EXHIBIT 10.2

CONFIDENTIAL TREATMENT

CONFIDENTIAL TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT
HAS BEEN REQUESTED IS OMITTED AND IS NOTED WITH “[CONFIDENTIAL TREATMENT
REQUESTED].” AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.

SUPPLY AGREEMENT

THIS SUPPLY AGREEMENT (this “Agreement”), dated as of December 21, 2007 (the
“Effective Date”), is made by and between CELL THERAPEUTICS, INC., a Washington
corporation (“Buyer”), and BIOGEN IDEC INC., a Delaware corporation
(“Manufacturer”).

WHEREAS, pursuant to that certain Asset Purchase Agreement, dated as of
August 15, 2007, by and between Buyer and Manufacturer (the “Asset Purchase
Agreement”), Buyer has purchased certain assets (the “Acquisition”) from
Manufacturer relating to the Product (as defined the Asset Purchase Agreement);
and

WHEREAS, in connection with the Acquisition, upon the terms and subject to the
conditions set forth herein, Buyer desires to engage Manufacturer to
(i) manufacture and supply Finished US Goods (as defined below) and (ii) provide
Buyer with an appropriate opportunity to establish its own capabilities to
manufacture Bulk Product (as defined below) and supply Finished US Goods,
whether directly or through a third Person.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Buyer and Manufacturer agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. As used in this Agreement, the following terms shall
have the meanings ascribed to them below (note: terms used but not otherwise
defined herein shall have their respective meanings as set forth in the Asset
Purchase Agreement):

“Acquisition” has the meaning set forth in the recitals.

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly Controls, is Controlled by or is under common Control with such first
Person. A Person will be deemed to “Control” another Person if such first Person
has the power to direct or cause the direction of the management and policies of
such other Person, whether through ownership of securities, by contract or
otherwise.

“Agreement” has the meaning set forth in the introductory paragraph.

“Asset Purchase Agreement” has the meaning set forth in the recitals.

“Bulk Product” means the Product in refrigerated liquid bulk form or such other
form as the parties may agree, but not in final dosage and not Finished US
Goods.

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

CONFIDENTIAL TREATMENT

“Buyer” has the meaning set forth in the introductory paragraph.

“Buyer Indemnified Parties” has the meaning set forth in the Asset Purchase
Agreement.

“Buyer NDC Number” has the meaning set forth in Section 7.11.

“cGMP Requirements” mean the FDA’s current good manufacturing practice
requirements as promulgated under the FFDCA at 21 C.F.R. (parts 210 and 211),
and as further defined by FDA guidance documents, as such may be amended from
time to time.

“COA” means a certificate of analysis, including a certification of manufacture
in accordance with cGMP Requirements and any deviations therefrom.

“Confidential Information” means information which is confidential or
proprietary to the Disclosing Party, including know-how, scientific information,
the terms of this Agreement, clinical data, efficacy and safety data, adverse
event information, formulas, methods and processes, specifications, pricing
information (including discounts, rebates and other price adjustments) and other
terms and conditions of sales, customer information, business plans and all
other intellectual property; provided, however, that Confidential Information
shall not include the following: (i) information of a Disclosing Party that is
known to a Receiving Party or its Affiliates prior to the time of disclosure to
it, to the extent evidenced by written records or other competent proof, unless
a proprietary interest in such information is transferred to the Disclosing
Party pursuant to this Agreement or the Asset Purchase Agreement;
(ii) information that is independently developed by employees, agents or
independent contractors/subcontractors of a Receiving Party or its Affiliates
without reference to or reliance upon the information furnished by the
Disclosing Party, as evidenced by written records or other competent proof,
unless a proprietary interest in such information is transferred to the
Disclosing Party pursuant to this Agreement or the Asset Purchase Agreement;
(iii) information disclosed to a Receiving Party or its Affiliates by a third
Person that has a right to make such disclosure; or (iv) any other information
that is or becomes part of the public domain through no fault or negligence of
the Receiving Party.

“Confidentiality Agreement” has the meaning set forth in the Asset Purchase
Agreement.

“Current Prescribing Information” means the prescribing information for the
Product as in effect on the Effective Date (a copy of which is attached to
Exhibit A as Appendix 1 thereto).

“Disclosing Party” has the meaning set forth in Section 10.1(a).

“Effective Date” has the meaning set forth in the introductory paragraph.

“FDA” means the United States Food and Drug Administration.

“FFDCA” means the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. 301 et seq.,
as amended.

 

2

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

CONFIDENTIAL TREATMENT

“Finished US Goods” mean either (i) packages (“Packages”) of two (2) Kits (one
In-111 Zevalin Kit and one Y-90 Zevalin Kit) labeled and ready for distribution
and sale to end-users in the United States, with each such Package representing
as of the Effective Date certain non-radioactive ingredients necessary to
produce one (1) treatment to a patient of the Product (i.e., a single dose of
Indium-111 Ibritumomab Tiuxetan (referred to on the Current Prescribing
Information as In-111 Zevalin) and Yttrium-90 Ibritumomab Tiuxetan (referred to
on the Current Prescribing Information as Y-90 Zevalin)), or (ii) individual
Kits (either In-111 Zevalin Kits or Y-90 Zevalin Kits) labeled and ready for
distribution and sale to end-users in the United States, all as more
particularly described on Exhibit A. Exhibit A, like the Current Prescribing
Information, also notes required materials, in addition to Rituxan® (Rituximab),
that are not part of the Product, not supplied with the Kits or not available
from Manufacturer or pursuant to this Agreement.

“Forecast” has the meaning set forth in Section 3.1(b).

“FTE Rate” means, with respect to employees of Manufacturer, the hourly rate of
$175 (which is based upon 2,000 working hours in a year and an annual rate of
$350,000); provided, however, that the FTE Rate shall be adjusted to take into
account inflation on January 1, 2008 and the first day of every calendar year
during the Term thereafter by multiplying the applicable FTE Rate originally set
forth above (without taking into account, if applicable, any previous
adjustment) by a fraction, the numerator of which is the FTE Index for the month
of December of the previous year (e.g., December 2007) and the denominator of
which is the FTE Index for December 2006. “FTE Index” means the Consumer Price
Index for “All Urban Consumers”, U.S. City Average, All Items, 1982-84=100 as
listed at www.bls.gov (Series ID: CUUR0000SA0), which is the United States
Department of Labor’s web site. In the event that such FTE Index ceases to be
published or is significantly changed following December 2006, then the parties
shall negotiate in good faith to select an appropriate successor index for the
remainder of the Term.

“Governmental Entity” means any court, administrative agency or commission or
other governmental or regulatory authority or instrumentality of applicable
jurisdiction, whether domestic or foreign.

“Governmental Rule” means any applicable law, judgment, order, award, decree,
statute, ordinance, rule or regulation issued or promulgated by any Governmental
Entity.

“In-111 Zevalin Kit” has the meaning set forth in the definition of Kit.

“Incremental Cost” shall mean the difference between the Manufacturing Cost Plus
[CONFIDENTIAL TREATMENT REQUESTED] for Finished US Goods resulting from the
process used prior to the implementation of a Required Change (or, as
applicable, a Proposed Change) and the Manufacturing Cost Plus [CONFIDENTIAL
TREATMENT REQUESTED] for Finished US Goods resulting from the process that
includes such Required Change (or, as applicable, such Proposed Change),
including in each instance (in the calculation of Manufacturing Cost) the fees
and costs charged to Manufacturer and its Affiliates by any non-Affiliated
subcontractors.

 

3

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

CONFIDENTIAL TREATMENT

“Kit” means a kit to make a single dose, as part of one (1) treatment to a
patient, of (i) Indium-111 Ibritumomab Tiuxetan (referred to on the Current
Prescribing Information as In-111 Zevalin) (an “In-111 Zevalin Kit”) or
(ii) Yttrium-90 Ibritumomab Tiuxetan (referred to on the Current Prescribing
Information as Y-90 Zevalin) (a “Y-90 Zevalin Kit”), all as more particularly
described on Exhibit A. Exhibit A, like the Current Prescribing Information,
also notes required materials, in addition to Rituxan® (Rituximab), that are not
part of the Product, not supplied with the Kits or not available from
Manufacturer or pursuant to this Agreement.

“Liabilities” mean any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured or determined or
determinable, including those arising under any Governmental Rule, Contract or
otherwise.

“Losses” mean any and all damages, losses, Taxes, Liabilities, claims,
judgments, penalties, costs and expenses, including reasonable attorneys’ fees
and litigation expenses.

“Manufacturer” has the meaning set forth in the introductory paragraph.

“Manufacturer Broader Changes” has the meaning set forth in Section 7.5(b).

“Manufacturing Confidential Information” means Confidential Information relating
to the manufacture or supply of Bulk Product or Finished US Goods (including
Product Manufacturing Technology) that is (i) disclosed to Buyer or any of its
Affiliates by Manufacturer or any of its Affiliates or subcontractors (including
through observation by Buyer or any of its Affiliates) and (ii) maintained as
confidential by Manufacturer, its Affiliates or any such subcontractor prior to
such disclosure; provided, however, that Manufacturing Confidential Information
shall not include (x) information disclosed to Buyer or any of its Affiliates by
a third Person (excluding, for this purpose, Manufacturer, its Affiliates and
its subcontractors and assignees) that has a right to make such disclosure or
(y) any other information that is or becomes part of the public domain through
no fault or negligence of Buyer or any of its Affiliates or any third party
manufacturer engaged by Buyer or any of its Affiliates.

“Manufacturing Cost” means the costs to produce any Finished US Goods at issue,
as reasonably determined by Manufacturer, to the extent that such costs would
ordinarily be included as a “Cost of Goods Sold” under United States generally
accepted accounting principles for a similar product as applied by Manufacturer
on a basis consistent with Manufacturer’s historical practice, including labor
and material costs, allocable depreciation and amortization, product quality
assurance/control costs, allocable facilities costs (e.g., sewer, water,
property taxes), third party intellectual property payments (including fees,
royalties and milestone payments), insurance and other costs for transport,
customs and duty clearance and storage of supplies or inventory. Without
limitation, Manufacturing Cost for any Finished US Goods will include a
proportionate allocation (based upon the relative sales of the Product over the
then preceding 12-month period in the United States versus such sales in the
other jurisdictions for which Manufacturer is supplying Product (e.g., Buyer’s
US sales versus Schering’s ex-US sales)) for the costs to produce any failed
batches of Bulk Product, Finished US Goods or any portion thereof (including
drug substance), but only in respect of batches failing for causes other than
Manufacturer’s failure to comply with the cGMP Requirements or the then current
Regulatory Applications/Approvals.

 

4

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

CONFIDENTIAL TREATMENT

“Manufacturing Cost Plus [CONFIDENTIAL TREATMENT REQUESTED]” means, with respect
to any Finished US Goods at issue, the Manufacturing Cost for such Finished US
Goods multiplied by [CONFIDENTIAL TREATMENT REQUESTED].

“Manufacturing Documentation” means any and all of the following that are
specific to and necessary for the manufacture of Bulk Product and Finished US
Goods: manufacturing process validation reports; manufacturing instructions;
batch record templates; manufacturing standard operating procedures;
specifications and test methods for Bulk Product and Finished US Goods, raw
materials and stability; standard operating procedures and specifications for
packaging and packaging instructions; master formula; validation reports
(analytical, packaging and cleaning); stability data; and approved supplier
lists.

“Manufacturing Supply Team” has the meaning set forth in Section 7.9.

“Mid-Term Transfer Election” means an election by Buyer to initiate the
manufacturing transfer activities contemplated by Section 7.8 prior to the date
which is thirty-six (36) months before the end of the Term with the goal of
enabling Buyer to effect a transfer of the manufacture of Bulk Product and
supply of Finished US Goods for Buyer’s requirements from Manufacturer and its
subcontractors to Buyer or to Buyer’s designee(s) so that Buyer (and/or Buyer’s
designee(s)) could commence the manufacture of Bulk Product and the supply of
Finished US Goods no later than thirty-six (36) months after a Mid-Term Transfer
Election, all as more fully set forth in Section 7.8(a); provided, however, that
any such election (i) may be made by Buyer only in circumstances where Buyer
could otherwise terminate this Agreement due to the uncured breach of this
Agreement by Manufacturer (pursuant to Section 8.2(a)(ii)) or pursuant to
Article IX and (ii) shall be deemed to be in lieu of Buyer’s right to terminate
this Agreement based upon the circumstances at issue. For the avoidance of
doubt, the provisions of Section 7.8(f) shall not apply to a Mid-Term Transfer
Election or the manufacturing transfer activities resulting therefrom.

“NDC Number” means either of the national drug code numbers associated with the
Product as of the Agreement Date, No. 64406-104-04 or No. 64406-103-03.

“Order Date” has the meaning set forth in Section 3.1(d).

“Package” has the meaning set forth in the definition of Finished US Goods.

“Person” means any individual, corporation, partnership, limited liability
company, joint venture, trust, business association, organization, or other
entity.

“Product” means the pharmaceutical product currently marketed and sold as
ZEVALIN® (Ibritumomab Tiuxetan), consisting of Indium-111 Ibritumomab Tiuxetan
and Yttrium-90 Ibritumomab Tiuxetan. Further information regarding the Product
is set forth in the Current Prescribing Information, which information is
incorporated herein by reference.

“Product Intellectual Property” has the meaning set forth in the Asset Purchase
Agreement.

 

5

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

CONFIDENTIAL TREATMENT

“Product Manufacturing Technology” means all trade secrets in the possession and
under the control of Manufacturer or its Affiliates, including research and
development, formulae, test procedures, manufacturing procedures, Bulk Product
and Finished US Goods formulations or other technical or proprietary information
and knowledge, whether or not patentable, to the extent (a) either (i) necessary
for, or used by Manufacturer or its Affiliates in, the manufacture of Bulk
Product or Finished US Goods or (ii) provided or made available by Manufacturer
or its Affiliates to Manufacturer’s subcontractors for purposes of supplying
Finished US Goods in connection with their further manufacturing activities in
respect of Bulk Product or Finished US Goods, and (b) in existence and owned by,
or licensed to and controlled by, Manufacturer as of immediately prior to the
date of the completion of the manufacturing transfer contemplated by Section 7.8
(excluding, in any event, any plant, tangible property or equipment). As of the
Effective Date (i.e., as if the date of the completion of the manufacturing
transfer contemplated by Section 7.8 were the Effective Date), no such
in-licensed Product Manufacturing Technology exists. Notwithstanding any
provision herein to the contrary, Product Manufacturing Technology shall not
include any item of intellectual property or any intellectual property right
that is or was an actual or potential subject (regardless of any territorial
limitation) for a grant of rights under any Sublicense Agreement (as defined in
the Asset Purchase Agreement).

“Proposed Change” has the meaning set forth in Section 7.5(a).

“Proposing Party” has the meaning set forth in Section 7.5(a).

“Quality Agreement” means that agreement in the form attached hereto as Exhibit
B that describes the parties’ respective quality control, quality assurance and
regulatory responsibilities relating to the manufacture and delivery of Finished
US Goods by Manufacturer to Buyer, as amended or restated from time to time upon
the written approval of the parties. To the extent of any conflict or
inconsistency between the provisions of the Quality Agreement and this
Agreement, the provisions of this Agreement shall control.

“Recipient” has the meaning set forth in Section 7.5(a).

“Receiving Party” has the meaning set forth in Section 10.1(a).

“Regulatory Applications/Approvals” mean Biologics License Application
No. 125019, as initially approved by the FDA on February 19, 2002, and all
supplements, amendments and revisions thereto, whether approved or not, together
with all annual reports with respect thereto.

“Replacement Source” has the meaning set forth in Section 7.8(e).

“Replacement Source Approval” has the meaning set forth in Section 7.8(e).

“Required Change” has the meaning set forth in Section 7.4.

“Seller Indemnified Parties” has the meaning set forth in the Asset Purchase
Agreement.

 

6

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

CONFIDENTIAL TREATMENT

“Short-Dated Product” means (i) In-111 Zevalin Kits with expiry dates in
December 2008 or March 2009 and (ii) Y-90 Zevalin Kits with expiry dates in
March 2009.

“Specifications” mean, for Bulk Product and for Finished US Goods, (i) the
requirements and standards for Bulk Product and Finished US Goods set forth on
Exhibit C attached hereto, as amended or supplemented in accordance with
Sections 7.4 or 7.5, or (ii) any variations thereto agreed to in writing by the
parties (including in situations where the parties anticipate the making of a
change in approved Specifications pursuant to activities contemplated by
Sections 7.4 or 7.5).

“Tax” means all domestic and foreign taxes and assessments, including all
interest, penalties and additions with respect thereto.

“Term” has the meaning set forth in Section 8.1.

“Transaction Document” has the meaning set forth in the Asset Purchase
Agreement.

“United States” has the meaning set forth in the Asset Purchase Agreement.

“Y-90 Zevalin Kit” has the meaning set forth in the definition of Kit.

Section 1.2 Interpretation.

(a) When used in this Agreement, the words “include,” “includes” and “including”
shall be deemed to be followed by the words “without limitation.”

(b) Any terms defined in the singular shall have a comparable meaning when used
in the plural, and vice-versa.

(c) All references to any introductory paragraph, recitals, Articles, Sections,
Exhibits and Schedules shall be deemed references to the introductory paragraph,
recitals, Articles, Sections, Exhibits and Schedules to this Agreement unless
otherwise specifically set forth herein.

(d) This Agreement shall be deemed drafted jointly by Buyer and Manufacturer and
shall not be specifically construed against either party based on any claim that
such party or its counsel drafted this Agreement.

ARTICLE II

ENGAGEMENT

Section 2.1 Engagement to Manufacture and Supply. During the Term and upon the
terms and subject to the conditions of this Agreement and the Quality Agreement,
Buyer hereby agrees to purchase, and Manufacturer hereby agrees to supply,
whether from inventory or otherwise, all of the requirements of Buyer (as well
as Buyer’s licensees, successors and assignees) for Finished US Goods to be
ultimately used by or sold to end-users in the United

 

7

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

CONFIDENTIAL TREATMENT

States. Buyer acknowledges and agrees that: (i) in the absence of the
establishment of a Replacement Source following a Mid-Term Transfer Election,
Buyer shall purchase all of such requirements for Finished US Goods during the
Term (as well, if applicable, as any other form of Product or portion thereof)
exclusively from Manufacturer as more specifically set forth herein, other than
limited amounts of Finished US Goods which may be procured from a Replacement
Source in the process of such Replacement Source being established in accordance
with Section 7.8; and (ii) Manufacturer’s foregoing engagement is not to the
exclusion of any other activities of Manufacturer (including the manufacture and
distribution of other products by Manufacturer, as well as the manufacture and
supply of Bulk Product or finished goods incorporating such Bulk Product to be
ultimately used by or sold to end-users outside the United States).
Notwithstanding any provision herein to the contrary, Manufacturer shall be
entitled to use subcontractors for the purpose of fulfilling its obligations
under this Agreement; provided, however, that Manufacturer shall not be relieved
of its responsibilities or obligations under this Agreement as a result thereof.
For the avoidance of doubt, in those cases where Manufacturer is to require
specified conduct of its subcontractor, Manufacturer’s obligation under this
Agreement is acknowledged to include such subcontractor actually conforming to
such specified conduct.

Section 2.2 Batch Release. Buyer shall be solely responsible for the batch
release of all Finished US Goods (as well, if applicable, as any other form of
Product or portion thereof) into the United States market, including as to the
distribution to, and use by, any and all end users in the United States;
provided, however, that Buyer is entitled to rely on COAs and other
Manufacturing Documentation provided hereunder by Manufacturer, as well as
Manufacturer’s representations, warranties and covenants under Article IV and
Article V. Nothing in the foregoing sentence is intended to relieve Manufacturer
of responsibility, with respect to Bulk Product or Finished US Goods, for its
provision of inaccurate COAs or other Manufacturing Documentation nor the breach
of such representations, warranties and covenants.

Section 2.3 Supply Chain. Manufacturer shall not be required at any time to take
physical possession of Finished US Goods (or in-process Finished US Goods) other
than for testing and release purposes and Buyer shall provide Manufacturer with
“ship-to” instructions, including alternate instructions for storage of
in-process Finished US Goods, for each step in the supply chain leading from
Bulk Product to Finished US Goods so that Manufacturer’s subcontractors can be
informed and directed appropriately.

ARTICLE III

ORDERS AND DELIVERY

Section 3.1 Forecasting and Committed Orders.

(a) Concurrent with the execution of this Agreement, Buyer is submitting a
purchase order previously reviewed and approved by Manufacturer for the purchase
of Packages and Kits. Such purchase order contains two (2) distinct lots of
packages and kits, one of which shall be delivered within thirty (30) days of
the Effective Date and the other of which shall be delivered within ninety
(90) days of the Effective Date.

 

8

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

CONFIDENTIAL TREATMENT

(b) In order to assist in the planning of production runs for Bulk Product and
Finished US Goods, Buyer shall, on or before each May 31 and November 30 during
the Term, provide Manufacturer with Buyer’s forecasted requirement for Packages
and Kits (a “Forecast”) for each half-year period (i.e., July 1 through
December 31 and January 1 through June 30) over the course of the then
immediately following six (6) half-year periods (i.e., the forecast due by
November 30, 2007 will cover the period of six (6) half-years, or thirty-six
(36) months, from January 1, 2008 through December 31, 2010) or, if less,
through the end of the Term. Buyer shall forecast and order (except for the
order contemplated by Section 3.1(a)) in amounts of at least 150 Packages (or
300 Kits, with each Package counting for this purpose as two Kits) in respect of
2008, 2009 and 2010, and of at least 250 Packages (or 500 Kits, with each
Package counting for this purpose as two Kits) thereafter during the Term. Each
Forecast shall be made by Buyer in good faith, taking into account reasonable
projections of demand for Packages (including allowance for reasonable safety
stock).

(c) As to each Forecast: (i) any forecasted requirement for a period that is
thirty (30) months or more into the forecasted period (i.e., the sixth half-year
period covered by such Forecast) shall be advisory only; (ii) any forecasted
requirement for a period that is eighteen (18) months or more, but less than
thirty (30) months, into the forecasted period (i.e., the fourth and fifth
half-year periods covered by such Forecast) may change by a factor of up to
fifty percent (50%) in terms of total Kits (with each Package counting for this
purpose as two Kits), up or down, in the next Forecast (but no more); and
(iii) any forecasted requirement for a period that is six (6) months or more,
but less than eighteen (18) months, into the forecasted period (i.e., the second
and third half-year periods covered by such Forecast) may change by a factor of
up to twenty-five percent (25%) in terms of total Kits (with each Package
counting for this purpose as two Kits), up or down, in the next Forecast (but no
more); provided, however, that notwithstanding the foregoing, prior to the
Forecast which includes the period of January 1, 2009 through June 30, 2009 as
the first half-year period covered by such Forecast (i.e., the Forecast which is
due prior to November 30, 2008), all Forecasts delivered by Buyer shall be
strictly for Manufacturer’s information (although prepared by Buyer in good
faith), and shall not be binding on Buyer. Except as provided in the foregoing
sentence, each Forecast shall represent the amount of Packages and Kits to which
Buyer is committed hereunder for any period at issue.

(d) Each Forecast shall: (i) specifically refer to this Agreement; (ii) be
accompanied by Buyer’s order for an amount of Packages and Kits as set forth for
the first half-year covered by such Forecast (i.e., the Forecast delivered on or
before November 30, 2008 shall include Buyer’s order for the period from
January 1, 2009 through June 30, 2009); and (iii) indicate Buyer’s requested
delivery date(s) during the half-year at issue, the delivery address, the
transportation method and carrier and any special instructions requested. Each
Forecast (as well as Buyer’s accompanying order) shall be delivered to such
location as Manufacturer designates in writing to Buyer from time to time. The
date an order is deemed placed (the “Order Date”) shall be the date that
Manufacturer actually receives the order form containing such order (as well as
the accompanying Forecast). Without limiting the provisions of Section 3.1(c):
(x) each order shall be a firm order; and (y) Buyer shall not place orders more
frequently than twice per year (i.e., as will result from the delivery of
Forecasts twice a year accompanied by Buyer’s order for the amount of Packages
and Kits as set forth for the first half-year covered by each such Forecast).

 

9

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

CONFIDENTIAL TREATMENT

(e) Notwithstanding the foregoing provisions of Section 3.1(d), Manufacturer
shall not be required to deliver any Kits or Packages: (i) more frequently than
once during each half-year period at issue; (ii) in quantities of less than 150
Packages (or 300 Kits, with each Package counting for this purpose as two Kits)
in respect of 2008, 2009 and 2010, and of less than 250 Packages (or 500 Kits,
with each Package counting for this purpose as two Kits) thereafter during the
Term; or (iii) less than six (6) months after the Order Date.

(f) Buyer’s forecasted requirements, as well as Buyer’s actual orders, for each
of 2008, 2009 and 2010 shall be for at least six hundred (600) Packages (or
twelve hundred (1,200) Kits, with each Package counting for this purpose as two
(2) Kits).

(g) In addition to orders resulting from Forecasts as provided in this
Section 3.1, Buyer may submit additional orders (“Supplemental Orders”) in
tandem with any Forecast-generated order. Manufacturer shall not be obligated to
accept, but shall consider in good faith whether to accept, any such
Supplemental Order. Following receipt of a Supplemental Order, Manufacturer may,
in Manufacturer’s sole discretion, identify additional terms and conditions
(including as to pricing and delivery) that would be a necessary part of any
acceptance of such Supplemental Order by Manufacturer (to which Buyer may agree
or respond by withdrawing the Supplemental Order at issue).

(h) Manufacturer, in its sole discretion, may reject any order that does not
comply with this Agreement. Each order in compliance with the requirements of
this Agreement (including this Section 3.1) shall be deemed accepted by
Manufacturer unless Manufacturer provides notification of rejection to Buyer
within fifteen (15) business days of the applicable Order Date; provided,
however, that any Supplemental Order (as modified by additional terms and
conditions identified by Manufacturer pursuant to Section 3.1(g)) must be
expressly accepted by Manufacturer in writing within such fifteen (15) day
period, or it will be deemed rejected.

(i) Notwithstanding anything to the contrary contained in this Agreement,
Manufacturer’s obligation to supply Finished US Goods in response to an accepted
order shall be only to use the same diligence in its efforts to manufacture and
supply Finished US Goods to Buyer pursuant to this Agreement that Manufacturer
uses to manufacture and supply like products for itself and its Affiliates.

Section 3.2 Delivery of Finished US Goods.

(a) Manufacturer shall not be liable for any delay in the delivery of Finished
US Goods as long as Manufacturer is in compliance with its obligations under
Section 3.1(i); provided, however, that in the event that the actual delivery
with respect to any accepted order delivered to Manufacturer pursuant to
Section 3.1(d) is more than ninety (90) days late (so long as the “timely”
delivery date at issue is not earlier than six (6) months after the applicable
Order Date), any such delay may, at Buyer’s election made within thirty
(30) days of the triggering event, be deemed a material breach of this Agreement
solely for purposes of Sections 7.8(f) and 8.2(a)(ii).

 

10

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

CONFIDENTIAL TREATMENT

(b) A COA shall accompany each shipment of Finished US Goods in the form
attached hereto as Exhibit D.

(c) Manufacturer may commence shipment as to any accepted order prior to the
completion of such order in full.

(d) All Finished US Goods shipped under this Agreement shall be shipped F.O.B.
the manufacturing site to such location in the United States designated by Buyer
in the applicable accepted order. Buyer shall pay all freight, insurance
charges, Taxes, levies, import and export duties, inspection fees and other
charges applicable to the sale and transport of Finished US Goods; provided,
however, that Buyer shall not be liable for any Taxes to the extent payable or
assessed based upon the income or worth of Manufacturer. Title and risk of loss
and damages to Finished US Goods shall pass to Buyer (and delivery to Buyer
shall be deemed to occur) upon delivery to the carrier at the manufacturing
site. In the event of damage or loss to Finished US Goods after delivery to the
carrier, Buyer shall be responsible to file claims with the carrier.
Manufacturer shall cooperate with Buyer in the filing of such claims.

(e) Each shipment of Finished US Goods to Buyer shall constitute a separate
sale, obligating Buyer to pay therefor, whether such shipment is in whole or
only partial fulfillment of any order or confirmation issued in connection
therewith.

Section 3.3 Price for Finished US Goods.

(a) The price payable by Buyer for Finished US Goods shall be the Manufacturing
Cost Plus [CONFIDENTIAL TREATMENT REQUESTED].

(b) Without limiting the calculation of the Manufacturing Cost for any Finished
US Goods at issue, the price payable by Buyer shall be adjusted pursuant to the
change control procedures provided in Sections 7.4 and 7.5.

Section 3.4 Change in Branding. Notwithstanding anything herein to the contrary,
and in addition to the pricing otherwise set forth in Section 3.3, in respect of
any activities associated with a change in packaging to reflect Buyer’s name,
trademarks or other branding, Buyer shall, promptly following Manufacturer’s
delivery to Buyer from time to time of itemized invoices for the same:
(i) reimburse Manufacturer and its subcontractors for (x) all third party costs
or expenses reasonably incurred by Manufacturer or its subcontractors with
respect to such activities and (y) the actual costs of all supplies reasonably
provided by Manufacturer or its subcontractors with respect to such activities;
and (ii) pay Manufacturer and its subcontractors for time reasonably spent by
their personnel on such activities at the FTE Rate.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4.1 Authority. Each party hereby represents and warrants to the other
party that (i) it has the requisite power and authority to enter into this
Agreement and (ii) the execution and delivery of this Agreement by it have been
duly and validly authorized.

 

11

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

CONFIDENTIAL TREATMENT

Section 4.2 Manufacturer’s Representations and Warranties. Manufacturer hereby
represents and warrants that during the Term:

(a) it will (or will require its subcontractors to) use raw materials in the
manufacture of Bulk Product and Finished US Goods that conform to applicable
Specifications, as verified in accordance with the testing standards and
procedures specified therein;

(b) Finished US Goods, when delivered by Manufacturer to Buyer hereunder, will
have at least eighteen (18) months remaining until their expiry date, except
(i) that any Finished US Goods ordered by Buyer pursuant to Section 3.1(a) will
be Short-Dated Product or (ii) to the extent Buyer agrees otherwise;

(c) each COA shall accurately reflect the values reported thereon;

(d) it will (or will require its subcontractors to) manufacture Bulk Product and
Finished US Goods hereunder in accordance with applicable cGMP Requirements and
the Specifications;

(e) it will not use for its performance hereunder any employee, consultant or
contractor that has been debarred by the FDA or, to its knowledge, is the
subject of debarment proceedings by the FDA; and

(f) it will maintain such records as are necessary and appropriate to
demonstrate compliance in the manufacturing of Bulk Product and Finished US
Goods with applicable cGMP Requirements for a period of not less than
twenty-four (24) months from the expiration date of each batch of Finished US
Goods, or such longer period as may be required by Governmental Rule.

Section 4.3 Disclaimer of Warranties. THE PROVISIONS OF THIS ARTICLE IV ARE
MANUFACTURER’S SOLE REPRESENTATIONS AND WARRANTIES RELATED TO THIS AGREEMENT OR
THE MANUFACTURE, SUPPLY, USE OR SALE OF BULK PRODUCT OR FINISHED US GOODS AND
ARE MADE IN LIEU OF (AND MANUFACTURER DISCLAIMS) ALL OTHER WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING ANY WARRANTIES OF QUALITY, PERFORMANCE, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR USE OR PURPOSE, AS WELL AS WARRANTIES WITH RESPECT TO
LACK OF THIRD PARTY INFRINGEMENT, THAT MAY RESULT FROM THIS AGREEMENT OR THE
MANUFACTURE, SUPPLY, USE OR SALE OF BULK PRODUCT OR FINISHED US GOODS.

ARTICLE V

CERTAIN MANUFACTURING STANDARDS AND MATTERS

Section 5.1 Stability Studies. Manufacturer shall conduct or have conducted
stability studies at least one (1) time each year (to the extent annual testing
is required by the FDA or the Regulatory Applications/Approvals) for at least
one (1) batch of Finished US Goods from each site where Finished US Goods are
manufactured. Manufacturer shall provide Buyer with an annual report of the
results from such stability studies which occur during the year preceding the
report.

 

12

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

CONFIDENTIAL TREATMENT

Section 5.2 Sampling Procedures; Reference Standards.

(a) Manufacturer shall retain samples of Finished US Goods from each batch for
at least a period of one (1) year after the expiration date of such batch. The
sample size shall be twice the size necessary to conduct quality control
testing. Upon Buyer’s written request, Manufacturer shall provide Buyer with up
to one half (1/2) (in the aggregate) of the original amount of the retained
samples of Finished US Goods.

(b) In order to facilitate the prompt and efficient generation and exchange
between the parties of quality control data pertaining to Finished US Goods,
Manufacturer shall, at Buyer’s request, send to Buyer test samples selected
according to a sampling plan agreed between Manufacturer and Buyer before
Manufacturer has finished all of its testing for a particular batch.

(c) Promptly after each of Buyer’s written requests, Manufacturer shall supply
Buyer from time to time with sufficient amounts of reference standards for
Finished US Goods and, as per Manufacturer’s current practice, the
intermediates, impurities and degradation products of each for Buyer to perform
appropriate quality control testing related to Finished US Goods to which this
Agreement applies.

Section 5.3 Cell Banks. Manufacturer shall be responsible for the biological
purity and maintenance of the master cell bank and any working cell banks
maintained by Manufacturer, it being understood that no working cell bank is
maintained as of the Effective Date for the Product. This includes monitoring
for viability by the procedures set forth in the Quality Agreement. Upon Buyer’s
request, Manufacturer shall provide Buyer with any requested number of vials of
viable cells from the master cell bank, together with the thawing and storage
protocols, within ninety (90) days of such request, but limited to an aggregate
(combining all such requests) of twenty (20) vials (including any vials provided
as part of a manufacturing transfer). From time to time thereafter (i.e., after
twenty (20) such vials have been provided in the aggregate), Manufacturer shall
deliver to Buyer such additional vials of viable frozen cells from the master
and any working cell banks as may be reasonably requested within twenty-four
(24) months of any such request.

Section 5.4 Costs. In respect of the performance by Manufacturer of the
activities contemplated by Sections 5.1, 5.2 and 5.3, Buyer shall, promptly
following Manufacturer’s delivery to Buyer from time to time of itemized
invoices for the same: (i) reimburse Manufacturer for (x) all third party costs
or expenses incurred by Manufacturer with respect to such activities and
(y) Manufacturer’s actual costs of all supplies provided by Manufacturer with
respect to such activities; and (ii) pay Manufacturer for time spent by
Manufacturer’s personnel on such activities at the FTE Rate.

Section 5.5 Rework/Reprocessing. Manufacturer shall conduct any rework or
reprocessing activities with respect to Bulk Product or Finished US Goods
manufacturing by using rework or reprocessing procedures, if any, that are:
(i) referenced in applicable

 

13

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

CONFIDENTIAL TREATMENT

Specifications; (ii) set forth in the Regulatory Applications/Approvals; and
(iii) approved by Buyer in writing in advance, such approval not to be
unreasonably withheld or delayed; provided, however, that Manufacturer shall be
entitled to implement (and Buyer shall be obligated to give effect to)
Manufacturer Broader Changes affecting any such rework or reprocessing
activities, in accordance with Section 7.5(d). Bulk Product or Finished US Goods
failing sterility testing shall not be reworked or reprocessed.

Section 5.6 Inspection and Notice.

(a) Manufacturer shall provide Buyer with a copy of all notices in relation to
Bulk Product or Finished US Goods supply that Manufacturer receives from
subcontractors that affect Bulk Product or Finished US Goods (including notices
of regulatory inspections and the like).

(b) Buyer shall have the right, on reasonable advance notice and during normal
business hours (but no more frequently than once per year), to have its quality
control or quality assurance personnel or representatives inspect and audit the
facilities and operations of Manufacturer directly related to the manufacture
and supply of Bulk Product and Finished US Goods in order to confirm compliance
with the covenants contained in this Agreement and, in the event that
Manufacturer relies upon subcontractors to manufacture or supply Bulk Product or
Finished US Goods, Manufacturer shall use commercially reasonable efforts to
cause such subcontractors to permit Buyer’s inspection and audit of their
facilities directly responsible for the manufacture or supply of Bulk Product or
Finished US Goods, on reasonable advance notice and during normal business hours
(but no more frequently than once per year); provided, however, that
Manufacturer reserves the right to refuse access, or to cause or permit its
subcontractors to refuse access, to any facilities where there is a material
risk to health or safety or to the security or quality of Bulk Product, Finished
US Goods or any other product of Manufacturer or its subcontractors.
Notwithstanding the foregoing limitations on the frequency of inspections and
audits of Manufacturer and its subcontractors, Buyer nevertheless shall be
entitled to conduct such number of follow-up audits as may be reasonably
necessary to ascertain the correction of any deficiency identified in a prior
audit, whether such audit was conducted by or on behalf of Buyer, the FDA, or
other Governmental Entity.

(c) Manufacturer shall: (i) notify Buyer, as promptly as practicable, of any
inspection of its facilities used to manufacture or supply Bulk Product or
Finished US Goods by any Governmental Entity which inspection relates
specifically to the manufacture or supply of Bulk Product or Finished US Goods
with the view towards providing such notice to Buyer as to allow Buyer to be
present to witness such inspection and any wrap-up or end of inspection meeting
conducted between Manufacturer and such Governmental Entity; and (ii) furnish
Buyer with copies of all reports and analyses generated by any such inspection
within seven (7) days of receipt (in addition to providing Buyer with a
facsimile copy within seventy-two (72) hours). For the avoidance of doubt,
Buyer’s attendance at any wrap-up or end of inspection meeting between
Manufacturer and a Governmental Entity shall be in the capacity of observer. If
Buyer is in attendance at any inspection by a Governmental Entity, Manufacturer
shall deliver to Buyer copies of inspection observations and findings promptly
upon their availability following the close of any such inspection or wrap-up or
end of inspection meeting, as the case may be.

 

14

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

CONFIDENTIAL TREATMENT

(d) With respect to inspections by Governmental Entities at which Buyer is not
present, Manufacturer shall (i) update Buyer as often as reasonably practicable
as to the progress of any such inspection and (ii) furnish Buyer with copies of
all reports and analyses generated by any such inspection within seven (7) days
of receipt.

Section 5.7 Buyer’s Covenants for Quality Assurance. Buyer hereby agrees, during
the Term, that it shall:

(a) hold, store, handle, ship, deliver, distribute and sell all Finished US
Goods (i) in accordance with applicable cGMP Requirements and any Governmental
Rules and (ii) in compliance with the Specifications; and

(b) enter into all necessary compliance agreements as may be reasonably
designated by Manufacturer upon reasonable, usual and customary terms and
conditions, including agreements to cover adverse experience reporting and a
pharmacovigilance agreement.

Section 5.8 Returns Requested by Manufacturer. Notwithstanding any other
provisions of this Agreement, Buyer agrees, if so requested by Manufacturer in
writing, to return (or to cause to be returned) to Manufacturer, at
Manufacturer’s expense, any Bulk Product (whether or not contained within
Product) or Finished US Goods in the possession, or under the control, of Buyer
that are, or are claimed to be, defective, or otherwise to dispose of such Bulk
Product and Finished US Goods as Manufacturer may direct. Buyer shall not be
obligated to pay Manufacturer for, and Manufacturer shall be responsible for all
costs associated with the delivery and destruction of, such Bulk Product and
Finished US Goods.

Section 5.9 Rejection by Buyer. Within thirty (30) days of receipt of any
shipment of Finished US Goods, Buyer shall, if it elects to do so, perform or
cause to be performed samplings and tests using validated test methods described
in the Regulatory Applications/Approvals to determine whether the Finished US
Goods in such shipment have been manufactured in conformity with applicable
cGMPs Requirements and the Specifications. Any shipment of Finished US Goods not
refused by Buyer on this basis within such 30-day period shall be deemed
accepted by Buyer. If Buyer wishes to refuse acceptance on this basis, Buyer
shall, within such 30-day period, inform Manufacturer in writing of Buyer’s
refusal to accept the shipment and the reason therefore (i.e., by identifying
the manner in which the manufacture of Finished US Goods in such shipment is not
in conformity with applicable cGMPs Requirements and the Specifications). In the
event that Buyer refuses acceptance of such shipment on such basis within such
30-day period, Manufacturer, upon confirmation of the reasons for such refusal,
shall either replace the defective Finished US Goods or refund the purchase
price, as Manufacturer may elect in its sole discretion. If Manufacturer and
Buyer do not agree on such refusal, then any party may refer the matter for
final analysis to a specialized laboratory of national reputation acceptable to
both parties for the purpose of determining the results. Any determination by
such laboratory shall be final and binding upon the parties. If such laboratory
determines that the manufacture of Finished US Goods in such shipment is not in
conformity with applicable cGMPs Requirements and the Specifications,
Manufacturer shall bear all expenses of shipping and testing the shipment
samples. Otherwise, Buyer shall bear all expenses of shipping and testing such
shipment samples. Buyer shall not be obligated to pay for, and Manufacturer
shall be responsible for all costs associated with, the delivery and destruction
of properly rejected Finished US Goods. For the avoidance of doubt, the parties
agree that, except pursuant to the provisions of Section 5.8 or this
Section 5.9, Buyer may not return any Finished US Goods to Manufacturer.

 

15

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

CONFIDENTIAL TREATMENT

ARTICLE VI

PAYMENTS

Section 6.1 Invoices. Manufacturer shall send invoices to a single address
specified in writing by Buyer, but not before the shipment to Buyer of the order
to which it relates (if applicable). All payments to be made hereunder shall be
made by Buyer to Manufacturer within thirty (30) days after receipt of an
invoice by electronic funds transmission, without any offset or deduction of any
nature whatsoever, to such account as Manufacturer specifies in writing to Buyer
with written confirmation of payment sent by facsimile to such address as
Manufacturer specifies in writing to Buyer. If Buyer fails to pay any invoiced
amount when due, (i) a service charge shall be imposed by Manufacturer equal to
the lesser of one and one-half percent (1.5%) or the highest rate permitted by
Governmental Rule of the outstanding amount for each month or portion thereof
that such amount is overdue and (ii) Buyer shall reimburse Manufacturer for all
Losses incurred as part of any collection efforts.

Section 6.2 Taxes. Buyer shall bear solely the cost of any Taxes of any kind,
nature or description whatsoever applicable to or by reason of this Agreement,
and Buyer shall forthwith pay to Manufacturer all such sums upon demand;
provided, however, that Buyer shall not be liable for any Taxes to the extent
payable or assessed based upon the income or worth of Manufacturer.

ARTICLE VII

REGULATORY MATTERS; RECORDS

Section 7.1 Inspections. During the Term, Manufacturer shall be responsible for
handling and responding to any FDA or other Governmental Entity inspections with
respect to the manufacture or supply of Bulk Product or Finished US Goods.
Manufacturer shall provide to Buyer any information reasonably requested by
Buyer and all information requested by any Governmental Entity concerning any
such inspection. To the extent Manufacturer requires the assistance of Buyer in
order to fulfill its obligations pursuant to this Section 7.1, Buyer agrees to
fully cooperate and assist Manufacturer at Buyer’s expense.

Section 7.2 Reporting. During the Term, Manufacturer shall be responsible for
any reporting of matters regarding the manufacture or supply of Bulk Product or
Finished US Goods to the FDA or other Governmental Entities, or Buyer, as the
case may be, in accordance with any Governmental Rules, except for any such
matters that Buyer is required to report as the owner of any Regulatory
Applications/Approvals, which matters Buyer shall report. If reported directly
to the FDA or other Governmental Entities, the party submitting the report shall
furnish copies of all such reports to the other party within forty-eight
(48) hours after submission to the FDA or any other Governmental Entities.
Manufacturer shall also advise Buyer of any occurrences or information that
arise out of the manufacturing activities of Manufacturer that, to
Manufacturer’s knowledge, have or could reasonably be expected to have adverse
regulatory compliance or reporting consequences concerning the Product.

 

16

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

CONFIDENTIAL TREATMENT

Section 7.3 Permits, Licenses and Approvals. During the Term, Manufacturer and
its contractors shall have responsibility to maintain all regulatory and
governmental permits, licenses and approvals that are necessary for the
manufacture of Bulk Product and the supply of Finished US Goods by Manufacturer
pursuant to this Agreement; provided, however, that the parties understand and
agree that Buyer owns the Regulatory Applications/Approvals and, as a result,
Buyer shall be responsible for any and all related filings required pursuant to
this Section 7.3. Each party agrees that, to the extent required to fulfill
their respective obligations under this Section 7.3, such party shall reasonably
cooperate and assist the other party at the requesting party’s expense (which
shall be calculated at an FTE Rate for Manufacturer’s cooperation). During the
Term, Buyer shall be responsible for and shall pay all product and application
fees related to the Product in the United States, including the manufacture or
supply of Bulk Product or Finished US Goods at the facilities of Manufacturer
and its contractors and the distribution and sale of Finished US Goods. Buyer
shall also be responsible for compliance with all Governmental Rules in the
United States relating to the distribution and sale of the Product. For the
avoidance of doubt, Manufacturer and its contractors shall own and shall be
responsible for all licenses, permits and filings relating to the basic
operation of their manufacturing facilities and the payment of all related
establishment license fees.

Section 7.4 Required Changes in Specifications or Process. If Buyer or
Manufacturer is required to change any Specifications or the process used to
manufacture or supply Bulk Product or Finished US Goods (i) in order to comply
with any Governmental Rule, (ii) in response to the order or request of any
Governmental Entity, (iii) due to the loss of a validated source of a reagent or
other raw materials or (iv) in order to avoid infringing any third party patent
(each of the foregoing, a “Required Change”), all of the following provisions
shall apply:

(a) The party receiving any order or request from the Governmental Entity, or
any notice of the loss of a validated source of a reagent or other raw materials
or of the infringement of any third party patent, shall promptly advise the
other party in writing of any such Required Change(s) to Specifications or the
process used to manufacture or supply Bulk Product or Finished US Goods and each
party shall promptly advise the other as to scheduling adjustments that may
result from such Required Change(s), if any.

(b) Manufacturer shall exercise commercially reasonable efforts to implement all
Required Changes to Specifications and the process used to manufacture or supply
Bulk Product or Finished US Goods and to resume any resulting interruptions in
production schedules as soon as reasonably possible after notice thereof, but in
any event shall do so within the time required by any Governmental Entity, if
applicable.

(c) Buyer shall reimburse Manufacturer for the following, upon delivery by
Manufacturer to Buyer from time to time of itemized invoices for the same, to
the extent incurred by Manufacturer or arising as part of Manufacturer’s efforts
to implement any such Required Changes to Specifications or the process used to
manufacture or supply Bulk Product or Finished US Goods: (i) all third party
costs or expenses; (ii) Manufacturer’s actual costs of all supplies provided by
Manufacturer; and (iii) time spent by Manufacturer’s personnel at the FTE Rate
(including with respect to activities contemplated by Sections 7.4(a), 7.4(b)
and 7.4(e)).

 

17

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

CONFIDENTIAL TREATMENT

(d) Without limiting the calculation of the Manufacturing Cost for any Finished
US Goods at issue, Manufacturer may increase the pricing for Finished US Goods
under this Agreement to reflect the Incremental Cost of any Required Change.

(e) Buyer shall prepare for submission, and Manufacturer shall review and
provide comments upon, any regulatory filings required in relation to
implementation of any Required Change other than those pertaining to any
establishment license or other license or permit necessary for the basic
operation of the facilities in which the Bulk Product or Finished US Goods are
manufactured. For the avoidance of doubt, Manufacturer shall prepare
modifications to the CMC section of any Regulatory Applications/Approvals,
subject to review and amendment by Buyer, for inclusion in any amendment or
modification by Buyer to the Regulatory Applications/Approvals necessitated by a
Required Change.

Section 7.5 Discretionary Changes to Specifications, Process or Suppliers.

(a) If either party (the “Proposing Party”) desires to change Specifications or
the process used to manufacture or supply Bulk Product or Finished US Goods in
way that does not involve a Required Change, it shall notify the other party
(the “Recipient”) in writing of the proposed change (a “Proposed Change”), and
the Manufacturing Supply Team shall review and discuss such Proposed Change,
including whether the implementation of such Proposed Change is expected to
result in material additional costs over what Manufacturer is then incurring to
manufacture or supply Bulk Product or Finished US Goods.

(b) Manufacturer shall be entitled to propose, as Proposed Changes, the
following (“Manufacturer Broader Changes”): (i) changes to, among or within the
manufacturing facilities of Manufacturer or its contractors (including changes
to general equipment or any facility-wide standard operating procedures, other
general changes to or within a facility, or any shifting of activities or other
changes among facilities) that are intended to address matters other than
Specifications or the process used to manufacture or supply Bulk Product or
Finished US Goods but which may have an effect on the same; and (ii) changes to
Specifications or the process used to manufacture or supply Bulk Product or
Finished US Goods, for batches of Bulk Product or Finished US Goods resulting
from a particular production campaign, due to events or circumstances that arise
following the start of such production campaign and are, for Manufacturer,
reasonably unexpected with respect to such production campaign.

(c) Neither party shall have any obligation to give effect to any Proposed
Change that is not a Manufacturer Broader Change unless the parties agree in
writing to effect the Proposed Change (which agreement, except as otherwise set
forth herein, shall not be unreasonably withheld or delayed); provided, however,
that if such effectiveness is reasonably practicable before the implementation
of such Manufacturer Broader Change, then Manufacturer shall not implement any
Manufacturer Broader Change until the effectiveness of any necessary
modification to the Regulatory Applications/Approvals for the Product.

 

18

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

CONFIDENTIAL TREATMENT

(d) Manufacturer shall be entitled to implement, and Buyer shall have an
obligation to give effect to, Manufacturer Broader Changes on reasonable advance
notice to Buyer and subject to Manufacturer providing, at no cost to Buyer, all
reasonable assistance to Buyer to make any regulatory filings required in
relation to implementation of any Manufacturer Broader Change within any
applicable time periods required by law; provided, however, that if such
effectiveness is reasonably practicable before the implementation of such
Manufacturer Broader Change, then Manufacturer shall not implement any
Manufacturer Broader Change until the effectiveness of any necessary
modification to the Regulatory Applications/Approvals for the Product.

(e) The Proposing Party shall reimburse the Recipient for the reasonable
out-of-pocket expenses incurred by the Recipient as a result of any Proposed
Change that is implemented. In addition, a party may condition its consent to
any Proposed Change that is not a Manufacturer Broader Change on the
implementation of satisfactory reimbursement arrangements to cover its costs and
expenses which are beyond reasonable out-of-pocket expenses.

(f) Without limiting the calculation of the Manufacturing Cost for any Finished
US Goods at issue, Manufacturer may increase the pricing for Finished US Goods
under this Agreement to reflect the Incremental Cost of any Proposed Change made
at the request of Buyer.

(g) Buyer shall prepare for submission, and Manufacturer shall review and
provide comments upon, any regulatory filings relating to the Regulatory
Applications/Approvals for the Product required in relation to implementation of
any Proposed Change. For the avoidance of doubt, Manufacturer shall prepare for
submission, and Buyer shall review and provide comments upon, any regulatory
filings relating to the basic operation of its manufacturing facilities.

(h) Manufacturer shall use commercially reasonable efforts to implement any
Proposed Changes in a manner that is orderly and avoids any supply interruption
to Buyer.

Section 7.6 Complaints; Recalls.

(a) Complaints. Buyer shall be solely responsible for handling and investigating
all complaints associated with Product in the United States. Buyer shall
promptly notify Manufacturer of all complaints concerning Finished US Goods sold
to Buyer pursuant to this Agreement, and Manufacturer shall investigate all such
complaints related to the manufacture of Finished US Goods by Manufacturer and
provide a written report to Buyer.

(b) Recalls. In the event Manufacturer is required to initiate a recall,
withdrawal or field correction with respect to any Finished US Goods provided
under this Agreement, Manufacturer shall immediately notify Buyer in writing. In
the event that Buyer believes that a recall, withdrawal or field correction is
necessary with respect to any Finished US Goods provided under this Agreement,
Buyer shall so notify Manufacturer and both parties shall cooperate to determine
the appropriate action to take. In the event any Governmental Entity issues a
request, directive or order requiring that any Finished US Goods provided under
this

 

19

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

CONFIDENTIAL TREATMENT

Agreement be recalled, or detains or destroys or prevents the release of any
Finished US Goods provided under this Agreement, each party shall give the other
party telephonic notice (to be confirmed in writing) within twenty-four
(24) hours of the occurrence of such event. In the event of such a recall,
withdrawal or field correction, Buyer shall have the sole responsibility to
implement the recall or other corrective action, but shall keep Manufacturer
informed on a regular basis of its progress in planning and implementing the
recall or other corrective action. Manufacturer shall cooperate with Buyer in
connection with, and the provisions of Section 7.6(c) shall be applicable to,
any such action. Without limiting the provisions of Section 5.8, if there is a
disagreement between the parties as to whether a recall, withdrawal or field
correction is required or advisable, the parties shall in good faith cooperate
and consider each other’s view to reach agreement as promptly as possible on a
mutually acceptable course of action in accordance with relevant Governmental
Rules. If relevant, either party may refer the matter for analysis to a
specialized laboratory of national reputation acceptable to both parties, and
any determination by such laboratory shall be final and binding upon the
parties.

(c) Cost of Recall. In the event that any Finished US Goods are quarantined or
recalled, or are subject to stop-sale or other corrective action, whether
voluntary or by Governmental Entity action, then any expenses (including
reasonable fees of any experts or attorneys that may be utilized by either party
and Governmental Entity fines or penalties related to such recall, quarantine or
stop-sale or other corrective action) shall be borne by Buyer, except to the
extent such quarantine, recall, stop-sale order or other corrective action is
demonstrated to be due to failure of Finished US Goods to be manufactured by
Manufacturer hereunder in accordance with applicable cGMP Requirements and
Specifications, in which case the expenses (including reasonable fees of any
experts or attorneys that may be utilized by either party and Governmental
Entity fines or penalties related to such recall, quarantine, stop-sale or other
corrective action) shall be borne by Manufacturer.

Section 7.7 Insurance. At all times from the Effective Date through that date
which is five (5) years after the expiration date for the Finished US Goods
supplied to Buyer hereunder, Buyer and Manufacturer shall each maintain (or, in
the instance of Manufacturer, self-insure for) product liability insurance in an
amount of not less than Fifteen Million Dollars ($15,000,000) annual aggregate,
including retention. Each party shall provide the other party with a certificate
of insurance on the Effective Date as evidence of such insurance and annually
thereafter evidencing the renewal of such insurance. Each party shall promptly
notify the other party of any change in the terms of such insurance from those
set forth in the most recent certificate of insurance provided to the other
party pursuant to this Section 7.7.

Section 7.8 Manufacturing Transfer.

(a) No later than the date which is thirty-six (36) months prior to the end of
the Term (or, if applicable, promptly upon a Mid-Term Transfer Election):
(i) Manufacturer shall provide one (1) copy of the Manufacturing Documentation
to Buyer; and (ii) Buyer shall submit to Manufacturer a project plan regarding
the transfer of the manufacture of Bulk Product and supply of Finished US Goods
for Buyer’s requirements from Manufacturer to Buyer (or a third party
manufacturer designated by Buyer). Appropriate representatives of Manufacturer
shall meet with appropriate representatives of Buyer within thirty (30) days
after Buyer submits such project plan to Manufacturer to discuss and comment on
such project plan. The parties

 

20

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

CONFIDENTIAL TREATMENT

acknowledge and agree that the goal of the project plan shall be to enable Buyer
to effect a transfer of the manufacture of Bulk Product and supply of Finished
US Goods for Buyer’s requirements from Manufacturer and its subcontractors to
Buyer or to Buyer’s designee(s) so that Buyer (and/or Buyer’s designee(s)) could
commence the manufacture of Bulk Product and the supply of Finished US Goods no
later than the end of the Term (or, if applicable, thirty-six (36) months after
a Mid-Term Transfer Election). To that end, the project plan shall include
Manufacturer’s agreement to provide, and to use commercially reasonable efforts
to cause its subcontractors to provide, Buyer with (x) access to the facilities
of Manufacturer and its subcontractors and (y) access to the personnel of
Manufacturer and its subcontractors, in any case limited to those facilities or
personnel directly responsible for the manufacture of Bulk Product and the
supply of Finished US Goods. The project plan shall include a detailed timeline
for the activities contemplated thereunder as well as a budget. Once the project
plan has been agreed to by both Manufacturer and Buyer (which in any event shall
occur no later than thirty (30) months prior to the end of the Term or, if
applicable, six (6) months after a Mid-Term Transfer Election), Manufacturer and
Buyer shall work diligently to complete the transfer of the Product
Manufacturing Technology and Buyer shall work diligently to obtain Governmental
Entity approval for the manufacture of Bulk Product and the supply of Finished
US Goods by Buyer or its designee(s) as contemplated by such project plan;
provided, however, that Manufacturer’s obligation in this regard shall (A) be
limited to activities that are substantially completed within the specified
thirty-six (36)-month period, (B) include no assurance of success whatsoever and
(C) be dependent upon the reasonable competence of Buyer and/or Buyer’s
designee(s) with respect to the activities at issue (including obtaining the
required approvals in a timely manner for the conduct of manufacturing
activities at a facility selected and prepared by Buyer and/or Buyer’s
designee(s) and possession by Buyer and/or Buyer’s designee(s) of the requisite
skills, equipment, ingredients and resources for the manufacture of Bulk Product
and Finished US Goods). Notwithstanding any provision herein to the contrary,
Manufacturer shall be obligated to participate in the manufacturing transfer
activities contemplated by this Section 7.8 only once (i.e., a Mid-Term Transfer
Election will render void any obligation of Manufacturer in this regard that
would otherwise exist during the last thirty-six (36) months of the Term).

(b) Except as provided in Section 7.8(f), in respect of the performance by
Manufacturer of the activities contemplated by this Section 7.8, Buyer shall,
promptly following Manufacturer’s delivery to Buyer from time to time of
itemized invoices for the same: (i) reimburse Manufacturer and its
subcontractors for (x) all third party costs or expenses reasonably incurred by
Manufacturer or its subcontractors with respect to such activities and (y) the
actual costs of all supplies reasonably provided by Manufacturer or its
subcontractors with respect to such activities; and (ii) pay Manufacturer and
its subcontractors for time reasonably spent by their personnel on such
activities at the FTE Rate.

(c) Effective as of the date of commencement of manufacturing transfer
contemplated by this Section 7.8, and without the requirement for the payment of
additional consideration by Buyer, Manufacturer hereby grants to Buyer a
paid-up, worldwide, non-exclusive license under Product Manufacturing Technology
solely to implement such manufacturing transfer.

 

21

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

CONFIDENTIAL TREATMENT

(d) Effective as of the date of the completion of the manufacturing transfer
contemplated by this Section 7.8, and without a requirement for the payment of
additional consideration by Buyer, Manufacturer hereby grants to Buyer a
paid-up, worldwide, sub-licensable, non-exclusive license under Product
Manufacturing Technology solely to make, have made, use, and import Bulk
Product, Finished US Goods and Product for the purpose of offering to sell and
selling Product to, or for use by, end-users in the United States. Without
limiting the foregoing, Buyer acknowledges and agrees that Manufacturer will
continue to possess rights to the Product Manufacturing Technology (including
the right to manufacture the Product for sale to, or use by, end-users outside
of the United States).

(e) Buyer hereby agrees that it shall use commercially reasonable efforts to
effect a transfer of the manufacture of Bulk Product and the supply of Finished
US Goods for Buyer’s requirements from Manufacturer and its subcontractors to
Buyer and/or to Buyer’s designees (in either instance, the “Replacement Source”)
pursuant to the project plan prior to the end of the Term (or, if applicable,
thirty-six (36) months after a Mid-Term Transfer Election). Upon the grant of
FDA approval to any such Replacement Source (the “Replacement Source Approval”),
Buyer shall notify Manufacturer and not submit any further orders under this
Agreement, irrespective of whether such Replacement Source thereafter ceases to
be authorized to manufacture and supply Bulk Product or Finished US Goods;
provided, however, that (i) unless Manufacturer shall consent to a termination
or reduction (in Manufacturer’s sole discretion), Buyer shall remain
(x) obligated to deliver Forecasts through the end of the Term as contemplated
by Section 3.1 and (y) committed to the amount of Packages that Buyer is
required to order in respect of any such Forecasts (pursuant to Section 3.1) and
(ii) in the event of a Mid-Term Transfer Election, Buyer may continue to submit
orders according to Forecasts (as contemplated by Section 3.1) following an
ensuing Replacement Source Approval so long as Buyer (x) notifies Manufacturer
in writing, as part of its Mid-Term Transfer Election, of Buyer’s intention to
do so and (y) purchases from Manufacturer pursuant to this Agreement at least
seventy percent (70%), measured on a rolling twelve (12)-month basis, of Buyer’s
requirements for Finished US Goods (as well, if applicable, as any other form of
Product or portion thereof) during the portion of the Term following such
Replacement Source Approval.

(f) In the event Buyer terminates this Agreement due to the uncured breach of
this Agreement by Manufacturer (pursuant to Section 8.2(a)(ii)) or pursuant to
Article IX, any notice of termination delivered by Buyer may contain Buyer’s
election to commence transfer of manufacturing pursuant to this Section 7.8. If
Buyer’s notice of termination includes such an election, the effective date of
termination shall not be until the completion of activities under this
Section 7.8 or such earlier date as may be specified in Buyer’s notice of
termination. Further, if Buyer terminates this Agreement due to the uncured
breach of this Agreement by Manufacturer, the provisions of clause (ii) of
Section 7.8(b) (i.e., with respect to Buyer paying Manufacturer and its
subcontractors for time reasonably spent by their personnel at the FTE Rate)
shall not apply.

Section 7.9 Manufacturing Supply Team; Bulk Product Reports.

(a) Manufacturer and Buyer shall, as soon as practicable following the Effective
Date, form a manufacturing supply team (the “Manufacturing Supply Team”) of two
(2) people, one to be designated by Manufacturer and one to be designated by
Buyer. The

 

22

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

CONFIDENTIAL TREATMENT

Manufacturing Supply Team shall meet on a periodic basis during the Term and
shall address any issues related to the manufacture and supply of Bulk Product
and Finished US Goods under this Agreement; provided, however, that in the event
Manufacturer is more than sixty (60) days late on the delivery for any order and
Buyer’s inventory of Finished US Goods is less than or equal to three
(3) months’ of supply, the Manufacturing Supply Team shall meet not less than
once per month (until such order is delivered) to address any issues or
difficulties that Manufacturer may be experiencing related to the supply of
Finished US Goods. The meetings of the Manufacturing Supply Team may be
conducted by telephone.

(b) From time to time during the Term (but no more frequently than once every
six (6) months), Manufacturer will, upon Buyer’s request, provide Buyer with
then current information regarding the amount, and the time remaining until the
expiry date, of Manufacturer’s inventories of (i) Bulk Product and (ii) the
unconjugated antibody (Ibritumomab) used to make Bulk Product.

Section 7.10 Manufacturer NDC Numbers. Until the earlier of (i) December 31,
2007 or (ii) Buyer’s establishment of the Buyer NDC Number as set forth in
Section 7.11, Manufacturer shall not discontinue the NDC Number.

Section 7.11 Buyer NDC Number. Buyer shall establish a new NDC Number (the
“Buyer NDC Number”) no later than December 31, 2007 and notify Manufacturer
thereof. Buyer agrees that, within five (5) days following the Effective Date,
it shall apply for, and initiate applicable processes to obtain, the Buyer NDC
Number. Buyer shall be permitted to continue to sell any Finished US Goods
inventory with the NDC Number that may be provided to Buyer pursuant to the
arrangements contemplated hereby until such inventory is exhausted; provided,
however, that Buyer shall sell all Finished US Goods bearing the NDC Number
prior to selling any products or inventory bearing the Buyer NDC Number.

ARTICLE VIII

TERM AND TERMINATION

Section 8.1 Term. This Agreement shall commence on the Effective Date and shall
expire on June 9, 2014, unless earlier terminated in accordance with this
Article VIII (the “Term”).

Section 8.2 Termination.

(a) Manufacturer and Buyer shall each have the right to terminate this Agreement
with immediate effect upon written notice to the other upon the occurrence of
any of the following:

(i) The other party files a petition in bankruptcy, or enters into an agreement
with its creditors, or applies for or consents to the appointment of a receiver
or trustee, or makes an assignment for the benefit of creditors, or becomes
subject to involuntary proceedings under any bankruptcy or insolvency law.

 

23

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

CONFIDENTIAL TREATMENT

(ii) The other party fails to cure any material noncompliance with any of the
terms and conditions hereof or of the Quality Agreement within the time period
specified in any written notice delivered to such non-compliant party, which
shall be at least thirty (30) days; provided, however, that (i) such period, for
any matter other than a payment, shall be extended for so long as the party at
issue has commenced efforts to cure the breach and is attempting, in good faith,
to complete such efforts (subject to a maximum aggregate period of one hundred
eighty (180) days), (ii) such period, with respect to any payment, may be as
little as ten (10) days and (iii) the provisions of this Section 8.2(a)(ii)
shall not be construed as modifying the provisions of Section 3.2(a).

(b) Manufacturer shall have the additional right to terminate this Agreement
with immediate effect upon written notice to Buyer upon Buyer failing to cure
any material noncompliance with any of the terms and conditions of any of the
Transaction Documents (other than this Agreement) within the time period
specified in any written notice (which shall be at least sixty (60) days)
delivered to Buyer; provided, however, that the foregoing shall not apply to any
such non-compliance relating solely to a good faith payment dispute so long as
such dispute remains unsettled and any amounts not in dispute have been timely
paid.

Section 8.3 Effect of Termination If this Agreement is terminated pursuant to
Section 8.2:

(a) Buyer acknowledges and agrees that Manufacturer shall be entitled to cancel
any order under this Agreement accepted prior to the date notice of termination
is given, and shall not be obligated to ship any Finished US Goods ordered by
Buyer pursuant to any such order except as such Finished US Goods may be
included in shipments pursuant to Section 8.4.

(b) The termination of this Agreement shall not release Buyer from the
obligation to pay any sum that may be owing to Manufacturer (whether then or
thereafter due to Manufacturer and including, for this purpose, any expenses
incurred in manufacturing Bulk Product or supplying Finished US Goods in respect
of Buyer’s minimum requirements under the then most recently delivered Forecast
or in respect of commitments made by Manufacturer or its subcontractors in
anticipation thereof) or operate to discharge any liability under this Agreement
that had accrued prior to any such termination.

(c) During the period between the giving of any notice of termination pursuant
to this Article VIII and the effective date of the termination as set forth in
such notice, all Finished US Goods shall be provided to Buyer solely on a C.O.D.
basis.

Section 8.4 Termination or Expiration of Agreement.

(a) Upon the termination or expiration of this Agreement, Manufacturer shall
transfer, or shall cause to be transferred, all Finished US Goods that have been
manufactured in anticipation of delivery to Buyer under this Agreement, as well
as all work in process relating to such Finished US Goods that are then in
Manufacturer’s possession (including Bulk Product), to fulfill Manufacturer’s
obligations hereunder, but only to fulfill Manufacturer’s obligations hereunder,
by delivery to Buyer at the price determined in accordance with this Agreement
(or a proportionate price based upon the extent of completion); provided,
however, that in the instance

 

24

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

CONFIDENTIAL TREATMENT

of a termination by Manufacturer for Buyer’s uncured material noncompliance
pursuant to Section 8.2(a)(ii) or Section 8.2(b), such transfer shall be at the
election of Manufacturer. Buyer shall pay for all such Finished US Goods and
work in process relating to such Finished US Goods on a C.O.D. basis.

(b) It is understood and agreed that Buyer shall be responsible for the
manufacture and supply of Bulk Product and Finished US Goods for Buyer’s
requirements after the earlier of the termination or expiration of this
Agreement. In addition, it is understood and agreed that Buyer shall be
responsible, at its sole expense, for the validation and qualification,
including analytic method testing, of any new manufacturing facility to be used
by Buyer.

(c) Termination or expiration of this Agreement shall not relieve the parties of
any obligation accruing prior to such termination. Without limiting the
foregoing, the rights and obligations of the parties under Sections 4.3, 5.8,
7.6, 7.7, 8.3 and 8.4 and Articles VI, X, XI and XIII of this Agreement shall
survive any expiration or termination of this Agreement.

ARTICLE IX

FORCE_MAJEURE

Notwithstanding any provision of this Agreement to the contrary, neither party
shall be deemed to have defaulted under or breached this Agreement for failure
or delay in fulfilling or performing any term or provision of this Agreement
(other than the payment of money) when such failure or delay is caused by any of
the following and not by the party seeking protection under this provision:
fire; flood; accident; explosion; equipment or machinery breakdown not related
to Manufacturer’s negligence in preventive maintenance; sabotage; strike or any
labor disturbance (regardless of the reasonableness of the demands of labor);
civil commotions; riots; invasions; wars (present or future); acts, restraints,
requisitions, regulations or directions of any Governmental Entity; voluntary or
mandatory compliance by Manufacturer with any request of any Governmental
Entity; voluntary or mandatory compliance by Manufacturer with any request for
material represented to be for purposes of (directly or indirectly) producing
articles for national defense or national defense facilities; shortage of labor,
fuel, power or raw materials; inability to obtain supplies; failures of normal
sources of supplies; inability to obtain or delays of transportation facilities;
any act of God; any act or omission of Buyer (insofar as Manufacturer or the
transactions or arrangements contemplated by this Agreement are concerned); or
any cause (whether similar or dissimilar to the foregoing) beyond the reasonable
control of a party or Manufacturer’s normal sources of supply of any products
affecting the production or delivery of Finished US Goods. If any such
disability delays any shipment hereunder for more than one-hundred eighty
(180) days, such shipment may be canceled at Manufacturer’s option or Buyer may
terminate this Agreement.

 

25

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

CONFIDENTIAL TREATMENT

ARTICLE X

CONFIDENTIALITY AND RESTRICTED USE

Section 10.1 Nondisclosure and Restricted Use Obligations.

(a) Confidential Information. Each party (a “Receiving Party”) acknowledges that
it may receive (or, as the result of one or more transfers contemplated hereby
or by the Asset Purchase Agreement or any other Transaction Document, it may be
or become in possession of) Confidential Information of another party (a
“Disclosing Party”) in the performance of this Agreement or any other
Transaction Document. Each Receiving Party shall use commercially reasonable
efforts to safeguard and to hold the Confidential Information of a Disclosing
Party in confidence, and shall limit disclosure of such Confidential Information
to those employees and consultants of the Receiving Party and its Affiliates who
are bound by obligations of confidentiality to the Receiving Party consistent
with the terms of this Article X. A Receiving Party shall not, directly or
indirectly, disclose, publish or use for the benefit of any other Person or
itself, except in performing this Agreement or any other Transaction Document,
any Confidential Information of a Disclosing Party without first having obtained
the Disclosing Party’s written consent to such disclosure or use. The foregoing
shall not be construed to prevent the necessary disclosure of Confidential
Information to a Governmental Entity by a party in the exercise of its rights
under this Agreement or any other Transaction Document, provided that such party
exercises commercially reasonable efforts to limit the extent of such disclosure
as well as any further disclosure by such Governmental Entity.

(b) Manufacturing Confidential Information. To the extent that any Confidential
Information constitutes Manufacturing Confidential Information, then in addition
to Buyer’s obligations under the foregoing subsection (a), Buyer shall:
(i) safeguard and hold such Manufacturing Confidential Information in strict
confidence; (ii) not use such Manufacturing Confidential Information other than
in the manufacture or supply of the Product solely for the purpose of offering
to sell and selling Product to, or for use by, end-users in the United States;
and (iii) limit disclosure of such Manufacturing Confidential Information only
to third party manufacturers and contractors engaged by Buyer which are bound by
obligations of confidentiality and restricted use (i.e., requiring such third
party manufacturers and contractors to (x) not use such Manufacturing
Confidential Information other than in the manufacture or supply of the Product
solely for sale to or use by end-users in the United States and (y) not further
disclose such Manufacturing Confidential Information to any Person under any
circumstances).

Section 10.2 Exception for Legal Requirement. A Receiving Party shall be
entitled to disclose any Confidential Information of a Disclosing Party: (i) if,
in the opinion of the Receiving Party’s outside counsel or general counsel, such
public announcement or public statement is necessary to avoid committing a
violation of any Governmental Rule or any regulation of any securities
association, stock exchange or national securities quotation system on which the
Receiving Party’s securities are, or are proposed to be, listed or traded, or by
order of any Governmental Entity: (ii) as may be necessary or appropriate in
connection with the enforcement of this Agreement or any other Transaction
Document; or (iii) as may be required in furtherance of a party’s obligations
under this Agreement or any other Transaction Document; provided, however, that
in any such event, the Receiving Party shall give advance written notice to the
Disclosing Party and use commercially reasonable efforts, wherever possible, to
obtain confidential treatment of such information by the applicable Governmental
Entity or other recipient (and, in the case of clause (i), the Disclosing Party
shall be provided with a copy of the proposed disclosure in sufficient time to
allow a reasonable opportunity to comment thereon) to the extent practicable.

 

26

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

CONFIDENTIAL TREATMENT

Section 10.3 Extended Term of Confidentiality Obligations. The obligations set
forth in this Article X shall survive the termination or expiration of this
Agreement for five (5) years. Nothing in this Article X shall be construed to
create or imply any right or license under any patent, trademark, copyright or
other intellectual property right owned or controlled by a party or its
Affiliates (except as may be expressly set forth elsewhere in this Agreement or
any other Transaction Document).

Section 10.4 Injunctive Relief. In addition to any other relief or remedy
available to it at law or in equity, each party shall be entitled to seek
temporary or permanent injunctive relief from any court of competent
jurisdiction, without the posting of any bond, in order to enforce its rights as
to the other party’s performance of its covenants under this Article X.

Section 10.5 Supplement to Confidentiality Agreement. The obligations of this
Article X shall supplement (i.e., be in addition to), but not supersede, the
Confidentiality Agreement or any confidentiality provisions in any other
Transaction Document (including the Asset Purchase Agreement).

ARTICLE XI

INDEMNIFICATION

Section 11.1 By Manufacturer. Manufacturer shall indemnify, defend and hold
harmless the Buyer Indemnified Parties (and, as applicable, any contractors of
Buyer) from and against any and all Losses resulting from claims of third
parties (i.e., parties other than the parties hereto and their Affiliates and,
as applicable, any contractors of Buyer) to the extent such Losses arise out of
or result from a failure of Finished US Goods to be manufactured by Manufacturer
or its Affiliates, subcontractors or assignees hereunder in accordance with
applicable cGMP Requirements and the Specifications; provided, however, that
Manufacturer shall not be so obligated (i) with respect to any failure of
Finished US Goods to be manufactured in accordance with applicable cGMP
Requirements and the Specifications where such Finished US Goods were not
rejected by Buyer and the same is known, or reasonably should have been known,
to Buyer or any of its Affiliates, contractors or assignees or (ii) to the
extent any such Losses result from (x) any act or omission of Buyer or any of
its Affiliates, contractors or assignees constituting negligence, recklessness
or willful misconduct or (y) any breach of this Agreement by Buyer or any of its
Affiliates, contractors or assignees.

Section 11.2 By Buyer. Buyer shall indemnify, defend and hold harmless
Manufacturer and the other Seller Indemnified Parties (and, as applicable, any
subcontractors or assignees of Manufacturer) from and against any and all Losses
resulting from claims of third parties (i.e., parties other than the parties
hereto and their Affiliates) to the extent such Losses arise out of or result
from the manufacture, promotion, sale, distribution or use of any Bulk Product,
Finished US Goods or Product by or on behalf of (or through) any Buyer
Indemnified Party or any contractor, successor or assignee thereof following the
Effective Date; provided, however, that Buyer’s obligations under this
Section 11.2 shall not extend to any Losses suffered by Manufacturer or any of
the other Seller Indemnified Parties (and subcontractors or assignees of
Manufacturer) as to which Manufacturer has agreed to indemnify Buyer pursuant to
Section 11.1.

 

27

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

CONFIDENTIAL TREATMENT

Section 11.3 Procedures. In the event of any claims for indemnification made by
one party (or, in the instance of Buyer or Manufacturer, any other Buyer
Indemnified Party or Seller Indemnified Party, respectively, or its
contractors/subcontractors or assignees, as applicable) against the other party
under this Article XI, the procedure to be used for the administration and
resolution of such claims shall be as set forth in Section 12.6 of the Asset
Purchase Agreement. The amount of any Losses for which indemnification is
provided under this Article XI shall be net of any amounts recovered or
recoverable by the indemnified party under insurance policies with respect to
such Losses.

Section 11.4 Exclusive Remedy. Buyer acknowledges and agrees that the
indemnification provided in this Article XI shall be the sole and exclusive
remedy against Manufacturer and its Affiliates, subcontractors and assignees for
the Buyer Indemnified Parties (and, as applicable, any contractors or assignees
of Buyer) from and against any and all Losses arising from claims of third
parties and, in furtherance thereof, Buyer waives, from and after the Effective
Date with respect to Losses arising from claims of third parties, to the fullest
extent permitted under applicable law, any and all rights, claims, actions or
causes of action (other than claims of, or causes of action arising from, fraud)
it (or any of the other Buyer Indemnified Parties or any contractors or
assignees of Buyer) may have against Manufacturer or any of its Affiliates,
subcontractors or assignees in respect of such third party claims relating to or
arising at law, under any statute, in equity or otherwise out of this Agreement
or the transactions contemplated hereby, other than the remedies provided in
this Article XI; provided, however, Buyer shall be entitled to seek temporary or
permanent injunctive relief or specific enforcement in order to enforce its
rights under this Agreement.

ARTICLE XII

INTELLECTUAL PROPERTY RIGHTS

Buyer hereby grants to Manufacturer and to each third party or subcontractor
that Manufacturer may use or designate to manufacture Bulk Product or to supply
Buyer’s requirements of Finished US Goods, for the Term, a royalty-free,
nontransferable, non-exclusive right and license (with the right to sublicense)
under the Product Intellectual Property to manufacture Bulk Product and to
supply Finished US Goods as contemplated hereby.

 

28

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

CONFIDENTIAL TREATMENT

ARTICLE XIII

MISCELLANEOUS

Section 13.1 LIMITATION ON LIABILITY. NONE OF MANUFACTURER, BUYER NOR THEIR
RESPECTIVE AFFILIATES OR CONTRACTORS/SUBCONTRACTORS SHALL BE LIABLE FOR
PUNITIVE, EXEMPLARY, SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE, TORT, STRICT LIABILITY OR OTHERWISE,
ARISING OUT OF OR RELATING TO THIS AGREEMENT; PROVIDED, HOWEVER, THAT THIS
EXCLUSION IS NOT INTENDED TO, NOR SHALL, EXCLUDE ACTUAL OR COMPENSATORY DAMAGES
OF THE AFFECTED PARTY, WHICH ACTUAL OR COMPENSATORY DAMAGES INCLUDE
INDEMNIFICATION UNDER ARTICLE XI FOR AMOUNTS A PARTY IS REQUIRED TO PAY A THIRD
PARTY.

Section 13.2 Assignment. Neither Manufacturer nor Buyer may assign its rights or
obligations under this Agreement without the prior written consent of the other
party; provided, however, that (i) Manufacturer may subcontract its obligations
under this Agreement and, (ii) so long as any such successor or assign agrees in
writing to be bound by this Agreement, either party may assign its rights and
obligations under this Agreement, without the prior written consent of the other
party, to an Affiliate or to a successor of the relevant portion of the
assigning party’s business by reason of merger, sale of all or substantially all
of its assets or securities or any similar transaction. Any permitted assignee
shall assume all obligations of its assignor under this Agreement. No assignment
shall relieve either party of its responsibility for the performance of any
obligation under this Agreement. Subject to the foregoing, this Agreement shall
be binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns.

Section 13.3 Severability. If any term or other provision of this Agreement is
held to be illegal, invalid or unenforceable by any Governmental Rule or public
policy, all other terms or provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or unenforceable, the parties shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the greatest
extent possible.

 

29

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

CONFIDENTIAL TREATMENT

Section 13.4 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be sent, delivered or mailed, addressed as
follows:

 

  (a) if to Buyer:

Cell Therapeutics, Inc.

501 Elliott Avenue, Suite 400

Seattle, WA 98119

Telephone: (206) 282-7100

Facsimile: (206) 284-6114

Attn: Legal Affairs

with a copy to:

Heller Ehrman LLP

4350 La Jolla Village Drive, 7th Floor

San Diego, CA 92122

Telephone: (858) 450-8400

Facsimile: (858) 450-8499

Attn: Richard A. Kaufman, Esq.

 

  (b) if to Manufacturer:

Biogen Idec Inc.

5200 Research Place

San Diego, CA 92122

Telephone: (858) 401-5747

Facsimile: (858) 795-9117

Attn: Rolf Schild

with a copy to:

Pillsbury Winthrop Shaw Pittman LLP

12255 El Camino Real, Suite 300

San Diego, California 92130

Telephone: (858) 509-4000

Facsimile: (858) 509-4010

Attn: Mike Hird

Each such notice, request or other communication shall be given by: (i) hand
delivery; (ii) by certified mail; or (iii) nationally recognized courier
service. Each such notice, request or communication shall be effective when
delivered at the address specified in this Section 13.4 (or in accordance with
the latest unrevoked direction from the receiving party). It is understood and
agreed that this Section 13.4 is not intended to govern the ordinary course
business communications necessary between the parties in performing their
duties, in due course, under the terms of this Agreement, including the
placement of orders and the delivery of forecasts.

Section 13.5 Applicable Law. This Agreement will be deemed to have been made in
the State of California and its form, execution, validity, construction and
effect will be determined in accordance with the laws of the State of
California, without giving effect to the principles of conflicts of law thereof.

 

30

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

CONFIDENTIAL TREATMENT

Section 13.6 Entire Agreement. This Agreement and the attached Schedules and
Exhibits, which are incorporated herein, together with the Quality Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and all prior agreements with respect hereto are superseded;
provided, however, that to the extent of any conflict or inconsistency between
the provisions of the Quality Agreement and this Agreement, the provisions of
this Agreement shall control. Each party confirms that it is not relying on any
representations, warranties, covenants or understandings of any kind, nature or
description whatsoever of the other party, except such as are as specifically
set forth herein, except that nothing herein shall be construed as intended to
relieve or release Buyer from its obligation to make payment of monies or
satisfy any other obligations which Buyer may owe to Manufacturer. No amendment
or modifications hereof shall be binding upon the parties unless set forth in a
writing specified to be an explicit amendment to this Agreement duly executed by
authorized representatives of each party. The parties recognize that, during the
Term, purchase orders, acknowledgements or similar routine forms may be used to
implement or administer provisions of this Agreement. Therefore, the parties
agree that the terms of this Agreement shall prevail in the event of any
conflict between this Agreement and any provision of such forms that add to,
vary, modify or are at conflict with the provisions of this Agreement.

Section 13.7 Headings. The headings used in this Agreement are intended for
convenience only and shall not be considered part of the written understanding
among the parties and shall not affect the construction of this Agreement.

Section 13.8 Independent Contractors. It is expressly agreed that Manufacturer
and Buyer shall be independent contractors and that neither the relationship
among the parties nor this Agreement shall be construed as creating a
partnership, joint venture or agency. Neither Manufacturer nor Buyer shall have
the authority to make any statements, representations or commitments of any
kind, or to take any action or to incur any liability or obligation which shall
be binding on the other, without the prior consent of the other party to do so.
All persons employed by a party shall be employees of such party and not of the
other party and all costs and obligations incurred by reason of any such
employment shall be for the account and expense of such party.

Section 13.9 Waiver. The waiver by either party of any right hereunder or the
failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.

Section 13.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party and delivered by each party to the other party, it being understood that
all parties need not sign the same counterpart.

 

31

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

CONFIDENTIAL TREATMENT

Section 13.11 WAIVER OF JURY TRIAL. EACH PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT, THE AGREEMENTS, INSTRUMENTS AND DOCUMENTS CONTEMPLATED HEREBY OR THE
TRANSACTIONS CONTEMPLATED HEREBY AND FOR ANY COUNTERCLAIM THEREIN.

Section 13.12 No Benefit to Third Parties. The representations, warranties,
covenants and agreements set forth in this Agreement are for the sole benefit of
the parties and their successors and permitted assigns, and, except for the
third parties expressly referenced in Article XI (and then solely with respect
to the indemnification benefits set forth in such Article XI), nothing herein,
express or implied, is intended to or shall confer upon any other person or
entity any legal or equitable rights, benefits or remedies.

[SIGNATURE PAGE FOLLOWS]

 

32

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

CONFIDENTIAL TREATMENT

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their
respective representatives thereunto duly authorized, all as of the Effective
Date.

 

BIOGEN IDEC INC. By:   /s/ Faheem Hasnain   Name:   Title: CELL THERAPEUTICS,
INC. By:   /s/ James Bianco   Name:   Title:

 

33