Exhibit 10.50


 


Execution
Version


 


NOTE AND WARRANT PURCHASE AGREEMENT


 


This Note and Warrant
Purchase Agreement (this “Agreement”), dated as of July 24, 2009,
is made by and among PharmAthene, Inc., a Delaware corporation (the “Company”),
and the investors identified on Annex
I and Annex II
(together with their respective successors and permitted assigns, the “Investors”;
the Investors are each individually referred to herein as an “Investor”).


 


WHEREAS, the Company and the Investors are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D (“Regulation D”), as
promulgated by the U.S. Securities and Exchange Commission (the “Commission”)
under the Securities Act of 1933, as amended (the “Act”); and


 


WHEREAS, the Investors wish to purchase from the Company, and
the Company wishes to sell and issue to the Investors, upon the terms and
conditions stated in this Agreement, (i) senior unsecured convertible
notes in the form attached hereto as Exhibit A in the initial
aggregate Principal amount of up to $19,272,928.08 (the “Notes”), and (ii) warrants
to purchase an aggregate of up to 2,569,724 shares of the Company’s common
stock, $0.0001 per share (the “Common Stock”), at an exercise price per
share equal to the closing price of the Common Stock on the NYSE Amex
immediately preceding the execution of this Agreement, in the form attached
hereto as Exhibit B (the “Warrants,” and together with the
Notes, the “Closing Securities”); and


 


WHEREAS, contemporaneous with the sale of the
Closing Securities, the parties hereto will execute and deliver a Registration
Rights Agreement, in the form attached hereto as Exhibit C (the “Registration
Rights Agreement”), pursuant to which the Company will agree to provide
certain registration rights under the Act, and the rules and regulations
promulgated thereunder, and applicable state securities laws.


 


NOW,
THEREFORE, in
consideration of the mutual promises, representations, warranties and covenants
herein contained, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Company and the Investors
mutually agree as follows.  Capitalized
terms used and not otherwise defined herein shall have the meanings given such
terms in the Notes.


 


ARTICLE 1



PURCHASE OF NOTES AND WARRANTS


 


1.1           Issuance
of Closing Securities in Exchange for Old Notes.


 


(a)           Subject
to the terms and conditions of this Agreement, on the Closing Date (as defined
below), each of the Investors listed in Annex I (each, an “Existing
Investor,” and collectively, the “Existing Investors”) shall
severally, and not jointly, purchase, and the Company shall sell and issue to
each Existing Investor, the Closing Securities in the respective amounts set
forth opposite each such Existing Investor’s name on Annex I in
exchange (the 


 

















 


“Exchange”)
for the Company’s existing senior unsecured convertible notes held by each such
Existing Investor as set forth on Annex I (collectively, the “Old Notes”).


 


(b)           As
a result of the Exchange, the Old Notes are hereby cancelled and cease to be
outstanding obligations of the Company and all rights of the Existing Investors
under the Old Notes, including all rights to payment of principal and interest
thereon, are hereby cancelled and terminated in full.


 


1.2           Issuance
of Closing Securities in Exchange for Cash Payment.  Subject to the terms and conditions of this
Agreement, on the Closing Date, each of the Investors listed in Annex II
(each, a “New Investor,” and collectively, the “New Investors”)
shall severally, and not jointly, purchase, and the Company shall sell and
issue to each of the New Investors, the Closing Securities in the respective
amounts set forth opposite each such New Investor’s name on Annex II
in exchange for the purchase price set forth opposite each such New Investor’s
name on Annex II.


 


1.3           Closing.  The closing (the “Closing”) of the
purchase and sale of the Closing Securities shall take place simultaneously
with the execution of this Agreement or such other time as the Company and the
Required Holders may mutually agree (the date on which the Closing occurs, the “Closing
Date”) at the offices of Edwards Angell Palmer & Dodge LLP, 111
Huntington Avenue, Boston, Massachusetts, 02199, or at such other location as
the Company and the Required Holders shall mutually agree.  At the Closing, the Company shall deliver to
each Investor a Note and Warrant, each registered in such name or names as each
Investor may designate.  On the Closing
Date, each Existing Investor shall deliver to the Company its Old Note(s) for
cancellation and each New Investor shall pay to the Company an amount equal to
the purchase price set forth opposite such New Investor’s name on Annex II
(payable by wire transfer in same day funds to an account specified by the
Company in writing).


 


ARTICLE 2



REPRESENTATIONS AND WARRANTIES OF THE COMPANY


 


The Company represents
and warrants to each of the Investors that, except as set forth on the Schedule
of Exceptions attached hereto (the “Schedule of Exceptions”) the
statements contained in this Article II are true and correct as of the
Closing Date as though made as of the Closing Date, except to the extent such
representations and warranties are specifically made as of a particular date
(in which case such representations and warranties are true and correct as of
such date).  The Schedule of Exceptions
shall be arranged in sections and subsections corresponding to the numbered and
lettered sections and subsections contained in this Article II, but any
information disclosed under any section or subsection of the Schedule of
Exceptions shall be deemed to be disclosed into any other section or subsection
where such disclosure would be reasonably apparent.


 


2.1           Organization, Qualifications and Corporate Power.  The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and, except as set forth in
Schedule 2.1, is duly licensed or qualified to transact 


 


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business
as a foreign corporation and is in good standing in each jurisdiction in which
the nature of the business transacted by it or the character of the properties
owned or leased by it requires such licensing or qualification.  The Company and each of its Subsidiaries has
the corporate power and authority to own and hold its properties and to carry
on its business as now conducted and as proposed to be conducted, and in the
case of the Company, to execute, deliver and perform the Transaction Documents
to which it is a party.  The Company has
the corporate power and authority to issue, sell and deliver the Closing
Securities, to issue and deliver the shares of Common Stock issuable upon
conversions of the Notes (the “Note Shares”) and to issue and deliver
the shares of Common Stock issuable upon exercise of the Warrants (the “Warrant
Shares”).


 


2.2           Authorization
of Agreements, Etc.


 


(a)           The
execution and delivery by the Company of the Transaction Documents to which
it is a party, the performance by the Company of its obligations
thereunder, the issuance, sale and delivery of the Closing Securities by the
Company and the reservation of the Note Shares and Warrant Shares by the
Company have been duly authorized by all requisite corporate action and will
not violate any provision of law, any order of any court or other agency of
government, the Certificate of Incorporation of the Company, as amended to date
(the “Charter”), or the By-laws of the Company, as amended to date (the “By-laws”),
or any provision of any indenture, agreement or other instrument to which the
Company or any of its Subsidiaries or any of its properties or assets is bound,
or conflict with, result in a breach of or constitute (with due notice or lapse
of time or both) a default under any such indenture, agreement or other
instrument, or result in the creation or imposition of any lien, charge,
restriction, claim or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company or any of its Subsidiaries.


 


(b)           The
Closing Securities have been duly authorized and, when issued and delivered
pursuant to this Agreement, will have been duly executed, issued and delivered
and will constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors’ rights and to general equity principles.


 


(c)           The
Company has an authorized capitalization and outstanding shares of capital
stock as set forth in Schedule 2.2(c), and all of the issued shares of capital
stock of the Company have been duly authorized and validly issued and are fully
paid and non-assessable; the Note Shares and Warrant Shares initially issuable
upon conversion of the Notes and exercise of the Warrants, respectively, have
been duly authorized and reserved for issuance and, when issued, delivered and
paid for in accordance with the provisions of the Notes and the Warrants,
respectively, will be validly issued, fully paid and non-assessable; and the
issuance of Note Shares and Warrant Shares upon conversion of the Notes and
exercise of the Warrants, respectively, will not be subject to any preemptive or
similar rights except as set forth in Schedule 2.2(c).


 


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(d)           The
designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of
the Company are as set forth in the Company’s Charter, and all such
designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable and in accordance with all
applicable laws.  Except as set forth in
Schedule 2.2(d), (i) no Person owns of record or is known to the Company
to own beneficially any share of Common Stock, (ii) no subscription,
warrant, option, convertible security, or other right (contingent or other) to
purchase or otherwise acquire equity securities of the Company or any of its
Subsidiaries is authorized or outstanding and (iii) there is no commitment
by the Company or any of its Subsidiaries to issue shares, subscriptions,
warrants, options, convertible securities, or other such rights or to
distribute to holders of any of its equity securities any evidence of
indebtedness or asset.  Except as
provided for in the Company’s Charter or as set forth in the attached
Schedule 2.2(d), neither the Company nor any of its Subsidiaries has any
obligation (contingent or other) to purchase, redeem or otherwise acquire any
of its equity securities or any interest therein or to pay any dividend or make
any other distribution in respect thereof. 
Except as set forth in the attached Schedule 2.2(d), to the best of
the Company’s knowledge there are no voting trusts or agreements, stockholders’
agreements, pledge agreements, buy-sell agreements, rights of first refusal,
preemptive rights or proxies relating to any securities of the Company or any
of its Subsidiaries (whether or not the Company or such Subsidiaries is a party
thereto).  The warrants issued by the
Company in its initial public offering have not been extended or modified since
the date of issuance thereof.  All of the
outstanding securities of the Company were issued in compliance with all
applicable federal and state securities laws.


 


(e)           The
outstanding shares of Common Stock are listed on the NYSE Amex and the Note
Shares and the Warrant Shares will have been approved for listing on the NYSE
Amex, subject to notice of issuance, on or before the Closing Date.  The transactions contemplated by the
Transaction Documents do not require shareholder approval under the rules of
the NYSE Amex.


 


(f)            There has not been any change, effect,
event or occurrence resulting in a material adverse effect on the business,
financial condition or results of operations of the Company that has not been
disclosed in the Company’s reports filed with the Commission prior to the date
of this Agreement.


 


(g)           Except
as set forth in Schedule 2.2(g), there are no actions, suits or proceedings at
law or in equity or by or before any governmental instrumentality or other
agency or regulatory authority now pending, or, to the knowledge of the
Company, threatened against the Company which, if adversely determined, would
materially and adversely affect the business, assets, operations or condition,
financial or otherwise, of the Company. 
There is no action, suit or proceeding by the Company currently pending
or that the Company currently intends to initiate.


 


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ARTICLE 3



REPRESENTATIONS AND WARRANTIES OF THE INVESTORS


 


Each Investor, severally
and not jointly, represents and warrants to the Company that, the statements
contained in this Article III are true and correct as of the Closing Date
as though made as of the Closing Date, except to the extent such
representations and warranties are specifically made as of a particular date
(in which case such representations and warranties are true and correct as of
such date).


 


3.1           Investor is an “accredited investor”
as defined by Rule 501 of Regulation D, and Investor is capable of
evaluating the merits and risks of its investment in the Closing Securities and
has the ability and capacity to protect its interests.  If Investor is a resident of Canada or
otherwise subject to the provincial securities laws of Canada, such Investor is
an “accredited investor” (as that term is defined in National Instrument 45
106), was not formed for the specific purpose of and is not being used
primarily for the purpose of purchasing and holding the Closing Securities, and
is neither a “Limited States Person” (as that term is defined in Rule 902
of Regulation S under the Act) nor purchasing the Closing Securities for the
account of a Limited States Person or for resale to a United States person or
to a person in the United States.


 


3.2           Investor understands that, except as
provided in the Registration Rights Agreement, the Closing Securities, the Note
Shares and the Warrant Shares have not been registered under the Act on the
ground that the issuance thereof is exempt under Section 4(2) of the
Act and/or Regulation D as a transaction by an issuer not involving any public
offering and that, in the view of the Commission, the statutory basis for the
exception claimed would not be present if any of the representations and
warranties of Investor contained in this Agreement are untrue or,
notwithstanding the Investor’s representations and warranties, the Investor
currently has in mind acquiring any of the Closing Securities for resale upon
the occurrence or non-occurrence of some predetermined event.


 


3.3           Investor is purchasing the Closing
Securities and, in the event that the Investor should acquire any Note Shares
or Warrant Shares, will be acquiring such Note Shares or Warrant Shares, as
applicable, as principal for its own account, and not for the benefit of any
other Person, for investment purposes and not with a view to distribution or
resale, nor with the intention of selling, transferring or otherwise disposing
of all or any part thereof for any particular price, or at any particular time,
or upon the happening of any particular event or circumstance, except selling,
transferring, or disposing of the Closing Securities, Note Shares and Warrant
Shares, as applicable, in full compliance with all applicable provisions of the
Act, the rules and regulations promulgated by the Commission thereunder,
and applicable state securities laws; and that an investment in the Closing
Securities, Note Shares and Warrant Shares is not a liquid investment.


 


3.4           Investor confirms that Investor has
had the opportunity to ask questions of, and receive answers from, the Company
or any authorized Person acting on its behalf concerning the Company and its
business and to obtain any additional information, to the extent possessed by
the Company (or to the extent it could have been acquired by the Company
without unreasonable effort or expense) necessary to verify the accuracy of the
information received by Investor.  In 


 


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connection therewith,
Investor acknowledges that Investor has had the opportunity to discuss the
Company’s business, management and financial affairs with the Company’s
management or any authorized Person acting on its behalf.  Investor has received and reviewed all the
information concerning the Company and the Closing Securities, both written and
oral, that Investor desires.  Without
limiting the generality of the foregoing, Investor has been furnished with or
has had the opportunity to acquire, and to review: all information, both
written and oral, that Investor desires with respect to the Company’s business,
management, financial affairs and prospects. 
In determining whether to make this investment, Investor has relied
solely on Investor’s own knowledge and understanding of the Company and its
business based upon Investor’s own due diligence investigations and the Company’s
filings with the Commission.


 


3.5           If the Investor is a resident of
Canada or otherwise subject to the provincial securities laws of Canada, such
Investor understands and acknowledges that (i) the Closing Securities have
not been, and that the Note Shares and Warrant Shares will not be, qualified
for distribution under provincial securities laws, (ii) the Closing
Securities will be distributed to such Investor pursuant to exemptions from the
registration and prospectus filing requirements of applicable provincial
securities laws, and (iii) the Closing Securities and if acquired, the
Note Shares and Warrant Shares, must be held by such Investor indefinitely
unless a subsequent distribution thereof is qualified for distribution under
the applicable provincial securities laws, or is exempt from the prospectus
registration requirements thereof.


 


3.6           Investor has all requisite legal and
other power and authority to execute and deliver this Agreement and to carry
out and perform its obligations under the terms of this Agreement.  This Agreement constitutes a valid and
legally binding obligation of Investor enforceable in accordance with its
terms, subject as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors’ rights
and to general equity principles.


 


3.7           Investor has carefully considered and
has discussed with its legal, tax, accounting and financial advisors, to the
extent the Investor has deemed necessary, the suitability of this investment
and the transactions contemplated by this Agreement for the Investor’s
particular federal, state, provincial, local and foreign tax and financial
situation and has independently determined that this investment and the
transactions contemplated by this Agreement are a suitable investment for the
Investor.  Investor understands that it
(and not the Company) shall be responsible for Investor’s own tax liability
that may arise as a result of the investment in the Closing Securities or the
transactions contemplated by this Agreement, except as provided in Section 6.1(b).


 


3.8           Investor acknowledges that an
investment in the Closing Securities is speculative and involves a high degree
of risk and that Investor can bear the economic risk of the acceptance of the
Closing Securities, including a total loss of its investment.  Investor recognizes and understands that no
federal, state, provincial or foreign agency has recommended or endorsed the
purchase of the Closing Securities. 
Investor acknowledges that it has such knowledge and experience in
financial and business matters that Investor is capable of evaluating the
merits and risks of an investment in the Closing Securities and of making an
informed investment decision with respect thereto.


 


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3.9           Because of the legal restrictions
imposed on resale or transfer of the Closing Securities, Investor understands
that the Company shall have the right to note stop-transfer instructions in its
records, and Investor has been informed of the Company’s intention to do
so.  Any sales, transfers, or other
dispositions of the Closing Securities by Investor, if any, will be made in
compliance with the Act and any other applicable securities laws, and all
applicable rules and regulations promulgated thereunder and the terms of
this Agreement.


 


3.10         Investor acknowledges that Investor has
not assigned or transferred any interest or rights under the Old Notes.


 


3.11         The residency of Investor (or, in the
case of a partnership, limited liability company or corporation, such entity’s
principal place of business) is correctly set forth below Investor’s name on Annex
I or Annex II, as applicable.


 


ARTICLE 4



CONDITIONS RELATING TO THE CLOSING


 


4.1           Conditions
to the Obligations of the Investors at the Closing.  The several obligations of each Investor to
consummate the transactions to be performed by it in connection with the
Closing Date are, unless otherwise indicated, subject to the satisfaction of
the following conditions as of the Closing Date, unless such conditions are
waived by such Investor with respect to the Closing Date:


 


(a)           Approval
by Disinterested Directors.  This
Agreement, the Transaction Documents and the transactions contemplated hereby
and thereby shall have been approved by a committee of the Company’s Board of
Directors consisting solely of one or more disinterested directors.


 


(b)           Approval
and Participation by Holders of Old Notes.


 


(i)            Holders of not less than two-thirds
(2/3) of the aggregate principal amount of Old Notes shall have approved this
Agreement and the transactions contemplated hereby; and


 


(ii)           Holders of not less than fifty
percent (50%) of the aggregate principal amount of the Old Notes shall be
Existing Investors, and such Existing Investors shall collectively exchange not
less than fifty percent (50%) of the aggregate principal amount of the Old
Notes outstanding for Notes.


 


(c)           Consents,
Permits, and Waivers.  The Company
shall have obtained any and all approvals, consents, permits and waivers
necessary or appropriate for consummation of the transactions contemplated by
this Agreement and the other Transaction Documents.


 


(d)           Authorizations.  All authorizations, approvals or permits, if
any, of any governmental authority or regulatory body that are required in
connection with the lawful 


 


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issuance
and sale of the Closing Securities pursuant to this Agreement shall have been
duly obtained and shall be effective on and as of the Closing Date.


 


(e)           Representations,
Warranties and Covenants.  The
representations and warranties made by the Company in Article II hereof
and in the other Transaction Documents shall be true and correct when made, and
shall be true and correct as of the Closing Date with the same force and effect
as if they had been made on and as of that date.  The Company shall have performed and complied
in all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.  As of the Closing Date, Company
shall have delivered a certificate to the foregoing effect to the Investors.


 


(f)            Opinion
of Counsel to the Company.  The
Investors shall have received an opinion of counsel to the Company reasonably
satisfactory to the Investors.


 


ARTICLE 5


 


COVENANTS


 


5.1           Board
of Directors and Committee Designation Rights; Voting Agreement.


 


(a)           The Company shall maintain a Board of
Directors consisting of no more than nine (9) individuals and each of the
Compensation Committee and Nominating Committee (or other committees serving
similar functions) shall have no more than three (3) members.  The Designators (as defined below) shall have
the right, but not the obligation, to collectively designate up to two (2) Noteholder
Directors who shall have the right but not the obligation to serve as members
of each such committee of the Company’s Board of Directors.  At the election of the Designators, all
Subsidiaries of the Company shall maintain a Board of Directors which shall
include the Noteholder Directors and have no more than nine (9) individuals,
except to the extent otherwise required by the laws of the jurisdiction of each
Subsidiary’s organization.


 


(b)           Each Investor agrees to vote all of
his, her or its voting securities (including, but not limited to, the Notes,
Note Shares and Warrant Shares) in the Company, whether now owned or hereafter
acquired or which such Investor may be empowered to vote (together the “Voting
Securities”), from time to time and at all times, in whatever manner shall
be necessary to ensure that at each meeting of Investors at which an election
of directors is held or pursuant to any written consent of Investors, the
following persons (each a “Noteholder Director”) shall be elected to the
Company’s Board of Directors pursuant to Section B of ARTICLE SIXTH of the
Company’s Charter:


 


(i)            one individual designated by
HealthCare Ventures VII, L.P. (or any recipient of all of the Notes held by
HealthCare Ventures VII, L.P. as of the date hereof) (the “HCV Designator”),
which individual shall initially be James Cavanaugh; and


 


(ii)           one individual designated by MPM
BioVentures III, L.P. (or any recipient of all of the Notes held by MPM
BioVentures III, L.P. as of the date hereof) (the 


 


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“MPM Designator”
and together with the HCV Designator, the “Designators”), which
individual shall initially be Steven St. Peter.


 


(c)           The
Board of Directors of the Company shall nominate such Noteholder Directors and
recommend that the Investors vote to elect such Noteholder Directors as
directors of the Company and shall fill any vacancies that may arise upon the
resignation of any of the Noteholder Directors with a new Noteholder Director
designated in accordance with the foregoing Section 5.1.


 


(d)           The
Company shall provide at least thirty (30) days’ prior written notice of all
intended mailings of notices to the Investors for a meeting at which directors
are to be elected (or an action by written consent pursuant to which directors
are to be elected) to each Designator, and each Designator shall notify the
Company in writing, at least ten (10) days prior to such mailing, of the
person(s) so designated as nominees for election as directors in
accordance with this Section 5.1. 
If any Designator shall fail to give notice to the Company as provided
above, it shall be deemed that such Designator’s Noteholder Director then
serving as director shall be such Designator’s nominee for reelection.


 


(e)           Each
Investor also agrees to vote all of his, her or its Voting Securities from time
to time and at all times in whatever manner as shall be necessary to ensure
that (i) no director elected pursuant to this Section 5.1 of this
Agreement may be removed from office other than for cause unless (A) such
removal is directed or approved by the Designator entitled under this Section 5.1
to designate that director or (B) the Designator originally entitled to
designate such director pursuant to this Section 5.1 is no longer so
entitled to designate such director; (ii) any vacancies created by the
resignation, removal or death of a Noteholder Director shall be filled pursuant
to the provisions of this Section 5.1; and (iii) upon the request of
the Designator entitled to designate a director pursuant to this Section 5.1
to remove such director, such director shall be removed.  All Investors agree to execute any written
consents required to effectuate the obligations of this Agreement, and the
Company agrees at the request of any Designator to call a special meeting of
Investors for the purpose of electing directors.


 


(f)            The
Company shall take such action as is necessary to convene meetings of its Board
of Directors and meetings of the Investors for the election of the directors
(or to act by written consent) in order to elect and re-elect the Noteholder
Directors in accordance with this Section 5.1.


 


(g)           The
Company hereby represents and warrants that as of the date hereof the
transactions contemplated hereby are not inconsistent with the Company’s
Charter or By-laws and agrees that until such time as the obligations under
this Section 5.1 have expired, the Company will not take any action or
amend its Charter or By-laws in a manner inconsistent with or in derogation of
this Agreement.  The Company shall at the
next meeting of stockholders of the Company recommend that the Charter be
amended to implement the provisions of this Article V, including, without
limitation, to: (A) set a maximum board size of nine members; (B) provide
that only two (2) members of the Board are to be elected by at least a
majority of the Principal amount of the Notes outstanding, voting as a separate
class; and (C) 


 


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provide
that the Company’s Board of Directors shall nominate the Noteholder Directors,
as designated by the Designators, pursuant to the terms of this Agreement.  Each Investor hereby agrees to vote its
Voting Securities in favor of such amendments to the Charter.  The Company shall take such action as is
reasonably necessary to amend its By-laws to implement the provisions of this Article V
and the Charter amendments described in this Section 5.1(g).


 


(h)           The
Notes shall not be transferred unless the recipient of such Notes agrees in
writing to be bound by the terms hereof.


 


(i)            Each
Investor hereby grants to the Secretary of the Company, in the event that such
Investor fails to vote its Voting Securities as required by this Agreement, a
proxy coupled with an interest in all Voting Securities beneficially owned by
such Investor to vote such Voting Securities in accordance with this Section 5.1,
which proxy is irrevocable until this Agreement terminates pursuant to its
terms or is amended to remove such grant of proxy in accordance with Section 5.1
of this Agreement.


 


(j)            The
provisions of this Section 5.1 shall remain in effect at all times while
at least thirty percent (30%) of the aggregate Principal amount of the Notes
remain outstanding. Upon the date that this Section 5.1 ceases to be in
force or effect, the Company shall have the right, without further action or
consent by the Investors, to amend its Charter to remove any and all such
provisions related to the subject matter of this Section 5.1.


 


5.2           No Liability for
Designation or Election of Directors.  No Investor, nor any affiliate of any
Investor, shall have any liability as a result of designating a person for
election as a director for any act or omission by such designated person in his
or her capacity as a director of the Company, nor shall any Investor have any
liability as a result of voting for any such designee in accordance with the
provisions of this Agreement.


 


5.3           Observer Rights.  Until the earlier of (a) twelve (12)
months following the Closing Date and (b) the date on which Baker Brothers
Investments and its affiliates (“Baker”) no longer holds Notes with an
aggregate Principal amount of at least five million dollars ($5,000,000), one
representative (an “Observer”) to be appointed by Baker shall be
entitled to notice of and to attend all meetings of the Company’s Board of
Directors (which Observer shall be entitled to have expenses reimbursed by the
Company as if such Observer were a director of the Company) in a nonvoting
observer capacity and, in this respect, the Company shall provide to such
Observer copies of all notices, minutes, consents and other materials that it
provides to the members of the Board of Directors at the same time and in the
same manner as provided to such members (“Observer Rights”); provided,
however, that such Observer shall agree to hold in confidence and trust
and to act in a fiduciary manner with respect to all information so provided;
and, provided further, that the Company reserves the right to withhold any
information and to exclude such Observer from any meeting or portion thereof if
access to such information or attendance at such meeting could adversely affect
the attorney-client privilege between the Company and its counsel or result in
a conflict of interest.


 


5.4           Registration Rights.  The Investors shall have the registration
rights set forth in the Registration Rights Agreement, the Warrants and the
Notes.


 


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5.5           Listing.  Immediately prior to or on the Closing Date,
the Company shall secure the listing of all of the Registrable Securities (as
defined in the Registration Rights Agreement) upon each national securities
exchange and automated quotation system, if any, upon which the Common Stock is
then listed (subject to official notice of issuance) and shall maintain such
listing of all Registrable Securities from time to time issuable under the
terms of the Transaction Documents.  The
Company shall maintain the Common Stock’s authorization for quotation on the
principal exchange or market in which it is listed.  Neither the Company nor any of its
Subsidiaries shall take any action which would be reasonably expected to result
in the delisting or suspension of the Common Stock on the principal market in
which it is listed.  The Company shall
pay all fees and expenses in connection with satisfying its obligations under
this Section 5.5.


 


5.6           No Extension or Modification of
Warrants.  From and after the
Closing, the Company shall not extend or modify, or agree to extend or modify,
the warrants issued by the Company in its initial public offering until they
are exercised or expire according to their terms.


 


5.7           Incurrence of Indebtedness.  From and after the Closing, the Company will
not, and will not permit any Subsidiary to, create, incur, assume or permit to
exist any Indebtedness for borrowed money in an aggregate amount in excess of
ten million dollars ($10,000,000) (the “Indebtedness Limit”) without the
prior written approval of the Required Holders; provided, that (i) Indebtedness
that is subordinated in right of payment to the Notes and (ii) customary
trade payables incurred in the ordinary course of business shall not be subject
to the limitation set forth in this Section 5.7.


 


5.8           Right of First Refusal of Senior
Indebtedness.  From and after the
Closing and subject to Section 5.7 hereof, in the event that the Company,
or any of its Subsidiaries, wishes to create, incur or assume any Indebtedness
for borrowed money that is senior or “pari passu” in right of payment to the
Notes (“Senior Indebtedness”), the Company shall deliver a written
notice (the “Indebtedness Notice”) to the Investors disclosing in
reasonable detail the terms and conditions of the proposed Senior
Indebtedness.  For ten (10) days
following receipt by the Investors of the Indebtedness Notice (the “ROFR
Period”), the Investors shall have the option to provide all or part of the
proposed Senior Indebtedness up to a maximum aggregate amount of ten million
dollars ($10,000,000) under the terms and conditions set forth in the
Indebtedness Notice, on a pro rata basis based on the ownership of the then
outstanding Principal amount of the Notes. 
The Company, or any of its Subsidiaries, as applicable, shall have
ninety (90) days from the expiration of the ROFR Period to incur or assume the
Senior Indebtedness specified in the relevant Indebtedness Notice that is not
provided by the Investors, but only upon terms and conditions (including,
without limitation, principal amounts, maturity dates and interest rates) that
are not more favorable to the providers of such Senior Indebtedness or less
favorable to the Company than those set forth in the Indebtedness Notice.


 


11

















 


ARTICLE 6


 


MISCELLANEOUS


 


6.1           Expenses.


 


(a)           The Company
will pay, and save the Investors harmless against (i) all liability for
the payment of the reasonable costs and expenses, including without limitation
the legal expenses of Edwards Angell Palmer & Dodge LLP of up to
$60,000 as counsel to the Designators, incurred by the Designators in
connection with the transactions contemplated by this Agreement, and (ii) all
liability for the payment of the reasonable costs and expenses, including without
limitation the reasonable fees and expenses of one counsel selected by the
Designators, incurred by the Investors in connection with the ownership of the
Closing Securities including, without limitation, any amendment or waiver of,
or enforcement of, any Transaction Document relating to the transactions
contemplated hereby.


 


(b)           The Company further agrees that they
will pay, and will save each Investor harmless from, any and all Liabilities
with respect to any stamp or similar taxes which may be determined to be
payable in connection with the execution and delivery and performance of the
Transaction Documents or any modification, amendment or alteration of the terms
or provisions of the Transaction Documents (excluding any taxes on the income
or gain of the Investor).


 


6.2           Further Assurances.  The Company shall duly execute and deliver,
or cause to be duly executed and delivered, at its own cost and expense, such
further instruments and documents and to take all such action, in each case as
may be necessary or proper in the reasonable judgment of the Investors to carry
out the provisions and purposes of this Agreement and the other Transaction
Documents.


 


6.3           Remedies.  In case any one or more of the
representations, warranties, covenants and/or agreements set forth in this
Agreement or any other Transaction Documents shall have been breached by a
party, the other parties may proceed to protect and enforce its rights either
by suit in equity and/or by action at law, including an action for damages as a
result of any such breach and/or an action for specific performance of any such
covenant or agreement contained in this Agreement or any of the other
Transaction Documents, and may exercise all remedies under the Closing
Securities.


 


6.4           Survival.  The representations, warranties, covenants
and agreements made herein shall survive any investigation made by any party
hereto, the execution and delivery of this Agreement and the closing of the
transactions contemplated hereby.


 


6.5           Successors and Assigns.  This Agreement shall bind and inure to the
benefit of the Company and the Investors and their respective successors and
permitted assigns.  Subject to applicable
federal, state and provincial securities laws and regulations, the Investors
may freely assign either this Agreement or any of their rights, interests, or
obligations hereunder without the prior written approval of the other parties,
except (a) to a Competitor as defined in the Notes and (b) subject to
the provisions set forth in Section 17 thereof.


 


6.6           Entire Agreement.  This Agreement and the other writings
referred to herein or delivered pursuant hereto (including the other
Transaction Documents) which form a part hereof contain the entire agreement
among the parties with respect to the subject matter hereof and thereof and
supersede all prior and contemporaneous arrangements or understandings with 


 


12

















 


respect thereto
including, without limitation, the Note Exchange Agreement dated August 3,
2007 by and among the Company and the holders of the Old Notes.


 


6.7           Notices.  All notices, requests, demands, claims,
consents and other communications delivered hereunder (whether or not required
to be delivered hereunder) shall be deemed to be sufficient and duly given if
contained in a written instrument (a) personally delivered, (b) sent
by fax, (c) sent by nationally-recognized overnight courier guaranteeing
next business day delivery or (d) sent by first class registered or
certified mail, postage prepaid, return receipt requested, in each case
addressed as follows:


 


(i)                                  if to the Company, to:


 


PharmAthene, Inc.


One Park Place


Suite 450


Annapolis, MD 21401


Attention:  David P. Wright


Fax:  (410) 269-2601


 


with a copy to:


 


Jeffrey A. Baumel, Esq.


Sonnenschein Nath &
Rosenthal LLP


101 JFK Parkway


Short Hills, NJ 07078


Fax:  (973) 912-7199;


 


and


 


(ii)           if
to an Investor, to him, her or it at his, her or its address set forth on such
Investor’s signature block hereto,


 


with a copy to:


 


James T. Barrett, Esq.

Edwards Angell Palmer & Dodge LLP

111 Huntington Avenue

Boston, MA 02199-7613

Fax:  (617) 227-4420


 


or to such other address
as the party to whom such notice or other communication is to be given may have
furnished to each other party in writing in accordance herewith.  Any such notice or communication shall be
deemed to have been received (A) when delivered, if personally delivered, (B) when
sent, if sent by telecopy on a business day (or, if not sent on a business day,
on the next business day after the date sent by telecopy), (C) on the next
business day after dispatch, if sent by nationally recognized, overnight
courier guaranteeing next business day 


 


13

















 


delivery, and (D) on
the fifth (5th) business day following the date on
which the piece of mail containing such communication is posted, if sent by
mail.


 


6.8           Amendments, Modifications,
Terminations and Waivers.  The terms
and provisions of this Agreement and the Closing Securities may not be
modified, amended or terminated, nor may any of the provisions hereof be
waived, temporarily or permanently, except (i) prior to the Closing,
pursuant to a written instrument executed by the Company and those parties to
this Agreement that have agreed to purchase at least a majority of the Closing
Securities, which parties must include both of the Designators, or (ii) after
the Closing, pursuant to a written instrument executed by the Company and the
Required Holders.


 


6.9           Governing
Law; Waiver of Jury Trial.


 


(a)           All
questions concerning the construction, interpretation and validity of this
Agreement shall be governed by and construed and enforced in accordance with
the domestic laws of the State of Delaware without giving effect to any choice
or conflict of law provision or rule (whether in the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware. 
In furtherance of the foregoing, the internal law of the State of
Delaware will control the interpretation and construction of this Agreement,
even if under such jurisdiction’s choice of law or conflict of law analysis,
the substantive law of some other jurisdiction would ordinarily or necessarily
apply.


 


(b)           BECAUSE
DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST
QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE
PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE
PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS.  THEREFORE, TO ACHIEVE
THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION,
THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.


 


6.10         No Third Party Reliance.  Anything contained herein to the contrary
notwithstanding, the representations and warranties of the Company contained in
this Agreement (a) are being given by the Company as an inducement to the
Investors to enter into this Agreement and the other Transaction Documents (and
the Company acknowledges that the Investors have expressly relied thereon) and (b) are
solely for the benefit of the Investors. 
Accordingly, no third party (including, without limitation, any holder
of capital stock of the Company) or anyone acting on behalf of any holder
thereof other than the Investors, and each of them, shall be a third-party or
other beneficiary of such representations and warranties and no such third
party shall have any rights of contribution against the Investors or the
Company with respect to such representations or warranties or any matter
subject to or resulting in indemnification under this Agreement or otherwise.


 


14

















 


6.11         Publicity.  Neither the Investors nor the Company shall
issue any press release or make any public disclosure regarding the
transactions contemplated hereby unless such press release or public disclosure
is approved by the Required Holders and those parties mentioned in such press
release or public disclosure in advance. 
Notwithstanding the foregoing, each of the parties hereto may, in
documents required to be filed by it with the Commission or other regulatory
bodies, make such statements with respect to the transactions contemplated
hereby as each may be advised by counsel is legally necessary or advisable.


 


6.12         Severability.  It is the desire and intent of the parties
that the provisions of this Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. 
Accordingly, in the event that any provision of this Agreement would be
held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any jurisdiction.  Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as to not be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.


 


6.13         Independence of Agreements,
Covenants, Representations and Warranties. 
All agreements and covenants hereunder shall be given independent effect
so that if a certain action or condition constitutes a default under a certain
agreement or covenant, the fact that such action or condition is permitted by
another agreement or covenant shall not affect the occurrence of such default,
unless expressly permitted under an exception to such covenant.  In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject
matter is correct or is not breached will not affect the incorrectness of or a
breach of a representation and warranty hereunder.  The annexes, exhibits and schedules attached
hereto are hereby made part of this Agreement in all respects.


 


6.14         Counterparts; Facsimile and
Electronic Signatures.  This
Agreement may be executed in any number of counterparts, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.  Counterpart signatures to this Agreement
delivered by facsimile or other electronic transmission shall be acceptable and
binding.


 


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


 


*    *   
*    *    *


 


15

















 


IN
WITNESS WHEREOF,
each of the undersigned has duly executed this Note and Warrant Purchase
Agreement as of the date first written above.


 


	
   

  	
  PHARMATHENE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David P. Wright

  
	
   

  	
   

  	
  Title:

  	
  President and CEO

  



 


[Signature page to Note and
Warrant Purchase Agreement]


 

















 


	
   

  	
  INVESTORS:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


[Signature page to Note and
Warrant Purchase Agreement]


 
















 


Amendment
No. 1 to


Note
and Warrant Purchase Agreement


Dated
as of July 26, 2009


 


Pursuant to Section 6.8
of the Note and Warrant Purchase Agreement dated as of July 24, 2009 by
and among PharmAthene, Inc. and the Investors listed in Annex I and Annex
II thereof (the “Agreement”), the Company and the parties to the
Agreement that have agreed to purchase at least a majority of the Closing
Securities, including both of the Designators, hereby agree and consent to
amend the Agreement as follows:


 


1.             The second recital of the Agreement is deleted in its
entirety and replaced with the following:


 


“WHEREAS, the
Investors wish to purchase from the Company, and the Company wishes to sell and
issue to the Investors, upon the terms and conditions stated in this Agreement,
(i) senior unsecured convertible notes in the form attached hereto as Exhibit A
in the initial aggregate Principal amount of up to $19,294,123.84 (the “Notes”),
and (ii) warrants to purchase an aggregate of up to 2,572,550 shares of
the Company’s common stock, $0.0001 per share (the “Common Stock”), at
an exercise price per share equal to the closing price of the Common Stock on
the NYSE Amex immediately preceding the execution of this Agreement, in the
form attached hereto as Exhibit B (the “Warrants,” and
together with the Notes, the “Closing Securities”);”


 


2.             Annex I and Annex II of the Agreement are
deleted in their entirety and replaced with the Annex I and Annex II
set forth in Exhibit A hereto, for the purpose of adding the
additional Investors listed therein.


 


This Amendment No. 1
to Note and Warrant Purchase Agreement (this “Amendment”)  may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one agreement.  Counterpart signatures to
this Amendment delivered by facsimile or other electronic transmission shall be
acceptable and binding.  Capitalized terms used and not defined herein
have the meaning ascribed to such terms in the Agreement.


 


[Signature Pages Follow]


 

















 


IN
WITNESS WHEREOF,
each of the undersigned has duly executed this Amendment No. 1 to Note and
Warrant Purchase Agreement as of the date first written above.


 


 


	
   

  	
  PHARMATHENE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David P. Wright

  
	
   

  	
   

  	
  Title:

  	
  President and CEO

  



 

















 


	
   

  	
  INVESTORS:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 
















 


Amendment No. 2 to


Note and Warrant Purchase Agreement


Dated as of July 28, 2009


 


Pursuant
to Section 6.8 of the Note and Warrant Purchase Agreement dated as of July 24,
2009 by and among PharmAthene, Inc. and the Investors listed in Annex I
and Annex II thereof, as amended as of July 26, 2009 by Amendment No. 1
to Note and Warrant Purchase Agreement (as so amended, the “Agreement”),
the Company and the parties to the Agreement that have agreed to purchase at
least a majority of the Closing Securities, including both of the Designators,
hereby agree and consent to amend the Agreement as follows:


 


1.             The second recital of the Agreement
is deleted in its entirety and replaced with the following:


 


“WHEREAS, the Investors wish to purchase from the Company,
and the Company wishes to sell and issue to the Investors, upon the terms and
conditions stated in this Agreement, (i) senior unsecured convertible
notes in the form attached hereto as Exhibit A in the initial
aggregate Principal amount of up to $19,295,801.83 (the “Notes”), and (ii) warrants
to purchase an aggregate of up to 2,572,775 shares of the Company’s common
stock, $0.0001 per share (the “Common Stock”), at an exercise price per
share equal to the closing price of the Common Stock on the NYSE Amex immediately
preceding the execution of this Agreement, in the form attached hereto as Exhibit B
(the “Warrants,” and together with the Notes, the “Closing Securities”);”.


 


2.             Article 2.2(e) of the
Agreement is deleted in its entirety and replaced with the following:


 


“The
outstanding shares of Common Stock are listed on the NYSE Amex and the Note
Shares and the Warrant Shares will have been approved for listing on the NYSE
Amex, subject to notice of issuance, not later than thirty (30) days
following the Closing Date.  The Company
or its representatives or agents have had conversations and correspondence with
representatives of the NYSE Amex in which they described in reasonable detail
the terms and conditions of and the transactions contemplated by the Transaction
Documents (the “Amex Conversations”), and based on the Amex
Conversations, the Company (i) reasonably believes that the Note Shares
and the Warrant Shares will be listed on the NYSE Amex within thirty (30) days following
the Closing Date and (ii) is not aware of any reason that the Note Shares
and the Warrant Shares will not be so listed. 
The transactions contemplated by the Transaction Documents do not
require shareholder approval under the rules of the NYSE Amex.”


 


3.             Article 5.5 of the Agreement
is deleted in its entirety and replaced with the following:


 


“Listing.  The Company shall use its best efforts to
obtain the written approval for listing on the NYSE Amex, subject to notice of
issuance, of the Note Shares and the Warrant Shares as promptly as possible,
but in no event later than thirty (30) days after the Closing Date (the date on
which such shares are listed, the “Listing Date”).  From and after the Listing Date, the 


 

















 


Company
shall maintain the listing of all of the Registrable Securities (as defined in
the Registration Rights Agreement) from time to time issuable under the terms
of the Transaction Documents upon each national securities exchange and
automated quotation system, if any, upon which the Common Stock is then listed.  The Company shall maintain the Common Stock’s
authorization for listing on the principal exchange or market in which it is
listed.  Neither the Company nor any of
its Subsidiaries shall take any action which would be reasonably expected to
result in the delisting or suspension of the Common Stock on the principal
market in which it is listed.  The
Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 5.5.”


 


4.             Annex I of the
Agreement is deleted in its entirety and replaced with the Annex I set
forth in Exhibit A hereto.


 


5.             The
Schedule of Exceptions is amended and restated as attached hereto.


 


This
Amendment No. 2 to Note and Warrant Purchase Agreement (this “Amendment”)  may be executed in any number of counterparts,
and each such counterpart hereof shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one agreement.  Counterpart signatures to this Amendment
delivered by facsimile or other electronic transmission shall be acceptable and
binding.  Capitalized terms used and not defined herein have the meaning ascribed
to such terms in the Agreement.


 


[Signature Pages Follow]


 

















 


IN WITNESS WHEREOF, each of the undersigned
has duly executed this Amendment No. 2 to Note and Warrant Purchase
Agreement as of the date first written above.


 


 


	
   

  	
  PHARMATHENE,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  David
  P. Wright

  
	
   

  	
   

  	
  Title:

  	
  President
  and CEO

  



 


[Signature
Page to Amendment No. 2 to Note and Warrant Purchase Agreement]


 

















 


	
   

  	
  INVESTORS:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  

  	
   

  
	
   

  	
   

  	
  Title: