Document:

10Q Q1 2002 Exhibit 10.2

[***] Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2. 

CONFIDENTIAL TREATMENT
REQUESTED - EDITED COPY 

Exhibit 10.2

SUPPLY AGREEMENT

This Supply Agreement (the "Agreement") is
entered into as of August 17, 2001 (the "Effective Date"), between
EMS-Dottikon AG, having an address at Hembrunnstrasse 17, CH-5605,
Dottikon, Switzerland ("DOTTIKON"), and Pharmacyclics, Inc., a
Delaware corporation, having its principal executive offices at 995 E. Arques
Avenue, Sunnyvale, California 94085-4521 ("PCYC").  DOTTIKON and PCYC
are sometimes referred to herein individually as a "Party" and
collectively as the "Parties."

Recitals

Whereas, PCYC is engaged in the development of and owns
or has a license to certain rights relating to its proprietary compounds
motexafin lutetium and motexafin gadolinium, each of which is a human
pharmaceutical agent for the treatment of certain diseases, and wishes to
develop, market and commercially distribute such agents;

Whereas, DOTTIKON has expertise in conducting the cGMP
manufacturing of bulk pharmaceutical intermediates;

Whereas, DOTTIKON and PCYC are parties to that certain
Feasibility Evaluation Agreement [ *** ] as amended, regarding DOTTIKON's
conduct of certain process scale-up and cGMP fine chemicals manufacturing
services for PCYC; 

Whereas, PCYC now desires to have DOTTIKON
manufacture, label, package, test and ship bulk forms of its proprietary
pharmaceutical intermediates, and DOTTIKON desires to undertake such activities,
on the terms hereinafter set forth;

Now, Therefore, in consideration of the foregoing
premises and the mutual promises hereinafter set forth, the Parties hereby agree
as follows:

ARTICLE 1

Definitions.

As used herein, the following capitalized terms shall
have the following meanings:

	"Acceptable Product" means a Batch of
Product Manufactured by DOTTIKON and delivered to PCYC hereunder that meets the
Release Criteria for such Product, as determined pursuant to Section
4.2.

	"Batch" means a specific quantity of a
Product that (a) is intended to have uniform character and quality within
specified limits, and (b) is produced according to a single manufacturing order
during the same cycle of manufacture.

	"Business Day" means any day on which
banks are open for business in both the United States and Switzerland, other
than a Saturday, Sunday or any day that is a national holiday in either the
United States or Switzerland.

	"Capacity" means, with respect to each
Product to be Manufactured by DOTTIKON hereunder, DOTTIKON's Manufacturing
capacity for such Product, as set forth in the applicable Product
Appendix.

	"Confidential Information" shall have
the meaning ascribed in Section 12.1.

	"Controlled" means, with respect to any
material, information or intellectual property right, possession of the ability
by a Party to grant access, a license, or a sublicense to such material,
Information or intellectual property right as provided for herein without
violating an agreement with a Third Party as of the time such Party would be
first required hereunder to grant the other Party such access, license or
sublicense.  

	"Current Good Manufacturing Practices" or
"cGMP" means: (a) the good manufacturing practices required by the
FDA and set forth in the FD&C Act or FDA regulations (including without
limitation 21 CFR 210 and 211 and Part 11), policies, or guidelines, in effect
at any time during the term of this Agreement, for the manufacture and testing
of pharmaceutical materials as applied to bulk pharmaceuticals or their
intermediates, as applicable; and (b) the corresponding requirements of each
applicable Regulatory Authority, in each case as may be further specified in the
applicable Product Appendix.

	"DOTTIKON Technology" means (a) all
inventions that are necessary or useful for the Manufacture, use or sale of a
Product, Drug Product or Drug Substance and all patents (including without
limitation reissues, re-examinations and inventor's certificates) covering such
inventions; and (b) all information, trade secrets and know-how that are
necessary or useful for the Manufacture, use or sale of a Product, Drug Product
or Drug Substance, in each case that are Controlled by DOTTIKON during the term
of this Agreement.  

	"Drug Master File" or "DMF"
means, with respect to each Product Manufactured by DOTTIKON hereunder, a
drug master file covering DOTTIKON's Manufacture of such Product in accordance
with 21 CFR 314.420, as may be amended from time to time, and any foreign
equivalents.

	"Drug Product" means a filled and
finished pharmaceutical product for clinical use, or for commercial use and/or
sale, that employs or incorporates one or more Products.

	"Drug Substance" means a bulk form of
the pharmaceutically active compound motexafin lutetium or motexafin gadolinium,
as applicable.  

	"Facility" means DOTTIKON's
Manufacturing facility located in [ *** ] or such other Manufacturing
facility as may be set forth in the applicable Product Appendix.

	"FDA" means the United States Food and
Drug Administration or any successor entity thereto.

	"FD&C Act" means the United States
Federal Food, Drug and Cosmetic Act, as may be amended from time to
time.

	"Field" means [ *** ] 

	"Force Majeure Event" shall have the
meaning ascribed in Article 14.

	"Identification Testing Standards" means
the identification standards for each PCYC Material to be supplied hereunder as
set forth in the applicable Product Appendix. 

	"Improvements" shall have the meaning
ascribed in Section 1.4 of the Prior Agreement.

	"IND" means an Investigational New Drug
Application filed with the FDA, or a corresponding application filed with any
other Regulatory Authority.

	"Intellectual Property" means any and
all inventions, improvements, information and know-how, including without
limitation those related to processes, compositions of matter and methods of
use, made by or on behalf of either Party individually or jointly, arising out
of the performance of this Agreement, whether protectable by patent or as a
trade secret, and all intellectual property rights therein and thereto.

	"Intermediate" means an intermediate
compound required for the synthesis of a Drug Substance.

	"Manufacture," "Manufactured" or
"Manufacturing" means the synthesis, processing, preparation,
handling, packaging and labeling of Products, the storage and testing of
Materials and Products, and the cleaning of the equipment used in the foregoing
activities.

	"Master Batch Record" means, with
respect to each Product to be Manufactured hereunder, the approved formal set of
instructions for the Manufacture of such Product, as further described in
Section 6.1. 

	"Materials" means, with respect to each
Product to be Manufactured hereunder, the raw material, primary packaging,
secondary packaging and labeling to be used in the Manufacture of such Product
hereunder.

	"Materials Specifications" means, with
respect to each of the Materials for a particular Product, the written
specifications for each of such Materials as set forth in the applicable Product
Appendix.

	 "Material Supply Breach"
means:

	DOTTIKON's falling more than [ *** ] behind its
schedule for its Manufacturing campaign with respect to any Purchase Order
submitted by PCYC and accepted by DOTTIKON pursuant to Section 3.4, as such
schedule is provided to PCYC pursuant to Section 3.4.3; or

	DOTTIKON's failure to supply to PCYC at least [ ***
] of the quantity of Acceptable Product set forth in any Purchase Order
submitted to and accepted by DOTTIKON pursuant to Section 3.4 by the delivery
date set forth in such Purchase Order.

Except with respect to Section 13.2.2,  "Material Supply
Breach" shall include DOTTIKON's failure to meet such its Manufacturing
obligations as described in subsection (a) or (b) above due to a Force Majeure
Event.  

	"NDA" means a New Drug Application filed
with the FDA or any other regulatory filing necessary to obtain marketing
approval from a Regulatory Authority.

	"Packaging Specifications" means, with
respect to each Product to be Manufactured hereunder, the written
specifications for the packaging of such Product as set forth in the applicable
Product Appendix, as such specifications may be amended from time-to-time by
written agreement of the Parties.

	"PCYC Materials" means, with respect to
each Product to be Manufactured hereunder, those Materials for such Product
that PCYC is obligated to supply as set forth in the applicable Product
Appendix.

	"PCYC Technology" means all patents
(including without limitation, reissues, re-examinations and inventor's
certificates) covering the Manufacture of Products hereunder, and all
information, trade secrets and know-how related thereto, that is Controlled by
PCYC during the term of this Agreement.

	"Prior Agreement" means the Feasibility
Evaluation Agreement entered into between the Parties [ *** ] as
amended.

	"Product" means an Intermediate to be
Manufactured by DOTTIKON for PCYC hereunder.

	"Product Appendix" means, for each
Product to be Manufactured hereunder, the Product Specifications, the
price per kilogram and the validation and Manufacturing activities to be
performed by DOTTIKON for such Product, including without limitation the testing
programs and development schedules, and any other information that the Parties
deem appropriate.  Each Product Appendix shall be agreed upon by the Parties as
further described in Section 2.1. The documentation comprising the Product
Appendices shall be attached and incorporated herein as Schedule 1.33 hereto,
and may be amended only by the Parties' written agreement.  

	"Product Specifications" means, with
respect to each Product to be Manufactured hereunder, the written specifications
for the testing of such Product, as detailed in the applicable Product Appendix,
as such specifications may be amended from time-to-time by written agreement of
the Parties.

	"Purchase Orders" means written purchase
orders provided by PCYC to DOTTIKON, which shall specify: (a) the quantity of
Product to be Manufactured by DOTTIKON, (b) the Purchase Price of such Product
as set forth in the applicable Product Appendix, (c) the dates on which such
Product shall be shipped, and (d) the shipping address(es) designated by PCYC.

	"Purchase Price" means, with respect to
each Product to be Manufactured hereunder, the price per kilogram of such
Product as set forth in the applicable Product Appendix. 

	"QC Sample" shall have the meaning
ascribed in Section 4.1. 

	"Regulatory Approval" means all
authorizations by the appropriate Regulatory Authority necessary for use,
development, Manufacture, distribution, promotion or sale of a Product, Drug
Substance or Drug Product in a particular regulatory jurisdiction.

	"Regulatory Authority" means any
national, supranational, regional, state or local regulatory agency, department
or other government entity with the authority to approve and regulate the use,
development, Manufacture, distribution or sale of a Product or Drug Product in a
regulatory jurisdiction.  "Regulatory Authority" shall also include
any non-governmental group licensed by an entity described in the preceding
sentence to perform inspections, audits and/or reviews.

	"Release Criteria" shall have the
meaning ascribed in Section 4.2.1.

	"Released Executed Batch Record" means
the completed Batch record and associated deviation reports, investigation
reports and certificates of analysis created by DOTTIKON for each Batch
Manufactured hereunder, including written confirmation that such Batch record
has been reviewed and approved by DOTTIKON's quality assurance unit.

	"Test Methods" means, with respect to
each Product Manufactured hereunder, the written procedures for
evaluating compliance with the applicable Product Specifications, as set
forth in the applicable Product Appendix.

ARTICLE 2

Product Appendices

	Product Appendices.  

	For each Product to be Manufactured by DOTTIKON
hereunder, the Parties shall agree in writing upon a Product Appendix, as
follows:   For all Products that PCYC desires DOTTIKON to Manufacture hereunder,
PCYC shall prepare and deliver to DOTTIKON two (2) copies of the corresponding
Product Appendix.  DOTTIKON shall either sign such Product Appendix and return
one (1) copy to PCYC, or shall return to PCYC an amended Product Appendix
acceptable to DOTTIKON, in each case within [ *** ] of receipt of such
Product Appendix from PCYC.  In the latter case, if such amended Product
Appendix is not acceptable to PCYC, then PCYC shall so notify DOTTIKON within
[ *** ] of PCYC's receipt of such amended Product Appendix, and the
Parties shall promptly meet in order to resolve in good faith any outstanding
disagreements with respect to such amended Product Appendix. 

	Notwithstanding any other provision of this Section 2.1,
this Agreement shall not be deemed to be amended or modified in any manner by
any provision of any Product Appendix.  Notwithstanding the foregoing, a
particular Product Appendix may supersede a particular term of this Agreement,
solely with respect to the work that is the subject of such Product Appendix,
only if such Product Appendix specifically and expressly sets forth the intent
that such term shall be so superseded.

	Amendments to Product Appendix. Each Product
Appendix may be amended from time to time, as the Parties' experience with the
development, Manufacture, testing and use of the applicable Product warrants,
upon mutual written agreement of PCYC and DOTTIKON.

ARTICLE 3

Manufacturing

	Agreement to Purchase and Supply.  During the term of
this Agreement, PCYC agrees to purchase from DOTTIKON and DOTTIKON agrees to
Manufacture, sell and deliver to PCYC, such quantities of each Product as
may be set forth on Purchase Orders placed by PCYC and accepted by DOTTIKON,
pursuant to the terms and conditions of this Agreement (including without
limitation the applicable Product Appendix). 

	Supply of Materials.

	DOTTIKON shall supply, at its expense, all Materials
necessary to Manufacture each Product other than the PCYC Materials.  

	PCYC shall supply, at its expense, all PCYC Materials
necessary to Manufacture each Product hereunder.  PCYC shall deliver or
cause to be delivered a reasonably sufficient amount of the applicable PCYC
Materials for each Product to be Manufactured hereunder to the applicable
Facility sufficiently in advance of the date of delivery set forth in the
applicable Purchase Order such that DOTTIKON can fill such Purchase Orders,
which required advance time, as well as any storage requirements for such PCYC
Materials, shall be set forth in the applicable Product Appendix.  

	Upon receipt of the PCYC Materials as set forth above,
DOTTIKON shall review the accompanying certificate(s) of analysis and test the
PCYC Materials for conformance with the Identification Testing Standards, in
accordance with the analytical test methods set forth in the applicable
Product Appendix.  Both the Identification Testing Standards and related
analytical test methods may be amended from time to time upon mutual written
agreement of PCYC and DOTTIKON.  

	Within [ *** ] of receipt of the PCYC Materials
described in Section 3.3.1, or such other period as may be specified in the
applicable Product Appendix, DOTTIKON shall determine if such PCYC Materials
meet the applicable Identification Testing Standards.  If DOTTIKON determines
that such PCYC Materials meet the Identification Testing Standards, then such
PCYC Materials shall be used by DOTTIKON in performing its Manufacturing
obligations under this Agreement.  If DOTTIKON determines that any such PCYC
Materials do not meet the Identification Testing Standards, then DOTTIKON shall
make no use of such non-conforming PCYC Materials and shall promptly confer with
PCYC to determine how to proceed.  DOTTIKON shall return, rework or destroy any
non-conforming PCYC Materials as directed by PCYC in writing and at PCYC's
expense.  

	From the time of delivery of the PCYC Materials to
DOTTIKON until the earlier of (a) delivery by DOTTIKON of Product, or (b) return
or destruction of the PCYC Materials by DOTTIKON that do not meet the
Identification Testing Standards, each in the manner provided in this Agreement,
DOTTIKON shall bear all risk of loss of such PCYC Materials.  DOTTIKON shall
comply with all applicable laws, rules, regulations and guidelines in the use,
storage, handling and transportation of the PCYC Materials.  PCYC shall retain
all right, title and interest in and to all PCYC Materials at all times.

	Forecasts.  During the term of this Agreement,
PCYC shall provide to DOTTIKON [ *** ] a written rolling forecast of the
quantities of such Product it intends in good faith to purchase under
this Agreement during [ *** ]  For example, the forecast provided at [ *** ]
will cover the quantities of Products to be delivered during [ *** ]  Each such
forecast shall have the following effect, except as otherwise
set forth in the applicable Product Appendix:  

	[ *** ]

	[ *** ]  

	[ *** ]; and 

	[ *** ]; and

	[ *** ]

	Purchase Orders.  

	All purchases of Products shall be made pursuant to
Purchase Orders which shall be delivered to the Facility, or such other location
as agreed to in writing by the Parties, at least [ *** ] in advance of
the date of shipment specified in such Purchase Order, or to such other location
and/or within such other time period as may be specified in the applicable
Product Appendix.  

	DOTTIKON shall ship all Products as set forth in Section
4.5 by the date and in the quantities specified in the applicable Purchase
Order.  PCYC shall be obligated to buy and DOTTIKON shall be obligated to sell
only the quantities of Product which are subject to a Purchase Order accepted by
DOTTIKON; [ *** ] as may be described in the applicable Product Appendix.
DOTTIKON shall be obligated to accept any Purchase Order that does not require
DOTTIKON to Manufacture a Product in quantities in excess of DOTTIKON's Capacity
for such Product, and shall use its best efforts to accept any Purchase Order in
excess thereof.  Any Purchase Order (or portion thereof) for which PCYC has not
received a written rejection from DOTTIKON within [ *** ] of DOTTIKON's
receipt of such Purchase Order shall automatically be deemed accepted by
DOTTIKON.  

	Within [ *** ] following its acceptance of a
Purchase Order, DOTTIKON shall provide to PCYC a written schedule of its
intended Manufacturing campaign for fulfilling such Purchase Order.

	To the extent that the terms of a Purchase Order are
inconsistent with the terms of this Agreement, this Agreement shall control.
No Purchase Order shall be deemed to amend, modify or supplement this Agreement
or any Product Appendix.

	Purchase Orders and the acceptance or rejection thereof
shall be submitted by facsimile to the attention of the contact person or
department specified in the applicable Product Appendix, and confirmed by mail,
unless otherwise agreed in the applicable Product Appendix. 

	Amendment or Cancellation of Purchase Order.  PCYC
may amend or cancel any Purchase Order by providing DOTTIKON written notice of
such amendment or cancellation no later than [ *** ] after DOTTIKON's
acceptance of the original Purchase Order, or such other period as may be set
forth in the applicable Product Appendix.   In the event that PCYC amends or
cancels any Purchase Order, DOTTIKON's sole and exclusive remedy shall be as
follows:  PCYC shall reimburse DOTTIKON for any non-cancelable, out-of-pocket
costs of Materials and processing reasonably incurred by DOTTIKON in fulfilling
such amended or canceled Purchase Order up to the time of DOTTIKON's receipt of
such notice of amendment or cancellation.  Such reimbursement shall only be made
to the extent of costs that are not otherwise recoverable by DOTTIKON.  Title in
all Materials for which PCYC so reimburses DOTTIKON shall vest in PCYC.  Such
Materials shall not be used for any purpose other than the Manufacture of
Products for PCYC hereunder, unless otherwise agreed in writing by PCYC.  At
PCYC's request, all Materials paid for by PCYC under this Section 3.5 shall be
shipped to PCYC.

	Testing of Batches by DOTTIKON.  DOTTIKON will
test each Batch of Product in accordance with the applicable Test Methods and
Product Specifications, and shall supply PCYC with a certificate of analysis
confirming that such Batch meets the applicable Product Specifications and
Packaging Specifications at the time of batch release if practicable, but in any
event no later than with shipment of the QC Sample.  DOTTIKON shall hold and
store samples from each Batch in accordance with Section 6.3.1.  If DOTTIKON
notices any testing or material manufacturing discrepancies during the
Manufacturing of a Product, DOTTIKON shall promptly notify PCYC.  PCYC may
retest a Product as more fully set forth in Section 4.2 to confirm that it meets
the applicable Product Specifications and Packaging Specifications.  

	DOTTIKON Covenant.  DOTTIKON shall not (a) sell,
provide or transfer any Product to any third party, nor (b) use, allow
any third party to use nor otherwise dispose of any Product, except in each case
as specifically set forth in this Agreement or as expressly authorized by PCYC
in writing.  PCYC shall retain all right, title and interest in and to the
Products Manufactured hereunder at all times.

	Material Supply Breach.  

	If, within [ *** ] following receipt of
written notice from PCYC that a Material Supply Breach has occurred, (a)
DOTTIKON has failed to deliver to PCYC a plan detailing how DOTTIKON will cure
such Material Supply Breach to PCYC's satisfaction, or (b) PCYC has accepted
such plan to cure such Material Supply Breach and DOTTIKON fails to adhere to
such plan to PCYC's reasonable satisfaction, then in addition to any other
rights that PCYC may have at law or equity, [ *** ]  Notwithstanding the
foregoing, if a Material Supply Breach occurs [ *** ]

	If DOTTIKON reasonably anticipates that there is a
substantial likelihood that a Material Supply Breach will occur, then DOTTIKON
shall promptly notify PCYC in writing thereof.  Upon receipt of such notice, the
Parties shall promptly confer to discuss the circumstances and magnitude of such
potential Material Supply Breach, and to determine in good faith whether there
are any reasonable steps that DOTTIKON could take to avoid such Material Supply
Breach.  [ *** ]

	If PCYC cancels any Purchase Orders as described in
this Section 3.8, then upon PCYC's request DOTTIKON shall promptly, but no later
than [ *** ] after receipt of PCYC's request, (a) ship to PCYC or its
designee, [ *** ] any PCYC Materials delivered to DOTTIKON under Section
3.2.2 for use in Manufacturing such Product which have not been consumed in the
Manufacture of such Product, and (b) [ *** ] 

	Subcontractors.  DOTTIKON may not subcontract its
obligations under this Agreement to any third party or affiliate without PCYC's
prior written consent or as specifically set forth in the applicable Product
Appendix.  All such subcontractors shall agree in writing to be bound by the
terms of this Agreement prior to conducting any work hereunder.

	DOTTIKON's Facility.  All Manufacture of Products
hereunder shall be conducted at the Facility.  In the event that DOTTIKON sells
or otherwise transfers ownership or control of the Facility to any third party
or affiliate, such third party or affiliate shall expressly assume DOTTIKON's
obligations hereunder in writing; provided, however, that any such
assumption shall not relieve DOTTIKON of any liability for such third party's or
affiliate's failure to perform under this Agreement.  DOTTIKON hereby expressly
waives any requirement that PCYC exhaust any right, power or remedy, or proceed
directly against such third party or affiliate, for any obligation or
performance hereunder prior to proceeding directly against DOTTIKON.

	[ *** ] 

ARTICLE 4

Delivery and Acceptance

	Quality Control Sample of Product.  Prior to the
shipment of any Batch of Product, DOTTIKON shall provide PCYC with (a) a quality
control sample of such Batch as specified in the applicable Product Appendix
(the "QC Sample") for the purpose of confirming that such Batch meets
the Product Specifications; (b) one copy of the corresponding Released Executed
Batch Record, together with written confirmation that such Batch record has been
reviewed and approved by DOTTIKON's quality assurance unit; and (c) a
certificate of analysis for such Batch. 

	Acceptance and Rejection of Product.  

	PCYC may reject any Batch delivered hereunder that
does not conform with the applicable Master Batch Record, DOTTIKON's standard
operating procedures, certificate of analysis, Product Specifications or
Packaging Specifications, or applicable documentation or process requirements
(collectively, the "Release Criteria") based upon PCYC's testing of
the QC Sample in accordance with the Test Methods and review of the Released
Executed Batch Record.  Any such notice of rejection shall be in writing
and shall indicate the reasons for such rejection.  Such notice is to be
delivered to DOTTIKON within [ *** ] from PCYC's receipt of the QC
Sample, Released Executed Batch Record and certificate of analysis from the
designated carrier or such other period as may be specified in the applicable
Product Appendix (the "Testing Period").  If DOTTIKON does not receive
such notice of rejection by the end of the Testing Period, then PCYC shall be
deemed to have accepted such Batch. 

	(a)After notice of rejection is given, PCYC
shall cooperate with DOTTIKON in establishing the root cause of the rejection
and shall deliver to DOTTIKON a sample of the allegedly non-conforming QC Sample
for DOTTIKON's evaluation.  DOTTIKON will evaluate process issues and other
reasons for such non-compliance.  DOTTIKON shall notify PCYC in writing as
promptly as reasonably possible whether it disputes PCYC's basis for any
rejection, but in any event no later than [ *** ] after its receipt of
PCYC's notice of rejection or such other period as may be specified in the
applicable Product Appendix (the "Response Period").  If PCYC does not
receive such notice of dispute by the end of the Response Period, then DOTTIKON
shall be deemed to agree with PCYC's rejection of such Batch.  

	If DOTTIKON provides PCYC notice, in accordance with
subsection (a) above, that it disputes PCYC's determination that a QC Sample
does not meet the Release Criteria, then such QC Sample shall be submitted to a
mutually acceptable, independent third party laboratory to determine whether
such QC Sample conforms to the Release Criteria.  The Parties shall use
commercially reasonable efforts to locate such a third party laboratory in
Switzerland, but if no such laboratory can be located within [ *** ]
following PCYC's receipt of DOTTIKON's notice of dispute, then the Parties may
select a laboratory located elsewhere.  The Parties agree that such third party
laboratory's determination shall be final and binding.  

	If the third party laboratory determines that such QC
Sample meets the Release Criteria, then PCYC shall be deemed to have accepted
such Batch, and shall pay for such Batch as set forth in Section 5.2.  

	If the third party laboratory determines that such
Product does not meet the Release Criteria, then such Batch shall be deemed
rightfully rejected, and PCYC shall have no further obligation under this
Agreement with respect to such Batch.  

	[ *** ] 

	[ *** ]

	Any Batch accepted by PCYC under this Section 4.2
shall remain subject to DOTTIKON's warranties in Sections 8.2 and
8.3.

	Replacement Batches.  Whether or not DOTTIKON
accepts PCYC's basis for rejection of a Batch under Section 4.2, promptly
following receipt of a notice of such rejection and receipt of the applicable
PCYC Materials from PCYC, DOTTIKON shall use its best efforts at PCYC's written
request to replace such rejected Batch.  PCYC shall purchase such replacement
Batch at the applicable Purchase Price, subject to its acceptance of such Batch
pursuant to Section 4.2.  

	Destruction of Product.  Neither Party may destroy
any Product rejected by PCYC under Section 4.2.1 until the independent third
party laboratory determines whether such Product meets such Release Criteria and
provides written notification to the Parties with respect to such determination,
unless DOTTIKON accepts PCYC's basis for such rejection.  Thereafter, DOTTIKON
shall have the obligation to destroy, or have destroyed, at its cost, all such
rejected Product.  Upon DOTTIKON's written request and at DOTTIKON's cost, PCYC
shall return to DOTTIKON any rejected Product. The method of such destruction
shall be in compliance with all national, federal, state and local laws, rules
and regulations.

	Delivery of Product.  All deliveries of Product
and QC Samples shall be shipped FCA (INCOTERMS 2000) the Facility to a location
designated by PCYC, using a carrier acceptable to PCYC.  All Batches shall be so
shipped within [ *** ] of acceptance of each Batch pursuant to Section
4.2 unless otherwise agreed in writing by the Parties.  PCYC shall be
responsible for all freight and delivery charges, including without limitation
insurance charges, and shall assume all risk of loss of the Product and QC
Samples after transfer of possession to the designated carrier.  All Product and
QC Samples shall be delivered to PCYC free and clear of all liens, claims and
encumbrances.  

ARTICLE 5

Purchase Price and Payment.

	Purchase Price.  Subject to the terms of this Section
5.1, PCYC shall pay DOTTIKON the applicable Purchase Price for each shipment of
Product delivered by DOTTIKON and accepted by PCYC pursuant to Section 4.2. The
Purchase Price shall be deemed to be full compensation for all work performed by
DOTTIKON relating to the Manufacture and supply of such Product hereunder,
including without limitation all Materials provided by DOTTIKON for use in such
Manufacture, all inspection and testing activities performed by DOTTIKON and
delivery of such Product as set forth in Section 4.5 and all overhead, unless
expressly provided otherwise herein or in the applicable Product Appendix.

	Payment.  Each Product Manufactured and supplied
hereunder shall be invoiced at the applicable Purchase Price following PCYC's
acceptance thereof pursuant to Section 4.2.  Payments by PCYC shall be made in
U.S. dollars by check mailed to DOTTIKON by regular air mail or courier within
[ *** ] from the date of DOTTIKON's shipment of the applicable Batch, or
in such other manner as the Parties may agree in writing.  

	Records.  DOTTIKON shall keep accurate records in
sufficient detail to permit the determination of all invoices and fees payable,
credits due and quantities of Product Manufactured hereunder.  Within [ ***
] following a request by PCYC, DOTTIKON shall permit PCYC or its designee to
examine such records during ordinary business hours for the purpose of verifying
the correctness of any such invoices, fees, credits and quantities.  DOTTIKON
shall retain such records for at least [ *** ] from the date of each
invoice to which such records pertain or for such longer period as may be
required by any Regulatory Authority.  

ARTICLE 6

Quality Assurance; Regulatory.

	Master Batch Record. Each Master Batch Record for
each Product shall be prepared and maintained in DOTTIKON's standard format by
DOTTIKON, using PCYC's master formula and technical support.  Each Master Batch
Record must be approved by Pharmacyclics' [ *** ] groups.  

	Audits.  

	PCYC shall have the right to conduct a general audit
of the Facility and of the equipment, system, processes and related
documentation used in the Manufacture of Products to evaluate compliance with
cGMP [ *** ]  PCYC may make recommendations to DOTTIKON based on such
audit, and DOTTIKON agrees to give such recommendations good faith
consideration. DOTTIKON shall be responsible for compliance with cGMP and shall
promptly take such action, at its expense, as may be necessary to bring said
equipment, system, processes, documentation and Facility into conformance
therewith.

	In the event that PCYC notifies DOTTIKON following an
audit under Section 6.2.1 that DOTTIKON is not in compliance with cGMP, and
DOTTIKON disagrees with such finding, then the Parties shall promptly meet to
resolve in good faith the issues relating to such alleged non-
compliance.

	Reasonable notice will be provided by PCYC to DOTTIKON to
schedule the date of such audit.  If DOTTIKON needs to cancel such audit due to
events outside of DOTTIKON's reasonable control (e.g., FDA inspection unrelated
to the Product, act of God, etc.), DOTTIKON will immediately contact PCYC to
reschedule the audit as soon as possible. 

	PCYC's failure to exercise its right to audit the
Facility will not represent a waiver of any future exercise of this right or of
any other rights under this Agreement, nor does it represent acceptance of any
conditions past or present that might exist or result from such conditions at
the Facility.

	Regulatory Matters; Records.  

	DOTTIKON shall keep documentation and records in
accordance with the requirements of cGMP.  DOTTIKON shall provide fully-executed
copies of all documents approved by PCYC promptly following signature of such
documents by each Party's authorized representative.  DOTTIKON will provide to
PCYC copies of all documentation and information relating to the Manufacture,
processing, packaging and shipping of Product and/or required to support PCYC's
NDAs (or INDs, if appropriate) or other regulatory submissions, including but
not limited to information relating to Batch records, specifications, methods,
method validations, equipment and the Facility, for review and inclusion as
necessary in PCYC's regulatory submissions.  DOTTIKON shall maintain all records
and documentation under this Section 6.3 and any inspection samples and data for
at least [ *** ]  past the expiration dates of each Batch or for such
longer period as may be required by cGMP or other regulations promulgated by the
Regulatory Authorities applicable to the relevant Product

	Prior to DOTTIKON's destruction of any of the records or
documentation described in Section 6.3.1, DOTTIKON shall notify PCYC in writing
specifically identifying the records or documentation that it wishes to destroy.
PCYC shall have [ *** ] from its receipt of such notice to notify
DOTTIKON that it desires to receive such records or documentation.  In such
event, such records or documentation shall be delivered to PCYC or its designee
at PCYC's expense.  If PCYC does not notify DOTTIKON that it desires to receive
such records or documentation within such [ *** ] period, then DOTTIKON
shall be free to destroy such records or documentation.  

	DOTTIKON shall be solely responsible, at its expense, for
obtaining and maintaining all Regulatory Approvals required for it to carry out
its development, regulatory and Manufacturing obligations hereunder.  DOTTIKON
agrees to cooperate fully with PCYC in PCYC's efforts to obtain and maintain any
Regulatory Approval which may be required for the use of the Products, or the
Manufacture and/or marketing of Drug Products, in any country.  Such efforts
shall include, without limitation, (a) providing information in DOTTIKON's
possession that is useful or required by PCYC to submit regulatory filings or
obtain or maintain Regulatory Approvals with respect to Products and/or Drug
Products, including all information necessary for PCYC to complete the CMC
portions of its regulatory filings; (b) allowing the use of DOTTIKON's name in
any such filings; and (c) taking any and all other actions reasonably required
to assist PCYC or its designee in obtaining Regulatory Approval of Drug
Products.  

	Upon the request of any Regulatory Authority, such entity
shall have access to observe and inspect the Facility and DOTTIKON's quality and
manufacturing documents and procedures used for the Manufacture of any Product,
including process development and Manufacturing operations, and to audit such
Facility, documents and procedures for compliance with cGMP and/or other
applicable regulatory standards.  DOTTIKON shall give PCYC immediate notice of
any upcoming inspections or audits by a Regulatory Authority of the Facility,
documents and/or procedures relating to any Product Manufactured hereunder, and
shall provide PCYC the opportunity to conduct a pre-inspection of the Facility
and such documents and procedures, and to observe and participate in such
inspection or audit.

	DOTTIKON also agrees to notify PCYC within [ *** ]
of any written or oral inquiries, notifications, or inspection activity by any
Regulatory Authority in connection with any Product.  DOTTIKON shall provide a
reasonable written description to PCYC of any such inquiries, notifications or
inspections promptly (but in no event later than [ *** ] after such visit
or inquiry.  DOTTIKON shall furnish to PCYC (a) within [ *** ] after
receipt, any report or correspondence issued by the Regulatory Authority in
connection with such visit or inquiry, including but not limited to any FDA Form
483 (List of Inspectional Observations) or warning letter, and (b) not later
than [ *** ] prior to the time it provides to a Regulatory Authority,
copies of any and all proposed written responses or explanations relating to
items set forth above (each, a "Proposed Response"), in each case
purged only of trade secrets or other confidential or proprietary information of
DOTTIKON that are unrelated to the obligations under this Agreement or are
unrelated to Products.  DOTTIKON shall discuss with PCYC any comments provided
by PCYC on the Proposed Response and the Parties shall mutually agree on the
final written response or explanation to be provided to the Regulatory
Authority.  After the filing of a response with the appropriate Regulatory
Authority, DOTTIKON will notify PCYC of any further contacts with a Regulatory
Authority relating to DOTTIKON's Manufacture of Products.

	DOTTIKON shall promptly notify PCYC of any other
production issues or other information of which DOTTIKON becomes aware that may
affect the regulatory status of a Product or the ability of DOTTIKON to supply a
Product in accordance with PCYC's forecasted requirements.

	DOTTIKON agrees to promptly rectify or resolve any
deficiencies noted by a Regulatory Authority in a report or correspondence
issued to DOTTIKON, and that are based on DOTTIKON's performance under this
Agreement, at DOTTIKON's expense.

	Each Party shall promptly notify the other of new
regulatory requirements of which it becomes aware which are relevant to the
Manufacture of a Product under this Agreement and which are required by the FDA,
other applicable Regulatory Authority or other applicable laws or governmental
regulations, and shall confer with each other with respect to the best means to
comply with such requirements.

	Drug Master File.  DOTTIKON shall file and
maintain the appropriate DMF for its Manufacture of each Product hereunder, at
DOTTIKON's expense, except as otherwise agreed in writing by the Parties.
DOTTIKON shall provide PCYC and its affiliates, partners, licensees and
designees with letters of authorization to reference such DMF in their
respective filings with the FDA and other Regulatory Authorities.  Upon PCYC's
request,  DOTTIKON shall provide PCYC with copies of such DMFs.

	Stability Testing.  Except as otherwise set forth
in the applicable Product Appendix:  PCYC shall have the initial responsibility
for performing stability testing of each commercial Product; such responsibility
shall be transferred to DOTTIKON at a time to be mutually agreed by the Parties
in writing.

	Changes in Manufacture.  

	DOTTIKON shall not alter any processing steps with
respect to the Manufacture of each Product, as such steps are set forth in the
NDA, DMF (or IND, if appropriate), applicable Manufacturing protocols, Master
Batch Records or any other document governing such steps, unless requested in
writing by PCYC's authorized [ *** ] representatives designated in the
applicable Product Appendix.  

	DOTTIKON may, from time to time, suggest to PCYC changes
DOTTIKON may wish to make in the Manufacture of a Product, the location of
Manufacture within the Facility, the equipment used to Manufacture such
Intermediate or Product or the process used to Manufacture such Intermediate or
Product.  DOTTIKON shall notify PCYC of any such suggested changes via
DOTTIKON's change notice procedure, but shall not implement any such changes
until signature approval has been received from PCYC's authorized [ *** ]
representatives designated in the applicable Product Appendix.  PCYC shall have
no obligation to accept any such suggestions. Any such changes shall be made in
accordance with both DOTTIKON's and PCYC's change control policies and
procedures.

	In the event that [ *** ], unless otherwise agreed
by the Parties in writing:  

	[ *** ] and  

	[ *** ]

For clarity, [ *** ] 

	If facility, process, equipment or system changes are
required of DOTTIKON as a result of requirements set forth by a Regulatory
Authority, regardless of whether such requirements are in force as of the
Effective Date, then DOTTIKON shall have sole responsibility of implementing
such changes, at DOTTIKON's sole expense.   

	Emergency Access.  The Parties agree that in case
of an emergency with the potential to affect the quality of any Product, a PCYC
representative shall have  [ *** ] to DOTTIKON's Facility, personnel,
records and documents for the purpose of dealing with such emergency, and shall
have the right to audit the Facility for cause as set forth in Section 6.2.1.

	Compliance with Laws.  In its performance under
this Agreement, DOTTIKON shall comply, to the extent applicable, with all
applicable present and future orders, regulations, requirements and laws of the
United States federal, state and local authorities and agencies, and all other
Regulatory Authorities, including without limitation all laws and regulations
applicable to the transportation, storage, use, handling and disposal of
hazardous materials.  DOTTIKON represents and warrants to PCYC that it has and
will maintain during the term of this Agreement all Regulatory Approvals,
including without limitation health, safety and environmental permits, necessary
for the conduct of the actions and procedures that it undertakes pursuant to
this Agreement. 

ARTICLE 7

Complaints; Recalls.

	Complaints and Adverse Reactions.  

	DOTTIKON shall advise PCYC of any complaints, adverse
reaction reports, safety issues or toxicity issues relating to any Product of
which it becomes aware, regardless of the origin of such information, within the
time frame required by cGMP and 21 CFR 312 and 314, and the corresponding
regulations of the applicable Regulatory Authorities (collectively, the
"Regulations"), but in no event later than [ *** ] from the
initial complaint or report.  PCYC shall notify DOTTIKON promptly, but in no
event later than [ *** ] of complaints that are relevant to the
Manufacturing activities conducted by DOTTIKON hereunder, except where such
complaints or adverse reactions are due to inherent Product characteristics or
arise from the activities of third parties unrelated to DOTTIKON.  

	PCYC shall retain and manage complaints in accordance
with the Regulations.  The Parties hereby agree to cooperate with one another
and with any Regulatory Authority in the evaluation and investigation of any
complaint, claim or adverse reaction report related to the Manufacture of a
Product with the intention of promptly complying with the Regulations.

	If any such event occurs, DOTTIKON shall retain any
unused supplies of such Product and its associated Materials (including without
limitation PCYC Materials), and all associated Batch and other production
records in such manner as PCYC may reasonably direct.  Such retention shall be
at PCYC's expense, except to the extent that such event is caused by DOTTIKON's
wrongful act or omission.  DOTTIKON agrees to respond to PCYC in respect to such
complaint investigations involving DOTTIKON's Manufacturing of a Product or
services rendered hereunder as soon as reasonably possible but in any case
within [ *** ] from receipt by DOTTIKON of the report of such complaint
and sample (if available), or in the case of a serious adverse event, within
[ *** ] from receipt of the report of such complaint and sample (if
available).  PCYC and/or its designee shall serve as the sole point of contact
with the FDA or other applicable governmental entity concerning any complaints,
adverse reaction reports, safety issues or toxicity issues with respect to the
Product.

	Product Defects.  If either Party becomes aware at
any time of any defect or the possibility of any defect associated with any
Product Manufactured by DOTTIKON hereunder, such Party will notify the other
Party immediately and confirm the notification as soon as possible in writing.

	Recalls. 

	PCYC shall notify DOTTIKON promptly if any Drug Product
employing or incorporating a Product Manufactured by DOTTIKON hereunder is the
subject of a recall, market withdrawal or correction, to the extent that such
recall, market withdrawal or correction is due to such Product being employed or
incorporated into such Drug Product.  PCYC and/or its designee shall have the
sole responsibility for the handling and disposition of any such recall, market
withdrawal or correction.  

	If a recall is required as a result of DOTTIKON's breach
of any of its warranties set forth in Section 8.2 hereof, then DOTTIKON shall
reimburse PCYC for the Purchase Price of such Product and all other reasonable
costs and expenses associated with such Drug Product recall, market withdrawal
or correction, but only to the extent that the foregoing costs and expenses are
attributable to DOTTIKON's breach of its warranties hereunder.  [ *** ]
In all other events of a recall, market withdrawal or correction, all costs and
expenses incurred in connection with such Drug Product recall, market withdrawal
or correction shall be borne by PCYC.  

	PCYC and/or its designee shall serve as the sole point of
contact with the FDA or other applicable Regulatory Authority concerning any
recall, market withdrawal or correction with respect to such Drug Product.

ARTICLE 8

Representations and Warranties.

	Mutual Representations and Warranties.  Each Party
hereby represents and warrants to the other Party that:  (a) the person
executing this Agreement is authorized to execute this Agreement; (b) this
Agreement is legal and valid and the obligations binding upon such Party are
enforceable by their terms; and (c) the execution, delivery and performance of
this Agreement does not conflict with any agreement, instrument or
understanding, oral or written, to which such Party may be bound, nor violate
any law or regulation of any court, governmental body or administrative or other
agency having jurisdiction over it.

	DOTTIKON Product Warranties.  DOTTIKON warrants
that all Products Manufactured by DOTTIKON hereunder shall, at the time of
delivery to PCYC's designated carrier:  (a) conform to the applicable Product
Specifications and Packaging Specifications; (b) have been Manufactured,
handled, stored, labeled, packaged and transported in accordance with the Master
Batch Records, and with cGMP and all other applicable laws, regulations and
other requirements of all applicable Regulatory Authorities; and (c) not be (i)
adulterated or misbranded by DOTTIKON within the meaning of the FD&C Act, or
(ii) an article that may not be introduced into interstate commerce under the
provisions of Sections 404 or 505 of the FD&C Act.  DOTTIKON further
represents and warrants that all computer systems used to gather, process or
report cGMP related data in connection with its activities hereunder are
compliant with 21 CFR Part 11 or that a program is in place to bring them to
such a level of compliance.

	No Debarment or Convictions.  DOTTIKON represents
and warrants that: (a) it has not and will not use in any capacity the services
of any persons debarred under 21 U.S.C.   335a(a) or 335a(b) in connection with
its Manufacture of any Product hereunder; (b) neither DOTTIKON nor any DOTTIKON
official or employee has been convicted of a felony under Federal law for
conduct relating to the development or approval, including the process for
development or approval, of any drug, product, NDA, abbreviated NDA or IND; and
(c) no DOTTIKON official or employee has been convicted of a felony under United
States law for conduct otherwise relating to the regulation of any drug
substance or drug product under the FD&C Act.

	Intellectual Property.  DOTTIKON represents and
warrants that: (a) PCYC's practice of the Improvements, Intellectual Property
and/or DOTTIKON Technology as contemplated herein will not infringe upon the
intellectual property rights of any third party; (b) none of the Improvements,
Intellectual Property or DOTTIKON Technology has been misappropriated from any
third party nor is the result of any misuse of any third party's intellectual
property; and (c) there is no action, suit or proceeding pending or that has
been threatened, orally or in writing, against DOTTIKON, with respect to the
infringement or misappropriation of any third party's intellectual property
rights through the creation or use of the Improvements, Intellectual Property or
DOTTIKON Technology. 

ARTICLE 9

Indemnification.

	Indemnification by DOTTIKON.  Subject to
PCYC's compliance with Section 9.3, DOTTIKON shall indemnify, defend and hold
harmless PCYC and its directors, officers, employees and agents from all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including without limitation reasonable attorneys' fees) or
disbursements of any kind and nature whatsoever arising out of property damage
or personal injury (including without limitation death) of third parties
(collectively, "Claims"), to the extent that such Claims arise from
any: (a) breach by DOTTIKON of any of its obligations under this Agreement
including without limitation any of its warranties and representations
hereunder, (b) negligent acts or omissions or willful misconduct of DOTTIKON or
its employees or agents, and/or (c) infringement of any third party patents or
other proprietary rights by DOTTIKON's manufacturing processes.

	Indemnification by PCYC.  Subject to DOTTIKON's
compliance with Section 9.3, PCYC shall indemnify, defend and hold harmless
DOTTIKON and its directors, officers, employees and agents from all Claims to
the extent that such Claims arise from any: (a) breach by PCYC of any of its
obligations under this Agreement including without limitation any of its
warranties and representations hereunder, (b) negligent acts or omissions or
willful misconduct of DOTTIKON or its employees or agents, (c)  personal injury
caused by adverse reaction to the formula of a Drug Product employing or
incorporating a Product Manufactured by DOTTIKON hereunder, and/or (d) the
promotion, labeling, marketing, distribution, use or sale of any Drug Product
employing or incorporating a Product Manufactured by DOTTIKON hereunder, but in
each case only to the extent that such liability is not covered by DOTTIKON's
indemnification obligations under Section 9.1.

	Indemnification Procedures.  

	A Party (the "Indemnitee") which intends to
claim indemnification under this Article 9 shall promptly notify the other Party
(the "Indemnitor") in writing of any action, claim or other matter in
respect of which the Indemnitee or any of its directors, officers, employees or
agents, intend to claim such indemnification; provided, however, the
failure to provide such notice within a reasonable period of time shall not
relieve the Indemnitor of any of its obligations hereunder except to the extent
the Indemnitor is prejudiced by such failure.  

	The Indemnitee shall permit, and shall cause its
directors, officers, employees and agents to permit, the Indemnitor at its
discretion to settle any such action, claim or other matter, and the Indemnitee
agrees to the complete control of such defense or settlement by the Indemnitor.
Notwithstanding the foregoing, the Indemnitor shall not enter into any
settlement that would adversely affect the Indemnitee's rights hereunder, nor
impose any obligations on the Indemnitee in addition to those set forth herein
in order for it to exercise such rights, without Indemnitee's prior written
consent, which shall not be unreasonably withheld or delayed.  No such action,
claim or other matter shall be settled without the prior written consent of the
Indemnitor, which shall not be unreasonably withheld or delayed. 

	The Indemnitor shall not be responsible for any
attorneys' fees or other costs incurred other than as provided herein.  The
Indemnitee and its directors, officers, employees and agents shall cooperate
fully with the Indemnitor and its legal representatives in the investigation and
defense of any action, claim or other matter covered by the indemnification
obligations of this Article 9.  The Indemnitee shall have the right, but
not the obligation, to be represented in such defense by counsel of its own
selection and at its own expense.

ARTICLE 10

Insurance.

DOTTIKON shall at all times maintain general liability
(including product liability) insurance coverage, at its own expense in full
force and effect, [ *** ] with a responsible insurance carrier.  Such
insurance shall not be terminated or reduced without providing PCYC with at
least [ *** ] advance written notice.  PCYC may request certification of
the existence and maintenance of this insurance coverage at any time.

ARTICLE 11

Intellectual Property; License Grants.

	License Grant by PCYC.  During the term of this
Agreement, and subject to the terms and conditions of this Agreement, PCYC
hereby grants to DOTTIKON a non-exclusive, royalty-free license, without the
right to sublicense, under the PCYC Technology, solely to Manufacture Products
for PCYC as provided herein.

	[ *** ] 

	[ *** ]

	[ *** ] or

	[ *** ]  

	Except in the cases described in Section 11.2.1 above,
[ *** ]   

	Upon PCYC's request, [ *** ]  

	Ownership of Intellectual Property.  

	PCYC shall be the sole and exclusive owner of all
Intellectual Property.  DOTTIKON agrees to assign, and shall automatically be
deemed to have assigned, DOTTIKON's entire right, title and interest in and to
all Intellectual Property to PCYC.  Upon request by PCYC, and without additional
consideration, DOTTIKON agrees to promptly execute documents, testify and take
such other acts at PCYC's expense as PCYC may deem necessary or desirable to
procure, maintain, perfect, and enforce the full benefits, enjoyment, rights,
title and interest of the Intellectual Property on a worldwide basis, and to
render all necessary or reasonably requested assistance in making application
for and obtaining original, divisional, renewal, or reissued utility and design
patents, copyrights, mask works, trademarks, trade secrets, and all other
technology and intellectual property rights throughout the world related to any
of the Intellectual Property, in PCYC's name and for its benefit.  

	DOTTIKON shall promptly provide PCYC with a copy of any
formal invention disclosure document that relates to the Intellectual Property.

	Intellectual Property shall be deemed to be the
Confidential Information of PCYC.  

	[ *** ]  

	If, during the term of this Agreement, [ *** ]
shall give [ *** ] written notice thereof.  Upon [ *** ] receipt
of such notice, the Parties shall [ *** ] as to the [ *** ]
including without limitation [ *** ]  If the Parties [ *** ]
receipt of such notice, then [ *** ] under this Section 11.4.

	If, during the term of this Agreement, [ *** ]
shall first notify [ *** ] in writing.  If, within [ *** ] receipt
of [ *** ] receives written notice from [ *** ] under Section
11.4.1 as if [ *** ] such written notice from [ *** ] under this
Section 11.4.

	[ *** ] of this Agreement, [ *** ] shall be
[ *** ] 

ARTICLE 12

Confidentiality.

	Confidentiality and Exceptions.  Except as otherwise
provided in this Agreement, all information disclosed by one Party (the
"Disclosing Party") to the other Party (the "Receiving
Party") pursuant to this Agreement shall be deemed to be the Disclosing
Party's "Confidential Information."  Confidential Information shall
include, but not be limited to, information relating to the structure of any
Product, Drug Substance, Drug Product or PCYC Materials, any know-how relating
to the Manufacture of any Product, Drug Substance or Drug Product, Manufacturing
records and documentation, and the Manufacturing cost, purchase prices and other
financial arrangements made pursuant to this Agreement.  Each Party agrees that
it will take the same steps to protect the confidentiality of the other Party's
Confidential Information as it takes to protect its own proprietary and
confidential information, which shall in no event be less than reasonable steps.
Each Party, and its employees and agents shall protect and keep confidential and
shall not use, publish or otherwise disclose to any third party, except as
permitted by this Agreement, or with the other Party's written consent, the
other Party's Confidential Information.  For the purposes of this Agreement,
Confidential Information shall not include such information that:

	was already known to the Receiving Party at the time of
disclosure by the Disclosing Party, other than under an obligation of
confidentiality; or

	was generally available to the public or was otherwise
part of the public domain at the time of disclosure or became generally
available to the  public or otherwise part of the public domain after disclosure
other than through any act or omission of the Receiving Party in breach of this
Agreement; or

	was lawfully disclosed to the Receiving Party, other than
under an obligation of confidentiality, by a third party who had no obligation
not to disclose such information to others; or

	was independently developed by or for the Receiving Party
without the aid, application or use of the other Party's Confidential
Information by persons who did not have access to such Confidential
Information.

	Authorized Disclosure.  

	Each Party may disclose Confidential Information
hereunder to the extent such disclosure is reasonably necessary for prosecuting
or defending litigation, filing for Regulatory Approvals, complying with
applicable laws or regulations or conducting preclinical or clinical trials;
provided that if a Party is required by law or regulation to make any
such disclosure of the other Party's Confidential Information it will, except
where impracticable for necessary disclosures (for example in the event of
medical emergency), give reasonable advance notice to the other Party of such
disclosure requirement and will use its best efforts assist such other Party to
secure a protective order or confidential treatment of such Confidential
Information required to be disclosed. 

	Neither Party shall disclose Confidential Information of
the other Party in any patent filings without the prior written consent of the
disclosing Party.

	Confidentiality and Publicity.  The Parties agree
that, except as may otherwise be required by applicable laws, regulations,
rules, or orders, including without limitation the rules and regulations
promulgated by the United States Securities and Exchange Commission or any
comparable Swiss or European authority, and except as may be authorized in
Section 12.2, no information concerning this Agreement and the transactions
contemplated herein shall be made public by either Party without the prior
written consent of the other.  The Parties agree that the public announcement of
the execution of this Agreement shall be by one or more press releases mutually
agreed to by the Parties.  A failure of a Party to return a draft of a press
release with its proposed amendments or modifications to such press release to
the other Party within[ *** ] of such Party's receipt of such press
release shall be deemed as such Party's approval of such press release as
received by such Party.  Each Party agrees that it shall cooperate fully and in
a timely manner with the other with respect to all disclosures to the Securities
and Exchange Commission and any other governmental and regulatory agencies,
including requests for confidential treatment of Confidential Information of
either Party included in any such disclosure.

	Survival of Confidentiality.  All
obligations of confidentiality and non-use imposed upon the Parties under this
Agreement shall continue [ *** ] 

ARTICLE 13

Term and Termination of Agreement.

	Term.  This Agreement shall commence upon the
Effective Date and, unless terminated sooner in accordance with Section 13.2 or
Article 14, shall remain in full force and effect with respect to each Product
to be Manufactured hereunder until the date which is five (5) years from the
date of Regulatory Approval by the FDA of both of the Drug Substances motexafin
gadolinium and motexafin lutetium.  Thereafter, this Agreement will
automatically renew with respect to such Product for successive two (2) year
terms, subject to Section 13.2 and Article 14, unless either Party provides one
(1) year written notice to the other Party prior to the expiration of the then-
current term that the Agreement shall not be renewed with respect to such
Product.

	Termination for Breach.  

	Either Party may terminate this Agreement upon thirty
(30) days prior written notice in the event of a material breach of this
Agreement by the other Party which is not cured by the breaching Party within
such thirty (30) day period.  At the option of the non-breaching Party, such
termination may be with respect to the entire Agreement, or only with respect to
the Product which is the subject of such material breach.  

	A Material Supply Breach shall be deemed to be a material
breach of this Agreement; provided that a Material Supply Breach that is the
direct result of a Force Majeure Event shall not be deemed a material breach of
this Agreement, but shall entitle PCYC to terminate this Agreement in accordance
with Article 14.  PCYC shall have the right to terminate this Agreement for an
uncured Material Supply Breach as described in Section 13.2.1. 

	In the event that a Party materially breaches this
Agreement [ *** ] the other Party shall have the right to terminate this
Agreement pursuant to this Section 13.2 either with respect to the Product(s)
that is the subject of such material breach or in its entirety, effective upon
giving the breaching Party written notice thereof, and without being required to
provide the breaching Party the cure period described in Section
13.2.1.

	Consequences of Expiration/Termination.

	 Upon expiration or termination of this Agreement,
except for termination for DOTTIKON's material breach:

	PCYC agrees to purchase, and DOTTIKON agrees to sell, any
quantity of Products Manufactured by DOTTIKON and held by DOTTIKON against the
requirements of a Purchase Order on the effective date of termination at the
applicable Purchase Price, subject to PCYC's acceptance of such Product pursuant
to Section 4.2.  

	At the request of PCYC, DOTTIKON shall fulfill any
outstanding Purchase Orders for Product using, at DOTTIKON's option, Materials
on hand or on order by DOTTIKON for such Purchase Order, in accordance with the
terms of this Agreement.  In such event, such Product shall be purchased by PCYC
at the applicable Purchase Price, subject to PCYC's acceptance of such Product
pursuant to Section 4.2  

	Upon any termination or expiration of this
Agreement:

	All licenses granted pursuant to Sections 11.1, 11.2
and 11.4 shall terminate;

	DOTTIKON shall return to PCYC all PCYC Materials
currently in inventory that are not being used as set forth in Section 13.3.1.
PCYC shall pay the shipping costs associated therewith, except that if PCYC
terminates this Agreement for DOTTIKON's material breach, then DOTTIKON shall
pay such shipping costs.

	Each Party shall, within sixty (60) days of such
termination, return all tangible forms of the other Party's Confidential
Information in its possession; provided, however, that each Party may
retain an archival copy of such Confidential Information solely for determining
the scope of its confidentiality obligations hereunder.  

	If this Agreement is terminated only with respect to one
or more Product(s) and not in its entirety, then this Section 13.3 shall apply
only with respect to such Product(s).

	Bankruptcy Rights.  In the event that this
Agreement is terminated or rejected by a Party or its receiver or trustee under
applicable bankruptcy laws due to such Party's bankruptcy, then all rights and
licenses granted under or pursuant to this Agreement by such Party to the other
Party are, and shall otherwise be deemed to be, for purposes of Section 365(n)
of the United States Bankruptcy Code (the "Bankruptcy Code") and any
similar law or regulation in any other country, licenses of rights to
"intellectual property" as defined under Section 101(35A) of the
Bankruptcy Code.  The Parties agree that all intellectual property rights
licensed hereunder, including without limitation any trade secrets, patents or
patent applications of a Party in any country covered by the license grants
under this Agreement, are part of the "intellectual property" as
defined under Section 101(35A) of the Bankruptcy Code subject to the protections
afforded the non-terminating Party under Section 365(n) of the Bankruptcy Code,
and any similar law or regulation in any other country.  

	Survival.  The following provisions shall survive
termination of this Agreement:  Sections 3.2.5, 3.7, 3.8.3, 4.4, 5.3, 6.3, 11.3,
11.5, 13.3, 13.4 and 13.5, and Articles 7, 9, 12 and 15.  Termination of this
Agreement shall not relieve either Party of any liability or obligation which
accrued hereunder prior to the effective date of such termination, nor preclude
either Party from pursuing all rights and remedies it may have hereunder or at
law or in equity with respect to any breach of this Agreement, nor prejudice
either Party's right to obtain performance of any obligation.  

ARTICLE 14

Force Majeure Events.

If, by any reason of impediment such as Acts of God, war,
rebellion, tumult, riot, civil commotion, insurrection, political disturbance,
strike, lock-out, fire, flood, interruption of transportation, embargo,
shortages of raw materials, or any other cause or event of a similar nature
affecting either Party over which such Party has had no control (a "Force
Majeure Event"), such Party cannot perform its obligations hereunder, it
shall have the right to postpone the performance of such obligation for the
duration of such Force Majeure Event. The Parties shall use all reasonable
efforts to avoid or overcome the causes affecting performance, and the Party
whose performance is affected by such Force Majeure Event shall fulfill all
outstanding obligations as soon as possible.  The affected Party shall give
facsimile notice to the other Party of the occurrence of such impediment and its
anticipated duration and shall subsequently notify the other Party as quickly as
possible of the cessation of said cause or event. [ *** ]  

ARTICLE 15

Miscellaneous.

	Notices.  

	Except as expressly stated otherwise in this Agreement or
the applicable Product Appendix, all notices, requests and other communications
provided for herein (including without limitation any allegation of breach)
shall be given or made in writing and shall be deemed to have been duly given if
(a) delivered by hand, (b) mailed by certified mail, return receipt requested,
or (c) delivered by a recognized courier service, or (d) transmitted by
facsimile and confirmed by express courier delivery of a hard copy, with
appropriate documentation of delivery, to the intended recipient and, in the
case of mail or courier service, at the following address:

PCYC:

Pharmacyclics, Inc.

                   995 E. Arques Avenue

                   Sunnyvale, California 94085-4521

                   Fax:  (408) 774-0340

                   Attention:  President

                   With copies to:  General Counsel

                   Vice President, Chemical Operations

DOTTIKON:

EMS-Dottikon AG

                   Hembrunnstrasse 17

                   CH-5605 Dottikon

                   Switzerland

                   Fax:  011-41-56-616-8959

                   Attention:  Senior Director, Marketing & Sales

or, as to any Party, at such other address as shall be
designated by such Party in a written notice to the other Party.  All such
communications shall be deemed to have been duly given when hand delivered, or
mailed, in each case given or addressed as aforesaid.

	Routine communications between the Parties relating to
quality control, quality assurance and other general Manufacturing issues shall
be addressed to the contact persons listed in the applicable Product Appendix.
Such communications may be sent be any reasonable method upon which the Parties
agree in such Product Appendix.

	Independent Contractor.  The Parties hereunder are
independent contractors, and nothing herein shall create any association,
partnership, joint venture or the relation of principal and agent between the
Parties hereto.  Neither Party shall have the authority to bind the other or the
others' representatives in any way.  Nothing in this Agreement shall constitute
one Party as an employee, agent, or general representative of the other
Party.

	Amendments.  No provision of this Agreement or of
the Product Appendices attached hereto may be modified or supplemented except by
an instrument in writing signed by a duly authorized of officer of each Party.

	Waiver.  No failure on the part of either Party to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.

	Headings.  The article and section headings
appearing herein are included solely for convenience of reference and are not
intended to affect the interpretation of any provision of this
Agreement.

	Assignment.  Neither Party may assign or transfer
this Agreement or any rights or obligations hereunder without the prior written
consent of the other, except that a Party may make such an assignment without
the other Party's consent to a successor-in-interest to substantially all of the
business assets of such Party to which this Agreement relates, whether in a
merger, sale of stock, sale of assets or other transaction.  Any permitted
successor or assignee of rights and/or obligations hereunder shall, in a writing
to the other Party, expressly assume performance of such rights and/or
obligations.  Any permitted assignment shall be binding on the successors of the
assigning Party.  Any assignment or attempted assignment by either Party in
violation of the terms of this Section 15.6 shall be null and void and of no
legal effect.  This Agreement shall be binding upon and shall inure to the
benefit of each Party's successors-in-interest and permitted assigns.

	Remedies Cumulative.  Unless specifically and
expressly provided otherwise, the remedies provided under this Agreement are
cumulative, and are not exclusive of other remedies available to a Party in law
or equity.

	Complete Agreement.  This Agreement, together with
the Product Appendices hereto, which are hereby incorporated into and shall form
part of this Agreement, represents the complete agreement between the Parties
hereto as to all matters covered hereby or thereby, and supersedes any prior
agreements or understanding (oral or written) between the Parties regarding the
subject matter hereof.  Notwithstanding the foregoing, this Agreement is not
intended to replace or supersede the Prior Agreement.

	Severability.  If, for any reason, any provision
of this Agreement shall be deemed by a court of competent jurisdiction to be
illegal, invalid or unenforceable, the validity, legality or enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired, and such provision shall be modified to the minimum extent necessary
to make such provision consistent with applicable law, and in its modified form
such provision shall be enforceable and enforced.

	Governing Law and Language.  This Agreement shall
be governed exclusively by laws of [ *** ] as such laws apply to
contracts made between, and performed entirely in that [ ***]  residents,
and [ *** ] hereby consents to the jurisdiction of the courts located in
the [ *** ]  The official text of this Agreement and any appendices,
exhibits and schedules hereto, or any notice given or accounts, reports or
statements required by this Agreement shall be in English.  In the event of any
dispute concerning the construction or meaning of this Agreement, reference
shall be made only to this Agreement as written in English and not to any other
translation into any other language.

	Dispute Resolution. In the event of any
controversy or claim arising out of, relating to or in connection with any
provision of this Agreement, or the rights or obligations of the Parties
hereunder, the Parties shall try to settle their differences amicably between
themselves by referring the disputed matter to the President of PCYC and the
President of DOTTIKON or their designates for discussion and resolution.  Either
Party may initiate such informal dispute resolution by sending written notice of
the dispute to the other Party, and within [ *** ] of such notice the
President of PCYC and the President of DOTTIKON or their designates shall meet
for attempted resolution by good faith negotiations.  If such personnel are
unable to resolve such dispute within [ *** ] of initiating such
negotiations, each Party may thereafter pursue any and all rights and remedies
it may have at law or equity.  If mutually agreeable, the Parties may explore
alternative forms of dispute resolution, such as mediation and/or arbitration.
Notwithstanding any other provision of this Section 15.11, either Party may seek
a temporary restraining order or injunction against the other Party in the event
of a breach of any confidentiality obligation hereunder, or to prevent a Party's
wrongful use of any intellectual property hereunder.

	United States Dollars.  References in this
Agreement to "Dollars" or "$" shall mean the legal tender of
the United States of America.  

	Counterparts.  This Agreement may be executed in
counterparts with the same force and effect as if each of the signatories had
executed the same instrument.

	Ambiguities.  Ambiguities, if any, in this
Agreement shall not be construed against either Party, regardless of which Party
is deemed to have drafted the provision at issue.

In Witness Whereof, the Parties hereto have caused this
Agreement to be duly executed and delivered as of the Effective Date.

 
	

EMS-DOTTIKON, AG 

By: /s/ H.R. Wittmer

Name:   Dr. H.R.  Wittmer

Title:  President

	

PHARMACYCLICS, INC.

By: /s/ Richard A. Miller, M.D.

Richard A. Miller, M.D.

President & Chief Executive Officer

	

 

 

 

	

 

 

 

	

By: /s/  M. Bachmann

Name:   Dr. M. Bachmann 

Title:  Head of R&D<PAGE>

                           SELECT MEDICAL CORPORATION

                     4716 Old Gettysburg Road P.O. Box 2034
                        Mechanicsburg, Pennsylvania 17055

                                  March 1, 2000

Mr. Scott A. Romberger
Select Medical Corporation
4716 Old Gettysburg Road
P.O. Box 2034
Mechanicsburg, PA 17055

     Re:  Agreement in the Event of a Change of Control of SMC
          ----------------------------------------------------

Dear Mr. Romberger:

          The following will confirm the agreement of Select Medical
Corporation, a Delaware corporation (the "Company"), with you concerning the
consequences upon certain terminations of your employment in connection with a
change in control of the Company.

          In consideration of your past and continued service to the Company and
in consideration of the mutual covenants and agreements contained in this letter
(this "Letter Agreement"), the Company and you hereby agree, intending to be
legally bound hereby, as follows:

          1. Covered Termination. A "Covered Termination" shall be deemed to
             -------------------
occur if your employment with the Company terminates under any one of the
following circumstances: (i) within the two-year period immediately following a
Change of Control (as defined below), your employment with the Company (a) is
terminated by the Company without Cause (as defined below), (ii) within the
six-month period immediately following a Change of Control, you terminate your
employment with the Company for Good Reason (as defined below), or (iii) within
the six-month period preceding a Change of Control, your employment is
terminated by the Company other than for Cause, and you reasonably demonstrate
that such termination of employment was at the request of a third party who has
taken steps reasonably calculated to effect the Change of Control.

          2. Payments Upon a Covered Termination. If a Covered Termination
             -----------------------------------
occurs, then (i) the Company agrees that such termination is not a voluntary
termination or a termination "for cause" as contemplated by any of the Company's
stock option or other incentive plans and any stock option or other award
agreements entered into between you and the Company (including agreements that
may be entered into in the future in connection with additional awards granted
pursuant to any Company plan, the "Award Agreements") and the Company agrees
that all unvested, unexercised stock options held by you which were granted to
you by the Company shall become fully vested and exercisable as of the date of
the Covered Termination and you will have the right to exercise, at any time
prior to the earlier of three months after the date of termination or the
expiration date of such option, all such options to purchase the Company's stock
notwithstanding any contrary vesting
<PAGE>

schedule that may be contained in the applicable plan or Award Agreement, and
(ii) the Company will, on or before your last day as an employee of the Company,
pay to you, in lieu of any other rights to cash compensation other than the
payment of your salary for services performed before the date of termination and
as a severance benefit, a lump sum cash payment equal to your total base salary
plus bonus compensation from the Company for the preceding three years (or, if
you shall have been employed for less than three years, an amount equal to three
times your average total annual cash compensation for base salary and bonus for
your years of service to the Company).

          3. Definitions.
             -----------

          (a) Change of Control.
              -----------------

               (i) Prior to a Public Offering(as defined below), a "Change of
Control" shall be deemed to have occurred, subject to Section 3(a)(iii) below,
upon (i) any sale, lease, exchange or other transfer of all or substantially all
of the property and assets of the Company (on a consolidated basis) to an
entity, other than an entity at least 75% of the combined voting power of the
voting securities of which are owned by persons in substantially the same
proportion as their ownership of the Company immediately prior to such sale or
other transfer, (ii) any merger or consolidation to which the Company is a party
and as a result of which the holders of the voting securities of the Company
immediately prior thereto own less than a majority of the outstanding voting
securities of the surviving entity immediately following such transaction, or
(iii) any person's (excluding WCAS, GTCR and Thoma Cressey Partners, the
financial sponsors of the Company as of the date hereof), including a group's,
becoming the beneficial owner of securities representing more than 50% of the
voting securities of the Company then outstanding.

               (ii) Following a Public Offering, a "Change of Control" shall be
deemed to have occurred if, subject to Section 3(a)(iii) below, (i) any person
including a group, but excluding any stockholder of the Company who immediately
prior to the Public Offering beneficially owned 12% or more of the Company's
outstanding shares, becomes the beneficial owner of shares of the Company having
more than 50% of the total number of votes that may be cast for the election of
directors of the Company, (ii) any person including a group, other than you or
any group of which you are a party, increases its beneficial ownership of shares
of the Company beyond such person's ownership immediately after the Public
Offering by a number of shares equal to or greater than 33% of the total number
of votes that may be cast for the election of directors; (iii) the individuals
who serve on the Board of Directors of the Company as of the effective date
hereof (the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Board of Directors of the Company; provided, however, any person
who becomes a director subsequent to the effective date hereof, whose election
or nomination for election was approved by a vote of at least a majority of the
directors then constituting the Incumbent Directors, shall for purposes of this
clause (iii) be considered an Incumbent Director; (iv) the consummation of a
merger or consolidation of the Company in which the stockholders of the Company
immediately prior to such merger or consolidation, would not, immediately after
the merger or consolidation, beneficially own, directly or indirectly, shares
representing in the aggregate more than 50% of the combined voting power of the

                                       -2-
<PAGE>

voting securities of the corporation issuing cash or securities in the merger or
consolidation (or of its ultimate parent corporation, if any); or (v) there is
consummated an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets (on a consolidated basis), other than
a sale or disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 50% of the combined voting power of the
voting securities of which are owned by persons in substantially the same
proportion as their ownership of the Company immediately prior to such sale.

               (iii) Notwithstanding the foregoing, in no event shall a "Change
of Control" be deemed to occur for purposes of this Letter Agreement, whether
prior to or following a Public Offering, unless the total consideration for the
transaction or transactions which would, absent this clause (iii), constitute a
Change of Control, has a value that is equal to or greater than $3.75 per share
of common stock of the Company (the "Minimum Value"); provided that such Minimum
Value shall be adjusted to reflect changes to such common stock in the event of
a stock dividend, stock split, reverse stock split, stock combination,
reclassification, recapitalization, or other similar change in the structure or
capitalization of the Company, or any other event which in the discretion of the
Board of Directors of the Company necessitates such an adjustment.

               (iv) For purposes of this Section 3(a), (A) the terms "person,"
"group," "beneficial owner," and "beneficially own" have the same meanings as
such terms under Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, (B) the term
"Public Offering" shall mean the consummation of the first public offering of
shares of common stock of the Company in a firm commitment underwritten offering
registered under the Securities Act of 1933, as amended, on Form S-1 or its
successor forms, and (C) the term "voting securities" shall mean securities, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect the corporate directors (or persons performing similar functions).

          (b) Cause. For purposes of this Letter Agreement, "Cause" shall mean
              -----
(i) your willful and continued failure to substantially perform your duties
hereunder (other than any such failure resulting from incapacity due to physical
or mental illness); (ii) your engaging in willful or reckless misconduct which
is demonstrably and materially injurious to the Company, monetarily or
otherwise; or (iii) your conviction of a felony involving moral turpitude;
provided that an act, or failure to act, on your part shall be considered
"willful" or "reckless" only if done, or omitted to be done, by you not in good
faith and without a reasonable belief that his action or omission was in the
best interest of the Company. Your employment shall not be deemed to have been
terminated for Cause unless the Company shall have given or delivered to you (i)
reasonable notice setting forth the reasons for the Company's intention to
terminate your employment for Cause; (ii) an opportunity to cure any such breach
during the 30-day period after your receipt of such notice; (iii) a reasonable
opportunity, at any time during the 30-day period after your receipt of such
notice, together with your counsel, to be heard before the Board of Directors;
and (iv) a notice of termination stating that, in the good faith opinion of not
less than a majority of the entire membership of the Board of Directors of the
Company, you are guilty of the conduct set forth in any of clauses (i), (ii) or
(iii) of the definition of Cause above.

          (c) Good Reason. For purposes of this Letter Agreement, you shall have
              -----------
"Good Reason" to terminate your employment after a Change of Control if you make
good faith determination that, as a result of such Change of Control, (x) you
are unable to perform your services effectively or there is any significant
adverse change in your authority or responsibilities, as performed immediately
prior to such Change of Control, (y) there is a reduction by the Company in your
compensation from that in effect prior to such Change of Control, or (z) you are
required to be based anywhere other than the Company's principal executive
offices in (or within 25 miles of) Mechanicsburg, Pennsylvania (except for
required travel on the Company's business to an extent substantially consistent
with your business travel obligations prior to the Change of Control).

                                      -3-
<PAGE>

          4. Additional Payments.
             -------------------

          (a) If all, or any portion, of the payments or other benefits provided
under any section of this Agreement, either alone or together with other
payments and benefits that you receive or are entitled to receive from the
Company or its affiliates, (whether or not under an existing plan, arrangement
or other agreement) (collectively the "Payments") would constitute an excess
"parachute payment" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code") and would result in the imposition on you
of an excise tax under Section 4999 of the Code, (such excise tax, together with
any interest and penalties related thereto, are hereinafter collectively
referred to as the "Excise Tax") then, in addition to any other benefits to
which you are entitled under this Agreement, you will be entitled to receive an
additional payment (a "Gross-Up Payment") in cash, in an amount such that after
you pay all taxes including, without limitation, (i) any income taxes (and any
interest and penalties imposed with respect thereto) and (ii) any Excise Tax,
imposed upon the Gross-Up Payment, you will retain an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. Unless you and the
Company otherwise agree in writing, any determination required under this
Section 4, including without limitation, the amount of payments under this
Article 6 (the "Parachute Gross-up") shall be computed and made in writing by
the Employer's then independent public accountants (the "Accountants"), whose
determination shall be, subject to the Employee's reasonable approval of the
calculations required under this Article 6, conclusive and binding upon the
Employee and the Employer for all purposes. For purposes of making the
calculations required by this Section 4, the Accountants may rely on reasonable,
good faith interpretations concerning the application of Section 280G and 4999
of the Code. You and the Company shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make a determination under this Section 4. The Company shall bear all costs the
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 4.

          (b) As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination by the Accountants
hereunder, it is possible that (i) Gross-Up Payments which will not have been
made by the Company should have been made (an "Underpayment"), consistent with
the calculations required to be made hereunder or that (ii) Gross-Up Payments
that have been made will be determined to have been in excess of the Gross-Up
Payments actually required (an "Overpayment"). In the event that you are
required to make a payment of any Excise Tax, the Accountants shall determine
the amount of the Underpayment that has occurred and any such Underpayment shall
be promptly paid by the Company to or for your benefit. In the event that it is
finally determined that an Overpayment has occurred, you will promptly, and in
any event within 30 days of such determination, refund the amount of the
Overpayment, plus any interest actually paid to you with respect to the
Overpayment, to the Company. The Company shall have the right with respect to
the determination of either an Underpayment or an Overpayment to you to appeal
the assertion of any Underpayment or to claim, and sue for, a refund of any
Excise Tax paid by you upon any Payment or Gross-Up Payment, provided that the
Company shall promptly reimburse you for all expenses, including counsel and
accounting fees, incurred in connection with any such proceeding. Alternatively,
the Company may undertake any such proceeding, and you shall cooperate with the
Company in any such proceeding.

                                      -4-
<PAGE>

          5. Miscellaneous.
             -------------

          (a) The Company will require any purchaser of all or substantially all
of the assets of the Company, by agreement in form and substance reasonably
satisfactory to you, to expressly assume and agree to perform this Letter
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such purchase had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Letter Agreement and shall entitle you to
compensation from the Company in the same amount and on the same terms as you
would be entitled hereunder if a Covered Termination had occurred. As used in
this Letter Agreement, "Company" shall mean the Company as hereinbefore defined
and any purchaser of its assets as aforesaid which executed and delivers the
agreement provided for herein.

          (b) This Letter Agreement shall remain in effect for so long as you
are employed by the Company. This Letter Agreement may not be modified or waived
except in writing and agreed to by the Company and you. This Letter Agreement
shall be governed by the laws of the Commonwealth of Pennsylvania and shall
inure to the benefit of your heirs.

          (c) The Company represents that this Letter Agreement has been duly
authorized and is binding on and enforceable against the Company. The invalidity
or unenforceability of any provision of this Letter Agreement shall not affect
the validity or enforceability of any other provision, which shall remain in
full force and effect.

          (d) Upon payment of the amount required under paragraph 1 hereof, you
shall deliver to the Company a general release of liability of the Company and
its officers and directors in a form reasonably satisfactory to the Company.

          (e) All payments made pursuant to this Letter Agreement shall be
subject to withholding of applicable deductions and income and employment taxes.

          (f) Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally, sent by facsimile
transmission or sent by certified, registered or express mail, postage prepaid.
Any such notice shall be deemed given when so delivered personally or sent by
facsimile transmission or, if mailed, five days after the date of deposit in the
United States mails to the following addresses:

          If to Employee:

          Scott A. Romberger
          440 Boyer Street
          Halifax, PA  17032

          If to the Company:

          Select Medical Corporation
          4716 Old Gettysburg Road
          Mechanicsburg, PA 17055
          Attention: General Counsel

                                      -5-
<PAGE>

          6. Entire Agreement. This writing represents the entire agreement and
             ----------------
understanding of the parties with respect to the subject matter hereof, and
supersedes all prior agreements, written or oral, with respect thereto. This
Agreement may not be altered or amended except by an agreement in writing.

          Please indicate your acceptance of the above agreement by signing
below in the space indicated.

                                          Very truly yours,

                                          SELECT MEDICAL CORPORATION, a Delaware
                                          corporation

                                          By: /s/ Robert A. Ortenzio,
                                             --------------------------
                                                 Robert A. Ortenzio,
                                                 President

Agreed to and accepted:

 /s/ Scott A. Romberger
--------------------------
    Scott A. Romberger

                                      -6-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}]]