Document:

Unassociated Document

     

    CONVERSION
SERVICES INTERNATIONAL, INC.

    7%
CONVERTIBLE UNSECURED NOTE

    DUE
ON APRIL 30, 2012

     

    
      
        	
                $500,000

              	
                March
      8, 2010

              

      

       

    

    THIS
NOTE IS ISSUED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE
SECURITIES ACT OF 1933 (THE "ACT") AND QUALIFICATION PROVISIONS OF APPLICABLE
STATE SECURITIES LAWS.  NEITHER IT NOR THE SHARES OF COMMON STOCK INTO
WHICH IT CAN BE CONVERTED CAN BE SOLD, HYPOTHECATED OR OTHERWISE TRANSFERRED
UNLESS REGISTERED PURSUANT TO THE ACT AND QUALIFIED UNDER APPLICABLE STATE LAW
OR, IN THE OPINION OF COUNSEL REASONABLY ACCEPTABLE TO MAKER, AN EXEMPTION
THEREFROM IS AVAILABLE.

    

    FOR VALUE
RECEIVED, the undersigned, Conversion Services International, Inc. (“CSI”), a
Delaware corporation with an address at 100 Eagle Rock Avenue, East Hanover, New
Jersey 07936, ("Maker"), promises to pay to Hunter & Co., with an address at
c/o TAG Virgin Islands, Inc., The Tunick Building, 1336 Beltjen Road, Suite 202,
St. Thomas, VI 00802, as agent ("Payee"), on April 30, 2012, or sooner as
otherwise provided herein (the "Maturity Date"), the principal amount of Five
Hundred Thousand ($500,000) Dollars in lawful money of the United States of
America (the "Principal”).  This Note bears interest (the "Interest"),
payable semi-annually on May 1st and
November 1st, or the date on which this Note is converted into Maker's common
stock as provided herein, at the annual rate of seven percent (7%), except as
otherwise provided herein, until the Principal and all accrued Interest thereon
(collectively the “Obligations”) shall be paid in full.  This Note is
convertible into Maker's common stock, par value $0.001 per share (the "Common
Stock"), as set forth below. This Note permanently supercedes that certain 7%
Convertible Unsecured Note, dated as of December 23, 2008 and in the amount of
$1,050,000, of CSI to Hunter & Co.

    

    1.           Interest; Repayment of
Principal.

    

    Interest
on the Note will accrue from the most recent date to which Interest has been
paid or, if no Interest has been paid, from the date of delivery of the
Note.  It will be computed on the basis of a 360-day year of twelve
30-day months.  Maker shall repay to Payee the full Principal, Five
Hundred Thousand ($500,000) Dollars, on the Maturity Date plus accrued but
unpaid Interest.

    

    2.           Method of
Payment.

    

    Maker
will pay Principal and Interest in money of the United States that at the time
of payment is legal tender for the payment of public and private
debts.  All payments shall be sent to Payee at its address first set
forth above or such other address as Payee shall notify Maker.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    3.           Conversion.

    

    (a)           Conversion
of Note.  Except as provided in Paragraph (c)(iii) of
this Section 3
below, by or on the Maturity Date, the Obligations will either be: (1) repaid in
full to the Payee, or (2) converted into Common Stock.  Conversion of
this Note into Common Stock shall be solely at the option of the Payee. The
price for conversion (the “Conversion Price”), subject to adjustment as provided
in Section 4
below, shall be equal to $0.03 per share of the Common Stock on the date of
conversion (subject to adjustment for any stock split, stock dividends, stock
combination, recapitalization and like occurrences to occur after the date
hereof).  Maker will not issue a fractional share of Common Stock upon
conversion but will round any fractional share to the nearest share so that if
the fraction is less than 0.5 no share shall be issued and if the fraction is
0.5 or higher Maker shall issue one full share.  Maker shall pay Payee
all accrued but unpaid Interest (the “Outstanding Interest”) as of the
Conversion Date, as defined in Paragraph 3 (b)
below, as provided in Paragraph 3(b)
below.  The date on which the Maker shall deliver the Common Stock and
outstanding Interest is herein referred to as the “Conversion
Date.”  After the Conversion Date, this Note shall be void and Payee
shall have the sole right to receive the Common Stock and outstanding
Interest.

    

    (b)           Taxes
on Shares Issued.  The issue of stock certificates on conversion of
this Note shall be made without charge to Payee for any tax in respect of such
issue.  Maker shall not, however, be required to pay any tax that may
be payable in respect of any transfer involved in the issue and delivery of
Common Stock in any name other than that of Payee, and Maker shall not be
required to issue or deliver any certificates representing such Common Stock
unless and until the person or persons requesting the issue thereof shall have
paid to Maker the amount of such tax or shall have established to the
satisfaction of Maker that such tax has been paid.

    

    (c)           Covenants
of Maker Relating to Conversion.  Maker covenants and agrees that,
except as provided in Subparagraphs (i) and (iv) of this Paragraph 3(c), from
and after the date hereof and until the date of repayment in full of the
Obligations, or full conversion of the Obligations:

    

    (i)           
On the Conversion Date it shall have, free from preemptive rights, out of its
authorized but unissued shares, or out of shares held in its treasury,
sufficient shares to effect the conversion of the Obligations;

    

    (ii)           All
Common Stock that may be issued upon conversion of the Obligations will upon
issue be validly issued, fully paid and non-assessable, free from all taxes,
liens and charges with respect to the issue thereof except as provided in Paragraph 3(c) above,
and will not be subject to the preemptive rights of any stockholder of
Maker;

    
      
        
           

        

         

      

      
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    (iii)           If
any Common Stock to be provided for the purpose of conversion of the Obligations
require registration with or approval of any governmental authority under any
federal or state law before such shares may be validly issued upon conversion,
Maker will in good faith and as expeditiously as possible attempt to secure such
registration or approval, as the case may be, and Maker's obligation to deliver
shares of the Common Stock upon conversion of the Obligations shall be abated
until such registration or approval is obtained; provided, however, that this
Note and the Obligations shall remain outstanding unless paid in full until
Maker delivers the Common Stock and the outstanding Interest to Payee and in no
event shall this Note be converted until Maker effects such delivery;
and

    

    (iv)If on
the Conversion Date, and thereafter so long as the Common Stock shall be listed
on any securities exchange, market or other quotation system, Maker will, if
permitted by the rules of such exchange, market or other quotation system, list
and keep listed and for sale so long as the Common Stock shall be so listed on
such exchange, market or other quotation system, upon official notice of
issuance, all Common Stock issuable upon conversion of the
Obligations.

    

    4.           Adjustment in Conversion
Price.

    

    (a)           Adjustments
for Change in Capital Stock.  Except as provided in Paragraph 4(n) below,
if Maker shall (i) declare a dividend on all its outstanding Common Stock in
shares of its capital stock, (ii) subdivide all its outstanding Common Stock,
(iii) combine all its outstanding Common Stock into a smaller number of shares,
or (iv) issue any shares of its capital stock by reclassification of its Common
Stock (including any such reclassification in connection with a consolidation or
merger in which Maker is the continuing corporation), then in each such case the
conversion privilege and the Conversion Price in effect immediately prior to
such action shall be adjusted so that if the Note is thereafter converted, Payee
may receive the number and kind of shares that it would have owned immediately
following such action if it had converted the Note immediately prior to such
action.  Such adjustment shall be made successively whenever such an
event shall occur.  The adjustment shall become effective immediately
after the record date in the case of a dividend or distribution and immediately
after the effective date in the case of a subdivision, combination or
reclassification.  If after an adjustment Payee upon conversion of
this Note may receive shares of two or more classes of capital stock of Maker,
Maker's Board of Directors, in good faith, shall determine the allocation of the
adjusted Conversion Price between the classes of capital stock.  After
such allocation, the conversion privilege and Conversion Price of each class of
capital stock shall thereafter be subject to adjustment on terms comparable to
those applicable to Common Stock in this Section
4.

    

     (b)           Other
Offerings.  In case Maker shall issue to all of its existing
stockholders  or otherwise grant rights, options, or warrants
entitling the holders thereof to subscribe for or purchase Common Stock (or
securities convertible into or exchangeable for Common Stock) at a price per
share (or having a conversion price per share, in the case of a security
convertible into or exchangeable for Common Stock) less than the Current Market
Price per share (as defined in Paragraph 4(d) below)
on the record date for the determination of stockholders entitled to receive
such rights on the granting date, as the case may be, (i) to distribute to all
holders of its Common Stock evidences of its indebtedness or assets (excluding
cash dividends or distributions paid from retained earnings) or rights or
warrants to subscribe or purchase Common Stock (excluding those referred to
above), then in each such case the Company shall need to obtain the express
written consent of the Payee prior to such offering.

     

    
      
        
           

        

         

      

      
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    (c)           Omitted.

    

    (d)           Current
Market Price.  For the purpose of any computation under Paragraphs 4(b)
above, the "Current Market Price" per share of Common Stock on any date
shall be deemed to be the closing price on the date of issuance.  The
"Closing Price" for each day shall mean the last reported sales price regular
way or, in case no such reported sale takes place on such day, the closing bid
price regular way, in either case on the principal national securities exchange
on which the Common Stock is listed or admitted to trading or, if the Common
Stock is not listed or admitted to trading on any national securities exchange,
the highest reported bid price as furnished by the National Association of
Securities Dealers, Inc. through NASDAQ or similar organization if NASDAQ is no
longer reporting such information, or by the Pink Sheets, LLC or similar
organization if the Common Stock is not then quoted on an inter-dealer quotation
system.  If on any such date the Common Stock is not quoted by any
such organization, the fair value of the Common Stock on such date, as
determined in good faith by Maker's Board of Directors, shall be
used.

    

     (e)           Action
to Permit Valid Issuance of Common Stock.  Before taking any action
which would cause an adjustment reducing the Conversion Price below the then par
value, if any, of the shares of Common Stock issuable upon conversion of this
Note, Maker will take all corporate action which may, in the opinion of its
counsel, be necessary in order that Maker may validly and legally issue shares
of such Common Stock at such adjusted Conversion Price.

    

    (f)           Minimum
Adjustment.  No adjustment in the Conversion Price shall be required
if such adjustment is less than 1% of the then Existing Conversion Price; provided, however, that any
adjustments which by reason of this Paragraph 4(f) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this Section 4 shall be
made to the nearest cent or to the nearest one-hundredth of a share, as the case
may be.  Anything to the contrary notwithstanding, Maker shall be
entitled to make such reductions in the Conversion Price, in addition to those
required by this Paragraph 4(f), as it
in its discretion shall determine to be advisable in order that any stock
dividends, subdivision of shares, distribution of rights to purchase stock or
securities, or distribution of securities convertible into or exchangeable for
stock hereafter made by Maker to its stockholders shall not be
taxable.

    

    (g)           Referral
of Adjustment.  In any case in which this Section 4 shall
require that an adjustment in the Conversion Price be made effective as of a
record date for a specified event, if the Note shall have been converted after
such record date Maker may elect to defer until the occurrence of such event
issuing to Payee the shares, if any, issuable upon such conversion event over
and above the shares, if any, issuable upon such conversion on the basis of the
Conversion Price in effect prior to such adjustment; provided, however, that Maker
shall deliver to Payee a due bill or other appropriate instrument evidencing
Payee's right to receive such additional shares upon the occurrence of the event
requiring such adjustment.

    
      
        
           

        

         

      

      
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    (h)           Number
of Shares.  Upon each adjustment of the Conversion Price as a result
of the calculations made in Paragraphs 4(a)
through (c)
above, this Note shall thereafter evidence the right to purchase, at the
adjusted Conversion Price, that number of shares (calculated to the nearest
one-hundredth) obtained by dividing (i) the product obtained by multiplying the
number of shares issuable upon conversion of this Note prior to adjustment of
the number of shares by the Conversion Price in effect prior to adjustment of
the Conversion Price by (ii) the Conversion Price in effect after such
adjustment of the Conversion Price.

    

    (i)           When
No Adjustment Required.  No adjustment need be made for a transaction
referred to in Paragraphs 4(a)
through (c)
above if Payee is permitted to participate in the transaction on a basis no less
favorable than any other party and at a level which would preserve Payee's
percentage equity participation in the Common Stock upon conversion of the
Note.  No adjustment need be made for sales of Common Stock pursuant
to any Maker plan for reinvestment of dividends or interest, the granting of
options and/or the exercise of options outstanding under any of Maker's stock
option plans, the exercise of any other of Maker's currently outstanding
options, or any currently authorized warrants, whether or not
outstanding.  No adjustment need be made for a change in the par value
of the Common Stock, or from par value to no par value.  If the Note
becomes convertible solely into cash, no adjustment need be made
thereafter.  Interest will not accrue on the cash.

    

    (j)           Notice
of Adjustment.  Whenever the Conversion Price is adjusted, Maker shall
promptly mail to Payee a notice of the adjustment together with a certificate
from Maker's Chief Financial Officer briefly stating (i) the facts requiring the
adjustment, (ii) the adjusted Conversion Price and the manner of computing it,
and the date on which such adjustment becomes effective.  The
certificate shall be evidence that the adjustment is correct, absent manifest
error.

    

    (k)           Voluntary
Reduction.  Maker from time to time may reduce the Conversion Price by
any amount for any period of time if the period is at least twenty (20) days and
if the reduction is irrevocable during the period.  Whenever the
Conversion Price is reduced, Maker shall mail to Payee a notice of the
reduction.  Maker shall mail the notice at least fifteen (15) days
before the date the reduced Conversion Price takes effect.  The notice
shall state the reduced Conversion Price and the period it will be in
effect.  A reduction of the Conversion Price does not change or adjust
the Conversion Price otherwise in effect for purposes of Paragraphs 4(a)
through (c)
above.  Anything to the contrary notwithstanding, this Paragraph 4(k) shall
be void and of no effect if it violates the rules and/or regulations of any
exchange on which the Common Stock is then listed for trading.

    
      
        
           

        

         

      

      
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    (l)           Prohibition
against Certain Reductions of Exercise Price.  Anything to the
contrary notwithstanding, in no event shall the Conversion Price be reduced
below the par value of the Common Stock.

    

    (m)           Notice
of Certain Transactions.  If (i) Maker takes any action that would
require an adjustment in the Conversion Price pursuant to this Section 4; or (ii)
there is a liquidation or dissolution of Maker, Maker shall mail to Payee a
notice stating the proposed record date for a distribution or effective date of
a reclassification, consolidation, merger, transfer, lease, liquidation or
dissolution.  Maker shall mail the notice at least fifteen (15) days
before such date.  Failure to mail the notice or any defect in it
shall not affect the validity of the transaction.

    

    (n)           Reorganization
of Company.  If Maker and/or the holders of Common Stock are parties
to a merger, consolidation or a transaction in which (i) Maker transfers or
leases substantially all of its assets; (ii) Maker reclassifies or changes its
outstanding Common Stock; or (iii) the Common Stock is exchanged for securities,
cash or other assets; the person who is the transferee or lessee of such assets
or is obligated to deliver such securities, cash or other assets shall assume
the obligations under this Note.  If the issuer of securities
deliverable upon conversion of the Note is an affiliate of the surviving,
transferee or lessee corporation, that issuer shall join in such
assumption.  The assumption agreement shall provide that the Payee may
convert the Obligations into the kind and amount of securities, cash or other
assets which it would have owned immediately after the consolidation, merger,
transfer, lease or exchange if it had converted the Note immediately before the
effective date of the transaction.  The assumption agreement shall
provide for adjustments that shall be as nearly equivalent as may be practical
to the adjustments provided for in this Section
4.  The successor company shall mail to Payee a notice briefly
describing the assumption agreement.  If this Paragraph applies, Paragraph 4(a) above
does not apply.

    

    5.           Covenants.

    

    Maker
covenants and agrees that from and after the date hereof and until the date of
repayment in full of the Obligations it shall comply with the following
conditions:

    

    (i)           Maintenance
of Existence and Conduct of Business.  Maker shall, and shall cause
each of its subsidiaries, if any, to (A) do or cause to be done all things
necessary to preserve and keep in full force and effect its legal existence and
rights and maintain its property; and (B) continue to conduct its business so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times.

    

    (ii)           Books
and Records.  Maker shall, and shall cause each of its subsidiaries,
if any, to keep adequate books and records of account with respect to its
business activities.

    
      
        
           

        

         

      

      
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    (iii)           Insurance.  Maker
shall, and shall cause each of its subsidiaries, if any, to maintain insurance
policies insuring such risks as are customarily insured against by companies
engaged in businesses and/or with property similar to those operated and/or
owned or leased by Maker or any such subsidiaries, as the case may be, including
but not limited to, insurance policies covering real property acceptable to
Payee on which Payee is named as an additional insured.  All such
policies are to be carried with reputable insurance carriers and shall be in
such amounts as are customarily insured against by companies with similar assets
and properties engaged in a similar business.

    

    (iv)           Compliance
with Law.  Maker shall, and shall cause each of its subsidiaries, if
any, to comply in all material respects with all federal, state, local and other
laws and regulations applicable to it or any such subsidiaries, as the case may
be, which, if breached, would have a material adverse effect on Maker's or any
such subsidiaries', as the case may be, business or financial
condition.

    

    6.           Reorganization of
Maker.

    

    If Maker
is party to a merger, consolidation or a transaction in which it is not the
surviving or continuing entity or transfers or leases all or substantially all
of its assets, the person who is the surviving or continuing entity or is the
transferee or lessee of such assets shall assume the terms of this Note and the
Obligations.

    

    7.           Representations and
Warranties of Maker.

    

    Maker
represents and warrants that  (i) it is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has all
requisite power to carry on its business as now conducted and to own its
properties and assets it now owns; (ii) it is duly qualified or licensed to do
business as a foreign corporation in good standing in the jurisdictions in which
ownership of property or the conduct of its business requires such qualification
except jurisdictions in which the failure to qualify to do business will have no
material adverse effect on its business, prospects, operations, properties,
assets or condition (financial or otherwise); (iii) it has full power and
authority to execute and deliver this Note, and that the execution and delivery
of this Note will not result in the breach of or default under, with or without
the giving of notice and/or the passage of time, any other agreement, financial
instrument, arrangement or indenture to which it is a party or by which it may
be bound, or the violation of any law, statute, rule, decree, judgment or
regulation binding upon it; (iv) it has filed all reports, schedules, forms,
statements and other documents required to be filed by it with the Securities
and Exchange Commission (the “Commission”) pursuant
to the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange
Act of 1934 (the “Exchange Act”) (the
“SEC
Documents”); (v) the SEC Documents have complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the Commission promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the Commission, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; (vi) as of their respective dates,
Maker’s financial statements included in the SEC Documents complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto, such
financial statements have been prepared in accordance with accounting principles
generally accepted in the United States as in effect from time to time,
consistently applied, during the periods involved (except (a) as may be
otherwise indicated in such financial statements or the notes thereto, or (b) in
the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial condition of Maker as of the respective dates
thereof and the results of its operations and cash flows for the respective
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments); (vii) except as set forth in the SEC Documents,
Maker has not received notification from the Commission, the American Stock
Exchange and/or any federal or state securities bureaus that any investigation
(informal or formal), inquiry or claim is pending, threatened or in process
against Maker and/or relating to any of Maker’s securities; (viii) except as set
forth in the SEC Documents or as disclosed to the purchaser, there is no action,
suit, proceeding, or investigation pending or currently threatened against
Maker, and (ix) it has taken and will take all acts required, including but not
limited to authorizing the signatory hereof on its behalf to execute this Note,
so that upon the execution and delivery of this Note, it shall constitute the
valid and legally binding obligation of Maker enforceable in accordance with the
terms thereof.

    
      
        
           

        

         

      

      
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    8.           Defaults and
Remedies.

    

    (a)           Events
of Default.  The occurrence or existence of any one or more of the
following events or conditions (regardless of the reasons therefor) shall
constitute an "Event of Default" hereunder:

    

    (i)           Maker
shall fail to make any payment of Principal or Interest when due and payable or
declared due and payable pursuant to the terms hereof;

    

    (ii)           Maker
shall fail at any time to be in material compliance with any of the covenants
set forth in Paragraph
3(d) or
Section 5 of
this Note, or shall fail at any time to be in material compliance with or
neglect to perform, keep or observe any of the provisions of this Note, to be
complied with, performed, kept or observed by Maker and such failure shall
remain uncured for a period of five (5) days after notice thereof has been given
by Payee to Maker;

    

    (iii)           Any
representation or warranty made in this Note by Maker shall be untrue or
incorrect in any material respect as of the date when made or deemed
made;

    

    (iv)           Maker
shall have received a written notice of default related to any material
agreement to which it is a party, and such act of default shall remain uncured
after any applicable cure period;

    
      
        
           

        

         

      

      
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    (v)           A
case or proceeding shall have been commenced against Maker or any of its
subsidiaries, if any, (each a “Proceeding Company”) in a court having competent
jurisdiction seeking a decree or order in respect of a Proceeding Company (A)
under Title 11 of the United States Code, as now constituted or hereafter
amended, or any other applicable federal, state or foreign bankruptcy or other
similar law; (B) appointing a custodian, receiver, liquidator, assignee, trustee
or sequestrator (or similar official) of a Proceeding Company, or any of its
properties; or (C) ordering the winding-up or liquidation of the affairs of a
Proceeding Company, and such case or proceeding shall remain unstayed or
undismissed for a period of ten (10) consecutive days or such court shall enter
a decree or order granting the relief sought in such case or proceeding;
or

    

    (vi)           A
Proceeding Company shall (A) file a petition seeking relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other
applicable federal, state or foreign bankruptcy or other similar law; or (B)
consent to the institution of proceedings thereunder or to the filing of any
such petition or to the appointment of or the taking of possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of such Proceeding Company, or any of its properties.

    

    (b)           Remedies.  Upon
the occurrence of an Event of Default specified in Paragraph 8(a) above,
all Obligations then remaining unpaid hereunder shall immediately become due and
payable in full, plus interest on the unpaid portion of the Obligations at the
highest rate permitted by applicable law, without notice to Maker and without
presentment, demand, protest or notice of protest, all of which are hereby
waived by Maker together with all reasonable costs and expenses of the
collection and enforcement of this Note, including reasonable attorney's fees
and expenses, all of which shall be added to the amount due under this
Note.  The rights, powers, privileges and remedies of Payee pursuant
to the terms hereof are cumulative and not exclusive of any other rights,
powers, privileges and remedies which Payee may have under this Note or any
other instrument or agreement.

    

    9.           Acknowledgment of Payee's
Investment Representations.

    

    By
accepting this Note, Payee acknowledges that, neither this Note nor the Common
Stock have been or will be registered under the Act or qualified under any state
securities laws and that the transferability thereof is restricted by the
registration provisions of the Act as well as such state laws.  Based
upon the representations and agreements being made by it herein, this Note is
being and any Common Stock will be issued to it pursuant to an exemption from
such registration provided by Section 4(2) of the Act, and applicable state
securities law qualification exemptions.  Payee represents that it (i)
is an “Accredited Investor” as that term is defined in Rule 501 (a) of
Regulation D promulgated under the Act, and (ii) is acquiring this Note and will
acquire any Common Stock for its own account, for investment purposes only and
not with a view to resale or other distribution thereof, nor with the intention
of selling, transferring or otherwise disposing of all or any part of these
securities for any particular event or circumstance, except selling,
transferring or disposing of them only upon full compliance with all applicable
provisions of the Act, the Securities Exchange Act of 1934, the Rules and
Regulations promulgated by the Commission thereunder, and any applicable state
securities laws.  In addition, Payee understands and acknowledges that
any routine sales of these securities made in reliance upon Rule 144 promulgated
by the Commission under the Act can be effected only in the amounts set forth in
and pursuant to the other terms and conditions, including applicable holding
periods, of that Rule.  Payee further understands and agrees that no
transfer of this Note shall be valid unless made in compliance with the
restrictions set forth on the front of this Note, effected on Maker's books by
the registered holder hereof, in person or by an attorney duly authorized in
writing, and similarly noted hereon as provided in Paragraph 11(h)
below.

    
      
        
           

        

         

      

      
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    10.           Limitation of Interest
Payments.

    

    Nothing
contained in this Note or in any other agreement between Maker and Payee
requires Maker to pay or Payee to accept interest in an amount that would
subject Payee to any penalty or forfeiture under applicable law.  In
no event shall the total of all charges payable hereunder, whether of interest
or of such other charges, which may or might be characterized as interest,
exceed the maximum rate permitted to be charged under the laws of the States of
New Jersey, New York, Delaware, North Carolina, the United States Virgin Islands
or any other state or domestic or other jurisdiction in which either Maker or
Payee may be located or may conduct business.  Should Payee receive
any payment that is or would be in excess of that permitted to be charged under
such laws, such payment shall have been and shall be deemed to have been made in
error and shall automatically be applied to reduce the Principal outstanding on
this Note.

    

    11.           Miscellaneous.

    

    (a)           Effect
of Forbearance.  No forbearance, indulgence, delay or failure to
exercise any right or remedy by Payee with respect to this Note shall operate as
a waiver or as an acquiescence in any default.

    

    (b)           Effect
of Single or Partial Exercise of Right.  No single or partial exercise
of any right or remedy by Payee shall preclude any other or further exercise
thereof or any exercise of any other right or remedy by Payee.

    

    (c)           Governing
Law; Waiver of Right to Jury Trial; Venue.  This Note shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the internal laws of the jurisdiction to be determined by Payee
applicable to contracts made and to be performed entirely within such
jurisdiction.  Maker hereby waives all right to trial by jury in any
action, suit or proceeding brought to enforce or defend any rights or remedies
under this Note, and agrees that any lawsuit brought to enforce or interpret the
provisions of this Note shall be instituted in state or federal courts, as
appropriate, in the jurisdiction to be determined by Payee, and Maker further
agrees to submit to the personal jurisdiction of such court and waives any
objection which it may have, based on improper venue, forum non conveniens or
sufficiency of contact with the forum state, to the conduct of any proceeding in
any such court and waives personal service of any and all process upon it, and
consents that all such service of process be made by mail or messenger directed
to it at the address set forth in Paragraph 11(g) below
and that service so made shall be deemed to be completed upon the earlier of
actual receipt or three (3) days after the same shall have been posted to its
address.  Nothing contained in this Paragraph 11(c)
affects the right of Payee to serve legal process in any other manner permitted
by law or affects the right of Payee to bring any action or proceeding against
Maker or its property in the courts of any other jurisdiction.

    
      
        
           

        

         

      

      
        -10-

        
          

        

      

      
         

      

    

    

    (d)           Headings.  The
headings and captions of the various sections herein are for convenience of
reference only and shall in no way modify any of the terms or provisions of this
Note.

    

    (e)           Loss,
Theft, Destruction or Mutilation of Note.  Upon receipt by Maker of
evidence reasonably satisfactory to it of loss, theft, destruction or mutilation
of this Note, Maker shall make and deliver or caused to be made and delivered to
Payee a new Note of like tenor in lieu of this Note.

    

    (f)           Modification
of Note or Waiver of Terms Thereof Relating to Payee.  No modification
or waiver of any of the provisions of this Note shall be effective unless in
writing and signed by Payee and then only to the extent set forth in such
writing, or shall any such modification or waiver be applicable except in the
specific instance for which it is given.  This Note may not be
discharged orally but only in writing duly executed by Payee.

    

    (g)           Notice.  All
offers, acceptances, notices, requests, demands and other communications under
this Note shall be in writing and, except as otherwise provided herein, shall be
deemed to have been given only when delivered in person, via nationally
recognized overnight courier service, via facsimile transmission if receipt
thereof is confirmed by the recipient, or, if mailed, when mailed by certified
or registered mail prepaid, to the parties at their respective addresses first
set forth above, or at such other address as may be given in writing in future
by either party to the other.

    

    (h)           Transfer.  This
Note shall be transferable only on the books of Maker upon delivery thereof duly
endorsed by Payee or by its duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment, or authority to
transfer.  In all cases of transfer by an attorney, executor,
administrator, guardian, or other legal representative, duly authenticated
evidence of his authority shall be produced.  Upon any registration of
transfer, Maker shall deliver a new Note or Notes to the person entitled
thereto.  Notwithstanding the foregoing, Maker shall have no
obligation to cause Notes to be transferred on its books to any person if, in
the opinion of counsel to Maker, such transfer does not comply with the
provisions of the Act and the rules and regulations thereunder.

    

    (i)           Successors
and Assigns.  This Note shall be binding upon Maker, its successors,
assigns and transferees, and shall inure to the benefit of and be enforceable by
Payee and its successors and assigns.

    
      
        
           

        

         

      

      
        -11-

        
          

        

      

      
         

      

    

    

    (j)           Severability.  If
one or more of the provisions or portions of this Note shall be deemed by any
court or quasi-judicial authority to be invalid, illegal or unenforceable in any
respect, the invalidity, illegality or unenforceability of the remaining
provisions, or portions or provisions contained herein shall not in any way be
affected or impaired thereby.

    

    (k)           Gender.  The
use herein of the masculine pronouns or similar terms shall be deemed to include
the feminine and neuter genders as well and the use of the singular pronouns
shall be deemed to include the plural as well.

    

        IN WITNESS
WHEREOF, Maker has caused this Note to be executed on its behalf by an officer
thereunto duly authorized as of the date set forth above.

     

    
      
        	 	CONVERSION SERVICES
      INTERNATIONAL, INC.	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Lori
      Cohen	 
	 	 	Name: Lori
      Cohen	 
	 	 	Title:  
      President and Chief Executive Officer	 
	 	 	 	 

      

    

    
      
        
           

        

         

      

      
        -12-Employee
Name: Eric Richman

       

      EMPLOYMENT
AGREEMENT

       

      This
EMPLOYMENT AGREEMENT
(this “Agreement”) is made and entered into this April
18, 2008 by and between Eric Richman (the “Executive”)
and PharmAthene, Inc.,
a Delaware corporation (the “Company”).

       

      WITNESSETH:

       

      WHEREAS, the Company desires
to employ the Executive and the Executive desires to accept employment with the
Company subject to the terms and conditions herein agreed upon:

       

      NOW, THEREFORE, in
consideration of the foregoing and of the mutual covenants and obligations
hereinafter set forth, the parties hereto hereby agree as follows:

       

      
        	
                1.

              	
                Employment; Term. The
      Company hereby agrees to employ the Executive and the Executive hereby
      accepts employment with the Company upon the terms and conditions
      hereinafter set forth for the period commencing on April 18, 2008 (the
      “Effective
      Date”) and ending on the first
      anniversary of such date. The term of this Agreement shall be
      automatically extended for an additional year on each anniversary of the
      date hereof unless written notice of non-extension is provided by either
      party to the other party at least 90 days prior to such anniversary. The
      period of the Executive’s
      employment under this Agreement, as it may be terminated or extended from
      time to time as provided herein is referred to as the “Employment
      Period.”

              

      

       

      2.           Position
and Duties.

       

      
        	
                 
      

              	
                a.

              	
                Position and Duties Generally.
      The Executive shall be employed by the Company in the position of
      Senior Vice President, Business Development & Strategie Planning and
      shall faithfully render such executive, managerial, administrative and
      other services as are customarily associated with and incident to such
      position and as the Company may from time to time reasonably require
      consistent with such position. The Executive shall report to the President
      and CEO, David P. Wright.

              

      

       

      
        	
                 
      

              	
                b.

              	
                Other Positions. The
      Executive shall hold such other positions and executive offices with the
      Company and/or of any of the Company’s subsidiaries or affiliates as may
      from time to time be authorized by the Board. The Executive shall not be
      entitled to any compensation other than the compensation provided for
      herein for serving during the Employment Period in any other office or
      position of the Company or any of its subsidiaries or affiliates, unless
      the Compensation Committee specifically approves such additional
      compensation.

              

      

       

      
        	
                 
      

              	
                c.

              	
                Devotion to Employment.
      Except for vacation time taken in accordance with the Company’s
      vacation policy in effect from time to time and in accordance with the
      terms of this Agreement and for absences due to temporary illness, the
      Executive shall be a full-time employee of the Company and shall devote
      full time, attention and efforts during the Employment Period to the
      business of the Company and the duties required of him in his position.
      During the Employment Period, the Executive shall not be engaged in any
      other business activity which, in the reasonable judgment of the
      Board or its designee, conflicts with the duties of the Executive
      hereunder, whether or not such activity is pursued for gain, profit or
      other pecuniary advantage.

              

      

       

      Page 1 of
10

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Employee
Name: Eric Richman

       

      
        	
                3. 

              	
                Compensation;
      Reimbursement.

              

      

       

      
        	
                 
      

              	
                a.

              	
                Base Salary. For the
      Executive’s services, the Company shall pay to the Executive an annual
      base salary of not less than $275,126.00 per annum, payable in equal
      periodic installments according to the Company’s customary payroll
      practices, but no less frequently than monthly. The Executive’s base
      salary shall be subject to review annually by the Compensation Committee
      and shall be subject to increase at the option and sole discretion of the
      Compensation Committee.

              

      

       

      
        
          	
                	
                  b.

                	
                  Bonus. The Executive
      shall be eligible to receive at the sole discretion of the Compensation
      Committee, an annual cash bonus of up to an additional 30% of the
      Executive’s base salary. In addition, the Executive may be eligible for
      additional bonuses at the option and sole discretion of the Compensation
      Committee based upon based upon the achievement of certain pre-determined
      performance milestones.

                

        

      

       

      
        	
              	
                c. 

              	
                Benefits
      Generally.

              

      

       

      
        	
                 
      

              	
                i.

              	
                In
      addition to the salary and cash bonus described above, the Executive shall
      be entitled during the Employment Period to participate in such employee
      benefit plans and programs of the Company, and shall be entitled to such
      other fringe benefits, as are from time to time made available by the
      Company generally to employees of the level, position, tenure, salary,
      age, health and other qualifications of the Executive including, without
      limitation, medical, dental and vision insurance coverage for the
      Executive and the Executive’s dependents, disability, death benefit and
      life insurance and pension plans.

              

      

       

      
        
          	
                	
                  ii.

                	
                  Without
      limiting the generality of the foregoing, the Executive shall be eligible
      for such awards, if any, including stock and stock options under the
      Company’ s 2007 Long-Term Incentive Plan or such other plan as the Company
      may from time to time put into effect as shall be granted to the Executive
      by the Compensation Committee or other appropriate designee of the Board
      acting in its sole
discretion.

                

        

      

       

      
        
          	
                	
                  iii.

                	
                  The
      Executive acknowledges and agrees that the Company does not guarantee the
      adoption or continuance of any particular employee benefit plan and
      participation by the Executive in any such plan or program shall be
      subject to the rules and regulations applicable
  thereto.

                

        

      

       

      
        
          	
                	
                  d.

                	
                  Vacation. The Executive
      shall be entitled to 20 days of vacation in each calendar
      year.

                

        

      

      

      Page 2 of
10

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Employee
Name: Eric Richman

       

      
        	
                 
      

              	
                e.

              	
                Expenses. The Company
      shall reimburse the Executive in aecordance with the practices in effect
      from time to time for other officers or staff personnel of the Company for
      all reasonable and necessary business and travel expenses and other
      disbursements incurred by the Executive for or on behalf of the Company in
      the performance of the Executive’s duties hereunder, upon presentation by
      the Executive to the Company of appropriate supporting
      documentation.

              

      

       

      
        	
                 
      

              	
                f.

              	
                Perquisites. The
      Executive shall be entitled to those perquisites as the Company shall make
      available from time to time to other executive officers of the Company,
      which shall include, without limitation, the costs associated with the use
      of an automobile in an amount not to exceed $1,000 per month and the costs
      for Executive’s use of a cellular telephone and personal digital assistant
      to the extent such equipment is used for business
  purposes.

              

      

       

      
        	
                4.

              	
                Death; Disability. In
      the event that the Executive dies or is incapacitated or disabled by
      accident, sickness or otherwise, so as to render the Executive mentally or
      physically incapable of performing the services required to be performed
      by the Executive under this Agreement for a period that would entitle the
      Executive to qualify for long-term disability benefits under the Company’s
      then-current long-term disability insurance program or, in the absence of
      such a program, for a period of 120 consecutive days or longer (such
      condition being herein referred to as a “Disability”) then (i) in the case of the
      Executive’s death, the Executive’s employment shall be deemed to terminate
      on the date of the Executive’s death and (ii) in the case of a Disability,
      the Company, at its option, may terminate the employment of the Executive
      under this Agreement immediately upon giving the Executive notice to that
      effect. The determination to terminate the Executive in the event of a
      Disability shall be made by the Board or the Board’s designee. In the case
      of a Disability, until the Company shall have terminated the Executive’s
      employment hereunder in accordance with the foregoing, the Executive shall
      be entitled to receive compensation provided for herein notwithstanding
      any such physical or mental
disability.

              

      

       

      
        	
                5.

              	
                Termination
      For Cause. The Company may terminate the employment of the
      Executive hereunder at any time during the Employment Period for “cause”
      (such termination being herein referred to as a “Termination
      for Cause”) by giving the Executive notice
      of such termination, which termination shall be effective on the date of
      such notice or such later date as may be specified by the Company. For
      purposes of this Agreement, “Cause” means (i) the Executive’s
      willful and substantial misconduct that is materially injurious to the
      Company and is either repeated after written notice from the Company
      specifying the misconduct or is continuing and not corrected within 20
      days after written notice form the Company specifying the misconduct, (ii)
      the Executive’s repeated neglect of duties or failure to act which can
      reasonably be expected to affect materially and adversely the business or
      affairs of the Company after written notice from the Company specifying
      the neglect or failure to act, (iii) the Executive’s material breach of
      any of the agreements contained in Sections 11,12, 13 or 14 hereof or of
      any of the Company’s policies, (iv) the commission by the Executive of any
      material fraudulent act with respect to the business and affairs of the
      Company, (v) the Executive’s conviction of (or
      plea of nolo contendere to) a crime constituting a felony, (vi)
      demonstrable gross negligence, or (vii) habitual insobriety or use of
      illegal drugs by the Executive while performing the Executive’s duties
      under this Agreement which adversely affects the Executives Performance of
      the Executive’s duties under this
      Agreement.

              

      

       

      Page 3 of
10

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Employee
Name: Eric Richman

       

      
        	
                6.

              	
                Termination Without Cause.
      The Company may terminate the employment of the Executive hereunder
      at any time without “cause” or fail to extend this Agreement pursuant to
      the terms hereof (such termination being herein referred to as “Termination
      Without Cause”) by giving the Executive notice
      of such termination, upon the giving of which such termination shall take
      effect not later than 30 days from the date such notice is
      given.

              

      

       

      
        	
                7.

              	
                Voluntary Termination by
      Executive. Any termination of the employment of the Executive by
      the Executive otherwise than as a result of death or Disability or for
      Good Reason (as defined below) (such termination being herein referred to
      as “Voluntary
      Termination”). A Voluntary Termination will
      be deemed to be effective immediately upon such
    termination.

              

      

       

      
        	
                8.

              	
                Termination
      by Executive for Good Reason. Any termination of the employment of
      the Executive by the Executive for Good Reason which shall be deemed to be
      equivalent to a Termination without Cause. For purposes of this Agreement
      “Good
      Reason” means  (i) any
      material breach by the Company of any of its obligations under this
      Agreement, (ii)
      any material reduction in the Executive’s duties, authority or
      responsibilities without the Executive’s consent, (iii) any assignment to
      the Executive of duties or responsibilities materially inconsistent with
      the Executive’s position and duties contained in this Agreement without
      the Executive’s consent, (iv) a relocation of the Company’s principal
      executive offices or the Company determination to require the Executive to
      be based anywhere other than within 25 miles of the location at which the
      Executive on the date hereof performs the Executive’s duties; (v) the
      taking of any action by the Company which would deprive the Executive of
      any material benefit plan (including, without limitation, any medical,
      dental, disability or life insurance); or (vi) the failure by the Company
      to obtain the specific assumption of this Agreement by any successor or
      assignee of the Company or any person acquiring substantially all of the
      Company’s assets; provided, however, that the Executive may not terminate
      the Employment Period for Good Reason unless the Executive first provides
      the Company with written notice specifying the Good Reason and providing
      the Company with 20 days in which to remedy the stated
      reason.

              

      

       

      9.           Effect
of Termination of Employment.

       

      
        	
              	
                a.  
      

              	
                Voluntary
      Termination; Termination For Cause. Upon the termination of the
      Executive’s employment as a result of the Executive’s Voluntary
      Termination or a Termination For Cause, the Executive shall not have any
      further rights or claims against the Company under this Agreement except
      the right to receive (i) the unpaid portion of the base salary provided
      for in Section 3(a) hereof, computed on a pro rata basis to the date of
      termination, (ii) payment of the Executive’s accrued but unpaid amounts
      and extension of applicable benefits in accordance with the terms of any
      incentive compensation, retirement, employee welfare or other employee
      benefit plans
      or programs of the Company in which the Executive is then participating in
      accordance with the terms of such plans or programs, and (iii)
      reimbursement for any expenses for which the Executive shall not have
      theretofore been reimbursed as provided in Section 3
      hereof.

              

      

       

      Page 4 of
10

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Employee
Name: Eric Richman

       

      
        	
                 
      

              	
                b.

              	
                Termination Without Cause;
      Termination for Good Reason. Upon the termination of the
      Executive’s employment as a result of a Termination Without Cause or for
      Good Reason, the Executive shall not have any further rights or Claims
      against the Company under this Agreement except the right to reeeive (i)
      the payments and other rights provided for in Section 9(a) hereof and (ii)
      severance payments in the form of a continuation of the Executive’s base
      salary as in effect immediately prior to such termination for a period of
      12 (twelve) months following the effective date of such termination. To
      the extent that severance payments shall be payable under this Agreement
      such payments shall be in consideration for and only after the Executive
      executes a General Release containing terms reasonably satisfactory to the
      Company.

              

      

       

      
        	
                 
      

              	
                c.

              	
                Death and Disability.
      Upon the termination of the Executive’s employment as a result of
      death or Disability, neither the Executive nor the Executive’s
      beneficiaries or estate shall have any further rights or claims against
      the Company under this Agreement except the right to reeeive the payments
      and other rights provided for in Section 9(a)
  hereof.

              

      

       

      
        	
                 
      

              	
                d.

              	
                Forfeiture of Rights. In
      the event that, subsequent to termination of employment hereunder, the
      Executive (i) breaches any of the provisions of Sections 11, 12,13 or 14
      hereof or (ii) makes or facilitates the making of any adverse public
      Statements or disclosures with respect to the business or securities of
      the Company, all payments and benefits to which the Executive may
      otherwise have been entitled shall immediately terminate and be forfeited,
      and any portion of such amounts as may have been paid to the Executive
      shall forthwith be returned to the
Company.

              

      

       

      
        	
                10.  

              	
                Disclosure of Confidential
      Information. The Executive shall not, directly or indirectly, at
      any time during or after the Employment Period, disclose to any person,
      firm, corporation or other business entity, except as required by law, or
      use for any purpose except in the good faith Performance of the
      Executive’s duties to the Company, any Confidential Information (as herein
      defined). For purposes of this Agreement, “Confidential
      Information” means all trade secrets and
      other non-public Information of a business, financial, marketing,
      technical or other nature pertaining to the Company or any subsidiary,
      including Information of others that the Company or any subsidiary has
      agreed to keep confidential; provided, however, that Confidential
      Information shall not include any Information that has entered or enters
      the public domain (other than through breach of the Executive’s
      obligations under this Agreement) or which the Executive is required to
      disclose by law or legal process. Upon the Company’s request at any time,
      the Executive shall immediately deliver to the Company all materials in
      the Executive’s possession which contain Confidential
      Information.

              

      

       

      Page 5 of
10

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Employee
Name: Eric Richman

       

      
        	
                11. 

              	
                Restrictive
      Covenant.

              

      

       

      
        	
                 
      

              	
                a.

              	
                Term of Restrictive Covenant.
      The Executive hereby acknowledges and recognizes that, during the
      Employment Period, the Executive shall be privy to trade secrets and
      Confidential Information critical to the Company’s business and the
      Executive further acknowledges and recognizes that the Company would find
      it extremely difficult or impossible to replace the Executive and,
      accordingly, the Executive agrees that, in consideration of the benefits
      to be received by the Executive hereunder, the Executive shall not, from
      and after the date hereof, throughout the Employment Period, and for a
      period of 12 months following the termination of the Employment Period (i)
      directly or indirectly engage in the development, production, marketing or
      sale of products that compete (or, upon commercialization, would compete)
      with products of the Company being developed (so long as such development
      has not been abandoned), marketed or sold at the time of the termination
      of the Employment Period (such business or activity being herein referred
      to as a “Competing
      Business”) whether such engagement shall
      be as an officer, director, owner, employee, partner, affiliate or other
      participant in any Competing Business, (ii) assist others in engaging in
      any Competing Business in the manner described in the foregoing clause
      (i), or (iii) induce other employees of the Company or any subsidiary
      thereof to terminate their employment with the Company or any subsidiary
      thereof or engage in any Competing Business or hire any employees of the
      Company or any subsidiary unless such persons have not been employees of
      the Company for at least 12 months.

              

      

       

      
        
          	
                	
                  b.

                	
                  Sufficient Consideration.
      The Executive understands that the foregoing restrictions may limit
      the ability of the Executive to earn a livelihood in a business similar to
      the business of the Company, but nevertheless believes that the Executive
      has received and shall receive sufficient consideration and other
      benefits, as an employee of the Company and as otherwise provided
      hereunder, to justify such restrictions which, in any event (given the
      education, skills and ability of the Executive), the Executive believes
      would not prevent the Executive from earning a
  living.

                

        

      

       

      
        	
                12.

              	
                Non-Disparagement. The
      Executive shall not engage in conduct, through word, act, gesture or other
      means, or disclose any Information to the public or any third party which
      (i) directly or indirectly discredits or disparages in whole or in part
      the Company, its subsidiaries, divisions, affiliates and/or successors as
      well as the products and the respective officers, directors, stockholders
      and employees of each of them; (ii) is detrimental to the reputation,
      character or Standing of these entities, their products or any of their
      respective officers, directors, stockholders and/or employees; or (iii)
      which generally reflects negatively on the management decisions, strategy
      or decision-making of these
entities.

              

      

      

      Page 6 of
10

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Employee
Name: Eric Richman

       

      
        	
                13.

              	
                Company Right to Inventions.
      The Executive shall promptly disclose, grant and assign to the
      Company, for its sole use and benefit, any and all inventions,
      improvements, technical information and suggestions relating in any way to
      the business of the Company which the Executive may develop or acquire
      during the Employment Period (whether or not during usual working hours),
      together with all patent applications, letters patent, copyrights and
      reissues thereof that may at any time be granted for or upon any such
      invention, improvement or technical information. In connection therewith:
      (i) the Executive shall, without charge, but at the expense of the
      Company, promptly at all times hereafter execute and deliver such
      applications, assignments, descriptions and other instruments as may be
      necessary or proper in the opinion of the Company to vest title to any
      such inventions, improvements, technical information, patent applications,
      patents, copyrights or reissues thereof in the Company and to enable it to
      obtain and maintain the entire right and title thereto throughout the
      world, and (ii) the Executive shall render to the Company, at its expense
      (including a reasonable payment for the time involved in case the
      Executive is not then in its employ), all such assistance as it may
      require in the prosecution of applications for said patents, copyrights or
      reissues thereof, in the prosecution or defense of interferences which may
      be declared involving any said applications, patents or copyrights and in
      any litigation in which the Company may be involved relating to any such
      patents, inventions, improvements or technical
  information.

              

      

       

      
        
          
            	
                    14.

                  	
                    Enforcement. It is the
      desire and intent of the parties hereto that the provisions of this
      Agreement be enforceable to the füllest extent permissible under the laws
      and public policies applied in each jurisdiction in which enforcement is
      sought. Accordingly, to the extent that a restriction contained in this
      Agreement is more restrictive than permitted by the laws of any
      jurisdiction where this Agreement may be subject to review and
      interpretation, the terms of such restriction, for the purpose only of the
      operation of such restriction in such jurisdiction, shall be the maximum
      restriction allowed by the laws of such jurisdiction and such restriction
      shall be deemed to have been revised accordingly
  herein.

                  

          

        

      

       

      
        	
                15. 

              	
                Remedies;
      Survival.

              

      

       

      
        	
                 
      

              	
                a.

              	
                Injunctive Relief. The
      Executive acknowledges and understands that the provisions of the
      covenants contained in Sections 11, 12, 13 and 14 hereof, the violation of
      which cannot be accurately compensated for in damages by an action at law,
      are of crucial importance to the Company, and that the breach or
      threatened breach of the provisions of this Agreement would cause the
      Company irreparable harm. In the event of a breach or threatened breach by
      the Executive of the provisions of Sections 11, 12, 13 or 14 hereof, the
      Company shall be entitled to an injunction restraining the Executive from
      such breach. Nothing herein contained shall be construed as prohibiting
      the Company from pursuing any other remedies available for any breach or
      threatened breach of this
Agreement.

              

      

       

      
        	
                 
      

              	
                b.

              	
                Survival.
      Notwithstanding anything contained in this Agreement to the
      contrary, the provisions of the Sections 3, 9, and 11 through 17 hereof
      shall survive the expiration or earlier termination of this Agreement
      until, by their terms, such provisions are no longer
      operative.

              

      

       

      
        	
                16.  

              	
                Notices. Notices and
      other communications hereunder shall be in writing and shall be delivered
      personally or sent by air courier or first class certified or registered
      mail, return receipt requested and postage prepaid, addressed as
      follows:

              

      

       

      Page 7 of
10

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Employee
Name: Eric Richman

       

      if to the
Company:

       

      PharmAthene,
Inc.

      One Park
Place, Suite 450

      Annapolis,
Maryland 21401

       

      with a
copy to: 

      McCarter
& English, LLP 

      Four
Gateway Center 

      100
Mulberry Street 

      Newark,
New Jersey 07102 

      Attention:
Jeffrey Baumel, Esq.

       

      if to the
Executive to: 

       

      with a
copy to :

       

      All
notices and other communications given to any party hereto in aecordance with
the provisions of this Agreement shall be deemed to have been given on the date
of delivery, if personally delivered; on the business day after the date when
sent, if sent by air courier; and on the third business day after the date when
sent, if sent by mail, in each case addressed to such party as provided in this
Section 16 or in accordance with the latest unrevoked direction from such
party.

       

      
        
          	
                  18.

                	
                  Binding Agreement; Benefit.
      The provisions of this Agreement shall be binding upon, and shall
      inure to the benefit of, the respective heirs, legal representatives and
      successors of the parties
hereto.

                

        

      

       

      
        
          	
                  19.

                	
                  Governing Law; Jurisdiction.
      This Agreement shall be governed by, and construed and enforced in
      accordance with, the laws of the State of Maryland applicable to contract
      made and to be performed therein. Any action to enforce any of the
      provisions of this Agreement shall be brought in a court of the State of
      Maryland or in Federal court located within that State. The parties
      consent to the jurisdiction of such courts and to the service of process
      in any manner provided by Maryland law. Each party irrevocably waives any
      objection which it may now or hereafter have to the laying of the venue of
      any such suit, action or proeeeding brought in such court and any claim
      that such suit, action or proeeeding brought in such court has been
      brought in an inconvenient forum and agrees that service of process in
      accordance with the foregoing shall be deemed in every respect effective
      and valid personal service of process upon such
  party.

                

        

      

       

      Page 8 of
10

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Employee
Name: Eric Richman

       

      
        	
                20.

              	
                Waiver of Breach. The
      waiver by either party of a breach of any provision of this Agreement by
      the other party must be in writing and shall not operate or be construed
      as a waiver of any subsequent breach by such other
  party.

              

      

       

      
        	
                21.

              	
                Entire Agreement; Amendments.
      This Agreement contains the entire agreement between the parties
      with respect to the subject matter hereof and supersedes all prior
      agreements or understandings among the parties with respect thereof. This
      Agreement may be amended only by an agreement in writing signed by the
      parties hereto.

              

      

       

      
        	
                22.

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

              

      

       

      
        	
                23.

              	
                Severability. Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent
      of such prohibition or unenforceability without invalidating the remaining
      provisions hereof, and any such prohibition or unenforceability in any
      jurisdiction shall not invalidate or render unenforceable such provision
      in any other jurisdiction.

              

      

       

      
        	
                24.

              	
                409A Compliance. The
      intent of the Executive and the Company is that the severance and other
      benefits payable to the Executive under this Agreement not be deemed
      “deferred compensation” under, and shall otherwise comply with, Section
      409A of the Internal Revenue Code of 1986, as amended. The Executive and
      the Company agree to use reasonable best efforts to amend the terms of
      this Agreement from time to time as may be necessary to avoid the
      imposition of liability under Section 409A of the Code in any manner that
      does not materially alter the substantive rights and obligations of the
      parties hereunder.

              

      

       

      
        	
                25.

              	
                Executive’s Acknowledgement.
      The Executive acknowledges (a) that the Executive has had the
      opportunity to consult with independent counsel of his own choice
      concerning this Agreement and (b) that the Executive has read and
      understands the Agreement, is fully aware of its legal effect and has
      entered into it freely based on the Executive’s own
    judgment.

              

      

       

      
        	
                26.

              	
                Assignment. This
      Agreement is personal in its nature and the parties hereto shall not,
      without the consent of the other, assign or transfer this Agreement or any
      rights or obligations hereunder; provided, that the provisions hereof
      shall inure to the benefit of, and be binding upon, each successor of the
      Company, whether by merger, consolidation, transfer of all or
      substantially all of its assets or
otherwise.

              

      

       

      
        	
                27.

              	
                Counterparts. This
      Agreement may be executed in two or more counterparts, each of which shall
      for all purposes constitute one agreement which is binding on all of the
      parties hereto.

              

      

       

      Page 9 of
10

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Employee
Name: Eric Richman

       

      IN WITNESS WHEREOF, the
parties have duly executed this Agreement as of the date first above
written.

       

      
        
          
            
              	
                      EXECUTIVE

                    
	
                           

                      /s/
      Eric Richman  

                    
	
                      Eric
      Richman

                    
	 
      
	
                      PHARMATHENE,
      INC.

                    
	 
      	 
      
	
                      By

                    	/s/
      David P. Wright   
	
                      Name:
      David P. Wright

                    
	
                      Title: President and Chief Executive
    Officer

                    

            

          

        

      

      

      Page 10
of 10

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