Document:

Exhibit
10.4 

Execution
Copy 

REORGANIZATION AGREEMENT

REORGANIZATION AGREEMENT, dated as of December 18,
2006 (this “Agreement”), by and among PROTECTION ONE, INC., a Delaware
corporation (the “Company”), POI ACQUISITION I, INC., a Delaware
corporation and minority stockholder of the Company and its successors (“Parent”),
QUADRANGLE CAPITAL PARTNERS LP, a Delaware limited partnership (“QCP”), QUADRANGLE
SELECT PARTNERS LP, a Delaware limited partnership (“QSP”), QUADRANGLE
CAPITAL PARTNERS-A LP, a Delaware limited partnership (“QCP-A” and,
together with QCP and QSP, the “Quadrangle Investors”, who are
collectively indirect owners of Parent), QUADRANGLE MASTER FUNDING LTD, a
Cayman Islands exempted company incorporated with limited liability (“QMFL”),
QDRF MASTER LTD, a Cayman Islands exempted company incorporated with limited
liability and an owner of QMFL (“QDRF”), QUADRANGLE DEBT OPPORTUNITIES
FUND MASTER LTD, a Cayman Islands exempted company incorporated with limited
liability and an owner of QMFL (“QDOF” and, together with QMFL, QDRF and
the Quadrangle Investors, collectively, the “Parent Stockholders”).

WHEREAS, Parent Stockholders, Parent and the Company
desire to restructure the ownership of the Company by Parent and Parent
Stockholders;

WHEREAS, Parent will be converted to a Delaware
limited liability company immediately after and pursuant to a plan including
the Reorganization (as defined below) (the “Conversion”); and

WHEREAS, the parties intend for the transactions
contemplated by this Agreement (including the Conversion) to constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the “Code”), and that this Agreement will
constitute a “plan of reorganization” for such purposes.

NOW, THEREFORE, in consideration of the foregoing and
the respective representations, warranties, covenants and agreements set forth
in this Agreement, and intending to be legally bound hereby, the Company,
Parent and the Parent Stockholders agree as follows:

ARTICLE I

THE REORGANIZATION

2.1.          The
Reorganization.  Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing Parent
shall transfer to the Company all of the Company common stock, par value $0.01
per share (the “Company Common Stock”), owned by it immediately prior to
the Closing (as defined below) in exchange for an equal number of shares of
newly-issued Company Common Stock or Company Common Stock held by the Company
as treasury shares (the “Reorganization”).

1.2.          Tax Treatment. 
Parent, the Company and the Parent Stockholders intend that the
Reorganization and the Conversion be treated as a reorganization within the
meaning of Section 368(a) of the Code. 
Neither the Company, Parent nor any Parent Stockholder will (i) 

take any position with the Internal Revenue Service or
any other federal, state or local taxing authority with respect to the
Reorganization or Conversion that is inconsistent with the intended tax
treatment described in this Section 1.2 or (ii) take any action that would
cause the Reorganization and Conversion to fail to qualify as a reorganization
within the meaning of Section 368(a) of the Code.

1.3           Closing. 
Subject to the satisfaction or waiver of the conditions set forth in
Article IV hereto, the closing of the Reorganization and the transactions
contemplated by this Agreement (the “Closing”) will take place at a date
and time to be determined by Parent and the Company (the “Closing Date”).  The Closing shall be held at the offices of
Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York,
10017, unless another place is agreed to in writing by the parties hereto.  At the Closing or promptly thereafter, (i)
Parent will deliver and surrender, or will cause to be delivered and
surrendered with the assistance of the Company, to the Company the stock
certificate or stock certificates representing the Company Common Stock, in
each case duly endorsed for transfer to the Company or accompanied by stock or
other appropriate powers duly endorsed in blank, (ii) the Company will deliver,
or cause to be delivered, to Parent a stock certificate or stock certificates
representing the Company Common Stock, and (iii) Parent shall file, or cause to
be filed, a certificate of conversion with the Secretary of State of the State
of Delaware in accordance with the requirements of the DGCL.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE PARTIES

2.1.          Representations
of Parent.  Parent represents and
warrants to the Company as of the date hereof that:

(a)           The
delivery to the Company of the certificate or certificates representing the
Company Common Stock (with respect to which Parent has good and marketable
title) in accordance with Article I hereto will transfer to the Company  record and beneficial ownership of the Company
Common Stock owned by it free and clear of any charge, claim, community
property interest, condition, equitable interest, lien, option, pledge security
interest, right of first refusal or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income or exercise of any
other attribute of ownership (the foregoing, collectively, “Encumbrances”)
(other the Encumbrances created or placed thereon by the Company).

(b)           The
execution, delivery and performance by Parent of this Agreement and
consummation of the Reorganization by Parent has been duly authorized by all
necessary corporate, partnership or limited liability company action, if
applicable, and this Agreement constitutes, and upon execution and delivery by
the Company, will constitute, a valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms.

2.2.          Representations of the Parent Stockholders.  Each Parent Stockholder, severally as to
itself and not jointly or as to the other Parent Stockholders, represents and
warrants to the Company as of the date hereof that the execution, delivery and
performance by 

 2
 

such Parent Stockholder of this Agreement and the
consummation of the Reorganization by such Parent Stockholder has been duly
authorized by all necessary corporate, partnership or limited liability company
action, if applicable, and this Agreement constitutes, and upon execution and
delivery by the Company, will constitute, a valid and binding obligation of
such Parent Stockholder, enforceable against such Parent Stockholder in
accordance with its terms.

2.3.          Representations of the Company.  The Company represents and warrants to Parent
and the Parent Stockholders, as of the date hereof:

(a)           The delivery to
Parent of the certificate or certificates representing the Company Common Stock
in accordance with Article I hereto will transfer to Parent record and
beneficial ownership of the Company Common Stock free and clear of any
Encumbrances (other than Encumbrances created or placed thereon by Parent).

(b)           The execution,
delivery and performance by the Company of this Agreement and the consummation
of the Reorganization by the Company has been duly authorized by all necessary
corporate action, and this Agreement constitutes, and upon execution and
delivery by Parent, will constitute, a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.

(c)           The newly-issued
Company Common Stock, if applicable, will be, upon delivery of the Company
Common Stock owned by Parent in accordance with the terms of this Agreement,
and payment of the par value thereof, duly authorized, validly issued, fully
paid, nonassessable and free of preemptive rights.

ARTICLE III

TAX MATTERS

3.1.          Tax Indemnification.

(a)           Parent and
each Parent Stockholder shall jointly and severally indemnify and hold harmless
the Company and its affiliates and each of their respective officers,
directors, employees, stockholders, agents and other representatives from and
against any loss, claim, liability, expense, or other damage attributable to
(i) all Taxes (as defined below) of Parent (other than any consolidated income
Taxes arising from the consolidated group including the Company for which
Parent was the common parent and attributable to the income of a member of such
consolidated group other than Parent) with respect to any taxable period of
Parent ending on or before the Closing Date (“Pre-Closing Tax Period”),
(ii) all Taxes (as defined below) of the Company attributable to its status as
a withholding agent with respect to the payment of $6,592,346.75 the Company or
its agents made on behalf of Parent to the Parent’s stockholders on May 12,
2006 and (iii) all Taxes (as defined below) resulting from the
Reorganization.  For purposes of this
Agreement, “Tax” or “Taxes” shall mean taxes and governmental
impositions of any kind in the nature of (or similar to) taxes, payable to any
federal, state, local or foreign taxing authority, including those on or
measured by or referred to as income, franchise, profits, gross receipts,
capital ad valorem, custom
duties, alternative or add-on minimum taxes, 

 3
 

estimated, environmental, disability, registration,
value added, sales, use, service, real or personal property, capital stock,
license, payroll, withholding, employment, social security, workers’
compensation, unemployment compensation, utility, severance, production,
excise, stamp, occupation, premiums, windfall profits, transfer and gains
taxes, and  interest, penalties and
additions to tax imposed with respect thereto.

(b)           The Company
shall, and shall cause its subsidiaries to, indemnify and hold harmless the
Parent and Parent Stockholders and their affiliates and each of their
respective officers, directors, employees, stockholders, agents and other
representatives from and against any loss, claim, liability, expense, or other
damage relating to any consolidated income Taxes arising from the consolidated
group including the Company for which Parent was the common parent and
attributable to the income of a member of such consolidated group other than
Parent.

(c)           Notwithstanding
any provision in this Agreement to the contrary, the obligations to indemnify
and hold harmless another party pursuant to this Section 3.1(a) and (b)
shall terminate at the close of business on the thirtieth (30th) day following
the expiration of the applicable statute of limitations with respect to the Tax
liabilities in question (giving effect to any waiver, mitigation or extension
thereof).

3.2.          Tax Claims.

(a)           If
a claim shall be made by any taxing authority, which, if successful, might
result in an indemnity payment to an indemnified party pursuant to Section 3.1,
then such indemnified party shall give prompt notice to the indemnifying party
in writing of such claim and of any counterclaim the indemnified party proposes
to assert (a “Tax Claim”); provided, however, the failure to give such notice
shall not affect the indemnification provided hereunder except to the extent
the indemnifying party has been materially prejudiced as a result of such
failure.

(b)           With
respect to any Tax Claim relating to a Tax for which the Parent and Parent
Stockholders, on the one hand, or the Company and its subsidiaries on the
other, is required to indemnify the other parties pursuant to Section 3.1
hereof, the indemnifying party shall, solely at its own cost and expense, be
entitled to assume and control all proceedings and may make all decisions taken
in connection with such Tax Claim (including selection of counsel) and, without
limiting the foregoing, may in its sole discretion pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with any taxing
authority with respect thereto, and may, in its sole discretion, either pay the
Tax claimed and sue for a refund where applicable law permits such refund suits
or contest the Tax Claim in any permissible manner.  The indemnified party shall have the right to
employ counsel separate from counsel employed by the indemnifying party in any
action involving a Tax Claim described above and to participate in the defense
thereof, but the fees and expenses of such counsel employed by the indemnified
party shall be at the expense of the indemnified party unless the employment
thereof has been specifically authorized by the indemnifying party in writing.

(c)           Notwithstanding
anything to the contrary herein, if the indemnifying party assumes or controls
the defense of any Tax Claim pursuant to Section 3.2(b), the indemnifying party
shall obtain the prior written consent of the indemnified party (which shall
not be 

 4
 

unreasonably withheld or delayed) before entering into
any settlement of a Tax Claim or ceasing to defend a Tax Claim, if pursuant to
or as a result of such settlement or cessation, injunctive or other equitable relief
will be imposed against the indemnified party.

3.3.          Cooperation.  The Parent Stockholders, the Company, each of
Company’s subsidiaries and Parent shall reasonably cooperate, and shall cause
their respective affiliates, officers, employees, agents, auditors and other
representatives to reasonably cooperate, in preparing and filing all Tax
returns and in resolving all disputes and audits with respect to all taxable
periods relating to Taxes, including by maintaining and making available to
each other all records reasonably necessary in connection with Taxes and making
employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify at
proceedings relating to such matters.

3.4.          Refunds.
The amount or economic benefit of any refunds of Taxes of Parent (other than
refunds of Taxes attributable to a member of Parent’s consolidated group for a
Pre-Closing Tax Period when Parent was the parent company of a consolidated
group that included Company) or Taxes with respect to which Parent and the
Parent Stockholders have provided an indemnity hereunder shall be for the
account of Parent and the Parent Stockholders. 
The amount or economic benefit of any refunds of Taxes with respect to
which the Company or its subsidiaries have provided an indemnity hereunder
shall be for the account of the Company and its subsidiaries.  The Parent Stockholders or the Company, as
the case may be, shall forward, and shall cause its affiliates to forward, to
the other party the amount or economic benefit of any such refund within ten
(10) days after such benefit or refund is received.

3.5.          Calculation
of Indemnity Payments.  The amount of
any Tax for which indemnification is provided under this Article III shall be
reduced to take account of any net Tax Benefit (as defined below) realized by
the indemnified party arising from the incurrence or payment of any such Tax;
provided, any such Tax Benefit shall be reduced by any net Tax cost
incurred by the indemnified
party as a result of or related to the indemnification payment (including, without limitation, any Tax
related to the inclusion in gross income of the indemnification payment).  For
purposes of this Agreement, “Tax Benefit” shall mean any refund of Taxes paid
or actual reduction in the amount of Taxes which otherwise would have been
paid, with the amount and timing of a Tax Benefit determined assuming the indemnified party has recognized
and/or utilized all other items of income, gain, loss, deduction and credit
available to such indemnified party before
recognizing any item associated with such Tax Benefit.

ARTICLE IV

CONDITIONS TO THE SHARE EXCHANGE

4.1.          Conditions to Each Party’s Obligations.  The respective obligations of each party
hereto to consummate the transactions contemplated by this Agreement will be
subject to the satisfaction of the condition, which may be waived by such
party, that no temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the 

 5
 

consummation of the Reorganization, shall be in
effect, and there shall not be any action taken, or any statute, rule,
regulation or order enacted, entered or enforced which makes the consummation
of the Reorganization illegal.

4.2.          Conditions to Parent’s Obligations.  The obligations of Parent and the Parent
Stockholders to consummate the transactions contemplated by this Agreement will
be subject to the satisfaction of the condition, which may be waived by Parent
or the Parent Stockholders, that the representations and warranties of the
Company shall be true in all respects as of the Closing Date.

4.3.          Conditions to the Company’s Obligations.  The obligations of the Company to consummate
the transactions contemplated by this Agreement will be subject to the
satisfaction of the following conditions, which may be waived by the Company:

(a)           The representations
and warranties of Parent and the Parent Stockholders shall be true in all
respects as of the Closing Date;

(b)           All certificates and
other documents to be delivered by Parent or the Parent Stockholders and all
other matters to be accomplished by Parent or the Parent Stockholders prior to
or at the Closing shall be satisfactory in the reasonable judgment of the
Company and its counsel;

(c)           The dissolution and
liquidation of Parent shall have been approved by Parent’s board of directors
and approved and adopted by the affirmative vote (or written consent in lieu of
such vote) of the Parent Stockholders in accordance with the requirements of
the DGCL.

ARTICLE V

TERMINATION

5.1.          Termination.  This Agreement may be terminated and the
transactions contemplated hereby may be abandoned prior to Closing at any time
by the written consent of each of the parties hereto.  Notwithstanding anything to the contrary
herein, this Agreement shall terminate without the taking of any action by any
party hereto if the Closing shall not have occurred by December 31, 2006.

ARTICLE VI

AMENDMENT

This Agreement may be amended by the parties hereto at
any time by an instrument in writing signed on behalf of each of the parties
hereto.

 6
 

ARTICLE VII

MISCELLANEOUS

Section 7.1.            Indemnification
Agreement.  For the
avoidance of doubt and notwithstanding anything to the contrary in this
Agreement, this Agreement shall not affect any rights or obligations with
respect to Taxes and any Tax matters that are the subject of the indemnity
provided in the Tax Indemnification Agreement, dated as of May 11, 2006,
by and among the Company, QMFL, QDRF and QDOF.

Section 7.2.            Notices.  All notices, demands, or other communications
to be given or delivered under or by reason of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, one (1) day after being sent to the recipient by reputable overnight
courier service (charges prepaid), upon machine-generated acknowledgment of
receipt after transmittal by facsimile, or five (5) business days after being
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid.  Such
notices, demands, and other communications shall be sent to the address
indicated below, or to such other address or addresses or to the attention of
such other person or persons as the recipient party has specified by prior
written notice to the sending party:

	
  If to the Company, at:

  	
  Protection One, Inc.

  
	
   

  	
  1035 N. 3rd Street, Suite 101

  
	
   

  	
  Lawrence, Kansas 66112

  
	
   

  	
  Attention: Darius Nevin

  
	
   

  	
  Facsimile No.: (785) 575-6511

  
	
   

  	
   

  
	
  with a copy to:

  	
  Kirkland & Ellis LLP

  
	
   

  	
  200 East
  Randolph Drive

  
	
   

  	
  Chicago, Illinois 60601

  
	
   

  	
  Attention: R. Scott Falk, P.C.

  
	
   

  	
  Facsimile No.: (312) 861-2200

  
	
   

  	
   

  
	
  If to Parent or
  the:

  	
  Quadrangle Group LLC

  
	
  Parent
  Stockholders, at:

  	
  375 Park Avenue

  
	
   

  	
  New York, New
  York 10152

  
	
   

  	
  Attention: Henry Ormond

  
	
   

  	
  Facsimile No. (212) 418-1740

  
	
   

  	
   

  
	
  with a copy to:

  	
  Simpson Thacher & Bartlett LLP

  
	
   

  	
  425 Lexington
  Avenue

  
	
   

  	
  New York, New York 10017

  
	
   

  	
  Attention: Joseph H. Kaufman, Esq.

  
	
   

  	
  Facsimile No.: (212) 455-2502

  

 

Section 7.3.            Counterparts.        This Agreement may be executed in
counterparts, each of which when so executed shall be deemed to be an original,
and such counterparts shall 

 7
 

together constitute one and the same instrument.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.

[Remainder of this
page intentionally left blank.]

 8
 

IN WITNESS WHEREOF, the Company, Parent and the Parent
Stockholders have caused this Agreement to be executed as of the date first
written above by their respective officers thereunto duly authorized.

	
  

  	
  PROTECTION ONE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Darius G. Nevin

  
	
   

  	
   

  	
  Name:

  	
  Darius G. Nevin

  
	
   

  	
   

  	
  Title:

  	
  Executive VP and CFO

  

 

	
  

  	
  POI ACQUISITION I, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Weinstock

  
	
   

  	
   

  	
  Name:

  	
  Michael Weinstock

  
	
   

  	
   

  	
  Title:

  	
  Director

  

 

	
  

  	
  QUADRANGLE CAPITAL PARTNERS LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Quadrangle GP Investors LP, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  QCP GP Investors LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven Rattner

  
	
   

  	
   

  	
  Name:

  	
  Steven Rattner

  
	
   

  	
   

  	
  Title:

  	
  Managing Member

  

 

	
  

  	
  QUADRANGLE SELECT PARTNERS LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Quadrangle GP Investors LP, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  QCP GP Investors LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven Rattner

  
	
   

  	
   

  	
  Name:

  	
  Steven Rattner

  
	
   

  	
   

  	
  Title:

  	
  Managing Member

  

 

	
  

  	
  QUADRANGLE CAPITAL PARTNERS-A LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Quadrangle GP Investors LP, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  QCP GP Investors LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Steven Rattner

  
	
   

  	
   

  	
  Name:

  	
  Steven Rattner

  
	
   

  	
   

  	
  Title:

  	
  Managing Member

  

 

	
  

  	
  QUADRANGLE MASTER FUNDING LTD

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Quadrangle Debt Recovery Advisors LP, 

  
	
   

  	
   

  	
  its investment advisor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Weinstock

  
	
   

  	
   

  	
  Name:

  	
  Michael Weinstock

  
	
   

  	
   

  	
  Title:

  	
  Managing Principal

  

 

 9
 

 

	
  

  	
  QDRF MASTER LTD

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Quadrangle Debt Recovery Advisors LP, 

  
	
   

  	
   

  	
  its investment advisor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Weinstock

  
	
   

  	
   

  	
  Name:

  	
  Michael Weinstock

  
	
   

  	
   

  	
  Title:

  	
  Managing Principal

  

 

	
  

  	
  QUADRANGLE DEBT OPPORTUNITIES FUND MASTER LTD

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Quadrangle Debt Recovery Advisors LP, 

  
	
   

  	
   

  	
  its investment advisor

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Weinstock

  
	
   

  	
   

  	
  Name:

  	
  Michael Weinstock

  
	
   

  	
   

  	
  Title:

  	
  Managing Principal

  

 

 10Exhibit
10.1

 

 

 

AMENDED
AND RESTATED CONTRACT MANUFACTURING AGREEMENT

 

BETWEEN

 

THE DOW
CHEMICAL COMPANY

 

AND

 

GENZYME
CORPORATION

 

 

Table
of Contents

	
  ARTICLES

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1 -

  	
  DEFINITIONS

  	
  l

  
	
  ARTICLE 2 -

  	
  PURPOSE

  	
  4

  
	
  ARTICLE 3 -

  	
  TERM

  	
  5

  
	
  ARTICLE 4 -

  	
  QUALITY

  	
  5

  
	
  ARTICLE 5 -

  	
  [             ]*

  	
  5

  
	
  ARTICLE 6 -

  	
  COMMERCIAL SUPPLY AND PRICING

  	
  6

  
	
  ARTICLE 7 -

  	
  DELIVERY, TITLE, AND TRANSPORTATION

  	
  9

  
	
  ARTICLE 8 -

  	
  INVOICES AND PAYMENT

  	
  9

  
	
  ARTICLE 9 -

  	
  WARRANTIES OF GENZYME

  	
  9

  
	
  ARTICLE 10 -

  	
  LIMITED WARRANTY

  	
  9

  
	
  ARTICLE 11 -

  	
  DISCLAIMER OF WARRANTIES

  	
  9

  
	
  ARTICLE 12 -

  	
  INSPECTION AND NOTICE OF CLAIMS

  	
  10

  
	
  ARTICLE 13 -

  	
  LIMITATION OF REMEDIES AND LIABILITIES

  	
  11

  
	
  ARTICLE 14 -

  	
  INTELLECTUAL PROPERTY

  	
  12

  
	
  ARTICLE 15 -

  	
  INDEMNITY

  	
  13

  
	
  ARTICLE 16 -

  	
  INSURANCE

  	
  15

  
	
  ARTICLE 17 -

  	
  DOW FACILITY

  	
  16

  
	
  ARTICLE 18 -

  	
  PRODUCT STEWARDSHIP

  	
  17

  
	
  ARTICLE 19 -

  	
  FORCE MAJEURE AND HARDSHIP

  	
  18

  
	
  ARTICLE 20 -

  	
  EARLY TERMINATION

  	
  18

  
	
  ARTICLE 21 -

  	
  ASSIGNMENT

  	
  19

  
	
  ARTICLE 22 -

  	
  NOTICE

  	
  19

  
	
  ARTICLE 23 -

  	
  PLANT VISITS

  	
  20

  
	
  ARTICLE 24 -

  	
  CONFIDENTIALITY OF INFORMATION

  	
  20

  
	
  ARTICLE 25 -

  	
  EXPORT CONTROL OF TECHNICAL DATA

  	
  21

  
	
  ARTICLE 26 -

  	
  TAXES

  	
  21

  
	
  ARTICLE 27 -

  	
  INDEPENDENT CONTRACTOR

  	
  22

  
	
  ARTICLE 28 -

  	
  SEVERABILITY

  	
  22

  
	
  ARTICLE 29 -

  	
  NON-WAVIER OF DEFAULTS

  	
  22

  
	
  ARTICLE 30 -

  	
  CREDIT

  	
  22

  
	
  ARTICLE 31 -

  	
  GOVERNING LAW

  	
  23

  
	
  ARTICLE 32 -

  	
  HEADINGS

  	
  23

  
	
  ARTICLE 33 -

  	
  ENTIRE AGREEMENT

  	
  23

  
	
  ARTICLE 34 -

  	
  ARBITRATION

  	
  23

  
	
   

  	
   

  	
   

  
	
  SCHEDULE ONE

  	
  26

  
	
  SCHEDULE TWO

  	
  27

  

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 

 

 

AMENDED
AND RESTATED CONTRACT MANUFACTURING
AGREEMENT

This Amended and Restated Contract Manufacturing
Agreement is between The Dow Chemical
Company, a Delaware corporation (“DOW”), and Genzyme Corporation, a Massachusetts
corporation (“GENZYME”).  In consideration
of the mutual covenants set forth in this Agreement, DOW and GENZYME agree as
follows:

ARTICLE
1 — DEFINITIONS

“Affiliate” as used in this
Agreement with respect to one party, means any company controlling, controlled
by or under common control with such party. 
For the purpose of this definition, a company shall be deemed to control
another company when it owns, directly or indirectly, more than 50% of the
voting stock of (or similar interest in) the latter.

“Agreement” means this Amended and
Restated Contract Manufacturing Agreement, as may be amended from time to time
according to Article 33, and any Schedules to this Agreement.  The terms and conditions of this Agreement
shall control over any terms and conditions included in documents used by
GENZYME, or its Affiliates to order Product, or by DOW in accepting or
confirming orders.  Any term or condition
on a purchase order, acceptance or any other document which is not in
accordance with this Agreement is invalid.

“Applied Background IP” is as
defined in Section 14.5.

“Arising Other IP” has the
meaning set forth in Section 14.6.

“Arising Subject IP” has the
meaning set forth in Section 14.6.

“Calendar Year” means a twelve (12)
month period commencing January 1.

“CERCLA” means the
Federal Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. 6901 et seq.

“Claim(s)” means any legal or
equitable causes of action (including but not limited to negligence; strict
liability; other tort; express or implied warranty, indemnity or contract;
contribution; or subrogation) related to or arising out of the performance or
nonperformance of this Agreement.

“Confidential Information” means
any non-public information which relates to another Party’s or its Affiliates’
business affairs, financial data, pricing, customer lists, projects, economic
information, systems, plans, procedures, operations, techniques, technology,
patent applications, trade secrets, know-how, inventions, technical data or
specifications, testing methods, research and development activities, clinical
studies (including, without limitation, information related to the participants
of such studies), marketing strategies,

 1
 

 

 

the substance and terms
of this Agreement or other confidential or proprietary information.

 “Discloser” means a Party who discloses Confidential
Information.

“DOW Background IP” means [       ]*.

“DOW Facility” means
DOW’s
multi-purpose manufacturing facility located in Midland, Michigan.

“DOW Know-How” means
[       ]*.

“Effective Date” means [       ]*.

“EMEA” means the European
Medicines Evaluation Agency.

“FDA” means the United States
Food and Drug Administration.

“FFDCA” means the Federal Food, Drug
and Cosmetic Act, 21 U.S.C. §§301 et  seq.

“Field” has the meaning set
forth in Section 14.6.

“Firm Period” has the meaning set forth in Section 6.6.

“Force Majeure Event” means any
event beyond the reasonable control of the party affected which significantly
interferes with the production, supply, transportation, consumption or Waste
disposal practice of the party at the time respecting the Product covered by
this Agreement, or the inability to obtain on terms reasonably deemed by DOW to
be practicable any supplies, parts or raw material (including energy or other
utilities) used in connection therewith, such as any accident, mechanical
breakdown of facilities, fire, flood, strike, labor trouble, riot, revolt, war,
drought, inability to meet governmental environmental waste disposal standards,
action of governmental authority and laws, rules, ordinances and regulations
(including, but not limited to, those dealing with pollution, health, ecology,
or environmental matters), acts of God, or other similar types of
contingencies.

“GENZYME Know-How” means [       ]*.

“GMPs” means current Good Manufacturing Practices as
defined in the International Conference on Harmonization of Technical
Requirements for Registration of Pharmaceuticals for Human Use (ICH) Q7A “Good
Manufacturing Practice Guidance for Active Pharmaceutical Ingredients”, August
2001, and the FFDCA and related regulations, as amended from time to
time.

“IND(s)” means an
Investigational New Drug as defined in FFDCA and related regulations or the
equivalent document filed in foreign countries.

“Initial Term” has the meaning
set forth in Section 3.1.

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 2
 

 

 

“Kg” means kilograms.

“Material Adverse Change” means
[       ]*.

“Month(s)” means
a calendar month commencing on the first day of a month.

“MT” means metric tons.

“NDA(s)” means a New Drug
Application as defined in FFDCA and related regulations or the equivalent
document filed in foreign countries.

“Outside the Field” has the
meaning set forth in section 14.6

“Operating Guidelines” means
a description of the process for the manufacture of the Product as contained in
the IND or NDA maintained by GENZYME.

[       ]*.

“Plant Capacity” is as set forth in Section 6.3.

“Price” means the
charge for the contract manufacturing of the Product in United States dollars
as calculated in Article 6.

“Product” means [       ]*.

“Proprietary
Information” means confidential information disclosed or developed
pursuant to the terms of this Agreement.

“Quality Agreement” has the
meaning set forth in Section 4.1.

“Quarter” means
three consecutive Months commencing January 1, April 1, July 1, or October 1.

“Quarterly Plant Capacity” is as
set forth in Section 6.4.

“RCRA” means the Federal
Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq.

“Recipient” means a Party who
receives Confidential Information.

[       ]*

[       ]*

“Specification(s)”
means the agreed-to specifications for the Product as fully
described in Schedule 2.  The
Specifications may be amended from time to time upon the mutual written
agreement of DOW and GENZYME.

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 3
 

 

 

[       ]*

“Waste(s)” means “hazardous
substance which is disposed or released” as defined in CERCLA, and “waste” as
defined in RCRA and includes waste of any kind including, without limitation,
both routine process waste and by-products which are disposed.

“Work Day” means
each day of the week excluding Saturday, Sunday and any public holiday.

[       ]*

ARTICLE
2 — PURPOSE

2.1 DOW agrees
to manufacture and sell Product to GENZYME, or its Affiliates, as
directed by GENZYME, and GENZYME agrees that it, or its Affiliates will
purchase and receive Product from DOW, pursuant to the terms and conditions
stated in this Agreement.  DOW’s
manufacturing responsibilities are:

(a)                                  [       ]*;

(b)                                 [       ]*;

(c)                                  [       ]*;

(d)                                 unloading,
handling and storing raw materials and packaging materials at the DOW Facility;

(e)           manufacturing
Product in quantities sufficient to supply GENZYME’s purchase orders subject to
the provisions of Article 6;

(f)                                    collecting
and retaining for [       ]*plus current
year lot samples of the Product;

(g)           packaging
Product;

(h)           handling
and storing bulk and packaged Product;

(i)            preparing
Product for shipment;

(j)            making
the Product available to a common carrier;

(k)                                  keeping
records and reporting to GENZYME and applicable governmental agencies;

(l)                                     handling,
storing, treating, and disposing of Wastes generated by DOW in DOW’s
performance of this Agreement; and

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 4
 

 

 

(m)                               compliance
with all applicable laws and regulations regarding the manufacture of the
Product, including, but limited to, current GMPs.

2.2           DOW will accept
delivery of and title to [       ]*.

2.3           During manufacture
of Product, DOW and GENZYME will have periodic meetings to discuss issues
related to manufacturing of Product.

ARTICLE
3 — TERM, TERMINATION OF PRIOR MANUFACTURING AGREEMENT

3.1            This
Agreement shall be in effect from the Effective Date until [       ]*.

3.2           [       ]*

ARTICLE 4
— QUALITY 

4.1 The
manufacturing process for the Product shall conform to the process set forth
in the Quality Agreement between DOW and GENZYME or its designated Affiliate
related to manufacture of Product.  DOW
will follow standard DOW change control procedures [       ]*.

ARTICLE
5 — [       ]*

5.1           Upon
the signing of this Agreement, DOW will [       ]*.

5.2           DOW
shall [       ]*.

5.3           Notwithstanding
any provisions to the contrary in the [       ]*.

5.4           The
parties agree that during the term of this Agreement, DOW shall not use any of
[       ]*.

5.5           Upon
completion of the [       ]*set forth in
Section 5.1, DOW will complete at [       ]*.

5.6           Upon
completion of the [       ]*, DOW will [       ]*.

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 5

 

 

5.7           GENZYME
will pay for [       ]*.

5.8           It
is anticipated that after [       ]*.

ARTICLE 6 — COMMERCIAL SUPPLY AND
PRICING  

6.1           The
rights and obligations of the parties pertaining to commercial supply and
pricing of [       ]* shall commence upon
the Effective Date of this Agreement, provided that DOW’s obligations relating
to the physical supply of [       ]* shall
be delayed until the successful completion of the [       ]*.  To the extent that DOW is unable to meet its
obligations with respect to [       ]*, DOW
shall not be excused from any of its obligations under Article 2 and this
Article 6 with regard to [       ]*.  The parties shall meet and agree upon a
reasonable course of action designed to expedite as much as possible a supply
of [       ]* to GENZYME (the “Alternate
Supply”) and DOW shall utilize the best technical resources then available
within the Dowpharma organization to effectuate such an Alternate Supply.  GENZYME shall also use commercially
reasonable efforts to effectuate such an Alternate Supply.  If DOW is not able to successfully complete
the [       ]*, or to successfully
manufacture [       ]*, Genzyme shall have
the right to terminate this Agreement at any time, provided that upon
termination pursuant to this paragraph 6.1, [       ]*.  Nothing contained in this paragraph 6.1 shall
limit GENZYME’s rights under this Agreement in the event of DOW’s default of
its obligations under Article 2, Article 5 or this Article 6.

6.2           During the Initial Term of the
Agreement, GENZYME shall be obligated to purchase from DOW a minimum of [       ]*
of Product [       ]* in accordance with the
order processes and restrictions set forth in this Article 6. In addition,
GENZYME agrees to purchase all [       ]*
produced by DOW in 2006, up to [       ]*.
If DOW produces more than [       ]* in
2006, GENZYME and DOW will [       ]*. In
2007, GENZYME agrees to purchase all [       ]*
that Dow manufactures in the [       ]* up
to a maximum of [       ]*. For [       ]*,
GENZYME purchases will be subject to the minimum quarterly volume of [       ]*
per quarter and forecast provisions in the agreement. GENZYME and DOW agree
that the [       ]* produced in 2006 shall
not be included in the [       ]* of Product
to be purchased over the term of the Agreement.

6.3           Consistent with order procedures and
limitations set forth in this Article 6, DOW shall be obligated to supply [       ]*.  For the purpose only of determining DOW’s
maximum obligation to supply under this Section 6.3, if [       ]*.

Plant Capacity is [       ]*
per year of [       ]*.  For Calendar Years 2007 and beyond, the Plant
Capacity for [       ]* will be calculated
once for each Calendar Year to be [       ]*.
This value will then define the Plant Capacity for the following Calendar Year.

6.4           GENZYME shall purchase a minimum
amount of [       ]* of Product in each
calendar quarter.  The maximum [       ]*
would [       ]*.

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 6
 

 

 

6.5           [       ]*
 Thus, the following ordering
restrictions apply:

a.) a minimum of [       ]* must be
given to any Product manufactured in a given [       ]*
period.

b.) [       ]*.

c) [       ]*.

6.6           (a)           At
least [       ]* prior to the beginning of
each Quarter, GENZYME shall provide a written forecast to DOW stating the
amount and identity of Product GENZYME and its affiliates reasonably anticipate
purchasing from DOW for each of the next [       ]*.
GENZYME may seek to increase the amount of Product ordered in the [       ]*
until it issues a Purchase Order for that Month pursuant to Section 6.6(b)
hereof.  DOW will make reasonable
business efforts to accommodate the production of such increases in Product
ordered by GENZYME.  However, for the
avoidance of doubt, DOW’s sole obligation with respect to Purchase Orders shall
in no case be greater than the [       ]*.  Notwithstanding the above, the parties agree
that the forecast for the [       ]* of the
Agreement shall be [       ]*.

(b) Purchase Orders for Product
shall be placed by GENZYME and/or its Affiliates on or before [       ]*
of the date on which GENZYME expects to receive shipment of the Product
(Purchase Order).  If GENZYME does not
issue Purchase Order which meets minimum purchase obligations, DOW may
manufacture, deliver and invoice Product and GENZYME will accept and pay for
Product based on firm forecast.

(c) Each Purchase Order
shall include (i) the quantity of Product to be purchased; (ii) the requested
delivery date(s) therefore; (iii) any relevant shipping instructions; (iv)
packaging instructions (including package sizes) and (v) any other information
dictated by the circumstances of the order. 
DOW shall accept Purchase Orders issued to it by GENZYME that are within
the amounts allowed by the restrictions set forth in Section 6.3 and Section
6.4 above within [       ]* after receipt of
such purchase order, which acceptance shall be conclusively presumed by GENZYME
in the absence of receipt of written notice from DOW to the contrary.  DOW shall ship product to GENZYME in
accordance with the terms of each accepted Purchase Order.

(d) Based on current
protocols, [       ]*. If protocols must be
modified, DOW and GENZYME will meet to determine the revised downtime, if any.

6.7           Prices for [       ]*
in a calendar year where [       ]* are as
follows:

       [       ]*                                                                   Purchase Price ($kg)

Volume Purchased

       [       ]*                                                                             [       ]*

[       ]*.

6.8           For [       ]*produced
in 2006, the pricing for Product shall be [       ]*.
For 2007, the initial invoice pricing for [       ]*
at the beginning of 2007 will be based on [       ]*,

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 7
 

 

 

and the [       ]* price schedules
below. The final invoice price for 2007 will be based on the actual volume
produced in 2007, as defined in the [       ]*
price schedules below. During December 2007, both parties will [       ]*.  For 2008 and beyond, the prices for [       ]*
purchased in a calendar year [       ]*:

For [       ]*

                  [       ]*                                                                  Purchase
Price ($kg)
        Volume Purchased

[       ]*                                                                                    [       ]*

For [       ]*

                  [       ]*                                                                  Purchase
Price ($kg)
        Volume Purchased

[       ]*                                                                                    [       ]*

For [       ]*

      [       ]*                                                                              Purchase
Price ($kg)
        Volume Purchased

                 [       ]*                                                                                   [       ]*

 [       ]*

6.9           In the case where
GENZYME requires [       ]*, the following
pricing rules apply:

a) GENZYME may, subject to the provisions of Sections 6.5 and 6.6,
determine in its sole discretion the frequency and dates of [       ]*.  Genzyme shall discuss its requirements for [       ]*
and shall consider and accommodate as appropriate any reasonable requests made
by DOW relating to [       ]*.

b) [       ]*.

c) The process to determine the pricing for [       ]*
in the [       ]* is as follows:

i) [       ]*.

ii) [       ]*

iii) [       ]*

6.10         [       ]*

6.11         For 2007, the Product pricing in
Sections 6.7 and 6.8 [       ]*.

6.12         For 2008 and beyond, the Product pricing
in Sections 6.7 through 6.9 shall be [       ]*.

6.13         The Product pricing in Sections 6.7 and
6.8 assumes a [       ]*

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 8
 

 

 

ARTICLE 7 — DELIVERY, TITLE, TRANSPORTATION

7.1           Title
to, and risk of loss for, Product shall transfer to GENZYME upon delivery by
DOW to a common carrier acceptable to DOW and GENZYME.

7.2           Product shall be shipped in mutually
acceptable types and sizes of packaging or other shipping containers.  The method of shipment shall be by a mutually
agreed common carrier.  GENZYME will pay
all freight, which shall be invoiced separately to GENZYME.  Emergency response for any emergencies or
other incidents occurring during transit shall be the responsibility of
GENZYME.  GENZYME may, at its election,
purchase cargo insurance to cover product shipments and shall be responsible
for payment of all premiums in respect of any insurance so purchased.

ARTICLE
8 — INVOICES AND PAYMENT

8.1           DOW shall invoice GENZYME for Product
as such Product is shipped.

8.2           Payment terms are net thirty (30)
days from date of invoice. In the event that payment for an outstanding invoice
is made within ten (10) days of invoice date, then the amount of such invoice
shall be reduced by [       ]*.  Invoices past due [       ]*.

ARTICLE
9 — WARRANTIES OF GENZYME

GENZYME warrants that, with regard to the Product, it
shall comply with all applicable laws, including but not limited to the FFDCA
and rules and regulations promulgated by the FDA.

ARTICLE
10 — LIMITED WARRANTY

SUBJECT TO THE
LIMITATIONS OF ARTICLES 11, 12 and 13, DOW warrants that, at the time of
delivery, the Product supplied by DOW shall (a) meet the Specification for the Product and any packaging specifications
agreed to by the Parties; (b) be conveyed with good title, free from any lawful
security interest, lien or encumbrance; (c) be manufactured and packaged
in accordance with current GMPs and all other applicable legal and regulatory
requirements; and (d) not be adulterated or misbranded within the meaning of
the FFDCA; provided, however, DOW shall not be liable for misbranding which is
due to any labeling, instructions or package insert text provided to DOW by
GENZYME.

ARTICLE
11 — DISCLAIMER OF WARRANTIES

THE LIMITED WARRANTIES
CONTAINED IN ARTICLE 10 AND SECTION 14.3 OF THIS AGREEMENT ARE DOW’S SOLE
WARRANTIES WITH RESPECT TO THE PRODUCT AND ARE MADE EXPRESSLY IN LIEU OF AND
EXCLUDE ANY IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A 

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 9
 

 

 

PARTICULAR PURPOSE AND
ALL OTHER EXPRESS OR IMPLIED REPRESENTATIONS AND WARRANTIES PROVIDED BY COMMON
LAW OR STATUTE.

ARTICLE
12 — INSPECTION AND NOTICE OF CLAIMS

12.1                (a) Promptly upon receipt of each batch of
Product by GENZYME, GENZYME shall inspect the Product for any damage, defect or
shortage (including testing to confirm that Product conforms to
Specifications).  GENZYME shall have the
right to reject Product for damage defect or shortfall, including for failure
to conform to Specifications, pursuant to this Section 12.  GENZYME shall notify Dow of any damage,
defect, or shortfall within [       ]* days
of receipt of such shipment, if such damage, defect or shortfall can be
ascertained by the exercise of reasonable diligence upon examination by GENZYME
on receipt of such shipment. If such damage, defect or shortfall cannot be
ascertained by the exercise of reasonable diligence upon examination by GENZYME
on receipt of such shipment, GENZYME shall notify Dow within [       ]*
days after discovery of the damage, defect, or shortfall.

(b) Promptly upon receipt of each batch of Product by
GENZYME’s designated recipient (“Recipient”), Recipient is obligated to inspect
the Product for any damage, defect or shortage (including testing to confirm
that Product conforms to Specifications). 
GENZYME shall notify DOW of any damage, defect, or shortfall within [       ]*
days of receipt of such shipment by Recipient, if such damage, defect or
shortfall can be ascertained by the exercise of reasonable diligence upon
examination by Recipient on receipt of such shipment.  GENZYME shall notify DOW within the shorter
of [       ]* days after discovery of the
same by Recipient, or within [       ]* days
of GENZYME having knowledge of the same, if such damage, defect or shortfall
(including a failure to conform to the Specifications) could not be ascertained
by the exercise of reasonable diligence upon physical examination by Recipient
on receipt of such shipment.

(c)
If and to the extent that GENZYME has failed to notify Dow of any damage,
defect or shortage in accordance with Section 12.1(a) or 12.1(b), the relevant
shipment of the Product will be deemed to have been accepted by GENZYME in
satisfactory condition, in respect of all damage, shortage or defects which
could reasonably have been discovered upon examination.

(d) If any Product does not conform to the
Specifications and such nonconformity could not have been ascertained by the
exercise of reasonable diligence upon examination by GENZYME (or its designated
recipient for the shipment) on receipt of such Product and provided GENZYME met
its notice obligations with regard to the same under 12.1 (a) or (b) as may be
applicable, GENZYME shall not be deemed to have accepted such Product and may
reject such Product, unless a time-period equal to [       ]*
has  elapsed since the receipt of the
Product by GENZYME (or its designated recipient for the shipment).

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 10
 

 

 

12.2         Genzyme shall return any properly
Rejected Product to DOW promptly upon request by DOW and DOW shall be obligated
to pay all transportation costs for properly Rejected Product.  Dow may undertake appropriate testing of a
sample of Rejected Product and will notify GENZYME whether it has confirmed
such non-conformity within [       ]* days
after receipt of such sample or notice (whichever is later).  If Dow notifies GENZYME that it has not
confirmed such non-conformity, GENZYME will submit the disputed shipment for
testing to a mutually agreed upon independent testing laboratory of recognized
standing in the industry.  The findings
of this laboratory will be binding on the Parties.  The expenses of such laboratory testing will
be borne by DOW if the testing confirms the non-conformity or by GENZYME if the
testing does not confirm the non-conformity. 
Genzyme shall not be obligated to pay for any properly Rejected
Product.  On Genzyme’s request, DOW shall
be obligated to replace properly Rejected Product as quickly as possible but in
any event within [       ]* days of the
request, at no additional cost to Genzyme, [       ]*.  DOW shall be responsible for the following
reasonable costs associated with properly Rejected Product and its
replacement:  transportation for return
of Product, storage costs, testing costs all to the extent set forth above in
this section 12.2, disposal costs if any, and [       ]*
to the extent due to Rejected Product, except that DOW shall not be responsible
for costs that were reasonably foreseeable to and avoidable by GENZYME..  Dow’s liability for such costs shall in no
event exceed the lesser of the cap stated in 13.1 or [       ]*
of the value of the Rejected Product. 
Nothing contained in this section 12.2 shall affect GENZYME’s rights at
law or under this Agreement with respect to Product defects that are not
readily discoverable within the [       ]*
day rejection period.

12.3  The remedies of this Article 12 shall be the
exclusive remedies for Product defects that can be ascertained by exercise of
reasonable diligence upon examination on receipt of such shipments.

ARTICLE
13 — LIMITATION OF REMEDIES AND LIABILITY

13.1         EXCEPT AS TO SECTION 15.1(a), DOW’S
TOTAL LIABILITY TO GENZYME FOR CLAIMS FOR PRODUCT DELIVERED UNDER THIS
AGREEMENT SHALL IN NO EVENT EXCEED [       ]*.

13.2         NEITHER
DOW NOR GENZYME SHALL BE UNDER ANY LIABILITY TO THE OTHER FOR ANY INCIDENTAL,
CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES.

13.3         The
provisions of this Article 13 shall not apply to any claims for indemnity under
Article 15, or to claims for breach of Article 14 (Intellectual Property) or
Article 24 (Confidentiality).

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 11
 

 

 

ARTICLE 14 — INTELLECTUAL PROPERTY

14.1         GENZYME has provided DOW with
technology including GENZYME Know-How
concerning the manufacture and packaging of the Product.  GENZYME grants to DOW a non-exclusive, non-transferable, royalty-free license
to use GENZYME Know-How in order to manufacture Product for GENZYME and
its Affiliates.

14.2         GENZYME warrants that
GENZYME has the right to have Product made by DOW, and to have DOW use the technology
provided to DOW by GENZYME or its predecessors, including GENZYME Know-How,
used to produce Product.  GENZYME assumes
all responsibility for use of any design, trademark, trade name, copyright or
part thereof, appearing on the Product at GENZYME’s request

14.3         DOW
warrants that it has the right to use DOW Know-How to produce Product.

14.4         DOW and GENZYME recognize that it may
be necessary to exchange detailed information in order to optimize the administration of this Agreement and the
manufacture and sale of Product by DOW to GENZYME, consistent with the
respective rights and obligations of DOW and GENZYME under this Agreement.  In that regard, GENZYME will provide
Operating Guidelines and GENZYME Know-How to DOW and DOW will provide quality
control information and data and analytical procedures and data to
GENZYME.  GENZYME will provide
consultation to DOW in regard to such process information at no charge to DOW.

14.5         DOW
or DOW’s designated Affiliate shall retain all right, title and interest in,
DOW Background IP, including DOW Know-How, and in any software, hardware,
firmware and other information management and control systems, including,
without limitation, business, research and manufacturing control and
information management systems (such as computers, computer programs and other computer related technology), and information,
plans, technical data, ideas, discoveries, works of authorship,
patentable and unpatentable inventions, know-how, process improvements,
procedures, specifications, engineering drawings, equipment, packaging etc.
that specifically relate to software, hardware, firmware and other information
management and control systems, resulting from DOW’s efforts under this
Agreement.  For DOW Background IP that is
being used by DOW as of the Effective Date in manufacture of [       ]*
(“Applied Background IP”), DOW hereby grants a paid-up, royalty-free,
non-exclusive license to GENZYME to use such Applied Background IP to make or
have made Product during the term of this Agreement.  Upon expiration or termination of this
Agreement, DOW will cause its Affiliate, Dow Global Technologies Inc., to
negotiate in good faith with GENZYME a royalty bearing license to use such
Applied DOW Background IP to make or have made Product.   DOW shall identify its Applied Background IP
in Schedule 3 hereto.

14.6         [       ]*.

14.7         [       ]*.

14.8      If, following
termination of the Agreement for any reason, GENZYME requires [       ]*.

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 12

 

 

ARTICLE 15 — INDEMNITY

15.1         (a)           DOW
shall indemnify, defend and hold GENZYME harmless from and against any and all
liabilities, claims, demands, damages, costs, expenses or money judgments
(including attorneys’ fees) incurred by, or rendered against, GENZYME arising
out of any damage to the environment or damage to natural resources at the DOW
Facility or a facility/location chosen by DOW for its disposal of Wastes
generated by DOW in connection with
DOW’s performance of this Agreement provided, however, GENZYME shall give DOW
notice in writing as soon as practicable of any such claim or lawsuit and shall
permit DOW to undertake the defense thereof at DOW’s expense.  For purposes of this Section 15.1(a), “liabilities,
claims, demands, damages, costs, expenses or money judgments” shall include
assertions involving federal, state and local laws, regulations and ordinances,
including, but not limited to, CERCLA and
RCRA, or comparable and applicable state statutes.  DOW has no obligation to indemnify GENZYME (including
under common law) except as specifically set forth in this Section 15.1.

(b)           DOW shall indemnify, defend and hold
GENZYME and its directors, officers, employees, agents and Affiliates (the
GENZYME Indemnitees), harmless from and against any and all third party (other
than an Affiliate, employee, officer, director or agent of GENZYME) claims made
against a GENZYME Indemnitee for liabilities, claims, demands, damages, costs,
expenses or money judgments (including reasonable attorneys’ fees) to the extent
they arise out of: (i) breach by DOW of any representation or warranty
contained in this Agreement other than those claims related to such breach that
could have been ascertained by exercise of reasonable diligence by GENZYME (or
its designated recipient of Product) prior to use, sale or distribution of
Product or end products made from Product; (ii) out of the negligence of DOW in
connection with performance of this Agreement other than: (1) those claims
related to defects that could have been ascertained by exercise of reasonable
diligence by GENZYME (or its designated recipient of Product) prior to use,
sale or distribution of Product or end products made from Product;  and (2) those claims for which Genzyme is
obligated to indemnify Dow under 15.4 (d) or (f); (iii) the gross negligence or
willful misconduct of DOW in connection with the performance of this Agreement;
or (iv) patent or copyright infringement to the extent it is based on the use
by Dow in the manufacture or sale of Product of technology which Dow elected to
use in such manufacture and which was not provided to Dow by Genzyme, including
DOW Know-How, DOW Background IP or Applied Background IP.  GENZYME shall give DOW notice in writing as
soon as practicable of any such claim or lawsuit and shall permit DOW to
undertake the defense thereof at DOW’s expense.

15.2         GENZYME shall cooperate in any defense
DOW undertakes pursuant to Section 15.1 by providing access to witnesses and
evidence available to GENZYME.  GENZYME
shall have the right to participate in any defense to the extent that, in its
judgment, GENZYME may be prejudiced thereby.

 13
 

 

 

15.3         In any claim or suit in which GENZYME
seeks indemnification by DOW, GENZYME shall not settle, offer to settle or
admit liability or damages in any such claim or suit without the consent of
DOW.

15.4         GENZYME shall indemnify, defend and
hold DOW and its directors, officers, employees, agents and Affiliates (the Dow
Indemnitees),  harmless from and against
any and all third party (other than an Affiliate, employee, officer, director
or agent of DOW) claims made against a DOW Indemnitee for liabilities, claims,
demands, damages, costs, expenses or money judgments (including reasonable
attorneys’ fees) to the extent they arise out of the following: (a) the design
of the Product as set forth in the Specifications; (b) the use of raw materials
or manufacturing processes specified by GENZYME in the manufacture of the
Product except to the extent caused by the negligence or willful misconduct of
DOW, or attributable to DOW Know-How, DOW Background IP or Applied Background
IP; (c) after delivery of the Product by DOW to GENZYME (or GENZYME’s
designee), the handling, storage, testing, transportation, promotion,
distribution, sale, use, treatment or disposal of the Product (including other
goods which incorporate Product as a component) except (i) to the extent caused
by the gross negligence or willful misconduct of DOW, or (ii) to the extent
caused by negligence of Dow or a breach by DOW of its warrantees contained in
this Agreement except to the extent the harm caused by such negligence or the
breach could have been ascertained by exercise of reasonable diligence by GENZYME
(or its designated recipient of Product) prior to use, sale or distribution of
Product or end products made from Product; or (d) injury to GENZYME employees
or agents during GENZYME visits to the DOW Facility except to the extent caused
by the gross negligence or willful misconduct of DOW;  or  (e)
alleged design, trademark, trade name or copyright infringement resulting from
the use of any design, trademark, trade name, copyright or part thereof,
appearing on the Product at GENZYME’s request; or (f) patent or copyright
infringement to the extent it is based on the use by DOW in the manufacture or
sale of Product made for GENZYME of technology 
provided by GENZYME to DOW, including the GENZYME Know-How or (g) the
negligence or willful misconduct of Genzyme in connection with its performance
of  this Agreement except that this
indemnity shall not extent to any action or inaction by GENZYME or Recipient
pursuant to Section 12 hereof.  DOW shall
give GENZYME notice in writing as soon as practicable of any such claim or
lawsuit and shall permit GENZYME to undertake the defense thereof at GENZYME’s
expense.

15.5         DOW
shall cooperate in such defense undertaken by GENZYME pursuant to Section 15.4
by providing access to witnesses and evidence available to DOW.  DOW shall have the right to participate in
any defense to the extent that, in its judgment, DOW may be prejudiced thereby.

15.6         In
any claim or suit in which DOW seeks indemnification by GENZYME, DOW shall not
settle, offer to settle or admit liability or damages in any such claim or suit
without the consent of GENZYME.

15.7         The provisions of this Article 15 shall
survive any termination of this Agreement.

 14
 

 

 

ARTICLE 16 — INSURANCE   

16.1         Minimum Insurance Coverage Limits:  Without limiting the scope of their
respective aforementioned defense, hold harmless and indemnity duties, GENZYME
and DOW shall maintain at their sole cost and expense at least the following
insurance coverage:

(a)                                  Commercial
General Liability (“CGL”)/Limits: a bodily injury, death, and property
damage combined single limit of at least [       ]* per occurrence [       ]* annual aggregate. This coverage must
include contractual liability coverage.

(b)                                 Products-Completed
Operations/Limits: Global Coverage for bodily injury, death, and
property  damage combined single limit of
at least [       ]* per occurrence[       ]* annual aggregate (This coverage and
associated limits requirement may be contained within the CGL form or part of a
separate Products Liability/Completed Operations policy.  Such primary product liability insurance may
be included in a combination of domestic and international policies, and may
include corresponding excess liability policies.)

(c)           Workers Compensation and Employers
Liability Limits.

Workers
Compensation:                                                     As
defined by statute.

Employers
Liability:

[       ]*

(For the monopolistic states:  North Dakota, Ohio, Wyoming, West Virginia
and Washington, Stop-Gap liability is an acceptable alternative to Employers
Liability at the limits indicated above.)

(d)                                 Excess
Liability/Limit: [       ]* per
occurrence/[       ]* annual aggregate
and sits excess to the, General Liability and Employer’s Liability policies.

(e)                                  Personal
Property of Others “Bailment”/Limits: [       ]*.

(f)                                    The
insurance required herein will contain no more than an ordinary deductible
consistent with industry practice.

SECTION
16.2     Additional Insured Requirements.  Each party will cause the other party
(including the other party’s officers, directors, agents, successors, and
assigns) to be named as an additional insured on all of the aforementioned
general liability, products liability or umbrella/excess liability policies, by
specific endorsement, unless the party’s insurer so designates the other party
in writing under a “blanket” coverage provision.  Each such policy shall provide the additional
insured party with primary coverage applicable as to any occurrence, accident
or condition caused in whole or in part by the work of the other party (to
include any of its employees, officers, or agents) whether ongoing or as
completed operations.

SECTION 16.3     Certificates of Insurance.  Before commencing the work,
each 

*Confidential
information omitted and filed separately with the Securities and Exchange
Commission.

 15
 

 

party shall furnish the
other with a true copy of a certificate of coverage issued by the responsible
insurance carrier referencing this Agreement, designating the other party (as
defined in this Agreement) as an “additional insured” and specifying the forms
or endorsements conferring such status as deemed acceptable herein.  Each party shall reimburse the other party in
full for all monetary loss associated with any inaccuracy of said certificates
or its failure to procure coverage in accordance with the requirements herein.
The certificate(s) will include the following statement: “The
insurance certified hereunder is applicable to the Agreement between The DOW
Chemical Company and GENZYME Corporation.” The insurance, and the
certificate(s), shall provide that “The underwriters and
insurance companies of both DOW and GENZYME may not have any right of
subrogation against the other party, including such other party’s affiliates,
and the officers, directors and employees of each.”

SECTION 16.4     Cancellation of Insurance.  Before either party, or its
insurer,  cancels or replaces any
insurance required under this Agreement, not due to failure to pay premium,
that party, or insurer, shall provide the other party with at least thirty (30)
days written notice, but only if such replacement coverage diminishes the scope
of the existing coverage sought to be changed or cancelled.  If either
party receives actual or constructive notice that insurance required under this
Agreement is to be terminated by an insurer due to failure to pay premium, then
that party shall give the other party notice of such termination as soon as is
commercially reasonable after receiving such notice, but in no case, more than two
(2) business days after receiving such notice.

SECTION 16.5     Occurrence v. Claims-Made.  Provided such coverage is commercially
available, coverage required under this Agreement will be provided on an
occurrence basis.  When only claims-made coverage is commercially
available, such coverage will, for a period of not less than three years
following expiration, or earlier termination of this Agreement, either continue
to be maintained or provided through an extended reporting endorsement (tail
coverage), provided such coverage is commercially available.

SECTION
16.6     Carrier Rating.  All insurance obligations under this
Agreement shall be placed with an insurer that (a) has an A.M. Best rating of
A- (X) or better or (b) is a qualified self-insurance program that is approved
by the other party to this Agreement.

SECTION
16.7    Failure to
follow any terms and conditions of this Article 16 will be considered a
material breach under this Agreement.

ARTICLE
17 — DOW FACILITY

17.1         In DOW’s performance of its obligations
under this Agreement, DOW retains the obligations to fully comply with all
applicable federal, state and local laws and 

 16
 

 

regulations which are in
effect at the time, including FFDCA, and all applicable regulations promulgated
by the FDA thereunder.  DOW retains the
sole right and authority to make all decisions with respect to the
construction, maintenance and operation of DOW’s Facility.  Without limiting DOW’s obligations, GENZYME
acknowledges that it may have certain independent obligations in order for
GENZYME to be in compliance with laws, rules and regulations applicable to
GENZYME.

17.2         The DOW Facility is registered with the
FDA pursuant to §510 of FFDCA.  DOW
agrees to maintain a valid FDA Establishment Number for the DOW Facility.  DOW shall keep and maintain records as
required by all applicable federal, state and local laws and regulations
including, but not limited to FFDCA.  DOW
shall prepare and submit all reports that DOW is required by applicable
federal, state and local laws and regulations to submit.  DOW shall provide GENZYME with a copy of any
such reports that pertain to the production of Products.  DOW shall promptly notify GENZYME of any
reportable incidents involving the raw materials, packaging materials or
Product involving DOW’s performance
under this Agreement or of any actions or inspections by the FDA relating to
the manufacture of the Product.  DOW
retains exclusive ownership and responsibility of all DOW Facility materials,
reports and records.

ARTICLE
18 — PRODUCT STEWARDSHIP

18.1         GENZYME acknowledges that it has
requested DOW to contract manufacture Product for GENZYME pursuant to
instructions and specifications provided to DOW by GENZYME.  GENZYME represents that it has used its own
independent skill and expertise in connection with the design, selection and
use of the Product (including other goods which incorporate Product as a component)
and that it possesses skill and expertise in the handling, storage,
transportation, treatment, use and disposal of the Product (including other
goods which incorporate Product as a component).  GENZYME shall accept and agree to be bound by
appropriate product stewardship guidelines, including but not limited to: (a)
responsibility for providing Material Safety Data Sheets, (b) following safe
handling, use, selling, storage, transportation, treatment and disposal
practices (including special practices as GENZYME’s use of the Product requires)
and instruct its employees, contractors (including DOW), agents and customers
in these practices (including the information contained in the most current
Material Safety Data Sheet), (c) taking appropriate action to avoid spills or
other dangers to persons, property or the environment, and (d) understanding
and complying (and has complied) with all applicable governmental statutes,
rules, regulations and ordinances including, without limitation, those
promulgated by the FDA and the Environmental Protection Agency.

18.2         DOW shall report to GENZYME, in writing
and as promptly as practicable, any complaints it receives concerning the
Product, including any regulatory complaints. 
GENZYME shall be responsible for handling such complaints, and DOW shall
cooperate to the extent reasonably requested by GENZYME.  GENZYME shall promptly disclose to DOW any
information which becomes available to it relating to alleged side effects,
toxicity or other adverse effects allegedly caused by the Product (including
other goods which incorporate Product as a component).

 17
 

 

 

ARTICLE 19 — FORCE
MAJEURE AND HARDSHIP

19.1         The
performance of the party impacted by a Force Majeure Event, other than for
payment for Product already delivered, under this Agreement is delayed, without
liability, for the duration of a Force Majeure Event.

19.2         The party whose performance is affected
by a Force Majeure
Event shall give prompt notice to the other party stating the details and
expected duration of the event.  Once
notice is given of a Force Majeure Event, the parties shall keep each other
apprised of the situation until the Force Majeure Event terminates or this
Agreement is terminated, whichever occurs first.  Each party has full management discretion in
dealing with its own labor issues, and in determining how and when to perform
obligations (other than payment for work already performed) under this Agreement
when the other party is involved in a strike, work stoppage or slowdown
condition.

19.3         DOW may, during any period of shortage
of raw materials (including energy or other utilities), waste handling
capability, labor, or Product due to force majeure as defined in this
Agreement, in DOW’s discretion allocate its supply of such raw materials
(including energy or other utilities), waste handling capability, labor and
Product among the various uses therefore in any manner.  DOW shall have no obligation to obtain
Product, or raw materials (including energy or other utilities) from a third
party in order to supply DOW’s excused contractual shortfall.  The Product, or raw materials (including
energy or other utilities) obtained by DOW from a third party solely for DOW’s
internal use are not subject to allocation.

19.4         In the event of a
Material Adverse Change that is reasonably documented by GENZYME, promptly upon
GENZYME’s request, GENZYME and DOW [       ]*.

ARTICLE 20 —
EARLY TERMINATION

20.1         Either party is entitled (without
prejudice to its other rights and remedies under this Agreement) to terminate
this Agreement upon (a) written notice at any time if the other party breaches
a material obligation under this Agreement and such breach has not be remedied
within thirty (30) days after the non-breaching party provides written notice
of such breach to the breaching party or (b) written notice by the party not
affected by a Force Majeure Event to the party affected by the Force Majeure
Event if a Force Majeure Event lasts for more than sixty (60) days.  Further, either party shall be deemed to have
breached this Agreement in the event such party (a) voluntarily or
involuntarily enters a bankruptcy or similar proceeding; (b) passes a
resolution for winding up its business or a Court makes an order to that effect
(otherwise than for the purpose of amalgamation or reconstruction); or (c) a
receiver is appointed in respect of substantially all of its assets.

*Confidential
information omitted and filed separately with the Securities and Exchange
Commission.

 18

 

 

20.2         If GENZYME has paid the invoice set
forth in Section 5.2 prior to a termination of this Agreement, and some of the
amount of the cost of the invoice has not yet been incurred by DOW, DOW shall
refund to GENZYME an amount equal to the portion of the payment reasonably
remaining unused on the date of the notification of termination.

ARTICLE 21 — ASSIGNMENT

This Agreement is not assignable or transferable by either party
without the prior written consent of the other party, such consent not to be
unreasonably withheld. Notwithstanding the preceding either Party may assign
all or part of its rights or obligations to its Affiliates without consent of
the other Party.  In addition, a Party
may assign this Agreement to successor to substantially all of the assets of
the business to which this agreement pertains provided that the assigning Party
gives prior notice to the other Party of its intent to assign.  The other Party may object to the assignment
by presenting a reasonable basis for concern about the assignment.  In the event such concern (including a
reasonable basis) is not presented within thirty (30) days from receipt of the
notice of assignment, the assigning Party may complete the assignment.  If a reasonable concern is asserted by the
non-assigning party, the assigning Party will use commercially reasonable
efforts (not including a payment to the other Party) to co-operate with the
other Party to alleviate their concerns. 
If such concerns are not alleviated, the non-assigning Party must elect
within a reasonable time after it becomes clear that the concerns cannot be
alleviated one of the following options: 
(1) terminate the agreement upon thirty days written notice or (2) allow
assignment of the Agreement, reserving the right to terminate within the next
twelve month period.  If neither option
is elected the assigning Party may terminate the Agreement upon six (6) months
written notice.

ARTICLE 22 — NOTICE

Any notice to be given under this Agreement shall be
in writing and shall be deemed given when received and may be sent by mail,
express courier or facsimile to:

If to GENZYME:

GENZYME Corporation

15 Pleasant Street Connector

P.O. Box 9322

Framingham, MA  01701

Attention:  James Shuman

Vice President, Materials

Fax: 
(508) 271-3942

 19
 

 

 

With a copy to:

If to DOW:

The Dow Chemical Company

Michigan Operations

574 Building

Midland, MI  48674

Attention:  Business Director, Dowpharma

Fax:  (989)-636-0986

With a copy to:

The Dow Chemical Company

2030 Dow Center

Midland, MI  48674

Attention:  Business Counsel, Dowpharma

Fax:  (989) 638-9997

Either party may change its location or facsimile
number to receive notices upon ten (10) days prior written notice.

ARTICLE 23 — PLANT
VISITS

Subject to DOW Facility safety and confidentiality
limitations, DOW will permit employees and representatives of GENZYME to visit
the DOW Facility for the purpose of reviewing the equipment, manufacturing
process, testing of the Product, batch and other internal records pertaining to
the Product that are provided by DOW, and of conducting compliance audits
associated with GMP and other FDA regulations, if applicable.  Employees and other approved representatives
of GENZYME who enter onto DOW premises will comply with DOW’s safety, security
and confidentiality requirements. 
GENZYME will give DOW reasonable notice of any proposed visit to the DOW
Facility and identify the individuals who will be in attendance.  DOW is entitled to approve the individuals
who will visit and GENZYME may not designate contractors for such visits
without DOW’s prior permission.  All
visits will be during DOW’s normal business hours on weekdays.  DOW may inspect any documents, vehicles, or
containers entering or leaving DOW’s premises. 
Each employee and other approved representatives of GENZYME who visit
the Facility, or other DOW premises, will fully comply with the respective
site’s standard access requirements.

ARTICLE 24 — CONFIDENTIALITY OF INFORMATION

24.1         For the longer of [       ]*, the Recipient of Confidential
Information shall not disclose the Confidential Information to any third party,
or use the Confidential Information for any purpose other than the permitted
activities set forth in this Agreement.

24.2         The obligations of Section 24.1 shall
not apply to any Confidential Information that the Recipient can show, by
written records:

*Confidential information
omitted and filed separately with the Securities and Exchange Commission.

 20
 

 

 

(a)                                  Is
publicly known or becomes publicly known through no fault of the Recipient;

(b)                                 Was
known to the Recipient without duty of secrecy or non-use prior to receipt from
the Discloser;

(c)                                  Was
provided to the Recipient by a third party who owes no duty of secrecy to Discloser,
provided that Recipient’s use or disclosure of the Confidential Information is
permitted by Recipient’s agreement with the third-party discloser; or

(d)                                 Was
independently developed by employees of Recipient without access to or use of
Confidential Information of Discloser.

24.3         Notwithstanding Section 24.1, Recipient
may disclose Confidential Information when required by operation of law,
regulation or court order, if Recipient gives the Discloser reasonable advance
notice of the impending disclosure and uses reasonable efforts, in conjunction
with Discloser, to obtain confidential treatment of the Confidential
Information.

24.4         A Recipient may disclose Confidential
Information to its Affiliates or receive Confidential Information through its
Affiliates as long as:

(e)                                  the
Affiliates are under an obligation of secrecy and non-use at least as stringent
as the obligation in this Agreement; and

(f)                                    the
Recipient warrants that its Affiliates shall not breach any obligation of
Recipient under this Article 24.

24.5         A Discloser may disclose Confidential
Information through its Affiliate.  A
Recipient and its Affiliates shall treat Confidential Information disclosed
and/or received through Affiliates as if it had been disclosed directly between
the Parties.

ARTICLE 25 — EXPORT CONTROL
OF TECHNICAL DATA

The
parties acknowledge their obligations to adhere to the United States export
laws and regulations, such as Export Administration Regulations,
International Traffic in Arms Regulations
and regulations promulgated by the Office of Foreign Assets Control and the
parties agree to adhere to such laws and regulations.

ARTICLE
26 — TAXES

GENZYME shall pay to DOW
(a) any applicable sales, use, gross receipts, or value-added tax that is currently or hereafter imposed or increased as a result of, or measured by, the sales of Product, and (b) the amount of any
and all governmental taxes, duties and/or charges of every kind,
excluding any income tax imposed upon DOW,
that is currently or hereafter
imposed or increased, and which DOW may be required to pay with respect
to the production, sale, disposal,
or transportation of Product, or
with respect to any material used in the manufacture thereof. GENZYME will cooperate with DOW in providing
DOW with exemption certificates, if applicable, for the minimization of sales
tax or other governmental taxes, duties, and/or charges to the extent permitted
by law.

 21
 

 

 

ARTICLE 27 — INDEPENDENT CONTRACTOR

DOW is an independent contractor, with all the attendant rights and
liabilities, and not an agent or employee of GENZYME.  The relationship between DOW and GENZYME
shall not constitute a partnership, joint venture or agency.  Any provision in this Agreement, or any
action by GENZYME, which may appear to give GENZYME the right to direct or
control DOW in performing under this Agreement means DOW shall follow the
desires of GENZYME in results only. 
Neither party shall have the authority to make any statements,
representations or commitments of any kind, or take any action, which shall be
binding on the other, without the prior written consent of the other party.

ARTICLE 28 — SEVERABILITY

If any provision of this
Agreement or the application thereof to any person or circumstance shall, for
any reason, and to any extent, be held to be invalid or unenforceable under
applicable law, such provision shall be deemed limited or modified to the
extent necessary to make the same valid and enforceable under applicable
law.  Any invalid or unenforceable
provision shall be replaced with such new provision which shall allow the
parties to achieve the intended economic result in a legally valid and
effective manner.

ARTICLE 29 — NON-WAIVER OF DEFAULTS

Any failure by
either party at any time to enforce or require strict keeping and performance
of any of the terms or conditions of this Agreement shall not constitute a
waiver of such terms or conditions and shall not affect or impair such terms or
conditions in any way, or the right of either party at any time to avail itself
of such remedies as it may have for any breach or breaches of such terms or
conditions.

ARTICLE
30 — CREDIT 

If GENZYME fails to pay any invoice in accordance with the terms
of this Agreement, DOW may defer shipments, alter payment terms or cancel this
Agreement.  If GENZYME’s financial
responsibility becomes unsatisfactory to DOW and DOW deems itself insecure, DOW
may defer shipments, accelerate the due date and demand immediate payment on
any outstanding invoice for Product, or may require cash payments or
satisfactory security for future deliveries. 
GENZYME agrees to pay all costs and expenses, including reasonable
attorney’s fees, incurred by DOW in the collection of any sum payable by GENZYME
to DOW, or in the exercise of any remedy.

 22
 

 

 

ARTICLE
31 — GOVERNING LAW

The interpretation, validity and performance of this
Agreement shall be governed by Delaware law, without regard to Delaware’s
conflict-of-law rules.

ARTICLE 32 — HEADINGS

The headings used in this
Agreement are for the convenience of the reader and are not intended to have
any substantive meaning.

ARTICLE 33 — ENTIRE AGREEMENT; SURVIVAL

This Agreement
constitutes the full understanding of the parties, and is a final, complete and
exclusive statement of the terms and conditions of their agreement regarding
the subject matter of this Agreement. 
All representations, offers, and undertakings, of the parties made prior
to the effective date of this Agreement are merged in this Agreement, [       ]*.  All amendments or modifications to this
Agreement must be in writing, identified as an Amendment to this Agreement and
signed by an authorized representative of each party.  All rights accruing to the parties prior to
the termination or expiration of this Agreement shall survive its termination
or expiration, including those right explicitly referenced herein.

ARTICLE
34 — ARBITRATION 

34.1         Any
Claim arising out of or relating to this Agreement, or any breach thereof,
including, without limitation, the validity of the provisions of this Article
34, but excluding any Claim regarding technology or patents, shall be settled
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association as amended and in effect January 1, 1990 (the “Rules”), except as
such Rules are modified by this Article 34.

34.2         Any arbitration pursuant to this
Article 34 shall occur before a panel of three (3) arbitrators.  Each of DOW and GENZYME shall select one
arbitrator within thirty (30) days of the notice of arbitration.  The two arbitrators so selected then shall
have thirty (30) days to select a third arbitrator from a list of potential
arbitrators provided by the American Arbitration Association.  If the two arbitrators cannot select a third
arbitrator within the thirty-day period, then the American Arbitration
Association shall select the third arbitrator. 
The third arbitrator, regardless of how selected, shall chair the
arbitration panel.

34.3         Any
arbitration pursuant to this Article 34 shall take place at the offices of the
American Arbitration Association in New York, New York, or at such other
offices in New York, New York, as the American Arbitration Association may
stipulate.  The arbitration shall be in
English.  Each party shall bear its
respective costs (including travel 

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 23
 

 

costs, witness and attorneys’ fees) relating to the
arbitration.  Each party shall bear an
equal portion of the actual arbitration costs including, but not limited to,
arbitrator’s fees and administrative fees of the American Arbitration
Association.

34.4         Not less than sixty (60) days from the
date of any arbitration proceeding under this Article 34, each party will
provide to the other a list of the witnesses that it intends to produce.  The other party, at its expense, shall have
the opportunity to take the deposition of such witnesses prior to the
arbitration.  In addition, not less than
forty-five (45) days prior to the arbitration date, each party shall provide to
the other copies of the evidence intended for use during the arbitration.  Not less than ten (10) days before the
arbitration date, the parties may move the arbitration panel to exclude certain
evidence, setting forth the grounds for such request.  The arbitrators shall decide on any such
motions in accordance with applicable law.

34.5         The arbitrators shall issue a written
opinion, setting forth their decision and its legal and factual basis.  The opinion of the arbitrators shall be
binding upon the parties absent manifest error in the understanding of the
facts or the interpretation of applicable law.

 24

 

 

34.6         Anything in this Article 34 to the
contrary notwithstanding, prior to initiating any arbitration, a party to this
Agreement may seek an injunction, temporary restraining order, or other similar
temporary relief, from a court of competent jurisdiction in order to protect
the assets that are the subject of dispute.

The parties have caused this
Agreement to be executed by their duly authorized representatives.

	
  GENZYME CORPORATION

  	
  THE DOW CHEMICAL COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Henri A. Termeer

  	
   

  	
  By:

  	
  /s/ Andrew N. Liveris

  	
   

  
	
  Name:

  	
  Henri A. Termeer

  	
  Name:

  	
  Andrew N. Liveris

  
	
  Title:

  	
  CEO

  	
  Title:

  	
  Chairman & CEO

  
						

 25
 

 

 

SCHEDULE
1

[       ]*

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 26
 

 

 

SCHEDULE
2

Part A

SEVELAMER
CARBONATE 

[       ]*

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 27
 

 

 

SCHEDULE
2

Part B

[       ]*

*Confidential information omitted and filed separately
with the Securities and Exchange Commission.

 28

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