Exhibit 10.34


 


PRIVATE BETWEEN THE PARTIES


 


PharmAthene,
Inc.


Confidential
Materials Omitted and Filed Separately with the


Securities and
Exchange Commission


Confidential
Portions denoted by [***]


 


MASTER
SERVICES AGREEMENT


 


THIS
AGREEMENT is made this 18th day of August 2005
between:


 


1.             AVECIA
LIMITED whose registered office is at PO Box 42, Hexagon House,
Blackley, Manchester, M9 8ZS acting through its Avecia Biotechnology business (“Avecia”); and


 


2.             THE
SECRETARY OF STATE FOR DEFENCE,  [***].


 


WHEREAS


 


(A)          Dstl has expertise in
the non-clinical, clinical and regulatory development of vaccines and support
of programmes therefor (“the Field”).  Dstl also has expertise in the conduct of
Good Laboratory Practice (“GLP”) potency
assays.


 


(B)           [***]


 


(C)           Avecia wishes to enter
into an arrangement with Dstl in order to make use of [***] to fulfil its obligations
under the Prime Contract.


 


(D)          Dstl is willing to enter
into an arrangement with Avecia on the following conditions.


 


NOW IT IS
HEREBY AGREED AS FOLLOWS:


 


1.             Performance of the Services


 


1.1           Subject to the terms and conditions
hereinafter set out Avecia engages Dstl and [***] professional advice and
assistance to Avecia in the Field and, in particular, to provide the services
listed in more detail in Schedule 1. 
Such advice, assistance and services are referred to in this Agreement
as “the Services”.


 


1.2           The Services shall be performed at the times
and locations mutually agreed between the parties.


 


1.3           Dstl warrants that:


 


	
  1.3.1

  	
  it shall perform the Services to the best
  of its ability and in accordance with the standards of care and skill to be
  reasonably expected of a provider of similar services competent in the Field;
  and

  



 


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  1.3.2

  	
  all personnel employed by Dstl to carry out
  the Services shall be suitably qualified and accredited with appropriate
  professional organisations and no principal or employee of Dstl has been
  debarred by United States Food and Drug Administration, nor have debarment or
  disqualification proceedings been commenced and Dstl agrees to notify Avecia
  promptly if such proceedings are commenced.

  



 


2.             Performance of GLP Potency Assays


 


2.1           Dstl shall carry out the potency assays (“the GLP Potency Assays”) in accordance with GLP (in
compliance with The United Kingdom Good Laboratory Practice Monitoring
Authority) and in accordance with the provisions of Schedule 2 which relate to
the GLP Potency Assays.


 


2.2           For Drug Product release testing or
Stability testing, Dstl shall complete the required analysis and provide to
Avecia QC (Billingham) and nominee (i.e. stability site) finalised QA reviewed
potency results, approved by Dstl’s Quality Assurance unit, in respect of each
sample of the Vaccine on which a potency assay has been carried out, within
eighty seven (87) calendar days of the mutually agreed assay start date of such
sample set out in Schedule 2.  This
deadline may be extended in exceptional or unforeseen circumstances by mutual
agreement between Avecia and Dstl.  In
the event that Dstl is either unable to: 
(i) complete the GLP Potency Assays within the eighty seven (87)
calendar day period above or (ii) carry out the number of GLP Potency
Assays agreed between the parties pursuant to Schedule 2, then in each case
Dstl shall prioritise the GLP Potency Assays as directed in writing by Avecia
subject to mutual agreement between Avecia and Dstl.  In such cases it is understood that it shall
take longer than eighty seven (87) calendar days for Dstl to provide the
finalised QA reviewed potency results. 
All such requests for prioritisation shall be issued in writing by [***]
Vaccines Manager, Avecia QC (Billingham) for the attention of [***].  Dstl shall have no liability to Avecia for
any delay to Avecia’s programme of work under the Prime Contract which arises
as a result of late delivery of an approved report where such late delivery is
as a consequence of late delivery of the relevant sample by Avecia or its
subcontractors or where a sample is delivered which does not comply with the
agreed sample presentation as defined in the Quality Agreement set out at
Schedule 5, or to the extent that such delay is caused by Avecia’s instruction
to Dstl regarding prioritisation of the work.


 


2.3           If the report delivered to Avecia is discovered
to be inaccurate or Dstl fails to carry out the GLP Potency Assays in
accordance with GLP and in accordance with the provisions of Schedule 2 which
relate to the GLP Potency Assays, Dstl shall repeat the GLP Potency Assays at a
time directed by Avecia (taking into consideration the impact on the schedule
for other GLP Potency Assays, but otherwise at Dstl’s own expense and at no
additional cost to Avecia.


 


2.4           For the purpose of permitting a quality and
compliance audit, including to ascertain compliance with GLP, Dstl shall grant
to authorised representatives of


 


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Avecia and NIAID, upon reasonable notice, access to the Facility.  Dstl shall promptly respond to NIAID’s or
Avecia’s request and the parties shall agree on the time, scope and manner of
the audit.  Such access shall be granted
subject to the following provisions:


 


2.4.1        Avecia and/or NIAID shall bear the cost of such
audit unless such audit ascertains non-compliance with GLP or other agreed
quality related issues.


 


2.4.2        Prior to any audit involving NIAID personnel,
Avecia shall procure the entry by NIAID into a confidentiality agreement
between Dstl and NIAID to ensure the confidentiality of Dstl’s information.


 


2.4.3        Access shall be subject to and in compliance
with Dstl and MOD Visitor and Security procedures.


 


2.4.4        Prior to any audit Avecia shall submit in
writing to Dstl for approval, a list of those representatives who may need to
enter the site for the purpose of, or in connection with, the audit, giving
such particulars as Dstl may require, including full details of birthplace and
parentage of any such Representative who: 
a) was not born in the United Kingdom; or b) if he was born in the
United Kingdom, was born of parents either or both of whom were not born in the
United Kingdom.


 


2.4.5        Prior to the commencement of the audit Dstl
shall notify Avecia in writing which representatives have been approved for
admission to the site.


 


2.4.6        Notwithstanding the provisions above if, in the
opinion of Dstl, any representative shall misconduct himself, or it shall not
be in the public interest for any person to be allowed access, then Avecia or
NIAID shall remove such person without delay on being required to do so.


 


2.4.7        The decision of Dstl upon any matter arising
under Clauses 2.4.3 to 2.4.6 inclusive shall be final and conclusive.


 


3.             Duration


 


This Agreement shall be deemed to have
commenced on 1st October 2004 and shall continue for the period
of the Prime Contract or any extension, variation or replacement thereof,
currently estimated to be 31st March 2007.


 


4.             Price and Payment


 


4.1           The consideration for the Services and the
GLP Potency Assays is set out in [***].


 


4.2           Dstl shall issue monthly invoices in arrears
in respect of the cost of the Services and the GLP Potency Assays set out in
Parts A and B of the Pricing Schedule on the 8th day of each month and Avecia shall pay such
sums by the end of the month following the month of the date of the relevant
invoice, subject to formal sign-off


 


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by Avecia that the breakdowns submitted under Clause 4.5 represent an
accurate reflection of the work carried out during the period invoiced.  Avecia shall make payment by means of the
Bankers Automated Clearing Service (BACS) directly into Dstl’s nominated bank
account.


 


4.3           In addition to payment of the cost of the
Services and the GLP Potency Assays, Avecia shall pay to Dstl the fee set out
in Part C of the Pricing Schedule. 
The total fee shall be payable in monthly instalments as described in
Part C of the Pricing Schedule from the date of signature of this
Agreement.  Dstl shall issue a separate
invoice for each monthly instalment of the fee, which shall be separate from
the Dstl invoice for costs rendered under Clause 4.2 above.  Avecia shall settle such invoices by the end
of the month following the month of the date of the invoice.


 


4.4           Since the total fee is a percentage of
actual cost, as set out in Part C of the Pricing Schedule, a review
mechanism will be put in place whereby appropriate adjustments to the fee are
made to ensure that it is in line with actual cost.  The review period will be six monthly.


 


4.5           Avecia shall, in its sole discretion, have
the right to withhold payment of any invoice submitted under Clause 4.3 if Dstl
does not perform according to the performance targets set out in Clauses 2.2 of
this Agreement and in accordance with Schedule 1, as assessed by Avecia’s
Contracting Officer.  In the event that
Dstl disputes Avecia’s assessment of Dstl’s performance, the provisions of
Clause 16.2 shall apply.


 


4.6           Dstl shall keep activity records detailing
the work carried out by it under this Agreement, including a breakdown of the
number of hours spent by each person in carrying out such work.  Dstl shall provide a breakdown of the number
of hours spent by each person in carrying out the work under this Agreement
with each invoice submitted under Clause 4.2. 
Avecia shall be entitled to inspect all activity records and supporting
documentation at Dstl’s premises on reasonable notice and during normal
business hours.


 


4.7           Dstl will not make any purchase or incur any
liability on behalf of Avecia nor in any way bind Avecia nor do anything likely
to cause Dstl to be taken by third parties as acting as an agent of Avecia,
except with Avecia’s specific prior written authorisation.


 


4.8           Dstl will be responsible for all income tax
liabilities and national insurance or similar contributions in respect of any
fees payable hereunder and hereby agrees to indemnify Avecia in respect of any
claims which may be made against Avecia by the relevant authorities in respect
of income tax or national insurance or similar contributions and any costs,
interest, penalties and gross up which may be found due in respect of such
fees.


 


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4.9           With the exception of Avecia’s review of
Dstl’s activity records and supporting documentation which shall take place
under Clause 4.6 above, any financial audit shall take place in the following
manner:


 


4.9.1        Dstl shall make available for inspection and/or
audit all records mutually agreed as necessary to substantiate its performance
under this Agreement.  Said records are
subject to inspection and audit by appropriate audit agencies.  Dstl agrees to retain any and all records
associated with this Agreement for three (3) years following Avecia’s
final payment and until such time as any disputes arising therefrom are
resolved.  All audit disallowances under
this Agreement shall be the responsibility of Dstl.


 


4.9.2        Dstl shall maintain accurate records of all
costs incurred in the performance of this work. 
Dstl warrants that it conducts audits, which it believes meet the
standards as required by OMB Circulars, federal cost principles, or cost
accounting standards applicable to its performance as a recipient of US
Government funds, that such audit has revealed no material findings and agrees
to provide Avecia with audit report(s) attesting to the fact that Dstl’s
records covering the period of this Agreement have been audited in accordance
with such requirements.


 


5.             Confidentiality


 


5.1           Dstl shall at all times while this Agreement
remains in force and thereafter keep confidential any and all commercial and
technical information relating to any of the existing or planned products,
business, research and/or development activities, customers and suppliers of
Avecia and/or any subsidiary or associated company of Avecia and all other
information relating to Avecia and/or any subsidiary or associated company of
Avecia and/or to any of the activities or financial affairs of Avecia or any
such subsidiary or associated company which it may acquire or to which he may
have access during or by virtue of its participation in this Agreement and any
information generated in its provision of the Services and performance of the
GLP Potency Assays (“the Confidential
information”).  The
Confidential Information shall be used by Dstl for the sole purpose of
fulfilling its obligations under this Agreement and shall not at any time while
this Agreement is in force or thereafter be disclosed by Dstl to any third
party without the prior written consent of Avecia.  PROVIDED THAT Dstl shall have the right to
use, or have used, any information generated in its performance of the tasks
allocated to it under this Agreement for any United Kingdom Government purpose
free of any payments to Avecia, its subcontractors or the US Government.


 


5.2           The obligations of confidentiality contained
in Clause 5.1 shall not apply to any Confidential Information which:


 


(a)           is now or hereafter becomes available to the
public otherwise than by a breach of this Agreement; or


 


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(b)           in the case of Confidential Information
received by Dstl from Avecia Dstl can show that such Confidential Information
was in its possession free from obligations of confidentiality prior to such
receipt; or


 


(c)           is received by Dstl from a third party who
has not directly or indirectly received it from Avecia and who has not imposed
any restrictions as to its disclosure.


 


6.             Intellectual
Property


 


6.1           In this Article 6, the following terms
shall have the meanings attributed to them:


 


	
  Background
  IP

  	
   

  	
  Intellectual
  Property generated by Dstl:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (1)

  	
  prior to
  this Agreement, or

  
	
   

  	
   

  	
  (2)

  	
  independently
  of this Agreement,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and, in any
  case, necessary for the performance of the Prime Contract.

  
	
   

  	
   

  	
   

  
	
  Development Contracts

  	
   

  	
  The contracts between Dstl
  and Avecia dated 28 June 2000 (Dstl reference [***]) and 21 November 2003 (Dstl reference
  [***]) under which Avecia
  carried out process development and production work in relation to the
  Vaccine on behalf of Dstl, as amended.

  
	
   

  	
   

  	
   

  
	
  Foreground
  IP

  	
   

  	
  Intellectual
  Property generated by Dstl under this Agreement.

  
	
   

  	
   

  	
   

  
	
  Intellectual Property

  	
   

  	
  all know-how, inventions,
  discoveries, devices, data, utility models, patents, designs, copyrights, or
  other industrial or intellectual property and all applications therefor.

  
	
   

  	
   

  	
   

  



6.2           Dstl grants to Avecia a royalty-free,
world-wide licence (with the right to grant sub-licences) to use Background IP
to perform the Prime Contract, and any other contract awarded by NIAID which
covers the same or substantially similar work to that covered by the Prime Contract.  PROVIDED THAT no rights are hereby granted to
Avecia to use, or have used, Background IP for the manufacture and supply of
doses of [***] which meet the regulatory deliverables as required for drug
licensure in the USA, which rights Dstl is prepared to make available to Avecia
on fair and reasonable commercial terms under a separate licence agreement to
be agreed.


 


6.3           In addition to the licence referred to in
Clause 6.2, with respect to any Foreground IP, including subject inventions in
which Dstl retains title under FAR clause [***], Avecia shall have a
nonexclusive, non-transferable, irrevocable, paid-up licence to practice or
have 


 


Page 6 of 22

















 


practiced for or on behalf of Avecia the subject invention throughout
the world.  Dstl shall ensure that it
secures these rights for Avecia when placing sub-contracts under this
Agreement.


 


6.4           In consideration for the licences set out in
Clauses 6.2 and 6.3, Avecia shall supply to Dstl, a complete set of all data
produced by Avecia and its subcontractors (other than Dstl) in the performance
of the Prime Contract, and Dstl shall have the right to use, or have used, the
said data, free of any payments to Avecia, its subcontractors or the US
Government, for any United Kingdom Government purpose.  Avecia shall ensure that it secures these
rights for Dstl when placing sub-contracts under the Prime Contract.  For the avoidance of doubt, if and to the
extent that the said data includes Avecia’s Background Intellectual Property
(as defined in the Development Contracts), then nothing in this Clause 6.4
shall be construed so as to vary Avecia’s rights in respect of such Background
Intellectual Property set out in clause 7.1 of the Development Contracts.


 


7.             Termination


 


7.1           Avecia may terminate this Agreement
immediately by notice in writing at any time.


 


7.2           Upon termination of this Agreement, Dstl, if
requested by Avecia, shall immediately deliver up to Avecia all copies of and
other embodiments of any work in progress pursuant to the Services or the GLP
Potency Assays and any correspondence, documents, specifications, and any other
property belonging to Avecia or NIAID which may be in its possession.


 


7.3           In the event of termination for any reason,
the provisions of FAR Clause [***], incorporated by reference under Clause
12.1, shall apply.


 


8.             Key
Personnel


 


The following individuals (“Key Personnel”) are considered to be essential o the work
being performed hereunder:


 


	
  Name

  	
   

  	
  Title

  
	
   

  	
   

  	
   

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  
	
  [***]

  	
   

  	
  [***]

  



 


None of the Key Personnel shall be replaced
in his/her role for the duration of this contract unless otherwise agreed
between the parties.  Dstl shall ensure
that any 


 


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replacement for a role possesses similar
qualifications and experience to the Key Personnel it proposes to replace.


 


9.             Publicity
And Publication


 


9.1           During the term of this Agreement neither
party shall use the other party’s name in any advertising or promotional
material unless the other party gives its prior written approval.  The party wishing to issue such advertising
or promotional material shall provide a copy thereof to the other for review.


 


9.2           Without prejudice to any other provision in
this Agreement neither party shall publish any information obtained under this
Agreement including the results of work conducted without the prior written
permission of the other party.  Such
permission shall not be unreasonably withheld or delayed.  Such permission shall be given where security
considerations allow and subject to appropriate protection of the party’s
Intellectual Property.


 


9.3           Any request for publication shall be
submitted in writing.


 


9.4           In the event of any publication the
provisions of HHSAR [***] shall apply.


 


10.           Compliance-with-Rules


 


Whilst providing the Services and carrying
out the GLP Potency Assays, Dstl shall observe and comply with all applicable
local legislation and any relevant regulations and codes of practice issued
thereunder and with all other applicable legal or regulatory requirements and
all policies, procedures, regulations and rules of Avecia or applicable at
any premises of Avecia to which Dstl may have access whilst providing the Services
or carrying out the GLP Potency Assays hereunder.


 


11.           Liability
and Indemnity


 


11.1         Subject to Clause 11.2 below, Avecia shall
defend, indemnify and hold Dstl and its directors, officers, employees and
affiliates (“Dstl indemnified Parties”) harmless
from and against (1) any damage or loss suffered by the Dstl Indemnified
Parties and (2) all third party claims, liabilities, judgements and other
costs (including, but not limited to, reasonable attorney fees and expenses
incurred in investigating, defending and settling claims and in enforcing
Avecia’s obligations under this Clause 11.1) (collectively “Avecia Liabilities”) of any kind resulting from the use,
sale, distribution, advertising or marketing of the Vaccine by or on behalf of
Avecia.


 


11.2         Avecia’s obligations to Dstl Indemnified
Parties under Clause 11.1 shall not extend to any Avecia Liabilities to the
extent that such Avecia Liabilities arise as a result of the negligence, wilful
misconduct or breach of this Agreement by the Dstl Indemnified Parties.


 


11.3         Dstl shall defend, indemnify and hold Avecia,
and its directors, officers, employees and affiliates (“Avecia
Indemnified Parties”) harmless from and 


 


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8 of 22

















 


against (1) any damage or loss suffered by the Avecia Indemnified
Parties and (2) all third party claims, liabilities, judgements and other
costs (including, but not limited to, reasonable attorney fees and expenses
incurred in investigating, defending and settling claims and in enforcing Dstl’s
obligations under this Clause 11.3) of any kind resulting from the negligence,
wilful misconduct or breach of this Agreement by Dstl (collectively “Dstl Liabilities”). 
Save to the extent that such Dstl Liabilities are due to the wilful
misconduct of Dstl, Dstl’s liability under this Clause 11.3 to Avecia shall be
limited to [***] per incident.


 


11.4         Dstl’s obligations to Avecia Indemnified
Parties under Clause 11.3 shall not extend to any Dstl Liabilities to the
extent that such Dstl Liabilities arise as a result of the negligence, wilful
misconduct or breach of this Agreement by the Avecia Indemnified Parties or
their subcontractors.


 


12.           FAR
and HHSAR Flowdown Provisions


 


The FAR and HHSAR clauses contained in the
Prime Contract and listed in Schedule 4 are incorporated by reference into this
Agreement.


 


13.           Assignment
and Subcontracting


 


13.1         Neither party to the Contract shall give,
bargain, sell, assign, or otherwise dispose of the Contract or any part
thereof, or the benefit or advantage of the Contract or any part thereof,
without the previous consent in writing of the other party, such consent not to
be unreasonably withheld or delayed.


 


13.2         Dstl shall not be entitled to subcontract any
part of this Agreement.


 


14.           Entire
Agreement and Scope Changes


 


14.1         This Agreement constitutes the entire
agreement of the parties in relation to the provision of the Services and, save
as set out in Clause 14.2 below, shall not be modified or varied except as
agreed in writing by Avecia and Dstl.


 


14.2         Avecia shall be entitled to make changes to
the scope of the Services or the GLP Assays by giving not less than 60 days’
notice in writing to Dstl.  In the case
of a reduction in the Services or number of GLP Assays, Dstl shall carry out
the reduced Services or number of GLP Assays as directed by Avecia in such
written notice and the fees payable under Clause 4 shall be adjusted
accordingly.  In the case of an increase
in the Services or number of GLP Assays, Dstl shall provide a written proposal
of the increased cost therefor and shall carry out such increased Services of
GLP Assays on formal written amendment to this Agreement by Avecia.


 


15.           Force
Majeure


 


15.1         Either party shall not be liable for any
failure to perform or any delay in performing its obligations if the failure or
delay is due directly or indirectly to any 


 


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9 of 22

















 


cause beyond the reasonable control of that party, which shall include
but is not limited to the following:


 


15.1.1      any Act of God, fire, flood, explosion, accident,
civil disturbance, emergency or period of armed conflict;


 


15.1.2      any major plant or equipment failure which
results in closure of a facility;


 


15.1.3      the postponement of any trial or test as a result
of adverse weather conditions or conditions being otherwise unsafe; and


 


15.1.4      in the case of the Contractor, the withdrawal of
facilities or resources due to specific direction from a higher UK Government
authority.


 


15.2         In the event of a delay arising from such circumstances,
the affected party will provide full details to the other party and shall take
all reasonable steps to mitigate the effect of the delay.  Performance of the party’s obligations under
this contract shall be suspended for such time as the delay continues.


 


16.           Law,
Disputes and Jurisdiction


 


16.1         This Agreement is governed by and shall be
construed and interpreted in accordance with the laws of England and
Wales.  Any proceedings between the
parties shall be conducted in the English language.


 


16.2         In the event of any dispute, difference or
disagreement concerning this Agreement, the parties shall seek to resolve the
matter within 30 days by referring it to the Commercial Director, Vaccines
Business, Avecia Biotechnology, the Head of Commercial Services, DSTL and, if
Avecia considers it necessary, the Contracting Officer under the Prime
Contract.


 


16.3         The parties agree to refer any matter or
dispute which is not able to be resolved pursuant to Clause 16.2 to settlement
in good faith by Alternative Dispute Resolution (“ADR”).


 


16.4         In the event that a dispute arises between
NIAID and Avecia which relates to the Services but which is not also the
subject of a dispute between Avecia and Dstl, Dstl shall provide reasonable
assistance to Avecia in order for Avecia to pursue the matter in accordance to
FAR Clause [***], incorporated into the Prime Contract by reference.


 


Signed for and on behalf AVECIA LIMITED by


 


 


	
  Signature:

  	
  /s/ Kevin M.
  Price

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  Kevin M.
  Price

  	
   

  
	
   

  	
   

  
	
  Position:

  	
  Business
  Manager

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  11 Aug 05

  	
   

  
						



 


Signed for and on behalf of THE SECRETARY OF STATE FOR DEFENCE, acting through the Defence Science
and Technology Laboratory by


 


 


	
  Signature:

  	
  [***]

  	
   

  
	
   

  	
   

  
	
  Name:

  	
  [***]

  	
   

  
	
   

  	
   

  
	
  Position:

  	
  [***]

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  [***]

  	
   

  
						



 


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[Schedule 1 - The Services]


 


[***]


 


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[***]


 


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[***]


 


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[Schedule 2 - The GLP Potency
Assays]


 


[***]


 


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[***]


 


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[***]


 


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[Schedule 3 - The Pricing
Schedule]


 


[***]


 


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[***]


 


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Schedule 4 - [***]


 


[***]


 


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Schedule 4 - [***]


 


[***]


 


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Schedule 4 - [***]


 


[***]


 


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[Schedule
5 - Quality Agreement]


 


[***]


 


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