Exhibit 10.51


 


Execution Version


 


REGISTRATION RIGHTS AGREEMENT


 


This REGISTRATION RIGHTS
AGREEMENT (this “Agreement”) is
entered into as of July 28, 2009 by and among PharmAthene, Inc., a
Delaware corporation (the “Company”) and
the “Investors” parties hereto.


 


The parties hereto agree as follows:


 


1.             Certain Definitions.  Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in that certain Note and Warrant Purchase Agreement dated as of July 24,
2009 by and among the Company and the Investors, as the same may be amended
and/or restated from time to time (the “Note and Warrant Purchase
Agreement”).  As used in this
Agreement, the following terms shall have the following meanings:


 


(a)           “Common Stock” mean the Company’s common stock, par value $0.0001 per share, and any
securities into which such shares may hereinafter be reclassified.


 


(b)           “Effective Date”
shall mean, with respect to the Registration Statement, the date on which the
Registration Statement shall have been declared effective by the SEC.


 


(c)           “Effectiveness Period”
shall mean the period from the Closing Date until the earlier of (i) the
date on which all Registrable Securities covered by such Registration
Statement, as amended from time to time, have been sold, and (ii) the date
on which all Registrable Securities covered by such Registration Statement may
be sold without restriction pursuant to Rule 144.  The Company shall advise the Investors in
writing when the Effectiveness Period has expired pursuant to clause (ii) of
this Section 1(c).


 


(d)           “Exchange Act”
means the Securities Exchange Act of 1934, as amended, together with all rules and
regulations promulgated thereunder.


 


(e)           “Holders”
means the Investors
or any of their respective affiliates or permitted transferees.


 


(f)            “Notes”
means the 10% Senior Unsecured Convertible Notes issued to the Investors
pursuant to the Note and Warrant Purchase Agreement, the form of which is
attached to Note and Warrant Purchase Agreement as Exhibit A.


 


(g)           “Note Shares” means the shares of Common Stock issuable upon the conversion of the
Notes.


 


(h)           “Prospectus”
means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 424(b) promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.


 

















 


(i)            “Registrable Securities”
shall mean the Note Shares, the Warrant Shares, and any other securities issued
or issuable with respect to in exchange for Registrable Securities, but
excluding (i) any such shares sold under an effective registration
statement or (ii) any such shares sold pursuant to Rule 144 under the
Securities Act.


 


(j)            “Registration Statement”
means any registration statement required to be filed under this Agreement,
including the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.


 


(k)           “SEC” means the
U.S. Securities and Exchange Commission.


 


(l)            “Securities Act”
means the Securities Act of 1933, as amended, together with all rules and
regulations promulgated thereunder


 


(m)          “Warrants”
means the warrants to purchase shares of Common Stock issued to the Investors pursuant
to the Note and Warrant Purchase Agreement, the form of which is attached to
the Note and Warrant Purchase Agreement as Exhibit B.


 


(n)           “Warrant Shares” means the shares of Common Stock issuable upon the exercise of the
Warrants.


 


2.             Registration.


 


(a)           Mandatory Registration.  Within thirty
(30) days after the Closing Date, the Company shall cause to be prepared and
filed with the SEC a Registration Statement providing for the resale of all
Registrable Securities for an offering to be made by the Holders on a
continuous basis pursuant to Rule 415. 
Such Registration Statement shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another
appropriate form in accordance herewith). 
The Company shall cause such Registration Statement to be declared
effective under the Securities Act as promptly as possible after the filing
thereof but in any event within ninety (90) days (one hundred and twenty (120)
days if the Registration Statement is reviewed by the SEC) after the Closing
Date. The Company shall keep such Registration Statement continuously effective
under the Securities Act until the date when all Registrable Securities covered
by such Registration Statement have been sold. 
Reference is made to Registration Default Payments (as such term is
defined in the Notes) set forth in Section 14(f) of the Notes and Section 5.4
of the Note and Warrant Purchase Agreement. 
Notwithstanding anything to the contrary contained herein, if the SEC
specifically prohibits the Registration Statement from including all
Registrable Securities (“SEC Guidance”)
(provided that the Company shall advocate with the SEC for the registration of
all or the maximum number of the Registrable Securities permitted by SEC
Guidance to be included in such Registration Statement, such maximum number,
the “Rule 415 Amount”), then the
Company will not be in breach of this provision by following such SEC Guidance,
and the Company will file such additional Registration Statements at the
earliest practicable date on which the Company is permitted by SEC Guidance to
file such additional


 


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Registration Statements
related to the Registrable Securities, each registering the Rule 415
Amount, seriatim, until all of the Registrable Securities have been registered.


 


(b)           Demand Registration.  At any time
following the date that is 180 days following the Closing Date but prior to the
expiration of the Effectiveness Period, if the Company shall be requested (a “Registration Request”) by Holders holding at least a
majority of the then outstanding Registrable Securities to effect the
registration under the Securities Act of Registrable Securities, then the
Company shall (i) within ten (10) days of the receipt of such
Registration Request, give written notice of such request to all Holders
describing the terms of such registration and, if applicable, the underwriting
and (ii) as soon as practicable cause to be prepared and filed with the
SEC a Registration Statement providing for the resale of all Registrable
Securities which Holders request to be registered.  The Registration Statement shall be on Form S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall
be on another appropriate form in accordance herewith).  The Company shall cause the Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof. The Company shall keep the Registration
Statement continuously effective under the Securities Act until the date when
all Registrable Securities covered by such Registration Statement have been
sold.  The Company shall not be obligated
to file and cause to become effective more than two (2) Registration
Statements pursuant to this Section 2(b). 
A Registration Statement shall not be counted for purposes of the
foregoing until such time as such Registrations Statement has been declared
effective by the SEC and all of the Registrable Securities offered pursuant to
such Registration Statement are sold thereunder upon the price and terms
offered.  Notwithstanding anything to the
contrary contained herein, the amount of Registrable Securities required to be
included in the initial Registration Statement as described in this Section 2(b) shall
equal the lesser of (a) the amount of Registrable Securities that Holders
request to have so registered pursuant to this Section 2(b) and (b) the
maximum amount of Registrable Securities which may be included in a
Registration Statement without exceeding the Rule 415 Amount.


 


(c)           Each Holder will furnish to the Company in writing the
information specified in Item 507 and/or 508 of Regulation S-K, as applicable,
of the Securities Act for use in connection with any Registration Statement or
prospectus or preliminary prospectus included therein.  Each Holder agrees to promptly furnish additional
information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.


 


(d)           The Company shall notify each Holder in writing
promptly (and in any event within one business day) after receiving
notification from the SEC that a Registration Statement has been declared
effective.


 


(e)           Any Registration Statement required hereunder shall
contain (except if otherwise directed by the Holders of at least a majority of
the Registrable Securities included in such Registration Statement) the “Plan
of Distribution” attached hereto as Annex A.


 


3.             Registration Procedures.  In connection
with the Company’s registration obligations hereunder, the Company shall:


 


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(a)           (i) prepare and file with the SEC such
amendments, including post-effective amendments, to the Registration Statement
as may be necessary to keep the Registration Statement continuously effective
as to the Registrable Securities until the date when all Registrable Securities
covered by such Registration Statement have been sold or, with respect to
Registration Statements filed pursuant to Section 2(a), can be sold
without restriction by Holders; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; and (iii) respond
as promptly as reasonably possible to any comments received from the SEC with
respect to the Registration Statement or any amendment thereto and as promptly
as reasonably possible provide each Holder  copies of all
correspondence from and to the SEC relating to the Registration Statement.


 


(b)           Notify each Holder as promptly as reasonably possible,
and confirm such notice in writing no later than one (1) trading day
thereafter, of any of the following events: 
(i) the SEC notifies the Company whether there will be a “review”
of the Registration Statement; (ii) the SEC comments in writing on the
Registration Statement (in which case the Company shall deliver to each Holder
a copy of such comments and of all written responses thereto); (iii) the
SEC or any other Federal or state governmental authority in writing requests
any amendment or supplement to the Registration Statement or Prospectus or requests
additional information related thereto; (iv) if the SEC issues any stop
order suspending the effectiveness of the Registration Statement or initiates
any action, claim, suit, investigation or proceeding (a “Proceeding”)
for that purpose; (v) the Company receives notice in writing of any
suspension of the qualification or exemption from qualification of any
Registrable Securities for sale in any jurisdiction, or the initiation or
threat of any Proceeding for such purpose; or (vi) the financial statements
included in the Registration Statement become ineligible for inclusion therein
or any statement made in the Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference is
untrue in any material respect or any revision to the Registration Statement,
Prospectus or other document is required so that it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.


 


(c)           Use its reasonable best efforts to avoid the issuance
of or, if issued, obtain the withdrawal of: (i) any order suspending the
effectiveness of the Registration Statement or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.


 


(d)           Promptly deliver to each Holder, without charge, such
reasonable number of copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Holder may
reasonably request.  The Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by the Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto.


 


(e)           (i)  In the time and manner required by the NYSE
Amex and any other market on which the Registrable Securities are traded (each,
a “Principal Market”), prepare and file
with each Principal Market an additional shares listing application covering
all of the


 


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Registrable Securities
and a notification form regarding the change in the number of the Company’s
outstanding Shares; (ii) take all steps necessary to cause such
Registrable Securities to be approved for listing on each Principal Market as
soon as possible thereafter; (iii) provide to each Holder notice of such
listing; and (iv) maintain the listing of such Registrable Securities on
each Principal Market.


 


(f)            Prior to any public offering of Registrable
Securities, register or qualify or cooperate with the Holders in connection
with the registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or “blue sky” laws of such jurisdictions within the United States as
any Holder requests in writing, to keep each such registration or qualification
(or exemption therefrom) effective until the date when all Registrable
Securities covered by such Registration Statement have been sold and to do any
and all other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the Company
shall not be required for any such purpose to: (i) qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not be
otherwise required to qualify but for the requirements of this Section (3)(f),
or (ii) subject itself to taxation.


 


(g)           Upon the occurrence of any event described in Section (3)(b)(vi) above,
as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company may
suspend sales pursuant to the Registration Statement for a period (such period
being a “Blackout Period”) of up to sixty (60) days
(unless the Holders of at least a majority of the Registrable Securities
consent in writing to a longer delay of up to an additional thirty (30) days)
no more than once in any twelve-month period if the Company furnishes to the
Holders a certificate signed by the Company’s Chief Executive Officer stating
that in the good faith judgment of the Company’s Board of Directors: (i) the
offering could reasonably be expected to materially interfere with an
acquisition, corporate reorganization or other material transaction then under
consideration by the Company or (ii) there is some other material
development relating to the operations or condition (financial or other) of the
Company that has not been disclosed to the general public and as to which it is
in the Company’s best interests not to disclose; provided
further, however, that the Company may not so suspend sales more
than once in any calendar year without the written consent of the Holders of at
least a majority of the Registrable Securities.


 


(h)           Comply with all applicable rules and regulations
of the SEC and each Principal Market with respect to the Company’s obligations
hereunder.


 


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4.             Underwritten Offerings.


 


(a)           At the request (an “Underwriting
Request”) of the Holders of at least a majority of the then
outstanding Registrable Securities (the “Requesting Stockholders”),
the distribution of the Registrable Securities covered by a Registration
Statement filed or to be filed pursuant to Section 2(b) hereof,
and/or the distribution of that portion of the Registrable Securities covered
by a Registration Statement filed pursuant to Section 2(a) hereof as
to which Underwriting Request is made, shall be effected by means of an
underwriting.


 


(b)           In the event of an Underwriting Request, the Company,
together with all Holders proposing to distribute their securities through such
underwriting (the “Participating Stockholders”),
shall enter into an underwriting agreement in customary form with the managing
underwriter(s) selected for such underwriting by the Requesting
Stockholders, which underwriter(s) shall be reasonably acceptable to the
Company; provided, however, that no Holder shall be required to make any
representations or warranties concerning the Company or its business,
properties, prospects, financial condition or related matters.  Notwithstanding any other provision of this Section 4,
if the managing underwriter(s) advises the Company and the Participating
Stockholders in writing that because the number of shares requested by the
Participating Stockholders to be included in the registration exceeds the
number which can be sold in an orderly manner in such offering within a price
range acceptable to the Requesting Stockholders or that marketing factors require
a limitation of the number of shares to be underwritten on behalf of the
Participating Stockholders (the “Underwritten Registration
Cutback”), and such Underwritten Registration Cutback results in
less than all of the Registrable Securities of the Participating Stockholders
that are requested to be included in such registration to actually be included
in such registration, then the Company will include in such registration, to
the extent of the number which the Company is so advised can be sold in (or during
the time of) such offering without such interference or affect on the price or
sale, such number of Registrable Securities shared pro rata among all of the
Participating Stockholders based on the total number of Registrable Securities
held by each such Participating Stockholder. 
For the avoidance of doubt, the Company shall not sell shares in any
underwritten offering in connection with a Registration Statement filed
pursuant to Section 2(a) or (b) in the event of an Underwritten
Registration Cutback.


 


(c)           In the event of an Underwriting Request, the Company
shall


 


(i)            cooperate with the
Participating Stockholders, the underwriters participating in the offering and
their counsel in any due diligence investigation reasonably requested by the
Participating Stockholders or the underwriters in connection therewith, and
participate, to the extent reasonably requested by the Participating
Stockholders and the underwriter for the offering, in efforts to sell the
Registrable Securities under the offering (including, without limitation,
participating in “roadshow” meetings with prospective investors) that would be
customary for underwritten primary offerings of a comparable amount of equity
securities by the Company;


 


(ii)           cooperate, to the extent
reasonably requested, with each underwriter participating in the disposition of
such Registrable Securities and their


 


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respective counsel in connection with any
filings required to be made with each Principal Market;


 


(iii)          afford the Requesting
Stockholders with the opportunity to participate in the drafting of the
registration statement and the documentation relating thereto;


 


(iv)          furnish, on the date on
which such Registrable Securities are sold to the underwriter, (A) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and (B) a “comfort” letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriters; and


 


(v)           take all other steps
reasonably necessary to effect the registration of the Registrable Securities
contemplated hereby.


 


5.             Registration Expenses.  The Company
shall pay all fees and expenses incident to the performance of or compliance
with this Agreement by the Company, including without limitation: (a) all
registration and filing fees and expenses, including without limitation those
related to filings with the SEC, each Principal Market and in connection with
applicable state securities or “Blue Sky” laws, (b) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing copies of Prospectuses reasonably
requested by a Holder), (c) messenger, telephone and delivery expenses, (d) fees
and disbursements of counsel for the Company, and (e) fees and expenses of
all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement.  The Company shall also pay the reasonable
fees and expenses of one counsel to the Holders (selected by the Holders of at
least a majority of the Registrable Shares to be registered on such applicable
Registration Statement).  Notwithstanding
the foregoing, each Holder shall pay any and all costs, fees, discounts or
commissions attributable to the sale of its respective Registrable Securities.


 


6.             Indemnification.


 


(a)           Indemnification by the Company. 
In the event of a registration of any Registrable Securities under the
Securities Act pursuant to this Agreement, the Company will indemnify and hold
harmless each of the Holders, and their respective officers, directors and each
other Person, if any, who controls or is an affiliate of such Holder within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities (collectively, “Losses”), to
which such Holder, or such Persons may become subject under the Securities Act
or otherwise, insofar as such Losses arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement under which such Registrable Securities were registered
under the Securities Act pursuant to this Agreement, any preliminary Prospectus
or final Prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a


 


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material fact required to
be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Holder, and each such Person for any reasonable legal or
other expenses incurred by them in connection with investigating or defending
any such Losses; provided, however, that the
Company will not be liable in any such case if and to the extent that any such
Losses arise out of or are based upon: (i) an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by or on behalf of such Holder or any such Person in
writing specifically for use in any such document and specifically relating to
such Holder, (ii) the failure of a Holder to deliver a Prospectus, to the
extent that such Holder was required to do so under applicable securities laws,
or (iii) in the case of an occurrence of an event of the type specified in
Section (3)(b)(iii)-(vi) above, the use by such Holder of an outdated
or defective Prospectus after the Company has notified such Holder in writing
that the Prospectus is outdated or defective and prior to the receipt by such
Holder of the Advice contemplated in Section 7 below.


 


(b)           Indemnification by Holders. 
In the event of a registration of the Registrable Securities under the
Securities Act pursuant to this Agreement, each Holder will severally, but not
jointly, indemnify and hold harmless the Company, and its officers, directors
and each other Person, if any, who controls the Company within the meaning of
the Securities Act, against all Losses to which the Company or such Persons may
become subject under the Securities Act or otherwise, insofar as such Losses
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact in the Registration Statement under which such Registrable
Securities were registered under the Securities Act pursuant to this Agreement,
any preliminary Prospectus or final Prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company and each such Person for any reasonable legal or other
expenses incurred by them in connection with investigating or defending any
such Losses; provided, however, that a Holder
will be liable in any such case if and only to the extent that any such Losses
arise out of or are based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information
furnished in writing to the Company by or on behalf of such Holder specifically
for use in any such document and specifically relating to such Holder.  In addition, the foregoing shall not inure to
the benefit of a Holder (i) if such Holder fails to deliver a Prospectus,
to the extent that such Holder was required to do so under applicable
securities laws, or (ii) in the case of an occurrence of an event of the
type specified in Section (3)(b)(iii)-(vi) above, by reason of the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective
and prior to the receipt by such Holder of the Advice contemplated in Section 7
below.


 


(c)           Conduct of Indemnification Proceedings. 
If any Proceeding shall be brought or asserted against any Person
entitled to indemnity hereunder (an “Indemnified Party”),
such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”) in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof,
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant
to this Agreement, except (and only)


 


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to the extent that such
failure shall have prejudiced the Indemnifying Party.  An Indemnified Party shall have the right to
employ separate counsel in any such Proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Parties unless: (i) the Indemnifying
Party has agreed in writing to pay such fees and expenses; or (ii) the
Indemnifying Party shall have failed promptly to assume the defense of such
Proceeding and to employ counsel reasonably satisfactory to such Indemnified
Party in any such Proceeding; or (iii) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and such counsel shall be at the expense of the
Indemnifying Party; provided, however,
that in the event that the Indemnifying Party shall be required to pay the fees
and expenses of separate counsel, the Indemnifying Party shall only be required
to pay the fees and expenses of one separate counsel for such Indemnified Party
or Parties.  The Indemnifying Party shall
not be liable for any settlement of any such Proceeding affected without its
written consent, which consent shall not be unreasonably withheld.  No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party
from all liability on claims that are the subject matter of such Proceeding.  All fees and expenses of the Indemnified
Party (including reasonable fees and expenses to the extent incurred in
connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten trading days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided, that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).


 


(d)           Contribution.  If a claim for
indemnification under Section 6(a) or (b) is unavailable to an
Indemnified Party (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. 
The relative fault of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission of a material fact, has been taken or made by,
or related to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such action, statement or omission.  The amount paid or payable by a party as a
result of any Losses shall be deemed to include any reasonable attorneys’ or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees
or


 


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expenses if the
indemnification provided for in this Section 6 was available to such party
in accordance with its terms.


 


The parties hereto agree
that it would not be just and equitable if contribution pursuant to this Section 5(d) were
determined by pro rata allocation or by any other method of allocation that
does not take into account the equitable considerations referred to in the
immediately preceding paragraph.  No
Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.


 


(e)           Notwithstanding the provisions of this Section 6,
no Holder shall be required to pay indemnification or to contribute, in the
aggregate, any amount in excess of the amount of proceeds actually received by
such Holder from the sale of the Registrable Securities subject to the
Proceeding.


 


(f)            The indemnity and contribution agreements contained in
this Section are in addition to any liability that the Indemnifying
Parties may have to the Indemnified Parties.


 


7.             Dispositions.  Each Holder
agrees that it will comply with the prospectus delivery requirements of the
Securities Act as applicable to it in connection with sales of Registrable
Securities pursuant to the Registration Statement.  Each Holder further agrees that, upon receipt
of a notice from the Company of the occurrence of any event of the kind
described in Section 3(b)(iii)-(vi), such Holder will discontinue
disposition of such Registrable Securities under the Registration Statement
until such Holder’s receipt of the copies of the supplemented Prospectus and/or
amended Registration Statement contemplated by Section 3(g), or until it
is advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings that
are incorporated or deemed to be incorporated by reference in such Prospectus
or Registration Statement.  The Company
may provide appropriate stop orders to enforce the provisions of this
paragraph.


 


8.             Piggy-Back Registrations. 
If at any time during the Effectiveness Period, the Company shall
determine to prepare and file with the SEC a registration statement relating to
an offering for its own account or the account of others under the Securities
Act of any of its equity securities, other than on Form S-4 or Form S-8
(each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the Company
shall send to the each Holder written notice of such determination and if,
within fifteen (15) days after receipt of such notice, any such Holder shall so
request in writing, the Company shall include in such registration statement
all or any part of such Registrable Securities such Holder requests to be
registered.  Notwithstanding the
foregoing, if the Company’s proposed registration of equity securities
hereunder is, in whole or in part, an underwritten public offering, and the
managing underwriter of such proposed registration determines and advises in
writing that the inclusion of all Registrable Securities proposed to be
included in the underwritten public offering, together with any other issued
and outstanding shares of the Company’s common stock proposed to be included
therein (such other shares hereinafter collectively referred to as the “Other Shares”), would interfere with the


 


10

















 


successful marketing of
the Company’s securities, then the total number of such securities proposed to
be included in such underwritten public offering shall be reduced, (i) first
by the shares requested to be included in such registration by the holders of
Other Shares (not including shares held by the Holders and registered pursuant
to that certain Registration Rights Agreement dated August 3, 2007 between
the Company and certain of the Holders (the “2007
Registration Rights Agreement”), and (ii) second, if necessary,
(A) one-half (1⁄2) by the securities proposed to be issued by the Company,
and (B) one-half (1⁄2) by the Registrable Securities proposed to be included
in such registration by the Holders, on a pro rata basis, based upon the number
of Registrable Securities then held by each such Holder.  The shares of the Company’s common stock that
are excluded from the underwritten public offering pursuant to the preceding
sentence shall be withheld from the market by the holders thereof for a period,
not to exceed 90 days from the closing of such underwritten public offering,
that the managing underwriter reasonably determines as necessary in order to
effect such underwritten public offering. 
Notwithstanding anything to the contrary contained herein, the amount of
Registrable Securities required to be included in the initial Registration
Statement as described in this Section 8 shall be equal to the lesser of (a) the
amount of Registrable Securities that Holders request to have so registered
pursuant to this Section 8 and (b) the maximum amount of Registrable
Securities which may be included in a Registration Statement without exceeding
the Rule 415 Amount.


 


9.             Reports Under Exchange Act. 
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of
the SEC that may at any time permit a Holder to sell securities of the Company
to the public without registration, the Company shall:


 


(a)           make and keep public information available, as those
terms are understood and defined in Rule 144, at all times after the date
hereof and so long as the Company is subject to the periodic reporting
requirements under Sections 13 or 15(d) of the Exchange Act;


 


(b)           file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and


 


(c)           furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of SEC Rule 144,
the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements), or that it qualifies as a registrant
whose securities may be resold pursuant to Form S-3 (at any time after it
so qualifies), (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company,
and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.


 


10.           Mergers.  The Company
shall not, directly or indirectly, enter into any merger, consolidation or
reorganization in which the Company shall not be the surviving corporation
unless the proposed surviving corporation shall, prior to such merger,
consolidation or reorganization, agree in writing to assume the obligations of the
Company under this Agreement, and for that purpose references hereunder to “Registrable
Securities” shall be deemed to be references to the securities which the
Holders would be entitled to receive in exchange for


 


11

















 


Registrable Securities
under any such merger, consolidation or reorganization, provided, however, that
the provisions of this Agreement shall not apply in the event of any merger,
consolidation or reorganization in which the Company is not the surviving
corporation if the Holders are entitled to receive in exchange therefor (i) cash
or (ii) securities of the acquiring corporation which may be immediately
sold to the public pursuant to an effective registration statement under the
Securities Act or pursuant to an exemption therefrom which permits sales
without limitation as to volume or the manner of sale on a nationally
recognized exchange in the United States or on a Principal Market.


 


11.           Miscellaneous.


 


(a)           Governing Law. This Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of Delaware, without
giving effect to principles of conflicts of law or choice of law that would
cause the laws of any other jurisdiction to apply.


 


(b)           Transfer of Registration Rights. 
Any Holder that is a partnership, corporation or limited liability
company may transfer or assign its registration rights provided pursuant to
this Agreement with respect to any Registrable Securities to any partner,
shareholder, member or affiliate of such Holder; provided, however, that (i) such
Holder shall give the Company written notice prior to the time of such transfer
or assignment stating the name and address of the transferee and identifying
the Registrable Securities with respect to which the rights under this
Agreement are being transferred and (ii) such transferee or assignee
agrees in writing, the form and substance of which shall be reasonably
satisfactory to the Company, to be bound as a Holder by the provisions of this
Agreement, following which any such transferee or assignee shall be deemed a “Holder”
pursuant to this Agreement.


 


(c)           Amendment, Waiver and Termination. Any provision of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) and this
Agreement may be terminated, only upon the written consent of both the Company
and the Holders of not less than a majority of the then outstanding Registrable
Securities.


 


(d)           Entire Agreement. This Agreement, the Notes, the Warrants and the Note
and Warrant Purchase Agreement constitute the entire agreement between the
parties relative to the specific subject matter hereof. Any previous agreement
among the parties relative to the specific subject matter hereof is superseded
by this Agreement; provided, that the 2007 Registration Rights Agreement
shall remain in full force and effect notwithstanding this Agreement; provided,
however, that the definition of Registrable Securities as defined in the
2007 Registration Rights Agreement shall be amended and be deemed not to
include any Registrable Securities as defined in this Agreement.


 


(e)           Third Party Beneficiaries. 
There shall be no third party beneficiaries or intended beneficiaries of
this Agreements.


 


12
















 


(f)            Notices. All
notices required or permitted hereunder shall be in writing and shall be deemed
effectively given in accordance with the Note and Warrant Purchase Agreement.


 


(g)           Severability.
In the event one or more of the provisions of this Agreement should, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any other
provisions of this Agreement, and this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein.


 


(h)           Counterparts.  This Agreement may be executed in
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. 
In the event that any signature is delivered by facsimile or other
electronic transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature page were an original thereof.


 


(i)            Successors and
Assigns.  The provisions hereof shall
inure to the benefit of, and be binding upon, the successors and assigns of the
parties hereto.


 


(j)            Independent
Nature of Holders’ Obligations and Rights. 
The obligations of each Holder hereunder are several and not joint with
the obligations of any other Holder hereunder, and no Holder shall be
responsible in any way for the performance of the obligations of any other
Holder hereunder.  Nothing contained
herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Holders are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement.  Each
Holder shall be entitled to protect and enforce its rights, including without
limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Holder to be joined as an additional party in any
proceeding for such purpose.


 


(k)           Remedies.  In the event of a breach by the Company or by
a Holder, of any of their respective obligations under this Agreement, each
Holder or the Company, as the case may be, in addition to being entitled to
exercise all rights granted by law and under this Agreement, including recovery
of damages, will be entitled to specific performance of its rights under this
Agreement.


 


(l)            Titles and
Subtitles.             The titles of
the sections and subsections of this Agreement are for convenience of reference
only and are not to be considered in construing this Agreement.


 


[Signature Pages Follow]


 


13

















 


IN
WITNESS WHEREOF,
the parties hereto have executed this Registration Rights Agreement as of the
date and year first set forth above.


 


 


	
   

  	
  PHARMATHENE,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David P. Wright

  
	
   

  	
   

  	
  Title:

  	
  President and
  CEO

  



 


[Signature page to Registration
Rights Agreement]


 

















 


	
   

  	
  INVESTORS:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 

















 


ANNEX A


 


Plan of
Distribution


 


The shares covered by this prospectus may be offered
and sold from time to time by the selling stockholders. The term “selling
stockholder” includes pledgees, donees, transferees or other successors in
interest selling shares received after the date of this prospectus from each
selling stockholder as a pledge, gift, partnership distribution or other
non-sale related transfer. The number of shares beneficially owned by a selling
stockholder will decrease as and when it effects any such transfers. The plan
of distribution for the selling stockholders’ shares sold hereunder will
otherwise remain unchanged, except that the transferees, pledgees, donees or
other successors will be selling stockholders hereunder. To the extent
required, we may amend and supplement this prospectus from time to time to
describe a specific plan of distribution.


 


The selling stockholders will act independently of
us in making decisions with respect to the timing, manner and size of each
sale. The selling stockholders may make these sales at prices and under terms
then prevailing or at prices related to the then current market price. The
selling stockholders may also make sales in negotiated transactions. The
selling stockholders may offer their shares from time to time pursuant to one
or more of the following methods:


 


·                  ordinary brokerage transactions and
transactions in which the broker-dealer solicits purchasers;


 


·                  one or more block trades in which the
broker-dealer will attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction;


 


·                  purchases by a broker-dealer as principal and
resale by the broker-dealer for its account;


 


·                  an exchange distribution in accordance with
the rules of the applicable exchange;


 


·                  publicly or privately negotiated
transactions;


 


·                  on the NYSE Amex (or through the facilities
of any national securities exchange or U.S. inter-dealer quotation system of a
registered national securities association, on which the shares are then
listed, admitted to unlisted trading privileges or included for quotation);


 


·                  through underwriters, brokers or dealers (who
may act as agents or principals) or directly to one or more purchasers;


 


·                  a combination of any such methods of sale;
and


 


·                  any other method permitted pursuant to
applicable law.


 


A-1

















 


In
connection with distributions of the shares or otherwise, the selling
stockholders may:


 


·                  enter into hedging transactions with
broker-dealers or other financial institutions, which may in turn engage in
short sales of the shares in the course of hedging the positions they assume;


 


·                  sell the shares short and redeliver the
shares to close out such short positions;


 


·                  enter into option or other transactions with
broker-dealers or other financial institutions which require the delivery to
them of shares offered by this prospectus, which they may in turn resell; and


 


·                  pledge shares to a broker-dealer or other
financial institution, which, upon a default, they may in turn resell.


 


In addition to the foregoing methods, the selling
stockholders may offer their shares from time to time in transactions involving
principals or brokers not otherwise contemplated above, in a combination of
such methods or described above or any other lawful methods. The selling
stockholders may also transfer, donate or assign their shares to lenders,
family members and others and each of such persons will be deemed to be a
selling stockholder for purposes of this prospectus. The selling stockholders
or their successors in interest may from time to time pledge or grant a
security interest in some or all of the shares of common stock, and if the
selling stockholders default in the performance of their secured obligations,
the pledgees or secured parties may offer and sell the shares of common stock
from to time under this prospectus; provided however in the event of a pledge
or then default on a secured obligation by the selling stockholder, in order
for the shares to be sold under this registration statement, unless permitted
by law, we must distribute a prospectus supplement and/or amendment to this
registration statement amending the list of selling stockholders to include the
pledgee, secured party or other successors in interest of the selling
stockholder under this prospectus.


 


The selling stockholders may also sell their shares
pursuant to Rule 144 under the Securities Act, which permits limited
resale of shares purchased in a private placement subject to the satisfaction
of certain conditions.


 


Sales through brokers may be made by any method of
trading authorized by any stock exchange or market on which the shares may be
listed or quoted, including block trading in negotiated transactions. Without
limiting the foregoing, such brokers may act as dealers by purchasing any or
all of the shares covered by this prospectus, either as agents for others or as
principals for their own accounts, and reselling such shares pursuant to this
prospectus. The selling stockholders may effect such transactions directly, or
indirectly through underwriters, broker-dealers or agents acting on their
behalf. In effecting sales, broker-dealers or agents engaged by the selling
stockholders may arrange for other broker-dealers to participate.
Broker-dealers or agents may receive commissions, discounts or concessions from
the selling stockholders, in amounts to be negotiated immediately prior to the
sale (which compensation as to a particular broker-dealer might be in excess of
customary commissions for routine market transactions).


 


A-2

















 


In offering the shares covered by this prospectus,
the selling stockholders, and any broker-dealers and any other participating
broker-dealers who execute sales for the selling stockholders, may be deemed to
be “underwriters” within the meaning of the Securities Act in connection with
these sales. Any profits realized by the selling stockholders and the
compensation of such broker-dealers may be deemed to be underwriting discounts
and commissions.


 


The Company is required to pay all fees and expenses
incident to the registration of the shares.


 


The Company has agreed to indemnify the selling
stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.


 


A-3