Document:

exv10w1

 

EXHIBIT 10.1

LICENSE AND SUPPLY AGREEMENT

Contents

	 	 	 	 	 	 	 	 	 
	1.	 	Definitions	 	 	3	 
	2.	 	Rights	 	 	5	 
	 
	 	2.1	 	Granting of Rights/ Warranties	 	 	5	 
	 
	 	2.2	 	Negative covenants of LICENSEE	 	 	6	 
	 
	 	2.3	 	No duplication of Registration Dossiers	 	 	6	 
	3.	 	License Fee and Establishment Fees	 	 	6	 
	 
	 	3.1	 	License Fee	 	 	6	 
	 
	 	3.2	 	Establishment and Maintenance Fee	 	 	7	 
	 
	 	3.3	 	Cost for Medical Commitments	 	 	7	 
	4.	 	Regulatory Compliance	 	 	7	 
	 
	 	4.1	 	Marketing Authorization	 	 	7	 
	 
	 	4.2	 	Maintenance of Marketing Authorization	 	 	8	 
	5.	 	Manufacture and Quality Assurance	 	 	8	 
	 
	 	5.1	 	Supply of Finished Product	 	 	8	 
	 
	 	5.2	 	Complaints and Notifications	 	 	8	 
	 
	 	5.3	 	Settlement of Complaints	 	 	8	 
	 
	 	5.4	 	Responsibility	 	 	9	 
	6.	 	Product Recall	 	 	9	 
	7.	 	Purchase and Delivery	 	 	9	 
	 
	 	7.1	 	Exclusive Purchase	 	 	9	 
	 
	 	7.2	 	Forecast	 	 	10	 
	 
	 	7.3	 	Orders	 	 	10	 
	 
	 	7.4	 	Minimum Order Quantities	 	 	10	 
	 
	 	7.5	 	First Binding Order	 	 	10	 
	 
	 	7.6	 	Order Confirmation	 	 	10	 
	 
	 	7.7	 	Quantity bulk batch Orders	 	 	10	 
	 
	 	7.8	 	Delivery Time	 	 	10	 
	 
	 	7.9	 	Delivery Conditions	 	 	11	 
	 
	 	7.10	 	Return of Finished Goods	 	 	11	 
	 
	 	7.11	 	No Tampering	 	 	11	 
	8.	 	Prices and Terms	 	 	11	 
	 
	 	8.1	 	Initial Transfer Price	 	 	11	 
	 
	 	8.2	 	Final Product Prices	 	 	11	 
	 
	 	8.3	 	Payment	 	 	12	 
	 
	 	8.4	 	Control of Total Gross Sales Price	 	 	12	 
	 
	 	8.5	 	Right of HAMELN to terminate the Agreement	 	 	12	 
	 
	 	8.6	 	Control on Base Cost	 	 	12	 
	9.	 	Market Introduction and Marketing of the Product	 	 	13	 
	 
	 	9.1	 	Sales and Marketing Plan	 	 	13	 
	 
	 	9.2	 	[Reserved]	 	 	13	 
	 
	 	9.3	 	Launch of Product	 	 	13	 
	 
	 	9.4	 	Marketing of the Product	 	 	13	 
	 
	 	9.5	 	Promotion	 	 	14	 
	 
	 	9.6	 	Regular Reporting	 	 	14	 

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	 	9.7	 	Comply with Laws	 	 	14	 
	 
	 	9.8	 	Stock Keeping	 	 	14	 
	 
	 	9.9	 	Trade Mark Protection	 	 	14	 
	10.	 	Exchange of Information	 	 	15	 
	 
	 	10.1	 	Serious Adverse Reactions	 	 	15	 
	 
	 	10.2	 	Not Serious Adverse Reactions	 	 	15	 
	 
	 	10.3	 	Other Information	 	 	15	 
	11.
	 	Confidentiality	 		 	 	15	 
	 
	 	11.1	 	Confidential Information	 	 	15	 
	 
	 	11.2	 	Disclosure of Confidential Information	 	 	15	 
	 
	 	11.3	 	No confidentiality obligations	 	 	15	 
	12.	 	Indemnification	 	 	16	 
	 
	 	12.1	 	Indemnification by HAMELN	 	 	16	 
	 
	 	12.2	 	Indemnification by LICENSEE	 	 	16	 
	 
	 	12.3	 	Insurance	 	 	17	 
	 
	 	12.4	 	Limitation of Liability	 	 	17	 
	13.	 	Relationship between Parties	 	 	17	 
	14.	 	Effective Date and Duration	 	 	17	 
	 
	 	14.1	 	Term	 	 	17	 
	 
	 	14.2	 	Termination upon Breach	 	 	17	 
	 
	 	14.3	 	Termination upon Bankruptcy	 	 	17	 
	 
	 	14.4	 	Termination by HAMELN	 	 	18	 
	 
	 	14.5	 	Effect of Termination	 	 	18	 
	15.	 	Rights and Obligations upon Termination	 	 	18	 
	 
	 	15.1	 	In case of Expiration or Regular Termination	 	 	18	 
	 
	 	15.2	 	In case of breach by HAMELN	 	 	19	 
	 
	 	15.3	 	In case of breach by LICENSEE	 	 	19	 
	16.	 	Protection of Licensed Patents	 	 	19	 
	17.	 	Patent Strategy, Judicial Cost and Legal Fees	 	 	19	 
	 
	 	17.1	 	Patent Strategy	 	 	19	 
	 
	 	17.2	 	Judicial Cost and Legal Fees	 	 	20	 
	18.	 	Force Majeure	 	 	20	 
	19.	 	Severability	 	 	20	 
	20.	 	Waiver	 	 	20	 
	21.	 	Notices	 	 	21	 
	22.	 	Governing Law and Dispute Resolution	 	 	21	 
	 
	 	22.1	 	Governing Law	 	 	21	 
	 
	 	22.2	 	Dispute Resolution	 	 	21	 
	23.	 	Miscellaneous	 	 	22	 
	 
	 	23.1	 	Entire Agreement	 	 	22	 
	 
	 	23.2	 	Modifications	 	 	22	 
	 
	 	23.3	 	Interpretation	 	 	22	 
	 
	 	23.4	 	Counterparts	 	 	22	 
	 
	 	23.5	 	Severability	 	 	22	 
	 
	 	23.6	 	Setoff	 	 	22	 
	 
	 	23.7	 	Assignments	 	 	23	 
	 
	 	23.8	 	Interpretation	 	 	23	 
	 
	 	23.9	 	Special Clauses	 	 	23	 

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LICENSE AND SUPPLY AGREEMENT

     This LICENSE AND SUPPLY AGREEMENT is made and entered into this 11th day
of November 2004, by and between HAMELN PHARMACEUTICALS GMBH, a company
organized and existing under the laws of Germany with its principal office at
Langes Feld 13, D-31789 Hameln, Germany (“HAMELN”), and AKORN, INC., a company
organized and existing under the laws of Louisiana with its principal office at
2500 Millbrook Drive, Buffalo Grove, Illinois 60089-4694, United States of
America (“LICENSEE”).

     WHEREAS, HAMELN has developed pharmaceutical specialties in different
pharmaceutical dosage forms and furthermore has compiled Registration Dossiers
for obtaining Marketing Authorizations for the Products in the Territory (all
as defined hereinafter);

     WHEREAS HAMELN is seeking an exclusive distributor of the Products in the
Territory upon the general terms outlined in the DTPA Business Principles
executed by the Parties and attached hereto as Appendix A;

     WHEREAS LICENSEE is interested in obtaining the exclusive use of the
Marketing Authorization for the Products in the Territory in order to
exclusively promote, market, sell and distribute the Products in the Territory;

     NOW, THEREFORE, in consideration of the mutual promises, covenants and
obligations contained herein, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:

1. Definitions

     The following definitions relate to the wording of this Agreement. The
meaning and content of the below terms is set forth next to it.

	 	 	 
	“Active Substance”

	 	means active pharmaceutical ingredients of the Products.
	 
	 	 
	“Affiliated Company”

	 	means any company or business entity controlled by, controlling or under common control with a
Party to this Agreement. For this purpose, “control” means the direct or indirect ownership of more
than fifty percent (50%)) of the voting stock of a company, or in the absence of ownership of more
than fifty percent (50%) of the voting stock of that company, the power, directly or indirectly, to
direct or cause the direction of the management and policies of such company.
	 
	 	 
	“Agreement”

	 	means this License and Supply Agreement, together with all attached appendices, as they may be
amended or otherwise modified from time to time pursuant to this Agreement.
	 
	 	 
	“Base Cost”

	 	means the cost of the Active Substance plus the total cost of labor and overhead expenses required
in the purchase of starting materials, manufacture, testing, storing and delivery of the Finished
Product.
	 
	 	 
	“Bulk Finished Product”

	 	means Product which has undergone all stages of production except blistering, final packaging and/or
labeling.
	 
	 	 
	“c-GMP”

	 	means current good manufacturing practice in both the EU and in the Territory.
	 
	 	 
	“Confidential Information”

	 	means all confidential information of a Party relating to any designs, know-how, inventions,
technical data, ideas, uses, processes, methods, formulae, research and development activities, work
in process, or any scientific, engineering,

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	 	manufacturing, marketing, business or financial information relating to the disclosing Party, its present or future products, sales,
suppliers, customers, employees, investors or business, whether in oral, written, graphic or electronic form disclosed by the
Parties prior to or during this Agreement (which is marked confidential or acknowledged as being confidential prior to disclosure).
If the Confidential Information is disclosed orally or visually, it shall be identified as such at the time of disclosure and
confirmed in writing by the disclosing Party within thirty (30) days of disclosure. Confidential Information shall also include any
other information in oral, written, graphic or electronic form which, given the circumstances surrounding such disclosure, would be
considered confidential. This Agreement shall be deemed Confidential Information. HAMELN’s Confidential Information shall include
the total Registration Dossier including all Information around the Registration Dossier, Marketing Authorization, Orphan Drug
applications and Orphan Drug designations and the patents and patent applications in the name of, or granted to HAMELN that may
cover the Product and/or the Active Substance to the extent relevant for the Territory, all as set forth in Appendix C, attached
hereto and fully incorporated herein, as amended by the Parties from time to time.
	 
	 	 
	“Effective Date”

	 	means the date on which this Agreement is signed by the Parties.
	 
	 	 
	“Establishment Fees”

	 	has the meaning given in Article 3.2.
	 
	 	 
	“Final Product Price”

	 	has the meaning given in Article 8.2.
	 
	 	 
	“Finished Product”

	 	means Bulk Finished Product which has undergone blistering, final packaging and/or labeling.
	 
	 	 
	“Incoterms”

	 	means the 2000 edition of the “International Chamber of Commerce Official Rules for the
Interpretation of Trade Terms”.
	 
	 	 
	“Intellectual Property Rights”

	 	means all rights of ownership and the exclusive entitlement to claim ownership and/or
registration of exclusive rights created under or by copyright, moral rights, design
registration, patent registration, trade mark registration and all other exclusive rights in or
to intangible property and all other intellectual and industrial property rights, including
rights in present and future intangible property and rights in information, including know-how,
granted by law or equity from time to time under a law or otherwise in the Territory or any
other jurisdiction throughout the world.
	 
	 	 
	“License Fee”

	 	has the meaning given in Article 3.1.
	 
	 	 
	“Local Currency”

	 	are the currencies officially being used in the countries of the Territory.
	 
	 	 
	“Marketing Authorization”

	 	(Zulassung nach AMG) in relation to a Product, is the grant of all necessary registrations,
permits, licenses, authorizations, approvals and notifications by the Relevant Regulatory
Authority in the Territory for the development, manufacturing, testing, labeling, importation,
storage, promotion, sale, distribution and use of that Product in such Territory.

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	“Orphan Drug”

	 	means a Product that has been designated by the United States Food and Drug Administration
pursuant to the Orphan Drug Act as a drug for a specified rare disease or condition.
	 
	 	 
	“Party/ Parties”

	 	means LICENSEE or HAMELN as the context requires and “Parties” means both LICENSEE and HAMELN.
	 
	 	 
	“Product(s)”

	 	means all finished dosage form products set forth in Appendix B-2, attached hereto and fully
incorporated herein, as amended by the Parties from time to time.
	 
	 	 
	“Initial Transfer Price”

	 	means the minimum transfer price which is payable by LICENSEE to HAMELN for the supply of
Products, in Finished Product form, and which is documented in Appendix B-2.
	 
	 	 
	“Registration Dossiers”

	 	means any and all information, processes, techniques, and data relating to the Product that are
necessary to obtain a Marketing Authorization.
	 
	 	 
	“Relevant Regulatory Authority”

	 	 means in relation to a country or region in the Territory, the governmental authority, whether
federal, state or municipal, regulating the development, manufacturing, testing, labeling, importation, storage, promotion, sale,
distribution and use of Products and the grant of Marketing Authorizations in such a country or region.
	 
	 	 
	“SPC”

	 	means the summary of product characteristics as disclosed to the FDA.
	 
	 	 
	“Territory”

	 	means the United States of America and Canada.
	 
	 	 
	“Third Parties”

	 	means all other companies, including, without limitation, Affiliated Companies of the Parties,
which are not party to this Agreement.
	 
	 	 
	“Third Party Patents”

	 	means the patents and patent applications in the name of Third Parties that may cover the
Product and/or the Active Substance to the extent relevant for the Territory
	 
	 	 
	“Total Gross Sales Price”

	 	means the gross sales amount actually received by LICENSEE less up to two percent (2%) in
customary business term discounts (e.g. 2% 10 net 30 or 2% 10 net 60) for the sale or other
disposition of Products during a given period of time, without any other deductions. For the
avoidance of doubt, the Total Gross Sales Price will be equal to the amount reported by LICENSEE
to the United States Securities and Exchange Commission as trade receivables arising out of the
sale of Products in accordance with United States GAAP standards.

2. Rights

2.1 Granting of Rights/ Warranties

	 	(i)	 	HAMELN hereby grants to LICENSEE, subject to the terms and
conditions of this Agreement, the exclusive right to use the
Marketing Authorization to promote, market, sell and distribute the
Products under HAMELN’s trademark in the Territory. HAMELN shall
not sell Products to any other party in the Territory.
	 
	 	(ii)	 	The holder of Marketing Authorization for the Products under
this Agreement shall be HAMELN. HAMELN warrants that the Products
shall conform with all approved specifications for manufacture and
testing, the package insert and

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	 	 	 	SPC as set forth in the Registration Dossier and Marketing
Authorization and that it will manufacture the Products in
conformity with c-GMP, all applicable United States Food and Drug
Administration regulatory requirements, the procedures and
parameters set forth in this Agreement and generally accepted
professional standards. HAMELN further warrants that it shall only
manufacture Products in a facility that has been inspected and
approved by the United States Food and Drug Administration pursuant
to c-GMP
	 
	 	(iii)	 	HAMELN covenants that it shall keep the Product packaging
and instructions current and in English. HAMELN warrants that the
Products shall adapt the latest developments in science and
technology as soon as practicable.

2.2 Negative covenants of LICENSEE

     LICENSEE shall not:

	 	(i)	 	use the Registration Dossiers for the purpose of applying
itself or through Third Parties for Marketing Authorization for the
Products in and for countries inside or outside the Territory; or
	 
	 	(ii)	 	actively promote the sale of the Product to customers having
their place of business in countries inside the Territory which
LICENSEE knows want to sell the Products themselves primarily
outside of the Territory; or
	 
	 	(iii)	 	sell the Product to customers having no place of business in
countries inside the Territory; or
	 
	 	(iv)	 	maintain any distribution depot for the Product outside the
Territory; or
	 
	 	(v)	 	grant sub-licenses under all or any of the rights granted to
LICENSEE under Article 2.1 above; or
	 
	 	(vi)	 	challenge directly or indirectly the validity of HAMELN’s
Intellectual Property Rights relating to the Product; or
	 
	 	(vii)	 	during the term of this Agreement, market, sell, distribute
or otherwise be interested in other products containing the Active
Substance or products that are functionally equivalent thereof; or
	 
	 	(viii)	 	enter into any transactions, either directly or indirectly, with
respect to the Products with Affiliated Companies unless such
transactions are on terms and conditions no less favorable than
would be reached in a comparable arm’s-length transactions with a
third party that is not an Affiliated Company.

2.3 No duplication of Registration Dossiers

LICENSEE is not allowed to provide a Third Party with any kind of
duplicate Registration Dossiers for the Product under this Agreement.
Furthermore, LICENSEE is not allowed to sell the Marketing Authorization,
the Registration Dossiers, or parts hereof, to any Third Party or provide
any Third Party with the Registration Dossiers in any other way without
the explicit prior written consent of HAMELN.

3. License Fee and Establishment Fees

3.1 License Fee

LICENSEE will pay a non-refundable one-time license fee in the amount
specified in Appendix B-1, attached hereto and fully incorporated herein,
(“License Fee”), subject to Article 15.2. The payment of the License Fee
will not reduce the amount of any other payment provided for in this
Agreement. The License Fee is due and payable within thirty (30)
calendar days after the Agreement has been signed by both Parties and
LICENSEE has received an invoice accordingly from HAMELN. If HAMELN has

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not received the License Fee in full in readily available funds within
thirty (30) calendar days after the Agreement has been signed by both
Parties, the Agreement will automatically terminate with no further
action by either Party and shall be considered null and void.

3.2 Establishment and Maintenance Fee

LICENSEE shall pay HAMELN for all amounts due to applicable governmental
authorities in connection with maintaining the Marketing Authorization
and Registration Dossier in the Territory (“Establishment Fees”) as
follows. Upon HAMELN’s receipt of any invoices for Establishment Fees,
HAMELN shall immediately send such invoices to LICENSEE. LICENSEE shall,
promptly following its receipt of such invoices, pay HAMELN the amount
due for the Establishment Fees set forth in such invoices. HAMELN shall
promptly upon its receipt of payment of Establishment Fees from LICENSEE
pay the applicable governmental authorities such amounts and shall send
LICENSEE documentation confirming payment of such Establishment Fees.
LICENSEE reserves the right to perform on behalf of HAMELN with respect
to payment of such Establishment Fees should HAMELN fail to pay the
applicable governmental authorities in a timely manner following HAMELN’s
receipt of payment therefor from LICENSEE and in such case only LICENSEE
shall be permitted to deduct the amount of duplicate Establishment Fees
paid from amounts otherwise due to HAMELN. Except for the case described
in the previous sentence, the payment of Establishment Fees shall not
reduce the amount of any other payment from LICENSEE to HAMELN provided
for in this Agreement. LICENSEE shall be responsible to apply with
applicable governmental authorities for any permitted refunds of
Establishment Fees and HAMELN shall assist LICENSEE with such
applications by providing all necessary information and executing any
required documentation. To the extent that HAMELN receives any refunds
of Establishment Fees at any time, it shall promptly pay LICENSEE the
amount received pursuant to such refund.

3.3 Cost for Medical Commitments

AKORN will pay up to Four Hundred Fifty Thousand Euros (€450,000) of
costs relating to regulatory commitments for post-approval studies of the
Product and the pharmacokinetic study for inhalation therapy.

4. Regulatory Compliance

4.1 Marketing Authorization

HAMELN hereby warrants that, to the best of its knowledge, there is no
hindrance that precludes distribution and/or sale of the Products, such
as patents, industrial protective rights or other rights. HAMELN further
warrants, to the best of its knowledge, that (i) none of the Products nor
any of their elements, nor the use thereof, nor any of HAMELN’s
manufacturing processes or methods employed or to be employed at HAMELN’s
facility violate or will violate or infringe upon the Intellectual
Property Rights of any Third Party; and (ii) there is neither pending nor
threatened any claim, litigation or proceeding in any way contesting
HAMELN’s rights to manufacture or supply any of the Products or attacking
the validity or enforcement of any HAMELN’s Intellectual Property Rights
related to its manufacturing processes or methods.

LICENSEE shall promptly inform HAMELN about relevant requirements
LICENSEE has knowledge of for obtaining and maintaining the necessary
Marketing Authorizations.

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HAMELN shall ensure that all artwork (leaflet, box and label) on all
printed packaging materials comply with all applicable regulatory
requirements in the Territory.

4.2 Maintenance of Marketing Authorization

HAMELN warrants that it shall maintain and keep the Marketing
Authorization current, and that it shall inform LICENSEE in writing of
all relevant variations to the Marketing Authorizations.

5. Manufacture and Quality Assurance

     5.1 Supply of Finished Product

HAMELN shall supply the Product to LICENSEE as a Finished Product. HAMELN
warrants that the Product is manufactured according to all applicable
c-GMP rules and regulations and in accordance with the current EU and
United States laws and the processes and techniques laid down in the
Marketing Authorization. Any intended change of manufacturer of the
Product shall be approved by the Relevant Regulatory Authorities of the
Territory before the first supply of the Product from HAMELN to LICENSEE.
HAMELN further warrants (i) that the Products shall be free from defects
in workmanship and materials; (ii) that the Products shall meet their
applicable specifications set forth in the applicable Marketing
Authorization; and (iii) that, upon delivery of a Product and during such
time as such Product was under HAMELN’s control, the Product shall not be
adulterated, misbranded, misused, contaminated, tampered with or
otherwise altered, mishandled, or subjected to negligence.

HAMELN shall supply Products to LICENSEE finally packed under
HAMELN  ́s own trade name and logo.

5.2 Complaints and Notifications

Any complaint regarding defects in quality apparent upon inspection
and/or shortfalls in quantities of the Product delivered by and
attributable to HAMELN shall be made in writing by LICENSEE to HAMELN
within thirty (30) days after delivery and LICENSEE shall simultaneously
send samples of such defective Product to HAMELN. If LICENSEE fails to
notify HAMELN within such period, LICENSEE shall be deemed to have
accepted the shipment. Notwithstanding the previous sentence, in case
LICENSEE becomes aware of any defects in quality in the Product at any
time, LICENSEE shall notify HAMELN without undue delay.

5.3 Settlement of Complaints

In cases of objections on the ground of defective quality, HAMELN shall
rework or replace at its own discretion the faulty Product as soon as
practicable and free of charge, but in no case longer than the normal
lead time for such Product. Shortfalls in quantities delivered and
quantitative deficiencies shall be made up free of charge. Parties agree
that in the event that HAMELN does not acknowledge the defect of such
Product which LICENSEE has found to be defective, the Parties shall
endeavor to settle such disagreement amicably and constructively between
themselves.

In the event that the Parties fail to agree within four (4) weeks after
HAMELN’s receipt of the notice of defects, the Parties agree to nominate
an independent, reputable laboratory, acceptable to both Parties, which
shall examine representative examples taken from such consignment, using
the methods of analysis laid down in the Registration Dossier or as
otherwise agreed upon by both Parties, and the result shall be binding on
both Parties. The charges for such examination shall be borne by the
Party not prevailing in such dispute.

Page 8 of 31

 

5.4 Responsibility

Except for HAMELN’s obligations pursuant to Article 12.1 below, HAMELN’s
responsibility for defective Product supplied to LICENSEE hereunder is
limited to the replacement or rework mentioned in Article 5.3 only.

6. Product Recall

If any Relevant Regulatory Authority recommends, requests or
requires the recall of any of the Products due to an act, omission or
breach by HAMELN with respect to its obligations, covenants or warranties
herein or HAMELN deems it necessary to initiate a voluntary recall of any
batch of Products due to an act, omission or breach by HAMELN with
respect to its obligations, covenants or warranties herein, HAMELN will
immediately notify LICENSEE of such recall and will consult with LICENSEE
regarding the timely compliance with all applicable regulations and
requirements pertaining to that recall. In the event of such a product
recall, HAMELN will reimburse LICENSEE (i) within fifteen (15) days of
such recall all amounts paid by LICENSEE for Product subject to the
recall; and (ii) within fifteen (15) days of LICENSEE’s invoice together
with supporting documentation from the applicable wholesalers, all costs
incurred by LICENSEE with respect to wholesaler recall costs; and (iii)
within fifteen (15) days of LICENSEE’s invoice, all other costs incurred
with respect to the administration and implementation of the recall,
including, but not limited to, (a) notification/approval of Relevant
Regulatory Authorities; (b) notification to Product distributors/agents
and customers and/or contractors; (c) market withdrawal or field
correction; (d) return/destruction of recalled Products; and (e)
reasonable legal costs.

If any Relevant Regulatory Authority recommends, requests or
requires the recall of any of the Products due to an act, omission or
breach by LICENSEE with respect to its obligations, covenants or
warranties herein, LICENSEE will immediately notify HAMELN of such recall
and will consult with HAMELN regarding the timely compliance with all
applicable regulations and requirements pertaining to that recall. In
the event of such a product recall, LICENSEE will pay for all costs
incurred with respect to the administration and implementation of such
recall and LICENSEE will reimburse HAMELN within fifteen (15) days of
HAMELN’s invoice, all costs incurred by HAMELN with respect to the
administration and implementation of the recall, including, but not
limited to, (a) notification/approval of Relevant Regulatory Authorities;
(b) notification to Product distributors/agents and customers and/or
contractors; (c) market withdrawal or field correction; (d)
return/destruction of recalled Products; and (e) reasonable legal costs.

To the extent that a product recall is not clearly due to an act,
omission or breach by either Party with respect to its obligations,
covenants or warranties herein, then the Parties shall mutually discuss
and negotiate in good faith an equitable solution with respect to costs
related to the administration and implementation of the recall.

Both Parties shall cooperate and use best efforts to minimize the costs
of any product recall.

7. Purchase and Delivery

7.1 Exclusive Purchase

During the term of this Agreement, LICENSEE shall purchase all quantities
for the Product for the Territory exclusively from HAMELN and HAMELN
agrees to sell to LICENSEE such quantities of the Product as LICENSEE
shall order from HAMELN in accordance with the terms of this Agreement.

Page 9 of 31

 

7.2 Forecast

LICENSEE shall on a monthly basis provide HAMELN with a rolling
non-binding twelve (12) month forecast of its requirements of the
Product. The first four (4) months of such rolling forecast shall
constitute firm and binding orders. Further the Parties agree that for
the subsequent three (3) months each forecast may not deviate from
previously provided forecasts for that period by more than twenty percent
(20%), whereas the following five (5) months shall be considered for
planning purposes only. LICENSEE and HAMELN shall liaise with one
another on a quarterly basis in developing the forecast to accommodate
for both sales and manufacturing requirements and concerns.

7.3 Orders

LICENSEE shall submit purchase orders to HAMELN in writing. All purchase
orders shall include:

	 	(i)	 	the quantity of the Product to be purchased;
	 
	 	(ii)	 	the requested delivery date(s); and
	 
	 	(iii)	 	any other information dictated by the circumstances of the order.

7.4 Minimum Order Quantities

The minimum order quantities for the Products are noted in Appendix B-1.

7.5 First Binding Order

On the Effective Date, a first binding order for the Products shall be
issued by the LICENSEE. The quantity of this first order is documented in
Appendix B-1 and is included in the first forecast provided by LICENSEE.

7.6 Order Confirmation

No purchase order shall be binding on HAMELN until accepted in writing
with confirmation of the delivery date. HAMELN will reply to LICENSEE
with respect to purchase orders within five (5) business days of HAMELN’s
receipt. The terms and conditions of this Agreement shall prevail if the
terms and conditions stated in HAMELN  ́s acceptance of the order or in any
other communication of HAMELN relating to the order are inconsistent with
these terms and conditions. HAMELN will accept all purchase orders in
any month until accepted purchase orders, in the aggregate, are up to
twenty percent (20%) greater than the applicable quantity set forth in
LICENSEE’s forecast, and will use commercially reasonable efforts to
accept all purchase orders in any month that, in the aggregate, are in
excess of twenty percent (20%) than the applicable quantity set forth in
LICENSEE’s forecast.

7.7 Quantity bulk batch Orders

HAMELN will always produce a complete bulk batch size of unlabelled
Product, in order to split the bulk batch in several varying size
Finished Product batches for LICENSEE.

Due to this procedure, LICENSEE accepts to receive Finished Product
not older than six (6) months from the manufacturing date of the bulk
batch.

7.8 Delivery Time

Delivery time is subject to the forecast provided by LICENSEE as
mentioned under Article 7.2 and the availability of approved artwork at
the time of issuing the order. In

Page 10 of 31

 

the event HAMELN supplies the Product as Finished Product, the delivery
time shall be no later than one (1) month after LICENSEE’s purchase order
date to the extent the applicable purchase order is anticipated by
LICENSEE’s forecast; or no later than four (4) months after LICENSEE’s
purchase order date, to the extent the applicable purchase order is not
anticipated by LICENSEE’s forecast.

7.9 Delivery Conditions

HAMELN shall deliver the Product Ex Works, as such term is defined in
Incoterms 2000.

7.10 Return of Finished Goods

HAMELN will not accept any return of Products from LICENSEE or customers
or agents of LICENSEE unless agreed in writing or unless otherwise
required in this Agreement.

7.11 No Tampering

LICENSEE shall use its best efforts to protect the quality of the Product
while in the LICENSEE’s control and possession. In furtherance of the
foregoing, LICENSEE shall not (i) tamper with or use the Product except
for the purpose of conducting reasonable tests; (ii) sell or dispose of
(other than by destruction after obtaining the prior written consent of
HAMELN) any Product that LICENSEE knows has become damaged, nor permit
the salvage thereof except by such means and in such manner as HAMELN may
authorize in writing; (iii) remove, destroy, alter, or otherwise tamper
with the trade dresses, trademarks, trade names, slogans, serial numbers
and/or labels affixed to the Products by HAMELN, in any way, except that
LICENSEE, with the prior written approval of HAMELN, may affix such
additional labels as may be necessary and required by applicable law.

8. Prices and Terms

8.1 Initial Transfer Price

The initial
transfer price applicable for LICENSEE’s Products purchases
from HAMELN (“Initial Transfer Price”) as of the Effective Date is set
forth in Appendix B-2. The Parties shall in October of each year agree
on a revised Initial Transfer Price to be applicable for
LICENSEE’s
Products purchases from HAMELN during the following calendar year. The
revised Initial Transfer Price, when agreed to by the Parties, will be
documented by the Parties in a revised Appendix B-2 to the Agreement
signed by both Parties, provided that in no case shall the revised
Initial Transfer Price in any year increase more than ten percent (10%)
over the Initial Transfer Price in effect in the immediately preceding
calendar year.

8.2 Final Product Prices

HAMELN shall supply the Products to LICENSEE in each calendar quarter
hereunder at prices which correspond to fifty percent (50%) of the Total
Gross Sales Price actually achieved in the market in such calendar
quarter (“Final Product Price”), but in no event shall the price of the
Product be less than the then applicable Initial Transfer Product Price
as specified in Appendix B-2.

LICENSEE shall provide HAMELN with summary documentation of all
sales transactions of the Products in the previous calendar quarter no
later than the 15th calendar day following the close of each such
quarter.

Page 11 of 31

 

On delivery of each ordered batch, LICENSEE shall be invoiced with
the Initial Transfer Price as listed in the then applicable Appendix B-2.
At the end of every calendar quarter, HAMELN shall invoice LICENSEE
according to the following formula: Final Product Price less the number
of Products invoiced during such quarter times the then applicable
Initial Transfer Price. For the conversion from Local Currency into
Euro, the exchange rate listed in the Wall Street Journal for the last
day of the applicable quarter will be used. For reference purposes, a
sample calculation is attached hereto as Appendix D.

The difference between the amounts already paid by LICENSEE to
HAMELN for a calendar quarter (i.e., the number of Products invoiced
during such quarter times the then applicable Initial Transfer Price),
and the Final Product Price achieved by LICENSEE for such calendar
quarter shall be paid by LICENSEE to HAMELN no later than thirty (30)
calendar days after each calendar quarter (i.e., the end of each January,
April, July and October during the term of this Agreement).

8.3 Payment

All payments to be made pursuant to this Agreement shall be in Euro. All
invoices will be issued in Euro.

The terms of payment for Initial Transfer Price shall be thirty
percent (30%) on the date of order and the remainder within thirty (30)
days after date of invoice; which shall never be earlier than the date of
shipment of the corresponding Product.

Payment shall be affected by bank transfer to an account designated
in writing by HAMELN to LICENSEE.

8.4 Control of Total Gross Sales Price

LICENSEE agrees, by request of HAMELN and upon reasonable notice period,
to permit an independent certified public accountant, selected by HAMELN
and to whom LICENSEE has no reasonable objections, to audit the sales
activities and specifically the Total Gross Sales Price and invoiced
units in respect of the Products and all other relevant information which
are necessary in the auditor  ́s opinion to determine the correctness and
accuracy of the calculations on which the Final Product Prices are based,
provided that such audit must take place during LICENSEE’s regular
business hours and shall not unreasonably interfere with LICENSEE’s
business. Such audit shall be at the sole expense of HAMELN and the
certified public accountant shall be obligated to execute LICENSEE’s
confidentiality agreement and to treat all LICENSEE information and
materials as confidential. If the audit reveals that LICENSEE
underreported aggregate Total Gross Sales Price to HAMELN for any quarter
by ten percent (10%) or more, then LICENSEE shall pay to HAMELN within
thirty (30) calendar days of HAMELN’s invoice therefor the amount that
the corresponding corrected Final Product Price for such quarter was
underpaid with interest at a ten percent (10%) rate per annum from the
date such amount would have been otherwise due, and all reasonable costs
and expenses incurred by HAMELN in connection with such audit.

8.5 Right of HAMELN to terminate the Agreement

If in any full calendar year the Final Product Price of the Product does
not exceed on an average basis the Base Cost of the Product by at least
twenty-five percent (25%), HAMELN will be entitled to terminate the
Agreement upon giving a six (6) month prior written notification thereof
to LICENSEE.

Page 12 of 31

 

8.6 Control on Base Cost

HAMELN agrees, by request of LICENSEE and upon reasonable notice period,
to permit an independent certified public accountant, selected by
LICENSEE and to whom HAMELN has no reasonable objections, to audit the
Base Cost and other relevant information which are necessary in the
auditor’s opinion to determine the correctness and accuracy of the
calculations on which the Base Cost is based, provided that such audit
must take place during HAMELN’s regular business hours and shall not
unreasonably interfere with HAMELN’s business. Such audit shall be at
the sole expense of LICENSEE and the certified public accountant shall be
obligated to execute HAMELN’s confidentiality agreement and to treat all
HAMELN information and materials as confidential.

9. Market Introduction and Marketing of the Product

9.1 Sales and Marketing Plan

LICENSEE will, as soon as practicable following the Effective Date
hereof, consult with HAMELN and will prepare and provide HAMELN with a
sales and marketing plan detailing the quantities of the Products to be
sold, which will meet the minimum order quantities for the Products are
noted in Appendix B-1, and the activities to be undertaken by LICENSEE
(the “Sales and Marketing Plan”) in the period beginning on the Effective
Date and ending on the last day of the following calendar year. In
October of each calendar year LICENSEE will consult with HAMELN and will
prepare and provide HAMELN with a revised Sales and Marketing Plan for
the following calendar year, which will meet the minimum order quantities
for the Products are noted in Appendix B-1.

9.2 [Reserved]

9.3 Launch of Product

LICENSEE shall introduce the Product to the market in the Territory
within sixty (60) days, following the grant of the Marketing
Authorization and shall not unreasonably delay such introduction, subject
to shipment of sufficient quantities of Product by HAMELN.

LICENSEE represents, warrants and undertakes to HAMELN that it will use
commercially reasonable efforts to cause its customers not to offer,
sell, deliver and/or distribute the Product outside the Territory.

9.4 Marketing of the Product

LICENSEE shall use commercially reasonable efforts to market the Product
in the Territory, at its own expense, and to:

	 	(i)	 	advertise and promote sales of the Product, using techniques
and methods which are customary in the pharmaceutical industry for
the marketing of pharmaceutical Product and to promote and advertise
the Product in the same manner as it promotes and advertises other
similar product which it manufactures or distributes;
	 
	 	(ii)	 	make and maintain regular and sufficient contact with present
and future customers of the Product;
	 
	 	(iii)	 	maintain such sales organization, facilities, personnel and
training as may be required to ensure fulfillment of its obligations
under this Agreement;

Page 13 of 31

 

	 	(iv)	 	conduct its obligations under this Agreement in a manner that
will reflect favorably upon LICENSEE, HAMELN and the Product so as
to preserve the goodwill and customer’s acceptance of the Products.

9.5 Promotion

During the
term of this Agreement, LICENSEE shall promote HAMELN’s
Products in the Territory in such a manner as best to achieve the agreed
goals as laid down in the applicable Sales and Marketing Plan. To the
extent LICENSEE fails to substantially comply with the requirements of
the Sales and Marketing Plan in two (2) successive calendar years, then
HAMELN may terminate this Agreement, following written notice to LICENSEE
detailing such non-compliance and LICENSEE’s failure to cure such
non-compliance within three (3) months.

9.6 Regular Reporting

LICENSEE will prepare a quarterly marketing reporting detailing own
marketing activities, competitors’ activities and actions, prices of
competitor products etc. and send this report not later than the 15th day
of January, April, July and October respectively to HAMELN.

9.7 Comply with Laws

LICENSEE shall, at its sole expense, comply with any applicable federal,
state, and/or local laws, regulations or ordinances in the Territory and
shall obtain any licenses, registrations, permits, certifications,
approvals and/or other similar consents or authorizations of any federal,
state, and/or local government authorities, agencies or divisions
thereof, as may be required for it to meet its obligations in connection
with this Agreement, except for those obligations that HAMELN is
obligated to comply with under this Agreement. For the avoidance of
doubt, LICENSEE shall, to the extent desirable, obtain certification
and/or designation of the Products under the SAFETY Act of the Homeland
Security Act of 2002 (the “SAFETY Act”) prior to initiating any sales of
the Products in the Territory at its sole expense. LICENSEE shall keep
HAMELN apprised of its activities with respect to obtaining certification
and/or designation under the SAFETY Act.

9.8 Stock Keeping

LICENSEE will maintain a distribution center in the Territory. LICENSEE
shall keep at all times sufficient stocks of the Products equivalent to
three (3) months estimated sales in order to ensure a continuous supply
to the market and shall not repack or otherwise change the Products but
shall sell them in their original form and packs as delivered by HAMELN,
unless otherwise agreed in writing by HAMELN.

9.9 Trade Mark Protection

No right, title or interest in or to any of HAMELN’s Intellectual
Property Rights relating to the Products shall pass to LICENSEE by virtue
of the activities contemplated under this Agreement or by virtue of any
other activity. LICENSEE shall exercise vigilance to detect any
limitations, infringements, or improper or wrongful use or suspected
infringements, improper or wrongful use, third-party claims, actions, and
proceedings of and with regard to any such Intellectual Property Rights
in the Territory and shall immediately notify HAMELN in writing of same.
LICENSEE shall exert every effort to safeguard HAMELN’s Intellectual
Property Rights in the Territory. LICENSEE shall fully cooperate with
HAMELN in any action HAMELN may take in order to prevent or end such
infringement, or improper or wrongful use or suspected infringement, or
improper or wrongful use. At HAMELN’s request and expense, LICENSEE
shall assist HAMELN in defending any claim of infringement.

Page 14 of 31

 

10. Exchange of Information

10.1 Serious Adverse Reactions

Both Parties shall report to each other promptly any information on
serious (expected or unexpected) adverse reactions attributable to the
use of the Product.

10.2 Not Serious Adverse Reactions

Additionally, information on not serious adverse reactions attributable
to the use of the Product shall be reported to each other as soon as
practicable.

10.3 Other Information

LICENSEE shall report to HAMELN any information that is relevant in the
course of trade, or in the context of the Agreement. Should it be
required, further details regarding exchange of information will be
agreed to between the Parties and described in the technical agreement
and/or the pharmacovigilance agreement that the Parties may enter into.

11. Confidentiality

11.1 Confidential Information

Each Party (i) shall keep the other Party’s Confidential Information
confidential and shall not directly or indirectly, use, divulge, publish
or otherwise disclose or allow to be disclosed any aspect of such other
Party’s Confidential Information, except with the other Party’s prior
written consent and as specifically permitted by this Agreement; and (ii)
shall refrain from any action or conduct which might reasonably or
foreseeably be expected to compromise the confidentiality or proprietary
nature of Confidential Information. Upon request, each of the Parties
shall immediately return to the other the originals and all copies of any
Confidential Information of the other Party. Each Party may disclose the
other Party’s Confidential Information to the appropriate governmental
authorities in the Territory necessary to effectuate the purposes of this
Agreement. Each Party may additionally disclose and publish this
Agreement and the other Party’s Confidential Information to the extent
required by applicable securities laws; provided that such disclosing
Party will endeavor to minimize the amount of such required disclosures
so as to avoid disclosing trade secrets.

11.2 Disclosure of Confidential Information

Each Party may disclose the other Party’s Confidential Information to
such of its directors, officers, employees and agents who need to know
the Confidential Information for the purposes hereunder and who are bound
by an agreement with the Party intending to disclose such Confidential
Information to them to keep such Confidential Information confidential.

11.3 No confidentiality obligations

A Party’s obligations under Article 11.1 above shall not apply to
information which such Party can show:

	 	(i)	 	at the time of disclosure to be in the public domain; or
	 
	 	(ii)	 	after the time of disclosure becomes part of the public
domain by publication or otherwise, other than by an unauthorized
act or omission of such Party; or

Page 15 of 31

 

	 	(iii)	 	was in such Party’s rightful possession prior to the time of
disclosure and was not acquired directly or indirectly from the
disclosing Party, or
	 
	 	(iv)	 	is disclosed to such Party after the Effective Date by a
Third Party who did not acquire the Information from the disclosing
Party; or
	 
	 	(v)	 	is independently developed by or for a receiving Party
completely apart from the disclosures hereunder.

12. Indemnification

12.1 Indemnification by HAMELN

HAMELN shall indemnify, defend and hold harmless LICENSEE against all
damages, claims, liabilities, losses and other expenses, including,
without limitation, reasonable attorneys’ fees and costs, whether or not
a lawsuit or other proceeding is filed, that arise out of or relate to
(i) any dispute or claim that the Products, or any HAMELN manufacturing
processes or methods employed or to be employed, infringe or violate any
Third Party’s Intellectual Property Rights; (ii) product liability
claims, injury to or death of persons or damage to property that may have
been caused, or that may be alleged to have been caused, directly or
indirectly, by HAMELN, the Products, or any HAMELN manufacturing
processes or methods employed or to be employed, HAMELN’s employees or
agents, or HAMELN’s Affiliated Companies, subcontractors, their employees
or agents; (iii) any defect in the Products, their manufacture, or other
failure of the Products to comply with their respective specifications,
the Marketing Authorization and/or Registration Dossiers, including, but
not limited to, any costs associated with Product recalls which directly
result from HAMELN’s or HAMELN’s Affiliated Companies’, or their
respective subcontractors’, employees’ or agents’ negligent acts or
omissions; (iv) any negligent act or omission of HAMELN, its agents, or
subcontractors; (v) a breach of any covenants or warranties provided by
HAMELN under this Agreement; or (vi) HAMELN’s failure to fully conform to
all laws, ordinances, rules and regulations which affect the Products,
their use, or any part thereof. In the event HAMELN fails to promptly
indemnify and defend such claims and/or pay LICENSEE’s expenses, as
provided above, LICENSEE shall have the right to defend itself and shall
have the right to withhold payments otherwise due to HAMELN to pay for
costs and expenses actually incurred by LICENSEE under this Article, and
in addition, HAMELN shall reimburse LICENSEE for any remaining reasonable
attorneys’ fees, costs and damages incurred in settling or defending such
claims within thirty (30) calendar days of each of LICENSEE’ written
requests, provided that any settlement shall only be with HAMELN’s prior
written approval.

12.2 Indemnification by LICENSEE

LICENSEE shall indemnify, defend and hold harmless HAMELN against all
damages, claims, liabilities, losses and other expenses, including,
without limitation, reasonable attorneys’ fees and costs, whether or not
a lawsuit or other proceeding is filed, that arise out of or relate to
(i) any negligent act or omission of LICENSEE, its employees, its agents,
its Affiliated Companies, its subcontractors and their employees or
agents; and (ii) LICENSEE’s breach of any covenants or warranties
provided by LICENSEE under this Agreement. In the event LICENSEE fails
to promptly indemnify and defend such claims and/or pay HAMELN’s
expenses, as provided above, HAMELN shall have the right to defend
itself, and in that case, LICENSEE shall reimburse HAMELN for all of its
reasonable attorneys’ fees, costs and damages incurred in settling or
defending such claims within thirty (30) calendar days of each of
HAMELN’s written requests, provided that any settlement shall only be
with LICENSEE’s prior written approval.

Page 16 of 31

 

12.3 Insurance

Each Party shall obtain, at its expense, property, commercial and
liability insurance covering its obligations hereunder, in each case in
amounts appropriate to the conduct of its business, as determined in its
sole and exclusive judgment. The policies of insurance obtained by the
Parties hereunder must state that the insurer shall notify the other
Party at least thirty (30) days prior to termination, cancellation of, or
any material change in, the coverage provided. Each Party shall make
available to the other Party at such other Party’s request certificates
of insurance evidencing satisfaction of its obligations under this
Article 12.3.

12.4 Limitation of Liability

UNDER NO CIRCUMSTANCES WILL EITHER PARTY BE LIABLE FOR THE OTHER PARTY’S
INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES,
INCLUDING LOSS OF PROFITS, WHETHER FORSEEABLE OR NOT, ARISING IN
CONNECTION WITH THIS AGREEMENT OR WITH THE USE OR LIABILITY TO USE THE
PRODUCTS FURNISHED UNDER THIS AGREEMENT. THE PREVIOUS SENTENCE SHALL NOT
LIMIT THE RESPECTIVE PARTIES’ INDEMNIFICATION OBLIGATIONS PURSUANT TO
ARTICLES 12.1 AND 12.2 TO THE EXTENT THAT SUCH DAMAGES ARE AWARDED TO
THIRD PARTIES AND WHICH ONE OF THE PARTIES HERETO IS OBLIGATED TO PAY.

13. Relationship between Parties

The relationship between the Parties under this Agreement is that of
independent contractors are not by this Agreement made agents or
employees of the other.

14. Effective Date and Duration

14.1 Term

This Agreement shall be effective from the Effective Date and shall,
unless terminated earlier under the provisions of this Agreement,
continue for an initial term of five (5) years and thereafter extend
automatically for successive two (2) year periods. Unless otherwise
provided for herein, either Party may terminate this Agreement by giving
written notice to the other Party at least six (6) months prior to the
end of the initial five (5) years or the end of a successive two (2) year
term.

14.2 Termination upon Breach

Unless otherwise provided for herein, if one Party materially breaches
any of the material terms of this Agreement and fails to remedy such
breach within sixty (60) days after the other Party has given notice
requiring it to do so, the non-breaching Party shall have the right to
terminate this Agreement upon one (1) months’ prior written notice. For
the purpose of this Agreement, non-compliance with payment obligations
under this Agreement will be considered a material breach of a material
term.

14.3 Termination upon Bankruptcy

Either Party shall be entitled to terminate this Agreement immediately in
case a proceeding of bankruptcy or composition shall be instituted
against the other Party which is not dismissed within sixty (60) days, or
if an interim order is applied for or made, or a voluntary arrangement
approved, or if a petition for a bankruptcy order is presented or a
bankruptcy order is made against either Party or if a receiver or trustee

Page 17 of 31

 

in bankruptcy is appointed over either Party’s estate or a voluntary
arrangement is proposed or approved or an administration order is made,
or a receiver or administrative receiver is appointed over any of either
Party’s assets or undertaking or a winding up resolution or petition is
passed or presented (otherwise than for the purposes of a reconstruction
or amalgamation) or if any circumstances arise which would entitle the
court or a creditor to appoint a receiver, administrative receiver or
administrator or to present a winding-up petition or make a winding-up
order or other similar or equivalent action is taken against or by either
Party by reason of its insolvency or in consequence of debt.

14.4 Termination by HAMELN

	 	(i)	 	HAMELN shall have the right to terminate this Agreement
immediately if LICENSEE challenges the validity of HAMELN’s
Intellectual Property Rights that may apply to the Product, the
Active Substance or the manufacturing thereof.
	 
	 	(ii)	 	HAMELN shall have the right to terminate this Agreement in
accordance with Articles 8.5 and 9.5.
	 
	 	(iii)	 	HAMELN shall have the right to terminate this Agreement
immediately if agreement on the Initial Transfer Price cannot be
reached between the Parties, subject to the cap provided by Article
8.1, or if LICENSEE fails, in any twenty four (24) month period, to
meet the minimum order quantity set forth in Appendix B-1 hereto,
and fails to cure such failure within thirty (30) calendar days of
HAMELN’s written notice. Purchases made by LICENSEE to cure such
failure shall only be counted for the twenty four (24) month period
with a deficit in the minimum order quantity even if made in the
following measurement period.

14.5 Effect of Termination

BY REASON OF THE EXPIRATION, NON-RENEWAL, OR TERMINATION OF THIS
AGREEMENT, EXCEPT FOR ANY TERMINATION BY LICENSEE PURSUANT TO ARTICLE
14.2 (CAUSED BY A BREACH BY HAMELN) OR 14.3 (DUE TO A HAMELN BANKRUPTCY),
HAMELN SHALL NOT BE LIABLE TO LICENSEE FOR COMPENSATION OR REIMBURSEMENT
OF COSTS AND/OR DAMAGES, ON ACCOUNT OF ANY LOSS OF PRESENT OR PROSPECTIVE
PROFITS ON SALES OR ANTICIPATED SALES, ON ACCOUNT OF ANY EXPENDITURES,
INVESTMENTS, INVENTORY, LEASES OR OTHER COMMITMENTS MADE IN CONNECTION
WITH THIS AGREEMENT OR IN THE ANTICIPATION OF EXTENDED PERFORMANCE
HEREUNDER, OR IN CONNECTION WITH THE ESTABLISHMENT, DEVELOPMENT, OR
MAINTENANCE OF LICENSEE’S BUSINESS OR GOODWILL, OR FOR ANY OTHER REASON.

15. Rights and Obligations upon Termination

15.1 In case of Expiration or Regular Termination

Upon the regular expiration or termination in accordance with Article
14.1 of this Agreement, all outstanding sums payable by LICENSEE to
HAMELN shall immediately become due and payable. In this event the rights
and licenses in Article 2 shall cease as per the date this Agreement is
terminated. Notwithstanding anything to the contrary, upon such
expiration or termination, LICENSEE shall nevertheless be permitted to
sell Products remaining in its inventory in the Territory, on a
non-exclusive basis provided that LICENSEE complies with all other terms
and conditions herein until such Products are sold or otherwise disposed.

Page 18 of 31

 

15.2 In case of breach by HAMELN

Upon the justified termination of this Agreement by LICENSEE in
accordance with Article 14.2 or 14.3 or an unauthorized termination by
HAMELN, HAMELN shall promptly pay to LICENSEE the amount equal to (Y)
€1,500,000, less (Z) €1,500,000 multiplied by a fraction, the
numerator of which is equal to the number of days elapsed from the
Effective Date, and the denominator of which is the total number of days
in a seven (7) year period. Notwithstanding anything to the contrary,
upon such termination, LICENSEE shall nevertheless be permitted to sell
Products remaining in its inventory in the Territory, on a non-exclusive
basis provided that LICENSEE complies with all other terms and conditions
herein until such Products are sold or otherwise disposed.

15.3 In case of breach by LICENSEE

Upon the justified termination of this Agreement by HAMELN in accordance
with Article 14.2, 14.3 or 14.4 above, the rights and licenses in Article
2 shall cease as per the date this Agreement is terminated pursuant to
such Articles. Notwithstanding anything to the contrary, upon such
termination, LICENSEE shall nevertheless be permitted to sell Products
remaining in its inventory in the Territory, on a non-exclusive basis
provided that LICENSEE complies with all other terms and conditions
herein until such Products are sold or otherwise disposed.

16. Protection of Licensed Patents

	 	(i)	 	The Product and/or the Active Substance and/or the
manufacturing thereof may be protected by one or more patents or
patent applications in the name of or licensed to HAMELN or any of
its Affiliated Companies.
	 
	 	(ii)	 	If LICENSEE obtains information that:

	 	(a)	 	a Third Party may infringe any of HAMELN’s
Intellectual Property Rights related to the Products in the
Territory, or
	 
	 	(b)	 	a Third Party intends to file or has filed a
patent application or has obtained a patent which may overlap
with any of HAMELN’s Intellectual Property Rights in the
Territory,

	 	 	 	LICENSEE shall promptly notify HAMELN thereof. HAMELN will in its
sole discretion take such steps as necessary to prosecute such
infringement or oppose such conflicting patent application or
patent. If such actions would require the cooperation of LICENSEE,
LICENSEE shall provide HAMELN with all necessary assistance.
HAMELN may reasonably require without charging this to HAMELN
except in respect to external costs incurred which had been
previously agreed in writing by HAMELN.
	 
	 	(iii)	 	The expenses incurred in taking such steps as mentioned
under Article 16(ii) and any proceeds which may be obtained out of
legal activities against a Third Party infringing HAMELN  ́s
Intellectual Property Rights related to the Products are, in the
absence of agreement to the contrary, for the sole account of
HAMELN.

17. Patent Strategy, Judicial Cost and Legal Fees

17.1 Patent Strategy

HAMELN has developed a patent strategy (“Patent Strategy”) that involves
steps to enable launch of the Product in the respective countries of the
Territory or elsewhere, right upon expiry of the relevant Third Party
Patents. HAMELN’s Patent Strategy

Page 19 of 31

 

focuses on avoiding preliminary injunctions and/or other Third Party
measures meant to prevent or delay launch of the Product in the Territory
and the subsequent sales of the Product. The Patent Strategy is also
aiming at avoiding claims and/or the revoking thereof.

17.2 Judicial Cost and Legal Fees

To the extent that

	 	(i)	 	LICENSEE authorizes HAMELN to conduct, execute and control
such Patent Strategy and the related litigation at its sole
discretion and cost, and that
	 
	 	(ii)	 	LICENSEE agrees to provide HAMELN with all assistance HAMELN
may reasonably require (at HAMELN’s sole expense),

any and all external judicial cost and legal fees HAMELN will make either
pro-actively or reactively in view of the Patent Strategy, will be for
the account of HAMELN. In case any damages or compensation of legal cost
are rewarded to any of the Parties by a court of law as a result of
HAMELN’s Patent Strategy, HAMELN will benefit solely.

18. Force Majeure

In the event of any circumstances beyond the control of the Parties
(“Force Majeure”) and in particular, but without prejudice to the
generality of the foregoing, acts of God, fire, explosion, earthquake,
lightning, storm, hurricane, flood, shortage or failure of supply of
materials or equipment from normal sources for manufacture of the
Products, failure of public services, terrorism, war, riots, strikes,
sabotage, accident, embargo or any other action by any government
authority, neither Party shall have any claim, whatsoever, against the
other Party and the Parties further agree that neither will have any
claim against the other for any direct or indirect or consequential loss,
injury or damage which shall include any loss of trade or profit. If
either Party is unable to perform its respective obligations under this
Agreement for a continuous period of ninety (90) days, consecutively or
cumulative during any one (1) year period beginning on the effective date
of this Agreement, by reason of Force Majeure, then the Parties shall
mutually discuss a work-around solution or alternate steps to take to
minimize the impact of such Force Majeure event or other possible courses
of action, including, but not limited to, a mutual agreement to terminate
this Agreement.

19. Severability

If any provision of this Agreement is found by any court or
administrative body of competent jurisdiction to be invalid or
unenforceable, the invalidity or unenforceability of such provision shall
not affect the other provisions of this Agreement, and all provisions not
affected by such invalidity or unenforceability shall remain in full
force and effect. The Party agree to attempt to substitute for any
invalid or unenforceable provision a valid or enforceable provision which
achieves to the greatest extent possible the economic objectives of the
invalid or unenforceable provision.

20. Waiver

The waiver by either Party of a breach of any of the provisions of this
Agreement by the other Party shall not be construed as a waiver of any
succeeding breach of the same or other provisions; nor shall any delay or
omission by either Party in exercising any right that it may have under
this Agreement operate as a waiver of any breach or default by the other
Party.

Page 20 of 31

 

21. Notices

Any notice, demand, consent, election, offer, approval, request, or other
communication given under this Agreement shall be in writing and shall be
served personally or delivered by first class, registered or certified,
return receipt requested U.S. mail, postage prepaid. Notices may also be
given by transmittal over electronic transmitting devices such as Telex,
facsimile or telecopy machine, if the Party to whom the notice is being
sent has such a device in its office, provided a complete copy of any
notice so transmitted shall also be mailed in the same manner as required
for a mailed notice. Notices shall be deemed received at the earlier of
actual receipt or three (3) days following deposit in U.S. mail, postage
prepaid. Notices shall be directed to Parties at their addresses as
specified below, provided a Party may change such Party’s address for
notice by giving written notice to the other Party in accordance with
this Article 21.

	 	 	 
	HAMELN:

	 	LICENSEE:
	hameln pharmaceuticals gmbh.

	 	Akorn, Inc.
	Langes Feld 13

	 	2500 Millbrook Drive
	D-31789 Hameln, Germany

	 	Buffalo Grove, Illinois 60089-4694, USA
	Telefax: +49 5151 581 258

	 	Telefax: +1 847 279-6191

22. Governing Law and Dispute Resolution

22.1 Governing Law

This Agreement is governed by and shall be construed in accordance with
the law of the State of New York, excluding any conflict-of-laws rule or
principle that might refer the governance or the construction of this
Agreement to the law of another jurisdiction.

22.2 Dispute Resolution

The Parties shall, before the commencement of arbitration proceedings,
attempt in good faith to settle their dispute by mediation.

	 
	 	(i)	 	Except as otherwise provided in this Agreement, any dispute,
controversy or claim arising out of or relating to this Agreement,
or any breach thereof, including, without limitation, any claim that
this Agreement, or any part hereof, is invalid, illegal or otherwise
voidable or void, shall be submitted, at the request of any Party,
to binding arbitration by a JAMS ENDISPUTE (“JAMS”) arbitrator, or
such other arbitrator as may be agreed upon by the Parties.
Hearings on such arbitration shall be conducted in New York, New
York. A single arbitrator shall arbitrate any such controversy.
The arbitrator shall hear and determine the controversy in
accordance with applicable law and the intention of the Parties as
expressed in this Agreement, upon the evidence produced at an
arbitration hearing scheduled at the request of either Party. The
arbitrator shall decide all discovery disputes. Judgment on the
award of the arbitrator may be entered in any court having
jurisdiction thereof.
	 
	 	(ii)	 	Each of the Parties reserves the right to file with a court
of competent jurisdiction an application for temporary or
preliminary injunctive relief, writ of attachment, writ of
possession, temporary protective order and/or appointment of a
receiver on the grounds that the arbitration award to which the
applicant may be entitled may be rendered ineffectual in the absence
of such relief.

Page 21 of 31

 

	 	(iii)	 	Any arbitration hereunder may be consolidated by JAMS with
the arbitration of any other dispute arising out of or relating to
the same subject matter when the arbitrator determines that there is
a common issue of law or fact creating the possibility of
conflicting rulings by more than one arbitrator. Any disputes over
which arbitrator or panel of arbitrators shall hear any consolidated
matter shall be resolved by JAMS.
	 
	 	(iv)	 	The arbitrator shall not have any power to alter, amend,
modify or change any of the terms of this Agreement nor to grant any
remedy which is either prohibited by the terms of this Agreement, or
not available in a court of law.
	 
	 	(v)	 	All questions in respect of procedure to be followed in
conducting the arbitration as well as the enforceability of this
Agreement to arbitrate which may be resolved by state law shall be
resolved according to the laws of the State of New York.
	 
	 	(vi)	 	The costs of the arbitration, including any JAMS
administration fee, the arbitrator’s fee, and costs for the use of
facilities during the hearings, shall be borne equally by the
Parties to the arbitration. Attorneys’ fees may be awarded to the
prevailing or most prevailing Party at the discretion of the
arbitrator.

23. Miscellaneous

23.1 Entire Agreement

This Agreement constitutes the entire agreement between the Parties with
respect to the subject matter hereto, and supersedes all prior agreements
between the Parties, whether written or oral, relating to the same
subject matter.

23.2 Modifications

No modifications, amendments or supplements to this Agreement shall be
effective for any purpose unless in writing signed by each Party.
Approvals or consents hereunder by a Party shall also be in writing.

23.3 Interpretation

This Agreement is executed in the English language. The language used in
this Agreement shall be deemed to be the language chosen by the Parties
hereto to express their mutual intent and no rule of strict construction
against either Party shall apply to any term or condition of this
Agreement. The headings to this Agreement are for ease of reference only
and shall not be used to construe any provision. The word “including”
shall not limit a more general preceding phrase and the word “hereof”
shall refer to this Agreement as a whole.

23.4 Counterparts

     This Agreement may be executed in several counterparts that together
shall be originals and constitute one and the same instrument.

23.5 Severability

     If any provision of this Agreement, or part thereof, is declared by a
court of competent jurisdiction to be invalid, void or unenforceable,
each and every other provision, or part thereof, shall nevertheless
continue in full force and effect.

Page 22 of 31

 

23.6 Setoff

Except as provided in Section 12.1, all payments made in connection with
this Agreement are to be made without any setoff. Any attempt by a Party
to setoff amounts against payments owed to the other Party, except as
provided in Section 12.1, shall constitute a material breach of this
Agreement pursuant to Article 14.2.

23.7 Assignments

Either Party may assign this Agreement or any part thereof upon the prior
written consent of the other Party, which approval shall not be
unreasonably withheld. Any permitted assignee shall resume all
obligations of its assignor under this Agreement. No assignment shall
relieve any Party of responsibility for the performance of any accrued
obligation which such Party then has hereunder.

23.8 Interpretation

The Parties acknowledge and agree that neither this Agreement nor the
other documents executed pursuant hereto shall be construed in favor of
one Party based upon which Party drafted the same, it being acknowledged
that the Parties contributed substantially to the negotiation and
preparation of this Agreement and the other documents executed pursuant
hereto or in connection herewith.

23.9 Special Clauses

The Parties have not agreed, either in writing or orally, on any special
clauses deviating from this Agreement. The General Terms and Conditions
of HAMELN are valid in every instance that is not addressed in this
Agreement. This shall also be valid for forms the Parties use for
business activities, e.g. when placing or confirming separate orders, in
which it is referred to General Terms and Conditions.

[signature page follows]

Page 23 of 31

 

     IN WITNESS WHEREOF HAMELN and LICENSEE have caused this Agreement to be
executed by their duly authorized representatives on the day and year first set
forth above.

	 	 	 	 	 	 	 
	HAMELN PHARMACEUTICALS GMBH	 	AKORN, INC.
	 
	 	 	 	 	 	 
	By:

	 	/s/ Christoph Kerstein	 	By:	 	/s/ Arthur S. Przybyl
	

	 	

	 	 	 	

	Name:

	 	Christoph Kerstein	 	Name:	 	Arthur S. Przybyl
	

	 	

	 	 	 	

	Title:

	 	Managing Director	 	Title:	 	President & CEO
	

	 	

	 	 	 	

	 
	 	 	 	 	 	 
	By:

	 	/s/ Stefan Gliwitzki	 	By:	 	/s/ Abu Alam
	

	 	

	 	 	 	

	Name:

	 	Stefan Gliwitzki	 	Name:	 	Abu Alam
	

	 	

	 	 	 	

	Title:

	 	Marketing Director	 	Title:	 	Senior Vice President, Product and Business 
Development
	

	 	

	 	 	 	

Page 24 of 31

 

Appendix A

DTPA Business Principles

Please see attached.

Page 25 of 31

 

1. DTPA Business Principles

1.1 Introduction

The Marketing Approval for Ca-DTPA and Zn-DTPA was granted to hameln
pharmaceuticals Gmbh (HAMELN) on 11 August 2004 by the US FDA. HAMELN
is currently in negotiations with several interested parties which would
like to market the two products in the US. In order to structure these
discussions HAMELN has noted down in this document the main principles
for cooperation with a potential partner in the US.

1.2 Exclusive License and Supply Agreement

HAMELN is seeking and Exclusive License and Supply Agreement with a
partner who shows the clear potential to successfully introduce the two
products to the US market and who has a clear strategy of how best to
market and sell the products to the various customers in the USA.

1.3 License Fee/Term

An initial non refundable
minimum License Fee of €1,500,000 (Euro one
Million five-hundred-thousand) is to be paid by the Licensee to HAMELN in
order to receive an Exclusive License to market and sell Ca-DTPA and
Zn-DTPA in the USA for an initial term of 5 (five) years which thereafter
will extend automatically for successive 2 (two) year periods if neither
party has not given notice of termination.

1.4 Annual Royalty

A non refundable Annual Royalty according to the following post schedule
is to be paid.

	 	 	 	 	 
	 	 	2005
	Annual Establishment Fee
	 	$	262,200	 
	Annual Product Fee
	 	$	41,710	 
	 
	 	$	41,710	 
	Sum in $  
	 	$	347,625	 
	In Euro
	 	€	288,588	 
	Regulatory Maintenance
	 	€	50,000	 
	Grand total
	 	€	338,588	 

The cost will increase annually by approximately 5% to take care of the inflation rate.

1.5 Cost for Medical Commitments

It is currently estimated
that €450,000 (Euro
four-hundred-fifty-thousand) cost are to be incurred for complying with
the regulatory commitments for post approval studies and Pharmacokinetic
Study for inhalation Therapy. This cost has to be born by the Licensee
as and when it occurs.

1.6 Total Product Prices

HAMELN will supply the Products to the Licensee at process which
correspond to 50% of the Total (Gross) Sales Price actually achieved in
the market with all purchasing organizations but not less than the
Initial Transfer price.

Licensee shall provide HAMELN with summary documentation of all sales
transactions of the Products in the previous quarter not later than the
15th day of the next months after a quarter in order do the final
calculations for the money transferable to HAMELN.

1

 

* Confidential Treatment Requested Under

17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2

1.7 Initial Transfer Price

The Initial transfer Price for both products will be [...***...]
([...***...]) for a single pack of 10 ampoules.

1.8 Annual Minimum Order Quantities

HAMELN
requests annual minimum order quantities of [...***...] packs of 10 ampoules of either or both products.

1.9 First Binding Order

On signing
the final contract a first binding order for [...***...] packs of 10 ampoules of either or both products will be raised by the Licensee.

2. FURTHER PROCEEDINGS

We want to assure that first sales can still be achieved in 2004. This
is due to the fact that governmental organizations as well as Individual
hospitals, ambulance services and fire brigades have already approached
us and are demanding for urgent deliveries.

2.1 Binding Offers

HAMELN is expecting a binding offer from each interested Party not later
than 11 October 2004. These offers should clearly state under which
conditions the Party would like to continue the discussions with HAMELN
and in detail explain by which means what turnover and units could be
sold to the market (marketing strategy/marketing plan).

HAMELN will review these offers thoroughly by 18 October 2004 and take a
decision with which individual interested party to continue the
discussions and to start negotiations.

2.2 Signing of Term Sheet

The chosen Party will have to sign a binding Term Sheet guaranteeing her
an exclusive negotiation period for an Exclusive License for the USA
until 30 November 2004. By this date a binding contract has to be
signed.

Upon signing
of the Term Sheet the Party will pay €100,000 (Euro
one-hundred-thousand). Should no agreement for a contract be achieved by
30 November 2004 this payment will not be refunded. On signing a final
Exclusive License and Supply Agreement 50% of this payment of €100,000
(i.e. €50,000) will be subtracted from the agreed Initial License Fee.

	 	 	 
	Offer of Akorn Accepted 12/10/2004

	 	Agreed to and Accepted By:
	 
	 	 
	/s/ Christoph Kerstein

	 	/s/ Arthur S. Przybyl
	

	 	

	Christoph Kerstein

	 	Arthur S. Przybyl
	Managing Director, Hameln Pharmaceuticals

Gmbh

	 	President and CEO, Akorn, Inc.

	*	 	CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed
separately with the Securities & Exchange Commission.

2

 

* Confidential Treatment Requested Under

17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2

Appendix B-1

License Fee, Establishment Fee And Quantity

License Fee: €1,500,000; provided that €50,000 of the €100,000 paid
by LICENSEE under the DTPA Business Principles shall apply towards the License
Fee yielding a net due amount of €1,450,000.

First Binding Order Quantity: [...***...] packs (10 ampoules per packs), in
the aggregate, of Ca-DTPA and ZN-DTPA.

Minimum Order Quantity: For each twenty-four (24) calendar month period,
beginning as of the Effective Date, [...***...] packs (10 ampoules per packs),
in the aggregate, of Ca-DTPA and ZN-DTPA. (For the avoidance of doubt, the
above first binding order quantity shall be included in the initial twenty-four
(24) month measurement period.)

	*	 	CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed
separately with the Securities & Exchange Commission.

Page 26 of 31

 

* Confidential Treatment Requested Under

17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2

Appendix B-2

Product List

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Product /	 	 	 	 	 	Shelf Life	 	Bulk Batch	 	Initial Transfer Price
	Strength
	 	Presentation
	 	(years)
	 	Size /Unit
	 	(EUR) per Unit

	 
	 	 	 	 	 	 	 	 	 	10 ampoules	 	 	 	 
	Ca-DTPA
	 	 	 	 	 	 	2	 	 	per pack	 	 	[***]	 
	 
	 	 	 	 	 	 	 	 	 	10 ampoules	 	 	 	 
	Zn-DTPA
	 	 	 	 	 	 	2	 	 	per pack	 	 	[***]	 

*   CONFIDENTIAL
TREATMENT REQUESTED - This language has been omitted and filed
separately with the Securities & Exchange Commission.

Page 27 of 31

 

Appendix C

Hameln’s Patents

	 	 	 	 	 	 	 	 	 
	Product
	 	NDA
	 	Orphan Drug Designation

	Pentetate Calcium Trisodium
	 	 	21749	 	 	IP
	Pentetate Zinc Trisodium
	 	 	21751	 	 	IP

Page 28 of 31

 

* Confidential Treatment Requested Under
17 C.F.R. §§ 200.80(b)(4), 200.83 and 240.24b-2

Appendix D

Example of Final Product Prices

Example for calculation of Final Product Price

A given quarter

	 	 	 	 	 	 	 
	1. Delivery to Akorn

	 	 	 	2. Sales by Akorn to the market	 	 
	Units delivered

	 	[...***...]
	 	Number of Units invoiced
	 	[...***...]
	Transfer Price per unit

	 	[...***...]
	 	Total Gross Sales Price
	 	[...***...]
	Invoice to Akorn

	 	[...***...]	 	 	 	 

3. Formula for calculating Final
Product Price

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(Total Gross Sales Price * [...***...]) - (Number of Units invoices *

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Initial Transfer Price)

	 	(
	 	 	[...***...]	 	 	*
	 	[...***...]
	 	) - (
	 	[...***...]
	 	*
	 	[...***...]
	 	 	)	 	 	 
	

	 	assumed echange rate
	 	1€=
	 	 	$ 1.20	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	(
	 	 	[...***...]	 	 	*
	 	[...***...]
	 	) - (
	 	[...***...]
	 	*
	 	[...***...]
	 	 	)	 	 	 
	

	 	 	 	 	 	 	[...***...]	 	 	 	 	 	 	-
	 	 	 	 	 	[...***...]
	 	 	=	 	 	[...***...]
	

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 

	 	 	 	 	 
	4. At the end of this Quarter Akorn has
to pay

	 	[...***...]
	 	to hameln according to the “Final Product Price” calculation.

* CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed
separately with the Securities & Exchange Commission.<PAGE>

                                                                     EXHIBIT 4.1

                              CANCERVAX CORPORATION
              AMENDED AND RESTATED 2003 EQUITY INCENTIVE AWARD PLAN

                                    ARTICLE 1
                                     PURPOSE

      1.1 GENERAL. The purpose of the CancerVax Corporation Amended and Restated
2003 Equity Incentive Award Plan (the "Plan") is to promote the success and
enhance the value of CancerVax Corporation (the "Company") by linking the
personal interests of the members of the Board, employees, officers, and
executives of the Company and any Subsidiary, to those of Company stockholders
and by providing such individuals with an incentive for outstanding performance
to generate superior returns to Company stockholders. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of members of the Board, employees, officers,
and executives of the Company upon whose judgment, interest, and special effort
the successful conduct of the Company's operation is largely dependent.

                                    ARTICLE 2
                          DEFINITIONS AND CONSTRUCTION

      2.1 DEFINITIONS. The following words and phrases shall have the following
meanings:

            (a) "Award" means an Option, a Restricted Stock award, a Stock
Appreciation Right award, a Performance Share award, a Dividend Equivalents
award, a Stock Payment award, a Deferred Stock award, or a Performance-Based
Award granted to a Participant pursuant to the Plan.

            (b) "Award Agreement" means any written agreement, contract, or
other instrument or document evidencing an Award.

            (c) "Board" means the Board of Directors of the Company.

            (d) "Cause" unless otherwise defined in an employment or services
agreement between the Participant and the Company or a Subsidiary, means
dishonesty, fraud, misconduct, unauthorized use or disclosure of confidential
information or trade secrets, or conviction or confession of a crime punishable
by law (except minor violations), in each case as determined by the Board, and
its determination shall be conclusive and binding.

            (e) "Change of Control" means and includes each of the following:

                  (1) the acquisition, directly or indirectly, by any "person"
or "group" (as those terms are defined in Sections 3(a)(9), 13(d) and 14(d) of
the Exchange Act and the rules thereunder) of "beneficial ownership" (as
determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled
to vote generally in the election of directors ("voting securities") of the
Company that represent 40% or more of the combined voting power of the Company's
then

<PAGE>

outstanding voting securities, other than

                        (A) an acquisition by a trustee or other fiduciary
holding securities under any employee benefit plan (or related trust) sponsored
or maintained by the Company or any person controlled by the Company or by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any person controlled by the Company, or

                        (B) an acquisition of voting securities by the Company
or a corporation owned, directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of the stock of
the Company, or

                        (C) an acquisition of voting securities pursuant to a
transaction described in clause (3) below that would not be a Change of Control
under clause (3);

                  Notwithstanding the foregoing, neither of the following events
shall constitute an "acquisition" by any person or group for purposes of this
subsection (e): an acquisition of the Company's securities by the Company which
causes the Company's voting securities beneficially owned by a person or group
to represent 40% or more of the combined voting power of the Company's then
outstanding voting securities; provided, however, that if a person or group
shall become the beneficial owner of 40% or more of the combined voting power of
the Company's then outstanding voting securities by reason of share acquisitions
by the Company as described above and shall, after such share acquisitions by
the Company, become the beneficial owner of any additional voting securities of
the Company, then such acquisition shall constitute a Change of Control; or

                  (2) during any period of two consecutive years, individuals
who, at the beginning of such period, constitute the Board together with any new
director(s) (other than a director designated by a person who shall have entered
into an agreement with the Company to effect a transaction described in clauses
(1) or (3) of this subsection (e)) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the two year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof; or

                  (3) the consummation by the Company (whether directly
involving the Company or indirectly involving the Company through one or more
intermediaries) of (x) a merger, consolidation, reorganization, or business
combination or (y) a sale or other disposition of all or substantially all of
the Company's assets or (z) the acquisition of assets or stock of another
entity, in each case other than a transaction

                        (A) which results in the Company's voting securities
outstanding immediately before the transaction continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
Company or the person that, as a result of the transaction, controls, directly
or indirectly, the Company or owns, directly or indirectly, all or substantially
all of the Company's assets or otherwise succeeds to the business of the Company
(the Company or such person, the "Successor Entity")) directly or indirectly, at
least a majority

<PAGE>

of the combined voting power of the Successor Entity's outstanding voting
securities immediately after the transaction, and

                        (B) after which no person or group beneficially owns
voting securities representing 40% or more of the combined voting power of the
Successor Entity; provided, however, that no person or group shall be treated
for purposes of this clause (B) as beneficially owning 40% or more of combined
voting power of the Successor Entity solely as a result of the voting power held
in the Company prior to the consummation of the transaction; or

                  (4) the Company's stockholders approve a liquidation or
dissolution of the Company.

            The Committee shall have full and final authority, which shall be
exercised in its discretion, to determine conclusively whether a Change of
Control of the Company has occurred pursuant to the above definition, and the
date of the occurrence of such Change of Control and any incidental matters
relating thereto.

            (f) "Code" means the Internal Revenue Code of 1986, as amended.

            (g) "Committee" means the committee of the Board described in
Article 12.

            (h) "Covered Employee" means an Employee who is, or could be, a
"covered employee" within the meaning of Section 162(m) of the Code.

            (i) "Deferred Stock" means a right to receive a specified number of
shares of Stock during specified time periods pursuant to Article 8.

            (j) "Disability" means, for purposes of this Plan, that the
Participant qualifies to receive long-term disability payments under the
Company's long-term disability insurance program, as it may be amended from time
to time.

            (k) "Dividend Equivalents" means a right granted to a Participant
pursuant to Article 8 to receive the equivalent value (in cash or Stock) of
dividends paid on Stock.

            (l) "Employee" means any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company or any Subsidiary.

            (m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            (n) "Fair Market Value" shall mean, as of any date, the value of
Stock determined as follows:

                  (1) If the Stock is listed on any established stock exchange
      or a national market system, including without limitation the Nasdaq
      National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
      its Fair Market Value shall be the closing sales price for such stock (or
      the closing bid, if no sales were reported) as quoted on such exchange or
      system for the last market trading day prior to the date of

<PAGE>

      determination, as reported in The Wall Street Journal or such other source
      as the Committee deems reliable;

                  (2) If the Stock is regularly quoted by a recognized
      securities dealer but selling prices are not reported, its Fair Market
      Value shall be the mean of the closing bid and asked prices for the Stock
      on the date prior to the date of determination as reported in The Wall
      Street Journal or such other source as the Committee deems reliable; or

                  (3) In the absence of an established market for the Stock, the
      Fair Market Value thereof shall be determined in good faith by the
      Committee.

            (o) "Good Reason" means the occurrence of any of the following
events or conditions and the failure of the successor corporation to cure such
event or condition within 30 days after receipt of written notice from the
Participant:

                  (1) a change in the Participant's status, position or
      responsibilities (including reporting responsibilities) that, in the
      Participant's reasonable judgment, represents a substantial reduction in
      the status, position or responsibilities as in effect immediately prior
      thereto; the assignment to the Participant of any duties or
      responsibilities that, in the Participant's reasonable judgment, are
      materially inconsistent with such status, position or responsibilities; or
      any removal of the Participant from or failure to reappoint or reelect the
      Participant to any of such positions, except in connection with the
      termination of the Participant's employment for Cause, as a result of his
      or her Disability or death, or by the Participant other than for Good
      Reason;

                  (2) a material reduction in the Participant's annual base
      salary, except in connection with a general reduction in the compensation
      of the successor corporation's personnel with similar status and
      responsibilities;

                  (3) the successor corporation's requiring the Participant
      (without the Participant's consent) to be based at any place outside a
      50-mile radius of his or her place of employment prior to a Change of
      Control, except for reasonably required travel on the successor
      corporation's business that is not materially greater than such travel
      requirements prior to the Change of Control;

                  (4) the successor corporation's failure to provide the
      Participant with compensation and benefits substantially equivalent (in
      terms of benefit levels and/or reward opportunities) to those provided for
      under each material employee benefit plan, program and practice as in
      effect immediately prior to the Change of Control;

                  (5) any material breach by the successor corporation of its
      obligations to the Participant under the Plan or any substantially
      equivalent plan of the successor corporation; or

<PAGE>

                  (6) any purported termination of the Participant's employment
      or service relationship for Cause by the successor corporation that is not
      in accordance with the definition of Cause under the Plan

            (p) "Incentive Stock Option" means an Option that is intended to
meet the requirements of Section 422 of the Code or any successor provision
thereto.

            (q) "Non-Employee Director" means a member of the Board who
qualifies as a "Non-Employee Director" as defined in Rule 16b-3(b)(3) of the
Exchange Act, or any successor definition adopted by the Board.

            (r) "Non-Qualified Stock Option" means an Option that is not
intended to be an Incentive Stock Option.

            (s) "Option" means a right granted to a Participant pursuant to
Article 5 of the Plan to purchase a specified number of shares of Stock at a
specified price during specified time periods. An Option may be either an
Incentive Stock Option or a Non-Qualified Stock Option.

            (t) "Participant" means a person who, as a member of the Board,
consultant to the Company or Employee, has been granted an Award pursuant to the
Plan.

            (u) "Performance-Based Award" means an Award granted to selected
Covered Employees pursuant to Articles 6 and 8, but which is subject to the
terms and conditions set forth in Article 9. All Performance-Based Awards are
intended to qualify as Qualified Performance-Based Compensation.

            (v) "Performance Criteria" means the criteria that the Committee
selects for purposes of establishing the Performance Goal or Performance Goals
for a Participant for a Performance Period. The Performance Criteria that will
be used to establish Performance Goals are limited to the following: net
earnings (either before or after interest, taxes, depreciation and
amortization), net losses, sales or revenue, operating earnings, operating cash
flow, return on net assets, return on stockholders' equity, return on assets,
return on capital, stockholder returns, gross or net profit margin, earnings per
share, price per share of Stock, and market share, any of which may be measured
either in absolute terms or as compared to any incremental increase or as
compared to results of a peer group. The Committee shall, within the time
prescribed by Section 162(m) of the Code, define in an objective fashion the
manner of calculating the Performance Criteria it selects to use for such
Performance Period for such Participant.

            (w) "Performance Goals" means, for a Performance Period, the goals
established in writing by the Committee for the Performance Period based upon
the Performance Criteria. Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a division, business
unit, or an individual. The Committee, in its discretion, may, within the time
prescribed by Section 162(m) of the Code, adjust or modify the calculation of
Performance Goals for such Performance Period in order to prevent the dilution
or enlargement of the rights of Participants (i) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (ii) in recognition of, or in anticipation of,

<PAGE>

any other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.

            (x) "Performance Period" means the one or more periods of time,
which may be of varying and overlapping durations, as the Committee may select,
over which the attainment of one or more Performance Goals will be measured for
the purpose of determining a Participant's right to, and the payment of, a
Performance-Based Award.

            (y) "Performance Share" means a right granted to a Participant
pursuant to Article 8, to receive cash, Stock, or other Awards, the payment of
which is contingent upon achieving certain performance goals established by the
Committee.

            (z) "Plan" means this CancerVax Corporation Amended and Restated
2003 Equity Incentive Award Plan, as it may be amended from time to time.

            (aa) "Public Trading Date" means the first date upon which Stock is
listed (or approved for listing) upon notice of issuance on any securities
exchange or designated (or approved for designation) upon notice of issuance as
a national market security on an interdealer quotation system.

            (bb) "Qualified Performance-Based Compensation" means any
compensation that is intended to qualify as "qualified performance-based
compensation" as described in Section 162(m)(4)(C) of the Code.

            (cc) "Restricted Stock" means Stock awarded to a Participant
pursuant to Article 6 that is subject to certain restrictions and to risk of
forfeiture.

            (dd) "Stock" means the common stock of the Company and such other
securities of the Company that may be substituted for Stock pursuant to Article
11.

            (ee) "Stock Appreciation Right" or "SAR" means a right granted
pursuant to Article 7 to receive a payment equal to the excess of the Fair
Market Value of a specified number of shares of Stock on the date the SAR is
exercised over the Fair Market Value on the date the SAR was granted as set
forth in the applicable Award Agreement.

            (ff) "Stock Payment" means (a) a payment in the form of shares of
Stock, or (b) an option or other right to purchase shares of Stock, as part of
any bonus, deferred compensation or other arrangement, made in lieu of all or
any portion of the compensation, granted pursuant to Article 8.

            (gg) "Subsidiary" means any corporation or other entity of which a
majority of the outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company.

<PAGE>

                                    ARTICLE 3
                           SHARES SUBJECT TO THE PLAN

      3.1 NUMBER OF SHARES.

            (a) Subject to Article 11, the aggregate number of shares of Stock
that may be issued or transferred pursuant to Awards under the Plan shall be the
sum of (i) 2,500,000 shares; (ii) the number of shares of Stock remaining
available for issuance and not subject to awards granted under the CancerVax
Corporation Third Amended and Restated 2000 Stock Incentive Plan (the "Existing
Plan") as of the Effective Date; (iii) with respect to awards granted under the
Existing Plan on or before the Effective Date that expire or are canceled
without having been exercised in full or shares of Stock that are repurchased
pursuant to the terms of awards granted under the Existing Plan, the number of
shares of Common Stock subject to each such award as to which such award was not
exercised prior to its expiration or cancellation or which are repurchased by
the Company; plus (iv) any shares of Stock which the Company repurchases using
the cash proceeds received by the Company from Option exercises and from the
value of any tax deductions realized by the Company with respect to Option
exercises. In addition to the foregoing, subject to Article 11, commencing on
the Effective Date and on each annual anniversary of the Effective Date during
the initial ten-year term of the Plan, the number of shares of Stock which may
be issued or transferred pursuant to Awards under the Plan shall be increased by
that number of shares of Stock equal to the least of (i) five percent (5%) of
the Company's outstanding shares of Stock on such date, (ii) 2,500,000 shares of
Stock or (iii) a lesser amount determined by the Board. The payment of Dividend
Equivalents in conjunction with any outstanding Awards shall not be counted
against the shares available for issuance under the Plan. Notwithstanding
anything in this Section 3.1 to the contrary, the number of shares of Stock that
may be issued or transferred pursuant to Awards under the Plan shall not exceed
an aggregate of 25,000,000 shares, subject to Article 11.

            (b) To the extent that an Award terminates, expires, or lapses for
any reason, any shares of Stock subject to the Award shall again be available
for the grant of an Award pursuant to the Plan. Additionally, any shares of
Stock tendered or withheld to satisfy the grant or exercise price or tax
withholding obligation pursuant to any Award shall again be available for the
grant of an Award pursuant to the Plan. To the extent permitted by applicable
law or any exchange rule, shares of Stock issued in assumption of, or in
substitution for, any outstanding awards of any entity acquired in any form of
combination by the Company or any Subsidiary shall not be counted against shares
of Stock available for grant pursuant to this Plan.

            (c) Notwithstanding the provisions of this Section 3.1, no shares of
Stock may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an Incentive Stock Option under
Code Section 422.

      3.2 STOCK DISTRIBUTED. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.

      3.3 LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS. Notwithstanding any
provision in the Plan to the contrary, and subject to Article 11: the maximum
number of shares of Stock with respect to one or more Awards that may be granted
to any one Participant during a rolling three-year period (measured from the
date of any grant) shall

<PAGE>

be 1,000,000.

                                    ARTICLE 4
                          ELIGIBILITY AND PARTICIPATION

      4.1 ELIGIBILITY.

            (a) GENERAL. Persons eligible to participate in this Plan include
Employees, consultants to the Company and all members of the Board, as
determined by the Committee.

            (b) FOREIGN PARTICIPANTS. In order to assure the viability of Awards
granted to Participants employed in foreign countries, the Committee may provide
for such special terms as it may consider necessary or appropriate to
accommodate differences in local law, tax policy, or custom. Moreover, the
Committee may approve such supplements to, or amendments, restatements, or
alternative versions of, the Plan as it may consider necessary or appropriate
for such purposes without thereby affecting the terms of the Plan as in effect
for any other purpose; provided, however, that no such supplements, amendments,
restatements, or alternative versions shall increase the share limitations
contained in Sections 3.1 and 3.3 of the Plan.

      4.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from among all eligible individuals,
those to whom Awards shall be granted and shall determine the nature and amount
of each Award. No individual shall have any right to be granted an Award
pursuant to this Plan.

                                    ARTICLE 5
                                  STOCK OPTIONS

      5.1 GENERAL. The Committee is authorized to grant Options to Participants
on the following terms and conditions:

            (a) EXERCISE PRICE. The exercise price per share of Stock subject to
an Option shall be determined by the Committee and set forth in the Award
Agreement; provided that the exercise price for any Option shall not be less
than par value of a share of Stock on the date of grant.

            (b) TIME AND CONDITIONS OF EXERCISE. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part,
provided that the term of any Option granted under the Plan shall not exceed ten
years, and provided further, that in the case of a Non-Qualified Stock Option,
such Option shall be exercisable for one year after the date of the
Participant's death. The Committee shall also determine the performance or other
conditions, if any, that must be satisfied before all or part of an Option may
be exercised.

            (c) PAYMENT. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including, without
limitation,

<PAGE>

cash, promissory note bearing interest at no less than such rate as shall then
preclude the imputation of interest under the Code, shares of Stock held for
longer than six months having a Fair Market Value on the date of delivery equal
to the aggregate exercise price of the Option or exercised portion thereof, or
other property acceptable to the Committee (including through the delivery of a
notice that the Participant has placed a market sell order with a broker with
respect to shares of Stock then issuable upon exercise of the Option, and that
the broker has been directed to pay a sufficient portion of the net proceeds of
the sale to the Company in satisfaction of the Option exercise price, provided
that payment of such proceeds is then made to the Company upon settlement of
such sale), and the methods by which shares of Stock shall be delivered or
deemed to be delivered to Participants. Notwithstanding any other provision of
the Plan to the contrary, no Participant who is a member of the Board or an
"executive officer" of the Company within the meaning of Section 13(k) of the
Exchange Act shall be permitted to pay the exercise price of an Option in any
method which would violate Section 13(k).

            (d) EVIDENCE OF GRANT. All Options shall be evidenced by a written
Award Agreement between the Company and the Participant. The Award Agreement
shall include such additional provisions as may be specified by the Committee.

      5.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be granted only
to Employees and the terms of any Incentive Stock Options granted pursuant to
the Plan must comply with the following additional provisions of this Section
5.2:

            (a) EXERCISE PRICE. The exercise price per share of Stock shall be
set by the Committee, provided that the exercise price for any Incentive Stock
Option shall not be less than 100% of the Fair Market Value on the date of
grant.

            (b) EXPIRATION OF OPTION. An Incentive Stock Option may not be
exercised to any extent by anyone after the first to occur of the following
events::

                  (1) Ten years from the date it is granted, unless an earlier
      time is set in the Award Agreement.

                  (2) One year after the date of the Participant's termination
      of employment or service on account of Disability or death, unless in the
      case of death a shorter or longer period is designated in the Award
      Agreement. Upon the Participant's Disability or death, any Incentive Stock
      Options exercisable at the Participant's Disability or death may be
      exercised by the Participant's legal representative or representatives, by
      the person or persons entitled to do so pursuant to the Participant's last
      will and testament, or, if the Participant fails to make testamentary
      disposition of such Incentive Stock Option or dies intestate, by the
      person or persons entitled to receive the Incentive Stock Option pursuant
      to the applicable laws of descent and distribution.

            (c) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market Value
(determined as of the time the Option is granted) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a Participant
in any calendar year may not exceed $100,000.00 or such other limitation as
imposed by Section 422(d) of the Code, or any

<PAGE>

successor provision. To the extent that Incentive Stock Options are first
exercisable by a Participant in excess of such limitation, the excess shall be
considered Non-Qualified Stock Options.

            (d) TEN PERCENT OWNERS. An Incentive Stock Option shall be granted
to any individual who, at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of Stock of the
Company only if such Option is granted at a price that is not less than 110% of
Fair Market Value on the date of grant and the Option is exercisable for no more
than five years from the date of grant.

            (e) TRANSFER RESTRICTION. The Participant shall give the Company
prompt notice of any disposition of shares of Stock acquired by exercise of an
Incentive Stock Option within (1) two years from the date of grant of such
Incentive Stock Option or (2) one year after the transfer of such shares of
Stock to the Participant.

            (f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an Incentive
Stock Option may be made pursuant to this Plan after the tenth anniversary of
the Effective Date.

            (g) RIGHT TO EXERCISE. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant.

                                    ARTICLE 6
                             RESTRICTED STOCK AWARDS

      6.1 GRANT OF RESTRICTED STOCK. The Committee is authorized to make Awards
of Restricted Stock to any Participant selected by the Committee in such amounts
and subject to such terms and conditions as determined by the Committee. All
Awards of Restricted Stock shall be evidenced by a written Restricted Stock
Award Agreement.

      6.2 ISSUANCE AND RESTRICTIONS. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the
Committee determines at the time of the grant of the Award or thereafter.

      6.3 FORFEITURE. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment or
service during the applicable restriction period, Restricted Stock that is at
that time subject to restrictions shall be forfeited; provided, however, that
the Committee may provide in any Restricted Stock Award Agreement that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from specified
causes, and the Committee may in other cases waive in whole or in part
restrictions or forfeiture conditions relating to Restricted Stock.

      6.4 CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted

<PAGE>

pursuant to the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing shares of Restricted Stock are
registered in the name of the Participant, certificates must bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, at its discretion, retain physical
possession of the certificate until such time as all applicable restrictions
lapse.

                                    ARTICLE 7
                            STOCK APPRECIATION RIGHTS

      7.1 GRANT OF STOCK APPRECIATION RIGHTS. A Stock Appreciation Right may be
granted to any Participant selected by the Committee. A Stock Appreciation Right
may be granted (a) in connection and simultaneously with the grant of an Option,
(b) with respect to a previously granted Option, or (c) independent of an
Option. A Stock Appreciation Right shall be subject to such terms and conditions
not inconsistent with the Plan as the Committee shall impose and shall be
evidenced by an Award Agreement.

      7.2 COUPLED STOCK APPRECIATION RIGHTS.

            (a) A Coupled Stock Appreciation Right ("CSAR") shall be related to
a particular Option and shall be exercisable only when and to the extent the
related Option is exercisable.

            (b) A CSAR may be granted to a Participant for no more than the
number of shares subject to the simultaneously or previously granted Option to
which it is coupled.

            (c) A CSAR shall entitle the Participant (or other person entitled
to exercise the Option pursuant to the Plan) to surrender to the Company
unexercised a portion of the Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from the Company in
exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of
Stock on the date of exercise of the CSAR by the number of shares of Stock with
respect to which the CSAR shall have been exercised, subject to any limitations
the Committee may impose.

      7.3 INDEPENDENT STOCK APPRECIATION RIGHTS.

            (a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Stock as the Committee may determine.
The exercise price per share of Stock subject to each ISAR shall be set by the
Committee; provided, however, that, the Committee in its sole and absolute
discretion may provide that the ISAR may be exercised subsequent to a
termination of employment or service, as applicable, or following a Change in
Control of the Company, or because of the Participant's retirement, death or
disability, or otherwise.

            (b) An ISAR shall entitle the Participant (or other person entitled
to exercise the ISAR pursuant to the Plan) to exercise all or a specified
portion of the ISAR (to the extent

<PAGE>

then exercisable pursuant to its terms) and to receive from the Company an
amount determined by multiplying the difference obtained by subtracting the
exercise price per share of the ISAR from the Fair Market Value of a share of
Stock on the date of exercise of the ISAR by the number of shares of Stock with
respect to which the ISAR shall have been exercised, subject to any limitations
the Committee may impose.

      7.4 PAYMENT AND LIMITATIONS ON EXERCISE.

            (a) Payment of the amounts determined under Section 7.2(c) and
7.3(b) above shall be in cash, in Stock (based on its Fair Market Value as of
the date the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee.

            (b) To the extent any payment under Section 7.2(c) or 7.3(b) is
effected in Stock it shall be made subject to satisfaction of all provisions of
Article 5 above pertaining to Options.

                                    ARTICLE 8
                              OTHER TYPES OF AWARDS

      8.1 PERFORMANCE SHARE AWARDS. Any Participant selected by the Committee
may be granted one or more Performance Share awards which may be denominated in
a number of shares of Stock or in a dollar value of shares of Stock and which
may be linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee. In making such determinations, the Committee shall consider (among
such other factors as it deems relevant in light of the specific type of award)
the contributions, responsibilities and other compensation of the particular
Participant.

      8.2 DIVIDEND EQUIVALENTS.

            (a) Any Participant selected by the Committee may be granted
Dividend Equivalents based on the dividends declared on the shares of Stock that
are subject to any Award, to be credited as of dividend payment dates, during
the period between the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Stock by such
formula and at such time and subject to such limitations as may be determined by
the Committee.

            (b) Dividend Equivalents granted with respect to Options or SARs
that are intended to be Qualified Performance-Based Compensation shall be
payable, with respect to pre-exercise periods, regardless of whether such Option
or SAR is subsequently exercised.

      8.3 STOCK PAYMENTS. Any Participant selected by the Committee may receive
Stock Payments in the manner determined from time to time by the Committee. The
number of shares shall be determined by the Committee and may be based upon the
Performance Criteria or other specific performance criteria determined
appropriate by the Committee, determined on the

<PAGE>

date such Stock Payment is made or on any date thereafter.

      8.4 DEFERRED STOCK. Any Participant selected by the Committee may be
granted an award of Deferred Stock in the manner determined from time to time by
the Committee. The number of shares of Deferred Stock shall be determined by the
Committee and may be linked to the Performance Criteria or other specific
performance criteria determined to be appropriate by the Committee, in each case
on a specified date or dates or over any period or periods determined by the
Committee. Stock underlying a Deferred Stock award will not be issued until the
Deferred Stock award has vested, pursuant to a vesting schedule or performance
criteria set by the Committee. Unless otherwise provided by the Committee, a
Participant awarded Deferred Stock shall have no rights as a Company stockholder
with respect to such Deferred Stock until such time as the Deferred Stock Award
has vested and the Stock underlying the Deferred Stock Award has been issued.

      8.5 TERM. The term of any Award of Performance Shares, Dividend
Equivalents, Stock Payments or Deferred Stock shall be set by the Committee in
its discretion.

      8.6 EXERCISE OR PURCHASE PRICE. The Committee may establish the exercise
or purchase price of any Award of Performance Shares, Deferred Stock or Stock
Payments; provided, however, that such price shall not be less than the par
value of a share of Stock, unless otherwise permitted by applicable state law.

      8.7 EXERCISE UPON TERMINATION OF EMPLOYMENT OR SERVICE. An Award of
Performance Shares, Dividend Equivalents, Deferred Stock and Stock Payments
shall only be exercisable or payable while the Participant is an Employee,
consultant to the Company or a member of the Board, as applicable; provided,
however, that the Committee in its sole and absolute discretion may provide that
an Award of Performance Shares, Dividend Equivalents, Stock Payments or Deferred
Stock may be exercised or paid subsequent to a termination of employment or
service, as applicable, or following a Change in Control of the Company, or
because of the Participant's retirement, death or disability, or otherwise;
provided, however, that any such provision with respect to Performance Shares
shall be subject to the requirements of Section 162(m) of the Code that apply to
Qualified Performance-Based Compensation.

      8.8 FORM OF PAYMENT. Payments with respect to any Awards granted under
this Article 8 shall be made in cash, in Stock or a combination of both, as
determined by the Committee.

      8.9 AWARD AGREEMENT. All Awards under this Article 8 shall be subject to
such additional terms and conditions as determined by the Committee and shall be
evidenced by a written Award Agreement.

                                    ARTICLE 9
                            PERFORMANCE-BASED AWARDS

      9.1 PURPOSE. The purpose of this Article 9 is to provide the Committee the
ability

<PAGE>

to qualify Awards other than Options and SARs and that are granted pursuant to
Articles 6 and 8 as Qualified Performance-Based Compensation. If the Committee,
in its discretion, decides to grant a Performance-Based Award to a Covered
Employee, the provisions of this Article 9 shall control over any contrary
provision contained in Articles 6 or 8; provided, however, that the Committee
may in its discretion grant Awards to Covered Employees that are based on
Performance Criteria or Performance Goals but that do not satisfy the
requirements of this Article 9.

      9.2 APPLICABILITY. This Article 9 shall apply only to those Covered
Employees selected by the Committee to receive Performance-Based Awards. The
designation of a Covered Employee as a Participant for a Performance Period
shall not in any manner entitle the Participant to receive an Award for the
period. Moreover, designation of a Covered Employee as a Participant for a
particular Performance Period shall not require designation of such Covered
Employee as a Participant in any subsequent Performance Period and designation
of one Covered Employee as a Participant shall not require designation of any
other Covered Employees as a Participant in such period or in any other period.

      9.3 PROCEDURES WITH RESPECT TO PERFORMANCE-BASED AWARDS. To the extent
necessary to comply with the Qualified Performance-Based Compensation
requirements of Section 162(m)(4)(C) of the Code, with respect to any Award
granted under Articles 6 and 8 which may be granted to one or more Covered
Employees, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (i) designate one or more Covered
Employees, (ii) select the Performance Criteria applicable to the Performance
Period, (iii) establish the Performance Goals, and amounts of such Awards, as
applicable, which may be earned for such Performance Period, and (iv) specify
the relationship between Performance Criteria and the Performance Goals and the
amounts of such Awards, as applicable, to be earned by each Covered Employee for
such Performance Period. Following the completion of each Performance Period,
the Committee shall certify in writing whether the applicable Performance Goals
have been achieved for such Performance Period. In determining the amount earned
by a Covered Employee, the Committee shall have the right to reduce or eliminate
(but not to increase) the amount payable at a given level of performance to take
into account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the Performance Period.

      9.4 PAYMENT OF PERFORMANCE-BASED AWARDS. Unless otherwise provided in the
applicable Award Agreement, a Participant must be employed by the Company or a
Subsidiary on the day a Performance-Based Award for such Performance Period is
paid to the Participant. Furthermore, a Participant shall be eligible to receive
payment pursuant to a Performance-Based Award for a Performance Period only if
the Performance Goals for such period are achieved. In determining the amount
earned under a Performance-Based Award, the Committee may reduce or eliminate
the amount of the Performance-Based Award earned for the Performance Period, if
in its sole and absolute discretion, such reduction or elimination is
appropriate.

<PAGE>

      9.5 ADDITIONAL LIMITATIONS. Notwithstanding any other provision of the
Plan, any Award which is granted to a Covered Employee and is intended to
constitute Qualified Performance-Based Compensation shall be subject to any
additional limitations set forth in Section 162(m) of the Code (including any
amendment to Section 162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as qualified
performance-based compensation as described in Section 162(m)(4)(C) of the Code,
and the Plan shall be deemed amended to the extent necessary to conform to such
requirements.

                                   ARTICLE 10
                         PROVISIONS APPLICABLE TO AWARDS

      10.1 STAND-ALONE AND TANDEM AWARDS. Awards granted pursuant to the Plan
may, in the discretion of the Committee, be granted either alone, in addition
to, or in tandem with, any other Award granted pursuant to the Plan. Awards
granted in addition to or in tandem with other Awards may be granted either at
the same time as or at a different time from the grant of such other Awards.

      10.2 AWARD AGREEMENT. Awards under the Plan shall be evidenced by Award
Agreements that set forth the terms, conditions and limitations for each Award
which may include the term of an Award, the provisions applicable in the event
the Participant's employment or service terminates, and the Company's authority
to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an
Award.

      10.3 LIMITS ON TRANSFER. No right or interest of a Participant in any
Award may be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no Award
shall be assigned, transferred, or otherwise disposed of by a Participant other
than by will or the laws of descent and distribution. The Committee by express
provision in the Award or an amendment thereto may permit an Award (other than
an Incentive Stock Option) to be transferred to, exercised by and paid to
certain persons or entities related to the Participant, including but not
limited to members of the Participant's family, charitable institutions, or
trusts or other entities whose beneficiaries or beneficial owners are members of
the Participant's family and/or charitable institutions, or to such other
persons or entities as may be expressly approved by the Committee, pursuant to
such conditions and procedures as the Committee may establish. Any permitted
transfer shall be subject to the condition that the Committee receive evidence
satisfactory to it that the transfer is being made for estate and/or tax
planning purposes (or to a "blind trust" in connection with the Participant's
termination of employment or service with the Company or a Subsidiary to assume
a position with a governmental, charitable, educational or similar non-profit
institution) and on a basis consistent with the Company's lawful issue of
securities.

      10.4 BENEFICIARIES. Notwithstanding Section 10.3, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights

<PAGE>

pursuant to the Plan is subject to all terms and conditions of the Plan and any
Award Agreement applicable to the Participant, except to the extent the Plan and
Award Agreement otherwise provide, and to any additional restrictions deemed
necessary or appropriate by the Committee. If the Participant is married and
resides in a community property state, a designation of a person other than the
Participant's spouse as his beneficiary with respect to more than 50% of the
Participant's interest in the Award shall not be effective without the prior
written consent of the Participant's spouse. If no beneficiary has been
designated or survives the Participant, payment shall be made to the person
entitled thereto pursuant to the Participant's will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a Participant at any time provided the change or revocation is
filed with the Committee.

      10.5 STOCK CERTIFICATES. Notwithstanding anything herein to the contrary,
the Company shall not be required to issue or deliver any certificates
evidencing shares of Stock pursuant to the exercise of any Award, unless and
until the Board has determined, with advice of counsel, that the issuance and
delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authorities and, if applicable, the requirements of
any exchange on which the shares of Stock are listed or traded. All Stock
certificates delivered pursuant to the Plan are subject to any stop-transfer
orders and other restrictions as the Committee deems necessary or advisable to
comply with federal, state, or foreign jurisdiction, securities or other laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock. In addition to the terms and conditions provided
herein, the Board may require that a Participant make such reasonable covenants,
agreements, and representations as the Board, in its discretion, deems advisable
in order to comply with any such laws, regulations, or requirements. The
Committee shall have the right to require any Participant to comply with any
timing or other restrictions with respect to the settlement or exercise of any
Award, including a window-period limitation, as may be imposed in the discretion
of the Committee.

<PAGE>

                                   ARTICLE 11
                          CHANGES IN CAPITAL STRUCTURE

      11.1 ADJUSTMENTS. In the event of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash dividends) of
Company assets to stockholders, or any other change affecting the shares of
Stock or the share price of the Stock, the Committee shall make such
proportionate adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such change with respect to (i) the aggregate number and
type of shares that may be issued under the Plan (including, but not limited to,
adjustments of the limitations in Sections 3.1 and 3.3); (ii) the terms and
conditions of any outstanding Awards (including, without limitation, any
applicable performance targets or criteria with respect thereto); and (iii) the
grant or exercise price per share for any outstanding Awards under the Plan. Any
adjustment affecting an Award intended as Qualified Performance-Based
Compensation shall be made consistent with the requirements of Section 162(m) of
the Code.

      11.2 ACCELERATION UPON A CHANGE OF CONTROL. If a Change of Control occurs
and a Participant's Awards are not converted, assumed, or replaced by a
successor, such Awards shall become fully exercisable and all forfeiture
restrictions on such Awards shall lapse. Upon, or in anticipation of, a Change
in Control, the Committee may cause any and all Awards outstanding hereunder to
terminate at a specific time in the future and shall give each Participant the
right to exercise such Awards during a period of time as the Committee, in its
sole and absolute discretion, shall determine. In the event that the terms of
any agreement between the Company or any Company subsidiary or affiliate and a
Participant contains provisions that conflict with and are more restrictive than
the provisions of this Section 11.2, this Section 11.2 shall prevail and control
and the more restrictive terms of such agreement (and only such terms) shall be
of no force or effect. Except as otherwise provided in the Agreement evidencing
the Award, any such Awards that are assumed or replaced in a Change of Control
and do not otherwise accelerate at that time shall become fully exercisable and
all forfeiture restrictions on such Awards shall lapse in the event that the
Participant's employment or service relationship with the successor corporation
should terminate (i) in connection with the Change of Control or (ii)
subsequently within two years following such Change of Control, unless such
employment or service relationship is terminated by the successor corporation
for Cause or by the Participant voluntarily without Good Reason.

      11.3 OUTSTANDING AWARDS - CERTAIN MERGERS. Subject to any required action
by the stockholders of the Company, in the event that the Company shall be the
surviving corporation in any merger or consolidation (except a merger or
consolidation as a result of which the holders of shares of Stock receive
securities of another corporation), each Award outstanding on the date of such
merger or consolidation shall pertain to and apply to the securities that a
holder of the number of shares of Stock subject to such Award would have
received in such merger or consolidation.

<PAGE>

      11.4 OUTSTANDING AWARDS - OTHER CHANGES. In the event of any other change
in the capitalization of the Company or corporate change other than those
specifically referred to in this Article 11, the Committee may, in its absolute
discretion, make such adjustments in the number and class of shares subject to
Awards outstanding on the date on which such change occurs and in the per share
grant or exercise price of each Award as the Committee may consider appropriate
to prevent dilution or enlargement of rights.

      11.5 NO OTHER RIGHTS. Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger, or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan or pursuant to action of the Committee
under the Plan, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares
of Stock subject to an Award or the grant or exercise price of any Award.

                                   ARTICLE 12
                                 ADMINISTRATION

      12.1 COMMITTEE. Unless and until the Board delegates administration to a
Committee as set forth below, the Plan shall be administered by the Board. The
Board may delegate administration of the Plan to a Committee or Committees of
one or more members of the Board, and the term "Committee" shall apply to any
person or persons to whom such authority has been delegated. If administration
is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. Notwithstanding the foregoing,
however, from and after the Public Trading Date, a Committee of the Board shall
administer the Plan and the Committee shall consist solely of two or more
members of the Board each of whom is both an "outside director," within the
meaning of Section 162(m) of the Code, and a Non-Employee Director. Within the
scope of such authority, the Board or the Committee may (i) delegate to a
committee of one or more members of the Board who are not outside directors,"
within the meaning of Section 162(m) of the Code the authority to grant awards
under the Plan to eligible persons who are either (1) not then "covered
employees," within the meaning of Section 162(m) of the Code and are not
expected to be "covered employees" at the time of recognition of income
resulting from such award or (2) not persons with respect to whom the Company
wishes to comply with Section 162(m) of the Code and/or (ii) delegate to a
committee of one or more members of the Board who are not Non-Employee
Directors, the authority to grant awards under the Plan to eligible persons who
are not then subject to Section 16 of the Exchange Act. The Board may abolish
the Committee at any time and revest in the Board the administration of the
Plan. Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may only be filled by the Board.

<PAGE>

      12.2 ACTION BY THE COMMITTEE. A majority of the Committee shall constitute
a quorum. The acts of a majority of the members present at any meeting at which
a quorum is present, and acts approved in writing by a majority of the Committee
in lieu of a meeting, shall be deemed the acts of the Committee. Each member of
the Committee is entitled to, in good faith, rely or act upon any report or
other information furnished to that member by any officer or other employee of
the Company or any Subsidiary, the Company's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Company to assist in the administration of the Plan.

      12.3 AUTHORITY OF COMMITTEE. Subject to any specific designation in the
Plan, the Committee has the exclusive power, authority and discretion to:

            (a) Designate Participants to receive Awards;

            (b) Determine the type or types of Awards to be granted to each
Participant;

            (c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;

            (d) Determine the terms and conditions of any Award granted pursuant
to the Plan, including, but not limited to, the exercise price, grant price, or
purchase price, any reload provision, any restrictions or limitations on the
Award, any schedule for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers thereof, any provisions
related to non-competition and recapture of gain on an Award, based in each case
on such considerations as the Committee in its sole discretion determines;
provided, however, that the Committee shall not have the authority to accelerate
the vesting or waive the forfeiture of any Performance-Based Awards;

            (e) Determine whether, to what extent, and pursuant to what
circumstances an Award may be settled in, or the exercise price of an Award may
be paid in, cash, Stock, other Awards, or other property, or an Award may be
canceled, forfeited, or surrendered;

            (f) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;

            (g) Decide all other matters that must be determined in connection
with an Award;

            (h) Establish, adopt, or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;

            (i) Interpret the terms of, and any matter arising pursuant to, the
Plan or any Award Agreement; and

            (j) Make all other decisions and determinations that may be required
pursuant to the Plan or as the Committee deems necessary or advisable to
administer the Plan.

<PAGE>

      12.4 DECISIONS BINDING. The Committee's interpretation of the Plan, any
Awards granted pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.

                                   ARTICLE 13
                          EFFECTIVE AND EXPIRATION DATE

      13.1 EFFECTIVE DATE. The Plan is effective as of the date the Plan is
approved by the Company's stockholders (the "Effective Date"). The Plan will be
deemed to be approved by the stockholders if it receives the affirmative vote of
the holders of a majority of the shares of stock of the Company present or
represented and entitled to vote at a meeting duly held in accordance with the
applicable provisions of the Company's Bylaws.

      13.2 EXPIRATION DATE. The Plan will expire on, and no Award may be granted
pursuant to the Plan after, the earlier of the tenth anniversary of (i) the
Effective Date or (ii) the date this Plan is approved by the Board. Any Awards
that are outstanding on the tenth anniversary of the Effective Date shall remain
in force according to the terms of the Plan and the applicable Award Agreement.
Each Award Agreement shall provide that it will expire on the tenth anniversary
of the date of grant of the Award to which it relates.

                                   ARTICLE 14
                    AMENDMENT, MODIFICATION, AND TERMINATION

      14.1 AMENDMENT, MODIFICATION, AND TERMINATION. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan; provided, however, that (i) to the extent necessary and
desirable to comply with any applicable law, regulation, or stock exchange rule,
the Company shall obtain stockholder approval of any Plan amendment in such a
manner and to such a degree as required, and (ii) shareholder approval is
required for any amendment to the Plan that (A) increases the number of shares
available under the Plan (other than any adjustment as provided by Article 11),
(B) permits the Committee to grant Options with an exercise price that is below
Fair Market Value on the date of grant, or (C) permits the Committee to extend
the exercise period for an Option beyond ten years from the date of grant.

      14.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted pursuant to the Plan without the prior written consent of the
Participant.

                                   ARTICLE 15
                               GENERAL PROVISIONS

      15.1 NO RIGHTS TO AWARDS. No Participant, employee, or other person shall
have any claim to be granted any Award pursuant to the Plan, and neither the
Company nor the Committee is obligated to treat Participants, employees, and
other persons uniformly.

      15.2 NO STOCKHOLDERS RIGHTS. No Award gives the Participant any of the
rights of a stockholder of the Company unless and until shares of Stock are in
fact issued to such

<PAGE>

person in connection with such Award.

      15.3 WITHHOLDING. The Company or any Subsidiary shall have the authority
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local and foreign taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event concerning a Participant arising as a result
of this Plan. The Committee may in its discretion and in satisfaction of the
foregoing requirement allow a Participant to elect to have the Company withhold
shares of Stock otherwise issuable under an Award (or allow the return of shares
of Stock) having a Fair Market Value equal to the sums required to be withheld.
Notwithstanding any other provision of the Plan, the number of shares of Stock
which may be withheld with respect to the issuance, vesting, exercise or payment
of any Award (or which may be repurchased from the Participant of such Award
within six months after such shares of Stock were acquired by the Participant
from the Company) in order to satisfy the Participant's federal, state, local
and foreign income and payroll tax liabilities with respect to the issuance,
vesting, exercise or payment of the Award shall be limited to the number of
shares which have a Fair Market Value on the date of withholding or repurchase
equal to the aggregate amount of such liabilities based on the minimum statutory
withholding rates for federal, state, local and foreign income tax and payroll
tax purposes that are applicable to such supplemental taxable income.

      15.4 NO RIGHT TO EMPLOYMENT OR SERVICES. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment or services at any
time, nor confer upon any Participant any right to continue in the employ or
service of the Company or any Subsidiary.

      15.5 UNFUNDED STATUS OF AWARDS. The Plan is intended to be an "unfunded"
plan for incentive compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater than those of a
general creditor of the Company or any Subsidiary.

      15.6 INDEMNIFICATION. To the extent allowable pursuant to applicable law,
each member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act pursuant to the Plan and against and from any and all amounts paid by him
or her in satisfaction of judgment in such action, suit, or proceeding against
him or her, provided he or she gives the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled pursuant to the Company's Certificate of Incorporation or
Bylaws, as a matter of law, or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.

      15.7 RELATIONSHIP TO OTHER BENEFITS. No payment pursuant to the Plan

<PAGE>

shall be taken into account in determining any benefits pursuant to any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary except to the extent otherwise expressly
provided in writing in such other plan or an agreement thereunder.

      15.8 EXPENSES. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.

      15.9 TITLES AND HEADINGS. The titles and headings of the Sections in the
Plan are for convenience of reference only and, in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.

      15.10 FRACTIONAL SHARES. No fractional shares of Stock shall be issued and
the Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up or down as appropriate.

      15.11 LIMITATIONS APPLICABLE TO SECTION 16 PERSONS. Notwithstanding any
other provision of the Plan, the Plan, and any Award granted or awarded to any
Participant who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.

      15.12 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register pursuant
to the Securities Act of 1933, as amended, any of the shares of Stock paid
pursuant to the Plan. If the shares paid pursuant to the Plan may in certain
circumstances be exempt from registration pursuant to the Securities Act of
1933, as amended, the Company may restrict the transfer of such shares in such
manner as it deems advisable to ensure the availability of any such exemption.

      15.13 GOVERNING LAW. The Plan and all Award Agreements shall be construed
in accordance with and governed by the laws of the State of Delaware.

      15.14 ACCELERATION UPON DEATH OR DISABILITY. In addition, with respect to
Participants who are Employees or members of the Board of the Company or any
Subsidiary, in the event of a Participant's termination of employment on account
of Disability or death, that number of Participant's unvested Awards that would
have become fully vested, exercisable and/or payable, as applicable, over the
twelve (12) months following the Participant's termination under the vesting
schedules applicable to such Awards had the Participant remained continuously
employed by or providing services to the Company during

<PAGE>

such period shall immediately become so vested, exercisable and/or payable, as
applicable, on the date of termination.

<PAGE>

                              CANCERVAX CORPORATION

              AMENDED AND RESTATED 2003 EQUITY INCENTIVE AWARD PLAN

                             STOCK OPTION AGREEMENT

            THIS AGREEMENT, dated as of the Grant Date set forth on Exhibit A
hereto, (the terms of which are hereby incorporated by reference and made a part
of this Agreement) is made by and between CancerVax Corporation, a Delaware
corporation, hereinafter referred to as the "Company," and the Associate,
Director or consultant of the Company, or a Subsidiary of the Company,
identified on Exhibit A and hereinafter referred to as "Optionee."

            WHEREAS, the Company wishes to afford the Optionee the opportunity
to purchase shares of its Stock, par value $0.00004 per share; and

            WHEREAS, the Company wishes to carry out the CancerVax Corporation
Amended and Restated 2003 Equity Incentive Award Plan (the "Plan") (the terms of
which are hereby incorporated by reference and made a part of this Agreement);
and

            WHEREAS, the Committee appointed to administer the Plan has
determined that it would be to the advantage and best interest of the Company
and its stockholders to grant the Option provided for herein to the Optionee as
an inducement to enter into or remain in the service of the Company or its
Subsidiaries and as an incentive during such service, and has advised the
Company thereof and instructed the undersigned officer to issue said Option.

            NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto do hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

            1.1 General. Wherever the following terms are used in this Agreement
they shall have the meanings specified below, unless the context clearly
indicates otherwise. Capitalized terms not specifically defined herein shall
have the meanings specified in the Plan.

            1.2 Associate. "Associate" shall mean an Employee.

            1.3 Director. "Director" shall mean a member of the Board.
"Director" shall include both a member of the Board who is an Associate and a
"Non-Employee Director" (as defined in the Plan).

            1.4 Exercise Notice. "Exercise Notice" shall mean a written notice
to the Company, substantially in the form attached hereto as Exhibit B (or such
other form as the Committee shall approve), stating that the Option or a portion
of the Option is exercised.

<PAGE>

            1.5 Grant Date. "Grant Date" shall mean the date of grant set forth
on Exhibit A.

            1.6 Secretary. "Secretary" shall mean the Secretary of the Company.

            1.7 Termination of Service. "Termination of Service" shall mean the
time when the service relationship (whether as an Associate, a Director or a
consultant) between the Optionee and the Company or any Subsidiary is terminated
for any reason, with or without Cause, including, but not by way of limitation,
a termination by resignation, discharge, death or Disability; but excluding (a)
a termination where there is a simultaneous reemployment or continuing
employment or consultancy of the Optionee by the Company or any Subsidiary or a
parent corporation thereof (within the meaning of Section 422 of the Code), (b)
at the discretion of the Committee, a termination which results in a temporary
severance of the employee-employer relationship, and (c) at the discretion of
the Committee, a termination which is followed by the simultaneous establishment
of a consulting relationship by the Company or a Subsidiary with the former
Associate. The Committee, in its absolute discretion, shall determine the effect
of all matters and questions relating to Termination of Service for the purposes
of this Agreement, including, but not by way of limitation, the question of
whether, for Optionees who are Associates of the Company or any of its
Subsidiaries, a Termination of Service resulted from a discharge for Cause, and
all questions of whether particular leaves of absence for Optionees who are
Associates of the Company or any of its Subsidiaries constitute Terminations of
Service; provided, however, that, if this Option is designated as an Incentive
Stock Option, unless otherwise determined by the Administrator in its
discretion, a leave of absence, change in status from an Associate to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Service if, and to the extent that, such leave
of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section. Notwithstanding any other provision of
the Plan or this Agreement, the Company or any Subsidiary has an absolute and
unrestricted right to terminate the Optionee's employment and/or consultancy at
any time for any reason whatsoever, with or without Cause, except to the extent
expressly provided otherwise in a written agreement between the Company and the
Optionee.

                                   ARTICLE II

                                 GRANT OF OPTION

            2.1 Grant of Option. In consideration of the Optionee's agreement to
remain in the employ of the Company or its Subsidiaries, if Optionee is an
Associate, or to continue to provide services to the Company or its
Subsidiaries, if Optionee is a consultant, or to serve on the Company's Board of
Directors, if Optionee is a Director, and for other good and valuable
consideration, effective as of the Grant Date, the Company irrevocably grants to
the Optionee the Option to purchase any part or all of an aggregate of the
number of shares of Stock set forth on Exhibit A, upon the terms and conditions
set forth in this Agreement. Unless designated as a Non-Qualified Stock Option
on Exhibit A, the Option shall be an Incentive Stock Option to the maximum
extent permitted by law.

<PAGE>

            2.2 Purchase Price. The purchase price of the shares of Stock
subject to the Option per share shall be as set forth on Exhibit A hereto,
without commission or other charge; provided, however, that if this Option is
designated as an Incentive Stock Option the price per share of the shares
subject to the Option shall not be less than the greater of (i) 100% of the Fair
Market Value of a share of Stock on the Grant Date, or (ii) 110% of the Fair
Market Value of a share of Stock on the Grant Date in the case of an Optionee
then owning (within the meaning of Section 424(d) of the Code) more than 10% of
the total combined voting power of all classes of stock of the Company or any
Subsidiary or parent corporation thereof (within the meaning of Section 422 of
the Code).

            2.3 Consideration to the Company. In consideration of the granting
of the Option by the Company, the Optionee agrees to render faithful and
efficient services to the Company or any Subsidiary. Nothing in the Plan or this
Agreement shall confer upon the Optionee any right to (a) continue in the employ
of the Company or any Subsidiary or shall interfere with or restrict in any way
the rights of the Company and its Subsidiaries, which are hereby expressly
reserved, to discharge the Optionee, if the Optionee is an Associate, or (b)
continue to provide services to the Company or any Subsidiary or shall interfere
with or restrict in any way the rights of the Company or its Subsidiaries, which
are hereby expressly reserved, to terminate the services of Optionee, if the
Optionee is a consultant, at any time for any reason whatsoever, with or without
Cause, except to the extent expressly provided otherwise in a written agreement
between the Company and the Optionee.

                                   ARTICLE III

                            PERIOD OF EXERCISABILITY

            3.1 Commencement of Exercisability.

            (a) Subject to Sections 3.3 and 5.10, the Option shall become
exercisable in such amounts and at such times as are set forth in Exhibit A
hereto.

            (b) No portion of the Option which has not become exercisable at
Termination of Service shall thereafter become exercisable, except as may be
otherwise provided by the Committee or as set forth in a written agreement
between the Company and the Optionee.

            3.2 Duration of Exercisability. The installments provided for in
Section 3.1(a) and Exhibit A hereto are cumulative. Each such installment which
becomes exercisable pursuant to Section 3.1 shall remain exercisable until it
becomes unexercisable under Section 3.3.

            3.3 Expiration of Option. The Option may not be exercised to any
extent by anyone after the first to occur of the following events:

            (a) The expiration of ten (10) years from the Grant Date; or

            (b) If this Option is designated as an Incentive Stock Option and
the Optionee owned (within the meaning of Section 424(d) of the Code), at the
time the Option was granted, more than ten percent (10%) of the total combined
voting power of all classes of stock of the

<PAGE>

Company or any Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code), the expiration of five years from the date the Option
was granted; or

            (c) The expiration of 90 days following the date of the Optionee's
Termination of Service, unless, if Optionee is an Associate of the Company or
any of its Subsidiaries, such Termination of Service occurs by reason of the
Optionee's discharge for Cause, or by reason of the Optionee's death, or
Disability or as set forth in a written agreement with the Company; or

            (d) The date of the Optionee's Termination of Service by reason of
the Optionee's discharge for Cause if Optionee is an Associate of the Company or
any of its Subsidiaries; or

            (e) The expiration of one year following the date of the Optionee's
Termination of Service by reason of the Optionee's death or Disability if
Optionee is an Associate of the Company or any of its Subsidiaries.

            3.4 Special Tax Consequences. The Optionee acknowledges that, to the
extent that the aggregate Fair Market Value of stock with respect to which
Incentive Stock Options (but without regard to Section 422(d) of the Code),
including the Option, are exercisable for the first time by the Optionee during
any calendar year (under the Plan and all other incentive stock option plans of
the Company, any Subsidiary and any parent corporation thereof (within the
meaning of Section 422 of the Code)) exceeds $100,000, the Option and such other
options shall be treated as not qualifying under Section 422 of the Code but
rather shall be taxed as Non-Qualified Stock Options. The Optionee further
acknowledges that the rule set forth in the preceding sentence shall be applied
by taking options into account in the order in which they were granted. For
purposes of these rules, the Fair Market Value of Stock shall be determined as
of the time the option with respect to such Stock is granted.

                                   ARTICLE IV

                               EXERCISE OF OPTION

            4.1 Person Eligible to Exercise. Except as provided in Sections
5.2(b) and 5.2(c), during the lifetime of the Optionee, only the Optionee may
exercise the Option or any portion thereof. After the death of the Optionee, any
exercisable portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by the Optionee's beneficiary
designated in accordance with Section 10.4 of the Plan. If no beneficiary has
been designated or survives the Optionee, the Option may be exercised by the
person entitled to such exercise pursuant to the Optionee's will or the laws of
descent and distribution.

            4.2 Partial Exercise. Any exercisable portion of the Option or the
entire Option, if then wholly exercisable, may be exercised in whole or in part
at any time prior to the time when the Option or portion thereof becomes
unexercisable under Section 3.3.

            4.3 Manner of Exercise. The Option, or any exercisable portion
thereof, may be exercised solely by delivery to the Secretary or the Secretary's
office of all of the following

<PAGE>

prior to the time when the Option or such portion thereof becomes unexercisable
under Section 3.3:

            (a) An Exercise Notice in writing signed by the Optionee or the
other person then entitled to exercise the Option or portion thereof, stating
that the Option or portion thereof is thereby exercised, such notice complying
with all applicable rules established by the Committee. Such notice shall be
substantially in the form attached as Exhibit (or such other form as is
prescribed by the Committee); and

            (b)   (i) Full payment (in cash or by check) for the shares with
      respect to which the Option or portion thereof is exercised, to the extent
      permitted under applicable laws; or

                  (ii) With the consent of the Committee, such payment may be
      made, in whole or in part, through the delivery of shares of Stock which
      have been owned by the Optionee for at least six months, duly endorsed for
      transfer to the Company with a Fair Market Value on the date of delivery
      equal to the aggregate exercise price of the Option or exercised portion
      thereof; or

                  (iii) To the extent permitted under applicable laws, through
      the delivery of a notice that the Optionee has placed a market sell order
      with a broker with respect to shares of Stock then issuable upon exercise
      of the Option, and that the broker has been directed to pay a sufficient
      portion of the net proceeds of the sale to the Company in satisfaction of
      the Option exercise price, provided, that payment of such proceeds is made
      to the Company upon settlement of such sale; or

                  (iv) With the consent of the Committee, any combination of the
      consideration provided in the foregoing subparagraphs (i), (ii) and (iii);
      and

            (c) A bona fide written representation and agreement, in such form
as is prescribed by the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the shares of
Stock are being acquired for the Optionee's own account, for investment and
without any present intention of distributing or reselling said shares or any of
them except as may be permitted under the Securities Act and then applicable
rules and regulations thereunder, and that the Optionee or other person then
entitled to exercise such Option or portion thereof will indemnify the Company
against and hold it free and harmless from any loss, damage, expense or
liability resulting to the Company if any sale or distribution of the shares by
such person is contrary to the representation and agreement referred to above.
The Committee may, in its absolute discretion, take whatever additional actions
it deems appropriate to ensure the observance and performance of such
representation and agreement and to effect compliance with the Securities Act
and any other federal or state securities laws or regulations. Without limiting
the generality of the foregoing, the Committee may require an opinion of counsel
acceptable to it to the effect that any subsequent transfer of shares acquired
on an Option exercise does not violate the Securities Act, and may issue
stop-transfer orders covering such shares. Share certificates evidencing Stock
issued on exercise of the Option shall bear an appropriate legend referring to
the provisions of this subsection (c)

<PAGE>

and the agreements herein. The written representation and agreement referred to
in the first sentence of this subsection (c) shall, however, not be required if
the shares to be issued pursuant to such exercise have been registered under the
Securities Act, and such registration is then effective in respect of such
shares; and

            (d) Full payment to the Company (or other employer corporation) of
all amounts which, under federal, state or local tax law, it is required to
withhold upon exercise of the Option. With the consent of the Committee, (i)
shares of Stock owned by the Optionee for at least six months duly endorsed for
transfer or (ii) shares of Stock issuable to the Optionee upon exercise of the
Option, having a Fair Market Value at the date of Option exercise equal to the
statutory minimum sums required to be withheld, may be used to make all or part
of such payment; and

            (e) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the Option.

            4.4 Conditions to Issuance of Stock Certificates. The shares of
Stock deliverable upon the exercise of the Option, or any portion thereof, may
be either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any
certificate or certificates for shares of Stock purchased upon the exercise of
the Option or portion thereof prior to fulfillment of all of the following
conditions:

            (a) The admission of such shares to listing on all stock exchanges
on which such Stock is then listed; and

            (b) The completion of any registration or other qualification of
such shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body, which the Committee shall, in its absolute discretion, deem necessary or
advisable; and

            (c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and

            (d) The receipt by the Company of full payment for such shares,
including payment of all amounts which, under federal, state or local tax law,
the Company (or other employer corporation) is required to withhold upon
exercise of the Option; and

            (e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish for
reasons of administrative convenience.

            4.5 Rights as Stockholder. The holder of the Option shall not be,
nor have any of the rights or privileges of, a stockholder of the Company in
respect of any shares purchasable upon the exercise of any part of the Option
unless and until certificates representing such shares

<PAGE>

shall have been issued by the Company to such holder.

                                    ARTICLE V

                                OTHER PROVISIONS

            5.1 Administration. The Committee shall have the power to interpret
the Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. All actions taken and all
interpretations and determinations made by the Committee in good faith shall be
final and binding upon the Optionee, the Company and all other interested
persons. No member of the Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
this Agreement or the Option. In its absolute discretion, the Board may at any
time and from time to time exercise any and all rights and duties of the
Committee under the Plan and this Agreement.

            5.2 Option Not Transferable.

            (a) Subject to Section 5.2(b), the Option may not be sold, pledged,
assigned or transferred in any manner other than by will or the laws of descent
and distribution unless and until the Option has been exercised, or the shares
underlying such Option have been issued, and all restrictions applicable to such
shares have lapsed. Neither the Option nor any interest or right therein shall
be liable for the debts, contracts or engagements of the Optionee or his or her
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition is
permitted by the preceding sentence.

            (b) Notwithstanding any other provision in this Agreement, with the
consent of the Committee and to the extent the Option is not intended to qualify
as an Incentive Stock Option, the Option may be transferred to, and exercised by
and paid to certain persons or entities related to the Optionee, including but
not limited to members of the Optionee's family, charitable institutes or trusts
or other entities whose beneficiaries or beneficial owners are members of the
Optionee's family or to such other persons or entities as may be expressly
approved by the Committee (each a "Permitted Transferee"), pursuant to such
conditions and procedures as the Committee may require.

            (c) Unless transferred to a Permitted Transferee in accordance with
Section 5.2(b), during the lifetime of the Optionee, only the Optionee may
exercise the Option (or any portion thereof). Subject to such conditions and
procedures as the Committee may require, a Permitted Transferee may exercise the
Option or any portion thereof during the Optionee's lifetime. After the death of
the Optionee, any exercisable portion of the Option may, prior to the time when
the Option portion becomes unexercisable under Section 3.3, be exercised by the
Optionee's beneficiary designated in accordance with Section 10.4 of the Plan.
If no beneficiary

<PAGE>

has been designated or survives the Optionee, the Option may be exercised by the
person entitled to such exercise pursuant to the Optionee's will or the laws of
descent and distribution.

            5.3 Restrictive Legends and Stop-Transfer Orders.

            (a) The share certificate or certificates evidencing the shares of
Stock purchased hereunder shall be endorsed with any legends that may be
required by state or federal securities laws.

            (b) The Optionee agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate "stop
transfer" instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.

            (c) The Company shall not be required: (i) to transfer on its books
any shares of Stock that have been sold or otherwise transferred in violation of
any of the provisions of this Agreement, or (ii) to treat as owner of such
shares of Stock or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such shares shall have been so transferred.

            5.4 Shares to Be Reserved. The Company shall at all times during the
term of the Option reserve and keep available such number of shares of Stock as
will be sufficient to satisfy the requirements of this Agreement.

            5.5 Notices. Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in care of the
Secretary, and any notice to be given to the Optionee shall be addressed to the
Optionee at the address given beneath the Optionee's signature hereto. By a
notice given pursuant to this Section 5.5, either party may hereafter designate
a different address for notices to be given to that party. Any notice which is
required to be given to the Optionee shall, if the Optionee is then deceased, be
given to the Optionee's designated beneficiary, if any, or the person otherwise
entitled to exercise his or her Option pursuant to Section 4.1 by written notice
under this Section 5.5. Any notice shall be deemed duly given when sent via
email or enclosed in a properly sealed envelope or wrapper addressed as
aforesaid and deposited (with postage prepaid) in a post office or branch post
office regularly maintained by the United States Postal Service.

            5.6 Titles. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Agreement.

            5.7 Stockholder Approval. The Plan will be submitted for approval by
the Company's stockholders within 12 months after the date the Plan was
initially adopted by the Board. The Option may not be exercised to any extent by
anyone prior to the time when the Plan is approved by the stockholders, and if
such approval has not been obtained by the end of said 12 month period, the
Option shall thereupon be canceled and become null and void.

            5.8 Notification of Disposition. If this Option is designated as an
Incentive Stock Option, the Optionee shall give prompt notice to the Company of
any disposition or other

<PAGE>

transfer of any shares of stock acquired under this Agreement if such
disposition or transfer is made (a) within two years from the Grant Date with
respect to such shares or (b) within one year after the transfer of such shares
to him. Such notice shall specify the date of such disposition or other transfer
and the amount realized, in cash, other property, assumption of indebtedness or
other consideration, by the Optionee in such disposition or other transfer.

            5.9 Construction. This Agreement shall be administered, interpreted
and enforced under the laws of the State of California without regard to
conflicts of laws thereof.

            5.10 Conformity to Securities Laws. The Optionee acknowledges that
the Plan is intended to conform to the extent necessary with all provisions of
the Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, and state
securities laws and regulations. Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Option is granted and may be
exercised, only in such a manner as to conform to such laws, rules and
regulations. To the extent permitted by applicable law, the Plan and this
Agreement shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.

            5.11 Amendments. This Agreement may not be modified, amended or
terminated except by an instrument in writing, signed by the Optionee or such
other person as may be permitted to exercise the Option pursuant to Section 4.1
and by a duly authorized representative of the Company.

                            (signature page follows)

<PAGE>

            IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto.

                                                      CANCERVAX CORPORATION

                                                      BY: ______________________

     __________________________________
     Optionee Name

     Address:
     __________________________________
     __________________________________

     Optionee's Social Security Number:
     __________________________________

<PAGE>

                                    EXHIBIT A

                             STOCK OPTION AGREEMENT

                           dated _____________, _____,

                                 by and between

                              CancerVax Corporation

                            and _____________________

      Optionee's Name: ______________________________________

      Optionee's Address: ______________________________________

                       __________________________________

      Optionee's Social Security Number: _________________________

      Type of Option (check one):

            [ ]   Incentive Stock Option

            [ ]   Non-Qualified Stock Option

      Date of Grant:___________________________________________

      Vesting Commencement Date: _____________________________

                  1. Pursuant to Section 2.1 of the Agreement, the Company
grants an option to purchase any part or all of an aggregate of _____________
shares of Common Stock ("Option Shares") at a price per share of $_______ upon
the terms and conditions set forth in the Agreement.

            2. In accordance with Section 3.1(a) of the Agreement and subject to
stockholder approval of the Plan, the Option shall become exercisable in
cumulative installments, rounded down to the nearest whole number of shares, as
follows:

            (a) One-fourth (1/4) of the Option Shares will vest one year after
      the Vesting Commencement Date.

            (b) The remainder of the Option Shares will vest monthly thereafter
      over the following three (3) years at a rate of 1/36th of the shares each
      month.

            3. Capitalized terms not otherwise defined herein shall have the
meanings assigned thereto in the Agreement.

<PAGE>

                             FORM OF EXERCISE NOTICE

      CancerVax Corporation
      2110 Rutherford Road
      Carlsbad, CA 92008

      Attention: Corporate Secretary

            Re: Exercise of Stock Option

      Ladies and Gentlemen:

      1. Exercise of Option. The undersigned Optionee, _______________________,
was granted an option (the "Option") to purchase shares of the Common Stock, par
value $0.00004 per share ("Common Stock"), of CancerVax Corporation, a Delaware
corporation (the "Company"), effective as of ____________, pursuant to the Stock
Option Agreement, dated ________________ (the "Option Agreement"). The
undersigned hereby elects to exercise the Option as follows:

            (a)   The undersigned hereby elects to exercise the Option as to
                  ___________ shares of the Common Stock, in accordance with
                  Section 3.1 of the Option Agreement (the "Shares").

            (b)   This date of this exercise is _________ __, ____.

      2. Payment. The undersigned has enclosed herewith __________ (representing
full payment for such Shares in accordance with Section 4.3 of the Option
Agreement). The undersigned authorizes payroll withholding and otherwise will
make adequate provision for the tax withholding obligations of the Company, if
any, with respect to such exercise.

      3. Binding Effect. The undersigned agrees that the Shares are being
acquired in accordance with and subject to the terms, provisions and conditions
of the Option Agreement set forth therein, to all of which the undersigned
hereby expressly assent. This Agreement shall inure to the benefit of and be
binding upon the heirs, executors, administrators, successors and assigns of the
undersigned.

         The undersigned understands that she is purchasing the Shares
pursuant to the terms of the Option Agreement, a copy of which the undersigned
has received and carefully read and understands.

                                        __________________________________

      Receipt of the above is hereby acknowledged

      CANCERVAX CORPORATION,

      a Delaware corporation

      By: ____________________________

      Title: __________________________

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