Exhibit 10.32


 


PharmAthene, Inc.


Confidential Materials Omitted and Filed
Separately with the


Securities and Exchange Commission


Confidential Portions denoted by [***]


 


	
  LN_937421_13.DOC

  	
  EXECUTION COPY

  



 


MASTER
SERVICES AGREEMENT


 


THIS AGREEMENT is made this 2nd
day of April 2008 between:


 


(1)                                  PHARMATHENE UK LIMITED, c/o Hogan & Hartson, Juxon
House, London, England (“PharmAthene”);
and


 


(2)                                  AVECIA BIOLOGICS LIMITED of Hexagon Tower, Blackley,
Manchester, M9 8ZS, England (“Avecia”);


 


WHEREAS


 


A                                      Avecia
has experience and knowledge with regard to manufacture of recombinant
proteins.


 


B                                        PharmAthene
is carrying out development in relation to Drug Products under various Prime
Contracts.


 


C                                        PharmAthene
wishes to have Avecia carry out Programmes, including, without limitation,
process development, analytical development, Production and Disposition of Drug
Substance and stability testing of Drug Substance and Drug Product, from time
to time in support of the Prime Contracts and Avecia wishes to carry out
Programmes for PharmAthene.


 


D                                       PharmAthene
and Avecia also desire to enter into a relationship in which, at the request of
PharmAthene, Avecia will be obligated to supply Drug Substance to PharmAthene
and/or its Affiliate to permit PharmAthene and/or its Affiliate to comply with
its supply obligations to a Third Party. 
It is intended this relationship be the subject of a separate supply
agreement the terms for which have been agreed between the parties and dated April 2,
2008.


 


NOW IT IS HEREBY AGREED AS
FOLLOWS:


 


1.                                      Definitions
and Interpretation


 


1.1                               Definitions:


 


In this Agreement, the
following expressions shall have the following meanings:


 


	
  Affiliate

  	
   

  	
  In relation to any party to this Agreement,
  any corporation, association or other business entity which directly or
  indirectly controls, is controlled by or is under common control with such
  party and “control” shall mean the legal
  power to direct or cause the direction of the 

  



 




	
   

  	
   

  	
  Page 1 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


 




	
   

  	
   

  	
  general management and policies of such
  entity whether through the ownership of at least 50% of voting securities or
  capital stock of such business entity or any other comparable equity or
  ownership interest with respect to a business entity other than a corporation.

  
	
   

  	
   

  	
   

  
	
  Applicable
  Law(s)

  	
   

  	
  The laws, rules, and regulations, including
  any statutes, rules, regulations, or other requirements, that may be in
  effect from time to time and that apply (i) to the development,
  Production, registration, and marketing of Drug Product, including any such
  statutes, rules, regulations, or other requirements of any applicable
  Regulatory Authority and/or (ii) to the manufacture of Drug Substance at
  the Facility.

  
	
   

  	
   

  	
   

  
	
  Avecia
  Operating

  Documents

  	
   

  	
  The standard operating procedures, standard
  manufacturing procedures, protocols, validation documentation, and supporting
  documentation, such as environmental monitoring, in each of the foregoing
  cases, for operation and maintenance of the Facility and Avecia equipment
  used for Producing Drug Substance and/or Other Material, excluding any of the
  foregoing that are unique to Production of Drug Substance.

  
	
   

  	
   

  	
   

  
	
  Avecia
  Technology

  	
   

  	
  All Intellectual Property, information,
  protocols, data procedures, records and materials, including polynucleotides
  encoding Drug Substance and cell lines and vectors that arc owned by or
  licensed to Avecia (other than licensed to Avecia by PharmAthene for the
  limited purposes hereunder) and used for producing Drug Substance and/or
  Other Material. For the avoidance of doubt, Avecia Technology includes Avecia
  Operating Documents and the pPoPTM Technology.

  
	
   

  	
   

  	
   

  
	
  Avecia
  Quality

  	
   

  	
  The function within Avecia responsible for
  review of documents produced during a Programme against the Drug Substance
  Specification and/or Drug Substance Requirements.

  






 




	
   

  	
   

  	
  Page 2 of 29

  	
   

  	
  CONFIDENTIAL

  





















 




	
  Batch

  	
   

  	
  The quantity of Drug Substance derived from
  one fermentation.

  
	
   

  	
   

  	
   

  
	
  Batch

  Manufacturing

  Records

  	
   

  	
  All
  documentation recording specifications, manufacturing formulae, processing,
  packaging, procedures and records relating to the Production of each Batch.

  
	
   

  	
   

  	
   

  
	
  Business
  Day

  	
   

  	
  A day (other
  than a Saturday and a Sunday) on which banks generally are open for business
  in Delaware or London as appropriate depending on whether it is the US or UK.

  
	
   

  	
   

  	
   

  
	
  Cancellation
  Fee

  	
   

  	
  The fees set out in a Project Plan payable
  by PharmAthene in the event of:

   

  (i)delay to any manufacturing activity
  detailed in the applicable Project Plan; or

  
	
   

  	
   

  	
  (ii)termination of the applicable Project
  Plan.

  
	
   

  	
   

  	
   

  
	
  cGMP

  	
   

  	
  Current Good Manufacturing Practice as
  defined in the MHRA Rules and Guidance for Pharmaceutical Manufacturers
  and Distributors 2007 part II: Basic Requirements for Active Substances used
  as Starting Materials, and ICHQ7a - as incorporated in the Federal Register
  volume 66 No 186 (ICHQ7a) and those sections applicable within the FDA
  Regulations 210, 211, 600, 601 and 610.

  
	
   

  	
   

  	
   

  
	
  Confidential

  Information

  	
   

  	
  All
  information and data provided by one party to the other party except any
  portion of such information and data which:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  is known to the recipient (as evidenced by
  its written records) before receipt thereof from the disclosing party;

  
	
   

  	
   

  	
  (ii)

  	
  is disclosed to the recipient by a third
  person who has the right to make such disclosure;

  
	
   

  	
   

  	
  (iii)

  	
  is or becomes part of the public domain
  through no fault of the recipient; or

  
	
   

  	
   

  	
  (iv)

  	
  the
  recipient can reasonably establish is independently developed by the
  recipient without use of the information disclosed 

  






 




	
   

  	
   

  	
  Page 3 of 29

  	
   

  	
  CONFIDENTIAL

  





















 




	
   

  	
   

  	
  by the disclosing party.

  
	
   

  	
   

  	
   

  
	
  Disposition

  	
   

  	
  The process by which all documentation
  related to Production of a Batch is reviewed as set out in sections 2.5 and
  5.5 and/or any other applicable provisions of the Quality Agreement.

  
	
   

  	
   

  	
   

  
	
  Disposition
  Package

  	
   

  	
  The executed Batch Manufacturing Records
  and associated deviation reports, investigation reports, corrective and
  prevention action reports and certificate of analysis resulting from the
  Production and Disposition of each Batch.

  
	
   

  	
   

  	
   

  
	
  Drug
  Product

  	
   

  	
  The final dosage form of the vaccine which
  contains Drug Substance in association with other active or inactive
  ingredients.

  
	
   

  	
   

  	
   

  
	
  Drug
  Substance

  	
   

  	
  The (i) protective antigen of a
  recombinant anthrax vaccine and (ii) the two antigens known as Fl and V
  for a recombinant plague vaccine, as the case may be.

  
	
   

  	
   

  	
   

  
	
  Drug
  Substance

  Requirements

  	
   

  	
  The applicable Batch Manufacturing Records,
  Quality Agreement. Avecia’s current (at the execution of the relevant
  Programme) standard operating procedures and cGMP and the Quality Agreement.

  
	
   

  	
   

  	
   

  
	
  Drug
  Substance

  Specification

  	
   

  	
  A listing of specifications for, and the
  analytical testing to be performed on, the applicable Drug Substance.

  
	
   

  	
   

  	
   

  
	
  Facility

  	
   

  	
  The facility located at Belasis Avenue,
  Billingham, Cleveland, UK, TS23 1YN.

  
	
   

  	
   

  	
   

  
	
  Intellectual

  Property

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Other
  Material

  	
   

  	
  Any material or substance manufactured by
  Avecia that is used in the process for Producing Drug Substance.

  
	
   

  	
   

  	
   

  
	
  PharmAthene

  Technology

  	
   

  	
  All Intellectual Property, Business
  Intellectual Property (as defined in the following agreement) and materials
  (including but not limited to cell 

  






 




	
   

  	
   

  	
  Page 4 of 29

  	
   

  	
  CONFIDENTIAL

  





















 




	
   

  	
   

  	
  lines) that is owned by or licensed to
  PharmAthene and/or its Affiliates including but not limited to Intellectual
  Property, Business Intellectual Property (as defined in the following
  agreement) transferred to PharmAthene Inc. and/or its Affiliates pursuant to
  the Sale and Purchase Agreement dated March 20, 2008 between Avecia
  Investments Limited and Others and PharmAthene and Others; Intellectual Property
  licensed to PharmAthene by the Secretary of State for Defence as represented
  by the Defence Science and Technology Laboratory; polynucleotides encoding
  Drug Substance and cell lines and vectors for producing Drug Substance.

  
	
   

  	
   

  	
   

  
	
  pPoPTM
  Technology

  	
   

  	
  The
  technology claimed in patent applications which are equivalent to and/or
  derived from application WO9905297 (including US Patent#6,537,779) and
  granted patents issuing from such applications, together with all re-issues,
  continuations, continuations-in-part, divisions, substitutes, renewals and
  extensions of such granted patents and all foreign equivalents thereof.

  
	
   

  	
   

  	
   

  
	
  Marketing

  Authorization

  	
   

  	
  The necessary regulatory approval for the
  sale of any of the Drug Product in any country within the Territory.

  
	
   

  	
   

  	
   

  
	
  Master
  Batch

  Record

  	
   

  	
  The document in respect of the applicable
  Drug Substance which sets out in detail the master production instructions
  and Batch Manufacturing Records, as agreed between the parties pursuant to
  sections 2.14 and 5.4 and any other applicable provisions of the Quality
  Agreement.

  
	
   

  	
   

  	
   

  
	
  Non-Conforming

  Batch

  	
   

  	
  A Batch which does not conform to the Drug
  Substance Requirements.

  
	
   

  	
   

  	
   

  
	
  Prime
  Contract

  	
   

  	
  A contract between PharmAthene and a
  national government or agency thereof for supply of services in relation to
  Drug Substance or Drug Product, including, at the date of this Agreement, the
  contracts set out below:

  






 




	
   

  	
   

  	
  Page 5 of 29

  	
   

  	
  CONFIDENTIAL

  





















 




	
   

  	
   

  	
  (i)

  	
  Contract in
  respect of validations of a process for production of a plague vaccine with
  the Defence Science and Technology Laboratory (“Dstl”), being part of the UK
  Ministry of Defence, numbered RD 032 016784;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  Contract in
  respect of development of an anthrax vaccine with the National Institutes of
  Health (“NIH”), being an agency of the US Government, numbered NO-Al-30052;
  and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  Contract in
  respect of development of a plague vaccine with NIH, numbered NO-Al -40034.

  
	
   

  	
   

  	
   

  
	
  Process

  Specification

  	
   

  	
  The document
  which defines the process for Production of the applicable Drug Substance
  including any critical processing parameters as agreed between the parties
  pursuant to sections 2.9 and 5.9 and any other applicable provisions of the
  Quality Agreement.

  
	
   

  	
   

  	
   

  
	
  Production
  or

  Produce

  	
   

  	
  The production and packaging of Drug
  Substance by Avecia.

  
	
   

  	
   

  	
   

  
	
  Programme

  	
   

  	
  The programme of work to be carried out by
  Avecia as set out in more detail in the applicable Project Plan together with
  any additional work which the parties agree to add using a Programme
  Amendment Order.

  
	
   

  	
   

  	
   

  
	
  Programme

  Amendment Order

  	
   

  	
  A document detailing changes to a Programme
  agreed and signed by both parties.

  
	
   

  	
   

  	
   

  
	
  Project
  Plan

  	
   

  	
  The plan for conduct of a Programme,
  including (where applicable) Production and Disposition of Drug Substance and
  any other activities, as agreed between the parties under this Agreement.

  
	
   

  	
   

  	
   

  
	
  Quality
  Agreement

  	
   

  	
  The document agreed by the parties and
  dated April 2, 2008 or any modification or replacement thereof).

  






 




	
   

  	
   

  	
  Page 6 of 29

  	
   

  	
  CONFIDENTIAL

  





















 




	
   

  	
   

  	
  (i)

  	
  the mutually
  agreed quality standards applicable for the Production and Disposition of
  Drug Substance, and in accordance with cGMP; and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  the roles
  and responsibilities of each party’s personnel in relation to quality matters
  applicable thereto.

  
	
   

  	
   

  	
   

  
	
  QC
  Document

  	
   

  	
  The documents referred to in section 2.1.1
  of the Quality Agreement.

  
	
   

  	
   

  	
   

  
	
  Regulatory

  Authority

  	
   

  	
  Those agencies or authorities responsible
  for regulation of Drug Product and Drug Substance in the United States,
  European Community or any other country in the Territory as identified in the
  applicable Project Plan.

  
	
   

  	
   

  	
   

  
	
  Tax
  Authority

  	
   

  	
  Any taxing
  or other authority, body or official (whether within or outside the United
  Kingdom) competent to impose, administer or collect any form of taxation,
  levy, impost, duty, charge, contribution or withholding of any kind whether
  of the United Kingdom or elsewhere.

  
	
   

  	
   

  	
   

  
	
  Territory

  	
   

  	
  The entire World.

  
	
   

  	
   

  	
   

  
	
  Third
  Party

  	
   

  	
  Any person other than the parties or their
  respective Affiliates.

  
	
   

  	
   

  	
   

  
	
  VAT

  	
   

  	
  Value added
  tax chargeable under or pursuant to the Value Added Tax Act 1994 or the EC
  Council Directive 2006/112/EC on the common system of value added tax or any
  similar sales, purchase or turnover tax chargeable outside the European
  Union;

  






 


1.2                               Headings:  The headings
used in this Agreement are for convenience only and are not part of this
Agreement.


 




	
   

  	
   

  	
  Page 7 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


2.                                      Conduct
of Programmes.


 


2.1                               Agreement
of Project Plans and Initiation of Programmes:


 


(a)                                  Prior to commencement
of a Programme, PharmAthene shall communicate its requirements for work to
Avecia and a Project Plan shall be developed by Avecia and agreed to in writing
by PharmAthene under this Agreement. 
Once the content of the Project Plan has been agreed, Avecia shall
deliver two (2) signed originals of the Project Plan to PharmAthene.  PharmAthene shall sign both originals of the
Project Plan and return one (1) fully executed original to Avecia.  The fully executed Project Plan shall be
incorporated herein by reference and made a part of this Agreement.  Project Plans 1 through 4 attached hereto
have been agreed to by Avecia and PharmAthene and are incorporated herein by
reference and made part of this Agreement without separate execution by Avecia
and PharmAthene.  Unless otherwise
specified in a Project Plan, in the event there is a conflict between the terms
of a Project Plan and this Agreement, this Agreement shall govern.  In the event of a conflict between a Project
Plan and any other term(s) and/or requirement(s) of this Agreement,
the other term(s) and/or requirement(s) of this Agreement will
control, provided that if there is a conflict between the terms of this
Agreement or a Project Plan and the Quality Agreement, the Quality Agreement
shall govern.  Where more than one
Project Plan has been agreed to and executed, each said executed Project Plan
shall be incorporated herein by reference and made a part hereof.  Avecia shall have no obligation for conduct
of a Programme until PharmAthene has executed and returned the Project Plan to
Avecia.  Following execution of the
Project Plan, Avecia shall commence the Programme pursuant to the Project Plan,
provided however that Avecia will not commence Production until the Master
Batch Record, the Process Specification and the Quality Agreement applicable to
the Programme shall have been agreed in accordance with Clause 2.2.  It is recognised and understood that the
timings set out in a Project Plan at the time of execution will be based on
activities to be conducted during calendar quarters, with detailed schedules of
specific timings during particular calendar months to be agreed in writing
following execution of a Project Plan.


 


(b)                                 In the event that
PharmAthene enters into (x) an extension to an existing Prime Contract or (y) arising
as a result of the Plague Vaccine Resource Allocation Decision of the US
Department of Defense (a “RAD Contract”), in each case pursuant to which
PharmAthene is to carry out further development of a Drug Substance, at the
request of PharmAthene, Avecia and PharmAthene shall enter into, sign and
execute a Project Plan pursuant to which Avecia will develop such Drug
Substance as follows:


 


(i)                                     Avecia
shall Produce the Drug Substance in accordance with the requirements of the
applicable government contract or extension thereof, and any other terms
applicable to a subcontractor;


 




	
   

  	
   

  	
  Page 8 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


(ii)           Avecia shall Produce
the plague vaccine Drug Substance for a RAD Contract in accordance with the
financial terms set out in Avecia’s proposal B2434 in support of the proposal
submitted for the Plague Vaccine Resource Allocation Decision attached as Exhibit 2.1;


(iii)          Avecia shall Produce the
plague vaccine Drug Substance under the existing Prime Contract in accordance
with the price mechanism set out in the existing Prime Contract;


(iv)          Avecia shall Produce the
anthrax vaccine Drug Substance in accordance with the price mechanism set out
in Project Plan #l .


 


(c)                                  In the event that
PharmAthene enters into a government contract other than one referred to in Section 2.1(b) above
pursuant to which PharmAthene is to carry out further development of a Drug
Substance, at the request of PharmAthene, the parties shall act in good faith
and use commercially reasonable endeavours to enter into, sign and execute a
Project Plan pursuant to which Avecia will develop such Drug Substance at a
price reasonably consistent with the Drug Substance pricing referred to in Section 2.1(b) above.


 


2.2                               Production
Documentation:  The Master Batch
Record, the Drug Substance Specification, the Process Specification and the QC
Document applicable to a Programme or any change thereto shall be reviewed and
approved in accordance with the Quality Agreement.  Each Batch shall be Produced and its
Disposition carried out by using a copy of the Master Batch Record, the Process
Specification and the Drug Substance Specification and the Quality Agreement
Document.  Each executed Batch
Manufacturing Record for such Batch shall be assigned a unique batch
number.  Any deviation from the Master
Batch Record, the Drug Substance Specification or the Process Specification
shall be dealt with in accordance with sections 2.10 and 5.10 of the Quality
Agreement.  Avecia shall provide
PharmAthene with supporting Production and Disposition documentation requested
by PharmAthene in a form suitable for PharmAthene’s submission to any
Regulatory Authority.


 


2.3                               Vendor
and Supplier Audit and Certification: 
Avecia shall certify and audit all suppliers and vendors of raw
materials and consumable items intended for use in Production of Drug Substance
in accordance with Avecia’s vendor assurance procedures.  Audits in respect of any critical raw
materials which are mandated by PharmAthene shall be conducted subject to
agreement of a Project Plan covering such audit.


 


2.4                               Delivery
Terms:  Avecia shall deliver all Drug
Substance to PharmAthene or to PharmAthene’s designated consignee.  All deliveries shall be made Ex Works the
Facility (Incoterms 2000), to a carrier designated by PharmAthene, at
PharmAthene’s expense.  PharmAthene shall
procure, at its cost, insurance covering damage or Ioss of Drug Substance
during shipping.


 


2.5                               Conduct
of Programmes.  Avecia shall carry
out each Programme :


 




	
   

  	
   

  	
  Page 9 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


(a)                                  in accordance with
the terms of this Agreement; and


 


(b)                                 with reasonable skill,
care and diligence and no less than the level of skill, care and diligence to
be reasonably expected of a provider of similar services.


 


For the avoidance of doubt, it shall not be
considered a breach of this Agreement or the applicable Project Plan by Avecia
if a development objective of a development Programme is not achieved so long
as Avecia has complied with its obligations set out in Section 2.5(b).  Time shall not be of the essence in the
performance of any development Programme or part thereof unless specifically
stated otherwise in the applicable Project Plan.  The parties acknowledge that, having regard
to the fact that some of the work to be performed hereunder may by its nature
be developmental, Avecia cannot and consequently does not guarantee to
PharmAthene the achievement of a successful outcome for a development
Programme.


 


2.6                               Consideration:  PharmAthene shall pay to Avecia the amounts
and at the times set out in the applicable Project Plan.


 


2.7                               Issue
of Invoices:  Unless otherwise
specified in a Project Plan, Avecia shall issue invoices for the sums set out
in the applicable Project Plan as such sums fall due and PharmAthene shall pay
such sums within 30 calendar days of the date of receipt of the relevant
invoice, unless stated otherwise in the applicable Project Plan.  Interest shall become due on late payments at
an annual rate of 2% above the base lending rate of the bank referred to in Section 2.8
below, from the date on which payment falls due until the date of payment.


 


2.8                               Bank
Account Details:  Unless otherwise
agreed, all amounts payable to Avecia under this Agreement shall be paid in
U.S. Dollars, without deduction, by authenticated and value dated Swift
telegraphic transfer, quoting invoice numbers of payment, to:



 The Royal Bank of Scotland PLC,
Manchester Mosley street, 38 Mosley Street,

Manchester M60 2BE.

Swift [***], sort code [***],

Account number [***], IBAN [***]


 


2.9                               Taxes:


 


(a)                                  All payments under
this Agreement are exclusive of any VAT (or other tax) that may apply.  Where any VAT is properly chargeable on any
supply of goods or services in respect of which payment is required to be made
under this Agreement, subject to the party supplying such goods or services
(the Supplier) having delivered to the other party to this Agreement (the
Recipient) a proper VAT invoice in respect of that VAT, the Recipient shall pay
to the Supplier the amount of that VAT in addition to the amount of such
payment not later than the date on which such payment is made or, if later, the
date falling thirty (30) calendar days after 


 




	
   

  	
   

  	
  Page 10 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


the delivery by the Supplier to the Recipient of a proper VAT invoice
in accordance with this Clause 2.9(a).


 


(b)                                 Any payment to be made
by either party under this Agreement (the Payer) to the other party to this
Agreement (the Payee) shall be made in full without, and free and clear of, any
deduction or withholding whatsoever (save only as required by any applicable
law).


 


(c)                                  If a Payer makes a
deduction or withholding required by any applicable law from a payment under
this Agreement, the sum due from the Payer shall be increased to the extent
necessary to ensure that, after the making of any such deduction or
withholding, the Payee receives a sum equal to the sum it would have received
had no deduction or withholding been made.


 


(d)                                 If any deduction or
withholding is required by any applicable law as referred to in Clause 2.9(b),
the Payer shall:


 


(i)                                     make such
deduction or withholding; and


(ii)                                  pay the full amount deducted
or withheld to the relevant Tax Authority, in accordance with applicable law.


 


(e)                                  If, at any time after
any increased payment is made as a consequence of the application of Clause
2.9(c), the Payee receives or is granted credit against, refund of, or
remission from any tax payable but which it would not have received or been
granted had the relevant payment not been made under this Agreement, the Payee
shall to the extent that it can do so without prejudicing the retention of the
amount of such credit or remission, reimburse the Payer such amount as, acting
reasonably, the Payee determines will leave it in no worse a position than it
would have been in had the circumstances giving rise to the increased payment
not in fact arisen.  Such reimbursement
shall be made not later than ten (10) Business Days after the Payee
receives or is granted such credit.


 


2.10                        Default
in Payment Obligations:  In addition
to all other remedies available to Avecia in the event of a PharmAthene
default, if PharmAthene fails to make payments as required hereunder, Avecia
may refuse all further Project Plans, refuse to Produce or Disposition any Drug
Substance or carry out Programmes until all outstanding sums are paid in full,
modify the foregoing terms of payment, place the account on a letter of credit
basis, require full or partial cash payment in advance and/or suspend
deliveries of Drug Substance until PharmAthene provides assurance of further or
future payment reasonably satisfactory to Avecia.


 


2.11                        Flowdown
provisions:  To the extent that any
work performed by Avecia under this Agreement is performed pursuant to a Prime
Contract, Avecia acknowledges and agrees that any and all work performed
thereunder is subject to the terms and conditions of the Prime Contract that are
applicable to a subcontractor under the Prime Contract.  Avecia acknowledges that it has been provided
with a copy of 


 




	
   

  	
   

  	
  Page 11 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


the existing Prime Contracts and is informed as to the terms,
conditions and obligations of the Prime Contract that are applicable to a
subcontractor thereunder.  Avecia
covenants and agrees to be bound by the terms, conditions and obligations of
the Prime Contract that are applicable to a subcontractor thereunder.  Without limiting the foregoing, it is
understood that Programmes under this Agreement will be carried out pursuant to
obligations contained in the Prime Contracts and such Prime Contracts contain
obligations on PharmAthene to flow down certain clauses (including, without
limitation, US Government FAR, DFAR and HHSAR clauses and UK Government DEFCON
clauses) to PharmAthene’s subcontractors, including Avecia.  Clauses applicable to Prime Contract with
Dail are set out in Schedule 1A and clauses applicable to Prime Contracts with
NIH are set out in Schedule 1)B.  Clauses
flowing down from additional Prime Contracts will be set out in further
schedules, to be added by written agreement of the parties.  If a Project Plan refers to a schedule to
this Agreement, the clauses set out in the relevant schedule shall be
incorporated into this Agreement by reference solely in respect of such Project
Plan.


 


3.                                      Term
and Termination


 


3.1                               Term:  This Agreement shall commence on the date
first above written and will continue until all Programmes have been completed,
unless terminated earlier pursuant to Section 32 below (the “Term”).


 


3.2                               Termination:  This Agreement or a Project Plan (as
appropriate) may be terminated at any time upon the occurrence of any of the
following events:


 


(a)                                  Termination
for Material Breach:  Either
party may terminate this Agreement or a Project Plan if the other is in
material breath of this Agreement and does not rectify such breach (if such
breath is capable of remedy) within fourteen (14) calendar days for monetary
defaults (which default can be cured by making such payment within said
fourteen (14) calendar day period) or thirty (30) calendar days for
non-monetary defaults (or such additional time reasonably necessary to cure
such non-monetary default provided the breaching party has commenced a cure
within the thirty (30) day period (or such other period as is reasonably
practicable) and is diligently pursuing completion of such cure) after receipt
by the breaching party of written notice of such default.  At the option of the non-breaching party,
such termination may be with respect to the entire Agreement, or only with
respect to an individual Project Plan which is subject to the breach.


 


(b)                                 Termination
for Financial Matters:  Either
party may terminate this Agreement immediately by giving the other party
written notice thereof if the other has a liquidator, receiver, manager
receiver or administrator appointed, or ceases to continue trading or is unable
to pay debts as defined in Section 123 of the Insolvency Act 1986 (England
and Wales) or the equivalent occurs in any jurisdiction in which the other is
resident or carried on business.


 




	
   

  	
   

  	
  Page 12 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


(c)                                  Termination
for Convenience:  A Project
Plan or the Agreement may be terminated by PharmAthene for convenience without
cause in its absolute discretion by giving Avecia written notice thereof.  Avecia may terminate a Project Plan only if
the applicable Project Plan specifically states that such termination is
permitted.


 


3.3                               Payment
on Termination:  In the event of the
termination of this Agreement or a Project Plan, PharmAthene shall pay to
Avecia:


 


(a)                                  all sums payable
under the applicable Project Plan(s) up to the date of termination but not
yet paid, including sums which are payable but in respect of which no invoice
has been issued at the date of termination, including all sums due in relation
to raw materials or consumables ordered or purchased by Avecia (if applicable);,
and


 


(b)                                 in consideration for
research and development and technical consultancy provided by Avecia relating
to termination of the manufacturing stage or stages of a terminated Programme,
any applicable Cancellation Fees, except for termination by PharmAthene in the
event of a material breach by Avecia pursuant to Section 3.2(a); and


 


(c)                                  in consideration for
research and development and technical consultancy provided up to the date of
termination, a pro rated sum based on work completed in respect of any
commenced but incomplete stage or milestone under a terminated Programme (other
than a stage or milestone identified as a manufacturing stage or milestone in
the applicable Project Plan) at the date of such termination, less any payments
already made in respect of such stage or milestone.


 


3.4                               Survival:  Termination or expiration of this Agreement
through any means or for any reason, except as set out in Section 10,
shall be without prejudice to the rights and remedies of either party with
respect to any antecedent breach of any of the provisions of this
Agreement.  The provisions of Sections 3,
8, 9, 10, 11, 12, 13, 14, 18 and 19 hereof shall survive expiration or
termination of this Agreement.


 


3.5                               Events
upon Termination


 


Upon termination and unless otherwise agreed between the Parties:


 


(a)                                  Products Produced for
PharmAthene under this Agreement shall be delivered by Avecia to PharmAthene
whereupon PharmAthene shall pay Avecia in accordance with the terms of this
Agreement;


 


(b)                                 work in progress
commenced by Avecia under this Agreement shall be completed by Avecia and
delivered to PharmAthene whereupon PharmAthene shall pay Avecia in full thereof
in accordance with the terms;


 




	
   

  	
   

  	
  Page 13 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


(c)                                  all records relating
to the Production and analysis of Drug Substance and retained samples of
materials, components and Drug Substance shall be transferred to PharmAthene if
requested by PharmAthene, except as provided in Section 3.5(d).


 


(d)                                 Avecia shall, upon
PharmAthene’s prior written request, return or destroy any PharmAthene
Confidential Information in the possession or control of Avecia.  Likewise, PharmAthene shall, upon Avecia’s
prior written request, return or destroy any Avecia Confidential Information in
the possession or control of PharmAthene, except Avecia Confidential
Information as to which PharmAthene retains rights under this Agreement.  Notwithstanding the foregoing provisions:  (i) Avecia may retain and preserve, at
its sole cost and expense, samples and standards of each Batch following
termination or expiration of this Agreement solely for use in determining
Avecia’s rights and obligations hereunder, (ii) each Party may retain such
of the other Party’s Confidential Information as may be required by Applicable
Laws, regulations, or guidelines and (iii) PharmAthene may continue to
retain, use and have used Avecia Confidential Information that is required to
maintain Marketing Approval and/or is useful to Produce Drug Substance and Product,
and (iv) Avecia may retain Confidential Information of PharmAthene to the
extent required for Avecia to supply Drug Substance to PharmAthene or its
Affiliate pursuant to a contract with respect to such supply.


 


4.                                      Compliance


 


4.1                               Manufacturing
Compliance:  Avecia shall advise
PharmAthene immediately if an authorised agent of any regulatory body visits
Avecia’s manufacturing facility and makes an inquiry regarding Avecia’s
Production of Drug Substance for PharmAthene. 
Upon such notice being given, PharmAthene, or its designee, shall, upon
prompt notice to Avecia, be permitted to be present at such visit if
PharmAthene reasonably believes that such visit is related to the Production or
storage of Drug Substance and/or Programmes under this Agreement.  Manufacturing deviations and investigations
which occur during Production of Drug Substance and which do not cause the
Production to be non-compliant with the Drug Substance Requirements, shall not
be deemed to cause such Drug Substance to be non-conforming.


 


4.2                               Cleaning
Validation:  Avecia shall provide to
PharmAthene details of all other products manufactured in the same stream of
Avecia’s facility as any Drug Substance Produced under this Agreement,
including dosage information, and shall demonstrate successful cleaning
verification.


 


4.3                               Reserve
Samples:  Avecia shall be responsible
for obtaining and maintaining sufficient quantities of Drug Substance reserve
samples pursuant to cGMP as specified in the appropriate Project Plan.


 




	
   

  	
   

  	
  Page 14 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


4.4                               Audits:  Audits of the portions of Avecia’s facility
used for Production of Drug Substance shall be conducted in accordance with the
Quality Agreement or the applicable Project Plan.  If PharmAthene chooses to audit Avecia other
than in accordance with section 2.12 of the Quality Agreement, PharmAthene
agrees to reimburse Avecia for Avecia’s reasonable expenses incurred in hosting
the audit.  All audited data will be
treated as Confidential Information of Avecia and PharmAthene shall not be
permitted to remove or copy data without Avecia’s prior consent, such consent
not to be unreasonably denied.


 


4.5                               Unless
otherwise agreed by PharmAthene, Avecia shall Produce the Drug Substance and
the Other Material only at the Facility.


 


4.6                               Avecia
shall Produce, package, handle, and provide quality assurance for Drug
Substance Produced under this Agreement, as set forth in the Drug Substance
Requirements and in accordance with cGMP Rules and Marketing Authorization
(if applicable under a Project Plan) and in all material respects in accordance
with Applicable Laws, and deliver to PharmAthene the quantities of Drug
Substance specified in the applicable Project Plan.


 


4.7                               Avecia
shall package and label Drug Substance for shipment in accordance with the Drug
Substance Requirements and Drug Substance Specification.  Each delivery shall be accompanied by the
Disposition Package.  Should Avecia at
any time during the term of this Agreement have reason to believe that it shall
be unable to meet a delivery date (if applicable under a Project Plan), Avecia
shall promptly notify PharmAthene.


 


4.8                               Avecia
shall maintain accurate records for the Production of Drug Substance as
required by Applicable Laws, including cGMP. 
PharmAthene shall have the right to use, read, audit, copy and reference
any of the foregoing in connection with a filing for or maintaining Marketing
Authorizations of Drug Substance; in connection with the review of
manufacturing activities related to preventive maintenance, calibrations,
equipment validations, testing, housekeeping, or personnel training, or as
otherwise authorized by this Agreement. 
PharmAthene shall own the Drug Substance Requirement and all Batch
Manufacturing Records.


 


4.9                               Avecia
shall comply with the Drug Substance Requirements, cGMP and Applicable Laws in
Producing the Drug Substance.


 


4.10                        Avecia
shall employ sufficient and appropriately qualified technical and other staff
to properly fulfil its obligations relating to the Production of the Drug
Substance in accordance with the provisions of this Agreement.


 


4.11                        Avecia
shall store samples of each Batch of the Drug Substance in accordance with the
Drug Substance Specification, and Drug Substance Requirements, Applicable Laws,
and cGMP.


 


4.12                        Avecia
shall produce Other Material in accordance with the manufacturing procedures,
specifications, batch manufacturing records, master batch records and 


 




	
   

  	
   

  	
  Page 15 of 29

  	
   

  	
  CONFIDENTIAL

  




















 


any quality agreement, that are applicable to Other Material and in
accordance with Applicable Laws.


 


5.                                      Disposition
of Drug Substance


 


5.1                               Disposition
Procedure:


 


(a)                                  Disposition shall be
carried out in accordance with sections 2.5 and 5.5 of the Quality
Agreement.  Within forty-two (42)
calendar days after Batch production by Avecia, Avecia will provide to
PharmAthene the Disposition Package.


 


(b)                                 Within twenty one (21)
Business Days following receipt of the Disposition Package, PharmAthene shall
confirm in writing whether PharmAthene accepts Avecia’s findings detailed in
the Disposition Package, or provide to Avecia a written list of questions for
dose out prior to completion of Disposition.


 


(c)                                  Disposition shall be
deemed to be complete and PharmAthene shall be deemed to have waived its right
to reject Avecia’s findings in the Disposition Package and shall be deemed to
have accepted the Drug Substance, if:


 


(i)            PharmAthene notifies Avecia that
PharmAthene accepts Avecia’s assessment that a Batch conforms to the Drug
Substance Requirements; or


 


(ii)           PharmAthene fails to notify Avecia within
twenty-one (21) Business Days following receipt of the Disposition Package,
whichever is longer whether PharmAthene accepts Avecia’s findings in the
Disposition Package; or


 


(iii)          the list of questions provided by PharmAthene
under Section 5.1(b) is closed out to the parties’ mutual
satisfaction as evidenced in writing, signed by both parties.


 


5.2                               Non-
Conforming Drug Substance:


 


(a)                                  If (i) Avecia’s
findings detailed in the Disposition Package indicate that a Batch of Drug
Substance is a Non-Conforming Batch or (ii) PharmAthene notifies Avecia
that PharmAthene does not accept Avecia’s finding that a Batch is in conformity
with the Drug Substance Requirements detailed in the Disposition Package and
instead PharmAthene believes that the Disposition Package indicates that the
Batch is a Non-Conforming Batch, it shall notify Avecia by telephone including
a detailed explanation of the non-conformity and shall confirm such notice in
writing to Avecia by facsimile or email. 
Upon receipt of such facsimile or email notice, Avecia will investigate
such alleged non-conformity, and (i) if Avecia agrees that 


 




	
   

  	
   

  	
  Page 16 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


such Drug Substance is a Non-Conforming Batch, deliver to PharmAthene a
corrective action plan within thirty (30) calendar days after receipt of
PharmAthene’s written notice of non-conformity, or such additional time as is
reasonably required if such investigation or plan requires data from sources
other than PharmAthene or Avecia, or (ii) if Avecia disagrees with
PharmAthene’s belief that the Batch is a Non-Conforming Batch, Avecia shall so
notify PharmAthene by telephone within the thirty (30) calendar day period and
confirm such notice in writing by facsimile or email.


 


(b)                                 If the parties dispute
whether the Disposition Package indicates that a Batch is conforming or
non-conforming and are unable to resolve the matter in accordance with Section 2.5.13
of the Quality Agreement, the Disposition Package will be submitted to a
mutually acceptable laboratory or consultant for resolution, whose
determination of conformity or non-conformity, and the cause thereof if
non-conforming, shall be binding upon the parties.  PharmAthene shall bear the costs of such
laboratory or consultant, except as set out in Section 5.3.


 


5.3                               Remedies
for Non-Conforming Batch:


 


(a)                                  In the event a
Non-Conforming Batch results from wilful or intentional misconduct and/or
negligence and/or failure to comply with Applicable Laws or the Quality
Agreement, as agreed to by Avecia or as determined by the laboratory pursuant
to Section 2.5(b), then Avecia, in consultation with PharmAthene, shall,
at Avecia’s expense, rework or reprocess such Non-Conforming Batch or Produce a
replacement Batch and Disposition such Batch as soon as reasonably
practicable.  In such event, Avecia shall
bear the costs of the laboratory or consultant engaged under Section 5.2(c).


 


(b)                                 If a Non-Conforming
Batch results other than from the circumstances of Section 5.3(a), then
Avecia and PharmAthene shall meet to agree a course of action, which may
include (but is not limited to) rework or reprocessing of such Non-Conforming
Batch or Production of a replacement Batch at additional cost to PharmAthene.


 


6.                                      Force
Majeure


 


Failure of either party to
perform under this Agreement (except the obligation to make payments) shall not
subject such party to any liability to the other if such failure is caused by
acts of God, lightning, acts of terrorism, earthquakes, fire, explosion, flood,
drought, war, riot, sabotage, hijackings, embargoes, blockades, strikes, labour
disputes (excluding labour disputes involving the work force or any part
thereof of the party in question), compliance with any order or regulation of
any government entity, or by any cause beyond the reasonable control of the
affected party, whether or not foreseeable, provided that written notice of
such event is promptly given to the other party.  For the avoidance of doubt, this provision
shall not be applicable in the event of failure of Drug Product in clinical
trials or failure of Drug Product to gain regulatory approval.


 




	
   

  	
   

  	
  Page 17 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


7.                                      Changes
Mandated by Regulatory Authority


 


7.1                               Drug
Substance-Specific Changes:  If
facility, equipment, process or system changes are required of Avecia as a
result of a change in the regulatory requirements of a Regulatory Authority,
and such regulatory changes apply primarily to the Production and supply of one
or more of Drug Substances, then PharmAthene and Avecia will review such
requirements and agree in writing to such regulatory changes, and PharmAthene
shall bear I00% of the reasonable costs thereof.


 


7.2                               General
Changes:  If such regulatory changes
apply generally to one or more Drug Substances as well as to other products
produced by Avecia for itself or for third parties, then Avecia shall bear the
cost of those changes.


 


8.                                      Confidentiality


 


8.1                               Confidentiality:  It is contemplated that in the course of the
performance of this Agreement each party may, from time to time, disclose
Confidential Information to the other. 
Except as permitted by the Agreement, each party agrees to take all
reasonable steps to prevent disclosure of Confidential Information of the other
party to Third Party.  Except for the
Avecia Technology, any and all information, data, materials including cell
lines, and know how that relates to Drug Substance, Drug Product or the Production
of Drug Substance and/or Drug Product including but not limited to PharmAthene
Technology in the possession of or which comes into the possession of Avecia
shall be deemed to be Confidential Information of PharmAthene that is disclosed
to Avecia and shall not be subject to any of the exceptions (i), (ii) or (iv) of
the definition of Confidential Information of Section 1.1.  No provision of this Agreement shall be
construed so as to preclude disclosure of Confidential Information as may be
reasonably necessary to secure from any governmental agency necessary approvals
or licenses or to obtain patents with respect to the Drug Product or the Drug
Substance.


 


8.2                               Third
Party Disclosure:  Avecia shall be
permitted to disclose Drug Product and Drug Substance information to Third
Party developmental and analytical services providers in connection with
performance of its obligations hereunder provided such providers shall be
subject to confidentiality agreements. 
Either party may disclose Confidential Information of the disclosing
party to those Affiliates, agents and consultants who need to know such
information to accomplish the purposes of this Agreement and PharmAthene shall
have the right to disclose Confidential Information of Avecia pursuant to the licenses
granted to PharmAthene under this Agreement (collectively, ‘Permitted
Recipients”); provided such Permitted Recipients are bound to maintain such
Confidential Information in confidence.


 


8.3                               Disclosure
to Courts or by Law or Other Rules: 
Subject to the proviso below, nothing in this Section 8 shall
preclude disclosure of any Confidential Information (a) required by any
court entitled by law to disclosure of the same, or (b) which is required
by law to be disclosed (including, without limitation, to a regulatory 


 




	
   

  	
   

  	
  Page 18 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


authority, in connection with freedom of information legislation or
regulations, or in relation to filings with any recognised stock
exchange).  If a party is required to
make a disclosure in accordance with this Section 8.3 it shall only make a
disclosure to the extent to which it is obliged.  Notwithstanding the foregoing, the party
intending to make such disclosure shall in each case promptly notify the other
party when any requirement to disclose has arisen, to enable the other party to
seek an appropriate protective order and to make known to the intended
recipient the proprietary nature of the Confidential Information and to make
any applicable claim of confidentiality in respect thereof.  The party intending to make such disclosure
shall co-operate in any action which the other party may in its reasonable
discretion decide to take.


 


8.4                               Publicity.  The parties agree that the public
announcement of the execution of this Agreement or a particular Project Plan
shall only be by one or more press releases mutually agreed to by the
parties.  A Party wishing to make a press
release shall forward a copy of the proposed press release to the other Party
prior to publishing said press release, whereupon the Party receiving such
proposed Press Release shall approve, amend or reject such press release.  In the event the Parties do not mutually
agree on the contents of the proposed press release such press release shall
not be made, except that neither party shall unreasonably withhold approval of
such press release.


 


8.5                               Duration
of Confidentiality:  All obligations
of confidentiality and non-use imposed upon the parties under this Agreement
shall expire ten (10) years after the expiration or earlier termination of
this Agreement; provided, however, that Confidential Information which
constitutes the trade secrets of a party and which is identified as such shall
be kept confidential indefinitely, subject to the limitations set out in this
Section.


 


9.                                      Intellectual
Property


 


9.1                               Existing
Intellectual Property:


 


(a)                                  Except as the parties
may otherwise expressly agree in writing, each party shall continue to own its
existing patents, trademarks, copyrights, trade secrets and other Intellectual
Property, without conferring any interests therein on the other party.  Neither party nor any Third Party shall
acquire any right, title or interest in the Intellectual Property of the other
party by virtue of this Agreement or otherwise, except to the extent expressly
provided herein.


 


(b)                                 Avecia acknowledges
that Avecia currently has in its possession PharmAthene Technology useful for
producing Drug Substance and acknowledges and agrees that as between Avecia and
PharmAthene, PharmAthene has all rights in and to PharmAthene Technology.


 


9.2                               Disclaimer:  Except as otherwise expressly provided
herein, nothing contained in this Agreement shall be construed or interpreted,
either expressly or by 


 




	
   

  	
   

  	
  Page 19 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


implication, estoppel or otherwise, as: 
(i) a grant, transfer or other conveyance by either party to the
other of any right, title, license or other interest of any kind in any of its
Inventions or other Intellectual Property, (ii) creating an obligation on
the part of either party to make any such grant, transfer or other conveyance
or (iii) requiring either party to participate with the other party in any
cooperative development program or project of any kind or to continue with any
such program or project.


 


9.3                               New
Intellectual Property:  Except as
prohibited by a Prime Contract, Intellectual Property arising during and as a
direct result of a Programme (“New Intellectual Property”) shall be owned by
PharmAthene.  Avecia shall ensure that it
secures these rights for PharmAthene when placing sub-contracts under this
Agreement.  PharmAthene hereby grants to
Avecia a non-exclusive, paid-up, perpetual, non-terminable, worldwide license,
with the right to grant sublicenses, and otherwise transfer such license to
practice any and all New Intellectual Property for any purpose other than to
make, have made, use, offer for sale, sell, and import Drug Substance or Drug
Product, which license shall survive termination of this Agreement.  Avecia agrees to assign and hereby assigns to
PharmAthene all of Avecia’s right, title and interest in and to the New
Intellectual Property.


 


9.4                               Rights
in Intellectual Property:  The party
owning any Intellectual Property shall have the world wide right to control the
drafting, filing, prosecution and maintenance of patents covering such
Intellectual Property, including decisions about the countries in which to file
patent applications.  Patent costs
associated with the patent activities described in this Section 9.4 shall
be borne by the sole owner.  Each party
will cooperate with the other party in the filing and prosecution of patent
applications.  Such cooperation will
include, but not be limited to, furnishing supporting data and affidavits for
the prosecution of patent applications and completing and signing forms needed
for the prosecution, assignment and maintenance of patent applications.


 


9.5                               Confidentiality
of Intellectual Property: 
Intellectual Property shall be deemed to be the Confidential Information
of the party owning or licensed to such Intellectual Property.  The protection of each party’s Confidential
Information is described in Article 8. 
It shall be the responsibility of the party preparing a patent
application to obtain the written permission of the other party to use or
disclose the other party’s Confidential Information in the patent application
before the application is filed and for other disclosures made during the
prosecution of the patent application.


 


9.8                               Avecia covenants and
agrees that Avecia will use PharmAthene Technology only for Production of Drug
Substance under this Agreement except as otherwise agreed between the parties.


 


9.9                               At the request of
PharmAthene, Avecia shall provide PharmAthene with access to any and all PharmAthene
Technology in the possession of Avecia; and provide, as 


 




	
   

  	
   

  	
  Page 20 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


requested, samples of cell lines, vectors and polynucleotides in the
possession of Avecia that is PharmAthene Technology.


 


10.                               Warranties,
Liability and Indemnity


 


10.1                        Save
as expressly set out in this Agreement, neither party makes any warranty,
express or implied (including any warranty implied by law).


 


10.2                        (a) 
Avecia warrants that it possesses and shall maintain in full force and effect
at all times during the term of this Agreement all licences, 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 Production of Drug Substance.  Avecia
shall promptly notify PharmAthene if Avecia receives notice that any such
license, permit, or approval is or may be revoked or suspended. 


 


(b) Avecia
represents and warrants that (i) Avecia is licensed to the pPOPTM Technology and
that such license is in full force and effect; (ii) Avecia has the right
to grant the sublicenses to the pPOPTM Technology
that have been granted to PharmAthene under this Agreement; (iii) the
granting of such sublicenses does not require the consent of any Third Party
and is not inconsistent with any rights or licenses that have been granted to
any other person or entity; and (iv) such sublicenses have been validly
granted.


 


10.3                        Intellectual
Property Indemnity:  Each party (“the First Party”) shall be liable for and indemnify the
other (“the Second Party”) against any
liability, loss, claim, damage, proceedings and costs whatsoever arising out of
any actual or suspected infringement of any Intellectual Property of a Third
Party (an “Intellectual Property Infringement”)
as a result of the Second Party’s use of the Intellectual Property of the First
Party in performance of a Programme, provided that the Second Party:


 


(a)                                  gives the First Party
the sole conduct of the defence to any claim or action in respect of the
Intellectual Property Infringement and does not at any time admit liability or
otherwise settle or compromise or attempt to settle or compromise the said
claim or action except upon the express instructions of the First Party; and


 


(b)                                 acts in accordance
with the reasonable instructions of the First Party and gives the First Party
such assistance as it shall reasonably require in respect of the conduct of
such defence.


 


Notwithstanding the foregoing provisions of this Section 10.2, the
First Party’s liability to indemnify the Second Party shall cease in respect of
continuing use by the Second Party of the Intellectual Property of the First
Party which is the subject of the Intellectual Property Infringement following
either:


 




	
   

  	
   

  	
  Page 21 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


(i)                                     notification
(which shall be given promptly) by the First Party to the Second Party that the
Intellectual Property of the First Party is actually or is believed by the
First Party to be the subject of an Intellectual Property Infringement; or


 


(ii)                                  the
Second Party becoming aware that the Intellectual Property of the First Party
is the subject of an Intellectual Property Infringement;


 


except where the First Party agrees or insists
that the Second Party shall continue to use the Intellectual Property of the
First Party which is the subject of the Intellectual Property Infringement.


 


10.4                        PharmAthene
Indemnity:  PharmAthene shall fully
indemnify and defend Avecia against, all Third Party claims, suits, actions,
demands, liabilities, expenses and/or losses (including reasonable legal fees)
brought against or suffered by Avecia or its Affiliates or its or their
directors, officers, shareholders or employees, and against all costs incurred
in connection therewith arising out of or resulting from the use of Drug
Substance following acceptance of a Batch of Drug Substance by PharmAthene or
arising out of or resulting from use of Drug Product and/or arising from the
negligence or wilful misconduct on the part of PharmAthene in performing any
activity contemplated by this Agreement except that this indemnity shall not
apply to the extent that Avecia is obligated to indemnify PharmAthene under Section 103
or 10.5.


 


10.5                        Avecia
Indemnity:  Avecia shall fully
indemnify and defend PharmAthene against, all Third Party claims, suits,
actions, demands, liabilities, expenses and/or losses (including reasonable
legal fees) brought against or suffered by PharmAthene or its Affiliates or its
or their directors, officers, shareholders or employees, and against all costs
incurred, arising out of or resulting from Production of Drug Substance by or
on behalf of Avecia and/or arising out of the negligence or wilful misconduct
on the part of Avecia in performing any activity contemplated by this
Agreement, except that this indemnity shall not apply to the extent that
PharmAthene has an obligation to indemnify Avecia pursuant to Section 10.3
or 10.4 of this Agreement.


 


10.6                        Indemnification
Procedure.


 


(a)                                  Notice of Claim.  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”) with respect to which such
Indemnified Party intends to base a request for indemnification under any of
Sections 10.3, 10.4 or 10.5 (a “Loss”). 
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 such Loss are known at such time. 
The Indemnified Party will furnish promptly to the Indemnifying 


 




	
   

  	
   

  	
  Page 22 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


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 Claim by giving
written notice to the Indemnified Party within thirty (30) days after the
Indemnifying Party’s receipt of an Indemnification Claim Notice.


 


(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.  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 Indemnitee 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 Indemnitee for
any legal expenses subsequently incurred by such Indemnified Party or other
Indemnitee in connection with the analysis, defense or settlement of the Third
Party Claim.


 


(d)                                 Right to Participate
in Defense.  Without limiting the
preceding section 10.6, 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 10.6(c), 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’s 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 Indemnitee 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 10.6(b),
the Indemnifying Party will have authority to consent to the entry of any
judgment, enter into any settlement or otherwise dispose of such Loss provided
it obtains the prior written consent of the Indemnified Party (which consent will
be at the 


 




	
   

  	
   

  	
  Page 23 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


Indemnified Party’s sole and absolute discretion).  The Indemnifying Party will not be liable for
any settlement or other disposition of a Loss by an Indemnitee 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 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)                                    Cooperation.  Regardless of whether the Indemnifying Party
chooses to defend or prosecute any Third Party Claim, the Indemnified Party
will, and will cause each other Indemnitee to, cooperate in the defense or
prosecution thereof 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 Indemnitees 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.


 


10.7                        Insurance.  Each party shall secure and maintain in full
force and effect during the term of this Agreement policies of insurance having
policy limits, deductibles and other terms appropriate to the conduct of that
party’s business.  Evidence of such
insurance in the form of a broker’s letter will be made available for
examination upon request of the other party.


 


11.                               Technology
Transfer and Licence from Avecia


 


11.1                        In the
event that for any reason this Agreement is terminated or a Project Plan
directed to Production of Drug Substance is terminated or PharmAthene intends
to manufacture or have manufactured Drug Substance pursuant to a written notice
from PharmAthene to Avecia, Avecia shall transfer to PharmAthene and/or its
designee any and all PharmAthene Technology and shall provide to PharmAthene
and/or its designee Avecia Technology, so as to permit PharmAthene and/or its
designee(s) to Produce Drug Substance and Avecia shall provide sufficient
technical assistance to enable PharmAthene and/or its designee(s) to
Produce Drug Substance, all in accordance with a plan submitted to Avecia by
PharmAthene.  To the extent transferable,
Avecia shall also transfer any license(s), permit(s), or approval(s) obtained
specifically for the Production of Drug Substance under this Agreement.


 


11.2                        Avecia
hereby grants to PharmAthene a non-exclusive, royalty-free, paid-up, perpetual,
non-terminable, worldwide license, with the right to grant sublicenses (except
to the extent set out in Section 11.3 below in respect of the pPoPTM



 




	
   

  	
   

  	
  Page 24 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


Technology), and otherwise transfer such license to practice any and
all Avecia Technology to make, have made, use, offer for sale, sell, and import
Drug Substance or Drug Product, which license shall survive termination of this
Agreement.


 


11.3                        Notwithstanding
the provisions of Section 11.2, PharmAthene shall not be entitled to grant
sublicenses under the pPoPTM Technology.  At PharmAthene’s request, Avecia shall grant
a further non-exclusive, royalty-free, paid-up, perpetual, non-terminable,
worldwide license to a third party nominated by PharmAthene to practice the
pPoPTM Technology to make, have made, use, offer for sale, sell, and
import Drug Substance or Drug Product on behalf of PharmAthene, which license
shall survive termination of this Agreement. 
PharmAthene may choose not to take a license under the pPoPTM
Technology under Section 11.2 or to surrender such license and may instead
request Avecia to grant a second license to a third party nominated by
PharmAthene on the same terms as the first license granted under this Section 113.  PharmAthene may request Avecia to terminate a
license granted to a third party under this Section 11.2 and to grant a
replacement license to a further third party such that, at any time, no more
than two licences under the pPoPTM Technology are granted under this
Agreement at any one time.


 


11.4                        In
consideration for the technical assistance provided by Avecia under Section 11.1
above, PharmAthene shall make payment to Avecia in accordance with the rates
for personnel based on the relevant Project Plan.


 


12.                               Notices


 


Any formal notice required or
permitted under this Agreement shall be in writing which may take the form of a
letter or facsimile and shall be sent by prepaid post, facsimile, or hand
delivery (including messenger service) to the following address of the
respective parties:


 




	
  If to PharmAthene:

  	
   

  	
  PharmAthene
  Inc.

  
	
   

  	
   

  	
  One Park
  Place, Suite 450

  Annapolis

  MD 21401

  USA

  Attn:  Joan Fusco, Senior Vice
  President Operations 

  Facsimile:  410-269-2601

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  PharmAthene
  Inc. (address as above)

  Attn:  Contracts

  Facsimile; 410-269-2601

  
	
   

  	
   

  	
   

  
	
  If to Avecia:

  	
   

  	
  Avecia
  Biologics Limited

  Belasis Avenue

  Billingham

  Cleveland, TS23 1YN

  






 




	
   

  	
   

  	
  Page 25 of 29

  	
   

  	
  CONFIDENTIAL

  





















 




	
   

  	
   

  	
  Attn:  President

  Facsimile:  +44 (0)1642 364463

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Avecia
  Biologics Limited

  Hexagon Tower

  Blackley

  Manchester, M9 8ZS

  Attn:  Company Secretary

  Facsimile:  +44 (0)161-7211886

  






 


Any party may, at any time by
written notice to the other parties, change the address or the facsimile
numbers to which notices or other communications shall be sent.  All notices and other communications shall
have been duly given or made (i) when delivered by hand (including by
messenger service) upon delivery or (ii) when delivered by post upon
delivery or (iii) when faxed upon receipt of a legible copy by recipient
and production of a satisfactory transmission report by sender confirming
transmission of the fax in full to the appropriate number by the fax machine
which sent the fax.


 


13.                               Independent
Contractor


 


Nothing in this Agreement shall
create, or be deemed to create, a partnership or the relationship of principal
and agent or employer and employee between the parties.  Each party agrees to perform under this
Agreement solely as an independent contractor.


 


14.                               Entire
Agreement


 


This Agreement, together with
the Quality Agreement, the applicable Project Plan (and any associated
Programme Amendment Orders) and the Master Batch Record, the Process
Specification and the QC Document applicable to a Programme, contains the
entire agreement between the parties and supersedes any previous agreements
relating to a Programme and any understandings between the parties with respect
thereto.


 


15.                               Assignment
and Subcontracting


 


15.1                        Assignment:  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective legal
successors but shall not otherwise be assignable by either party, without the
prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed, provided that either party may assign this
Agreement (including its rights and obligations under it) without consent to an
Affiliate or in connection with a genuine business re-organisation or to a
purchaser of the whole or part of the business or assets to which this
Agreement relates.  At the request of the
assigning party, the parties shall execute a novation agreement in support of
and confirming such assignment.


 


15.2                        Subcontracting:  With the prior written consent of
PharmAthene, Avecia shall be entitled to subcontract certain analytical work
under a Programme, subject to inclusion in such subcontract of confidentiality
and intellectual property provisions no less onerous than those contained
herein and provided that Avecia 


 




	
   

  	
   

  	
  Page 26 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


shall be liable for any acts or omissions of any subcontractor as if
such acts or omissions were Avecia’s own.


 


16.                               Variation


 


No variation or amendment of
this Agreement shall bind either party unless made in writing in the English language
and agreed to in writing by duly authorised officers of both parties.


 


17.                               Severability


 


If any provision of this
Agreement is agreed by the parties or otherwise determined to be illegal, void
or unenforceable under any law that is applicable hereto, this Agreement shall
continue in force save that such provision shall be deemed to be excised
herefrom with effect from the date of such agreement or decision or such
earlier date as the parties may agree.


 


18.                               Waiver


 


A failure by either party hereto
to exercise or enforce any rights conferred upon it by this Agreement shall not
be deemed to be a waiver of any such rights or operate so as to bar the
exercise or enforcement thereof at any subsequent time or times.


 


19.                               Law,
Jurisdiction and Dispute Resolution


 


19.1                        Governing
Law and Jurisdiction:  This Agreement
is governed by and shall be construed and interpreted in accordance with
English law.


 


19.2                        Reference
to Parties’ Senior Representatives: 
Any dispute, difference or disagreement concerning this Agreement shall
initially he referred to the President, Avecia Biologics and the CEO of
PharmAthene.  Without prejudice to the
foregoing, any disputes relating to quality issues shall be dealt with in
accordance with the Quality Agreement.


 


19.3                        Arbitration:  Any matter or dispute arising out of or in
connection with this Agreement which is not able to be resolved pursuant to
Clause 19.2 within thirty calendar days (or such long period as the parties may
agree) shall be finally settled by commercial arbitration in accordance with
the Rules of Arbitration of the International Chamber of Commerce to be
held in London, England.  The language of
the proceedings shall be English.  In
appointing arbitrators, the parties shall consider the appointment of an
arbitrator or arbitrators capable of making decisions on the technical aspects
of the applicable Programme.  The
decision of the arbitrators shall be binding on both parties and may be
enforced by either party in any court having competent jurisdiction.


 


19.4                        Interim
Steps:  Neither of the parties shall
be deemed to be precluded from taking such interim formal steps as may be
considered necessary to protect such party’s position while the procedures
referred to in Clauses 19.2 and 19.3 are pursued.


 




	
   

  	
   

  	
  Page 27 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


IN WITNESS
WHEREOF, the parties hereto have each caused this
Agreement m be executed by their duly-authorised representatives as of the date
above written.


 


 


	
  PHARMATHENE UK LIMITED

  	
   

  	
  AVECIA BIOLOGICS LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ David P.
  Wright

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  David P.
  Wright

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Chief
  Executive Officer

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  March 31,
  2008

  	
   

  	
  Date:

  	
   

  



 




	
   

  	
   

  	
  Page 28 of 29

  	
   

  	
  CONFIDENTIAL

  





















 


IN WITNESS
WHEREOF, the parties hereto have each caused this
Agreement m be executed by their duly-authorised representatives as of the date
above written.


 


 


	
  PHARMATHENE UK LIMITED

  	
   

  	
  AVECIA BIOLOGICS LIMITED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ A. C.
  Buckmaster

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
  A. C.
  Buckmaster

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
  April 2,
  2008

  



 




	
   

  	
   

  	
  Page 29 of 29

  	
   

  	
  CONFIDENTIAL

  




















 


Schedule 1A


 


[***]


 


[Pages omitted: 8]


 





















 


Schedule 1B


 


ADDITIONAL TERMS APPLICABLE TO WORK PLANS

UNDER NIH PRIME CONTRACTS


 


PART I - NIH CONTRACT
FLOWDOWN PROVISIONS


 


A.            Incorporation
of FAR/HHSAR Clauses and Additional Prime Contract Clauses


 


1.             The Federal
Acquisition Regulation (FAR) and Health and Human Services Acquisition
Regulation (HHSAR) clauses listed in Section D are incorporated into the
Contract by reference, with the same force and effect as if they were given in
full text, and are applicable, subject to the notes contained in Section C,
during the performance of this Contract If the date or substance of any of the
clauses listed below is different than the date or substance of the clause
actually incorporated in the Prime Contract referenced by number herein, the
date or substance of the clause incorporated by said Prime Contract shall apply
instead.


 


2.             The additional
clauses set out in full in Section E are incorporated into this Contract
and are applicable during the performance of this Contract.


 


B.            Additional
Definitions


 


As used in the clauses listed in Section D
and set out in full in Section E below and otherwise in this Schedule:


 


1.             “Contractor”
means Avecia, acting as the immediate (first-tier) subcontractor to
PharmAthene.


 


2.             “Contract”
means the Master Services Agreement and the applicable Project Plan together
with the FAR and HHSAR clauses and additional clauses incorporated by virtue of
this Schedule.


 


3.             “Master
Services Agreement” means the agreement entered into between PharmAthene and
Avecia and dated April 2nd 2008 under which Avecia agrees to
carry out Programmes.


 


4.             “Subcontract”
means any contract placed by the Contractor or lower-tier subcontractors under
the Contract.


 


C.            Notes
for Interpretation of FAR and HHSAR clauses


 


In respect of each clause:


 


1.             Substitute “PharmAthene”
for ‘Government” or “United States” as applicable throughout the clause.


 


2.             Substitute “PharmAthene
Contracts Manager” for “Contracting Officer,” “Administrative Contracting
Officer,” and “ACO” throughout the clause.


 





















 


3.             Insert “and
PharmAthene” after “Government” or “Contracting Officer,” as appropriate,
throughout the clause.


 


4.             Insert “or
PharmAthene” after “Government” throughout the clause.


 


5.             Communication
or notification required under the clause from or to the Contractor, and to or
from the Contracting Officer shall be through PharmAthene.


 


6.             “Contracting
Officer” shall mean the U.S. Government Contracting Officer for PharmAthene’s
Prime Contract under which this Contract is entered.


 


D.            FAR and
HHSAR clauses


 


The full text of a clause may be accessed
electronically at the following addresses:

http://www.a m et.gov/far/

http://farsite.hill.af.millreg html/regs/other/hhsar/352.htm#P271_51559


 


Although this list is extensive,
several of the clauses are inapplicable to Avecia at the current time (e.g.
US-centric provisions related to Veteran owned businesses, Equal Opportunity,
Drug Free Workplace, etc) because they are inoperative to the extent that work
is carried on outside the US.  They are
however all included for the sake of completeness and to address a situation in
which Avecia was called upon to subcontract to a US subcontractor, in which
case the clauses may be required to flow down to this second tier
subcontractor.


 


1.             FEDERAL
ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES:


 


	
  FAR

  Clause

  	
  DATE

  	
  TITLE

  
	
  52.202-1

  	
  Jul
  2004

  	
  Definitions

  
	
  52.203-3

  	
  Apr
  1984

  	
  Gratuities
  (Over $100,000)

  
	
  52.203-5

  	
  Apr
  1984

  	
  Covenant
  Against Contingent Fees (Over $100,000)

  
	
  52.203-6

  	
  Jul
  1995

  	
  Restrictions
  on Subcontractor Sales to the Government (Over $100,000)

  
	
  52.203-7

  	
  Jul
  1995

  	
  Anti-Kickback
  Procedures (Over $100,000)

  
	
  52.203-8

  	
  Jan
  1997

  	
  Cancellation,
  Rescission, and Recovery of Funds for Illegal or Improper Activity (Over
  $100,000)

  
	
  52.203-10

  	
  Jan
  1997

  	
  Price
  or Fee Adjustment for Illegal or Improper Activity (Over $100,000)

  
	
  52.203-12

  	
  Jun
  2003

  	
  Limitation
  on Payments to Influence Certain Federal Transactions (Over $100,000)

  
	
  52.204-4

  	
  Aug
  2000

  	
  Printed
  or Copied Double-Sided on Recycled Paper (Over $100,000)

  
	
  52.204-7

  	
  Oct
  2003

  	
  Central
  Contractor Registration

  
	
  52.209-6

  	
  Jul
  1995

  	
  Protecting
  the Government’s Interests When Subcontracting With Contractors Debarred,
  Suspended, or Proposed for Debarment (Over $25,000)

  
	
  52.215-2

  	
  Jun
  1999

  	
  Audit
  and Records - Negotiation (Over $100,000)

  
	
  52.215-8

  	
  Oct
  1997

  	
  Order
  of Precedence - Uniform Contract Format

  



 





















 


	
  52.215-10

  	
  Oct
  1997

  	
  Price
  Reduction for Defective Cost or Pricing Data

  
	
  52.215-12

  	
  Oct
  1997

  	
  Subcontractor
  Cost or Pricing Data (Over $500,000)

  
	
  52.215-14

  	
  Oct
  1997

  	
  Integrity
  of Unit Prices (Over $100,000)

  
	
  52.215-15

  	
  Jan
  2004

  	
  Pension
  Adjustments and Asset Reversions

  
	
  52.215-17

  	
  Oct
  1997

  	
  Waiver
  of Facilities Capital Cost of Money

  
	
  52.215-18

  	
  Oct
  1997

  	
  Reversion
  or Adjustment of Plans for Post-Retirement Benefits (PRB) other than Pensions

  
	
  52.215-19

  	
  Oct
  1997

  	
  Notification
  of Ownership Changes

  
	
  52.215-21

  	
  Oct
  1997

  	
  Requirements
  for Cost or Pricing Data or Information Other Than Cost or Pricing Data -
  Modifications

  
	
  52.216-7

  	
  Dec
  2002

  	
  Allowable
  Cost and Payment

  
	
  52.216-8

  	
  Mar
  1997

  	
  Fixed
  Fee

  
	
  52.219-4

  	
  Jan
  1999

  	
  Notice
  of Price Evaluation Preference for HUBZone Small Business Concerns
  “(c) Waiver of evaluation preference [ ]  Offeror
  elects to waive the evaluation preference.” ALTERNATE I

  
	
  52.219-8

  	
  May 2004

  	
  Utilization
  of Small Business Concerns (Over $100,000)

  
	
  52.219-9

  	
  Jan
  2002

  	
  Small
  Business Subcontracting Plan (Over $500,000)

  
	
  52.219-16

  	
  Jan
  1999

  	
  Liquidated
  Damages - Subcontracting Plan (Over $500,000)

  
	
  52.219-23

  	
  Oct
  1999

  	
  Notice
  of Price Evaluation Adjustment for Small Disadvantaged Business Concerns

  
	
  52.222-2

  	
  Jul
  1990

  	
  Payment
  for Overtime Premium (Over $100,000) (Note: The dollar amount in paragraph
  (a) of this clause is $0 unless otherwise specified in the Contract)

  
	
  52.222-3

  	
  Jun
  2003

  	
  Convict
  Labor

  
	
  52.222-26

  	
  Apr
  2002

  	
  Equal
  Opportunity

  
	
  52.222-35

  	
  Dec
  2001

  	
  Equal
  Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and
  Other Eligible Veterans

  
	
  52.222-36

  	
  Jun
  1998

  	
  Affirmative
  Action for Workers with Disabilities

  
	
  52.222-37

  	
  Dec
  2001

  	
  Employment
  Reports on Special Disabled Veterans, Veterans of the Vietnam Era, and Other
  Eligible Veterans

  
	
  52.223-6

  	
  May 2001

  	
  Drug-Free
  Workplace

  
	
  52.223-14

  	
  Aug
  2003

  	
  Toxic
  Chemical Release Reporting (Over $100,000)

  
	
  52.225-1

  	
  Jun
  2003

  	
  Buy
  American Act - Supplies

  
	
  52.225-5

  	
   

  	
  Trade
  Agreements

  
	
  52.225-13

  	
  Dec
  2003

  	
  Restrictions
  on Certain Foreign Purchases

  
	
  52.227-1

  	
  Jul
  1995

  	
  Authorization
  and Consent, Alternate I (Apr 1984)

  
	
  52.227-2

  	
  Aug
  1996

  	
  Notice
  and Assistance Regarding Patent and Copyright Infringement (Over $100,000)

  
	
  52.227-11

  	
  Jun
  1997

  	
  Patent
  Rights - Retention by the Contractor (Short Form) (Note: In accordance with
  FAR 27.303(a)(2), paragraph (f) is modified to include the requirements
  in FAR 27.303(a)(2)(i) through (iv). The frequency of reporting in (i) is
  annual.

  
	
  52.227-14

  	
  Jun
  1987

  	
  Rights
  in Data - General

  
	
  52.227-16

  	
  Jun
  1987

  	
  Additional
  Data Requirements

  
	
  52.229-8

  	
  Mar
  1990

  	
  Taxes-Foreign
  Cost-Reimbursement Contracts

  



 





















 


	
  52.232-9

  	
  Apr
  1984

  	
  Limitation
  on Withholding of Payments

  
	
  52.232-17

  	
  Jun
  1996

  	
  Interest
  (Over $100,000)

  
	
  52.232-20

  	
  Apr
  1984

  	
  Limitation
  of Cost

  
	
  52.232-23

  	
  Jan
  1986

  	
  Assignment
  of Claims

  
	
  52.232-25

  	
  Oct
  2

  	
  Prompt
  Payment, Alternate I (Feb 2002)

  
	
  52.232-33

  	
  Oct
  2003

  	
  Payment
  by Electronic Funds Transfer-Central Contractor Registration

  
	
  52.232-34

  	
  May 1999

  	
  Payment
  by Electronic Funds Transfer - Other than Central Contractor Registration

  
	
  52.233-1

  	
  Jul
  2002

  	
  Disputes

  
	
  52.233-3

  	
  Aug
  1996

  	
  Protest
  After Award, Alternate I (Jun 1985)

  
	
  52.242-1

  	
  Apr
  1984

  	
  Notice
  of Intent to Disallow Costs

  
	
  52.242-3

  	
  May 2001

  	
  Penalties
  for Unallowable Costs (Over $500,000)

  
	
  52.242-4

  	
  Jan
  1997

  	
  Certification
  of Final Indirect Costs

  
	
  52.242-13

  	
  Jul
  1995

  	
  Bankruptcy
  (Over $100,000)

  
	
  52.242-15

  	
  Aug
  1989

  	
  Stop
  Work Order with Alternate I (April 1984)

  
	
  52.243-2

  	
  Aug
  1987

  	
  Changes
  - Cost Reimbursement, Alternate V (Apr 1984)

  
	
  52.244-2

  	
  Aug
  1998

  	
  Subcontracts,
  Alternate II (Aug 1998)

  
	
  52.244-5

  	
  Dec
  1996

  	
  Competition
  in Subcontracting (Over $100,000)

  
	
  52-244-6

  	
  Apr
  2003

  	
  Subcontracts
  for Commercial Items

  
	
  52.245-5

  	
  May 2004

  	
  Government
  Property (Cost-Reimbursement, Time and Material, or Labor-Hour Contract)

  
	
  52.246-5

  	
  Apr
  1984

  	
  Inspection
  of Services – Cost Reimbursement

  
	
  52.246-8

  	
  May 2001

  	
  Inspection
  of Research and Development – Cost Reimbursement

  
	
  52.246-23

  	
  Feb
  1997

  	
  Limitation
  of Liability (Over $100,000)

  
	
  52.247-63

  	
  Jun
  2003

  	
  Preference
  for U.S. Flag Air Carriers

  
	
  52.249-6

  	
  Sep
  1996

  	
  Termination
  (Cost-Reimbursement)

  
	
  52.249-14

  	
  Apr
  1984

  	
  Excusable
  Delays

  
	
  52.253-1

  	
  Jan
  1991

  	
  Computer
  Generated Forms

  



 


2.             DEPARTMENT
OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR) (48 CFR CHAPTER 3)
CLAUSES:


 


	
  HHSAR

  Clause

  	
  DATE

  	
  TITLE

  
	
  352.202-1

  	
  Jan
  2001

  	
  Definitions
  - with Alternate paragraph (h) (Jan 2001)

  
	
  352.216-72

  	
  Oct
  1990

  	
  Additional
  Cost Principles

  
	
  352.223-70

  	
  Jan
  2001

  	
  Safety
  and Health

  
	
  352.228-7

  	
  Dec
  1991

  	
  Insurance
  - Liability to Third Persons

  
	
  352.232-9

  	
  Apr
  1984

  	
  Withholding
  of Contract Payments

  
	
  352.233-70

  	
  Apr
  1984

  	
  Litigation
  and Claims

  
	
  352.242-71

  	
  Apr
  1984

  	
  Final
  Decisions on Audit Findings

  
	
  352.270-5

  	
  Apr
  1984

  	
  Key
  Personnel

  
	
  352.270-6

  	
  Jul
  1991

  	
  Publications
  and Publicity

  
	
  352.270-7

  	
  Jan
  2001

  	
  Paperwork
  Reduction Act

  



 





















 


3.             NATIONAL
INSTITUTES OF HEALTH (NIH) RESEARCH CONTRACTING (RC) CLAUSES:


 


The following clauses are attached and made a
part of this Contract:


 


NIH(RC)-4 Invoice/Financing Request
Instructions and Contract Financial Reporting for NIH Cost-Reimbursement Type
Contracts

NIH (RC)-7, Procurement of Certain Equipment (APRIL 1984) (OMB Bulletin 81-16).


 


4.             ADDITIONAL
FAR CONTRACT CLAUSES INCLUDED IN FULL TEXT


 


FAR Clause 52.244-6, SUBCONTRACTS FOR
COMMERCIAL ITEMS (JULY 2004)


 


(a)           Definitions.  As used in this clause– 

Commercial item, has the meaning
contained in Federal Acquisition Regulation 52.202-1, Definitions.

Subcontract, includes a transfer of
commercial items between divisions, subsidiaries, or affiliates of the
Contractor or subcontractor at any tier.


 


(b)           To the maximum
extent practicable, the Contractor shall incorporate, and require its
subcontractors at all tiers to incorporate, commercial items or
nondevelopmental items as components of items to be supplied under this
Contract.


 


(c)           (1) The Contractor
shall insert the following clauses in subcontracts for commercial items:  (i) 52.219-8, Utilization of Small
Business Concerns (MAY 2004) (15 U.S.C. 637(d)(2) and (3)), in all
subcontracts that offer further subcontracting opportunities.  If the subcontract (except subcontracts to
small business concerns) exceeds $500,000 ($1,000,000 for construction of any
public facility), the subcontractor must include 52.219-8 in lower tier
subcontracts that offer subcontracting opportunities.

(ii) 52.222-26, Equal Opportunity (APR 2002) (E.O. 11246).

(iii) 52.222-35, Equal Opportunity for Special Disabled Veterans, Veterans
of the Vietnam Era, and Other Eligible Veterans (DEC 2001) (38 U.S.C. 4212(a)).

(iv) 52.222-36, Affirmative Action for Workers with Disabilities (JUN
1998) (29 U.S.C. 793).

(v) 52.247-64, Preference for Privately Owned U.S.-Flag Commercial Vessels
(APR 2003) (46 U.S.C. Appx 1241 and 10 U.S.C. 2631) (flow down required in
accordance with paragraph (d) of FAR clause 52.247-64).

(2) While not required, the Contractor may flow down to subcontracts for
commercial items a minimal number of additional clauses necessary to satisfy
its contractual obligations.


 


(d)           The Contractor
shall include the terms of this clause, including this paragraph (d), in subcontracts
awarded under this Contract.


 





















 


E.             Additional
Clauses


 


1.             Possession
Use and Transfer of Select Biological Agents or Toxins


 


Work involving select biological agents or
toxins shall not be conducted under this Contract until the Contractor and any
affected subcontractor(s) are granted a certificate of registration or are
authorized to work with the applicable agents.


 


For prime or subcontract awards to domestic
institutions who possess, use, and/or transfer Select Agents under this
Contract, the institution must complete registration with the Centers for
Disease Control and Prevention (CDC), Department of Health and Human Services
(DHHS) or the Animal and Plant Health Inspection Services (APHIS), U.S.
Department of Agriculture (USDA), as applicable, before using NIH funds for
research involving Select Agents.  No NIH
funds can be used for research involving Select Agents if the final
registration certificate is denied.


 


For prime or subcontract awards to foreign
institutions who possess, use, and/or transfer Select Agents under this
Contract, the institution must provide information satisfactory to the NIH that
a process equivalent to that described in 42 CFR 73
(http://www.cdc.gov/od/sap/docs/42cfr73.pdf ) for U.S. institutions is in place
and will be administered on behalf of all Select Agent work sponsored by these
funds before using these funds for any work directly involving the Select
Agents.  The Contractor must provide
information addressing the following key elements appropriate for the foreign
institution:  safety, security, training,
procedures for ensuring that only approved/appropriate individuals have access
to the Select Agents, and any applicable laws, regulations and policies
equivalent to 42 CFR 73.  An
NIAID-chaired committee of U.S. federal employees (including representatives of
NIH grants/contracts and scientific program management, CDC , Department of
Justice and other federal intelligence agencies, and Department of State) will
assess the policies and procedures for comparability to the U.S. requirements
described in 42 CFR Part 73.  When
requested by the contracting officer, the Contractor should provide key
information delineating any laws, regulations, policies, and procedures
applicable to the foreign institution for the safe and secure possession, use,
and transfer of Select Agents.  This
includes concise summaries of safety, security, and training plans, and
applicable laws, regulations, and policies. 
For the purpose of security risk assessments, the Contractor must provide
the names of all individuals at the foreign institution who will have access to
the Select Agents and procedures for ensuring that only approved and
appropriate individuals have access to Select Agents under the Contract.


 


Listings of HHS select agents and toxins,
biologic agents and toxins, and overlap agents or toxins as well as information
about the registration process, can be obtained on the Select Agent Program Web
site at http://www.cdc.gov/od/sap/


 


2.             Prohibition
on Contractor Involvement with Terrorist Activities


 


The Contractor acknowledges that U.S.
Executive Orders and Laws, including but not limited to E.O. 13224 and P.L.
107-56, prohibit transactions with, and the provision of resources and support
to, individuals and organizations associated with terrorism.


 


It is the legal responsibility of the
Contractor to ensure compliance with these Executive Orders and Laws.  This clause must be included in all
subcontracts issued under this Contract.


 





















 


3.             Reimbursement
of Costs for Independent Research and Development


 


The primary purpose of the Public Health
Service (PHS) is to support and advance independent research within the
scientific community.  PHS has
established effective, time tested and well recognized procedures for stimulating
and supporting this Independent research by selecting from multitudes of
applications those research projects most worthy of support within the
constraints of its appropriations.  The
reimbursement through the indirect cost mechanism of independent research and
development costs not incidental to product improvement would circumvent this
competitive process.


 


To ensure that all research and development
projects receive similar and equal consideration, all organizations may compete
for direct funding of independent research and development projects they
consider worthy of support by submitting those projects to the appropriate
Public Health Service grant office for review. 
Since these projects may be submitted for direct funding, the Contractor
agrees that no costs for any independent research and development project,
including all applicable indirect costs, will be claimed under this contract.


 


4.             Privacy
Act


 


This procurement requires the Contractor to
do one or more of the following:  design,
develop, or operate a system of records on individuals to accomplish an agency
function in accordance with the Privacy Act of 1974, Public Law 93-579, December 31,
1974 (5 USC 552a) and applicable agency regulations.  Violation of the Act may involve the
imposition of criminal penalties.


 


The Privacy Act System of Records applicable
to this project is Number 09-25-0200. 
This document may be accessed on the Internet at the following URL:  http://oma.od.nih.gov/ms/privacy/pa-files/0200.htm.


 


5.             Salary
Rate Limitation Legislation Provisions


 


a.             Pursuant to
Public Law(s) the cited in paragraph b, below, no NIH Fiscal Year funds
may be used to pay the direct salary of an individual through this contract at
a rate in excess of applicable amount shown for the fiscal year covered.  Direct salary is exclusive of fringe
benefits, overhead, and general and administrative expenses (also referred to
as Indirect cost” or “facilities and administrative (F&A) costs”).  Direct salary has the same meaning as the
term “institutional base salary.” An individual’s direct salary (or
institutional base salary) is the annual compensation that the contractor pays
for an individual’s appointment whether that individual’s time is spent on
research, teaching, patient care or other activities.  Direct salary (or institutional base salary)
excludes any income that an individual may be permitted to earn outside of
duties to the contractor.  The per year
salary rate limit also applies to individuals proposed under subcontracts.  It does not apply to fees paid to consultants
If this is a multiple year contract, it may be subject to unilateral
modifications by the Government if an individual’s salary rate exceeds any
salary rate ceiling established in future HHS appropriation acts.


 





















 


	
  b.

  	
   

  	
  Public
  Law No.

  	
   

  	
  Fiscal
  Year

  	
   

  	
  Dollar
  Amount of 

  
	
   

  	
   

  	
  P.L.
  110-161, Division G.

  Title II, General Provisions,

  Section 203

  	
   

  	
  2008

  	
   

  	
  Salary
  Limitation*

  Executive Level I

  



 


c.             Payment of
direct salaries is limited to the Executive Level I* rate which was in effect
on the date(s) the expense was incurred.


 


* For the period 10/1107 – 12/31107, the
Executive Level I rate is $186,600. 
Effective January 1, 2008, the Executive Level 1 rate increased to
$191,300 and will remain at that rate until it is revised.  See the web site listed below for the
Executive Schedule rates of pay:


 


FOR FY-08 EXECUTIVE LEVEL SALARIES EFFECTIVE
JANUARY 1, 2008:


 


http://www,opm.gov/oca/PATRATES/index.htm
(click on “Executive Schedule” for the current Fiscal Years salary rate or
scroll down to the “Prior Salary Tables” to locate the Executive Level salary
rates from previous years.)


 


F.             Representations
and Certifications


 


The following document is incorporated by
reference:


 


Representations and Certifications filed 12 July 2007
using the Online Representations and Certifications Application (ORCA) website.


 

















 


PART II - OTHER TERMS


 


A.            Applicability
of Additional Terms


 


The following additional terms shall be
applicable to any Programme carried out under a Project Plan which incorporates
reference to this Schedule 1.


 


B.            Additional
Definition


 


“Consumables” means consumable items intended
for use in Production including, without limitation, reagents (including
analytical reagents), raw materials, packaging components, chromatography
resins, filters, filtration membranes, media bags, tubing, hoses, in-process
measurement probes and analytical columns.


 


C.            Additional
Consideration In relation to Consumables.


 


1.             Avecia shall
provide an estimate of anticipated expenditure on Consumables when Avecia has
generated a bill of materials prior to commencement of Production.  Avecia shall bear the expenditure on
Consumables itself.


 


2.             Avecia shall
issue invoices for technical consultancy services provided in respect of such
Consumables as follows:


 


(a)           Avecia shall
issue an invoice in an amount equivalent to 50% of the estimated expenditure
when Avecia has generated the bill of materials.


 


(b)           On completion
of Disposition or earlier termination of the applicable Project Plan, Avecia
shall calculate the expenditure actually incurred in respect of Consumables
used during Production and shall issue an invoice for an amount equivalent to
10% of the expenditure actually incurred in respect of such Consumables plus a
sum equivalent to the difference between the expenditure actually incurred and
the amount paid by PharmAthene under paragraph (a) above.


 





















 


Schedule


 


[***]


 


[Pages omitted: 5]


 





















 


MASTER SERVICES AGREEMENT

BETWEEN AVECIA BIOLOGICS LIMITED AND PHARMATHENE INC.

DATED APRIL 2nd 2008


 


Protect Plan #1


 


[***]


 


[Pages omitted: 14]


 

















 


MASTER
SERVICES AGREEMENT


BETWEEN
AVECIA BIOLOGICS LIMITED AND PHARMATHENE


DATED
APRIL 2nd 2008


 


Project
Plan #2


 


[***]


 


[Pages omitted: 13]


 

















 


MASTER
SERVICES AGREEMENT


BETWEEN
AVECIA BIOLOGICS LIMITED AND PHARMATHENE UK LIMITED


DATED
APRIL 2ND 2008


 


Protect
Plan #3


 


[***]


 


[Pages omitted:
19]


 

















 


MASTER
SERVICES AGREEMENT


BETWEEN
AVECIA BIOLOGICS LIMITED AND PHARMATHENE UK LIMITED


DATED
APRIL 2ND 2008


 


Protect
Plan #4


 


[***]


 


[Pages omitted:
8]