Document:

exv10w1

 

EXHIBIT 10.1

SUBLEASE FOR

THERACOM, INC., an Ohio corporation

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 	 	 	 	

	1.	 	
Premises
	 	 	1	 
	2.	 	
Term
	 	 	4	 
	3.	 	
Use
	 	 	7	 
	4.	 	
Rent
	 	 	8	 
	5.	 	
Deposit
	 	 	9	 
	6.	 	
Operating Expenses and Real Estate Taxes
	 	 	11	 
	7.	 	
Rent Escalation
	 	 	12	 
	8.	 	
Assignment and Subletting
	 	 	12	 
	9.	 	
Alterations
	 	 	15	 
	10.	 	
 Liens
	 	 	17	 
	11.	 	
Repairs and Maintenance
	 	 	17	 
	12.	 	
Signs and Advertisements
	 	 	18	 
	13.	 	
Deliveries and Moving of Subtenant’s Property
	 	 	18	 
	14.	 	
Equipment
	 	 	19	 
	15.	 	
Service and Utilities
	 	 	20	 
	16.	 	
Subtenant’s Responsibility for Damage
	 	 	20	 
	17.	 	
Right of Entry
	 	 	20	 
	18.	 	
[Omitted]
	 	 	21	 
	19.	 	
Indemnity
	 	 	21	 
	20.	 	
Insurance
	 	 	22	 
	21.	 	
Subtenant’s Contractor’s Insurance
	 	 	22	 
	22.	 	
Requirements for Subtenant’s Insurance Policies
	 	 	23	 
	23.	 	
Liability for Damage
	 	 	24	 
	24.	 	
Default of Subtenant
	 	 	24	 
	25.	 	
Waiver
	 	 	27	 
	26.	 	
Terms of Prime Lease
	 	 	27	 
	27.	 	
Sublease Subject to Prime Lease
	 	 	28	 
	28.	 	
Casualty and Condemnation
	 	 	30	 
	29.	 	
Right of Sublessor to Cure Subtenant’s Default
	 	 	30	 
	30.	 	
Brokers
	 	 	30	 
	31.	 	
Notices
	 	 	30	 
	32.	 	
Estoppel Certificates
	 	 	31	 
	33.	 	
Holding Over
	 	 	32	 
	34.	 	
Quiet Enjoyment
	 	 	32	 
	35.	 	
[Omitted]
	 	 	33	 
	36.	 	
Parking
	 	 	33	 
	37.	 	
Cafeteria
	 	 	33	 
	38.	 	
Satellite Dish/Emergency Generator/Conduit Rights
	 	 	33	 
	39.	 	
Miscellaneous
	 	 	35	 

 

 

EXHIBITS

	 	 	 
	A	 	
Site Plan Showing Premises
	 	 	 
	B	 	
List of Licensed FF&E
	 	 	 
	C	 	
Location of Exclusive Dock Area
	 	 	 
	D	 	
List of Initial Plans
	 	 	 
	E	 	
Form of Sublease Consent, Subordination, Non-disturbance and Attornment Agreement
	 	 	 
	F	 	
Declaration as to Date of Delivery and Acceptance of Possession of Premises
	 	 	 
	G	 	
Form of Letter of Credit
	 	 	 
	H	 	
Form of Sublease Guaranty
	 	 	 
	I	 	
Description of 6509 Equipment
	 	 	 
	J	 	
Location of Reserved Parking Spaces
	 	 	 
	K	 	
Location of Generator Area
	 	 	 
	L	 	
Prime Lease

 

 

SUBLEASE

     THIS SUBLEASE is made and entered into as of this 10th day of June, 2003
(the “Effective Date”) by and between MANUGISTICS, INC., a Delaware
corporation, hereinafter called “Sublessor,” and THERACOM, INC., an Ohio
corporation, hereinafter called “Subtenant.”

WITNESSETH:

     WHEREAS, by Office Lease dated December 19, 2000, as amended by First
Amendment to Lease dated June 14, 2001 (the “First Amendment”) and Second
Amendment to Lease dated March 24, 2003 (collectively, the
“Prime Lease”), JOHN
F. JAEGER, TRUSTEE (“Prime Landlord”) leased to Sublessor approximately 282,783
square feet of rentable area (the “Prime Lease Premises”) being the entire
rentable area of Buildings 1, 2 and 3 (said Buildings collectively referred to
as the “Project”) of the Danac Stiles Corporate Office Campus (the “Park”) at
the intersection of Great Seneca Highway and Key West Avenue, at the rent and
upon and subject to the terms and conditions set forth in the Prime Lease; and

     WHEREAS, Subtenant desires to sublet from Sublessor a portion of the Prime
Lease Premises;

     NOW, THEREFORE, the parties hereto, for themselves, their successors and
assigns, mutually covenant and agree as follows:

1. Premises

     A.     Sublessor hereby leases to Subtenant, and Subtenant hereby leases from
Sublessor, for the term and upon the conditions hereinafter provided,
approximately 72,599 square feet of rentable area (the Premises), being the
entire rentable area in the building (Building 3) situated at 9715-C Key West
Avenue, Rockville, Maryland (the “Building”). The Premises is cross-hatched
on the site plan attached hereto and made a part hereof as Exhibit A. The
Building and the land upon which it is situated is referred to as the
“Property”. Subtenant shall also be entitled to the use of the exterior
portions of the Park to the same extent as Sublessor’s rights thereto under the
Prime Lease. Sublessor hereby reserves exclusive use of Buildings 1 and 2 of
the Project, including the lobby areas therein.

     Subtenant accepts possession of the Premises in its “as is” condition
existing on the date possession is delivered to Subtenant (Sublessor represents
to its actual knowledge that the base building systems are in good working
condition), without requiring any alterations, improvements or decorations to
be made by Sublessor or at Sublessor’s expense, provided, however, that
Sublessor, at Sublessor’s expense, shall remove all furniture, trade fixtures,
tenant equipment and voice and data cabling from the Premises, other than the
furniture, fixtures, equipment and cabling specified on Exhibit B attached
hereto (the “Licensed FF&E”). Sublessor hereby licenses to Subtenant the
Licensed FF&E, for the Term and upon the terms and conditions set forth in this
Sublease. Subtenant represents that it has thoroughly examined the Building
and the Premises and is aware of and accepts the existing condition of the
Building and the Premises.

- 1 -

 

     B.     If and to the extent Sublessor markets any additional office space in
the Prime Lease Premises for subleasing during the term of this Sublease, then
Sublessor shall first offer such office space to Subtenant at the same terms
and conditions as the Premises, except at the then-prevailing market rent
including appropriate adjustments for market concessions and transaction
expenses for similar space in the Rockville/Gaithersburg submarket. Sublessor
shall deliver to Subtenant written notice (the “First Offer Notice”) of the
size and location of the space (the “First Offer Space”) that Sublessor desires
to market and the market rent and other economic terms and conditions upon
which Sublessor proposes to sublease the First Offer Space. If Subtenant
desires to lease the First Offer Space, then Subtenant shall deliver written
notice of exercise (the “Exercise Notice”) to Sublessor no later than ten (10)
business days following delivery of the First Offer Notice. In such event,
Sublessor and Subtenant shall attempt in good faith to negotiate the economic
terms and conditions for the subleasing of the First Offer Space. If (a)
Subtenant does not timely deliver the Exercise Notice to Sublessor, or (b)
Sublessor and Subtenant do not agree on the economic terms and conditions for
the subleasing of the First Offer Space within ten (10) business days after
delivery of the First Offer Notice, or (c) Sublessor and Subtenant do not
execute an amendment to this Sublease within ten (10) business days after
Sublessor delivers to Subtenant a draft amendment, then Sublessor shall be
entitled to sublease such First Offer Space to any third party at not less than
90% of the base rent set forth in the First Offer Notice. If Sublessor has not
leased the First Offer Space (or is not in bona fide good faith negotiation of
a final lease document for it) within six (6) months after the date of the
First Offer Notice, Sublessor may not then lease the First Offer Space to a
third party or Sublessor affiliate without first reoffering it to Subtenant
using the procedure set forth in this Section. It is expressly understood that
the Sublease Consent/SNDA (as hereinafter defined) shall not apply to any such
First Offer Space subleased by Subtenant, with the result that if the Prime
Lease is terminated prior to the expiration of the Term of this Sublease and
this Sublease is converted into an amended and restated lease between Prime
Landlord and Subtenant (the “Restated Direct Lease”), pursuant to the terms of
the Sublease Consent/SNDA, then this Section 1.B shall be null and void and the
Term of this Sublease with respect to any First Offer Space subleased by
Subtenant hereunder shall terminate upon termination of the Prime Lease.

     C.     Subtenant shall have the right to use both loading docks serving the
Project. Sublessor and Subtenant shall cooperate to share the truck court area
of the Project to accommodate deliveries. So long as Subtenant subleases all
of the rentable area of the Building, Subtenant shall have the option (the
“Exclusive Dock Election”) to have the right to the exclusive use of the
loading dock which does not have the load leveler, as indicated on Exhibit C
(the “Exclusive Dock”) by delivering to Sublessor written notice of the
Exclusive Dock Election within ninety days after the Rent Commencement Date.
If Subtenant timely delivers such a notice, then, (i) Subtenant at its expense
shall be entitled to secure and demise approximately 700 square feet of staging
area adjacent to the Exclusive Dock, as outlined on Exhibit C (the “Exclusive
Dock Area”); (ii) Subtenant shall have exclusive use of the Exclusive Dock and
Exclusive Dock Area at no additional charge or rent hereunder; and
(iii) Subtenant
shall not be entitled to use the other loading dock or area adjacent thereto,
as indicated on Exhibit C. If after making the Exclusive Dock Election
Subtenant subleases less than all of the rentable area in the Building, then
Subtenant shall share the Exclusive Dock and Exclusive Dock Area with other
tenants and occupants of the Building.

- 2 -

 

     D.     Subtenant, its employees and visitors shall have the right to use the
lobby of Building 2 (the “Building 2 Lobby”) in the Project for the purpose of
pedestrian access to (and from) Building 3 to (and from) the conference
facilities in Buildings 1 and 2 and the parking garage for the Project. The
Building 2 Lobby may be used only in accordance with the provisions of this
Section 1.D and in a manner consistent with the professional corporate image
projected by the Building 2 Lobby and Sublessor’s use thereof as of the
Effective Date.

     The following specific rules and regulations (“Lobby Rules”) apply to use
of the Building 2 Lobby: (a) use shall be only in a manner consistent with the
professional corporate image of the Building 2 Lobby; (b) all individuals shall
be dressed in appropriate business attire (which shall be deemed to include
“business casual” attire); (c) individuals shall not congregate or sit, but
shall use the Building 2 Lobby only for ingress and egress; (d) no food or
drink shall be consumed; (e) no loud or boisterous conversation (including on
cell phones) shall be allowed; (f) no cell phone ringers or music (including
personal radios/CDs/tape players, etc. with headphones) shall be allowed; and
(g) no smoking shall be allowed. In addition, the Lobby Rules shall include
such other reasonable rules and regulations promulgated by Sublessor for the
purpose of maintaining the professional corporate image of the Building 2
Lobby, so long as Sublessor delivers to Subtenant written notice of the new
rules at least fifteen (15) days before they are applicable.

     Sublessor reserves the right to employ temporary or permanent security
practices and procedures (including lockdowns) applicable to all persons using
the Building 2 Lobby as Sublessor in good faith deems reasonably necessary and
prudent in light of then existing security threats or situations. Sublessor
shall deliver to Subtenant such prior notice of such practices and procedures
as is practicable under the circumstances.

     Sublessor reserves the right to retain exclusive use of the Lobby on a
temporary basis from time to time for special events. Sublessor shall deliver
to Subtenant five (5) business days’ prior written notice of each such special
event, provided that if Sublessor’s employees receive less than five (5)
business days’ notice of a special event, then Sublessor shall deliver to
Subtenant prior oral or written advice of such special event concurrently with
notice to its employees.

     Subtenant’s corporate policy shall include adherence to the Lobby Rules,
and Subtenant shall reasonably cooperate with Sublessor in the enforcement
thereof. Subtenant is responsible for providing the Lobby Rules to Subtenant’s
employees and procuring the employees’ compliance with the Lobby Rules.

     If any individual violates any Lobby Rule (a “Violation”), then Sublessor
shall have the right to require such individual to immediately comply with the
Lobby Rules, and if such individual does not so immediately comply (or is not
in a position to immediately comply, e.g., appropriate business attire),
Sublessor shall have the right to require such individual to immediately vacate
the Building 2 Lobby and access Building 3 from the exterior. Sublessor shall
use its security guard(s)/lobby attendant(s) for this purpose, and shall
exercise such right in a professional and courteous manner, unless
circumstances dictate otherwise.

- 3 -

 

     If any employee of Subtenant commits a Violation, Sublessor may deliver
prompt written notice thereof to Subtenant (the “Warning Notice”). If
Sublessor delivers the Warning Notice, then Subtenant promptly shall issue a
verbal warning to such employee. If such employee of Subtenant commits a
Violation within 120 days after delivery of the Warning Notice, then Sublessor
may deliver prompt written notice thereof to Subtenant (the “Probation
Notice”). If Sublessor delivers the Probation Notice, then Subtenant shall
promptly issue a written warning to such employee. If such employee of
Subtenant commits a Violation within 120 days after delivery of the Probation
Notice, then Sublessor may deliver prompt written notice thereof to Subtenant
(the “Suspension Notice”). If Sublessor delivers the Suspension Notice, then
(a) such employee’s use of the Building 2 Lobby shall be suspended for the 120
day period following delivery of the Suspension Notice (the “Suspension
Period”), and (b) Subtenant shall pay to Sublessor, as liquidated damages, the
amount of Two Thousand Five Hundred Dollars ($2,500.00) (the “Suspension

Payment”), as additional rent under this Sublease due within thirty (30) days
after delivery of the Suspension Notice, provided, however, that if within such
thirty (30) day period Subtenant delivers to Sublessor written evidence that
such employee is no longer working at the Project and will not work at the
Project for the 120 day period following delivery of such written evidence,
then, so long as such employee does not work at the Project during such 120 day
period, the Suspension Payment with respect to such employee shall be waived.
After delivery of the Suspension Notice, Subtenant shall take such action as
Subtenant deems necessary, in Subtenant’s reasonable judgment, to prevent such
employee’s use of the Building 2 Lobby during the Suspension Period. If such
employee enters or attempts to enter the Building 2 Lobby or commits a
Violation during the Suspension Period, then Sublessor may deliver prompt
written notice thereof to Subtenant (the “Repeated Violation Notice”). If
Sublessor delivers the Repeated Violation Notice, then (a) the Suspension
Period for such employee shall be extended to 120 days following delivery of
the Repeated Violation Notice, and (b) Subtenant shall pay to Sublessor, as
liquidated damages, the amount of Ten Thousand Dollars ($10,000.00), as
additional rent under this Sublease due within thirty (30) days after delivery
of the Repeated Violation Notice. If such employee enters or attempts to enter
the Building 2 Lobby or commits a Violation during the extended Suspension
Period, then the provisions of the immediately preceding sentence shall apply
for each such incident with respect to such employee.

2. Term

     A.     The term of this Sublease shall commence on the date (the “Commencement
Date”) that is the later of (i) the date Sublessor obtains and provides to
Subtenant complete copies of the Required Approvals (as hereinafter defined)
and (ii) the date Sublessor delivers possession of the Premises to Subtenant as
required in Section 1. The term of this Sublease shall expire on May 31, 2012
(the “Expiration Date”). The term of this Sublease and any extensions thereof
shall be referred to as the “Term”. Simultaneously with execution of this
Sublease by Subtenant, Subtenant shall deliver to Sublessor (a) the space
plans, demolition plans and signage plans listed on Exhibit D attached hereto
(collectively, the “Initial Plans”) and (b) the Sublease Consent/SNDA (as
hereinafter defined).

     It is a condition precedent to Subtenant’s obligations hereunder that the
Required Approvals be obtained. If the Commencement Date has not occurred by
the date which is one hundred twenty (120) days after Subtenant delivers to
Sublessor (a) this Sublease, executed by Subtenant, in form agreed to by
Sublessor and Subtenant, (b) the Sublease Consent/SNDA,

- 4 -

 

executed by Subtenant, and (c) the Initial Plans (such date, as extended by
Subtenant Revision Days [as hereinafter defined], referred to as the
“Cancellation Date”), then (a) this Sublease shall be null and void, (b)
Sublessor shall return to Subtenant the Security Deposit and Monthly Rent paid
by Subtenant, and (c) Sublessor and Subtenant each shall be completely released
and discharged from all obligations of this Sublease and any and all liability
for damages claimed or suffered by the other party in any way related to this
Sublease or the Premises. Subtenant shall incorporate all reasonable revisions
to the Initial Plans requested in writing by Sublessor or Prime Landlord. The
period of time from the delivery of such written request to submittal of the
revised Initial Plans by Subtenant shall be referred to as the “Subtenant
Revision Days.”

     "Required Approvals” is defined to mean (a) execution by Prime Landlord of
the Sublease Consent/SNDA, (b) Prime Landlord’s and Sublessor’s written consent
to the Initial Plans, and (c) consent in writing to this Sublease by Bank of
America, NA, as required or permitted under the Subordination, Non-Disturbance
and Attornment Agreement between Sublessor, Prime Landlord and Bank of America,
NA, dated December 20, 2000. The “Sublease Consent/SNDA” as referenced above
means a separate agreement between Sublessor, Subtenant, and Prime Landlord in
the form of Exhibit E attached to this Sublease, that is a recognition
agreement as contemplated under Section 10.1(c) and (d) of the Prime Lease, and
under which Prime Landlord consents to this Sublease, waives its right of
recapture in connection therewith, consents to Subtenant’s use, and approves
the Initial Plans and the location of the Generator Area (as defined below).

     B.     The “Rent Commencement Date” shall be the earlier of (i) sixty (60)
days following the Commencement Date, or (ii) the date Subtenant commences
business operations in the Premises. When Subtenant accepts possession of the
Premises, Sublessor and Subtenant shall execute the “Declaration as to Date of
Delivery and Acceptance of Possession of Premises,” attached hereto as Exhibit
F, which shall specify the Commencement Date.

     C.     So long as there is no Event of Default (as hereinafter defined) on the
date Subtenant exercises this option to terminate or at any time thereafter to
and including the Termination Date (as hereinafter defined), Subtenant shall
have the one-time right to terminate this Sublease (or terminate this Sublease
with respect to one (1) or two (2) full floors, as described below) effective
as of the last day of a calendar month, no earlier than the last day of the
sixtieth (60th) full calendar month following the Rent Commencement Date, and
no later than the earlier of (a) the last day of the seventy-second (72nd) full
calendar month following the Rent Commencement Date or (b) June 30, 2009.
Subtenant may exercise this option to terminate only by delivering to Sublessor
no less than twelve (12) months’ prior written notice of termination (the
“Termination Notice”) accompanied by the applicable Termination Payment (as
hereinafter defined). The Termination Date shall be the last day of the
calendar month in with the first (1st) anniversary of the date of delivery of
the Termination Notice occurs. The “Termination Payment” shall be the
following “per rsf amount,” multiplied by the number of rentable square feet of
the Premises being terminated, with respect to a termination effective as of
the last day of the following applicable full calendar month following the Rent
Commencement Date:

- 5 -

 

	 	 	 	 	 
	Month	 	Termination Payment per RSF
	
	 	

	60	 	$	5.19	 
	61	 	$	5.10	 
	62	 	$	5.00	 
	63	 	$	4.91	 
	64	 	$	4.81	 
	65	 	$	4.72	 
	66	 	$	4.62	 
	67	 	$	4.52	 
	68	 	$	4.42	 
	69	 	$	4.32	 
	70	 	$	4.22	 
	71	 	$	4.12	 
	72	 	$	4.02	 

     For example, if Subtenant exercises this right to terminate with respect
to 48,399 square feet of rentable area with a Termination Date on the last day
of the sixty-sixth (66th) full calendar month following the Rent Commencement
Date, then the Termination Payment shall be $223,603.38.

     Subtenant’s one-time right to terminate pursuant to this Section 2.C may
be for either (a) the entire Premises, (b) the entire first (1st) floor only,
(c) the entire third (3rd) floor only, (d) the entire first (1st) and second
(2nd) floors only, or (e) the entire second (2nd) and third (3rd) floors only.
Subtenant shall designate in the Termination Notice which of (a) – (e) above
Subtenant elects. If Subtenant fails to so designate one of (a) – (e) above in
the Termination Notice, then the Termination Notice shall be deemed to apply to
the entire Premises.

     If Subtenant exercises this option to terminate with respect to the entire
Premises, then the Term shall terminate on the Termination Date with the same
force and effect as if such date were the Expiration Date. If Subtenant
exercises this option to terminate with respect to one (1) or two (2) full
floors only, then (i) the Term with respect to the full floors designated for
termination in the Termination Notice shall terminate on the Termination Date
with the same force and effect as if such date were the Expiration
Date;(ii) the
Term shall continue with respect to the full floor(s) not designated for
termination; (iii) Monthly Rent, Subtenant’s Share of OE/Tax Rent (as hereinafter
defined) and Subtenant’s non-reserved parking spaces shall be

- 6 -

 

reduced as of the Termination Date on a pro rata per rentable square foot
basis; (iv)Subtenant’s reserved parking spaces shall be reduced on a pro rata per

rentable square foot basis, as indicated on Exhibit J;
(v) if Subtenant occupies
less than two (2) full floors in the Building, then Subtenant shall not be
entitled to the Exterior Sign and at its expense shall remove the Exterior
Sign; and (vi) if Subtenant occupies less than one (1) full floor in the Building,
then Subtenant shall not be entitled to the Monument Sign and at its expense
shall remove the Monument Sign.

     If an uncured Event of Default occurs between the date Subtenant delivers
the Termination Notice and the Termination Date, Sublessor at its option may
rescind the Termination Notice (by delivering written notice of rescission to
Subtenant) and apply the Termination Payment to the payment of rent hereunder,
in which event Subtenant’s right to terminate shall be null and void and the
Term shall continue through the Expiration Date, subject to the terms and
conditions of this Sublease.

     Sublessor agrees that so long as (a) no material Event of Default exists,
and (b) Subtenant does not exercise its right to terminate this Sublease with
respect to the entire Premises as set forth in this Section 2.C, then Sublessor
will not exercise its rights granted under Section 10 of the First Amendment to
terminate the Prime Lease as to the Premises. If Sublessor exercises any
renewal right under Article 29 of the Prime Lease, Sublessor shall give notice
of the exercise to Subtenant concurrently with delivery of such notice to Prime
Landlord.

3. Use

     A.     Subtenant shall use and occupy the Premises solely for general office
and administrative purposes, pharmacy fulfillment/distribution and all other
lawful purposes in connection with Subtenant’s intended use, subject to and in
accordance with the Prime Lease and all applicable zoning and other
governmental regulations. Subtenant shall not use or occupy the Premises for
any unlawful purpose or in any manner that will violate the certificate of
occupancy for the Premises and/or the Building or that will constitute waste,
nuisance or unreasonable annoyance to Sublessor or other tenants or users of
the Park. Subtenant shall comply with all present and future laws (including
court orders and judicial decisions), ordinances (including zoning ordinances
and land use requirements), regulations and orders (including those made by any
public or private agency having authority over insurance rates) (collectively,
“Laws”) concerning the use, occupancy and condition of the Premises and all
equipment, furnishings and improvements therein. If any Law requires an
occupancy or use permit or license for the Premises or the operation of any
business conducted therein, Subtenant at its expense shall obtain and keep
current such permit or license and shall promptly deliver a copy thereof to
Sublessor. Sublessor agrees that if there is space in the Building not
occupied by Subtenant, Sublessor shall not lease or allow occupancy of such
space by a medical office user or a direct competitor of Subtenant.

     B.     Subtenant shall pay, before delinquency, any franchise, business, rent
or other taxes that are now or hereafter levied, assessed or imposed upon
Subtenant’s use or occupancy of the Premises, the conduct of Subtenant’s
business at the Premises, or Subtenant’s equipment, fixtures, furnishings,
inventory or personal property. If any such taxes are enacted, changed or
altered so that any of such taxes are levied against Sublessor, or the mode of
collection of such

- 7 -

 

taxes is changed so that Sublessor is responsible for collection or
payment of such taxes, then Subtenant shall pay as additional rent due
hereunder the amount of any and all such taxes.

     C.     Subtenant shall not cause or permit any Hazardous Materials (as defined
in this Section 3.C) to be generated, used, released, stored or disposed of in
or about the Park; provided, however, that Subtenant may use and store
reasonable quantities of such materials as may be necessary for Subtenant to
conduct normal general office operations in the Premises (including fuel for
the Generator), so long as (i) such use and storage complies with all Laws,
(ii) prior to such use and storage, Subtenant provides Sublessor and Prime
Landlord with all applicable Material Safety Data Sheets required by any
governmental agency, and (iii) Subtenant complies with all provisions of the
Prime Lease with respect thereto. “Hazardous Materials” shall mean (a)
“hazardous wastes,” as defined by the Resource Conservation and Recovery Act of
1976, as amended from time to time, (b) “hazardous substances,” as defined by
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time, (c) “toxic substances,” as defined by the
Toxic Substances Control Act, as amended from time to time, (d) “hazardous
materials,” as defined by the Hazardous Materials Transportation Act, as
amended from time to time, (e) oil or other petroleum products, (f)
chlorofluorocarbons, and (g) any substance whose presence could be detrimental
to any portion of the Park or hazardous to health or the environment.
Subtenant shall promptly remediate in compliance with all Laws any disposal,
release or threatened release of Hazardous Materials within or from the
Premises and, to the extent caused by Subtenant, its agents, employees,
invitees and any party claiming by, through or under Subtenant, any disposal,
release or threatened release of Hazardous Materials outside of the Premises,
provided that Subtenant shall deliver to Sublessor and Prime Landlord no less
than ten (10) days’ prior written notice of the intended remediation (including
the intended method of remediation and such further information as Prime
Landlord and/or Sublessor shall reasonably request), and Prime Landlord shall
have the right, exercisable by written notice to Sublessor and Subtenant, to
itself perform, or cause to be performed, such remediation, and Subtenant shall
reimburse Prime Landlord for the actual cost incurred by Prime Landlord in
connection with such remediation.

     D.     To Sublessor’s actual knowledge without independent investigation, the
Building as of the Effective Date is not in violation of any Laws relating to
the Americans with Disabilities Act of 1990, as amended (and the regulations
promulgated thereunder) (collectively, the “ADA”), Hazardous Materials, or any
applicable life safety code or requirement. For purposes herein, “Sublessor’s
actual knowledge” shall mean to the actual knowledge, without independent
investigation, of Kevin Hammond, Manager of Facilities.

4. Rent

     A.     Subtenant covenants and agrees to pay to Sublessor rent of any kind or
nature specified in this Sublease, including Monthly Rent (as defined in
Section 4.C) and additional rent (as defined in Section 4.D). Subtenant’s
obligation to pay rent shall begin on the Rent Commencement Date and shall
accrue until this Sublease expires or is terminated in accordance with its
terms, and all rent so accruing shall continue to remain an obligation of
Subtenant until completely satisfied.

- 8 -

 

     B.     Subtenant shall make all payments of rent by check, payable to
Sublessor and delivered to c/o Manugistics, Inc., 9715 Key West Avenue,
Rockville, Maryland 20850-3915, Attention: Real Estate Manager, or to such
other party or to such other address as Sublessor may designate from time to
time by written notice to Subtenant, without demand and without deduction,
set-off or counterclaim. If Sublessor at any time or times accepts rent after
it is due and payable, such acceptance shall not excuse delay upon subsequent
occasions, or constitute, or be construed as, a waiver of any or all of
Sublessor’s rights hereunder.

     C.     The base annual rent for the Premises, as of the Rent Commencement
Date, shall be One Million One Hundred Ninety Seven Thousand Eight Hundred
Eighty Three and 50/100ths Dollars ($1,197,883.50) payable in equal monthly
installments of Ninety Nine Thousand Eight Hundred Twenty Three and 63/100ths
Dollars ($99,823.63) each (“Monthly Rent”), subject however to adjustment as
provided in Section 7. The term “Monthly Rent” is deemed to mean Monthly Rent
as adjusted pursuant to Section 7.

     D.     Monthly Rent as specified above shall be payable in advance on the
first (1st) day of each calendar month during the Term from and after the Rent
Commencement Date, with the first such installment to be paid simultaneously
with the execution of this Sublease by Subtenant and applied as of the Rent
Commencement Date. Subtenant shall also pay to Sublessor with the payment of
Monthly Rent such payments of additional rent provided for in Section 6. All
sums, charges, expenses and costs due hereunder by Subtenant (other than
Monthly Rent), including without limitation charges for additional services
provided by Sublessor at Subtenant’s request, shall constitute “additional
rent” under this Sublease.

     E.     If the Rent Commencement Date, and therefore the obligation under this
Sublease to pay Monthly Rent hereunder, begins on a day other than the first
day of a calendar month, then Monthly Rent from such date until the first day
of the following calendar month shall be prorated at the rate of one-thirtieth
(1/30th) of Monthly Rent for each day of that month from and including the Rent
Commencement Date, payable in advance, as specified above.

     F.     If Subtenant fails to make any payment of Monthly Rent, additional rent
or any other sum due hereunder within five days after the date such payment is
due and payable (without regard to any grace period specified in Section 24),
then Subtenant shall pay to Sublessor, as additional rent upon demand, a late
charge of five percent (5%) of the amount not timely paid, together with
interest on such payment and late fee at the Interest Rate (as hereinafter
defined), accruing from the date such installment or payment was due and
payable to the date of payment thereof by Subtenant.

5. Deposit

     Simultaneously with execution of this Sublease by Subtenant, Subtenant
shall deposit with Sublessor the sum of One Hundred Fifty One Thousand Two
Hundred Forty-Seven and 92/100ths Dollars ($151,247.92) (the “Security
Deposit”), as security for the payment and performance by Subtenant of all of
Subtenant’s obligations, covenants, conditions and agreements under this
Sublease. If an Event of Default occurs, Sublessor shall have the right, but
not the obligation, to use, apply or retain all or any portion of the Security
Deposit for the payment of any Monthly Rent or additional rent in default or
for the payment of any other sum to

- 9 -

 

which Sublessor may become obligated to pay hereunder, or which Sublessor
may incur, by reason of Subtenant’s default. If Sublessor so uses or applies
all or any portion of the Security Deposit, Subtenant shall upon demand deposit
cash with Sublessor in an amount sufficient to restore the Security Deposit to
the full amount set forth above. Sublessor shall not be required to keep the
Security Deposit separate from its general accounts. If Subtenant defaults
under this Sublease, the Security Deposit shall not be deemed liquidated
damages and Sublessor may apply the Security Deposit to reduce Sublessor’s
damages, and such application of the Security Deposit shall not preclude
Sublessor from recovering from Subtenant all additional damages incurred by
Sublessor. Except for early return of the Security Deposit as provided in the
last paragraph of this Section 5, the Security Deposit, or so much thereof as
has not been applied by Sublessor, shall be returned, without payment of
interest or other increment for its use, to Subtenant (or at Sublessor’s
option, to the last assignee, if any, of Subtenant’s interest hereunder) within
thirty (30) days after the later of (i) the last day of the Term, (ii) the date
Subtenant vacated the Premises, or (iii) the date Subtenant has fulfilled all
of its obligations hereunder.

     No trust relationship is created between Sublessor and Subtenant regarding
the Security Deposit. Subtenant shall not look to any Mortgagee (as
hereinafter defined) or successor in title to the Premises for accountability
for the Security Deposit unless the Security Deposit has actually been received
by said Mortgagee or successor in title as security for Subtenant’s performance
under this Sublease. Sublessor may deliver the Security Deposit to any
purchaser of Sublessor’s interest in the Premises, and thereupon Sublessor
shall be discharged from any further liability with respect to the Security
Deposit. The term “Mortgagee” as used in this Sublease, shall be the party
having the benefit of a Mortgage (as hereinafter defined) and shall include a
mortgagee-in-possession. The term “Mortgage” as used in this Sublease shall
mean any mortgage, deed of trust or ground lease now or subsequently arising
upon the Premises, Building or Project, and all renewals, extensions,
modifications, recastings or refinancings thereof.

     Subtenant shall have the right to deliver to Sublessor an unconditional,
irrevocable commercial letter of credit (the “Letter of Credit”) in
substitution for the cash Security Deposit. The Letter of Credit shall (a) be
in the amount of the Security Deposit as set forth above; (b) be in form and
substance reasonably satisfactory to Sublessor and issued by a federally
insured commercial bank reasonably acceptable to Sublessor located in the
Washington, D.C. metropolitan area (the “Issuer”); (c) be payable in full or
partial draws; (d) expressly provide that it and/or the proceeds thereof are
transferable and assignable (without cost to Sublessor); and (e) shall include
an “evergreen” provision which provides that the Letter of Credit shall be
automatically renewed on an annual basis unless the Issuer delivers sixty (60)
days’ prior written notice of non-renewal to Sublessor by nationally recognized
overnight courier with receipt therefor and copy by facsimile, such that the
Letter of Credit remains in effect through the thirtieth (30th) day after the
expiration of the Term (subject to early return of the Security Deposit as
provided in the last paragraph of this Section 5). Sublessor hereby approves
the form of letter of credit attached hereto as Exhibit G.

     Sublessor shall be permitted to draw upon the Letter of Credit in any of
the following circumstances: (i) if an Event of Default (as defined in Section
24) occurs, (ii) if a default under this Sublease occurs and Sublessor is
prevented by applicable law from delivering notice of such default, (iii) if
the Issuer delivers notice of cancellation or non-renewal, and Subtenant does
not

- 10 -

 

deliver to Sublessor a replacement Letter of Credit in compliance with the
provisions of this Section 5 no later than thirty (30) days prior to the
expiration of the Letter of Credit, or (iv) if Subtenant does not deliver to
Sublessor a replacement Letter of Credit in compliance with the provisions of
this Section 5 within five (5) business days after demand by Sublessor if
Standard and Poor’s (or its successor or comparable [if no successor]) long
term debt rating of the Issuer falls below AA. In the event of a draw,
Sublessor may apply all or a portion of the proceeds thereof necessary to fully
compensate Sublessor under the same terms that Sublessor would be entitled to
apply the Security Deposit and retain the remaining proceeds thereof for the
remainder of the Term as the Security Deposit, and Subtenant upon demand shall
deposit with Sublessor cash or an additional letter of credit meeting the
requirements for the Letter of Credit as set forth in this Section 5, in an
amount sufficient to replace the funds so used by Sublessor and the entire
amount shall thereafter be held by Sublessor in cash (and the additional letter
of credit, if applicable). Subtenant may not seek to prevent Sublessor from
drawing on the Letter of Credit, but rather may only seek return of funds in
the event of a wrongful draw.

     If the Letter of Credit expires without draw, Subtenant shall within five
(5) business days thereafter deliver to Sublessor a new Letter of Credit in
accordance with the provisions of this Section 5.

     So long as there has been no Event of Default in the preceding twelve
calendar months, Sublessor shall return the Security Deposit to Subtenant
within thirty (30) days following the second (2nd) anniversary of the Rent
Commencement Date, and as of that date Subtenant shall have no further
obligation to maintain the Letter of Credit.

     Simultaneously with execution of this Sublease by Subtenant, Subtenant
shall cause AdvancePCS, a Delaware corporation, to execute and deliver the
Sublease Guaranty in the form attached hereto as Exhibit H.

6. Operating Expenses and Real Estate Taxes.

     A.     Commencing on the Rent Commencement Date and continuing throughout the
Term, Subtenant shall pay to Sublessor, as additional rent under this Sublease,
25.67% (“Subtenant’s Share”) of the amount of additional rent Sublessor is
obligated to pay pursuant to Article 5 of the Prime Lease (the “OE/Tax Rent”).

     B.     Commencing with the Rent Commencement Date, and at the beginning of
each year thereafter, Sublessor shall submit to Subtenant a copy of Prime
Landlord’s estimate of Operating Expenses for such year, as received by
Sublessor pursuant to Section 5.2 of the Prime Lease. Subtenant shall make
monthly installment payments on account of Subtenant’s Share of OE/Tax Rent on
an estimated basis, based on Prime Landlord’s estimate (including any Mid-Year
Adjustment, as defined in Article 5 of the Prime Lease, as applicable). Each
monthly installment shall be due on the first (1st) day of the month,
commencing on the first (1st) day of the month following the date which is
thirty (30) days after Sublessor delivers Prime Landlord’s estimate to
Subtenant. As of the date of this Sublease, Prime Landlord’s estimate of
OE/Tax Rent is $6.50 per rentable square foot. Accordingly, commencing on the
Rent Commencement Date and until such time as Sublessor delivers to Subtenant a
revised estimate from Prime Landlord, Subtenant shall pay to Sublessor, as additional rent payable
with each installment of

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Monthly Rent, estimated payments on account of
Subtenant’s Share of OE/Tax Rent, in the amount of Thirty Nine Thousand Three
Hundred Twenty Four and 46/100ths Dollars ($39,324.46) per month.

     C.     Sublessor shall submit to Subtenant a copy of each annual
reconciliation statement received from Prime Landlord pursuant to Section 5.3
of the Prime Lease, together with a similar statement with respect to
Subtenant’s Share of OE/Tax Rent. If the statement indicates an overpayment,
Sublessor shall refund the excess, without interest, to Subtenant with delivery
of the statement, or shall credit the excess against the next installment(s) of
Rent due under this Sublease. With respect to any annual reconciliation
statement, Sublessor, at Subtenant’s request, shall exercise its rights to
inspect and/or audit Prime Landlord’s books and records pursuant to Section 5.8
of the Prime Lease, on Subtenant’s behalf and at Subtenant’s risk, but only so
long as Subtenant delivers to Sublessor written notice of the action(s)
Subtenant desires Sublessor to take under the Prime Lease within ninety (90)
days after Sublessor delivers to Subtenant such annual reconciliation
statement. Subtenant shall reimburse Sublessor, as additional rent hereunder
payable within thirty (30) days after Sublessor delivers a statement therefor,
for all reasonable costs and expenses incurred by Sublessor in connection with
any such inspection and dispute on Subtenant’s behalf.

     D.     In addition to OE/Tax Rent, Subtenant shall pay for electricity for the
Premises, as set forth in Section 15.B of this Sublease.

     E.     Notwithstanding anything in this Sublease or the Prime Lease to the
contrary, the parties agree that (a) it is their intention that Subtenant
receive the benefit of the cap on Controllable Operating Expenses set forth in
Section 5.9 of the Prime Lease and that Sublessor pass through to Subtenant
only Subtenant’s proportionate share of those sums of OE/Tax Rent that
Sublessor is actually obligated to pay to Prime Landlord, and (b) if Real
Estate Taxes (as defined in the Prime Lease) are levied against the Building at
a different rate than levied against Buildings 1 and 2 of the Project due to
occupancy by different parties (on account of the Miller Bill or otherwise),
then Subtenant’s obligation to pay OE/Tax Rent hereunder shall be calculated
with respect to the Real Estate Taxes levied against the Building.

7. Rent Escalation

     Commencing on the first (1st) anniversary of the Rent Commencement Date
and on each anniversary of the Rent Commencement Date thereafter during the
Term (each of such dates being herein referred to as an “Adjustment Date”),
Monthly Rent shall be increased by an amount equal to the product of (i) the
Monthly Rent in effect immediately prior to the Adjustment Date (ignoring any
rental concessions or abatements then in effect) and (ii) one hundred three
percent (103%). The Monthly Rent, as adjusted, shall be due and payable as of
such Adjustment Date and on the first (1st) day of each month thereafter until
the next Adjustment Date or the end of the Term, whichever is applicable.

8. Assignment and Subletting

     A.     Subject to the provisions of Section 8.E below, Subtenant may not
assign or otherwise transfer this Sublease, or sublet (which for purposes of
this Sublease is defined to

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include permitting occupancy or use by another
party, whether by license, concession, occupancy agreement or otherwise) the
Premises, or any part thereof, or extend the term of any subletting or
occupancy agreement, or materially amend or modify the terms of any assignment,
transfer, subletting or other occupancy agreement (collectively, a “Transfer”)
without giving Sublessor ten (10) days prior written notice (“Transfer Notice”)
of such proposed Transfer. If Subtenant seeks to sublet a part of the Premises
(the “Sublet Portion”), the Transfer Notice shall also identify the area of the
proposed Sublet Portion. Except as set forth in Section 8.E below, within ten
(10) days after receipt of the Transfer Notice (the “Recapture Period”),
Sublessor shall have the option (a) to terminate this Sublease, if Subtenant
desires to assign this Sublease, or (b) to terminate this Sublease with regard
to the Sublet Portion, in either event by giving Subtenant written notice of
its election to exercise the option (“Recapture Notice”) within the Recapture
Period.

     The effective date of termination shall be the proposed Transfer
commencement/effective date as stated in the Transfer Notice. If the Transfer
Notice does not set forth a commencement/effective date, then the termination
date or sublease commencement date shall be the date that is sixty (60) days
after the date Sublessor delivers the Recapture Notice. Upon termination, all
of the rights and obligations of Sublessor and Subtenant under the terms of
this Sublease shall be terminated, or terminated with regard to the Sublet
Portion, except that Subtenant shall continue to be obligated to pay rent and
all other charges for the Premises, or the Sublet Portion, which accrue to the
date of termination.

     If Sublessor does not exercise its option to terminate or sublet,
Subtenant may assign this Sublease or sublet the Premises (or the Sublet
Portion, as applicable) within one hundred eighty (180) days after expiration
of the Recapture Period. Subtenant shall be required however to obtain
Sublessor’s prior written consent to (i) any assignee or any subtenant (which
for purposes of this Sublease is defined to include any licensee, occupant or
other user), and (ii) the form of documentation implementing such assignment or
subletting. For any proposed Transfer, Subtenant shall deliver to Sublessor a
written request for consent, which request shall set forth the proposed
transferee, commencement date, term and rent for the proposed Transfer, and
financial statements for the proposed transferee. Subtenant shall upon request
provide Sublessor with such other information as Sublessor may reasonably
require in connection with the proposed Transfer. Sublessor’s consent to any
assignee or subtenant shall not be unreasonably withheld, conditioned or
delayed, and it shall not be deemed unreasonable for Sublessor to withhold
consent to any proposed assignee or subtenant which is a direct competitor of
Sublessor. If Subtenant fails to present to Sublessor any sublease or
assignment agreement, fully executed by the parties thereto, within said one
hundred eighty (180) day period, Subtenant may not assign this Sublease or
sublet the Premises without first affording Sublessor the option to terminate
as set forth above in this Section 8.

     B.     Subtenant shall reimburse Sublessor, as additional rent due and payable
within thirty (30) days after Sublessor delivers a statement, for all actual,
reasonable and customary expenses, including without limitation reasonable
attorney’s fees, which Sublessor incurs by reason of or in connection with any Transfer (whether or not permitted
under this Sublease), and all negotiations and actions with respect thereto.

- 13 -

 

     C.     No Transfer shall be effected by operation of law without the prior
written consent of Sublessor, which consent may be withheld in Sublessor’s sole
and absolute discretion. For the purposes of this Sublease, the transfer
and/or issuance of fifty percent (50%) or more of the ownership voting interest
of Subtenant, if Subtenant is not a publicly held corporation, to any persons
or entities that are not owners of Subtenant on the date of this Sublease,
shall be deemed an assignment of this Sublease thereby giving Sublessor the
option to terminate this Sublease as provided above.

     D.     If a Transfer occurs (whether by operation of law or otherwise,
including without limitation an assignment pursuant to the provisions of the
federal bankruptcy or any other bankruptcy or insolvency laws), Subtenant shall
pay to Sublessor fifty percent (50%) of any Transfer Premium. “Transfer
Premium” shall mean (A) all rent, additional rent, payments or other
consideration for such Transfer, in excess of (B) the sum of (i) the rental and
other charges due under this Sublease during the term of the Transfer, and (ii)
the reasonable out-of-pocket costs actually incurred by Subtenant to obtain the
Transfer (including brokerage commissions, construction costs or allowances,
and other concessions granted to the subtenant or assignee). Subtenant shall
pay to Sublessor any Transfer Premium, as additional rent hereunder, no later
than ten (10) business days after receipt thereof by Subtenant. Acceptance by
Sublessor of any payments due hereunder shall not be deemed to constitute
approval by Sublessor of any Transfer, nor shall such acceptance waive any
rights of Sublessor hereunder. Not more than one time per year (except if an
Event of Default occurs, such limitation shall not apply), Sublessor shall have
the right to inspect and audit Subtenant’s books and records relating to any
Transfer. If Subtenant proposes to include any Licensed FF&E with a Transfer,
Sublessor shall have the option to revoke the license with respect to such
portion of the Licensed FF&E proposed to be included and remove such portion of
the Licensed FF&E from the Premises.

     E.     Notwithstanding the foregoing provisions of this Section 8, if
Subtenant proposes a Transfer to a Related Party (as hereinafter defined), then
Sublessor shall not be entitled to deliver a Recapture Notice with respect to
such Transfer, nor shall Sublessor be entitled to a Transfer Premium with
respect to such Transfer. All other terms and conditions of this Section 8
(including without limitation the requirement to obtain Sublessor’s consent as
provided in Section 8.A above) shall apply to such Transfer. For purposes
hereof, a “Related Party” shall mean an entity which is not a direct competitor
of Sublessor, and which is a parent, subsidiary or affiliate of Subtenant, any
corporation or other entity into or with which Subtenant may be merged or
consolidated, or a corporation or other entity purchasing all or substantially
all of Subtenant’s assets or ownership interests.

     F.     The consent by Sublessor to any Transfer shall not be construed as
either a consent to any further Transfer or a waiver or release of Subtenant
from the terms of any covenant or obligation under this Sublease, and Subtenant
shall remain fully liable as a primary obligor for the payment of all rent and
other charges payable by Subtenant under this Sublease and for the performance
of all other obligations of Subtenant under this Sublease. Subtenant’s
liability as primary obligor under this Sublease after any assignment of this
Sublease shall not be released, discharged or terminated or in any way affected
by any circumstance or condition including without limitation (a) any amendment or modification of this
Sublease, (b) any extension of time for performance under this Sublease, (c)
any waiver, consent, indulgence or other action, inaction or omission under
this Sublease, (d) any insolvency or bankruptcy of the

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assignee, (e) any
release of a party or collateral, failure to pursue any party or failure to
perfect a lien on any collateral, or (f) any suretyship defense. Sublessor’s
collection or acceptance of rent from any assignee of Subtenant shall not
constitute a waiver or release of Subtenant of any covenant or obligation
contained in this Sublease, nor shall any such Transfer be construed to relieve
Subtenant from complying with the provisions of this Section 8 with respect to
any further Transfer. If Subtenant is in monetary default of any term or
provision of this Sublease, Subtenant hereby assigns to Sublessor the rent due
from any subtenant of Subtenant and hereby authorizes and directs each such
subtenant, upon notice from Sublessor, to pay said rent directly to Sublessor,
the collection or acceptance of rent from any subtenant in such instance not to
constitute a waiver or release of Subtenant of any covenant or obligation
contained in this Sublease.

     G.     Subtenant may not mortgage or encumber this Sublease, without the prior
written consent of Sublessor which consent may be withheld in Sublessor’s sole
and absolute discretion.

     H.     In addition to the provisions of this Section 8, Subtenant shall obtain
all required consents under, and comply with all provisions of, the Prime Lease
with respect to assignment and subletting.

9. Alterations

     Subtenant shall make no alterations, modifications, installations,
additions or improvements (hereinafter collectively called “Alterations,” which
term shall include Alterations made in connection with Tenant’s initial
occupancy of the Premises [the “Initial Alterations"]), in or to the Premises
or the Building without Sublessor’s prior written consent, which shall not be
unreasonably withheld, except that Sublessor may withhold its consent for any
or no reason with regard to requested Alterations by Subtenant which may
adversely affect the structure of the Building or the mechanical, plumbing or
electrical systems of the Building, or will be visible from the exterior of the
Premises. Subtenant shall have the right to engage architects, engineers and
construction managers of its selection subject only to the prior written
approval (not to be unreasonably withheld, conditioned or delayed) of
Sublessor, and in all cases, the approval of Prime Landlord under the Prime
Lease. Subtenant, at its sole cost and expense, shall provide Sublessor with a
copy of the original or revised full-floor mechanical and electrical plans for
the floor or floors on which the Alterations are to be made, revised by an
architect or engineer licensed in the State of Maryland and reasonably approved
by Sublessor, to show Subtenant’s proposed Alterations. Subtenant acknowledges
that Sublessor’s review and approval of plans for Alterations is not conducted
for the purposes of determining the accuracy or completeness of the plans, or
compliance with applicable codes and government regulations, including without
limitation the ADA, or their sufficiency for purposes of obtaining a building
permit, all of which remain the responsibility of Subtenant. Sublessor shall
not be liable or responsible for any losses or damages resulting from any
insufficiency of the plans, including any delays in obtaining building
permit(s) or any delays due to changes in the plans required by the applicable
government or regulatory agencies reviewing such plans. If Sublessor hires an
independent architect or engineer to review Subtenant’s Alterations (provided
the nature of the Alteration is beyond Sublessor’s in house capabilities), Subtenant shall reimburse
Sublessor for all reasonable expenses (not to exceed Five Thousand Dollars
($5,000.00) per request) incurred in connection with the independent architect
or engineer (whose fees shall be consistent with then current range

- 15 -

 

of market
rates), as additional rent hereunder due within thirty (30) days after
Sublessor delivers to Subtenant a statement therefor. To the extent Prime
Landlord charges Sublessor for any review of Subtenant’s proposed Alterations
pursuant to the Prime Lease, Subtenant shall reimburse Sublessor for such
amount, as additional rent hereunder due within thirty (30) days after
Sublessor delivers to Subtenant a statement therefor. If any Alterations are
made without the prior written consent of Sublessor, Sublessor may correct or
remove the same, and Subtenant shall be liable for any and all expenses
incurred by Sublessor therefor.

     All Alterations shall be made at Subtenant’s sole expense, at such times
and in such manner as Sublessor may reasonably designate and only by such
contractors or mechanics as are approved in writing by Sublessor, and in all
cases, subject to Prime Landlord’s approval under the Prime Lease. Approval of
contractors or mechanics by Sublessor, which approval may not be unreasonably
withheld, shall be based upon the contractors or mechanics being properly
licensed, their financial posture, experience and past job performance. Each
contractor and mechanic performing Alterations shall, prior to entry onto the
Premises, deliver to Sublessor reasonably satisfactory evidence that it is
licensed in the State of Maryland as a contractor, and is currently maintaining
the insurance required by Section 21. All Alterations shall be commenced
promptly, performed in accordance with approved plans and specifications, and
diligently prosecuted to completion. Upon substantial completion of any
Alterations, Subtenant shall provide to Sublessor completion affidavits,
“as-built” plans, receipted bills covering all labor and materials, and a
properly executed waiver and release of liens, in form approved by Sublessor,
from all each contractor, mechanic and materialman who has provided materials
or services in connection with such Alterations.

     As part of the Initial Alterations, Subtenant shall have the right to
modify the existing base building security system in the Building or install
its own security system, subject to the prior written approval of Sublessor
(not to be unreasonably withheld, conditioned or delayed), and the prior
written approval of Prime Landlord under the Prime Lease. Sublessor agrees to
charge no oversight fees or temporary fees associated with utilities in
connection with the Alterations, and Sublessor shall be responsible for any
required payments to Prime Landlord in connection with approval fees or third
party consultant reviews of the Sublease including without limitation Sublease
approval and review of construction documents, up to a maximum of Five Thousand
and 00/100ths Dollars ($5,000.00).

     Prior to removing any tenant improvements, alterations, fixtures,
furniture or equipment located on the Premises as of the Effective Date
(collectively, “Sublessor Installations”), Subtenant shall advise Sublessor
thereof and afford Sublessor the opportunity to remove such Sublessor
Installations as Sublessor elects to retain.

     All Alterations to the Premises, whether made by Sublessor or Subtenant,
and whether at Sublessor’s or Subtenant’s expense, or the joint expense of
Sublessor and Subtenant, shall during the Term be the property of Subtenant,
and upon expiration or termination of the Term shall become the property of
Sublessor, except as required to be removed (to the extent applicable) pursuant
to Section 11.

     Subtenant shall remove all of Subtenant’s property and trade fixtures at
the expiration or earlier termination of the Term. If Subtenant does not
remove Subtenant’s property or trade

- 16 -

 

fixtures at the expiration or earlier
termination of the Term, such property shall become the property of Sublessor.
If Subtenant fails to remove its property or trade fixtures or the Alterations
required to be removed (to the extent applicable) pursuant to Section 11 on or
before the expiration or earlier termination of the Term, then Sublessor, after
not less than three days’ notice to Subtenant, may remove such property, trade
fixtures and Alterations from the Premises at Subtenant’s expense, and
Subtenant hereby agrees to pay to Sublessor, as additional rent, the cost of
such removal, together with any and all actual damages sustained by Sublessor
directly resulting from Subtenant’s failure to remove same. Said amount of
additional rent shall be due and payable upon receipt by Subtenant of a written
statement of costs and actual damages from Sublessor.

     In addition to the provisions of this Section 9, Subtenant shall obtain
all required consents under, and comply with all provisions of, the Prime Lease
with respect to Alterations. During the Term, Sublessor shall cooperate with
Subtenant to obtain the timely review and decision of Prime Landlord with
respect to Subtenant’s proposed Alterations.

10. Liens

     If any lien is filed against the Premises or the Property for work, labor,
services, or materials done for or supplied to or claimed to have been done or
supplied to Subtenant, such lien shall be discharged by Subtenant, at its sole
cost and expense, within ten (10) business days after the date Subtenant
receives written demand from Sublessor to discharge said lien, by the payment
thereof or by filing any bond required by law. If Subtenant fails to discharge
any such lien, Sublessor may, at its option, discharge the same and treat the
cost thereof as additional rent, due and payable upon receipt by Subtenant of a
written statement of costs from Sublessor. Such discharge of any lien by
Sublessor shall not be deemed to waive or release Subtenant from its default
for failing to discharge same.

11. Repairs and Maintenance

     Subtenant shall maintain the Premises in good order, repair and condition,
and in compliance with Laws, ordinary wear and tear and damage from casualty
not required to be insured by Subtenant or condemnation excepted, subject to
the performance of the maintenance obligations of Prime Landlord under Section
12 of the Prime Lease. In making repairs and replacements, Subtenant shall use
materials equal in kind and quality to the original work, and shall comply with
the provisions of Section 9. At the expiration or earlier termination of the
Term, Subtenant shall surrender the Premises broom clean, free of subtenants or
other occupants, and in a condition considered to be normal and customary for
usable office space within the I-270 corridor, ordinary wear and tear and
damage from casualty not required to be insured by Subtenant or condemnation
excepted. If Sublessor does not exercise its option to extend the term of the
Prime Lease with respect to the Building, then with respect to the Premises (or
any portion thereof) for which Subtenant did not exercise its option to
terminate as set forth in Section 2.C of this Sublease, Subtenant shall be
required to restore Alterations only to the extent required by Prime Landlord.
Subtenant shall insure, maintain, repair and replace the Licensed FF&E as
prudent to keep it in good condition and repair, and shall surrender the
Licensed FF&E (including any replacements) to Sublessor at the expiration or earlier
termination of the Term, in

- 17 -

 

substantially the same order and condition as it
was on the Commencement Date, ordinary wear and tear and condemnation excepted.

     To the extent Subtenant’s use or uses of the Premises or Subtenant’s
manner of operation creates a need or requirement under applicable statute,
ordinance or regulation of any governmental authority (including, without
limitation, the ADA) to modify or alter the Premises, supporting facilities, or
access thereto, or the manner of operation, maintenance and repair thereof,
Subtenant shall be fully responsible for the expense to undertake such changes,
and to obtain approval from Sublessor pursuant to
Section 9 to undertake such
changes.

12. Signs and Advertisements

     No sign, advertisement or notice (including without limitation those of a
temporary nature) shall be inscribed, painted, affixed or displayed on any part
of the outside or inside of the Building, except with Prime Landlord’s and
Sublessor’s prior written consent (which consent of Sublessor shall not be
unreasonably withheld, conditioned, or delayed), and then only in such place,
number, size, color and style (i.e., Building standard lettering) as is
authorized by Prime Landlord and Sublessor. If any such sign, advertisement or
notice is exhibited without first obtaining Prime Landlord’s and Sublessor’s
written consent, Prime Landlord and Sublessor shall have the right, after five
(5) business days’ notice, to remove the violating signage, and Subtenant shall
reimburse Prime Landlord or Sublessor, as applicable, as additional rent due
and payable within thirty (30) days after delivery of a statement, for all
reasonable, actual expenses incurred by Prime Landlord or Sublessor, as
applicable, therefor.

     Notwithstanding the foregoing provisions of this Section 12, Subtenant
shall have the exclusive right to erect a sign on the exterior of the Building
(the “Exterior Sign”) and the non-exclusive right to erect a prominent ground
mounted monument sign (the “Monument Sign”), each in size, location and style
as mutually and reasonably agreed by Sublessor, Subtenant and Prime Landlord,
provided that if (i) Subtenant occupies less than two (2) full floors in the
Building, then Subtenant shall not be entitled to the Exterior Sign and at its
expense shall remove the Exterior Sign, and (ii) if Subtenant occupies less than
one (1) full floor in the Building, then Subtenant shall not be entitled to the
Monument Sign and at its expense shall remove the Monument Sign. Additionally,
Sublessor shall install at its expense a Building directory with the names of
the key Subtenant management personnel displayed in the Building lobby for the
benefit of Subtenant, subject to the approval of Prime Landlord under the Prime
Lease and in full compliance with all applicable laws and codes.

13. Deliveries and Moving of Subtenant’s Property

     All moving of furniture, equipment and other material within the exterior
public areas of the Property shall be under the direct reasonable control and
supervision of Sublessor who shall, however, not be responsible for any damage
to or charges for moving the same. Any special arrangements for the moving of
Subtenant’s furniture, equipment or other material shall be at Subtenant’s
expense. Subtenant shall remove promptly from the public areas of the Property
any furniture, equipment or other property of Subtenant.

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14. Equipment

     A.     Subtenant shall not, without obtaining the prior written consent of
Sublessor (which consent shall not be unreasonably withheld, conditioned or
delayed) and Prime Landlord (pursuant to the terms of the Prime Lease) install
any equipment which requires electricity consumption in excess of the capacity
of the electrical system serving the Premises. If any or all of Subtenant’s
equipment requires electricity consumption in excess of the capacity of the
electrical system serving the Premises, all additional transformers,
distribution panels and wiring that may be required to provide the amount of
electricity required for Subtenant’s equipment shall be installed by Subtenant
at its expense, in accordance with the requirements of Prime Landlord (pursuant
to the Prime Lease) and the reasonable requirements of Sublessor.

     B.     Subtenant shall not install any equipment which will or may necessitate
any changes, replacements or additions to, or in the use of, the Building
systems, without obtaining the prior written consent of Sublessor and Prime
Landlord. If any equipment causes noise or vibration that may be transmitted
to the structure of the Building or to any other space in the Building,
Subtenant at its expense shall install such equipment on vibration eliminators
or other devices sufficient to eliminate such noise and vibration.

     C.     Sublessor shall have the right to reasonably prescribe the weight and
position of all heavy equipment and fixtures, including, but not limited to,
data processing equipment, record and file systems, and safes which Subtenant
intends to install or locate within the Premises. Subtenant shall obtain
Sublessor’s and Prime Landlord’s prior review and approval before installing or
locating heavy equipment and fixtures in the Premises, and if installation or
location of such equipment or fixtures, in Sublessor’s opinion, requires
structural modifications or reinforcement of any portion of the Premises or the
Building, then Sublessor shall notify Subtenant in advance (prior to making any
structural modification or reinforcement) and if Subtenant does not elect to
relocate or change such equipment or fixtures, then Sublessor shall make such
modifications or reinforcements and Subtenant shall reimburse Sublessor, as
additional rent due and payable within thirty (30) days after Sublessor
delivers a statement, for all expenses incurred by Sublessor to make such
required modifications or reinforcements, and Subtenant shall not install such
equipment or fixtures until such modifications or reinforcements have been
completed.

     D.     During the Term, Subtenant shall be entitled to use the 6509 Access
Layer Switches as identified on Exhibit I attached hereto (the “6509
Equipment”). Subtenant shall maintain, repair and replace the 6509 Equipment
as prudent to keep it in good condition and repair, and shall surrender the
6509 Equipment to Sublessor at the expiration or earlier termination of the
Term, in the same order and condition as it was as of the Commencement Date,
ordinary wear and tear and damage from condemnation excepted. If Subtenant
exercises its right to terminate pursuant to Section 2.C of this Sublease with
respect to one (1) or two (2) floors only, then on or before the Termination
Date Subtenant shall surrender the 6509 Equipment on such floor(s) terminated
in the condition required above in this Section 14.D.

     E.     Sublessor specifically consents to Subtenant’s installation of the
commercial refrigerator room shown on the Initial Plans and the uninterruptible
power supply (UPS) system shown on the Initial Plans.

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15. Service and Utilities

     A.     Subtenant shall be entitled, without charge (other than OE/Tax Rent),
to the services and utilities provided by Prime Landlord in the Building
pursuant to Article 8 of the Prime Lease. Building hours are 8:00 a.m. to 6:00
p.m., Monday through Friday, other than holidays observed by the federal
government, and 9:00 a.m. to 1:00 p.m. on Saturdays. In addition, HVAC shall
be provided without separate charge from 6:00 p.m. to 8:00 p.m. Monday through
Friday (“Supplemental Hours”). For use of the HVAC system at times other than
Building hours or Supplemental Hours, Subtenant shall pay to Sublessor, as
additional rent, Fifty Dollars ($50.00) per hour.

     B.     Subtenant shall pay directly to the electricity provider all charges
for electricity used on the Premises, commencing on the Rent Commencement Date,
as measured by the separate electric meter for the Premises.

     C.     No interruptions, curtailments, stoppages or suspensions of services,
utilities or systems shall render Sublessor liable in any respect for damages
to either person or property nor shall the same be the basis (i) for any
abatement, reduction or rebate of rent or any other sums payable by Subtenant
to Sublessor hereunder, (ii) for relieving Subtenant from any of Subtenant’s
obligations hereunder, or (iii) for any claim by Subtenant that Subtenant has
been constructively evicted or disturbed or interfered with Subtenant’s use,
possession or enjoyment of the Premises. To the extent Sublessor is entitled
to an abatement of rent with respect to some or all of the Premises pursuant to
Section 8.2 of the Prime Lease, Subtenant shall be entitled to a corresponding
abatement of Monthly Rent and OE/Tax Rent hereunder.

16. Subtenant’s Responsibility for Damage

     Any and all injury, breakage or damage to the Premises or the Building
caused by Subtenant, its agents, employees, contractors or invitees, or by
individuals making deliveries to or from the Premises (except as required
hereunder to be insured by Sublessor, or for which Prime Landlord is
responsible for under the Prime Lease), shall be repaired by Sublessor at the
sole expense of Subtenant. Payment of the cost of such repairs by Subtenant
shall be due as additional rent with the next installment of Monthly Rent after
Subtenant receives a bill for such repairs from Sublessor. This provision
shall not be in limitation of any other rights and remedies which Sublessor has
or may have in such circumstances. Sublessor shall repair at its own cost any
such damage caused by Sublessor, its agents, employees, contractors or
invitees, or by individuals making deliveries to Sublessor.

17. Right of Entry

     Subtenant shall permit Sublessor, its agents, employees and contractors,
with twenty four (24) hours’ prior notice to Subtenant, to enter the Premises
at all reasonable times and in a reasonable manner, without charge to Sublessor
or diminution of rent payable by Subtenant, to examine, inspect and protect the
Building and to make such repairs as in the judgment of Sublessor may be deemed
necessary to maintain or protect the Building, tenant improvements or the
Licensed FF&E, or, during the last twelve (12) months of the Term or after an
Event of Default, to exhibit the Premises to prospective subtenants. Sublessor
shall use reasonable efforts

- 20 -

 

to minimize interference to
Subtenant’s business when making repairs and shall perform any such work in a
good and workmanlike manner without damaging Subtenant’s personal property,
trade fixtures, or improvements, but, other than core drilling or similarly
disruptive work, Sublessor shall not be required to perform the repairs at a
time other than during normal business hours.

     Notwithstanding the foregoing, in the event of an emergency, Sublessor may
enter the Premises without notice and make whatever repairs are necessary to
protect the Building.

     Subtenant shall permit Sublessor, its agents, employees and contractors,
upon no less than five (5) days’ prior written notice to Subtenant, to enter
the Premises at reasonable times and in a reasonable manner, without charge to
Sublessor or diminution of rent payable by Subtenant, to make installations
related to the construction of tenant work being performed by Sublessor for
other tenants of the Building; to make repairs, alterations and improvements in
connection with areas adjoining the Premises; to erect, use and maintain pipes
and conduits in and through the Premises; or to make installations,
improvements and repairs to utility services of the Building located in or
about the Premises. Sublessor shall use reasonable efforts to minimize
interference with Subtenant’s business operations, and shall conduct such work
in a careful manner so as not to damage the Premises or any of Subtenant’s
personal property, equipment, trade fixtures, inventory or other property in
the Premises, but, other than core drilling or similarly disruptive work,
Sublessor shall not be required to perform the work at a time other than during
normal business hours.

     If the Premises becomes vacant during the last one hundred twenty (120)
days prior to the Expiration Date, Sublessor shall have the right, upon
delivering to Subtenant no less than thirty (30) days’ prior written notice, to
enter the Premises to commence preparations for the succeeding subtenant or for
any other purpose whatever, without affecting Subtenant’s obligation to pay
rent for the full Term.

     Notwithstanding anything herein to the contrary, in entering the Premises,
Sublessor shall be subject to and comply with any regulations or laws
concerning privacy of medical records or information.

     Subtenant acknowledges that Prime Landlord, its agents and contractors
shall have the same right of entry afforded to Sublessor hereunder, subject to
the terms and conditions of this Section 17.

18. [Omitted]

19. Indemnity

     Subtenant shall indemnify and hold Prime Landlord, Sublessor and
their respective agents, employees, officers, directors and contractors
(collectively, “Sublessor Parties”) harmless and defend
Sublessor Parties from and against any and all claims, costs, damages,
expenses, fees (including without limitation attorneys’ fees, whether or not
suit is filed), liability, loss or suit (collectively,
“Claims”) arising from any act or omission by Subtenant, its
agents, employees, contractors or invitees which gives rise to Sublessor’s
obligation to indemnify Prime Landlord pursuant to Section
21.1 of the Prime Lease.

- 21 -

 

     Subject to the provisions of Section 20.B of this
Sublease, Subtenant shall indemnify and hold Sublessor Parties harmless and
defend Sublessor Parties from and against any and all Claims arising from (a)
the negligence or willful misconduct of Subtenant, its agents, employees or
contractors, other than to the extent caused by the negligence or willful
misconduct of Sublessor, (b) any breach of Subtenant’s obligations under this
Sublease, (c) any inspection or audit at Subtenant’s request pursuant to
Section 6 of this Sublease, and (d) any actions by Sublessor
pursuant to Section 26.C or Section 27.D
of this Sublease.

     Subject to the provisions of Section 20.B of this
Sublease, Sublessor shall indemnify and hold Subtenant, its agents, employees,
officers, directors and contractors (collectively “Subtenant
Parties”) harmless and defend Subtenant Parties from and against any
and all Claims arising from (a) the negligence or willful misconduct of
Sublessor, its agents, employees or contractors, except to the extent caused by
the negligence or willful misconduct of Subtenant, (b) any breach of
Sublessor’s obligations under this Sublease, and (c) any activities of
Sublessor in the Premises pursuant to the fourth (4th) paragraph of
Section 17 of this Sublease.

     The provisions of this Section 19 shall survive the
expiration or termination of the Term.

20. Insurance

     A.     At all times during the Term, Subtenant shall carry and
maintain, at Subtenant’s expense, (i) the insurance required to be maintained
by Sublessor as tenant under the Prime Lease, and (ii) all risk property
insurance (on a full replacement cost basis) covering the Licensed FF&E.

     B.     Sublessor and Subtenant each hereby releases the other and waives any
claims it now or hereafter may have against the other for loss or damage to the
Building, Premises, tenant improvements, fixtures, equipment and/or any other
personal property arising from a risk required to be insured against under the
special form (all risk) property insurance policies to be carried by Sublessor
and Subtenant, as required above, even though such loss or damage was caused by
the negligence of Sublessor, Subtenant, or their respective agents or employees
(or any combination thereof). Sublessor and Subtenant each agrees to obtain
and maintain throughout the Term endorsements to its respective special form
(all risk) property policy waiving the right of subrogation of its insurance
company against the other party, its agents and employees.

21. Subtenant’s Contractor’s Insurance

     Subtenant at its expense shall require any contractor of
Subtenant performing work in or Alterations to the Premises to carry and
maintain:

     A.     commercial general liability insurance, including contractor’s
liability coverage, blanket contractual liability coverage, completed
operations/products liability coverage, broad form property damage endorsement
and contractor’s protective liability coverage, personal injury, premises
medical payments, interest of employees as additional insureds, incidental
medical malpractice and broad form general liability endorsement, with a
combined single limit per occurrence not less than Two Million Dollars
($2,000,000), including coverage for bodily injury, death, property damage and
personal injury liability; such policy and certificates

- 22 -

 

evidencing such
insurance shall name Sublessor, Prime Landlord and any Mortgagee as additional
insured parties;

     B.     worker’s compensation or similar insurance in form and amounts required
by Law; and

     C.     full replacement cost builder’s risk coverage for the Alterations.

Such policies shall name Sublessor, Prime Landlord and any Mortgagee as
additional insured parties; shall be non-cancelable without thirty (30) days’
prior written notice to Sublessor, and shall be in amounts and with companies
reasonably satisfactory to Sublessor. Prior to commencement of any work or
Alterations, Sublessor without liability to Subtenant or any other party may
deny access to the Building to any contractor of Subtenant if Subtenant fails
to provide Sublessor with such certificates.

22. Requirements for Subtenant’s Insurance Policies

     The company or companies writing any insurance which Subtenant
is required to carry and maintain or cause to be carried or maintained pursuant
to this Sublease as well as the form of such insurance shall at all times be
subject to Sublessor’s approval and any such company or companies shall have a
Best’s rating of no less than A/VIII and shall be licensed to do business in
the State of Maryland. Subtenant’s commercial general liability and special
form (all risk) property insurance policies and certificates evidencing such
insurance shall name Sublessor, Prime Landlord and any Mortgagee of whom
Subtenant has been given notice in writing as additional insured parties and
shall also contain a provision by which the insurer
agrees that such policy shall not be canceled except after thirty (30)
days written notice to Sublessor and Prime Landlord. Subtenant shall provide
to Sublessor and Prime Landlord prior to taking possession of the Premises the
certificates and a copy of the endorsements on the insurance policy evidencing
such insurance and the additional insured status of Sublessor, Prime Landlord
and any Mortgagee; Sublessor may withhold delivery of the Premises without
delaying the Commencement Date, or triggering any abatement of rent, if
Subtenant fails to provide Sublessor with such certificates. Sublessor makes
no representation that the amount and types of insurance required under this
Sublease are adequate to protect Subtenant against its obligations under this
Sublease (including without limitation the indemnity set forth in
Section 19 of this Sublease), or in its business operations
at the Premises or otherwise. If Subtenant believes that the insurance
coverage required by this Sublease is insufficient, Subtenant at its expense
shall provide such additional insurance as Subtenant deems adequate.

     Any insurance carried or to be carried by Subtenant hereunder shall be
primary over any policy that might be carried by Sublessor or Prime Landlord.
If Subtenant shall fail to perform any of its obligations regarding the
acquisition and maintenance of insurance, Sublessor may perform the same and
the cost of same shall be deemed additional rent, payable upon Sublessor’s
demand. Sublessor shall have the right from time to time to increase the
limits of Subtenant’s insurance hereunder so long as such limits are
commercially reasonable and required by Prime Landlord.

- 23 -

 

23. Liability for Damage

     A.     All property of Subtenant, its employees, agents, subtenants,
invitees, licensees, customers, clients, family members or guests, in and on
the Premises shall be and remain in and on the Premises and the Building at the
sole risk of said parties and Sublessor shall not be liable to any such person
or party for any damage to, or loss of personal property thereof, including but
not limited to loss or damage arising from, (i) any act, including theft, or
any failure to act, of any other persons, (ii) the leaking of the roof, (iii)
the bursting, rupture, leaking or overflowing of water, sewer or steam pipes,
(iv) the rupture or leaking of heating or plumbing fixtures, including access
control systems, (v) short-circuiting or malfunction of electrical wires or
fixtures, including security and protective systems or (vi) the failure of the
heating or air-conditioning systems. Sublessor shall also not be liable for
the interruption or loss to Subtenant’s business for any reason.

     B.     Sublessor shall not be liable to any party for any bodily injury or
death in, on or about the Premises, unless caused by the negligence or willful
misconduct of Sublessor, its agents, employees or contractors.

24. Default of Subtenant

     A.     An
“Event of Default” is: (a) Subtenant’s
failure to make when due any payment of Monthly Rent, additional rent or other
sum, if the failure continues for a period of five (5) business days after
delivery to Subtenant of written notice thereof; (b) Subtenant’s failure to
perform or observe any other covenant or condition of this Sublease, if the
failure continues for a period of fifteen (15) days after delivery to Subtenant
of written notice thereof (except that such fifteen (15) day period shall be
extended for such additional time as is
reasonably necessary to cure such failure [not to exceed an additional
fifteen (15) days], only if such default by its nature cannot be cured within
the fifteen (15) day period, and Subtenant is at all times diligently pursuing
cure of same); (c) a Transfer in violation of Section 8 of
this Sublease which is not rescinded within fifteen (15) days after delivery to
Subtenant of written notice thereof; (d) Subtenant’s failure to restore the
Security Deposit upon demand as set forth in Section 5 of
this Sublease; and (e) if Subtenant declares bankruptcy or an involuntary
bankruptcy is filed against Subtenant or if Subtenant enters into or is subject
to a receivership, trusteeship, or arrangement or assignment for the benefit of
creditors under state law, voluntarily or involuntarily, and any such action or
filing is not dismissed or terminated within sixty (60) days after institution.

     B.     If an Event of Default occurs, the provisions of this Section
24.B shall apply and Sublessor may pursue any one or more of the
following remedies. Sublessor shall have the right, at its sole option, to
terminate this Sublease. In addition, with or without terminating this
Sublease, Sublessor may re-enter, terminate Subtenant’s right of possession and
take possession of the Premises. The notice provisions of the foregoing
Section 24.A of this Sublease shall operate as a notice to
quit, any additional notice to quit or of Sublessor’s intention to re-enter the
Premises or terminate this Sublease being hereby expressly waived. If
necessary, Sublessor may proceed to recover possession of the Premises under
applicable Laws, or by such other proceedings, including re-entry and
possession, as may be applicable. If Sublessor elects to terminate this
Sublease or elects to terminate Subtenant’s right of possession, everything
contained in this Sublease on the part of Sublessor to be done and performed
shall cease without

- 24 -

 

prejudice, however, to Subtenant’s liability for all
Monthly Rent, additional rent and other sums accrued through the later of
termination or Sublessor’s recovery of possession. Whether or not this
Sublease and/or Subtenant’s right of possession is terminated, Sublessor shall
have the right, at its sole option, to terminate any renewal or expansion right
contained in this Sublease and to grant or withhold any consent or approval
pursuant to this Sublease in its sole and absolute discretion. Sublessor may
relet the Premises or any part thereof, alone or together with other premises,
for such term(s) (which may extend beyond the date on which the Term would have
expired but for Subtenant’s default) and on such terms and conditions (which
may include concessions or free rent and Alterations of the Premises) as
Sublessor, in its sole discretion, may determine, but Sublessor shall not be
liable for, nor shall Subtenant’s obligations hereunder be diminished by reason
of, any failure by Sublessor to relet all or any portion of the Premises or any
failure by Sublessor to collect any rent due upon such reletting, provided
that, to the extent required by law, Sublessor shall use reasonable efforts to
mitigate Sublessor’s damages. Whether or not this Sublease is terminated,
Subtenant nevertheless shall remain liable for any Monthly Rent, additional
rent, damages or other sums which may be due or sustained prior to such
default, and all costs, fees and expenses (including, but not limited to,
reasonable attorneys’ fees, brokerage fees, expenses incurred in placing the
Premises in first-class rentable condition, advertising expenses, and any
concessions given to any successor tenant such as a rental abatement or an
improvements allowance) incurred by Sublessor in pursuit of its remedies
hereunder and in recovering possession of the Premises and renting the Premises
to others from time to time. Subtenant shall also be liable for additional
damages which at Sublessor’s election shall be either:

		
	 	     (i) An amount equal to the Monthly Rent and additional rent which
would have become due during the remainder of the Term, less the amount
of periodic rental
(i.e., Monthly Rent and OE/Tax Rent), if any,
which Sublessor receives during such period from others to whom the
Premises may be rented, which amount shall be computed and payable in
monthly installments, in advance, on the first day of each calendar month
following Subtenant’s default and continuing until the date on which the
Term would have expired but for Subtenant’s default. Separate suits may
be brought from time to time to collect any such damages for any month(s)
(and any such separate suit shall not in any manner prejudice the right
of Sublessor to collect any damages for any subsequent month(s)), or
Sublessor may defer initiating any such suit until after the expiration
of the Term (in which event Subtenant hereby agrees that such deferral
shall not be construed as a waiver of Sublessor’s rights as set forth
herein); OR

		
	 	     (ii) Final damages in an amount equal to the difference between (i)
all Monthly Rent, additional rent and other sums which would have become
due during the remainder of the Term, and (ii) the fair market value
rental of the Premises over the same period (net of all expenses
(including reasonable attorneys’ fees) and all vacancy periods reasonably
projected by Sublessor to be incurred in connection with the reletting of
the Premises) as reasonably determined by Sublessor, which difference
shall be discounted at the rate of three percent (3%)
per annum, and which resulting
amount shall be payable to Sublessor in a lump sum on demand. Sublessor
may bring suit to collect any such damages at any time after an Event of
Default.

- 25 -

 

Subtenant shall pay all expenses (including reasonable attorneys’ fees)
incurred by Sublessor in connection with or as a result of any Event of Default
whether or not a suit is instituted. Nothing herein shall be construed to
affect or prejudice Sublessor’s right to prove, and claim in full, unpaid rent
accrued prior to the termination of this Sublease.

     All rights and remedies of Sublessor set forth in this Sublease are
cumulative and in addition to all other rights and remedies available to
Sublessor at law or in equity. The exercise by Sublessor or any such right or
remedy shall not prevent the concurrent or subsequent exercise of any other
right or remedy. No delay or failure by Sublessor to exercise or enforce any
of Sublessor’s rights or remedies or Subtenant’s obligations shall constitute a
waiver of any such rights, remedies or obligations. Sublessor shall not be
deemed to have waived any default by Subtenant unless such waiver expressly is
set forth in a written instrument signed by Sublessor. If Sublessor waives in
writing any default by Subtenant, such waiver shall not be construed as a
waiver of any covenant, condition or agreement set forth in this Sublease
except as to the specific circumstances described in such written waiver.

     Effective as of the date of a valid, lawful termination under this
Sublease, Subtenant hereby expressly waives, for itself and all persons
claiming by, through or under it, any right of redemption, re-entry or
restoration of the operation of this Sublease under any present or future Law,
including without limitation any such right which Subtenant would otherwise
have in case Subtenant shall be dispossessed for any cause, or in case
Sublessor shall obtain possession of the Premises as herein provided.

     If Subtenant becomes bankrupt or insolvent, or files any debtor
proceedings, or if Subtenant takes or has taken against it in any court
pursuant to any statute either of the United States or of any State a petition
in bankruptcy or insolvency or for reorganization or for the
appointment of a receiver or trustee of all or a portion of Subtenant’s
property, or if Subtenant makes an assignment for the benefit of creditors, or
petitions for or enters into an arrangement (each of the foregoing referred to
as an “Event of Bankruptcy”), then this Sublease shall
terminate and Sublessor, in addition to any other rights or remedies it may
have, shall have the immediate right of reentry and may remove all persons and
property from the Premises and such property may be removed and stored in a
public warehouse or elsewhere at the cost of, and for the account of Subtenant,
all without service of notice or resort to legal process and without being
deemed guilty of trespass, or becoming liable for any loss or damage
occassioned thereby.

     If Sublessor fails to perform any of its obligations hereunder and such
failure continues for thirty (30) days after Sublessor’s receipt of written

notice thereof (except that such thirty (30) day period shall be extended for
such additional time as is reasonably necessary to cure such failure [not to
exceed an additional fifteen (15) days], only if such default by its nature
cannot be cured within the thirty (30) day period, and Sublessor is at all
times diligently pursuing cure of same), then Sublessor shall be in default
under this Sublease and Subtenant shall have all rights and remedies permitted
or granted under law and in equity, except as otherwise provided in this
Sublease.

- 26 -

 

25. Waiver

     If Sublessor institutes legal or administrative proceedings against
Subtenant and a compromise or settlement thereof is made, the same shall not
constitute a waiver of Subtenant’s obligations to comply with any covenant,
agreement or condition, nor of any of Sublessor’s rights hereunder. No waiver
by Sublessor of any breach of any covenant, condition, or agreement specified
herein shall operate as an invalidation or as a continual waiver of such
covenant, condition or agreement itself, or of any subsequent breach thereof.
No payment by Subtenant or receipt by Sublessor (or any party designated by
Sublessor to receive any payments of rent) of a lesser amount than the amount
of rent due Sublessor shall be deemed to be other than payment on account of
the earliest rent then accrued and payable. Amounts deposited into Sublessor’s
rental account shall not be deemed accepted by Sublessor if Sublessor promptly
returns such rental amounts to Subtenant. In addition, no endorsement or
statement on any check or letter accompanying a check for payment of such rent
shall be deemed an accord and satisfaction. Sublessor, or any party designated
by Sublessor, may accept such check or payment without prejudice to Sublessor’s
right to recover the balance of such rent or to pursue any other remedy
provided for in this Sublease or in the governing law of the jurisdiction in
which the Building is located. No re-entry by Sublessor, and no acceptance by
Sublessor of keys from Subtenant, shall be considered an acceptance of a
surrender of the Premises or this Sublease.

26. Terms of Prime Lease

     A.     All of the terms, provisions, covenants and conditions of the Prime
Lease are incorporated herein by reference and hereby made a part of and are
superior to this Sublease, except as herein otherwise expressly provided, and
Sublessor hereunder shall have all of the rights of Prime Landlord under the
Prime Lease as against Subtenant, as if Subtenant had executed the Prime Lease
as Tenant thereunder, except to the extent the same conflict with the
provisions hereof, in which case, as between Sublessor and Subtenant only,
Sublessor’s rights and remedies against Subtenant as set forth in this Sublease
shall control. All capitalized and
other terms not otherwise defined herein shall have the meanings ascribed
to them in the Prime Lease, unless the context clearly requires otherwise. The
following provisions of the Prime Lease shall not be incorporated in this
Sublease by reference: Article 3, Article
4, Section 8.5, Section 8.6,
Article 22, Article 29, Article
30, Article 31, Exhibit D,
Exhibit E, Exhibit I, Exhibit
J, Exhibit K, and Exhibit L. A
copy of the Prime Lease is attached hereto as Exhibit L.

     B.     Sublessor shall have no liability to Subtenant by reason of the default
of Prime Landlord under the Prime Lease. Notwithstanding anything to the
contrary contained in any other provision of this Sublease, Subtenant
recognizes that Sublessor is not in a position to and shall not be required to
render any of the services or utilities, to make repairs, replacements,
restorations, alterations or improvements or to perform any of the obligations,
of any nature whatsoever, required of Prime Landlord by the terms of the Prime
Lease. Sublessor, however, shall use commercially reasonable efforts to obtain
the performance of and furnishing of such services for the Premises by Prime
Landlord pursuant to the terms of the Prime Lease.

     C.     Subtenant shall promptly reimburse Sublessor for all reasonable
out-of-pocket costs paid to third parties in expending such efforts. Nothing
contained herein shall require Sublessor to institute any suit or action to
enforce any such rights, except as expressly set forth in

- 27 -

 

Section
27.D of this Sublease. Subtenant acknowledges that the failure of
Prime Landlord to provide any services or comply with any obligations under the
Prime Lease shall not entitle Subtenant to any abatement or reduction in either
Monthly Rent or Additional Rent payable hereunder.

     D.     Wherever the Prime Lease refers to the “Premises,” such references for
the purposes hereof shall be deemed to refer to the Sublease Premises; wherever
the Prime Lease refers to the “Lease,” such references for purposes hereof
shall be deemed to refer to this Sublease; wherever the Prime Lease refers to
the “term,” such references for the purposes hereof shall be deemed to refer to
the Term; wherever the Prime Lease refers to “Landlord,” such references for
the purposes hereof shall be deemed to refer to Sublessor; and wherever the
Prime Lease refers to “Tenant,” such references for the purposes hereof shall
be deemed to refer to “Subtenant.”

27. Sublease Subject to Prime Lease

     A.     This Sublease is subject and subordinate to the Prime Lease and to the
matters to which the Prime Lease is or shall be subordinate. If the Prime
Lease is cancelled or terminated prior to the Expiration Date of this Sublease,
whether by voluntary or involuntary means or by operation of law or for any
reason whatsoever, then this Sublease shall become a direct lease with Prime
Landlord, subject to the provisions of the Sublease Consent/SNDA. Prime
Landlord is not a party to this Sublease, and all of Prime Landlord’s
obligations relating to this Sublease shall be governed by the Sublease
Consent/SNDA, but Prime Landlord shall be a third party beneficiary of any
covenants and agreements of Subtenant which benefit Prime Landlord hereunder.

     B.     Except as specifically set forth in this Sublease, Subtenant covenants
and agrees with Sublessor and Prime Landlord that, throughout the Term,
Subtenant shall observe and perform all of the provisions of the Prime Lease,
which are to be observed and performed by the tenant thereunder as to the
Premises only, except payment of Monthly Rent and additional rent. Subtenant
covenants and agrees that Subtenant shall not do any act, matter or thing which
will be, result in, or constitute a violation or breach of or a default or
Event of Default under any provision of the Prime Lease; it being expressly
agreed to by Subtenant that any such violation, breach, default or Event of
Default shall constitute a material breach by Subtenant of a substantial
obligation under this Sublease entitling Sublessor to avail itself of the
remedies provided for herein or otherwise permitted at law. So long as
Subtenant is not in default under this Agreement, Sublessor covenants and
agrees that it will timely perform all its obligations as Tenant under the
Prime Lease, to the extent not being performed directly by Subtenant under the
express terms of this Sublease, and shall indemnify, defend, and hold Subtenant
harmless from and for any liability arising from Sublessor’s failure to so
perform. Within three (3) business days after receipt, Sublessor will provide
Subtenant with complete copies of any notices or correspondence Sublessor
receives from Prime Landlord which affect Subtenant’s rights or obligations
under this Sublease.

     C.     Subtenant shall indemnify and hold Sublessor harmless from and against
all claims, liabilities, penalties and expenses, including, without limitation,
reasonable attorneys’ fees and disbursements, arising from or in connection
with any default or Event of Default by

- 28 -

 

Subtenant in Subtenant’s performance of
those terms, covenants and conditions of the Prime Lease which are or shall be
applicable to Subtenant, as above provided, and all amounts payable by
Subtenant to Sublessor on account of such indemnity shall be deemed to be
Additional Rent hereunder and shall be payable to Sublessor upon demand. In
any case where the consent or approval of Prime Landlord shall be required
pursuant to the Prime Lease, Sublessor’s consent shall also be required
hereunder.

     D.     Sublessor shall have no obligation to perform Prime Landlord’s
obligations under the Prime Lease, and if Prime Landlord defaults in its
obligations to Sublessor under the Lease so that Subtenant is deprived of
service or performance to which it is entitled hereunder, Sublessor shall not,
except as and to the extent set forth below, be obligated to bring any action
or proceeding or to take any steps to enforce Sublessor’s rights against
Landlord.

               (i) Sublessor shall cooperate in seeking to obtain Prime Landlord’s
performance under the Prime Lease. Upon Subtenant’s request, Sublessor shall
make written demand upon Prime Landlord to perform its obligations regarding
the Premises. If after such demand, Prime Landlord’s grace period (if any)
under the Prime Lease expires and Prime Landlord has failed to perform the
obligation, then at Subtenant’s written direction and expense, Sublessor shall
proceed against Prime Landlord on Subtenant’s behalf, so long as Subtenant is
not in default under this Sublease. Prior to instituting any such proceeding,
Subtenant will post an additional security deposit of Twenty Five Thousand
Dollars ($25,000.00) which shall be returned to Subtenant upon final resolution
of such proceeding. Subtenant shall reimburse Sublessor, as additional rent
due within thirty (30) days after delivery from time to time of a statement
therefor, for all costs, expenses and attorneys’ fees incurred by Sublessor in
connection with such proceeding. If, as a result of Prime Landlord’s default
under the Prime Lease during the Term of this Sublease, Sublessor recovers any
sum from Prime Landlord relating to the
Premises or is entitled to any abatement, credit, setoff, or offset in
relation to rent of any kind due in connection with the Premises, the same, or
the benefit thereof, shall benefit Subtenant as applicable to the Premises, so
long as this Sublease is in effect and Subtenant is not in default hereunder.
So long as this Sublease is in effect, if Sublessor’s rent as to the Premises
is abated under the Prime Lease, then Subtenant’s rent under this Sublease
shall abate as applicable to the Premises.

               (ii) So long as it is at no cost to Sublessor and not contrary to the
provisions of the Prime Lease, Sublessor shall reasonably cooperate with
Subtenant:

	 	(a)	 	In obtaining for Subtenant (i) any
services under the Prime Lease; (ii) any benefit to
Sublessor relating to the Premises under the Prime Lease
that would directly benefit Subtenant, and (iii) Prime
Landlord’s consent to any action for which the Prime
Lease requires Prime Landlord’s consent, and
	 
	 	(b)	 	In delivering any notice to Prime
Landlord as required by a provision of the Prime Lease,
including, without limitation, promptly forwarding any
requests made by Subtenant to Prime Landlord for
services, consents or approvals, and providing Prime
Landlord with all information required regarding such
request.

- 29 -

 

28. Casualty and Condemnation

     If the Prime Lease is terminated due to casualty or condemnation, this
Sublease shall terminate on the effective date of such termination of the Prime
Lease with the same effect as if such date were the expiration date. Subtenant
shall be entitled to an abatement of rent hereunder for any space for which
rent is abated under the Prime Lease.

29. Right of Sublessor to Cure Subtenant’s Default

     If Subtenant defaults in the making of any payment to any third
party, or doing any act required to be made or done by Subtenant relating to
the Premises (including the performance of Subtenant’s obligations under this
Sublease), then Sublessor may, but shall not be required to, make such payment
or do such act, and Subtenant shall reimburse Sublessor, as additional rent
upon demand, for all expenses incurred by Sublessor, therefor together with
interest thereon at a rate (the “Interest Rate”) equal to
the lower of (a) three (3) percentage points above the then applicable base
rate of interest (or comparable rate of interest) per
annum as fixed by a federally chartered financial
institution reasonably selected by Sublessor, or (b) the maximum rate allowed
by Law, accruing from the date Sublessor incurred such expenses. The making of
such payment or the doing of such act by Sublessor shall not operate as a
waiver or cure of Subtenant’s default, nor shall it prevent Sublessor from the
pursuit of any remedy to which Sublessor would otherwise be entitled.

30. Brokers

     Sublessor and Subtenant each represents and warrants to the
other that, except as hereinafter set forth, it has not employed any broker in
carrying on the negotiations, nor had any dealings with any broker, relating to
this Sublease. Subtenant represents that it has employed The Staubach Company
– Northeast, Inc. (Cahill Team) as its broker; Sublessor represents that it has
employed The Staubach Company – Northeast, Inc. (Johnson Team) and further
agrees to pay the commissions accruing to each identified broker pursuant to
certain outside agreement(s). Sublessor shall indemnify and hold Subtenant
harmless, and Subtenant shall indemnify and hold Sublessor harmless, from and
against any claim or claims for brokerage or other commission arising from or
out of any breach of the foregoing representation and warranty by the
respective indemnitor.

31. Notices

     All notices or other communications hereunder shall be in writing and
shall be deemed duly delivered upon personal delivery (or attempted delivery);
or as of the third (3rd) business day after mailing by United States mail, by
certified, return receipt requested, postage prepaid (during times when normal
mail delivery is in effect); or as of the immediately following business day
after deposit for next day delivery with federal express or similar nationally
recognized overnight courier service:

	 	 	 	 	 
	 	 	
if to Sublessor:
	 	Manugistics, Inc.
	 	 	 	 	9715 Key West Avenue

- 30 -

 

	 	 	 	 	 
	 	 	 	 	Rockville, Maryland 20850-3915
	 	 	 	 	Attention: Real Estate
	 	 	 	 	 
	 	 	
with a copy to:
	 	Venable, LLP
	 	 	 	 	1201 New York Avenue, N.W.
	 	 	 	 	Suite 1000
	 	 	 	 	Washington, D.C. 20005
	 	 	 	 	Attention: Grier Hoyt, Esquire
	 	 	 	 	 
	 	 	
if to Subtenant:
	 	Theracom, Inc.
	 	 	 	 	at the Premises
	 	 	 	 	 
	 	 	
with a copy to:
	 	AdvancePCS
	 	 	 	 	9501 E. Shea Boulevard
	 	 	 	 	Scottsdale, AZ 85260
	 	 	 	 	Attn: Pat Cannavino

prior to the Commencement Date and at the Premises thereafter. The party to
receive notices and the place notices are to be sent for either Sublessor or
Subtenant may be changed by notice given pursuant to the provisions of this
Section 31.

32. Estoppel Certificates

     Subtenant agrees, at any time and from time to time but not more
than 1 time per year (except that such limitation shall not apply in connection
with a request by Prime Landlord under the Prime Lease or if there is an Event
of Default), upon not less than fifteen (15) days’ prior written notice, to
execute and deliver to Sublessor a statement in writing (A) certifying that
this Sublease is unmodified and in full force and effect (or, if there have
been modifications, that the Sublease is in full force and effect as modified
and stating the modifications), (B) stating the dates to which the rent and
other charges hereunder have been paid by Subtenant, (C) stating whether or
not, to the best knowledge of Subtenant, Sublessor is in default in the
performance of any covenant, agreement or condition contained in this Sublease,
and, if so, specifying each such default of which Subtenant may have knowledge,
(D) stating the address to which notices to Subtenant should be sent and, if
Subtenant is a corporation, partnership, limited liability company,
association, trust or other entity (collectively, “Entity”)
the name and address of its registered agent or its agent for service of
process in the jurisdiction in which the Building is located, (E) agreeing not
to pay Monthly Rent more than thirty (30) days in advance or to amend the
Sublease without the consent of Prime Landlord, and (F) containing such other
matters as Sublessor may reasonably request. Any such statement delivered
pursuant hereto may be relied upon by, or if so requested, addressed to any
owner of the Building or the Project or any interest therein, any prospective
purchaser of the Building or the Project or any interest therein, any Mortgagee
or prospective Mortgagee of the Building or the Project or any interest
therein, or any prospective assignee of any such Mortgagee. The failure of
Subtenant to timely execute and deliver such statement to Sublessor shall
constitute an acknowledgment by Subtenant of the facts set forth therein. If
the statement is requested by Prime Landlord, then the references in this

- 31 -

 

Section 32 to “Sublessor” shall be deemed references to
“Prime Landlord” if the context so requires.

33. Holding Over

     If Subtenant does not immediately surrender the Premises free of
all subtenants and occupants on the date of expiration or earlier termination
of the Term, then Sublessor shall be entitled to immediate recovery of
possession of the Premises by judicial or non-judicial means lawful in the
State of Maryland, and, whether or not Sublessor seeks recovery of possession
of the Premises, Subtenant shall be obligated to pay as Monthly Rent during the
holdover an amount (on a per month basis without reduction for partial months
during the holdover) equal to the following as applicable: (A) prior to
expiration or earlier termination of the term of the Prime Lease with respect
to the Premises during the first sixty (60) days of such holdover: 125% of the
sum of Monthly Rent and Subtenant’s Share of OE/Tax Rent, or (B) prior to the
expiration or earlier termination of the term of the Prime Lease with respect
to the Premises after the first sixty (60) days of such holdover: 200% of the
sum of Monthly Rent and Subtenant’s Share of OE/Tax Rent, or (C) in all events
after expiration of earlier termination of the term of the Prime Lease with
respect to the Premises, the Monthly Base Rent (as defined in the Prime Lease)
and Additional Rent (as defined in the Prime Lease) due under Section
32.8 of the Prime Lease for the entire
Prime Lease Premises
(and not just for the Premises). No acceptance of rent by Sublessor for any
holdover period shall constitute a waiver of Sublessor’s right to immediate
recovery of possession of the Premises, nevertheless, any rental amounts for
such holdover period which are deposited into Sublessor’s rental account
shall not be deemed accepted by Sublessor if Sublessor promptly returns
such rental amounts to Subtenant. Nothing herein shall limit Sublessor’s right
to recover damages pursuant to this Sublease and such other damages as are
available to Sublessor at law or in equity (including but not limited to any
and all damage caused by such holdover). Subtenant acknowledges that a
holdover by Subtenant beyond the term of the Prime Lease with respect to the
Premises shall cause a holdover by Sublessor under the Prime Lease and that the
resulting damage to Sublessor may be substantial, and, in addition to payment
of holdover rent for the entire Prime
Lease Premises as set forth above,
Subtenant shall indemnify and hold Sublessor harmless in connection therewith,
pursuant to Section 19 of this Sublease.

34. Quiet Enjoyment

     Sublessor covenants that if Subtenant pays the rent and performs
all of the covenants, agreements and conditions specified in this Sublease to
be performed by Subtenant, Subtenant shall, for the Term, freely, peaceably and
quietly occupy and enjoy the full possession of the Premises without
molestation or hindrance by Sublessor, its agents or employees subject to the
provisions of this Sublease and the Sublease Consent/SNDA. Entry in the
Premises for inspections, repairs, alterations, improvements and installations
by Sublessor, its agents, employees or contractors pursuant to Section
17 shall not constitute a breach by Sublessor of this covenant, nor
entitle Subtenant to any abatement or reduction of rent.

- 32 -

 

35. [Omitted]

36. Parking

     Sublessor grants to Subtenant a non-exclusive license to use at no
additional charge an allocation of Two Hundred Seventy Five (275) non-reserved
and ten (10) reserved parking spaces on the 1st level of the parking garage on
the Property and five (5) surface parking spaces in front of the Building for
use by Subtenant, its officers, agents, employees and visitors, in accordance
with the provisions of the Prime Lease. The reserved spaces shall be in the
locations designated on Exhibit J attached to this Sublease.
If additional space is added to the Premises, parking spaces shall be added at
a ratio of four (4) spaces per 1,000 additional square feet leased.

37. Cafeteria

     So long as Subtenant or an approved assignee or sub-subtenant individually
or in combination occupy the entire rentable area in the Building, Subtenant,
the assignee or sub-subtenant, and their respective employees and visitors
shall have the right to use the cafeteria service for breakfast and lunch at
the price paid by Sublessor for same.

38. Satellite Dish/Emergency Generator/Conduit Rights

     A.     Subject to the prior written approval of Sublessor (which approval
shall not be unreasonably withheld, conditioned or delayed) and the prior
written approval of Prime Landlord pursuant to the Prime Lease, Subtenant shall
have the right to use a portion of Sublessor’s rights to use the roof of the
Building for satellite dish and antenna usage directly related to and
incidental to Subtenant’s business at the Premises. All such usage shall
be in compliance with Article 28 of the Prime Lease.

     B.     Subtenant shall have the right to (a) install a generator of a minimum
600kw (the “Generator”) in a location shown on
Exhibit K (the “Generator Area”), and (b)
use available Building riser conduit and run additional riser conduit within
the Building from the Generator, roof, parking area and between floors of the
Premises, subject to obtaining Prime Landlord’s written consent and Sublessor’s
written consent, which consent of Sublessor shall not be unreasonably withheld,
conditioned or delayed. Subtenant’s right to install the Generator shall be
subject to Sublessor’s approval (which approval shall not be unreasonably
withheld, conditioned or delayed) and Prime Landlord’s approval of the manner
in which the Generator is installed, the manner in which any fuel pipe is
installed, the manner in which any ventilation and exhaust systems are
installed, the manner in which any cables are run to and from the Generator to
the Premises and the measures that will be taken to eliminate any vibrations or
sound disturbances from the operation of the Generator, including without
limitation, any necessary two (2) hour rated enclosures or sound installation.
Sublessor shall have the right to reasonably require an acceptable enclosure to
hide or disguise the existence of the Generator and to minimize any adverse
effect that the installation of the Generator may have on the appearance of the
Building or the Park. Subtenant shall be solely responsible for obtaining all
necessary governmental and regulatory approvals and for the cost of installing,
operating, maintaining and removing the Generator. Subtenant shall not install
or operate the Generator until Subtenant has obtained and submitted to
Sublessor copies of all required governmental permits, licenses and

- 33 -

 

authorizations necessary for the installation and operation of the Generator.
In addition to, and without limiting Subtenant’s obligations under this
Sublease, Subtenant shall comply with all applicable environmental and fire
prevention Laws pertaining to Subtenant’s use of the Generator Area. Subtenant
shall also be responsible for the cost of all utilities consumed in the
operation of the Generator.

     C.     Subtenant shall be responsible for assuring that the installation,
maintenance, operation and removal of the Generator shall in no way damage any
portion of the Building or the Park. To the maximum extent permitted by Law,
the installation, maintenance, operation, repair, replacement and removal of
the Generator and all appurtenances in the Generator Area shall be at the sole
risk of Subtenant, and Sublessor shall have no liability to Subtenant if the
Generator or any appurtenances or installations are damaged for any reason.
Subtenant agrees to be responsible for any damage caused to the Building or the
Park in connection with the installation, maintenance, operation or removal of
the Generator and, in accordance with the terms of Section
19 of this Sublease, to indemnify, defend and hold Sublessor Parties
harmless from all liabilities, obligations, damages, penalties, claims, costs,
charges and expenses, including without limitation, reasonable architects’ and
attorneys’ fees (if and to the extent permitted by Law), which may be imposed
upon, incurred by, or asserted against Sublessor Parties in connection with the
installation, maintenance, operation or removal of the Generator, including
without limitation, any environmental and hazardous materials claims. In
addition to, and without limiting Subtenant’s obligations under this Sublease,
Subtenant covenants and agrees that the installation and use of the Generator
and appurtenances shall not adversely affect the insurance coverage for the
Building. If for any reason the installation or use of the Generator and/or
the appurtenances results in an increase in the amount of the premiums for such
coverage, then Subtenant shall be liable for the full amount of any such
increase.

     Subtenant shall be responsible for the installation, operation,
cleanliness, maintenance and removal of the Generator and appurtenances, all of
which shall remain the personal property of Subtenant, and shall be removed by
Subtenant at its own expense and at the expiration or earlier termination of
the Term. Subtenant shall repair any damage caused by such removal, including
the patching of any holes to match, as closely as possible, the color
surrounding the area where the Generator and appurtenances were attached.
Subtenant shall take the Generator Area “as is” in the condition in which the
Generator Area is in as of the Commencement Date, without any obligation on the
part of Sublessor to prepare or construct the Generator Area for Subtenant’s
use or occupancy. Without limiting the foregoing, Sublessor makes no
warranties or representations to Subtenant as to the suitability of the
Generator Area for the installation and operation of the Generator. Subtenant
shall have no right to make any changes, alterations, additions, decorations or
other improvements to the Generator Area without Sublessor’s prior written
consent (such consent not to be unreasonably withheld, conditioned or delayed),
and the approval of Prime Landlord pursuant to the Prime Lease. Subtenant
agrees to maintain the Generator, including without limitation, any enclosure
installed around the Generator in good condition and repair. Subtenant shall
be responsible for performing any maintenance and improvements to any enclosure
surrounding the Generator so as to keep such enclosure in good condition.

     Subtenant shall have the right to test the Generator in accordance with
best practices and as and if required by law, but shall only test the Generator
before or after normal business hours

- 34 -

 

and at a time mutually agreed to in
writing by Sublessor, Subtenant and Prime Landlord in advance. Subtenant shall
be permitted to use the Generator Area solely for the maintenance and operation
of the Generator, and the Generator and Generator Area are solely for the
benefit of Subtenant. All electricity generated by the Generator may only be
consumed by Subtenant in the Premises. Sublessor shall have no obligation to
provide any services, including without limitation, electric current, to the
Generator Area. Subtenant shall have no right to assign or sublet the
Generator Area. Subtenant shall at all times, operate the Generator in
compliance with Laws.

39. Miscellaneous

     A.     Rule Against Perpetuities. If and to the extent
that this Sublease would, in the absence of the limitation imposed by this
Section 39.A, be invalid or unenforceable as being in
violation of the rule against perpetuity or any other rule of law relating to
the vesting of interests in property or the suspension of the power of
alienation of property, then it is agreed that notwithstanding any other
provision of this Sublease, this Sublease and any and all options, rights and
privileges granted to Subtenant thereunder, or on connection therewith shall
terminate if not previously terminated, on the date which is twenty-one (21)
years after the death of the last heir or issue, who are lives in being as of
the date of this Sublease, of the following named persons: George W. Bush and
Richard Cheney.

     B.     Gender. Feminine or neuter pronouns shall be
substituted for those of the masculine form, and the plural shall be
substituted for the singular number, in any place or places herein in which the
context may require such substitution or substitutions.

     C.     Benefit and Burden. The terms and provisions of
this Sublease shall be binding upon and shall inure to the benefit of the
parties hereto and each of their respective representatives, successors and
permitted assigns. Sublessor may freely and fully assign its interest
hereunder.

     Neither the members comprising Sublessor, nor the partners, directors or
officers of any of the foregoing (collectively, the
“Parties”) shall be personally liable for the performance of
Sublessor’s obligations under this Sublease. Subtenant shall look solely to
Sublessor to enforce Sublessor’s obligations hereunder and shall not seek any
damages against any of the Parties.

     D.     Financial Statements. Promptly after each fiscal
year of Subtenant, Subtenant shall deliver to Sublessor and Prime Landlord a
copy of Subtenant’s audited financial statements. Subtenant, within thirty (30)
days after request from time to time but not more than one time per year
(except such limitation shall not apply if an Event of Default occurs), shall
provide Sublessor and Prime Landlord with current monthly or quarterly
financial statements and such other information as Sublessor or Prime Landlord
may reasonably request in order to create a “business profile” of Subtenant and
determine Subtenant’s ability to fulfill its obligations under this Sublease.
The requirement to deliver financial statements shall not apply so long as

Subtenant is a public company and such information is readily available to the
public.

     E.     Savings Clause. If any provision of this Sublease
or the application thereof to any person or circumstance is to any extent held
invalid, then the remainder of this Sublease or the

- 35 -

 

application of such
provision to persons or circumstances other than those as to which it is held
invalid shall not be affected thereby, and each provision of this Sublease
shall be valid and enforced to the fullest extent permitted by law; provided,
however, that such illegal, invalid or unenforceable provision shall be
rewritten in a valid, legal and enforceable manner to achieve as closely as
possible the original intent.

     F.     Entity Subtenant. If Subtenant is an Entity, the
persons executing this Sublease on behalf of Subtenant hereby consent,
represent and warrant that Subtenant is duly organized and is duly qualified
and authorized to do business in the State of Maryland; and that the person or
persons executing this Sublease on behalf of Subtenant are duly authorized to
sign and execute this Sublease. Upon request of Sublessor to Subtenant,
Subtenant shall deliver to Sublessor documentation reasonably satisfactory to
Sublessor evidencing Subtenant’s compliance with the provisions of this
section. Further, Subtenant agrees to promptly execute all necessary and
reasonable applications or documents confirming such registration as requested
by Sublessor or its representatives, required by the jurisdiction in which the
Building is located to permit the issuance of necessary permits and
certificates for Subtenant’s use and occupancy of the Premises. Any delay or
failure by Subtenant in submitting such application or document so executed
shall not serve to delay the Commencement Date or delay or waive Subtenant’s
obligations to pay rent hereunder.

     G.     Joint and Several Liability. If two or more
individuals or Entities (or any combination of two or more thereof) sign this
Sublease as Subtenant, the liability of each of them shall be joint and
several. In like manner, if Subtenant is an Entity the members of which are,
by virtue of statute or general law, subject to personal liability, the
liability of each
individual who was, is or becomes a member of such Entity at any time from
the date of execution of this Sublease to and including the expiration or
earlier termination of the Term, shall be joint and several.

     H.     Unavoidable Delays. Whenever a period of time is
prescribed for the taking of an action by Sublessor or Subtenant, the period of
time for the performance of such action shall be extended by the number of days
that the performance is actually delayed due to strikes, acts of God, shortages
of labor or materials, casualty, unusually severe weather, war, terrorist
activity, civil disturbances, action or inaction of a governmental entity, or
any other cause beyond the reasonable control of the performing party
(“Unavoidable Delays”). However, Unavoidable Delays shall
not extend any period of time for the payment of Rent or other sums payable by
either party or any period of time for the written exercise of an option or
right by either party, or any holding over by Subtenant beyond the expiration
or termination of the Term.

     I.     Governing Law. This Sublease and the rights and
obligations of Sublessor and Subtenant hereunder shall be governed by the laws
of the State of Maryland without regard to conflict of laws principles.

     J.     Business Day. The term “business
day” means each calendar day Monday through Friday except any federal
holiday.

     K.     Rules of Construction. The deletion of any printed,
typed or other portion of this Sublease or any draft of this Sublease shall not
evidence an intention to contradict such deleted

- 36 -

 

portion. Such portion shall
be deemed not to have been inserted in this Sublease. Subtenant acknowledges
that this Sublease is a commercial transaction and Subtenant has had the
opportunity to engage legal counsel. Accordingly, no rule of construction
against the draftsperson of a document or against landlords shall be applicable
to this Sublease. Section references used herein (e.g.,
Section 39) shall refer to section numbers of this Sublease,
unless otherwise specified or unless the context clearly requires otherwise.

     L.     No Partnership. Nothing contained in this Sublease
shall be deemed or construed to create a partnership or joint venture of or
between Sublessor and Subtenant, or to create any other relationship between
the parties hereto other than that of landlord and tenant.

     M.     No Representations by Sublessor. Neither Sublessor
nor any agent or employee of Sublessor has made any representations or promises
with respect to the Premises or the Property except as herein expressly set
forth, and no rights, privileges, easements or licenses are acquired by
Subtenant except as herein expressly set forth. Subtenant, by taking
possession of the Premises, shall accept the same in the then “as is”
condition, except for latent defects and punch list items. Taking of
possession of the Premises by Subtenant shall be conclusive evidence that the
Premises and the Building are in good and satisfactory condition at the time of
such taking of possession, as provided for in Exhibit F
attached hereto.

     N.     Waiver of Jury Trial. SUBLESSOR AND SUBTENANT EACH
HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT
BY EITHER OF THE PARTIES HERETO AGAINST THE
OTHER ON OR WITH RESPECT TO ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY
WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF SUBLESSOR AND SUBTENANT
HEREUNDER, SUBTENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR
INJURY OR DAMAGE. SUBTENANT FURTHER AGREES NOT TO INSTITUTE, ASSERT, RAISE OR
INTERPOSE ANY NON-COMPULSORY CLAIM OR COUNTERCLAIM IN ANY ACTION OR PROCEEDING
INSTITUTED BY SUBLESSOR TO RECOVER POSSESSION OF THE PREMISES.

     O.     Enforcement of Sublease. If either party (the
“Enforcing Party”) is required or elects to take legal
action to enforce against the other party (the “Defaulting
Party”) the performance of the Defaulting Party’s obligations under
this Sublease, then the Defaulting Party shall immediately reimburse the
Enforcing Party for all costs and expenses, including, without limitation,
reasonable attorneys’ fees, litigation expenses, and expenses of investigating
and preparing for suit, incurred by the Enforcing Party in its successful
prosecution of that legal action. Other than in the event of a holding over by
Subtenant, neither Sublessor nor Subtenant shall be entitled to consequential
damages arising out of a breach of this Sublease.

     P.     Confidentiality. Neither this Sublease nor a
memorandum thereof may be recorded in the land records. Sublessor and
Subtenant each agrees to maintain all negotiations, financial terms and other
material non-public information (“Confidential Material”) in
strict confidence as provided herein. Sublessor and Subtenant each agrees not
to disclose to any person not authorized herein, and to require that all
authorized persons to whom it discloses the Confidential Material will not make
any further disclosure of any Confidential Material. The fact that a Sublease
has been executed between Sublessor and Subtenant for the Premises shall

- 37 -

 

not be
deemed to be Confidential Material provided that the specific financial
business terms thereof are not disclosed. All Confidential Material that is
provided to Sublessor or Subtenant will be used solely for informational
purposes and for purposes of negotiating and finalizing a Sublease. Sublessor
and Subtenant each acknowledges and confirms that the Confidential Material may
be disclosed only if (i) the information is already a matter of public
knowledge, (ii) the information may be necessary to Sublessor’s or Subtenant’s
financial, legal or real estate consultants, purchasers, bona fide potential
subtenants or assignees, or lenders (or potential purchasers or lenders), or
(iii) such disclosure is required by law. Prior to disclosure of any
Confidential Material, the persons receiving the Confidential Material must be
advised by the disclosing party of the confidential nature of Confidential
Material and agree not to make any further disclosure of any Confidential
Material except to the disclosing party, or use such Confidential Material
contained therein for any purpose other than for information use.

     Q.     Captions. The captions used herein are for
convenience of reference only, and are not part of this Sublease, and shall in
no way be deemed to define, limit, describe or modify the meaning of any
provision of this Sublease.

     R.     No Light or Air Easement. Any diminution or
shutting off of light, air or view by any structure which is now or may
hereafter be erected on lands adjacent to the Building shall in no way affect
this Sublease or impose any liability on Sublessor. Noise, dust or vibration
or other incidents to new construction of improvements on lands adjacent to the
Building, whether or not owned by Sublessor, shall in no way affect this
Sublease or impose any liability on Sublessor. Subtenant agrees that in any
such event, Subtenant shall not be entitled to any action, claim or relief,
including without limitation rent reduction or abatement, or termination of
this Sublease.

     S.     Consents and Approvals. If Subtenant seeks approval
or consent of Sublessor and Sublessor fails to give such consent or approval,
Subtenant shall not be entitled to any damages for any withholding or delay of
such approval or consent.

     T.     Entire Agreement. This Sublease, together with
Exhibits A, B, C,
D, E, F,
G, H, I,
J, K and L attached
hereto and made a part hereof, contains and embodies the entire agreement of
the parties hereto, and no representations, inducements, or agreements, oral or
otherwise, between the parties not contained and embodied in this Sublease and
said Exhibits shall be of any force or effect, and the same may not be
modified, changed or terminated in whole or in part in any manner other than by
an agreement in writing duly signed by all parties hereto. The submission of
an unsigned copy of this document to Subtenant shall not constitute an offer or
option to lease the Premises. This Sublease shall become effective and binding
only upon execution and delivery by both Sublessor and Subtenant.

- 38 -

 

     IN WITNESS WHEREOF, Sublessor and Subtenant have caused this Sublease to
be signed in their names by their duly authorized representatives and delivered
as their act and deed, intending to be legally bound by its terms and
provisions.

	 	 	 	 	 
	 	 	SUBLESSOR:
	 	 	 	 	 
	 	 	MANUGISTICS, INC., a Delaware corporation
	 	 	 	 	 
	 	 	
By:
	 	/s/ Raghavan Rajaji
	 	 	 	 	

	 	 	 	 	Name: Raghavan Rajaji
	 	 	 	 	Title: Chief Financial Officer
	 	 	 	 	 
	 	 	SUBTENANT:
	 	 	 	 	 
	 	 	THERACOM, INC., an Ohio corporation
	 	 	 	 	 
	 	 	
By:
	 	/s/ Jon S. Halbert
	 	 	 	 	

	 	 	 	 	Name: John S. Halbert
	 	 	 	 	Title: Vice Chairman

- 39 -

 

EXHIBIT F

DECLARATION AS TO DATE OF DELIVERY

AND ACCEPTANCE OF POSSESSION OF PREMISES

     Attached to and made a part of the Sublease, dated the 10th day of June,
2003, entered into by and between MANUGISTICS, INC., a Delaware corporation, as
Sublessor, and THERACOM, INC., an Ohio corporation, as Subtenant.

     Sublessor and Subtenant do hereby declare and evidence that possession of
the Premises was accepted by Subtenant in its “as is” condition on the 24th day
of July, 2003. The Sublease is now in full force and effect. For the purpose
of the Sublease, the Commencement Date is established as the 22nd day of
September, 2003. As of Commencement Date, Subtenant claims no right of set off
against rents.

     Subtenant states that its registered agent or its agent for service of
process in the State of Maryland is Corporation Services Company having an
address at N.E. Chase Street, Baltimore, MD 21202, and that it is a corporation
in good standing in the State of Maryland.

	 	 	 	 	 
	 	 	SUBLESSOR:
	 	 	 	 	 
	 	 	MANUGISTICS, INC., a Delaware corporation
	 	 	 	 	 
	 	 	
By:
	 	/s/ Raghavan Rajaji
	 	 	 	 	

	 	 	
Name:
	 	Raghavan Rajaji
	 	 	
Title:
	 	Chief Financial Officer
	 	 	 	 	 
	 	 	SUBTENANT:
	 	 	 	 	 
	 	 	THERACOM, INC., an Ohio corporation
	 	 	 	 	 
	 	 	
By:
	 	/s/ Jon S. Halbert
	 	 	 	 	

	 	 	
Name:
	 	Jon S. Halbert
	 	 	
Title:
	 	Vice Chairman

- 40 -

 

EXHIBIT H

FORM OF SUBLEASE GUARANTY

GUARANTY OF SUBLEASE

     THIS GUARANTY OF SUBLEASE is made as of June 10, 2003, by ADVANCEPCS,
Delaware corporation (“Guarantor”), to MANUGISTICS, INC., a
Delaware corporation, its successors and assigns
(“Sublessor”).

     WHEREAS, by Office Lease dated December 19, 2000, as amended by First
Amendment to Lease dated June 14, 2001 and Second Amendment to Lease dated
March 24, 2003, JOHN F. JAEGER, Trustee (“Prime Landlord”),
leased to Sublessor approximately 282,783 square feet of rentable area (the
(“Prime Lease Premises”), being the entire rentable area of
the Danac Stiles Corporate Office Campus at the intersection of Great Seneca
Highway and Key West Avenue, Rockville, Maryland;

     WHEREAS, Sublessor has subleased to Theracom, Inc., an Ohio corporation
(“Subtenant”) certain premises (the
“Premises”) located at 9715-C Key West Avenue, Rockville,
Maryland, being a portion of the Prime Lease Premises, pursuant to that certain
Sublease by and between Sublessor and Subtenant dated June 10, 2003 (the
“Sublease”); for purposes of this Guaranty, the term
“Subtenant” shall include any and all sublessees and assignees of Subtenant at
the Premises, and all successors and assigns of Subtenant and such sublessees
and assignees;

     WHEREAS, Guarantor owns one hundred percent (100%) of the issued and
outstanding stock of Subtenant;

     WHEREAS, Guarantor is materially benefited by the Sublease and is not just
an accommodation party, and the undertaking by Guarantor to execute and deliver
this Guaranty is a material inducement to Sublessor to enter into the Sublease.

     NOW THEREFORE, in consideration of the premises, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor agrees with Sublessor as follows:

     1.     Each of the above recitals is incorporated herein as if
restated in full.

     2.     Guarantor unconditionally and irrevocably guarantees that all rent and
other sums stated in the Sublease to be payable by Subtenant (collectively,
“Rent”) will be promptly paid in full when due in accordance
with the Sublease and that Subtenant will perform and observe each and every
covenant and agreement in the Sublease required to be performed and observed by
Subtenant (the “Obligations”). This Guaranty is
irrevocable, unconditional and absolute, and if for any reason any Rent shall
not be paid promptly when due, or any Obligation shall not be timely performed
or observed, Guarantor shall, promptly without notice, and prior to the
expiration of any period of grace provided for in the Sublease, pay such
Rent or perform such Obligation regardless of (a) any defenses or rights
of set-off or counterclaims which Subtenant or

- 41 -

 

Guarantor may have or assert
against Sublessor, (b) whether Sublessor shall have taken any steps to enforce
any rights against Subtenant or any other person to collect such sum or any
part thereof or (c) the termination as a result of the default of Subtenant
thereunder. Guarantor also agrees to pay to Sublessor the cost and expense
incurred by Sublessor in collecting such sums or any part thereof from
Subtenant or Guarantor or of otherwise enforcing the Sublease or this Guaranty,
including, without limitation, reasonable attorneys’ fees. This Guaranty is a
guaranty of payment and performance and not of collection only.

     3.     Guarantor is fully aware of the financial condition of Subtenant and is
executing and delivering this Guaranty based solely upon Guarantor’s own
independent investigation of all matters pertinent hereto and is not relying in
any manner upon any representation or statement of Sublessor. Guarantor
represents and warrants that Guarantor is in a position to obtain, and
Guarantor hereby assumes full responsibility for obtaining, any additional
information concerning Subtenant’s financial condition and any other matter
pertinent hereto as Guarantor may desire, and Guarantor is not relying upon or
expecting Sublessor to furnish to Guarantor any information now or hereafter in
Sublessor’s possession concerning the same or any other matter. By executing
this Guaranty, Guarantor knowingly accepts the full range of risks encompassed
within a contract of this type, which risks Guarantor acknowledges. Guarantor
shall have no right to require Sublessor to obtain or disclose any information
with respect to the financial condition or character of Subtenant or
Subtenant’s ability to pay the Rent and perform the Obligations, or the
existence or nonexistence of any other guaranties of all or any part of the
Rent or the Obligations.

     4.     (a) The obligations, covenants and agreements of Guarantor under this
Guaranty shall in no way be affected or impaired by reason of the happening
from time to time of any of the following, although without notice to or the
further consent of Guarantor: (i) the waiver by Sublessor of the performance
or observance by Subtenant, Guarantor or any other party of any of the
agreements, covenants or conditions contained in the Sublease or this Guaranty;
(ii) the extension, in whole or in part, of the time for payment by Subtenant
or Guarantor of any sums owing or payable under the Sublease or this Guaranty,
or of any other sums or obligations under or arising out of or on account of
the Sublease or this Guaranty; (iii) any assignment of the Sublease or
subletting of the Premises or any part thereof, whether or not permitted; (iv)
the modification or amendment (whether material or otherwise) of any of the
obligations of Subtenant under the Sublease; (v) any failure, omission or delay
on the part of Sublessor to enforce, assert or exercise any right, power or
remedy conferred on or available to Sublessor in or by the Sublease, this
Guaranty, or any other guaranty of the Sublease, or any action on the part of
Sublessor granting indulgence or extension in any form whatsoever; (vi) the
failure of Sublessor to file or enforce a claim against the estate (either in
administration, bankruptcy or any other proceeding) of Subtenant or any other
guaranty of this Sublease; (vii) the voluntary or involuntary liquidation,
dissolution or sale of any or all of the assets, marshaling of assets and
liabilities, receivership, conservatorship, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization, arrangement, composition or
readjustment of, or other similar proceeding affecting, Subtenant or Guarantor
or any of Subtenant’s or Guarantor’s assets; or (viii) the release of Subtenant
or Guarantor from the performance or observance of any of the
agreements, covenants, terms or conditions contained in the Sublease or
this Guaranty by operation of law.

- 42 -

 

          (b) To the extent not prohibited by law, Guarantor hereby expressly
waives (i) any right Guarantor may now or hereafter have to any hearing prior
to the attachment of any real or personal property of Guarantor to satisfy the
obligations of Guarantor hereunder, (ii) the benefits of any present or future
constitution, statute or rule of law which exempts property from liability for
debt, (iii) any defense based upon an election of remedies by Sublessor which
destroys or otherwise impairs the subrogation rights of Guarantor or the right
of Guarantor to proceed against Subtenant for reimbursement or both; and (iv)
any rights or defenses based upon an offset by Guarantor against any obligation
now or hereafter owed to Guarantor by Subtenant; it being the intention hereof
that Guarantor shall remain liable as principal, to the extent set forth
herein, until the full payment of all Rent and full performance of all the
Obligations notwithstanding any act, omission or thing which might otherwise
operate as a legal or equitable discharge of Guarantor.

     5.     An Event of Bankruptcy (as defined in the Sublease) shall in no way
excuse Guarantor from its obligations pursuant to this Guaranty.

     6.     Notice of acceptance of this Guaranty and notice of any obligations or
liabilities contracted or incurred by Subtenant are hereby waived by Guarantor.
Guarantor hereby waives presentment, demand for payment, notice of dishonor,
protest and notice of non-payment or non-performance.

     7.     Guarantor represents and warrants to Sublessor as follows:

		
	 	          (i) Guarantor has full right and authority to enter into this
Guaranty and to perform all of its obligations hereunder.

		
	 	          (ii) No consent, joinder or approval of any other person or party
is required with respect to Guarantor’s right and authority to enter into
this Guaranty and to perform its obligations hereunder.

     8.     If Subtenant defaults under the Sublease, then until the Obligations
are fully performed and the Rent paid, any indebtedness (including, without
limitation, interest obligations) of Subtenant to Guarantor now or hereafter
existing shall be, and such indebtedness hereby is deferred, postponed and
subordinated to the Rent and the Obligations. Guarantor hereby unconditionally
and irrevocably agrees that if Subtenant defaults under the Sublease, then
until the Obligations are fully performed and the Rent paid, (i) Guarantor will
not at any time assert against Subtenant (or Subtenant’s estate in the event
Subtenant becomes bankrupt or becomes the subject of any case or proceeding
under the bankruptcy laws of the United States of America) any right or claim
to indemnification, reimbursement, contribution or payment for or with respect
to any and all amounts Guarantor may pay or be obligated to pay Sublessor,
including, without limitation, the Rent, and any and all Obligations which
Guarantor may perform, satisfy or discharge, under or with respect to this
Guaranty unless such assertion shall be expressly subordinate to the claims of
Sublessor; (ii) Guarantor subordinates all such rights and claims and any other
rights and claims to indemnification, reimbursement, contribution or
payment which Guarantor, or any of them, may have now or at any time
against Subtenant (or Subtenant’s estate in the event Subtenant becomes
bankrupt or becomes the subject of any case or proceeding under any bankruptcy
laws); (iii) Guarantor subordinates any right of subrogation,

- 43 -

 

and Guarantor
waives any right to enforce any remedy which Sublessor now has or may hereafter
have against Subtenant; (iv) Guarantor subordinates its right to any benefit
of, and any right to participate in, any security, if any, now or hereafter
held by Sublessor; and (v) Guarantor waives any defense based upon an election
of remedies by Sublessor which destroys or otherwise impairs any subrogation
rights of Guarantor or the right of Guarantor to proceed against Subtenant for
reimbursement. The provisions of this Section 8 of this
Guaranty shall continue and survive until the payment of the Rent and the
satisfaction of the Obligations and the termination or discharge of Guarantor’s
obligations under this Guaranty. Guarantor further hereby unconditionally and
irrevocably agrees and guarantees (on a joint and several basis with Subtenant)
to make full and prompt payment to Sublessor of any of the Rent or other sums
paid to Sublessor pursuant to the Sublease which Sublessor is subsequently
ordered or required to pay or disgorge on the grounds that such payments
constituted an avoidable preference or a fraudulent transfer under applicable
bankruptcy, insolvency or fraudulent transfer laws; and Guarantor shall fully
and promptly indemnify Sublessor for all costs (including, without limitation,
attorney’s fees) incurred by Sublessor in defense of such claims of a voidable
preference or fraudulent transfer.

     9.     Sublessor need not inquire into the power of Subtenant or Guarantor or
the authority of the officers, directors or agents acting or purporting to act
on their behalf.

     10.     Guarantor hereby waives trial by jury in any action, proceeding or
permitted counterclaim brought in any matter, directly or indirectly, arising
out of or with respect to this Guaranty, that may hereafter be instituted with
respect to this Guaranty.

     11.     This Guaranty shall be governed by and construed in accordance with
the laws of the State of Maryland without regard to its conflicts of law
provisions. Guarantor hereby agrees that it will submit and does hereby
irrevocably submit to the personal jurisdiction of the Maryland State courts
and the United States District Court for Maryland and will not attempt to have
any action brought therein dismissed, abated, or transferred on the ground of
forum non conveniens or similar grounds; provided, however, that nothing
contained herein shall prohibit Guarantor or Sublessor from seeking, by
appropriate motion, to remove any action brought in a Maryland court to the
United States District Court for Maryland. If such action is so removed,
however, Guarantor shall not seek to transfer such action to any other
district.

     12.     This Guaranty may not be modified or amended except by a written
agreement duly executed by Guarantor and Sublessor.

     13.     Guarantor’s liability hereunder shall be primary and not secondary,
and shall be joint and several with that of Subtenant and any other guarantor
of Subtenant’s obligations under the Sublease. Sublessor may proceed against
Guarantor under this Guaranty without initiating or exhausting its remedy or
remedies against Subtenant, and may proceed against Subtenant and/or Guarantor
separately or concurrently. In the event Sublessor receives in excess of the
Obligations from among Subtenant, Guarantor and any other party, then so long
as Subtenant, Guarantor and each such other paying party has not filed for
protection under bankruptcy or
similar debtor’s rights laws, within ninety-one (91) days (or such greater
time period as allowed by applicable bankruptcy law or non-bankruptcy law for
avoidance of transfers) after Sublessor’s

- 44 -

 

receipt of the final payment by all
such parties, Sublessor shall make appropriate refund of such excess.

     14.     Within five (5) days after Sublessor’s written request to Guarantor,
Guarantor shall execute and deliver to Sublessor a statement in writing setting
forth any amendments to this Guaranty and stating whether or not this Guaranty
is in full force and effect and specifying what reasons or defenses, if any,
support any claim that this Guaranty is not in full force and effect.

     15.     Any notice which Sublessor may elect to send to Guarantor shall be
binding upon Guarantor if mailed to him or her at the address set forth above
or his last address known to Sublessor, by United States Certified or
Registered Mail, Return Receipt Requested. Any notice sent by Guarantor to
Sublessor in connection with this Guaranty shall be delivered to the address
and in the manner set forth in the Sublease.

     16.     This Guaranty shall be binding upon, and inure to the benefit of, the
parties hereto and their respective heirs, personal representatives, successors
and assigns. Prime Landlord is not a party to this Guaranty, but Prime
Landlord shall be a third party beneficiary of this Guaranty.

     17.     The amount and/or extent of liability of Guarantor, and all rights,
powers and remedies of Sublessor hereunder and under any other agreement now or
at any time hereafter in force between Sublessor and Guarantor relating to the
Rent or Obligations shall be cumulative and not alternative, and such rights,
powers and remedies shall be in addition to all rights, powers and remedies
given to Sublessor by law. If any term, covenant or condition of this Guaranty
or the application thereof to any person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Guaranty or the application
of such term, covenant or condition to persons or circumstances other than
those as to which it is held invalid or unenforceable shall not be affected
thereby and each term, covenant or condition of this Guaranty shall be valid
and be enforced to the fullest extent permitted by law.

     IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed as
of the date first above written.

	 	 	 	 	 
	 	 	GUARANTOR:
	 	 	 	 	 
	 	 	ADVANCEPCS, a Delaware corporation
	 	 	 	 	 
	 	 	
By:
	 	/s/ Jon S. Halbert
	 	 	 	 	

	 	 	 	 	Name: Jon S. Halbert
	 	 	 	 	Title: Vice Chairman

- 45 -exv10w19

 

EXHIBIT 10.19

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) entered into as of October 8,
2003, by and between First Potomac Realty Investment Limited Partnership, a
Delaware limited partnership, (the “Company”) and Douglas J. Donatelli
(“Executive”).

     WHEREAS, First Potomac Realty Trust, a Maryland real estate investment
trust, (the “Trust”) is the Company’s general partner;

     WHEREAS, the parties desire to enter into an agreement to reflect
Executive’s executive capacities in the Trust’s business and to provide for
Executive’s employment by the Company, upon the terms and conditions set forth
herein; and

     WHEREAS, Executive has agreed to certain confidentiality, non-competition
and non-solicitation covenants contained hereunder, in consideration of the
additional benefits provided to Executive under this Agreement;

     NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:

     1.     Employment. The Company hereby agrees to employ Executive, and
Executive hereby accepts such employment and agrees to perform Executive’s
duties and responsibilities, in accordance with the terms, conditions and
provisions hereinafter set forth.

     1.1. Employment Term. This Agreement shall be effective as of the
commencement of the Trust’s initial public offering, and shall continue until
the third anniversary of such offering, unless the Agreement is terminated
sooner in accordance with Section 2 or 3 below. In addition, the term of the
Agreement shall automatically renew for periods of two (2) years unless either
party gives written notice to the other party, at least ninety (90) days prior
to the end of the initial term or at least ninety (90) days prior to the end of
any two (2) year renewal period, that the Agreement shall not be further
extended. The period commencing on the effective date and ending on the date
on which the term of Executive’s employment under the Agreement shall terminate
is hereinafter referred to as the “Employment Term.” If a Change in Control
(as defined in Section 3) occurs, the Employment Term shall be automatically
extended to the later of (i) the end of the then existing initial or renewal
period or (ii) the date that is two (2) years after the Change in Control,
unless the Employment Term is sooner terminated according to Section 2 or 3
below.

     1.2. Duties and Responsibilities. During the Employment Term, Executive
shall serve as the President and Chief Executive Officer of the Trust and shall
be employed at the Company. The Executive’s principal employment duties and
responsibilities shall be those duties and responsibilities customary for the
positions of President and Chief Executive Officer and such other executive
duties and responsibilities as the Board of Trustees of the Trust (the “Board”)
shall reasonably assign to the Executive. Executive shall perform all duties
and accept all

 

 

responsibilities incident to such position as may be reasonably assigned to him
by the Trust’s Board. The Executive shall be responsible for and have
authority over the day-to-day operational management of the Company and the
Trust. The Executive shall report directly to the Board. All other officers
of the Company and Trust shall report to the Executive or such other person(s)
as the Executive may designate from time to time.

     1.3. Extent of Service. Executive agrees to use Executive’s best efforts
to carry out Executive’s duties and responsibilities under Section 1.2 hereof
and, consistent with the other provisions of this Agreement, to devote
substantially all of Executive’s business time, attention and energy thereto.
The foregoing shall not be construed as preventing Executive from making
investments in other businesses or enterprises, provided that Executive agrees
not to become engaged in any other business activity which, in the reasonable
judgment of the Board, is likely to interfere with Executive’s ability to
discharge Executive’s duties and responsibilities to the Company and the Trust.

     1.4. Base Salary. For all the services rendered by Executive hereunder,
the Company shall pay Executive a base salary (“Base Salary”), commencing on
the commencement of the Trust’s initial public offering, at the annual rate of
$250,000, payable in installments at such times as the Company customarily pays
its other senior level executives. Executive’s Base Salary shall be reviewed
annually for appropriate increases by the Board (or the compensation committee
of the Board) pursuant to the Board’s normal performance review policies for
senior level executives.

     1.5. Annual Incentive Award. Executive shall be entitled to receive an
annual cash incentive bonus for each fiscal year during the Employment Term
consistent with a bonus policy adopted by the Board (or the compensation
committee of the Board) (the “Bonus Policy”). If the Executive or the Company,
as the case may be, satisfies the performance criteria contained in such Bonus
Policy for a fiscal year, Executive shall receive an annual incentive bonus in
an amount determined by the Board (or the compensation committee of the Board).
If the Executive or the Company, as the case may be, fails to satisfy the
performance criteria contained in such Bonus Policy for a fiscal year, the
Board (or the compensation committee of the Board) may determine whether any
incentive bonus shall be payable to Executive for that year. For purposes of
this Agreement, the term “Incentive Bonus” shall mean the amount established
pursuant to this Section 1.5.

     1.6. Retirement, Welfare and Other Benefit Plans and Programs. During the
Employment Term, Executive shall be entitled to participate in all employee
retirement and welfare benefit plans and programs made available to the
Company’s senior level executives as a group or to its employees generally, as
such retirement and welfare plans may be in effect from time to time and
subject to the eligibility requirements of the plan. During the Employment
Term, Executive shall be entitled to vacation and sick leave in accordance with
the Company’s vacation, holiday and other pay for time not worked policies.
Nothing in this Agreement shall prevent the Company from amending or
terminating any retirement, welfare or other employee benefit plans or programs
from time to time as the Company deems appropriate.

2

 

     1.7. Reimbursement of Expenses. Executive shall be provided with
reimbursement of reasonable expenses related to Executive’s employment by the
Company on a basis no less favorable than that which may be authorized from
time to time for senior level executives as a group.

     1.8. Incentive Compensation.

          (a) Initial Option. At the time of the initial public offering of the
Trust’s common shares of beneficial interest, $0.001 par value, (the “Shares”),
the Trust shall grant to Executive an option (the “Initial Option”) to purchase
150,000 Shares, at a price per Share equal to the public offering price of the
Shares. The Initial Option shall become exercisable with respect to 1/4 of the
Shares on the first anniversary of the date of grant and the remaining 3/4 of
the Shares shall become exercisable in increments of 6.25% on the same day as
the date of grant of every third month, beginning with the third month that
commences after the first anniversary of the date of grant, provided that the
Executive is employed by or providing service to the Company or Trust on each
such date. All other terms and conditions of the Initial Option shall be
governed by the Trust’s standard stock option agreement for such grants.

          (b) Executive shall be entitled to participate in any short-term and
long-term incentive programs (including without limitation the 2003 Equity
Compensation Plan and any subsequently implemented stock option plans)
established by the Company or the Trust for the Company’s senior level
executives generally, at levels commensurate with the benefits provided to
other senior executives and with adjustments appropriate for his position as
the President and Chief Executive Officer of the Company.

     2.     Termination. Executive’s employment shall terminate upon the
occurrence of any of the following events:

     2.1. Termination Without Cause; Resignation for Good Reason.

          (a) The Company may remove Executive at any time without Cause (as defined
in Section 2.7) from the position in which Executive is employed hereunder (in
which case the Employment Term shall be deemed to have ended) not less than
thirty (30) days’ prior written notice to Executive; provided, however, that,
in the event that such notice is given, Executive shall be under no obligation
to render any additional services to the Company and shall be allowed to seek
other employment. In addition, Executive may initiate termination of
employment by resigning under this Section 2.1 for Good Reason (as defined in
Section 2.7). Executive shall give the Company not less than thirty (30) days’
prior written notice of such resignation.

          (b) Upon any removal or resignation described in Section 2.1(a) above,
Executive shall be entitled to receive only the amount due to Executive under
the Company’s then current severance pay plan for employees, if any. No other
payments or benefits shall be due under this Agreement to Executive, but
Executive shall be entitled to any benefits accrued or earned in accordance
with the terms of any applicable benefit plans and programs of the Company.

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          (c) Notwithstanding the provisions of Section 2.1(b), in the event that
Executive executes and does not revoke a written release upon such removal or
resignation, substantially in the form attached hereto as Exhibit A (the
“Release”), of any and all claims against the Company and all related parties
with respect to all matters arising out of Executive’s employment by the
Company, or the termination thereof (other than claims for any entitlements
under the terms of this Agreement or under any plans or programs of the Company
under which Executive has accrued a benefit), Executive shall be entitled to
receive, in lieu of the payment described in Section 2.1(b), the following:

               (i) Two (2) times Executive’s Base Salary, at the rate in effect
immediately before Executive’s termination of employment, payable in equal
installments, consistent with the Company’s past payroll practices, over the
twenty-four (24) month period after the Executive’s Date of Termination,
commencing with the first payroll period that occurs after the period during
which Executive’s right to revoke his acceptance of the terms of the Release
has expired. Notwithstanding the foregoing, the Company may determine, in its
sole discretion and at any time, to provide that the amounts payable under this
subsection (i) shall be paid to Executive in a lump sum, as opposed to
installments over the twenty-four (24) month period.

               (ii) Pro rated Incentive Pay (as defined in Section 2.7) for the year in
which Executive’s Date of Termination occurs. The pro rated Incentive Pay
shall be based on the Executive’s Incentive Pay for the fiscal year in which
Executive’s Date of Termination occurs, multiplied by a fraction, the numerator
of which is the number of days during which Executive was employed by the
Company in the fiscal year of his termination and the denominator of which is
365. Such pro rated Incentive Pay shall be paid to Executive in equal
installments, consistent with the Company’s past payroll practices, over the
twenty-four (24) month period after the Executive’s Date of Termination,
commencing with the first payroll period that occurs after the period during
which Executive’s right to revoke his acceptance of the terms of the Release
has expired. Notwithstanding the foregoing, the Company may determine, in its
sole discretion and at any time, to provide that the amounts payable under this
subsection (ii) shall be paid to Executive in a lump sum, as opposed to
installments over the twenty-four (24) month period.

               (iii) For a period of twenty-four (24) months following the Date of
Termination, Executive shall continue to receive the medical coverage in effect
at the date of his termination (or generally comparable coverage) for himself
and, where applicable, his spouse and dependents, as the same may be changed
from time to time for employees generally, as if Executive had continued in
employment during such period; or, as an alternative, the Company may elect to
pay Executive cash in lieu of such coverage in an amount equal to Executive’s
after-tax cost of continuing such coverage, where such coverage may not be
continued (or where such continuation would adversely affect the tax status of
the plan pursuant to which the coverage is provided). The COBRA health care
continuation coverage period under section 4980B of the Internal Revenue Code
of 1986, as amended, (the “Code”) shall run concurrently with the foregoing
twenty-four (24) month benefit period.

4

 

               (iv) Notwithstanding any provision to the contrary in any applicable plan,
program or agreement, all outstanding stock options, restricted stock and other
equity rights held by the Executive as of Executive’s Date of Termination shall
become fully vested and/or exercisable, as applicable, as of Executive’s Date
of Termination. All outstanding stock options and other equity rights that
have an exercise period shall remain exercisable for the shorter of: (A) five
(5) years from the Executive’s Date of Termination or (B) the end of their
applicable original term.

               (v) Executive shall receive any other amounts earned, accrued or owing but
not yet paid under Section 1 above and any benefits accrued or earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.

     2.2. Voluntary Termination. Executive may voluntarily terminate his
employment for any reason upon thirty (30) days’ prior written notice. In such
event, after the effective date of such termination, except as provided in
Section 2.1 with respect to a resignation for Good Reason, no further payments
shall be due under this Agreement, except that Executive shall be entitled to
any benefits due in accordance with the terms of any applicable benefit plans
and programs of the Company.

     2.3. Disability. The Company may terminate Executive’s employment if
Executive has been unable to perform the material duties of his employment for
a period of three (3) consecutive months in any 12-month period because of
physical or mental injury or illness (“Disability”); provided, however, that
the Company shall continue to pay Executive’s Base Salary until the Company
acts to terminate Executive’s employment. Executive agrees, in the event of a
dispute under this Section 2.3 relating to Executive’s Disability, to submit to
a physical examination by a licensed physician jointly selected by the Board
and Executive. If the Company terminates Executive’s employment for
Disability, Executive shall be entitled to receive the following:

          (a) The Company shall pay to Executive any amounts earned, accrued or
owing but not yet paid under Section 1 above and pro rated Incentive Pay for
the fiscal year in which his Date of Termination occurs, calculated according
to Section 2.1(c)(ii) above.

          (b) All outstanding stock options, restricted stock and other equity
rights held by the Executive as of Executive’s Date of Termination shall become
fully vested and/or exercisable, as applicable, as of Executive’s Date of
Termination. All outstanding stock options and other equity rights that have
an exercise period shall remain exercisable for the shorter of: (A) five (5)
years from the Executive’s Date of Termination or (B) the end of their
applicable original term.

          (c) Executive shall receive any other benefits accrued or earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.

     2.4. Death. If Executive dies while employed by the Company, the Company
shall pay to Executive’s executor, legal representative, administrator or
designated beneficiary, as applicable, (i) any amounts earned, accrued or owing
but not yet paid under Section 1 above and

5

 

any benefits accrued or earned under the Company’s benefit plans and programs,
(ii) a pro rated Incentive Pay for the fiscal year in which Executive’s death
occurs, which bonus shall be calculated according to Section 2.1(c)(ii) above
and (iii) all outstanding stock options, restricted stock and other equity
rights held by the Executive as of Executive’s Date of Termination shall become
fully vested and/or exercisable, as applicable, as of Executive’s Date of
Termination and all outstanding stock options and other equity rights that have
an exercise period shall remain exercisable for the shorter of: (A) five (5)
years from the Executive’s Date of Termination or (B) the end of their
applicable original term. Otherwise, the Company shall have no further
liability or obligation under this Agreement to Executive’s executors, legal
representatives, administrators, heirs or assigns or any other person claiming
under or through Executive.

     2.5. Cause. The Company may terminate Executive’s employment at any time
for Cause upon written notice to Executive, in which event all payments under
this Agreement shall cease, except for Base Salary to the extent already
accrued. Executive shall be entitled to any benefits accrued or earned before
his termination in accordance with the terms of any applicable benefit plans
and programs of the Company.

     2.6. Notice of Termination. Any termination of Executive’s employment
shall be communicated by a written notice of termination to the other party
hereto given in accordance with Section 10. The notice of termination shall
(i) indicate the specific termination provision in this Agreement relied upon,
(ii) briefly summarize the facts and circumstances deemed to provide a basis
for a termination of employment and the applicable provision hereof, and (iii)
specify the Date of Termination in accordance with the requirements of this
Agreement.

     2.7. Definitions.

          (a) “Cause” shall mean any of the following grounds for termination of
Executive’s employment:

               (i) Executive shall have been convicted of, or a plea of guilty or nolo
contendre to, a felony,

               (ii) Executive intentionally and continually fails substantially to
perform his reasonably assigned material duties to the Company (other than a
failure resulting from Executive’s incapacity due to physical or mental
illness), which failure has been materially and demonstrably detrimental to the
Company and has continued for a period of at least thirty (30) days after a
written notice of demand for substantial performance, signed by the Board, has
been delivered to Executive specifying the manner in which Executive has failed
substantially to perform,

               (iii) Executive engages in willful misconduct in the performance of his
duties, or

               (iv) Executive breaches any non-competition, non-disclosure or
non-solicitation agreement in effect with the Company.

6

 

          (b) “Date of Termination” shall mean the date that the termination of
Executive’s employment with the Company is effective on account of the
Executive’s death, Executive’s Disability, termination by the Company for Cause
or without Cause or by the Executive for Good Reason or without Good Reason, as
the case may be. The Employment Term shall end on the Date of Termination.

          (c) “Good Reason” shall mean the occurrence of any of the following events
or conditions, unless Executive has expressly consented in writing thereto or
unless the event is remedied by the Company promptly after receipt of notice
thereof given by Executive:

               (i) a substantial reduction in Executive’s Base Salary;

               (ii) a demotion of Executive;

               (iii) a material reduction of Executive’s duties hereunder;

               (iv) the Company’s requiring Executive to be based at a location other
than in the Washington, D.C. metropolitan area;

               (v) the non-renewal of the Agreement by the Company in accordance with
Section 1.1; or

               (vi) any material breach of this Agreement by the Company.

          (d) “Incentive Pay” shall mean the greater of (i) Executive’s maximum
Incentive Bonus for which Executive was eligible during the period that
includes the Date of Termination or (ii) the highest aggregate bonus or
incentive payment paid to Executive during any of the three (3) full calendar
years prior to his Date of Termination. For purposes of this definition,
“Incentive Pay” does not include any stock option, stock appreciation, stock
purchase, restricted stock or similar plan, program, arrangement or grant, one
time bonus or payment (including, but not limited to, any sign-on bonus), any
amounts contributed by the Company for the benefit of Executive to any
qualified or nonqualified deferred compensation plan, or any amounts designated
by the parties as amounts other than Incentive Pay.

     3.     Change in Control.

     3.1 Effect of Change in Control. If a Change in Control occurs and
Executive’s employment terminates under the circumstances described below, the
provisions of this Section 3 shall apply, instead of the provisions of Section
2.1.

     3.2 Termination Without Cause Upon or After a Change in Control. Upon or
after a Change in Control, the Company (by action of the Board) may remove
Executive at any time without Cause from the position in which Executive is
employed hereunder (in which case the Employment Term shall be deemed to have
ended) upon not less than sixty (60) days’ prior written notice pursuant to
Section 10 to Executive; provided, however, that, in the event that such notice
is given, Executive shall be under no obligation to render any additional
services to

7

 

the Company and shall be allowed to seek other employment. This provision
shall not apply if Executive’s employment is terminated by the Company on
account of the Executive’s death or Disability.

     3.3 Resignation for Good Reason Upon or After a Change in Control. Upon
or after a Change in Control, Executive may initiate termination of employment
by resigning under this Section 3 for Good Reason. Executive shall give the
Company not less than sixty (60) days’ prior written notice pursuant to Section
10 of such resignation.

     3.4. Resignation During a Window Period. If a Change in Control occurs,
Executive may initiate termination of employment by resigning under this
Section 3.4 with or without Good Reason during the one month period beginning
on the first anniversary of the consummation of the Change in Control (the
“Window Period”). Executive shall give the Company written notice pursuant to
Section 10 during the Window Period of such resignation, with the Date of
Termination to be effective not less than sixty (60) days after the date of
such notice.

     3.5 Benefits Payable Upon Termination Without Cause, Resignation for Good
Reason or Resignation During a Window Period Upon or After a Change in Control.

          (a) Upon any removal or resignation described in Section 3.2, 3.3 or 3.4
above, Executive shall be entitled to receive only the amount due to Executive
under the Company’s then current severance pay plan for employees, if any. No
other payments or benefits shall be due under this Agreement to Executive, but
Executive shall be entitled to any benefits accrued or earned in accordance
with the terms of any applicable benefit plans and programs of the Company.

          (b) Notwithstanding the provisions of Section 3.5(a), in the event of a
removal or resignation described in Section 3.2, 3.3 or 3.4 that occurs (i) (A)
not more than six (6) months prior to the date on which a Change in Control
occurs or (B) following the commencement of any discussion with a third person
that ultimately results in a Change in Control, or (ii) upon or after a Change
in Control, Executive shall be entitled to receive the severance benefits
described below, in lieu of the payment described in Section 3.5(a), if
Executive executes and does not revoke a written Release upon such removal or
resignation. If Executive is entitled to the benefits described in this
Section 3.5(b) by reason of clause (i) above, Executive shall receive the
compensation and benefits described in Section 2.1(c) above after his Date of
Termination, in accordance with the provisions of Section 2.1(c), regardless of
whether the Change in Control actually occurs, and Executive shall receive the
additional compensation and benefits described in this Section 3.5(b) only if
the Change in Control is consummated and shall receive such additional amounts
after the consummation of the Change in Control, in accordance with the
provisions of this Section 3.5(b). For purposes of clause (i)(B) above, to be
eligible to receive the amounts described in this Section 3.5(b), the Change in
Control must be consummated within the twelve (12) month period following the
Executive’s Date of Termination. Payment of the lump sum benefits described
below (other than as described in subsection (ii) below) shall be made within
thirty (30) days after the Executive’s Date of Termination or the end of the
revocation period for the Release, if later.

8

 

               (i) Executive shall receive a lump sum cash payment equal to (x) three (3)
times Executive’s Base Salary at the rate in effect immediately before
Executive’s termination of employment and (y) three (3) times Executive’s
Incentive Pay.

               (ii) Executive shall receive his pro rated Incentive Pay for the year in
which Executive’s Date of Termination occurs. The pro rated Incentive Pay
shall be based on the Executive’s Incentive Pay for the fiscal year in which
Executive’s Date of Termination occurs, multiplied by a fraction, the numerator
of which is the number of days during which Executive was employed by the
Company in the fiscal year of his termination and the denominator of which is
365. Payment shall be made within thirty (30) days after the effective date of
the termination (or the end of the revocation period for the Release, if
later).

               (iii) For a period of thirty-six (36) months following the Date of
Termination, Executive shall continue to receive the medical coverage in effect
at the date of his termination (or generally comparable coverage) for himself
and, where applicable, his spouse and dependents, as the same may be changed
from time to time for employees generally, as if Executive had continued in
employment during such period; or, as an alternative, the Company may elect to
pay Executive cash in lieu of such coverage in an amount equal to Executive’s
after-tax cost of continuing such coverage, where such coverage may not be
continued (or where such continuation would adversely affect the tax status of
the plan pursuant to which the coverage is provided). The COBRA health care
continuation coverage period under section 4980B of the Code shall run
concurrently with the foregoing thirty-six (36) month benefit period.

               (iv) All outstanding stock options and other equity rights held by the
Executive as of his Date of Termination that have an exercise period shall
remain exercisable for the shorter of: (A) five (5) years from the Executive’s
Date of Termination or (B) the end of their applicable original term.

               (v) Executive shall receive any other amounts earned, accrued or owing but
not yet paid under Section 1 above and any benefits accrued or earned in
accordance with the terms of any applicable benefit plans and programs of the
Company.

     3.6 Acceleration of Vesting and Exercisability on a Change in Control.
Notwithstanding any provision to the contrary in any applicable plan, program
or agreement, upon the occurrence of a Change in Control, all outstanding stock
options, restricted stock and other equity rights held by the Executive will
become fully vested and/or exercisable, as applicable, on the date in which the
Change in Control occurs.

     3.7 Increase in Payments Upon a Change in Control.

          (a) Anything in this Agreement to the contrary notwithstanding, in the
event that it shall be determined that any payment or distribution by the
Company to or for the benefit of Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a “Payment”), would constitute an “excess parachute payment” within
the meaning of section 280G of the Code, the Company shall pay Executive an
additional

9

 

amount (the “Gross-Up Payment”) such
that the net amount retained by Executive after deduction of any excise tax
imposed under section 4999 of the Code, and any federal, state and local income
tax, employment tax and excise tax imposed upon the Gross-Up Payment, shall be
equal to the Payment. For purposes of determining the amount of the Gross-Up
Payment, Executive shall be deemed to pay federal income tax and employment
taxes at the highest marginal rate of federal income and employment taxation in
the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of Executive’s residence on Executive’s Date of Termination, net of
the maximum reduction in federal income taxes that may be obtained from the
deduction of such state and local taxes.

          (b) All determinations to be made under this Section 3.7 shall be made by
the Company’s independent public accountant immediately prior to the Change in
Control (the “Accounting Firm”), which firm shall provide its determinations
and any supporting calculations both to the Company and Executive within twenty
(20) days after the Executive’s Date of Termination. Any such determination by
the Accounting Firm shall be binding upon the Company and Executive. Within
ten days after the Accounting Firm’s determination, the Company shall pay the
Gross-Up Payment to Executive.

          (c) Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after Executive knows of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the thirty (30) day period following the date on
which Executive gives such notice to the Company (or such shorter period ending
on the date that any payment of taxes with respect to such claim is due). If
the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall:

               (i) give the Company any information reasonably requested by the Company
relating to such claim,

               (ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company,

               (iii) cooperate with the Company in good faith in order to contest such
claim effectively, and

               (iv) permit the Company to participate in any proceedings relating to such
claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold Executive harmless, on an
after-tax basis, for any excise tax, income tax or

10

 

employment tax, including interest and penalties, with respect thereto, imposed
as a result of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 3.7, the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings,
hearing and conferences with the taxing authority in respect of such claim.
The Company’s control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder, and Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.

          (d) All of the fees and expenses of the Accounting Firm in performing the
determinations referred to in subsections (b) and (c) above shall be borne
solely by the Company.

     3.8     Definition of a Change in Control. As used herein, a “Change in
Control” shall be deemed to have occurred if:

          (a) Any “person” (as such term is used in sections 13(d) and 14(d) of the
Exchange Act) becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Trust representing
more than 50% of the voting power of the then outstanding securities of the
Trust; provided that a Change in Control shall not be deemed to occur as a
result of a change of ownership resulting from the Trust’s initial public
offering or the death of a shareholder, and a Change in Control shall not be
deemed to occur as a result of a transaction in which the Trust becomes a
subsidiary of another real estate investment trust and in which the
shareholders of the Trust, immediately prior to the transaction, will
beneficially own, immediately after the transaction, shares entitling such
shareholders to more than 50% of all votes to which all shareholders of the
parent real estate investment trust would be entitled in the election of
trustees (without consideration of the rights of any class of stock to elect
trustees by a separate class vote);

          (b) The consummation of (i) a merger or consolidation of the Trust with
another real estate investment trust where the shareholders of the Trust,
immediately prior to the merger or consolidation, will not beneficially own,
immediately after the merger or consolidation, shares entitling such
shareholders to more than 50% of all votes to which all shareholders of the
surviving real estate investment trust would be entitled in the election of
trustees (without consideration of the rights of any class of stock to elect
trustees by a separate class vote), or where the members of the Board,
immediately prior to the merger or consolidation, would not, immediately after
the merger or consolidation, constitute a majority of the board of trustees of
the surviving real estate investment trust, (ii) a sale or other disposition of
all or substantially all of the assets of the Trust, or (iii) a liquidation or
dissolution of the Trust; or

          (c) After the effective date of this Agreement, trustees are elected such
that a majority of the members of the Board shall have been members of the
Board for less than two years, unless the election or nomination for election
of each new trustee who was not a trustee at the beginning of such two-year
period was approved by a vote of at least two-thirds of the trustees then still
in office who were trustees at the beginning of such period.

11

 

     4.     Indemnity for Personal Loan Guarantees. If a Change in Control occurs
or if Executive’s employment terminates for any reason, with or without Cause,
by the Company or the Executive, the Company shall indemnify the Executive for
any liability that arises after the Change in Control or Executive’s Date of
Termination in connection with Executive’s personal guarantee of loans taken
out by the Trust or Company for the benefit of the Trust or the Company.

     5.     Non-Competition, Confidentiality and Non-Solicitation. Executive
hereby acknowledges that, during and solely as a result of his employment by
the Company, Executive will receive special training and education with respect
to the operation of the Company’s business and other related matters, and
access to confidential information and business and professional contacts. In
consideration of Executive’s employment and in consideration of the special
and unique opportunities afforded by the Company to Executive as a result of
Executive’s employment, Executive hereby agrees to execute and abide by the
terms of the Non-Competition, Confidentiality and Non-Solicitation Agreement
attached as Exhibit B. Executive agrees and acknowledges that his employment
is full, adequate and sufficient consideration for the restrictions and
obligations set forth in the foregoing Agreements.

     6.     Non-Exclusivity of Rights. Nothing in this Agreement shall prevent or
limit Executive’s continuing or future participation in or rights under any
benefit, bonus, incentive or other plan or program provided by the Company and
for which Executive may qualify; provided, however, that if Executive becomes
entitled to and receives the payments provided for in Section 2 and 3 of this
Agreement, Executive hereby waives Executive’s right to receive payments under
any severance plan or similar program applicable to all employees of the
Company.

     7.     Survivorship. The respective rights and obligations of the parties
under this Agreement shall survive any termination of Executive’s employment to
the extent necessary to the intended preservation of such rights and
obligations.

     8.     Mitigation. Executive shall not be required to mitigate the amount of
any payment or benefit provided for in this Agreement by seeking other
employment or otherwise and there shall be no offset against amounts due
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that Executive may obtain.

     9.     Arbitration; Expenses. In the event of any dispute under the
provisions of this Agreement, other than a dispute in which the primary relief
sought is an equitable remedy such as an injunction, the parties shall be
required to have the dispute, controversy or claim settled by arbitration in
Washington, D.C. in accordance with the National Rules for the Resolution of
Employment Disputes then in effect of the American Arbitration Association,
before a panel of three arbitrators, two of whom shall be selected by the
Company and Executive, respectively, and the third of whom shall be selected by
the other two arbitrators. Any award entered by the arbitrators shall be
final, binding and nonappealable and judgment may be entered thereon by either
party in accordance with applicable law in any court of competent jurisdiction.
This arbitration provision shall be specifically enforceable. The arbitrators
shall have no authority to modify any provision of this Agreement or to award a
remedy for a dispute involving this

12

 

Agreement other than a benefit specifically provided under or by virtue of the
Agreement. If Executive prevails on any material issue which is the subject of
such arbitration or lawsuit, the Company shall be responsible for all of the
fees of the American Arbitration Association and the arbitrators and any
expenses relating to the conduct of the arbitration (including the Company’s
and Executive’s reasonable attorneys’ fees and expenses). Otherwise, each
party shall be responsible for its own expenses relating to the conduct of the
arbitration (including reasonable attorneys’ fees and expenses) and shall share
the fees of the American Arbitration Association.

     10.     Notices. All notices and other communications required or permitted
under this Agreement or necessary or convenient in connection herewith shall be
in writing and shall be deemed to have been given when hand delivered or mailed
by registered or certified mail, as follows (provided that notice of change of
address shall be deemed given only when received):

     If to the Company, to:

	 	First Potomac Realty Trust

7200 Wisconsin Avenue, Suite 310

Bethesda MD 20814

Attention: Douglas J. Donatelli

     With a required copy to:

	 	Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia PA 19103-2921

Attention: James W. McKenzie, Jr., Esquire

     If to Executive, to:

	 	Douglas J. Donatelli

First Potomac Realty Trust

7200 Wisconsin Avenue, Suite 310

Bethesda MD 20814

or to such other names or addresses as the Company or Executive, as the case
may be, shall designate by notice to each other person entitled to receive
notices in the manner specified in this Section.

     11.     Contents of Agreement; Amendment and Assignment.

          (a) This Agreement sets forth the entire understanding between the parties
hereto with respect to the subject matter hereof and cannot be changed,
modified, extended or terminated except upon written amendment approved by the
Board and executed on its behalf by a duly authorized officer and by Executive.

13

 

          (b) All of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective heirs,
executors, administrators, legal representatives, successors and assigns of the
parties hereto, except that the duties and responsibilities of Executive under
this Agreement are of a personal nature and shall not be assignable or
delegatable in whole or in part by Executive. The Company and Trust shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of the
business or assets of the Company or Trust, within fifteen (15) days of such
succession, expressly to assume and agree to perform this Agreement in the same
manner and to the same extent as the Company and Trust would be required to
perform if no such succession had taken place.

     12.     Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect any other provision or application of this Agreement which can be
given effect without the invalid or unenforceable provision or application and
shall not invalidate or render unenforceable such provision or application in
any other jurisdiction. If any provision is held void, invalid or
unenforceable with respect to particular circumstances, it shall nevertheless
remain in full force and effect in all other circumstances.

     13.     Remedies Cumulative; No Waiver. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission by a party in exercising any right, remedy or
power under this Agreement or existing at law or in equity shall be construed
as a waiver thereof, and any such right, remedy or power may be exercised by
such party from time to time and as often as may be deemed expedient or
necessary by such party in its sole discretion.

     14.     Beneficiaries/References. Executive shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary or
beneficiaries to receive any compensation or benefit payable under this
Agreement following Executive’s death by giving the Company written notice
thereof. In the event of Executive’s death or a judicial determination of
Executive’s incompetence, reference in this Agreement to Executive shall be
deemed, where appropriate, to refer to Executive’s beneficiary, estate or other
legal representative.

     15.     Miscellaneous. All Section headings used in this Agreement are for
convenience only. This Agreement may be executed in counterparts, each of
which is an original. It shall not be necessary in making proof of this
Agreement or any counterpart hereof to produce or account for any of the other
counterparts.

     16.     Withholding. All payments under this Agreement shall be made subject
to applicable tax withholding, and the Company shall withhold from any payments
under this Agreement all federal, state and local taxes as the Company is
required to withhold pursuant to any law or governmental rule or regulation.
Except as specifically provided otherwise in this

14

 

Agreement, Executive shall bear all expense of, and be solely responsible for,
all federal, state and local taxes due with respect to any payment received
under this Agreement.

     17.     Governing Law. This Agreement shall be governed by and interpreted
under the laws of the State of Maryland without giving effect to any conflict
of laws provisions.

[SIGNATURE PAGE FOLLOWS]

15

 

     IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have
executed this Agreement as of the date first above written.

	 	 	 	 	 	 	 
	 	 	FIRST POTOMAC REALTY
	 	 	INVESTMENT LIMITED PARTNERSHIP
	 	 	 	 	 	 	 
	 	 	By:	 	First Potomac Realty Trust
	 	 	 	 	Its general partner
	 	 	 	 	 	 	 
	 	 	 	 	By:	 	/s/ Louis T. Donatelli
	 	 	 	 	 	 	

	 	 	 	 	Name:
	 	Louis T. Donatelli
	 	 	 	 	Title:
	 	Chairman of the
Board of Trustees
	 	 	 	 	 	 	 
	 	 	/s/ Douglas J. Donatelli
	 	 	

	 	 	EXECUTIVE

GUARANTEE:

For good and valuable consideration, including the Executive’s agreement to
serve as an officer of First Potomac Realty Trust, the obligations of First
Potomac Realty Investment Limited Partnership under this Employment Agreement,
dated October 8, 2003, with Douglas J. Donatelli, shall be guaranteed by
First Potomac Realty Trust.

FIRST POTOMAC REALTY TRUST

	 	 	 
	By:	 	/s/ Louis T. Donatelli
	 	 	

	 	 	
Name: Louis T. Donatelli
	 	 	
Title: Chairman of the Board of Trustees

Dated: October 8, 2003

16

 

Exhibit A

Separation of Employment Agreement and General Release

     THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the
“Agreement”) is made as of this      day of      ,      , by and between
First Potomac Realty Investment Limited Partnership (the “Company”) and
          (“Executive”).

     WHEREAS, Executive formerly was employed by the Company as      
pursuant to the terms of the Employment Agreement, dated           , 200   ,
(the “Employment Agreement”);

     WHEREAS, the Employment Agreement provides for certain benefits in the
event that Executive’s employment is terminated on account of a reason set
forth in the Employment Agreement;

     WHEREAS, Executive and the Company mutually desire to terminate
Executive’s employment on an amicable basis, such termination to be effective
     ,      (“Date of Resignation”); and

     WHEREAS, in connection with the termination of Executive’s employment, the
parties have agreed to a separation package and the resolution of any and all
disputes between them.

     NOW, THEREFORE, IT IS HEREBY AGREED by and between Executive and the
Company as follows:

     1.     (a) Executive, for and in consideration of the commitments of the
Company as set forth in paragraph 5 of this Agreement, and intending to be
legally bound, does hereby REMISE, RELEASE AND FOREVER DISCHARGE the Company,
its affiliates, subsidiaries and parents, and its officers, directors,
employees, and agents, and its and their respective successors and assigns,
heirs, executors, and administrators (collectively, “Releasees”) from all
causes of action, suits, debts, claims and demands whatsoever in law or in
equity, which Executive ever had, now has, or hereafter may have, whether known
or unknown, or which his or her heirs, executors, or administrators may have,
by reason of any matter, cause or thing whatsoever, from the beginning of his
or her employment to the date of this Agreement, and particularly, but without
limitation of the foregoing general terms, any claims arising from or relating
in any way to his or her employment relationship with Company, the terms and
conditions of that employment relationship, and the termination of that
employment relationship, including, but not limited to, any claims arising
under the Age Discrimination in Employment Act, the Older Workers Benefit
Protection Act (“OWBPA”), Title VII of The Civil Rights Act of 1964, the
Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the
Employee Retirement Income Security Act of 1974, [State Fair Employment
Practice Law], and any other claims under any federal, state or local common
law, statutory, or regulatory provision, now or hereafter recognized, and any
claims for attorneys’ fees and costs. This

A-1

 

Agreement is effective without regard to the legal nature of the claims
raised and without regard to whether any such claims are based upon tort,
equity, implied or express contract or discrimination of any sort.

          (b) To the fullest extent permitted by law, and subject to the provisions
of paragraph 10 below, Executive represents and affirms that (i) [other than
     ,] he or she has not filed or caused to be filed on his or her behalf
any claim for relief against the Company or any Releasee and, to the best of
his or her knowledge and belief, no outstanding claims for relief have been
filed or asserted against the Company or any Releasee on his or her behalf; and
(ii) [other than      ,] he or she has not reported any improper, unethical
or illegal conduct or activities to any supervisor, manager, department head,
human resources representative, agent or other representative of the Company,
to any member of the Company’s legal or compliance departments, or to the
ethics hotline, and has no knowledge of any such improper, unethical or illegal
conduct or activities; and (iii) he or she will not file, commence, prosecute
or participate in any judicial or arbitral action or proceeding against the
Company or any Releasee based upon or arising out of any act, omission,
transaction, occurrence, contract, claim or event existing or occurring on or
before the date of this Agreement.

     2.     In consideration of the Company’s agreements as set forth in paragraph
5 herein, Executive agrees to be bound by the terms of the Company’s
Non-Competition, Confidentiality and Non-Solicitation Agreement executed by the
Executive on                  ,      .

     3.     Executive further agrees and recognizes that he or she has permanently
and irrevocably severed his or her employment relationship with the Company,
that he or she shall not seek employment with the Company or any affiliated
entity at any time in the future, and that the Company has no obligation to
employ him or her in the future.

     4.     Executive further agrees that he or she will not disparage or subvert
the Company, or make any statement reflecting negatively on the Company, its
affiliated corporations or entities, or any of their officers, directors,
employees, agents or representatives, including, but not limited to, any
matters relating to the operation or management of the Company, Executive’s
employment and the termination of his or her employment, irrespective of the
truthfulness or falsity of such statement.

     5.     In consideration for Executive’s agreement as set forth herein, the
Company agrees:

[Note: Severance Benefits provided under Employment Agreement would be inserted
in this paragraph 5.]

     6.     Executive understands and agrees that the payments, benefits and
agreements provided in this Agreement are being provided to him or her in
consideration for his or her acceptance and execution of, and in reliance upon
his or her representations in, this Agreement. Executive acknowledges that if
he or she had not executed this Agreement containing a release of all claims
against the Company, he or she would only have been entitled to the payments
provided in the Company’s standard severance pay plan for employees.

A-2

 

     7.     Executive acknowledges and agrees that the Company previously has
satisfied any and all obligations owed to him or her under any employment
agreement or offer letter he or she has with the Company and, further, that
this Agreement supersedes any employment agreement or offer letter he or she
has with the Company, and any and all prior agreements or understandings,
whether written or oral, between the parties shall remain in full force and
effect to the extent not inconsistent with this Agreement, and further, that,
except as set forth expressly herein, no promises or representations have been
made to him or her in connection with the termination of his or her employment
agreement or offer letter with the Company, or the terms of this Agreement.

     8.     Executive agrees not to disclose the terms of this Agreement to anyone,
except his or her spouse, attorney and, as necessary, tax/financial advisor.
Likewise, the Company agrees that the terms of this Agreement will not be
disclosed except as may be necessary to obtain approval or authorization to
fulfill its obligations hereunder or as required by law. It is expressly
understood that any violation of the confidentiality obligation imposed
hereunder constitutes a material breach of this Agreement.

     9.     Executive represents that he or she does not presently have in his or
her possession any records and business documents, whether on computer or hard
copy, and other materials (including but not limited to computer disks and
tapes, computer programs and software, office keys, correspondence, files,
customer lists, technical information, customer information, pricing
information, business strategies and plans, sales records and all copies
thereof) (collectively, the “Corporate Records”) provided by the Company and/or
its predecessors, subsidiaries or affiliates or obtained as a result of his or
her prior employment with the Company and/or its predecessors, subsidiaries or
affiliates, or created by Executive while employed by or rendering services to
the Company and/or its predecessors, subsidiaries or affiliates. Executive
acknowledges that all such Corporate Records are the property of the Company.
In addition, Executive shall promptly return in good condition any and all
beepers, credit cards, cellular telephone equipment, business cards and
computers. As of the Date of Resignation, the Company will make arrangements
to remove, terminate or transfer any and all business communication lines
including network access, cellular phone, fax line and other business numbers.

     10.     Nothing in this Agreement shall prohibit or restrict Executive from:
(i) making any disclosure of information required by law; (ii) providing
information to, or testifying or otherwise assisting in any investigation or
proceeding brought by, any federal regulatory or law enforcement agency or
legislative body, any self-regulatory organization, or the Company’s
[designated legal, compliance or human resources officer]; or (iii) filing,
testifying, participating in or otherwise assisting in a proceeding relating to
an alleged violation of any federal, state or municipal law relating to fraud,
or any rule or regulation of the Securities and Exchange Commission or any
self-regulatory organization.

     11.     The parties agree and acknowledge that the agreement by the Company
described herein, and the settlement and termination of any asserted or
unasserted claims against the Releasees, are not and shall not be construed to
be an admission of any violation of any federal, state or local statute or
regulation, or of any duty owed by any of the Releasees to Executive.

A-3

 

     12.     Executive agrees and recognizes that should he or she breach any of
the obligations or covenants set forth in this Agreement, the Company will have
no further obligation to provide Executive with the consideration set forth
herein, and will have the right to seek repayment of all consideration paid up
to the time of any such breach. Further, Executive acknowledges in the event
of a breach of this Agreement, Releasees may seek any and all appropriate
relief for any such breach, including equitable relief and/or money damages,
attorney’s fees and costs.

     13.     Executive further agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as to an equitable accounting of all earnings, profits
and other benefits arising from any violations of this Agreement, which rights
shall be cumulative and in addition to any other rights or remedies to which
the Company may be entitled.

     14.     This Agreement and the obligations of the parties hereunder shall be
construed, interpreted and enforced in accordance with the laws of the State of
Maryland.

     15.     Executive certifies and acknowledges as follows:

          (a) That he or she has read the terms of this Agreement, and that he or
she understands its terms and effects, including the fact that he or she has
agreed to RELEASE AND FOREVER DISCHARGE the Company and each and everyone of
its affiliated entities from any legal action arising out of his or her
employment relationship with the Company and the termination of that employment
relationship;

          (b) That he or she has signed this Agreement voluntarily and knowingly in
exchange for the consideration described herein, which he or she acknowledges
is adequate and satisfactory to him or her and which he or she acknowledges is
in addition to any other benefits to which he or she is otherwise entitled;

          (c) That he or she has been and is hereby advised in writing to consult
with an attorney prior to signing this Agreement;

          (d) That he or she does not waive rights or claims that may arise after
the date this Agreement is executed;

          (e) That the Company has provided him or her with a period of twenty-one
(21) days within which to consider this Agreement, and that Executive has
signed on the date indicated below after concluding that this Agreement is
satisfactory to him or her; and

          (f) Executive acknowledges that this Agreement may be revoked by him or
her within seven (7) days after execution, and it shall not become effective
until the expiration of such seven day revocation period. In the event of a
timely revocation by Executive, this Agreement will be deemed null and void and
the Company will have no obligations hereunder.

A-4

 

          Intending to be legally bound hereby, Executive and the Company executed
the foregoing Confidential Separation Agreement and General Release this      
day of      ,      .

	 	 	 	 	 	 	 	 	 
	
	 	Witness:	 	 
	[Executive]	 	 	

	 	 	 	 	 	 	 	 	 
	FIRST POTOMAC REALTY	 	 	 
	INVESTMENT LIMITED PARTNERSHIP	 	 	 
	 	 	 	 	 	 	 	 	 
	By:	 	First Potomac Realty Trust	 	 	 
	 	 	Its general partner	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	
By:	 	 	 	 	 	 
	 	 	 	
	 	 	 	 
	 	 	
Name:	 	 	 	 	 	 
	 	 	
Title:
	 	 	 	Witness:	 	 
	 	 	 	 	 	 	 	

A-5

 

Exhibit B

Non-Competition, Confidentiality and Non-Solicitation Agreement

     In consideration of my new employment with First Potomac Realty Investment
Limited Partnership (the “Company”), and intending to be legally bound, I agree
as follows:

     1.     Confidentiality. I agree that my services to the Company are of a
special, unique and extraordinary character, and that my position places me in
a position of confidence and trust with the Company’s customers and employees.
I also recognize that my position with the Company will give me substantial
access to Confidential Information (as that term is defined below), the
disclosure of which to competitors of the Company would cause the Company to
suffer substantial and irreparable damage. I recognize, therefore, that it is
in the Company’s legitimate business interest to restrict my use of
Confidential Information for any purposes other than the discharge of my
employment duties at the Company, and to limit any potential appropriation of
Confidential Information by me for the benefit of the Company’s competitors and
to the detriment of the Company. Accordingly, I agree as follows:

     (a)  During and after my employment by the Company, I will not disclose to
any other person or company, nor use for my own personal benefit, except as may
be necessary in the performance of my duties as an employee of the Company, any
Confidential Information disclosed to me or of which I become aware by reason
of my employment or association with the Company.

     (b)  The term “Confidential Information” means any and all data and
information relating to the business of the Company (whether or not it
constitutes a trade secret), which is or has been disclosed to me or of which I
became aware as a consequence of my employment or relationship with the
Company, and which has value to the Company and is not generally known by its
competitors, including but not limited to information relating to experimental
and research work of the Company, the Company’s methods, processes, tools,
machinery, formulas, drawings or appliances, and the financial or business
affairs of the Company relating to services, customers, customer lists,
employees or employees’ compensation, projections, plans, development,
accounting and marketing studies or analyses. Confidential Information shall
not include any data or information that has been disclosed voluntarily to the
public by the Company (except where such public disclosure has been made by me
or some other person without authorization), or that has been independently
developed and disclosed by others, or that otherwise enters the public domain
through lawful and legitimate means.

     (c)  I agree that upon the termination of my employment with the Company, I
will not take with me or retain without written authorization any documents,
files or other property of the Company, and I will return promptly to the
Company any such documents, files or property in my possession or custody. In
connection with this Agreement, I recognize that all documents, files and
property which I have received and will receive from the Company, including but
not limited to customer lists, handbooks, memoranda, policy manuals, product
specifications, and other materials (with the exception of documents relating
to benefits to which I might be entitled following the termination of my
employment with the Company), are for the exclusive use of the

B-1

 

Company and employees who are discharging their responsibilities on behalf
of the Company, and that I have no claim or right to the continued use,
possession or custody of such documents, files or property following the
termination of my employment with the Company.

     2.     Intellectual Property. I will communicate to the Company any and all
novel ideas, concepts, inventions, processes, and improvements, patentable or
unpatentable, made or conceived by me, either solely or jointly with others,
from the time of entering the Company’s employ until I leave, along the line of
the Company’s business, or resulting from or suggested by any work which I may
do for the Company, or at its request, and I will, at all times during my
employment with the Company and after my termination for any reason, assist the
Company in every proper way (at the Company’s expense), to obtain for the
Company’s own benefit patents for any or all of these ideas, concepts,
inventions, processes and improvements in the United States and any and all
foreign countries, if patentable, by executing and delivering to the Company
any and all applications, assignments, and other instruments, by giving
evidence and testimony, and by executing and delivering to the Company all
drawings, blueprints, notes, and specifications deemed necessary by the Company
in order to apply for and obtain letters patent of the United States or foreign
countries for such ideas, concepts, inventions, processes and improvements, and
I do hereby assign and will assign and convey to the Company my entire right,
title and interest in and to all such ideas, concepts, inventions, processes,
and improvements, and all patent applications and patents thereon. I further
agree to conduct myself as described above after leaving the Company’s
employment as to all ideas, concepts, inventions, processes and improvements
conceived or disclosed while with the Company.

     3.     Non-Competition.

     (a)  During my employment by the Company and for a period of one (1) year
after my termination of employment for any reason, I will not, except with the
prior written consent of the Board of Trustees of First Potomac Realty Trust
(the “Board”), directly or indirectly, own, manage, operate, join, control,
finance or participate in the ownership, management, operation, control or
financing of, or be connected as an officer, director, employee, partner,
principal, agent, representative, consultant or otherwise with, or use or
permit my name to be used in connection with, any business or enterprise which
is engaged in any business or enterprise that acquires, operates and develops
properties in the industrial and flex property markets, within the Company’s
“Service Area,” as defined below. For the purposes of this Section, “Service
Area” shall mean (i) the States of Maryland, Delaware, North Carolina and West
Virginia, (ii) the Commonwealths of Pennsylvania and Virginia, and (iii)
Washington, D.C. I acknowledge that the Service Area is the area in which the
Company presently does, or currently intends to do, business.

     (b)  The foregoing restrictions shall not be construed to prohibit my
ownership of less than five percent of any class of securities of any
corporation which is engaged in any of the foregoing businesses and has a class
of securities registered pursuant to the Securities Exchange Act of 1934,
provided that such ownership represents a passive investment and that neither I
nor any group of persons including me in any way, either directly or
indirectly, manages or exercises control of any such corporation, guarantees
any of its financial obligations, otherwise takes any

B-2

 

part in its business, other than exercising my rights as a shareholder, or
seeks to do any of the foregoing.

     4.     Non-Solicitation.

     (a)  I covenant and agree that during my employment by the Company and for
the period of one (1) year thereafter, I will not, directly or indirectly, (i)
solicit, divert, take away, or attempt to solicit, divert or take away, any of
the Company’s principal customers, or (ii) encourage any principal customer to
reduce its patronage of the Company.

     (b)  I further covenant and agree that during my employment by the Company
and for the period of one (1) year thereafter, I will not, except with the
prior written consent of the Board, directly or indirectly, solicit or hire, or
encourage the solicitation or hiring of, any person who was an employee of the
Company at any time during the term of my employment by the Company by any
employer other than the Company for any position as an employee, independent
contractor, consultant or otherwise. The foregoing covenant shall not apply to
any person after 12 months have elapsed after the date on which such person’s
employment by the Company has terminated.

     5.     General Provisions.

     (a)  I acknowledge and agree that the type and periods of restrictions
imposed in this Agreement are fair and reasonable, and that such restrictions
are intended solely to protect the legitimate interests of the Company, rather
than to prevent me from earning a livelihood. I recognize that the Company
competes throughout the United States, and that my access to Confidential
Information makes it necessary for the Company to restrict my post-employment
activities in any market in which the Company competes, and in which my access
to Confidential Information and other proprietary information could be used to
the detriment of the Company. In the event that any restriction set forth in
this Agreement is determined to be overbroad with respect to scope, time or
geographical coverage, I agree that such a restriction or restrictions should
be modified and narrowed, either by a court or by the Company, so as to
preserve and protect the legitimate interests of the Company as described in
this Agreement, and without negating or impairing any other restrictions or
agreements set forth herein.

     (b)  I acknowledge and agree that if I should breach any of the covenants,
restrictions and agreements contained herein, irreparable loss and injury would
result to the Company, and that damages arising out of such a breach may be
difficult to ascertain. I therefore agree that, in addition to all other
remedies provided at law or at equity, the Company may petition and obtain from
a court of law or equity all necessary temporary, preliminary and permanent
injunctive relief to prevent a breach by me of any covenant contained in this
Agreement. I agree further that if it is determined by a court that I have
breached the terms of this Agreement, the Company shall be entitled to recover
from me all costs and attorneys’ fees incurred as a result of its attempts to
redress such a breach or to enforce its rights and protect its legitimate
interests.

B-3

 

     (c)  This Agreement shall be deemed to made in, and in all respects shall
be interpreted, construed and governed by and in accordance with, the laws of
the State of Maryland.

     (d)  I agree that if the Company fails to take action to remedy any breach
by me of this Agreement or any portion of the Agreement, such inaction by the
Company shall not operate or be construed as a waiver of any subsequent breach
by me of the same or any other provision, agreement or covenant.

     (e)  I agree that each covenant, paragraph and division of this Agreement
is intended to be severable and distinct, and that if any paragraph,
subparagraph, provision or term of this Agreement is deemed to be unlawful or
unenforceable, such a determination will not impair the legitimacy or
enforceability of any other aspect of the Agreement.

     (f)  I hereby state that I have read this Agreement in its entirety, that I
have been given an opportunity to consider the Agreement and discuss it with
the attorney of my choice, and that I enter into this Agreement voluntarily and
intending to be legally bound.

     (g)  I agree that the Company may assign this Agreement to any of its
successors by merger or otherwise, and that this Agreement shall inure to the
benefit of any such successor.

	 	 	 	 	 	 	 
	/s/ Thomas P. Conaghan	 	/s/ Douglas J. Donatelli
	

Witness	 	

Douglas J. Donatelli
	 	 	 	 	 	 	 
	/s/ Thomas P. Conaghan

Witness	 	FIRST POTOMAC REALTY

INVESTMENT LIMITED PARTNERSHIP
	 	 	 	 	 	 	 
	 	 	By:	 	First Potomac Realty Trust

Its general partner
	 	 	 	 	 	 	 
	 	 	 	 	By:	/s/ Louis T. Donatelli
	 	 	 	 	 	

	 	 	 	 	Name: Louis T. Donatelli
	 	 	 	 	Title: Chairman of the Board of Trustees

B-4

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