Exhibit
10.12





FIRST
AMENDMENT TO LEASE AGREEMENT








THIS FIRST AMENDMENT TO LEASE
AGREEMENT (the “Amendment”) is made this 11th day of March, 2009, by and
between MOR BEN, LLC, a
Maryland limited liability company (“Landlord”), successor-in-interest to MOR
Bennington LLLP and GENVEC,
INC., a Delaware corporation (“Tenant”).





THE PARTIES ENTER INTO THIS
AMENDMENT on the basis of the following facts, understandings and
intentions.





A.           Landlord’s
predecessor-in-interest, MOR Bennington LLLP, and Tenant entered into a Lease
Agreement (the “Lease”) dated May 4, 1999 for the premises (the “Premises” or
“Leased Premises”) consisting of approximately 42,900 square feet of space,
being the entire single story building located at 65 West Watkins Mill Road,
Gaithersburg, Maryland  20879.





B.           At
Tenant’s request, Tenant and Landlord have agreed to extend the term of the
Lease and amend certain terms of the Lease in accordance with the terms
hereof.





NOW THEREFORE, IN CONSIDERATIONof the mutual covenants and promises of the parties, the parties hereto
agree as follows:





1.           Defined
Terms.  All capitalized
terms used but not defined herein shall have that meaning given to them in the
Lease.





2.           Extension
of Lease Term.  (a)  The
Lease Term is hereby extended through and until October 31, 2014.  The
Tenant shall have one further right to extend the Lease Term for a period of
five (5) years, pursuant to the second renewal option set forth in Rider No. 3
of the Lease.  For this purpose, the first paragraph of subparagraph
(ii) of Rider No. 3 of the Lease is hereby amended to read as
follows:





(ii) the
Basic Annual Rent payable with respect to the Leased Premises shall be adjusted
to reflect the then prevailing rental rate (but in no event less than the
current Basic Annual Rent) for comparable space within Bennington Corporate
Center and comparable buildings in the vicinity of the Bennington Corporate
Center as of the commencement of the renewal term (as determined
below).





(b)           Except
as provided for in Section 2(a) above, Tenant shall have no other or further
options to extend or renew the Lease Term.  The extension option
provided for Paragraph II A.2 of the Lease is null and void.





3.           Basic
Annual Rent.  From the date
hereof through and until October 31, 2009, the Tenant shall pay the Landlord all
Basic Annual Rent set forth in Paragraph III B of the
Lease.  Commencing on November 1, 2009, and on the first day of each
calendar month thereafter during the Lease Term, Tenant will pay to Landlord the
Basic Annual Rent set forth below for the Leased Premises in equal monthly
installments, in lawful money of the United States, in advance and without
offset, deduction prior notice or demand, in accordance with the
Lease:







PeriodFrom
              
              Through
              
              Rentable
      Square Footage
              
              Basic
      Annual Rent Per Square Foot
              
              Basic
      Annual Rent
              
              Monthly
      Installment of Basic Annual Rent11/1/2009
              
              10/31/201
              
              42,900
              
              $19.50
              
              $836,550.00
              
              $69,712.5011/1/2010
              
              10/31/2011
              
              42,900
              
              $20.09
              
              $861,861.00
              
              $71,821.7511/1/2011
              
              10/31/2012
              
              42,900
              
              $20.69
              
              $887,601.00
              
              $73,966.7511/1/2012
              
              10/31/2013
              
              42,900
              
              $21.31
              
              $914,199.00
              
              $76,183.2511/1/2013
              
              10/31/2014
              
              42,900
              
              $11.95
              
              $512,655.00
              
              $42,721.25






Note:
            The
      Basic Annual Rent for the period of November 1, 2013 through October 31,
      2014 reflects a rent credit of $429,000 for the period of November 1, 2013
      through October 31, 2014, applied in 12 equal monthly credit amounts of
      $35,750 each.





4.           Additional
Rent.  Tenant shall continue to pay all additional rent due
under the Lease for the Leased Premises.





5.           Security
Deposit.




5.1           In
the event that Tenant determines to use the Landlord’s Allowance (as defined in
Section 3 of Exhibit
A attached hereto), then as a condition to Landlord’s obligation to
disburse all or any portion of Landlord’s Allowance in accordance with Section 3
of Exhibit A
attached hereto, and prior to Landlord’s disbursement of any of the Landlord’s
Allowance, Tenant shall deposit the sum of $143,000 (the “Security Deposit”)
with Landlord in accordance with the terms of this Section 5.  The
Security Deposit shall be held by Landlord as security for the faithful
performance by Tenant of all the terms, covenants and conditions of the Lease to
be kept and performed by Tenant and not as an advance rental deposit or as a
measure of Landlord’s damage in case of Tenant’s default.  If an Event
of Default occurs and is continuing under the Lease, Landlord may use any part
of the Security Deposit for the payment of any rent or any other sum in default,
or for the payment of any amount which Landlord may spend or become obligated to
spend by reason of Tenant’s default, or to compensate Landlord for any other
loss or damage which Landlord may suffer by reason of Tenant’s
default.  If any portion of the Security Deposit is so used, Tenant
shall within ten (10) days after written demand therefore, deposit with Landlord
an amount sufficient to restore the Security Deposit to its original amount and
Tenant’s failure to do so shall constitute an Event of Default under the
Lease.  Except to such extent, if any, as shall be required by law,
Landlord shall not be required to keep the Security Deposit separate from its
general funds, and Tenant shall not be entitled to interest on such
deposit.  In the event that the Security Deposit has not been fully
released prior to the termination of the Lease, then following the termination
of the Lease, the Security Deposit or any balance thereof shall be returned to
Tenant at such time when Landlord shall have determined that all of Tenant’s
obligations under the Lease have been fulfilled, but not later than sixty (60)
days following the termination of the Lease.




5.2           The
required Security Deposit shall be in the form of an irrevocable standby letter
of credit in favor of Landlord (the “letter of credit”) in the amount of
$143,000.  Under any circumstance under which Landlord is entitled the
use of all or a part of the Security Deposit, then, Landlord, in addition to all
other rights and remedies provided under the Lease, shall have the right to draw
down upon the letter of credit for the amount then claimed by Landlord and
retain the proceeds.  The following terms and conditions shall govern
the letter of credit:




5.2.1           The
letter of credit shall be returned to Tenant at the expiration of the Lease Term
or such earlier date when Tenant is entitled to return of its Security Deposit
under Section 5.3 below.




2


5.2.2           The
letter of credit shall be in favor of Landlord, shall be issued by a commercial
bank reasonably acceptable to Landlord having a Standard & Poors rating of
“A” or better, and branches in either Northern Virginia, Washington, D.C. or
Baltimore, Maryland, shall comply with all of the terms and conditions of this
Section 5.2 and shall otherwise be in form reasonably acceptable to
Landlord.  The initial letter of credit shall have an expiration date
not earlier than fifteen (15) months after the date of its
issuance.  A draft of the form of letter of credit must be submitted
to Landlord for its approval prior to issuance.




5.2.3           The
letter of credit or any replacement letter of credit shall be irrevocable for
the term thereof and shall automatically renew on a year to year basis until a
period ending not earlier than three (3) months after the expiration date of the
Lease (“End Date”) without any action whatsoever on the part of Landlord;
provided that the issuing bank shall have the right not to renew the letter of
credit by giving written notice to Landlord not less than sixty (60) days prior
to the expiration of the then current term of the letter of credit that it does
not intend to renew the letter of credit.Tenant
understands that the election by the issuing bank not to renew the letter of
credit shall not, in any event, diminish the obligation of Tenant to maintain
such an irrevocable letter of credit in favor of Landlord through such
date.




5.2.4           Landlord,
or its then managing agent, shall have the right from time to time to make one
or more draws on the letter of credit at any time that an Event of Default has
occurred.  The letter of credit must state that it can be presented
for payment at the office of the issuer or an approved correspondent in the
Northern Virginia, Washington D.C. or Baltimore, Maryland.  Funds may
be drawn down on the letter of credit upon presentation to the issuing or
corresponding bank of Landlord’s (or Landlord’s then managing agent’s)
certificate stating as follows:




“Beneficiary
is entitled to draw on this credit pursuant to that certain Lease dated for
reference _______________ between [INSERT CURRENT NAME OF
LANDLORD], as Landlord and [INSERT CURRENT NAME OF TENANT],as Tenant, as amended from time to time.”





It is
understood that if Landlord or its managing agent be a corporation, partnership
or other entity, then such statement shall be signed by an officer (if a
corporation), a general partner (if a partnership), or any authorized party (if
another entity).




5.2.5           Tenant
acknowledges and agrees (and the letter of credit shall so state) that the
letter of credit shall be honored by the issuing bank without inquiry as to the
truth of the statements set forth in such draw request and regardless of whether
the Tenant disputes the content of such statement.




5.2.6           In
the event of a transfer of Landlord’s interest in the Leased Premises, Landlord
shall have the right to transfer the letter of credit to the transferee and
thereupon the Landlord shall, without any further agreement between the parties,
be released by Tenant from all liability therefore, and it is agreed that the
provisions hereof shall apply to every transfer or assignment of said letter of
credit to a new landlord; and Tenant shall pay all fees to the issuer necessary
to effect and evidence such transfer.




3


5.2.7           Without
limiting the generality of the foregoing, if the letter of credit expires
earlier than the End Date, or the issuing bank notifies Landlord that it will
not renew the letter of credit, Landlord shall accept a renewal thereof or
substitute letter credit (such renewal or substitute letter of credit to be in
effect not later than thirty (30) days prior to the expiration of the expiring
letter of credit), irrevocable and automatically renewable as above provided to
the End Date upon the same terms as the expiring letter of credit or upon such
other terms as may be reasonably acceptable to Landlord.  However, if
(i) the letter of credit is not timely renewed, or (ii) a substitute letter of
credit, complying with all of the terms and conditions of this Section is not
timely received, then Landlord may present the expiring letter of credit to the
issuing bank, and the entire sum so obtained shall be paid to Landlord, to be
held by Landlord until Tenant would otherwise be entitled to the return of the
letter of credit, and to be retained by Landlord if a default occurs, provided
that if Tenant provides Landlord with a new letter of credit for the full amount
of the Security Deposit in accordance with the requirements for a letter of
credit set forth above, then Landlord shall refund Tenant the cash Security
Deposit that it is holding.




5.3           Provided
that no Event of Default has occurred and is continuing under this Lease, then
on the first day of the 25th month
following the date of Landlord’s receipt of the letter of credit, the Security
Deposit shall be reduced by $47,666, and on the first day of the 37th month
following the date of Landlord’s receipt of the letter of credit, the Security
Deposit shall be reduced by another $47,666, and on the first day of the 49th month
following the date of Landlord’s receipt of the letter of credit, the Security
Deposit shall be reduced to zero dollars and released.





Each reduction to the letter of credit
as set forth below shall be processed by an amendment to the letter of credit or
a replacement letter of credit, as reasonably approved by Landlord.





6.           As Is
Condition.  The Leased Premises shall be leased to Tenant for
the Lease Term in “As Is” condition, provided that, to the extent that Tenant
provides Landlord with the Security Deposit of $143,000 as set forth in Section
5 above, then Landlord shall provide Tenant with the improvement allowance
described on Exhibit
A hereto, subject to the terms and conditions set forth on Exhibit A
hereto.





7.           Use.  The
following new paragraph is hereby added to the end of Article IV A of the Lease
(Use Restrictions and Rules) to read as follows:





The
Leased Premises are to be used solely for purposes set forth in this
Lease.  Tenant shall not do or permit anything to be done in or about
the Leased Premises which will in any way unreasonably obstruct or interfere
with the rights of other tenants or occupants of the Building, if any, or
injure, annoy, or disturb them, or allow the Leased Premises to be used for any
improper, immoral, unlawful, or objectionable purpose, or commit any
waste.  Tenant shall not do, permit or suffer in, on, or about the
Leased Premises the sale of any alcoholic liquor without the written consent of
Landlord first obtained.  Tenant shall comply in all material respects
with all governmental laws, ordinances and regulations applicable to the use of
the Leased Premises and its occupancy and shall promptly comply with (or
properly contest, if applicable), all governmental orders and directions for the
correction, prevention and abatement of any violations in the Building or
appurtenant land, caused or permitted by, or resulting from the specific use by,
Tenant, or in or upon, or in connection with, the Leased Premises, all at
Tenant’s sole expense.  Except as otherwise expressly permitted in
this Lease, Tenant shall not do or permit anything to be done on or about the
Leased Premises or bring or keep anything into the Leased Premises which will in
any way increase the rate of, invalidate or prevent the procuring of any
insurance protecting against loss or damage to the Building or any of its
contents by fire or other casualty or against liability for damage to property
or injury to persons in or about the Building or any part thereof.  To
the extent the terms of the above conflict with any provisions of Article IV A,
the above terms shall govern.




4


8.           Tenant’s
Insurance.  (a)  The
first paragraph of Paragraph IV E of the Lease is hereby deleted in its entirety
and the following replacement paragraph is hereby inserted in lieu
thereof:





Tenant
shall keep in force throughout the Term: (a) a Commercial General Liability
insurance policy or policies to protect Landlord and its managing agent at the
Property against liability to the public or to any invitee of Tenant or a
Landlord Entity incidental to the use of or resulting from any accident
occurring in or upon the Leased Premises with a limit of not less than
$1,000,000 per occurrence and not less than $2,000,000 in the annual aggregate,
or such larger amount as Landlord may prudently require from time to time,
covering bodily injury and property damage liability and $1,000,000
products/completed operations aggregate; (b) Business Auto Liability covering
owned, non-owned and hired vehicles with a limit of not less than $1,000,000 per
accident; (c) Worker’s Compensation Insurance with limits at least as required
by statute and Employers Liability with limits of $500,000 each accident,
$500,000 disease policy limit, $500,000 disease--each employee; (d) All
Risk or Special Form coverage protecting Tenant against loss of or damage to
Tenant’s alterations, additions, improvements, carpeting, floor coverings,
panelings, decorations, fixtures, inventory and other business personal property
situated in or about the Leased Premises to the full replacement value of the
property so insured; and (e) Business Interruption Insurance with limits of
liability representing loss of at least approximately six (6) months of
income.





The
aforesaid policies shall (a) be provided at Tenant’s expense; (b) name the
Landlord and its managing agent at the Property, as additional insureds (General
Liability) and loss payee (Property—Special Form); (c) be issued by an insurance
company with a minimum Best’s rating of “A:VII” during the Term; and (d) provide
that said insurance shall not be canceled unless thirty (30) days prior written
notice (ten days for non-payment of premium) shall have been given to Landlord;
a certificate of Liability insurance on Accord Form 25 and a certificate of
Property insurance on Accord Form 27 shall be delivered to Landlord by Tenant
upon the Commencement Date and at least thirty (30) days prior to each renewal
of said insurance.





5


Whenever
Tenant shall undertake any alterations, additions or improvements in, to or
about the Leased Premises (“Work”) the aforesaid insurance protection must
extend to and include injuries to persons and damage to property arising in
connection with such Work, without limitation including liability under any
applicable structural work act, and such other insurance as Landlord shall
require; and the policies of or certificates evidencing such insurance must be
delivered to Landlord prior to the commencement of any such Work.





(b)           Paragraph
V E of the Lease is hereby deleted in its entirety and the following Paragraph V
E is hereby inserted in lieu thereof:





E.           Indemnity.  None
of the Landlord Entities (as defined below) shall be liable and Tenant hereby
waives all claims against them for any damage to any property or any injury to
any person in or about the Leased Premises or the Property by or from any cause
whatsoever (including without limiting the foregoing, rain or water leakage of
any character from the roof, windows, walls, basement, pipes, plumbing works or
appliances, the Leased Premises, Property and the Building not being in good
condition or repair, gas, fire, oil, electricity or theft), except to the extent
caused by or arising from the gross negligence or willful misconduct of Landlord
or its agents, employees or contractors.  Tenant shall protect,
indemnify and hold the Landlord Entities harmless from and against any and all
loss, claims, liability or costs (including court costs and attorney’s fees)
incurred by reason of (a) any damage to any property (including but not limited
to property of any Landlord Entity) or any injury (including but not limited to
death) to any person occurring in, on or about the Leased Premises, Property or
the Building to the extent that such injury or damage shall be caused by or
arise from any actual or alleged act, neglect, fault, or omission by or of
Tenant or any Tenant Entity to meet any standards imposed by any duty with
respect to the injury or damage; (b) the conduct or management of any work or
thing whatsoever done by the Tenant in or about the Leased Premises or from
transactions of the Tenant concerning the Leased Premises; (c) Tenant’s
failure to comply with any and all governmental laws, ordinances and regulations
applicable to the condition or use of the Leased Premises or its occupancy; or
(d) any breach or default on the part of Tenant in the performance of any
covenant or agreement on the part of the Tenant to be performed pursuant to this
Lease.  Landlord shall protect, indemnify and hold Tenant, Tenant’s
investment manager, and the trustees, boards of directors, officers, general
partners, beneficiaries, stockholders, employees and agents of each of them,
harmless from and against any and all loss, claims, liability or costs
(including court costs and attorney’s fees) arising out of the gross negligence
or willful misconduct of Landlord or its agents or employees.  The
provisions of this Section shall survive the termination of this Lease with
respect to any claims or liability accruing prior to such
termination.





“Landlord
Entities” shall mean Landlord, Landlord’s investment manager, and the trustees,
boards of directors, officers, general partners, beneficiaries, stockholders,
employees and agents of each of them.





6


9.           Hazardous
Materials.  Notwithstanding anything herein to the contrary or
in Paragraph IV G of the Lease, Landlord hereby acknowledges that Tenant is
Generating certain Hazardous Substances in the Leased Premises, as permitted
under the Lease.  Landlord acknowledges that it is not the intent of
the Lease to prohibit Tenant from using the Leased Premises for the uses
permitted in Paragraph IV A of the Lease.  Tenant may operate its
business according to prudent industry practices so long as the use or presence
of Hazardous Substances is strictly and properly monitored according to all then
applicable environmental laws.  Further, the list of Hazardous
Substances on Exhibit J to the Lease shall be deemed to be modified from time to
time to reflect any substances (and quantities of such substances) which Tenant
is permitted or licensed to use under all then applicable environmental
laws.  Upon request by Landlord not more than one time each Lease
Year, Tenant agrees to deliver to Landlord true and correct copies of the
following documents (“Haz Mat
Documents”) relating to the use, storage, handling, treatment,
generation, release or disposal of Hazardous Materials at the Leased
Premises:  permits; approvals; reports and correspondence; storage and
management plans; and notice of violations of any legal
requirements.  Tenant is not required, however, to provide Landlord
with any portion(s) of the Haz Mat Documents containing information of a
proprietary nature which, in and of themselves, do not contain a reference to
any Hazardous Materials or hazardous activities.  It is not the intent
of this Section to provide Landlord with information which could be detrimental
to Tenant’s business should such information become possessed by Tenant’s
competitors.





10.           Estoppel
Certificates.  Article X B of the Lease (Estoppel
Certificates) is hereby deleted in its entirety and the following is
hereby inserted in lieu thereof:





B.  Estoppel
Certificates.  Within ten (10) business days following any
written request which Landlord may make from time to time, Tenant shall execute
and deliver to Landlord or mortgagee or prospective mortgagee a sworn statement
certifying:  (a) the date of commencement of this Lease; (b) the fact
that this Lease is unmodified and in full force and effect (or, if there have
been modifications to this Lease, that this lease is in full force and effect,
as modified, and stating the date and nature of such modifications); (c) the
date to which the rent and other sums payable under this Lease have been paid;
(d) the fact that there are no current defaults under this Lease by either
Landlord or Tenant except as specified in Tenant’s statement; and (e) such other
matters as may be reasonably and customarily requested by
Landlord.  Landlord and Tenant intend that any statement delivered
pursuant to this Article may be relied upon by any mortgagee, beneficiary or
purchaser.  Tenant’s failure to deliver such estoppel certificate
within said ten (10) business day period shall be deemed a material default by
Tenant under this Lease.





11.           Tenant’s
Authority.  If Tenant signs as a corporation, partnership,
trust or other legal entity each of the persons executing this Lease on behalf
of Tenant represents and warrants that Tenant has been and is qualified to do
business in the state in which the Building is located, that the entity has full
right and authority to enter into this Lease, and that all persons signing on
behalf of the entity were authorized to do so by appropriate
actions.





7


Tenant hereby represents and warrants
that neither Tenant, nor any persons or entities holding any legal or beneficial
interest whatsoever in Tenant, are (i) the target of any sanctions program that
is established by Executive Order of the President or published by the Office of
Foreign Assets Control, U.S. Department of the Treasury (“OFAC”); (ii)
designated by the President or OFAC pursuant to the Trading with the Enemy Act,
50 U.S.C. App. § 5, the International Emergency Economic Powers Act, 50 U.S.C.
§§ 1701-06, the Patriot Act, Public Law 107-56, Executive Order 13224 (September
23, 2001) or any Executive Order of the President issued pursuant to such
statutes; or (iii) named on the following list that is published by
OFAC:  “List of Specially Designated Nationals and Blocked
Persons.”  If the foregoing representation is untrue at any time
during the Term, an Event of Default will be deemed to have occurred under the
Lease without the necessity of notice to Tenant.





12.           Credit
Reports.  At Landlord’s
request, Tenant shall deliver to Landlord a copy, certified by an officer of
Tenant as being a true and correct copy, of Tenant’s most recent audited
financial statement, or, if unaudited, certified by Tenant’s chief financial
officer as being true, complete and correct in all material
respects.  Such request shall not be made by Landlord more than once
in any calendar year, unless such request is made in connection with the
proposed sale or financing of the Building.  Tenant hereby authorizes
Landlord to obtain one or more credit reports on Tenant at any time, and shall
execute such further authorizations as Landlord may reasonably require in order
to obtain a credit report.  So long as Tenant is a publicly traded
corporation with its financial statements generally available to the public for
review, the foregoing requirement of delivery of financial statements shall be
waived by Landlord.




13.           Incorporation.  Except as
modified herein, all other terms and conditions of this Lease between the
parties above described, as attached hereto, shall continue in full force and
effect.





14.           Brokers.  Tenant
represents and warrants to Landlord that CresaPartners of Washington, DC, Inc.
and Scheer Partners (the “Brokers”) are the only agents, brokers, finders or
other parties with whom Tenant has dealt who may be entitled to any commission
or fee with respect to this Amendment.  Tenant and Landlord agree to
indemnify and hold each other harmless from any claim, demand, cost or liability
asserted by any party other than Brokers based upon dealings of that party with
Tenant or Landlord, as applicable, with respect to this Amendment.





15.           Limitation
of Landlord’s Liability.  Redress for any claim against
Landlord under this Amendment and the Lease shall be limited to and enforceable
only against and to the extent of Landlord’s interest in the
Building.  The obligations of Landlord under this Amendment and the
Lease are not intended to be and shall not be personally binding on, nor shall
any resort be had to the private properties of, any of its or its investment
manager’s trustees, directors, officers, partners, beneficiaries, members,
stockholders, employees, or agents, and in no case shall Landlord be liable to
Tenant hereunder for any lost profits, damage to business, or any form of
special, indirect or consequential damages.





8


IN WITNESS WHEREOF, the
parties hereto have executed this Amendment under seal as of the day and year
first above-written in one or more copies.






WITNESS:
                
                LANDLORD:MOR
      BEN, LLC
                  a
      Maryland limited liability companyBy:
                RREEF
      Management Company,
                  a
      Delaware corporation,
                  Its
      Authorized Agent
  /s/
      Bobbie J. Riddle
              
              By:
              /s/ Jeffrey
      A. Spruille   (SEAL)Jeffrey
      A. Spruille        (Name)Regional
      Director        
       (Title)Date: March
      11, 2009





WITNESS:
              
              TENANT:GENVEC,
      INC.,
                a
      Delaware corporation/s/
      Cindy Utley
              
              By:
              /s/
      Douglas J. Swirsky    (SEAL)Douglas
      J. Swirsky         
      (Name)
                Chief
      Financial
    Officer     (Title)Date:  March
      9, 2009







9


EXHIBIT
A – ALTERATIONS TO LEASED PREMISES





attached
to and made a part of First Amendment to Lease Agreement


dated
_________________, 2009, between


Mor Ben,
LLC, as Landlord and


Genvec,
Inc., as Tenant


65 West
Watkins Mill Road


Gaithersburg,
Maryland





1.           (a)  Tenant
shall cause its architect and engineer, at its sole expense (but subject to
application of the Landlord’s Allowance), to complete all drawings, plans and
specifications necessary for the construction of certain improvements to
Tenant’s direct physical leasehold improvements to be made to the Leased
Premises, including but not limited to, MEP working drawings as required for the
permitting and construction of certain improvements to the Leased Premises (such
improvements to be located in the Leased Premises are hereafter referred to as
the “Tenant’s
Improvements”).
 Tenant’s architect and engineer shall be subject to Landlord’s prior
reasonable approval.  All of Tenant’s Improvements and the related
drawings, plans and specifications, including without limitation, MEPs, shall
comply with applicable laws, shall be suitable for obtaining all necessary
construction permits and shall be submitted to Landlord for Landlord’s approval,
not to be unreasonably conditioned, delayed or withheld (upon approval by
Landlord, the “Final
Plans”).
 Landlord shall approve or disapprove the drawings, plans and
specifications for Tenant’s Improvements within seven (7) business days after
receipt of such drawings; if Landlord fails to respond within such seven (7)
business day period, said drawings shall be deemed approved by
Landlord.  Thereafter, any revisions to the drawings, plans and
specifications for Tenant’s Improvements shall be approved or disapproved by
Landlord within five (5) business days of receipt; if Landlord fails to respond
within such five (5) business day period, such revisions shall be deemed
approved.  Any revisions to drawings, plans and specifications made
pursuant to this paragraph shall be made at Tenant’s expense.





(b)           If
Landlord should determine, in its reasonable discretion, that it is necessary
for Landlord to retain third-party professionals to assist Landlord in
evaluating the proposed Tenant’s Improvements and/or the Final Plans due to the
complexity of the Tenant’s Improvements and/or Final Plans, such services and
related fees and expenses (not to exceed $5,000) shall be at Tenant’s
expense.  Before Landlord engages any such third-party professional
for the purposes set forth in this Section 1(b), Landlord shall notify
Tenant of its intent to engage such third-party
professional.  Landlord will provide Tenant with a breakdown of all
such third party professional fees.





2.           Tenant
shall cause its own contractor(s) to construct Tenant’s
Improvements.  Tenant shall submit a list of proposed general
contractors to Landlord for its review and reasonable
approval.  Tenant’s general contractor (the “General
Contractor”) and
all material subcontractors shall be approved by Landlord (to the extent that
Tenant has the opportunity to expressly approve such subcontractors), such
approval not to be unreasonably withheld, conditioned or delayed subject to the
following conditions:





(a)           Tenant
shall indemnify, defend (with counsel reasonably acceptable to Landlord), and
hold harmless the Landlord from and against any and all losses, damages, costs
(including costs of suits and reasonable attorneys’ fees), liabilities or causes
of action arising out of or relating to the construction of the Tenant’s
Improvements, including but not limited to mechanic’s, materialman’s or other
liens or claims (and all costs or expenses associated therewith) asserted, filed
or arising out of any such work.  Without limiting the generality of the
foregoing, Tenant shall repair or cause to be repaired at its expense all damage
caused by its contractor and Tenant shall reimburse Landlord for all actual and
reasonable costs incurred by Landlord to repair any damage caused by Tenant’s
contractor.  Subject to Landlord’s satisfaction of its funding obligations
pursuant to this Exhibit A,
all parties contracting with Tenant to furnish labor, services, materials,
suppliers or equipment with respect to the Leased Premises shall look solely to
Tenant for payment of same and Tenant’s purchase orders and contracts shall
state this requirement.








(b)           Tenant
shall request that its contract include a provision requiring such contractor to
use commercially reasonable efforts to keep the Leased Premises, the Building
and appurtenant land and Tenant’s leasehold interest in the Leased Premises free
from any liens arising out of any work performed with respect to Tenant’s
Improvements.  Tenant shall provide Landlord with final unconditional
lien waivers from each contractor with whom Tenant has contracted with respect
to Tenant’s Improvements upon final completion of Tenant’s
Improvements.





(c)           Tenant’s
contractor shall comply with Landlord’s rules and regulations applicable to all
work being performed in the Building.





(d)           Tenant’s
contractors shall maintain such insurance, including but not limited to
Builder’s all-risk insurance, in full force and effect as may be reasonably
requested by Landlord or as required by applicable law, and all such insurance
shall be with a carrier and in a form reasonably acceptable to Landlord, and
shall name Landlord as an additional insured.





(e)           Notwithstanding
Landlord’s obligation to pay invoices as provided in this Section, Landlord
shall have no responsibility to, nor privity of agreement with, any contractors,
subcontractors or third party vendors by reason of payment of the Landlord’s
Allowance.  Notwithstanding the foregoing, Landlord shall be deemed a
third party beneficiary under any construction contract or agreement between
Tenant and such third party contractor and any warranties or guarantees supplied
to Tenant by such third party contractor shall also inure to and be for the
benefit of Landlord.





(f)           All
contractors, including the General Contractor and its subcontractors, shall be
licensed in the State of Maryland and shall be reputable.





(g)           Tenant
shall have sole responsibility for compliance with governmental requirements and
shall, at its expense, procure all permits necessary with respect to the work to
be performed by Tenant’s General Contractor and/or subcontractor(s) and all
other contractors.





(h)           Tenant,
the General Contractor and its subcontractor(s) and all other contractors shall
be solely responsible for the transportation, storage and safekeeping of
materials and equipment used in the performance of any work, for the removal of
waste and debris resulting therefrom on a daily basis, and for any damage caused
by them to any installation or work performed by Landlord’s contractors and
subcontractors; and Tenant’s General Contractor or its subcontractor(s) shall
each deliver to Landlord a certificate of insurance indicating contractor
liability in amounts and with companies and otherwise satisfactory to Landlord,
and naming the Leased Premises as an insured site.





(i)           Tenant’s
General Contractor and its subcontractor(s) and all other contractors shall be
subject to the general administrative supervision of Landlord’s general
contractor or other construction manager for scheduling purposes, but Landlord’s
general contractor/construction manager shall not be responsible for any aspect
of the work performed by Tenant’s contractors or subcontractors, or for the
coordination of the work of Landlord’s contractors with Tenant’s General
Contractor and/or its subcontractor(s) and all other contractors;
and





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(j)           All
of the Tenant’s Improvements and other work done by Tenant shall be performed in
accordance with the current building standards or better quality.





3.           Provided
that both (a) no uncured default or Event of Default exists under the Lease, and
(b) Tenant has provided Landlord with the Security Deposit of $143,000 pursuant
to the terms of Section 5 of the First Amendment to Lease Agreement, Landlord
covenants and agrees that Landlord will contribute to Tenant an amount equal to
$5.00 per rentable square foot of the Leased Premises (which is $214,500 based
upon the 42,900 square feet in the Leased Premises) (“Landlord’s
Allowance”) to be
applied solely toward the cost of the Tenant’s Improvements, including but not
limited to construction, design, permitting, project management, phasing-related
costs (i.e. moving, cabling, etc.).





Landlord shall disburse Landlord’s
Allowance, at Landlord’s election, either directly to Tenant’s General
Contractor (in which case Landlord shall give Tenant written notice of such
disbursement) or directly to Tenant, to be applied towards the cost of
constructing Tenant’s Improvements, together with a proportionate credit against
the Landlord’s Supervisory Fee (as defined below).  Prior to each such
payment of the Landlord’s Allowance by Landlord, the following conditions also
shall be satisfied (the “Payment
Conditions”):
(i) receipt by Landlord of invoices and/or applications for payment
recovering all labor and materials expended and used and subject to a five
percent (5%) retainage until completion of all Tenant’s Improvements, (ii)
architect’s and General Contractor’s percentage of completion affidavits
certifying that the work covered by such invoice and/or application for payment
is complete and in place, and is installed in a good and workmanlike manner in
accordance with the Final Plans and applicable codes, (iii) notarized
original, partial lien waivers covering work with respect to which any
materialman or contractor was previously paid pursuant to an earlier payment by
Landlord in a reasonable and customary form; and (iv) with respect to final
payment and release of retainage, Tenant shall provide final unconditional
notarized original lien waivers with respect to final contract payments upon
final completion of the Tenant’s Improvements, any licenses or permits required
by any applicable governmental authority for Tenant’s legal occupancy of the
Leased Premises and use of the equipment installed therein and as-built plans
covering all architectural work and mechanical, electrical, plumbing and
structural engineering.  Subject to satisfaction of the foregoing Payment
Conditions, Landlord shall pay Tenant for such charges one (1) time per month.
 In no event shall any portion of Landlord’s Allowance be disbursed if
Tenant is in default (or will be in default upon notice and/or lapse of time)
under the Lease.  Tenant shall cause its contractors to be paid in full
within thirty (30) days of substantial completion of the Tenant’s Improvements
(or otherwise as required under the applicable contract), subject to Tenant’s
withholding five percent (5%) retainage (from all contracts other than
professional service agreements) until completion of all Tenant’s Improvements
as provided above.  Tenant shall cause disbursement requests to be
submitted to Landlord in a timely manner, if applicable, to enable Tenant to
satisfy the foregoing requirement.  Tenant shall use Landlord’s Allowance
on or before October 31, 2011.





4.           Tenant
agrees to pay the cost of Tenant’s Improvements (less any applicable amount of
Landlord’s Allowance).





5.           Landlord
shall be entitled to withhold one percent (1%) of each disbursement of the
Landlord’s Allowance to Tenant as a construction supervisory fee (the
“Supervisory Fee”).  Landlord shall be entitled to no further
compensation for any of its services in this Exhibit A (other than
reimbursements under Section 2 above).






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