Exhibit 10.2
DEVELOPMENT AND CLINICAL MANUFACTURING AGREEMENT
      This Development and Clinical Manufacturing Agreement (the “Agreement”) is
made as of April 18th, 2005, (the “Effective Date”) between Advancis
Pharmaceutical Corporation existing under the laws of United States of America
and having an address at 20425 Seneca Meadows Parkway, Germantown, Maryland
20876 (“Advancis”) and Clonmel Healthcare Limited existing under the laws of
Ireland and having an address at Waterford Road, Clonmel Co, Tipperary, Ireland
(“Clonmel”), each a “Party” and collectively, the “Parties.”
RECITALS
      A. Clonmel operates a multi-client manufacturing facility located at
Waterford Road, Clonmel, Co. Tipperary, Clonmel, Ireland (the “Facility”).
      B. Advancis desires to have Clonmel manufacture certain products for
certain clinical trials, site specific stability batches, scale-up, process
development and validation batches and Clonmel desires to manufacture such
products.
      NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants hereinafter set forth, Clonmel and Advancis, intending to be
legally bound, hereby agree as follows:
AGREEMENT

1.   Definitions

      When used in this Agreement, capitalized terms shall have the meanings as
defined below and throughout the Agreement. Unless the context indicates
otherwise, the singular shall include the plural and the plural shall include
the singular.
      1.1 “Advancis Approved Suppliers” means those suppliers approved by
Advancis and as listed in Schedule 4 and as modified from time to time by mutual
written agreement of the Parties.

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      1.2 “Advancis Intellectual Property Rights” means Intellectual Property
Rights made, conceived, developed or reduced to practice during the Term by
(a) Advancis or its employees or agents; or (b) by Clonmel or its employees or
agents; or (c) jointly by Advancis and Clonmel or their employees or agents; and
that relate to Product and/or the manufacture or use thereof and/or Confidential
Information of Advancis.
      1.3 “Affiliate” means any person, corporation, company, partnership, joint
venture and / or entity which, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with a
party.
      1.4 “Applicable Law(s)” means the laws, rules, and regulations, including
any statutes, rules, regulations, or other requirements, that may be in effect
from time to time and that apply to the development, manufacture, registration,
and marketing of Clinical Materials, Site Specific Stability Batches and
Validation Batches in the United States and the European Union and its member
states, including any such statutes, rules, regulations, or other requirements
of the FDA and the EMEA and/or to the manufacture of Clinical Materials, Site
Specific Stability Batches and Validation Batches at the Facility.
      1.5 “Approved Master Production Record” has the meaning set forth in
Section 2.1(c).
      1.6 “Batch” means a specific quantity of Clinical Materials, Site Specific
Stability Batches and Validation Batches that is intended to have uniform
character and quality, within specified limits, and is produced according to a
single manufacturing order during the same cycle of manufacture.
      1.7 “Batch Record” means the production record pertaining to a Batch.
      1.8 “cGMP” means the current Good Manufacturing Practices as contained in
21 CFR Parts 210 and 211 and related regulations as amended from time to time.
      1.9 “Clinical Materials” means Product for administration to patients in
clinical trials.

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      1.10 “Clonmel Intellectual Property Rights” means any Intellectual
Property Rights made, conceived, developed or reduced to practice by Clonmel or
its employees or agents on, before or after the Effective Date; and excluding
any Advancis Intellectual Property Rights.
      1.11 “Clonmel Operating Documents” means the standard operating
procedures, standard manufacturing procedures, protocols, validation
documentation, and supporting documentation, such as environmental monitoring,
for operation and maintenance of the Facility and Clonmel equipment used in the
process of producing Clinical Materials, Site Specific Stability Batches and
Validation Batches, excluding any of the foregoing that are unique to the
manufacture of Clinical Materials, Site Specific Stability Batches and
Validation Batches, excluding the Process and the Approved Master Production
Record.
      1.12 “Competent Authorities” means any national or local agency,
authority, department, inspectorate, minister official, parliament or public or
statutory person (whether autonomous or not) of any government of any country
having jurisdiction over either any of the activities contemplated by this
Agreement or over the parties, including the European Commission, The Court of
First Instance and the European Court of Justice, the FDA, EMEA or other
governmental health authority.
      1.13 “Control” and the correlative meanings “controlled by” and “under
common control with” means, for purposes of the definition of Affiliate only,
the beneficial ownership, directly or indirectly, of more than 50% of the issued
share capital or other comparable equity or ownership interest with respect to a
business entity or the legal power to direct or cause direction of the general
management and policies of the party in question.
      1.14 “Development and Technology Transfer Plan” means the development and
technology transfer plan between the Parties dated as of the date of this
Agreement for developing the Process to manufacture Clinical Materials, Site
Specific Stability Batches, scale-up, process development and Validation Batches
attached hereto as Schedule 1 and any amendments thereto that are mutually
agreed in writing from time to time by the Parties.
      1.15 “EMEA” means the European Agency for the Evaluation of Medicinal
Products or any other successor agency where approval is necessary to market the
Product in Europe.

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      1.16 “FDA” means the U.S. Food and Drug Administration, and any successor
agency thereof.
      1.17 “FCA” has the meaning as such term is defined in the ICC Incoterms,
2000, International Rules for the Interpretation of Trade Terms, ICC Publication
No. 560.
      1.18 “Facility” means Clonmel’s production facility at Waterford Road,
Clonmel, Co Tipperary.
      1.19 “Facilities Build Out Agreement” shall mean the Facilities Build Out
Agreement entered into between the parties on.
      1.20 “Force Majeure” in relation to any Party means any event or
circumstance which is beyond the reasonable control of that Party which event or
circumstance that Party could not reasonably be expected to have taken into
account at the date of this Agreement and which results in or causes the failure
of that Party to perform any or all of its obligations under this Agreement
including act of God, lighting, fire, storm, flood, earthquake, strike, act of
the public enemy, war, terrorist act, blockade, governmental restraint, act of
legislature or requirement of governmental authority.
      1.21 “Intellectual Property Rights” means any Patent Right, invention,
registered design, design right, copyright, database right, trade mark, service
mark, application to register any of the aforementioned rights, trade secrets,
confidential information, and all rights in Know-How or equivalent rights
recognized in any jurisdiction.
      1.22 “Know-How” means any technical and other information which is not in
the public domain, including information comprising or relating to concepts,
discoveries, data, formulae, ideas, inventions (whether patentable or not),
procedures for experiments and tests and results of research or development,
laboratory records, processes including manufacturing processes, specifications
and techniques, clinical trial data and information contained in submissions to
Competent Authorities.
      1.23 “Manufacturing and Supply Agreement” means the Manufacturing and
Supply Agreement to be entered into between the parties.

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      1.24 “Latent Defect” has the meaning set forth in Section 3.5.
      1.25 “Master Production Record” means the documentation that contains a
detailed description of the Process and any other instructions to be followed by
Clonmel in the production of Clinical Materials, Site Specific Stability Batches
and Validation Batches.
      1.26 “Material Specifications” means the Materials specifications set
forth in Schedule 3 and as modified from time to time by mutual written
agreement of the Parties.
      1.27 “Materials” means all raw materials and supplies provided by Advancis
and / or an Advancis Approved Supplier to Clonmel to be used in the
manufacturing of the Clinical Materials, Site Specific Stability Batches and
Validation Batches.
      1.28 “Materials Warranty” means those warranties set forth in Section 3.2.
      1.29 “Patent Rights” means design and utility patent applications and
patents (including provisional patent applications), author certificates,
inventor certificates, utility certificates, improvement patents and utility
models and certificates of addition and all foreign counterparts of them in all
countries, including any divisional applications and patents, filings, renewals,
continuations, continuations-in-part, patents of addition, extensions (including
patent term extensions), reissues, substitutions, confirmations, registrations,
revalidation and additions of or to any of them, as well as any supplementary
protection certificates and equivalent protection rights in respect of any of
them.
      1.30 “Process” means the manufacturing process for Clinical Materials,
Site Specific Stability Batches and Validation Batches in accordance with the
Approved Master Production Record.
      1.31 “Product” means [***].
      1.32 “Product Specifications” means the finished Product specifications
set forth in Schedule 2 and as modified from time to time by mutual written
agreement of the Parties.
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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      1.33 “Product Warranties” means those warranties set forth in Section 3.1.
      1.34 “Regulatory Approval” means the approval by the FDA to market and
sell Product in the United States.
      1.35 “Site Specific Stability Batches” means site specific stability
batches of the Product and scale up batches of the Product produced by Clonmel
as set out in the Development and Technology Transfer Plan and subsequently put
on a formal stability program.
      1.36 “Shipping Documentation” means the documents, including but not
limited to certificates of analyses, MSDS and packaging slip summarizing the
contents of the shipment as set forth in the Approved Master Production Record.
      1.37 “SOP” means a standard operating procedure.
      1.38 “Term” means the period commencing on the Effective Date and
terminating on the date of expiration or termination of this Agreement as set
out in Section 9.
      1.39 “Validation Batches” means the validation batches of the Product as
set out in the Development and Technology Transfer Plan.
      1.40 “Third Party” means any party other than Clonmel, Advancis or their
respective Affiliates.

2.   Development of Manufacturing Process

      2.1 (a) Clonmel and Advancis agree to collaborate and cooperate with each
other in developing the Process at the Facility to manufacture Clinical
Materials, Site Specific Stability Batches, scale-up, process development and
Validation Batches, all in accordance with the work outlined in the Development
and Technology Transfer Plan and in accordance with the requirements set forth
in the Development and Technology Transfer Plan.
      (b) Clonmel and Advancis shall cooperate in the preparation of a Master
Production Record. The Master Production Record shall include but not be limited
to (i) manufacturing Batch Records including SOPs; (ii) quality control tests;
and (iii) Clinical

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Materials, Site Specific Stability Batches and Validation Batches packing and
shipping instructions. The Master Production Record shall be prepared under the
direction of Advancis.
      (c) Upon approval in writing by both Parties of the Master Production
Record, the Master Production Record shall become the Approved Master Production
Record. The Approved Master Production Record may be modified from time to time
by mutual written agreement of the Parties.
      (d) Clonmel shall provide sufficient space within the facility for use as
an Analytical Laboratory which will contain all analytical equipment supplied by
Advancis. Advancis will supply all analytical equipment listed on Schedule 6 .
It is understood that this is all the equipment necessary for both development
and commercial operations.
      Clonmel shall provide Advancis and Advancis’ employees and agents access
to the Facility only for the purposes of performing activities under the
Development and Technology Transfer Plan. Advancis shall have the right to
direct and supervise activities of Clonmel employees at the Facility with
respect to activities under the Development and Technology Transfer Plan.
Advancis shall be provided with an office including telephone and computer
connections at the Facility for use by Advancis during the Term.
      (e) Advancis employees working at the Facility shall be and remain
employees of Advancis, and shall not become employees or agents of Clonmel at
any time, and Advancis shall be solely responsible for the payment of
compensation for such Advancis employees (including applicable federal, state
and local laws withholding, FICA, pay related social insurance (P.R.S.I.) or
similar contributions to the extent applicable, and other payroll taxes,
workers’ compensation insurance, health insurance, pension, bonus, and other
similar statutory and fringe benefits (the “Employee Benefits”)).
      (f) Advancis hereby agrees to indemnify and hold harmless Clonmel against
any claims or demands that may be made by the relevant authorities or any other
Third Party in respect of any such Employee Benefits.

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      (g) The Process, Product Specifications, Material Specifications, SOPs and
any improvements or modifications thereto developed during the Term in relation
to the Product and / or Advancis Intellectual Property Rights shall be owned by
Advancis and shall be deemed Confidential Information of Advancis and subject to
the provisions set forth in Section 6. Advancis is permitted to use (itself or
through a third party), the Process and/or the Approved Master Production Record
to manufacture Product or to engage a third party as a contract manufacturer of
Product.
(h) With respect to work performed under the Development and Technology Transfer
Plan by Clonmel, during each shift during which Clinical Materials, Site
Specific Stability Batches, scale-up, process development and Validation Batches
is being manufactured at the Facility, each Clonmel employee assigned to such
work shall be dedicated to such work during the entire shift unless otherwise
agreed to in writing by Advancis.
(i) With respect to the Materials supplied by Advancis to Clonmel, for use at
the Facility pursuant to the Development and Technology Transfer Plan, title and
risk of loss of such Materials shall pass to Clonmel on delivery of the
Materials at the Facility.
(j) For scale up, process development and Validation Batches, Materials shall be
processed through Clonmel’s commercial purchasing and release systems in
conjunction with specifications and processes established and/or previously
agreed to by Advancis.
(k) [***] shall supply to [***], such quantities of Materials as Clonmel
requires for the manufacture and supply of Site Specific Stability Batches and
Clinical Materials [***] and, [***] shall obtain from [***] the Materials [***]
for manufacture and supply of Validation Batches for Advancis:
a) free from any liens or encumbrances;
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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b) conforming to Material Specifications and, in all material respects, to
Applicable Laws;
c) in sufficient quantities and on time to enable Clonmel to meet Advancis’
requirements;
d) labelled in accordance with Clonmel’s requirements communicated to Advancis
and or the Advancis Approved Suppliers, in particular as required pursuant to
any Regulatory Approval and so as to permit safe storage and transport;
e) with a certificate of analysis in respect of Material, in a form reasonably
acceptable to Clonmel (and Clonmel shall be entitled to rely upon such
certificate of analysis without the necessity of performing additional testing).
(l) In the event that there are delays in the supply of any information, data or
Materials by Advancis and / or the Advancis Approved Suppliers, or delays by any
government agency or authority, in each case, other than those caused by
Clonmel, which will [***] affect Clonmel’s ability to manufacture Clinical
Materials, Site Specific Stability Batches and / or Validation Batches, the
Parties shall agree [***] and amend the Development and Technology Transfer
Plan[***].
(m) Subject to Section 2.1(l), Clonmel agrees to use [***] to complete the work
set forth in the Development and Technology Transfer Plan in accordance with the
Development and Technology Transfer Plan, including the schedules set forth
therein. [***].
(n) Clinical Materials and Site Specific Stability Batches manufactured pursuant
to this Agreement shall be used by Advancis solely for research and development
purposes, including but not limited to stability studies and clinical studies,
and not for commercial
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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purposes. Advancis shall have the right to use Validation Batches for any and
all purposes in accordance with the terms of the Manufacturing and Supply
Agreement.
(o) Where Advancis provides any Materials to Clonmel, or where any Materials are
provided to Clonmel by an Advancis Approved Supplier, in each case, with respect
to Site Specific Stability Batches and/or Clinical Materials, Advancis shall be
responsible for ensuring that all such Materials are provided on time and in
accordance with the Material Specifications. Clonmel shall be responsible for
ensuring that all Materials for Validation Batches are provided on time and in
accordance with Material Specifications.
(p) Prior to the receipt by Clonmel of any Materials provided by Advancis or any
Advancis Approved Supplier, in each case, with respect to Site Specific
Stability Batches and/or Clinical Materials, Advancis shall supply Clonmel with
procedures and warnings necessary to help assure the safe handling and use of
the Materials.
(q) In addition to the payments under Section 2.7(c) Advancis shall pay Clonmel
for (i) the use of the Facility, (ii) the work performed by or on behalf of
Clonmel under the Development and Technology Transfer Plan; and (iii) the
Batches of Clinical Materials, Site Specific Stability Batches, scale-up,
process development and Validation Batches manufactured under the Development
and Technology Transfer Plan, in each case, in the amounts and at the times set
forth in the Development and Technology Transfer Plan. Except for the specific
amounts set forth in the Development and Technology Transfer Plan, Advancis
shall not be required to make any additional payments unless the amount is
authorized by Advancis in advance in writing.
      2.2 Manufacture by Clonmel. Clonmel shall manufacture, package, ship,
handle, and provide quality assurance for Clinical Materials, Site Specific
Stability Batches, scale-up, process development and Validation Batches that are
manufactured under this Agreement, as set forth in the Approved Master
Production Record and in accordance with cGMP and in all material respects in
accordance with Applicable Laws, and to deliver to Advancis the quantities of
Clinical Materials, Site Specific Stability Batches, scale-up, process
development and Validation Batches set forth in the Development and Technology
Transfer Plan, in accordance

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with the schedule set forth therein, or any Additional Materials and Batches
that Clonmel has agreed to manufacture pursuant to Section 2.7.
      2.3 Packaging and Shipping. Clonmel shall package and label Clinical
Materials, Site Specific Stability Batches and Validation Batches for shipment
in accordance with the Approved Master Production Record. Clonmel shall deliver
Clinical Materials, Site Specific Stability Batches, scale-up, process
development and Validation Batches FCA (having the meaning and importing the
rights and obligations provided in Incoterms 2000) delivered at the Facility to
a common carrier for shipment designated by Advancis to Clonmel in writing and
risk shall pass accordingly. Advancis shall pay for all shipping costs in
connection with each shipment of Clinical Materials, Site Specific Stability
Batches, scale-up, process development and Validation Batches. Each shipment
shall be accompanied by the Shipping Documentation. Clonmel shall [***] to
deliver each shipment of Clinical Materials, Site Specific Stability Batches,
scale-up, process development and Validation Batches to Advancis on the delivery
date for such shipment scheduled in the Development and Technology Transfer
Plan. Should Clonmel at any time during the term of this Agreement have reason
to believe that it shall be unable to meet a delivery date, Clonmel shall
promptly notify Advancis.
      Advancis shall be responsible for ensuring that all storage, shipping,
handling and distribution of Product by Advancis and/or any Third Party on
behalf of Advancis, including without limitation any agents and sub-contractors
of Advancis, is in accordance with, in all material respects, Applicable Laws.
      2.4 The title to any consignment of the Clinical Materials, Site Specific
Stability Batches, scale-up, process development and Validity Batches shall pass
to Advancis upon delivery to the carrier.
      2.5 Complaints and Clinical Material Recall. Advancis shall notify Clonmel
promptly in writing of any complaints from Third Parties reported to Advancis
involving any adverse reactions resulting from the use of the Clinical
Materials.
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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      2.6 Records. Clonmel shall maintain accurate records for the production of
Clinical Materials, Site Specific Stability Batches, scale-up, process
development and Validation Batches as required by Applicable Laws, including
cGMP regulations and shall retain such records for the longer of [***] or the
period required by relevant Applicable Law. Clonmel shall retain ownership of
Clonmel Operating Documents, and shall make copies thereof available to Advancis
upon Advancis’ request. Clonmel Operating Documents shall remain Clonmel
Confidential Information. Advancis shall have the right to use, read, audit and
reference any of the foregoing in connection with a filing for Regulatory
Approval of Clinical Materials, Site Specific Stability Batches, scale-up,
process development and Validation Batches; in connection with the review of
manufacturing activities related to preventive maintenance, calibrations,
equipment validations, testing, housekeeping, or personnel training, or as
otherwise authorized by the Agreement under Section 6. Advancis shall own the
Approved Master Production Record and all Batch Records. Clonmel shall be
entitled to retain possession of the originals thereof in the files of Clonmel,
as Confidential Information of Advancis.
      2.7 Orders for Additional Materials and Batches
      (a) In the event that Advancis desires reasonable quantities of Clinical
Materials, Site Specific Stability Batches, scale-up, process development and
Validation Batches in addition to the amount thereof set forth in the
Development and Technology Transfer Plan, Advancis shall submit orders to
Clonmel specifying the amount of additional Clinical Materials, Site Specific
Stability Batches, scale-up, process development and Validation Batches (the
“Additional Materials and Batches”) and the requested delivery date therefor
which shall be mutually agreed to by the Parties. Clonmel shall supply
Additional Materials and Batches in accordance with the order. It is expressly
understood that Advancis may obtain Clinical Materials, Site Specific Stability
Batches and Validation Batches from sources other than Clonmel.
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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      (b) No term or provision set forth in any order or similar document
submitted by Advancis for purposes of ordering Additional Materials and Batches
shall be construed to amend or supersede any provision of this Agreement, and
any such terms or provisions of any such order are hereby expressly rejected.
      (c) Advancis shall pay Clonmel for such Additional Materials and Batches
ordered by Advancis in the amounts set forth in Schedule 5 within [***] days of
invoice therefor, which invoice shall be no earlier than date of delivery to the
carrier.

3.   Product Warranties; Materials Warranty; Acceptance And Rejection of
Clinical Materials, Site Specific Stability Batches, scale-up, process
development and Validation Batches; Acceptance and Rejection of Materials

  3.1   Product Warranties

      (a) Clonmel warrants that any Clinical Materials, Site Specific Stability
Batches, scale-up, process development and Validation Batches delivered pursuant
to this Agreement shall be manufactured in accordance with the Approved Master
Production Record shall be manufactured in accordance with cGMP, and shall
conform to the Product Specifications therefor.
      (b) The warranties set forth in this Section 3.1 shall not apply to any
Clinical Materials, Site Specific Stability Batches, scale-up, process
development and Validation Batches which (i) have been tampered with or altered
after delivery to Advancis; (ii) have been subject to misuse, negligence or
accident after delivery to Advancis; or (iii) have been stored, handled or used
after delivery to Advancis in any manner contrary to Applicable Laws.
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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  3.2   Materials Warranty

      (a) Advancis warrants that any Material delivered pursuant to this
Agreement, by or on behalf of Advancis, for the production of Site Specific
Stability Batches and/or Clinical Material shall conform in all material
respects to the Material Specifications and shall be manufactured in accordance
with cGMP.
      (b) Clonmel warrants that any material used for scale-up, process
development and the production of Validation Batches shall conform in all
material respects to the Material Specifications and shall be manufactured in
accordance with cGMP.

  3.3   Clonmel General Warranties

      (a) Clonmel represents and warrants to Advancis as of the Effective Date,
as follows:
      (i) Clonmel has the right to enter into this Agreement; and
      (ii) there are no agreements between Clonmel and any Third Party that
conflict with this Agreement
(the “Clonmel General Warranties”).

  3.4   Advancis General Warranties

      (a) Advancis represents and warrants to Clonmel as of the Effective Date,
as follows:
      (i) Advancis has the right to enter in this Agreement; and
      (ii) there are no agreements between Advancis and any Third Party that
conflict with this Agreement
(the “Advancis General Warranties”).

  3.5   Approval of Shipment of Clinical Materials, Site Specific Stability
Batches and Validation Batches

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      (a) When a shipment of Clinical Materials, Site Specific Stability Batches
and / or Validation Batches is ready for delivery, Clonmel shall notify Advancis
and supply Advancis with the required Shipping Documentation. Clonmel shall not
ship any shipment of Clinical Materials, Site Specific Stability Batches and /
or Validation Batches until the required Shipping Documentation for such
shipment has been approved in writing by Advancis.
      (b) Advancis shall have [***] after receipt of each shipment of Clinical
Materials, Site Specific Stability Batches and / or Validation Batches (such
period, the “Acceptance Period”) to review such shipment and test Clinical
Materials, Site Specific Stability Batches and / or Validation Batches therein.
If Advancis believes that Clinical Materials, Site Specific Stability Batches
and / or Validation Batches do not comply with the Product Warranties, then
Advancis shall deliver to Clonmel written notice of rejection (the “Rejection
Notice”) of such Clinical Materials, Site Specific Stability Batches and / or
Validation Batches, stating in reasonable detail the basis for such assertion of
non-compliance. Any Clinical Materials, Site Specific Stability Batches and /or
Validation Batches not rejected within such [***] period shall be deemed to be
accepted by Advancis; provided, however, that Advancis thereafter may send a
Rejection Notice for Clinical Materials and/or Site Specific Stability Batches
and/or Validation Batches promptly following the discovery of any failure to
comply with the Product Warranties if such non-compliance was not reasonably
discoverable within such [***] period (each such non-compliance a “Latent
Defect”). If a Rejection Notice is received by Clonmel during the Acceptance
Period, or thereafter as permitted with respect to Latent Defects. Clonmel and
Advancis shall attempt to resolve any dispute regarding the conformity of a
shipment of Clinical Materials, Site Specific Stability Batches and / or
Validation Batches with the Product Warranties. If such dispute cannot be
settled within 30 days of the submission of the Rejection Notice, then such
dispute shall be resolved as set forth in Section 3.7.
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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      3.6 Approval and Rejection of Materials
      Clonmel shall have [***] after receipt of each shipment of Materials that
Advancis is required to supply for production of Site Specific Stability Batches
and/or Clinical Materials (such period, the “Materials Acceptance Period”) to
review such shipment and test the Materials therein. If Clonmel believes that
the Materials do not comply with the Materials Warranty, then Clonmel shall
deliver to Advancis written notice of rejection (the “Materials Rejection
Notice”) of such Materials, stating in reasonable detail the basis for such
assertion of non-compliance. Any Materials not rejected within such [***] period
shall be deemed to be accepted by Clonmel. If a Materials Rejection Notice is
received by Advancis during the Materials Acceptance Period, Advancis and
Clonmel shall attempt to resolve any dispute regarding the conformity of a
shipment of the Materials with the Material Warranty. If such dispute cannot be
settled within [***] of the submission of the Materials Rejection Notice, then
such dispute shall be resolved as set forth in Section 3.8.
      3.7 Disputes Regarding Clinical Materials, Site Specific Stability Batches
and / or Validation Batches.
      (a) If Clinical Materials, Site Specific Stability Batches and / or
Validation Batches are alleged not to conform with the Product Warranties, then
Advancis shall submit a sample of the Batch of the disputed shipment to an
independent testing laboratory of recognized repute selected by Advancis and
approved by Clonmel (such approval not to be unreasonably withheld) for
analysis, under quality assurance approved procedures, of the conformity of such
shipment of Clinical Materials, Site Specific Stability Batches and / or
Validation Batches with the Product Warranties. The costs associated with such
analysis by such independent testing laboratory shall be paid by the Party whose
assessment of the conformity of the shipment of Clinical Materials, Site
Specific Stability Batches and / or Validation Batches with the Product
Warranties was
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

16

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mistaken. The determination by the independent testing laboratory, shall be
final and binding.
3.8 Disputes Regarding Materials
            (a) If Materials supplied by or on behalf of Advancis pursuant to
Section 3.6 are alleged not to conform with Materials Warranty, then Clonmel
shall submit a sample of the Material of the disputed shipment to an independent
testing laboratory of recognized repute selected by Clonmel and approved by
Advancis (such approval not to be unreasonably withheld) for analysis, under
quality assurance approved procedures, of the conformity of such shipment of
Materials with the applicable Materials Warranty. The costs associated with such
analysis by such independent testing laboratory shall be paid by the Party whose
assessment of the conformity of the shipment of Materials with the Material
Warranty was mistaken. The determination by the independent testing laboratory,
shall be final and binding.
      3.9 In the event that the Parties or an independent testing laboratory
agree that all or a portion of a shipment of Clinical Materials, Site Specific
Stability Batches and / or Validation Batches fails to conform to the Product
Warranties, Clonmel shall manufacture for and deliver to Advancis, by expedited
means, for no additional costs, sufficient quantities of Clinical Materials,
Site Specific Stability Batches and / or Validation Batches to replace the non
conforming portion of such shipment of Clinical Materials, Site Specific
Stability Batches and Validation Batches, in accordance with the provisions of
this Agreement.
      3.10 In the event that the Parties or an independent testing laboratory
agree that all or a portion of a shipment of Materials fails to conform to the
Materials Warranty, Advancis shall supply to Clonmel, for no additional costs,
sufficient quantities of Materials to replace the non conforming portion of such
shipment of Materials, in accordance with the provisions of this Agreement.

4.   Regulatory Matters

      4.1 Permits and Approvals. During the Term, Clonmel shall maintain any
licences, permits and approvals necessary for the manufacture of Clinical
Materials, Site Specific Stability

17

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Batches and Validation Batches in the Facility. Clonmel shall promptly notify
Advancis if Clonmel receives notice that any such licence, permit, or approval
is or may be revoked or suspended.
      4.2 Inspections by Advancis. Up to [***] during the Term and upon not less
than [***] prior written notice, Clonmel shall permit Advancis, or Advancis’s
representative, to inspect, at reasonable business hours, the parts of the
Facility where the manufacture of Clinical Materials, Site Specific Stability
Batches and Validation Batches is carried out in order to assess Clonmel’s
compliance with cGMP and Applicable Laws, and to discuss, subject to Section 6,
any related issues with Clonmel’s management personnel.
      4.3 Inspections by Regulatory Agencies. Clonmel shall allow
representatives of any regulatory agency to inspect the relevant parts of the
Facility where the manufacture of Clinical Materials, Site Specific Stability
Batches and Validation Batches is carried out and to inspect the Approved Master
Production Record and Batch Records to verify compliance with cGMP and
Applicable Laws and other practices or regulations and shall promptly notify
Advancis of the scheduling of any such inspection relating to the manufacture of
Clinical Materials, Site Specific Stability Batches and Validation Batches.
Advancis shall have the right to be present during and to participate in any
such inspection. Clonmel shall promptly send to Advancis a copy of any reports,
citations, or warning letters received by Clonmel in connection with an
inspection of a regulatory agency to the extent such documents relate to or
affect the manufacture of Clinical Materials, Site Specific Stability Batches
and Validation Batches.
      4.4 Advancis shall be fully responsible for designing all clinical
protocols and for all other arrangements and directions in relation to all
clinical trials in respect of Product.

5.   Financial Terms

      5.1 Invoices. Subject to Sections 2.1(q) and 2.7, during the Term, and
within [***] of the end of each month during which permitted charges were
incurred under this Agreement, Clonmel shall provide Advancis with an invoice
setting forth a detailed account of any such fees,
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

18

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expenses, or other payments payable by Advancis under this Agreement for the
preceding month. The amounts set forth in each such invoice shall be due and
payable within [***] of receipt of such invoice by Advancis.
      5.2 Method of Payment. All invoices issued by Clonmel and all payments
made by Advancis hereunder shall be denominated in U.S. Dollars, regardless of
the currency in which Clonmel’s third party obligations are denominated.
Advancis shall not be required to compensate Clonmel for any currency
fluctuations, including any occurring between the date of Clonmel’s invoice and
the date of Advancis’ payment.
      5.3 Advancis shall pay all sums payable by them under this Agreement free
and clear of all deductions or withholding unless the law requires a deduction
or withholding to be made. If a deduction or withholding is so required Advancis
shall pay such additional amount as will ensure that the net amount Clonmel
receives equals the full amount which it would have received had the deduction
or withholding not been required.
      5.4 Any sums payable to Clonmel pursuant to this Agreement or the
Development and Technology Transfer Agreement shall be exclusive of VAT.

6.   Confidential Information

      6.1 Definition. “Confidential Information” means all technical, scientific
and other know-how and information, trade secrets, knowledge, technology, means,
methods, processes, practices, formulas, instructions, skills, techniques,
procedures, specifications, data, results and other material, pre-clinical and
clinical trial results, manufacturing procedures, test procedures and
purification and isolation techniques, and any tangible embodiments of any of
the foregoing, and any scientific, manufacturing, marketing and business plans,
any financial and personnel matters relating to a Party or its present or future
products, sales, suppliers, customers, employees, investors or business, that
has been disclosed by or on behalf of such Party to the other Party either in
connection with the discussions and negotiations pertaining to this Agreement or
in the course of performing this Agreement. Without limiting the foregoing, the
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

19

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terms of this Agreement shall be deemed “Confidential Information” and shall be
subject to the terms and conditions set forth in this Section 6.
      6.2 Each Party undertakes and agrees in relation to Confidential
Information of the other Party:

  (a)   to use such Confidential Information only for the purposes envisaged
under this Agreement and not to use the same or any part thereof for any other
purpose whatsoever;     (b)   to ensure that those of its Affiliates, employees
and sub-contractors who are concerned with the carrying out of this Agreement
are informed of the secret and confidential nature of it;     (c)   in
accordance with Section 6.2 (b) to ensure that those Affiliates, employees and
sub-contractors agree to keep such Confidential Information secret and
confidential;     (d)   to keep such Confidential Information secret and
confidential and not, save as envisaged as part of this Agreement, to disclose
or permit to be disclosed the same to any Third Party for any reason without the
prior written consent of the disclosing Party.

      6.3 Notwithstanding the foregoing Section 6.2, the obligations of
confidence and non-use shall not extend to Confidential Information which:
                        (a) at the time of disclosure is in the public domain;
or
                        (b) becomes part of the public domain, by publication or
otherwise, through no breach of this Agreement; or
                        (c) at the time of disclosure is already in possession
of the Party who received such information, as established by contemporaneous
written records; or
                        (d) becomes available to a receiving Party on a
non-confidential basis, whether directly or indirectly, from a source other than
another Party, which source did not acquire this information on a confidential
basis; or

20

--------------------------------------------------------------------------------

 

                        (e) is independently developed by a Party without use of
or reference to the other Party’s Confidential Information, as established by
contemporaneous written records.
      6.4 The Parties agree that the obligations of this Section 6 may cause
irreparable injury to a Party and that, in addition to any other remedies that
may be available, in law and equity otherwise, each Party shall be entitled to
seek injunctive relief against the threatened breach of the provisions of this
Section 6, or a continuation of any such breach by any other Party, and other
equitable relief to redress such breach.
      6.5 Disclosure and Use Restriction. Except as expressly provided herein,
the Parties agree that, for the longer of (i) 15 years from the Effective Date,
and (ii) the Term and the 10 years’ period following any expiration or
termination of the Agreement, each Party and its Affiliates shall keep
completely confidential and shall not publish or otherwise disclose any
Confidential Information of the other Party, its Affiliates or sub-licensees.
Neither Party shall use Confidential Information of the other Party except as
necessary to perform its obligations or to exercise its rights under this
Agreement. Subject to Section 6.6, no announcements or public statement
concerning the specific terms of this Agreement shall be made by or on behalf of
any Party without the prior written approval of the other Party. The terms of
any such announcement shall be agreed in good faith by the Parties.
      6.6 Permitted Disclosures. A Party (the “disclosing Party”) shall be
entitled to make an announcement or public statement concerning the existence,
subject matter or any term of this Agreement, or to disclose Confidential
Information that the disclosing Party is required to make or disclose pursuant
to:
(i) a valid order of a court or governmental authority; or
(ii) any other requirement of law or any securities or stock exchange;
provided that if the disclosing Party becomes legally required to make such
announcement, public statement or disclosure hereunder, the disclosing Party
shall give the other Party reasonable notice of such fact and such other Party
shall have been given the opportunity to oppose such disclosure by the
disclosing Party subject to the required disclosure by seeking a protective
order or other appropriate remedy.

21

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The disclosing Party shall fully co-operate with the other Party in connection
with the other Party’s efforts to obtain any protective order or other
appropriate remedy.
If any such order or other remedy does not fully preclude announcement, public
statement or disclosure, the disclosing Party shall make such announcement,
public statement or disclosure only to the extent that the same is legally
required.
      A Party shall be entitled to disclose this Agreement and the terms thereof
to its attorneys, accountants and advisors or in connection with a proposed
merger, sale, consolidation, financing permitted assignment or permitted use of
Confidential Information, or similar transactions provided that the disclosing
Party makes reasonable efforts to obtain an obligation of confidentiality with
respect thereto no less protective than the terms of this Section 6.
      6.7 Publicity. Neither Party shall refer to, display or use the other’s
name, corporate style, trade marks or trade names confusingly similar thereto,
alone or in conjunction with any other words or names, in any manner or
connection whatsoever, including any publication, article, or any form of
advertising or publicity.

7.   Intellectual Property

      7.1 Ownership.
            (a) As between the Parties, Advancis shall own all right, title and
interest in and to the Advancis Intellectual Property Rights. Clonmel agrees to
assign and hereby assigns to Advancis all of Clonmel’s right, title and interest
in and to the Advancis Intellectual Property Rights.
            (b) As between the Parties, Clonmel shall retain all right, title
and interest in and to the Clonmel Intellectual Property Rights.
      7.2 License Grants.
            Clonmel hereby grants to Advancis a non-exclusive, royalty-free,
paid-up, perpetual, non-terminable, worldwide license, with the right to grant
sublicenses, to practice any and all Clonmel Intellectual Property Rights
embodied in the Product or the

22

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Process to use, make, have made, offer for sale, sell, and import Product, which
license shall survive termination of this Agreement.

8.   Disclaimer

      8.1 DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS
AGREEMENT, BOTH PARTIES MAKE NO REPRESENTATIONS AND GRANT NO WARRANTIES, EXPRESS
OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, WITH
RESPECT TO PRODUCTS, MATERIALS, AND SERVICES PROVIDED UNDER THIS AGREEMENT, AND
CLONMEL SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR
EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR USE OR PURPOSE WITH RESPECT TO SUCH PRODUCTS,
MATERIALS, OR SERVICES.

9.   Term and Termination

      9.1 Term. The Term of this Agreement shall commence on the Effective Date
and shall continue until the later of: (i) 5 years from the Effective Date; or
(ii) the date of completion of all Validation Batches; or (iii) completion of
the work under the Development and Technology Transfer Plan unless terminated
earlier pursuant to the terms of this Agreement.
      9.2 Termination for Material Breach.
      (a) Any failure by a Party to comply with any of its material obligations
contained herein shall constitute a material breach (including but not limited
to a failure to make a payment pursuant to this Agreement) and in addition to
any other remedy available at law or in equity shall entitle the Party not in
breach to give to the Party in breach written notice specifying the nature of
the breach. Such notice shall require the breaching Party to make good or
otherwise cure such breach.
      (b) If such breach is not cured or payment made within [***] after the
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

23

--------------------------------------------------------------------------------

 

receipt of notice pursuant to Section 9.2 (a) above (or, if such default cannot
be cured within such [***] period, and the Party in breach does not commence
actions to cure such breach within such period and thereafter diligently
continue such actions and cure such breach within [***] after the receipt of
such notice, except in the case of a payment default, as to which the breaching
Party shall have only a [***] cure period), then the Party not in breach shall
be entitled, without prejudice to any of the other rights conferred on it by
this Agreement, to terminate this Agreement upon written notice to the other
Party.
      9.3 Termination by Insolvency.
      Any Party shall be entitled to terminate this Agreement by written notice
to the other Party where the other Party ceases to do business, has a receiver,
examiner or similar officer appointed in respect of the whole or any part of its
assets or business, makes any composition or arrangement with its creditors,
takes or suffers any similar action in consequence of debt or an order or
resolution is made for its dissolution or liquidation (in each of the foregoing
cases other than for the purpose of solvent amalgamation or reconstruction or
reorganization), or any equivalent or similar action or proceeding is taken or
suffered in any jurisdiction and the same is not dismissed or discharged within
30 days thereafter.
      9.4 Termination upon termination of the Facilities Build Out Agreement.
      Where Advancis terminates the Facilities Build Out Agreement pursuant to
Section 8.2 of that Agreement, Clonmel may terminate this Agreement by written
notice with immediate effect.
      9.5 Effects of Termination.
      (a) Accrued Rights. Termination of this Agreement for any reason shall be
without prejudice to any rights that shall have accrued to the benefit of a
Party prior to such termination. Such termination shall not relieve a Party of
obligations that are expressly indicated to survive the termination of this
Agreement. For the avoidance of
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

24

--------------------------------------------------------------------------------

 

doubt, termination of this Agreement by Advancis (other than due to a material
breach of this Agreement by Clonmel) or by Clonmel shall be without prejudice to
Clonmel’s right to receive payment of all costs incurred by Clonmel prior to the
date of termination. Costs shall mean all costs incurred by Clonmel in carrying
out its obligations under this Agreement. In addition, such termination shall be
without prejudice to a Party’s right to recover damages with respect to any
breach of this Agreement.
            (b) Disposition of Remaining Advancis Confidential Information. Upon
termination or expiration of this Agreement, Clonmel shall, upon Advancis’s
prior written request, return or destroy any Advancis Confidential Information
in the possession or control of Clonmel. Likewise, Advancis shall, upon
Clonmel’s prior written request, return or destroy any Clonmel Confidential
Information in the possession or control of Advancis. Notwithstanding the
foregoing provisions: (i) Clonmel may retain and preserve, at its sole cost and
expense, samples and standards of each Clinical Material, Site Specific
Stability Batch and Validation Batch following termination or expiration of this
Agreement solely for use in determining Clonmel’s rights and obligations
hereunder; and (ii) each Party may retain such of the other Party’s Confidential
Information as may be required by Applicable Laws, regulations, or guidelines
provided that such Confidential Information may not be used for any purpose
without the prior written consent of the other Party and provided also that the
provisions of Section 6 shall continue to apply to such Confidential
Information.
      (c ) Upon termination by Clonmel of this Agreement in accordance with
Section 9.4 :
(i) Clinical Materials, Site Specific Stability Batches and/or Validation
Batches manufactured prior to termination shall be delivered by Clonmel to
Advancis whereupon Advancis shall pay Clonmel in accordance with the terms of
this Agreement;
(ii) Clonmel shall have no obligation to complete any work in progress commenced
by Clonmel prior to termination and Advancis shall fully and finally release
Clonmel from its obligation to develop, manufacture and/or supply Clinical
Material, Site Specific Stability Batch, scale up, process development and
Validation Batch pursuant to this

25

--------------------------------------------------------------------------------

 

Agreement; and
(iii) Materials acquired by Clonmel pursuant to the Development and Technology
Transfer Plan and/or Section 2.7 shall be transferred to Advancis and Advancis
shall reimburse Clonmel for the acquisition costs thereof incurred by Clonmel.
(iv) Clonmel shall not be liable to Advancis for any breach of this Agreement to
the extent that such breach has arisen by reason of a termination of the
Facilities Build Out Agreement by Advancis pursuant to Section 8.2 of the
Facilities Build Out Agreement.

10.   Indemnification

      10.1 Indemnity by Advancis. Advancis shall indemnify Clonmel and its
Affiliates, and their respective directors, officers, employees and agents (the
“Clonmel Parties”), and defend and hold each of them harmless, from and against
any and all losses, claims, damages, liabilities, costs and expenses (including
reasonable attorneys’ fees and expenses) in connection with any and all Third
Party liability suits, investigations, claims or demands (collectively,
“Losses”) arising from or occurring as a result of or in connection with (i) a
breach of any Advancis General Warranties; (ii) a breach of Materials Warranty
by Advancis; (iii) the negligence or wilful misconduct on the part of Advancis,
its Affiliates, and their respective directors, officers, employees and agents
(the “Advancis Parties”) in performing any activity contemplated by this
Agreement; (iv) the design of all clinical protocols in relation to the Product;
and / or (v) all clinical trials conducted by Advancis utilising the Clinical
Materials, or otherwise in relation to the Products, except for those Losses for
which Clonmel has an obligation to indemnify Advancis Parties pursuant to
Section 10.2.
      10.2 Indemnity by Clonmel. Clonmel shall indemnify the Advancis Parties,
and defend and hold each of them harmless, from and against any and all Losses
arising from or occurring as a result of or in connection with (i) a breach of
any Clonmel General Warranties; (ii) a breach of the Product Warranties; and /or
(iii) the negligence or wilful misconduct on the part of one or more of the
Clonmel Parties in performing any activity contemplated by this Agreement,
except for those Losses for which Advancis has an obligation to indemnify
Clonmel Parties pursuant to Section 10.1.

26

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      10.3 EXCEPT FOR INDEMNIFICATION, NOTWITHSTANDING ANYTHING TO THE CONTRARY
IN THIS AGREEMENT, NONE OF THE PARTIES HERETO SHALL BE LIABLE TO ANY OTHER PARTY
HERETO BY REASON OF ANY REPRESENTATION OR WARRANTY, CONDITION OR OTHER TERM OR
ANY DUTY OF COMMON LAW, OR UNDER THE EXPRESS TERMS OF THIS AGREEMENT, FOR ANY
CONSEQUENTIAL, SPECIAL OR INCIDENTAL OR PUNITIVE LOSS OR DAMAGE AND WHETHER
OCCASIONED BY THE NEGLIGENCE OF THE RESPECTIVE PARTIES, THEIR EMPLOYEES OR
AGENTS OR OTHERWISE.
      10.4 Indemnification Procedure
        (a) Notice of Claim. All indemnification claims in respect of a Party,
its Affiliates or their respective directors, officers, employees and agents
(each, an “Indemnitee”) shall be made solely by the applicable Party (the
“Indemnified Party”). The Indemnified Party shall give the indemnifying Party
(the “Indemnifying Party”) prompt written notice (an “Indemnification Claim
Notice”) of any Losses or discovery of fact upon which such Indemnified Party
intends to base a request for indemnification under Section 10.1 or
Section 10.2, but in no event shall the Indemnifying Party be liable for any
Losses that result from any delay in providing such Indemnification Claim
Notice. Each Indemnification Claim Notice must contain a description of the
claim and the nature and amount of such Loss, to the extent that the nature and
amount of such Loss are known at such time. The Indemnified Party shall furnish
promptly to the Indemnifying Party copies of all papers and official documents
received in respect of any Losses.
              (b) Third Party Claims. The obligations of an Indemnifying Party
under this Section 10 with respect to Losses that are subject to indemnification
as provided for in Section 10.1 or Section 10.2 (a “Third Party Claim”) shall be
governed by and be contingent upon the following additional terms and
conditions:
                  (i) At its option, the Indemnifying Party may assume the
defence of any Third Party Claim by giving written notice to the Indemnified
Party within 30 days after the Indemnifying Party’s receipt of an
Indemnification Claim Notice.

27

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                  (ii) Upon assuming the defence of a Third Party Claim, the
Indemnifying Party may appoint as lead counsel in the defence of the Third Party
Claim any legal counsel selected by the Indemnifying Party. In the event the
Indemnifying Party assumes the defence of a Third Party Claim, the Indemnified
Party shall immediately deliver to the Indemnifying Party all original notices
and documents (including court papers) received by any Indemnitee in connection
with the Third Party Claim. Should the Indemnifying Party assume the defence of
a Third Party Claim, the Indemnifying Party shall not be liable to the
Indemnified Party or any other Indemnitee for any legal expenses subsequently
incurred by such Indemnified Party or other Indemnitee in connection with the
analysis, defence or settlement of the Third Party Claim.
            (c) Right to Participate in Defence. Without limiting the preceding
Section 10.3(b), any Indemnitee shall be entitled to participate in, but not
control, the defence of such Third Party Claim and to appoint counsel of its
choice for such purpose; provided, however, that such appointment shall be at
the Indemnitee’s own expense unless (i) the appointment thereof has been
specifically authorized by the Indemnifying Party in writing; or (ii) the
Indemnifying Party has failed to assume the defence and appoint counsel in
accordance with the preceding Section 10.4(b), in which case the Indemnified
Party shall control the defence.
            (d) Settlement. With respect to any Losses relating solely to the
payment of money damages in connection with a Third Party claim and that shall
not result in the Indemnitee’s becoming subject to injunctive or other relief or
otherwise adversely affect the business of the Indemnitee in any manner, and as
to which the Indemnifying Party shall have acknowledged in writing the
obligation to indemnify the Indemnitee hereunder, the Indemnifying Party shall
have the sole right to consent to the entry of any judgment, enter into any
settlement or otherwise dispose of such Loss, on such terms as the Indemnifying
Party, in its sole discretion, shall deem appropriate, and shall transfer to the
Indemnified Party all amounts which said Indemnified Party shall be liable to
pay prior to the entry of judgment. With respect to all other Losses in
connection with a Third Party claim, where the Indemnifying Party has assumed
the defence of the Third Party claim in accordance with Section 10.3(b), the
Indemnifying Party shall have authority to consent to the entry of any judgment,
enter into any settlement or

28

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otherwise dispose of such Loss provided it obtains the prior written consent of
the Indemnified Party (which consent shall not be withheld unreasonably). The
Indemnifying Party shall not be liable for any settlement or other disposition
of a Loss by an Indemnitee that is reached without the written consent of the
Indemnifying Party. Regardless of whether the Indemnifying Party chooses to
defend or prosecute any Third Party claim, no Indemnitee shall admit any
liability with respect to, or settle, compromise or discharge, any Third Party
claim without the prior written consent of the Indemnifying Party.
              (e) Cooperation. Regardless of whether the Indemnifying Party
chooses to defend or prosecute any Third Party claim, the Indemnified Party
shall, and shall cause each other Indemnitee to, cooperate in the defence or
prosecution thereof and shall furnish such records, information and testimony,
provide such witnesses and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be reasonably requested in connection
therewith. Such cooperation shall include access during normal business hours
afforded to the Indemnifying Party, and reasonable retention by the Indemnified
Party of, records and information that are reasonably relevant to such Third
Party claim, and making Indemnitees and other employees and agents available on
a mutually convenient basis to provide additional information and explanation of
any material provided hereunder, and the Indemnifying Party shall reimburse the
Indemnified Party for all its reasonable out-of-pocket expenses in connection
therewith.
      10.5 Expenses. Except as provided in this Section 10, the reasonable and
verifiable costs and expenses, including fees and disbursements of counsel,
incurred by the Indemnified Party in connection with any claim shall be
reimbursed on a calendar quarter basis by the Indemnifying Party, without
prejudice to the Indemnifying Party’s right to contest the Indemnified Party’s
right to indemnification and subject to refund in the event the Indemnifying
Party is ultimately held not to be obligated to indemnify the Indemnified Party.

11.   Miscellaneous

      11.1 Independent Contractors. Neither Party is authorized, nor shall
undertake, to bind the other Party in any way as agent, partner, joint venturer
or otherwise, whether in the name of Clonmel or Advancis or otherwise. Clonmel
is an independent contractor of Advancis, and

29

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neither Clonmel nor any person or entity employed, contracted, or otherwise
utilized by Clonmel for any purposes shall be deemed to be an employee,
representative or agent of Advancis.
     11.2 Force Majeure. Neither Party to this Agreement shall be liable for
failure or delay in the performance of any of its obligations hereunder if such
failure or delay results from Force Majeure, but any such failure or delay shall
be remedied by such Party as soon as practicable.
     11.3 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and shall be deemed to have been given
when (i) delivered by hand (with written confirmation of receipt), (ii) sent by
fax (with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, (iii) when received by the addressee,
if sent by a nationally recognized overnight delivery service (receipt
requested), in each case to the appropriate address and fax numbers set forth
below (or to such other addresses and fax numbers as a Party may designate by
notice to the other Party):
     If to Clonmel, to:

     
 
  Clonmel Healthcare Limited
 
  Waterford Road
 
  Clonmel Co.
 
  Tipperary, Ireland
 
  Attention: CEO
 
  Fax:

     and
     If to Advancis, to:

     
 
  Advancis Pharmaceutical Corporation
 
  20425 Seneca Meadows Parkway
 
  Germantown, Maryland 20876
 
  Attention: CEO
 
  Fax:

Either Party may change its address for notice by giving notice thereof in the
manner set forth in this Section 11.3.

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     11.4 Entire Agreement. This Agreement, including the Schedules hereto, the
Facilities Build Out Agreement and the Manufacturing and Supply Agreement
constitutes the entire agreement of the Parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, oral and
written, among the Parties with respect to the subject matter hereof. The
“RECITALS”, “DEFINITIONS”, and Schedules hereto are incorporated herein by
reference.
     11.5 Governing Law and Jurisdiction. This Agreement will be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to its conflicts of laws provisions. All suits, disputes, actions, and
other legal proceedings (collectively, “Suits”) related to or arising out of
this Agreement, will be brought in the Federal District Court of the District of
Maryland, or in a state court located in Maryland, as the case may be, which
will have the exclusive jurisdiction over such Suits, and to the personal
jurisdiction of which Clonmel and Advancis irrevocably submit.
     11.6 Counterparts. This Agreement and any Schedule hereto may be executed
in counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
     11.7 Amendments. This Agreement (including any Schedule hereto) may not be
amended or modified, and no provisions hereof may be waived, without the written
consent of the Parties.
     11.8 Severability. Each provision of this Agreement (and each Schedule
hereto) shall be treated as a separate and independent clause, and the
unenforceability of any one clause shall in no way impair the enforceability of
any of the other clauses herein. If one or more of the provisions contained in
this Agreement (or any Schedule hereto) shall for any reason be held to be
excessively broad as to scope, activity, subject or otherwise, so as to be
unenforceable at law, such provision or provisions shall be construed by the
appropriate judicial body by limiting or reducing it or them so as to be
enforceable to the maximum extent compatible with the applicable law as it shall
then appear.

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     11.9 Titles and Subtitles. The titles and subtitles used in this Agreement
(including any Schedule hereto) are for convenience only and are not to be
considered in construing or interpreting any term or provision of this Agreement
(or any Schedule hereto).
     11.10 Pronouns. Where the context requires, (i) all pronouns used herein
shall be deemed to refer to the masculine, feminine or neuter gender as the
context requires.
     11.11 Assignment. Neither Party shall assign this Agreement (or any
Schedule hereto), in whole or in part, without the prior written consent of the
other Party, except that, without consent, either Party shall be permitted to
assign its rights hereunder to one or more of its Affiliates and each Party
shall have the right to assign this Agreement in connection with a merger or
consolidation or similar transaction or in connection with the sale or transfer
of substantially its entire business or that portion of the business to which
this Agreement relates and provided that the assignee agrees to be bound by the
terms and conditions of this Agreement. No such assignment shall relieve the
assignor of its obligations under this Agreement unless agreed to in writing by
the other Party. Any purported assignment not permitted under this Section 11.11
shall be null, void, and of no effect.
     11.12 Waiver. The failure of any Party at any time or times to require
performance of any provision of this Agreement (including any Schedule hereto)
shall in no manner affect its rights at a later time to enforce the same. No
waiver by any Party of the breach of any term contained in this Agreement
(including any Schedule hereto), whether by conduct or otherwise, in any one or
more instances, shall be deemed to be or construed as a further or continuing
waiver of any such breach or the breach of any other term of this Agreement
(including any Schedule hereto).
     11.13 Survival. The provisions of this Agreement which are expressed to
survive its termination or from their nature or context it is contemplated that
they are to survive such termination shall remain in full force and effect
notwithstanding the termination of this Agreement. Without limiting the
foregoing, the following sections shall survive Sections 1, 2.1(g) and (i); 2.6,
6, 7, 8.1, 10 and 11.

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     11.14 Further Assurances. At the request of any of the Parties, the other
Party shall execute and perform all such documents, acts and things as may
reasonably be required subsequent to the signing of this Agreement for assuring
to or vesting in the requesting Party the full benefit of the terms hereof.
     11.15 No Presumption Against Drafter. For purposes of this Agreement,
Advancis hereby waives any rule of construction that requires that ambiguities
in this Agreement (including any Schedule hereto) be construed against the
drafter.
[Remainder of page intentionally left blank. Signatures appear on following
page]

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      IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day
and year first above written.

                  ADVANCIS PHARMACEUTICAL CORPORATION    
 
           
 
  By:     /s/ Edward M. Rudnic    
 
           
 
      Edward M. Rudnic, Ph.D.         Title: Chairman & CEO    

                  CLONMEL HEALTHCARE LIMITED    
 
           
 
  By:     /s/ Rory O’Riordan    
 
           
 
      Rory O’Riordan         Title: CEO    

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SCHEDULE 1
DEVELOPMENT AND TECHNOLOGY TRANSFER PLAN
Technology Transfer Agreement Between Clonmel Healthcare and Advancis
Pharmaceutical Corporation for the Development (Feasibility), Site-Specific
Manufacture, Process Scale Up and Process Validation of Amoxicillin Pulsatile
Products
Advancis Pharmaceutical Corporation and Clonmel Healthcare Ltd have entered into
an agreement to transfer the technology into Clonmel Healthcare for the
manufacture of the following products:
      Amoxicillin Pulsatile [***]
      Amoxicillin Pulsatile [***]
      Amoxicillin Pulsatile [***]
This agreement will outline the scope of work involved and the resources deemed
necessary to effectively carry out the technology transfer operation.
Scope of Technology Transfer Work

I.   Feasibility (development) and Site-Specific Stability Batches.

  a.   Feasibility batches for Amoxicillin [***].

                  [***].
            Cost : [***].

  b.   Site-Specific Stability Batches

            [***]
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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                                    [***]
            Cost : [***].

II.   Scale-up trials from site-specific batch size to commercial batch size.

      [***]
      Cost: [***].
Note: [***].
III. Process Validation Batches
      [***]
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

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      Costs: [***].
IV. Raw Materials and Components

  a.   Feasibility and Site Specific Study

            [***]

  b.   Scale Up Trials

            [***]

  c.   Process Validation Batches

            [***]
                  Note: [***]

V.   Finished Product Testing and Intermediate Product Testing

  a.   Feasibility and Site Specific Batches

                        [***]
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

37

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         [***]
      b. Scale up and Process Validation Batches
         [***]
VI. Equipment support and equipment qualifications for the following:
         [***]
Clonmel will charge Advancis for staff time devoted exclusively to this part of
the project so that all the steps above can be completed. To date [***] have
committed significant time to the preparation and approval of equipment IQ/OQ
documentation. Clonmel will at all times request Advancis to approve all such
expenditure.
VII. Compliance Support
[***]
Clonmel will charge Advancis for any Materials and/or equipment that must be
purchased exclusively for this project so that all the steps above can be
completed. Clonmel will at all times request Advancis to approve all such
expenditure before purchase orders are written.
Additional Resources Required at Clonmel Healthcare
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

38

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It is expected that Clonmel Healthcare will require additional resources in
order to manage the transfer of these products into the Clonmel site in an
efficient and effective manner. It is anticipated that Clonmel will acquire the
following resources at key agreed milestones in the project:

  1.   A project manager that will co-ordinate all the activities necessary to
ensure successful transfer of the pulsatile range of products. This person will
liaise closely with key Advancis personnel and will work on a fixed term
contract.     2.   Laboratory analysts [***] that will carry out the test method
transfers in a timely fashion     3.   Production operatives [***] that will
work on the site-specific stability and scale-up Batches. These operatives will
be deployed to pulsatile manufacture when necessary.

Clonmel will charge Advancis for the costs of providing these resources.
Advancis will at all times be requested to approve all such resources before
they are brought on stream. Although Clonmel will charge Advancis for the
services of certain personnel, it is intended that Clonmel will train a large
group of personnel on relevant aspects of the technology.
Note that these resource requirements are not rigidly fixed but are intended to
serve as a guide as to what level of support will be required to facilitate a
professional technology transfer process in the time identified. Both parties
will work together to ensure that the necessary resources are put in place
without incurring unnecessary cost or risk to the project goals.
All invoices will be issued by Clonmel Healthcare in US dollars. Advancis is
requested to pay these invoices within [***] so that Clonmel Healthcare can
manage the exchange rate risk in a cost effective manner.
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

39

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SCHEDULE 2
PRODUCT SPECIFICATIONS

          Test   Method   Provisional Acceptance Criteria
[***]
  [***]   [***]
 
       
 
      [***]
 
       
[***]
  [***]   [***]
 
       
[***]
  [***]   [***]
 
       
[***]
  [***]   [***]
 
       
[***]
  [***]   [***].
 
       
[***]
  [***]   [***]
 
       
[***]
  [***]   [***].

 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

40

--------------------------------------------------------------------------------

 

SCHEDULE 3
MATERIAL SPECIFICATIONS
(To be finalized within 30 days of Effective Date)

41

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SCHEDULE 4
ADVANCIS APPROVED SUPPLIERS
Excipient List of Vendors for Amoxicillin Tablet and Sprinkle Dose:
[***]
 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

42

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SCHEDULE 5
PRICES FOR ADDITIONAL MATERIALS AND BATCHES

43

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SCHEDULE 6
ANALYTICAL EQUIPMENT

      Capital Equipment Type   Number of Instruments
[***]
  [***]
[***]
  [***]
[***]
  [***]

OTHER ADVANCIS SUPPLIED EQUIPMENT

                      Location   APC #   Model #   Serial #   Description  
Manufacturer
[***]
  [***]   [***]   [***]   [***]   [***]
[***]
  [***]   [***]   [***]   [***]   [***]
[***]
  [***]   [***]   [***]   [***]   [***]
[***]
  [***]   [***]   [***]   [***]   [***]
[***]
  [***]   [***]   [***]   [***]   [***]

 
[***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL
TREATMENT HAS BEEN REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.

44