[LETTERHEAD]
PASTEUR MERIEUX CONNAUGHT CANADA
0000 XXXXXXX XXXXXX XXXX
XXXXXXX, XXXXXXX, XXXXXX X0X 0X0
TELEPHONE: (0) 000-000-0000 FAX: (0) 000-000-0000
IN QUADRUPLICATE
August 25, 1998
Aphton Corporation
World Trade Centre
00 XX 0xx Xxxxxx
Xxxxx, Xxxxxxx XXX 00000
Attention: Xx. Xxxxxx X. Xxxxx
Chairman, President and Chief Executive Officer
RE: Letter Agreement relating to conjugate product, between Aphton Corporation
("Aphton") and Connaught Laboratories Limited, a Pasteur Merieux Connaught
company ("PMCC")
This letter sets forth our agreement with respect to certain lots of
conjugate product (the "Conjugate") which, at Aphton's request, PMCC has
produced and shipped to Aphton or Aphton's designated agents and contractors:
1. We have informed you that the Conjugate contained in Lot 2 was prepared for
research purposes only and that Lot 2 was not prepared in accordance with Good
Manufacturing Practices. We have also informed you that the Conjugate contained
in Lot 3 has been prepared in accordance with Good Manufacturing Practices and
will be released accordingly in due course. Aphton acknowledges and accepts:
(i) that the vast majority of the equipment used to process Lot 3 was dedicated;
(ii) that some small glassware used to mix reagents, which was then added to the
main process equipment (amicon), was not dedicated; (iii) that twenty litre
bottles used to hold buffers which were then added to the main process equipment
were validated for cleaning; and (iv) that the SDS PAGE method validation will
not be completed by or prior to the release of Lot 3. It is our understanding
that Aphton intends to use a portion of the Lot 3 Conjugate to produce the
Product (as defined in the Co-Promotion License dated as of February 14, 1997,
hereinafter the "License") to be used in connection with certain clinical trials
which Aphton is conducting.
Letter Agreement between Page 2
Aphton and PMCC August 25, 1998
2. Except as expressly set forth herein, PMCC makes no warranties of any kind,
express or implied, written or oral, including any implied warranties of
merchantability or fitness for a particular purpose. For purposes of this Letter
Agreement, risk of loss to Conjugate shall pass to Aphton upon delivery to
Aphton, DDP at a point or points of destination selected by Aphton. Except as
provided in the next paragraph, PMCC shall have no liability whatsoever in
respect of such Conjugate or of its use howsoever or in respect of the Product
or of any product which contains any such Conjugate. Aphton agrees that it shall
not use the Lot 3 Conjugate in connection with human clinical trials until such
Conjugate is released by PMCC.
3. For good and valuable consideration, PMCC hereby agrees to indemnify, defend
and hold harmless Aphton, its affiliates, officers, directors, employees and
agents from and against any liabilities, claims, damages, costs, expenses
(including reasonable attorney's fees) or judgments (collectively "Damages")
arising out of, based upon or resulting from the failure by PMCC to prepare the
Lot 3 Conjugate in accordance with the specifications attached hereto as
Schedule "A", except to the extent any such Damages arise out, are based upon or
result from the negligence or willful misconduct of Aphton or the failure of any
material (including without limitation, peptides) supplied by Aphton to PMCC for
use in preparing the Conjugate to conform to the specifications attached hereto.
PMCC warrants that Lot 3 Conjugate, when delivered to Aphton in accordance with
clause 2 hereof, shall meet the specifications.
4. In consideration for PMCC's shipment of the Conjugate to Aphton,
Aphton hereby agrees to indemnify, defend and hold harmless PMCC, its
affiliates, officers, directors, employees and agents from and against any
liabilities, claims, damages, costs, expenses (including reasonable attorneys'
fees) or judgments (collectively ("Damages") arising out of, based upon or
resulting from (i) the negligence or willful misconduct of Aphton or its
directors, officers, employees, agents or contractors, (ii) the possession,
processing, shipment, storage or disposal of any Conjugate delivered hereunder,
from and after the time such Conjugate is delivered to a carrier for shipment to
Aphton (or its designee), or (iii) the possession, manufacture, sale, use
(including in any clinical trial), administration, distribution, processing,
shipment, storage or disposal of the Product or of any product by Aphton or any
of Aphton's agents or contractors, whether or not any of the Conjugate is
incorporated therein. Aphton agrees to obtain and to maintain comprehensive
general liability, including product liability and clinical trial liability
insurance (with PMCC and its affiliates named as additional insureds), with an
insurer rated "A" or better by A.M. Best, with coverage of US$10,000,000 per
occurrence and in the aggregate. Such insurance may not be cancelled or
terminated except upon thirty (30) days' prior written notice to PMCC. Such
insurance shall be obtained and maintained at Aphton's sole cost and expense.
From time to time, at the request of PMCC, Aphton will cause certificates of
such insurance to be supplied to PMCC evidencing compliance with the obligations
set forth herein. The procedures for such indemnification shall be as set forth
in the License. Aphton further agrees that the confidentiality provisions of the
License shall apply equally to this Letter Agreement. This Letter Agreement
shall be governed by New York law.
If the foregoing accurately sets forth Aphton's understanding of this
transaction and its (and PMCC's) responsibilities and liabilities in respect of
Letter Agreement between Page 3
Aphton and PMCC August 25, 1998
the Conjugate and of the Product or of any product containing the Conjugate,
please sign the duplicate of this letter to evidence your agreement to the terms
contained herein and return the duplicate to the undersigned at your earliest
convenience.
Yours very truly,
CONNAUGHT LABORATORIES LIMITED
By /s/ J. Xxxx Xxxxxxxx
-----------------------------------
J. Xxxx Xxxxxxxx
Senior Vice President, and General Manager, Oncology Business Unit
By /s/ Xx. Xxxxxx Xxxxx
-----------------------------------
Xx. Xxxxxx Xxxxx
Vice President, Industrial Operations
Accepted and Agreed:
APHTON CORPORATION
By /s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx
Chairman, President and Chief Executive Officer
Letter Agreement between Page 4
Aphton and PMCC August 25, 1998
SCHEDULE "A"
to the Letter Agreement between Aphton Corporation
and Connaught Laboratories Limited, dated August 25, 1998
Specifications of Lot 3 Conjugate
[Omitted pursuant to Regulation S-K]
APHTON CORORATION
00 Xxxxxx Xxxxxx, Xxxxx 00
Xxxxxxxx, XX 00000
Specification for Gastrimmune(R) Conjugate (GDT)
Test Specification
[Omitted pursuant to Regulation S-K]
