**Exhibit 10.52**

** **

**PharmAthene, Inc.**

**ConfidentialMaterials Omitted and Filed Separately with the Securities and ExchangeCommission**

|  | TECHNOLOGY TRANSFER AND DEVELOPMENT SERVICES SUBCONTRACT THIS  TECHNOLOGY TRANSFER AND DEVELOPMENT SERVICES SUBCONTRACT (the “Subcontract”)  is made as of September 17, 2009 (the “Effective Date”) by and between  Diosynth RTP Inc., a Delaware corporation, located at 101 J. Morris Commons  Lane, Morrisville, North Carolina 27560 (“Diosynth”), and PharmAthene, Inc.,  a Delaware corporation, located at One Park Place, Suite 450, Annapolis, MD  21401 (“PharmAthene”). Each of Diosynth and PharmAthene may be referred to  herein separately as a “Party” and collectively as the “Parties.” WHEREAS,  PharmAthene owns rights to a recombinant protective antigen for anthrax  vaccine (rPA) product (the “Product”); WHEREAS, PharmAthene has been awarded  a prime contract in respect of the development of an anthrax vaccine,  numbered NO-A1-30052 with the National Institutes of Health (“NIH”), an  agency of the U.S. Government, which contract was recently transferred from  NIH to the Biomedical Advanced Research and Development Authority (“BARDA”)  within the Department of Health and Human Services (as amended from time to  time, and together with any successor or replacement contract (s),  collectively the “Prime Contract”); WHEREAS, PharmAthene anticipates further  funding of its development of recombinant protective antigen (rPA) for  anthrax (rPA); WHEREAS, Diosynth is a contract manufacturing organization  (“CMO”) providing a range of services related to the development and  manufacture of biopharmaceutical products; WHEREAS, prior to the date hereof,  another CMO provided certain development and manufacturing services to  PharmAthene related to the supply of the bulk drug substance for the Product  (“Drug Substance”); WHEREAS, PharmAthene desires to transfer the technology  related to, among other things, the development, scale-up and manufacture of  the Drug Substance from the prior CMO to Diosynth (the “Technology Transfer”);  WHEREAS, Diosynth desires to assist PharmAthene with the Technology Transfer  to its organization and facilities and to begin development work related to  the manufacturing process for the Drug Substance in support of the Prime  Contract (all of the foregoing, including the Technology Transfer and all  other services included in the Scope, collectively, the “CMO Services”);  WHEREAS, PharmAthene and Diosynth may in the future decide to amend this  Subcontract to add additional development services and provisions relating to  the Drug Substance, including without limitation validation, verification and  conformance manufacturing; |
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|  | 2 WHEREAS, PharmAthene and Diosynth are also in discussions  regarding entering into a separate subcontract (a “Development and Supply  Subcontract”) under which Diosynth would supply Drug Substance in support of  any future prime contract awarded to PharmAthene for the advanced development  and procurement of the Product; and WHEREAS, Diosynth wishes to be hired by  PharmAthene and to assist PharmAthene with the CMO Services (collectively the  “Program”) under the terms of this Subcontract. NOW, THEREFORE, in  consideration of the foregoing premises and the promises, benefits, rights  and obligations set forth below, the Parties agree as follows: 1. CMO  Services. 1.1 Statement of Work. (a) Diosynth shall perform the CMO Services  described in the Statement of Work attached hereto as Exhibit A (the  “Scope”), in accordance with the terms and conditions of this Subcontract and  all exhibits attached hereto, including without limitation the Quality  Agreement, all of which are incorporated herein by reference. In exchange,  PharmAthene shall pay Diosynth the fixed prices specified in the Program  Price and Payment Schedule attached hereto as Exhibit B (“Program Price”). In  addition, Process Consumables (as defined in the Scope), Raw Materials (as  defined in the Scope) and Third Party Analytical Testing (as defined in the  Scope) purchased for the CMO Services will be invoiced separately as pass-through  costs as such costs are incurred by Diosynth (such pass-through costs and the  Program Price, collectively the “Total Program Price”). PharmAthene agrees to  pay Diosynth’s actual cost (inclusive of necessary testing) for the Process  Consumables, Third Party Analytical Testing and Raw Materials (collectively,  the “Pass-Through Costs”) purchased for the CMO Services Diosynth represents  that such mark-up represents its mark-up on Process Consumables, Third Party  Analytical Testing and Raw Materials, customarily offered to Diosynth’s  customers. Amounts payable for Process Consumables, Third Party Analytical  Testing and Raw Materials will be invoiced as they are incurred by Diosynth,  but in no event shall Diosynth invoice PharmAthene more than once monthly. Subject  to the accuracy of applicable Assumptions, the total price (including  mark-up) charged to PharmAthene for the Pass-Through Costs shall not exceed  the “not to exceed” price for such items set forth in the Scope. (b)  PharmAthene shall perform its obligations as set forth in this Subcontract,  the Scope and the Quality Agreement, and shall support and cooperate with  Diosynth in its performance of the CMO Services. However, the foregoing shall  not require PharmAthene to incur any material burden, cost or obligation not  its responsibility under this Subcontract. 1.2 Sponsor Deliverables. |
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|  | 3 (a) As further set forth in the Scope, PharmAthene will timely  provide Diosynth with Sponsor Deliverables (as defined in the Scope). A  failure by PharmAthene to provide Sponsor Deliverables within the timeframes  set forth in the Scope or as otherwise agreed to by the Parties in writing  that delays performance of the CMO Services could result in additional  charges to PharmAthene and a delay in meeting the objectives of this  Subcontract. Claims for any such charges and delays must be pursued in  accordance with Section 2.2 hereof. (b) Title to Sponsor Deliverables shall  remain with PharmAthene. Diosynth shall not sell, pledge, hypothecate,  dispose of, or otherwise transfer any interest in Sponsor Deliverables except  as otherwise provided in this Subcontract, and shall use Sponsor Deliverables  solely for purposes of performing the CMO Services. Diosynth shall provide  safe and secure storage conditions for Sponsor Deliverables while they are at  Diosynth’s Facility. 1.3 Entire Agreement; Conflicts. This Subcontract  (together with the exhibits attached hereto), the Quality Agreement, and the  Scope collectively constitute the Parties’ entire agreement for the CMO  Services. Terms defined in this Subcontract shall have same meaning when used  in the Scope or the Quality Agreement except as otherwise provided. In the  event of any conflict among the components of this Subcontract, the following  order of precedence shall apply: (i) “flow down” requirements of the Prime  Contract attached hereto as Exhibit C; (ii) the terms set forth in this  Subcontract; (iii) the Quality Agreement; and (iv) the Scope. References to  this Subcontract herein shall, unless the context clearly indicates otherwise,  be deemed to include the Scope, the exhibits, and Change Orders. 1.4  Facility. Diosynth shall perform the CMO Services at Diosynth’s manufacturing  facilities in Morrisville, North Carolina, or at such other place(s) as are  mutually agreed upon by the Parties (the “Facility” or “Facilities”). 1.5  Shipping and Packaging. The delivery point for all items to be delivered by  Diosynth under this Subcontract shall be FCA, Diosynth’s Facility. Diosynth  shall package for shipment and ship all items at PharmAthene’s expense and in  accordance with PharmAthene’s written instructions, with PharmAthene bearing  all packaging, shipping and insurance charges during transit. Diosynth shall  retain representative samples for record keeping, testing and regulatory  purposes. Diosynth shall notify PharmAthene in writing when each lot of  Product Deliverables is ready to be released as described in Article 10 of  the Quality Agreement, and PharmAthene shall arrange for each lot of Product  Deliverables to be shipped within thirty (30) days after PharmAthene provides  release documentation such as a Certificate of Conformance, or similar, as  described in Article 10 of the Quality Agreement. In the event of any delay  by PharmAthene in providing release documentation or shipping for one or more  lots of Product Deliverables that is not the fault of Diosynth, the Parties  acknowledge and agree that title and risk of loss for each such lot of  Product Deliverables shall automatically transfer to (and be assumed by)  PharmAthene effective upon expiration of the applicable thirty (30) day  period. 1.6 Additional Manufacturing Activities. The Parties acknowledge that  this Agreement does not currently contemplate additional production of the  Drug Substance at commercial production levels beyond the one (1) cGMP  manufacturing run contemplated by the Scope. At |
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|  | 4 PharmAthene’s request, Diosynth agrees to negotiate in good  faith the terms and conditions of an agreement to manufacture and supply  additional amounts of Drug Substance, including without limitation a  Development and Supply Subcontract, that provides for additional  manufacturing capacity; provided however that the foregoing shall not require  Diosynth to reserve or set aside additional manufacturing capacity for  PharmAthene unless such reservation or set-aside is mutually agreed upon in  such negotiations. 2. Performance Standards; Covenants; Changes to Scope and  Other Responsibilities. 2.1 Performance Standards and Related Matters. (a)  Diosynth shall at all times perform the CMO Services in accordance with: (i)  the Scope, (ii) this Subcontract, including without limitation the Quality  Agreement and the “flow down” requirements of the Prime Contract attached  hereto as Exhibit C (iii) cGMP as defined in the Quality Agreement (“cGMP”),  (iv) with respect to matters not addressed by cGMP, reasonable and  professional care and in a good and workmanlike manner, and (v) all  applicable federal and state laws, rules and regulations (collectively,  “Applicable Law”). The Parties acknowledge that they have jointly designed  the Scope to be consistent with current U.S. regulatory requirements and  guidelines. Notwithstanding the foregoing, Diosynth does not warrant that  compliance with the requirements of this Subcontract will satisfy the  requirements of any regulatory agencies at the time of submission of the  results to such agencies. (b) Except as otherwise provided herein, all  warranties in this Subcontract shall survive inspection, test and Acceptance  of, and payment for, the CMO Services. All warranties shall run to  PharmAthene and its successors, assigns, and customers and shall extend for a  period of one (1) year after PharmAthene’s final Acceptance of the CMO  Services. (c) Subject to each Party’s contractual obligations under this  Subcontract, PharmAthene shall have the right and responsibility for  determining regulatory strategy, decision and actions to the extent relating  to the Program or Product and Diosynth shall have the right and  responsibility for determining regulatory strategy, decision and actions to  the extent relating to (i) the Facility, or its utilities, equipment or  personnel; (ii) Diosynth’s quality systems; (iii) any requirement imposed on  Diosynth by a Regulatory Authority or (iv) any other commitments made by  Diosynth prior to the Effective Date of this Subcontract. In the event of  dispute concerning the appropriate division of the foregoing rights and  responsibilities, the Parties agree to negotiate in good faith to resolve  such dispute and, in the event that such dispute is not resolved through  negotiation, either party may submit such dispute to arbitration pursuant to  Article 26. 2.2 Change Orders; Changes to the Scope. (a) The Program Price  and Payment Schedule for the CMO Services are fixed, subject to the  assumptions set forth in Section 3.0 of the Scope (“Assumptions”). This  Section 2.2 describes the exclusive means by which the Program Price and  Payment Schedule, the |
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|  | 5 Scope, or associated Program timeline may be changed. As used  herein, “Change Order” means a written document signed by both Parties  describing in reasonable detail a change in the Program Price and Payment  Schedule, the Scope, and/or associated Program timeline. (b) Change Orders  must be agreed by both Parties in writing, and consent to a Change Order  shall not be unreasonably withheld, conditioned or delayed by either Party.  Either Party may propose in writing a change to the Program Price and Payment  Schedule, the Scope and/or associated Program timeline, which shall contain  the terms of such proposed change in reasonable detail. In such event,  Diosynth shall prepare and deliver to PharmAthene within ten (10) days a  proposed Change Order which shall include a statement of all effects on the  Program Price and Payment Schedule, the Scope and/or associated Program  timeline. The proposed Change Order shall include (i) cost information in  reasonable detail for all Pass- Through Costs and (ii) a fixed price for all  other services related to the proposed change(s). Diosynth agrees that such  Pass-Through Costs and fixed price quote will be commercially reasonable.  Within ten (10) days thereafter, PharmAthene shall respond to Diosynth  indicating whether it approves or rejects the proposed Change Order, and if  the Change Order is approved the Parties shall promptly execute same,  whereupon the Change Order shall be effective to modify the Program Price and  Payment Schedule, the Scope and/or associated Program timeline. In the event  that the Parties cannot agree on the terms of any Change Order and the  Parties do not resolve same promptly through good faith negotiations, then  the dispute procedures of Article 26 hereof shall apply. Unless directed  otherwise by PharmAthene, Diosynth shall continue to perform all work not  affected by the proposed Change Order in accordance with this Subcontract  during the pendency of any dispute regarding such proposed Change Order,  provided that PharmAthene shall continue to comply with its payment  obligations hereunder. Notwithstanding the preceding sentence, Diosynth shall  not be required to continue performance of the CMO Services during the  pendency of any dispute to the extent that performance of such work would be  impossible in the absence of such a Change Order. Except in the case of a  stop work order as described in Section 2.3 below, each Party shall notify  the other within fifteen (15) days after first becoming aware of the  existence of circumstances giving rise to a Change Order. (c) Except as  otherwise provided herein, all notices to be furnished by Diosynth shall be  sent to PharmAthene’s Director of Contracts at the address set forth in  Article 20 with a copy to PharmAthene’s General Counsel at the same address.  2.3 Stop-Work Orders. (a) PharmAthene may, at any time, by written order to  Diosynth, require Diosynth to stop all, or any part, of the work called for  by the Scope for a period of ninety (90) days after the order is delivered to  Diosynth, and for any further period to which the Parties may agree. The  order shall be specifically identified as a stop-work order issued under this  Section 2.3. Upon receipt of the order, Diosynth shall immediately comply  with its terms and take all reasonable steps to minimize the incurrence of  costs allocable to the work covered by the order during the period of work  stoppage. Within a period of 90 days after a stop-work |
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|  | 6 order is delivered to Diosynth, or within any extension of  that period to which the Parties shall have agreed, PharmAthene shall either:  (i) cancel the stop-work order, or (ii) terminate the work covered by the  order as provided in Section 4.2. (b) If a stop-work order issued under this  Section 2.3 is canceled or the period of the order or any extension thereof  expires, Diosynth will use all commercially reasonable efforts to resume work  as soon as possible thereafter. Diosynth may request an equitable adjustment  via the Change Order process in accordance with Section 2.2, within thirty  (30) days after the end of the period of work stoppage, to the extent that  (i) its direct costs were, or are reasonably expected to be, increased  thereby or (ii) actual delay to its ability to perform was, or is reasonably  expected to be, incurred. (c) If a stop-work order is not canceled and the  work covered by the order is terminated for the convenience of PharmAthene  pursuant to Section 4.2 (b), PharmAthene shall pay Diosynth the amounts, if  any, specified in Section 4.2 (b). 2.4 Allocation of Resources. If delays in  the agreed commencement or performance of the CMO Services occur because of  (i) a stop-work order issued under Section 2.3, or (ii) PharmAthene’s failure  to supply Diosynth with Sponsor Deliverables as required by this Subcontract  within thirty (30) days of the timeframes set forth in the Scope or as  otherwise agreed to by the Parties in writing, that is not the fault of  Diosynth, Diosynth may, after providing ten (10) business days’ prior written  notice to PharmAthene, temporarily reallocate resources being held for  performance of the Scope without incurring liability to PharmAthene. In  addition, in such event Diosynth’s obligation to perform the CMO Services as  set forth in the Scope shall be suspended to the extent that such performance  has been stopped by a stop-work order, or is prevented by a failure to  provide a Sponsor Deliverable, but only during and for so long as Diosynth’s  performance is actually stopped or prevented thereby. 2.5 Support for  Regulatory Submissions. (a) Except as otherwise provided herein or as  required by Applicable Law, PharmAthene shall be the sole communicator with  the Food and Drug Administration (“FDA”) or other applicable regulatory  authority (each a “Regulatory Authority”) regarding the Drug Substance and  the Product or any regulatory approvals therefor. Except as otherwise  provided herein or as required by Applicable Law, Diosynth shall not initiate  contact with any Regulatory Authority without PharmAthene’s prior written  approval. (b) If PharmAthene is required to submit to a Regulatory Authority  any information concerning the CMO Services, Diosynth will provide  PharmAthene copies of such documentation, data and other information as shall  be necessary or reasonably desirable for such submission to the Regulatory  Authorities and such other information in such form as PharmAthene may  reasonably request, provided that such assistance shall be subject to the  terms of the Quality Agreement. Diosynth shall also cooperate and consult as  reasonably requested by PharmAthene and/or required by the Regulatory  Authorities for development of additional data or performance of studies  concerning the Product beyond the Scope, and |
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|  | 7 PharmAthene shall pay Diosynth’s reasonable costs therefor.  Diosynth shall also provide, if required by the Regulatory Authorities,  information concerning its laboratory, manufacturing, and quality control  procedures with respect to the CMO Services. If requested, Diosynth shall use  reasonable best efforts to provide PharmAthene all documentation, data and  information referred to in this Section 2.5 reasonably in advance of their  required submission to allow for PharmAthene’s review and comments. Diosynth  shall endeavor in good faith to satisfactorily resolve all PharmAthene  comments prior to submission if such submission is to be made by PharmAthene.  2.6 SAFETY Act and PREP Act Compliance. The Parties acknowledge and agree  that the Product is intended to prevent or deter acts of terrorism and/or to  limit the harm such acts might otherwise cause and mitigate, treat, or cure a  pandemic or epidemic, and to limit the harm such pandemic or epidemic might  otherwise cause. Diosynth shall provide reasonable assistance to PharmAthene  in its efforts to secure certification and designation of the Drug Substance  and the Product as a Qualified Anti-Terrorism Technology (“QATT”) under U.S.  law, and specifically under the Support Anti-terrorism by Fostering Effective  Technologies Act of 2002 (the “SAFETY Act”), sections 441-444 of title 6,  United States Code. The Parties acknowledge and agree that the Drug Substance  and/or Product is intended to qualify as a “covered counter measure” within  the meaning of the Public Readiness and Emergency Preparedness Act (the “PREP  Act”) and that each is a “covered person” as therein defined. 2.7 Quality  Agreement. On the Effective Date, PharmAthene and Diosynth entered into the  Quality Agreement attached hereto as Exhibit D, which shall be used by both  Parties to assign certain of the day-to-day responsibilities and manage the  operations of both the PharmAthene and Diosynth Quality Assurance groups with  respect to the CMO Services. 2.8 Project Manager. Each Party shall appoint a  project manager for this Subcontract (the “Project Managers”). Diosynth’s  project manager for this Subcontract is Dr. Bernard Adkins. The Diosynth  Project Manager shall be considered a “key” employee and so long as the  Diosynth Project Manager remains in the employ of or under contract with  Diosynth, said person shall not be replaced in the performance of this  Subcontract or have their responsibilities materially reduced or altered,  unless an equally qualified replacement approved by PharmAthene is assigned.  Such approval shall not be unreasonably denied. Notwithstanding the  foregoing, PharmAthene shall be permitted to request the replacement of the  Diosynth Project Manager at any time by written notice, whereupon Diosynth  shall designate and assign a qualified replacement subject to approval by  PharmAthene, such approval not to be unreasonably withheld, conditioned or  delayed. In the event that the Diosynth Project Manager terminates his/her  relationship with Diosynth, or is unable or unwilling, for any reason, to  continue with or complete the work effort, then Diosynth may propose a new  Project Manager for PharmAthene’s consideration. Any increase in the cost of  performing the Scope due to the addition of the new Project Manager shall be  the sole responsibility of Diosynth. The Project Managers will oversee the  day-to-day activities of the Parties with respect to the Program and will be  the primary point of contact between the |
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|  | 1 Parties with respect to the Program. The Project Managers  shall report to the Joint Steering Committee. 2.9 Additional Diosynth  Responsibilities. Diosynth shall be responsible for all necessary education  and training of its employees and contractors with respect to the Facilities,  equipment and processing methods used in providing the CMO Services. 3.  Invoicing and Payment. 3.1 Payment. PharmAthene shall pay Diosynth for the  CMO Services provided in accordance with this Subcontract on the terms and  conditions and in the amounts set forth in the Program Price and Payment  Schedule, as modified by any Change Orders, which amounts shall include all  expenses, taxes and other charges whatsoever except as otherwise specified in  this Section 3.1. All invoices for CMO Services shall contain all supporting  data and other information required under this Subcontract and as otherwise  reasonably requested by PharmAthene. PharmAthene shall pay Diosynth for  Process Consumables, Raw Materials and Third Party Analytical Testing in  accordance with Section 1.1 (a) and for packaging, shipping and insurance  charges in accordance with Section 1.5. All invoices shall contain a summary  of activities completed during the invoice period, including activities  completed and an indication of Process Consumables and Raw Materials  purchased, cost of Third Party Analytical Testing and any packaging, shipping  or insurance charges incurred. Diosynth shall invoice PharmAthene monthly not  later than the fifth (5th) day of each month. Separate invoices shall be  submitted according to the activities described in the Scope. Unless  otherwise provided in any Scope, PharmAthene shall pay Diosynth all  undisputed amounts invoiced within thirty (30) days after the date of receipt  of a proper invoice for such fees and expenses provided that such invoice is  received by the fifth (5th) day of the month. If such invoice is received  after the fifth (5th) day of any month, such invoice shall be treated as if  received before the fifth (5th) day of the month after the month in which it  is actually received and shall be paid in the next payment cycle. If  PharmAthene disputes the amount due, then PharmAthene shall notify Diosynth  of such dispute by the payment due date provided that Diosynth has timely  provided such supporting documentation as PharmAthene reasonably requests. Both  parties will act in good faith to promptly resolve such dispute. Late  payments are subject to an interest charge of one percent (1%) per month.  Unless within thirty (30) days of the date of PharmAthene’s receipt of the  invoice PharmAthene has advised Diosynth in good faith and in writing of the  specific basis for disputing an invoice, failure to pay an undisputed invoice  within ninety (90) days from the date of invoice may, at Diosynth’s election,  constitute a material breach of this Subcontract. 3.2 Form of Invoice. The  Parties shall mutually agree on an acceptable form of invoice, consistent  with the requirements of this Subcontract, the Prime Contract and Applicable  Law. No amounts set forth on an invoice shall be due and payable to Diosynth  hereunder unless such invoice is accurate and complete. 3.3 Address for  Invoicing. Invoices shall be submitted to PharmAthene at: PharmAthene, Inc. |
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|  | 2 Attn: Accounts Payable One Park Place, Suite 450 Annapolis, MD  21401 and to Diosynth at: Diosynth RTP Inc. 101 J Morris Commons Lane  Morrisville, North Carolina 27560. or to such other addresses provided to the  other Party in writing in accordance with the terms of Article 20 of this  Subcontract. 3.4 Acceptance. “Acceptance” shall mean that deliverables as set  forth in the Scope conform to all applicable requirements and the agreed upon  acceptance criteria for such deliverable as provided in this Subcontract. (a)  With respect to protocols, reports, study plans and reports,  PharmAthene-specific analytical test methods and other written deliverables  that are identified as Diosynth Deliverables in the Scope (collectively, the  “Written Deliverables”), the Parties shall engage in review and revision of  such deliverable in a timely manner in accordance with the principles provided  in the Scope to generate a final Written Deliverable. PharmAthene shall  review and, if acceptable in all reasonable respects, accept final Written  Deliverables within ten (10) days after receipt, unless specified otherwise  in the Quality Agreement. (b) With respect to a shipment of Drug Substance  (the “Product Deliverable”), Acceptance shall occur on the date of delivery  of the Certificate of Conformance by PharmAthene in accordance with Article  10 of the Quality Agreement. Diosynth shall not deliver any Product  Deliverable to PharmAthene until such deliverable has been released in  accordance with Article 10 of the Quality Agreement. (c) PharmAthene shall  have the right to reject any Deviating Product in accordance with Article 9  of the Quality Agreement and this Section 3.4 (c). PharmAthene shall promptly  (and, in any event, no later than thirty (30) days following delivery of any  Product Deliverables (pursuant to Section 3.4 (b))) notify Diosynth in  writing that such Product Deliverables are Deviating Product due to a  suspected defect that is known to PharmAthene or that was readily  ascertainable through reasonable inspection. “Deviating Product” shall mean  Product Deliverables that (i) were not processed in accordance with the  process set forth in the Scope; (ii) were not processed, handled or stored in  accordance with cGMP, or (iii) are damaged or defective. Notwithstanding  anything to the contrary contained herein, in the case of suspected defects  that are not readily ascertainable through reasonable inspection, PharmAthene  shall notify Diosynth of such defect within ten (10) days from the date of  discovery of such defect, or earlier if required by the Quality Agreement.. |
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|  | 3 (i) As soon as practicable after PharmAthene provides Diosynth  with a notice of rejection, the Parties shall undertake an investigation of  such Product Deliverables in accordance with Article 9 of the Quality  Agreement. Upon commencement of the investigation, PharmAthene shall  immediately deliver to Diosynth all potentially Deviating Product. The  Parties shall cooperate in good faith during such investigation and use  reasonable best efforts to complete the investigation. Diosynth shall notify  PharmAthene within five (5) days of the conclusion of such investigation,  whether Diosynth accepts or disputes PharmAthene’s assertion(s) that certain  Product Deliverables are a Deviating Product. (ii) After the completion of  such investigation (or earlier, if agreed to by the Parties), at  PharmAthene’s request, whether or not Diosynth accepts PharmAthene’s  assertion that certain Product Deliverables are Deviating Product, Diosynth  shall process and deliver replacement Product Deliverables (“Replacement  Product”) as soon as reasonably possible, provided that Diosynth shall not be  required to cease, interrupt or otherwise disturb campaigns in progress. If  Diosynth disputes in writing whether the Product Deliverables are Deviating  Product or whether such Deviating Product was caused by the failure of  Diosynth, PharmAthene shall pay Diosynth, within thirty (30) days of such  Replacement Product request: (A) for such Replacement Product in accordance  with the prices set forth in the Program Price and Payment Schedule and (B)  for all Pass-Through Costs purchased for such Replacement Product, plus a fee  equal to seven and one half percent (7.5%) of such actual costs. Following  completion of an investigation and dispute resolution if any pursuant to this  Section 3.4 (c), Diosynth shall reimburse PharmAthene such payment, in  accordance with Section 3.4 (c)(iv), to the exent such Deviating Product is  agreed or determined to be caused by the failure of Diosynth. (iii) If  Diosynth disputes PharmAthene’s assertion that certain Product Deliverables  are Deviating Product or Diosynth believes that the Deviating Product was not  caused by any failure of Diosynth, then the Parties shall work together in  good faith to resolve the dispute. If the Parties are unable to resolve such  a dispute through good faith negotiation, then the dispute procedures of  Article 26 hereof shall apply. (iv) If Diosynth accepts PharmAthene’s  assertion or if it is determined through the dispute procedures of Article 26  hereof that such Deviating Product was caused by the failure of Diosynth and  PharmAthene previously paid for the Replacement Product, then Diosynth shall,  within thirty (30) days of such acceptance or determination, reimburse  PharmAthene for the price of the Replacement Product to the extent that such  Deviating Product was caused by the failure of Diosynth |
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|  | 4 (v) if it is determined through the dispute procedures of  Article 26 hereof, or if PharmAthene acknowledges the same in writing, that  such Product Deliverable was not a Deviating Product or such Deviating  Product was not caused by the failure of Diosynth, then Diosynth shall be  entitled to retain the payment made by PharmAthene pursuant to Section  3.4(c)(ii) for such Replacement Product. Such purchase price for the  Replacement Product shall be in addition to the purchase price for the  original shipment of the allegedly Deviating Product. PharmAthene’ liability  for such Deviating Products shall be limited to that stated in this Section  3.4(c). (d) If any CMO Services other than Written Deliverables and Product  Deliverables (collectively, the “Service Deliverables”) do not comply with  the standards set forth in Section 2.1(a) and such failure is not the fault  of PharmAthene, Diosynth shall promptly, upon notice, re-perform such Service  Deliverables in accordance with the standards set forth in Section 2.1(a) for  no additional costs to PharmAthene. (e) Provided that Diosynth re-performs  its obligations with respect to Deviating Product or non-conforming Service  Deliverables in accordance herewith and the timeframe for cure provided in  Section 4.2(a)(i)(1) or (2) as applicable, the initial failure of such  Deviating Product or Service Deliverable to comply with the standards set  forth herein shall not be considered a default under this Subcontract (unless  such failure resulted from gross negligence, bad faith or intentional misconduct).  3.5 Payment Not Acceptance. Payment by PharmAthene for any CMO Services  performed under this Subcontract shall not be deemed to constitute acceptance  of such CMO Services nor waive any rights, warranties or remedies available  to PharmAthene under this Subcontract or Applicable Law. 4. Term and  Termination 4.1 Term. The term of this Subcontract shall begin on the  Effective Date and continue until completion of all CMO Services and as long  as reasonably necessary to settle all accounts and for such additional period  thereafter as may be necessary to make any payments due and fulfill any  post-termination obligations. The Parties acknowledge that PharmAthene is  required to complete performance under the Prime Contract by March December  31, 2011 and Diosynth agrees to use reasonable best efforts to (i)  demonstrate consistent progress towards completion of this Subcontract by  December 31, 2010, and (ii) complete this Subcontract by such date, subject  to the terms of this Subcontract. Diosynth will provide regular reports, as  described in this Subcontract, indicating progress towards milestones in  reasonable detail, and such further information as PharmAthene may reasonably  request. 4.2 Termination. This Subcontract is terminable only as follows: (a)  Default. |
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|  | 5 (i) If Diosynth is in default of its material obligations  under this Subcontract, then PharmAthene may notify Diosynth in writing of  any such default. (1) Diosynth shall have a period of twenty (20) days from  the date of receipt of such notice within which to cure such default, and  shall diligently pursue efforts to cure such default at all reasonable times.  If Diosynth fails to cure within such twenty (20) day period, then  PharmAthene shall have the right to immediately terminate all or any part of  this Subcontract by providing written notice to Diosynth. In the event of  such termination, PharmAthene shall not be liable to pay for any work not  Accepted; provided however that PharmAthene’s Acceptance shall not be  unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing,  Diosynth shall upon request deliver to PharmAthene any supplies and  materials, manufacturing materials, and manufacturing information that  Diosynth has specifically produced or acquired for this Subcontract and PharmAthene  shall compensate Diosynth for the reasonable cost of such supplies, materials  and/or information and any costs associated with these deliverables. (2) With  respect to production runs or other activities that are not capable of being  cured in twenty (20) days from the date of receipt of such notice, Diosynth  shall initiate actions during such twenty (20) day period that are reasonably  anticipated to cure the default within a reasonable period (not to exceed one  hundred and fifty (150) days), and thereafter cure such default within a  reasonable period (not to exceed one hundred and fifty (150) days). If  Diosynth fails to cure within such period, then PharmAthene shall have the  right to immediately terminate all or any part of this Subcontract by providing  written notice to Diosynth in accordance with Section 4.2(a)(i)(1). (ii) If  PharmAthene is in default of its material obligations under this Subcontract,  Diosynth shall promptly notify PharmAthene in writing of any such default.  PharmAthene shall have a period of twenty (20) days from the date of receipt  of such notice within which to cure such default provided that it diligently  continues efforts to cure such default at all reasonable times. With respect  to non-monetary performances that are not capable of being cured in twenty  (20) days from the date of receipt of such notice, PharmAthene shall initiate  actions during such twenty (20) day period that are reasonably anticipated to  cure the default within a reasonable period (not to exceed sixty (60) days),  and thereafter cure such default within a reasonable period (not to exceed  sixty (60) days). If PharmAthene fails to so cure, then Diosynth shall have  the right to immediately terminate this Subcontract by providing written  notice to Diosynth. |
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|  | 6 (iii) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, UNDER  NO CIRCUMSTANCES SHALL EITHER PARTY BE ENTITLED TO INCIDENTAL, INDIRECT,  CONSEQUENTIAL OR SPECIAL DAMAGES ARISING IN CONNECTION WITH THE DEFAULT OR  BREACH OF ANY OBLIGATION OF THE OTHER PARTY UNDER THIS SUBCONTRACT, THE SCOPE  OR ANY DOCUMENTS OR APPENDICES RELATED THERETO. (iv) EXCEPT IN THE EVENT OF  GROSS NEGLIGENCE, WILFUL MISCONDUCT, OR BAD FAITH, DIOSYNTH’S MAXIMUM  LIABILITY FOR DAMAGES IN CONNECTION WITH A CLAIM RELATED TO THIS SUBCONTRACT,  REGARDLESS OF THE CAUSE OF ACTION, WILL NOT EXCEED THREE MILLION,  THREE-HUNDRED THOUSAND DOLLARS ($3,300,000.00). (v) If after termination by  PharmAthene under Section 4.2(a)(i), it is later determined by binding  arbitration pursuant to Article 26 or otherwise that Diosynth was not in  default, such termination shall be deemed a termination for convenience under  Section 4.2(b) hereof. (b) Termination for Convenience. PharmAthene reserves  the right to terminate this Subcontract, or any part hereof, for its sole  convenience at any time. In the event of such termination, Diosynth shall  immediately stop all work on the terminated effort hereunder and shall use  all reasonable best efforts to minimize the incurrence of costs allocable to  the terminated effort. Subject to the terms of this Subcontract and the  Scope, in the event that PharmAthene terminates this Subcontract pursuant to  this Section 4.2(b), PharmAthene shall pay Diosynth within forty (40) days  after receipt of Diosynth’s termination invoice, the following amounts: (i)  all amounts owed for CMO Services milestones completed (as defined by the  line items in Exhibit B) but not yet invoiced and/or paid; plus (ii) with  respect to the CMO Services terminated, the percentages of unbilled amounts  set forth in the Program Price and Payment Schedule for CMO Services to be  performed in accordance with the following chart (but without duplication and  only to the extent of CMO Services terminated under this Section 4.2(b) which  result in loss of revenue to Diosynth): Time from the date of termination  until the date on which such CMO Services are scheduled to be performed as  provided in the then-current Program Price and Payment Schedule Percentage of  Unbilled Amounts More than 12 months from date of termination Between 6 and  12 months from date of termination |
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|  | 7 Between 3 and 6 months from date of termination Less than 3  months from date of termination   provided, however than in no event shall PharmAthene’s liability for  such termination exceed the total price set forth in the Program Price and  Payment Schedule less all amounts paid to Diosynth prior to the date of  termination. In no event shall PharmAthene be liable for any additional  amounts, including without limitation, lost or anticipated profits or  unabsorbed indirect costs or overhead. Diosynth’s termination invoice shall  be submitted within ninety (90) days from the effective date of the  termination and must satisfy all requirements of a regular invoice. In the  event of a partial termination for convenience, Diosynth shall continue all  CMO Services not terminated. (c) Bankruptcy or Insolvency. Either Party at  its sole option may immediately terminate this Subcontract upon written  notice, but without prior advance notice, to the other Party in the event  that (i) the other Party is declared insolvent or bankrupt by a court of  competent jurisdiction, (ii) a voluntary petition of bankruptcy is filed in  any court of competent jurisdiction by such other Party, or (iii) this  Subcontract is assigned by such other Party for the benefit of creditors  (each, an “Insolvency Event”). Notwithstanding the foregoing, PharmAthene  shall retain all rights under Section 365(n) of the Bankruptcy Code if an  Insolvency Event occurs with respect to Diosynth. 4.3 Winding Down and Mitigation.  Upon early termination of this Subcontract or any Scope for any reason, at  PharmAthene’s request Diosynth shall inform PharmAthene of the extent to  which it expects work in progress to be completed as of the termination date  and Diosynth shall (unless otherwise instructed by PharmAthene) take  reasonable steps to wind down work in progress in an orderly fashion and  mitigate any losses and costs. Upon early termination or expiration of any  Scope, each party shall return all Confidential Information, files and other  materials in its possession related to such Scope to PharmAthene. Each party  shall be permitted to retain one copy of such materials solely for archival  purposes to ensure compliance with the provisions of this Subcontract or with  the requirements of regulatory authorities, subject to Article 5. 4.4  Technology Transfer Upon Termination. (a) Upon expiration or sooner  termination of this Subcontract for any reason Diosynth shall on an expedited  basis transfer to PharmAthene any and all PharmAthene Intellectual Property  Rights (as defined in Article 8), and shall provide to PharmAthene any and  all Diosynth Intellectual Property Rights that may be required to manufacture  the Drug Substance in accordance with the Subcontract and to support regulatory  filings for the Drug Substance; provided, however, that Diosynth shall not be  required to provide PharmAthene with any such Diosynth Intellectual Property  Rights if PharmAthene does not possess a then current license under Section  8.4. Subject to the availability of the appropriate Diosynth |
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|  | 8 personnel, PharmAthene may request that Diosynth provide to  PharmAthene reasonable consulting services related to the manufacturing,  quality control, quality assurance, and the CMC (chemistry, manufacturing and  control) part of the Drug Substance registration process; provided however  that Diosynth shall not be required to provide consulting services under this  Section 4.4 for so long as PharmAthene has not paid Diosynth amounts due to  Diosynth hereunder. PharmAthene shall pay Diosynth for all reasonable  expenses related to the consulting services provided under this Section 4.4,  and shall compensate Diosynth at its then current rates for such consulting  services. All technical assistance to be provided by Diosynth pursuant to  this Section 4.4 shall be in accordance with a plan provided to Diosynth by  PharmAthene and agreed upon by the Parties. To the extent transferable,  Diosynth shall also transfer any license(s), permit(s), or approval(s)  obtained specifically for the manufacturing of the Drug Substance. The  Parties agree to work in good faith for the transfer of any information and  materials related to the Drug Substance, PharmAthene’s Intellectual Property  Rights and any Diosynth Intellectual Property Rights required under this  Section 4.4(a). (b) Subject to the limitations set forth in Section 4.4(a),  the technology transfer contemplated by Section 4.4(a) shall include without  limitation at least the following activities: (i) Diosynth shall provide  PharmAthene access to any and all Diosynth Intellectual Property Rights (as  defined in Article 8) that are used in the manufacture of the Drug Substance  in accordance with the Subcontract and to support regulatory filings for the  Drug Substance (including, without limitation, analytical testing methods,  protocols, process descriptions, batch records, specifications and other  process and manufacturing data and documentation); (ii) Diosynth shall  provide PharmAthene with reasonable access to Diosynth employees with expertise  in development and manufacturing the Drug Substance to answer questions  related to such technology transfer; and (iii) Diosynth shall allow  PharmAthene reasonable access to the Facility at reasonable times on business  days for any reasonable purpose connected with such technology transfer;  provided, however, that such access must be scheduled in advance with  Diosynth and may not interfere with Diosynth’s business operations (such  training sessions, assistance, cooperation, access to Diosynth employees and  access to the Facility shall be limited to (i) PharmAthene employees and (ii)  any consultants hired by PharmAthene and approved by Diosynth, with such  approval not to be unreasonably denied, provided each consultant signs a  confidentiality agreement that consistent with the confidentiality  obligations established in this Subcontract. PharmAthene shall provide  Diosynth with a list of proposed visitors to the Facility at least one (1)  business day in advance of such visit. PharmAthene shall pay Diosynth for all  reasonable expenses related to Diosynth’s provision of Facility access under  this Section 4.4(b). (c) The technology transfer contemplated in Section  4.4(a) and (b) above shall be provided promptly and in accordance with the  terms of this Subcontract for the provision of CMO Services. In the event  that this Subcontract is terminated (i) by Diosynth due to a default of  PharmAthene under Section 4.2(a) or due to an Insolvency Event with respect  to PharmAthene described in Section 4.2(c), or (ii) by PharmAthene under  Section 4.2(b), PharmAthene shall pay for the technology transfer  contemplated in Section 4.4(a) and (b) above at Diosynth’s then-current  hourly rates. If this Subcontract is terminated by |
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|  | 9 PharmAthene due to a default of Diosynth under Section 4.2(a)  or due to an Insolvency Event with respect to Diosynth described in Section  4.2(c), Diosynth shall provide such technology transfer without charge to  PharmAthene, except for the consulting services described in Section 4.4(a).  5. Confidential Information and Records. 5.1 Disclosure. During and in  furtherance of this Subcontract, each of the Parties hereto may disclose  certain of its Confidential Information to the other Party. “Confidential  Information” shall mean a Party’s non-public and/or proprietary information  that is disclosed under this Subcontract by the disclosing Party to the  recipient Party in writing or in other tangible form and marked  “confidential,” or if disclosed orally (or in some other non-tangible form),  are identified as confidential to the recipient Party or reasonably should be  considered confidential by the recipient Party. Such information may include  technology, data, know-how, trade secrets, cell lines, specifications,  drawings, designs, regulatory strategies, inventions, discoveries, methods  and procedures, and all information whether technical or non-technical,  including, but not limited to, financial statements, reports, pricing, secret  processes, formulae, samples, proposals, SOPs, Scope, Quality Agreement, business  and financial information, capacity information, etc. and any unpublished  patent applications. 5.2 Use and Non-Disclosure of Confidential Information.  During the term of this Subcontract and for a period of ten (10) years from  the termination thereof, each of the Parties hereto agrees (a) to use the  other Party’s Confidential Information only in connection with the  performance of this Subcontract; (b) to treat the other Party’s Confidential  Information as it would its own sensitive or proprietary information; and (c)  to take all reasonable precautions to prevent the disclosure of the other  Party’s Confidential Information to any individual or entity, (except to such  of its employees and contractors who reasonably require same for purposes  hereof and who are bound to that Party by like obligations as to  confidentiality and non-use), without the prior written consent of the other  Party. The receiving Party shall be responsible for any breaches of this  Subcontract by its employees, agents, board members, consultants or  suppliers. In addition, a Party may disclose Confidential Information  provided under this Subcontract by the other Party to any governmental  authority in order to prosecute or maintain any Intellectual Property Rights  or any Regulatory Authority to obtain approval to manufacture and/or market  the Product or perform its obligations under the Prime Contract. 5.3  Exceptions to Confidential Information. Each Party shall be relieved of its  obligations under Section 5.2 regarding Confidential Information which such  Party demonstrates (a) was lawfully in the possession of such Party as  evidenced by competent evidence of such Party, and which was not acquired  directly or indirectly from the disclosing Party or any of the  representatives or advisors to the disclosing Party, or in violation of any  confidentiality agreement; (b) at the time of disclosure, was generally  available to the public or which after disclosure hereunder becomes generally  available to the public through no fault attributable to the receiving Party  hereto; (c) is developed by the receiving Party independently of information  received by it from the disclosing Party hereunder, or (d) is required to be  disclosed by the law |
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|  | 10 or the rules of any applicable regulatory organization provided  that the receiving Party shall apply for confidential treatment of such  Confidential Information to the fullest extent permitted by law, shall  provide the other Party a copy of the confidential treatment request far  enough in advance of its filing, if reasonably practical or legally  permitted, to give the other Party a meaningful opportunity to comment  thereon, and shall use reasonable efforts to incorporate in such confidential  treatment request any reasonable comments of the other Party. 5.4 Return.  Upon the expiration or sooner termination of this Subcontract or written  request, all information of the disclosing Party in the receiving Party’s  possession will be returned to the disclosing Party (or irretrievably  destroyed by the receiving Party, with written confirmation of such  destruction), and the receiving Party will make no further use thereof.  Notwithstanding the foregoing, the receiving Party may retain one copy of the  Confidential Information of the disclosing Party solely for archival purposes  to ensure compliance with the provisions of this Article 5 or with the  requirements of regulatory authorities. 5.5 Designation of Confidential  Information. For purposes of this Subcontract, the Parties hereby acknowledge  and agree that this Subcontract and all results, data and other information  that result or are generated from the CMO Services rendered by Diosynth  hereunder (other than the Diosynth Intellectual Property Rights (as defined  below)) shall be considered PharmAthene’s Confidential Information to the  extent relating to the Drug Substance. Furthermore, any all data,  information, and materials that PharmAthene transfers to Diosynth as part of  the Technology Transfer shall be considered PharmAthene’s Confidential  Information. The Diosynth Intellectual Property Rights shall be considered  Diosynth’s Confidential Information. 6. Safety; Protected Health Information.  6.1 Adherence to Safety Procedures. Diosynth shall adhere to its internal  health and safety procedures during the performance of the CMO Services,  including any handling of the Drug Substance or raw materials, components,  hazardous waste and other materials. Such procedures shall comply with all  applicable federal, state and local laws and regulations (including without  limitation federal, state and local health and safety laws and regulations).  6.2 Training. Diosynth shall educate and train all employees and contractors  involved in the performance of the CMO Services about the potential hazards  associated with the handling of the Drug Substance, raw materials,  components, hazardous waste and other materials involved in the CMO Services  and on the proper use of personal protective equipment, to the extent that  such hazards relating to the Drug Substance have been communicated to  Diosynth by PharmAthene. Diosynth shall make applicable material safety data  sheets available to all affected employees and contractors to the extent that  such sheets have been provided to Diosynth by PharmAthene. 6.3 Disposal of  Waste. Diosynth shall handle, store and dispose of all Hazardous Waste in  accordance with Applicable Law. For purposes of the foregoing sentence, the  term “Hazardous |
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|  | 11 Waste” shall mean all hazardous waste, as defined by  Applicable Law, to the extent the same arise out of Diosynth’s performance of  CMO Services. 6.4 HIPAA Compliance. The Parties recognize that the Federal  Health Insurance Portability and Accountability Act of 1996 and implementing  regulations (“HIPAA”) require written confidentiality agreements to protect  the privacy and security of protected health information (as defined under  HIPAA) that may be acquired in the course of performing this Subcontract. The  parties agree to comply with HIPAA and other Applicable Law governing  protected health information. 7. Program Management. 7.1 Joint Steering  Committee. Effective on the Effective Date, the Parties shall establish a  Joint Steering Committee (the “Joint Steering Committee”) comprised of three  (3) representatives designated by PharmAthene and three (3) representatives  designated by Diosynth, each of whom shall have experience and seniority  sufficient to enable him or her to make decisions on behalf of the Party he  or she represents. The Project Managers may not be appointed to the Joint  Steering Committee. 7.2 Replacement of Joint Steering Committee  Representatives. Each party shall be free to replace its representative  members on the Joint Steering Committee with new appointees who have  authority to act on behalf of such party, on notice to the other Party. 7.3  Responsibilities of Joint Steering Committee. The Joint Steering Committee  shall be responsible for overseeing and directing the Parties’ interaction  and performance of their respective obligations under this Subcontract.  Without limiting the generality of the foregoing, its duties shall include:  (i) monitoring the performance of the Program; (ii) resolving disagreements  that arise under this Subcontract; and (iii) determining the need for and  terms of any Change Orders. 7.4 Meetings. The Joint Steering Committee shall meet  at such times as the Joint Steering Committee determines to resolve issues  arising hereunder and to perform its responsibilities under this Subcontract,  provided that the Joint Steering Committee shall meet not less than four (4)  times per calendar year unless otherwise mutually agreed. Such meetings may  be in person or by telephone as agreed by the Joint Steering Committee. To  the extent that meetings are held in person, they shall alternate between the  offices of the Parties unless the Parties agree otherwise. The Project  Managers shall attend all meetings of the Joint Steering Committee. All  decisions of the Joint Steering Committee shall be unanimous. 7.5  Administration. The chairperson of the Joint Steering Committee shall at all  times be a representative designated by PharmAthene. The chairperson shall be  responsible for calling meetings, sending notices of meetings and for leading  such meetings; provided however that each member of the Joint Steering  Committee may demand that the chairperson convene a meeting of the Joint  Steering Committee. |
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|  | 12 7.6 Minutes. Within fifteen (15) days after each Joint  Steering Committee meeting, the PharmAthene Project Manager shall prepare and  distribute minutes of the meeting, which shall provide a description in  reasonable detail of the discussions had at the meeting and a list of any  actions, decisions or determinations approved by the Joint Steering  Committee. Minutes shall be approved or disapproved and revised, as  necessary, at the next meeting. Final minutes shall be distributed to the  members of the Joint Steering Committee. 7.7 Dispute Resolution. In the event  that the Joint Steering Committee cannot reach agreement with respect to any  material issue, then the issue may be submitted to dispute resolution  pursuant to Article 26. 7.8 Limitations. The Joint Steering Committee is not  empowered to amend the terms of this Subcontract. 8. Intellectual Property  and Proprietary Rights. 8.1 Intellectual Property Definitions. For purposes  of this Subcontract, “Intellectual Property Rights” shall mean all  proprietary rights and proprietary information, in any tangible or intangible  form, including without limitation inventions, discoveries, devices, data,  patents, patent applications, designs, copyrights, trademarks, trade secrets,  proprietary know-how, Confidential Information and similar rights of any type  under the laws of any governmental authority, including all applications and  registrations relating to any of the foregoing and any Improvements relating  to any of the foregoing. For purposes of this Subcontract, “Improvements”  mean all improvements, discoveries, inventions, developments, enhancements,  derivative works and the like, whether or not patentable or protectable. 8.2  Background IP. As between the Parties, each Party shall be sole owner of any  Intellectual Property Rights it owns, licenses or controls as of the  Effective Date and all Improvements thereto reduced to practice by either  Party during the term of this Subcontract (each Party’s “Background IP”). Diosynth  hereby represents and warrants that Diosynth owns or holds sufficient rights  to its Background IP to perform the activities contemplated by this  Subcontract relating to the Drug Substance, including without limitation all  Background IP used by Diosynth in the development and manufacturing of the  Drug Substance pursuant to this Subcontract. 8.3 PharmAthene License to  Diosynth. PharmAthene hereby grants Diosynth a non-exclusive,  non-sublicensable, non-transferable, fully paid, royalty-free license under  any PharmAthene Intellectual Property Rights, including without limitation  any PharmAthene Background IP, relating to the Drug Substance solely in order  for Diosynth to provide the CMO Services to PharmAthene during the term and  to otherwise perform its obligations under the terms of this Subcontract. 8.4  Diosynth License to PharmAthene. Diosynth hereby grants PharmAthene a  non-exclusive, perpetual, worldwide, fully paid, royalty free, fully  transferable license with the right to grant sublicenses, to and under  Diosynth’s Intellectual Property Rights, including without |
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|  | 13 limitation any Diosynth Background IP and any Process  Inventions, solely for the purpose of developing, marketing, selling,  manufacturing or having manufactured the Drug Substance and/or the Product  and to support regulatory filings for the Drug Substance and/or Product;  provided however that Diosynth may suspend this license by written notice at  any time that amounts due by PharmAthene under this Subcontract have not been  paid; provided further that such license shall be reinstated upon  satisfaction of PharmAthene’s payment obligations hereunder. Diosynth shall  confirm such reinstatement by written notice to PharmAthene. 8.5 New  Intellectual Property. (a) PharmAthene shall retain all rights to, and  Diosynth will, at no cost or further action by PharmAthene, assign to  PharmAthene, any Product improvement or use invention or other trade secret  or other intellectual property right to the extent relating to the Product,  discovered by Diosynth as a result of performing the CMO Services under this  Subcontract (“Product Invention”). Any Product Invention is deemed included  in PharmAthene’s Intellectual Property Rights and the license set forth in  Section 8.3. Diosynth shall retain all rights to any patentable invention  other than a Product Invention relating to manufacturing and analytical  methods and processes discovered in connection with the CMO Services and any  pre-existing know-how (“Process Invention”). Any Process Invention is deemed included  in Diosynth’s Intellectual Property Rights and the license set forth in  Section 8.4. (b) If PharmAthene requests and at PharmAthene’s expense,  Diosynth will execute any and all applications, assignments or other  instruments and give such testimony as shall be necessary to apply for and  obtain Letters of Patent of the United States or of any foreign country with  respect to the Product Invention. PharmAthene shall compensate Diosynth for  the time devoted to such activities and reimburse it for expenses incurred.  If Diosynth requests and at Diosynth’s expense, PharmAthene will execute any  and all applications, assignments or other instruments and give such  testimony as shall be necessary to apply for and obtain Letters of Patent of  the United States or of any foreign country with respect to the Process  Invention and Diosynth shall compensate PharmAthene for the time devoted to  such activities and reimburse it for expenses incurred. (c) Diosynth shall  promptly disclose to PharmAthene any Product Invention or Process Invention  generated by Diosynth during the performance of this Subcontract, and all  such Product Invention shall be deemed to the fullest extent possible to be  works made for hire exclusively for PharmAthene, with PharmAthene having sole  ownership of such Product Invention and the sole right to obtain and to hold  in its own name patents, copyrights, or such other protection as PharmAthene  may deem appropriate to the subject matter, and any extensions or renewals  thereof (though PharmAthene is under no obligation to file any patent  application, secure or maintain any patent or register any copyright). 8.6  Rights in Data. |
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|  | 14 (a) Diosynth agrees to use its best efforts to complete the  requirements of this Subcontract and the Scope without having to include any  Diosynth Intellectual Property Rights in the items, data, and information  required to be delivered in the performance of this Subcontract. As soon as  Diosynth knows or should have known that it plans to deliver to PharmAthene  any item, data or information that will include any element of Diosynth’s  Intellectual Property Rights, Diosynth agrees to notify PharmAthene in  writing that it plans to deliver said item, data, or information with limited  rights as defined in FAR 52.227-14 Rights in Data-General (the “Limited  Rights Data”) and the rationale for the required inclusion of Diosynth’s  Intellectual Property Rights and the impact if the same is not included in  the deliverable product. Without limiting PharmAthene’s rights under Section  8.4, subject to the immediately preceding sentence and the fulfillment of any  payment-related obligations by PharmAthene to Diosynth under this  Subcontract, Diosynth hereby grants to PharmAthene an irrevocable, perpetual,  worldwide, fully paid, royalty free, non-exclusive license to use the Limited  Rights Data provided pursuant to this Subcontract for the purpose of  fulfilling its obligations to the U.S. Government under the Prime Contract  and any future contract with the U.S. Government or any foreign government  related to the Product (the “Permitted Use”), and to deliver the same as  Limited Rights Data per FAR 52.227-14 Rights in Data-General. PharmAthene may  sublicense, disclose, reproduce, modify, prepare derivative works of,  distribute copies of, and perform or display the Limited Rights Data solely  for the Permitted Use. Diosynth agrees to provide, if requested in writing by  PharmAthene pursuant to a valid request of the Prime Contract’s Contracting  Officer, written substantiation of the propriety of any limited rights  legend. (b) Diosynth is responsible for marking its Limited Rights Data in  accordance with FAR 52.227-14, Rights in Data-General. (c) Unless otherwise  marked at time of delivery, all data, information, and other items delivered  under this Subcontract shall be provided to PharmAthene with unlimited rights  per FAR 52.227-14, Rights in Data-General. Diosynth reserves the right to use  data during the course of the CMO Services to support applications,  assignments or other instruments necessary to apply for and obtain Letters of  Patent of the United States or any foreign country with respect to Process  Inventions so long as no information which Diosynth is required to keep  confidential under this Subcontract is disclosed in any such application, assignment,  or other instrument. To the extent practicable, Diosynth shall notify  PharmAthene at least ninety (90) days in advance of intent to file such  application, assignment or other instrument and PharmAthene shall have an  opportunity to review same prior to filing. (d) At the time of the execution  of this Subcontract, Diosynth is not aware of any item, data or information  to be provided under this Subcontract that is or will be deemed Limited  Rights Data. 8.7 Enforcement. (a) Diosynth shall immediately notify  PharmAthene in writing of (i) any unauthorized or improper use by any person,  entity or organization of the PharmAthene |
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|  | 15 Intellectual Property Rights and activities which are likely  to amount to infringement, misuse, passing-off or counterfeiting in respect  of such Intellectual Property Rights, and/or (ii) any allegations, claims or  demands (actual or threatened) in respect of infringement of any third party  proprietary rights by virtue of Diosynth’s use of the PharmAthene  Intellectual Property Rights. PharmAthene may, at it sole discretion, bring  an action based on infringement, misappropriation or misuse or passing off in  relation to its Intellectual Property Rights, at its own cost. Diosynth shall  provide such assistance to PharmAthene as may be reasonably required in  connection with such proceedings. Any damages, awards or settlement monies  actually received by PharmAthene pursuant to this Article 8 upon the final  judgment or settlement of any such action shall belong to PharmAthene. (b) PharmAthene  shall immediately notify Diosynth in writing of (i) any unauthorized or  improper use by any person, entity or organization of the Diosynth  Intellectual Property Rights and activities which are likely to amount to  infringement, misuse, passing-off or counterfeiting in respect of such  Intellectual Property Rights, and/or (ii) any allegations, claims or demands  (actual or threatened) in respect of infringement of any third party  proprietary rights by virtue of PharmAthene’s use of the Diosynth Intellectual  Property Rights. Diosynth may, at it sole discretion, bring an action based  on infringement, misappropriation or misuse or passing off in relation to its  Intellectual Property Rights, at its own cost. PharmAthene shall provide such  assistance to Diosynth as may be reasonably required in connection with such  proceedings. Any damages, awards or settlement monies actually received by  Diosynth pursuant to this Article 8 upon the final judgment or settlement of  any such action shall belong to Diosynth. 9. Representations and Warranties.  The applicable Party indicated below represents and warrants to the other  Party as of the date hereof and as of the date on which such Party enters  into each Scope as follows: 9.1 Requisite Experience, Etc. Diosynth represents  and warrants that it has the experience, capability, personnel and resources  necessary to perform the CMO Services under this Subcontract in accordance  with the Scope, this Subcontract, the Quality Agreement, cGMP (as defined in  the Scope), the Federal Food, Drug, and Cosmetic Act, as amended (the  “FFDCA”) and other Applicable Law. 9.2 Technology. PharmAthene represents and  warrants that it owns or otherwise has sufficient legal rights to the Drug  Substance, the Product, and all technology that will be provided to Diosynth  so it may perform under this Subcontract. 9.3 Power and Authority,  Non-Contravention. Each Party represents and warrants that (a) it has the  corporate power and authority to enter into and perform its obligations under  this Subcontract; and (b) entering into and performing this Subcontract will  not conflict with or result in a violation of any of the terms or provisions,  or constitute a default under any of its organizational documents any  mortgage, indenture, lease, contract or other agreement or instrument binding  upon it or by which any of its properties are bound, or any permit, |
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|  | 16 concession, franchise, license, judgment, order, decree,  statute, law ordinance, rule or regulation applicable to it or its  properties. 9.4 Debarment. Diosynth represents and warrants that it does not  use the services of any persons debarred or suspended under 21 U.S.C. § 335a  (a) or (b) in any capacity associated with or related to the CMO Services.  Diosynth further represents and warrants that it shall not hire or retain as  an officer or employee any person who has been convicted of a felony under  the laws of the United States for conduct relating to the regulation of any  drug product under the FFDCA. 9.5 Diosynth Warranties. Diosynth represents  and warrants that: (i) work it performs hereunder will be in accordance with  Sections 2.1 and 2.7, (ii) all work performed hereunder shall be in  accordance with the regulatory approvals for the Drug Substance, cGMP (as  defined in the Scope), OSHA and applicable federal, state and local  regulations related to manufacturing and (iii) Diosynth possesses and shall  maintain in full force and effect at all times during the term of this  Subcontract all licenses, permits and similar certificates required for the  operation of the Facility and for the production of Drug Substance and the  storage of the materials and components for manufacturing of Drug Substance  and Diosynth shall promptly notify PharmAthene if Diosynth receives any  notice that any such license, permit, or approval is or may be revoked or  suspended. 9.6 DISCLAIMER OF WARRANTIES. EXCEPT AS OTHERWISE SET FORTH IN  THIS SUBCONTRACT OR ATTACHMENTS HERETO, PHARMATHENE AND DIOSYNTH MAKE NO  REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH  REGARD TO THE DRUG SUBSTANCE OR THE PRODUCT INCLUDING ANY WARRANTIES OF  MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. EXCEPT AS EXPRESSLY SET  FORTH IN THIS SUBCONTRACT OR ATTACHMENTS HERETO, DIOSYNTH MAKES NO WARRANTIES  THAT THE EXECUTION OF THE SCOPE WILL RESULT IN ANY SPECIFIC QUANTITY OR  QUALITY OF PRODUCT. 10. Indemnification. 10.1 SAFETY Act. (a) Application.  Notwithstanding anything to the contrary contained in this Article 10, the  indemnification provisions contained in this Subcontract are intended by the  Parties to be fully consistent with the application of the SAFETY Act. The  Parties recognize that PharmAthene has not yet received recognition of the  Product as a QATT and, as such, the provisions of the SAFETY Act may not  apply to this Subcontract. However, to the extent anything contained herein  conflicts with the SAFETY Act and the terms of the SAFETY Act apply to the  activities described in this Subcontract and the Drug Substance and/or  Product, the provisions of the SAFETY Act shall govern. (b) Limitations.  PharmAthene and Diosynth agree that with respect to all third party claims,  suits, actions and demands brought against either PharmAthene or Diosynth |
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|  | 17 or both to which the provisions of the SAFETY Act apply to  limit the liability of PharmAthene and/or Diosynth, each party retains  responsibility for Losses (as defined below), including business interruption  Losses, that it sustains, and for Losses sustained by its own employees  resulting from an Act of Terrorism when Drug Substance has been deployed in  defense against, response to, or recovery from such act, but only to the  extent that such Party’s liability is actually limited by the application of  the SAFETY Act. 10.2 PharmAthene Indemnification. PharmAthene agrees to  defend, indemnify and hold Diosynth, its Affiliates, officers, directors,  employees and agents harmless against any and all losses, damages, fines,  costs, claims, demands, judgments and liability (including reasonable legal  fees and court costs) (collectively, “Losses”) to which the provisions of the  SAFETY Act do not apply resulting from, or relating to: (i) the negligence,  gross negligence or intentional misconduct of PharmAthene; (ii) the  infringement or alleged infringement of the Product on the intellectual property  rights of a third party; (iii) PharmAthene’s breach of its agreements,  representations or warranties under this Subcontract or (iv) the handling,  distribution, storage, sales, use or testing of the Drug Substance and/or  Product that is manufactured by Diosynth in accordance with this Agreement,  including without limitation Section 2.1(a) and the Scope; except in any such  case to the extent that any such Losses are due to the negligence or  intentional misconduct of Diosynth or its Affiliates or their respective  officers, employees, contractors or agents;. 10.3 Diosynth Indemnification.  Diosynth agrees to defend, indemnify and hold PharmAthene, its Affiliates,  officers, directors, employees and agents harmless against any and all Losses  to which the provisions of the SAFETY Act do not apply, resulting from, or  relating to (i) the negligence, gross negligence or intentional misconduct of  Diosynth or its subcontractors; (ii) the infringement or alleged infringement  of any Diosynth Intellectual Property, including without limitation any  Diosynth Background IP, on the intellectual property rights of a third party;  (iii) Diosynth’s breach of its agreements, representations or warranties  under this Subcontract or (iv) failure to take safety precautions to prevent  known risks of the Sponsor Deliverables, the Drug Substance or the Product as  communicated in writing to Diosynth by PharmAthene; except in any such case  to the extent that any such Losses are due to the negligence or intentional  misconduct of PharmAthene or its Affiliates or their respective officers,  employees, contractors or agents. 10.4 Indemnification Procedures. (a) All  indemnification claims in respect of a Party, its Affiliates or their  respective directors, officers, employees and agents (each, an “Indemnitee”)  will be made solely by the applicable Party (the “Indemnified Party”). The  Indemnified Party will give the indemnifying Party (the “Indemnifying Party”)  prompt written notice (an “Indemnification Claim Notice”) of any Losses for  which Indemnified Party intends to request indemnification under any Section  of this Article 10. Each Indemnification Claim Notice must contain a  description of the claim and the nature and amount of such Loss, to the  extent that the nature and amount of |
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|  | 18 such Loss are known at such time. The Indemnified Party will  furnish promptly to the Indemnifying Party copies of all papers and official  documents received in respect of any Losses. (b) At its option, the  Indemnifying Party may assume the defense of any third party claims, suits,  actions and demands (each a “Third Party Claim”) by giving written notice to  the Indemnified Party within thirty (30) days after the Indemnifying Party’s  receipt of an Indemnification Claim. (c) Upon assuming the defense of a Third  Party Claim, the Indemnifying Party may appoint as lead counsel in the  defense of the Third Party Claim any legal counsel selected by the  Indemnifying Party and acceptable to the Indemnified Party in its reasonable  judgment. In the event the Indemnifying Party assumes the defense of a Third  Party Claim, the Indemnified Party will immediately deliver to the  Indemnifying Party all original notices and documents (including court  papers) received by any lndemnitee in connection with the Third Party Claim.  Should the Indemnifying Party assume the defense of a Third Party Claim, the  Indemnifying Party will not be liable to the Indemnified Party or any other  lndemnitee for any legal expenses subsequently incurred by such Indemnified  Party or other lndemnitee in connection with the analysis defense or  settlement of the Third Party Claim. (d) Without limiting the preceding  Section 10.4(c), any Indemnitee will be entitled to participate in, but not  control, the defense of such Third Party Claim and to employ counsel of its  choice for such purpose; provided, however, that such employment will be at  the Indemnitee’s own expense unless (i) the employment thereof has been  specifically authorized by the Indemnifying Party in writing, or (ii) the  Indemnifying Party has failed to assume the defense and employ counsel in  accordance with the preceding Section 10.4(b), in which case the Indemnified  Party will control the defense. (e) With respect to any Losses relating  solely to the payment of money damages in connection with a Third Party Claim  and that will not result in the Indemnitee becoming subject to injunctive or  other relief or otherwise adversely affect the business of the Indemnitee in  any manner, and as to which the Indemnifying Party will have acknowledged in  writing the obligation to indemnify the lndemnitee hereunder, the  Indemnifying Party will have the sole right to consent to the entry of any  judgment, enter into any settlement or otherwise dispose of such Loss, on  such terms as the Indemnifying Party, in its sole discretion, will deem  appropriate, and will transfer to the Indemnified Party all amounts which  said Indemnified Party will be liable to pay prior to the entry of judgment.  With respect to all other Losses in connection with a Third Party Claim,  where the Indemnifying Party has assumed the defense of the Third Party Claim  in accordance with Section 10.4(b), the Indemnifying Party will have  authority to consent to the entry of any judgment, enter into any settlement  or otherwise dispose of such Losses provided it obtains the prior written  consent of the Indemnified Party (which consent will be at the Indemnified  Party’s sole and absolute discretion). The Indemnifying Party will not be  liable for any settlement or other disposition of Losses by an lndemnitee that  is reached without the written consent of the Indemnifying Party. Regardless  of whether the Indemnifying Party chooses to defend or prosecute any Third  Party Claim, no |
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|  | 19 Indemnitee will admit any liability with respect to, or  settle, compromise or discharge, any Third Party Claim without the prior  written consent of the Indemnifying Party. (f) The Indemnified Party will,  and will cause each other Indemnitee to, cooperate in the defense or  prosecution of any Third Party Claim and will furnish such records,  information and testimony, provide such witnesses and attend such  conferences, discovery proceedings, hearings, trials and appeals as may be  reasonably requested in connection therewith. Such cooperation will include  access during normal business hours afforded to the Indemnifying Party, and  reasonable retention by the Indemnified Party of, records and information  that are reasonably relevant to such Third Party Claim, and making  Indennnitees and other employees and agents available on a mutually convenient  basis to provide additional information and explanation of any material  provided hereunder, and the Indemnifying Party will reimburse the Indemnified  Party for all its reasonable out-of-pocket expenses in connection therewith.  10.5 Definition of Affiliates. As used in this Subcontract, “Affiliate” of  any Party means any corporation, firm, partnership, joint venture, limited  liability company or other entity or association which is controlled by or is  under common control with a Party. For the purpose of this definition,  “control” shall mean the power to direct, or cause the direction of, the  management and policies of such entity or association through the ownership  of at least fifty percent (50%) of the voting share capital of such entity or  any other comparable equity, by contract, or by ownership interest. 11.  Insurance. 11.1 Diosynth Requirement. Diosynth shall have and maintain  throughout the term, at a minimum, the insurance coverage listed below but in  no event shall the policy limits, deductibles, and other terms of such  insurance afford less protection than that required by the Department of  Homeland Security under the SAFETY Act. All insurance shall be with an  insurance carrier with an A.M. Best rating of at least “A” or greater or the  equivalent rating: (a) workers compensation insurance, including occupational  disease, in the statutory limits of the state in which the CMO Services will  be performed; (b) employers liability insurance in each state in which the  CMO Services will be performed with minimum limits of $500,000 each accident  and a $1,000,000 disease policy limit; (c) comprehensive general liability  insurance with minimum limits of $5,000,000 per occurrence and $5,000,000  aggregate for bodily injury and property damage, also providing coverage for  (i) broad form contractual liability insurance insuring the hold harmless and  indemnification provisions contained in this Subcontract, (ii) broad form  property damage insurance, (iii) completed operations insurance for a term of  two (2) years, which term shall commence upon expiration or termination of  this Subcontract and (iv) the exclusion in the |
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|  | 20 comprehensive general liability policy commonly referred to  as the x, c, u exclusion shall be deleted therefrom; and (d) comprehensive  automobile liability insurance covering claims arising from owned, hired, and  non-owned vehicles for bodily injury and property damage with minimum limits  of $2,000,000 per occurrence and $2,000,000 aggregate. 11.2 Excess Insurance.  Diosynth may fulfill its insurance obligations under this Article 11 by  providing $5,000,000 primary coverage limits for comprehensive general  liability and for automobile liability, and by providing excess or umbrella  liability insurance with minimum limits of $5,000,000 per occurrence and  $5,000,000 aggregate in excess of the primary coverage limits, but only so  long as such excess policy includes broad form contractual liability, broad  form property damage, and completed operations coverage. 11.3 Certificates of  Insurance and Other Requirements. Certificates of the above insurance must be  filed with PharmAthene within five (5) days before the time performance under  this Subcontract is commenced. Diosynth covenants, represents and warrants to  PharmAthene that (a) all policies of insurance required hereunder shall by  appropriate endorsement, or otherwise, provide for thirty (30) days prior  written notice of cancellation to PharmAthene, (b) the contractual liability  insurance required hereunder, shall, by appropriate endorsement, or  otherwise, specifically insure the terms and conditions as expressed in this  Subcontract, (c) all insurance policies, except worker’s compensation, shall  identify PharmAthene as an additional insured under such policies, (d) all  policies required to be provided by Diosynth shall be primary and not  secondary to any policies held by PharmAthene; and (e) all policies  referenced in Section 11.1 include waivers of all rights of subrogation. 11.4  PharmAthene Requirement. PharmAthene shall secure and maintain in full force  and effect throughout the performance of the Program policies of insurance  for (a) general liability and (b) product liability having policy limits,  deductibles and other terms appropriate to the conduct of PharmAthene’s  business in PharmAthene’s reasonable judgment. 12. Prime Contract and FAR  Provisions. 12.1 Applicable FAR Provisions. Diosynth recognizes that, under  this Subcontract, it will provide commercial item goods and/or services as  defined in the Federal Acquisition Regulation (“FAR”) 2.101. All work  conducted by Diosynth shall be in accordance with the terms of this  Subcontract, including the flow-down terms and other obligations set forth in  Exhibit C. 12.2 Cost Accounting Standards; Support of Earned Value Management  System. (a) In providing the commercial item goods and/or services under this  Subcontract, Diosynth shall be exempt from the Cost Accounting Standards  pursuant to Part 48 of the Code of Federal Regulations, Section  9903.201-1(b)(6). |
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|  | 21 (b) PharmAthene will be operating an Earned Value Management  System (“EVMS”) for the assessment and reporting of progress to the U.S.  Government with respect to work under the Prime Contract. In support of  PharmAthene’s EVMS, Diosynth will periodically and as otherwise requested by  PharmAthene from time to time: report progress against timeline (by, among  other things, updating appropriate gantt chart(s) with % completion, recorded  by task); report status of work against the agreed payment schedule; report  time deviations and how they will be addressed; and provide input necessary  for PharmAthene to update its risk register. Exhibit E sets forth additional  requirements with respect to the Earned Value Management System applicable to  Diosynth. Diosynth shall provide the required report(s) covering these  activities electronically by the 2nd working day of each calendar month.  PharmAthene shall provide Diosynth with electronic templates for such  reports. 13. Inspections and Audits. 13.1 Inspections and Audits. During the  term of this Subcontract, Diosynth shall permit PharmAthene, its authorized  representatives or representatives of a Regulatory Authority to inspect and  audit the Facility in connection with this Subcontract. The terms and  conditions of such inspections or audits are provided in the Quality  Agreement. 13.2 Post-Termination Audits. For five (5) years following the  completion or termination of any Scope authorized under this Subcontract, the  applicable Regulatory Authority and/or government audit agency shall have  access to Diosynth’s records and documentation related to the CMO Services  being performed under this Subcontract for audit purposes during normal  business hours and upon twenty (20) day’s notice. Diosynth will accommodate  any such a request on the specified date, and in the event that a visit on  the specified date is not possible, on the next available date. 13.3 Record  Retention. During the term of this Subcontract, Diosynth shall maintain and  safeguard all materials and all other data obtained or generated by it in the  performance of the Scope, including all computerized records and files in a  secure environment. Archive data will be retained in accordance with the  Quality Agreement for a period of five (5) years following the completion or  termination of any Scope authorized under this Subcontract. Following the  retention period in this Section 13.3, PharmAthene may request that Diosynth  destroy any such data or return it to PharmAthene at PharmAthene’s expense.  14. Force Majeure; Other Delays. 14.1 Excusing Performance. Neither Party  shall be liable for the failure to perform its obligations under this  Subcontract if such failure is not preventable, was not reasonably  foreseeable at the time of contracting, and is caused by a contingency beyond  such Party’s reasonable control, including, but not limited to, riots, wars,  fires, floods or storms, strikes, public utilities or common carriers. A  failure or delay of performance of suppliers or contractors shall not excuse  performance hereunder. |
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|  | 22 14.2 Notice. A Party claiming a right to excused performance  under this Article 14 shall promptly notify the other Party in writing of the  extent of its inability to perform, which notice shall specify the occurrence  beyond its reasonable control that prevents such performance. 14.3  Resumption. Each Party shall employ all reasonable efforts toward resumption  of its performance hereunder if such performance is delayed or interrupted by  reason of force majeure. Each Party shall bear its own costs and losses  arising from any event described in Section 14.1, including all costs of  resuming performance under this Section 14.3. 15. Non-Solicitation;  Independent Contractors. During the term of this Subcontract, neither  Diosynth nor PharmAthene shall directly solicit employees of the other Party  without the other Party’s prior written authorization. Neither party shall be  in breach of this Article 15 to the extent that one Party’s employee responds  to a bona fide advertisement for employment offered to the public by the  other Party. The Parties shall be deemed to be independent contractors, and  this Subcontract shall not be construed to create between PharmAthene arid  Diosynth any other relationship such as, by way of example only, that of  employer-employee, principal and agent, joint-venturer, co-partners or any  similar relationship, the existence of which is expressly denied by the  Parties hereto. 16. Publications; Public Statements. Diosynth may not publish  any articles or make any presentations relating to any Scope or referring to data,  information or materials generated as part of any Scope without the prior  written consent of PharmAthene. Diosynth understands that the written consent  of the federal government may also be required. Except as required by  Applicable Law, or as required by the rules of the exchange on which a  Party’s stock is traded, no Party will originate any publication, news  release or other public announcement, written or oral, whether in the public  press, stockholders’ reports or otherwise, relating to this Subcontract or  referring to the other Party without the prior written approval of the other  Party, which approval shall not be unreasonably withheld, conditioned or  delayed, provided, however, that information previously mutually approved for  disclosure by the Parties may be reiterated by each Party without addition  approval by the other Party. The Parties shall agree on a mutual press  release and the timing of such press release to announce the timing of this  Subcontract. 17. Subcontracting. Diosynth shall not, without prior written  approval of PharmAthene (which shall not be unreasonably withheld,  conditioned or delayed), subcontract any part of its responsibilities under  this Subcontract to another party; provided however that Diosynth may  subcontract raw material testing to an approved Diosynth vendor without  obtaining prior written approval from PharmAthene. PharmAthene expressly  approves of and consents to Diosynth’s use of as detailed in the Scope.  Diosynth shall have the obligation to ensure its subcontractors are monitored  and audited through Diosynth’s internal management program. 18. Assignment.  This Subcontract shall not be assigned in whole or in part by either Party  without the prior written consent of the other Party, which consent shall not  be unreasonably withheld, conditioned or delayed. Any attempt to assign this  Subcontract without such consent |
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|  | 23 shall be void and of no effect. Notwithstanding the  foregoing, either Party shall be entitled, without the prior written consent  of the other Party, to assign all or part of its rights under this  Subcontract to a purchaser of all or substantially all of its assets, or an  entity with which it may merge where it is not the surviving company,  provided that the assignee agrees in writing to assume all obligations  undertaken by its assignor in this Subcontract and, with respect to an  assignment by Diosynth, the assignee possesses adequate technical  capabilities to perform the CMO Services. The terms of this Subcontract shall  inure to the benefit of all successors and permitted assigns. 19. Governing  Law. This Subcontract and any Scope will be governed by and construed and  interpreted in accordance with the law of the State of Maryland without  reference to conflicts of law principles that may dictate application of the  laws of another jurisdiction, except that any applicable flow-down clauses as  set forth in Exhibit C will be construed and interpreted according to the  federal common law of government contracts as enunciated and applied by  federal judicial bodies, Boards of Contract Appeal, and quasi-judicial  agencies of the U.S. Government. 20. Notices. Any notice, approval,  instruction or other written communication required or permitted hereunder  shall be sufficient if made or given to the other Party by personal delivery,  courier service or Certified First Class U.S. Mail to the mailing address set  forth below: If to PharmAthene: PharmAthene, Inc. One Park Place, Suite 450  Annapolis, MD 21401 Attn: Director of Contracts with separate correspondence  to PharmAthene, Inc. One Park Place, Suite 450 Annapolis, MD 21401 Attn:  General Counsel If to Diosynth: Diosynth RTP Inc. 101 J Morris Commons Lane  Morrisville, North Carolina 27560 Attn: Henrik Edeback or Jenifer Wheat with  separate correspondence to: 23 |
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|  | 24 Diosynth RTP Inc. c/o Schering-Plough Corporation 2000  Galloping Hill Road Kenilworth, NJ 07033 Attn: Legal Director, Business  Development and Licensing or to such other addresses provided to the other  Party in writing in accordance with the terms of this Article 20. Notices of  written communication made or given by personal delivery or courier service  shall be deemed to have been sufficiently made or given when sent (receipt  acknowledged). 21. Entire Agreement. This Subcontract, which includes the  exhibits hereto, the Scope and any Change Order (s) entered into hereunder  constitute the full, complete, final and integrated agreement between the  Parties hereto relating to the subject matter hereof and supersede all  previous written or oral negotiations, commitments, agreements, transactions,  or understandings with respect to the subject matter hereof. Nothing herein  shall be deemed to require the parties to enter into a Development and Supply  Subcontract. Nothing in this Subcontract shall be deemed or construed to  establish any precedent with respect to any other or future agreement, if  any, between the Parties. 22. Amendments; No Waiver. No provision of this  Subcontract may be amended, revoked or waived except in writing signed and  delivered by an authorized officer of each Party. No failure or delay on the  part of either Party in exercising any right hereunder will operate as a  waiver of, or impair, any such right. No single or partial exercise of any  such right will preclude any other or further exercise thereof or the  exercise of any other right. No waiver of any such right will be deemed a  waiver of any other right hereunder. 23. Validity. Should any part or  provision of this Subcontract be held unenforceable or invalid, the invalid  or unenforceable provision shall be replaced with a provision which  accomplishes, to the extent possible, the original business purpose of such  provision in a valid and enforceable manner, and the remainder of this  Subcontract shall remain binding upon the Parties. 24. Headings. The  descriptive headings in this Subcontract are inserted for the convenience of  reference only and are not intended to be part of or affect the meaning of or  interpretation of this Subcontract. 25. Execution in Counterparts. This  Subcontract may be executed, either by original or by facsimile signature, in  one or more counterparts, each of which shall be deemed to be an original,  but all of which together shall constitute one and the same instrument. 26.  Dispute Resolution. The Parties shall attempt in good faith to resolve any  dispute arising out of this Subcontract. Except for claims for injunctive  relief as provided in Section |
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|  | 25 26.6, any dispute, controversy or claim arising under, out of  or in connection with this Subcontract, or the validity, enforceability,  construction, performance or breach hereof, shall be submitted by the Parties  to binding arbitration as the exclusive forum for resolving such dispute in  lieu of filing suit in a court of law or seeking other remedies. The Parties  agree not to take any action, including the filing of any lawsuit or other  proceeding, in contravention thereof. 26.1 Binding Arbitration. Binding  arbitration will be conducted in Washington, D.C. in accordance with: (i) the  Federal Arbitration Act; (ii) the then-current commercial arbitration rules  of the American Arbitration Association (the “AAA”); and (iii) this  Subcontract. The terms set forth in this Subcontract will control in the  event of any inconsistency between such terms and the AAA rules. 26.2  Arbitrator. The arbitration will be conducted by a single arbitrator  reasonably familiar with the technology and business covered by this  Subcontract selected by mutual agreement of the Parties. If the Parties fail  to select an arbitrator within thirty (30) days following the date of either  party’s notice of demand to conduct arbitration, then the AAA will, in  accordance with its rules, appoint an arbitrator reasonably familiar with the  technology and business covered by this Subcontract. The award of the  arbitrator will be in writing setting forth findings of fact and conclusions  of law. 26.3 Judgment and Fees. Judgment on the arbitrator’s award will be  final and binding upon the Parties and may be entered in any court having  jurisdiction thereof. The arbitrator’s fees will be shared equally by the  Parties and each party will bear its own costs and attorneys’ fees; provided  that the arbitrator may in his or her discretion award to the prevailing  Party the costs and expenses incurred by the prevailing Party in connection  with the arbitration proceeding. 26.4 Discovery. All papers, documents, or  evidence, whether written or oral, filed with or presented in connection with  the arbitration proceeding shall be considered confidential and not disclosed  to anyone without prior written consent of the Parties. Highly sensitive  documents produced by a producing party may be designated “outside counsel  only”, and in that event, subject to any de-designation by the arbitrator,  shall be limited to outside counsel only, may not be shown to any officer,  director, employee or independent contractor of the non-producing party  (except non-party expert witnesses), and may not be shown to any attorney or  patent agent that is responsible for prosecuting patent applications for the  non-producing party (“patent counsel”). In the event that any attorney,  patent counsel or a non-party expert witness is given access to such “outside  counsel only” documents of the producing party, such person may not  thereafter have any role in the prosecution of patents for the non-producing  party for a period of not less than one year. Nothing herein shall limit a  party’s counsel with respect to that party’s own highly sensitive documents.  In all events, documents produced pursuant to the arbitration shall not be used  for any purpose other than the conduct of the arbitration. The arbitrator  shall permit such limited discovery necessary for an understanding of any  legitimate issue raised in the arbitration, including the production of  documents. Each party shall be permitted but not required to take the  deposition of not more |
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|  | 26 than five (5) persons, each such deposition not to exceed  seven (7) hours in length. If the arbitrator believes that exceptional  circumstances exist, and additional discovery is necessary for a full and  fair resolution of the issue, the arbitrator may order such additional  discovery as the arbitrator deems necessary. At the hearing the Parties may  present testimony (either by live witness or deposition) and documentary  evidence. 26.5 Pre-Arbitration Dispute Resolution. No dispute under this  Subcontract shall be referred to arbitration under this Article 26 until the  following procedures in this Section 26.5 have been satisfied. Executive  officers of Diosynth and PharmAthene shall meet as soon as practicable, as  reasonably requested by either Party to review any dispute with respect to  the interpretation of any provision of this Subcontract or the Quality  Agreement, or with respect to the performance of either Party under this  Subcontract or the Quality Agreement. If the dispute is not resolved by the  officers by mutual agreement within thirty (30) days after a meeting to  discuss the dispute, either Party may at any time thereafter provide the  other Party written notice specifying the terms of such dispute in reasonable  detail and notifying the other Party of its decision to institute arbitration  proceedings under Article 26. 26.6 Injunctive Remedy. Nothing in this  Subcontract shall limit the right of either Party to seek to obtain in any court  of competent jurisdiction any injunctive relief and seeking or obtaining such  equitable relief shall not be deemed a waiver of this Subcontract to  arbitrate. For clarity, any such equitable remedies shall be cumulative and  not exclusive and are in addition to any other remedies that either Party may  have under this Subcontract or Applicable Law. 27. Survival. The rights and  obligations of the Parties set forth in Sections 2.1(b), 2.5, 4.3, 4.4,  Article 5, Article 8, Article 9, Article 10, Section 13.2 and 13.3, Article  16 and Article 26 shall survive expiration or earlier termination of this  Subcontract. IN WITNESS WHEREOF, the Parties have executed this Subcontract  as of the Effective Date. Diosynth RTP Inc. PharmAthene, Inc. By: /s/ Stephen  A. Spearman By: /s/ Christopher Camut Name: Stephen A. Spearman, Ph.D., MBA  Name: Christopher Camut General Manager Title: Title: VP Contracting By: /s/  Henrik Edeback Name: Henrik Edeback Title: Finance Director  LAW DEPARTMENT /s/ M. H. Skorella M. H.  Skorella |
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|  | 1 Exhibit A  Scope of Work  for Technology Transfer, Scale-Up and cGMP Manufacturing of rPA Drug  Substance Diosynth Biotechnology CONFIDENTIAL |
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|  | 35 EXHIBIT B Program Price and Payment Schedule |
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|  | 36 EXHIBIT C Prime Contract Flow-Down Terms Incorporation of FAR  Clauses: The Federal Acquisition Regulation (“FAR”) clauses clauses  referenced below are incorporated herein by reference, with the same force  and affect as if they were given in there full text, during the performance  of this Contract. The reference to the Contractor in the FAR clauses shall  mean the Diosynth acting as the immediate subcontractor to PharmAthene. The  full text of a FAR clause may be accessed electronically at:  http://www.arnet.gov Notes: 1. Substitute PharmAthene for “Government” or  United States as applicable throughout this clause. 2. Substitute PharmAthene  “Director of Contracts” for “Contracting Officer,” “Administrative  Contracting Officer,” and “ACO” throughout this clause. 3. Insert “and  PharmAthene after “Government” or Contracting Officer throughout this clause.  4. Insert “or PharmAthene” after Government throughout this clause. 5.  Communication or notification required under this clause from or to the  Contracting Officer and to and from the Contracting Officer shall be through  PharmAthene. 6. “Contracting Officer” shall mean the US Government  Contracting Officer for PharmAthene’s government Prime Contract under which  this Contract is entered. ItemFAR- #.SectionDateTitle 352.246-16Apr  1984Responsibility for SuppliesSee Note 1: title passes upon formal  acceptance. Does not eliminate right of rejection 852.203-12Sept  2005Limitation on Payments to Influence Certain Federal Transactions (Over  $100,000)See Note 3: Required Certification by Subcontractor shall be  submitted upon written request. 952.203-13Dec 2007Contractor Code of Business  Ethics and Conduct 1152.211-5Aug 2000Material RequirementsSee Note 2  1252.222-19Jan 2006Child Labor – Cooperation with Authorities and Remedies |
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|  | 37 13  52.222-20  Dec 1996   Walsh-Healey Public Contracts Act   Applicable if the work is to be performed in United States, Puerto  Rico, and or the US Virgin Islands. 14   52.222-21  Feb 1999  Prohibition of Segregated Facilities  15  52.222-26  Mar 2007   Equal Opportunity 16   52.222-35  Sept 2006  Equal Opportunity for Special Disabled  Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans 17  52.222-36   Jun 1998  Affirmation Action for  Workers with Disabilities 18   52.222-37  Sept 2006  Employment Reports on Special Disabled  Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans 19  52.222-50   Aug 2007  Combating Trafficking  in Persons  Must be flown down to  Contractor’s subcontractors 21   52.223-14  Aug 2003  Toxic Chemical Release Reporting (Over  $100,000) 22  52.225-1  Jun 2003   Buy American Act – Supplies 23   52.225-13  Feb 2006  Restrictions on Certain Foreign Purchases  See Notes 5 and 6 24  52.227-1   Jul 1995  Authorization and  Consent  See Notes 3 and 4 25  52.227-2   Aug 1996  Notice and Assistance  Regarding Patent and Copyright Infringement (Over $100,000)  See Note 3 27  52.227-14   Jun 1987  Rights in Data –  General  See Notes 1 and 2 89  52.222-39   Dec. 2004  Notification of  Employee Rights Concerning Payment of Union Dues or Fees 90  52.247-64   Feb 2006  Preference for  Privately Owned U.S.-Flag Commercial Vessels  |
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|  | 38 EXHIBIT D Quality Agreement |
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|  | 16 Definitions and Abbreviations Analytical Test Methods  Methods used for analytical testing,  including Standard Test Methods and Compendial Methods. Anomalous  A result that does not follow the expected  trend, either in comparison with other batches or with respect to previous  results collected during a stability study. API  Active Pharmaceutical Ingredient, may be  used interchangeably with Bulk Drug Substance. Approval  The term “Approval” is defined as  concurrence between PharmAthene and Diosynth, such as agreement on a proposed  Change, as evidenced in writing and signed by both companies’ Authorized  Quality Representatives. Approved Supplier   A supplier who has met minimum approval standards and who has been  approved to provide required items or services that may impact product  quality. Authorized Quality Representatives   An individual named within the Quality Agreement with the authority to  resolve any disputes or conflicts relating to this Quality Agreement in a  timely and equitable manner and in compliance with all applicable quality and  regulatory requirements. Batch  Batches  are defined as the material represented at the end of the processing step for  Bulk Drug Substance. Batch Packet   Relevant documentation to be transferred to PharmAthene to facilitate  the release of a Batch. This packet consists of copies of QA reviewed; • executed  processing batch records •all Deviations and NOEs, which references CAPA’s initiated  •investigations •in-process and release assay results including raw data  •Certificate of Analysis (CoA) or analytical results •QA disposition of  product statement •batch genealogy (when applicable) •restriction summary  •facility summary including associated laminar flow environmental data  |
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|  | 17 Bulk Drug Substance (BDS)   Any substance or mixture of substances intended to be used in the  manufacture of a drug (medicinal) product and that, when used in the  production of a drug, becomes an active ingredient of the Drug Product. Such  substances are intended to furnish pharmacological activity or other direct  effect on the diagnosis, cure mitigation, treatment, or prevention of disease  or to affect the structure and function of the body. Certificate of Analysis  (CoA)  An authentic document that  states that a specific batch of material has been evaluated in accordance  with the Item Specification for that material. Certificate of Conformance  (CoC)  A PharmAthene supplied document  that states a specific lot of material has been evaluated by PharmAthene and  conforms to all product and regulatory requirements for further manufacturing  or release. cGMP  Current Good  Manufacturing Practices pursuant to (a) the U.S. Federal Food, Drug and  Cosmetics Act as amended (21 USC 301 et seq.), (b) U.S. regulations in Title  21 of the U.S. Code of Federal Regulations Parts 210, 211, 600 and 610, (c)  the EU Guide to Good Manufacturing Practice for Medicinal Products, Volume 4,  Part lI including relevant sections of DIR 2003/94/EC, and (d) International  Conference on Harmonization (ICH) Guidance for Industry Q7 Good Manufacturing  Practice Guidance for Active Pharmaceutical Ingredients. Change  Management  Any change that: (a) has  the potential to impact the quality of PharmAthene’s Product; (b) impacts the  regulatory commitments and/or reporting requirements of the bulk drug  substance; (c) requires re-qualification or re-validation of PharmAthene’s  methods, process or reference standards; and/or (d) results in changing or modifying  PharmAthene’s approved Item Specifications, test methods or any document  approved by PharmAthene. Critical Raw Materials  Critical raw materials are raw materials  that have the potential to impact process performance attributes and/or  product quality, compromise the final formulation components or combine  structurally or chemically with the active pharmaceutical ingredient or drug  product. Critical Consumable  A  consumable that comes into direct contact with the product post the CSIB  stage. |
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|  | 18 Date of Manufacturing   At Diosynth determined from the first date of fill into final  container or packaging for intermediate or Bulk Drug Substance.  Deviation  An unplanned event requiring  investigation with 1) may affect the quality or compliance status of the  product, process, materials, equipment or facility involved or 2) may not be  in alignment with regulatory submissions. Disposition  A recommendation given by Diosynth Quality  on the suitability of the Intermediate or BDS for further processing. Drug Substance  (DS)  Synonymous with Bulk Drug  Substance (BDS). Drug Product  The  dosage form in the final immediate packaging intended for clinical use.  Exception  An exception to a validation  protocol is either a deviation from or modification to pre-established  acceptance criteria; or an issue encountered after approval of the protocol  that requires retesting or additional test plans. For Cause Visit  The term “for cause visit” is used to  describe site visits, other than internal audits or business discussions, for  the purpose of reviewing documentation, facilities or processes related to a  specific deviation affecting Product disposition. Item Specification  A set of criteria to which a material must  conform to be considered acceptable for its intended use. Master Batch  Record  A detailed description of  PharmAthene specific production process outlining the different actions an  operator has to perform to complete the BDS production process. A scaled copy  of the master batch record is the batch production record. Notice of Events  (NOE)  Events which are not considered  deviations. These events have no impact to products or materials because the  incident is a departure from Standard Operating Procedures (SOPs),  manufacturing/testing instructions, maintenance/calibration out of  tolerances, environmental monitoring excursions, deemed minor in nature and  can be verified by existing documentation available at the time of  observation. Out-of-Specification (OOS)   A test that is valid but the sample result does not comply with the  established specification. In this case, “result” is defined as the final  reportable value as determined according to the test  |
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|  | 19 method. Such a reportable value may be comprised of multiple  individual determinations (i.e., replicates) as per the test method. Only  reportable values are compared to specifications; therefore only a reportable  value may constitute an OOS. Process Consumable  Disposable equipment or equipment parts  that may/may not come in contact with an intermediate or bulk drug substance.  A consumable may be single or for multiple use, and may/may not be sterile.  Process Consumables  Process  Consumables include any Process Consumable or Raw Material used in the  manufacture of an intermediate or BDS that do not themselves participate in a  chemical or biological reaction. Such other materials include: media, resins,  filters, membranes, product-contact materials or surfaces, disposable  analytical test kits, analytical columns dedicated to the Program, disposable  containers, and subcontracted analytical testing are considered to be process  consumables. Process Profiling  A  campaign of three (or more) batches performed at scale, in advance of Process  Validation, to demonstrate the final process can perform effectively and  reproducibly and meet the predefined acceptance criteria.  Product   Any (a) API/Bulk Drug Substance, or (b) Drug Product comprised of  API/Bulk Drug Substance, or (c) intermediate(s) of (a) or (b), in each case  as specified in the applicable Scope. Production Batch Record  An accurate reproduction of a Master Batch  Record used as instruction for and documentation of production activities. QC  Raw Data  Analytical worksheets or  notebook pages used to record analyses, including details of preparation and  expiry dates of reagents, sample and standard solutions and details of  instruments used and associated printouts, sequences and methods. For HPLC,  single injection reports for all injections, this includes integration events  and the sequence table. For SDS-PAGE and IEF, original gel scans, processed  gels and details of processing parameters. Any analytical report or CoA from  a sub-contractor. Raw Material  Any  ingredient intended for use in the manufacture of an intermediate or API, including  those that may not appear in the final formulation. These include chemicals  used directly and/or indirectly in the manufacturing process. Release  Dispositioned material is approved by  PharmAthene for further processing, as evidence by Diosynth’s receipt of  PharmAthene’s CoC. |
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|  | 20 Significant Deviation   An unplanned event requiring investigation which has a known serious  negative impact on the quality of the product, process, materials, equipment  or facility, represents a quality system failure with serious negative  impact, or is not in alignment with regulatory submissions. Standard Test  Methods  An approved document  describing a method of testing which establishes a particular course of  action or way of performing an activity as established by Diosynth. Statement  of Compliance  A Diosynth QA  Disposition of Product Statement stating that a specific Batch of BDS  complies with all Product, GMP and regulatory requirements and is signed by  an authorized representative of Diosynth.  |
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|  | 39 EXHIBIT E Earned Value Management System 1. Reporting a.  Diosynth shall provide a detailed schedule in line with the Work Breakdown  Structure (WBS), provided by PharmAthene. b. Diosynth shall submit monthly  reports to PharmAthene compared against the agreed baseline plan. The monthly  reports will be submitted electronically by the end of the 2nd business day  following the end of each calendar month. c. Diosynths’ reporting will be  submitted in accordance with the WBS structure. Each report must include: i.  Monthly Technical Progress Report by work package; ii. Any schedule changes  or slippages by work package; and iii. An updated cash flow analysis  spreadsheet. 2. Schedule a. Setting the Baseline schedule i. PharmAthene will  provide Diosynth with a WBS for its portion of the work. ii. Diosynth will  provide a detailed schedule (Microsoft project gantt) that breaks down the  tasks into activities that are four (4) weeks or less in duration. Some  management activities may be longer, but tasks that are discretely measurable  and/or have defined products should follow this guideline wherever possible.  b. Monthly Schedule Status Reports i. Diosynth shall provide schedule updates  to PharmAthene on a monthly basis (in accordance with the project schedule  outlined above). Actual start and end dates must be reported and percentage  (%) completion against all active activities. Any proposed changes to the  forward planned activities should be listed, for discussion/agreement by  PharmAthene. |
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|  | 40 3. Budget a. Diosynth shall provide a payment schedule by  work package to PharmAthene. The time-phased budget will include all  subcontracted costs, purchased materials costs as well as Diosynth costs.  This payment schedule will be structured to show how the invoices will be  presented. b. Monthly Status Reports i. As the program progresses, changes to  the cost and schedule may be negotiated between PharmAthene and Diosynth. If  those changes impact either the program Master Schedule or budget, those  changes must be formally approved. c. Cost to complete. Diosynth shall  highlight in the monthly report any changes to the Scope or to the proposed  costs, and therefore any change to the overall cost to complete. 4. Risk  Management a. Diosynth shall, however, provide input and feedback to  PharmAthene during routine program status meetings on high impact/high  probability risks and opportunities on the program and discuss and agree how  identified risks should be mitigated. Monthly program management updates  shall include any changes in risk assessment. |
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