Document:

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                                                                    EXHIBIT 10.4

                              PHARMION CORPORATION

                          SECURITIES PURCHASE AGREEMENT

                           Dated as of April 11, 2003

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                                Table of Contents

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1.    Sales of Securities; Authorization.........................................................................    1

   1.1     Sale of Securities....................................................................................    1
   1.2     Authorization.........................................................................................    1

2.    The Closing................................................................................................    1

3.    Representations of the Company.............................................................................    1

   3.1     Organization and Standing.............................................................................    2
   3.2     Capitalization........................................................................................    2
   3.3     Subsidiaries, Etc.....................................................................................    3
   3.4     Securityholder Lists and Agreements...................................................................    4
   3.5     Issuance of Securities................................................................................    4
   3.6     Authority for Agreement; No Conflict..................................................................    4
   3.7     Governmental Consents.................................................................................    5
   3.8     Litigation............................................................................................    5
   3.9     Financial Statements; Liquidity.......................................................................    5
   3.10    Absence of Undisclosed Liabilities....................................................................    6
   3.11    Taxes.................................................................................................    6
   3.12    Property and Assets...................................................................................    6
   3.13    Intellectual Property.................................................................................    7
   3.14    Insurance.............................................................................................    8
   3.15    Material Contracts and Obligations....................................................................    8
   3.16    Compliance............................................................................................    9
   3.17    Absence of Changes....................................................................................    9
   3.18    Employees.............................................................................................    9
   3.19    ERISA.................................................................................................   10
   3.20    Books and Records.....................................................................................   10
   3.21    Permits...............................................................................................   10
   3.22    Environmental Matters.................................................................................   11
   3.23    U.S. Real Property Holding Corporation................................................................   12
   3.24    No Preemptive Rights or Rights of First Refusal.......................................................   12
   3.25    Related-Party Transactions............................................................................   12
   3.26    Disclosures...........................................................................................   12
   3.27    Comparability to Celgene Agreement....................................................................   13

4.    Representations of the Purchaser...........................................................................   13

   4.1     Investment............................................................................................   13
   4.2     Authority.............................................................................................   13
   4.3     Experience............................................................................................   13
   4.4     Limitations on Disposition............................................................................   13
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   4.5     Foreign Purchaser.....................................................................................   14

5.    Conditions to the Obligations of the Purchaser.............................................................   14

   5.1     Accuracy of Representations and Warranties............................................................   14
   5.2     Performance...........................................................................................   14
   5.3     Amendment of the Investors' Rights Agreement..........................................................   14
   5.4     Opinion of Counsel....................................................................................   14
   5.5     Certificates and Documents............................................................................   15
   5.6     Other Matters.........................................................................................   15

6.    Conditions to the Obligations of the Company...............................................................   15

   6.1     Accuracy of Representations and Warranties............................................................   15
   6.2     Payment of Purchase Price.............................................................................   15
   6.3     Other Stockholder Signature Page......................................................................   15

7.    Covenants of the Company...................................................................................   16

   7.1     Other Indebtedness; Restricted Payments...............................................................   16
   7.2     Changes to Celgene Transaction........................................................................   16
   7.3     No Impairment.........................................................................................   18
   7.4     Notification of Certain Matters.......................................................................   18
   7.5     Inspection Rights.....................................................................................   19
   7.6     Compliance............................................................................................   20
   7.7     Insurance.............................................................................................   20
   7.8     Maintenance...........................................................................................   20
   7.9     Taxes.................................................................................................   20
   7.10    Preservation of Corporate Existence...................................................................   21

8.    Transfer of Securities.....................................................................................   21

   8.1     Restricted Securities.................................................................................   21
   8.2     Requirements for Transfer.............................................................................   21
   8.3     Legend................................................................................................   21
   8.4     Rule 144A Information.................................................................................   22

9.    Miscellaneous..............................................................................................   22

   9.1     Successors and Assigns................................................................................   22
   9.2     Indemnification.......................................................................................   22
   9.3     Survival of Representations and Warranties............................................................   23
   9.4     Brokers...............................................................................................   23
   9.5     Severability..........................................................................................   23
   9.6     Specific Performance..................................................................................   23
   9.7     Governing Law.........................................................................................   23
   9.8     Choice of Forum.......................................................................................   24
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                                      -ii-

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   9.9     Notices...............................................................................................   24
   9.10    Complete Agreement....................................................................................   24
   9.11    Amendments and Waivers................................................................................   24
   9.12    Pronouns..............................................................................................   25
   9.13    Counterparts; Facsimile Signatures....................................................................   25
   9.14    Delays or Omissions...................................................................................   25
   9.15    Section Headings......................................................................................   25
   9.16    Disclosure............................................................................................   25
</TABLE>

EXHIBITS

     Exhibit A -   Form of Convertible Promissory Note

     Exhibit B -   Form of Warrant

     Exhibit C -   Company Disclosure Schedule

     Exhibit D -   List of Securityholders

     Exhibit E - 1 Non-Disclosure and Assignment of Inventions Agreement

     Exhibit E - 2 List of Key Employees

     Exhibit E - 3 Non-Competition and Non-Solicitation Agreement

     Exhibit F     Amendment to Investors' Rights Agreement

     Exhibit G     Opinion of Counsel to Pharmion Corporation

     Exhibit H     Form of Other Stockholder Signature Page

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                                                                  EXECUTION COPY

                              PHARMION CORPORATION

                          SECURITIES PURCHASE AGREEMENT

                  This Agreement, dated as of April 11, 2003, is entered into by
and between Pharmion Corporation, a Delaware corporation (the "Company"), and
Penn Pharmaceuticals Holdings Limited, a corporation organized under the laws of
England and Wales (the "Purchaser").

                    In consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:

         1.       Sales of Securities; Authorization.

                  1.1      Sale of Securities.

                  Subject to the terms and conditions of this Agreement, at the
Closing (as defined in Section 2) the Company will sell and issue to the
Purchaser, and the Purchaser will purchase, (i) the Convertible Subordinated
Promissory Note in the principal amount of $2,000,000, substantially in the form
attached hereto as Exhibit A (the "Note") and (ii) a warrant to purchase shares
of the Company's common stock, $0.001 par value per share (the "Common Stock"),
substantially in the form attached hereto as Exhibit B (the "Warrant" and
together with the Note, the "Securities") for an aggregate purchase price of
$2,000,000 (the "Purchase Price"). The Purchase Price shall be paid by wire
transfer of immediately available funds to the account of the Company in
accordance with the wire instructions provided by the Company prior to the
Closing.

                  1.2      Authorization.

                  The Company has, or before the Closing will have, duly
authorized the sale and issuance, pursuant to the terms of this Agreement, of
the Securities and the shares of Common Stock initially issuable upon conversion
of the Note and exercise of the Warrant.

         2.       The Closing.

                  Subject to the terms and conditions of this Agreement, the
closing (the "Closing") of the sale and purchase of the Securities under this
Agreement shall take place at the offices of Willkie Farr & Gallagher, 787
Seventh Avenue, New York, New York (or remotely via the exchange of documents
and signatures) at 10:00 a.m. on the date of this Agreement (the "Closing
Date"). At the Closing, the Company shall deliver to the Purchaser (i) the Note,
dated the Closing Date and registered in the name of the Purchaser and (ii) the
Warrant, dated the Closing Date and registered in the name of the Purchaser,
each against full payment to the Company of the Purchase Price. If at the
Closing any of the conditions specified in Section 5 shall not have been
fulfilled or waived, as provided in Section 5, the Purchaser shall, at its
election, be relieved of all of its obligations under this Agreement without
thereby waiving any other rights it may have by reason of such failure or such
non-fulfillment.

         3.       Representations of the Company. Except as otherwise stated in
Exhibit C hereto (the "Company Disclosure Schedule"), the Company hereby
represents and warrants to the

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Purchaser that the statements contained in this Section 3 are true, complete and
correct as of the date of this Agreement. The Company Disclosure Schedule shall
be arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Section 3, and the disclosures in any paragraph of the Company
Disclosure Schedule shall qualify only the corresponding paragraph of this
Section 3, unless otherwise specified.

                  3.1      Organization and Standing. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to conduct
its business as presently conducted and as presently proposed to be conducted by
it and to enter into and perform this Agreement and to carry out the
transactions contemplated by this Agreement. The Company is duly qualified to do
business as a foreign corporation and is in good standing in the States of
Colorado and Kansas and in every other jurisdiction in which the failure to so
qualify would have a material adverse effect on the business operations,
prospects, assets, properties or condition (financial or otherwise) of the
Company or any Subsidiary (as defined in Section 3.3) (a "Company Material
Adverse Effect"). Each such other jurisdiction is listed in Section 3.1 of the
Company Disclosure Schedule. The Company has furnished to the Purchaser true and
complete copies of its Charter (as defined in Section 3.2) and By-laws, each as
amended and/or restated to date and presently in effect. The Company has at all
times complied with all provisions of its Charter and By-laws and is not in
default under, or in violation of, any such provision.

                  3.2      Capitalization. The authorized capital stock of the
Company (immediately prior to the Closing) consists of:

                  (a)      100,000,000 shares of Common Stock, of which:

                           (i)      3,457,958 shares are issued and outstanding,
of which 589,958 have been issued as a result of the exercise of options granted
under the Pharmion Corporation 2000 Stock Incentive Plan (the "Employee Plan")
and 160,000 have been issued as a result of the exercise of options granted
under the Pharmion Corporation Amended and Restated 2001 Non-Employee Director
Stock Option Plan (the "Director Plan");

                           (ii)     5,160,450 shares have been reserved for
issuance upon the exercise of outstanding options granted under the Employee
Plan;

                           (iii)    5,281,592 shares have been reserved for
future option grants and other incentive awards under the Employee Plan;

                           (iv)     470,000 shares have been reserved for
issuance upon the exercise of outstanding options granted under the Director
Plan;

                           (v)      870,000 shares have been reserved for future
option grants and other incentive awards under the Director Plan; and

                  (b)      71,000,000 shares of Preferred Stock, $0.001 par
value per share, of which:

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                           (i)      5,069,792 shares have been designated Series
A-1 Preferred Stock (which are convertible into 5,069,792 shares of Common
Stock), all of which are issued and outstanding;

                           (ii)     12,843,473 shares have been designated
Series A-2 Preferred Stock (which are convertible into 12,843,473 shares of
Common Stock), all of which are issued and outstanding;

                           (iii)    33,000,000 shares have been designated
Series B Preferred Stock (which are convertible into 33,000,000 shares of Common
Stock), 31,071,769 of which are issued and outstanding; and

                           (iv)     20,000,000 shares have been designated
Series C Preferred Stock (which are convertible into 20,000,000 shares of Common
Stock), 19,138,755 of which are issued or outstanding.

                  All of the issued and outstanding shares of Common Stock and
Preferred Stock have been duly authorized and validly issued and are fully paid
and nonassessable. Except as provided in (A) this Agreement, (B) (i) the Amended
and Restated Investors' Rights Agreement (as further amended as described below,
the "Investors' Rights Agreement"), (ii) the Amended and Restated Right of First
Refusal and Co-Sale Agreement and (iii) the Amended and Restated Voting
Agreement, each by and among the Company and various of its shareholders, each
dated as of November 30, 2001, and each as further amended by the Series C
Omnibus Amendment Agreement, dated as of October 11, 2002 (such agreements as
amended, the "Ancillary Agreements"), or (C) the Third Restated Certificate of
Incorporation as amended to and including the date hereof (the "Charter"), (i)
no subscription, warrant, option, convertible security or other right of
whatever nature (contingent or otherwise) to purchase or acquire any shares of
capital stock of the Company is authorized or outstanding, (ii) the Company has
no obligation (contingent or otherwise) to issue any subscription, warrant,
option, convertible security or other such right or to issue or distribute to
holders of any shares of its capital stock any evidences of indebtedness or
assets of the Company, (iii) the Company has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any shares of its capital
stock or any interest therein or to pay any dividend or make any other
distribution in respect thereof, and (iv) there are no outstanding or authorized
stock appreciation, phantom stock or similar rights with respect to the Company.
All of the issued and outstanding shares of capital stock of the Company have
been offered, issued and sold by the Company in compliance with applicable
federal and state securities laws.

                  3.3      Subsidiaries, Etc. Section 3.3 of the Company
Disclosure Schedule sets forth (a) the name and jurisdiction of organization of
each corporation, partnership, trust, limited liability company, or other
non-corporate business enterprise which the Company owns, controls or has any
direct or indirect interest in (each being hereinafter referred to as a
"Subsidiary") and (b) with respect to each Subsidiary, (i) the number of shares
of authorized, issued and outstanding capital stock, or other indicia of
ownership ("Ownership Units"), of each class of its capital stock or Ownership
Units, and (ii) the names and the number of shares of capital stock or Ownership
Units held by each holder thereof. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization and has full

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corporate power and authority to conduct its business as presently conducted and
as presently proposed to be conducted by it. Each Subsidiary is duly qualified
to do business and is in good standing under the laws of each jurisdiction in
which the failure to so qualify would have a material adverse effect on the
business operations, prospects, assets, properties or condition (financial or
otherwise) of such Subsidiary. All of the issued and outstanding shares of
capital stock or Ownership Units of each Subsidiary are duly authorized, validly
issued, fully paid, nonassessable and are held of record and beneficially by
either the Company or another Subsidiary, free and clear of any restrictions on
transfer (other than restrictions under the Securities Act of 1933, as amended
(the "Securities Act"), and state securities laws), claims, security interests,
options, warrants, rights, contracts, calls, commitments, equities and demands.
There are no outstanding or authorized options, warrants, rights, agreements or
commitments to which the Company or any Subsidiary is a party or which are
binding on any of them providing for the issuance, disposition or acquisition of
any capital stock or Ownership Units of any Subsidiary, including, without
limitation, indebtedness or securities convertible into, or exchangeable for,
any such capital stock or Ownership Interests. There are no outstanding stock
appreciation, phantom stock or similar rights with respect to any Subsidiary.
There are no voting trusts, proxies or other agreements or understandings with
respect to the voting of any capital stock or Ownership Units of any Subsidiary.
No Subsidiary is in default under or in violation of any provision of any of its
organizational instruments.

                  3.4      Securityholder Lists and Agreements. Attached as
Exhibit D is a true and complete list of the securityholders of the Company,
showing the number of shares of Common Stock, Series A-1 Preferred Stock, Series
A-2 Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or other
securities of the Company held by each securityholder as of the date of this
Agreement and, in the case of options, warrants and other convertible
securities, the exercise price and expiration date thereof and the number and
type of securities issuable thereunder. Except as set forth in Section 3.4 of
the Company Disclosure Schedule, there are no agreements, written or oral,
between the Company and any holder of its securities, or, to the best of the
Company's knowledge, among any holders of its securities, relating to the
acquisition (including without limitation rights of first refusal, anti-dilution
or preemptive rights), disposition, registration under the Securities Act, or
voting of the capital stock of the Company.

                  3.5      Issuance of Securities. The issuance, sale and
delivery of the Securities in accordance with this Agreement, and the issuance
and delivery of the shares of Common Stock issuable upon conversion or exercise
of the Securities, have been, or will be prior to the Closing, duly authorized
by all necessary corporate action on the part of the Company, and all such
shares have been, or will be prior to the Closing, duly reserved for issuance.
The Securities when so issued, sold and delivered against payment therefor in
accordance with the provisions of this Agreement, and the shares of Common Stock
issuable upon conversion or exchange of the Securities, when issued upon such
conversion in accordance with their respective terms, will be duly and validly
issued, fully paid and nonassessable.

                  3.6      Authority for Agreement; No Conflict. The execution,
delivery and performance by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company enforceable in accordance with its terms. The
execution

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and performance of the transactions contemplated by this Agreement and
compliance with its provisions by the Company will not (a) conflict with or
violate any provision of the Charter or By-laws of the Company, (b) require on
the part of the Company any filing with, or any permit, authorization, consent
or approval of, any court, arbitrational tribunal, administrative agency or
commission or other governmental or regulatory authority or agency (each of the
foregoing is hereafter referred to as a "Governmental Entity"), (c) conflict
with, result in a breach of, constitute (with or without due notice or lapse of
time or both) a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest (as defined below) or other
arrangement to which the Company is a party or by which the Company is bound or
to which the Company's assets are subject, (d) result in the imposition of any
Security Interest upon any assets of the Company or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company or any
of its properties or assets. For purposes of this Agreement, "Security Interest"
means any mortgage, pledge, security interest, encumbrance, charge, or other
lien (whether arising by contract or by operation of law).

                  3.7      Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any Governmental Entity is required on the part of the Company in
connection with the execution and delivery of this Agreement, the offer,
issuance, sale and delivery of the Securities, the issuance and delivery of the
shares of Common Stock issuable upon conversion or exchange of the Securities or
the other transactions to be consummated at the Closing, as contemplated by this
Agreement, except such filings as shall have been made prior to and shall be
effective on and as of the Closing and such filings required to be made after
the Closing under applicable federal and state securities laws, all of which
filings are specified in Section 3.7 of the Company Disclosure Schedule. Based
on the representations made by the Purchaser in Section 4 of this Agreement, the
offer and sale of the Securities to the Purchaser will be in compliance with
applicable federal and state securities laws.

                  3.8      Litigation. There is no action, suit or proceeding,
or governmental inquiry or investigation, pending, or, to the best of the
Company's knowledge, any basis therefor or threat thereof, against the Company
or any Subsidiary, which questions the validity or legality of this Agreement or
the right of the Company to enter into any such agreement, or which might
result, either individually or in the aggregate, in a Company Material Adverse
Effect, nor is there any litigation pending, or, to the best of the Company's
knowledge, any basis therefor or threat thereof, against the Company or any
Subsidiary by reason of the past or present employment relationships of any of
the Company's or any Subsidiary's employees, the past, current or proposed
activities of the Company or any Subsidiary, or negotiations by the Company with
possible investors in the Company. Neither the Company nor any Subsidiary is
subject to any outstanding judgment, order or decree.

                  3.9      Financial Statements; Liquidity.

                  (a)      The Company has furnished to the Purchaser a complete
and correct copy of the audited balance sheet of the Company at December 31,
2001 and December 31, 2002 and

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the related audited statements of operations and cash flows for the respective
fiscal years then ended (collectively, the "Financial Statements"). The
Financial Statements are complete and correct, are in accordance with the books
and records of the Company and present fairly the financial condition and
results of operations of the Company at the dates and for the periods indicated,
and have been prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") consistently applied.

                  (b)      The Company reasonably believes that it has the
financial resources, without giving effect to the proceeds of the Celgene note
and the Note hereunder, to conduct the business of the Company and its
Subsidiaries, as presently conducted and as proposed to be conducted, during the
twelve-month period ending March 31, 2004.

                  3.10     Absence of Undisclosed Liabilities. Neither the
Company nor any Subsidiary has any liability (whether known or unknown and
whether absolute or contingent), except for contractual liabilities incurred in
the ordinary course of business which are not required by GAAP to be reflected
on a balance sheet and which contractual liabilities would not, either
individually or in the aggregate, result in a Company Material Adverse Effect.

                  3.11     Taxes.

                  The amount shown on the Financial Statements as provision for
taxes is sufficient in all material respects for payment of all accrued and
unpaid federal, state, county, local and foreign taxes for the period then ended
and all prior periods and any other taxes payable by the Company howsoever
arising. The Company has filed or has obtained presently effective extensions
with respect to all federal, state, county, local and foreign tax returns which
are required to be filed by it, such returns are true and correct and all taxes
shown thereon to be due have been timely paid with exceptions not material to
the Company. Federal income tax returns of the Company have not been audited by
the Internal Revenue Service, and no controversy with respect to taxes of any
type is pending or, to the best of the Company's knowledge, threatened. The
Company has withheld or collected from each payment made to its employees the
amount of all taxes required to be withheld or collected therefrom and has paid
all such amounts to the appropriate taxing authorities when due. Neither the
Company nor any of its stockholders (with respect to the Company) has ever filed
(a) an election pursuant to Section 1362 of the Internal Revenue Code of 1986,
as amended (the "Code"), that the Company be taxed as an S Corporation or (b) a
consent pursuant to Section 341(f) of the Code relating to collapsible
corporations. To the best of the Company's knowledge, without inquiring as to
any direct or indirect changes in the ownership structure of stockholders of the
Company that are investment funds, the Company's net operating losses for
federal income tax purposes, as set forth in the Financial Statements, are not
subject to any limitations imposed by Section 382 of the Code, and consummation
of the transactions contemplated by this Agreement or by any other agreement,
understanding or commitment, contingent or otherwise, to which the Company is a
party or by which it is otherwise bound will not have the effect of limiting the
Company's ability to use such net operating losses in full to offset such
taxable income.

                  3.12     Property and Assets.

         The Company and each Subsidiary has good title to, or a valid leasehold
interest in, all of its material properties and assets, and none of such
properties or assets is subject to any Security

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Interest other than those the material terms of which are described in the
Company Disclosure Schedule.

                  3.13     Intellectual Property.

                  (a)      The Company and each Subsidiary owns, free and clear
of all Security Interests, or has the valid right to use, all Intellectual
Property (as defined below in this Section 3.13) used by it in its business as
currently conducted or as currently proposed to be conducted. No other person or
entity (other than licensors of software that is generally commercially
available on reasonable terms, licensors of Intellectual Property under the
agreements disclosed pursuant to paragraph (d) below and non-exclusive licensees
of the Company's Intellectual Property in the ordinary course of the Company's
business) has any rights to any of the Intellectual Property owned or used by
the Company and, to the best of the Company's knowledge, no other person or
entity is infringing, violating or misappropriating any of the Intellectual
Property that the Company owns or to which it has obtained exclusive licenses.
For purposes of this Agreement, "Intellectual Property" means all (i) United
States and foreign patents and patent applications, and any divisional,
continuation, continuation in part, reissue, renewal or re-examination patent
issuing therefrom (including any foreign counterparts), (ii) copyrights and
registrations thereof, (iii) mask works and registrations and applications for
registration thereof, (iv) computer software, including any and all software
implementations of algorithms, models and methodologies, whether in source code
or object code, (v) databases and compilations, including any and all data and
collections of data, whether machine readable or otherwise, (vi) technology
supporting any Internet site(s) operated by or on behalf of the Company, (vii)
trade secrets and other confidential business information, whether patentable or
unpatentable and whether or not reduced to practice, know-how, technology,
proprietary processes, techniques, methodologies, formulae, algorithms, models,
user interfaces, research and development information, copyrightable works,
financial, marketing and business data, pricing and cost information, business
and marketing plans and customer and supplier lists and information, inventions,
source code, object code, and, with respect to all of the foregoing, related
confidential documentation, (viii) trademarks, service marks, trade names,
domain names and applications and registrations therefor, (ix) all
documentation, including user manuals and training materials relating to any of
the foregoing and descriptions, flow-charts and other work product used to
design, plan, organize and develop any of the foregoing, and (x) other
proprietary rights relating to any of the foregoing.

                  (b)      To the best of the Company's knowledge, none of the
activities or business conducted by the Company or any Subsidiary infringes,
violates or constitutes a misappropriation of (or in the past infringed,
violated or constituted a misappropriation of) any Intellectual Property of any
other person or entity and none of the activities or business presently proposed
to be conducted will infringe, violate or constitute a misappropriation of any
Intellectual Property, in existence on the date of this Agreement, of any other
person or entity. Neither the Company nor any Subsidiary has received any
complaint, claim or notice alleging any such infringement, violation or
misappropriation, and to the knowledge of the Company, there is no basis for any
such complaint, claim or notice.

                  (c)      Section 3.13(c) of the Company Disclosure Schedule
identifies with respect to the Company and each Subsidiary each (i) patent that
has been issued or assigned to it

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with respect to any of its Intellectual Property, (ii) pending patent
application that it has made with respect to any of its Intellectual Property,
(iii) copyright, trademark or service mark registration or application with
respect to its Intellectual Property, (iv) domain name registration or
application with respect to its Intellectual Property and (v) mask work
registration or application with respect to its Intellectual Property.

                  (d)      Section 3.13(d) of the Company Disclosure Schedule
hereto identifies each agreement (other than employee and consultant agreements
concerning assignment of inventions) with a third party pursuant to which the
Company or any Subsidiary obtains rights to Intellectual Property material to
the business of the Company or any such Subsidiary as currently conducted or as
currently proposed to be conducted (other than software that is generally
commercially available on reasonable terms) that is owned by a party other than
the Company or any Subsidiary. Except as set forth on Section 3.13(d) of the
Company Disclosure Schedule, other than license fees for software that is
generally commercially available on reasonable terms, neither the Company nor
any Subsidiary is obligated to pay any royalties or other compensation to any
third party in respect of its ownership, use or license of any of its
Intellectual Property.

                  (e)      The Company and each Subsidiary has taken and shall
take all reasonable precautions and actions (i) to protect its rights in its
Intellectual Property and (ii) to maintain the confidentiality of its trade
secrets, know-how and other confidential Intellectual Property. To the best of
the Company's knowledge, there have been no acts or omissions by the officers,
directors, shareholders, employees, independent contractors or other agents of
the Company or any Subsidiary, which could materially compromise the rights of
the Company or any Subsidiary in its Intellectual Property, including without
limitation the Company's or any Subsidiary's ability to apply for or enforce
appropriate legal protection of its Intellectual Property.

                  (f)      All of the Company's and each Subsidiary's
Intellectual Property has been created by employees of the Company or such
Subsidiary within the scope of their employment by the Company or such
Subsidiary or by independent contractors of the Company or such Subsidiary, each
of whom has executed agreements expressly assigning all right, title and
interest in such Intellectual Property to the Company or such Subsidiary. No
portion of the Company's or any Subsidiary's Intellectual Property was jointly
developed with any third party. To the best of the Company's knowledge, no other
person or entity (including without limitation any prior employer of any
employee of the Company or any Subsidiary) has any right to, or interest in, any
of the Intellectual Property that is material to the business of the Company or
such Subsidiary as currently conducted or as currently proposed to be conducted
(other than software that is generally commercially available on reasonable
terms).

                  3.14     Insurance. Each of the Company and each Subsidiary
maintains valid policies of workers' compensation insurance and of insurance
with respect to its properties and business of the kinds and in the amounts not
less than is customarily obtained by corporations of established reputation
engaged in the same or similar business and similarly situated, including,
without limitation, insurance against loss, damage, fire, theft, public
liability and other risks, as well as directors and officers liability
insurance.

                  3.15     Material Contracts and Obligations. Section 3.15 of
the Company Disclosure Schedule sets forth a list of all material agreements or
commitments of any nature

                                       8

<PAGE>

(whether written or oral) to which the Company and each Subsidiary is a party or
by which it is bound, including without limitation (a) any agreement which
requires future expenditures by the Company or any Subsidiary in excess of
$50,000 or which might result in payments to the Company or any Subsidiary in
excess of $50,000, (b) any employment or consulting agreement, employee benefit,
bonus, pension, profit-sharing, stock option, stock purchase or similar plan or
arrangement, (c) any distributor, sales representative or similar agreement, (d)
any agreement with any current or former stockholder, officer or director of the
Company or any Subsidiary, or any "affiliate" or "associate" of such persons (as
such terms are defined in the rules and regulations promulgated under the
Securities Act), including without limitation any agreement or other arrangement
providing for the furnishing of services by, rental of real or personal property
from, or otherwise requiring payments to, any such person or entity, (e) any
agreement under which the Company or any Subsidiary is restricted from carrying
on any business anywhere in the world, (f) any agreement relating to
indebtedness for borrowed money or the extension of credit, whether or not
currently funded, (g) any agreement for the disposition of a material portion of
the Company's or any Subsidiary's assets (other than for the sale of inventory
in the ordinary course of business) and (h) any agreement for the acquisition of
the business or securities or other ownership interests of another party,
whether such acquisition is completed or pending. Each such agreement or
contract is valid, binding and in full force and effect. Neither the Company,
nor, to the best of the Company's knowledge, any other party thereto, is in
default of any of its obligations under any agreement or contract listed on the
Company Disclosure Schedule, except for defaults that would not have a Company
Material Adverse Effect.

                  3.16     Compliance. Each of the Company and each Subsidiary
has, in all material respects, complied with all laws, regulations, orders and
all industry accepted prescription safety standards applicable to its present
and proposed business except where the failure to so comply would not have a
Company Material Adverse Effect and has all approvals, permits and licenses
required to operate its business in the manner presently operated, except for
defaults that would not have a Company Material Adverse Effect. To the best of
the Company's knowledge, no material expenditures will be required in order to
comply with any existing statute, law or regulation. There is no term or
provision of any mortgage, indenture, contract, agreement or instrument to which
the Company or any Subsidiary is a party or by which it is bound, or, to the
best of the Company's knowledge, of any provision of any state or federal
judgment, decree, order, statute, rule or regulation applicable to or binding
upon the Company or any Subsidiary, which materially adversely affects or, so
far as the Company may now foresee, in the future is reasonably likely to result
in or have a Company Material Adverse Effect. To the best of the Company's
knowledge, no employee of the Company is in violation of any material term of
any contract or covenant (either with the Company, a Subsidiary or with another
entity) relating to employment, patents, assignment of inventions, proprietary
information disclosure, non-competition or non-solicitation.

                  3.17     Absence of Changes. Since December 31, 2002, there
has been no material adverse change in the business, prospects, condition
(financial or otherwise), or results of operations of the Company or any
Subsidiary.

                  3.18     Employees. All current and former employees of the
Company or any Subsidiary who have or have had access to confidential or
proprietary information of the Company or such Subsidiary have executed and
delivered non-disclosure and assignment of

                                        9

<PAGE>

inventions agreements in the form of Exhibit E-1, and all such agreements are in
full force and effect. All employees of the Company or any Subsidiary who
provide services to the Company or such Subsidiary which are material to the
Company's or such Subsidiary's success ("Key Employees") are listed on Exhibit
E-2. All Key Employees have executed and delivered non-competition and
non-solicitation agreements in the form of Exhibit E-3, and all such agreements
are in full force and effect. The Company has no knowledge that any employee of
the Company or any Subsidiary has plans to terminate his or her employment
relationship with the Company or such Subsidiary. Except as set forth in Section
3.18 of the Company Disclosure Schedule, all employees of the Company or any
Subsidiary are engaged by the Company or such Subsidiary on a full-time basis.
Each of the Company and each Subsidiary has complied in all material respects
with all applicable laws relating to wages, hours, equal opportunity, collective
bargaining, workers' compensation insurance and the payment of social security
and other taxes and, to the knowledge of the Company and its Subsidiaries, no
charges or complaints with respect to or relating to the Company or any
Subsidiary are threatened or pending before the National Labor Relations Board,
the Equal Employment Opportunity Commission or any corresponding state, local or
foreign agency. None of the employees of the Company or any Subsidiary is
represented by any labor union, and there is no labor strike to the knowledge of
the Company or other concerted labor trouble by employees of the Company or any
Subsidiary (including, without limitation, any union organizational drive) and,
to the best of the Company's knowledge, none is threatened. Section 3.18 of the
Company Disclosure Schedule sets forth a list of all agreements of which the
Company has knowledge between any Key Employee or officer of the Company or any
Subsidiary and a previous employer of such person that contains non-competition
or non-solicitation covenants. The Company has delivered copies of any such
agreements to the Purchasers. To the knowledge of the Company, no employee of
the Company or any Subsidiary is obligated under any contract (including any
license, covenant or commitment of any nature) or subject to any judgment,
decrees or administrative agency of which the Company has knowledge, that would
conflict or interfere with (i) the performance of the employee's duties as an
employee, director or officer of the Company or each Subsidiary, or (ii) the
Company's or any such Subsidiary's business as conducted or proposed to be
conducted.

                  3.19     ERISA. Section 3.19 of the Company Disclosure
Schedule lists all employee benefit plans (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"))
maintained by the Company or any Subsidiary. Each of such employee benefit plans
complies in all material respects with (i) all applicable requirements of ERISA
and (ii) all applicable requirements of the Code.

                  3.20     Books and Records. The minute books of the Company
and each Subsidiary contain complete and accurate records of all meetings and
other corporate actions of its stockholders and its Board of Directors and
committees thereof, each of which has been attested to by the appropriate
officer or officers. The stock ledger of the Company is complete and reflects
all issuances, transfers, repurchases and cancellations of shares of capital
stock of the Company.

                  3.21     Permits. Section 3.21 of the Company Disclosure
Schedule sets forth a list of all material permits, licenses, registrations,
certificates, orders or approvals from any Governmental Entity ("Permits")
issued to or held by the Company and each Subsidiary. Such listed Permits are
the only Permits that are required for the Company or any Subsidiary to

                                       10

<PAGE>

conduct its business as presently or proposed to be conducted, except for those
the absence of which would not have a Company Material Adverse Effect. Each such
Permit is in full force and effect and, to the best of the knowledge of the
Company, no suspension or cancellation of such Permit is threatened and there is
no basis for believing that such Permit will not be renewable upon expiration.

                  3.22     Environmental Matters.

                  (a)      Each of the Company and each Subsidiary has complied
in all material respects with all applicable Environmental Laws (as defined
below in this Section 3.22(a)). There is no pending or, to the knowledge of the
Company, threatened civil or criminal litigation, written notice of violation,
formal administrative proceeding, or investigation, inquiry or information
request by any Governmental Entity, relating to any Environmental Law involving
the Company or any Subsidiary. For purposes of this Agreement, an "Environmental
Law" means any foreign, federal, state or local law, statute, rule or regulation
or the common law relating to the protection of human health or the environment,
including without limitation CERCLA (as defined below in this Section 3.22(a)),
the Resource Conservation and Recovery Act of 1976, and any statute, regulation
or order pertaining to (i) treatment, storage, disposal, generation or
transportation of Materials of Environmental Concern (as defined below in this
Section 3.22(a)); (ii) air, water or noise pollution; (iii) groundwater or soil
contamination; (iv) the release or threatened release into the environment of
Materials of Environmental Concern, including without limitation, emissions,
discharges, injections, spills, escapes or dumping of pollutants, contaminants,
or chemicals; (v) the protection of wildlife, marine life and wetlands,
including without limitation all endangered and threatened species; (vi) storage
tanks, vessels, abandoned or discarded barrels, containers and other closed
receptacles; (vii) health and safety of employees and other persons including,
for example, as regulated by the Occupational and Health Act (42 U.S.C. Section
1801 et seq.); and (viii) manufacture, processing, use, distribution, treatment,
storage, disposal, transportation or handling of Materials of Environmental
Concern. As used in this Section 3.22, the terms "release" and "environment"
shall have the meaning set forth in the federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"). For purposes of
this Agreement, "Materials of Environmental Concern" means any chemicals,
pollutants or contaminants, hazardous substances (as such term is defined under
CERCLA), solid wastes and hazardous wastes (as such terms are defined under the
federal Resource Conservation and Recovery Act of 1976), toxic materials, oil or
petroleum and petroleum products, or any other material subject to regulation
under any Environmental Law.

                  (b)      Neither the Company, any Subsidiary, nor, to the best
knowledge of the Company, any third party has released any Materials of
Environmental Concern into the environment at any parcel of real property or any
facility formerly or currently owned, operated or controlled by the Company or
any Subsidiary. The Company is not aware of any releases of Materials of
Environmental Concern at parcels of real property of facilities that are not
owned, operated or controlled by the Company or any Subsidiary that could
reasonably be expected to have an impact on the real property or facilities
owned, operated or controlled by the Company or such Subsidiary.

                                       11

<PAGE>

                  (c)      The Company is not aware of any material
environmental liability of the solid and hazardous waste transporters and
treatment, storage and disposal facilities that have been utilized by the
Company or any Subsidiary.

                  (d)      Set forth in Section 3.22(d) of the Company
Disclosure Schedule is a list of all environmental reports, investigations and
audits of which the Company has knowledge and has in its possession, custody or
control (whether conducted by or on behalf of the Company or a third party, and
whether done at the initiative of the Company or directed by a Governmental
Entity or other third party) issued or conducted since the inception of the
Company relating to premises currently or previously owned or operated by the
Company or a Subsidiary. Complete and accurate copies of each such report, or
the results of each such investigation or audit, have been provided to special
counsel for the Purchaser.

                  3.23     U.S. Real Property Holding Corporation. Neither the
Company nor any Subsidiary is now and has never been a "United States Real
Property Holding Corporation" as defined in Section 897(c)(2) of the Code and
Section 1.897-2(b) of the Regulations promulgated by the Internal Revenue
Service. The Company has filed with the Internal Revenue Service all statements,
if any, with its U.S. income tax returns, which are required under Treasury
Regulation Section 1.897-2(h).

                  3.24     No Preemptive Rights or Rights of First Refusal. The
sale of the Securities is not, and the subsequent conversion or exercise of the
Securities into Common Stock will not be, subject to any preemptive rights or
rights of first refusal that have not been properly waived or complied with.

                  3.25     Related-Party Transactions.

                  (a)      No employee, consultant, officer, shareholder,
director or affiliate (as defined in the rules and regulations promulgated under
the Securities Act) of the Company, or, in the case of any of the foregoing who
are individuals, any member of his or her immediate family, or any affiliate of
any of the foregoing, is indebted to, or owns an interest in the property,
technology or licenses of, the Company. The Company is not indebted (or
committed to make loans or extend or guaranty credit) to any of the foregoing,
other than for (i) the payment of salary and/or performance bonuses for services
rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the
Company, and/or (iii) other standard employee benefits made generally available
to all employees or to similarly situated persons.

                  (b)      To the best of the Company's knowledge, none of such
persons has any direct or indirect ownership interest in any firm or corporation
that competes with the Company, except that such persons may own stock in
publicly traded companies (not exceeding one percent of such companies'
outstanding capital stock) that may compete with the Company.

                  3.26     Disclosures. Neither this Agreement nor any Exhibit
or Schedule hereto, nor any report, certificate, document or instrument
furnished to the Purchaser or its agents in connection with the transactions
contemplated by this Agreement, when read together, contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.

                                       12

<PAGE>

                  3.27     Comparability to Celgene Agreement. The provisions of
this Agreement and the transactions contemplated hereby, including without
limitation its representations, warranties and covenants, are in all material
respects identical to those contained in that certain securities purchase
agreement, dated April 8, 2003 (the "Celgene Agreement"), by and among the
Company and Celgene Corporation ("Celgene"), with the following exceptions: (a)
Celgene is providing $12,000,000 of funding instead of $2,000,000, and the
warrant to be issued to Celgene (the "Celgene Warrant") is proportionally larger
than the Warrant; and (b) the note to be issued to Celgene (the "Celgene Note")
is a Senior Convertible Note, while the Note issued under this Agreement is
expressly subordinated to the Celgene Note. No changes to the Celgene Note or
Celgene Warrant have been proposed or are currently contemplated by the Company.

         4.       Representations of the Purchaser. The Purchaser represents and
warrants to the Company as follows:

                  4.1      Investment. The Purchaser is acquiring the
Securities, and the shares of Common Stock into which the Securities may be
converted or exchanged, for the Purchaser's own account for investment and not
with a view to, or for sale in connection with, any distribution thereof, nor
with any present intention of distributing or selling the same; and, except as
contemplated by this Agreement and the Exhibits hereto, the Purchaser has no
present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for the disposition thereof. The Purchaser
is an "accredited investor" as that term is defined in Rule 501(a) of Regulation
D promulgated under the Securities Act.

                  4.2      Authority. The Purchaser has full power and authority
to enter into and to perform this Agreement in accordance with its terms. The
Purchaser represents that it has not been organized, reorganized or
recapitalized specifically for the purpose of investing in the Company.

                  4.3      Experience. The Purchaser has carefully reviewed the
representations concerning the Company contained in this Agreement and has made
detailed inquiry concerning the terms and conditions of the Securities and the
purchase and sale of Securities contemplated hereby, the Company, its business
financial condition, operations, assets and its personnel. The officers or
representatives of the Company have made available to the Purchaser any and all
written information which it has requested and have answered to the Purchaser's
satisfaction all inquiries made by the Purchaser; and the Purchaser has
sufficient knowledge and experience in finance and business that it is capable
of evaluating the risks and merits of its investment in the Company and the
Purchaser is able financially to bear the risks thereof (including a complete
loss of its investment).

                  4.4      Limitations on Disposition. The Purchaser recognizes
that no public market exists for the Securities, and none may exist in the
future. The Purchaser understands that it must bear the economic risk of this
investment indefinitely unless its Securities are registered pursuant to the
Securities Act or an exemption from such registration is available, and unless
the disposition of such Securities is qualified or registered under applicable
state securities laws or an exemption from such qualification or registration is
available, and that the Company has no obligation or present intention of so
registering the Securities. The Purchaser further understands that there is no
assurance that any exemption from the Securities Act will be

                                       13

<PAGE>

available, or, if available, that such exemption will allow it to transfer any
or all the Securities, in the amounts, or at the times it might propose. The
Purchaser understands that at the present time Rule 144 promulgated under the
Securities Act by the Securities and Exchange Commission ("Rule 144") is not
applicable to sales of the Securities because the Company is not subject to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the information concerning the Company specified in
Rule 144 is not publicly available. The Purchaser further acknowledges that the
Company is not presently under any obligation to register under Section 12 of
the Exchange Act or to make publicly available the information specified in Rule
144 and that it may never be required to do so.

                  4.5      Foreign Purchaser. The Purchaser:

                  (a)      is not a U.S. person (as defined in Rule 902(k)
promulgated under the Securities Act) and is not acquiring the Securities, and
the shares of Common Stock into which the Securities may be converted or
exercised, for the account or benefit of any U.S. person; and

                  (b)      will resell the Securities, and the shares of Common
Stock into which the Securities may be converted or exercised, only in
accordance with (i) the provisions of Regulation S promulgated under the
Securities Act ("Regulation S"), (ii) pursuant to an effective registration
statement under the Securities Act, or (iii) pursuant to an available exemption
from registration under the Securities Act; and agrees not to engage in hedging
transactions unless in compliance with the Securities Act.

         5.       Conditions to the Obligations of the Purchaser. The obligation
of the Purchaser to purchase the Securities at the Closing is subject to the
fulfillment, or the waiver by Purchaser, of each of the following conditions on
or before the Closing:

                  5.1      Accuracy of Representations and Warranties. Each
representation and warranty contained in Section 3 shall be true on and as of
the Closing Date with the same effect as though such representation and warranty
had been made on and as of that date.

                  5.2      Performance. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement required
to be performed or complied with by the Company prior to or at the Closing.

                  5.3      Amendment of the Investors' Rights Agreement. An
amendment to the Investors' Rights Agreement, substantially in the form attached
hereto as Exhibit F, shall have been executed by the Company, Purchaser, Patrick
Mahaffy, Judith Hemberger, Celgene Corporation and holders of a majority of the
Series A Registrable Securities and 55% of the Senior Preferred Registrable
Securities outstanding (not including Founders' Stock) (as such terms are
defined in the Investors' Rights Agreement).

                  5.4      Opinion of Counsel. The Purchaser shall have received
an opinion from Willkie Farr & Gallagher, counsel for the Company, dated the
Closing Date, addressed to the Purchaser, and reasonably satisfactory in form
and substance to the Purchaser substantially in the form set forth on Exhibit G.

                                       14

<PAGE>

                  5.5      Certificates and Documents. The Company shall have
delivered to the Purchaser:

                  (a)      The Charter in effect as of the Closing Date,
certified by the Secretary of State of the State of Delaware;

                  (b)      Certificates, as of the most recent practicable
dates, as to the corporate good standing of the Company issued by the Secretary
of State of the State of Delaware, the Secretary of the State of Colorado, the
Secretary of State of the State of Kansas and each other jurisdiction listed in
Section 3.1 of the Company Disclosure Schedule;

                  (c)      The By-laws of the Company, certified by its
Secretary or Assistant Secretary as of the Closing Date;

                  (d)      A certificate of the Secretary or Assistant Secretary
of the Company, dated as of the Closing Date, certifying as to:

                           (i)      the signatures and titles of the officers of
the Company executing this Agreement; and

                           (ii)     resolutions of the Board of Directors and
stockholders of the Company, authorizing and approving all matters in connection
with this Agreement and the transactions contemplated hereby.

                  (e)      A certificate, executed on behalf of the Company by
the President of the Company, dated the Closing Date, certifying to the
fulfillment of the conditions specified in Sections 5.1 and 5.2 of this
Agreement.

                  5.6      Other Matters. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser, and the Purchaser shall
have received all such counterpart originals or certified or other copies of
such documents as they may reasonably request.

         6.       Conditions to the Obligations of the Company. The obligations
of the Company under Section 1.1 of this Agreement are subject to fulfillment,
or the waiver by the Company, of each of the following conditions on or before
the Closing:

                  6.1      Accuracy of Representations and Warranties. The
representations and warranties of the Purchaser contained in Section 4 shall be
true on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of that date.

                  6.2      Payment of Purchase Price. The Company shall have
received payment in full from the Purchaser by wire transfer of the Purchase
Price.

                  6.3      Other Stockholder Signature Page. The Purchaser shall
have become a party to that certain Amended and Restated Right of First Refusal
and Co-Sale Agreement, dated

                                       15

<PAGE>

as of October 11, 2002, by and among the Company and its shareholders, as an
Other Stockholder (as defined therein) by executing and delivering to the
Company an "Other Stockholder Signature Page" substantially in the form attached
hereto as Exhibit H.

         7.       Covenants of the Company. From and after the date of this
Agreement, and thereafter so long as the Note remains outstanding, the Company
will duly perform and observe, for the benefit of the Purchaser, each and all of
the covenants and agreements hereinafter set forth.

                  7.1      Other Indebtedness; Restricted Payments.

                  (a)      From and after the Closing, (i) neither the Company
nor any Subsidiary shall (A) create, incur, assume or directly or indirectly
guarantee or in any other manner become directly or indirectly liable for any
Indebtedness (as hereinafter defined) that is pari passu with, or senior in
right of payment to, the Note or that is secured by any assets or properties of
the Company or any Subsidiary; or (B) directly or indirectly, create, incur,
assume or suffer to exist any Security Interest with respect to any of their
respective properties or assets. Notwithstanding the foregoing, the Company
shall have the right to incur and suffer to exist: (x) Indebtedness that is
secured by any accounts receivable of the Company or any Subsidiary which
Indebtedness shall not exceed 50% of the aggregate accounts receivable in
existence from time to time, and (y) any Purchase Money Indebtedness (as
hereinafter defined). For the purposes of this Section 7.1(a), "Indebtedness"
shall mean indebtedness for borrowed money or for the deferred purchase price of
property or services or which is evidenced by a note, bond, debenture or similar
instrument, and "Purchase Money Indebtedness" shall mean any Indebtedness
incurred for the acquisition of intellectual property rights, property, plant or
equipment used or useful in the business of the Company or any of its
Subsidiaries.

                  (b)      From and after the Closing, neither the Company nor
any Subsidiary shall declare or pay any dividend or other distribution in
respect of its capital stock (other than dividends or distributions payable
solely in shares of capital stock of the Company), or purchase, redeem or
otherwise acquire or retire for value any capital stock of the Company or any
Subsidiary; provided, however, that this restriction shall not apply to the
repurchase of shares of capital stock from employees, officers, directors,
consultants or other persons performing services for the Company or any
Subsidiary pursuant to agreements under which the Company has the option to
repurchase such shares at cost upon the occurrence of certain events, such as
the termination of employment, or through the exercise of any right of first
refusal; provided, further, however, that such permitted repurchases shall not
exceed the limits contained in Section 8(a)(v) and Section 8(b)(v) of Article IV
of the Charter, as the same may be amended from time to time.

                  (c)      The provisions of this Section 7.1 shall terminate
and be of no further force or effect upon the conversion or indefeasible
repayment in full of the Note and all accrued interest thereon and any and all
expenses or liabilities relating thereto.

                  7.2      Changes to Celgene Transaction. In the event that the
Company agrees to any change in (a) the interest rate, payment terms, conversion
provisions or maturity date of the Celgene Note, or (b) the exercise terms,
adjustment provisions or expiration date of the Celgene Warrant (collectively
(a) and (b) are referred to herein as a "Proposed Change"), the Company

                                       16

<PAGE>

shall promptly notify the Purchaser of such Proposed Change and certify to the
Purchaser (i) whether such change has been agreed to by the Company solely in
consideration of a waiver of a covenant relating to the Celgene Note or a waiver
of a default under the Celgene Note, (ii) whether or not Celgene's consideration
for the Proposed Change (the "Consideration") is in a form that is reasonably
comparable in kind and value to that which the Purchaser could provide
("Comparable Consideration"), (iii) if Comparable Consideration exists, the
identity and amount of such Comparable Consideration, an explanation of how such
Comparable Consideration has been determined and that such Comparable
Consideration is fair and proportionate to that being offered by Celgene
("Fair"), and (iv) if Comparable Consideration does not exist, that the
Consideration was arrived at through arms length negotiations. If such changes
shall have been agreed to by the Company solely in consideration of a waiver of
a covenant relating to the Celgene Note or a waiver of an event of default under
the Celgene Note, then the Company shall offer the Purchaser corresponding
changes to the Note or Warrant substantially simultaneously with the changes to
the Celgene instruments in exchange for a comparable waiver from the Purchaser.
If Comparable Consideration exists, the Company shall offer the Purchaser
corresponding changes to the Note and Warrant, as the case may be, substantially
simultaneously with the changes to the Celgene instruments in exchange for the
payment by the Purchaser of Comparable Consideration and the Purchaser shall
notify the Company in writing within five (5) business days after receipt of the
offer whether or not the Purchaser accepts such offer or, alternatively, whether
it will accept such offer, subject to further negotiations regarding the
Fairness of the Comparable Consideration.

                  If the Purchaser's notice indicates its willingness to accept
the offer subject to such further negotiations, the Company agrees to provide to
Purchaser such evidence as Purchaser shall reasonably require in connection with
the Purchaser's determination of the Purchaser's Proposal (as defined below)
and, within ten (10) business days of receipt of such information, the Purchaser
shall certify to the Company the nature and amount of consideration that
Purchaser deems is Fair ("Purchaser's Proposal"). In the event that the
Purchaser and the Company are unable to agree on which of the Comparable
Consideration or the Purchaser's Proposal is Fair or to compromise their
respective positions on such proposals within ten (10) business days after the
Company's receipt of Purchaser's notice, such dispute shall be referred for
resolution to a firm of independent certified public accountants mutually
acceptable to the Purchaser and the Company. The accounting firm so selected by
agreement shall be requested to deliver to the Purchaser and the Company, within
twenty (20) business days after its selection, a written report regarding which
of the proposals it deems to be the closest to Fair, it being expressly agreed
by the Purchaser and the Company that the authority of such firm shall be
limited solely to a choice between the Comparable Consideration or the
Purchaser's Proposal. Upon the delivery of such report in final form, the
determination of such accounting firm shall be conclusive and binding upon the
parties hereto so that changes to the Note and Warrant corresponding to the
Proposed Change shall be made by the Company in exchange for the delivery of the
consideration selected in such final report, and Purchaser shall deliver such
consideration in exchange for such corresponding changes to the Note and
Warrant. The Purchaser and the Company shall cooperate fully and provide full
access to such accounting firm in connection with its determination hereunder,
provided always that the parties shall not, without the consent of the other
party, provide any evidence or information to such accounting firm that has not
been provided to such other party prior to the date of submission of the

                                       17

<PAGE>

Purchaser's Proposal. The costs and expenses of any such accounting firm
selected by the parties shall be paid by the party whose proposal on
consideration is not selected.

                  If Comparable Consideration does not exist, then the Company
shall offer the Purchaser the opportunity to negotiate in good faith changes to
the Note or Warrant, as the case may be, comparable to the Proposed Change in
exchange for such consideration as the Company and the Purchaser mutually
believe is fair to both parties under the circumstances.

                  7.3      No Impairment. The Company will not take or permit
any action, or cause or permit any Subsidiary to take or permit any action, that
impairs or adversely affects the rights of the Purchaser under this Agreement,
the Note or the Warrant.

                  7.4      Notification of Certain Matters. The Company shall
deliver to the Purchaser the following notices, in each case under the
circumstances and in accordance with the procedures as described herein:

                  (a)      Notice of Default or Event of Default. promptly, and
in any event within five days after becoming aware of the existence of any
default or Event of Default (as defined in Section 7 of the Note) or that any
notice has been given or any action has been taken with respect to a claimed
default or Event of Default under the Note or that any notice has been given or
any action has been taken with respect to a claimed default or Event of Default
of the type referred to in Section 7 of the Note, a written notice specifying
the nature and period of existence thereof and what action the Company is taking
or proposes to take with respect thereto;

                  (b)      Notices from Governmental Entity. promptly, and in
any event within five days of receipt thereof, copies of any notice to the
Company or any Subsidiary from any federal or state Governmental Entity relating
to any order, ruling, statute or other law or regulation that could reasonably
be expected to have a Company Material Adverse Effect;

                  (c)      Liquidity. promptly, and in any event within ten
days, (i) after there is a reasonable likelihood that the Company's financial
resources shall not be sufficient to conduct the business of the Company and its
Subsidiaries, as then presently conducted and as then proposed to be conducted,
for the ensuing twelve-month period, or (ii) after the Company becomes aware
that its cash on hand, including readily marketable securities, is less than the
then outstanding principal amount of the Note; and

                  (d)      Requested Information. with reasonable promptness,
such other data and information relating to the business, operations, affairs,
financial condition, assets or properties of the Company or any Subsidiary,
including, without limitation, copies of all notices and other materials
provided to members of the Board of Directors of the Company, or relating to the
ability of the Company to perform its obligations hereunder and under the Note
as from time to time may be reasonably requested by the Purchaser, provided,
however, that the Company reserves the right to exclude any information that any
executive officer of the Company or the Company's counsel, in their sole
discretion, determines could adversely affect or jeopardize the attorney-client
privilege between the Company and its counsel, or is necessary to protect highly
confidential or competitively sensitive information (of the Company or of third
parties).

                                       18

<PAGE>

                  7.5      Inspection Rights. The Company shall permit the
representatives of the Purchaser:

                  (a)      Prior to Closing. Prior to the Closing, at the
expense of the Purchaser, to visit and inspect any of the offices or properties
of the Company or any Subsidiary, to examine all their respective books of
account, records, reports and other papers not contractually required of the
Company or such Subsidiary to be kept confidential or secret, to make copies and
extracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers and independent public accountants,
consultants and advisors, (and by this provision the Company authorizes said
accountants, consultants and advisors, to discuss the affairs, finances and
accounts of the Company and each Subsidiary), all at such times and as often as
may be requested.

                  (b)      No Default. After the Closing, if no default or Event
of Default then exists, at the expense of the Purchaser and upon reasonable
prior notice to the Company, to visit the principal executive office of the
Company, to discuss the affairs, finances and accounts of the Company and any
Subsidiary with the Company's officers, and (with the consent of the Company,
which consent will not be unreasonably withheld) its independent public
accountants, consultants and advisors, and (with the consent of the Company,
which consent will not be unreasonably withheld) to visit the other offices and
properties of the Company and each Subsidiary, all at such reasonable times and
as often as may be reasonably requested in writing; and

                  (c)      Default. After the Closing, if a default or Event of
Default then exists, at the expense of the Company to visit and inspect any of
the offices or properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make copies
and extracts therefrom, and to discuss their respective affairs, finances and
accounts with their respective officers and independent public accountants,
consultants and advisors (and by this provision the Company authorizes said
accountants, consultants and advisors, to discuss the affairs, finances and
accounts of the Company and any and each Subsidiary), all at such times and as
often as may be requested.

                  (d)      Confidentiality. As to so much of the information and
other material furnished under or in connection with this Agreement (whether
furnished before, on or after the date hereof, including without limitation
information furnished pursuant to Section 7.5 hereof) as constitutes or contains
confidential business, financial or other information of the Company or any
Subsidiary, the Purchaser covenants for itself and its directors, officers,
employees, agents and advisors (collectively "Representatives") that it will
maintain the confidentiality of such information and it will use due care to
prevent its Representatives from disclosing such information to persons other
than other Representatives to whom such information must necessarily be
disclosed in connection with Purchaser's investment in the Note and Warrant and
any other transactions or dealings between Purchaser and the Company; provided,
however, that the Purchaser may disclose or deliver any information or other
material disclosed to or received by it if such information or other material
(i) is or becomes available to the public other than as a result of a breach of
this Section 7.5(d), (ii) was or becomes available to the Purchaser on a
non-confidential basis from a source other than the Company or any of its
Subsidiaries (whether before or after disclosure by the company or any of its
Subsidiaries), provided that to the

                                       19

<PAGE>

Purchaser's knowledge such source is not prohibited from disclosing such
information to the Purchaser by contractual, legal or fiduciary obligation to
the Company or any of its Subsidiaries or (iii) is independently developed by
the Purchaser without violating its obligations hereunder or (iv) is required to
be disclosed or delivered by law, regulation or judicial or administrative
order. For purposes of this Section 7.5(d), "due care" means at least the same
level of care that the Purchaser would use to protect the confidentiality of its
own sensitive or proprietary information. This obligation shall survive any
termination of this Agreement.

                  7.6      Compliance. The Company will and will cause each
Subsidiary to comply with all laws, ordinances or governmental rules or
regulations to which each of them is subject, including, without limitation,
Environmental Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the conduct of
their respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or regulations
or failures to obtain or maintain in effect such licenses, certificates,
permits, franchises and other governmental authorizations could not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.

                  7.7      Insurance. The Company will and will cause each
Subsidiary to maintain, with financially sound and reputable insurers, insurance
with respect to their respective properties, businesses and products against
such casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if adequate
reserves are maintained with respect thereto) as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.

                  7.8      Maintenance. The Company will and will cause each
Subsidiary to maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition (other than
ordinary wear and tear), so that the business carried on in connection therewith
may be properly conducted at all times, provided that this Section 7.8 shall not
prevent the Company or any Subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such discontinuance
could not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.

                  7.9      Taxes. The Company will and will cause each
Subsidiary to file all tax returns required to be filed in any jurisdiction and
to pay and discharge all taxes shown to be due and payable on such returns and
all other taxes, assessments, governmental charges, or levies imposed on them or
any of their properties, assets, income or franchises, to the extent such taxes
and assessments have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable that have
or might become a lien on properties or assets of the Company or any Subsidiary,
provided that neither the Company nor any Subsidiary need pay any such tax or
assessment or claims if (i) the amount, applicability or validity thereof is
contested by the Company or such Subsidiary on a timely basis in good faith and
in appropriate proceedings, and the Company or such Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to have a Company Material
Adverse Effect.

                                       20

<PAGE>

                  7.10     Preservation of Corporate Existence. The Company will
at all times preserve and keep in full force and effect its corporate existence.
The Company will at all times preserve and keep in full force and effect the
corporate existence of each Subsidiary (unless merged into the Company or a
Subsidiary) and all rights and franchises of the Company and each Subsidiary
unless, in the good faith judgment of the Company, the termination of or failure
to preserve and keep in full force and effect such corporate existence, right or
franchise could not, individually or in the aggregate, have a Company Material
Adverse Effect.

         8.       Transfer of Securities.

                  8.1      Restricted Securities. "Restricted Securities" means
(i) the Securities, (ii) the shares of Common Stock issued or issuable upon
conversion or exchange of the Securities, and (iii) any other shares of capital
stock of the Company issued in respect of such shares (as a result of stock
splits, stock dividends, reclassifications, recapitalizations, or similar
events); provided, however, that shares of Common Stock which are Restricted
Securities shall cease to be Restricted Securities (x) upon any sale pursuant to
an effective registration statement under the Securities Act, Section 4(1) of
the Securities Act or Rule 144 under the Securities Act or (y) at such time as
they become eligible for sale under Rule 144(k) or Regulation S under the
Securities Act.

                  8.2      Requirements for Transfer.

                  (a)      Restricted Securities shall not be sold or
transferred unless either (i) they first shall have been registered under the
Securities Act, or (ii) the Company first shall have been furnished with an
opinion of legal counsel, reasonably satisfactory to the Company, to the effect
that such sale or transfer is exempt from the registration requirements of the
Securities Act.

                  (b)      Notwithstanding the foregoing, no registration or
opinion of counsel shall be required for a transfer by the Purchaser to an
affiliate (as such term is defined in the Securities Act) of the Purchaser.

                  8.3      Legend. Each instrument representing Restricted
Securities issued to the Purchaser shall bear the following legends
substantially in the form set forth below:

                  (a)      In the case of the Note:

                           "This note and the securities issuable upon its
                           conversion have not been registered under the
                           Securities Act of 1933, as amended (the "Securities
                           Act") and may not be transferred unless (i) a
                           registration statement for the note and the
                           underlying securities under the Securities Act is in
                           effect or (ii) the Company has received an opinion of
                           counsel, which opinion is satisfactory to the
                           Company, to the effect that such registration is not
                           required under the Securities Act, or (iii) such
                           offer or transfer is made in accordance with the
                           provisions of Regulation S under the Securities Act.
                           Hedging transactions involving this note

                                       21

<PAGE>

                           and the underlying securities may not be conducted
                           unless in compliance with the Securities Act."

                  (b)      In the case of the Warrant:

                           "This warrant and the securities issuable upon its
                           exercise have not been registered under the
                           Securities Act of 1933, as amended (the "Securities
                           Act") and may not be transferred unless (i) a
                           registration statement for the warrant and the
                           underlying securities under the Securities Act is in
                           effect or (ii) the Company has received an opinion of
                           counsel, which opinion is satisfactory to the
                           Company, to the effect that such registration is not
                           required under the Securities Act, or (iii) such
                           offer or transfer is made in accordance with the
                           provisions of Regulation S under the Securities Act.
                           Hedging transactions involving this warrant and the
                           underlying securities may not be conducted unless in
                           compliance with the Securities Act."

                  The foregoing legends shall be removed from the instrument
representing any Restricted Securities, at the request of the holder thereof, at
such time as such Registrable Securities become eligible for resale pursuant to
Rule 144(k) under the Securities Act or have been registered under the
Securities Act.

                  8.4      Rule 144A Information. The Company shall, at all
times during which it is neither subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, nor exempt from reporting pursuant to
Rule 12g3-2(b) under the Exchange Act, upon the written request of the
Purchaser, provide in writing to such Purchaser and to any prospective
transferee of any Restricted Securities of the Purchaser the information
concerning the Company described in Rule 144A(d)(4) under the Securities Act.

         9.       Miscellaneous.

                  9.1      Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns. This Agreement, and the rights and obligations
of the Purchaser hereunder, may be assigned by the Purchaser to any person or
entity to which the Note and/or Warrant are transferred by the Purchaser, and
such transferee shall be deemed a "Purchaser" for purposes of this Agreement;
provided that the transferee provides written notice of such assignment to the
Company and agrees in writing to be bound by the terms hereof to the same extent
as if the original Purchaser. The Company may not assign its rights under this
Agreement.

                  9.2      Indemnification.

                  (a)      The Company agrees to indemnify the Purchaser and
each officer, director, employee, agent, partner, stockholder and affiliate of
the Purchaser (collectively, the "Indemnified Parties") for, and hold each
Indemnified Party harmless from and against: (i) any and all damages, losses,
claims and other liabilities of any and every kind, including, without

                                       22

<PAGE>

limitation, judgments and costs of settlement, and (ii) any and all
out-of-pocket costs and expenses of any and every kind, including, without
limitation, reasonable fees and disbursements of counsel for such Indemnified
Parties (all of which expenses periodically shall be reimbursed as incurred), in
each case, arising out of or suffered or incurred in connection with any of the
following: (a) any misrepresentation or any breach of any warranty made by the
Company herein or in the Note or Warrant, (b) any breach or non-fulfillment of
any covenant or agreement made by the Company herein or in the Note or Warrant
and (c) any claim relating to or arising out of a violation of applicable
federal or state securities laws by the Company or any Subsidiary in connection
with the sale of the Securities by the Company to the Purchaser.

                  (b)      The Company shall have the right, but not the
obligation, to conduct the defense of any action or claim and all negotiations
for the settlement or compromise thereof with counsel of its own choice
reasonably satisfactory to the Indemnified Parties; provided that (i) any
settlement negotiated by the Company involves no cost or liability to any of the
Indemnified Parties and includes an unconditional release of all Indemnified
Parties from all liability with respect to such claim or action, (ii) any
Indemnified Party shall have the right to retain their own counsel, with the
fees and expenses to be paid by the Company if the Company elects not to defend
against such action or claim, or if in such Indemnified Party's reasonable
judgment there exists any actual or potential conflict of interest between the
Company and such Indemnified Party and (iii) in the absence of any conflict, any
of the Indemnified Parties shall have the right at any time to participate in
and join the defense of any action or claim at the expense of such Indemnified
Party.

                  9.3      Survival of Representations and Warranties. All
agreements, representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the closing of the transactions
contemplated hereby.

                  9.4      Brokers. The Company represents and warrants to the
Purchaser that it has not retained a finder or broker in connection with the
transactions contemplated by this Agreement. The Purchaser represents and
warrants to the Company that it has not retained a broker in connection with the
transactions contemplated by this Agreement. Each party hereto will indemnify
and save the other party harmless from and against any and all claims,
liabilities or obligations with respect to brokerage or finders' fees or
commissions, or consulting fees in connection with the transactions contemplated
by this Agreement asserted by any person on the basis of any statement or
representation alleged to have been made by such indemnifying party.

                  9.5      Severability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.

                  9.6      Specific Performance. In addition to any and all
other remedies that may be available at law in the event of any breach of this
Agreement, the Purchaser shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other injunctive
or other equitable relief as may be granted by a court of competent
jurisdiction.

                  9.7      Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Delaware
(without reference to the conflicts of law provisions thereof).

                                       23

<PAGE>

                  9.8      Choice of Forum. The parties hereby submit to the
jurisdiction of the federal or state courts located within the City of New York,
State of New York, for the conduct of any suit, action or proceeding arising out
of or relating to this Agreement. The Company hereby agrees that the Purchaser
may effect service of process upon the Company by delivery (other than by
telecopier) in the manner provided for the giving of notices under Section 9.9
hereof.

                  9.9      Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be deemed
delivered (i) five business days after being sent by registered or certified
mail, return receipt requested, postage prepaid or if sent overseas, on the
tenth business day, (ii) one business day after being sent via a reputable
overnight courier service guaranteeing next business day delivery, or if sent
overseas on the second business day after being sent, (iii) at the time of
delivery thereof to the receiving party if delivered by hand and (iv) at the
time that receipt thereof has been acknowledged by electronic confirmation or
otherwise, if sent by telecopier, in each case to the intended recipient as set
forth below:

                  If to the Company, at Pharmion Corporation, 2525 28th Street,
Boulder, CO 80301, Attention: Chief Executive Officer, or at such other address
or addresses as may have been furnished in writing by the Company to the
Purchaser, with a copy to Willkie Farr & Gallagher, 787 Seventh Avenue, New
York, NY 10019-6099, Attention: Peter H. Jakes, Esq.;

                  If to the Purchaser, at Penn Pharmaceuticals Holdings Limited,
Units 23-24 Tafarnaubach Industrial Estate, Tradegar, Gwent, NP22 3AA,
Attention: Chief Executive Officer, or at such other address or addresses as may
have been furnished to the Company in writing by the Purchaser, with a copy to
Addleshaw Booth & Co., 100 Barbirolli Square, Manchester M2 3AB, United Kingdom,
Attention: Philip Goodstone, Esq.

                  Any party may give any notice, request, consent or other
communication under this Agreement using any other means (including, without
limitation, personal delivery, messenger service, telecopy, first class mail or
electronic mail), but no such notice, request, consent or other communication
shall be deemed to have been duly given unless and until it is actually received
by the party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.

                  9.10     Complete Agreement. This Agreement (including its
Exhibits and Schedules) constitutes the entire agreement and understanding of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter.

                  9.11     Amendments and Waivers. Except as otherwise expressly
set forth in this Agreement, any term of this Agreement may be amended or
terminated and the observance of any term of this Agreement may be waived with
respect to all parties to this Agreement (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the Purchaser. No waivers of or exceptions to any term,
condition or provision of this Agreement, in any one or more instances, shall be
deemed to be, or construed as, a further or continuing waiver of any such term,
condition or provision.

                                       24

<PAGE>

                  9.12     Pronouns. Whenever the context may require, any
pronouns used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural, and vice versa.

                  9.13     Counterparts; Facsimile Signatures. This Agreement
may be executed in any number of counterparts each of which shall be deemed to
be an original, and all of which shall constitute one and the same document.
This Agreement may be executed by facsimile signatures.

                  9.14     Delays or Omissions. It is agreed that no delay or
omission to exercise any right, power or remedy accruing to any party, upon any
breach, default or noncompliance by another party under this Agreement, shall
impair any such right, power or remedy, nor shall it be construed to be a waiver
of any such breach, default or noncompliance, or any acquiescence therein, or of
or in any similar breach, default or noncompliance thereafter occurring. It is
further agreed that any waiver, permit, consent or approval of any kind or
character on the Purchaser's part of any breach, default or noncompliance under
this Agreement, or any waiver on the Purchaser's part of any provisions or
conditions of the Agreement must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement, or otherwise afforded to any party, shall be cumulative and not
alternative.

                  9.15     Section Headings. The section headings are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.

                  9.16     Disclosure. Except to the extent required by
applicable law, regulation or judicial or administrative order, neither the
Company nor the Purchaser shall publish any press release or make any comparable
broadly disseminated public announcement (including website postings) with
respect to this Agreement or the transactions contemplated hereby without the
prior written consent of the other party hereto.

                                       25

<PAGE>

                  Executed as of the date first written above.

                                    COMPANY:

                                    PHARMION CORPORATION

                                    By: /s/ Patrick J. Mahaffy
                                        ----------------------------------------
                                        Name: Patrick J. Mahaffy
                                        Title: President and CEO

                                    PURCHASER:

                                    PENN PHARMACEUTICALS HOLDINGS LIMITED

                                    By: /s/ Craig R. Rennie
                                        ---------------------------------------
                                        Name: Craig R. Rennie
                                        Title: Chief Executive

                                    By: /s/ D. G. Henderson
                                        ---------------------------------------
                                        Name: D. G. Henderson
                                        Title: Finance Director<PAGE>

                                                                   EXHIBIT 10.5

                              AMENDED AND RESTATED
                            DISTRIBUTION AND LICENSE
                                    AGREEMENT

                             Dated as March 7, 2001

                  Amended and restated as of November 16, 2001

                                     Between

                                  PHARMION GMBH

                                       and

                               INHOCO 2388 LIMITED
                         (to be renamed PENN T LIMITED)

<PAGE>

             AMENDED AND RESTATED DISTRIBUTION AND LICENSE AGREEMENT

         This Distribution and License Agreement made and effective as of the
7th day of March, 2001 by and between Pharmion GmbH, a Swiss limited liability
company ("Pharmion"), and Penn Pharmaceuticals Ltd., a corporation organized
under the laws of England and Wales ("PPL") is amended and restated as of the
16th day of November 2001 by and between Pharmion and Inhoco 2388 Limited (to be
renamed Penn T Limited), a corporation organized under the laws of England and
Wales ("Penn").

         WHEREAS PPL has assigned the benefit subject to the burden of this
Agreement to Penn Pharmaceutical Services Limited ("PPSL") and PPSL has assigned
the benefit subject to the burden of this Agreement to Inhoco 2387 Limited and
Inhoco 2387 Limited has assigned the benefit subject to the burden of this
Agreement to Penn.

         WHEREAS Penn manufactures Thalidomide and currently supplies
Thalidomide on a "specials license" arrangement under the trademark
Sauramide(TM); and

         WHEREAS, Pharmion has considerable knowledge in obtaining regulatory
approvals, distributing, promoting, detailing and marketing pharmaceutical
products throughout the world and has in place an experienced distribution,
marketing and selling organization to address key markets for sale of
Thalidomide; and

         WHEREAS, Pharmion desires to obtain the exclusive right to distribute
Thalidomide manufactured by Penn throughout the Penn Territory (as hereinafter
defined); and

         WHEREAS, Pharmion is willing to commit substantial financial resources,
as well as its regulatory development, distribution, marketing and selling
organization to filing and obtaining one or more produce license approvals in
various jurisdictions within the Penn Territory (as defined hereinafter) for one
or more indications for Thalidomide based upon existing and available clinical
data (including possible "orphan drug" indications) and to initiate additional
clinical studies for multiple indications;

         WHEREAS, Penn believes that an exclusive distribution and licensing
arrangement with Pharmion regarding Sauramide(TM) would be desirable;

         WHEREAS, Pharmion and Celgene Corporation ("Celgene") have entered into
a License Agreement, of even date hereto, pursuant to which Pharmion has
acquired a license to register, distribute, market, use and sell Celgene's
formulation of Thalidomide in a territory including all countries in the world
except the United States, Canada, Mexico, Japan, Korea, Taiwan and China;

         WHEREAS, Penn currently manufactures Celgene's formulation of
Thalidomide and is prepared to manufacture such formulation for Pharmion;

         WHEREAS, under its agreement with Pharmion, Celgene has agreed to
permit Penn to manufacture Celgene's formulation of Thalidomide for Pharmion;
and

<PAGE>

         WHEREAS, Penn and Pharmion desire to amend and restate the terms of the
Distribution and License Agreement as provided herein.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, Penn and Pharmion hereby agree that this
Distribution and License Agreement be amended and restated in its entirety as
follows:

                                   Article I

                                   DEFINITIONS

         As used herein, the following terms shall have the meanings described
below:

                  "Affiliate" shall mean, with respect to any Person, any other
         Person which, directly or indirectly, owns or controls, or is owned or
         controlled by, or is under common control with, the specified Person.
         For purposes of this definition, the term "control" (including, with
         correlative meanings, the terms "controlling", "controlled by", and
         "under common control with") as applied to any Person, means the
         possession, directly or indirectly, of the power to direct or cause the
         direction of the management of that Person, whether through ownership
         of voting securities, by means of contractual arrangements or
         otherwise.

                  "Agreement" shall mean this Distribution and License
         Agreement, as the same may be modified, amended or supplemented from
         time to time.

                  "Approval Date" as to any country within the Territory shall
         mean the first date upon which any of the Products are approved by the
         appropriate health regulatory authority for sale by Pharmion or its
         Affiliates or Subdistributors for any specific indication to
         independent third parties in such country.

                  "Celgene Patent Rights" shall mean (i) the patent applications
         namely patent application PCT/US00/29303, Australian patent application
         62486/94, New Zealand patent application 262076 and European patent
         application 94909773; and (ii) any patents hereafter issued or patent
         applications hereafter filed by or on behalf of Celgene or any of its
         Affiliates in either case, necessary or useful for the registration,
         manufacture, distribution, marketing or sale of any of the Products in
         the Territory during the term of this Agreement.

                  "Celgene Product" shall mean formulations of Thalidomide using
         the Celgene Technology and manufactured under the Celgene Patent
         Rights.

                  "Celgene Technology" shall mean data, manufacturing know-how,
         regulatory submissions and other intellectual property that is either
         in the possession of Celgene as of the date hereof or developed by
         Celgene during the term of the Pharmion Celgene Agreement in connection
         with any additional regulatory approvals to market Products in the
         United States (including without limitation STEPS and any clinical data
         from pivotal studies relating to the Celgene Products as well as
         additional clinical studies relating to the Celgene Products conducted
         from time to time by Celgene or any of its Affiliates in

                                       2

<PAGE>

         either case, owned, controlled by, or licensed (with the right of
         sub-license) to Celgene and that is necessary or useful to register,
         manufacture, distribute, market or sell Celgene Products in the Celgene
         Territory;

                  "Celgene Territory" shall mean all the countries of the world
         except the United States, Canada, Mexico, Japan, Korea, Taiwan and
         China provided that the exception of Taiwan may be eliminated upon
         notice from Pharmion to Penn that Pharmion has obtained a licence from
         Celgene with respect to Taiwan and the scope of the Celgene Territory
         may be reduced in accordance with the provisions of Section 2.4.

                  "Confidential Information" shall mean information relating to
         the business, products or services of a party to this Agreement which
         is either non-public, confidential or proprietary in nature; provided,
         however, that Confidential Information shall not include (i)
         information which has come within the public domain through no fault or
         action of the other party; (ii) information that was known to the other
         party on prior to its disclosure hereunder or in connection with the
         negotiation of this Agreement; or (iii) information which becomes
         rightfully available to the other party on a non-confidential basis
         from any third party, the disclosure of which to such other party does
         not violate any contractual or legal obligation the third party has to
         the first party with respect to such Confidential Information. Without
         limiting the generality of the foregoing, Confidential Information
         shall include: (x) information which relates to the Products and their
         manufacture, sale or use, including financial statements, costs and
         expense data, marketing and consumer data, production data, know-how,
         trade secrets, secret processes and formulae, technical data and
         reports including pharmacological, clinical, chemical, biochemical,
         toxicological, pharmacokinetic, manufacturing and formulation data, or
         any other information relating to the Products which is not generally
         ascertainable from public or published information, regardless of
         whether such information was provided pursuant to the terms of this
         Agreement, by request of the other party or in any other manner; (y)
         information developed or to be developed by a party to this Agreement,
         its Affiliates, and/or clinicians, and all material and information
         submitted to and/or filed with a governmental regulatory agency or any
         other equivalent agency covering the Products; and (z) information
         related to the Products contained in all documents submitted in
         connection with regulatory submissions throughout the world covering
         the Products.

                  "Contract Year" shall have the meaning set forth in Section
         7.7

                  "Coordinating Committee" shall have the meaning set forth in
         Section 8.1.

                  "Dedicated Containment Facility" shall mean a manufacturing
         facility for the manufacture of Thalidomide initially located at Unit
         23-24, Tafarnaubach Industrial Estate, Tredegar, Gwent, NP22 3AA.

                  "Effective Date" shall mean the date first written above.

                  "Future Net Sales" shall mean Penn's and its Affiliates
         invoiced sales price of Penn Product billed to unaffiliated customers
         in the future (if any) in accordance with the

                                       3

<PAGE>

         provisions of Section 13.3(c) hereof, less: (i) to the extent such
         amounts are included in the invoiced sales price, charge-backs for
         spoiled, damaged or out-dated product, (ii) quantity and other trade
         discounts and early settlement discounts (where such discounts are
         effectively non-discretionary and are given as a matter of course)
         actually allowed and taken, (iii) transportation, insurance and
         handling expenses to the extent chargeable to such sales, (iv) sales,
         value-added and other direct taxes incurred, (v) customs duties and
         surcharges and other governmental charges incurred in connection with
         the exportation or importation of Penn Product, and (vi) legally
         mandated rebates, if any

                  "Minimum Price" shall mean Penn's fully allocated cost of
         manufacture of each of the Products, respectively.

                  "Minimum Royalty" shall mean the minimum royalty specified in
         relation to each Contract Year in Exhibit A.

                  "Net Sales" shall mean Pharmion's and its Affiliates invoiced
         sales price of Products billed to unaffiliated customers, less: (i) to
         the extent such amounts are included in the invoiced sales price,
         actual credited allowances and/or charge-backs for spoiled, damaged,
         out-dated and returned product, (ii) quantity and other trade discounts
         and early settlement discounts (where such discounts are effectively
         non-discretionary and are given as a matter of course) actually allowed
         and taken, (iii) transportation, insurance and handling expenses to the
         extent chargeable to such sales, (iv) sales, value-added and other
         direct taxes incurred, (v) customs duties and surcharges and other
         governmental charges incurred in connection with the exportation or
         importation of any Products, and (vi) legally mandated rebates, if any.
         The parties acknowledge and agree that any part of Net Sales received
         by Pharmion or an Affiliate of Pharmion that is computed in a currency
         other than U.K. Pounds Sterling will be translated into U.K. Pounds
         Sterling as follows: the exchange rate will be the average of: (1) the
         rate applicable on the last day of the month prior to the month of
         sale, and (2) the rate applicable on the last day of the month in which
         the sale was made (each published in the New York edition of the Wall
         Street Journal); provided that if between the date such sales were made
         and the date the royalty with respect to such sales is payable pursuant
         to Section 7.5 the exchange rates change to such a degree so as to
         result in significant economic detriment to one of the parties, the
         parties will mutually agree on an exchange rate to apply to such Net
         Sales that allocates such detriment equally to both parties.

                  "Person" shall mean any individual, corporation, partnership,
         limited liability company, business trust, business association,
         governmental entity, governmental authority or other legal entity.

                  "Pharmion-Celgene Agreement" shall mean that certain License
         Agreement, dated as of November 16, 2001, between Celgene, Pharmion and
         Pharmion Corporation, as the same may be amended from time to time.

                  "Penn Product" shall mean Thalidomide, including Penn's
         formulation of Thalidomide currently marketed under the tradename
         Sauramide(TM), and any other formulation of Thalidomide other than the
         formulation of Thalidomide manufactured for

                                       4

<PAGE>

         Celgene Corporation pursuant to that certain Manufacturing Agreement
         dated December 1, 1995 (the "Celgene Agreement") or future formulations
         of Thalidomide in development by Penn on behalf of Celgene.

                  "Penn Territory" shall mean all countries throughout the
         world, with the exception of the United States and Canada, provided,
         that the scope of the Penn Territory may be reduced in accordance with
         the provisions of Section 2.4.

                  "Products" shall mean the Penn Product and/or the Celgene
         Product. The term Products shall include, without limitation, finished
         and packaged dosage units of the Products and formulated Products in
         bulk.

                  "S.T.E.P.S" shall mean the System for Thalidomide Education
         and Prescribing Safety of Celgene;

                  "Subdistributors" shall mean such sub-distributors or agents
         as Pharmion appoints hereunder in accordance with Section 3.5.

                  "Target" shall mean the net sales figures identified in
         relation to each year set out in Exhibit A.

                  "Territory" means the Celgene Territory and the Penn
         Territory.

                   "Thalidomide" shall mean the drug commonly known as
         thalidomide which is represented by the chemical name
         2-(2,6-Dioxo-3-piperindinyl)-1H-isoindole-1,3(2H)-dione.

                  "Trademarks" has the meaning set forth in Section 2.2.

                                   Article II

                         APPOINTMENT AND LICENSE GRANTS

         Section 2.1 Appointment. Penn hereby appoints Pharmion as its exclusive
distributor to launch, detail, promote, advertise, distribute and sell the Penn
Product in every country in the Penn Territory during the term of this
Agreement. Except as otherwise provided in Section 7.1, such exclusivity shall
also extend fully to sales by Penn itself. Without limiting the foregoing,
during the term of this Agreement, Penn will not manufacture (or cause to be
manufactured) any formulation of Thalidomide for distribution or sale by any
Person other than Pharmion within the Penn Territory, provided that, Penn may
manufacture formulations of Thalidomide using the Celgene Technology for
distribution or sale by Celgene (or a distributor or licensee of Celgene) (i)
within Mexico, Japan, Korea, Taiwan and China and (ii) in those territories that
have reverted to Penn pursuant to Section 2.4.

         Section 2.2 License. In furtherance of its position as Penn's exclusive
distributor, Penn hereby grants Pharmion an exclusive, royalty free, license
during the term of this Agreement to use Penn's Confidential Information and:
(i) the trademark Sauramide(TM) or such other mark(s) as Penn shall cause to be
registered for the Penn Product in the Penn Territory

                                       5

<PAGE>

from time to time in connection with the promotion, advertising, distribution
and sale of the Penn Product and (ii) if Pharmion does not use trade marks of
Celgene licensed to Pharmion pursuant to the Pharmion-Celgene Agreement in
respect of the Celgene Product, such marks as Penn shall cause to be registered
for the Celgene Product in the Celgene Territory from time to time in connection
with the promotion, advertising, distribution and sale of the Celgene Product.

         Collectively the trademarks of Penn referred to in sub-paragraphs (i)
         and (ii) above shall hereinafter be referred to as "THE TRADEMARKS").

         Section 2.3 Option on Additional Penn Territory. The Penn Territory
shall exclude the United States and Canada. Should Penn or any of its Affiliates
seek to distribute Thalidomide in the United States or Canada, other than
through Celgene pursuant to the Celgene Agreement, Penn agrees to first provide
Pharmion with an option to act as exclusive distributor of Thalidomide and
licensee of Penn's Trademarks in such regions, the terms of which will be
determined by good faith negotiations between the parties at that time.

         Section 2.4 Reduction of Territory. On or prior to June 30, 2003,
Pharmion will send written notice to Penn setting forth a list of all of the
countries within the Penn Territory in which Pharmion will commercialize or seek
to commercialize a Penn Product and all the countries within the Celgene
Territory in which Pharmion will commercialize or seek to commercialize a
Celgene Product. Any countries within the world that are not so listed in such
notice shall, effective upon delivery of such notice, be removed from the
definition of the Territory, and from and after the date of delivery of such
notice, all rights to launch, detail, promote, advertise, distribute and sell
the Penn Product in the countries so removed shall revert fully to Penn.

                                  Article III

                        ACCEPTANCE; MARKETING OBLIGATIONS

         Section 3.1 Acceptance. Pharmion shall use all commercially reasonable
endeavors, consistent with applicable legal requirements, to maximize the
commercial potential of the Penn Product within the Penn Territory and the
Celgene Product in the Celgene Territory, each taken as a whole; provided that,
so long as the Pharmion-Celgene Agreement is in effect and Pharmion continues to
use commercially reasonable endeavors to maximize the commercial potential of
the Celgene Product within the Celgene Territory, Pharmion shall have no
obligation to commercialize the Penn Product.

         Section 3.2 Promotion Standard. In launching, detailing, promoting,
advertising, distributing and selling the Products, Pharmion shall maintain and
adhere strictly to the therapeutic claims of the Penn Product as approved by the
health authorities in each country in the Penn Territory and the Celgene Product
in the Celgene Territory. All promotional materials prepared by Pharmion and all
promotional activities relating to the Penn Products sold by Pharmion shall
comply with all applicable laws and regulations of the health authorities in
each country in the Penn Territory and all promotional materials and activities
relating to the Celgene Products shall comply with all applicable laws and
regulations in each country in the Celgene Territory in which Pharmion sells the
Penn Products and Celgene Products respectively.

                                       6

<PAGE>

         Section 3.3 Pharmion's Authority/Responsibility. During the term of
this Agreement, except as otherwise expressly herein provided, Pharmion shall
have the right and responsibility to take such actions with respect to the
Products as would normally be done in accordance with accepted business
practices in the marketing of pharmaceutical products and legal requirements to
obtain and maintain the authorization and/or ability to market a pharmaceutical
product in the countries in the Territory and to market the Products within such
countries, including, without limitation, the following:

         (a)      conducting human clinical trials of the Products as Pharmion
                  determines are reasonable, necessary or desirable;

         (b)      making appropriate filings, as contemplated by Article IV, for
                  the registration of one or more indications for the
                  therapeutic use of the Products;

         (c)      marketing the Products in such regions, at such prices and on
                  such other terms and conditions as Pharmion determines are
                  reasonable, necessary or desirable;

         (d)      developing patient and physician educational programs as may
                  be required by the appropriate health regulatory authorities;

         (e)      responding to product and medical complaints relating to the
                  Products (as called for by Section 9.1 hereof, each party
                  shall promptly advise the other of any such complaints which
                  it receives from regulators, customers or patients in the
                  Territory);

         (f)      with the cooperation of Penn, handling all returns of the
                  Products;

         (g)      handling, in accordance with Section 9.2 hereof, all recalls
                  of the Products;

         (h)      communicating with any governmental agencies and satisfying
                  their requirements regarding the authorization and/or
                  continued authorization to market the Products in commercial
                  quantities in the Territory; and

         (i)      handling Product distribution, inventory and receivables;

provided that, so long as the Pharmion-Celgene Agreement is in effect and
Pharmion continues to use commercially reasonable endeavors to maximize the
commercial potential of the Celgene Product within the Celgene Territory,
Pharmion shall have no obligation to take any of the foregoing actions with
respect to the Penn Product

         Section 3.4 Notice of Approval Dates. Pharmion shall notify Penn of the
Approval Date in each country within the Territory as soon as practicable after
its occurrence.

         Section 3.5 Subdistributors. Pharmion may appoint one or more of its
Affiliates or one or more other Persons to act as a Subdistributor for the Penn
Product in the Penn Territory, provided that:

                                       7

<PAGE>

         (a)      Penn has given its written approval in advance (such approval
                  not to be unreasonably withheld); and

         (b)      No such appointment will reduce the liability of Pharmion
                  under this agreement; and

         (c)      Pharmion shall be liable for the actions and omissions of any
                  Subdistributor as if the action or omission were Pharmion's
                  own.

         Section 3.6 Sales for Export. Pharmion shall not actively export any
Penn Product from the Penn Territory nor Celgene Product from the Celgene
Territory. Correspondingly, Penn shall not actively export any Products into the
Territory except (a) to Pharmion and (b) to Celgene (or one of its
subdistributors or licensees) as provided in Section 2.1 with respect to (i)
Mexico, Japan, Korea, Taiwan and China and (ii) in those territories that have
reverted to Penn pursuant to Section 2.4.

                                   Article IV

                              PRODUCT REGISTRATIONS

         Section 4.1 Pharmion Registration Activities. Pharmion solely shall be
responsible for obtaining governmental registrations and other licenses and
permits necessary for the promotion, marketing, sale and distribution of the
Penn Product in each of the individual countries within the Penn Territory and
Celgene Product in each of the individual countries in the Celgene Territory
that Pharmion determines to market, sell or distribute the Products. Penn shall
provide Pharmion with such information and other material as Pharmion shall
reasonably request (or as the appropriate health regulatory authorities shall
require) in support of applications for Product registrations. All such
registrations, permits and licenses shall be obtained in the name of Pharmion or
one of its Affiliates or Subdistributors. Pharmion shall provide Penn with
copies of all correspondence and documentation in connection with obtaining such
registrations, licenses and permits reasonably necessary for Penn to comply with
its obligations and warranties contained in this Agreement. Pharmion shall be
responsible for the payment of all product registration fees.

         Section 4.2 Regulatory Changes. Each party shall promptly advise the
other party of any known new instructions or specifications relating to the Penn
Product required by the health regulatory authorities of any country within the
Penn Territory and Celgene Product in the Celgene Territory, and the parties
shall confer with respect to the best mode of compliance with such new
requirements.

                                   Article V

                                     SUPPLY

         Section 5.1 Exclusive Supply; Requirements. Penn will sell to Pharmion
and Pharmion will purchase from Penn all of Pharmion's requirements of the Penn
Product for sale in the Penn Territory and Celgene Product for sale in the
Celgene Territory, for conducting clinical trials and for such other purposes as
Pharmion shall require.

                                       8

<PAGE>

         Section 5.2 Penn's Supply Efforts. Penn shall use all commercially
reasonable endeavors to manufacture or otherwise supply sufficient quantities of
the Products to Pharmion to satisfy Pharmion's purchase requirements. Penn will
manufacture the Products at the Dedicated Containment Facility or such newer
facility as Penn may establish, provided that such newer facility shall have
regulatory compliance characteristics at least as favorable as the Dedicated
Containment Facility and is otherwise reasonably acceptable to Pharmion. Penn
will provide the Products to Pharmion in bulk with capsules either packaged in
individual blisters or in plastic containers, as Pharmion shall direct.

         Section 5.3 Purchase Requirements. Pharmion shall during the term of
this Agreement provide regular three monthly rolling forecasts in writing of its
requirements of the Products for the period of twelve months ahead and any
revisions to those estimates, promptly after they are made. Any orders for
Products shall be delivered by Pharmion to Penn at least sixty (60) days before
the required date for delivery of such Products.

         Section 5.4 Shipping Terms. Each shipment of the Products shall be
delivered to Pharmion FCA (Incoterms 2000) to a specified facility of Pharmion
or Pharmion's agent. Penn will cooperate with Pharmion and will arrange for
carriage of the Products to such destinations as Pharmion shall direct and for
insurance of the Products (in such amounts as Pharmion shall determine) in
connection therewith, all at Pharmion's sole cost and expense.

         Section 5.5 Acceptance. Pharmion shall, within forty-five (45) days of
receipt of each shipment of Products by Pharmion or Pharmion's agent, notify
Penn in writing of any defect by reason of which Pharmion alleges that the
Products delivered fails to meet the specifications warranted by Penn as
provided in Section 11.1 hereof and which should be apparent on reasonable
inspection. If Pharmion notifies Penn of any defect in a shipment of Products,
Penn shall have the right, but not the obligation, to send one or more quality
control representatives to retest such Products in co-operation with quality
control representatives of Pharmion. Pharmion shall store all shipments of the
Products in accordance with storage specifications established by Penn. In the
event of a disagreement between Pharmion and Penn regarding the quality of one
or more shipments of Products, the parties shall submit samples of the shipment
in question to an independent testing laboratory (selected by mutual agreement
of Pharmion and Penn) to make a determination, which shall be binding upon the
parties, as to the compliance or lack of compliance of such shipment with the
specifications warranted by Penn. Penn shall promptly credit Pharmion for any
defective shipments. If Pharmion fails to give such a notice under this Section
5.5 then, except in respect of any defect which is not apparent on reasonable
inspection, the Products shall be conclusively presumed to meet the
specifications warranted by Penn as provided in Section 11.1 hereof, and
accordingly Pharmion shall be deemed to have accepted the delivery of the
Products in question.

         Section 5.6 Pharmion Representative. Pharmion shall have the right to
access Penn's facilities on reasonable notice Section and during normal business
hours when Penn is manufacturing or packaging Products for Pharmion.

         Section 5.7 Interruption of Supply. In case of any interruption of
supply by Penn, whether as a result of force majeure events or failure of Penn
for any reason to meet Pharmion's supply requirements, the parties will
cooperate to seek to provide Pharmion with an alternate

                                       9

<PAGE>

source of supply (including seeking to validate an alternative manufacturing
source) for the period in which (or for the amount of Products that) Penn is
unable to supply Pharmion.

         Section 5.8 Technical Agreement. Following the execution and delivery
of this Agreement, the parties will negotiate and enter into a "technical
agreement" pursuant to European Commission Directive 91/356/EEC of 12 June 1991,
article 12 relating to work contracted out in compliance with Good Manufacturing
Practice.

         Section 5.9 Conflicting Terms. This Agreement sets forth the entire
understanding between the parties relating to the subject matter hereof and
shall govern all transactions between the parties contemplated hereby. Except
for terms relating only to: quantities, ship dates, packaging instructions and
delivery destinations, none of the terms and conditions contained on any
purchase order, invoice or similar document shall have any effect upon or change
the provisions of this Agreement unless signed by both parties and clearly
indicating that the parties intend to vary the terms hereof.

         Section 5.10 PPSL to Manufacture and Supply. Pharmion acknowledges that
Penn may appoint as its agent and sub-contractor PPSL (or such other agent or
sub-contractor as shall be reasonably acceptable to Pharmion as Penn shall
notify to Pharmion in accordance with the terms of this Agreement) to
manufacture and sell Products to Pharmion and act on Penn's behalf in carrying
out all ancillary matters relating thereto. Penn shall be liable to Pharmion for
all the actions and omissions of PPSL or any such other agent or sub-contractor
as if the action or omission were Penn's own. Penn agrees not to terminate any
of the services provided to it under the Services Agreement, of even date
herewith, with PPSL unless, at such time, Penn is fully capable of assuming the
responsibility for such services, and then only upon no less than 30 days
advance notice to Pharmion.

                                   Article VI

                            PRODUCT PRICING; PAYMENT

         Section 6.1 Purchase Price.

         (a)      Except as provided in paragraph (b) below, Pharmion shall
                  purchase the Products from Penn at the Minimum Price. Such
                  pricing shall be subject to annual audit by Pharmion, and
                  adjustment, if appropriate, as provided in Section 15.3.

         (b)      During the period between the Effective Date and the second
                  anniversary of the Effective Date, the price for Products
                  purchased for the purpose of conducting clinical trials shall
                  equal fifty percent (50%) of the Minimum Price therefor. If
                  the aggregate amount of Products purchased at such a reduced
                  price is not reasonable in amount nor economically or
                  commercially viable for Penn to produce for Pharmion, Penn
                  shall be under no obligation to produce or sell the Products
                  at the reduced price.

         Section 6.2 Invoicing; Payment. Penn shall invoice the Products for
each shipment at the then applicable price as specified in Section 6.1 above.
Pharmion shall pay Penn for each

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<PAGE>

shipment of Products at the invoiced price within thirty (30) days from the date
of invoice for each shipment, which shall not be earlier than the date of
shipment.

         Section 6.3 Currency. All prices for Products shall be quoted by Penn
to Pharmion, and payments by Pharmion to Penn under this Agreement shall be
made, in U.K. Pounds Sterling.

                                  Article VII

                                    ROYALTIES

         Section 7.1 Penn Right to Continue Specials License Supply.
Notwithstanding the execution of this Agreement, Penn will have the right, and
will use its commercially reasonable efforts, to continue to supply Penn Product
under a specials license basis in each country in which it currently does so.
Penn will cease its supply of Penn Product under a specials license basis in a
particular country on such date as Pharmion has notified Penn pursuant to
Section 3.4 of the first Approval Date that would enable Pharmion to sell
Products in such country. Penn will keep true and complete records of all Penn
Product supplied under specials licenses as to each region or country in which
it is so supplied (including, without limitation, lists of Persons to whom the
Penn Product is supplied) and will make such records available to Pharmion.

         Section 7.2 Royalty. Commencing on the first Approval Date, Pharmion
will pay Penn during the then remaining term of this Agreement a royalty,
payable on a quarterly basis, equal to (a) twenty-eight percent (28%) of Net
Sales of Products in the Territory during such calendar quarter, for the purpose
of calculating royalties payable hereunder, less (b) Pharmion's purchase price
of the units of Products sold during such calendar quarter (as charged to
Pharmion by Penn in accordance with Section 6.1 for purposes other than clinical
trials) based upon a "first-in/first-out" accounting of Pharmion's Products
inventory, subject always to Penn's right to receive Minimum Royalties as
provided in Section 7.7.

         Section 7.3 Withholding Tax. Any tax which Pharmion is required to pay
or withhold from royalty payments to be made to Penn under this Agreement shall
be deducted from the amount otherwise due, provided that, in regard to any such
deduction, Pharmion shall give Penn such assistance as may be reasonably
necessary to enable or assist Penn to claim exemption therefrom or a reduction
thereof and shall provide Penn with an official tax certificate as soon as
possible.

         Section 7.4 Invoices for Royalties. If required by Pharmion, Penn shall
submit a written invoice addressed to Pharmion for each royalty payment to be
made by Pharmion under this Agreement. Penn shall submit these written invoices
to Pharmion within a reasonable period following the request from Pharmion and
based upon the last quarterly royalty report from Pharmion provided to Penn in
accordance with Section 7.6.

         Section 7.5 Royalty Calculation and Payment.

         (a)      Timing. Royalties shall be calculated and paid to Penn
                  quarterly, and shall be due as to Net Sales within any of the
                  United Kingdom, Germany or Australia forty-

                                       11

<PAGE>

                  five (45) days following the end of each calendar quarter and
                  as to Net Sales elsewhere within ninety (90) days following
                  the end of each calendar quarter.

         (b)      Currency of Payment. Royalties shall be payable in U.K. Pounds
                  Sterling.

         Section 7.6 Royalty Reports. After the first Approval Date occurring
hereunder and for the remainder of the term of this Agreement, Pharmion shall
submit quarterly payment reports to Penn within (45) days following the end of
each calendar quarter. Such reports shall include, but not be limited to:

         (a)      An accounting of Net Sales within the Territory during such
                  quarter on a country by country basis;

         (b)      An accounting of the purchase price of the units of Products
                  sold during such quarter; and .

         (c)      An accounting of Net Sales set out in clauses (a) and (b)
                  above (in U.K. Pounds Sterling) and the calculation of the
                  royalty amounts owing to Penn pursuant to this Article VII (in
                  U.K. Pounds Sterling), including, if applicable, the exchange
                  rates used in determining the amount of U.K. Pounds Sterling.

         Section 7.7 Minimum Royalties. For each twelve month period commencing
with the first day of the calendar quarter which occurs immediately following
the first commercial sale of either of the Penn Product or the Celgene Product
in the fifth country anywhere within the Territory in which Pharmion sells the
Products (a "Contract Year"), if the sum of (x) the amounts paid to Penn
pursuant to Section 7.2(a) and (y) the amounts referred to in Section 7.2(b)
(paid by Pharmion as the purchase price for the relevant units) shall be less
than the Minimum Royalty for such Calendar Year set forth in Exhibit A, then
Pharmion shall make a lump sum payment to Penn in the amount equal to such
shortfall, with such lump sum payment to be made simultaneously with the
payments due to Penn under Section 7.2 in respect of the fourth quarter of such
Calendar Year.

         Section 7.8 No Other Royalties. The royalties set out in this Article
VII are the only royalties payable by Pharmion to Penn in connection with the
exclusive distributor and purchase arrangements and licenses granted herein.

                                  Article VIII

                             COORDINATING COMMITTEE

         Section 8.1 Coordinating Committee. The parties shall establish a
committee ("Coordinating Committee") consisting of an equal number of
representatives from each party to act as a forum (i) to periodically review the
progress that has been made in the regulatory approval of the Products and the
marketing of the Products, (ii) to discuss the strategic and tactical plans for
marketing of the Penn Product in the Penn Territory and the Celgene Product in
the Celgene Territory the strategies and programs that should be developed to
maximize sales of the Products, and (iii) to discuss manufacturing and
production processes to minimize the cost of manufacturing of the Products. The
Coordinating Committee shall meet periodically as

                                       12

<PAGE>

reasonably requested by either party, but in any event no less than
semi-annually within each calendar year of the term of this Agreement, at such
location or by such means as the parties shall agree.

                                   Article IX

                               COMPLAINTS/RECALLS

         Section 9.1 Complaints. To the extent that it has knowledge thereof,
each party shall promptly notify the other in writing of any defect in, or
condition of, the Products which may cause the Penn Product to violate the
applicable laws and regulations of any country in the Penn Territory and the
Celgene Product in the Celgene Territory where the Products are being sold by
Pharmion. Penn and Pharmion shall share with each other all data on complaints
respecting the Products, including, but not limited to, complaints or
information regarding performance or allegations or reports of any effects on a
patient from use of such Products, as soon as such data is available.

         Section 9.2 Recall. In the event that either party has reason to
believe that one or more lots of Products should be recalled or withdrawn from
distribution, such party shall immediately notify the other party in writing.
Unless otherwise required by the relevant health regulatory authorities, Penn
will be consulted before Pharmion initiates any recall, but the decision as to
whether or not to initiate a recall of Products in any country in the Territory
shall be Pharmion's alone. Pharmion shall maintain adequate sales and service
records to enable it to carry out any Product recall and to conduct such recall.
If the recall is required because of a modification of the registrations,
permits or licenses for the Product or a failure of the Products to conform to
its specifications as provided to the health authorities in any specific country
in connection with the registration of the Products, Penn shall reimburse
Pharmion for the costs and expenses of such recall, and Penn shall promptly
elect to either replace recalled Products or credit or refund the purchase price
of recalled Products. If the recall is required because of a negligent act or
omission of Pharmion in handling, storage or distribution of the Products, then
such recall shall be conducted by Pharmion, with the cooperation of Penn, at
Pharmion's sole cost and expense and Pharmion shall not be entitled to any such
credits, replacements or refunds from Penn. If such recall is required because
of a joint act or omission, Pharmion, with the cooperation of Penn, shall
conduct the recall and the parties shall negotiate in good faith an appropriate
allocation of the costs and expense of such recall.

         Section 9.3 Regulatory Records; Adverse Reactions. Each party shall be
responsible for maintaining such records and making such reports as may be
required in connection with any regulatory approval held by the party. Each
party shall promptly inform the other of all adverse drug experience reports and
other information relating to the safety or effectiveness of the Products which
come to its attention, in a form and within time periods necessary to permit
compliance with the law and regulations of each of the countries within the
Territory.

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<PAGE>

                                   Article X

                      PRODUCT IDENTIFICATION AND TRADEMARK

         Section 10.1 Use of Trademarks.

         (a)      Pharmion undertakes that all Penn Products shall be clearly
                  and conspicuously marked in conformity with the following
                  principles unless otherwise required by the appropriate health
                  regulatory authorities or unless the parties otherwise agree
                  in writing:

                  (i)      the general style of the marking shall conform with
                           that developed and adopted by Penn;

                  (ii)     all uses of the Trademarks upon Penn Products and
                           their labeling and packaging shall be accompanied by
                           the words: UNDER LICENCE FROM PENN T LIMITED, UNITED
                           KINGDOM together with the symbol (R) where the
                           Trademarks are registered in the Territory for goods
                           of the same type as the Products or the symbol (TM)
                           where it is not so registered;

                  (iii)    Penn shall be entitled, in its reasonable discretion
                           and at its sole expense, to require Pharmion to amend
                           the form of any marking on Penn Products and the use
                           of the Trademarks.

         (b)      Except with respect to the data submitted to health regulatory
                  authorities in accordance with Section 4.1 in connection with
                  obtaining or continuing authorizations for the Products,
                  Pharmion shall not make, give or supply any guarantee,
                  warranty or other undertaking as to the quality or other
                  attributes of Products that binds or purports to bind Penn
                  except as may be specifically authorized by Penn in this
                  Agreement or subsequently, in writing.

         (c)      Pharmion shall use the Trademarks only in the manner of a
                  trade mark and in connection with the marketing, sale or
                  description of the Penn Products and upon no other merchandise
                  and for no other purpose.

         (d)      The provisions of Section 10.1(a) and (c) shall apply to
                  Celgene Products where it has been agreed between the parties
                  pursuant to Section 2.2 that Celgene Products shall be sold by
                  Pharmion under any of the Trademarks.

         (e)      Pharmion shall in all respects co-operate fully with Penn at
                  Penn's expense during the term of this Agreement and
                  thereafter in protecting and maintaining Penn's exclusive
                  title to the Trademarks in the Territory and elsewhere and any
                  registrations thereof and shall give Penn all assistance and
                  execute all deeds and documents which may be necessary to
                  register the Trademarks and/or to record Pharmion as a
                  permitted or registered user thereof in any country forming
                  part of the Territory or elsewhere in the name of Penn or such
                  other name as it may select. Penn will, from time to time,
                  provide Pharmion with a list of all countries in which the
                  Trademarks are registered.

                                       14

<PAGE>

         (f)      Pharmion shall neither during the term of this Agreement nor
                  thereafter except as herein provided use the Trademarks or any
                  colourable imitation thereof in any manner whatsoever
                  including (without limitation) use thereof as or within a
                  trade mark, trade name, company name, commercial name or title
                  of establishment.

         Section 10.2 Ownership of Marks. Pharmion acknowledges that the
Trademarks are and shall remain the property of Penn, and Pharmion disclaims any
rights to such Trademarks other than the rights granted by this Agreement for
the term of this Agreement. Pharmion shall not use the Marks or any other Penn
trademark, trade or brand name for any purpose other than as provided in this
Agreement.

                                   Article XI

                         WARRANTIES AND INDEMNIFICATION

         Section 11.1 Manufacturing Warranty. Penn warrants that in respect of
Products manufactured by Penn (i) the Products shall be produced in accordance
with current good manufacturing practices of each country within the Territory
in which the Products are then being marketed or sold, (ii) when shipped to
Pharmion the Products shall not be adulterated or misbranded and (iii) the
Products shall be otherwise manufactured in accordance with written
manufacturing procedures and finished product specifications (including
packaging specifications) which will meet the requirements set forth in the
governmental approvals of the health regulatory authorities in the Territory. To
the extent permitted by law, Penn HEREBY DISCLAIMS ALL OTHER WARRANTIES
REGARDING THE PRODUCTS, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

         Section 11.2 Corporate Authority, etc.. Each party warrants and
represents to the other (i) that it has the full right and authority to enter
into this Agreement, (ii) that all corporate action necessary to authorize the
execution and delivery of this Agreement by such party has been duly and
properly taken, (iii) that this Agreement constitutes a valid obligation of it,
legally binding on it and enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
from time to time in effect affecting creditor's rights generally, (iv) that it
is not under any obligation (contractual or otherwise) to any third party that
conflicts with or is inconsistent with the provisions of this Agreement or
impedes its ability to carry out its obligations under this Agreement and (v)
that it is not aware of any other impediment that would inhibit its ability to
perform its obligations under this Agreement.

         Section 11.3 Pharmion Indemnification. With respect to Penn Product
sold by Pharmion in the Penn Territory and Celgene Product sold in the Celgene
Territory, Pharmion shall defend Penn, its agents, directors, officers and
employees at its cost and expense, and will indemnify and hold harmless Penn,
its agents, directors, officers, and employees from and against all claims,
demands, costs, losses, expenses or liabilities (collectively "Liabilities")
suffered or incurred by Penn arising from or in relation to the manufacture by
Penn of the Products for Pharmion or the use or consumption of the Products by
any person or otherwise in relation to Products or arising out of the
performance by Penn of the Agreement in whole or in

                                       15

<PAGE>

part except to the extent that any such Liabilities are caused by or otherwise
due to a breach by Penn of the warranty set forth in Section 11.1 above and the
indemnity set out in Section 12.2.

         Section 11.4 Penn Indemnification. Penn shall defend Pharmion, its
agents, directors, officers and employees at its cost and expense, and will
indemnify and hold harmless Pharmion, its agents, directors, officers and
employees, from and against any and all Liabilities arising out of a breach by
Penn of the warranty set forth in Section 11.1 above, including, but not limited
to, any actual or alleged injury, damage, death or other consequence occurring
to any person as a result, directly or indirectly, of the possession, use or
consumption of any Product manufactured by Penn, whether claimed by reason of
negligence, product defect or otherwise, and regardless of the form in which any
such claim is made.

         Section 11.5 Indemnification Procedures.

         (a)      Promptly after the receipt by any party hereto of notice under
                  Section 11.3 or Section 11.4 of (A) any claim or (B) the
                  commencement of any action or proceeding, such party (the
                  "Aggrieved Party") will, if a claim with respect thereto is to
                  be made against any party obligated to provide indemnification
                  (the "Indemnifying Party") pursuant to such sections, give
                  such Indemnifying Party written notice of such claim or the
                  commencement of such action or proceeding and shall permit the
                  Indemnifying Party to assume the defense of any such claim or
                  any litigation resulting from such claim, and, upon such
                  assumption, shall cooperate fully with the Indemnifying Party
                  in the conduct of such defense. Failure by the Indemnifying
                  Party to notify the Aggrieved Party of its election to defend
                  any such action within a reasonable time, but in no event more
                  than fifteen days after notice thereof shall have been given
                  to the Indemnifying Party, shall be deemed a waiver by the
                  Indemnifying Party of its right to defend such action. If the
                  Indemnifying Party assumes the defense of any such claim or
                  litigation resulting therefrom, the obligations of the
                  Indemnifying Party as to such claim shall be limited to taking
                  all steps necessary in the defense or settlement of such claim
                  or litigation resulting therefrom and to holding the Aggrieved
                  Party harmless from and against any and all losses, damages
                  and liabilities caused by or arising out of any settlement
                  approved by the Indemnifying Party or any judgment in
                  connection with such claim or litigation resulting therefrom.
                  The Aggrieved Party may participate, at its expense, in the
                  defense of such claim or litigation provided that the
                  Indemnifying Party shall direct and control the defense of
                  such claim or litigation. The Indemnifying Party shall not, in
                  the defense of such claim or any litigation resulting
                  therefrom, consent to entry of any judgment, except with the
                  written consent of the Aggrieved Party, or enter into any
                  settlement, except with the written consent of the Aggrieved
                  Party, which does not include as an unconditional term thereof
                  the giving by the claimant or the plaintiff to the Aggrieved
                  Party of a release from all liability in respect of such claim
                  or litigation.

         (b)      If the Indemnifying Party shall not assume the defense of any
                  such claim or litigation resulting therefrom within a period
                  of 15 days from the date of issue of the claim, the Aggrieved
                  Party may defend against such claim or litigation in such

                                       16

<PAGE>

                  manner as it may deem appropriate and, unless the Indemnifying
                  Party shall deposit with the Aggrieved Party a sum equivalent
                  to the total amount demanded in such claim or litigation
                  within a period of 15 days from the date of issue of the
                  claim, or shall deliver to the Aggrieved Party a surety bond
                  in form and substance reasonably satisfactory to the Aggrieved
                  Party, the Aggrieved Party may settle such claim or litigation
                  on such terms as it may deem appropriate, and the Indemnifying
                  Party shall promptly reimburse the Aggrieved Party for the
                  amount of all reasonable expenses, legal or otherwise,
                  incurred by the Aggrieved Party in connection with the defense
                  against or settlement of such claims or litigation. If no
                  settlement of such claim or litigation is made, the
                  Indemnifying Party shall promptly reimburse the Aggrieved
                  Party for the amount of any judgment rendered with respect to
                  such claim or in such litigation and of all reasonable
                  expenses, legal or otherwise, incurred by the Aggrieved Party
                  in the defense against such claim or litigation.

         Section 11.6 Insurance Coverage. Each party shall purchase and maintain
from insurance carriers reasonably acceptable to the other insurance at its own
expense to cover liabilities that it may incur in the testing, manufacture,
distribution, sale or use of the Products. Each party agrees to obtain, at
minimum unless otherwise agreed between the parties, Commercial General
Liability Insurance and Product Liability/Clinical Studies Liability, covering
not less than $1,000,000 per occurrence.

         In the event that any such policies are on a claims made basis,
coverage shall be maintained for a period of at least five years after the
termination of this Agreement. Each party shall furnish to the other
certificates of insurance, evidencing such insurance and naming the other party
as an additional-insured.

                                  Article XII

                        PATENT AND TRADEMARK INFRINGEMENT

         Section 12.1 Patents Penn hereby notifies and Pharmion acknowledges
such notification by Penn of the existence of certain patent applications made
by Celgene Corporation in Australia, New Zealand and certain European countries
in relation to the Products and/or any aspect thereof. Penn gives no warranties
or representations and accepts no liability that the Products or manufacture,
use, sale of or other dealing in the Products by Pharmion shall not infringe the
rights of any third party. Pharmion hereby accepts that it shall be solely
responsible for any claims, demands, costs, losses, expenses or liability it
suffers arising out of any claim that the Products infringe the patents or
intellectual property or other rights of any third party. Pharmion shall
undertake at its own expense, the defense of any such action, suit or
proceedings and shall manage and control the defense of such action and its
settlement. Pharmion shall defend Penn, its agents, directors, officers, and
employees from and against all claims, demands, costs, losses, expenses or
liabilities suffered or incurred by Penn arising out of any claim that the
manufacture, use, sale of otherwise of the Products infringe the patent or any
other intellectual property or other rights of any third party.

                                       17

<PAGE>

         Section 12.2 Infringement of Trade Mark. In the event that a third
party at any time provides written notice of a claim to, or brings an action,
suit or proceeding against, Pharmion or any of its Affiliates, claiming
infringement of its trademark rights by virtue of the use by Pharmion of any of
the Trademarks, Pharmion shall promptly notify Penn of the claim or the
commencement of such action, suit or processing, enclosing a copy of the claims
and/or all papers served. Penn shall undertake, at its expense, the defense of
any such action, suit or proceeding and shall manage and control the defense of
such action and its settlement.

                                  Article XIII

                              TERM AND TERMINATION

         Section 13.1 Term. This Agreement shall commence on the Effective Date
and, except as provided below in this Article XIII, shall extend through the
tenth anniversary of the Approval Date in the United Kingdom (the "Initial
Term"). The term shall be extended thereafter for additional successive two-year
periods, unless and until either party notifies the other party, in writing, of
its intention to cancel such extension as of the end of the then current term;
provided, that, any such non-extension notice shall be given not less than 180
days prior to the end of the then current term. (The Initial Term and all such
successive periods, if any, shall collectively be known as the "term of this
Agreement")

         Section 13.2 Termination Rights.

         (a)      Either party shall have the right to terminate this Agreement:

                  (i)      upon sixty (60) days prior notice to the other in the
                           event that the other shall commit any material breach
                           of its obligations hereunder and shall fail to remedy
                           the same within forty-five (45) after being called
                           upon in writing to do so; or

                  (ii)     to the extent permitted by law, upon notice to the
                           other in the event the other party becomes insolvent,
                           fails generally to pay its debts as they mature,
                           files a voluntary petition or any answer admitting
                           the material allegations of, or consents to, an
                           involuntary petition pursuant to or purporting to be
                           pursuant to any reorganization or insolvency law of
                           any jurisdiction, makes an assignment for the benefit
                           of creditors, or applies for or consents to the
                           appointment of a receiver or trustee of a substantial
                           party of its property; or

                  (iii)    in respect of rights relating to the Celgene Product
                           only, on the expiration or earlier termination of the
                           Pharmion-Celgene Agreement.

                                       18

<PAGE>

         Section 13.3 Rights and Obligations Upon Termination.

         (a)      Upon any termination of this Agreement, Pharmion shall
                  promptly return to Penn or its designee or otherwise cause to
                  be transferred to Penn all Confidential Information of Penn,
                  and, except as otherwise required by applicable law or
                  regulation, shall at the election of Penn return to Penn or
                  destroy all documents and copy documents (in whatsoever media)
                  containing such Confidential Information and Pharmion shall
                  have no further rights to the Confidential Information.
                  Pharmion shall not after the termination of this Agreement use
                  in the Territory:

                  (i)      except as provided in clause (e) below, any name or
                           mark confusingly similar to any Trademarks of Penn's
                           in connection with the sale of any product by
                           Pharmion; and

                  (ii)     any of the Confidential Information of Penn.

         (b)      Notwithstanding clause (a) above, in the event this Agreement
                  is terminated by Pharmion pursuant to Section 13.2(a)(i) or
                  (ii), at Pharmion's request Penn will provide Pharmion with
                  (and Pharmion will be entitled to retain) all relevant
                  know-how and technical information to enable Pharmion to
                  manufacture the Penn Product or to enable another Person to
                  manufacture the Penn Product on Pharmion's behalf.

         (c)      Concurrent with the termination of this Agreement by Penn
                  pursuant to Section 13.2(a)(i) or (ii), Pharmion shall
                  transfer to Penn all governmental registrations and other
                  licenses and permits that Pharmion has obtained for the
                  promotion, marketing, sale and distribution of the Penn
                  Product in the Penn Territory, and other Confidential
                  Information in Pharmion's possession relating exclusively to
                  the promotion, marketing, sale and distribution of the Penn
                  Product in consideration for payment by Penn of a royalty of
                  5% on Future Net Sales for a period of three years from the
                  date of transfer under this clause. In the event of the
                  implementation of this clause (c), the provisions of Section
                  7.5, Section 7.6, Section 15.3 shall survive, mutadis
                  mutandis, to enable Pharmion to receive from Penn quarterly
                  royalty payments, royalty reports and audit rights.

         (d)      Termination of this Agreement in whole or in part shall not
                  relieve the parties of any amounts owing between them, nor
                  shall it relieve the parties of their obligations with respect
                  to the Products distributed hereunder, or with respect to
                  limiting disclosure and use of Confidential Information. Upon
                  termination of this Agreement: (i) as a result of Penn's
                  breach, Pharmion shall have the right either to sell its then
                  inventory of the Products for a period of three (3) months
                  following termination, or to return such inventory to Penn for
                  a price equal to the price paid to Penn therefor, and (ii) for
                  any reason other than Penn's breach, Penn shall have the right
                  to repurchase all or any portion of Pharmion's inventory of
                  Products, at Pharmion's landed cost thereof; and with respect
                  to any quantities not repurchased by Penn, Pharmion shall have
                  the right to sell Products, in the ordinary course of
                  business, for a period of three (3) months following

                                       19

<PAGE>

                  termination. The provisions of Article XI shall survive any
                  termination of this Agreement.

         (e)      Upon termination of this Agreement for any reason (other than
                  by Pharmion pursuant to Section 13.2(a)(i) or (ii)) Pharmion's
                  right to use the Trademarks shall cease and all rights in,
                  (insofar as these were granted to Pharmion under this
                  Agreement) and goodwill attaching to, the Trademarks and the
                  Penn Product shall revert back to Penn. Where pursuant to
                  Section 2.2 a trade mark of Penn is used in connection with
                  the promotion, advertising, distribution and sale of Celgene
                  Product, goodwill attaching to such Trademark and the Celgene
                  Product shall revert to Penn. Upon termination of this
                  Agreement by Pharmion pursuant to Section 13.2(a)(i) or (ii),
                  Pharmion shall be entitled to continue to use the Trademark
                  for a reasonable period of time following such termination
                  (not to exceed one (1) year) so as to enable Pharmion to
                  transition the Penn Product (and where applicable Celgene
                  Product) to a new tradename, and the provisions of Article X
                  shall survive for such transitional period. Following such
                  transitional period, Pharmion's right to use the Trademark
                  shall cease and all rights in, (insofar as these were granted
                  to Pharmion under this Agreement) and goodwill attaching to,
                  the Trademark and the Penn Product (and where applicable the
                  Celgene Product) shall revert back to Penn.

                                  Article XIV

                                 CONFIDENTIALITY

         Section 14.1 Confidentiality. For a period of ten (10) years from the
Effective Date of this Agreement or five (5) years from the termination hereof,
whichever occurs later:

         (a)      each party shall refrain from the use of Confidential
                  Information furnished by the other party for any purpose
                  inconsistent with this Agreement; and

         (b)      each party shall treat Confidential Information provided that
                  such disclosure is furnished by the other party as if it were
                  its own proprietary information and shall not disclose it to
                  any third party other than its Affiliates or consultants
                  without the prior written consent of the other party who
                  furnished such information and subject to the same obligations
                  of Confidentiality as set out in this Agreement.

         Clause (b) above shall not apply where such Confidential Information is
         disclosed to comply with the requirements of any law, governmental
         order (including a court order), regulation or Internal Revenue Service
         request. Recipient shall notify and consult with the disclosing party
         prior to such disclosure of information.

         Section 14.2 Advertising and Publicity. Subject to Section 14.3 and
except for such disclosures as are deemed necessary in Penn's or Pharmion's, as
the case may be, reasonable judgment to comply with applicable law (such as, by
way of example but not limitation, the securities laws of the United States),
neither Penn nor Pharmion nor anyone acting on its behalf

                                       20

<PAGE>

will make any publicly disseminated oral or written disclosure relating or
referring to, or use any advertising or publicity which relates or makes
reference to, the other party, this Agreement or the terms hereof, without in
each case having received the other party's prior approval (which approval will
not be unreasonably withheld or delayed); each party will respond promptly to a
disclosure request, but in any event not later than forty-eight (48) hours from
receipt of such a request. The foregoing restriction shall not apply to any
information which is contained in any previously issued press release or other
disclosure that has been approved by the other party or that is otherwise
indicated on labels, packaging, brochures or similar promotional material
relating to the Products.

         Section 14.3 Disclosure Required by Law. In the event that Penn or
Pharmion shall be required to make disclosure of the other's Confidential
Information as a result of the issuance of a court order or other government
process, the party subject to such requirement promptly, but in not event more
than forty-eight (48) hours after learning of such court order or other
government process, shall notify the other party and, at the other party's
expense, the party subject to such requirements shall: (a) take all reasonably
necessary steps requested by the other party to defend against the enforcement
of such court order or other government process, and, (b) permit the other party
to intervene and participate with counsel of its choice in any proceeding
relating to the enforcement thereof.

                                   Article XV

                                  MISCELLANEOUS

         Section 15.1 Governing Law; Choice of Forum. The parties agree that
this Agreement shall be governed by and construed in accordance with the laws of
England and Wales.

         Section 15.2 Independent Contractor. Pharmion will perform all of its
activities hereunder as an independent contractor, and nothing contained in this
Agreement shall be deemed to create any association, partnership, joint venture,
or relationship of principal and agent between the parties to this Agreement or
any of their respective Affiliates, or to provide either party with the right,
power or authority, whether express or implied, to create any such duty or
obligation on behalf of the other party. No employee or representative of a
party shall have any authority to bind or obligate the other party to this
Agreement for any sum or in any manner whatsoever, or to create or impose any
contractual or other liability on the other party without said party's
authorized written approval.

         Section 15.3 Accounting Audits. Each party shall maintain books of
account relating to its payment obligations and reimbursement rights pursuant to
this Agreement, in the case of Pharmion, Net Sales, and in the case of Penn,
Penn's fully allocated cost of manufacturing the Products, all in accordance
with U.K. generally accepted accounting principals with appropriate controls to
insure that transactions are properly recorded. Each party shall have the right,
at its own expense, to have an independent certified public accountant of its
own selection, reasonably acceptable to the other, examine at a time reasonably
acceptable to the other, during normal business hours but not more than once
each calendar year, the relevant books and records of account of the other, to
determine whether appropriate accounting has been made under Section 6.1 and
Article VII hereof. Such independent certified accountant shall treat as
confidential and

                                       21

<PAGE>

shall not disclose to the party engaging such accountant any information other
than that which is relevant to the rights of the engaging party hereunder or the
performance by the other party of its obligations hereunder. In the event of a
dispute between the independent certified public accountants of Pharmion and
Penn with respect to any matter called for by this Agreement, the parties shall
select a third independent public accounting firm to arbitrate the dispute,
provided, that such firm shall have the authority only to select from among the
positions of the original two firms that position which it deems most accurate.
The fees of such third firm shall be borne by the party whose position is not
approved of by such arbitrator.

         Section 15.4 Manufacturing Audits. Pharmion shall have the right to
conduct an audit of the Penn facility where the Products are being manufactured
at least annually or more frequently if any questions about the quality of the
Products are raised by either party or by a third party.

         Section 15.5 Interest Due on Late Payments. If any amount payable by
Pharmion to Penn hereunder is not paid when due, then without limiting any other
rights which Penn may have as a result of such late payment, the amount unpaid
shall bear interest until paid at a rate per annum equal to the prime rate
published and as changed from time to time by Citibank, N.A. New York, New York
(as reported in The Wall Street Journal) plus two and one-half percent (2.5%),
with such interest to be paid on demand together with all costs incurred by Penn
to collect the amounts due hereunder, including but not limited to reasonable
attorneys fees and disbursements.

         Section 15.6 Taxes. Each party shall bear all taxes imposed on it as a
result of the performance by such party under this Agreement including, but not
limited to, any sales tax, any tax on or measured by any payment required to be
made hereunder, any registration tax, or any tax imposed with respect to the
granting of licenses or other rights hereunder. The parties shall cooperate
fully with each other in obtaining and filing all requisite certificates and
documents with the appropriate authorities and shall take such further action as
may reasonably be necessary to avoid the deduction of any withholding or similar
taxes from any remittance of funds by Pharmion to Penn hereunder.

         Section 15.7 Employees. Neither party shall have any responsibility for
the hiring, firing or compensation of the other party's employees or for any
employee benefits of the other party's employees.

         Section 15.8 Assignment. This Agreement shall be binding upon, and
shall inure to the benefit of successors to a party hereto, but shall not
otherwise be assignable without the prior written consent of both parties,
except to the successor or assignee of all or substantially all of a party's
business relating to the licensed Product. In the event all or such part is
assigned or transferred, each party shall notify the other prior to such
assignment or transfer.

         Section 15.9 Notices. Any notice required or permitted to be made or
given hereunder shall (except as otherwise expressly provided herein) be in
writing and shall be made or given to the other party by personal in-hand
delivery; by telecopier or telex communication; by first-class mail, postage
prepaid; or by air courier to the mailing or telecopier or telex numbers set
forth below:

                                       22

<PAGE>

                                    Pharmion GmbH
                                    C/O Durr Vogele Partner
                                    Centralbahnstr. 7
                                    4052 Basel
                                    Switzerland

                                    With a copy to:

                                    Pharmion Corporation
                                    4865 Riverbend Road
                                    Boulder, CO 80301
                                    Attention: Chief Executive Officer
                                    Fax No.: (720) 564-9191

                                    Inhoco 2388 Limited
                                    Units 23-24 Tafarnaubach Industrial Estate
                                    Tredegar
                                    Gwent, NP22 3AA
                                    Attention: Chief Executive Officer
                                    Fax No.: +44(0) 1495 711225

or to such other address or telecopier or telex numbers as either party shall
designate by notice, similarly given, to the other party. Notices shall be
deemed to have been sufficiently made or given: (i) if by personal in-hand
delivery, or by facsimile with confirmed transmissions, when performed; (ii) if
mailed, ten (10) days after being deposited in the mail, postage prepaid; or
(iii) by air courier, three (3) days after delivery to the air courier company.

         Section 15.10 Force Majeure. In the event that either party is
prevented from performing or is unable to perform any of its obligations under
this Agreement due to any act of God, fire, casualty, flood, war, strike,
lockout, failure of public utilities, injunction or any act, exercise, assertion
or requirement of governmental authority, including any governmental law, order
regulation permanently or temporarily prohibiting or reducing the level of
research, development or production work hereunder or the manufacture, use or
sale of Product, epidemic, destruction of production facilitates, riots,
insurrection, inability to procure or use materials, labor, equipment,
transportation or energy sufficient to meet experimentation or manufacturing
needs; or any other cause beyond the reasonable control of the party invoking
this Section 15.10 provided such party shall have used its best efforts to avoid
such occurrence; such party shall give notice to the other party in writing
promptly, and thereupon the affected party's performance shall be excused and
the time for performance shall be extended for the period of delay or inability
to perform due to such occurrence.

         Section 15.11 Waiver. The waiver by either party of a breach or a
default of any provision of this Agreement by the other party shall not be
construed as a waiver of any succeeding breach of the same or any other
provision, nor shall and delay or omission on the part of either party to
exercise or avail itself of any right, power or privilege that it has or may
have hereunder operate as a waiver of any right, power or privilege by such
party.

                                       23

<PAGE>

         Section 15.12 Partial Invalidity. The parties to this Agreement desire
and intend that the terms and conditions of this Agreement be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction where enforcement is sought. If any particular term or condition of
this Agreement is adjudicated , or becomes by operation of law, invalid or
unenforceable, this Agreement will be deemed amended to delete the portion which
is adjudicated, or which becomes by operation of law, invalid or unenforceable,
provided, however, that where possible, a particular term or condition will be
reduced to the extent necessary to permit the remainder of the particular term
or condition to be enforced, the deletion or reduction to apply only with
respect to the operation of the term or condition and the remainder of this
Agreement to remain in full force and effect. A deletion or reduction of any
term or condition will apply only with respect to the operation of that term or
condition in the particular jurisdiction in which such adjudication is made or
becomes by operation of law, invalid or unenforceable.

         Section 15.13 Captions. All captions herein are for convenience only
and shall not be interpreted as having any substantive meaning.

         Section 15.14 Integration. This Agreement constitutes the entire
agreement between the parties hereto relating to the subject matter hereof and
supersedes all prior communications and understandings, written or oral, with
respect to this subject. This Agreement may be amended only by means of an
instrument executed in writing by properly authorized representatives of Penn
and Pharmion.

         Section 15.15 Counterparts; English language. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
This Agreement is entered into in the English language. In the event of any
dispute concerning the construction or meaning of this Agreement, reference
shall be made only to this Agreement as written in English and not to any
translation hereof into any other language, and this English language version
shall be controlling for all purposes.

                                       24

<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their authorized representatives, in duplicate on the dates written
herein below.

                                                  PHARMION GmbH

                                                  By  /s/ Patrick J. Mahaffy
                                                      --------------------------

                                                  Date  11/16/01

                                                  INHOCO 2388 LIMITED
                                                  (to be renamed PENN T LIMITED)

                                                  By  /s/ C.R. Rennie
                                                      --------------------------

                                                  Date 16th November 2001

                                       25

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