**Exhibit 10.1**

 

**FIRST AMENDED AND RESTATEDSYNTHETIC CARDIOLIPIN SUPPLY AGREEMENT**

 

**THIS AGREEMENT** is hereby made and entered into as of the     day of November, 1999 (the “Effective Date”) byand between **Avanti Polar Lipids, Inc.,**an Alabama corporation having its principal place of business at 700 IndustrialPark Drive, Alabaster, Alabama 35007 (“Avanti”), and **Neopharm, Inc.,** a Delaware corporation having a place ofbusiness at 100 Corporate North, Suite 215, Bannockburn, Illinois 60015(“Neopharm”) (Avanti and Neopharm being referred to hereinafter from time totime, collectively, as the “parties”).

 

**W I T N E S S E T H:**

 

**WHEREAS,** Avanti and Neopharm have entered into thatcertain Synthetic Cardiolipin Supply Agreement, effective as of May 26, 1998(hereinafter the “Original Supply Agreement”), setting forth the terms pursuantto which Avanti will supply synthetic cardiolipin to Neopharm in connectionwith Neopharm’s efforts to commercialize Liposomal Doxorubicin and Paclitaxel;and

 

**WHEREAS,**Avanti and Neopharm now wishto amend and restate the Original Agreement to modify Section 1(a) to addtwo additional fields in which Avanti will supply synthetic cardiolipin toNeopharm and Section 5(b) to change the terms on which the Original Agreementmay be unilaterally terminated.

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**NOW THEREFORE,**for good and valuableconsideration, including, the mutual covenants, agreements, representations andwarranties set forth herein, the receipt and sufficiency of which is herebyacknowledged, Avanti and Neopharm hereby agree as follows:

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**1.**                                       Supply of Synthetic Cardiolipin by Avanti.  (a) Avanti will supply Synthetic Cardiolipin to Neopharmand/or its designated affiliates or sublicensees in the amounts and of thequality described on Schedule 1 attached hereto and incorporated byreference herein.  Avanti will supplySynthetic Cardiolipin to Neopharm or its affiliates or sublicensees forpurposes of conducting research, clinical trials and obtaining governmentapprovals required for Neopharm and/or its designated affiliates andsublicensees to commercialize Neopharm’s proprietary liposomal products,Liposomal Doxorubicin and Paclitaxel. In addition, Avanti will supply Synthetic Cardiolipin to Neopharm or itsaffiliates or sublicensees for purposes of conducting research, clinical trialsand obtaining government approvals required for Neopharm and/or its designatedaffiliates and sublicensees to commercialize one or more drugs designed toinhibit:  (i) the aging process inhumans, or (2) topoisomerase.  Avantiwill not knowingly sell Synthetic Cardiolipin to any third party usingSynthetic Cardiolipin to commercialize liposomal products which will directlycompete with Liposomal Doxorubicin and Paclitaxel.

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**(b)**                                 All Synthetic Cardiolipinsold by Avanti to Neopharm and/or its designated affiliates or sublicenseespursuant to this Agreement shall be manufactured by Avanti in accordance withthe production specifications described on Schedule 1 under “goodmanufacturing practices” conditions as described in the United States Code ofFederal Regulations “Good Manufacturing Practices” regulations (collectively,the “US GMP Regulations”) and the European Community Guide to GoodManufacturing Practices, in all events adhering to the US GMP Regulations whereconflict between the US GMP Regulations and such European Community regulationsarise (the “Avanti-GMP Production Process”). The price for GMP-Neopharm Products set forth on Schedule 2hereto shall include all analytical services (other than the costs of Bioburdonand LAL Testing), stability studies, and other similar activities required tomeet GMP standards of production. Avanti shall not make any changes to the production specificationsdescribed on Schedule 1 or any material changes to test methods, batchrecords or raw materials with respect to the Synthetic Cardiolipin withoutNeopharm’s prior written approval, which approval shall not be unreasonablywithheld.

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**(c)**                                  Neopharm and Avantiacknowledge and agree that the initial production of Synthetic Cardiolipin inthe quantities required by Neopharm requires certain so-called “scale up” andrelated activities and that Avanti may make such changes in Avanti’s processesand procedures, including, without limitation, any enhancements or improvementsthereto, as Neopharm shall approve, which approval shall not be unreasonablywithheld.  Further, Neopharm recognizesand agrees that Avanti has developed and created certain processes andprocedures for the production and manufacture of lipids (i) to which Avanti hassole and exclusive ownership and which is a trade secret of Avanti, and (ii)which Avanti previously has disclosed to Neopharm and which Neopharm has agreedin writing to keep in strict confidence, and (iii) which Avanti may choose touse (and which Neopharm hereby expressly permits Avanti to use) in themanufacture and production of Synthetic Cardiolipin.  All test methodologies used by Avanti pursuant to its obligationsunder this Agreement shall be validated. For those procedures which appear in the current USP/NF, or otherrecognized standard reference, a statement indicating the reference shallsuffice.  For those test methods whichare developed by Avanti, documentation supporting the validation of the testmethod shall be provided.

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**(d)**                                 In order to permit Avanti toregularly supply Neopharm with Synthetic Cardiolipin, at least thirty (30) daysbefore the beginning of each calendar quarter, Neopharm shall provide Avantiwith a non-binding forecast of Neopharm’s estimated requirements of SyntheticCardiolipin for the next twelve (12) month period.  Such updated forecast, depending upon the progress of clinicaland regulatory studies and approvals, may vary from previous projections andshall be incorporated into Schedule 2 attached hereto.  Within thirty (30) days after receiving awritten request from Neopharm and/or its designated affiliates or sublicensees,Avanti shall produce and ship to Neopharm and/or its designated affiliates orsublicensees such amounts of the requested Synthetic Cardiolipin of the qualityand at the price described on Schedule 2 hereto.  The parties recognize and agree that eachorder for Synthetic Cardiolipin shall not be less than the minimum amount norgreater than the maximum amount of Synthetic Cardiolipin as set forth on Schedule2.  Each shipment of SyntheticCardiolipin shall be shipped to Neopharm and/or its designated affiliates orsublicensees at Neopharm’s Bannockburn, Illinois facility (or at such otherlocation as Neopharm may direct from time to time).

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**(e)**                                  Neopharm and/or itsdesignated affiliates or sublicensees shall inspect each shipment of SyntheticCardiolipin and shall advise Avanti of any damage, shipping problems or delays,or other defects in the quality or quantity of Synthetic Cardiolipin orderwithin thirty (30) days after receipt of such shipment.  In the event that any damage to theSynthetic Cardiolipin has occurred in shipment or the Synthetic Cardiolipindoes not meet GMP standards, Neopharm shall return the Synthetic Cardiolipin toAvanti, or take such other action as Avanti may reasonably direct.  Avanti shall have thirty (30) days to curesuch damage or other problem by the shipment of additional SyntheticCardiolipin.  Notwithstanding theforegoing, in the case of any non-conformity which is not readily apparent ordiscoverable upon reasonable inspection within such thirty (30) day period, anyclaim of non-conformity with respect thereto shall not be deemed waived anddelivery of the Synthetic Cardiolipin shall not be deemed to have been acceptedif Neopharm notifies Avanti as soon as practicable, but not later than fifteen(15) days, following the date on which Neopharm learns of such non-conformity.

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**(f)**                                    Avanti shall be responsiblefor performing all quality control tests and assays on raw and packagingmaterials used in preparing and shipping the Synthetic Cardiolipin, as well asthe Synthetic Cardiolipin, all in a manner consistent with Avanti’s internalquality control procedures.  Avantishall retain records pertaining to such testing and shall, upon written requestfrom Neopharm, provide Neopharm with copies of such records.  Without limiting the generality of theforegoing, Avanti shall prepare and maintain batch records and file samples,properly stored, from each lot or batch of Synthetic Cardiolipin supplied toNeopharm hereunder.  Avanti shall alsobe responsible for updating the U.S. Drug Master File (DMF) submitted to theFDA to reflect Avanti’s current manufacturing process (including scale up andcommercial), facility and equipment employed, analytical methods andspecifications and stability data to support shelf life and storageconditions.  A letter of authorizationreferring to said DMF shall be provided to Neopharm.  Upon termination of this Agreement for any reason other than adefault on the part of Neopharm, Avanti shall transfer the originals orcertified true copies of the originals of such batch records and file samplesto Neopharm.

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**(g)**                                 AVANTI MAKES NOREPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED (i) OF COMMERCIAL UTILITY OR(ii) OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.  NOTWITHSTANDING ANY OTHER PROVISION OF THISAGREEMENT, AVANTI WILL NOT BE LIABLE TO Neopharm, Neopharm’S SUCCESSORS ORASSIGNS, AFFILIATES, SUBLICENSEES, OR ANY THIRD PARTY WITH RESPECT TO ANY CLAIMARISING FROM Neopharm’S USE OF SYNTHETIC CARDIOLIPIN, OR THE USE OF SYNTHETICCARDIOLIPIN BY ANY SUCH SUCCESSOR, ASSIGNEE, AFFILIATE, SUBLICENSEE OR OTHERTHIRD PARTY, ANY CLAIM FOR LOSS OR PROFITS, FOR LOSS OR INTERRUPTION OFBUSINESS OR FOR INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND.

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**2.**                                      Purchase of Synthetic Cardiolipin byNeopharm.  Neopharm and its designatedaffiliates and sublicensees will purchase their requirements for SyntheticCardiolipin exclusively from Avanti; *provided,however,* that if Avanti is unable to meet Neopharm’s commerciallyreasonable

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**requirements for the quantity and/or qualityof Synthetic Cardiolipin for a particular order then Neopharm or its designatedaffiliates or sublicensees, as the case may be, shall be entitled to fill thatorder by purchasing either a like quality or quantity of Synthetic Cardiolipinfrom a third party.**

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**3.**                                      Reservation of Rights by Avanti.  Avanti reserves the right to license the manufacture ofSynthetic Cardiolipin for supply to Neopharm and its designated affiliates andsublicensees.  In licensing themanufacturing rights, Avanti will be responsible for ensuring, from informationreasonably available at the time the license or contract is granted, that thelicensee or other supplier is generally able to meet the requirements ofNeopharm and its designated affiliates and sublicensees as to quality, quantityand delivery schedules.

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**4.**                                      Payment.  Avanti shallinvoice Neopharm for each order of Synthetic Cardiolipin at the rates set forthon Schedule 2 attached hereto, plus the costs of all shipping orfreight, packaging, insurance, sales, gross receipts, or other similar taxesand other similar charges related to such sale, and such aggregate amountsshall be due and payable with thirty (30) days thereafter and, if not paid bysuch date, shall bear interest at the rate of one and one-half (1.5%) percentper month (or such lesser legal interest rate, if such is required byapplicable law).

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**5.**                                      Term.  (a) This Agreement shallcommence on May 1, 1998 and shall expire on May 1, 2008, unless earlierterminated in accordance with the terms and conditions of this Agreement.  In the event that this Agreement is still ineffect on May 1, 2008, this Agreement shall thereafter automatically renew foradditional terms of two (2) years each.

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**(b)**                                 This Agreement may beterminated by the mutual agreement of the parties or upon one party giving atleast one (1) year’s prior written notice to the other party.

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**(c)**                                  If, at the time of theexpiration or earlier termination of this Agreement, Neopharm and\or itsdesignated affiliates and sublicensees have placed orders for SyntheticCardiolipin which have not been filled, Avanti shall deliver such SyntheticCardiolipin required pursuant to such outstanding orders and this Agreementshall continue in effect solely and exclusively for the purpose of suchactivities.

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**(d)**                                 In the event that Avantishall sell all or substantially all of its assets relating to the manufactureof Synthetic Cardiolipin to another entity, or in the event that Avanti shallmerge (or otherwise combine) with or into another entity and shall not be thesurviving entity, Avanti agrees that it shall impose as a condition to any suchsale or combination that the obligation to supply Synthetic Cardiolipinpursuant to this Agreement shall be a part of the assets which are transferredand taken up by the purchaser of the assets or the obligations imposed by thiscontract to supply Synthetic Cardiolipin shall be specifically assumed by anysuch surviving entity purchaser.

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**(e)**                                  In the event that Avantishall elect to terminate the manufacture of Synthetic Cardiolipin, Neopharmshall have the right to license, on a non-exclusive basis and upon mutually

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agreeableterms and conditions, so much of the Avanti-GMP Production Process as isnecessary to allow Neopharm to continue the manufacture of SyntheticCardiolipin on an uninterrupted basis.

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**(f)**                                    In the event of atermination of this Agreement, transition of Synthetic Cardiolipin supply willbe conducted in such manner as to not cause inconvenience to either party.  In the event of notice of termination by Avantifor any reason other than a breach of this Agreement by Neopharm, Avanti shallprovide reasonable assistance to Neopharm in connection with the transition ofthe source of Synthetic Cardiolipin supply to another manufacturer.

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**6.**                                      Confidentiality.  (a)Each party recognizes and agrees that it is and shall continue to be bound bythat certain Confidentiality Agreement, dated             ,1998, between and among the parties and that “Confidential Information” (asdefined in such Confidentiality Agreement) shall include any information ormaterial disclosed or provided by one party to another pursuant to thisAgreement (including without limitation the GMP-Avanti ProductionProcess).  Each party shall maintainConfidential Information in confidence and shall not disclose ConfidentialInformation to any third party or use Confidential Information for any purposenot authorized under this Agreement, except as required by law or with thewritten consent of the other party.

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**(b)**                                 Notwithstanding Section 6(a)hereof, Neopharm may provide Confidential Information to the FDA and/orequivalent European regulatory authorities or to third parties for analyticalpurposes only, in all events as required to support development of productswhich use Liposomal Doxorubicin or Paclitaxel, provided that Neopharm firstgives Avanti written notice of such intended disclosure of ConfidentialInformation and takes all action necessary or appropriate in making suchdisclosure to maintain such Confidential Information as required under theConfidentiality Agreement, including requiring the execution and delivery ofwritten agreements in substantially the same form and effect as theConfidentiality Agreement with respect to Confidential Information disclosed toany third parties other than regulatory authorities.

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**7.**                                      Intellectual Property.  (a) Avanti and Neopharm recognize and agree that Avanti andNeopharm are separate and independent entities and are independently engaged inresearch and in the development, either directly or indirectly, of innovationsand Intellectual Property, including without limitation, compounds andbiochemical and pharmaceutical products, and in the authorship, innovation,development, enhancement, modification, and creation of Intellectual Property.  Each party further agrees that by executingthis Agreement, Avanti does not grant nor intend to grant to Neopharm a licenseor any right, title or interest in any Intellectual Property of Avantiincluding, without limitation, any Intellectual Property which relates eitherdirectly or indirectly, to the GMP-Avanti Production Process, and that Neopharmdoes not grant or intend to grant to Avanti a license or any right, title orinterest in any Intellectual Property including, without limitation to anyIntellectual Property relating, either directly or indirectly, to LiposomalDoxorubicin or Paclitaxel, except as expressly set forth in this Agreement orin other written agreements between the parties, as in effect from time totime.

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**(b)**                                 For the purposes of thisAgreement, the term “Intellectual Property” shall mean any and all innovations,patents, copyrights, trade secrets, patentable ideas, copyrightable works, andall confidential technical, scientific or business information of any party, inwhatever form or stage of completion.

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**8.**                                      Representations and Warranties.  (a) Avanti hereby covenants, represents and warrants thatit has all power and authority to enter into this Agreement and to execute anddeliver this Agreement and perform its obligations hereunder; that neither theexecution, delivery, nor performance of this Agreement or any of thetransactions contemplated hereby will breach, be in conflict with, orconstitute a default under any agreement between it and any third party orunder the terms of any order, judgment or decree to which it is a party, orresult in the imposition of any lien, claim or incumbrance upon it or any ofits assets.

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**(b)**                                 Neopharm hereby covenants,represents and warrants that it is the owner by assignment of LiposomalDoxorubicin and Paclitaxel; that Neopharm has all power and authority to enterinto this Agreement and to execute this Agreement and to perform itsobligations hereunder; that neither the execution, delivery nor performance ofthis Agreement or any of the transactions contemplated hereby will breach, bein conflict with, or constitute a default under any agreement between it andany third party or under the terms of any order, judgment or decree to which itis a party, or result in the imposition of any lien, claim or encumbrance uponit or any of its assets.

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**9.**                                      Indemnification.  Neopharmand its designated affiliates and sublicensees shall indemnify, defend and holdAvanti harmless from and against all liability, claims, actions, causes ofaction, demands, damages, costs and expenses (including reasonable attorneysfees and all court costs) brought against Avanti arising from or in connectionwith (i) the use of Synthetic Cardiolipin in the development orcommercialization of Liposomal Doxorubicin or Paclitaxel, or (ii) the ownershipof or any right, title or interest in, or infringement related to ormisappropriation of Liposomal Doxorubicin and Paclitaxel, on the condition thatAvanti shall promptly notify Neopharm of any and all liability, claims, causesof action, actions, demands, damages costs and expenses.  Avanti shall indemnify, defend and holdNeopharm and its designated affiliates and sublicensees harmless from andagainst all liability, claims, actions, causes of action, demands, damages,costs and expenses (including reasonable attorney fees and all court costs)brought against Neopharm which result from the gross negligence or malfeasanceof Avanti’s employees in the course of manufacturing Synthetic Cardiolipinunder the terms of this Agreement.

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**10.**                               Independent Contractors.  Avanti and Neopharm hereby acknowledge and agree that each is anindependent contractor and that neither Avanti nor Neopharm shall be consideredto be the agent, representative, master or servant of the other for any purposewhatsoever and that neither Avanti nor Neopharm has the authority to enter intoany contract or agreement, to assume any obligation, or to give or make anyguarantees, warranties, representations on behalf of the other.  Nothing in this Agreement or therelationship described herein shall be construed or deemed to be a jointventure, partnership, fiduciary, or other similar relationship between theparties.

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**11.**                               Insurance. Avantishall have and maintain such types and amounts of its insurance as is normaland customary in the pharmaceutical industry generally for persons similarlysituated, and Avanti will provide Neopharm with a copy of its certificates ofinsurance.  For its part, Neopharm,after receiving approval from the FDA or other applicable regulatory authorityfor the sale of any product containing Synthetic Cardiolipin to the public,shall have and maintain product liability insurance coverage as is normal andcustomary in the pharmaceutical industry for persons similarly situated andNeopharm shall provide Avanti with a copy of its certificates of insurance.

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**12.**                               General Terms and Conditions.  (a) This Agreement shall be binding upon and shall inure to thebenefit of the parties, their legal representatives, successors andassigns.  This Agreement and any rightsgranted hereunder may be assigned, transferred or conveyed by either partywithout the prior written consent of the other.

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**(b)**                                 This Agreement shall begoverned by and construed in accordance with the laws of the State ofAlabama.  Any modifications, changes oramendments to this Agreement shall be effective only if in writing and signedby a duly authorized representative of each party.  The provisions contained in Sections 6(a) and 9 hereofshall survive the termination or expiration of this Agreement (or any renewalor extension thereof) and remain in full force and effect.

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**(c)**                                  This Agreement constitutesthe entire understanding of the parties relating to the production and sale byAvanti to Neopharm and\or its designated affiliates and sublicensees ofSynthetic Cardiolipin.  Neither Avantinor Neopharm have relied on and do not rely on any representations orstatements by the other party or such party’s agents, whether verbal orwritten, with respect to the subject matter of this Agreement, except asspecifically set forth herein.

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**(d)**                                 Any notice, communication orother information permitted or required to be given under this Agreement shallbe effective and deemed properly given upon sending with confirmed writtenanswer back, if sent by facsimile; upon delivery, return as undeliverable, orrefusal of delivery, if delivered by hand; or on the seventh (7th) day afterbeing placed in the United States Mail, addressed to a party at the address setforth below or as hereinafter identified by a party, postage prepaid, returnreceipt requested; in all events any such notice, communication or informationshall be sent to the parties addressed as follows:

 
| **If to Avanti:** | **Avanti Polar Lipids, Inc.**           |
|-------------------|-----------------------------------------|
|              | **700 Industrial Park Drive**           |
|              | **Alabaster, Alabama 35007**            |
|              | **Attention:  Dr. Walter A. Shaw** |
|              | **Facsimile:  205/663-0756**       |

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| **If to Neopharm:** | **Neopharm, Inc.**                        |
|---------------------|-------------------------------------------|
|                | **100 Corporate North, Suite 215**        |
|                | **Bannockburn, Illinois 60015**           |
|                | **Attention:  Mr. James M.  Hussey** |
|                | **Facsimile:  (847) 295-8678**       |

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**Any party may give notice of a change of address, facsimile number,telephone number or other pertinent mailing or delivery information from timeto time, so long as such notice is given in accordance with this Section.**

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**(e)**                                  Avanti and Neopharm shallexecute and deliver such other instruments and do such other acts as may benecessary to carry out the intended purpose of this Agreement.

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**(f)**                                    Whenever the context may require,any pronouns used herein shall include the corresponding masculine, feminine,or neuter forms and the singular form of pronouns and nouns shall include theplural and *visa versa.*

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**(g)**                                 This Agreement may beexecuted in any number of counterparts, all executed counterparts shallconstitute one and the same agreement, notwithstanding that all signatories arenot signatories to the original or the same counterpart.

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**(h)**                                 The captions contained inthis Agreement are inserted only as a matter of convenience and in no waydefine, limit, extend or describe the scope of this Agreement or the intent ofany provision hereof.

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**(i)**                                     If any action is necessaryto enforce or interpret the terms of this Agreement, the prevailing partiesshall be entitled to recover from the other party reasonable attorneys’ feesand costs including appellate attorney’s fees.

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**(j)**                                     The invalidity, in whole orin part, of any covenant, promise, undertaking or any paragraph, subsection,sentence, clause, phrase or word or any provision of this Agreement shall notaffect validity of the remaining portions thereof.  Each party acknowledges and agrees that the restrictionscontained in this Agreement are reasonable and valid in scope and in all otherrespects.  If any provision of thisAgreement or the application thereof by or to any party or circumstance shallbe determined to be invalid or unenforceable to any extent, the remainder ofthis Agreement and the application of such provision to other parties orcircumstances shall not be affected thereby and shall be enforced to themaximum permitted under applicable law. Without limiting the generality of the foregoing, if any court ofcompetent jurisdiction determines that any part of this Agreement is unenforceablebecause of the duration or scope of any provision, or both, the parties agreethat such duration or scope shall be reduced to the extent determined to bereasonable by such court of competent jurisdiction and, in its reduced form,such provisions shall then be valid and enforceable.

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**(k)**                                  Neopharm shall have theright, upon reasonable notice to Avanti, during normal business hours, no morefrequently than reasonably necessary and under appropriate confidentialityagreements, to send authorized representatives to manufacturing facilitieswhere Synthetic Cardiolipin is manufactured, to audit any manufacturing andtesting operations that Neopharm deems reasonably appropriate to confirm thatproduction of each batch of Synthetic Cardiolipin is in compliance withGMP.  Upon request, Avanti agrees tonotify Neopharm of the next scheduled production run of SyntheticCardiolipin.  Avanti agrees to cooperatewith Neopharm’s authorized representatives in their conduct of such audits.

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**(l)**                                     Avanti shall address orcorrect any audit deficiencies noted by Neopharm as the result of itsinspections of Avanti’s facility as soon as is reasonably possible, but in noevent more than thirty (30) days after the date such deficiencies are broughtto the attention of Avanti by Neopharm, assuming such deficiencies canreasonably be expected to be corrected within such thirty (30) day period.

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**(m)**                               Avanti shall permitregulatory authorities from the United States and other countries to inspectits facility in connection with product license applications submitted byNeopharm for Liposomal Doxorubicin and Paclitaxel.  Avanti shall notify Neopharm as soon as possible of any plannedor surprise visits of Avanti’s facility by the U.S. Food and DrugAdministration.

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**IN WITNESS WHEREOF,**each Party has caused thedue execution of this Agreement as of the Effective Date.

 
| **ATTEST**: | **Avanti Polar Lipids, Inc.,**an Alabama corporation, |
|-------------|-------------------------------------------------------|
|        |                                                  |
|        |                                                  |   |
| **By:**     | **    /s/ Rowena C. Shaw**        |   | **By:** | **  /s/ Walter A. Shaw,** |   |
|        |                                                  |   | **Walter A. Shaw, Ph.D.** |
| **Its:**    | **Vice-President**                                    |   | **Its:** | **President** |
|        |                                                  |   |   |   |
| **ATTEST:** | **Neopharm, Inc.,**a Delaware corporation,            |
|        |                                                  |
|        |                                                  |
| **By:**     | **    /s/ Lewis Strauss**         |   | **By:** | **  /s/ James M. Hussey** |   |
|        |                                                  |   | **James M. Hussey, R.Ph., M.B.A.** |
| **Its:**    | **Chief Medical Officer**                             |   | **Its:** | **President** |
|             |                                                       |  |  |  |  |  |  |  |

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**Schedule 1**

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**SyntheticCardiolipin**

**GMP ProductionSpecifications**

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**Test**                                                                                                                        Specification

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**1.**               *Identity*

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**2.**               *Purity*

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**3.**               *Quality*

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**4.**               Documentation

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**a.**                                       In general, Avanti documentscontain proprietary information of a sensitive nature and thus cannot bedisclosed to outside personnel. However, Avanti understands that you will need to perform quality auditsat some point in the future and proof of existence and use of batch productionrecords will be demonstrated.

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**b.**                                      Avanti has validated thecleaning process of equipment utilized in the production of lipids such thatthe risk of cross contamination is minimized.

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**5.**               General

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**a.**                                       Program Schedule

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**i.**                                          Development and validationof analytical tests.

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**(1)**

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**ii.**                                       Production of three batchesof Synthetic Cardiolipin for evaluation.

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**(1)**

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**iii.**                                    Avanti’s productionfacilities are available for inspection by your quality control team.  However, specific processes are proprietaryand would be screened from the inspection.

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**(1)**                                  Production questionsconcerning any non-proprietary process would be addressed directly withyou.  Proprietary process question wouldbe addressed through the filing of the drug master file with the Food and DrugAdministration.

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**Schedule 2**

**Production ofGMP-Synthetic Cardiolipin**

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