EMPLOYMENT AGREEMENT
 
This EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into this 14th
day of August 2009 by and between Charles A. Reinhart III (the “Executive”) and
PharmAthene, Inc., a Delaware corporation (the “Company”).
 
W I T N E S S E T H:
 
WHEREAS, the Company desires to employ the Executive and the Executive desires
to accept employment with the Company subject to the terms and conditions herein
agreed upon:
 
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and obligations hereinafter set forth, the parties hereto hereby agree as
follows:
 
1. 
Employment; Term.  The Company hereby agrees to employ the Executive and the
Executive hereby accepts employment with the Company upon the terms and
conditions hereinafter set forth for the period commencing on August 14, 2009
(the “Effective Date”) and ending on the first anniversary of such date.  The
term of this Agreement shall be automatically extended for an additional year on
each anniversary of the date hereof unless written notice of non-extension is
provided by either party to the other party at least 90 days prior to such
anniversary.  The period of the Executive’s employment under this Agreement, as
it may be terminated or extended from time to time as provided herein is
referred to as the “Employment Period.”

 

 
a. 
Position and Duties Generally.  The Executive shall be employed by the Company
in the position of Senior Vice President, Chief Financial Officer and shall
faithfully render such executive, managerial, administrative and other services
as are customarily associated with and incident to such position and as the
Company may from time to time reasonably require consistent with such
position.  The Executive shall report to the President and CEO, David P. Wright.

 

 
b. 
Other Positions.  The Executive shall hold such other positions and executive
offices with the Company and/or of any of the Company’s subsidiaries or
affiliates as may from time to time be authorized by the Board.  The Executive
shall not be entitled to any compensation other than the compensation provided
for herein for serving during the Employment Period in any other office or
position of the Company or any of its subsidiaries or affiliates, unless the
Compensation Committee specifically approves such additional compensation.

 

 
c. 
Devotion to Employment.  Except for vacation time taken in accordance with the
Company’s vacation policy in effect from time to time and in accordance with the
terms of this Agreement and for absences due to temporary illness, the Executive
shall be a full-time employee of the Company and shall devote full time,
attention and efforts during the Employment Period to the business of the
Company and the duties required of him in his position.  During the Employment
Period, the Executive shall not be engaged in any other business activity which,
in the reasonable judgment of the Board or its designee, conflicts with the
duties of the Executive hereunder, whether or not such activity is pursued for
gain, profit or other pecuniary advantage.

 
 
 

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3. 
Compensation; Reimbursement.

 

 
a. 
Base Salary.  For the Executive’s services, the Company shall pay to the
Executive an annual base salary of not less than $330,000.00 per annum, payable
in equal periodic installments according to the Company’s customary payroll
practices, but no less frequently than monthly.  The Executive’s base salary
shall be subject to review annually by the Compensation Committee and shall be
subject to increase at the option and sole discretion of the Compensation
Committee.

 

 
b. 
Bonus.  The Executive shall be eligible to receive at the sole discretion of the
Compensation Committee, an annual cash bonus of up to an additional 30% of the
Executive’s base salary.  In addition, the Executive may be eligible for
additional bonuses at the option and sole discretion of the Compensation
Committee based upon based upon the achievement of certain pre-determined
performance milestones.

 

 
c. 
Benefits Generally.

 
i.  
In addition to the salary and cash bonus described above, the Executive shall be
entitled during the Employment Period to participate in such employee benefit
plans and programs of the Company, and shall be entitled to such other fringe
benefits, as are from time to time made available by the Company generally to
employees of the level, position, tenure, salary, age, health and other
qualifications of the Executive including, without limitation, medical, dental
and vision insurance coverage for the Executive and the Executive’s dependents,
disability, death benefit and life insurance and pension plans.

 
ii.  
Without limiting the generality of the foregoing, the Executive shall be
eligible for such awards, if any, including stock and stock options under the
Company’s 2007 Long-Term Incentive Plan or such other plan as the Company may
from time to time put into effect as shall be granted to the Executive by the
Compensation Committee or other appropriate designee of the Board acting in its
sole discretion.

 
 
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In addition, on August 10, 2009, the Company granted to Executive pursuant to
the Company’s 2007 Long-Term Incentive Plan (“2007 Plan”) a non-qualified stock
option to purchase 200,000 shares of common stock, par value $0.0001 per share,
of the Company at an exercise price per share equal to $ 2.78, the Fair Market
Value (as defined in. the 2007 Plan), with a term of ten (10) years from the
‘Date of Grant (as defined in the 2007 Plan) and the following vesting
schedule:  25% on the first anniversary of the Date of Grant and 25% on each of
the next three anniversaries.
 
iii.  
First-Year Temporary Living Expense Bonus.  The Company agrees to pay the
Executive a temporary living expense bonus in the net (after tax) amount of
Forty Thousand Dollars ($40,000), to be paid on a semi-monthly basis in
accordance with the Company’s regular payroll practices over a period of twelve
(12) months (“Temporary Living Expense Bonus”).  The gross amount of the
Temporary Living Expense Bonus will be treated as taxable wages subject to
withholding of all applicable taxes.

 
Relocation Expenses.  The Executive shall relocate to Maryland within a
reasonable period of time, as agreed to by the Executive and the Company.  The
Company shall reimburse the Executive for customary expenses incurred in
relocating to Maryland, including but not limited to (a) packing and
transportation fees for relocating household possessions, (b) utility costs for
service hookups and related service charges, fees for appliance and utilities
installations, and re-registration of personal vehicles and driver’s licenses,
and (c) sales commissions on the Executive’s existing primary residence in New
Jersey.  Appropriate expense records must be obtained and submitted by Executive
to the Human Resources Department and accounts payable prior to
reimbursement.  No amounts will be paid to reimburse Executive for “points” or
other amounts paid to lock-in or reduce the interest rate (or secure other
favorable terms) on any mortgage loan associated with the purchase of a primary
residence in Maryland.
 
iv.  
The Executive acknowledges and agrees that the Company does not guarantee the
adoption or continuance of any particular employee benefit plan and
participation by the Executive in any such plan or program shall be subject to
the rules and regulations applicable thereto.

 

 
d. 
Vacation.  The Executive shall be entitled to 20 days of vacation in each
calendar year.

 

 
e. 
Expenses.  The Company shall reimburse the Executive in accordance with the
practices in effect from time to time for other officers or staff personnel of
the Company for all reasonable and necessary business and travel expenses and
other disbursements incurred by the Executive for or on behalf of the Company in
the performance of the Executive’s duties hereunder, upon presentation by the
Executive to the Company of appropriate supporting documentation.

 
 
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f. 
Perquisites.  The Executive shall be entitled to those perquisites as the
Company shall make available from time to time to other executive officers of
the Company, which shall include, without limitation, the costs for Executive’s
use of a cellular telephone and personal digital assistant to the extent such
equipment is used for business purposes.

 
4. 
Death; Disability.  In the event that the Executive dies or is incapacitated or
disabled by accident, sickness or otherwise, so as to render the Executive
mentally or physically incapable of performing the services required to be
performed by the Executive under this Agreement for a period that would entitle
the Executive to qualify for long-term disability benefits under the Company’s
then-current long-term disability insurance program or, in the absence of such a
program, for a period of 120 consecutive days or longer (such condition being
herein referred to as a “Disability”) then (i) in the case of the Executive’s
death, the Executive’s employment shall be deemed to terminate on the date of
the Executive’s death and (ii) in the case of a Disability, the Company, at its
option, may terminate the employment of the Executive under this Agreement
immediately upon giving the Executive notice to that effect. The determination
to terminate the Executive in the event of a Disability shall be made by the
Board or the Board’s designee.  In the case of a Disability, until the Company
shall have terminated the Executive’s employment hereunder in accordance with
the foregoing, the Executive shall be entitled to receive compensation provided
for herein notwithstanding any such physical or mental disability.

 
5. 
Termination For Cause.  The Company may terminate the employment of the
Executive hereunder at any time during the Employment Period for “cause” (such
termination being herein referred to as a “Termination for Cause”) by giving the
Executive notice of such termination, which termination shall be effective on
the date of such notice or such later date as may be specified by the
Company.  For purposes of this Agreement, “Cause” means (i) the Executive’s
willful and substantial misconduct that is materially injurious to the Company
and is either repeated after written notice from the Company specifying the
misconduct or is continuing and not corrected within 20 days after written
notice from the Company specifying the misconduct, (ii) the Executive’s repeated
neglect of duties or failure to act which can reasonably be expected to affect
materially and adversely the business or affairs of the Company after written
notice from the Company specifying the neglect or failure to act, (iii) the
Executive’s material breach of any of the agreements contained in Sections 11,
12, 13 or 14 hereof or of any of the Company’s policies, (iv) the commission by
the Executive of any material fraudulent act with respect to the business and
affairs of the Company, (v) the Executive’s conviction of (or plea of nolo
contendere to) a crime constituting a felony, (vi) demonstrable gross
negligence, or (vii) habitual insobriety or use of illegal drugs by the
Executive while performing the Executive’s duties under this Agreement which
adversely affects the Executives performance of the Executive’s duties under
this Agreement.

 
 
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6. 
Termination Without Cause.  The Company may terminate the employment of the
Executive hereunder at any time without “cause” or fail to extend this Agreement
pursuant to the terms hereof (such termination being herein referred to as
“Termination Without Cause”) by giving the Executive notice of such termination,
upon the giving of which such termination shall take effect not later than 30
days from the date such notice is given.

 
7. 
Voluntary Termination by Executive.  Any termination of the employment of the
Executive by the Executive otherwise than as a result of death or Disability or
for Good Reason (as defined below) shall be herein referred to as “Voluntary
Termination”.  A Voluntary Termination will be deemed to be effective
immediately upon such termination.

 
8. 
Termination by Executive for Good Reason.  Any termination of the employment of
the Executive by the Executive for Good Reason which shall be deemed to be
equivalent to a Termination without Cause.  For purposes of this Agreement “Good
Reason” means (i) any material breach by the Company of any of its obligations
under this Agreement, (ii) any material reduction in the Executive’s duties,
authority or responsibilities without the Executive’s consent, (iii) any
assignment to the Executive of duties or responsibilities materially
inconsistent with the Executive’s position and duties contained in this
Agreement without the Executive’s consent, (iv) a relocation of the Company’s
principal executive offices or the Company determination to require the
Executive to be based anywhere other than within 25 miles of the location at
which the Executive on the date hereof performs the Executive’s duties; (v) the
taking of any action by the Company which would deprive the Executive of any
material benefit plan (including, without limitation, any medical, dental,
disability or life insurance); or (vi) the failure by the Company to obtain the
specific assumption of this Agreement by any successor or assignee of the
Company or any person acquiring substantially all of the Company’s assets;
provided, however, that the Executive may not terminate the Employment Period
for Good Reason unless the Executive first provides the Company with written
notice specifying the Good Reason and providing the Company with 20 days in
which to remedy the stated reason.

 

 
 
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9. 
Effect of Termination of Employment.

 

 
a. 
Voluntary Termination; Termination For Cause.  Upon the termination of the
Executive’s employment as a result of the Executive’s Voluntary Termination or a
Termination For Cause, the Executive shall not have any further rights or claims
against the Company under this Agreement except the right to receive (i) the
unpaid portion of the base salary provided for in Section 3(a) hereof, computed
on a pro rata basis to the date of termination, (ii) payment of the Executive’s
accrued but unpaid amounts and extension of applicable benefits in accordance
with the terms of any incentive compensation, retirement, employee welfare or
other employee benefit plans or programs of the Company in which the Executive
is then participating in accordance with the terms of such plans or programs,
and (iii) reimbursement for any expenses for which the Executive shall not have
theretofore been reimbursed as provided in Section 3 hereof.

 

 
b. 
Termination Without Cause; Termination for Good Reason.  Upon the termination of
the Executive’s employment as a result of a Termination Without Cause or for
Good Reason, the Executive shall not have any further rights or claims against
the Company under this Agreement except the right to receive (i) the payments
and other rights provided for in Section 9(a) hereof and (ii) severance payments
in the form of a continuation of the Executive’s base salary as in effect
immediately prior to such termination for a period of six (6) months following
the effective date of such termination. To the extent that severance payments
shall be payable under this Agreement such payments shall be in consideration
for and only after the Executive executes a General Release containing terms
reasonably satisfactory to the Company.

 

 
c. 
Death and Disability.  Upon the termination of the Executive’s employment as a
result of death or Disability, neither the Executive nor the Executive’s
beneficiaries or estate shall have any further rights or claims against the
Company under this Agreement except the right to receive the payments and other
rights provided for in Section 9(a) hereof.

 

 
d. 
Forfeiture of Rights.  In the event that, subsequent to termination of
employment hereunder, the Executive (i) breaches any of the provisions of
Sections 11, 12, 13 or 14 hereof or (ii) makes or facilitates the making of any
adverse public statements or disclosures with respect to the business or
securities of the Company, all payments and benefits to which the Executive may
otherwise have been entitled shall immediately terminate and be forfeited, and
any portion of such amounts as may have been paid to the Executive shall
forthwith be returned to the Company.

 
 
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10. 
Disclosure of Confidential Information.  The Executive shall not, directly or
indirectly, at any time during or after the Employment Period, disclose to any
person, firm, corporation or other business entity, except as required by law,
or use for any purpose except in the good faith performance of the Executive’s
duties to the Company, any Confidential Information (as herein defined).  For
purposes of this Agreement, “Confidential Information” means all trade secrets
and other non-public information of a business, financial , marketing, technical
or other nature pertaining to the Company or any subsidiary, including
information of others that the Company or any subsidiary has agreed to keep
confidential; provided, however, that Confidential Information shall not include
any information that has entered or enters the public domain (other than through
breach of the Executive’s obligations under this Agreement) or which the
Executive is required to disclose by law or legal process. Upon the Company’s
request at any time, the Executive shall immediately deliver to the Company all
materials in the Executive’s possession which contain Confidential Information.

 
11. 
Restrictive Covenant.

 

 
a. 
Term of Restrictive Covenant.  The Executive hereby acknowledges and recognizes
that, during the Employment Period, the Executive shall be privy to trade
secrets and Confidential Information critical to the Company’s business and the
Executive further acknowledges and recognizes that the Company would find it
extremely difficult or impossible to replace the Executive and, accordingly, the
Executive agrees that, in consideration of the benefits to be received by the
Executive hereunder, the Executive shall not, from and after the date hereof,
throughout the Employment Period, and for a period of 12 months following the
termination of the Employment Period (i) directly or indirectly engage in the
development, production, marketing or sale of products that compete (or, upon
commercialization, would compete) with products of the Company being developed
(so long as such development has not been abandoned), marketed or sold at the
time of the termination of the Employment Period (such business or activity
being herein referred to as a “Competing Business”) whether such engagement
shall be as an officer, director, owner, employee, partner, affiliate or other
participant in any Competing Business, (ii) assist others in engaging in any
Competing Business in the manner described in the foregoing clause (i), or (iii)
induce other employees of the Company or any subsidiary thereof to terminate
their employment with the Company or any subsidiary thereof or engage in any
Competing Business or hire any employees of the Company or any subsidiary unless
such persons have not been employees of the Company for at least 12 months.

 
 
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b. 
Sufficient Consideration.  The Executive understands that the foregoing
restrictions may limit the ability of the Executive to earn a livelihood in a
business similar to the business of the Company, but nevertheless believes that
the Executive has received and shall receive sufficient consideration and other
benefits, as an employee of the Company and as otherwise provided hereunder, to
justify such restrictions which, in any event (given the education, skills and
ability of the Executive), the Executive believes would not prevent the
Executive from earning a living.

 
12. 
Non-Disparagement.  The Executive shall not engage in conduct, through word,
act, gesture or other means, or disclose any information to the public or any
third party which (i) directly or indirectly discredits or disparages in whole
or in part the company, its subsidiaries, divisions, affiliates and/or
successors as well as the products and the respective officers, directors,
stockholders and employees of each of them; (ii) is detrimental to the
reputation, character or standing of these entities, their products or any of
their respective officers, directors, stockholders and/or employees; or (iii)
which generally reflects negatively on the management decisions, strategy or
decision-making of these entities.

 
13. 
Company Right to Inventions.  The Executive shall promptly disclose, grant and
assign to the Company, for its sole use and benefit, any and all inventions,
improvements, technical information and suggestions relating in any way to the
business of the Company which the Executive may develop or acquire during the
Employment Period (whether or not during usual working hours), together with all
patent applications, letters patent, copyrights and reissues thereof that may at
any time be granted for or upon any such invention, improvement or technical
information. In connection therewith:  (i) the Executive shall, without charge,
but at the expense of the Company, promptly at all times hereafter execute and
deliver such applications, assignments, descriptions and other instruments as
may be necessary or proper in the opinion of the Company to vest title to any
such inventions, improvements, technical information, patent applications,
patents, copyrights or reissues thereof in the Company and to enable it to
obtain and maintain the entire right and title thereto throughout the world, and
(ii) the Executive shall render to the Company, at its expense (including a
reasonable payment for the time involved in case the Executive is not then in
its employ), all such assistance as it may require in the prosecution of
applications for said patents, copyrights or reissues thereof, in the
prosecution or defense of interferences which may be declared involving any said
applications, patents or copyrights and in any litigation in which the Company
may be involved relating to any such patents, inventions, improvements or
technical information.

 
 
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14. 
Enforcement.  It is the desire and intent of the parties hereto that the
provisions of this Agreement be enforceable to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought.  Accordingly, to the extent that a restriction contained
in this Agreement is more restrictive than permitted by the laws of any
jurisdiction where this Agreement may be subject to review and interpretation,
the terms of such restriction, for the purpose only of the operation of such
restriction in such jurisdiction, shall be the maximum restriction allowed by
the laws of such jurisdiction and such restriction shall be deemed to have been
revised accordingly herein.

 
15. 
Remedies; Survival.

 

 
a. 
Injunctive Relief.  The Executive acknowledges and understands that the
provisions of the covenants contained in Sections 11, 12, 13 and 14 hereof, the
violation of which cannot be accurately compensated for in damages by an action
at law, are of crucial importance to the Company, and that the breach or
threatened breach of the provisions of this Agreement would cause the Company
irreparable harm.  In the event of a breach or threatened breach by the
Executive of the provisions of Sections 11, 12, 13 or 14 hereof, the Company
shall be entitled to an injunction restraining the Executive from such
breach.  Nothing herein contained shall be construed as prohibiting the Company
from pursuing any other remedies available for any breach or threatened breach
of this Agreement.

 

 
b. 
Survival.  Notwithstanding anything contained in this Agreement to the contrary,
the provisions of the Sections 3, 9, and 11 through 17 hereof shall survive the
expiration or earlier termination of this Agreement until, by their terms, such
provisions are no longer operative.

 
16. 
Notices.  Notices and other communications hereunder shall be in writing and
shall be delivered personally or sent by air courier or first class certified or
registered mail, return receipt requested and postage prepaid, addressed as
follows:

 
if to the Company:
 
PharmAthene, Inc.
One Park Place, Suite 450
Annapolis, Maryland 21401
Attention:  CEO
 
with a copy to:
 
Sonnenschein Nath & Rosenthal LLP
101 JFK Parkway
 
 
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Short Hills, NJ  07078
Attention:  Jeffrey Baumel, Esq.
 
if to the Executive to:
_______________________________________
_______________________________________
_______________________________________
_______________________________________
 
with a copy to:
_______________________________________
_______________________________________
_______________________________________
_______________________________________
 
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of delivery, if personally delivered; on the business day after the date
when sent, if sent by air courier; and on the third business day after the date
when sent, if sent by mail, in each case addressed to such party as provided in
this Section 16 or in accordance with the latest unrevoked direction from such
party.
 
17. 
Binding Agreement; Benefit.  The provisions of this Agreement shall be binding
upon, and shall inure to the benefit of, the respective heirs, legal
representatives and successors of the parties hereto.

 
18. 
Governing Law; Jurisdiction.  This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Maryland applicable to
contract made and to be performed therein.  Any action to enforce any of the
provisions of this Agreement shall be brought in a court of the State of
Maryland or in Federal court located within that State.  The parties consent to
the jurisdiction of such courts and to the service of process in any manner
provided by Maryland law.  Each party irrevocably waives any objection which it
may now or hereafter have to the laying of the venue of any such suit, action or
proceeding brought in such court and any claim that such suit, action or
proceeding brought in such court has been brought in an inconvenient forum and
agrees that service of process in accordance with the foregoing shall be deemed
in every respect effective and valid personal service of process upon such
party.

 
 
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19. 
Waiver of Breach.  The waiver by either party of a breach of any provision of
this Agreement by the other party must be in writing and shall not operate or be
construed as a waiver of any subsequent breach by such other party.

 
20. 
Entire Agreement; Amendments.  This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements or understandings among the parties with respect thereof.  This
Agreement may be amended only by an agreement in writing signed by the parties
hereto.

 
21. 
Headings.  The section headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

 
22. 
Severability.  Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 
23. 
409A Compliance.  The intent of the Executive and the Company is that the
severance and other benefits payable to the Executive under this Agreement not
be deemed “deferred compensation” under, and shall otherwise comply with,
Section 409A of the Internal Revenue Code of 1986, as amended.  The Executive
and the Company agree to use reasonable best efforts to amend the terms of this
Agreement from time to time as may be necessary to avoid the imposition of
liability under Section 409A of the Code in any manner that does not materially
alter the substantive rights and obligations of the parties hereunder.

 
24. 
Executive’s Acknowledgement.  The Executive acknowledges (a) that the Executive
has had the opportunity to consult with independent counsel of his own choice
concerning this Agreement and (b) that the Executive has read and understands
the Agreement, is fully aware of its legal effect and has entered into it freely
based on the Executive’s own judgment.

 
25. 
Assignment.  This Agreement is personal in its nature and the parties hereto
shall not, without the consent of the other, assign or transfer this Agreement
or any rights or obligations hereunder; provided, that the provisions hereof
shall inure to the benefit of, and be binding upon, each successor of the
Company, whether by merger, consolidation, transfer of all or substantially all
of its assets or otherwise.

 
26. 
Counterparts.  This Agreement may be executed in two or more counterparts, each
of which shall for all purposes constitute one agreement which is binding on all
of the parties hereto.

 
 
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first above written.
 

 
EXECUTIVE
         
/s/ Charles A. Reinhart III                       
 
Name:  Charles A. Reinhart III
     
PHARMATHENE, INC.
         
By /s/ David P. Wright                            
Name:  David P. Wright
 
Title:  President and Chief Executive Officer

 
 
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