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EXHIBIT 10.10 AGREEMENT OF LEASE

Lease Agreement

EXHIBIT 10.10   AGREEMENT OF LEASE | Document Parties: Vocus, Inc. | MOR FORBES LLLP You are currently viewing:
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Title: EXHIBIT 10.10 AGREEMENT OF LEASE
Governing Law: Maryland     Date: 6/15/2005

EXHIBIT 10.10   AGREEMENT OF LEASE, Parties: vocus  inc. , mor forbes lllp
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<PAGE>

 

                                                                   EXHIBIT 10.10

 

                               AGREEMENT OF LEASE

                                 by and between

                                 MOR FORBES LLLP

                                    (Landlord)

                                      and

                               VOCUS, INC.(Tenant)

 

<TABLE>

<CAPTION>

                                                               Page

<S>                                                              <C>

1.   Leased Premises ........................................      1

 

2.   Term ...................................................      2

 

3.   Security Deposit .......................................      4

 

4.   Use ....................................................      5

 

5.   Basic Annual Rent ......................................      6

 

    5.1. Definitions .......................................      6

    5.2. Rent Adjustment ...................................      8

    5.3. Tax Adjustment ....................................      9

    5.5. Utilities .........................................     10

    5.6. Payments ..........................................     10

 

6.   Requirements of Law ....................................     11

 

7.   Tenant's Improvements ..................................     11

 

8.   Condition of Premises ..................................     11

 

9.   Conduct on Premises ....................................     13

 

10. Insurance ..............................................     13

 

11. Mechanics' and Materialmen's Liens and Other Liens .....     13

 

12. Tenant's Failure to Perform ............................     13

 

13. Loss, Damage, Injury ...................................     13

 

14. Destruction -- Fire or Other Casualty ..................     14

 

15. Eminent Domain .........................................     14

 

16. Environmental Assurances ...............................     15

 

    (a) Covenants ..........................................     15

    (b) Indemnification by Tenant ..........................     15

    (b) Indemnification by Landlord ........................     15

    (c) Definitions ........................................     16

 

17. Assignment/Subletting ..................................     16

 

18. Defaults ...............................................     17

 

19. Acceptance of Leased Premises ..........................     20

 

20. Access to Premises and Change in Services ..............     20

 

21. Estoppel Certificates ..................................     20

 

22. Subordination ..........................................     20

 

23. Attornment .............................................     21

 

24. Notices ................................................     21

 

25. Landlord's Liability ...................................     21

</TABLE>

 

<PAGE>

 

<TABLE>

<S>                                                             <C>

26. Separability, Enforceability ............................     21

 

27. Captions ................................................     22

 

28. Recordation .............................................     22

 

29. Successors and Assigns ..................................     22

 

30. Holding Over ...........................................      22

 

31. Commissions ............................................      22

 

32. Waiver of Jury Trial ...................................      22

 

33. Miscellaneous ..........................................      23

 

34. Authority ..............................................      24

 

35. Riders .................................................      24

</TABLE>

 

Rider No. 1 - Right of First Offer

Rider No. 2 - Renewal Option

 

EXHIBIT A - Site Plan and Leased Premises

EXHIBIT B - Plans and Specifications

EXHIBIT C - Lease Commencement Agreement

EXHIBIT D - Rules and Regulations

EXHIBIT E - HVAC Contract Specifications

EXHIBIT F - HVAC Certification

 

<PAGE>

 

                                 MOR FORBES LLLP

 

                                 LEASE AGREEMENT

 

      THIS AGREEMENT OF LEASE is made this 21st day of December, 2000, by and

between MOR FORBES LLLP, a limited liability limited partnership formed under

the laws of the state of Maryland (hereinafter referred to as "Landlord"), and

VOCUS, INC., a corporation duly formed under the laws of the State of Delaware

(hereinafter referred to as "Tenant").

 

      WITNESSETH, that the parties hereby covenant, promise and agree as

follows:

 

      1. Leased Premises.

 

            (a) Landlord is the developer of the building to be constructed at

4260 Forbes Boulevard, known as Building A (hereinafter referred to as the

"Building"), in the Forbes 50 Business Center, Prince George's County, Maryland.

The Building is located in a project which, upon completion, is expected to be

comprised of two one-story research and development buildings (the "Project").

Landlord does hereby lease unto Tenant and Tenant does hereby rent from

Landlord, that portion of the Building containing approximately 22,488 square

feet (hereinafter referred to as the "Leased Premises") as more particularly

shown on "Exhibit A" attached hereto, incorporated by reference herein and

initialled by the parties, together with the non-exclusive right to use the

designated parking areas, driveways and sidewalks. See Rider No.1 - Right of

First Offer.

 

            (b) The Leased Premises will be finished (the "Tenant Improvements")

by Landlord (through its general contractor, Manekin, LLC), in accordance with

plans and specifications to be prepared by Tenant's space planner/architect (the

"Architect") on or before January 16, 2001, and approved by Landlord and Tenant.

The Architect shall additionally provide to Landlord from time to time during

the design process schematic and design development drawings of the proposed

Tenant Improvements. The selection of Tenant's Architect shall be subject to

Landlord's approval, such approval not to be unreasonably withheld, conditioned

or delayed. GHK is hereby approved by Landlord as Tenant's Architect. At such

time as the plans and specifications for the Tenant Improvements are finalized

and approved by Landlord and Tenant, they shall be attached hereto as Exhibit B

and made a part hereof (the "Plans and Specifications"). All fees and expenses

payable to Tenant's Architect shall be paid by Tenant, but Tenant shall have the

right, to apply Landlord's Contribution, defined below, toward payment of such

expenses. Tenant agrees that Tenant shall bear full responsibility for the Plans

and Specifications, and the Leased Premises, as improved in accordance with the

Plans and Specifications, as being in compliance with all applicable

requirements of law, including without limitation, the Americans With

Disabilities Act, as amended. Tenant releases Landlord from any claim by Tenant

arising out of failure of the Leased Premises to be in compliance with all

applicable requirements of law, except to the extent that Landlord, or its

general contractor, fails to finish the Leased Premises in accordance with the

Plans and Specifications. Except to the extent that Tenant is responsible for

assuring that the Leased Premises comply with all applicable laws, and except to

the further extent that any legal requirements are attributable to Tenant's

particular use of the Leased Premises, and are not applicable to the building

generally, Landlord, at its expense, shall be responsible for assuring that the

Building and the Project are constructed in accordance with all applicable laws,

codes and ordinances,

 

<PAGE>

 

including the Americans With Disabilities Act, as such laws exist on the

Commencement Date.

 

             (c) Landlord shall contribute up to Twenty Dollars ($20.00)

multiplied by the Rentable Area of the Leased Premises, as hereinafter defined,

toward the cost of the Tenant Improvements ("Landlord's Contribution"). In

addition to Landlord's Contribution, at Tenant's option, Landlord shall

contribute an additional allowance of up to Ten Dollars ($10.00) multiplied by

the Rentable Area of the Leased Premises toward the cost of the Tenant

Improvements ("Landlord's Additional Contribution"). To the extent Landlord's

Additional Contribution is utilized by Tenant, the Basic Annual Rent described

below shall be increased by an amount sufficient to amortize Landlord's

Additional Contribution over the initial Lease Term, with interest at a rate of

twelve percent (12%) per annum. All charges and expenses incurred for work and

material respecting the finishing of the Leased Premises which are in excess of

Landlord's Contribution and Landlord's Additional Contribution and approved by

Tenant as set forth below, shall be deemed additional rent and shall be paid by

Tenant upon receipt of an invoice from Landlord therefor. All charges and

expenses incurred in connection with any change orders will be paid by Tenant at

the time it executes such change order.

 

            (d) The cost of the work to be performed by Landlord shall include

the general contractor's fee of 5% of all construction costs, excluding soft

costs (the "Hard Costs"), plus an additional 5% of all Hard Costs for general

conditions. After the Plans and Specifications are finalized, Landlord or its

general contractor shall obtain, for each of the major trades, competitive bids

from at least three reputable subcontractors acceptable to Landlord. Tenant

shall have the right to select one subcontractor to bid on each of such

subcontracts, subject to Landlord's prior approval. The selection of such

subcontractors from the bidding process shall be made by mutual agreement of

Landlord and Tenant.

 

            (e) After the major trades are bid and selected as aforesaid,

Landlord shall prepare and deliver to Tenant a budget for the cost of

constructing the Tenant Improvements (the "Budget"). To the extent that the

Budget includes any costs in excess of the amount of Landlord's Contribution

(which excess costs are hereinafter referred to as the "Tenant Costs"), Tenant

shall have the right to approve same; provided, however, the cost of all

subcontracts approved by Tenant and the fees payable to the general contractor

pursuant to subparagraph (d) above, are hereby deemed approved by Tenant. In the

event that the Budget includes Tenant Costs not otherwise approved or deemed

approved by Tenant and Tenant fails to approve or disapprove same in writing

within three (3) business days after receipt of the Budget from Landlord, then

the Budget and such Tenant Costs shall be deemed approved by Tenant. In the

event that Tenant disapproves same in writing within said three (3) business day

period, then Tenant, Landlord and Tenant's Architect shall endeavor in a prompt

and cooperative manner to reduce or eliminate the Tenant Costs to Tenant's

reasonable satisfaction by revising the Plans and Specifications, reducing the

scope of the work or otherwise. Any delays in the Commencement Date, as

hereinafter defined, resulting from Tenant's failure to approve the original

Budget shall be deemed a "Tenant Delay" for purposes of Section 2 below, it

being understood and agreed, however, that both parties will endeavor in good

faith to avoid unnecessary delays so as to enable construction to proceed

timely.

 

      2. Term. This Lease shall be for a term of approximately ten (10) years

(the Lease Term) commencing on the "Commencement Date", as hereinafter defined,

and terminating at

 

                                      -2-

 

<PAGE>

 

11:59 p.m. on the last day of the tenth (10th) full lease year, unless otherwise

terminated or extended in accordance with the provisions hereof. Each respective

period of twelve (12) successive calendar months during the Lease Term or any

renewals thereof commencing with the first full calendar month during the Lease

Term shall be hereinafter referred to as the "lease year". If the Commencement

Date does not occur on the first day of a month, the first lease year shall

include the twelve (12) calendar months and the period from the Commencement

Date until the first day of the following month. See Rider No. 2 - Renewal

Option.

 

            The Commencement Date will be the latest to occur of the following:

(a) the date on which Landlord's construction of the Tenant Improvements in

accordance with the Plans and Specifications is substantially complete and

certified as such to Landlord and Tenant by Landlord's architect; and (b) the

date on which Landlord obtains a temporary use and occupancy permit or other

applicable governmental approval which permits Tenant's occupancy of the Leased

Premises. Landlord estimates that the Commencement Date will occur on or about

May 1, 2001 (the "Estimated Commencement Date), so long as this Lease is

executed and delivered by Tenant on or before December 21, 2000, and the Plans

and Specifications are finalized and approved by Landlord and Tenant on or

before January 16, 2001 (collectively, "Tenant's Deadlines"). The Estimated

Commencement Date of May 1, 2001 will be postponed by one day for each day

Tenant is late in meeting either or both of Tenant's Deadlines, and for the

period of any other Tenant Delay hereunder. The Estimated Commencement Date

shall be further post-poned as reasonably required by Landlord if the Tenant

Improvements, as shown on the Plans and Specifications, require laboratory space

or any other specialty construction.

 

      Notwithstanding any language in this Lease to the contrary, in the event

that the Commencement Date fails to occur by May 1, 2001, then, to the extent

caused by Tenant's failure to meet either or both of Tenant's Deadlines, or as a

result of any Tenant Delay, or any other delay attributable to Tenant, then

Tenant's obligation to pay Basic Annual Rent shall nevertheless commence as of

May 1, 2001 (or such later date the Commencement Date would have occurred if not

for Tenant's delay), which date shall be deemed the Commencement Date for all

purposes of this Lease. In the event that the Commencement Date fails to occur

within thirty (30) days after the Estimated Commencement Date (as the same may

be postponed in accordance with the terms of this Lease)[that date which, is

thirty (30) days after the Estimated Commencement Date being referred to herein

as the "Final Delivery Date"], then the Basic Annual Rent payable by Tenant

hereunder shall be abated by one day for each day after the Final Delivery Date

that the actual Commencement Date occurs.

 

            In the event that Landlord shall be unable, by reason of

construction delays or otherwise, to deliver possession of the Leased Premises

on the Estimated Commencement Date (as the same may be postponed in accordance

with the terms of this Lease), then this Lease shall nevertheless continue in

full force and effect, and Tenant shall have no right to rescind, cancel or

terminate the same if possession is given within one hundred twenty (120) days

thereafter. If Landlord fails to deliver the Leased Premises within one hundred

twenty (120) days after the Estimated Commencement Date (as the same may be

postponed in accordance with the terms of this Lease) then Tenant may terminate

this Lease by giving written notice to Landlord of such termination within ten

(10) days after the expiration of such 120-day period (so long as Landlord does

not deliver possession within such 10-day period), which remedy, if exercised by

Tenant, shall be Tenant's sole and exclusive remedy for Landlord's

 

                                      -3-

 

<PAGE>

 

failure to deliver possession hereunder. In the event of such termination,

Landlord shall promptly return to Tenant all deposits and/or letters of credit

previously delivered to Landlord hereunder, and the parties shall not have any

further obligations under this Lease, other than the indemnification obligations

set forth in Section 31 below which shall survive such termination. Whether or

not Landlord shall deliver possession of the Leased Premises on the Estimated

Commencement Date, or within such additional 120-day period, Tenant agrees that

in no event shall Landlord be liable for damages, if any, sustained by Tenant as

a result of Landlord's failure to deliver possession.

 

            After Landlord delivers possession of the Leased Premises, Landlord

will remain responsible for the completion of those "punchlist" items, if any,

to which Landlord and Tenant have agreed in writing within fifteen (15) days

after the date Tenant occupies the Leased Premises. Landlord shall endeavor in

good faith to cause its general contractor to complete all punchlist items

within thirty (30) days following the preparation of a list of the agreed

punchlist items.

 

            Landlord shall use its reasonable efforts to notify Tenant fifteen

(15) days prior to the date on which the Leased Premises will be ready for

Tenant's occupancy, and Tenant shall have the right to enter the Leased Premises

at that time for the installation of its telephones, cabling, wiring, furniture

and equipment, provided that such work is done under the general supervision of

Landlord and does not interfere with Landlord's work. Such entry shall be at

Tenant's sole risk and expense. Commencing on the first day of such early

access, Tenant agrees that all the terms and provisions of this Lease shall be

in full force and effect except that Tenant shall have no obligation to pay rent

during such early access period. Tenant agrees to indemnify and hold harmless

landlord for any damage or personal injury which may occur as a result of

Tenant's entry into the Leased Premises prior to the Commencement Date. Tenant

shall deliver to Landlord evidence of the insurance required to be maintained by

Tenant pursuant to Section 10 of this Lease prior to Tenant's entry into the

Leased Premises.

 

            On the Commencement Date or such later date as Landlord may request,

Tenant shall promptly enter into a supplementary written agreement (the "Lease

Commencement Agreement") in substantially the form attached hereto as "Exhibit

C," thereby specifying, among other things, the date as of which the Lease Term

shall have begun and as of which the Lease Term shall end, the amount of Basic

Annual Rent payable by Tenant hereunder, and the principal amount of the Letter

of Credit, defined below.

 

      3. Security Deposit.

 

            (a) Cash. Tenant, contemporaneously with the execution of this

Lease, shall deposit with Landlord the sum of Twenty-Two Thousand Three Hundred

Dollars and Sixty Cents ($22,300.60) as a security deposit (the "Deposit").

Landlord's receipt of the Deposit shall be confirmed by Landlord in the Lease

Commencement Agreement. To the extent the Deposit has not been applied or

exhausted pursuant to the further terms hereof, ninety percent (90%) thereof

shall be returned by Landlord to Tenant within thirty (30) days following the

expiration of the Lease Term, and the balance within ninety (90) days after the

end of the Operating Year in which the Lease expiration date occurs. Landlord

shall have the right to apply the Deposit to cure any breach by Tenant beyond

the applicable cure period, if any, of any of Tenant's obligations or duties

pursuant to this Lease, and upon any such application of the Deposit by

Landlord, Tenant

 

                                      -4-

 

<PAGE>

 

shall immediately restore the same to the dollar amount set forth in this

Section. Landlord shall be entitled to the full use of the Deposit, shall not be

required to escrow or otherwise segregate the Deposit, and no interest shall

accrue thereon or be paid or payable by Landlord with respect to the Deposit.

 

            (b) Letter of Credit. In addition to the Deposit, Tenant shall

deposit with Landlord a clean, non-contingent irrevocable Letter of Credit (the

"Letter of Credit"), in form and substance and issued by a financial institution

reasonably acceptable to Landlord, in an amount equal to the cost of all Tenant

Improvements to be performed by Landlord hereunder, the total cost of which is

expected to exceed $18.00 multiplied by the Rentable Area of the Leased Premises

(the "Excess Costs"). The Letter of Credit shall be freely assignable to any

lender of Landlord, and to any successor or assign of Landlord's interest under

the Lease. The Letter of Credit shall be deposited with Landlord within five (5)

calendar days after the date the Budget is delivered to Tenant or, if the Budget

requires Tenant's approval, within five (5) calendar days after the date the

Budget is approved (or deemed approved) by Tenant. If from time to time, during

the course of construction or upon completion thereof, the Excess Costs are

reasonably expected to or actually exceed the original amount of the Letter of

Credit, then within five (5) days of Landlord's request, the principal amount of

the Letter of Credit shall be increased by Tenant accordingly. Landlord's

receipt of the Letter of Credit shall be confirmed in the Lease Commencement

Agreement. To the extent the same has not been applied or exhausted pursuant to

the further terms hereof, the Letter of Credit shall be returned by Landlord to

Tenant following the expiration of the Lease Term. In addition to any and all

other remedies available to Landlord under this Lease, Landlord shall have the

right to draw upon the Letter of Credit to cure any breach by Tenant of any of

Tenant's obligations or duties pursuant to the Lease, if such breach is not

cured beyond the applicable cure period, if any. Any demand by Landlord for a

draw upon the Letter of Credit shall be accompanied by a statement to the issuer

thereof purportedly signed by an authorized representative of Landlord

certifying that Tenant is in breach of its obligations under the Lease beyond

the expiration of applicable grace and cure periods, if any, and that Landlord

is entitled to draw upon the Letter of Credit in accordance with the terms of

the Lease. Upon any such draw, Tenant shall immediately restore the same to its

original amount. No interest shall accrue thereon or be paid or payable with

respect to the Letter of Credit.

 

            (c) Waiver of Letter of Credit. So long as Tenant is not then in

default of this Lease and has not been in default beyond the applicable grace

and cure periods, if any, more than once during any lease year of the term

hereof, Tenant's obligation to maintain the Letter of Credit shall be waived and

the Letter of Credit shall be returned to Tenant if Tenant has achieved either

of the following: (a) a credit rating of BBB or better as reported by a

national, reputable credit reporting agency acceptable to Landlord, and such

rating has continued for no less than three (3) consecutive quarters during the

term of this Lease, or (b) profitability in four (4) consecutive quarters during

the term of this Lease, as evidenced by Tenant's unaudited financial statements,

certified to be true and correct by Tenant's chief financial officer.

 

      4. Use. Landlord and Tenant expressly agree that the Leased Premises shall

be used or occupied by Tenant for general office and administrative purposes,

and for no other purposes whatsoever.

 

                                      -5-

 

<PAGE>

      5. Basic Annual Rent. Subject to adjustment pursuant to Section l(c)

above, Tenant shall pay to Landlord during the Lease Term "Basic Annual Rent" in

an amount equal to the per square foot amount set forth below, multiplied by the

Rentable Area of the Leased Premises:

 

<TABLE>

<CAPTION>

LEASE    BASIC ANNUAL       MONTHLY

  YEAR         RENT         INSTALLMENT    PER SQUARE FOOT

-----    -------------    -----------    ---------------

<S>      <C>              <C>            <C>

  1      $   267,607.20    $ 22,300.60        $11.90

  2      $   274,353.60    $ 22,862.80        $12.20

  3      $   281,324.88    $ 23,443.74        $12.51

  4      $   288,296.16    $ 24,024.68        $12.82

  5      $   295,492.32    $ 24,624.36        $13.14

  6      $   302,913.36    $ 25,242.78        $13.47

  7      $   310,559.28    $ 25,879.94        $13.81

  8      $   318,430.08    $ 26,535.84        $14.16

  9      $   326,300.88    $ 27,191.74        $14.51

  10      $   334,396.56    $ 27,866.38        $14.87

</TABLE>

 

Basic Annual Rent shall be payable in equal monthly installments as set forth

above, without any deductions or set-offs, and without demand, in advance on the

first day of each and every month for which payment is due, and the first such

monthly installment shall be due and payable simultaneously with Tenant's

execution of this Lease. If the Lease Term shall commence on a day other than

the first day of a month, then the Basic Annual Rent for the fractional part of

a month at the beginning of the term shall be pro-rated accordingly.

 

            5.1. Definitions. For purposes of this Lease, the following meanings

or definitions shall apply:

 

                  (a) "Rentable Area of the Building" shall, for all purposes of

this Lease, be deemed to be 54,692 square feet. The "Rentable Area of the

Project" shall be deemed to be 54,692 square feet until such time as "Building

B", to be located at 4230 Forbes Blvd., is substantially completed. Upon

substantial completion of Building B, the Rentable Area of the Project will

thereafter comprise both buildings on the Real Property with which Tenant shares

certain expenses, which shall be deemed to be 110,449 square feet. Landlord's

architect will certify to Landlord and Tenant that, if built in accordance with

the drawings of the Project previously provided to Tenant, the rentable area of

the finished Project will be 110,449 square feet.

 

                   (b) "Rentable Area of the Leased Premises" is hereby deemed to

be 22,488 square feet, which amount shall be certified to Landlord and Tenant by

Landlord's architect after the Plans and Specifications are finalized. The

Rentable Area of the Leased Premises has been determined in accordance with the

"industrial" standard (i.e., measured to the outside face of exterior walls and

the middle of interior demising walls). Tenant's pro rata portion of those

expenses applicable to the Project ("Tenant's Portion") shall be a fraction, the

numerator of which shall be the Rentable Area of the Leased Premises, and the

denominator of which shall be the Rentable Area of the Project, as it exists

from time to time. As of the Commencement Date, Tenant's Portion shall be

forty-one and twelve hundredths percent (41.12%). Notwithstanding the foregoing

figures and expectations, Landlord reserves the right to change the total number

and square footage of the buildings comprising the Project prior to completion

of construction thereof, in which event the number and percentages set forth

herein will be revised by Landlord accordingly.

 

                  (c) The term "Common Area Expenses" shall mean all reasonable

and customary expenses paid or incurred by

 

                                       -6-

 

<PAGE>

 

Landlord in connection with Landlord's management of the Real Property and the

management, maintenance, operation and repair of the common areas of the Real

Property, including, but not limited to, (i) keeping the driveways, parking

areas, sidewalks and steps free and clear of ice, snow and debris; (ii)

maintaining all grass and landscaping on the Real Property; (iii) maintaining

the common areas of the buildings of the Real Property (including the Building),

including the utility rooms and security systems, if any, and repair of normal

wear and tear of the roof and caulking; (iv) trash removal from dumpsters on the

Real Property, if any and pick-up for paper recycling; (v) monitoring, repairing

and payment of all common utilities, including water, sewerage, unmetered or

metered sprinkler and exterior electrical utilities on the Real Property; (vi)

management fees not to exceed those customarily charged for buildings comparable

to the Building in the general vicinity of the Project; and (vii) the cost of

maintaining Insurance, as defined below. "Common Area Expenses" does not include

(1) the costs of work Landlord performs for, and/or at the expense of, any

particular tenant (including Tenant), which costs will be billed directly to

Tenant or such other tenant, as the case may be, (2) any expenses incurred in

connection with capital improvements, other than as expressly permitted herein,

(3) costs of repairs and replacements occasioned by casualty or condemnation and

payable by insurance proceeds, (4) any cost that is reimbursed to Landlord by

insurance carriers, or is separately charged to and payable by tenants, (5) all

ownership costs not allocable to actual management, repair, maintenance or

operation of the Building, including, without limitation, leasing commissions,

advertising and other direct expenses or procuring tenants, including lease

concessions, (6) depreciation of the Building and other depreciable property

within the Real Property, (7) interest on and amortization of any debt or any

costs of financing, refinancing, constructing or purchasing the Leased Premises,

(8) interest and penalties for late payment of Taxes provided Tenant has

deposited with Landlord the amount necessary to pay such Taxes in accordance

with this Lease and any fines or penalties incurred by Landlord due to violation

by Landlord of any rule of a governmental authority other than those arising

from tenant's use or occupancy, (9) wages, salaries and benefits of employees

over the rank of property manager except to the extent those employees are

directly involved in the day to day management and operation of the Building,

(10) costs of correcting initial construction defects for work performed by

Landlord or any affiliate of Landlord, (11) costs of repairs caused by

Landlord's gross negligence, (12) any rent under any ground or underlying lease,

(13) costs incurred due to Landlord's negligence or willful misconduct or due to

violation by Landlord of the terms or conditions of this Lease on its part to be

performed, and (14) general overhead of Landlord except as set forth in (9)

above. Notwithstanding the foregoing, Landlord will be allowed reasonably to

allocate the costs of trash removal based on actual use of such service.

 

                   (d) "Taxes" shall mean any present or future federal, state,

municipal, local and/or any other taxes, assessments, levies, benefit charges,

and/or other governmental and/or private impositions (including business park

charges and dues), levied, assessed and/or agreed to be imposed upon the Real

Property of which the Leased Premises are a part or any part or parts of said

Real Property, or upon the rent due and payable hereunder, whether or not now

customary or within the contemplation of the parties hereto and regardless of

whether the same shall be extraordinary or ordinary, general or special,

foreseen or unforeseen, or similar or dissimilar to any of the foregoing but

shall not include any inheritance, estate, succession, income, profits or

franchise tax, provided, however, if at any time during the Lease Term or any

extension thereof the method of taxation prevailing at the commencement of the

Term

 

                                      -7-

 

<PAGE>

 

shall be altered or eliminated so as to cause the whole or any part of the items

defined as Taxes above to be replaced by a levy, assessment or imposition,

wholly or partly as a capital levy, or otherwise, on the rents or income

(provided the tax on such income is not a tax levied on taxable income

generally) received from the buildings, wholly or partly in place of an

imposition on or as a substitute for, or an increase of, taxes in the nature of

real estate taxes issued against the Real Property, then the charge to Landlord

resulting from such altered or replacement method of taxation shall be deemed to

be within the definition of "Taxes". All reasonable expenses incurred by

Landlord (including attorneys' fees and costs) in contesting any increase in

Taxes or any increase in the assessment of the Real Property shall be included

as an item of Taxes for the purpose of computing additional rent due hereunder.

Notwithstanding the foregoing, until Building B is constructed by Landlord,

Parcel L shall be excluded from the Real Property for purposes of determining

Taxes hereunder.

 

                  (e) "Real Property" shall mean the Lots, the two buildings on

the Lots, and all fixtures, equipment and other improvements in or upon said

Lots, and shall include the sidewalks, areaways, parking areas, loading areas,

gardens and lawns.

 

                  (f) "Insurance" shall mean all insurance of whatsoever nature

kept or caused to be kept by Landlord out of or in connection with its ownership

of the Real Property, the buildings, equipment, fixtures and other improvements

installed and/or owned by Landlord and used in connection with the buildings

and/or the Real Property and/or all alterations, rebuildings, replacements and

additions thereto, including, but not limited to, insurance insuring the same

against loss or damage by, or abatement of rental income resulting from fire,

and other such hazards, casualties and contingencies (including, but not limited

to, war risk insurance, if available), liability and indemnity insurance.

 

                  (g) "Lots" shall mean Parcels J, K, and L in Block A of the

Hanson-Palmer Business Park, Prince George's County, Maryland, upon which

Buildings A and B are or will be situated. Building A will be located on Parcel

J and a portion of Parcel K, and Building B will be located on Parcel L and a

portion of Parcel K.

 

                  (h) The term "Operating Year" shall mean: (i) when used in

context with Common Area Expenses, such applicable fiscal year as Landlord may

adopt from time to time during the Lease Term provided same is consistent with

the fiscal year Landlord uses for all other tenants in the Project and is not

changed more than one (1) time in any calendar year, and (ii) when used in

context with Taxes, each respective tax year (i.e., the fiscal year beginning

July 1) during the Lease Term, or such other fiscal year as the applicable

authorities may select.

 

            5.2. Rent Adjustment. Tenant agrees to pay to Landlord monthly, as

additional rent, with and at the same time as the payments of Basic Annual Rent,

the following amounts:

 

                  (a) One-twelfth of Tenant's estimated Portion of Common Area

Expenses, which estimated Portion shall be calculated on the basis of One Dollar

and Seventy Cents ($1.70) per square foot, resulting in a monthly installment of

Three Thousand One Hundred Eighty-Five Dollars and Eighty Cents ($3,185.80); and

 

                  (b) One-twelfth of Tenant's estimated Portion of Taxes, which

estimated Portion shall be calculated on

 

                                      -8-

 

<PAGE>

 

the basis of Eighty Cents ($.80) per square foot, resulting in a monthly

installment of One Thousand Four Hundred Ninety-Nine Dollars and Twenty Cents

($1,499.20).

 

            At any time during a lease year, but not more than one (1) time in

such year, Landlord may revise its estimate of Tenant's Portion of Common Area

Expenses and Taxes (collectively, the "Expenses") as set forth above and adjust

Tenant's monthly installments to reflect the revised estimates. Landlord will

give Tenant prior written notice of the revised estimates and the amount by

which Tenant's monthly installments will be adjusted, and Tenant will pay the

adjusted installments with each payment of the rent, beginning with the first

payment of the Basic Annual Rent to come due after Tenant's receipt of such

notice.

 

            Landlord will deliver to Tenant, within one hundred twenty (120)

days (or such longer time as is reasonable under the circumstances) after the

end of each applicable Operating Year for the Expenses, a statement for such

Operating year (the "Statement"), showing Tenant's Portion of such Expenses.

Tenant will pay Landlord within thirty (30) days of the receipt of the

Statement, such amounts as may be necessary to adjust Tenant's estimated

payments for such preceding Operating Year so that such payments will equal

Tenant's Portion of the actual Expenses for such Operating Year. If the actual

amount of Tenant's Portion of such Expenses is less than the amounts paid by

Tenant as installments of its applicable portion of such Expenses, then Landlord

will credit Tenant's account by the amount of the excess or, if at the end of

the Lease Term, promptly refund to Tenant the amount of the excess. Unless

Tenant gives Landlord written notice of its exception to any Statement for such

preceding Operating Year within thirty (30) days after delivery thereof, the

same shall be conclusive and binding on Tenant; provided, however, that in the

event that Tenant shall give Landlord written notice of its exception to such

Statement within such thirty (30) day period, Tenant shall nevertheless be

obligated to pay the additional rent.

 

            At Tenant's sole cost and expense and without unreasonable

interference with Landlord's business operations or waiving Tenant's obligation

to pay the amount shown on such Statement, Tenant shall have the right, upon at

least ten (10) business days' prior written notice given to Landlord within

sixty (60) days after its receipt of a Statement, to examine the books, records

and other papers of Landlord used to compute the Expenses reflected on such

Statement (the "Audit"). Any overpayment by Tenant reflected by the Audit shall

be promptly corrected. Any such examination shall be conducted only during

Landlord's regular business hours, and all information examined shall be kept by

Tenant in the strictest confidence.

 

            Failure of Landlord to provide any Statement within the time

prescribed will not relieve Tenant of its obligations under this Section 5.2.

 

            5.3. Tax Adjustment. Tenant acknowledges that Landlord must pay the

Taxes for an entire tax year (i.e., July 1 - June 30) in advance. Therefore,

within thirty (30) days after the Commencement Date, Tenant shall pay to

Landlord a sum equal to Tenant's Portion of the pre-paid Taxes paid by Landlord

for the tax year in which the Commencement Date occurs (the "Commencement Tax

Year"), pro-rated from the Commencement Date to the end of the Commencement Tax

Year. During the tax year immediately following the Commencement Tax Year (the

"Second Tax Year"), Tenant shall reimburse Landlord, upon receipt of an invoice

therefor, for Tenant's Portion of any pre-paid Taxes paid by Landlord with

respect to the Second Tax Year, after subtracting therefrom the amount of any

estimated payments made

 

                                       -9-

 

<PAGE>

 

by Tenant pursuant to Section 5.2(b) above with respect to such Second fax Year.

Thereafter, Tenant's estimated monthly amount of Tenant's Portion of Taxes as

set forth in Section 5.2(b) above shall be adjusted to reflect its Portion of

such actual Taxes, which monthly amounts shall be applied to the tax years

immediately following the Second Tax Year and succeeding tax years, subject to

further adjustment. Following termination of the Lease Term by passage of time

or for any reason other than Tenant's default of this Lease (the "Termination

Date"), Tenant shall be reimbursed by Landlord to the extent of any Portion of

Taxes which it has pre-paid as of such Termination Date for the period beyond

such Termination Date.

 

            5.4. Summary of Payments. The following is a list of the various

payments and installments of Basic Annual Rent and additional rent pursuant to

this Section 5 as of the Commencement Date. Some of these amounts will change

during the Lease Term.

 

<TABLE>

<CAPTION>

                          Monthly

                       Installments    P.S.F.

                       ------------    ------

<S>                     <C>             <C>

Basic Annual Rent        $22,300.60     $11.90

(1st lease year)

 

Common Area Expenses     $ 3,185.80     $ 1.70

(estimate)

 

Taxes (estimate)         $ 1,499.20     $   .80

                        ----------     ------

 

     TOTAL               $26,985.60     $14.40

                        ==========     ======

</TABLE>

 

             5.5. Utilities.

 

                  (a) Notwithstanding that certain utilities are commonly

metered on the Real Property and the costs of such utilities are included within

the Common Area Expenses set forth above, if Tenant's use of water or any other

commonly metered utility is disproportionate to that of other tenants in the

Building or Project, Landlord or Tenant shall have the right, at Tenant's sole

cost and expense, to have a meter installed upon the Leased Premises and

thereafter to pay to Landlord or the applicable utility provider all charges

respecting the Leased Premises based upon readings of said meter. In such event,

those costs which are separately metered shall be excluded from Tenant's Portion

of Common Area Expenses.

 

                   (b) Except to the extent included in Common Area Expenses,

Tenant shall pay on a timely basis to the appropriate utility or other supplier,

all charges for gas, steam, electricity, light, heat, power, telephone and all

other utility and communication services, used, rendered and/or supplied upon or

in connection with the Leased Premises.

 

            5.6. Payments. All payments or installments of any rent hereunder,

other than Basic Annual Rent, and all sums whatsoever due under this Lease

(including attorneys' fees) shall he deemed additional rent and shall be paid to

Landlord at the address designated for notice to Landlord herein, or as

otherwise designated by Landlord, If any rent or additional rent is not paid

within five days of when due, Tenant shall pay a late charge equal to five

percent (5%) of the arrearage. In addition, the arrearage shall bear interest

calculated at the rate of eighteen percent (18%) per annum for each day such sum

is in arrears in consideration of Landlord's additional expense caused by such

failure to pay. Such late charges shall be payable simultaneously with the

arrearage payment, without demand. Time is of the essence with respect to

Tenant's monetary obligations in this Lease. Unless otherwise stated, any such

additional rent shall be due within thirty (30) days after the Landlord has

 

                                      -10-

 

<PAGE>

 

submitted a written statement to Tenant showing the amount due, and Tenant's

obligation to pay any such additional rent which applies to the period prior to

the termination of the Lease shall survive the termination of this Lease.

 

      6. Requirements of Law. Tenant shall, at the sole cost and expense of

Tenant, observe and comply with all laws, requirements, rules, orders,

ordinances and regulations applicable to the Leased Premises, the Real Property

or the Building. Tenant shall comply with Landlord's rules and regulations for

the Project, a copy of which is attached hereto as Exhibit D, as the same may be

amended, modified or supplemented from time to time by Landlord, provided same

are generally enforced uniformly and non-discriminatorily and do not increase

Tenant's monetary obligations under the Lease.

 

      7. Tenant's Improvements. Tenant shall not make any alterations,

decorations, installations, additions and/or improvements to the Leased

Premises, including, but not limited to, the installation of any fixtures,

amenities, equipment, appliances or other apparatus (collectively, the "Work"),

without Landlord's prior written consent which shall not be unreasonably

withheld, conditioned or delayed, and then only by contractors or mechanics

approved by Landlord. Notwithstanding the foregoing, Tenant shall have the

right, without Landlord's consent, to make non-structural repairs to the Leased

Premises which do not affect the roof, mechanical, electrical or plumbing

systems of the Building, and which do not, in any lease year, cost more than Ten

Thousand Dollars ($10,000) in the aggregate. All such Work shall be done at

Tenant's sole cost and expense and at such times and in such manner as Landlord

may from time to time reasonably designate. All such Work shall be done under

the general supervision of Landlord to assure standard quality improvements on

the Real Property for which Landlord shall be paid a reasonable supervisory fee,

not to exceed seven percent (7%) of the cost of the Work. All such Work done by

either of the parties hereto upon the Leased Premises, except movable furniture,

equipment and trade fixtures put in at the expense of Tenant, shall be the

property of Landlord and shall remain upon and be surrendered with the Leased

Premises at the termination of this Lease without molestation or injury;

provided, however, that Landlord may elect to require Tenant to remove all or

any part of said work at the expiration of this Lease, in which event such

removal shall be done at Tenant's sole cost and expense. At Tenant's request,

Landlord will inform Tenant at the time it grants its consent to any proposed

Work, of whether the Work must be removed by Tenant at the expiration of the

Lease Term. Tenant shall, at its sole cost and expense, repair any damage to the

Leased Premises and/or the Building caused by such removal or by the removal of

its personalty.

 

      8. Condition of Premises. (a) Landlord hereby agrees to and will assign

to Tenant at the termination of Landlord's Warranty Period (as defined below),

to the extent they are assignable, any and all written warranties and guarantees

from Landlord's contractors, subcontractors and suppliers of any materials and

labor to the Leased Premises for that portion, if any, of the Lease Term that

such warranties and guarantees are in effect. With regard to any new

construction performed by Landlord for the benefit of Tenant pursuant to Section

1(b) of this Lease, Landlord hereby warrants ("Landlord's Warranty") to Tenant

that Landlord will be responsible for a period ("Landlord's Warranty Period") of

one (1) year from the Commencement Date to repair or to have repaired all

defects in such construction, to the extent such defects are not caused by the

negligence of Tenant or any of its agents, servants, employees or contractors

(in which event such defects will be repaired at Tenant's sole cost). To the

extent that Landlord is obligated to make repairs pursuant to

 

                                      -11-

 

<PAGE>

 

Landlord's Warranty, Tenant will be relieved during Landlord's Warranty Period

of the obligations imposed upon it pursuant to this Lease to make or pay for

such repairs to the Leased Premises. Tenant agrees to and will give Landlord

prompt notice of the need for any such repairs.

 

            (b) Subject to Landlord's Warranty, Tenant shall at all times during

the Lease Term take good care of and keep the Leased Premises and the

improvements, fixtures, equipment and appurtenances therein and thereto

(including, but not limited to, interior and exterior windows, interior and

exterior doors, including locks and hardware, pipes, plumbing, water and sewer

connections within or exclusively serving the Leased Premises, and light

fixtures) in good order and condition and, at Tenant's sole cost and expense,

shall make all necessary repairs thereto, which repairs shall be in quality and

class at least equal to the original work. Tenant shall not commit or suffer any

waste of the Leased Premises and will assume responsibility for all maintenance

and repair, regardless of the nature, pertaining to the heating and/or air

conditioning equipment. Tenant will secure and maintain during the Lease Term, a

full service contract on such mechanical equipment with a company reasonably

acceptable to Landlord and providing at least the services outlined on the

attached Exhibit E. Tenant must deliver a copy of such service contract to

Landlord upon the commencement of the term of this Lease and whenever a change

of company or a change in such contract occurs. At the expiration of the Lease

Term, Tenant must also deliver to Landlord a certification from the company

regularly maintaining the mechanical systems in the Leased Premises, which

certification must be based on an inspection conducted within thirty (30) days

of the termination date of the Lease and which must state that all such systems

are in good operating order and be in substantially the form attached as Exhibit

F. Landlord or Landlord's representatives may enter the Leased Premises at any

reasonable time upon at least twenty-four (24) hours' prior notice which may be

verbal to verify Tenant's compliance with this Lease. In the event Tenant fails

to maintain the mechanical equipment as provided in this Section 8, Tenant will

be liable to Landlord for any costs incurred by Landlord in maintaining or

repairing such mechanical equipment.

 

            (c) Landlord shall maintain in good order, condition and repair, the

exterior walls (excluding windows), downspouts, foundation and the roof, along

with the common areas of the Project, the cost of which shall be included in the

Common Area Expenses, so long as such maintenance is not required as a result of

any acts of Tenant, or Tenant's agents, employees or visitors, in which event

the same shall be repaired by Landlord at the sole cost and expense of Tenant

(to the extent not covered by insurance).

 

            (d) At the expiration of the Lease Term, or at the sooner

termination of this Lease as herein provided, Tenant shall deliver up the Leased

Premises in the same good order and condition, reasonable wear and tear and

damage from casualty or condemnation excepted, as at the beginning of the

tenancy, broom clean and (subject to the provisions of the preceding Section

hereof) Tenant shall remove all of its property and/or property maintained

and/or stored for or on the account of others therefrom prior to such

termination. Any items of Tenant's personalty remaining in the Leased Premises

after the termination of the Lease shall be deemed abandoned by Tenant and

become the sole property of Landlord. Notwithstanding the foregoing, any costs

incurred by Landlord in storing and/or disposing of such abandoned property

shall remain the sole obligation of Tenant, which obligation shall survive the

termination of this Lease.

 

                                      -12-

 

<PAGE>

 

      9. Conduct on Premises. Tenant shall not do, or permit anything to be done

in the Leased Premises, or bring or keep anything therein which will, in any way

invalidate or conflict with the fire insurance policies on the Real Property;

obstruct or interfere with the rights of Landlord or other tenants; or interfere

with the good order of the Building. Tenant agrees that any increase in fire or

other insurance premiums on the Real Property and/or the contents thereof to the

extent caused by the use or occupancy of Tenant shall, as they occur or accrue,

be added to the rent heretofore reserved and b


 
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