DEVELOPMENT AND LICENSE AGREEMENT

EXHIBIT 10.1 

DEVELOPMENT AND LICENSE AGREEMENT

BETWEEN

G ENTA I NCORPORATED

AND

E MISPHERE T ECHNOLOGIES , I NC.

March 22, 2006

DEVELOPMENT AND LICENSE AGREEMENT

T HIS D EVELOPMENT AND L ICENSE A GREEMENT (the “Agreement” ) is entered into as of March 22, 2006 (the “Effective Date” ) by and between Genta Incorporated , a Delaware corporation having a place of business at 2 Connell Drive, Berkeley Heights, New Jersey 07922 ( “Genta” ), and Emisphere Technologies, Inc. , a Delaware corporation having an address of 765 Old Saw Mill River Road, Tarrytown, NY 10591 ( “Emisphere” ). 

R ECITALS

W HEREAS , Emisphere is a biopharmaceutical company specializing in the oral delivery of therapeutic molecules and compounds;

W HEREAS , Emisphere has developed a certain oral delivery technology known as eligen™, and oral dosage formulations of therapeutic compounds;

W HEREAS , Genta is a biopharmaceutical company engaged in the research, development and commercialization of pharmaceutical products;

W HEREAS , Genta has developed a gallium-nitrate compound known as GANITE ^® , for which Genta has obtained FDA approval to market and sell (and which Genta currently markets and sells) as an intravenous treatment for patients with cancer-related hypercalcemia;

W HEREAS , Genta desires to develop, and Emisphere is willing to develop for Genta, a customized version of Emisphere’s eligen™ technology for use with gallium-nitrate to produce oral dosage formulations of gallium nitrate and other gallium-containing compounds;

W HEREAS , Genta desires to obtain, and Emisphere is willing to grant to Genta, an exclusive, worldwide right to develop and commercialize oral dosage formulations of gallium nitrate and other gallium-containing compounds based upon the eligen™ technology, subject to the terms and conditions set forth herein.

N OW , T HEREFORE , in consideration of the foregoing premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.          D EFINITIONS

             1.1        “Active Pharmaceutical Ingredient” or “API” shall mean a compound (in bulk form) having therapeutic activity, excluding any excipients and other ingredients that do not have any therapeutic activity, and excluding Carriers.

             1.2          “Affiliate” shall mean an individual, trust, business trust, joint venture, partnership, corporation, association or any other entity which (directly or indirectly) is controlled by, controls or is under common control with a party to this Agreement.  For the purposes of this definition, the term “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) as used with respect to a party, shall mean the possession (directly or indirectly) of more than fifty percent (50%) of the outstanding voting securities of a corporation or comparable equity interest in any other type of entity, or otherwise having the power to govern the financial and the operating policies or to appoint the management of such entity.

             1.3          “Carrier” shall mean any synthetic chemical compound that enables a drug molecule to cross membranes.

             1.4          “Carrier A ” shall mean the Carrier set forth in Exhibit A hereto that is designated as “Carrier A.”

             1.5          “Carrier B ” shall mean the Carrier set forth in Exhibit A hereto that is designated as “Carrier B.”

             1.6          “Carrier Inventions” shall have the meaning provided in Section 9.1(b).

             1.7          “Clinical Plan” shall mean the plan agreed upon by the parties for conducting the Clinical Program, as such plan may be amended from time to time by the TLC.           

             1.8          “Clinical Program” shall mean the program of clinical development to be conducted during the Clinical Term, as more fully described in the Clinical Plan.  At least initially, the focus of the Clinical Program will be the clinical development of a Product in the * Field.

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             1.9          “Clinical Term” shall mean the period of time commencing upon the first dosing of the first subject in a Phase I clinical trial of a Product and, unless terminated as provided in this Agreement, ending upon the date upon which Genta has obtained an initial Regulatory Approval of a Product in the * Field, provided that, upon mutual written consent after the Effective Date the parties may extend the Clinical Term to pursue additional indications.  After the Effective Date, the Clinical Term may only be extended by mutual written agreement between the parties that references this Section 1.9.

             1.10          “Combination Invention” shall have the meaning provided in Section 9.1(b).

             1.11          “Combination Product” shall have the meaning provided in Section 6.3(c).

             1.12          “Confidential Information” shall have the meaning provided in Section 11.1.

             1.13          “Control” shall mean, with respect to any Information or intellectual property right, possession by a party of the ability (whether by ownership, license or otherwise) to grant access, a license or a sublicense to such Information or intellectual property right without violating the terms of any agreement or other arrangement with any Third Party.

             1.14          “Development Plan ” means collectively or individually, as context requires, the Formulation-Development Plan and/or the Clinical Development Plan.

             1.15          “Development Program ” means collectively or individually, as context requires, the Formulation-Development Program and/or the Clinical Development Program.

             1.16          “Development Term” shall have the meaning provided in Section 12.1.

             1.17          “DMF” shall mean a drug master file (as such term is defined in 21 C.F.R. Part 314.420).

             1.18          “Emisphere Inventions” shall have the meaning provided in Section 9.1(c).

             1.19          “Emisphere Know-How” shall mean, to the extent Controlled by Emisphere or its Affiliates as of the Effective Date or at any time during the Term, all Information not included in the Valid Claims of Emisphere Patents or Joint Patents that is necessary or useful for Genta for to perform its obligations under the Formulation-Development Program or to manufacture, use, sell, offer for sale or import Products, including, in each case, any replication or any part of any of the foregoing Information.

             1.20          “Emisphere Patents” shall mean, to the extent Controlled by Emisphere or its Affiliates as of the Effective Date or at any time during the Term, all Patents that claim inventions necessary or useful for Genta to perform its obligations under the Formulation-Development Program or to manufacture, use, sale, offer for sale or import of Products, but excluding in each case the Joint Patents.  For clarity, Emisphere Patents includes all Patents that claim Emisphere Inventions.

             1.21          “Emisphere Technology” shall mean the Emisphere Patents and Emisphere Know-How.

             1.22          “Existing MTA” means the Material Transfer Agreement between the parties dated July 8, 2004.

             1.23          “FDA” shall mean the United States Food and Drug Administration, or any successor agency thereto having the administrative authority to regulate the marketing of human pharmaceutical products or biological therapeutic products, delivery systems and devices in the United States of America.

             1.24          “Field” shall mean all human and veterinary medical uses.

             1.25          “First Commercial Sale” shall mean, with respect to any Product, the first sale in a country after the governing health regulatory authority of such country has granted Regulatory Approval to market and sell the Product.

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             1.26          “Formulation-Development Budget ” means budget agreed upon by the parties for Emisphere’s conduct of its responsibilities under the Formulation-Development Program, as such budget may be amended from time to time by the TLC.  The Formulation-Development Budget in effect as of the Effective Date of this Agreement has been agreed upon by the parties in writing. 

             1.27          “Formulation-Development Plan” shall mean the plan agreed upon by the parties for conducting the Formulation-Development Program, as such plan may be amended from time to time by the TLC.  The Formulation-Development Plan in effect as of the Effective Date of this Agreement has been agreed upon by the parties in writing.

             1.28          “Formulation-Development Program” shall mean the program of formulation research and development of a Product (including selection and incorporation of the Program Carrier in connection therewith) to be conducted during the Formulation-Development Term, as more fully described in the Formulation-Development Plan.  At least initially, the focus of the Formulation-Development Program will be the research and development of a Product for use within the * Field. 

             1.29          “Formulation-Development Term” shall mean the period of time commencing upon the Effective Date of this Agreement and, unless earlier terminated as provided in this Agreement, ending upon completion of the activities set forth in the Formulation-Development Plan.

             1.30          “Gallium Compound” means a compound containing the element gallium (including, without limitation, a Gallium Salt) as its Active Pharmaceutical Ingredient.

             1.31          “Gallium Inventions” shall have the meaning provided in Section 9.1(b).

             1.32          “Gallium Salt ” means any salt form of gallium, including without limitation gallium nitrate, gallium citrate, gallium maltolate or gallium sulfate in anhydrous solvate or hydrate forms.

             1.33          “Genta Inventions” shall have the meaning provided in Section 9.1(c).

             1.34          “Genta Know-How” shall mean, to the extent Controlled by Genta or its Affiliates as of the Effective Date or at any time during the Term, all Information not included in the Genta Patents or Joint Patents that is necessary or useful for Emisphere to perform its obligations under the Formulation-Development Program or the manufacture and supply of Products under Article 8.  For clarity, other than the Gallium Salt (in the form of gallium nitrate or such other form as may be the subject of the parties’ efforts under this Agreement) and the Materials (as defined in Section 3.7) that Genta is required to provide under the Formulation-Development Plan, no compositions of matter, cells, cell lines, assays, animal models and physical, biological or chemical materials owned or Controlled by Genta or its Affiliates are included within the Genta Know-How to be provided hereunder.

             1.35          “Genta Patents” shall mean, to the extent Controlled by Genta or its Affiliates as of the Effective Date or at any time during the Term, all Patents that claim inventions necessary or useful for Emisphere to perform its obligations under the Formulation-Development Program or under Article 8, but excluding the Joint Patents.  For clarity, Genta Patents includes all Patents that claim Genta Inventions.

             1.36          “Genta Technology” shall mean the Genta Patents and the Genta Know-How.

             1.37          “* Field” shall have the meaning provided in Section 6.2(b)(i).

             1.38          “Improvement” shall mean, with respect to the Program Carrier or a Potential Program Carrier, a Carrier that is derived from or based upon the Program Carrier, any Potential Program Carrier, or any other Emisphere Technology, but that also incorporates or embodies enhancements, modifications or improvements thereto. 

             1.39          “IND” shall mean an Investigational New Drug Application filed with the FDA, or the equivalent application or filing filed with any equivalent agency or governmental authority outside the United States of America (including any supra-national agency such as in the European Union) necessary under law to commence human clinical trials in such jurisdiction.

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             1.40          “Information” shall mean all tangible and intangible (a) techniques, technology, practices, trade secrets, inventions (whether patentable or not), methods, knowledge, know-how, skill, experience, test and commercial data and results (including pharmacological, toxicological, clinical and pre-clinical test data and results), analytical and quality control data, results or descriptions, software and algorithms and (b) compounds, compositions of matter, cells, cell lines, assays, animal models and physical, biological or chemical materials.

             1.41          “Inventions” shall have the meaning provided in Section 9.1(a).

             1.42          “Joint Inventions” shall have the meaning provided in Section 9.1(c).

             1.43          “Joint Patents” shall mean all Patents that claim a Joint Invention.

             1.44           “ Joint Technology ” shall mean the Joint Patents and Joint Inventions.

             1.45          “Milestones” means, collectively, the First Milestone (including the individual Formulation-Development Term Milestones therein), Second Milestone, Third Milestone, Fourth Milestone, Fifth Milestone, and Sixth Milestone, each of which shall have the meaning provided in Section 6.2(a).

             1.46          “NDA” shall mean a New Drug Application (as more fully defined in 21 C.F.R. Part 314.5 et seq. ) and all amendments and supplements thereto filed with the FDA, or the equivalent application filed with any equivalent agency or governmental authority outside the United States of America (including any supra-national agency such as in the European Union), including all documents, data, and other information concerning a pharmaceutical product which are necessary for gaining Regulatory Approval to market and sell such pharmaceutical product in the relevant jurisdiction.

             1.47          “Net Sales” shall mean the gross amounts received by Genta or its Affiliates or Sublicensees for sales of Products to Third Parties (it being understood that sales between Genta, its Affiliates and Sublicensees are not included within Net Sales, unless the buying party is the end user of such Product, in which case the amount billed therefor shall be deemed to be the amount that would be billed to a Third Party end user in an arm’s-length transaction), less the following deductions:  (i) returns and return reserves (such reserves consistent with generally accepted accounting principles (“ GAAP ”)) (including allowances actually given for spoiled, damaged, out-dated, rejected or returned Product sold, withdrawals and recalls), (ii) rebates to the extent consistently and reasonably applied by Genta or its Affiliates or Sublicensees to its products, price reductions, rebates to welfare systems, (iii) charge backs and charge back reserves (such reserves consistent with GAAP), (iv) cash sales incentives (but only to the extent it is a sales related deduction which is accounted for within Genta or its Affiliates or Sublicensees on a product-by-product basis), (v) government mandated rebates and similar types of rebates (e.g., Medicaid), each as consistently and reasonably applied by Genta or its Affiliates or Sublicensees to its products, (vi) volume (quantity) discounts and cash discounts), as consistently and reasonably applied by Genta or its Affiliates or Sublicensees to its products, and (vii) taxes (value added or sales taxes, government mandated exceptional taxes and other taxes directly linked to the gross sales amount), it being understood that income and capital gains taxes are not the type of taxes contemplated as a deduction in this definition of Net Sales. 

             1.48          “Oral Formulation ” shall mean a pharmaceutical product containing on the one hand, a Gallium Compound, and on the other hand, any Carrier, that is useful and is marketed only for oral administration, including sublingual and buccal dosage forms. 

             1.49          “Patents” shall mean (a) United States and foreign patents, re-examinations, reissues, renewals, extensions and term restorations, and (b) pending applications for United States and foreign patents, including, without limitation, provisional applications, non-provisional applications, continuations, continuations-in-part, divisional and substitute applications, including, without limitation, inventors’ certificates.

             1.50          “Potential Program Carriers ” shall mean the two (2) Carriers set forth in Exhibit A hereto, designated as “Carrier A” and “Carrier B,” respectively, and such additional Carriers, if any, that the Parties agree to add as Potential Program Carriers as set forth in Section 3.8. 

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             1.51          “Product” shall mean any Oral Formulation containing a Gallium Compound and the Program Carrier.

             1.52          “Program Carrier” shall mean the Carrier selected by the parties to be incorporated into the Products pursuant to the Formulation-Development Program in accordance with Section 3.8.         

             1.53          “Regulatory Approval” shall mean any and all approvals (including price and reimbursement approvals), licenses, registrations, or authorizations of any country, federal, state or local regulatory agency, department, bureau or other government entity that is necessary for the manufacture, use, storage, import, transport and/or sale of a Product in such jurisdiction.

             1.54          “Regulatory Authority” shall mean any and all national, supra-national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, whose approval or authorization is necessary for, or to whom notice must be given prior to, the manufacture, distribution, use or sale of a Product.

             1.55          “Sublicensee” means a Third Party to whom Genta or a Genta Affiliate has granted a sublicense under the Emisphere Technology to manufacture and/or sell Products.  A Sublicensee shall be considered a “Domestic Sublicensee” to the extent Genta or a Genta Affiliate has granted it a sublicense under the Emisphere Technology to sell Products in the United States, and a “Foreign Sublicensee” to the extent Genta or a Genta Affiliate has granted it a sublicense under the Emisphere Technology to sell Products outside the United States.  For clarity, (i) Net Sales of a Sublicensee who, under sublicense from Genta or a Genta Affiliate, makes Products inside the United States and sells them outside the United States are considered Net Sales of a Foreign Sublicensee, (ii) Net Sales of a Sublicensee who, under sublicense from Genta or a Genta Affiliate, makes Products outside the United States and sells them inside the United States are considered Net Sales of a Domestic Sublicensee, and (iii) a Sublicensee who, under sublicense from Genta or a Genta Affiliate, sells Products globally, is considered a Domestic Sublicensee with respect to sales made inside the United States and a Foreign Sublicensee with respect to Net Sales made outside the United States.

             1.56          “Supply Agreement” shall have the meaning provided in Article 8.

             1.57          “Technical Liaison Committee” or “TLC” shall mean the committee formed pursuant to Section 2.1.

             1.58          “Term” shall have the meaning provided in Section 12.1.

             1.59          “Third Party” shall mean any entity other than Emisphere or Genta or an Affiliate of Emisphere or Genta.

             1.60          “Valid Claim” shall mean any claim in an issued Emisphere Patent that (i) has not expired, been cancelled, been declared invalid, or been admitted to be invalid or unenforceable by a decision of a court or government agency of competent jurisdiction to which an appeal or other legal recourse is not, or is no longer, possible, and (ii) has not been admitted to be invalid by the patent’s owner or its successor or assigns through reissue, re-examination, or disclaimer.

2.          T ECHNICAL L IAISON C OMMITTEE

             2.1          Technical Liaison Committee.   Promptly after the Effective Date, the parties will form a Technical Liaison Committee (the “TLC” ) composed of three (3) representatives of each of Genta and Emisphere.  One (1) representative of Genta on the TLC shall be selected to act as the chairperson of the TLC.  The TLC shall meet as needed, but at least quarterly during the Development Term (and upon the termination or expiration of the Development Term, the TLC shall dissolve and have no further function under this Agreement).  Such meetings may be conducted by videoconference, teleconference or in person.  A reasonable number of additional representatives of either party may attend meetings of the TLC, subject to Articles 9 and 11.  Should the additional representatives not be an employee of either party, such individuals may attend TLC meetings provided they have appropriate confidentiality agreements in place that are commensurate with those set forth in Article 11 and have agreed to assign inventions to either party to effect the intent of Article 9.  The TLC shall have responsibility to (i) facilitate the exchange of information between the parties, (ii) review progress on the implementation and completion of the Development Plan, including timelines and adherence to the Formulation-Development Budget, and (iii) make such other decisions as are expressly allocated to the TLC under this Agreement. The TLC shall not have the power to amend or waive compliance with the terms of this Agreement.

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             2.2          Decision Making .  Decisions of the TLC shall be made by majority vote of all TLC members present either in person or by other means (e.g., teleconference) at any meeting; provided that, if there is not an equal number of TLC members who are representatives of each party present at such meeting, then only an equal number of such representatives of each party shall be entitled to vote at such meeting.  In the event that the votes required to approve a decision cannot be reached, then either party may, by written notice to the other, have such issue referred to the Chief Executive Officer of Genta and the Chief Executive Officer of Emisphere, for attempted resolution by good-faith negotiations within thirty (30) days after such notice is received.  For all matters that cannot be resolved by such Chief Executive Officers upon request by a party, then neither party shall have the deciding vote or the right to challenge the results thereof, through arbitration or otherwise, provided that the foregoing shall not limit either party’s right to submit claims of breach of this Agreement for resolution by binding arbitration pursuant to Section 14.3.

3.          C ONDUCT O F F ORMULATION -D EVELOPMENT P ROGRAM

             3.1          Objectives.   Emisphere hereby agrees to establish and conduct its responsibilities under the Formulation-Development Program during the Formulation-Development Term in accordance with the Formulation-Development Plan and the timelines set forth therein, the Formulation-Development Budget, and with the terms of this Agreement, to develop Products for further development and commercialization by Genta. 

             3.2          Initial Technology Transfer.   Commencing promptly after the Effective Date:  (a) Genta shall disclose to Emisphere all existing Genta Technology necessary to enable Emisphere to practice the license granted to it under Article 5; and (b) Emisphere shall disclose to Genta all existing Emisphere Technology necessary to enable Genta to practice the license granted to it under Article 5.  During the Development Term, Emisphere shall provide Genta with reasonable technical assistance relating to the use of the Emisphere Technology, solely to the extent necessary to enable Genta to practice the licenses granted to it under Article 5. 

             3.3          Research Commitment.   During the Formulation-Development Term, Emisphere shall use commercially reasonable efforts to conduct its responsibilities under the Formulation-Development Program in accordance with the Formulation-Development Plan and Formulation-Development Budget, as revised from time to time by the TLC.  Without limiting the generality of the foregoing, Emisphere shall devote to the Formulation-Development Program such personnel as is reasonably necessary to conduct all of Emisphere’s responsibilities required under the Formulation-Development Plan, it being understood that Genta is and will be responsible (a) under the Formulation-Development Plan only for the supply of cGMP quantities of Gallium Salt API (in the form of gallium nitrate or such Gallium Salt(s) as may be mutually agreed by the parties) to Emisphere in connection with formulation development, and (b) for the conduct of the Clinical Program (as set forth in greater detail in Article 4).  Emisphere acknowledges that while the Formulation-Development Plan describes the principal activities that Emisphere is to perform under the Formulation-Development Program, Emisphere’s responsibilities under the Formulation-Development Program (and the reimbursement provided under Section 6.1) include all such activities that would normally be performed to perform such principal activities, including the analysis and compilation of results from such activities in a form appropriate for submission in an IND filing.  Subject to the foregoing Genta acknowledges that Emisphere’s responsibilities under the Formulation-Development Program may not constitute all activities that are necessary to develop a Product for the * Field to the point of supporting the filing of an IND.  In addition, Emisphere shall promptly provide written reports of the status of its activities under the Formulation-Development Plan and the results from its performance of such activities, in accordance with a schedule agreed upon by the parties, which shall be in any event at least monthly.  Each party shall be solely responsible for the costs and expenses incurred in connection with its performance of Development Plan activities, subject to Section 6.1.  Genta shall be responsible for the conduct of toxicology studies of Products that it deems appropriate, to the extent such studies are not otherwise covered by the Formulation-Development Plan.  To the extent Genta conducts any toxicology studies of Products, Emisphere shall have no right to utilize the data generated from such studies without the prior written consent of Genta, unless required by law; provided, however, that, at Emisphere’s option, Emisphere shall have the right to purchase such data solely for use in accordance with Section 5.3, and Genta agrees, subject to Genta’s consent not to be unreasonably withheld, to sell such data to Emisphere solely for such purpose and as Confidential Information of Genta subject to the confidentiality restrictions of this Agreement, upon payment by Emisphere to Genta of an amount equal to Genta’s cost of conducting the applicable toxicology study(ies).

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             3.4          Continuing Information Exchange.  Without limiting its obligations under Section 3.2, Emisphere shall promptly disclose and keep Genta reasonably informed as of all Emisphere Technology developed or obtained, including without limitation inventions, discoveries and technical developments made in the course of performing its activities under the Formulation-Development Program, and all Inventions made by employees or independent contractors of Emisphere related to Oral Formulations or otherwise necessary or useful for the Formulation-Development Program, with any such Inventions that are included in the Emisphere Technology and that are directly relevant to the Formulation-Development Program being communicated reasonably promptly after it is developed or obtained, or its significance appreciated.  Emisphere shall disclose to Genta, in confidence, all reasonably requested toxicology and safety data and other information Controlled by Emisphere relating to the Potential Program Carriers, the Program Carrier or the Oral Formulations; it being understood that (a) with respect to Carrier A, Emisphere shall be required to disclose such information upon the Effective Date of this Agreement and thereafter for so long as Carrier A remains a Potential Program Carrier, and (b) with respect to the Carrier B, Emisphere shall only be required to disclose such information upon Genta’s selection of Carrier B *, and thereafter for so long as Carrier B remains a Potential Program Carrier.  Emisphere shall also provide reasonable technical assistance to enable Genta to utilize such information.

             3.5          Subcontracts.   Emisphere may perform some of its obligations under the Formulation-Development Plan through one (1) or more subcontractors, provided that (i) for any subcontractor involved in activities that are not solely related to Carriers, Genta approves of the subcontractor in advance in writing (such approval not to be unreasonably withheld), (ii) none of the rights of Genta hereunder are diminished or otherwise adversely affected as a result of such subcontracting, and (iii) the subcontractor undertakes in writing obligations of confidentiality and non-use regarding Confidential Information which are substantially the same as those undertaken by Emisphere pursuant to Articles 9 and 11 hereof.  In the event that Emisphere performs any of its obligations under the Formulation-Development Plan through a subcontractor, then Emisphere will, at all times, be responsible for the performance and payment of such subcontractor as if the obligations performed by the subcontractor were performed by Emisphere. For clarity, Emisphere shall have the right to use subcontractors to perform its activities under the Formulation-Development Program solely in connection with Carriers without first obtaining Genta’s approval of such subcontractor.

             3.6          Compliance.   All work conducted by either party in connection with the Formulation-Development Program, shall be conducted in accordance with applicable Good Laboratory Practices and, if applicable, Good Manufacturing Practices, as such rules of practice and regulations are amended from time to time.

             3.7          Materials Transfer.   In order to facilitate the Formulation-Development Program, Genta has provided (under the Existing MTA) and may continue to provide to Emisphere certain biological materials or chemical compounds (collectively, “Materials” ) Controlled by Genta (other than under this Agreement) for use by Emisphere in furtherance of the Formulation-Development Program.  Except as otherwise provided under this Agreement, all such Materials delivered to Emisphere are and will remain the sole property of Genta, have been and will be used by Emisphere only in furtherance of the Formulation-Development Program in accordance with this Agreement, have not been and will not be used or delivered to or for the benefit of any Third Party (other than a permitted subcontractor of Emisphere), and have been and will be used in compliance with all applicable laws, rules and regulations.  In particular, Genta has or may supply Emisphere with Gallium Salt API as set forth in the Formulation-Development Plan.  The Materials supplied under this Agreement must be used with prudence and appropriate caution in any experimental work because not all of their characteristics may be known.  Except as expressly set forth herein, THE MATERIALS ARE PROVIDED “AS IS” AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE. 

             3.8          Selection of the Program Carrier.  Under the Formulation-Development Program, Emisphere shall perform pre-clinical studies and other activities to generate such data and information as is necessary to evaluate the suitability of each of the two (2) Potential Program Carriers identified in Exhibit A hereto for incorporation into the Product to be developed under the Formulation-Development Program.  The selection of the Program Carrier shall be conducted in a * . 

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4.          D EVELOPMENT A ND C OMMERCIALIZATION O F P RODUCTS B Y G ENTA

             4.1          Development and Commercialization of Products.   Subject to the terms and conditions of this Agreement, and except as otherwise provided with respect to Emisphere’s performance of its responsibilities under the Formulation-Development Program under Article 3, its preparation and maintenance of certain regulatory filings under Article 4, and its manufacturing responsibilities under Article 8, Genta shall control and be solely responsible for the worldwide development and commercialization of Products, at its sole cost and expense. Genta hereby agrees to establish and conduct the Clinical Program during the Clinical Term in accordance with the Clinical Plan and the timelines set forth therein.  Genta shall own all data generated in the development and/or commercialization of Products other than data solely relating to Carriers (provided Genta shall have the right to access and use such Carrier-specific data as necessary to carry out the purposes of this Agreement). 

             4.2          Disclosure and Use of Data Relating to Program Carriers.  Genta shall during the Term of this Agreement promptly and fully disclose to Emisphere in writing all data generated by or on behalf of Genta or its Affiliates (or Sublicensees, to the extent provided to and Controlled by Genta) with respect to the Program Carrier.  Emisphere shall be free to use all such data disclosed to it by Genta for any purpose (including, without limitation, in support of patent filings), other than the development, manufacture or commercialization of Oral Formulations.  Without limiting the generality of the foregoing, Emisphere shall be free to use such data for the purpose of researching, developing, manufacturing or commercializing the Program Carrier pursuant to Article 8 hereof and/or for use of any Carrier in combination with any compound that is not a Gallium Compound.

             4.3          Clinical Trials and Clinical Data.  Genta shall have the sole right to conduct clinical trials of Products in the Field.  Genta shall establish and conduct the clinical trials of the Product developed under the Formulation-Development Program for the * Field in accordance with the Clinical Plan.  As between the parties, Genta shall own all clinical data and reports related to any Product clinical trials (including, but not limited to, the clinical trials for the Product developed under the Formulation-Development Program for the * Field).  All clinical data relating to Products, including safety reports from such clinical trials, shall be maintained by Genta in a centralized database.  Genta shall be the sole IND holder and will solely own all NDAs for all Products as further specified in Section 4.10.  Emisphere shall have the right to cross file and reference data from Product INDs or NDAs with respect to obtaining Regulatory Approval for any Program Carrier for use in combination with drugs that do not include a Gallium Compound.

             4.4          DMFs and Information Relating to Carriers.  Without limiting its obligations under Sections 3.2 and 3.4, * Emisphere shall provide Genta with true and complete copies of its DMFs (if any exist) for each Potential Program Carrier.  During the Term of this Agreement, Emisphere shall promptly provide Genta with true and complete copies of any additions that are made to such DMFs, along with any additional Program Carrier-related regulatory and scientific documents that Genta reasonably requests that are Controlled by Emisphere.  Genta, its Affiliates and Sublicensees hereunder shall have the right to cross file and reference data from the Program Carrier regulatory filings that are Controlled by Emisphere solely in connection with obtaining Regulatory Approval for Products.

             4.5          CMC Section.  Emisphere and Genta will together develop the Chemistry, Manufacturing and Controls section of the NDA for Products. 

             4.6          Communications with Regulatory Authorities.  Except as required by applicable law, Genta shall have the sole right to communicate with Regulatory Authorities concerning Products, including conducting meetings and holding telephone discussions with such Regulatory Authorities, provided that the foregoing prohibition shall not apply to Emisphere’s filings and filing-related communications with Regulatory Authorities relating solely to the Program Carrier (in which event Emisphere shall consult with Genta prior to such communication and consider Genta’s input in good faith) or to combinations of the Program Carrier with any API other than a Gallium Compound (in which event no consultation with Genta will be required).  During the Development Term, Emisphere will assist Genta, at Genta’s reasonable request, in preparing for any such communications or meetings, Genta shall notify Emisphere prior to scheduling any such meetings with the FDA to enable Emisphere to participate in such meetings, and Emisphere shall have the right to have a representative of Emisphere attend with Genta to observe any meeting with the FDA pertaining to Products, provided Emisphere gives Genta reasonable advance notice of its desire to attend such meeting, Emisphere participates with Genta in Genta’s preparation for the meeting, and the FDA does not object to Emisphere’s attendance or participation.  Emisphere’s participation in communications with Regulatory Authorities concerning Products shall be subject to Genta’s reasonable discretion.  Genta shall also provide to Emisphere copies of all meeting minutes that are kept for Genta interactions during the Development Term with the FDA in respect of Products. 

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             4.7          Assistance with NDA.  Emisphere shall compile all data and information Controlled by Emisphere from any studies conducted by or on behalf of Emisphere involving the Program Carrier in a format appropriate for NDA filings for the Product as necessary to support an NDA submission, as determined by the TLC.  Emisphere shall provide Genta with such data and information (including all research and clinical study reports) at a time agreed upon by the TLC, and in any event within a reasonable time.

             4.8          Clinical Efforts.  Genta shall use commercially reasonable efforts to conduct the Clinical Program during the Clinical Term in accordance with the Clinical Plan, as revised from time to time by the TLC.  Without limiting the generality of the foregoing, but subject to Section 5.4, Genta shall devote to the Clinical Program such personnel as is consistent with the use of commercially reasonable efforts to conduct Genta’s activities under the Clinical Plan, it being understood that Emisphere is and will be responsible under the Clinical Plan to supply cGMP quantities of Product to Genta in connection with clinical development, provided that Genta has first provided cGMP quantities of Gallium Salt API to Emisphere for the purpose of making such Product, as provided in the Clinical Plan.  In addition, during the Clinical Term, Genta shall promptly provide written reports of the status of its activities under the Clinical Plan and the results from its performance of such activities, in accordance with a schedule agreed upon by the parties, which shall be in any event at least monthly.  Each party shall be solely responsible for the costs and expenses incurred in connection with its performance of Clinical Plan activities, subject to Section 6.1.  As used in this Section 4.8, “commercially reasonable efforts” shall mean those efforts, consistent with the exercise of prudent scientific and business judgment, as applied in the pharmaceutical industry to development and commercialization activities conducted with respect to other products of similar potential and market size.  It is understood that such potential may change from time to time based upon changing scientific, business, marketing and return on investment considerations. 

             4.9          Pharmacovigilance.  Each party shall fully and timely disclose to the other all clinical safety data and information on products containing the Program Carrier to the extent required by regulatory authorities or applicable law. 

             4.10          Regulatory Approvals.   As between the parties, except as otherwise provided in this Agreement, Genta shall be responsible for and shall own all filings (including INDs, CTAs, NDAs and MAAs) necessary for Regulatory Approval of Products and for obtaining and maintaining such Regulatory Approvals, at Genta’s expense, provided that Genta shall provide Emisphere with a reasonable opportunity to review and comment on those portions of any such proposed filing regarding the Program Carrier prior to submission to the applicable Regulatory Authority.  Such regulatory documents shall be maintained and held by Genta.  Emisphere agrees to use its commercially reasonable efforts to assist Genta in obtaining FDA approval of an NDA for any Product developed pursuant to this Agreement, as well as Regulatory Approvals from any other Governmental Authority that may be required for the marketing of Products in any other country.  Genta will compensate Emisphere for any such assistance as provided in Section 6.1.  Emisphere specifically agrees to cooperate with any inspection by the FDA or other regulatory agency, including, but not limited to, any inspection prior to approval of the NDA for any Product.  Emisphere shall have the right to receive copies of all Regulatory Approvals and other filings with Regulatory Authorities with respect to Products, subject to the provisions of Article 11.

             4.11          Post-Development Term Development and Commercialization.   After the end of the Development Term, Emisphere shall have no obligation to perform any further Development Plan activities, and Genta shall have the sole right to control development and commercialization of the Products.  Notwithstanding the foregoing, during the Term of this Agreement (including after the end of the Development Term):

                              (a)           Genta will keep Emisphere informed regarding the worldwide development of Products by Genta, its Affiliates and Sublicensees on a quarterly basis;

                              (b)           Genta and Emisphere will coordinate their efforts with respect to development activities that would reasonably be considered to materially affect the other Party’s ability to market and commercialize Products (in the case of Genta) or the Program Carriers or products (other than the Products) containing Program Carriers (in the case of Emisphere), such as the design and conduct of any long-term toxicology study for the Program Carrier;

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                              (c)           if Emisphere receives any written or oral communications from a Regulatory Authority relating to a Product or solely to the Program Carrier, then Emisphere shall provide Genta with a copy of any such written communication or a summary of any such oral communication as soon as practicable but no later than ten (10) business days after receipt of such communication, or sooner if mandated by law;  and

                              (d)           each of the parties’ rights and obligations under Section 4.10 (Regulatory Approvals) shall continue in effect.

             4.12          Compliance.   All work conducted by either party in connection with the Clinical Program shall be conducted in accordance with applicable Good Clinical Practices, as such rules of practice and regulations are amended from time to time, and other applicable laws, rules and regulations.  Genta and its Affiliates shall conduct, and shall use commercially reasonable efforts to cause its Sublicensees to conduct, all commercialization activities with respect to the Products in accordance with applicable laws, rules and regulations.

5.          L ICENSE G RANTS

             5.1          License Grants.

                              (a)          Exclusive Development and Commercialization License By Emisphere.   Subject to the terms and conditions of this Agreement (including, without limitation, Article 6 hereof), Emisphere hereby grants to Genta and its Affiliates an exclusive (even as to Emisphere, but subject to Section 5.3), worldwide, royalty-bearing (under Section 6.3) license, with the right to sublicense through multiple tiers of sublicense, under the Emisphere Technology and the Joint Technology, solely to develop, make, have made, use, sell, offer for sale, have sold and import Products in the Field.  For purposes of clarification, in no event shall Genta have any right or license under this Agreement to make, have made, use, sell, have sold, offer for sale or import (A) any pharmaceutical product containing any formulation of a Gallium Compound and a Program Carrier that is not an Oral Formulation, or (B) any pharmaceutical product containing the Program Carrier and any drug other than a Gallium Compound.  Further, for purposes of clarification, in no event shall Genta have the right to practice the Emisphere Technology for any purpose other than to develop, make, have made, use, sell, offer for sale, have sold and import Products in the Field.  Genta shall be responsible for negotiating all Third-Party sublicenses that may be desirable under this Section 5.1 and shall periodically report on such activities to the Emisphere.  With respect to Third Parties to whom Genta proposes to enter into a sublicense under the foregoing license, Genta shall notify Emisphere in writing of the name of the proposed Sublicensee and the general nature of the proposed sublicense at least eleven (11) business days prior to entering into such sublicense.  No Third-Party sublicense shall be effective unless approved in writing by Emisphere, such approval not to be unreasonably withheld or delayed, and any Emisphere failure to notify Genta whether or not Emisphere approves such sublicense prior to the expiration of such eleven (11) business day period shall be considered approval.

                              (b)          Development License By Genta.  Subject to the terms and conditions of this Agreement, Genta hereby grants to Emisphere and its Affiliates, during the Term, a non-exclusive, worldwide, royalty-free license, with the right to sublicense only to subcontractors permitted under Section 3.5, under the Genta Technology solely to perform Emisphere’s obligations under the Formulation-Development Plan, its preparation and maintenance of certain regulatory filings under Article 4, and its supply obligations under Article 8.

             5.2          Exclusivity; Restricted Activities.  Without limiting the exclusivity of the license granted to Genta under Section 5.1(a), Emisphere hereby agrees that, during the Term and the Post-Termination Exclusive Period (defined below), Emisphere and its Affiliates shall not develop or commercialize, or collaborate with or grant any Third Party any license or right to develop or commercialize, any Oral Formulations.  For purposes of this Section 5.2, “Post-Termination Exclusive Period” shall mean the period of time beginning upon expiration or any termination of this Agreement (other than termination by Emisphere under Section 12.3, in which case there will be no Post-Termination Exclusive Period) and continuing thereafter for:

                              (a)           *, if this Agreement expires or terminates prior to the *-year anniversary of the Effective Date, or

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                              (b)           if this Agreement expires or terminates upon or after the *-year anniversary of the Effective Date, the lesser of the following:

                                             (i)           *; or

                                              (ii)           a number of days equal to the product of (i) the number of successive full calendar days elapsed from the Effective Date to the date of such expiration or termination, and (ii) *. 

             5.3          Permitted Activities .  For purposes of clarification, Emisphere shall at all times retain the right to use the Carriers (including without limitation the Program Carrier) for the research, development, manufacture and/or commercialization of any product, other than an Oral Formulation.  Emisphere shall at all times be free to use the Carriers with products other than those containing a Gallium Compound. For purposes of clarification and notwithstanding anything to the contrary contained in this Agreement, Genta shall at all times retain the right to develop or commercialize any formulations of Gallium Compounds that do not use Emisphere Technology, and any oral-delivery formulations and technologies that do not use Emisphere Technology, either alone, through Affiliates or sublicensees, or in collaboration with third parties, and such activities shall be considered outside the scope of the Development Program and this Agreement. 

             5.4          Diligence.  Genta shall use commercially reasonable efforts to commercialize the Product developed under the Development Program in the * Field in the United States, and to maximize sales of such Product, either alone, or through Affiliates or sublicensees, in the * Field in the United States.  As used herein, “commercially reasonable efforts” shall mean those efforts, consistent with the exercise of prudent scientific and business judgment, as applied in the pharmaceutical industry to development and commercialization activities conducted with respect to other products of similar potential and market size.  It is understood that such potential may change from time to time based upon changing scientific, business, marketing and return on investment considerations.

             5.5          No Implied Licenses.   No right or license under any Patents or Information is granted or shall be granted by implication.  All such rights or licenses are or shall be granted only as expressly provided in the terms of this Agreement.

6.          F EES A ND P AYMENTS

             6.1          Reimbursement : Genta shall reimburse Emisphere for all costs (at the rates set forth in Section 6.1(d)) incurred by Emisphere in conducting its responsibilities under the Development Program, as outlined in the Development Plan; subject to the following:

                              (a)           The total amount set forth in the Formulation-Development Budget for Emisphere’s performance of its responsibilities set forth in the Formulation-Development Plan is *.  Subject to Section 6.1(c), Genta shall have no obligation to reimburse, and Emisphere shall be solely responsible for, any costs and expenses it incurs in excess of * in performing its responsibilities set forth in the Formulation-Development Plan.

                              (b)           In addition to the total amount budgeted, the Formulation-Development Budget includes a separate break out of distinct Development Program activities that Emisphere is to perform and the amounts budgeted for these distinct activities (to the extent highlighted in bold in the Formulation-Development Budget, the “ Budgeted Activities ”).  Subject to Section 6.1(a) and 6.1(c), Genta shall have no obligation to reimburse, and Emisphere shall be solely responsible for, any costs and expenses it incurs in the performance of any individual Budgeted Activity in excess of *% of the amount budgeted for that Budgeted Activity.  However, if an IND for a Product is filed, and the total cost of performing all activities set forth in the Formulation-Development Plan was less than *, then Emisphere shall be entitled to reimbursement from Genta up to a total of * to the extent that the amount of any costs incurred by Emisphere in conducting Budgeted Activities exceeded *% of the amount budgeted.

                              (c)           Any additional work co