exv4w28



 


Exhibit 4.28




Confidential treatment has been requested for certain portions of
this exhibit. The copy filed herewith omits the information subject
to the confidential treatment request. Omissions are designated as
“[*****]” or “*****”. A complete
version of this exhibit has been filed separately with the Commission
pursuant to an application for confidential treatment under
Rule 24b-2 promulgated under the Securities Exchange Act of
1934, as amended.




ACAMBIS CONFIDENTIAL-PROPRIETARY INFORMATION




SUBCONTRACT



     Section A – Subcontract Form




	 	 	 
	Subcontract between:	 	
Subcontract No: 200-2002-00010(BXTR)
	Acambis Inc.	 	
Prime Contract No: 200-2002-00004
	38 Sidney Street	 	
Contractual Officer: [ **** ]
	Cambridge, MA 02139	 	
Program Officer: [ **** ]
	 	 	
 
	AND	 	 
	 	 	
 
	Baxter Healthcare SA	 	
Baxter Healthcare Corporation
	Hertistrassse 2	 	
One Baxter Parkway
	CH-8304 Wallisellen, Switzerland	 	
Deerfield, IL 60015



     This Subcontract is entered into this 14th day of November 2001, between
Acambis Inc., 38 Sidney Street, Cambridge, MA 02139 (hereinafter “Contractor”)
and Baxter Healthcare SA, Hertistrassse 2, CH-8304 Wallisellen, Switzerland
(hereinafter “1st Subcontractor”) and Baxter Healthcare Corporation, One Baxter
Parkway, Deerfield, IL 60015, (hereinafter “2nd Subcontractor”). The 1st
Subcontractor and the 2nd Subcontractor together are hereinafter referred to as
the “Subcontractors.” This Subcontract is issued under a Prime Contract
executed between the Contractor and the United States Government, through the
Department of Health and Human Services (Contract No. 200-2002-00004).



     In consideration of the mutual promises, covenants and agreements set
forth herein, the parties agree that the Subcontractors shall furnish and
deliver to the Contractor all the supplies and perform all the services set
forth in this Subcontract, for the consideration stated herein. The rights and
obligations of the parties to this Subcontract shall be subject to and governed
by this Subcontract and other documents attached hereto or referenced herein.



     This Subcontract sets forth the entire agreement of the parties and
supersedes any and all prior agreements of the parties, whether oral or
written, concerning the subject matter hereof. Neither party has relied upon
any representations, oral or written, in entering into this Subcontract that
are not incorporated herein.



     This Subcontract shall not be varied or changed in its terms or conditions
by any oral agreement or representation, or otherwise, except by an instrument
in writing of even or subsequent date thereto, properly executed.



     The Article and Paragraph titles used herein are for convenience only and
shall in no way be construed as part of this Subcontract, or as an indication
of the meaning of a particular section.




 







 


IN WITNESS WHEREOF, the parties hereto have executed this Subcontract to be
effective as of the day and year first above written.




	 	 	 
	Acambis Inc.
(Contractor)	 	
Baxter Healthcare Corporation

(2nd Subcontractor)
	By:                	 	
By:                
	[ **** ]	 	
[ **** ]
	[ **** ]	 	
[ **** ]
	[ **** ]	 	
[ **** ]
	Execution Date: 9 May 02	 	
Execution Date: April 30, 2002
	Baxter Healthcare S.A.
(1st Subcontractor)	 	 
	By:                 	 	 
	[ **** ]	 	 
	[ **** ]	 	 
	Execution Date: April 29, 2002	 	 



ACAMBIS CONFIDENTIAL -- PROPRIETARY INFORMATION

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Section A — Introduction





	A.1 	 	BACKGROUND
	 
	 	 	The United States Government has recognized the need to maintain a stockpile of smallpox
vaccine to deal with the consequences if smallpox virus were used as a terrorist weapon
against the civilian population. The Department of Health and Human Services (DHHS),
Centers for Disease Control and Prevention (CDC), National Center for Infectious Diseases
(NCID), has awarded Acambis Inc. a contract to develop, license, manufacture, and [ ****
], in quantities as may be ordered by the Government,
[ **** ].
	 
	A.2	 	 PURPOSE
	 
	 	 	The purpose of this Subcontract is for Contractor to purchase crude bulk
vaccine from the 1st Subcontractor sufficient to produce an estimated 155
million doses of such vaccine (with a maximum total quantity of [ ****
] doses), as an investigational new drug (“IND”).
[ **** ].
	 
	A.3	 	 SCOPE OF WORK
	 
	 	 	The 1st Subcontractor, as an independent organization and not as an agent
of the Contractor, shall furnish all labor, materials, supplies,
facilities, and equipment necessary to [ **** ]. The 2nd Subcontractor,
as an independent organization and not as an agent of the Contractor,
shall [ **** ]. Such efforts shall be performed in accordance with the
Security Plans attached to this Subcontract (Section J, Attachment E) and
the technical requirements set forth below. The manufacturing processes
of the vaccine will be based upon specifications and processes that have
been reviewed and approved by the U.S. Government. Contractor and
Subcontractors have fully informed the U.S. Government of the risks
associated with these processes and the resulting product. [ **** ].




Section B – Schedule of Subcontract ITEMs/Prices





	 	 	 	 	 	 	 	 	 
		 	
	 	Estimated	 	 Unit	 	Estimated
	ITEM	 	Description	 	Quantity	 	 Price	 	Total Amount
	
	 	
	 	
	 	
	 	

	0001	 	
– Bulk Vaccine/Partial Kit Assembly

-Preliminary kit (IND)(initial order)**	 	 	 	 	 	 
	 	 	
0001A Crude Bulk Vaccine
	 	155,000,000 doses
	 	[ ****  ]
	 	[ **** ]
	 	 	
0001B Partial Kit Assembly
	 	1,550,000 Kits*
	 	[ ****  ]
	 	[ **** ]
	0002	 	
–Bulk Vaccine/Partial Kit Assembly	 	 	 	 	 	 
	 	 	
-Preliminary kit (IND)**	 	 	 	 	 	 
	 	 	
0002A Crude Bulk Vaccine
	 	[As Ordered] Doses
	 	$ [ **** ]
	 	[ **** ]
	 	 	
0002B Partial Kit Assembly
	 	[As Ordered] Kits*
	 	$ [ **** ]
	 	[ **** ]





		
	 	     *Orders for
ITEMs 0001 and 0002 combined shall not exceed [ ****
].
	 
	 	     ** [ **** ]




Title, Risk of Loss and Invoices for Crude Bulk Vaccine



ACAMBIS CONFIDENTIAL -- PROPRIETARY INFORMATION

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1.     The [ **** ]shall, with at least ten (10) working days advance notice to
the Contractor, ship crude bulk vaccine conforming to the Subcontract
requirements from [ **** ] to [ **** ]. Each lot of crude bulk vaccine shipped to
Contractor shall be accompanied with a Certificate of Conformance (Section J,
Attachment B) to the effect that shipped crude bulk vaccine conforms to
Subcontract requirements.



2.     Legal title to such crude bulk vaccine shall pass to the Contractor upon
shipment from [ **** ], however, due to the sensitive nature of the crude
bulk vaccine and the [ **** ] transportation and logistics capabilities, the
[ **** ] shall continue to be responsible for and bear all risks of loss or
damage to the crude bulk vaccine, cost of insurance, freight and transportation
until Contractor’s receipt of such crude bulk vaccine at Contractor’s facility
[ **** ]. Upon Contractor’s receipt of each shipment of crude bulk vaccine,
Contractor shall thereafter assume all future risks of loss or damage to such
vaccine when the vaccine is processed, returned, and received [ **** ].



3.     [ **** ]



4.     The
[ **** ] shall submit an invoice for each lot of crude bulk vaccine
(exclusive of pilot lots) shipped from [ **** ] to [ **** ]for manufacture
of kits under Subcontract Item(s) 0001 and/or 0002. Initially, such invoices
shall be based upon the assumption that each lot of crude bulk vaccine
delivered to Contractor, shall yield [ **** ] after down-stream processing,
purification, and lyophilization. (For example, under ITEM 0001A, [ **** ]).
Subsequent invoices for future crude bulk lots shipped for manufacture of kits
under Item(s) 0001 and/or 0002 shall be based on anticipated actual yields as
agreed to by the parties. Crude bulk vaccine in excess of that required to
manufacture vaccine kits for the U.S. Government under this Subcontract shall
be processed and finished into vaccine kits for commercial sales under the
terms of a separate commercial sales agreement between Contractor and the 1st
Subcontractor.



5.     Notwithstanding any other provision of this Subcontract, except Section C,
ITEM 0001, Paragraph A.4, payment for ITEMs 0001 and 0002 shall be made and be
due at the earlier of: (1) thirty (30) days after the US Government makes
payment to Contractor for completed kits accepted by the Government under the
terms of Contractor’s Prime Contract (See Paragraph G.2) upon due performance
by the Subcontractors of Subcontract ITEM(s) 0001 and 0002 and Subcontractors’
submission of proper invoices for the actual number of kitted vaccine delivered
and accepted by the Contractor; or (2) on December 31, 2003 for the amounts
invoiced for each lot of crude bulk vaccine, as described above. In no event
shall Subcontractor(s) be paid more under this Subcontract than the Subcontract
price shown above for ITEMs 0001 and 0002 for the number of kits delivered and
accepted unless the Contractor orders additional crude bulk vaccine for which
it is obligated to make payment under Section C, ITEM 0001, Paragraph A.4.
below.




0003 – Kit and Component [ **** ][ **** ]




0004 – Label Vaccine/Diluent [ **** ]

            And Re-kit after-Licensure

            [ **** ]




	 	 	 	 	 	 	 	 	 	 	 
	0005A 	– Final Kit Assembly and

   Distribution of Vaccine and

   Diluent after Licensure	
[TBD] Kits **
	 	[
	 	****
	 	]
	 	[ **** ]
	0005B 	– Labeling, Final Kit Assembly,

   and Distribution of IND

   Vaccine and Diluent	
[TBD] Kits **	 	[
	 	****
	 	]
	 	[ **** ]




** As ordered, ITEMs 0005A and 0005B combined shall not exceed [ **** ]




			
	0006 –	 	Data—Not Separately Priced
	0007 –	 	Payment for Additional [ **** ]

Services
	–	 	Payable as specified in Paragraph H.26.






ACAMBIS CONFIDENTIAL -- PROPRIETARY INFORMATION

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Section C – Description/Specification/Work Statement (References to “TBD” shall
be determined by Mutual Agreement of the Parties)




ITEM 0001- Manufacture of Bulk Vaccine and Partial Kit Assembly



     [ **** ]




ITEM 0002-Manufacture of Bulk Vaccine and Partial Kit Assembly



     [ **** ]




ITEM 0003- [ **** ]



     [ **** ]



     2nd Subcontractor shall provide samples of vaccine and diluent to
Contractor from time to time, according to a schedule to be provided by
Contractor, for stability tests (performed by Contractor). Samples shall
correspond to individual lots of vaccine and diluent. Samples will be shipped
to Contractor’s Quality Control laboratory on dry ice at Contractor’s expense.




ITEM 0004- Labeling and Re-Kitting (Following Licensure)



     [ **** ]




ITEM 0005A — Final Kit Assembly and Distribution (Following Licensure)



     [ **** ]




ITEM 0005B – Final Kit Assembly and Distribution (IND Material)



     [ **** ]




ITEM 0006-Data





	 	A.	 	1st Subcontractor shall create appropriate batch records for
crude bulk vaccine (ITEMs 0001A and 0002A) and the 2nd Subcontractor
shall create appropriate batch records for Assembly of Preliminary
Kits (ITEMs 0001B and 0002B), Labeling and Kitting (ITEM 0004), and
Final Kit Assembly and Distribution (ITEM 0005). Such batch records
shall be submitted to the Contractor for review.
	 
	 	B.	 	Within 20 days of the end of each calendar quarter, 2nd
Subcontractor shall also submit to Contractor a Quarterly Progress
Report, which shall describe:





		
	 	     1. The materials (kit components) received during the previous
quarter (by component);
	 
	 	     2. The number of kits assembled [ **** ];
	 
	 	     3. The cumulative number of kits [ **** ];
	 
	 	     4. The start dates and expected completion dates for kitting
materials received, but not yet assembled into kits;
	 
	 	     5. Problems encountered, delays, and recommended corrective
action;
	 
	 	     6. FDA inspections/consultations, findings, and recommendations;
and
	 
	 	     7. A security assessment, describing any security compromises,
problems, and proposed corrective action.



ACAMBIS CONFIDENTIAL -- PROPRIETARY INFORMATION

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[A flow chart of the component/kit assembly process is shown on the following
page for informational purposes only.]




[ **** ]



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



ACAMBIS CONFIDENTIAL -- PROPRIETARY INFORMATION

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Section D — Packaging and Marking




PACKAGING AND MARKING REQUIREMENTS (ITEM 0005)





	 	(a)	 	Packaging of final kits for distribution shall conform to [
**** ] commercial practice to ensure safe delivery by common
carrier to the consignee destination specified in each Delivery
Order. Final kits shall be packaged so as to ensure that the
vaccine will remain at no more than [ **** ] for at least [ ****
] after shipment. Each package shall be shipped so as to ensure
delivery within [ **** ] of shipment.
	 
	 	(b)	 	[ **** ] shall
mark all shipping containers [ **** ].




Section E — Inspection and Acceptance



     The following FAR clauses are incorporated herein by reference.
References to the “Government” shall be deemed to refer to the “Contractor.”
References to the “Contractor” shall be deemed to refer to the
“Subcontractors.” To the extent that FAR clauses incorporated herein may
conflict with the clauses set forth below in full text, the clauses in full
text shall govern.




	 	 	 
	FAR SOURCE	 	TITLE AND DATE
	52.246-2	 	
Inspection of Supplies—Fixed-Price (Aug 1996)
	52.246-16	 	
Responsibility for Supplies (Apr 1984)
	52. 246-4	 	
Inspection of Services-Fixed Price (Aug 1996)





	E.1	 	 Inspection and Acceptance





	 	(a)	 	Inspection and acceptance of the articles, services, and
documentation called for herein shall
be accomplished by the Contractual Officer, or his duly authorized
representative (who for the purposes of this Subcontract shall be the
Project Officer).
	 
	 	(b)	 	The Contractor may designate one or more representatives to
perform on-site inspection(s) of the physical plant(s) on a full or
part time basis. Plant inspection, at a minimum will include Device
Master Records, document control procedures, facilities, personnel
training records, equipment process procedures, and Quality
Assurance Program reviews.
	 
	 	(c)	 	ITEMs 0001B and 0002B -Partially assembled kits shall be [
**** ] and accepted by the Contractor within seven (7) work days
after [ **** ] submits to the Contractual Officer (or his duly
authorized quality assurance representative) a Certificate of
Conformance (Section J, Attachment B) certifying that such kits,
including the processed bulk vaccine, have been [ **** ] and that
they conform to Subcontract requirements.
	 
	 	(d)	 	ITEM 0003- [ **** ].
	 
	 	(e)	 	ITEM 0004-Labeled vaccine and diluent re-kitted after
licensure shall be accepted upon receipt of a Certificate of
Conformance from the 2nd Subcontractor that such kits have been
labeled and re-kitted in accordance with Subcontract requirements.
	 
	 	(f)	 	0005- Final Assembly and Distribution of Kits shall be
accepted upon Contractor’s receipt of evidence that kits have been
shipped to the destination(s) specified in each Delivery Order and
Contractor’s receipt of a Certificate of Conformance from the 2nd
Subcontractor that such kits have been shipped in a condition that
conforms to Subcontract requirements.
	 
	 	(g)	 	The Contractual Officer (or his duly authorized
representative) shall have the right to inspect articles, services,
and documentation delivered and tendered for acceptance.
Contractor’s inspection of delivered items shall be completed within
seven (7) work days from the date on which the applicable
Subcontractor furnishes Contractor a Certificate of Conformance
properly executed by the Subcontractor and notifies the Contractor
that the tendered items are available for inspection, after which
time, the tendered items shall be either 1) accepted or 2) rejected.



ACAMBIS CONFIDENTIAL -- PROPRIETARY INFORMATION

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	 	 	 	In the absence of a timely rejection, the tendered item(s) or services
shall be deemed accepted.
	 
	 	(h)	 	Subcontractors agree to provide and maintain quality control
systems acceptable to Contractor and to provide access to
Subcontractors’ facilities at all reasonable times for surveillance
by Contractor and authorized representatives of the Government.
	 
	 	(i)	 	Contractor shall have the right to audit Subcontractors’
facilities to determine compliance with (i) cGMP and (ii) applicable
federal, state, and local laws, regulations and rules regarding
facilities. Such audits shall be scheduled at mutually agreeable
times upon two (2) business days written notice to Subcontractors
and shall not occur more than one (1) time per calendar year unless
required by Subcontractors’ compliance status or Contractor’s
obligations as a license holder. In connection with performing such
audits, each party shall bear its own expenses and the Contractor
shall comply with all reasonable rules and regulations promulgated
by Subcontractors. All information disclosed or reviewed in such
inspections shall be deemed to be the property of Subcontractors and
Subcontractor’s Confidential Information and Propriety Information.
	 
	 	(j)	 	All notices, forms, approvals, certificates, acceptances and
other communications identified above may be transmitted by
facsimile or electronic mail with e-signature.




Section F — Deliveries or Performance




	 	 	 
	FAR SOURCE	 	TITLE AND DATE
	52.242-15	 	
Stop Work Order (Aug 1989) (the Contractor may exercise its
rights under this clause only if and to the same extent that
the Government has issued a stop work order to the Contractor
under the terms of the Prime Contract)




F.1 DELIVERABLE(S) SCHEDULE




	 	 	 	 	 	 	 	 	 
	 	 	ITEM	 	 	 Quantity	 	 	Deliver
	 	 	
	 	 	
	 	 	

	1	 	
Draft Security Plan
(Manufacturing and Kitting/ [ **** ] Facilities)
	 	 	2	 	 	30 Calendar Days
After Execution of
the Subcontract
	2	 	
Final Security Plan
	 	 	2	 	 	10 Calendar Days
After Receipt of
the Contractor’s
Comments
	3	 	
Confidentiality Agreements
	 	 	1	 	 	Complete and retain
in personnel files
within 20 days
after Subcontract
Execution and for
new employees
thereafter, prior
to Performance of
work under the
Subcontract




	 	 	 	 	 	 	 
	ITEM	 	Description	 	Quantity	 	Delivery Date
	
	 	
	 	
	 	

	0001 and 0002	 	
Manufacture of Bulk
Vaccine and
Preliminary Kit
Assembly for
Stockpile to be
used
Under an IND
in an
Emergency
Situation
	 	As Ordered
	 	[ **** ]



ACAMBIS CONFIDENTIAL -- PROPRIETARY INFORMATION

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	ITEM	 	Description	 	Quantity	 	Delivery Date
	
	 	
	 	
	 	

	0003

0004
 
 
 
 

0005A	 	
[ **** ]

Labeling and
Re-Kitting of ITEMs
0001 and 0002
Preliminary Kits as
Licensed Product
Final Kit Assembly
And Distribution
(Licensed Product)
	 	[ **** ]

As Ordered

 

 

 

As Ordered
	 	[ ****
]

To be determined when Ordered

 

 

 

 

Shipment Beginning [ ****
] After Order is Received
until Full Quantity Ordered
Shipped
	0005B	 	
Final Kit Assembly
and Distribution
(IND)
	 	As Ordered
	 	Shipment [ **** ] After
Order is Received until Full
Quantity Ordered Shipped




F.2 PERFORMANCE SCHEDULE



     Overall Subcontract Performance Period: November 14, 2001 through
December 31, 2006.




Section G — Subcontract Administration Data




G.1 INVOICE/VOUCHER SUBMISSION



     Invoices (Fixed-Price)





	 	(1)	 	Subcontractors shall submit an original and
three (3) copies of Subcontract invoices to:
	 
	 	 	 	Acambis Inc.

Accounts Payable

38 Sidney Street

Cambridge, MA 02139
	 
	 	(2)	 	Subcontractors agree to include (at a minimum)
the following information on each invoice:





			
	i.	 	 Subcontractor’s Name & Address;
	 
	ii.	 	Subcontractor’s Tax Identification Number (TIN);
	 
	iii.	 	 Prime Contract, Subcontract, and
Purchase Order Numbers (and Delivery Order Number, if
applicable;
	 
	iv.	 	Invoice Number;
	 
	 v.	 	Invoice Date;
	 
	 vi.	 	 Subcontract ITEM Number (See Section B);
	 
	 vii.	 	 Quantity;
	 
	 viii.	 	 Unit Price & Extended Amount for each ITEM;
	 
	 ix.	 	Total Amount of Invoice;
	 
	 x.	 	Name, title and telephone number
of person to be notified in the event of a defective
invoice;
	 
	 xi.	 	 Payment Address, if different
from the information in (2) i. above;
	 
	 xii.	 	 A copy of the Certificate of
Conformance signed by the Subcontractor for the ITEMs
invoiced; and
	 
	 xiii.	 	 An itemized summary of shipping
charges subject to reimbursement and a copy of each
paid freight bill, invoice, Commercial Bill of Lading,
and evidence that kits have been shipped in accordance
with Subcontract requirements. (Applicable to ITEM
0005).





	 	 	 	Any invoice not containing the above information/documentation may
be considered defective and returned to the Subcontractor without
payment within five (5) business days.



ACAMBIS CONFIDENTIAL -- PROPRIETARY INFORMATION

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G.2 CONTRACTOR’S OBLIGATION TO PAY





	 	 	Subject to the conditions of Section B, “Title, Risk of Loss and Invoices
for Crude Bulk Vaccine” and Section C (Item 0001, Paragraph A.4.),
Contractor agrees to make payment by wire for any ITEM accepted under
this Subcontract within thirty (30) days following receipt of a properly
submitted invoice from the Subcontractor(s) and Contractor receipt of
payment from the U.S. Government for the equivalent ITEM under the Prime
Contract (200-2002-0004). Payment shall be deemed to have been “made” on
the date that the electronic transfer of funds has been authorized. Late
payments (other than as to amounts for which Contractor liability to
Subcontractors is in dispute under Paragraph H. 22 DISPUTES or Paragraph
H. 24 CLAIMS INVOLVING THE GOVERNMENT) shall accrue simple interest (at
the then prime rate as published by the Federal Reserve Board) from
thirty (30) days after both receipt of a proper invoice from the
Subcontractor(s) and Government payment to the Contractor until the date
of payment.




G.3 TITLE





	 	 	Title to crude bulk vaccine delivered to [ **** ], under ITEMs 0001 and
0002 shall vest in the Contractor as stated in Section B. Title to kits,
including all components thereof not furnished by the Contractor shall
vest in Contractor upon payment for such ITEMs at the prices specified in
Section B.




G.4 RETURN OF RESIDUAL PRODUCTION/WORKING VIRUS SEED





	 	 	1st Subcontractor shall return all residual production/working virus seed
to Contractor upon completion of, and payment for, ITEMs 0001 and 0002.




G.5 PROGRAM OFFICER





	 	(a)	 	Performance of the work hereunder shall be subject to the
technical directions of the designated Program Officer for this
Subcontract.
	 
	 	(b)	 	The Program Officer is not authorized to change any of the
terms or conditions of the Subcontract. In the event that the
Subcontractor believes that implementation of any of the direction
issued by the Program Officer constitute a change to the Subcontract
requirements or to otherwise warrant an adjustment to Subcontract
price, Subcontractor(s) shall promptly notify the Program Officer
and the Contractual Officer in writing.
	 
	 	(c)	 	Contractor may from time to time change the person designated
as the Program Officer for this Subcontract by delivering a written
notice of such change to Subcontractors.
	 
	 	(e)	 	The designated Program Officer for this project is:
	 
	 	 	 	[ **** ]
	 
	 	 	 	[ **** ]
	 
	 	 	 	Acambis, Inc.

38 Sidney Street

Cambridge, MA 02139

(617) 494-1339 (Phone)

(617) 494-1741 (Fax)
	 
	 	 	 	[ **** ]





	G.6	 	 CONTRACTUAL OFFICER





	 	(a)	 	The Contractual Officer is the only individual who can legally commit
the Contractor to the
expenditure of funds. No person other than the Contractual Officer
can make any changes to the terms, conditions, general provisions,
or other stipulations of this Subcontract. Such changes may be
made only with the mutual agreement of the parties, through their
duly authorized representatives, in writing. If any such change
causes an increase or decrease



ACAMBIS CONFIDENTIAL -- PROPRIETARY INFORMATION

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	 	 	 	in the cost of, or the time required for, performance of any part
of the work under the Subcontract, whether or not changed, the
Subcontract price and delivery schedule shall be subject to
equitable adjustment.
	 
	 	(b)	 	No information, other than that which may be contained in an
authorized modification to this Subcontract, duly issued by the
Contractual Officer, which may be received from any person employed
by the Contractor, or otherwise, shall be considered grounds for
deviation from any stipulation of this Subcontract.
	 
	 	(c)	 	Contractor may from time to time change the person designated
as the Contractual Officer for this Subcontract by delivering a
written notice of such change to Subcontractor(s).
	 
	 	(d)	 	The designated Contractual Officer for this Subcontract is:
	 
	 	 	 	[ **** ]
[ **** ]
	 
	 	 	 	Acambis Inc.

38 Sidney Street

Cambridge, MA 02139

(617) 494-1339 (Phone)

(617) 494-1741 (Fax)

[ **** ]





	G.7	 	 AUTHORIZED REPRESENTATIVE OF 1ST and 2ND SUBCONTRACTOR





	 	(a)	 	The Authorized Representative of 1st and 2nd Subcontractor is
the only individual who can legally commit 1st or 2nd Subcontractor.
No person other than the Authorized Representative of 1st and 2nd
Subcontractor can agree to any changes to the terms, conditions,
general provisions, or other stipulations of this Subcontract.
	 
	 	(b)	 	No information, which may be received from any person
employed by 1st or 2nd Subcontractor other than from the 1st or 2nd
Subcontractor’s Authorized Representative, shall be considered
grounds for deviation from any stipulation of this Subcontract.
	 
	 	(c)	 	1st and 2nd Subcontractor may from time to time change the
person designated as the Authorized Representative of the 1st and
2nd Subcontractor for this Subcontract by delivering a written
notice of such change to Contractor.
	 
	 	(d)	 	The Authorized Representative of the 1st Subcontractor for
this Subcontract is:
	 
	 	 	 	[ **** ]
	 
	 	 	 	[ **** ]
	 
	 	 	 	Baxter Healthcare SA
	 
	 	 	 	Hertistrasse 2
	 
	 	 	 	CH-8304 Wallisellen, Switzerland [ **** ]
	 
	 	 	 	[ **** ]
	 
	 	 	 	[ **** ]
	 
	 	(e)	 	The Authorized Representative of the 2nd Subcontractor for
this Subcontract is:
	 
	 	 	 	[ **** ]
	 
	 	 	 	[ **** ]
	 
	 	 	 	Baxter Healthcare Corp.
10150 Old Columbia Road
Columbia, MD 21046
	 
	 	 	 	[ **** ]
	 
	 	 	 	[ **** ]
	 
	 	 	 	[ **** ]





	G.8 	 	ISSUANCE OF DELIVERY ORDERS (Applicable to All Subcontract ITEMs)



ACAMBIS CONFIDENTIAL -- PROPRIETARY INFORMATION

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	 	(a)	 	Orders for work to be performed by the
Subcontractors under this Subcontract shall be placed by
means of Delivery Orders. (See Section J, Attachment C).
Delivery Orders may be issued in writing, by facsimile, or
e-mail with electronic signature. (See Paragraph I.1).
	 
	 	(b)	 	Delivery Orders issued under this Subcontract
shall contain, at a minimum, the following information:





	 	(1)	 	Delivery Order, Subcontract, and
Prime Contract Numbers;
	 	(2)	 	Quantity of ITEM(s) Ordered;
	 	(3)	 	Unit Price;
	 	(4)	 	Extended Price; and
	 	(5)	 	Consignee Name and Address;
	 	(6)	 	Consignee contact name and
telephone number.





	 	(c)	 	Ordering Period:





	 	(1)	 	ITEMs 0001 and 0002: From
Subcontract award until [ **** ] or such later
period as the parties may agree in writing.
	 	(2)	 	ITEMs 0003, 0004, and 0005: From Subcontract award
until [ **** ], or such later period as the parties may
agree in writing.





	 	(d)	 	Contractor may issue Delivery Orders at any
time during the stated ordering period. The period of
performance for a delivery order may extend beyond the
ordering period.
	 
	 	(e)	 	Delivery Order Authority: The Contractual
Officer or any individual so
designated in writing by the Contractual Officer shall be the
only Contractor representative authorized to place Delivery
Orders under this Subcontract. The Subcontractor(s) shall not
accept any Delivery Order or verbal request from any other
Contractor representative or any Government personnel.
	 
	 	(f)	 	All Delivery Orders issued under this
Subcontract shall be sent to the Subcontractor as follows:






	 	(1)	 	1st Subcontractor:
	 
	 	 	 	[****] with informational copy to:
	 	 	 	[****]
	 
	 	(2)	 	2nd Subcontractor:
	 
	 	 	 	[****] with informational copy to:
	 	 	 	[****]





	 	(g)	 	Contractor designates the following individual
and agrees to make such individual available to allow
Subcontractors to confirm receipt of Contractor’s Delivery
Order(s) in the event that the Contractual Officer is
unavailable:
	 
	 	 	 	[****]




	 	 	 	 	 	 
	 	ADDRESS:	 	Acambis Inc
	 	 
	 	 	 	38 Sidney Street	 	 
	 	 	 	Cambridge, MA 02139	 	 





	 	 	 	[****]




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	G.9	 	 SUBCONTRACT COMMUNICATIONS/CORRESPONDENCE



Subcontractors shall identify all correspondence, reports, and other data
pertinent to this Subcontract by imprinting thereon the Subcontract number from
Page 1 of the Subcontract.




Section H — Special Subcontract Requirements





	H.1	 	 KEY PERSONNEL
	 
	 	 	The key personnel cited below are considered essential to the work being
performed under the Subcontract. If this individual leaves the
Subcontractors’ employ or is reassigned to other programs, the 1st or 2nd
Subcontractor shall notify the Contractual Officer reasonably in advance
and shall submit justification (including proposed substitutions) in
sufficient detail to permit evaluation of the impact on the program. The
Subcontractors shall not divert or replace such individual without the
written consent of the Contractual Officer, which shall not be
unreasonably withheld.




	 	 	 	 	 
	Personnel	 	Title	 	 
	[****]	 	
[****]
	 	 





	H.2	 	 EMERGENCY CONTACTS
	 
	 	 	The Subcontractor shall provide a point of contact that will be available
24 hours per day, seven days per week to be contacted in case of a public
health emergency.
	 
	H.3	 	 PROHIBITION ON THE USE OF APPROPRIATED FUNDS FOR LOBBYING ACTIVITIES
	 
	 	 	Subcontractors are hereby notified of the restrictions on the use of
DHHS’s funding for lobbying of federal, state and local legislative
bodies.
	 
	 	 	Section 1352 of Title 31, United Stated Code among other things,
prohibits a recipient (and their subcontractors) of a federal contract,
grant, loan, or cooperative agreement from using appropriated funds
(other than profits from a federal contract) to pay any person for
influencing or attempting to influence an officer or employee of any
agency, a Member of Congress, an officer or employee of Congress, or an
employee of a Member of Congress in connection with any of the following
covered federal actions; the awarding of any federal contract; the making
of any federal grant; the making of any federal loan; the entering into
of any cooperative agreement; or the modification of any federal
contract, grant, loan, or cooperative agreement. For additional
information of prohibitions against lobbying activities, see FAR Subpart
3.8 and FAR Clause 52.203-12.
	 
	 	 	In addition, the current DHHS Appropriations Act provides that no part of
any appropriation contained in this Act shall be used, other than for
normal and recognized executive-legislative relationships, for publicity
or propaganda purposes, for the preparation, distribution, or use of any
kit, pamphlet, booklet, publication, radio, television, or video
presentation designed to support, or defeat legislation pending before
the Congress, or any state or local legislature except in presentation to
the Congress, or any state or local legislative body itself.
	 
	 	 	The current DHHS Appropriations Act also provides that no part of any
appropriation contained in this Act shall be used to pay the salary or
expenses of any contract or grant recipient, or agent acting for such
recipient, related to any activity designed to influence legislation or
appropriations pending before the Congress, or any state or local
legislature.
	 
	H.4	 	 SECURITY REQUIREMENTS




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1st and 2nd Subcontractors’ manufacturing, [****]of vaccine/kits shall be
performed under a security plan that ensures [****].





	 	(a)	 	Security Plan Requirement





	 	 	 	Subcontractors shall develop and submit a written Security Plan to
the Contractual Officer prior to award. The Security Plan shall
describe [****].
	 
	 	(b)	 	Performance of work under this Subcontract shall be in
accordance with the Subcontractors’ approved written Security Plan.
	 
	 	(c)	 	Subcontractors shall also obtain a confidentiality agreement
from each employee performing tasks under this Subcontract in which
the employee(s) agree not to disclose information pertaining to this
Subcontract with any third-party other than other employees incident
to Subcontract performance.





	H.5	 	 SMOKE FREE ENVIRONMENT
	 
	 	 	In compliance with DHHS regulations, all Subcontractor personnel
performing work within CDC/ Agency for Toxic Substances and Disease
Registry (“ATSDR”) facilities shall observe the CDC/ATSDR smoke-free
working environment policy at all times. This policy prohibits smoking
in all CDC/ATSDR buildings and in front of buildings that are open to the
public. This policy is also applicable to Subcontractor personnel who do
not work full-time within CDC/ATSDR facilities, but are attending
meetings within CDC/ATSDR facilities.
	 
	H.6	 	 REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS OF OFFERORS
	 
	 	 	The Representations, Certifications and Other Statements of Offerors
submitted by Subcontractors, dated (To-Be-Determined) are hereby
incorporated by reference, with the same force and effect as if they were
given in full text.
	 
	H.7	 	 LABORATORY LICENSE REQUIREMENTS
	 
	 	 	The Subcontractor shall comply with all applicable FDA requirements,
requirements of Section 353 of the Public Health Service Act (Clinical
Laboratory Improvement Act as amended) and cGMP regulations. This
requirement shall also be included in any lower-tier subcontract awarded
by the Subcontractors.
	 
	H.8	 	 MANUFACTURING STANDARDS





	 	(a)	 	The cGMP regulations (21 CFR Parts 210-211) will be the
standard to be applied for manufacturing and packing of the vaccine.
	 
	 	(b)	 	If at any time during the life of the Subcontract, the
Subcontractors fail to comply with cGMP in the manufacturing or
packaging of this vaccine and such failure results in a material
adverse effect on the safety, purity or potency of this vaccine (a
material failure) as identified by the Center for Biologics
Evaluation and Research of the FDA, the Subcontractors shall have
thirty (30) calendar days from the time such material failure is
identified within which to cure such material failure. If the
Subcontractors fail to take such an action within the thirty (30)
calendar day period, the Subcontract may be terminated.





	H.9	 	 INDEMNIFICATION





	 	(a)	 	Contractor shall request the U.S. Government to approve the
indemnification of the Subcontractors from certain unusually
hazardous risks associated with the performance of this Subcontract
including, but not limited to, the design, development, manufacture,
testing, [****] of the vaccine and crude bulk vaccine, as
described in the following provision:




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Indemnification Under Public Law 85-804 (Applicable to Subcontracts under Contract 200-2002-00004)





	 	(a)	 	“Subcontractors’ principal officials,” as used in this clause,
means directors, officers, managers, superintendents, or other
representatives of Subcontractors supervising or directing—





	 	(1)	 	All or substantially all of the Subcontractors’
business;
	 	(2)	 	All or substantially all of the Subcontractors’
operations at any one plant or separate location in which this
Subcontract is being performed; or
	 	(3)	 	A separate and complete major industrial operation in
connection with the performance of this Subcontract.





	 	(b)	 	Under Public Law 85-804 (50 U.S.C. §§ 1431-1435) and Executive
Order 10789, as amended, and regardless of any other provision of this
Subcontract, the Government shall, subject to the limitations contained
in the other paragraphs of this clause, indemnify the Subcontractors
against—





	 	(1)	 	Claims (including reasonable expenses of litigation
or settlement) by third persons (including employees of the
Contractor or Subcontractors) for death; personal injury; or
loss of, damage to, or loss of use of property;
	 	(2)	 	Loss of, damage to, or loss of use of Contractor
property, excluding loss of profit;
	 	(3)	 	Loss of, damage to, or loss of use of Subcontractors’
property, excluding loss of profit;
	 	(4)	 	Loss of, damage to, or loss of use of Government
property, excluding loss of profit; and
	 	(5)	 	Litigation, arbitration, or alternative dispute
resolution-related expenses if Subcontractors are required by
the Government or the Contractor, as a condition of
indemnification, to sue insurance carriers that decline to
compensate for claims for losses related to this Subcontract.





	 	(c)	 	This indemnification applies only to the extent that the claim,
loss, or damage:





	 	(i)	 	Arises out of or results from risks defined below as “unusually
hazardous” and
	 	(ii)	 	Is not compensated for by insurance or otherwise.





	 	 	 	Any such claim, loss, or damage that is [****] (the deductible
portion of the Subcontractors’ insurance coverage to be maintained), is
not covered under this clause. If Subcontractors’ insurance coverage is
reduced below [****] with respect to the indemnified risks, the
Government’s liability under this clause shall not increase as a result.





	 	(d)	 	The following risks are defined to be “unusually hazardous” for the
purposes of this indemnification agreement:





	 	(1)	 	Alleged adverse reactions in humans resulting
from administration of vaccine, vaccine placebos, or other
materials used in the development of the vaccine or crude
bulk incident to contract performance; or resulting from the
administration of vaccine delivered or otherwise furnished
under the contract, irrespective of whether such vaccine was
furnished, delivered, or administered to humans prior to or
after FDA licensure;
	 	(2)	 	The alleged release of toxic materials
(including infectious agents) into the environment that is
alleged to have resulted in environmental damage or human
exposure to such toxic materials that were involved in the
development, testing, manufacture, [****],
transportation, or disposal of vaccine or crude bulk under
the Subcontract;
	 	(3)	 	“Adverse reactions” include anaphylaxis and any
other adverse reactions, whether foreseeable or not,
including, but not limited to:





	 	i.	 	Adverse reactions resulting
from the administration of the vaccine, vaccine
placebo, or other materials involved in the
development of the vaccine or crude bulk, including
challenge materials,
	 	ii.	 	The failure of the vaccine to
function as intended or to fail to confer immunity,
	 	iii.	 	Side effects or performance of
the vaccine in a manner not intended, and




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	 	iv.	 	Reactions that may be
manifested long after exposure to the vaccine,
vaccine placebo, or other materials associated with
the development or manufacture of the vaccine or
crude bulk (including challenge materials), which
reactions are directly attributable to or result from
the administration of such vaccine, vaccine placebo,
or other materials.





	 	(4)	 	“Acts of terrorism,” meaning any act of one or more persons,
whether or not agents of a sovereign power, for political or
terrorist purposes and whether the loss or damage resulting
therefrom is accidental or intentional.





	 	(e)	 	When the claim, loss, or damage is caused by the willful misconduct
or lack of good faith on the part of any of the Subcontractors’
principal officials, the Subcontractors shall not be indemnified for—





	 	(1)	 	Government claims against the Subcontractors (other
than those arising through subrogation); or
	 
	 	(2)	 	Loss or damage affecting the Subcontractors’
property.





	 	(f)	 	Neither the Government nor the Contractor shall be liable to the
Subcontractors under this or any other Subcontract provision for any
liability arising from Subcontractors’ indemnification of any
subcontractor at a lower tier unless such lower-tier indemnification
provisions have been approved in writing by both the Government and the
Contractor.
	 
	 	(g)	 	The rights and obligations of the parties under this clause shall
survive the Subcontract’s termination, expiration, or completion. No
payments shall be required to be made under this clause unless the
agency head determines that the amount is just and reasonable. The
Government shall pay the Subcontractors directly for any amounts
payable hereunder; or may directly pay the parties to whom the
Subcontractors are alleged to be or found liable.
	 
	 	(h)	 	The Subcontractors shall—





	 	(1)	 	promptly notify the Contractor and the Government of
any claim or action against, or any loss by, the Subcontractors
that may be reasonably expected to involve indemnification under
this clause;
	 
	 	(2)	 	immediately furnish to the Government and the
Contractor copies of all pertinent papers the Subcontractors
receive;
	 
	 	(3)	 	furnish evidence or proof of any claim, loss, or
damage covered by this clause in the manner and form required;
and
	 
	 	(4)	 	comply with the Government’s directions and execute
any authorizations required in connection with settlement or
defense of claims or actions.





	 	(i)	 	The Government may direct, control, or assist in settling or
defending any claim or action that may involve indemnification under
this clause.
	 
	 	(j)	 	Notwithstanding any other provision of this Subcontract: (1) no
settlement shall be executed involving sums to be paid by
Subcontractors (e.g., deductible amounts on Subcontractor’s insurance
policies) unless Subcontractors consent to the settlement; and (2)
Subcontractors shall not be required to take any action in violation of
any existing insurance policy.




—xxxxxxxxxxxxx—



(b)  Until the Government approves the indemnification of Subcontractors, as
provided in the clause set forth above, Subcontractors shall not be obligated
to perform any of the tasks or work specified in this Subcontract. In the
event 1st or 2nd Subcontractor, in its sole discretion, elects to perform under
the Subcontract, the Contractor shall be obligated to perform as required by
the Subcontract.



(c)  [****]. If and when the U.S. Government approves indemnification of the
Subcontractors, the above provision, as revised to the extent required by the
U.S. Government, and as agreed to by the parties, shall be incorporated into
this Subcontract.





	H.10	 	 DISSEMINATION OF INFORMATION




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	 	 	Information related to this Subcontract or to data obtained or generated
under this Subcontract may be released or publicized only after
coordination with the Contractual Officer, provided, however, that the
Subcontractors may, notwithstanding anything in this clause, disclose
such information (i) to regulatory authorities as may be required to
obtain product marketing authorizations and pricing approvals in
connection with the marketing and distribution of ACAM2000 vaccine under
Paragraph H.25 and (ii) to such third parties, under appropriate
confidentiality restrictions, as may be necessary or useful in connection
with the manufacturing, kitting, [****] and marketing of smallpox
vaccine hereunder.
	 
	H.11	 	 CONFIDENTIALITY OF PROPRIETARY INFORMATION AND INTELLECTUAL PROPERTY
RIGHTS
	 
	 	 	Except to the extent as may be authorized in writing, each party agrees
that, during the term of this Subcontract and for a period of ten (10)
years following its termination or completion, it shall (1) use any
Proprietary Information disclosed to it only for the purpose of
performance under this Subcontract, (2) not disclose Proprietary
Information to any third party, or to any employee who does not have a
need-to-know such information, and (3) employ the same standard of care
it uses to protect its own Proprietary Information. To be considered
“Proprietary Information” under this clause, the information must be (a)
disclosed in written or tangible form and appropriately marked as
proprietary, or (b) if disclosed orally or visually, clearly identified
as proprietary at the time of disclosure and summarized in writing within
thirty (30) calendar days after such disclosure. Information shall not
be deemed to be proprietary if such information is already known without
restriction to a receiving party; or is rightfully received without
restriction by the receiving party from a third party having the right to
disclose the information; or becomes publicly available through no
wrongful act of the receiving party; or is hereafter furnished by the
disclosing party without a similar restriction on disclosure; or is
independently developed by the receiving party without breach of this
Subcontract. The receiving party shall not be liable for inadvertent
disclosure or use of the information received hereunder if, upon
discovery of such, it shall take reasonable steps to prevent any further
inadvertent disclosure or unauthorized use. The receiving party may make
disclosures to the Government as may be required under the terms of the
Prime Contract shown on the cover page to this Subcontract. The
receiving party may make disclosures required by operation of law,
provided that the receiving party shall give the disclosing party
reasonable advance notice to provide the disclosing party an opportunity
to contest the requirement of disclosure. No license is either granted
or implied by the conveyance of Proprietary Information by either party.
The Parties further agree that the obligations set forth above shall
survive termination or completion of this Subcontract.
	 
	 	 	Notwithstanding any other provision of this Subcontract,
Subcontractors grant no rights to any party in its technical data,
computer software, or other intellectual property that may be developed
under or in connection with this Subcontract.
	 
	H.12	 	 MANUFACTURING SITE
	 
	 	 	The manufacturing site for vaccine under this Subcontract shall be at the
address shown below. Alternate sites may be used upon receipt of written
approval from the Contractual Officer.
	 
	 	 	[****]
	 
	H.13	 	 [****]
	 
	 	 	[****]
	 
	H.14	 	 GOVERNMENT PROPERTY/CONTRACTOR FURNISHED PROPERTY
	 
	 	 	Each Subcontractor shall be responsible for the control and accountable
record keeping for all Government Property in their possession under this
subcontract in accordance with FAR Subpart 45.5 as supplemented by DHHS
Publication (OS) 74.115 entitled “Contractor’s Guide for Control of




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	 	 	Government Property,” a copy of which will be provided upon request.
Similar controls and record keeping procedures shall be used for any
Contractor-furnished property as well.
	 
	 	 	The Chief of Material Management Branch, PGO, CDC, is the Government’s
Property Administrator for government property accountable under this
Subcontract. The Subcontract Program Officer (or his duly authorized
representative) shall be the Contractor’s Property Administrator for any
Government or Contractor-furnished property under this Subcontract. The
Subcontractor agrees to furnish information regarding the Government
property (or any Contractor-furnished property) under this Subcontract to
the respective Property Administrator, an authorized representative, or a
duly designated successor(s). Any inquiry from or information proposed to
be furnished to the Government Property Administrator shall be promptly
reported to Contractor’s Property Administrator before furnishing
information to the Government representative.
	 
	 	 	The following Government property shall be furnished to the specified
Subcontractor under this Subcontract. Such items shall be marked as U.S.
Government Property, with the Subcontract # 200-2002-0001(BXTR), the
Prime Contract #200-2002-00004 (Acambis Inc, Prime Contractor) (if not
already so marked when received) and shall be managed and administered
while in Subcontractors’ possession in accordance with the Government
Property (Fixed Price Contracts) (Dec 1989) clause, FAR 52.245.2:





	 	1.	 	Two (2) 9 mL vials of master virus seed (as is) [****]; and
	 
	 	2.	 	[****]





	 	 	Contractor shall furnish the following materials in sufficient quantities
to enable the 2nd Subcontractor to assemble the number of smallpox
vaccine kits ordered, in accordance with the Government Property (Fixed
Price Contracts) (Dec 1989) clause, FAR 52.245.2, modified to properly
reflect the parties, and marked to identify as the property as property
of Acambis Inc. (“Contractor Furnished Property”):
	 
	 	 	[****]
	 
	H.15	 	 FORCE MAJEURE/RISK OF LOSS
	 
	 	 	This Subcontract seeks the manufacture, [****] of a smallpox vaccine
to the U.S. Government in the event of a national bio-terrorism
emergency. [****]. For purposes of this Subcontract, force majeure
shall include the causes of excusable delay set forth in the clause at
FAR 52.249-14 except in so far as subsection (a)(5) of such clause
includes smallpox epidemics. In no event shall either party be liable to
the other as a result of the performance of this Subcontract for any loss
of profits, or any incidental, special, exemplary, or consequential
damages.
	 
	H.16	 	 ASSIGNMENT OF CLAIMS
	 
	 	 	Assignment of this Subcontract, or any interest therein, or any payment
due or to become due thereunder, without the prior written consent of
Contractor, which shall not be unreasonably withheld, shall be void.
Should Contractor approve any assignment thereof, in no event shall any
copy of any part or all of this Subcontract which is marked “Top Secret”,
“Secret,” “Confidential”, or “Proprietary Information” be furnished to
any assignee of any claim arising under this Subcontract, or to any
person not entitled to receive the same, without prior written consent of
Contractor.
	 
	H.17	 	 VALIDITY OF INDIVIDUAL PROVISION
	 
	 	 	The invalidity, in whole or in part, of any provision of this Subcontract
shall not void or otherwise affect the validity of any other provision.
	 
	H.18	 	 WAIVER OF BREACH
	 
	 	 	No waiver of a breach of any provision of this Subcontract shall
constitute a waiver of any other breach of such provision. Failure of
any party to enforce at any time, or from time to time, any provision of
this Subcontract shall not be construed as a waiver thereof. The
remedies herein shall be cumulative and additional to any other remedies
in law and in equity.




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	H.19	 	 COMPLIANCE WITH LAWS
	 
	 	 	Each party agrees to comply with all applicable U.S. federal, state and
municipal laws and ordinances and all rules and regulations thereunder.
Each party agrees to indemnify and hold the other party harmless for all
costs (including attorney’s fees) liabilities and judgments incurred by a
party and caused by another party’s failure to comply with such laws,
ordinances, rules or regulations.
	 
	H.20	 	 INDEPENDENT CONTRACTOR
	 
	 	 	It is understood and agreed that 1st and 2nd Subcontractor shall be
deemed to be independent contractors in all their operations and
activities hereunder; that the employees furnished by 1st and 2nd
Subcontractor to perform work hereunder shall be deemed to be 1st or 2nd
Subcontractor’s employees exclusively, without any relationship to
Contractor with respect to their employment; that said employees shall be
paid by 1st or 2nd Subcontractor for all services in this connection, and
that 1st and 2nd Subcontractor shall be responsible for all obligations
and reports covering Social Security, unemployment insurance, workers’
compensation, income tax, and other reports and deductions required by
state, U.S. federal, or foreign law.
	 
	H.21	 	 SOLICITATION OF EMPLOYEES
	 
	 	 	Each of the parties agrees that, during the term of this Subcontract and
for a period of one (1) year thereafter, it will not directly solicit or
recruit the employees of the other party associated with the performance
of this Subcontract. Nothing herein shall preclude any employee of any
party from pursuing and securing employment opportunities with another
party on such employee’s own initiation.
	 
	H.22	 	 DISPUTES
	 
	 	 	Any dispute arising under or related to the performance of this
Subcontract, including the breach, termination, or validity thereof, that
is not resolved by good faith negotiations shall, upon the written
request of either party, be submitted to non-binding arbitration to be
conducted in accordance with the rules of the CPR Institute for Dispute
Resolution for Non-Administered Arbitration by a sole arbitrator who is a
member of the National Health Lawyers Association or another mutually
agreeable individual. Such arbitrator shall set a schedule for
determination of such dispute that is reasonable under the circumstances.
Such arbitrator shall determine the dispute in accordance with the
substantive rules of law (but not the rules of procedure) as required by
Paragraph H.23 below. The arbitration shall take place in Delaware. The
arbitration will be governed by the Federal Arbitration Act, 9 U.S.C. §§
1-16, and, where applicable, the Patent Arbitration Act, 35 U.S.C. § 294.
Each party shall bear their own costs of such arbitration and shall
equally share the common costs of the arbitration.
	 
	 	 	In the event that non-binding arbitration fails to resolve a dispute, any
legal proceedings between the Contractor and the Subcontractor(s) shall
be brought and jurisdiction and venue shall be proper only in the United
States District Court for the District of Delaware, or if jurisdiction is
lacking, the Courts of the State of Delaware.
	 
	 	 	Pending final resolution of any dispute, as evidenced by a written
agreement of the parties, or in the event of legal proceedings, as
evidenced by final judgment by a court of competent jurisdiction, the
parties shall proceed diligently with the performance of their respective
responsibilities under this Subcontract, except to the extent that
Contractor may have terminated the Subcontract.
	 
	 	 	Any reference to disputes procedures in FAR clauses incorporated
into this Subcontract by reference shall be deemed to refer to this
provision.
	 
	H.23	 	 GOVERNING LAW
	 
	 	 	The validity, construction, scope and performance of this Subcontract,
including any attachments and modifications hereto, and all disputes
related thereto, shall be governed by the laws of the State of Delaware,
without regard to its “Choice of Law” provisions; except that with
respect to any provisions “flowed-down” from the Prime Contract or based
upon FAR clauses, such provisions




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	 	 	shall be interpreted and governed by the body of federal government
procurement law interpreting such provisions.
	 
	H.24	 	 CLAIMS INVOLVING THE GOVERNMENT
	 
	(a)	 	Government Claims Against Contractor and Contractor Claims Against the
Government – To the extent that the Contractor may present any request for
equitable adjustment, request for schedule extension, settlement proposal,
or other matter to the Government that may become a “claim” under the
Contract Disputes Act of 1978 (41 U.S.C. 604)(hereinafter referred to as
the Contract Disputes Act); or, to the extent that the Government may
assert any claim against the Contractor, the Parties agree:





	 	(1)	 	To the extent that such matters involve the
performance of this Subcontract, Subcontractors shall fully
cooperate with the Contractor, provide supporting documentation,
witnesses, statements, and otherwise participate in negotiations
with or litigation against the Government, to the extent
reasonably requested by the Contractor.
	 
	 	(2)	 	That the Subcontractor(s) shall not be bound by any
settlement the Contractor may make with the Government or other
compromise with respect to any matter within the coverage of
paragraph (a)(1) above unless the Subcontractor(s) agree to such
settlement or compromise in writing.
	 
	 	(3)	 	That, if the Government issues a final decision of
the Contracting Officer under the terms of the Prime Contract
with respect to any claim described in paragraph (a) above, and
the Contractor elects not to file an appeal from such final
decision under the Disputes provisions of the Prime Contract,
within sixty (60) days of Contractor receipt of such final
decision; the Contractor may authorize the Subcontractor(s) to
appeal such final decision, in the name of and with the consent
of the Contractor, at the Subcontractor’s expense. In the event
that the Subcontractor(s) elect to appeal any such final
decision, the Contractor shall cooperate with the
Subcontractor(s) in the same manner provided in subparagraph (1)
above with respect to Subcontractor cooperation with the
Contractor.





	(b)	 	Subcontractor Claims Against the Government – To the extent that the
costs of Subcontract performance have been increased or the schedule or
manner of Subcontract performance has been adversely affected by actions
or inactions of the Government, and the Subcontractor(s) request consent
to pursue a claim against the Government, the Parties agree as follows:





	 	(1)	 	If the subject matter of the
Subcontractor(s)’ claim is not within the coverage of
a matter governed by paragraph (a) above,
Subcontractor(s) shall submit to the Contractor a
fully supported claim with respect to such matter no
later than final payment under this Subcontract.
	 
	 	(2)	 	If the Parties are unable to
resolve the Subcontractor(s)’ claim within ninety (90)
days of Subcontractor’s submission to the Contractor,
the Contractor may either: (A) Present a request for
equitable adjustment or other relief, as appropriate,
to the Government, which submission shall embody the
Subcontractor’s claim and shall be governed by
paragraph (a) above, or (B) may authorize the
Subcontractor(s) to assert such claim against the
Government on behalf of the Contractor, to negotiate a
settlement thereof, and to prosecute any appeal from
any final decision of the Government Contracting
Officer with respect to such claim, in the name of
and with the consent of the Contractor.





	(c)	 	If the Contractor authorizes the Subcontractor(s) to assert any claim
against the Government
in the name of the Contractor, or to prosecute an appeal from the final
decision of the Government Contracting Officer, in the name of and with
the consent of the Contractor, if the claim is subject to certification
by the Contractor under the Contract Disputes Act, Subcontractors shall
submit with their claim, when submitted to the Contractor under paragraph
(b)(1), a certification that: (i) the claim is made in good faith, (ii)
the supporting data are accurate and complete to the best of the
Subcontractors’ knowledge and belief, and (iii) the amount requested
accurately reflects the Subcontract adjustment for which Subcontractors
believe the Government through the Contractor is liable; furthermore,
such certification shall be executed by a person duly authorized to
certify the claim and bind Subcontractors, and Subcontractors shall
indemnify and hold Contractor harmless




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	 	 	from damages, judgments, costs (including reasonable attorneys’ fees),
and other liabilities arising from any breach of such certification or
any violation of section 5 of the Contract Disputes Act of 1978 (41
U.S.C. § 604) or any violation of common law or statutory prohibitions
against misrepresentations, fraud or false statements.
	 
	(d)	 	Contractor shall include interest in the amount of any Subcontract price
adjustment to which the Subcontractors are found entitled on any
Subcontractor claim. Such interest shall be computed from (1) the date
the Contractor received the Subcontractor’s claim (certified, if required)
or (2) from the date that such Subcontract payments would otherwise be
due, if such date is later, until the date of payment to the
Subcontractor. If the Subcontractor’s certification was defective, but is
cured prior to the date of settlement or the date on which the Board of
Contract Appeals or Court enters judgment, such defect shall not affect
the computation of interest to which the Subcontractor is entitled. Simple
interest shall be paid at the rate fixed by the Secretary of the Treasury
under the Contract Disputes Act, from the date such interest is first
payable until payment to the Subcontractor, as such rate may be adjusted
by the Secretary of the Treasury each six months during the pendency of
the claim.
	 
	(e)	 	The Contractor and Subcontractor(s) shall each bear their own costs of
prosecuting any claims under this provision.
	 
	(f)	 	With respect to any claim under this provision affecting both the
Contractor and the Subcontractor(s), the parties agree to enter into a
formal or informal joint defense agreement, the parameters of which shall
be mutually agreed upon by the parties, and further to (i) promptly
cooperate in the case, (ii) grant reasonable requests to make records and
employees available to the other party, (iii) provide to the other party
free of charge, copies of all pleadings, filings, and communications with
the Government, and (iv) inform the other party of all oral communications
with the Government.
	 
	(g)	 	Nothing in this Subcontract shall be construed to grant Subcontractors
the right to file any claim under this Subcontract directly against the
Government or to appeal, other than in the name of and with the consent of
the Contractor, any final decision of the Government Contracting Officer
under the Disputes clause of the Prime Contract.
	 
	H.25	 	 LICENSING TO MARKET THE ACAM2000 SMALLPOX VACCINE





	 	(a)	 	Solely for the purposes of performing this Subcontract,
Contractor grants [ **** ], a royalty-free license to use the
ACAM1000 and ACAM 2000 vaccinia strain for the manufacture of crude
bulk vaccine. [ **** ] agrees that it shall not use the strain,
or authorize others to use the strain, for any other purpose and
that, if the product based upon the strain (the derivative product,
ACAM2000, or ACAM 1000) is licensed by any regulatory authority, the
license shall be owned solely by Contractor.
	 
	 	(b)	 	Upon completion of this Subcontract, [ **** ] shall either
destroy or retain any ACAM1000 or ACAM2000 materials, any products
derived therefrom, and related documentation; as directed by the
Contractor.
	 
	 	(c)	 	Neither 1st nor 2nd Subcontractor, nor its parent company,
nor any affiliate of 1st or 2nd Subcontractor or its parent company,
shall compete against the Contractor in the United States smallpox
market for a period of five (5) years following completion of this
Subcontract or in other world markets for a period of five (5) years
after Subcontract execution. An “affiliate” is any company or
entity substantially owned or controlled by Subcontractors or their
indirect parent, Baxter International Inc.





	H.26	 	 PAYMENT FOR ADDITIONAL SERVICES (ITEM 0007)
	 
	 	 	Contractor shall pay 1st Subcontractor [ **** ] in exchange for
Subcontractors providing to the Contractor during the term of this
Subcontract reasonable technical and consulting assistance and
services regarding export/import assistance, technical and quality
issues, and assistance concerning Contractor’s Security Plan with
respect to facilities and vaccine transportation security after
purification at Contractor’s facilities. The 1st Subcontractor
shall submit an invoice for additional services under ITEM 0007 at
the same time invoices are submitted for completed kits under ITEMs
0001 and 0002. Payment for ITEM 0007 shall be due at the same time
payment is due for ITEMs 0001 and 0002.




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	H.27	 	 COMPLAINTS AND ADVERSE EVENTS
	 
	 	 	Contractor shall be responsible for and Subcontractors shall be relieved
of any responsibility for reporting any and all product complaints to the
FDA. Subcontractors and Contractor shall report to the other any
information that they have knowledge of concerning any adverse drug
experience in connection with the use of the vaccine, including the
incidence or severity thereof, associated with non-clinical toxicity
studies, clinical uses, studies, investigations or tests, whether or not
determined to be attributable to the vaccine. Reports of routine adverse
drug experiences of the type defined in Section 214.80 of Title 21 of the
United States Code of Federal Regulations shall be exchanged by each
party on a quarterly basis. Reports of serious adverse drug experiences
of the type defined in Sections 312.32 and 314.80 of Title 21 of the
United States Code of Federal Regulations shall be made available to the
other party within five (5) calendar days after a party becomes aware of
such adverse drug experience. Upon receipt of any such information
concerning any serious drug experience by either Subcontractors or
Contractor, the parties shall promptly consult each other and use their
best efforts to arrive at a mutually acceptable procedure for taking such
possible actions as appropriate or required under the circumstances.
	 
	H.28	 	 FIELD CORRECTIVE ACTIONS
	 
	 	 	In the event Contractor shall be required to recall any vaccine because
such vaccine may violate local, state or federal laws or regulations or
the product specifications, or in the event that Contractor elects to
institute a voluntary recall, Contractor shall be responsible for
coordinating such recall. Contractor shall promptly notify
Subcontractors if any vaccine is the subject of a recall and provide
Subcontractors with a copy of all documents relating to such recall.
	 
	 	 	Subcontractors shall cooperate with Contractor in connection with any
recall at Contractor’s expense, except in the event that a recall,
product withdrawal, or field correction is necessary because either (i)
Subcontractors have delivered a non-conforming product to Contractor, or
(ii) such non-conformity was due to the negligence of Subcontractors,
Subcontractors shall bear all reasonable costs associated with such
recall, product withdrawal or field correction (including but not limited
to costs associated with receiving and administering the recalled vaccine
and notification of the recall to those persons whom Contractor deems
appropriate).
	 
	H.29	 	 TRUTH-IN-NEGOTIATIONS
	 
	 	 	Subcontractors shall indemnify and hold the Contractor harmless from
any liability that the Contractor may have to the U.S. Government
based upon any cost or pricing data (as defined in FAR Subpart 15.4)
that the Subcontractors submitted to the Contractor or to the U.S.
Government, or that Subcontractors were required to submit, but
failed to do so, that was not accurate, current, and complete, as
required by the Truth-in-Negotiations Act (41 U.S.C. 254b).



Section I — Subcontract Clauses



Section I-1 — CLAUSES INCORPORATED BY REFERENCE





	 	 	The Federal Acquisition Regulation (FAR) and Health And Human Services
Supplemental Acquisition Regulation (HHSAR) clauses identified herein
below are hereby incorporated into this Subcontract by reference with
full force and effect. The additional HHSAR clauses augment and
supplement the FAR clauses, taking precedence thereover to any extent
inconsistent therewith.
	 
	 	 	All such clauses, as well as any other FAR or HHSAR clauses referred to
elsewhere in this Subcontract, shall with respect to the rights, duties,
and obligations of the Contractor and the Subcontractors thereunder, be
interpreted and construed in such manner as to recognize and give effect
to (i) the contractual relationship between the Contractor and
1st and
2nd Subcontractors under this Subcontract and (ii) the rights of the
Government with respect thereto under the Prime Contract from which such
clauses are derived. Where rights, duties and obligations are expressed
herein as applying to the “Government” the “United States,” or the
“Contracting Officer”, they shall generally apply by reason of the flow
down to the “Contractor”; and where expressed herein as applying to the
“Contractor”, they shall generally apply by reason of the flow down to
the “1st and 2nd Subcontractor”. However, the terms “Government” or
“Contracting Officer” do not change (i) in 





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	 	 	the phrases “Government
Property”; “Government-Owned Property,” “Government Equipment” or
“Government-Owned Equipment” except with respect to property identified
in provision H.14 as Contractor Furnished Property.; (ii) when a right,
act, authorization or obligation can only be exercised by the
Government or the Contracting Officer under the prime contract or his
duly authorized representative, (iii) when title to property is to be
transferred directly to the Government, and (iv) in FAR 52.227-1 and
52.227-2. To the extent there is a conflict between the FAR or HHSAR
clauses incorporated by reference and the text of this Subcontract, the
text of the Subcontract shall have precedence.




	 	 	 
	52.227-1	 	
Authorization and Consent (Jul 1995) Alternate I (Apr 1984)
	52.227-2	 	
Notice and Assistance Regarding Patent and Copyright Infringement (Aug 1996)
	52.245-2	 	
Government Property (Fixed Price)(Dec 1989)(as implemented at Paragraph H. 14)
	352. 270-4	 	
Pricing of Adjustments (Apr 1984)
	52.249-14	 	
Excusable Delays (Apr 1984)
	52.232-1	 	
Payments (Apr 1984)



Section I-2 CLAUSES IN FULL TEXT





	I.1	 	 ORDERING (ITEM 0001 through 0005)





	 	(a)	 	ITEM(s) (work) to be performed under this Subcontract shall
be ordered by issuance of
Delivery Orders by the individuals designated in Paragraph G.8(e).
Such Delivery Orders may be issued at any time within the
ordering period set forth in the Subcontract .
	 
	 	(b)	 	All Delivery Orders are subject to the terms and conditions
of this Subcontract. In the event of conflict between a Delivery
Order and this Subcontract, the Subcontract shall control.
	 
	 	(c)	 	If mailed, a Delivery Order is considered “issued” when the
Subcontractor receives the order, as evidenced by written receipt
thereof or Subcontractor confirmation of receipt by facsimile or
electronic mail. Delivery Orders may also be issued by facsimile or
by electronic mail, in which case they are considered to have been
“issued” when the Subcontractor provides the Contractual Officer or
his designee confirmation of receipt in the same manner as specified
above for mailed Delivery Orders.
	 
	 	(d)	 	The period of performance for Delivery Orders may extend
beyond the performance period set forth in Section F of the
Subcontract.
	 
	 	(e)	 	Guaranteed Minimum Order(s): When and if the U.S. Government
places funded orders with the Contractor for manufacture of smallpox
vaccine kits under the Prime Contract shown on the cover page of
this Subcontract, Contractor shall order the manufacture of an
equivalent number of smallpox vaccine kits from the Subcontractors.
Estimated quantities are as set forth in Section B of the
Subcontract.





	I.2	 	 FAR 52.215-21 REQUIREMENTS FOR COST OR PRICING DATA OR INFORMATION OTHER
THAN COST OR PRICING DATA — MODIFICATIONS (OCT 1997) ALTERNATE IV (OCT
1997)





	 	(a)	 	Submission of cost or pricing data is not required.
	 
	 	(b)	 	Provide information described below:
	 
	 	 	 	If information is required to determine reasonableness of an
equitable adjustment in the price for a line ITEM(s), the
information to be provided by the Subcontractor(s) shall include
an itemized cost breakdown of applicable unit price(s). The cost
breakdown shall include, at a minimum, the type of labor,
estimated number of hours, and hourly rate for each labor
category, fringe benefits, overhead, other direct costs, general
and administrative, and profit. The requirement of this clause
does not entitle the Government to require such information to
support the prices included in the contract at time of award.





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	I.3	 	 FAR 52.244-6 SUBCONTRACTS FOR COMMERCIAL ITEMS AND COMMERCIAL
COMPONENTS (OCT 1998)





	 	(a)	 	Definitions.
	 
	 	 	 	“Commercial item”, as used in this clause, has the meaning
contained in the clause at 52.202-1, Definitions.
	 
	 	 	 	“Subcontract”, as used in this clause, includes a transfer of
commercial items between divisions, subsidiaries, or affiliates of
the Contractor or subcontractor at any tier.
	 
	 	(b)	 	To the maximum extent practicable, the Subcontractors shall
incorporate, and require its subcontractors at all tiers to
incorporate, commercial items or nondevelopmental items as
components of items to be supplied under this Subcontract.
	 
	 	(c)	 	Notwithstanding any other clause of this Subcontract, the
Subcontractor(s) is not required to include any FAR provision or
clause, other than those listed below to the extent they are
applicable and as may be required to establish the reasonableness of
prices under Part 15, in a subcontract at any tier for commercial
items or commercial components:




	 	 	 	 	 	 	 
	 	 	 	 	(1)	 	52.222-26, Equal Opportunity (E.O. 11246);
	 	 	 	 	 	 	 
	 	 	 	 	(2)	 	52.222-35, Affirmative Action for Disabled
Veterans and Veterans of the Vietnam Era (38 U.S.C. 4212(a));
	 	 	 	 	 	 	 
	 	 	 	 	(3)	 	52.222-36, Affirmative Action for Workers with
Disabilities (29 U.S.C. 793); and





	 	(d)	 	The Subcontractor shall include the terms of this clause,
including this paragraph (d), in lower-tier subcontracts awarded
under this Subcontract.





	I.4	 	 TERMINATION FOR CONVENIENCE (FIXED PRICE)





	 	(a)	 	The Contractor may terminate performance of work under this
Subcontract in whole or, from time to time, in part, if the
Contractual Officer determines that a termination is in the
Contractor’s interest, but only if and to the same extent that the
Government has terminated the Contractor’s Prime Contract. The
Contractual Officer shall terminate by delivering to the
Subcontractor(s) a Notice of Termination specifying the extent of
termination and the effective date.
	 
	 	(b)	 	After receipt of a Notice of Termination, and except as
directed by the Contractual Officer, the Subcontractor(s) shall
immediately proceed with the following obligations, regardless of
any delay in determining or adjusting any amounts due under this
clause:




	 	 	 	 	 	 	 
	 	 	 	 	(1)	 	Stop work as specified in the notice.
	 	 	 	 	 	 	 
	 	 	 	 	(2)	 	Place no further subcontracts or orders
(referred to as subcontracts in this clause) for materials,
services, or facilities, except as necessary to complete the
continued portion of the Subcontract.
	 	 	 	 	 	 	 
	 	 	 	 	(3)	 	Terminate all subcontracts to the extent they
relate to the work terminated.
	 	 	 	 	 	 	 
	 	 	 	 	(4)	 	Assign to the Contractor or the Government, as
directed by the Contractual Officer, all right, title, and
interest of the Subcontractor(s) under the subcontracts
terminated, in which case the Contractor shall have the right
to settle or to pay any termination settlement proposal
arising out of those terminations.
	 	 	 	 	 	 	 
	 	 	 	 	(5)	 	With approval or ratification to the extent
required by the Contractual Officer, settle all outstanding
liabilities and termination settlement proposals arising from





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	 	 	 	 	 	 	the termination of subcontracts; the approval or ratification
will be final for purposes of this clause.
	 	 	 	 	 	 	 
	 	 	 	 	(6)	 	As directed by the Contractual Officer,
transfer title and deliver to the Contractor or the
Government –




	 	 	 	 	 
	 	 	
(i)
	 	The fabricated or unfabricated
parts, work in process, completed work, supplies and
other material produced or acquired for the work
terminated; and
	 	 	 	 	 
	 	 	
(ii)
	 	The completed or partially
completed plans, drawings, information, and other
property that, if the Subcontract had been completed
would be required to be furnished to the Contractor or
the Government.




	 	 	 	 	 	 	 
	 	 	 	 	(7)	 	Complete performance of the work not terminated.
	 	 	 	 	 	 	 
	 	 	 	 	(8)	 	Take any action that may be necessary, or that
the Contractual Officer may direct, for the protection and
preservation of the property related to this Subcontract that
is in the possession of the Subcontractor(s) and in which the
Contractor or the Government has or may acquire an interest.
	 	 	 	 	 	 	 
	 	 	 	 	(9)	 	Use its best efforts to sell, as directed or
authorized by the Contractual Officer, any property of the
types referred to in subparagraph (b)(6) of this clause;
provided, however, that the Subcontractor(s) (i) is not
required to extend credit to any purchaser and (ii) may
acquire the property under the conditions prescribed by, and
at prices approved by, the Contractual Officer. The proceeds
of any transfer or disposition will be applied to reduce any
payments to be made by the Contractor under this Subcontract,
credited to the price or cost of the work, or paid in any
other manner directed by the Contractual Officer.





	 	(c)	 	The Subcontractor(s) shall submit complete termination
inventory schedules no later than 90 days from the effective date of
termination, unless extended in writing by the Contractual Officer
upon written request of the Subcontractor(s) within this 90-day
period.
	 
	 	(d)	 	After expiration of the plant clearance period as defined in
Subpart 45.6 of the Federal Acquisition Regulation, the
Subcontractor(s) may submit to the Contractual Officer a list,
certified as to quantity and quality, of termination inventory not
previously disposed of, excluding items authorized for disposition
by the Contractual Officer. The Subcontractor(s) may request the
Contractor to remove those items or enter into an agreement for
their storage. Within 30 days, the Contractor will accept title to
those items and remove them or enter into a storage agreement. The
Contractual Officer may verify the list upon removal of the items,
or if stored, within 45 days from submission of the list, and shall
correct the list, as necessary, before final settlement.
	 
	 	(e)	 	After termination, the Subcontractor(s) shall submit a final
termination settlement proposal to the Contractual Officer in the
form and with the certification prescribed by the Contractual
Officer. The Subcontractor(s) shall submit the proposal promptly,
but no later than 240 days from the effective date of termination,
unless extended in writing by the Contractual Officer upon written
request the Subcontractor(s) within this 240-day period. However,
if the Contractual Officer determines that the facts justify it, a
termination settlement proposal may be received and acted on after
240 days or any extension. If the Subcontractor(s) fails to submit
the proposal within the time allowed, the Contractual Officer may
determine, on the basis of information available, the amount, if
any, due the Subcontractor(s) because of the termination and shall
pay the amount determined.
	 
	 	(f)	 	Subject to paragraph (e) of this clause, the Subcontractor(s)
and the Contractual Officer may agree upon the whole or any part of
the amount to be paid or remaining to be paid because of the
termination. The amount may include a reasonable allowance for
profit on work done. However, the agreed amount, whether under this
paragraph (f) or paragraph (g) of this clause, exclusive of costs
shown in subparagraph (g)(3) of this clause, may not exceed the
total Subcontract price as reduced by (1) the amount of payments
previously 





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	 	 	 	made and (2) the Subcontract price of work not
terminated. The Subcontract shall be modified, and the
Subcontractor(s) paid the agreed amount. Paragraph (g) of this
clause shall not limit, restrict, or affect the amount that may be
agreed upon to be paid under this paragraph.
	 
	 	(g)	 	If the Subcontractor(s) and the Contractual Officer fail to
agree on the whole amount to be paid because of the termination of
work, the Contractual Officer shall pay the Subcontractor(s) the
amounts determined by the Contractual Officer as follows, but
without duplication of any amounts agreed on under paragraph (f) of
this clause:




	 	 	 	 	 	 	 
	 	 	 	 	(1)	 	The Subcontract price for completed supplies or
services accepted by the Contractor (or sold or acquired
under subparagraph (b)(9) of this clause) not previously paid
for, adjusted for any saving of freight and other charges.
	 	 	 	 	 	 	 
	 	 	 	 	(2)	 	The total of –




	 	 	 	 	 
	 	 	
(i)
	 	The costs incurred in the
performance of the work terminated, including initial
costs and preparatory expense allocable thereto, but
excluding any costs attributable to supplies or
services paid or to be paid under subparagraph (g)(1)
of this clause;
	 	 	 	 	 
	 	 	
(ii)
	 	The cost of settling and paying
termination settlement proposals under terminated
subcontracts that are properly chargeable to the
terminated portion of the Subcontract if not included
in subdivision (g)(2)(i) of this clause; and
	 	 	 	 	 
	 	 	
(iii)
	 	A sum, as profit on subdivision
(g)(2)(i) of this clause, determined by the
Contractual Officer under 49.202 of the Federal
Acquisition Regulation, in effect on the date of this
Subcontract, to be fair and reasonable; however, if it
appears that the Subcontractor(s) would have sustained
a loss on the entire Subcontract had it been
completed, the Contractual Officer shall allow no
profit under this subdivision (g)(2)(iii) and shall
reduce the settlement to reflect the indicated rate of
loss.




	 	 	 	 	 	 	 
	 	 	 	 	(3)	 	The reasonable costs of settlement of the work
terminated, including –




	 	 	 	 	 
	 	 	
(i)
	 	Accounting, legal, clerical, and
other expenses reasonably necessary for the
preparation of termination settlement proposals and
supporting data;
	 	 	 	 	 
	 	 	
(ii)
	 	The termination and settlement of
subcontracts (excluding the amounts of such
settlements); and
	 	 	 	 	 
	 	 	
(iii)
	 	Storage, transportation, and
other costs incurred, reasonably necessary for the
preservation, protection, or disposition of the
termination inventory.





	 	(h)	 	Except for normal spoilage, and except to the extent that the
Contractor or the Government expressly assumed the risk of loss, the
Contractual Officer shall exclude from the amounts payable to the
Subcontractor(s) under paragraph (g) of this clause, the fair value,
as determined by the Contractual Officer, of property that is
destroyed, lost, stolen, or damaged so as to become undeliverable to
the Contractor.
	 
	 	(i)	 	The cost principles and procedures of Part 31 of the Federal
Acquisition Regulation, in effect on the date of this Subcontract,
shall govern all costs claimed, agreed to, or determined under this
clause.
	 
	 	(j)	 	The Subcontractor(s) shall have the right to dispute the
termination settlement amount unilaterally established by Contractor
under paragraph (e) or (g) of this clause and any equitable
adjustment unilaterally established by the Contractor under
paragraph (l), except that if the Subcontractor(s) failed to submit
the termination settlement proposal or request 





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	 	 	 	for equitable
adjustment within the time provided in paragraph (e) or (l),
respectively, and failed to request a time extension, there is no
right to dispute the amount allowed by the Contractor.
	 
	 	(k)	 	In arriving at the amount due the Subcontractor(s) under this
clause, there shall be deducted




	 	 	 	 	 	 	 
	 	 	 	 	(1)	 	All unliquidated advance or other payments to
the Subcontractor(s) under the terminated portion of this
Subcontract;
	 	 	 	 	 	 	 
	 	 	 	 	(2)	 	Any claim which the Contractor has against the
Subcontractor(s) under this Subcontract; and
	 	 	 	 	 	 	 
	 	 	 	 	(3)	 	The agreed price for, or the proceeds of sale
of, materials, supplies, or other things acquired by the
Subcontractor(s) or sold under the provisions of this clause
and not recovered by or credited to the Contractor.





	 	(l)	 	If the termination is partial, the Subcontractor(s) may file
a proposal with the Contractual Officer for an equitable adjustment
of the price(s) of the continued portion of the Subcontract. The
Contractual Officer shall make any equitable adjustment agreed upon.
Any proposal by the Subcontractor(s) for an equitable adjustment
under this clause shall be requested within 90 days from the
effective date of termination unless extended in writing by the
Contractual Officer.




	 	 	 	 	 	 	 	 	 
	 	 	
(m)
	 	 	(1	)	 	The Contractor may, under the terms and conditions it
prescribes, make partial payments and payments against costs
incurred by the Subcontractor(s) for the terminated portion of the
Subcontract, if the Contractual Officer believes the total of these
payments will not exceed the amount to which the Subcontractor(s)
will be entitled.
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	(2	)	 	If the total payments exceed the amount finally
determined to be due, the Subcontractor(s) shall repay the
excess to the Contractor upon demand, together with interest
computed at the rate established by the Secretary of the
Treasury under 50 U.S.C. App. 1215(b)(2). Interest shall be
computed for the period from the date the excess payment is
received by the Subcontractors to the date the excess is
repaid. Interest shall not be charged on any excess payment
due to a reduction in the Subcontractor’s termination
settlement proposal because of retention or other disposition
of termination inventory until 10 days after the date of the
retention or disposition, or a later date determined by the
Contractual Officer because of the circumstances.





	 	(n)	 	Unless otherwise provided in this Subcontract or by statute,
the Subcontractors shall maintain all records and documents relating
to the terminated portion of this Subcontract for 3 years after
final settlement. This includes all books and other evidence
bearing on the Subcontractors’ costs and expenses under this
Subcontract. The Subcontractors shall make these records and
documents available to the Contractor and the Government, at the
Subcontractors’ offices, at all reasonable times, without any direct
charge. If approved by the Contractual Officer, photographs,
microphotographs, or other authentic reproductions may be maintained
instead of original records and documents.





	I.5	 	 DEFAULT (FIXED PRICE)





	 	(a)(1)	 	The Contractor may, subject to paragraphs (c) and (d) of this
clause, by written notice of default to the Subcontractor(s),
terminate this Subcontract in whole or in part if the
Subcontractor(s) fail to:





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(i)
	 	Deliver the supplies or to perform the services
within the time specified in this Subcontract or any
extension
	 	 	 	 	 
	 	 	
(ii)
	 	Make progress, so as to endanger performance of
this Subcontract (but see subparagraph (a)(2) of this
clause); or
	 	 	 	 	 
	 	 	
(iii)
	 	Perform any of the other provisions of this
Subcontract (but see subparagraph (a)(2) of this clause).





		
	 	     (2) The Contractor’s right to terminate this Subcontract under
subdivisions (a)(1)(ii) and (1)(iii) of this clause, may be exercised if
the Subcontractor(s) do not provide the Contractor with written
assurances that it can and will cure such failure within 10 days (or more
if authorized in writing by the Contractual Officer) after receipt of the
notice from the Contractual Officer specifying the failure. The failure
of Contractor to issue such notice to the Subcontractor(s), or to give
the Subcontractor(s) at least 10 days within which to cure its failure to
perform under subdivisions (a)(1)(ii) or (1)(iii), shall not be a basis
to invalidate a default termination if, in fact, the Subcontractor(s)
were either failing to make progress so as to endanger performance or was
in breach of a material Subcontract requirement.





	 	(b)	 	If the Contractor terminates this Subcontract in whole or in
part, it may acquire, under the terms and in the manner the
Contractual Officer considers appropriate, supplies or services
similar to those terminated, and the Subcontractors shall be liable
to the Contractor for any excess costs for those supplies or
services. However, the Subcontractors shall continue the work not
terminated.
	 
	 	(c)	 	Except for defaults of subcontractors at any tier, the 1st
and 2nd Subcontractor(s) shall not be liable for any excess costs if
the failure to perform the Subcontract arises from causes beyond the
control and without the fault or negligence of the 1st and 2nd
Subcontractors. Examples of such causes include (1) acts of God or
of the public enemy, (2) acts of the Government in either its
sovereign or contractual capacity, (3) fires, (4) floods, (5)
epidemics, (6) quarantine restrictions, (7) strikes, (8) freight
embargoes, and (9) unusually severe weather. In each instance the
failure to perform must be beyond the control and without the fault
or negligence of the 1st and 2nd Subcontractors.
	 
	 	(d)	 	If the failure to perform is caused by the default of a
Subcontractor(s) to the 1st or 2nd Subcontractor(s) at any tier, and
if the cause of the default is beyond the control of both the 1st
and 2nd Subcontractor(s) and any of their subcontractors, and
without the fault or negligence of either the 1st and 2nd
Subcontractor(s) any of their lower-tier subcontractors, the 1st and
2nd Subcontractor(s) shall not be liable for any excess costs for
failure to perform, unless the subcontracted supplies or services
were obtainable from other sources in sufficient time for the 1st
and 2nd Subcontractors to meet the required delivery schedule.
	 
	 	(e)	 	If this Subcontract is terminated for default, the Contractor
may require the Subcontractor(s) to transfer title and deliver to
the Contractor or to the Government, as directed by the Contractual
Officer, any (1) completed supplies, and (2) partially completed
supplies and materials, parts, tools, dies, jigs, fixtures, plans,
drawings, information, and contract rights (collectively referred to
as “manufacturing materials” in this clause) that the
Subcontractor(s) has specifically produced or acquired for the
terminated portion of this Subcontract. Upon direction of the
Contractual Officer, the Subcontractors shall also protect and
preserve property in its possession in which the Contractor or the
Government has an interest.
	 
	 	(f)	 	The Contractor shall pay the Subcontract price for completed
supplies delivered and accepted. The Subcontractor(s) and
Contractual Officer shall agree on the amount of payment for
manufacturing materials delivered and accepted and for the
protection and preservation of the property. The Contractor may
withhold from these amounts any sum the Contractual Officer
determines to be necessary to protect the Contractor against loss
because of outstanding liens or claims of former lien holders.
	 
	 	(g)	 	If, after termination, it is determined that the
Subcontractor(s) was not in default, or that the default was
excusable, the rights and obligations of the parties shall be the
same as if the termination had been issued for the convenience of
the Contractor.





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	 	(h)	 	The rights and remedies of the Contractor in this clause are
in addition to any other rights and remedies provided by law or
under this Subcontract. Additionally, if the Contractor elects to
waive its right to terminate the Subcontractor(s) for default under
paragraph (a)(1)(i) or (iii) by accepting late deliveries or
nonconforming performance, the Contractor shall retain the right to
recover any damages resulting from the Subcontractors’ breach to the
extent allowed by law.



Section J — List Of Attachments




	 	 	 
	A	 	
1st and 2nd Subcontractors’ Certifications, Representations, and Other Statements
	 	 	 
	B	 	
Certificate of Conformance
	 	 	 
	C	 	
Contractor Delivery Order Form
	 	 	 
	D	 	
Estimated Availability of Vaccine, Diluent and Needle Components
	 	 	 
	E	 	
1st and 2nd Subcontractor Security Plans
	 	 	 
	F	 	
Quality Control Tests







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