<PAGE>   1

DIACRIN, INC., HAS REQUESTED THAT THE MARKED PORTIONS OF THIS DOCUMENT BE
ACCORDED CONFIDENTIAL TREATMENT PURSUANT TO RULE 24b-2 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.


                                                                   EXHIBIT 10.18

                            COLLABORATION AGREEMENT

                                     among

                                 DIACRIN, INC.,

                              GENZYME CORPORATION

                                      and

                              DIACRIN/GENZYME LLC

                          dated as of October 1, 1996
<PAGE>   2
                               TABLE OF CONTENTS

ARTICLE 1.  DEFINITIONS ..................................................  1
        1.1.    "Affiliate" ..............................................  1
        1.2.    "Biologics Regulatory Scheme" ............................  2
        1.3.    "Collaboration Product" ..................................  2
        1.4.    "Commercialization Costs" ................................  2
        1.5.    "Commercialization Plan" .................................  2
        1.6.    "Dedicated Facility" .....................................  3
        1.7.    "Dedicated Facility Costs" ...............................  3
        1.8.    "Development Costs" ......................................  3
        1.9.    "Development Plan" .......................................  4
        1.10.   "Development Program" ....................................  4
        1.11.   "Diacrin Patent Rights" ..................................  4
        1.12.   "Diacrin Technology" .....................................  4
        1.13.   "Effective Date" .........................................  4
        1.14.   "Field" ..................................................  4
        1.15.   "FDA" ....................................................  5
        1.16.   "Fully Absorbed Cost of Goods" ...........................  5
        1.17.   "Genzyme Patent Rights" ..................................  5
        1.18.   "Genzyme Technology" .....................................  5
        1.19.   "Manufacturing Know-how" .................................  5
        1.20.   "Net Pretax Profit" ......................................  6
        1.21.   "Net Sales" ..............................................  6
        1.22.   "Patent Rights" ..........................................  7
        1.23.   "Program" ................................................  7
        1.24.   "Program Costs" ..........................................  7
        1.25.   "Program Management Team" ................................  7
        1.26.   "Regulatory Approvals" ...................................  7
        1.27.   "Specifications" .........................................  7
        1.28.   "Steering Committee" .....................................  7
        1.29.   "Technology" .............................................  7
        1.30.   "Third Party" ............................................  7

ARTICLE 2.  SCOPE AND STRUCTURE OF THE COLLABORATION .....................  8
        2.1.    General ..................................................  8
        2.2.    Exclusive Relationship ...................................  8

ARTICLE 3.  GRANTS AND RESERVATIONS OF RIGHTS ............................  8
        3.1.    Licenses of Rights by Diacrin and Genzyme to Diacrin/
                Genzyme LLC ..............................................  8
        3.2.    Sublicenses of Rights from Diacrin/Genzyme 
                LLC to Diacrin and Genzyme ...............................  9


                                     (i)
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        3.3.    Rights of Diacrin/Genzyme LLC to Technology or 
                Patent Rights Developed Outside the Program ..............   9
        3.4.    Reservation of Rights ....................................   9
        3.5.    Assignment of Orphan Drug Designation. ...................  10

ARTICLE 4.   CAPITAL CONTRIBUTIONS; FINANCIAL ARRANGEMENTS ...............  11
        4.1.    Program Funding Commitments ..............................  11
                4.1.1.  Genzyme's Program Funding Commitment .............  11
                4.1.2.  Diacrin's Program Funding Commitment .............  11
                4.1.3.  Program Funding Capital Contributions. ...........  11
        4.2.    Genzyme's Stand-by Line of Credit ........................  12
        4.3.    Distribution of Net Pretax Profits .......................  13
        4.4.    Audit ....................................................  14

ARTICLE 5.  THE DEVELOPMENT PROGRAM ......................................  14
        5.1     Conduct of the Development Program .......................  14
                5.1.1.  General ..........................................  14
                5.1.2.  Development Plan .................................  15
                5.1.3.  Initial and Updated Development Plan .............  15
                5.1.4.  Execution and Performance ........................  16
                5.1.5.  Attendance at Regulatory Meetings ................  16
        5.2.    Development Information ..................................  16
                5.2.1.  Reports and Information Exchange .................  16
                5.2.2.  Adverse Reaction Reporting .......................  17
                5.2.3.  Clinical and Regulatory Audits ...................  17
        5.3.    Regulatory Approval Filings ..............................  17
        5.4.    Facilities Visits ........................................  18

ARTICLE 6.  SALES, MARKETING AND ADMINISTRATIVE SERVICES .................  18
        6.1.    Sales and Marketing Services .............................  18
                6.1.1.  General ..........................................  18
                6.1.2.  Initial and Updated Commercialization Plans ......  19
                6.1.3.  Execution and Performance ........................  19
        6.2.    General and Administrative Services ......................  20

ARTICLE 7.  MANUFACTURE AND SUPPLY .......................................  20
        7.1.    Process Development; Manufacturing Approvals .............  20
        7.2.    Manufacture and Supply of Collaboration Products for
                Clinical Trials ..........................................  20
        7.3.    Manufacture and Supply of Collaboration Products for
                Commercial Sale ..........................................  21
                7.3.1.  General ..........................................  21
                7.3.2.  Manufacturing Capacity Requirements ..............  21
                7.3.3.  Forecasts ........................................  21

                                      (ii)
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        7.4.    Certificates of Analysis ...............................  21
        7.5.    Certificates of Manufacturing Compliance ...............  21
        7.6.    Access to Facilities ...................................  22

ARTICLE 8.  MANAGEMENT .................................................  22
        8.1.    Program Management Team ................................  22
                8.1.1.  General ........................................  22
                8.1.2.  Development Program Functions ..................  23
                8.1.3.  Commercialization Functions ....................  23
                8.1.4.  Minutes ........................................  23
        8.2.    Steering Committee .....................................  23
                8.2.1.  General ........................................  23
                8.2.2.  Functions ......................................  24
                8.2.3.  Minutes ........................................  24
        8.3.    General Disagreements ..................................  24

ARTICLE 9.  INTELLECTUAL PROPERTY RIGHTS ...............................  25
        9.1.    Ownership ..............................................  25
                9.1.1.  Ownership of Discoveries and Improvements ......  25
                9.1.2.  Ownership of Trademarks ........................  25
                9.1.3.  Cooperation of Employees .......................  25
        9.2.    Filing, Prosecution and Maintenance of Patent Rights ...  26
                9.2.1.  Filing, Prosecution and Maintenance ............  26
                9.2.2.  Patent Filing Costs ............................  26
        9.3.    Cooperation ............................................  26
        9.4.    Notification of Patent Term Restoration ................  27
        9.5.    No Other Technology Rights .............................  27
        9.6.    Enforcement of Patent Rights; Defense of 
                Infringement Actions ...................................  27
                9.6.1.  First Right to Respond .........................  27
                9.6.2.  Sharing of Litigation and Settlement Expenses ..  28
                9.6.3.  Second Right to Respond ........................  28

ARTICLE 10.  CONFIDENTIALITY ...........................................  28
        10.1.   Nondisclosure Obligations ..............................  28
        10.2.   Terms of this Agreement ................................  29
        10.3.   Publications. ..........................................  29

ARTICLE 11.  REPRESENTATIONS AND WARRANTIES ............................  30
        11.1.   Authorization ..........................................  30
        11.2.   Intellectual Property Rights ...........................  30
        11.3.   Warranties .............................................  30
                11.3.1. Genzyme Warranties .............................  31
                11.3.2. Diacrin Warranties .............................  31
        11.4.   Disclaimer of Representations and Warranties ...........  31


                                     (iii)
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        11.5.   Limitation of Liability ................................  31

ARTICLE 12.  INDEMNITY .................................................  31
        12.1.   Diacrin/Genzyme LLC Indemnity Obligations ..............  31
        12.2.   Insurance ..............................................  32

ARTICLE 13.  TERM AND TERMINATION ......................................  32
        13.1.   Term ...................................................  32
        13.2.   Termination. ...........................................  32
                13.2.1. For Breach .....................................  32
                13.2.2. For Convenience ................................  32
        13.3.   Effect of Termination by Diacrin. ......................  32
                13.3.1. For Breach .....................................  32
                13.3.2. For Convenience ................................  33
        13.4.   Effect of Termination by Genzyme. ......................  34
                13.4.1. For Breach .....................................  34
                13.4.2. For Convenience ................................  35
        13.5.   Survival of Rights and Duties. .........................  35

ARTICLE 14.  MISCELLANEOUS .............................................  36
        14.1.   Cooperation ............................................  36
        14.2.   Exchange Controls ......................................  36
        14.3.   Withholding Taxes ......................................  36
        14.4.   Interest on Late Payments ..............................  36
        14.5.   Force Majeure ..........................................  37
        14.6.   Assignment .............................................  37
        14.7.   Severability ...........................................  37
        14.8.   Notices ................................................  37
        14.9.   Applicable Law .........................................  39
        14.10.  Arbitration ............................................  39
                14.10.1. General .......................................  39
                14.10.2. Procedure .....................................  39
        14.11.  Entire Agreement .......................................  40
        14.12.  Headings ...............................................  40
        14.13.  Independent Contractors ................................  40
        14.14.  Agreement Not to Solicit Employees .....................  41
        14.15.  Waiver .................................................  41
        14.16.  Counterparts ...........................................  41


                                      (iv)
<PAGE>   6
                            COLLABORATION AGREEMENT

        THIS COLLABORATION AGREEMENT dated as of October 1, 1996 (the
"Agreement") is made among Diacrin, Inc., a Delaware corporation having its
principal place of business at Charlestown Navy Yard, Building 96, 13th Street,
Charlestown, Massachusetts 02129 ("Diacrin"), Genzyme Corporation, a
Massachusetts corporation having its principal place of business at One Kendall
Square, Cambridge, Massachusetts 02139 ("Genzyme") and Diacrin/Genzyme LLC, a
Massachusetts limited liability company having its principal place of business
at One Kendall Square, Cambridge, Massachusetts 02139 ("Diacrin/Genzyme LLC").
Diacrin, Genzyme and Diacrin/Genzyme LLC are sometimes referred to herein
individually as a "Party" and collectively as the "Parties."

                                R E C I T A L S

        A. Diacrin is currently developing populations of transplantable porcine
fetal cells for the treatment of Parkinson's Disease and Huntington's Disease
and technology for the immunomodulation of major histocompatibility complex
class I antigens on cell populations prior to transplantation to prevent immune
system rejection of transplanted cells.

        B. Genzyme has expertise in the areas of development and marketing of
bio-pharmaceutical products.

        C. Diacrin/Genzyme LLC has been organized by Diacrin and Genzyme as a
joint venture to develop and commercialize the Collaboration Products (as herein
defined) throughout the world.

        NOW THEREFORE, in consideration of the premises and of the covenants
herein contained, the Parties mutually agree as follows:

                            ARTICLE 1.  DEFINITIONS

        For purposes of this Agreement, the terms defined in this Article shall
have the meanings specified below. Certain other capitalized terms are defined
elsewhere in this Agreement.

        1.1. "Affiliate" shall mean any corporation or other entity which
controls, is controlled by, or is under common control with a Party. A
corporation or other entity shall be regarded as in control of another
corporation or entity if it owns or directly or indirectly controls more than
fifty percent (50%) of the voting stock or other ownership interest of the other
corporation or entity, or if it possesses, directly 


                                      -1-
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or indirectly, the power to direct or cause the direction of the management and
policies of the corporation or other entity or the power to elect or appoint
more than fifty percent (50%) of the members of the governing body of the
corporation or other entity. For purposes of this Agreement, HealthCare
Investment Corporation ("HealthCare") and its Affiliates shall not be regarded
as Affiliates of Diacrin for so long as HealthCare and its Affiliates own or
directly or indirectly control less than fifty percent (50%) of the voting stock
of Diacrin.

        1.2. "Biologics Regulatory Scheme" shall mean the United States Public
Health Service Act and the regulations, interpretations and guidelines
promulgated thereunder by the FDA or the regulatory scheme applicable to the
Collaboration Products in any country other than the United States, as such
statutes, regulations, interpretations and guidelines or regulatory schemes may
be amended from time to time.

        1.3. "Collaboration Product" shall mean any product or process developed
for use in the Field by a Party to this Agreement utilizing, based upon or
arising out of the Diacrin Patent Rights, the Genzyme Patent Rights, the Diacrin
Technology, the Genzyme Technology or the Manufacturing Know-How owned or
controlled by any Party, including NeuroCell(TM)-PD, NeuroCell(TM)-HD and any 
and all improvements, combination products, delivery systems and dosage forms
related thereto.

        1.4. "Commercialization Costs" with respect to a Collaboration Product
shall mean the direct variable costs and direct fixed costs incurred by
Diacrin/Genzyme LLC with respect to work performed by the Parties and their
Affiliates and subcontractors in connection with the conduct of the
Commercialization Plan for such Collaboration Product, including without
limitation sales and marketing costs related to performing market research,
advertising, producing promotional literature, sponsoring seminars and symposia,
originating sales and providing reimbursement and other patient support
services. Direct variable costs shall be deemed to be the cost of labor, raw
materials, supplies and other resources directly consumed in the conduct of the
Commercialization Plan, as well as royalties payable to Third Parties, including
royalties payable to Massachusetts General Hospital. Direct fixed costs shall be
deemed to be the cost of facilities, utilities, insurance, equipment
depreciation and other fixed costs directly related to the conduct of the
Commercialization Plan, allocated based upon the proportion of such costs
directly attributable to support of the Commercialization Plan or by such other
method of cost allocation as may be approved by the Steering Committee. All cost
determinations made hereunder shall be made in accordance with United States
generally accepted accounting principles, consistently applied.

        1.5. "Commercialization Plan" shall mean the comprehensive plan for the
commercialization of a Collaboration Product, as more specifically described in
Section 6.1.1. of this Agreement.

                                      -2-
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          CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
        SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

        1.6. "Dedicated Facility" shall mean the facilities to be used to
manufacture Collaboration Products for commercial sale.

        1.7. "Dedicated Facility Costs" shall mean the direct variable costs and
direct fixed costs incurred by Diacrin/Genzyme LLC with respect to (i) the
design, construction, validation and operation of the Dedicated Facility,
including without limitation (a) costs for preparing, submitting, reviewing or
developing data or information for the purpose of submission of applications to
obtain Regulatory Approval for the Dedicated Facility and (b) the scale up of
the manufacturing process for Collaboration Products to be manufactured in the
Dedicated Facility, and (ii) the manufacture of Collaboration Products in the
Dedicated Facility. Direct variable costs shall be deemed to be the cost of
labor, raw materials, supplies and other resources directly consumed in the
design, construction, validation and operation of the Dedicated Facility and in
the manufacture of Collaboration Products in the Dedicated Facility. Direct
fixed costs shall be deemed to be the cost of facilities, utilities, insurance,
equipment depreciation and other fixed costs related to the operation of the
Dedicated Facility and the manufacture of Collaboration Products in the
Dedicated Facility. If the Dedicated Facility is used to manufacture
Collaboration Products and products for other programs of either Diacrin or
Genzyme, direct fixed costs shall be allocated in proportion to the use of the
Dedicated Facility for the manufacture of Collaboration Products and products
for such other programs. Dedicated Facility Costs shall exclude all costs
otherwise reimbursed pursuant to this Agreement. Except as otherwise provided in
this Agreement, all cost determinations made hereunder shall be made in
accordance with United States generally accepted accounting principles,
consistently applied.

        1.8. "Development Costs" with respect to a Collaboration Product shall
mean the direct variable costs and direct fixed costs incurred by
Diacrin/Genzyme LLC with respect to work performed by the Parties and their
Affiliates and subcontractors in connection with the conduct of the Development
Plan for such Collaboration Product, including without limitation (a) direct,
out-of-pocket external costs, including clinical grants, clinical laboratory
fees, positive controls and the cost of studies conducted and services provided
by contract research organizations and individuals, consultants, toxicology
contractors, and manufacturers necessary or useful for the purpose of obtaining
Regulatory Approvals for such Collaboration Product, (b) amounts paid to Diacrin
and Genzyme by Diacrin/Genzyme LLC in respect of research and development and
pre-commercialization sales and marketing efforts as set forth in the
Development Plan for such Collaboration Product, including the efforts of
Diacrin and Genzyme to develop a process for the manufacture of such
Collaboration Product and Diacrin's **************************** for batches of
such 

                                      -3-
<PAGE>   9
Collaboration Product manufactured and supplied by Diacrin for use in clinical
trials, (c) costs related to data management, statistical designs and studies,
document preparation and other expenses associated with the clinical testing
program, and (d) costs for preparing, submitting, reviewing or developing data
or information for the purpose of submission of applications to obtain
Regulatory Approvals for such Collaboration Product. Direct variable costs shall
be deemed to be the cost of labor, raw materials, supplies and other resources
directly consumed in the conduct of the Development Program. Direct fixed costs
shall be deemed to be the cost of facilities, utilities, insurance, equipment
depreciation and other fixed costs directly related to the conduct of the
Development Program, allocated based upon the proportion of such costs directly
attributable to support of the Development Program or by such other method of
cost allocation as may be approved by the Steering Committee. All cost
determinations made hereunder shall be made in accordance with United States
generally accepted accounting principles, consistently applied.

        1.9. "Development Plan" shall mean the comprehensive plan and budget for
the development of a Collaboration Product under the Development Program, as
more specifically described in Section 5.1.2. of this Agreement.

        1.10. "Development Program" shall mean the preclinical and clinical
development of Collaboration Products, including the preparation and filing of
all applications for Regulatory Approvals for each Collaboration Product.

        1.11. "Diacrin Patent Rights" shall mean all present and, to the extent
such Patent Rights claim Inventions or Joint Inventions (as such terms are
defined in Section 9.1.1.) that are discovered, made or conceived during and in
connection with the Program, future Patent Rights owned or controlled by, or
licensed (with the right to sublicense) to, Diacrin, to the extent that such
Patent Rights cover a compound, composition, biological or other material,
product-by-process, method, apparatus, manufacturing or other process, or
immunomodulation technology relating to or useful in the Field.

        1.12. "Diacrin Technology" shall mean all present and, to the extent
such Technology is discovered, made or conceived during and in connection with
the Program, future Technology owned or controlled by, or licensed (with the
right to sublicense) to, Diacrin relating to or useful in the Field.

        1.13. "Effective Date" shall mean the date appearing on the cover page
of this Agreement.

        1.14. "Field" shall mean the treatment of Parkinson's Disease or
Huntington's Disease in humans using porcine fetal cells.

                                      -4-
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          CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
        SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

        1.15. "FDA" shall mean the United States Food and Drug Administration,
any successor agency, or the regulatory authority of any country other than the
United States with responsibilities comparable to those of the United States
Food and Drug Administration.

        1.16. "Fully Absorbed Cost of Goods" with respect to a Collaboration
Product shall mean the direct variable costs and direct fixed costs associated
with the manufacture of batches of such Collaboration Product. Direct variable
costs shall be deemed to be the cost of labor, raw materials, supplies and other
resources directly consumed in the manufacture of batches of such Collaboration
Product. Direct fixed costs shall be deemed to be the cost of facilities,
utilities, insurance, equipment depreciation and other fixed costs directly
related to the manufacture of batches of such Collaboration Product. Direct
fixed costs shall be allocated to such Collaboration Product based upon the
proportion of such costs directly attributable to support of the manufacturing
process for such Collaboration Product. If a facility is used to manufacture
Collaboration Products and products for other programs of either Diacrin or
Genzyme, direct fixed costs shall be allocated in proportion to the use of such
facility for the manufacture of Collaboration Products and products for such
other programs. Fully Absorbed Cost of Goods shall exclude all costs otherwise
reimbursed pursuant to this Agreement. Except as otherwise provided in this
Agreement, all cost determinations made hereunder shall be made in accordance
with United States generally accepted accounting principles, consistently
applied.

        1.17. "Genzyme Patent Rights" shall mean Patent Rights claiming
Inventions or Joint Inventions discovered, made or conceived during and in
connection with the Program that are owned or controlled by, or licensed (with
the right to sublicense) to, Genzyme, to the extent that such Patent Rights
cover a compound, composition, biological or other material, product-by-process,
method, apparatus, manufacturing or other process, relating to or useful in the
Field.

        1.18. "Genzyme Technology" shall mean Technology discovered, made or
conceived during and in connection with the Program, that is owned or controlled
by, or licensed (with the right to sublicense) to, Genzyme relating to or useful
in the Field.

        1.19. "Manufacturing Know-how" shall mean all information, techniques,
inventions, discoveries, improvements, practices, methods, knowledge, skill,
experience, and other technology, whether or not patentable or copyrightable,
and any patent applications, patents or copyrights based thereon, relating to or
necessary or useful for the production, packaging, storage and transportation of
Collaboration 

                                      -5-







<PAGE>   11
Products, including without limitation specifications, acceptance criteria,
manufacturing batch records, standard operating procedures, engineering plans,
installation, operation and process qualification protocols for equipment,
validation records, master files submitted to the FDA, process validation
reports, environmental monitoring processes, test data including
pharmacological, toxicological and clinical test data, cost data and employee
training materials.

        1.20. "Net Pretax Profit" of Diacrin/Genzyme LLC for any period shall be
equal to (a) the sum during such period of (i) Net Sales of all Collaboration
Products, (ii) all revenues received by Diacrin/Genzyme LLC from Third Parties
as consideration for sublicensing the manufacture, use, distribution or sale of
Collaboration Products and (iii) all other revenues of Diacrin/Genzyme LLC from
any source other than the sale of Diacrin Property (as defined in the Operating
Agreement of even date herewith between Diacrin and Genzyme (the
"Diacrin/Genzyme LLC Operating Agreement")), less (b) all expenses incurred by
Diacrin/Genzyme LLC during such period, including expenses incurred in respect
of Development Costs, Dedicated Facility Costs and Commercialization Costs. All
cost determinations made hereunder shall be made in accordance with United
States generally accepted accounting principles, consistently applied.

        1.21. "Net Sales" with respect to a Collaboration Product shall mean the
gross invoiced sales price of such Collaboration Product billed to independent
Third Party customers, including without limitation distributors, in bona fide
arms-length transactions, less, for purposes only of calculating the payments
set forth in Article 13, to the extent such amounts are included in the gross
invoiced sales price, actual: (a) freight and insurance costs incurred in
transporting such Collaboration Product to such customers; (b) quantity, cash
and other trade discounts actually allowed and taken; (c) customs duties,
surcharges and taxes and other governmental charges incurred in connection with
the exportation or importation of such Collaboration Product in final form; (d)
bad debt expense; (e) amounts repaid or credited by reason of rejections (due to
Collaboration Product spoilage, damage, expiration of useful life or otherwise)
or retroactive price reductions; (f) amounts incurred resulting from
governmental mandated rebate or discount programs; and (g) Third Party rebates
and chargebacks actually allowed and taken, including hospital buying group
chargebacks, hospital buying group/group purchasing organization administration
fees or managed care organization rebates. The amount of Net Sales for any
period shall be determined on the basis of sales recorded in such period in
accordance with United States generally accepted accounting principles,
consistently applied. The transfer of a Collaboration Product to Genzyme or one
of its Affiliates shall not be considered a sale; in such cases, Net Sales shall
be determined based on the invoiced sales price to the first independent
customer, less the deductions allowed under this Section.

                                      -6-
<PAGE>   12
        1.22. "Patent Rights" shall mean patents, patent applications,
certificates of invention, or applications for certificates of invention,
together with any extensions, registrations, confirmations, reissues, divisions,
continuations or continuations-in-part, re-examinations or renewals thereof.

        1.23. "Program" shall mean the collaboration among Diacrin/Genzyme LLC,
Diacrin and Genzyme described in this Agreement.

        1.24. "Program Costs" shall mean all Program-related costs, including
without limitation Development Costs, Dedicated Facility Costs and
Commercialization Costs, in each case as such costs are incurred or accrued by
Diacrin/Genzyme LLC on or after the Effective Date.

        1.25. "Program Management Team" shall mean the joint team composed of
representatives of Diacrin and Genzyme described in Section 8.1.1. of this
Agreement.

        1.26. "Regulatory Approvals" shall mean all approvals from regulatory
authorities in any country required lawfully to market Collaboration Products in
any such country, including any product license application filed with the FDA
after completion of human clinical trials to obtain marketing approval for a
Collaboration Product, any establishment license application filed with the FDA
to obtain approval of the facilities and equipment to be used to manufacture a
Collaboration Product, and any product pricing approvals where applicable.

        1.27. "Specifications" with respect to a Collaboration Product shall
mean the written specifications for such Collaboration Product determined by the
Program Management Team and approved by the Steering Committee, provided that
such specifications shall at all times comply with the relevant Biologics
Regulatory Scheme in the country of sale and in the country of use. The
Specifications may be amended from time to time by the Program Management Team,
provided such amendments are approved by the Steering Committee or the written
agreement of the Parties, as the case may be. Copies of such Specifications
shall be maintained by both Parties, and shall become a part of this Agreement
as if incorporated herein.

        1.28. "Steering Committee" shall mean the governing body of
Diacrin/Genzyme LLC composed of representatives of Diacrin and Genzyme appointed
as described in Section 8.2.1. of this Agreement.

        1.29. "Technology" shall mean inventions, trade secrets, copyrights,
know-how, data and other intellectual property of any kind (including any
proprietary biological or other materials, compounds or reagents, and
immunomodulation technology but not including Patent Rights).

        1.30. "Third Party" shall mean any entity other than Diacrin/Genzyme
LLC, 

                                      -7-
<PAGE>   13
Diacrin or Genzyme and their respective Affiliates.

              ARTICLE 2. SCOPE AND STRUCTURE OF THE COLLABORATION

        2.1. General. Diacrin and Genzyme have formed Diacrin/Genzyme LLC to
develop and commercialize Collaboration Products throughout the world.
Diacrin/Genzyme LLC will undertake the Development Program for each of the
Collaboration Products, with each of the Parties assuming responsibility for
those portions of the Development Program allocated to it under this Agreement.
Upon completion of the Development Program, Diacrin/Genzyme LLC will manufacture
the Collaboration Products for commercial sale and Genzyme will market and sell
the Collaboration Products as agent for and on behalf of Diacrin/Genzyme LLC on
the terms and conditions set forth in this Agreement or such other terms and
conditions as the Parties may agree upon.

        2.2. Exclusive Relationship. During the term of this Agreement, neither
Diacrin/Genzyme LLC, Diacrin nor Genzyme, nor any of their Affiliates shall
independently, or with a Third Party, conduct research regarding, or engage in
the manufacture, marketing, sale or distribution of, products in the Field other
than as part of the Program. In addition, during the two-year period following
termination of this Agreement (i) under Section 13.3.1. or, in the event that
Genzyme exercises its option to assume the Program rights, under Section
13.4.1., neither the Party in breach nor its Affiliates shall independently, or
with a Third Party, conduct research regarding, or engage in the manufacture,
marketing, sale or distribution of, products in the Field or (ii) under Section
13.4.2 or, in the event that Genzyme exercises its option to assume the Program
rights, under Section 13.3.2., neither the terminating Party nor its Affiliates
shall independently, or with a Third Party, conduct research regarding, or
engage in the manufacture, marketing, sale or distribution of, products in the
Field

                  ARTICLE 3. GRANTS AND RESERVATIONS OF RIGHTS

        3.1. Licenses of Rights by Diacrin and Genzyme to Diacrin/Genzyme LLC.
Except as otherwise expressly provided herein, Diacrin hereby grants to
Diacrin/Genzyme LLC the exclusive, worldwide, irrevocable (during the term of
this Agreement), royalty-free right and license, with the right to grant
sublicenses, under the Diacrin Patent Rights, the Diacrin Technology and the
Manufacturing Know-How owned or controlled by Diacrin to develop, make, have
made, use, offer for sale, sell, have sold, import and export Collaboration
Products. Except as otherwise expressly provided herein, Genzyme hereby grants
to Diacrin/Genzyme LLC the exclusive, worldwide, irrevocable (during the term of
this Agreement), royalty-free right and license, with the right to grant
sublicenses, under the Genzyme Patent Rights, 


                                      -8-
<PAGE>   14
Genzyme Technology and the Manufacturing Know-How owned or controlled by
Genzyme, to develop, make, have made, use, offer for sale, sell, have sold,
import and export Collaboration Products. Each of the licenses granted under
this Section 3.1 shall be subject to Diacrin/Genzyme LLC's undertaking to pay
all royalties, sublicense fees and other costs or expenses payable to Third
Parties associated with the acquisition or use of such license by
Diacrin/Genzyme LLC. Except as provided in Section 3.2., all sublicenses granted
by Diacrin/Genzyme LLC shall be subject to prior approval by the Steering
Committee.

        3.2. Sublicenses of Rights from Diacrin/Genzyme LLC to Diacrin and
Genzyme. Diacrin/Genzyme LLC hereby grants to each of Diacrin and Genzyme a
non-exclusive, worldwide, irrevocable right and sublicense under the Patent
Rights, Technology and Manufacturing Know-How licenses granted to it pursuant to
Section 3.1. solely to the extent required to permit such Party to perform its
duties under this Agreement.

        3.3. Rights of Diacrin/Genzyme LLC to Technology or Patent Rights
Developed Outside the Program. In the event that either Diacrin or Genzyme
develops, acquires or otherwise comes to own or control Technology or Patent
Rights after the date hereof other than in connection with the Program and such
Technology or Patent Rights are useful in the Field, the Party owning or
controlling such Technology or Patent Rights shall grant to Diacrin/Genzyme LLC
an exclusive, worldwide, irrevocable (during the term of this Agreement) right
and license, with the right to grant sublicenses, to such Technology or Patent
Rights limited to the Field to the extent necessary to enable Diacrin/Genzyme
LLC to develop, make, have made, use, offer for sale, sell, have sold, import
and export Collaboration Products, subject only to Diacrin/Genzyme LLC's
undertaking to pay all royalties, sublicense fees and other costs or expenses
payable to Third Parties associated with the acquisition or use of such license
by Diacrin/Genzyme LLC.

        3.4. Reservation of Rights. Notwithstanding the license grants set forth
in Sections 3.1. and 3.3., Diacrin at all times reserves the rights under the
Diacrin Patent Rights, the Diacrin Technology, and Manufacturing Know-How owned
or controlled by Diacrin (i) to make, have made and use Collaboration Products
for research and development purposes (ii) to develop, make, have made, use,
offer for sale, sell, have sold, import and export products outside the Field
and (iii) to grant licenses to Third Parties for the foregoing purposes.
Notwithstanding the license grants set forth in Sections 3.1. and 3.3., Genzyme
at all times reserves the rights under the Genzyme Patent Rights, the Genzyme
Technology, and Manufacturing Know-How owned or controlled by Genzyme (i) to
make, have made and use Collaboration Products for research and development
purposes, (ii) to develop, make, have made, use, offer for sale, sell, have
sold, import and export products outside the Field and (iii) to grant licenses
to Third Parties for the foregoing purposes.

                                      -9-
<PAGE>   15
        3.5. Assignment of Orphan Drug Designation. Except to the extent
prohibited by the Biologics Regulatory Scheme, Diacrin hereby assigns and
Diacrin and Genzyme hereby agree to assign to Diacrin/Genzyme LLC any "Orphan
Drug" designations for any Collaboration Products which Diacrin has received or
Diacrin or Genzyme may receive during the term of this Agreement.

                                      -10-
<PAGE>   16
            ARTICLE 4. CAPITAL CONTRIBUTIONS; FINANCIAL ARRANGEMENTS

        4.1.    Program Funding Commitments.

                4.1.1. Genzyme's Program Funding Commitment. Genzyme hereby
undertakes to make capital contributions to Diacrin/Genzyme LLC sufficient to
pay (i) one hundred percent (100%) of the first ten million dollars
($10,000,000) in Program Costs (the "Genzyme 100% Funding Commitment") plus (ii)
seventy-five percent (75%) of the next forty million dollars ($40,000,000) in
Program Costs incurred by Diacrin/Genzyme LLC after the Genzyme 100% Funding
Commitment has been satisfied (the "Genzyme 75% Funding Commitment") plus (iii)
fifty percent (50%) of all Program Costs incurred by Diacrin/Genzyme LLC after
the Genzyme 75% Funding Commitment has been satisfied.

                4.1.2. Diacrin's Program Funding Commitment. Diacrin hereby
undertakes to make capital contributions to Diacrin/Genzyme LLC sufficient to
pay (i) twenty-five percent (25%) of all Program Costs incurred by
Diacrin/Genzyme LLC after the Genzyme 100% Funding Commitment has been satisfied
and until the Genzyme 75% Funding Commitment has been satisfied plus (ii) fifty
percent (50%) of all Program Costs incurred by Diacrin/Genzyme LLC after the
Genzyme 75% Funding Commitment has been satisfied.

                4.1.3. Program Funding Capital Contributions. Genzyme shall make
an initial capital contribution to Diacrin/Genzyme LLC on the Effective Date in
an amount equal to one-third of the Program Costs budgeted to be incurred by
Diacrin/Genzyme LLC for the calendar quarter commencing October 1, 1996.
Thereafter, during the Program, Genzyme and Diacrin shall each make capital
contributions to Diacrin/Genzyme LLC, monthly in advance, not later than the
fifteenth (15th) day of the prior calendar month, in an aggregate amount equal
to one-third of the Program Costs budgeted to be incurred by Diacrin/Genzyme LLC
in any then-current Development Plan or Commercialization Plan for the calendar
quarter in which such calendar month occurs, allocated between such Parties in
accordance with the funding responsibility assumed by Genzyme and Diacrin
pursuant to Section 4.1.1. or Section 4.1.2., respectively. Upon receipt of each
such capital contribution from Genzyme or Diacrin, as the case may be,
Diacrin/Genzyme LLC shall promptly pay the Parties that portion of the budgeted
Program Costs to which they are respectively entitled. Either Diacrin or Genzyme
shall have the right to withhold such monthly capital contributions, without
interest, during any period when the other Party shall have failed, within the
time periods prescribed by this Agreement or in any Development Plan or
Commercialization Plan then in effect to submit (i) a Development Plan or a
Commercialization Plan in a format substantially similar to the initial
Development Plan approved by the Steering Committee or the initial
Commercialization Plan approved by the Steering Committee, (ii) quarterly
financial reports in accordance with this Section 4.1.3. or (iii) quarterly
activity reports 

                                      -11-
<PAGE>   17
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in accordance with Section 5.2.1.. Within thirty (30) days after the end of each
of the first three calendar quarters of each year and within sixty (60) days
after the end of each calendar year, each of Diacrin and Genzyme shall provide
Diacrin/Genzyme LLC with a detailed itemization of its Program Costs actually
incurred during the previous quarter. Within thirty (30) days following receipt
of the quarterly statement of actual Program Costs provided by each of Diacrin
and Genzyme, Diacrin and Genzyme shall each make an additional capital
contribution to Diacrin/Genzyme LLC in the amount of any actual Program Costs
shown thereon and not yet paid for which such Party has assumed funding
responsibility pursuant to Section 4.1.1. or Section 4.1.2., respectively, but
only to the extent that such amount, together with all prior capital
contributions to date during such year, does not exceed *******************
percent (***%) of the Program Costs budgeted year-to-date through the end of the
quarter to which such statement relates (except to the extent such excess is
approved by the Steering Committee pursuant to Section 5.1.3.). If the aggregate
amount stated to be due from Diacrin/Genzyme LLC in such quarterly statements
for actual Program Costs is less than the amount already contributed by the
Parties to the capital of Diacrin/Genzyme LLC with respect to budgeted Program
Costs for such calendar quarter, such excess shall be credited pro rata against
the next successive monthly capital contribution due from Genzyme or Diacrin
hereunder.

        4.2. Genzyme's Stand-by Line of Credit. Genzyme hereby agrees to make
available to Diacrin certain financing on the terms hereinafter described. From
and after the date that the Genzyme 100% Funding Commitment is satisfied,
Genzyme shall make available to Diacrin an unsecured, subordinated line of
credit of up to an aggregate amount of *********** dollars ($**********) (the
"Line of Credit"), subject to the following conditions:

                (a) The Line of Credit shall be available through the date
************** after the date Diacrin first draws thereon (the "Maturity Date").
Outstanding principal and all interest accrued thereon shall be repaid on the
Maturity Date.

                (b) Advances against the Line of Credit shall be evidenced by a
promissory note; upon the first such advance, Diacrin shall execute and deliver
a credit agreement containing customary representations, warranties and
covenants. The aggregate amount of all advances under the Line of Credit in any
calendar year shall not exceed ************ dollars ($*********). Advances shall
bear interest at the Base Rate of interest declared from time to time by The
First National Bank of Boston in Boston, Massachusetts, from the date of each
advance. 

                                      -12-
<PAGE>   18
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        (c) Diacrin may draw on the Line of Credit only in the event that
*******************************************************************************
*******************************************************************************
*********************and only to fund its capital contributions to
Diacrin/Genzyme LLC.

        (d) Upon any advance under the Line of Credit, Diacrin shall issue to
Genzyme warrants to purchase that number of shares of Diacrin Common Stock equal
to 
*******************************************************************************
*******************************************************************************
*******************************************************************************
Warrants issued to Genzyme hereunder shall have a term of ************** from
the date of issuance and ************************************. Diacrin may
redeem warrants issued hereunder ******************************************
******* (i) at a price equal to ***************** of the advance in respect of
which such warrants were issued, if such advance is repaid within
****************** from the date such advance is drawn and (ii) at a price equal
to ************************* of the advance in respect of which such warrants
were issued, if such advance is repaid after *********** and within ***********
*********** from the date such advance is drawn.

        4.3. Distribution of Net Pretax Profits. Unless otherwise provided by
the Diacrin/Genzyme LLC Operating Agreement, the Net Pretax Profits of
Diacrin/Genzyme LLC shall be allocated one-half (1/2) to Diacrin and one-half
(1/2) to Genzyme. Net Pretax Profit shall be calculated for each calendar
quarter after the date of the first sale of a Collaboration Product following
Regulatory Approval of such Collaboration Product and shall be reported to each
of Diacrin and Genzyme within forty-five (45) days following the end of each
such quarter. Distributions of Net Pretax Profit shall be made semi-annually to
each of Diacrin and Genzyme; provided, however, that the amount of Net Pretax
Profit distributable to Diacrin and Genzyme shall be reduced by the amount
required to fund the budgeted capital, working capital and reserve requirements
of Diacrin/Genzyme LLC during the ************************ days following the
proposed distribution date and by such other amounts as the Steering Committee
reasonably determines to be necessary or appropriate for the operation of
Diacrin/Genzyme LLC. All distributions to the Parties will be accompanied by a
report setting forth the basis for such distribution. Such reports shall be
subject to audit rights as set forth in Section 4.4., mutatis mutandis.

                                      -13-
<PAGE>   19
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        4.4. Audit. Each of Diacrin and Genzyme shall keep and maintain proper
and complete records and books of account documenting all Program Costs incurred
by it. Each Party shall permit independent accountants retained by the other
Parties to have access to its records and books for the sole purpose of
determining the appropriateness of Program Costs charged by the non-auditing
Party hereunder. Such examination shall be conducted during regular business
hours and upon reasonable notice, at the auditing Party's own expense and no
more than once in each calendar year during the term of this Agreement and once
during the three (3) calendar years following the termination hereof. If such
examination reveals that such Program Costs have been overstated, any
overpayment shall be promptly refunded. The auditing Party shall pay the fees
and expenses of the accountant engaged to perform the audit, unless such audit
reveals an overcharge of ***************** or more for the period examined, in
which case the Party who received such overpayment shall pay all reasonable
costs and expenses incurred by the auditing Party in the course of making such
determination, including the fees and expenses of the accountant.

                       ARTICLE 5. THE DEVELOPMENT PROGRAM

        5.1.    Conduct of the Development Program.

                5.1.1. General. Diacrin/Genzyme LLC, Diacrin and Genzyme each
agree to collaborate diligently in the development of Collaboration Products in
the Field and to use commercially reasonable and diligent efforts to develop,
obtain Regulatory Approvals for and bring to market Collaboration Products in
the Field as soon as practicable, all in accordance with the Development Plan
and the Commercialization Plan for each Collaboration Product. The Parties agree
to execute and substantially perform and to cooperate with each other in
carrying out the Development Plan for each Collaboration Product. Neither Party
shall be required to undertake activities in furtherance of the Development Plan
or Commercialization Plan in the absence of funding from Diacrin/Genzyme LLC
pursuant to the provisions of this Agreement; provided, however, that the
withholding of payments in accordance with Section 4.1.3. shall not excuse a
Party from performance of duties required under this Agreement. As used in this
Agreement, the term "commercially reasonable and diligent efforts" will mean
that level of effort which, consistent with the exercise of prudent scientific
and business judgment, is applied by the Party in question to its other
therapeutic products at a similar stage of development and with similar
commercial potential.

                                      -14-
<PAGE>   20
                5.1.2. Development Plan. The Development Program shall be
conducted by Diacrin/Genzyme LLC under a Development Plan which shall describe
the proposed overall program of development for each of the Collaboration
Products, including preclinical studies, toxicology, formulation, clinical
studies and regulatory plans and other key elements necessary to obtain
Regulatory Approvals for each Collaboration Product. The Development Plan shall
include a summary of estimated Development Costs expected during the development
process through obtaining such Regulatory Approvals and a detailed description
of and budget for all development activities proposed for each calendar year for
each Collaboration Product. Until the initial Commercialization Plan is
submitted in accordance with Section 6.1.2., the Development Plan shall also
include summary of estimated Dedicated Facility Costs expected during the period
through obtaining Regulatory Approval for the Dedicated Facility and a detailed
description of and budget for all activities related to the design,
construction, validation and operation of the Dedicated Facility proposed for
the calendar year to which the Development Plan relates.

                5.1.3. Initial and Updated Development Plan. A preliminary
initial Development Plan has been agreed to by the Parties for the period
beginning on the Effective Date and ending on December 31, 1997. Within thirty
(30) days after the Effective Date, Diacrin, in consultation with the Program
Management Team, shall submit to the Steering Committee for review and approval
the definitive initial Development Plan for the period beginning on the
Effective Date and ending on December 31, 1997, upon which approval such
definitive initial Development Plan shall be signed by an authorized
representative of each of Diacrin and Genzyme. The Development Plan shall be
updated annually by the Program Management Team and submitted to the Steering
Committee for review and approval not later than sixty (60) days prior to
January 1 of each year during the Development Program. Each such updated
Development Plan shall include (i) an overall development plan for each
Collaboration Product which sets forth all major development tasks remaining to
be accomplished prior to submission of filings for Regulatory Approvals, (ii) a
detailed description and budget for the development activities proposed for the
forthcoming calendar year and (iii) until the initial Commercialization Plan is
submitted in accordance with Section 6.1.2., (a) an overall plan which sets
forth all major tasks remaining to be accomplished prior to submission of
filings for Regulatory Approval of the Dedicated Facility and (b) a detailed
description of and budget for all activities related to the construction,
validation and operation of the Dedicated Facility proposed for the calendar
year to which the Development Plan relates, in each case including estimated
time lines to accomplish such major tasks or detailed activities, respectively.
The Program Management Team shall be primarily responsible for preparing the
annual updates to the Development Plan and, in connection with the preparation
of such updates, shall consult with Diacrin and Genzyme regarding the
identification, timing and execution of and budget for the major tasks and
detailed activities required to perform the updated Development Plan. Each such
updated Development Plan approved by the Steering Committee shall be signed by
an 

                                      -15-
<PAGE>   21
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authorized representative of each of Diacrin and Genzyme. The members of the
Program Management Team shall actively consult with one another throughout the
term of the Development Plan so as to adjust the specific work performed under
the Development Plan to conform to evolving developments in technology and the
results of the development work performed. While minor adjustments to the
Development Plan may be made from time to time upon approval of the Program
Management Team, significant changes in the scope or direction of the work and
any changes in funding exceeding ********************************** of the total
amount budgeted in any calendar year must be approved by the Steering Committee,
in the absence of which approval the most recently approved Development Plan
shall remain in effect.

                5.1.4. Execution and Performance. The Development Plan shall
allocate among the Parties responsibility for each of the activities described
therein. The Parties shall use commercially reasonable and diligent efforts to
conduct the activities described in the Development Plan. The Development Plan
shall be supervised by the Program Management Team. The Program Management Team
will coordinate preclinical and clinical testing of the Collaboration Products
and work with designated individuals at Diacrin/Genzyme LLC, Diacrin and Genzyme
in the preparation of Regulatory Approval filings for the Collaboration Products
and for the Dedicated Facility.

                5.1.5. Attendance at Regulatory Meetings. Each Party shall
provide the others with prior notice of all meetings between representatives of
the notifying Party and regulatory authorities regarding any Collaboration
Product. Except as otherwise provided herein, the Party receiving such notice
shall have the right to have representatives present at all such meetings.

        5.2.    Development Information.

                5.2.1. Reports and Information Exchange. Diacrin/Genzyme LLC
shall own all clinical trial data accumulated from all clinical trials of
Collaboration Products. Each of Diacrin and Genzyme shall use commercially
reasonable and diligent efforts to disclose to Diacrin/Genzyme LLC and to the
other Party all material information relating to any Collaboration Product
promptly after it is learned or its materiality is appreciated. Diacrin/Genzyme
LLC shall maintain the database of clinical trial data accumulated from all
clinical trials of Collaboration Products and of adverse reaction information
for all such Collaboration Products. Each of Diacrin and Genzyme shall have a
permanent and irrevocable right of access and reference to all such clinical
trial data for use outside the Field. At the request of 

                                      -16-
<PAGE>   22
either Diacrin or Genzyme, such data shall be provided to the requesting Party
in a computer readable format by Diacrin/Genzyme LLC, to the extent available,
and Diacrin/Genzyme LLC shall also assist in the transfer and validation of such
data to the receiving Party. Each Party shall also keep the Program Management
Team informed as to its progress in the Development Plan. Within sixty (60) days
following the end of each calendar quarter during the Development Program, each
of Diacrin and Genzyme shall provide to Diacrin/Genzyme LLC and to the other
Party a reasonably detailed written report which shall describe the progress to
date of all activities for which such Party was allocated responsibility during
such quarter under the Development Plan.

                5.2.2. Adverse Reaction Reporting. Each of Diacrin and Genzyme
shall notify Diacrin/Genzyme LLC and the other Party of any adverse reaction
information relating to any Collaboration Product within twenty-four (24) hours
of the receipt of such information and as necessary for compliance with
regulatory requirements. Adverse reaction information includes without
limitation information relating to any experience that suggests a significant
hazard, contraindication, side effect or precaution, any experience that is
fatal or life threatening, is permanently disabling, requires or prolongs
inpatient hospitalization, or is a congenital anomaly, cancer, or overdose or
any experience that is one not identified in nature, specificity, severity or
frequency in the current investigator brochure or the United States labeling for
the Collaboration Product.

                5.2.3. Clinical and Regulatory Audits. Each of Diacrin and
Genzyme shall permit Diacrin/Genzyme LLC and the other Party or the
representatives of Diacrin/Genzyme LLC or the other Party to have access, at the
auditing Party's own expense, no more than once in each calendar year during the
term of this Agreement, to the non-auditing Party's records and facilities
relating to the Development Program for the purpose of monitoring compliance
with Good Clinical Practice and other applicable requirements of the Biologics
Regulatory Scheme.

        5.3. Regulatory Approval Filings. Regulatory Approval filings for the
Collaboration Products and for the facilities used to manufacture such
Collaboration Products shall be filed in the name of Diacrin/Genzyme LLC to the
extent permitted by the Biologics Regulatory Scheme and otherwise in the name of
such other Party as the Steering Committee shall determine. Prior to submission
to the FDA, the Parties, through the Program Management Team, shall consult,
cooperate in preparing and mutually agree on the content and scope of the
Regulatory Approval filings. If and for so long as the Biologics Regulatory
Scheme does not permit Diacrin/Genzyme LLC to file and own all Regulatory
Approvals in its own name, (i) Regulatory Approval filings shall be made in the
name of such other Party as may be designated by the Steering Committee, (ii)
such designated Party shall hold the licenses issued in respect of such
Regulatory Approval filings and maintain control over the manufacturing
facilities and equipment to the extent required by the Biologics 

                                      -17-
<PAGE>   23
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Regulatory Scheme, (iii) such designated Party shall provide manufacturing and
supply services to Diacrin/Genzyme LLC (a) at ********************************
of Collaboration Products so manufactured and supplied and (b) in accordance
with the terms and conditions set forth in Article 7 and shall be reimbursed for
any Dedicated Facility Costs incurred in connection with the use of such
facilities for the manufacture and supply of such Collaboration Products, and
(iv) Diacrin/Genzyme LLC and the other Party shall have a permanent and
irrevocable right of access and reference to such Regulatory Approval filings,
licenses and facilities.

        5.4. Facilities Visits. Representatives of Diacrin and Genzyme may visit
all manufacturing sites and the sites of any clinical trials or other
experiments being conducted by the other Party or Diacrin/Genzyme LLC in
connection with the Development Program. If requested by the other Party,
Diacrin and Genzyme shall cause appropriate individuals working on the
Development Program to be available for meetings at the location of the
facilities where such individuals are employed at times reasonably convenient to
the Party responding to such request.

             ARTICLE 6. SALES, MARKETING AND ADMINISTRATIVE SERVICES

        6.1. Sales and Marketing Services. Subject to the terms and conditions
of this Agreement, Genzyme shall market and sell the Collaboration Products on
an exclusive basis as agent for and on behalf of Diacrin/Genzyme LLC upon the
following terms and conditions:

                6.1.1. General. The commercialization of each Collaboration
Product shall be governed by a Commercialization Plan which shall describe the
overall plan for commercializing such Collaboration Product, including (i) a
comprehensive marketing, sales, pricing, manufacturing, distribution and
licensing strategy for such Collaboration Product in all applicable countries,
including the Third Parties to be utilized and the arrangements with them that
have been or are proposed to be agreed upon (including policies and procedures
for adjustments, rebates, bundling and the like), (ii) estimated launch date,
market and sales forecasts, in numbers of patients and local currency, and
competitive analysis for such Collaboration Product, (iii) a detailed budget for
the Commercialization Costs to be incurred in connection with performing such
Plan and (iv) a detailed manufacturing plan, including (a) if Regulatory
Approval for the Dedicated Facility has not been obtained, an overall plan which
sets forth all major tasks remaining to be accomplished prior to submission of
filings for Regulatory Approval of the Dedicated Facility and (b) a detailed

                                      -18-
<PAGE>   24
description of and budget for all activities related to the design,
construction, validation and operation of and the manufacture of Collaboration
Products in the Dedicated Facility proposed for the calendar year to which the
Commercialization Plan relates.

                6.1.2. Initial and Updated Commercialization Plans. Upon the
submission of all Regulatory Approval filings for a Collaboration Product in any
given country, Genzyme shall develop and submit to the Steering Committee for
review and approval an initial Commercialization Plan in accordance with its
customary standard for a product of comparable market potential, taking into
consideration factors such as market conditions, regulatory factors, competition
and the costs and profits of such Collaboration Product. Genzyme shall be
primarily responsible for developing each Commercialization Plan and, in
connection therewith, shall consult with Diacrin regarding the identification,
timing and execution of and budget for the major commercialization tasks
required to perform the Commercialization Plan, including without limitation the
coordination of manufacturing with sales and marketing. Diacrin shall be
primarily responsible for developing the detailed manufacturing plan included
within each Commercialization Plan and shall deliver such plan to Genzyme within
a reasonable period of time prior to the date Genzyme expects to submit the
overall Commercialization Plan to the Steering Committee. Each Commercialization
Plan shall be updated annually by Genzyme, in consultation with Diacrin as
herein provided, and shall be submitted to the Steering Committee for approval
not later than sixty (60) days prior to January 1 of each year. Each
Commercialization Plan approved by the Steering Committee shall be signed by an
authorized representative of each of Diacrin and Genzyme.

                6.1.3. Execution and Performance. Genzyme shall be primarily
responsible for the implementation of each Commercialization Plan, including
without limitation setting all terms of sale, including establishing pricing
policies, credit terms and cash discounts and allowances, formulating marketing
plans, selecting trademarks, providing patient information, providing customer
support services, providing reimbursement counselling services and sales force
training; provided that Genzyme's execution and performance in respect of its
marketing and sale of Collaboration Products shall be consistent with the
strategy, policies and procedures established by each Commercialization Plan.
Genzyme shall act as an agent of Diacrin/Genzyme LLC in connection with the sale
of Collaboration Products and all revenues from such sales shall be booked by
Diacrin/Genzyme LLC. Genzyme shall use commercially reasonable and diligent
efforts to conduct the activities described in each Commercialization Plan.
Diacrin shall use commercially reasonable and diligent efforts to perform any
activities allocated to it under a Commercialization Plan and to provide such
additional marketing support services as Genzyme may from time to time
reasonably request. In addition to such activities and services, Genzyme shall
provide Diacrin with access to market information and direct contact with
physicians and patients for purposes other than making sales or 

                                      -19-
<PAGE>   25
participating in Genzyme's marketing activities; provided, however, that Genzyme
shall have no obligation to provide such direct contact with physicians and
patients at any time when, in the reasonable exercise of Genzyme's discretion,
such access would unreasonably interfere with Genzyme's performance of the
Commercialization Plan. Diacrin shall not be reimbursed for the cost of any
activities undertaken pursuant to the preceding sentence.

        6.2. General and Administrative Services. General and administrative
services required by Diacrin/Genzyme LLC shall be provided at cost by either or
both of Diacrin and Genzyme as determined by the Steering Committee. All such
costs, in addition to general and administrative costs payable to Third Parties
(such as accountants), shall be considered to be Program Costs.

                       ARTICLE 7. MANUFACTURE AND SUPPLY

        Subject to the terms and conditions of this Agreement, Collaboration
Products shall be manufactured and supplied for pre-clinical and clinical
testing and for commercial sale upon the following terms and conditions:

        7.1. Process Development; Manufacturing Approvals. The Parties will use
commercially reasonable and diligent efforts to develop a process for the
manufacture of each Collaboration Product and to scale up that process to a
scale sufficient to manufacture and supply (i) the anticipated demand for
clinical trials of such Collaboration Product in accordance with the projections
set forth in the Development Plan and (ii) the anticipated market demand for
such Collaboration Product at the time Regulatory Approval is obtained for such
Collaboration Product in accordance with the projections set forth in the
Commercialization Plan for such Collaboration Product. The development of the
process for the manufacture of Collaboration Products as well as the scale up of
such process and all material issues incident to the development of the ability
to produce Collaboration Products for commercial purposes in sufficient quantity
and in a timely manner will be within the purview of the Program Management
Team. The Parties will use commercially reasonable and diligent efforts, and
will cause any approved Third Party supplier, to make filings necessary to
obtain approval of any license application for the Dedicated Facility which may
be required as part of any Regulatory Approval for the first Collaboration
Product.

        7.2. Manufacture and Supply of Collaboration Products for Clinical
Trials. Diacrin will use commercially reasonable and diligent efforts to
manufacture and supply Collaboration Products for preclinical studies and
clinical trials in quantities and within a time period sufficient to conduct the
activities set forth in the Development Plan. Diacrin shall be entitled to
charge to Diacrin/Genzyme LLC 

                                      -20-
<PAGE>   26
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********************************, on a product-by-product basis, for
Collaboration Products supplied for such purposes.
******************************** of such Collaboration Products shall be deemed
Development Costs and reimbursed in accordance with Section 4.1.3..

        7.3. Manufacture and Supply of Collaboration Products for Commercial
Sale. Diacrin/Genzyme LLC shall manufacture and supply Collaboration Products
for commercial sale on the following terms and conditions:

                7.3.1. General. Diacrin/Genzyme LLC shall use commercially
reasonable and diligent efforts to manufacture and supply Collaboration Products
to meet market demand for Collaboration Products ordered in accordance with the
terms hereof. Diacrin/Genzyme LLC may subcontract with Third Parties for the
manufacture or packaging of Collaboration Products.

                7.3.2. Manufacturing Capacity Requirements. The Steering
Committee shall approve the design and capacity requirements for the Dedicated
Facility.

                7.3.3. Forecasts. The Program Management Team shall establish a
procedure for providing forecasts of patients scheduled for transplants of
Collaboration Products, updating such forecasts and ordering Collaboration
Product for such transplants, in each case within time periods sufficient to
enable Diacrin/Genzyme LLC to manufacture such Collaboration Products to meet
such forecasts in a commercially reasonable and diligent manner.

        7.4. Certificates of Analysis. Diacrin or Diacrin/Genzyme LLC, as the
case may be, shall perform or cause to be performed quality assurance and
control tests on each lot of Collaboration Products manufactured pursuant to
this Agreement before delivery and shall prepare a written report of the results
of such tests (the Party manufacturing a lot of Collaboration Product is
referred to in this Article 7 as the "Manufacturing Party"). Each test report
shall set forth for each lot delivered the items tested, specifications and
results in a certificate of analysis containing the types of information which
shall have been approved by the Program Management Team or required by the FDA.
The Manufacturing Party shall maintain such certificates for a period of not
less than five (5) years from the date of manufacture and for so long as
required under applicable requirements of the FDA.

        7.5. Certificates of Manufacturing Compliance. The Manufacturing Party
shall prepare and maintain for a period of not less than five (5) years and for
so long as required under applicable requirements of the FDA for each lot of
Collaboration 

                                      -21-
<PAGE>   27
Products manufactured a certificate of manufacturing compliance
containing the types of information which shall have been approved by the
Program Management Team or required by the FDA, which certificate will certify
that the lot of Collaboration Products was manufactured in accordance with the
Specifications and the Good Manufacturing Practices of the FDA or other
applicable governmental regulatory agency as the same may be amended from time
to time. The Manufacturing Party shall advise the other Parties immediately if
an authorized agent of the FDA or other governmental regulatory agency visits
any of the Manufacturing Party's manufacturing facilities, or the facilities
where the Collaboration Products are being manufactured, for an inspection with
respect to the Collaboration Products. The Manufacturing Party shall furnish to
the other Parties the report by such agency of such visit, to the extent that
such report relates to Collaboration Products, within ten (10) business days of
the Manufacturing Party's receipt of such report.

        7.6. Access to Facilities. Each Party shall have the right to inspect
those portions of the manufacturing or storage facilities of the Manufacturing
Party where Collaboration Products are being manufactured or stored, or any
subcontractor who is manufacturing or storing Collaboration Products for the
Manufacturing Party, at any time during regular business hours and upon
reasonable notice to ascertain compliance with the Good Manufacturing Practices
of the FDA or other applicable governmental regulatory agency as the same may be
amended from time to time. Any confidential information disclosed to or
otherwise gathered by the Party conducting such inspection during any such
inspection shall be deemed "Information" as defined in Section 10.1..

                             ARTICLE 8. MANAGEMENT

        8.1.    Program Management Team.

                8.1.1. General. Within thirty (30) days of the Effective Date,
the Parties shall establish a Program Management Team to oversee and control
development of Collaboration Products and to prepare for and oversee the launch
of Collaboration Products. The Program Management Team will be composed of four
representatives appointed by Diacrin and four representatives appointed by
Genzyme. Such representatives will include individuals with expertise and
responsibilities in such areas as preclinical development, clinical development,
manufacturing, regulatory affairs, marketing, sales management and
reimbursement. The Program Management Team shall meet as needed but not less
than once each week. The Team shall appoint one of its members to act as
Chairman. Such meetings shall be at times and places or in such form (e.g.,
telephone or video conference) as the members of the Program Management Team
shall agree. A Party may change one or more of its representatives to the
Program Management Team at any time. Members of the Program Management Team may
be represented at any meeting by another member 

                                      -22-
<PAGE>   28
of the Program Management Team, or by a deputy. Any approval, determination or
other action agreed to by a majority of the members of the Program Management
Team appointed by each of Diacrin and Genzyme or their deputies present at the
relevant Team meeting shall be the approval, determination or other action of
the Program Management Team, provided at least two representatives of each of
Diacrin and Genzyme are present at such meeting. Representatives of either
Diacrin and Genzyme who are not members of the Program Management Team may
attend meetings of the Team as agreed to by the representative members of the
other Party.

                8.1.2. Development Program Functions. During the term of the
Development Program, the Program Management Team shall coordinate, expedite and
control the development of Collaboration Products to obtain Regulatory
Approvals. The Program Management Team will develop and recommend to the
Steering Committee Development Plans (including annual development budgets),
will facilitate the flow of information with respect to development work being
conducted for each Collaboration Product on a worldwide basis, and will discuss
and cooperate regarding such worldwide development.

                8.1.3. Commercialization Functions. Following submission of
filings for Regulatory Approvals for the first Collaboration Product, the
Program Management Team shall function as the operational staff of
Diacrin/Genzyme LLC and the functions of the Program Management Team shall be
expanded to include: (i) monitoring the commercialization of Collaboration
Products pursuant to the Commercialization Plan, including oversight of
planning, annual budgeting, manufacturing, marketing, sales and distribution,
and licensing of Collaboration Products, (ii) monitoring actual expenses
incurred in the manufacture, marketing, sale and distribution of Collaboration
Products and (iii) facilitating cooperation regarding the worldwide
commercialization and marketing activities of the Parties.

                8.1.4. Minutes. The Program Management Team shall keep accurate
minutes of its deliberations which shall record all proposed decisions and all
actions recommended or taken. The Chairman shall be responsible for the
preparation of draft minutes. Draft minutes shall be sent to all members of the
Program Management Team within five (5) working days after each meeting. All
records of the Program Management Team shall at all times be available to both
parties.

        8.2.    Steering Committee.

                8.2.1. General. Within thirty (30) days of the Effective Date,
the Parties shall establish a Steering Committee to oversee and manage the
collaboration contemplated by this Agreement. The Steering Committee will be
composed of three representatives appointed by Diacrin and three representatives
appointed by Genzyme. Such representatives will be senior officers and/or
managers of their respective companies. The Steering Committee will meet as
needed but not less than 

                                      -23-
<PAGE>   29
once each calendar quarter. The Committee shall appoint one of its members to
act as Chairman. Such meetings shall be at times and places or in such form
(e.g., telephone or video conference) as the members of the Steering Committee
shall agree. A Party may change one or more of its representatives to the
Steering Committee at any time. Members of the Steering Committee may be
represented at any meeting by another member of the Steering Committee, or by a
deputy. Any approval, determination or other action agreed to by unanimous
consent of the members of the Steering Committee or their deputies present at
the relevant Committee meeting shall be the approval, determination or other
action of the Steering Committee, provided at least one representative of each
of Diacrin and Genzyme is present at such meeting. Representatives of either
Diacrin and Genzyme who are not members of the Steering Committee may attend
meetings of the Committee as agreed to by the representative members of the
other Party.

                8.2.2. Functions. The Steering Committee shall perform the
following functions: (i) determine the overall strategy for the Program in the
manner contemplated by this Agreement; (ii) coordinate the activities of the
Parties hereunder; (iii) settle disputes or disagreements that are unresolved by
the Program Management Team; (iv) approve any agreements with Third Parties
regarding a Collaboration Product or which involve the grant of any rights
related to the development, manufacture or marketing of a Collaboration Product;
provided, however, that no approval of the Steering Committee shall be required
for the agreements set forth on Appendix A to this Agreement; (v) review and
approve each Development Plan, including each annual update, submitted to it
pursuant to Section 5.1.3.; (vi) review and approve each Commercialization Plan,
including each annual update, submitted to it for approval pursuant to Section
6.1.2.; (vii) serve as the governing body of Diacrin/Genzyme LLC; and (viii)
perform such other functions as appropriate to further the purposes of this
Agreement as determined by the Parties.

                8.2.3. Minutes. The Steering Committee shall keep accurate
minutes of its deliberations which shall record all proposed decisions and all
actions recommended or taken. The Chairman shall be responsible for the
preparation of draft minutes. Draft minutes shall be sent to all members of the
Steering Committee within ten (10) working days after each meeting. All records
of the Steering Committee shall at all times be available to both parties.

        8.3. General Disagreements. All disagreements within the Program
Management Team and the Steering Committee shall be subject to the following:

                (a) The representatives to the Team or Committee will negotiate
in good faith for a period of not less than thirty (30) days to attempt to
resolve the dispute. In the case of the Program Management Team, any unresolved
dispute shall be referred to the Steering Committee for good faith negotiations
for an additional period of not less than thirty (30) days to attempt to resolve
the dispute.

                                      -24-
<PAGE>   30
                (b) In the event that the dispute is not resolved after the
period specified in clause (a), the representatives shall promptly present the
disagreement to the Chief Executive Officer of each of Diacrin and Genzyme or a
designee of such Chief Executive Officer reasonably acceptable to the other
Party.

                (c) Such executives shall meet or discuss in a telephone or
video conference each of Diacrin and Genzyme's views and explain the basis for
such dispute.

                (d) If such executives cannot resolve such disagreement within
sixty (60) days after such issue has been referred to them, then such dispute
shall be referred to arbitration as described in Section 14.10..

                    ARTICLE 9. INTELLECTUAL PROPERTY RIGHTS

        9.1. Ownership. The parties acknowledge that the ownership rights set
forth herein (i) shall not be affected by the participation in the discovery or
development of an Invention by the Program Management Team or the Steering
Committee in the course of discharging their duties hereunder and (ii) are
subject to the license grants set forth in Article 3 above.

                9.1.1. Ownership of Discoveries and Improvements. All right,
title and interest in all writings, inventions, discoveries, improvements and
other technology, whether or not patentable or copyrightable, and any patent
applications, patents or copyrights based thereon (collectively, the
"Inventions") that are discovered, made or conceived during and in connection
with the Program solely by employees of Diacrin or others acting on behalf of
Diacrin ("Diacrin Inventions") shall be owned by Diacrin. All right, title and
interest in all Inventions that are discovered, made or conceived during and in
connection with the Program solely by employees of Genzyme or others acting on
behalf of Genzyme ("Genzyme Inventions") shall be owned by Genzyme. All right,
title and interest in all Inventions that are discovered, made or conceived
during and in connection with the Program jointly by employees of Diacrin and
Genzyme ("Joint Inventions") shall be jointly owned by Genzyme and Diacrin. Each
of Diacrin and Genzyme shall promptly disclose to Diacrin/Genzyme LLC and the
other Party the making, conception or reduction to practice of Inventions by
employees or others acting on behalf of such Party.

                9.1.2. Ownership of Trademarks. Genzyme shall select (which
selection shall be approved by the Steering Committee) and Diacrin/Genzyme LLC
shall own all trademarks for the sale and use of Collaboration Products and
shall bear all expenses thereof.

                9.1.3. Cooperation of Employees. Each of Diacrin and Genzyme


                                      -25-
<PAGE>   31
represents and agrees that all employees or others acting on its behalf in
performing its obligations under this Agreement shall be obligated under a
binding written agreement to assign to such Party, or as such Party shall
direct, all Inventions made or conceived by such employee or other person. In
the case of non-employees working for other companies or institutions on behalf
of Diacrin or Genzyme, Diacrin or Genzyme, as applicable, shall have the right
to obtain licenses for all Inventions made by such non-employees on behalf of
Diacrin or Genzyme, as applicable, in accordance with the policies of said
company or institution. Diacrin and Genzyme agree to undertake to enforce such
agreements (including, where appropriate, by legal action) considering, among
other things, the commercial value of such Inventions.

        9.2. Filing, Prosecution and Maintenance of Patent Rights.

                9.2.1. Filing, Prosecution and Maintenance. Each of Diacrin and
Genzyme shall be responsible for the filing, prosecution and maintenance of all
patent applications and patents which make up its Patent Rights. For so long as
any of the license grants set forth in Article 3 remain in effect and upon
request of the other Party, each of Diacrin and Genzyme agrees to file and
prosecute patent applications and maintain the patents covering its Patent
Rights in all countries in which such Party customarily files for products of
similar interest. Each of Diacrin and Genzyme shall consult with and keep the
other fully informed of important issues relating to the preparation and filing
(if time permits), prosecution and maintenance of such patent applications and
patents, and shall furnish to the other Party copies of documents relevant to
such preparation, filing, prosecution or maintenance in sufficient time prior to
filing such document or making any payment due thereunder to allow for review
and comment by the other Party and, to the extent possible in the reasonable
exercise of its discretion, the filing Party shall incorporate all such
comments.

                9.2.2. Patent Filing Costs. All costs associated with filing,
prosecuting and maintaining patent applications and patents covering each of
Diacrin and Genzyme's Patent Rights specific to the Field shall be deemed
Development Costs; provided, however, that if the claims of any such Patent
Rights include claims outside the Field, each of Diacrin/Genzyme LLC and the
Party filing, prosecuting and maintaining such patents and patent applications
shall bear one-half (1/2) of such costs.

        9.3. Cooperation. Each of Diacrin and Genzyme shall make available to
the other Party (or to the other Party's authorized attorneys, agents or
representatives) its employees, agents or consultants to the extent necessary or
appropriate to enable the appropriate Party to file, prosecute and maintain
patent applications and resulting patents with respect to inventions owned by a
Party and for periods of time sufficient for such Party to obtain the assistance
it needs from such personnel. Where 


                                      -26-
<PAGE>   32
appropriate, each of Diacrin and Genzyme shall sign or cause to have signed all
documents relating to said patent applications or patents at no charge to the
other Party.

        9.4. Notification of Patent Term Restoration. Each of Diacrin and
Genzyme shall notify the other Party of (i) the issuance of each United States
patent included within the notifying Party's Patent Rights, giving the date of
issue and patent number for each such patent, and (ii) each notice pertaining to
any patent included within the notifying Party's Patent Rights which it receives
as patent owner pursuant to the Drug Price Competition and Patent Term
Restoration Act of 1984, including notices pursuant to 101 and 103 of such Act
from persons who have filed an abbreviated NDA. Such notices shall be given
promptly, but in any event within ten (10) business days after receipt of each
such notice pursuant to such Act. Each of Diacrin and Genzyme shall notify the
other Party of each filing for patent term restoration under such Act, any
allegations of failure to show due diligence and all awards of patent term
restoration (extensions) with respect to the notifying Party's Patent Rights.

        9.5. No Other Technology Rights. Except as otherwise expressly provided
in this Agreement, under no circumstances shall a Party hereto, as a result of
this Agreement, obtain any ownership interest in or other right to the Patent
Rights, Technology or Manufacturing Know-How of the other Party, including items
owned, controlled or developed by the other Party, or transferred by the other
Party to said Party at any time pursuant to this Agreement. It is understood and
agreed that this Agreement does not grant either Party any license or other
right in the Patent Rights of the other Party for uses other than the
development, production, use and sale of Collaboration Products.

        9.6. Enforcement of Patent Rights; Defense of Infringement Actions.
Diacrin and Genzyme shall each promptly notify the other in writing of any
alleged or threatened infringement of any patents or patent applications
comprising the Diacrin or Genzyme Patent Rights or if either Party, or any of
their respective Affiliates, shall be individually named as a defendant in a
legal proceeding by a Third Party for infringement of a patent because of the
manufacture, use or sale of a Collaboration Product.

                9.6.1. First Right to Respond. Each of Diacrin and Genzyme shall
have the first right to respond to or defend against such challenge or
infringement of its Patent Rights or charge of infringement. In the event such
Party elects to so respond or defend, the other Party will cooperate with the
responding Party's legal counsel, join in such suits as may be brought by the
responding Party to enforce its Patent Rights, and be available at the
responding Party's reasonable request to be an expert witness or otherwise to
assist in such proceedings.

                                      -27-
<PAGE>   33
                9.6.2. Sharing of Litigation and Settlement Expenses. The costs
incurred in responding to or defending against a challenge to or infringement of
a Party's Patent Rights specific to the Field or a charge that the manufacture,
use or sale of Collaboration Products infringe upon the Patent Rights of Third
Parties shall be deemed Program Costs.

                9.6.3. Second Right to Respond. If a Party does not exercise its
right to respond to or defend against challenges or infringements of its Patent
Rights as provided in Section 9.6.1 within sixty (60) days of becoming aware of
or being notified of such challenges or infringements, then the other Party
shall have the option to do so at its sole cost; provided that in such case all
amounts so recovered from such Third Party shall be retained by the Party
undertaking such response or defense and the Party so responding shall have no
further obligations to the other Party with respect to the response or defense
thereof.

                          ARTICLE 10. CONFIDENTIALITY

        10.1. Nondisclosure Obligations. Except as otherwise provided in this
Article 10, during the term of this Agreement and for a period of five (5) years
thereafter, both Parties shall maintain in confidence and use only for purposes
specifically authorized under this Agreement (i) confidential information and
data resulting from or related to the development of Collaboration Products and
(ii) all information and data not described in clause (i) but supplied by the
other Party under this Agreement and marked "Confidential."

        For purposes of this Article 10, information and data described in
clause (i) or (ii) of the preceding paragraph shall be referred to as
"Information." To the extent it is reasonably necessary or appropriate to fulfil
its obligations or exercise its rights under this Agreement, a Party may
disclose Information it is otherwise obligated under this Section not to
disclose to its Affiliates, sublicensees, consultants, outside contractors and
clinical investigators, on a need-to-know basis and on the condition that such
entities or persons agree to keep the Information confidential for the same time
periods and to the same extent as such Party is required to keep the Information
confidential; and a Party or its sublicensees may disclose such Information to
government or other regulatory authorities to the extent that such disclosure is
reasonably necessary to obtain patents or authorizations to conduct clinical
trials with and to market commercially Collaboration Products or, in the case of
information and data described in clause (i), products outside the Field to the
extent that a Party has the right to use such information and data outside the
Field. The obligation not to disclose Information shall not apply to any part of
such Information that (i) is or becomes patented, published or otherwise becomes
publicly known other than by acts of the Party obligated not to disclose such
Information or its Affiliates or sublicensees in contravention of this
Agreement; (ii) can be shown by written 

                                      -28-
<PAGE>   34
documents to have been disclosed to the receiving Party or its Affiliates or
sublicensees by a Third Party, provided such Information was not obtained by
such Third Party directly or indirectly from the other Party under this
Agreement; (iii) prior to disclosure under this Agreement, was already in the
possession of the receiving Party or its Affiliates or sublicensees, provided
such Information was not obtained directly or indirectly from the other Party
under this Agreement; (iv) can be shown by written documents to have been
independently developed by the receiving Party or its Affiliates without breach
of any of the provisions of this Agreement; (v) is disclosed by the receiving
Party pursuant to a subpoena lawfully issued by a court or governmental agency,
provided that the receiving Party notifies the other Party immediately upon
receipt of any such subpoena or (vi) is used outside the Field on the condition
that any entity or person to whom such Information is disclosed agrees to keep
such Information confidential for the same time periods and to the same extent
as the Party disclosing such Information is required to keep such terms
confidential.

        10.2. Terms of this Agreement. The Parties agree that the public
announcement of the execution of this Agreement shall be substantially in the
form of the press release attached to this Agreement as Appendix B and, from and
after the Effective Date, each Party shall be entitled to make or publish any
statement limited to the contents of such press release. The Parties further
agree to seek confidential treatment for the filing of this Agreement with the
Securities and Exchange Commission and shall agree upon the content of the
request for confidential treatment made by each Party in respect of such filing.
Except as permitted by the foregoing provisions or as otherwise required by law,
Diacrin and Genzyme each agree not to disclose any terms or conditions of this
Agreement to any Third Party without the prior consent of the other Party;
provided, that each Party shall be entitled to disclose the terms of this
Agreement without such consent to potential investors or other financing sources
on the condition that such entities or persons agree to keep such terms
confidential for the same time periods and to the same extent as such Party is
required to keep such terms confidential.

        10.3. Publications. Each Party recognizes the mutual interest in
obtaining valid patent protection. Consequently, any Party, its employees or
consultants wishing to make a publication (including any oral disclosure made
without obligation of confidentiality) relating to work performed by such Party
as part of the Program (the "Publishing Party") shall transmit to the other
Party (the "Reviewing Party") a copy of the proposed written publication at
least forty-five (45) days prior to submission for publication, or an abstract
of such oral disclosure at least fifteen (15) days prior to submission of the
abstract or the oral disclosure, whichever is earlier. The Reviewing Party shall
have the right (a) to request a delay in publication or presentation in order to
protect patentable information, (b) to propose modifications to the publication
for patent reasons or (c) to request that the information be maintained as a
trade secret.

                                      -29-
<PAGE>   35
        If the Reviewing Party requests a delay as described in (a) above, the
Publishing Party shall delay submission or presentation of the publication for a
period of ninety (90) days to enable patent applications protecting each Party's
rights in such information to be filed. Upon the expiration of forty-five (45)
days, in the case of proposed written disclosures, or fifteen (15) days, in the
case of an abstract of proposed oral disclosures, from transmission of such
proposed disclosures to the Reviewing Party, the Publishing Party shall be free
to proceed with the written publication or the oral presentation, respectively,
unless the Reviewing Party has requested the delay described above.

        To the extent possible in the reasonable exercise of its discretion, the
Publishing Party shall incorporate all modifications proposed under clause (b)
above. If a trade secret that is the subject of a request made under clause (c)
above cannot be otherwise protected without unreasonable expense to the
Reviewing Party, such information shall be omitted from the publication.

                   ARTICLE 11. REPRESENTATIONS AND WARRANTIES

        11.1. Authorization. Each Party warrants and represents to the other
that it has the legal right and power to enter into this Agreement, to extend
the rights and licenses granted to the other in this Agreement, and to perform
fully its obligations hereunder, that this Agreement is a valid and binding
agreement of such Party, enforceable in accordance with its terms, and that such
Party has not made nor will it make any commitments to others in conflict with
or in derogation of such rights or this Agreement.

        11.2.   Intellectual Property Rights.

                11.2.1. Diacrin hereby represents and warrants that as of the
Effective Date, (i) it possesses an exclusive right, title and interest to or,
in the case of Technology licensed from Massachusetts General Hospital, an
exclusive license (subject to certain exceptions set forth in the license
covering such Technology) to, the Diacrin Patent Rights and the Diacrin
Technology, (ii) that the Diacrin Patent Rights and the Diacrin Technology are
free and clear of any lien or other encumbrance and (iii) that it has the right
to: (a) enter into the obligations set forth in this Agreement; and (b) grant
the rights and licenses set forth in Article 3.

                11.2.2. Diacrin warrants that it is not aware of any issued
patent that would be infringed by the manufacture and sale of Collaboration
Products as contemplated by this Agreement.

        11.3.   Warranties.

                                      -30-
<PAGE>   36
                11.3.1. Genzyme Warranties. Genzyme warrants that the
Collaboration Products sold pursuant to Section 6.1.3. of this Agreement will be
marketed and sold in all material respects in accordance with the conditions of
any applicable Regulatory Approvals and any applicable labelling claims.

                11.3.2. Diacrin Warranties. Diacrin warrants that the
Collaboration Products delivered pursuant to Section 7.2. of this Agreement will
conform in all material respects to the Specifications, the conditions of any
applicable Regulatory Approvals regarding the manufacturing process and any
applicable requirements of the Biologics Regulatory Scheme regarding the
manufacturing process.

        11.4. Disclaimer of Representations and Warranties. EXCEPT AS OTHERWISE
EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER DIACRIN, GENZYME NOR
Diacrin/Genzyme LLC MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY
KIND, EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND THE NON-INFRINGEMENT OF
ANY THIRD-PARTY PATENTS OR PROPRIETARY RIGHTS. ALL UNIFORM COMMERCIAL CODE
WARRANTIES ARE EXPRESSLY DISCLAIMED BY THE PARTIES.

        11.5. Limitation of Liability. It is agreed by the Parties that no Party
shall have a right to or shall claim special, indirect or consequential damages,
including lost profits, for breach of this Agreement. Remedies shall be limited
to claims for amounts due hereunder or as otherwise provided in this Agreement,
including claims for indemnification as provided in Section 12.1..

                             ARTICLE 12. INDEMNITY

        12.1. Diacrin/Genzyme LLC Indemnity Obligations. The Diacrin/Genzyme LLC
Operating Agreement shall provide that Diacrin/Genzyme LLC shall indemnify each
of the Parties and its Affiliates, employees and agents for any act performed by
such Party within the scope of the authority conferred upon such Party under
this Agreement; provided, that it shall be a condition to such indemnity that
the Party seeking indemnification (i) acted in good faith and in a manner
reasonably believed to be in, or not opposed to, the best interests of
Diacrin/Genzyme LLC and (ii) the act for which indemnification is sought did not
constitute gross negligence or wilful misconduct by such Party. 

                                      -31-
<PAGE>   37
     CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES
              AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

        12.2. Insurance. Diacrin/Genzyme LLC shall maintain product liability
insurance with respect to development, manufacture and sales of Collaboration
Products in an amount reasonably believed by Genzyme and Diacrin to be adequate
and customary for the development, manufacture and sale of novel therapeutic
products. Genzyme and Diacrin shall be named as additional insureds on any such
policy.

                       ARTICLE 13.  TERM AND TERMINATION

        13.1. Term. The term of this Agreement shall be perpetual unless
terminated pursuant to Section 13.2.

        13.2.   Termination.  This Agreement may be terminated in the following
circumstances:

                13.2.1. For Breach. If either Genzyme or Diacrin fails to
perform any material duty imposed upon such Party by this Agreement and such
failure to perform is not cured within ninety (90) days of written notice
thereof from the non-breaching Party, the non-breaching party may terminate
this Agreement. Such 90-day period shall be extended to one hundred eighty
(180) days if the breaching Party has engaged in good faith efforts to remedy
such default within such 90-day period and indicated in writing to the
non-breaching Party prior to the expiration of such 90-day period that it
believes that it will be able to remedy the default within such 180-day period,
but such extension shall apply only so long as the breaching Party is engaging
in good faith efforts to remedy such default.

                13.2.2. For Convenience. Diacrin at any time or Genzyme at any
time after Genzyme shall have made capital contributions to Diacrin/Genzyme LLC
of not less than *********** dollars ($**********) may terminate this Agreement
for any reason upon one hundred eighty (180) days notice to the other Party
(during which 180-day period the obligations of the Parties, including without
limitation obligations with respect to capital contributions, shall continue in
full force and effect).

        13.3. Effect of Termination by Diacrin.

                13.3.1. For Breach. In addition to the rights and duties set
forth in Section 13.5., Diacrin and Genzyme shall have the following rights and
duties upon termination of this Agreement by Diacrin pursuant to Section
13.2.1.:

                                      -32-
<PAGE>   38
          CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
        SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                (a) Diacrin/Genzyme LLC shall be dissolved;

                (b) the licenses granted in Article 3 shall be revoked;
provided, however, that Diacrin shall have the exclusive, worldwide,
irrevocable, royalty-bearing right and license, with the right to grant
sublicenses, under the Genzyme Patent Rights, Genzyme Technology and the
Manufacturing Know-How owned or controlled by Genzyme, to develop, make, have
made, use, offer for sale, sell, have sold, import and export Collaboration
Products;

                (c) any "Orphan Drug" designation, applicable Regulatory
Approval and clinical data and any trademark owned by Diacrin/Genzyme LLC or
assigned to Diacrin/Genzyme LLC by either Genzyme or Diacrin shall be assigned
to Diacrin; and

                (d) Diacrin shall make payments to Genzyme equal to **** percent
(*%) of Net Sales until such time as the aggregate amount of such payments
equals (i) the total amount of all capital contributions made by Genzyme to
Diacrin/Genzyme LLC plus (ii) interest thereon at *************************
declared from time to time by The First National Bank of Boston in Boston,
Massachusetts, from the date each such capital contribution was made.

                13.3.2. For Convenience. In addition to the rights and duties
set forth in Section 13.5., Diacrin and Genzyme shall have the following rights
and duties upon termination of this Agreement by Diacrin pursuant to Section
13.2.2.:

                (a) Diacrin/Genzyme LLC shall be dissolved;

                (b) the licenses granted in Article 3 shall be revoked;
provided, however, that Genzyme shall have an option exercisable upon written
notice to Diacrin within the 180-day period provided in Section 13.2.2. to
obtain from Diacrin the exclusive, worldwide, irrevocable, royalty-bearing right
and license, with the right to grant sublicenses, under the Diacrin Patent
Rights, Diacrin Technology and the Manufacturing Know-How owned or controlled by
Diacrin, to develop, make, have made, use, offer for sale, sell, have sold,
import and export Collaboration Products; any license granted to Genzyme
hereunder shall be subject to the obligation of Genzyme to use commercially
reasonable and diligent efforts to develop and market Collaboration Products
pursuant to such license;

                (c) upon exercise of its license option provided in paragraph
(b) of this Section 13.3.2., any "Orphan Drug" designation, applicable
Regulatory Approval 

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and clinical data and any trademark owned by Diacrin/Genzyme LLC or assigned to
Diacrin/Genzyme LLC by either Genzyme or Diacrin shall be assigned to Genzyme;
and

                (d) Genzyme shall make payments to Diacrin equal to **** percent
(*%) of Net Sales until such time as the aggregate amount of such payments
equals (i) the sum of (A) ************************************* dollars
($**********) and (B) the total amount of all capital contributions made by
Diacrin to Diacrin/Genzyme LLC plus (ii) interest thereon at the
********************* declared from time to time by The First National Bank of
Boston in Boston, Massachusetts, from the Effective Date in the case of amount
described in clause (i)(A) and from the date each such capital contribution
described in clause (i)(B) was made.

        13.4.   Effect of Termination by Genzyme.

                13.4.1. For Breach. In addition to the rights and duties set
forth in Section 13.5., Diacrin and Genzyme shall have the following rights and
duties upon termination of this Agreement by Genzyme pursuant to Section
13.2.1.:

                (a) Diacrin/Genzyme LLC shall be dissolved;

                (b) the licenses granted in Article 3 shall be revoked;
provided, however, that Genzyme shall have an option exercisable upon written
notice to Diacrin within the 90-day period provided in Section 13.2.1. to obtain
from Diacrin the exclusive, worldwide, irrevocable, royalty-bearing right and
license, with the right to grant sublicenses, under the Diacrin Patent Rights,
Diacrin Technology and the Manufacturing Know-How owned or controlled by
Diacrin, to develop, make, have made, use, offer for sale, sell, have sold,
import and export Collaboration Products; any license granted to Genzyme
hereunder shall be subject to the obligation of Genzyme to use commercially
reasonable and diligent efforts to develop and market Collaboration Products
pursuant to such license;

                (c) upon exercise of its license option provided in paragraph
(b) of this Section 13.4.1., any "Orphan Drug" designation, applicable
Regulatory Approval and clinical data and any trademark owned by Diacrin/Genzyme
LLC or assigned to Diacrin/Genzyme LLC by either Genzyme or Diacrin shall be
assigned to Genzyme; and

                (d) Genzyme shall make payments to Diacrin equal to **** percent
(*%) of Net Sales until the later of (i) such time as all Diacrin Patent Rights
subject to the license granted in paragraph (b) of this Section 13.4.1. shall
have expired or (ii) 

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fifteen (15) years after the date of first sale of a Collaboration Product in
the United States following Regulatory Approval of such Collaboration Product.

                13.4.2. For Convenience. In addition to the rights and duties
set forth in Section 13.5., Diacrin and Genzyme shall have the following rights
and duties upon termination of this Agreement by Genzyme pursuant to Section
13.2.2.:

                (a) Diacrin/Genzyme LLC shall be dissolved;

                (b) the licenses granted in Article 3 shall be revoked;
provided, however, that Diacrin shall have the exclusive, worldwide,
irrevocable, royalty-bearing right and license, with the right to grant
sublicenses, under the Genzyme Patent Rights, Genzyme Technology and the
Manufacturing Know-How owned or controlled by Genzyme, to develop, make, have
made, use, offer for sale, sell, have sold, import and export Collaboration
Products.

                (c) any "Orphan Drug" designation, applicable Regulatory
Approval and clinical data and any trademark owned by Diacrin/Genzyme LLC or
assigned to Diacrin/Genzyme LLC by either Genzyme or Diacrin shall be assigned
to Diacrin;

                (d) Diacrin shall make payments to Genzyme equal to **** percent
(*%) of Net Sales until such time as the aggregate amount of such payments
equals (i) the total amount of all capital contributions made by Genzyme to
Diacrin/Genzyme LLC plus (ii) interest thereon at *************************
declared from time to time by The First National Bank of Boston in Boston,
Massachusetts, from the date each such capital contribution was made; and

                (e) Genzyme shall make available to Diacrin funding under the
Line of Credit for a period of one hundred eighty (180) days following the date
of termination.

        13.5. Survival of Rights and Duties. No termination of this Agreement
shall eliminate any rights or duties accrued prior to such termination. The
provisions of Articles 1, 10 and 12 and Sections 2.2., 3.4., 4.1., 4.4., 9.1.1.,
9.1.3., 9.3., 9.5., 13.3, 13.4., 13.5, 14.9 and 14.10 shall survive any
termination of this Agreement.

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                           ARTICLE 14. MISCELLANEOUS

        14.1. Cooperation. If either Diacrin or Genzyme (the "Assuming Party")
shall assume the Program rights from the other Party (the "Responsible Party")
in accordance with the provisions of Article 13, the Responsible Party shall
promptly provide to the Assuming Party (or any Third Party or Affiliate
designated by the Assuming Party) all Technology, Manufacturing Know-How and
access to regulatory filings sufficient to allow the Assuming Party to perform
the duties assumed. The Responsible Party shall further use its best efforts to
provide all assistance required by the Assuming Party with respect to such
transfer so as to permit the Assuming Party to begin to perform such duties as
soon as possible to minimize any disruption in the continuity of supply or
marketing of Collaboration Products. In addition, if upon the date this
Agreement is terminated Collaboration Products are being manufactured in
facilities owned or leased by the Responsible Party (including facilities
subleased by Diacrin/Genzyme LLC from the Responsible Party), the Responsible
Party agrees to lease such facilities to the Assuming Party on commercially
reasonable terms for a period of up to twenty-four (24) months.

        14.2. Exchange Controls. All payments due hereunder shall be paid in
United States dollars. If at any time legal restrictions prevent the prompt
remittance of part or all payments with respect to any country where a
Collaboration Product is sold, payment shall be made through such lawful means
or methods as the Parties may determine.

        14.3. Withholding Taxes. If applicable laws or regulations require that
taxes be withheld from payments made hereunder, Diacrin/Genzyme LLC will (i)
deduct such taxes, (ii) timely pay such taxes to the proper authority, and (iii)
send written evidence of payment to the Party from whom such taxes were withheld
within sixty (60) days after payment. Each Party will assist the other Parties
in claiming tax refunds, deductions or credits at such other Party's request and
will cooperate to minimize the withholding tax, if available, under various
treaties applicable to any payment made hereunder.

        14.4. Interest on Late Payments. Any payments to be made hereunder that
are not paid on or before the date such payments are due under this Agreement
shall bear interest, to the extent permitted by applicable law, at
************************* declared from time to time by The First National Bank
of Boston in Boston, Massachusetts, calculated on the number of days payment is
delinquent.

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        14.5. Force Majeure. Neither Party shall be held liable or responsible
to the other Party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any term of this
Agreement when such failure or delay is caused by or results from causes beyond
the reasonable control of the affected Party, including but not limited to
contamination or diseases affecting the swine herd from which the Collaboration
Products are produced, fire, floods, embargoes, war, acts of war (whether war is
declared or not), insurrections, riots, civil commotions, strikes, lockouts or
other labor disturbances, acts of God or acts, omissions or delays in acting by
any governmental authority or the other Party.

        14.6. Assignment. This Agreement may not be assigned or otherwise
transferred by either Party without the consent of the other Party; provided,
however, that either Diacrin or Genzyme may, without such consent, assign its
rights and obligations under this Agreement (i) in connection with a corporate
reorganization, to any member of an affiliated group, all or substantially all
of the equity interest of which is owned and controlled by such Party or its
direct or indirect parent corporation, or (ii) in connection with a merger,
consolidation or sale of substantially all of such Party's assets to an
unrelated third Party; provided, however, that such Party's rights and
obligations under this Agreement shall be assumed by its successor in interest
in any such transaction and shall not be transferred separate from all or
substantially all of its other business assets, including those business assets
that are the subject of this Agreement. Any purported assignment in violation of
the preceding sentence shall be void. Any permitted assignee shall assume all
obligations of its assignor under this Agreement.

        14.7. Severability. Each Party hereby agrees that it does not intend to
violate any public policy, statutory or common laws, rules, regulations, treaty
or decision of any government agency or executive body thereof of any country or
community or association of countries. Should one or more provisions of this
Agreement be or become invalid, the Parties hereto shall substitute, by mutual
consent, valid provisions for such invalid provisions which valid provisions in
their economic effect are sufficiently similar to the invalid provisions that it
can be reasonably assumed that the Parties would have entered into this
Agreement with such valid provisions. In case such valid provisions cannot be
agreed upon, the invalidity of one or several provisions of this Agreement shall
not affect the validity of this Agreement as a whole, unless the invalid
provisions are of such essential importance to this Agreement that it is to be
reasonably assumed that the Parties would not have entered into this Agreement
without the invalid provisions.

        14.8. Notices. Any consent, notice or report required or permitted to be
given or made under this Agreement by one of the Parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery or courier) or courier, postage prepaid (where
applicable), addressed to such other Party at its address indicated below, or to
such other address as the addressee 

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shall have last furnished in writing to the addressor and shall be effective
upon receipt by the addressee.

        If to                   Diacrin, Inc.
        Diacrin:                Charlestown Navy Yard, Building 96
                                13th Street
                                Charlestown, Massachusetts 02129
                                Attention: President

        with a copy to:         Hale and Dorr
                                60 State Street
                                Boston, Massachusetts 02109
                                Attention: Steven D. Singer, Esq.

        If to                   Genzyme Corporation
        Genzyme:                One Kendall Square
                                Cambridge, Massachusetts 02139
                                Attention: President, GTR

        with a copy to:         Genzyme Corporation
                                One Kendall Square
                                Cambridge, Massachusetts 02139
                                Attention: General Counsel

        If to Diacrin/          Diacrin/Genzyme LLC
        Genzyme LLC (if         c/o Genzyme Corporation
        such notice is          One Kendall Square
        sent by Diacrin):       Cambridge, Massachusetts 02139
                                Attention: President, GTR

        with a copy to:         Genzyme Corporation
                                One Kendall Square
                                Cambridge, Massachusetts 02139
                                Attention: General Counsel

        If to Diacrin/          Diacrin/Genzyme LLC 
        Genzyme LLC (if         c/o Diacrin, Inc.   
        such notice is sent     Charlestown Navy Yard, Building 96
        by Genzyme):            13th Street
                                Charlestown, Massachusetts 02129
                                Attention: President

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        with a copy to:         Hale and Dorr
                                60 State Street
                                Boston, Massachusetts 02109
                                Attention: Steven D. Singer, Esq.

        14.9. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.

        14.10. Arbitration. Any disputes arising between the Parties relating
to, arising out of or in any way connected with this Agreement or any term or
condition hereof, or the performance by either Party of its obligations
hereunder, whether before or after termination of this Agreement (a "Dispute"),
which has not resolved in accordance with the provisions of Section 8.3, shall
be finally resolved by binding arbitration as herein provided.

                14.10.1. General. Except as otherwise provided in this Section
14.10., any arbitration hereunder shall be conducted under the commercial rules
of the American Arbitration Association. Each such arbitration shall be
conducted in the English language by a panel of three arbitrators (the
"Arbitration Panel"). Each of Diacrin and Genzyme shall appoint one arbitrator
to the Arbitration Panel and the third arbitrator shall be appointed by the two
arbitrators appointed by Diacrin and Genzyme. The Arbitration Panel shall be
convened upon delivery of the Notice of Arbitration (as herein defined). Any
such arbitration shall be held in Boston, Massachusetts. The Arbitration Panel
shall have the authority to grant specific performance, and to allocate between
the Parties the costs of arbitration in such equitable manner as it shall
determine. Judgment upon the award so rendered may be entered in any court
having jurisdiction or application may be made to such court for judicial
acceptance of any award and an order of enforcement, as the case may be.

                14.10.2. Procedure.

                        (a) Whenever a Party (the "Claimant") shall decide to
institute arbitration proceedings, it shall give written notice to that effect
(the "Notice of Arbitration") to the other Party (the "Respondent"). The Notice
of Arbitration shall set forth in detail the nature of the Dispute, the facts
upon which the Claimant relies and the issues to be arbitrated (collectively,
the "Arbitration Issues"). Within fifteen (15) days of its receipt of the Notice
of Arbitration, the Respondent shall send the Claimant and the Arbitration Panel
a written Response (the "Response"). The Response shall set forth in detail the
facts upon which the Respondent relies. In addition, the Response shall contain
all counterclaims which the Respondent may have against the Claimant which are
within the Arbitration Issues, whether or not such claims have previously been
identified. If the Response sets forth a counterclaim, the Claimant may, within
fifteen (15) days of the receipt of the 

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Response, deliver to the Respondent and the Arbitration Panel a rejoinder
answering such counterclaim.

                        (b) Within fifteen (15) days after the later of (i) the
expiration of the period provided in Section 14.10.2.(a) for the Claimant to
deliver a rejoinder or (ii) the completion of any discovery proceedings
authorized by the Arbitration Panel: (A) the Claimant shall send to the
Arbitration Panel a proposed resolution of the Arbitration Issues and a proposed
resolution of any counterclaims set forth in the Response (the "Claimant's
Proposal"), including the amount of monetary damages, if any, or other relief
sought; and (B) the Respondent shall send to the Arbitration Panel a proposed
resolution of the Arbitration Issues, a proposed resolution of any counterclaims
set forth in the Response and a proposed resolution of any rejoinder submitted
by the Claimant (the "Respondent's Proposal"), including the amount of monetary
damages, if any, or other relief sought. Once both the Claimant's Proposal and
the Respondent's Proposal have been submitted, the Arbitration Panel shall
deliver to each Party a copy of the other Party's proposal.

                        (c) The Arbitration Panel shall issue an opinion with
respect to any Dispute, which opinion shall explicitly accept either the
Claimant's Proposal or the Respondent's Proposal in its entirety (the "Final
Decision"). The Arbitration Panel shall not have the authority to reach a Final
Decision that provides remedies or requires payments other than those set forth
in the Claimant's Proposal or the Respondent's Proposal. The concurrence of two
(2) arbitrators shall be sufficient for the entry of a Final Decision. The
arbitrators shall issue a Final Decision within one (1) month from the later of
(i) the last day for submission of proposals under Section 14.10.2.(b) or (ii)
the date of the final hearing on any Dispute held by the Arbitration Panel. A
Final Decision shall be binding on both Parties.

        14.11. Entire Agreement. This Agreement and the Diacrin/Genzyme LLC
Operating Agreement contain the entire understanding of the Parties with respect
to the subject matter hereof. All express or implied agreements and
understandings, either oral or written, heretofore made are expressly merged in
and made a part of this Agreement. This Agreement may be amended, or any term
hereof modified, only by a written instrument duly executed by both Parties
hereto.

        14.12. Headings. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are merely guides or labels to
assist in locating and the several Articles and Sections hereof.

        14.13. Independent Contractors. It is expressly agreed that Diacrin and
Genzyme shall be independent contractors and that, except as members of
Diacrin/Genzyme LLC, the relationship between the two Parties shall not
constitute a partnership, joint venture or agency. Neither Diacrin nor Genzyme
shall have the authority to make any statements, representations or commitments
of any kind, or to 


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take any action, which shall be binding on the other, without the prior consent
of the other Party to do so.

        14.14. Agreement Not to Solicit Employees. During the term of this
Agreement and for a period of ************* following the termination of this
Agreement, Diacrin and Genzyme agree not to seek to persuade or induce any
employee of the other Party to discontinue his or her employment with that Party
in order to become employed by or associated with any business, enterprise or
effort that is associated with its own business.

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

        14.16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

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        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.

                            DIACRIN, INC.

                            By:  /s/ Thomas H. Fraser
                               ----------------------------------------
                            Title:  President
                                  -------------------------------------

                            GENZYME CORPORATION



                            By:  /s/ Gregory D. Phelps
                               ----------------------------------------
                            Title:  Executive Vice President
                                  -------------------------------------


                            DIACRIN/GENZYME LLC



                            By:     DIACRIN, INC.

                            By:  /s/ Thomas H. Fraser
                               ----------------------------------------
                            Title:  President
                                  -------------------------------------


                            BY:     GENZYME CORPORATION

                            By: /s/ Gregory D. Phelps
                               ----------------------------------------
                            Title:  Executive Vice President
                                  -------------------------------------

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