Sample Business Contracts

Supply Agreement - Organon Teknika Corp. and CancerVax Inc.

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                                SUPPLY AGREEMENT

         This supply agreement is entered into as of April 15, 1998, (the
"Effective Date") between Organon Teknika Corporation ("TEKNIKA"), a Delaware
corporation, with its principal offices at 100 Akzo Avenue, Durham, North
Carolina, and CancerVax, Inc. ("CANCERVAX"), a California corporation, with its
principal offices at 802 84th Avenue NE, Medina, Washington (each singularly a
"Party" and collectively the "Parties") with reference to the following:


         WHEREAS, Teknika manufactures BCG, as defined below, and

         WHEREAS, CancerVax is performing research and development in the field
of vaccines for human cancers and is interested in purchasing BCG from Teknika
for use in clinical trials and possible commercial sales of such vaccines; and

         WHEREAS, Teknika is willing to sell BCG to CancerVax for such purposes;

         THEREFORE, the parties agree as follows:

1.       DEFINITIONS. The following terms shall have the following meanings for
purposes of this Agreement:

         1.1      "AFFILIATE" means any corporation, firm, partnership or other
entity, whether de jure or de facto, which directly or indirectly owns, is owned
by, or is under common ownership with a party to this Agreement to the extent of
at least fifty percent (50%) of the equity (or such lesser percentage which is
the maximum allowed to be owned by a foreign corporation in a particular
jurisdiction) having the power to vote on or direct the affairs of the entity
and any person, firm, partnership, corporation or other entity actually
controlled by, controlling, or under common control with a party to this
Agreement. For example, Akzo Nobel, N.V. is an Affiliate of Teknika pursuant to
this definition.

         1.2      "AGREEMENT" means this Supply Agreement, including any
exhibits, schedules or other attachments thereto, as any of the foregoing may be
validly amended and agreed to in writing by the Parties from time to time.

         1.3      "COMMERCIAL INTRODUCTION" means the date of first commercial
sale (other than for purposes of obtaining regulatory approval) of a Melanoma
Vaccine by CancerVax, Inc.


         1.4      "EFFECTIVE DATE" is defined in the introductory paragraph.

         1.5      "cGLPs" means the current Good Laboratory Practices for
Finished Pharmaceuticals pursuant to 21 C.F.R. 58 et sea., as amended from time
to time.

         1.6      "cGMPs" means the current Good Manufacturing Practices for
Finished Pharmaceuticals pursuant to 21 C.F.R. 210 et seci., as amended from
time to time.

         1.7      "BCG" means Bacillus Calmette Guerin.

         1.8      "BCG REQUIREMENTS" means the quantity of BCG in doses which
CancerVax may require for all research and development, pre-clinical and human
clinical testing of Melanoma Vaccines and, after Commercial Introduction, for
Melanoma Vaccines for commercial sales.

         1.9      "KNOW-HOW" means materials, data, results, formulae, designs,
specifications, methods, processes, improvements, techniques, ideas,
discoveries, technical information, process information, clinical information
and any other information, whether or not any of the foregoing is patentable,
which is confidential (in accordance with Section 3 hereof) and proprietary to
Teknika now or hereafter during the Term of this Agreement, related to the
development, manufacture, use or sale of BCG in connection with the development,
manufacture, use or sale of any Melanoma Vaccine, provided however, that the
term "Know-how" shall not include any of the foregoing that is subject to
proprietary rights of third parties.

         1.10     "MELANOMA VACCINE" means the CVAX-M vaccine or vaccines
employing the CVAX-M antigen structure (whether alone or in combination) for the
prevention or treatment of human cancers.

         1.11     "MANUFACTURE" OR "MANUFACTURING PROCESS" means the
aseptic-storage, handling, production, processing and packaging of BCG in
accordance with this Agreement.

         1.12     "MANUFACTURING YEAR" means each calendar year commencing after
the Effective Date.

         1.13     "PARTY" and "PARTIES" are defined in the introductory

         1.14     "TEKNIKA" means Organon Teknika Corporation, a Delaware
corporation, its Affiliates and its successors and permitted assigns.

         1.15     "SPECIFICATIONS" means those product requirements defined in
Teknika's FDA Product License.

         1.16     "TERM" is defined in Section 4.1.

                                     Page 2


         1.17     "CANCERVAX" means CancerVax, Inc., a California corporation,
its Affiliates and its permitted successors and assigns.

         1.18     "FDA" means the U.S. Food and Drug Administration.


         2.1      GENERAL. CancerVax agrees that Teknika shall have the
exclusive right and obligation during the Term to Manufacture and supply to
CancerVax one hundred percent (100%) of its reasonable BCG Requirements for
purposes of research and development, pre-clinical studies and human clinical
trials and commercial sales of Melanoma Vaccines. Teknika hereby agrees, at its
sole expense, to commit all reasonably necessary facilities, appropriately
trained personnel, machinery, equipment, utilities and other Teknika resources
required to satisfy its obligations under this Agreement. Nothing herein,
however, shall be deemed to require Teknika, other than as it may decide in its
sole discretion, to expand beyond its current BCG Manufacturing facility. It is
further understood that if for reasons beyond its reasonable control, Teknika is
unable to fill all orders for BCG which it receives, then Teknika may equitably
apportion the supply of BCG among all orders it receives and fill such orders
partially without being in breach of this Agreement.


         With respect to each and every Melanoma Vaccine, Teknika shall, subject
to the forecasts and purchase order provisions of Section 2.4 below, Manufacture
and supply one hundred percent (100%) of BCG Requirements of such Melanoma
Vaccine (i.e., for IND BCG, Pivotal Trial BCG, and Commercial Sale BCG as
defined in Section 2.3. Teknika agrees to supply IND BCG at a transfer price of
[***] per dose. Teknika agrees to provide a reasonable quantity of Pivotal Trial
BCG at [***]. Teknika agrees to supply Commercial Sale BCG at a transfer price
equal to the average wholesale price of TICE(R) BCG (NDC No. 0052-0602-02), as
quoted in the "Drug Topics Redbook", as amended from time to time, less [***].
In the event the Drug Topics Redbook is no longer published, the average
wholesale price shall be determined by reference to a mutually acceptable
comparable publication or in an otherwise mutually acceptable manner.

hereby represents and warrants to CancerVax as follows:

Teknika shall exercise diligent efforts to Manufacture all reasonable BCG
Requirements for use in any vaccine used in connection with any pre-clinical
study or human clinical trial of any Melanoma Vaccine (the "IND BCG") (i) in
compliance with (A) this Agreement, (B) all Specifications, and (C) all
applicable laws and regulations, including but not limited to

*** Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

                                     Page 3


cGMPs to the extent applicable, and (ii) in a Teknika facility holding all
applicable licenses in the jurisdiction of Manufacture.

                  (b)      PIVOTAL CLINICAL TRIALS. Teknika shall manufacture
all BCG Requirements provided for herein for use in any vaccine used in
connection with pivotal (Phase II and/or Phase III) clinical trials (the
"Pivotal Trial BCG") and shall supply same to Cancervax upon Cancervax providing
Teknika with the pertinent protocols which identify the quantity of Pivotal
Trial BCG, at no charge per dose, up to the amount of doses required by said

                  (c)      COMMERCIAL USE. Teknika shall Manufacture all BCG
Requirements provided for herein for use in the commercialization of any
Melanoma Vaccine (the "Commercial Sale BCG") (i) in compliance with (A) this
Agreement, (B) all Specifications, and (C) all applicable laws and regulations,
including but not limited to cGMPs to the extent applicable, and (ii) in a
Teknika facility holding all applicable licenses in the jurisdiction of
Manufacture. Teknika shall provide the Commercial Sale BCG to CancerVax under a
private label pending FDA approval of that label.

                  (d)      CERTIFICATE OF ANALYSIS: NON-COMPLYING BCG. Before,
during and after Manufacture of BCG Requirements, as applicable, Teknika shall
obtain samples, monitor the Manufacturing Process and the environment of such
Manufacture, and keep such technical books and records of all of the foregoing
as are required under the Specifications and Procedures and all applicable laws
and regulations, including but not limited to cGLPs or cGMPs (as appropriate and
applicable). Teknika shall test each lot of BCG Requirements manufactured for
CancerVax or as required under the Specifications. Together with each such lot
of BCG Requirements, Teknika shall provide a written certificate of analysis
which shall set forth the results of such testing by Teknika and Teknika's
quality control approval of such lot of BCG Requirements. Teknika's obligations
under this Section 2.3(d) shall be performed at Teknika's sole expense.
CancerVax shall be entitled to test any such BCG Requirements in accordance with
the Specifications, at CancerVax's sole expense. Without limiting any of
CancerVax's other rights or remedies under this Agreement with respect to any
BCG Requirements supplied hereunder that do not comply with applicable
representations and warranties under this Section 2.3, and provided Teknika
reasonably confirms CancerVax's test results, the Parties agree that; (i)
CancerVax shall not be obligated to pay Teknika the transfer price applicable to
such non-complying BCG Requirements; (ii) if CancerVax has already paid for such
non-complying BCG Requirements, CancerVax shall be entitled to a credit against
future purchases for the amount paid to Teknika therefor; (iii) Teknika shall,
on a priority basis, Manufacture and supply to CancerVax, as applicable,
replacement BCG Requirements in full compliance with this Section 2.3; and (iv)
Teknika shall bear the reasonable cost of returning or destroying the non-
complying BCG Requirements.

                                     Page 4



         Subject to the other terms of this Agreement:

Upon execution hereof, CancerVax will provide Teknika with a written rolling
forecast of BCG Requirements for each month of calendar year 1998, which shall
be binding as to the first three (3) months and non-binding as to the remaining
nine (9) months. Thereafter, CancerVax shall provide, by the end of each
calendar month, an updated rolling forecast for the twelve (12) calendar months
beginning three (3) months thence, the first three (3) months of which shall be
considered as binding.

                  (b)      PURCHASE ORDERS. CancerVax shall place a firm
purchase order or purchase orders with Teknika setting forth (i) the quantities
of BCG Requirements to be supplied hereunder, (ii) the requested schedule for
delivery from Teknika of such BCG Requirements, and (iii) instructions for
shipping and packaging. The first such purchase order shall be placed upon
execution of this Agreement and each succeeding firm purchase order shall be
submitted no less than 120 days in advance of the first requested date of
delivery thereof. Subject to the other terms of this Agreement, CancerVax shall
be obligated to place firm purchase orders with Teknika for, and Teknika hereby
commits to Manufacture and supply hereunder pursuant to such firm purchase
orders, one hundred percent (100%) of the amount of BCG Requirements in the
binding portion of each twelve (12) month forecast under Section 2.4(a);
provided, however, that: (A) the Parties may mutually agree in writing to amend
any such firm purchase order; (B) Teknika in its discretion may agree to
Manufacture and supply hereunder additional amounts of BCG Requirements in
excess of the then-binding amount, provided that CancerVax places firm purchase
order(s) for such excess BCG Requirements on a timely basis; (C) Teknika shall
not be obligated to accept any purchase orders for BCG Requirements that exceed
the binding forecasts by CancerVax, and (D) Teknika agrees to provide CancerVax
with as much advance written notice as possible (and in any case at least
thirty (30) days' written advance notice) if Teknika determines that any
scheduled delivery of BCG Requirements pursuant to any purchase order will be
delayed by more than fifteen (15) days for any reason of which Teknika becomes

         2.5      SUPPLY.

                  a)       ASSURANCE OF SUPPLY. CancerVax and Teknika will
cooperate to anticipate CancerVax's long-term BCG Requirements, and Teknika and
CancerVax will take reasonable measures to assure that CancerVax's BCG
Requirements can be met, which measures may include the maintenance of adequate
safety stocks of BCG by Teknika and CancerVax.

                                      Page 5


                  b)       REDUCED DOSE SUPPLY. Teknika agrees that once a
Melanoma Vaccine has been approved for sale by FDA or a corresponding foreign
regulatory agency, it will, upon written request of CancerVax, use diligent
efforts to develop a reduced dosage form of Commercial Sale BCG for introduction
by CancerVax provided such development, in the opinion of Teknika, is
scientifically and commercially feasible. CancerVax would however be responsible
for the conduct and expense of all clinical trials related to the reduced dose
form of the Melanoma Vaccine.

                  c)       In the event Teknika sells, transfers or otherwise
ceases the Manufacture of BCG for any reason, other than as expressed in Section
7.6, Teknika shall use reasonable efforts to supply CancerVax with CancerVax's
best estimate of a two (2) year supply of BCG Requirements and will provide
CancerVax with reasonable prior notice of such event.

         2.6.     REGULATORY APPROVAL OF MANUFACTURING. Teknika shall be solely
responsible, at its sole cost and expense, for obtaining all necessary
regulatory approvals particular to the Manufacture and supply of BCG
Requirements, but Teknika makes no representation that BCG shall be suitable for
use in any vaccine. CancerVax shall advise Teknika of any new Specifications
required by the FDA or the Federal Food, Drug and Cosmetic Act (or the
equivalent regulatory authority or law in other countries) with respect to any
Melanoma Vaccine. Teknika shall not modify in any manner any Specifications
without CancerVax's prior written consent (which consent shall not be
unreasonably withheld); provided, however, Teknika shall not be limited in
making modifications or changes to BCG to improve the performance of BCG in its
current usages approved by the FDA. No such changes shall be implemented unless
required by the FDA without at least six (6) months' written notice to

         2.7      REGULATORY FILINGS. Without limiting the generality of the
foregoing, for purposes of supporting all pre-clinical studies and human
clinical trials and all regulatory filings, applications and approvals on the
part of CancerVax with respect to any Melanoma Vaccine, Teknika hereby agrees
that on an on-going basis during the Term: (1) Teknika shall permit CancerVax to
reference Teknika's drug master file and/or Investigational New Drug
Applications (IND's) for BCG with the United States Food and Drug
Administration; (ii) to the extent not subject to the proprietary rights of
third parties, Teknika shall provide CancerVax with all pre-clinical and
clinical data, results and other relevant information with respect to BCG
(including but not limited to information regarding the toxicity, safety and
stability of BCG) that is (A) submitted by Teknika in connection with any
Investigational New Drug application or other regulatory filing with respect to
BCG from time to time during the Term or (B) otherwise in Teknika's possession
from time to time during the Term; and (iii) a Teknika representative, at
CancerVax's request, shall attend periodic meetings to discuss the progress of
clinical trials of any Melanoma Vaccines. CancerVax will reimburse Teknika for
the foregoing assistance only (i) for its reasonable out-of pocket expenses,
including but not limited to

                                      Page 6


travel, and (ii) Teknika's fully burdened costs of performing technical studies
or engaging outside services subject to the prior approval of CancerVax.

                  a)       ADVERSE EVENTS REPORTING. On an on-going basis during
the Term and for at least ten (10) years after the expiration or termination of
this Agreement, each Party agrees to provide the other Party with any written
information in its possession which indicates adverse effects in humans
associated with BCG or any products using BCG.


                  (a)      TECHNICAL RECORDS. With respect to any Manufacture
and supply of BCG Requirements, Teknika shall, at its expense, keep properly
completed technical books and records, test data and reports as required under
the Specifications and all applicable laws and regulations, including but not
limited to cGLPs or cGMPs (as appropriate), and in any case shall maintain such
technical Information for at least two (2) years from the expiration date of the
relevant Melanoma Vaccine or longer if required under applicable laws and
regulations (including but not limited to cGLPs and cGMPs, as applicable).
During regular business hours and upon reasonable advance written request,
Teknika shall make any such technical information available to CancerVax for

                  (b)      QUALITY AUDIT. Upon submission of a proposal by
CancerVax which is approved by Teknika, Teknika shall permit CancerVax to audit,
in cooperation with Teknika's personnel, production, packaging, and quality
control facilities of Teknika and any of its significant suppliers as they
relate to Manufacture of BCG to allow CancerVax to verify Teknika's compliance
with its responsibilities under this Agreement. All confidential information
disclosed thereunder shall be held in confidence by CancerVax in accordance with
Article 3 below.

         2.9      LIABILITY.

                  (a)      INDEMNIFICATION BY CANCERVAX. Except as otherwise
provided in Sections 2.9 (b) or (c), CancerVax will defend, indemnify and hold
harmless Teknika against any and all claims, actions, liabilities, damages,
losses, costs or expenses, including reasonable attorney's fees, based upon or
arising out of the manufacture, sales or use of any Melanoma Vaccine by
CancerVax, provided that Teknika gives CancerVax prompt notice thereof in
writing, permits CancerVax to control the investigation, preparation and defense
thereof (including any compromise or settlement thereof and any appeal) and
provides reasonable assistance to CancerVax, at CancerVax expense, in that

                  (b)      LIABILITY. Each Party assumes full responsibility and
liability for any injury, damage or expense which it or its employees, agents
and invitees incur and

                                     Page 7


which arise from its manufacture, handling and use of BCG or Melanoma Vaccines,
except to the extent such injury, damage or expense arises from the negligence
or willful misconduct of the other Party.

                  (c)      INDEMNIFICATION BY TEKNIKA. Except as otherwise
provided in Sections 2.9 (a) or (b) Teknika will defend, indemnify and hold
harmless CancerVax against any and all claims, actions, liabilities, damages,
losses, costs or expense (including reasonable attorneys' fees) including
without limitation expenses of total or partial product recalls in connection
with the manufacture, use or sale of Melanoma Vaccines (i) based upon the gross
negligence or willful misconduct of Teknika or its employees arising out of the
Manufacture or shipment of BCG Requirements by Teknika or (ii) the failure of
Teknika to comply with governmental regulations with respect to BCG, provided
that CancerVax gives Teknika prompt notice thereof in writing, permits Teknika
to control the investigation, preparation and defense thereof (including any
compromise or settlement thereof and any appeal) and provides reasonable
assistance to Teknika, at Teknika's expense, in that regard.


         3.1.     Each party agrees to take such steps and, when necessary to
protect the rights of the other, shall cause its employees and agents and its
Affiliates employees and agents, to take such steps as are reasonably required
to protect and keep confidential, and shall not use, publicize or otherwise
disclose to third parties other than Affiliates, Confidential Information (as
defined below) of the other party, which was acquired from the other party
pursuant to this Agreement, including, without limitation, following procedures
designed to limit access of such information to those persons having a need to
know it. The parties agree not to disclose or use such Confidential Information
except as they may be entitled to do so or if necessary pursuant to or in the
performance of this Agreement.

         3.2      The obligation of confidentiality and restriction on use
imposed by the foregoing Section 3.1 shall not apply to any particular item of
Confidential Information that:

                  3.2.1    is known or generally available, or subsequently
         becomes known or generally available, to the public, or is otherwise at
         the time of disclosure or subsequently becomes part of the public
         domain, whether by printed publication or otherwise through no fault of
         the receiving parties;

                  3.2.2    the receiving party can demonstrate by competent
         evidence, based in substance upon writings and/or physical evidence,
         (i) was known to the receiving party at the time of receipt or (ii) is
         furnished to the receiving party without obligation of confidentiality
         or non-use by a third party, either before or after the time of its
         disclosure by the disclosing party, which third party is not

                                     Page 8


         restricted by a confidential undertaking to the disclosing party at the
         time of the disclosure;

                  3.2.3    the receiving party can demonstrate by competent
         evidence, based in substance upon writings and/or physical evidence,
         has been developed independently for the receiving party by persons not
         having access to the Confidential information; or

                  3.2.4    is the Confidential Information of the disclosing
         party and that the disclosing party discloses to a non-Affiliate party
         without restriction.

         3.3      The obligations of confidentiality and restriction on use
under this Article 3 shall continue to be binding upon the parties for a period
of five years following termination of this Agreement.

         3.4      Either party may also disclose Confidential Information
disclosed to it by the other party to the extent, and only to the extent, such
disclosure is necessary for such party to comply with court orders or other due
process of law or with applicable governmental laws or regulations The party
that desires to so disclose Information shall give the other party reasonable
advance notice of any such proposed disclosure pursuant to such compliance with
law or regulation, shall use its best efforts to secure confidential treatment
of the Information thus disclosed, and shall advise the other party in writing
of the manner in which that was done.

         3.5      For purposes of this Agreement, Confidential Information shall
mean: (a) data, inventions, Information, processes, know-how, patent
applications, trade secrets and similar intellectual property rights of a party,
including, without limitation, the original and copies of all documents,
inventions, laboratory notebooks, drawings, specifications, devices, equipment,
prototype models and tangible manifestations embodying any technology disclosed
hereunder, (b) a party's customer lists and marketing, sales, costs, royalty and
similar information related to the manufacture or sale of BCG or other part of
the Parties' business, and (c) any other information disclosed in writing and
marked as "Confidential Information" or, if disclosed orally, reduced to writing
and marked as "Confidential Information" and submitted within thirty (30) days
of the original oral disclosure.

         3.6      PERMITTED DISCLOSURES. Each Party may disclose the other
Party's information to the extent such disclosure is reasonably necessary in
prosecuting or defending litigation, filing, prosecuting or maintaining patent
applications or patents, complying with applicable laws or regulations, or, in
the case of CancerVax, conducting pre-clinical or clinical trials or preparing
or filing regulatory filings with respect to Melanoma Vaccines; provided,
however, that if a Party is required to make any disclosure of the other Party's
information furnished pursuant to this Agreement, it will give reasonable
advance notice of such disclosure requirements to the other Party and,

                                     Page 9


except to the extent inappropriate in the case of patent applications, will use
its best efforts to secure confidential treatment of such information required
to be disclosed.


         4.1      TERM. The term of this Agreement shall be for one (1) year
from the Effective Date and will renew automatically for successive 12 month
periods unless sooner terminated as provided in this Article 4.

         4.2      MATERIAL BREACH. Subject to Section 7.6, failure by either
Party to comply with any of the material obligations contained in this Agreement
shall entitle the other Party to give to the Party in default notice specifying
the nature of the default and requiring it to make good such default. If such
default is not cured within sixty (60) days after the receipt of such notice,
the notifying Party shall be entitled, without prejudice to any of its other
rights conferred on it by this Agreement and in addition to any other remedies
available to it by law or in equity, to terminate this Agreement effective upon
written notice to the other Party. The right of a Party to terminate this
Agreement, as herein above provided, shall not be affected in any way by its
waiver or failure to take action with respect to any previous default.

         4.3      INSOLVENCY OR BANKRUPTCY. Either Party may, in addition to any
other remedies available to it by law or in equity, terminate this Agreement, in
whole or in part as the terminating Party may determine, effective upon written
notice to the other Party, in the event the other party shall have become
insolvent or bankrupt, or shall have made an assignment for the benefit of its
creditors, or there shall have been appointed a trustee or receiver of the other
Party for all or a substantial part of its property, or any case or proceeding
shall have been commenced seeking reorganization, liquidation, dissolution,
winding-up, arrangement, composition or readjustment of its debts or any other
relief under any bankruptcy, insolvency, reorganization or other similar act or
law of any jurisdiction now or hereafter in effect, or there shall have been
issued a warrant of attachment, execution, disdain or similar process against,
any substantial part of the property of the other Party, and any such event
shall have continued for sixty (60) days undismissed, unbounded and

any termination of this Agreement for any reason shall be without prejudice to
any rights which shall have accrued to the benefit of either Party prior to such
expiration or termination. Such expiration or termination shall not relieve
either Party from obligations which are expressly indicated to survive
expiration or termination of this Agreement, which obligations include, without
limitation, those under Sections 2.8 or 2.9, or Articles 3, 5 and 6.

         4.5      Termination. In the event CancerVax ceases to produce the
Melanoma Vaccine and does not purchase BCG from Teknika pursuant to this
Agreement for

                                     Page 10


ninety (90) days, either Party shall have the right to terminate this Agreement
upon thirty (30) days written notice to the other. In the event CancerVax does
not purchase its full BCG Requirements from Teknika, or fails to purchase any
BCG for a period of six (6) months, Teknika may terminate this Agreement upon
written notice to CancerVax.


         5.1      Teknika represents and warrants that:

                  (a)      the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly authorized by

                  (b)      the performance by Teknika of any of the terms and
conditions of this Agreement on its part to be performed does not and will not
constitute a breach or violation of any other agreement or understanding,
written or oral, to which it is a party;

                  (c)      To the best of Teknika's knowledge, there are no
adverse proceedings, claims or actions pending, or threatened, relating to BCG
and at the time of disclosure and delivery thereof to CancerVax and Teknika
shall have the full right and legal capacity to disclose and deliver BCG without
violating the rights of third parties.

FITNESS FOR A PARTICULAR PURPOSE. Teknika does not warrant the suitability of
BCG for use in connection with any vaccine prepared by CancerVax and CancerVax
acknowledges that it relies on its own judgment in determining the suitability
of BCG Manufactured by Teknika for such purpose. Notwithstanding any other terms
of this Agreement, Teknika shall not be liable to CancerVax for any incidental,
special or consequential damages arising out of or in connection with the
Manufacture, use or supply of BCG by Teknika under this Agreement.


         Any dispute, controversy or claim between the Parties, arising out of
or relating to this Agreement or the Parties' respective rights and obligations
hereunder either during or after the Term (including the question as to whether
any such matter is arbitrable) shall be subject to binding arbitration in
accordance with then-existing commercial arbitration rules of the American
Arbitration Association. The Parties agree that, in the course of any such
arbitration, service of any notice at their respective addresses in accordance
with Section 7.11 of this Agreement shall be valid and sufficient, and any
arbitration hereunder shall be in the jurisdiction of the defendant Party, which
in the case of CancerVax shall be California and in the case of Teknika

                                     Page 11


shall be North Carolina. In any such arbitration, an award shall be rendered by
a majority of the members of a board of arbitration consisting of three (3)
members, one (1) of whom shall be chosen by each of CancerVax and Teknika and
the third of whom shall be appointed by mutual agreement of such two (2)
arbitrators. In the event of failure of such two (2) arbitrators to agree within
sixty (60) days after the commencement of arbitration (as defined below) upon
appointment of the third arbitrator, or, in the event that either Party shall
fail to appoint an arbitrator within thirty (30) days after the commencement of
the arbitration proceedings, the third arbitrator or (upon request of the other
Party) the second arbitrator and the third arbitrator, as the case may be, shall
be appointed by the American Arbitration Association in accordance with its then
existing commercial arbitration rules. For purposes of this Section, the
"commencement of the arbitration proceeding" shall mean the date upon which the
defendant Party receives from the American Arbitration Association a copy of the
request for arbitration filed by the Party desiring to have recourse to
arbitration. The decision of the arbitrators shall be in writing and shall set
forth the basis therefor. The Parties shall abide by all awards rendered in
arbitration proceedings, and such awards may be enforced and executed upon in
any court having jurisdiction over the Party against whom enforcement of such
award is to be sought. The Parties shall divide equally the administrative
charges, arbitrators' fees, and related expenses of arbitration, but each Party
shall pay its own legal fees incurred in connection with any such arbitration;
provided, however, if the arbitrators determine that one Party prevailed clearly
and substantially over the other Party, then the non-prevailing Party shall also
pay the reasonable attorneys' fees and expert witness costs and other
arbitration costs of the prevailing Party.


         7.1      NO PARTNERSHIP. Nothing in this Agreement is intended or shall
be deemed to constitute a partnership, distributorship, agency employer-employee
or joint venture relationship between the Parties. No Party shall incur any
debts or make any commitments for the other, except to the extent, if at all,
specifically provided herein.

         7.2      ASSIGNMENTS. Neither Party shall assign any of its rights or
obligations hereunder or this Agreement, except that either Party may do so: (a)
as incident to the merger, consolidation, reorganization or acquisition of stock
or assets affecting substantially all of the assets or voting control of such
Party; (b) to any Affiliate, if such Party remains liable and responsible for
the performance and observance of all of the Affiliate's duties and obligations
hereunder; (c) with the prior written consent of the other Party; or (d) as
incident to an agreement between CancerVax and a major corporate partner, who is
not a competitor to Teknika in any other FDA-approved applications of BCG. This
Agreement shall be binding upon the successors and permitted assigns of the
Parties and the name of a Party appearing herein shall be deemed to include the
names of such Party's successors and permitted assigns to the extent necessary

                                     Page 12


carry out the intent of this Agreement. Any assignment not in accordance with
this Section 7.2 shall be void.

         7.3      FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this

         7.4      NO NAME OR TRADEMARK RIGHTS. Except as otherwise provided
herein, no right, express or implied, is granted by this Agreement to use in any
manner the names Teknika" or "CancerVax" or any contraction thereof or any other
trade name or trademark of Teknika (including Tice) or CancerVax in connection
with the performance of this Agreement.

         7.5      PUBLIC ANNOUNCEMENT. Except as may otherwise be required by
applicable law or regulation, neither Party shall make any public announcement
concerning this Agreement or the subject matter hereof without the prior written
consent of the other Party (not to be unreasonably withheld).

         7.6      FORCE MAJEURE. If any default or delay occurs which prevents
or materially impairs a Party's performance and is due to a cause beyond the
Party's reasonable control, including but not limited to any act of any god or
demon, flood, fire, explosion, earthquake, casualty, accident, war, revolution,
civil commotion, blockade or embargo, injunction, law, proclamation, order,
regulation or governmental demand, the affected Party promptly shall notify the
other Party in writing of such cause and shall exercise diligent efforts to
resume performance under this Agreement as soon as possible. Neither Party shall
be liable to the other Party for any loss or damage due to such cause. Neither
Party may terminate this Agreement because of such default or delay.

         7.7      ENTIRE AGREEMENT OF THE PARTIES: AMENDMENTS. This Agreement,
including the exhibits attached hereto which are incorporated herein,
constitutes and contains the entire understanding and agreement of the Parties
and cancels and supersedes any and all prior negotiations, correspondence,
understandings and agreements, whether verbal or written, between the Parties
respecting the subject matter hereof. No waiver, modification or amendment of
any provision of this Agreement shall be valid or effective unless made in
writing and signed by a duly authorized officer of each of the Parties.

         7.8      SEVERABILITY. In the event that any of the provisions of this
Agreement shall for any reason be held by any court or authority of competent
jurisdiction to be invalid, illegal or unenforceable, such provision or
provisions shall be validly reformed to as nearly as possible approximate the
intent of the Parties and, if unreformable, shall be divisible and deleted in
such jurisdiction; elsewhere, this Agreement shall not be

                                     Page 13


affected so long as the Parties are still able to realize the principal benefits
bargained for in this Agreement.

         7.9      CAPTIONS. The captions to this Agreement are for convenience
only, and are to be of no force or effect in construing or interpreting any of
the provisions of this Agreement.

         7.10     APPLICABLE LAW. This Agreement shall be governed by and
interpreted for all purposes in accordance with the laws of North Carolina.

         7.11     NOTICE. All notices and other communications shall be deemed
to have been duly given when delivered in person or by registered or certified
mail (postage prepaid, returned receipt requested) to the respective parties as

         If to CancerVax:

          CancerVax, Inc.
          802 84th Avenue NE
          Medina, Washington 98039

         If to Teknika:

          Organon Teknika Corporation
          100 Akzo Avenue
          Durham, North Carolina 27712
          Attn: President

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective corporate officers, duly authorized as of the day and
year first above written.


By: /s/ Lloyd R. Moores                        By: /s/ Mark E. Lostrom
  ---------------------------                     ------------------------------
Name: Lloyd R. Moores                          Name: Mark E. Lostrom
Title: SR VP.                                  Title: ACTING PRESIDENT

 By: /s/ Robert S. Timmins
 Name: Robert S. Timmins
 Title: President

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