Common use of DEFINED CONTRIBUTION PLAN - 401(K) Clause in Contracts

DEFINED CONTRIBUTION PLAN - 401(K). The Company has a defined contribution plan (the Plan) under Internal Revenue Code Section 401(k) which became effective on January 1, 1995. All full-time employees who have completed six months of service and are over age 21 are eligible for participation in the Plan. Participants may elect to have up to 15 percent of compensation contributed to the Plan. Under the Plan, the Company's contributions are discretionary. During the years ended December 31, 1996 and 1995, no discretionary contributions were made. EXHIBIT B UNAUDITED GENVEC, INC. BALANCE SHEET AS OF APRIL 30,1997 Current Period Current Period Actual Budget Variance ----------------------------------------------------------- ASSETS Current Assets: Cash and cash equivalents 3,087,307 2,356,978 730,329 Short term investments 1,296,606 2,579,124 (1,282,518) Accounts receivable 51,162 103,712 (52,550) Inventory - - - Prepaids and other current assets 378,819 164,928 213,891 ----------------------------------------------------------- Total current assets 4,813,894 5,204,742 (390,848) Property, plant and equipment: Building and improvements 176,311 176,311 - Research equipment 1,569,575 1,496,000 73,575 Office equipment 85,260 70,091 15,169 Furniture and fixtures 62,234 58,256 3,978 Production equipment - - - Assets under financing agreements - - - Construction In Process - - - ----------------------------------------------------------- Gross property, plant and equipment 1,893,380 1,800,658 92,722 Accumulated depreciation (1,361,735) (1,327,560) (34,175) Net property, plant and equipment 531,645 473,098 58,547 Other assets: Investments - - - Other long term assets 37,950 37,950 - Intangible assets - - - ----------------------------------------------------------- Total other assets 37,950 37,950 - Total assets 5,383,489 5,715,790 (332,301) =========================================================== GENVEC, INC. UNAUDITED BALANCE SHEET AS OF APRIL 30,1997 Current Period Current Period Actual Budget Variance ------------------------------------------ LIABILITIES AND EQUITY Current Liabilities: Accounts payable 234,797 264,011 (29,214) Payroll liabilities 53,742 54,593 (851) Accrued expenses 311,379 883,226 (571,847) Unearned revenue - - - Current portion of notes payable - - - Current portion of capital leases 339,344 339,344 - Deferred taxes - - - Other current liabilities - - - ------------------------------------------ Total current liabilities 939,262 1,541,174 (601,912) Long Term Liabilities: Long term notes payable - - - Long term capital lease obligations 92,743 92,743 - Unearned revenue - - - Deferred taxes - - - Other long term liabilities - - - ------------------------------------------ Total liabilities 1,032,005 1,633,917 (601,912) ------------------------------------------ Stockholders' equity: Preferred stock 342,907 342,907 Common stock 58,715 58,260 Additional paid in capital 34,099,703 34,095,613 Treasury stock (27,907) (27,907) Unrealized gain on investments - - Retained earnings (deficit) (27,604,590) (27,604,590) Net profit / (loss) (2,517,344) (2,782,410) ------------------------------------------ Total stockholders' equity 4,351,484 4,081,873 269,611 ------------------------------------------ Total liabilities and equity 5,383,489 5,715,790 (332,301) ========================================= GENVEC, INC. UNAUDITED COMBINED STATEMENT OF OPERATIONS FOR THE MONTH ENDED APRIL 30, 1997 Current Current Period Period Year to Date Year to Date Actual Budget Variance Actual Budget Variance ------------------------------------------------------------------------- Revenues: Product sales -- -- -- -- -- -- Other sales -- -- -- -- -- -- Contract research revenues -- -- -- -- -- -- Royalties, licenses and other -- -- -- -- -- -- revenues ------------------------------------------------------------------------- Total revenues -- -- -- -- -- -- Cost of sale: Cost of products sold -- -- -- -- -- -- Costs of other sales -- -- -- -- -- -- Cost of contract research -- -- -- -- -- -- ------------------------------------------------------------------------- Total cost of sales -- -- -- -- -- -- Gross margin -- -- -- -- -- -- ------------------------------------------------------------------------- Operating expenses: General and administrative 167,710 176,500 8,790 718,170 753,376 35,206 Research and development 465,577 468,924 3,347 1,852,739 2,012,196 159,457 Clinical and regulatory 16,217 36,714 20,497 47,647 98,505 50,858 Product development -- -- -- -- -- -- Manufacturing -- -- -- -- -- -- ------------------------------------------------------------------------- Total operating expenses 649,504 682,138 32,634 2,618,556 2,864,077 245,521 ------------------------------------------------------------------------- Operating income (loss) (649,504) (682,138) 32,634 (2,618,556) (2,864,077) 245,521 Other income and expense: Interest income 30,372 23,750 6,622 117,853 95,000 22,853 Interest expense 3,740 3,333 (407) 16,641 13,333 (3,308) Gain (loss) disposal of assets -- -- -- -- -- -- Other income (expense) -- -- -- -- -- -- ------------------------------------------------------------------------- Net other income and expense 26,632 20,417 6,215 101,212 81,667 19,545 Income (loss) before taxes (622,872) (661,721) 38,849 (2,517,344) (2,782,410) 265,066 Provision for income taxes -- -- -- -- -- -- ------------------------------------------------------------------------- Net income (loss) (622,872) (661,721) 38,849 (2,517,344) (2,782,410) 265,066 ========================================================================= GENVEC, INC. UNAUDITED COMBINED STATEMENT OF OPERATIONS FOR THE MONTH ENDED APRIL 30, 1997 Current Current Year To Year To Period Period Date Date Actual Budget Variance Actual Budget Variance --------------------------------------------------------------------------------------------------- Cash flows used in operating activities: Net loss (622,872) (661,721) 38,849 (2,517,344) (2,782,410) 265,066 Adjustments to reconcile net loss used in operating activities: Depreciation expense 42,259 33,333 8,926 167,507 133,333 34,174 Decrease (increase) in other current assets (205,424) - (205,424) (161,341) - (161,341) Decrease (increase) in other assets - - - - - - Increase (decrease) in accounts payable and accrued expenses (104,546) - (104,546) (601,911) - (601,911) --------------------------------------------------------------------------------------------------- Net cash used in operating activities (890,583) (628,388) (262,195) (3,113,089) (2,649,077) (464,012) --------------------------------------------------------------------------------------------------- Cash flows provided by (used for) Investing activities: Maturity (purchase) of Short Term investments 977,327 - 977,327 1,282,518 - 1,282,518 Purchase of property and equipment (28,682) - (28,682) (92,722) - (92,722) Net cash used for investing activities 948,645 - 948,645 1,189,796 - 1,189,796 --------------------------------------------------------------------------------------------------- Cash flows provided by (used in) financing activities: Proceeds from issuance of stock 927 - 927 4,545 - 4,545 Payments under capital lease obligations (35,464) (35,464) - (140,171) (140,171) - --------------------------------------------------------------------------------------------------- Net cash used in financing activities (34,537) (35,464) 927 (135,626) (140,171) 4,545 --------------------------------------------------------------------------------------------------- Decrease in cash and cash equivalents 23,525 (668,852) 687,377 (2,058,919) (2,789,248) 730,329 Cash and cash equivalents, beginning of period 3,063,782 3,020,830 42,952 5,146,226 5,146,226 - Cash and cash equivalents, end of period Liabilities in excess of $250,000 Sponsored Research Agreement by and between Cornell University for its medical college, and the Company, dated as of May 18, 1993, and related Side Letter Agreement by Cornell University, dated May 18, 1993. Exclusive License Agreement by and between ARCH Development Corporation, Xxxx-Xxxxxx Cancer Institute and the Company, effective May 26, 1993, amended January 1, 1994 (currently under renegotiation).

DEFINED CONTRIBUTION PLAN - 401(K). The Company has a defined contribution plan (the Plan) under Internal Revenue Code Section 401(k) which became effective on January 1, 1995. All full-time employees who have completed six months of service and are over age 21 are eligible for participation in the Plan. Participants may elect to have up to 15 percent of compensation contributed to the Plan. Under the Plan, the Company's contributions are discretionary. During the years ended December 31, 1996 and 1995, no discretionary contributions were made. EXHIBIT B UNAUDITED GENVEC, INC. BALANCE SHEET AS OF APRIL 30,1997 Current Period Current Period Actual Budget Variance ----------------------------------------------------------- ASSETS Current Assets: Cash and cash equivalents 3,087,307 2,356,978 730,329 Short term investments 1,296,606 2,579,124 (1,282,518) Accounts receivable 51,162 103,712 (52,550) Inventory - - - Prepaids and other current assets 378,819 164,928 213,891 ----------------------------------------------------------- Total current assets 4,813,894 5,204,742 (390,848) Property, plant and equipment: Building and improvements 176,311 176,311 - Research equipment 1,569,575 1,496,000 73,575 Office equipment 85,260 70,091 15,169 Furniture and fixtures 62,234 58,256 3,978 Production equipment - - - Assets under financing agreements - - - Construction In Process - - - ----------------------------------------------------------- Gross property, plant and equipment 1,893,380 1,800,658 92,722 Accumulated depreciation (1,361,735) (1,327,560) (34,175) Net property, plant and equipment 531,645 473,098 58,547 Other assets: Investments - - - Other long term assets 37,950 37,950 - Intangible assets - - - ----------------------------------------------------------- Total other assets 37,950 37,950 - Total assets 5,383,489 5,715,790 (332,301) =========================================================== GENVEC, INC. UNAUDITED BALANCE SHEET AS OF APRIL 30,1997 Current Period Current Period Actual Budget Variance ------------------------------------------ LIABILITIES AND EQUITY Current Liabilities: Accounts payable 234,797 264,011 (29,214) Payroll liabilities 53,742 54,593 (851) Accrued expenses 311,379 883,226 (571,847) Unearned revenue - - - Current portion of notes payable - - - Current portion of capital leases 339,344 339,344 - Deferred taxes - - - Other current liabilities - - - ------------------------------------------ Total current liabilities 939,262 1,541,174 (601,912) Long Term Liabilities: Long term notes payable - - - Long term capital lease obligations 92,743 92,743 - Unearned revenue - - - Deferred taxes - - - Other long term liabilities - - - ------------------------------------------ Total liabilities 1,032,005 1,633,917 (601,912) ------------------------------------------ Stockholders' equity: Preferred stock 342,907 342,907 Common stock 58,715 58,260 Additional paid in capital 34,099,703 34,095,613 Treasury stock (27,907) (27,907) Unrealized gain on investments - - Retained earnings (deficit) (27,604,590) (27,604,590) Net profit / (loss) (2,517,344) (2,782,410) ------------------------------------------ Total stockholders' equity 4,351,484 4,081,873 269,611 ------------------------------------------ Total liabilities and equity 5,383,489 5,715,790 (332,301) ========================================== GENVEC, INC. UNAUDITED COMBINED STATEMENT OF OPERATIONS FOR THE MONTH ENDED APRIL 30, 1997 Current Current Period Period Year to Date Year to Date Actual Budget Variance Actual Budget Variance ------------------------------------------------------------------------- Revenues: Product sales -- -- -- -- -- -- Other sales -- -- -- -- -- -- Contract research revenues -- -- -- -- -- -- Royalties, licenses and other -- -- -- -- -- -- revenues ------------------------------------------------------------------------- Total revenues -- -- -- -- -- -- Cost of sale: Cost of products sold -- -- -- -- -- -- Costs of other sales -- -- -- -- -- -- Cost of contract research -- -- -- -- -- -- ------------------------------------------------------------------------- Total cost of sales -- -- -- -- -- -- Gross margin -- -- -- -- -- -- ------------------------------------------------------------------------- Operating expenses: General and administrative 167,710 176,500 8,790 718,170 753,376 35,206 Research and development 465,577 468,924 3,347 1,852,739 2,012,196 159,457 Clinical and regulatory 16,217 36,714 20,497 47,647 98,505 50,858 Product development -- -- -- -- -- -- Manufacturing -- -- -- -- -- -- ------------------------------------------------------------------------- Total operating expenses 649,504 682,138 32,634 2,618,556 2,864,077 245,521 ------------------------------------------------------------------------- Operating income (loss) (649,504) (682,138) 32,634 (2,618,556) (2,864,077) 245,521 Other income and expense: Interest income 30,372 23,750 6,622 117,853 95,000 22,853 Interest expense 3,740 3,333 (407) 16,641 13,333 (3,308) Gain (loss) disposal of assets -- -- -- -- -- -- Other income (expense) -- -- -- -- -- -- ------------------------------------------------------------------------- Net other income and expense 26,632 20,417 6,215 101,212 81,667 19,545 Income (loss) before taxes (622,872) (661,721) 38,849 (2,517,344) (2,782,410) 265,066 Provision for income taxes -- -- -- -- -- -- ------------------------------------------------------------------------- Net income (loss) (622,872) (661,721) 38,849 (2,517,344) (2,782,410) 265,066 ========================================================================= GENVEC, INC. UNAUDITED COMBINED STATEMENT OF OPERATIONS FOR THE MONTH ENDED APRIL 30, 1997 Current Current Year To Year To Period Period Date Date Actual Budget Variance Actual Budget Variance --------------------------------------------------------------------------------------------------- Cash flows used in operating activities: Net loss (622,872) (661,721) 38,849 (2,517,344) (2,782,410) 265,066 Adjustments to reconcile net loss used in operating activities: Depreciation expense 42,259 33,333 8,926 167,507 133,333 34,174 Decrease (increase) in other current assets (205,424) - (205,424) (161,341) - (161,341) Decrease (increase) in other assets - - - - - - Increase (decrease) in accounts payable and accrued expenses (104,546) - (104,546) (601,911) - (601,911) --------------------------------------------------------------------------------------------------- Net cash used in operating activities (890,583) (628,388) (262,195) (3,113,089) (2,649,077) (464,012) --------------------------------------------------------------------------------------------------- Cash flows provided by (used for) Investing activities: Maturity (purchase) of Short Term investments 977,327 - 977,327 1,282,518 - 1,282,518 Purchase of property and equipment (28,682) - (28,682) (92,722) - (92,722) Net cash used for investing activities 948,645 - 948,645 1,189,796 - 1,189,796 --------------------------------------------------------------------------------------------------- Cash flows provided by (used in) financing activities: Proceeds from issuance of stock 927 - 927 4,545 - 4,545 Payments under capital lease obligations (35,464) (35,464) - (140,171) (140,171) - --------------------------------------------------------------------------------------------------- Net cash used in financing activities (34,537) (35,464) 927 (135,626) (140,171) 4,545 --------------------------------------------------------------------------------------------------- Decrease in cash and cash equivalents 23,525 (668,852) 687,377 (2,058,919) (2,789,248) 730,329 Cash and cash equivalents, beginning of period 3,063,782 3,020,830 42,952 5,146,226 5,146,226 - Cash and cash equivalents, end of period Liabilities in excess of $250,000 Sponsored Research Agreement by and between Cornell University for its medical college, and the Company, dated as of May 18, 1993, and related Side Letter Agreement by Cornell University, dated May 18, 1993. Exclusive License Agreement by and between ARCH Development Corporation, Xxxx-Xxxxxx Cancer Institute and the Company, effective May 26, 1993, amended January 1, 1994 (currently under renegotiation). Exclusive License Agreement by and between ARCH Development Corporation and the Company, effective May 26, 1993 (currently under renegotiation).