Document:

Agreement - March 2nd, 2005 between GB Innomech Ltd & Bioprogress Technology Ltd

 Exhibit 4.46 
  
 AGREEMENT 
  
 FOR THE DEVELOPMENT OF A PROOF-OF-PRINCIPLE 
 AUTOMATED TABLET ENCAPSULATING MACHINE 
  

							
	Made on	  	2nd March 2005	  	 	  	 
				
	Project number	  	TABWRAP - Capri	  	 	  	 
				
	Issue A	  	 	  	 	  	 
				
	Author:	  	Stephen Lee	  	Date:	  	1st March 2005

  
 BioProgress Technology Ltd

 Hostmoor Avenue 
 March 
 Cambridgeshire 
 PE15 0AX 

 COMPANY CONFIDENTIAL 
  

	1	INTRODUCTION 

  
 GB Innomech has a unique blend of expertise that closely compliments the requirements of this project. These include conceptual design, development of new production processes, integration of new and existing plant,
and innovation of unique solutions, which are reliable, safe and easy to use and maintain. We can provide a turnkey solution from design, (hardware and software), through integration and assembly to installation, commissioning and on into full
production, including complete documentation, all handled by our in-house engineering team. 
  
 We have extensive experience in providing equipment for many industries and have chosen to apply the procedures and practices used when supplying the pharmaceutical industry to all projects. This has resulted in the
development of procedures and project management systems which ensure the equipment will work reliably and to specification for applications such as that of your Tablet Encapsulation requirement. Indeed, it is worth noting that we are registered BS
ISO 9001:2000 and TickIT for our management systems. We are confident that our offering will provide BioProgess with the best results and optimum benefits associated with a thoroughly considered and comprehensive solution. 
  

	1.1	Project Scope 

  
 Because of the significant level of development involved in this project the parties have agreed to break the total job down into smaller parts to make it easier to manage and control. This Agreement therefore
comprises a staged estimate covering the various activities associated with the complete design, manufacture, supply and commissioning of a Proof-of-Principle automated Tablet Encapsulation Machine in accordance with the initial User Requirement
Specification (URS) produced by BioProgress. 
  
 As progress is made through each
of the project stages, the work content of the subsequent stages becomes clear and enables the parties to accurately determine and agree the costs prior to each stage commencing. The estimate therefore includes a fixed price for stages 1 - 4 and
shows our best estimates for the subsequent stages, based on detailed analysis of the initial version of the URS. Although, only estimates, they are expected to be reasonably accurate and they will be reviewed and binding quotations agreed prior to
commencement of each stage as they arise. 
  
 The project is also divided into two
phases each representing a variant of the machine as it moves through the development process, with each phase comprising a group of stages, as follows; 
  

	 	Phase	1: A three lane version of the machine comprising stages 1 to 11 of the quotation. 

  

	 	Phase	2: The full twenty-one lane machine comprising stages 11 to 16 of the quotation. 

  
 The details of the content and the deliverables of each of the stages are shown in section 6. 
  

 2 

 COMPANY CONFIDENTIAL 
  

	2	ISSUE HISTORY 

  

							
	 Issue

	  	 Change Description

	  	Author

	  	 Date

	 A
	  	 Initial Issue
	  	Stephen Lee	  	02/03/05

  

	3	CONTENTS 

  

							
	1	  	 	  	INTRODUCTION	  	2
				
	 	  	1.1  	  	 PROJECT SCOPE
	  	2
				
	2	  	 	  	ISSUE HISTORY	  	3
				
	 	  	 	  	 CONTENTS
	  	3
				
	4	  	 	  	SUMMARY	  	5
				
	 	  	4.1  	  	 REFERENCES
	  	5
	 	  	4.2  	  	 DEFINITIONS
	  	5
				
	5	  	 	  	MACHINE OVERVIEW	  	6
				
	6	  	 	  	PROJECT BREAKDOWN	  	6
				
	 	  	6.1  	  	 STAGE 1: PROJECT DEFINITION - PHASE 1
	  	6
	 	  	6.2  	  	 STAGE 2: EXPERIMENTATION
	  	6
	 	  	6.3  	  	 STAGE 3: MECHANICAL FUNCTIONAL DESIGN (TO RUN
IN PARALLEL WITH STAGE 2)
	  	6
	 	  	6.4  	  	 STAGE 4: CONTROL SYSTEM FUNCTIONAL DESIGN (TO
RUN IN PARALLEL WITH STAGE 3)
	  	7
	 	  	6.5  	  	 STAGE 5: MECHANICAL DETAIL DESIGN AND RELEASE
TO MANUFACTURE
	  	7
	 	  	6.6  	  	 STAGE 6: DETAILED CONTROL AND ELECTRICAL DESIGN
PLUS CODING
	  	7
	 	  	6.7  	  	 STAGE 7: PROCUREMENT (TO OVERLAP WITH STAGE
5)
	  	7
	 	  	6.8  	  	 STAGE 8: ASSEMBLY
	  	8
	 	  	6.9  	  	 STAGE 9: INTEGRATION
	  	8
	 	  	6.10	  	 STAGE 10: DEVELOPMENT (SOME OVERLAP WITH STAGE
9)
	  	8
	 	  	6.11	  	 STAGE 11: RELEASE TO PHASE 2
	  	8
	 	  	6.12	  	 STAGE 12: PROCUREMENT - PHASE 2 (TO OVERLAP WITH
STAGE 10)
	  	8
	 	  	6.13	  	 STAGE 13: ASSEMBLY
	  	8
	 	  	6.14	  	 STAGE 14: INTEGRATION
	  	9
	 	  	6.15	  	 STAGE 15: DEVELOPMENT (SOME OVERLAP WITH STAGE
9)
	  	9
	 	  	6.16	  	 STAGE 16: DELIVER AND SAT
	  	9
				
	7	  	 	  	PERFORMANCE SPECIFICATION	  	9
				
	8	  	 	  	PROJECT MANAGEMENT	  	10
				
	9	  	 	  	PRICES AND TIMESCALES	  	10
				
	 	  	9.1	  	 PRICES
	  	10
	 	  	9.2	  	 VALIDITY
	  	11
	 	  	9.3	  	 PAYMENT STAGES
	  	11
	 	  	9.4	  	 DELIVERY 
	  	11
	 	  	9.5	  	 EXPENSES
	  	12

  

 3 

 COMPANY CONFIDENTIAL 
  

							
	 	  	9.6	  	 CANCELLATION
	  	12
	 	  	9.7	  	 EQUIPMENT TO BE SUPPLIED
	  	13
	 	  	9.8	  	 ITEMS NOT INCLUDED
	  	13
	 	  	9.9	  	 SCOPE AND CHANGE CONTROL
	  	13
	 	  	9.10	  	 DOCUMENTATION
	  	14
				
	 10
	  	 	  	 INTELLECTUAL PROPERTY RIGHTS
	  	15
				
	 11
	  	 	  	 MAINTENANCE
	  	15
				
	 12
	  	 	  	 WARRANTY
	  	15
				
	 13
	  	 	  	 RISK AND TITLE
	  	16
				
	 14
	  	 	  	 FORCE MAJEURE
	  	17
				
	 15
	  	 	  	 CONFIDENTIALITY
	  	17
				
	 16
	  	 	  	 GENERAL
	  	18

  

 4 

 COMPANY CONFIDENTIAL 
  

	4	SUMMARY 

  
 This Agreement is made on 2nd March 2005 and sets out the initial terms which have been agreed between GB Innomech (“GBI” or “we”) and BioProgess Technology Ltd (“BPT” or “you”)
(whose respective addresses are set out on the front sheet.) It outlines a design proposal for an automated Tablet Encapsulation Machine and provides prices and time scales for the development of the system. Upon signature by the parties, this
document will form the basis of the contractual agreement between GBI and BPT and the terms set out herein shall be binding on each party unless and until superseded by a fuller legal agreement. 
  
 The proposed design is intended to meet the requirements and performance specifications as
described in the User Requirements Specification. 
  
 To ensure safe operation,
the system will be designed and inspected in accordance with all relevant European Union health and safety regulations. This will enable the complete system to be taken through EMC and safety certification. The machine will be built to comply with
GAMP 4 guidelines and when completed will be ready for the validation process. 
  

	4.1	References 

  

							
	 Ref.

	  	 Full Document Title

	  	Reference

	  	Produced By

	 1
	  	User Requirement Specification (URS)	  	TBA	  	BPT/GBI
	 2
	  	Factory Acceptance Test (FAT)	  	TBA	  	BPT/GBI
	 3
	  	Functional Design Specification (FDS)	  	QAEVD02	  	GBI

  
 Each of the above is subject to final;
approval and sign off by BPT 
  

	4.2	Definitions 

  
 In this Agreement, unless the context otherwise requires 
  
 “FMECA” means Failure Mode and Effect and Criticality Analysis 
  
 “____” means general arrangement of the equipment 
  
 “GAMP 4” means Good Automated Manufacturing Processes referenced to International Society of Pharmaceutical Engineers 
  

“HDS” means hardware design specification “IQ” means Installation Qualification 
  
 “OQ” means Operational Qualification 
  
 “PQ” means Process Qualification 
  
 “SAT” means Site Acceptance Test 
  
 “SDS” means software design specification 
  
 “URS” means, until the agreement of the final User Requirement Specification, the initial User Requirement Specification, developed by BPT prior to the date
hereof. 
  
 “CAD” means computer aided design, including graphical
representations and finite element analyses. 
  

 5 

 COMPANY CONFIDENTIAL 
  

	5	MACHINE OVERVIEW 

  
 The machine will be a Proof-of-Principle development system of a method of encapsulating tablets with an HPMC film. It will comprise two rotating drums with pockets for retaining the tablets. A small dose of glue will
be applied to the tablet using inkjet printing technology and the film will be applied, heated, vacuum formed around the tablet and cut by lasers. This process is then repeated for the opposite side of the tablet and the seam where the two coatings
overlap will then be ‘ironed’ to improve bonding and appearance. 
  
 The
initial version of the machine will have 3 lanes of pockets and when the size, shape and other design criteria are successfully achieved then a final 21-lane version will be completed. 
  

	6	PROJECT BREAKDOWN 

  
 The parties have agreed to divide the project down into smaller parts to make it easier to manage and control. Below are the breaks and the work content of each stage as currently agreed. As much of GBI’s focus
will be on maintaining good progress, it is agreed that on some occasions these stages will overlap, with the prior agreement of BPT. The Parties have also grouped some of the stages to assist with identifying significant milestones and payment
points. These are shown in section 9. 
  

	6.1	Stage 1: Project Definition - Phase 1 

  
 a) Review of concepts 
  
 b) Project planning 
  
 c) Review risks 
  
 d) Determine main areas of investigation needed to minimise risk 
  

e) Discussions with key suppliers on feasibility of process and selection of probable partners 
  
 f) Agree URS 
  
 Deliverables; 
  
 Revised URS 
  
 Project Timing Plan 
  
 Quotation and agreement (this document) approved and signed. (Note: price for stages 1 through 
  
 4 agreed and authorised at £170,000). 
  
 First release of FMECA 
  
 6.2 Stage 2: Experimentation 
  
 a) Define experiments needed to prove concepts 
  
 b) Build and/or organize suitable methods and means to test and prove the
suitability and capability of the concepts. 
  
 c) Work in
conjunction with suppliers 
  
 d) Review results and practical
implementation 
  
 Deliverables; 
  
 Written test reports 
  
 Confirmation by physical demonstration or through analytical means (i.e
calculation, CAD models), of key processes 
  
 Written report
identifying critical process and machined design parameters from experiments. 
  
 6.3 Stage 3: Mechanical Functional Design (to run in parallel with stage 2) 
  
 a) Layout machine 
  
 b) Fully investigate in 3D design of risk areas in parallel with experiments 
  

 6 

 COMPANY CONFIDENTIAL 
  

 c) Produce 3D design of machine and main structure 
  
 d) Complete FDS 
  
 e) FMECA review 
  
 f) Revise GA if required 
  
 Deliverables; 
  
 Machine G A – 1st release 
  
 Functional Design Specification 
  
 Mechanical FMECA – 2nd review 
  
 Process FMECA – 2nd review 
  
 Firm quotation for stages 5-7 and 8-10 
  
 6.4 Stage 4: Control System Functional Design (to run in parallel with stage 3) 
  
 a) Layout control system and block diagram 
  
 b) Define hardware and software 
  
 c) Define interfaces 
  
 d) Complete control system HDS 
  
 e) Create first draft of SDS 
  
 f) FMECA review 
  
 g) Revise specifications if required 
  
 Deliverables; 
  
 Hardware Design Specification 
  
 Software Design Specification 
  
 Software FMECA –
2nd review 
  
 6.5 Stage 5: Mechanical Detail Design and release to manufacture 
  
 a) Complete G A for all parts 
  
 b) Detail parts and issue for manufacture 
  
 Deliverables; 
  
 G A – final release 
  
 Detailed drawings made available for review if requested by BPT 
  
 Parts List 
  
 6.6 Stage 6: Detailed Control
and Electrical Design plus coding 
  
 a) First issue of SDS

  
 b) Create control software for modules required for first
trials 
  
 c) Create software for User Interface 
  
 d) Circuit diagrams 
  
 Deliverables; 
  
 Software Design Specification 
  
 User interface review 
  
 Circuit Diagrams – 1st issue 
  
 Draft FAT and SAT qualification
document for phases 1 and 2. 
  
 6.7 Stage 7: Procurement (to overlap with
stage 5) 
  
 a) Create full parts list (including all specified
sourced items) 
  
 b) Order all parts for scheduled build (and
test requirements) 
  

 7 

 COMPANY CONFIDENTIAL 
  

 Deliverables; 
  
 Confirmation of order and delivery of parts and effect (if any) on Project Timing Plan 
  
 6.8 Stage 8: Assembly 
  
 a) Assemble hardware and electrical equipment 
  
 Deliverables; 
  
 Assembly inspection 
  
 6.9 Stage 9:
Integration 
  
 a) Integrate hardware software and bought out
equipment 
  
 b) Modify code and hardware as required during
development 
  
 Deliverables; 
  
 Agreed FAT and SAT qualification document for phases 1 and 2 
  
 Machine ready for in-house testing 
  
 6.10 Stage 10: Development (some overlap with stage 9) 
  
 a) Run machine 
  
 b) Evaluate 
  
 c) Re-design as required to achieve reliable phase 1 machine 
  
 d) FMECA review 
  
 Deliverables; 
  
 Successful completion of Phase 1 FAT 
  
 Firm quotation for stages 11 & 12 and 13 - 15 
  
 6.11 Stage 11:
Release to Phase 2 
  
 Deliverables; 
  
 Revised G A 
  
 6.12 Stage 12: Procurement - Phase 2 (to overlap with stage 10) 
  
 a) Create full parts list (including all specified sourced items) 
  
 b) Order all parts for scheduled build (and test requirements) 

 
 Deliverables; 
  
 Confirmation of order and delivery of parts and effect (if any) on Project Timing Plan 
  
 6.13 Stage 13: Assembly 
  
 a) Assemble hardware and electrical equipment 
  
 Deliverables; 
  
 Assembly inspection 
  

 8 

 COMPANY CONFIDENTIAL 
  

 6.14 Stage 14: Integration 
  
 a) Integrate hardware software and bought out equipment 
  
 b) Modify code and hardware as required during development 
  
 Deliverables; 
  
 Machine ready for in-house testing 
  
 6.15 Stage 15: Development (some overlap with stage 9) 
  
 a) Run machine 
  
 b) Evaluate 
  
 c) Re-design as required to achieve reliable phase 2 machine 
  
 d) FMECA review 
  
 Deliverables; 
  
 Successful
completion of Phase 2 FAT 
  
 Comment: Firm quotation for stage
16 
  
 6.16 Stage 16: Deliver and SAT 
  
 a) Ship and install 
  
 b) Complete installation SAT 
  
 c) Documentation completed 
  
 Deliverables; 
  
 Delivery of Machine 
  
 IQ 
  
 OQ 
  
 Machine ready for process development and validation 
  
 Work by GBI on each stage (or where previously agreed by BPT group of stages) shall only be commenced when expressly authorized in writing by BPT following agreement of
the detailed specifications for the deliverables, timescale, milestones fixed price and payment stages for the relevant stage as appropriate; 
  

	7	PERFORMANCE SPECIFICATION 

  
 The machine will perform and handle product as per the initial URS. Changes may be required once the final version of the URS has been established at the completion of
stage 1. The parties will, so soon as practicable agree full OQ and PQ documentation, in accordance, in the case of PQ, with a detailed brief produced by BPT, which shall form part of the eventual FAT and, together with IQ, the SAT test protocol.
GBI will make such modifications to the machine during the course of design and/or assembly as may be necessary to ensure that the machine complies with the URS, the PQ and OQ 
  
 Upon completion of the manufacture of the machine, GBI shall carry out a FAT on the principles to be agreed in detail prior to the
commencement of Stage 7. The purpose of this trial shall be primarily to determine that the machine is compliant with the URS, PQ and OQ Upon satisfactory completion of the FAT, GBI shall deliver a written certification that the machine has passed
the FAT and fully meets the URS and the detailed standards agreed. BPT shall work with GBI and observe such FAT. It is understood that all defects in materials, workmanship and design for relevant compliance requirements which may be identified as a
result of the FAT will be corrected GBI prior to the issue of the certificate of compliance unless specifically directed to the contrary by BPT. 
  

 9 

 COMPANY CONFIDENTIAL 
  

 Upon completion of the installation of the machine, GBI shall carry out a SAT on the principles agreed in detail
prior to the commencement of Stage 7 in the presence of and with the co-operation of BPT. Upon satisfactory completion of the SAT, GBI shall deliver a written certification that the machine has passed the SAT and fully meets the URS and the detailed
standards agreed. 
  
 In the event that BPT reasonably believes that the SAT
identifies areas of non-conformity with the URS and/or the detailed SAT principles agreed, BPT shall itemize those areas in which the machine has failed to perform acceptably. GBI shall acknowledge such list and, save in the case of bona fide
dispute, in which case the provisions set out below shall apply, shall inform BPT in writing as to how and when the non-conformity will be corrected. GBI agrees that such corrections shall be carried out with all reasonable dispatch and at no
additional cost to BPT. BPT shall have the right to withhold payment of any outstanding funds due in relation to the project until such time as the machine has fully complied with the URS. Upon completion of the corrections by GBI, GBI shall notify
BPT of the same and the SAT shall again be conducted in its entirety should BPT elect to do so. Where BPT does not elect to repeat the SAT or to refer any dispute as to compliance pursuant to dispute resolution within 14 days of such notification,
the machine shall be deemed accepted and any sums withheld in respect thereof shall be due and payable. 
  
 In the event that the parties are unable to agree whether or not the machine has performed acceptably in accordance with the URS and /or the detailed SAT principles agreed, or whether any machine has any prefect in
workmanship or materials, the matter may be referred at the insistance of either party to such person as may be appointed by agreement between them, or in default of agreement, nominated on the application of either party to the President for the
time being of the Institution of Mechanical Engineers in London (the “Expert”). Such person shall act as an expert and not as an arbitrator and shall be entitled to appoint such technical expert or experts as he considers necessary to
assist him in determining the matter referred to him. The decision of the Expert (which shall be given by him in writing stating his reasons) shall, in the absence of manifest error, be final and binding on the parties hereto. Each party shall
provide the Expert with such information as he may reasonably require for the purposes of his determination. If any party claims any such information to be confidential to it, then, provided that in the opinion of the Expert that party has properly
claimed the same as confidential, the Expert shall not disclose the same to the other party or to any third party. The costs of the Expert (including the cost of any technical experts appointed by him) shall be borne in such proportions as the
Expert may determine to be fair and reasonable in all the circumstances or, if no such determination is made by the Expert by the parties hereto, in equal proportions. 
  

	8	PROJECT MANAGEMENT 

  
 _______ will assign a project manager to the project. The project manager will develop the Quality Plan and Project Plan for this project for approval by BPT and oversee their implementation. The project manager will
keep BPT informed of the progress of the project via regular project meetings and updated project plans at least once per month. BPT will be invited to participate in risk and design reviews at key stages of the project. 
  

	9	PRICES AND TIMESCALES 

  

	9.1	Prices 

  
 GBI shall provide to BPT, upon request, full cost breakdowns of the initial estimates and subsequent firm quotations produced by GBI for any stage requested and shall provide such further detail and explanation as BPT
may request. 
  

 10 

 COMPANY CONFIDENTIAL 
  

 To provide the equipment as outlined: 
  

				
	 Stages 1
	  	£	25,000
	 Stages 2, 3 & 4
	  	£	145,000
	 Stages 5, 6 & 7
	  	£	590,000
	 Stages 8, 9 & 10
	  	£	175,000
	 Stages 11 & 12
	  	£	365,000
	 Stages 13, 14 & 15
	  	£	135,000
	 Stages 16
	  	£	35,000
	 Project Total
	  	£	1,470,000

  
 The prices shown are exclusive of VAT,
packing and shipping charges. 
  

	9.2	Validity 

  
 Stages 1 to 4; prices are fixed and agreed. 
  
 Validity of the subsequent stages will be agreed at the time of quoting the individual stages. Quotations shall be valid for 3 months from the date of the quotation. 
  

	9.3	Payment stages 

  
 A. For all stages except those identified B. below. 
  
 GBI’s standard payment requirements for a staged project of this nature are 50% of the project stage (or group of stages) is payable with order (or amendment) and the balance on satisfactory completion of the stage(s). 
  
 B. For stages where significant external purchases are to be made. 
  
 GBI shall propose for acceptance an invoicing schedule which will be structured and timed in
accordance with delivery and payment terms of the bought-out equipment and as far as possible will be planned to be ‘cash neutral’ The payment for each stage will, however, contain a retention of 15% which will be released only on
acceptance by BPT that the stage has been satisfactorily completed. 
  
 Payments
will be invoiced to BPT upon the dates (or achievement of the relevant milestone as the case may be) agreed and shall be payable within 30 days of receipt of a correct invoice in respect of the payment concerned. 
  
 If BPT shall fail to pay any amounts specified under this Agreement by the due date thereof,
the amount ________ shall bear interest from the due date until paid at 4% (four per cent) over the base rate of Barclays Bank plc from the due date until paid. Where any amount is subject to a bona fide dispute, BPT shall be entitled to withhold
the sums in dispute only pending resolution of the dispute but, in the event that it is found or agreed that such sums were properly payable, interest shall be due thereon (or upon such amount as was properly payable) from the original due date
until the date of payment. 
  

	9.4	Delivery 

  
 Due to the experimental nature of this project, the timing for the delivery of each stage as set out in the timing plan in appendix A, is an estimate only but such estimate has been prepared to the best of GBI’s
knowledge and experience. 
  
 The precise and binding delivery date for each stage
(or group of stages) shall be agreed prior to commencement of the relevant stage(s). If any stage is not completed, to the reasonable satisfaction of BPT by the relevant agreed date (provided that such delays are not due to an event of force majeure
or delays by BPT in providing any materials for which it is responsible, or the failure of third party suppliers, for reasons beyond the reasonable control of GBI, to supply special tooling or bought in materials, or any agreed change pursuant to
clause 9.9 below then GBI will be deemed to be in default of the agreement. 
  

 11 

 COMPANY CONFIDENTIAL 
  

	9.5	Expenses 

  
 All expenses associated with attending the machine away from GBI’s premises other than for installation, commissioning or warranty purposes will be charged extra, unless previously agreed otherwise. This includes
travelling, accommodation and general out-of-pocket expenditure such as meals etc. Payments will be made in accordance with the agreed costs set-forth below. 
  
 Time spent on site and travelling to and from the installation site nominated by BPT (other than for installation, commissioning or warranty purposes), will be charged at
GBI’s then standard rate depending on the level of engineering resource required. 
  
 GBI Standard Expenses 
  
 Travel: 
  
 By car within the UK charged at 0.40 GBP per mile. 
 Car hire: By prior agreement (UK and overseas) 
 By Train - Standard fare

 By Air - Economy ticket for short haul flights. Optional Business class for long haul flights subject to prior agreement. 
  
 Accommodation : 
  
 Reasonable Motels and Hotels up to 3 star rating typically. Maximum of 100.00 GBP (or the equivalent in the relevant currency) per night
including breakfast unless agreed otherwise. 
  
 Meals and snacks: As required but
supported by receipts. 
  
 For all above expenses a surcharge of 10% will be
applied for as a contribution to administration costs upto a maximum of £50 per item. 
  

	9.6	Cancellation 

  
 BPT shall, have the right to terminate this Agreement prior to the completion of any Stage if 
  
 a) if the quotation is more than 15% greater than the original estimate or the quoted delivery of the stage is more than one week later than the estimated delivery of
that stage or 
  
 b) GBI shall fail satisfactorily to complete such Stage within 2
weeks following the agreed date for such completion or 
  
 c) if GBI is otherwise
in breach of any of its obligations hereunder and, if capable of remedy, fails to remedy the same within 28 days of receipt of notice specifying the nature of such breach and the steps required to remedy it, or 
  
 d) GBI shall become insolvent or have a receiver, administrator or administrative receiver
appointed over all or any part of its assets, or enter into liquidation or winding up (other than a bona fide solvent winding up for the purposes of amalgamation or reconstruction). 
  
 Cancellation of the project by BPT within any stage for any reason will result in all the costs incurred by GB Innomech up to the date of
cancellation (demonstrated on an open book basis) being paid in full (but without any mark up or profit element) (up to and not exceeding the full order price for the Stage.) 
  
 This will also include costs associated with terminating the project such as; 
  
 The cost of all goods delivered which are non-returnable 
  
 Cancellation charges for products, components or assemblies on order 
  
 Cancellation charges for any sub-contract work 
  
 Restocking charges for returnable items 
  

 12 

 COMPANY CONFIDENTIAL 
  

 Where the cancellation by BPT for any reason other than those set out above there will also be a surcharge of 20% of
the full order value for the stage of the project in progress but the total of costs incurred together with such surcharge shall not exceed the full order value of the stage. 
  
 GBI shall have the right to terminate this Agreement if: 
  
 a) BPT shall fail to provide any information or other materials which it has agreed to provide and which are reasonably required for GBI to
carry out its duties hereunder and BPT shall have failed to remedy such default within 28 days of notice specifying the materials concerned. 
  
 b) BPT shall fail to pay any sum due (save in the case of bona fide dispute or any permitted retention deduction or set off) within 28 days of the due date or 

 
 c) BPT shall become insolvent or have a receiver, administrator or administrative receiver
appointed over all or any part of its assets, or enter into liquidation or winding up (other than a bona fide solvent winding up for the purposes of amalgamation or reconstruction). 
  
 Upon termination of this agreement however occuring GBI shall provide such assistance (for a period not to exceed 6 months) as BPT may
reasonably request in transferring the design and manufacture of the Machine to BPT or to a third party such assistance shall be at GBI’s expense save where the termination is by reason of default by BPT in which case such assistance shall be
at GBI’s then standard rates, the parties shall co-operate fully and in good faith to agree on a termination plan and to implement the same which shall specify such measures as are necessary to ensure an orderly transfer of the design,
manufacture and test of the machine to BPT or such other person as BPT may nominate and that there is no substantial disruption of the supply of the machine to BPT. GBI shall deliver up (or procure that any subcontractors which may have been
appointed with the consent of BPT to deliver up) to BPT any existing parts or elements of the tabwrap machine and plans and/or design materials in respect of the TABWRAPTM machine together with all dies or tooling either paid for by BPT or which are designed or adapted only for use in
respect of the TABWRAPTM machine without further
charge to BPT. GBI shall not have any lien or security interest in any such parts, elements, plans, design materials, dies or tooling. 
  
 9.7 Equipment to be supplied 
  

	 	•	 	Completion of Stage 11; 3-lane development machine without guarding and any non-essential functions (e.g. Cutter, Shredder etc.) 

  

	 	•	 	Completion of Stage 15; 21-lane fully functional version of the above machine ready for validation with all necessary guarding and ancillary equipment. 

  
 9.8 Items not included 
  
 The supply of the following consumable items is not included in the price. 
  

	 	•	 	Tablets 

  

	 	•	 	HPMC Film 

  

	 	•	 	Glue 

  
 9.9 Scope and Change Control 
  
 The initial timings and prices
for the project set out herein reflect the initial URS. With the exception of the fixed price for stages 1 to 4, firm quotations and timings will be agreed by the parties as set out in Clause 9.4 above on the basis of the final URS and Project
Timing Plan agreed during Stage 1 prior to the commencement of each Stage or group of Stages. 
  

 13 

 COMPANY CONFIDENTIAL 
  

 BPT reserves the right, on reasonable notice, to change the URS to meet specific customer needs subject to the change
control procedure set out in this clause 9.9. The parties further recognize that modifications to the URS may be required by law or regulation, particularly those relating to the safety of the machine or any products produced thereby. All
modifications shall be addressed in accordance with the procedure below:- 
  
 If
BPT requires a change in the URS BPT shall notify GBI in writing specifying in as much detail as practicable the nature of such change or improvement. Upon receipt of such notification, the following procedure shall come into effect: 
  
 i) GBI will consider the impact on the design and production of the machine
(or on the relevant Stage) of the change or improvement proposed, the requirement for any additional development work, tooling and/or equipment, the effect on the Project Timing Plan and the potential effect on the price and/or timing of the
relevant Stage and/or the machine and shall, as soon as practicable, and in any event within 7 days, prepare and deliver to BPT a report specifying in reasonable detail the additional costs likely to be incurred, its estimate of the effect of such
change or improvement on the timing for the stage and, if applicable, why it considers that its ability to provide the machine pursuant to this Agreement may be adversely affected; 
  
 ii) GBI shall discuss the proposed change or improvement with BPT which may withdraw its proposal or make such changes as it
deems expedient to its proposal in the light of GBI’s comments and GBI shall then, if so required, provide a firm quotation of the effect of the change on the price for the relevant Stage and/or the Project; 
  
 iii) within 7 days of receipt of such quotation, BPT shall either (a) accept
the proposal in which case the parties shall sign a memorandum recording the change to the URS and the resulting change to the price for the relevant Stage and /or the Project (which shall be binding upon the parties) and the timing for the stage,
or (b) withdraw its request; 
  
 No change to the URS shall be implemented without
the agreement of both parties recorded in writing 
  
 GBI shall also use
reasonable endeavors to devise and propose improvements in the equipment which shall be dealt with in accordance with this clause 9.9. 
  
 9.10 Documentation 
  
 The following documentation will be supplied by GB Innomech: 
  

	 	•	 	Estimate 

  

	 	•	 	Quotations 

  

	 	•	 	Factory Acceptance Test Document 

  

	 	•	 	Functional Design Specification 

  

	 	•	 	Hardware Design Specification 

  

	 	•	 	Software Design Specification 

  

	 	•	 	Reviewed FMECA documents 

  

	 	•	 	Basic Operation Instructions 

  

	 	•	 	Machine assembly drawings 

  

	 	•	 	Control Circuits (including but not limited to pneumatic, vacuum and wiring diagrams) 

  

	 	•	 	Software control diagrams (ladder or functional block preferred) 

  

	 	•	 	Parts lists with supplier & part codes and descriptions identified 

  

	 	•	 	Supplier manuals for all bought-out items delivered 

  

	 	•	 	Machine software licences 

  

	 	•	 	Valid Insurance certificates 

  
 The following documentation is required by GB Innomech: 
  

	 	•	 	User Requirement Specification 

  
 All documents created by GB Innomech will be supplied in one of the following formats: 
  

	 	•	 	Word (.doc) 

  

	 	•	 	Excel (.xls) 

  

	 	•	 	Adobe Acrobat (.pdf) 

  

 14 

 COMPANY CONFIDENTIAL 
  

	10	INTELLECTUAL PROPERTY RIGHTS 

  
 GBI acknowledges that its appointment hereunder is as a subcontractor of BPT commissioned to design and produce the machine for and on behalf of BPT and that any and all
intellectual property rights which may arise in relation to such machine shall vest in and at all times remain the property of BPT. GBI shall, forthwith upon request, provide to BPT all drawings and designs resulting from its work hereunder and
shall not have or purport to exercise any right of retention or lien in relation to such drawings or designs or, save as expressly provided below, the machine or any element thereof. 
  
 GBI acknowledges that all rights in and to the XGEL® and TABWRAPTM system intellectual property shall, as between the parties, vest entirely in BPT and GBI hereby expressly disclaims and waives any claim to such
intellectual property currently existing and/or developed by BPT or any affiliate of BPT in the future and undertakes to assign any such intellectual property to BPT forthwith upon request. 
  
 To the extent that any improvements in such intellectual property are developed by GBI, GBI
shall grant to BPT a fully paid royalty free irrevocable license to use such improvements. Where such improvements are not severable from the XGELTM or TABWRAPTM system intellectual property (as appropriate), such license shall be exclusive in the fields covered by such intellectual property. 
  
 GBI further acknowledges that it shall not at any time seek to make use of the XGEL® or the TABWRAPTM system intellectual property on its own account other than as expressly set out herein
nor supply nor enter into any arrangement to supply any third party with TABWRAPTM equipment or provide parts or servicing therefor without the prior written consent of BPT. 
  

	11	MAINTENANCE 

  
 This machine is intended for experimental and development use but the equipment will be designed using known quality parts for a 5 year minimum maintenance life. Components used will be chosen from suppliers who keep
them in stock for immediate delivery. Where possible, the design will remove the need for regular preventative maintenance. 
  
 Cleaning details and frequency are to be agreed prior to SAT. 
  

	12	WARRANTY 

  
 12.1 GBI shall perform its services with all due care, skill and diligence using that degree of skill and ____ ordinarily exercised and consistent with generally accepted practices. GBI shall be responsible for __
professional quality, technical accuracy, completeness and co-ordination of all reports, designs, drawings, plans, models, information, specifications and any other items and services to the extent furnished by GBI under these Heads of Terms.

  
 12.2 GBI warrants 
  
 12.2.1 that the machine and all other goods, articles, material and work produced pursuant to
this Agreement will conform with the URS and that the machine supplied hereunder shall at the time of delivery comply with all applicable EMC and GAMP 4 standards and any other statutes, regulations, codes of practice or other legal requirements
applicable to the production of pharmaceutical products and/or the operation of production machinery in relation thereto. 
  
 12.2.2 that at the time of delivery and for the period of one year from the date of the issue of the relevant site acceptance certificate (the “Warranty
Period”), the machine shall be free from defects in materials or workmanship; and 
  
 12.2.3 that, save in relation to the use of the TABWRAPTM System or XGELTM
film in the manner and for the purposes instructed by BPT (for which no warranty is given by GBI), neither the design or construction of the machine nor its use for the purposes intended nor any other materials produced by GBI hereunder shall
infringe the intellectual property rights of any third party. 
  

 15 

 COMPANY CONFIDENTIAL 
  

 12.3 GBI shall repair, replace or make good without cost to BPT any defects or faults arising during the Warranty
Period resulting from imperfect or defective work or materials furnished by GBI provided that such defects or faults are reported to GBI in writing within 45 (forty five) days of the date of discovery of such defect and provided that GBI is
permitted access to inspect the equipment concerned. Acceptance or use of any machine by BPT shall not constitute a waiver of any claim under this warranty. Such warranty obligation shall also apply to any items not furnished by GBI even if
specified by BPT unless, prior to fitting or utilizing the same, GBI have drawn BPT’s attention in writing to the likely occurrence of the problem in question and BPT shall, nonetheless have instructed GBI to fit or use the item. For the
avoidance of doubt, BPT shall have the full and unfettered right to assign the benefit of such warranty to any subsequent owner, save that for warranty outside the UK, GBI will be entitled to recover any additional travel charges and to re-negotiate
clause 12.8. 
  
 12.4 The warranty set out above shall not apply to: 

 
 12.4.1 any defect caused other than by faulty materials or workmanship (by either GBI or
its suppliers) or caused by accident, misuse, negligence, lack of reasonable maintenance, incorrect fitting, storage or alteration by any person other than GBI. 
  

12.4.2 any high wear or consumable part or material replaced as part of normal maintenance. 
  
 12.5 In respect of any claim by an unaffiliated third party (“Third Party Claim”), relating to any machine supplied by GBI to BPT,
GBI shall indemnify, defend and hold BPT harmless from and against any and all claims, demands, losses, liabilities, damages, costs and expenses (including the cost of settlement, reasonable legal and accounting fees and any other expenses for
investigating or defending any actions or threatened actions) directly arising out of or directly resulting from any such Third Party Claim involving either. 
  
 12.5.1 death or bodily injury actually or allegedly arising out or resulting from the use of the machine, where such use of the machine was in accordance with its
intended use save if and to the extent that such injury arose solely by reason of any defect in the TABWRAPTM System or XGELTM Film when properly used in accordance with the instructions of BPT which could not reasonably have been discovered by GBI using proper skill and care, during the course of the design construction and commissioning of
the relevant machine. 
  
 12.5.2 infringement of the intellectual property rights
of any third party, save where such infringement is caused solely by the use of the TABWRAPTM System or XGELTM Film in the manner and for the purposes instructed by BPT. 
  
 12.6 Save as provided to the contrary in this clause 12 , GBI shall on no account be liable to BPT for indirect, incidental, consequential, special, exemplary or punitive damages arising from or relating to any each
of this Agreement or for lost profits arising from or relating to any breach of this Agreement regardless of any notice of such damages. 
  
 12.7 With effect from the date of delivery of the machine delivered as part of the Project and for not less than six years thereafter, GBI shall maintain product and
public liability insurance in respect of the machines produced hereunder with minimum limits of £1 million per occurrence and £10 million in aggregate in any year with a reputable insurance company. GBI shall provide BPT with a copy of
the certificate of such insurance in evidence of the payment premiums therefor promptly upon request. 
  
 12.8 GBI will respond to warranty requests received by phone, fax or E-mail within 1 working day and aim to carry out site visits within 3 days. 
  
 12.9 Any on site work required within the Warranty Period but which is not directly attributable to a fault in the part or workmanship will
be charged at the prevailing rates. 
  

	13	RISK AND TITLE 

  
 13.1 Unless otherwise mutually agreed in writing, risk in the machine shall not pass to BPT until the completion of the installation and commissioning of the machine and the successful completion of the SAT

  

 16 

 COMPANY CONFIDENTIAL 
  

 13.2 GBI shall, at all times until risk in the machine passes to BPT, keep such machine insured against all standard
risks for its full replacement value. In the event that there is a partial or total loss of such machine (including a total write off for insurance purposes) prior to risk passing, BPT shall have the right, at its sole option to cancel the order for
the machine or to require GBI to build and supply a replacement. GBI shall (unless BPT shall have elected to cancel by notice in writing) use all reasonable endeavors to replace the lost or damaged items without delay at its own expense and shall
apply the proceeds of any insurance for such purpose. Where BPT shall elect to cancel the order, GBI shall procure that the proceeds of any applicable insurance shall be paid to BPT to the extent of any and all sums previously paid by BPT in respect
of the relevant machine under this Agreement. 
  
 13.3 Title to the machine shall
pass BPT upon delivery of the machine by GBI to the site nominated for its installation by BPT. If, at any time, either party shall cancel this Agreement during the course of production but prior to the delivery of the machine, title to such machine
shall pass to BPT upon payment by BPT of the cancellation fees set out in Clause 9.6 and, upon receipt of such payment, GBI shall deliver to BPT, the machine or such elements of the machine or other deliverables as were in existence at the date of
cancellation in the condition in which they were at such date. 
  
 13.4 BPT will
advise GBI of any disposal of the machine and details of the subsequent owner. 
  

	14	FORCE MAJEURE 

  
 14.1 Neither party shall be in breach of this Agreement if there is any total or partial failure of performance by it of its obligations under this Agreement which results from causes beyond its reasonable control
including (but not limited to) fires, strikes (of its own or other employees), war, insurrection or riots, embargoes, container shortages, wrecks or delays in transportation, inability to obtain supplies, raw materials or requirements or regulations
of any civil or military authority (“an Event of Force Majeure”). 
  
 14.2 Each of the parties agrees to give notice to the other immediately upon becoming aware of any Event of Force Majeure, such notice to contain details of the circumstances giving rise to the Event of Force Majeure and specifying the
period for which it is estimated that it will continue. 
  
 14.3 The operation of
this Agreement shall continue during the period in which an Event of Force Majeure continues to have effect except to the extent that such operation is restricted or prevented by such Event of Force Majeure. Immediately upon the Event of Force
Majeure ceasing to have effect, the party relying on it shall notify the other in writing accordingly. 
  
 14.4 If a default due to an Event of Force Majeure shall continue for more than 10 weeks, the party not in default shall be entitled to terminate this Agreement. Neither party shall have any liability to the other in
respect of the termination of this Agreement as a result of an Event of Force Majeure. 
  

	15	CONFIDENTIALITY 

  
 15.1 An existing confidentialty agreement, dated 26th November 2004, (the
“Confidentiality Agreement”) exists between the two parties and the clauses expressly written herein serve to supplement such agreement. Each of the parties undertakes to the other that it will:- 
  
 15.1.1 keep confidential all information (written or oral) concerning the business or affairs
of the other parties that it shall obtain or receive as a result of the discussions leading up to, or the entering into this Agreement or in the course of it except that which is trivial or obvious, already in its possession prior to the
commencement of such discussions, or in the public domain other than as a result of a breach of this clause; 

  

 17 

 COMPANY CONFIDENTIAL 
  

 15.1.2 use information covered by this clause 15 only for the purpose of exploiting its rights and fulfilling its
obligations under this Agreement; and 
  
 15.1.3 take all reasonable steps as
shall from time to time be necessary to ensure compliance with the provisions of this clause by its officers, employees, agents and sub-contractors. 
  
 15.2 Notwithstanding anything contained elsewhere in this Agreement, the provisions of this clause 15 shall remain in effect if and when this Agreement is terminated or
expires. 
  

	16	GENERAL 

  
 16.1 This Agreement supersedes all prior agreements, arrangements, and undertakings (whether express or implied) between the parties (other than the Confidentiality Agreement), and constitutes the tire agreement
between the parties relating to the subject matter of this Agreement to the exclusion of terms and representations whether express or implied, written or oral (save in the case of fraudulent misrepresentation). 
  
 16.2 No addition to or modification of this Agreement or any of its provisions shall be
binding upon the parties unless made by written instrument signed by a duly authorised representative of each of the parties. Any such written instrument shall form part of and is deemed to be incorporated into This Agreement. 
  
 16.3 The unenforceability or invalidity of any provision of this Agreement shall not affect
the enforceability or validity of the balance of this Agreement. 
  
 16.4
Termination of this Agreement, however occurring, shall not affect any rights or liabilities of either party which have accrued prior to such termination, nor shall it prevent the continuation in force or coming into force of any provision which is
expressed or intended to continue or come into force upon termination. 
  
 16.5
Each party hereto is an independent contractor and is not an agent, employee or legal representative of the other and persons engaged by each of them shall not be employees, legal representatives or agents of the other party. 
  
 16.6 Any right or remedy of any party in respect of a breach of any provision of this
Agreement or otherwise arising in connection with this Agreement shall be in addition to and without prejudice to all other rights and remedies and the exercise of or failure to exercise any such right or remedy shall not constitute a waiver of that
or of any other rights or remedies and shall not prejudice its further exercise nor the exercise of any other right or remedy. A party seeking to waive any right or remedy shall give notice of waiver in writing signed by a duly authorised
representative of that party to the other party. 
  
 16.7 Any notice to be given
under this Agreement shall be in writing and shall be delivered by hand or sent by pre-paid first class post or by facsimile (such facsimile transmission notice to be confirmed by letter posted within twelve hours) to the address of the other party
set out in this Agreement or notified under the provisions of this clause 16.7 Any such notice shall be effective notice when actually received. 
  
 16.8 Any notice shall be deemed to have been received. 
  

	16.8.1	if delivered by hand, on the date of delivery; 

  
 16.8.2 if sent by pre-paid air mail post at the end of the fourth Business Day after posting, including the day of posting if a Business Day; 
  

 18 

 COMPANY CONFIDENTIAL 
  

 16.8.3 if sent by facsimile on the expiration of 12 hours after dispatch or on commencement of the Business Day
following dispatch, whichever is the later, provided that a letter of confirmation was posted within 12 hours. 
  
 16.9 This Agreement shall be governed by and construed in accordance with English law and the parties submit to the non-exclusive jurisdiction of the English Courts. 
  
 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year written above. 
  

					
	 SIGNED by David Beale, Managing Director
	  	)	  	/s/ David Beale
			
	 for and on behalf of
	  	)	  	 
			
	G B INNOMECH LIMITED	  	)	  	 
			
	 Date:
	  	)	  	 
			
	 SIGNED by Graham Hind, Chief Executive Officer
	  	)	  	/s/ Graham Hind
			
	 for and on behalf of
	  	)	  	 
			
	BIOPROGRESS TECHNOLOGY LIMITED	  	)	  	 
			
	 Date:
	  	)	  	 

  

 19 

 COMPANY CONFIDENTIAL 
  

 APPENDIX A; PROJECT TIMING PLAN 
  

									
	 	  	 	  	Duration

	  	 START
 W/C

	 	 FINISH
 W/C

	 2 Phase 1
	  	Machine	  	190 days	  	 	 	 
	 3 Stage 1
	  	-  Project Definition	  	 	  	24th Jan	 	7th Feb
	 11 Stage 2
	  	-  Experimentation	  	 	  	14th Feb	 	28th March
	 13 Stage 3
	  	-  Mechanical Functional Design	  	 	  	14th Feb	 	4th April
	 28 Stage 4
	  	-  Control System Functional Design	  	21 days	  	7th March	 	4th April
	 35 Stage 5
	  	-  Mechanical Detail Design	  	44 days	  	4th April	 	6th June
	 __ Stage 6
	  	-  Control System Detail Design	  	45 days	  	4th April	 	6th June
	 54 Stage 7
	  	-  Procurement	  	80 days	  	21st March	 	11th July
	 69 Stage 8
	  	-  Assembly	  	91 days	  	21st March	 	22nd Aug
	 79 Stage 9
	  	-  Integration	  	30 days	  	8th Aug	 	19th Sept
	 82 Stage 10
	  	-  Development	  	22 days	  	19th Sept	 	17th Oct
					
	 90 Phase 2
	  	Machine	  	76 days	  	 	 	 
	 91 Stage 11
	  	-  Phase 2 Scale-Up	  	15 days	  	24th Oct	 	7th Nov
	 101 Stage 12
	  	-  Procurement (to be pre-ordered)	  	1 day	  	24th Oct	 	 
	 116 Stage 13
	  	-  Assembly	  	30 days	  	15th Nov	 	19th Dec
	 126 Stage 14
	  	-  Integration	  	15 days	  	26th Dec	 	9th Jan
	 129 Stage 15
	  	-  Development	  	16 days	  	9th Jan	 	6th Feb
	 137 Stage 16
	  	-  Delivery & Installation	  	8 days	  	6th Feb	 	13th FebAgreement relating to Production of Xgel Film, dated February 4th, 2005

 Exhibit 4.47 
  
 DATED 4th FEBRUARY 2005 
  
 (1) BIOCUSTOM
LIMITED 
  
 (2) CUSTOM PHARMACEUTICALS LIMITED

  

  
 AGREEMENT 
  
 RELATING TO PRODUCTION OF XGELTM 
 FILM 
  

  
 

 

 THIS AGREEMENT is made on
                                        
                                    2005 
  
 BETWEEN: 
  

	(1)	BIOCUSTOM LIMITED a company registered in England under number 05279679 whose registered office is at Hostmoor Avenue, March Industrial Estate, March, Cambridgeshire, PE15
0AX (“BCL”); and 

  

	(2)	CUSTOM PHARMACEUTICALS LIMITED a company registered in England under number 01431692 whose registered office is at Tecore House, Conway Street, Hove, East Sussex, BN3 3LW
(“Custom”). 

  
 WHEREAS: 
  

	(A)	BCL owns, controls or has the right to use patents and technical information relating to the production and use of a non animal derived film coating system for pharmaceutical
products known as the XGELTM System.

  

	(B)	BCL wishes to appoint Custom as its subcontractor to produce XGELTM Film on its behalf and has agreed to make available to Custom for such purposes the necessary production equipment and know how to establish a fully
functional film casting line. 

  

	(C)	Custom has agreed to produce XGELTM Film on behalf of BCL and to make available facilities for the installation of such film casting line at the Premises. 

  
 IT IS AGREED as follows: 
  

	1.	INTERPRETATION 

  

	1.1	In this Agreement the following words and phrases shall, unless the context otherwise requires, have the following meanings: 

  
 “cGMP” means those current practices, as amended from time
to time, related to the manufacture of pharmaceutical active ingredients and their precursors laid down in guidelines and regulations such as the GMP rules of the World Health Organization, the United States Code of Federal Regulations (Title 21,
Parts 210-211), the Guide to Inspection of Bulk Pharmaceutical Chemicals (U.S. Department of Health and Human Services, Revised September 1991), the Pharmaceutical Inspection Convention, and the European Community Guide to Good Manufacturing
Practice in the production of pharmaceutical products; 
  

 “Customer” means a purchaser of the Products; 
  
 “Development Plan” means the agreed programme of works
required to establish the facility as a stand alone facility for the production of the Products to the required standards and to install and commission the Equipment as set out in Schedule 1; 
  
 “Effective Date” means the date of signature hereof;

  
 “Equipment” means the Film Line together
with all ancillary equipment and parts supplied by and the property of BCL and used in connection with the production of the Products at the Premises a list of which, as at the Effective Date, is attached as Schedule 5; 
  
 “Facility” means the dedicated area of the Premises used
exclusively for the production of the Products in which the Equipment is positioned as outlined in red in the plan attached as part of Schedule 1; 
  
 “Film Line” means the primary production line for XGELTM Film comprising dosing mechanism, travelling belt, heating ovens and winding mechanism; 
  
 “Fit Out Period” means the period from the Effective date
until Custom have certified that Start of Production can take place; 
  
 “Key Personnel” means the personnel employed by Custom selected to fulfil the functions listed in Schedule 3 and who are to be trained by BCL and who, save as otherwise provided herein will be employed solely in operating
the Facility and the Film Line; the individuals initially appointed to fulfil such roles shall be the “Initial Key Personnel”; 
  
 “Premises” means Custom’s premises at Unit 2, Fairway Trading Estate, Moulescoombe, Brighton BN2 4PB; 
  
 “Products” means the reels of finished XGELTM Film produced, configured and packaged in accordance
with the Specification; 
  
 “Qualified Person”
means a person who fulfils the minimum conditions of scientific qualification as a Qualified Person referred to in Article 49 of Directive 2001/83/EC or any amendment or replacement thereof and is properly registered as such by the relevant
professional body; 
  

 “Quality Assurance” or “QA” means the quality assurance requirements
and processes set out in the Specification including final checking and sign off by a Qualified Person; 
  
 “Quality Control” or “QC” means the quality control requirements and processes during the course of production set out
in the Specification; 
  
 “Raw Materials” means
those raw materials used in the production of the Products as set out in the Specification; 
  
 “Specification” means the specification as set out in schedule 2 together with the detailed Technical Agreement laid down by BCL from time to time for each type of Product; 
  
 “Start of Production” or “SOP” means the
date upon which BCL shall certify by notice in writing that all necessary conditions for commencement of production, shall have been fulfilled. Unless otherwise agreed, this shall be upon the date of issue by Custom of an acceptance certificate for
the Equipment; and 
  
 “Technical Agreement”
means the detailed specification document laid down by BCL for each type of Product to be produced hereunder covering (without limitation) Raw Materials suppliers and specification, Quality Control procedures prior to, during and after
manufacture, manufacturing procedures, machine set up, storage, post-production Quality Assurance and criteria for release for sale, records and documentation to be provided for each batch of the Product and other data and procedures necessary for
the satisfactory production of the Products. 
  

	1.2	The headings in this Agreement do not affect its interpretation. Save where the context otherwise requires, references to sub-clauses, Clauses and Schedules are to sub-clauses,
Clauses and Schedules of this Agreement. 

  

	1.3	Unless the context otherwise so requires: 

  

	1.3.1	references to the parties shall include their permitted successors and assigns; 

  

	1.3.2	references to statutory provisions include those statutory provisions as amended or re-enacted; and 

  

	1.3.3	references to any gender include all genders. 

  

	1.4	In the case of any conflict or ambiguity between any provision contained in the body of this Agreement and any provision contained in any Schedule, the provision in the body of this
Agreement shall take precedence. 

  

	2.	DURATION 

  

	2.1	This Agreement shall commence on the Effective Date and, unless terminated previously in accordance with Clause 14 below, shall continue thereafter until the fifth anniversary of
the Effective Date (the “Initial Term”). 

  

	2.2	BCL shall have the option, exercisable by notice in writing no later than six months prior to the end of the Initial Term, to extend this Agreement once only by a period specified
in such notice, not to exceed five (5) years. 

  

	2.3	During any period of notice arising under this Agreement the parties agree that they shall continue to perform their respective obligations in accordance with the terms of this
Agreement. 

  

	3.	THE FACILITY AND INSTALLATION OF THE EQUIPMENT 

  

	3.1	Custom shall, throughout the continuance of this Agreement make available and dedicate the Facility for the purpose exclusively of producing the Products on behalf of BCL and for no
other purpose unless otherwise expressly agreed by BCL in writing. The Facility shall be established in accordance with the Development Plan in such manner that it is physically separated from other areas of the Premises and that suitable
precautions are in place to avoid contamination of the Products. 

  

	3.2	 BCL shall have the right to visit the Facility at any time during normal working hours and at such other reasonable times as the parties may agree, for the purpose
of reviewing progress of work on the Development Plan, ensuring that the manufacture of the Products meets the Specification and the required standards and for such other purposes as BCL may reasonably require. BCL shall, in addition, have the
right, at any time during normal working hours to bring visitors to inspect the Facility and production of the Products. Custom shall make available at all times suitable office accommodation at the Premises (to be equipped by BCL, such equipment to
remain, at all times, the property of BCL) for the sole use of visiting BCL personnel and, upon request, a suitable fully equipped meeting room on the premises, for presentations to and meetings with such visiting parties. BCL shall and shall
procure that any visitors shall use all reasonable endeavours not to disrupt 

  

	 	 
production at the Facility and shall undertake to comply with such safety, security and confidentiality requirements as Custom may reasonably require.

  

	3.3	So soon as is practical following the date hereof, BCL will furnish to Custom full layout drawings of the Equipment and details of all requirements for site preparation including,
without limitation, all relevant loadings and requirements for the provision of utilities and, subject to receiving such information, Custom shall ensure that the Facility is prepared for the delivery installation and commissioning of the Equipment
and that all necessary services and utilities are provided as set out in the Development Plan and the layout drawings no later than the agreed date for the delivery of the Equipment to the facility set out in the Development Plan. Custom shall
procure that all utilities provided for the Facility are metered separately from those in the remainder of the Premises. 

  

	3.4	Custom shall be responsible for carrying out all the works in relation to the Facility and the Premises set out in the Development Plan to make ready the Facility for the
installation of the Equipment and for Start of Production. The Parties shall hold regular site meetings at such intervals as BCL may reasonably require to review progress on the works in the Development Plan during the Fit Out Period. Save in
relation to those items detailed in the Development Plan in respect of which BCL has agreed to pay or contribute to the costs (in respect of which, Custom shall provide detailed binding quotations and obtain written approval by BCL prior to carrying
out any work) Custom shall carry out such works, to the agreed standard set out in the Development Plan, at its sole cost. The Parties acknowledge that BCL has already, prior to the date hereof, agreed to cover the cost of certain building works
necessary for the Facility. Any costs so incurred shall be deemed to be costs incurred hereunder. 

  

	3.5	 BCL shall at its sole cost be responsible for the supply and delivery of the Equipment to the Premises and for the mechanical and electrical assembly and
commissioning of the Equipment to its final condition including all setting and adjustment works and performance optimisation up to Start of Production. Once the installation is complete, BCL shall carry out a Site Acceptance Test (“SAT”)
of the Equipment in accordance with the SAT Protocol set out at Schedule 6 or as subsequently agreed between the parties. Upon successful completion of the SAT, Custom shall sign an acceptance certificate to acknowledge that the Equipment has

  

	 	 
been installed and adjusted to produce the Products fully in accordance with the Specification. Any dispute as to acceptance shall be dealt with in
accordance with Clause 19. 

  

	3.6	Custom shall be responsible at its own cost for obtaining and maintaining throughout the period from SOP to the termination or expiry of this Agreement all UK, EU and other
approvals as may be necessary for the operation of, and the production of the Products in, the Facility and all other areas of the Premises used for the production of the Products on a cGMP basis save that if BCL shall also require Custom to obtain
FDA approval for the Facility or Premises, the parties shall work together fully to obtain such approval. Custom shall, within 45 days of the request of BCL to obtain FDA approval, produce a full costed budget for any inspections and/or necessary
additional works to obtain such FDA approval, for approval by BCL and shall, upon request, provide all necessary breakdowns, explanations and back up for such budget. If such budget is approved by BCL, the inspections and/or necessary works shall be
carried out in accordance with the approved budget and BCL shall be responsible for all costs of the inspections and works up to and including the sums approved. For the avoidance of doubt, the Raw Materials will be dispensed and mixed in
Custom’s dispensary which does not form part of the Facility and is not dedicated to the Products. The dispensary and the means of transfer of the mixed Raw Materials to storage tanks in the Facility shall nonetheless comply with all relevant
cGMP standards, pharmaceutical clean area rules and all necessary approvals (including FDA approval where appropriate) and any other provisions laid down in the Technical Agreement for each of the Products. 

  

	3.7	If at any time during the continuance of this Agreement, any competent authority shall, or shall threaten to, withdraw any approval or authorisation required pursuant to Clause 3.6,
Custom shall forthwith inform BCL of the same and shall take all necessary steps, at its sole cost, to maintain such approval. 

  

	3.8	 BCL will also be responsible for the costs of BW Pharma, the Project Manager currently employed by Custom with regard to the overall development of the Premises, in
respect of their additional services in relation to the Facility and the installation of the Equipment only upon terms to be agreed direct between BW Pharma and BCL. For the avoidance of doubt Custom shall not be entitled to 

  

	 	 
receive any commission, payment or mark-up from BCL in relation to its use of BW Pharma. 

  

	3.9	Upon receipt of the certificate of acceptance in relation to the Equipment, BCL shall, unless otherwise agreed, confirm in writing that SOP has occurred. Both parties shall use all
reasonable endeavours to ensure that the conditions for SOP are met no later than 1 September 2005. If the conditions for SOP are not met by such date other than for reasons within the control of, or due to any default by, Custom, BCL shall
reimburse to Custom so soon as practicable following SOP the salary, NI and other employment costs of any Key Personnel or other Custom personnel for any period between such date and SOP during which Custom can reasonably demonstrate such Key
Personnel or other personnel were engaged exclusively in relation to the achievement of SOP or otherwise on behalf of BCL. Where SOP, shall not have taken place by October 1 2005, (other than for reasons within the control of, or due to any default
by, Custom, BCL shall, in addition, pay to Custom the Accommodation Charge for the period from 1 October 2005 to SOP. Such personnel charge and accommodation charge shall be at their respective cost to Custom and Custom shall not be entitled to
charge BCL any mark up or profit element in relation thereto. 

  

	4.	SUPPLY OF THE PRODUCTS 

  

	4.1	With effect from SOP, BCL hereby appoints Custom to produce at the Facility as subcontractor on behalf of BCL, such quantities of the Products at such times as BCL may specify from
time to time in accordance with the terms set out in this Agreement. 

  

	4.2	With effect from SOP the parties shall meet as BCL require to plan production and to review the operation of the line. The aim of such planning meeting shall be to optimise the
production cycle by: 

  

	 	•	 	making the most efficient use of the Equipment and Key Personnel on, initially, a single shift basis, to avoid peaks and troughs of production; 

  

	 	•	 	reviewing stockholding requirements against the production plan; 

  

	 	•	 	reviewing the monthly reports from Custom on line operation and efficiencies; 

  

	 	•	 	Reviewing QA and testing issues; 

  

	 	•	 	ensuring that all orders from Customers are fulfilled by the date required 

  

	 	•	 	reviewing any accounting issues and requirements. 

  

	4.3	Custom shall produce and submit to BCL in good time before each such production meeting and at such other times as BCL may reasonably require a report detailing the usage of the
Equipment and the Key Personnel, the efficiency of production (to include details of inputs of materials, amount used, Products produced and wastage), stock levels of Raw Materials and finished Products, QA, QC and technical operations and such
other matters as BCL may reasonably require from time to time. 

  

	4.4	Custom shall be responsible for ordering on behalf of BCL sufficient Raw Materials to meet production requirements and reserve stock levels as laid down by BCL from time to time in
accordance with the procedure set out in clause 4.5 and for manufacturing at the Facility using the Equipment the quantity of Products required, in accordance with the Specification and the timescales laid down by BCL, including (without limitation)
all necessary packaging and palletisation for storage and onward shipment as set out in the Specification. 

  

	4.5	All orders for Raw Materials shall be placed by Custom as agent on behalf of BCL with the suppliers of Raw Materials specified by BCL from time to time in the quantities and upon
the terms agreed by BCL with such suppliers but shall be invoiced to and paid direct by BCL. Custom shall, however, bring to the attention of BCL any special offers or discounts available in respect of the purchase of Raw Materials of which it may
become aware and, if so requested by BCL, seek to ensure that BCL enjoys the benefit thereof. For the avoidance of doubt, Custom shall not be entitled to receive any commission, payment or mark up of any kind from either the Supplier or BCL in
relation to such purchases. Custom shall prepare and submit to BCL no later than 7 days following the commencement of each month a report detailing any orders for Raw Materials placed for delivery in the previous month but not delivered, specifying
the supplier, quantity of Raw Materials and cost. 

  

	4.6	 BCL shall, as soon as practicable, pass to Custom full particulars of each Order for the Products accepted by BCL which BCL wishes to be fulfilled by the Facility.
Provided that such order can be fulfilled from existing stocks or planned production 

  

	 	 
without disrupting orders previously accepted, then Custom undertakes that it will allocate Products from stock or production and fulfil such order on behalf
of BCL fully in accordance with the delivery dates and terms of sale agreed by BCL. Where the order cannot be met from stock or planned production, but it would be possible to meet the delivery dates set out in the order by increasing production
with the existing staffing, Custom shall take all reasonable steps necessary (including, without limitation, ordering the necessary additional Raw materials as agent for BCL in accordance with the provisions of Clause 4.5) to meet such delivery
dates. Where such delivery dates cannot be met except by overtime or the use of additional staff, Custom shall seek the approval of BCL prior to using such additional resources but, if approval is granted, Custom shall fulfil such orders on the
basis agreed but BCL shall bear the additional costs of overtime or additional labour incurred. 

  

	4.7	Custom shall also be responsible for providing all necessary laboratory services for quality control testing and for obtaining final pharmaceutical certification for the Products in
accordance with the quality and testing protocol set out in the Technical Agreement for the relevant type of Product. Other testing required by BCL which is not included in the relevant Technical Agreement shall be provided by Custom on the basis
which the parties may agree, acting reasonably, from time to time 

  

	4.8	The parties acknowledge that it is the ultimate intention, if levels of demand permit, to add a second production shift at the Facility. Custom shall, as soon as is practicable
following the Effective Date, devise and submit to BCL for approval a detailed plan for the introduction of such second shift. BCL shall have the right at any time, to require the introduction of such second shift. The additional cost to BCL of such
shift shall reflect only the additional cost to Custom previously demonstrated to and agreed by BCL on an open book basis and be calculated in accordance with Clause 9 and Schedule 4 save that there shall be no increase in the Accommodation Charge
by reason of such additional shift. 

  

	4.9	For the avoidance of doubt: 

  

	4.9.1	 the Products produced hereunder are produced by Custom as subcontractor on behalf of BCL using BCL Equipment and Raw Materials and in consideration of 

  

	 	 
the payments set out in Clause 9 only. Custom shall not be entitled to any additional payments in relation to the Products. 

  

	4.9.2	Nothing herein shall be taken to grant any right to Custom to supply Products on an exclusive basis. BCL shall have the right to source Products elsewhere at its sole discretion.

  

	4.9.3	Nothing herein shall be taken to bind BCL to order any minimum quantity of Products from the Facility during any period. 

  

	4.9.4	Unless otherwise expressly authorised in writing by BCL, Custom shall not affix its name or mark to any Products produced hereunder or on any packaging or documentation used in
connection with such Products. 

  

	4.10	All rights, title and interest in the Raw Materials and Products shall remain at all times the property of BCL until such time as title in the Products passes to a Customer in
accordance with the relevant terms of sale. At no time and under no circumstances shall title in the Products pass to Custom. Custom shall ensure that such Raw Materials and Products are at all times kept identifiable and distinct from raw materials
and products owned by Custom or any other client of Custom and marked clearly as the property of BCL. Custom shall not, nor purport or attempt at any time, to sell, assign, pledge, part with possession or control of the Products or any interest
therein nor otherwise attempt to deal with any interest therein save as expressly permitted by this Clause 4 and shall keep such Raw Materials and Products free from distress execution or other legal process. Custom expressly agrees that it shall
have no lien or right of possession of any kind in relation to such Raw Materials or Products and that BCL shall have the right to enter into the Facility or any other part of the Premises where such Raw Materials or Products are or are believed to
be situated at any time to remove the same. 

  

	5.	STORAGE AND DISTRIBUTION SERVICES 

  

	5.1	Custom shall be responsible for the storage of Raw Materials pending use and the Products pending distribution together with the onward distribution of the Products to such
Customers as BCL may direct in accordance with Clause 4. 

  

	5.2	 Custom shall, at all times during the continuance of this Agreement make available to BCL such number of pallet spaces at the Premises (or, with the agreement of
BCL, elsewhere) as BCL may require from time to time for the storage of Raw 

  

	 	 
Materials and Products. The storage accommodation shall be clean, dry and secure and comply with all necessary standards laid down for the storage of active
ingredients for pharmaceuticals and their precursors and such additional standards as BCL may notify to Custom from time to time and shall be such as to prevent deterioration or contamination of the Raw Materials and/or Products. For the purposes of
this Agreement a pallet space shall be a standard Europallet of 80 x 120cm. 

  

	5.3	Inventories of Raw Materials and the Products stored shall be fully and accurately maintained at all times on a suitable inventory management system which will permit fast and
accurate stock control and reconciliation, stock rotation and picking for use or despatch. Picking shall be on a first in first out basis unless otherwise instructed by BCL. Custom shall provide a stock report monthly for the production planning
meetings and at such other intervals as BCL may require for accounting purposes and shall carry out, at its own cost, a full physical stocktake of the Raw Materials and Products held at least once every six months but BCL shall be entitled to carry
out its own full physical stocktake at its own expense at any time. All such reports shall be made available to BCL electronically in such form and with such content as BCL may reasonably specify from time to time. 

  

	5.4	Custom shall, in addition, provide all necessary personnel and materials handling equipment required for the proper storage of the Raw Materials and the Products and the inward and
outward processing (including, without limitation, production and administration of delivery notes and such other documentation as may be required to facilitate shipment of the Products) and transportation within the Premises thereof. Such personnel
and services shall be included in the Warehousing Charge set out in Clause 9 and Custom shall not be entitled to any additional fees or charges in relation thereto. 

  

	5.5	 Where the relevant terms of sale of the Products involve carriage or shipment of the Products, Custom will also arrange such carriage or shipment as agent on behalf
of BCL. The invoices for such carriage or shipment shall, however, be directed to and payable direct by BCL. Custom shall not be entitled to any commission, payment or mark-up of any nature in respect of such carriage or shipment whether from BCL or
the carrier nor to raise any charge for the provision of services in relation thereto. Custom shall if requested, obtain quotations from suitable carriers for prospective 

  

	 	 
orders and provide full details of the relevant cost to BCL to allow for this to be factored into the price quoted for the Products. Custom shall, unless
otherwise instructed by BCL, use to transport the Products, those freight service providers it uses for itself or other customers, where suitable. Custom shall use all reasonable endeavours to agree (as agent for and on behalf of BCL) the most
favourable possible freight rates and terms with each freight service provider which shall be no worse than those applicable to Custom or any other customer of Custom for similar loads. Custom shall, if so requested by BCL, demonstrate that the
rates are at the lowest achievable level. BCL shall have the right, at any time, to require that the transportation of the Products shall be moved to an alternative freight service provider. 

  

	5.6	Custom shall be fully liable for all stocks of the Raw Materials and/or the Products while in its custody and control. Custom shall reimburse to BCL forthwith the full value (which
shall be the full replacement cost to BCL plus freight and storage charges and duty if any) of all Raw Materials or Products which are damaged or lost while in the Premises or in transit in the charge of Custom. In the case of loss or damage while
in the custody of any freight service provider engaged by Custom pursuant to Clause 5.5, Custom shall file and diligently prosecute claims on behalf of BCL with freight service providers engaged in respect of any such loss or damage, shall use all
reasonable endeavours to recover from such freight service providers the full value of Products lost or damaged and shall forthwith pay over to BCL in full all sums recovered. 

  

	6	QUALITY AND LIABILITY 

  

	6.1	Custom warrants that the Products manufactured will, at the time of delivery to the Customer meet the Specification in all respects and be produced to cGMP standards and free from
defects in manufacture. Custom shall provide suitably qualified Quality Control and Quality Assurance personnel (including adequate Qualified Persons) and laboratory testing facilities to carry out batch testing in accordance with the relevant
Technical Agreement for each type of Product to ensure that the Products are fully in accordance with the Quality Control and Quality Assurance requirements itemised in the relevant Technical Agreement. 

  

	6.2	If, at any time, any Products produced hereunder shall be found whether on testing by Custom or BCL prior to dispatch or by the Customer upon receipt, not to comply with the above
warranty then, save as otherwise expressly provided herein, Custom’s sole liability for the breach of such warranty shall be, at the option of BCL either: 

  

	6.2.1	to pay to BCL a sum equivalent to the full price of the Products concerned to the Customer (including duty and freight, where appropriate); or 

  

	6.2.2	to replace such non-compliant Products at Custom’s sole cost (including any payment for late delivery pursuant to Clause 6.4 where relevant). Custom shall be entitled to use
the Equipment and the Key Personnel for such purpose but such use must in no way delay or prevent the fulfilment of other orders or production requirements received from BCL. Custom shall purchase the necessary Raw Materials at its own cost and
shall reimburse to BCL the shift rate of each of the Key Personnel engaged for each shift spent in producing such replacement Products together with the mark up charged in relation thereto. All costs of carriage to the Customer shall also be borne
by Custom. For the avoidance of doubt, any overtime charges incurred as a result of such replacement shall be borne entirely by Custom. 

  

	6.3	In respect of any claim by an unaffiliated third party (“Third Party Claim” which shall, for the avoidance of doubt include any claim by Customers) relating to Products
supplied hereunder, Custom shall indemnify, defend and hold BCL harmless from and against any and all claims, demands, losses, liabilities, damages, costs and expenses (including the cost of settlement, reasonable legal and accounting fees and any
other expenses for investigating or defending any actions or threatened actions) directly arising out of or directly resulting from any such Third Party Claim involving death or bodily injury actually or allegedly arising out of or resulting from
the use of the Product where such death or personal injury arose wholly or substantially by reason of the failure of Custom to manufacture the relevant Product fully in accordance with the Specification but not, for the avoidance of doubt if any
such death or injury arose as a result of a defect in the Specification of the Product in question. 

  

	6.4	Where in accordance with the terms of any order provided to Custom hereunder BCL would be required to pay any form of rebate, penalty or other sums to a Customer if Products ordered
by such Customer are not delivered by a particular date and Custom nonetheless fails to deliver such Products as required by the order by such date (other than by reason of: 

  

	6.4.1	force majeure, which shall include, without limitation, delays in the supplies of raw materials beyond the reasonable control of Custom, or 

  

	6.4.2	the failure by BCL to authorise the purchase or holding of adequate stocks of Raw Materials or to provide the level of lead time agreed between the parties from time to time)

  
 then Custom shall indemnify BCL and hold BCL
harmless in respect of any such rebate, penalty or other sums. BCL shall inform Custom at the time of providing the order of any such rebate penalty or other sum. 
  

	6.5	SAVE AS OTHERWISE PROVIDED IN THIS CLAUSE 6, CUSTOM SHALL ON NO ACCOUNT BE LIABLE TO BCL FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR PUNITIVE DAMAGES ARISING FROM
OR RELATING TO ANY BREACH OF THIS AGREEMENT OR FOR LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT REGARDLESS OF ANY NOTICE OF SUCH DAMAGES. 

  

	7.	PERSONNEL ENGAGED IN THE PROVISION OF THE SERVICES 

  

	7.1	With effect from SOP, Custom shall, at all times during the continuance of this Agreement, save as provided below or as otherwise agreed, make available the Key Personnel on an
exclusive full time basis to man the Facility and Equipment and to produce the Products in accordance with this Agreement. 

  

	7.2	 Custom shall ensure at its own expense that the Initial Key Personnel and any additional Key Personnel employed whether as replacements of the Initial Key Personnel
or by reason of any expansion of the staffing requirements will be appropriately trained and skilled for the role allotted. If, at any time, BCL notifies Custom that it considers that the performance, skills or conduct of any of the Key Personnel
are unsatisfactory, the parties shall meet to discuss such actions as are required to resolve the problem. Following such discussion, if an alternative 

  

	 	 
solution acceptable to BCL is not agreed, BCL shall have the right to require that the relevant person be replaced as a member of the Key Personnel by a
suitably qualified alternative. 

  

	7.3	BCL will be responsible for the provision of specialist training in the use of the Equipment for such of the Initial Key Personnel as it believes necessary at its film line in
Florida. BCL shall be responsible for all travel, accommodation and pre agreed subsistence costs during such training. If BCL requests that such training be provided prior to SOP then Custom shall make the relevant Key personnel available for such
training but shall be entitled to charge BCL for the time of the relevant Key Employees at a rate to be agreed (not to exceed the salary cost to Custom of such employee(s) for the relevant period). 

  

	7.4	In the provision of the Services, Custom shall, unless otherwise agreed by BCL, only use the Key Personnel and shall ensure that such Key Personnel perform their tasks in a
workmanlike and professional manner. 

  

	7.5	It is recognised by the parties that, in the initial stages following SOP, it may not be necessary for all the Key Personnel to be employed in the Facility full time to meet the
levels of production of the Products required. If BCL shall so request at production planning meeting or otherwise, Custom shall use all reasonable endeavours to provide alternative work for such of the Key Employees for such periods as BCL may
require. Custom will otherwise use all reasonable endeavours to ensure that the Key Personnel remain engaged at all times during working hours in the provision of the Services. If BCL shall request or agree, at any time, that one or more of the Key
Personnel shall be released to other duties, Custom shall: 

  

	7.5.1	procure that such member of the Key Personnel resumes his duties at the Facility forthwith if required for the purposes hereof or BCL shall otherwise so request; and

  

	7.5.2	reimburse to BCL a sum equivalent to the shift rate for relevant member of the Key Personnel for each shift for which such member of the Key Personnel was released for other duties
together with the mark-up thereon set out in Clause 9. 

  

	7.6	 Custom shall ensure that they are able to provide sufficient appropriately qualified additional personnel to man a second shift (if BCL so requires) in accordance
with the agreed plan (and such additional personnel shall thereafter be deemed to be Key Personnel) and/or to provide temporary cover for members of the Key Personnel 

  

	 	 
during periods of holiday or sickness or to cover additional demand at such time or times as BCL may require. 

  

	7.7	Custom shall, to the extent practicable, procure that the Initial Key Personnel provide all necessary specialist training in the use of the Equipment to any replacement for any
member of the Key Personnel or to other personnel nominated by BCL. If further specialist training is required, then BCL may, at its discretion, make such training available at its Florida facility and the travel accommodation and pre agreed
subsistence costs of the persons to be trained shall be borne solely by BCL. 

  

	7.8	For the avoidance of doubt, the Key Employees shall remain at all times employees of Custom which shall be responsible for payment of or accounting for the remuneration and
associated benefits, taxation and national insurance or the equivalent deductible by the employer together with expenses incurred by the Key Employees except as otherwise expressly provided herein. 

  

	8.	USE OF EQUIPMENT 

  

	8.1	The Equipment is made available on loan to the Facility, terminable at will by BCL, for use by Custom at the Facility for the purpose of production of Products on behalf of BCL
only. All right, title and interest in the Equipment shall at all times remain the sole property of BCL. At no time and under no circumstances shall title in the Equipment pass to Custom. Custom shall ensure that the Equipment is marked clearly as
the property of BCL. 

  

	8.2	Custom shall not, nor purport or attempt at any time to, sell, assign, pledge, part with possession or control of the Equipment or any interest therein nor otherwise attempt to deal
with any interest therein and shall keep such Equipment free from distress, execution or other legal process. Custom expressly agrees that it shall have no lien or right of possession of any kind in relation to the Equipment and that BCL shall have
the right to enter into the Facility or any other part of the Premises where such Equipment is or is believed to be situated at any time to remove the same. 

  

	8.3	 BCL will permit Custom, using Key Personnel or such others as may be approved from time to time by BCL, such use of the Equipment as is reasonably required for the
purpose of producing the Products in accordance with the terms hereof. 

  

	 	 
Authorisation procedures will be agreed between BCL and Custom from time to time. 

  

	8.4	Custom shall use the Equipment for the purpose of producing the Products only and for no other purpose without the express prior written consent of BCL. 

  

	8.5	Custom shall ensure that Key Personnel, and others permitted to operate the Equipment by BCL, operate the Equipment with all reasonable skill and care and Custom shall indemnify and
hold harmless BCL against all and any damage (other than normal wear and tear) to the Equipment caused by persons using the Equipment with Custom’s authorisation. 

  

	8.6	Custom undertakes that it shall: 

  

	8.6.1 	ensure that proper environmental, health and safety and working conditions, as recommended by BCL and/or laid down by any relevant governmental, quasi governmental or industry laws,
regulations or codes of practice, are maintained for the Equipment; 

  

	8.6.2	 ensure that the Equipment is kept clean and in good condition and that it is only used in accordance with the manufacturer’s instructions; 

  

	8.6.3	 not make any modifications to the Equipment except with the prior express consent of BCL; 

  

	8.6.4 	comply with the terms of any warranty provided by the manufacturer of the Equipment; 

  

	8.6.5	 in consideration of the engineering support element of the Management and Technical Support Charge provide standard day to day maintenance for the Equipment fully in
accordance with the service schedule and instructions laid down by the manufacturer and using only replacement parts approved by the manufacturer or BCL. Such parts shall, following prior approval by BCL, be ordered and fitted by Custom but the cost
of such parts shall be reimbursed by BCL without mark-up. In the event of any serious malfunction or breakdown of the Equipment, Custom shall forthwith inform BCL and BCL shall arrange and bear the cost of any repairs, unless caused by any default
of Custom, in which case, Custom shall reimburse to BCL the full cost thereof; 

  

	8.6.6 	ensure that the Equipment remains at all times within the requirements of cGMP, any applicable approvals and adjusted and calibrated to meet the Specification;

  

	8.6.7 	not change, remove, or obscure any labels, plates, insignia, lettering or other markings on the Equipment. 

  

	8.7	In the event that this Agreement is terminated, BCL will be responsible for the cost of removing the Equipment and, save where termination is by reason of any default by Custom,
making good any damage to the Premises caused by such removal and removing the wall constructed around the wet mixing area marked in [red] on the plan attached at Schedule 1 and making good any damage to the floor caused by such removal.

  

	9.	FINANCIAL CONDITIONS 

  

	9.1	During the Fit Out Period, it is expressly agreed and acknowledged that BCL shall be liable to pay only for those items expressly set out in Clause 3 and/or the Development Plan.
All other costs (including without limitation all accommodation, overhead and staff costs save as otherwise expressly provided pursuant to Clause 3.9 or 7.3) shall be borne by Custom. 

  

	9.2	With effect from SOP, in consideration of the services provided hereunder, BCL undertakes to pay Custom during the continuation of this agreement the following:-

  

	9.2.1 The Accommodation	Charge; 

  

	9.2.2 The Servicing	and Maintenance Charge; 

  

	9.2.3 The Building	Maintenance Charge; 

  

	9.2.4 The Management	and Technical Support Charge; 

  

	9.2.5	 The Warehousing Charge; 

  

	9.2.6	 The Staffing Charge; 

  
 each as defined and calculated in accordance with Schedule 4 together, in each case, with a profit mark up of 30% of such amounts net of VAT (where
applicable). 
  

	9.3	 At the end of each calendar month, with effect from SOP, Custom shall invoice BCL for the full amount of such charges in respect of such month, together with the
relevant mark-up and the amount of any bills for the separately metered utilities in 

  

	 	 
relation to the Facility (the “Utility Charge”) paid by Custom during such month which shall be reimbursed at cost by BCL without mark-up.

  

	9.4	BCL shall pay such invoices no later than the last day of the month following that in which such invoice was delivered but shall be entitled to set off against such payment (if not
previously deducted by Custom) any shift rates to be reimbursed pursuant to Clauses 6.2.2 or 7.5.2 and/or payments in respect of late deliveries pursuant to Clause 6.4 together with any other sum which is in bona fide dispute between the parties.
The parties shall, in good faith seek to resolve any such dispute as quickly as practicable. 

  

	9.5	Save in the case of such permitted set offs, late payment shall bear interest at the rate of 2% over the base rate for the time being of the Bank of Scotland from the due date until
the date of payment in full inclusive. 

  

	9.6	All sums payable under this agreement are exclusive of VAT which shall where applicable be paid in addition at the rate in force at the due time for payment subject to the relevant
valid VAT invoice being issued. 

  

	10.	INTELLECTUAL PROPERTY RIGHTS 

  

	10.1	Notwithstanding the installation of the Equipment at the Facility, it is expressly agreed and acknowledged that all intellectual property rights of whatever nature in and to the
XGELTM System, and/or the Products shall remain the
property of BCL or its affiliates. BCL grants or shall procure the grant to Custom a licence free of charge to use the intellectual property rights to the extent required in order to manufacture the Products during the continuance and for the
purposes of this Agreement only. Custom expressly disclaims and waives any claim to any such intellectual property rights and undertakes to assign any interest therein which it may acquire to BCL (or as it may direct) forthwith upon request and
without charge. 

  

	10.2	To the extent that any improvements to such intellectual property are developed by Custom, Custom shall grant to BCL and to such other affiliates of BCL as BCL may specify from time
to time, a fully paid, royalty free irrevocable licence to use and to sublicense such improvements; where such improvements are not severable from such intellectual property, such licence shall be exclusive. 

  

	10.3	Custom shall not, at any time, whether during the continuance of this Agreement or thereafter, without the prior written consent of BCL, utilise the intellectual property rights,
produce the Products or make any use whatever of the Equipment for any purpose other than production of Products for delivery as BCL shall direct. 

  

	11.	INSURANCE 

  

	11.1	Without limiting Custom’s responsibilities, liabilities or obligations under this Agreement, Custom shall be responsible for arranging and maintaining in force for the duration
of this Agreement insurances as follows: 

  

	11.1.1	All risks of physical loss of or damage to the Equipment, the Raw Materials or the Products while in the custody or control of Custom for their full replacement value.

  

	11.1.2	Public liability with a limit of £5,000,000 on any one event (limit shall not apply in cases of gross negligence or wilful misconduct). 

  

	11.1.3	Product liability during the continuance of this Agreement and for not less than 6 years following its termination in respect of Products delivered hereunder with minimum limits of
£1,000,000 per occurrence and £5,000,000 in the aggregate 

  

	11.2	Custom shall, upon request, provide to BCL copies of or full details of such insurance and evidence of the due payment of premiums. On the renewal of each policy Custom shall
promptly send a copy of the premium receipt to BCL. 

  

	11.3	Custom shall ensure that the appropriate noting of BCL’ interest has been recorded on the policies or a generic interest clause has been included. 

  

	11.4	Custom shall at all times during the term of this Agreement and for a period of 6 years thereafter; 

  

	11.4.1	administer the insurance policies and Custom’s relationship with its insurers at all times to preserve the benefits for BCL set out in this Agreement; 

 

	11.4.2 	do nothing to invalidate any such insurance policy or to prejudice BCL’s entitlement thereunder; 

  

	11.4.3 	procure that the terms of such policies shall not be altered in such a way as to diminish the benefit to BCL, 

  

	11.4.4 	deal with all claims arising in respect of losses involving BCL in consultation with BCL, provide to BCL copies of all correspondence in relation thereto and comply with all
reasonable instructions of BCL in relation to such claims 

  

	12.	RESTRICTIONS 

  

	12.1	Custom recognises that, to enable it to produce the Products hereunder, BCL will be providing to Custom extensive proprietary know how in relation to the production of film coatings
for pharmaceutical products. In order to protect such know how, Custom agrees that it will not, during the continuance of this Agreement, enter into any arrangement for the production of film for pharmaceutical coatings for any other company engaged
in the production or development of such films without the prior written consent of BCL. For the avoidance of doubt, nothing herein shall prevent Custom from continuing to use coatings supplied by third parties to carry out film, enteric or sugar
coating of third party products. 

  

	13.	FORCE MAJEURE 

  

	13.1	Subject to due compliance with sub-clauses 13.2. and 13.3, neither party shall be liable to the other for any delay or non-performance of its obligations under this Agreement
arising from any cause or causes beyond its reasonable control including, without limitation, any of the following: act of God, governmental act, war, fire, flood, explosion, or civil commotion. 

  

	13.2	In the event of either party being so delayed or prevented from performing its obligations such party shall: 

  

	13.2.1	give notice in writing of such delay or prevention to the other party as soon as reasonably possible stating the commencement date and extent of such delay or prevention, the cause
thereof and its estimated duration; 

  

	13.2.2	use all reasonable endeavours to mitigate the effects of such delay or prevention upon the performance of its obligations under this Agreement; and 

  

	13.2.3	resume performance of its obligations as soon as reasonably possible after the removal of the cause of the delay or prevention. 

  

	13.3	Custom will not be entitled to claim it is delayed or affected by a cause beyond its reasonable control if the cause in question is one which a reasonable manufacturer or provider
of the relevant services should have foreseen and provided for, nor shall it be so entitled unless it has performed and continued to perform to the best of its ability, all of its obligations under this Agreement. 

  

	13.4	If Custom is prevented from performing its obligations by an event of force majeure for more than four weeks, BCL may terminate this Agreement by notice to Custom and for the
purposes of clause 14 such termination shall be deemed to be for cause. 

  

	14.	TERMINATION 

  

	14.1	Either party shall have the right to terminate this Agreement by notice in writing if the other party shall: 

  

	14.1.1	commit a material breach of this Agreement which, if remediable, is not remedied within 30 days of receipt of a notice specifying the nature of such breach and the steps required to
remedy it; or 

  

	14.1.2	have a receiver or administrative receiver appointed over it or any part of its undertaking or assets or pass a resolution for winding up (otherwise than for the purposes of a bona
fide scheme of solvent amalgamation or reconstruction) or a court of competent jurisdiction shall make an order to such effect or become subject to an administration order or enter into any voluntary arrangement with its creditors, fail or become
unable to pay its debts as they fall due or cease or threaten to cease carrying on its business; or 

  

	14.2	BCL shall, in addition, have the right to terminate this Agreement 

  

	14.2.1	in the event of there being any change in the effective management or voting control of Custom which shall not be have been approved in writing by BCL prior to such change of
control; or 

  

	14.2.2	any competent authority shall cancel or withdraw any approval or authorisation required by Clause 3.6 and Custom shall not procure that such approval or authorisation is reinstated
within the time limit specified by the authority concerned. 

  

	15.	CONSEQUENCES OF TERMINATION 

  

	15.1	 On or, where practicable, before the termination of this Agreement, howsoever arising, the parties shall co-operate fully in good faith to agree on a termination
plan and to implement the same which shall specify such measures as are necessary to ensure an orderly transfer of production of the Products to an internal department of BCL or to such other person as BCL may nominate. The termination plan shall

  

	 	 
specify such measures as are necessary to ensure, as far as is possible, that there is no substantial disruption of the production of the Products for BCL
occasioned by the transfer. 

  

	15.2	The parties shall, in any event, upon termination, however occurring, comply with the obligations set out below. 

  

	15.2.1	Custom shall allow BCL to remove without delay the Equipment, any remaining stocks of Raw Materials or finished Products and such other of BCL’s assets which are located at the
Premises and shall provide BCL with all reasonable assistance in relation to such removal at no cost to BCL. Until such removal shall have taken place, Custom shall, notwithstanding termination, continue to be responsible for the completion of any
orders remaining unfulfilled as at the time of termination unless instructed to the contrary by BCL 

  

	15.2.2	If by operation of law (including by virtue of the Transfer of Undertakings (Protection of Employment) Regulations 1981, as amended) the contract of employment of any Custom
employee shall be transferred to BCL, Custom shall (save to the extent that prior to the termination of this Agreement BCL has identified any such employee as a person whom BCL wishes to employ following such termination) indemnify and keep BCL
indemnified against all losses, claims, liabilities and expenses arising out of or in connection with any claim or liability for redundancy or unfair dismissal or otherwise in respect of any such employee (including the cost of salary and all
benefits and National Insurance contributions payable to or in respect of any such employee which BCL shall incur in relation to such employee) provided BCL shall terminate the contract of employment of such employee as soon as reasonably
practicable after becoming aware of such transfer of employment and, in any event, no later than 3 months following the date of termination hereof. 

  

	15.2.3	 Custom will promptly after the Termination Date deliver up to BCL all materials supplied by BCL incorporating any confidential information of, or relative to, BCL
its products, business or customers and all copies thereof and destroy or erase any confidential information of, or relative to BCL contained in any materials prepared by or on behalf of Custom or recorded in any memory device and within 30 days

  

	 	 
after the Termination Date Custom will certify in writing to BCL that it has fully complied with its obligations under this clause.

  

	15.2.4	If this Agreement terminates by reason of the default of Custom prior to the expiry of the Initial Term, Custom shall reimburse to BCL the unamortized proportion of any sums paid by
BCL pursuant to the Development Plan in respect of the fit out of the Facility or the Premises (not including the provision of the Equipment but including any sums in respect of agreed drainage works paid prior to the date hereof as referred to in
Clause 3.4.). Such sums shall be deemed amortized on a straight line basis over the full period of the Initial Term and the unamortized proportion shall be calculated pro rata on a day to day basis. 

  

	15.3	Termination of this Agreement, for whatever reason, will not affect any accrued rights or liabilities of either Party or payments due nor will it affect the coming into force or the
continuance in force of any provision of this Agreement which is expressly or by implication intended to come into or continue in force on or after such termination. 

  

	16.	CONFIDENTIALITY AND ANNOUNCEMENTS 

  

	16.1	Each of the parties undertakes to the other to keep confidential the terms of this Agreement and all information that they have acquired about the Facility and each other’s
business or operations and to use the information only for the purposes contemplated by this Agreement. 

  

	16.2	Custom undertakes that it will procure that each employee involved in the production of the Products will enter into a confidentiality agreement in such form as BCL may reasonably
require pursuant to which they will undertake not to disclose any confidential information concerning the XGELTM System, the Products or the Equipment. 

  

	16.3	A party does not have to keep confidential or to restrict its use of: 

  

	16.3.1	information that is or becomes public knowledge other than as a direct or indirect result of a breach of this Agreement; or 

  

	16.3.2	information that it receives from a source not connected with the party to whom the duty of confidence is owed that it has acquired free from any obligation of confidence to any
other person. 

  

	16.4	Any party may disclose any information that it is otherwise required to keep confidential under this clause 16 

  

	16.4.1	to such professional advisers, consultants and employees or officers of its Group as are reasonably necessary to advise on this agreement, or to facilitate the installation and
operation of the Equipment, provided that the disclosing party procures that the people to whom the information is disclosed keep it confidential as if they were that party; or 

  

	16.4.2	to the extent that the disclosure is required by law or by a regulatory body, taxation authority or securities exchange; or 

  

	16.4.3	to protect the disclosing party’s interest in any legal proceedings, but shall use reasonable endeavours to consult the other parties and to take into account any reasonable
requests they may have in relation to the disclosure before making it. 

  

	16.5	Each party shall supply the other party with any information about itself or this Agreement as such other party may reasonably require for the purposes of satisfying the
requirements of a law, regulatory body or securities exchange to which such other party is subject. 

  

	16.6	Custom shall, at all times, maintain prominently displayed on the exterior of the Facility and in the reception area of the Premises notices in a format, size and wording approved
by BCL announcing the production of XGELTM Film on
behalf of BCL subject to any necessary Landlord or planning authority approval. Custom shall not otherwise make any announcement or public comment in respect of its relationship with BCL in any form or medium without the prior written approval of
BCL. 

  

	17.	FURTHER ASSURANCE 

  

	17.1	Each party shall (at that party’s expense) promptly execute and deliver all such documents, and do all such things, as the other party may from time to time reasonably require
for the purpose of giving full effect to the provisions of this Agreement. 

  

	18.	VARIATION AND WAIVER 

  

	18.1	No delay in exercising or enforcing, failure to exercise or enforce or partial, single or defective exercise or enforcement of any right, remedy, power or privilege given to any
party by or pursuant to this Agreement or by law and no custom or practice of any of the parties at variance with the terms of this Agreement shall constitute or be construed as constituting a waiver or partial waiver by any of the parties of any
right, remedy, power or privilege, nor shall it operate to prevent the exercise or enforcement of any right, remedy, power or privilege at any subsequent time. 

  

	18.2	A party seeking to waive any right, power or privilege shall give notice of waiver in writing signed by a duly authorised representative of that party to the other party.

  

	19.	DISPUTE RESOLUTION 

  

	19.1	If a dispute arises between the parties with regard to this Agreement, the parties shall try in good faith to negotiate a settlement. If the dispute is not resolved, the matter
shall be referred, 

  

	19.1.1	if in relation to financial matters to an accountant agreed between the parties, or in the absence of agreement, and on the application of either party, appointed by the President
of the Institute of Chartered Accountants in England and Wales; or, 

  

	19.1.2	if in respect of technical matters to such party as may be agreed between the parties or, in the absence of agreement and on the application of either party appointed by the
President of the Pharmaceutical Society of Great Britain. 

  

	19.2	The person agreed, or so appointed (the “Expert”), shall act as expert and not as arbiter and his decision shall be final and binding on both parties. Each party will
co-operate fully with the Expert and produce to the Expert forthwith upon request such information and/or documentation as he may reasonably request in connection with the dispute. The Expert’s costs and expenses shall be borne in such
proportions as the Expert determines, or, failing which, equally between the parties. 

  

	20.	ACCOUNTING RECORDS 

  

	20.1	 Custom will keep full and accurate batch records showing input, output and wastage of Raw Materials together with full and accurate records of each element of the
costs payable to Custom hereunder pursuant to Clause 9. Such records to be 

  

	 	 
in sufficient detail to enable such usage and/or costs to be accurately determined in accordance with Custom’s standard accounting practices. Custom
shall, upon request, provide BCL or its duly authorised representatives access to such records at any reasonable time during normal office hours. Custom will, in addition, permit its books and records to be examined twice a year to the extent
necessary to verify such usage and/or costs of production, such examination to be made at the expense of BCL by an independent auditor appointed by BCL who shall report to BCL only the relevant details of such costs for the period under examination.
If any examination reveals wastage of Raw Materials is materially above the levels agreed as standard or that BCL has been charged by Custom more than the sum of such costs plus the relevant mark-up (where applicable) for the period being examined,
the auditor shall promptly notify both BCL and Custom of the perceived discrepancy together with the auditor’s detailing of the asserted discrepancy. At the request of either party, any such discrepancy perceived in the auditor’s report
shall be the subject of a prompt meeting between BCL and Custom at which meeting the parties shall discuss the purported discrepancy and attempt to resolve any dispute concerning it. If any examination reveals that BCL overpaid sums due to Custom
under this Agreement as to the period being examined by more than two percent (2%) of the amount that was payable for such period, then Custom shall pay the cost of the auditor’s examination of the books and records. If BCL and Custom shall be
unable to resolve the dispute, then at the request of either party it shall be dealt with in accordance with the provisions of Clause 19. 

  

	21.	GENERAL 

  

	21.1	Except as provided otherwise in this Agreement, no party may assign subcontract, or grant any Encumbrance or security interest over, any of its rights under this Agreement or any
document referred to in it. 

  

	21.2	This Agreement, and any documents referred to in it, constitute the whole agreement between the parties and (save in the case of fraudulent misrepresentation) supersede any
arrangements, understanding or previous agreement between them relating to the subject matter they cover. 

  

	21.3	If any provision of this Agreement (or part of a provision) is found by any court or administrative body of competent jurisdiction to be invalid, unenforceable or illegal, the other
provisions shall remain in force. 

  

	21.4	If any invalid, unenforceable or illegal provision would be valid, enforceable or legal if some part of it were deleted, the provision shall apply with whatever modification is
necessary to give effect to the commercial intention of the parties. 

  

	21.5	This Agreement and the documents referred to in it are made for the benefit of the parties and their successors and permitted assigns and are not intended to benefit, or be
enforceable by, anyone else. 

  

	21.6	Where this Agreement refers to the consent or approval of BCL, such consent or approval shall not be valid unless given by a director of BCL or a person duly authorized in writing
by BCL to give such consent or approval from time to time. 

  

	21.7	Other than as explicitly stated in this Agreement, this Agreement shall not constitute or imply any partnership, joint venture, agency, fiduciary relationship or other relationship
between the parties other than the contractual relationship expressly provided for in this Agreement. Save as otherwise expressly provided herein, Custom shall not enter into commitments on behalf of BCL or pledge the credit of BCL in any way nor
purport or hold itself out as authorized to bind or pledge the credit of BCL. 

  

	21.8	This Agreement is not intended to give rise to any landlord and tenant relationship nor shall there be any deemed sharing of possession of the Premises or Facility

  

	21.9	This Agreement may be executed in any number of counterparts, each of which is an original and which together have the same effect as if each party had signed the same document.

  

	21.10	 Unless otherwise provided, all costs in connection with the negotiation, preparation, execution and performance of this Agreement, and any documents referred to in it, shall
be borne by the party that incurred the costs. 

  

	22.	NOTICES 

  

	22.1	 Any notice to be given under this Agreement shall be in writing and shall be delivered by hand or sent by pre-paid first class post or by facsimile (such facsimile
transmission notice to be confirmed by letter posted within twelve hours) to the 

  

	 	 
address of the other party set out in this Agreement or notified under the provisions of this clause 22. Any such notice shall be effective notice when
actually received. 

  

	22.2	Any notice shall be deemed to have been received 

  

	22.2.1	 if delivered by hand, on the date of delivery; 

  

	22.2.2	 if sent by pre-paid air mail post at the end of the second Business Day after posting, including the day of posting if a Business Day; 

  

	22.2.3	 if sent by facsimile on the expiration of 12 hours after dispatch or on commencement of the Business Day following dispatch, whichever is the later, provided that a letter of
confirmation was posted within 12 hours. 

  

	23.	GOVERNING LAW AND JURISDICTION 

  

	23.1	This Agreement and any disputes or claims arising out of or in connection with its subject matter are governed by and construed in accordance with the law of England.

  

	23.2	The parties irrevocably agree that the courts of England have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this Agreement.

  
 IN WITNESS whereof the parties hereto have executed this
deed on the date first mentioned above. 
  

					
	SIGNED by	  	)  	  	/s/ Graham Hind
	for and on behalf of	  	)  	  	 
	BIOCUSTOM LIMITED	  	)  	  	 
			
	SIGNED by	  	)  	  	/s/ Illegible
	for and on behalf of	  	)  	  	 
	CUSTOM PHARMACEUTICALS LIMITED	  	)  	  	 

  

 SCHEDULE 1 
 DEVELOPMENT PLAN 
  
 Custom
Pharmaceuticals undertakes to manage the installation and supervise the activities of the nominated sub-contractors who will carry out the works as set out below in the area shown on the attached plans, to establish a stand alone facility, in which
Custom Pharmaceuticals will be able to meet the production requirements of BCL to produce its Xgel film products to the required standards. 
  
 All main utilities to be available at required input levels – electricity, gas and water- to be upgraded as required 
  
 Existing Mezzanine Floor to be extended and increased in height to accommodate BCL”s
equipment. 
  
 Ensure an allowance for support and strengthening for up to a total
of 4 mix and run tanks on mezzanine 
  
 Erection of additional cubicle
partitioning to accommodate the film casting line 
  
 Erect additional
partitioning to create a suitable liquid mixing area 
  
 Provide specific staff
changing facilities for BCL staff 
  
 Construct external plant room to house gas
boilers 
  
 Install suitable drainage in production cubicle and mixing areas

  
 Reception area modifications /Meeting rooms and BCL office 
  
 Install suitable lighting in both production and mixing areas 
  
 Install specific ceilings for production and mixing areas 
  
 Supply additional service supplies, including electrical and compressed air, to production
and mixing area 
  
 Floors to be finished to required standards 
  
 Stainless steel sinks to be installed in wet/mixing areas 
  
 Steam distribution to line and mixing/run tank areas plus controls 
  
 Condensate pipework/pumps etc 
  
 Chilled water distribution to line and mixing/run tanks 
  

 SCHEDULE 2 
 SPECIFICATION 
  
 (To be Agreed) 
  

 SCHEDULE 3 
 KEY PERSONNEL 
  
 1 x
Engineer/Supervisor 
 1 x Liquid manufacturing operator 
 1 x
QC/In process technician 
 2 x Machine Operators 
  

 SCHEDULE 4 
 FEES 
  
 The various charges payable
pursuant to Clause 9 shall be calculated as follows:- 
  

	1	The Accommodation Charge 

  
 The Facility occupies approximately 20% of the total area of the Premises. BCL shall therefore, with effect from the date of SOP pay to Custom during the continuance of
this Agreement a sum equivalent to 20% of the following costs as actually incurred by Custom in relation to the Premises or activities therein 
  

				
	 Cost Element

	  	Anticipated Full Yr
Cost to BCL as at SOP
(20% of actual cost)

	 Rent
	  	£	48,000
	 Rates
	  	£	22,680
	 Landlord Service Charge
	  	£	3,126
	 Buildings Insurance
	  	£	1,500
	 	  	
	

	 Total
	  	£	75,306
	 	  	
	

  
 With effect from SOP the monthly
Accommodation Charge shall be 1/12 of the above total (£6,275.50) which shall be paid monthly in arrears in accordance with Clause 9. 
  
 The monthly Accommodation Charge shall only be reviewed if the actual cost to Custom of any of the above elements shall be changed, in which case the relevant element
shall be increased or decreased , with effect from the month following that in which the change takes effect, to a sum equivalent to 1/12 of 20% of the new total annual cost to Custom of the relevant element (demonstrated on an open book basis) save
in the case of any increase in insurance costs caused by the installation of the Equipment which shall be dealt with in accordance with Paragraph 9 of this Schedule. Custom shall inform BCL so soon as practicable of any proposal to change the cost
of any of the above elements 
  

	2	Servicing and Maintenance Charge 

  
 BCL shall reimburse to Custom the actual cost to Custom (demonstrated on an open book basis) of the following incurred in relation to the Facility or the Products only
(as appropriate). 
  
 Supply of parts for the Servicing and Maintenance of the
Equipment 
  
 Cost of Consumables - packaging, tape boxes, stretch wrap and
pallets 
  
 Custom shall agree any such expenditure with BCL in advance and shall
provide to BCL, at the end of each month, a fully itemised invoice in respect of all such expenditure incurred during such month together with copies of all third party invoices if so requested by BCL. 
  

	3	The Building Maintenance Charge 

  
 The parties acknowledge that over the term of this Agreement it may be necessary to carry out maintenance work in respect of the Premises. Custom shall consult with BCL
provide full details of any works proposed to BCL prior to commencement. If Custom wishes BCL to reimburse any part of the costs thereof, it shall not commence any such works without the prior written approval of BCL. 
  
 Subject to such approval, Custom shall be entitled to invoice to BCL 20% of the actual cost
to Custom of such works (demonstrated on an open book basis) in such instalments as the parties shall have agreed. 
  

	4	The Management and Technical Support Charge 

  
 BCL agree to pay Custom the following annual charges for the management and technical support required to run the BCL facility. The duties to be carried out by Custom in
respect of these charges are set out in detail in Schedule 7. 
  

				
	 Quality Assurance , Quality control management, MHRA licencing
	  	£	62,000
	 Engineering Support
	  	£	35,000
	 Production management
	  	£	15,000
	 Accountancy, planning, purchasing goods handling, administration, finance, Senior management supervision
	  	£	89,000
	 	  	
	

	 total annual charge
	  	£	201,000

  
 With effect from SOP, BCL shall pay to
Custom monthly in arrears (in accordance with Clause 9) 1/12 of the total annual charge (£16,750 per month). The annual and monthly charges shall remain fixed until 31 December 2006. 
  
 No later than 3 months prior to December 31 2006 the parties shall meet to discuss , in good
faith, any amendments to the Annual Charge to apply for the period following such date. 
  

	5	The Warehousing Charge 

  
 The Warehousing Charge to be invoiced by Custom at the end of each month shall be the agreed Pallet Charge for the number of pallet spaces actually used during such
month. 
  
 As from SOP the Pallet Charge at the Premises shall be set at a sum per
Pallet per week agreed in accordance with the principles to be set out in Schedule 8. It is agreed and acknowledged that, where BCL agrees that pallet spaces may be provided at alternative premises, the relevant Pallet Charge shall be as agreed by
BCL in advance to reflect the actual pallet charges charged to Custom for such alternative location. The Pallet Charge, whether at the Premises or otherwise, shall include all costs in relation to the storage and 

  

 
handling of the Raw Materials and Products within the Premises other than actual production including (without limitation) the cost of inventory control, the
annual stock take, picking for use or dispatch, receipt and unloading of Raw Materials and loading of Products for dispatch and all movements within the Premises. 
  
 The rate for Pallet Charges at the Premises agreed pursuant to Schedule 8 shall be fixed until 31 December 2006. No later than 3 months
prior to 31 December 2006, Custom shall carry out a benchmarking exercise in accordance with Schedule 8 or such other format as the parties may agree to ascertain the market rate for storage of pallets of equivalent products and the parties will
negotiate in good faith a revised Pallet Charge to reflect such market rate. 
  

	6	The Staffing Charge 

  
 The staffing charge shall be the sum required to reimburse Custom in full for the salaries, national insurance and other agreed benefits (including any pre agreed
overtime and/or bonuses) paid to the Key Personnel each month together with the cost of any pre-agreed temporary workers utilised , all of which shall be charged in arrears at the end of the month in which such staffing costs were incurred.

  
 The initial annual salaries on which such costs are to be based shall be those
actually agreed at the time the relevant member of the Key Personnel is appointed with the approval of BCL. Custom shall not increase such salaries without the prior written approval of BCL, such approval not to be unreasonably withheld to any rate
of increase the same as that offered to other equivalent staff employed by Custom at the Premises for Custom’s own business. 
  
 The relevant annual salary and NI costs and benefits for each of the Key Personnel shall be divided by 234 (4.5 shifts per week x 52 weeks per year) to establish a
standard shift rate for each member of the Key Personnel. Custom shall deduct from the Staffing Charge for each month (prior to the calculation of any mark up pursuant to Clause 9 so that the mark up is only paid on the net sum) the standard shift
rate for each of the Key Personnel, for each shift for which such person was released by BCL for other duties pursuant to Clause 7.5 or was engaged in replacing defective Products pursuant to Clause 6.2 during such month. 
  

	7	Custom Profit Element 

  
 In accordance with clause 9.2, Custom shall be entitled to add an agreed 30% profit element to invoices for each of the following charges only: 
  
 Staffing Charge (6) 
 Accommodation Charge (1) 
 Building Maintenance (3) 
 Management and Technical Support Charges (4) 
  

	8	Utility Charges 

  
 Custom undertake to meter and accurately record the actual monthly usage of Electricity, Gas and Water in respect of the Facility. These will be invoiced to BCL monthly
at cost with no additional Custom mark up. 
  

	9	Insurance of the Equipment Raw Materials and Products 

  
 Without prejudice to the liability of Custom in respect of any loss or damage to the Equipment, Raw Materials or Products while in its custody or control, Custom shall be
entitled to charge to BCL each year, with effect from SOP, any demonstrable increase in its buildings and contents insurance premium as a result of the extension of cover to include the following elements: 
  

	 	•	 	£1.6 million, being the estimated value of the Equipment (when installed); 

  

	 	•	 	£0.5 million in respect of stocks of Raw Materials and/or Products held on the Premises 

  

	 	•	 	Improvements to the Premises carried out on behalf of BCL 

  
 PROVIDED that such increment shall be line with standard commercial rates. While BCL shall bear 100% of such increase, BCL shall not bear any additional costs incurred as
a result of additional equipment installed by Custom at the Premises other than the Equipment or Custom’s own improvements to the Premises. Custom shall request its insurers to identify separately any increases in the base premium as a result
of the Equipment or such other equipment. Where, as a result of any act or default of Custom such insurance shall increase beyond normal commercial rates, any such increase shall be borne solely by Custom. 
  

 SCHEDULE 5 
 THE EQUIPMENT 
  
 (To be Agreed) 
  

 SCHEDULE 6 
 SITE ACCEPTANCE TEST PROTOCOL 
  
 (To be Agreed) 
  

 SCHEDULE 7 
 MANAGEMENT AND TECHNICAL SUPPORT SERVICES 
  
 Services Provided 
  
 QA/QC/MHRA

  
 Maintenance of MHRA Manufacturing Licence. 
 Production and maintenance of Standard Operating Procedures (SOP’s) 
 Maintenance and implementation of Quality systems. 
 Performance of regular internal self audits by QA. 
 Production of GMP deviation reports by QA. 
 Issue of Certificate of
Compliance (sign off of manufacturing batch runs). 
 In Process physical testing. 
 Attending annual QA audits, one per customer. 
  
 Production Management 
  
 Production and maintenance of Batch
Manufacturing Records (BMR’s). 
 Management of Human Resources. 
 Health and Safety training. 
 Job training. 
  
 Engineering Support 
  
 Planned and Preventative maintenance on MAINBOS. 
 Additional engineering support. 
 Health & Safety Inspections. 
  
 Administration 
  
 Maintenance, control and reporting of stocks. 
 Purchasing functions. 
 Production planning functions. 
 Costing reports & setting production
standards. 
 Production efficiency reports. 
 Customer services.

 Senior management time. 
 Accounting services. 
 Creation of manufacturing specifications. 
  

 SCHEDULE 8 
 WAREHOUSING COST CRITERIA 
  
 (To be Agreed)

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