Document:

Exhibit 10.27

           CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT
                 HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
                 SECURITIES AND EXCHANGE COMMISSION (THE "SEC")
  PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WITH RESPECT TO THE OMITTED
                                    PORTIONS.
                    OMITTED PORTIONS ARE INDICATED BY [***].

                          BIOPHARMACEUTICAL DEVELOPMENT

                      AND MANUFACTURING SERVICES AGREEMENT

                                     Between

                                PHARMATHENE, INC.

                                       And

                              LAUREATE PHARMA, INC.

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                                TABLE OF CONTENTS

                                                                     Page Number
                                                                     -----------

Section 1.  Definitions........................................................1
Section 2.  Scope of Work; Orders for Products.................................5
Section 3.  Program Performance................................................7
Section 4.  Program Materials..................................................8
Section 5.  Use of Subcontractors..............................................9
Section 6.  Compliance with Government Regulations............................10
Section 7.  Facility Visits, Audits and FDA Inspections.......................10
Section 8.  Compensation......................................................11
Section 9.  Change Orders.....................................................12
Section 10. Confidential Information/Legal Proceedings........................13
Section 11. Work Product......................................................14
Section 12. Inventions and Patents............................................14
Section 13. Independent Contractor............................................16
Section 14. Insurance.........................................................16
Section 15. Shipping; Risk of Loss; Inspection................................17
Section 16. Default...........................................................17
Section 17. Dispute Resolution................................................18
Section 18. Indemnification; Limitation of Liability..........................19
Section 19. Representations, Warranties and Covenants.........................21
Section 20. Force Majeure.....................................................23
Section 21. Use of Names......................................................23
Section 22. Term; Termination.................................................24
Section 23. Assignment; Third Party Beneficiary...............................25
Section 24. Notice............................................................25
Section 25. Choice of Law.....................................................26
Section 26. Headings..........................................................26
Section 27. Waiver/Severability...............................................26
Section 28. Entire Agreement; Modification/Counterparts.......................26

Annex A         Letter of Intent
Appendix 1      Cell Lines and Their Products
Appendix 2      Approved Subcontractors and Services
Appendix 3      Access and Audits
Appendix 4      Scope Documents
Appendix 5      Shipping
Appendix 6      Termination Fees
Appendix 7      FAR Clauses
Schedule 4(b)   Medarex Authorizations
Schedule 5(c)   Medarex Consent for Pre-approved Subcontractors

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                        BIOPHARMACEUTICAL DEVELOPMENT AND
                        MANUFACTURING SERVICES AGREEMENT

      This BIOPHARMACEUTICAL DEVELOPMENT AND MANUFACTURING SERVICES AGREEMENT,
effective as of this 15th day of June 2007 (the "Effective Date"), between
PharmAthene, Inc., a Delaware corporation ("Customer"), having its principal
place of business at 175 Admiral Cochrane Drive, Suite 101, Annapolis, MD 21401
and LAUREATE PHARMA, INC., a Delaware corporation ("Laureate"), having a
principal place of business at 201 College Road East, Princeton, NJ 08540, (each
a "Party", collectively the "Parties").

                              W I T N E S S E T H:

      WHEREAS, Laureate provides a full range of bioprocessing services to the
biopharmaceutical industry, including cell line development, process
development, protein production, cell culture, protein purification,
bioanalytical chemistry, aseptic filling and QC testing.

      WHEREAS, on July 31, 2006, Laureate entered into a letter of intent and
purchase order with Customer (the "LOI") and a Material and Technology Transfer
Agreement (the "Medarex MTA") with Medarex, Inc. ("Medarex"), Customer's
strategic partner with respect to the Drug Product, pursuant to which Laureate
commenced the performance of certain bioprocessing services for Customer.

      WHEREAS, on April 12, 2007, Laureate and Medarex entered into an amended
and restated Medarex MTA (the "Amended and Restated Medarex MTA").

      WHEREAS, for reference purposes only, a copy of the LOI is attached hereto
as Annex A of this Agreement.

      WHEREAS, Customer now desires Laureate to continue to perform those
bioprocessing services and to perform additional bioprocessing services in
accordance with the terms of this Agreement and any executed Scope (as
hereinafter defined) related to the cGMP production and purification of a
monoclonal antibody, produced by an engineered cell line, and Laureate desires
to perform such services on behalf of Customer.

      NOW, THEREFORE, in consideration of the above statements and other good
and valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the Parties hereto agree as follows:

Section 1. Definitions.

      Terms defined elsewhere in this Agreement shall have the meanings set
forth therein for all purposes of this Agreement unless otherwise specified to
the contrary. The following terms shall have the meanings set forth below in
this Section 1:

      (a) "Affiliate(s)" for purposes of this Agreement shall mean any person,
firm, trust, partnership, corporation, company or other entity or combination
thereof which directly or indirectly: (i) controls a Party; (ii) is controlled
by a Party; or (iii) is under common control with a Party. As used in this
definition, the terms "control" and "controlled" shall mean ownership of fifty

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percent (50%) or more (including ownership by trusts with substantially the same
beneficial interests) of the voting and equity rights of such person, firm,
trust, partnership, corporation, company or other entity or combination thereof
or the power to direct the management of such person, firm, trust, corporation
or other entity or combination thereof.

      (b) "Agreement" means this document as signed by the Parties including the
Scope and any referenced attachments and any amendments and additions to this
document.

      (c) "Assumptions" shall have the meaning as set forth in Section 9.

      (d) "Batch" means a number of vials each filled at the same time with the
same Lot or a group of Lots of Drug Product.

      (e) "Batch Record" means a complete manufacturing record for a Batch
generated by Laureate and approved by Customer made concurrently with the
performance of each step of the production, purification and aseptic filling
process for the Drug Substance, Drug Substance testing and lot release data,
such that successive steps in such processes may be traced.

      (f) "Cell Line" means the Chinese Hamster Ovary ("CHO") cell line that has
been designed and engineered to produce the corresponding monoclonal antibody
product as shown in Appendix 1, supplied by Medarex to Laureate pursuant to the
Medarex MTA, particulars of which are set out in the Scope.

      (g) "Certificate of Analysis" means a document signed by an authorized
representative of Laureate, describing Specifications for, and testing methods
applied to, any Drug Product, Drug Substance, samples or other Materials, and
the results thereof.

      (h) "Claim" shall have the meaning set forth in Section 18.

      (i) "Compound" means the monoclonal antibody product candidate known as
MDX-1303 or Valortim(TM).

      (j) "Compound Materials" shall have the meaning given such term in the
Amended and Restated Medarex MTA.

      (k) "Contaminants" shall have the meaning set forth in Section 18(c).

      (l) "Customer Confidential Information" means any information, business,
technical or financial data related to the Program that is provided to Laureate
by Customer.

      (m) "Customer Know How" means all scientific, technical and other
information relating to the Drug Product or the Process provided by Customer or
Medarex other than Laureate Confidential Information.

      (n) "Debarred Entity" means an entity that has been debarred by the FDA
pursuant to 21 U.S.C. ss. 335(a) or (b).

      (o) "Debarred Individual" means an individual that has been debarred by
the FDA pursuant to 21 U.S.C. ss. 335(a) or (b).

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      (p) "Drug Product" means the final dosage form pharmaceutical medicine
containing Drug Substance that Customer or its Affiliates will use for clinical
trials or for commercial supply, as applicable.

      (q) "Drug Substance" is the bulk purified Compound produced using the Cell
Line and the Process.

      (r) "Facility" means Laureate's manufacturing facility located at 201
College Road East, Princeton, NJ 08540.

      (s) "FDA" means the United States Food and Drug Administration, or any
successor entity thereto having substantially the same functions.

      (t) "Filling Components" means vials, stoppers and crimps used for an
aseptic fill of the Drug Product.

      (u) "Filled Product" means vials filled with Drug Product from an
identified Lot or Lots which are in a form ready for release and shipment from
the Facility.

      (v) "Good Manufacturing Practices" or "GMP" or "cGMP" means current good
manufacturing practices, as specified in regulations promulgated from time to
time by the FDA for the manufacture and testing of pharmaceutical products.
Laureate's operational quality standards are defined in internal cGMP policy
documents and are based on Laureate's current interpretation of cGMP, which
interpretation Laureate has reason to believe is in compliance with cGMP.

      (w) "Laureate Confidential Information" means any information, business,
technical or financial data, including, but not limited to, Laureate's
production, purification and aseptic filling process and techniques and Laureate
Know How, supplied by Laureate to Customer (excluding any such information or
data provided by Medarex to Laureate in writing pursuant to the Amended and
Restated Medarex MTA).

      (x) "Laureate Group" shall have the meaning set forth in Section 18(b).

      (y) "Laureate IP" shall have the meaning set forth in Section 12(b).

      (z) "Laureate Know-How" shall have the meaning set forth in Section 12(b).

      (aa) "Laureate SOP" means the written standard operating procedures and
methods of Laureate, as the same may be amended, in Laureate's sole discretion,
from time to time, but in any event, such SOPs will comply with all applicable
laws in the United States.

      (bb) "Loss" shall have the meaning set forth in Section 18.

      (cc) "Lot" means the Drug Substance produced in a single production run,
which may be contained in one or more containers thereof.

      (dd) "Materials Invention" means any invention relating to the Compound
Materials discovered or developed by Laureate, its employees, agents,
consultants or contractors, solely or jointly with Medarex and/or Customer, in
connection with the activities described in this Agreement or the Amended and
Restated Medarex MTA.

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      (ee) "Medarex" shall have the meaning set forth in the Recitals.

      (ff) "Media Fill" means a fill of bacteriological growth media into vials
for validation purposes.

      (gg) "Modification" shall have the meaning set forth in Section 9.

      (hh) "Permitted Regulatory Authority" shall have the meaning set forth in
Section 7(b).

      (ii) "Person" means an individual, partnership, corporation, limited
liability company, joint stock company, unincorporated organization or
association, trust or joint venture, or a governmental agency or political
subdivision thereof.

      (jj) "Process" means the production methods, purification processes and
other know-how as provided by PharmAthene or Medarex pursuant to the Amended and
Restated Medarex MTA for use by Laureate in the manufacture of Drug Substance
and Drug Product from the Cell Line, and (ii) any modifications, enhancements or
improvements to such methods or processes that may be made by Laureate, its
employees, agents, consultants or contractors, solely or jointly with Customer,
or Medarex from time-to-time.

      (kk) "Process Consumables" means raw materials, filters, membranes,
disposable analytical test kits, tubing, filling needles, disposable bags,
disposable glass/plasticware, cleaning supplies and other changeover parts
consumed during the manufacture of Drug Substance or Drug Product.

      (ll) "Process Invention" means any invention relating to the Process
discovered or developed by either Party or by Medarex (including each of its
respective employees, agents, consultants or contractors, solely or jointly, in
connection with the activities described in this Agreement or the Amended and
Restated Medarex MTA.

      (mm) "Product-Dedicated Equipment" means equipment such as chromatography
columns and resins and filters and filter housings that will be used by Laureate
solely for the manufacture of Drug Substance or Drug Products pursuant to a
Scope under this Agreement.

      (nn) "Product Invention" means any improvement or invention relating to
the Compound (but excluding any Materials Invention or Process Invention) that
is discovered by Laureate, its employees, agents, consultants or contractors,
solely or jointly with Medarex and/or Customer, in connection with the
activities described in this Agreement or the Amended and Restated Medarex MTA.

      (oo) "Program" means the services to be performed by Laureate for Customer
as described in a particular Scope.

      (pp) "Quality Agreement" shall have the meaning set forth in Section 3(c).

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      (qq) "Scope" means a detailed scope-of-work document entered into by the
parties for the performance by Laureate of certain services on behalf of
Customer relating to the Drug Substance, which shall be governed by, made part
of, and be subject to this Agreement.

      (rr) "Specification" means the requirements for tests, analysis, test
procedures and acceptable test results with which Drug Substance and, as
applicable, Drug Product, raw materials and excipients shall conform as set
forth in a Scope, as amended from time-to-time by the Parties.

      (ss) "Third Party" shall mean any party other than Customer or Laureate
and their respective Affiliates.

Section 2. Scope of Work; Orders for Products.

      (a) From time to time, the parties will prepare and enter into detailed
Scopes for the Program and mutually agree to the associated Service Fees for
each Scope. The Scopes shall be prepared by Laureate under Customer's direction
and shall be subject to the final approval of Customer and shall be attached as
an Appendix 4 to this Agreement. The first Scope document is attached hereto as
Appendix 4-1. Each additional Scope shall be sequentially numbered (i.e., Scope
#2, Scope #3) and shall be attached as additional appendices and numbered as
follows: Appendix 4-2, Appendix 4-3, etc. Laureate will perform the services for
Customer in accordance with each executed Scope. Each Scope will specify the
Program design, information desired, estimated duration of the Program, and all
other matters pertinent to completion of the Program, and will be deemed to be a
part of this Agreement and incorporated herein by reference. Scope #1 was
prepared by Laureate under Customer's direction and approved by Customer. The
Service Fees associated with Scope #1 are attached to this Agreement as Appendix
4-1, Section II - "Service Fees and Payment Schedule."

      (b) During the Term the parties will undertake the following procedures
with respect to submitting forecasts and purchase orders for production runs
under a Scope:

            (i) Within [***], Customer will submit to Laureate for acceptance a
written forecast for the scheduling of the bioreactor runs described in Scope
#1. Within [***] of acceptance of the foregoing forecast by Laureate (the "Scope
#1 Forecast"), Customer will submit to Laureate a purchase order (and
corresponding reservation fees) for all production runs scheduled to take place
within the [***] of the Scope #1 Forecast. Customer will submit to Laureate
additional purchase orders (and corresponding reservation fees), on a [***]
basis, if additional production runs are scheduled to occur on the Scope #1
Forecast but are scheduled to take place more than [***] after the delivery of
the Scope #1 Forecast, provided such production runs have not been canceled as
permitted by Section 22 of this Agreement. Each subsequently submitted purchase
order shall include production runs scheduled to take place within [***] of the
date of the purchase order.

            (ii) Within [***] of the Effective Date, Customer shall, for Scope
#2, submit to Laureate a written non-binding (except as set forth below), [***]
rolling forecast setting forth the number of production runs of Drug Substance

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Customer reasonably believes it will require for each [***] during that period
and the estimated timing for the delivery of those production runs of Drug
Substance. Upon agreement by the Parties in writing, such forecast shall be
deemed to be the initial forecast (the "Initial Forecast"). The Parties
acknowledge that the Initial Forecast assumes the successful completion of [***]
pursuant to Scope #1. If any consistency Lots are not completed successfully, as
determined by Company in its reasonable discretion based on mutually agreed
specifications for the consistency Lots, then the Initial Forecast shall be
resubmitted by Customer to Laureate pursuant to this subsection (ii) and any
[***] paid by Customer under the previously submitted [***], notwithstanding any
other provision of this Agreement.

            (iii) At the time that the [***] is determined by the Parties,
Customer shall also submit to Laureate a purchase order for the total number of
production runs of Drug Substance for the [***], if any, and the requested
delivery dates for such production runs of Drug Substance, which dates will be
the same as the dates set forth in the [***].

            (iv) Customer will provide additional forecasts within [***] of the
end of each calendar quarter during the period that the Scope is being
performed, updating the information set forth in the Initial Forecast or any
updated forecast (each, a "Forecast") for the [***] period following the
completion of the first quarter of the immediately prior Forecast. For each
additional Forecast, Laureate and Customer shall agree as to the delivery dates
for production runs of Drug Substance not previously agreed to in a prior
Forecast.

            (v) At the time that each Forecast (other than the Initial Forecast)
is agreed to by Customer and Laureate, Customer shall also deliver a purchase
order for production runs of Drug Substance for the [***] of the Forecast. For
the avoidance of doubt, the purchase order for the [***] of each subsequently
delivered Forecast will already have been submitted to Laureate with the prior
period's Forecast.

Any purchase order submitted under clauses (i), (iii) and (v) above, shall be
firm and binding on Laureate and Customer at the time that Laureate receives the
reservation fee for such production runs (such reservation fee to be determined
in accordance with the appropriate Appendix 4). The purchase price for any
purchase order for production runs shall be determined in accordance with, and
shall be payable at the times set forth in the appropriate Appendix 4.

Additionally, if [***] notifies Laureate (either pursuant to a notification by
Customer or a solicitation by Laureate) that it intends to schedule a production
run [***], then Laureate shall promptly provide Customer with [***]. The notice
from Laureate to Customer shall include the specific production runs of Drug
Substance [***]. Customer shall have five (5) business days from the receipt of
the notice to notify Laureate [***], at which time, such notification shall
require Customer to pay Laureate a reservation fee in the manner set forth
below. Failure by Customer to notify Laureate within such five (5) business day
period shall be deemed to be [***]. Within ten (10) days after such notification
by Customer, Customer will provide Laureate with the corresponding reservation
fees for the Conflicting Customer Production Runs. [***] Laureate shall act in
good faith and with a reasonable belief with respect to the notices that it is

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obligated to Provide Customer under this paragraph and such notices shall be
provided by Laureate to Customer via electronic mail to the Customer project
manager and to a member of Customer's senior management to be identified by
Customer. Reservation fees paid by Customer under this paragraph shall be
nonrefundable except as provided by Section 22(c); provided that once Customer
notifies Laureate of its request to have [***], Customer shall be required to
pay such reservation fees to Laureate, in the manner set forth above.

      (c) Laureate shall consult with Customer in developing the Program design
in a manner consistent with Laureate's current reasonable understanding of
United States (the "US") regulatory guidelines, including cGMP. Provided that
the Drug Product meets the Specifications in accordance with the terms of this
Agreement (which Specifications may require compliance with cGMP), Laureate does
not represent or warrant that any Program and/or any Program results will result
in obtaining marketing approval for the Drug Product at the time of submission
of the Program's results to such agencies.

      (d) Laureate's performance of the Program will be based on technical
information provided by or for the Customer. This information will be
incorporated by Laureate into Program documents (scale up plans, Batch Records,
Specifications, etc.) that will be reviewed and approved by the Customer prior
to use by Laureate. These Program documents will form the sole basis upon which
manufacturing runs will be performed. Laureate makes no representations or
warranties that the execution of the Program according to the Program documents
will result in any specific quantity of Drug Product or Drug Substance. Until
the successful production of three (3) consistency Lots of Drug Substance,
Laureate makes no representations or warranties that the execution of the
Program according to the Program documents will result in any specific quality
of Drug Substance.

      (e) In addition to routine Program meetings, senior representatives of the
Parties shall meet on an occasional basis or as necessary, the first meeting
being no later than one (1) month from the Effective Date of a particular Scope,
to review progress of the Program relative to the Scope and to agree on any
necessary changes to the Scope. Any disagreement between the Parties concerning
a Scope (including, without limitation, the failure of the Parties to agree upon
any necessary changes to the Scope) shall be resolved in accordance with the
dispute-resolution procedures set forth in Section 17 hereof.

Section 3. Program Performance.

      (a) Laureate shall provide the Facility, supplies, and staff necessary to
complete the Program as provided in a particular Scope, as it may be modified as
provided herein, in accordance with the terms of this Agreement. In the event of
any conflict between the terms and provisions of this Agreement and a Scope, the
terms of this Agreement shall control.

      (b) Laureate will appoint a Laureate representative (the "Program
Manager") to be responsible for the completion of the Program pursuant to a
Scope by Laureate. The Program Manager will coordinate performance of the
Program with a representative designated by Customer (the "Customer
Representative"), which representative shall have responsibility over all
matters relating to performance of the Program on behalf of Customer. Unless
otherwise agreed in a Scope, or mutually agreed to by the Parties, all
communications between Laureate and the Customer regarding the conduct of the
Program pursuant to a Scope shall be addressed to or routed through the Program

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Manager and Customer Representative. Laureate may, at its option, substitute the
Program Manager during the course of the Program, on the condition that the
substitute Program Manager is reasonably acceptable to Customer. Customer may,
at its option, substitute the Customer Representative during the course of the
Program.

      (c) The parties have prepared and executed a detailed document ("Quality
Agreement") specifying the quality and regulatory procedures and
responsibilities of the parties hereunder with respect to the manufacture of
Drug Substance and Drug Product.

Section 4. Program Materials.

      (a) Laureate acknowledges that the Cell Line has been provided to Laureate
by Medarex under the Medarex MTA. Customer is responsible for providing Laureate
with sufficient amounts of Cell Line as reasonably requested by Laureate. Under
any Scope, Customer is responsible for providing Laureate with reference
standards and other substances, with which to perform the Program as specified
in a particular Scope, as well as all documentation and such other data as may
be necessary for Laureate to perform the Program as specified in a particular
Scope and to apprise Laureate of the stability of the Compound and Compound
Materials, process characteristics, proper storage, and manufacturing and safety
requirements including, without limitation, the Certificate of Analysis and/or
Material Safety Data Sheet, as applicable, relating to the Cell Line and
reference standards as specified in a relevant Scope.

      (b) Laureate shall procure the Compound, Filling Components, cell culture
media, and Process Consumables for use in the Program and each manufacturing run
all of which will comply with the Specifications. By written notice to Laureate,
Customer may procure certain Filling Components specified in a Scope, such as
media, resins, vials, overseals or stoppers. By written notice to Laureate from
Customer, Laureate will procure and store, at Customer's sole cost and expense,
materials, Filling Components, cell culture media, and Process Consumables in
sufficient quantities to serve as "safety stock" for the completion of one 2000L
production run. For clarity, the Parties acknowledge and agree that some
materials described in this Section 4(b) may be obtained by Laureate from
Medarex's supplier of media pursuant to written authorizations from Medarex to
Laureate and from Medarex to its supplier of media, authorizing direct
procurement by Laureate from Medarex's media supplier of media relating to the
Program; copies of such authorizations attached hereto as Schedule 4(b).

      (c) Laureate shall procure any Product-Dedicated Equipment and pass
through the costs to the Customer consistent with Section 8. For any Scope,
Laureate will obtain the written consent of Customer prior to procuring any
single piece of Product-Dedicated Equipment that costs $[***] or more, or
multiple pieces of Product-Dedicated Equipment that cost more than [***], in the
aggregate. By written notice to Laureate, Customer may procure and provide
certain Product-Dedicated Equipment for use in the Program at its own expense.
If Customer provides any Product-Dedicated Equipment to Laureate, such equipment
shall be in good operating condition and free from all material defects and
Contaminants. All right, title and interest in any Product-Dedicated Equipment

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shall be vested in Customer. Customer may file financing statements or other
similar documentation in order to serve as notice or otherwise perfect its
interest in any Product-Dedicated Equipment.

      (d) Upon completion of the Program, (i) the Product-Dedicated Equipment
will be returned to the Customer, at the Customer's expense and (ii) any
remaining samples of the Compound or other substances, documentation or data
provided to Laureate will be returned, at the Customer's request, to Customer or
retained by Laureate in compliance with applicable regulatory requirements or
destroyed/disposed of by Laureate under written authorization from Customer.

Section 5. Use of Subcontractors.

      (a) Laureate reserves the right to employ subcontractors from time-to-time
to undertake certain activities related to the Program. All such subcontractors
will be pre- approved by Customer, in any case, and by Medarex, in the case that
such subcontractor will perform activities relating to the Process or that
require access to the Process, Process Inventions, Compound Materials, or
Materials Inventions. All approved subcontractors for the Program will perform
services under a separate written agreement. A list of the pre-approved
subcontractors as of the Effective Date is attached hereto as Appendix 2.
Laureate will use commercially reasonable efforts to have each written agreement
with a subcontractor for the Program contain (i) obligations of confidentiality
and non-use consistent with Section 10 of the Agreement, (ii) obligations
regarding compliance with laws consistent with Sections 19(h), 19(i) and any
Scope specific terms which are mutually agreed to by the Parties in writing, and
(iii) assignments, licenses or similar transfers of intellectual property rights
to the extent any intellectual property rights are vested in the subcontractor
as a result of performing services for Customer, in each case for the benefit of
Customer (or, in the case of Materials Inventions, Process Inventions and the
Process, for the direct benefit of Medarex). If Laureate's written agreements
with its subcontractors do not contain these provisions or Laureate is not able
to obtain written agreements, then Laureate will notify Customer prior to
commencing work with that subcontractor and Laureate will not commence work with
that subcontractor for the Program until Customer provides its consent, or in
the case where such subcontractor will perform activities relating to the
Process or such subcontractor requires access to the Process, Medarex also
provides its consent. Customer will be responsible for obtaining Medarex's
consent to use subcontractors other than those set forth on Appendix 2. Customer
will be responsible for delays to the performance of the Program resulting from
Customer unreasonably delaying, conditioning or hindering this consent. No
subcontracting arrangement will relieve Laureate of its obligations under this
Agreement, and Laureate shall remain primarily liable for the performance of all
obligations delegated to any subcontractor, provided, however, that if a
subcontractor agrees in writing that Customer is and shall be a third party
beneficiary of the applicable service agreement(s) between Laureate and such
subcontractor, with full right of enforcement, then Laureate shall not be liable
for any breach of this Agreement by subcontractor.

      (b) Laureate will not be held responsible or liable for the performance of
any Third Party retained directly by Customer or Medarex to perform services
related to the Program, including, without limitation, distributors, consultants
and testing entities.

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      (c) Laureate acknowledges that it shall not transfer the Compound in a
manner not permitted in the Amended and Restated MTA. Notwithstanding the
foregoing, Medarex has provided Laureate with consent to transfer Compound to
such pre-approved subcontractors as set forth on Schedule 5(c). In the event
that Medarex revokes its consent to use such pre- approved subcontractors,
Laureate shall not be responsible for any delays associated with obtaining such
revocation.

Section 6. Compliance with Government Regulations.

      (a) Laureate will perform each Program in accordance with the Scope.
Subject to paragraph (c) of this Section 6, Laureate will comply with applicable
government regulatory requirements concerning cGMP appropriate to a particular
Program.

      (b) Should such government regulatory requirements concerning cGMP
applicable to the Program be changed or Customer requires Laureate to comply
with regulatory requirements other than those of the United States, Laureate
will comply with the new requirements or foreign requirements, as applicable,
subject to the remaining terms of this Section 6(b). In the event that
compliance with such new or foreign regulatory requirements necessitates, in the
reasonable discretion of Laureate, a change in the Scope or the Program or the
cost of the services provided by Laureate, Laureate will submit to Customer a
revised technical and cost proposal for Customer's acceptance. This technical
and cost proposal may take into account undue burden or interruption to
Laureate's business. Unless the parties agree to a revised Scope or Program or
cost structure, as the case may be, Laureate will not be obligated to continue
to perform the Program as Customer has requested that it be revised.

      (c) In the event of a conflict in government regulations, Customer will
designate, in writing, which regulations shall be followed by Laureate in its
performance of the Program and shall hold Laureate harmless for following such
written designation.

Section 7. Facility Visits, Audits and FDA Inspections.

      (a) Customer's representatives may visit the Facility at appropriate times
consistent with the Program to observe the progress of the Program or to audit
the Program subject to the limitations provided in Appendix 3 to this Agreement.
In addition, Customer will use its reasonable efforts to include a right of
audit by Laureate in all its agreements with sites, laboratories and analytical
subcontractors used by Customer (except for Customer's contract manufacturers)
or any Third Party analytical subcontractor engaged by Customer in connection
with the Compound, Cell Line, the Drug Product, Drug Substance, Compound
Materials and other materials provided by or on behalf of Customer to Laureate.
The foregoing right to "audit by Laureate" may only be exercised to the extent
Customer and Laureate agree that such audit is required to comply with
applicable law, rule or regulation.

      (b) Laureate acknowledges and agrees that the FDA or the EMEA (each a
"Permitted Regulatory Authority") may visit Laureate's Facility in accordance
with this Section 7(b) and Appendix 3. If Customer believes or wishes to have
any other regulatory authority having jurisdiction or oversight authority over a
particular Program (each an "Additional Regulatory Authority") visit a Laureate
Facility for the Program-related Visit (as defined herein), Customer shall
provide Laureate with reasonable prior written notice and such Program-related

                                      -10-
<PAGE>

Visit may take place upon terms reasonably acceptable to Laureate. If Laureate
permits the Program-related Visit by an Additional Regulatory Authority in
accordance with the preceding sentence, then that Additional Regulatory
Authority shall be considered a Permitted Regulatory Authority for the purposes
of this Section 7(b). If a Permitted Regulatory Authority notifies a Party that
it plans to visit Laureate's Facility or the facility of a subcontractor for any
purposes related to the Program (a "Program-related Visit"), then that Party
shall provide the other Party with notice thereof within [***] (or a shorter
period, if possible) of receiving the notice from the Permitted Regulatory
Authority. If the Permitted Regulatory Authority performs the Program-related
Visit without notice, then the applicable Party shall provide the other Party
with notice thereof within [***] of the Program-related Visit. Each Party shall
also provide the other Party with copies (or summaries) of any written or oral
inquiries by the Permitted Regulatory Authority concerning the Program, the Drug
Substance or the Drug Product, subject to applicable confidentiality
obligations. To the extent practicable, the Parties shall consult with one
another in an effort to arrive at a mutually acceptable response to the
Permitted Regulatory Authority. Each Party shall promptly furnish to the other
Party any report or correspondence issued by or provided to any Permitted
Regulatory Authority in connection with such Program-related Visit, redacted
only of any information that is unrelated to the Program, Drug Substance or Drug
Product, as the case may be, subject to any confidentiality obligation with
respect to Laureate's or its Affiliate's or subcontractors. If prior notice of
the Program-related Visit is provided, then Customer shall have the right to be
present at Laureate's facility during that visit to the extent permissible by
the Permitted Regulatory Authority.

      (c) Customer shall have the responsibility for communications with any
Permitted Regulatory Authority and Additional Regulatory Authority relating to
the Program. Laureate shall provide Customer in a timely manner, all information
reasonably in its (or its Affiliate's) control concerning the Program reasonably
necessary to meet Customer's regulatory obligations, at Customer's cost and
expense, and Customer shall provide Laureate or its Affiliates, in a timely
manner, all information reasonably in its control concerning the Program
necessary to meet Laureate's or its Affiliates regulatory obligations.

      (d) Subject to the next to last sentence of subsection (b) above (i.e.,
Laureate's confidentiality obligations to its other customers), within
forty-five (45) days following any inspection of Laureate's facility by a
Permitted Regulatory Authority (in each case, an "Inspection"), Laureate shall
provide Customer with [***]. Additionally, within [***] of the receipt by
Laureate of the [***] referred to above, Laureate will provide Customer with
[***], subject to Laureate's confidentiality obligations to third parties. In
addition, Medarex and Customer agree that Laureate may provide [***] related to
the Program in accordance with this Section 7(d) to customers of Laureate if
requested by such customers.

Section 8. Compensation.

      Laureate shall be paid the development and service fees as set forth in a
Scope (the "Service Fees") as specified in the applicable Appendix 4 to perform
the services set forth therein, which Service Fees shall be subject to increase
in accordance with the provisions of Section 9. Customer shall pay Laureate the

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Service Fees in accordance with the payment schedule set forth in the relevant
Scope. Laureate will invoice the Customer for Product-Dedicated Equipment
purchased for the Program. An administrative fee equal to [***] of Laureate's
actual cost of Product-Dedicated Equipment purchased for the Program will be
added to Product-Dedicated Equipment invoices. Invoices containing charges
related to Product-Dedicated Equipment shall be accompanied by supporting
documentation, including Third Party invoices. Payments shall be wired to an
account designated by Laureate and are due thirty (30) days from the date of
receipt, except that the Service Fees' payments are due at the times indicated
in the relevant Scope. For the purposes of this Section 8, if Laureate sends an
invoice via electronic mail (e-mail), receipt shall be deemed to occur on the
business day following the day such e-mail is transmitted by Laureate to the
email addresses designated in Section 24 for the receipt of invoices. Late
payments are subject to an interest charge of one percent (1%) per month.

Section 9. Change Orders.

      (a) The Service Fees are subject to a number of specific and general
assumptions described in the particular Scope. The specific assumptions relate
to each particular Scope and Program design and objectives, timing, capital
expenditure requirements, if any, and other matters relating to the completion
of the Program as set forth in a Scope (the "Program Assumptions"). Laureate
also assumes that the Customer will cooperate and perform its obligations under
the Agreement and Scope in a timely manner and to the extent reasonably
consistent with similarly situated customers, that no event outside the
reasonable control of Laureate will occur, including, without limitation, the
events described in Section 20, and that there are no changes to any applicable
laws, rules or regulations that materially affect the Program (the foregoing
assumptions together with the Program Assumptions, collectively, the
"Assumptions"). In the event that any of the Assumptions require material
modification or the Program objectives cannot be achieved based on the
Assumptions (each being, a "Modification") then the Scope may be amended as
provided in paragraph (b) of this Section 9.

      (b) In the event a Modification is identified by the Customer or by
Laureate, the identifying Party shall notify the other Party as soon as is
reasonably possible. Laureate shall provide the Customer with a change order
containing an estimate of the required adjustments to the Service Fees within
[***] of receiving or delivering such notice (the "Change Order"). The Customer
shall respond in writing to such Change Order promptly. If Customer does not
approve such Change Order and has not terminated this Agreement, the relevant
Scope and Program in accordance with Section 22, but wants the Program to be
modified to take into account the Modification, then Customer and Laureate shall
use commercially reasonable efforts to agree on a Change Order that is mutually
acceptable. If in any way practicable in the context of the prospective change
order, Laureate will continue to work on the Program during any such
negotiations. Laureate shall not commence work with respect to a Change Order
unless authorized in writing. Any disagreement between the Parties concerning a
Change Order (including, without limitation, the failure of the Parties to agree
upon a mutually acceptable Change Order) shall be resolved in accordance with
the dispute-resolution procedures set forth in Section 17 hereof.

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Section 10. Confidential Information/Legal Proceedings.

      (a) Laureate will not disclose, without Customer's written permission,
Customer Confidential Information to any Third Party or use any Customer
Confidential Information for any purpose other than the performance of Programs
under this Agreement. Notwithstanding the foregoing, Laureate may disclose
Customer Confidential Information (i) to an Affiliate of Laureate that is under
a similar obligation to keep such information confidential; (ii) to Medarex; or
(iii) to a subcontractor of Laureate that has been pre-approved pursuant to
Section 5(a) above and that is under a similar obligation to keep such
information confidential. Laureate may also make disclosures of Customer
Confidential Information to the extent required by any law, rule, regulation,
order decision, decree, subpoena or other legal process to be disclosed;
provided, that if such disclosure is required by law, Laureate will make all
reasonable efforts to notify Customer as applicable, of this request promptly
prior to any disclosure to permit Customer to oppose such disclosure by
appropriate legal action and, in any event, will make only such disclosures as
are necessary to comply with the applicable order. Additionally, if such
disclosure is being made in connection with a filing with the Securities
Exchange Commission, Laureate will use commercially reasonable efforts to obtain
"confidential treatment" for the disclosure and to redact such information as
Customer may reasonably request. The foregoing obligations of confidentiality
and non-use will not apply with respect to any Customer Confidential Information
that: (i) is or becomes publicly available other than as a result of a breach of
this Agreement by Laureate; (ii) is disclosed to Laureate by a Third Party which
Laureate reasonably believes is entitled to disclose it without restriction;
(iii) is already known to Laureate as shown by its prior written records other
than through Customer; or (iv) is independently developed by Laureate without
the use of Customer Confidential Information, as evidenced by contemporaneous
written records.

      (b) Customer will not disclose, without Laureate's written permission,
Laureate Confidential Information to any Third Party or use any Laureate
Confidential Information for any purpose other than the performance of Programs
under this Agreement. Notwithstanding the foregoing, Customer may disclose
Laureate Confidential Information (i) to Medarex (provided that Medarex shall be
required to keep such information confidential pursuant to the confidentiality
agreement between Medarex and Laureate dated June 1, 2004) or to an Affiliate of
Customer that is under a similar obligation to keep such information
confidential; (ii) to the extent necessary, is required pursuant to a United
States Government contract or grant; provided that Laureate shall be given
reasonable prior notice of such disclosure; or (iii) to a subcontractor of
Customer that has been pre-approved by Laureate and that is under a similar
obligation to keep such information confidential. Customer may also make
disclosures of Laureate Confidential Information to the extent required by any
law, rule, regulation, order decision, decree, subpoena or other legal process
to be disclosed; provided, that if such disclosure is required by law, Customer
will make all reasonable efforts to notify Laureate of this request promptly
prior to any disclosure to permit Laureate to oppose such disclosure by
appropriate legal action and, in any event, will make only such disclosures as
are necessary to comply with the applicable order. Additionally, if such
disclosure is being made in connection with a filing with the Securities
Exchange Commission, Customer will use commercially reasonable efforts to obtain
"confidential treatment" for the disclosure and to redact such information as
Laureate may reasonably request. The foregoing obligations of confidentiality
and non-use will not apply with respect to any Laureate Confidential Information
that: (i) is or becomes publicly available other than as a result of a breach of

                                      -13-
<PAGE>

this Agreement by Customer; (ii) is disclosed to Customer by a Third Party which
Customer reasonably believes is entitled to disclose it without restriction;
(iii) is already known to Customer as shown by its prior written records other
than through Laureate; or (iv) is independently developed by Customer without
the use of Laureate Confidential Information, as evidenced by contemporaneous
written records.

      (c) Laureate will not transfer any Compound without Customer's written
permission to any Third Party unless such transfer is to a pre-approved
subcontractor, is consistent with the relevant Program and is permitted by the
Amended and Restated Medarex MTA. Medarex acknowledges that it has provided its
consent to transfer such Compound to pre-approved subcontractors as of June 13,
2007, pursuant to the written consent attached hereto as Schedule 5(c).

      (d) If Laureate shall be obliged to provide testimony or records regarding
a particular Program in any legal or administrative proceeding, then Customer
shall reimburse Laureate for its reasonable and documented out-of-pocket costs
plus a reasonable hourly fee for its employees or representatives at Laureate's
standard commercial rates.

      (e) Notwithstanding the provisions of subsection (b) above, Customer may
only disclose standard operating procedures used by Laureate that are directly
related to the Process, and the Batch Record to any party manufacturing Drug
Substance or Drug Product on Customer's behalf, including (i) to Medarex, or
(ii) to a Third Party that needs to know such information to manufacture Drug
Substance or Drug Product and that agrees to be bound by the provisions of
subsection (b) with respect to such information and further agrees not to use
the information for any other purpose.

Section 11. Work Product.

All work outputs (e.g., reports) under this Agreement and any Scope will be
prepared on Laureate's standard format unless otherwise specified in the Scope.

Section 12. Inventions and Patents.

      (a) With respect to any Materials Invention, Process Invention, or Product
Invention, Laureate shall comply with the provisions of Section 5(f) of the
Amended and Restated Medarex MTA.

      (b) Laureate shall retain all rights to (i) any manufacturing methods and
processes including, without limitation, any production, purification and
aseptic filling processes, discovered or developed by Laureate prior to the
effective date of the Medarex MTA ("Laureate IP"), (ii) any inventions, and
enhancements, improvements, or modifications made by Laureate to the Laureate IP
(but excluding any Materials Inventions, Process Inventions, or Product
Inventions), and (iii) all scientific, technical, or other information that are
generally applicable to the maintenance or operation of a manufacturing facility
or operation of a manufacturing business and that are generated by Laureate as a
result of performing the activities described in this Agreement (including any
enhancements, modifications or improvements thereto) ("Laureate Know-How").
Customer acknowledges that all Laureate IP and Laureate Know-How is vested in
Laureate and, except as expressly set forth in Article 12 of this Agreement or
in Section 5(i) of the Amended and Restated Medarex MTA, Customer shall not have
at any time any right, title, license or interest in or to such Laureate IP or
Laureate Know-How.

                                      -14-
<PAGE>

      (c) Laureate hereby grants to Customer a [***].

      (d) To the extent requested by Customer, Laureate shall provide reasonable
technology transfer assistance services to Customer in the event that Customer
transfers the services provided hereunder by Laureate to a third party
manufacturer. Customer shall compensate Laureate for these transfer assistance
services as follows: (i) services shall be performed on a [***] basis at
Laureate's standard rates, (ii) the cost of reasonable third party out of pocket
expenses incurred by Laureate in performing those services; and (iii) a mutually
agreed upon and commercially reasonable technology transfer fee for work not
covered by the fees charged under subsection (i) above, if such work is
requested by Customer. If this Agreement is terminated by Laureate pursuant to
Section 22(e), then [***]:

                                      [***]

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Section 13. Independent Contractor.

      Laureate shall perform each Program as an independent contractor of
Customer and shall have complete and exclusive control over its Facility,
equipment, employees and agents. Nothing in this Agreement or other arrangements
for which it is made shall constitute Laureate, or anyone furnished or used by
Laureate in the performance of the Program, as an employee, joint venture,
partner, or servant of Customer. Laureate also agrees that it shall not have any
rights to receive any employee benefits such as health insurance and accident
insurance, sick leave or vacation as are in effect generally for employees of
Customer. Laureate will not enter into any agreements or incur obligations on
behalf of Customer nor commit Customer in any other manner without prior written
consent from a duly authorized officer or representative of Customer.

Section 14. Insurance.

      (a) Laureate agrees to maintain standard insurance policies covering the
Drug Product, Compound and Product-Dedicated Equipment while under control and
care of Laureate, during the performance of any Program, including general
liability insurance in the amount of [***] Dollars (US $[***]) per occurrence
and [***] Dollars (US $[***]) in the aggregate. Customer agrees to maintain (i)
general liability insurance in the amount of [***] Dollars (US $[***]) per
occurrence and [***] Dollars (US $[***]) in the aggregate and (ii) clinical
trial insurance in the amount of [***] Dollars (US $[***]) per occurrence and
[***] Dollars (US $[***]) in the aggregate covering the Cell Line, Drug
Substance, Drug Product and Compound or any harm caused by the Cell Line, Drug
Substance, Drug Product and Compound, and to name Laureate as an additional
insured under such policy at no cost to Laureate. Upon the commencement of the
commercial manufacturing or supply of the Drug Product, Customer will have the
appropriate levels of insurance which are customary to cover the Cell Line, Drug
Substance, Drug Product and Compound or any harms caused by the Cell Line, Drug
Substance, Drug Product and Compound, and to name Laureate as an additional
insured under such policy at no cost to Laureate; provided that in no event will
such insurance levels be less than [***] Dollars (US $[***]) per occurrence and
[***] Dollars (US $[***]) in the aggregate. Customer further agrees to provide
Laureate with a Certificate(s) of Insurance issued to Customer for an insurance
policy or policies directed to the aforementioned insurance coverage, in which
Laureate is named as an additional insured.

      (b) Prior to the delivery of the Drug Substance, Drug Product, or Compound
under Section 15(a) below, Laureate shall [***]. If the Drug Substance, Drug
Product or Compound is lost due to any reason other than a Laureate Failure,
then Customer shall bear the risk of loss therefore.

      (c) Prior to the delivery of the Drug Substance, Drug Product, or Compound
under Section 15(a) below. Laureate shall [***]. If the Drug Substance, Drug
Product or Compound is lost due to destabilization, then Customer shall bear the
risk of loss therefore, unless the destabilization is due to Laureate's
negligence or intentional misconduct.

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Section 15. Shipping; Risk of Loss; Inspection.

      (a) Laureate shall package for shipment Drug Substance, Drug Product,
samples or other Compound in accordance with Customer's written instructions and
at the Customer's expense, including the procurement of reasonable insurance.
Laureate shall not knowingly ship any Drug Substance, Drug Product, samples or
other Compound that do not conform to the Specifications. Delivery of Drug
Substance, Drug Product, samples or other materials by Laureate will be F.C.A.
(Incoterms 2000) the Facility and Customer shall bear all packaging, shipping
and insurance charges as per Appendix 5. Subject to the provisions of Section
14(b) above, title and risk of loss shall transfer to Customer on transfer to
carrier at the Facility.

      (b) Each shipment of Drug Substance or Drug Product shall be accompanied
by quality assurance documents as required under the Quality Agreement,
including a Certificate of Analysis and/or Material Safety Data Sheet, as
applicable, attesting to the compliance of each Batch with Specifications for
each of the Drug Substance and Drug Product as set forth in the relevant Scope.
Customer shall carry out appropriate visual inspection of the shipment, as well
as any other analysis which Customer may deem appropriate or necessary, upon
receipt. Should it occur that any of the Drug Substance, Drug Product or
corresponding samples do not meet the stated Specifications, Customer shall, as
soon as possible and in any case within [***], give notice in writing to
Laureate specifying in detail the claimed non-conforming characteristics of the
shipment. In the absence of Customer's notification within the said term,
Customer shall be deemed to have accepted such Drug Substance or Drug Product,
samples or other Compound. Should Laureate agree that such Drug Substance or
Drug Product does not meet the approved Specifications or it is determined that
the Specifications are not met under the last sentence of this subsection (b),
and provided that Customer demonstrates that the Drug Substance, Drug Product or
related samples has been properly handled and stored after delivery, Laureate
shall [***] such Drug Substance or Drug Product and shall use commercially
reasonable efforts to make replacement Drug Substance or Drug Product as soon as
practicable (i.e., Laureate shall use its best efforts to promptly reschedule
production of Drug Substance or Drug Product for Customer [***]. Regardless, in
no event shall Laureate [***] following the date that the Drug Substance or Drug
Product was identified as not meeting Specifications (the "Identification
Date"), provided that in the case of a Disputed Defect (as defined below),
Laureate shall not be required to commence such manufacturing in [***]. Should
Laureate not be in agreement with Customer's claim of defect (a "Disputed
Defect"), a sample of the alleged defective Drug Substance or Drug Product shall
be submitted to an agreed upon independent laboratory and the decision of such
laboratory shall be final and binding for both Laureate and Customer and the
corresponding expense will be paid by the party found to be in error.

      (c) Laureate shall retain representative samples of Drug Product and
Filled Products solely for record keeping, testing and regulatory purposes.

Section 16. Default.

      (a) If Laureate is in default of its obligations under this Agreement or
any Scope, then Customer shall promptly notify Laureate in writing of any such

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                                      -17-
<PAGE>

default. Laureate shall have a period of [***] from the date of receipt of such
notice within which to cure such default, or if the default is not capable of
being cured within such [***] period, then Laureate shall have commenced actions
to cure the default within such period and shall have an [***] to cure the
default. If, however, the default renders a production run unusable, then
Laureate shall, at Customer's option, either [***]. If Laureate shall fail to
cure such default within the specified cure period or repeat the Program, as the
case may be, then the particular Scope and/or this Agreement shall, at
Customer's option, immediately terminate. In the event that Customer chooses the
remedy specified in this Section 16(a)(l) or Section 16(a)(2), then such remedy
shall be Customer's sole and exclusive remedy for Laureate's default hereunder
and Laureate's liability to Customer shall be subject to the limitations set
forth in Section 18(e).

      (b) If Customer is in default of its material obligations under this
Agreement or any Scope, Laureate shall promptly notify Customer in writing of
any such default. Customer shall have a period of [***] from the date of receipt
of such notice within which to cure such default; provided, that, if Customer
fails to cure such breach within the specified cure period, then the particular
Scope and/or this Agreement shall, at Laureate's option, immediately terminate.
Notwithstanding the cure period specified in the preceding sentence, if Customer
fails to make any payment to Laureate within the time period specified in a
Scope, Laureate may, in its discretion, suspend performance of the relevant
Program until Laureate receives such outstanding payment.

Section 17. Dispute Resolution.

      (a) In the event any dispute shall arise between the Customer and Laureate
with respect to any of the terms and conditions of this Agreement, a Scope or
the Program, then senior executives of the Customer and Laureate shall meet (in
person or telephonically) as promptly as practicable after notice of such
dispute (but in no event more than 7 business days after) to resolve in good
faith such dispute.

      (b) If the Customer and Laureate are unable to satisfactorily resolve the
dispute, then such dispute shall be finally settled by arbitration in accordance
with this Section 17. The arbitration will be held in the State of New York, and
except as noted below, shall be conducted in accordance with the rules of the
American Arbitration Association (or such successor organization) by two (2)
arbitrators appointed, one by each Party. If the arbitrators appointed cannot
agree on the resolution of the dispute within [***] after the dispute is
submitted to them, they shall thereupon appoint a third arbitrator, and if they
fail to agree upon a third arbitrator within [***] after a deadlock is declared
by either arbitrator, a third arbitrator will be appointed by the American
Arbitration Association (or such successor organization) upon the request of
either arbitrator. The arbitrators shall have no authority to vary from or
ignore the terms of this Agreement or the relevant Scope and shall be bound by
controlling law. Finally, the Parties may seek judicial intervention for
emergency relief, such as restraining orders and injunctions where appropriate.

      (c) Any decision by the initial two (2) arbitrators or the third
arbitrator and either one of the initial two (2) arbitrators shall be binding
upon the Parties and may be entered as final judgment in any court having

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                                      -18-
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jurisdiction. The cost of any arbitration proceeding shall be borne by the
Parties as the arbitrators shall determine if the Parties have not otherwise
agreed. The arbitrators shall render their final decision in writing to the
Parties.

Section 18. Indemnification; Limitation of Liability.

      (a) Laureate shall indemnify Customer, their respective Affiliates and
their respective officers, directors and employees from any loss, cost, damage
or expense (a "Loss") from any lawsuit, action, claim, demand, assessment or
proceeding (a "Claim") to the extent arising from or related to (i) personal
injury to Program participants or to any employee of Customer or its Affiliates
or property damage arising or occurring during the conduct of the Program as a
result of Laureate's gross negligence or intentional misconduct; (ii) Laureate's
breach of any of the representations, warranties or covenants (including [***])
contained in this Agreement or a Scope; (iii) the gross negligence or
intentional misconduct or wilfull omission of Laureate in the performance of its
obligations under this Agreement or a Scope related to the Program; or (iv) the
infringement by Laureate of any patents or other intellectual property rights
vested in any Third Party to the extent arising from Laureate Know-How or
Laureate IP; provided, that, if such Loss or Claim arises in whole or in part
from any circumstance for which Customer is required to indemnify Laureate
pursuant to Section 18(b) below, then the amount of the Loss that Laureate shall
indemnify Customer for pursuant to this Section 18 shall be reduced by an amount
in proportion to the percentage of Customer's responsibilities for such Loss as
determined in accordance with Section 17 or in a binding settlement between the
Parties.

      (b) Customer shall indemnify Laureate and Laureate's Affiliates and their
respective officers, directors, employees and agents (the "Laureate Group") from
any Loss from any Claim to the extent arising from or related to (i) personal
injury or property damage to a participant in the Program, any employee of the
Laureate Group or any Third Party directly or indirectly caused by the Cell
Line, Compound, Product-Dedicated Equipment, Process Consumables, cell culture
media, Drug Product, Drug Substance or the Program except to the extent the
injury or damage was due to Laureate's failure to follow any applicable U.S.
laws, regulations, or guidelines, or the applicable Scope, Specifications, or
Laureate SOPs; (ii) the harmful or otherwise unsafe effect of the Compound,
Process Consumables, cell culture media, Drug Product or Drug Substance
including, without limitation, a Claim based upon Customer's or any other
person's use, consumption, sale, distribution or marketing of any substance,
including the Compound, Process Consumables, cell culture media, the Drug
Substance or the Drug Product; (iii) the negligence, gross negligence or
intentional misconduct or wilfull omission of Customer in the performance of its
obligations under this Agreement or a Scope related to the Program; (iv)
Customer's breach of any of the representations, warranties or covenants
contained in this Agreement or a Scope, (v) a breach of the representation set
forth in Section 19(a) if that representation was affirmatively stated [***], or
(vi) breaches or the representations set forth in Sections 19(c) and (d) if
those representations were affirmatively stated and without [***]; provided,
that, if such Loss or Claim arises in whole or in part from any circumstance for
which Laureate is required to indemnify Customer pursuant to Section 18(a)
above, then the amount of such Loss that Customer shall indemnify the Laureate
Group for pursuant to this Section 18 shall be reduced by an amount in
proportion to the percentage of Laureate's responsibilities for such Loss as
determined in accordance with Section 17 or in a binding settlement between the
Parties.

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      (c) Customer assumes full responsibility and liability for any and all
direct damages to Laureate in the event that the handling of Cell Line,
Compound, Compound Materials, Process Consumables, cell culture media, Drug
Product or Drug Substance on its premises, or the use of the Product-Dedicated
Equipment, in accordance with Laureate SOP, a Scope and the terms of this
Agreement results in contamination of equipment, facilities, personnel or Third
Parties by noxious, toxic, infectious, and/or corrosive agents (collectively,
"Contaminants") in the Cell Line, Compound, Compound Materials, Process
Consumables, cell culture media, Drug Product, Drug Substance or associated
materials, as initially received by Laureate, and to the extent that said
contamination can be conclusively determined to have arisen from such materials,
wherein infectious agents refers to any microbiological or viral agents of
infection, including but not limited to bacteria, fungae, mycoplasmas, prions,
and viruses. To the extent that any contamination of equipment, facilities,
personnel or Third Parties results from Laureate's negligence or failure to
follow its SOP or the terms of this Agreement or a Scope, then Laureate will
assume full responsibility and liability for any such direct damages, provided,
however, that Laureate's conduct in this regard had an effect that contributed
materially to the contamination or its consequences. Laureate agrees to use
commercially reasonable efforts to mitigate any direct damages in the event of a
contamination incident caused by Compound, Compound Materials, Process
Consumables, cell culture media, Drug Products, Drug Substance or associated
materials.

      (d) Upon receipt of notice of any Claim that may give rise to a right of
indemnity from the other Party hereto, the Party seeking indemnification (the
"Indemnified Party") shall give written notice thereof to the other Party (the
"Indemnifying Party"), of the Claim for indemnity within thirty (30) days of
receiving such notice. Such Claim for indemnity shall indicate the nature of the
Claim and the basis therefore. Promptly after a claim is made for which the
Indemnified Party seeks indemnity, the Indemnified Party shall permit the
Indemnifying Party, at its option and expense, to assume the complete defense of
such Claim, provided, that, (i) the Indemnified Party will have the right to
participate in the defense of any such Claim at its own cost and expense; (ii)
the Indemnifying Party will conduct the defense of any such Claim with due
regard for the business interests and potential related liabilities of the
Indemnified Party; and (iii) the Indemnifying Party will, prior to making any
settlement, consult with the Indemnified Party as to the terms of such
settlement. The Indemnifying Party will not, in defense of any such Claim,
except with the consent of the Indemnified Party, consent to the entry of any
judgment or enter into any settlement which does not include, as an
unconditional term thereof, the giving by the claimant or plaintiff to the
Indemnified Party of a release from all liability in respect thereof. After
notice to the Indemnified Party of the Indemnifying Party's election to assume
the defense of such Claim, the Indemnifying Party shall only be liable to the
Indemnified Party for such reasonable legal or other expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof at the
request of the Indemnifying Party. As to those Claims with respect to which the
Indemnifying Party does not elect to assume control of the defense, the
Indemnifying Party shall be liable for all reasonable legal or other expenses
incurred by the Indemnified Party in connection with the defense thereof and the
Indemnified Party will afford the Indemnifying Party an opportunity to
participate in such defense at the Indemnifying Party's own cost and expense,
and will not settle or otherwise dispose of any of the same without the consent
of the Indemnifying Party, which consent shall not be unreasonably withheld.

                                      -20-
<PAGE>

      (e) Limitations on Total Liability of Laureate.

            (i) Consequential Damages Waiver. EXCEPT AS OTHERWISE SET FORTH IN
SECTION 18(C) OR TO THE EXTENT RESULTING FROM A BREACH OF SECTION 10, UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY THIRD PARTY
FOR INCIDENTAL, INDIRECT, CONSEQUENTIAL OR SPECIAL DAMAGES ARISING IN CONNECTION
WITH THIS AGREEMENT, A SCOPE OR ANY DOCUMENTS OR APPENDICES RELATED THERETO.
Except in the case of [***], in no event shall Laureate's maximum liability
under this Agreement for all claims (whether or not brought by Third Parties),
whether in connection with a warranty claim, an indemnity claim, a combination
thereof, or otherwise and whether arising under contract, warranty, tort
(including negligence), strict liability, product liability, a combination
thereof, or any other theory of liability or indemnification [***]. The
limitations of liability reflect the allocation of risk between the parties. The
limitations specified in this Section 18(e) will survive and apply even if any
limited remedy specified in this Agreement is found to have failed of its
essential purpose.

            (ii) Product Loss. By way of clarification, Laureate's aggregate
liability resulting from the loss, destabilization, alteration or contamination
of Drug Product of a particular Batch in crude or purified form as a result of
Laureate's breach of this Agreement or a Scope, failure to comply with Master
Batch Record or negligence, wherein such Drug Product is lost, destabilized,
altered or contaminated such that it cannot be used in clinical trials or cannot
be placed into commerce, shall not exceed the Service Fees to be received by
Laureate with respect to the Batch giving rise to the liability in question.

            (iii) For purposes of the limitations set forth in Section 18(e)(i)
above, direct damages shall be deemed to include all third party damages,
including consequential or incidental damages, for which the arbitrators, in
accordance with Section 17 or a court of law or other governing tribunal or
agency, determines a party to be responsible and/or liable.

Section 19. Representations, Warranties and Covenants.

      (a) Customer hereby represents and warrants to Laureate that prior to the
first commercial sale of Drug Product, Customer shall have legal title and/or a
valid license to the Cell Line, Process, Compound, Compound Materials, Drug
Product and Drug Substance (with rights to allow Laureate to perform the
Services hereunder) and that Laureate's performance of the Program (including
its use of the Process) will not violate or infringe on the patents, industrial
property rights, trade secrets, trademarks, tradenames, servicemarks, copyrights
or any other intellectual property rights of any Third Party. Customer further
represents and warrants that prior to the commencement of any Program under this
Agreement it shall be entitled to supply Cell Line, Compound, Compound
Materials, Drug Product, Drug Substance and Customer Confidential Information to
Laureate.

----------
*** Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the SEC.

                                      -21-
<PAGE>

      (b) Customer will notify Laureate immediately if Customer knows or should
know that it is no longer entitled through Medarex or directly to supply the
Cell Line, Compound, Compound Materials, process patents, Drug Products, Drug
Substance, any other materials and/or the Customer Confidential Information to
Laureate or that the use by Laureate of such materials and/or information
infringes or is alleged to infringe any rights (including any intellectual or
industrial property rights) vested in any Third Party.

      (c) To the best of Customer's knowledge, it hereby represents and warrants
to Laureate that the Customer has performed testing to assure itself reasonably
that the Compound, Compound Materials, Cell Line, Drug Substance and Drug
Product are safe and stable and are and will be in compliance with all federal,
state and local laws and regulations required for use, distribution and testing
of such materials and that such materials pose no environmental risk. Customer
hereby represents and warrants to Laureate that the Process has been operated by
Medarex in a manner that can be consistently reproduced at the scale of a 35
liter bioreactor.

      (d) To the best of Customer's knowledge, it hereby represents to Laureate
that any technical or regulatory information or documentation supplied by
Customer or on its behalf to Laureate (including, but not limited to, process
details, analytical methods, Specifications, development reports, technology
transfer documents, plans, engineering documents and other documents) and
required for execution of the Program is accurate and suitable for its intended
use in all material respects.

      (e) Each Party hereby represents and warrants to the other Party that it
has full power and authority to enter into, deliver and perform its obligations
under this Agreement, and it has taken all action required to authorize the
execution and delivery of this Agreement and to consummate the transactions
contemplated hereby, and the person signing this Agreement on behalf of such
Party has been duly authorized to act on behalf of and to bind such Party.

      (f) Laureate warrants and represents that (i) each Program will be
performed in accordance in with standard industry custom, (ii) it will use all
commercially reasonable efforts to achieve the estimated deadlines for the
Program, (iii) the Drug Product will meet the Specifications set forth in the
Program at the time of delivery to Customer, and (iv) after applicable
regulatory approval of the Process and the Drug Product, Laureate will not
knowingly ship Drug Substance to Customer that is considered to be adulterated
or misbranded, within the meaning of the U.S. Food, Drug & Cosmetics Act, or any
comparable U.S. laws, rules or regulations as a result of any act or omission of
Laureate, unless Customer has authorized Laureate in writing to do so.

      (g) Laureate warrants and represents that (i) it has never been, is not
currently, and during the term of this Agreement will not become, a Debarred
Entity and (ii) to the best of its knowledge no Debarred Entity or Debarred
Individual, including any subcontractors or third parties, will perform any
services on the Customer's behalf. In the event that Laureate becomes aware of
FDA investigations of, or debarment proceedings against, Laureate or any Person
performing the Program, Laureate will immediately notify the Customer of any
such circumstances during the term of this Agreement.

      (h) Laureate represents and warrants that the services provided pursuant
to this Agreement shall be in compliance with all applicable laws in the United
States.

                                      -22-
<PAGE>

      (i) Customer is a holder of U.S. Government contracts and is subject to
certain additional statutory, regulatory, and contract requirements by virtue
thereof. If this Agreement is issued under a U.S. Government prime contract or a
subcontract under a U.S. Government prime contract, Laureate agrees to use
commercially reasonable efforts to comply with all statutory, regulatory, and
contract requirements applicable to the prime contract or subcontract, copies of
which shall be furnished to Laureate.

      (j) THE EXPRESS WARRANTIES OF LAUREATE SET FORTH IN SECTIONS 19 OF THIS
AGREEMENT AND THE CERTIFICATIONS REGARDING THE FEDERAL ACQUISITION REGULATIONS
SET FORTH IN THE APPLICABLE SCOPE ARE IN LIEU OF ALL CONDITIONS, WARRANTIES AND
STATEMENTS IN RESPECT OF THE PROGRAM AND/OR THE DRUG PRODUCT, WHETHER EXPRESS OR
IMPLIED BY STATUTE, CUSTOM OF THE TRADE OR OTHERWISE INCLUDING ANY SUCH
CONDITION, WARRANTY OR STATEMENT RELATING TO THE DESCRIPTION OR QUALITY OF THE
DRUG PRODUCT UPON COMPLETION OF LAUREATE'S SERVICES, ITS FITNESS FOR A
PARTICULAR PURPOSE OR USE UNDER ANY CONDITIONS, WHETHER OR NOT KNOWN TO
LAUREATE, AND THAT ANY SUCH CONDITION, WARRANTY OR STATEMENT IS EXCLUDED FROM
THIS AGREEMENT.

Section 20. Force Majeure.

      Either Party shall be excused from performing its respective obligations
under this Agreement or any Scope if its performance is delayed or prevented by
any event beyond such Party's reasonable control, including, but not limited to,
acts of God, fire, explosion, weather, disease, war, terrorism, insurrection,
civil strife, riots, government action, or power failure, provided that such
performance shall be excused only to the extent of and during such disability.
Any time specified for completion of performance under a Scope falling due
during or subsequent to the occurrence of any or such events shall be
automatically extended for a period of time reasonably necessary to recover from
such disability. Laureate will promptly notify Customer if, by reason of any of
the events referred to herein, Laureate is unable to meet any such time for
performance specified in a Scope and will, upon written request from Customer,
but at Customer's sole cost and expense, repeat that part of the Program
affected by the disability. If the event of force majeure continues for a period
greater than ninety (90) days, then the unaffected Party may terminate this
Agreement immediately by notice in writing to the affected Party.

Section 21. Use of Names.

      Subject to the prior approval of the other party (such approval not to be
unreasonably withheld), each party shall be permitted to use the name and logo
of the other Party in the "promotion of its business." The promotion of a
Party's business means use in (i) sales and marketing materials, (ii) web sites,
and (iii) other customary promotional business uses agreed to by the Parties.
Neither party shall issue a press release or make any other public statement
regarding this Agreement without the prior written consent of the other party;
provided, however, disclosures to the United States Securities Exchange
Commission shall be governed by Sections 10(a) and 10(b), as applicable.

                                      -23-
<PAGE>

Section 22. Term; Termination.

      (a) Unless earlier terminated in accordance with the other provisions of
this Agreement, this Agreement shall commence on the Effective Date and shall
continue in full force and effect until December 31, 2017. [***]:

            (i) [***];

      (b) For purposes of clarification, reservation fees are not refundable and
are not creditable toward the termination payments indicated above and will be
forfeited by Customer in addition to the termination payments indicated above,
except that [***].

      (c) [***]

      (d) Notwithstanding anything to the contrary contained in this Agreement,
Customer may terminate this Agreement at any time, with or without cause,
effective upon written notice to Laureate of not less than [***]. If Customer
terminates this Agreement pursuant to the foregoing sentence, Customer shall
[***].

      (e) Notwithstanding anything to the contrary contained in this Agreement,
Laureate may terminate this Agreement [***], effective upon written notice to
Customer of not less than [***]. Upon issuance of such termination notice,
Laureate will solely be required to complete any production runs for which a
reservation fee has been paid for a then-current Program, wind down any
then-current Programs under which there is a current supply of Drug Product, and
to provide the technology transfer assistance services pursuant to Section
12(d), but shall not be required to begin any new or additional Programs or
enter into any additional Scopes unless such Scope or Program can be completed
within such [***] period.

      (f) Either party shall have the right to immediately terminate this
Agreement, effective upon written notice of such termination, in the event that:
(i) voluntary or involuntary proceedings by or against the other party are
instituted in bankruptcy under any insolvency law, (ii) a receiver or custodian
is appointed for the other party, (iii) proceedings are instituted by or against
the other party for corporate reorganization or dissolution of such party, which
proceedings, if involuntary, shall not have been dismissed within sixty (60)
days after the date of filing, (iv) the other party makes an assignment for the
benefit of creditors, or (v) substantially all of the assets of the other party
are seized or attached and not released within sixty (60) days thereafter.

      (g) The termination of this Agreement for any reason shall not relieve
either Party of its obligation to the other Party for obligations in respect of
(i) compensation for services performed (Sections 8, 9 and 22 and pursuant to
any effective Scope) (ii) confidentiality and non-use of information (Section
10), (iii) work product (Section 11), (iv) inventions and patents (Section 12),
(v) insurance (Section 14), (vi) indemnification (Section 18), and (vii)
consents for advertising purposes and publications (Section 23).

----------
*** Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the SEC.

                                      -24-
<PAGE>

Section 23. Assignment; Third Party Beneficiary.

      (a) This Agreement or any Scope entered into hereunder may not be assigned
or otherwise transferred by either Party without the prior written consent of
the other Party (or, in the case of assignment by Laureate, the prior written
consent of Customer); provided, however, either Party may, without such consent,
assign this Agreement or any Scope entered into hereunder (i) in connection with
the transfer or sale of all or substantially all of the assets of such Party or,
in the case of Customer, its rights to the Cell Line, Drug Substance or Drug
Product; (ii) in the event of the merger or consolidation of a Party hereto with
another company, except in the case of a merger or consolidation of Laureate
with a competitor of Customer; (iii) to any Affiliate of the assigning Party; or
(iv) to Medarex, in the case of Customer. Any purported assignment in violation
of the preceding sentence shall be void. Any permitted assignee shall assume all
obligations of its assignor under this Agreement and any existing Scopes,
provided however that if Customer assigns this Agreement or a Scope to an
Affiliate, the Customer shall continue to remain obligated under this Agreement.
[***]

      (b) The parties acknowledge and agree that Medarex is an intended third
party beneficiary of provisions in this Agreement applicable to Medarex and,
accordingly, will be entitled to full right of enforcement of such provisions.

Section 24. Notice.

      All notices to be given as required in the Agreement shall be in writing
and may be delivered personally, or mailed either by a reputable overnight
carrier with required receipt signature or certified mail, postage prepaid to
the Parties at the addresses set forth above or at such other address as either
Party may provide by written notice to the other Party in accordance with the
provisions of this Section 24. Such notice shall be effective: (i) on the date
sent, if delivered personally or by facsimile (receipt of which is confirmed);
(ii) the date after delivery if sent by overnight carrier; or (iii) on the date
received if sent by certified mail.

             If to Customer:

             PharmAthene, Inc.
             175 Admiral Cochrane Drive, Suite 101
             Annapolis, MD 21401
             Attn: David P. Wright, President and Chief Executive Officer
             Telefax: (410)571-8927

             with a copy to:

             Elizabeth Mackessy-Lloyd
             Contracts Manager
             PharmAthene, Inc.
             175 Admiral Cochrane Drive, Suite 101
             Annapolis, MD 21401

----------
*** Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the SEC.

                                      -25-
<PAGE>

             If an invoice is to be delivered by email to:

             Ms. Maxine Berritt (accounts payable): berrittm(q)pharmathene.com
             Ms. Penny Schnell (accounts payable): schnellp@pharmathene.com

             If to Laureate:

             Laureate Pharma, Inc.
             201 College Road East
             Princeton, NJ 08540
             Attn: Robert J. Broeze, Ph.D., President & Chief Executive Officer
             Telefax: (609)520-3963

             With a copy to:
             Safeguard Scientifics, Inc.
             800 The Safeguard Building
             435 Devon Park Drive
             Wayne, PA 19087
             Attn: Legal Department
             Fax: (610)975-0261

Section 25. Choice of Law.

      This Agreement, any Scopes entered into hereunder, and all matters arising
directly or indirectly hereunder, shall be governed by, and construed in
accordance with the laws of the State of New York.

Section 26. Headings.

      The heading of each paragraph of this Agreement is for descriptive
purposes only and shall not be deemed to modify or qualify any of the
provisions, rights, or obligations set forth in this Agreement.

Section 27. Waiver/Severability.

      No waiver of any provision of this Agreement, whether by conduct or
otherwise, in any one or more instances shall be deemed to be or be construed as
a further or continuing waiver of any such provision, or of any other provision
or condition of this Agreement. The invalidity of any portion of this Agreement
shall not affect the validity, force or effect of the remaining portions of this
Agreement. If it is ever held that any provision hereunder is too broad to
permit enforcement of such provision to its fullest extent, such provision shall
be enforced to the maximum extent permitted by law.

Section 28. Entire Agreement; Modification/Counterparts.

      (a) This document (and any Scope and Appendices attached hereto) sets
forth the entire Agreement between the Parties hereto with respect to the
performance of any Program by Laureate for Customer and as such, supersedes all

                                      -26-
<PAGE>

prior and contemporaneous negotiations, agreements, representations,
understandings, and commitments with respect thereto and shall take precedence
over all terms, conditions and provisions on any purchase order form or form of
order acknowledgment or other document purporting to address the same subject
matter, except that if there is any conflict between the terms of this Agreement
and the Quality Agreement, the Quality Agreement shall govern; provided,
however, that the Amended and Restated Medarex MTA and the confidentiality
agreement between Laureate and Medarex dated June 1, 2004 and the LOI; will
continue in full force and effect in accordance with its terms. This Agreement
and any Scope shall not be waived, released, discharged, changed or modified in
any manner except by an instrument signed by the duly authorized officers of
each of the Parties hereto, which instrument shall make specific reference to
this Agreement and any Scope and shall express the plan or intention to modify
same. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument. In the event of any conflict between this Agreement, as it
may be modified as provided herein, and a Scope, the terms of this Agreement
shall control. For purposes of execution, facsimile signatures shall be deemed
originals.

      (b) This Agreement becomes effective and binding on both Parties as of the
Effective Date. Should terms contained herein be at variance with the terms and
conditions specified in Customer's written acceptance, then the terms and
conditions contained herein take precedence.

                            (signature page follows)

                                      -27-
<PAGE>

                                         LAUREATE PHARMA, INC.

                                         By: /s/Robert J. Broeze
                                             -----------------------------------
                                             Robert J. Broeze, Ph.D
                                             President & Chief Executive Officer

                                         PHARMATHENE, INC.

                                         By: /s/David P Wright
                                             -----------------------------------
                                             David P. Wright
                                             President & Chief Executive Officer

                                      -28-Exhibit 10.28

           CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT
                 HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
                 SECURITIES AND EXCHANGE COMMISSION (THE "SEC")
  PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT WITH RESPECT TO THE OMITTED
                                    PORTIONS.
                    OMITTED PORTIONS ARE INDICATED BY [***].

                         FIRST AMENDMENT TO OFFICE LEASE

      THIS FIRST AMENDMENT TO OFFICE LEASE (this "Amendment") is made as of
January 22, 2007, by and between Park Place Trust, a Maryland business trust
("Landlord") and PharmAthene, Inc., a Delaware corporation ("Tenant").

                                   WITNESSETH:

      WHEREAS, Landlord and Tenant entered into that certain Office Lease dated
September 14, 2006 (the "Lease").

      WHEREAS, pursuant to the Lease, Landlord has agreed to lease to Tenant and
Tenant has agreed to lease from Landlord certain space (the "Premises"),
consisting of approximately [***] rentable square feet of office space located
on the fourth (4th) floor of the building known as Park Place Office Building
One and located at West Street and Taylor Avenue, Annapolis, Maryland (the
"Building"), as more particularly described in the Lease.

      WHEREAS, Landlord has agreed to lease to Tenant, and Tenant has agreed to
lease from Landlord, approximately [***] square feet of additional rentable area
on the fourth (4th) floor of the Building (the "Expansion Space") as shown on
Exhibit A-1 attached hereto.

      WHEREAS, Landlord and Tenant have agreed that the Commencement Date as to
the Demised Premises Expanded (defined below) occurred on January __, 2007 and
simultaneously with the execution hereof, Landlord and Tenant have executed and
delivered Exhibit D to the Lease confirming such facts.

      WHEREAS, Landlord and Tenant desire to amend the Lease upon the terms and
conditions set forth in this Amendment.

      WHEREAS, except as otherwise defined herein, all terms used in this
Amendment that are defined in the Lease shall have the same meaning as set forth
in the Lease.

      NOW, THEREFORE, in consideration of the sum of Ten Dollars ($10.00) cash
in hand paid, the mutual covenants hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

                                      -1-
<PAGE>

1. Landlord hereby leases the Expansion Space to Tenant, and Tenant hereby
leases the Expansion Space from Landlord. With the addition of the Expansion
Space, the Demised Premises (as so expanded, the "Demised Premises Expanded")
shall contain approximately [***] rentable square feet.

      The Monthly Rent for the Expansion Space ("Expansion Space Monthly Rent")
shall be as follows:

                                        Expansion Space               Rate Per
                 Period                   Monthly Rent              Square Foot
                 ------                   ------------              -----------

                                      [***]

      With the addition of the Expansion Space, Tenant's Share of Operating
Expenses shall be increased from [***]% to [***]%, Tenant's Share of Operating
Costs shall be increased from [***]% to [***]% and Tenant's Share of Real Estate
Taxes shall be increased from [***]% to [***]%.

      The Allowance, computed as [***] Dollars ($[***]) per rentable square
foot, shall be increased from [***] Dollars ($[***]) to [***] Dollars ($[***]),
of which [***] Dollars ($[***]) may be utilized to pay the costs of installing
voice and data cabling in the Demised Premises.

      The advance rent deposit referenced in Section 6(A) shall be increased
from [***] Dollars ($[***]) to [***] Dollars ($[***]). The Security Deposit
Letter of Credit referenced in Section 6(B) shall be increased from [***]

----------
*** Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the SEC.

                                      -2-
<PAGE>

Dollars ($[***]) to [***] Dollars ($[***]). The Letter of Credit Reduction chart
contained in Section 6(B) shall be deemed deleted and replaced with the
following:

                               Security Deposit       Security Deposit Remaining
         Reduction Date        Reduction Amount            After Reduction
         --------------        ----------------            ---------------

                                      [***]

      Exhibit F to the Lease is deemed deleted and replaced with Exhibit F
attached hereto.

      Except as herein set forth the Expansion Space shall be deemed part of the
Demised Premises and the Lease shall apply to the Expansion Space in the same
manner it applies to the space originally demised.

      2. Landlord agrees to abate and forgive Monthly Rent in the aggregate
amount of [***] Dollars ($[***]), such abatement to be applied against Monthly
Rent first due and owing.

      3. The provisions of Exhibit C to the Lease notwithstanding, Landlord
shall permit Tenant to have one or more free standing water coolers (i.e., not
connected to the Building's water system) within the Demised Premises Expanded
and to allow its personnel to bring dogs into the Demised Premises Expanded,
such circumstances to be governed by reasonable mutually acceptable arrangements
established with Landlord's property manager.

      4. This Amendment shall be binding upon and inure to the benefit of the
parties hereto, their successors and assigns.

      5. This Amendment may be executed in multiple counterparts, each of which
shall be an original, but all of which shall constitute one and the same
Amendment. Faxed signatures shall have the same binding effect as original
signature, and a faxed Amendment containing the signatures (original or faxed)
of the parties shall be binding.

      6. In all other respects the Lease shall continue in full force and effect
in accordance with its terms.

----------
*** Portions of this page have been omitted pursuant to a Request for
Confidential Treatment filed separately with the SEC.

                                      -3-
<PAGE>

      IN WITNESS WHEREOF, Landlord and Tenant have caused this Amendment to be
executed under seal as of the date first above written.

                                    LANDLORD:

                                    PARK PLACE TRUST,
                                    a Maryland business trust

                                    By: JBJ/Carlyle Park Place LP, a
                                        Delaware limited partnership,
                                        as Trustee

                                    By: JBJ Management Company,
                                        Inc., a Maryland limited
                                        liability company, Managing
                                        General Partner

                                    By: /s/ J. Jeremy Parks              [SEAL]
                                        ---------------------------------
                                    Name: J. Jeremy Parks
                                    Date: 1-22-07

                                    TENANT:

                                    PHARMATHENE, INC.,
                                    a Delaware corporation

                                    By: /s/ Christopher Camut            [SEAL]
                                        ---------------------------------
                                    Name: Christopher Camut
                                    Title: CFO/VP

                                      -4-
<PAGE>

                                  OFFICE LEASE

                                       FOR

                                PHARMATHENE, INC.

                                  Suite No. 450
                                   Park Place
                               Office Building One
                                 200 Park Place
                               Annapolis, Maryland

<PAGE>

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

1.   BASIC LEASE INFORMATION ...............................................  1
2.   DEMISED PREMISES ......................................................  2
3.   TERM ..................................................................  3
4.   USE ...................................................................  4
5.   RENT ..................................................................  4
6.   DEPOSITS ..............................................................  5
7.   OPERATING EXPENSES. OPERATING COSTS AND REAL ESTATE TAXES .............  8
8.   PARKING ...............................................................  15
9.   RIGHT OF FIRST OFFER ..................................................  15
10.  ASSIGNMENT AND SUBLETTING .............................................  16
11.  ALTERATIONS ...........................................................  18
12.  LIENS .................................................................  20
13.  MAINTENANCE ...........................................................  20
14.  SIGNS AND ADVERTISEMENTS ..............................................  20
15.  DELIVERIES AND MOVING OF TENANT'S PROPERTY ............................  21
16.  TENANT'S EQUIPMENT ....................................................  21
17.  SERVICES AND UTILITIES ................................................  22
18.  TENANT'S RESPONSIBILITY FOR DAMAGE ....................................  24
19.  ENTRY FOR INSPECTIONS. REPAIRS AND INSTALLATIONS ......................  24
20.  INSURANCE RATING ......................................................  25
21.  INDEMNITY AND PUBLIC LIABILITY INSURANCE ..............................  25
22.  WORKER'S COMPENSATION INSURANCE .......................................  26
23.  ALL RISK PROPERTY INSURANCE ...........................................  26
24.  TENANT'S CONTRACTOR'S INSURANCE .......................................  26
25.  REQUIREMENTS FOR TENANT'S INSURANCE POLICIES ..........................  27
26.  LIABILITY FOR DAMAGE TO PERSONAL PROPERTY AND PERSON ..................  27
27.  DAMAGE TO THE BUILDING AND/OR THE DEMISED PREMISES ....................  28
28.  DEFAULT OF TENANT .....................................................  29
29.  REPEATED DEFAULTS .....................................................  29
30.  WAIVER ................................................................  30
31.  SUBORDINATION .........................................................  30
32.  CONDEMNATION ..........................................................  31
33.  RULES AND REGULATIONS .................................................  31
34.  RIGHT OF LANDLORD TO CURE TENANT'S DEFAULT ............................  32
35.  LATE CHARGES ..........................................................  32
36.  NO PARTNERSHIP ........................................................  33
37.  NO REPRESENTATIONS BY LANDLORD ........................................  33
38.  BROKER AND AGENT ......................................................  33
39.  WAIVER OF JURY TRIAL ..................................................  33
40.  ENFORCEMENT OF LEASE ..................................................  33
41.  NOTICES ...............................................................  34
42.  ESTOPPEL CERTIFICATES .................................................  34
43.  HOLDING OVER ..........................................................  34

                                       -i-
<PAGE>

44.  RIGHTS RESERVED BY LANDLORD ...........................................  35
45.  COVENANTS OF LANDLORD .................................................  35
46.  LIEN FOR RENT .........................................................  36
47.  NO OPTION .............................................................  36
48.  LENDER APPROVAL .......................................................  36
49.  GENDER ................................................................  37
50.  BENEFIT AND BURDEN ....................................................  37
51.  RENTABLE AREA .........................................................  37
52.  GOVERNING LAW .........................................................  37
53.  BANKRUPTCY ............................................................  37
54.  SAVINGS CLAUSE ........................................................  38
55.  AUTHORITY OF TENANT ...................................................  38
56.  JOINT AND SEVERAL LIABILITY ...........................................  38
57.  FINANCIAL STATEMENTS ..................................................  39
58.  BUSINESS DAY/WORKING DAY ..............................................  39
59.  CONFIDENTIALITY .......................................................  39
60.  RENT RELATED REQUIREMENTS .............................................  39
61.  ENVIRONMENTAL REQUIREMENTS ............................................  39
62.  ENTIRE AGREEMENT ......................................................  40

                                      -ii-
<PAGE>

                                    Exhibits

A.    Floor Plan, Demised Premises

A-1   Legal Description of the Land

B.    Work Agreement

C.    Rules and Regulations

D.    Declaration as to Date of Delivery and Acceptance of Possession of Demised
      Premises

D-1   Declaration as to Rent Commencement Date

E.    Specifications for Office Cleaning

F.    Form Letter of Credit

G.    Current Lender's Form SNDA

                                     -iii-
<PAGE>

                                  OFFICE LEASE

      THIS LEASE, made and entered into on this 14th day of September, 2006 by
and between Park Place Trust, a Maryland Business Trust, hereinafter called
"Landlord," and PharmAthene, Inc., a Delaware corporation, hereinafter called
"Tenant."

      WITNESSETH, That, for and in consideration of the rents, mutual covenants,
and agreements hereinafter set forth, the parties hereto do hereby mutually
agree as follows:

            1. BASIC LEASE INFORMATION

      Landlord: Park Place Trust, a Maryland Business Trust

      Landlord's Address: c/o Jerome J. Parks Companies, 15 School Street,
                          Annapolis, Maryland 21404, Attn: Jerome J. Parks.

      Tenant: PharmAthene.

      Tenant's Current Address: 175 Admiral Cochrane Drive, Suite 101,
                                Annapolis, Maryland 21401.

      Building: Park Place Office Building One, Annapolis, Maryland.

      Land: See Exhibit A-1.

      Demised Premises: As shown on Exhibit A and known as Suite 450 on the
                        fourth floor.

      Rentable Area of the Demised Premises: approximately [***] rentable square
                                             feet.

      Rentable Area of the Building: 160,358 rentable square feet.

      Term: ten (10) years.

      Anticipated Commencement Date: January 1, 2007.

      Rent Commencement Date: three (3) months following the Commencement Date
                              (See Section 3(B)), but not earlier than
                              March 1, 2007. See Section 5.

      Anticipated Rent Commencement Date: April 1, 2007.

      Anticipated Expiration Date: March 31, 2017.

      Security Deposit: See Section 6(B).

      Monthly Rent: See chart following:

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                                                                 Annual Rate Per
             Period                   Monthly Rent                 Square Foot
             ------                   ------------                 -----------

                                     [***]

      Right of First Offer: See Section 9.

      Tenant's Special Right to Terminate: See Section 3(E).

      Base Year: calendar year 2007.

      Tenant's Share of Operating Expenses: [***]%.

      Tenant's Share of Operating Costs: [***]%.

      Tenant's Share of Real Estate Taxes: [***]%.

      Parking: Four (4) reserved spaces. See Section 8.

      Allowance: [***] Dollars ($[***]) per rentable square foot. See Exhibit B.

      Tenant's Broker: CB Richard Ellis

      Landlord's Broker: CB Richard Ellis

      Lease Year: The term "Lease Year" shall mean a period of twelve (12)
consecutive months commencing on the Rent Commencement Date, and each successive
twelve (12) month period thereafter; provided, however, that if the Rent
Commencement Date is not the first day of a month, then the second Lease Year
shall commence on the first day of the month following the month in which the
first anniversary of the Rent Commencement Date occurs.

            2. DEMISED PREMISES

      Landlord does hereby lease to Tenant, and Tenant does hereby lease from
Landlord, for the term and upon the conditions hereinafter provided,
approximately [***] square feet of rentable area on the fourth (4th) floor of

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                                      -2-
<PAGE>

the office building known as Park Place Office Building One situated at West
Street and Taylor Avenue, Annapolis, Maryland (such building being hereinafter
referred to as the "Building" and such rentable area being hereinafter referred
to as the "Demised Premises"). The Demised Premises has been assigned Suite No.
450, and is outlined on the floor plan attached hereto and made a part hereof as
Exhibit A.

      The Building and the Land (defined below) is part of Park Place, a
Condominium (the "Condominium") and more specifically described on that certain
Phase One Condominium Plat for Park Place, a Condominium dated February 15, 2005
and recorded among the land records of Anne Arundel County, Maryland.

            3. TERM

      (a) The initial term of this Lease shall commence on the Commencement
Date. The initial term of this Lease shall expire on the last day of the tenth
(10th) Lease Year (the "Expiration Date"). The term of this Lease (the "Lease
Term") shall also include any properly exercised renewal or extension of this
Lease.

      (b) The "Commencement Date" shall be the later of (i) the date on which
the shell improvements referenced in Schedule 1 to Exhibit B are substantially
complete and the Building is Ready for Occupancy (as defined in Exhibit B) other
than Deferrable Base Building Work, or January 1, 2007. Promptly after the
Commencement Date is ascertained, Landlord shall provide and Tenant shall
execute a certificate confirming the Commencement Date in the form attached
hereto as Exhibit D. "Deferrable Base Building Work" shall mean those portions
of base building work that can be completed during the period from the
Commencement Date to the Rent Commencement Work without interfering with the
construction of tenant improvements in the Demised Premises.

      (c) For the purposes of this Lease, the term "Commencement Date" shall
also mean any extended Commencement Date which may be established pursuant to
the operation of the provisions of this section of this Lease.

      (d) It is presently anticipated that the shell improvements referenced in
Schedule 1 to Exhibit B will be substantially complete and the Building will be
Ready for Occupancy (other than Deferrable Base Building Work), on or about
January 1, 2007; provided, however, that if those events do not occur by such
date, Landlord shall not have any liability whatsoever, and this Lease shall not
be rendered void or voidable, as a result thereof.

      (e) Notwithstanding anything to the contrary herein, Tenant shall have the
right to terminate this Lease for any or no reason ("Tenant's Special Terminate
Right") upon written notice to Landlord given no later than October 1, 2006,
time being of the essence. Along with Tenant's notice, Tenant shall pay to
Landlord a termination fee of Thirty-Five Thousand Dollars ($35,000.00) (the
"Termination Fee"), and the payment thereof along with such notice shall be a
condition to the effectiveness of such notice. In the event Tenant exercises
Tenant's Special Termination Right, Landlord shall promptly return Tenant's
Deposits and thereafter neither party shall have any farther rights or
obligations hereunder.

                                      -3-
<PAGE>

            4. USE

      Tenant shall use and occupy the Demised Premises solely for general office
purposes in accordance with the applicable zoning regulations, including
reasonable ancillary uses thereto not inconsistent with the operation of a first
class office building. The Demised Premises shall not be used for any other
purpose without the prior written consent of Landlord. Tenant shall not use or
occupy the Demised Premises for any unlawful purpose, and will comply with all
present and future laws, including without limitation the Americans With
Disabilities Act of 1990 and the regulations promulgated thereunder, as the same
may be amended from time to time, ordinances, regulations, and orders of all
governments, government agencies and any other public authority concerning the
use, occupancy and condition of the Demised Premises and all machinery,
equipment and furnishings therein.

            5. RENT

      (a) Tenant covenants and agrees to pay to Landlord rent of any kind or
nature, including Monthly Rent (as hereinafter defined) and any sums, charges,
expenses and costs identified in the Lease as additional rent to be paid by
Tenant to Landlord. Tenant's obligation to pay rent shall begin on the earlier
of (i) the date Tenant commences to utilize the Demised Premises for the actual
conduct of business or (ii) the date which is three (3) months following the
Commencement Date (the "Rent Commencement Date") and shall continue to remain an
obligation of Tenant until completely satisfied. Promptly after the Rent
Commencement Date is ascertained, Landlord and Tenant shall execute a
certificate confirming the Rent Commencement Date in the form attached hereto as
Exhibit D-l.

      Tenant shall make all payments of rent by check, payable to Park Place
Trust or to such other party as Landlord may designate from time to time by
written notice to Tenant, and to such address as Landlord may designate from
time to time by written notice to Tenant, without demand and without deduction,
set-off or counterclaim. If Landlord at any time or times accepts rent after it
shall become 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 Landlord's rights hereunder.

      (b) The monthly rent for the Demised Premises (hereinafter referred to as
"Monthly Rent") as of the Rent Commencement Date, which Tenant hereby agrees to
pay in advance to Landlord and Landlord hereby agrees to accept, shall be as
follows:

                                      -4-
<PAGE>

                                                                   Annual Rate
            Period                    Monthly Rent               Per Square Foot
            ------                    ------------               ---------------

                                     [***]

      (c) Monthly Rent as specified above shall be payable in advance on the
first day of each calendar month during the term of this Lease. Tenant shall
also pay to Landlord with the payment of Monthly Rent such payments of
additional rent provided for in the section of the Lease entitled, "OPERATING
EXPENSES, OPERATING COSTS AND REAL ESTATE TAXES."

      (d) If the Rent Commencement Date, and therefore the obligation under the
Lease 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 (l/30th)
of Monthly Rent for each day of that month from and including the Rent
Commencement Date, payable in advance, as specified above.

            6. DEPOSITS

      (a) Simultaneously with the execution of this Lease by Tenant, Tenant
shall deposit with Landlord the sum of [***] Dollars ($[***]), as a deposit
towards payment of Monthly Rent for the first (1st) full calendar month. Any
good faith deposit made at the time Tenant executed and delivered to Landlord
any letter of intent or proposal to Lease shall be applied toward the amount of
this deposit. Such deposit, prior to its being applied to the payment of Monthly
Rent, shall be security for the payment and performance by Tenant of all
Tenant's obligations, covenants, conditions and agreements under this Lease, and
Landlord shall have the right, but shall not be obligated, to apply all or any
portion of the deposit to cure any default by Tenant, in which event Tenant
shall be obligated to promptly deposit with Landlord the amount necessary to
restore the deposit to its original amount In the event Tenant fails to perform
its obligations and to take possession of the Demised Premises on the
appropriate Commencement Date provided herein, said deposit shall not be deemed
liquidated damages and Landlord may apply the deposit to reduce Landlord's
damages, and such application of the deposit shall not preclude Landlord from
recovering from Tenant all additional damages incurred by Landlord.

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                                      -5-
<PAGE>

      (b) Simultaneously with the execution of this Lease by Tenant, Tenant
shall deliver to Landlord an unconditional, irrevocable letter of credit in the
amount of [***] Dollars ($[***]) (the "Security Deposit") as security for the
payment and performance by Tenant of all Tenant's obligations, covenants,
conditions and agreements under this Lease, subject to the following terms and
conditions. Such letter of credit shall be (a) hi form and substance
satisfactory to Landlord in its sole discretion; (b) at all times in the amount
of the Security Deposit (it being agreed that if at any time the amount drawable
by Landlord under the letter of credit is less than the amount of the Security
Deposit, whether as a result of a draw by Landlord or otherwise, then Tenant
shall, within one (1) business day thereafter, cause the amount drawable under
the letter of credit to be increased to the amount of the Security Deposit); (c)
issued by a commercial bank reasonably acceptable to Landlord from time to time
and located in the Baltimore/Annapolis metropolitan area, (d) made payable to,
and expressly transferable and assignable at no charge by, the owner from time
to time of the Building or its mortgagees (which transfer/assignment shall be
conditioned only upon the execution by such owner of a written document hi
connection with such transfer/assignment); (e) payable at sight upon presentment
to a local branch of the issuer of Landlord's sight draft drawn on the issuer
and accompanied by a notarized certificate stating that Landlord is entitled to
draw the amount sought; (f) of a term not less than one year; and (g) at least
thirty (30) days prior to the then-current expiration date of such letter of
credit, renewed (or automatically and unconditionally extended) from time to
time through the sixtieth (60th) day after the expiration of the Lease Term. If
Landlord transfers the Security Deposit to any transferee of the Building or
Landlord's interest therein, then such transferee shall be liable for the return
of the Security Deposit, and Landlord shall be released from all liability for
the return thereof. Notwithstanding the foregoing, Tenant hereby agrees not to
look to Landlord's mortgagees, as mortgagee, mortgagee in possession, or
successor in title to the property, for accountability for any Security Deposit
required by Landlord hereunder, unless said sums have actually been received by
said mortgagees as security for Tenant's performance of this Lease. If Tenant
fails to timely comply with the requirements of subsection (g) above, then
Landlord or its mortgagees shall have the right to immediately draw upon the
letter of credit without notice to Tenant and/or opportunity to cure. Any
amounts drawn under the letter of credit shall be applied by Landlord from time
to time to amounts owed in connection with (or arising from) any default
(including damages), with any remaining proceeds to be held without interest
until the sixtieth (60th) day after the expiration of the Lease as cash
collateral to secure the payment and performance by Tenant of all of Tenant's
obligations, covenants, conditions and agreements under this Lease. Each letter
of credit shall be issued by a commercial bank that has a credit rating with
respect to certificates of deposit, short term deposits or commercial paper of
at least P-2 (or equivalent) by Moody's Investor Service, Inc., or at least A-2
(or equivalent) by Standard & Poor's Corporation, and shall be otherwise
acceptable to Landlord in its sole and absolute discretion. If the issuer's
credit rating is reduced below P-2 (or equivalent) by Moody's Investors Service,
Inc. or below A-2 (or equivalent) by Standard & Poor's Corporation, or if the
financial condition of such issuer changes in any other materially adverse way,
then Landlord shall have the right to require that Tenant obtain from a
different issuer a substitute letter of credit that complies in all respects
with the requirements of this Section, and Tenant's failure to obtain such
substitute letter of credit within thirty (30) days following Landlord's written

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                                      -6-
<PAGE>

demand therefor (with no other notice or cure or grace period being applicable
thereto, notwithstanding anything in this Lease to (he contrary) shall entitle
Landlord or its mortgagees to immediately draw upon the then existing letter of
credit in whole or in part, without notice to Tenant and to apply and hold such
proceeds in the manner set forth above. In the event the issuer of any letter of
credit held by Landlord is placed into receivership or conservatorship by the
Federal Deposit Insurance Corporation, or any successor or similar entity, then,
effective as of the date such receivership or conservatorship occurs, said
letter of credit shall be deemed to not meet the requirements of this Section,
and, within thirty (30) days thereof, Tenant shall replace such letter of credit
with other collateral acceptable to Landlord in its sole and absolute discretion
(and Tenant's failure to do so shall, notwithstanding anything in this Lease to
the contrary, constitute a default under the section of this Lease entitled
"DEFAULT OF TENANT" for which there shall be no notice or grace or cure periods
being applicable thereto other than the aforesaid thirty (30) day period).
Except as otherwise expressly set forth in this Lease, Landlord or its
mortgagees shall only draw upon the Letter of Credit upon the occurrence of a
default and the expiration of any applicable cure or grace period (or if
Landlord is precluded by law from sending any notice necessary to establish that
a default has occurred, the failure of Tenant to make any payment of rent within
five (5) business days after the same is due). Upon the occurrence of a default
and the expiration of any applicable cure or grace period, Landlord or its
mortgagees shall be entitled to draw on the Letter of Credit in whole or in part
and apply cash then held as a Security Deposit (including any amounts) drawn on
the Letter of Credit) in the amount necessary to cure the applicable default.
Any failure or refusal of the issuer to honor the letter of credit shall be at
Tenant's sole risk and shall not relieve Tenant of its obligations hereunder
with respect to the Security Deposit. The form Letter of Credit attached hereto
as Exhibit F is hereby approved by Landlord.

      (c) Provided (a) no default then exists and (b) Landlord has not imposed
(nor had the right to impose) a late charge pursuant to Section 35 below during
the twelve (12) months preceding the applicable Reduction Date (as hereinafter
defined) with respect to any installment of Monthly Rent or Estimated Payments,
Tenant shall have the right with respect to each Reduction Date to reduce the
Security Deposit by the Security Deposit Reduction Amount set forth below with
respect to each Reduction Date. Each reduction of the Security Deposit shall
occur by means of delivery by Tenant to Landlord of a substitute letter of
credit in such reduced amount and in strict conformity with the terms of this
Section 5(B), in which event, the previous letter of credit will be returned to
Tenant. Alternatively, if the terms of the letter of credit permit reduction of
the stated amount thereof upon delivery by Landlord to the issuer of the letter
of credit of notice of reduction, then, in such case, the reduction of the
Security Deposit shall occur by Landlord's delivery to the issuer of a letter of
credit a notice of reduction complying in all respects with the letter of credit
(which Landlord agrees to do promptly upon Tenant meeting the requirements set
forth in clauses (a) and (b) above).

                                                                Security Deposit
                           Security Deposit Reduction            Remaining After
     Reduction Date                 Amount                         Reduction
     --------------                 ------                         ---------

                                     [***]

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                                      -7-
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            7. OPERATING EXPENSES. OPERATING COSTS AND REAL ESTATE TAXES

      (a) If the Operating Expenses (as defined below) of the Building increase
during any calendar year after calendar year 2007(hereafter called the "Base
Year"), Tenant shall pay to Landlord, as additional rent, Tenant's proportionate
share of the increase in such Operating Expenses. Tenant's proportionate share
shall be the percentage which the total rentable square feet of the Demised
Premises bears to the total rentable square feet of all office and retail areas
in the Building, which percentage as of the date of this Lease is [***]%. The
amount of such percentage to be paid by Tenant for any calendar year shall be
the percentage of the calendar year that the Demised Premises were leased by
Tenant.

      (b) The term "Operating Expenses" shall mean any and all expenses, charges
and fees incurred in connection with managing, owning, operating, maintaining,
servicing, insuring and repairing the Building, atrium (if any), related
exterior appurtenances (including the Plaza) and the land upon which the
Building is located (the "Land") including all of the following:

            (1) premiums and other charges for insurance related solely to the
Building (including, but not limited to, property insurance, rent loss insurance
and liability insurance);

            (2) all management fees incurred in the management of the Building,
whether such services are provided by Landlord, an affiliate of Landlord or an
independent management company;

            (3) all costs incurred in connection with service and maintenance
contracts (except elevator maintenance contracts);

            (4) maintenance and repair expenses and supplies;

            (5) amortization (calculated over the Approved Period (as
hereinafter defined), with interest at Landlord's cost of funds or (if the
improvement is not financed) at the prime rate reported in The Wall Street
Journal) for capital expenditures made by Landlord subsequent to calendar year
2007 for the purpose of (x) complying with legal or insurance requirements
imposed subsequent to the date hereof or (y) that are intended to result in a
net decrease in Operating Expenses or Operating Costs. The "Approved Period"
shall mean the estimated useful life of the improvement except that with respect
to an improvement made for the purpose of reducing Operating Expenses or
Operating Costs, Landlord may amortize the expense over the period such that the
yearly amortization amount is equal to the projected annual savings as
reasonably estimated by Landlord;

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                                      -8-
<PAGE>

            (6) salaries, wages, benefits and other expenses of Building
personnel, including any General Manager (such costs with respect to personnel
serving multiple buildings to be prorated among the buildings receiving such
services using a method selected by Landlord in its reasonable discretion);

            (7) legal fees for the Building (except as excluded below),
administrative expenses, and accounting, architectural and other professional
fees and expenses;

            (8) costs of any service not provided to the Building on the
Commencement Date but thereafter provided by Landlord in the prudent management
of the Building;

            (9) charges for lobby attendant or security services;

            (10) charges for cleaning services and supplies furnished to common
and public areas of the Building;

            (11) costs associated with the provision or operation of any common
facilities and service amenities;

            (12) any vault rent or charges for the use of vault space;

            (13) the cost of maintaining management or engineering offices for
the Building, including rent thereon; and

            (14) any and all fees and charges relating to the Condominium.

Exclusions from "Operating Expenses"

      Notwithstanding the foregoing to the contrary, "Operating Expenses" shall
not include the following (collectively, "Excluded Items"):

                  (i) debt service, including interest, financing costs and
amortization of mortgages;

                  (ii) painting or decorating other than in common or public
areas of the Building;

                  (iii) any tenant work performed or alteration of space leased
to tenants or occupants of the Building whether such work or alteration is
performed for the initial occupancy by such tenant or occupant or thereafter;

                  (iv) the cost of alterations, capital improvements and
replacements which under generally-accepted accounting principles are properly
classified as capital expenditures, except as set forth in subsection (B)(5)
above;

                  (v) any cash or other consideration paid by Landlord on
account of, with respect to, or in lieu of tenant work or alterations described
in clause (iii) above;

                                      -9-
<PAGE>

                  (vi) base ground rent (if any), plus escalations thereto, but
exclusive of real estate taxes, utilities and other "net" elements constituting
rent under a ground lease;

                  (vii) depreciation to work spent on matters unrelated to the
Building; or amortization on the Building except as provided in subsection
(B)(5) above;

                  (viii) repairs or replacements (a) necessitated by the gross
negligence or willful misconduct of Landlord or its employees or agents, or (b)
required to cure violations of governmental laws, ordinances, rules and
regulations applicable to the Building as of the date hereof;

                  (ix) costs of enforcement of leases;

                  (x) salaries, commissions, fringe benefits and other
compensation paid to (a) officers or executives of Landlord, Landlord's Agent
(except as specifically permitted herein, it being understood that compensation
of personnel above the level of General Manager shall in no event be included in
Operating Expenses) Or their affiliates or (b) employees of Landlord who devote
only a portion of their time to the maintenance or operation of the Building to
the extent that such salaries, fringe benefits and other compensation are
properly allocated;

                  (xi) leasing commissions, advertising and promotional expenses
and any other comparable expenses directly related to leasing or procuring
tenants or negotiating with prospective tenants;

                  (xii) legal fees, accounting fees and other professional and
consulting fees (a) incurred hi procuring tenants for the Building, (b) incurred
in connection with Landlord's gross negligence or willful misconduct or
non-compliance with any mortgage, deed of trust or ground lease relating to the
Building, (c) relating to enforcing any leases or any landlord/tenant
proceeding, (d) relating to the defense of Landlord's title to, or interest in,
the Building, (e) relating to the refinancing or sale of the Building or any
interest therein; or (f) relating to the internal affairs of the ownership
entity or entities constituting Landlord;

                  (xiii) the cost of repairs incurred by reasons of fire or
other casualty or condemnation to the extent that either (a) Landlord is
compensated therefor through proceeds of insurance or condemnation awards; or
(b) Landlord is not fully compensated therefor due to the failure of Landlord to
obtain insurance against such fire or casualty or the decision of Landlord to
self-insure; or (c) if Landlord is not fully compensated by reason of the
coinsurance provisions of its insurance policies due to Landlord's failure to
obtain and maintain a sufficient amount of insurance coverage;

                  (xiv) any cost representing an amount paid for services or
materials to a related person, firm or entity to the extent such amount exceeds
the amount that would be paid for such services or materials of comparable
quality at the then-existing market rates to an unrelated person, firm or
corporation (no management fee or related fees meeting the standard set forth in
exclusion (xxiii), or portion thereof, shall be excluded from Operating Expenses
pursuant to the provisions hereof);

                                      -10-
<PAGE>

                  (xv) all expenses for which Landlord has received
reimbursement (such as by insurance and by other tenants of the Building) except
as additional rent under comparable provisions in this Section of this Lease;

                  (xvi) income or franchise taxes or such other taxes imposed
upon or measured by Landlord's net income from the operation of the Building;

                  (xvii) costs allocable to properties other than the Building
in which Landlord or any partner thereof has a direct or indirect interest;

                  (xviii) rentals and other related expenses incurred in leasing
air-conditioning systems, elevators or other equipment ordinarily considered to
be of a capital nature;

                  (xix) direct and indirect costs incurred to clean up, contain,
abate, remove, or otherwise remedy asbestos or hazardous waste (as determined by
federal, state or local laws or regulations) from the Building unless the wastes
were in or on the Demised Premises or the Building because of Tenant's acts or
those of its agents, invitees, or subtenants;

                  (xx) the cost of performing special services or installations
to or for tenants or occupants to the extent such service exceeds that provided
by Landlord to Tenant without charge hereunder;

                  (xxi) electricity costs or overtime HVAC costs, if charged
separately to any other tenant in the Building;

                  (xxii) recordation and transfer taxes and transfer gain taxes,
including, without limitation, any such taxes incurred if this Lease is
recorded;

                  (xxiii) fees or expenses of property management services
provided by Landlord or parties related to or affiliated with Landlord, except
to the extent such fees or expenses are not in excess of the market rate for
services of comparable quality as charged by unaffiliated parties (provided that
in no event will the following be deemed in excess of the market rate: property
management fees equal to three percent (3%) of gross income derived from the
Building, including net parking income (or rent under a garage lease, as
applicable) and amounts received as reimbursements for Operating Expenses and
Operating Costs and Real Estate Taxes, but excluding reimbursements of a capital
nature (insurance or otherwise));

                  (xxiv) expenses incurred in connection with the management,
repair, maintenance, and replacement of the garage facilities, such as by way of
example, but not in limitation, parking management fees and restriping of
parking spaces; however, utilities, Real Estate Taxes and building security
expenses are not separately allocated to the garage and the management services
fee included in Operating Expenses will include a percentage of the net income
from parking garage operation (or rent under a garage lease, as applicable); and

                  (xxv) Operating Costs (as hereinafter defined);

                  (xxvi) Real Estate Taxes (as hereinafter defined);

                                      -11-
<PAGE>

                  (xxvii) advertising and promotional expenses;

                  (xxviii) the cost of installing, operating, and maintaining
any specialty facility such as an observatory, broadcasting facility, restaurant
or luncheon club, athletic or recreational club, theater or cafeteria;

                  (xxix) the cost of any additions to the Building that result
in a larger building;

                  (xxx) the cost of artwork;

                  (xxxi) costs or payments associated with Landlord's obtaining
air rights or development rights;

                  (xxxii) assessments, common charges or the like imposed by the
Condominium to the extent the same are imposed to pay for items which if
incurred directly by Landlord would constitute Excluded Items.

      (c) If the Operating Costs (as defined below) of the Building increase
during any calendar year after the Base Year, Tenant shall pay to Landlord, as
additional rent, Tenant's proportionate share of the increase in such Operating
Costs. Tenant's proportionate share shall be the percentage which the total
rentable square feet of the Demised Premises bears to the total rentable square
feet of all office areas in the Building, which percentage as of the date of
this Lease is [***]%. The amount of such percentage to be paid by Tenant for any
calendar year shall be the percentage of the calendar year that the Demised
Premises were leased by Tenant.

      (d) The term "Operating Costs" shall mean the costs of (i) the cleaning
contract and cleaning supplies, (ii) electricity and water and (iii) elevator
maintenance contracts. Operating Costs shall not include Operating Expenses and
Excluded Items.

      (e) If the Real Estate Taxes (as defined below) of the Building increase
during any calendar year after the Base Year, Tenant shall pay to Landlord, as
additional rent, Tenant's proportionate share of the increase in such Real
Estate Taxes. Tenant's proportionate share shall be the percentage which the
total rentable square feet of the Demised Premises bears to the total rentable
square feet of all office and retail areas in the Building, which percentage as
of the date of this Lease is [***]%. The amount of such percentage to be paid by
Tenant for any calendar year shall be the percentage of the calendar year that
the Demised Premises were leased by Tenant.

      (f) The term "Real Estate Taxes" shall mean (i) any and all real estate
taxes and ad valorem taxes, surcharges, special assessments and impositions,
general and special, ordinary and extraordinary, foreseen or unforeseen, of any
kind levied against the Building or land upon which the Building is located, or
in connection with the use thereof (including any transit, personal property,
sales, rental, use, gross receipts and occupancy tax and other similar charges),
any other present or future taxes or governmental charges that are imposed upon
Landlord which are in the nature of or in substitution for real estate taxes,

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including any tax levied or measured by the rents payable by tenants of the
Building, and business improvement district taxes and (iii) expenses (including
reasonable attorneys' fees and appraisers' fees) incurred in reviewing,
protesting or seeking a reduction of Real Estate Taxes. Real Estate Taxes shall
not, however, include (x) income or franchise taxes or such other taxes imposed
directly upon Landlord's net income from the operation of the Building and (y)
recordation and transfer taxes. If Landlord's contest of Real Estate Taxes for
the Base Year results in a decrease in Real Estate Taxes for such year, the Real
Estate Taxes for the Base Year shall mean the amount incurred following such
appeals, and Landlord shall have the right to bill Tenant for prior
underpayments of Real Estate Taxes thereby resulting.

      (g) Landlord shall notify Tenant prior to the beginning of calendar year
2008 and each calendar year thereafter of Landlord's estimate of the amount of
Operating Expenses (the "Estimated Operating Expenses"), the amount of Operating
Costs (the "Estimated Operating Costs") and the amount of Real Estate Taxes (the
"Estimated Real Estate Taxes") that Landlord likely will incur for the Building
during the coming calendar year, and pursuant to paragraph (H) hereof, shall
advise Tenant of the amount of its Estimated Payments for the coming calendar
year.

      (h) Tenant shall pay to Landlord, as additional rent, an amount equal to
the sum of (a) one-twelfth (l/12th) of Tenant's proportionate share of the
amount by which Estimated Operating Expenses exceed the Operating Expenses for
the Base Year, (b) one-twelfth (l/12th) of Tenant's proportionate share of the
amount by which Estimated Operating Costs exceed the Operating Costs for the
Base Year, and (c) one-twelfth (l/12th) of Tenant's proportionate share of the
amount by which Estimated Real Estate Taxes exceed the Real Estate Taxes for the
Base Year (collectively the "Estimated Payments"). The components of the
Estimated Payments described in clauses (a), (b) and (c) of the immediately
preceding sentence shall be calculated independently without reference to one
another. Tenant shall commence to make its first Estimated Payments on January
1, 2008. Thereafter, Tenant shall make its Estimated Payments on the first day
of each calendar month. Tenant shall pay the same amount of the Estimated
Payments until the amount is adjusted, effective the next succeeding January 1,
based upon Landlord's determination of the Estimated Operating Expenses,
Estimated Operating Costs and Estimated Real Estate Taxes for the following
calendar year.

      (i) Within ninety (90) days after the expiration of each calendar year
(including the calendar years in which the Rent Commencement Date and expiration
or earlier termination of this Lease occurs), or as soon as reasonably practical
thereafter, a firm of certified public accountants selected by Landlord, shall
audit Landlord's books and records for the Building. Thereafter, Landlord shall
determine any increase in the Operating Expenses, Operating Costs and Real
Estate Taxes for such calendar year over the Operating Expenses, Operating Costs
and Real Estate Taxes for the Base Year. The Operating Expenses, Operating Costs
and Real Estate Taxes for each calendar year shall be those actually incurred
provided, however, that if the Building was not at least [***] percent ([***]%)
occupied during the entire calendar year on a monthly weighted average basis,
the Operating Expenses and Operating Costs shall be adjusted to project the

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Operating Expenses and Operating Costs as if the Building were [***] percent
([***]%) occupied on a monthly weighted average basis. The categories of
expenses to be so adjusted in such event shall be limited to (i) electricity,
(ii) nighttime janitorial services, (iii) (if and so long as the management fee
varies proportionately with the gross income of the Building) the management fee
and (iv) water and sewer charges.

      (j) Landlord shall submit to Tenant a statement setting forth Landlord's
determination of (i) any increases in Operating Expenses, Operating Costs and
Real Estate Taxes over the Operating Expenses, Operating Costs and Real Estate
Taxes, respectively for the Base Year; (ii) Tenant's proportionate share of such
increases; and (iii) Tenant's net obligation for such Operating Expenses,
Operating Costs and Real Estate Taxes for the calendar year ("Tenant's Net
Obligation") which reflects the credit of Tenant's Estimated Payments for
Estimated Operating Expenses, Estimated Operating Costs and Estimated Real
Estate Taxes during the prior calendar year. In computing Tenant's Net
Obligation, Tenant's obligations with respect to each of (x) increases in
Operating Expenses, (y) increases in Operating Costs and (z) increases in Real
Estate Taxes shall be computed independently without reference to one another.
Within thirty (30) days after the delivery of such statement (including any
statement delivered after the expiration or earlier termination of this Lease),
Tenant shall pay Landlord the full stated amount of Tenant's Net Obligation. If
the aggregate amount of Tenant's Estimated Payments for Estimated Operating
Expenses, Estimated Operating Costs and Estimated Real Estate Taxes during the
prior calendar year exceeds Tenant's proportionate share of (i) the increases in
Operating Expenses, (ii) the increases in Operating Costs and (iii) the
increases in Real Estate Taxes, the excess, at Landlord's option, shall be
refunded to Tenant or credited to Tenant's next Estimated Payments), until such
excess is fully refunded to Tenant.

      (k) Tenant, and/or an independent certified public accounting firm
offering a full range of accounting services retained by Tenant on a
non-contingent fee basis, may, at Tenant's expense, at reasonable times, upon
reasonable notice, audit Landlord's books and records for the Building relating
to Landlord's determination of any increase in the Operating Expenses, Operating
Costs and Real Estate Taxes for (i) the calendar year for which Landlord's
current determination is being made, and (ii) the Base Year. In any and all
events any such request to audit Landlord's books and records with respect to
(x) the Base Year, shall be made no later than one hundred eighty (180) days
following the date on which Tenant's first Estimated Payment is due and payable,
and (y) any subsequent year, shall be made no later than one hundred eighty
(180) days following Tenant's receipt of Landlord's annual statement setting
forth Tenant's Net Obligation. Tenant shall (and shall cause its employees,
agents and consultants to) keep the results of any such audit or audited
statements strictly confidential. Landlord shall compute the Operating Expenses,
Operating Costs and Real Estate Taxes on the accrual basis.

      (l) Notwithstanding anything herein to the contrary, if it is determined
pursuant to an audit undertaken by Tenant pursuant to subsection (K) hereinabove
that Landlord overstated (or in the case of the Base Year, understated) the
aggregate of Operating Expenses, Operating Costs and Real Estate Taxes for any
year, then Landlord shall promptly refund any excess payment to Tenant. If
Landlord overstated such aggregate by more than [***] percent ([***]%), then

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Landlord shall reimburse Tenant for the reasonable out-of-pocket costs
(exclusive of travel related expenses) of any audit undertaken with respect to
such year pursuant to subsection (K) hereinabove. Tenant may not audit any
calendar year more than once.

      (m) Subject to Section 52 hereof, no payment by Tenant of any amount
hereunder shall constitute a waiver of any claim that such amount is in fact not
due and owing, in whole or in part.

            8. PARKING

      Landlord shall obtain for Tenant an allocation of four (4) contracts for
reserved parking spaces for use by Tenant and its employees in the parking
facility serving the Building, provided that Tenant notifies Landlord in writing
of its desire to obtain all or a specified number of said parking contracts, and
Tenant enters into said contracts with the parking facility operator (the
"Operator") within sixty (60) days after the Rent Commencement Date.

      Tenant shall be directly responsible to the Operator for the payment of
any and all fees or charges thereunder, and Landlord shall be under no
obligation to pay the Operator for said parking contracts. The parking contracts
shall contain the same terms and conditions as are usually contained in such
contracts with other monthly parking customers of the Operator, and the monthly
rate to be paid by Tenant shall be the prevailing monthly rate charged to other
monthly parking customers which are office tenants in the Building, (said rate
to be established from time to time by the City of Annapolis) and to increase
and decrease as the prevailing monthly parking rate for other applicable monthly
parking customers increases and decreases from time to time, hi the event Tenant
fails to execute with the Operator the monthly parking contracts within the
sixty (60) day period, or subsequently relinquishes in any manner its parking
contracts, Landlord shall be under no obligation to seek restoration of the
relinquished contracts or waive Tenant's failure to execute said contracts prior
to expiration of the applicable sixty (60) day period.

      Tenant hereby agrees to comply with all traffic and parking rules and
regulations imposed from time to time by Landlord, the Operator or the City of
Annapolis,

            9. RIGHT OF FIRST OFFER

      During the term hereof (provided Tenant (x) is not in default under this
Lease beyond any applicable cure period on the date Tenant notifies Landlord of
its intent to exercise this right and (y) has not sublet more than [***] percent
([***]%) of the Demised Premises or assigned the Lease in a transaction
requiring Landlord consent), Tenant shall have the right of first offer for the
leasing of any space on the fourth (4th) floor of the Building (the "ROFO
Space") when it becomes available after the initial lease up thereof. For
purposes hereof, the ROFO Space will be available when it is vacant or otherwise
ready, in Landlord's commercially reasonable judgment, to be marketed by
Landlord to parties other than the then existing tenant or then current occupant
thereof.

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      Landlord shall give Tenant written notice of the availability of the ROFO
Space and the terms for the leasing thereof, which shall provide for rent equal
to [***] percent ([***]%) of the then current market rent as determined by
Landlord in its reasonable discretion. Tenant shall have ten (10) business days
from the receipt of Landlord's notice to notify Landlord whether it is accepting
Landlord's offer.

      In the event Tenant timely accepts the right of first offer, the term for
which such available space is leased shall be coterminous with the term of this
Lease. The ROFO Space shall be delivered in its "as is" condition, the Rent
Commencement Date with respect thereto shall be sixty (60) days following
delivery of possession thereof to Tenant. In the event Tenant fails to timely
accepts the right of first offer, Tenant's right of first offer shall be null
and void and of no further force and effect and Landlord shall be free to lease
the ROFO Space to any person, partnership, corporation or other entity upon any
terms and for any purpose. After the ROFO Space has been leased by Landlord to
another person, partnership, corporation or other entity, if the ROFO Space
should again become available, Tenant shall again have the first right to lease
with respect thereto.

            10. ASSIGNMENT AND SUBLETTING

      (a) Tenant may not assign or otherwise transfer this Lease, or sublet
(including permitting occupancy or use by another party) the Demised Premises,
or any part thereof, without giving Landlord thirty (30) days prior written
notice of Tenant's intention to assign this Lease or sublet all or any part of
the Demised Premises. In the event Tenant seeks permission to sublease a part of
the Demised Premises, the notice shall also identify the area of the Demised
Premises Tenant seeks to sublease. Within thirty (30) days after receipt of said
notice of intent to assign or sublease, Landlord shall have the option (i) to
elect to terminate the Lease, if Tenant desires to assign this Lease, or (u) if
Tenant desires to sublet a portion of the Demised Premises that (1) when
combined with all other portions of the Demised Premises then being sublet,
exceeds [***] percent ([***]%) of the rentable area of the Demised Premises, or
(2) has a proposed sublet term in excess of [***] percent ([***]%) of the
remaining term of this Lease, to terminate the Lease with regard to that portion
of the Demised Premises which Tenant seeks to sublet, or alternately to sublet
that portion of the Demised Premises from Tenant for the term which Tenant
desires to sublet that portion of the Demised Premises, at the rate and upon the
same terms and conditions as Tenant is leasing the Demised Premises from
Landlord. Landlord may exercise the option by giving Tenant written notice of
its election to exercise the option within said thirty (30) day period.

      (b) The effective date of termination, or the effective date of
commencement of the sublease to Landlord, shall be mutually agreed upon by
Landlord and Tenant. If the parties cannot agree upon a termination date or upon
a sublease commencement date, the termination date or sublease commencement date
shall be the date that is sixty (60) days after the date Landlord received the
notice that Tenant desired to assign the Lease or sublet all or any portion of
the Demised Premises. Upon termination, all of the rights and obligations of
Landlord and Tenant under the terms of this Lease shall be terminated, or
terminated with regard to that portion of the Demised Premises that Tenant

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                                      -16-
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notified Landlord that Tenant desired to sublet, except that Tenant shall
continue to be obligated to pay rent and all other charges for the Demised
Premises which accrue to the date of termination.

      (c) If Landlord does not exercise its option to terminate or sublet,
Tenant may assign this Lease or sublet all or any part of the Demised Premises
within one hundred twenty (120) days after the date that the thirty (30) day
period referenced above expires. Tenant shall be required however to obtain
Landlord's prior written consent to any assignee or any subtenant, which consent
may not be unreasonably withheld, contingent upon the proposed assignee or
subtenant being similar in kind and character to Tenant and financially
reliable, hi the event that Tenant fails to present to Landlord any sublease or
assignment agreement, fully executed by the parties thereto, within said one
hundred twenty (120) day period, Tenant may not assign this Lease or sublet the
Demised Premises without first affording Landlord the option to terminate or
sublease as previously provided for in this section. The form of documentation
implementing any assignment or subletting shall be on Landlord's approved form
of sublease or assignment.

      (d) Tenant shall reimburse to Landlord, as additional rent, all reasonable
costs and expenses, including reasonable attorney's fees, which Landlord incurs
by reason of or in connection with any assignment, sublease, or leasehold
mortgage proposed or granted by Tenant (whether or not permitted under this
Lease), and all negotiations and actions with respect thereto, such additional
rent to be due and payable within fifteen (15) days of receipt of a statement of
such costs and expenses from Landlord.

      (e) No assignment of this Lease shall be effectuated by operation of law
or otherwise without the prior written consent of Landlord. For the purposes of
this Lease, the transfer of fifty percent (50%) or more of the ownership
interest of Tenant or the transfer and/or issuance of more than fifty percent
(50%) of the voting stock of Tenant, if Tenant is not a publicly held
corporation, to any persons or entities that are not owners or stockholders of
Tenant on the date of execution of this Lease shall be deemed an assignment of
this Lease thereby giving Landlord the option to terminate this Lease as
provided above.

      (f) Notwithstanding any other provision of this Lease to the contrary,
Tenant has the right to assign this Lease or sublet the Demised Premises in
whole or in part to any subsidiary or affiliate upon giving Landlord ten (10)
days prior written notice of such assignment or subleasing. Such an assignment
or sublease shall not trigger Landlord's right to terminate the Lease or
subsequently require Landlord's consent to any assignee or subtenant. A
"subsidiary" of Tenant shall mean any corporation not less than fifty percent
(50%) of whose outstanding voting stock shall, at the time, be owned, directly
or indirectly, by Tenant. An "affiliate" of Tenant shall mean any corporation
which, directly or indirectly, controls or is controlled by or is under common
control with Tenant. For purpose of the definition of "affiliate," the word
"control" (including "controlled by" and "under common control with"), as used
with respect to any corporation, partnership, or association, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policy of a particular corporation, partnership
or association, whether through the ownership of voting securities or by
contract or otherwise. Notwithstanding the foregoing definition of affiliate,
SiGA Technologies, Inc., shall be deemed an affiliate of Tenant for the purposes
of this Lease.

                                      -17-
<PAGE>

      (g) Notwithstanding any other provision of this Lease to the contrary,
Tenant shall have no right to transfer, assign, sublet, enter into license or
concession agreements, or mortgage or hypothecate this Lease or Tenant's
interest in the Demised Premises or any part thereof to a foreign government or
to any individual or entity whereby enforcement of the obligations of the Tenant
under this Lease might be limited by sovereign immunity. Any such attempted
transfer, assignment, subletting, license or concession agreement, mortgage or
hypothecation shall be void and confer no rights on such foreign government or
individual or entity.

      (h) The consent by Landlord to any assignment or subletting to any party
other than Landlord, including a subsidiary or affiliate, shall not be construed
as a waiver or release of Tenant from the terms of any covenant or obligation
under this Lease. Landlord's collection or acceptance of rent from any assignee
of Tenant shall not constitute a waiver or release of Tenant of any covenant or
obligation contained in this Lease, nor shall any such assignment or subletting
be construed to relieve Tenant from giving Landlord said thirty (30) days notice
or from obtaining the consent in writing of Landlord to any further assignment
or subletting. In the event that Tenant is in default of any term or provision
of this Lease, Tenant hereby assigns to Landlord the rent due from any subtenant
of Tenant and hereby authorizes and directs each such subtenant, upon notice
from Landlord, to pay said rent directly to Landlord, the collection or
acceptance of rent from any subtenant in such instance not to constitute a
waiver or release of Tenant of any covenant or obligation contained in this
Lease.

      (i) Tenant may not mortgage or encumber this Lease without the prior
written consent of Landlord.

      (j) If any sublease, assignment or other transfer (whether by operation of
law or otherwise) provides that the subtenant, assignee or other transferee is
to pay any amount in excess of the sum of (i) the rent and other charges due
under this Lease and (ii) the reasonable, out-of-pocket costs (including
brokerage commissions, marketing costs and construction costs) incurred and paid
by Tenant to obtain the assignment or sublease, then, whether such excess is in
the form of an increased monthly or annual rental, a lump sum payment, payment
for the sale, transfer or lease of Tenant's fixtures, leasehold improvements,
furniture and other personal property, or any other form (and if the subleased
or assigned space does not constitute the entire Demised Premises, the existence
of such excess shall be determined on a pro rata basis), Tenant shall pay [***]
percent ([***]%) of any such excess to Landlord as additional rent no later than
ten (10) days after Tenant's receipt thereof. Landlord shall have the right to
inspect and audit Tenant's books and records relating to any sublease,
assignment or other transfer.

            11. ALTERATIONS

      Tenant shall make no alterations, installations, additions or improvements
(hereinafter collectively called "Alterations") in or to the Demised Premises or
the Building (other than Immaterial Alterations, hereinafter defined) without
Landlord's prior written consent. Consent by Landlord to Tenant's Alterations
shall not be unreasonably withheld, except that Landlord may withhold its
consent for any reason with regard to requested Alterations by Tenant which (i)

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affect the structure of the Building or the mechanical, plumbing or electrical
systems of the Building, or (ii) could cause the imposition of additional costs
or obligations on Landlord. Tenant, at its sole cost and expense, shall provide
Landlord 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 the Building architect and engineers to show Tenant's proposed
Alterations. If any Alterations are made without the prior written consent of
Landlord, Landlord may correct or remove the same, and Tenant shall be liable
for any and all expenses incurred by Landlord in the performance of this work.
All Alterations shall be made (i) at Tenant's sole expense, (ii) at such limes
and in such manner as Landlord may designate, (iii) in a good, workmanlike,
first class and prompt manner, (iv) using new materials only, (v) in accordance
with all applicable legal requirements and the requirements of any insurance
company insuring the Building, (vi) in accordance with Landlord's then
Construction Rules and (vii) only by such contractors or mechanics as are
approved in writing by Landlord. Approval of contractors or mechanics by
Landlord, 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. Prior to the commencement of any
Alterations in the Demised Premises, Tenant shall submit to Landlord copies of
all permits required in connection therewith, and upon the completion of any
Alterations, Tenant, at its expense, shall furnish to Landlord a set of the
"as-built" plans for such Alterations constructed or installed in the Demised
Premises. An "Immaterial Alteration" is defined as an Alteration which (i) is
not visible from the exterior of the Demised Premises or the Building and (ii)
is cosmetic in nature and does not affect the Building structure or any Building
system.

      All Alterations to the Demised Premises, whether made by Landlord or
Tenant, and whether at Landlord's or Tenant's expense, or the joint expense of
Landlord and Tenant, shall be and remain the property of Landlord. Any
replacements of any property or improvements of Landlord, whether made at
Tenant's expense or otherwise, shall be and remain the property of Landlord.

      Landlord, at the expiration or earlier termination of the term of the
Lease, may elect to require Tenant to remove all or any part of the Alterations
made by Tenant subsequent to the Rent Commencement Date, unless Landlord agrees
in writing not to require the removal of any Alterations at the time Landlord
consents to the Alterations. Removal of Tenant's Alterations shall be at
Tenant's cost and expense, and Tenant shall, at its cost and expense, repair any
damage to the Demised Premises or the Building caused by such removal.

      Tenant shall remove all of Tenant's property at the expiration or earlier
termination of the Lease. In the event Tenant does not remove Tenant's property
at the expiration or earlier termination of the Lease, such property shall
become the property of Landlord.

      In the event Tenant fails to remove its property or the Alterations
requested to be removed by Landlord on or before the expiration or earlier
termination of the term of the Lease, then Landlord may remove such property and
Alterations from the Demised Premises at Tenant's expense, and Tenant hereby
agrees to pay to Landlord, as additional rent, the cost of such removal together
with any and all damages which Landlord may suffer and sustain by reason of the
failure of Tenant to remove the same. Said amount of additional rent shall be
due and payable upon receipt by Tenant of a written statement of costs and
damages from Landlord.

                                      -19-
<PAGE>

      Without limiting the generality of the foregoing provisions of this
Section, the term "Alterations" shall include, without limitation, all telephone
and data wiring and cabling installed by or on behalf of Tenant (collectively,
"Cabling"). Notwithstanding anything to the contrary contained in this Section,
at the expiration or earlier termination of the term of the Lease, Tenant shall
remove all Cabling (whether installed as part of the initial tenant improvements
or as a subsequent Alteration) at its cost and expense, and Tenant shall, at its
cost and expense, repair any damage to the Demised Premises or the Building
caused by such removal.

            12. LIENS

      If any mechanic's or other lien is filed against the Demised Premises, or
the Building of which the Demised Premises are a part, for work claimed to have
been done for Tenant or materials claimed to have been furnished to Tenant, such
lien shall be discharged by Tenant, at its sole cost and expense, within ten
(10) days from the date Tenant receives written demand from Landlord to
discharge said lien, by the payment thereof or by filing any bond required by
law. If Tenant shall foil to discharge any such lien, Landlord may, at its
option, discharge the same and treat the cost thereof as additional rent, due
and payable upon receipt by Tenant of a written statement of costs from
Landlord. It is hereby expressly covenanted and agreed that such discharge of
any lien by Landlord shall not be deemed to waive or release Tenant from its
default under the Lease for failing to discharge the same.

      Tenant will indemnify and hold harmless Landlord and its mortgagees from
and against any and all claims, damages and expenses incurred by Landlord,
arising from any liens placed against the Demised Premises or the Building and
the land upon which it is situated, as a result of Tenant undertaking
construction work in the Demised Premises at its own cost and under its own
control and direction, or making any Alterations to the Demised Premises.

            13. MAINTENANCE

      Tenant, at its sole cost and expense, shall keep the Demised Premises and
the fixtures and equipment therein in clean, safe and sanitary condition, shall
take good care thereof and shall suffer no waste or injury thereto. At the
expiration or earlier termination of the term of this Lease, Tenant shall
surrender the Demised Premises broom clean and in the same order and condition
in which they were on the Rent Commencement Date, ordinary wear and teat and
damage by the elements, fire and other insured casualty excepted.

      Landlord shall keep and maintain in good order and repair the
base-building structure and systems, including the roof, exterior walls,
elevators, electrical, plumbing and HVAC systems, and the ground floor lobby and
other common areas and facilities of the Building.

            14. SIGNS AND ADVERTISEMENTS

      No sign, advertisement or notice shall be inscribed, painted, affixed or
displayed on any part of the outside or the inside of the Building, except with
Landlord's prior written consent and then only in such place, number, size,
color and style (i.e., Building standard lettering) as is authorized by
Landlord. If any such sign, advertisement or notice is exhibited without first
obtaining Landlord's written consent, Landlord shall have the right to remove
the same, and Tenant shall be liable for any and all expenses incurred by
Landlord by said removal, as additional rent. Nothing herein shall restrict
Tenant's right to post signs or notices within the Demised Premises not visible
from common areas of the Building or from the exterior of the Building.

                                      -20-
<PAGE>

      Landlord agrees to display Tenant's name on the Building directory in the
size and style of lettering used by Landlord, at Tenant's expense. Tenant may
display its name on the main entry door of the Demised Premises in Building
standard color, size and style of lettering, at Tenant's expense.

      Landlord shall have the right to prohibit any published advertisement of
Tenant which in its reasonable opinion tends to impair the reputation of the
Building or its desirability as a high-quality office building, and, upon
written notice from Landlord, Tenant shall immediately refrain from and
discontinue any such advertisement.

            15. DELIVERIES AND MOVING OF TENANT'S PROPERTY

      No furniture, equipment or other bulky matter of any description shall be
received into the Building or carried in the elevators except in the manner and
during the times approved by Landlord. Tenant shall obtain Landlord's
determination prior to moving said property into the Building. All moving of
furniture, equipment and other material within the public areas shall be under
the direct control and supervision of Landlord who shall, however, not be
responsible for any damage to or charges for moving the same. Landlord shall
have the sole right to determine the load capacities of the elevators of the
Building and to determine if Tenant's property can be safely transported in the
elevators. Tenant agrees promptly to remove from the sidewalks adjacent to the
Building any of the Tenant's furniture, equipment or other material there
delivered or deposited.

            16. TENANT'S EQUIPMENT

      Tenant will not install or operate in the Demised Premises any
electrically operated equipment or other machinery, other than typewriters, word
processing machines, personal desk . top computers, adding machines, radios,
televisions, tape recorders, dictaphones, bookkeeping machines, copying
machines, clocks, and other business machines and equipment normally employed
for general office use which do not require high electricity consumption for
operation, but specifically including supplemental HVAC equipment, computer
rooms, and cafeterias), without first obtaining the prior written consent of
Landlord, who may (without reference to the aggregate amount of electricity
consumed within the Demised Premises) (i) condition such consent upon payment by
Tenant of additional rent as compensation for additional consumption of
electricity and/or other utility services, or (ii) require that such equipment
be separately metered or submetered, with Tenant paying the cost of electricity
so consumed as measured by such meter or submeter. Such additional rent shall be
in addition to Tenant's obligations, pursuant to the section of this Lease
entitled, "OPERATING EXPENSES, OPERATING COSTS AND REAL ESTATE TAXES," to pay
its proportionate share of increases in Operating Costs.

      If any or all of Tenant's equipment requires electricity consumption in
excess of the capacity of the electrical system installed by Landlord in the
Demised Premises, all additional transformers, distribution panels and wiring
that may be required to provide the amount of electricity required for Tenant's

                                      -21-
<PAGE>

equipment shall be installed by Landlord at the cost and expense of Tenant. If
Tenant's equipment causes Tenant's consumption of electricity to exceed an
average of eight (8) watts per rentable square foot (of which two and one-half
(2.5) watts per rentable square foot shall be high voltage for lighting and five
and one half (5.5) watts per rentable square foot shall be low voltage for
general power and equipment), or if such equipment is to be consistently
operated beyond the normal Building hours of 8:00 a.m. to 6:00 p.m., Monday
through Friday, and 8:00 a.m. to 1:00 p.m. on Saturday, Landlord at its option
may install (i) a separate electric meter for the Demised Premises at Tenant's
sole cost and expense, or (ii) a separate meter for the specific equipment that
is causing Tenant's excessive consumption of electricity at Tenant's sole cost
and expense. In the event Landlord installs a separate meter for the Demised
Premises, Tenant shall then pay the cost of electricity it consumes as recorded
by such meter directly to the electric company, and an appropriate adjustment
shall be made to Tenant's proportionate share of Operating Costs to reflect
Tenant's reduced consumption of electricity because of such separate metering of
the Demised Premises. In the event Landlord separately meters the specific
equipment, Tenant shall be billed periodically by Landlord based upon such
consumption, but no adjustment shall be made to Tenant's proportionate share of
Operating Costs.

      Tenant shall not install any equipment of any kind or nature whatsoever
which will or may necessitate any changes, replacements or additions to, or in
the use of, the water system, heating system, plumbing system, air-conditioning
system, or electrical system of the Demised Premises or the Building without
first obtaining the prior written consent of Landlord. Business machines and
mechanical equipment belonging to Tenant which cause noise or vibration that may
be transmitted to the structure of the Building or to any space therein to such
a degree as to be objectionable to Landlord or to any tenant in the Building
shall be installed and maintained by Tenant, at Tenant's expense, on vibration
eliminators or other devices sufficient to eliminate such noise and vibration.

      Landlord shall have the right to 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 Tenant intends to install or
locate within the Demised Premises. Tenant shall obtain Landlord's prior review
and approval before installing or locating heavy equipment and fixtures in the
Demised Premises, and if installation or location of such equipment or fixtures,
in Landlord's opinion, requires structural modifications or reinforcement of any
portion of the Demised Premises or the Building, Tenant agrees to reimburse
Landlord, as additional rent, for any and all costs incurred by Landlord to make
such required modifications or reinforcements, and such modifications or
reinforcements shall be completed prior to Tenant installing or locating such
equipment or fixtures in the Demised Premises. Tenant shall reimburse Landlord
within thirty (30) days of receipt of any statement setting forth those costs.

            17. SERVICES AND UTILITIES

      (a) Landlord shall provide the following utilities and services:

            (1) Hot and cold water and lavatory supplies, it being understood
and agreed that hot and cold water shall be furnished by Landlord only at those
points of supply provided for general use of other tenants in the Building.

                                      -22-
<PAGE>

            (2) Automatically operated elevator service at all times.

            (3) Cleaning and char services, as specified in Exhibit E, after
normal business hours, Monday through Friday of each week, except on the
holidays listed in subparagraph (4) below.

            (4) Heat and air-conditioning in season, Monday through Friday from
8:00 a.m. to 6:00 p.m., and on Saturday from 8:00 a.m. to 1:00 p.m., except for
the following holidays: New Year's Day, Dr. Martin Luther King, Jr. Day,
Presidents' Day, Memorial Day, Fourth of July, Labor Day, Columbus Day, Veterans
Day, Thanksgiving Day, and Christmas Day, and any other national holiday
promulgated by a Presidential Executive Order or Congressional Act. Landlord
shall provide heat and air-conditioning at times in addition to those specified
in the preceding sentence at Tenant's expense, provided Tenant gives Landlord
notice prior to 1:00 p.m. on a business day in the case of after-hours service
on that business day and prior to 3:00 p.m. on the immediately preceding
business day in the case of after-hours service on a Saturday, a Sunday or a
holiday. Landlord shall charge Tenant for said after-hours services the same
rate it charges other tenants, which is $50.00 per hour per zone (each floor of
the Building being one (1) zone) on the date of execution of this Lease.
Landlord reserves the right, in its sole discretion, to reasonably increase the
hourly charge for said after-hours service, but in no event shall the rate per
hour charged Tenant be more than the rate per hour charged other tenants. In the
event the same after-hours service is also requested by other tenants of the
Building in addition to Tenant, the charge therefor to each tenant requesting
such after-hours service shall be prorated among all requesting tenants based
upon the respective square footages of each of the demised premises of the
tenants requesting such after-hours service.

            (5) Maintenance, painting and electric lighting service for all
public areas and special service areas in the Building.

            (6) A controlled-access system to the Building comparable to other
first-class office buildings in the city or county where the Building is
located.

            (7) Electricity and proper electrical facilities to furnish
sufficient electricity for equipment of Tenant installed pursuant to the section
of this Lease entitled, "TENANT'S EQUIPMENT."

      (b) In the event any public utility supplying energy requires, or
government law, regulation, executive or administrative order results in a
requirement, that Landlord or Tenant must reduce, or maintain at a certain
level, the consumption of electricity for the Demised Premises or Building,
which affects the heating, air-conditioning, lighting, or hours of operation of
the Demised Premises or Building, Landlord and Tenant shall each adhere to and
abide by said laws, regulations or executive orders without any reduction in
rent.

      (c) Landlord's inability to furnish, to any extent, these defined
services, or any cessation thereof, resulting from, but not limited to, any
causes including from entry from inspections, repairs, alterations, improvements
and installations by Landlord, its agents, employees or contractors pursuant to
the section of this Lease entitled "ENTRY FOR INSPECTIONS, REPAIRS AND
INSTALLATION," or from renovation, redecoration or rehabilitation of any area of

                                      -23-
<PAGE>

the Building, including the lobby, or any of the surrounding public spaces,
shall not render Landlord liable for damages to either person or property, nor
be construed as an eviction of Tenant, nor work an abatement of any portion of
rent, nor relieve Tenant from fulfillment of any covenant or agreement hereof.
Should any of the Building equipment or machinery cease to function properly for
any cause, Landlord shall use reasonable diligence to repair the same promptly,
but Tenant shall have no claim for damages or for a rebate of any portion of
rent on account of any interruptions in any services occasioned thereby or
resulting therefrom.

      (d) Notwithstanding the foregoing, if for reasons within the control of
Landlord and not caused by force majeure, any interruption, curtailment,
stoppage or suspension of the Essential Services (as hereinbelow defined) shall
continue for more than five (5) consecutive business days and shall render the
Demised Premises unusable, and if Tenant shall in fact vacate and cease using
the Demised Premises, then so long as Tenant is not in default hereunder, all
rent and additional rent due hereunder shall be abated for the period beginning
on the first (1st) consecutive business day of such failure and shall continue
until use of the Demised Premises is restored to Tenant. If due to a force
majeure event or an event beyond the control of Landlord, any interruption,
curtailment, stoppage or suspension of the Essential Services shall continue for
more than twenty (20) consecutive business days and shall render the Demised
Premises unusable, and if Tenant shall in fact vacate and cease using the
Demised Premises, then so long as Tenant is not in default hereunder, all rent
and additional rent payable hereunder shall be abated for the period beginning
on the first (1st) consecutive business day of such failure and shall continue
until use of the Demised Premises is restored to Tenant. For purposes hereof,
"Essential Services" shall mean the provision of (a) cold water, (b) one (1)
automatically-operated elevator, (c) heat and air conditioning in season, in
reasonably sufficient amounts, during the hours and days provided for in the
first sentence of item (4) of subsection (A) of this Section, and (d)
electricity.

            18. TENANT'S RESPONSIBILITY FOR DAMAGE

      Any and ail injury, breakage or damage to the Demised Premises or the
Building arising solely from any cause done by Tenant or its agents,
contractors, servants, employees and visitors, or by individuals and persons
making deliveries to or from the Demised Premises solely for the benefit of
Tenant, except as provided for in the section of this Lease entitled, "ALL RISK
PROPERTY INSURANCE," shall be repaired by Landlord at the sole expense of
Tenant. Payment of the cost of such repairs by Tenant shall be due as additional
rent with the next installment of Monthly Rent after Tenant receives a bill for
such repairs from Landlord. This provision shall not be in limitation of any
other rights and remedies which Landlord has or may have in such circumstances.

            19. ENTRY FOR INSPECTIONS. REPAIRS AND INSTALLATIONS

      Tenant shall permit Landlord, or its agents, employees or contractors,
without notice to Tenant, to enter the Demised Premises at all reasonable tunes
and in a reasonable manner, without charge to Landlord or diminution of Monthly
Rent payable by Tenant, to examine, inspect and protect the Building, and, upon
one (1) day written notice, to make such repairs as in the judgment of Landlord
may be deemed necessary to maintain or protect the Building, or to exhibit the

                                      -24-
<PAGE>

Demised Premises to prospective tenants during the last year of the term of this
Lease. Landlord shall use reasonable efforts to minimize interference to
Tenant's business when making repairs, but Landlord shall not be required to
perform the repairs at a time other than during normal working hours. In
connection with any such non-emergency entry, Tenant shall have the right to
have one of its personnel accompany Landlord's representative(s) throughout the
Demised Premises.

      In the event of an emergency, Landlord may enter the Demised Premises
without notice and make whatever repairs are necessary to protect the Building.

      Tenant shall permit Landlord, or its agents, employees or contractors,
upon no less than ten (10) days prior written notice to Tenant, to enter the
Demised Premises at reasonable times and in a reasonable manner, without charge
to Landlord or diminution of Monthly Rent payable by Tenant, to make
installations related to the construction of pre-occupancy tenant work being
performed by Landlord for other tenants of the Building, to make repairs,
alterations and improvements arising due to repairs, alterations and
improvements to any areas adjoining the Demised Premises, to erect, use and
maintain pipes and conduits in and through the Demised Premises, or to make
installations, improvements and repairs to utility services of the Building
located in or about the Demised Premises. Landlord shall use reasonable efforts
to minimize interferences with Tenant's business operations, but except in
unusual circumstances, Landlord shall not be required to perform such work at a
time other than normal working hours. In connection with any such non-emergency
entry, Tenant shall have the right to have one of its personnel accompany
Landlord's representative(s) throughout the Demised Premises.

            20. INSURANCE RATING

      Tenant shall not conduct or permit to be conducted any activity, or place
any equipment or property in or about the Demised Premises that will increase in
any way the rate of All Risk Property insurance or other insurance on the
Building, unless consented to by Landlord. Landlord's consent may be conditioned
upon Tenant's payment of any costs arising directly or indirectly from such
increase. If any increase in the rate of All Risk Property insurance or other
insurance on the Building is stated by any insurance company or by the
applicable Insurance Rating Bureau to be due to Tenant's activity, equipment or
property in or about the Demised Premises, said statement shall be conclusive
evidence that the increase in such rate is due to such activity, equipment or
property and, as a result thereof, Tenant shall be liable for such increase. Any
such rate increase and related costs incurred by Landlord shall be deemed
additional rent due and payable by Tenant to Landlord upon receipt by Tenant of
a written statement of the rate increase and costs. Tenant may contest, at its
sole cost and expense, any insurance rate increase, provided such action by
Tenant will not adversely affect the insurance coverage of Landlord.

            21. INDEMNITY AND PUBLIC LIABILITY INSURANCE

      (a) Tenant shall indemnify and save harmless Landlord, or its mortgagees
and its Agent from any and all liability, damage, expense, cause of action,
suits, claims, judgments and cost of defense arising from injury to person or
personal property in and on the Demised Premises, or upon any adjoining
sidewalks or public areas of the Building, which arise out of the act, failure
to act or negligence of Tenant, its agents or employees.

                                      -25-
<PAGE>

      (b) Tenant shall, at its sole cost, carry and keep in full force and
effect at all times during the term of this Lease, a commercial general
liability policy with (i) no exclusion for contractual liability assumed
hereunder, (ii) a severability of interest endorsement, and (iii) limits of not
less then Two Million Dollars ($2,000,000) combined single limit per occurrence
and not less then Two Million Dollars ($2,000,000) in the aggregate for bodily
injury, sickness or death and property damage, and umbrella coverage of not less
then Five Million Dollars ($5,000,000). Landlord shall have the right to
reasonably increase such coverage limits consistent with requirements of owners
of first class office buildings in Annapolis, Maryland from time to time.

            22. WORKER'S COMPENSATION INSURANCE

      Tenant shall carry and keep in full force and effect at all times during
the term of this Lease, at its sole cost, worker's compensation or similar
insurance in form and amounts required by law. Such insurance shall contain
waiver of subrogation provisions in favor of Landlord, its mortgagees and its.
Agent.

            23. ALL RISK PROPERTY INSURANCE

      Landlord shall obtain and maintain All Risk Property insurance covering
the Building. Tenant shall obtain and maintain throughout the term of this Lease
and any extension periods All Risk Property insurance insuring against damage to
and loss of tenant improvements, fixtures, equipment, furniture, and all other
personal property in and about the Demised Premises, which policy shall name
Landlord and its mortgagees as loss payee. Landlord and Tenant hereby release
each other and waive any claims they may have against the other for loss or
damage to the Building, Demised Premises, tenant improvements, fixtures,
equipment and/or any other personal property arising from a risk insured against
under the All Risk Property insurance policies to be carried by Landlord and
Tenant, as required above, even though such loss or damage was caused by the
negligence of Landlord and Tenant, their agents or employees. Landlord and
Tenant agree to obtain and maintain throughout the term of this Lease
endorsements to their respective All Risk Property policies waiving the right of
subrogation of their insurance companies against the other party and its agents
and employees and Landlord's mortgagees. Except to the extent expressly provided
herein, nothing contained in this Lease shall relieve Landlord or Tenant of any
liability to each other or to their insurance carriers which Landlord or Tenant
may have under law or the provisions of this Lease in connection with any damage
to the Building, Demised Premises, tenant improvements, fixtures, equipment,
furniture, and all other personal property, by fire or other casualty.

            24. TENANT'S CONTRACTOR'S INSURANCE

      Tenant shall require any contractor of Tenant performing work on the
Demised Premises to carry and maintain, at no expense to Landlord:

      (a) commercial general liability insurance, including contractor's
liability coverage, contractual liability coverage, completed operations
coverage for a period of not less than two years following substantial
completion of the applicable work, waiver of subrogation against Landlord and
its mortgagees and contractor's protective liability coverage, to afford
protection with limits, for each occurrence, of not less than One Million
Dollars ($1,000,000.00) with respect to personal injury, death, or property
damage; and

                                      -26-
<PAGE>

      (b) worker's compensation or similar insurance in form and amounts
required by law.

            25. REQUIREMENTS FOR TENANT'S INSURANCE POLICIES

      The company or companies writing any insurance which Tenant is required to
carry and maintain or cause to be carried or maintained pursuant to this Lease
as well as the form of such insurance shall at all times be subject to
Landlord's approval and any such company or companies shall be a good and
responsible insurance company, licensed to do business in the State of Maryland.
Tenant's and Tenant's contractors' public liability insurance policies and
certificates evidencing such insurance shall name Landlord, its mortgagees and
its Agent as additional insured. All of Tenant's insurance policies and
certificates evidencing such insurance shall contain a provision by which the
insurer agrees that such policy shall not be cancelled except after thirty (30)
days written notice to Landlord. Tenant agrees to provide to Landlord no later
than five (5) days prior to taking possession of the Demised Premises (and no
later than five (5) days prior to each renewal date thereof) the certificates
evidencing all insurance required hereunder; Landlord may withhold delivery of
the Demised Premises without delaying the Commencement Date, or triggering any
abatement of rent, if Tenant fails to provide Landlord with these certificates.

      Any insurance carried or to be carried by Tenant hereunder shall be
primary over any policy that might be carried by Landlord or its Agent If Tenant
shall fail to perform any of its obligations regarding the acquisition and
maintenance of insurance, Landlord may perform the same and the cost of same
shall be deemed additional rent, payable upon Landlord's demand.

            26. LIABILITY FOR DAMAGE TO PERSONAL PROPERTY AND PERSON

      All personal property of Tenant, its employees, agents, subtenants,
business invitees, licensees, customers, clients, family members, guests or
trespassers, in and on the Demised Premises shall be and remain in and on the
Demised Premises and the Building at the sole risk of said parties and Landlord
shall not be liable to any such person or party for any damage to, or loss of
personal property thereof, including loss or damage arising from, (a) any act,
including theft, or any failure to act, of any other persons, (b) the leaking of
the roof, (c) the bursting, rupture, leaking or overflowing of water, sewer or
steam pipes, (d) the rupture or leaking of heating or plumbing fixtures,
including security and protective systems, (e) short-circuiting or malfunction
of electrical wires or fixtures, including security and protective systems or
(f) the failure of the heating or air conditioning systems. Landlord shall also
not be liable for the interruption or loss to Tenant's business arising from any
of the above-described acts or causes. Tenant specifically agrees to save
Landlord harmless in all such cases.

      Landlord shall not be liable for any personal injury to Tenant, Tenant's
employees, agents, business invitees, licensees, customers, clients, family
members, guests or trespassers arising from the use, occupancy and condition of
the Demised Premises or the Building, unless such party establishes that there
has been negligence or a willful act or failure to act on the part of Landlord,
its agents or employees.

                                      -27-
<PAGE>

            27. DAMAGE TO THE BUILDING AND/OR THE DEMISED PREMISES

      If the Demised Premises is damaged by fire, casualty or other event
insured against by Landlord's All Risk Property insurance policy covering the
Building, and the Demised Premises can be fully repaired, in Landlord's opinion,
within 180 days from the date of the insured fire, casualty or other event,
Landlord, at Landlord's expense, shall repair such damage, provided, however,
Landlord shall have no obligation to repair any damage to, or to replace,
Tenant's non building standard tenant improvements or any other property located
in the Demised Premises. Except as otherwise provided herein, if the entire
Demised Premises is rendered untenantable by reason of the insured fire,
casualty or other event, then Monthly Rent shall abate for the period from the
date of such damage to the date when such damage is repaired, and if only a
portion of the Demised Premises is so rendered untenantable, then Monthly Rent
shall abate for such period in the proportion which the area of the portion of
the Demised Premises so rendered untenantable bears to the total area of the
Demised Premises, provided, however, if, prior to the date when all of such
damage is repaired, any portion of the Demised Premises so damaged shall be
rendered tenantable and shall be used or occupied by Tenant or any person
claiming through or under Tenant, then the amount by which the Monthly Rent
shall abate shall be equitably apportioned for the period from the date of any
such use or occupancy to the date when all such damage is repaired. No
compensation or claim or reduction of rent will be allowed or paid by Landlord
by reason of inconvenience, annoyance, or injury to business arising from the
necessity of repairing the Demised Premises or any portion of the Building of
which they are a part.

      Notwithstanding the foregoing, if, prior to or during the term of this
Lease, (a) the Demised Premises is so damaged that, in Landlord's opinion, the
Demised Premises cannot be fully repaired within 180 days from the date the
damage occurred, or (b) the Building is so damaged that, in Landlord's opinion,
substantial repair or reconstruction of the Building shall be required (whether
or not the Demised Premises is damaged or rendered untenantable), then, in any
of such events, Landlord, at its option, may give to Tenant, within sixty (60)
days after such fire or other casualty, thirty (30) days notice of termination
of this Lease and, in the event such notice is given, this Lease shall terminate
(whether or not the term shall have commenced) upon the expiration of such
thirty (30) days with the same effect as if the date of expiration of such
thirty (30) days were the date definitely fixed for expiration of the term of
the Lease, and the then-applicable Monthly Rent shall be apportioned as of such
date, including any rent abatement as provided above.

      In the event that Landlord's restoration of the Demised Premises or access
thereto is not substantially completed by Landlord within two hundred ten (210)
days from the date of the damage, Tenant shall also have the right to terminate
this Lease by delivering thirty (30) days prior written notice to Landlord and
its mortgagees, no later than two hundred and forty (240) days from the date of
the damage, of the exercise of such right. In the event the restoration of the
Demised Premises is substantially completed within such thirty (30) day period,
such right of termination shall be deemed to be void and without effect.

                                      -28-
<PAGE>

            28. DEFAULT OF TENANT

      This Lease shall, at the option of Landlord, cease and terminate if (i)
Tenant fails to pay rent, including any installment of Monthly Rent or any
additional rent, although no legal or formal demand has been made, and such
failure to pay rent continues for a period of five (5) days after written notice
addressed to Tenant has been delivered by Landlord to the Demised Premises, or
(ii) Tenant violates or fails to perform any of the other conditions, covenants
or agreements of this Lease made by Tenant, and any violation or failure to
perform any of those conditions, covenants or agreements continues for a period
often (10) days after written notice thereof has been delivered by Landlord to
Tenant, or, in cases where the violation or failure to perform cannot be
corrected within ten (10) days, Tenant does not begin to correct the violation
or failure to perform within ten (10) days after receiving Landlord's written
notice and/or Tenant thereafter does not diligently pursue the correction of the
violation or failure to perform. Any said violation or failure to perform or to
pay any rent, if left uncorrected, shall operate as a notice to quit, any
further notice to quit or notice of Landlord's intention to re-enter being
hereby expressly waived. Landlord may thereafter proceed to recover possession
under and by virtue of the provisions of the laws of the jurisdiction in which
the Building is located or by such other proceedings, including re-entry and
possession, as may be applicable. If Landlord elects to terminate this Lease,
everything herein contained on the part of Landlord to be done and performed
shall cease without prejudice to the right of Landlord to recover from Tenant
all rent accruing up to and through the date of termination of this Lease or the
date of recovery of possession of the Demised Premises by Landlord, whichever is
later. Should this Lease be terminated before the expiration of the term of this
Lease by reason of Tenant's default as hereinabove provided, or if Tenant
abandons or vacates the Demised Premises before the expiration or termination of
the term of this Lease, the Demised Premises may be relet by Landlord for such
rent and upon such terms as are not unreasonable under the circumstances, and,
if the full rent hereinabove provided is not realized by Landlord, Tenant shall
be liable for all damages sustained by Landlord, including, without limitation,
deficiency in rent, reasonable attorneys' fees, brokerage fees, and expenses of
placing the Demised Premises in first-class rentable condition. In the event
Landlord terminates the Lease, Landlord shall use reasonable efforts to mitigate
its damages in accordance with applicable law. Any damage or loss of rent
sustained by Landlord may be recovered by Landlord, at Landlord's option, at the
time of the reletting, or in separate actions, from time to time, as said damage
shall have been made more easily ascertainable by successive relettings, or, at
Landlord's option, may be deferred until the expiration of the term of this
Lease, in which event the cause of action shall not be deemed to have accrued
until the date of expiration of said term. The provisions contained in this
section shall be in addition to and shall not prevent the enforcement of any
claim Landlord may have against Tenant for anticipatory breach of the unexpired
term of this Lease.

            29. REPEATED DEFAULTS

      If Tenant is in default of this Lease for the same or substantially the
same reason more than twice during any twelve (12) month period during the term
of this Lease (Tenant having received notice of each such default), then, at
Landlord's election, Tenant shall not have any right to cure such repeated
default, the terms and conditions of the section of this Lease entitled,
"DEFAULT OF TENANT," notwithstanding. In the event of Landlord's election not to
allow a cure of a repeated default, Landlord shall have all of the rights
provided for in that section of this Lease for an uncured default.

                                      -29-
<PAGE>

            30. WAIVER

      If Landlord institutes legal or administrative proceedings against Tenant
and a compromise or settlement thereof is made, the same shall not constitute a
waiver of Tenant's obligations to comply with any covenant, agreement or
condition, nor of any of Landlord's rights hereunder. No waiver by Landlord 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 Tenant
or receipt by Landlord (or any party designated by Landlord to receive any
payments of rent) of a lesser amount than the amount of rent due Landlord shall
be deemed to be other than on account of the earliest stipulated rent, nor shall
any endorsement or statement on any check or letter accompanying a check for
payment of such rent be deemed an accord and satisfaction, and Landlord, or any
party designated by Landlord, may accept such check or payment without prejudice
to Landlord's right to recover the balance of such rent or to pursue any other
remedy provided for in this Lease or in the governing law of the jurisdiction in
which the Building is located. No re-entry by Landlord, and no acceptance by
Landlord of keys from Tenant, shall be considered an acceptance of a surrender
of the Lease.

            31. SUBORDINATION

      Unless Mortgagee shall otherwise elect as provided for in this Section,
this Lease is subject and subordinate to the lien of all and any mortgages
(which term "mortgages" shall include both construction and permanent financing
and shall include deeds of trust and similar security instruments) which may now
or hereafter encumber or otherwise affect the real estate (including the
Building) of which the Demised Premises is a part, or Landlord's leasehold
interest therein, and to all and any renewals, extensions, modifications,
recastings or refinancings thereof. In confirmation of such subordination,
Tenant shall, at Landlord's request, promptly execute any requisite or
appropriate certificate or other document. Tenant hereby constitutes and
appoints Landlord as Tenant's attorney-in-fact to execute any such certificate
or other document for or on behalf of Tenant if Tenant does not execute said
certificate or document within five (5) days after receipt thereof. Landlord
shall provide to Tenant a Subordination, Non-Disturbance and Attornment
Agreement from its current lender and from any future lenders on such lender's
standard form. The current lender's standard form is attached hereto as Exhibit
G.

      Tenant agrees that in the event any proceedings are brought for the
foreclosure of any such mortgage, Tenant shall attorn to the purchaser at such
foreclosure sale, if requested to do so by such purchaser. Tenant shall also
recognize such purchaser as the Landlord under this Lease. Tenant waives the
provisions of any statute or rule of law, now or hereafter in effect, which may
give or purport to give Tenant any right to terminate or otherwise adversely
affect this Lease and the obligations of Tenant hereunder in the event that any
such foreclosure proceeding is prosecuted or completed.

      If the Building, the Demised Premises or any part respectively thereof is
at any time subject to a mortgage or a deed of trust or other similar
instrument, and this Lease or the rents are assigned to such mortgagees, trustee

                                      -30-
<PAGE>

or beneficiary, and Tenant is given written notice thereof including the post
office address of such assignee, then Tenant may not terminate this Lease for
any default on the part of Landlord without first giving written notice by
certified or registered mail, return receipt requested, to such Assignee,
Attention: Mortgage Loan Department. The notice shall specify the default in
reasonable detail, and afford such assignee a reasonable opportunity to make
performance, at its election, for and on behalf of Landlord.

      If Landlord's mortgagee shall so elect by notice to Tenant or by the
recording of a unilateral declaration of subordination, this Lease and Tenant's
rights hereunder shall be superior and prior in right to the mortgage of which
such mortgagee has the benefit, with the same force and effect as if this Lease
had been executed, delivered and recorded prior to the execution, delivery and
recording of such mortgage, subject, nevertheless, to such conditions as may be
set forth in any such notice or declaration.

            32. CONDEMNATION

      If the whole or a substantial part of the Demised Premises or the Building
is condemned or acquired in lieu of condemnation by any governmental authority
for any public or quasi-public use or purpose, then the term of this Lease shall
cease and terminate as of the date when title vests in such governmental
authority. Tenant shall have no claim against Landlord or the condemning
authority for any portion of the amount of the condemnation award or settlement
that Tenant claims as its damages arising from such condemnation or acquisition,
or for the value of any unexpired term of the Lease. Tenant may make a separate
claim against the condemning authority for a separate award for the value of any
of Tenant's tangible personal property and trade fixtures, for moving and
relocation expenses and for such business damages and/or consequential damages
as may be allowed by law, provided the same shall not diminish the amount of
Landlord's award.

      If less than a substantial part of the Demised Premises is condemned or
acquired in lieu of condemnation by any governmental authority for any public or
quasi-public use or purpose, the rent shall be equitably adjusted on the date
when title vests in such governmental authority and the Lease shall otherwise
continue in full force and effect. For purposes of this section, a "substantial
part of the Demised Premises" shall be considered to have been taken if
twenty-five percent (25%) or more of the Demised Premises is condemned or
acquired in lieu of condemnation, or if less than twenty-five percent (25%) of
the Demised Premises is taken and the portion of the Demised Premises taken
renders the entire Demised Premises untenantable for the conduct of Tenant's
business.

      If twenty-five percent (25%) or more of the Building is condemned (whether
or not the Demised Premises shall have been condemned) and Landlord elects to
demolish the remainder of the Building, Landlord may elect to terminate this
Lease.

            33. RULES AND REGULATIONS

      Tenant, its agents and employees, shall abide by and observe the rules and
regulations attached hereto as Exhibit C and such other reasonable rules and
regulations as may be promulgated from time to time by Landlord for the
operation and maintenance of the Building, provided a copy thereof is sent to

                                      -31-
<PAGE>

Tenant. Nothing contained in this Lease shall be construed to impose upon
Landlord any duty or obligation to enforce such rules and regulations, or the
terms, conditions or covenants contained in any other lease as against any other
tenant, and Landlord shall not be liable to Tenant for violation of the same by
any other tenant, any other tenant's employees, agents, business invitees,
licensees, customers, clients, family members or guests. Landlord shall not
discriminate against Tenant in the enforcement of any rule or regulation. Tenant
shall also comply with any rules and regulations which may be promulgated by the
Council of Unit Owners.

            34. RIGHT OF LANDLORD TO CURE TENANT'S DEFAULT

      If Tenant defaults in the making of any payment to any third party, or
doing any act required to be made or done by Tenant relating to the Demised
Premises, then Landlord may, but shall not be required to, make such payment or
do such act, and the amount of the expense thereof, if made or done by Landlord,
with interest thereon at a rate equal to two (2) percentage points above the
then applicable Wall Street Journal Prime Rate (U.S. money center commercial
banks) or its successor (or in the absence thereof such similar rate reasonably
designated by Landlord), accruing from the date paid by Landlord, shall be paid
by Tenant to Landlord and shall constitute additional rent hereunder due and
payable by Tenant upon receipt of a written statement of costs from Landlord.
The making of such payment or the doing of such act by Landlord shall not
operate to cure Tenant's default, nor shall it prevent Landlord from the pursuit
of any remedy to which Landlord would otherwise be entitled.

            35. LATE CHARGES

      If Tenant shall fail to pay any installment of rent, including Monthly
Rent, additional rent or other charges to be paid by Tenant pursuant to this
Lease within five (5) days after the same becomes due and payable, Tenant shall
be obligated to pay a late charge equal to [***] percent ([***]%) of any rent or
other charge not so paid when due. In addition, any installments of Monthly
Rent, additional rent or other charges to be paid by Tenant pursuant to this
Lease which are not paid by Tenant within five (5) days after the same becomes
due and payable shall bear interest at a rate equal to [***] percentage points
above the then applicable Wall Street Journal Prime Rate (U.S. money center
commercial banks) or its successor (or in the absence thereof such similar rate
reasonably designated by Landlord), accruing from the date such installment or
payment became due and payable to the date of payment thereof by Tenant. Such
interest shall constitute additional rent due and payable to Landlord by Tenant
upon the date of payment of the delinquent payment referenced above.
Notwithstanding the foregoing provisions of this Section to the contrary,
Landlord shall waive such late charge and interest the first time during any
twelve (12) month period that Tenant fails to pay any Monthly Rent, additional
rent or other charges to be paid by Tenant pursuant to this Lease within five
(5) days after the same becomes due and payable, provided that such failure is
cured prior to the expiration of the notice and cure period set forth in Section
28 of this Lease.

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                                      -32-
<PAGE>

            36. NO PARTNERSHIP

      Nothing contained in this Lease shall be deemed or construed to create a
partnership or joint venture of or between Landlord and Tenant, or to create any
other relationship between the parties hereto other than that of landlord and
tenant.

            37. NO REPRESENTATIONS BY LANDLORD

      Neither Landlord nor any agent or employee of Landlord has made any
representations or promises with respect to the Demised Premises or the Building
except as herein expressly set forth, and no rights, privileges, easements or
licenses are acquired by Tenant except as herein expressly set forth. Tenant, by
taking possession of the Demised Premises, shall accept the same in the then "as
is" condition, except for latent defects and punch list items.

            38. BROKER AND AGENT

      Landlord and Tenant each represent and warrant one to another that, except
as hereinafter set forth, neither of them has employed any broker in carrying on
the negotiations, or had any dealings with any broker, relating to this Lease.
Tenant represents that it has employed CB Richard Ellis as its broker; Landlord
represents that it has also employed CB Richard Ellis as its broker, and further
agrees to pay the commissions accruing to such identified broker pursuant to
certain outside agreements). Landlord shall indemnify and hold Tenant harmless,
and Tenant shall indemnify and hold Landlord and its mortgagees 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 indemnitors.

      Landlord appoints and Tenant recognizes, until such time as Landlord
otherwise notifies Tenant in writing, CB Richard Ellis as Landlord's exclusive
agent (referred to in this Lease as "Agent") for the management and operations
of the Building and for the service of process, issuance and receipt of all
notices, and instituting and processing all legal actions on behalf of Landlord
under this Lease.

            39. WAIVER OF JURY TRIAL

      Landlord and Tenant hereby waive 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 Landlord and Tenant hereunder, Tenant's use
or occupancy of the Demised Premises, and/or any claim of injury or damage.

            40. ENFORCEMENT OF LEASE

      In the event either party is required or elects to take legal action to
enforce against the other party the performance of the other party's obligations
under this Lease, then the non-prevailing party shall immediately reimburse the
prevailing party for all costs and expenses including, without limitation,
reasonable attorneys' fees, incurred by the prevailing party in its successful
prosecution or defense of that legal action.

                                      -33-
<PAGE>

            41. NOTICES

      All notices or other communications hereunder shall be in writing and
shall be deemed duly given if delivered in person; by nationally recognized
commercial delivery service, next business day delivery, certified mail, return
receipt requested; or by registered mail, postage prepaid: (A) if to Landlord,
at c/o Jerome J. Parks Companies, 15 School Street, Annapolis, Maryland 21404,
Attn: Jerome J. Parks; and (B) if to Tenant, at 175 Admiral Cochrane Drive,
Suite 101, Annapolis, Maryland 21401 prior to the Rent Commencement Date and at
the Demised Premises thereafter. The party to receive notices and the place
notices are to be sent for either Landlord or Tenant may be changed by notice
given pursuant to the provisions of this section.

            42. ESTOPPEL CERTIFICATES

      Tenant agrees, at any time and from time to time, upon not less than five
(5) days prior written notice by Landlord, to execute, acknowledge and deliver
to Landlord a statement in writing (i) certifying that this Lease is unmodified
and in full force and effect (or, if there have been modifications, that the
Lease is in full force and effect as modified and stating the modifications),
(ii) stating the dates to which the rent and other charges hereunder have been
paid by Tenant, (iii) stating whether or not, to the best knowledge of Tenant,
Landlord is in default in the performance of any covenant, agreement or
condition contained in this Lease, and, if so, specifying each such default of
which Tenant may have knowledge, (iv) stating the address to which notices to
Tenant should be sent and, if Tenant is a corporation, the name and address of
its registered agent in the jurisdiction in which the Building is located, (v)
agreeing not to pay Monthly Rent more than thirty (30) days in advance or to
amend the Lease without the consent of any mortgage lender having a security
interest in the Building, and (vi) certifying such other matters related to this
Lease as Landlord may reasonably request Any such statement delivered pursuant
hereto may be relied upon by any owner of the Building, any prospective
purchaser of the Building, any mortgagee or prospective mortgagee of the
Building or of Landlord's interest, or any prospective assignee of any such
mortgage.

            43. HOLDING OVER

      In the event Tenant does not immediately surrender the Demised Premises on
the date of expiration of the term of this Lease or any extension period
thereof, Tenant shall, by virtue of this section of the Lease, become a tenant
by the month and hereby agrees to pay to Landlord a Monthly Rent equal to twice
the amount of (a) the Monthly Rent in effect during the last month of the term
of this Lease as it may have been extended, plus (b) the one-twelfth (l/12th)
payment made with Monthly Rent pursuant to the section of this Lease entitled,
"OPERATING EXPENSES, OPERATING COSTS AND REAL ESTATE TAXES." The month-to-month
tenancy shall commence with the first day next after the expiration of the term
of this Lease. Tenant as a month-to-month tenant shall continue to be subject to
all of the conditions and covenants of this Lease. Tenant shall give to Landlord
at least thirty (30) days written notice of any intention to quit the Demised
Premises. Tenant shall be entitled to thirty (30) days written notice to quit
the Demised Premises, except in the event of nonpayment of the modified Monthly
Rent in advance, in which event Tenant shall not be entitled to any notice to
quit, the usual thirty (30) days notice to quit being hereby expressly waived.

                                      -34-
<PAGE>

      Notwithstanding the foregoing, in the event Tenant holds over after the
expiration of the term of the Lease or extension period thereof, and Landlord
desires to regain possession of the Demised Premises promptly at the expiration
of the term of this Lease or extension period thereof, then at any time prior to
Landlord's acceptance of modified Monthly Rent from Tenant as a month-to-month
tenant hereunder, Landlord, at its option, may forthwith re-enter and take
possession of the Demised Premises without process, or by any legal process in
force in the jurisdiction in which the Building is located.

            44. RIGHTS RESERVED BY LANDLORD

      Landlord shall have the following rights, exercisable without notice to
Tenant, without liability for damage or injury to property, person or business
and without effecting an eviction, constructive or actual, or disturbance of
Tenant's use or possession of the Demised Premises or giving rise to any claim
for set-off, abatement of rent or otherwise:

      (a) To change the Building's name or street address;

      (b) To affix, maintain and remove any and all signs on the exterior and
interior of the Building;

      (c) To designate and approve, prior to installation, all window shades,
blinds, drapes, awnings, window ventilators, lighting and other similar
equipment to be installed by Tenant that may be visible from the exterior of the
Demised Premises or the Building;

      (d) To decorate and make repairs, alterations, additions and improvements,
whether structural or otherwise, in, to and about the Building and any part
thereof, and, during the continuance of any of such work, to temporarily close
doors, entry ways, and common areas in the Building and to interrupt or
temporarily suspend Building services and facilities, all without affecting
Tenant's obligations hereunder, so long as the Demised Premises remain
tenantable;

      (e) To grant to anyone the exclusive right to conduct any business or
render any service in the Building, provided Tenant is not thereby excluded from
uses expressly permitted herein;

      (f) To alter, relocate, reconfigure and reduce the common areas of the
Building, as long as the Demised Premises remain reasonably accessible; and

      (g) To alter, relocate, reconfigure, reduce and withdraw the common areas
located outside the Building, including parking and access roads, as long as the
Demised Premises remain reasonably accessible.

            45. COVENANTS OF LANDLORD

      Landlord covenants that it has legal title to the Building and has
(subject to Section 48 hereof) the right to make this Lease for the term of the
Lease aforesaid. Further Landlord covenants that if Tenant shall pay the rent
and shall perform all of the covenants, agreements and conditions specified in
this Lease to be performed by Tenant, Tenant shall, for the term of the Lease,
freely, peaceably and quietly occupy and enjoy the full possession of the

                                      -35-
<PAGE>

Demised Premises without molestation or hindrance by Landlord, its agents or
employees. Entry in the Demised Premises for inspections, repairs, alterations,
improvements and installations by Landlord, its agents, employees or contractors
pursuant to the section of this Lease entitled "INSPECTIONS, REPAIRS AND
INSTALLATIONS" and the exercise by Landlord of Landlord's rights reserved in the
section of this Lease entitled "RIGHTS RESERVED BY LANDLORD" shall not
constitute a breach by Landlord of this covenant, nor entitle Tenant to any
abatement or reduction of rent. In addition, planned activities of Landlord,
whether in the form of renovation, redecoration or rehabilitation of any area of
the Building, including the lobby, and any of the surrounding public spaces by
Landlord or in the form of organized activities, public or private, shall not be
deemed violation by Landlord of Landlord's covenant of quiet enjoyment
benefiting Tenant

            46. LIEN FOR RENT

      In consideration of the mutual benefits arising under this Lease, Tenant
hereby grants to Landlord a lien on all tangible personal property of Tenant now
or hereafter placed in or upon the Demised Premises (except such part of any
tangible personal property as may be exchanged, replaced, or sold from time to
time in the ordinary course of business operations or trade of Tenant), and such
tangible personal property shall be and remain subject to such lien of Landlord
for payment of all rent and other sums agreed to be paid by Tenant herein. Said
lien shall be in addition to and cumulative upon Landlord's liens provided by
law. Said lien shall be second in priority to the rights of any landlord of, or
the mortgagee of, any equipment or personal property under any equipment lease
or mortgage, the rights of the seller under any conditional sales contract, or
the rights of the lender under any leasehold mortgage consented to by Landlord.
Tenant shall reimburse to Landlord, as additional rent, all costs and expenses,
including reasonable attorney's fees (not to exceed $[***], which Landlord
incurs by reason of or in connection with any request for waiver of Landlord's
lien hereunder or enforcement of Landlord's rights hereunders such costs and
expenses to be due and payable within fifteen (15) days of receipt of a
statement of such costs and expenses from Landlord.

            47. NO OPTION

      The submission of an unsigned copy of this document to Tenant shall not
constitute an offer or option to lease the Demised Premises. This Lease shall
become effective and binding only upon execution and delivery by both Landlord
and Tenant.

            48. LENDER APPROVAL

      If Landlord does not receive consent of Landlord's current lenders), if
any, with respect to the terms and provisions of this Lease, Landlord may
terminate this Lease.

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Confidential Treatment filed separately with the SEC.

                                      -36-
<PAGE>

            49. 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.

            50. BENEFIT AND BURDEN

      The terms and provisions of this Lease shall be binding upon and shall
inure to the benefit of the parties hereto and each of their respective
representatives, successors and permitted assigns. Landlord may freely and fully
assign its interest hereunder. In the event of any sale or transfer of the
Building by operation of law or otherwise by the party named as Landlord
hereunder (or any subsequent successor, transferee or assignee), then said
party, whose interest is thus sold or transferred shall be and is completely
released and forever discharged from and with respect to all covenants,
obligations and liabilities as Landlord hereunder after the date of such sale or
transfer, but only to the extent such obligations are assumed by the transferee
(which assumption may be documented pursuant to a general assignment of leases).

      In the event Landlord shall be in default under this Lease, and if as a
consequence of such default, Tenant shall recover a money judgment against
Landlord, such judgment shall be satisfied only out of the proceeds of sale
received upon execution of such judgment against the right, title and interest
of Landlord in the Building as the same may then be constituted and encumbered
and Landlord shall not be liable for any deficiency. In no event shall Tenant
have the right to levy execution against any property of Landlord other than its
interests in the Building.

            51. RENTABLE AREA

      Any representations in this Lease regarding the rentable square footage
figures for the Building and the Demised Premises have been conclusively
accepted and agreed upon by Landlord and Tenant; no remeasurement of the
Building or the Demised Premises shall result in any modification of this Lease
or adjustment of any rent payable hereunder. The Building and the Demised
Premises have been measured in accordance with the Standard Method of Measuring
Floor Areas in Office Buildings (ANSI/BOMA Z-65.1 - 1996).

            52. GOVERNING LAW

      This Lease and the rights and obligations of Landlord and Tenant hereunder
shall be governed by the laws of the jurisdiction in which the Building is
located. The parties acknowledge and agree that no suit for breach of lease may
be filed by either party which claim accrued more than three (3) years prior to
the date the suit is filed.

            53. BANKRUPTCY

      If Tenant or any guarantor of this Lease becomes bankrupt or insolvent, or
files any debtor proceedings, or if Tenant or any guarantor 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 Tenant's or any

                                      -37-
<PAGE>

such guarantor's property, or if Tenant or any such guarantor makes an
assignment for the benefit of creditors, or petitions for or enters into an
arrangement, then this Lease shall terminate and Landlord, 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 Demised Premises and such
property may be removed and stored in a public warehouse or elsewhere at the
cost of, and for the account of Tenant, 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 which may be occasioned thereby.

            54. SAVINGS CLAUSE

      If any provision of this Lease or the application thereof to any person or
circumstance is to any extent held invalid, then the remainder of this Lease or
the 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 the Lease shall be valid and enforced to the fullest extent permitted by law.

            55. AUTHORITY OF TENANT

      If Tenant executes this Lease as a corporation, limited partnership,
limited liability company or any other type of entity, Tenant does hereby
represent and warrant that Tenant is a duly organized and validly existing
corporation, limited partnership, limited liability company or other type of
entity, that Tenant is hi good standing and qualified to do business in the
jurisdiction where the Building is located, that Tenant has full right, power
and authority to enter into this Lease, and that each person signing on behalf
of Tenant is fully empowered and authorized to do so. Upon Landlord's request,
Tenant shall provide to Landlord evidence reasonably satisfactory to Landlord
confirming the foregoing representations and warranties. Further, Tenant agrees
to promptly execute all necessary and reasonable applications or documents
confirming Tenant's registration and qualification as requested by Landlord or
its representatives, or required by the jurisdiction in which the Building is
located to permit the issuance of necessary permits and certificates for
Tenant's use and occupancy of the Demised Premises. Any delay or failure by
Tenant in submitting such evidence, application or document so executed shall
not serve to delay the Commencement Date or delay or waive Tenant's obligations
to pay rent hereunder.

            56. JOINT AND SEVERAL LIABILITY

      If two or more individuals, corporations, partnerships or other business
associations (or any combination of two or more thereof) shall sign this Lease
as Tenant, the liability of each of them shall be joint and several. In like
manner, if Tenant is a partnership or other business association 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
partnership or association at any time from the date of execution of this Lease
to and including the expiration or earlier termination of the term of this
Lease, shall be joint and several.

                                      -38-
<PAGE>

            57. FINANCIAL STATEMENTS

      Upon Landlord's written request Tenant shall (except when Tenant is
subject to the reporting requirements of Sections 12 or 15(d) of the Securities
Exchange Act of 1934, as amended) promptly furnish Landlord from time to time
with its most recent annual financial statements, and written evidence of
ownership and ownership interests if Tenant is other than a sole proprietorship.

            58. BUSINESS DAY/WORKING DAY

      The terms "business day" and "working day" are terms describing each
calendar day Monday through Friday except any holiday identified specifically or
generically in the section of this Lease entitled, "SERVICES AND UTILITIES"
falling on one of such calendar days.

            59. CONFIDENTIALITY

      Tenant acknowledges and agrees that the terms of this Lease are
confidential and constitute propriety information of Landlord. Disclosure of the
terms hereof could adversely affect the ability of Landlord to negotiate other
leases with respect to the Building and may impair Landlord's relationship with
other tenants of the Building. Tenant agrees that it and its partners, officers,
directors, employees, brokers, and attorneys, if any, shall not make any public
disclosure of the terms and conditions of this Lease other than in Tenant's
ordinary course of business to its lenders, accountants, and other consultants
without the prior written consent of Landlord. Nothing herein shall prevent any
disclosure required by applicable law or court order.

            60. RENT RELATED REQUIREMENTS

      (a) No rent or other payment in respect of the Demised Premises shall be
based in any way upon net income or profits from the Demised Premises. Tenant
may not enter into or permit any sublease or license or other agreement in
connection with the Demised Premises which provides for a rental or other
payment based on net income or profit.

      (b) If Landlord is advised by its counsel at any time that any part of the
payments by Tenant to Landlord under this Lease may be characterized as
unrelated business income under the United States Internal Revenue Code and its
regulations, then Tenant shall enter into any amendment proposed by Landlord to
avoid such income, so long as the amendment does not require Tenant to make more
payments or accept fewer services from Landlord, than this Lease provides.

            61. ENVIRONMENTAL REQUIREMENTS

      Tenant, its agents, employees, sublessees, contractors, invitees and
guests shall not use any portion or all of the Demised Premises or the Building
or land or other appurtenances thereto for the generation, treatment, storage or
disposal of "hazardous materials," "hazardous waste," "hazardous substances" or
"oil" (collectively "Materials") as such terms are defined under the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., as amended, the Resource Conservation and Recovery Act of
1976, 42 U.S.C. 6901 et seq., as amended, and any and all other "environmental
statutes" which regulate the use of hazardous and/or dangerous substances, and

                                      -39-
<PAGE>

the regulations promulgated thereunder and any and all state and local laws,
rules and regulations, without the express prior written consent of Landlord.
Tenant shall clean up and remove or cause to be cleaned up and removed from,
under or about the Demised Premises, the Building or the land or other
appurtenances thereto any Materials it or its agents or employees have or have
caused to be introduced to the Demised Premises or the Building, at its sole
cost and expense, and shall ensure that such removal is conducted in compliance
with all applicable laws, rules and regulations. Notwithstanding the foregoing,
however, Tenant may use Materials in the ordinary course of business and only as
customarily used in office environments and in types and quantities customarily
used in office environments, provided that such use is in accordance with all
applicable statutes, laws, rules and regulations, and any manufacturer
instructions; and provided further that Tenant may not discharge any Materials
in any public sewer or any drain and/or drainpipe leading or connected thereto.
Tenant shall promptly give written notice to Landlord of any communication
received by Tenant from any governmental authority or other person or entity
concerning any complaint, investigation or inquiry regarding any use or
discharge (or alleged use or alleged discharge) by Tenant of any Materials.
Landlord shall have the right (but not the obligation) to conduct such
investigations or tests (or both) as Landlord shall deem necessary with respect
to any such complaint, investigation or inquiry, and Tenant, at its expense,
shall take such action (or refrain from taking such action) as Landlord may
request in connection with such investigations and tests by Landlord. Tenant
shall indemnify, defend (with counsel selected by Landlord), and hold Landlord
and its mortgagees harmless from and against any such improper use or discharge
(or both) by Tenant, including any costs of all necessary clean-up activities
occasioned by Tenant's actions, whether during the term or after termination of
this Lease. This Section shall survive the expiration or earlier termination of
this Lease.

            62. ENTIRE AGREEMENT

      This Lease, together with Exhibits A, A-l, B, C, D, D-1, E, F and G
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 Lease 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 hi any manner other
than by an agreement in writing duly signed by all parties hereto.

                                      -40-
<PAGE>

      IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be
signed as of the date first written above, in their names, under seal, by their
duly authorized representatives and delivered as their act and deed, intending
to be legally bound by its terms and provisions.

                                    LANDLORD:

                                    PARK PLACE TRUST,
                                    a Maryland Business Trust

                                    By: JBJ/Carlyle Park Place LP, a Delaware
                                        limited partnership, as Trustee

                                    By: JBJ Management Company, Inc., a

                                        Maryland limited liability company, its
                                        Managing General Partner

                                    By: /s/ Jerome J. Parks              (SEAL)
                                        ---------------------------------
                                        Name: /s/ Jerome J. Parks
                                        Title: VP

                                    TENANT:

                                    PHARMATHENE, INC.,
                                    a Delaware corporation

                                    By: /s/ David P. Wright              (SEAL)
                                        ---------------------------------
                                        Name:
                                        Title:

                                      -41-

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