**Exhibit 4.11**

**EXECUTION VERSION**

| Crucell N.V.                                                  |
|---------------------------------------------------------------|
| Confidential Materials Omitted and Filed  Separately with the |
| Securities and Exchange Commission.                           |
| Confidential Portions denoted by [***]                        |

 

**COLLABORATIONAGREEMENT**

This CollaborationAgreement is made and entered into as of April 30,  2001 by and among Chiron BehringGmbH &**Co, a companyincorporated in Germany, with offices at Emil von Behring Strasse 76, 35041Marburg, Germany (“**Chiron Behring**”),Chiron S.p.A., a company incorporated in Italy, with offices at Via Fiorentina1, 53100 Siena, Italy (“**Chiron S.p.A.**”,and together with Chiron Behring GmbH & Co, “**Chiron**”), Rhein Biotech N.V., a companyincorporated in the Netherlands, with offices at Gaetano Martinolaan 95, 6229GS Maastricht, The Netherlands (“**Rhein Biotech**”),and GreenCross Vaccine Corporation, a company incorporated in the Republic ofKorea, with offices at 303 Bojung-Ri, Koosung-Eup, Yongin 449-770,Republic of Korea (“**GCVC**”, andtogether with Rhein Biotech, “**Rhein Biotechand GCVC**”).

**RECITALS**

A.   **WHEREAS,** Chiron and Rhein Biotech each hasdeveloped expertise in the fields of vaccine research, development andmanufacturing.

B.   **WHEREAS,** Chiron and Rhein Biotech enteredinto a Letter of Intent dated as of December 1, 2000 (the “Letter ofIntent”) with respect to their intent to co-develop and manufacture one or morenew pentavalent combination vaccines for pediatric use.

C.   **WHEREAS,** Chiron, Rhein Biotech and GCVCentered into a Materials Transfer Agreement effective as of December 11,2000 (the “Materials Transfer Agreement”) with respect to their respectiverights and obligations in connection with any materials transferred inconnection with the project contemplated by the Letter of Intent.

D.   **WHEREAS,** Chiron, Rhein Biotech and GCVCwish to collaborate on the research, development, manufacturing andcommercialization of one or more new pentavalent combination vaccines forpediatric use on the terms and conditions set forth herein with a view toreducing duplicative, unnecessary costs, exchanging ideas and developingresulting products and technologies more rapidly than would otherwise be thecase.

**NOWTHEREFORE** in consideration of the premises and other good andvaluable consideration, Chiron and Rhein Biotech and GCVC agree as follows.

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**ARTICLE IDEFINITIONS**

 

**1.1****        ****Definitions.** For the purposes ofthisCollaboration Agreement, capitalized terms used herein but not defined hereinshall have the meaning ascribed to them in Schedule A attached hereto.

 

**1.2****        ****Rules****of****Interpretation.** Forthe purposes ofthis Collaboration Agreement the following rules of interpretationshall apply:

 

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(a)**         **The descriptive headings ofArticles and Sections are inserted solely for convenience of reference and arenot intended as complete or accurate descriptions of the content of suchArticles or Sections.

 

(b)          The use of words in thesingular or plural, or with a particular gender, shall not limit the scope orexclude the application of any provision of this Collaboration Agreement tosuch person or persons or circumstances as the context otherwise permits.

 

(c)          Whenever a provision of thisCollaboration Agreement requires an approval or consent by a Party to thisCollaboration Agreement and notification of such approval or consent is notdelivered within the applicable time limit, then, unless otherwise specified,the Party whose approval or consent is required shall be conclusively deemed tohave withheld its approval or consent.

 

(d)          Whenever any payment is tobe made or action to be taken under this Collaboration Agreement is required tobe made or taken on a day other than a business day, such payment shall be madeor action taken on the next business day following such day in the jurisdictionof the Party to make such payment or do such act.

 

(e)          In the event of any conflictbetween this Collaboration Agreement and any schedule hereto, thisCollaboration Agreement shall prevail.

 

**ARTICLE 2 COLLABORATION**

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**2.1****      Collaboration.**Chiron,Rhein Biotech and GCVC shall establish a collaboration in the Field (the“Collaboration”) subject to the terms and conditions set forth in thisCollaboration Agreement. The Parties shall collaborate on research, developmentand commercialization of the Whole Cell Product and, subject to the terms ofSection 2.5, of the Acellular Product, all as more fully set forth in thisCollaboration Agreement.

 

**2.2****      Annual Plan and Budget for2001.**Attached as Schedule I hereto is the Annual Plan and Budget for theyear 2001, which shall be deemed to have been approved by the Parties.

 

**2.3****      Level of Effort.** EachParty shall use commercially reasonable efforts to perform the duties andobligations assigned to it under this Collaboration Agreement and the AnnualPlans and Budgets and shall employ at least the level of effort and care thatsuch Party would use in performing similar activities in connection with itsown internal projects with comparable risk/reward profiles.

 

**2.4****      Commitment to Annual Planand Budget.**Each Party shall use and shall cause its Affiliates to use allreasonable efforts to conduct its activities in accordance with and within theparameters set by the Annual Plan and Budget, including without limitation,making all investment in the Collaboration necessary and in accordance with theInvestment Plan attached as Schedule L and the timelines for the Collaborationset forth in each Annual Plan and Budget and the Collaboration and DevelopmentPlan in order to meet the levels of production of the Product set forth in eachAnnual Plan and Budget.

 

**2.5****      Acellular Product.**TheParties agree that they shall collaborate exclusively for a**period of twelve months from theEffective Date to evaluate alternatives for implementation of the Collaborationwith respect to the Acellular Product. The provisions in the Collaboration andDevelopment Plan with respect to the Acellular Product shall be used as a basisfor such evaluation. If either Party, in its sole discretion, determines duringsuch twelve month evaluation that the Collaboration with respect to theAcelluar Product should not proceed, such Party shall notify the other Party inwriting of such determination and the Collaboration with respect to theAcellular Product shall be terminated with immediate effect. For the avoidanceof doubt, all R &**DExpenses incurred by either Party prior to any such termination of theCollaboration with respect to the Acellular Product shall be shared by theParties in accordance with the terms of Section 6.2.

 

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**ARTICLE 3MANAGEMENT**

 

**3.1****        ****SteeringCommitteem**The Parties shall establish a SteeringCommittee. The Steering Committee will be comprised of four members, of whichtwo members shall be appointed by Chiron and two members shall be appointed byRhein Biotech and GCVC. Either Party, in its sole discretion, may from time totime remove one or more of its appointees from the Steering Committee andappoint new members with appropriate expertise in their place.

 

**3.2****        ****Functions.**In addition to other functions which may beperformed by the Steering Committee from time to time, the Steering Committeeshall

 

(a)          direct the preparation ofand approve annually no later than November 30 of each year an Annual Plan andBudget for the following calendar year. In approving the Annual Plan andBudget, the Steering Committee shall be presented information by the Parties inreasonable detail in the following areas: (i) the proposed schedule ofcommercial launch of the Product for the distribution channels of the Partiesin their respective Territories; (ii) the anticipated sales targets for theProduct for the distribution channels of the Parties in their respectiveTerritories; (iii) the anticipated COGs, (iv) the proposed Schedule G to theSupply and Manufacturing Agreement and the Bulk Supply Agreement; (v) theanticipated capital expenditure of each Party; (vi) the R &D Expenses; and (vii) other pre-commercialization expensesfor such year. The Annual Plan and Budget shall be submitted to the SteeringCommittee at least three months prior to the start of the calendar year towhich it applies, provided, however, that in the event the Annual Plan andBudget shall not have been approved for any calendar year, (x) the provisionsof the Collaboration and Development Plan for such year and (y) the expenditurelevels in the Annual Plan and Budget for the previous year shall continue toapply until such Annual Plan and Budget has been approved. For the avoidance ofdoubt, the Parties agree that any failure by the Steering Committee to approveany Annual Plan and Budget shall not result in any interruption of or delay inthe work of the Collaboration;

 

(b)          monitor and review theprogress and results of the Collaboration and performance as against theCollaboration and Development Plan and the relevant Annual Plan and Budget;

 

(c)          from time to time, approvemodifications or amendments to the Collaboration and Development Plan or thethen-current year’s Annual Plan and Budget as appropriate in the light of theCollaboration’s progress and results, including, without limitation, anyexpenditure not included within the then-current year’s Annual Plan and Budget;

 

(d)          establish annually theamount allocable to each FTE for each Party, including all associated costs,such as salaries, benefits, lab materials and supplies, non-capitalizedequipment, depreciation, repair and maintenance and other ordinary direct expensesrelated to research and development activities.

 

(e)          consider and determinewhether and when to initiate clinical studies of the Product in humans;

 

(f)           consider and determinewhether it is necessary or appropriate for the Parties to obtain access tointellectual property or technologies Controlled by Third Parties and, if so,review and approve the terms of any proposed license or similar agreement;

 

(g)          consider and determinewhether it is appropriate to grant to Third Parties any licenses or otherrights with respect to Collaboration Technology;

 

(h)          review and approve thepublication of any Collaboration Technology;

 

(i)           consider and determine apatent strategy for Collaboration Technology;

 

(j)           ingeneral, to direct theresearch, development and commercialization of the Product in accordance withthe terms and conditions of this Collaboration Agreement;

 

(k)          consider any decisionsrequired to be taken pursuant to the terms of Schedule G to the Bulk SupplyAgreement and the Supply and Manufacturing Agreement; and

 

(1)          review on a regular basisthe overall pricing policy applied by both Parties.

 

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**3.3****        ****Subcommittees.**The Steering Committee may from time to timeestablish, and delegate certain of its responsibilities to, one or moresubcommittees (including, without limitation, a development committee, ascientific subcommittee, a finance subcommittee, and a marketingsubcomunittee). Each such subcommittee shall be comprised of an equal number ofrepresentatives from Chiron on the one hand and Rhein Biotech and GCVC on theother hand. Either Party, in its sole discretion, may from time to time removeone or more of its appointees from any such subcommittee and appoint newmembers with appropriate expertise in their place.

 

**3.4****        ****Meetings.** TheSteering Committee shall meet at least once every six months, and each standingsubcommittee shall meet at least once each calendar quarter at alternativelyRhein Biotech and GCVC’s and Chiron’s facilities or another location mutuallyagreed upon by the members of such committee. These meetings may be waived orheld by telephone or videoconference if agreed by all members of suchcommittee. The Steering Committee and each subcommittee may take action only bythe unanimous consent of the Parties (all the members of each committeeappointed by one Party collectively representing one voting right). TheSteering Committee shall be chaired by a representative from Chiron, on the onehand, and a representative from Rhein Biotech and GCVC, on the other hand, inalternating periods of six months. The chairman of the Steering Committee shallprepare the agenda and subsequently prepare and circulate minutes of themeetings within 30 days after each meeting, which shall be approved and signedby each Party. Chiron shall provide the initial chairman of the SteeringCommittee.

 

**3.5****        ****Failure to****Reach Consensus.** in the event a matterremains unresolved after consideration by a subcommittee, it shall be submittedfor resolution by the Steering Committee. In the event a matter remains unresolvedafter consideration by the Steering Committee, it shall be submitted forresolution by the Chief Executive Officers of Chiron, on the one hand, andRhein Biotech and GCVC, on the other hand. Each Party shall provide to theother Party a brief and concise statement of the its position and the ChiefExecutive Officers shall meet and confer to resolve the matter.

 

**3.6****        ****No****Amendments or Waivers.**For the avoidanceofdoubt: except as expressly set forth herein, neither the Steering Committeenor any subcommittee shall be authorized to amend or waive any provision ofthis Collaboration Agreement. Any such amendment or waiver shall be in writingas formal as this Collaboration Agreement and shall be signed by a dulyauthorized executive officer of each Party.

 

**ARTICLE 4RESEARCH AND DEVELOPMENT**

 

**4.1****        ****Researchand Development.**The Parties jointly shallconduct all the development activities of the Collaboration, as more fully setforth in the-Collaboration and Development Plan and the applicable Annual Planand Budget.

 

**4.2****        ****R & D Expenses.** R& D Expenses shall be comprised of the following categories which shall bedetermined on a cost per FTE basis: (a) research services; (b) preclinical andclinical development; (c) costs and expenses associated with regulatory filingsand approvals and the maintenance of such approvals for the initialregistration of the Product in Korea; (d) and other fully burdened, fairlyallocable costs in direct support of other functions related to such researchand development services. R & D Expenses shall be calculated as follows:(i) for each FTE participating in research and development activities on behalfofeach Party, the approved FTE amount shall be multiplied by the amount oftimeof such FTE participation; (ii) to such FTE calculated amount shall be addedthe actual, direct expenses incurred by each Party supported by externalinvoices for items which are specifically required for research and developmentactivities and which are in addition to the FTE amount, including, without limitation,payment for

 

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activitiesconducted by third parties, such as clinical trials. All manufacturing costs,such as the costs of producing clinical lots, incurred prior tocommercialization shall be shared by the Parties in accordance with the termsof Section 6.2 and reimbursed on a period basis prior to commercialization; and(iii) all other costs (other than capital costs but including depreciation onsuch capital expenditures) shall be reimbursed on a period basis. Each Partyshall use all reasonable efforts to include such costs in the Annual Plan andBudget. In no event shall the Allowable Expenses for research and developmentexceed by [***] the Annual Plan and Budget. Moreover, the Parties agree thatthe initial estimate of the expected lifetime development costs of theCollaboration will be in the range of [***] United States Dollars to [***]United States Dollars, generally in accordance with the terms of Schedule H.which amount shall not be exceeded by more than ten percent (10%) without priorapproval of the Steering Committee.

 

**4.3****        ****Product Registrations.**Subject to the terms of Section 3.2 (Functions), each Party shall prepare, fileand control all IND’s and BLA’s in its respective sales and marketingTerritory. Each Party shall consult with, and provide all reasonable assistanceto the other with respect to such filings. Each Party shall be permitted toattend all meetings with the Regulatory Agencies relating to such filings. EachParty shall hold all Marketing Authorizations in its respective sales andmarketing Territory in its name on behalf of the Collaboration, unlessotherwise required by law.

 

**4.4****        ****Manufacture of R&D Supplies.**Subject to the terms of Section 3.2 (Functions),the manufacture of all suppliesof the Product required for research anddevelopment purposes shall be asprovided for in the Collaboration andDevelopment Plan.

 

**ARTICLE 5COMMERCIALIZATION**

 

**5.1****        ****Marketing and Sales.**Subject to the terms of Section 6.4 (Commercialization), each Party shall haveexclusive rights to market and sell the Product on behalf of the Parties in itsrespective sales and marketing Territory as follows:

 

(a)           the Rhein Biotech and GCVC territory shall be (i) withrespect to the Whole Cell Product, supranational institutions, such as WHO,PAHO, GAVI and UNICEF, worldwide (the “Rhein Biotech and GCVC Whole CellProduct Territory”); and (ii) with respect to the Acellular Product, if any,North Korea and South Korea (the “Rhein Biotech and GCVC Acellular ProductTerritory”)(the Rhein Biotech and GCVC Whole Cell Product Territory and theRhein Biotech and GCVC Acellular Product Territory herein jointly referred toas the “Rhein Biotech and GCVC Territory”); and

 

(b)           the Chiron territory shall be (i) with respect to theWhole Cell Product, the private market worldwide and public markets worldwideexcluding the Rhein Biotech and GCVC Whole Cell Product Territory (the “ChironWhole Cell Product Territory”); and (ii) with respect to the Acellular Product,if any, all markets worldwide excluding the Rhein Biotech and GCVC AcellularProduct Territory (the “Chiron Acellular Product Teritory”)(the Chiron WholeCell Product  Territory and the ChironAcellular Product Territory herein jointly referred to as  the “Chiron Territory”);

 

provided,however, that (i) neither the Rhein Biotech and GCVC Territory nor the  Chiron Territory shall include India orIndonesia, (ii) the Territory shall include only countries and markets in which it is in accordance with applicablelaw to sell  the Product, and(iii) subject to the prior written approval of the Steering Committee,either Rhein Biotech and GCVC or Chiron shall be permitted to sell  the Product in the other Party’s Territory ina market in which such other Party is  notselling the Product. 

 

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**5.2****        ****Manufacture.**Rhein Biotech and GCVC shall manufacture, or subjectto the approval of the Steering Committee, procure the manufacture of, all ofthe Parties’ requirements for the Product as follows:

 

(a)**          **in accordance with the terms of the Bulk SupplyAgreement with respect to Productfor sale in the Rhein Biotech and GCVC Territory; and

 

(b)**          **in accordance with the terms of the Supply andManufacturing Agreement with respect to Product for sale in the ChironTerritory.

 

**5.3****        ****Transfer Price.** TheTransfer Price with respect to the Product shall be calculated in accordancewith Schedule G to the Supply and Manufacturing Agreement and the Bulk SupplyAgreement.

 

**5.4****        ****Inspection.**From time to time, upon at least fifteen days’ priorwritten notice and during normal business hours, either Party and itsrepresentatives may inspect the other Party’s facilities used in connectionwith the Collaboration (including, without limitation, facilities used inconnection with the manufacture and storage of the Product, Chiron Materials,Rhein Biotech and GCVC Materials or Collaboration Materials) for the solepurpose of making quality control inspections of such facilities. Theinspection shall be limited to the activities related to the Collaboration andshall not exceed fourteen days. The inspecting Party shall comply with thevisited Party’s security and other facility access procedures. The visitedParty in its discretion may require that the inspecting Party’s representativesbe accompanied at all times by one or more representatives of the visitedParty. Access to areas not used in connection with the Collaboration shall notbe required. All information providedto the visiting Party and its representatives during any such inspection,whether written or oral, shall be deemed Confidential Information and issubject to the confidentiality provisions of Article 10. For up to two suchinspections by each Party per year, each Party shall bear its own costs,thereafter, the inspecting Party shall bear the costs of any such inspection.

 

**5.5****        ****Contract Requirements.**Chiron and Rhein Biotech and GCVC each shall beobligated to provide the Chiron Materials and the Rhein Biotech and GCVCMaterials, respectively, in sufficient quantities to fuilfill the MinimumContract Requirements set forth in the Bulk Supply Agreement and the Supply andManufacturing Agreement.

 

**ARTICLE 6****PAYMENTS**

 

**6.1****      Upfront Payments.** Neither Party shall beobligated to pay any upfront payments to the other Party.

 

**6.2****     ****R&D Cost-sharing Prior to Commercialization.**

 

(a)      Rhein Biotech and GCVC andChiron shall share all R&D Expenses incurred in connection their activitiesunder this Collaboration Agreement as follows:

 

(i)        RheinBiotech and GCVC shall pay [***] and Chiron shall pay [***] of the R&DExpenses incurred on or after December 1, 2000 for the Collaboration withrespect to the Whole Cell Product; and

 

(ii)       RheinBiotech and GCVC shall pay [***] and Chiron shall pay [***] of the R&DExpenses incurred for the Collaboration with respect to the Acellular Product,if any.

 

(b)      The agreed accountingmethodologies for determining R&D Expenses are included in Schedule F tothis Collaboration Agreement.

 

(c)       The agreed reportingrequirements with respect to R&D Expenses are included in Schedule F tothis Collaboration Agreement. Within 15 days of receipt of such reports, theParties shall determine the sum of all R&D Expenses incurred by bothParties, and a single payment shall be made by one Party to the other Partysuch that total R&D Expenses are shared in accordance with paragraph (a).

 

**6.3****         ****MilestonePayments.**  NeitherParty shall be obligated to pay any milestone payments to the other Party.

 

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**6.4****          Commercialization.**

 

(a) **         **The Supply andManufacturing Agreement and the Bulk Supply Agreement shall contain the termsand conditions with respect to the commercialization of the Product. 

 

(b) **         **The accountingmethodologies that shall be applied by the Parties with respect to anyfinancial determinations in connection with the Collaboration are attached asSchedule F to this Collaboration Agreement. 

 

(c) **         **The reportingrequirements that shall be fulfilled by the Parties with respect to theCollaboration are attached as Schedule F to this Collaboration Agreement. 

 

**6.5****         Record Keeping.** Each Party shall keepand maintain complete and accurate books of account and adequate records of allNet Sales, and each Party shall keep and maintain complete and accurate booksof account and adequate records of all R&D Expenses, COGS and Third PartyRoyalties incurred by it and shall retain such books and records for a periodof three years from the end of the quarter in which such sales were made orsuch costs were incurred. 

 

**6.6****         Audit.** At the request of either Party,the other Party shall make such books of account and records available forinspection during normal business hours for the sole purpose of determiningwhether appropriate accounting and payment have been made hereunder. Such auditshall be conducted by an certified public accountant or like person appointedby the inspecting Party and reasonably acceptable to the other Party. Theinspecting Party shall bear the cost of any such audit, provided, that in theevent the audit discloses that costs charged to the inspecting Party hereunderfor any accounting period were excessive by more than five percent or profitspaid to the inspecting Party were deficient by more than five percent, theother Party shall promptly reimburse the inspecting Party for the cost of suchindependent audit and shall pay to the inspecting Party the amount of suchexcess/deficiency. The inspecting party and its representatives shall be underconfidentiality obligations to the other Party and such accountant's reportshall only state the amount and accuracy of costs charged and payments madeunder this Collaboration Agreement. 

 

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**ARTICLE 7INTELLECTUAL PROPERTY**

**7.1****      Ownership.**

 

(a)      **Contributed Chiron Technology.** AllContributed Chiron Technology shall be owned solely and exclusively by Chiron.No licenses are granted except as expressly set forth in Article 8(Licenses) or Article 14 (Termination).

 

(b)      **Contributed Rhein Biotech and GCVC Technology.**All Contributed Rhein Biotech and GCVCTechnology shall be owned solely and exclusively by Rhein Biotech and GCVC. Nolicenses are granted except as expressly set forth in Article 8 (Licenses)or Article 14 (Termination).

 

(c)       **Chiron/Rhein Biotech and GCVC Joint BackgroundTechnology.**All Chiron/RheinBiotech and GCVC Joint Background Technology shall continue to be ownedjointly by Chiron and Rhein Biotech and GCVC. Except as otherwise expressly setforth in Article 14 (Termination), neither Party shall license itsinterest in Chiron/Rhein Biotech and GCVC Joint Background Technology withoutthe prior written consent of the other Party.

 

**7.2****      Ownership of CollaborationTechnology.**

 

(a)      **Ownership.** All Collaboration Technology shall be jointly owned by Rhein Biotechand GCVC and Chiron.

 

(b)      **Licenses.** Except as otherwise expressly set forth in Article 14(Termination), neither Party shall license its interest in CollaborationTechnology without the prior written consent of the other Party.

 

**7.3****      Patent Filing, Prosecution,Maintenance and Defense.** Chiron shall file, prosecute, maintain and defendthe Collaboration Patents in accordance with the patent strategy established bythe Steering Committee. Chiron shall keep Rhein Biotech and GCVC fully andpromptly informed of the status of the prosecution of such CollaborationPatents, shall consult with Rhein Biotech and GCVC concerning each step of suchprosecution, and shall afford Rhein Biotech and GCVC timely opportunity toreview and comment on any submission to be made in connection therewith. RheinBiotech and GCVC shall cooperate fully with Chiron in connection with suchmatters. All costs and expenses incurred by either Party in connection therewithshall be shared, with Chiron paying [***] of such costs and Rhein Biotech andGCVC paying [***] thereof.

 

**7.4****        ****InfringementAction By A Third Party.** Each Party shall promptlynotify the other Party in the event any legal proceedings are commenced or threatenedagainst any Party on the ground that the manufacture, use or sale of anyProduct infringes an unaffiliated third party’s patents or misappropriates suchthird party’s know-how. For the avoidance of doubt, the Parties do not intendany such infringement. Chiron shall have the right (but not the obligation) toassume and control the defense of any such action or claim, in its own name orin the name of Rhein Biotech and GCVC, if necessary. If Chiron elects toexercise such right, Rhein Biotech and GCVC may participate in, but notcontrol, such defense at its sole cost and expense. If Chiron does not exerciseits right to assume and manage the defense ofany such action or claim, Rhein Biotechand GCVC shall have the rght to assume and manage such defense. Regardless of whichParty controls such defense, the other Party shall take all appropriate ornecessary actions to assist in the defense ofsuch action or claim and all costsand expenses incurred by either Party in connection therewith (including, withoutlimitation, any damages required to be paid by the Parties) shall be shared,with Chiron paying [***] of such costs and Rhein Biotech and GCVC paying [***] thereof.

 

**7.5****        ****Infringement Action Against A Third Part.**EachParty shall promptly notify the other Party in the event it becomes aware ofany infringement of any Collaboration Patents, Chiron Background Patents, RheinBiotech and GCVC Background Patents or Chiron/Rhein Biotech and GCVC BackgroundPatents by any third party. Chiron shall have the sole right (but not theobligation) to file and maintain lawsuits for infringement of any such thirdparty in the Field, in its own name or in the name of Rhein Biotech and GCVC,if necessary. If Chiron does not exercise its right to file and maintain anysuch claim within 90 days after the date of such notice, Rhein Biotech and GCVCshall have the right to file and maintain such claim. Regardless of which Partyinitiates and controls such claim, the other Party shall take all appropriateor necessary actions to assist in such proceedings (including the entry intoadditional agreements necessary to perfect the filing Party’s right to bring ormaintain such lawsuits) and all costs and expenses incurred by either Party inconnection therewith shall be shared, with Chiron paying [***] of such costsand Rhein Biotech and GCVC paying [***] thereof. Any monetary recovery inconnection with any such infringement action shall-be shared, with Chironreceiving [***] of such recovery and Rhein Biotech and GCVCreceiving [***] thereof.

 

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**7.6****        ****Trademarks.** TheParties shall have the right to use multiple trademarks for the Product theirrespective Territory, provided, however, that the marketing subcommitteeappointed pursuant to the terms of Section 3.3 of this Collaboration Agreementshall approve the use of each such trademark. Each Party shall be solelyresponsible for registering and enforcing any and all trademarks ituses toidentify the Product.

 

**ARTICLE 8**LICENSES

**8.1**      **License to ContributedChiron Technology.** Subject to the terms and conditions of thisCollaboration Agreement, Chiron hereby grants to Rhein Biotech and GCVC aworldwide royalty-free license, without the right to sublicense, under theContributed Chiron Technology, to make, use and sell the Product. Such licenseshall be co-exclusive with Chiron.

 

**8.2**      **License to ContributedRhein Biotech and GCVC Technology.** Subject to the terms andconditions of this Collaboration Agreement, Rhein Biotech and GCVC herebygrants to Chiron a worldwide royalty-free license, without the right tosublicense, under the Contributed Rhein Biotech and GCVC Technology, to havemade, use and sell the Product. Such license shall be co-exclusive with RheinBiotech and GCVC.

 

**ARTICLE 9**

**MATERIALS**

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**9.1****        ****Rhein Biotech and GCVC Materials.** RheinBiotech and GCVC is the sole and exclusive owner or licensee of the RheinBiotech and GCVC Materials. Chiron shall be permitted to use the Rhein Biotechand GCVC Materials for purposes of the Collaboration and for no other purposeswhatsoever. Chiron shall have no rights or licenses to the Rhein Biotech andGCVC Materials except as expressly set forth herein. Chiron shall not provideany Rhein Biotech and GCVC Materials to any unaffiliated third party withoutthe prior written consent of Rhein Biotech and GCVC. Except as expressly setforth herein or otherwise required by applicable law or regulations, upon thetermination of the Collaboration, Chiron shall cease to use the Rhein Biotechand GCVC Materials and shall, at Rhein Biotech and GCVC’s option and expense,either destroy the Rhein Biotech and GCVC Materials or return the Rhein Biotechand GCVC Materials to Rhein Biotech and GCVC.

 

**9.2****        ****Chiron Materials.**Chiron is the sole and exclusive owner or licensee of the Chiron Materials.Rhein Biotech and GCVC shall be permitted to use the Chiron Materials forpurposes of the Collaboration and for no other purposes whatsoever. RheinBiotech and GCVC shall have no rights or licenses to the Chiron Materialsexcept as expressly set forth herein. Rhein Biotech and GCVC shall not provideany Chiron Materials to any unaffiliated third party without the prior writtenconsent of Chiron. Except as expressly set forth herein or otherwise requiredby applicable law or regulations, upon the termination of the Collaboration,Rhein Biotech and GCVC shall cease to use the Chiron Materials and shall, atChiron’s option and expense, either destroy the Chiron Materials or return theChiron Materials to Chiron.

 

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**9.3****        ****No****Warranties.**The Chiron Materials and theRhein Biotech and GCVCMaterials shall be supplied without any warranties,expressed or implied,including any warranty of merchantability or fitness for aparticular purpose.

 

**9.4****        ****CollaborationMaterials.**Rhein Biotech and GCVC and Chiron shalljointly own all Collaboration Materials. Neither Party shall provide anyCollaboration Materials to any third party without the prior written consent ofthe other Party. Except as expressly set forth herein, upon the termination ofthe Collaboration, each Party shall cease to use and shall destroy theCollaboration Materials.

 

**ARTICLE 10CONFIDENTIALITY**

 

**10.1****     ****General.**During the term of this Collaboration Agreement andfor a period of five years following the expiration or early termination ofthis Collaboration Agreement, each Party (the “Receiving Party”) shall maintainin confidence any and all confidential information obtained from the otherParty (the “Disclosing Party”) in connection with the activities of the Partiesunder this Collaboration Agreement, including, without limitation, any and allcommercial, scientific, technical or other information, whether in oral orwritten form or physical object (“Confidential Information”).

 

The ReceivingParty shall use such information of the Disclosing Party only as necessary tofulfill its rights and obligations under this Collaboration Agreement.

 

The ReceivingParty shall deal with such information so as to protect it from disclosure witha degree ofcare not less than that used by it in dealing with its owninformation intended to remain exclusively within its knowledge and shall notdisclose such information to anyone other than its employees, agents orconsultants, and those of its Affiliates, (collectively, “Representatives’), asare necessary in connection with the Receiving Party’s activities ascontemplated in this Collaboration Agreement. Each Party shall notify all of itsRepresentatives who have access to Confidential Information of itsconfidentiality and the care therefor required, and shall obtain from anynon-employee Representative an agreement of confidentiality incorporating therestrictions at least as restrictive as those contained herein.

 

The obligationsset forth in this Article 10 shall extend to copies, ifany, of ConfidentialInformation made by any Representatives referred to in Section 10.1 and todocuments in whatever form prepared by such Parties which embody or containConfidential Information.

 

**10.2****     ****Exceptions.** Theobligation of confidentiality contained in this Article 10 shall not apply tothe extent that such information:

 

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(a)      isor hereafter becomes generally available to the public other than by reason ofany breach or default by the Receiving Party of its confidentiality obligationunder this Collaboration Agreement;

(b)      wasalready known to the Receiving Party (as shown by its written records) prior tothe date of receipt by the Receiving Party from the Disclosing Party hereunderor is independently developed by the Receiving Party (as shown by its writtenrecords) without access to the Disclosing Party’s information; or

(c)       isdisclosed to the Receiving Party by a third-party not directly or indirectlyunder a duty of confidentiality to the Receiving Party;

(d)      tothe extent such disclosure is reasonable necessary in connection with thefollowing:

(i)        filing,prosecuting or maintaining Collaboration Patents;

(ii)       IND’sor BLAs;

(iii)      prosecuting or defending litigation;

(iv)      compliancewith applicable laws or court orders.

Whenever the Receiving Party becomes aware of any state of facts whichwould or might result in disclosure of Confidential Information pursuant tosubparagraph (d) above, it shall, if possible, promptly notify the Partymaking disclosure (the “Disclosing Party”) prior to any such disclosure so thatthe Disclosing Party may seek a protective order or other appropriate remedyand/or waive compliance with the provisions of this Collaboration Agreement. Inany event, if the Receiving Party is unable to promptly notify the DisclosingParty or if such protective order or other remedy is not obtained, or if theDisclosing Party waives compliance with the provisions of this CollaborationAgreement, the Receiving Party will furnish only that portion of theinformation which it is advised by counsel is legally required and willexercise reasonable efforts to obtain assurance that confidential treatmentwill be accorded the Confidential Information.

Each party shall be entitled, in addition to any other right or remedyit may have, at law or in equity, to an injunction, enjoining or restrainingany other party from any violation or threatened violation of thisArticle 9.

**10.3****      ****Return of ConfidentialInformation.** Within thirty (30) days after expiration orearlier termination of this Collaboration Agreement, the Receiving Party shall(and shall cause its Affiliates and their respective Representatives to) returnto the Disclosing Party or destroy all documents and tangible items (includingelectronic format) then in its possession which contain, relate to or refer toConfidential Informationreceived from the Disclosing Party; provided, however, that the Receiving Partymay retain one copy of each document in its legal files solely to permit theReceiving Party to comply with its obligations hereunder.

 

----

 

**ARTICLE11PUBLICATION**

 

**11.1****     ****General.**Any and allproposed publications or communications relating in whole or in part to theCollaboration or Collaboration Technology (including, without limitation,posters) shall be reviewed and approved by both Parties. Any such proposedpublication or communication shall not include any Confidential Information. Acopy of any proposed publication or communication (including, in the case ofany proposed oral communication, a transcript) shall be sent by the publishingParty to the other Party at least sixty (60) days before the projectedpublication or communication in order to allow the other Party to requestdeletion of any of its Confidential Information. In addition, Rhein Biotech andGCVC or Chiron, as the case may be, may require delay in publication orcommunication for a period not to exceed six months in order to haveappropriate patent applications filed. In the event that additional results arenecessary or appropriate to ensure patentability, Rhein Biotech and GCVC orChiron, as the case may be, may require further delay of the publication orcommunication until the expected results have been obtained and, ifappropriate, have been included in a filed patent application. In no eventshall either Party publish, present or communicate Confidential Information ofthe other Party without prior written approval by the other Party.

 

**11.2****     ****Authorship.** Anyand all publications and communications relating to the Collaboration orCollaboration Technology shall mention all Rhein Biotech and GCVC and Chironscientists that may be considered as co-author (as determined by the ScientificCommittee) and shall refer to Rhein Biotech and GCVC and Chiron asparticipating in the Collaboration.

 

**ARTICLE 12**

**REPRESENTATIONSAND WARRANTIES**

 

**12.1****     ****Representationsand Warranties by Chiron.**Each of Chiron Behring andChiron S.p.A. represents and warrants with respect to itself to Rhein Biotechand GCVC, as of the Effective Date, that:

 

(a)          Each of Chiron Behring and Chiron S.p.A. is a corporationand is validly existing and in good standing under the laws of its jurisdictionof incorporation; each of Chiron Behring and Chiron S.p.A. has all necessarycorporate power to execute, deliver and perform this Collaboration Agreementand to carry out its obligations hereunder this Collaboration Agreement; andthe execution and delivery of this Collaboration Agreement by each of ChironBehring and Chiron S.p.A. and the performanceby each of Chiron Behring and Chiron S.p.A of its obligations hereunder havebeen duly authorized by all necessary corporate action on the part of each ofChiron Behring and Chiron S.p.A;

 

(b)          no consent, license, permit, approval, order orauthorization of, or registration, declaration, qualification or filing with,any foreign, federal, state, provincial or local governmental authority isrequired to be obtained or made in connection with the execution and deliveryof this Collaboration Agreement by Chiron Behring or Chiron S.p.A. or theperformance of its obligations hereunder;

 

(c)          the execution and delivery by each of Chiron Behringand Chiron S.p.A. of this Collaboration Agreement and the performance by eachof Chiron Behring and Chiron S.p.A. of its obligations hereunder do notconflict with or require the consent of any third party to any contract,agreement, commitment, covenant, understanding or arrangement to which ChironBehring or Chiron S.p.A. is a party;

 

(e)          Chiron owns or controls the Contributed ChironTechnology free and clear of any liens, claims, encumbrances or charges, andhas not previously licensed, assigned or otherwise encumbered its right, titleor interest in the Contributed Chiron Technology in the Field.

 

EACH OF CHIRON BEHRING AND CHIRON S.P.A. DISCLAIMS ALL WARRANTIES,EXPRESS OR IMPLIED, INCLUDING, WITROUT LIMITATION, WARRANTIES OFMERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF TIHE ANY AND ALL PRODUCTSOR CHIRON MATERIALS SUPPLIED HEREUNDER, EXCEPT AS EXPRESSLY SET FORTH IN THISAGREEMENT.

 

**12.2****     ****Representationsand Warranties by Rhein Biotech and GCVC.**Each of RheinBiotech and GCVC represents and warrants with respect to itself to Chiron,as of the Effective Date, that:

 

(a)          Each of Rhein Biotech and GCVC is a corporation and isvalidly existing and in good standing under the laws of its jurisdiction ofincorporation; each of Rhein Biotech and GCVC has all necessary corporate powerto execute, deliver and perform this Collaboration Agreement and to carry outits obligations hereunder this Collaboration Agreement; and the execution and deliveryof this Collaboration Agreement by each of Rhein Biotech and GCVC and theperformance by each of Rhein Biotech and GCVC of its obligations hereunder havebeen duly authorized by all necessary corporate action on the part of each ofRhein Biotech and GCVC;

 

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(b)          no consent, license, permit, approval, order or authorizationof, or registration, declaration, qualification or filingwith, any foreign, federal, state, provincial or local governmental authorityis required to be obtained or made in connection with the execution anddelivery of this Collaboration Agreement by Rhein Biotech or GCVC or theperformance of its obligations hereunder;

 

(c)          the execution and delivery by each of Rhein Biotech and GCVCof this Collaboration Agreement and the performance by each of Rhein Biotechand GCVC of its obligations hereunder do not conflict with or require theconsent of any third party to any contract, agreement, commitment, covenant,understanding or arrangement to which Rhein Biotech or GCVC is a party;

 

(d)          Rhein Biotech and GCVC owns or controls the Contributed RheinBiotech and GCVC Technology free and clear of any liens, claims, encumbrancesor charges, and has not previously licensed, assigned or otherwise encumberedits right, title or interest in the Contributed Rhein Biotech and GCVCTechnology in the Field.

 

EACH OF RHEINBIOTECH AND GCVC DISCLAIMS ALL WARRANTIES, EXPRESS OR IMIPLIED, INCLUDING,WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULARPURPOSE OF THE ANY AND ALL PRODUCTS OR RHEIN BIOTECH AND GCVC MATERIALSSUPPLIED HEREUNDER, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT.

 

**ARTICLE 13INDEMNIFICATION****AND****INSURANCE**

 

**13.1****      ****Indemnification by Rhein Biotech****and GCVC.**Rhein Biotech and GCVC shallindemnify, defend and hold harmless Chiron and its affiliates and theirrespective officers, directors, employees, agents and representatives for anyLosses arising out of or relating to (a) any material inaccuracy as of the datewhen made of any ofRhein Biotech and GCVC’s representations and warrantieshereunder, or (b) the breach by Rhein Biotech and GCVC of any of itsobligations hereunder.

 

**13.2****      ****Indemnification****by****Chiron.**Chiron shall indemnify, defend and hold harmless Rhein Biotech and GCVC and itsAffiliates and their respective officers, directors, employees, agents andrepresentatives for any Losses arising out of or relating to (a) any materialinaccuracy as ofthe date when made of any of Chiron’s representations andwarranties hereunder, or (b) the breach by Chiron of any of its obligationshereunder.

 

**13.3****      ****Indemnification****Procedures.**Any person seeking indemnitypursuant to this section (the “Indemnified Party”) shall notify the Party fromwhom indemnification is sought (the “Indemnifying Party”) in writing promptly uponbecoming aware of any claim, threatened claim, damage, loss, suit, proceedingor liability (“Claim”) to which such indemnification may apply. Failure toprovide such notice shall constitute a waiver ofthe Indemnifying Party’sindemnity obligations hereunder if and to the extent the Indemnifying Party ismaterially damaged thereby. The Indemnifying Party shall have the right toassume and control the defense of the Claim at its own expense. If the right toassume and control the defense is exercised, the Indemnified Party shall havethe right to participate in, but not control, such defense at its own expenseand the Indemnify Party’s indemnity obligations shall be deemed not to includeattorneys’ fees and litigation expenses incurred by the Indemnified Party afterthe assumption of the defense by the Indemnifying Party. If the IndemnifyingParty does not assume the defense of the Claim, the Indemnified Party maydefend the Claim; provided, that the Indemnified Party will not settle orcompromise the Claim without consent of Indemnifying Party, which consent willnot be unreasonably withheld. The Indemnified Party shall cooperate withIndemnifying Party and will make available to Indemnifying Party all pertinentinformation under the control of the Indemnified Party.

 

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**13.4**    **Waiver of Consequential or Punitive Damages.** Subject only tothe terms of Section 14.6, no Party shall be liable to any other Party forany special, incidental or consequential damages, including lost profits,whether any claim for such recovery is based upon theories of contract,negligence, or tort (including strict liability). Each Party hereby waives foritself and its successors and assigns any and all claims for any special,incidental or consequential damages, including lost profits.

 

**13.5**    **Insurance.** Each Party shall obtain and maintain comprehensivegeneral liability insurance, including product liability insurance, with areputable and financially secure insurance carrier(s), to cover its activitiesunder this Collaboration Agreement.

 

**ARTICLE 14 TERM, TERMINATION AND REMEDY FOR BREACH**

** **

**14.1**    **Term.** This Collaboration Agreement is effective as of the datehereof and shall continue indefinitely unless terminated by either Party inaccordance with the terms hereof.

 

**14.2**    **Mutual Agreement.** The Parties may terminate the Collaborationand the Collaboration Documents at any time by mutual written agreement.

 

**14.3****    Termination for MaterialBreach.** Subject to the terms of this Section 14.3, either Party mayterminate the Collaboration and the Collaboration Documents by notice withimmediate effect in the event of the occurrence of a Material Breach by theother Party, provided that:

 

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(a)                                  for the purposes of this Collaboration Agreement andthe Collaboration Documents, the following are the only breaches which shallconstitute Material Breaches:

 

(i)                                     failure of either Party to make the agreed investmentin the Collaboration pursuant to Section 2.4 within sixty days of the planneddate of such investment pursuant to Section 2.4; and

 

(ii)                                  failure of either Party to proceed in accordance withthe timelines for the Collaboration pursuant to Section 2.4 within sixty daysof the planned date of any activity pursuant to Section 2.4.

 

(b)                                 the non-breaching Party has notified the breachingParty and the Steering Committee in writing of the occurrence of such MaterialBreach and such Material Breach has not been cured by the breaching Partywithin 30 days of receipt of such notification (the “Cure Date”); and

 

(c)                                  in the event the non-breaching Party shall not havecured such Material Breach by the Cure Date, neither the Steering Committee northe CEO’s of the Parties shall have been able to resolve the matter within oneweek of the Cure Date.

 

In the event of anysuch termination due to the occurrence of a Material Breach, the breachingParty shall grant the non-breaching Party a non-exclusive royalty bearing licenseto any of the breaching Party’s Contributed Technology, any Joint BackgroundTechnology and any Collaboration Technology requested by the non- breachingParty, which license shall be granted on commercially reasonable terms whichshall be agreed at the time and subject to the condition that any such technologyshall only be used in connection with the development, manufacture, distributionand sale of the Product.

 

**14.4****                  ****Immediate Termination.**Either Party mayterminate the Collaboration and the Collaboration Documents with immediateeffect upon written notice to the other Party in the event:

 

(a)                                  the Korean Food and Drug Administration (i) refuses toauthorize the manufacture of the Product in Korea or (ii) fails within 18months of the filing of the submission thereto for regulatory approval and theSteering Committee shall not have extended such 18 month period to authorizethe manufacture of the Product in Korea or (iii) withdraws the authorizationfor the manufacture of the Product in Korea;

 

(b)                                 either Glaxo SmithKline or Aventis Pasteur S.A. or anyAffiliate thereof or any successor thereto shall acquire a Controlling interestin the other Party (the “Changed Party”), in which case the Party not thesubject of such acquisition shall have the right to terminate the Collaborationand the Collaboration Documents subject to receipt by the Changed Party ofwritten notice of the exercise of such right within ninety (90) days after thecompletion of such acquisition.

 

**14.5**    **Effect of Termination In General.**Upon termination of theCollaboration and the Collaboration Documents:

 

(a)       eachParty shall be obligated to pay 50% of the Residual Expenses; and

 

(b)      neitherParty shall be relieved of any obligation which accrued prior to the effectivedate of such termination; in particular, each Party shall remain obligated topay its share of all R&D Expenses incurred by the Parties prior totermination in accordance with the provisions of Section 6.2 and bothParties shall fulfill all payment and other obligations incurred with respectto commercialization of the Product prior to the date of such termination inaccordance with the provisions of Section 6.4.

 

(c)       exceptas provided in Section 14.3, Rhein Biotech and GCVC shall not have anycontinuing license to or any other right, title or interest in or to theContributed Chiron Technology, and Chiron shall not have any continuing licenseto or any other right, title or interest in or to the Contributed Rhein Biotechand GCVC Technology;

 

(d)      theParties shall continue to jointly own all Collaboration Technology developedprior to such termination; each Party shall have the right to freely licenseits interest in such Collaboration Technology without the consent of the otherParty; and neither Party shall be obligated to pay any royalties to the otherParty for the use of such Collaboration Technology by such Party or itslicensees;

 

(e)       Thefollowing provisions shall survive any such termination. Article 6(Payments), Article 7 (Intellectual Property), Article 8 (Licenses),Article 10 (Confidentiality), Article 12 (Representations andWarranties), Article 13 (Indemnification and Insurance) andArticle 14 (Termination).

**14.6**    **Remedies for Other Breaches.** The Parties agree that theremedies set forth below shall be the exclusive remedies with respect to thefollowing other breaches under the Collaboration Documents:

(a)       Inthe event (i) either Party shall breach Section 5.5 (ContractRequirements) or (ii) there is a delay in the supply of any Materialsother than by reason of Force Majeure or by reason of any processing failurebeyond the reasonable control of the relevant Party by more than thirty (30)days, the Party in breach or with respect to whose Materials such delay hasoccurred shall pay to the other Party one percent(l%) of the then minimumselling price of the Product per day as a penalty.

 

(b)      In the event either Party breaches Section 15.11(Absence of Future Competition) or Section 7.2 (Licenses to CollaborationTechnology), then such breaching Party shall pay to the other Party on anongoing basis as a penalty an amount equal to fifty percent (50%) of any salesfrom any Product sold as a result of such breach.

 

(c)       Any late payment due under any Collaboration Documentshall bear interest at the prime rate as specified in the Wall StreetJournal.

 

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**ARTICLE 15MISCELLANEOUS**

 

**15.****1****      ****Notices.**

 

Any consent,notice or report required or permitted to be given or made under thisCollaboration Agreement by one of the Parties hereto to the other shall be inwriting, delivered personally or by facsimile (and promptly confirmed bypersonal delivery, first class air mail or courier), first class air mail orcourier, postage prepaid (where applicable), addressed to such other Party atits address indicated below, or to such other address as the addressee shallhave last furnished in writing to the addressor and (except as otherwiseprovided in this Collaboration Agreement) shall be effective upon receipt bythe addressee.

 

If to Chiron:

 

Chiron BehringGmbH & Co

Emil von BehringStrasse 76

35041 Marburg

Germany

 

Attention:Business Development

Facsimile: 496421 39 5187

 

with a copy to:

 

Chiron S.p.A.

Via Fiorentina 1

53100 Siena

Italy

 

Attention: Project Development

Facsimile: 39 0577 24 3085

 

If to RheinBiotech and GCVC:

 

GreenCrossVaccine Corporation

303 Bojung-Ri,Koosung-Eup

Yongin 449-770

Republic of Korea

 

Attention:Representative Director

Facsimile: 82 31260 9012

 

with a copy to:

 

Rhein BiotechN.Y.

GaetanoMartinolaan 95

6229 GSMaastricht

The Netherlands

 

Attention: CEO

Facsimile: 31 4335 67 899

 

**15.2**        **EntireAgreement.** The Collaboration Documents constitute the entire agreement betweenthe Parties hereto with respect to the subject matter hereof and supersede anyprior agreement whether written or oral.

 

**15.3**        **ForceMajeure.** Neither Party shall be held liable orresponsible to the other Party nor be deemed to have defaulted under orbreached the Agreement for failure or delay in fulfilling or performing anyterm of the Agreement when such failure or delay is caused by or results fromcauses beyond the reasonable control of the affected Party (including but notlimited to fire, floods, embargoes, war, acts of war (whether war be declaredor not), insurrections, riots, civil commotion, strikes, lockouts or otherlabor disturbances, acts of God or acts, omissions or delays in acting by anygovernmental authority or the other Party (collectively, “Events of Force Majeure”);provided, however, that the affected Party (i) shall immediately notifythe other Party of the occurrence of any such Event of Force Majeure and(ii) shall exert all reasonable efforts to eliminate, cure or overcome anysuch Event of Force Majeure and to resume performance of its covenants with allpossible speed; and provided, further, that nothing contained herein shallrequire any Party to settle on terms unsatisfactory to such Party any strike,lockout or other labor difficulty, any investigation or proceeding by anygovernmental authority or any litigation by any third-party. Notwithstandingthe foregoing, to the extent that an Event of Force Majeure continues for aperiod in excess of six (6) months, the affected Party shall promptlynotify in writing the other Party of such Event of Force Majeure and withinfour (4) months of the other Party’s receipt of such notice, the Partiesagree to negotiate in good faith either (i) to resolve the Event of ForceMajeure, if possible, (ii) to extend by mutual agreement the time periodto resolve, eliminate, cure or overcome such Event of Force Majeure, (iii) toamend this Collaboration Agreement to the extent reasonably possible, or (iv)to terminate this Collaboration Agreement.

 

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**15.4****      ****Assignment.** This CollaborationAgreement shall not be assignable in whole or in part by either Party withoutthe prior written consent of the other Party. Each Party is, however,authorized to assign this Collaboration Agreement in whole or in part to any ofits Affiliates provided that the assigning Party promptly informs the otherParty of the transfer of rights and obligations.

 

**15.5****     ****Waiver****orModification.**This Collaboration Agreement may not beamended, modified or supplemented except by a written instrument manuallysigned by all of the Parties hereto or thereto. No omission or delay on thepart of either Party in requiring the due and punctual fulfillment by the otherof any of the obligations hereunder shall constitute a waiver by the omittingor delaying Party of any of its rights to require such due and punctualfulfillment of any obligation hereunder, whether similar or otherwise, or awaiver of any remedy it may have hereunder or otherwise.

 

**15.6****     ****Severability.** In the event any one ormore of the provisions of this Collaboration Agreement shall be held to beinvalid, illegal or unenforceable, the validity, legality or enforceability ofthe remaining provisions or parts hereof shall not in any way be affected orimpaired thereby.

 

**15.7****      ****Dispute Resolution.** The Parties agree that inthe event of a dispute between them arising out of or in any way relating tothis Collaboration Agreement, the Parties shall undertake good faith efforts toresolve any such dispute in good faith. In the event the Parties shall beunable to resolve any such dispute, the matter shall be referred to the ChiefExecutive Officer of Chiron and the Chief Executive Officer of Rhein Biotechand GCVC for further review and resolution.

 

**15.8****      ****Governing Law and Arbitration.** ThisCollaboration Agreement is construed and shall be governed by, interpreted andenforced in accordance with thelawvs of England. In the event the Parties areunable to reach accord using the procedures specified in Section 15.7, suchdispute shall be finally settled without recourse to the courts, in accordancewith the Rules of Conciliation and Arbitration of the International Chamber ofCommerce, by one arbitrator designated in conformity with those Rules.Arbitration shall be held in English in San Francisco, California if initiatedby Rhein Biotech and GCVC and in Amsterdam, the Netherlands if initiated byChiron. Either party may ask the competent tribunal to confirm an arbitrationaward or otherwise provide that it shall be enforceable.

 

**15.9****      ****Independent Contractors.** The relationshipbetween Chiron and Rhein Biotech and GCVC created by this CollaborationAgreement is one of independent contractors and neither Party shall have thepower or authority to bind or obligate the other except as expressly set forthin this Collaboration Agreement.

 

**15.10**    **Absence of ExistingCompetition.** Each of Rhein Biotech and GCVC representsand warrants to Chiron that, to the best of its knowledge and belief, neitherof Rhein Biotech or GCVC nor any Affiliate of either Rhein Biotech or GCVC ispresently engaged in the business of manufacturing, marketing or distributingthe Product. Chiron represents and warrants to Rhein Biotech and GCVC that, tothe best of its knowledge and belief, neither Chiron nor any Affiliate ofChiron is presently engaged in the business of manufacturing, marketing ordistributing the Product.

 

**15.11**    **Absence of FutureCompetition.** Except as otherwise provided in thisCollaboration Agreement, each Party covenants and agrees that none of suchParty or any Affiliate of such Party (whether or not such Affiliate hasaccepted a sublicense hereunder and agreed to be bound by the terms hereof) orany of their respective successors in interest shall engage in the business ofdeveloping, manufacturing, marketing or distributing any Product in the Fieldother than through Chiron and Rhein Biotech and GCVC, as contemplated by thisCollaboration Agreement, provided, however, that in the event the Collaborationwith respect to the Acellular Product is terminated pursuant to the terms of Section 2.5,then this Section 15.11 shall not apply to any acellular product in theField.

 

**15.12**    **Ethical BusinessPractices.** Neither Party, nor any person employed by itor representing it, has ever made, offered, provided or authorized, andcovenants that neither it, nor any person employed by it or representing it,will make offer provide or authorize, direct or indirectly, any payment ortransfer of anything of value to any official, representative or employee ofany government agency or instrumentality, any political party or officerthereof, or any candidate for public office for the purpose of influencing adecision by any of them in their official capacity, and no officer, director,partner, owner, principal, employee, or agent of either Party is an official oremployee of a governmental agency or instrumentality or a government ownedcompany in a position to influence action or a decision regarding theactivities of such Party contemplated in this Collaboration Agreement. EachParty covenants that it will inform the other, if and as soon as any personassumes such a position as an official or employee of a governmental agency orinstrumentality or government owned company, while at the same time remainingan officer, director, partner, owner, principal, employee, or agent of suchParty.

 

**15.13****   ****Use of Name.** No right, express orimplied, is granted to either Party by this Collaboration Agreement to use inany manner any trademark or trade name of the other Party including the names“Rhein Biotech and GCVC” and “Chiron” without the prior written consent of theowning Party.

 

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**15.14****   ****Joint and Several Liability.**

 

(a)           Each of Chiron Behring and Chiron S.p.A. shall (i) be jointlyand severally liable for the obligations of Chiron arising pursuant to theterms of this Collaboration Agreement and (ii) procure the performance by theother of all the obligations arising pursuant to the terms of thisCollaboration Agreement.

 

(b)           Each of Rhein Biotech and GCVC shall (i) be jointly andseverally liable for the obligations of Rhein Biotech and GCVC arising pursuantto the terms of this Collaboration Agreement and (ii) procure the performanceby the other of all the obligations arising pursuant to the terms of thisCollaboration Agreement.

 

**15.15****  ****Press Release.**Within seven days of the execution ofthis Collaboration Agreement by allParties hereto, the Parties agree to each issue a press release on the samedate which shall have received the prior written approval of each Party, whichapproval shall not be unreasonably withheld.

 

**15.16****  ****Successors.**Without prejudice to the provisions of Section 14.4(b) (Immediate Termination),this Collaboration Agreement binds each of the Parties hereto and theirrespective successors.

 

**15.17****  ****Counterparts.**ThisCollaboration Agreement has been executed in one or more counterparts, each of whichshall be deemed an original and all of which together shall constitute one andthe same instrument.

 

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IN WITNESSWHEREOF, the parties have executed this Collaboration Agreement as of the dateset forth above.

 

 
| **CHIRON  BEHRING GMBH & CO** | **RHEIN  BIOTECH N.V.**     |
|-----------------------------------|-----------------------------|
| ** **                        | ** **                  |
|                              |                        |
| By:                               | /s/ John Lambert            |   | By: | /s/ Jan Thio |   |
| Name:                             | John Lambert                | Name: | Jan Thio |
| Title:                            | President,  Chiron Vaccines | Title: | Business  Director |
|                              |                        |   |
|                              | By:                         | /s/ Kees  Moonen |   |
| **CHIRON  S.P.A.**                | Name:                       | Kees Moonen |
|                              | Title:                      | Legal  Counsel |
|                              |                        |   |
|                              |                        |   |
| By:                               | /s/ John  Lambert           |   | **GREENCROSS  VACCINE** |
| Name:                             | John Lambert                | **CORPORATION** |
| Title:                            | President,  Chiron Vaccines |   |
|                              |                        |
|                              | By:                         | /s/ Ton  Kuiper |   |
|                              | Name:                       | Ton Kuiper |
|                              | Title:                      | Representative  Director |
|                                   |                             |  |  |  |  |  |  |  |  |  |  |

 

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List of Schedules

 
| Schedule A: | Definitions                                 |
|-------------|---------------------------------------------|
|        |                                        |
| Schedule B: | Contributed  Chiron Patents                 |
|        |                                        |
| Schedule C: | Contributed  Rhein Biotech and GCVC Patents |
|        |                                        |
| Schedule D: | Chiron  Material                            |
|        |                                        |
| Schedule E: | Rhein  Biotech and GCVC Material            |
|        |                                        |
| Schedule F: | Accounting  Methodologies                   |
|        |                                        |
| Schedule G: | Existing  Royalty Agreements                |
|        |                                        |
| Schedule H: | Collaboration  and Development Plan         |
|        |                                        |
| Schedule I: | 2001 Annual  Plan and Budget                |
|        |                                        |
| Schedule J: | Form of Bulk  Supply Agreement              |
|        |                                        |
| Schedule K. | Form of  Supply and Manufacturing Agreement |
|        |                                        |
| Schedule L: | Investment  Plan                            |

 

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**SCHEDULE A**

 

**DEFINITIONS**

 

For thepurposes of the Collaboration Documents the following words and phrases shallhave the following meanings:

 
| **1.1**    | [***]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **1.2**    | **“Affiliate”,**  with respect to any person, means any company, entity, joint venture or  similar business arrangement which is controlled by, controlling or under  common control with such person, and shall include without limitation any  company fifty percent or more of whose voting stock or participating profit  interest is owned or controlled, directly or indirectly, by such person, and  any company which owns or controls, directly or indirectly, fifty percent or  more of such person.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **1.3**    | **“Allowable  Expenses”** means the fully burdened, fairly allocated  direct and indirect costs and expenses incurred by either Party in connection  with its activities under the Collaboration Documents, which shall include a  reasonable depreciation of employed assets, as determined in accordance with  the accounting methodologies set forth in Schedule F to the Collaboration  Agreement; provided that such costs and expenses are contemplated by an  Annual Plan and Budget approved in accordance with the provisions of Article  3 of the Collaboration Agreement; provided, however, that any depreciation  and amortization associated with any capital expenditure prior to  commercialization of the Product shall be treated as an Allowable Expense  only to the extent that such expenses combined with the other R & D  Expenses do not exceed [***] of the amount set forth in the Annual Plan and  Budget for R & D Expenses. Allowable Expenses shall not include any (a)  Excluded Expenses or (b) any allocation of general and administration  expenses or any G&A Markup or (c) any Sales & Marketing Expenses. |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **1.4**    | **“Annual Plan and Budget”**means, with respect  to any year, a plan for such year which shall include at least the following:  planned research and development activities, including timeline and targeted  milestones; planned manufacturing activities; and planned sales and marketing  activities and which shall be prepared and approved in accordance with the  terms of Section 3.2(a) to the Collaboration Agreement,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **1.5**    | **“Batch”**  shall mean a specific quantity of the Product comprising a number of units  mutually agreed upon between Chiron and Rhein Biotech and GCVC, and that (a)  is intended to have uniform character and quality within specified limits,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

 

 

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| ** ** | and (b) is  produced according to a single Manufacturing order during the same cycle of  Manufacture.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **1.6**    | **“BLA”**  stands for biologic license application and means, with respect to any  Product, any application filed with a Regulatory Agency for approval to  market such Product in any jurisdiction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **1.7**    | **“Bulk Chiron Material”**means  the bulk form of the Chiron Materials used as raw material in the Manufacture  of the Product.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **1.8**    | **“Bulk Loss Allowance”**means the allowances  for losses of Bulk Chiron Material and Bulk Rhein Biotech and GCVC Material  as more specifically set forth in Schedule F to the Bulk Supply Agreement and  the Supply and Manufacturing Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **1.9**    | **“Bulk Rhein Biotech and****GCVC****Material”**means the bulk form of  the Rhein Biotech and GCVC Materials used as raw material in the Manufacture  of the Product.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **1.10**   | **“Bulk Supply Agreement”**means the bulk supply  agreement dated as of the date of the Collaboration Agreement between Chiron  and Rhein Biotech and GCVC, and all schedules, amendments and supplements  thereto, a form of which is attached as Schedule J to the Collaboration  Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **1.11**   | **“Certificate  of Analysis”**  means the certificate of analysis confirming that the accompanying Product  complies with the Product Specifications and cGMP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **1.12**   | **“Chiron Contract Requirements”**means one  hundred percent (100%) of the quantity of the Product sold and/or distributed  by Chiron in accordance with the terms of the Collaboration Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **1.13**   | **“Chiron Inventions”**means inventions arising  from the activities of the parties under the Collaboration Agreement and  invented solely by employees of Chiron or persons obligated to assign their  inventions to Chiron.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **1.14**   | **“Chiron Materials”**means the materials  described in Schedule D to the Collaboration Agreement and the additional  biological materials, if any, which Chiron provides to Rhein Biotech and/or  GCVC in connection with the Collaboration, together with (a) any part,  progeny, mutant or hybrid thereof, (b) any nucleic acid or other genetic  material therefrom, (c) any vector materials derived therefrom, and any  progeny, derivatives or modifications of such vector particles, (d) any copy,  complement or transcription or expression Whole Cell Product thereof, and (e)  any combination of the foregoing with other substances (other than Rhein  Biotech and GCVC Materials, which combination shall be deemed Collaboration  Materials). |

 

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| **1.15**   | **“Chiron Purchase Order”**means written orders  from Chiron to Rhein Biotech and GCVC which shall specify (a) the quantity of  the Product ordered, (b) shipping instructions, (c) delivery dates, and (d)  delivery destinations. |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                          |
| **1.16**   | **“Chiron Purchase Price”**means the price to  be paid by Chiron to Rhein Biotech and GCVC for the Product in accordance  with the terms of Section 5.2 of the Supply and Manufacturing Agreement.                                  |
| ** ** |                                                                                                                                                                                                                                          |
| **1.17**   | **“Chironl Rhein****Biotech and GCVC Joint Background Technology”**means                                                                                                                                                            |
| ** ** |                                                                                                                                                                                                                                          |
|       | (a)                                                                                                                                                                                                                                           | all  inventions, discoveries, procedures, processes, methods, data, information,  results, trade secrets and know-how, whether patentable or otherwise, arising  out of the Materials Transfer Agreement prior to the Effective Date; and |
|       |                                                                                                                                                                                                                                          |   |
|       | (b)                                                                                                                                                                                                                                           | all patents  and patent applications claiming such inventions and other technology; all  patents issued from such patent applications; and all reissues,  confirmations, renewals, extensions, counterparts, divisions, continuations,  continuations-in-part, supplemental protection certificates or utility models  relating to such patents and patent applications. |
| ** ** |                                                                                                                                                                                                                                          |
| **1.17**   | **“Chiron Territory”**shall have the  meaning ascribed to it in Section 5.I(b) of the Collaboration Agreement.                                                                                                                      |
| ** ** |                                                                                                                                                                                                                                          |
| **1.18**   | **“COGS”**  stands for cost of goods sold and shall have the meaning ascribed to it in  Schedule F to the Collaboration Agreement.                                                                                                  |
| ** ** |                                                                                                                                                                                                                                          |
| **1.19**   | **“Collaboration”**shall have  the meaning ascribed to it in Section 2.1 of the Collaboration Agreement.                                                                                                                            |
| ** ** |                                                                                                                                                                                                                                          |
| **1.20**   | **“Collaboration  Agreement”**means  the collaboration agreement dated as of April 30, 2001 between Chiron  and Rhein Biotech and GCVC and all schedules, amendments and supplements  thereto.                                      |
| ** ** |                                                                                                                                                                                                                                          |
| **1.21**   | **“Collaboration  and Development Plan”**means  the collaboration and development plan attached as Schedule H to the  Collaboration Agreement.                                                                                      |
| ** ** |                                                                                                                                                                                                                                          |
| **1.22**   | **“Collaboration  Documents”****means  the Collaboration Agreement*,*the Bulk Supply Agreement and  the Supply and Manufacturing Agreement.                                                                                         |
| ** ** |                                                                                                                                                                                                                                          |
| **1.23**   | **“Collaboration  Inventions”** shall have the meaning ascribed to it in  the definition of Collaboration Technology.                                                                                                               |
| ** ** |                                                                                                                                                                                                                                          |
| **1.24**   | **“Collaboration****Know-How”**  shall have the meaning ascribed to it in the definition of Collaboration  Technology.                                                                                                              |

 

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| **1.23**   | **“Collaboration  Materials”**means  the biological materials, if any, created in connection with the  Collaboration, including, without limitation, any combination of the Chiron  Materials and the Rhein Biotech and GCVC Materials, together with (a) any  part, progeny, mutant or hybrid thereof, (b) any nucleic acid or other  genetic material therefrom, (c) any vector materials derived therefrom, and  any progeny, derivatives or modifications of such vector particles, (d) any  copy, complement or transcription or expression product thereof. |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **1.24**   | **“Collaboration  Technology”**means:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|       | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | all inventions  arising from the activities of the parties under the Collaboration Agreement,  including all Chiron Inventions, all Rhein Biotech and GCVC Inventions and  all Joint Inventions (collectively, “Collaboration Inventions”); |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|       | (b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | all patents  and patent applications relating to Collaboration Inventions; all patents  issued from such patent applications; and all reissues, confirmations,  renewals, extensions, counterparts, divisions, continuations,  continuations-in-part, supplemental protection certificates or utility models  relating to such patents and patent applications (collectively,  “Collaboration Patents”); and |
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |
|       | (c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | all  scientific, engineering, economic, commercial or other technical data or  information, research results, methods, processes, procedures, trade-secrets  and know-how arising from the activities of the Parties under the  Collaboration Agreement, whether or not patentable (collectively,  “Collaboration Know-How”). |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **1.25**   | **“Confidential  Information”** shall have the meaning ascribed to it  in Article 10 of the Collaboration Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **1.26**   | **“Contributed****Chiron****Technology”** means:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|       | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | all patents  and patent applications Controlled by Chiron as of the Effective Date that  cover the Product, including without limitation, the patents and patent  applications listed on Schedule B to the Collaboration Agreement; for these  purposes a patent or patent application shall be deemed to “cover” the  Product if the manufacture, use or sale of the Product by Rhein Biotech and  GCVC would infringe a claim in such patent or patent application but for the  licenses contemplated hereby; all patents issued from such patent  applications; and all reissues, confirmations, renewals, extensions,  counterparts, divisions, continuations, continuations-in-part, supplemental  protection certificates or utility models relating to such patents and patent  applications; and |

 

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|       | (b)                                                                                                                                                                                                                                                                                                               | all  unpublished scientific, engineering, economic, commercial and other technical  data or information, research results, methods, processes, procedures,  trade-secrets and know-how relating to the Product which are Controlled by  Chiron as of the Effective Date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                              |
| **1.27**   | **“Contributed Rhein Biotech and GCVC Technology”**means:                                                                                                                                                                                                                                               |
| ** ** |                                                                                                                                                                                                                                                                                                              |
|       | (a)                                                                                                                                                                                                                                                                                                               | all patents  and patent applications Controlled by Rhein Biotech and GCVC as of the  Effective Date that cover the Product, including without limitation, the  patents and patent applications listed on Schedule C to the Collaboration  Agreement; for these purposes a patent or patent application shall be deemed  to “cover” the Product if the manufacture, use or sale of the Product by  Chiron would infringe a claim in such patent or patent application but for  the licenses contemplated hereby; all patents issued from such patent  applications; and all reissues, confirmations, renewals, extensions,  counterparts, divisions, continuations, continuations-in-part, supplemental  protection certificates or utility models relating to such patents and patent  applications; and |
|       |                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|       | (b)                                                                                                                                                                                                                                                                                                               | all  unpublished scientific, engineering, economic, commercial and other technical  data or information, research results, methods, processes, procedures,  trade-secrets and know-how relating to the Product which are Controlled by  Rhein Biotech and GCVC as of the Effective Date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ** ** |                                                                                                                                                                                                                                                                                                              |
| **1.28**   | **“Controls” or “Controlled”**means possession  of the right to grant licenses or sublicenses without violating the terms of  any agreement or other arrangement with, or the rights of, any Third Party.                                                                                     |
| ** ** |                                                                                                                                                                                                                                                                                                              |
| **1.29**   | **“Current Good Manufacturing Practices”**or **“cGMP”**means the good manufacturing practices  required by each applicable regulatory authority at any time during the term  of this Agreement for the manufacture and testing of pharmaceutical materials  as applied solely to the Product. |
| ** ** |                                                                                                                                                                                                                                                                                                              |
| **1.30**   | **“Effective Date”**means the date of the  Collaboration Agreement.                                                                                                                                                                                                                                     |
| ** ** |                                                                                                                                                                                                                                                                                                              |
| **1.31**   | **“Excluded  Expenses”** means any and all costs and expenses  incurred in defending, settling or otherwise discharging any liability to a  third party, including, without limitation, any employee of either Party or  their Affiliates, based upon tortious acts.                                    |

 

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| **1.32**   | **“Extraordinary Items”**means (i) any and all  Losses incurred by either Party in connection with Third Party claims arising  out of or relating to the manufacture, use, or sale of the Product,  including, without limitation, product liability claims and claims based on  the alleged infringement or misappropriation of intellectual property rights  held by Third Parties; and (ii) any other extraordinary items which the  Steering Committee determines are an appropriate deduction from Operating Profits. |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **1.33**   | **“Field”**  means the field of pentavalent combination vaccines for pediatric use.                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **1.34**   | **“Finance Committee”**means the finance  subcommittee established pursuant to the terms of Section 3.3 of the  Collaboration Agreement.                                                                                                                                                                                                                                                                                                                                                                                   |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **1.35**   | **“FTE”** means the full time equivalent effort of one person who  participates directly in the research and development activities of  the Collaboration other than Third Party contractors determined in accordance  with the terms of Section 3.2(d) of the Collaboration Agreement.                                                                                                                                                                                                                                    |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **1.36**   | **“G&A  Markup”**means  any allocation of the Parties’ respective general and administration costs.                                                                                                                                                                                                                                                                                                                                                                                                               |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **1.37**   | **“IND”**  stands for investigational new drug, and means, with respect to any Product,  the application filed with a Regulatory Agency in any jurisdiction for  approval to conduct clinical studies of such Product in humans.                                                                                                                                                                                                                                                                                           |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **1.38**   | **“Investment Plan”**means the investment plan  agreed by the Parties and attached to the Collaboration Agreement as Schedule  L to the Collaboration Agreement.                                                                                                                                                                                                                                                                                                                                                           |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **1.39**   | **“Joint Inventions”**means inventions arising  from the activities of the parties under the Collaboration Agreement and  invented jointly by employees of Chiron (including persons obligated to  assign inventions to Chiron) and employees of Rhein Biotech and GCVC  (including persons obligated to assign inventions to Rhein Biotech and GCVC).                                                                                                                                                                     |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **1.40**   | **“Loss”**  means any loss, damage, liability, cost, deficiency, assessment and expense  including, without limitation, any interest, fine, court cost and reasonable investigation  cost, penalty and attorneys’ and expert witnesses’ fees, disbursements and  expenses.                                                                                                                                                                                                                                       |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **1.41**   | **“Manufacture”**or **“Manufacturing”**shall mean the formulation, filling,  packaging, inspecting, labeling, and testing of the Product by Rhein Biotech  and GCVC.                                                                                                                                                                                                                                                                                                                                             |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **1.42**   | **“Marketing  Authorization”,** with respect to any Product, means  any approval granted by any Regulatory Agency to market such Product in any  jurisdiction.                                                                                                                                                                                                                                                                                                                                                             |

 

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| **1.43**   | **“Master Batch Record”**means, with respect to  each Product to be Manufactured hereunder, a formal set of instructions for  the Manufacture of such Product.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **1.44**   | **“Material Breach”**shall have the meaning  ascribed to it in Section 14.3 of the Collaboration Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **1.45**   | **“Minimum Contract Requirements”**means the  quantity of the Product set forth in Schedule B to the Bulk Supply Agreement  and Schedule B to the Manufacturing and Supply Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **1.46**   | **“Net****Sales”** means,  with respect to either Party, the total gross sales or consideration for the  Product charged to unaffiliated third parties, including without limitation,  amounts invoiced for sales of the Product, less the Sales and Return  Allowances, provided, however, that the selling Party may, at its option,  allocate the Sales and Return Allowances based upon accruals estimated  reasonably and consistent with such Party’s standard business practices; and  provided fuirther, however, that if the selling Party elects to utilize such  accruals, actual deductions will be calculated and, if applicable, a  “true-up” made, on an annual basis and to the extent the aggregate amount of  such deductions is required under the terms of this Agreement to be allocated  between countries, such allocation will be in the same proportion as gross  sales of the Product realized in each country in the applicable period. |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **1.47**   | **“Other Revenues”**means any revenues arising  out of Collaboration Technology other than Net Sales, including, without  limitation, royalties or other amounts paid by Third Parties for licenses to  Collaboration Technology.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **1.48**   | **“Parties”**  means Chiron and Rhein Biotech and GCVC and “Party” shall mean one of them.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **1.49**   | **“Product”**means (a) the Whole Cell Product;  and (b) to the extent of the Collaboration proceeding in accordance with the  terms of Section 2.5 of the -Collaboration  Agreement, the Acellular Product.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **1.50**   | **“Product Addendum”**means the addendum  attached as Schedule C to the Bulk Supply Agreement and as Schedule C to the  Manufacturing and Supply Agreement setting forth the Product Requirements,  terms and presentations for each Product Manufactured under the Bulk Supply  Agreement and the Manufacturing and Supply Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **1.51**   | **“Product Loss Allowance”**means the  allowances for losses of the finished Product as more specifically set forth  in Schedule F to the Bulk Supply Agreement and the Supply and Manufacturing  Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| **1.52**   | **“Product  Requirements”** means the Product Specifications, the  Master Batch Record and Rhein Biotech and GCVC’s SOPs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

 

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| **1.53**   | **“Product Specifications”**means, with respect  to the Product, the specifications and testing to be performed for the Bulk  Chiron Material, the Bulk Rhein Biotech and GCVC Material, the Product and/or  the stability program that are****set forth in the Rhein Biotech  and GCVC SOPs and the Master Batch Records. The Product Specifications  include all tests that Rhein Biotech and GCVC are required to conduct or  cause to be conducted as specified in the Collaboration and Development Plan.  The Product Specifications my be modified from time**to  time only in accordance with the terms of the Collaboration Agreement.                                                                                                              |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **1.54**   | **“R&D Expenses”**means Allowable Expenses  incurred in connection with research and development of the Product,  including, without limitation, manufacture of research and clinical supplies  of the Product, determined in accordance with the terms of Section 4.2 of the  Collaboration Agreement and with the accounting methodologies set forth in  Schedule F to the Collaboration Agreement.                                                                                                                                                                                                                                                                                                                                                    |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **1.55**   | **“Regulatory Agency”**means the United States  Food and Drug Administration or EMEA or the Korean Food and Drug  Administration or any equivalent regulatory agency in any other jurisdiction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **1.56**   | **“Released Executed Batch Record”**means the  completed batch record and associated deviation reports, investigation  reports, and certificates of analysis created for each Batch of the Product.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **1.57**   | **“Residual Expenses”**means, with respect to  either Party, any Allowable Expenses which such Party incurs following any  termination of the Collaboration Agreement and which such Party cannot reasonably  eliminate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **1.58**   | **“Rhein Biotech and****GCVC Contract Requirements”**means one  hundred percent (100%) of the quantity of the Product sold and/or distributed  by Rhein Biotech and GCVC in accordance with the terms of the Collaboration  Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **1.59**   | **“Rhein Biotech and****GCVC Inventions”**means inventions  arising from the activities of the parties under the Collaboration Agreement  and invented solely by employees of Rhein Biotech and/or GCVC or persons  obligated to assign their inventions to Rhein Biotech and/or GCVC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **1.60**   | **“Rhein Biotech and****GCVC Materials”**means the materials  described in Schedule E to the Collaboration Agreement and the additional  biological materials, if any, which Rhein Biotech and GCVC provide to Chiron  in connection with the Collaboration, together with (a) any part, progeny,  mutant or hybrid thereof, (b) any nucleic acid or other genetic material  therefrom, (c) any vector materials derived therefrom, and any progeny,  derivatives or modifications of such vector particles, (d) any copy,  complement or transcription or expression Whole Cell Product thereof, and (e)  any combination of the foregoing with other substances (other than Chiron  Materials, which combination shall be deemed Collaboration Materials). |

 

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| **1.61**   | **“Rhein Biotech and GCVC Purchase Order”**means  written orders from Rhein Biotech and GCVC to Chiron which shall specify (a)  the quantity of the Bulk Chiron Material ordered, (b) shipping instructions,  (c) delivery dates, and (d) delivery destinations. |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                       |
| **1.62**   | **“Rhein Biotech and GCVC Purchase Price”**means  the price to be paid by Rhein Biotech and GCVC to Chiron for the Bulk Chiron  Material in accordance with the terms of Section 5.2 of the Bulk Supply  Agreement.                                              |
| ** ** |                                                                                                                                                                                                                                                                       |
| **1.63**   | **“Rhein Biotech and****GCVC Territory”**shall have the meaning  ascribed to it in Section 5.1 of the Collaboration Agreement.                                                                                                                                   |
| ** ** |                                                                                                                                                                                                                                                                       |
| **1.64**   | **“Sales & Marketing Expenses”**means the  following sales and marketing expenses for the Product including:                                                                                                                                                 |
| ** ** |                                                                                                                                                                                                                                                                       |
| ** ** |                                                                                                                                                                                                                                                                       | (i) | Costs  associated with sales representatives such as compensation, benefits, travel,  supervision and training of sales representatives, sales meetings and other  sales expenses. |
| ** ** |                                                                                                                                                                                                                                                                       |   |   |
| ** ** |                                                                                                                                                                                                                                                                       | (ii) | Direct costs  of marketing, promotion, advertising, professional education, product related  to public relations, relationships with opinion leaders and professional  societies, market research and other similar activities. |
| ** ** |                                                                                                                                                                                                                                                                       |
| **1.65**   | **“Sales  and Return Allowances”**means  the following sales and return allowances as determined under US GAAP:                                                                                                                                                  |
| ** ** |                                                                                                                                                                                                                                                                       |
| ** ** | (a)                                                                                                                                                                                                                                                                        | normal and  customary trade and/or quantity discounts; |
| ** ** |                                                                                                                                                                                                                                                                       |   |
| ** ** | (b)                                                                                                                                                                                                                                                                        | returns,  rebates, credit for product defects actually; |
| ** ** |                                                                                                                                                                                                                                                                       |   |
| ** ** | (c)                                                                                                                                                                                                                                                                        | to the  extent separately stated on purchase orders and invoices or other documents  of sale and actually taken: |
| ** ** |                                                                                                                                                                                                                                                                       |   |
| ** ** |                                                                                                                                                                                                                                                                       | (i) | imported and  export duties; |
| ** ** |                                                                                                                                                                                                                                                                       |   |   |
| ** ** |                                                                                                                                                                                                                                                                       | (ii) | excise,  sales or use taxes; |
| ** ** |                                                                                                                                                                                                                                                                       |   |   |
| ** ** |                                                                                                                                                                                                                                                                       | (iii) | value added  taxes, and other governmental charges; and |
| ** ** |                                                                                                                                                                                                                                                                       |   |
| ** ** | (d)                                                                                                                                                                                                                                                                        | transportation,  transit and insurance for transportation, each to the extent separately  invoiced and paid by the selling Party. |
| ** ** |                                                                                                                                                                                                                                                                       |
| **1.66**   | **“SOPs”**  mean standard operating procedures for the Manufacture of the Product which  shall be reviewed by both Parties.                                                                                                                                      |
| ** ** |                                                                                                                                                                                                                                                                       |
| **1.67**   | **“Steering  Committee”** shall have the meaning ascribed to it in  Article 3 of the Collaboration Agreement.                                                                                                                                                    |
| ** ** |                                                                                                                                                                                                                                                                       |
| **1.68**   | **“Supply  and Manufacturing Agreement”** means the supply and  manufacturing agreement dated as of the date of the Collaboration Agreement  between Chiron and Rhein Biotech and GCVC, and all schedules, amendments and  supplements                           |

 

----

 
| ** ** | thereto, a  form of which is attached as Schedule K to the Collaboration Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **1.69**   | **“Termination Products”**means the Whole Cell  Product and the Acellular Product, if any, included within the Collaboration  in accordance with the provisions of Section 2.1 to the Collaboration  Agreement prior to the termination, if any, of the Collaboration Agreement.                                                                                                                                                                                                                                                                                                                                                                                       |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **1.70**   | **“Territory”**means the Chiron Territory  and/or the Rhein Biotech and GCVC Territory, as the case may be.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **1.71**   | **“Testing Standards and Procedures”**means,  with respect to each Product Manufactured hereunder, the written standards  and procedures for evaluating compliance with the applicable Product  Specifications, as mutually agreed upon in writing by Chiron and Rhein  Biotech and GCVC.                                                                                                                                                                                                                                                                                                                                                                              |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **1.72**   | **“Third Party”**means any person or entity  other than the Parties and their respective Affiliates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **1.73**   | **“Third Party Royalties”**means all royalties  either Party is obligated to pay based on the manufacture, use or sale of any  Product under (a) agreements in effect as of the Effective Date, all of which  agreements are identified in Schedule G to the Collaboration Agreement, or  (b) agreements contemplated at the Effective Date and referred to in Schedule  G to the Collaboration Agreement, or (c) agreements entered into after the  date hereof and not referred to in Schedule G to the Collaboration Agreement,  provided that such agreements are approved by the Steering Committee in  accordance with Article 3 of the Collaboration Agreement. |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **1.74**   | **“Transfer Price”**means the transfer price  set in accordance with the terms of the Collaboration Agreement and  calculated in accordance with the formula indicated in Schedule G to the Bulk  Supply Agreement and Schedule G to the Supply and Manufacturing Agreement.                                                                                                                                                                                                                                                                                                                                                                                           |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **1.75**   | **“Unit”**  shall mean one individually packaged unit of the final Product, including,  without limitation, one or more doses of the Product in a vial or uniject,  all as specified in the applicable Product Addendum.                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| ** ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **1.76**   | **“Whole****Cell Product”**means the whole cell  pentavalent liquid combination vaccine for pediatric use DTwP-Hib-HBV for  protection against Diptheria, Tetanus, Pertussis, Haemophilus Influenza type  b and Hepatitis B.                                                                                                                                                                                                                                                                                                                                                                                                                                           |

 

----

 

**SCHEDULE B**

 

**Contributed Chiron Patents**

 
| **Title**                           | ** ** | **No.**                                                                                                           |
|-------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------|
| **Detoxified PT mutants** | ** ** | **Country**                                                                                                       | ** ** | **Status** | ** ** | **issue/serial number** |
|                                |       | United States                                                                                                     |   | pending |   | 08/261668 |
|                                |       | United States                                                                                                     |   | pending |   | 08/261692 |
|                                |       | United States                                                                                                     |   | issued |   | 5925546 |
|                                |       | United States                                                                                                     |   | issued |   | 5889172 |
|                                |       | Italy                                                                                                             |   | issued |   | 1223334 |
|                                |       | Canada                                                                                                            |   | pending |   | 581889 |
|                                |       | Japan                                                                                                             |   | issued |   | 2728275, 2857105 |
|                                |       | Europe (Austria, Belgium,  Switzerland, Germany, Spain, France, UK, Greece, Luxembourg, The Netherlands,  Sweden) |   | issued |   | 322533 |
|                                |       | Singapore                                                                                                         |   | issued |   | 9591848-8 |
|                                |       | Hong Kong                                                                                                         |   | issued |   | 1929/1995 |

 
| **Detoxified PT mutants (double ****mutants)** | ** ** | **Country**                                                                                                                       | ** ** | **Status** | ** ** | **issue/serial number** |
|--------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|------------------------------|
|                                                               |       | United States                                                                                                                     |       | pending    |       | 08/261691                    |
|                                                               |       | United States                                                                                                                     |       | pending    |       | 08/431673                    |
|                                                               |       | Europe (Austria, Belgium,  Switzerland, Germany, Denmark, Spain, France, UK, Greece, Italy, Luxembourg,  The Netherlands, Sweden) |       | issued     |       | 396964                       |
|                                                               |       | Canada                                                                                                                            |       | pending    |       | 2015677                      |
|                                                               |       | Japan                                                                                                                             |       | issued     |       | 2655583, 2852025             |
|                                                               |       | Mexico                                                                                                                            |       | issued     |       | 177114                       |
|                                                               |       | Hong Kong                                                                                                                         |       | issued     |       | 170/1996                     |
|                                                               |       | Singapore                                                                                                                         |       | issued     |       | 9592061-7                    |

 

----

 

**SCHEDULE C**

 

**Contributed Rhein Biotech and GCVC Patents**

 
| **Title**                                                                                                             | ** ** | **No.**                             |
|-----------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------|
| Process for preparing a Polypeptide  by****culturing  a****transformed  Microorganism suitable                        |       | **EP 173  378**                     |
| Therefore and DNA  sequences suitable for preparing****such microorganism                                             |       | ** **                          |
|                                                                                                                  |       | **US****5, 240,****838**            |
|                                                                                                                  |       | **US 5, 741****672**                |
| (“MOX”-patent)                                                                                              |       | **JP 2  592444**                    |
|                                                                                                                  |       | **JP 2 675  202**                   |
|                                                                                                                  |       | **JP 2  575284**                    |
|                                                                                                                  |       | ** **                          |
|                                                                                                                  |       | **Filed****in DK,****CA**           |
|                                                                                                                  |       | ** **                          |
| DNA-molecules coding for  FMDH control regions and structured gene for a protein having FMDH-activity  and their uses |       | **EP 299  108**                     |
|                                                                                                                  |       | ** **                          |
| (“FMD”-patent)                                                                                              |       | **US 5,  389, 525**                 |
|                                                                                                                  |       | ** **                          |
|                                                                                                                  |       | **CA****1,339,012**                 |
|                                                                                                                  |       | ** **                          |
|                                                                                                                  |       | **Filed****in DK (pending)**        |
|                                                                                                                  |       | **JP 307  299****3**                |
|                                                                                                                  |       | ** **                          |
|                                                                                                                  |       | **BR Pl****1100065-1**              |
|                                                                                                                  |       | **Filed****in CL (pipeline appl.)** |

 

----

 

**SCHEDULE D**

 

**Chiron Material**

** **

**1.**                                                               **DIPHTHERIA TOXOID**

** **

Diphtheriatoxoid is manufactured according to WHO Requirements (TRS 800, 1990) andcomplies with the requirements of the Eur. Ph.

 

All processsteps with regard to the manufacture and control of this antigen are undertakenat:

 

[***]

 

----

 

**1.1****                             ****SPECIFICATIONS AND ROUTINE****TESTS**

 

**1.1.1Specifications**

** **

The specifications for theDiphtheria Toxoid Concentrate (without preservative) are indicated in thefollowing table.

 

***Specifications for the Diphtheria Toxoid Concentrate(without preservative)***

 

[***]

 

**1.1.2 Testmethods**

** **

**pH**

** **

The pH is determined by thepotentiometric method, according to Eur. Ph.

 

**Nitrogen**

** **

[***]

 

----

 

**Toxoidcontent**

** **

[***]

 

**Sulphate**

** **

[***]

 

**Formaldehyde**

** **

[***]

 

**Sodiumchloride**

** **

[***]

 

**Sterility**

** **

[***]

 

----

 

**Absenceof diphtheria toxin**

** **

[***]

 

**Reversionto toxicity**

** **

[***]

 

----

 

**2.**                                                               **TETANUS TOXOID**

** **

Tetanus toxoid ismanufactured according to WHO Requirements (TRS 800, 1990) and complies withthe requirements of the Eur. Ph.

 

All process steps withregard to the manufacture and control of this antigen are undertaken at:

 

[***]

 

----

 

**2.1****                             ****SPECIFICATIONS AND ROUTINETESTS**

** **

**2.1.1Specifications**

** **

The specifications for theTetanus Toxoid Concentrate (without preservative) are indicated in thefollowing table.

 

***Specifications for the Tetanus Toxoid Concentrate (withoutpreservative)***

*** ***

[***]

 

**2.1.2 Testmethods**

** **

pH

 

The pH is determined by thepotentiometric method, according to Eur. Ph.

 

**Nitrogen**

** **

[***]

 

----

 

[***]

 

**Toxoidcontent**

** **

[***]

 

**Sulphate**

** **

[***]

 

**Formaldehyde**

** **

[***]

 

**Sodiumchloride**

** **

[***]

 

**Sterility**

** **

[***]

 

----

 

**Absenceof tetanus toxin**

 

[***]

 

**Reversionto toxicity**

 

[***]

 

----

 

**3.**                                                               **PERTUSSIS CONCENTRATE**

** **

Pertussisconcentrate is manufactured according to WHO Requirements (TRS 800, 1990) andcomplies with the requirements of the Eur. Ph.

 

All processsteps with regard to the manufacture and control of this antigen are undertakenat:

 

[***]

 

----

 

3.1                                **SPECIFICATIONS AND ROUTINE TESTS**

** **

**3.1.1 Specifications**

** **

Thespecifications for the Pertussis Concentrate are indicated in the followingtable.

 

***Specifications for the Pertussis Toxoid Concentrate***

*** ***

[***]

 

**3.1.2Test methods**

** **

**Agglutinogens**

** **

[***]

 

**pH**

** **

[***]

 

**Thiomersal**

 

[***]

 

----

 

**EDTA**

 

[***]

** **

**Sterility**

** **

[***]

 

*Turbidity*

* *

[***]

 

----

 

**4.****                                                                CRM-HIBGLYCOCONJUGATE**

** **

[***]

 

----

 

**4.1*****                              *SPECIFICATIONSAND ROUTINE TESTS**

 

**4.1.1Specifications**

 

The specifications for theCRM-Hib Glycoconjugate are indicated in the following tables.

 

[***]

 

----

 

**4.1.2 Test methods**

 

**Hib Identity**

 

[***]

 

**CRMIdentity**

 

[***]

 

**Proteincontent - micro****BCA method**

 

[***]

 

**FreeSaccharide (by Ribitol)**

 

[***]

 

----

 

[***]

 

**Sterility**

 

The test isperformed by membrane filtration according to Ph. Eur. and KFDA methods.

 

**Endotoxincontent (LAL chromogenic kinetics method)**

 

[***]

 

**Endotoxin/Saccharide**

 

[***]

 

**Degreeof glycosilation (saccharide/protein)**

 

[***]

 

**kD**

 

[***]

 

**TotalSaccharide (Ribose content)**

** **

----

 

[***]

 

----

 

**SCHEDULE E**

 

**Rhein Biotech and GCVC Material**

 

**Formalinetreated Hepatitis B surface antigen solution**

 

Hepatitis Bvaccine is manufactured according to Minimum Requirement for Biologics of KFDAand WHO Requirements (TRS No. 760, 1987)

 

All processsteps with regard to the manufacture and control of this antigen are undertakenat:

 

[***]

 

----

** **

**1.****                                     SPECIFICATION AND ROUTINE TESTS**

 

**1.1****                  Specifications**

 

Thespecifications for the Hepatitis B vaccine derived from Hansenula*polymorpha are*indicatedin the following tables.

 

***Specifications for the HBV Bulk concentrate.***

 

[***]

 

----

** **

**1.2****                  Test methods**

 

**Polysaccharidecontent**

 

[***]

 

**Lipidcontent**

 

[***]

 

**Formaldehydecontent**

 

[***]

 

**DNAcontent**

 

[***]

 

**Agentsfor purification process**

 

*Tween 20*

 

[***]

 

*CsC/*

 

[***]

 

**Proteincontent**

 

[***]

 

**Antigenicidentity**

 

*SDS PAGE*

 

[***]

 

*Western blot*

 

[***]

 

----

 

*HPLC*

 

[***]

 

**Sterility**

 

[***]

 

**HBsAgcontent**

 

[***]

 

**Pyrogenicity**

 

[***]

 

----

 

**SCHEDULE F**

 

**Accounting Principles and Methodologies**

 

**1.**                                      **Introduction**

 

(a)                                  **Accounting Principles and Methodologies.**ThisSchedule F sets forth the accounting principles and methodologies to befollowed in connection with the Collaboration,including, without limitation, in connection with determining the Transfer Price,Additional Payments and the sharing of expenses by the Parties. For suchpurposes, this Schedule F sets out the principles for reporting actual andprojected results, the frequency of reporting and the use of a singlefunctional currency for the reporting method of determining payments andresults to the Parties.

 

**(b)****                                  Definitions.**This Schedule F also provides certain agreed upon definitions of financialterms applicable to the Parties for purposes of the Collaboration. Capitalizedterms used in this Schedule F but not defined herein shall have the meaningsascribed to them in Schedule A to the Collaboration Agreement and Schedule G tothe Bulk Supply Agreement and the Supply and Manufacturing Agreement.

 

**2.**                                      **Generally Accepted Accounting Principles**

 

Chiron andRhein Biotech and GCVC acknowledge that any issues which may emerge that arenot specifically addressed in the Collaboration Documents or this Schedule Fshall be resolved using U.S. Generally Accepted Accounting Principles (“GAAP”).Where acceptable alternatives exist under GAAP, the Parties will document theapproach used (or agreed to be used) and if no conflict exists thedocumentation will be added to this Schedule F. If a conflict exists, the issuewill be addressed by each of the Parties’ Finance Departments. If agreementcannot be reached, the issue will be resolved by the Steering Committee.

 

**3.**                                      **Accounting Periods**

 

Chiron andRhein Biotech and GCVC agree that all payment calculations and reporting shallbe performed on a January 1 to December 31 calendar year.

 

**4.**                                      **Principles of Reporting**

 

To the extentnecessary, each Party shall make the appropriate adjustments to all relevantfinancial information it supplies pursuant to the Collaboration Documents inorder that such information shall conform to the format of reporting theinformation as set forth below.

 

(a)                                  **R&D****ExpenseReport** Each party will provide a presentation of R&D Expensesbased on the following reporting format:

 

----

 

(i)                                     Headcount related expenses

 
| ** **                  | ** ** | **Ouarter** | ** ** |
|-----------------------------|------------|-------------|------------|
| # of FTEs                   |       | A           |       |
| Average $ Rate per FTE |       | B           |       |

 

Headcount total US$                             AxB                                   

 

Average $ Rateper FTE will be determined based on the Cost per FTE as described in Section4.2 of the Collaboration Agreement.

 

(ii)                                  Non-headcount related expenses

 
| Process  Development      |   |   |
|---------------------------|--------|--------|
| Clinical  Trials          |   |   |
| Animal costs              |   |   |
| Other                     |   |   |
| Non Head  count total US$ |   | $      |
|                      |   |   |
| Total R&D Expenses    |   | $      |

 

**(b)****                                  GrossMargin Report**

 

For thepurposes of setting the Transfer Price, each Party shall provide a presentationfor each of their respective distribution channels and countries based on AnnexA attached to this Schedule F detailing:

 

•                  actual resultsfor the first three (3) months and forecasted results for the next three (3)months

•                  projected resultsused during the reporting 6 month period 

•                  proposed resultsto be used during the next 6 month period

 

**(c)**                                  **Cost of Goods Sold Report**

 

For purposesof setting the Transfer Price, each Party shall provide a presentation based onAnnex B attached to this Schedule F detailing:

 

•                  actual resultsfor the first three (3) months and forecasted results for the next three (3) months

•                  projectedresults used during the reporting 6 month period

•                  proposed resultsto be used during the next 6 month period

 

----

 

**(d)****                                  AdditionalPayment Report**

 

Each Partywill provide a presentation of results for each of their respectivedistribution channels and countries, as relevant, based on Annex C attached tothis Schedule F.

 

**5.**                                      **Frequency of Reporting**

 

The fiscalyear of the Collaboration will be a calendar year. Reporting by each Party ofthe above reporting requirements will be performed as follows:

 
| **Reporting Event**                           | ** ** | **Frequency**  | ** ** | **Timing of Submission** |
|----------------------------------------------------|------------|----------------|------------|------------------------------------|
|                                               |       |           |       |                               |
| R&D  Expenses                                  |       | Quarterly      |       | QI-Q4  +45days                     |
|                                               |       |           |       |                               |
| Cost of  Sales                                     |       | Semi  Annually |       | June 1 and  December 1             |
|                                               |       |           |       |                               |
| Gross Margin                                       |       | Semi  Annually |       | June 1 and  December 1             |
|                                               |       |           |       |                               |
| Additional  Payment                                |       | Quarterly      |       | Q1-Q4 +60  days                    |
|                                               |       |           |       |                               |
| Management  Reporting                              |       | Semi  Annually |       | September 1  and March 1           |
|                                               |       |           |       |                               |
| Annual  Forecast  (Rest of year –  by month)  |       | Semi  Annually |       | June 1 and December 1              |
|                                               |       |           |       |                               |
| Annual Plan and Budget  (one year – by month) |       | Annually       |       | November 30                        |
|                                               |       |           |       |                               |
| Long Range  Plan                                   |       | Annually       |       | November 30                        |

 

The GrossMargin Report will be presented to each Party on May 15 and November 15 of each year of the Agreement.

 

The Cost ofGoods Sold will be presented to each Party May 1 and November 1 of each year ofthe Agreement.

 

ManagementReports of actual results compared to budget will be made to the SteeringCommittee on a semi-annual basis. Line item variances from budgets judged to besignificant by the Steering Committee will only be allocable for R&DExpense.

 

Each Partyshall be responsible for the preparation of each of the above reports for theirrespective distribution channels and countries and for R&D Expenses. TheFinance Committee shall consolidate the reported information from the Partiesand prepare all final submissions to the Steering Committee.

 

----

 

Chiron andRhein Biotech and GCVC shall submit the reports required above in localcurrency and the U S. dollar using the average foreign exchange rate as quotedby the New York Branch of the United States Federal Reserve’s daily afternoonrate for the reporting period.

 

**6.****                                      ForeignExchange**

 

The functionalcurrency for accounting for the Transfer Price, Additional Payments and R&DExpenses will be in U.S. Dollars.

 

Chiron willbill shipments of Chiron Bulk Materials to Rhein Biotech and GCVC in U.S.Dollars. Rhein Biotech and GCVC will bill shipments of Product to Chiron inU.S. Dollars.

 

**Definitions**

 

“AllocableOverhead” means costs incurred by a Party or for its account which areattributable to a Party’s supervisory, services, occupancy costs and itspayroll, information systems, human relations or purchasing functions and whichare allocated to the company departments based on space occupied or head countor other activity-based method and shall not include any idle capacity. “AllocableOverhead” shall not include any general and administrative costs such asexecutive management, investor relations, business development, legal affairsand finance.

 

“AllowableExpenses” means the fully burdened, fairly allocated direct and indirect costsand expenses incurred by either Party in connection with its activities underthe Collaboration Documents, which shall include a reasonable depreciation ofemployed assets, as determined in accordance with the accounting methodologiesset forth in Schedule F to the Collaboration Agreement; provided that suchcosts and expenses are contemplated by an Annual Plan and Budget approved inaccordance with the provisions of Article 3 of the Collaboration Agreement;provided, however, that any depreciation and amortization associated with anycapital expenditure prior to commercialization of the Product shall be treatedas an Allowable Expense only to the extent that such expenses combined with theother R & D Expenses do not exceed 120 % of the amount set forth in theAnnual Plan and Budget for R & D Expenses. Allowable Expenses shall notinclude any (a) Excluded Expenses or (b) any allocation of general andadministration expenses or any G&A Markup or (c) any Sales & MarketingExpenses.

 

“Bulk LossAllowance” means the allowances for losses of Bulk Chiron Material and BulkRhein Biotech and GCVC Material as more specifically set forth in Schedule F tothe Bulk Supply Agreement and the Supply and Manufacturing Agreement.

 

----

 

“Cost of GoodsSold” means the Cost of Sales of an Antigen or the Product in finished productform, as determined by the Parties performing or contracting each stage of themanufacturing process in accordance with GAAP consistently applied by suchParties.

 

“Cost of Sales”means the Party’s consolidated fully burdened Manufacturing Costs (as definedin the Party’s GAAP of the Product (in bulk, vials or finished product form, asthe case may be), which shall comprise the sum of:

 

a)         ManufacturingCosts included in the definition of Manufacturing Costs (Annex D)

b)        Allof the Party’s allocable intellectual property acquisition and licensing costspaid to third parties as it relates to the Product

c)         Anyother costs borne by either Party for transport, customs clearance and storageof product (if necessary) at the request of another Party (i.e. freight, duty,insurance and warehousing).

d)        BulkLoss Allowance and Product Loss Allowance.

 

“ExcludedExpenses” means any and all costs and expenses incurred in defending, settlingor otherwise discharging any liability to a third party, including, withoutlimitation, any employee of either Party or their Affiliates, based upontortious acts.

 

“G&AMarkup” means any allocation of the Parties respective general andadministration costs.

 

“ManufacturingCosts” means the manufacturing costs set forth in the Annex D to this ScheduleF.

 

“Net Sales”means, with respect to either Party, the total gross sales or consideration forthe Product charged to unaffiliated third parties, including withoutlimitation, amounts invoiced for sales of the Product, less the Sales andReturn Allowances, provided, however, that the selling Party may, at itsoption, allocate the Sales and Return Allowances based upon accruals estimatedreasonably and consistent with such Party’s standard business practices; andprovided further, however, that if the selling Party elects to utilize suchaccruals, actual deductions will be calculated and, if applicable, a “true-up”made, on an annual basis and to the extent the aggregate amount of suchdeductions is required under the terms of this Agreement to be allocatedbetween countries, such allocation will be in the same proportion as grosssales of the Product realized in each country in the applicable period.

 

“OtherRevenues” means any revenues arising out of the Collaboration Technology otherthan Net Sales, including without limitation, royalties or other amounts paidby Third Parties for licenses to Collaboration Technology.

 

“Product LossAllowance” means the allowances for losses of the finished Product as morespecifically set forth in Schedule F to the Bulk Supply Agreement and theSupply and Manufacturing Agreement.

 

----

 

“R&DExpenses” means Allowable Expenses incurred in connection with research anddevelopment of the Product, including, without limitation, manufacture ofresearch and clinical supplies of the Product, determined in accordance withthe termns of Section 4.2 of the Collaboration Agreement and with theaccounting methodologies set forth in Schedule F to the CollaborationAgreement.

 

“Sales andMarketing Expenses” means the following sales and marketing expenses for theProduct including:

 

(a)               Costsassociated with sales representatives such as compensation, benefits, travel,supervision and training of sales representatives, sales meetings and othersales expenses.

(b)              Directcosts of marketing, promotion, advertising, professional education, productrelated to public relations, relationships with opinion leaders andprofessional societies, market research and other similar activities.

 

“Sales andReturn Allowances” means the following sales and return allowances asdetermined under US GAAP:

 

(a)          normal and customary trade and/or quantitydiscounts actually allowed and taken;

(b)         returns,rebates, credit for product defects actually taken or paid;

(c)          tothe extent separately stated on purchase orders and invoices or other documentsof sale and actually taken:

(i)                       importedand export duties;

(ii)                    excise,sales or use taxes;

(iii)                 valueadded taxes, and other governmental charges; and

(d)         transportation, transit and insurance fortransportation, each to the extent separately invoiced and paid by the sellingParty;

 

“Third PartyRoyalties” means all royalties either Party is obligated to pay based on themanufacture, use or sale of any Product under (a) agreements in effect as ofthe Effective Date, all of which agreements are identified in Schedule G to theCollaboration Agreement, or (b) agreements contemplated at the Effective Dateand referred to in Schedule G to the Collaboration Agreement, or (c) agreementsentered into after the date hereof and not referred to in Schedule G to theCollaboration Agreement, provided that such agreements are approved by theSteering Committee in accordance with Article 3 of the Collaboration Agreement.

 

----

 

**ANNEX A**

**Chiron/Rhoin****Biotech& GCVC ReportingGross Margin Reporting - Whole Cell Product**

 

Frequency of Reporting: Every6 months

Period Covered: 3 months ofactuals and 3 months of forecasted resultsDue date: 4th****Month of the 6 month period

 

**Month:**

 
| Average Net Sales Price            |           |
|------------------------------------|----------------|
| Cost of Goods Sold                 | RB             |
|                               | Chiron         |
| Total Cost of Goods Sold  per Unit |           |
|                               |           |
| Gross Margin per Unit              |           |
|                               |           |
| Profit Share                       | RB - [***]     |
|                               | Chiron - [***] |
|                               |           |
| Transfer Price                     | RB             |
|                               | Chiron         |

 

Foreign Exchange Rate   # of doses shipped   # of Units/Antigens produced

 
| GAAVI Price              | ** **  | **$** |
|--------------------------|-------------|-------|
| Projected incremental    | ** **  | $     |
| Capital  Expenditures    | ** **  | $     |
| Related  Depreciation    | ** **  | $     |
| Impact  on Cost per Unit | Per Antigen | $     |
|                     | Blend       | $     |
|                     | Fill        | $     |
|                     | Finish      | $     |

 

Definitions:

 
| **Actual**     | Actual results for the  month                     |
|----------------|---------------------------------------------------|
| **Forecasted** | Forecasted results for the  month                 |
| **Projected**  | Projected value as agreed  for the 6 month period |
| **Proposed**   | Suggested value for the  next 6 month period      |

 
| **Distribution Channel 1** | ** ** | **Distribution Channel 2** | ** ** | **Distribution Channel 3** |
|----------------------------|------------|----------------------------|------------|----------------------------|
| **Actual or  Forecasted**  | ** ** | **Projected**              | ** ** | **Proposed**               | ** ** | **Actual or  Forecasted** | ** ** | **Projected** | ** ** | **Proposed** | ** ** | **Actual or  Forecasted** | ** ** | **Projected** | ** ** | **Proposed** |
|                       |       |                       |       |                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                       |       |                       |       |                       |   |   |   |   |   |   |   |   |   |   |   |   |
| $                          |       | $                          |       | $                          |   | $ |   | $ |   | $ |   | $ |   | $ |   | $ |

 

----

 

**ANNEX B**

**Chiron/RheinBiotech& GCVC Reporting**

**Cost ofGoods Sold Reporting - Whole Cell Product**

 

Frequency of Reporting:Every 6 months

Period Covered: 3 months ofactual and 3 months of forecasted resultsDue date: 15 days after the 3rd Month of the 6 month period

 
| *Per Unit  Basis*                 |                  |
|-----------------------------------|-----------------------|
| Cost of Goods Sold                | HIB                   |
|                              | DTP                   |
|                              | Third Party Royalties |
|                              |                  |
| Total Chiron Cost of Goods  Sold  |                  |
|                              |                  |
| Cost of Goods Sold                | HBV                   |
|                              | Blend                 |
|                              | Fill                  |
|                              | Finish                |
|                              | Third Party Royalties |
|                              |                  |
| Total RB/GCVC Cost of  Goods Sold |                  |
|                              |                  |
| Incremental                       | Capital expenditure   |
|                              | Depreciation          |

 

 
| **Actual**     | Actual results for the  month                     |
|----------------|---------------------------------------------------|
| **Forecasted** | Forecasted results for the  month                 |
| **Projected**  | Projected value as agreed  for the 6 month period |
| **Proposed**   | Suggested value for the  next 6 month period      |

 
| **Mth********Actual** | ** ** | **Mth********Actual** | ** ** | **Mth********Actual** | ** ** | **Mth****Forecast** | ** ** | **Mth****Forecast** | ** ** | **Mth****Forecast** | ** ** | **Projected** | ** ** | **Projected** |
|-----------------------|------------|-----------------------|------------|-----------------------|------------|---------------------|------------|---------------------|------------|---------------------|------------|---------------|------------|---------------|
| ** **            | ** ** | ** **            | ** ** | ** **            | ** ** | ** **          | ** ** | ** **          | ** ** | ** **          | ** ** | ** **    | ** ** | ** **    |
| ** **            | ** ** | ** **            | ** ** | ** **            | ** ** | ** **          | ** ** | ** **          | ** ** | ** **          | ** ** | ** **    | ** ** | ** **    |
| ** **            | ** ** | ** **            | ** ** | ** **            | ** ** | ** **          | ** ** | ** **          | ** ** | ** **          | ** ** | ** **    | ** ** | ** **    |

 

----

 

**ANNEX C**

**Chiron/RheinBiotech& GCVC Reporting**

**Additional Payment Reporting -****Whole Cell Product**

 

Frequency of Reporting: Every3 monthsPeriod Covered: 3 months of actual results

Due date: 30 days after the3rd Month of the 6 month period

 

Actual Average Net SalesPriceProjected Average Net Sales PriceDifference

 

Units Sold during the period(FIFO basis)
| Total $ Difference |         |
|-------------------------|--------------|
| Parties share           | Chiron [***] |
|                    | RB [***]     |

 

Additional Payment

 

Local CurrencyForeign Currency Rate

 
| **Distribution  Channel 1** | ** ** | **Distribution  Channel 2** | ** ** | **Distribution  Channel 3** | ** ** | ** **  |
|-----------------------------|------------|-----------------------------|------------|-----------------------------|------------|-------------|
| **Month 1**                 | ** ** | **Month 2**                 | ** ** | **Month****3**              | ** ** | **Month 1** | ** ** | **Month 2** | ** ** | **Month****3** | ** ** | **Month 1** | ** ** | **Month 2** | ** ** | **Month****3** | ** ** | **Total** |
| ** **                  | ** ** | ** **                  | ** ** | ** **                  | ** ** | ** **  | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 0                           |       | 0                           |       | 0                           |       | 0           |   | 0 |   | 0 |   | 0 |   | 0 |   | 0 |   | 0 |
| 0                           |       | 0                           |       | 0                           |       | 0           |   | 0 |   | 0 |   | 0 |   | 0 |   | 0 |   | 0 |

 

----

 

**Annex D**

 

**DEFINITION OF MANUFACTURING COST (****“****MC****”****)**

 

**I.****     ****MC includes the direct, indirect and overhead cost incurredin the manufacture of the Product.**

** **

**•**      **Direct Expenses are thoseexpenses captured in time sheets, invoices, etc. specifically for the Product**

 

***Direct material costs******include:***

 

The cost ofraw materials, filters, manufacturing supplies, solvents, containers, containercomponents, packaging, labels and other printed materials used in production.

 

***Direct labor costs include:***

 

Salaries andfringe benefits for personnel directly involved in manufacturing Product inaccordance with cGMP requirements. This includes Production, QC, QA,Microbiology, and other departments as needed who participate directly in theproduction of a lot of PRODUCT.

 

***Direct******Servicecosts include:***

 

Costs of servicesprovided by third parties for which the manufacturer does not have thecapability to provide (e.g., sterilization and specialized testing).

 

**•****      Indirect Expense:**

 

***Production overhead cost include:***

 

A reasonableallocation of expenses associated with personnel supporting the directmanufacturing of Product in accordance with cGMP requirements. This includelabor and overhead for Quality Control, Quality Assurance, raw materialacquisition and acceptance, Microbiology, Document Control, Calibration/Validation,expenses for Process Development and Analytical Methods Development.

 

**•**      **Overhead Expense:**

 

***Manufacturingoverhead cost******include:***

 

Direct andindirect manufacturing costs that cannot be identified in a practical mannerwith specific units of production and, therefore, cannot be included in MC asdirect material or direct labor. Such overhead costs include:

 

1

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1.          Specific manufacturing overheadallocations, including, but not limited to, utilities (e.g., oil, electric,steam, water), indirect materials and supplies, consumables (e.g., maintenanceand repair materials, tools, spare parts), plant management, engineering anddevelopment support, maintenance and repair of the production plant and productionequipment, property taxes (excluding income taxes), materials management,inventory storage, Information Services and insurance.

 

2.          Depreciation, which reflects on a prorata basis, the use of assets used for manufacturing the Product.

 

**II.****    TotalMC can be divided into two categories: Dedicated Facility Cost and Production Cost.**

 

**“DedicatedFacility Cost”** means that portion of MC that arerelated to the facility and equipment in the Dedicated Facility rather than tothe product. These costs include:

 

•      Labor and fringe fordepartments such as facilities, validation /**calibration, and the portion of QC and Microbiology associated withthe facility rather than the product.

 

•      Equipment maintenance andrepairs

 

•      Equipment and facilitydepreciation 

 

**•   **A reasonable allocation of general site costssuch as IT, materials management, and general facilities support.

 

**“Production Cost”** means the non-Dedicated Facility Costportion of MC that are specifically product related rather than relatedto the facility and equipment. This means the Direct Expenses included in Iabove including Direct material costs, Direct labor, and Direct Services.

 

**III.****   MC does not include:**

 

A. Interest.

 

B. General andadministrative expenses.

 

**IV.****   ProductionCapacity:**

 

•      The parties agree that theywill spend per the agreed to Capital Expenditures Plan so as to produce thequantities included in this Plan, approximately [***] of the Product.

 

----

 

•      “Practical Capacity” isdefined as the capacity dedicated by the Parties to the Collaboration toproduce [***] using the agreed to shift operations(l, 2, or 3 shifts) and basedon the agreed to product manufacturing yields.

 

•      “Theoretical Capacity” isthe maximum capacity (# of doses) possible based on using the maximum capacityof the then existing machinery and equipment in each Party’s dedicatedfacilities.

 

•      No costs of back up orsecond source capacity will be charged as part of Manufacturing Costs unlessand until Chiron and Rhein Biotech/Korea Green Cross mutually agree that suchadditional capacity is necessary in order to meet the Collaborationrequirements.

 

**V.****         Idle Capacity:**

 

•      Any significant shortfall inmarket demand for the Product versus the Practical Capacity results in IdleCapacity.

 

•      Each Party can charge each otherfor the reasonable costs of Idle Capacity. However, the Party charging for IdleCapacity will use “best efforts” to find alternative uses for the idle capacityas soon as possible so as to significantly reduce or eliminate the IdleCapacity.

 

•      Reasonable costs means theDedicated Facility cost for a maximum of two (2) years.

 

•      The cost of any shortfallbetween Theoretical Capacity and Practical Capacity cannot be charged by eitherParty.

 

IV.   MCwill be calculated in accordance with generally accepted accounting principles(GAAP) applied on a consistent basis as agreed upon by the parties. Thesupplying plant should have well-organized procedures for performing theallocation of expenses to products, and the procedures should be applied on aconsistent basis. The procedures should ensure that products are allocated afair and reasonable portion of costs on a basis that is consistent with allproducts produced at the manufacturing facility.

 

----

 

**SCHEDULE G**

 

**EXISTING ROYALTY AGREEMENTS**

 

Chiron RoyaltyObligations and Estimated Financial Impact

 

Listed beloware the royalty obligations which reasonably could affect the Partiescollaboration given the countries the Product will be sold in based on theagreed to Marketing Plan.

 

[***]

 

[***]

 

5- Hib- No known royalty obligations to third parties.

 

Rhein Biotech and GCVC Rovalty Obligations and Estimated FinancialImpact

 

None.

 

----

 

**SCHEDULEH**

 

 

 

**PROJECT DEVELOPMENT PLAN**

**Pentavalent****Vaccines**

[***]

 

----

 

**SCHEDULE I**

 
|                                    | Schedule I |   |
|------------------------------------|------------|--------|
| Collaboration and Development Plan |       |

 

[***]

 

1

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**SCHEDULE J**

 

**EXECUTION VERSION**

 

**BULK SUPPLY AGREEMENT**

 

This Supply Agreement ismade and entered into as of April 30, 2001 by and among Chiron Behring GmbH& Co, a company incorporated in Germany, with offices at Emil von BehringStrasse 76, 35041 Marburg, Germany (“**ChironBehring**”), Chiron S.p.A., a company incorporated in Italy, withoffices at Via Fiorentina 1, 53100 Siena, Italy (“**Chiron S.p.A.**”, and together with Chiron Behring GmbH &Co, “**Chiron**”), Rhein Biotech N.V.,a company incorporated in the Netherlands, with offices at Gaetano Martinolaan95, 6229 GS Maastricht, The Netherlands (“**RheinBiotech**”), and GreenCross Vaccine Corporation, a companyincorporated in the Republic of Korea, with offices at 303 Bojung-Ri,Koosung-Eup, Yongin 449-770, Republic of Korea (“**GCVC**”, and together with Rhein Biotech, “**Rhein Biotech and GCVC**”).

 

**RECITALS**

 

A.                **WHEREAS**,Chiron, Rhein Biotech and GCVC have entered into a Collaboration Agreementdated the date hereof the (“Collaboration Agreement”) pursuant to which they willcollaborate on the research, development and manufacturing of one or more newpentavalent combination vaccines for pediatric use (as more specificallydefined herein, the “Product”).

 

B.                **WHEREAS**,Chiron, Rhein Biotech and GCVC agreed pursuant to the terms of theCollaboration Agreement to enter into a supply agreement pursuant to whichChiron shall supply certain materials to Rhein Biotech and GCVC for use in themanufacture of the Product for sale of the Product by Rhein Biotech and GCVC,all as more specifically set forth herein.

 

**NOWTHEREFORE** in consideration of the premises and other good andvaluable consideration, Chiron and Rhein Biotech and GCVC agree as follows.

 

**ARTICLE 1**

**DEFINITIONS**

 

**1.1**                   **Definitions.** For the purposes of thisAgreement, (a) capitalized terms used herein but not defined herein shall havethe meanings ascribed to them in Schedule A attached hereto, and (b) “Agreement”means this agreement, all amendments and supplements to this agreement and allschedules to this agreement.

 

1

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**1.2**                   **Rules of Interpretation.** For the purposesof this Agreement the following rules of interpretation shall apply:

 

(a)                     Thedescriptive headings of Articles and Sections are inserted solely forconvenience of reference and are not intended as complete or accuratedescriptions of the content of such Articles or Sections.

 

(b)                    The use ofwords in the singular or plural, or with a particular gender, shall not limitthe scope or exclude the application of any provision of this Agreement to suchperson or persons or circumstances as the context otherwise permits.

 

(c)                     Whenever aprovision of this Agreement requires an approval or consent  by a Party to this Agreement and notificationof such approval or consent is not delivered within the applicable time limit,then, unless otherwise specified, the Party whose approval or consent isrequired shall be conclusively deemed to have withheld its approval or consent.

 

(d)                    Whenever anypayment is to be made or action to be taken under this Agreement is required tobe made or taken on a day other than a business day, such payment shall be madeor action taken on the next business day following such day in the jurisdictionof the Party to make such payment or do such act.

 

(e)                     In the event**of any conflict between this Agreementand the Schedules, this Agreement shall prevail.

 

**ARTICLE 2**

**COLLABORATION AND DEVELOPMENTPLAN**

 

**2.1**                   **Collaboration and Development Plan.** Chiron,Rhein Biotech and GCVC have agreed a Collaboration and Development Plan forcollaboration on the research, development and commercialization of theProduct. The Collaboration and Development Plan shall be deemed to beincorporated herein and by reference made a part of this Agreement.

 

**2.2**                   **No Amendment of Collaboration and Development Plan.**The terms of the Collaboration and Development Plan may be varied or amendedonly in accordance with the terms of the Collaboration Agreement. In the eventthat the terms of the Collaboration and Development Plan are inconsistent withthe terms of this Agreement, the Collaboration and Development Plan shallcontrol, unless otherwise explicitly agreed to in writing by the Parties.

 

**2.3**                   **Product Addendum.** For each Product to beManufactured by Rhein Biotech and GCVC hereunder, the Parties shall agree inwriting upon a Product

 

2

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Addendum. A ProductAddendum for the Whole Cell Product shall be approved by the Steering Committeeand attached hereto as Schedule C. The terms of a Product Addendum may bevaried or amended only in accordance with the terms of the CollaborationAgreement applicable to variations or amendments to the Collaboration andDevelopment Plan.

 

**ARTICLE 3**

**PURCHASE AND SUPPLY OF PRODUCT**

 

**3.1**                   **Agreement to Purchase and Supply.** Pursuantto the terms and conditions of this Agreement, Rhein Biotech and GCVC shallpurchase from Chiron the Bulk Chiron Material required for the Rhein Biotechand GCVC Contract Requirements of the Product, and Rhein Biotech and GCVC shalluse good faith efforts to Manufacture the Minimum Contract Requirements of theProduct in accordance with Article 4 of this Agreement.

 

**3.2**                   **Remanufacturing, Rework or Reprocessing.** Ifduring the Manufacture of any Batch of Product, any reprocessing, rework, orremanufacture is required in order to meet the Product Specifications and theProduct Requirements, Rhein Biotech and GCVC shall conduct such reprocessing,rework, or remanufacture in compliance with cGMPs and the BLA. Anyreprocessing, rework, remanufacture, or change not referred to in the ProductRequirements must be agreed with Chiron in writing prior to implementation inaccordance with the Collaboration and Development Plan.

 

**3.3**                   **Bulk Chiron Material Delivery.** Chiron shalldeliver or**cause to be deliveredto Rhein Biotech and GCVC the amount of Bulk Chiron Material referred to inSchedule B and the applicable Certificate of Analysis therefore by facsimile orby e-mail at least seven (7) days in advance of the date set forth in theapplicable Product Addendum for Manufacture of the relevant Product. On receiptof the Bulk Chiron Material as set forth above, Rhein Biotech and GCVC’s soleobligation subject to any applicable regulatory requirements with respect toevaluation of the Bulk Chiron Material shall be to review the accompanyingCertificate of Analysis to confirm that the Bulk Chiron Material conforms withthe Product Specifications. Each Batch of Bulk Chiron Material shall beaccompanied by a reference sample thereof.

 

**3.4**                   **Bulk Rhein Biotech and GCVC Material Availability.**Rhein Biotech and GCVC shall make available the amount of Bulk Rhein Biotechand GCVC Material referred to in Schedule B and the applicable Certificate ofAnalysis therefore by facsimile or by e-mail at least seven (7) days in advanceof the date set forth in the applicable Product Addendum for Manufacture of therelevant Product.

 

3

----

 

**3.5**                   **Delay in Availability of Bulk Chiron Material or BulkRhein Biotech and GCVC Material.** The terms of Section 14.6(a) of theCollaboration Agreement shall apply in the event of the delay in availabilityof Bulk Chiron Material or Bulk Rhein Biotech and GCVC Material and shallhereby be incorporated by reference herein.

 

**3.6**                   **Use of Bulk Chiron Material.** Any BulkChiron Material delivered to Rhein Biotech and GCVC pursuant to the terms ofthis Agreement shall be used only for the manufacture of the Product for saleby Rhein Biotech and GCVC and not for the manufacture of any other product orProduct.

 

**ARTICLE 4**

**FORECASTS AND ORDERS**

 

**4.1**                   **Initial Forecasts.** As of the date ofreceipt by Rhein Biotech and GCVC of notice of the first regulatory approvalfor the Product, Rhein Biotech and GCVC shall provide non-binding estimates fordeliveries of the Bulk Chiron Material for a twelve (12) month period dividedon a quarterly basis and for one subsequent twelve (12) month period to meetthe Parties’ estimated Contract Requirements for each Product, in accordancewith the terms of the Collaboration Agreement and the Collaboration andDevelopment Plan.

 

**4.2**                   **Subsequent Forecasts.** For all forecastssubsequent to the initial forecasts set forth in Section 4.1, at least nine (9)months before the beginning of each calendar quarter, Rhein Biotech and GCVCshall place a binding order (“Firm Order”) with Chiron for the quantities ofthe Bulk Chiron Material required for such calendar quarter. At the same time,Rhein Biotech and GCVC shall provide an additional, non-binding estimate forthe subsequent twenty-four (24) months, the estimates for the first six (6)months of the twenty-four (24) months being provided by month. Each Firm Orderfor Bulk Chiron Material shall be not less than 75% nor more than 125% of thelatest non-binding estimate for such Bulk Chiron Material for the applicablecalendar quarter during the first two (2) years of sale of such Product, andthereafter no less than 90% nor more than 110% of the latest non-bindingestimate for such Bulk Chiron Material for the applicable calendar quarter. AFirm Order may not be cancelled. Notwithstanding the foregoing, Chiron shallmake every reasonable effort to comply with unplanned changes in Firm Orders,but shall not be held liable for its inability to do so. In each Firm Order forany calendar quarter, Chiron shall state, after consultation with Rhein Biotechand GCVC, a reasonable delivery schedule for Bulk Chiron Material to bedelivered in that calendar quarter.

 

**4.3**                   **Purchase Orders.** The Parties shall agree aform of Rhein Biotech and GCVC Purchase Order for Rhein Biotech and GCVC tosubmit to Chiron covering Rhein Biotech and GCVC’s purchase of Bulk ChironMaterial pursuant to this Agreement.

 

4

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**ARTICLE 5**

**COMMERCIAL TERMS**

 

**5.1**                   **Purchase of Bulk Chiron Material.** Title andrisk of loss with respect to each shipment of Bulk Chiron Material shall passto Rhein Biotech and GCVC upon delivery of the Bulk Chiron Material to a commoncarrier at Chiron’s manufacturing facility pursuant to the terms of Section6.1.

 

**5.2**                   **Purchase Price.** The Rhein Biotech and GCVCPurchase Price to be paid by Rhein Biotech and GCVC to Chiron for the BulkChiron Material shall be the Transfer Price calculated in accordance withSchedule G attached hereto.

 

**5.3**                   **Additional Payment.** No later than sixty (60)days after the end of each calendar quarter, Rhein Biotech and GCVC shall makean additional payment to Chiron in accordance with the terms and provisions ofSchedule G attached hereto.

 

**ARTICLE 6**

**SHIPMENT AND INVOICING**

 

**6.1**                   **Delivery Terms.** The Bulk Chiron Material supplied pursuanthereto shall be delivered FCA (Incoterms, 2000). Chiron shall ship inaccordance with Rhein Biotech and GCVC’s shipping instructions at Rhein Biotechand GCVC’s expense. Such shipping instructions shall be in accordance with thestorage conditions for Bulk Chiron Material, as specified to Rhein Biotech andGCVC by Chiron. Rhein Biotech and GCVC shall have an authorized person certifyin writing the condition of such materials immediately upon receipt. RheinBiotech and GCVC shall store all received materials immediately upon receipt inaccordance with the storage conditions indicated on the containers.

 

**6.2**                   **Payment Terms.** (a) The Rhein Biotech andGCVC Purchase Price shall be paid by Rhein Biotech and GCVC to Chiron withinsixty (60) days of the later of (i) delivery of the Bulk Chiron Material toRhein Biotech and GCVC in accordance with the terms of this Agreement and therelevant Purchase Order or (ii) receipt by Rhein Biotech and GCVC of an invoicefrom Chiron. Payments not received within the specified time shall bearinterest in accordance with the terms of Section 14.6(c) of the CollaborationAgreement; (b) All payments due to Chiron under any Collaboration Documentshall be remitted by telegraphic transfer in immediately available funds to abank account to be designated from time to time by Chiron. (c) Unless otherwiseagreed between the Parties, the invoiced currency shall be US Dollars.

 

**6.3**                   **Taxes.** All payments made under thisAgreement shall be made without deduction or withholding for or on account ofany present or future taxes, levies, imposts, duties, fees, assessments orother charges now or hereafter imposed by any taxing authority or government.

 

5

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**ARTICLE 7**

**ACCEPTANCE OF BULK CHIRONMATERIAL**

 

**7.1**                   **Bulk Chiron Material Conformity.**Withinthirty (30) calendar days from the date of receipt of both the Bulk ChironMaterial and the Certificate of Analysis to Rhein Biotech and GCVC, RheinBiotech and GCVC shall determine whether any shipment of the Bulk ChironMaterial conforms to the Product Specifications. If any shipment of the BulkChiron Material conforms to the Product Specifications, Rhein Biotech and GCVCshall be deemed to have accepted the Bulk Chiron Material and waived its rightto revoke acceptance. If Rhein Biotech and GCVC fail to notify Chiron withinthe thirty (30) calendar day period that any shipment of the Bulk ChironMaterial does not conform to the Certificate of Analysis, then Rhein Biotechand GCVC shall be deemed to have accepted the Bulk Chiron Material and waivedits right to revoke acceptance. If Rhein Biotech and GCVC believe any shipmentof the Bulk Chiron Material does not conform to the Certificate of Analysis,Rhein Biotech and GCVC shall notify Chiron including a detailed explanation ofthe non-conformity. Upon receipt of such notice, Chiron will investigate suchalleged non-conformity and (i) if Chiron agrees such Bulk Chiron Material isnon-conforming, deliver to Rhein Biotech and GCVC a corrective action planwithin thirty (30) calendar days after receipt of Rhein Biotech and GCVC’swritten notice of non-conformity, or (ii) if Chiron disagrees with RheinBiotech and GCVC’s determination that the shipment of the Bulk Chiron Materialis non-conforming, Chiron shall so notify Rhein Biotech and GCVC by telephonewithin the thirty (30) calendar day period and confirm such notice in writingby overnight delivery. If the Parties dispute whether a shipment of the BulkChiron Material is conforming or non-conforming, the shipment of the BulkChiron Material will be submitted to a mutually acceptable laboratory orconsultant for resolution, whose determination of conformity or non-conformityshall be binding upon the Parties. The incorrect Party shall bear the costs ofsuch laboratory or consultant. In the event that Chiron agrees that theshipment of the Bulk Chiron Material is non-conforming or the laboratorydetermines that the shipment of the Bulk Chiron Material is non-conforming,Chiron shall replace such non-conforming Bulk Chiron Material within sixty (60)calendar days from receipt of the written notice of non-conformity from RheinBiotech and GCVC or the laboratory determination, as the case may be. Suchreplacement of the Bulk Chiron Material by Chiron shall be made at Chiron’sexpense, provided, however, that in the event a shipment of the Bulk ChironMaterial is determined to be non-conforming solely as a result of the acts oromissions of Rhein Biotech and GCVC, then such replacement of the Bulk ChironMaterial by Chiron shall be at Rhein Biotech and GCVC’s expense.

 

**7.2**                   **Non-conforming Product.** For the avoidanceof doubt, if the Product fails to meet the Product Requirements, and suchfailure is the result of non-conforming Bulk Chiron Material, then Chiron shallsupply Rhein Biotech and GCVC with the Bulk Chiron Material for replacementProduct, and Rhein Biotech and GCVC shall Manufacture a replacement Batch ofsuch Product as promptly as reasonably

 

6

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possible and at RheinBiotech and GCVC’s expense. Such replacement of the Bulk Chiron Material byChiron shall be made at Chiron’s expense. Rhein Biotech and GCVC’s**Manufacture of such replacement Batch ofProduct shall be Rhein Biotech and GCVC’s sole and exclusive remedy for RheinBiotech and GCVC’s failure to identify such non-conforming Bulk Chiron Materialand its subsequent Manufacture of such non-conforming Product hereunder.

 

**ARTICLE 8**

**INTELLECTUAL PROPERTY**

 

**8.1**                   **Intellectual Property.** The provisions ofArticle 7 (Intellectual Property) and Article 8 (Licenses) of the CollaborationAgreement shall apply *mutatis mutandis*tothis Agreement and are hereby incorporated by reference herein.

 

**ARTICLE 9**

**MANUFACTURE OF THE PRODUCT**

 

**9.1**                   **Manufacture.** Rhein Biotech and GCVC shallManufacture the Product in accordance with cGMP and any applicable laws orregulations as set forth in the Collaboration and Development Plan.

 

**9.2**                   **Inspections.** Each Party shall have theright to inspect the other Party’s facilities to determine compliance with theterms and provisions of the Collaboration and Development Plan, the ProductRequirements and this Agreement.

 

**9.3**                   **Changes to Master Batch Records and ProductSpecifications.** Any regulatory development or change to any SOP thataffects the Manufacture of the Product shall be discussed by the Parties, andany resulting changes to Master Batch Records or Product Specifications shallbe agreed in writing by the Parties prior to such change in accordance with theterms of the Collaboration and Development Plan and the terms of theCollaboration Agreement as applicable to changes to the Collaboration andDevelopment Plan.

 

**9.4**                   **Testing.** Rhein Biotech and GCVC shall test,or cause to be tested, in accordance with the Product Specifications, eachBatch of Product Manufactured pursuant to this Agreement before delivery toChiron. A Certificate of Analysis for each Batch of Product delivered to Chironshall set forth the items tested by Rhein Biotech and GCVC, specifications, andtest results. Rhein Biotech and GCVC shall send, or cause to be sent,**such certificates along with one (1) copyof the Released Executed Batch Record to Chiron prior to or at the same time asshipment of the Product to Chiron and (a) within six (6) weeks from the date offill if such Batch requires no investigations and/or additional testing or (b)within 44 days from the date of fill if such Batch requires investigationsand/or additional testing.

 

7

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**9.5**                   **Stability Testing.** Rhein Biotech and GCVCshall perform all stability testing required to be performed on clinical,development, and/or production Batches of the Product. Such testing shall beperformed in accordance with the procedures set out in the Product-specificRhein Biotech and GCVC SOPs for the stability protocol and the ProductSpecifications.

 

**9.6***                  ***Material Safety Data Sheet.** Rhein Biotechand GCVC**shall maintain amaterial safety data sheet for the Product. Rhein Biotech and GCVC shallimmediately notify Chiron of any unusual health or environmental occurrencerelating to the Product, including, but not limited to any claim or complaintby any Rhein Biotech and GCVC employee or third party that the operations ofRhein Biotech and GCVC pursuant to this Agreement have resulted in any adversehealth or safety effect on an employee or third party. Rhein Biotech and GCVCshall advise Chiron immediately of any safety or toxicity problem of which itbecomes aware in connection with the Product.

 

**9.7**                   **Intentionally Omitted.**

 

**9.8**                   **Permits and Licenses.** With the exception ofthe initial registration of the Product in Korea which shall be subject to theterms of Section 4.2 of the Collaboration Agreement Rhein Biotech and GCVCshall have sole responsibility, at its expense, for obtaining all permits andlicenses necessary or required for the sale, marketing and commercialization ofthe Product Manufactured by Rhein Biotech and GCVC hereunder. Rhein Biotech andGCVC shall be responsible, at its expense, to make all necessary filings and toobtain and maintain all permits and licenses required for the carrying out ofits Manufacturing obligations hereunder.

 

**9.9**                   **Regulatory Requirements.** Each Party shallnotify the other of new regulatory requirements of which it becomes aware whichare relevant to the Manufacture of the Product under this Agreement and whichare required by any applicable regulatory authority or applicable laws orgovernmental regulations, and shall confer with each other with respect to thebest means to comply with such requirements in accordance with the terms of theCollaboration Agreement and the Collaboration and Development Plan.

 

(a)                     **Changes in Manufacturing.** If facility,equipment, process or system changes are required of Rhein Biotech and GCVC asa result of requirements set forth by any relevant regulatory authority suchcosts shall be borne by Rhein Biotech and GCVC.

 

8

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**ARTICLE 10**

**CONFIDENTIALITY**

 

**10.1**            The provisions ofArticle 10 (Confidentiality) of the Collaboration Agreement shall apply *mutatis mutandis*to this Agreement and arehereby incorporated by reference herein.

 

**ARTICLE 11**

**RECALL OF PRODUCT**

 

**11.1**            In the event RheinBiotech and GCVC shall be required to recall any Product because such Productmay violate any relevant laws or regulations or the Product Specifications,Rhein Biotech and GCVC shall be responsible for coordinating such recall. RheinBiotech and GCVC shall promptly notify Chiron if any Product is the subject ofa recall. Chiron shall cooperate with Rhein Biotech and GCVC in connection withany recall. Rhein Biotech and GCVC shall be responsible for all of the costsand expenses of such recall unless (a) such recall is caused solely by Chiron’sbreach of this Agreement, in which case, Chiron shall be responsible for thecosts and expenses of such recall or (b) such recall is the result of anadverse event the cause of which cannot be attributed solely to any act oromission of Rhein Biotech and GCVC or any third party, in which case, theParties shall share the costs and expenses of such recall.

 

**ARTICLE 12**

**REPRESENTATIONS AND WARRANTIES**

 

**12.1**            **Mutual Representations.** Each Party herebyrepresents and warrants to the other that (a) the person executing thisAgreement is authorized to execute this Agreement; (b) this Agreement is legaland valid and the obligations binding upon such Party are enforceable by theirterms; and (c) the execution, delivery and performance of this Agreement doesnot conflict with any agreement, instrument or understanding, oral or written,to which such Party may be bound, nor violate any law or regulation of anycourt, governmental body or administrative or other agency having jurisdictionover it.

 

**12.2**            **Rhein Biotech and GCVC Warranty.** Each ofRhein Biotech and GCVC represents and warrants with respect to itself toChiron, that (a) at the time of Manufacture, the Product shall conform to theMaster Batch Record, Rhein Biotech and GCVC’s SOPs, and the Collaboration andDevelopment Plan and shall be Manufactured in accordance with cGMP; (b) it hasobtained (or will obtain prior to Manufacturing the Product) and will remain incompliance with during the term of this Agreement, all permits, licenses andother authorizations which are required under all laws, rules and regulationsapplicable to the Manufacture of the Product as specified in the Collaborationand Development Plan; and (c) the Bulk Rhein Biotech and GCVC Material

 

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provided hereunder will**conform to**the Bulk Rhein Biotech and GCVC Material specifications.

 

**12.3**            **Disclaimer of Warranties.** Except for thosewarranties set forth in Sections 12.1 and 12.2 of this Agreement, Rhein Biotechand GCVC make no other warranties, written, oral, express or implied, withrespect to the Bulk Rhein Biotech and GCVC Material, the Product or theManufacture of the Product. ALL OTHER WARRANTIES; EXPRESS OR IMPLIED;INCLUDING; WITHOUT LIMITATION; THE IMPLIED WARRANTIES OF MERCHANTABILITY ANDFITNESS FOR A PARTICULAR PURPOSE HEREBY ARE DISCLAIMED BY RHEIN BIOTECH ANDGCVC.

 

**12.4**            **Chiron Warranties.** Chiron warrants that (a)it has the right to give Rhein Biotech and GCVC any information provided byChiron hereunder, and that Rhein Biotech and GCVC have the right to use such informationfor the Manufacture of the Product, and (b) Chiron has no knowledge of any (i)patents or other intellectual rights that would be infringed by Rhein Biotechand GCVC’s Manufacture of the Product under this Agreement, or (ii) proprietaryrights of third parties which would be violated by Rhein Biotech and GCVC’sperformance hereunder. Chiron further warrants that the Bulk Chiron Materialprovided to Rhein Biotech and GCVC hereunder will conform to the Bulk ChironMaterial specifications.

 

**12.5**            **Disclaimer of Warranties.** Except for thosewarranties set forth in Sections 12.1 and 12.4 of this Agreement, Chiron makesno other warranties, written, oral, express or implied, with respect to theBulk Chiron Material or the Product. ALL OTHER WARRANTIES; EXPRESS OR IMPLIED;INCLUDING; WITHOUT LIMITATION; THE IMPLIED WARRANTIES OF MERCHANTABILITY ANDFITNESS FOR A PARTICULAR PURPOSE HEREBY ARE DISCLAIMED BY CHIRON.

 

**ARTICLE 13**

**INDEMNIFICATION AND INSURANCE**

 

**13.1**            **Indemnification by Rhein Biotech and GCVC.**Rhein Biotech and GCVC shall indemnify, defend and hold harmless Chiron and itsaffiliates and their respective officers, directors, employees, agents andrepresentatives for any Losses arising out of or relating to (a) any materialinaccuracy as of the date when made of any of Rhein Biotech and GCVC’srepresentations and warranties hereunder, or (b) the breach by Rhein Biotechand GCVC of any of its obligations hereunder.

 

**13.2**            **Indemnification by Chiron.** Chiron shallindemnify, defend and hold harmless Rhein Biotech and GCVC and its Affiliatesand their respective officers, directors, employees, agents and representativesfor any Losses arising out of or relating to (a) any material inaccuracy as ofthe date when made of any of Chiron’s representations and warranties hereunder,or (b) the breach by Chiron of

 

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any of its obligationshereunder

 

**13.3****            IndemnificationProcedures.** Any person seeking indemnity pursuant to this section (the “IndemnifiedParty”) shall notify the Party from whom indemnification is sought (the “IndemnifyingParty”) in writing promptly upon becoming aware of any claim, threatened claim,damage, loss, suit, proceeding or liability (“Claim”) to which suchindemnification may apply. Failure to provide such notice shall constitute awaiver of the Indemnifying Party’s indemnity obligations hereunder if and tothe extent the Indemnifying Party is materially damaged thereby. TheIndemnifying Party shall have the right to assume and control the defense ofthe Claim at its own expense. If the right to assume and control the defense isexercised, the Indemnified Party shall have the right to participate in, butnot control, such defense at its own expense and the Indemnify Party’sindemnity obligations shall be deemed not to include attorneys’ fees andlitigation expenses incurred by the Indemnified Party after the assumption ofthe defense by the Indemnifying Party. If the Indemnifying Party does notassume the defense of the Claim, the Indemnified Party may defend the Claim;provided, that the Indemnified Party will not settle or compromise the Claimwithout consent of Indemnifying Party, which consent will not be unreasonablywithheld. The Indemnified Party shall cooperate with Indemnifying Party and willmake available to Indemnifying Party all pertinent information under thecontrol of the Indemnified Party.

 

**13.4**            **Waiver of Consequential or Punitive Damages.**Notwithstanding anything to the contrary contained herein, in no event shalleither party be liable to the other party for any special, incidental,consequential or punitive damages, including lost profits, whether any claimfor such recovery is based upon theories of contract, negligence, or tort(including strict liability). Each party hereby waives for itself and itssuccessors and assigns any and all claims for any special, incidental,consequential or punitive damages, including lost profits.

 

**13.5**            **Insurance.**Each Party shall obtain andmaintain comprehensive general liability insurance, including product liabilityinsurance, with a reputable and financially secure insurance carrier(s), tocover its activities under this Agreement.

 

**ARTICLE 14**

**TERM, TERMINATION AND REMEDY FORBREACH**

 

**14.1**            **Term.**This Agreement is effective as of thedate hereof and shall continue indefinitely unless terminated by either Partyin accordance with the terms hereof.

 

**14.2**            **Termination.** The Parties agree that anytermination of this Agreement shall be only in accordance with the terminationprovisions set forth in Section 14 of the Collaboration Agreement which is hereby incorporated by referenceherein.

 

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**14.3**            **Effect of Termination.** The Parties agreethat the effect of any termination of this Agreement shall be in accordancewith the termination provisions set forth in Section 14 in the CollaborationAgreement.

 

**14.4**            **Survivals.** Termination, expiration,cancellation or abandonment of this Agreement through any means or for anyreason shall be without prejudice to the rights and remedies of either Partywith respect to any antecedent breach of any of the provisions of thisAgreement. The provisions of Sections 8 (Intellectual Property), 10(Confidentiality), 11 (Recall of Product), 12 (Representations and Warranties)and 13 (Indemnification and Insurance).

 

**14.5**            **Remedy for Breach.** The Parties agree thatthe sole remedies for breach under this Agreement shall be as set forth inSection 14 of the Collaboration Agreement which is hereby incorporated byreference herein.

 

**ARTICLE 15**

**MISCELLANEOUS**

 

**15.1**            **Notices.**

 

Any consent, notice orreport required or permitted to be given or made under this Agreement by one ofthe Parties hereto to the other shall be in writing, delivered personally or byfacsimile (and promptly confirmed by personal delivery, first class air mail orcourier), first class air mail or courier, postage prepaid (where applicable),addressed to such other Party at its address indicated below, or to such otheraddress as the addressee shall have last furnished in writing to the addressorand (except as otherwise provided in this Agreement) shall be effective uponreceipt by the addressee.

 

If to Chiron:

 

Chiron Behring GmbH &Co

Emil von Behring Strasse76

35041 Marburg

Germany

 

Attention: BusinessDevelopment

 

Facsimile: 49 6421 395187

 

with a copy to:

 

Chiron S.p.A.

Via Fiorentina 1

53100 Siena

Italy

 

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Attention:   ProjectDevelopment

Facsimile:  390577 24 3085

 

If to Rhein Biotech andGCVC:

 

GreenCross Vaccine Corporation

303 Bojung-Ri,Koosung-Eup

Yongin 449-770

Republic of Korea

 

Attention:  RepresentativeDirector

Facsimile: 82 31 2609012

 

with a copy to:

 

Rhein Biotech N.V.

Gaetano Martinolaan 95

6229 GS Maastricht

The Netherlands

 

Attention:  CEO

Facsimile: 31 43 3567 899

 

**15.2****            Entire Agreement.**This Agreement and the Collaboration Agreement constitute the entire agreementbetween the Parties hereto with respect to the subject matter hereof andsupersede any prior agreement whether written or oral.

 

**15.3****            Force Majeure.**Neither Party shall be held liable or responsible to the other Party nor bedeemed to have defaulted under or breached the Agreement for failure or delayin fulfilling or performing any term of the Agreement when such failure ordelay is caused by or results from causes beyond the reasonable control of theaffected Party (including but not limited to fire, floods, embargoes, war, actsof war (whether war be declared or not), insurrections, riots, civil commotion,strikes, lockouts or other labor disturbances, acts of God or acts, omissionsor delays in acting by any governmental authority or the other Party(collectively, “Events of Force Majeure”); provided, however, that the affectedParty (i) shall immediately notify the other Party of the occurrence of anysuch Event of Force Majeure and (ii) shall exert all reasonable efforts toeliminate, cure or overcome any such Event of Force Majeure and to resumeperformance of its covenants with all possible speed; and provided, further,that nothing contained herein shall require any Party to settle on termsunsatisfactory to such Party any strike, lockout or other labor difficulty, anyinvestigation or proceeding by any governmental authority or any litigation byany third-party. Notwithstanding the foregoing, to

 

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the extent that an Eventof Force Majeure continues for a period in excess of six (6) months, theaffected Party shall promptly notify in writing the other Party of such Eventof Force Majeure and within four (4) months of the other Party’s receipt ofsuch notice, the Parties agree to negotiate in good faith either (i) to resolvethe Event of Force Majeure, if possible, (ii) to extend by mutual agreement thetime period to resolve, eliminate, cure or overcome such Event of ForceMajeure, (iii) to amend this Agreement to the extent reasonably possible, or(iv) to terminate this Agreement.

 

**15.4****            Assignment.** ThisAgreement shall not be assignable in whole or in part by either Party withoutthe prior written consent of the other Party. Each Party is, however,authorized to assign this Agreement in whole or in part to any of itsAffiliates provided that the assigning Party promptly informs the other Partyof the transfer of rights and obligations.

 

**15.5****            Waiver orModification.** This Agreement may not be amended, modified or supplementedexcept by a written instrument manually signed by all of the Parties hereto orthereto. No omission or delay on the part of either Party in requiring the dueand punctual fulfillment by the other of any of the obligations hereunder shallconstitute a waiver by the omitting or delaying Party of any of its rights torequire such due and punctual fulfillment of any obligation hereunder, whethersimilar or otherwise, or a waiver of any remedy it may have hereunder orotherwise.

 

**15.6****            Severability.** Inthe event any one or more of the provisions of this Agreement shall be held tobe invalid, illegal or unenforceable, the validity, legality or enforceabilityof the remaining provisions or parts hereof shall not in any way be affected orimpaired thereby.

 

**15.7****            Dispute Resolution.**The Parties agree that in the event of a dispute between them arising out of orin any way relating to this Agreement, the Parties shall undertake good faithefforts to resolve any such dispute in good faith. In the event the Partiesshall be unable to resolve any such dispute, the matter shall be referred tothe Chief Executive Officer of Chiron and the Chief Executive Officer of RheinBiotech and GCVC for further review and resolution.

 

**15.8****            Governing Law andArbitration.**This Agreement is construed and shall be governed by,interpreted and enforced in accordance with the laws of England. In the eventthe Parties are unable to reach accord using the procedures specified inSection 15.7, such dispute shall be finally settled without recourse to thecourts, in accordance with the Rules of Conciliation and Arbitration of theInternational Chamber of Commerce, by one arbitrator designated in conformitywith those Rules. Arbitration shall be held in English in San Francisco,California if initiated by Rhein Biotech and GCVC and in Amsterdam, theNetherlands if initiated by Chiron. Either party may ask the competent tribunalto confirm an arbitration award or otherwise provide that it shall beenforceable.

 

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**15.9****                        IndependentContractors.** The relationship between Chiron and Rhein Biotech and GCVCcreated by this Agreement is one of independent contractors and neither Partyshall have the power or authority to bind or obligate the other except asexpressly set forth in this Agreement.

 

**15.10****                 Absence ofExisting Competition.** Each of Rhein Biotech and GCVC represents andwarrants to Chiron that, to the best of its knowledge and belief, neither ofRhein Biotech or GCVC nor any Affiliate of either Rhein Biotech or GCVC ispresently engaged in the business of manufacturing, marketing or distributingthe Product except as follows. Chiron represents and warrants to Rhein Biotechand GCVC that, to the best of its knowledge and belief, neither Chiron nor anyAffiliate of Chiron is presently engaged in the business of manufacturing,marketing or distributing the Product.

 

**15.11****                 Absence of FutureCompetition.** Except as otherwise provided in this Agreement, each Partycovenants and agrees that neither such Party nor any Affiliate of such Party(whether or not such Affiliate has accepted a sublicense hereunder and agreedto be bound by the terms hereof) nor shall any of their respective successorsin interest engage in the business of developing, manufacturing, marketing ordistributing any Product in the Field other than through Chiron and RheinBiotech and GCVC, as contemplated by this Agreement, provided, however, that inthe event the collaboration with respect to the Acellular Product is terminatedpursuant to the terms of Section 2.5 of the Collaboration Agreement, then thisSection 15.11 shall not apply to any acellular product in the Field.

 

**15.12****                 Ethical BusinessPractices.** Neither Party, nor any person employed by it or representing it,has ever made, offered, provided or authorized, and covenants that neither it,nor any person employed by it or representing it, will make offer provide orauthorize, direct or indirectly, any payment or transfer of anything of valueto any official, representative or employee of any government agency orinstrumentality, any political party or officer thereof, or any candidate forpublic office for the purpose of influencing a decision by any of them in theirofficial capacity, and no officer, director, partner, owner, principal,employee, or agent of either Party is an official or employee of a governmentalagency or instrumentality or a government owned company in a position toinfluence action or a decision regarding the activities of such Partycontemplated in this Agreement. Each Party covenants that it will inform theother, if and as soon as any person assumes such a position as an official oremployee of a governmental agency or instrumentality or government ownedcompany, while at the same time remaining an officer, director, partner, owner,principal, employee, or agent of such Party.

 

**15.13****                 Change ofControl.** The Parties agree that the terms of Section 14.4(b) of theCollaboration Agreement apply *mutatismutandis*to this Agreement and are hereby incorporated by referenceherein.

 

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**15.14**                 **Use of Name.** No right, express or implied,is granted to either Party by this Agreement to use in any manner any trademarkor trade name of the other Party including the names “Rhein Biotech and GCVC”and “Chiron” without the prior written consent of the owning Party.

 

**15.15****                 Joint and SeveralLiability.**

 

(a)                     Each ofChiron Behring and Chiron S.p.A. shall (i) be jointly and severally liable forthe obligations of Chiron arising pursuant to the terms of this CollaborationAgreement and (ii) procure the performance by the other of all the obligationsarising pursuant to the terms of this Collaboration Agreement.

 

(b)                    Each of RheinBiotech and GCVC shall (i) be jointly and severally liable for the obligationsof Rhein Biotech and GCVC arising pursuant to the terms of this CollaborationAgreement and (ii) procure the performance by the other of all the obligationsarising pursuant to the terms of this Collaboration Agreement.

 

**15.16****                 Successors.**Withoutprejudice to the**provisions ofSection 14.4(b) (Immediate Termination) of the Collaboration Agreement, thisBulk Supply Agreement binds each of the Parties hereto and their respectivesuccessors.

 

**15.16****                 Counterparts.**This Agreement has been executed in one or more counterparts, each of whichshall be deemed an original and all of which together shall constitute one andthe same instrument.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of thedate set forth above.

 

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| **CHIRON  BEHRING GMBH *&*CO**            | **RHEIN  BIOTECH N.V.**              |
|-----------------------------------------------|--------------------------------------|
|                                          |                                 |
|                                          |                                 |
| By:                                           | /s/ John A Lambert                   |   | By: | /s/ Jan Thio |   |
| Name:  John  Lambert                | Name:  Jan  Thio           |
| Title:  President,  Chiron Vaccines | Title:  Business  Director |
|                                               |                                      |  |  |  |  |

 

 
|               | By:                          | /s/ Kees Moonen |                             |
|--------------------|------------------------------|-----------------|----------------------------------|
| **CHIRON  S.P.A.** | Name:  Kees Moonen |
|               |                         |            | Title:  Legal  Counsel |
|                    |                              |                 |                                  |  |  |

 

 
| By:                                           | /s/ John A Lambert                         | ** **     | **GREENCROSS  VACCINE** |
|-----------------------------------------------|--------------------------------------------|----------------|-------------------------|
| Name:  John  Lambert                | **CORPORATION**                            |
| Title:  President,  Chiron Vaccines |                                       |
|                                          |                                       |
|                                          | By:                                        | /s/ Ton Kuiper |                    |
|                                          | Name:  Ton  Kuiper               |
|                                          | Title:  Representative  Director |

 

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List of Schedules

 
| Schedule A: | Definitions                      |
|-------------|----------------------------------|
|        |                             |
| Schedule B: | Minimum Contract Requirements    |
|        |                             |
| Schedule C: | Product Addendum                 |
|        |                             |
| Schedule D: | Chiron Materials                 |
|        |                             |
| Schedule E: | Rhein Biotech and GCVC Materials |
|        |                             |
| Schedule F: | Loss Allowances                  |
|        |                             |
| Schedule G: | Price Calculations               |

 

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**SCHEDULE A**

 

**DEFINITIONS**

 

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**SCHEDULE A**

** **

**DEFINITIONS**

 

For the purposes of the Collaboration Documents the following words andphrases shall have the following meanings:

 

**1.1****                  **[***]

 

**1.2****                  **“**Affiliate**”, with respect to any person,means any company, entity, joint venture or similar business arrangement whichis controlled by, controlling or under common control with such person, andshall include without limitation any company fifty percent or more of whosevoting stock or participating profit interest is owned or controlled, directlyor indirectly, by such person, and any company which owns or controls, directlyor indirectly, fifty percent or more of such person.

 

**1.3****                  **“**Allowable Expenses**” means the fullyburdened, fairly allocated direct and indirect costs and expenses incurred byeither Party in connection with its activities under the CollaborationDocuments, which shall include a reasonable depreciation of employed assets*,*as determined in accordance with theaccounting methodologies set forth in Schedule F to the CollaborationAgreement; provided that such costs and expenses are contemplated by an AnnualPlan and Budget approved in accordance with the provisions of Article 3 of theCollaboration Agreement; provided, however, that any depreciation andamortization associated with any capital expenditure prior to commercializationof the Product shall be treated as an Allowable Expense only to the extent thatsuch expenses combined with the other R & D Expenses do not exceed [***] ofthe amount set forth in the Annual Plan and Budget for R & D Expenses.Allowable Expenses shall not include any (a) Excluded Expenses or (b) anyallocation of general and administration expenses or any G&A Markup or (c)any Sales *&*MarketingExpenses.

 

**1.4****                  **“**Annual Plan and Budget**” means, with respectto any year, a plan for such year which shall include at least the following:planned research and development activities, including timeline and targetedmilestones; planned manufacturing activities; and planned sales and marketingactivities and which shall be prepared and approved in accordance with theterms of Section 3.2(a) to the Collaboration Agreement.

 

**1.5****                  **“**Batch**” shall mean a specific quantity ofthe Product comprising a number of units mutually agreed upon between Chironand Rhein Biotech and GCVC, and that (a) is intended to have uniform characterand quality within specified limits,

 

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and (b) is producedaccording to a single Manufacturing order during the same cycle of Manufacture.

 

**1.6**                   “**BLA**” stands for biologic licenseapplication and means, with respect to any Product, any application filed witha Regulatory Agency for approval to market such Product in any jurisdiction.

 

**1.7****                  **“**Bulk Chiron Material**” means the bulk formof the Chiron Materials used as raw material in the Manufacture of the Product.

 

**1.8****                  **“**Bulk Loss Allowance**” means the allowancesfor losses of Bulk Chiron Material and Bulk Rhein Biotech and GCVC Material asmore specifically set forth in Schedule F to the Bulk Supply Agreement and theSupply and Manufacturing Agreement.

 

**1.9****                  **“**Bulk Rhein Biotech and GCVC Material**” meansthe bulk form of the Rhein Biotech and GCVC Materials used as raw material inthe Manufacture of the Product.

 

**1.10****           **“**Bulk Supply Agreement**” means the bulksupply agreement dated as of the date of the Collaboration Agreement betweenChiron and Rhein Biotech and GCVC, and all schedules, amendments andsupplements thereto, a form of which is attached as Schedule J to theCollaboration Agreement.

 

**1.11****           **“**Certificate of Analysis**” means thecertificate of analysis confirming that the accompanying Product complies withthe Product Specifications and cGMP.

 

**1.12****           **“**Chiron Contract Requirements**” means onehundred percent (100%) of the quantity of the Product sold and/or distributedby Chiron in accordance with the terms of the Collaboration Agreement.

 

**1.13****           **“**Chiron Inventions**” means inventions arisingfrom the activities of the parties under the Collaboration Agreement andinvented solely by employees of Chiron or persons obligated to assign theirinventions to Chiron.

 

**1.14****           **“**Chiron Materials**” means the materialsdescribed in Schedule D to the Collaboration Agreement and the additionalbiological materials, if any, which Chiron provides to Rhein Biotech and/orGCVC in connection with the Collaboration, together with (a) any part, progeny,mutant or hybrid thereof, (b) any nucleic acid or other genetic materialtherefrom, (c) any vector materials derived therefrom, and any progeny,derivatives or modifications of such vector particles, (d) any copy, complementor transcription or expression Whole Cell Product thereof, and (e) anycombination of the foregoing with other substances (other than Rhein Biotechand GCVC Materials, which combination shall be deemed Collaboration Materials).

 

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**1.15**            “**Chiron Purchase Order**” means written ordersfrom Chiron to Rhein Biotech and GCVC which shall specify (a) the quantity ofthe Product ordered, (b) shipping instructions, (c) delivery dates, and (d)delivery destinations.

 

**1.16****           **“**Chiron Purchase Price**” means the price tobe paid by Chiron to Rhein Biotech and GCVC for the Product in accordance withthe terms of Section 5.2 of the Supply and Manufacturing Agreement.

 

**1.17****            “Chiron/Rhein Biotechand GCVC Joint Background Technology”**means

 

(a)                     allinventions, discoveries, procedures, processes, methods, data, information,results, trade secrets and know-how, whether patentable or otherwise, arisingout of the Materials Transfer Agreement prior to the Effective Date; and

 

(b)                    all patentsand patent applications claiming such inventions and other technology; allpatents issued from such patent applications; and all reissues, confirmations,renewals, extensions, counterparts, divisions, continuations,continuations-in-part, supplemental protection certificates or utility modelsrelating to such patents and patent applications.

 

**1.17****           **“**Chiron Territory**” shall have the meaningascribed to it in Section 5.l(b) of the Collaboration Agreement.

 

**1.18****           **“**COGS**” stands for cost of goods sold andshall have the meaning ascribed to it in Schedule F to the CollaborationAgreement.

 

**1.19****           **“**Collaboration**” shall have the meaningascribed to it in Section 2.1 of the Collaboration Agreement.

 

**1.20****           **“**Collaboration Agreement**” means thecollaboration agreement dated as of April 30, 2001 between Chiron and RheinBiotech and GCVC and all schedules, amendments and supplements thereto.

 

**1.21****           **“**Collaboration and Development Plan**” meansthe collaboration and development plan attached as Schedule H to theCollaboration Agreement.

 

**1.22****           **“**Collaboration Documents**” means theCollaboration Agreement, the Bulk Supply Agreement and the Supply andManufacturing Agreement.

 

**1.23****           **“**Collaboration Inventions**” shall have themeaning ascribed to it in the definition of Collaboration Technology.

 

**1.24****           **“**Collaboration Know-How**” shall have themeaning ascribed to it in the definition of Collaboration Technology.

 

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**1.23****           **“**Collaboration Materials**” means thebiological materials, if any, created in connection with the Collaboration,including, without limitation, any combination of the Chiron Materials and theRhein Biotech and GCVC Materials, together with (a) any part, progeny, mutantor hybrid thereof, (b) any nucleic acid or other genetic material therefrom,(c) any vector materials derived therefrom, and any progeny, derivatives ormodifications of such vector particles, (d) any copy, complement ortranscription or expression product thereof.

 

**1.24**            “**CollaborationTechnology**” means:

 

(a)                     allinventions arising from the activities of the parties under the  Collaboration Agreement, including all ChironInventions, all Rhein Biotech and GCVC Inventions and all Joint Inventions(collectively, “Collaboration Inventions”);

 

(b)                    all patentsand patent applications relating to Collaboration Inventions; all patentsissued from such patent applications; and all reissues, confirmations,renewals, extensions, counterparts, divisions, continuations,continuations-in-part, supplemental protection certificates or utility modelsrelating to such patents and patent applications (collectively, “CollaborationPatents”); and

 

(c)                     allscientific, engineering, economic, commercial or other technical data orinformation, research results, methods, processes, procedures, trade-secretsand know-how arising from the activities of the Parties under the CollaborationAgreement, whether or not patentable (collectively, “Collaboration Know-How”).

 

**1.25**            “**Confidential Information**” shall have themeaning ascribed to it in Article 10 of the Collaboration Agreement.

 

**1.26**            “**ContributedChiron Technology**” means:

 

(a)                     all patentsand patent applications Controlled by Chiron as of the Effective Date thatcover the Product, including without limitation, the patents and patentapplications listed on Schedule B to the Collaboration Agreement; for thesepurposes a patent or patent application shall be deemed to “cover” the Productif the manufacture, use or sale of the Product by Rhein Biotech and GCVC wouldinfringe a claim in such patent or patent application but for the licensescontemplated hereby; all patents issued from such patent applications; and allreissues, confirmations, renewals, extensions, counterparts, divisions, continuations,continuations-in-part, supplemental protection certificates or utility modelsrelating to such patents and patent applications; and

 

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(b)                    allunpublished scientific, engineering, economic, commercial and other technicaldata or information, research results, methods, processes, procedures,trade-secrets and know-how relating to the Product which are Controlled byChiron as of the Effective Date.

 

**1.27****           **“**Contributed Rhein Biotech and GCVC Technology**” means:

 

(a)                     all patentsand patent applications Controlled by Rhein Biotech and GCVC as of theEffective Date that cover the Product, including without limitation, thepatents and patent applications listed on Schedule C to the CollaborationAgreement; for these purposes a patent or patent application shall be deemed to“cover” the Product if the manufacture, use or safe of the Product by Chironwould infringe a claim in such patent or patent application but for thelicenses contemplated hereby; all patents issued from such patent applications;and all reissues, confirmations, renewals, extensions, counterparts, divisions,continuations, continuations-in-part, supplemental protection certificates orutility models relating to such patents and patent applications; and

 

(b)                    allunpublished scientific, engineering, economic, commercial and other technicaldata or information, research results, methods, processes, procedures,trade-secrets and know-how relating to the Product which are Controlled byRhein Biotech and GCVC as of the Effective Date.

 

**1.28****           **“**Controls**” **or**“**Controlled**” means possession ofthe right to grant licenses or sublicenses without violating the terms of anyagreement or other arrangement with, or the rights of, any Third Party.

 

**1.29****           **“**Current Good Manufacturing Practices**” **or** “**cGMP**”means the good manufacturing practices required by each applicable regulatoryauthority at any time during the term of this Agreement for the manufacture andtesting of pharmaceutical materials as applied solely to the Product.

 

**1.30**            “**Effective Date**” means the date of theCollaboration Agreement.

 

**1.31**            “**Excluded Expenses**” means any and all costsand expenses incurred in defending, settling or otherwise discharging anyliability to a third party, including, without limitation, any employee ofeither Party or their Affiliates, based upon tortious acts.

 

5

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**1.32**            “**Extraordinary Items**” means (i) any and allLosses incurred by either Party in connection with Third Party claims arisingout of or relating to the manufacture, use, or sale of the Product, including,without limitation, product liability claims and claims based on the allegedinfringement or misappropriation of intellectual property rights held by ThirdParties; and (ii) any other extraordinary items which the Steering Committeedetermines are an appropriate deduction from Operating Profits.

 

**1.33**            “**Field**” means the field of pentavalentcombination vaccines for pediatric use.

 

**1.34**            “**Finance Committee**” means the financesubcommittee established pursuant to the terms of Section 3.3 of theCollaboration Agreement.

 

**1.35**            “**FTE**” means the full time equivalent effortof one person who participates directly in the research and developmentactivities of the Collaboration other than Third Party contractors determinedin accordance with the terms of Section 3.2(d) of the Collaboration Agreement.

 

**1.36**            “**G&A Markup**” means any allocation of theParties’ respective general and administration costs.

 

**1.37**            “**IND**”stands for investigational new drug, and means, with respect to any Product,the application filed with a Regulatory Agency in any jurisdiction for approvalto conduct clinical studies of such Product in humans.

 

**1.38**            “**Investment Plan**” means the investment planagreed by the Parties and attached to the Collaboration Agreement as Schedule Lto the Collaboration Agreement.

 

**1.39**            “**Joint Inventions**” means inventions arisingfrom the activities of the parties under the Collaboration Agreement andinvented jointly by employees of Chiron (including persons obligated to assigninventions to Chiron) and employees of Rhein Biotech and GCVC (includingpersons obligated to assign inventions to Rhein Biotech and GCVC).

 

**1.40****           **“**Loss**” means any loss, damage, liability,cost, deficiency, assessment and expense including, without limitation, anyinterest, fine, court cost and reasonable investigation cost, penalty andattorneys’ and expert witnesses’ fees, disbursements and expenses.

** **

**1.41****           **“**Manufacture**” or “**Manufacturing**” shall mean the formulation, filling, packaging,inspecting, labeling, and testing of the Product by Rhein Biotech and GCVC.

** **

**1.42****           **“**Marketing Authorization**”, with respect toany Product, means any approval granted by any Regulatory Agency to market suchProduct in any jurisdiction.

 

6

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**1.43****           **“**Master Batch Record**” means, with respect toeach Product to be Manufactured hereunder, a formal set of instructions for theManufacture of such Product.

 

**1.44****           **“**Material Breach**” shall have the meaningascribed to it in Section 14.3 of the Collaboration Agreement.

 

**1.45****           **“**Minimum Contract Requirements**” means thequantity of the Product set forth in Schedule B to the Bulk Supply Agreementand Schedule B to the Manufacturing and Supply Agreement.

 

**1.46****           **“**Net Sales**” means, with respect to eitherParty, the total gross sales or consideration for the Product charged tounaffiliated third parties, including without limitation, amounts invoiced forsales of the Product, less the Sales and Return Allowances, provided, however,that the selling Party may, at its option, allocate the Sales and ReturnAllowances based upon accruals estimated reasonably and consistent with suchParty’s standard business practices; and provided further, however, that if theselling Party elects to utilize such accruals, actual deductions will becalculated and, if applicable, a “true-up” made, on an annual basis and to theextent the aggregate amount of such deductions is required under the terms ofthis Agreement to be allocated between countries, such allocation will be inthe same proportion as gross sales of the Product realized in each country inthe applicable period.

 

**1.47****           **“**Other Revenues**” means any revenues arisingout of Collaboration Technology other than Net Sales, including, withoutlimitation, royalties or other amounts paid by Third Parties for licenses toCollaboration Technology.

 

**1.48****           **“**Parties**” means Chiron and Rhein Biotech andGCVC and “Party” shall mean one of them.

 

**1.49****           **“**Product**” means (a) the Whole Cell Product;and (b) to the extent of the Collaboration proceeding in accordance with theterms of Section 2.5 of the Collaboration Agreement, the Acellular Product.

 

**1.50****           **“**Product Addendum**” means the addendumattached as Schedule C to the Bulk Supply Agreement and as Schedule C to theManufacturing and Supply Agreement setting forth the Product Requirements,terms and presentations for each Product Manufactured under the Bulk SupplyAgreement and the Manufacturing and Supply Agreement.

 

**1.51****           **“**Product Loss Allowance**” means theallowances for losses of the finished Product as more specifically set forth inSchedule F to the Bulk Supply Agreement and the Supply and ManufacturingAgreement.

 

**1.52****           **“**Product Requirements**” means the ProductSpecifications, the Master Batch Record and Rhein Biotech and GCVC’s SOPs.

 

7

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**1.53**            “**Product Specifications**” means, with respectto the Product, the specifications and testing to be performed for the BulkChiron Material, the Bulk Rhein Biotech and GCVC Material, the Product and/orthe stability program that are set forth in the Rhein Biotech and GCVC SOPs andthe Master Batch Records. The Product Specifications include all tests thatRhein Biotech and GCVC are required to conduct or cause to be conducted asspecified in the Collaboration and Development Plan. The Product Specificationsmy be modified from time to time only in accordance with the terms of theCollaboration Agreement.

 

**1.54**            “**R&D Expenses**” means Allowable Expensesincurred in connection with  research anddevelopment of the Product, including, without limitation, manufacture ofresearch and clinical supplies of the Product, determined in accordance withthe terms of Section 4.2 of the Collaboration Agreement and with the accountingmethodologies set forth in Schedule F to the Collaboration Agreement.

 

**1.55**            “**Regulatory Agency**” means the United StatesFood and Drug Administration or EMEA or the Korean Food and Drug Administrationor any equivalent regulatory agency in any other jurisdiction.

 

**1.56**            “**Released Executed Batch Record**” means thecompleted batch record and associated deviation reports, investigation reports,and certificates of analysis created for each Batch of the Product.

 

**1.57**            “**Residual Expenses**” means, with respect toeither Party, any Allowable Expenses which such Party incurs following anytermination of the Collaboration Agreement and which such Party cannotreasonably eliminate.

 

**1.58**            “**Rhein Biotech and GCVC Contract Requirements**”means one hundred percent (100%) of the quantity of the Product sold and/ordistributed by Rhein Biotech and GCVC in accordance with the terms of theCollaboration Agreement.

 

**1.59**            “**Rhein Biotech and GCVC Inventions**” meansinventions arising from the activities of the parties under the CollaborationAgreement and invented solely by employees of Rhein Biotech and/or GCVC orpersons obligated to assign their inventions to Rhein Biotech and/or GCVC.

 

**1.60**            “**Rhein Biotech and GCVC**Materials**” means the materials described in Schedule E tothe Collaboration Agreement and the additional biological materials, if any,which Rhein Biotech and GCVC provide to Chiron in connection with theCollaboration, together with (a) any part, progeny, mutant or hybrid thereof,(b) any nucleic acid or other genetic material therefrom, (c) any vectormaterials derived therefrom, and any progeny, derivatives or modifications ofsuch vector particles, (d) any copy, complement or transcription or expressionWhole Cell Product thereof, and (e) any combination of the foregoing with other

 

8

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substances (other thanChiron Materials, which combination shall be deemed Collaboration Materials).

 

**1.61**            “**Rhein Biotech and GCVC Purchase Order**”means written orders from Rhein Biotech and GCVC to Chiron which shall specify(a) the quantity of the Bulk Chiron Material ordered, (b) shippinginstructions, (c) delivery dates, and (d) delivery destinations.

 

**1.62**            “**Rhein Biotech and GCVC Purchase Price**”means the price to be paid by Rhein Biotech and GCVC to Chiron for the BulkChiron Material in accordance with the terms of Section 5.2 of the Bulk SupplyAgreement.

 

**1.63****           **“**Rhein Biotech and GCVC Territory**” shallhave the meaning ascribed to it in Section 5.1 of the Collaboration Agreement.

 

**1.64**            “**Sales & Marketing Expenses**” means thefollowing sales and marketing expenses for the Product including:

 

(i)                        Costsassociated with sales representatives such as compensation, benefits, travel,supervision and training of sales representatives, sales meetings and othersales expenses.

(ii)                     Direct costsof marketing, promotion, advertising, professional education, product relatedto public relations, relationships with opinion leaders and professionalsocieties, market research and other similar activities.

 

**1.65****           **“**Sales and Return Allowances**” means thefollowing sales and return allowances as determined under US GAAP:

 

(a)                      normal andcustomary trade and/or quantity discounts;

(b)                     returns,rebates, credit for product defects actually;

(c)                      to theextent separately stated on purchase orders and invoices or other documents ofsale and actually taken:
| (i)   | imported and export duties;                             |
|-------|---------------------------------------------------------|
| (ii)  | excise, sales or usetaxes;                              |
| (iii) | value added taxes, and other governmental charges;  and |

(d)                     transportation,transit and insurance for transportation, each to the extent separatelyinvoiced and paid by the selling Party.

 

**1.66**            “**SOPs**” mean standard operating proceduresfor the Manufacture of the Product which shall be reviewed by both Parties.

 

**1.67**            “**Steering Committee**” shall have the meaningascribed to it in Article 3 of the Collaboration Agreement.

 

**1.68****           **“**Supply and Manufacturing Agreement**” meansthe supply and manufacturing  agreementdated as of the date of the Collaboration Agreement between Chiron and RheinBiotech and GCVC, and all schedules, amendments and supplements

 

9

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thereto, a form of whichis attached as Schedule K to the Collaboration Agreement.

 

**1.69****           **“**Termination Products**” means the Whole CellProduct and the Acellular Product, if any, included within the Collaboration inaccordance with the provisions of Section 2.1 to the Collaboration Agreementprior to the termination, if any, of the Collaboration Agreement.

 

**1.70****           **“**Territory**” means the Chiron Territoryand/or the Rhein Biotech and GCVC Territory, as the case may be.

 

**1.71****           **“**Testing Standards and Procedures**” means,with respect to**each Product Manufacturedhereunder, the written standards and procedures for evaluating compliance withthe applicable Product Specifications, as mutually agreed upon in writing byChiron and Rhein Biotech and GCVC.

 

**1.72****           **“**Third Party**” means any person or entityother than the Parties and their respective Affiliates.

 

**1.73****           **“**Third Parry Royalties**” means all royaltieseither Party is obligated to pay based on the manufacture, use or sale of anyProduct under (a) agreements in effect as of the Effective Date, all of whichagreements are identified in Schedule G to the Collaboration Agreement, or (b)agreements contemplated at the Effective Date and referred to in Schedule G tothe Collaboration Agreement, or (c) agreements entered into after the datehereof and not referred to in Schedule G to the Collaboration Agreement,provided that such agreements are approved by the Steering Committee in accordancewith Article 3 of the Collaboration Agreement

 

**1.74****           **“**Transfer Price**” means the transfer priceset in accordance with the terms of the Collaboration Agreement and calculatedin accordance with the formula indicated in Schedule G to the Bulk SupplyAgreement and Schedule G to the Supply and Manufacturing Agreement

 

**1.75****           **“**Unit**” shall mean one individually packagedunit of the final Product, including, without limitation, one or more doses ofthe Product in a vial or uniject, all as specified in the applicable ProductAddendum.

 

**1.76****           **“**Whole Cell Product**” means the whole cellpentavalent liquid combination vaccine for pediatric use DTwP-Hib-HBV forprotection against Diptheria, Tetanus, Pertussis, Haemophilus Influenza type band Hepatitis B.

 

10

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**SCHEDULE B**

 

**MINIMUM CONTRACT REQUIREMENTS**

 

[***]

 

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**SCHEDULE C**

 

**PRODUCT ADDENDUM**

 

**[TO BE AGREED PURSUANT TO SECTION2.3 OF THIS AGREEMENT]**

 

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**SCHEDULE D**

 

**CHIRON MATERIALS**

** **

**[IDENTICAL TO SCHEDULE D OF THECOLLABORATION AGREEMENT. NOT REPEATED AT THIS POINT IN THE FILING.]**

 

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**SCHEDULE E**

 

**RHERN BIOTECH AND GCVC MATERIALS**

** **

**[IDENTICAL TO SCHEDULE E OF THECOLLABORATION AGREEMENT. NOT REPEATED AT THIS POINT IN THE FILING.]**

 

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**SCHEDULE F**

 

**LOSS ALLOWANCES**

** **

**[IDENTICAL TO SCHEDULE F OF THECOLLABORATION AGREEMENT. NOT REPEATED AT THIS POINT OF THE FILING.]**

 

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SCHEDULE G

TO BULK SUPPLY

AGREEMENT

 

**Transfer Pricing**

 

**1.****                          Definitions**

 

Capitalized terms used in this Schedule but not defined herein shallhave the meanings ascribed to them in Schedules A and F to the CollaborationAgreement. The following  words and phrasesshall have the following meanings:

 

“Actual Average Foreign Exchange Rate” means the average of the monthlyexchange rates quoted by the New York branch of the United States FederalReserve Bank.

 

“Actual Average Net Sales Price” means the actual weighted average NetSales price per Unit for the Product invoiced to all unaffiliated third partiesin the Territory.

 

“Actual Chiron Cost of Goods Sold” means the actual Cost of Goods Soldof the Chiron Antigen costs per Unit of the Product.

 

“Actual Cost of Goods Sold” means the actual Cost of Goods Sold perUnit.

 

“Actual Gross Margin” means the Actual Average Net Sales Price minusthe Actual Cost of Goods Sold.

 

“Actual Rhein Biotech and GCVC Cost of Goods Sold” means the actualCost of Goods Sold of the Rhein Biotech and GCVC Antigen and the blending,filling, and packaging costs per Unit of the Product.

 

“Additional Payment Report” means the written report provided by RheinBiotech and GCVC to Chiron detailing the additional payment, if any, requiredto be made to Chiron for differences between the Actual Average Net Sales Priceand the Projected Average Net Sales Price. This report shall be prepared byRhein Biotech and GCVC and delivered to Chiron in the format and within thetiming described in the Accounting Methodologies Schedule F to theCollaboration Agreement.

 

“Antigen” means a Chiron Antigen and/or a Rhein Biotech and GCVCAntigen as the context may require.

 

“Chiron Antigen” means each antigen referred to in Schedule D to theCollaboration Agreement.

 

“Cost of Goods Sold” shall have the meaning ascribed to it in ScheduleF (Accounting Methodologies) to the Collaboration Agreement.

 

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“Cost of Goods Sold Report” means the written report detailing theActual Chiron Cost of Goods Sold and the Projected Chiron Cost of Goods Soldand the Actual Rhein Biotech and GCVC Cost of Goods Sold and the ProjectedRhein Biotech and GCVC Cost of Goods Sold. These reports shall be prepared inthe format and within the timing described in and in accordance with theAccounting Methodologies Schedule F to the Collaboration Agreement.

 

“GAVI Actual Average Net Sales Price” means the Actual Average NetSales Price per Unit of the Product invoiced to the Global Alliance forVaccines and Immunization (“ GAVI)”.

 

“GAVI Projected Average Net Sales Price” means the best estimate of theweighted average Net Sales price per Unit of the Product invoiced to the GlobalAlliance for Vaccines and Immunization (“GAVI”).

 

“Gross Margin Report” means the written report provided to Chiron byRhein Biotech and GCVC which shall include in reasonable detail the ActualGross Margin, the Projected Gross Margin, Actual Average Net Sales Price,applicable Projected Average Net Selling Price, Projected Cost of Goods Sold,Actual Cost of Goods Sold, Actual Foreign Exchange Rate, Projected ForeignExchange Rate, and actual number of doses sold by month. This report shall beprepared by Rhein Biotech and GCVC and delivered to Chiron in the format andwithin the timing described in the Accounting Methodologies Schedule F of theCollaboration Agreement.

 

“Indicative Tender” means the last major tender or request won or lostin the Supranational Market that the Parties agree may be reasonably expectedto establish the price per dose for subsequent tenders or requests.

 

“Initial Period” means the period from the date of the first sale ofthe Product in the Territory to December 31 of such calendar year.

 

“Initial Period Transfer Price” means the transfer price for theInitial Period as calculated in accordance with the terms of Section 2(a) ofthis Schedule G.

 

“Initial Shipment Transfer Price” means the Projected Chiron Cost ofGoods Sold per Unit for the initial shipment of the Bulk Chiron Material.

 

“Market Condition Change” means an unexpected change in marketconditions beyond Rhein Biotech and GCVC’s control where an Indicative Tenderhas occurred.

 

“Maximum COGS” means the Cost of Goods Sold estimate agreed to by theSteering Committee pursuant to Section 2(b) or Section 3(b) hereof plus [***].

 

“Maximum Projected Average Net Sales Price” is [***] of the ProjectedAverage Net Sales Price to be used in the calculation of the Projected GrossMargin and corresponding Transfer Price.

 

“Minimum Projected Average Net Sales Price” means the GAVI Projected AverageNet Sales Price which is equal to U.S. Dollars[***].

 

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“Net Sales” shall have the meaning ascribed to in Schedule F(Accounting Methodologies) to the Collaboration Agreement.

 

“Projected Average Net Sales Price” means the best estimate of theweighted average Net Sales price per Unit of the Product**invoiced to unaffiliated third parties inthe Supranational Market in the Territory as agreed by the Parties in goodfaith.

 

“Projected Chiron Cost of Goods Sold” is defined as the estimated Costof Goods Sold of all of the Chiron Antigens.

 

“Projected Cost of Goods Sold” means the estimated Cost of Goods Soldof the Product.

 

“Projected Forward Foreign Exchange Rate” means the projected forwardforeign exchange rate used to convert the local currency used into US Dollars.This rate is the best estimate of the average foreign exchange rate for therelevant period as agreed by the Parties in good faith.

 

“Projected Gross Margin” means the Projected Average Net Sales Priceminus the Projected Cost of Goods Sold.

 

“Public Market” shall mean the market for the Product directly derivedfrom any tender or requests funded by any provincial and/or federal authorityin the Territory excluding the Supranational Market.

 

“Rhein Biotech and GCVC Antigen” means each antigen referred to inSchedule E to the Collaboration Agreement.

 

“Subsequent Period” means each twelve month period following theInitial Period.

 

“Subsequent Period Transfer Price” means the transfer price for theSubsequent Period as calculated in accordance with the terms of Section 3(a) ofthis Schedule G.

 

“Substantially Different” means a [***]**increase or decrease.

 

“Supranational Market” shall mean the market for sales of the Productto institutions such as the Global Alliance for Vaccines and Immunization (“GAVI”),the World Health Organization (“WHO”), the Pan American Health Organization (“PAHO”),the United Nations Children’s Fund (“UNICEF”) and any similar organizationoperating on a worldwide basis.

 

“Transfer Price” meansthe Initial Period Transfer Price and each Subsequent Period Transfer Price.

 

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**2.****                          InitialPeriod Transfer Price Calculation**

 

(a)          **Calculation of the Initial Period Transfer Price.**The Transfer Price for the Bulk Chiron Material will be fixed and remain inforce for a six month period prospectively. The Transfer Price for this BulkChiron Material for the Initial Period shall be calculated on per Unit basis by(i) Multiplying the Projected Gross Margin for the new Initial Period by [***]and (ii) adding to such amount the Projected Chiron Cost of Goods Sold for theInitial Period provided, however, that the Transfer Price for the initialshipment of the Bulk Chiron Material shall be set forth in 2 (d) below.

 

(b)         **Setting of the Initial Period Transfer Price.**The Steering Committee shall agree on the Initial Period Transfer Price and allcomponents thereof except as set forth in Section 2 (d) below (i) with respectto the Initial Period Transfer Price for the first six month portion of theInitial Period, to the extent applicable, no later than two months before thebeginning of Initial Period, and (ii) with respect to the Initial Period Transfer Price for any subsequent portion ofthe Initial Period, no later than the end of the fourth month of the first sixmonth portion of the Initial Period, provided, however, that if the Partiesfail to agree to a Transfer Price pursuant to Section 2 (b) (ii) above suchTransfer Price will be determined by applying the prior actual results asfollows:

 

TheActual Average Net Sales Price will be the tender price for the last IndicativeTender. The Actual ChironCost of Goods Sold, Actual Rhein Biotech Cost of Goods Sold, and the ActualAverage Foreign Exchange Rate will be based on the average of last two monthsof the preceding six month period of the Initial Period.

 

With respect to the setting of the Cost of Goods Soldper Unit, each Party will update**theinitial Cost of Goods Sold per Unit estimate exchanged between the Parties.This updated estimate will include Cost of Goods per Unit details (see Annex Bto Schedule F (Accounting Methodologies) to the Collaboration Agreement)including the cost per dose of each antigen, the blending, filling, finishing,and Third Party Royalty amounts. The previously listed details will be reportedfor the then current capacity of each Party’s manufacturing facilities and foreach step of increased capacity up to the agreed capacity necessary to complete[***] units of the Product.

 

Each Party initially shall have the right to audit theother prior to the Steering Committee agreeing the Initial Period TransferPrice. If the results of such audit would result in a change of [***] then theCost of Good Sold per Unit as determined by the audit, will be the resultingCost of Goods Sold per Unit used in determining the Transfer Price. Each suchInitial Period Transfer Price shall be fixed and subject to change only inaccordance with the provisions of Section 2(c) below.

 

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(c)          **Market Condition Change.** In the event ofthe occurrence of a Market Condition Change, then Chiron and Rhein Biotech andGCVC shall confer regarding a possible adjustment to the Projected Average NetSales Price for the relevant period and the resulting adjustment to the InitialPeriod Transfer Price. Any such adjusted Projected Average Net Sales Price andInitial Period Transfer Price shall apply prospectively with respect to allcalculations in connection with all Product shipped by Rhein Biotech and GCVCduring remainder of the relevant portion of the Initial Period. Only two suchadjustments to the Initial Period Transfer Price may be made during the InitialPeriod, and only one may be made during the first six months, to the extentapplicable, of the Initial Period and only one during the second six months, ifany, of the Initial Period.

 

(d)         **Initial Shipment of Bulk Chiron Material TransferPrice** The initial shipment of Bulk Chiron Material from Chiron toRhein Biotech and GCVC will be at the Initial Shipment Transfer Price. The**maximum number of Units that may beincluded in the initial shipment at the Initial Shipment Transfer Price shallbe calculated by taking the amount of U.S. Dollars [***] divided by the perUnit fully burdened Initial Transfer Price determined in Section 2 (a) above.Only the Initial Shipment of BulkChiron Material will be at the Initial Shipment Transfer Price. All subsequentshipments during the Initial Period will be at the full Transfer Price detailedin Section 2 (a).

 

Notwithstanding the use of the initial ShipmentTransfer Price, it is understood by the Parties that while the Transfer Pricefor initial shipment of Bulk Chiron Material is set at the Initial ShipmentTransfer Price that Chiron will recover its full Transfer Price including theprofit element as determined in Section 2(a)(i) above through the InitialPeriod Additional Payment mechanism set forth in Section 7.

 

On or before the date of the initial shipment of BulkChiron Material to Rhein Biotech and GCVC, Rhein Biotech and GCVC shall provideto Chiron an “On Demand” bank guarantee from ABN AMRO Bank N.V. or other suchinternationally recognized bank in the United States in the amount of theadditional payment calculated in**accordancewith Section 7 (a). Chiron shall have the right to demand payment of theguarantee on the date which is nine months from the date of the initialshipment of Bulk Chiron Material to Rhein Biotech and GCVC.

 

Payment for the additional payment for the initialshipment of Bulk Chiron Material to Rhein Biotech and GCVC by Chiron set forthin Section 7 (a) will be due on the earlier of:

 

(a)          60 days after the end ofthe calendar quarter where sales of the relevant Product were made or

 

(b)         nine (9) months fromshipment of the Bulk Chiron Material from Chiron to Rhein Biotech and GCVC.

 

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**3.****                          SubsequentPeriod Transfer Price Calculation**

 

(a)          **Calculation of the Subsequent Period Transfer Price.**The Transfer Price for the Bulk Chiron Material t wilt be fixed and remain inforce for a six month period prospectively. The Transfer Price for this BulkChiron Material each Subsequent Period shall be calculated on a per Unit basisby (i) multiplying the Projected Gross Margin for the relevant SubsequentPeriod as agreed upon in Section 3(b) below by [***] and (ii) adding to this amount the Projected Chiron Cost of Goods Sold forsuch period.

 

(b)         **Setting of the Subsequent Period Transfer Price.**Rhein Biotech and GCVC shall provide Chiron with a Gross Margin Report withinthe timelines and in the format described in the Schedule F (AccountingMethodologies) to the Collaboration Agreement. Based on the information in suchGross Margin Report and on the information in the Cost of Goods Sold Report,the Steering committee shall agree on a Projected Gross Margin, the ProjectedChiron Costs of Good sold and the Projected Forward Foreign Exchange Rates forthe Subsequent Period to be applied in calculating the relevant SubsequentPeriod Transfer Price. The Steering Committee shall set the Subsequent PeriodTransfer Price for the first six**monthsof the first Subsequent Period at the beginning of the final month of theInitial Period. Thereafter, the Subsequent Period Transfer Price shall be setby the Steering Committee once every six months using the same methodology.Each Subsequent Period Transfer Price shall be fixed for the relevant six monthperiod and shall be subject to change only in accordance with the provisions ofSection 3(c) below provided, however if the parties fail to agree to a TransferPrice pursuant to this section 2 (b)

 

that the Transfer Price will be determined by applyingthe prior actual results as follows: The Actual Average Net Sales Price will bethe tender price for the last Indicative Tender. The Actual Chiron Cost ofGoods Sold, Actual Rhein Biotech Cost of Goods Sold, and the Actual AverageForeign Exchange Rate will be based on the average of last two months of thepreceding six month period of the Subsequent Period.

 

(b)         **Market Condition Change.** In the event ofthe occurrence of a Market Condition Change, then Chiron and Rhein Biotech andGCVC shall confer regarding a possible adjustment to the Projected Average NetSales Price for the relevant period and the resulting adjustment to theSubsequent Period Transfer Price. Any such adjusted Projected Average Net SalesPrice and Subsequent Period Transfer Price shall apply prospectively withrespect to all calculations in connection with all Product shipped by RheinBiotech and GCVC during the remainder of the relevant portion of suchSubsequent Period. Only two such adjustments to the Subsequent Period TransferPrice may be made during each Subsequent Period, and only one may be madeduring the first six months of each Subsequent Period and only one during thesecond six months of each Subsequent Period.

 

**4.****              Maximum ProjectedAverage Net Sales Price**

 

The Projected Average Net Sales Price used incalculating the Projected Gross [Illegible]

 

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Average Net Sales Price which shall be [***] of theProjected Average Net Sales Price. It is understood that the Maximum ProjectedAverage Net Sales Price is intended in part to ensure a fair and reasonablereturn to Rhein Biotech and GCVC for having assumed the risks and borne thecosts associated with distributing the Product in the Rhein Biotech and GCVCTerritory and accordingly shall apply regardless of the Projected Average NetSales Price for any period.

 

**5.****              Minimum ProjectedAverage Net Sales Price.**

 

Notwithstanding anything to the contrary contained inthis Agreement, the Projected Average Net Sales Price for the Product shall notbe less than the Minimum Projected Average Net Sales Price unless the Partiesmeet, confer and agree on a different Projected Average Net Sales Price.Notwithstanding the above stated Minimum Projected Average Net Sales Price theParties agree in the event**theActual Average Net Sales Price for three consecutive months is less than theMinimum Projected Average Net Sales Price, the Parties shall meet and agree ingood faith a revised Minimum Projected Average Net Sales.

 

**6.****              Currency Translation**

 

The Transfer Price shall be expressed in U.S. Dollars. The ProjectedAverage Net Sales Price, Projected Cost of Goods Sold and Projected GrossMargin shall be converted in each case to U.S. Dollars based on the relevantProjected Forward Foreign Exchange Rate. The Actual Average Net Sales Price,Actual Cost of Goods Sold and Actual Gross Margin on the basis of which anyTransfer Price is calculated, shall be converted to U.S. Dollars at the averageforeign exchange rate quoted by the New York Branch of the Federal Reserve Bank’sdaily afternoon rate for the relevant quarter for which such Transfer Price iscalculated.

 

**7.****              Initial PeriodAdditional Payments**

 

The Actual Average Selling Price shall be the basis for establishingthe final Transfer Price. If the Actual Average Net Sales Price is less thanthe Initial Shipment Transfer Price or the Projected Average Net Sales Price,as applicable, no adjustment shall be made.

 

For the Initial Period, the additional payment, if any, each calendarquarter for all sales in such quarter shall be calculated for the relevantquarter

 

for the initial shipment of Bulk Chiron Material ,

by (i) taking the Actual Average Net Sales Price lessthe Initial Shipment Transfer COGS Chiron Price (ii) multiplying that figure bythe number of Units shipped during the initial shipment and (iii) multiplyingthe previous result by [***]. The applicable Initial Shipment Transfer Price tobe used in this calculation will be based on the price used when the BulkChiron Material was shipped to Rhein Biotech and GCVC from Chiron on afirst-in, first-out (“FIFO”) basis.

 

(a)          (b) for all othershipments of Bulk Chiron Material other than the initial shipment of Bulk Chiron Material

 

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by (i) taking the Actual Average Net Sales Price lessthe Projected Average Net Sales Price and (ii) multiplying the previous resultby the number of Units shipped during the relevant quarter and (iii)multiplying that figure by [***]. The applicable Projected Average Net SalesPrice to be used in this calculation will be based on the price used when theBulk Chiron Material was shipped to Rhein Biotech and GCVC from Chiron.

 

**8.****              Subsequent PeriodAdditional Payments**

 

The Actual Average Selling Price shall be the basis for establishingthe final Transfer Price. If the Actual Average Net Sales Price is less thanthe Projected Average Net Sales Price, no adjustment shall be made.

 

For the Subsequent Periods, the additional payment, if any, eachcalendar quarter for all sales in such quarter shall be calculated for therelevant quarter

 

(a) by (i) taking the Actual Average Net Sales lessthe Projected Average Net Sales Price and (ii) multiplying the previous resultby the number of Units shipped during the relevant quarter and (iii)multiplying that figure by [***]. The applicable Projected Average Net SalesPrice to be used in this calculation will be based on the price used when theBulk Chiron Material was shipped to Rhein Biotech and GCVC from Chiron.

 

**9.****              Reports**

 

**(a)****          Gross Margin Report**

The first Gross Margin Report shall cover the first three (3) months ofactual results and the following three (3) months of forecasted results of theInitial Period and each subsequent report shall cover the subsequent six (6)months until the end of the term of the agreement. The Parties will meet andconfer as how to coordinate the reporting so that it is consistent with aCalendar Year.

 

The purpose of the Gross Margin Report is to report actual results forthe reporting period and also to assist in determining the Transfer Price forthe next six (6) month period.

 

**(b)****          Cost of Goods SoldReport**

The first Cost of Goods Sold Report shall cover the first three (3)months of actual results and the following three (3) months of forecastedresults of the Initial Period and each subsequent report shall cover thesubsequent six (6) months until the end of the term of the agreement. TheParties will meet and confer as how to coordinate the reporting so that it isconsistent with a Calendar Year.

 

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The purpose of the Cost of Goods Sold Report is to report actualresults and to assist in preparing the Gross Margin Report.

 

**(c)****          Additional PaymentReport**

The first Additional Payment Report shall cover the first three (3)months of actual results of the Initial Period and each subsequent report shallcover the subsequent three (3) months until the end of the term of theagreement. The Parties will meet and confer as how to coordinate the reportingso that it is consistent with a Calendar Year.

 

The purpose of the Additional Payment Report is to determine theadditional payment, if any, required to be made to Rhein Biotech and GCVC forthe three (3) month period

 

**10.**  [***]

 

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**SCHEDULE K**

 

**EXECUTION VERSION**

** **

**SUPPLY AND MANUFACTURING AGREEMENT**

 

This Supply and Manufacturing Agreement ismade and entered into as of April 30, 2001 by and among Chiron Behring GmbH& Co, a company incorporated in Germany, with offices at Emil von BehringStrasse 76, 35041 Marburg, Germany (**“ChironBehring”**), Chiron S.p.A., a company incorporated in Italy, withoffices at Via Fiorentina 1, 53100 Siena, Italy (**“Chiron S.p.A.”**, and together with Chiron Behring GmbH &Co, **“Chiron”**), Rhein Biotech N.V.,a company incorporated in the Netherlands, with offices at Gaetano Martinolaan95,6229 GS Maastricht, The Netherlands (**“RheinBiotech”**), and GreenCross Vaccines Corporation, a companyincorporated in the Republic of Korea, with offices at 303 Bojung-Ri, Koosung-Eup,Yongin 449-770, Republic of Korea (**“GCVC”**,and together with Rhein Biotech, **“RheinBiotech and GCVC”**).

 

**RECITALS**

 

A.            **WHEREAS,** Chiron, RheinBiotech and GCVC have entered into a Collaboration Agreement dated the datehereof the (“Collaboration Agreement”) pursuant to which they will collaborateon the research, development and manufacturing of one or more new pentavalentcombination vaccines for pediatric use (as more specifically defined herein,the “Product”).

 

B.             **WHEREAS,** Chiron, RheinBiotech and GCVC agreed pursuant to the terms of the Collaboration Agreement toenter into a supply and manufacturing agreement pursuant to which Chiron shallsupply certain materials to Rhein Biotech and GCVC for use in the manufactureof the Product for sale of the Product by Chiron, all as more specifically setforth herein.

 

**NOW THEREFORE** in consideration of the premises and othergood and valuable consideration, Chiron and Rhein Biotech and GCVC agree asfollows.

 

**ARTICLE 1DEFINITIONS**

 

**1.1****         ****Definitions.** For the purposesof this Agreement, (a) capitalized terms used herein but not defined hereinshall have the meanings ascribed to them in Schedule A attached hereto, and (b)“Agreement” means this agreement, all amendments and supplements to thisagreement and all schedules to this agreement.

 

**1.2****         ****Rules of Interpretation.**For the purposes ofthis Agreement the following rules

 

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ofinterpretation shall apply:

 

(a)          Thedescriptive headings of Articles and Sections are inserted solely forconvenience of reference and are not intended as complete or accuratedescriptions of the content of such Articles or Sections.

 

(b)          Theuse of words in the singular or plural, or with a particular gender, shall notlimit the scope or exclude the application of any provision of this Agreementto such person or persons or circumstances as the context otherwise permits.

 

(c)          Whenevera provision of this Agreement requires an approval or consent by a Party tothis Agreement and notification of such approval or consent is not deliveredwithin the applicable time limit, then, unless otherwise specified, the Partywhose approval or consent is required shall be conclusively deemed to havewithheld its approval or consent.

 

(d)          Wheneverany payment is to be made or action to be taken under this Agreement isrequired to be made or taken on a day other than a business day, such paymentshall be made or action taken on the next business day following such day inthe jurisdiction of the Party to make such payment or do such act.

 

(e)          Inthe event of any conflict between this Agreement and the Schedules, thisAgreement shall prevail.

 

**ARTICLE 2COLLABORATION AND DEVELOPMENT PLAN**

 

**2.1****         ****Collaboration and Development Plan.** Chiron, Rhein Biotech and GCVC have agreed a Collaboration andDevelopment Plan for collaboration on the research, development andcommercialization of the Product. The Collaboration and Development Plan shallbe deemed to be incorporated herein and by reference made a part of this Agreement.

 

**2.2****         ****No Amendment of Collaboration****and****DevelopmentPlan.** The terms of theCollaboration and Development Plan may be varied or amended only in accordancewith the terms of the Collaboration Agreement. In the event that the terms ofthe Collaboration and Development Plan are inconsistent with the terms of thisAgreement, the Collaboration and Development Plan shall control, unlessotherwise explicitly agreed to in writing by the Parties.

 

**2.3****         ****Product Addendum.**For each Product to be Manufactured by Rhein Biotech and GCVC hereunder, theParties shall agree in writing upon a Product Addendum. A Product Addendum forthe Whole Cell Product shall be approved

 

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by the Steering Committee and attached hereto as ScheduleC. The terms of a Product Addendum may be varied or amended only in accordancewith the terms of the Collaboration Agreement applicable to variations oramendments to the Collaboration and Development Plan.

 

**ARTICLE 3PURCHASE AND SUPPLY OF PRODUCT**

 

**3.1****         ****Agreement to Purchase andSupply.** Pursuant to the terms and conditions of this Agreement, Chiron shallpurchase from Rhein Biotech and GCVC the Chiron Contract Requirements of theProduct, and Rhein Biotech and GCVC shall use good faith efforts to Manufactureand deliver to Chiron the Minimum Contract Requirements of the Product inaccordance with Article 4 of this Agreement.

 

**3.2****         ****Remanufacturing, Rework orReprocessing.** If during the Manufacture of any Batch of Product, any reprocessing,rework, or remanufacture is required in order to meet the ProductSpecifications and the Product Requirements, Rhein Biotech and GCVC shallconduct such reprocessing, rework, or remanufacture in compliance with cGMPsand the BLA. Any reprocessing, rework, remanufacture, or change not referred toin the Product Requirements must be agreed with Chiron in writing prior toimplementation in accordance with the Collaboration and Development Plan.

 

**3.3****         ****Bulk Chiron MaterialDelivery.** Chiron shall deliver or cause to be delivered to Rhein Biotech and GCVCthe amount of Bulk Chiron Material referred to in Schedule A and the applicableCertificate of Analysis therefore by facsimile or by e-mail at least seven (7)days in advance of the date set forth in the applicable Product Addendum forManufacture of the relevant Product. On receipt of the Bulk Chiron Material asset forth above, Rhein Biotech and GCVC’s sole obligation subject to anyapplicable regulatory requirements with respect to evaluation of the BulkChiron Material shall be to review the accompanying Certificate of Analysis toconfirm that the Bulk Chiron Material conforms with the Product Specifications.Rhein Biotech and GCVC shall use reasonable care with respect to storing theBulk Chiron Material. Each Batch of Bulk Chiron Material shall be accompaniedby a reference sample thereof.

 

**3.4****         ****Bulk Rhein Biotech and GCVCMaterial Availability.** Rhein Biotech and GCVC shall make available theamount of Bulk Rhein Biotech and GCVC Material referred to in Schedule B andthe applicable Certificate of Analysis therefore by facsimile or by e-mail atleast seven (7) days in advance of the date set forth in the applicable ProductAddendum for Manufacture of the relevant Product.

 

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**3.5****         ****Delay in Availability ofBulk Chiron Material or Bulk Rhein Biotech and GCVC Material.**The terms ofSection 14.6(a) of the Collaboration Agreement shall apply in the event of thedelay in availability of Bulk Chiron Material or Bulk Rhein Biotech and GCVCMaterial and shall hereby be incorporated by reference herein.

 

**3.6****         ****Use of Bulk Chiron Material.** Any Bulk ChironMaterial delivered to Rhein Biotech and GCVC pursuant to the terms of thisAgreement shall be used only for the manufacture of the Product for sale byChiron and not for the manufacture of any other product or Product.

 

**ARTICLE 4FORECASTS AND ORDERS**

 

**4.1****         ****Initial Forecasts.** As of the date ofreceipt by Chiron of notice of the first regulatory approval for the Product,Chiron shall provide non-binding estimates for deliveries of the Product for atwelve (12) month period divided on a quarterly basis and for one subsequenttwelve (12) month period to meet the estimated Chiron Contract Requirements foreach Product, in accordance with the terms of the Collaboration Agreement andthe Collaboration and Development Plan.

 

**4.2****         ****Subsequent Forecasts.** For all forecastssubsequent to the initial forecasts set forth in Section 4.1, at least nine (9)months before the beginning of each calendar quarter, Chiron shall place abinding order (“Firm Order”) with Rhein Biotech and GCVC for the quantities ofthe Product required for such calendar quarter. At the same time, Chiron shallprovide an additional, non-binding estimate for the subsequent twenty-four (24)months, the estimates for the first six (6) months of the twenty-four (24)months being provided by month. Each Firm Order for the Product shall be notless than 75% nor more than 125% of the latest non-binding estimate for suchProduct for the applicable calendar quarter during the first two (2) years ofsale of such Product, and thereafter no less than 90% nor more than 110% of thelatest non-binding estimate for such Product for the applicable calendarquarter. A Firm Order may not be cancelled. Notwithstanding the foregoing,Rhein Biotech and GCVC shall make every reasonable effort to comply withunplanned changes in Firm Orders, but shall not be held liable for itsinability to do so. In each Firm Order for any calendar quarter, Rhein Biotechand GCVC shall state, after consultation with Chiron, a reasonable deliveryschedule for the Product to be delivered in that calendar quarter.

 

**4.3****         ****Purchase Orders.** The Parties shallagree a form of Chiron Purchase Order for Chiron to submit to Rhein Biotech andGCVC covering Chiron’s purchase of Product pursuant to this Agreement.

 

**ARTICLE 5COMMERCIAL TERMS**

 

**5.1****         ****Bulk Chiron Material onConsignment.**All Bulk Chiron Material delivered by Chiron to Rhein Biotech and GCVCpursuant to the terms of this Agreement shall

 

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be held by Rhein Biotech and GCVC on consignment andsegregated to the satisfaction of Chiron from all other inventory held by RheinBiotech and GCVC. Title and risk of loss with respect to such Bulk ChironMaterial shall remain at all times with Chiron.

 

**5.2****         ****Purchase Price.** The ChironPurchase Price to be paid by Chiron to Rhein Biotech and GCVC for the Productshall be an amount equal to the number of Units received multiplied by theTransfer Price calculated in accordance with Schedule G attached hereto.

 

**5.3****         ****Additional Payment.** No later thansixty (60) days after the end of each calendar quarter, Chiron shall make anadditional payment to Rhein Biotech and GCVC in accordance with the terms andprovisions of Schedule G attached hereto.

 

**ARTICLE 6SHIPMENT AND INVOICING**

 

**6.1****         ****Delivery Terms.**The Product shallbe delivered to Chiron, or to a location designated by Chiron in the PurchaseOrder, FCA (Incoterms, 2000). Title and risk of loss with respect to each shipmentof the Product (excluding the Chiron Bulk Material included in such Product)shall pass to Chiron in accordance with such Incoterms. Rhein Biotech and GCVCshall ship in accordance with Chiron’s shipping instructions, at Chiron’sexpense. Such shipping instructions shall be in accordance with the storageconditions for the Product, as specified to Chiron by Rhein Biotech and GCVC.Chiron shall have an authorized person certify in writing the condition of suchmaterials immediately upon receipt in accordance with the storage conditionsindicated on the containers.

 

**6.2****         ****Payment Terms.** (a) The PurchasePrice shall be paid by Chiron to Rhein Biotech and GCVC within sixty (60) daysof the later of (i) delivery of the Product to Chiron in accordance with theterms of this Agreement and the relevant Purchase Order or (ii) receipt byChiron of an invoice from Rhein Biotech and GCVC. Payments not received withinthe specified time shall bear interest in accordance with the terms of Section14.6(c) of the Collaboration Agreement. (b) All payments due to Rhein Biotechand GCVC under any Collaboration Document shall be remitted by telegraphictransfer in immediately available funds to a bank account to be designated fromtime to time by Rhein Biotech and GCVC. (c) Unless otherwise agreed between theParties, the invoiced currency shall be US Dollars.

 

**6.3****         ****Taxes.**All payments madeunder mis Agreement shall be made without deduction or withholding for or onaccount of any present or future taxes, levies, imposts, duties, fees,assessments or other charges now or hereafter imposed by any taxing authorityor government.

 

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**ARTICLE 7ACCEPTANCE OF PRODUCT**

 

**7.1****         ****Product Conformity.**Within thirty (30)calendar days from the date of receipt of both the Product and the ReleasedExecuted Batch Record to Chiron or to a facility designated by Chiron, Chironshall test any shipment of the Product to determine whether it conforms to theProduct Requirements. If any shipment of the Product conforms to the ProductRequirements, Chiron shall be deemed to have accepted the Product and waivedits right to revoke acceptance. If Chiron fails to notify Rhein Biotech andGCVC within the thirty (30) calendar day period that any shipment of theProduct does not conform to the Product Requirements, then Chiron shall bedeemed to have accepted the Product and waived its right to revoke acceptance.If Chiron believes any shipment of the Product does not conform to the ProductRequirements, Chiron shall notify Rhein Biotech and GCVC including a detailedexplanation of the non-conformity. Upon receipt of such notice, Rhein Biotechand GCVC will investigate such alleged nonconformity and (i) if Rhein Biotechand GCVC agree such Product is non-conforming, deliver to Chiron a correctiveaction plan within thirty (30) calendar days after receipt of Chiron’s writtennotice of non-conformity, or (ii) if Rhein Biotech and GCVC disagree withChiron’s determination that the shipment of the Product is non-conforming,Rhein Biotech and GCVC shall so notify Chiron by telephone within the thirty(30) calendar day period and confirm such notice in writing by overnightdelivery. If the Parties dispute whether a shipment of the Product isconforming or non-conforming, the shipment of the Product will be submitted toa mutually acceptable laboratory or consultant for resolution, whosedetermination of conformity or non-conformity shall be binding upon theParties. The incorrect Party shall bear the costs of such laboratory orconsultant. In the event that Rhein Biotech and GCVC agree that the shipment ofthe Product is non-conforming or the laboratory determines that the shipment ofthe Product is non-conforming, Rhein Biotech and GCVC shall replace suchnon-conforming Product within sixty (60) calendar days from receipt ofreplacement Bulk Chiron Material from Chiron, Chiron shall pay for all Product;provided, however, in the event a shipment of the Product is determined to benon-conforming solely as a result of the acts or omissions of Rhein Biotech andGCVC, then Rhein Biotech and GCVC shall (a) reimburse Chiron for its actualcost of the Bulk Chiron Material for the non-conforming shipment of theProduct, and (b) either (i) refund the purchase price of the non-conformingProduct, to the extent already paid or (ii) replace the non-conforming shipmentof the Product at Rhein Biotech and GCVC’s expense but subject to Chironsupplying the replacement Bulk Chiron Material at Chiron’s expense.

 

**7.2****         ****Non-conforming Bulk ChironMaterial.**If the Product is rejected by Chiron, and such Product’s failure to meetthe Product Requirements is the result of non-conforming Bulk Chiron Material,then such non-conformity shall be deemed not to be non-conforming solely as aresult of the acts or omissions of Rhein Biotech and GCVC unless the Partiesagree otherwise. Rhein Biotech and GCVC’s

 

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Manufacture of such replacement Batch of Productshall be Chiron’s sole and exclusive remedy for Rhein Biotech and GCVC’sfailure to identify such non-conforming Bulk Chiron Material and its subsequentManufacture of such non-conforming Product hereunder.

 

**ARTICLE 8INTELLECTUAL PROPERTY**

 

**8.1****         ****Intellectual Property.**The provisions ofArticle 7 (Intellectual Property) and Article 8 (Licenses) of the CollaborationAgreement shall apply *mutatis mutandis*tothis Agreement and are hereby incorporated by reference herein.

 

**ARTICLE 9MANUFACTURE OF THE PRODUCT**

 

**9.1****         ****Manufacture.**Rhein Biotech andGCVC shall Manufacture the Product in accordance with cGMP and any applicablelaws or regulations as set forth in the Collaboration and Development Plan.

 

**9.2****         ****Inspections.** Each Party shallhave the right to inspect the other Party’s facilities to determine compliancewith the terms and provisions of the Collaboration and Development Plan, theProduct Requirements and this Agreement.

 

**9.3****         ****Changes to Master BatchRecords and Product Specifications.** Any regulatory development or change to anySOP that affects the Manufacture of the Product shall be discussed by theParties, and any resulting changes to Master Batch Records or ProductSpecifications shall be agreed in writing by the Parties prior to such changein accordance with the terms of the Collaboration and Development Plan and theterms of the Collaboration Agreement as applicable to changes to theCollaboration and Development Plan.

 

**9.4****         ****Testing.**Rhein Biotech andGCVC shall test, or cause to be tested, in accordance with the ProductSpecifications, each Batch of Product Manufactured pursuant to this Agreementbefore delivery to Chiron. A Certificate of Analysis for each Batch of Productdelivered to Chiron shall set forth the items tested by Rhein Biotech and GCVC,specifications, and test results. Rhein Biotech and GCVC shall send, or causeto be sent, such certificates along with one (1) copy of the Released ExecutedBatch Record to Chiron prior to or at the same time as shipment of the Productto Chiron and (a) within six (6) weeks from the date of fill if such Batch requiresno investigations and/or additional testing or (b) within 44 days from the dateof fill if such Batch requires investigations or additional testing.

 

**9.5****         ****Stability Testing.** Rhein Biotech andGCVC shall perform all stability testing

 

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required to be performed on clinical, development,and/or production Batches of the Product. Such testing shall be performed inaccordance with the procedures set out in the Product-specific Rhein Biotechand GCVC SOPs for the stability protocol and the Product Specifications.

 

**9.6*****         *****Material Safety Data Sheet.**Rhein Biotech andGCVC shall maintain a material safety data sheet for the Product. Rhein Biotechand GCVC shall immediately notify Chiron of any unusual health or environmentaloccurrence relating to the Product, including, but not limited to any claim orcomplaint by any Rhein Biotech and GCVC employee or third party that theoperations of Rhein Biotech and GCVC pursuant to this Agreement have resultedin any adverse health or safety effect on an employee or third party. RheinBiotech and GCVC shall advise Chiron immediately of any safety or toxicityproblem of which it becomes aware in connection with the Product.

 

**9.7****         ****Intentionally Omitted.**

 

**9.8****         ****Permits and Licenses.**With the exceptionof the initial registration of the Product in Korea which shall be subject tothe terms of Section 4.2 of the Collaboration Agreement, Chiron shall have soleresponsibility, at its expense, for obtaining all permits and licenses necessaryor required for the sale, marketing and commercialization of the ProductManufactured by Rhein Biotech and GCVC hereunder. Rhein Biotech and GCVC shallbe responsible, at its expense, to make all necessary filings and to obtain andmaintain all permits and licenses required for the carrying out of itsManufacturing obligations hereunder.

 

**9.9****         ****Regulatory Requirements.** Each Party shallnotify the other of new regulatory requirements of which it becomes aware whichare relevant to the Manufacture of the Product under this Agreement and whichare required by any applicable regulatory authority or applicable laws orgovernmental regulations, and shall confer with each other with respect to thebest means to comply with such requirements in accordance with the terms of theCollaboration Agreement and the Collaboration and Development Plan.

 

**(a)****         ****Changes in Manufacturing.** If facility,equipment, process or system changes are required of Rhein Biotech and GCVC asa result of requirements set forth by any relevant regulatory authority suchcosts shall be borne by Rhein Biotech and GCVC.

 

**ARTICLE 10CONFIDENTIALITY**

 

**10.1****      **The provisions of Article 10(Confidentiality) of the Collaboration Agreement shall apply *mutatis mutandis*to this Agreement and arehereby incorporated by reference herein.

 

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**ARTICLE 11RECALL OF PRODUCT**

 

**11.1****      **In the event Chiron shall be required torecall any Product because such Product may violate any relevant laws orregulations or the Product Specifications, Chiron shall be responsible forcoordinating such recall. Chiron shall promptly notify Rhein Biotech and GCVCif any Product is the subject of a recall. Rhein Biotech and GCVC shallcooperate with Chiron in connection with any recall. Chiron shall beresponsible for all of the costs and expenses of such recall unless (a) suchrecall is caused solely by Rhein Biotech and GCVC’s breach of this Agreement,in which case, Rhein Biotech and GCVC shall be responsible for the costs andexpenses of such recall or (b) such recall is the result of an adverse eventthe cause of which cannot be attributed solely to any act or omission of RheinBiotech and GCVC or any third party, in which case, the Parties shall share thecosts and expenses of such recall.

 

**ARTICLE 12REPRESENTATIONS AND WARRANTIES**

 

**12.1****      ****Mutual Representations.** Each Party herebyrepresents and warrants to the other that (a) the person executing thisAgreement is authorized to execute this Agreement; (b) this Agreement is legaland valid and the obligations binding upon such Party are enforceable by theirterms; and (c) the execution, delivery and performance of this Agreement doesnot conflict with any agreement, instrument or understanding, oral or written,to which such Party may be bound, nor violate any law or regulation of anycourt, governmental body or administrative or other agency having jurisdictionover it.

 

**12.2****      ****Rhein Biotech and GCVCWarranty.** Each of Rhein Biotech and GCVC represents and warrants with respect toitself to Chiron, that (a) at the time of Manufacture, the Product shallconform to the Master Batch Record, Rhein Biotech and GCVC’s SOPs, and theCollaboration and Development Plan and shall be Manufactured in accordance withcGMP; (b) it has obtained (or will obtain prior to Manufacturing the Product)and will remain in compliance with during the term of this Agreement, allpermits, licenses and other authorizations which are required under all laws,rules and regulations applicable to the Manufacture of the Product as specifiedin the Collaboration and Development Plan; and (c) the Bulk Rhein Biotech andGCVC Material provided hereunder will conform to the Bulk Rhein Biotech andGCVC Material specifications.

 

**12.3****      ****Disclaimer of Warranties.** Except for thosewarranties set forth in Sections 12.1 and 12.2 of this Agreement, Rhein Biotechand GCVC make no other warranties, written, oral, express or implied, withrespect to the Product or the

 

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Manufactureof the Product. ALL OTHER WARRANTIES; EXPRESS OR IMPLIED; INCLUDING; WITHOUTLIMITATION; THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR APARTICULAR PURPOSE HEREBY ARE DISCLAIMED BY RHEIN BIOTECH AND GCVC.

 

**12.4****      ****Chiron Warranties.**Chiron warrants that (a) it has the right to give Rhein Biotech and GCVC anyinformation provided by Chiron hereunder, and that Rhein Biotech and GCVC havethe right to use such information for the Manufacture of the Product, and (b)Chiron has no knowledge of any (i) patents or other intellectual rights thatwould be infringed by Rhein Biotech and GCVC’s Manufacture of the Product underthis Agreement, or (ii) proprietary rights of third parties which would beviolated by Rhein Biotech and GCVC’s performance hereunder. Chiron furtherwarrants that the Bulk Chiron Material provided to Rhein Biotech and GCVChereunder will conform to the Bulk Chiron Material specifications.

 

**12.5****      ****Disclaimer of Warranties.** Except for those warranties set forth in Sections 12.1 and 12.4 ofthis Agreement, Chiron makes no other warranties, written, oral, express orimplied, with respect to the Bulk Chiron Material or the Product. ALL OTHERWARRANTIES; EXPRESS OR IMPLIED; INCLUDING; WITHOUT LIMITATION; THE IMPLIEDWARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE HEREBY AREDISCLAIMED BY CHIRON.

 

**ARTICLE13INDEMNIFICATION AND INSURANCE**

 

**13.1****      ****Indemnification by Rhein Biotech****and****GCVC.** Rhein Biotech and GCVC shall indemnify,defend and hold harmless Chiron and its affiliates and their respective officers,directors, employees, agents and representatives for any Losses arising out ofor relating to (a) any material inaccuracy as of the date when made of any ofRhein Biotech and GCVC’s representations and warranties hereunder, or (b) thebreach by Rhein Biotech and GCVC of any of its obligations hereunder.

 

**13.2****      ****Indemnification by Chiron.** Chiron shall indemnify, defend and hold harmless Rhein Biotech andGCVC and its Affiliates and their respective officers, directors, employees,agents and representatives for any Losses arising out of or relating to (a) anymaterial inaccuracy as of the date when made of any of Chiron’s representationsand warranties hereunder, or (b) the breach by Chiron of any of its obligationshereunder.

 

**13.3****      ****Indemnification Procedures.** Any person seeking indemnity pursuant to this section (the “IndemnifiedParty”) shall notify the Party from whom indemnification is sought (the “IndemnifyingParty”) in writing promptly upon becoming aware of any claim, threatened claim,damage, loss, suit, proceeding or

 

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liability (“Claim”) to which such indemnificationmay apply. Failure to provide such notice shall constitute a waiver of theIndemnifying Party’s indemnity obligations hereunder if and to the extent theIndemnifying Party is materially damaged thereby. The Indemnifying Party shallhave the right to assume and control the defense of the Claim at its ownexpense. If the right to assume and control the defense is exercised, theIndemnified Party shall have the right to participate in, but not control, suchdefense at its own expense and the Indemnity Party’s indemnity obligationsshall be deemed not to include attorneys’ fees and litigation expenses incurredby the Indemnified Party after the assumption of the defense by theIndemnifying Party. If the Indemnifying Party does not assume the defense ofthe Claim, the Indemnified Party may defend the Claim; provided, that theIndemnified Party will not settle or compromise the Claim without consent ofIndemnifying Party, which consent will not be unreasonably withheld. TheIndemnified Party shall cooperate with Indemnifying Party and will makeavailable to Indemnifying Party all pertinent information under the control ofthe Indemnified Party.

 

**13.4****      ****Waiver of Consequential orPunitive Damages.** Notwithstanding anything to the contrary contained herein, in no eventshall either party be liable to the other party for any special, incidental,consequential or punitive damages, including lost profits, whether any claimfor such recovery is based upon theories of contract, negligence, or tort(including strict liability). Each party hereby waives for itself and itssuccessors and assigns any and all claims for any special, incidental,consequential or punitive damages, including lost profits.

 

**13.5****      ****Insurance.** Each Party shallobtain and maintain comprehensive general liability insurance, includingproduct liability insurance, with a reputable and financially secure insurancecarrier(s), to cover its activities under this Agreement.

 

**ARTICLE 14TERM, TERMINATION AND REMEDY FOR BREACH**

 

**14.1****      ****Term.**This Agreement iseffective as of the date hereof and shall continue indefinitely unlessterminated by either Party in accordance with the terms hereof.

 

**14.2****      ****Termination.** The Parties agreethat any termination of this Agreement shall be only in accordance with thetermination provisions set forth in Section 14 of the Collaboration Agreement,which is hereby incorporated by reference herein.

 

**14.3****      ****Effect of Termination.** The Parties agreethat the effect of any termination of this Agreement shall be in accordancewith the termination provisions set forth in Section 14 of the CollaborationAgreement.

 

**14.4****      ****Survivals.** Termination,expiration, cancellation or abandonment of this Agreement through any means orfor any reason shall be without prejudice to the

 

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rights and remedies of either Party with respect toany antecedent breach of any of the provisions of this Agreement. Theprovisions of Sections 8 (Intellectual Property), 10 (Confidentiality), 11(Recall of Product), 12 (Representations and Warranties) and 13(Indemnification and Insurance).

 

**14.5****      ****Remedy for Breach.** The Parties agreethat the sole remedies for breach under this Agreement shall be as set forth inSection 14 of the Collaboration Agreement which is hereby incorporated byreference herein.

 

**ARTICLE 15MISCELLANEOUS**

 

**15.1****      ****Notices.**

 

Any consent, notice or report required or permittedto be given or made under this Agreement by one of the Parties hereto to theother shall be in writing, delivered personally or by facsimile (and promptlyconfirmed by personal delivery, first class air mail or courier), first classair mail or courier, postage prepaid (where applicable), addressed to suchother Party at its address indicated below, or to such other address as theaddressee shall have last furnished in writing to the addressor and (except asotherwise provided in this Agreement) shall be effective upon receipt by theaddressee.

 

If to Chiron:

 

Chiron Behring GmbH & CoEmil von Behring Strasse 7635041 MarburgGermany

 

Attention: Business Development

 

Facsimile: 49 6421 39 5187

 

with a copy to:

 

Chiron S.p.A.Via Fiorentina 153100 SienaItaly

 

Attention: Project DevelopmentFacsimile: 39 0577 24 3085

 

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If to Rhein Biotech and GCVC:

 

GreenCross Vaccine Corporation303 Bojung-Ri, Koosung-EupYongin 449-770Republic of Korea

 

Attention: Representative DirectorFacsimile: 82 31 260 9012

 

with a copy to:

 

Rhein Biotech N.V.Gaetano Martinolaan 956229 GS**MaastrichtThe Netherlands

 

Attention: CEO

Facsimile: 31 43 35 67 899

 

**15.2****     ****Entire Agreement.**This Agreement andthe Collaboration Agreement constitute the entire agreement between the Partieshereto with respect to the subject matter hereof and supersede any prioragreement whether written or oral.

 

**15.3****     ****Force Majeure.**Neither Party shallbe held liable or responsible to the other Party nor be deemed to havedefaulted under or breached the Agreement for failure or delay in fulfilling orperforming any term of the Agreement when such failure or delay is caused by orresults from causes beyond the reasonable control of the affected Party(including but not limited to fire, floods, embargoes, war, acts of war(whether war be declared or not), insurrections, riots, civil commotion,strikes, lockouts or other labor disturbances, acts of God or acts, omissionsor delays in acting by any governmental authority or the other Party(collectively, “Events of Force Majeure”); provided, however, that the affectedParty (i) shall immediately notify the other Party of the occurrence of anysuch Event of Force Majeure and (ii) shall exert all reasonable efforts toeliminate, cure or overcome any such Event of Force Majeure and to resumeperformance of its covenants with all possible speed; and provided, further,that nothing contained herein shall require any Party to settle on termsunsatisfactory to such Party any strike, lockout or other labor difficulty, anyinvestigation or proceeding by any governmental authority or any litigation byany third-party. Notwithstanding the foregoing, to the extent that an Event ofForce Majeure continues for a period in excess of six (6) months, the affectedParty shall promptly notify in writing the other Party of such Event of ForceMajeure and within four (4) months of the other Party’s receipt of such notice,the Parties agree to negotiate in good faith either (i) to resolve the Event ofForce Majeure, if possible, (ii) to extend by mutual

 

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agreement the time period to resolve, eliminate,cure or overcome such Event of Force Majeure, (iii) to amend this Agreement tothe extent reasonably possible, or (iv) to terminate this Agreement.

 

**15.4****     ****Assignment.**This Agreementshall not be assignable in whole or in part by either Party without the priorwritten consent of the other Party. Each Party is, however, authorized toassign this Agreement in whole or in part to any of its Affiliates providedthat the assigning Party promptly informs the other Party of the transfer ofrights and obligations.

 

**15.5****     ****Waiver or Modification.** This Agreement maynot be amended, modified or supplemented except by a written instrumentmanually signed by all of the Parties hereto or thereto. No omission or delayon the part of either Party in requiring the due and punctual fulfillment bythe other of any of the obligations hereunder shall constitute a waiver by theomitting or delaying Party of any of its rights to require such due andpunctual fulfillment of any obligation hereunder, whether similar or otherwise,or a waiver of any remedy it may have hereunder or otherwise.

 

**15.6****     ****Severability.**In the event anyone or more of the provisions of this Agreement shall be held to be invalid,illegal or unenforceable, the validity, legality or enforceability of theremaining provisions or parts hereof shall not in any way be affected orimpaired thereby.

 

**15.7****     ****Dispute Resolution.** The Parties agreethat in the event of a dispute between them arising out of or in any way relatingto this Agreement, the Parties shall undertake good faith efforts to resolveany such dispute in good faith. In the event the Parties shall be unable toresolve any such dispute, the matter shall be referred to the Chief ExecutiveOfficer of Chiron and the Chief Executive Officer of Rhein Biotech and GCVC forfurther review and resolution.

 

**15.8****     ****Governing Law andArbitration.** This Agreement is construed and shall be governed by, interpreted andenforced in accordance with the laws of England. In the event the Parties areunable to reach accord using the procedures specified in Section 15.7, suchdispute shall be finally settled without recourse to the courts, in accordancewith the Rules of Conciliation and Arbitration of the International Chamber ofCommerce, by one arbitrator designated in conformity with those Rules.Arbitration shall be held in English in San Francisco, California if initiatedby Rhein Biotech and GCVC and in Amsterdam, the Netherlands if initiated byChiron. Either party may ask the competent tribunal to confirm an arbitrationaward or otherwise provide that it shall be enforceable.

 

**15.9****     ****Independent Contractors.**The relationshipbetween Chiron and Rhein Biotech and GCVC created by this Agreement is one ofindependent contractors and neither Party shall have the power or authority tobind or obligate the other except as expressly set forth in this Agreement.

 

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**15.10****   ****Absence of Existing Competition.**Each of RheinBiotech and GCVC represents and warrants to Chiron that, to the best of itsknowledge and belief, neither of Rhein Biotech or GCVC nor any Affiliate ofeither Rhein Biotech or GCVC is presently engaged in the business ofmanufacturing, marketing or distributing the Product except as follows. Chironrepresents and warrants to Rhein Biotech and GCVC that, to the best of itsknowledge and belief, neither Chiron nor any Affiliate of Chiron is presentlyengaged in the business of manufacturing, marketing or distributing theProduct.

 

**15.11****   ****Absence of Future Competition.** Except asotherwise provided in this Agreement, each Party covenants and agrees thatneither such Party nor any Affiliate of such Party (whether or not suchAffiliate has accepted a sublicense hereunder and agreed to be bound by theterms hereof) nor shall any of their respective successors in interest engagein the business of developing, manufacturing, marketing or distributing anyProduct in the Field other than through Chiron and Rhein Biotech and GCVC, ascontemplated by this Agreement, provided, however, that in the event thecollaboration with respect to the Acellular Product is terminated pursuant tothe terms of Section 2.5 of the Collaboration Agreement, then this Section15.11 shall not apply to any acellular product in the Field.

 

**15.12****   ****Ethical Business Practices.** Neither Party, norany person employed by it or representing it, has ever made, offered, providedor authorized, and covenants that neither it, nor any person employed by it orrepresenting it, will make offer provide or authorize, direct or indirectly,any payment or transfer of anything of value to any official, representative oremployee of any government agency or instrumentality, any political party orofficer thereof; or any candidate for public office for the purpose ofinfluencing a decision by any of them in their official capacity, and noofficer, director, partner, owner, principal, employee, or agent of eitherParty is an official or employee of a governmental agency or instrumentality ora government owned company in a position to influence action or a decisionregarding the activities of such Party contemplated in this Agreement. EachParty covenants that it will inform the other, if and as soon as any personassumes such a position as an official or employee of a governmental agency orinstrumentality or government owned company, while at the same time remainingan officer, director, partner, owner, principal, employee, or agent of suchParty.

 

**15.13****   ****Change of Control.** The Parties agree that the terms of Section14.4(b) of the Collaboration Agreement apply *mutatismutandis*to this Agreement and are hereby incorporated by referenceherein.

 

**15.14****   ****Use of Name.** No right, express or implied, is granted toeither Party by this Agreement to use in any manner any trademark or trade nameof the other Party including the names “Rhein Biotech and GCVC” and “Chiron”without the prior written consent of the owning Party.

 

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**15.15****   ****Joint and Several Liability.**

 

(a)           Each of Chiron Behring and Chiron S.p.A.shall (i) be jointly and severally liable for the obligations of Chiron arisingpursuant to the terms of this Collaboration Agreement and (ii) procure theperformance by the other of all the obligations arising pursuant to the termsof this Collaboration Agreement.

 

(b)           Each of Rhein Biotech and GCVC shall (i) bejointly and severally liable for the obligations of Rhein Biotech and GCVCarising pursuant to the terms of this Collaboration Agreement and (ii) procurethe performance by the other of all the obligations arising pursuant to theterms of this Collaboration Agreement.

 

**15.16****   ****Successors.** Without prejudice to the provisions ofSection 14.4(b) (Immediate Termination) of the Collaboration Agreement, this Agreementbinds each of the Parties hereto and their respective successors.

 

**15.16****   ****Counterparts.** This Agreement has been executed in one ormore counterparts, each of which shall be deemed an original and all of whichtogether shall constitute one and the same instrument.

 

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INWITNESS WHEREOF, the parties have executed this Agreement as of the date setforth above.

 

 
| **CHIRON BEHRING****GMBH****&****CO** | **RHEIN  BIOTECH****N.V.** |
|-------------------------------------------|----------------------------|
|                                      |                       |
|                                      |                       |
| By:                                       | /s/ John Lambert           |   | By: | /s/ Jan Thio |   |
| Name:                                     | John Lambert               | Name: | Jan Thio |
| Title:                                    | President, Chiron Vaccines | Title: | Business Director |
|                                      |                       |
|                                      |                       |
| ** **                                | By:                        | /s/ Kees Moonen |   |
| **CHIRON S.P.A.**                         | Name:                      | Kees Moonen |
|                                      | Title:                     | Legal Counsel |
|                                      |                       |
|                                      |                       |
| By:                                       | /s/ John Lambert           |   | **GREENCROSS VACCINES** |
| Name:                                     | John Lambert               | **CORPORATION** |
| Title:                                    | President, Chiron Vaccines |   |
|                                      |                       |
| ** **                                | By:                        | /s/ Ton Kuiper |   |
|                                      | Name:                      | Ton Kuiper |
|                                      | Title:                     | Representative Director |
|                                           |                            |  |  |  |  |  |  |  |

 

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List of Schedules

 
| Schedule A: |   | Definitions                       |
|-------------|--------|-----------------------------------|
|        |   |                              |
| Schedule B: |   | Minimum Contract  Requirements    |
|        |   |                              |
| Schedule C: |   | Product Addendum                  |
|        |   |                              |
| Schedule D: |   | Chiron Materials                  |
|        |   |                              |
| Schedule E: |   | Rhein Biotech and GCVC  Materials |
|        |   |                              |
| Schedule F: |   | Loss Allowances                   |
|        |   |                              |
| Schedule G: |   | Price Calculations                |

 

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**SCHEDULE A**

 

**DEFINITIONS**

 

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**SCHEDULE A**

 

**DEFINITIONS**

 

Forthe purposes of the Collaboration Documents the following words and phrasesshall have the following meanings:

 

**1.1**         [***]

 

**1.2**         **“Affiliate”,** withrespect to any person, means any company, entity, joint venture or similarbusiness arrangement which is controlled by, controlling or under commoncontrol with such person, and shall include without limitation any companyfifty percent or more of whose voting stock or participating profit interest isowned or controlled, directly or indirectly, by such person, and any companywhich owns or controls, directly or indirectly, fifty percent or more of suchperson.

 

**1.3****        ****“Allowable Expenses”**means the fully burdened, fairly allocated direct and indirect costs andexpenses incurred by either Party in connection with its activities under theCollaboration Documents, which shall include a reasonable depreciation ofemployed assets, as determined in accordance with the accounting methodologiesset forth in Schedule F to the Collaboration Agreement; provided that suchcosts and expenses are contemplated by an Annual Plan and Budget approved inaccordance with the provisions of Article 3 of the Collaboration Agreement;provided, however, that any depreciation and amortization associated with anycapital expenditure prior to commercialization of the Product shall be treatedas an Allowable Expense only to the extent that such expenses combined with theother R & D Expenses do not exceed [***] of the amount set forth in theAnnual Plan and Budget for R & D Expenses. Allowable Expenses shall notinclude any (a) Excluded Expenses or (b) any allocation of general andadministration expenses or any G&A Markup or (c) any Sales & MarketingExpenses.

 

**1.4**         **“Annual Plan****and****Budget”** means, with respect to any year, a plan forsuch year which shall include at least the following: planned research anddevelopment activities, including timeline and targeted milestones; plannedmanufacturing activities; and planned sales and marketing activities and whichshall be prepared and approved in accordance with the terms of Section 3.2(a)to the Collaboration Agreement.

 

**1.5**         **“Batch”** shall mean aspecific quantity of the Product comprising a number of units mutually agreedupon between Chiron and Rhein Biotech and GCVC, and that (a) is intended tohave uniform character and quality within specified limits,

 

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and (b) is produced according to a singleManufacturing order during the same cycle of Manufacture.

 

**1.6****        ****“BLA”** stands forbiologic license application and means, with respect to any Product, anyapplication filed with a Regulatory Agency for approval to market such Productin any jurisdiction.

 

**1.7****        ****“Bulk Chiron Material”** means the bulkform of the Chiron Materials used as raw material in the Manufacture of theProduct.

 

**1.8****        ****“Bulk Loss Allowance”** means theallowances for losses of Bulk Chiron Material and Bulk Rhein Biotech and GCVCMaterial as more specifically set forth in Schedule F to the Bulk SupplyAgreement and the Supply and Manufacturing Agreement.

 

**1.9****        ****“Bulk Rhein Biotech and GCVC**Material”** means the bulkform of the Rhein Biotech and GCVC Materials used as raw material in theManufacture of the Product.

 

**1.10****     ****“Bulk Supply Agreement”** means the bulksupply agreement dated as of the date of the Collaboration Agreement betweenChiron and Rhein Biotech and GCVC, and all schedules, amendments andsupplements thereto, a form of which is attached as Schedule J to theCollaboration Agreement.

 

**1.11****     ****“Certificate of Analysis”** means thecertificate of analysis confirming that the accompanying Product complies withthe Product Specifications and cGMP.

 

**1.12****     ****“Chiron Contract Requirements”** means one hundredpercent (100%) of the quantity of the Product sold and/or distributed by Chironin accordance with the terms of the Collaboration Agreement.

 

**1.13****     ****“Chiron Inventions”** means inventionsarising from the activities of the parties under the Collaboration Agreementand invented solely by employees of Chiron or persons obligated to assign theirinventions to Chiron.

 

**1.14****     ****“Chiron Materials”** means thematerials described in Schedule D to the Collaboration Agreement and theadditional biological materials, if any, which Chiron provides to Rhein Biotechand/or GCVC in connection with the Collaboration, together with (a) any part,progeny, mutant or hybrid thereof, (b) any nucleic acid or other geneticmaterial therefrom, (c) any vector materials derived therefrom, and anyprogeny, derivatives or modifications of such vector particles, (d) any copy,complement or transcription or expression Whole Cell Product thereof, and (e)any combination of the foregoing with other substances (other than RheinBiotech and GCVC Materials, which combination shall be deemed CollaborationMaterials).

 

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**1.15****     ****“Chiron Purchase Order”** means writtenorders from Chiron to Rhein Biotech and GCVC which shall specify (a) thequantity of the Product ordered,(b) shipping instructions, (c) delivery dates, and (d) delivery destinations.

 

**1.16****     ****“Chiron Purchase Price”** means the price tobe paid by Chiron to Rhein Biotech and GCVC for the Product in accordance withthe terms of Section 5.2 of the Supply and Manufacturing Agreement.

 

**1.17****     ****“Chiron/Rhein Biotech andGCVC Joint Background Technology”** means

 

(a)           all inventions, discoveries, procedures,processes, methods, data, information, results, trade secrets and know-how,whether patentable or otherwise, arising out of the Materials TransferAgreement prior to the Effective Date; and

 

(b)           all patents and patent applications claimingsuch inventions and other technology; all patents issued from such patentapplications; and all reissues, confirmations, renewals, extensions,counterparts, divisions, continuations, continuations-in-part, supplementalprotection certificates or utility models relating to such patents and patentapplications.

 

**1.17****     ****“Chiron Territory”** shall have themeaning ascribed to it in Section 5.1(b) of the Collaboration Agreement.

 

**1.18****     ****“COGS”** stands for cost ofgoods sold and shall have the meaning ascribed to it in Schedule F to theCollaboration Agreement.

 

**1.19****     ****“Collaboration”** shall have themeaning ascribed to it in Section 2.1 of the Collaboration Agreement.

 

**1.20****     ****“Collaboration Agreement”** means thecollaboration agreement dated as of April 30, 2001 between Chiron and RheinBiotech and GCVC and all schedules, amendments and supplements thereto.

 

**1.21****     ****“Collaboration andDevelopment Plan”** means the collaboration and development plan attached as Schedule H tothe Collaboration Agreement.

 

**1.22****     ****“Collaboration Documents”** means theCollaboration Agreement, the Bulk Supply Agreement and the Supply andManufacturing Agreement.

 

**1.23****     ****“Collaboration Inventions”** shall have themeaning ascribed to it in the definition of Collaboration Technology.

 

**1.24****     ****“Collaboration Know-How”** shall have themeaning ascribed to it in the definition of Collaboration Technology.

 

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**1.23****     ****“Collaboration Materials”** means thebiological materials, if any, created in connection with the Collaboration,including, without limitation, any combination of the Chiron Materials and theRhein Biotech and GCVC Materials, together with (a) any part, progeny, mutantor hybrid thereof, (b) any nucleic acid or other genetic material therefrom,(c) any vector materials derived therefrom, and any progeny, derivatives ormodifications of such vector particles, (d) any copy, complement ortranscription or expression product thereof.

 

**1.24****     ****“Collaboration Technology”** means:

 

(a)             all inventionsarising from the activities of the parties under the Collaboration Agreement,including all Chiron Inventions, all Rhein Biotech and GCVC Inventions and allJoint Inventions (collectively, “Collaboration Inventions”);

 

(b)             all patents andpatent applications relating to Collaboration Inventions; all patents issuedfrom such patent applications; and all reissues, confirmations, renewals,extensions, counterparts, divisions, continuations, continuations-in-part,supplemental protection certificates or utility models relating to such patentsand patent applications (collectively, “Collaboration Patents”); and

 

(c)             all scientific,engineering, economic, commercial or other technical data or information,research results, methods, processes, procedures, trade-secrets and know-howarising from the activities of the Parties under the Collaboration Agreement,whether or not patentable (collectively, “Collaboration Know-How”).

 

**1.25****     ****“Confidential Information”** shall have themeaning ascribed to it in Article 10 of the Collaboration Agreement.

 

**1*.*26*****     *****“Contributed ChironTechnology” means:**

 

(a)             all patents andpatent applications Controlled by Chiron as of the Effective Date that coverthe Product, including without limitation, the patents and patent applicationslisted on Schedule B to the Collaboration Agreement; for these purposes apatent or patent application shall be deemed to “cover” the Product if themanufacture, use or sale of the Product by Rhein Biotech and GCVC wouldinfringe a claim in such patent or patent application but for the licensescontemplated hereby; all patents issued from such patent applications; and allreissues, confirmations, renewals, extensions, counterparts, divisions,continuations, continuations-in-part, supplemental protection certificates orutility models relating to such patents and patent applications; and

 

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(b)             all unpublishedscientific, engineering, economic, commercial and other technical data orinformation, research results, methods, processes, procedures, trade-secretsand know-how relating to the Product which are Controlled by Chiron as of theEffective Date.

 

**1.27****     ****“Contributed Rhein Biotechand GCVC Technology”** means:

 

(a)             all patents andpatent applications Controlled by Rhein Biotech and GCVC as of the EffectiveDate that cover the Product, including without limitation, the patents andpatent applications listed on Schedule C to the Collaboration Agreement; forthese purposes a patent or patent application shall be deemed to “cover” theProduct if the manufacture, use or sale of the Product by Chiron would infringea claim in such patent or patent application but for the licenses contemplatedhereby; all patents issued from such patent applications; and all reissues,confirmations, renewals, extensions, counterparts, divisions, continuations,continuations-in-part, supplemental protection certificates or utility modelsrelating to such patents and patent applications; and

 

(b)             all unpublishedscientific, engineering, economic, commercial and other technical data orinformation, research results, methods, processes, procedures, trade-secretsand know-how relating to the Product which are Controlled by Rhein Biotech andGCVC as of the Effective Date.

 

**1.28****     ****“Controls” or “Controlled”** means possessionof the right to grant licenses or sublicenses without violating the terms ofany agreement or other arrangement with, or the rights of, any Third Party.

 

**1.29****     ****“Current Good ManufacturingPractices” or “cGMP”** means the good manufacturing practices required byeach applicable regulatory authority at any time during the term of thisAgreement for the manufacture and testing of pharmaceutical materials asapplied solely to the Product.

 

**1.30****     ****“Effective Date”****means the date ofthe Collaboration Agreement.

 

**1.31****     ****“Excluded Expenses”** means any and allcosts and expenses incurred in defending, settling or otherwise discharging anyliability to a third party, including, without limitation, any employee ofeither Party or their Affiliates, based upon tortious acts.

 

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**1.32****     ****“Extraordinary Items”** means (i) any andall Losses incurred by either Party in connection with Third Party claimsarising out of or relating to the manufacture, use, or sale of the Product,including, without limitation, product liability claims and claims based on thealleged infringement or misappropriation of intellectual property rights heldby Third Parties; and (ii) any other extraordinary items which the SteeringCommittee determines are an appropriate deduction from Operating Profits.

 

**1.33****     ****“Field”** means the field ofpentavalent combination vaccines for pediatric use.

 

**1.34****     ****“Finance Committee”** means the financesubcommittee established pursuant to the terms of Section 3.3 of theCollaboration Agreement.

 

**1.35****     ****“FTE”** means the fulltime equivalent effort of one person who participates directly in the researchand development activities of the Collaboration other than Third Partycontractors determined in accordance with the terms of Section 3.2(d) of theCollaboration Agreement.

 

**1.36****     ****“G&A Markup”** means anyallocation of the Parties’ respective general and administration costs.

 

**1.37****     ****“IND”** stands forinvestigational new drug, and means, with respect to any Product, theapplication filed with a Regulatory Agency in any jurisdiction for approval toconduct clinical studies of such Product in humans.

 

**1.38****     ****“Investment Plan”** means theinvestment plan agreed by the Parties and attached to the CollaborationAgreement as Schedule L to the Collaboration Agreement.

 

**1.39****     ****“Joint Inventions”** means inventionsarising from the activities of the parties under the Collaboration Agreementand invented jointly by employees of Chiron (including persons obligated toassign inventions to Chiron) and employees of Rhein Biotech and GCVC (includingpersons obligated to assign inventions to Rhein Biotech and GCVC).

 

**1.40****     ****“Loss”** means any loss,damage, liability, cost, deficiency, assessment and expense including, withoutlimitation, any interest, fine, court cost and reasonable investigation cost,penalty and attorneys’ and expert witnesses’ fees, disbursements and expenses.

 

**1.41****     ****“Manufacture”**or**“Manufacturing”** shall mean theformulation, filling, packaging, inspecting, labeling, and testing of theProduct by Rhein Biotech and GCVC.

 

**1.42****     ****“Marketing Authorization”,** with respect toany Product, means any approval granted by any Regulatory Agency to market suchProduct in any jurisdiction.

 

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**1.43****     ****“Master Batch Record”** means, withrespect to each Product to be Manufactured hereunder, a formal set ofinstructions for the Manufacture of such Product.

 

**1.44****     ****“Material Breach”** shall have themeaning ascribed to it in Section 14.3 of the Collaboration Agreement.

 

**1.45****     ****“Minimum ContractRequirements”** means the quantity of the Product set forth in Schedule B to the BulkSupply Agreement and Schedule B to the Manufacturing and Supply Agreement.

 

**1.46****     ****“Net Sales”** means, withrespect to either Party, the total gross sales or consideration for the Productcharged to unaffiliated third parties, including without limitation, amountsinvoiced for sales of the Product, less the Sales and Return Allowances,provided, however, that the selling Party may, at its option, allocate theSales and Return Allowances based upon accruals estimated reasonably andconsistent with such Party’s standard business practices; and provided further,however, that if the selling Party elects to utilize such accruals, actualdeductions will be calculated and, if applicable, a “true-up” made, on anannual basis and to the extent the aggregate amount of such deductions isrequired under the terms of this Agreement to be allocated between countries,such allocation will be in the same proportion as gross sales of the Productrealized in each country in the applicable period.

 

**1.47****     ****“Other Revenues”** means any revenuesarising out of Collaboration Technology other than Net Sales, including,without limitation, royalties or other amounts paid by Third Parties forlicenses to Collaboration Technology.

 

**1.48****     ****“Parties”** means Chiron andRhein Biotech and GCVC and “Party” shall mean one of them.

 

**1.49****     ****“Product”** means (a) theWhole Cell Product; and (b) to the extent of the Collaboration proceeding inaccordance with the terms of Section 2.5 of the Collaboration Agreement, theAcellular Product.

 

**1.50****     ****“Product Addendum”** means the addendumattached as Schedule C to the Bulk Supply Agreement and as Schedule C to theManufacturing and Supply Agreement setting forth the Product Requirements,terms and presentations for each Product Manufactured under the Bulk SupplyAgreement and the Manufacturing and Supply Agreement.

 

**1.51****     ****“Product Loss Allowance”** means theallowances for losses of the finished Product as more specifically set forth inSchedule F to the Bulk Supply Agreement and the Supply and ManufacturingAgreement.

 

**1.52****     ****“Product Requirements”** means the ProductSpecifications, the Master Batch Record and Rhein Biotech and GCVC’s SOPs.

 

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**1.53****     ****“Product Specifications”** means, withrespect to the Product, the specifications and testing to be performed for theBulk Chiron Material, the Bulk Rhein Biotech and GCVC Material, the Productand/or the stability program that are set forth in the Rhein Biotech and GCVCSOPs and the Master Batch Records. The Product Specifications include all teststhat Rhein Biotech and GCVC are required to conduct or cause to be conducted asspecified in the Collaboration and Development Plan. The Product Specificationsmy be modified from time to time only in accordance with the terms of theCollaboration Agreement.

 

**1.54****     ****“R&D Expenses”** means AllowableExpenses incurred in connection with research and development of the Product,including, without limitation, manufacture of research and clinical supplies ofthe Product, determined in accordance with the terms of Section 4.2 of theCollaboration Agreement and with the accounting methodologies set forth inSchedule F to the Collaboration Agreement.

 

**1.55****     ****“Regulatory Agency”**means the UnitedStates Food and Drug Administration or EMEA or the Korean Food and DrugAdministration or any equivalent regulatory agency in any other jurisdiction.

 

**1.56****     ****“Released Executed BatchRecord”** means the completed batch record and associated deviation reports,investigation reports, and certificates of analysis created for each Batch ofthe Product.

 

**1.57****     ****“Residual Expenses”** means, withrespect to either Party, any Allowable Expenses which such Party incursfollowing any termination of the Collaboration Agreement and which such Partycannot reasonably eliminate.

 

**1.58****     ****“Rhein Biotech and GCVCContract Requirements”** means one hundred percent (100%) of the quantity ofthe Product sold and/or distributed by Rhein Biotech and GCVC in accordancewith the terms of the Collaboration Agreement.

 

**1.59****     ****“Rhein Biotech and GCVCInventions”** means inventions arising from the activities of the parties under theCollaboration Agreement and invented solely by employees of Rhein Biotechand/or GCVC or persons obligated to assign their inventions to Rhein Biotechand/or GCVC.

 

**1.60****     ****“Rhein Biotech and GCVCMaterials”** means the materials described in Schedule E to the CollaborationAgreement and the additional biological materials, if any, which Rhein Biotechand GCVC provide to Chiron in connection with the Collaboration, together with(a) any part, progeny, mutant or hybrid thereof, (b) any nucleic acid or othergenetic material therefrom, (c) any vector materials derived therefrom, and anyprogeny, derivatives or modifications of such vector particles, (d) any copy,complement or transcription or expression Whole Cell Product thereof, and (e)any combination of the foregoing with other

 

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substances (otherthan Chiron Materials, which combination shall be deemed CollaborationMaterials).

 

**1.61****                 ****“Rhein Biotech and GCVCPurchase Order”**means written orders from Rhein Biotech and GCVC to Chiron which shallspecify (a) the quantity of the Bulk Chiron Material ordered, (b) shippinginstructions, (c) delivery dates, and (d) delivery destinations.

 

**1.62****                 ****“Rhein Biotech and GCVCPurchase Price”** means the price to be paid by Rhein Biotech and GCVC to Chiron for theBulk Chiron Material in accordance with the terms of Section 5.2 of the BulkSupply Agreement.

 

**1.63****                 ****“Rhein Biotech and GCVCTerritory”** shall have the meaning ascribed to it in Section 5.1 of theCollaboration Agreement.

 

**1.64      “Sales &**MarketingExpenses”** means the following sales and marketing expenses for the Productincluding:

 

(i)                               Costs associatedwith sales representatives such as compensation, benefits, travel, supervisionand training of sales representatives, sales meetings and other sales expenses.

 

(ii)                            Direct costs ofmarketing, promotion, advertising, professional education, product related topublic relations, relationships with opinion leaders and professional societies,market research and other similar activities.

 

**1.65      “Salesand Return Allowances”** means the following sales and return allowances asdetermined under US GAAP:

 

(a)                            normal and customary trade and/or quantitydiscounts;

(b)                           returns, rebates, credit for product defectsactually;

(c)                            to the extentseparately stated on purchase orders and invoices or other documents of saleand actually taken:

(i)                         imported and exportduties;

(ii)                      excise, sales oruse taxes;

(iii)                   value added taxes,and other governmental charges; and

(d)                           transportation,transit and insurance for transportation, each to the extent separatelyinvoiced and paid by the selling Party.

 

**1.66****                 ****“SOPs”** mean standardoperating procedures for the Manufacture of the Product which shall be reviewedby both Parties.

 

**1.67****                 ****“Steering Committee”** shall have themeaning ascribed to it in Article 3 of the Collaboration Agreement.

 

**1.68****                 ****“Supply and ManufacturingAgreement”** means the supply and manufacturing agreement dated as of the date of theCollaboration Agreement between Chiron and Rhein Biotech and GCVC, and allschedules, amendments and supplements

 

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thereto, aform of which is attached as Schedule K to the Collaboration Agreement.

 

**1.69****                  ****“Termination Products”** means the WholeCell Product and the Acellular Product, if any, included within theCollaboration in accordance with the provisions of Section 2.1 to theCollaboration Agreement prior to the termination, if any, of the CollaborationAgreement.

 

**1.70****                  ****“Territory”** means the ChironTerritory and/or the Rhein Biotech and GCVC Territory, as the case may be.

 

**1.71****                  ****“Testing Standards andProcedures”** means, with respect to each Product Manufactured hereunder, the writtenstandards and procedures for evaluating compliance with the applicable ProductSpecifications, as mutually agreed upon in writing by Chiron and Rhein Biotechand GCVC.

 

**1.72****                  ****“Third Party”** means any personor entity other than the Parties and their respective Affiliates.

 

**1.73****                  ****“Third Party Royalties”** means allroyalties either Party is obligated to pay based on the manufacture, use orsale of any Product under (a) agreements in effect as of the Effective Date,all of which agreements are identified in Schedule G to the CollaborationAgreement, or (b) agreements contemplated at the Effective Date and referred toin Schedule G to the Collaboration Agreement, or (c) agreements entered intoafter the date hereof and not referred to in Schedule G to the CollaborationAgreement, provided that such agreements are approved by the Steering Committeein accordance with Article 3 of the Collaboration Agreement.

 

**1.74****                  ****“Transfer Price”** means the transferprice set in accordance with the terms of the Collaboration Agreement andcalculated in accordance with the formula indicated in Schedule G to the BulkSupply Agreement and Schedule G to the Supply and Manufacturing Agreement.

 

**1.75****                  ****“Unit”** shall mean oneindividually packaged unit of the final Product, including, without limitation,one or more doses of the Product in a vial or uniject, all as specified in theapplicable Product Addendum.

 

**1.76****                  ****“Whole Cell Product”** means the wholecell pentavalent liquid combination vaccine for pediatric use DTwP-Hib-HBV forprotection against Diptheria, Tetanus, Pertussis, Haemophilus Influenza type band Hepatitis B.

 

10

----

 

**SCHEDULEB**

 

**MINIMUMCONTRACT REQUIREMENTS**

 

[***]

 

----

 

**SCHEDULEC**

 

**PRODUCT ADDENDUM**

 

[TO BE AGREED PURSUANT TO SECTION 2.3 OF THIS AGREEMENT]

 

21

----

 

**SCHEDULE D**

**CHIRON MATERIALS**

 

22

----

 

**Chiron Material**

**1.             DIPHTHERIATOXOID**

 

Diphtheria toxoid is manufactured according to WHO Requirements (TRS800, 1990) and complies with the requirements of the Eur. Ph.

 

All process steps with regard to the manufacture and control of thisantigen are undertaken at:

 

[***]

 

23

----

 

**1.1          SPECIFICATIONS AND ROUTINE TESTS**

 

**1.1.1  Specifications**

 

The specifications for theDiphtheria Toxoid Concentrate (without preservative) are indicated in thefollowing table.

 

***Specifications for theDiphtheria Toxoid Concentrate (without preservative)***

 

[***]

 

**1.1.2  Test methods**

** **

**pH**

 

The pH is determined by thepotentiometric method, according to Eur. Ph.

 

**Nitrogen**

 

[***]

 

24

----

 

[***]

** **

**Toxoidcontent**

 

[***]

 

**Sulphate**

 

[***]

 

**Formaldehyde**

 

[***]

 

**Sodium chloride**

 

[***]

 

**Sterility**

 

[***]

 

25

----

 

**Absence of diphtheria toxin**

 

[***]

 

**Reversion to toxicity**

 

[***]

 

26

----

 

**2.             TETANUSTOXOID**

 

Tetanus toxoid is manufacturedaccording to WHO Requirements (TRS 800, 1990) and complies with therequirements of the Eur. Ph.

 

All process steps with regard to the manufacture and control of thisantigen are undertaken at:

 

[***]

 

27

----

 

**2.1          SPECIFICATIONSAND ROUTINE TESTS**

 

**2.1.1  Specifications**

 

The specifications for theTetanus Toxoid Concentrate (without preservative) are indicated in thefollowing table.

 

***Specifications for the TetanusToxoid Concentrate (without preservative)***

 

[***]

 

**2.1.2  Test methods**

 

**pH**

 

The pH is determined by the potentiometric method, according to Eur. Ph.

 

**Nitrogen**

 

[***]

 

28

----

 

[***]

** **

**Toxoid content**

 

[***]

 

**Sulphate**

 

[***]

 

**Formaldehyde**

 

[***]

 

**Sodium chloride**

 

[***]

 

**Sterility**

 

[***]

 

29

----

 

**Absence of tetanus toxin**

 

[***]

 

**Reversion to toxicity**

 

[***]

 

30

----

 

**3.             PERTUSSISCONCENTRATE**

 

Pertussis concentrate ismanufactured according to WHO Requirements (TRS 800,1990) and complies with therequirements of the Eur. Ph.

 

All process steps with regard to the manufacture and control of thisantigen are undertaken at:

 

[***]

 

31

----

 

**3.1          SPECIFICATIONSAND ROUTINE TESTS**

 

**3.1.1 Specifications**

 

The specifications for the Pertussis Concentrate are indicated in thefollowing table.

 

***Specifications forthe Pertussis Toxoid Concentrate***

 

[***]

 

**3.1.2  Test methods**

 

**Agglutinogens**

 

[***]

 

**pH**

 

[***]

 

**Thiomersal**

 

[***]

 

32

----

 

**EDTA**

 

[***]

 

**Sterility**

 

[***]

 

***Turbidity***

 

[***]

 

----

 

**4.             CRM-HIBGLYCOCONJUGATE**

 

[***]

 

----

 

**4.1**          **SPECIFICATIONS AND ROUTINE TESTS**

 

**4.1.1****          ****Specifications**

 

The specifications for theCRM-Hib Glycoconjugate are indicated in the following tables.

 

***Specifications for the Glicoconjugate CRM-Hib Bulkconcentrate***

 

[***]

 

----

 

**4.1.2****          ****Test methods**

 

**HibIdentity**

 

[***]

 

**CRMIdentity**

 

[***]

 

**Proteincontent - micro BCA method**

 

[***]

 

**FreeSaccharide (by Ribitol)**

 

[***]

 

----

 

[***]

 

**Sterility**

 

[***]

 

**Endotoxincontent (LAL chromogenic kinetics method)**

 

[***]

 

**Endotoxin/Saccharide**

 

[***]

 

**Degreeof glycosilation (saccharide/protein)**

 

[***]

** **

**kD**

 

[***]

 

**TotalSaccharide (Ribose content)**

 

----

 

[***]

 

----

 

**SCHEDULE E**

 

**RHEIN BIOTECH AND GCVC MATERIALS**

 

23

----

** **

**Rhein Biotech and GCVC Material**

 

**Formaline treated Hepatitis B surface antigen solution**

 

Hepatitis B vaccine ismanufactured according to Minimum Requirement for Biologics of KFDA and WHORequirements (TRS No. 760, 1987)

 

All process steps withregard to the manufacture and control of this antigen are undertaken at:

 

[***]

 

----

 

**1.             SPECIFICATION AND ROUTINE TESTS**

 

**1.1Specifications**

 

The specifications for theHepatitis B vaccine derived from *Hansenulapolymorpha*are indicated in the following tables.

 

***Specifications for the HBV Bulk concentrate.***

 

[***]

 

----

 

**1.2          Test methods**

 

**Polysaccharidecontent**

 

[***]

 

**Lipidcontent**

 

[***]

 

**Formaldehydecontent**

 

[***]

 

**DNAcontent**

 

[***]

 

**Agentsfor purification process**

*Tween 20*

 

[***]

 

*CsCI*

 

[***]

 

**Proteincontent**

 

[***]

 

**Antigenicidentity**

*SDS PAGE*

 

[***]

 

*Western blot*

 

[***]

 

----

 

*HPLC*

 

[***]

 

**Sterility**

 

[***]

 

**HBsAgcontent**

 

[***]

 

**Pyrogenicity**

 

[***]

 

----

 

**SCHEDULE F**

 

**LOSS ALLOWANCES**

 

BulkLoss Allowances

 

The initial Bulk LossAllowances are set forth in the attached signed version of this Schedule F aspoints one and two beneath the table.

 

ProductLoss Allowances

 

The Product Loss Allowancesare set forth in the table in the attached signed version of this Schedule F.

 

----

 

**Schedule E: Bulk loss allowances**

 

[***]

 

[SIGNATURE BLOCKS]

 

----

 

**SCHEDULE G**

 

**PRICE CALCULATIONS**

 

25

----

 

**SCHEDULE G**

**TO SUPPLY AND**

**MANUFACTURING AGREEMENT**

 

**Transfer Pricing**

 

**1.**             **Definitions**

 

Capitalized terms used inthis Schedule but not defined herein shall have the meanings ascribed to themin Schedules A and F of the Collaboration Agreement. The following words andphrases shall have the following meanings:

 

“Actual Average ForeignExchange Rate” means the average of the monthly exchange rates quoted by theNew York branch of the United States Federal Reserve Bank.

 

“Actual Average Net SalesPrice” means the actual weighted average Net Sales price per Unit for theProduct invoiced to all unaffiliated third parties in the Territory.

 

“Actual Chiron Cost of GoodsSold” means the actual Cost of Goods Sold of the Chiron Antigen costs per Unitof the Product.

 

“Actual Cost of Goods Sold”means the actual Cost of Goods Sold per Unit.

 

“Actual Gross Margin” meansthe Actual Average Net Sales Price minus the Actual Cost of Goods Sold.

 

“Actual Rhein Biotech andGCVC Cost of Goods Sold” means the actual Cost of Goods Sold of the RheinBiotech and GCVC Antigen and the blending, filling, and packaging costs perUnit of the Product.

 

“Additional Payment Report”means the written report provided by Chiron to Rhein Biotech and GCVC detailingthe additional payment, if any, required to be made to Rhein Biotech and GCVCfor differences between the Actual Average Net Sales Price and the ProjectedAverage Net Sales Price. This report shall be prepared by Chiron and deliveredto Rhein Biotech and GCVC in the format and within the timing described in theAccounting Methodologies Schedule F to the Collaboration Agreement.

 

“Antigen” means a ChironAntigen and/or a Rhein Biotech and GCVC Antigen as the context may require.

 

“Chiron Antigen” means eachantigen referred to in Schedule D to the Collaboration Agreement.

 

“Cost of Goods Sold” shallhave the meaning ascribed to it in Schedule F (Accounting Methodologies) to theCollaboration Agreement.

 

----

 

“Costof Goods Sold Report” means the written report detailing the Actual RheinBiotech and GCVC Cost of Goods Sold and the Projected Rhein Biotech and GCVCCost of Goods Sold and the Actual Chiron Cost of Goods Sold and ProjectedChiron Cost of Goods Sold These reports shall be prepared in the format andwithin the timing described in accordance with the Accounting MethodologiesSchedule F of the Collaboration Agreement.

 

“GAVIActual Average Net Sales Price” means the Actual Average Net Sales Price per Unitof the Product invoiced to the Global Alliance for Vaccines and Immunization (“GAVI)”.

 

“GAVIProjected Average Net Sales Price” means the best estimate of the weightedaverage Net Sales price per Unit of the Product invoiced to the Global Alliancefor Vaccines and Immunization (“GAVI”).

 

“GrossMargin Report” means the written report provided to Rhein Biotech and GCVC byChiron which shall include in reasonable detail the Actual Gross Margin, theProjected Gross Margin, Actual Average Net Sales Price, applicable ProjectedAverage Net Selling Price, Projected Cost of Goods Sold, Actual Cost of GoodsSold Actual Foreign Exchange Rate, Projected Foreign Exchange Rate and actualnumber of doses sold by month. This report shall be prepared by Chiron and deliveredto Rhein Biotech and GCVC in the format and within the timing described in theAccounting Methodologies Schedule F of the Collaboration Agreement.

 

“IndicativeTender” means the last major tender or request won or lost in the Public Marketthat the Parties agree may be reasonably expected to establish the price perdose for subsequent tenders or requests.

 

“InitialPeriod” means the period from the date of the first sale of the Product in theTerritory to December 31 of such calendar year.

 

“InitialPeriod Transfer Price” means the transfer price for the Initial Period ascalculated in accordance with the terms of Section 2(a) of this Schedule G.

 

InitialShipment Transfer Price means the Projected Rhein Biotech and GCVC Cost ofGoods Sold per Unit for the initial shipment of the Product.

 

“Market Condition Change”means an unexpected change in market conditions beyond Chiron’s control for thePublic Market where an Indicative Tender has occurred and the for the PrivateMarket where the Actual Average Net Sales Price for a period of threeconsecutive months is Substantially Different from the Projected Average NetSales Price for such three months.

 

“MaximumCost of Good Sold” means the Cost of Good Sold estimate agreed to by theSteering Committee pursuant to Section 2(b) or Section 3(b) hereof plus [***].

 

----

 

“MaximumProjected Average Net Sales Price” is [***] of the Projected Average Net SalesPrice to be used in the calculation of the Projected Gross Margin andcorresponding Transfer Price.

 

“MinimumProjected Average Net Sales Price” means the minimum Projected Average NetSales Price which minimum shall not be less than the initial agreed to GAVIProjected Average Net Sales Price.

 

“NetSales” shall have the meaning ascribed to in Schedule F (AccountingMethodologies) to the Collaboration Agreement

 

“Private Market” shall meanthe market the Product in the Territory other than Public Market andSupranational Market.

 

“Projected Average Net SalesPrice” means the best estimate of the weighted average Net Sales price per Unitof the Product invoiced to unaffiliated third parties in the Territory asagreed by the Parties in good faith.

 

“Projected Forward ForeignExchange Rate” means the projected forward foreign exchange rate used toconvert the local currency used into US Dollars. This rate is the best estimateof the average foreign exchange rate for the relevant period as agreed by theParties in good faith.

 

“ProjectedGross Margin” means the Projected Average Net Sales Price minus the ProjectedCost of Goods Sold.

 

“ProjectedRhein Biotech and GCVC Cost of Goods Sold” is defined as the estimated Cost ofGoods Sold of the Rhein Biotech and GCVC Antigen and the blending, filling andpackaging costs of the Product as set forth in Annex A hereto.

 

“PublicMarket” shall mean the market for the Product directly derived from any tenderor requests funded by any provincial and/or federal authority in the Territoryexcluding the Supranational Market.

 

“Rhein Biotech and GCVCAntigen” means each antigen referred to in Schedule E to the CollaborationAgreement.

 

“SubsequentPeriod” means each twelve month period following the Initial Period.

 

“SubsequentPeriod Transfer Price” means the transfer price for the Subsequent Period ascalculated in accordance with the terms of Section 3(a) of this Schedule G.

 

“Substantially Different”means a [***] increase or decrease.

 

“SupranationalMarket” shall mean the market for sales of the Product to institutions such asthe Global Alliance for Vaccines and Immunization (“GAVI”), the World HealthOrganization (“WHO”), the Pan American Health Organization (“PAHO”), the UnitedNations Children’s Fund (“UNICEF”) and any similar organization operating on aworldwide basis.

 

----

 

“Transfer Price” means theInitial period Transfer Price and each Subsequent Period Transfer Price.

 

**2.            Initial PeriodTransfer Price Calculation**

 

**(a)****        ****Calculation of the Initial Period Transfer Price.** The transfer price for the Product will befixed and remain in force for a six month period prospectively. The Transfer Pricefor the Product for the Initial Period shall be calculated on per Unit basis by(i)   multiplying the Projected GrossMargin for the Initial Period by [***] and (ii) adding to such amount theProjected Rhein Biotech and GCVC Cost of Goods Sold for the Initial Periodprovided however that the Transfer Price for the initial shipment of theProduct shall be set forth in Section 2(d) below.

 

**(b)****        ****Setting of the Initial Period Transfer Price.** The Steering Committee shall agree on theInitial Period Transfer Price and all components thereof except as set forth inSection 2 (d) below (i) with respect to the Initial Period Transfer Price forthe first six month portion of the Initial Period, to the extent applicable, nolater than two months before the beginning of the Initial Period, and (ii) withrespect to the Initial Period Transfer Price for any subsequent portion of theInitial Period, no later than the end of the fourth month of the first sixmonth portion of the Initial Period provided, however, that if the Parties failto agree to a Transfer Price pursuant to this Section 2 (b) (ii) such TransferPrice will be determined by applying the prior actual results as follows:

 

TheActual Average Net Sales Price will be (i) for the Public Market based on thetender price for the last Indicative Tender and (ii) for the Private Marketbased on the Actual Average Net Sales Price of the last two months of thepreceding six month period of the Initial Period. The Actual Chiron Cost ofGoods Sold, Actual Rhein Biotech Cost of Goods Sold, and the Actual AverageForeign Exchange Rate will be based on the average of last two months of thepreceding six month period of the Initial Period.

 

Withrespect to the setting of the Cost of Goods Sold per Unit, each Party willupdate the initial Cost of Goods Sold per Unit estimate exchanged between theParties. This updated estimate will include Cost of Goods per Unit details (seeAnnex B to Schedule F (Accounting Methodologies) to the CollaborationAgreement) including the cost per dose of each antigen, the blending, filling,finishing, and Third Party Royalty amounts. The previously listed details willbe reported for the then current capacity of each Party’s manufacturingfacilities and for each step of increased capacity up to the agreed capacitynecessary to complete [***] units of the Product.

 

Eachparty initially shall have the right to audit the other prior to the SteeringCommittee agreeing the Initial Period Transfer Price. If the results of suchaudit would result in a change of [***] then the Cost of Good Sold per Unit asdetermined by the audit, will be the resulting Cost of Goods Sold per Unit usedin determining the Transfer Price. Each such Initial Period Transfer Priceshall be

 

----

 

fixedand subject to change only in accordance with the provisions of Section 2(c)below.

 

**(c)****       ****Market Condition Change.**In the event of theoccurrence of a Market Condition Change in the Public Market and/or PrivateMarket, then Chiron and Rhein Biotech and GCVC shall confer regarding apossible adjustment to the Projected Average Net Sales Price in the relevantPublic or Private Market for the relevant period and the resulting adjustmentto the Initial Period Transfer Price. Any such adjusted Projected Average NetSales Price and Initial Period Transfer Price shall apply prospectively withrespect to all calculations in connection with all Product shipped by Chironduring remainder of the relevant portion of the Initial Period. Only two suchadjustments for each of the Public and Private Markets to the Initial PeriodTransfer Price may be made during the Initial Period, and only one may be madeduring the first six months, to the extent applicable, of the Initial Periodand only one during the second six months, if any, of the Initial Period.

 

(d)        **Initialshipment of Product Transfer Price**The initial shipment of Product from Rhein Biotech and GCVC to Chironwill be at the Initial Shipment Transfer Price. The maximum number of Unitsthat may be included in the initial shipment at the initial Shipment TransferPrice shall be calculated by taking the amount of US Dollars [***] divided bythe per Unit fully burdened Initial Period Transfer Price determined in Section2 (a) above. Only the Initial Shipment of Product will be at the InitialShipment Transfer Price. All subsequent shipments during the Initial Periodwill be at the full Transfer Price detailed in Section 2 (a).

 

Notwithstandingthe use of the Initial Shipment Transfer Price, It is understood by the Partiesthat while the Transfer Price for initial shipment of Product is set at theInitial Shipment Transfer Price that Rhein Biotech and GCVC will recover itsfull Transfer Price including the profit element as determined in Section 2 (a)(i) above through the Initial Period Additional Payment mechanism set forth inSection 7.

 

Onor before the date of the initial shipment of Product to Chiron from RheinBiotech and GCVC, Chiron shall provide to Rhein Biotech and GCVC an “On Demand”bank guarantee from ABN AMRO Bank N.V. or other such Internationally recognizedbank in the United States in the amount of the additional payment calculated inaccordance with Section 7 (a). Rhein Biotech and GCVC shall have the right todemand payment of the guarantee on the date which is nine months from the dateof the initial shipment of Product from Rhein Biotech and GCVC to Chiron.

 

Paymentfor the additional payment for the initial shipment of Product to Chiron byRhein Biotech and GCVC set forth in Section 7 (a) will be due on the earlier of:

 

(a)       60 daysafter the end of the calendar quarter where sales of the relevant Product weremade or

 

(b)      nine (9)months from shipment of the Product from Rhein Biotech and GCVC to Chiron.

 

----

 

**3.            Subsequent PeriodTransfer Price Calculation**

 

**(a)  Calculation of theSubsequent Period Transfer Price.** The Transfer Price for the Product will be fixed and remain in forcefor a six month period prospectively The Transfer Price for the Product eachSubsequent Period shall be calculated on a per Unit basis by (i) multiplyingthe Projected Gross Margin for the relevant Subsequent Period as agreed upon inSection 3(b) below by [***] and (ii) adding to this amount the Projected RheinBiotech and GCVC Cost of Goods Sold for such period.

 

**(b)  Setting of the Subsequent Period TransferPrice.** Chiron shallprovide Rhein Biotech and GCVC with a Gross Margin Report within the timelinesand in the format described in Schedule F (Accounting Methodologies) to theCollaboration Agreement. Based on the information in such Gross Margin Reportand on the information in the Cost of Goods Sold Report, the Steering Committeeshall agree on a Projected Gross Margin, the Projected Rhein Biotech and GCVCCosts of Good Sold, and the Projected Forward Foreign Exchange Rates for theSubsequent Period to be applied in calculating the relevant Subsequent PeriodTransfer Price.

 

TheSteering Committee shall set the Subsequent Period Transfer Price for the firstsix months of the first Subsequent Period at the beginning of the final monthof the Initial Period. Thereafter, the Subsequent Period Transfer Price shallbe set by the Steering Committee once every six months using the samemethodology. Each Subsequent Period Transfer Price shall be fixed for therelevant six month period and shall be subject to change only in accordancewith the provisions of Section 3(c) below provided, however, if the partiesfail to agree to a Transfer Price pursuant to this section 2 (b)

 

the Transfer Price will bedetermined by applying the prior actual results as follows.: The Actual AverageNet Sales Price will be (i) for the Public Market based on the tender price forthe last Indicative Tender and (ii) for the Private Market based on the ActualAverage Net Sales Price of the last two months of the preceding six month periodof the Initial Period. The Actual Chiron Cost of Goods Sold, Actual RheinBiotech Cost of Goods Sold, and the Actual Average Foreign Exchange Rate willbe based on the average of last two months of the preceding six month period ofthe Subsequent Period.

 

Withrespect to the setting of the COGS per unit, each Party initially shall havethe ongoing right to audit the other prior to the Steering Committee agreeingthe Subsequent Period Transfer Price. Each such Subsequent Period TransferPrice shall be fixed and subject to change only in accordance with theprovisions of Section 3 (c) below.

 

**(c)****                   ****Market Condition Change.** In the event of the occurrence of a MarketCondition Change in the Public Market and/or Private Market, then Chiron andRhein Biotech and GCVC shall confer regarding a possible adjustment to theProjected Average Net Sales Price in the relevant Public or Private Market forthe relevant period and the resulting adjustment to the Subsequent PeriodTransfer Price. Any such adjusted Projected Average Net Sales Price andSubsequent Period Transfer Price shall apply prospectively with respect to allcalculations in connection with all Product shipped by Chiron during theremainder of the relevant portion of such

 

----

 

SubsequentPeriod. Only two such adjustments for each of the Public and Private Markets tothe Subsequent Period Transfer Price may be made during each Subsequent Period,and only one may be made during the first six months of each Subsequent Periodand only one during the second six months of each Subsequent Period.

 

**4.           Maximum ProjectedAverage Net Sales Price**

 

TheProjected Average Net Sales Price used in calculating the Projected GrossMargin and corresponding Transfer Price will not exceed the Maximum ProjectedAverage Net Sales Price. It is understood that the Maximum Projected AverageNet Sales Price is intended in part to ensure a fair and reasonable return toChiron for having assumed the risks and borne the costs associated withdistributing the Product in the Chiron Territory and accordingly shall applyregardless of the Projected Average Net Sales Price for any period.

 

**5            Minimum ProjectedAverage Net Sales Price**

 

Notwithstanding anything tothe contrary contained in this Agreement, the Projected Average Net Sales Pricefor the Product shall not be less than the Minimum Projected Average Net SalesPrice unless the Parties meet, confer and agree on a different ProjectedAverage Net Sales Price. Chiron will use its reasonable efforts to procure thatthe Actual Average Net Sales Price will not be lower than the GAVI ActualAverage Net Sales Price to which a premium will be added which will be limitedto the relevant volumes. A minimum premium of [***] is suggested. [***]. TheSteering Committee will review the Minimum Projected Average Net Sales Price ona regular basis.

 

Notwithstandingthe above stated Minimum Projected Average Net Sales Price the Parties agree inthe event the Actual Average Net Sales Price for three consecutive months isless than the Minimum Projected Average Net Sales Price, the Parties shall meetand agree in good faith a revised Minimum Projected Average Net Sales.

 

**6             CurrencyTranslation**

 

TheTransfer Price shall be expressed in U.S. Dollars. The Projected Average NetSales Price, Projected Cost of Goods Sold and Projected Gross Margin shall beconverted in each case to U.S. Dollars based on the relevant Projected ForwardForeign Exchange Rate. The Actual Average Net Sales Price, Actual Cost of GoodsSold and Actual Gross Margin on the basis of which any Transfer Price iscalculated, shall be converted to U.S. Dollars at the average foreign exchangerate quoted by the New York Branch of the Federal Reserve Bank’s dailyafternoon rate for the relevant quarter for which such Transfer Price iscalculated.

 

----

 

**7**              **InitialPeriod Additional Payments**

 

TheActual Average Selling Price shall be the basis for establishing the finalTransfer Price. If the Actual Average Net Sales Price is less than the InitialShipment Transfer Price or the Projected Average Net Sales Price, asapplicable, no adjustment shall be made

 

Forthe Initial Period, the additional payment, if any, each calendar quarter forall sales in such quarter shall be calculated for the relevant quarter

 

(a)   (a) for the initial shipment of Product,

 

by(i) taking the Actual Average Net Sales Price from Public and Private Marketuser sales less the Initial Shipment Transfer Price (ii) multiplying thatfigure by the number of Units shipped during the initial shipment and (iii)multiplying the previous result by [***]. The applicable Initial ShipmentTransfer Price to be used in this calculation will be based on the price usedwhen the Units were shipped to Chiron from Rhein Biotech and GCVC on afirst-in, first-out (“FIFO”) basis.

 

(b)   (b) for all other shipments of Product otherthan the initial shipment of Product,

 

by(i) taking the Actual Average Net Sales Price from Public and Private Marketuser sales less the Projected Average Net Sales Price (ii) multiplying thatfigure by the number of Units shipped during the relevant quarter and (iii)multiplying the previous result by [***]. The applicable Projected Average NetSales Price to be used in this calculation will be based on the price used whenthe Units were shipped to Chiron from Rhein Biotech and GCVC on a first-in,first-out (“FIFO”) basis.

 

**8.**           **Subsequent PeriodAdditional Payments**

 

TheActual Average Selling Price shall be the basis for establishing the finalTransfer Price. If the Actual Average Net Sales Price is less than theProjected Average Net Sales Price, no adjustment shall be made.

 

Forthe Subsequent Periods, the additional payment, if any,**eachcalendar quarter for all sales in such quarter shall be calculated for therelevant quarter

 

(a)for all shipments of Product,

 

by(i) taking the Actual Average Net Sales Price from Public and Private Marketsales less the Projected Average Net Sales Price. (ii) multiplying that figureby the number of Units shipped during the relevant quarter and (iii)multiplying the previous result by [***]. The applicable Projected Average NetSales Price to be used in this calculation will be based on the price used whenthe Units were shipped to Chiron from Rhein Biotech and GCVC on a FIFO basis.

 

----

 

**9.         Reports**

 

**(a)  Gross Margin Report**

Thefirst Gross Margin Report shall cover the first three(3) months of actualresults and the following three (3) months of forecasted results of the InitialPeriod and each subsequent report shall cover the subsequent six (6) monthsuntil the end of the term of the agreement. The Parties will meet and confer ashow to coordinate the reporting so that it is consistent with a Calendar Year.

 

Thepurpose of the Gross Margin Report is to report actual results for thereporting period and also to assist in determining the Transfer Price for thenext six (6) month period.

 

**(b)  Cost of Goods Sold Report**

Thefirst Cost of Goods Sold Report shall cover the first three (3) months ofactual results and the following three (3) months of forecasted results of theInitial Period and each subsequent report shall cover the subsequent six (6)months until the end of the term of the agreement. The Parties will meet andconfer as how to coordinate the reporting so that it is consistent with aCalendar Year.

 

Thepurpose of the Cost of Goods Sold Report is to report actual results and toassist in preparing the Gross Margin Report.

 

**(c)  Additional Payment Report**

Thefirst Additional Payment Report shall cover the first three (3) months ofactual results of the Initial Period and each subsequent report shall cover thesubsequent three (3) months until the end of the term of the agreement. TheParties will meet and confer as how to coordinate the reporting so that it isconsistent with a Calendar Year.

 

Thepurpose of the Additional Payment Report is to determine the additionalpayment, if any, required to be made to Rhein Biotech and GCVC for the three(3) month period.

 

**10.**       [***]

 

----

 

**SCHEDULE L**

 

**Investments for the Penta-valent projects**

 

Major assumption: All regulatory activities related to the investmentsneed to be considered in the development masterplan (regulatory time-bar).

 

**Investments Rhein Biotech / GCVC**

 

**1)****             Capacity assumptions**

•                  According tobusiness scenario 3b and optimistic [***]

•                  Current capacityin Korea is [***] doses for bulk, fill and finish [***]

This capacity will remain as mono presentation relatedand cannot be considered in the penta calculation.

•                  Investmentcalculations for [***] doses and [***] doses (scenario 3b [***])

•                  Presentations30% vials (of which 50% with syringe and 50% without) and 70% uniject.

 

**2)****             Investment planningassumptions:**

All current calculations are based on conceptualstudies with an accuracy of +/- [***] (on investment costs) and based on QC andmanufacturing process steps as per status of signing of this contract,(Additional KFDA requests with regard to any of the antigens delivered are notknown and therefore not taken into account).

**3)****             The followinginvestments have been reviewed and agreed upon to be reasonable:**

A)          QC/Animal Facility

approximately [***] Euro

assumptions: only release tests on final pentavalentproduct and the base line mono quantities have been considered. One timeinvestment in existing facility, to cover full capacity up to [***] doses(penta)

B)            HBV-bulk investment

Combination of remoddeling and bottle neckcompensation to cover the [***] (GCVC) [***] needs per year in [***] weeks. Onetime investment in existing facility, to cover full capacity up to [***] doses(penta). Estimate [***]

C)            Development relatedinvestments [***] Euro

Upgrading of the existing pilot facility and theexisting formulation, filling and finishing installations in order to supplythe:

pre clinical pentamaterial

clinical penta material(3 batches)

phase 3 penta material

Manufacturing consistency batches

D)           Formulation/filling/finishing/packaginginvestments (over all investment [***] in first phase and [***] in total):

Assumptions:

*       One new building for allproductlines. Building shell and infrastructure as one time investment.

*       split into [***] product lineand [***] lines

*         I [***] compactline(formulation >> packaging) [***] per minute

([***] vpm x [***]%x [***] minutes x [***]hours per day x [***] weeks = [***] doses)

(capacityexpansion by extending working cycle as reserve)

Line cost [***]

*       [***] Two step investmentto cover [***] doses with [***] and extending with [***] up to [***] doses.[***] doses per line

([***] upm x [***]x [***] x [***] hours per day x [***] days x [***] weeks)

[***] per line

E)             Coldroom facility fornew finishing facility [***]

 

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**Investments of Chiron Vaccines:**

 

**1)****             Capacity assumptions**

•                  According tobusiness scenario 3b and optimistic [***] 

•                  Currentcapacities are as follows:

T bulk capacity >> above [***] available forproject

D and wP bulk capacity [***] doses available for Pentaformulation

•                  Maximum capacityinvestment plans are based on existing Chiron Vaccines Operations Strategy andInvestment plans.

•                  According tocurrent development plan for the DTwP pentavalent the “cleaned up” D[***] for the DtaP pentavalent combo the new [***] Process for D are foreseen.

 

**2)****             Investment planningassumptions:**

All current calculations are based on conceptualstudies with an accuracy of [***] (on investment costs) and on aP realisationunder Chiron Vaccines control.

 

**3)****             The followinginvestments have been reviewed and agreed upon to be reasonable:**

 

**A) Expansion of D/wP facility(FDA approved)**

Approximately [***]

from [***] to [***] dose (technical measures, like[***]) step to [***] poses by expanded working time.

**B) Hib related investments**

Approximately [***]. Capacity approx [***] doses in a2 step approach. Initially [***] doses with [***]. Step 2: [***] for approxanother [***] dose. Current planning based on greenfield with existing siteinfrastructure, designed as multi purpose facility for poly-sacharides.

To go up from [***] to [***] doses detailed planninghave to be initiated, including the existing poly-sacharrides facilities in[***]. This will depend on the market needs for the other poly-sacharrides, andtherefore from Chiron Vaccines side not yet planned. The order of magnitude fora potential upgrade would be around [***].

**C)** [***]

 

The timeschedules for individual project-commitment and spending areattached to this schedule.

 
| Marburg, 22 March 2001 |
|------------------------|
|                   |
| Thomas Lingelbach      | /s/ Thomas Lingelbach |   |
|                   |
| Richard Holslag        | /s/ Richard Holslag |   |
|                        |  |  |  |

 

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