Exhibit 10.1

 

SUBLEASE AGREEMENT

 

THIS SUBLEASE AGREEMENT (this “Sublease”) is entered into as of the latest of
the signature dates on this Sublease by and between Affirmative Agencies Inc., a
Texas corporation, having an address of 7711 Center Ave., Suite 200, Huntington
Beach, CA 92647, (“Sublessor”) and JetPay Payment Services, TX, LLC
(“Sublessee”), having an address care of its parent JetPay Corporation located
at 7450 Tilghman Street, Allentown, PA 18106.

 

R E C I T A L S:

 

A.            WHEREAS, effective, June 3, 1999 Wilcox Soujourn Development Ltd,
as Landlord entered into that certain Lease Agreement with Old American
Insurance Services, Inc. Successive owners of the Building and predecessors of
Sublessor have entered into amendments to the June 3, 1999 Lease Agreement,
collectively (“Primary Lease”), for the lease of certain premises (the
“Premises”) currently containing approximately 56,888 rentable square feet
located in 4450 Sojourn Dr, Addison, TX 75001 of the property commonly known as
Sojourn Plaza (the “Building”). Sojourn Office, LLC, a Texas limited liability
company, is the current owner of the Building (“Landlord”).

 

B.            WHEREAS, true and correct copies of the Primary Lease, including
all subsequent amendments is attached hereto as Exhibit A, respectively and
incorporated herein by reference for all purposes. The subsequent amendments and
assignments forming a part of the Primary Lease are a: First Amendment dated
July 26, 1999, Second Amendment to Lease dated August 1, 2000, Third Amendment
to Lease dated August 4, 2003, Fourth Amendment to Lease dated December 14,
2004, Fifth Amendment to Lease dated November 23, 2009, Sixth Amendment to Lease
dated October 25, 2013, Seventh Amendment to Lease dated May 2, 2016, and
assignments of lease dated September 26, 2013 and August 25, 2015.

 

C.            WHEREAS, the Lease Agreement dated June 3, 1999 forming part of
the Primary Lease identified the Premises as consisting of approximately 45,000
square feet designated as Suite No. 500 in the Building. The Premises were
expanded to the current 56,888 rentable feet by some of the subsequent
amendments. The Sublandlord has obtained the Landlord’s consent for the Premises
to be divided to form a separate suite designated as Suite 500B having 28,646
rentable square feet, as shown in the attached Exhibit B (“Subleased Premises”).
The Subleased Premises are to be occupied by the Sublessee under the terms of
this Sublease.

 

TERMS:

 

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
contained herein, Sublessor and Sublessee agree as follows:

 

1.             Recitals. The Sublessor warrants and represents to the Sublessee
that: (i) the recitals above are true and correct, (ii) the Primary Lease is not
in default, is in full force and effect and has not been modified or amended
except as set forth in the Recitals, (iii) there exists no event which with the
passage of time could allow the Landlord or Sublessor to declare a default of
the Primary Lease, (iv) the Improvements, as identified in the Sixth Amendment
to Lease have all been made and paid for by Sublessor or its predecessors , and
(v) a security deposit of $0.00 Dollars is being held by the Landlord under the
Primary Lease. Sublessor further warrants and represents that it is the current
tenant under the Primary Lease, and Sojourn Office, LLC is the current owner of
the Building.

 

  1

 

 

2.             Sublease. Sublessor hereby subleases to Sublessee, and Sublessee
hereby subleases from Sublessor, upon the terms and conditions set forth herein,
the Subleased Premises.

 

3.             Term. The term of the Sublease shall be for a period of 72 months
and sixteen days commencing on October 15, 2018 (the “Commencement Date”) and
ending October 31, 2024 (the “Sublease Term”), provided, however, that this
Sublease shall terminate earlier upon a default of this Sublease as specified
herein. Notwithstanding the Sublease Term, this Sublease shall not commence,
until the Landlord executes a written consent to the Sublease as set forth at
the end of this Sublease or in another form acceptable to the Sublessee. If for
any reason the Landlord does not execute and deliver the Landlord Consent within
five business days of the date of this Sublease, this Sublease shall terminate,
and the parties shall have no further obligation to each other. Notwithstanding
anything to the contrary in this Sublease, the Sublessee shall not be required
to remit any funds to Sublessor until five days after the Landlord Consent is
executed and delivered to Sublessee.

 

4.             Rent. The Base Rental and Additional Rental under the Primary
Lease is greater than the Base Rental and Additional Rental that is due under
this Sublease. The parties agree that it is the Sublessor’s sole responsibly to
pay the shortfall in Base Rental and Additional Rental to the Landlord and that
Sublessor shall pay such shortfall timely as set forth in the Primary Lease.
Sublessee shall not be in default of this Sublease or the Primary Lease as long
as it pays direct to the Landlord the Base Rental and Additional Rental that is
due for the Subleased Premises under this Sublease.

 

a)                  During the period commencing upon Commencement Date and
terminating with this Sublease, Sublessee covenants to pay to Landlord, without
any demand or notice and without any offset or reduction whatsoever, a Base
Rental, payable in advance, as specified in Exhibit C attached hereto. Sublessee
shall pay all Base Rental monthly direct to Landlord without notice or demand to
the below address or any other address which the Landlord notifies Sublessee of
in writing.

 

Payable to: Sojourn Office, LLC

Attn: Property Manager

4455 Camp Bowie Blvd.

Suite 114 PMB 26

Fort Worth, Texas 76107

b)                  Sublessee shall pay Landlord at the address set forth in
4.a) above Additional Rental in the amount of any increases in operating
expenses over base year 2019. Sublessee’s Additional Rental shall be based on
the square footage of the Subleased Premises. Sublessor or Landlord shall
deliver direct to Sublessee the calculation of the amount due for Additional
Rental using a base year of 2019 and the square footage of the Subleased
Premises in accordance with the Primary Lease. The shortfall of Additional
Rental being paid by Sublessee under this Sublease, versus the amount of
Additional Rental due under the Primary Lease shall be the sole responsibility
of Sublessor.

 

c)                  Non-payment or late payment of monthly rent will be
penalized and enforced in accordance with sections 3.7 and 3.8 of the Primary
Lease.

 

5.Primary Lease.

 

a)                  The terms and conditions of the Primary Lease are hereby
incorporated herein by reference for all purposes, and Sublessor has furnished
Sublessee with a copy of the Primary Lease which is attached as Exhibit A. The
parties acknowledge that Sublessee has examined the Primary Lease and is
familiar with the terms thereof. Except as otherwise expressly provided in this
Sublease, Sublessee hereby agrees to comply in all respects with the terms and
conditions of the Primary Lease insofar as the same are applicable to the
Subleased Premises.

 

  2

 

 

b)                  As between Sublessor and Sublessee, Sublessor shall be
entitled to all of the rights and remedies reserved by and granted to the
Landlord in the Primary Lease as if Sublessor was the “Landlord” under the
Primary Lease and Sublessee was the “Tenant” under the Primary Lease, and such
rights and remedies are hereby incorporated herein by reference for all
purposes. No such rights, insofar as they would conflict with the Landlord’s
exercise of rights under the Primary Lease, shall be conferred upon or exercised
by Sublessor, for example the Landlord, and not the Sublessor shall have the
right to make rules and regulations pertaining to the Building and Subleased
Premises.

 

c)                  This Sublease is subject and subordinate to all of the
terms, covenants and conditions of the Primary Lease and to all of the rights of
Landlord under the Primary Lease.

 

d)                  Notwithstanding anything to the contrary in this Sublease,
the parties agree and acknowledge that Sublessee is responsible for paying the
Base Rental and Additional Rental set forth in this Sublease and not the amounts
set forth in the Primary Lease and Sublessee is not responsible for any terms
and conditions of the Primary Lease which apply to or effect portions of the
Premises which are not part of the Subleased Premises.

 

e)                  In the event the Primary Lease terminates for any reason
prior to the expiration or termination of this Sublease, Sublessee shall not
have any claim whatsoever against Sublessor arising or resulting from such
termination of the Primary Lease, unless the Primary Lease was terminated due to
actions or inactions on the part of the Sublessor which constituted gross
negligence or willful misconduct on the part of same. Sublessor agrees to fully
perform its obligations under the Primary Lease and this Sublease; it shall be
willful misconduct of the Sublessor if the Sublessor fails to perform its
obligations under the Primary Lease or this Sublease. Sublessor hereby
indemnifies and holds harmless Sublessee against all damages incurred by
Sublessee, including all relocation costs, litigation costs and attorneys’ fees,
caused by the cancellation of the Sublease due to Landlord’s terminating the
Primary Lease due to the default of Sublessor of its obligations under this
Sublease. Sublessor may not terminate or buyout of the Primary Lease or begin
such negotiations, without prior written consent from Sublessee. Sublessor may
not modify or amend the Primary Lease in any way that would be detrimental to
the Sublessee or which would negatively impact the Sublessee or the Sublease.

 

6.             Limitation of Liability and Indemnity. All indemnification, hold
harmless and release provisions contained in the Primary Lease running to the
benefit of Landlord are incorporated herein by reference for the benefit of
Sublessor as if Sublessor was the “Landlord” and Sublessee was the “Tenant”
under the Primary Lease. All indemnification, hold harmless and release
provisions contained in the Primary Lease running to the benefit of the Tenant
are incorporated herein by reference for the benefit of Sublessee as if
Sublessee was the “Tenant” under the Primary Lease and Sublessor was the
“Landlord” under the Primary Lease. This paragraph is for the benefit of the
Sublessee, Sublessor and Landlord only, and no right of action shall accrue
hereunder to any third party by way of subrogation or otherwise. The
indemnification, hold harmless and release above also only apply to the
Subleased Premises and the conduct of Sublessor and Sublessee, as applicable.
Sublessee shall not be obligated or responsible for the environmental condition
of the Subleased Premises, under paragraph 5.6 of the Primary Lease or
otherwise, caused by Sublessor.

 

7.             Access, Alterations, Improvements and Additions. On or before
September 24, 2018, Sublessee and its contractors shall be granted access to the
Subleased Premises for purposes of (a) the physical separation of the Subleased
Premises from the remaining portion of the Premises, and (b) the fit-up,
modification and furnishing of the Subleased Premises to Sublessee’s
satisfaction (“Sublessee’s Work”). The Sublessor shall vacate the Subleased
Premises, including the removal of all the Sublessor’s employees, furniture,
equipment and fixtures, as further set forth in Exhibit E. Sublessee may not
make any alterations, improvements or additions to the Subleased Premises
(collectively, “Improvements”) without the express prior written consent of
Landlord and Sublessor, which consent by Landlord and Sublessor shall not be
unreasonably withheld or delayed. Excepting the Sublessee’s Work, any
Improvements must be constructed and installed in accordance with (i) all
requirements contained in the Primary Lease and (ii) Sublessee will only be
responsible for improvements, which have been made during the Sublease term.
Exhibit D sets forth the procedures regarding the Sublessee’s Work, and a cash
allowance to be paid by Sublessor to Sublessee with regards to the Sublessee’s
Work.

 

  3

 

 

8.             Parking. Sublessee shall receive 145 parking spaces for its use,
out of the parking spaces allotted to Sublandlord under the Primary Lease, under
the terms and conditions set forth in Exhibit F of Primary Lease. The parties
agree that Sublessee’s pro rata share has been calculated based on 5 parking
spaces per each 1,000 sq. feet in the Subleased Premises rounded to the nearest
whole number.

 

9.             Security Deposit. Sublessee shall provide an equivalent of the
last month’s Base Rent in the amount of $38,791.46 to be held as Security
Deposit by the Landlord, until termination of the Sublease. The parties agree
that the Sublessee’s security deposit shall be a security deposit for the
Subleased Premises under the terms of the Primary Lease.

 

10.           Pre-Paid Rent: Upon receipt of Landlord’s Consent, Sublessee shall
prepay to Landlord Base Rent in the amount of $32,823.54, the prepaid Base Rent
shall be applied to the Base Rent due in the fifth and sixth month of the Term,
when the prepayment is exhausted the normal payment of Base Rent shall commence.

 

11.           Total due of Security Deposit and Pre-Paid Rent: $71,615.00, upon
Landlord’s Consent and full execution of this Sublease.

 

12.           Brokers. Sublessor and Sublessee hereby recognize Kurt North,
Northpointe Commercial as the broker for Sublessee and Jackson Cooksey as the
broker for Sublessor, as the only brokers involved in this Sublease transaction.
The Sublessor is responsible for paying any commission or fee due to both Kurt
North, Northpointe Commercial and Jackson Cooksey.

 

13.           FF&E. As further described in Exhibit “E”. Sub lessee will be
granted use of all of the

Furniture, fixtures and equipment (“FF&E”) currently located in the Premises.
The Sublessor acknowledges that this FF&E will be subject to normal wear and
tear during the course of normal business and Sublessor will not hold the
Sublessee liable for any damage incurred during the normal course of business.
Obsolete or non-functioning FF&E may be discarded by Sublessee without liability
or replacement obligation.

 

14.           Signage. Sublessee shall have the right at its own cost, to
install signage in the reception area and on the suite in accordance with the
Primary Lease.

 

15.           Condition of Subleased Premises and Surrender of the Sublease
Premises. The Subleased Premises shall be surrendered in the condition it was in
at the start of the Term, except consented to Improvements and ordinary wear &
tear.

 

16.           Primary Lease. As set forth and limited by this Sublease,
Sublessee is to perform Sublessor’s obligations under the Primary Lease.

 

17.           Insurance, Certificates, Licenses and/or Permits. Sublessee shall
as to the Subleased Premises provide the insurance required by the Tenant under
Article X of the Primary Lease.

 

18.           Complete Agreement and Amendment. This Sublease sets forth the
complete agreement between Sublessor and Sublessee with respect to the subject
matter hereof, and this Sublease may not be terminated, amended or modified in
any respect except by mutual agreement in writing executed by both Sublessor and
Sublessee.

 

  4

 

 

19.           Survival. All duties and obligations of Sublessee under this
Sublease that are intended to be performed after the Term shall survive the
termination of expiration of this Sublease.

 

20.           Binding Effect. This Sublease and all the terms and conditions
hereof shall be binding upon and inure to the benefit of Sublessor and Sublessee
and their respective successors, legal representatives and assigns.

 

21.           Assignment and Subletting. Sublessee shall not be entitled to
sublet or assign all or any part of its interest in the Subleased Premises
without the prior written consent of Landlord per the terms of the Primary
Lease, which shall not be unreasonably withheld or delayed. Regardless of any
assignment or sublease hereof, Sublessee shall at all times remain fully
responsible and liable for compliance with its obligations under the terms of
this Sublease.

 

22.           Right of First Refusal. Sublessor shall provide Sublessee a
one-time Right of First Refusal (ROFR) on any future contiguous vacancy that may
become available upon the same terms and conditions as this Sublease for the
first year of the Term. After the first year of the Term, Sublessee’s ROFR shall
be at the same terms and conditions of a bona-fide 3rd party offer. Sublessee
shall be given five (5) business days to respond.

 

23.           Relationship of Parties. The relationship between the parties
under this Sublease is that of Sublessor and Sublessee. Nothing in this Sublease
shall be deemed to make either party a partner or associate of the other in the
conduct of its business, nor shall either party be liable for any debts incurred
by the other party in the conduct of such party’s business.

 

24.           Notices. Any notice received by Sublessor from the Landlord shall
be transmitted to Sublessee within five (5) business days.

 

25.           List of Exhibits: Attached hereto and made a part of this
Agreement.

 

·Exhibit “A”: Master Lease

·Exhibit “B”: Sublease Premises Floor Plan

·Exhibit “C”: Base Rent Schedule

·Exhibit “D”: Sub-Tenant Improvement Allowance

·Exhibit “E”: Additional Terms and Conditions

 

 

THE SIGNATURES OF THE PARTIES AND LANDLORD FOLLOW ON THE NEXT PAGE

 

  5

 

 

EXECUTED as of the day, month and year set forth below.

 

SUBLESSOR: Affirmative Agencies Inc., a Texas corporation         By: /s/ Coleen
McNally   Name: Coleen McNally   Title: SVP Operations   Date: August 29, 2018  
      SUBLESSEE: JetPay Payment Services, TX, LLC         By: /s/ Diane Faro  
Name: Diane Faro   Title: CEO   Date: August 28, 2018  

 

 

  6

 

 

Exhibit “A”

 

Master Lease and Amendments

 

  

  7

 

 

Exhibit “B”

  

 Sublease Premises Floor Plan

 

 

  8

 

 

Exhibit “C”

 

Base Rent Schedule

 

Month During Lease Term

Monthly Installment

 

of Base Rent

 

Annual Rent per

 

Square Foot

 

Commencement Date to February 15, 2019 $0.00 + Electric $0.00/SF + Electric
February 16, 2019 to February 28, 2019 15,239.50 + Electric

$13.75/SF+ Electric 

Pro-Rated for Partial Month 

6-12 $32,823.54 + Electric $13.75/SF + Electric 13 $0.00 + Electric $0.00/SF +
Electric 14-25 $34,017.13 + Electric $14.25/SF + Electric 26-37 $35,210.71 +
Electric $14.75/SF + Electric 38-49 $36,404.29 + Electric $15.25/SF + Electric
50-61 $37,597.88 + Electric $15.75/SF + Electric 62-73 $38,791.46 + Electric
$16.25/SF + Electric

 

Sublessee shall pay their pro-rata share of the electric.

 

The parties acknowledge that there may be electrical equipment in the Subleased
Premises which controls or effects the portion of the Premises which is not
sublet (including but not limited to panels, fuse boxes, shut-offs, etc). During
the Sublease Term, Sublessee will provide Sublessor reasonable supervised access
to the electrical equipment in the Subleased Premises which controls or effects
the portion of the Premises which are not sublet.

 

  9

 

 

Exhibit “D”

 

Sublessee Improvement Allowance

 

Sublessor shall pay to Sublessee a one-time cash allowance up to and not to
exceed the total of (a) Thirteen ($13.00) Dollars per square foot of the
Subleased Premises (i.e., $372,398.00 based on the Subleased Premises area of
28,646 square feet) ("Sublessee Improvement Allowance").

 

The Sublessee Improvement Allowance shall be used to pay for the costs of
Sublessee’s Work, including the costs of construction (labor and material),
design services, architectural services, permitting costs, governmental
approvals, supervisory services, furniture, trade fixtures, equipment and moving
costs. Any and all costs to complete Sublessee's Work in excess of the Sublessee
Improvement Allowance shall be timely paid by the Sublessee.

 

Before the start of the Sublessee’s Work, Sublessee shall provide Sublessor with
(i) an estimate of the total cost of the Sublessee’s Work, (ii) reasonably
detailed plans of the modification to be made to the Subleased Premises, and
(iii) reasonable assurance that Sublessee has the financial ability to timely
pay the cost of the Sublessee’s Work in excess of the Sublessee Improvement
Allowance.

 

Sublessee shall submit to the Sublessor the invoices incurred with respect to
the Sublessee’s Work. Within thirty days of the date of the submission of each
invoice by Sublessee, the Sublessor shall pay the Sublessee the dollar amount of
invoices submitted with respect to the Sublessee’s Work, until all such payments
total the Sublessee Improvement Allowance. Sublessor’s obligation to pay
Sublessee is subject to the satisfaction of the following conditions:

 

a.Sublessee is not in default or breach in any manner under the Sublease;

 

b.Sublessee has provided Sublessor with a written request for payment of a
submitted invoice for Sublessee’s Work (to the extent possible Sublessee shall
submit Sublessor for payment invoices for the costs of construction (labor and
material), design services, architectural services, and supervisory services,
before submitting for payment invoices for furniture, trade fixtures, equipment
and moving costs; and

 

c.Sublessee shall have provided Sublessor a lien waiver with respect to the
submitted invoices.

 

Sublessee shall be responsible for obtaining any required Certificate of
Occupancy or comparable authorization from the local municipality having
jurisdiction that is necessary for the Subleased Premises to be legally
occupied. Sublessor and Landlord will co-operate with Sublessee and render any
necessary aid required for Sublessee to obtain the Certificate of Occupancy or
comparable authorization.

 

  10

 

 

Exhibit “E”

 

Additional Terms and Conditions

 

Sublessee:Sublessee shall have use of certain furniture that Sublessor has in
the building currently. Prior to the execution of the Sublease, the Sublessee
has walked the Premises with a Sublessor authorized person and has tagged and
inventoried the furniture that Sublessor will provide the Sublessor for use in
the Subleased Premises. Any furniture or parts tagged for Sublessee use that are
not in the Subleased Premises, shall be placed in the Subleased Premises at the
expense of Sublessee. Sublessee shall have full discretion to determine what
furniture it wishes to use in the Subleased Premises, including the office
cubicles. No later than September 24, 2018, Sublessor, at its expense, shall
vacate the Subleased Premises and remove all its employees, and the furniture,
fixtures and equipment, including office cubicles, from the Subleased Premises
that Sublessee does not want to use. Sublessee shall be responsible for the
rearranging and movement of the furniture tagged for its use in the Subleased
Premises during and after the construction. At the end of the term, the
furniture shall become the property of the Sublessee.

 

Sublessee:On and after September 10, 2018, Sublessor shall allow Sublessee
access to the Subleased Premises that are not occupied by Sublessor to conduct
certain limited construction activity. It is agreed that the portion of the
Subleased Premises that will be unoccupied by Sublessor on and after September
10, 2018 are the current operations area, board room, galley and reception area
and any other area Sublessor decides to vacate (“Unoccupied Area”). Sublessor
shall remove from the Unoccupied Area all personal property that is not tagged
for the Sublessee’s use by September 10, 2018. The construction activity the
Sublessee is allowed to conduct in the Subleased Premises on and after September
10, 2018 is:

 

a.prepare for and start painting and carpet work and millwork;

 

b.as allowed by Sublessor, access to the external electrical room located by the
large break room (Sublessor agrees not to unreasonably refuse access for the
wiring); and

 

c.construction of vestibule as required by building permit.

 

Sublessee shall contact the Sublessor’s designated employee prior to arriving at
the Subleased Premises between September 10, 2018 and September 24, 2018 to
conduct any work. The above restrictions in Sublessee’s activities no longer
apply on and after September 24, 2018 when Sublessee has full access to the
Subleased Premises to conduct the Sublessee’s Work. Sublessee hereby indemnifies
and hold Sublessor harmless against any damages, including legal defense costs,
caused by Sublessee or its employees or contractors in the Subleased Premises
prior to the Commencement Date.

 

Sublessee:Sublessee may use magnetic key card entry if Sublessee desires but
must pay the cost of setup for its use, and work in conjunction with the
Landlord to tie into the system.

 

Sublessee:Sublessor has a generator on the Premises, which are not part of the
Subleased Premises. Sublessee will have use of the generator for the term of the
Sublease. The generator supplies electricity to entire Premises, and so regular
maintenance, and all other expenses, of the generator shall be divided between
Sublessee and Sublessor on a pro-rata basis based on the square footage of the
Subleased Premises and the square footage of the Premises, less the Subleased
Premises. Sublessor is responsible for arranging for the maintenance and repair
of the generator. The generator shall be in good working order at the start of
the Sublease term and shall have been maintained by Sublessor in accordance with
its manufacture’s recommended maintenance schedule.

 

  11