MASTER
SERVICES AGREEMENT
 
 This
Master Services Agreement ("Agreement") is entered into as of August 24th, 2007
(the "Effective Date") by and between YM Biosciences USA Inc., a
corporation incorporated in Delaware located at 701 Lee Road, Suite 201, Wayne,
PA 19087 (hereinafter “YMB USA USA”) and AAIPharma Inc., having offices
at 2320 Scientific Drive, Wilmington, North Carolina 28405, including its
subsidiaries (“AAIPharma”). YMB USA USA and AAIPharma are referred to singly as
"Party" and jointly as "Parties" throughout this Agreement.
 
 WITNESSETH
 
 WHEREAS, AAIPharma is a
contract research organization that provides the implementation, management and
monitoring of clinical studies and related services (hereinafter, "Services");
and
 
 WHEREAS, the YMB USA desires
to obtain Services from AAIPHARMA throughout the Term of this Agreement in
accordance with the terms set forth herein and in accordance with a defined
specification and scope of work to be mutually agreed upon by the Parties in
writing (hereinafter the "Work Order") substantially in the form of Attachment A
which is herein incorporated by reference; and,
 
 NOW THEREFORE, for and in
consideration of the mutual covenants and agreements set Forth hereinafter and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto do hereby agree as
follows:
 
 Article
1
 DEFINITIONS
 
 For
purposes of this Agreement and the Protocol, each capitalized term shall have
the meaning ascribed to it in this Agreement. Each capitalized tern not defined
in this Agreement shall have the meaning ascribed to that term in the Protocol.
In the event of a discrepancy in the meaning ascribed to a term in the body of
this Agreement and the meaning ascribed to that term in the Protocol, the
definition utilized in the body of this Agreement shall control.
 
 1.1  "Case Report Form" or "CRF" means the record of
pertinent information collected on each subject who participates in the
Study;
 
 1.2  "Cause" means a Defaulting
Party's failure to correct a default or to provide a schedule for correcting a
default which is acceptable to the Non-Defaulting Party, within five (5)
business days after being given notice of default for failure to perform a
material obligation under this agreement.
 
 1.3  "Change Order" means of an
adjustment in fees, timeline, Protocol, performance milestones, budget, payment
schedule, duties, deliverables or matters related to Out of Scope
Services.
 
 1.4  "Clinical Research Associate"
or "CRA" means the
person assigned by AAIPharma to monitor one or more Study Sites.
 
 1.5  "Clinical Trial Agreement"
means the agreement between YMB USA and an Investigator that details the
respective rights and obligations of both parties in relation to the
Study;
  
 
 1.6  "Clinical Trial Materials"
means the printed Case Report Forms, CRF monitoring conventions, the Protocol,
the investigational drug brochure, informed consent form, guidelines for use of
theInvestigational
Product, and all other materials provided by YMB USA to conduct the
Study.
 
 1.7  "Closeout Services" means
those services described in Section 10.4 to be performed by AAIPharma upon
termination of this Agreement.
 
 1.8  "Confidential Information"
means all information relating to the Investigational Product and Study
including but not limited to YMB USA's business, operations, methods of
operating, customers, affairs, processes, inventions, know-how, research, trade
secrets, personnel, and financial, production, scientific and technical data and
information, whether written, graphic, electronic, digital or oral, as well as
samples and specimens thereof, howsoever or whensoever obtained by AAIPharma,
whether from YMB USA or otherwise and whether directly or indirectly and all
clinical data, including Case Report Forms, underlying data and all scientific
and technical information generated as a result of the Study and copies, notes
or summaries prepared with the Confidential Information.
 
 1.9  "Effective Date" means the
effective date of this Agreement as set forth in the initial paragraph of this
Agreement.
 
 1.10  "FDA" means United States Food
and Drug Administration.
 
 1.11
"GCPs" means established
ethical, medical and scientific standards, including without limitation good
clinical practices, including as described in the ICH Guidelines, the
Tri-Council Policy Statement: Ethical Conduct for Research Involving Humans and
the Declaration of Helsinki and all applicable regulatory
requirements.
 
 1.12
"GLPs" means good
laboratory practices as established by TPD and the FDA for the commercialization
of pharmaceutical products in Canada and the United States.
 
 1.13
"ICH Guidelines" means
the guidelines of the International Conference on Harmonization of Technical
Requirements for Registration of Pharmaceuticals for Human Use, providing for a
unified standard for Canada, the European Union, Japan and the United States
with respect to the interpretation and application of technical guidelines and
requirements for pharmaceutical product registration.
 
 1.14  "Institutional Review Board"
or "IRB" means the
independent group of professionals designated to ensure that the Study is safe
and effective for human participation and that the Study adheres to the
regulations issued by Health Canada and any other applicable country- specific
laws, regulations or guidelines.
 
 1.15
"Intellectual Property"
means all information, data, works of authorship, discoveries, concepts,
designs, processes, software, algorithms and inventions, whether patentable or
not, including, without limitation, those that could be the subject of patent,
copyright, industrial design, trade secret or other forms of
protection.
 
 1.16  "Investigational New Drug
Application'' or "IND"means the petition filed by YMB USA with Health Canada requesting Health
Canada to allow human testing on the Investigational Product.
  
 
 1.17  "Investigational Product"means the monoclonal antibody to Epidermal Growth Factor Receptor named
nimotuzumab or otherwise referred to as hR3 as described in the Protocol that
will be evaluated in this Study.
 
 1.18  "Investigator" means an
individual who actually conducts a clinical investigation, i.e., underwhose
immediate direction the Investigational Product is administered or dispensed to,
or used involving a subject, or, in the event of an investigation conducted by a
team of individuals, is the responsible leader of that team.
 
 1.19  "Laws" means all applicable:
(a) laws, statutes, codes, rules, regulations and Regulatory Requirements; (b)
judgments, orders, decisions, rulings, and words of a regulatory authority; and
(c) pharmaceutical guidelines, policies and standards relating to or having
jurisdiction over a Project.
 
 1.20  "Out of Scope Services" are
changes to a Project or Services that are not specifically provided for in an
executed Work Order.
 
 1.21  "Project Manager" means the
manager assigned by AAIPharma to be the primary contact person between AAIPharma
and YMB USA during the Study.
 
 1.22  "Project" means the Services
described by a Protocol and Work Order, conducted under this
Agreement.
 
 1.23  "Protocol" means the plan that
describes the objectives, study design, and methodology of a Study and any
approved amendments thereto, which is herein incorporated by
reference.
 
 1.24  "Regulatory Requirements"
means those laws, regulations, and professional and ethical standards and
guidelines then in effect in the countries in which the Study is conducted that
apply to the Investigational Product or clinical trials in general and as
specified in the individual Work Order.
 
 1.25  "Results" shall mean all
materials, samples, specimens or compounds, including sub-samples or progeny
thereof, all data, information, reports, slides, or presentations; conclusions
and interpretations created or arising in connection with a
Project.
 
 1.26  "Serious Adverse Event" shall
take the meaning given this term in the Protocol.
 
 1.27  "Services"means the
activities and work provided by AAIPharma in connection with the Study as set
out in this Agreement.
 
 1.28  "Service Documents"means all
Work Orders or Change Orders executed by both Parties under this
Agreement.
 
 1.29  "Standard Operating
Procedures" or "SOP's" means internal
procedures for the management of a clinical trial designed to ensure that the
trial is carried out in a consistent, controlled, and effective
manner.
 
 1.30
"Study" means the
clinical trial of the Investigational Product, the details of which are set out
in the Schedules.
  
 
 1.31  "Study Documents" means the
documents produced by AAIPharma in connection with the Study.
 
 1.32  "Subject" means a human
patient enrolled in the Study.
 
 1.33  "Term" means the duration or
this Agreement as set out in Section 10.1.
 
 1.34  "Test Materials" shall mean
all pharmaceutical compounds, Investigational Product, materials or other
substances provided by YMB USA to AAIPharma and administered or utilized as part
of this Study.
 
 1.35  ''TPD'' means Therapeutic
Products Directorate of Health
Canada (or whatever such agency might be called from time to time), or
any successor agency having regulatory jurisdiction over the manufacture,
distribution and sale of drugs in Canada from time to time.
 
 1.36  "Work Order" means a completed
and executed document in the form attached hereto as Appendix A, for a Study and
will include a description of the Project, details of the Services, Protocol,
specifications, deliverables, budget, payment schedule, and timelines, and other
terms agreed to by the Parties.
 
 ARTICLE
II
 SCOPE OF
AGREEMENT
 
 2.1  The
purpose of this Agreement is to set forth the terms, conditions and
administrative procedures applicable to Services provided by AAIPharma to YMB
USA. The Parties hereby agree that AAIPharma will provide such Services to YMB
USA, as set forth in each attached Work Order (which shall be attached hereto
and incorporated herein by reference). This Agreement and the Work Order,
attached as an Appendix, shall collectively constitute the entire agreement for
a Project. To the extent there is any discrepancy between the provisions of this
Agreement and any Work Order, the terms and conditions of this Agreement shall
govern unless otherwise explicitly set forth and mutually agreed upon by the
Parties.
 
 2.2  In
the event AAIPharma is requested or required to perform Out of Scope Services on
a Project after execution of the Work Order, AAIPharma will provide YMB USA with
a written Change Order. The Parties agree to act in good faith when considering
a Change Order requested by the other Party. Any Change Order will be effective
only upon written execution by both Parties, and the Out of Scope Services
agreed to in the Change Order shall be deemed to be Services pursuant to this
Agreement.
 
 2.3  Should
any Laws be amended, and compliance with the new requirements necessitates a
change in the Protocol or Work Order, AAIPharma will submit a Change Order to
YMB USA for acceptance prior to making any changes in the Protocol, Work Order
or the Project. AAIPharma agrees that no changes shall be made without the prior
written approval of YMB USA. In the event of a conflict in government
regulations, AAIPharma shall notify YMB USA to obtain clarification and guidance
regarding compliance with the regulations.
 
 2.4  AAIPharma
shall at all times be an independent contractor of YMB USA, and nothing in this
Agreement is intended, nor shall be construed, to create between YMB USA and
AAIPharma the relationship of principal and agent, employer and employee,
partnership, or joint venture, and the parties shall not represent themselves
otherwise. AAIPharma shall be liable for its own debts, obligations, acts or
omissions, including but not limited to the payment of all required
compensation, withholding, social security and other taxes or benefits for
AAIPharma's employees relative to Services provided under this
Agreement.
  
 
 2.5  The
Parties agree that this Agreement is executed subject to the condition that
AAIPharma receive a letter from the attorney named Richard Popkin, who
specializes in Cuban: US government issues, stating that AAIPharma may provide
services to YMB USA under YMB USA’s OFAC license, if necessary for a specific
Work Order. In such case where AAIPharma cannot obtain such assurances,
AAIPharma may terminate that Work Order upon thirty (30) days written notice to
YMB USA, and in no event shall AAIPharma be obligated to perform services under
a Work Order which violates the US laws or regulations governing products of
Cuban Origin.
 
 ARTICLE
III
 PROJECT
IMPLEMENTATION
 
 3.1  Representations of
AAIPharma.
 
 3.1.1  AAIPharma
represents and warrants that it has or shall procure and maintain consents,
approvals, licenses and operating certificate as required to perform its
obligations pursuant to this Agreement and in accordance with Regulatory
Requirements.
 
 3.1.2  AAIPharma
acknowledges, warrants and represents that it and all of the employees and
agents it assigns to perform Services hereunder possess the necessary
qualifications, knowledge, skills, expertise and experience. AAIPharma shall, at
all times during this Agreement, act in the best interests of YMB
USA.
 
 3.1.3  AAIPharma
certifies that to the best of its knowledge after investigation and inquiry,
that none of its employees or agents performing or affiliated with a Project or
Work Order is under investigation by a medical licensing board, TPD, a
regulatory authority, or the FDA for debarment action or is presently debarred,
and shall notify YMB USA immediately upon any inquiry or the commencement of any
proceeding concerning any such person(s).  AAIPharma represents and
warrants that it has not and will not use in any capacity the services of any
person debarred under such law with respect to Services to be performed under
this Agreement.
 
 3.1.4  AAIPharma
warrants that all Services provided by AAIPharma and the conduct of this Study
shall comply with the Protocol, YMB USA's instructions, and according to
established ethical, medical and scientific standards, including without
limitation, all applicable Good Laboratory Practices, Good Clinical Practices,
the requirements of the IRB, and all Laws governing or pertaining to clinical
trials and studies, and any amendments thereto or any successor documents
thereof.
 
 3.1.5  AAIPharma
represents that it has the requisite facilities, equipment and personnel with
the requisite expertise, experience and skill to render the desired Services in
a timely, competent and efficient manner, as specified in the Protocol and/or
Work Order and in accordance with the terms of this Agreement.
 
 3.1.6  Conflict
of Interest. AAIPharma certifies that:
 
 (a)  no
collateral benefit has been offered to it, or its employees or agents, for
participating in this
 Agreement
such as promises of gifts, future employment, or travel that is not related to
this Agreement; and
  
 
 (b)  the
performance of the work specified in this Agreement does not violate any
other
 agreement
AAIPharma may have with any other party; and
 (c)  no
gifts or other benefits have been offered to any family members;
and
 (d)  there
is no conflict of interest between AAIPharma and any other party that would
inhibit or
 affect
the performance of the work specified in this Agreement, and
 (e)  it
shall promptly inform YMB USA in writing in the event of any conflict of
interest that arises
 during
this Agreement.
 
 3.2  Obligations of
AAIPharma.
 
 3.2.1  AAIPharma
shall provide all labour and work required for the performance of the Services,
and agrees to perform such Services within the time limits set forth in the Work
Orders. YMB USA understands and agrees that completing the Services as set forth
in the Work Order assumes the full cooperation of YMB USA as well as other
necessary third parties. YMB USA will not hold AAIPharma responsible for any
occurrences outside AAIPharma's control that may delay thecompletion
of Services. YMB USA acknowledges that, if YMB USA materially delays or suspends
performance of the Services, then the personnel and/or resources originally
allocated to the Project may be re-allocated, and AAIPharma will not be
responsible for delays due to required re-staffing or re-allocation of
resources.
 
 3.2.2  AAIPharma
shall not engage any third party for any of the Services as set forth in Service
Documents without the prior written consent of YMB USA. AAIPharma shall be
responsible for all subcontractors performing any Services hereunder and
AAIPharma will not be relieved of any of its duties and obligations under this
Agreement in the event a subcontractor performs any Services. However, contract
CRAs, medical writers and biostatisticians shall not require such prior written
consent.
 
 3.2.3  Before
commencement of the Study, AAIPharma shall assign to the Study a Project Manager
and sufficient personnel, including CRAs, with suitable experience and training
to fulfill AAIPharma's obligations under this Agreement. Any change in the
Project Manager thereafter must be reasonably acceptable to YMB
USA.
 
 3.2.4  AAIPharma
shall apply to the Study systems of quality control and SOP's designed to ensure
that, as far as is reasonably practicable, YMB USA and the Investigators conduct
the Study; generate data; and record and report data, all in compliance with the
Regulatory Requirements, Good Clinical Practice, the Protocol, and this
Agreement, in that order.
 
 3.2.5  AAIPharma
will review all informed consents, Study related forms and CRFs to ensure their
accuracy and completeness and provide these forms and any other Study data or
samples to YMB USA in the format and manner requested by YMB USA. AAIPharma
agrees to use commercia1ly reasonable efforts to resolve any discrepancies or
errors in the informed consents and CRFs and perform audit requirements
pertaining to original case records, laboratory reports and/or other raw data
sources underlying the data recorded on the CRFs, as may be required by YMB USA
or Regulatory Requirements.
 
 3.2.6  AAIPharma
shall be responsible, at no cost to YMB USA, to provide such additional services
as may be necessary to remedy any defects or deficiencies in the Services caused
by the negligent acts or omissions of AAIPharma or by the failure to materially
perform the Services in accordance with the provisions of this Agreement or a
Work Order.
  
 
 3.2.7  AAIPharma
and its personnel shall cooperate with any other contractors or consultants
retained by YMB USA to undertake related work or programs for the
Project.
 
 3.2.8  AAIPharma
agrees to manage and review the use of the Test Materials by Study sites to
assure that Test Materials are being used in the manner provided in the Protocol
and in accordance with YMB USA's instructions, and shall not use the Test
Materials for any other purpose whatsoever. Upon completion of the Project, or
at any other time upon YMB USA's written request and YMB USA's expense,
AAIPharma agrees to promptly return to YMB USA all Test Materials in its
possession, other than those that AAIPharma is required to store in accordance
with applicable Laws. YMB USA will notify AAIPharma within sixty (60) days after
completion of a Project whether the remaining samples are to be returned to YMB
USA, stored or destroyed.
 
 3.2.9  AAIPharma
will provide YMB USA with written status reports in accordance with either YMB
USA or AAIPharma SOP’s (as mutually agreed by the Parties and as set forth in
the applicable Work Order).
 
 3.2.10  AAIPharma
shall notify YMB USA by phone immediately after becoming aware of a Serious
Adverse Event and shall submit an initial written report to YMB USA regarding
that Serious Adverse Event via facsimile within 24 hours after AAIPharma becomes
aware of any such event.
 
 3.3  Representations of YMB
USA.
 
 3.3.1  YMB
USA represents and warrants that the execution, delivery and performance of this
Agreement (a) has been duly authorized by all necessary corporate action; (b)
does not conflict with, or result in a material breach of, its articles of
incorporation or by-laws and any material agreement by which it is bound, or any
Laws and (c) this Agreement has been duly executed by it and constitutes its
valid and legally binding obligation enforceable in accordance with its
terms.
 
 3.3.2 YMB
USA certifies that to the best of its knowledge after investigation and inquiry,
that none of its employees or agents is under investigation by a medical
licensing board, TPD, a regulatory authority, or the FDA for debarment action or
is presently debarred and shall notify AAIPharma immediately upon any inquiry or
the commencement of any proceeding concerning any such person(s).
 
 3.3.3  YMB
USA represents and warrants that the delivery of the Investigational Product to
AAIPharma, its use in accordance with the Protocol and the performance of the
Services by AAIPharma in accordance with this Agreement, are permitted by YMB
USA’s OFAC license (if applicable), will not violate any applicable Laws, cause
a breach of any agreements with any third parties, or infringe upon any patent
or other intellectual property rights of third parties.
 
 3.4  Obligations of YMB
USA.
 
 3.4.1  YMB
USA shall procure and maintain all consents, approvals, licenses, and operating
certificates required to conduct the Study, including but not limited to, the
approval of the Protocol by TPD. YMB USA shall also develop, comply with, and
require staff to comply with, policies and procedures designed to assure, at all
times, that such consents, approvals, licenses, and operating certificates
remain in effect throughout the Term.
  
 
 3.4.2 YMB
USA shall provide AAIPharma, at no expense to AAIPharma (i) with all information
and documentation reasonably necessary for AAIPharma to perform its duties
hereunder, including but not limited to; (ii) all Clinical Trial Materials; and
(iii) with all advice, guidance, and assistance reasonably requested by
AAIPharma to fulfill its duties under this Agreement. Notwithstanding the
foregoing, AAIPharma will provide the CRF’s.
 
 3.4.3  YMB
USA will provide AAIPharma with sufficient amounts of Test Materials to perform
the Services. Prior to or concurrent with delivery of Test Materials, YMB USA
will provide information pertaining to stability, proper storage, safety and
other characteristics and requirements of the Test Materials. YMB USA will be
solely responsible for providing AAIPharma with the Test Materials in a manner
that complies with applicable laws, including but not limited to regulatory
permits or licenses to ship or test the Test Materials and/or labelling
requirements.
 
 3.4.4  YMB
USA shall have the right to visit and co-monitor a Study site or inspect and
audit any of the Study Documents maintained by AAIPharma consistent with Laws
regulating the review of study data and information. All such visits and
inspections must be conducted during normal working hours on regular business
days with reasonable written notice and at mutually agreed upon times, unless
otherwise agreed. AAIPharma shall arrange access to the Study site as soon as
reasonably practicable following notification by YMB USA.
 
 ARTICLE
IV
 PAYMENT FOR SERVICES
RENDERED
 
 4.1  YMB
USA agrees to pay to AAIPharma for Services provided, and all expenses incurred
by AAIPharma pursuant to this Agreement and properly executed Service
Documents.
 
 4.2  YMB
USA shall reimburse AAIPharma for all reasonable airfare, hotel, and other
travel expenses incurred by AAIPharma in its performance of the Services,
including but not limited to, expenses incurred by AAIPharma in connection with
site selection visits, initiation visits, monitoring visits, and closeout visits
and in connection with attendance at Project Meetings and Investigators'
Meetings. YMB USA shall also reimburse AAIPharma for all photocopying, courier,
and other similar expenses incurred by AAIPharma in its performance of its
duties under this Agreement. Original receipts will not accompany pass-through
invoices. All original and pass-through receipts will be housed at AAIPharma and
will be available for YMB USA's audit upon request. Notwithstanding the
foregoing, YMB USA shall not be responsible for any costs described in this
Paragraph 4.2 that exceed the amount budgeted for such expenses in Service
Documents, without prior written approval being obtained from YMB. Any amounts
approved by YMB USA in excess of those specified in Service Documents, shall be
separately invoiced to YMB USA and YMB USA shall pay these invoices according to
the terms of Paragraph 4.3 and 4.4 below.
 
 4.3  Unless
otherwise agreed by the Parties in writing, AAIPharma shall provide to YMB USA
one or more appropriate invoices on a calendar month basis for Services rendered
as set forth in the respective Service Documents. Invoices are due and payable
net thirty (30) days of receipt, unless YMB USA notifies AAIPharma of any
disputes with the invoiced amounts. All payments to AAIPharma shall be made in
the currency mutually agreed upon and set forth in a respective Work Order.
Invoice balances not remitted within thirty (30) days of YMB USA's receipt of
each invoice shall be subject to a one and one-half percent (1.5%) per month
interest charge. Should any part of the invoice be in dispute, the YMB USA shall
pay the balance of the undisputed amount according to the terms and conditions
described herein while said dispute is being resolved.
  
 
 4.4  All
payment will be made payable to AAIPharma Inc. Payments shall be sent to the
following address:
 
 Attn.
Accounts Receivable
 AAIPharma
Inc.
 PO Box
404120
 Atlanta,
GA 30384-4120
 Wire
Transfers: Bank of America ABA #0260-0959-3, Account # 3756316029
 
 4.5  If
advances or other payments by YMB USA exceed the amount owed for work actually
performed under the Protocol and Service Documents, AAIPharma agrees to return
the excess balance to YMB USA within thirty (30) days of the effective date of
termination or completion of Closeout Services by AAIPharma.
 
 4.6  In
the event of a dispute regarding payment or the performance of Services pursuant
to this Agreement or a Service Document (each, a “Dispute”),the Parties shall
endeavour to negotiate in good faith an agreeable solution. If after ten (l0)
business days following receipt of a Party's written notification of a Dispute
such Dispute has not been resolved, the Dispute shall be brought to the
attention of the CEO of each Party and such CEO or his/her designee will
negotiate in good faith to define and implement a final resolution. The intent
of this Section 4.6 is to encourage the Parties to work together to resolve any
Dispute without having to rely on arbitration or any other legal proceeding.
However, nothing in this Section 4.6 shall prevent or inhibit either Party to
institute any other action to resolve such Dispute(s).
 
 Article
V
 MONITORING
OF SERVICES, RECORD STORAGE, AND AUDITS
 
 5.1  Monitoring of
Services. AAIPharma will permit YMB USA representative to examine or
audit inspect AAIPharma's premises in pre-announced visits at mutually agreed
upon times and normal business hours during the course of AAIPharma's
performance of Service Documents hereunder. YMB USA may inspect the facilities,
systems and equipment at or with which the work is conducted, and personnel,
procedures, programming, experimental data, including source documents, notes,
schedules, written reports or other work product that pertains to Services and
Results, and quality assurance records.
 
 5.2  Regulatory
Audit.
 
 5.2.1
Each party acknowledges that the other party may respond independently to any
regulatory correspondence or inquiry in which such other party or its affiliates
is named. Each party, however, shall: a) notify the other party promptly of any
FDA or other governmental or regulatory inspection or inquiry concerning any
study or Project of YMB USA in which AAIPharma is providing the Services,
including, but not limited to, inspections of investigational sites or
laboratories; b) forward to the other party copies of any correspondence from
any regulatory or governmental agency relating to such a study or Project,
including, but not limited to, FDA Form 483 notices, and FDA refusal to file,
rejection or warning letters, even if they do not specifically mention the other
party; and, c) obtain the written consent of the other party, which will not
unreasonably be withheld, before referring to the other party or any of its
affiliates in any regulatory correspondence. Where reasonably practicable, each
party will be given the opportunity to have a representative present during a
FDA or regulatory inspection. Each party, however, acknowledges that it may not
direct the manner in which the other party fulfills its obligations to permit
inspection by governmental entities or any other obligations imposed by
Law.
  
  5.2.2  Each
party agrees that, during an inspection by the FDA or other regulatory authority
concerning any study or Project of YMB USA in which AAIPharma is providing the
Services, it will not disclose information and materials that are not required
to be disclosed to such agency, without the prior consent of the other party.
Such information and materials include, but are not limited to, the following:
a) financial data and pricing data (including, but not limited to, the budget
and payment sections of the Service Documents); b) sales data (other than
shipment data), and; c) personnel data (other than data as to qualification of
technical and professional persons performing functions subject to regulatory
requirements).
 
 5.2.3  If
FDA or other regulatory authority issues a written inspectional observation or
report of the facilities or general laboratory practices, that pertains to or
affects any part of a Services, AAIPharma shall forthwith provide YMB USA with
copy of this written observation along with AAIPharma’s response redacted if
necessary of any confidential information.
 
 5.3  Records. AAIPharma
shall maintain books of account of the Services rendered and the cost and
reimbursable expenses in accordance with generally accepted accounting
principles. AAIPharma shall make available to a third party, as selected by YMB
USA acting reasonably and reasonably accepted to AAIPharma, such books and
records for audit purposes upon the request of YMB USA at mutually agreed upon
times during this Agreement and for a period of two (2) years thereafter. YMB
USA shall be responsible for the costs and expenses of any third party
audit.
 
 5.4  Record
storage.
 
 5.4.1  During
the term of this Agreement, AAIPharma shall maintain all materials and all other
data obtained or generated by AAIPharma in the course of providing the Services
hereunder, including all computerized records and files, in a secure area
reasonably protected from fire, theft and destruction. All computerized records
and files shall be backed up in such a manner and frequency as to reasonably
protect against loss of information from computer viruses or other equipment
failure.
 
 5.4.2  AAIPharma
agrees to notify YMB USA no less than thirty (30) days prior to destruction or
disposal of materials, records and data to enable YMB USA to determine whether
it requires further archival time. In the event YMB USA requires storage of
records and data beyond the minimum storage, AAIPharma agrees to continue to
store the data until the Parties have agreed on storage or transfer of the data
and reports to YMB USA. Time shall be of the essence in respect to coming to an
agreement on further storage.
 
 Article
VI
 PRIVACY
 
 6.1  In
order to protect the confidentiality of personal information or personal health
information of subjects participating in a Project as defined in the Personal
Information Protection and Electronic Documents Act, Canada or as such
equivalent terms may be defined in the legislation pertaining to privacy of
personal information in a province that has enacted a law governing such
matters, the Parties agree as follows:
  
 
 (i)  to
use personal information or personal health information only as permitted by the
Subject in the consent form or as required or permitted by Law;
 (ii)  to
refrain from publishing Subject personal information or personal health
information in a form that could reasonably enable the Subject's identity to be
ascertained;
 (iii)  to
refrain from obtaining additional personal information or personal health
information from a Subject unless such Subject has provided
consent;
 (iv)  to
be liable for the actions of their respective employees and agents for the
collection, use or disclosure of personal Information or personal health
information and for ensuring compliance with the relevant legislation by such
persons.
 
 6.2  AAIPharma
shall remove all Subject identifying information from any copies of data or
reports prior to providing copies of such to YMB USA. If Subject identifying
information or Subject identifying health information is transferred to YMB USA,
its employees or agents, YMB USA and its employees and agents shall not use or
disclose such information except with the knowledge and consent of the Subject,
as set out in the Subject informed consent form, or as required by law,
regulation or legal process.
 
 ARTICLE
VII
 INTELLECTUAL
PROPERTY
 
 7.1  YMB
USA shall own all documentation, records, raw data, samples and Results
generated by AAIPharma in the performance of each Project under this Agreement
and all Clinical Trial Materials and Test Materials.
 
 7.2  AAIPharma
agrees to promptly disclose any Intellectual Property arising out of Services,
which shall be the property of YMB USA. AAIPharma agrees, and agrees on behalf
of its employees and agents to execute, acknowledge and deliver at YMB USA's
expense and as YMB USA may reasonably request all documents, including
assignment documents, and to perform such other actions to secure, verify or
reflect such ownership or to secure proprietary protection in the name of YMB
USA for such inventions or discoveries at YMB USA's expense and as YMB USA may
reasonably request. YMB USA shall be invoiced from time to time for its use of
AAIPharma’s personnel under this Section 7.2 at AAIPharma’s then current rate.
Payment shall be made as set forth in Section 4.3 herein. YMB USA shall have
full power and authority to file and prosecute patent applications throughout
the world on such inventions or discoveries.
 
 7.3  The
Parties agree that Intellectual Property owned or possessed by each Party prior
to the Effective Date hereof, used in the course of a Project shall remain the
property of such Party. YMB USA acknowledges that AAIPharma may develop methods
of operating, techniques, processes or procedures that are generally applicable
to providing contract clinical trial management services and unrelated to YMB
USA's Confidential Information. Accordingly, nothing in this Agreement shall
preclude AAIPharma from utilizing such general knowledge in providing services
as long as such services do not constitute a breach of Confidentiality under
Article VIII of this Agreement.
 
 7.4  Except
as set forth herein, no Intellectual Property right, title or interest of a
Party is granted to the other Party hereunder.
  
  ARTICLE
VIII
 CONFIDENTIALITY
 
 8.1
AAIPharma and YMB USA signed a Confidentiality Agreement for the purpose of
determining their interest in pursuing this Agreement. The Parties agree that
the terms of that confidentiality agreement shall apply up to the Effective Date
or this Agreement and shall be superceded by the terms of confidentiality
contained herein on and after the Effective Date. In the event of a conflict
between the terms of that confidentiality agreement and this Agreement, this
Agreement shall prevail.
 
 8.2  AAIPharma
agrees that without the express written consent of the YMB USA, it will not
directly or indirectly, deal with, use, exploit or disclose Confidential
Information of YMB USA to any person or entity for any purpose except as
described or permitted herein or unless and until expressly authorized in
writing to do so by YMB USA.
 
 8.3  AAIPharma
may disclose the Confidential Information only to those employees and agents who
shall have a need to know the Confidential Information for the purpose of a
Project. Each party shall, prior to disclosing the Confidential Information or
portion thereof to such designated employees or agents issue appropriate
instructions to them to satisfy the obligations herein and obtain their written
agreement to receive and use the Confidential Information as confidential and
subject to non-disclosure on the same conditions as contained
herein.
 
 8.4  AAIPharma
shall not reproduce the Confidential Information without the express written
permission of YMB USA, except for such copies as AAIPharma may require pursuant
to this Agreement for internal purposes on a need-to-know basis.
 
 8.5  AAIPHARMA
shall not be liable for disclosure of the Confidential Information or any
portion thereof upon the occurrence of one or more of the following
events:
 
 (i)
information of YMB USA which is now in the public domain or which subsequently
enters the public domain without fault on the part of AAIPharma; or
 (ii)
information which is subsequently lawfully obtained by AAIPharma from a third
party or parties without breach of this Agreement by AAIPharma as shown by
documentation sufficient to establish the third party as a source of the
Confidential Information; or
 (iii)
information of YMB USA which is presently known by AAIPharma from its own
sources where said present knowledge can be demonstrated by written records
sufficient to establish such knowledge; or
 (iv)
information developed by or for AAIPharma independent of disclosure hereunder as
evidenced by AAIPharma's written records; or
 (v)
information of which YMB USA has provided its prior written consent for such
disclosure; or
 (vi)
information which is required to be disclosed by AAIPharma as required by law
pursuant to an appropriate legal order by a court or government agency having
the authority to compel such disclosure; provided that AAIPharma shall notify
YMB USA of the nature of the information to be disclosed notified prior to such
disclosure to enable YMB USA to seek, and where possible, reasonably cooperate
with the YMB USA to provide it with the opportunity to take appropriate legal
action to prevent or safeguard said information.
 
 8.6  The
Parties agree that the disclosure of the Confidential Information does not
oblige YMB USA to give or grant any commercial rights to AAIPharma, other than
as specified herein.
  
 
 8.7  The
obligations of confidentiality shall survive the Term or earlier termination of
this Agreement for a period of seven (7) years.
 
 8.8  YMB
USA agrees not to use, or provide to, disclose to, or permit any third party to
use Confidential Information of AAIPharma ("AAIPharma Confidential
Information"), except as set forth in  exceptions (i) through (vi) set
forth in Section 8.5 herein. As used herein, AAIPharma Confidential Information
means information relating to, without limitation, the conduct and financial
aspects of AAIPharma's business, data, trade secrets, know-how, inventions
(whether or not patentable), patent applications, analytical and bioanalytical
methods, manufacturing and clinical research, whether written, electronic,
graphic, or oral, as well as samples and specimens, furnished or disclosed by
either party directly or indirectly, or as the result of a site visit or audit,
to YMB USA.
 
 8.9  Each
Party shall, upon written request of the other Party, return all Confidential
Information and copies thereof or shall destroy such Confidential Information
and copies as directed by a partyunless
required to retain certain of the Confidential Information or a copy thereof by
applicable Laws, regulation, or pursuant to this Agreement.
 
 8.10  AAIPharma
and its Affiliates will not publish any articles or make any presentations
relating to the Services or referring to data, information or materials
generated as part of the Services, in whole or in part, without the prior
written consent of YMB USA. Each Party agrees that it shall not use the other
Party's name or disclose any matters relating to the Services provided hereunder
in any advertising, promotion, written articles or communications without the
prior written consent of the other Party.
 
 ARTICLE
IX
 INSURANCE AND
INDEMNIFICATION
 
 9.1  YMB
USA and AAIPharma shall each maintain, at its sale cost and expense, insurance
coverage with a reputable insurer (which shall be either occurrence based or
claims made coverage) in an amount usual and customary for companies engaged in
activities as contemplated by this Agreement. All such insurance shall be in
place before the first patient is enrolled in the Study. Each shall designate
the other party as an additional insured on products and professional liability
policies, and an endorsement shall be made on each such policy prohibiting the
insurer from cancelling the policy for any reason or substantially modifying its
terms without first giving the other party at least thirty (30) days written
notice of its intention to do so.
 
 9.2  If
either party maintains it claims-made policy and this Agreement expires or
terminates for any reason, then that party shall either: 1) continue to maintain
the same or higher coverage with an insurance carrier for a period of two (2)
years thereafter; or 2) purchase "Tail Coverage" effective until the second
(2nd) anniversary date of the expiration or termination of this Agreement; or
3)obtain
and maintain "Prior Acts" coverage equivalent in time and coverage as the "Tail
Coverage" described herein.
 
 9.3  Upon
request by either party, the other party shall provide evidence of that party's
compliance with this Section 9.1 and/or 9.2.
  
  9.4  AAIPharma
agrees to defend, indemnify, save and hold harmless YMB USA and its parent,
subsidiaries and affiliates and their respective directors, officers, employees
and agents (the "YMB USA Indemnities") from and against any third party claims,
demands, suits, actions, causes of action, losses, damages, fines and
liabilities, including reasonable legal fees and disbursements (the "Claims")
arising out of or in connection with or attributable to: (a) AAIPharma's wilful
failure to comply with this Agreement, Work Order or Protocol and any amendments
thereto; (b) AAIPharma's gross negligence or willful misconduct in performance
of the Services; (c) violations of applicable Laws, GLPs or GCPs; and/or (d)
AAIPharma's submission of false or incorrect data and information to YMB USA;
except to the extent any of the Claims arise from the gross negligence or wilful
misconduct of YMB USA. AAIPharma agrees to pay the reasonable costs and damages
arising from such Claims, after exhaustion of all reasonable appeals, provided
that YMB USA provides AAIPharma with written notice of the Claims within five
business (5) days of the date YMB USA receives notice of the Claim and YMB USA
provides AAIPharma with reasonable information and assistance required to defend
the Claim. AAIPharma shall have the sale authority to defend and/or settle the
Claim, provided that AAIPharma may not settle a Claim that includes an admission
of liability on the part of YMB USA without YMB USA's prior written
consent.
 
 9.5  YMB
USA agrees to defend, indemnify, save and hold harmless AAIPharma and its
parent, subsidiaries and affiliates and their respective directors, officers,
employees and agents (the "AAIPharma Indemnities") from and against any Claims
arising out of or in connection with or attributable to: (a) the research
(including the ethical review of the Protocol and related materials),
development, manufacture, distribution, use, sale or other disposition of the
Test Materials by YMB USA, or any distributor, collaborator, customer,
sublicense, representative or agent of YMB USA; (b) an infringement of any third
party's patent rights or unauthorized use or misappropriation of its
intellectual property pertaining to the Test Materials; and/or (c) YMB USA's
gross negligence or willful misconduct in connection with this Agreement; (d)
YMB USA’s failure to comply with this Agreement, Work Order or Protocol and any
amendments thereto; or (e) YMB USA’s use of the data or other information
generated as a result of the services; except to the extent of any of the Claims
arise from the gross negligence or wilful misconduct of AAIPharma. YMB USA
agrees to pay the reasonable costs and damages arising from such Claims, after
exhaustion of all reasonable appeals, provided that AAIPharma has given YMB USA
written notice of the Claims within five business (5) days of the date AAIPharma
receives notice of the Claim, and AAIPharma has provided information and
reasonable assistance required to defend the Claim. YMB USA shall have the sole
authority to defend and/or settle the claim, provided that YMB USA may not
settle a claim that includes all admission of liability on the part of AAIPharma
without AAIPharma's prior written consent.
 
 ARTICLE
X
 TERM AND
TERMINATION
 
 10.1  Unless
sooner terminated in a manner herein provided, this Agreement shall commence on
the Effective Date and, unless terminated pursuant to this Article 10 or Clause
2.5, shall continue until such time as the Services and Closeout Services have
been completed for each respective Service Document (hereinafter the "Term").
The Parties may extend this Agreement by written mutual agreement as soon as
reasonably practicable prior to the expiration of the Term.
 
 10.2  This
Agreement and any corresponding Service Document then in effect may be
terminated by either Party as follows:
 
 (i)  by
YMB USA providing at least thirty (30) days written notice to AAIPharma;
or
 (ii)  by
mutual written agreement by the Parties: or
  
 
 (iii)  by
either Party (the "Non-defaulting Party") giving the other Party (the
"Defaulting Party") thirty (30) days written notice of termination for
Cause.
 
 10.3  Either
Party has the right to terminate this Agreement immediately upon written notice
to the other Party and without further liability hereunder, if a Party commits
an act of bankruptcy or if proceedings are taken against it for fraud, or
dishonest or serious misconduct in behaviour.
 
 10.4  In
the event of termination of any Service Document and/or this Agreement for any
reason, AAIPharma agrees to use its commercially reasonable best efforts to
limit any further cost to YMB USA. AAIPharma will cease performing any Services
not necessary for the orderly closeout of the affected Service Document or
fulfillment of Regulatory Requirements and AAIPharma shall instruct its
subcontractors, if any, to do the same. Within thirty (30) days following the
effective date of termination, AAIPharma shall deliver and cause subcontractors,
if any, to deliver all Confidential Information, Clinical Trial Materials, data,
Results, Study Documents, and Test Materials provided by YMB USA or generated
under this Agreement to YMB USA at no additional cost to YMB USA.
Notwithstanding the foregoing, AAIPharma shall retain and keep in custody any
materials or data, original or copy, for the purpose of compliance with
Regulatory Requirements.
 
 10.5  Upon
termination of this Agreement pursuant to Sections 10.2 or 10.3, YMB USA shall
continue to pay AAIPharma the amounts set forth in Service Documents for all
reasonable costs actually incurred or irrevocably obligated for Services
rendered by AAIPharma through to the effective date of termination and for the
Closeout Services furnished by AAIPharma after the termination of this
Agreement, provided that in no event will the amount owed to AAIPharma exceed
the maximum amounts specified in the Service Documents.
 
 ARTICLE
XI
 CORRESPONDENCE: AND
NOTICE
 
 11.1  Any
and all notices required or permitted to be given hereunder by either Party
hereunder shall be in writing and shall be deemed given on the date received if
delivered personally or received by facsimile transmission before 4:00 pm on a
business day in the jurisdiction of the recipient and otherwise on the next
business day:
 
 If
      to YMB USA:
              YM
      BioSciences USA Inc.701
      Lee Road, Suite 200Wayne,
      PA 19087Attn.
      Gary FloydPhone:
      (610)-560-0600Fax:
      (610)-560-0700If
      to AAIPharma:
              AAIPharma
      Inc.2320
      Scientific Park DriveWilmington,
      North Carolina 28405Attn:
      Legal Department, North American OperationsPhone:
      (910) 254-7000Fax:
      (910) 815-6067
  
 
 11.2 All
communications and notices related to a Service Document shall be addressed to
the appropriate individual for each Party as set forth in such Service
Document.
 
 ARTICLE
XII
 MISCELLANEOUS
 
 12.1  Waiver. No waiver by
any Party hereto of any condition, or of the breach of any provision, term,
covenant, representation, or warranty contained in this Agreement or a Service
Document, whether by conduct or otherwise, in anyone or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such
condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement or Service Document.
 
 12.2  Severability.
Whenever possible, it is the intention of the Parties that each provision of
this Agreement and related documents shall be interpreted so as to be effective
and valid under applicable Laws. In the event any provision of this Agreement,
or a Work Order or Change Order is prohibited by or invalid under applicable
Laws, such provision shall be ineffective only to the extent of such prohibition
or invalidity without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such related document.
 
 12.3  Cooperation. Each
Party will execute and deliver all such instruments and perform all such other
acts as the other Party may reasonably request to carry out the transactions
contemplated by this Agreement.
 
 12.4  Force Majeure. No
Party shall be in default hereunder by reason of its delay in the performance of
or failure to perform any of its obligations hereunder if such delay or failure
is caused by strikes, acts of God or the public enemy, terrorism or threats of
terrorism, riots, incendiaries, weather, interference by civil or military
authorities, compliance with governmental laws, rules, and regulations, delays
in transit or delivery, or any fault beyond its control or without its fault or
negligence.
 
 12.5  Headings. All
headings herein are for convenience only and shall not be construed as a
limitation or the scope of the particular sections to which they
refer.
 
 12.6  Entire Agreement
Modification. This Agreement, together with the Work Orders, Change
Orders if any, and Protocols, constitute the entire agreement and understanding
between the Parties, superseding any and all previous statements, negotiations,
documents agreements and understandings, whether oral or written. No
modification or waiver of the provisions of this Agreement shall be valid or
binding on either Party unless in writing and signed by both Parties. This
Agreement and any Protocol or Work Order executed pursuant to this Agreement
shall not be waived, released, discharged, changed or modified in any manner
except by an instrument signed by the authorized representatives of each
Parties, which instrument shall make specific reference to this Agreement or the
applicable Protocol or Work Order and shall clearly state the plan or intention
to modify same.
 
 12.7  Assignment - Neither
AAIPharma nor YMB USA shall assign its rights under this Agreement without the
prior written consent of the other Party, such consent not to be unreasonably
withheld; provided, however, the Parties
may transfer or assign its rights and obligations under this Agreement to a
successor to all or substantially all of its business or assets relating to this
Agreement whether by sale, merger, operation of law or otherwise. Subject to the
restrictions on transfers, assignments and encumbrances set forth herein, this
Agreement shall inure to the benefit of and be binding upon the undersigned
Parties and their respective legal successors.
  
 
 12.8  Surviving Provisions
- The Parties agree that the following provisions will survive the Agreement;
the definitions contained herein to the extent such definitions pertain to terms
in surviving provisions, Articles IV, VII, VIII, XI, XII in their entirety and
Sections 3.1, 3.2.8, 3.3, 5.3, 5.4, 9.4, 9.5.
 
 12.9  French/English
Language - The parties to this Agreement have agreed that this Agreement
and all related documents shall be drafted in the English language only. Les
parties ont convenu que cette convention ainsi que tout document y afférent
soient rédigés en anglais seulement.
 
 IN WITNESS WHEREOF, the
Parties have caused this Agreement to be executed by their duly
 authorized
officers.
 
 AAIPHARMA
      INC.
              YM
      BIOSCIENCES USA INC.By:
              By:Name:
      Ludo J. Reynders
              Name:
      David AllanTitle:
      President and CEO
              Title:
      Chairman and CEODate:
      August 28, 2007
              Date:
      August 28, 2007
  
 
 Attachment
A
 
 Sample
Work Order
 Date
__________
 
 The
services described herein will be provided in accordance with the terms and
conditions of the Master Services Agreement, dated August 24, 2007, between
AAIPharma Inc., on behalf of itself and its subsidiaries (collectively,
‘AAIPharma’) and YM BioSciences USA Inc. (hereinafter referred to as “YMB
USA”).
 
 The
following documents are attached to this Work Order and shall be incorporated
herein:
 
 Attachment
I      Final Protocol dated ___ 200_
 
 Attachment
II    Final Scope of Work dated ___ 200_, including the
description of Services to be provided and timeline
 
 Attachment
III   Costs and Payment Terms for the Final Scope of
Work
 
 All terms
and conditions provided in the Master Services Agreement executed by the parties
with an Effective Date of August 24, 2007 remain unmodified and in full force
and effect.
 
 ACKNOWLEDGED,
ACCEPTED AND AGREE TO:
 
 AAIPharma
      Inc.
              DateYM
      BioSciences USA Inc.
              Date