Document:

REGISTRATION RIGHTS AGREEMENT

     REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"),  dated as of December 20,
2002, by and among  Peabodys  Coffee,  Inc., a Nevada  corporation  (d/b/a Black
Rhino Coffee),  with its  headquarters  located at 3845 Atherton Road,  Suite 9,
Rocklin,  CA 95765 (the "COMPANY"),  and each of the undersigned  (together with
their  respective  affiliates  and any  assignee or  transferee  of all of their
respective rights hereunder, the "INITIAL INVESTORS").

     WHEREAS:

     A. In connection  with the Securities  Purchase  Agreement by and among the
parties hereto of even date herewith (the "Securities Purchase Agreement"),  the
Company  has  agreed,  upon the terms and  subject to the  conditions  contained
therein,  to issue and sell to the Initial Investors (i) convertible  debentures
in the aggregate  principal amount of up to Seven Hundred Fifty Thousand Dollars
($750,000) (the  "Debentures") that are convertible into shares of the Company's
common stock (the "Common Stock"), upon the terms and subject to the limitations
and conditions set forth in such  Debentures and (ii) warrants (the  "Warrants")
to acquire an aggregate of 1,875,000 shares of Common Stock,  upon the terms and
conditions  and  subject  to the  limitations  and  conditions  set forth in the
Warrants dated December 20, 2002; and

     B. To induce the Initial  Investors  to execute and deliver the  Securities
Purchase  Agreement,  the  Company  has agreed to provide  certain  registration
rights  under  the  Securities  Act of  1933,  as  amended,  and the  rules  and
regulations  thereunder,  or any similar  successor statute  (collectively,  the
"1933 ACT"), and applicable state securities laws;

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
contained  herein and other good and  valuable  consideration,  the  receipt and
sufficiency  of which  are  hereby  acknowledged,  the  Company  and each of the
Initial Investors hereby agree as follows:

     1.   DEFINITIONS.

          A. As used in this  Agreement,  the  following  terms  shall  have the
following meanings:

               (i) "INVESTORS" means the Initial Investors and any transferee or
assignee  who agrees to become  bound by the  provisions  of this  Agreement  in
accordance with Section 9 hereof.

               (ii)  "REGISTER,"  "REGISTERED,"  and  "REGISTRATION"  refer to a
registration  effected  by  preparing  and filing a  Registration  Statement  or
Statements  in  compliance  with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis ("RULE 415"),  and the  declaration or ordering of  effectiveness  of such
Registration  Statement by the United States Securities and Exchange  Commission
(the "SEC").

               (iii) "REGISTRABLE SECURITIES" means the Conversion Shares issued
or  issuable  upon  conversion  or  otherwise  pursuant  to the  Debentures  and
Additional

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Debentures (as defined in the Securities Purchase Agreement) including,  without
limitation,  Damages  Shares (as defined in the  Debentures)  issued or issuable
pursuant to the Debentures, shares of Common Stock issued or issuable in payment
of the Standard Liquidated Damages Amount (as defined in the Securities Purchase
Agreement), shares issued or issuable in respect of interest or in redemption of
the  Debentures  in  accordance  with the  terms  thereof)  and  Warrant  Shares
issuable,  upon  exercise or otherwise  pursuant to the Warrants and  Additional
Warrants (as defined in the Securities  Purchase  Agreement),  and any shares of
capital  stock  issued  or  issuable  as a  dividend  on or in  exchange  for or
otherwise with respect to any of the foregoing.

               (iv) "REGISTRATION  STATEMENT" means a registration  statement of
the Company under the 1933 Act.

          B.  Capitalized  terms used herein and not  otherwise  defined  herein
shall  have  the  respective  meanings  set  forth  in the  Securities  Purchase
Agreement or the Convertible Debenture.

     2.   REGISTRATION.

          A. MANDATORY REGISTRATION. The Company shall prepare, and, on or prior
to twenty  (20) days from the date of  Closing  (as  defined  in the  Securities
Purchase  Agreement)  (the  "FILING  DATE"),  file  with the SEC a  Registration
Statement  on Form S-3 (or, if Form S-3 is not then  available,  on such form of
Registration  Statement  as is then  available to effect a  registration  of the
Registrable Securities,  subject to the consent of the Initial Investors,  which
consent  will  not  be  unreasonably   withheld)  covering  the  resale  of  the
Registrable Securities underlying the Debentures and Warrants issued or issuable
pursuant to the Securities Purchase Agreement,  which Registration Statement, to
the  extent  allowable  under  the  1933  Act  and  the  rules  and  regulations
promulgated  thereunder (including Rule 416), shall state that such Registration
Statement also covers such  indeterminate  number of additional shares of Common
Stock as may become  issuable upon  conversion  of or otherwise  pursuant to the
Debentures and exercise of the Warrants to prevent dilution resulting from stock
splits, stock dividends or similar transactions.  The number of shares of Common
Stock initially included in such Registration Statement shall be no less than an
amount  equal to two (2) times the sum of the number of  Conversion  Shares that
are then issuable upon  conversion of the Debentures  and Additional  Debentures
(based on the Variable  Conversion Price as would then be in effect and assuming
the Variable  Conversion  Price is the Conversion  Price at such time),  and the
number of Warrant  Shares that are then  issuable upon exercise of the Warrants,
without  regard to any  limitation  on the  Investor's  ability to  convert  the
Debentures or exercise the Warrants. The Company acknowledges that the number of
shares initially included in the Registration  Statement represents a good faith
estimate  of the  maximum  number  of shares  issuable  upon  conversion  of the
Debentures and upon exercise of the Warrants.

          B. UNDERWRITTEN  OFFERING.  If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an underwritten offering, the
Investors who hold a majority in interest of the Registrable  Securities subject
to such underwritten offering, with the consent of a majority-in-interest of the
Initial  Investors,  shall  have the right to select  one legal  counsel  and an
investment banker or bankers and manager or managers to administer the

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offering,  which  investment  banker or bankers or manager or managers  shall be
reasonably satisfactory to the Company.

          C. PAYMENTS BY THE COMPANY.  The Company shall use its best efforts to
obtain  effectiveness of the Registration  Statement as soon as practicable.  If
(i) the Registration  Statement(s) covering the Registrable  Securities required
to be filed by the Company  pursuant to Section  2(a) hereof is not filed by the
Filing Date or  declared  effective  by the SEC on or prior to one hundred  five
(105) days from the date of Closing,  or (ii) after the  Registration  Statement
has  been  declared  effective  by the  SEC,  sales  of  all of the  Registrable
Securities cannot be made pursuant to the Registration  Statement,  or (iii) the
Common  Stock is not listed or included  for  quotation  on the Nasdaq  National
Market ("NASDAQ"),  the Nasdaq SmallCap Market ("NASDAQ SMALLCAP"), the New York
Stock  Exchange (the "NYSE") or the American  Stock  Exchange (the "AMEX") after
being so listed or included for quotation, or (iv) the Common Stock ceases to be
traded on the  Over-the-Counter  Bulletin  Board (the "OTCBB") or any equivalent
replacement  exchange  prior to being listed or included for quotation on one of
the aforementioned markets, then the Company will make payments to the Investors
in such  amounts  and at such  times  as shall be  determined  pursuant  to this
Section 2(c) as partial relief for the damages to the Investors by reason of any
such delay in or reduction of their ability to sell the  Registrable  Securities
(which remedy shall not be exclusive of any other  remedies  available at law or
in  equity).  The  Company  shall  pay  to  each  holder  of the  Debentures  or
Registrable  Securities an amount equal to the then outstanding principal amount
of the Debentures  (and, in the case of holders of Registrable  Securities,  the
principal  amount of  Debentures  from which such  Registrable  Securities  were
converted)  ("OUTSTANDING  PRINCIPAL  AMOUNT"),  multiplied  by  the  Applicable
Percentage  (as  defined  below)  times  the sum of:  (i) the  number  of months
(prorated  for  partial  months)  after  the  Filing  Date  or  the  end  of the
aforementioned  one  hundred  five  (105) day  period  and prior to the date the
Registration Statement is declared effective by the SEC, provided, however, that
there  shall  be  excluded   from  such  period  any  delays  which  are  solely
attributable to changes required by the Investors in the Registration  Statement
with  respect to  information  relating  to the  Investors,  including,  without
limitation,  changes  to the  plan of  distribution,  or to the  failure  of the
Investors to conduct  their  review of the  Registration  Statement  pursuant to
Section  3(h) below in a  reasonably  prompt  manner;  (ii) the number of months
(prorated for partial  months) that sales of all of the  Registrable  Securities
cannot be made pursuant to the  Registration  Statement  after the  Registration
Statement has been declared effective (including, without limitation, when sales
cannot be made by reason of the  Company's  failure to  properly  supplement  or
amend the  prospectus  included  therein  in  accordance  with the terms of this
Agreement, but excluding any days during an Allowed Delay (as defined in Section
3(f));  and (iii) the number of months  (prorated  for partial  months) that the
Common  Stock is not listed or  included  for  quotation  on the OTCBB,  Nasdaq,
Nasdaq  SmallCap,  NYSE or AMEX or that  trading  thereon  is  halted  after the
Registration  Statement  has  been  declared  effective.  The  term  "APPLICABLE
PERCENTAGE"  means two  hundredths  (.02).  (For  example,  if the  Registration
Statement  becomes  effective  one (1) month  after  the end of such  thirty-day
period, the Company would pay $5,000 for each $250,000 of Outstanding  Principal
Amount.  If  thereafter,  sales could not be made  pursuant to the  Registration
Statement  for an additional  period of one (1) month,  the Company would pay an
additional  $5,000 for each  $250,000 of  Outstanding  Principal  Amount.)  Such
amounts shall be paid in cash or, at the Company's  option,  in shares of Common
Stock  priced at the  Conversion  Price (as defined in the  Debentures)  on such
payment date.

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<PAGE>

          D.  PIGGY-BACK  REGISTRATIONS.  Subject to the last  sentence  of this
Section 2(d), if at any time prior to the expiration of the Registration  Period
(as  hereinafter  defined)  the Company  shall  determine to file with the SEC a
Registration  Statement  relating  to an  offering  for its own  account  or the
account of others under the 1933 Act of any of its equity securities (other than
on Form S-4 or Form S-8 or their then equivalents  relating to equity securities
to be issued solely in connection with any acquisition of any entity or business
or equity  securities  issuable in  connection  with stock  option or other BONA
FIDE,  employee  benefit plans),  the Company shall send to each Investor who is
entitled to  registration  rights under this Section 2(d) written notice of such
determination  and, if within fifteen (15) days after the effective date of such
notice, such Investor shall so request in writing,  the Company shall include in
such Registration  Statement all or any part of the Registrable  Securities such
Investor  requests  to be  registered,  except that if, in  connection  with any
underwritten  public  offering  for the  account  of the  Company  the  managing
underwriter(s)  thereof  shall  impose a  limitation  on the number of shares of
Common Stock which may be included in the  Registration  Statement  because,  in
such  underwriter(s)'   judgment,   marketing  or  other  factors  dictate  such
limitation  is necessary to  facilitate  public  distribution,  then the Company
shall be obligated to include in such  Registration  Statement only such limited
portion of the  Registrable  Securities  with respect to which such Investor has
requested  inclusion hereunder as the underwriter shall permit. Any exclusion of
Registrable  Securities  shall be made pro rata among the  Investors  seeking to
include  Registrable  Securities  in  proportion  to the  number of  Registrable
Securities sought to be included by such Investors;  PROVIDED, HOWEVER, that the
Company  shall not exclude  any  Registrable  Securities  unless the Company has
first excluded all outstanding securities, the holders of which are not entitled
to  inclusion  of such  securities  in such  Registration  Statement  or are not
entitled to pro rata inclusion with the  Registrable  Securities;  and PROVIDED,
FURTHER,  HOWEVER,  that,  after  giving  effect  to the  immediately  preceding
proviso,  any exclusion of  Registrable  Securities  shall be made pro rata with
holders of other  securities  having the right to include such securities in the
Registration Statement other than holders of securities entitled to inclusion of
their securities in such Registration Statement by reason of demand registration
rights.  No right to registration of Registrable  Securities  under this Section
2(d) shall be construed to limit any  registration  required  under Section 2(a)
hereof.  If an  offering  in  connection  with which an  Investor is entitled to
registration  under this Section  2(d) is an  underwritten  offering,  then each
Investor  whose  Registrable   Securities  are  included  in  such  Registration
Statement shall,  unless  otherwise  agreed by the Company,  offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and  conditions  as other shares of Common Stock  included in such  underwritten
offering.  Notwithstanding  anything  to the  contrary  set  forth  herein,  the
registration rights of the Investors pursuant to this Section 2(d) shall only be
available in the event the Company fails to timely file, obtain effectiveness or
maintain  effectiveness  of any  Registration  Statement to be filed pursuant to
Section 2(a) in accordance with the terms of this Agreement.

          E. ELIGIBILITY FOR FORM S-3, SB-2 OR S-1;  CONVERSION TO FORM S-3. The
Company  represents and warrants that it meets the  requirements  for the use of
Form S-3, SB-2 or S-1 for registration of the sale by the Initial  Investors and
any other  Investors of the Registrable  Securities.  The Company agrees to file
all reports  required to be filed by the Company with the SEC in a timely manner
so as to remain eligible or become eligible,  as the case may be, and thereafter
to  maintain  its  eligibility,  for the use of Form S-3.  If the Company is not
currently  eligible to use Form S-3, not later than five (5) business days after
the Company

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first meets the  registration  eligibility and transaction  requirements for the
use of Form S-3 (or any successor  form) for  registration of the offer and sale
by the Initial Investors and any other Investors of Registrable Securities,  the
Company shall file a Registration Statement on Form S-3 (or such successor form)
with respect to the Registrable Securities covered by the Registration Statement
on Form SB-2 or Form S-1,  whichever is  applicable,  filed  pursuant to Section
2(a) (and include in such  Registration  Statement  on Form S-3 the  information
required by Rule 429 under the 1933 Act) or convert the  Registration  Statement
on Form SB-2 or Form S-1,  whichever is  applicable,  filed  pursuant to Section
2(a) to a Form S-3  pursuant  to Rule 429  under  the  1933 Act and  cause  such
Registration  Statement (or such  amendment)  to be declared  effective no later
than forty-five (45) days after filing.  In the event of a breach by the Company
of the  provisions  of this Section  2(e),  the Company will be required to make
payments pursuant to Section 2(c) hereof.

     3.   OBLIGATIONS OF THE COMPANY.

     In connection  with the  registration of the  Registrable  Securities,  the
Company shall have the following obligations:

          A. The Company shall prepare promptly, and file with the SEC not later
than the Filing Date,  a  Registration  Statement  with respect to the number of
Registrable  Securities  provided in Section 2(a),  and  thereafter use its best
efforts to cause such Registration  Statement relating to Registrable Securities
to become  effective as soon as possible after such filing but in no event later
than one  hundred  five  (105)  days  from the  date of  Closing),  and keep the
Registration  Statement  effective  pursuant to Rule 415 at all times until such
date  as is  the  earlier  of (i)  the  date  on  which  all of the  Registrable
Securities have been sold and (ii) the date on which the Registrable  Securities
(in the opinion of counsel to the Initial  Investors) may be immediately sold to
the public without registration or restriction  (including without limitation as
to  volume  by each  holder  thereof)  under  the 1933  Act  (the  "REGISTRATION
PERIOD"),  which Registration Statement (including any amendments or supplements
thereto  and  prospectuses  contained  therein)  shall not  contain  any  untrue
statement  of a material  fact or omit to state a material  fact  required to be
stated therein, or necessary to make the statements therein not misleading.

          B. The Company  shall  prepare  and file with the SEC such  amendments
(including  post-effective  amendments)  and  supplements  to  the  Registration
Statements  and  the  prospectus  used  in  connection  with  the   Registration
Statements as may be necessary to keep the Registration  Statements effective at
all times during the Registration  Period, and, during such period,  comply with
the  provisions  of  the  1933  Act  with  respect  to  the  disposition  of all
Registrable  Securities of the Company  covered by the  Registration  Statements
until such time as all of such  Registrable  Securities have been disposed of in
accordance  with the intended  methods of  disposition  by the seller or sellers
thereof as set forth in the Registration Statements.  In the event the number of
shares available under a Registration Statement filed pursuant to this Agreement
is insufficient to cover all of the  Registrable  Securities  issued or issuable
upon  conversion of the  Debentures  and exercise of the  Warrants,  the Company
shall amend the Registration Statement, or file a new Registration Statement (on
the short form available therefor,  if applicable),  or both, so as to cover all
of the Registrable Securities, in each case, as soon as practicable,  but in any
event within fifteen (15) days after the necessity therefor

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arises (based on the market price of the Common Stock and other relevant factors
on which the Company  reasonably elects to rely). The Company shall use its best
efforts to cause such  amendment  and/or new  Registration  Statement  to become
effective as soon as practicable  following the filing thereof, but in any event
within  thirty  (30) days after the date on which the Company  reasonably  first
determines  (or  reasonably  should  have  determined)  the need  therefor.  The
provisions  of  Section  2(c) above  shall be  applicable  with  respect to such
obligation,  with the one  hundred  five  (105)  days  running  from the day the
Company  reasonably first determines (or reasonably  should have determined) the
need therefor.

          C. The  Company  shall  furnish  to each  Investor  whose  Registrable
Securities  are included in a  Registration  Statement and its legal counsel (i)
promptly  (but in no event more than two (2)  business  days)  after the same is
prepared  and  publicly  distributed,  filed with the SEC,  or  received  by the
Company, one copy of each Registration Statement and any amendment thereto, each
preliminary  prospectus and prospectus and each amendment or supplement thereto,
and, in the case of the Registration Statement referred to in Section 2(a), each
letter  written  by or on behalf of the  Company  to the SEC or the staff of the
SEC,  and each item of  correspondence  from the SEC or the staff of the SEC, in
each case relating to such Registration Statement (other than any portion of any
thereof which contains information for which the Company has sought confidential
treatment),  and (ii) promptly (but in no event more than two (2) business days)
after the Registration  Statement is declared  effective by the SEC, such number
of  copies  of  a  prospectus,  including  a  preliminary  prospectus,  and  all
amendments and supplements thereto and such other documents as such Investor may
reasonably  request in order to facilitate the  disposition  of the  Registrable
Securities  owned by such  Investor.  The Company will  immediately  notify each
Investor by facsimile of the effectiveness of each Registration Statement or any
post-effective  amendment.  The Company will promptly (but in no event more than
ten (10) days)  respond  to any and all  comments  received  from the SEC (which
comments shall promptly be made available to the Investors upon request), with a
view towards causing each Registration  Statement or any amendment thereto to be
declared  effective by the SEC as soon as  practicable,  shall  promptly file an
acceleration  request as soon as practicable  (but in no event more than two (2)
business days)  following the resolution or clearance of all SEC comments or, if
applicable,  following  notification  by the  SEC  that  any  such  Registration
Statement  or any  amendment  thereto  will not be  subject  to review and shall
promptly file with the SEC a final  prospectus as soon as practicable (but in no
event more than two (2) business days) following receipt by the Company from the
SEC of an order declaring the Registration Statement effective.  In the event of
a breach by the Company of the provisions of this Section 3(c), the Company will
be required to make payments pursuant to Section 2(c) hereof.

          D. The  Company  shall use  reasonable  efforts  to (i)  register  and
qualify the Registrable Securities covered by the Registration  Statements under
such other  securities  or "blue sky" laws of such  jurisdictions  in the United
States as the  Investors  who hold a majority  in  interest  of the  Registrable
Securities  being  offered  reasonably  request,  (ii) prepare and file in those
jurisdictions  such  amendments   (including   post-effective   amendments)  and
supplements  to such  registrations  and  qualifications  as may be necessary to
maintain the effectiveness  thereof during the Registration  Period,  (iii) take
such other  actions as may be  necessary  to  maintain  such  registrations  and
qualifications in effect at all times during the Registration  Period,  and (iv)
take all  other  actions  reasonably  necessary  or  advisable  to  qualify  the
Registrable Securities for sale in such jurisdictions;  PROVIDED,  HOWEVER, that
the Company

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shall not be required in connection  therewith or as a condition  thereto to (a)
qualify to do  business  in any  jurisdiction  where it would not  otherwise  be
required to qualify but for this  Section  3(d),  (b) subject  itself to general
taxation  in any such  jurisdiction,  (c) file a general  consent  to service of
process in any such  jurisdiction,  (d) provide any undertakings  that cause the
Company  undue  expense  or  burden,  or (e) make any  change in its  charter or
bylaws,  which in each case the Board of Directors of the Company  determines to
be contrary to the best interests of the Company and its shareholders.

          E. In the  event  Investors  who  hold a  majority-in-interest  of the
Registrable  Securities  being  offered in the offering  (with the approval of a
majority-in-interest  of the  Initial  Investors)  select  underwriters  for the
offering,  the Company  shall enter into and  perform its  obligations  under an
underwriting  agreement,  in  usual  and  customary  form,  including,   without
limitation,  customary  indemnification and contribution  obligations,  with the
underwriters of such offering.

          F. As promptly as practicable  after becoming aware of such event, the
Company shall notify each  Investor of the happening of any event,  of which the
Company  has  knowledge,  as a result of which the  prospectus  included  in any
Registration  Statement,  as then in effect,  includes an untrue  statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the  statements  therein not  misleading,  and use its best
efforts  promptly  to prepare a  supplement  or  amendment  to any  Registration
Statement to correct such untrue statement or omission,  and deliver such number
of copies of such  supplement or amendment to each Investor as such Investor may
reasonably  request;  provided  that,  for not more  than  ten (10)  consecutive
trading days (or a total of not more than twenty (20) trading days in any twelve
(12) month period),  the Company may delay the disclosure of material non-public
information  concerning  the  Company  (as well as  prospectus  or  Registration
Statement  updating)  the  disclosure  of which at the time is not,  in the good
faith opinion of the Company,  in the best interests of the Company (an "ALLOWED
DELAY");  provided,  further,  that the Company  shall  promptly  (i) notify the
Investors  in writing of the  existence  of (but in no event,  without the prior
written consent of an Investor,  shall the Company disclose to such investor any
of the facts or circumstances  regarding) material non-public information giving
rise to an Allowed  Delay and (ii) advise the  Investors in writing to cease all
sales under such Registration Statement until the end of the Allowed Delay. Upon
expiration of the Allowed  Delay,  the Company shall again be bound by the first
sentence  of this  Section  3(f) with  respect to the  information  giving  rise
thereto.

          G. The Company  shall use its best  efforts to prevent the issuance of
any  stop  order  or  other  suspension  of  effectiveness  of any  Registration
Statement,  and, if such an order is issued,  to obtain the  withdrawal  of such
order at the  earliest  possible  moment and to notify each  Investor  who holds
Registrable Securities being sold (or, in the event of an underwritten offering,
the  managing  underwriters)  of the  issuance of such order and the  resolution
thereof.

          H. The Company shall permit a single firm of counsel designated by the
Initial Investors to review such  Registration  Statement and all amendments and
supplements  thereto (as well as all requests for  acceleration or effectiveness
thereof) a reasonable period of time prior to their filing with the SEC, and not
file any  document in a form to which such counsel  reasonably  objects and will
not request acceleration of such Registration Statement

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without  prior  notice  to such  counsel.  The  sections  of  such  Registration
Statement  covering  information  with respect to the Investors,  the Investor's
beneficial  ownership of  securities  of the Company or the  Investors  intended
method of disposition of Registrable Securities shall conform to the information
provided to the Company by each of the Investors.

          I. The Company shall make generally  available to its security holders
as soon as  practicable,  but not later than ninety (90) days after the close of
the period covered  thereby,  an earnings  statement (in form complying with the
provisions  of Rule 158 under  the 1933  Act)  covering  a  twelve-month  period
beginning  not later than the first day of the  Company's  fiscal  quarter  next
following the effective date of the Registration Statement.

          J. At the request of any Investor,  the Company shall furnish,  on the
date that  Registrable  Securities are delivered to an underwriter,  if any, for
sale in connection  with any  Registration  Statement or, if such securities are
not being sold by an underwriter,  on the date of  effectiveness  thereof (i) an
opinion,  dated as of such date,  from  counsel  representing  the  Company  for
purposes of such  Registration  Statement,  in form,  scope and  substance as is
customarily  given  in  an  underwritten  public  offering,   addressed  to  the
underwriters, if any, and the Investors and (ii) a letter, dated such date, from
the Company's  independent certified public accountants in form and substance as
is customarily given by independent certified public accountants to underwriters
in an underwritten public offering,  addressed to the underwriters,  if any, and
the Investors.

          K.  The  Company  shall  make  available  for  inspection  by (i)  any
Investor,  (ii) any underwriter  participating in any disposition  pursuant to a
Registration Statement,  (iii) one firm of attorneys and one firm of accountants
or other agents  retained by the Initial  Investors,  (iv) one firm of attorneys
and one firm of accountants or other agents retained by all other Investors, and
(v) one firm of attorneys retained by all such underwriters  (collectively,  the
"INSPECTORS") all pertinent financial and other records, and pertinent corporate
documents and properties of the Company,  including without limitation,  records
of conversions by other holders of convertible  securities issued by the Company
and  the  issuance  of  stock  to  such  holders  pursuant  to  the  conversions
(collectively,  the "RECORDS"),  as shall be reasonably deemed necessary by each
Inspector to enable each Inspector to exercise its due diligence responsibility,
and cause  the  Company's  officers,  directors  and  employees  to  supply  all
information which any Inspector may reasonably  request for purposes of such due
diligence;  PROVIDED,  HOWEVER, that each Inspector shall hold in confidence and
shall not make any  disclosure  (except to an  Investor)  of any Record or other
information which the Company  determines in good faith to be confidential,  and
of which determination the Inspectors are so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a  misstatement  or omission in
any Registration Statement,  (b) the release of such Records is ordered pursuant
to a  subpoena  or other  order  from a court or  government  body of  competent
jurisdiction,  or (c) the  information  in such Records has been made  generally
available  to the public  other than by  disclosure  in violation of this or any
other agreement.  The Company shall not be required to disclose any confidential
information  in such Records to any  Inspector  until and unless such  Inspector
shall  have  entered  into  confidentiality  agreements  (in form and  substance
satisfactory   to  the  Company)   with  the  Company   with  respect   thereto,
substantially  in the form of this Section 3(k).  Each  Investor  agrees that it
shall,  upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give

                                       8
<PAGE>

prompt notice to the Company and allow the Company, at its expense, to undertake
appropriate  action to prevent  disclosure  of, or to obtain a protective  order
for,  the  Records  deemed  confidential.   Nothing  herein  (or  in  any  other
confidentiality  agreement between the Company and any Investor) shall be deemed
to limit the Investor's ability to sell Registrable Securities in a manner which
is otherwise consistent with applicable laws and regulations.

          L. The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such  information  is necessary  to comply with  federal or state  securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement  or omission in any  Registration  Statement,  (iii) the release of
such  information is ordered  pursuant to a subpoena or other order from a court
or governmental  body of competent  jurisdiction,  or (iv) such  information has
been  made  generally  available  to the  public  other  than by  disclosure  in
violation of this or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor is sought in
or by a court or  governmental  body of competent  jurisdiction or through other
means, give prompt notice to such Investor prior to making such disclosure,  and
allow the Investor,  at its expense, to undertake  appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.

          M. The Company shall (i) cause all the Registrable  Securities covered
by the Registration  Statement to be listed on each national securities exchange
on which  securities  of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable  Securities is then permitted
under the rules of such  exchange,  or (ii) to the extent the  securities of the
same class or series  are not then  listed on a  national  securities  exchange,
secure the designation and quotation,  of all the Registrable Securities covered
by the  Registration  Statement  on Nasdaq or, if not  eligible  for Nasdaq,  on
Nasdaq SmallCap or, if not eligible for Nasdaq or Nasdaq SmallCap,  on the OTCBB
or the BBX (or an equivalent  exchange) and,  without limiting the generality of
the  foregoing,  to arrange for at least two market  makers to register with the
National  Association of Securities Dealers,  Inc. ("NASD") as such with respect
to such Registrable Securities.

          N. The Company shall provide a transfer agent and registrar, which may
be a single entity, for the Registrable  Securities not later than the effective
date of the Registration Statement.

          O. The Company shall cooperate with the Investors who hold Registrable
Securities being offered and the managing  underwriter or underwriters,  if any,
to facilitate the timely  preparation and delivery of certificates  (not bearing
any  restrictive  legends)  representing  Registrable  Securities  to be offered
pursuant to a Registration  Statement and enable such certificates to be in such
denominations  or amounts,  as the case may be, as the managing  underwriter  or
underwriters,  if any, or the Investors may reasonably request and registered in
such names as the managing underwriter or underwriters, if any, or the Investors
may request, and, within three (3) business days after a Registration  Statement
which  includes  Registrable  Securities  is ordered  effective  by the SEC, the
Company shall deliver,  and shall cause legal counsel selected by the Company to
deliver,  to the transfer agent for the Registrable  Securities  (with copies to
the Investors whose Registrable Securities are included in such Registration

                                       9
<PAGE>

Statement)  an  instruction  in the form  attached  hereto  as  EXHIBIT 1 and an
opinion of such counsel in the form attached hereto as EXHIBIT 2.

          P. At the  request  of the  holders of a  majority-in-interest  of the
Registrable  Securities,  the Company  shall  prepare and file with the SEC such
amendments   (including   post-effective   amendments)   and  supplements  to  a
Registration   Statement  and  any  prospectus   used  in  connection  with  the
Registration  Statement  as may be  necessary  in  order to  change  the plan of
distribution set forth in such Registration Statement.

          Q. From and after the date of this  Agreement,  the Company shall not,
and shall not agree to,  allow the holders of any  securities  of the Company to
include any of their securities in any Registration Statement under Section 2(a)
hereof or any amendment or supplement  thereto under Section 3(b) hereof without
the  consent  of  the  holders  of a  majority-in-interest  of  the  Registrable
Securities.

          R. The Company shall take all other  reasonable  actions  necessary to
expedite and facilitate  disposition by the Investors of Registrable  Securities
pursuant to a Registration Statement.

     4.   OBLIGATIONS OF THE INVESTORS.

     In connection  with the  registration of the  Registrable  Securities,  the
Investors shall have the following obligations:

          A. It shall be a condition precedent to the obligations of the Company
to complete  the  registration  pursuant to this  Agreement  with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information  regarding  itself,  the Registrable  Securities
held by it and the intended method of disposition of the Registrable  Securities
held by it as shall be reasonably  required to effect the  registration  of such
Registrable  Securities and shall execute such documents in connection with such
registration as the Company may reasonably  request. At least three (3) business
days prior to the first anticipated  filing date of the Registration  Statement,
the Company shall notify each Investor of the information  the Company  requires
from each such Investor.

          B. Each Investor,  by such  Investor's  acceptance of the  Registrable
Securities,  agrees to cooperate with the Company as reasonably requested by the
Company  in  connection  with the  preparation  and  filing of the  Registration
Statements  hereunder,  unless such Investor has notified the Company in writing
of such  Investor's  election  to  exclude  all of such  Investor's  Registrable
Securities from the Registration Statements.

          C.  In the  event  Investors  holding  a  majority-in-interest  of the
Registrable  Securities  being  registered  (with the  approval  of the  Initial
Investors)  determine to engage the services of an  underwriter,  each  Investor
agrees  to  enter  into  and  perform  such  Investor's   obligations  under  an
underwriting  agreement,  in  usual  and  customary  form,  including,   without
limitation,  customary  indemnification and contribution  obligations,  with the
managing  underwriter  of such  offering  and take  such  other  actions  as are
reasonably  required in order to expedite or facilitate  the  disposition of the
Registrable Securities, unless such Investor has

                                       10
<PAGE>

notified  the Company in writing of such  Investor's  election to exclude all of
such Investor's Registrable Securities from such Registration Statement.

          D. Each  Investor  agrees  that,  upon  receipt of any notice from the
Company of the  happening of any event of the kind  described in Section 3(f) or
3(g),  such Investor will  immediately  discontinue  disposition  of Registrable
Securities  pursuant to the  Registration  Statement  covering such  Registrable
Securities  until such Investor's  receipt of the copies of the  supplemented or
amended  prospectus  contemplated by Section 3(f) or 3(g) and, if so directed by
the Company,  such Investor  shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a  certificate  of  destruction)
all  copies in such  Investor's  possession,  of the  prospectus  covering  such
Registrable Securities current at the time of receipt of such notice.

          E.  No  Investor  may  participate  in any  underwritten  registration
hereunder  unless such Investor (i) agrees to sell such  Investor's  Registrable
Securities on the basis provided in any  underwriting  arrangements in usual and
customary  form  entered into by the Company,  (ii)  completes  and executes all
questionnaires,  powers of attorney,  indemnities,  underwriting  agreements and
other  documents  reasonably  required  under  the  terms  of such  underwriting
arrangements,  and (iii)  agrees to pay its pro rata  share of all  underwriting
discounts  and  commissions  and any expenses in excess of those  payable by the
Company pursuant to Section 5 below.

     5.   EXPENSES OF REGISTRATION.

     All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including,  without limitation, all registration,  listing and
qualification  fees, printers and accounting fees, the fees and disbursements of
counsel  for the  Company,  and the  reasonable  fees and  disbursements  of one
counsel  selected by the Initial  Investors  pursuant to Sections  2(b) and 3(h)
hereof shall be borne by the Company.

     6.   INDEMNIFICATION.

     In the event any  Registrable  Securities  are  included in a  Registration
Statement under this Agreement:

          A. To the extent  permitted by law, the Company will  indemnify,  hold
harmless  and defend (i) each  Investor who holds such  Registrable  Securities,
(ii) the directors,  officers,  partners,  employees, agents and each person who
controls  any  Investor  within the  meaning  of the 1933 Act or the  Securities
Exchange Act of 1934, as amended (the "1934 ACT"), if any, (iii) any underwriter
(as  defined  in the 1933  Act)  for the  Investors,  and  (iv)  the  directors,
officers,  partners, employees and each person who controls any such underwriter
within  the  meaning  of the  1933  Act or  the  1934  Act,  if  any  (each,  an
"INDEMNIFIED  PERSON"),  against any joint or several losses,  claims,  damages,
liabilities  or expenses  (collectively,  together with actions,  proceedings or
inquiries by any regulatory or self-regulatory  organization,  whether commenced
or  threatened,  in respect  thereof,  "CLAIMS") to which any of them may become
subject  insofar as such Claims  arise out of or are based upon:  (i) any untrue
statement or alleged

                                       11
<PAGE>

untrue statement of a material fact in a Registration  Statement or the omission
or alleged  omission to state  therein a material  fact required to be stated or
necessary  to make the  statements  therein  not  misleading;  (ii)  any  untrue
statement  or alleged  untrue  statement  of a material  fact  contained  in any
preliminary  prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented,  if
the Company files any amendment  thereof or supplement  thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein,  in light of the circumstances under which the
statements therein were made, not misleading;  or (iii) any violation or alleged
violation  by the  Company  of the  1933  Act,  the 1934  Act,  any  other  law,
including,  without  limitation,  any  state  securities  law,  or any  rule  or
regulation  thereunder  relating  to  the  offer  or  sale  of  the  Registrable
Securities  (the  matters in the  foregoing  clauses  (i) through  (iii)  being,
collectively,  "Violations").  Subject to the  restrictions set forth in Section
6(c) with respect to the number of legal  counsel,  the Company shall  reimburse
the Indemnified  Person,  promptly as such expenses are incurred and are due and
payable,  for any reasonable legal fees or other reasonable expenses incurred by
them  in   connection   with   investigating   or  defending   any  such  Claim.
Notwithstanding  anything to the contrary contained herein, the  indemnification
agreement contained in this Section 6(a): (i) shall not apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information  furnished in writing to the Company by any Indemnified  Person
or underwriter for such Indemnified  Person expressly for use in connection with
the preparation of such Registration  Statement or any such amendment thereof or
supplement  thereto, if such prospectus was timely made available by the Company
pursuant  to  Section  3(c)  hereof;  (ii)  shall not apply to  amounts  paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company,  which consent shall not be unreasonably  withheld;  and
(iii) with respect to any preliminary prospectus, shall not inure to the benefit
of any Indemnified  Person if the untrue  statement or omission of material fact
contained in the  preliminary  prospectus was corrected on a timely basis in the
prospectus,  as then amended or  supplemented,  such  corrected  prospectus  was
timely made  available by the Company  pursuant to Section 3(c) hereof,  and the
Indemnified  Person was  promptly  advised in writing  not to use the  incorrect
prospectus  prior to the use giving  rise to a  Violation  and such  Indemnified
Person,  notwithstanding  such advice,  used it. Such indemnity  shall remain in
full force and effect  regardless of any  investigation  made by or on behalf of
the  Indemnified  Person  and shall  survive  the  transfer  of the  Registrable
Securities by the Investors pursuant to Section 9.

          B. In connection with any Registration  Statement in which an Investor
is  participating,  each such  Investor  agrees  severally  and not  jointly  to
indemnify,  hold harmless and defend,  to the same extent and in the same manner
set forth in Section  6(a),  the  Company,  each of its  directors,  each of its
officers who signs the Registration Statement, each person, if any, who controls
the Company within the meaning of the 1933 Act or the 1934 Act, any  underwriter
and any  other  shareholder  selling  securities  pursuant  to the  Registration
Statement or any of its  directors  or officers or any person who controls  such
shareholder  or  underwriter  within the meaning of the 1933 Act or the 1934 Act
(collectively and together with an Indemnified Person, an "INDEMNIFIED  PARTY"),
against any Claim to which any of them may become  subject,  under the 1933 Act,
the 1934 Act or otherwise,  insofar as such Claim arises out of or is based upon
any  Violation  by such  Investor,  in each case to the extent  (and only to the
extent)  that such  Violation  occurs in reliance  upon and in  conformity  with
written information  furnished to the Company by such Investor expressly for use
in connection with such

                                       12
<PAGE>

Registration Statement; and subject to Section 6(c) such Investor will reimburse
any legal or other expenses  (promptly as such expenses are incurred and are due
and payable)  reasonably  incurred by them in connection with  investigating  or
defending  any such  Claim;  PROVIDED,  HOWEVER,  that the  indemnity  agreement
contained in this Section 6(b) shall not apply to amounts paid in  settlement of
any Claim if such  settlement is effected  without the prior written  consent of
such  Investor,  which consent  shall not be  unreasonably  withheld;  PROVIDED,
FURTHER,  HOWEVER,  that the  Investor  shall be  liable  under  this  Agreement
(including  this  Section  6(b) and  Section 7) for only that amount as does not
exceed the net proceeds to such Investor as a result of the sale of  Registrable
Securities pursuant to such Registration Statement.  Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such  Indemnified  Party and  shall  survive  the  transfer  of the  Registrable
Securities by the Investors pursuant to Section 9.  Notwithstanding  anything to
the contrary contained herein, the  indemnification  agreement contained in this
Section 6(b) with respect to any preliminary  prospectus  shall not inure to the
benefit of any Indemnified Party if the untrue statement or omission of material
fact contained in the preliminary  prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented.

          C. Promptly  after  receipt by an  Indemnified  Person or  Indemnified
Party  under  this  Section  6 of  notice  of the  commencement  of  any  action
(including any  governmental  action),  such  Indemnified  Person or Indemnified
Party  shall,  if a  Claim  in  respect  thereof  is  to  be  made  against  any
indemnifying  party under this  Section 6, deliver to the  indemnifying  party a
written notice of the commencement  thereof,  and the  indemnifying  party shall
have the right to participate in, and, to the extent the  indemnifying  party so
desires,  jointly with any other indemnifying party similarly noticed, to assume
control  of the  defense  thereof  with  counsel  mutually  satisfactory  to the
indemnifying  party and the Indemnified  Person or the Indemnified Party, as the
case may be; PROVIDED,  HOWEVER, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel  with the fees and expenses to be
paid by the  indemnifying  party,  if,  in the  reasonable  opinion  of  counsel
retained by the indemnifying  party, the  representation  by such counsel of the
Indemnified  Person or  Indemnified  Party and the  indemnifying  party would be
inappropriate  due to actual  or  potential  differing  interests  between  such
Indemnified  Person or Indemnified Party and any other party represented by such
counsel  in such  proceeding.  The  indemnifying  party  shall  pay for only one
separate legal counsel for the Indemnified  Persons or the Indemnified  Parties,
as applicable,  and such legal counsel shall be selected by Investors  holding a
majority-in-interest  of the Registrable Securities included in the Registration
Statement   to   which   the   Claim   relates   (with   the   approval   of   a
majority-in-interest of the Initial Investors), if the Investors are entitled to
indemnification  hereunder,  or the  Company,  if the  Company  is  entitled  to
indemnification  hereunder, as applicable. The failure to deliver written notice
to the  indemnifying  party within a reasonable time of the  commencement of any
such action shall not relieve such  indemnifying  party of any  liability to the
Indemnified  Person or  Indemnified  Party  under this  Section 6, except to the
extent  that the  indemnifying  party is actually  prejudiced  in its ability to
defend such action. The indemnification required by this Section 6 shall be made
by  periodic   payments  of  the  amount   thereof  during  the  course  of  the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.

                                       13
<PAGE>

     7.   CONTRIBUTION.

     To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying  party agrees to make the maximum  contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the  fullest  extent  permitted  by law;  PROVIDED,  HOWEVER,  that  (i) no
contribution  shall be made under  circumstances  where the maker would not have
been liable for  indemnification  under the fault standards set forth in Section
6,  (ii)  no   seller   of   Registrable   Securities   guilty   of   fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution  from any seller of Registrable  Securities who was not
guilty of such fraudulent  misrepresentation,  and (iii) contribution  (together
with any  indemnification  or other  obligations  under this  Agreement)  by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.

     8.   REPORTS UNDER THE 1934 ACT.

     With a view to making  available to the  Investors the benefits of Rule 144
promulgated  under the 1933 Act or any other  similar rule or  regulation of the
SEC that may at any time permit the investors to sell  securities of the Company
to the public without registration ("RULE 144"), the Company agrees to:

          A. make and keep  public  information  available,  as those  terms are
understood and defined in Rule 144;

          B.  file  with  the SEC in a  timely  manner  all  reports  and  other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company  remains  subject to such  requirements  (it being  understood  that
nothing herein shall limit the Company's  obligations  under Section 4(c) of the
Securities  Purchase  Agreement)  and the  filing  of  such  reports  and  other
documents is required for the applicable provisions of Rule 144; and

          C. furnish to each Investor so long as such Investor owns  Registrable
Securities,  promptly upon request,  (i) a written statement by the Company that
it has complied  with the reporting  requirements  of Rule 144, the 1933 Act and
the 1934 Act, (ii) a copy of the most recent  annual or quarterly  report of the
Company and such other reports and documents so filed by the Company,  and (iii)
such other information as may be reasonably requested to permit the Investors to
sell such securities pursuant to Rule 144 without registration.

     9.   ASSIGNMENT OF REGISTRATION RIGHTS.

     The rights under this Agreement  shall be  automatically  assignable by the
Investors to any transferee of all or any portion of Registrable  Securities if:
(i) the  Investor  agrees in writing with the  transferee  or assignee to assign
such rights,  and a copy of such  agreement is furnished to the Company within a
reasonable time after such assignment,  (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such  transferee or assignee,  and (b) the  securities  with
respect to which such  registration  rights are being  transferred  or assigned,
(iii)  following  such transfer or assignment,  the further  disposition of such
securities by the transferee or assignee is restricted under the 1933

                                       14
<PAGE>

Act and applicable state securities laws, (iv) at or before the time the Company
receives the written notice  contemplated  by clause (ii) of this sentence,  the
transferee or assignee  agrees in writing with the Company to be bound by all of
the  provisions  contained  herein,  (v) such  transfer  shall have been made in
accordance  with  the  applicable   requirements  of  the  Securities   Purchase
Agreement,  and (vi) such transferee  shall be an "ACCREDITED  INVESTOR" as that
term defined in Rule 501 of Regulation D promulgated under the 1933 Act.

     10.  AMENDMENT OF REGISTRATION RIGHTS.

     Provisions of this Agreement may be amended and the observance  thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively), only with written consent of the Company, each of the Initial
Investors  (to  the  extent  such  Initial   Investor  still  owns   Registrable
Securities)  and  Investors  who hold a  majority  interest  of the  Registrable
Securities.  Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company.

     11.  MISCELLANEOUS.

          A. A  person  or  entity  is  deemed  to be a  holder  of  Registrable
Securities  whenever  such  person or entity  owns of  record  such  Registrable
Securities.  If  the  Company  receives  conflicting  instructions,  notices  or
elections  from  two or more  persons  or  entities  with  respect  to the  same
Registrable  Securities,  the Company shall act upon the basis of  instructions,
notice  or  election  received  from the  registered  owner of such  Registrable
Securities.

          B. Any  notices  required  or  permitted  to be given  under the terms
hereof shall be sent by certified or registered mail (return receipt  requested)
or delivered personally or by courier (including a recognized overnight delivery
service) or by facsimile and shall be effective  five days after being placed in
the mail, if mailed by regular United States mail, or upon receipt, if delivered
personally or by courier (including a recognized  overnight delivery service) or
by  facsimile,  in each  case  addressed  to a  party.  The  addresses  for such
communications shall be:

                    If to the Company:

                    Peabodys Coffee, Inc.
                    3845 Atherton Road
                    Suite 9
                    Rocklin, CA 95765
                    Attention:  Todd Tkachuk
                    Telephone:  916-632-6090
                    Facsimile:   916-632-6099

                                       15
<PAGE>

                    With copies to:

                    Sichenzia Ross Friedman Ference LLP
                    1065 Avenue of the Americas, 21st Floor
                    New York, New York 10018
                    Attention:  Gregory Sichenzia, Esq.
                    Telephone:  212-930-9700
                    Facsimile:   212-930-9725
                    Email:  GSichenzia@srfllp.net

If to an Investor:  to the address set forth  immediately  below such Investor's
name on the signature pages to the Securities Purchase Agreement.

                    With a copy to:

                    Ballard Spahr Andrews & Ingersoll, LLP
                    1735 Market Street
                    51st Floor
                    Philadelphia, Pennsylvania  19103
                    Attention:  Gerald J. Guarcini, Esq.
                    Telephone:  215-865-8625
                    Facsimile:  215-864-8999
                    Email:  guarcini@ballardspahr.com

          C.  Failure of any party to  exercise  any right or remedy  under this
Agreement or otherwise,  or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

          D. THIS  AGREEMENT  SHALL BE  ENFORCED,  GOVERNED BY AND  CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES
OF  CONFLICT  OF  LAWS.  THE  PARTIES  HERETO  HEREBY  SUBMIT  TO THE  EXCLUSIVE
JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED NEW YORK, NEW YORK WITH
RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED INTO
IN CONNECTION HEREWITH OR THE TRANSACTIONS  CONTEMPLATED HEREBY OR THEREBY. BOTH
PARTIES   IRREVOCABLY  WAIVE  THE  DEFENSE  OF  AN  INCONVENIENT  FORUM  TO  THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING.  BOTH PARTIES FURTHER AGREE THAT SERVICE
OF  PROCESS  UPON A PARTY  MAILED BY FIRST  CLASS  MAIL SHALL BE DEEMED IN EVERY
RESPECT  EFFECTIVE  SERVICE  OF  PROCESS  UPON THE  PARTY  IN ANY  SUCH  SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
ANY  OTHER  MANNER   PERMITTED  BY  LAW.   BOTH  PARTIES   AGREE  THAT  A  FINAL
NON-APPEALABLE  JUDGMENT IN ANY SUCH SUIT OR PROCEEDING  SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR

                                       16
<PAGE>

IN ANY OTHER  LAWFUL  MANNER.  THE PARTY  WHICH DOES NOT  PREVAIL IN ANY DISPUTE
ARISING UNDER THIS  AGREEMENT  SHALL BE  RESPONSIBLE  FOR ALL FEES AND EXPENSES,
INCLUDING  ATTORNEYS' FEES,  INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH
SUCH DISPUTE.

          E. In the event that any  provision  of this  Agreement  is invalid or
unenforceable  under any applicable  statute or rule of law, then such provision
shall be deemed  inoperative  to the extent that it may conflict  therewith  and
shall be deemed  modified  to  conform  with such  statute  or rule of law.  Any
provision  hereof which may prove invalid or  unenforceable  under any law shall
not affect the validity or enforceability of any other provision hereof.

          F. This Agreement,  the Warrants and the Securities Purchase Agreement
(including all schedules and exhibits  thereto)  constitute the entire agreement
among the parties  hereto with respect to the subject matter hereof and thereof.
There are no  restrictions,  promises,  warranties or  undertakings,  other than
those set forth or  referred  to herein  and  therein.  This  Agreement  and the
Securities  Purchase Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

          G. Subject to the  requirements  of Section 9 hereof,  this  Agreement
shall be  binding  upon and  inure  to the  benefit  of the  parties  and  their
successors and assigns.

          H. The headings in this  Agreement  are for  convenience  of reference
only and  shall  not  form  part of,  or  affect  the  interpretation  of,  this
Agreement.

          I. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall  constitute one and the
same agreement and shall become effective when  counterparts have been signed by
each party and delivered to the other party. This Agreement,  once executed by a
party, may be delivered to the other party hereto by facsimile transmission of a
copy of this  Agreement  bearing the signature of the party so  delivering  this
Agreement.

          J. Each party shall do and perform, or cause to be done and performed,
all such further acts and things,  and shall  execute and deliver all such other
agreements,  certificates,  instruments  and  documents,  as the other party may
reasonably  request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

          K.  Except  as  otherwise  provided  herein,  all  consents  and other
determinations  to be made by the Investors  pursuant to this Agreement shall be
made by Investors holding a majority of the Registrable  Securities,  determined
as if the all of the Debentures  then  outstanding  have been converted into for
Registrable Securities.

          L. The  Company  acknowledges  that a breach by it of its  obligations
hereunder will cause  irreparable  harm to each Investor by vitiating the intent
and purpose of the transactions  contemplated hereby.  Accordingly,  the Company
acknowledges  that the  remedy at law for breach of its  obligations  under this
Agreement will be inadequate and agrees,  in the event of a breach or threatened
breach by the Company of any of the provisions  under this Agreement,  that each
Investor shall be entitled,  in addition to all other available  remedies in law
or in equity,

                                       17
<PAGE>

and  in  addition  to the  penalties  assessable  herein,  to an
injunction or injunctions  restraining,  preventing or curing any breach of this
Agreement and to enforce  specifically the terms and provisions hereof,  without
the necessity of showing  economic  loss and without any bond or other  security
being required.

          M.  The  language  used in this  Agreement  will be  deemed  to be the
language  chosen by the parties to express their mutual intent,  and no rules of
strict construction will be applied against any party.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       18
<PAGE>

     IN WITNESS WHEREOF,  the Company and the undersigned Initial Investors have
caused this Agreement to be duly executed as of the date first above written.

PEABODYS COFFEE, INC.

______________________________________
Todd N. Tkachuk
President

AJW PARTNERS, LLC
By:  SMS Group, LLC

______________________________________
Corey S. Ribotsky
Manager

AJW OFFSHORE, LTD.
By:  First Street Manager II, LLC

______________________________________
Corey S. Ribotsky
Manager

AJW QUALIFIED PARTNERS, LLC
By:  AJW Manager, LLC

____________________________________
Corey S. Ribotsky
Manager

                                       19
<PAGE>BNP Agreement between Scios Inc. and BioChemie

 Exhibit 10.54 
 Confidential Treatment
Requested 
  
 BNP AGREEMENT (1995) 
  
 entered into as of November 17, 1995 by and between 
  
 SCIOS NOVA INC. 

2450 Bayshore Parkway 
 Mountain View, CA 94043/USA 
  
 (hereinafter referred to as “SCIOS NOVA”) 
  
 and 
  
 BIOCHEMIE GESELLSCHAFT M.B.H. 
 A-6250 Kundl/Austria 
 (hereinafter referred to as “BC”) 
  
 WHEREAS, SCIOS NOVA is seeking to start
Phase III clinical trials and obtain regulatory approval of its NATRECOR® brand
brain natriuretic peptide (“BNP”) for the treatment of acute congestive heart failure and is seeking a long-term source of supply of BNP made by recombinant manufacture; and 
  
 WHEREAS, BC is in the business of the recombinant manufacture of peptides and proteins and wishes to become SCIOS NOVA’s supplier; and 
  

WHEREAS, SCIOS NOVA has developed a 10 liter recombinant manufacturing process for BNP and BC is willing to scale-up SCIOS NOVA’s 10 liter manufacturing process for BNP to the 150 liter
scale so that the parties’ can evaluate BC’s capability to become SCIOS NOVA’s long-term supplier of BNP in bulk solution in commercial quantities; and 
  
 WHEREAS, SCIOS NOVA wishes to ensure BC is willing and has the capacity to meet SCIOS NOVA’s requirements for bulk BNP during the term of this AGREEMENT, and BC is willing to provide such
assurance; and 
  
 WHEREAS, BC and SCIOS NOVA wish to set forth the principal terms and conditions on which they will evaluate BC’s
capability to scale BIOCHEMIE GESELLSCHAFT M.B.H. up the production of BNP in BULK SOLUTION and on which the parties may thereafter agree to continue to work together; and 
  
 WHEREAS, SCIOS NOVA is willing to purchase BULK SOLUTION from BC on a long-term basis and BC is willing to sell BULK SOLUTION to SCIOS NOVA on a long-term basis; 
  
 THE PARTTES HERETO AGREE AS FOLLOWS: 
  

	1.
	 
	Definitions 
 

  
 Whenever written in capital letters throughout this Agreement the following terms shall have the following meaning: 
  

	 	1.1
	 
	BC DELIVERABLES shall mean the following items to be delivered by BC to SCIOS NOVA after Development Phase I: 
 

  

	 	(a)
	 
	a written report of BC’s complete results in Development Phase I; 
 

  

	 	(b)
	 
	samples of BULK SOLUTION that has been manufactured by BC at the 150 liter fermentation volume; 
 

  

 
 1 

 Confidential Treatment Requested 
  

	 	(c)
	 
	results of the tests described in Annex 4; 
 

  

	 	(d)
	 
	copies of the batch records for all of the production runs performed by BC in Development Phase I; 
 

  

	 	(e)
	 
	BC’s statement of its yield from fermentation at the 150 liter scale, including supporting data, 
 

  

	 	(f)
	 
	BC’s estimate of the quantity of BNP that will be contained in the BULK SOLUTION to be produced in Development Phase II; and 

  

	 	(g)
	 
	BC’s proposed revision of the TARGET PRICE. 
 

  

	 	1.2
	 
	BC KNOWHOW shall mean all know how, technology and trade secrets developed by BC during the course of this Agreement that relate or are useful to the
manufacture of BULK SOLUTION or BNP that are not included in BC PATENT RIGHTS. 
 

  

	 	1.3
	 
	BC PATENT RIGHTS shall mean all patent applications and valid, issued and unexpired patents which are now or hereafter owned or controlled by BC,
including any substitutions, extensions, reissues, renewals, divisions, continuations, or continuations-in-part therefor or thereof, and all foreign counterparts of the foregoing, which cover the development or manufacture of BULK SOLUTION or BNP.

 

  

	 	1.4
	 
	BNP means brain natriuretic peptide produced by recombinant DNA expression in E. coli which has the amino acid sequence and meets the BNP SPECIFICATIONS
set forth in Annex 1. 
 

  

	 	1.5
	 
	BNP COMPOUND shall mean BNP or any derivative thereof containing [*****] 
 

  

	 	1.6
	 
	BNP SPECIFICATIONS shall mean the specifications set forth in Annex 1. Annex 1 may be updated by mutual agreement of the parties at the end of
Development Phase I as provided in Article 4.1 and at the end of Development Phase II as provided in Article 5.3. All revisions shall take into account the then current requirements of regulatory authorities with regard to the acceptable
characteristics for proteins manufactured by recombinant means. 
 

  

	 	1.7
	 
	BULK SOLUTION means frozen bulk solution of BNP that meets the SPECIFICATIONS FOR BULK SOLUTION. 
 

  

	 	1.8
	 
	COMMERCIAL PRICE shall mean the price per gram of BNP in BULK SOLUTION that the parties establish in Article 5.5 will be charged by BC for deliveries
under Article 6 during the Commercial Phase, such price to be valid until December 31, 2002. 
 

  

	 	1.9
	 
	COMPREHENSIVE AGREEMENT means any superseding agreement that the parties may subsequently elect to create under Article 6.10. 

  

	 	1.10
	 
	CONFIDENTIAL INFORMATION shall have the definition that is set forth in the Confidential Disclosure Agreement between the parties dated December 30,
1994. 
 

  

	 	1.11
	 
	DEVELOPMENT PHASE I means the development work to be conducted by BC under Article 4. 
 

  

	 	1.12
	 
	DEVELOPMENT PHASE II means the development work to be conducted by BC under 
 

	 	

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Article 5. 
  

	 	1.13
	 
	NATRECOR is the United States trademark under which SCIOS NOVA intends to market its BNP product. As used in this Agreement, NATRECOR shall mean a
synonym for BNP in finished form to be sold to the trade, irrespective of whether such trademark shall be used or not. 
 

  

	 	1.14
	 
	REVISED TARGET PRICE shall mean the revision of the TARGET PRICE based on BC’s results in DEVELOPMENT PHASE I that is established by the parties
according to Article 4.1. 
 

  

	 	1.15
	 
	SCIOS NOVA KNOWHOW shall mean the 10 liter PROCESS and other know-how, technology and trade secrets that SCIOS NOVA may disclose to BC related or useful
to the manufacture of BULK SOLUTION or BNP that are not included in the SCIOS NOVA PATENT RIGHTS. 
 

  

	 	1.16
	 
	SCIOS NOVA PATENT RIGHTS shall mean all patent applications and valid, issued and unexpired patents which are now or hereafter owned or controlled by
SCIOS NOVA, including any substitutions, extensions, reissues, renewals, divisions, continuations, or continuations-in-part therefor or thereof, and all foreign counterparts of the foregoing, which cover the development or manufacture of BULK
SOLUTION or BNP or a derivative thereof. 
 

  

	 	1.17
	 
	SPECIFICATIONS FOR BULK SOLUTION shall mean the specifications in Annex 2. Annex 2 may be updated by mutual agreement of the parties at the end of
DEVELOPMENT PHASE I as provided in Article 4.1 and at the end of DEVELOPMENT PHASE II as provided in Article 5.3. All revisions shall take into account the then current requirements of regulatory authorities with regard to the acceptable
characteristics for proteins manufactured by recombinant means. 
 

  

	 	1.18
	 
	TARGET PRICE means a price per gram of BNP delivered to SCIOS NOVA in BULK SOLUTION of [*****] calculated upon BC’s knowledge before
DEVELOPMENT PHASE I for the supply of BULK SOLUTION in commercial quantities. 
 

  

	 	1.19
	 
	10 liter PROCESS means SCIOS NOVA’s current process to manufacture BULK SOLUTION at a 10 liter fermentation volume including: 

  
 [*****] 
  
 details being listed in Annex 3. 
  

	 	1.20
	 
	150 liter PROCESS means a manufacturing process to produce BULK SOLUTION at a 150 liter fermentation volume to be developed by BC based on the 10 liter
PROCESS. 
 

  

	 	1.21
	 
	3,000 liter PROCESS means a manufacturing process for BULK SOLUTION at a 3,000 liter fermentation volume to be developed by BC based on the 150 liter
PROCESS. 
 

  
 2.     Supply of information from SCIOS NOVA to BC, starting criteria

  

	 	2.1
	 
	Delivery. Under a separate letter agreement, SCIOS NOVA has provided BC with the 10 liter PROCESS so that BC could begin its work on approximately
November 1, 1995. 
 

  

	 	2.2
	 
	Response. Within 2 weeks of BC’s receipt of the 10 liter PROCESS under Article 2.1, BC 
 

  
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 3 

  
 Confidential Treatment Requested 
  

shall advise SCIOS NOVA whether BC regards the information provided to be adequate for BC’s activities as per Article 3. In the event BC shall regard the
information provided by SCIOS NOVA to be inadequate, SCIOS NOVA shall, to the extent SCIOS NOVA has previously generated such information, provide upon BC’s request within 14 days such additional documents and research/development results that
SCIOS NOVA may possess. 
  
 Within 2 weeks of BC’s receipt of the additional information, BC shall advise SCIOS
NOVA whether BC regards the additional information so obtained to be adequate. 
  
 In the event BC shall have
concluded that it does not have adequate information, to perform DEVELOPMENT PHASE I for the price indicated, BC shall so advise SCIOS NOVA and the parties shall endeavor to reach an agreement on terms for proceeding. If the parties are unable to
reach such a revised agreement by December 1, 1995, then this Agreement shall be automatically terminated with immediate effect (except Articles 11 and 12 which shall continue in effect) and no party shall have a right for compensation. Upon any
termination under this Article, BC shall return to SCIOS NOVA and cease to use all information and materials provided by SCIOS NOVA as part of the 10 liter PROCESS. 
  

	 	2.3
	 
	Support. Upon BC’s request, SCIOS NOVA shall, without charge to BC, provide BC with a maximum of two experts from SCIOS NOVA for a period of up to
three weeks each to support BC’s development activities in DEVELOPMENT PHASE I. 
 

  

	 	2.4
	 
	Essential Dates. The dates as per Articles 3, 4 and 5 shall depend on SCIOS NOVA having provided the 10 liter PROCESS and additional information under
Article 2.2 so that BC can provide the positive advice from BC to SCIOS NOVA by November 15. In the event delays by SCIOS NOVA cause such advice to be given later, the dates as mentioned in Articles 3, 4 and 5 shall be postponed by the period
of such delay. 
 

  

	 	2.5
	 
	Addition of Lyophilization. During DEVELOPMENT PHASE I the parties shall decide whether BC shall also perform the lyophilization of the BULK
SOLUTION and ship BNP in a solid form. If the parties determine that BC should perform such work, appropriate amendments will be made by mutual agreement, including revisions of the specifications, the references to the specifications, and setting
an additional charge for BC to perform the lyophilization. 
 

  

	3.
	 
	DEVELOPMENT PHASE I (150 liter PROCESS) 
 

  

	 	3.1
	 
	General. In DEVELOPMENT PHASE I, BC shall use its best efforts and provide the necessary resources to scale up the 10 liter PROCESS to produce BULK
SOLUTION by recombinant manufacturing methods at the 150 liter fermentation volume so that the parties may fully assess the feasibility of larger scale production. The goal of the parties is to assess whether BC can produce BULK SOLUTION that meets
the SPECIFICATIONS FOR BULK SOLUTION at a price equal to or less than the TARGET PRICE. DEVELOPMENT PHASE I shall begin [*****]. SCIOS NOVA may, at its expense, have representatives visit BC's facility and view BC's fermentation and product recovery
activities during DEVELOPMENT PHASE I. 
 

  

	 	3.2
	 
	DELIVERABLES. During DEVELOPMENT PHASE I BC shall develop the 150 liter PROCESS and define the yields and quantity of BNP in BULK SOLUTION that BC is
able to produce. On or about January 15, 1996, BC shall provide to SCIOS NOVA a written interim report of BC's activities and not later than March 1, 1996, BC shall deliver the BC 
 

  
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 DELIVERABLES to SCIOS NOVA. 
  

	 	3.3
	 
	Charge. BC’s work in DEVELOPMENT PHASE I is outlined in Annex 5. SCIOS NOVA will be charged for BC’s work in DEVELOPMENT PHASE I based on the
actual time used by BC in DEVELOPMENT PHASE I applying the rates set forth in Annex 5. Regardless of the specific results achieved in DEVELOPMENT PHASE I, SCIOS NOVA is obligated to pay for the time actually devoted by BC through completion or
earlier termination; provided, however, the aggregate charge to SCIOS NOVA for all of BC’s work under Articles 2 and 3 shall, in no event, exceed [*****] without SCIOS NOVA’s prior written consent. 
 

 

	 	3.4
	 
	Payment. In February 1996, BC shall invoice SCIOS NOVA for all of BC’s charges for DEVELOPMENT PHASE I, calculated per Article 3.3, and such amount
shall be paid by SCIOS NOVA within fourteen days from the later of (a) SCIOS NOVA’s receipt of the invoice or (b) SCIOS NOVA’s receipt of all of the BC DELIVERABLES. 
 

  

	4.
	 
	Analysis of DEVELOPMENT PHASE I 
 

  

	 	4.1
	 
	Analysis and Discussion. Promptly following receipt of the BC DELIVERABLES, SCIOS NOVA shall determine whether it believes the samples and data indicate
that BC will be able to meet the SPECIFICATIONS FOR BULK SOLUTION, and promptly advise BC of the results of its analysis. Not later than 30 days after receipt of the BC DELIVERABLES, SCIOS NOVA shall notify BC whether SCIOS NOVA wishes BC to conduct
DEVELOPMENT PHASE II. If either party does not wish to conduct DEVELOPMENT PHASE II, this Agreement shall be discontinued per Article 10.2. If SCIOS NOVA notifies BC that it wishes to have BC perform DEVELOPMENT PHASE II, then BC and SCIOS NOVA
shall meet to establish: (a) the Standard Operating Procedure to be used for the 3,000 liter PROCESS in DEVELOPMENT PHASE II and thereafter; (b) the BNP SPECIFICATIONS; (c) the SPECIFICATIONS FOR BULK SOLUTION; and (d) the REVISED TARGET PRICE that
will be charged to SCIOS NOVA per gram of BNP in BULK SOLUTION that is produced by BC in commercial runs after DEVELOPMENT PHASE II. Upon mutual agreement of the parties, their decisions concerning these four matters shall be memorialized in a
written addendum to be attached to and become a part of this Agreement. 
 

  

	 	4.2
	 
	Advance Work. In order to avoid delay in commencing DEVELOPMENT PHASE II, BC agrees to perform the programming of its process control computers and
complete the installation of additional equipment necessary for the manufacture of BULK SOLUTION by the end of March 1996. SCIOS NOVA will reimburse BC at the rate specified in Annex 5 for the actual time spent by BC in programming its process
control computers up to a maximum of [*****] within 30 days after invoice from BC following any termination under Article 4.1 or, if SCIOS NOVA subsequently elects not to have BC perform DEVELOPMENT PHASE II or the parties are unable to agree
on the four items for a long-term supply relationship per Article 4.1. 
 

  

	 	4.3
	 
	Use of 150 liter PROCESS. If the parties are unable to agree on the four matters in Article 4.1 or SCIOS NOVA shall otherwise elect not to proceed to
DEVELOPMENT PHASE II then, in exchange for having funded the development of such process, BC does hereby grant to SCIOS NOVA a royalty-free, exclusive license to use, or allow others to use, all or any part of the 150 liter PROCESS solely for the
manufacture of BNP. Such license shall be irrevocable if SCIOS NOVA has made the payment specified in Article 3.4 and in 
 

  
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 5 

  
  
 Confidential Treatment Requested 

 
  
 Article 10.2, if any is due, but may be revoked by BC by written notice to SCIOS NOVA
if such payments are not made. BC shall have the right to use all or any part of the 150 liter PROCESS solely for any use other than the manufacture of BNP. 
  

	5.
	 
	DEVELOPMENT PHASE II (3,000 liter PROCESS) 
 

  

	 	5.1
	 
	Timing. If the parties agree on the four items per Article 4.1, then DEVELOPMENT PHASE II shall be conducted by BC according to the terms of this
Article 5. It is the parties’ mutual goal, assuming adequate results in DEVELOPMENT PHASE I, to begin DEVELOPMENT PHASE II not later than [*****]. Once DEVELOPMENT PHASE II is commenced, BC shall use its best efforts to complete the work
described below as quickly as reasonable. 
 

  

	 	5.2
	 
	Efforts. During DEVELOPMENT PHASE II, BC shall use its best efforts and provide the necessary resources to perform the following to manufacture BULK
SOLUTION: 
 

  

	 	(a)
	 
	complete the modification of its manufacturing plant by investment in specific equipment necessary to manufacture BULK SOLUTION at the 3,000 liter scale;

 

  

	 	(b)
	 
	develop the 3,000 liter PROCESS; 
 

  

	 	(c)
	 
	manufacture, according to the Standard Operating Procedure written by BC and approved by SCIOS NOVA under Article 4.1, at least three batches using the 3,000
liter PROCESS; 
 

  

	 	(d)
	 
	deliver to SCIOS NOVA the samples for DEVELOPMENT PHASE II and results of tests described in Annex 4; 
 

  

	 	(e)
	 
	deliver to SCIOS NOVA all BULK SOLUTION (except samples for testing at BC) manufactured in DEVELOPMENT PHASE II, together with a copy of the complete batch
records for each of the 3 batches to be produced; 
 

  

	 	(f)
	 
	advise SCIOS NOVA of BC’s yield from fermentation at the 3000 liter scale for each of the 3 batches, including supporting data; 

  

	 	(g)
	 
	advise SCIOS NOVA of the price per gram of BNP that BC proposes to charge for production of BULK SOLUTION at commercial scale under Article 6 based on results
in DEVELOPMENT PHASE II. 
 

  

	 	5.3
	 
	Assessment of DEVELOPMENT PHASE II and Payment. SCIOS NOVA shall promptly assay the BULK SOLUTION produced in DEVELOPMENT PHASE II for conformity
with the SPECIFICATIONS FOR BULK SOLUTION, (as established by the parties under Article 4.1) and provide the results of its analysis to BC. If three batch runs produce BULK SOLUTION that satisfies the SPECIFICATIONS FOR BULK SOLUTION and have a
yield of at least 125 grams each, then SCIOS NOVA shall make one of the following payments to BC based on when SCIOS NOVA received the final shipment of the three batches from DEVELOPMENT PHASE II: 
 

  
 [*****] 
  
 Recognizing that delivery of BULK SOLUTION from DEVELOPMENT PHASE II and batch records to SCIOS NOVA after [*****] will prevent SCIOS NOVA from achieving its development timelines, the parties agree that SCIOS NOVA shall have
the option 
  
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Exchange Commission 
  

 
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 whether to accept and pay [*****] for any batch that is delivered after [*****]. In addition, if the COMMERCIAL
PRICE proposed by BC under Article 5.5 is more than the REVISED TARGET PRICE, then the amount otherwise payable by SCIOS NOVA under this Article 5.3 shall be [*****]; provided, however, that such reduction shall not apply if the COMMERCIAL
PRICE is higher than the REVISED TARGET PRICE due to the fact that the average fermentation yield of the 3 batches (each yielding at least 125 grams) at the 3000 liter scale (as provided in Article 5.2(f)) is less than the fermentation yield from
the 150 liter scale provided by BC under Article 1.1(e). 
  

	 	5.4
	 
	Third Party Testing. If SCIOS NOVA rejects the material from any of the three batches as not meeting the SPECIFICATIONS FOR BULK SOLUTION, and if the
first results of BC conflict, a sample of such shipment shall be submitted for testing to a qualified independent laboratory mutually agreed on by the parties, and such test results shall control. Fees and expenses of the laboratory will be paid by
the party against whom the finding is made. 
 

  

	 	5.5
	 
	Setting Commercial Price. Within 60 days of delivery of the final DEVELOPMENT PHASE II shipment to SCIOS NOVA in accordance with Article 5.3, the
parties shall endeavor to establish by mutual agreement (a) the COMMERCIAL PRICE to be charged for BULK SOLUTION produced under Article 6 by BC for SCIOS NOVA and (b) any revision to the SPECIFICATIONS FOR BULK SOLUTION and to the Standard Operating
Procedure for the 3,000 liter PROCESS. The agreement of the parties concerning these matters shall be memorialized in a written addendum to be attached to and become part of this Agreement. The agreement on these matters shall thereafter apply
between the parties for the duration of this Agreement or until revised by mutual agreement. 
 

  

	 	5.6
	 
	Regulatory Documents. If the BULK SOLUTION manufactured in DEVELOPMENT PHASE II has been found by SCIOS NOVA to meet the SPECIFICATIONS FOR BULK
SOLUTION, yield the minimum quantity of BNP, and the parties have agreed on the COMMERCIAL PRICE and SPECIFICATIONS as per Article 5.5, then BC shall also use its best efforts and provide the necessary resources to prepare and either deliver to
SCIOS NOVA or file directly, as appropriate, the following materials written in the English language concerning the manufacture of BULK SOLUTION for use by SCIOS NOVA in seeking regulatory approval for NATRECOR: 
 

 

	 	n
	 
	all site relevant documents necessary to the filing of an IND amendment by SCIOS NOVA to support the testing of BNP produced by BC in human clinical trials
shall be filed or delivered to SCIOS NOVA within 30 days of the setting of the COMMERCIAL PRICE under Article 5.5. 
 

  

	 	n
	 
	all site relevant documents necessary to support an Establishment License Application (ELA) (which may include BC filing a PLA concurrently with SCIOS NOVA).
The parties shall coordinate their efforts with the other regulatory filings that will be necessary to determine in which countries an ELA (or equivalent filing or PLA by BC) shall be filed in addition to filings with the United States FDA, and
consult with each fully concerning the content and scope of all filings to be made related to BC’s manufacture of BULK SOLUTION. If the parties determine that BC should make any filing directly, then a full copy of each such filing and any
subsequent amendments shall be provided to SCIOS NOVA simultaneous with its 
 

  
 ***** Confidential
portions of the material have been omitted and filed separately with the Securities and Exchange Commission 

 
 7 

  
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 filing by BC. 
  

	 	n
	 
	all relevant information and documents relating to the process for the production of BULK SOLUTION that is needed for SCIOS NOVA to prepare the Chemical
Manufacturing Control section of the Product License Application or New Drug Application (PLA/NDA), whichever is required to be filed with, and meeting the standards of the United States FDA. 
 

  

	 	5.7
	 
	Payment for Regulatory Documents. Upon the complete delivery to SCIOS NOVA of all documentation described in Article 5.6 necessary for filings with, and
meeting the standards of, the United States FDA for an ELA, and PLA/NDA for NATRECOR, SCIOS NOVA shall pay [*****] to BC. 
 

  

	 	5.8
	 
	Timing. The payments specified in Articles 5.3 and 5.6 shall be made within 30 days of completion of the delivery to SCIOS NOVA of the specified items by
BC and confirmation that the relevant specifications have been met. 
 

  
 ***** Confidential portions of the
material have been omitted and filed separately with the Securities and Exchange Commission 
  

 
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	 	6.
	 
	Commercial Phase 
 

  

	 	6.1
	 
	Terms. As provided in Article 5.5, at the conclusion of DEVELOPMENT PHASE II the parties shall have established and documented by mutual agreement
certain key matters, including, (a) the Standard Operating Procedure for the 3,000 liter PROCESS, (b) any revision to the SPECIFICATIONS FOR BULK SOLUTION, (c) any revision to the BNP SPECIFICATIONS, and (d) the COMMERCIAL PRICE. 

  

	 	6.2
	 
	Future Orders. After DEVELOPMENT PHASE II, future orders will be initiated by written purchase order from SCIOS NOVA and the manufacture, delivery,
acceptance and purchase of all such orders shall be governed by the provisions of this Article 6, and the other applicable provisions of this Agreement. Process validation shall be fully performed by BC with SCIOS NOVA’s input prior to
regulatory approval. Assuming successful clinical trials, SCIOS NOVA’s current goal is to file prior to December 31, 1997 an NDA application with the United States FDA for approval to market BNP in the United States. 

  

	 	6.3
	 
	Price. Subject to Article 6.9(e), (which applies after regulatory approval has been obtained), the price to SCIOS NOVA for BULK SOLUTION produced by BC
after DEVELOPMENT PHASE II shall be the COMMERCIAL PRICE that the parties established under Article 5.5. Such price shall be valid until [*****]. In the event the 5 calendar year term as per Article 10.1 shall not have ended at that time, the
COMMERCIAL PRICE shall be revised by mutual agreement of both parties for the remaining term of this Agreement taking into consideration BC’s cost development, and BC’s and SCIOS NOVA’s respective profitability related to BNP. If the
parties are unable to agree on a revision to the COMMERCIAL PRICE, shipments shall nonetheless continue and initially be paid for at the COMMERCIAL PRICE, with a retroactive adjustment upon a determination by the arbitrators under Article 13.3
setting the revised COMMERCIAL PRICE to apply for the remainder of 5 calendar years. Payment for deliveries of BNP shall be based on the net quantity of BNP meeting the BNP SPECIFICATIONS that is contained in a shipment of BULK SOLUTION as
determined initially by BC using methods consistent with applicable regulatory requirements and guidelines, and with the methods described in the then current ELA and PLA/NDA filings related to NATRECOR. The quantity shipped shall be subject to
confirmation by SCIOS NOVA under Article 6.5. If there is a disagreement about the quantity shipped of [*****], then the parties shall confer and attempt to resolve the matter. If the parties are unable to resolve the matter, then it will be
submitted to a qualified independent laboratory mutually agreed by the parties, and the determination of such laboratory shall control. Fees and expenses of such laboratory will be paid by the party against whom the finding is made. 

  

	 	6.4
	 
	Forecasts and Coordination. In order to assist BC in planning for and meeting SCIOS NOVA’s requirements for BULK SOLUTION, SCIOS NOVA agrees to: (a)
keep BC informed on a regular basis with respect to its long-range development plans for NATRECOR, and notify BC promptly of any developments expected to substantially impact SCIOS NOVA’s future BULK SOLUTION requirements; (b) provide BC on a
quarterly basis, beginning in [*****], with non-binding, good faith, rolling forecasts of its supply requirements and dates it anticipates requiring delivery in the ensuing twelve months; and (c) provide BC with firm orders at least
[*****] prior to scheduled delivery date. 
 

  
 In addition, in order to ensure a high level
of communication between the parties, SCIOS 
  
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 NOVA and BC agree, beginning after completion of DEVELOPMENT PHASE II, to meet not less frequently than bi-annually during the
term of this Agreement to discuss issues relating to the supply of BULK SOLUTION. Subject to SCIOS NOVA’s compliance with the foregoing lead times, during the term of this Agreement BC is committed and prepared to supply up to [*****] of
SCIOS NOVA’s forecasted purchases of BNP in BULK SOLUTION. 
  

	 	6.5
	 
	Acceptance and Payment. Acceptance of delivery and payment for all orders will be subject to release testing and acceptance by SCIOS NOVA for conformity
with the then current SPECIFICATIONS FOR BULK SOLUTION. SCIOS NOVA will be invoiced upon shipment of BULK SOLUTION, with a summary of BC’s results of analysis against the SPECIFICATIONS FOR BULK SOLUTION, and [*****] after receipt of
such items (in order to allow time for release testing of each batch by SCIOS NOVA). SCIOS NOVA may reject within [*****] after receipt of any batch of BULK SOLUTION that fails to meet the then current SPECIFICATIONS FOR BULK SOLUTION. If
test results of BC and SCIOS NOVA conflict with respect to a given shipment, a sample of such shipment shall be submitted for testing to a qualified independent laboratory, mutually agreed upon by the parties, and such test results will control.
Fees and expenses of the laboratory will be paid by the party against whom the findings were made. 
 

  

	 	6.6
	 
	Risk of Loss. Deliveries of each lot or portion thereof will be CIP SCIOS NOVA’s facility in Mountain View, CA, or if directed by SCIOS NOVA, its
third party fill and finish contractor or marketing partner. 
 

  

	 	6.7
	 
	Marketing Partner(s). SCIOS NOVA currently intends to market NATRECOR in territories outside the United States and Canada through partners. BC agrees to
supply BULK SOLUTION to such partner(s) on terms comparable to those set forth herein if SCIOS NOVA determines not to supply NATRECOR to such partner(s) via SCIOS NOVA. 
 

  

	 	6.8
	 
	Access to Plant. SCIOS NOVA shall have reasonable access to BC’s facility at all times that BC is manufacturing BULK SOLUTION for the purpose of
monitoring BC’s activities under this Agreement. During such visits SCIOS NOVA personnel shall be observers and shall not have the authority to direct the operations of BC’s personnel. BC shall keep SCIOS NOVA reasonably informed
concerning BC’s manufacturing schedule and facilitate such access. Following the agreement of the parties under Article 4.1, changes to the 3,000 liter PROCESS are to be agreed upon in writing by both parties prior to implementation.

 

  

	 	6.9
	 
	Understanding on Quantity and Shipment. In the commercial production phase under this Article 6, the following shall apply unless otherwise agreed by the
parties: 
 

  

	 	(a)
	 
	The minimum quantity per BC production campaign shall be [******] of BNP in BULK SOLUTION. 
 

  

	 	(b)
	 
	BC shall be under no obligation to deliver more than [******] of BNP in BULK SOLUTION per calendar year or portion thereof. 

  

	 	(c)
	 
	The minimum quantity to be purchased by SCIOS NOVA over the life of this Agreement shall be an aggregate of 25 kg of BNP in BULK SOLUTION. 

  

	 	(d)
	 
	Each shipment of BULK SOLUTION to SCIOS NOVA, or a designee, shall contain a quantity of BNP representing an invoice value of less than [******] under
this 
 

  
 ***** Confidential portions of the material have been omitted and filed separately with the
Securities and Exchange Commission 
  

 
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Agreement. 
  

	 	(e)
	 
	The COMMERCIAL PRICE established under Articles 5.5 and 6.3 is based on SCIOS NOVA purchasing a minimum of 
 

  

	 	•
	 
	[******] of BNP in BULK SOLUTION in each full calendar year of the 5 calendar years’ term under Article 10.1; and 
 

 

	 	•
	 
	25 kg of BNP in BULK SOLUTION in the aggregate during such 5 calendar years’ term starting with the January 1 after first delivery of commercial
quantities. 
 

  
 If SCIOS NOVA purchases less than such yearly or total minimum quantities, then
SCIOS NOVA shall pay to BC a surcharge determined by multiplying (x) the amount, if any, obtained by subtracting (i) the quantity of BNP that SCIOS NOVA actually purchased in that period from (ii) the applicable minimum for that period stated above
by (y) [******] of the COMMERCIAL PRICE. BC shall invoice SCIOS NOVA for any shortfall within 1 month after the end of such term and payment shall be due from SCIOS NOVA within 30 days of receipt of the invoice. For purposes of this Article
6.9 (e), SCIOS NOVA’s purchases of BNP in the Commercial Phase prior to January 1 after first delivery of commercial quantities in order to build inventory shall be counted against the [******] quantity for the first calendar year in the
5 calendar year term that begins after the first delivery of commercial quantities by BC (Articles 10.1). 
  

	 	6.10
	 
	Comprehensive Agreement.  After DEVELOPMENT PHASE II the parties may elect to enter into the COMPREHENSIVE AGREEMENT as an updated statement
reflecting the terms of this Agreement, including Article 6.1 through 6.9, Article 7, Article 8, and Article 10, and such additional terms as they may then deem to be reasonable and customary in such agreements. The COMPREHENSIVE AGREEMENT would
consolidate in one document all of the aspects of the parties’ relationship, perhaps to make it easier for a SCIOS NOVA marketing partner or various regulatory authorities to more easily understand the commitments of the parties. However, if
the parties elect to conduct DEVELOPMENT PHASE II and have agreed on the items described in Article 4.1, then this current Agreement is intended by the parties as their binding commitment to one another until such time, if ever, as the COMPREHENSIVE
AGREEMENT is finalized, at which time the COMPREHENSIVE AGREEMENT will supersede this Agreement. Each of BC and SCIOS NOVA will exercise good faith and reasonable best efforts to conclude the COMPREHENSIVE AGREEMENT within 90 days after SCIOS NOVA
gives notice that it believes the COMPREHENSIVE AGREEMENT is needed to secure a marketing partner for NATRECOR or to clarify matters for any regulatory authority. In specific reliance upon the understandings indicated above, SCIOS NOVA has engaged
BC to conduct DEVELOPMENT PHASE I which in turn may lead to DEVELOPMENT PHASE II as per Article 5. 
 

  

	7.
	 
	Regulatory 
 

  

	 	7.1
	 
	Compliance.  SCIOS NOVA intends to use BULK SOLUTION produced in DEVELOPMENT PHASE II to produce its product NATRECOR for large-scale, pivotal
clinical trials in humans. BULK SOLUTION produced in the commercial phase will be 
 

  
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material have been omitted and filed separately with the Securities and Exchange Commission 

 
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used to produce NATRECOR for sale as a pharmaceutical agent throughout the world, wherever regulatory approval has been obtained. Accordingly, BC agrees that
beginning with the three production runs to be performed using the 3,000 liter PROCESS in DEVELOPMENT PHASE II and for all production runs thereafter, all BULK SOLUTION will be manufactured, tested, stored, and shipped by BC in accordance with the
then current Good Manufacturing Practices Regulations as interpreted by the United States FDA and relevant regulatory agencies in other major countries, as well as other applicable regulatory requirements of the United States FDA, which are not
otherwise specifically described in the Good Manufacturing Practices. Once the ELA, BC’s PLA (if any), and/or SCIOS NOVA’s PLA/NDA have been filed, then BC agrees that all BULK SOLUTION shall also be manufactured, tested, stored and
shipped in accordance with the then current version of such regulatory documents. As manufacturer of BULK SOLUTION, BC will promptly provide all assistance reasonably requested by SCIOS NOVA to secure and maintain regulatory approval for NATRECOR,
and BC shall make all regulatory filings and provide to SCIOS NOVA all information concerning the manufacture of BULK SOLUTION by BC, that may be necessary or advisable in order for SCIOS NOVA or its licensees to obtain approval to market BNP in any
country, and SCIOS NOVA shall have full access, and the right to review and copy all such filings, including, but not limited to, the following: 
  
 (i)     BC will prepare, maintain and give SCIOS NOVA’s regulatory and quality personnel access to all batch records, and provide copies to SCIOS NOVA upon reasonable
request; 
  
 (ii)    BC will file and keep current (including filing of all annual updates) the
portions of the ELA or DMF relating to the manufacturing of BULK SOLUTION being performed by BC (the filing date will be agreed upon by BC and SCIOS NOVA based on the schedule for the PLA/NDA filing); 
  
 (iii)   BC will cooperate with SCIOS NOVA regarding product marketing application requirements to demonstrate the
consistency of the characteristics of BULK SOLUTION, from lot to lot, and of the purity profile of the BULK SOLUTION from lot to lot. BC will also cooperate with SCIOS NOVA and perform the activities necessary to assure that all validation
requirements are met on a timely basis; 
  
 (iv)   SCIOS NOVA will be permitted to inspect BC’s
facility, at reasonable times and at least annually, and, upon advance notice, to be present during manufacture and to be present during regulatory inspections; 
  
 (v)    BC will notify SCIOS NOVA of all regulatory inspections and provide SCIOS NOVA with copies of all significant correspondence to or from the United States FDA (e.g., Section
483 letters, warning letters and BC’s responses) and with any comparable regulatory agency in another country; and 
  
 (vi)   BC will notify SCIOS NOVA in writing at least 30 days in advance of any proposed modification to those portions of its facility or organization that are involved in the manufacture of BULK SOLUTION, consider all
concerns that SCIOS NOVA may express in writing about the impact of such changes on regulatory compliance and production timing, minimize the negative impact of such changes on BC’s methods and schedule for production of BULK SOLUTION
(including obtaining advance regulatory approval of the change), and promptly prepare and file 
  
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any such amendments to the regulatory filings related to the BULK SOLUTION which need to be amended. 
  
 Compensation for all such services is included in the price to be charged by BC under Article 6.3. 
  

	8.
	 
	Back-up Supplier: Licenses 
 

  

	 	8.1
	 
	Alternate Supplier.  In order that SCIOS NOVA is not dependent on a single supplier of BULK SOLUTION and recognizing that regulatory
requirements dictate that all BULK SOLUTION utilized by SCIOS NOVA should be manufactured by the same process, BC agrees that beginning in 1998 and pursuant to Article 8.2, SCIOS NOVA may itself use, or have another supplier use, the 150 liter
PROCESS or the 3,000 liter PROCESS to produce annually the quantity of BULK SOLUTION that is necessary to yield [*****] of BNP. In addition to the foregoing, in the event BC fails for any reason, including without limitation, a force majeure
event described in Article 14.6, to deliver BULK SOLUTION to SCIOS NOVA for a continuous period of 120 days, then SCIOS NOVA shall have the right to make or have made all of its requirements of BULK SOLUTION for the duration of BC’s inability
to supply. 
 

  

	 	8.2
	 
	Access to Process; Royalties.  To permit SCIOS NOVA to manufacture BULK SOLUTION itself or arrange for such an alternate supplier, BC does
hereby grant to SCIOS NOVA a license to use and to allow such alternate supplier to use the 3,000 liter PROCESS and the 150 liter PROCESS solely to make or have made BULK SOLUTION. Such license shall be royalty-free when it is exercised under
Article 8.1 due to BC’s inability to supply. When exercised under Article 8.2 or when exercised under Article 8.1 so that SCIOS NOVA may establish an alternate supplier even though BC is able to supply SCIOS NOVA’s needs, such license
shall bear a royalty of [*****] of SCIOS NOVA’s net sales of NATRECOR that has been produced by using BC KNOWHOW or BC PATENT RIGHTS. The license shall be irrevocable except for a termination under Article 10.5 based on SCIOS NOVA’s
material breach or SCIOS NOVA becoming insolvent or going into liquidation where such insolvency or liquidation is not withdrawn within 90 days. To implement the foregoing license, promptly after setting the COMMERCIAL PRICE as per Article 5.5, BC
will take all steps necessary to disclose all details concerning the 3,000 liter PROCESS and 150 liter PROCESS to SCIOS NOVA in order to enable SCIOS NOVA itself to manufacture BULK SOLUTION pursuant to this provision. BC shall not be required to
make available members of its staff for face-to-face meetings with SCIOS NOVA for more than 100 person hours in the aggregate. SCIOS NOVA shall reimburse BC for reasonable travel, living, other out-of-pocket expenses, and for the work at the rates
incurred by BC in providing assistance to SCIOS NOVA under this paragraph. 
 

  

	9.
	 
	Investment in Specific Equipment 
 

  

	 	9.1
	 
	Investment.  In order to manufacture BULK SOLUTION in DEVELOPMENT PHASE II, BC will invest in planning, purchasing and installing of specific
equipment, such activities and equipment to be listed in Annex 6 to this Agreement as investment. Any such equipment shall be ordered by BC and any such construction activity shall be started not later than [*****]. 

  
 BC’s investment under this Article, including BC’s internal and external planning cost, specific
equipment and installation thereof shall not exceed [*****] in the aggregate 
  

	*****
	 
	Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission 
 

 
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without SCIOS NOVA’s prior written approval. 
  
 Subject to Article 9.3, full and unencumbered title to all such investment by BC under Article 9.1 shall at all times be with BC. 
  

	 	9.2
	 
	Identification of Cost and Payment. BC agrees to notify SCIOS NOVA in writing of the actual cost of BC’s investment under Article 9.1 not later than
[*****]. BC’s notification shall be accompanied by BC’s invoice and by copies of the respective third parties’ invoices for any work and delivery performed and BC’s internal activity-report and charges according to
BC’s accounting guidelines. [*****] 
 

  

	 	9.3
	 
	Effects of Termination on Investment. The termination of this Agreement shall not affect SCIOS NOVA’s obligation to reimburse BC’s investment
as per Article 9.1 and 9.2. 
 

  
 Upon a termination before the first purchase of BULK SOLUTION in
the COMMERCIAL PHASE as per Article 6: 
  
 [*****] 
  

	 	n
	 
	BC shall credit SCIOS NOVA with the amount of [*****], provided such amount had been reimbursed by SCIOS NOVA for the [*****] as detailed in item
1 of Annex 6 as per Article 9.2. 
 

  

	*****
	 
	Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission 
 

 
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	10.
	 
	Term and Discontinuance 
 

  

	 	10.1
	 
	Term. Unless earlier terminated pursuant to the provisions of this Article 10, this Agreement shall remain in full force and effect for 5 calendar years
following the January 1st after the first delivery of commercial quantities by BC to SCIOS NOVA under Article 6 or until this Agreement is superseded by the COMPREHENSIVE AGREEMENT. 
 

  

	 	10.2
	 
	Termination after DEVELOPMENT PHASE I. Pursuant to Article 4.1, the parties shall determine whether or not to proceed to DEVELOPMENT PHASE II after
reviewing the results of DEVELOPMENT PHASE I. If SCIOS NOVA elects not to continue to DEVELOPMENT PHASE II and to terminate the Agreement even though BC has proposed a REVISED TARGET PRICE that is not higher than the TARGET PRICE and BC has
otherwise succeeded in the goals of DEVELOPMENT PHASE I, then SCIOS NOVA shall pay to BC (in addition to any payments due under Article 3) a cancellation fee equal to [*****] of the charge under Article 3.3 for the DEVELOPMENT PHASE I work.
In all other cases (i.e., if SCIOS NOVA terminates after BC has proposed a REVISED TARGET PRICE under Article 5.2 that is higher than the TARGET PRICE or after the goals of DEVELOPMENT PHASE I are not met or if BC elects to terminate under any
circumstances), then no additional payment shall be due from SCIOS NOVA to BC. 
 

  

	 	10.3
	 
	Termination after DEVELOPMENT PHASE II. If the COMMERCIAL PRICE as proposed by BC under Article 5.2 is higher than the REVISED TARGET PRICE and the
parties are unable to agree under Article 5.5 on a COMMERCIAL PRICE and on the other terms specified in Article 5.5, then either party may terminate this Agreement without additional payment. 
 

  

	 	10.4
	 
	Termination for NATRECOR Results. SCIOS NOVA may also terminate this Agreement any time during or after DEVELOPMENT PHASE II if it believes the clinical
results for NATRECOR warrant such termination so that SCIOS NOVA finally decides not to market directly or indirectly NATRECOR. In the event SCIOS NOVA so terminates this Agreement after giving notice to BC to commence DEVELOPMENT PHASE II, then
SCIOS NOVA shall pay to BC (in addition to any payments due under Articles 3) a cancellation fee equal to [*****] of the cost that SCIOS NOVA previously paid to BC for the DEVELOPMENT PHASE I work. 
 

  

	 	10.5
	 
	Termination for Breach. Either party may terminate this Agreement upon a material breach by the other party which goes uncured for more than 30 days
after receipt of written notice identifying the alleged breach. In the event BC terminates this Agreement upon a material breach by SCIOS NOVA that occurs prior to SCIOS NOVA having purchased 25 kg of BNP or alternatively paid for any shortfall per
Article 6.9(e), then BC shall have the right to revoke the license granted under Article 8 by notice given to SCIOS NOVA at the time of notice of the termination for breach. 
 

  

	 	10.6
	 
	Termination for Third Party Patent. If a party receives a claim that a third party patent on BNP would be infringed by BC’s manufacture of BNP for
SCIOS NOVA under this Agreement, the parties shall attempt to agree on a strategy to respond to such claim. If the parties are unable to agree within 90 days, then notwithstanding the obligations of the parties in Article 11.4, either party may
terminate this Agreement effective upon 60 days notice to the other party. 
 

	 	

	 	  
	 
	In the event such termination shall be based upon a claim of a third party, alleging 
 

  

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	infringement based on the structure of BNP or the fact that BC is manufacturing BNP, then SCIOS NOVA shall pay to BC a cancellation fee equal to [*****]
of the cost that SCIOS NOVA previously paid to BC for the DEVELOPMENT PHASE I work. 
 

  

	 	  
	 
	In the event of a termination under this Article 10.6, the license to SCIOS NOVA under Article 8 shall be deemed to have been granted under Article 8.2 and bear
the 1% royalty set forth in Article 8.2. 
 

  

	 	10.7
	 
	Notice. Each party shall give notice to the other of any discontinuance or breach by registered air mail letter or air courier. 

  

	 	10.8
	 
	Survival of Certain Obligations. Termination shall not affect any right or obligation previously accrued. In addition, Article 4.3, Article 7, Article 8,
Article 9, Article 11, Article 12, Article 13 and Article 14 shall survive and continue to have effect following any termination of this Agreement. 
 

  

	11.
	 
	Intellectual Property 
 

  

	 	11.1
	 
	General. Recognizing: (a) that SCIOS NOVA has developed SCIOS NOVA KNOWHOW and holds the SCIOS NOVA PATENT RIGHTS; (b) that SCIOS NOVA will contribute to
BC to develop the 150 liter PROCESS and the 3,000 liter PROCESS; and (c) that in the course of developing the 150 liter PROCESS and 3,000 liter PROCESS BC may develop the BC KNOWHOW and the BC PATENT RIGHTS, the parties agree as follows concerning
intellectual property matters. 
 

  

	 	11.2
	 
	License to BC. SCIOS NOVA hereby grants to BC a non-exclusive, non-transferable license to use SCIOS NOVA KNOWHOW and SCIOS NOVA PATENT RIGHTS solely for
the purpose of manufacturing BNP for SCIOS NOVA as provided in this Agreement. The license granted under this Article 11.2 should automatically terminate upon the expiration or termination of this Agreement. 
 

 

	 	11.3
	 
	BC Ownership, License to Scios Nova. BC shall own the BC KNOWHOW and BC PATENT RIGHTS. Pursuant to Article 4 and Article 8 BC has granted to SCIOS NOVA
certain licenses to use or to authorize others to use any of the of the BC KNOWHOW or BC PATENT RIGHTS solely for the purpose of manufacturing BNP pursuant to SCIOS NOVA’s exercise of its rights in accordance with such articles. 

  

	 	11.4
	 
	Third Party Claims. With respect to any third party claims for infringement of intellectual property (I) SCIOS NOVA shall indemnify and hold harmless BC
to the extent the claim alleges infringement based on the structure of BNP or the fact that BC is manufacturing BNP and (ii) BC shall indemnify and hold harmless SCIOS NOVA to the extent the claim alleges infringement based on the specific process
and methods of fermentation or manufacturing when utilized by BC and only to the extent such claim is based on BC KNOWHOW. 
 

  

	 	11.5
	 
	Non-Use. Recognizing that the transfer by SCIOS NOVA of SCIOS NOVA KNOWHOW constitutes a disclosure of valuable proprietary information of SCIOS NOVA and
also that it may be difficult to separate SCIOS NOVA KNOWHOW from BC KNOWHOW, BC agrees that during the term of this Agreement BC shall not undertake a project involving the manufacture of a BNP COMPOUND without first obtaining the written approval
of SCIOS NOVA. 
 

  
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	 	11.6
	 
	Allowed Use.  SCIOS NOVA acknowledges and agrees that BC shall be free to: 
 

  

	 	•
	 
	Manufacture any compound other than a BNP COMPOUND at any time using the BC KNOWHOW and/or BC PATENT RIGHTS, if such manufacture can be done without infringing
or using any of the SCIOS NOVA PATENT RIGHTS or SCIOS NOVA KNOWHOW falling within the scope of Article 12; 
 

  

	 	•
	 
	Manufacture a BNP COMPOUND for itself or third parties following any termination of this Agreement to the extent such manufacture will not infringe SCIOS NOVA
PATENT RIGHTS or SCIOS NOVA KNOWHOW being covered by Article 12. 
 

  
 The foregoing shall not be
deemed to grant BC any right in the continued use of SCIOS NOVA KNOWHOW or SCIOS NOVA PATENT RIGHTS after the term of this Agreement. 
  

	12.
	 
	Secrecy and Non-Use 
 

  

	 	12.1
	 
	General.  Each party shall keep strictly secret and use solely for the purposes described or authorized herein any CONFIDENTIAL INFORMATION it
may receive from the other party through the activities described in this Agreement. Except as may be required by law or for SCIOS NOVA to secure a licensee for BNP, neither party may discuss the terms of this Agreement without the prior approval of
the other party. 
 

  

	 	12.2
	 
	Exclusions.  Such secrecy and non-use obligations shall not apply to any facts which 
 

  

	 	n
	 
	are or will be part of the public domain without breach of these secrecy provisions; 
 

  

	 	n
	 
	is already in the receiving parties possession at the time of receipt; or 
 

  

	 	n
	 
	will be made available to a party through a third party who has not breached an obligation of confidentiality in so doing. 
 

 

	 	12.3
	 
	Non-exclusion.  Information which is specific shall not be excluded from a secrecy and non-use obligation when it is in general form in the
public domain or being made available to the receiving party. 
 

  

	 	12.4
	 
	Term.  These secrecy and non-use obligation shall be enforced for the term of this Agreement and 10 years thereafter. 

  

	 	12.5
	 
	Outside Patent Counsel.  BC shall be free to disclose the SCIOS NOVA KNOWHOW solely to BC’s patent advisors, including those in BC’s
affiliated company [*****], provided such advisors are subject to the same obligations of secrecy and non-use as set out in this Article 12 and such disclosure is made and used solely for the purpose of BC obtaining patent advice to implement
the purposes of the Agreement. 
 

  

	13.
	 
	Interpretation and Jurisdiction 
 

  

	 	13.1
	 
	No Agency.  This Agreement shall not be interpreted as a contract of association or agency and, except as specifically set forth herein, the
parties shall be under no obligation to enter into any further agreement or to make available to each other any CONFIDENTIAL INFORMATION. 
 

  

	 	13.2
	 
	Governing Law.  This Agreement shall be governed by the laws of Switzerland. 
 

  

	 	13.3
	 
	Dispute Resolution.  Any dispute arising out of this Agreement shall be finally settled by 
 

  
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arbitration according to the Rules of Conciliation and Arbitration of the International Chamber of Commerce headquartered in Paris, France. The arbitration shall be
effected by 3 arbitrators to be appointed according to said rules and the arbitration shall be held in Geneva, Switzerland in the English language. 
  

	14.
	 
	Miscellaneous 
 

  

	 	14.1
	 
	Assignment.  Neither party may assign its obligations under this Agreement without the written consent of the other party, except that (a)
either party shall assign its rights and obligations to a third party which merges with or otherwise acquires substantially all of its assets; and (b) SCIOS NOVA may assign its rights and obligations to a third party which acquires rights to
distribute NATRECOR. 
 

  

	 	14.2
	 
	Entire Agreement.  This Agreement sets forth the entire Agreement of the parties, relating to the subject matter hereof, and supersedes all
prior understandings. 
 

  

	 	14.3
	 
	Notices.  Any notices under this Agreement shall be in writing and may be transmitted personally, by telefax, mail or courier. Notices shall be
deemed to have been given upon receipt. Until changed by further notice from one party to another, the following address shall be used for Notices under this Agreement: 
 

  
 If to SCIOS NOVA: 
  
 2450 Bayshore
Parkway 
 Scios Nova Inc. 
 Mountain View, CA 94043

 Telefax:    01-415-962-5816 
 Attention: General Counsel 
  
 If to BC: 
  
 Biochemie Gesellschaft m.b.H. 
 A-6250 Kundl/Austria 
 Telefax:    0043-5338-8828 
 Attention: General Counsel

  

	 	14.4
	 
	Waiver.  Should either party fail to enforce any provision of this Agreement or fail to exercise or waive any right with respect thereto, such
failure shall not be deemed a waiver or continuing waiver of its rights to enforce such provision or any other provisional right. 
 

  

	 	14.5
	 
	Further Assurances.  From time to time, either SCIOS NOVA or BC shall, at the request of the other party, take or cause to be taken, such other
actions as the other party may reasonably deem necessary or desirable in order to carry out the transactions contemplated by this Agreement. 
 

  

	 	14.6
	 
	Force Majeure.  No failure or omission by a party hereto in the performance of any obligation of this Agreement shall be deemed a breach of
this Agreement nor creating a liability, if the same shall arise from any cause or any causes beyond the control of the party, including, but not limited to, the following, which, for the purposes of this Agreement, shall be regarded as beyond the
control of the party in question: acts of God; acts or omissions of any government; any rules, regulations or orders issued by governmental authority or by any officer, department, agency of instrumentality thereof; 
 

 
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fire, storm; flood; earthquake; accident; war; rebellion; insurrection; riot; invasion; strikes and lockout. Performance shall be excused only for the duration of such
an event and upon cessation of the cause of non-performance the party whose performance has been delayed shall promptly resume performance and use all reasonable efforts to make up time lost in the delay. If the delay in performance shall extend for
more than [*****] days, then the party whose performance is not being delayed may terminate this Agreement by notice to the other or SCIOS NOVA may exercise its rights under Article 8.1. 
  

	 	14.7
	 
	Currency. The parties have selected the German Deutsche Mark (abbreviated DM) as the currency for all payments under this Agreement and all payment
amounts expressed herein are intended to be references to the Deutsche Mark. 
 

  

	*****
	 
	Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission 
 

 

 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. 
  
 
	 SCIOS NOVA INC., a Delaware
 Corporation
 	 	  	 	 BIOCHEMIE
 Gesellschart m.b.H.
 	 	  
	 
	 By:
 	 	 /s/    Richard L. Casey      
 
	 	  	 	 By:
 	 	 /s/    Signature Illegible      
 
	 	 /s/    Dr. F. Nachtmann
 

	 Its:
 	 	 Chairman and CEO
 
	 	  	 	 Its:
 	 	 President and CEO
 
	 	 Director New
 Business Development
 

 
  
 List of Annexes: 
  
 Annex 1 BNP SPECIFICATIONS 
 Annex 2 SPECIFICATIONS FOR BULK SOLUTION 

Annex 3 Details 10 liter PROCESS per Article 1.19 
 Annex 4 Samples and tests to be provided from DEVELOPMENT PHASE I
and Development Phase II 
 Annex 5 Description of BC’s DEVELOPMENT PHASE I effort and charges 
 Annex
6 Investment in Equipment 
 Annex 7 Chromatography Filling Materials 
  

 
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Annex 1 
  
 SPECIFICATIONS FOR HUMAN
BRAIN NATRIURETIC 
 PEPTIDE (1-32) 
  
 [*****] 
  
  
  
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Annex 2 
  
 SPECIFICATIONS FOR BULK
SOLUTION 
  
 [*****] 
  
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Annex 3 
  
 SCIOS NOVA DELIVERABLES
(Details of 10 liter PROCESS as per Article 1.19) 
  
 [*****] 
  
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Annex 4 
  
 SAMPLES AND TESTS TO BE
PROVIDED FROM DEVELOPMENT 
 PHASE I AND DEVELOPMENT PHASE II 
  
 [*****] 
  
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Annex 5 
  
 DESCRIPTION OF BC’S
DEVELOPMENT PHASE I EFFORT AND CHARGES 
 All rates are given in DM/hour 
  
 [*****] 
  
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Annex 6 
  
 INVESTMENT IN EQUIPMENT

  
 [*****] 
  
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Annex 7 
  
 CHROMATOGRAPHY FILLING
MATERIALS 
  
 [*****] 
  
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 FIRST ADDENDUM 
 to the BNP Agreement (1995) 
 entered into as of November 17, 1995 
  
 entered into as of April 30, 1996 by and
between 
  
 SCIOS INC.  
 2450 Bayshore Parkway 

Mountain View, CA 94043/USA 
  
 and 
  
 BIOCHEMIE Gesellschaft mbH 
 A-6250 Kundl/Austria 
  
 WHEREAS, BIOCHEMIE Gesellschaft mbH (hereinafter “BC”) and Scios Nova Inc. entered into the BNP AGREEMENT (1995) as of November 17, 1995 (the
“Agreement”).  
 WHEREAS, Scios Nova Inc. subsequently changed its name to Scios Inc. (hereinafter “Scios”). 
 WHEREAS, BC and Scios wish to amend the Agreement to document their agreements on the following matters: (1) their agreement on four items as specified in article 4.1 of the Agreement; (2) their
agreement that Development Phase H shall be conducted by BC; and (3) their agreement according to article 2.5 of the Agreement that BC shall perform lyophilization of the BULK SOLUTION and ship BNP in solid form to Scios. 
  
 The parties hereto agree as follows: 
  
 1.     Definitions 
  
 Capitalized terms used herein shall have the meaning given to them in the
Agreement unless otherwise defined herein. All references To “Scios Nova” in the Agreement shall be deemed to be references to Scios. 
  
 2.   Analysis and discussion as per article 4.1 
  

	 	a.
	 
	BNP SPECIFICATIONS 
 

  
 The BNP SPECIFICATIONS remain unchanged and shall be as set forth in Annex 1 to the Agreement. 
  

	 	b.
	 
	SPECIFICATIONS FOR BULK SOLUTION 
 

  
 The SPECIFICATIONS FOR BULK SOLUTION remain unchanged and shall be as set forth in Annex 2 to the Agreement. Based on the changes below to incorporate lyophilization into the manufacturing process to
be performed by BC in DEVELOPMENT PHASE II and thereafter, the SPECIFICATIONS FOR BULK SOLUTION now have application primarily to the DEVELOPMENT PHASE I work. 
  

	 	c.
	 
	SOP FOR 3000 liter PROCESS 
 

  
 The standard operating procedure to be used for the 3000 liter PROCESS in DEVELOPMENT PHASE II and thereafter has been agreed on in a separate document which will be signed by both parties.

  

	 	d.
	 
	REVISED TARGET PRICE 
 

  
 [*****] 
  
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separately with the Securities and Exchange Commission 
  

 
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 3.     Agreement on DEVELOPMENT PHASE II (3000 liter PROCESS) 
  
 The
parties agree that DEVELOPMENT PHASE II shall be conducted by BC according to the terms of article 5 of the Agreement. 
  
 4.
    Agreement on lyophilization 
  
 a.     New Definitions

  
 Article 1 is hereby amended by adding the following definitions to the Agreement: 
  

“1.22 BULK LYOPHILIZED BNP means lyophilized BNP that meets the SPECIFICATIONS FOR BULK LYOPHILIZED BNP.” 
  
 “1.23 SPECIFICATIONS FORBULK LYOPHILIZED BNP shall mean the specifications set forth in Annex 8 which shall be used
beginning in Development Phase II. Annex 8 may be updated by mutual agreement of the parties at the end of DEVELOPMENT PHASE II. Such a revision shall take into account the then current requirements of the characteristics for proteins manufactured
by recombinant means. 
  
 b.     Lyophilization 
  
 The parties agree that BC shall perform during DEVELOPMENT PHASE II and the commercial phase as per article 6 of the Agreement the
lyophilization of the BULK SOLUTION to obtain BULK LYOPHILIZED BNP that meets the SPECIFICATIONS FOR BULK LYOPHILIZED BNP. The 3000 liter PROCESS shall include the process for lyophilization to be developed by BC. 
  
 c.     Amendment of article 5.3 
  
 To allow time for the lyophilization work to be performed by BC, Article 5.3 of the Agreement is hereby amended to read as follows: 
  

	 	“5.3
	 
	Assessment of DEVELOPMENT PHASE II and Payment. SCIOS shall promptly assay the BULK LYOPHILIZED BNP produced in DEVELOPMENT PHASE II for conformity with
the SPECIFICATIONS FOR BULK LYOPHILIZED BNP and provide the results of its analysis to BC. If three batch runs produce BULK LYOPHILIZED BNP that satisfies the SPECIFICATIONS FOR BULK LYOPHILIZED BNP and have a yield of at least 125 grams BNP each,
then SCIOS shall make one of the following payments to BC based on when SCIOS received the final shipment of the three batches from DEVELOPMENT PHASE II: 
 

  
 [*****] 
  
 d.
    Amendment of article 5.7 of the Agreement 
  
 Article 5.7 of the Agreement is hereby
amended to read in its’ entirety as follows: 
  

	 	“5.7
	 
	Payment for Regulatory Documents. Upon the complete delivery to SCIOS of all documentation described in Article 5.6 necessary for filings with,
and meeting the standards of the United States FDA for an ELA, and PLA/NDA for NATRECOR, SCIOS shall pay to BC, [*****]” 
 

  
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e.   References to BULK SOLUTION 
  
 The following references to BULK SOLUTION in the Agreement shall hereafter be deemed to be references to BULK LYOPHILIZED BNP: Whereas clauses 3, 5, & 6, articles 1.2, 1.3, 1.8, 1.15, 1.16, 1.21, 5.2, 5.5, 5.6, 6.3, 6.4,
6.5, 6.7, 6.8, 6.9 (all paragraphs), 7.1, 8.1, 8.2, 9.1, and 9.3. 
  
 f.   References to SPECIFICATIONS
FOR BULK LYOPHILIZED BNP 
  
 The following references to SPECIFICATIONS FOR BULK SOLUTION in the Agreement shall
hereafter be deemed to be references to SPECIFICATIONS FOR BULK LYOPHILIZED BNP: articles 5.4, 5.5, 5.6, 6.1 and 6.5. 

 
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IN WITNESS WHEREOF, the parties have executed this Addendum, which shall form an integral part of the Agreement and shall come into force as of April 30, 1996.

  
 
	 SCIOS INC., a Delaware corporation
 	 	 BIOCHEMIE Gesellschaft m.b.H.
 	 	  
	 
	 By:
 	 	 /s/    Armin H. Ramel        
 
	 	 By:  /s/    Dr. W. Killiches        

	 	 By:  /s/    Dr. F. Nachtmann         

	 Name:  Armin H. Ramel
 	 	 Name:  Dr. W. Killiches
 	 	 Dr. F. Nachtmann
 
	 Its:  Vice President of Product Development
 	 	 Its:  General Counsel
 	 	 Director New Business Development
 

 
  
 Attachment: Annex 8—SPECIFICATIONS FOR BULK LYOPHILIZED BNP 
  

 
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Annex 8 
 SPECIFICTIONS FOR BULK LYOPHILIZED BNP 
  
 [*****] 
  
 ***** Confidential
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SECOND ADDENDUM 
 to the BNP Agreement (1995) 
 entered into as of November 17, 1995 and 
 amended as of April 30, 1996

  
 entered into as of September 30, 1997 by and between 
  

Scios Inc. 
 2450 Bayshore Parkway 
 Mountain View, CA 94043/USA 
 (hereinafter referred to as “SCIOS”)

  
 and 
  
 BIOCHEMIE GmbH 
 Biochemiestraße 10, A-6250 Kundl 
 (hereinafter referred to as “BC”) 
  
 WHEREAS, BC and SCIOS
entered into the BNP AGREEMENT (1995) (hereinafter referred to as “AGREEMENT”) as of November 17, 1995 and entered into a first addendum to the AGREEMENT as of April 30, 1996 (hereinafter referred to as “FIRST ADDENDUM”);

  
 WHEREAS, BC and SCIOS wish to amend the AGREEMENT and FIRST ADDENDUM, to document their agreements on the
following matters: 
  

	 	A.
	 
	COMMERCIAL PRICE of BNP in BULK SOLUTION and in BULK LYOPHILIZED BNP 
 

  

	 	B.
	 
	Payment of additional specific equipment 
 

  

	 	C.
	 
	Updated specifications 
 

  
 the parties hereto agree as follows: 
  

	1.
	 
	Definitions 
 

  
 Capitalized terms used herein shall have the meaning given to them in the AGREEMENT or FIRST ADDENDUM unless otherwise defined herein. 
  

	2.
	 
	Setting commercial price as per article 5.5 
 

  

	2.1
	 
	BULK LYOPHILIZED BNP 
 

  

	2.1.1.
	 
	The COMMERCIAL PRICE per gram of BNP delivered to SCIOS as BNP BULK LYOPHILIZED shall be [*****],—. 
 

  
 Even though BC has manufactured BULK LYOPHILIZED BNP, the parties have agreed that, subject to SCIOS obtaining all necessary approvals,
future deliveries will be as BULK SOLUTION. 
  

	2.2
	 
	BULK SOLUTION 
 

  

	2.2.1
	 
	[*****] 
 

  

	2.2.2
	 
	[*****] 
 

  
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	2.2.3
	 
	[*****] 
 

  

	2.3
	 
	The COMMERCIAL PRICE shall be understood CIP SCIOS’ facility in Mountain View, California, USA, payment within 45 days after receipt of delivery.

 

  

	2.4
	 
	[*****] 
 

  

	3.
	 
	Additional Specific equipment 
 

  

	3.1
	 
	SCIOS requests BC to purchase and install the specific equipment at a price not to exceed [*****],— and invoice the total cost related to such
investment as listed in Annex 9 to SCIOS by [*****]. BC’s invoice shall be paid by SCIOS within 30 days after date of invoice but not earlier than completion of installation. 
 

  

	3.2
	 
	Full and unencumbered title to such investment by BC shall at all times be with BC and such investment shall not be reimbursed by BC to SCIOS for any reason
whatsoever. 
 

  

	4.
	 
	SPECIFICATIONS for BULK SOLUTION and BULK LYOPHILIZED BNP 
 

  

	4.1
	 
	The specifications for BULK SOLUTION and for BULK LYOPHILIZED BNP shall be amended as per the annex to this SECOND ADDENDUM. 
 

 

	5.
	 
	Continuation of validity 
 

  

	 	5.1
	 
	The terms of the AGREEMENT, the FIRST ADDENDUM and the SECOND ADDENDUM shall apply to the purchase of BULK SOLUTION as well as to BULK LYOPHILIZED BNP.

 

  
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 IN WITNESS WHEREOF, the parties have executed
this Addendum, which shall form an integral part of the AGREEMENT and shall come into force as of September 30, 1997. 
  
 
	 Scios Inc.
 	 	  	 	 BIOCHEMIE GmbH
 	 	  
	 
	 By:
 	 	 /s/ John H. Newman        
 
	 	  	 	 By:
 	 	 /s/ Dr. W. Killiches        
 
	 	  	 	 /s/ Dr. F. Nachtmann        
 

	 
	 Name: John H. Newman
 	 	  	 	 Name: Dr. W. Killiches
 	 	  	 	 Dr. F. Nachtmann
 
	 Function: Vice President of
                 Legal Affairs
 	 	  	 	 Function: General Counsel
 	 	  	 	 Head Bioproducts
 

 
  
  
 Annex 2: Specifications for BULK SOLUTION

 Annex 8: Specifications for BULK LYOPHILIZED BNP 
 Annex 9: Specific equipment 

 
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 Annex 2 
 to the BNP Agreement between SCIOS Inc. and BIOCHEMIE GmbH 
 entered into as of November 17, 1995 as amended by the 
 SECOND ADDENDUM of
September 30, 1997 
  
 Specifications for BULK SOLUTION 
  
 [*****] 
  
 ***** Confidential
portions of the material have been omitted and filed separately with the Securities and Exchange Commission 

 
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 Annex 8 
 to the BNP Agreement between SCIOS Inc. and BIOCHEMIE GmbH 
 entered into as of November 17, 1995 as amended by the 
 SECOND ADDENDUM of
September 30, 1997 
  
 Specifications for BULK LYOPHILIZED BNP 
  
 [*****] 
  
 ***** Confidential
portions of the material have been omitted and filed separately with the Securities and Exchange Commission 

 
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 Annex 9 
 to the BNP Agreement between SCIOS Inc. and BIOCHEMIE GmbH 
 entered into as of November 17, 1995 as amended by the 
 SECOND ADDENDUM of
September 30, 1997 
  
 Specific Equipment 
  
 [*****] 
  
 ***** Confidential portions of the material have
been omitted and filed separately with the Securities and Exchange Commission 
  

 
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THIRD ADDENDUM 
 to the BNP Agreement (1995) 
 entered into as of November 17, 1995 and 
 amended as of April 30, 1996 and as of
September 30, 1997 
  
 entered into as of September 1, 1998 by and between 
  
 Scios Inc. 
 2450 Bayshore Parkway

 Mountain View, CA 94043/USA 
 (hereinafter referred to as
“SCIOS”) 
  
 and 
  
 BIOCHEMIE GmbH 
 Biochemiestraße 10, A6250 Kundl/Austria 
 (hereinafter referred to as “BC”) 
  
 WHEREAS, BC and SCIOS entered into the BNP AGREEMENT (1995) (hereinafter referred to as “AGREEMENT”) as of November 17, 1995 and entered into a FIRST ADDENDUM to the AGREEMENT as of April 30, 1996 (hereinafter referred to
as “FIRST ADDENDUM”) and SECOND ADDENDUM to the AGREEMENT as of September 30, 1997 (hereinafter referred to as “SECOND ADDENDUM”); 
  
 WHEREAS, BC and SCIOS wish to amend the AGREEMENT and prior ADDENDUMS to document their agreements on the following matters: 
  
 (a)    Revision of COMMERCIAL PRICE of BNP in BULK LYOPHILIZED BNP; 
  
 (b)    Updated specifications; and 
  
 (c)    Prolongation of the AGREEMENT; 
  
 the parties hereto agree as follows: 
  

	 	1.
	 
	Definitions 
 

  
 Capitalized terms used herein shall have the meaning given to them in the AGREEMENT or prior ADDENDUMS unless otherwise defined herein. 
  

	 	2.
	 
	Revision of the COMMERCIAL PRICE for BULK LYOPHILIZED BNP 
 

  
 The COMMERCIAL PRICE in DM per gram of BNP delivered to SCIOS as BNP BULK LYOPHILIZED shall be as follows: 
  
 [*****] 
  
 Even though BC has
manufactured BULK LYOPHILIZED BNP, the parties have agreed that subject to SCIOS obtaining all necessary approvals, future deliveries will be as BULK SOLUTION once the production process for BULK SOLUTION has been validated. In order to accomplish
the changeover to BULK SOLUTION, the parties anticipate that certain additional development work will be performed on a contract or project basis as to which the parties shall separately specify the scope and 
  
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cost for each project in a separate letter agreement to be agreed regarding work that does not produce validated BNP that may be used for commercial purposes.

  

	3.
	 
	SPECIFICATIONS for BULK SOLUTION and BULK LYOPHILIZED BNP 
 

  

	 	3.1
	 
	The specifications for BULK SOLUTION shall be amended to now read as per Annex 2 to this THIRD ADDENDUM and the specifications for BULK LYOPHILIZED BNP shall be
amended to read as per Annex 8 to this THIRD ADDENDUM. 
 

  

	4.
	 
	PROLONGATION of the AGREEMENT 
 

  
 4.1 Article 10.1 of the AGREEMENT shall read as follows: 
  
 10.1
Term. Unless earlier terminated pursuant to the provisions of this Article 10, this AGREEMENT shall remain in full force and effect for eight calendar years following the January 1st after the first delivery of commercial quantities by BC to
SCIOS under Article 6 or until this AGREEMENT is superseded by the COMPREHENSIVE AGREEMENT. 
  

	4.2
	 
	The references made in the AGREEMENT and relating to the five years term shall be adapted to relate to an eight years term. The parties intend that this
modification of the term of the AGREEMENT shall also increase the period of time set forth in Sections 6.9(c) and (e) during which SCIOS shall purchase from BC at least 25 kg of BNP in BULK SOLUTION of BULK LYOPHILIZED form from 5 years after the
first delivery of commercial quantities by BC to the period of eight years after first delivery of commercial quantities by BC. 
 

  

	5.
	 
	Continuation of validity 
 

  

	5.1
	 
	The terms of the AGREEMENT, the FIRST ADDENDUM and SECOND ADDENDUM, and this THIRD ADDENDUM shall apply to the purchase of BULK SOLUTION as well as to BULK
LYOPHILIZED BNP. 
 

  
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with the Securities and Exchange Commission 

 
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IN WITNESS WHEREOF, the parties have executed this Addendum, which shall form an integral part of the AGREEMENT and shall come into force as of July 1, 1998. 
  
 
	 Scios Inc.
 	 	  	 	 BIOCHEMIE GmbH
 
	 
	 By:
 	 	 /s/  Elliot Grossbard, M.D.
 
	 	  	 	 By:
 	 	 /s/  Dr. F. Nachtmann
 

	 Name:    Elliott Grossbard, M.D.
 Function:    Senior Vice President, Development
 	 	  	 	 Name:    Dr. F. Nachtmann
 Function:    Head Bioproducts
 
	 
	  	 	  	 	  	 	 By:
 	 	 /s/  Dr. E. Dolejei
 

	  	 	  	 	 Name:     Dr. E. Dolejei
 Function:    Legal Counsel
 

 
  
 Annex 2:  Specifications for BULK SOLUTION 
 Annex 8:  Specifications for BULK LYOPHILIZED BNP 
  

 
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 Annex 2 
 to the BNP Agreement between
SCIOS Inc. and BIOCHEMIE GmbH 
 entered into as of November 17, 1995 as amended by the 
 THIRD ADDENDUM of September 1, 1998 
  
 Specifications for BULK SOLUTION

  
  
 [*****] 
  
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 Annex 8 
 to the BNP Agreement between
SCIOS Inc. and BIOCHEMIE GmbH 
 entered into as of November 17, 1995 as amended by the 
 THIRD ADDENDUM of September 1, 1998 
  
 Specifications for BULK LYOPHILIZED BNP

  
  
 [*****] 
  
 ***** Confidential portions of the material have been omitted and filed separately with the Securities and Exchange Commission 

 
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