Research, Collaboration And Distribution Agreement

DISTRIBUTION AGREEMENT BETWEEN PERIMMUNE, INC.,
AND MENTOR CORP.


This Exclusive Distribution Agreement (hereinafter the "Agreement") is made in Rockville, Maryland, by and between PerImmune, Inc. (hereinafter "PERIMMUNE"), a corporation existing under the laws of Delaware, and MENTOR Corp. (hereinafter "MENTOR"), a corporation existing under the laws of Minnesota.


WHEREAS, PERIMMUNE desires to sell and/or market its AuraTek-FDP Bladder Cancer Diagnostic product and MENTOR desires to purchase PERIMMUNE's product for resale to customers bearing a trademark or trade name and logo owned by MENTOR; and


WHEREAS, the parties desire to enter into an agreement setting forth the terms of their relationship;


NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties do hereby agree as follows:


1. Product. The product of PERIMMUNE covered by this Agreement is set forth
on Exhibit A attached hereto (hereinafter the "Product") and any future
modifications or improvements thereto. PERIMMUNE reserves the right to
modify the Product from time to time, and shall give MENTOR at least six
(6) months prior written notice before making changes to its
manufacturing process that would have an impact on any of PERIMMUNE's
product verifications or validations, or changes in raw materials that
would alter the operating principle of the Product or other changes that
could impact product labeling or promotional literature; provided,
however, that PERIMMUNE shall be required to provide MENTOR with only
reasonable advance notice where such modification is required to comply
with any applicable legal or regulatory requirement or the unanticipated
modification or unavailability of raw material.


2. Appointment and Acceptance. PERIMMUNE hereby grants MENTOR the exclusive
right to distribute the Products in the United States, and outside the
United States (the "Territory").


3. Term and Renewal. The term of this Agreement shall be for a period of
five (5) years, commencing on the Effective Date (the "Initial Term").
"Effective Date" means the date on which this Agreement is executed. This
Agreement shall automatically renew for additional and successive terms
of one (1) year unless either party provides written notice on
non-renewal at least six (6) months prior to the close of the Initial
Term or any anniversary date thereafter.


4. Terms of Sale.


(a) MENTOR shall fix the price of the individual Product sold hereunder.
On a monthly basis, MENTOR shall pay to PerImmune, in United States
Dollars, fifty


2
percent (50%) of the Net Sales, as defined below, received by MENTOR
from the sale of the Product, less the Advances, as hereinafter
defined, paid by MENTOR to PerImmune during such month. For purposes
herein, "Advances" shall mean an amount equal to 25% of the list
price, per kit, paid by MENTOR to PerImmune within 30 days of
MENTOR's receipt of kits ordered by it. Unless MENTOR and PerImmune
otherwise agree in a writing signed by both of them, the payment and
other provisions set forth in this Agreement shall supersede those
of any subsequent purchase order, sales confirmation form or other
document hereafter sent by either party hereto to the other. For
purposes hereof, Net Sales shall mean the gross invoiced price for
the sales of the Products to Purchasers by MENTOR, its agents or
affiliates ("Gross Sales") less (a) any credits and allowances
granted by MENTOR to purchasers with respect to the Product,
including, without limitation, credits and allowances on account of
price adjustments, returns, discounts, and chargebacks, (b) any
sales, excise, value added, turnover or similar taxes, and (c)
transportation, insurance and handling expenses if separately
invoiced and directly chargeable to such sales.


(b) Within thirty (30) days after the end of each month MENTOR shall
submit a report to PERIMMUNE setting forth the (i) cumulative
number of kits purchased from PERIMMUNE through the end of the
preceding month (ii) 50% of net sales price for each such kit sold
through the end of the preceding month, (iii) the advances
previously paid for such kits. Each such report shall be
accompanied by payment of the difference between (ii) and (iii).


(c) Title and risk of loss shall pass to MENTOR upon release of Product
for shipment by PERIMMUNE to the designated carrier. All freight and
applicable insurance charges shall be the responsibility of MENTOR.
PERIMMUNE will be responsible for contracting freight services, in
accordance with Section 8(a) of this Agreement, for which MENTOR
will be billed on a shipment by shipment basis. Product is subject
to inspection and acceptance by MENTOR upon receipt. MENTOR shall be
deemed to have accepted all shipments of Product unless rejected for
non-conformity with the Quality Specifications, as hereinafter
defined, in accordance with Article 9 of this Agreement, within
twenty (20) working days after receipt of shipments from PERIMMUNE.


(d) Unless approved by MENTOR in writing, PERIMMUNE will not sell any
Product to MENTOR as of the effective date hereof that has less
than eighteen (18) months shelf-life from date of shipment by
PERIMMUNE.


5. Termination. Should any of the following events occur, the affected party
may terminate this Agreement by giving notice, in writing to be effective
on the date specified in the notice, namely,


2 3 (a) failure to either party to observe any of the terms hereof to a material
extent and to remedy the same (where it is capable to being remedied)
after having received reasonable notice from the aggrieved party and a
reasonable opportunity to cure;


(b) either party becoming insolvent or having a receiver appointed of its
assets, or execution or distress levied upon its assets;


(c) an order being made or a resolution being passed for the winding up or
liquidation of either party;


(d) if PERIMMUNE discontinues manufacturing the product for valid business
reasons that cannot be remedied during the term of this Agreement then (i)
at the request of MENTOR, PERIMMUNE shall assist MENTOR in establishing an
alternative source of supply and shall transfer any necessary technology or
knowledge to MENTOR or its alternative supplier provided that MENTOR
reimburses PERIMMUNE the out-of-pocket costs of doing so (including salary
and benefits for time expended by PERIMMUNE employees, (ii) or if the
discontinuation occurs during the first three years MENTOR can receive the
return of its investment at its election. Nothing herein is intended to
permit PERIMMUNE to breach its obligation under the agreement.


6. Procedures on Termination. Upon termination or non-renewal of this
Agreement:


(a) MENTOR shall return to PERIMMUNE all literature which PERIMMUNE shall have
supplied to MENTOR and which is in its possession.


(b) the rights and duties of each party under this Agreement in respect of
performance prior to termination or non-renewal shall survive and be
enforceable in accordance with the terms of this Agreement.


(c) within thirty (30) days of receipt of PERIMMUNE's invoice therefor, MENTOR
will pay PERIMMUNE for all remaining inventory of Product for which MENTOR
has issued purchase orders to PERIMMUNE. Upon payment, PERIMMUNE will ship
such inventory to MENTOR at MENTOR's expense.


7. MENTOR's Duties. MENTOR shall:


(a) use best commercial efforts to advertise and promote the sale of the
Product in a manner calculated by MENTOR to yield benefit to the parties
hereto in light of the prevailing circumstances and to the extent to which
any products are at the relevant time competitive with other products.
MENTOR agrees that during the term of this Agreement, it will not market
any product using the same technology which detects the same analyte and
thereby directly competes with a Product.


3 4 (b) submit its purchase orders to PERIMMUNE in writing or via facsimile, signed
by an authorized representative of MENTOR.


(c) pay all PERIMMUNE invoices in United States currency by company check.


(d) submit to PERIMMUNE a twelve (12) month forecast of purchases delivery
dates from PERIMMUNE for the Product in a format to be mutually determined
by the parties. Said forecast shall be submitted by MENTOR to PERIMMUNE
within thirty (30) days of commencement of the term of this Agreement, and
quarterly thereafter.


(e) obtain advance written authorization and a Returned Material Authorization
("RMA") prior to returning any of the Product.


(f) maintain a properly trained sales force of adequate size to represent and
promote the sale of the Product and provide instructions to customers in
the use of the Product. MENTOR shall be responsible for developing its own
marketing plan and system for dispensing the Product.


(g) carry in stock an inventory of Product sufficient to promptly fill the
orders of MENTOR's customers in the Territory.


(h) apply for and obtain all necessary licenses, permits and other
authorizations required by local law or regulation in relation to the
promotion, marketing, distribution and supply of the Product in any
jurisdiction or country in which MENTOR sells the Product.


(i) pay any import duty or like charge on the entry of the Product into the
Territory and any local or other applicable taxes.


(j) maintain separate and detailed accurate and complete records of all
transactions in respect of the Product, including, but not limited to, such
records as identify all customer purchases by Product and serial and/or lot
number, and possess the capability to notify all purchasers in the event of
a Product recall or corrective action.


(k) defray all expenses of and incidental to the distribution and sale of
Product hereunder incurred by MENTOR.


(l) make no contracts or commitments on behalf of PERIMMUNE or make any
promises or representations or give any warranties or guarantees with
respect to the Product except as herein expressly permitted or otherwise
incur any liability on behalf of PERIMMUNE without PERIMMUNE's prior
written consent, nor


4 5
represent itself as agent or partner of PERIMMUNE.


(m) comply with all laws and regulations and requirements applicable to
a seller of in-vitro diagnostics products, and with all laws and
regulations and requirements of governmental agencies having
jurisdiction with the Territory.


(n) except as authorized in writing by PERIMMUNE, refrain absolutely
from using the trademark or trade name and logo of PERIMMUNE in
connection with the marketing, distribution and sale of any Product.


8. PERIMMUNE's Duties. PERIMMUNE shall:


(a) make reasonable best efforts, in good faith, to ship MENTOR's
orders for Product within thirty(30) days from date of order
receipt. MENTOR shall specify the method of shipment and insurance
and PERIMMUNE shall make reasonable best efforts, in good faith, to
comply with such specifications. If no such specification is made,
or if the specification cannot be reasonably complied with after
notice to MENTOR and an opportunity to resolve the issues
surrounding PERIMMUNE's alleged inability to comply, PERIMMUNE may
select a reasonable manner of shipment and insurance.


(b) at the time of shipment, the product will have a remaining shelf
life of not less than 16 months.


(c) will provide up to 12,000 units per year of product at PERIMMUNE's
cost plus shipping charges to be used by MENTOR for promotional
purposes at no reimbursement to MENTOR.


(d) comply with all laws and regulations and requirements applicable
to PERIMMUNE as a manufacturer of in-vitro diagnostic products.


(e) except as authorized in writing by MENTOR, refrain absolutely from
using the trademark or trade name and logo of MENTOR in connection
with the marketing, distribution and sale of any Product.


(f) provide reasonable technical assistance to MENTOR's personnel
necessary for the marketing of the Product.


(g) at PERIMMUNE's expense, provide MENTOR with written product inserts
relating to the Product's use, and with such amendments thereto as
subsequently become available.


(h) provide necessary documentation to assist MENTOR in meeting
requirements to


5 6
register Products in the Territory, and where possible, allow MENTOR
to utilize prior registrations by PERIMMUNE.


(i) provide MENTOR with copies of the 510(k) premarket notifications
submitted for the Product, copies of current package insert for the
Product, copies of documents describing specifications for the
Product, and copies of all current and future correspondence with
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