Document:

exh10_1lease.htm

    CONFIDENTIAL
      TREATMENT REQUESTED.  CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN
      REDACTED AND FILED SEPARATELY WITH THE COMMISSION.***

    

    

    

    Appendix
      B

    AGREEMENT
      OF LEASE

    

    

    

    This
      Agreement of Lease (hereinafter
      "Lease") is made this 27th day of February, 2008, by and between 1332 LONDONTOWN
      ROAD, LLC, having an address of 1300 York Road, Suite 300, Lutherville, Maryland
      21093 (“Landlord”) and GSE SYSTEMS, INC., having an address at 7133 Rutherford
      Road, Baltimore, MD 21244 (hereinafter “Tenant”).

    

    WITNESSETH

    

    1.           PREMISES.  Landlord,
      in consideration of the covenants upon the part of Tenant, hereby leases to
      Tenant approximately 31,583 square feet of space (hereinafter the “Premises”) on
      the first and second floors of the building located at 1332 Londontown Road,
      Eldersburg, Maryland (hereinafter the "Building"), being part of the business
      park known as the Londontown Business Center.  The Building, the
      parcel of land on which the Building is situated (the “Land”), and any other
      improvements thereon are referred to collectively as "the
      Property").  The Premises are shown in more particular detail on
      Exhibit A attached hereto and made a part hereof.

    

    2.           TERMS.

    

    (a)           Term,
      Termination and Delivery.  This Lease shall have an original term
      (the "Term") (i) commencing on the earlier to occur of April 15, 2008 or the
      date upon which Landlord delivers the first floor portion of the Premises (the
      “Priority Space”) to Tenant after completing the applicable portion of
      Landlord’s Work therein, as defined in Exhibit B attached hereto and made a part
      hereof (the “Commencement Date”), and (ii) terminating at 11:59 o'clock p.m.,
      local time, on June 30, 2018 (the "Termination
      Date").  Notwithstanding the foregoing, Tenant shall have the right to
      terminate the Lease at the end of the sixth (6th) year if
      Tenant is
      not then in default of the Lease, provided that Tenant shall provide Landlord
      a
      minimum of six (6) months written notice and pay a termination penalty equal
      to
      Landlord’s unamortized costs associated with the Lease. Landlord shall use
      reasonably diligent efforts to complete the remainder of Landlord’s Work and to
      deliver the remainder of the Premises to Tenant by August 1, 2008;
      however Landlord shall have no liability to Tenant if Landlord is delayed in
      doing so, and Tenant’s lease obligations shall not be limited except as provided
      in Section 3 hereof.  Landlord acknowledges that time is of the
      essence and that Tenant may be harmed and incur certain costs, expenses and
      fees
      in the event of delay including but not limited to payment of rent and related
      leasing penalties should Landlord’s delay result in Tenant holding over in its
      existing premises or finding interim or alternate premises until such time
      as
      Landlord is able to tender the Premises in accordance with the provisions of
      the
      delivery schedule set forth therein and herein.  Landlord further
      acknowledges and expressly agrees that, in the event Landlord is unable to
      perform and tender the Premises in accordance with the provisions of the
      delivery schedule set forth therein and herein, Landlord shall be, and be deemed
      to be, in breach of the terms of this Lease and shall reimburse Tenant for
      any
      and all fees, costs, expenses and penalties incurred without demand and without
      offset, deduction or withholding of any sums within thirty (30) calendars days
      after it receives notice thereof.

     

    

    
      
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    (b)           Surrender.  Tenant
      shall, at its expense, at the expiration of the Term or any earlier termination
      of this Lease, (i) promptly surrender to Landlord possession of the Premises
      (including any fixtures or other improvements which, under the provisions of
      Section 5, are owned by Landlord) in the condition in which the Premises
      existed on the Commencement Date, ordinary wear and tear excepted, and broom
      clean, (ii) remove therefrom Tenant's signs, goods and effects and any
      machinery, trade fixtures and equipment which are used in conducting Tenant's
      trade or business and are not owned by Landlord, and (iii) repair any damage
      to
      the Premises caused by such removal.

    

    (c)           Holding
      Over.  If Tenant continues to occupy the Premises after the
      expiration of the Lease or any earlier termination without obtaining Landlord's
      written consent thereto, such occupancy shall be deemed to be under a
      month-to-month tenancy.  The rental payable for the first four (4)
      months shall equal the aggregate of (i) the Base Rent for the Lease Year during
      which such expiration of the Lease, or earlier termination occurs, and (ii)
      the
      Additional Rent payable under the provisions of this Lease.  The
      rental payable for each such monthly period after the fourth (4th) month
      shall equal
      the aggregate of (x) one and one half (1 1⁄2) times the monthly installment of
      Base Rent for the Lease Year during which such expiration of the Lease, or
      earlier termination thereof, occurs and (y) the Additional Rent payable under
      the provisions of this Lease; however, Tenant shall nevertheless remain liable
      to Landlord for damages relating to Tenant’s failure to vacate the Premises in a
      timely manner.

    

    (d)           Right
      of First Offer.  In the event the office space adjacent to the
      Premises (the “Expansion Premises”) becomes available for lease, Landlord agrees
      to offer such space to Tenant prior to entering into a written lease with a
      third party for the lease of such space.  Notwithstanding the
      foregoing, Landlord shall have no obligation to offer the Expansion Premises
      to
      Tenant and Tenant shall have no right to lease the Expansion Premises if Tenant
      is in default hereunder at the time the Expansion Premises becomes
      available.  Tenant shall have ten (10) days in which to irrevocably
      agree in writing to lease the Expansion Premises from Landlord, on the terms
      mutually agreed by Landlord and Tenant, which shall be for a Base Rent and
      for a
      tenant improvement allowance for the Expansion Premises (the “Basic Expansion
      Terms”) that are no less favorable that the terms that Landlord is then offering
      for the Expansion Premises to third parties. If Tenant does not so notify
      Landlord of its intention to lease the Expansion Premises within such ten (10)
      day period, then Landlord shall be free to lease the Expansion Premises to
      any
      third party on terms which are no less favorable than the Basic Expansion
      Terms.

    

    3.           RENT.  Commencing
      on the later of August 1, 2008 or that date which is thirty (30) days after
      the
      delivery of the Premises by Landlord to Tenant with Landlord’s Work (exclusive
      of the elevator installation) substantially complete condition (the “Rent
      Commencement Date”), as rent for the Premises (all of which is hereinafter
      referred to collectively as "Rent"), Tenant shall pay to Landlord the
      following:

    

    (a)           Base
      Rent.  During the first Lease Year of this Lease, Tenant shall pay
      an annual base rent (the "Base Rent") in the amount of Three Hundred
      Twenty-Three Thousand, Seven Hundred Twenty-Five Dollars and Seventy-Five Cents
      ($323,725.75), payable in twelve (12) equal monthly installments of Twenty-Six
      Thousand, Nine Hundred Seventy-Seven Dollars and Fifteen Cents ($26,977.15)
      each.  Said Base Rent shall increase on each anniversary of the Rent
      Commencement Date by three percent (3%) over the previous Lease Year’s amount of
      Base Rent.  Upon execution of the Lease, Tenant shall pay in advance
      the Base Rent due on August 1, 2008.

    

    
      
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      (b)           Tenant
        is eligible to participate in a relocation incentive program (the “County
        Incentive”) offered by Carroll County (the “County”)
        [***]

       

    

    (c)           Additional
      Rent. During the Term of this Lease, Tenant shall pay to Landlord additional
      rent in the amount of any payment in any provision of this Lease that accrues
      while this Lease is in effect other than the Base Rent (collectively,
“Additional Rent”). If
      Tenant fails to pay any Additional Rent after the expiration of any applicable
      grace, notice and cure period, Landlord shall have the same rights as in the
      case of Tenant's nonpayment of Base Rent.

    

    (d)           Late
      Payment.  Each payment of Rent shall be made in advance on the
      first day of each month of the Term promptly when due, without any deduction
      or
      set off whatsoever, and without demand, failing which Tenant shall pay to
      Landlord as Additional Rent,  a late charge equal to one hundred
      dollars ($100.00) if any payment of the monthly Rent is more than ten (10)
      business days late for any given month and increasing to five hundred dollars
      ($500.00) if any payment of the monthly Rent is more than thirty (30) calendar
      days late for any given month.  In addition, any payment that is not
      paid by the tenth (10th) business
      day
      after such payment is due shall bear interest at an annual floating rate of
      interest equal to two (2) percentage points in excess of the prime rate of
      interest as announced from time to time by Bank of America or its successor
      (the
“Default Rate”).

    

    (e)           Place
      of Payment.  All Rent payable hereunder, together with all
      statements, notices, and other written communication from Tenant, shall be
      sent
      or delivered to Landlord at Landlord’s address specified in Section 25
      hereof.

    

    (f)           Lease
      Year.  As used in the provisions of this Lease, the term "Lease
      Year" means (i) the period commencing on the Commencement Date and terminating
      on the day immediately preceding the first (1st) anniversary of the first (1st)
      day of the first (1st) full calendar month during the Term, and (ii) each
      successive period of twelve (12) calendar months thereafter during the
      Term.

    

    
      
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    4.           USE
      AND ENVIRONMENTAL REQUIREMENTS.

    

    (a)                 Tenant
      shall use and occupy the Premises only as an office for Tenant’s business and
      for no other use or purpose.  Tenant covenants and agrees to make no
      unlawful or offensive use of the Premises and to comply with all statutes,
      ordinances, rules, orders, regulations and requirements of Federal, State and
      Municipal governments.  Specifically, Tenant shall not make, maintain
      or store hazardous materials on the Premises or in the
      Building.  Notwithstanding the foregoing, Landlord agrees that Tenant
      may use and store paint and ordinary cleaning and janitorial supplies on the
      Premises or in an area(s) designated by Landlord for that purpose.  If
      Tenant's use as provided for herein is prohibited by Landlord, Tenant may
      terminate this Lease and Tenant shall cease to have any obligation to Landlord
      and Landlord shall refund any and all sums held as deposit against this Lease
      without offset, deduction or reservation.  Furthermore, Landlord shall
      not prohibit such use except upon a bona fide default notice or notice of
      non-compliance duly given from Carroll County or any other agreement, law,
      rule
      or ordinance by which the Premises, Landlord or Tenant may be bound and failure
      to cure such default within the applicable grace period and cure period as
      set
      forth herein and hereunder.

    

    (b)           The
      term "Hazardous Substances" as used in this Lease shall mean pollutants,
      petroleum, contaminants, infectious waste, asbestos, radioactive materials,
      polychlorinated biphenyls (PCBs), toxic or hazardous wastes or any other
      substances, the removal of which is required or the use of which is restricted,
      prohibited or penalized by any "Environmental Law", which term shall mean any
      federal, state or local law, rule, regulation or ordinance relating to pollution
      or protection of the environment.  Tenant shall comply with all
      Environmental Laws in its use of the Property, including, without limitation,
      the obligation to obtain and maintain in effect and comply with all requisite
      permits and reporting and notification requirements.  Tenant hereby
      agrees that (i) no activity will be conducted on the Property that will produce
      or cause the release of any Hazardous Substance, except for such activities
      that
      are part of the ordinary course of Tenant's business activities (the "Permitted
      Activities"), provided said Permitted Activities are conducted in accordance
      with all Environmental Laws and have been approved in advance in writing by
      Landlord; (ii) the Property will not be used in any manner for the storage
      of
      any Hazardous Substances except for the temporary storage of such materials
      that
      are used or produced in the ordinary course of Tenant's business (the "Permitted
      Materials"), including but not limited to cleaning supplies and copier supplies,
      provided such Permitted Materials are properly stored in a manner and location
      and are properly disposed of in a manner meeting all Environmental Laws and
      approved in advance in writing by Landlord; (iii) upon Landlord's request,
      Tenant shall provide Landlord with evidence satisfactory to Landlord that Tenant
      is complying with all Environmental Laws regarding the storage, cleanup and
      disposal of Permitted Materials; and (iv) Tenant will not permit any Hazardous
      Substances to be brought onto the Property (except for the Permitted Materials),
      and if so brought or found located thereon, the same shall be immediately
      removed, all required cleanup and disposal procedures shall be diligently
      undertaken in accordance with all Environmental Laws and Tenant shall provide
      Landlord with evidence satisfactory to Landlord of Tenant's compliance with
      all
      Environmental Laws.  If at any time during or after the Term, the
      Property is found to be contaminated with Hazardous Substances resulting from
      Tenant's use thereof or Tenant's use of the Property results in a violation
      or
      alleged violation of any Environmental Law, Tenant agrees to indemnify, hold
      harmless, protect and (at Landlord's election) defend Landlord from all claims,
      demands, actions, liabilities, costs, expenses, damages and obligations of
      any
      nature arising from or as a result of the use of the Property by
      Tenant.  The foregoing indemnification shall survive the termination
      or expiration of this Lease.

    

    
      
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    (c)           So
      long as Tenant pays the Base Rent and Additional Rent and observes and performs
      all the terms, covenants and conditions on Tenant's part to be observed and
      performed under this Lease, Landlord hereby covenants and agrees that Tenant
      shall have the right to peaceably and quietly use and enjoy the Premises without
      undue interference by or on behalf of Landlord (or its agents, affiliates,
      subsidiaries and assigns), subject, nevertheless, to the terms and conditions
      of
      this Lease, and subject to causes beyond Landlord’s reasonable
      control.

    

    (d)           This
      Lease and the obligation of Tenant to pay Rent hereunder and perform all of
      the
      other covenants and agreements hereunder on the part of Tenant to be performed
      shall in no wise be affected, impaired or excused because Landlord is unable
      to
      fulfill any of its obligations under this Lease or to supply or is delayed
      in
      supplying any service expressly or impliedly to be supplied or is unable to
      make
      or is delayed in making any repairs, additions, alterations or decorations
      required or permitted under this Lease or is unable to supply or is delayed
      in
      supplying any equipment or fixtures.  However, if Landlord is
      prevented or delayed from doing any if the foregoing by reason of strike or
      labor troubles or any other cause whatsoever beyond the control of Landlord,
      including but not limited to, government preemption in connection with a
      national emergency, or any rule, order or regulation of any department or
      subdivision of any government agency, Landlord agrees to use reasonably diligent
      efforts to fulfill its obligations hereunder.

    

    5.           SECURITY
      DEPOSIT.  No Security Deposit is required.

    

    6.           ASSIGNMENT
      AND SUBLETTING.

    

    (a)           For
      the purposes of this Lease, an “Assignment” shall mean any assignment, mortgage,
      transfer, or encumbrance, whether voluntarily, involuntarily or by operation
      of
      law, of Tenant’s interest in the Lease, any sublease by Tenant, any license by
      Tenant of space in the Premises, or any concession agreement by Tenant with
      respect to all or a part of the Premises, or any agreement by Tenant giving
      any
      other person the right to use all or a part of the Premises.  Tenant
      shall not make nor permit an Assignment of this Lease or any interest of Tenant
      herein without first obtaining the prior written consent of Landlord, which
      consent shall not be unreasonably withheld or delayed by Landlord.

    

    (b)           Without
      conferring any rights upon Tenant not otherwise provided in this Section, the
      parties agree that, should Tenant desire to enter into an Assignment, then,
      at
      least thirty (30) days before the proposed effective date of the Assignment,
      Tenant shall request Landlord's consent and provide the
      following:  (i) the full particulars of the proposed assignment or
      sublet, including its nature, effective date, terms and conditions, and copies
      of all offers, draft agreements, subleases, letters of commitment or intent,
      and
      other documents pertaining to the proposed transfer; and (ii) a description
      of
      the identity, net worth and previous business experience of the proposed
      transferee, including without limitation copies of the proposed transferee's
      then latest income statement, balance sheet and changes in financial position
      statements certified as accurate by the proposed transferee.  Tenant
      shall pay promptly all reasonable attorneys’ fees Landlord may incur in
      reviewing the foregoing materials and in granting or denying its consent
      hereunder, including those for drafting or reviewing the documents granting
      or
      denying such consent.

    

    
      
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    (c)           If
      this Lease or any interest of Tenant herein is assigned or if the whole or
      any
      part of the Premises is sublet or used or occupied by others, after having
      obtained Landlord's prior written consent thereto, Tenant shall nevertheless
      remain fully liable for the full performance of all obligations under this
      Lease
      to be performed by Tenant, and Tenant shall not be released therefrom in any
      manner.

    

    (d)           Notwithstanding
      anything contained herein to the contrary, no approval shall be required from
      Landlord for an Assignment to any company that is owned by or is a subsidiary
      of
      Tenant (a “Permitted Assignment”). In the event of such a Permitted Assignment,
      Tenant shall provide Landlord reasonable prior written notice of such Assignment
      and Tenant shall not be relieved of liability hereunder.

    

    7.           MAINTENANCE
      AND REPAIR.

    

    (a)           By
      Landlord.  Except for damages arising from the acts or omissions
      of Tenant, its agents, servants, employees, visitors or invitees, Landlord
      shall
      repair the structural elements of the Premises (as set forth in Section 10(a)
      as
      Operating Costs), including without limitation, but not limited to, the roof
      and
      exterior walls, load-bearing walls, wiring, plumbing, main electrical service
      for the Building, parking areas and access driveways, heating, ventilation
      and
      air-conditioning equipment and shall make all necessary replacements to same
      from time to time during the Term of this Lease, and shall otherwise maintain,
      manage, insure, repair and operate the Building and the Property, subject to
      (i)
      reimbursement of the Operating Costs set forth in Section 10 hereof, (ii)
      Tenant’s obligations under Section 7 (b) below, and provided the foregoing shall
      be at Tenant’s expense if necessitated by the negligence or wrongful acts of
      Tenant or Tenant’s agents, employees or invitees. Any necessary alterations or
      repairs done by Landlord shall be performed in such manner so as to minimize
      interference with Tenant's quiet use and enjoyment of the
      Premises.  To the extents such acts, actions, activities, materials,
      equipment and personnel shall unduly interfere with such right  and
      cause Tenant to lose business or disrupt business for a period in excess of
      that
      period stated in Landlord’s written notice to Tenant, Tenant shall be entitled
      to a pro rata rent reduction.

    

    (b)           By
      Tenant.  Except for those items for which Landlord is expressly
      responsible hereunder, Tenant shall maintain, repair and keep, at Tenant's
      own
      cost and expense, the interior of the Premises, and each and every part thereof,
      and its equipment, fixtures and appurtenances, including without limitation,
      electrical fixtures and bulbs, doors, window and door glass, and jambs in good
      condition and repair.  In the event Tenant fails, after ten (10) days’
written notice from Landlord, to keep the Premises in good condition and repair,
      or commence and continuously prosecute required repairs, Landlord may upon
      reasonable advance written notice, enter upon the Premises to make such repair
      which Tenant has failed to make.  Upon demand, Tenant shall reimburse
      Landlord for any expense incurred by Landlord in doing the
      foregoing.  Any monies expended by Landlord shall be deemed Additional
      Rent, and collected as such by Landlord.  Without limiting the
      generality of the foregoing obligations, Tenant shall be responsible for
      repairing all parts or portions of the non-structural elements of the Premises,
      its equipment, fixtures and appurtenances.  Tenant shall also pay for
      all damage to the Premises and its equipment, fixtures and appurtenances caused
      by waste, misuse or neglect of the same by Tenant, its agents, servants,
      employees or invitees. Landlord shall be responsible for repairing and/or
      replacing any elements which Tenant would be responsible for if the need for
      such repair or replacement is caused by the act or omission of
      Landlord.

    

    
      
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    8.           UTILITIES.

    

    (a)           Tenant
      shall pay eight point seventy-seven percent (8.77%) (“Pro Rata Share of Property
      Utilities”) of all charges for water, sewage, heating oil (subject to conversion
      of the system measuring usage thereof for the Building, as described below),
      and
      other services or utilities (exclusive of electricity charges) which may be
      furnished to or used in or about the Property during the Term of this Lease,
      and
      Tenant shall pay sixty-three percent (63%) (“Pro Rata Share of Building
      Utilities”) of the following which may be furnished to or used in or about the
      office portion of the Building during the Term of this Lease: (i) all
      electricity charges and (ii) and all heating oil, if Landlord installs one
      or
      more sub-meters for the Building.  All utility charges which Tenant is
      responsible for which are billed to Landlord shall be payable by Tenant to
      Landlord as Additional Rent, upon demand, and shall be collectible as
      such.

    

    (b)           Landlord
      shall not be liable to Tenant, in damages or otherwise, for any interruption
      in
      the service of water, electricity, gas, heating, air-conditioning or other
      utilities or services caused by an unavoidable delay, by the making of any
      necessary repairs or improvements or by any cause beyond Landlord's reasonable
      control unless Landlord fails to work diligently in the restoration of the
      utilities or Landlord is solely responsible for the loss of
      utilities.  Tenant shall be entitled to a pro rata rent reduction for
      any such interruption which is caused by Landlord’s failure to work diligently
      in the restoration of the utilities or for which Landlord is solely responsible.
      Significant impairment of Tenant’s right to quiet use and enjoyment caused by
      Landlord’s negligence, failure to work diligently in the restoration of the
      utilities or if Landlord is solely responsible for the loss of utilities shall
      be deemed an eviction of Tenant. If Landlord fails to act diligently in the
      restoration of any utility or Landlord or any of its agents, employees,
      affiliates, assigns or contractors are the cause of the interruption of a
      utility, then Tenant shall be entitled to one day of rental abatement for each
      day, or portion thereof, that the Premise is without a utility.

    

    9.           MISCELLANEOUS
      RESTRICTIONS.  It is further agreed that:

    

    (a)           Storage
      outside of the Building is prohibited and Tenant agrees to strictly abide by
      this provision.

    

    (b)           Tenant
      shall not be permitted to attach any of its equipment by welding to, or drilling
      of holes in, the structural steel or concrete of the Building.

    

    (c)           Tenant
      shall not, in any manner, alter the exterior appearance or decoration of the
      Premises or Building, including the improvements thereon, except such as may
      be
      necessary in connection with the performance by Tenant of its obligation to
      repair and maintain the Premises, and make necessary replacements thereto as
      hereinbefore provided, but in no event shall any color or other decorative
      changes be made without the prior written approval of Landlord, said approval
      not to be unreasonably withheld.

    

    
      
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    (d)           Tenant
      shall be permitted to fabricate and install an exterior sign on the Building
      at
      its sole cost and expense at a location approved by Landlord.  Any and
      all signage shall be in compliance with Carroll County laws and specifications
      and subject to Landlord’s prior written approval, not to be unreasonably
      withheld or delayed.  At the end of the Term or any prior termination
      of the Lease, at Landlord’s option, Tenant shall remove Tenant’s sign and repair
      any damage caused by such removal.  Tenant shall maintain Tenant’s
      sign in a first class condition throughout the Term.  Notwithstanding
      the foregoing, Landlord shall, at its sole cost and expense, include Tenant’s
      name on the Building’s directory and any floor directional signs.

    

    10.           OPERATING
      COSTS.  Tenant shall pay Landlord as Additional Rent, Tenant’s
      Pro-Rata Share (as defined hereunder) of the Operating Costs, as
      follows:

    

    (a)           Operating
      Costs are hereby defined as all of the costs and expenses which are incurred
      or
      accrued by Landlord in maintaining, managing, insuring, repairing or operating
      the Building and the remainder of the Property, under generally accepted
      accounting principles, including, but not limited to security; common area
      maintenance; landscaping; sales or use taxes on supplies or services; management
      and administrative fees, the cost of Landlord’s insurance, legal and accounting
      fees and expenses; and engineering fees and expenses; and window cleaning and
      janitorial expenses.

    

    (b)           Operating
      Costs do not include Real Estate Taxes (as hereinafter defined), lease payments
      made by Landlord on any ground lease(s), interest or other financing costs
      of
      Landlord, depreciation of improvements which are in existence or under
      construction as of March 1, 2009 other than under generally accepted accounting
      principle, depreciation of tenant improvements other than under generally
      accepted accounting principles, or any costs or expenses incurred or accrued
      exclusively for the benefit of specific tenants.

    

    (c)           Tenant's
      Pro-Rata Share is defined for purposes of this lease, as Tenant’s leasable area,
      which is hereby agreed to be approximately 31,583 square feet, divided by the
      leasable area of the Building, which is hereby agreed to be approximately
      360,000 square feet, Tenant’s Pro-Rata share is therefore 8.77%.

    

    (d)           Tenant’s
      Operating Costs shall be payable by Tenant within twenty (20) business days
      after a reasonably detailed statement of actual expenses is presented to Tenant
      by Landlord.  At Landlord's option, however, Tenant’s Pro-Rata Share
      of annual Operating Costs may be estimated by Landlord from time to time and
      the
      same shall be payable monthly or quarterly, as Landlord may designate, during
      each twelve (12) month period of the Term, on the same day as the monthly Base
      Rent is due hereunder.  In the event that Tenant pays Landlord's
      estimate of Tenant's Pro-Rata Share of Operating Costs as described in the
      preceding sentence, Landlord shall deliver to Tenant within ninety (90) calendar
      days after the expiration of each calendar year a reasonably detailed statement
      showing Tenant's Pro-Rate Share of the actual Operating Costs incurred during
      the preceding year. If Tenant's payments under this paragraph during such
      preceding year exceed Tenant's Pro-Rata Share as indicated on such statement,
      Tenant shall be entitled to the prompt cash reimbursement of such
      overpayment.  If Tenant's payments under this paragraph during such
      preceding year were less than Tenant's Pro-Rata Share as indicated on such
      statement, Tenant shall pay to Landlord the amount of the deficiency within
      thirty (30) business days after delivery by Landlord to Tenant of such
      statement.

    

    
      
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    11.           REAL
      ESTATE TAXES.  Tenant shall pay Landlord as Additional Rent,
      Tenant’s Pro-Rata Share of the “Real Estate Taxes”, as follows:

    

    (a)           The
      term “Real Estate Taxes” means all taxes, rates and assessments, general and
      special, levied or imposed with respect to the Building, the Land and any other
      improvements constructed thereon (the “Improvements”) and the
      Property.

    

    (b)           The
      term “Real Estate Tax Year” means each successive twelve (12) month period
      following and corresponding to the period in respect of which the Real Estate
      Taxes are established, or such other period or periods which may from
      time-to-time in the future be established by taxing authority for the purposes
      of levying or imposing Real Estate Taxes.

    

    (c)           Each
      year Tenant shall pay to Landlord within thirty (30) business days after demand
      in writing therefore as Additional Rent, Tenant’s Pro-Rata Share of Real Estate
      Taxes for or attributable to the then-current Real Estate Tax Year.

    

    (d)           Landlord
      shall have no obligation to contest, object to, or litigate the levying or
      imposition of any Real Estate Taxes and may settle, compromise, consent to,
      waive or otherwise determine in its discretion any Real Estate Taxes without
      consent or approval of Tenant.

    

    (e)           If
      the Termination Date of this Lease shall not coincide with the end of a Real
      Estate Tax Year, then with respect to Tenant’s obligation under Section 11 for
      the period between the commencement of the applicable Real Estate Tax Year
      in
      question and the Termination Date of this Lease, Landlord, at its option, may
      bill Tenant for such pro-rata tax (1) at the time of termination, using either
      the Real Estate Taxes payable for the current Real Estate Tax Year, if
      available, or for the previous Real Estate Tax Year, if taxes for the then
      current tax year are not available on the date of termination; or (b) subsequent
      to the date of termination, if Landlord wishes to wait for information as to
      the
      amount of Real Estate Taxes payable for the Real Estate Tax Year during which
      this Lease is terminated.  Such statement for the final Real Estate
      Tax shall be payable by Tenant upon receipt, it being understood that Tenant’s
      obligation to pay its pro-rata share of Real Estate Taxes for the final period
      of the Lease shall survive the expiration of the Term of this
      Lease.  In the event that only a portion of Real Estate Tax Year is
      included within the first or last Lease Year, Tenant shall be liable only for
      the pro-rated portion of the Real Estate Taxes attributable to the period
      falling within the Lease Year in question.

    

    12.           LANDLORD
      WORK.  By executing this Lease, Tenant shall be deemed to accept
      the Premises in their “As-Is” condition on the Commencement Date, and Tenant
      acknowledges that Landlord shall have no obligation to undertake any
      improvements at the Premises on behalf of the Tenant, except for those items
      of
      Landlord’s Work outlined in Exhibit B of this Lease.

    

    
      
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    13.           ALTERATIONS.  Tenant
      covenants and agrees not to make any alterations, improvements and/or structural
      changes to the Premises and/or the Building costing more than Twenty-five
      Thousand Dollars ($25,000) without the prior written consent of Landlord, which
      consent Landlord agrees not to withhold unreasonably if such proposed changes
      are non-structural in nature. Tenant shall have the right to make non-structural
      alteration to its Premises costing less than Twenty-five Thousand Dollars
      ($25,000) at any time during the Lease Term. Any alterations, improvements
      and/or structural changes shall, at the option of Landlord, be supervised by
      Landlord.  Tenant further agrees that such alterations, improvements
      which cost in excess of Twenty-five Thousand Dollars ($25,000) and/or structural
      changes, which may be approved by Landlord as herein provided, shall not be
      begun until Tenant furnishes to Landlord a good and sufficient mechanic's lien
      bond placed with a reliable bonding company authorized to do business in
      Maryland in an amount deemed sufficient by Landlord to indemnify Landlord
      against any and all claims for mechanic's liens for both labor and material,
      which may be made against the Premises or against Landlord, or both, arising
      out
      of the making of such alterations, improvements and/or structural
      changes.  Tenant further agrees to indemnify and hold harmless
      Landlord from and against all liens, including mechanic's liens claims or
      demands of any nature whatsoever arising out of any work performed, materials
      furnished or obligations incurred by or for Tenant upon the Premises during
      the
      Term of this Lease, and agrees not to suffer such lien to be obtained or
      created.  Should any injury or damage to the Premises result, directly
      or indirectly, from such alterations of the Premises to their previous
      condition, Tenant at its sole cost and expense shall promptly repair such injury
      or damage.

    

    14.           FIXTURES
      AND EQUIPMENT.  All trade fixtures and equipment installed by
      Tenant shall remain the property of Tenant and may be removed by Tenant upon
      the
      expiration or termination of this Lease; provided, however, Tenant shall, at
      its
      own cost and expense, promptly repair any injury or damage to the Premises
      resulting from such removal and shall restore the Premises to their original
      condition.  All alterations, additions, improvements and changes and
      all installation of trade fixtures and equipment made by Tenant shall be made
      in
      accordance with the rules, regulations and ordinances of the County, its
      agencies or departments.

    

    15.           INSURANCE;
      INDEMNITY.

    

    (a)           Landlord's
      Insurance.  Landlord shall secure and maintain policies of
      insurance for the Property (including the Premises) covering loss of or damage
      to the Property, including the Premises as delivered to Tenant, but excluding
      all subsequent alterations, additions and improvements to the Premises, with
      loss payable to Landlord and to any mortgagees of Landlord.  Landlord
      shall not be obligated to obtain insurance for Tenant's trade fixtures,
      equipment, furnishings, machinery or other property.  Such policies
      shall provide protection against fire and extended coverage perils and such
      additional perils as Landlord deems suitable, and with such deductibles(s)
      as
      Landlord shall deem reasonably appropriate.  Landlord shall further
      secure and maintain commercial general liability insurance with respect to
      the
      Property in such amount as Landlord shall determine, such insurance to be in
      addition to, and not in lieu of, the liability insurance required to be
      maintained by Tenant.  In addition, Landlord shall secure and maintain
      rental income insurance in such amounts and with such coverage as determined
      by
      Landlord.  If the annual cost to Landlord for any such insurance
      exceeds the standard rates because of the nature of Tenant's operations, Tenant
      shall, upon receipt of appropriate invoices, reimburse Landlord for such
      increases in cost, which amounts shall be deemed Additional Rent
      hereunder.

    

    
      
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    (b)           Tenant's
      Liability Insurance.  (i) Tenant (with respect to both the
      Premises and the Property) shall secure and maintain, at its own expense, at
      all
      times during the Term, a policy or policies of commercial general liability
      insurance with the premiums thereon fully paid in advance, protecting Tenant
      and
      naming Landlord, the holders of any mortgages on the Property, and Landlord's
      representatives as additional insureds against claims for bodily injury,
      personal injury and property damage (including reasonable attorneys' fees)
      based upon, involving or arising directly or indirectly out of Tenant's
      operations, assumed liabilities or Tenant's use, occupancy or maintenance of
      the
      Premises and the Property.  Such insurance shall provide for a minimum
      amount of One Million Dollars ($1,000,000) for property damage or injury to
      or
      death of one or more than one person in any one accident or occurrence, with
      an
      annual aggregate limit of at least Two Million Dollars ($2,000,000) and One
      Million Dollars ($1,000,000) in excess liability coverage.  The
      coverage required to be carried shall include fire legal liability, blanket
      contractual liability, personal injury liability (libel, slander, false arrest
      and wrongful eviction), broad form property damage liability, products liability
      and completed operations coverage (as well as owned, non-owned and hired
      automobile liability if an exposure exists).  Such insurance shall be
      written on an occurrence basis and contain a separation of insured’s provision
      or cross-liability endorsement acceptable to Landlord.  Tenant shall
      provide Landlord with a certificate evidencing such insurance coverage prior
      to
      the Commencement Date.  The certificate shall indicate that the
      insurance provided specifically recognizes the liability assumed by Tenant
      under
      this Lease and that Tenant's insurance is primary to and not contributory with
      any other insurance maintained by Landlord, whose insurance shall be considered
      excess insurance only; (ii) Tenant shall, at Tenant's expense, comply with
      (i)
      all insurance company requirements pertaining to the use of the Premises and
      (ii) all rules, orders, regulations or requirements of the American Insurance
      Association (formerly the National Board of Fire Underwriters) and any similar
      body.

    

               (c)           Tenant's
      Additional Insurance Requirements.  Tenant shall secure and
      maintain, at Tenant's expense, at all times during the Term, a policy of
      physical damage insurance on all of Tenant's fixtures, furnishings, equipment,
      machinery, merchandise and personal property in the Premises and on any
      alterations, additions or improvements made by or for Tenant upon the Premises,
      all for the full replacement cost thereof without deduction for depreciation
      of
      the covered items and in amounts that meet any co-insurance clauses of the
      policies of insurance.  Such insurance shall insure against those
      risks customarily covered in an "all risk" policy of insurance covering physical
      loss or damage.  Tenant shall use the proceeds from such insurance for
      the replacement of fixtures, furnishings, equipment and personal property and
      for the restoration of the alterations, additions or improvements made by or
      for
      Tenant to the Premises.  Further, Tenant shall secure and maintain at
      all times during the Term workers' compensation insurance in such amounts as
      are
      required by law, employer's liability insurance in the amount of not less than
      Five Hundred Thousand Dollars ($500,000.00) per occurrence, plate glass coverage
      if required by Landlord, and all such other insurance as may be required by
      applicable law or as may be reasonably required by Landlord. Tenant shall
      provide Landlord with certificates of all such insurance prior to the
      Commencement Date.  The property insurance certificate shall confirm
      that the waiver of subrogation required to be obtained pursuant to this Lease
      is
      permitted by the insurer.  Tenant shall, at least thirty (30) calendar
      days prior to the expiration of any policy of insurance required to be
      maintained by Tenant under this Lease, furnish Landlord with an "insurance
      binder" or other satisfactory evidence of renewal thereof.

    

    (d)           All
      policies required to be carried by Tenant under this Lease shall be issued
      by
      and binding upon a reputable insurance company of good financial standing
      licensed to do business in the State of Maryland with a rating of at least
“A”
and a financial size rating of “X” or larger or such other rating as may be
      required by a lender having a lien on the Property, as set forth in the most
      current issue of "Best's Key Rating Guide and Supplement Service Property,
      Casualty” (or comparable insurance rating service).  Tenant shall not
      do or permit anything to be done that would invalidate the insurance policies
      referred to in this Section 15.  Evidence of insurance provided to
      Landlord shall include an endorsement showing that Landlord, its representatives
      and the holders of any mortgages on the Property, are included as additional
      insureds on general liability insurance, and an endorsement whereby the insurer
      agrees not to cancel, non-renew or alter the policy without at least ten (10)
      calendar days prior written notice to Landlord and any mortgagee of
      Landlord.

     

    
      
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    (e)           In
      the event that Tenant fails to provide evidence of insurance required to be
      provided by Tenant under this Lease, prior to commencement of the Term, and
      thereafter during the Term, within ten (10) days following Landlord's request
      therefore, and ten (10) days prior to the expiration date of any such coverage,
      Landlord shall be authorized (but not required) to procure such coverage in
      the
      amounts stated with all costs thereof (plus a ten percent (10%) administrative
      fee) to be chargeable to Tenant and payable upon written invoice therefor,
      which
      amounts shall be deemed Additional Rent hereunder.

     

    (f)           The
      minimum limits of insurance required by this Lease, or as carried by Tenant,
      shall not limit the liability of Tenant nor relieve Tenant of any obligation
      hereunder.

     

    16.           INDEMNITY.

    

    (a)           Landlord
      and Landlord's representatives shall not be liable for any loss, injury or
      damage to person or property of Tenant, Tenant's agents, employees, contractors,
      invitees or any other person, whether caused by theft, fire, act of God, acts
      of
      the public enemy, riot, strike, insurrection, war, court order, requisition
      or
      order of governmental body or authority or which may arise through repair,
      alteration or maintenance of any part of the Property or failure to make any
      such repair or from any other cause whatsoever except to the extent caused
      by
      Landlord's gross negligence or willful misconduct and except as expressly
      otherwise provided herein.  Landlord shall not be liable for any loss,
      injury or damage arising from any act or omission of any other tenant or
      occupant of the Property.

    

    (b)           Tenant
      shall indemnify, protect and hold the Property, Landlord and its
      representatives, harmless of and from any and all claims, liability, costs,
      penalties, fines, damages, injury, judgments, forfeiture, losses (including
      without limitation diminution in the value of the Premises or the Property)
      or
      expenses (including without limitation attorneys' fees, consultant fees, testing
      and investigation fees, expert fees and court costs) arising out of or in any
      way related to or resulting directly or indirectly from (i) the use or occupancy
      of the Premises by Tenant and Tenant’s employees, agents, contractors and
      invitees and the parking spaces leased hereunder, (ii) the activities of Tenant,
      its agents, employees, contractors or invitees in, on or about the Premises
      (where not covered primarily by Landlord's insurance), (iii) any failure to
      comply with any applicable law, and (iv) any default or breach by Tenant in
      the
      performance of any obligation of Tenant under this Lease; provided, however,
      that the foregoing indemnity shall not be applicable to any claims to the extent
      arising by reason of the gross negligence or willful misconduct of
      Landlord.

     

    (c)           Tenant
      shall indemnify, protect, defend and hold the Property, Landlord and its
      representatives, harmless of and from any and all claims, liability, costs,
      penalties, fines, damages, injury, judgments, forfeiture, losses (including
      without limitation diminution in the value of the Premises) or expenses
      (including without limitation attorneys' fees, consultant fees, testing and
      investigation fees, expert fees and court costs) arising out of or in any way
      related to or resulting directly or indirectly from work or labor performed,
      materials or supplies furnished to or at the request of Tenant or in connection
      with obligations incurred by or performance of any work done for the account
      of
      Tenant in the Premises.

     

    
      
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    (d)           The
      provisions of this Section 16 shall survive the expiration or sooner termination
      of this Lease.

     

    (e)           Waiver
      of Subrogation.  Anything in this Lease to the contrary
      notwithstanding, Landlord and Tenant each waives all rights of recovery, claim,
      action or cause of action against the other, its trustees, officers, directors,
      partners, members, managers, agents and employees, for any loss or damage that
      may occur to the Premises or the Property, or any improvements thereto, or
      the
      Property or any personal property of such party therein or thereon, by reason
      of
      any cause required to be insured against under this Lease, but only to the
      extent of the coverage required or provided, whichever is higher, regardless
      of
      cause or origin, including negligence of the other party hereto, provided that
      such party's insurance is not invalidated thereby; and each party covenants
      that, to the fullest extent permitted by law, no insurer shall hold any right
      of
      subrogation against such other party.  Tenant shall advise its
      insurers of the foregoing and such waiver shall be a part of each policy
      maintained by Tenant that applies to the Premises any part of the Property
      or
      Tenant's use and occupancy of any part thereof, and such waiver shall not be
      effective unless and until Tenant provides written evidence to Landlord of
      acknowledgement by Tenant’s insurer of such waiver.

     

    17.           ESTOPPEL
      CERTIFICATE.

     

    Tenant
      shall, without charge, at any time and from time to time, within fifteen (15)
      business days after receipt of request no more than two (2) times per year
      from
      Landlord, execute, acknowledge and deliver to Landlord, and to any lender of
      Landlord (“Mortgagee”) or other party as may be designated by Landlord, a
      written estoppel certificate in form and substance as may be reasonably
      requested from time to time by Landlord, the other party or any Mortgagee,
      certifying to the other party, any Mortgagee, any purchaser of Landlord's
      interest in all or any part of the Property, or any other person or entity
      designated by the other party, as of the date of such estoppel certificate,
      the
      following: (a) whether Tenant is in possession of the Property; (b) whether
      this
      Lease is in full force and effect; (c) whether there are any amendments to
      this
      Lease, and if so, specifying such amendments; (d) whether there are any
      then-existing setoffs or defenses against the enforcement of any rights
      hereunder, and if so, specifying such matters in detail; (e) the dates, if
      any,
      to which any rent or other sums due hereunder have been paid in advance and
      the
      amount of any security deposit held by Landlord; (f) that Tenant has no
      knowledge of any then-existing defaults of Landlord under this Lease, or if
      there are such defaults, specifying them in detail; (g) that Tenant has no
      knowledge of any event having occurred that authorized the termination of this
      Lease by Tenant, or if such event has occurred, specifying it in detail; (h)
      the
      address to which notices to Tenant should be sent; and (i) any and all other
      matters reasonably requested by Landlord, any Mortgagee and/or any other person
      or entity designated by Landlord.  Any such estoppel certificate may
      be relied upon by the person or entity to whom it is directed or by any other
      person or entity that could reasonably be expected to rely on it in the normal
      course of business.  The failure of Tenant to execute, acknowledge and
      deliver such a certificate in accordance with this Section within fifteen (15)
      business days after a request therefore by Landlord shall constitute an
      acknowledgment by Tenant, which may be relied on by any person or entity who
      would be entitled to rely upon any such certificate, that such certificate
      as
      submitted by the requesting party to the other party is true and correct, and
      the requesting party is hereby authorized to so certify.  At Tenant's
      request, no more than one time per year, Landlord agrees to provide, within
      fifteen (15) business days of such request, a written estoppel certificate
      in
      form and substance as may be reasonably requested by Tenant certifying that,
      as
      of the date of such estoppel certificate, the following: (a) whether Tenant
      is
      in possession of the Property; (b) whether this Lease is in full force and
      effect; (c) whether there are any amendments to this Lease, and if so,
      specifying such amendments; (d) whether there are any then-existing setoffs
      or
      defenses against the enforcement of any rights hereunder, and if so, specifying
      such matters in detail; (e) the dates, if any, to which any rent or other sums
      due hereunder have been paid in advance and the amount of any security deposit
      held by Landlord; (f) that Landlord has no knowledge of any then-existing
      defaults of Tenant under this Lease, or if there are such defaults, specifying
      them in detail; (g) that Landlord has no knowledge of any event having occurred
      that authorized the termination of this Lease, or if such event has occurred,
      specifying it in detail; (h) the address to which notices to Landlord should
      be
      sent; and (i) any and all other matters reasonably requested by
      Tenant.

    

    
      
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    18.           CONDEMNATION.

    

    (a)           If
      the whole of the Premises shall be taken by any public or quasi-public authority
      under the power of eminent domain, condemnation, or expropriation or in the
      event of a conveyance in lieu thereof, then this Lease shall terminate as of
      the
      date on which possession of the Premises is required to be surrendered to the
      condemning authority, and Tenant shall have no claim against Landlord or the
      condemning authority for the value of the unexpired Term of this
      Lease.

    

    (b)           If
      any part of the Premises shall be so taken or conveyed, and if such partial
      taking or conveyance shall render the Premises unsuitable for the business
      of
      Tenant in the reasonable opinion of Landlord, then the Term of this Lease shall
      cease and terminate as of the date on which possession of the part of the
      Premises so taken or conveyed is required to be surrendered to the condemning
      authority, and Tenant shall have no claim against Landlord or the condemning
      authority for the value of any unexpired Term of this Lease.

    

    (c)           If
      the whole or any part of the Building or Property shall be so taken or conveyed,
      then in such events notwithstanding the fact that the Premises in whole or
      in
      part is not so taken or conveyed, Landlord shall have the right and power,
      at
      its option to be exercised by written notice to Tenant, to terminate this Lease
      effective either the date title vests in the condemning authority or the date
      Landlord is required to deliver possession of the part so taken or conveyed.
      In
      any event, Tenant shall have no claim against Landlord or the condemning
      authority for the value of any unexpired Term of this Lease.

    

    (d)           Tenant
      may, after securing Landlord, to Landlord's reasonable satisfaction, against
      all
      damages, interest, penalties and expenses, including, but not limited to,
      reasonable attorney's fees, by cash deposit or by surety bond in an amount
      and
      with a company reasonably satisfactory to Landlord, contest and appeal any
      such
      laws, ordinances, orders, rules, regulations or requirements provided same
      is
      done with all reasonable promptness.

    

    (e)           In
      the event all or a portion of the Building or Premises are so taken or conveyed,
      Tenant shall have the right to terminate this Lease if, in Tenant’s reasonable
      opinion, the Premises and/or Building is no longer adequate for Tenant’s
      needs.

    

    
      
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    (f)           Nothing
      herein shall preclude either Landlord or Tenant from making a separate claim
      for
      compensation and damages in the event the Premises and/or Building are
      condemned.

    

    19.           DAMAGE
      OR DESTRUCTION.  In the event of a fire or other casualty in the
      Premises, Tenant shall immediately give notice thereof to
      Landlord.  The following provisions shall then apply:

    

    (a)           If
      the damage is limited solely to the Premises and the Premises can, in Landlord's
      opinion, be made tenantable with all damage repaired within three (3) months
      from the date of damage (subject to receipt of applicable insurance proceeds),
      then Landlord shall be obligated to rebuild the same to substantially their
      former condition to the extent that the same is feasible (subject to reasonable
      changes which Landlord shall deem desirable and such changes as may be required
      by applicable law and subject to Landlord’s receipt of adequate insurance
      proceeds) and shall proceed with reasonable diligence to do so and this Lease
      shall remain in full force and effect.

     

    (b)           If
      Section 19(a) does not apply, Landlord shall so notify Tenant within sixty
      (60)
      calendar days after the date of the damage or destruction and either Tenant
      or
      Landlord may terminate this Lease within thirty (30) calendar days after the
      date of such notice, such termination notice to be effective
      immediately.

     

    (c)           During
      any period when Tenant’s use of the Premises is significantly impaired by damage
      or destruction as reasonably determined by Landlord, Rent shall abate in
      proportion to the degree to which Tenant’s use of the Premises is impaired until
      such time as the Premises are made tenantable, as reasonably determined by
      Landlord’s architect; provided that no such rental abatement shall be permitted
      if the casualty is a result of the gross negligence or willful misconduct of
      Tenant or Tenant’s employees, agents, contractors or invitees.

     

    (d)           The
      proceeds from any insurance paid by reason of damage to or destruction of the
      Property or the Premises or any part thereof insured by Landlord shall belong
      to
      and be paid to Landlord, subject to the rights of any holder(s) of any mortgage
      on the Property or the Premises.  Tenant shall be responsible, at its
      sole cost and expense, for the repair, restoration and replacement of (i) its
      fixtures, furnishings, equipment, machinery, merchandise and personal property
      in the Premises, and (ii) its alterations, additions, and improvements;
      provided, however, that Landlord shall have the option of requiring Tenant
      to
      assign to Landlord (or any party designated by Landlord) some or all of the
      proceeds payable to Tenant under this Section 19, and upon the receipt of
      adequate insurance proceeds to effect such repairs and restoration, Landlord
      shall be responsible for the repair and restoration of such insured
      property.

     

    
      
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    (e)           Landlord's
      repair and restoration obligations under this Section 19 shall not impair or
      otherwise affect the rights and obligations of the parties set forth elsewhere
      in this Lease.  Subject to Section 19(c), Landlord shall not be liable
      for any inconvenience or annoyance to Tenant, its employees, agents, contractors
      or invitees, or injury to Tenant's business resulting in any way from such
      damage or the repair thereof.  Landlord and Tenant agree that the
      terms of this Lease shall govern the effect of any damage to or destruction
      of
      the Premises with respect to the termination of this Lease and hereby waive
      the
      provisions of any present or future statute or law to the extent inconsistent
      therewith.

     

           20.                DEFAULT.  Any
      one or more of the following events shall constitute a default under the terms
      of this Lease ("Default"):

     

    (a)           the
      failure of Tenant to pay any Rent or other sum of money due hereunder to
      Landlord or any other person within ten (10) business days after written notice
      that the same is due;

     

    (b)           the
      filing of a petition proposing the adjudication of Tenant as a bankrupt or
      insolvent, or the reorganization of Tenant, or an arrangement by Tenant with
      its
      creditors, whether pursuant to the Federal Bankruptcy Act or any similar federal
      or state proceeding, unless such petition is filed by a party other than Tenant
      and is withdrawn or dismissed within sixty (60) business days after the date
      of
      its filing;

     

    (c)           the
      appointment of a receiver or trustee for the business or property of Tenant,
      unless such appointment is vacated within sixty (60) business days of its
      entry;

     

    (d)           the
      making by Tenant of an assignment for the benefit of its creditors;

     

    (e)           a
      default by Tenant in the performance or observance of any covenant or agreement
      of this Leases to be performed or observed by Tenant (other than as set forth
      in
      clauses (a) through (d) above), which default is not cured within forty (40)
      calendar days after the giving of written notice thereof by Landlord; unless
      Tenant is working with reasonable diligence to cure such default; provided,
      however, that if Tenant defaults in the performance of any such covenant or
      agreement more than two (2) times during the Term, then notwithstanding that
      such defaults have each been cured by Tenant, any further defaults shall be
      deemed a Default without the ability to cure.

    

               21.           LANDLORD’S
      REMEDIES; DAMAGES.

    

    (a)           Upon
      the occurrence of a Default which remains uncured for at least ten (10) days,
      Landlord, without notice to Tenant in any instance (except where expressly
      provided for below), may do any one or more of the following:

     

    (i)           perform,
      on behalf and at the expense of Tenant, any obligation of Tenant under this
      Lease which Tenant has failed to perform beyond any applicable grace or cure
      periods and of which Landlord shall have given Tenant notice (except in an
      emergency situation in which no notice is required), the cost of which
      performance by Landlord, together with interest thereon at the Default Rate
      from
      the date of such expenditure, shall be deemed Additional Rent and shall be
      payable by Tenant to Landlord as otherwise set forth herein;

     

    
      
        CONFIDENTIAL
          TREATMENT

        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (ii)           elect
      to terminate this Lease and the tenancy created hereby by giving notice of
      such
      election to Tenant without any right on the part of Tenant to save the
      forfeiture by payment of any sum due or by other performance of condition,
      term,
      agreement or covenant broken, or elect to terminate Tenant's possessory rights
      and all other rights of Tenant without terminating this Lease, and in either
      event, at any time thereafter without notice or demand and without any liability
      whatsoever, re-enter the Premises by force, summary proceedings or otherwise,
      and remove Tenant and all other persons and property from the Premises, and
      store such property in a public warehouse or elsewhere at the cost and for
      the
      account of Tenant without resort to legal process and without Landlord being
      deemed guilty of trespass or becoming liable for any loss or damage occasioned
      thereby; and

    

    (iii)           exercise
      any other legal and/or equitable right or remedy which it may have at law or
      in
      equity, including rights of specific performance and/or injunctive relief,
      where
      appropriate.

     

     

    (b)           If
      this Lease, or Tenant's right to possession, is terminated by Landlord as a
      result of Tenant’s Default hereunder, Tenant nevertheless shall remain liable
      for any Rent and damages which may be due or sustained prior to such
      termination, as well as all reasonable costs, fees and expenses incurred by
      Landlord in pursuit of its remedies hereunder, and/or in connection with any
      bankruptcy proceedings of Tenant, and/or in connection with renting the Premises
      to others from time to time plus either:

     

    (i)           the
      Rent which, but for the termination of this Lease, would have become due during
      the remainder of the Term, less the amount or amounts of rent, if any, which
      Landlord receives during such period from others to whom the Premises may be
      rented (other than any additional rent received by Landlord as a result of
      any
      failure of such other person to perform any of its obligations to Landlord),
      in
      which case Landlord's damages shall be computed and payable in monthly
      installments, in advance, on the first business day of each calendar month
      following the termination of this Lease and shall continue until the date on
      which the Term would have expired but for such termination, and any action
      or
      suit brought to collect any such damages for any month shall not in any manner
      prejudice the right of Landlord to collect any damages for any subsequent months
      by similar proceeding; or

     

    (ii)           limited
      damages equal to the present worth (as of the date of such termination) of
      the
      Rent which, but for the termination of this Lease, would have become due during
      the remainder of the Term, less the fair rental value of the Premises, as
      determined by an independent real estate appraiser or broker selected by
      Landlord, in which case Landlord's damages shall be payable to Landlord in
      one
      lump sum on demand, and shall bear interest at the Default
      Rate.  "Present worth" shall be computed by discounting such amount to
      present worth at a rate equal to one percentage point above the discount rate
      then in effect at the Federal Reserve Bank.

     

    (c)           Notwithstanding
      anything to the contrary set forth in this Section 21, Tenant shall be
      responsible for reasonable attorneys’ fees and related costs incurred by
      Landlord in enforcing its rights or collecting damages from Tenant, regardless
      of whether Landlord commences litigation against Tenant in connection
      therewith.  In addition, if either party commences an action against
      the other party arising out of or in connection with this Lease, the prevailing
      party shall be entitled to have and recover from the losing party reasonable
      attorneys' fees, costs of suit, investigation expenses and discovery costs,
      including costs of appeal.

     

    
      
        CONFIDENTIAL
          TREATMENT

        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    (d)           If
      this Lease is terminated pursuant to Section 21, then Landlord shall, in good
      faith, use commercially reasonable efforts to relet the Premises or any part
      thereof, alone or together with other premises, for such term or terms (which
      may be greater or less than the period which otherwise would have constituted
      the balance of the Term) and on such terms and conditions (which may include
      concessions or free rent and alterations of the Premises) as Landlord may
      determine in good faith, in its sole discretion, but Landlord shall not be
      liable for, nor shall Tenant's obligations hereunder be diminished by reason
      of,
      any failure by Landlord to relet the Premises or any failure by Landlord to
      collect any rent due upon such reletting.  In no event shall the
      foregoing be deemed an obligation by Landlord to lease the Premises prior to
      any
      other space to be leased by Landlord.

     

    (e)           
      EACH PARTY HERETO HEREBY WAIVES ANY RIGHT WHICH IT MAY OTHERWISE HAVE AT LAW
      OR
      IN EQUITY TO A TRIAL BY JURY (EXCEPT FOR PERSONAL INJURY OR PROPERTY DAMAGE
      IN
      EXCESS OF TWO MILLION DOLLARS ($2,000,000) IN CONNECTION WITH ANY SUIT OR
      PROCEEDING AT LAW OR IN EQUITY BROUGHT BY THE OTHER AGAINST THE WAIVING PARTY
      OR
      WHICH OTHERWISE RELATES TO THIS LEASE, AS A RESULT OF A DEFAULT OR
      OTHERWISE.  EACH OF THE PARTIES HERETO HEREBY (I) CERTIFIES THAT
      NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED,
      EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
      LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT
      IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS
      CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
      MUTUAL WAIVERS AND CERTIFICATIONS HEREIN. FURTHERMORE, NOTWITHSTANDING THE
      FOREGOING, EACH PARTY SHALL HAVE THE RIGHT AT LAW OR IN EQUITY TO A BENCH TRIAL
      IN CONNECTION WITH ANY SUIT OR PROCEEDING AT LAW OR IN EQUITY BROUGHT BY THE
      OTHER AGAINST THE WAIVING PARTY OR WHICH OTHERWISE RELATES TO THIS LEASE, AS
      A
      RESULT OF A DEFAULT OR OTHERWISE.  FURTHERMORE, TENANT AGREES THAT IN
      THE EVENT LANDLORD COMMENCES ANY SUMMARY PROCEEDING FOR NONPAYMENT OF RENT
      OR
      POSSESSION OF THE PREMISES, TENANT WILL NOT INTERPOSE ANY UNRELATED CLAIM IN
      SUCH PROCEEDING.

    

    22.           SUBORDINATION.  Tenant
      covenants and agrees that all of its rights hereunder are and shall be subject
      and subordinate to the lien of any mortgage or mortgages hereafter placed on
      the
      Premises or any part thereof, except Tenant's property or trade
      fixtures.  Such subordination shall be automatic, without the
      execution of any further subordination agreement by Tenant.  If,
      however, a written subordination agreement, consistent with this provision,
      is
      required by a mortgagee, Tenant agrees to execute, acknowledge and deliver
      the
      same and in the event of failure so to do, Landlord may, in addition to any
      other remedies for breach of covenant hereunder, execute, acknowledge and
      deliver the same as the agent or attorney in fact of Tenant, and Tenant hereby
      irrevocably constitutes Landlord its attorney-in-fact for such
      purpose.

    

    
      
        CONFIDENTIAL
          TREATMENT

        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    23.           ATTORNMENT
      AND NONDISTURBANCE.

    

    (a)           If,
      at any time during the Term of this Lease, Landlord shall be the holder of
      a
      leasehold estate covering premises which include the Premises, and if such
      leasehold shall terminate or be terminated for any reason, or if, at any time
      during the Term a mortgage to which this Lease is subordinate shall be
      foreclosed, Tenant agrees at the election and upon written demand of any owner
      of any portion of the Property which includes the Premises, or of any mortgagee
      in possession thereof, or of any holder of a leasehold thereafter affecting
      any
      portion of the Premises, or of any purchaser at foreclosure, to attorn, from
      time to time, to any such owner, mortgagee, holder or purchaser (“New Landlord”)
      upon the terms and conditions set forth herein for the remainder of the Term
      provided such New Landlord agrees not to disturb Tenant’s quiet use and
      enjoyment and occupancy of the Premises for the Term provided Tenant is not
      in
      default of its Lease obligations.  At Tenant’s written request,
      Landlord shall submit a non-disturbance agreement to Landlord’s present or
      future lender on such lender’s customary form pursuant to which such lender
      shall agree that so long as Tenant performs all the terms, covenants and
      conditions of this Lease, on Tenant's part to be performed, Tenant's possession
      and quiet use and enjoyment of the Premises under the provisions of this Lease
      shall not be disturbed by such lender.  Landlord shall have no
      responsibility to Tenant hereunder other than to submit a form of
      non-disturbance to such lender.

    

    (b)           The
      foregoing provisions shall inure to the benefit of any such owner, mortgagee,
      holder or purchaser (referred to as a “lender” for the purpose of this
      Section 23) and shall apply notwithstanding that this Lease may terminate
      upon the termination of any such leasehold estate or upon such foreclosure,
      and
      shall be self-operative upon any such demand, without requiring any further
      instrument to give effect to such provisions.  Tenant, however, upon
      demand of any such owner, mortgagee, holder or purchaser, agrees to execute,
      from time to time, an instrument in confirmation of the foregoing provisions,
      satisfactory to any such owner, mortgagee, holder or purchaser, in which Tenant
      shall acknowledge such attornment and set forth herein and shall apply for
      the
      remainder of the term originally demised in this Lease.  Nothing
      contained in this article shall be construed to impair any right otherwise
      exercisable by any such owner, mortgagee, holder or purchaser.

    

    24.           INSPECTION.  Tenant
      agrees that Landlord and its agents may enter upon the Premises at all
      reasonable times, with twenty-four (24) hours’ written notice (except without
      notice in the event of an emergency), to inspect the same, to submit them to
      a
      prospective purchaser, current or prospective lender, or a prospective tenant,
      or to make any changes or alterations or repairs which Landlord shall consider
      necessary for the protection, improvement or preservation thereof, or of the
      Building or to make changes in the plumbing, wiring, meters or other equipment,
      fixtures or appurtenances of the Building, or to post any notice provided for
      by
      law, or otherwise to protect any and all rights of Landlord.

    

    25.           NOTICES.  All
      notices required or permitted to be given under the provisions herein shall
      be
      in writing and shall be deemed to be properly given if delivered (a) by hand
      with receipt of delivery, or (b) by a nationally recognized delivery service
      or
      (c) by certified mail, return receipt requested.  In addition to the
      aforegoing, a copy shall also be sent by U.S. mail, postage pre-paid, to the
      address set forth herein.  Notice shall be deemed to be given on the
      first (1st) business day following such hand delivery or overnight mailing
      or on
      the third (3rd)
      business day following any certified mailing.  Notices shall be
      delivered to the following:

    

    
      
        CONFIDENTIAL
          TREATMENT

        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    To
      Landlord:                                                                                        To
      Tenant:

    

    1332
      LONDONTOWN ROAD,
      LLC                                                              GSE
      SYSTEMS, INC.

    c/o
      BTR
      Capital
      Group                                                                                   7133
      Rutherford Road

    1300
      York Road, Suite
      300                                                                              Baltimore,
      MD  21244

    Lutherville,
      MD
      21093                                                                                     Phone:
      410.277.3740

    Phone:
      410.252.5919

    

    Either
      party may, at any time, or from time to time, designate in writing a substitute
      address for that above set forth, and thereafter all notices to such party
      shall
      be sent in accordance with the above.

    

    26.           MISCELLANEOUS.

    

    (a)           This
      Lease and all of the covenants, conditions and provisions herein contained,
      shall inure to the benefit of and be binding upon the successors or successors
      and assigns of the respective parties hereto.

    

    (b)           This
      Lease shall be construed under the laws of the State of Maryland.

    

    (c)           Tenant
      agrees to be bound by the rules and regulations which Landlord may from time
      to
      time adopt and promulgate, and thereafter supplement and amend, applicable
      to
      the Premises, the Building, and the Property.  Notice of such rules
      and regulations (and any amendments) shall be given to Tenant, and Tenant agrees
      thereupon to comply with and observe all rules and regulations.  A
      breach of said rules and regulations shall be deemed a Default of this
      Lease.  If there is any conflict between the rules and regulations of
      this Lease, this Lease shall govern.

    

    (d)           Landlord
      and Tenant each represent and warrant to the other that it has not authorized
      any broker, agent or finder to act on its behalf, other than BTR/Capital Group,
      in cooperation with AGM Commercial Real Estate Advisors, for whom Landlord
      shall
      pay a brokerage commission in accordance with a separate written
      agreement.  Except for the foregoing, Landlord and Tenant each
      represent and warrant to the other that it does not have knowledge of any other
      broker, agent or finder purporting to act on its behalf in respect to this
      Lease
      transaction. Landlord and Tenant hereby agree to and shall indemnify and hold
      harmless the other from and against any cost, expense, claim, liability or
      damage resulting from or out of a breach of the representations and warranties
      contained in this Section.

    

    (e)           If
      Tenant is a corporation, each person executing this Lease on behalf of Tenant
      hereby covenants, represents and warrants that Tenant is duly qualified to
      do
      business in the State of Maryland; and (i) that Tenant has full right and
      authority to enter into this Lease, and (ii) that each person executing this
      Lease on behalf of Tenant is an officer of Tenant and is duly authorized to
      execute, acknowledge and deliver this Lease to Landlord.

    

    (f)           Headings
      contained herein are for convenience and reference only and do not define,
      limit
      or describe the scope or intent of any provision of this Lease.

    

    
      
        CONFIDENTIAL
          TREATMENT

        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    (g)           In
      the event any term, covenant or provision of this Lease or the application
      thereof to a person or circumstance shall be to any extent illegal, invalid
      or
      unenforceable, the remainder thereof or the application of such term, covenant
      or provision to persons or circumstances other than those as to which it is
      held
      illegal, invalid or unenforceable shall not be affected thereby and each term,
      covenant or provision of this Lease shall be valid and enforceable to the full
      extent permitted by law.

    

    (g)           This
      Lease shall be construed and interpreted according to the Laws of the State
      of
      Maryland.

    

    (h)           The
      covenants, conditions and agreements contained in this Lease shall bind and
      inure to the benefit of Landlord and Tenant and, except as otherwise provided
      in
      this Lease, their respective successors and assigns.

    

    (i)           This
      Lease shall not be binding upon Landlord or Tenant until Landlord shall execute
      and deliver to Tenant a fully executed counterpart.

    

    WITNESS
      the hand and seal of Landlord, and the hand of Tenant, and their respective
      corporate seals hereto affixed the day and year first above
      written.

    

    

      

      
        	
                WITNESS:

              	 	
                1332
                  LONDONTOWN ROAD, LLC

                 

              	 
	 /s/
                J P Robinson	
                By:

              	
                /s/
                  David Lipson

              	
                (SEAL)

              
	 	 	
                David
                  Lipson

              	 
	 	 	
                Authorized
                  Signatory

              	 

      

      

      

      [Signatures
        continue on following page]

      

      
        	
                WITNESS/ATTEST:

              	 	
                GSE
                  SYSTEMS, INC.

                 

              	 
	
                /s/
                  Pamela G. Schlachter

              	
                By:

              	
                /s/
                  Jeffery G. Hough

              	
                (SEAL)

              
	 	 	
                Name:  Jeffery
                  G. Hough

              	 
	 	 	
                Title:  Sr.
                  Vice President & CFO

              	 

      

      
        
          CONFIDENTIAL
            TREATMENT

          
          

        

        
          21

          
            

          

        

        
          
          

        

      

    EXHIBIT
      A

    

    PLAT
      SHOWING THE PREMISES

    

    
      
        CONFIDENTIAL
          TREATMENT

        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

     

     

     

     

    LANDLORD’S
      WORK

     

     

     

     

    Landlord
      will deliver the space on a
      turn-key basis based on the existing space plan/drawings attached as Exhibit
      B-1
      along with any reasonable, mutually agreed upon modifications to those drawings
      from this point forward.

     

    In
      addition to the improvements
      depicted on the drawings, Landlord will:

     

    
      	
              1.  

            	
              Deliver
                all building systems in good repair and
                operational;

            

    

     

    
      	
              2.  

            	
              Construct
                a parking lot in front of the Building with approximately  163
                spaces (Landlord will use diligent effort to finish the construction
                of
                the expanded parking lot prior to the Lease Commencement Date, however,
                the Lease Commencement Date shall not be contingent upon the completion
                of
                this lot);

            

    

     

    
      	
              3.  

            	
              Construct
                the appropriate ramps, handrails, and other details in order to make
                the
                front entrance of the building ADA accessible;
                and

            

    

     

    
      	
              4.  

            	
              Increase
                the height of the doorways on the first floor to accommodate commercially
                reasonable loading requirements of Tenant as notated on the attached
                floor
                plan

            

    

     

     

    
      	
              5.

            	
              Install
                an elevator near the entrance to the office building based on a design
                and
                standard consistent with other Class A office buildings in the
                area.

            

    

     

    
      
        CONFIDENTIAL
          TREATMENT

        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B-1

     

     

     

    PLANS

     

    
      
        CONFIDENTIAL
          TREATMENT

        
        

      

      
        24

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B-2

     

     

     

     

    NOTES

     

     

    

    CONFIDENTIAL
      TREATMENT

     

    25exh4-6_formofrep.htm

     

    
      

      

    

     

     

     

     

     

     

     

     

     

     

     

     

     

    EXHIBIT 4.6

     

    FORM OF REPRESENTATIVE'S PURCHASE WARRANT

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    

    

    

    

    

    THIS
WARRANT HAS NOT BEEN REGISTERED

    UNDER THE
SECURITIES ACT OF 1933

    AND IS
NOT TRANSFERABLE

    EXCEPT AS
PROVIDED HEREIN

    

    Healthy
Fast Food, Inc.

    

    PURCHASE
WARRANT

    

    Issued
to:

    

    PAULSON
INVESTMENT COMPANY, INC.

    

    Exercisable
to Purchase

    

    100,000
Units

    

    

    of

    

    

    HEALTHY
FAST FOOD, INC.

    

    

    

    

    

    

    

    

    

    

    

    

    Void
after _________, 2013

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    This is
to certify that, for value received and subject to the terms and conditions set
forth below, the Warrantholder (hereinafter defined) is entitled to purchase,
and the Company promises and agrees to sell and issue to the Warrantholder, at
any time on or after ________, 2009 and on or before _______, 2013, up to
100,000 Units (hereinafter defined) at the Exercise Price (hereinafter
defined).

     

    This
Warrant Certificate is issued subject to the following terms and
conditions:

     

    1.          
 Definitions of Certain
Terms.  Except as may be otherwise clearly required by the
context, the following terms have the following meanings:

     

    (a)  “Act”
means the Securities Act of 1933, as amended.

     

    (b)  “Cashless
Exercise” means an exercise of Warrants in which, in lieu of payment of the
Exercise Price, the Holder elects to receive a lesser number of Securities such
that the value of the Securities that such Holder would otherwise have been
entitled to receive but has agreed not to receive, as determined by the closing
price of such Securities on the date of exercise or, if such date is not a
trading day, on the next prior trading day, is equal to the Exercise Price with
respect to such exercise.  A Holder may only elect a Cashless Exercise
if Securities issuable by the Company on such exercise are publicly traded
securities.

     

    (c)     
“Class A Warrant” means a warrant defined as a Class A Warrant in the Warrant
Agreement.

     

    (d)  “Class B
Warrant” means a warrant defined as a Class B Warrant in the Warrant
Agreement.

     

    (e)  “Closing
Date” means the date on which the Offering is closed.

     

    (f)  “Commission”
means the Securities and Exchange Commission.

     

    (g)  “Common
Stock” means the common stock, par value $0.001, of the Company.

     

    (h)  “Company”
means Healthy Fast Food, Inc., a Nevada corporation.

     

    (i)  “Company’s
Expenses” means any and all expenses payable by the Company or the Warrantholder
in connection with an offering described in Section 6 hereof, except
Warrantholder’s Expenses.

     

    (j)  “Corporate
Financing Rule”  means Rule 2710 of the rules of the Financial
Industry Regulatory Authority.

     

    (k)  “Effective
Date” means the date on which the Registration Statement is declared effective
by the Commission.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    (l)  “Exercise
Price” means the price at which the Warrantholder may purchase one Unit upon
exercise of Warrants as determined from time to time pursuant to the provisions
hereof.  The initial Exercise Price is $_____ per Unit.

     

    (m)   
“Offering”
means the public offering of Units made pursuant to the Registration
Statement.

     

    (n)  “Participating
Underwriter” means any underwriter participating in the sale of the Securities
pursuant to a registration under Section 6 of this Warrant
Certificate.

     

    (o)  “Registration
Statement” means the Company’s registration statement (File No. 333 - _________)
as amended on the Closing Date.

     

    (p)  “Rules
and Regulations” means the rules and regulations of the Commission adopted under
the Act.

     

    (q)  “Securities”
means the securities obtained or obtainable upon exercise of the Warrant or
securities obtained or obtainable upon exercise, exchange, or conversion of such
securities.

     

    (r)  “Unit”
means one share of Common Stock and one Class A Warrant and two Class B
Warrants.

     

    (s)  “Unit
Warrant” means either a Class A Warrant or a Class B Warrant.

     

    (t)  “Warrant
Agreement” means that certain Warrant Agreement, dated as of ________, 2008, by
and between the Company and Computershare Trust Company relating to the issuance
of Unit Warrants.

     

    (u)  “Warrant
Certificate” means a certificate evidencing the Warrant.

     

    (v)  “Warrantholder”
means a record holder of the Warrant or Securities.  The initial
Warrantholder is Paulson Investment Company, Inc.

     

    (w)  “Warrantholder’s
Expenses” means the sum of (i) the aggregate amount of cash payments made to an
underwriter, underwriting syndicate, or agent in connection with an offering
described in Section 6 hereof multiplied by a fraction the numerator of which is
the aggregate sales price of the Securities sold by such underwriter,
underwriting syndicate, or agent in such offering and the denominator of which
is the aggregate sales price of all of the securities sold by such underwriter,
underwriting syndicate, or agent in such offering and (ii) all out-of-pocket
expenses of the Warrantholder, except for the fees and disbursements of one firm
retained as legal counsel for the Warrantholder that will be paid by the
Company.

     

    (x)  “Warrant”
means the warrant evidenced by this certificate, any similar certificate issued
in connection with the Offering, or any certificate obtained upon transfer or
partial exercise of the Warrant evidenced by any such certificate.

     

    2.   Exercise of
Warrant.  All or any part of the Warrant represented by this
Warrant Certificate may be exercised commencing on the first anniversary of the
Effective Date and 

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

      ending at
5 p.m. Pacific Time on the fifth anniversary of the Effective Date (the
“Expiration Date”) by surrendering this Warrant Certificate, together with
appropriate instructions, duly executed by the Warrantholder or by its duly
authorized attorney, at the office of the Company, 1075 American Pacific, Suite
C, Henderson, Nevada 89074; or at such other office or agency as the Company may
designate.  The date on which such instructions are received by the
Company shall be the date of exercise.  If the Holder has elected a
Cashless Exercise, such instructions shall so state.  Subject to the
provisions below, upon receipt of notice of exercise, the Company shall
immediately instruct its transfer agent to prepare certificates for the
Securities to be received by the Warrantholder upon completion of the Warrant
exercise.  When such certificates are prepared, the Company shall
notify the Warrantholder and deliver such certificates to the Warrantholder or
as per the Warrantholder’s instructions immediately upon payment in full by the
Warrantholder, in lawful money of the United States, of the Exercise Price
payable with respect to the Securities being purchased, if any.  If
the Warrantholder shall represent and warrant that all applicable registration
and prospectus delivery requirements for their sale have been complied with upon
sale of the Securities received upon exercise of the Warrant, such certificates
shall not bear a legend with respect to the Act.

    

     

    If fewer
than all the Securities purchasable under the Warrant are purchased, the Company
will, upon such partial exercise, execute and deliver to the Warrantholder a new
Warrant Certificate (dated the date hereof), in form and tenor similar to this
Warrant Certificate, evidencing that portion of the Warrant not
exercised.  The Securities to be obtained on exercise of the Warrant
will be deemed to have been issued, and any person exercising the Warrant will
be deemed to have become a holder of record of those Securities, as of the date
of the payment of the Exercise Price.

     

    Notwithstanding
the foregoing, in no event shall such Securities be issued, and the Company is
authorized to refuse to honor the exercise of the Warrant, if such exercise
would result in the opinion of the Company’s Board of Directors, upon advice of
counsel, in the violation of any law; and provided further that, if the Warrant
is exercisable solely for Securities listed on a securities exchange or for
which there are at least three independent market makers, the Company may elect
to redeem the Warrant submitted for exercise for a price equal to the difference
between the aggregate low asked price, or closing price, as the case may be, of
the Securities for which the Warrant is exercisable on the date of exercise and
the Exercise Price; in the event of such redemption, the Company will pay to the
holder of the Warrant the above-described redemption price in cash within 10
business days after receipt of notice of exercise.

     

    3.   Adjustments in Certain
Events.  The number, class, and price of Securities for which
this Warrant Certificate may be exercised are subject to adjustment from time to
time upon the happening of certain events as follows:

     

    (a)  If the
outstanding shares of the Company’s Common Stock are divided into a greater
number of shares or a dividend in stock is paid on the Common Stock, the number
of shares of Common Stock for which the Warrant is then exercisable will be
proportionately increased and the Exercise Price will be proportionately
reduced; and, conversely, if the outstanding shares of Common Stock are combined
into a smaller number of shares of Common Stock, the number of shares of Common
Stock for which the Warrant is then exercisable will be proportionately reduced
and the Exercise Price will be proportionately increased. The increases and
reductions provided for in this Section 3(a) will be made with the intent and,
as nearly as 

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

      practicable,
the effect that neither the percentage of the total equity of the Company
obtainable on exercise of the Warrants nor the price payable for such percentage
upon such exercise will be affected by any event described in this Section
3(a).

    

     

    (b)  In case
of any change in the Common Stock through merger, consolidation,
reclassification, reorganization, partial or complete liquidation, purchase of
substantially all the assets of the Company, or other change in the capital
structure of the Company, then, as a condition of such change, lawful and
adequate provision will be made so that the holder of this Warrant Certificate
will have the right thereafter to receive upon the exercise of the Warrant the
kind and amount of shares of stock or other securities or property to which he
would have been entitled if, immediately prior to such event, he had held the
number of shares of Common Stock obtainable upon the exercise of the
Warrant.  In any such case, appropriate adjustment will be made in the
application of the provisions set forth herein with respect to the rights and
interest thereafter of the Warrantholder, to the end that the provisions set
forth herein will thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the exercise of the Warrant.  The Company will not permit any change
in its capital structure to occur unless the issuer of the shares of stock or
other securities to be received by the holder of this Warrant Certificate, if
not the Company, agrees to be bound by and comply with the provisions of this
Warrant Certificate.

     

    (c)  When any
adjustment is required to be made in the number of shares of Common Stock, other
securities, or the property purchasable upon exercise of the Warrant, the
Company will promptly determine the new number of such shares or other
securities or property purchasable upon exercise of the Warrant and (i) prepare
and retain on file a statement describing in reasonable detail the method used
in arriving at the new number of such shares or other securities or property
purchasable upon exercise of the Warrant and (ii) cause a copy of such statement
to be mailed to the Warrantholder within thirty (30) days after the date of the
event giving rise to the adjustment.

     

    (d)  No
fractional shares of Common Stock or other securities will be issued in
connection with the exercise of the Warrant, but the Company will pay, in lieu
of fractional shares, a cash payment therefor on the basis of the mean between
the bid and asked prices of the Common Stock in the over-the-counter market or
the last sale price of the Common Stock on the principal exchange or other
trading facility on which the Common Stock is traded on the day immediately
prior to exercise.

     

    (e)  If
securities of the Company or securities of any subsidiary of the Company are
distributed pro rata to holders of Common Stock, such number of securities will
be distributed to the Warrantholder or its assignee upon exercise of its rights
hereunder as such Warrantholder or assignee would have been entitled to if this
Warrant Certificate had been exercised prior to the record date for such
distribution.  The provisions with respect to adjustment of the Common
Stock provided in this Section 3 will also apply to the securities to which the
Warrantholder or its assignee is entitled under this Section 3(e).

     

    (f)  Notwithstanding
anything herein to the contrary, there will be no adjustment made hereunder on
account of the sale by the Company of the Common Stock or other Securities
purchasable upon exercise of the Warrant.

     

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (g)  If,
immediately prior to any exercise of Warrants, there shall be outstanding no
securities of a class or series that, but for the provisions of this Section 3,
would be issuable upon such exercise (the “Formerly Issuable
Securities”), then, upon such exercise, and in lieu of the Formerly
Issuable Securities, the Company shall issue that number and kind of other
securities or property for which the Formerly Issuable Securities were most
recently exercisable or into which the Formerly Issuable Securities were most
recently convertible, as the case may be.

     

    4.   Reservation of
Securities.  The Company agrees that the number of shares of
Common Stock or other Securities sufficient to provide for the exercise of the
Warrant upon the basis set forth above will at all times during the term of the
Warrant be reserved for exercise.

     

    5.   Validity of
Securities.  All Securities delivered upon the exercise of the
Warrant will be duly and validly issued in accordance with their terms, and the
Company will pay all documentary and transfer taxes, if any, in respect of the
original issuance thereof upon exercise of the Warrant.

     

    6.   Registration of Securities
Issuable on Exercise of Warrant Certificate.

     

    (a)  The
Company will register the Securities with the Commission pursuant to the Act so
as to allow the unrestricted sale of the Securities to the public from time to
time commencing on the first anniversary of the Effective Date and ending at
5:00 p.m. Pacific Time on the fifth anniversary of the Effective Date (the
“Registration
Period”).  The Company will also file such applications and
other documents necessary to permit the sale of the Securities to the public
during the Registration Period in those states in which the Units were qualified
for sale in the Offering or such other states as the Company and the
Warrantholder agree to.  In order to comply with the provisions of
this Section 6(a), the Company is not required to file more than one
registration statement.  No registration right of any kind,
“piggyback” or otherwise, will last longer than five years from the Effective
Date.

     

    (b)  The
Company will pay all of the Company’s Expenses and each Warrantholder will pay
its pro rata share of the Warrantholder’s Expenses relating to the registration,
offer, and sale of the Securities.

     

    (c)  Except as
specifically provided herein, the manner and conduct of the registration,
including the contents of the registration, will be entirely in the control and
at the discretion of the Company.  The Company will file such
post-effective amendments and supplements as may be necessary to maintain the
currency of the registration statement during the period of its
use.  In addition, if the Warrantholder participating in the
registration is advised by counsel that the registration statement, in their
opinion, is deficient in any material respect, the Company will use its best
efforts to cause the registration statement to be amended to eliminate the
concerns raised.

     

    (d)  The
Company will furnish to the Warrantholder the number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as it may reasonably request in order to
facilitate the disposition of Securities owned by it.

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (e)  The
Company will, at the request of Warrantholders holding at least 50 percent of
the then outstanding Warrants, (i) furnish an opinion of the counsel
representing the Company for the purposes of the registration pursuant to this
Section 6, addressed to the Warrantholders and any Participating Underwriter,
(ii) furnish an appropriate letter from the independent public accountants of
the Company, addressed to the Warrantholders and any Participating Underwriter,
and (iii) make representations and warranties to the Warrantholders and any
Participating Underwriter.  A request pursuant to this subsection (e)
may be made on three occasions.  The documents required to be
delivered pursuant to this subsection (e) will be dated within ten days of the
request and will be, in form and substance, equivalent to similar documents
furnished to the underwriters in connection with the Offering, with such changes
as may be appropriate in light of changed circumstances.

     

    7.   Indemnification in
Connection with Registration.

     

    (a)  If any of
the Securities are registered, the Company will indemnify and hold harmless each
selling Warrantholder, any person who controls any selling Warrantholder within
the meaning of the Act, and any Participating Underwriter against any losses,
claims, damages, or liabilities, joint or several, to which any Warrantholder,
controlling person, or Participating Underwriter may be subject under the Act or
otherwise; and it will reimburse each Warrantholder, each controlling person,
and each Participating Underwriter for any legal or other expenses reasonably
incurred by the Warrantholder, controlling person, or Participating Underwriter
in connection with investigating or defending any such loss, claim, damage,
liability, or action, insofar as such losses, claims, damages, or liabilities,
joint or several (or actions in respect thereof), arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained,
on the effective date thereof, in any such registration statement or any
preliminary prospectus or final prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that the Company will
not be liable in any case to the extent that any loss, claim, damage, or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in any registration statement,
preliminary prospectus, final prospectus, or any amendment or supplement
thereto, in reliance upon and in conformity with written information furnished
by a Warrantholder for use in the preparation thereof.  The indemnity
agreement contained in this subparagraph (a) will not apply to amounts paid to
any claimant in settlement of any suit or claim unless such payment is first
approved by the Company, such approval not to be unreasonably
withheld.

     

    (b)  Each
selling Warrantholder, as a condition of the Company’s registration obligation,
will indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed any registration statement or other filing or any
amendment or supplement thereto, and any person who controls the Company within
the meaning of the Act, against any losses, claims, damages, or liabilities to
which the Company or any such director, officer, or controlling person may
become subject under the Act or otherwise, and will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer, or
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, or action, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue or alleged untrue statement of any material fact 

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

      contained
in said registration statement, any preliminary or final prospectus, or other
filing, or any amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in said registration
statement, preliminary or final prospectus, or other filing, or amendment or
supplement, in reliance upon and in conformity with written information
furnished by such Warrantholder for use in the preparation thereof; provided,
however, that the indemnity agreement contained in this subparagraph (b) will
not apply to amounts paid to any claimant in settlement of any suit or claim
unless such payment is first approved by the Warrantholder, such approval not to
be unreasonably withheld.

    

     

    (c)  Promptly
after receipt by an indemnified party under subparagraphs (a) or (b) above of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party, notify the
indemnifying party of the commencement thereof; but the omission to notify the
indemnifying party will not relieve it from any liability that it may have to
any indemnified party otherwise than under subparagraphs (a) and
(b).

     

    (d)  If any
such action is brought against any indemnified party and it notifies an
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party; and after notice from the
indemnifying party to such indemnified party of its election to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation.

     

    8.   Restrictions on
Transfer.  This Warrant Certificate and the Warrant may not be
sold, transferred, assigned, pledged, or hypothecated, or be the subject of any
hedging, short sale, derivative, put, or call transaction that would result in
the effective economic disposition of the securities by any person for a period
of one year immediately following the Effective Date, except as permitted
in subparagraph (g)(2) of the Corporate Financing Rule.  The Warrant
may be divided or combined, upon request to the Company by the Warrantholder,
into a certificate or certificates evidencing the same aggregate number of
Warrants.

     

    9.   No Rights as a
Shareholder.  Except as otherwise provided herein, the
Warrantholder will not, by virtue of ownership of the Warrant, be entitled to
any rights of a shareholder of the Company but will, upon written request to the
Company, be entitled to receive such quarterly or annual reports as the Company
distributes to its shareholders.

     

    10.   Notice.  Any
notices required or permitted to be given hereunder will be in writing and may
be served personally or by mail; and if served will be addressed as
follows:

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    If to the Company:

    

    Healthy
Fast Food, Inc.

    1075
American Pacific, Suite C

    Henderson,
NV  89074

    Attention:  President

    

    If to the Warrantholder:

    

    at the address furnished

    by the Warrantholder to
the

    Company for the purpose of

    notice.

     

     

    Any notice so given by mail will be
deemed effectively given 48 hours after mailing when deposited in the United
States mail, registered or certified mail, return receipt requested, postage
prepaid and addressed as specified above.  Any party may by written
notice to the other specify a different address for notice
purposes.

    

    11. 
 Applicable
Law.  This Warrant Certificate will be governed by and
construed in accordance with the laws of the State of Oregon, without reference
to conflict of laws principles thereunder.  All disputes relating to
this Warrant Certificate shall be tried before the courts of Oregon located in
Multnomah County, Oregon to the exclusion of all other courts that might have
jurisdiction.

     

    Dated as of ____________,
2008

    

    HEALTHY
FAST FOOD, INC.

    

    

    By:
______________________________________

    Name:  Henry
E. Cartwright

    Title:    President

    

    

    Agreed
and Accepted as of __________, 2008

     

    PAULSON
INVESTMENT COMPANY, INC.

    

    

    By:
______________________________________

    Name:

    Title:

    

    #
4708457_v4

     

    8

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