**EXECUTION COPY**“Effective Date” means the date of this Agreement.“Facility” means Avecia’s cGMP facility located in Milford, MA, which currently consists of thefacilities designated as M1 and M2.“cGMP” means current good manufacturing practice and standards as provided for (and as amended fromtime to time) in the European Community Directive 91/356/EEC (Principles and guidelines of goodmanufacturing practice for medicinal products) and the Current Good Manufacturing PracticeRegulations to the US Code of Federal Regulations, Title 21 (21 CFR 210 and 211) in relation to theproduction of pharmaceutical intermediates and active pharmaceutical ingredients, as interpreted byICH Harmonized Tripartite Guideline, Good Manufacturing Practice Guide for Active PharmaceuticalIngredients, Q7, and subject to any arrangement, additions or clarifications agreed from time totime between the Parties in the Quality Agreement.“FDA” means the U.S. Food and Drug Administration, or any successor entity thereto or foreigncounterpart thereof.“Governmental Authority” means any (1) nation, state, county, city, town, village, district orother jurisdiction of any nature, (2) federal, state, local, municipal, foreign or othergovernment, (3) governmental or quasi-governmental authority of any nature (including anygovernmental agency, branch, department, official or entity and any court or other tribunal,including an arbitral tribunal), (4) multi-national organization or body, or (5) body exercising,or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatoryor taxing power of any nature.“Independent Intellectual Property” shall have the meaning set forth in Section 13.“Intellectual Property” means patents, patent applications, all provisional, divisional,continuations, renewals, continuations in part, reexaminations, patents of addition, supplementaryprotection certificates, extensions, letters of patent, registration or confirmation patents andreissues with respect to any patents described in the foregoing clauses, any know how, tradesecrets, data, technology and technical information.“Latent Defect” means an impurity in API caused by Avecia, other than an impurity which is anintrinsic feature of API as produced by Avecia and present in numerous historic batches, whichwould not be expected by Customer to be in such API, either by type or degree of impurity, andwhich is not known to Customer or not readily discoverable by Customer at the time of delivery ofsuch API, using commercially reasonable inspection procedures.“New Process” means process changes to the Current Process as contemplated in Section 3 andAppendix 3.“New Process Strategy” is the strategy for implementing a New Process as set forth in Appendix 3.“New Process Validation” is the * by * of * of API produced in accordance with the New Process,with the * being *.
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**EXECUTION COPY**“PAI” means “Pre Approval Inspection” which is the formal inspection of the Facility by aRegulatory Authority for the purpose of approving the Facility for manufacture of commercialquantities of API.“API” means * that certain * oligonucleotide consisting of * with the sequence and chemicalstructure set forth in Appendix 1, and currently referred to under the trademark“Genasense.”“API Requirements” means conformance with (a) cGMP, (b) API Specifications, (c) the currentvalidated process and (d) the Quality Agreement.“API Release Date” means, with respect to any API sold by Avecia to Customer hereunder, (i) theAvecia QA release date, if Avecia is responsible for all API release testing; or otherwise (ii) thedate of the completion of manufacturing and sign off by Avecia QA on the executed batch records andthe analytical report for all API release testing under Avecia control.“API Specifications” means the specifications for the API as agreed and attached hereto as Appendix4, as may be modified from time to time by the Parties.“Quality Agreement” means the document agreed to by the Parties in the form attached hereto asAppendix 5, as amended, supplemented or restated from time to time.“Recall” shall have the meaning set forth in Section 18.6.“Regulatory Authority” means the FDA or any court, tribunal, arbitrator, agency, commission,official or other instrumentality of any federal, state, county, city or other politicalsubdivision, domestic or foreign, that performs a function for such political subdivision similarto the function performed by the FDA for the United States with regard to the approval, licensing,registration or authorization to test, manufacture, promote, market, distribute, use, store,import, transport or sell a product in the defined territory or political subdivisions.“Regulatory Authority Approval” means the first marketing approval by any Regulatory Authority forthe drug product containing API.“Regulatory Requirements” means (i) any and all permits, licenses, filings and certificationsrequired by the US Food and Drug Administration (FDA), US Occupational Safety and HealthAdministration (OSHA), US Environmental Protection Agency (EPA), The International Conference ofHarmonization Q7 (ICH Q7), The United States Pharmacopeia, (USP), The European Pharmacopeia (EP),the European Medicines Agency (EMEA), and compliance with the cGMP of the FDA, ICH Q7, USP, EP andEMEA, applicable to any manufacturing or processing activities hereunder or facilities at which anyof the manufacturing or processing activities hereunder are performed, and (ii) any Laws, rules,guidelines, regulations, and standards of any governmental authority within the United States(including, without limitation, EPA, OSHA, the Drug Enforcement Administration (DEA) and state andlocal authorities), that apply to any manufacturing or processing activities hereunder or theFacility or other facilities at which any of the manufacturing or processing activities hereunderare performed.“Requalification Plan” means the plan * , which describes * API using the Current Process at theFacility.
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**EXECUTION COPY**“Rolling Forecast” shall have the meaning set forth in Section 6.2.“Seizure” shall have the meaning set forth in Section 18.6.“Shelf Life” means, with respect to particular quantities of API, the total time from date of suchAPI’s manufacture (such date of manufacture determined by reference to Avecia’s approved masterbatch records) until the latest point in time at which such API’s conformance with APISpecifications can, in consideration of the passage of time, continue to be assured.“Special Mechanism” shall have the meaning set forth in Section 4.2.“Waste” shall mean any “hazardous substance” and/or “hazardous material” as provided under theComprehensive Environmental Response, Compensation and Liability Act (CERCLA), any “hazardouswaste” as provided under the Resource Conservation and Recovery Act (RCRA), and/or any other wastematerial, pollutant and/or contaminant of any kind including, without limitation, any routineprocess waste or any by-product arising from any activities conducted pursuant to this Agreement.**2. Residual Commitments.**Within * of issuance of * will reimburse * for those materials * and * in accordance with the * inthe * of * that * has already * so the * has been * will continue to * where * and if the * thebenefit will be *. Other than a maximum liability of *owed by * as expressly set forth above,neither Party shall owe the other Party any consideration or compensation for anything arisingprior to the Effective Date.**3. Current Process; New Process Implementation; Other Process Improvements.**3.1 The initial pricing, campaign size and capacity availability for API formulated for thisAgreement are based upon the Current Process. In anticipation of the possibility forsignificant beneficial changes to the Current Process, the Parties have developed a strategyfor implementing a New Process, which strategy is attached hereto as Appendix 3 (the “NewProcess Strategy”). The New Process Strategy establishes *: (a) definition and demonstrationof the New Process (*); (b) investigation of the New Process * and * for the New Process * ;and (c) New Process Validation *. The Parties shall verify that the New Process Strategycomplies with all Regulatory Requirements prior to its implementation. 3.2 In the event that the Parties agree to implement the New Process Strategy, Customer shallmake the following payments to Avecia: * agree to * the * agreement to *; and * following *of*. 3.3 Other improvements to the Current Process not constituting a New Process and improvements tothe New Process after implementation of the New Process shall be implemented consistent withthe provisions of the Quality Agreement, with the
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**EXECUTION COPY**  assumption that the *. Prior to moving forward with any such proposed improvement, the * shallagree on the *to be so *, it being * that such * would *, * of * and *. * which would not *the * any * and * with necessary *. At Customer’s request, Avecia shall provide to Customerdetailed documentation sufficient * relating to any such improvement.3.4 The costs and benefits associated with any process improvements or changes which do notrequire the approval of Customer under the Quality Agreement *.**4. Capacity; Capital or Other Investment.**4.1 As of the Effective Date, Avecia has at the Facility installed equipment and assets with thetechnical capability to produce API at the rate of * using the Current Process, which could beincreased to * with the implementation of the New Process (the “Facility Capacity”). * forthe * is * by the * for the * for * (the “Available Capacity”. The Available Capacity as ofthe Effective Date is a maximum rate of *. If an increase in Available Capacity is required byCustomer forecasts, the Available Capacity shall be increased by Avecia to: the * of * duringthe * the * after the * and *; the * during the * the *; the * thereafter. In the event of theimplementation of the New Process, the applicable Available Capacity would be * under theCurrent Process. 4.2 In the event that Customer anticipates that its requirements for API will be in excess of theAvailable Capacity set forth in Section 4.1, Avecia and Customer will work together, in goodfaith, to agree on special mechanisms to accommodate such excess requirements. Such “SpecialMechanisms” might include, among other things, * in * and *. Special Mechanisms might *, amongother things*, and * to * and * to * and *. This Section 4.2 is intended, simply, to indicatethe good faith intention of the Parties to seek solutions to the possible changingcircumstances of Customer resulting in a need for API in excess of Avecia’s ability to supply.For the avoidance of doubt, if Customer’s requirements fall within the Available Capacitypursuant to Section 4.1, then no Special Mechanisms will apply * or * by *.**5. Term.**This Agreement shall take effect as of the Effective Date and shall remain in effect until the datewhich is the earlier of (i) December 31, 2017 and (ii) the seventh anniversary of the date ofRegulatory Authority Approval (the “Initial Term”). Either Party may terminate this Agreement as ofthe end of the Initial Term upon the giving of at least two (2) years prior written notice to thenon-terminating Party; provided that such notice must be given during the month of *; provided,further, that the first time either Party may give such two (2) year notice is the date which is *and *. In the absence of such notice, this Agreement shall continue in effect thereafter on a *basis, with either Party having the right thereafter to terminate this Agreement upon the giving ofat least two (2) years prior written notice to the non-terminating Party.
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**EXECUTION COPY****6. Sale and Purchase; Forecasts; Minimum Order Size.**6.1 During the term of this Agreement, Avecia shall sell and Customer shall purchase, andCustomer shall cause Customer’s Affiliates and Customer Partners to purchase, * of thecombined global requirements of Customer and such Affiliates and Customer Partners of APIduring the term of this Agreement; provided, however, that, during any single Agreement Year,Avecia shall sell and Customer shall purchase, and, if applicable, shall cause Customer’sAffiliates and Customer Partners to purchase, (i) when the Rolling Forecast for such AgreementYear is * of API, * of the global requirements of Customer and its Affiliates and CustomerPartners and (ii) when such Rolling Forecast is * a * of such requirements. 6.2 Within the first * of each * during the term of this Agreement, Customer shall provide toAvecia a written forecast of the requirement for API of Customer (and, if applicable, of itsAffiliates and Customer Partners) during such * and the next succeeding * (the “RollingForecast”). The forecasted quantity with respect to the * of each Rolling Forecast shallconstitute a firm commitment by Avecia to sell and Customer (and, if applicable, Customershall cause its Affiliates and Customer Partners) to purchase such forecasted quantity. Theforecasted quantity with respect to the * of such Rolling Forecast shall be a firm commitmentby Avecia to sell and Customer (and, if applicable, Customer shall cause its Affiliates andCustomer Partners) to purchase * up to * of such forecasted quantity. The forecasted quantitywith respect to the * of the Rolling Forecast shall be an indicative quantity with nocommitment on either Avecia or Customer. 6.3 Upon either Party’s request, the Parties will work together, in good faith, to permit Aveciato increase the Available Capacity and, if applicable, agree upon a Special Mechanism.Notwithstanding any provision of this Section 6, in no event shall Avecia be required tosupply API under this Agreement in an amount greater than the Available Capacity (unless theParties have agreed to increase the Available Capacity using a Special Mechanism pursuant toSection 4.2, in which case the Parties will work together, in good faith, to permit Avecia toincrease the Available Capacity). If Avecia has not increased the Available Capacity,Customer may purchase its API requirements in excess of the Available Capacity from a thirdparty until Avecia can meet such requirements and such purchases shall count towardsCustomer’s minimum purchase requirements referred to in this Section 6; provided, however,that, if Customer fails to negotiate in good faith, notwithstanding Avecia’s willingness to doso, a Special Mechanism to increase the Available Capacity, any such purchases by Customer ofAPI from a third party shall not count towards Customer’s minimum purchase requirementsreferred to in this Section 6. 6.4 Customer shall order API in quantities of at least *, provided that Customer may request *of less than * and the price of such * shall be determined through good faith negotiation ofthe Parties. 6.5 No Rolling Forecasts will be issued prior to Regulatory Authority Approval. The first RollingForecast following Regulatory Authority Approval will be * in *. Avecia is
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**EXECUTION COPY**  allowed complete discretion to bring forward the timing of the * forecast in the * period toany point within the *period of the first Rolling Forecast.6.6 If due to unusual or unanticipated circumstances, Customer has a requirement for API prior toRegulatory Authority Approval, the Parties shall work together, in good faith, to fulfill andotherwise accommodate such requirement.**7. Delivery; Title; Invoices; Payment Terms.**7.1 API will be Delivered ex-works, the Facility. Notwithstanding any actions taken by Avecia onbehalf of Customer as hereinafter set forth in this Section 7, title and risk of loss in theAPI shall pass to Customer on the earlier of (i) transfer at the Facility to Customer’sdesignated agent or carrier and (ii) Avecia’s placement of such API in its cGMP storage areaat the Facility at Customer’s request. 7.2 Avecia shall arrange, on behalf of Customer, for the shipment of API to the location asstated on the relevant purchase order. Avecia shall package API in a manner consistent withgood commercial practices, validated shipping procedures that comply with RegulatoryRequirements (including, without limitation, shipment in approved containers), and anyagreed-upon shipping specifications and the Quality Agreement. 7.3 Subject to the proviso to this Section 7.3, if Avecia Delivers any portion of API later thanthe date of Delivery set out in the relevant purchase order then:   7.3.1  * shall be made with respect to * that is * than *;   7.3.2  * shall be made with respect to * that is *than * ;   7.3.3  * shall be made with respect to * that is *; that * such * shall be applicable tothe extent that any such * or * is *. 7.4 Avecia shall seek, in good faith, to make Delivery of amounts ordered by Customer in eachpurchase order within * agreed to by the Parties in such purchase order. Avecia shall promptlynotify Customer of any occurrence expected to inhibit Avecia’s ability to provide on-timeDelivery of API meeting the terms and conditions of this Agreement. In addition, Avecia shallpromptly inform Customer of any notice, written or oral, received from any of itssubcontractors regarding a possible shortage or inability to obtain or supply API rawmaterials or any components or materials used in the manufacture of API. 7.5 To the extent that Customer obtains quantities of API from an alternative source as a resultof a delay of *, then Customer shall be * identified in* to the extent that and for so long as* as a result of the delay, * in such * herein. 7.6 Until Customer, its Affiliates and Customer Partners shall have purchased an aggregate of *of API pursuant to this Agreement, Avecia shall issue invoices for API *of the API ReleaseDate for such API, as estimated by Avecia, and Customer shall pay, or arrange to have paid, toAvecia: (i) * of the amount due under each such invoice by no later than * after Customer’sreceipt of such invoice and (ii) the remaining * of such amount by * after such API ReleaseDate. After Customer, its Affiliates and Customer Partners shall have purchased an *of APIpursuant to this Agreement, Avecia shall issue invoices for API on the API Release Date forsuch API and Customer shall pay, or arrange to have paid, to Avecia *of the amount due undereach such invoice by no later than * after such API Release Date. If Avecia is not
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**EXECUTION COPY**  responsible for all API release testing, then the invoicing point will be the completion ofmanufacturing and sign off by Avecia QA on the executed batch records and the analytical reportfor all API release testing under Avecia’s control.7.7 In addition to the supply of API as contemplated hereunder, the Parties may develop and agreeto documents, each entitled a scope of work, setting forth the terms and conditions pursuantto which Avecia would undertake for Customer development work or other service projects comingwithin the terms of this Agreement (such as, for example, service projects related to thematters set forth in Sections 17.7 and 17.8). Changes to any such scope of work shall beagreed to in writing between the Parties. Invoices for services under any such scope of workwill be issued as follows: * in the *for such * on agreement to the scope of work; * for the*. Customer on completion of the services under such scope of work. Unless otherwise statedin the scope of work, “completion” will be defined as delivery of the draft report. Customershall pay such invoices within * of Customer’s receipt of any such invoice.**8. Exclusivity.**During * of this *, neither Avecia nor its Affiliates shall * or *or *of *. In the event that *for * than the *of this * or *or * of *, for a * the * of the * of this *or the *. In the eventthat * for * other than * of this * shall not be subject to the * of this * the * of *, but *ofthis * shall continue in effect for a *the *of the * or the *. For clarity, the foregoing *.**9. Price.**9.1 The price for API shall be determined in accordance with Appendix 2. 9.2 The price for API hereunder excludes any applicable sales, use, consumption, value added orexcise taxes, duties, tariffs and other similar assessments which may be imposed by anyGovernmental Authority as a result of the sale of API hereunder. The Parties shall cooperateand take any reasonable steps to reduce or eliminate such charges.
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**EXECUTION COPY****10. Acceptance of API.**10.1 Within * of Delivery of API to Customer and except in the case of a Latent Defect, Customershall notify Avecia of any claim for shortage of API or that all or some of such API does notmeet API Requirements. In the absence of such notification, such API shall be deemed acceptedby Customer as complete and in accordance with API Requirements. In the event of a LatentDefect, Customer shall have * from the earlier of (i) the date that Customer becomes aware ofsuch Latent Defect, (ii) the date that the applicable API is used by Customer (or itsAffiliate or Customer Partner, if applicable) in the manufacture of its drug product and (iii)* after the API Release Date of the applicable API to notify Avecia of any claim with respectthereto. In the absence of such notification, such API shall be deemed accepted by Customer asin accordance with API Requirements even as to Latent Defects. 10.2 If Customer notifies Avecia in accordance with the provisions of Section 10.1 that API doesnot conform to API Requirements or that the amount of API is less than the amount set forth inthe applicable invoice, Customer shall advise Avecia of the manner in which API does notconform to API Requirements or shall document the shortage. In the event that Avecia acceptssuch determination, Avecia shall, at Customer’s option, process free of charge sufficient APIor reimburse the price to Customer, to make up such shortage or replace defective API andshall dispose of the defective API at Avecia’s cost. 10.3 If a dispute arises between the Parties as to any failure of API to meet API Requirementswhich dispute is not resolved by the Parties within * of notice to Avecia as set forth inSection 10.1, either Party shall be entitled to require that the matter in dispute be referredto an independent laboratory or other appropriate expert nominated by agreement of theParties. Such referral shall be solely for the purpose of establishing whether or not there isany failure of the relevant API to meet API Requirements. The decision of such independentlaboratory or expert shall be binding upon the Parties, and the Party against which thedecision is made shall be responsible for the costs of such independent laboratory or expert.If the decision shows that Avecia failed to supply API in accordance with API Requirements,then Avecia shall process free of charge sufficient API to replace the defective API and shalldispose of the defective API at its own cost. 10.4 All API supplied to Customer shall at the time of Delivery have the longest remaining ShelfLife reasonably practicable, but in any event a minimum of (i)* if the total Shelf Life fromthe date of manufacture is equal to or greater than * and (ii) * if the total Shelf Life fromthe date of manufacture is equal to or greater than* ; provided, however, that Avecia shall bepermitted to supply API with shorter Shelf Life on a case-by-case basis where Customer soagrees in writing in advance of the shipment of such API.
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**EXECUTION COPY****11. Representations and Warranties.**11.1 Avecia represents and warrants to Customer as follows: 11.1.1 Avecia is a corporation validly existing and in good standing under the laws of theState of Delaware, with the power to own all of its properties and assets and to carry onits business as it is currently being conducted.  11.1.2 Avecia has the power to execute and deliver this Agreement and to perform itsobligations under this Agreement.  11.1.3 Avecia has obtained all necessary consents and authorizations to execute and deliverthis Agreement and to perform its obligations under this Agreement, and no other corporateproceedings of Avecia or third party consents are necessary with respect thereto.  11.1.4 Avecia shall handle, accumulate, label, package, store, transport and dispose of allWastes generated through performance of the manufacturing and processing activitieshereunder in accordance with all Regulatory Requirements.  11.1.5 All API conforms to and is produced in accordance with API Requirements.  11.1.6 Avecia has, and will remain in material compliance with, all Applicable Laws, includingpermits, licenses and other authorizations (the “Permits”) which are required under USAfederal, state and local laws, rules and regulations applicable to the manufacture of API.  11.1.7 No person performing services on behalf of Avecia under this Agreement has been debarredunder Section 306 of the United States Federal Food, Drug and Cosmetic Act nor otherwise(i) disqualified or debarred by the FDA or any other Regulatory Authority for any purposepursuant to 21 U.S.C. § 355a or any foreign counterparts thereof; or (ii) charged with orconvicted under United States federal law, or foreign counterparts thereof, for conductrelating to the development or approval of, or otherwise relating to the regulation of,any drug product under the Generic Drug Enforcement Act of 1992 or any other relevantstatute, law or regulation.  11.1.8 Manufacture of API will be performed consistent with standards then customary in theoligonucleotide and API industry, and, in any event, with at least the degree of care andquality that Avecia uses to perform similar activities for other parties.  11.1.9 To the best of Avecia’s knowledge, Avecia’s manufacture of API in the performance ofthis Agreement will not infringe the Intellectual Property or other rights of thirdparties.  11.1.10 API manufactured using the New Process (i) will be of a quality equal to or better thanthat of API manufactured using the Current Process, (ii) will have no new impurities, asdetermined using the same analytical methods and (iii) will * than * the *.11.2 Customer represents and warrants to Avecia that (i) Customer is a corporation validlyexisting and in good standing under the laws of the State of Delaware, with the power to ownall of its properties and assets and to carry on its business as currently being conducted,(ii) Customer has the power to execute and deliver this Agreement and to perform itsobligations under this Agreement, (iii) Customer has
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**EXECUTION COPY**  obtained all necessary consents and authorizations to execute and deliver this Agreement and toperform its obligations under this Agreement, and no other corporate proceedings of Customer orthird party consents are necessary with respect thereto, (iv) Customer has all rights necessaryto permit Avecia to manufacture API as contemplated in this Agreement and (v), to the best ofCustomer’s knowledge, Avecia’s use of Customer’s Intellectual Property in the performance ofthis Agreement will not infringe the Intellectual Property or other rights of third parties.11.3 EXCEPT AS EXPRESSLY PROVIDED HEREIN, NEITHER PARTY MAKES ANY WARRANTY OF ANY KIND, EXPRESS,IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT. AVECIAEXPRESSLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS OF API FOR ANY PARTICULARPURPOSE.**12. Indemnification; Remedies; Limitation of Liability.**12.1 Avecia shall indemnify and hold Customer harmless from all losses, liabilities, damages andexpense (including reasonable attorneys’ fees and costs) incurred as a result of any claim,demand, action or other proceeding by a third party to the extent caused by (i) any breach byAvecia of the covenants, representations or warranties hereunder, (ii) the infringement of theIntellectual Property rights of a third party arising from Avecia’s manufacture of APIhereunder other than to the extent arising out of Avecia’s use of Customer’s IntellectualProperty in its manufacture of API hereunder, (iii) claims for personal injury or death,damage to property, for failure to comply with operating permits or Regulatory Requirementsrelating to the operation of the Facility during the course of Avecia’s manufacturing andprocessing activities or (iv) arising out of gross negligence or willful misconduct on thepart of Avecia or any of its agents or employees; in each case (i) through (iv) above, otherthan to the extent caused by (a) any breach of the covenants, representations or warranties ofCustomer hereunder or (b) the gross negligence or willful misconduct of Customer hereunder. 12.2 Customer shall indemnify and hold Avecia harmless from all losses, liabilities, damages andexpense (including reasonable attorneys’ fees and costs) incurred as a result of any claim,demand, action or other proceeding by a third party to the extent caused by (i) any breach byCustomer of the covenants, representations or warranties of Customer hereunder, (ii) theinfringement of the Intellectual Property rights of a third party arising out of Avecia’s useof Customer’s Intellectual Property in Avecia’s manufacture of API or the provision of otherservices for Customer hereunder, (iii) the use or sale of API by Customer, Customer’sAffiliates and Customer Partners, or by any other third party or (iv) any use of Avecia’sIntellectual Property in the manufacture of API by Customer, a Customer Partner or any otherthird party appointed a sub-licensee of Customer pursuant to rights granted to Customerpursuant to Section 13; in each case (i) and (ii) other than to the extent caused by (a) abreach of the covenants, representations or warranties of Avecia hereunder, (b) the grossnegligence or willful misconduct of Avecia hereunder or (c) any API supplied hereunder thatdoes not conform to API Requirements, provided, however, that, in
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**EXECUTION COPY**  such case, Customer shall have notified Avecia of such non-conformance within the applicabletime period prescribed in Section 10.1.12.3 NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, EXCEPT FOR WILLFUL MISCONDUCT ANDRECKLESS DISREGARD, (A) * FOR ANY AND ALL LOSSES OR DAMAGES RESULTING FROM ANY CAUSEWHATSOEVER OR WITH RESPECT TO ANY * HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY LIABILITYRELATING TO *, * OR* AS SET FORTH IN SECTION 18, SHALL IN NO EVENT EXCEED *, AND (B) IN NOEVENT SHALL EITHER PARTY BE LIABLE FOR SPECIAL, INCIDENTAL PUNITIVE OR CONSEQUENTIAL DAMAGES,WHETHER THE CLAIM IS IN CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE.**13. Intellectual Property.**13.1 Nothing in this Agreement shall affect the ownership by either Party of any IntellectualProperty or process owned by or in the possession of that Party as of the Effective Date orIntellectual Property developed independently of the work undertaken pursuant to thisAgreement by any employee of that Party without reference to any of the ConfidentialInformation disclosed by the other Party (“Independent Intellectual Property”). Other thangiving Avecia the right to manufacture API for Customer, nothing in this Agreement shall giveeither Party the right to use the other Party’s Independent Intellectual Property. 13.2 Intellectual Property generated, developed, discovered or invented in connection with workconducted pursuant to this Agreement by the Parties relating to the composition of API orother product-specific invention shall *. Intellectual Property generated, developed,discovered or invented in connection with work conducted pursuant to this Agreement relatingto Avecia’s process to manufacture API or other process-related invention shall *. 13.3 Avecia hereby grants to Customer a * , * license, with the right to grant sublicenses, toAvecia’s interest in any Intellectual Property generated, developed, discovered or inventedduring work conducted pursuant to this Agreement with general application to manufacturingprocesses (including as specifically applicable to the manufacture of API) to the extent thatsuch Intellectual Property can be used to enhance the manufacture of API. 13.4 During the term of this Agreement, Avecia hereby grants to Customer a *license, with theright to grant sublicenses, to Avecia’s process to manufacture API with respect to themanufacture of API (i) in an amount up to * of Customer’s requirements for API during anyAgreement Year commensurate with the minimum volume requirements of Section 6.1 or (ii) forsuch greater amount to the extent that Avecia does not supply Customer its requirements forAPI in excess of such *during any such Agreement Year for any reason other than a breach ofthis Agreement by Customer. 13.5 Avecia hereby grants to Customer a * license, with the right to grant sublicenses, toAvecia’s process to manufacture API (the “Licensed Process”), such license to take effect *,subject to payment to Avecia of the following royalties:* for each of the *of
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**EXECUTION COPY**  API or portion thereof manufactured during any license year using the Licensed Process; * foreach * of API or portion thereof so manufactured during such license year in excess of *; withsuch royalty being prorated linearly for such * of API or portion thereof so manufacturedduring such license year between * and *.13.6 Each Party shall be the sole owner of all regulatory filings and all governmental approvalsobtained by such Party from any Regulatory Authority with respect to the API.**14. Confidentiality.**14.1 In consideration of the Disclosing Party (Avecia or Customer, as the case may be) disclosingConfidential Information to the Receiving Party (Avecia or Customer, as the case may be), theReceiving Party hereby undertakes to maintain as confidential all such ConfidentialInformation, and it will not use or disclose any of such Confidential Information in whole orin part save for purposes envisaged in this Agreement. 14.2 The foregoing restrictions on the Receiving Party shall not apply to any ConfidentialInformation which: (a) was already in the Receiving Party’s possession and at its free disposal before thedisclosure hereunder to it;  (b) is hereafter disclosed to, purchased or otherwise legally acquired by the ReceivingParty by or from a third party who has not derived it, directly or indirectly, from theDisclosing Party;  (c) is or becomes available to the public or otherwise in the public domain through noact or default on the part of the Receiving Party, its agents or employees; or  (d) has been developed by the Receiving Party independently of the Disclosing Partywithout reference to any of the Confidential Information disclosed by the DisclosingParty.14.3 In order to secure the obligations under this Section 14, the Receiving Party agrees toexercise reasonable precautions to prevent and restrain the unauthorized disclosure and use ofinformation subject to confidentiality, including restricting access to such information tosuch of its employees and representatives (i) as are bound to keep such informationconfidential and (ii) who need to have such access for the purposes of this Agreement. 14.4 The confidentiality obligations under this Section 14 shall not apply to the extent that aParty is required to disclose information by Applicable Law, regulation or order of agovernmental agency or a court of competent jurisdiction or otherwise required by aGovernmental Authority (including, without limitation, the requirement to announce and file acopy of this Agreement with the U.S. Securities and Exchange Commission). In connection withsuch disclosure, such Party shall provide written notice thereof to the other Party, usereasonable efforts to consult with the other Party with respect to such disclosure and usereasonable efforts to provide the other Party sufficient opportunity to object to any suchdisclosure, to request confidential
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**EXECUTION COPY**  treatment thereof or to redact any of such information not required to be so disclosed,provided that each of the foregoing are subject to such Party’s legal obligations and to theextent practical under the circumstances.14.5 Any of Customer’s Affiliates and any Customer Partner shall have access to ConfidentialInformation of Avecia as reasonably necessary in connection with its agreement with Customerprovided that it is bound by confidentiality terms in connection therewith which are no lessonerous than those set forth herein. 14.6 The terms of this Section 14 shall not be construed to limit either Party’s right toindependently make, develop or acquire products, processes or concepts without use of theother Party’s Confidential Information, even if similar. Neither Party shall have anyobligation to limit or restrict the assignment of its employees or consultants as a result oftheir having had access to Confidential Information of the other Party. 14.7 The provisions of this Section 14 shall survive termination or expiry of this Agreement andshall continue for a period of * from the date of such termination or expiry. 14.8 From time to time during the term of this Agreement, Customer may have employees assigned towork full-time at the Facility. For clarification purposes, Customer shall treat allConfidential Information disclosed to or learned by such employees at the Facility asConfidential Information of Avecia for purposes of this Section 14. Furthermore, Customershall require that such Customer employees review and sign an employee acknowledgement ofconfidentiality agreement in form and substance reasonably satisfactory to Avecia.**15. Force Majeure.**Neither Party is liable for any failure to perform or delay in performing any obligation under thisAgreement, if such failure or delay is due to fire, flood, strike or any other industrialdisturbance, war, embargo, legal prohibition, terrorism, insurrection, regulatory delay or anyother cause beyond the reasonable control of such defaulting Party preventing or delaying theperformance of such obligations. The Party so affected will, upon giving notice thereof to theother Party, be excused from such performance to the extent of such prevention, restriction ordelay. Except in the case of strike or similar work stoppage, the affected Party is obligated touse its commercially reasonable efforts to avoid or remove such causes of non-performance and tocontinue performance with the utmost dispatch whenever such causes are removed.Neither Party shall be entitled to relief under this Section 15 for any delay or failure inperforming any of its payment obligations under this Agreement.**16. Termination; Consequences of Termination.**
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**EXECUTION COPY**16.1 Without prejudice to any other rights or remedies which may be available to them, the Partiesmay terminate this Agreement at any time by mutual agreement of both Parties in writing. 16.2 Without prejudice to any other rights or remedies which may be available to them, eitherParty may terminate this Agreement with immediate effect by giving written notice oftermination to the other Party if the other commits a material breach of any of the provisionsof this Agreement and, in the case of a breach capable of being remedied, fails to remedy suchbreach within * of receiving notice from the non-breaching Party specifying such and requiringthe same to be remedied, provided, however, if, for any reason other than an event of forcemajeure referred to in Section 15 or a failure of Customer to meet its obligations under thisAgreement, Avecia fails to Deliver the API set out in the applicable purchase order within *following the date of Delivery set out in such purchase order, * may terminate this agreementfor material breach effective upon written notice if * fails to cure such breach *of receivingnotice of such breach *. 16.3 Without prejudice to any other rights or remedies which may be available to Customer,Customer may terminate this Agreement by giving written notice of termination to Avecia ifCustomer, in its sole discretion, determines that the drug product containing API shall not befurther developed or marketed by Customer, Customer’s Affiliates and Customer Partners. 16.4 Subject to Section 16.5 and without prejudice to any other rights or remedies which a Partymay have, upon termination of this Agreement, howsoever the same occurs, each Party shall: (a) immediately pay to the other all sums which at the date of termination are due andpayable to the other hereunder;  (b) immediately cease all use of any property of the other, including, withoutlimitation, any Intellectual Property of the other Party, except as permitted underSection 13; and  (c) at the expense of the requesting Party, promptly return to the other Party anyproperty of the other in its possession, custody or control.16.5 If (i) the Parties terminate this Agreement pursuant to Section 16.1, (ii) Avecia terminatesthis Agreement in accordance with Section 16.2 or (iii) Customer terminates this Agreement inaccordance with Section 16.3, Customer shall purchase all amounts of API which have beenmanufactured but not yet delivered and pay to Avecia Avecia’s costs related to any API whichis in the process of being manufactured or is in the Avecia manufacturing schedule as of thedate of such termination to fulfill Customer’s firm commitment portion of the effectiveRolling Forecast, including, without limitation, Avecia’s cost for any raw materials purchasedin anticipation of meeting the firm commitment portion of the effective Rolling Forecast,subject to Section 25. Customer shall have the right to take possession of any such rawmaterials or unfinished API at it expense.
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**EXECUTION COPY**16.6 If it is determined by the final decision of an arbitrator pursuant to Section 26.3 thatCustomer has committed a material breach of this Agreement and has not cured such breachwithin * after notice thereof, Avecia shall thereafter have the right to * pursuant to *written notice* (except with respect to the * pursuant to *), it being understood, however,that, in the event that this Agreement is terminated for any other reason, Avecia shall nothave the right thereafter * pursuant to *. 16.7 Sections 12, 13, 14, 17 to 19, and 21 to 26 shall survive the termination of this Agreementhowsoever the same occurs.**17. Regulatory; Facility Access; Audits.**17.1 Except as otherwise set forth in the proviso to this sentence, Avecia shall be responsiblefor obtaining at its own expense all permissions, licenses and approvals necessary todischarge its obligations under this Agreement; provided, however, that Customer shall payfor, or reimburse Avecia for, all reasonable work carried out by Avecia in support ofregulatory filings and preparation for any PAI, including, without limitation, Avecia staffparticipation in the PAI or practice PAIs. If, however, Avecia fails a PAI due to its grossnegligence or willful misconduct, or a failure in the Avecia general Quality systems notrelated specifically to API, then Customer will not be required to pay for the PAI orreimburse Avecia. Once the cumulative total of API produced under this Agreement reaches *,Customer will no longer be charged for additional PAIs. 17.2 If Customer requests that Avecia adopt any approach to cGMP or Avecia operating standardswhich is different from Avecia’s operating norms, the change will only be implemented ifAvecia agrees to the change, and Avecia will charge Customer for Avecia’s cost to deliver therequest, except when Customer makes such a request because Avecia is operating outsideindustry norms (as reasonably demonstrated by Customer), Regulatory Requirements, cGMPrequirements or contractual commitments. 17.3 Avecia shall promptly furnish Customer with such information and documentation as Customermay request relating to any regulatory filings or submissions for API. Avecia shall provideCustomer with a copy of all proposed submissions to any regulatory agency associated with themanufacture of API hereunder for Customer’s review and approval. 17.4 Avecia shall permit Customer’s employees, consultants and/or representatives to havereasonable access to the Facility for the purpose of verifying quantities of Customersupplied materials and API and observing manufacturing and related activities, includingaccess to certain agreed documents (“Reasonable Access”); provided that such persons agree tobe bound by a mutually acceptable confidentiality agreement.
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**EXECUTION COPY**17.5 Customer shall have the right to conduct, upon reasonable notice and at its own expense,periodic technical, quality, and environmental health and safety audits. Avecia shall giveReasonable Access to Customer for purposes of auditing the Facility. Preferably * noticeshould be reasonable, but Avecia will provide Customer immediate access in case of rejectionsor emergency conditions. 17.6 Avecia, if it is so aware (or as soon as it becomes aware) will promptly advise Customer ifany regulatory agency intends to inspect the Facility and the nature of the inspection.Customer shall have the right to observe such inspection relating to the manufacture of API.Avecia shall promptly provide a report of the results of such inspection to Customer. Inaddition, Avecia shall promptly notify Customer of any notice of deficiencies by anyregulatory agency, and provide Customer with a copy of the unredacted copies of any FDA 483(s)and Establishment Inspection Reports or their equivalents issued as a result of saidinspection and any follow-up written communications between Avecia and the relevant GovernmentAuthority if, and only if, such reports or FDA 483(s) do not contain third party confidentialinformation. Avecia will use best efforts to correct all identified deficiencies in a timelymanner and advise Customer periodically of progress being made, as well as when alldeficiencies are corrected. 17.7 Avecia will complete the Requalification Plan* within *of receipt of a purchase order if thescope of the Requalification Plan remains unaltered from the current scope (i.e. as*). 17.8 The Parties shall cooperate to obtain approval for Avecia to become responsible for all APIrelease testing. As part of such cooperation, it is intended that quality control methodswill be validated at the Facility and Avecia’s quality control laboratory will be included inthe next Regulatory Authority Approval. 17.9 Customer Partners shall have the same rights as Customer under this Section 17, subject toreasonable confidential obligations. 17.10 Avecia shall not have the right to subcontract, sublicense or otherwise delegate allor any portion of its obligations under this Agreement without Customer’s prior writtenapproval. For the avoidance of doubt, Customer has already granted such approval for thesubcontractors approved as part of the process validation and subsequent production conductedin 2004.**18. Recalls.**18.1 Each Party shall keep the other Party fully informed of any notification, or otherinformation of which it has actual knowledge, which might result in the Recall, Seizure orother enforcement action relating to the API. 18.2 If Avecia independently believes that a withdrawal of API or Recall of drug productcontaining API or field corrective action may be necessary or appropriate, Avecia
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**EXECUTION COPY**  shall so notify Customer of Avecia’s conclusion within * and the Parties shall cooperate witheach other to ascertain the necessity and nature of such action.18.3 Promptly after Customer notifies a Regulatory Authority of a withdrawal of API or Recall ofdrug product containing API, Customer shall so notify Avecia as soon as possible and, to theextent related to Avecia’s supply of API pursuant to this Agreement, no later than withintwenty-four hours. If requested by Customer, Avecia shall reasonably assist Customer, and, ifapplicable the Customer Partner(s), in the investigation to determine the cause and extent ofthe problem. In such case, *shall * with respect thereto. 18.4 Notwithstanding anything to the contrary in the foregoing, Customer shall make the finaldecision as to whether API or drug product containing API is withdrawn or Recalled. 18.5 If any Governmental Authority withdraws its approval to sell the API or drug productcontaining API or issues a directive or request that all or specified quantities of the API ordrug product containing API be Recalled for product safety reasons or Customer reasonablydetermines that all or specified quantities of the API or drug product containing API shouldbe withdrawn or Recalled, * shall * with the *to the extent *. 18.6 For purposes of this Section 18, “Recall” shall mean any action by Customer or CustomerPartner to recover title to or possession of drug products containing API sold or shipped tothird parties. For purposes of this Section 18, “Seizure” shall mean any action by anyGovernmental Authority to detain or destroy API. For the purposes of this Section 18,(a) neither “Recall” nor “Seizure” shall mean any actions taken by Customer or CustomerPartner that are solely related to nonpayment or contract issues and are not related to anytoxicity, safety, efficacy or Regulatory Requirements-related issues; and (b) references to“API” include drug product containing API.**19. Announcements and Publicity.**Except in connection with disclosures under Section 14.4, the Parties agree that they shall notmake any official press release, announcement or other formal publicity relating to thetransactions which are the subject of this Agreement, or any ancillary matter, without firstobtaining in each case the prior written consent of the other Party, which consent shall not beunreasonably withheld.**20. Assignment and Change of Control.**This Agreement shall be binding upon and inure to the benefit of the Parties hereto and theirrespective legal successors but shall not otherwise be assignable by either Party without the priorwritten consent of the other Party; provided, however, that (i) either
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**EXECUTION COPY**Party, without the need for consent, shall assign this Agreement and its rights and delegate itsobligations hereunder in connection with the transfer or sale of all or substantially all of itsbusiness and assets to which this Agreement relates, or in the event of its merger, consolidation,change in control or similar transaction; and (ii) Customer, without the consent of Avecia, mayassign this Agreement, in whole or in part, to a Customer Partner or Customer Affiliate; *, in theevent of * to this *, unless * has a * at the time of *, subject to all of * and * . Any permittedassignee shall assume all obligations of its assignor (and in the case of assignment by Genta, bedeemed a “Customer” hereunder) and otherwise be subject to all of the terms and conditions underthis Agreement (and, to the extent applicable due to their ongoing activities, Genta and itsAffiliates would each be deemed a “Customer Partner” of Genta’s assignee). Any purportedassignment in violation of this Section 20 shall be void. All Customer Partners or Customer’sAffiliates purchasing API as provided herein shall be subject to all obligations, terms andconditions under this Agreement to the same extent as Customer.**21. Integration and Variation.**This Agreement shall constitute the sole and exclusive agreement between the parties regarding thesubject matter hereof. Any other agreement or arrangement between the Parties relating to the saleof API by Avecia to Customer, including the Manufacturing and Supply Agreement dated December 20,2002, as subsequently amended by the Parties, and any letter or side agreements relating thereto(the “December 20, 2002 Agreement”), is hereby superceded and terminated as of the Effective Date,and the provisions of this Agreement shall govern the rights, remedies and obligations of theParties with respect to any sale of API by Avecia to Customer, provided that the terms of theletter agreements attached as Appendix 6 shall remain in full force and effect and are incorporatedherein as part of this Agreement. No variation or amendment of this Agreement shall bind a Partyunless made in writing in the English language and agreed to in writing by duly authorized officersof both Parties.**22. Illegality.**If any provision of this Agreement is agreed by the Parties to be illegal, void or unenforceableunder any Applicable Law or if any court of competent jurisdiction in a final decision sodetermines, this Agreement shall continue in full force save that such provision shall be deemed tobe excised herefrom with effect from the date of such agreement or decision or such earlier date asthe Parties may agree.**23. Waiver.**A failure by either Party to exercise or enforce any rights conferred upon it by this Agreementshall not be deemed to be a waiver of any such rights or operate so as to bar the exercise orenforcement thereof at any subsequent time or times.
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**EXECUTION COPY****24. Notices.**All notices and any other communications given or made in relation to this Agreement shall be inwriting and delivered by hand, registered mail or recognized overnight mail service to the addressof the Party set forth below:If to Avecia:Avecia Biotechnology Inc.