COMMERCIAL SUPPLY (MANUFACTURING SERVICES) AGREEMENT BETWEEN CMC ICOS Biologics, Inc. and Portola Pharmaceuticals, Inc.

    For the purposes of this Agreement, the terms defined in this Section shall have the respective meanings set forth below:

"Affiliate"

means any company, partnership or other entity which directly or indirectly through one or more intermediaries controls or is controlled by, or is under common control with a Party.  For the purpose of this definition control means the direct or indirect beneficial ownership of more than 50% of the voting share capital in such company, partnership or entity or the legal power to control the general management and policies of such company, partnership or entity;

"Agreement"

means this Agreement including all Appendices and any amendments to the foregoing made in accordance with this Agreement;

"Appendix" or "Appendices"

means one or more of the Appendices to this Agreement;

"Batch"

means the Product manufactured from harvesting a fermentation using the Cell Line at a specified operating scale that is processed through a single downstream purification into BDS according to the Master Batch Records and that is analytically tested according to the Specification that results in one (1) lot of BDS.  All references to Batches herein are to complete Batches and not to any partial Batches;

“Batch Price”

means the price payable for each Batch as initially described in the Appendix Two and as may be amended by agreement between the Parties or by operation of Section 6;

“Batch Record”

means the production record pertaining to a particular Batch filled out using the Master Batch Record as a template;

"Bulk Drug   Substance” or “BDS"

means the Product in bulk, as expressed by the Cell Line and harvested and purified in bulk from a fermentation run pursuant to the applicable Process;

"Business Day"

means any day which is not a Saturday, a Sunday or a public holiday in Seattle, Washington or San Francisco, California;

“Calendar Day”

means any day;

“Calendar Quarter”

means a 3-month period beginning on January 1, April 1, July 1, or October 1 of each year;

“Campaign”

means a series of Batches manufactured consecutively in accordance with the Process;

"Cell Line"

means the mammalian cell line expressing a recombinant Factor X analog coded as PRT064445;

"Certificate  of Analysis"

means CMC’s standard form certificate of analysis customized for the Product and agreed to by the Parties showing data and results to determine whether the Product meets the Specifications and such other criteria as identified on the certificate;

“Certificate of Compliance”

means CMC’s standard form certificate of compliance customized for the Product and agreed to by the Parties confirming that Product to which the certificate relates was manufactured in compliance with the requirement of the Specification, the Commercial Quality Agreement and all applicable laws and regulations, including cGMP;

"cGMP"

means all the then-current applicable standards for the manufacture of pharmaceutical products, pursuant to (a) the FD&C Act; (b) relevant United States regulations in Title 21 of the United States Code of Federal Regulations (including Parts 11, 210, and 211), as well as applicable guidance published by the FDA; (c) the EU good manufacturing practices set forth in the European Community directives 2003/94 EC 2001/83/EC as amended by 2004/27/EC and all relevant implementations of such directives and all relevant principles and guidelines including ICH Tripartite Guidance Q7A and Volume 4 of the Rules Governing Medicinal Products in the European Union: Medicinal Products for Human and Veterinary Use; (d) applicable quality guidelines promulgated under the International Conference on Harmonization (ICH); (e) the Ministry of Health Labor and Welfare GMP/GQP ordinances and accompanying regulations in Japan; and (f) all additional Regulatory Authority documents or regulations that replace, amend, modify, supplant or complement any of the foregoing;

“Change of Control”

means, in relation to a corporate body, the occurrence of an event or circumstance where a person or group (as such term is defined in the Securities Exchange Act of 1934, as amended) who is not presently able to do any of the following things becomes able to do one of the following things (whether directly or indirectly or through one or more intervening persons, companies or trusts):

(a)control the composition of more than one half of the body's board of directors;

(b)be in a position to cast, or control the casting of, more than one half of the maximum number of votes that might be cast at a general meeting of the members of the body; or

(c)hold or have a beneficial interest in more than one half of the issued share capital of the body;

"CMC Facility"

means CMC's cGMP compliant facility at Bothell, Washington known as the PF2 facility (the “PF2 Facility”) and an expansion of the existing PF2 Facility that will [*] and [*] (the “Expansion Facility”);

"CMC Intellectual Property Rights"

means CMC Patents and CMC Know-How;

"CMC Know-How"

means all information, techniques, processes, protocols, assays, analytics, data, results and other technical information owned or controlled by CMC or any of its Affiliates as of the Effective Date or at any time during the Term that are not of general public knowledge and that relate to the manufacturing of the Product under this Agreement by CMC;

“CMC Patents”

means all patents and patent applications owned or controlled by CMC or any of its Affiliates as of the Effective Date or at any time during the Term that cover (a) the manufacturing of the Product under this Agreement and/or (b) the process, assays, analytics and/or other technical information in connection therewith;

“CMC Release”

means completion of a Certificate of Analysis and Certificate of Compliance for a Batch made by CMC under the terms of this Agreement;  

"Commercial Quality Agreement" (QAg)”

means the agreement between the Parties defining the quality responsibilities, including cGMP standards, regarding the performance of the Services;

"Confidential Information"

means all proprietary information disclosed by, or on behalf of, the Disclosing Party to Recipient Party (each as defined in Section 10.1) relating to this Agreement and is either (a) identified as “confidential” at the time of disclosure or (b) the type of

information ordinarily identified as confidential, and includes:

(i)information disclosed in writing, orally or by any other means;

(ii)information disclosed before, after or on the date of this Agreement; and

(iii)information relating to the Disclosing Party’s operations, processes, plans, intentions, production information, know how, data, formulae, expertise, methodology, drawings, specifications, design rights, trade secrets, market opportunities and business affairs, and any new and novel combinations thereof,

the confidentiality and use of which is governed according to the provisions of Section 10.

The terms of this Agreement, the Existing Agreement and the Commercial Quality Agreement shall be deemed both Parties’ Confidential Information; and

All Process documentation, Specifications, Master Batch Record, Batch Records, issued Certificate of Analysis, Certificate of Compliance, Product-specific SOPs, and Drug History Record shall be deemed Customer’s Confidential Information.  All Process documentation, Master Batch Records, Batch Records, and Product-specific SOPs shall also be deemed CMC’s Confidential Information.

"Customer Intellectual Property Rights"

means Customer Patents and Customer Know-How;

"Customer Know-How"

means all information, techniques, processes, protocols, assays, analytics, data, results and other technical information owned or controlled by Customer that are necessary or reasonably useful in connection with the Cell Line, Customer Materials or Process which is not known to CMC or of general public knowledge;

“Customer Patents”

means all patents and patent applications owned or controlled by Customer that cover the Cell Line, Customer Materials or the Process;

"Customer Materials"

means the Cell Line, vectors, plasmids and any and all other materials and equipment supplied or made available to CMC by or on behalf of Customer including, without limitation, those

described in a Work Document and resins purchased by CMC for the Services (subject to any sums due to CMC for such resins);

"Deliverables"

means the data, results, reports and materials generated from the performance of the Services including Drug History Record and Product;

"Defect"

has the meaning in Section 6.12;

"Defect Notice"

has the meaning in Section 6.12;

“Delivery”

has the meaning set out in Section 6.9;

“Drug History Record”

means all lot disposition documentation relevant to a cGMP Batch to be provided to Customer with the Product from that cGMP Batch as described in a Work Document, including but not limited to Batch Records, Certificates of Analysis, Certificate of Compliance and analytical (raw) data.  CMC shall be the sole owner of all such documentation;

“EMA”

means European Medicines Agency, or its successor agency;

“Effective Date”

has the meaning in the recital;  

"Exceptional Batches"

has the meaning in Section 5.4;

"Expansion Batches"

means Batches to be manufactured at the Expansion Facility;

"FDA”

means the United States Food and Drug Administration, or its successor agency;

“Firm Order”

has the meaning set out in Section 5.3;

“Force Majeure Event”

means any cause beyond the reasonable control of the applicable Party, including, but not limited to, fires, earthquakes, floods, embargoes, wars, acts of war (whether war is declared or not), terrorist acts, insurrections, riots, civil commotion, strikes, lockouts or other labour disturbances, other substantial similar acts of nature, omissions or delays in acting by any administrative authority, government agency or other Party;

“Fundamental Change”

means [*] or [*].

"Group"

means, in respect of the relevant Party, its Affiliates and holding companies and the Affiliates of those holding companies;

"Joint Steering

Committee”

has the meaning set out in Section 4.10;

“Existing Agreement"

means the Development and Manufacturing Services Agreement by and between CMC and Customer, effective 18 March 2010;

“Latent Defect”

means a Defect in the BDS which cannot be ascertained during visual inspection of the BDS or review of the Batch Records;

“Master Batch Record”

means the formal set of instructions for production of the Product approved by Customer, which shall be owned by CMC;

"Non-Fault Delays"

has the meaning set out in Section 4.1;

"Objective"

means the desired outcome of the Services as described in a Work Document;

"Permitted Recipients"

means (a) the directors, officers, employees, Testing Laboratories or professional advisers of a Party or any its Affiliates who are required, on a strict need to know basis, in the course of their duties to receive and consider the Confidential Information for the purpose of enabling the relevant Party to perform its obligations under this Agreement; and (b) any actual and/or potential investors, collaborators, and/or acquirors of a Party of any of its Affiliates; provided that in each case of (a) and (b), such persons are under obligations of confidence no less onerous than those set out in Section 10 imposed on the recipient Party.

"PF2 Batches"

means Batches to be manufactured at the PF2 Facility;

"Process"

means the method for manufacture, harvesting and purification of the Product as defined in the Master Batch Records approved by Customer;

"Product"

means Customer’s proprietary biologics known as andexanet alfa manufactured in Batch form as Bulk Drug Substance;

"Project Manager”

has the meaning set out in Section 4.10;

"Project Team"

has the meaning set out in Section 4.11;

"Raw Materials"

means media, resins, catalysts, solvents, filters, membranes, disposable analytical test kits, disposable bags, and other items consumed for the manufacture of Products in accordance with this Agreement as well as any subcontracted analytical testing of the Products performed by Testing Laboratories during the

performance of the Services,

“Recall”

means any action to withdraw from supply or distribution or to recover title to or possession of quantities of Product sold or shipped to third parties (including, without limitation, the voluntary withdrawal of Product from the market or correction) or the detention or destruction of any Product by any regulatory authorities;

“Regulatory Obligations"

means those mandatory regulatory requirements applicable to the manufacture of cGMP Product for human use in Europe, the United States of America or Japan;

"Services"

means, collectively, any or all parts of the development and manufacturing services to be conducted by CMC as fully described in this Agreement or a Work Document;

"Shipping Guidelines"

means storage and transport guidelines according to the Commercial Quality Agreement in relation to the Product, which shall be owned by Customer and deemed Customer’s Confidential Information;

“Slot”

means, in respect of the CMC Facilities, the period of time such suite is reserved in preparation for and the performance of a Batch under this Agreement;

"Specification"

means the specification for the Product as defined in cGMP documentation or as may otherwise be agreed between the Parties, set forth in Appendix One, a Work Document, or modified in accordance with Section 4.8 which includes (i) physical and analytical testing and release requirements for BDS and Raw Materials, (ii) manufacturing, testing and packaging instructions for Product in accordance with the Process, (iii) storage and shipping requirements, and (iv) any other technical information necessary to manufacture a Batch;

"Standard"

means the reasonable professional standards and endeavours generally expected of a professional contract manufacturing organization;

"Standard Operating Procedures" or "SOPs"

means the standard operating procedures of CMC which define CMC's methods of performing activities applicable to the Services;

“Term”

means the term as defined in Section 14.1;

"Testing Laboratories"

means any third party instructed by CMC to carry out tests on the Cell Line, Raw Materials, Customer Materials, BDS and/or Product pursuant to and in connection with the performance of the Services, either (a) as set forth on Appendix Six hereto or (b) with the Customer’s prior written consent, which consent shall not be unreasonably withheld or delayed;

“Timeline”

means the dates for delivery of Product as set out in an Work Document or a Firm Order;

“Work Document”

means the Work Statement, Work Orders, and Interim Work Orders;

“Work Statement”

Means the Process Validation work known as the Core Validation and Supporting Validation Activities including Process Characterization, Phase III Clinical Manufacturing, Cleaning Validation, Mixing Validation and Process Validation of the process intended for Commercial Production of Customer’s PRM-151 which will be incorporated into this Agreement through the work statement described in Section 2.6.

“Work Order”

has the meaning set out in Section 2.7.

“[*]”

means: (a) [*] that result in [*] due to [*]; (b) [*]; and/or (c) [*].

In this Agreement (except where the context otherwise requires):

any reference to a recital, section or appendix is to the relevant recital, section or appendix of or to this Agreement and any reference to a sub-section or paragraph is to the relevant sub-section or paragraph of the section or appendix in which it appears;

the table of contents and section headings are included for convenience only and shall not affect the interpretation of this Agreement;

use of the singular includes the plural and vice versa and use of any gender includes the other genders;

any reference to "persons" includes natural persons, firms, partnerships, companies, corporations, associations, organizations, governments, states, governmental or state agencies, foundations and trusts (in each case whether or not having separate legal personality and irrespective of the jurisdiction in or under the law of which it was incorporated or exists);

a reference to a "Party" is a reference to a party to this Agreement and a reference to a "Party" includes a reference to that Party's successors in title, permitted assignees and transferees (if any) and in the case of an individual, to his or her estate and personal representatives;

a reference to "writing" does not include email, unless the Party receiving such email confirms the receipt of such email (which confirmation may be by email as  well);

any phrase introduced by the terms "including", "include", "in particular" or any similar expression shall be construed as illustrative and shall not limit the sense of the words preceding those terms.

   The Appendices form an integral part of this Agreement shall have effect as if set out in full in the body of this Agreement and any reference to this Agreement includes the Appendices.

Where the is any inconsistency between the Appendices and the main body of this Agreement, the conflicting terms of the main body of this Agreement shall, unless expressly specified to the contrary, prevail.

    During the Term CMC shall manufacture the Product in the quantity of Batches that are the subject of a Purchase Order pursuant to the forecast mechanism set out in Section 5 and in accordance with the terms, standards, Specifications, Timeline and requirements set out in this Agreement.  Customer shall purchase from CMC the Product in the quantity of Batches in accordance with the terms of this Agreement.

    CMC shall act diligently and shall apply the Standard in its performance of the Services and discharge of its obligations under this Agreement to undertake the Services.

  The Parties shall agree upon a Commercial Quality Agreement and the forms of Certificate of Analysis and Certificate of Compliance within ninety (90) days of the Effective Date.

CMC shall perform the Services in compliance with all applicable laws and regulations, including the applicable Regulatory Obligations and FDA guidelines. Without limiting the foregoing, where the relevant stage of the Services defines the performance of that stage to be in accordance with cGMP standards, then CMC shall comply with the applicable cGMP criteria for the performance of that stage and shall obtain the validation of the CMC Facilities to do so in accordance with the Work Statement.  Where applicable CMC shall comply with the obligatory requirements stipulated in the International Conference on Harmonisation guidelines on quality.  CMC shall be solely responsible for the maintenance and storage of the Raw Materials and any Customer Materials (including the Cell Banks) under appropriate conditions in compliance with cGMP requirements, and for the qualification of the Raw Materials and any Customer Materials prior to their use in the manufacturing process, in accordance with the Commercial Quality Agreement, Master Batch Record, SOPs, and the Specifications.  CMC shall retain and store samples of all cGMP Product released by CMC's quality department with a Certificate of Analysis and a Certificate of Compliance under this Agreement under appropriate conditions and for such period as may be required by applicable Regulatory Obligations, which in the absence of a definitive time period shall be [*].  If the Parties agree, CMC shall retain such samples for a longer period at the Customer's cost.

CMC may subcontract to its Affiliates, any Testing Laboratory or, with the prior written consent of Customer, any other third party; provided that CMC may not change the subcontracted party nor introduce a new subcontracted part(s) of the Services which may require Customer to update or amend any regulatory filings for the Product; provided further that, in any case CMC shall remain responsible for the activities of the subcontractor to whom that part(s) of the Services is subcontracted and shall enter into written agreement with such subcontractor and ensure that such subcontractor complies with the obligations under this Agreement applicable to such subcontractor’s activities (including without limitation confidentiality and non-use obligations, intellectual property assignment obligations, compliance and quality-related obligations and record keeping obligations and permission for access for audit by Customer).

Totality of Services

    Nothing in this Agreement shall affect the ongoing services being undertaken by CMC on behalf of Customer as of the Effective Date, pursuant to the Existing Agreement.  For clarity, however, this Agreement shall apply to all Batches and related services to be performed after the Effective Date, including the Work Orders executed by the Parties dated May 5, 2014 (Word Order 8) and May 18, 2014 (Work Order 115) (the “Interim Work Orders”) under the Existing Agreement. The Parties’ respective rights and obligations with respect to such Interim Work Orders shall be governed by the Existing Agreement prior to the Effective Date, and governed by this Agreement on and after the Effective Date.  Unless otherwise agreed in writing by the Parties, the Existing Agreement shall apply to all Batches and related services completed before the Effective Date, and this Agreement shall apply to all other Batches and related services.  The Parties acknowledge that the Services under this Agreement will include the Work Statement which will be incorporated into this Agreement after the Effective Date.  The Work Statement will cover core validation activities and supporting validation studies.  The Work Statement will not be effective unless and until it has been agreed to and signed by authorized representatives of both Parties.  If specified in the Work Statement, the Interim Work Orders will be replaced by the Work Statement.  

    Additional Services and Work Orders.  In addition to the Services described in the Work Statement, from time to time, Customer may wish to engage CMC to perform additional Services for Customer.  Such additional Services will be set forth in a work order(s) (the “Work Order”).  Each Work Order will be appended to this Agreement and will set forth the material terms for the project, and may include the scope of work, specified Services, Specifications, deliverables, timelines, milestones (if any), quantity, budget, payment schedule and such other details and special arrangements as are agreed to by the Parties with respect to the activities to be performed under such Work Order.  No Work Order will be effective unless and until it has been agreed to and signed by authorized representatives of both Parties.  Documents relating to the relevant project, including without limitation Specifications, proposals, quotations and any other relevant documentation, will be attachments to the applicable Work Order and incorporated in the Work Order by reference.  Each fully signed Work Order will be subject to the terms of this Agreement and will be incorporated herein and form part of this Agreement.  CMC will perform the Services specified in each fully signed Work Order, as amended by any applicable Change Order(s), and in accordance with the terms and conditions of such Work Order and this Agreement.  

Notwithstanding the foregoing, nothing in this Agreement will obligate either Party to enter into any Work Order under this Agreement.

Changes to Work Orders.  If the scope of work of the Work Statement, an Interim Work Order, or a Work Order changes then the Work Statement or applicable Work Order may be amended as provided in this Section 2.8.  If a required modification to the Work Statement or a Work Order is identified by Customer, or by CMC, the identifying Party will notify the other Party in writing as soon as reasonably possible.  CMC will provide Customer with a change order containing a description of the required modifications and their effect on the scope, fees and timelines specified in the Work Statement or Work Order (“Change Order”) and will use reasonable efforts to do so within [*] Business Days of receiving or providing such notice, as the case may be.  No Change Order will be effective unless and until it has been signed by authorized representatives of both parties.  If Customer does not approve such Change Order, and has not terminated the Work Statement or Work Order, but requests the Work Statement or Work Order to be amended to take into account the modification, then the parties will use reasonable efforts to agree on a Change Order that is mutually acceptable.  If practicable and permitted under applicable law, CMC will continue to work on the existing Work Statement or Work Order during any such negotiations, provided such efforts would facilitate the completion of the work envisioned in the proposed Change Order, but will not commence work in accordance with the Change Order until it is authorized in writing by Portola.

Timeline

CMC shall use commercially reasonable efforts to meet the Timeline set forth in each a Work Document or Firm Order as well as the Timeline set forth in Appendix Four.  Notwithstanding that obligation, the Parties acknowledge and agree that the Timeline may be varied as agreed by CMC and the Customer in order to accommodate delays or changes caused by or contributed to by (i) actions or omissions of the Customer (or its agents); (ii) additional activities added to the Services; (iii) CMC’s inability to procure Raw Materials despite its using the Standard to mitigate or minimize the possibility of such shortfall (through establishing secondary sources, stockpiling, adding lead time and the like), and/or (iv) Force Majeure Events (collectively, "Non-Fault Delays").  

CMC shall inform Customer in writing immediately ([*]) of any anticipated delays of more than [*] Calendar Days in the final shipment of any Batch, including Non-Fault Delays that it

determines in good faith are likely to occur. CMC shall use commercially reasonable efforts to mitigate and minimize any such anticipated or actual delays, including by increasing manufacturing activities in the CMC Facility.  If necessary, CMC shall update the Timeline as agreed with the Customer and, shall endeavour to keep the revised Timeline as close as possible to the Timeline in its form as it existed immediately prior to the Non-Fault Delays.  

    Notwithstanding Sections 18.5 and 18.6, the Timeline may be amended by agreement between CMC and Customer provided that the revised Timeline is set out in writing and agreed by the Project Team.

    Where the Timeline has been amended in accordance with this Section 4, it shall be automatically binding upon the Parties.  CMC shall keep Customer updated as to the current Timeline on a reasonable frequency.  Customer may at any time on a reasonable basis request an update on performance of the Service against the current Timeline.

PF2 Facility Timeline.  The Parties expect that the Chemistry, Manufacture and Control section for the PF2 Facility in the BLA for the Product (the “PF2 BLA”) will be ready for submission to the FDA by [*].

If the PF2 BLA is ready for submission to the FDA (“FDA Submission Ready”), on or before [*], then Customer and CMC shall [*] and [*].

If PF2 BLA is FDA Submission Ready before [*], then the total Batch Commitment for the last production year for the Expansion Facility shall be increased by [*].

If the PF2 BLA is not FDA Submission Ready by [*], then the total Batch Commitment for the Expansion Facility for the last production year shall be decreased by (a) [*] and (b) [*]. If the number of Batch reductions exceeds the number of batches in the final production year, then Batch reductions shall then be applied to immediately preceding year(s). In the event any delay in the PF2 BLA not being FDA Submission Ready results from [*], the calculation of the duration of any such delay shall [*] and [*].

If the PF2 BLA is not FDA Submission Ready by [*], then Portola may terminate this Agreement pursuant to Section 14.4.1.  In the event any delay in the PF2 BLA not being FDA Submission Ready results from [*], the calculation of the duration of any such delay shall [*] and [*].

Expansion Facility Timeline.  The Parties expect that the Expansion Facility will pass facility operational qualification by [*], and the Chemistry, Manufacture and Control section for the Expansion Facility in the supplemental BLA for the Product (the “Supplemental BLA”) will be ready for submission to the FDA by [*].

If the Expansion Facility does not pass facility operational qualification by [*], then the total Batch Commitment for the Expansion Facility shall be decreased by (a) [*] and (b) [*].

If the Supplemental BLA is FDA Submission Ready on or before [*], then Customer and CMC shall [*] and [*].

If the Supplemental BLA is FDA Submission Ready before [*], then the total Batch Commitment for the Expansion Facility for the last production year for the Expansion Facility shall be increased by [*].

If the Supplemental BLA is not FDA Submission Ready by [*], then the total Batch Commitment for the Expansion Facility for the last production year shall be decreased by (a) [*] and (b) [*].  If the number of Batch reductions exceeds the number of batches in the final production year, then Batch reductions shall then be applied to immediately preceding year(s).  In addition, in the event of any production shortfall in the Expansion Facility, upon Customer’s request, CMC shall manufacture additional Product in the PF2 Facility [*] at the Batch Price to compensate product short fall caused by such delay. In the event any delay in the Supplemental BLA not being FDA Submission Ready results from [*], the calculation of the duration of any such delay shall [*] and [*].

If the Supplemental BLA is not FDA Submission Ready by [*], then Portola may terminate this Agreement pursuant to Section 14.4.2. In the event any delay in the Supplemental BLA not being FDA Submission Ready results from [*], the calculation of the duration of any such delay shall [*] and [*].       

Specification & Quantities

CMC shall manufacture Product to meet Specification.

The Parties agree that the Specification may be modified and updated by the Parties if agreed to by the Project Team in writing and signed by an authorized Representative of both Parties, and neither Party shall unreasonably withhold, delay or condition its agreement to the extent any modification or update is required to meet Regulatory Obligations. For the avoidance of doubt, Product Specifications are expected to be revised prior to process validation runs, and may be further revised prior to or during the regulatory approval process, or during routine commercial manufacturing.  Revisions will be based on manufacturing history, assay history, assay changes and updates, process and product knowledge and regulatory requirements.  If changes to the Specification result in a material increase or decrease in costs for CMC, the Batch Price will be increased or decreased for the applicable increase or decrease in cost.

   The Parties have agreed to the yield range [*] as set forth in Appendix Three (each, a “Batch Yield Range”).  For clarity, the Parties acknowledge that [*].  

    Each Party shall, within [*] days of the Effective Date, appoint an individual as a project leader ("Project Manager") who shall be responsible for leading and co-ordinating the day to day operation of the Services.  In addition, within [*] days of the Effective Date, each Party shall select two or three of their senior executives (each a "Committee Member"), one of whom (for each Party) may be a Project Manager, to form the steering committee who shall

have responsibility for providing leadership and strategic oversight of the Services governed by this Agreement ("Joint Steering Committee").  

    Separate from the Joint Steering Committee, the Parties shall each name and notify the other of representatives (“Representatives”) who shall form a project team (the “Project Team”) that will be responsible for the day to day performance of the Services including planning, executing and discussing issues regarding the Timeline, the Services and communicating between the Parties.  Any disputes or issues that cannot be readily resolved by the Project Team shall be referred to the Joint Steering Committee for resolution.

    Each Party's Project Manager shall, subject to the oversight of the Joint Steering Committee, (i) manage the relationship between the Parties, (ii) oversee the performance of the Services and the activities of the Project Team, (iii) undertake actions delegated to them by the Joint Steering Committee and (iv) be the principal point of contact for the Services.  The Project Managers shall meet upon reasonable request either in person or by telephone or video conference and each Party shall bear its own costs for attending such meetings.

   The Joint Steering Committee shall be responsible for (i) making decisions regarding issues outside the scope of the Project Team or Project Managers, (ii) reviewing the decisions of the Project Team and/or Project Managers, (iii) providing a forum for the Parties to exchange information and coordinate their respective activities regarding the Services, (iv) providing a forum to discuss any technical difficulties or changes to Services or Batch Price triggered by a change to the Services or in accordance with Section 7.3 as well as resolving any disputes or disagreements before escalation to the dispute resolution provided for in Section 17, and (v) ensure that intent of this Agreement is maintained throughout the Term  The Joint Steering Committee shall meet on a reasonably regular basis during the Term, but in no event less frequently than once every three (3) months.

    At regular intervals (no less than twice every month during the two years starting on the Effective Date, and once per month thereafter) the Representatives shall schedule Project Team meetings for the purpose of overcoming any issues with delivery of Product or the performance of all other aspects of the Services and providing an initial forum for discussing and resolving any difficulties or hurdles encountered in the performance of the Services. Such meetings shall be conducted by telephone conference or, if necessary, by face-to-face meetings at an agreed frequency unless particular difficulties arise which dictate the need for more frequent meetings.  Each Party shall be responsible for their own costs in attending and conducting the Project Team meetings.  

    Any decision by the Project Team, the Project Managers or Joint Steering Committee which has the effect of amending the Services in any way must, before it becomes binding, be recorded in writing and signed by both Parties in accordance with Section 18.5 and 18.6.

(a) After the end of each calendar month, as soon as it is available but in any event within [*] days after the end of each calendar month, CMC shall provide to Customer [*], and [*], consisting of [*].

Batch Commitment

The minimum numbers of Expansion Batches that Customer is obligated to order and purchase from CMC, and CMC is obligated to CMC Release and sell to Customer in each calendar year are set forth in the payment schedule in Appendix Four (the “Batch Commitment”). The Batch Commitment is subject to increase and decrease as set forth in Sections 4.5 and 4.6.  In addition, in the event that (a) the [*] is delayed (in the aggregate) by more than [*] due to [*]; or (b) after the [*], the [*] is less than the [*], then Customer may increase or reduce the Batch Commitment with respect to particular years as set forth on Appendix Four [*] upon written notice to CMC, subject to reallocation due to applicable regulatory requirements, provided that:

For increases, the maximum number of Batches that can be CMC Released in one Calendar Quarter is [*], which will be reasonably spread over the Calendar Quarter.

The total Batch Commitment may not be reduced to less than [*] Batches in aggregate over the Term, subject to adjustment as set forth in Sections 4.5 or 4.6 hereto.

For reductions, the total Batches to be CMC Released in a Calendar Year shall not be less than [*] of the Batch Commitment for the applicable calendar year as set forth on Appendix Four.  

For the avoidance of doubt, the [*] and the determination of [*] in clause (a) above is determined on the basis that [*] pursuant to the terms of this Agreement.  

During the Term, within  [*] Calendar Days of the start of every Calendar Quarter, Customer shall provide CMC with a written or electronic purchase order for the number of Batches to be CMC Released in each month of the [*] full Calendar Quarter beginning after the date of

such order (each, a “Purchase Order”), in conformance with the total Batch Commitment for the Calendar Year during which such Calendar Quarter resides.  By way of example, Customer shall provide a Purchase Order on [*] that orders the number of Batches to be CMC Released during the Calendar Quarter beginning [*].  Each Purchase Order shall be in a form agreed upon by CMC and Customer as soon as practicable after the Effective Date.  No terms contained in any Purchase Order, order acknowledgment or similar document shall be construed to amend or modify the terms of this Agreement and in the event of any conflict, this Agreement shall prevail and control, unless the Parties otherwise expressly agree in writing by making reference to both this Agreement and the alternative terms.  

Within [*] Calendar Days after receiving each such Purchase Order, CMC shall confirm receipt and its acceptance of the Purchase Order, provided that CMC shall not reject any Purchase Order consistent with the Batch Commitment for the applicable Calendar Year and the maximum number of Batches to be CMC Released in any Calendar Quarter does not exceed [*] Batches unless otherwise approved by CMC.  Upon such acceptance, such Purchase Order shall become a “Firm Order.”  All Firm Orders shall be binding upon Customer and CMC and may not be revoked, adjusted or delayed by either Party without the express written consent of the other Party.

Notwithstanding anything to the contrary herein, CMC may, in response to Customer's written request, elect to manufacture additional Batches of Product for a Calendar Quarter beyond the quantity allocated in a Purchase Order for that same Calendar Quarter ("Exceptional Batches").  CMC's obligation to manufacture Exceptional Batches shall only arise upon CMC's written acceptance whereby the Exceptional Batches accepted by CMC shall be deemed part of the Purchase Order placed for the relevant Calendar Quarter(s).  The obligation to manufacture Exceptional Batches shall not alter any other obligations of the Parties herein, except that any Exceptional Batches accepted by CMC to be CMC Released in a particular Calendar Year shall count towards the Batch Commitment for such Calendar Year.

CMC shall be obligated to manufacture the quantity of Batches in any Firm Order and shall use the Standard to meet the Timeline for delivery of those Batches subject to the provisions of Section 4.1.  

    CMC shall use the Batch Commitments and Firm Orders to plan for and, as appropriate, reserve Slots in its cGMP manufacturing suite for those Batches to be manufactured according to the then current Timeline.  

Should CMC, when subject to a Firm Order, become aware that it will be unable to meet the Timeline for delivery of a Batch of Product or to manufacture a Batch of Product in accordance with such Firm Order, then CMC shall as soon as reasonably practicable notify Customer of such circumstances and explain what efforts CMC is taking to address such delay.  If Customer agrees that CMC is actually unable to supply Batch(es) of Product in accordance with such Firm Orders ("Supply Failure") then the following shall apply, without limiting Customer’s other rights under this Agreement:

CMC and Customer shall work collaboratively to discuss and find ways to promptly overcome the Supply Failure and re-establish supply of Product as soon as practicable in accordance with the contractual obligations of such Firm Orders.

Gross Margin and Next Gen Improvements.  [*]  If the gross margin of the Product manufactured using Next Gen Improvements is still less than [*], then Customer shall have the right to terminate this Agreement under Section 14.3.4.  

Implementation of Next Gen Improvements.  In addition to the Next Gen Improvements implementation procedures of Section 5.8, Customer may request that CMC adopt Next Gen Improvements at any time on the following terms: (a) The Next Gen Improvements shall be implemented pursuant to a Work Order to be agreed by the parties setting forth the scope of work and reimbursement to CMC in undertaking such effort; (b)  Batches produced with Next Gen Improvements shall count against the Batch Commitment and shall be purchased at the Batch prices set forth in Appendix Two, subject to the credits and other adjustments set forth in this Agreement; (c)  [*] shall be reestablished in the same manner as the establishment of [*] for the Expansion Facility as set forth in Appendix Three; (d) Credits from CMC to Customer in the event of Actual Yield shortfalls below the Lower Limit for Batches produced using Next Gen Improvements shall equal [*] per gram of shortfall. and additional payments from Customer to CMC in the event of Actual Yields in excess of the Upper Limit for Batches produced using such Next Gen Improvements shall equal [*] per gram of excess; and (e) The [*] for a Batch produced using the Next Gen Improvements shall be calculated by using the result obtained from the following formula:

Packaging

    All Cell Lines, Product and perishable Deliverables to be delivered shall be packaged by CMC in accordance with its applicable packaging SOPs, Master Batch Records, Commercial Quality Agreement, Regulatory Obligations and Work Documents.

    CMC shall provide Customer with advance notice of the anticipated date of CMC Release and, in any event, shall provide at least [*] advance notice of the date CMC is to Release Product to Customer or Customer's shipping company.

    Except as set out in Section 6.5 or in the Specifications or a Work Document, all Product that CMC manufactures pursuant to this Agreement shall be released by CMC in accordance with the Commercial Quality Agreement at CMC's Facilities at 9:00am on the date specified on CMC's notification to Customer that the Deliverables are available for collection.  

CMC shall not be responsible for or have an obligation to clear for export or import any Deliverables that CMC (or its sub-contractors) generates or manufactures pursuant to this Agreement. All Product manufactured under this Agreement, if CMC Released, shall be made available to Customer within [*] after the completion of the last manufacture step,

unless there is a deviation from conformance or Release For Further Processing as described in Section 6.6.

   CMC shall deliver [*] to Customer by mail or electronic mail to the address provided by Customer concurrent with the CMC Release of the applicable Batch of the Product.  Customer shall have the right to rely on such data, results and Drug History Records in its acceptance of the Batch and shall not be required to conduct independent testing to verify the accuracy thereof.  

   Subject to Regulatory Obligations and cGMP compliance, Customer may, by written notice, request that CMC Delivers Product to Customer prior to CMC issuing a Certificate of Analysis (“Release For Further Processing”).  Any Product that is the subject of Release For Further Processing shall until the applicable [*]

CMC shall deliver Product to Customer [*] (Incoterms 2010) – CMC Biologics’s loading dock, 220th St SE, Bothell, WA 98021, USA.

    Where Customer elects to have a shipping company or other agent ("Shipping Company") collect and transport the Product upon CMC Release, Customer shall, prior to the collection of the Product, inform CMC of its designated Shipping Company. Customer shall coordinate with such Shipping Company for the shipment of the Product and CMC shall not be responsible for any shipping costs of the Shipping Company. The Customer shall ensure that the Product is stored and transported in accordance with the Shipping Guidelines.

    Customer shall elect by providing CMC with written notification of the method of delivery, which delivery shall occur within [*] after the date of release and shall consist of one of the following (the “Delivery”): (a) collection at any time during normal business hours on Business Days or such other time as may be agreed by the Parties; or (b) storage of the Deliverables at CMC’s facility for a period of [*] after Delivery on behalf of Customer.  Title to the Deliverables shall transfer to the Customer [*].  Storage of Deliverables at CMC’s premises after Delivery shall be at CMC’s sole risk and liability and CMC shall be responsible for damage to the Deliverables to the extent any damage is caused during such storage solely by an act or omission of CMC.  If Deliverables have not been collected by Customer or Customer's shipping company [*] after Delivery, CMC shall notify Customer of the outstanding collection and any subsequent storage at CMC on behalf of Customer shall be at a cost to Customer of [*] which includes all costs required to insure and take due care of the stored Deliverables.

Customer may, prior to their Delivery, request that CMC arranges for preparation of Deliverables and storage prior to the Deliverables being transported to a location specified by Customer ("Alternative Site") subsequent to their Delivery. Where CMC agrees to such a request:

Customer shall provide CMC with all of the necessary export and import clearances, consents, permits and licenses to allow CMC to arrange transport of the Deliverables to the Alternative Site; and,

storage organized by CMC shall be at the CMC’s sole cost, risk and liability; and,

CMC shall, in the Customer's name and at the Customer's cost, insure the Deliverables until such time as they are transported to the Alternative Site.

    If Customer shall or intends to examine or test Deliverables and wishes to reserve its right to make a claim against CMC under this Section 6 in respect of defective Deliverables, Customer undertakes to ensure that the Deliverables since collection from CMC's Facility or transport to the Alternative Site are always stored and transported in accordance with the Shipping Guidelines.

    Following their Delivery, Customer shall promptly examine and test the Deliverables for any defect or non-conformity, including in the case of Product or BDS non-conformity with the Specifications and cGMP standards which Deliverables are specified to meet (a “Defect” or “Defective”).  Where any alleged Defect is identified, Customer shall notify CMC by written notice (“Defect Notice”) within [*] of Customer’s or its agent’s receipt of the last of the Deliverables for applicable Batch.  If Customer identifies a Latent Defect in a particular Batch within [*] after the Product from such Batch is first [*], Customer shall send CMC a Defect Notice with respect to such Latent Defect.  

    A Defect Notice must identify (i) the Deliverable and, in the case of Product, the Batch from which the Product was derived, (ii) the date(s) of Delivery and collection (or where the Deliverables are transported to the Alternative Site the date received at the Alternative Site), (iii) reasonable detail, including test results, of the Defect, (iv) where applicable full disclosure of the methodology of all analytical tests performed on the Deliverables and the results of those tests, and (v) confirmation that the Deliverables have been stored and transported in accordance with the applicable Shipping Guidelines while in Customer’s possession.  Customer shall arrange with CMC to return the Deliverables which are the subject of the Defect Notice in accordance with the Shipping Guidelines to CMC within [*] of notification.  If a Defect in any Deliverable is not notified to CMC in accordance with the provisions and time limits stipulated in Sections 6.12 and 6.13 the Deliverable shall be deemed accepted and free of Defect and Customer shall have no further remedy against CMC in respect of that Deliverable.

    Upon receipt of the Defect Notice CMC shall promptly investigate whether or not the Defect is due to CMC’s negligence or failure to comply with its obligations hereunder and shall report to Customer within [*] of receipt of the Defect Notice whether it accepts responsibility for the Defect in full, in part or not or not at all.  

   [*] for any Defective Deliverable hereunder, if a Defective Deliverable is solely due to CMC’s fault and not as a result of any Customer action or inaction, CMC shall replace the Defective Deliverables.  If the Parties cannot agree on the cause of the Defective Product for a period

of [*] after beginning discussions, then such dispute shall be determined by a mutually-agreed upon independent laboratory in accordance with the procedures in Section 6.16 hereto.  CMC shall not rework or reprocess any Product.  CMC shall, using its reasonable endeavours and as soon as reasonably practicable, having regard to its other obligations and commercial commitments to third parties in the timing of such replacement, replace such Defective Deliverables. However, manufacturing for replacement of Defective Deliverables shall be initiated [*] if outside of a Campaign or [*] if it occurs during a Campaign.  [*]

    If there is a dispute regarding whether or not a Deliverable is Defective ("Disputed Deliverable"), then (a) analysts from both parties will directly communicate to determine the Parties' respective methods of analysis are the same and are being executed in the same manner, and to attempt to determine whether any non-compliance may have been caused during the shipment of the sample from CMC's Facility, and (b) carefully controlled and split samples as agreed should be sent from one site to another for testing in an attempt to reach agreement (which may involve Customer sending a representative and a sample of the Disputed Deliverable to CMC, and the parties conducting jointly agreed upon tests on the Customer sample of the Disputed Deliverable and a sample of the Disputed Deliverable retained by CMC).  The parties will use good faith efforts for a period of [*] after completing such tests to resolve whether the Disputed Deliverable is Defective due to CMC's failure to manufacture in accordance with this Agreement.  In the event the parties cannot resolve their dispute in the manner described, a mutually agreed-upon independent laboratory shall be asked to test the Disputed Deliverable.  The costs of such independent laboratory shall be borne by the parties equally; provided, however, the Party that is determined to be incorrect in the dispute shall be responsible for all such reasonable costs and shall reimburse the correct Party for its share of such reasonable costs incurred.  The decision of such independent laboratory shall be in writing and shall be binding on both CMC and Customer.  With respect to all Product that Customer properly rejects, Customer shall destroy all remaining unused Product as soon as possible after CMC’s request.  In no event may Customer use any of the rejected Product for any human clinical testing or trials after it becomes aware of the basis for such rejection, and Customer shall indemnify CMC for all liabilities, costs and damages incurred by CMC resulting from Customer’s breach of this limitation on use.

   The Batch Price in Appendix Two is stipulated to be in U.S. Dollars and is exclusive of all taxes, duties, or other fees of whatever nature imposed by or under the authority of any State, government or public authority (other than taxes on CMC’s income), or any cost of resins or shipping and associated costs that CMC incurs to provide the Services, which Customer agrees to pay in addition to the Batch Price; provided, however, that the Batch Price includes costs for Raw Materials.

Batch Price stipulated in Appendix Two shall be adjusted for Batch yield outside of the Batch Yield Range in accordance with the methodology set forth in Appendix Three.

If there are any material and unforeseen changes in cGMP or manufacturing regulations promulgated pursuant to enabling legislation under a statute that:

are specific to the Product and not of general requirement for biologics contract manufacturing services; or

which result [*] under this Agreement [*] other than [*],

All invoices will be raised in U.S. dollars and Customer agrees to pay all sums due hereunder in U.S. dollars, in accordance with the invoice and payment schedule set forth in Appendix Four, subject to Customer’s right to dispute any invoice as set forth in Section 7.8. Any invoice submitted by CMC to Customer prior to the applicable date as set forth in Appendix Four shall be deemed invalid and no payment (or late payment interest charge) shall be due on such invalid invoice.  

    CMC will issue invoices in accordance with the provisions of Appendix Two.

    All invoices shall be paid by wire transfer to the following account:

Raw Material costs for resins will be invoiced to Customer on an item by item basis and will be reconciled in a timely manner, but at least once per quarter. [*] and Customer shall have no additional payment obligations with respect to such other Raw Material costs.

All invoice disputes will be notified by Customer to CMC in writing before the due date of the invoice in question.  If CMC agrees with such dispute, it shall reissue the invoice with the corresponding adjustment and Customer shall pay such invoice within [*] days after its receipt.  If CMC disagrees with such dispute, then the matter shall be resolved in accordance with the dispute resolution mechanism set forth in Article 17.  

All shipping costs for samples, and not for Batches, will be charged with a flat fee of [*] for domestic shipping destinations and [*] for international shipping destinations.

On or before July 2, 2014, Customer shall pay to CMC an upfront fee in the amount of ten million dollars ($10,000,000) (the “Prepayment Fee”), and on or before November 10, 2014, Customer shall pay to CMC a reservation fee in the amount of four million six hundred thousand dollars ($4,600,000) (the “Reservation Fee”).  The Prepayment Fee will be credited against Batch Price for Batches ordered in [*], and the Reservation Fee will be credited against Batch Price for Batches ordered in [*], as specified in Appendix 2.  At any point in time, the amounts of the Prepayment Fee and the Reservation Fee that have not been credited against a Batch as set forth in this Section 7.10 and Appendix Two are known as the Remaining Pre-payment (the “Remaining Pre-payment”)

If an invoice is not settled by Customer in full in accordance with this Agreement and after providing the Customer with [*] days prior written notice to settle such invoice, CMC may charge Customer, which Customer will pay, interest at a rate of the lesser of (i) [*] per month, or (ii) the maximum rate allowable by applicable law, on the undisputed sums overdue on a compounded basis until payment is received in full.

If Customer disputes an invoice or part thereof then Customer shall notify CMC in writing stating the basis of the dispute.  Customer and CMC will in good faith work towards resolving the dispute in no more than [*] days.  If a resolution cannot be agreed, then the executive sponsor from CMC and Customer will be given [*] days to resolve.

In the event that undisputed and unpaid amounts exceed [*], CMC may suspend the performance of the Services.  CMC will give [*] Business Days’ prior written notice to Customer before suspending such performance.  Where performance is suspended, CMC shall have no liability to Customer for such suspension or delay in the Timeline and the Batch Price for any Batches that are the subject of a Firm Order which are delayed or cancelled as a result of the suspension shall become due and payable by Customer.  

Where any payment, credit or refund is properly due to the Customer under this Agreement, the Customer can elect to:

have that amount refunded to it by CMC on [*] days notice; or

have that amount set-off against any further amount payable by the Customer under this Agreement or any future agreement the Parties enter into.

Where Customer elects to have an amount set-off against any further amount payable by the Customer under this Agreement and, subsequent to that credit, the Customer remains entitled to a payment, credit or refund, CMC shall refund that amount to the Customer within [*] Business Days of the Customer requesting CMC refund that amount.  

Work Statement.  Customer shall pay CMC for the Services performed under the Work Statement in accordance with the payment amount and schedule set forth therein.

    Customer shall be entitled, [*], to conduct one quality audit and one financial audit (a "Customer Audit") of CMC’s facility [*] in respect of Product manufacture, CMC’s financial statements and records relevant to the financial statements provided under Section 4.16 and CMC’s compliance with this Agreement.  A Customer Audit shall be arranged upon no less than [*] Business Days’ notice. Such audit can include review of supporting information used to invoice Customer for costs not covered by the Batch Price.

Additional Customer Audits may be conducted:

other than in accordance with Section 8.1 on no less than [*] Business Days’ notice subject to CMC's consent and at a cost of [*]; and

for cause audits shall be accommodated at the request of Customer as soon as reasonably practicable for CMC without additional cost to Customer, including each time the performance of the Services has encountered a serious and material difficulty, failure or obstacle.

    A Customer Audit shall last no longer than [*] Business Days and may only be conducted during regular business hours. A maximum of [*] named employees or consultants of Customer (the “Auditors”) on any given day, all of whom must be subject to an enforceable confidentiality agreement with CMC no less stringent than the confidentiality obligations hereunder, may attend the Audit. During the Audit, the Auditors may enter those permitted areas of CMC’s facility concerned with the Services for the sole purpose of observing and inspecting the performance of the Services and those records of CMC specific to or otherwise relevant for the Services (including qualification systems, HVAC systems, Utilities and environmental monitoring, water systems and environmental monitoring) or CMC’s financial statements and records relevant to the financial statements provided under Section 4.16, subject to the following:

the Auditors will obey and adhere to the rules and regulations in place at CMC concerning health and safety, cGMP and customer confidentiality;

the Auditors may not enter any prohibited parts of the facility;

Customer indemnifying CMC for the Auditor's actions or omissions in accordance with Section 12.

    Customer will itself and shall procure that its Auditors will not take advantage of or use any information obtained or observed (by error or otherwise) during a Customer Audit which does not relate to the Services.

    Customer may elect, at Customer’s expense, to have up to [*] persons in plant ("PIP") during the performance of the Services subject to:

the PIP will obey and adhere to all rules, regulations and directions of CMC during their attendance at the CMC Facility including, but not limited to those concerning health and safety, the agreed procedure between the parties for PIP interaction, cGMP and customer confidentiality and such PIP only have access to those areas of the CMC Facility actually concerned with the Services where acceptable under applicable laws and cGMP.

CMC will not unreasonably restrict access to the PIP.

    CMC shall permit, upon reasonable notice and during reasonable times, a competent governmental or regulatory authority body to enter those areas of CMC’s premises concerned with the Services for the sole purpose of observing and inspecting the performance of the cGMP Services and those records of CMC specific to the cGMP Services.  Such inspections are subject to:

the individuals representing such governmental or regulatory authority body obeying and adhering to the rules and regulations in place at CMC concerning health and safety, cGMP and confidentiality;

CMC being entitled to charge Customer for such for work associated to such visits at an hourly rate of [*] in the event such audit is requested by Customer and not required by any governmental or regulatory authority body.  

    During any Regulatory Inspections CMC shall provide reasonable assistance as requested by the relevant government or regulatory authority and shall promptly permit access to and (at Customer’s expense) copy and verify records and reports in CMC’s possession, custody or control relating to the Services.

  CMC shall notify Customer in writing any other regulatory inspection, audit or inquiry of CMC that relates to the performance of its obligations under this Agreement.  Customer shall have the right to participates in such inspection, audit or inquiry and CMC shall provide Customer with a complete copy of any documentation, correspondence, finding and/or

report in connection with such inspection, audit or inquiry (in advance for Customer’s review and approval if to be provided by CMC to governmental or regulatory authority body).  

    During the preparation for filing with any regulatory authority of any documentation which is or is equivalent to the regulatory authority’s Chemistry and Manufacturing Controls (“Authority Submission”) portion of applicable approval application, including any New Drug Application, Abbreviated New Drug Application (ANDA), Marketing Approval Application (MAA) or other approval, as the case may be, Customer shall provide CMC with a copy of the relevant Authority Submission portion as well as all supporting documents which have been relied upon to prepare the Authority Submission portion so as to permit CMC to verify that the Authority Submission portion accurately describes the work that CMC has performed and the manufacturing processes that CMC will perform pursuant to this Agreement. CMC shall provide Customer with its comments within [*] Business Days from receipt of the documents.  If Customer does not receive CMC’s comments within said [*] Business Day period it shall be deemed that the Authority Submission portion accurately describes the work that CMC has performed and the Process that CMC will use for the manufacture of the Product.  Customer (and, with prior notice to CMC, any of its designees) shall have the right of reference to any master files maintained by or on behalf of CMC in connection with the manufacturing and storage of the Product.

    For clarity, the Parties agree that in reviewing the documents referred to in Section 8.9 above, CMC’s role will be limited to verifying the accuracy of the description of the work undertaken or to be undertaken by CMC.  As such, CMC shall not assume responsibility or liability for the accuracy of the filings with regulatory authorities other than for information provided by CMC in writing and intended for inclusion in regulatory filings. The sole responsibility of the preparation and filing of all regulatory documents with the regulatory authorities shall be borne by Customer.

    Customer shall provide to CMC all documents reasonably necessary or requested by CMC relating to any regulatory authority’s pre-approval inspection of CMC’s Facility, including but not limited to, development reports, Chemistry and Manufacturing Controls documentation and stability data, subject to Customer being able to legally provide such documents to CMC.  In the event any section of any documents to be filed with any Regulatory Authority that incorporate data generated by CMC, at Customer’s request, CMC shall cooperate with Customer to draft and review such section and Customer shall provide CMC with a copy of such section incorporating such data sufficiently in advance so as to permit CMC to verify the accuracy and regulatory validity of such section as it relates to the CMC-generated data.

    Customer warrants and represents to CMC that:

it has the right to supply and deliver to CMC the Customer Materials (including the Cell Line provided by or on behalf of Customer where applicable) and the Customer

Intellectual Property Rights and CMC has the right to use the same for the Services and the manufacture of Product on behalf of Customer hereunder.

to the best of its knowledge the Materials and Safety Data Sheet for the BDS and Cell Line is accurate and the Cell Line provided by or on behalf of Customer and any Customer Materials are free from contaminants as set forth in the applicable Specifications and if handled and used in accordance with the recommendations and guidelines in the Materials and Safety Data Sheet supplied by Customer will not cause a health hazard or biohazard;

to the best of its knowledge the use of any of the Cell Line, Customer Materials, Customer Intellectual Property Rights, and the Process and  the manufacture of Product in accordance with this Agreement does not infringe any Intellectual Property rights of third parties;

the license of Customer Intellectual Property Rights to CMC for the Services is lawfully granted; and

to the best of its knowledge the Cell Line and Process provided by or on behalf of the Customer and Customer Materials are viable, adequate and suitable for the effective performance of the Services and manufacture of Product according to Specification and it knows of no reason (suspected or otherwise) why the Objective cannot be achieved or the Services successfully performed and the information supplied to CMC regarding the Cell Line provided by or on behalf of the Customer and Process is full and true;

    CMC warrants and represents to Customer that:

to the best of CMC's knowledge it has the necessary permits, facilities, third party contractors and skilled personnel that may be reasonably anticipated to be necessary of a biologics contract manufacturer for the regular provision of manufacturing and development services of biologic material and required for performance of the Services in accordance with this Agreement;

all Deliverables shall be delivered free of encumbrances or liens but for the avoidance of doubt no warranty is given in this Section 9.2.2 in respect (i) non-infringement of third party Intellectual Property Rights, or (ii) freedom to use;

to the best of its knowledge, the CMC Intellectual Property Rights used in the Services do not infringe third party Intellectual Property rights except that no warranty is given to the extent that infringement arises due to the use of the Cell Line, Process, Customer Materials and Customer Intellectual Property Rights;

where stages are to be performed according to cGMP, CMC shall apply the appropriate cGMP standards to the performance of those stages; and

where Product is released with a Certificate of Analysis by CMC, the Product at the time of release shall comply with the criteria specified in that Certificate of Analysis as at Delivery and the Specification.

    Each Party warrants and represents to the other that:

it has the corporate authority to execute this Agreement;

it shall obtain and during the Term maintain in force all appropriate permits and regulatory licenses required in connection with the handling, transport and storage of the Cell Line and Product;

it will promptly (and within five (5) Business Days if permissible under applicable law or stock exchange rules) notify the other of any allegation of or misuse of or infringement of any third party Intellectual Property rights due to the handling, storage or use of the Cell Line, Customer Materials, Customer Intellectual Property Rights, CMC Intellectual Property Rights or manufacture of Product;

It is not debarred and has not and will not knowingly use in any capacity the services of any person debarred in subsections 306(a) or (b) of the Generic Drug Enforcement Act of 1992 or any comparable law of any foreign jurisdiction, as each may be amended from time to time and that each Party will notify the other immediately in the event of a change in such status known to the Party; and

Neither Party nor any of its Affiliates nor any member of their staff have been charged with or convicted under federal laws, or other applicable laws of the EU, for conduct relating to the development or approval, or otherwise relating to the regulation of any drug product under the Generic Drug Enforcement Act of 1992 or any and all other relevant statutes, laws or regulations.

   EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT.

    In consideration of one Party (the “Disclosing Party”) making available its Confidential Information to the other (the “Recipient Party”), the Recipient Party hereby undertakes that it shall, and shall procure that each of its Permitted Recipients, shall:

treat and safeguard as private and confidential all the Confidential Information;

use the Confidential Information only during the Term for those purposes reasonably necessary for or anticipated under this Agreement and without

prejudice to the generality of the foregoing, not use any Confidential Information to obtain any commercial advantage over the Disclosing Party;

ensure the proper and secure storage of all Confidential Information applying standards of care reasonably expected and no less stringent than standards applied to protection of Recipient Party's own confidential information; and

not at any time without the Disclosing Party’s prior written consent disclose or reveal, whether directly or indirectly, any of the Confidential Information to any person whatsoever except its Permitted Recipients, and then only on a limited need to know basis, who shall be informed by it of the confidential nature of the Confidential Information and of the confidentiality terms of this Agreement and for whom it hereby accepts full responsibility in the event that any such person shall breach the duty of confidence imposed upon them;

   The obligations in this Agreement regarding Confidential Information do not apply to information:

which, at the time of its disclosure by the Disclosing Party, was available to the public and could be obtained without reference to the Confidential Information by any person with no more than reasonable diligence;

which becomes generally available to the public after such disclosure otherwise than by reason of a breach of any of the undertakings in this Agreement or any breaches of confidence by the Recipient Party or its Permitted Recipients;

which is, at the time of such disclosure and as evidenced by the Recipient Party's written records, lawfully already within its possession; or

to the extent that the Recipient Party or any of its Permitted Recipients is compelled to disclose the Confidential Information by law or by any stock exchange or other regulatory authority having jurisdiction over it or them.

    Other than the limited and restricted rights of use set out in this Section 10 nothing in this Agreement intends to or has the effect of granting any right, title, license or interest in or to the Recipient Party or Permitted Recipients in respect of the Disclosing Party's Confidential Information.

    If the Recipient Party or any of its Permitted Recipients becomes aware of any misuse of the Confidential Information, compelled to disclose any Confidential Information in the circumstances described in Section 10.2.4 of this Agreement or a breach or threatened breach of this Section 10 occurs or becomes apparent, the Recipient Party shall inform the Disclosing Party in writing of such obligation or fact as soon as possible after it is informed, or becomes aware, of it and if possible, before any Confidential Information is disclosed, so that (if the Disclosing Party in its absolute discretion shall see fit) a protective order or other appropriate remedy may be sought. The Recipient Party agrees to assist and co‑operate (and shall procure that each of its Permitted Recipients shall, as appropriate, assist and co-operate) in any action which the Disclosing Party may decide to take. The Recipient

Party shall notify the Disclosing Party prior to each disclosure of Confidential Information if it is under any obligation which would or might compel it to disclose any Confidential Information and subsequent to such disclosure it shall not voluntarily assume any such obligation.

    Except as otherwise provided for in this Agreement or otherwise required by law or administrative authorities, neither Customer nor CMC shall disclose any terms or conditions of the Agreement to any third party without the prior written consent of the other Party.

    Upon termination or expiry of this Agreement or at the request of the Disclosing Party, the Recipient Party shall promptly destroy (on request) or return to the Disclosing Party any and all Confidential Information (including copies of documents, computer records and records on all other media) then in its possession or under its control except where such Confidential Information is covered under surviving license rights between the Parties. Notwithstanding the foregoing, the Parties may retain a single copy of any document contained the Disclosing Party's Confidential Information solely for the purpose of determining the scope of the obligations under this Agreement.

    The Parties acknowledge that they have received Confidential Information under the Existing Agreement.  The Parties hereby agree that Confidential Information received under the Existing Agreement may be used for the purposes of performing the Services under this Agreement.  

The Parties acknowledge that any breach or threatened breach of this Section 10 by the Recipient Party may cause immediate and irreparable harm to the Disclosing Party that may not be adequately compensated by damages.  Each Party therefore agrees that in the event of such breach or threatened breach by the Recipient Party, the Disclosing Party shall be entitled to obtain timely injunctive relief, without the posting of a bond or other security, as well as such further relief as may be granted by a court of competent jurisdiction.    

The provisions of this Section 10 shall survive termination or expiration of the Agreement for a period of [*] years.

For the avoidance of doubt, the provisions of this Section 10 do not restrict the Customer’s right to disclose, handle or otherwise fully exploit the Deliverables after such Deliverables have been delivered to the Customer.

    Any Intellectual Property owned by a Party or licensed by a third party to a Party as of the Effective Date or before the commencement of the Services (“Pre-Existing IPR”) or during the Term but independently of this Agreement (“Independent IPR”), shall remain the sole and absolute property of the Party.  Nothing in this Agreement shall act as any assignment or transfer of the Pre-Existing IPR or Independent IPR.  The Pre-Existing IPR or Independent IPR shall not be licensed to the other Party under this Agreement unless an express license is granted hereunder.

   The Customer hereby grants to CMC for the Term of this Agreement a non-exclusive, royalty-free, sub-licensable solely in connection with a permissible subcontract as set forth in Section 2.5 hereto, non-transferable limited license in respect of Customer Intellectual Property Rights solely to the extent the same is required and necessary for the proper performance of the Services.  This license:

does not prevent the Customer from granting a license to or making any use of Customer Intellectual Property; and

terminates automatically upon the expiry or termination of this Agreement, whichever is the earlier.  

Intellectual Property created in the course of the Services

    All data, information and Intellectual Property newly generated by CMC exclusively in its performance of the Services and which [*], including improvements to Customer Intellectual Property Rights, shall be owned by Customer  (“Customer IPR”).  CMC hereby assigns to Customer all of its rights and interests in and to the Customer IPR.

    All Intellectual Property other than Customer IPR generated by CMC under the Services shall be owned by CMC (“CMC Services IPR”).

   CMC hereby grants to Customer a non-exclusive, general, royalty free, perpetual, irrevocable, and sub-licensable (through multiple tiers), worldwide license to use CMC Intellectual Property Rights (including without limitation CMC’s Pre-existing IPR, CMC’s Independent IPR and CMC Services IPR) to the extent that the same is necessary to (i) develop, manufacture or obtain or maintain any regulatory or governmental approval for Product, or (ii) use the Cell Line or Process (or any derivative of the Cell Line or Process)  including, without limitation, use of Process documentation or Master Batch Records, to manufacture Product.  Nothing in the foregoing shall permit Customer to make any disclosure of CMC's Confidential Information or CMC's Know-How to a third party without the express prior written consent of CMC, except for a disclosure reasonably related to its and its licensees and sublicensees’ exercise of the license granted to it in this Section 11.5. Such a disclosure shall be made in confidence unless such disclosure is not permitted to be kept confidential under relevant law, rules, or regulations or requirements of any relevant regulatory authority.  Until the later of: (a) [*]; and (b) [*], CMC shall not use any CMC Service IPR to manufacture the Product or any biosimilar version of the Product on behalf of itself or any other entity other than Customer.

    Each Party may file patent protection on any Intellectual Property it owns in accordance with Sections 11.3 or 11.4 above and the other Party shall promptly upon request co-operate at the requesting Party’s reasonable expense, with any requests to assist or enable the Party’s protection including but not limited to signing and delivering documents and other information necessary for the valid application and prosecution of any such patent.

Except as otherwise provided for in this Agreement or required by any applicable law, regulation or order of an administrative agency (including without limitation the FDA and SEC) or court of competent jurisdiction, neither Party shall use the name of the other Party or of the other Party’s Affiliates, directors, officers or employees in any advertising, news release or other without the prior consent of the other Party.

    Customer shall promptly indemnify and hold harmless CMC and each of its directors and officers, Testing Laboratories, and permitted subcontractors (the “CMC Parties”) against any and all third party losses, demands, claims, liabilities, damages, costs and expenses (including but not limited to, court costs and reasonable documented attorney’s fees and expenses together with any applicable taxes thereon) ("Claims") that the CMC Parties may or have suffered or incurred directly as  a result of the following:

any infringement or alleged infringement or breach of any third party rights including Intellectual Property rights in CMC’s use of the Cell Line, Process, Customer Intellectual Property Rights or Customer Materials in the course of the performance of the Services or manufacture of Product;

negligence, wilful misconduct or any breach of this Agreement or representations or warranties in this Agreement by Customer; or

any claims resulting from the use, handling, distribution, marketing, safety or sale of the Product or BDS including any derivative, conjugated form or formulation of the same by Customer or its Affiliates.

    CMC shall promptly indemnify and hold harmless Customer and each of its directors and officers, employees, agents, contractors or representatives (the “Customer Parties”) against any and all third party demands, claims, liabilities, damages, costs and expenses (including but not limited to, court costs and reasonable documented attorney’s fees and expenses together with any applicable taxes thereon) ("Claims") that the Customer Parties may or have suffered or incurred directly as a result of the following:

a material inaccuracy in a Certificate of Analysis such that certified Product at the time of Delivery does not meet Specification when certified to meet Specification;

CMC’s failure to manufacture Product or BDS according to cGMP, the Process or the Specifications, including CMC’s obligation to source, handle, and test Raw Materials according to the Commercial Quality Agreement;

material defects, inadequacies or inefficacies in Raw Materials;

negligence, wilful misconduct or any breach of this Agreement or representations or warranties in this Agreement by CMC;

the infringement or alleged infringement or breach of any third party rights including Intellectual Property rights by CMC to the extent such infringement is due to CMC’s use of the CMC Intellectual Property Rights in the performance of the Services but excluding claims where such use is in combination with the Cell Line, Customer Materials, Process or Customer Intellectual Property Rights.

The foregoing indemnities shall not apply to the extent the Claims arose directly from the Customer or any of the Customer Parties' negligence, breach of this Agreement or wilful default or are covered by an indemnity under Section 12.1.

   The Party (the "Indemnitee”) that intends to claim indemnification under this Section 12  shall:

promptly, and in any event within twenty-one (21) Calendar Days of it receiving notice of the Claim, threat or action, notify the other Party (the "Indemnitor”) in writing in general terms of any Claim, threat or action which has or has the potential to give rise to the Indemnitee seeking to rely on and claim the benefit of the indemnification together with notification of the Indemnitee's intention to rely on such indemnity, provided that, failure to give such notice shall not relieve the Indemnitor of its indemnification obligations except and only to the extent such failure actually and materially prejudices the ability of the Indemnitor to defend against such Claims;

not prejudice any defence to any Claim or attempt to settle or compromise such Claim;

shall comply with the procedure in Section 12.3.1 except that nothing shall prevent it from complying with the procedural requirement of any proceedings which have been commenced;

subject to its other rights and obligations and compliance with the procedures set out in this Section 12 permit the Indemnitor to have overall control of the conduct of the negotiations and the proceedings including any counterclaim;

cooperate as reasonably requested by the Indemnitor, at the Indemnitor's expense, in the conduct of such Claim (and any counterclaim); and

have the right (at its own expense) to instruct independent counsel and participate in all proceedings and negotiations whether named or not as a party in the Claim or proceedings.

Notwithstanding any other provision in this Section 12, the Indemnitor shall not settle or consent to an adverse judgment in any such claim, demand, action or other proceeding that adversely affects the rights or interests of any Indemnitee or imposes additional obligations (financial or otherwise) on such Indemnitee, without the prior express written consent of such Indemnitee (such consent to be at the Indemnitee's sole discretion).

In the event of a claim under Section 12.1.1 or Section 12.2.5, the Parties shall promptly and in good faith discuss ways, whether by modifications to the Services or Product, licensing or otherwise, to settle or overcome the Claim. In the event that legal proceedings are commenced by a third party, the Parties shall use their best endeavours to conduct such discussions as expeditiously as possible.  If the Parties are unable to agree to a solution to avoid the infringement within 30 days of good faith negotiations, both Parties may suspend the infringing Services without liability or penalty on either Party.  

Customer shall procure from a reputable insurance carrier commercial product liability insurance including coverage for products and completed operations with a limit of no less than [*] in the aggregate, and commercial general liability insurance with a combined singe limit of no less than [*] per occurrence and [*] in the aggregate through a combination of primary & umbrella/excess liability insurance. Customer will maintain such insurance during the Term and after expiration or termination of this Agreement for a period [*] following the Commercial Product expiration date for the last lot of Commercial Product delivered hereunder.  Upon reasonable request, Customer will deliver a certificate of insurance evidencing such coverage and an endorsement of additional insured in favour of CMC.

CMC shall maintain, at its expense comprehensive general liability insurance and workers compensation insurance, in the amount of [*] per occurrence and [*] in the aggregate, and commercial product liability insurance with a limit of no less than [*] in the aggregate.  All insurance required under this Agreement shall be maintained during the Term, and CMC shall from time to time provide copies of certificates of such insurance to Customer upon reasonable request.  Notwithstanding the preceding sentence, CMC shall be obligated to maintain product liability insurance obtained by it pursuant to this Section 12.7 during the Term and after expiration or termination of this Agreement for a period [*] following the Commercial Product expiration date for the last lot of Commercial Product delivered hereunder.

Each Party will provide the other Party with at least 30 days’ written notice prior to non-renewal, termination or modification of their respective insurance coverage as described above.

   CMC shall during the term of the Agreement maintain a comprehensive general liability insurance against claims for bodily injury or property damage arising from CMC's activities in performing the Services, with such insurance companies and in such amounts as CMC customarily maintains for similar activities.

Customer shall during the term of this Agreement and for a minimum period of 10 (ten) years after the expiration or termination of this Agreement maintain a comprehensive general liability insurance covering all liability and claims arising or that may arise from the use, supply, licensing or distribution of the Product including product liability with such insurance companies and in such amounts as Customer customarily maintains for similar activities.

The parties represent and acknowledge that they have negotiated the terms of this Agreement and have reached agreement on the terms based on their own assessment of their own risks, liabilities and rewards in connection with this Agreement and the Product in addition to having had the benefit of professional legal advice.  

NEITHER PARTY WILL BE LIABLE UNDER ANY LEGAL THEORY (WHETHER TORT, CONTRACT OR OTHERWISE) FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, HOWEVER CAUSED, EVEN IF THE PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXCEPT AS A RESULT OF A BREACH OF THE CONFIDENTIALITY OBLIGATIONS IN SECTION 10, ITS INDEMNIFICATION OBLIGATIONS IN THIS SECTION 12, OR AS SET FORTH IN SECTION 12.13.  

Nothing in this Agreement shall purport or attempt or serve to exclude or restrict any liability for (i) death or personal injury; (ii) liability for any fraud or fraudulent misrepresentation; (iii) damages available for breach of confidentiality obligations set forth in Section 10; or (iv) the indemnification obligations set forth in Sections 12.1 and 12.2. In addition, nothing in this Agreement shall purport or attempt or serve to exclude or restrict any liability for [*] or [*].

Subject to Section 13.3, the costs and obligations with respect to any Recall of Product and handling enquiries and contacts from any regulatory authority relating to any Recall of Product shall be the responsibility of Customer. Customer shall notify all regulatory authorities having jurisdiction over Product (whether or not the issue arose in the jurisdiction controlled by the regulatory authority) of any Recall, and shall be responsible for coordinating all necessary activities regarding the action taken.  CMC shall, at Customer’s expense, provide all reasonable assistance to Customer in connection with any Recall.  The Parties agree to keep each other advised of any Recall, the progress of undertaking any Recall, and to exchange copies of such documentation as may be reasonably required, to assure regulatory compliance with a Recall.

If either Party has reason to believe that any Product (whether the Product itself or particular Batch(es)) should be Recalled, such Party shall promptly inform the other in writing, to also include the reasons and explanations for the Recall, prior to taking any such action.  In addition, Customer shall give CMC prompt written notice of any Recalls that Customer believes were caused by or may have been caused by CMC’s failure to comply with its obligations under this Agreement.

If any Product is Recalled for safety reasons or due to a mandatory notification from a regulatory authority dictating the Recall and, in either case, such reasons are directly and solely as a result of CMC’s failure to manufacture Product in accordance with the terms of this Agreement (“Manufacturing Failure”), then CMC shall, subject to Section 12, reimburse Customer for all reasonable expenses actually and properly incurred by Customer in undertaking the Recall of those specific Products which are the subject of a Manufacturing Failure.  Such payment shall be made within forty-five (45) days of Customer providing CMC will a detailed breakdown of such costs and responses to all requests for clarification by CMC with respect thereto.  If CMC disputes that the Recall is:

due to safety reasons or mandatory notification from a regulatory authority dictating the Recall then the Parties shall mutually select a regulatory expert to evaluate whether the Recall was appropriate to address the safety reason or comply with the regulatory authority’s notice (as applicable); and/or

due to CMC’s Manufacturing Failure, then the Parties shall mutually select an independent laboratory to evaluate whether the Product is defective due to CMC’s Manufacturing Failure; and,

This Agreement shall commence on and have effect as of  date of last execution  and will, subject to earlier termination in accordance with this Section 14 or otherwise, continue for a term of seven (7) years (the “Term”) commencing on the Effective Date.

    Either Party (“Non-Defaulting Party”) may terminate this Agreement before expiry of the Term with immediate effect upon prior written notice to the other Party (“Defaulting Party”) if:

the Defaulting Party fails to pay any undisputed sum payable under this Agreement within [*] Calendar Days of notice demanding payment served after expiry of the original payment term stipulated in Section 6;

the Defaulting Party commits a material breach of its obligations under this Agreement and (i) if the breach is capable of remedy, fails to remedy it during a period of [*] Calendar Days starting on the date of receipt of notice from the Non-Defaulting Party generally identifying the breach and requiring it to be remedied; (ii) if the breach is CMC's breach in the manufacture or performance of a

Batch, CMC fails to commence manufacture of a replacement Batch within the time period set forth in Section 6.15;

the Defaulting Party is (i) generally unable to pay its debts as they become due; or (ii) has an administrator appointed or administration order made against it or an order for winding-up or dissolution made (otherwise than in the course of a bona fide reorganisation previously approved in writing by the Non-Defaulting Party) or liquidator appointed and such step is not withdrawn within [*] Calendar days;

any material permit or regulatory license is permanently revoked preventing the performance of the Services by the Defaulting Party.

    Customer may terminate this Agreement before expiry of the Term upon prior written notice to CMC with immediate effect:

if the application to register Product or BDS in a major market, specifically the EU, or USA, is rejected by the regulatory authority or if the Customer otherwise discontinues the development of the Product in a major market;

for any other safety, efficacy or commercial reasons that lead to the discontinuation, reduction in market demand or commercial infeasibility of the Product;

If after Product launch, the projected market demand for the Product [*] is less than [*];

If the gross margin of the Product is less than [*] even after the adoption of the GEN 2 Process (as set forth in Section 5.8).  

In addition, Customer may also terminate this Agreement before expiry of the Term upon prior written notice to CMC, with immediate effect if:

Customer terminates this Agreement pursuant to Section 4.5.4;

Customer terminates this Agreement pursuant to Section 4.6.5; or    

if the Actual Yield and/or Target Yield (as determined in accordance with Appendix Three) is below the following minimum thresholds:

After the [*] Calendar Quarter after the Target Yield has been established for the Expansion Facility in accordance with Appendix Three, for each interval of [*] (each, a “Look Back Period”), if the average yield delivered in the Expansion Batches CMC Released during the applicable Look Back Period (which is calculated by dividing the [*] by [*]) is less than [*].  

If the Target Yield for Expansion Batches is below [*].

    Upon termination of this Agreement:

If this Agreement is terminated by Customer pursuant to Section 14.3 but only if, at the time of such termination, CMC is in material compliance with its obligations under this Agreement, then as CMC’s sole and exclusive remedy Customer shall pay to CMC an amount equal to (a) the applicable Termination Settlement Amount (as set forth in Appendix 5) minus (b) Remaining Pre-payment and minus (c) any other pre-payment (including the First Payment or Second Payment for each outstanding and uncompleted Batch, as applicable).  

If this Agreement is terminated by Customer pursuant to Section 14.4, then CMC shall (i) have the right to complete any Batch that is in progress, which shall be purchased by Customer in accordance with the terms of this Agreement at the applicable Batch Price, and any other Batches covered by pending Firm Orders will be deemed terminated; (ii) transfer to Customer CMC's remaining Raw Materials that were purchased for Batches within [*] of commencement of manufacturing or thereafter, for which Customer will reimburse CMC at cost (provided that, if requested by Customer, CMC shall first use reasonable efforts to return such Raw Materials for a refund, and Customer will reimburse CMC for any restocking fee or difference between the cost of the Raw Materials and the total amount refunded, if any); and (iii) pay to Customer an amount equal to (a) Remaining Pre-payment  plus (b) any pre-payment for Batches that CMC will not complete pursuant to subsection (i) (including the First Payment or Second Payment, as applicable). .  

payments due at the time of termination pursuant to this Section 14.5 shall be made within [*] days of the effective date of termination;

    Upon termination of this Agreement for any reason, provided the Customer has paid all undisputed sums outstanding and which are properly due under this Agreement, CMC shall, within [*] Calendar Days of:

those payments having been made; or

the date of termination of this Agreement,

    Termination or expiry of this Agreement for whatever reason shall not affect the accrued rights of either CMC or Customer arising under or out of this Agreement and all provisions which are expressed to survive this Agreement and the provisions of Sections 1.1, 1.2, 3, 6.12-6.16, 7.3, 7.11 - 7.14, 9, 10, 11, 12, 13.3, 14.5, 14.6, 14.7, 15, 16, 17, and 18 shall survive termination or expiry and remain in full force and effect, and the provisions of Sections 8.1 through 8.5 shall survive for a period of [*] following termination or expiry.  

    Upon (i) termination or during the notice period regarding termination of this Agreement or the Services other than where termination is for material breach by Customer or (ii) expiry of this Agreement, Customer may by written notice to CMC seek assistance from CMC with respect to the transfer to another manufacturer of the then-current Process solely for the purpose of manufacturing Product ("Technology Transfer").  Following CMC’s receipt of such notice, the Parties will establish, in good faith, a schedule and plan for effecting such transfer and CMC will thereafter co-operate with Customer in implementing such plan as agreed by the Parties.  As part of the Technology Transfer CMC will make available for collection, subject to any Regulatory Obligations, all Customer Materials, Cell Line and one copy of all documentation (to the extent not previously delivered to Customer) generated pursuant to the Services up to the date of termination or expiry including the Master Batch Records, development reports and production process documentation.

    The obligations on CMC in respect of the Technology Transfer shall only be exercisable by Customer within a period of [*] after the date of termination or expiry (whichever is the earlier) and CMC shall not be obliged to commit any greater human resources in the Technology Transfer than [*] FTE days. Customer shall pay, CMC's costs providing the Technology Transfer at a daily FTE rate of [*] U.S. dollars (to increase annually on the anniversary of the Effective Date in accordance with the agreed rate of inflation) and all other costs shall be charged [*] if not otherwise agreed.  The Customer will not, and CMC will not be obliged to, transfer any CMC Know-How pursuant to this Technology Transfer until the contract manufacturer to whom the process is transferred enters into a limited royalty-free license and confidentiality agreement acceptable to and with CMC in order to protect CMC's Know-How and Confidential Information.

    A Party shall not be held liable or responsible to the other Party nor be deemed to have defaulted under or breached the Agreement for failure or delay in fulfilling or performing any term of the Agreement or the Services to the extent (excluding obligations for payment or placing Purchase Orders in accordance with this Agreement), and for so long as, such failure or delay is caused by or results from a Force Majeure Event.

    A Party shall notify the other Party in writing of any force majeure event which prevents the notifying Party from performing its obligations under this Agreement.  If a force majeure situation continues for more than [*] months after such notice is served, and is adversely affecting the performance of this Agreement, each Party will have the right, on [*] Calendar days advance written notice not to expire before the [*] month period to terminate this Agreement. In the case of such termination the other Party will not have a right to any claim

for damages as a result of the termination of the Agreement or non-performance of the Agreement, and CMC shall (i) have the right to complete any Batch that is in progress, which shall be purchased by Customer in accordance with the terms of this Agreement at the applicable Batch Price, and any other Batches covered by pending Firm Orders will be deemed terminated; (ii) transfer to Customer CMC's remaining Raw Materials that were purchased for Batches within nine [*] of commencement of manufacturing or thereafter, for which Customer will reimburse CMC at cost (provided that, if requested by Customer, CMC shall first use reasonable efforts to return such Raw Materials for a refund, and Customer will reimburse CMC for any restocking fee or difference between the cost of the Raw Materials and the total amount refunded, if any); and (iii) pay to Customer an amount equal to (a) Remaining Pre-payment  plus (b) any pre-payment for Batches that CMC will not complete pursuant to subsection (i) (including the First Payment or Second Payment, as applicable).  If this Agreement is terminated by Customer for Force Majeure affecting CMC, then Customer shall account to CMC for any sums due under this Agreement in respect of obligations performed up to and including the day of the first day of the force majeure situation giving rise to the termination when CMC has been unable to perform its affected obligations or any part thereof from that date.

This construction, validity and performance of this Agreement (and any claim, dispute or matter arising under or in connection with it or its enforceability) and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with the laws of New York.

Before resorting to litigation, unless emergency relief is required by either Party when either Party shall be free to resort to litigation, the parties shall use their reasonable efforts to negotiate in good faith and settle amicably any dispute that may arise out of or relate to this Agreement (or its construction, validity or termination) (a "Dispute"). If a Dispute cannot be settled through negotiations by appropriate representatives of each of the parties, either Party may give to the other a notice in writing (a "Dispute Notice"). Within [*] days of the Dispute Notice being given the parties shall each refer the Dispute to their respective Representatives who shall meet in order to attempt to resolve the dispute. If within [*] days of the Dispute Notice the Dispute is not settled by the Representatives the Dispute shall be referred to the Parties' respective Chief Executive Officers who shall meet in order to attempt to resolve the dispute. If within [*] days of the Dispute Notice (i) the Dispute is not settled by agreement in writing between the parties or (ii) the parties have failed to discuss the Dispute or use good faith negotiations the provisions of Sections 17.3 and 17.4 below shall apply.  

Subject to Section 17.2, any Dispute shall be referred to and finally resolved by arbitration under the Rules of Arbitration of the International Chamber of Commerce as in force from time to time, which Rules are deemed to be incorporated by reference into this section.  For the purpose of any such arbitration:

The number of arbitrators shall be one who shall be appointed by the International Court of Arbitration of the International Chamber of Commerce;

The language to be used in the arbitral proceedings shall be English.

The arbitration shall be conducted in complete confidence.  The parties undertake not to disclose details of the Dispute or of the arbitration except to their professional advisers, and shall procure that their professional advisers do not disclose such details.  The parties shall keep confidential and not use for any collateral or ulterior purpose all documents and materials relating to the Dispute, produced for, or arising in relation to, the arbitration except:

so far as is necessary to implement and enforce any agreement in writing settling a Dispute;

as required by court order; or

otherwise as required by law.

CMC shall not approve or effect a Fundamental Change where [*] unless [*].

The occurrence of a Fundamental Change shall not relieve CMC of its responsibility for performance of its obligations under this Agreement. CMC must promptly:

notify Customer as soon as CMC is aware that a Fundamental Change has occurred or is reasonably likely to occur;

upon request, provide to Customer such further information and written assurances, [*] that there will be no adverse consequences to the supply of Product to Customer or the performance of CMC obligations under this Agreement resulting from the occurrence of the Fundamental Change. Without prejudice to the generality of these Sections 18.1 and 18.2.2, Customer may seek written assurances from CMC [*].

[*] shall be entitled to terminate this Agreement as a result of a Fundamental Change.

For the avoidance of doubt, a breach of Section 18.1 or 18.2, shall be deemed to be a material breach of this Agreement.

    Other than as provided for elsewhere in this Agreement in respect of the Timeline, any modification, extension or variation of this Agreement (or any document entered into pursuant to or in connection with this Agreement) shall only be valid if it is in writing and

signed by or on behalf of each Party to this Agreement. No modification or variation of this Agreement shall be valid if made by e-mail.

    Unless expressly so agreed, no modification or variation of this Agreement shall constitute or be construed as a general waiver of any provisions of this Agreement, nor shall it affect any rights, obligations or liabilities under this Agreement which have already accrued up to the date of such modification or waiver, and the rights and obligations of the Parties under this Agreement shall remain in full force and effect, except and only to the extent that they are so modified or varied.

    Except as provided in Section 18.8, a Party shall not without the prior written consent of the other Party (such consent not to be unreasonably withheld) assign at law or in equity (including by way of a charge or declaration of trust), sub-license or deal in any other manner with this Agreement or any rights under this Agreement, or sub-contract any or all of its obligations under this Agreement, or purport to do any of the same.  Any purported assignment in breach of this section shall confer no rights on the purported assignee.

    Customer shall be entitled upon giving written notice to CMC to assign its rights under this Agreement to any member of Customer's Group, or in connection with the sale or exclusive license of all or substantially all of Customer’s stock or assets to which the Product relates.

no assignment shall relieve Customer of any of its obligations under this Agreement; and

any assignment shall be made on terms that the assignee acknowledges that CMC may continue to deal exclusively with Customer in respect of all matters relating to this Agreement at all times unless and until the assignee notifies CMC in writing that it is exercising its rights as assignee.

    This Agreement, and the documents referred to in it, constitutes the entire Agreement and understanding of the Parties and supersedes any previous agreement between the Parties relating to the subject matter of this Agreement.   If any term of this Agreement conflicts with any term of the Commercial Quality Agreement, the conflicting term of this Agreement shall prevail.

In no event will any delay, failure or omission (in whole or in part) in enforcing, exercising or pursuing any right, power, privilege, claim or remedy conferred by or arising under this Agreement or by law, be deemed to be or construed as a waiver of that or any other right, power, privilege, claim or remedy in respect of the circumstances in question, or operate so as to bar the enforcement of that, or any other right, power, privilege, claim or remedy, in any other instance at any time or times subsequently.

If any provision of this Agreement shall be found by any court or administrative body of competent jurisdiction to be invalid or unenforceable, such invalidity or unenforceability shall not affect the other provisions of this Agreement which shall remain in full force and effect. The Parties agree, in the circumstances referred to in this section to attempt to substitute for any invalid or unenforceable provision a valid or enforceable provision which achieves to the greatest extent possible the same effect as would have been achieved by the invalid or unenforceable provision. The obligations of the Parties under any invalid or unenforceable provision of this Agreement shall be suspended while an attempt at such substitution is made.

Any notice or other communication given or made under this Agreement shall be in writing and in English and signed by or on behalf of the Party giving it and shall be served by hand, delivering it or sending it by facsimile (with copy by hand, post or airmail), prepaid recorded or special delivery post or prepaid international recorded airmail, to the address and for the attention of the relevant Party set out in this Section 18.12 (or as otherwise notified by that Party hereunder). Any such notice shall be deemed to have been received:

if hand delivered or sent by prepaid recorded or special delivery post or prepaid international recorded airmail, at the time of delivery;

if sent by post (other than by prepaid recorded or special delivery post), 5 (five) Business Days from the date of posting;

if sent by airmail (other than by prepaid international recorded airmail), 5 (five) Business Days from the date of posting; or

if sent by facsimile, at the time of delivery.

This Agreement may be executed in any number of counterparts and by the Parties to it on separate counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. This Agreement is not effective until each Party has executed at least one counterpart.

Nothing in this Agreement is intended to or shall operate to create a partnership or joint venture of any kind between the Parties or to authorise either Party to act as agent for the other, and no Party shall have authority to act in the name or on behalf of or otherwise to bind the other in any way (including but not limited to the making of any representation or warranty, the assumption of any obligation or liability and the exercise of any right or power). Each Party is entering into this Agreement as principal not agent, and may not enforce any of its rights under or in connection with this Agreement for the benefit of any other person.  Without limiting the foregoing, CMC shall be solely responsible for the operation of the CMC Facility, including all liabilities arising therefrom, and nothing here shall be deemed to create any property interest by Customer in the CMC Facility or make Customer the operator of the CMC Facility.  

Signed on behalf of

CMC Biologics

by

Name :       /s/ Gustavo Mahler

Position :     President and COO

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Signed on behalf of

Portola Pharmaceuticals, Inc.

by

Name :          /s/ WILLIAM LIS

Position :     CEO

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)

)

)

)

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)

Batch price ($)

Batches [*]

$[*]

Batches [*]

$[*]

[*].  

[*]  

Authorized Contract Laboratories

Test Performed

Vendor Test Method Number

Address

[*]

[*]

[*]

[*]