Document:

Exhibit 10.35

 

PRIVATE BETWEEN THE PARTIES

 

PharmAthene, Inc.

Confidential Materials Omitted and Filed Separately
with the

Securities and Exchange Commission

Confidential Portions denoted by [***]

 

MANUFACTURING LICENCE AGREEMENT

 

Between

 

THE SECRETARY OF STATE FOR DEFENCE

 

as represented by

 

THE DEFENCE SCIENCE AND TECHNOLOGY LABORATORY (Dstl)

 

And

 

AVECIA LIMITED

 

in respect of

 

[***]

VACCINE

 

TECHNOLOGY

 

	
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THIS AGREEMENT is made the 20th June 2006

BETWEEN

 

THE SECRETARY OF STATE FOR DEFENCE acting
through the Defence Science and Technology Laboratory of [***]

 

AND

 

AVECIA LIMITED a
company registered in England under the number 3730853 and having its
registered office at Hexagon Tower, Blackley, Manchester M9 8ZS, acting through
its Avecia Biotechnology business at PO Box 2, Belasis Avenue, Billingham TS23
1YN (hereinafter referred to as the “Licensee”)
of the second part 

 

hereinafter referred to collectively as the “Parties” or in the singular as a “Party”. 

 

WHEREAS:

 

(A)         [***]

 

(B)         Under
contracts between the Licensor and the Licensee dated 28 June 2000
(Licensor reference [***]) and 21 November 2003 (Licensor reference [***])
(hereinafter referred to as the “Development
Contracts”), the Licensor has made the Background IP available to
the Licensee to enable the Licensee to develop a production process for the
Vaccine and to manufacture batches of the Vaccine for use by the Licensor in
clinical trials.

 

(C)         The
Licensor and the Licensee have entered a further contract dated 10th May 2006
(Licensor reference [***]) under which the Licensor is intended to carry out
work in relation to validation of the manufacturing process for production of
the Vaccine 

 

	
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(hereinafter referred to as the “Process
Validation Contract”). The United States and Canadian Governments
co- funded, with the Licensor, the Process Validation Contract. As a consequence
of carrying out work under the Process Validation Contract, the Licensee may
develop further intellectual property which (i) relates solely to antigens
and Vaccine or any process specific modification to antigens and Vaccine, or (ii) relates
to the process for manufacture of the antigens and Vaccine (“Process Validation
Foreground IP”). For the avoidance of doubt, Process Validation Foreground IP
does not include intellectual property developed under the Process Validation
Contract which relates to any process suitable for manufacturing products
generally. By virtue of the conditions of the Process Validation Contract, the
Licensor is the owner of certain Process Validation Foreground IP.

 

(D)         By virtue of the
conditions of the Development Contracts, the Licensor is also the proprietor of
certain foreground intellectual property (hereinafter referred to as the “Foreground
IP”) relating to the Vaccine and generated by the Licensee during the Licensee’s
performance of the Development Contracts.

 

(E)         The Licensor has
permitted the Licensee to use the Background IP and the Foreground IP,
including the patents and patent applications listed in the Schedule to this
Agreement, and any equivalents thereto, and any associated know-how and any of
the Process Validation Foreground IP owned by the Authority under the Process
Validation Contract in the event of any such intellectual property arising
(hereinafter together referred to as the “Vaccine IP”) to perform for the
National Institute of Allergy and Infectious Diseases (hereinafter referred to
as “NIAID”), a part of the Government of the United States of America
(hereinafter referred to as the “US Government”), a contract having reference
number [***] for inter alia the
development of a prototype recombinant protective antigen plague vaccine and
the production of trials doses thereof (hereinafter referred to as the “NIAID
Contract”).

 

(F)         The Licensor has also
undertaken that if, subsequent to the NIAID Contract, the Licensee is awarded
contracts by the US Government for the further development, manufacture and
supply of [***], the Licensor will grant the Licensee a licence to use the
Vaccine IP on fair and reasonable commercial terms in the performance of said
contracts. Furthermore, the Licensee desires to pursue licensure of the Vaccine
in other territories in addition to the United States of America and therefore
the Licensee desires a licence to use the Vaccine IP to fulfil manufacturing
and/or supply contracts for customers in addition to the  US  Government.

 

(G)         The Licensor is
willing to permit the Licensee to use the Vaccine IP for the purposes set out
in Recital F above subject to certain terms and conditions.

 

	
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(H)         The Licensor has
undertaken to the United States and Canadian Governments to collect a levy in
respect of the Process Validation Foreground IP whose generation was funded
under the Process Validation Contract.

 

NOW IT IS HEREBY AGREED BETWEEN THE PARTIES
AS FOLLOWS:-

 

1.           DEFINITIONS AND
INTERPRETATION

 

1.1         For the purposes of this
Agreement, unless the context clearly or necessarily indicates otherwise, the
following words and phrases shall have the meanings set forth below:

 

“Agreement” shall mean this manufacturing licence agreement.

 

[***]

 

“Calendar Quarter” shall mean any period of three months ending on 31 March or
30 June or 30 September or 31 December in any year.

 

“Commencement Date” shall mean the day and year first above written.

 

“Net Sales Price” shall mean the actual sale price invoiced by the
Licensee or, where applicable, a Partner of the Licensee less any separate
charges identified for packaging, transportation, insurance and sales taxes.

 

“Supply Contract” shall mean a contract or contracts for the production
and/or supply of Plague Vaccine Doses.

 

“Partner” shall mean any third party organisation which Avecia elects
to involve in the performance of a Supply Contract.

 

“Third Party” shall mean any person other than the Governments of the
United Kingdom, the United States of America and Canada.

 

1.2         The singular shall include the plural and vice
versa, and the masculine shall include the feminine or the neuter gender and
vice versa.

 

1.3         Unless the context otherwise indicates,
references to Articles and Clauses and Schedule, are to articles and clauses
and the Schedule of this Agreement.

 

1.4         Headings to Articles in this Agreement are
included for ease  of reference
only 

 

	
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and shall not have any effect on the construction or the interpretation
of this Agreement.

 

1.5         References in this Agreement to any statute or
statutory provision shall include any statute or statutory provision which
amends, extends, consolidates or replaces the same and shall include any
orders, regulations, instruments or other subordinate legislation made under
the relevant statute.

 

2. GRANT OF RIGHTS BY
THE LICENSOR

 

2.1         In consideration for the payments to be made
by the Licensee to the Licensor under the provisions of Article 3 below,
the Licensor, warranting that he has the right to do so, hereby grants and the
Licensee hereby accepts a non-exclusive licence to use the Vaccine IP to
further develop, manufacture, use, keep, import, export, supply or offer to
supply, or, subject to Clause 2.6 and Article 3 below, have a Partner
manufacture, use, keep, import, export, supply or offer to supply, [***] in
performance of Supply Contracts.

 

2.2         Without prejudice to the provisions of Clause
2.3 and 2.4 below the Licensor undertakes that it shall not for the shorter of
a period of 3 years from the date of this Agreement or whilst this licence
remains in effect grant a licence relating to the Vaccine IP to any third party
providing that the Licensee is diligent and makes reasonable progress, as
determined by the Licensor, in obtaining licensure approval of the relevant US
Government regulatory authorities or any authorities acting on behalf of the US
Government to supply and use the Vaccine [***] throughout the US and in
particular for human use.

 

2.3         For the avoidance of any doubt, the Licensor and any other Department or
Agency of the UK Government shall retain the right at any time to use, or
authorise others to use, the Vaccine IP for any UK Government purpose or
otherwise to the extent customary pursuant to standard UK MOD contracting
procedures, and to dispose of products made in consequence of such use but no
longer required; and nothing in this Agreement shall be construed as in any way
limiting or derogating from such retained rights, nor from any rights of the
Crown arising under any other agreement or contract or provision of law.

 

2.4         The restrictions imposed by Clause 2.2 above
shall not prevent or restrict the use of any UK Government patent by or on
behalf of the US Government where such use is under the “Agreement between the
Government of the United Kingdom of Great Britain and Northern Ireland and the
Government of the United States of America to facilitate the interchange of
patents and technical information for defence purposes” done in London on 19th
January 1953. Furthermore the restrictions imposed by Clause 2.2 above
shall not be deemed to prevent or hinder the UK Government from authorising any
foreign Government to use and have used the Vaccine IP where such use is in 

 

	
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furtherance of any international co-operative arrangement including but
not limited to Memoranda of Understandings involving two or more of the
Governments of the United Kingdom the United States of America and Canada.

 

2.5         Save as permitted under Clause 2.6 below, the
Licence granted under this Agreement is personal to the Licensee and as such
shall not be assigned, sub-licensed, mortgaged or in any way dealt with by the
Licensee without the prior written consent of the Licensor, which consent shall
not be unreasonably withheld, provided that the Licensee may assign the Licence
and this Agreement without consent in connection with a genuine business re-organisation
or to any corporation, association or other business entity which directly or
indirectly controls, is controlled by or is under common control with the
Licensee. For the avoidance of doubt, consent shall be deemed to be reasonably
withheld where the Chief Executive of Dstl receives notice from an appropriate
authority at the Ministry of Defence or other UK Government Department that
assignment to such person would damage the essential public or national
interest. Any assignment, sub-licensing or mortgaging of this Agreement by the
Licensee otherwise than as permitted by this Clause 2.5 without the prior
written consent of the Licensor shall immediately invalidate this Agreement and
the Licence granted hereunder.

 

2.6         Notwithstanding the provisions of Clause 2.5
above, the Licensee shall be entitled to employ Partners to assist the Licensee
in its performance of Supply Contracts, subject to the provisions of Article 3
below.

 

2.7         Save as expressly stated under this Article 2
the Licensee is not authorised to grant any rights to use the Vaccine IP to any
third party.

 

2.8         The Licensee may request within 6 months of
the expiry of the period granted under Clause 2.2 above that such period should
be extended. The Licensee in support of an extension will provide the Licensor
with clear information that is sufficient for the Licensor to assess the
progress made to date in obtaining licensure of the [***] and such further work
that might be needed to achieve licensure and the timeframes within which it is
reasonable that the further work be completed and licensure obtained. Provided
the Licensor is content that the Licensee has been diligent and has made
sufficient progress in obtaining licensure then the Licensor may at his sole discretion
extend the period for such additional time as he deems reasonable to achieve
licensure. If licensure is achieved whether within the original period under
Clause 2.2 above or within an extended period as may be granted under this
Clause 2.8 then the Licensor will, subject to any legal constraints and the
Licensee’s continuing conformance to this Agreement, further extend the period
indefinitely but only in respect of the US or such other territories that
licensure is achieved by the Licensee.

 

	
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2.9         Should the Licensor wish to abandon a patent,
patent application or equivalent forming part of the Vaccine IP, it shall offer
it to the Licensee, which shall be entitled to accept assignment the said
patent, patent application or equivalent at the Licensee’s expense but
otherwise without charge and, if such assignment is effected, the Licensee
shall be responsible for all further expenditure thereon. The Licensor shall retain
a free non-exclusive licence for the purposes set out in Clauses 2.3 and 2.4
above.

 

3. LICENCE PAYMENTS

 

3.1         In consideration for the grant of rights by
the Licensor in Article 2 above, the Licensee shall pay to the Licensor a
royalty on each and every Plague Vaccine Dose, equal to the greater of:

 

3.1.1 [***] of the Net Sales Price of the Plague Vaccine Dose;

 

3.1.2 [***] of the Net Sales Price of any
Plague Vaccine Dose where such sale is to a Third Party and when Process
Validation Foreground IP has been used in the process for production of such
Plague Vaccine Dose; or

 

3.1.3 [***]

 

Notwithstanding the foregoing, no royalties shall be payable in respect
of any samples of [***] which are provided by Avecia for clinical, product
development, marketing development or bona fide study purposes.

 

3.2         Payment of the royalty as set out in Clause
3.1 discharges all obligations of the Licensee to pay any levies in respect of
the support given by the Licensor and the US and Canadian Governments pursuant
to the Process Validation Contract and, for the avoidance of doubt, upon
execution of this Agreement by the Licensor and the Licensee, clause 6.10 of
the Process Validation Contract shall no longer apply.

 

3.3         If the UK Ministry of Defence, US Department
of Defence or the Department of Defence of the Government of Canada claims that
[***] should be supplied free of royalties in respect of patents under existing
UK or international arrangements and seeks a waiver of that part of the royalty
attributable to patents forming part of the Vaccine IP, the Licensee shall
inform the Licensor. If it is agreed that such supply should be free of patent
royalties an appropriately reduced royalty will be settled which represents the
contribution of the patents to the Vaccine IP concerned.

 

3.4         The royalty in respect of a [***] shall become
payable by the Licensee under this Agreement when the cost of the [***] is 

 

	
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invoiced. Where the cost of a [***] is payable in two or more
installments, the invoice for each installment will be considered separately
for the payment of royalties, subject always to the total royalty payable being
in respect of the [***] not exceeding the maximum royalty set out in Clause
3.1.3 above.

 

3.5         The payments called
for in Clause 3.1 above will fall due at the end of each Calendar Quarter and
will be payable within sixty days of the due date, or within thirty (30) days
of receipt of the Licensors invoice for same, whichever is the later, in
accordance with the instructions contained in Clauses 3.5 and 3.6 below.

 

3.6         All payments due to
the Licensor shall be paid in accordance with the instructions issued with the
relevant invoice, and all statements, payments and correspondence relating to
payments hereunder shall quote the Licensor’s reference [***].

 

3.7         All payments due to the Licensor shall be paid
in pounds Sterling plus, if applicable, VAT at the UK rate prevailing at the
time of payment. Where a payment due is in a currency other than pounds
Sterling, the rate of exchange to be applied shall be the rate of exchange
applied by the Bank of England on the date of the relevant invoice for [***] supplied
by the Licensee.

 

3.8         Without prejudice to the provisions of Clause
12.2, if the Licensee fails to make any payment to the Licensor within the time
specified in this Agreement, then the Licensee shall be liable to pay interest
on the outstanding payment calculated at [***] per annum with effect from the
date on which the payment originally fell due, where [***].

 

3.9         Within thirty (30) days of the end of each
Calendar Quarter, the Licensee shall submit or cause to be submitted to the
Licensor a statement in writing [including, where appropriate, a nil return]
recording the calculation of royalties payable under this Agreement in respect
of the said Calendar Quarter, and showing, in particular:

 

3.9.1 the quantity of [***] which has been
supplied by the Licensee and its Partners during the Calendar Quarter;

 

3.9.2 the Net Invoice Price of each [***]
sold by the Licensee and its Partners during the Calendar Quarter;

 

3.9.3 the total amount of royalties due and
payable on the [***] in accordance with the provisions of Clause 3.1 above.

 

3.10       Subject to the provisions of Clause 3.11 below,
the Licensee shall keep at its usual place of business proper records and books
of account showing the quantities and Net Sales Price of all [***] supplied by
the 

 

	
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Licensee and its Partners under this Agreement and such records and
books shall be kept separate from any records and books not relating solely to
the [***]. Such records and books of account shall contain such true entries
(complete in every particular) as may be necessary or proper for enabling the
amount of the payments due to the Licensor under this Agreement to be
ascertained. At the reasonable request of the Licensor, the Licensee shall, and
shall ensure that its Partners shall, make the appropriate records and books of
account available to inspection at all times during office hours by the
Licensor or his duly authorised agent or representative who shall be entitled
to take copies of or extracts from the same. In addition to the foregoing, the
Licensee shall also provide the Licensor or its duly authorised agent or
representative with any other information which may be necessary or appropriate
with a view to determining or verifying the royalties due under this Agreement.
In the event that such inspection or audit should reveal an underreporting in
the royalties payable under this Agreement, the Licensee shall immediately make
up any shortfall and, in the event that the said shortfall is more that [***],
shall reimburse the Licensor in respect of any professional charges incurred
for such audit or inspection.

 

3.11       The books of account referred to in Clause 3.10
above shall be kept for a minimum of four years after any relevant transaction
and thereafter in accordance with applicable commercial law.

 

3.12       In accordance with the provisions of Article 10
(Consequences of Termination), the provisions of this Article 3 shall
continue to apply notwithstanding termination or expiry of this Agreement until
all royalties properly owed by the Licensee to the Licensor in accordance with
this Article 3 have been paid to the Licensor.

 

3.13       In the event that the Licensor grants a licence
to a third party for the manufacture and supply of [***] on more favourable
terms than those herein, the Licensor shall offer to amend the terms of this
licence to be no less favourable than those granted to the third party.

 

3.14       In the event that any of the patents, patent
applications or equivalents forming part of the Vaccine IP expire or are
abandoned or revoked, or are reduced in scope such that operation within the
scope of a patent claim comprising the Vaccine IP is no longer necessary, but
it remains necessary for the Licensee to use some or all of the know-how making
up the remainder of the Vaccine IP in order to fulfill a Supply Contract, then
Avecia shall have the right to request a meeting of the parties at which the
parties shall negotiate in good faith with a view to agreeing upon an
appropriate reduction to the  royalty
payable under this Agreement.

 

4. OWNERSHIP, AND PROTECTION, OF INTELLECTUAL
PROPERTY

 

4.1           Both of the Parties acknowledge that nothing
contained in this Agreement

 

	
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shall affect the ownership of any intellectual property existing at the
Commencement Date and which is owned by either of the Parties.

 

4.2         Both the Parties acknowledge that nothing
contained in this Agreement shall effect the arrangements for the protection of
information which are contained in the Development Contracts.

 

4.3         The Licensee shall promptly and fully notify
the Licensor in writing of:

 

4.3.1 any actual, threatened or suspected
infringement by any third party of the Vaccine IP;

 

4.3.2 any proceedings commenced or threatened
against the Licensee in which it is alleged that the rights licensed by the
Licensor are invalid and/or infringe third party rights; 

which come to the notice of the Licensee
during the term of this Agreement.

 

4.4         In the event that the Licensor decides (in the
circumstances referred to in Clause 4.3.1 above) to institute any proceedings
or (in the circumstances referred to in Clause 4.3.2 above) to defend any
proceedings instituted against the Licensee, the Licensee shall render to the
Licensor at the Licensor’s expense such reasonable assistance in connection
with such proceedings as the Licensor may request.

 

4.5         In the event that during the term of this
Agreement when the provisions of Clause 2.2 above shall apply a third party is
found to be infringing any of the patents which form part of the Vaccine IP,
then the Licensor and the Licensee agree to review the effect that the
infringement may have on the Licensee’s business and consider the option of the
Licensee negotiating a sub-licence with the infringing party on fair and
reasonable terms as a way to resolve the infringement issue.

 

4.6         Nothing herein shall oblige the Licensor to
institute proceedings in the circumstances referred to in Clause 4.3.1 above,
or to defend any proceedings in the circumstances referred to in Clause 4.3.2
above. In the event that the Licensor decides not to institute or defend any
proceedings in the circumstances referred to in Clauses 4.3.1 or 4.3.2 above,
the Licensor will allow the Licensee, if necessary in the Licensor’s name, to
institute or defend such proceedings at its own expense with the Licensor’s
permission, in which event:

 

4.6.1      the Licensee shall have sole control of the
proceedings and shall take or conduct such action in its discretion in any way
that it deems necessary or appropriate; and

 

4.6.2      the Licensor shall render to the Licensee at the
Licensee’s expense 

 

	
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such reasonable assistance (including performing such acts and executing
such documents) in connection with such proceedings, as the Licensee may
request; and

 

4.6.3      the Licensee shall be responsible for all costs
and expenses arising therefrom and shall be solely responsible for any damages
payable to the third party and for satisfying any award or judgment in favour
of any third party and shall be solely entitled to the full benefit of all
remedies awarded including but not limited to all damages and other sums which
may be paid or awarded as a result thereof.

 

4.7         Provided that the Parties are not engaged in
negotiating a sub-licence with an infringing third party under Clause 4.5
above, in the event that at any time during the term of this Agreement the
Licensee is able to establish to the reasonable satisfaction of the Licensor
that a third party is infringing any of the patents which form part of the
Vaccine IP in any country or countries of the world where such patents have
force, and that such infringement can be shown to be having a significant
impact upon sales of the Licensee’s own [***] (for example, such infringement
has an impact on sales which the Licence could have made but for such
infringement) in such countries, and the Licensor is unable or unwilling within
a reasonable period to take such action as may be necessary to settle or
prevent such infringement, then the royalty payable under this Agreement by the
Licensee in respect of such patents in such countries shall cease to be payable
until the date on which such infringement is settled or prevented.

 

4.8         The cessation of royalties under Clause 4.7
above shall apply in respect of sales of [***] by the Licensee in the relevant
country or countries from the date on which the Licensee is able to establish
the infringement in accordance with Clause 4.7 above.

 

5. WARRANTY AND LIABILITY

 

5.1         Nothing contained in this Agreement or in any
licence granted hereunder shall be construed as or deemed to be:-

 

5.1.1     a representation or warranty that any patents
contained in the Vaccine IP are valid, or that any use of the Vaccine IP will
not infringe any intellectual property rights owned by a third party anywhere
in the world; or

 

5.12      an indemnity against costs, damages, royalties,
liabilities, expenses or other payments arising out of any proceedings based on
infringement brought against the Licensee or customers, agents or distributors
of the Licensee;

 

	
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and any such representation, warranty or indemnity is hereby expressly
excluded.

 

5.2         The Licensee shall at all times indemnify and
keep indemnified the Licensor against all costs, claims, damages or expenses
incurred by the Licensor or for which the Licensor may become liable with
respect to any product liability claim relating to any products supplied or put
into use by the Licensee pursuant to this Agreement. The Licensee shall
maintain sufficient product liability insurance coverage to cover its
commitments under this Agreement.

 

5.3         The Licensor shall not be liable for any loss
or damage howsoever caused which results from the Licensee’s use of the Vaccine
IP in exercise of the Licensee’s rights under this Agreement and the Licensor
gives no warranty that the Vaccine IP is suitable for any purpose.

 

6.           TAXATION

 

6.1         If any stamp taxes, registration taxes,
turnover taxes, or other taxes, duties or governmental charges are levied on
this Agreement by reason of its execution or performance, it shall be the
responsibility of the Licensee to pay all such taxes or charges when due.

 

6.2         The Licensee agrees to release and indemnify
the Licensor from and against any liability of whatever nature arising out of
the Licensee’s failure duly and timely to pay and discharge any of the
above-mentioned taxes.

 

7.           EXPORT CONTROL

 

7.1         The Licensee shall be responsible for
complying with the applicable Export of Goods (Control) Order.

 

7.2         This Agreement does not grant authority for
the Licensee to export the Vaccine IP, or any part thereof, or any products
manufactured using the Vaccine IP from the United Kingdom and application for
any necessary export licence must be made to the Export Licensing Unit of the
Department of Trade and Industry.

 

8.           COMING INTO EFFECT AND
DURATION

 

8.1         This Agreement shall come into effect on the
Commencement Date and, unless terminated in accordance with the provisions of Article 9,
shall remain in effect indefinitely.

 

	
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9.             TERMINATION

 

9.1           The Licensor shall have the right to
terminate this Agreement at any time forthwith by notice in writing to the
Licensee on the happening of any one of the following events:-

 

9.1.1        if the Licensee is in breach of any of its
obligations under this Agreement, and fails to remedy such breach or fails to
take steps to substantially remedy the breach within thirty (30) days of a
written notice issued to it by the Licensor to do so; or

 

9.1.2        if the Licensee shall have a Receiver or
Liquidator appointed to the whole or any part of its assets or if an Order
shall be made or any resolution
passed for winding up the Licensee unless such Order or resolution is part of a
scheme for amalgamation or reconstruction of the Licensee; or

 

9.1.3        if the Licensee assigns, sub-licences,
mortgages, or in any other way deals with the licence granted under this
Agreement without the prior written consent of the Licensor; or

 

9.1.4        if a person, whether alone or in conjunction
with any Connected Person (as defined in section 839 of the Taxes Act 1998)
acquires control of the Licensee and the Chief Executive of Dstl receives
notice from an appropriate authority at the Ministry of Defence or other UK
Government Department that such an acquisition would damage the essential
public or national interest, where control of the Licensee means the power of a
person to secure either by means of the holding of share or possession of
voting power in or in relation to the Licensee or by virtue of any powers
conferred by articles of association or other document regulating the Licensee
that its affairs are conducted in accordance with the wishes of that person; or

 

9.1.5        in any other event expressly identified in this
Agreement as giving the Licensor a right to terminate.

 

9.2           The Licensee shall have the right to
terminate this Agreement at any time on giving three (3) months prior
written notice to the Licensor.

 

9.3           If the Licensee has not secured a Supply
Contract by 31 December 2008 or, if the Parties agree, by 31 December in
any subsequent calendar year, the Licensor and the Licensee shall review the
situation together. As a result of such review and subject to the following
provisions of this Clause 9.3, the Parties may agree to extend the period for
securing a Supply Contract for a further calendar year. A period of 90 days
shall be permitted for such a review. If, after such 90 day period, it appears
to the Licensor that there is no reasonable prospect of a Supply Contract being
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within a reasonable time, the Licensor may terminate this Agreement by
giving three (3) months written notice to the Licensee.

 

10.          CONSEQUENCES OF TERMINATION

 

10.1         Upon the termination of this Agreement under
the provisions of Article 9 above, all rights and licences granted in
favour of the Licensee hereunder shall cease, except and to the extent
expressly provided otherwise under the terms of this Agreement.

 

10.2         Immediately upon the termination of this
Agreement all licence payments accrued to date under Clause 3.1 above shall
become payable and all other obligations shall become due. In the event of
termination of this Agreement under the provisions of Article 9, the
Licensee shall have the right from the date of termination to dispose of all
stocks of [***] in its possession and to complete any outstanding Supply
Contracts, subject in each case to the payment of royalties as payable under
Clause 3.1 hereof.

 

10.3         The expiry or termination of this Agreement
shall be without prejudice to the provisions of Article 5 (Warranty and
Liability) and this Article 10 (Consequences of Termination), to any other
express obligations in this Agreement of a continuing nature, and to any rights
of either Party which may have accrued up to the date of termination.

 

11.          VALIDITY OF THE AGREEMENT

 

11.1         In the event that any provisions of this
Agreement shall for any reason be declared or rendered invalid, illegal or
unenforceable in any respect, such provisions shall, to the extent of such
invalidity, illegality or unenforceability, be deemed severable and shall not
affect the validity, legality or enforceability of the remainder of this
Agreement, which shall continue in full force and effect, save that if the
nature of the invalidity, illegality or unenforceability is such that it
destroys the business efficacy of this Agreement, the Parties shall confer to
determine whether the Agreement shall be terminated or whether such severed
provisions shall be replaced with enforceable provisions to the satisfaction of
both of the Parties.

 

12.          MISCELLANEOUS PROVISIONS

 

12.1         Each Party shall at any time on the request of
the other do and execute all such acts, deeds, documents and things as may
reasonably be required by the other to perfect and complete the grant of rights
and licences conferred by this Agreement on the other, or to record any change
in the status of such rights, including in particular entry into forms of
licence or other instruments

 

	
  [***]

  	
   

  	
  14

  

 

 

PRIVATE BETWEEN THE PARTIES

 

confirmatory of such rights for registration with appropriate
authorities in any country.

 

12.2         No relaxation, forbearance, delay or indulgence
by either Party in enforcing any of the terms and conditions of this Agreement
or the granting of time by either Party to the other shall prejudice, affect or
restrict the rights and powers of that Party under this Agreement nor shall any
waiver by either Party of any breach of this Agreement operate as a waiver of
or in relation to any subsequent or any continuing breach of this Agreement.

 

12.3         No variation of this Agreement shall be
effective unless it is in writing signed by a duly authorised officer of each
Party.

 

12.4         Nothing in this Agreement shall be deemed to
constitute a partnership between the Parties nor shall either Party be taken to
have any authority to bind or commit the other or be taken to have authority to
act as the agent of the other or in any other capacity other than as expressly
authorised in this Agreement.

 

12.5         Any notice or communication authorised or
required to be given hereunder or for the purpose hereof shall be deemed to be
duly given if left or sent by post or if sent by cable, facsimile or telex so
addressed if confirmed by post in like manner to:-

 

12.5.1      the Licensor at:

 

[***]

[***]

[***]

[***]

[***]

[***]

 

[***]

 

[***]

 

12.5.2      the Licensee at:

 

Business Manager, Vaccines

Avecia Limited

PO Box 2

Belasis Avenue

Billingham TS23 1YN

 

Facsimile: 01642 522622

 

	
  [***]

  	
   

  	
  15

  

 

 

PRIVATE BETWEEN THE PARTIES

 

Copied to:

 

The Company Secretary

Avecia Limited

Legal Affairs Department

PO Box 42

Hexagon Tower

Blackley

Manchester M9 8ZS

 

Facsimile: 0161 721 1886

 

Any notice so given by post shall be deemed to be served at the
expiration of seven (7) days after it has been posted and in proving such
service it shall be sufficient to prove that the envelope containing the notice
was properly addressed and posted.

 

12.6         A person who is not a party to this Agreement
shall have no right under the Contracts (Rights of Third Parties) Act 1999 to
enforce any term of this Agreement. This clause does not affect any right or
remedy of any person which exists or is available otherwise than pursuant to
that Act.

 

13.          LAW AND JURISDICTION

 

13.1         This Agreement shall be considered as a
contract made in England and subject to English Law.

 

13.2         Subject to Article 14 and without
prejudice to the dispute resolution process set out in that article, each Party
hereby irrevocably submits and agrees to the exclusive jurisdiction of the
Courts of England to resolve, and the laws of England to govern, any actions,
proceedings, controversy or claim of whatever nature arising out of or relating
to this Agreement or breach thereof.

 

13.3         Other jurisdictions may apply solely for the
purpose of giving effect to this Article and for the enforcement of any
judgement, order or award given under English jurisdiction.

 

14.          DISPUTE RESOLUTION

 

14.1         Without prejudice to the operation of the
dispute resolution or arbitration provisions, if any, governing disputes,
differences or questions arising out of the Development Contracts and where
necessary the examination of this Agreement pursuant to such dispute resolution
or arbitration provisions:

 

	
  [***]

  	
   

  	
  16

  

 

 

PRIVATE BETWEEN THE PARTIES

 

14.1.1      the parties will attempt in good faith to resolve
any dispute or claim arising out of or relating to this Agreement through
negotiations between the respective representatives of the parties having
authority to settle the matter, which attempts may include the use of any
Alternative Dispute Resolution (ADR) procedure on which the parties may agree;

 

14.1.2      in the event that the dispute or claim is not
resolved by negotiation, or where the parties have agreed to use an ADR
procedure, by the use of such procedure, the dispute shall be referred to
arbitration;

 

14.1.3      the party initiating the arbitration shall give a
written Notice of Arbitration to the other party, which Notice of Arbitration
shall specifically state:

 

(a)        that the dispute is
referred to arbitration; and

 

(b)        the particulars of
this Agreement out of or in relation to which the dispute arises;

 

14.1.4      unless otherwise agreed in writing by the parties, the arbitration and this Article 14
shall be governed by the provisions of the Arbitration Act 1996 or any
statutory modification or re-enactment thereof;

 

14.1.5      it is agreed between the Parties that for the
purposes of the arbitration, the arbitrator shall have the power to make
provisional awards as provided for in Section 39 of the Arbitration Act
1996; and

 

14.1.6      for the avoidance of doubt it is agreed between
the Parties that the arbitration process and anything said, done or produced in
or in relation to the arbitration process (including any awards) shall be
confidential as between the Parties, except as may be lawfully required in
judicial proceedings relating to the arbitration or otherwise; and no report
relating to anything said, done or produced in or in relation to the
arbitration process may be made beyond the tribunal, the Parties, their legal
representatives and any person necessary to the conduct of the proceedings, without
the concurrence of all the Parties to the arbitration.

 

15.          COMPLETE AGREEMENT

 

15.1         This Agreement consisting of fifteen (15)
Articles represents the entire agreement between the Parties on the subject of
the use by the Licensee of the Vaccine IP for the purposes set out herein and
supersedes all prior proposals, oral or written, between the Parties on this
subject.

 

IN WITNESS WHEREOF the
Parties have entered into this Agreement in two (2) counterparts, each of
which is equally valid, the day and year first above written.

 

	
  [***]

  	
   

  	
  17

  

 

 

PRIVATE BETWEEN THE PARTIES

 

	
  SIGNED on behalf of THE SECRETARY

  	
  [***]

  
	
  OF STATE FOR DEFENCE by:

  	
   

  
	
   

  	
  [***]

  [***]

  [***]

  [***]

  

 

 

	
  SIGNED for and on behalf of AVECIA 

  	
  /s/ Kevin
  Cox

  
	
  LIMITED by:

  	
   

  
	
   

  	
  KEVIN COX, Director

  
	
   

  	
  Authorised to sign on behalf of Avecia 

  
	
   

  	
  Limited

  

 

 

	
   

  	
   

  	
  Approved as to

  
	
   

  	
   

  	
  legal form by 

  	
  [***]

  

 

	
  [***]

  	
   

  	
  18

  

 

 

PRIVATE BETWEEN THE PARTIES

 

[***]

 

	
  [***]

  	
   

  	
  19

  

 

 

PRIVATE BETWEEN THE PARTIES

 

[***]

 

	
  [***]

  	
   

  	
  20Exhibit 10.36

 

PRIVATE BETWEEN THE PARTIES

 

PharmAthene, Inc.

Confidential Materials Omitted and Filed Separately with the

Securities and Exchange Commission

Confidential Portions denoted by [***]

 

MANUFACTURING AND MARKETING LICENCE AGREEMENT

between

 THE SECRETARY OF STATE FOR DEFENCE

 

as represented by

 

THE DEFENCE SCIENCE AND TECHNOLOGY LABORATORY
(Dstl)

 

and

 

AVECIA LIMITED

 

in respect of

 

[***]

1

 

PRIVATE BETWEEN THE PARTIES

 

THIS AGREEMENT is
made the 4th day of December      2006

 

BETWEEN

 

THE SECRETARY OF STATE FOR DEFENCE acting
through the Defence Science and Technology Laboratory [***] (hereinafter
referred to as the “Licensor”) of
the one part

 

AND

 

AVECIA LIMITED a
company registered in England under the number 3730853 and having its
registered office at Hexagon Tower, Blackley, Manchester M9 8ZS, acting through
its Avecia Biotechnology business at PO Box 2, Belasis Avenue, Billingham TS23
1YN (hereinafter referred to as the “Licensee”)
of the second part

 

hereinafter referred to collectively as the “Parties” or in the singular as a “Party”.

 

WHEREAS:

 

(A)          The Licensor is the
proprietor of certain patents and patent applications set out in Schedule 1
relating to a [***].

 

(B)            The Licensor has agreed
to grant and the Licensee has agreed to accept a licence in respect of the
Patents to make, use, keep and/or sell [***];

 

(C)            The Licensor has also
assisted the Licensee in the development of [***] and its licensure through a
series of contracts, viz:

 

[***] dated 26 June 2003 being a Master Services Agreement under
which Dstl provided services to Avecia in support of Avecia’s contract with the
National Institutes for Health (no. [***]);

 

[***] dated 15 December 2004 being a Master Services Agreement under
which Dstl provided services to Avecia in support of Avecia’s contract with the
National Institutes for Health (no. [***]);

 

[***] dated 30 March 2006 being a Master Services Agreement under
which Dstl provided services to Avecia in support of a National Institutes for
Health grant to Avecia;

 

2

 

PRIVATE BETWEEN THE PARTIES

 

a further possible contract [***] under discussion;

 

and the Licensee has assisted the Licensor in the development of
recombinant anthrax vaccine through a series of contracts viz:

 

[***] dated 2 November 1999 being a contract under which Avecia
provided services to Dstl in relation to expression of [***] protective antigen
[***];

 

19 February 2002 being a contract under which Avecia provided
services to Dstl in relation to process development of [***] protective antigen
[***]

 

(hereinafter called “the Contracts”).

 

(D)           The Licensor has also
provided the Licensee with certain technical information and know-how relating
to [***].

 

(E)             The Licensee has
provided to the Licensor certain technical information and know-how regarding
its vaccine manufacturing processes.

 

(F)             It has been agreed
between the Parties that while the licence is in force and subject to the
conditions contained herein, the Licensee may use all relevant know-how and
technical information belonging to the Licensor.

 

NOW IT IS HEREBY AGREED BETWEEN THE PARTIES
AS FOLLOWS:-

 

1. DEFINITIONS AND INTERPRETATION

 

1.1. For the purposes of this Agreement,
unless the context clearly or necessarily indicates otherwise, the following
words and phrases shall have the meanings set forth below:

 

1.1.1. “Agreement” shall mean this manufacturing
and marketing licence agreement.

 

1.1.2. [***]

 

1.1.3. [***]

 

3

 

PRIVATE BETWEEN THE PARTIES

 

1.1.4. “Commencement
Date” shall mean the day and year first above written.

 

1.1.5. “The Intellectual
Property” shall mean the Patents and other know-how and technical
information owned by the Licensor necessary to further develop, manufacture,
use, keep, sell and offer to sell the [***] Vaccine.

 

1.1.6. “Licensed
Product” shall mean an Anthrax Vaccine Dose.

 

1.1.7. “Net
Sales Price” shall mean the actual sale price invoiced by the
Licensee or, where applicable, a Partner of the Licensee less any separate
charges identified for packaging, transportation, insurance and sales taxes and
(where applicable) any royalties paid to any Third Party in respect of the
Licensed Product in question. If the Licensee sells or disposes of any Licensed
Product on otherwise than an arms length transaction basis at the open full
market price (eg to another company in the Avecia group or under an off-set or
barter agreement), the open market price shall be taken as the actual sales price.

 

1.1.8. “PIL” shall
mean Ploughshare Innovations Limited, Building 114, Tetricus Science Park,
Porton Down, Salisbury SP4 0 JQ.

 

1.1.9. “Patents” The
patents and patent applications set out in Schedule 1 and any equivalents
thereof, and any divisionals, continuations, continuations-in-part, re-filings
or re-issues of any of the foregoing.

 

1.1.10. “Partner”
shall mean any Third Party organisation which Avecia elects to
involve in the performance of a Supply Contract.

 

1.1.11. “Third
Party” shall mean any person other than the Government of the United
Kingdom.

 

1.2. The singular shall include the plural
and vice versa, and the masculine shall include the feminine or the neuter
gender and vice versa.

 

1.3. Unless the context otherwise indicates,
references to Articles and Articles and Schedule, are to articles and Articles
and the Schedule of this Agreement.

 

1.4. Headings to Articles in this Agreement
are included for ease of reference 

 

4

 

PRIVATE BETWEEN THE PARTIES

 

only and shall not have any effect on the
construction or the interpretation of this Agreement.

 

1.5.  References
in this Agreement to any statute or statutory provision shall include any
statute or statutory provision which amends, extends, consolidates or replaces
the same and shall include any orders, regulations, instruments or other
subordinate legislation made under the relevant statute.

 

2. GRANT OF RIGHTS BY THE LICENSOR

 

2.1.   In consideration for the payments to be made
by the Licensee to the Licensor under the provisions of Article 3 below,
the Licensor, warranting that he has the right to do so, hereby grants and the
Licensee hereby accepts a non-exclusive worldwide licence to use the
Intellectual Property to develop, make, use, keep and sell or offer to sell
Licensed Products.

 

2.2.   Without prejudice to the provisions of Article 2.3
and 2.4 below the Licensor undertakes that it shall not for the shorter of a
period of 3 years from the date of this Agreement or whilst this licence remains
in effect grant a licence under the Intellectual Property to further develop,
make, use, keep, import or export, or supply or offer to supply Licensed
Products to any Third Party providing that the Licensee is diligent and makes
reasonable progress, as determined by the Licensor, in obtaining licensure
approval of the relevant Government regulatory authorities or any authorities
acting on their behalf to supply and use Licensed Products throughout the world
and in particular for human use.

 

2.3.   For the avoidance of any doubt, the Licensor
and any other Department or Agency of the UK Government shall retain the right
at any time to use, or authorise others to use the Licensed Products for any UK
Government purpose or otherwise to the extent customary pursuant to standard UK
Ministry of Defence contracting procedures, and to dispose of products made in
consequence of such use but no longer required; and nothing in this Agreement
shall be construed as in any way limiting or derogating from such retained rights,
nor from any rights of the Crown arising under any other agreement or contract
or provision of law.

 

2.4.   The restrictions imposed by Article 2.2
above shall not prevent or restrict the use of any UK Government patent by or
on behalf of the US Government where such use is under the “Agreement between
the Government of the United Kingdom of Great Britain and Northern Ireland and
the Government of the United States of America to facilitate the interchange of
patents and technical information for defence purposes” done in London on 19th
January 1953. Furthermore the restrictions imposed by Article 2.2
above shall not be deemed to prevent or hinder the UK Government from
authorising any foreign Government to use and have used the Intellectual
Property where such use is in furtherance of any formal international
co-operative arrangement.

 

2.5.   Save as permitted under Article 2.6
below, the licence granted under this 

 

5

 

PRIVATE BETWEEN THE PARTIES

 

Agreement is personal to the Licensee and as such shall not be
assigned, sub-licensed, mortgaged or in any way dealt with by the Licensee
without the prior written consent of the Licensor, which consent shall not be
unreasonably withheld, provided that the Licensee may assign the licence and
this Agreement without consent in connection with a genuine business re-organisation
or to any corporation, association or other business entity which directly or
indirectly controls, is controlled by or is under common control with the
Licensee. For the avoidance of doubt, consent shall be deemed to be reasonably
withheld where the Chief Executive of Dstl receives formal notice from an
appropriate authority at the Ministry of Defence or other UK Government
Department that assignment to such person would damage the essential public or
national interest. Any assignment, sub-licensing or mortgaging of this
Agreement by the Licensee, otherwise than as permitted by this Article 2.5,
without the prior written consent of the Licensor shall immediately invalidate
this Agreement and the licence granted hereunder.

 

2.6.          Notwithstanding the
provisions of Article 2.5 above, the Licensee shall be entitled to employ
Partners to assist the Licensee in its performance of contracts, subject to the
provisions of Article 3 below.

 

2.7.          Save as expressly stated
under this Article 2 the Licensee is not authorised hereunder to grant to
any Third Party any sub-licence under the Patents Or to pass to such Third
Party any of the Intellectual Property.

 

2.8.          The Licensee may request
within 6 months prior to the expiry of the period granted under Article 2.2
above that such period should be extended. The Licensee in support of an
extension will provide the Licensor with clear information that is sufficient
for the Licensor to assess the progress made to date in obtaining licensure of
the Licensed Product and such further work’ that might be needed to achieve
licensure and the timeframes within which! it is reasonable that the further
work be completed and licensure obtained. Provided the Licensor is content that
the Licensee has been diligent and’ has made sufficient progress in obtaining
licensure then the Licensor may at his sole discretion extend the period for
such additional time as he deems reasonable to achieve licensure. If licensure
is achieved whether within the original period under Article 2.2 above or
within an extended period as may be granted under this Article 2.8 then
the Licensor will, subject to any legal constraints and the Licensee’s
continuing conformance to this Agreement, further extend the period
indefinitely but only in respect of the territories that licensure is achieved
by the Licensee.

 

3. LICENCE PAYMENTS

 

3.1.          In consideration for the
grant of rights by the Licensor in Article 2.1 above; the Licensee shall
pay to the Licensor a royalty on each and every Licensed Product, equal to
[***] of the Net Sales Price of the Licensed Product. Notwithstanding the
foregoing, no royalties shall be payable in respect of any samples of Licensed
Products which are provided by Avecia for clinical, product development,
marketing development or bona fide study
purposes.

 

6

 

PRIVATE BETWEEN THE PARTIES

 

3.2.          If the UK Ministry of
Defence, US Department of Defence or the Department of Defence of the
Government of Canada claims that Licensed Products should be supplied free of
royalties or at a reduced royalty rate under existing UK or international
arrangements and seeks a waiver of any part of the royalty attributable to
Patents set out in Schedule 1, the Licensee shall inform the Licensor. If it is
agreed by the Licensor that such supply should be free of patent royalties or
at an appropriately reduced royalty, then the Licensor shall inform the
Licensee of the royalty (if any) that the Licensor will apply to the supply of
Licensed Products concerned. In such a case the notified royalty (if any) shall
be substituted for the royalty mentioned Article 3.1 in respect of the
relevant supply of Licensed Products.

 

3.3.          The royalty in respect
of a Licensed Product shall become payable by the Licensee under this Agreement
when the cost of the Licensed Product is invoiced by Avecia. Where the cost of
a Licensed Product is payable in two or more installments, the invoice for each
installment will be considered separately for the payment of royalties. If no
invoice is issued, royalty will become due on delivery of the Licensed Product
concerned.

 

3.4.          The payments due under Article 3.1
of this Agreement will fall due half-yearly on 30 June and 31 December and
will be payable in accordance with the instructions contained in Articles 3.5
and 3.6 below. The Licensor has appointed PIL as its agent to administer the
Licence on its behalf.

 

3.5.          Within sixty (60) days
of the end of each half-year period as mentioned in Article 3.4 hereof,
the Licensee shall send to PIL (or as otherwise advised) a true and complete
statement in writing, including where appropriate a Zero return, of the number
of Licensed Products manufactured and sold by or for Licensee during the
relevant period, the Net Sales Price derived from sales of such Licensed
Products, and the royalty calculated to be payable in respect thereof in
accordance with the provisions of Article 3.1.

 

3.6.          All invoiced payments to
be made to Licensor under this Agreement shall be made by the end of the month
following the month of the date of an invoice from PIL and in accordance with
the instructions issued with the relevant invoice. All royalty statements,
correspondence and payments to PIL under the provisions of this Article 3
shall quote the PIL reference [***].

 

3.7.          All payments due to PIL
shall be paid in pounds Sterling plus, if applicable, VAT at the UK rate
prevailing at the time of payment. Where a payment due is in a currency other
than pounds Sterling, the rate of exchange to be applied shall be the rate of
exchange applied by the Bank of England on the date of the relevant invoice for
Licensed Product(s) supplied by the Licensee.

 

7

 

PRIVATE BETWEEN THE PARTIES

 

3.8.                   Without
prejudice to the provisions of Article 14.2, if the Licensee fails to make
any payment to the Licensor within the time specified in this Agreement, then
the Licensee shall be liable to pay interest on the outstanding payment
calculated at [***] per annum with effect from the date on which the payment
originally fell due, where [***].

 

3.9.                   Subject to the
provisions of Article 3.10 below, the Licensee shall keep at its usual
place of business proper records and books of account showing the quantities
and Net Sales Price of all Licensed Products supplied by the Licensee and its
Partners under this Agreement and such records and books shall be kept separate
from any records and books not relating solely to the Licensed Products. Such
records and books of account shall contain such true entries (complete in every
particular) as may be necessary or proper for enabling the amount of the
payments due to the Licensor under this Agreement to be ascertained. The Licensor
or PIL by giving no less than ten (10) working days notice, shall be
entitled to inspect such records and books. The Licensee shall, and shall
ensure that its Partners shall, make the appropriate records and books of
account available to inspection at all times during office hours by the
Licensor or PIL or their duly authorised agent or representative who shall be
entitled to take copies of or extracts from the same. In addition to the
foregoing, the Licensee shall also provide the Licensor or PIL or their duly
authorised agent or representative with any other information which may be
necessary or appropriate with a view to determining or verifying the royalties
due under this Agreement. In the event that such inspection or audit should
reveal an underreporting in the royalties payable under this Agreement, the
Licensee shall make up any shortfall within thirty (30) days of written
notification and, in the event that the said shortfall is more that [***],
shall reimburse the Licensor or PIL in respect of any professional charges
incurred for such audit or inspection.

 

3.10.             The books of account
referred to in Article 3.9 above shall be kept fix a minimum of six years
after any relevant transaction and thereafter in accordance with applicable
commercial law.

 

3.11.             In accordance with
the provisions of Article 11 (Consequences of Termination), the provisions
of this Article 3 shall continue to apply notwithstanding termination or
expiry of this Agreement until all royalties properly owed by the Licensee to
the Licensor in accordance with this Article 3 have been paid to the
Licensor.

 

3.12.             In the event that any
of the patents, patent applications or equivalents listed in the Schedule
expire or are abandoned or revoked, or are reduced in scope such that operation
within the scope of a patent claim to manufacture or sell Licensed Products is
no longer necessary, but it remains necessary for the Licensee to use some or
all of the other Intellectual Property in order to fulfill an extant order for
the Licensed Products, then Avecia shall have the right to request a meeting of
the parties at which the parties shall negotiate in good

 

8

 

PRIVATE BETWEEN THE PARTIES

 

faith with a view to agreeing upon an appropriate reduction to the
royalty payable under this Agreement.

 

4. OWNERSHIP, AND PROTECTION, OF INTELLECTUAL
PROPERTY

 

4.1.    Both
of the Parties acknowledge that nothing contained in this Agreement shall
affect the ownership of any intellectual property existing at the Commencement
Date and which is owned by either of the Parties.

 

4.2.    Both
the Parties acknowledge that nothing contained in this Agreement shall affect
the arrangements for the protection of information which are contained in the
Contracts.

 

4.3.    The Licensee shall promptly
and fully notify the Licensor in writing of:

 

4.3.1.      any actual, threatened or
suspected infringement by any Third Party of the patents listed in Schedule 1
or, if granted, any patent that might be granted pursuant to a patent application
listed in Schedule 1.

 

4.3.2.      any proceedings commenced or
threatened against the Licensee in which it is alleged that any patent listed
in Schedule 1 is invalid and/or its use would infringe Third Party rights, or
that use of any of the know how or information, or material contained in any
patent application list d in Schedule 1 would infringe Third Party rights;

 

4.3.3.       that come to the notice of the Licensee during
the term of this Agreement.

 

4.4.           In the event that the Licensor decides (in
the circumstances referred to in Article 4.3.1 above) to institute any
proceedings or (in the circumstances referred to in Article 4.3.2 above)
to defend any proceedings instituted against the Licensee, the Licensee shall
render to the Licensor at the Licensor’s expense such reasonable assistance in
connection with such proceedings as the Licensor may request.

 

4.5.           In the event that during the term of this
Agreement when the provisions of Article 2.2 above shall apply a Third
Party is found to be infringing any of the Patents, then the Licensor and the
Licensee agree to review the effect that the infringement may have on the
Licensee’s business and consider the option of the Licensor negotiating a
licence with the infringing party on fair and reasonable terms as a way to
resolve the infringement issue.

 

4.6.           Provided that the Parties are not engaged in
negotiating a sub-licence with an infringing Third Party under Article 4.5
above, in the event that at any time during the term of this Agreement the
Licensee is able to establish td the reasonable satisfaction of the Licensor
that a Third Party is infringing any of the patents listed in Schedule 1 in any
country or countries of the world where

 

9

 

PRIVATE BETWEEN THE PARTIES

 

such patents have force, and that such infringement can be shown to be
having a significant impact upon sales of the Licensee’s own Licensed Products
(for example, such infringement has an impact on sales which the Licence could
have made but for such infringement) in such countries, and the Licensor is
unable or unwilling within a reasonable period to take such action as may be
necessary to settle or prevent such infringement in that country, then the
royalty payable under this Agreement by the Licensee in respect of such patents
in such countries shall cease to be payable until the date on which such
infringement is settled or prevented.

 

4.7.           The cessation of royalties under Article 4.6
above shall apply in respect of sales of Licensed Products by the Licensee in
the relevant country or countries from the date on which the Licensee is able
to establish the infringement in accordance with Article 4.6 above.

 

5. WARRANTY AND LIABILITY

 

5.1. Nothing contained in this Agreement or
in any licence granted hereunder shall be construed as or deemed to be:-

 

5.1.1.      a representation or warranty
that use of any the Patents will not infringe any intellectual property rights
owned by a Third Party anywhere in the world; or

 

5.1.2.      an indemnity against costs,
damages, royalties, liabilities, expenses or other payments arising out of any
proceedings based on infringe6ent brought against the Licensee or customers,
agents or distributors of the Licensee;and any such representation, warranty or
indemnity is hereby expressly excluded.

 

5.2.    The
Licensee shall at all times indemnify and keep indemnified the Licensor against
all costs, claims, damages or expenses incurred by the Licensor for which the
Licensor may become liable with respect to any product liability claim relating
to any products supplied or put into use by the Lice see pursuant to this
Agreement. The Licensee shall maintain sufficient product liability insurance
coverage to cover its commitments under this Agreement.

 

5.3.    The
Licensor shall not be liable for any loss or damage howsoever caused which
results from the Licensee’s use of the Patents in exercise of the Licensee’s
rights under this Agreement and the Licensor gives no warranty that anything
contained in the Patents, any know-how or information is suitable for any
purpose.

 

10

 

PRIVATE BETWEEN THE PARTIES

 

6.     TAXATION

 

6.1.     If any stamp taxes, registration taxes, turnover
taxes, or other taxes, duties or governmental charges are levied on this
Agreement by reason of its execution or performance, it shall be the
responsibility of the Licensee to pay all such taxes and charges when due.

 

6.2.     The Licensee agrees to
release and indemnify the Licensor from and against any liability of whatever
nature arising out of the Licensee’s failure duly and timely to pay and
discharge any of the above-mentioned taxes.

 

7.     DISCLOSURES OF INFORMATION
ABROAD

 

7.1.     Each Party will keep all
know-how and other information belonging to the other Party confidential and
will not disclose it to any Third Party. Where either Party engages an agent
(such as PIL) to undertake anything in connection with this Agreement, that
party will procure that the agent is bound likewise and any breaches of the
confidentiality obligations by such agent shall be treated s a breach of this
Agreement by the party engaging such agent. This restriction does not apply to
disclosures made in accordance with Article 7.2 below, or authorised under
Article 7.3, or to:

 

7.1.1. Any information which is or comes into
the public domain otherwise than through breach of this Agreement;

 

7.1.2. Any information already known, at the
time of its disclosure, by the recipient;

 

7.1.3. Any information received from a Third
Party which has the right to disclose the same;

 

7.1.4. Any information that it is necessary
to impart to customers of the recombinant protective antigen Licensed Products
to ensure its safe and effective use.

 

7.2.     The Licensor permits the Licensee to use any
know-how and information owned or controlled by the Licensor and in the
possession of the License as necessary to secure from any part of the US
Government or the Government of Canada contracts for the further development,
manufacture and supp y of recombinant protective antigen Licensed Products

 

7.3.     Furthermore, if the Licensee desires to pursue
contracts for the fu her development, manufacture and supply of recombinant
protective antigen Licensed Products outside the Governments of the United
States of America, Canada, or the United Kingdom, the Licensee will approach
the Licensor for permission to release information such know-how and
information owned or controlled by the Licensor in the possession of the
Licensee as may be

 

11

 

PRIVATE BETWEEN THE PARTIES

 

necessary to enable that to be done. Each approach will be considered
on its merits and permission will not be unreasonably with-held, provided that
it is consistent with wider UK Government interests.

 

8.     EXPORT CONTROL

 

8.1.     The Licensee shall be
responsible for complying with the applicable Export of Goods (Control) Order.

 

8.2.     This Agreement does not grant
authority for the Licensee to export from the United Kingdom, any Licensed
Product, or any information relating thereto without any necessary licence
under any applicable Export of Goods (Control) Order. Any necessary export
licence must be made to the Export Licensing Unit of the Department of Trade
and Industry.

 

9.     COMING INTO EFFECT AND
DURATION

 

9.1.     This Agreement shall come
into effect on the Commencement Date and, unless terminated in accordance with
the provisions of Article 10, shall remain in effect indefinitely.

 

10.   
TERMINATION

 

10.1.   The Licensor shall have the
right to terminate this Agreement at any time forthwith by notice in writing to
the Licensee on the happening of any of the following events:

 

10.1.1.     if the Licensee is in breach of any of its
obligations under this Agreement, and fails to remedy such breach or fails to
take steps to substantially remedy the breach within thirty (30) days of a
written notice issued to it by the Licensor to do so; or

 

10.1.2.     if the Licensee shall have a Receiver or
Liquidator appointed to the whole or any part of its assets or if an Order
shall be made or any resolution passed for winding up the Licensee unless such
Order or resolution is part of a scheme for amalgamation or reconstruction of
the Licensee; or

 

10.1.3.     if the Licensee assigns, sub-licences, mortgages,
or in any other way deals with the licence granted under this Agreement without
the prior written consent of the Licensor; or

 

10.1.4.     if a person, whether alone or in conjunction with
any Connected Person (as defined in section 839 of the Taxes Act 1998) acquires
control of the Licensee and the Chief Executive of Dstl receives notice from an
appropriate authority at the Ministry of Defence or other UK Government
Department that such an acquisition would

 

12

 

PRIVATE BETWEEN THE PARTIES

 

damage the essential public or national interest, where control of the
Licensee means the power of a person to secure either by means of the holding
of share or possession of voting power in or in relation to the Licensee or by
virtue of any powers conferred by articles of association or other document
regulating the Licensee that its a airs are conducted in accordance with the
wishes of that person; or

 

10.1.5.     in any other event expressly identified in this
Agreement as givin0 the Licensor a right to terminate.

 

10.2.    The Licensee shall have the
right to terminate this Agreement at any time on giving three (3) months
prior written notice to the Licensor.

 

10.3.    At any time after the expiry
of the three year period mentioned in Article 2.2 it appears to the
Licensor that there is no prospect of the Licensee selling any Licensed
Products, the Licensor shall notify the Licensee.

 

10.4     If Licensee does not agree
with the Licensor’s opinion expressed in such a notification under Article 10.3,
the Licensee shall inform the Licensor giving his reasons for disagreement. If
the Parties cannot resolve their differences on this matter within 6 months,
the disagreement will be resolved according to Dispute Resolution procedures of
Article 16.

 

10.5.    If the Licensee agrees with
the Licensor’s opinion expressed in such a notification under Article 10.3,
or the Licensee does not respond with 90 days to a notification given under Article 10.3,
or any subsequent dispute Resolution procedure under Articles 10.4 and 16
concludes that there is no reasonable prospect of the Licensee selling any
Licensed Products, the this agreement will terminate on notice given in writing
by the Licensor.

 

11. CONSEQUENCES OF TERMINATION

 

11.1.    Upon the termination of this
Agreement under the provisions of Article 10 above, all rights and
licences granted in favour of the Licensee hereunder shall cease, except and to
the extent expressly provided otherwise under the terms of this Agreement.

 

11.2.    Immediately upon the
termination of this Agreement all licence payments accrued to date under Article 3.1
above shall become payable and all other obligations shall become due. In the
event of termination of this Agreement under the provisions of Article 10
the Licensee shall have the right from the date of termination to dispose of
all stocks of Licensed Products its possession and to fulfill any outstanding
orders for the Licensed Products, subject in each case to the payment of
royalties as payable under Article 3.1 hereof.

 

13

 

PRIVATE BETWEEN THE PARTIES

 

11.3.    The expiry or termination of
this Agreement shall be without prejudice to the provisions of Article 5
(Warranty and Liability) and this Article 11 (Consequences of
Termination), to any other express obligations in his Agreement of a continuing
nature, and to any rights of either Party which ay have accrued up to the date
of termination.

 

12. ASSIGNMENT BY THE
LICENSOR

 

12.1.    During the period mentioned in
Clause 2.2, the Licensor will not assign this Agreement or any of the
Intellectual Property to any Third Party without the consent of the Licensee.

 

12.2.    After the period mentioned in
Clause 2.2, any such assignment made will preserve the rights of the Licensor
set out in this Agreement.

 

13. VALIDITY OF THE
AGREEMENT

 

13.1.    In the event that any
provisions of this Agreement shall for any reason be declared or rendered
invalid, illegal or unenforceable in any respect, such provisions shall, to the
extent of such invalidity, illegality or unenforceability, be deemed severable
and shall not affect the validity, legality or enforceability of the remainder
of this Agreement, which shall continue in full force and effect, save that if
the nature of the invalidity, illegality or unenforceability is such that it
destroys the business efficacy of this Agreement, the Parties shall confer to
determine whether the Agreement shall be terminated or whether such severed
provisions shall be replaced with enforceable provisions to the satisfaction of
both of the Parties.

 

14. MISCELLANEOUS PROVISIONS

 

14.1.    Each Party shall at any time
on the request of the other do and execute all such acts, deeds, documents and
things as may reasonably be required by the other to perfect and complete the
grant of rights and licences conferred by this Agreement on the other, or to
record any change in the status of such rights, including, in particular, entry
into forms of licence or other instruments confirmatory of such rights for
registration with appropriate authorities in any country.

 

14

 

PRIVATE BETWEEN THE PARTIES

 

14.2.    No relaxation, forbearance,
delay or indulgence by either party  in
enforcing any of the terms and conditions of this Agreement or the granting of
time by either Party to the other shall prejudice, affect or restrict the
rights and powers of that Party under this Agreement nor shall any waiver by
either Party of any breach of this Agreement operate as a waiver of or in
relation to any subsequent or any continuing breach of this Agreement.

 

14.3.    No variation of this Agreement
shall be effective unless it is in writing signed by a duly authorised officer
of each Party.

 

14.4.    Nothing in this Agreement
shall be deemed to constitute a partnership between the Parties nor shall
either Party be taken to have any author’ y to bind or commit the other or be
taken to have authority to act as the age t of the other or in any other
capacity other than as expressly authorised in this Agreement.

 

14.5.    Any notice or communication
authorised or required to be given hereunder or for the purpose hereof shall be
deemed to be duly given if left or sent by post or if sent by cable, facsimile
or telex so addressed if confirmed by post in like manner to:-

 

the Licensor at:

 

[***]

[***]

[***]

[***]

[***]

 

[***]

 

quoting the reference [***].

 

the Licensee at:

 

Business Manager, Vaccines

Avecia Limited

PO Box 2

Belasis Avenue

Billingham TS23 lYN

 

Facsimile: 01642 522622 

 

15

 

PRIVATE BETWEEN THE PARTIES

 

Copied to:

The Company Secretary Avecia Limited

Legal Affairs Department PO Box 42

Hexagon Tower Blackley

Manchester M9 8ZS

 

Facsimile: 0161 721 1886

 

Any notice so given by post shall be deemed to be served at the
expiration of seven (7) days after it has been posted and in proving such
service it shaII be sufficient to prove that the envelope containing the notice
was properly addressed and posted.

 

14.6.    A person who is not a party to
this Agreement shall have no right under the Contracts (Rights of Third
Parties) Act 1999 to enforce any term of this Agreement. This Article does
not affect any right or remedy of any person which exists or is available
otherwise than pursuant to that Act.

 

15. LAW AND JURISDICTION

 

15.1.    This Agreement shall be
considered as a contract made in England subject to English Law.

 

15.2.    Subject to Article 15 and
without prejudice to the dispute resolution process set out in that Article,
each Party hereby irrevocably submits and agrees to the exclusive jurisdiction
of the Courts of England to resolve, and the laws of England to govern, any
actions, proceedings, controversy or claim of whatever nature arising out of or
relating to this Agreement or breach thereof.

 

15.3.    Other jurisdictions may apply
solely for the purpose of giving effect to this Article and for the
enforcement of any judgement, order or award given under English jurisdiction.

 

16. DISPUTE RESOLUTION

 

16.1.    Without prejudice to the
operation of the dispute resolution or arbitration provisions, if any,
governing disputes, differences or questions arising out of the Development
Contracts and where necessary the examination of this Agreement pursuant to
such dispute resolution or arbitration provisions:

 

16

 

PRIVATE BETWEEN THE PARTIES

 

16.1.1    the parties will attempt in
good faith to resolve any dispute or claim arising out of or relating to this
Agreement through negotiations between the respective representatives of the
parties having authority to settle the matter, which attempts may include the
use of any Alternative Dispute Resolution (ADR) procedure on which the parties
may agree;

 

16.1.2    in the event that the dispute
or claim is not resolved by negotiation, or where the parties have agreed to
use an ADR procedure, by the use of such procedure, the dispute shall be
referred to arbitration;

 

16.1.3    the party initiating the
arbitration shall give a written Notice of Arbitration to the other party,
which Notice of Arbitration shall specifically state:

 

(a)     that the dispute is referred
to arbitration; and

 

(b)     the particulars of this
Agreement out of or in relation to which the dispute arises;

 

16.1.4    unless otherwise agreed in
writing by the  parties, the
arbitration and this Article 14 shall be governed by the provisions of the
Arbitration Act 1996 or any statutory modification or re-enactment thereof;

 

16.1.5    it is agreed between the
Parties that for the purposes of the arbitration, the arbitrator shall have the
power to make provisional awards as provided for in Section 39 of the
Arbitration Act 1996; and

 

16.1.6    for the avoidance of doubt it
is agreed between the Parties that the arbitration process and anything said,
done or produced in or in relation to the arbitration process (including any
awards) shall be confidential as between the Parties, except as may be lawfully
required in judicial proceedings relating to the arbitration or otherwise; and
no report relating to anything said, done or produced in or in relation to the
arbitration process may be made beyond the tribunal, the Parties, their legal
representatives and any person necessary to the conduct of the proceedings,
without the concurrence of all the Parties to the arbitration.

 

17. COMPLETE AGREEMENT

 

17.1.     This Agreement consisting of
seventeen (17) Articles represents the e tire agreement between the Parties on
the subject of the use by the License of the Patents and other Intellectual
Property for the purposes set out h rein and supersedes all prior proposals,
oral or written, between the Parties on this subject.

 

IN WITNESS WHEREOF the
Parties entered into this Agreement in two (2) counterparts, each of which is
equally valid, he day and year first above written.

 

	
  SIGNED on behalf of THE SECRETARY

  OF STATE FOR DEFENCE by:

  	
  [***]

  
	
   

  	
  [***]

  
	
   

  	
  [***]

  
	
   

  	
  [***]

  
	
   

  	
  [***]

  

 

17

 

PRIVATE BETWEEN THE PARTIES

 

	
  SIGNED for and on behalf of AVECIA 

  	
  /s/ Kevin Cox

  
	
  LIMITED by:

  	
  K.P. COX Director

  
	
   

  	
  Authorised to sign on behalf of Avecia

  Limited

  

 

18

 

PRIVATE BETWEEN THE PARTIES

 

[***]

 

19

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