) The cost of any other service to be provided by Lessor that is elsewhere
in this Lease stated to be an “Operating Expense”;

(iv) The cost of the premiums for the insurance policies maintained by Lessor
pursuant to paragraph 8 and any deductible portion of an insured loss concerning
the Building or the Common Areas;

(v) The amount of the Real Property Taxes payable by Lessor pursuant to
paragraph 10;

(vi) The cost of water, sewer, gas, electricity, and other publicly mandated
services not separately metered;

(vii) Labor, salaries, and applicable fringe benefits and costs, materials,
supplies and tools, used in maintaining and/or cleaning the Project and
accounting and management fees attributable to the operation of the Project;

(viii) The cost of any capital improvement to the Building or the Project not
covered under the provisions of Paragraph 2.3 provided; however, that Lessor
shall allocate the cost of any such capital improvement over a 12 year period
and Lessee shall not be required to pay more than Lessee’s Share of 1/144th of
the cost of such Capital Expenditure in any given month;

(ix) The cost to replace equipment or improvements that have a useful life for
accounting purposes of 5 years or less.

(x) Reserves set aside for maintenance, repair and/or replacement of Common Area
improvements and equipment.

(d) Any item of Operating Expense that is specifically attributable to the
Premises, the Building or to any other building in the

 

 

   

 

 

   

 

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Project or to the operation, repair and maintenance thereof, shall be allocated
entirely to such Premises, Building, or other building. However, any such item
that is not specifically attributable to the Building or to any other building
or to the operation, repair and maintenance thereof, shall be equitably
allocated by Lessor to all buildings in the Project.

(e) The inclusion of the improvements, facilities and services set forth in
Subparagraph 4.2(c) shall not be deemed to impose an obligation upon Lessor to
either have said improvements or facilities or to provide those services unless
the Project already has the same, Lessor already provides the services, or
Lessor has agreed elsewhere in this Lease to provide the same or some of them.

(f) Lessee’s Share of Operating Expense Increase is payable monthly on the same
day as the Base Rent is due hereunder. The amount of such payments shall be
based on Lessor’s estimate of the Operating Expense Expenses. Within 60 days
after written request (but not more than once each year) Lessor shall deliver to
Lessee a reasonably detailed statement showing Lessee’s Share of the actual
Common Area Operating Expenses for the preceding year. If Lessee’s payments
during such Year exceed Lessee’s Share, Lessee shall credit the amount of such
over-payment against Lessee’s future payments. If Lessee’s payments during such
Year were less than Lessee’s Share, Lessee shall pay to Lessor the amount of the
deficiency within 10 days after delivery by Lessor to Lessee of said statement.
Lessor and Lessee shall forthwith adjust between them by cash payment any
balance determined to exist with respect to that portion of the last Comparison
Year for which Lessee is responsible as to Operating Expense Increases,
notwithstanding that the Lease term may have terminated before the end of such
Comparison Year.

(g) Operating Expenses shall not include the costs of replacement for equipment
or capital components such as the roof, foundations, exterior walls or a Common
Area capital improvement, such as the parking lot paving, elevators, fences that
have a useful life for accounting purposes of 5 years or more.

(h) Operating Expenses shall not include any expenses paid by any tenant
directly to third parties, or as to which Lessor is otherwise reimbursed by any
third party, other tenant, or by insurance proceeds.

[SEE PARAGRAPHS 4.2(h) AND 4.2(1) OF ADDENDUM]

4.3 Payment. Lessee shall cause payment of Rent to be received by Lessor in
lawful money of the United States on or before the day on which it is due,
without offset or deduction (except as specifically permitted in this Lease).
All monetary amounts shall be rounded to the nearest whole dollar. In the event
that any invoice prepared by Lessor is inaccurate such inaccuracy shall not
constitute a waiver and Lessee shall be obligated to pay the amount set forth in
this Lease. Rent for any period during the term hereof which is for less than
one full calendar month shall be prorated based upon the actual number of days
of said month. Payment of Rent shall be made to Lessor at its address stated
herein or to such other persons or place as Lessor may from time to time
designate in writing. Acceptance of a payment which is less than the amount then
due shall not be a waiver of Lessor’s rights to the balance of such Rent,
regardless of Lessor’s endorsement of any check so stating. In the event that
any check, draft, or other instrument of payment given by Lessee to Lessor is
dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 in
addition to any Late Charge and Lessor, at its option, may require all future
Rent be paid by cashier’s check. Payments will be applied first to accrued late
charges and attorney’s fees, second to accrued interest, then to Base Rent and
Common Area Operating Expenses, and any remaining amount to any other
outstanding charges or costs.

5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the
Security Deposit as security for Lessee’s faithful performance of its
obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults
under this Lease, Lessor may use, apply or retain all or any portion of said
Security Deposit for the payment of any amount already due Lessor, for Rents
which will be due in the future, and/ or to reimburse or compensate Lessor for
any liability, expense, loss or damage which Lessor may suffer or incur by
reason thereof. If Lessor uses or applies all or any portion of the Security
Deposit, Lessee shall within 10 days after written request therefor deposit
monies with Lessor sufficient to restore said Security Deposit to the full
amount required by this Lease. If the Base Rent Increases during the term of
this Lease, Lessee shall, upon written request from Lessor, deposit additional
monies with Lessor so that the total amount of the Security Deposit shall at all
times bear the same proportion to the increased Base Rent as the initial
Security Deposit bore to the initial Base Rent. Should the Agreed Use be amended
to accommodate a material change in the business of Lessee or to accommodate a
sublessee or assignee, Lessor shall have the right to increase the Security
Deposit to the extent necessary, in Lessor’s reasonable judgment, to account for
any Increased wear and tear that the Premises may suffer as a result thereof. If
a change in control of Lessee occurs during this Lease and following such change
the financial condition of Lessee is, in Lessor’s reasonable judgment,
significantly reduced, Lessee shall deposit such additional monies with Lessor
as shall be sufficient to cause the Security Deposit to be at a commercially
reasonable level based on such change in financial condition. Lessor shall not
be required to keep the Security Deposit separate from its general accounts.
Within 90 days after the expiration or termination of this Lease, Lessor shall
return that portion of the Security Deposit not used or applied by Lessor. No
part of the Security Deposit shall be considered to be held in trust, to bear
interest or to be prepayment for any monies to be paid by Lessee under this
Lease.

6. Use.

6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or
any other legal use which is reasonably comparable thereto, and for no other
purpose. Lessee shall not use or permit the use of the Premises in a manner that
is unlawful, creates damage, waste or a nuisance, or that disturbs occupants of
or causes damage to neighboring premises or properties. Other than guide, signal
and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets,
animals, birds, fish, or reptiles. Lessor shall not unreasonably withhold or
delay its consent to any written request for a modification of the Agreed Use,
so long as the same will not impair the structural integrity of the improvements
of the Building, will not adversely affect the mechanical, electrical, HVAC, and
other systems of the Building, and/or will not affect the exterior appearance of
the Building. If Lessor elects to withhold consent, Lessor shall within 7 days
after such request give written notification of same, which notice shall include
an explanation of Lessor’s objections to the change in the Agreed Use.

6.2 Hazardous Substances.

(a) Reportable Uses Require Consent. The term “Hazardous Substance” as used in
this Lease shall mean any product, substance, or waste whose presence, use,
manufacture, disposal, transportation, or release, either by itself or in
combination with other materials expected to be on the Premises, is either:
(i) potentially injurious to the public health, safety or welfare, the
environment or the Premises, (ii) regulated or monitored by any governmental
authority, or (iii) a basis for potential liability of Lessor to any
governmental agency or third party under any applicable statute or common law
theory but shall not Include Common Materials as defined herein. Hazardous
Substances shall include, but not be limited to, hydrocarbons, petroleum,
gasoline, and/or crude oil or any products, byproducts or fractions thereof.
Lessee shall not engage in any activity in or on the Premises which constitutes
a Reportable Use of Hazardous Substances without the express prior written
consent of Lessor and timely compliance (at Lessee’s expense) with all
Applicable Requirements. “Reportable Use” shall mean (i) the installation or use
of any above or below ground storage tank, (ii) the generation, possession,
storage, use, transportation, or disposal of a Hazardous Substance that requires
a permit from, or with respect to which a report, notice, registration or
business plan is required to be filed with, any governmental authority, and/or
(iii) the presence at the Premises of a Hazardous Substance with respect to
which any Applicable Requirements requires that a notice be given to persons
entering or occupying the Premises or neighboring properties. Notwithstanding
the foregoing, Lessee may use any ordinary and customary materials reasonably
required to be used in the normal course of the Agreed Use such as ordinary
office supplies (copier toner, liquid paper, glue, etc.) and common household
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materials, so long as such use is in compliance with all Applicable
Requirements, is not a Reportable Use, and does not expose the Premises or
neighboring property to any meaningful risk of contamination or damage or expose
Lessor to any liability therefor (such materials being “Common Materials”). In
addition, Lessor may condition its consent to any Reportable Use upon receiving
such additional assurances as Lessor reasonably deems necessary to protect
itself, the public, the Premises and/or the environment against damage,
contamination, injury and/or liability, including, but not limited to, the
installation (and removal on or before Lease expiration or termination) of
protective modifications (such as concrete encasements) and/or increasing the
Security Deposit.

(b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe,
that a Hazardous Substance has come to be located in, on, under or about the
Premises, other than as previously consented to by Lessor, Lessee shall
immediately give written notice of such fact to Lessor, and provide Lessor with
a copy of any report, notice, claim or other documentation which it has
concerning the presence of such Hazardous Substance.

(c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance
to be spilled or released in, on, under, or about the Premises (including
through the plumbing or sanitary sewer system) and shall promptly, at Lessee’s
expense, comply with all Applicable Requirements and take all investigatory
and/or remedial action reasonably recommended, whether or not formally ordered
or required, for the cleanup of any contamination of, and for the maintenance,
security and/or monitoring of the Premises or neighboring properties, that was
caused or materially contributed to by Lessee, or pertaining to or involving any
Hazardous Substance brought onto the Premises during the term of this Lease, by
or for Lessee, or any third party.

(d) Lessee Indemnification. Lessee shall indemnify, defend and hold Lessor, its
agents, employees, lenders and ground lessor, if any, harmless from and against
any and all loss of rents and/or damages, liabilities, judgments, claims,
expenses, penalties, and attorneys’ and consultants’ fees arising out of or
involving any Hazardous Substance brought onto the Premises by or for Lessee, or
any third party (provided, however, that Lessee shall have no liability under
this Lease with respect to underground migration of any Hazardous Substance
under the Premises from areas outside of the Project not caused or contributed
to by Lessee). Lessee’s obligations shall include, but not be limited to, the
effects of any contamination or injury to person, property or the environment
created or suffered by Lessee, and the cost of investigation, removal,
remediation, restoration and/or abatement, and shall survive the expiration or
termination of this Lease. No termination, cancellation or release agreement
entered into by Lessor and Lessee shall release Lessee from its obligations
under this Lease with respect to Hazardous Substances, unless specifically so
agreed by Lessor in writing at the time of such agreement.

(e) Lessor Indemnification. Lessor and its successors and assigns shall
indemnify, defend, reimburse and hold Lessee, its employees and lenders,
harmless from and against any and all environmental damages, including the cost
of remediation, which result from Hazardous Substances not previously disclosed
to Lessee which existed on the Premises prior to Lessee’s occupancy or which are
brought onto the Premises by Lessor or which are caused by the gross negligence
or willful misconduct of Lessor, its agents or employees. Lessor’s obligations,
as and when required by the Applicable Requirements, shall include, but not be
limited to, the cost of investigation, removal, remediation, restoration and/or
abatement, and shall survive the expiration or termination of this Lease.

(f) Investigations and Remediations. Lessor shall retain the responsibility and
pay for any investigations or remediation measures required by governmental
entities having jurisdiction with respect to the existence of Hazardous
Substances on the Premises prior to Lessee’s occupancy, unless such remediation
measure is required as a result of Lessee’s use (including “Alterations”, as
defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall
be responsible for such payment. Lessee shall cooperate fully in any such
activities at the request of Lessor, including allowing Lessor and Lessor’s
agents to have reasonable access to the Premises at reasonable times in order to
carry out Lessor’s investigative and remedial responsibilities.

(g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph
9.1(e)) occurs during the term of this Lease, unless Lessee is legally
responsible therefor (in which case Lessee shall make the investigation and
remediation thereof required by the Applicable Requirements and this Lease shall
continue in full force and effect, but subject to Lessor’s rights under
Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either
(i) investigate and remediate such Hazardous Substance Condition, if required,
as soon as reasonably possible at Lessor’s expense, in which event this Lease
shall continue in full force and effect, or (ii) if the estimated cost to
remediate such condition exceeds 12 times the then monthly Base Rent or
$100,000, whichever is greater, give written notice to Lessee, within 30 days
after receipt by Lessor of knowledge of the occurrence of such Hazardous
Substance Condition, of Lessor’s desire to terminate this Lease as of the date
60 days following the date of such notice. In the event Lessor elects to give a
termination notice, Lessee may, within 10 days thereafter, give written notice
to Lessor of Lessee’s commitment to pay the amount by which the cost of the
remediation of such Hazardous Substance Condition exceeds an amount equal to 12
times the then monthly Base Rent or $100,000, whichever is greater. Lessee shall
provide Lessor with said funds or satisfactory assurance thereof within 30 days
following such commitment. In such event, this Lease shall continue in full
force and effect, and Lessor shall proceed to make such remediation as soon as
reasonably possible after the required funds are available. If Lessee does not
give such notice and provide the required funds or assurance thereof within the
time provided, this Lease shall terminate as of the date specified in Lessor’s
notice of termination.

6.3 Lessee’s Compliance with Applicable Requirements. Except as otherwise
provided in this Lease, Lessee shall, at Lessee’s sole expense, fully,
diligently and in a timely manner, materially comply with all Applicable
Requirements, the requirements of any applicable fire insurance underwriter or
rating bureau, and the recommendations of Lessor’s engineers and/or consultants
which relate in any manner to the Premises, without regard to whether said
requirements are now in effect or become effective after the Start Date. Lessee
shall, within 10 days after receipt of Lessor’s written request, provide Lessor
with copies of all permits and other documents, and other information evidencing
Lessee’s compliance with any Applicable Requirements specified by Lessor, and
shall immediately upon receipt, notify Lessor in writing (with copies of any
documents involved) of any threatened or actual claim, notice, citation,
warning, complaint or report pertaining to or involving the failure of Lessee or
the Premises to comply with any Applicable Requirements. Likewise, Lessee shall
immediately give written notice to Lessor of: (i) any water damage to the
Premises and any suspected seepage, pooling, dampness or other condition
conducive to the production of mold; or (ii) any mustiness or other odors that
might indicate the presence of mold in the Premises.

6.4 Inspection; Compliance. Lessor and Lessor’s “Lender” (as defined in
Paragraph 30) and consultants shall have the right to enter into Premises at any
time, in the case of an emergency, and otherwise at reasonable times, after
reasonable notice, for the purpose of inspecting the condition of the Premises
and for verifying compliance by Lessee with this Lease. The cost of any such
inspections shall be paid by Lessor, unless a material violation of Applicable
Requirements, or a Hazardous Substance Condition (see paragraph 9.1e) is found
to exist or be imminent, or the inspection is requested or ordered by a
governmental authority. In such case, Lessee shall upon request reimburse Lessor
for the cost of such inspection, so long as such inspection is reasonably
related to the violation or contamination. In addition, Lessee shall provide
copies of all relevant material safety data sheets (MSDS) to Lessor within 10
days of the receipt of written request therefor.

7. Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.

7.1 Lessee’s Obligations. Notwithstanding Lessor’s obligations to keep the
Premises in good condition and repair In Paragraph 7.2, Lessee shall be
responsible for payment of the cost thereof to Lessor as additional rent for
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Premises, or any equipment (wherever located) that serves only Lessee or the
Premises, to the extent such cost is attributable to abuse or misuse. Lessee
shall be responsible for the cost of painting, repairing or replacing wall
coverings, and to repair or replace any improvements within the Premises. Lessor
may, at its option, upon reasonable notice, elect to have Lessee perform any
particular such maintenance or repairs the cost of which is otherwise Lessee’s
responsibility hereunder.

7.2 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2
(Condition), 2.3 (Compliance), 4.2 (Operating Expenses), 6 (Use), 7.1 (Lessee’s
Obligations), 9 (Damage or Destruction) and 14 (Condemnation), Lessor, subject
to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition
and repair the foundations, exterior walls, structural condition of interior
bearing walls, exterior roof, fire sprinkler system, fire alarm and/or smoke
detection systems, fire hydrants, and the Common Areas. Lessee expressly waives
the benefit of any statute now or hereafter in effect to the extent it is
inconsistent with the terms of this Lease.

7.3 Utility Installations; Trade Fixtures; Alterations.

(a) Definitions. The term “Utility Installations” refers to all floor and window
coverings, air lines, vacuum lines, power panels, electrical distribution,
security and fire protection systems, communication cabling, lighting fixtures,
HVAC equipment, and plumbing in or on the Premises. The term “Trade Fixtures”
shall mean Lessee’s machinery and equipment that can be removed without doing
material damage to the Premises. The term “ Alterations” shall mean any
modification of the improvements, other than Utility Installations or Trade
Fixtures, whether by addition or deletion. “Lessee Owned Alterations and/or
Utility Installations” are defined as Alterations and/or Utility Installations
made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a).

(b) Consent. Lessee shall not make any Alterations or Utility Installations to
the Premises without Lessor’s prior written consent. Lessee may, however, make
non-structural Alterations or Utility Installations to the interior of the
Premises (excluding the roof) without such consent but upon notice to Lessor, as
long as they are not visible from the outside, do not involve puncturing,
relocating or removing the roof, ceilings, floors or any existing walls, will
not affect the electrical, plumbing, HVAC, and/or life safety systems, and the
cumulative cost thereof during this Lease as extended does not exceed $2000.
Notwithstanding the foregoing, Lessee shall not make or permit any roof
penetrations and/or install anything on the roof without the prior written
approval of Lessor. Lessor may, as a precondition to granting such approval,
require Lessee to utilize a contractor chosen and/or approved by Lessor. Any
Alterations or Utility Installations that Lessee shall desire to make and which
require the consent of the Lessor shall be presented to Lessor in written form
with detailed plans. Consent shall be deemed conditioned upon Lessee’s:
(i) acquiring all applicable governmental permits, (ii) furnishing Lessor with
copies of both the permits and the plans and specifications prior to
commencement of the work, and (iii) compliance with all conditions of said
permits and other Applicable Requirements in a prompt and expeditious manner.
Any Alterations or Utility Installations shall be performed in a workmanlike
manner with good and sufficient materials. Lessee shall promptly upon completion
furnish Lessor with asbuilt plans and specifications. For work which costs an
amount in excess of one month’s Base Rent, Lessor may condition its consent upon
Lessee providing a lien and completion bond in an amount equal to 150% of the
estimated cost of such Alteration or Utility Installation and/or upon Lessee’s
posting an additional Security Deposit with Lessor.

(c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials
furnished or alleged to have been furnished to or for Lessee at or for use on
the Premises, which claims are or may be secured by any mechanic’s or
materialmen’s lien against the Premises or any interest therein. Lessee shall
give Lessor not less than 10 days notice prior to the commencement of any work
in, on or about the Premises, and Lessor shall have the right to post notices of
non-responsibility. If Lessee shall contest the validity of any such lien, claim
or demand, then Lessee shall, at its sole expense defend and protect itself,
Lessor and the Premises against the same and shall pay and satisfy any such
adverse judgment that may be rendered thereon before the enforcement thereof. If
Lessor shall require, Lessee shall furnish a surety bond in an amount equal to
150% of the amount of such contested lien, claim or demand, indemnifying Lessor
against liability for the same. If Lessor elects to participate in any such
action, Lessee shall pay Lessor’s attorneys’ fees and costs.

7.4 Ownership; Removal; Surrender; and Restoration.

(a) Ownership. Subject to Lessor’s right to require removal or elect ownership
as hereinafter provided, all Alterations and Utility Installations made by
Lessee shall be the property of Lessee, but considered a part of the Premises.
Lessor may, at any time, elect in writing to be the owner of all or any
specified part of the Lessee Owned Alterations and Utility Installations. Unless
otherwise instructed per paragraph 7.4(b) hereof, all Lessee Owned Alterations
and Utility Installations shall, at the expiration or termination of this Lease,
become the property of Lessor and be surrendered by Lessee with the Premises.

(b) Removal. By delivery to Lessee of written notice from Lessor not earlier
than 90 and not later than 30 days prior to the end of the term of this Lease,
Lessor may require that any or all Lessee Owned Alterations or Utility
Installations be removed by the expiration or termination of this Lease. Lessor
may require the removal at any time of all or any part of any Lessee Owned
Alterations or Utility Installations made without the required consent. Lessor
shall notify Lessee at the time of approval whether the Improvements will be
required to be removed by Lessee at the expiration or termination of this Lease.

(c) Surrender; Restoration. Lessee shall surrender the Premises by the
Expiration Date or any earlier termination date, with all of the improvements,
parts and surfaces thereof clean and free of debris, and in good operating
order, condition and state of repair, ordinary wear and tear excepted. “Ordinary
wear and tear” shall not include any damage or deterioration that would have
been prevented by good maintenance practice. Notwithstanding the foregoing, if
this Lease is for 12 months or less, then Lessee shall surrender the Premises in
the same condition as delivered to Lessee on the Start Date with NO allowance
for ordinary wear and tear. Lessee shall repair any damage occasioned by the
installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations
and/or Utility Installations, furnishings, and equipment as well as the removal
of any storage tank installed by or for Lessee. Lessee shall also completely
remove from the Premises any and all Hazardous Substances brought onto the
Premises by or for Lessee, or any third party (except Hazardous Substances which
were deposited via underground migration from areas outside of the Premises)
even if such removal would require Lessee to perform or pay for work that
exceeds statutory requirements. Trade Fixtures shall remain the property of
Lessee and shall be removed by Lessee. Any personal property of Lessee not
removed on or before the Expiration Date or any earlier termination date shall
be deemed to have been abandoned by Lessee and may be disposed of or retained by
Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises
pursuant to this Paragraph 7.4(c) without the express written consent of Lessor
shall constitute a holdover under the provisions of Paragraph 26 below.

8. Insurance; Indemnity.

8.1 Insurance Premiums. The cost of the premiums for the insurance policies
maintained by Lessor pursuant to paragraph 8 are included as Operating Expenses
(see paragraph 4.2 (c)(iv)). Said costs shall Include increases in the premiums
resulting from additional coverage related to requirements of the holder of a
mortgage or deed of trust covering the Premises, Building and/or Project,
increased valuation of the Premises, Building and/or Project, and/or a general
premium rate increase. Said costs shall not, however, include any premium
increases resulting from the nature of the occupancy of any other tenant of the
Building. If the Project was not insured for the entirety of the Base Year, then
the base premium shall be the lowest annual premium reasonably obtainable for
the required insurance as of the Start Date, assuming the most nominal use
possible of the Building and/or Project. In no event, however, shall Lessee be
responsible for any portion of the premium cost attributable to liability
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coverage in excess of $2,000,000 procured under Paragraph 8.2(b).

8.2 Liability Insurance.

(a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial
General Liability policy of insurance protecting Lessee and Lessor as an
additional insured against claims for bodily injury, personal injury and
property damage based upon or arising out of the ownership, use, occupancy or
maintenance of the Premises and all areas appurtenant thereto. Such insurance
shall be on an occurrence basis providing single limit coverage in an amount not
less than $1,000,000 per occurrence with an annual aggregate of not less than
$2,000,000. Lessee shall add Lessor as an additional insured by means of an
endorsement at least as broad as the Insurance Service Organization’s
“Additional Insured-Managers or Lessors of Premises” Endorsement and coverage
shall also be extended to include damage caused by heat, smoke or fumes from a
hostile fire. The policy shall not contain any intra-insured exclusions as
between insured persons or organizations, but shall include coverage for
liability assumed under this Lease as an “insured contract” for the performance
of Lessee’s indemnity obligations under this Lease. The limits of said insurance
shall not, however, limit the liability of Lessee nor relieve Lessee of any
obligation hereunder. Lessee shall provide an endorsement on its liability
policy(ies) which provides that its insurance shall be primary to and not
contributory with any similar insurance carried by Lessor, whose insurance shall
be considered excess insurance only.

(b) Carried by Lessor. Lessor shall maintain liability insurance as described in
Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required to
be maintained by Lessee. Lessee shall not be named as an additional insured
therein.

8.3 Property Insurance - Building, Improvements and Rental Value.

(a) Building and Improvements. Lessor shall obtain and keep in force a policy or
policies of insurance in the name of Lessor, with loss payable to Lessor, any
ground-lessor, and to any Lender insuring loss or damage to the Building and/or
Project. The amount of such insurance shall be equal to the full insurable
replacement cost of the Building and/or Project, as the same shall exist from
time to time, or the amount required by any Lender, but in no event more than
the commercially reasonable and available insurable value thereof. Lessee Owned
Alterations and Utility Installations, Trade Fixtures, and Lessee’s personal
property shall be insured by Lessee not by Lessor. If the coverage is available
and commercially appropriate, such policy or policies shall insure against all
risks of direct physical loss or damage (except the perils of flood and/or
earthquake unless required by a Lender), including coverage for debris removal
and the enforcement of any Applicable Requirements requiring the upgrading,
demolition, reconstruction or replacement of any portion of the Premises as the
result of a covered loss. Said policy or policies shall also contain an agreed
valuation provision in lieu of any coinsurance clause, waiver of subrogation,
and inflation guard protection causing an increase in the annual property
insurance coverage amount by a factor of not less than the adjusted U.S.
Department of Labor Consumer Price Index for All Urban Consumers for the city
nearest to where the Premises are located. If such insurance coverage has a
deductible clause, the deductible amount shall not exceed $5,000 per occurrence.

(b) Rental Value. Lessor shall also obtain and keep in force a policy or
policies in the name of Lessor with loss payable to Lessor and any Lender,
insuring the loss of the full Rent for one year with an extended period of
indemnity for an additional 180 days (“Rental Value insurance”). Said insurance
shall contain an agreed valuation provision in lieu of any coinsurance clause,
and the amount of coverage shall be adjusted annually to reflect the projected
Rent otherwise payable by Lessee, for the next 12 month period.

(c) Adjacent Premises. Lessee shall pay for any increase in the premiums for the
property insurance of the Building and for the Common Areas or other buildings
in the Project if said increase is caused by Lessee’s acts, omissions, use or
occupancy of the Premises.

(d) Lessee’s Improvements. Since Lessor is the Insuring Party, Lessor shall not
be required to insure Lessee Owned Alterations and Utility Installations unless
the item in question has become the property of Lessor under the terms of this
Lease.

8.4 Lessee’s Property; Business Interruption Insurance; Worker’s Compensation
Insurance.

(a) Property Damage. Lessee shall obtain and maintain insurance coverage on all
of Lessee’s personal property, Trade Fixtures, and Lessee Owned Alterations and
Utility Installations. Such insurance shall be full replacement cost coverage
with a deductible of not to exceed $1,000 per occurrence. The proceeds from any
such insurance shall be used by Lessee for the replacement of personal property,
Trade Fixtures and Lessee Owned Alterations and Utility Installations. Lessee
shall provide Lessor with written evidence that such insurance is in force.

(b) Worker’s Compensation Insurance. Lessee shall obtain and maintain Worker’s
Compensation Insurance in such amount as may be required by Applicable
Requirements.

(c) Business Interruption. Lessee shall obtain and maintain loss of income and
extra expense insurance in amounts as will reimburse Lessee for direct or
indirect loss of earnings attributable to all perils commonly insured against by
prudent lessees in the business of Lessee or attributable to prevention of
access to the Premises as a result of such perils.

(d) No Representation of Adequate Coverage. Lessor makes no representation that
the limits or forms of coverage of insurance specified herein are adequate to
cover Lessee’s property, business operations or obligations under this Lease.

8.5 Insurance Policies. Insurance required herein shall be by companies
maintaining during the policy term a “General Policyholders Rating” of at least
A-, VII, as set forth in the most current issue of “Best’s Insurance Guide”, or
such other rating as may be required by a Lender. Lessee shall not do or permit
to be done anything which invalidates the required insurance policies. Lessee
shall, prior to the Start Date, deliver to Lessor certified copies of policies
of such insurance or certificates with copies of the required endorsements
evidencing the existence and amounts of the required insurance. No such policy
shall be cancelable or subject to modification except after 10 days prior
written notice to Lessor. Lessee shall, at least 30 days prior to the expiration
of such policies, furnish Lessor with evidence of renewals or “insurance
binders” evidencing renewal thereof, or Lessor may order such insurance and
charge the cost thereof to Lessee, which amount shall be payable by Lessee to
Lessor upon demand. Such policies shall be for a term of at least one year, or
the length of the remaining term of this Lease, whichever is less. If either
Party shall fail to procure and maintain the insurance required to be carried by
it, the other Party may, but shall not be required to, procure and maintain the
same.

8.6 Waiver of Subrogation. Without affecting any other rights or remedies,
Lessee and Lessor each hereby release and relieve the other, and waive their
entire right to recover damages against the other, for loss of or damage to its
property arising out of or incident to the perils required to be insured against
herein. The effect of such releases and waivers is not limited by the amount of
insurance carried or required, or by any deductibles applicable hereto. The
Parties agree to have their respective property damage insurance carriers waive
any right to subrogation that such companies may have against Lessor or Lessee,
as the case may be, so long as the insurance is not invalidated thereby.

8.7 Indemnity. Except for Lessor’s gross negligence or willful misconduct,
Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor
and its agents, Lessor’s master or ground lessor, partners and Lenders, from and
against any and all claims, loss of rents and/or damages, liens, judgments,
penalties, attorneys’ and consultants’ fees, expenses and/or liabilities arising
out of, involving, or in connection with, the use and/or occupancy of the
Premises by Lessee. If any action or proceeding is brought against Lessor by
reason of any of the foregoing matters, Lessee shall upon notice defend the same
at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor
shall cooperate with Lessee in such defense. Lessor need not have first paid any
such claim in order to be defended or indemnified.

8.8 Exemption of Lessor and its Agents from Liability. Notwithstanding the
negligence or breach of this Lease byExcept as may result from any grossly
negligent or willful misconduct of Lessor or its agents, neither Lessor nor its
agents shall be liable under any circumstances for: (i)

 

 

   

 

 

   

 

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injury or damage to the person or goods, wares, merchandise or other property of
Lessee, Lessee’s employees, contractors, invitees, customers, or any other
person in or about the Premises, whether such damage or injury is caused by or
results from fire, steam, electricity, gas, water or rain, indoor air quality,
the presence of mold or from the breakage, leakage, obstruction or other defects
of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting
fixtures, or from any other cause, whether the said injury or damage results
from conditions arising upon the Premises or upon other portions of the
Building, or from other sources or places, (ii) any damages arising from any act
or neglect of any other tenant of Lessor or from the failure of Lessor or its
agents to enforce the provisions of any other lease in the Project, or
(iii) injury to Lessee’s business or for any loss of income or profit therefrom.
Instead, it is intended that Lessee’s sole recourse in the event of such damages
or injury be to file a claim on the insurance policy(ies) that Lessee is
required to maintain pursuant to the provisions of paragraph 8. Lessor shall be
responsible for its grossly negligent acts or omissions or willful misconduct.

8.9 Failure to Provide Insurance. Lessee acknowledges that any failure on its
part to obtain or maintain the insurance required herein will expose Lessor to
risks and potentially cause Lessor to incur costs not contemplated by this
Lease, the extent of which will be extremely difficult to ascertain.
Accordingly, for any month or portion thereof that Lessee does not maintain the
required insurance and/or does not provide Lessor with the required binders or
certificates evidencing the existence of the required insurance, the Base Rent
shall be automatically increased, without any requirement for notice to Lessee,
by an amount equal to 10% of the then existing Base Rent or $100, whichever is
greater. The parties agree that such increase in Base Rent represents fair and
reasonable compensation for the additional risk/costs that Lessor will incur by
reason of Lessee’s failure to maintain the required insurance. Such increase in
Base Rent shall in no event constitute a waiver of Lessee’s Default or Breach
with respect to the failure to maintain such insurance, prevent the exercise of
any of the other rights and remedies granted hereunder, nor relieve Lessee of
its obligation to maintain the insurance specified in this Lease.

9. Damage or Destruction.

9.1 Definitions.

(a) “Premises Partial Damage” shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations, which can reasonably be repaired in 3 months or less from the
date of the damage or destruction, and the cost thereof does not exceed a sum
equal to 6 month’s Base Rent. Lessor shall notify Lessee in writing within 30
days from the date of the damage or destruction as to whether or not the damage
is Partial or Total.

(b) “Premises Total Destruction” shall mean damage or destruction to the
improvements on the Premises, other than Lessee Owned Alterations and Utility
Installations and Trade Fixtures, which cannot reasonably be repaired in 3
months or less from the date of the damage or destruction and/or the cost
thereof exceeds a sum equal to 6 month’s Base Rent. Lessor shall notify Lessee
in writing within 30 days from the date of the damage or destruction as to
whether or not the damage is Partial or Total.

(c) “Insured Loss” shall mean damage or destruction to improvements on the
Premises, other than Lessee Owned Alterations and Utility Installations and
Trade Fixtures, which was caused by an event required to be covered by the
insurance described in Paragraph 8.3(a), irrespective of any deductible amounts
or coverage limits involved.

(d) “Replacement Cost” shall mean the cost to repair or rebuild the improvements
owned by Lessor at the time of the occurrence to their condition existing
immediately prior thereto, including demolition, debris removal and upgrading
required by the operation of Applicable Requirements, and without deduction for
depreciation.

(e) “Hazardous Substance Condition” shall mean the occurrence or discovery of a
condition involving the presence of, or a contamination by, a Hazardous
Substance, in, on, or under the Premises which requires restoration.

9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an
Insured Loss occurs, then Lessor shall, at Lessor’s expense, repair such damage
(but not Lessee’s Trade Fixtures or Lessee Owned Alterations and Utility
Installations) as soon as reasonably possible and this Lease shall continue in
full force and effect; provided, however, that Lessee shall, at Lessor’s
election, make the repair of any damage or destruction the total cost to repair
of which is $5,000 or less, and, in such event, Lessor shall make any applicable
insurance proceeds available to Lessee on a reasonable basis for that purpose.
Notwithstanding the foregoing, if the required insurance was not in force or the
insurance proceeds are not sufficient to effect such repair, the Insuring Party
shall promptly contribute the shortage in proceeds as and when required to
complete said repairs. In the event, however, such shortage was due to the fact
that, by reason of the unique nature of the improvements, full replacement cost
insurance coverage was not commercially reasonable and available, Lessor shall
have no obligation to pay for the shortage in insurance proceeds or to fully
restore the unique aspects of the Premises unless Lessee provides Lessor with
the funds to cover same, or adequate assurance thereof, within 10 days following
receipt of written notice of such shortage and request therefor. If Lessor
receives said funds or adequate assurance thereof within said 10 day period, the
party responsible for making the repairs shall complete them as soon as
reasonably possible and this Lease shall remain in full force and effect. If
such funds or assurance are not received, Lessor may nevertheless elect by
written notice to Lessee within 10 days thereafter to: (i) make such restoration
and repair as is commercially reasonable with Lessor paying any shortage in
proceeds, in which case this Lease shall remain in full force and effect, or
(ii) have this Lease terminate 30 days thereafter. Lessee shall not be entitled
to reimbursement of any funds contributed by Lessee to repair any such damage or
destruction. Premises Partial Damage due to flood or earthquake shall be subject
to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but
the net proceeds of any such insurance shall be made available for the repairs
if made by either Party.

9.3 Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an
Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in
which event Lessee shall make the repairs at Lessee’s expense), Lessor may
either: (i) repair such damage as soon as reasonably possible at Lessor’s
expense, in which event this Lease shall continue in full force and effect, or
(ii) terminate this Lease by giving written notice to Lessee within 30 days
after receipt by Lessor of knowledge of the occurrence of such damage. Such
termination shall be effective 60 days following the date of such notice. In the
event Lessor elects to terminate this Lease, Lessee shall have the right within
10 days after receipt of the termination notice to give written notice to Lessor
of Lessee’s commitment to pay for the repair of such damage without
reimbursement from Lessor. Lessee shall provide Lessor with said funds or
satisfactory assurance thereof within 30 days after making such commitment. In
such event this Lease shall continue in full force and effect, and Lessor shall
proceed to make such repairs as soon as reasonably possible after the required
funds are available. If Lessee does not make the required commitment, this Lease
shall terminate as of the date specified in the termination notice.

9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises
Total Destruction occurs, this Lease shall terminate 60 days following such
Destruction. If the damage or destruction was caused by the gross negligence or
willful misconduct of Lessee, Lessor shall have the right to recover Lessor’s
damages from Lessee, except as provided in Paragraph 8.6.

9.5 Damage Near End of Term. If at any time during the last 6 months of this
Lease there is damage for which the cost to repair exceeds one month’s Base
Rent, whether or not an Insured Loss, Lessor or Lessee may terminate this Lease
effective 60 days following the date of occurrence of such damage by giving a
written termination notice to the other party Lessee within 30 days after the
date of occurrence of such damage. Notwithstanding the foregoing, if Lessor
provides a written termination notice, and if Lessee at that time has an
exercisable option to extend this Lease or to purchase the Premises, then Lessee
may preserve this Lease by, (a) exercising such option and (b) providing Lessor
with any shortage in insurance proceeds (or adequate assurance thereof) needed
to make the repairs on or before the earlier of (i) the date which is 10 days
after Lessee’s receipt of Lessor’s written notice purporting to terminate this
Lease, or (ii) the day prior to the date upon which such option expires. If
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option during such period and provides Lessor with funds (or adequate assurance
thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor’s
commercially reasonable expense, repair such damage as soon as reasonably
possible and this Lease shall continue in full force and effect. If Lessee fails
to exercise such option and provide such funds or assurance during such period,
then this Lease shall terminate on the date specified in the termination notice
and Lessee’s option shall be extinguished.

9.6 Abatement of Rent; Lessee’s Remedies.

(a) Abatement. In the event of Premises Partial Damage or Premises Total
Destruction or a Hazardous Substance Condition for which Lessee is not
responsible under this Lease, the Rent payable by Lessee for the period required
for the repair, remediation or restoration of such damage shall be abated in
proportion to the degree to which Lessee’s use of the Premises is impaired, but
not to exceed the proceeds received from the Rental Value insurance. All other
obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall
have no liability for any such damage, destruction, remediation, repair or
restoration except as provided herein.

(b) Remedies. If Lessor is obligated to repair or restore the Premises and does
not commence, in a substantial and meaningful way, such repair or restoration
within 90 days after such obligation shall accrue, Lessee may, at any time prior
to the commencement of such repair or restoration, give written notice to Lessor
and to any Lenders of which Lessee has actual notice, of Lessee’s election to
terminate this Lease on a date not less than 60 days following the giving of
such notice. If Lessee gives such notice and such repair or restoration is not
commenced within 30 days thereafter, this Lease shall terminate as of the date
specified in said notice. If the repair or restoration is commenced within such
30 days, this Lease shall continue in full force and effect. “Commence” shall
mean either the unconditional authorization of the preparation of the required
plans, or the beginning of the actual work on the Premises, whichever first
occurs.

9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to
Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made
concerning advance Base Rent and any other advance payments made by Lessee to
Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s Security
Deposit as has not been, or is not then required to be, used by Lessor.

10. Real Property Taxes.

10.1 Definitions. As used herein, the term “Real Property Taxes” shall include
any form of assessment; real estate, general, special, ordinary or
extraordinary, or rental levy or tax (other than inheritance, personal income or
estate taxes); improvement bond; and/or license fee imposed upon or levied
against any legal or equitable interest of Lessor in the Project, Lessor’s right
to other income therefrom, and/or Lessor’s business of leasing, by any authority
having the direct or indirect power to tax and where the funds are generated
with reference to the Project address and where the proceeds so generated are to
be applied by the city, county or other local taxing authority of a jurisdiction
within which the Project is located. “Real Property Taxes” shall also include
any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed
by reason of events occurring during the term of this Lease, including but not
limited to, a change in the ownership of the Project, (ii) a change in the
improvements thereon, and/or (iii) levied or assessed on machinery or equipment
provided by Lessor to Lessee pursuant to this Lease.

10.2 Payment of Taxes. Except as otherwise provided in Paragraph 10.3, Lessor
shall pay the Real Property Taxes applicable to the Project, and said payments
shall be included in the calculation of Operating Expenses in accordance with
the provisions of Paragraph 4.2.

10.3 Additional Improvements. Operating Expenses shall not include Real Property
Taxes specified in the tax assessor’s records and work sheets as being caused by
additional improvements placed upon the Project by other lessees or by Lessor
for the exclusive enjoyment of such other lessees. Notwithstanding Paragraph
10.2 hereof, Lessee shall, however, pay to Lessor at the time Operating Expenses
are payable under Paragraph 4.2, the entirety of any increase in Real Property
Taxes if assessed solely by reason of Alterations, Trade Fixtures or Utility
Installations, other than the Tenant Improvements constructed pursuant to the
Work Letter, placed upon the Premises by Lessee or at Lessee’s request or by
reason of any alterations or improvements to the Premises made by Lessor
subsequent to the execution of this Lease by the Parties.

10.4 Joint Assessment. If the Building is not separately assessed, Real Property
Taxes allocated to the Building shall be an equitable proportion of the Real
Property Taxes for all of the land and improvements included within the tax
parcel assessed, such proportion to be determined by Lessor from the respective
valuations assigned in the assessor’s work sheets or such other information as
may be reasonably available. Lessor’s reasonable determination thereof, in good
faith, shall be conclusive.

10.5 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes
assessed against and levied upon Lessee Owned Alterations and Utility
Installations, Trade Fixtures, furnishings, equipment and all personal property
of Lessee contained in the Premises. When possible, Lessee shall cause its
Lessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings,
equipment and all other personal’ property to be assessed and billed separately
from the real property of Lessor. If any of Lessee’s said property shall be
assessed with Lessor’s real property, Lessee shall pay Lessor the taxes
attributable to Lessee’s property within 10 days after receipt of a written
statement setting forth the taxes applicable to Lessee’s property.

11. Utilities and Services.

11.1 Services Provided by Lessor. Lessor shall provide heating, ventilation, air
conditioning, reasonable amounts of electricity for normal lighting and office
machines, water for reasonable and normal drinking and lavatory use in
connection with an office, and replacement light bulbs and/or fluorescent tubes
and ballasts for standard overhead fixtures. Lessor shall also provide
janitorial services to the Premises and Common Areas 5 times per week, excluding
Building Holidays, or pursuant to the attached janitorial schedule, if any.
Lessor shall not, however, be required to provide janitorial services to
kitchens or storage areas included within the Premises; except, however, that
Lessor shall provide trash pickup services to the kitchen areas.

11.2 Services Exclusive to Lessee. Lessee shall pay for all water, gas, light,
power, telephone and other utilities and services specially or exclusively
supplied and/or metered exclusively to the Premises or to Lessee, together with
any taxes thereon. If a service is deleted by Paragraph 1.13 and such service is
not separately metered to the Premises, Lessee shall pay at Lessor’s option,
either Lessee’s Share or a reasonable proportion to be determined by Lessor of
all charges for such jointly metered service.

11.3 Hours of Service. Said services and utilities shall be provided during
times set forth in Paragraph 1.12. Utilities and services required at other
times shall be subject to advance request and reimbursement by Lessee to Lessor
of the cost thereof.

11.4 Excess Usage by Lessee. Lessee shall not make connection to the utilities
except by or through existing outlets and shall not install or use machinery or
equipment in or about the Premises that uses excess water, lighting or power, or
suffer or permit any act that causes extra burden upon the utilities or
services, including but not limited to security and trash services, over
standard office usage for the Project. Lessor shall require Lessee to reimburse
Lessor for any excess expenses or costs that may arise out of a breach of this
subparagraph by Lessee. Lessor may, in its sole discretion, install at Lessee’s
expense supplemental equipment and/or separate metering applicable to Lessee’s
excess usage or loading.

11.5 Interruptions. There shall be no abatement of rent and Lessor shall not be
liable in any respect whatsoever for the inadequacy, stoppage, interruption or
discontinuance of any utility or service due to riot, strike, labor dispute,
breakdown, accident, repair or other cause beyond Lessor’s reasonable control or
in cooperation with governmental request or directions.

12. Assignment and Subletting.

12.1 Lessor’s Consent Required.

 

 

   

 

 

   

 

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(a) Lessee shall not voluntarily or by operation of law assign, transfer,
mortgage or encumber (collectively, “assign or assignment”) or sublet all or any
part of Lessee’s interest in this Lease or in the Premises without Lessor’s
prior written consent which consent shall not be unreasonably withheld.

(b) [SEE ADDENDUM PARAGRAPH 12.1(b)] Unless Lessee is a corporation and its
stock is publicly traded on a national stock exchange, a change in the control
of Lessee shall constitute an assignment requiring consent. The transfer, on a
cumulative basis, of 25% or more of the voting control of Lessee shall
constitute a change in control for this purpose.

(c) The involvement of Lessee or its assets in any transaction, or series of
transactions (by way of merger, sale, acquisition, financing, transfer,
leveraged buyout or otherwise), whether or not a formal assignment or
hypothecation of this Lease or Lessee’s assets occurs, which results or will
result in a reduction of the Net Worth of Lessee by an amount greater than 25%
of such Net Worth as it was represented at the time of the execution of this
Lease or at the time of the most recent assignment to which Lessor has
consented, or as it exists immediately prior to said transaction or transactions
constituting such reduction, whichever was or is greater, shall be considered an
assignment of this Lease for which Lessee’s consent Is required and to which
Lessor may withhold its consent. “Net Worth of Lessee” shall mean the net worth
of Lessee (excluding any guarantors) established under generally accepted
accounting principles.

(d) Except for transfers which comply with Paragraphs 12.1(b) and (c), an An
assignment or subletting without consent shall, at Lessor’s option, be a Default
curable after notice per Paragraph 13.1(c), or a noncurable Breach without the
necessity of any notice and grace period. If Lessor elects to treat such
unapproved assignment or subletting as a noncurable Breach, Lessor may either:
(i) terminate this Lease, or (ii) upon 30 days written notice, increase the
monthly Base Rent to 110% of the Base Rent then in effect. Further, in the event
of such Breach and rental adjustment, (i) the purchase price of any option to
purchase the Premises held by Lessee shall be subject to similar adjustment to
110% of the price previously in effect, and (ii) all fixed and non-fixed rental
adjustments scheduled during the remainder of the Lease term shall be increased
to 110% of the scheduled adjusted rent.

(e) Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shall be limited
to compensatory damages and/or injunctive relief.

(f) Lessor may reasonably withhold consent to a proposed assignment or
subletting if Lessee is in Default at the time consent is requested.

(g) Notwithstanding the foregoing, allowing a de minimis portion of the
Premises, i e. 20 square feet or less, to be used by a third party vendor in
connection with the installation of a vending machine or payphone shall not
constitute a subletting.

12.2 Terms and Conditions Applicable to Assignment and Subletting.

(a) Regardless of Lessor’s consent, no assignment or subletting shall: (i) be
effective without the express written assumption by such assignee or sublessee
of the obligations of Lessee under this Lease, (ii) release Lessee of any
obligations hereunder, or (iii) alter the primary liability of Lessee for the
payment of Rent or for the performance of any other obligations to be performed
by Lessee.

(b) Lessor may accept Rent or performance of Lessee’s obligations from any
person other than Lessee pending approval or disapproval of an assignment.
Neither a delay in the approval or disapproval of such assignment nor the
acceptance of Rent or performance shall constitute a waiver or estoppel of
Lessor’s right to exercise its remedies for Lessee’s Default or Breach.

(c) Lessor’s consent to any assignment or subletting shall not constitute a
consent to any subsequent assignment or subletting.

(d) In the event of any Default or Breach by Lessee, Lessor may proceed directly
against Lessee, any Guarantors or anyone else responsible for the performance of
Lessee’s obligations under this Lease, including any assignee or sublessee,
without first exhausting Lessor’s remedies against any other person or entity
responsible therefore to Lessor, or any security held by Lessor.

(e) Each request for consent to an assignment or subletting shall be in writing,
accompanied by information relevant to Lessor’s determination as to the
financial and operational responsibility and appropriateness of the proposed
assignee or sublessee, including but not limited to the intended use and/or
required modification of the Premises, if any, together with a fee of $500 as
consideration for Lessor’s considering and processing said request. Lessee
agrees to provide Lessor with such other or additional information and/or
documentation as may be reasonably requested. (See also Paragraph 36)

(f) Any assignee of, or sublessee under, this Lease shall, by reason of
accepting such assignment, entering into such sublease, or entering into
possession of the Premises or any portion thereof, be deemed to have assumed and
agreed to conform and comply with each and every term, covenant, condition and
obligation herein to be observed or performed by Lessee during the term of said
assignment or sublease, other than such obligations as are contrary to or
inconsistent with provisions of an assignment or sublease to which Lessor has
specifically consented to in writing.

(g) Lessor’s consent to any assignment or subletting shall not transfer to the
assignee or sublessee any Option granted to the original Lessee by this Lease
unless such transfer is specifically consented to by Lessor in writing. (See
Paragraph 39.2)

12.3 Additional Terms and Conditions Applicable to Subletting. The following
terms and conditions shall apply to any subletting by Lessee of all or any part
of the Premises and shall be deemed included in all subleases under this Lease
whether or not expressly incorporated therein:

(a) Lessee hereby assigns and transfers to Lessor all of Lessee’s interest in
all Rent payable on any sublease, and Lessor may collect such Rent and apply
same toward Lessee’s obligations under this Lease; provided, however, that until
a Breach shall occur in the performance of Lessee’s obligations, Lessee may
collect said Rent. In the event that the amount collected by Lessor exceeds
Lessee’s then outstanding obligations any such excess shall be refunded to
Lessee. Lessor shall not, by reason of the foregoing or any assignment of such
sublease, nor by reason of the collection of Rent, be deemed liable to the
sublessee for any failure of Lessee to perform and comply with any of Lessee’s
obligations to such sublessee. Lessee hereby irrevocably authorizes and directs
any such sublessee, upon receipt of a written notice from Lessor stating that a
Breach exists in the performance of Lessee’s obligations under this Lease, to
pay to Lessor all Rent due and to become due under the sublease. Sublessee shall
rely upon any such notice from Lessor and shall pay all Rents to Lessor without
any obligation or right to inquire as to whether such Breach exists,
notwithstanding any claim from Lessee to the contrary.

(b) In the event of a Breach by Lessee, Lessor may, at its option, require
sublessee to attorn to Lessor, in which event Lessor shall undertake the
obligations of the sublessor under such sublease from the time of the exercise
of said option to the expiration of such sublease; provided, however, Lessor
shall not be liable for any prepaid rents or security deposit paid by such
sublessee to such sublessor or for any prior Defaults or Breaches of such
sublessor.

(c) Any matter requiring the consent of the sublessor under a sublease shall
also require the consent of Lessor.

(d) No sublessee shall further assign or sublet all or any part of the Premises
without Lessor’s prior written consent.

(e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to
the sublessee, who shall have the right to cure the Default of Lessee within the
grace period, if any, specified in such notice. The sublessee shall have a right
of reimbursement and offset from and against Lessee for any such Defaults cured
by the sublessee.

13. Default; Breach; Remedies.

13.1 Default; Breach. A “Default” is defined as a failure by the Lessee to
comply with or perform any of the terms, covenants, conditions or Rules and
Regulations under this Lease. A “Breach” is defined as the occurrence of one or
more of the following Defaults, and the failure

 

 

   

 

 

   

 

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of Lessee to cure such Default within any applicable grace period:

(a) The abandonment of the Premises; or the vacating of the Premises without
providing a commercially reasonable level of security, or where the coverage of
the property insurance described in Paragraph 8.3 is jeopardized as a result
thereof, or without providing reasonable assurances to minimize potential
vandalism.

(b) The failure of Lessee to make any payment of Rent or any Security Deposit
required to be made by Lessee hereunder, whether to Lessor or to a third party,
when due, to provide reasonable evidence of insurance or surety bond, or to
fulfill any obligation under this Lease which endangers or threatens life or
property, where such failure continues for a period of 3 business days following
written notice to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT
OR SECURITY DEPOSIT SHALL NOT CONSTITUTE A WAIVER OF ANY OF LESSOR’S RIGHTS,
INCLUDING LESSOR’S RIGHT TO RECOVER POSSESSION OF THE PREMISES.

(c) The failure of Lessee to allow Lessor and/or its agents access to the
Premises or the commission of waste, act or acts constituting public or private
nuisance, and/or an illegal activity on the Premises by Lessee, where such
actions continue for a period of 3 business days following written notice to
Lessee.

(d) The failure by Lessee to provide (i) reasonable written evidence of
compliance with Applicable Requirements, (ii) the service contracts, (iii) the
rescission of an unauthorized assignment or subletting, (iv) an Estoppel
Certificate or financial statements, (v) a requested subordination,
(vi) evidence concerning any guaranty and/or Guarantor, (vii) any document
requested under Paragraph 41, (viii) material data safety sheets (MSDS), or
(ix) any other documentation or information which Lessor may reasonably require
of Lessee under the terms of this Lease, where any such failure continues for a
period of 10 days following written notice to Lessee.

(e) A Default by Lessee as to the terms, covenants, conditions or provisions of
this Lease, or of the rules adopted under Paragraph 2.9 hereof, other than those
described in subparagraphs 13.1(a), (b) or (c), above, where such Default
continues for a period of 30 days after written notice; provided, however, that
if the nature of Lessee’s Default is such that more than 30 days are reasonably
required for its cure, then it shall not be deemed to be a Breach if Lessee
commences such cure within said 30 day period and thereafter diligently
prosecutes such cure to completion.

(f) The occurrence of any of the following events: (i) the making of any general
arrangement or assignment for the benefit of creditors; (ii) becoming a “debtor”
as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the
case of a petition filed against Lessee, the same is dismissed within 60 days);
(iii) the appointment of a trustee or receiver to take possession of
substantially all of Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where possession is not restored to Lessee within 30
days; or (iv) the attachment, execution or other judicial seizure of
substantially all of Lessee’s assets located at the Premises or of Lessee’s
interest in this Lease, where such seizure is not discharged within 30 days;
provided, however, in the event that any provision of this subparagraph is
contrary to any applicable law, such provision shall be of no force or effect,
and not affect the validity of the remaining provisions.

(g) The discovery that any financial statement of Lessee or of any Guarantor
given to Lessor was materially false.

(h) If the performance of Lessee’s obligations under this Lease is guaranteed:
(i) the death of a Guarantor, (ii) the termination of a Guarantor’s liability
with respect to this Lease other than in accordance with the terms of such
guaranty, (iii) a Guarantor’s becoming insolvent or the subject of a bankruptcy
filing, (iv) a Guarantor’s refusal to honor the guaranty, or (v) a Guarantor’s
breach of its guaranty obligation on an anticipatory basis, and Lessee’s
failure, within 60 days following written notice of any such event, to provide
written alternative assurance or security, which, when coupled with the then
existing resources of Lessee, equals or exceeds the combined financial resources
of Lessee and the Guarantors that existed at the time of execution of this
Lease.

13.2 Remedies. If Lessee fails to perform any of its affirmative duties or
obligations, within 10 days after written notice (or in case of an emergency,
without notice), Lessor may, at its option, perform such duty or obligation on
Lessee’s behalf, including but not limited to the obtaining of reasonably
required bonds, insurance policies, or governmental licenses, permits or
approvals. Lessee shall pay to Lessor an amount equal to 115 105% of the costs
and expenses incurred by Lessor in such performance upon receipt of an invoice
therefor. In the event of a Breach, Lessor may, with or without further notice
or demand, and without limiting Lessor in the exercise of any right or remedy
which Lessor may have by reason of such Breach:

(a) Terminate Lessee’s right to possession of the Premises by any lawful means,
in which case this Lease shall terminate and Lessee shall immediately surrender
possession to Lessor. In such event Lessor shall be entitled to recover from
Lessee: (i) the unpaid Rent which had been earned at the time of termination;
(ii) the worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that the Lessee proves could have been reasonably
avoided; (iii) the worth at the time of award of the amount by which the unpaid
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that the Lessee proves could be reasonably avoided; and
(iv) any other amount reasonably necessary to compensate Lessor for all the
detriment proximately caused by the Lessee’s failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to
result therefrom, including but not limited to the cost of recovering possession
of the Premises, expenses of reletting, including necessary renovation and
alteration of the Premises, reasonable attorneys’ fees, and that portion of any
leasing commission paid by Lessor in connection with this Lease applicable to
the unexpired term of this Lease. The worth at the time of award of the amount
referred to in provision (iii) of the immediately preceding sentence shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of the District within which the Premises are located at the time of award
plus one percent. Efforts by Lessor to mitigate damages caused by Lessee’s
Breach of this Lease shall not waive Lessor’s right to recover damages under
Paragraph 12. If termination of this Lease is obtained through the provisional
remedy of unlawful detainer, Lessor shall have the right to recover in such
proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may
reserve the right to recover all or any part thereof in a separate suit. If a
notice and grace period required under Paragraph 13.1 was not previously given,
a notice to pay rent or quit, or to perform or quit given to Lessee under the
unlawful detainer statute shall also constitute the notice required by Paragraph
13.1. In such case, the applicable grace period required by Paragraph 13.1 and
the unlawful detainer statute shall run concurrently, and the failure of Lessee
to cure the Default within the greater of the two such grace periods shall
constitute both an unlawful detainer and a Breach of this Lease entitling Lessor
to the remedies provided for in this Lease and/or by said statute.

(b) Continue the Lease and Lessee’s right to possession and recover the Rent as
it becomes due, in which event Lessee may sublet or assign, subject only to
reasonable limitations. Acts of maintenance, efforts to relet, and/or the
appointment of a receiver to protect the Lessor’s interests, shall not
constitute a termination of the Lessee’s right to possession.

(c) Pursue any other remedy now or hereafter available under the laws or
judicial decisions of the state wherein the Premises are located. The expiration
or termination of this Lease and/or the termination of Lessee’s right to
possession shall not relieve Lessee from liability under any indemnity
provisions of this Lease as to matters occurring or accruing during the term
hereof or by reason of Lessee’s occupancy of the Premises.

13.3 Inducement Recapture. Any agreement for free or abated rent or other
charges, or for the giving or paying by Lessor to or for Lessee of any cash or
other bonus, inducement or consideration for Lessee’s entering into this Lease,
all of which concessions are hereinafter referred to as “Inducement Provisions”,
shall be deemed conditioned upon Lessee’s full and faithful performance of all
of the terms, covenants and conditions of this Lease. Upon Breach of this Lease
by Lessee, any such Inducement Provision shall automatically be deemed deleted
from this Lease and of no further force or effect, and any rent, other charge,
bonus, inducement or consideration theretofore abated, given or paid by Lessor
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Inducement Provision shall be immediately due and payable by Lessee to Lessor,
notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by
Lessor of rent or the cure of the Breach which initiated the operation of this
paragraph shall not be deemed a waiver by Lessor of the provisions of this
paragraph unless specifically so stated in writing by Lessor at the time of such
acceptance.

13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of
Rent will cause Lessor to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. Such costs include,
but are not limited to, processing and accounting charges, and late charges
which may be imposed upon Lessor by any Lender. Accordingly, if any Rent shall
not be received by Lessor within 5 days after such amount shall be due, then,
without any requirement for notice to Lessee, Lessee shall immediately pay to
Lessor a one-time late charge equal to 10% of each such overdue amount or $100,
whichever is greater. The parties hereby agree that such late charge represents
a fair and reasonable estimate of the costs Lessor will incur by reason of such
late payment. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee’s Default or Breach with respect to such overdue
amount, nor prevent the exercise of any of the other rights and remedies granted
hereunder. In the event that a late charge is payable hereunder, whether or not
collected, for 3 consecutive installments of Base Rent, then notwithstanding any
provision of this Lease to the contrary, Base Rent shall, at Lessor’s option,
become due and payable quarterly in advance.

13.5 Interest. Any monetary payment due Lessor hereunder, other than late
charges, not received by Lessor, when within five (5) days after such amount
shall be due as to scheduled payments (such as Base Rent) or within 30 days
following the date on which it was due for nonscheduled payment, shall bear
interest from the date when due, as to scheduled payments, or the 31st day after
it was due as to nonscheduled payments. The interest (“Interest”) charged shall
be computed at the rate of 10% per annum but shall not exceed the maximum rate
allowed by law. Interest is payable in addition to the potential late charge
provided for in Paragraph 13.4.

13.6 Breach by Lessor.

(a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless
Lessor fails within a reasonable time to perform an obligation required to be
performed by Lessor. For purposes of this Paragraph, a reasonable time shall in
no event be less than 30 days after receipt by Lessor, and any Lender whose name
and address shall have been furnished Lessee in writing for such purpose, of
written notice specifying wherein such obligation of Lessor has not been
performed; provided, however, that if the nature of Lessor’s obligation is such
that more than 30 days are reasonably required for its performance, then Lessor
shall not be in breach if performance is commenced within such 30 day period and
thereafter diligently pursued to completion.

(b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor
nor Lender cures said breach within 30 days after receipt of said notice, or if
having commenced said cure they do not diligently pursue it to completion, then
Lessee may elect to cure said breach at Lessee’s expense and offset from Rent
the actual and reasonable cost to perform such cure, provided however, that such
offset shall not exceed an amount equal to the greater of one month’s Base Rent
or the Security Deposit, reserving Lessee’s right to seek reimbursement from
Lessor for any such expense in excess of such offset. Lessee shall document the
cost of said cure and supply said documentation to Lessor.

14. Condemnation. If the Premises or any portion thereof are taken under the
power of eminent domain or sold under the threat of the exercise of said power
(collectively “Condemnation”), this Lease shall terminate as to the part taken
as of the date the condemning authority takes title or possession, whichever
first occurs. If more than 10% of the rentable floor area of the Premises, or
more than 25% of Lessee’s Reserved Parking Spaces, if any, are taken by
Condemnation, Lessee may, at Lessee’s option, to be exercised in writing within
10 days after Lessor shall have given Lessee written notice of such taking (or
in the absence of such notice, within 10 days after the condemning authority
shall have taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and effect
as to the portion of the Premises remaining, except that the Base Rent shall be
reduced in proportion to the reduction in utility of the Premises caused by such
Condemnation. Condemnation awards and/or payments shall be the property of
Lessor, whether such award shall be made as compensation for diminution in value
of the leasehold, the value of the part taken, or for severance damages;
provided, however, that Lessee shall be entitled to any compensation paid by the
condemnor for Lessee’s relocation expenses, loss of business goodwill and/or
Trade Fixtures, without regard to whether or not this Lease is terminated
pursuant to the provisions of this Paragraph. All Alterations and Utility
Installations made to the Premises by Lessee, for purposes of Condemnation only,
shall be considered the property of the Lessee and Lessee shall be entitled to
any and all compensation which is payable therefor. In the event that this Lease
is not terminated by reason of the Condemnation, Lessor shall repair any damage
to the Premises caused by such Condemnation.

15. Brokerage Fees.

15.1 Additional Commission. If a separate brokerage fee agreement is attached
then in addition to the payments owed pursuant to Paragraph 1.10 above, and
unless Lessor and the Brokers otherwise agree in writing, Lessor agrees that:
(a) if Lessee exorcises any Option, (b) if Lessee or anyone affiliated with
Lessee acquires from Lessor any rights to the Premises or other premises owned
by Lessor and located within the Project, (c) if Lessee remains in possession of
the Premises, with the consent of Lessor, after the expiration of this Lease, or
(d) if Base Rent is increased, whether by agreement or operation of an
escalation clause herein, then, Lessor shall pay Brokers a fee in accordance
with the schedule attached to such brokerage fee agreement.

15.2 Assumption of Obligations. Any buyer or transferee of Lessor’s interest in
this Lease shall be deemed to have assumed Lessor’s obligation hereunder.
Brokers shall be third party beneficiaries of the provisions of Paragraphs 1.10,
15, 22 and 31. If Lessor fails to pay to Brokers any amounts due as and for
brokerage fees pertaining to this Lease when due, then such amounts shall accrue
Interest. In addition, if Lessor fails to pay any amounts to Lessee’s Broker
when due, Lessee’s Broker may send written notice to Lessor and Lessee of such
failure and if Lessor fails to pay such amounts within 10 days after said
notice, Lessee shall pay said monies to its Broker and offset such amounts
against Rent. In addition, Lessee’s Broker shall be deemed to be a third party
beneficiary of any commission agreement entered into by and/or between Lessor
and Lessor’s Broker for the limited purpose of collecting any brokerage fee
owed.

15.3 Representations and Indemnities of Broker Relationships. Lessee and Lessor
each represent and warrant to the other that it has had no dealings with any
person, firm, broker or finder (other than the Brokers, if any) in connection
with this Lease, and that no one other than said named Brokers is entitled to
any commission or finder’s fee in connection herewith. Lessee and Lessor do each
hereby agree to indemnify, protect, defend and hold the other harmless from and
against liability for compensation or charges which may be claimed by any such
unnamed broker, finder or other similar party by reason of any dealings or
actions of the indemnifying Party, including any costs, expenses, attorneys’
fees reasonably incurred with respect thereto.

16. Estoppel Certificates.

(a) Each Party (as “Responding Party”) shall within 10 days after written notice
from the other Party (the “Requesting Party”) execute, acknowledge and deliver
to the Requesting Party a statement in writing in form similar to the then most
current “Estoppel Certificate” form published by the AIRCommercial Real Estate
Association, plus such additional information, confirmation and/or statements as
may be reasonably requested by the Requesting Party.

(b) If the Responding Party shall fail to execute or deliver the Estoppel
Certificate within such 10 day period, the Requesting Party may execute an
Estoppel Certificate stating that: (i) the Lease is in full force and effect
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Requesting Party, (ii) there are no uncured defaults in the Requesting Party’s
performance, and (iii) if Lessor is the Requesting Party, not more than one
month’s rent has been paid in advance. Prospective purchasers and encumbrancers
may rely upon the Requesting Party’s Estoppel Certificate, and the Responding
Party shall be estopped from denying the truth of the facts contained in said
Certificate.

(c) If Lessor desires to finance, refinance, or sell the Premises, or any part
thereof, Lessee and all Guarantors shall within 10 days after written notice
from Lessor deliver to any potential lender or purchaser designated by Lessor
such financial statements as may be reasonably required by such lender or
purchaser, including but not limited to Lessee’s financial statements for the
past 3 years. All such financial statements shall be received by Lessor and such
lender or purchaser in confidence and shall be used only for the purposes herein
set forth.

17. Definition of Lessor. The term “Lessor” as used herein shall mean the owner
or owners at the time in question of the fee title to the Premises, or, if this
is a sublease, of the Lessee’s interest in the prior lease. In the event of a
transfer of Lessor’s title or interest in the Premises or this Lease, Lessor
shall deliver to the transferee or assignee (in cash or by credit) any unused
Security Deposit held by Lessor. Upon such transfer or assignment and delivery
of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all
liability with respect to the obligations and/or covenants under this Lease
thereafter to be performed by the Lessor. Subject to the foregoing, the
obligations and/or covenants in this Lease to be performed by the Lessor shall
be binding only upon the Lessor as hereinabove defined.

18. Severability. The invalidity of any provision of this Lease, as determined
by a court of competent jurisdiction, shall in no way affect the validity of any
other provision hereof.

19. Days. Unless otherwise specifically indicated to the contrary, the word
“days” as used in this Lease shall mean and refer to calendar days.

20. Limitation on Liability. The obligations of Lessor under this Lease shall
not constitute personal obligations of Lessor or its partners, members,
directors, officers or shareholders, and Lessee shall look to the Project, and
to no other assets of Lessor, for the satisfaction of any liability of Lessor
with respect to this Lease, and shall not seek recourse against Lessor’s
partners, members, directors, officers or shareholders, or any of their personal
assets for such satisfaction.

21. Time of Essence. Time is of the essence with respect to the performance of
all obligations to be performed or observed by the Parties under this Lease.

22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all
agreements between the Parties with respect to any matter mentioned herein, and
no other prior or contemporaneous agreement or understanding shall be effective.
Lessor and Lessee each represents and warrants to the Brokers that it has made,
and is relying solely upon, its own investigation as to the nature, quality,
character and financial responsibility of the other Party to this Lease and as
to the use, nature, quality and character of the Premises. Brokers have no
responsibility with respect thereto or with respect to any default or breach
hereof by either Party.

23. Notices.

23.1 Notice Requirements. All notices required or permitted by this Lease or
applicable law shall be in writing and may be delivered in person (by hand or by
courier) or may be sent by regular, certified or registered mail or U.S. Postal
Service Express Mail, with postage prepaid, or by facsimile transmission, and
shall be deemed sufficiently given if served in a manner specified in this
Paragraph 23. The addresses noted adjacent to a Party’s signature on this Lease
shall be that Party’s address for delivery or mailing of notices. Either Party
may by written notice to the other specify a different address for notice,
except that upon Lessee’s taking possession of the Premises, the Premises shall
constitute Lessee’s address for notice. A copy of all notices to Lessor shall be
concurrently transmitted to such party or parties at such addresses as Lessor
may from time to time hereafter designate in writing.

23.2 Date of Notice. Any notice sent by registered or certified mail, return
receipt requested, shall be deemed given on the date of delivery shown on the
receipt card, or if no delivery date is shown, the postmark thereon. If sent by
regular mail the notice shall be deemed given 72 hours after the same is
addressed as required herein and mailed with postage prepaid. Notices delivered
by United States Express Mail or overnight courier that guarantees next day
delivery shall be deemed given 24 hours after delivery of the same to the Postal
Service or courier. Notices transmitted by facsimile transmission or similar
means shall be deemed delivered upon telephone confirmation of receipt
(confirmation report from fax machine is sufficient), provided a copy is also
delivered via delivery or mail. If notice is received on a Saturday, Sunday or
legal holiday, it shall be deemed received on the next business day.

24. Waivers.

(a) No waiver by Lessor of the Default or Breach of any term, covenant or
condition hereof by Lessee, shall be deemed a waiver of any other term, covenant
or condition hereof, or of any subsequent Default or Breach by Lessee of the
same or of any other term, covenant or condition hereof. Lessor’s consent to, or
approval of, any act shall not be deemed to render unnecessary the obtaining of
Lessor’s consent to, or approval of, any subsequent or similar act by Lessee, or
be construed as the basis of an estoppel to enforce the provision or provisions
of this Lease requiring such consent.

(b) The acceptance of Rent by Lessor shall not be a waiver of any Default or
Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of
moneys or damages due Lessor, notwithstanding any qualifying statements or
conditions made by Lessee in connection therewith, which such statements and/or
conditions shall be of no force or effect whatsoever unless specifically agreed
to in writing by Lessor at or before the time of deposit of such payment.

(c) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO
ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR
FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS LEASE.

25. Disclosures Regarding The Nature of a Real Estate Agency Relationship.

(a) When entering into a discussion with a real estate agent regarding a real
estate transaction, a Lessor or Lessee should from the outset understand what
type of agency relationship or representation it has with the agent or agents in
the transaction. Lessor and Lessee acknowledge being advised by the Brokers in
this transaction, as follows:

(i) Lessor’s Agent. A Lessor’s agent under a listing agreement with the Lessor
acts as the agent for the Lessor only. A Lessor’s agent or subagent has the
following affirmative obligations: To the Lessor: A fiduciary duty of utmost
care, integrity, honesty, and loyalty in dealings with the Lessor. To the Lessee
and the Lessor: a. Diligent exercise of reasonable skills and care in
performance of the agent’s duties, b. A duty of honest and fair dealing and good
faith, c. A duty to disclose all facts known to the agent materially affecting
the value or desirability of the property that are not known to, or within the
diligent attention and observation of, the Parties. An agent is not obligated to
reveal to either Party any confidential information obtained from the other
Party which does not involve the affirmative duties set forth above.

(ii) Lessee’s Agent. An agent can agree to act as agent for the Lessee only. In
these situations, the agent is not the Lessor’s agent, even if by agreement the
agent may receive compensation for services rendered, either in full or in part
from the Lessor. An agent acting only for a Lessee has the following affirmative
obligations. To the Lessee: A fiduciary duty of utmost care, integrity, honesty,
and loyalty in dealings with the Lessee. To the Lessee and the Lessor: a.
Diligent exercise of reasonable skills and care in performance of the agent’s
duties, b. A duty of honest and fair dealing and good faith, c. A duty to
disclose all facts known to the agent materially affecting the value or
desirability of the property that are not known to, or within the diligent
attention and observation of, the Parties. An agent is not obligated to reveal
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confidential information obtained from the other Party which does not involve
the affirmative duties set forth above.

(iii) Agent Representing Both Lessor and Lessee. A real estate agent, either
acting directly or through one or more associate licenses, can legally be the
agent of both the Lessor and the Lessee in a transaction, but only with the
knowledge and consent of both the Lessor and the Lessee. In a dual agency
situation, the agent has the following affirmative obligations to both the
Lessor and the Lessee: a. A fiduciary duty of utmost care, integrity, honesty
and loyalty in the dealings with either Lesser or the Lessee, b. Other duties to
the Lessor and the Lessee as stated above in subparagraphs (i) or (ii). In
representing both Lessor and Lessee, the agent may not without the express
permission of the respective Party, disclose to the other Party that the Lessor
will accept rent in an amount less than that indicated in the listing or that
the Lessee is willing to pay a higher rent than that offered. The above duties
of the agent in a real estate transaction do not relieve a Lessor or Lessee from
the responsibility to protect their own interests. Lessor and Lessee should
carefully read all agreements to assure that they adequately express their
understanding of the transaction. A real estate agent is a person qualified to
advise about real estate. If legal or tax advise is desired, consult a competent
professional.

(b) Brokers have no responsibility with respect to any default or breach hereof
by either Party. The Parties agree that no lawsuit or other legal proceeding
involving any breach of duty, error or omission relating to this Lease may be
brought against Broker more than one year after the Start Date and that the
liability (including court costs and attorneys’ fees), of any Broker with
respect to any such lawsuit and/or legal proceeding shall not exceed the fee
received by such Broker pursuant to this Lease; provided, however, that the
foregoing limitation on each Broker’s liability shall not be applicable to any
gross negligence or willful misconduct of such Broker.

(c) Lessor and Lessee agree to identify to Brokers as “Confidential” any
communication or information given Brokers that is considered by such Party to
be confidential.

26. No Right To Holdover. Lessee has no right to retain possession of the
Premises or any part thereof beyond the expiration or termination of this Lease.
In the event that Lessee holds over, then the Base Rent shall be increased to
150% of the Base Rent applicable immediately preceding the expiration or
termination. Nothing contained herein shall be construed as consent by Lessor to
any holding over by Lessee.

27. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive but shall, wherever possible, be cumulative with all other remedies at
law or in equity.

28. Covenants and Conditions; Construction of Agreement. All provisions of this
Lease to be observed or performed by Lessee are both covenants and conditions.
In construing this Lease, all headings and titles are for the convenience of the
Parties only and shall not be considered a part of this Lease. Whenever required
by the context, the singular shall include the plural and vice versa. This Lease
shall not be construed as if prepared by one of the Parties, but rather
according to its fair meaning as a whole, as if both Parties had prepared it.

29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties,
their personal representatives, successors and assigns and be governed by the
laws of the State in which the Premises are located. Any litigation between the
Parties hereto concerning this Lease shall be initiated in the county in which
the Premises are located.

30. Subordination; Attornment; Non-Disturbance.

30.1 Subordination. This Lease and any Option granted hereby shall be subject
and subordinate to any ground lease, mortgage, deed of trust, or other
hypothecation or security device (collectively, “Security Device”), now or
hereafter placed upon the Premises, to any and all advances made on the security
thereof, and to all renewals, modifications, and extensions thereof. Lessee
agrees that the holders of any such Security Devices (in this Lease together
referred to as “Lender”) shall have no liability or obligation to perform any of
the obligations of Lessor under this Lease. Any Lender may elect to have this
Lease and/or any Option granted hereby superior to the lien of its Security
Device by giving written notice thereof to Lessee, whereupon this Lease and such
Options shall be deemed prior to such Security Device, notwithstanding the
relative dates of the documentation or recordation thereof. Lessor shall use
commercially reasonable efforts to procure non-disturbance agreements from any
current Lenders.

30.2 Attornment. In the event that Lessor transfers title to the Premises, or
the Premises are acquired by another upon the foreclosure or termination of a
Security Devise to which this Lease is subordinated (i) Lessee shall, subject to
the non-disturbance provisions of Paragraph 30.3, attorn to such new owner, and
upon request, enter into a new lease, containing ail of the terms and provisions
of this Lease, with such new owner for the remainder of the term hereof, or, at
the election of the new owner, this Lease will automatically become a new lease
between Lessee and such new owner, and (ii) Lessor shall thereafter be relieved
of any further obligations hereunder and such new owner shall assume all of
Lessor’s obligations, except that such new owner shall not: (a) be liable for
any act or omission of any prior lessor or with respect to events occurring
prior to acquisition of ownership; (b) be subject to any offsets or defenses
which Lessee might have against any prior lessor, (c) be bound by prepayment of
more than one month’s rent, or (d) be liable for the return of any security
deposit paid to any prior lessor which was not paid or credited to such new
owner.

30.3 Non-Disturbance. With respect to Security Devices entered into by Lessor
after the execution of this Lease, Lessee’s subordination of this Lease shall be
subject to receiving a commercially reasonable non-disturbance agreement (a
“Non-Disturbance Agreement”) from the Lender which Non-Disturbance Agreement
provides that Lessee’s possession of the Premises, and this Lease, including any
options to extend the term hereof, will not be disturbed so long as Lessee is
not in Breach hereof and attorns to the record owner of the Premises. Further,
within 60 days after the execution of this Lease, Lessor shall, if requested by
Lessee, use its commercially reasonable efforts to obtain a Non-Disturbance
Agreement from the holder of any pre-existing Security Device which is secured
by the Premises. In the event that Lessor is unable to provide the
Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee’s
option, directly contact Lender and attempt to negotiate for the execution and
delivery of a Non-Disturbance Agreement.

30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be
effective without the execution of any further documents; provided, however,
that, upon written request from Lessor or a Lender in connection with a sale,
financing or refinancing of the Premises, Lessee and Lessor shall execute such
further writings as may be reasonably required to separately document any
subordination, attornment and/or Non-Disturbance Agreement provided for herein.

31. Attorneys’ Fees. If any Party or Broker brings an action or proceeding
involving the Premises whether founded in tort, contract or equity, or to
declare rights hereunder, the Prevailing Party (as hereafter defined) in any
such proceeding, action, or appeal thereon, shall be entitled to reasonable
attorneys’ fees. Such fees may be awarded in the same suit or recovered in a
separate suit, whether or not such action or proceeding is pursued to decision
or judgment. The term, “Prevailing Party” shall include, without limitation, a
Party or Broker who substantially obtains or defeats the relief sought, as the
case may be, whether by compromise, settlement, judgment, or the abandonment by
the other Party or Broker of its claim or defense. The attorneys’ fees award
shall not be computed in accordance with any court fee schedule, but shall be
such as to fully reimburse all attorneys’ fees reasonably incurred. In addition,
Lessor shall be entitled to attorneys’ fees, costs and expenses incurred in the
preparation and service of notices of Default and consultations in connection
therewith, whether or not a legal action is subsequently commenced in connection
with such Default or resulting Breach ($200 is a reasonable minimum per
occurrence for such services and consultation).

32. Lessor’s Access; Showing Premises; Repairs. Lessor and Lessor’s agents shall
have the right to enter the Premises at any time, in the case of an emergency,
and otherwise at reasonable times after reasonable prior notice for the purpose
of showing the same to prospective purchasers, lenders, or tenants, and making
such alterations, repairs, improvements or additions to the Premises as Lessor
may deem necessary or desirable and the erecting, using and maintaining of
utilities, services, pipes and conduits through the Premises and/or other
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adverse effect on Lessee’s use of the Premises. All such activities shall be
without abatement of rent or liability to Lessee.

33. Auctions. Lessee shall not conduct, nor permit to be conducted, any auction
upon the Premises without Lessor’s prior written consent. Lessor shall not be
obligated to exercise any standard of reasonableness in determining whether to
permit an auction.

34. Signs. Lessor may place on the Premises ordinary “For Sale” signs at any
time and ordinary “For Lease” signs during the last 6 months of the term hereof.
Lessor may not place any sign on the exterior of the Building that covers any of
the windows of the Premises. Except for ordinary “For Sublease” signs which may
be placed only on the Premises, Lessee shall not place any sign upon the Project
without Lessor’s prior written consent. All signs must comply with all
Applicable Requirements.

35. Termination; Merger. Unless specifically stated otherwise in writing by
Lessor, the voluntary or other surrender of this Lease by Lessee, the mutual
termination or cancellation hereof, or a termination hereof by Lessor for Breach
by Lessee, shall automatically terminate any sublease or lesser estate in the
Premises; provided, however, that Lessor may elect to continue any one or all
existing subtenancies. Lessor’s failure within 10 days following any such event
to elect to the contrary by written notice to the holder of any such lesser
interest, shall constitute Lessor’s election to have such event constitute the
termination of such interest.

36. Consents. Except as otherwise provided herein, wherever in this Lease the
consent of a Party is required to an act by or for the other Party, such consent
shall not be unreasonably withheld or delayed. Lessor’s actual reasonable costs
and expenses (including but not limited to architects’, attorneys’, engineers’
and other consultants’ fees) incurred in the consideration of, or response to, a
request by Lessee for any Lessor consent, including but not limited to consents
to an assignment, a subletting or the presence or use of a Hazardous Substance,
shall be paid by Lessee upon receipt of an invoice and supporting documentation
therefor. Lessor’s consent to any act, assignment or subletting shall not
constitute an acknowledgment that no Default or Breach by Lessee of this Lease
exists, nor shall such consent be deemed a waiver of any then existing Default
or Breach, except as may be otherwise specifically stated in writing by Lessor
at the time of such consent. The failure to specify herein any particular
condition to Lessor’s consent shall not preclude the imposition by Lessor at the
time of consent of such further or other conditions as are then reasonable with
reference to the particular matter for which consent is being given. In the
event that either Party disagrees with any determination made by the other
hereunder and reasonably requests the reasons for such determination, the
determining party shall furnish its reasons in writing and in reasonable detail
within 10 business days following such request.

37. Guarantor.

37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the
form most recently published by the AIR Commercial Real Estate Association.

37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails
or refuses, upon request to provide: (a) evidence of the execution of the
guaranty, including the authority of the party signing on Guarantor’s behalf to
obligate Guarantor, and in the case of a corporate Guarantor, a certified copy
of a resolution of its board of directors authorizing the making of such
guaranty, (b) current financial statements, (c) an Estoppel Certificate, or
(d) written confirmation that the guaranty is still in effect.

38. Quiet Possession. Subject to payment by Lessee of the Rent and performance
of all of the covenants, conditions and provisions on Lessee’s part to be
observed and performed under this Lease, Lessee shall have quiet possession and
quiet enjoyment of the Premises during the term hereof.

39. Options. If Lessee is granted an Option, as defined below, then the
following provisions shall apply.

39.1 Definition. “Option” shall mean: (a) the right to extend or reduce the term
of or renew this Lease or to extend or reduce the term of or renew any lease
that Lessee has on other property of Lessor; (b) the right of first refusal or
first offer to lease either the Premises or other property of Lessor; (c) the
right to purchase, the right of first offer to purchase or the right of first
refusal to purchase the Premises or other property of Lessor.

39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this
Lease is personal to the original Lessee, and cannot be assigned or exercised by
anyone other than said original Lessee and only while the original Lessee is in
full possession of the Premises and, if requested by Lessor, with Lessee
certifying that Lessee has no intention of thereafter assigning or subletting.

39.3 Multiple Options. In the event that Lessee has any multiple Options to
extend or renew this Lease, a later Option cannot be exercised unless the prior
Options have been validly exercised.

39.4 Effect of Default on Options.

(a) Lessee shall have no right to exercise an Option: (i) during the period
commencing with the giving of any notice of Default and continuing until said
Default is cured, (ii) during the period of time any Rent is unpaid (without
regard to whether notice thereof is given Lessee), (iii) during the time Lessee
is in Breach of this Lease, or (iv) in the event that Lessee has been given 3 or
more notices of separate Default, whether or not the Defaults are cured, during
the 12 month period immediately preceding the exercise of the Option.

(b) The period of time within which an Option may be exercised shall not be
extended or enlarged by reason of Lessee’s inability to exercise an Option
because of the provisions of Paragraph 39.4(a).

(c) An Option shall terminate and be of no further force or effect,
notwithstanding Lessee’s due and timely exercise of the Option, if, after such
exercise and prior to the commencement of the extended term or completion of the
purchase, (i) Lessee fails to pay Rent for a period of 30 days after such Rent
becomes due (without any necessity of Lessor to give notice thereof), or (ii) if
Lessee commits a Breach of this Lease.

40. Security Measures. Lessee hereby acknowledges that the Rent payable to
Lessor hereunder does not include the cost of guard service or other security
measures, and that Lessor shall have no obligation whatsoever to provide same.
As part of the Tenant Improvements, Lessor shall Install a card access system
for access to the Premises. Lessee assumes all responsibility for the protection
of the Premises, Lessee, its agents and invitees and their property from the
acts of third parties. In the event, however, that Lessor should elect to
provide security services, then the cost thereof shall be an Operating Expense.

41. Reservations.

(a) Lessor reserves the right: (i) to grant, without the consent or joinder of
Lessee, such easements, rights and dedications that Lessor deems necessary,
(ii) to cause the recordation of parcel maps and restrictions, (iii) to create
and/or install new utility raceways, so long as such easements, rights,
dedications, maps, restrictions, and utility raceways do not unreasonably
interfere with the use of the Premises by Lessee. Lessor may also: change the
name, address or title of the Building or Project upon at least 90 days prior
written notice; provide and install, at Lessee’s expense, Building standard
graphics on the door of the Premises and such portions of the Common Areas as
Lessor shall reasonably deem appropriate; grant to any lessee the exclusive
right to conduct any business as long as such exclusive right does not conflict
with any rights expressly given herein; and to place such signs, notices or
displays as Lessor reasonably deems necessary or advisable upon the roof,
exterior of the Building or the Project or on signs in the Common Areas. Lessee
agrees to sign any documents reasonably requested by Lessor to effectuate such
rights. The obstruction of Lessee’s view, air, or light by any structure erected
in the vicinity of the Building, whether by Lessor or third parties, shall in no
way affect this Lease or impose any liability upon Lessor.

(b) Lessor also reserves the right to move Lessee to other space of comparable
size in the Building or Project. Lessor must provide at least 45 days prior
written notice of such move, and the new space must contain improvements of
comparable quality to those contained

 

 

   

 

 

   

 

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within the Premises, Lessor shall pay the reasonable out of pocket costs that
Lessee incurs with regard to such relocation, including the expenses of moving
and necessary stationary revision costs. In no event, however, shall Lessor be
required to pay an amount in excess of two months Base Rent. Lessee may not be
relocated more than once during the term of this Lease.

(c) Lessee shall not: (i) use a representation (photographic or otherwise) of
the Building or Project or their name(s) in connection with Lessee’s business;
or (ii) suffer or permit anyone, except in emergency, to go upon the roof of the
Building.

42. Performance Under Protest. If at any time a dispute shall arise as to any
amount or sum of money to be paid by one Party to the other under the provisions
hereof, the Party against whom the obligation to pay the money is asserted shall
have the right to make payment “under protest” and such payment shall not be
regarded as a voluntary payment and there shall survive the right on the part of
said Party to institute suit for recovery of such sum. If it shall be adjudged
that there was no legal obligation on the part of said Party to pay such sum or
any part thereof, said Party shall be entitled to recover such sum or so much
thereof as it was not legally required to pay. A Party who does not initiate
suit for the recovery of sums paid “under protest” within 6 months shall be
deemed to have waived its right to protest such payment.

43. Authority; Multiple Parties; Execution

(a) If either Party hereto is a corporation, trust, limited liability company,
partnership, or similar entity, each individual executing this Lease on behalf
of such entity represents and warrants that he or she is duly authorized to
execute and deliver this Lease on its behalf. Each Party shall, within 30 days
after request, deliver to the other Party satisfactory evidence of such
authority.

(b) If this Lease is executed by more than one person or entity as “Lessee” or
as “Lessor,”, each such person or entity shall be jointly and severally liable
hereunder. It is agreed that any one of the named parties Lessees shall be
empowered to execute any amendment to this Lease, or other document ancillary
thereto and bind all of the named LesseesParties, and the parties Lessor may
rely on the same as if all of the named PartiesLessees had executed such
document. The entities Included as “Lessor” are executing this Lease and are
responsible hereunder.

(c) This Lease may be executed by the Parties in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.

44. Conflict. Any conflict between the printed provisions of this Lease and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.

45. Offer. Preparation of this Lease by either party or their agent and
submission of same to the other Party shall not be deemed an offer to lease to
the other Party. This Lease is not intended to be binding until executed and
delivered by all Parties hereto.

46. Amendments. This Lease may be modified only in writing, signed by the
Parties in interest at the time of the modification. As long as they do not
materially change Lessee’s obligations hereunder, Lessee agrees to make such
reasonable nonmonetary modifications to this Lease as may be reasonably required
by a Lender in connection with the obtaining of normal financing or refinancing
of the Premises.

47. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT
OF THIS AGREEMENT.

48. Arbitration of Disputes. An Addendum requiring the Arbitration of all
disputes between the Parties and/or Brokers arising out of this Lease ¨ is þ is
not attached to this Lease.

49. Americans with Disabilities Act. Since compliance with the Americans with
Disabilities Act (ADA) is dependent upon Lessee’s specific use of the Premises,
Lessor makes no warranty or representation as to whether or not the Premises
comply with ADA or any similar legislation. In the event that Lessee’s specific
use of the Premises requires modifications or additions to the Premises in order
to be in ADA compliance, Lessee agrees to make any such necessary modifications
and/or additions at Lessee’s expense.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE
TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE
PREMISES.

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL
REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY, LEGAL
EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT
RELATES. THE PARTIES ARE URGED TO:

1. SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

2. RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE
PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING AND SIZE OF THE PREMISES, THE
STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS,
COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE
PREMISES FOR LESSEE’S INTENDED USE.

WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE
STATE IN WHICH THE PREMISES ARE LOCATED.

The parties hereto have executed this Lease at the place and on the dates
specified above their respective signatures.

 

Executed at:  

San Francisco, CA

   Executed at:  

New Haven, CT

On:  

05/26/10

    On:  

05/26/10

 

By LESSOR:  

By LESSEE:

GSR II, LLC

 

HIGHER ONE PAYMENTS, INC.

 

 

 

 

By:  

/s/ David Currie

    By:  

/s/ Mark Volchek

Name Printed:  

David Currie

    Name Printed:  

Mark Volchek

 

 

   

 

 

   

 

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Title:  

Manager

LM SWAN WAY, LLC By:  

/s/ Lance Miller

Name Printed:  

Lance Miller

Title:  

 

Address:  

c/o GRAHAM STREET REALTY

37 GRAHAM STREET, SUITE 200B

SAN FRANCISCO, CA 94129

Telephone:(415)  

561-6800

Facsimile:(415)  

561-6801

Federal ID No.  

 

LESSOR’S BROKER:

 

Attn:  

 

Address:  

 

 

 

Telephone:(        )  

 

Facsimile:(        )  

 

Broker/Agent DRE License #:  

 

 

 

Title:  

CFO

By:  

 

Name Printed:  

 

Title:  

 

Address:  

80 SWAN WAY

OAKLAND, CA 94621

 

Telephone:(        )  

 

Facsimile:(        )  

 

Federal ID No.  

 

LESSEE’S BROKER:

 

Attn:  

 

Address:  

 

 

 

Telephone:(        )  

 

Facsimile:(        )  

 

Broker/Agent DRE License #:  

 

 

 

 

 

NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form: AIR Commercial Real Estate Association, 800 W 6th Street, Suite
800, Los Angeles, CA 90017. Telephone No. (213) 687-8777. Fax No.:
(213) 687-8616.

©Copyright 1999-By AIR Commercial Real Estate Association.

All rights reserved.

No part of these works may be reproduced in any form without permission in
writing.

 

 

   

 

 

   

 

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Exhibit A:

Lessor:

GSR II, LLC and LM Swan Way, LLC (Please see Exhibit A for Lessor description)

GSR II, a Delaware limited liability company, as to an undivided 20% interest,
and LM Swan Way, LLC, a Delaware limited liability company, as to an undivided
80% interest.

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RENT ADJUSTMENT(S)

LEASE ADDENDUM

 

Dated: May 21, 2010    By and Between (Lessor)    GSR II, LLC and LM Swan Way,
LLC (please see Exhibit A for Lessor description) (Lessee)    Higher One
Payments, Inc. Address of Premises:    80 Swan Way, Suite 200 and 201, Oakland,
CA 94621

 

A. RENT ADJUSTMENTS:

The monthly rent for each month of initial term of the Lease shall be as
indicated below:

 

     The New Base Rent shall be:

Suite 200 Premises

  

Suite 200 Premises

8.1.2010 - 1.31.2011

   $0.00 RSF per month ($0.00

2.1.2011 - 7.31.2012

   $1.25 RSF per month ($11,700)

8.1.2012 - 7.31.2013

   $1.28 RSF per month ($11,934)

8.1.2013 - 7.31.2014

   $ 1.30 RSF per month ($12,173)

8.1.2014 - 7.31.2015

   $1.33 RSF per month ($12,416)

8.1.2015 - 1.31.2016

   $1.35 RSF per month ($12,664)

Suite 201 Premises

  

Suite 201 Premises

8.1.2010 - 7.31.2011

   $0.00 RSF per month ($0.00)

8.1.2011 - 7.31.2012

   $0.63 RSF per month ($1,500)

8.1.2012 - 7.31.2013

   $ 1.28 RSF per month ($3,072)

8.1.2013 - 7.31.2014

   $1.30 RSF per month ($3,120)

8.1.2014 - 7.31.2015

   $1.33 RSF per month ($3,182)

8.1.2015 - 1.31.2016

   $1.35 RSF per month ($3,240)

 

B. NOTICE:

Unless specified otherwise herein, notice of any such adjustments, other than
Fixed Rental Adjustments, shall be made as specified in paragraph 23 of the
Lease.

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Addendum to Lease

This Addendum to Lease modified the Standard Multi-Tenant Office Lease – Gross
(“Lease”) between GSR II, LLC and LN Swan Way, LLC (collectively “Lessor”) and
Higher One Payments, Inc. (“Lessee”). Each of the following paragraphs shall be
inserted in the Lease in the order of numbering and lettering established by the
Lease.

3.3(a) If the Lessor does not cause Substantial Completion of the Premises to be
achieved on or before August 1, 2010 (the “Delivery Date”) as such Delivery Date
may be extended by any of the causes of delays described in Section 5.2.1
through 5.2.8 of the Work Letter, then Lessor shall pay to Lessee the sum of
$281.30 per day from the Delivery Date to the date of Substantial Completion of
the Premises.

4.2(h) Operating Expense Exclusions. Notwithstanding anything in this Lease to
the contrary, the following expenses are excluded from Operating Expenses:

(i) depreciation and amortization;

(ii) tenant improvement expenses;

(iii) expenses incurred by Lessor for repairs or other work occasioned by fire,
windstorm, or other insurable casualty or condemnation, to the extent insured;

(iv) expenses incurred by Lessor to lease space to new tenants or to retain
existing tenants including leasing commissions, advertising and promotional
expenditures;

(v) expenses incurred by Lessor to resolve disputes with tenants, enforce or
negotiate lease terms with prospective or existing tenants or in connection with
any financing, sale or syndication of the Project;

(vi) interest, principal, points and fees, amortization or other costs
associated with any debt and rent payable under any lease to which this Lease is
subject and all costs and expenses associated with any such debt or lease and
any ground lease rent, irrespective of whether this Lease is subject or
subordinate thereto;

(vii) expenses incurred for the repair, maintenance or operation of any pay
parking garage, including but not limited to salaries and benefits of any
attendants, electricity, insurance and taxes and any expense to construct such a
garage;

(viii) expenses for the replacement of any item to the extent that the expense
is paid for by any applicable warranty;

 

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(ix) cost to correct any penalty or fine incurred by Lessor due to Lessor’s
violation of any federal, state, or local law or regulation and any interest or
penalties due for late payment by Lessor of any of the Operating Expenses;

(x) cost of correcting any latent defects or original design defects in the
Project construction, materials, or equipment;

(xi) expenses for any item or service which the Lessor does not provide
hereunder and the cost of which Lessee pays directly to a third party or
separately reimburses Lessor and expenses incurred by Lessor to the extent the
same are reimbursed from any other tenants, occupants of the property, or third
parties;

(xii) expenses for any item or service not provided to Lessee but exclusively to
certain other tenants in the Project;

(xiii) salaries of (a) employees above the grade of building superintendent or
building manager, and (b) that portion of employee expenses for employees whose
time is not spent directly and solely in the operation of the Project;

(xiv) Lessor’s general corporate overhead and administrative expenses except if
it is solely for the Project.

(xv) fees paid to affiliates of Lessor to the extent that such fees exceed the
customary amount charged for the services provided;

4.2(i) Audit Rights. Any objection to a Lessor’s statement delivered pursuant to
Paragraph 4.2(f), or to any information reported therein, shall be deemed waived
if not raised by written notice to Lessor within ninety (90) days following the
later of delivery of such Lessor’s statement. Following the giving of such
notice, Tenant shall have the right during Lessor’s regular business hours and
on reasonable prior notice, to inspect, at the location of Lessor’s accounting
records, at Tenant’s sole cost, Lessor’s books and records with respect to
Operating Expenses and Real Property Taxes for the calendar year to which such
Lessor’s statement relates, on the terms and conditions set forth below:

(i) The inspection of Lessor’s books and records may be conducted by an employee
of Tenant, or a reputable certified public accountant (which accountant is a
member of a reputable independent nationally or regionally recognized certified
public accounting firm, who has had previous experience in reviewing financial
operating records of Lessors of office buildings; provided that such accountant
is not retained by Tenant on a contingency fee basis and is not a tenant of the
Building). The inspection of Lessor’s books and records must be completed not
later than sixty (60) days after such books and records are made available to
Tenant, and any audit report prepared by Tenant’s auditors shall be delivered
concurrently to Lessor and Tenant within thirty (30) days after the end of such
sixty (60) day period.

(ii) If, after such inspection of Lessor’s books and records, Tenant disputes
the amount of Operating Expenses and/or Real Property Taxes for the calendar
year

 

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under inspection, Lessor and Tenant shall meet and attempt in good faith to
resolve the dispute. If the parties are unable to resolve the dispute within
sixty (60) days after completion of Tenant’s inspection, then Tenant shall have
the right to submit the dispute to arbitration, in the City and County of San
Francisco, which right shall be exercised, if at all, by delivering a notice of
election to arbitrate to Lessor not later than the last day of the sixty
(60) day period. Lessor and Tenant shall agree, within fifteen (15) days after
Tenant’s delivery of the arbitration election, to retain an arbitrator who shall
be an unaffiliated real estate attorney with at least ten (10) years of
experience representing lessors and lessees in the leasing of office space in
the City and County of San Francisco. If Lessor and Lessee fail to agree upon
and appoint an arbitrator, then the appointment of the arbitrator shall be made
by the Presiding Judge of the Superior Court, or, if he or she refuses to act,
by any judge having jurisdiction over the parties. Such arbitrator shall have
the right to retain an unaffiliated, reputable certified public accountant who
is a member of a reputable independent nationally or regionally recognized
certified public accounting firm, with at least ten (10) years’ of experience
representing landlords and tenants in reviewing financial operating records of
landlords of office buildings in the County of San Francisco as an expert to
consult with the arbitrator with respect to the dispute.

(iii) The arbitration shall be limited to the determination of the appropriate
amount of Operating Expenses and Real Property Taxes relevant to the subject of
the dispute, for the calendar year under review. The decision of the arbitrator
shall be delivered simultaneously to Lessor and Lessee, and shall be final and
binding upon Lessor and Lessee.

(iv) If the arbitrator determines that the amount of Operating Expenses or Real
Property Taxes, billed to Lessee was incorrect, the appropriate party shall pay
to the other party the deficiency or overpayment, as applicable, within thirty
(30) days following delivery of the arbitrator’s decision, without interest. All
costs and expenses of the arbitration shall be paid by Lessee unless the final
determination in such arbitration is that Lessor overstated Operating Expenses
and/or Real Property Taxes for the applicable calendar year by more than five
percent (5%) of the originally reported expenses, in which case Lessor shall pay
all costs and expenses of the arbitration.

(v) Lessee shall keep any information gained from any such audit (including
Lessee’s review or audit of Lessor’s books and record) confidential, and shall
cause Lessee’s employees and agents to keep such information confidential, and
shall not disclose it to any other party, except to its attorneys and
accountants, in connection with litigation, or except as required by law.

(vi) Lessee’s exercise of its audit rights shall not relieve Lessee of its
obligation to pay disputed amounts, and Lessee’s rights under this section may
only be exercised by Lessee if Lessee is not in default under this Lease during
the period that Lessee is exercising its rights hereunder.

(vii) In no event shall this section be deemed to allow any review of any of
Lessor’s records by any subtenant of Lessee. Lessee agrees that, absent fraud or
gross negligence, this section shall be the sole method to be used by Lessee to
dispute concerning the subject matter herein payable or not payable by Lessee
pursuant to the terms of this Lease, and Lessee hereby waives any other rights
at law or in equity relating thereto.

 

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8.7(b) Lessor’s Indemnity. Lessor shall indemnify, protect, defend and hold
harmless the Premises, Lessee and its agents, Lessee’s sublessee’s or assignees,
partners, and lenders, from and against any and all claims and/or damages,
liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or
liabilities caused solely by Lessor’s gross negligence or willful misconduct. In
any action or proceeding is brought against Lessee by reason of any of the
foregoing matters, Lessor shall upon notice, defend the same at Lessor’s expense
by counsel reasonably satisfactory to Lessee and Lessee shall cooperate with
Lessor in such defense. Lessee need not have first paid any such claim in order
to be defended or indemnified.

12.1(b) Subject to the provisions of Paragraph 12.1(c), Lessee shall have the
right to assign this Lease or sublet the Premises, without Lessor’s consent, to
a subsidiary, affiliate or other organization in which Lessee is a majority
owner or controlling shareholder or to the surviving entity in a merger,
acquisition divestiture or consolidation, provided that Lessee utilizes a form
for the same which is approved by Lessor in advance and pursuant to which the
transferee assumes all of Lessee’s obligations hereunder and provided, further,
that a fully executed copy of the transfer document is provided to Lessor within
ten (10) days following the date on which the transfer is effective.

55. Right to Lease. (a) Subject to the provisions of Paragraph 39, Lessee shall
have a continuing right to lease (the “Right to Lease”) the space described in
subparagraph (b) if such space becomes available during the term of this Lease.

(b) This Right to Lease shall only apply to the following space in the Project
located adjacent to the Premises on the 2nd floor of 80 Swan Way, Oakland, CA
94621 (the “Adjacent Space”). References to the “Adjacent Space” shall refer to
the portion in all of such space which is becoming available and which is the
subject of a written notice (“Offer Notice”) from Lessor under this Right to
Lease.

(c) Prior to offering or leasing the Adjacent Space to anyone else Lessor shall
give Lessee and Offer Notice of the availability of the Adjacent Space and the
date the existing tenant or occupant, if any, is expected to vacate such space.
Such notice shall set forth the basic economic terms, including, but not limited
to, Lessor’s determination of the monthly Base Rent, an improvement allowance,
if any, and all other economic terms and conditions (collectively, the “Lessor’s
Economic Terms”), upon which Lessor is willing to lease the Adjacent Space.

(d) For a period of ten (10) business days after the Lessor’s Economic Terms are
given to Lessee in a notice from Lessor, time being of the essence, Lessee shall
have the right to give written notice to Lessor of Lessee’s exercise of its
Right to Lease the Adjacent Space which is the subject of the Offer Notice.
Lessee’s notice must irrevocably elect to lease the Adjacent Space which is the
subject of Lessor’s Offer Notice and may (i) accept the Lessor’s Economic Terms
or (ii) reject such Lessor’s Economic Terms and propose alternative economic
terms (“Lessee’s Economic Terms”) which shall be set forth in the Lessee’s
notice exercising the Right to Lease. If Lessee’s exercise notice does not
unequivocally accept the Lessor’s Economic Terms or

 

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propose Lessee’s Economic Terms, then the Lessee shall be deemed to have
accepted the Lessor’s Economic Terms. If Lessee proposes Lessee’s Economic
Terms, the parties shall attempt to agree on the economic terms which shall
apply. If the parties do not reach agreement within ten (10) days, then either
party may select a real estate broker to act as an arbitrator and shall notify
the other party of such selection. Upon receipt of such notice selecting such
broker, the party receiving the notice may select another broker by giving
written notice of such selection within five (5) days after the notice selecting
the first broker is received. If a second broker is timely selected, then the
two brokers selected shall promptly, without conferring with or receiving any
direction from the Lessor or Lessee, select a third broker. If a second broker
is not timely selected, then the first broker selected shall act as the sole
arbitrator. The arbitrator or arbitrators, as the case may be, shall, within
thirty (30) days after appointment of the first (or only) broker, decide whether
Lessor’s Economic Terms or Lessee’s Economic Terms are closer to the fair market
rental value of the Adjacent Space which was the subject of the Offer Notice
and, within such thirty (30) day period shall so advise the Lessor and Lessee in
writing. The written decision shall be conclusive and the economic terms
selected as being closer to fair market rental value of the Adjacent Space shall
be the terms on which the Adjacent Space which was the subject of the Offer
Notice is leased to the Lessee. If Lessee timely exercises its Right to Lease as
provided herein, the parties will promptly execute an amendment to this Lease to
include the Adjacent Space in the Premises and to document the lease terms
thereof. Failure to exercise such an amendment shall not prevent addition of the
Adjacent Space to the Premises on the terms proposed, agreed to or selected, as
applicable, in accordance with the foregoing provisions. If Lessor has not
timely received Lessee’s notice electing to lease the Adjacent Space which was
the subject of the Offer Notice, Lessee shall be conclusively presumed to have
elected not to lease the Adjacent Space and, subject to subparagraph (e) below,
Lessor may thereafter freely lease the Adjacent Space to any prospective tenant
for terms which are the same as or different than the Lessor’s Economic Terms
without having to re-offer the space to Lessee.

(e) If Lessor gives an Offer Notice to Lessee on or before November 1, 2010 and
if some other party leases the space which is the subject of the Offer Notice,
then the definition of Adjacent Space to which the right described in this
Paragraph 55 applies shall be modified to include space on the first floor of
the Building of not less than 3,000 rentable square feet and not more than 5,000
rentable square feet which has all of the following characteristics: (i) the
space is vacant and located on the first floor of the Building, (ii) the space
is not subject to any lease or letter of intent and is not the subject of
correspondence with any prospective tenant, or with the agent or broker of such
prospective tenant, indicating an interest in pursuing lease negotiations on
such space, and (iii) the space has been identified as the Adjacent Space to
which this Paragraph 55 shall thereafter apply in a written notice from Lessor
to Lessee. Lessor has not made any representation to Lessee that any space
satisfying the criterion in the preceding sentence will be available and has no
obligation to refrain from leasing or negotiating to lease space on the first
floor of the Building so that space satisfying such criteria will be available.
Lessor shall give the notice described in clause (iii) of this subparagraph
(e) to Lessee within thirty (30) days after a request by Lessee made after the
initial Adjacent Space is leased to another tenant which notice from Lessor
shall identify the space, if any, which satisfies the criteria set forth in
clauses (i) and (ii) of this subparagraph (e).

 

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WORK LETTER

This Work Letter shall set forth the terms and conditions relating to the
construction of the Tenant Improvements in the Premises. This Work Letter is
essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during the
actual construction of Tenant Improvements, as defined below, in the Premises.
All references in this Work Letter to Articles or Sections of “this Lease” shall
mean the relevant portion of the Standard Multi-Lessee Office Lease – Gross
(“Lease”) between GSR II, LLC and LM Swan Way, LLC (collectively Lessor”) and
Higher One Payments, Inc. (“Lessee”) of which this Work Letter is a part, and
all references in this Work Letter to Sections of “this Work Letter” shall mean
the relevant portion of Sections 1 through 6 of this Work Letter.

SECTION 1

PLANS AND SPECS FOR THE PREMISES

Lessor and Lessee have approved that certain space plan for the Premises
prepared by Ware Malcomb, dated May 6, 2010, Scheme 01_B and 80 Swan Way, Higher
One – Tenant Improvements, Scope of Work (collectively the “Plans and Specs”) a
copy of which is attached as Work Letter Schedule 1. Immediately following
Lessee’s execution and delivery of this Lease, Lessee shall cooperate in good
faith with Lessor’s architects and engineers to supply such information as is
necessary to allow the Lessor’s architects and engineers to complete any
required architectural and engineering drawings for the Premises. Lessor shall
construct the improvements in the Premises (the “Tenant Improvements”) pursuant
to the Plans and Specs. Lessee shall make no changes or modifications to the
Plans and Specs without the prior written consent of Lessor, which consent may
be withheld in Lessor’s sole discretion if such change or modification would
directly or indirectly delay the “Substantial Completion,” as that term is
defined in Section 5.1 of this Work Letter, of the Premises or increase the cost
of constructing the Tenant Improvements.

SECTION 2

IMPROVEMENT DEPOSIT BY LESSEE

Upon Lessee’s execution of this Lease, Lessee shall deliver to Lessor cash in an
amount (the “Improvement Deposit”) equal to Two Hundred Eighty Four Thousand,
Nine Hundred Forty-Four and 80/100 ($284,944.80). The Improvement Deposit shall
be disbursed by Lessor for the design and construction of the Tenant
Improvements. If the Lease is terminated before the Tenant Improvements are
completed, then Lessor shall be entitled to retain the unexpended portion of the
Improvement Deposit as consideration for entering into the Lease, which amount
shall be deemed to have been earned and fully payable upon execution of the
Lease. In the event that after Lessee’s execution of this Lease, any revisions,
changes, or substitutions shall be made to (i) the Plans and Specs, or (ii) the
Tenant Improvements, or in the event that Lessee requests revisions, changes, or
substitutions in the work described in the Plans and Specs then any additional
costs which arise in connection with such revisions, changes or substitutions
shall be

 

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paid by Lessee to Lessor immediately upon Lessor’s request as an addition to the
Improvement Deposit.

SECTION 3

CONTRACTOR’S WARRANTIES AND GUARANTIES

Lessor hereby assigns to Lessee all warranties and guaranties by the contractor
who constructs the Tenant Improvements (the “Contractor”) relating to the Tenant
Improvements, and Lessee hereby waives all claims against Lessor relating to, or
arising out of the construction of, the Tenant Improvements.

SECTION 4

LESSEE’S COVENANTS

Lessee hereby indemnifies Lessor for any loss, claims, damages or delays arising
from the actions of Lessee’s space planner/architect on the Premises or in the
Building. In addition, immediately after the “Substantial Completion” of the
Premises, as that term is defined in Section 5.1 of this Work Letter, Lessee
shall have prepared and delivered to the Building a copy of the record set of
plans and specifications (including all working drawings) for the Tenant
Improvements.

SECTION 5

COMPLETION OF THE TENANT IMPROVEMENTS:

LEASE COMMENCEMENT DATE

5.1 Ready for Occupancy. For purposes of this Lease, “Substantial Completion” of
the Premises shall occur upon the completion of construction of the Tenant
Improvements in the Premises pursuant to the Plans and Specs (as reasonably
determined by Lessor), with the exception of any punch list items, and any
Lessee fixtures, telephones and computers and any cabling related thereto,
photocopy machines, work-stations (including any related fixture and/or
equipment electrification), built-in furniture, systems (including security and
other Lessee systems) or equipment (including any related electrification) to be
installed by Lessee or under the supervision of Contractor.

5.2 Delay of the Substantial Completion of the Premises. Except as provided in
this Section 5.2, the Lease Commencement Date shall occur on the date of
Substantial Completion of the Tenant Improvements as described in Section 5.1
above. Delay of the Commencement Date shall not extend the Expiration Date of
the Lease. If there shall be a delay or there are delays in the Substantial
Completion of the Tenant Improvements as a direct, indirect, partial, or total
result of:

5.2.1 Lessee’s failure to timely approve any matter requiring Lessee’s approval;

5.2.2 A breach by Lessee of the terms of this Work Letter or the Lease;

 

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5.2.3 Lessee’s request for changes in the Plans and Specs or the Tenant
Improvements;

5.2.4 Changes in any of the Plans and Specs because the same do not comply with
applicable laws;

5.2.5 Lessee’s requirement for materials, components, finishes or improvements
which are not available in a commercially reasonable time given the anticipated
date of Substantial Completion of the Tenant Improvements, as set forth in the
Lease, or which are different from, or not included in, Lessor’s standard
improvement package items for the Building in which the Premises are located;

5.2.6 Changes to the base, shell and core work of the Building required by the
Plans and Specs;

5.2.7 Any other acts or omissions of Lessee, or its agents, or employees; or,

5.2.8 Any event or occurrence which is not within the reasonable control of the
Lessor, including without limitation, any action by any labor union, any change
in law or any direction given by any governmental agency or bureau, or any
person acting on its behalf, any casualty, theft or vandalism or any
unavailability of any materials.

then, notwithstanding anything to the contrary set forth in the Lease or this
Work Letter and regardless of the actual date of the Substantial Completion of
the Premises, the date of Substantial Completion of the Premises shall be deemed
to be the date the Substantial Completion of the Premises would have occurred if
no Lessee delay or delays, as set forth above, had occurred. If the sole basis
of delay in Substantial Completion of the Premises is a delay caused by any
event or occurrence described in Section 5.2.8 (and not in any of Sections 5.2.1
through 5.2.7 inclusive) then the payment of rent shall not commence on the
Commencement Date, but on the date of actual Substantial Completion of the
Premises.

SECTION 6

MISCELLANEOUS

6.1 Lessee’s Entry Into the Premises Prior to Substantial Completion. Provided
that Lessee and its agents do not interfere with Contractor’s work in the
Building and the Premises, Contractor shall allow Lessee access to the Premises
prior to the Substantial Completion of the Premises for the purpose of Lessee
installing overstandard equipment or fixtures (including Lessee’s data and
telephone equipment) in the Premises. Prior to Lessee’s entry into the Premises
as permitted by the terms of this Section 6.1, Lessee shall submit a schedule to
Lessor and Contractor, for their approval, which schedule shall detail the
timing and purpose of Lessee’s entry. Lessee shall hold Lessor harmless from and
indemnify, protect and defend Lessor against any loss or damage to the Building
or Premises and against injury to any persons caused by Lessee’s actions
pursuant to this Section 6.1.

 

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6.2 Freight Elevators. Lessor shall, consistent with its obligations to other
tenants of the Building, make the freight elevator reasonably available to
Lessee in connection with initial decorating, furnishing and moving into the
Premises.

6.3 Lessee’s Representative. Lessee has designated Mark Volchek as its sole
representative with respect to the matters set forth in this Work Letter, who,
until further notice to Lessor, shall have full authority and responsibility to
act on behalf of the Lessee as required in this Work Letter.

6.4 Lessor’s Representative. Lessor has designated John Gilmore as its sole
representative with respect to the matters set forth in this Work Letter, who,
until further notice to Lessee, shall have full authority and responsibility to
act on behalf of the Lessor as required in this Work Letter.

6.5 Time of the Essence in This Work Letter. Unless otherwise indicated, all
references herein to a “number of days” shall mean and refer to calendar days.
In all instances where Lessee is required to approve or deliver an item, if no
written notice of approval is given or the item is not delivered within the
stated time period, at Lessor’s sole option, at the end of such period the item
shall automatically be deemed approved or delivered by Lessee and the next
succeeding time period shall commence.

6.6 Lessee’s Lease Default. Notwithstanding any provision to the contrary
contained in this Lease, if an event of default as described in the Lease, or a
default by Lessee under this Work Letter, has occurred at any time on or before
the Substantial Completion of the Premises, then (i) in addition to all other
rights and remedies granted to Lessor pursuant to the Lease, Lessor shall have
the right to cause Contractor to cease the construction of the Premises (in
which case, Lessee shall be responsible for any delay in the Substantial
Completion of the Premises caused by such work stoppage as set forth in
Section 5 of this Work Letter), and (ii) all other obligations of Lessor under
the terms of this Work Letter shall be forgiven until such time as such default
is cured pursuant to the terms of the Lease.

6.7 Cooperation by Lessee. Lessee acknowledges that the timing of the completion
of the Tenant Improvements is of the utmost importance to Lessor. Accordingly,
Lessee hereby agrees to fully and diligently cooperate with all reasonable
requests by Lessor in connection with or related to the design and construction
of the Tenant Improvements, and in connection therewith, shall respond to
Lessor’s requests for information and/or approvals, except as specifically set
forth herein to the contrary, within two (2) business days following request by
Lessor.

 

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Schedule 1 to Work Letter

Plans and Specs

80 Swan Way

Higher One - Tenant Improvements

Scope of Work

Demolition

 

  •  

Interior Walls

 

  •  

Ceilings

 

  •  

Lighting

 

  •  

Doors (some will be re-used)

Carpentry & Drywall

 

  •  

Interior Walls per architect’s space plan

 

  •  

Level 4 finish on all walls

Cabinets

 

  •  

Break room cabinets and countertops per architect’s space plan

Insulation

 

  •  

Building insulation per code

Doors, Frames, & Hardware

 

  •  

Re-use solid core wood doors and frames (except for 6 new glass conf. room door)

 

  •  

New exterior access door (from break room to perimeter deck)

Glass & Glazing

 

  •  

Frameless glass wall and door for large executive conference room per
architect’s space plan

 

  •  

Storefront glass walls and doors for five other conference rooms per architect’s
space plan

Tile

 

  •  

12”x12” Ceramic tile in reception area per architect’s space plan

Acoustical Ceiling

 

  •  

New T-bar ceiling grid

 

  •  

New 2nd look acoustical ceiling tiles

Flooring

 

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  •  

New rolled carpet, pad, and base in all office and conference room areas

 

  •  

New VCT and base in break room, printing/shipping, closet, and storage room

 

  •  

New static free VCT and base in server room

Painting

 

  •  

Paint (3 coats) all interior walls

 

  •  

2 color scheme (base color + accent walls)

Fire extinguishers & alarm

 

  •  

Install 4 new fire extinguishers

 

  •  

Disconnect and reinstall 2nd floor fire alarm

Plumbing

 

  •  

Install required plumbing supply and drain lines for new kitchen sink

 

  •  

Re-use existing kitchen sink and faucet

HVAC

 

  •  

Modify and expand existing ductwork, dampers, and thermostats to accommodate
entire suite

 

  •  

Testing and balancing

Electrical

 

  •  

104 new 2’x4’ ceiling lights (troffers) for entire suite (standard lighting per
code – Title 24)

 

  •  

13 new ceiling lights (hanging troffers) in conference rooms (standard lighting
per code – Title 24)

 

  •  

84 outlets on 38 circuits

 

  •  

Exit and emergency lighting per code

 

  •  

4 dedicated circuits for server room

Phone/Data

 

  •  

Rough-in data and phone to each workstation, conference room, server room,
break-room, file room, reception, and shipping room.

Required Tenant Selections

 

•  

Break room cabinet and countertop colors

 

•  

Paint Colors

 

•  

Carpet Style/Color

 

•  

Tile Style/Color

 

•  

VCT Color

 

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OPTION(S) TO EXTEND

STANDARD LEASE ADDENDUM

 

Dated   

May 21, 2010

By and Between (Lessor)   

GSR II, LLC and LM Swan Way, LLC (please see Exhibit A for Lessor description)

By and Between (Lessee)   

Higher One Payments, Inc.

  

 

Address of Premises:   

80 Swan Way, Oakland, Suite 200 & 201, CA 94621

  

 

Paragraph                     

 

A. OPTION(S) TO EXTEND:

Lessor hereby grants to Lessee the option to extend the term of this Lease for
one additional thirty six month period(s) commencing when the prior term expires
upon each and all of the following terms and conditions:

(i) In order to exercise an option to extend, Lessee must give written notice of
such election to Lessor and Lessor must receive the same at least 6 but not more
than 9 months prior to the date that the option period would commence, time
being of the essence. If proper notification of the exercise of an option is not
given and/or received, such option shall automatically expire. Options (if there
are more than one) may only be exercised consecutively.

(ii) The provisions of paragraph 39, including those relating to Lessee’s
Default set forth in paragraph 39.4 of this Lease, are conditions of this
Option.

(iii) Except for the provisions of this Lease granting an option or options to
extend the term, all of the terms and conditions of this Lease except where
specifically modified by this option shall apply.

(iv) This Option is personal to the original Lessee, and cannot be assigned or
exercised by anyone other than said original Lessee and only while the original
Lessee is in full possession of the Premises and without the intention of
thereafter assigning or subletting.

(v) The monthly rent for each month of the option period shall be calculated as
follows, using the method(s) indicated below: (Check Method(s) to be Used and
Fill in Appropriately)

 

¨ I. Cost of Living Adjustment(s) (COLA)

 

a. On (Fill in COLA Dates):

  

 

 

 

the Base Rent shall be adjusted by the change, if any, from the Base Month
specified below, in the Consumer Price Index of the Bureau of Labor Statistics
of the U.S. Department of Labor for (select one):  ¨  CPI W (Urban Wage Earners
and Clerical Workers) or  ¨  CPI U (All Urban Consumers), for (Fill in Urban
Area):

 

 

All Items (1982-1984 = 100), herein referred to as “CPI”.

b. The monthly rent payable in accordance with paragraph A.l.a. of this Addendum
shall be calculated as follows: the Base Rent set forth in paragraph 1.5 of the
attached Lease, shall be multiplied by a fraction the numerator of which shall
be the CPI of the calendar month 2 months prior to the month(s) specified in
paragraph A.l.a. above during which the adjustment is to take effect, and the
denominator of which shall be the CPI of the calendar month which is 2 months
prior to (select one):  ¨  the first month of the term of this Lease as set
forth in paragraph 1.3 (“Base Month”) or  ¨  

 

 

   

 

 

   

 

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(Fill in Other “Base Month”):

 

 

The sum so calculated shall constitute the new monthly rent hereunder, but in no
event, shall any such new monthly rent be less than the rent payable for the
month immediately preceding the rent adjustment.

c. In the event the compilation and/or publication of the CPI shall be
transferred to any other governmental department or bureau or agency or shall be
discontinued, then the index most nearly the same as the CPI shall be used to
make such calculation. In the event that the Parties cannot agree on such
alternative index, then the matter shall be submitted for decision to the
American Arbitration Association in accordance with the then rules of said
Association and the decision of the arbitrators shall be binding upon the
parties. The cost of said Arbitration shall be paid equally by the Parties.

 

x II. Market Rental Value Adjustment(s) (MRV)

a. On the first day of the extended term (Fill in MRV Adjustment Date(s)) Base
Rent shall be 95% of Market Rental Value determined by the process outlined
below:

the Base Rent shall be adjusted to the “Market Rental Value” of the property as
follows:

1) Four months prior to each Market Rental Value Adjustment Date described
above, the Parties shall attempt to agree upon what the new MRV will be on the
adjustment date. If agreement cannot be reached, within thirty days, then:

(a) Lessor and Lessee shall immediately appoint a mutually acceptable appraiser
or broker to establish the new MRV within the next 30 days. Any associated costs
will be split equally between the Parties, or

(b) Both Lessor and Lessee shall each immediately make a reasonable
determination of the MRV and submit such determination, in writing, to
arbitration in accordance with the following provisions:

(i) Within 15 days thereafter, Lessor and Lessee shall each select an ¨
appraiser or x broker (“Consultant” - check one) of their choice to act as an
arbitrator. The two arbitrators so appointed shall immediately, without
consulting with or receiving direction from the Party which selected the
arbitrator, select a third mutually acceptable Consultant to act as a third
arbitrator.

(ii) The 3 arbitrators shall within 30 days of the appointment of the third
arbitrator reach a decision as to what the actual MRV for the Premises is, and
whether Lessor’s or Lessee’s submitted MRV is the closest thereto. The decision
of a majority of the arbitrators shall be binding on the Parties. The submitted
MRV which is determined to be the closest to the actual MRV shall thereafter be
used by the Parties.

(iii) If either of the Parties fails to appoint an arbitrator within the
specified 15 days, the arbitrator timely appointed by one of them shall reach a
decision on his or her own, and said decision shall be binding on the Parties.

(iv) The entire cost of such arbitration shall be paid by the party whose
submitted MRV is not selected, ie. the one that is NOT the closest to the actual
MRV.

2) Notwithstanding the foregoing, the new MRV shall not be less than the Base
Rent rent-payable for the month immediately preceding the rent adjustment.

b. Upon the establishment of each New Market Rental Value:

1) the new MRV will become the new “Base Rent” for the purpose of calculating
any further Adjustments, and

2) the first month of each Market Rental Value term shall become the new “Base
Month” for the purpose of calculating any further Adjustments.

 

¨ III. Fixed Rental Adjustment(s) (FRA)

The Base Rent shall be increased to the following amounts on the dates set forth
below:

 

On (Fill in FRA Adjustment Date(s)):   The New Base Rent shall be:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B. NOTICE:

Unless specified otherwise herein, notice of any rental adjustments, other than
Fixed Rental Adjustments, shall be made as specified in paragraph 23 of the
Lease.

 

C. BROKER’S FEE:

 

 

   

 

 

   

 

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The Brokers shall be paid a Brokerage Fee for each adjustment specified above in
accordance with paragraph 15 of the Lease.

NOTICE: These forms are often modified to meet changing requirements of law and
industry needs. Always write or call to make sure you are utilizing the most
current form: AIR Commercial Real Estate Association, 800 W 6th Street, Suite
800, Los Angeles, CA 90017. Telephone No. (213) 687-8777. Fax No.:
(213) 687-8616.

 

 

   

 

 

   

 

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©2000 - AIR COMMERCIAL REAL ESTATE ASSOCIATION    FORM OE-3-8/00E

 

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