MANUFACTURING AND MARKETING LICENCE AGREEMENT

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;

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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. [***]

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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

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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 19 ^th 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

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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.

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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.

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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 sho