MANUFACTURING and SUPPLY AGREEMENT

1.

Definitions

The following terms whenever used in this Agreement shall have the following meanings:-

1.4

“ Advancis Equipment ” shall mean additional equipment purchased and supplied by Advancis and labelled as property of Advancis Pharmaceutical Corporation and listed on Schedule C.

1.5

“Affiliate” means any person, corporation, company, partnership, joint venture and / or entity which, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with a Party.

1.6

“ Applicable Law(s) ” means the laws, rules, and regulations, including any statutes, rules, regulations, or other requirements, that may be in effect from time to time and that apply (i) to the development, manufacture, registration, and marketing of Product in the United States and the European Union and its member states, including any such statutes, rules, regulations, or other requirements of the FDA and the EMEA and/or (ii) to the manufacture of Product at the Facility.

1.7

“Batch” means a specific quantity of Product that is intended to have uniform character and quality, within specified limits, and is produced according to a single manufacturing order during the same cycle of manufacture.

1.8

“ Batch Manufacturing Records ” shall mean documentation recording specifications, manufacturing formulae, processing, packaging, procedures and records relating to the manufacture of each Batch.

1.9

“Clonmel Intellectual Property Rights” means any Intellectual Property Rights made, conceived, developed or reduced to practice by Clonmel or its employees or agents on, before or after the Effective Date, and excluding any Advancis Intellectual Property Rights.

1.10

“Clonmel Operating Documents” means the standard operating procedures, standard manufacturing procedures, protocols, validation documentation, and supporting documentation, such as environmental monitoring, for operation and

maintenance of the Facility and Clonmel equipment used in the process of producing Product(s), excluding any of the foregoing that are unique to the manufacture of Product(s).

1.11

“Competent Authorities” means any national or local agency, authority, department, inspectorate, minister official, parliament or public or statutory person (whether autonomous or not) of any government of any country having jurisdiction over either any of the activities contemplated by this Agreement or over the parties, including the European Commission, The Court of First Instance and the European Court of Justice, the FDA, EMEA or other governmental health authority.

1.12

“ Components ” shall mean containers, labelling and packaging for the Product(s).

1.13

“ Confidential Information ” shall have the meaning set forth in Section 18.1.

1.14

“Control” and the correlative meanings “controlled by” and “under common control with” means, for purposes of the definition of Affiliate only, the beneficial ownership, directly or indirectly, of more than 50% of the issued share capital or other comparable equity or ownership interest with respect to a business entity or the legal power to direct or cause direction of the general management and policies of the party in question.

1.15

“Development and Clinical Manufacturing Agreement” means the Development and Clinical Manufacturing Agreement entered into between the parties on April 18 ^th , 2005.

1.16

“Effective Supply Date” shall mean the date on which Advancis first places a Purchase Order in accordance with Section 9.

1.17

“EMEA” means the European Agency for the Evaluation of Medicinal Products or any other successor agency where approval is necessary to market the Product in Europe.

1.18

“ Facility ” has the meaning set forth in Section 4.1.

1.19

“Facility Build Out Agreement” shall mean the facilities build out agreement entered into between the parties substantially simultaneously herewith, together with all attachments and exhibits thereto, as the same may be amended from time to time.

1.20

“FDA” means the US Food and Drug Administration, and any successor agency thereof.

1.21

“ Force Majeure ” in relation to any Party means any event or circumstance which is beyond the reasonable control of that Party which event or circumstance that Party could not reasonably be expected to have taken into account at the date of this Agreement and which results in or causes the failure of that Party to perform any or all of its obligations under this Agreement including act of God, lighting, fire, storm, flood, earthquake, strike, act of the public enemy, war, terrorist act, blockade, governmental restraint, act of legislature or requirement of governmental authority.

1.22

“ GMP Rules ” means current Good Manufacturing Practices as contained in 21 CFR Parts 210 and 211 and related regulations as amended from time to time.;

1.23

“ Intellectual Property Rights ” means any Patent Right, invention, registered design, design right, copyright, database right, trade mark, service mark, application to register any of the aforementioned rights, trade secrets, confidential information, and all rights in Know-How or equivalent rights recognized in any jurisdiction.

1.24

“Know-How” means any technical and other information which is not in the public domain, including information comprising or relating to concepts, discoveries, data, formulae, ideas, inventions (whether patentable or not), procedures for experiments and tests and results of research or development, laboratory records, processes including manufacturing processes, specifications and techniques, clinical trial data and information contained in submissions to Competent Authorities.

1.25

“Latent Defect” has the meaning set forth in Section 5.5(b).

1.26

“ Manufacture ” shall include production, filling, packaging, quality control, batch release, and storage together with all other activities encompassed by the Master Production Record.

1.27

“Manufacturing Specifications” shall mean those specifications and procedures set out in Schedule G.

1.28

“Marketing Authorization(s)” shall mean the necessary regulatory approval for the sale of any of the Product(s) in any country within the Territory.

1.29

“ Master Production Record ” shall mean the documentation that contains a detailed description of the Process and any other instructions to be followed by Clonmel in the production of the Product as agreed in writing by the Parties. The Master Production Record shall be signed by the Parties and attached hereto as Schedule H.

1.30

“Material(s)” means all raw materials and supplies to be used in the Manufacture of the Product.

1.31

“Material Specifications” means the specification for Materials set forth in Schedule D, as modified from time to time by mutual agreement of the Parties.

1.32

“Patent Rights” means design and utility patent applications and patents (including provisional patent applications), author certificates, inventor certificates, utility certificates, improvement patents and utility models and certificates of addition and all foreign counterparts of them in all countries, including any divisional applications and patents, filings, renewals, continuations, continuations-in-part, patents of addition, extensions (including patent term extensions), reissues, substitutions, confirmations, registrations, revalidation and additions of or to any of them, as well as any supplementary protection certificates and equivalent protection rights in respect of any of them.

1.33

“Process” means the manufacturing process for the Product in accordance with the Master Production Record.

1.34

“ Product(s) ” shall mean the product(s) listed in Schedule 1 (including for the avoidance of doubt Validation Batches).

1.35

“ Purchase Order(s) ” shall mean orders for the Product(s) placed by Advancis upon Clonmel which are contractually binding on the Parties.

1.36

“Regulatory Application” shall mean any regulatory application or any other application for marketing approval for the Product, which Advancis will file in the Territory, including any supplements or amendments thereto which Advancis may file.

1.37

“RHA” shall mean any relevant government health authority (or successor agency thereof) in any country of the Territory whose approval is necessary to market the Product in the relevant country of the Territory.

1.38

“Shipping Documentation” means the documents, including but not limited to certificates of analyses, and packaging slip summarizing the contents of the shipment as set forth in the Master Production Record.

1.39

“Term” means the period commencing on the Effective Supply Date and terminating on the date of expiration or termination of this Agreement as set out in Section 23.

1.40

“ Territory ” shall mean the countries listed in Schedule I subject to such additions and deletions as may be agreed in writing between the Parties.

1.41

“Third Party” means any party other than Clonmel, Advancis or their respective Affiliates.

1.42

“Validation Batches” means the validation batches of the Product manufactured pursuant to the Development and Clinical Manufacturing Agreement.

Product; in connection with the review of manufacturing activities related to preventive maintenance, calibrations, equipment validations, testing, housekeeping, or personnel training, or as otherwise authorized by this Agreement. Advancis shall own the Master Production Record and all Batch Records. Clonmel shall be entitled to retain possession of the originals thereof in the files of Clonmel, as Confidential Information of Advancis.

4.5

Clonmel shall provide sufficient space within the facility for use as an Analytical Laboratory which will contain all analytical equipment supplied by Advancis. Advancis will supply all analytical equipment listed on Schedule E. It is understood that this is all the equipment necessary for both development and commercial operations

4.6

In carrying out its obligations under this Agreement, Clonmel shall comply with the Marketing Authorizations, GMP Rules and, in all material respects, Applicable Laws in manufacturing the Product(s).

4.7

Clonmel shall promptly inform Advancis of any deviation from the Manufacturing Specifications, Master Production Record or of any other problems or issues arising in relation to the Manufacture of the Product(s) and shall consult with Advancis in relation to the resolution of such matters.

4.8

Neither party shall change any part of the Manufacturing Specifications or Master Production Record without the prior written approval of the other following a written submission by the party proposing the change detailing the proposed change(s) and the reasons.

4.9

Clonmel shall make available adequate manufacturing facilities and capacity to enable Clonmel to fulfil Advancis requirements for the Product(s) in accordance with the forecasting and ordering provisions of Section 9.

4.10

Clonmel shall employ sufficient and appropriately qualified technical and other staff to properly fulfil its obligations relating to the Manufacture of the Product(s) in accordance with the provisions of this Agreement.

5.

Product Warranties; Acceptance and Rejection Of Clinical Material

5.1

Product Warranties. Clonmel warrants that (a) any Product manufactured by Clonmel pursuant to this Agreement, was manufactured in accordance with the Manufacturing Specifications, Master Production Record and Marketing Authorizations; (b) was manufactured in accordance with GMP Rules and (c) at the time of delivery, no more than three (3) months of the shelf life of the Product has expired (the “Product Warranties”).

5.2

The warranties set forth in Section 5.1 shall not apply to any Clinical Materials, Site Specific Stability Batches, scale-up, process development and Validation Batches which (i) have been tampered with or altered after delivery to Advancis; (ii) have been subject to misuse, negligence or accident after delivery to Advancis; or (iii) have been stored, handled or used after delivery to Advancis in any manner contrary to Applicable Laws.

5.3

Clonmel General Warranties

(i)

Clonmel has the right to enter into this Agreement; and

(ii)

there are no agreements between Clonmel and any Third Party that conflict with this Agreement

5.4

Advancis General Warranties

(i)

Advancis has the right to enter into this Agreement; and

(ii)

there are no agreements between Advancis and any Third Party that conflict with this Agreement.

5.5

Approval of Shipment of Product.

5.6

Disputes Regarding Product.

5.7

5.8

DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT, BOTH PARTIES MAKE NO REPRESENTATIONS AND GRANT NO WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, WITH RESPECT TO PRODUCTS, MATERIALS AND SERVICES PROVIDED UNDER THIS AGREEMENT, AND CLONMEL SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE WITH RESPECT TO SUCH PRODUCTS, MATERIALS, OR SERVICES.

6.

Recall

6.1

Each Party shall inform the other in writing without delay when quality issues relating to the safety or effectiveness of the Product(s) already shipped subsequently comes to that Party’s knowledge.

6.2

The decision to initiate a recall of the Product is the responsibility of Advancis.

6.3

In the event of a Product recall Clonmel shall comply with all reasonable requirements stipulated by Advancis.

6.4

Insofar as any recall arises because of any breach by Clonmel of any its obligations under this Agreement or any of the Product Warranties, Clonmel shall replace the Batch to which the issue relates within [***] at Clonmel’s cost and Clonmel shall pay the costs of the recall. Otherwise all other costs of a recall of Product shall be borne by Advancis.

7.

Handling of Complaints

7.1

Any material complaint as to the quality, safety and effectiveness of the Product brought to the attention of either of the Parties shall forthwith be communicated to the other of the Parties.

7.2

Clonmel shall provide all reasonable assistance requested by Advancis in the investigation of customer complaints regarding Product that, in Advancis’ reasonable opinion, are related to or arise from the manufacturing or packaging of such Product by Clonmel, including reviews of records and testing of the Product in accordance with the Master Production Record.

7.3

Advancis will be responsible for reporting all adverse events to the FDA.

8.

Retention of Records and Samples

8.1

Unless otherwise agreed in writing by the Parties, Clonmel shall retain:

9.

Forecasting and Purchase Orders

9.1

Advancis shall submit to Clonmel on a [***] basis by the [***] a [***] rolling forecast of its requirements for the Product(s). The amounts set forth in each [***] of the forecast are firm purchase orders and the amount set forth from [***] onwards represent a forecast. The quantity in the [***], which becomes a purchase order at this time, may not be less than [***] or more than [***] of the amount set forth in the previous month of said forecast. The firm purchase orders shall be accompanied by a Purchase Order for each month of the relevant four month period.

9.2

If the quantities of Product set out in any Purchase Orders for any month exceed [***] of the quantities previously forecast for the relevant month and Clonmel is not able to supply such increased quantities, Clonmel shall inform Advancis no later than one week after receipt of the Purchase Order whether it will make a good faith effort to supply the additional quantities of Product on the delivery date specified.

9.3

Each Purchase Order shall correspond to Clonmel production batch size or multiples thereof as set out in Schedule F.

9.4

If there is an inconsistency between any Purchase Order and this Agreement, the terms and conditions of this Agreement shall prevail.

9.5

The Parties agree that Clonmel in agreement with Advancis can utilise the Validation Batches in filling Purchase Orders.

10.

Delivery

10.1

Clonmel shall deliver the Product(s) by the dates stipulated in the Purchase Orders to the destinations nominated in writing by or on behalf of Advancis.

10.2

The cost of delivery shall be