EXHIBIT
10.1
 
 
 
 
 
 
 CONFIDENTIAL
TREATMENT REQUESTED.  CONFIDENTIAL PORTIONS OF
 THIS
DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN FILED
 SEPARATELY
WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION
 
 
 
 
 ATHEROGENICS,
INC., a Georgia corporation (“AGIX”)
 
 
 and
 
 
 ISP
PHARMA SYSTEMS LLC, a Delaware limited liability company (“ISP”)
 
 
 
 
 Manufacturing
and Supply Agreement
 
 Dated
as of April 1, 2008
 
 
 
 
  
  
 MANUFACTURING
AND SUPPLY AGREEMENT
 
 This
Manufacturing And Supply Agreement is made and entered into as of this 1st day of
April 2008 (the “Effective Date”) by and between ISP Pharma Systems LLC, a
Delaware limited liability company, having its principal office at 9176 Red
Branch Road, Suite R, Columbia, Maryland 21045 (“ISP”) and AtheroGenics, Inc., a
Georgia corporation, having an address at 8995 Westside Parkway, Alpharetta,
Georgia 30004 (“AGIX”).
  Whereas,
ISP is in the business of manufacturing active pharmaceutical ingredients and
pharmaceutical products;
  Whereas,
AGIX wishes ISP to manufacture for AGIX the active pharmaceutical ingredient
(“API” as defined below) and the spray dried dispersion of said API (the
“Product”) for AGIX, and ISP is willing to supply AGIX such API and
Product.
  Now,
Therefore, in consideration of the mutual covenants contained herein, ISP and
AGIX hereby agree as follows:
  1.  Definitions.
  As used
in this Agreement, the following terms have the meanings set forth
below.
  A.  “AGI-1067”
is chemically defined as [XXXXXXXX];(1)
includingits
pharmacologically acceptable salts, solvates, hydrates, hemihydrates,
polymorphs, metabolites, free base forms, pro-drugs, esters, tautomers and if
applicable, any isomers, stereoisomers, racemates, enantiomers and all optically
active forms thereof.
  B.  “AGIX
Forecast” has the meaning set forth in Article 3.A.(i) hereof.
  C.  “AGIX
Indemnitee” has the meaning set forth in Article 10.B(i) hereof.
  D.  “AGIX
Process” means the manufacturing process that was provided to ISP by AGIX for
use in Manufacturing API on November 9, 2007 and the manufacturing process
currently being used by ISP for use in Manufacturing Product, as the same may be
amended, supplemented or otherwise modified as agreed upon by the parties, in
writing, from time to time.
  E.  “AGIX
Requirements” means one hundred percent (100%) of the quantity of Product needed
by AGIX and AGIX’s affiliates, agents and/or licensees world wide, subject to
the terms of Articles 7.B.(iii)(b) and 11.B.(i) hereof.
  F.  “Agreement”
shall mean this Manufacturing and Supply Agreement, including any and all
exhibits attached hereto, as the same may be validly amended from time to time
by the parties.
    (1)
  1
 G.  “API”
means the active pharmaceutical ingredient AGI-1067 (and/or its chemical and/or
functional equivalent), as more specifically described on Exhibit A
hereto.
  H.  “Calendar
Quarter(ly)” means each three (3) month period beginning on January 1, April 1,
July 1 or October 1 during the term of this Agreement.
  I.  “Commercialization
Work” has the meaning set forth in Article 2.A. hereof.
  J.  “Confidential
Information” has the meaning set forth in Article 9.A. hereof.
  K.  “Confidentiality
Agreement” means the Mutual Confidentiality Agreement between AGIX and ISP
Management Company, Inc., an affiliate of ISP, dated July 23, 2007.
  L.  “Contract
Year” means each twelve (12) month period beginning on January 1 and ending on
December 31 during the term of this Agreement; provided that the first Contract
Year shall begin on the Effective Date and shall end on December 31,
2008.
  M.  “Current
Good Manufacturing Practices” or “cGMP(s)” means all laws and regulations
relating to the Manufacture of API and Product, including, but not limited to,
the current Good Manufacturing Practices specified in the United States Code of
Federal Regulations and any other applicable laws, guidelines and/or
regulations.
  N.  “Effective
Date” has the meaning set forth in the preamble of this Agreement.
  O.  “Equipment”
means the equipment described on Exhibit B hereto.
  P.  “Facility”
means (i) the manufacturing plant located at [XXXXXXXX] , (ii) the manufacturing
plant located at [XXXXXXXX], and/or (iii) with AGIX’s prior written approval and
in compliance with the terms of the Quality Agreement (as that term is defined
in Article 1.JJ. hereof), such approval not to be unreasonably withheld or
delayed, such other facilities at which ISP elects to Manufacture API and/or
Product.
  Q.  “FDA”
means the United States Food and Drug Administration and any successor agency
having substantially the same function.
  R.  “Fee
Balance” has the meaning set forth in Article 5.A.(i) hereof.
  S.  “Force
Majeure” has the meaning set forth in Article 14.A. hereof.
  T.  “Indemnified
Claim” has the meaning set forth in Article 10.C. hereof.
  U.  “Indemnitee”
has the meaning set forth in Article 10.C. hereof.
  V.  “Initial
Term” has the meaning set forth in Article 11.A. hereof.
  2
 W.  “Invention(s)”
has the meaning set forth in Article 4.C hereof.
  X.  “ISP
Indemnitee” has the meaning set forth in Article 10.A.(i) hereof.
  Y.  “Kg”
means kilogram.
  Z.  “Loss(es)”
has the meaning set forth in Article 10.A.(i) hereof.
  AA.  “Manufacture/Manufacturing/Manufactured”
means all operations in the production, packaging, quality assurance and/or
quality control testing of API and Product conducted by ISP pursuant to this
Agreement.
  BB.  “Manufacturing
Requirements” has the meaning set forth in Article 4.A.(ii) hereof.
  CC.  “Monthly
Development Fee” has the meaning set forth in Article 5.A.(i)
hereof.
  DD.  “Packaging
Specifications” means the packaging specifications set forth in Exhibit C
hereto.
  EE.  “PPI” has
the meaning set forth in Article 5.C.(i) hereof.
  FF.  “Preliminary
Work” has the meaning set forth in Article 2.A.(i) hereof.
  GG.  “Price
Index” has the meaning specified in Article 5.C.(i) hereof.
  HH.  “Product”
has the meaning set forth in the second “Whereas” clause hereof.
  II.  “Purchase
Order” means a firm, binding written order submitted by AGIX to ISP under this
Agreement to purchase a certain quantity of Product.  In the event of
any conflict between the terms of this Agreement and the terms of any Purchase
Order, the terms of this Agreement shall control.
  JJ.  “Quality
Agreement” means the Quality Agreement between the parties, of even date
herewith, a copy of which is attached hereto as Exhibit M.
  KK.  “Recall”
has the meaning set forth in Article 7.C. hereof.
  LL.  “Renewal
Term” has the meaning set forth in Article 11.A. hereof.
  MM.  “Retained
Samples” has the meaning set forth in Article 4.B.(iii) hereof.
  NN.  “Security
Agreement” shall mean that certain Security Agreement in the form attached as
Exhibit N hereto.
  3
 OO.  “Specifications”
are those specifications for (i) API set forth in Exhibit A, and (ii) Product
set forth in Exhibit D hereto, as amended, supplemented or otherwise modified as
agreed upon by the parties, in writing, from time to time .
  PP.  “Testing
Laboratory” has the meaning set forth in Article 4.B.(i) hereof.
  2.  Development; Supply of API
and PRODUCT.
  A.           Development.  (i)  ISP
shall initially Manufacture [XXXXXXXX]  registration batches of
approximately [XXXXXXXX] each of API delivered, and [XXXXXXXX] registration
batches of approximately [XXXXXXXX] Kg each of Product delivered, as more
particularly set forth in Exhibit E hereto, subject in each instance to the AGIX
Process (such work hereinafter referred to as the “Preliminary
Work”).
  (ii)           ISP
shall subsequently Manufacture [XXXXXXXX]  establishment and
[XXXXXXXX] validation batches of approximately [XXXXXXXX] Kg each of API, as
more particularly set forth in Exhibit F hereto, subject to the AGIX
Process.
  (iii)           Documentation
requirements are as more particularly set forth in Exhibit G
hereto.
  (iv)           API
and Product process optimization is as more particularly set forth in Exhibit H
hereto.
  (v)           Product
validation is as more particularly set forth in Exhibit I hereto.
  The
development work described in Article 2.A.(ii) through (v), above, is
hereinafter referred to as the “Commercialization Work”.  Such
Commercialization Work shall commence after completion of the ANDES clinical
trial if AGIX determines to continue to develop AGI-1067.
  B.           Commercial Supply of
Product.  Subject to the terms and conditions set forth herein,
ISP shall sell to AGIX, and AGIX shall purchase from ISP, the AGIX Requirements,
which shall be Manufactured at ISP's [XXXXXXXX]  Facility (with
respect to API) and [XXXXXXXX] Facility (with respect to Product), until such
time as ISP, in the exercise of its sole discretion, decides to Manufacture the
AGIX Requirements at such other Facility as may be determined by ISP, subject to
AGIX’s prior written approval, such approval not to be unreasonably withheld or
delayed.
  3.  Forecasts;
Supply.
  A.  Forecasts.  (i)
In order to facilitate production planning by both parties, prior to the
commencement of each Calendar Quarter, AGIX shall deliver to ISP a written,
rolling four (4)-Calendar Quarter forecast of the number of kilograms of Product
for ISP to Manufacture under this Agreement for the next four (4) Calendar
Quarters (the “AGIX Forecast”); provided, however, ISP shall not be obligated to
Manufacture more than [XXXXXXXX] metric tons of Product at ISP's [XXXXXXXX]
Facility during any consecutive
  4
 [XXXXXXXX]  month
period, which [XXXXXXXX]  metric ton limit shall be adjusted by ISP if
ISP cannot achieve a spray drying rate of [XXXXXXXX] Kg per hour.  The
first such AGIX Forecast shall be submitted by AGIX on or before June 30,
2008.  ISP shall be deemed to have accepted an AGIX Forecast unless,
within fifteen (15) business days of ISP's receipt of any such AGIX Forecast,
ISP provides AGIX with written notice (which may be by facsimile transmission or
electronic mail) of ISP's objections to such AGIX Forecast.
  (ii)           If
ISP is unable to Manufacture in excess of [XXXXXXXX]  metric tons of
Product (which [XXXXXXXX] metric ton limit shall be adjusted by ISP if ISP
cannot achieve a spray drying rate of [XXXXXXXX]  Kg per hour) in a
consecutive twelve (12) month period at ISP's [XXXXXXXX] Facility, after
exercising ISP's commercially reasonable efforts to do so, AGIX may have such
excess quantity of Product manufactured by a third party, but only in such
amounts and for such period of time as ISP is unable to supply such excess
quantity of Product from a Facility.
  B.  Supply.  Each
Purchase Order shall be submitted to ISP at least one hundred and twenty (120)
days prior to the requested delivery date of the quantity of Product which is
the subject of said Purchase Order.  ISP shall exert commercially
reasonable efforts to deliver such quantities of Product to AGIX as AGIX orders
pursuant to such Purchase Order under this Agreement on or before the date of
delivery specified in each such Purchase Order ; provided, however, each such
Purchase Order shall not provide for a quantity of Product in excess of
[XXXXXXXX]  of the quantity of Product set forth on the then most
recent AGIX Forecast.  This Agreement and the various Purchase Orders
to be placed hereunder shall be divisible according to shipments made, and each
shipment is deemed to be a separate and independent sale.
  4.  Manufacture
of API and Product; Testing and Retained Samples; Packaging and Labels; storage;
Shipping and Delivery; Purchase orders.
  A.  Manufacture of API and
Product.
  (i)  Prior to
the Manufacture of API and Product hereunder, ISP shall perform the validation
work described in Article 2.A. hereof.
  (ii)  ISP shall
Manufacture API and Product in accordance with: (a) the applicable
Specifications and AGIX Process; (b) all applicable cGMPs; (c) assay methods and
in-process specifications; and (d) all other applicable federal, state and local
laws and regulations (collectively, the “Manufacturing Requirements”). ISP shall
deliver Product having at least [XXXXXXXX] of the shelf life specified for such
Product in the Specification set forth in Exhibit D.
  (iii)  ISP shall
supply or obtain, at ISP's sole cost and expense, all starting materials,
reagents, solvents, and gases for the Manufacture of API and Product, including
[XXXXXXXX] (except for [XXXXXXXX] required during the development phase
described in Article 2.A. hereof, which shall be provided by AGIX at AGIX’s sole
cost and expense). ISP shall use commercially reasonable efforts to maintain
appropriate levels of
  5
 inventory,
as determined by ISP, of all such materials in order to support AGIX’s Purchase
Orders for Product.
  B.  Testing and Retained
Samples.
  (i)  If AGIX
rejects a lot of Product based upon AGIX’s belief that said lot does not comply
with the Specifications set forth in Exhibit D, AGIX shall so inform ISP, in
writing, no later than sixty (60) days after that lot of Product is shipped by
ISP.  If (a) ISP agrees with AGIX’s findings, ISP shall either
reprocess, rework or Manufacture an additional lot of Product meeting the
Specifications set forth in Exhibit D, as ISP deems appropriate, or take other
mutually acceptable corrective action at no cost to AGIX,  or (b) ISP
does not agree with AGIX’s findings, the parties shall promptly commission a
mutually acceptable independent third party testing laboratory (the “Testing
Laboratory”) to determine, in accordance with  AGIX -validated
analytical methods, whether the lot of Product is in compliance with the
Specifications set forth in Exhibit D.  AGIX shall not dispose of any
lot of Product claimed not to comply with the Specifications set forth in
Exhibit D until the resolution of any dispute with respect
thereto.  The parties shall be bound by the findings of the Testing
Laboratory and all costs for such re-testing shall be borne by the party found
to be in error as proven by the retest results.  If the Testing
Laboratory finds the lot of Product does not comply with the Specifications set
forth in Exhibit D, ISP shall reprocess, rework or Manufacture an additional lot
of Product that meets the Specifications set forth in Exhibit D at no cost to
AGIX.  If the Testing Laboratory finds the lot of Product complies
with the Specifications set forth in Exhibit D, AGIX shall accept and pay for
such lot of Product.
  (ii)  ISP (a)
may dispose of all material that has been determined not to meet Specifications,
and (b) shall dispose of all waste material that results from the Manufacture of
the API and Product, in accordance with all applicable federal, state and local
laws and regulations, and at ISP’s cost.
  (iii)  ISP shall
retain a representative sample from each lot of API and Product (“Retained
Samples”) and copies of Manufacturing records for each such lot for record
keeping, testing and regulatory purposes for at least eight (8) years from the
date of Manufacture of that lot, or such longer period as may be required by
Current Good Manufacturing Practices or by applicable law.  Upon
expiration or termination of this Agreement, ISP shall return all Retained
Samples to AGIX and all such Retained Samples shall be the property of AGIX;
provided, however, ISP shall be entitled to maintain Retained Samples to the
extent and for so long as ISP is required to maintain such Retained Samples for
the purpose of fulfilling its obligations under this Agreement and/or complying
with FDA and other applicable regulatory requirements, and ISP shall not
transfer any such Retained Samples maintained for such purpose to any third
party, unless required to do so by law, or use any such Retained Samples for any
other reason, unless otherwise agreed by AGIX, such agreement not to be
unreasonably withheld or delayed.
  C.  The
Specifications, AGIX Process and AGIX Confidential Information are owned solely
and exclusively by AGIX.  Any and all other intellectual property
rights, including, but not limited to, patent, trademark, and trade secret
rights, in and to the API and Product are owned solely and exclusively by
AGIX.  AGIX shall have the entire right, title and interest in
  6
 and to
each invention, improvement, discovery, modification, alteration and/or
derivative that is made by AGIX or ISP or by AGIX and ISP jointly in connection
with the Manufacture of API and Product hereunder, including, but not limited
to, any Invention with respect to the AGIX Process (“Invention(s)”), other than
with respect to equipment and equipment processes owned and/or developed solely
by ISP and/or jointly by ISP and AGIX and used in the Manufacture of Product,
and ISP shall have no rights to any such Inventions except as provided in this
Article 4.C.  Subject to the terms and conditions of this Agreement,
AGIX hereby grants to ISP, with respect to any Inventions, improvements,
discoveries, modifications, alterations and/or derivatives that are made solely
by ISP and/or jointly by ISP and AGIX and owned by AGIX a non-exclusive,
perpetual, irrevocable, fully paid-up license (with a right to sublicense) under
such Inventions, improvements, discoveries, modifications, alterations and/or
derivatives to make, have made, use, sell and offer for sale any product that
does not contain AGI-1067 either alone or in combination with other
compounds.  Subject to the terms and conditions of this Agreement, ISP
hereby grants to AGIX, with respect to any equipment and equipment process
inventions, improvements, discoveries, modifications, alterations and/or
derivatives that are made solely by ISP and owned by ISP a non-exclusive,
perpetual, irrevocable, fully paid-up license (with a right to sublicense) under
such inventions, improvements, discoveries, modifications, alterations and/or
derivatives to make, have made, use, sell and offer for sale any product that
contains AGI-1067 in combination with other compounds.
  D.  Packaging and
Labels.  Each Batch of Product Manufactured by ISP shall be
packaged in labeled containers in accordance with the Packaging Specifications
set forth on Exhibit C.  The labels shall be as set forth on Exhibit J
hereto.
  E.  Shipping and
Delivery.
  (i)  AGIX
reserves the right to designate means of shipping.  Shipping methods,
quantity of Product (subject to Articles 3.A. and 3.B. hereof) and delivery
location, will be as stated on the Purchase Order and no changes will be made to
the Purchase Order unless authorized in writing by AGIX.
  (ii)  All
shipments are F.O.B. the applicable Facility.  Title to, and risk of
loss of or damage to Product shall pass to AGIX upon ISP’s delivery of the
Product to the carrier at the applicable Facility, the carrier acting as AGIX's
agent.  Product shall be shipped to the location(s) and recipient(s)
specified in the applicable Purchase Order.
  (iii)  ISP shall
exert commercially reasonable efforts to deliver Product to AGIX on or before
the delivery date specified in the applicable Purchase Order.  Each
such order shall be accompanied by a copy of the certificate of analysis of such
Product.
  F.  Purchase
Orders.  AGIX shall order Product for delivery pursuant to this
Agreement by submitting Purchase Orders in writing, by facsimile transmission or
by electronic mail.  ISP shall be deemed to have accepted a Purchase
Order unless, within fifteen (15) business days of ISP's receipt of any Purchase
Order, ISP provides AGIX with written notice (which may be by facsimile
transmission or electronic mail) of ISP's refusal of such Purchase
Order.  Subject to the terms and conditions of this Agreement, ISP
shall not have the right to refuse a Purchase Order unless such Purchase Order
requires that ISP Manufacture and
  7
 deliver
Product on terms inconsistent with the Manufacturing Requirements or any other
term or condition of this Agreement.
  5.  Price and
payment.
  A.  Development
Price.  (i)  The fee for the Preliminary Work to be
performed by ISP pursuant to Article 2.A.(i) of this Agreement, shall be
[XXXXXXXX], as further described in Exhibit E hereto.  This fee shall
be invoiced on a monthly basis at the rates set forth in Exhibit E based upon
work completed during that month (the “Monthly Development Fee”).  The
cumulative balance of the monthly Development Fee (the “Fee Balance) shall be
payable as provided in Article 5.A(iii) or Article 5.A(iv) hereof.
  (ii)                                
In order to secure payment of the Fee Balance and any refund to be paid ISP
pursuant to Article 5.A.(vi) hereof, AGIX shall grant ISP a security interest in
the Equipment pursuant to the Security Agreement to be entered into on the
Effective Date by the parties in the form attached hereto as Exhibit
N.  ISP shall release the security interest in the Equipment granted
to it by AGIX pursuant to the Security Agreement upon purchase of the Equipment
by ISP pursuant to Article 5.A.(iii) hereof or payment, in full, of the Fee
Balance and any refund to be paid ISP pursuant to Article 5.A.(vi) hereof by
AGIX pursuant to Articles 5.A(iv) and 5.A.(vi) hereof.
  (iii)           Upon
completion of the ANDES clinical trial being conducted by AGIX [XXXXXXXX], if
the clinical trial has been successful such that AGIX decides to commence the
Commercialization Work , then ISP shall purchase all right and title to, and
ownership of, the Equipment in accordance with the terms of this Article 5.A.
and otherwise in accordance with Exhibit K hereto.  AGIX shall provide
ISP with written notice of whether or not AGIX intends to continue to develop
Product and if AGIX intends to continue development of Product then ISP shall
purchase the Equipment within fifteen (15) days after receipt of said
notice.  The purchase price for the Equipment shall be satisfied by
(a) ISP’s release of AGIX’s obligation to pay the Fee Balance; (b) ISP’s
continuing obligation to perform any remaining Preliminary Work pursuant to
clause (i) of Article 2.A of this Agreement and the Commercialization Work
pursuant to clauses (ii) through (v) of Article 2.A of this Agreement; and (c)
payment by ISP of the costs incurred by AGIX in storing the Equipment from the
Effective Date until the date the Equipment is so purchased.
  (iv)           If
upon completion of the ANDES clinical trial being conducted by AGIX, AGIX
determines that it will not continue development of Product then AGIX shall
notify ISP in writing and pay the Fee Balance in full within thirty (30) days
after giving such written notice.
  (v)           Notwithstanding
anything contained herein to the contrary, if the scope of any development work
requested by AGIX exceeds that described in Article 2.A. hereof, as said Article
may be amended upon mutual written agreement of the parties, ISP shall invoice
AGIX for the development work so in excess of said scope at ISP's customary
price for such development work and AGIX shall pay such amount as provided in
Article 5.D. hereof.
  (vi)                                ISP
shall pay [XXXXXXXX] of the costs incurred by AGIX in dismantling and crating
the Equipment within thirty (30) days after receipt of an invoice from
  8
 AGIX;
provided, however, if AGIX determines that it will not continue development of
Product, then AGIX shall refund to ISP the amount so paid by ISP in addition to,
and with payment of, the Fee Balance as provided in Article 5.A.(iv),
above.
  (vii)           ISP
shall have a right of first offer to purchase all right and title to, and
ownership of, the Equipment in accordance with Exhibit K hereto, which right of
first offer shall extend for a period of ninety (90) days from date of ISP’s
receipt of the notice described in Article 5.A.(iv) above.  AGIX shall
respond to any ISP offer to purchase the Equipment within ninety (90) days of
the date of such offer.  If ISP purchases the Equipment pursuant to
said right of first offer, ISP shall repay the amount refunded to ISP pursuant
to Article 5.A.(vi) hereof with payment of the purchase price of the
Equipment.
  B.  Initial Product
Price.  (i) ISP shall sell, and AGIX shall purchase, Product
produced at ISP’s [XXXXXXXX] at the following initial prices (in U.S. dollars),
which include the price of API and [XXXXXXXX] :
  Quantity
of Product
 (per Contract
Year)                                                      Price
  [XXXXXXXX]                                                      [XXXXXXXX]
  
  (ii)           The
parties agree that the initial Product prices set forth in Article 5.B.(i),
above, shall be subject to adjustment as provided in Exhibit L and Article 5.C.
of this Agreement.
  (iii)           If
Product is Manufactured using the Equipment, pricing for the same shall be as
mutually agreed upon, in writing, by the parties, subject to a [XXXXXXXX] /Kg
discount on the first [XXXXXXXX]  MT of Product Manufactured with said
Equipment; provided, however, it is understood and agreed that ISP is not
obligated to Manufacture Product using said Equipment if the parties are unable
to agree upon pricing for Product to be Manufactured using said Equipment and
this Agreement shall nonetheless remain in full force and effect.
  (iv)           During
the Initial Term and any Renewal Term of this Agreement, each party will discuss
with the other any changes to the API or Product Manufacturing process in order
to increase capacity, improve API or Product production costs or improve the
quality of the API or Product.  For each such proposed change, the
party proposing the same will provide a written proposal to the other party
outlining the anticipated costs and the associated benefits from such proposed
change.  The non-proposing party may approve or reject such
proposal.  Should the parties agree, in writing, to any such proposal,
the parties will share equally in any cost savings associated with such changes
after each party has recovered from such cost savings any costs it has incurred
in implementing any such proposal to the extent specified in the
proposal.
  C.  Price
Changes.  (i) ISP shall increase or decrease the prices for
Product (other than the [XXXXXXXX] component of the same) based on a composite
index which is equal to [XXXXXXXX]  of the annual increase or decrease
in the Producer Price Index
(“PPI”)[XXXXXXXX] and[XXXXXXXX] of the PPI[XXXXXXXX], each issued by
the US Bureau of
  9
 Labor Statistics, using a base year of
2007 (collectively, the “Price Index”), such price change to be
implemented by written notice to AGIX within sixty (60) days after the end of a
Contract Year based on the increase or decrease in the Price Index during such
Contract Year.  ISP shall provide AGIX with reasonable documented
evidence of such changes in the Price Index.  Such changed price or
prices shall be paid by AGIX for all Product shipped hereunder on and after the
effective date of the change, which shall be the first day following the first
day of said sixty (60) day period.  ISP shall further increase or
decrease prices for Product (the [XXXXXXXX] component of the same) based on
increases or decreases in ISP’s cost of [XXXXXXXX].  Such price change
shall be implemented by written notice to AGIX within fifteen (15) days after
the end of each Calendar Quarter and ISP shall provide AGIX with reasonable
documented evidence of such changes in ISP’s cost of [XXXXXXXX] l.  Such
changed price or prices shall be paid by AGIX for all Product Manufactured using
such higher or lower cost [XXXXXXXX].
  (ii)           In
the event any change in the Specifications requested by AGIX or mandated by law
shall result in actual increased or decreased Manufacturing costs to ISP (a) the
prices for Product shall be increased or decreased in an amount equal to the
amount of such actual changed costs (to the extent such prices have not
previously been adjusted to reflect such changed costs in accordance with this
Article 5.C), (b) AGIX shall reimburse ISP for the actual costs of implementing
any changes, including, but not limited to, costs in connection with labeling,
packaging and preprinting of package insert and label copy and of discontinuing
stock of the same due to such changes, and (c) AGIX shall reimburse ISP, at
ISP’s actual cost, for the cost of any inventory of ISP, including
work-in-progress, API and finished Product rendered obsolete or rejected as a
result of such change, including any formula, process, artwork, labeling or
packaging change, as well as for the cost of destruction of any such
inventory.
  (iii)           ISP
shall be responsible for any increase in Manufacturing costs resulting from a
discretionary change in Specifications requested by ISP or the decision by ISP
to Manufacture Product at a Facility other than [XXXXXXXX]  or
[XXXXXXXX] .
  D.  Payment
Terms.  All amounts payable hereunder shall be paid by check in
United States funds at the location indicated on ISP's
invoice.  Except as otherwise provided in Article 5.A. hereof, terms
of payment are net thirty (30) days from date of invoice.  If AGIX
fails to pay any invoice on time and ISP has commercially reasonable grounds to
doubt AGIX’s financial responsibility and AGIX fails to provide assurances or
security satisfactory to ISP within three (3) business days of ISP’s notice to
AGIX of such doubt, then ISP may require cash on delivery or reasonable security
as a condition of shipment.  If ISP requires cash on delivery or
security from AGIX in advance of shipment at any time during the Initial Term or
any Renewal Term of this Agreement, then ISP agrees to conduct a review of
AGIX’s financial condition in consultation with AGIX on at least a Calendar
Quarterly basis and will restore AGIX to the payment terms set forth in the
first sentence of this Article 5.D. as soon as ISP, using commercially
reasonable criteria, deems AGIX is financially responsible.
  6.  Audit.
  Upon
AGIX’s prior written request, and at agreed upon times during ISP’s normal
business hours, but not more frequently than once each Contract Year, and within
thirty (30) days after the date of expiration or termination of this Agreement,
ISP shall (i) permit
  10
 representatives
of AGIX to observe the Manufacture of API and Product and to have access to the
originals of any relevant records in connection with the Manufacture of API and
Product in order to audit and assess ISP’s compliance with applicable cGMP
requirements and quality assurance standards, and (ii) review process
performance with AGIX, and discuss any related issues and improvement
opportunities.  All such records shall at all times remain the
property of ISP and shall be treated as ISP's Confidential Information as
provided in Article 9 hereof.  Such AGIX representatives shall at all
times comply with ISP’s safety and security regulations then in effect and shall
not interfere with the operation of the applicable Facility or any part
thereof.
  7.  Regulatory
Matters.
  A.  Regulatory
Assistance.
  (i)  AGIX
shall be responsible for maintaining all applicable regulatory and governmental
approvals, filings and submissions associated with API and the Product in
accordance with the Quality Agreement.  ISP shall exercise
commercially reasonable efforts, as determined by ISP, to cooperate with AGIX in
making and maintaining all regulatory filings that may be necessary in
connection with the performance of this Agreement.  AGIX shall have
the responsibility for communications with regulatory and governmental
authorities relating to API and the Product.
  (ii)  ISP shall
cooperate with any inspection by regulatory authorities with respect to the
Manufacture of API and Product.  ISP shall notify AGIX of any and all
inspections which ISP determines are directly related to the Manufacture of API
or Product promptly upon receiving notice of the scheduling of the same, or, if
such inspection is unscheduled, promptly following its
commencement.  AGIX shall have the right to have its representatives
attend any such inspection by regulatory authorities.
  (iii)  ISP shall
immediately provide AGIX with all copies of establishment inspection reports,
copies of FORMs FDA 483, and any other similar reports by regulatory authorities
as well as non-U.S. health authorities, that directly relate to the Manufacture
of API or Product for AGIX.
  (iv)  At either
party’s request, one or more official representatives of the other party shall
attend FDA meetings relating to the Manufacture of API or Product.
  B.  Laws and
Regulations.
  (i)  The
parties shall comply with all federal, state and local laws and regulations
applicable to the performance of their respective obligations hereunder,
including, without limitation, with respect to recordkeeping.
  (ii)  ISP shall
maintain all applicable regulatory and governmental permits, licenses and
approvals required for the Manufacture of the API and Product in accordance with
the Quality Agreement, and shall maintain all records necessary to demonstrate
compliance with cGMPs.
  11
 (iii)  AGIX
shall provide ISP with written notice of any additional regulatory requirements
of countries other than the United States and Europe (as governed by EMEA
regulations) that relate to the Manufacture of API and/or Product for sale or
use in such other countries.  ISP shall be obligated to comply with
such additional requirements, but shall provide AGIX with written notice of any
costs associated with such additional requirements promptly upon notification of
such additional requirements, but in any event not later than sixty (60) days
after the date of ISP’s receipt of such notice, and AGIX shall either (a)
reimburse ISP for its actual cost of complying with such additional
requirements, or (b) if AGIX is unwilling to reimburse such costs then AGIX may
reduce the quantity of API and Product it is required to purchase hereunder with
respect to sale or use of the same outside of the United States and Europe and
source such API and Product from another party, and ISP shall not be obligated
to comply with such additional requirements.
  C.  Recalls.  In
the event (i) any national government authority or other regulatory agency
issues a request, directive or order that Product be recalled, or (ii) a court
of competent jurisdiction orders such a recall, or (iii) AGIX reasonably
determines after consultation with ISP that Product should be recalled (each
circumstance hereinbefore described as a “Recall”), each party, at its own
expense, shall cooperate in any investigations affecting that party with respect
to the Recall and take appropriate corrective actions; provided, however, that
ISP shall not be prohibited from taking any action that ISP believes it is
required to take by applicable law or otherwise.  In the event that
such Recall results from the material breach of the terms of this Agreement by
ISP, ISP shall reimburse AGIX for the price paid with respect to any such
recalled Product including AGIX’s reasonable costs of administration, subject to
the limitations set forth in Article 8.E. hereof.  In the event that
such Recall results from any reason other than ISP’s material breach of the
terms of this Agreement, AGIX will be responsible for all expenses and costs
arising out of the Recall.  AGIX will be solely responsible for all
administrative aspects of any Recall.ISP shall use
commercially reasonable efforts to provide AGIX, at AGIX’s sole cost and
expense, with such assistance, records and any other information related to the
Product to assist with such Recall as may reasonably be requested by
AGIX.
  D.  Quality
Agreement.  Simultaneously with the execution of this
Agreement, the parties are entering into the Quality
Agreement.  Quality and regulatory requirements shall be governed by,
and performed by the parties in accordance with, the terms and conditions of the
Quality Agreement.  The Quality Agreement is intended to supplement
this Agreement, except that in the event of a conflict between any term,
condition or provision of this Agreement and any term, condition or provision of
the Quality Agreement, the applicable term, condition or provision of this
Agreement shall control unless otherwise agreed in writing by the
parties.
  8.  Representations and
Warranties.
  A.  Product
Manufacture.  (i) AGIX covenants,
represents and warrants that (a) it owns all right, title and interest in and to
the AGIX Process and the patents, trademarks, tradenames, copyrights and other
intellectual property rights relating to API and/or Product, and (b) the
Manufacture of API and the Manufacture and sale of the Product does not and will
not infringe any applicable United States or foreign patent, trademark,
tradename, copyright or other intellectual property rights of any third
party.
  12
 (ii)           ISP
covenants, represents and warrants that, at the time of delivery, Product
delivered hereunder: shall (a) have been Manufactured in accordance with the
Manufacturing Requirements and will conform to all other requirements set forth
in this Agreement and will satisfy all requirements of law applicable to ISP's
obligations hereunder; (b) be free from defects in materials and workmanship;
and (c) be free and clear of all liens and encumbrances, other than those which
may be attributable to AGIX.
  B.  Power and
Authority.  Each party covenants, represents and warrants
that:  (i) it has the power and authority and the legal right to enter
into this Agreement and to perform its obligations hereunder; (ii) it has taken
all necessary action on its part to authorize the execution and delivery of this
Agreement and the performance of its obligations hereunder; (iii) this Agreement
has been duly executed and delivered on behalf of such party; and (iv)
constitutes a legal, valid, binding obligation, enforceable against such party
in accordance with its terms.
  C.  Consents.  Each
party covenants, represents and warrants that it has or will obtain all
necessary consents, approvals and authorizations of all governmental authorities
required to be obtained by that party for the performance of its obligations
under this Agreement.
  D.  No
Conflicts.  Each party covenants, represents and warrants that
the execution and delivery of this Agreement and the performance of that party’s
obligations hereunder do not: (i) conflict with or violate any requirement of
applicable laws or regulations or any material contractual obligation of such
party and (ii) materially conflict with, or constitute a material default or
require any consent under, any material contractual obligation of such
party.
  E.  Limitation of
Liability.  (i)  ISP DOES NOT MAKE AND IS NOT TO BE
HELD LIABLE FOR ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE
OR PURPOSE OR FOR ANY OTHER WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED,
EXCEPT AS SET FORTH IN THE PRECEDING SUBARTICLES OF THIS ARTICLE
8.  AGIX ASSUMES ALL RISK AND LIABILITY WITH RESPECT TO RESULTS
OBTAINED BY THE USE OF THE Product, WHETHER USED ALONE OR IN COMBINATION WITH
OTHER MATERIALS OR SUBSTANCES. THE TOTAL DOLLAR AMOUNT OF ALL CLAIMS OF ANY KIND
WHATSOEVER (INCLUDING, BUT NOT LIMITED TO Indemnified Claims), REGARDLESS OF THE
THEORY ON WHICH A CLAIM MAY BE MADE (INCLUDING, BUT NOT LIMITED TO Indemnified
Claims), INCLUDING, WITHOUT LIMITATION, NEGLIGENCE, CONTRACT, BREACH OF
WARRANTY, ABSOLUTE LIABILITY IN TORT, Product Recall, MISREPRESENTATION OR
OTHERWISE, WITH RESPECT TO Product DELIVERED OR FOR FAILURE TO DELIVER ANY
Product FOR WHICH ISP SHALL BE LIABLE HEREUNDER IN THE AGGREGATE, SHALL NOT
EXCEED THE GREATER OF (x) [XXXXXXXX], OR (y) [XXXXXXXX]  OF THE TOTAL
DOLLAR AMOUNT OF SALES OF Product UNDER THIS Agreement FOR THE TWELVE (12) MONTH
PERIOD IMMEDIATELY PRECEDING THE OCCURRENCE OF A CLAIM (INCLUDING, BUT NOT
LIMITED TO Indemnified Claims).  ANY ACTION TAKEN BY ISP PURSUANT TO
ARTICLE 14 HEREOF SHALL NOT CONSTITUTE THE BASIS OF ANY CLAIM (INCLUDING, BUT
NOT LIMITED TO AN Indemnified Claim). The cost of any reprocessing,
reworking or Manufacture of additional lots of API or Product pursuant to
Article 4.B.(i) hereof
  13
 shall not
be included in calculating the aggregate dollar amount of claims (including, but
not limited to Indemnified Claims) for purposes of this Article
8.E.
  (ii)           FAILURE
OF AGIX TO GIVE WRITTEN NOTICE OF CLAIM (INCLUDING, BUT NOT LIMITED TO
Indemnified Claims) WITHIN ONE HUNDRED EIGHTY (180) DAYS AFTER DELIVERY OF
Product OR THE DATE STATED FOR DELIVERY, AS THE CASE MAY BE, SHALL CONSTITUTE A
WAIVER BY AGIX OF ALL CLAIMS (INCLUDING, BUT NOT LIMITED TO Indemnified Claims)
WITH RESPECT TO SUCH Product, UNLESS ANY SUCH CLAIM (INCLUDING, BUT NOT LIMITED
TO AN Indemnified Claim) IS ATTRIBUTABLE TO A LATENT PRODUCT DEFECT NOT
REASONABLY DISCOVERABLE WITHIN SUCH ONE HUNDRED EIGHTY (180) DAY PERIOD BY AGIX,
IN WHICH EVENT SUCH NOTICE OF CLAIM (INCLUDING, BUT NOT LIMITED TO, AN
Indemnified Claim) MUST BE PROVIDED WITHIN TWO (2) YEARS AFTER THE DELIVERY DATE
OF SUCH Product.
  (iii)                   IN
NO EVENT SHALL EITHER PARTY, ITS AFFILIATES AND/OR SUBSIDIARIES BE LIABLE TO THE
OTHER, ITS AFFILIATES AND/OR SUBSIDIARIES FOR (a) INCIDENTAL, CONSEQUENTIAL,
SPECIAL, INDIRECT OR PUNITIVE DAMAGES AND/OR (b) LOSS OF PROFITS, EVEN IF A
PARTY IS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSS.
  F.  NOTWITHSTANDING
ARTICLES 8.E.(i) AND (iii) HEREOF, IF ISP “WILLFULLY” BREACHES ITS OBLIGATION TO
SUPPLY THE AGIX Requirements PURSUANT TO THE TERMS OF THIS Agreement, THEN ISP
SHALL REIMBURSE AGIX FOR ANY COSTS OR DAMAGES INCURRED BY AGIX AS A RESULT OF
SUCH BREACH; PROVIDED THAT, IN NO EVENT, SHALL ISP’S MAXIMUM TOTAL LIABILITY FOR
SUCH COSTS OR DAMAGES EXCEED [XXXXXXXX].  For purposes of this
Agreement, a “willful” breach shall mean a decision by ISP to commit capacity in
a Facility to another customer in a manner or volume which precludes ISP from,
or makes ISP incapable of, supplying up to sixty (60) metric tons of Product in
accordance with the terms hereof; PROVIDED, HOWEVER, ISP SHALL NOT BE
RESPONSIBLE FOR ANY QUANTITIES OF Product NOT TO BE Manufactured FOR AGIX BY ISP
AND WITH RESPECT TO WHICH AGIX HAS PROVIDED A NOTICE TO ISP PURSUANT TO
ARTICLE 11.B.(i) HEREOF, AND SUCH QUANTITIES OF Product SHALL NOT BE INCLUDED IN
ANY CALCULATION OF THE AFOREMENTIONED COSTS OR DAMAGES INCURRED BY
AGIX.  Any action taken by ISP pursuant to Article 14 hereof shall not
constitute a willful breach of this Agreement.
  G.  Notwithstanding
Articles 8.E. and/or 8.F. hereof, AGIX shall use its best efforts to mitigate
any damages with respect to which it may wish to make a claim, including, but
not limited to an Indemnified Claim.
  9.  Confidentiality.
  A.  Nondisclosure
Obligations.  Subject to Articles 9.B., 9.C. and 9.E. hereof,
each party hereto shall keep confidential and shall not disclose in any manner
to any third party (other than disclosures by ISP for purposes of Article 16.C.
hereof) nor use for any purposes
  14
 other
than those contemplated by this Agreement any secret, confidential or
proprietary data, trade secrets, know-how, intellectual property and related
information, including, without limitation operating methods and procedures,
costs, marketing, manufacturing (including, but not limited to, Manufacturing),
distribution and sales methods and systems, sales figures, pricing policies and
price lists and other business information, regardless of whether such
information is marked as “CONFIDENTIAL”, “TRADE SECRET”, “PROPRIETARY” or
carries a similar designation, and regardless of whether such information is
disclosed in writing or orally, which is acquired in connection with or in the
course of performance of this Agreement from the other party hereto
(“Confidential Information”).  Confidential Information disclosed by a
party shall remain the sole and absolute property of such disclosing party,
subject to the rights granted in this Agreement.
  B.  Non-Applicability.  The
provisions of Article 9.A. hereof shall not apply to any information which
:  (i) the party receiving such information can show by competent
proof to have been in its possession prior to its receipt thereof from the other
party; or (ii) is now or hereafter becomes generally available to the public
through no act or omission of the receiving party in violation of this
Agreement; or (iii) may hereafter lawfully be obtained by the receiving party
from a third party without obligation of confidentiality, provided the receiving
party does not know or have reason to know that such third party is under any
confidentiality obligation regarding such information; or (iv) is independently
developed by personnel of the receiving party who have not had access to
Confidential Information of the other party.
  C.  Right to
Disclose.  Each party shall have the right to disclose the
other party’s Confidential Information pursuant to compulsory process or
Government requirement only after the disclosing party has provided notice
thereof to said other party and cooperated with any efforts of said other party,
at said other party’s expense, to obtain a protective order or confidentiality
agreement with provisions equivalent to the provisions of this Agreement;
however, if such disclosure pertains to health or safety information, the
disclosing party shall only be required to provide notice of the disclosure to
said other party if any further delay in disclosure would violate any health or
safety law, and the disclosing party may disclose such health and safety
information as necessary to comply with any such health and safety
law.
  D.  Use of Confidential
Information.  Each party agrees that it shall not, without the
prior written consent of the other party, use Confidential Information of the
other party for any purposes other than those contemplated by this
Agreement.
  E.  Limit of
Disclosure.  Each party agrees to limit disclosure of the
Confidential Information of the other party to its agents, representatives,
officers, directors, employees or advisors and those of its parent, subsidiaries
or affiliated companies who need to know such Confidential Information in order
to carry out the purposes contemplated by this Agreement and each party further
agrees to use all reasonable efforts to prevent them from disclosing such
Confidential Information to others or using it except as needed for the purposes
contemplated by this Agreement .
  F.  Return of Confidential
Information.  All documents and materials containing
Confidential Information disclosed by one party hereto to the other shall remain
the property of the disclosing party and the receiving party agrees to return
all such documents and
  15
 materials
and all copies of such documents to the disclosing party upon request, except
that the receiving party may indefinitely retain one copy of any such document
in its legal files for the sole purpose of evaluating the legal rights of the
parties hereto.  Any such copy retained by the receiving party for
such purpose shall remain Confidential Information and shall be held and used by
the receiving party as Confidential Information in accordance with the terms of
this Agreement.
  G.  Survival.  Notwithstanding
any other provision set forth herein, the provisions of this Article 9 shall
survive the expiration or termination of this Agreement and continue for a
period of ten (10) years from said termination date.
  H.  Prior Confidentiality
Agreement.  The terms of the Confidentiality Agreement shall
continue with respect to “Confidential Information”, as defined therein,
exchanged prior to the Effective Date of this Agreement.  Any
Confidential Information disclosed by a party to the other after the Effective
Date shall be governed by this Agreement, including this Article 9.
  I.  Public
Disclosure.  Except for the disclosure in filings with
regulatory agencies as required by law or court order or by stock exchange rule,
regulation or listing requirements, no announcement, news release, public
statement or publication relating to the existence of this Agreement, the
subject matter hereof, or either party’s performance hereunder, shall be made
without the other party’s prior written approval, such approval not to be
unreasonably withheld or delayed.
  10.  Indemnification and
insurance.
  A.  AGIX Indemnification.
(i)  AGIX shall indemnify, hold harmless and defend ISP and ISP’s
directors, officers, employees and agents, and ISP's parent, subsidiaries and
affiliates and the directors, officers, employees and agents of any ISP parent,
subsidiary or affiliate (individually and/or collectively an “ISP Indemnitee”),
from and against any and all claims, suits, losses, damages, costs, fees and
expenses (including court costs, reasonable attorneys’ fees and reasonable
investigative costs) (collectively, “Loss(es)”) to the extent resulting from, or
arising out of, or directly or indirectly relating to (a) any material breach by
AGIX of any of its representations, warranties, covenants, agreements or
obligations under this Agreement, or (b) the distribution, formulation,
packaging, marketing, promotion, sale, handling, processing, use, shipping or
storage of Product (or other product into which Product has been transformed or
in which Product has been used), including, without limitation (x) liabilities
for product liability and returned goods, (y) liabilities in respect of product
warranties and (z) liabilities for any design or other defects with respect to
API and/or Product, or (c) the acts and/or omissions of any entity engaged by
AGIX to market, sell, distribute, represent and/or exploit the Product; provided
that AGIX shall have no obligation to indemnify any ISP Indemnitee for any Loss
under this Article 10.A.(i) to the extent ISP is required to indemnify any AGIX
Indemnitee for such Loss pursuant to Article 10.B.(i).
  (ii)           AGIX
shall indemnify, hold harmless and defend any ISP Indemnitee from and against
any and all Losses to the extent resulting from, or arising out of, or directly
or indirectly relating to any allegation that (a) the Manufacture of API and/or
Product
  16
 and/or
the use of the AGIX Process or any part thereof infringes any United States or
foreign patent, trademark, tradename, copyright or other intellectual property
rights of any third party; (b) the use alone of API or the use alone or sale of
Product in its original state infringes any claim of any United States or
foreign patent, trademark, tradename, copyright or other intellectual property
rights of any third party; or (c) the use(s) of API and/or Product and/or the
use of the AGIX Process or any part thereof infringes any claim of any United
States or foreign patent .  After receipt of any notification of such
infringement and/or of suit (x) AGIX may procure for ISP, at AGIX's sole cost
and expense, the right to continue to Manufacture the API and/or Product, as the
case may be, and/or use the AGIX Process, or (y) ISP may immediately terminate
this Agreement, without liability hereunder, upon written notice to
AGIX.
  B.  ISP
Indemnification.  (i)  Subject to the limitations set
forth in Articles 8.E. and 8.F. hereof, ISP shall indemnify, hold harmless and
defend AGIX and AGIX's directors, officers, employees and agents, and AGIX’s
parent, subsidiaries and affiliates and the directors, officers, employees and
agents of any AGIX parent, subsidiary or affiliate (individually and/or
collectively an “AGIX Indemnitee”) from and against any and all Losses to the
extent resulting from, or arising out of, or directly or indirectly relating to
(a) any material breach by ISP of any of its representations, warranties,
covenants, agreements or obligations under this Agreement, or (b) the failure of
Product Manufactured and delivered by ISP hereunder to meet the warranties set
forth in Article 8.A. hereof, except to the extent resulting from or arising out
of the (x) negligence or willful misconduct of AGIX or any AGIX Indemnitee or
(y) breach by AGIX of this Agreement; provided that ISP shall have no obligation
to indemnify any AGIX Indemnitee for any Loss under this Article 10.B.(i) to the
extent AGIX is required to indemnify any ISP Indemnitee for such Loss pursuant
to Article 10.A.(i).
  (ii)           Subject
to the limitations set forth in Articles 8.E. and 10.B.(i) hereof, ISP shall
indemnify, hold harmless and defend an AGIX Indemnitee, from and against any and
all Losses to the extent resulting from, or arising out of, or directly or
indirectly relating to any allegation that the Manufacture of API or Product or
any part thereof (other than the AGIX Process) infringes any United States or
foreign patent, trademark, tradename, copyright or other intellectual property
rights of any third party.
  C.  Notice and Exclusive Ability
to Defend.  Any ISP Indemnitee or AGIX Indemnitee (collectively
referred to hereinafter as an “Indemnitee”) shall promptly (and with respect to
an AGIX Indemnitee, within the applicable time period specified in Article
8.E.(ii) hereof) notify the indemnifying party in writing of any claim,
including, but not limited to, a Loss, for which the Indemnitee seeks
indemnification pursuant to this Article 10 (an “Indemnified
Claim”).  Any failure or delay in giving such notice shall not relieve
the indemnifying party of its obligations to indemnify, hold harmless and defend
the Indemnitee hereunder, except to the extent that such failure or delay
materially prejudices the indemnifying party with respect to its defense against
any such Indemnified Claim.  The indemnifying party shall be accorded
exclusive control of the defense, and of all negotiations for settlement or
compromise of such Indemnified Claim so long as (i) the indemnifying party gives
written notice to the Indemnitee of its assumption of control and defense of the
Indemnified Claim within fifteen (15) days after the Indemnitee has given notice
of the Indemnified Claim to the indemnifying party, (ii) the indemnifying party
provides the Indemnitee with evidence reasonably acceptable to the Indemnitee
that such indemnifying party has and will have adequate
  17
 financial
resources to defend against the Indemnified Claim and fulfill its
indemnification obligations hereunder, (iii) the Indemnified Claim involves only
money damages and does not seek an injunction or other equitable relief against
the Indemnitee, (iv) the Indemnified Claim does not relate to or otherwise arise
in connection with any criminal or regulatory enforcement action, and (v) the
indemnifying party conducts the defense of the Indemnified Claim actively and
diligently.  The Indemnitee may retain separate co-counsel at its own
cost and expense and participate in the defense of the Indemnified
Claim.  Notwithstanding anything to the contrary contained herein,
whether or not an indemnifying party assumes the defense of any Indemnified
Claim hereunder shall not constitute a presumption or omission with respect to
whether the Losses related to such Indemnified Claim are, in fact, subject to
indemnification hereunder. In no event shall the indemnifying party enter into
any judgment, settlement or compromise of any Indemnified Claim without the
Indemnitee’s prior written consent unless such judgment, compromise or
settlement (x) provides for the payment by the indemnifying party of money as
sole relief for the claimant, (y) results in the full and general release of the
Indemnitee from all liabilities arising or relating to, or in connection with,
the Indemnified Claim and (z) involves no finding or admission of any violation
of legal requirements or the rights of any person and has no effect on any other
claims that may be made against any Indemnitee.  The Indemnitee shall
cooperate with the indemnifying party in the defense and settlement of such
Indemnified Claim, including providing to the indemnifying party, at the
indemnifying party’s expense, such information and assistance as the
indemnifying party may reasonably request.
  D.  Separate
Defenses.  Notwithstanding the provisions of Article 10.C.
above, in the event that the parties cannot agree as to whether a claim is an
Indemnified Claim, the parties may conduct separate defenses of such
claim.  Each party further reserves the right to claim indemnity from
the other in accordance with Articles 10.A. and B. above upon resolution of such
claim.
  E.  Expenses. No party
shall be required to pay over to another amounts called for under this Article
10 until the final resolution of the claim, action, suit or proceeding from
which the right to such payment arose.
  F.  Exclusive Remedy. The
sole and exclusive remedy with respect to any material breach of any
representation, warranty, covenant or agreement contained herein (other than (i)
with respect to a breach of the terms of a covenant or agreement as to which ISP
or AGIX, as the case may be, also shall be entitled to seek specific performance
or other equitable relief and (ii) with respect to claims for fraud) shall be a
claim for Losses (whether by negligence, contract, breach of warranty, absolute
liability in tort, misrepresentation or otherwise, and whether in law, in equity
or both) made pursuant to Article 10.A or 10.B, as the case may be.
  G.  Limits on
Indemnification. (i) In calculating amounts payable to an Indemnitee, the
amount of the Losses shall (a) not be duplicative of any other Loss for which an
indemnification claim has been made under this Agreement, (b) be computed net of
any amounts actually recovered by such Indemnitee under any insurance policy
with respect to such Loss, and (c) be reduced to take account of any net tax
benefit realized by such Indemnitee arising from the incurrence or payment of
any indemnity payments hereunder.  In computing the amount of
any
  18
 such
tax benefit, the Indemnitee shall be deemed to recognize all other items of
income, gain, loss, deduction or credit after the incurrence or payment of any
indemnified Loss.
  (ii)           Each
Indemnitee shall be obligated to use its commercially reasonable efforts to
mitigate to the fullest extent practicable the amount of any Loss for which it
is entitled to seek indemnification hereunder, and, notwithstanding anything to
the contrary contained herein, the indemnifying party shall not be required to
make any payment to an Indemnitee in respect of such Loss to the extent such
Indemnitee has failed to comply with such obligation to mitigate.
  (iii)           In
any case where an Indemnitee recovers from third parties any amount in respect
of a matter with respect to which an indemnifying party has indemnified it
pursuant to this Article 10, such Indemnitee shall promptly pay over to the
indemnifying party the amount so recovered (after deducting therefrom the full
amount of the expenses incurred by it in procuring such recovery), but not in
excess of the sum of (a) any amount previously so paid by the indemnifying party
to or on behalf of the Indemnitee in respect of such matter and (b) any amount
expended by the indemnifying party in pursuing or defending any claim arising
out of such matter.
  H.  Insurance.
  (i)  ISP
shall, at its sole cost and expense, maintain during the Initial Term and any
Renewal Term or such longer time period as required, the following additional
insurances with minimum limits as set forth below:
  
 (a)           Commercial General Liability
and Foreign General Liability Insurance:  including coverage
for premises liability, personal and advertising injury, products and completed
operations liability and contractual liability coverage on an “occurrence” form,
with limits of at least $[XXXXXXXX] per occurrence and aggregate (or if in a
foreign currency, in an amount equivalent to $[XXXXXXXX]. The foregoing amounts
shall be increased to $[XXXXXXXX] per occurrence and aggregate (or if in a
foreign currency, in an amount equivalent to USD $[XXXXXXXX]) within sixty (60)
days of the date of the FDA approval letter pertaining to Product, a copy of
which shall be immediately provided by AGIX to ISP.  The use of
primary and excess limits and self-insured layers to achieve the total required
limits is acceptable subject to Article 10.H.(iii) below. The policies’
contractual liability coverage shall be broad enough to cover ISP’s obligations
set forth in Article 10.B.(i) hereof.  Altogether, the Commercial
General Liability and Foreign General Liability policies shall provide for a
worldwide coverage territory. The policies shall be endorsed to include AGIX’s
affiliates and subsidiaries as “additional insureds”. The policies shall also
state that all provisions of insurance, except for the limits of liability,
shall operate in the same manner as if there were a separate policy issued to
each insured.
 
 (b)           Workers’ Compensation and
Employer’s Liability Insurance: including domestic and foreign voluntary
workers’ compensation insurance pursuant to all applicable State, Federal,
and/or local laws, statutes and/or regulations, even where
  19
 
 provision of
such insurance is not required by law, covering ISP’s employees (including
principals), contractors and subcontractors engaged in providing services, or
involving  Product, to be provided under this Agreement.
 The policy
shall also include employer’s liability insurance with a minimum limit of
$[XXXXXXXX]  bodily injury – each accident,
$[XXXXXXXX]  disease – each employee, $[XXXXXXXX]  disease –
policy limit (or if in a
 foreign
currency, in an amount equivalent to USD[XXXXXXXX]). The use of primary and
excess limits and self-insured layers to achieve the total required limits is
acceptable.
 
 (ii)  AGIX
shall, at its sole cost and expense, maintain during the Initial Term and any
Renewal Term or such longer time period as required, the following additional
insurances with minimum limits as set forth below:
  
 (a)           Commercial General Liability
and Foreign General Liability Insurance:  including coverage
for premises liability, personal and advertising injury, products and completed
operations liability and contractual liability coverage on an “occurrence” form,
with limits of at least [XXXXXXXX]  per occurrence and aggregate (or
if in a foreign currency, in an amount equivalent to USD[XXXXXXXX]). The
foregoing amounts shall be increased to [XXXXXXXX]  per occurrence and
aggregate (or if in a foreign currency, in an amount equivalent to USD
[XXXXXXXX]) within sixty (60) days of the date of the FDA approval letter
pertaining to Product, a copy of which shall be immediately provided by AGIX to
ISP.  The use of primary and excess limits and self-insured layers to
achieve the total required limits is acceptable subject to Article 10.H.(iii)
below. The policies’ contractual liability coverage shall be broad enough to
cover AGIX’s obligations set forth in Article 10.A.(i)
hereof.  Altogether, the Commercial General Liability and Foreign
General Liability policies shall provide for a worldwide coverage territory. The
policies shall be endorsed to include ISP’s parent, affiliates and subsidiaries
as “additional insureds”. The policies shall also state that all provisions of
insurance, except for the limits of liability, shall operate in the same manner
as if there were a separate policy issued to each insured.
 
 (b)           Workers’ Compensation and
Employer’s Liability Insurance: including domestic and foreign voluntary
workers’ compensation insurance pursuant to all applicable State, Federal,
and/or local laws, statutes and/or regulations, even where provision of such
insurance is not required by law, covering AGIX’s employees (including
principals), contractors and subcontractors engaged in providing services, or
involving  Product, to be provided under this Agreement. The policy
shall also include employer’s liability insurance with a minimum limit of
[XXXXXXXX]  bodily injury – each accident, $[XXXXXXXX] disease – each
employee, $[XXXXXXXX] disease – policy limit (or if in a foreign currency, in an
amount equivalent to USD[XXXXXXXX]). The use of primary and excess limits and
self-insured layers to achieve the total required limits is
acceptable.
 
 (c)           Clinical Trial Liability
Insurance: in full force and effect during the Initial Term and any
Renewal Term, and for five (5) years following the expiration or termination of
this Agreement or the conclusion of the last human clinical trial
  20
 (whichever
is later). The minimum limits shall be [XXXXXXXX]each claim and aggregate (or if
in a foreign currency, in an amount equivalent to USD[XXXXXXXX]). The use of
primary and excess limits and self-insured layers to achieve the total required
limits is acceptable. If written on a “claims-made basis” the policy shall
contain a retroactive date equal to the Effective Date or earlier. If the policy
is terminated at any time following the expiration or termination of this
Agreement then equivalent tail coverage shall be purchased such that the
coverage shall remain in full force and effect for the time periods stated
above. This policy shall apply to and shall be written on an “admitted” basis in
all countries where trials shall be conducted. It shall provide a worldwide
coverage territory and respond to claims made anywhere in the world. The
policies shall be endorsed to include ISP’s affiliates and subsidiaries as
“additional insureds”.
 
 (iii)  Each
party shall accept the other party’s reasonable and adequate self-insurance
program, in lieu of coverage by an outside insurance carrier, provided that the
self-insured party provides documentation satisfactory to the other party
evidencing that the self-insured party is in as sound a financial condition as
is reasonably acceptable to the other party. Provision of said documentation
shall be predicated upon the execution of a mutually agreeable confidentiality
and non-disclosure agreement, which shall not be unreasonably withheld or
delayed and the terms of which shall not be unreasonably
negotiated.
  
 (iv)  Subject
to Article 10.H.(iii), the insurance coverages set forth in Articles 10.H.(i)
and 10.H.(ii) shall each be provided by insurers authorized to do business in
all applicable states or localities that maintain a minimum  A.M. Best
Rating of A  VII or better.  Upon request, each party shall
provide the other with one (1) or more original certificates of insurance
evidencing that all such insurance coverages are in effect.  The
certificate(s) shall confirm that none of such policies of insurance shall be
terminated, canceled or materially modified by the insurers unless the insurers
endeavor to provide the party named as the insured thereunder with at least
thirty (30) days prior written notice of the same.   Upon
request, each party shall provide the other with an annual certificate
evidencing renewal of such insurance coverages.
  (v)  AGIX
shall require all entities engaged in marketing, selling, distributing,
representing and/or exploiting the Product to maintain insurance that meets the
requirements of the provisions of Article 10.H.(ii)(a) and (b) and 10. H. (iv)
hereof, so that AGIX shall have the rights and liabilities which ISP has and
each such entity shall have the rights and liabilities which AGIX has under the
aforementioned provisions. AGIX  shall also require all such entities
to name each ISP Indemnitee as an “additional insured” on such entity’s
Commercial General Liability policy(ies) with such coverage applying as primary
and non-contributory before any other insurance or self-insurance, including any
deductible, maintained by, or provided to, ISP.
  21
 
 11.  Term And
Termination.
  A.  Term.  This
Agreement shall be effective as of the Effective Date and shall remain in full
force and effect for a period of five (5) years from the date of FDA approval of
the Product (the “Initial Term”), unless earlier terminated as provided
herein.  This Agreement shall be automatically extended for successive
terms of two (2) years each (each, a “Renewal Term”), unless either party
provides written notice of non-renewal to the other party at least one hundred
eighty (180) days prior to the last day of the Initial Term or then current
Renewal Term, as the case may be.
  B.  Early Termination
Right.  (i) Notwithstanding Article 11.A, AGIX may, upon three
hundred and sixty-five (365) days prior written notice to ISP delivered on or
after the second anniversary of the date of the first shipment by ISP to AGIX of
Product intended by AGIX for commercial sale, reduce the percentage of AGIX’s
requirements of Product Manufactured for AGIX by ISP, subject to (a) beginning
on the third anniversary of the date of the first shipment by ISP to AGIX of
Product intended by AGIX for commercial sale, ISP continuing to supply
[XXXXXXXX] of AGIX’s Requirements, and (b) beginning on the fourth anniversary
of the date of the first shipment by ISP to AGIX of Product intended by AGIX for
commercial sale, ISP continuing to supply [XXXXXXXX] of AGIX’s
Requirements.
  (ii)           Notwithstanding
Article 11.A. or any other provision of this Agreement, ISP may terminate this
Agreement upon written notice to AGIX if AGIX does not file its New Drug
Application for the Product with the FDA on or before December 31,
2011.
  C.  Default.  Either
party may terminate this Agreement by written notice at any time if the other
party defaults in the performance of any of its material obligations under this
Agreement.  In the event of such default, the party declaring the
default shall provide the defaulting party with written notice setting forth the
nature of the default, and the defaulting party shall have sixty (60) days (or
thirty (30) days, in the event of a payment default by AGIX) to cure the
default.  If the defaulting party fails to cure the default within
sixty (60) days (or thirty (30) days, if applicable), the other party may
immediately terminate this Agreement upon written notice to the defaulting
party.
  D.  Bankruptcy or
Reorganization.  Either party may terminate this Agreement by
written notice to the other party, if the other party files a petition for
bankruptcy, reorganization or arrangement under any state statute, or makes an
assignment for the benefit of creditors or takes advantage of any insolvency
statute or similar statute, or such filing is made by a third party, and such
filing is not withdrawn within ninety (90) days of the filing date, or if a
receiver or trustee is appointed for the property and assets of the party and
the receivership proceedings are not dismissed within ninety (90) days of such
appointment.
  E.  Survival.  Any
expiration or termination of this Agreement shall not affect any right or claim
hereunder, including, but not limited to any Indemnified Claim, that arises
prior to such expiration or termination, which claims, including, but not
limited to any Indemnified Claim, and rights shall survive any such expiration
or termination.  Expiration or termination of this Agreement shall not
impact the parties’ obligations under the Quality
  22
 Agreement.
Articles 1, 4.B.(iii), 4.C., 5.A., 5.D., 6, 7.C, 8.A., 8.E.-G., 9, 10, 11.E.,
12, 13, 15, 16.A.(i), 16.B. and 16.D. – 16.F. shall survive expiration or
termination of this Agreement.
  12.  No
Implied License.  No licenses or rights are granted to either
party’s products, intellectual property or know-how other than those expressly
granted herein.
  13.  Independent
Contractor.  The relationship between AGIX and ISP is solely
that of buyer and seller, it being understood that each party is acting as an
independent contractor for its own account, and nothing herein shall be
construed to be inconsistent with that relationship or status.  Under
no circumstances shall either party be considered to be an employee or agent of
the other.  This Agreement shall not constitute, create or in any
manner be interpreted as a joint venture or partnership of any
kind.
  14.  Force
Majeure.
  A.  Force
Majeure.  Neither party shall be liable for delay or failure to
perform, in whole or in part, any provision of this Agreement (other than the
obligation of AGIX to make the payments required to be made to ISP for Product
purchased under this Agreement) by reason of any Force Majeure
circumstance.  As used herein, Force Majeure means any circumstance or
cause beyond the reasonable control of the affected party (and with respect to
ISP, an affiliate, subsidiary or other entity to which ISP has delegated the
performance of any of its obligations hereunder as provided in Article 16.C.(ii)
hereof), including, but not limited to: acts of God; war; riot; earthquake;
fire; civil disorder; explosion; accident; flood; sabotage; lack of, or
inability to obtain, adequate fuel, power, raw materials, labor, containers,
transportation, supplies or equipment; compliance with governmental requests,
laws, regulations, orders or actions; inability to renew operating permits or
licenses from local, state or federal governmental authorities; breakage or
failure of machinery or apparatus;national defense
requirements, or; strike, lockout, injunction or other labor
problems.
  B.  Notice and
Remedy.  (i)  If either party is delayed or rendered
unable to perform due to Force Majeure, the affected party shall give written
notice of the same and its expected duration to the other party promptly after
the occurrence of the cause relied upon, and upon the giving of such notice the
obligations of the parties shall be suspended during the continuance of the
Force Majeure (other than the obligation of AGIX to make the payments to be made
to ISP hereunder); provided, however, such party shall take reasonable steps to
remedy the Force Majeure with all reasonable dispatch.  The
requirement that Force Majeure be remedied with all reasonable dispatch shall
not require the settlement of strikes, lockouts or other labor
problems.
  (ii)           If,
by reason of any of the foregoing contingencies or of national emergency, the
quantities of any materials used in the production of API and/or Product,
reasonably available to ISP, shall be equal to or less than ISP's total needs
for the same, ISP may use its available supply of such materials on any basis
ISP deems fair and practical, including, but not limited to, ISP's own internal
uses, without liability for any failure to perform this Agreement that may
result therefrom.
  23
 C.           Pricing
Provisions.  In addition to, and not in limitation of the
provisions of Article 5 or any other provisions of this Agreement, if ISP,
and/or an affiliate, subsidiary or other entity to which ISP has delegated the
performance of any of its obligations hereunder as provided in Article 16.C.(ii)
hereof, suffers hardship caused by escalating costs resulting from conditions
beyond its reasonable control, including, but not limited to, acts of God or
other events of Force Majeure, environmental or regulatory requirements, or raw
material prices, and/or other costs substantially higher than those prevailing
at the time of execution of this Agreement, then ISP shall have the right, upon
ten (10) days written notice to AGIX, to reopen negotiations with AGIX with
respect to the price charged for Product hereunder, and the parties agree to
negotiate any such price adjustment in good faith.  Any such agreed
upon price adjustment shall be discontinued if and when the hardship which
caused the same is removed.  If the parties are unable to reach
agreement on such a price adjustment within thirty (30) days of the date of
ISP’s aforementioned notice, then ISP shall have the right to terminate this
Agreement upon written notice to AGIX without liability to AGIX therefore, and
such termination shall take effect immediately.  During the term of
any such price increase, AGIX may terminate this Agreement upon ninety (90) days
prior written notice to ISP without liability to ISP therefore.
  15.  Notices.
  A.  Means and
Addresses.  Except as provided in Article 4.F. hereof, all
notices provided for herein shall be in writing and shall be deemed to be
delivered when deposited in the United States mail, postage prepaid, or
hand-delivered to an authorized representative of the party to whom notice is
directed, or sent by telex, facsimile transmission, telegram or cable, charges
prepaid, to the address of the other party as designated below:
  AGIX:
              ISP:AtheroGenics,
      Inc.,
              ISP
      Pharma Systems LLC8995
      Westside Parkway
              c/o
      ISP Management Company, Inc.Alpharetta,
      Georgia 30004
              1361
      Alps RoadWayne,
      NJ 07470Attn:  Executive
      Vice President of Commercial Operations
              Attn:  Senior
      Vice President Global MarketingFax:  [XXXXXXXX]
              Fax:  [XXXXXXXX]
  B.  Change in
Address.  The addresses and persons provided above may be
changed by either party by providing the other party with written notice of such
change.
  16.  Miscellaneous.
  A.  Entire Agreement;
Waiver.  (i) This Agreement (including all Exhibits attached
hereto, which are incorporated herein by this reference) and the Confidentiality
Agreement (except as superseded with respect to any Confidential Information
disclosed after the Effective Date) and the Quality Agreement contain the entire
understanding between the parties with respect to the subject matter hereof and
supersede all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written,
  24
 with
respect to the subject matter hereof.  This Agreement may not be
changed or modified except in writing signed by a duly authorized representative
of each party.  The parties’ use of Purchase Orders, acknowledgements
or other documentation in connection with the Manufacture of API and/or the
Manufacture and sale of Product hereunder is not intended to (nor shall it serve
to) add to or otherwise amend or modify any provisions of this
Agreement.
  (ii)           No
failure of either party to enforce any provisions hereof shall constitute a
waiver by that party of its right subsequently to enforce the same or any other
provision hereof.  No waiver of any provision of this Agreement shall
be effective unless in writing signed by the party claimed to have waived such
provision.
  B.  Severability.  If
any provision of this Agreement is held to be invalid, void, or unenforceable by
a court of competent jurisdiction, the remainder of the provisions of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired, or invalidated, and such invalid, void or unenforceable provision
shall be replaced by the parties by a provision which most closely reflects the
intent of the parties hereto; provided, however, that if the provisions of this
Agreement concerning the requirements of Product to be purchased by AGIX from
ISP during the term of this Agreement are held as aforesaid to be invalid, void,
or unenforceable, in whole or in part, such provisions shall be deemed altered
to conform to such holding, it being the intent of the parties that the volume
of purchases of Product be maintained at a level as close to the levels set
forth herein not inconsistent with such holding, with the preference of the
parties being to reduce those volume levels rather than to excise such
requirements provisions in their entirety.
  C.  Assignment;
Delegation.  (i) This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.  This Agreement shall not be assigned by either party without
the prior written consent of the other, which consent shall not unreasonably be
withheld or delayed; provided, however such consent shall not be required if
this Agreement is assigned by ISP or AGIX, as the case may be, by operation of
law or otherwise to an (a) entity with which that party may merge or
consolidate, or (b) entity that purchases all or any substantial portion of that
party’s business or assets to which this Agreement relates, or (c) affiliate,
subsidiary or an entity which either wholly or partially controls, is controlled
by or under common control with that party.  The assigning party shall
provide written notice of such assignment to the non-assigning party within
thirty (30) days of the date of the same.
  (ii)           Notwithstanding
Article 16.C.(i) or any other provision hereof, ISP may delegate the exercise of
any or all of its rights and/or the performance of any or all of its obligations
hereunder to an affiliate, subsidiary or an entity which wholly or partially
controls, is controlled by or under common control
with  ISP.  ISP shall provide written notice of such
delegation to AGIX within thirty (30) days of the date of the same.
  D.  Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, irrespective of any conflicts
of law rule which may direct or refer such determination of applicable law to
any other state, and as if this Agreement were performed wholly within the State
of Delaware.
  25
 E.  Headings;
Construction.  Article headings and captions used herein are
for convenience of reference only and shall not be used in the construction or
interpretation of this Agreement.  This Agreement has been jointly
prepared on the basis of the mutual understanding of the parties and shall not
be construed against either party by reason of such party being the drafter
hereof.
  F.  Use of Party’s
Name.  No right, express or implied, is granted by this
Agreement to either party to use in any manner the trademarks, or the name of
the other, or any other trade name, service mark, or trademark owned by or
licensed to the other in connection with the performance of this
Agreement.  Neither party shall use the other party’s name, trade
name, service marks or trademarks without the prior written consent of the other
party, which consent shall not unreasonably be withheld or delayed; provided,
however, such consent shall not be required with respect to any such use in
connection with a disclosure in filings with regulatory agencies, including, but
not limited to, the FDA, or as may be required by law, regulation or court
order, or to effect an assignment or delegation as provided in Article 16.C.
hereof.
  
  In
Witness Whereof, this Agreement has been executed by the parties hereto as of
the Effective Date.
  ATHEROGENICS,
INC.
 /s/MARK P COLONNESE
 Signature
 
 Mark
P. Colonnese
 Name
 Executive
Vice President
 Title
 
 
 
 ISP PHARMA SYSTEMS LLC
  /s/STEPHEN OLSEN
           
  26
  Exhibit
A
 
 API Specifications – page
1
 
 [XXXXXXXX]
  27
  Exhibit
A
 
 API Specifications – page
2
 [XXXXXXXX]
  28
  Exhibit
A
 
 API Specifications – page
3
 
 
 [XXXXXXXX]
  29
  Exhibit
B
 
 Equipment
 
 
 [XXXXXXXX]
  30
  
 Exhibit
C
 
 Packing
Specifications
 
 
 
 1.
              ISP
      will purchase, at its own expense, all packages and packing
      materials.
 2.
              API
      is to be packaged in fiber drums with double lined polyethylene bags each
      secured with a twist tie.
 3.
              Product
      is to be packaged in high density polyethylene (HDPE) drums double lined
      with polyethylene bags each secured with a twist
      tie.   Place two desiccants between the inner and outer
      bags.
 4.
              ISP
      is responsible for confirming that
 a.
              the
      quantity of API or Product packed is within the weight limit and other
      specifications of the packing materials as stated by the
      manufacturer,
 b.
              each
      outer packing is sealed with a tamper-evident closure according to ISP
      practices.
 c.
              outer
      packing contains a machine-made label that is consistent with the
      requirements in Exhibit J,
 d.
              the
      packing is appropriate for the mode of handling and transportation
      utilized, and,
 e.
              the
      packing is suitable for the storage requirements set forth in the
      applicable API and Product
Specifications.
 5.
              The
      normal container quantities and acceptable variation for API and Product
      will be established by mutual agreement, in writing, between AGIX and ISP
      after completion of the initial validation
  campaigns.
 
 
 
  31
  Exhibit
D
 
 Product Specifications –
page 1
 [XXXXXXXX]
   32
  Exhibit
D
 
 Product Specifications –
page 2
 [XXXXXXXX]
    33
  Exhibit
D
 
 Product Specifications –
page 3
 
 [XXXXXXXX]
  34
  Exhibit
E
 
 Manufacture of API and
Product Registration Batches
 
 [XXXXXXXX]
 
 
  35
  
 Exhibit
F
 
 Manufacture of API
Establishment and Validation Batches
 
 
 [XXXXXXXX]
  36
  
 Exhibit
G
 
 Documentation
Requirements
 
 
 
 [XXXXXXXX]
 
  37
  
 Exhibit
H
 
 API and Product Process
Optimization
 
 [XXXXXXXX]
  38
 
 Exhibit
I
 
 Product
Validation
 
 [XXXXXXXX]
  39
  
 Exhibit
J
 
 API and Product Container
Labels
 
 For any
API or Product shipped between ISP locations, the container label shall uniquely
and unambiguously identify the contents, storage requirements, and status in
accordance with ISP procedures.
 
  For any
API or Product shipped outside of ISP, the container label must state the
following:
   ·
              Agreed
      name (may be trade name)
   ·
              Material
      Code (Supplier and/or AtheroGenics)
   ·
              Name
      of Supplier
   ·
              Storage
      Requirements
   ·
              Batch
      Number
   ·
              Gross
      Weight
  ·
              Net
      Weight
 
  Where
over-wrapped each pallet must be labeled to state the following:
   ·
              Consignee
   ·
              Supplier
   ·
              Shipping/consignment
      number
   ·
              Item
      code
   ·
              Quantity
      on pallet
   ·
              Date
      of manufacture
   ·
              Retest
      period
   ·
              Storage
      Requirements
   ·
              Gross
      Weight
   ·
              Net
      weight
   
   Each
pallet, or individual pack if applicable, must show a hazard label, detailing
the following:
   ·
              Material
      description
   ·
              Supplier
   ·
              Manufacturing
      Site
   ·
              Hazard
      warning
  
 
  40
  
 Exhibit
K
 
 Terms and
Conditions of
 Equipment
Transfer
 
 
 1.
              Inspection.  AGIX
      agrees to arrange for an inspection by ISP of the Equipment and the
      manifest for the same at the location of said Equipment.  Upon
      inspection and acceptance of the Equipment by ISP, AGIX, or AGIX’s agent,
      will ship the Equipment to a location chosen by ISP, via a carrier
      designated by ISP, the cost of such shipment only to be at ISP's
      expense.
 
 2.
              Title.  A.  (i)  Title
      to, and risk of loss of, the Equipment shall pass to ISP upon delivery of
      the Equipment to ISP's designated carrier at the location of said
      Equipment.
 
 (ii)
              All
      documents associated with the Equipment, including, but not limited to
      vendor supplied documents and data (e.g., maintenance and operating
      manuals, equipment drawings, specifications, spare parts lists) as well as
      documents prepared by the engineering/design firm used for the Midland,
      Michigan design (including, but not limited to Piping &
      Instrumentation Diagrams, General Arrangement Drawings, Civil/Structural
      Drawings, Piping Drawings, and Electrical & Instrument Wiring
      Drawings) shall also be transferred to ISP by AGIX and ISP shall have all
      rights and title to, and ownership of the same, which shall not, in any
      event, be considered AGIX Confidential Information, but shall, upon such
      transfer, be deemed ISP Confidential Information.  AGIX shall
      ship all such documents to ISP at the address set forth in Article 15.A.
      hereof to the attention of ISP's Corporate Engineering
      Department.
 
  B.           AGIX
shall covenant, represent and warrant that AGIX has good and marketable title
to, and is the owner of, the Equipment, free and clear of all liens, mortgages,
security agreements, leases, options, pledges, charges, covenants, conditions,
restrictions and other encumbrances and claims of any kind or character
whatsoever and will so convey the Equipment to ISP. EXCEPT AS PROVIDED IN THIS
PARAGRAPH 2.B, THE Equipment SHALL BE TRANSFERRED TO ISP “AS IS, WHERE IS”. AGIX
DOES NOT MAKE AND IS NOT TO BE HELD LIABLE FOR ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR FOR ANY OTHER WARRANTY OF ANY KIND
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE Equipment EXCEPT AS SET
FORTH IN THIS PARAGRAPH 2.B.
  
 3.
              Assignment of
      Warranties. AGIX shall assign to ISP any and all valid warranties
      AGIX may have in and to the Equipment; provided, however, AGIX shall not
      be obligated to assign any warranties which are non-assignable pursuant to
      their terms.
 
 41
 4.
              Registrations, Filings
      and Consents. AGIX will cooperate in good faith, at ISP's request,
      to make all registrations, filings, and applications and to give all
      notices and to obtain all governmental and other consents, transfers,
      approvals, orders, qualifications and waivers necessary or desirable for
      the consummation of the transactions contemplated hereby or which may
      thereafter be reasonably necessary or desirable to effect the transfer of
      the Equipment.
 
 5.
              Further
      Assurances. AGIX agrees from time to time to execute and deliver
      such further instruments of conveyance and transfer and take such other
      action as ISP may reasonably request in order to more effectively convey
      and transfer the Equipment to ISP.
 
 
 
 
  42
  Exhibit
L
 Initial Product Price
Assumptions
 
 [XXXXXXXX]
 
  43
  Exhibit
M
 
 
 
 
 
 
 
 
  SUPPLIER
QUALITY AGREEMENT
 
  FOR
 
  AGI-1067
 
 
 
 between
 
 
 
 AtheroGenics,
Inc.
 
 
 and
 
 
 ISP
Pharma Systems LLC
 
 
 
  
   CONTENTS
 
 
 
 
 1.0
              Purpose
      of the Quality
      Agreement                                                                                                           p.
      3
 
 2.0
              Location
      and
      Facilities                                                                                                                           
         p. 3
 
 3.0
              Detailed
      List of Activities and
      Responsibilities                                                                                     p.
      4
 
 4.0
              Attachment
      A – Change Control and Deviation Notification
      Matrix                                 
                    
      p. 10
 
 5.0
              Attachment
      B – Primary Quality
      Contacts                                                                              
                     p.
      12
 
 6.0
              Attachment
      C – Project Change Agreement
      Request                                                                           p.
      13
 
 7.0
              Acceptance
      of the
      Agreement                                                                                                     
                  p.
      14
 
  
  
  1.0           PURPOSE OF THE QUALITY
AGREEMENT
 
 AtheroGenics,
Inc., a Georgia corporation with offices at 8995 Westside Parkway, Alpharetta,
GA  30004 (“AGIX”) and ISP Pharma Systems
LLC, a Delaware limited liability company with offices at 9176 Red Branch Road,
Suite R, Columbia, Maryland 21045 (“ISP”), have entered into a
Manufacturing and Supply Agreement for the Manufacture and supply of AGI-1067
active pharmaceutical ingredient (“API”) and spray-dried dispersion (“SDD”)(API
and SDD collectively referred to as “Product”).  This
Quality Agreement constitutes an agreement between the Quality Assurance
functions of AGIX and ISP and is a support document to the Manufacturing and
Supply Agreement.  Capitalized terms in this Quality Agreement shall
have the same meaning as defined in the Manufacturing and Supply
Agreement.  The purpose of this Quality Agreement between AGIX and ISP
is as follows:
 
  i)
              To
      ensure that the respective Quality Assurance and joint and individual
      responsibilities of AGIX and ISP under current Good Manufacturing
      Practices (cGMP) are defined, understood and agreed upon in advance by
      both parties.
 
 ii)
              To
      define how the Quality functions (Quality Assurance (QA) and Quality
      Control (QC)) at ISP and AGIX will interact with each
    other.
 
 iii)
              To
      ensure that any lot or batch of Product Manufactured, packaged, labeled or
      tested for AGIX at a Facility, is done so in accordance with the cGMP
      requirements as set forth by the Q7A Good Manufacturing Practice Guidance
      for Active Pharmaceutical Ingredients (APIs) issued by the US Food and
      Drug Administration (FDA) in August 2001 (Q7A), and the Federal Food, Drug
      and Cosmetic Act, 21 U.S.C. §§301, et. seq., and the regulations
      promulgated there under, as may be amended from time to
    time.
 
 iv)
              To
      help establish a strong co-operative partnership and working relationship
      between the personnel in the Quality functions at AGIX and
      ISP.
 
 
 
 2.0           LOCATION AND
FACILITIES
 
 ISP will
Manufacture the Product at its Facility and will maintain controlled access to
the  Facility.  The premises, utilities and equipment used
to Manufacture the Product will meet or exceed current regulatory requirements
(cGMP) and will be validated or qualified appropriately.
 
 
  3
   3.0
              DETAILED LIST OF
      ACTIVITIES AND
RESPONSIBILITIES
  
 This
section specifies in detail the cGMP and Q7A activities and responsibilities of
both AGIX and ISP relating to theManufacturing, testing
and distributionof
the Product.  AGIX and ISP are responsible for activities noted in
their respective columns by a capital “X.”
 
 FUNCTION
              ISP
              AGIX3.1    Generala.
              Changes
      to the Quality Agreement agreed to in advance and in
    writing
              X
              Xb.
              cGMP
      compliance
              X
              Xc.
              Controls
      to prevent cross contamination from other chemicals or manufactured
      products
              Xd.
              Development
      reports for technology transfer of the AGIX Process to Manufacture
      Product
              
              Xe.
              Process
      technical support
              
              Xf.
              Material
      safety data sheet for Product
              
              Xg.
              Product
      label content
              
              Xh.
              Subcontract
      work to a third party only in accordance with the Manufacturing and Supply
      Agreement and with AGIX notification and approval not to be unreasonably
      withheld or delayed
              Xi.
              List
      of subcontractors used for processing or testing
              Xj.
              Permit
      AGIX staff to view production processes
              Xk.
              Provide
      access toAGIX personnel or
      their appointed technical auditors to the warehouse and operations
      facilities including Manufacturing, packaging, labeling, and testing areas
      for cGMP audits in accordance with the Manufacturing and Supply
      Agreement
              Xl.
              Thirty
      day notification for one annual cGMP general audit
              
              Xm.
              Annual
      audit report to be issued by AGIX within 30 days
              
              Xn.
              Response
      to annual audit with corrective actions issued to AGIX within 30 days of
      report receipt
              X
 
  4
  
 3.2    Regulatorya.
              Consult
      with ISP in the preparation and submission of CMC sections of INDs, NDA,
      or similar filings for Product
              
              Xb.
              IND/NDA
      submission, updates, annual reports, and other required regulatory reports
      or filings for Product
              
              Xc.
              Provide
      copy of IND/NDA CMC section for Product to ISP (redacted as AGIX
      reasonably deems appropriate)
              
              Xd.
              Provide
      copy of written communications, redacted as appropriate, received from a
      regulatory Authority that would require ISP’s participation or impact
      ISP’s performance
              
              Xe.
              Consult
      with ISP in the preparation and submission of answers to questions from
      FDA about CMC sections for Product that pertain to ISP
              
              Xf.
              FDA
      Drug Listing – Form 2657
              X
              Xg.
              Annual
      Product Report (APR) covering all lots made, tested, released and rejected
      in previous calendar year, including summaries of test results, changes,
      validations, key parameter trending, and abnormalities.  ISP
      shall write and approve the APR.  AGIX may review APR prior to
      ISP approval.
              X
              Xh.
              Ongoing
      stability program, including data to establish expiration and/or retest
      dates as appropriate
              
              Xi.
              Advance
      notification given to AGIX for all pre-scheduled regulatory audits and
      immediate notification given to AGIX for all non pre-scheduled audits by
      any pharmaceutical regulatory Authority
              Xj.
              FDA
      Audits
                -
      Provide AGIX with a daily summary including topics covered and any issues
      raised
                -
      Contact AGIX for agreement prior to submitting documentation other than
      production-based documentation
              Xk.
              Supply
      requested documentation to support an FDA audit
              
              Xl.
              Notify
      AGIX of related regulatory requests for samples, documentation, etc.,
      within 2 business days, and provide sample/copies to the regulatory agency
      as needed.  Provide AGIX with a duplicate sample/copy if
      requested.
              Xm.
              Notify
      AGIX of the results of audits of AGI-1067, including audit reports
      (establishment inspection reports) and observations and citations (483s,
      warning letters, etc.) from a pharmaceutical regulatory Authority within
      30 days of receipt
              Xn.
              Provide
      AGIX with summary of responses (redacted as necessary) to regulatory
      Authority observations or citations
              Xo.
              Notify
      ISP of any FDA audits where materials supplied by ISP are involved or
      affected and provide summaries of relevant information (items covered,
      responses, commitments, etc.)
              
              X
  5
  
 FUNCTION
              ISP
              AGIX3.3    Validationa.
              Process
      validation master plan
              X
              Xb.
              Approval
      of process validation protocols and reports
              X
              Xc.
              Ensure
      all compendial test methods have been qualified
              Xd.
              Ensure
      all non-compendial test methods have been validated and
      transferred
              
              Xe.
              Ensure
      cleaning of process equipment is completed according to ISP standard
      operating procedures
              Xf.
              Provide
      required data, such as LD50, toxicity, solubility, minimum dose, etc., to
      establish cleaning limits and procedures
              
              Xg.
              Conduct
      cGMP related computer/PLC equipment and software validation according to
      the ISP implementation plan
              X3.4    Quality
      AssuranceSuppliers/
      Raw Materials/ Specificationsa.
              Sourcing
      of key materials
              Xb.
              Maintain
      supplier qualification program
              Xc.
              Qualify/audit
      key raw material suppliers
              X
              X
      (AGIX shall be involved only in qualifying  [XXXXX])d.
              Audit
      reports of third party labs
              Xe.
              Raw
      Material Specifications prepared by
              Xf.
              Raw
      material Specifications approved by
              X
              Xg.
              [XXXXXXXX]USP
      specification prepared and approved
              X
              X
  6
  
 FUNCTION
              ISP
              AGIX3.4    Quality
      Assurance (cont.)Campaign
      Preparation and Executionh.
              Training
      of supervisors and operators in the applicable standard operating
      procedures
              Xi.
              Batch
      number format.  ISP will develop format consistent with ISP work
      practices.  AGIX will review initial format and any changes in
      order to maintain compatibility with AGIX computer
systems.
              X
              Xj.
              Prepare
      and approve Master Batch Production Record--manufacturing instructions
      including in-process checks.
              X
              Xk.
              Issue
      batch records as true and accurate reproductions of the master and send
      copies of batch records to AGIX upon request.
              Xl.
              Provide
      oversight for pre/post facility and equipment preparation and
      cleaning
              Xm.
              Major
      changes that could affect the quality attributes of the Product or the
      validation status of the process for Product need AGIX notification,
      review, and approval (see Attachment A for details and see Attachment B
      for list of contacts)
              X
              Xn.
              Ensure
      appropriate deviation and change control notification, i.e., significant
      equipment problems, down time, significant process delays, or other
      discrepancies (see also Attachments A and B)
              Xo.
              Two
      business day notification of out of specification (OOS) or out of trend
      (OOT) result, deviations, or quality investigations.
              Xp.
              Reprocessing
      and Reworking
                ·AGIXnotified(prior to
      initiation)
                ·Verify
      reprocessing/rework status in IND/NDA
                ·Approved
      by
              X
                X
                X
              X
                Xq.
              Date
      of manufacture to be based upon manufacturing completion
    date
              Xr.
              Retest
      date to be based on the date of manufacture using approved retest period
      provided by AGIX
              X
              XBatch
      Releases.
              Review
      and approval of batch documentation including in-process and final testing
      results and send copies of documentation to AGIX upon
    request.
              Xt.
              Provide
      Certificate of Analysis and Certificate of cGMP Compliance for all shipped
      Product
              Xu.
              Release
      batches for shipment to AGIX or location designated by
AGIX
              X
  7
  
 FUNCTION
              ISP
              AGIX3.4    Quality
      Assurance (cont.)Post
      Completion Activitiesv.
              Maintain
      retention samples (raw materials, API, Product)
              Xw.
              Raw
      material analytical data and approval documentation and Product batch
      records retained a minimum of 8 years plus the current year past the date
      of manufacture.
                At
      the end of such retention time period, ISP may destroy such documentation
      unless agreement is reached with AGIX to extend the storage time on
      specific documents.  .
              X
                
                
                X
              Xx.
              Disposition
      of
                ·Rejected
      materials
                ·Retain/retention
      samples as per agreed upon time (8 years plus current)
                
                At
      the end of such retention time period, ISP may destroy such samples unless
      agreement is reached with AGIX to extend the storage time on specific
      retain samples.
              X
                X
                
                X
              Xy.
              Handling,
      storage and transportation Specifications:
                ·Supplied
      by
                ·Prepared
      by
                ·Approved
      by
              X
                X
              Xz.
              Storage
      of AGI-1067 under required conditions
              XRecall/
      Miscellaneousaa.
              AGIX
      to notify ISP of adverse drug reactions.  ISP to provide copies
      of associated batch record(s) if requested by AGIX.
              X
              Xbb.
              AGI-1067
      related complaint investigation reporting and resolution
                ·Notification
      to ISP
                ·Investigation
                ·Response
      to the complaint
                ·Review
      and approval of complaint response
              X
                X
              X
                
                
                Xcc.
              Product
      Recall:
                ·Overall
      responsibility for notification, initiation, coordination and dealings
      with FDA
                ·Tracking/genealogy,
      batch control, documentation and support
              X
              X
                
                X
  8
  
 FUNCTION
              ISP
              AGIX3.5   Quality
      Control Testinga.
              Use
      the appropriate methods (current pharmacopoeia edition, including
      published supplements, or validated non-compendial) and specifications for
      testing raw materials and Product
              Xb.
              Follow
      test methods as written and notify AGIX of any deviation
              Xc.
              Specifications
      and validated non-compendial test methods
                ·Supplied
      by
                ·Transferred/qualified
      by
              X
              Xd.
              Method
      development/validation report and technical
      support.  Responsibilities would be further defined within an
      Additional Services Amendment.
              X
              Xe.
              Implement
      mutually agreed upon method improvements as directed by
    AGIX
              Xf.
              Provide
      AGI-1067 reference standards/materials, including Certificates of
      Analysis, retest/expiry date, storage conditions and related
      information
              
              Xg.
              Follow
      ISP standard operating procedures for reference standards and safely
      dispose of expired standards
              Xh.
              Testing
      and release of raw materials
              Xi.
              Perform
      annual retain sample inspection
              X3.6    Dispute
      Resolutiona.
              Deviation/non-conformity
      stages
                ·Both
      parties attempt to reach agreement
                ·AGIX
      retains right to determine release status
                ·Financial
      liability aspects are covered in the Manufacturing and  Supply
      Agreement and are not part of the Quality Agreement
              X
              Xb.
              Test
      results resolution stages
                ·Direct
      communication between both parties, including analysts, to confirm
      method
                ·Re-issuance
      of split sample to both labs with analyst communication
                ·Analyst
      meet to work on same sample
                ·Sample
      sent to an agreed upon qualified third party lab
                ·AGIX
      retains right to determine release status
                ·Financial
      liability aspects are covered in the Commercial Supply Agreement and are
      not part of the Quality Agreement
              X
              X
  9
  4.0)           Attachment
A
 
 ISP
      and AGIX Change and Deviation Notification GuideChanges
      or
                Deviations
                Related
      to
              No
      Notification  or Approval Required
              Changes
      or Deviations -Discuss before Implementation
              Notify AGIX (1, 2)
              Approval
      by AGIX Required (3, 4)Deviations
              ChangesNDA
      or other product registration
              
              
              X
              XQuality
      Agreement
              
              
              
              XSupplier
      -  including solvents, reagents
              XSpecifications
      -  including solvents, reagents, packaging
    materials
              
              
              
              XKey
      material supplier Specifications/sources
              
              
              X
              XSyntheses
      process/pathways
              
              
              X
              XTest
      methods
              
              
              
              XFacilities/site/location
              
              
              
              XKey
      Utilities (i.e., HVAC,N2,H2O)
      (GMP)
              
              XCritical
      Process Parameters
              
              
              X
              XKey
      equipment (other than like for like)
              
              
              
              XBatch
      size (NLT 90% and NMT 110% of target or as defined in Batch Production
      Record)
              
              XYield
      variation per the master BPR limits
              
              
              XCleaning
      process/agent
              
              
              
              XPackaging,
      storage, transportation
              
              
              
              XBatch
      contamination (foreign material / specks)
              
              
              X
              XOOS
      or OOT result
              
              
              X
              XReprocessing
      or Rework
              
              
              
              XOther
      Major Changes or Deviations, or
      problems that could affect the quality attributes of the product or the
      validation documentation
              
              
              X
              XOther
      Minor Changes or Deviations that have
      no potential to impact the quality attributes of the product or validation
      documentation (5)
              X
  Notes:
   1)
              ISP
      will notify AGIX prior to quality release of API or Product of a deviation
      and AGIX reserves the right to participate in the
      investigation.
   2)
              AGIX
      will be notified if any problems are discovered that may impact production
      batches previously manufactured or
shipped.
   (Continued
      on next page)
   10
   Notes
      (continued):
   3)
              ISP
      may implement changes without approval from AGIX in cases where workers or
      the environment could be harmed, the quality of the material could be
      damaged, or equipment might be damaged by delaying implementation of the
      change.  ISP will inform AGIX as soon as possible after
      implementation of such changes.
   4)
              Approval
      of changes by AGIX and ISP will be documented using ISP’s Project Change
      Agreement Request (PCAR) form (Attachment
C).
   5)
              Minor Changes
      or Deviations that are defined as minor revisions in Master Batch Records
      per ISP SOP and changes made solely for safety, industrial hygiene, loss
      prevention, or environmental reasons do not require notification of or
      approval by AGIX.  ISP shall inform AGIX of all other Minor Changes
      or Deviations.
   11
  
 5.0)           Attachment
B
 
  
 AGIX
      PRIMARY CONTACTSName
              Title
              Phone
              Fax
              EmailJ.
      Christopher Prue
              VP
      Regulatory Affairs
              [XXXXXX]
              
              [XXXXXXXX]or
      designeeISP
      PRIMARY CONTACTSName
              Title
              Phone
              Fax
              EmailDr.
      James Marsh
              Quality
      Systems Manager
              [XXXXXXXX]
              
              [XXXXXXXX]Jess
      Tayag
              Manager,
      Quality Assurance
              [XXXXXXXX]
              
              [XXXXXXXX]
  
  12
  6.0)           Attachment
C
 
 [to
be supplied by ISP]
    13
 
 7.0)           ACCEPTANCE OF THE
AGREEMENT
 
 
 
 By way of
acceptance, the following individuals indicate that they have reviewed this
agreement, and are committed to abide by the conditions and spirit of the
agreement.
 
 
 
 
 AtheroGenics,
Inc.
 
  /s/MARK
P. COLONNESE
 date April
1,
2008
 
 
 
 
 ISP Pharma Systems LLC
   /s/STEPHEN
OLSEN
  
 
 
  14
  Exhibit
N
 Security
Agreement
 
 SECURITY
AGREEMENT
 
 THIS SECURITY AGREEMENT (this
“Security Agreement”) is made and entered into as of March __, 2008 between
AtheroGenics, Inc., a Georgia corporation, having an address at 8995 Westside
Parkway, Alpharetta, Georgia 30004 (including any successors and assigns,
“AGIX”) and ISP Pharma Systems LLC, a Delaware limited liability company, having
its principal office at 9176 Red Branch Road, Suite R, Columbia, Maryland 21045
(including any successors and assigns,“ISP”) in
connection with to the
Manufacturing and Supply Agreement described below.
 
 RECITALS
 
 WHEREAS, AGIX and ISP are
parties to that certain Manufacturing and Supply Agreement dated as of the date
hereof (as amended, modified, extended, renewed or replaced from time to time,
the “Manufacturing and Supply Agreement”); and
 
 WHEREAS, it is a condition
precedent to the effectiveness of the Manufacturing and Supply Agreement that
AGIX shall have executed and delivered this Security Agreement to
ISP;
 
 NOW, THEREFORE, in
consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
 
 SECTION
1
 DEFINITIONS.
 
 Capitalized
terms used and not otherwise defined herein shall have the meanings ascribed to
such terms in the Manufacturing and Supply Agreement.  In addition,
the following terms shall have the following meanings:
 
 (a)           “Collateral” has the
meaning set forth in Section 2 hereof.
 
 (b)           “Event
of Default” shall mean the occurrence of any of the following:  (i)
thefailure of AGIX
to pay any ofthe
Secured Obligations within thirty (30) days of the date when due,(ii) AGIX files a petition
for bankruptcy, reorganization or arrangement under any state statute, or makes
an assignment for the benefit of creditors or takes advantage of any insolvency
statute or similar statute, or such filing is made by a third party, and such
filing is not withdrawn within thirty (30) days of the filing date, or if a
receiver or trustee is appointed for the property and assets of AGIX and the
receivership proceedings are not dismissed within thirty (30) days of such
appointment,or (iii)
AGIX otherwise fails to perform of any of its material obligations under this
Security Agreement or the Manufacturing and Supply Agreement.
 
 (c)
              “Secured
      Obligations” means (i) all obligations owed by AGIX to ISP as fees
      for the “Preliminary Work”, as defined in the Manufacturing and Supply
      Agreement, and (ii) the amount to be refunded to ISP pursuant to Article
      5.A.(vi) of the Manufacturing and Supply
  Agreement.
 
 (d)
              “UCC”
      means the Uniform Commercial Code as in effect from time to time in the
      State of Delaware on the date hereof except as such terms may be used in
      connection with the perfection of the Collateral and then the applicable
      jurisdiction with respect to such affected Collateral shall
      apply.
 
 
 SECTION
2
 GRANT
OF SECURITY INTEREST IN THE COLLATERAL
 
 To
secure the prompt payment and performance in full when due, whether by lapse of
time, acceleration, mandatory prepayment or otherwise, of the Secured
Obligations, AGIX hereby grants to ISP a continuing security interest in,and right of setoff
against, any and all
right, title and interest of AGIX in and to each item of  theEquipment (as such term is defined in
the Manufacturing and Supply Agreement)set forth and described on
Appendix 1 hereto, and all Accessions (as defined in the UCC) and Proceeds (as
defined in the UCC) thereof (collectively, the “Collateral”).
 
 SECTION
3
 REPRESENTATIONS
AND WARRANTIES
 
 AGIX
hereby represents and warrants to ISP that:
 
 3.1                      Ownership.AGIX is
the legal and beneficial owner of the Collateral and has the right to pledge,
sell, assign or transfer the same.
 
 3.2                      Legal Name; State of Organization;
Address.As of the Effective Date of the Manufacturing and
Supply Agreement and for one hundred and twenty (120) days prior thereto, AGIX's
exact legal name, state of organization and address are as set forth on Appendix
2 attached hereto.
 
 3.3                      Security
Interest.This Security Agreement creates a valid security
interest in favor of ISP in the Collateral and, when properly perfected by
filing of an appropriate financing statement, shall constitute a valid perfected
security interest in such Collateral, free and clear of all liens except for the
lien granted hereunder, liens for taxes not yet due and payable or which are
being contested in good faith, carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s or other like liens arising in the ordinary course of
business, liens on deposits, and nonconsensual liens arising by operation of
law.
 
 
 SECTION
4
 COVENANTS
 
 AGIX
covenants that :
 
 4.1           Perfection of Security Interest by
Filing, Etc.  AGIX shallexecute and deliver to ISP and/or file
such agreements, assignments or instruments and do all such other things as ISP
may reasonably deem necessary or appropriate to assure to ISP that its security
interests hereunder are perfected.  Not in limitation of the
foregoing, AGIX hereby authorizes ISP (or any of ISP’s designees) to file one or
more financing statements disclosing ISP’s security interest in the Collateral
without AGIX’s signature thereon.
 
 4.2           No
Contravention.  The execution, delivery and performance by AGIX
of this Security Agreement has been duly authorized by all necessary corporate
action, and (a)  does not and will not conflict with or result in any
breach or contravention of any other contract to which AGIX is a party; and (b)
no approval, consent, exemption, authorization, or other action by, or notice
to, or filing with any person or entity, other than the financing statement
referred to in Section 3.3 is necessary or required in connection
  
 with the
execution, delivery or performance by, or enforcement against, AGIX of this
Security Agreement or any security interest granted herein.
 
 4.3           Location and Use of
Equipment.  AGIX shall advise ISP, in writing, at least thirty
(30) days prior to re-location of the Equipment from its present location at
Corrigan Moving Services, United Van Lines Agent, Attn: Bonnie
Robison,
 
 Secured
warehouse:                     1411
Straits Drive
 Bay City, MI
48706
 Phone:  [XXXXXXXX]
 Fax:  [XXXXXXXX]
 
 or any
subsequent re-location of the Equipment.  AGIX shall not use the
Collateral or permit any third party to use the Collateral for any reason
whatsoever so long as this Security Agreement is in full force and
effect.
 
 4.4           AGIX
shall defend the Collateral against the claims and demands of all third parties
at AGIX’s sole cost and expense.
 
 4.5           AGIX
shall not change its name, type of organization or jurisdiction of organization
unless ISP shall have received not less than thirty (30) days’ prior written
notice of such proposed change which notice shall set forth the details of such
change.
 
 
 SECTION
5
 REMEDIES.
 
 5.1           General
Remedies.  Upon the occurrence of an Event of Default, and
during continuation thereof, ISP shall have, in addition to the rights and
remedies provided herein, in the Manufacturing and Supply Agreement or under
applicable laws, the rights and remedies of a secured party under the UCCof any applicable
jurisdiction,including, without limitation, the right to foreclose the security
interests granted herein and to realize upon any Collateral by any available
judicial procedureand/or to take
possession of and sell any of the Collateral with or without judicial
process.
 
 5.2           Nonexclusive Nature of
Remedies.Failure by ISP to exercise any right, remedy or
option under this Security Agreement, the Manufacturing and Supply
Agreement,  or as provided by law, or any delay by ISP in exercising
the same, shall not operate as a waiver of any such right, remedy or
option.  The rights and remedies of ISP under this Security Agreement
shall be cumulative and not exclusive of any other right or remedy which ISP may
have.
 
 5.3           Retention of
Collateral.  ISP may, in compliance with Sections 9-620 and
9-621 of the UCC or otherwise complying with the requirements of applicable law
of the relevant jurisdiction, accept or retain the Collateral in satisfaction of
the Secured Obligations.  Unless and until ISP has provided such
notices, however, ISP shall not be deemed to have retained any Collateral in
satisfaction of any Secured Obligations for any reason.
 
 5.4           Deficiency.In the
event that the proceeds of any sale, collection or realization are insufficient
to pay the Secured Obligations, AGIX shall be liable for the deficiency,
together with interest thereon, together with the costs of collection and the
reasonable fees of any attorneys employed by ISP to collect such
deficiency.  Any surplus remaining after the full payment and
satisfaction of the Secured Obligations shall be returned to AGIX or to
whomsoever a court of competent jurisdiction shall determine to be entitled
thereto.
 
 
 5.5           If
AGIX shall fail to do any act which it has agreed to do hereunder, ISP may (but
shall not be obligated to) do the same or cause it to be done, either in its
name or in the name and on behalf of AGIX, and AGIX hereby irrevocably
authorizes ISP so to act.
 
 
 SECTION
6                                MISCELLANEOUS
 
 6.1           Continuing
Agreement.  This Security Agreement shall remain in full force
and effect until such time as the Secured Obligations have been indefeasibly
paid in full in cash and terminated, at which time this Security Agreement shall
be automatically terminated and ISP shall, upon the request and at the expense
of AGIX, promptly release all of its liens and security interests hereunder and
shall execute and deliver all UCC termination statements and/or authorizations
with respect thereto and/or other documents reasonably requested by AGIX
evidencing such termination.
 
 6.2           Miscellaneous.This
Security Agreement and the provisions hereof may not be amended, waived,
modified, changed, discharged or terminated except as set forth in the
Manufacturing and Supply Agreement.  All notices required or permitted
to be given under this Security Agreement shall be in conformance with the
Manufacturing and Supply Agreement.  This Security Agreement may be
executed in any number of counterparts, each of which where so executed and
delivered shall be an original, but all of which shall constitute one and the
same instrument.  The headings of the sections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Security Agreement.
 
 6.3           Governing Law; Venue; Submission to
Jurisdiction; Waiver of Jury Trial.The terms of the
Manufacturing and Supply Agreement with respect to governing law, submission to
jurisdiction, venue and waiver of jury trial are incorporated herein by
reference, mutatis
mutandis, and the parties hereto agree to such terms.
 
 6.4           Severability.If
any provision of this Security Agreement is determined to be illegal, invalid or
unenforceable, such provision shall be fully severable and the remaining
provisions shall remain in full force and effect and shall be construed without
giving effect to the illegal, invalid or unenforceable provisions.
 
 6.5           Successors in
Interest.  This SecurityAgreement shall create a
continuing security interest in the Collateral and shall be binding upon AGIX,
its successors and assigns, and shall inure to the benefit of ISP and its
successors and assigns; provided, however, AGIX may not assign its rights or
delegate its duties hereunder without the prior written consent of
ISP.
 
 
 {remainder
of page intentionally left blank}
  
  Each
of the parties hereto has caused a counterpart of this Security Agreement to be
duly executed and delivered as of the date first above written.
 
 ATHEROGENICS,
      INC.,a Georgia
corporation
 
 
 By 
      /s/MARK P. COLONNESE
 Name: 
      Mark P. Colonnese
 Title:   
      Executive Vice President
 
 
 
 
 Accepted
and agreed to as of the date first above written.
 
 
 ISP PHARMA SYSTEMS LLC, a
Delaware limited liability company
 
 
 By   /s/STEPHEN
OLSEN
 Name: 
Stephen Olsen
 Title:   
Senior Vice President
 
  
  Appendix
1
 
 
 List of
Equipment
 
 
 [XXXXXXXX]
 
  
  
 Appendix
2
 
 
 
 Exact
corporate
name:                         AtheroGenics,
Inc.
 
 State of
incorporation:                        Georgia
 
 Address:                                               8995
Westside Parkway
 Alpharetta,
Georgia   30004