Document:

exv10w38

Table of Contents

	

TABLE OF CONTENTS

									
		SECTION B — SUPPLIES OR SERVICES AND PRICES/COSTS
			ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES
			ARTICLE B.2. ESTIMATED COST AND FIXED FEE
			ARTICLE B.3. PROVISIONS APPLICABLE TO DIRECT COSTS
			ARTICLE B.4. ADVANCE UNDERSTANDINGS
		SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT
			ARTICLE C.1. STATEMENT OF WORK
			ARTICLE C.2. REPORTING REQUIREMENTS
			ARTICLE C.3. INVENTION REPORTING REQUIREMENT
		SECTION D - PACKAGING, MARKING AND SHIPPING
		SECTION E - INSPECTION AND ACCEPTANCE
		SECTION F — DELIVERIES OR PERFORMANCE
			ARTICLE F.1. DELIVERIES
			ARTICLE F.2. CLAUSES INCORPORATED BY REFERENCE, FAR 52.252-2 (FEBRUARY 1998)
		SECTION G — CONTRACT ADMINISTRATION DATA
			ARTICLE G.1. PROJECT OFFICER
			ARTICLE G.2. KEY PERSONNEL
			ARTICLE G.3. INVOICE SUBMISSION/CONTRACT FINANCING REQUEST AND CONTRACT FINANCIAL REPORT
			ARTICLE G.4. INDIRECT COST RATES
			ARTICLE G.5. GOVERNMENT PROPERTY
			ARTICLE G.6. POST AWARD EVALUATION OF CONTRACTOR PERFORMANCE
		SECTION H — SPECIAL CONTRACT REQUIREMENTS
			ARTICLE H.1. REIMBURSEMENT OF COSTS FOR INDEPENDENT RESEARCH AND DEVELOPMENT PROJECTS
			ARTICLE H.2. RESTRICTION FROM USE OF HUMAN SUBJECTS
			ARTICLE H.3. REQUIRED EDUCATION IN THE PROTECTION OF HUMAN RESEARCH PARTICIPANTS
			ARTICLE H.4. DATA AND SAFETY MONITORING IN CLINICAL TRIALS
			ARTICLE H.5. HUMAN MATERIALS
			ARTICLE H.6. CONTINUED BAN ON FUNDING OF HUMAN EMBRYO RESEARCH
			ARTICLE H.7. NEEDLE EXCHANGE
			ARTICLE H.8. PRIVACY ACT
			ARTICLE H.9. INTRODUCTION OF RODENTS AND RODENT PRODUCTS
			ARTICLE H.10. ANIMAL WELFARE
			ARTICLE H.11. RESTRICTION FROM USE OF LIVE VERTEBRATE ANIMALS
			ARTICLE H.12. SALARY RATE LIMITATION LEGISLATION PROVISIONS
			ARTICLE H.13. PUBLICATION AND PUBLICITY
			ARTICLE H.14. PRESS RELEASES
			ARTICLE H.15. REPORTING MATTERS INVOLVING FRAUD, WASTE AND ABUSE
			ARTICLE H.16. ANTI -LOBBYING
			ARTICLE H.17. OBTAINING AND DISSEMINATING BIOMEDICAL RESEARCH RESOURCES
			ARTICLE H.18. PROHIBITION ON CONTRACTOR INVOLVEMENT WITH TERRORISM ACTIVITIES
	PART II — CONTRACT CLAUSES
		SECTION I — CONTRACT CLAUSES
			ARTICLE I.1. GENERAL CLAUSES FOR A COST-REIMBURSEMENT RESEARCH AND DEVELOPMENT CONTRACT
			ARTICLE I.2 AUTHORIZED SUBSTITUTION OF CLAUSES
			ARTICLE I.3. ADDITIONAL CONTRACT CLAUSES
			ARTICLE I.4. ADDITIONAL FAR CONTRACT CLAUSES INCLUDED IN FULL TEXT
	PART III
		SECTION J — LIST OF ATTACHMENTS
			1. Statement of Work, September 26, 2003, 2 pages.
			2. Invoice/Financing Request and Contract Financial Reporting Instructions
			3. Inclusion Enrollment Report, 5/01 (Modified OAMP: 10/01), 1 page.
			4. Annual Technical Progress Report Format for Each Study, July 1994, 1 page.
			5. Safety and Health, HHSAR Clause 352.223-70, (1/01), 1 page.
			6. Research Patient Care Costs, NIH(RC)-11, 4/1/84, 1 page.
			7. Procurement of Certain Equipment, NIH(RC)-7, 4/1/84, 1 page.
			8. Report of Government Owned, Contractor Held Property, 1 page.
	PART IV
		SECTION K — REPRESENTATIONS AND CERTIFICATIONS
			1. Representations and Certifications, dated September 4, 2003.
			2. Animal Welfare and Human Assurance Numbers
	Exhibit 10.38
	Exhibit 14
	Exhibit 21
	Exhibit 23
	Exhibit 31.1
	Exhibit 31.2
	Exhibit 32.1
	Exhibit 32.2

Table of Contents

DETAILED TABLE OF CONTRACT CONTENTS

	 	 	 	 	 
	PART I - THE SCHEDULE
	 	 	 	 
	SECTION A - SOLICITATION/CONTRACT FORM
	 	 	 	 
	SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS
	 	 	4	 
	ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES
	 	 	4	 
	ARTICLE B.2. ESTIMATED COST AND FIXED FEE
	 	 	4	 
	ARTICLE B.3. PROVISIONS APPLICABLE TO DIRECT COSTS
	 	 	4	 
	ARTICLE B.4. ADVANCE UNDERSTANDINGS
	 	 	5	 
	SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT
	 	 	8	 
	ARTICLE C.1. STATEMENT OF WORK
	 	 	8	 
	ARTICLE C.2. REPORTING REQUIREMENTS
	 	 	8	 
	ARTICLE C.3. INVENTION REPORTING REQUIREMENT
	 	 	10	 
	SECTION D - PACKAGING, MARKING AND SHIPPING
	 	 	10	 
	SECTION E - INSPECTION AND ACCEPTANCE
	 	 	10	 
	SECTION F - DELIVERIES OR PERFORMANCE
	 	 	11	 
	ARTICLE F.1. DELIVERIES
	 	 	11	 
	ARTICLE F.2. CLAUSES INCORPORATED BY REFERENCE
	 	 	11	 
	SECTION G - CONTRACT ADMINISTRATION DATA
	 	 	12	 
	ARTICLE G.1. PROJECT OFFICER
	 	 	12	 
	ARTICLE G.2. KEY PERSONNEL
	 	 	12	 
	ARTICLE G.3. INVOICE SUBMISSION/CONTRACT FINANCING
REQUEST AND CONTRACT FINANCIAL REPORT
	 	 	12	 
	ARTICLE G.4. INDIRECT COST RATES
	 	 	13	 
	ARTICLE G.5. GOVERNMENT PROPERTY
	 	 	13	 
	ARTICLE G.6. POST AWARD EVALUATION OF CONTRACTOR
PERFORMANCE
	 	 	14	 
	SECTION H - SPECIAL CONTRACT REQUIREMENTS
	 	 	14	 
	ARTICLE H.1. REIMBURSEMENT OF COSTS FOR INDEPENDENT
RESEARCH AND DEVELOPMENT PROJECTS
	 	 	14	 
	ARTICLE H.2. RESTRICTION FROM USE OF HUMAN SUBJECTS
	 	 	15	 
	ARTICLE H.3. REQUIRED EDUCATION IN THE PROTECTION OF HUMAN
RESEARCH AND PARTICIPANTS
	 	 	15	 
	ARTICLE H.4. DATA AND SAFETY MONITORING IN CLINICAL TRIALS
	 	 	15	 
	ARTICLE H.5. HUMAN MATERIALS
	 	 	15	 
	ARTICLE H.6. CONTINUED BAN ON FUNDING OF HUMAN EMBRYO RESEARCH
	 	 	16	 
	ARTICLE H.7. NEEDLE EXCHANGE
	 	 	16	 
	ARTICLE H.8. PRIVACY ACT
	 	 	16	 
	ARTICLE H.9. INTRODUCTION OF RODENTS AND RODENT PRODUCTS
	 	 	16	 
	ARTICLE H.10. ANIMAL WELFARE
	 	 	17	 
	ARTICLE H.11. RESTRICTION FROM USE OF LIVE VERTEBRATE ANIMALS
	 	 	17	 
	ARTICLE H.12. SALARY RATE LIMITATION LEGISLATION PROVISIONS
	 	 	17	 
	ARTICLE H.13. PUBLICATION AND PUBLICITY
	 	 	17	 
	ARTICLE H.14. PRESS RELEASES
	 	 	18	 
	ARTICLE H.15. REPORTING MATTERS INVOLVING FRAUD, WASTE AND ABUSE
	 	 	18	 
	ARTICLE H.16. ANTI -LOBBYING
	 	 	18	 
	ARTICLE H.17. OBTAINING AND DISSEMINATING BIOMEDICAL RESEARCH RESOURCES
	 	 	18	 
	ARTICLE H.18. PROHIBITION ON CONTRACTOR INVOLVEMENT WITH TERRORISM
ACTIVITIES
	 	 	19	 

2

Table of Contents

	 	 	 	 	 
	PART II - CONTRACT CLAUSES
	 	 	20	 
	SECTION I
- CONTRACT CLAUSES
	 	 	20	 
	ARTICLE I.1. GENERAL CLAUSES FOR A COST-REIMBURSEMENT RESEARCH AND
DEVELOPMENT CONTRACT
	 	 	20	 
	ARTICLE I.2 AUTHORIZED SUBSTITUTION OF CLAUSES
	 	 	23	 
	ARTICLE I.3. ADDITIONAL CONTRACT CLAUSES
	 	 	23	 
	ARTICLE I.4. ADDITIONAL FAR CONTRACT CLAUSES INCLUDED IN FULL TEXT
	 	 	24	 
	PART III
	 	 	25	 
	SECTION J - LIST OF ATTACHMENTS
	 	 	25	 
	1. Statement of Work
	 	 	25	 
	2. Invoice/Financing Request and Contract Financial Reporting
Instructions for NIH Cost-Reimbursement Type Contracts
	 	 	25	 
	3. Inclusion Enrollment Report
	 	 	25	 
	4. Annual Technical Progress Report Format for Each Study
	 	 	25	 
	5. Safety and Health
	 	 	25	 
	6. Research Patient Care Costs
	 	 	25	 
	7. Procurement of Certain Equipment
	 	 	25	 
	8. Report of Government Owned, Contractor Held Property
	 	 	25	 
	PART IV
	 	 	26	 
	SECTION K - REPRESENTATIONS AND CERTIFICATIONS
	 	 	26	 
	1. Representations and Certifications
	 	 	26	 
	2. Human Subjects Assurance Identification Number
	 	 	26	 
	3. Animal Welfare Assurance Number
	 	 	26	 

3

Table of Contents

SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS

ARTICLE B.1. BRIEF DESCRIPTION OF SUPPLIES OR SERVICES

The purpose of this contract is the development of an efficacious vaccine
against HIV for worldwide use in stemming the AIDS epidemic.

ARTICLE B.2. ESTIMATED COST AND FIXED FEE

	a.	 	The estimated cost of this contract is $17,964,371.
	 
	b.	 	The fixed fee for this contract is $1,077,861. The fixed fee shall be
paid in installments based on the negotiated milestones set forth in
Article B.4.c, and subject to the withholding provisions of the clauses
ALLOWABLE COST AND PAYMENT and FIXED FEE referenced in the General Clause
Listing in Part II, ARTICLE I.1. of this contract.
	 
	c.	 	The Government’s obligation, represented by the sum of the estimated cost
plus fixed fee, is $19,042,232.
	 
	d.	 	Total funds currently available for payment and allotted to this contract
are $2,695,203, of which $2,542,644, represents the estimated costs, and
of which $152,559 represents the fixed fee. For further provisions on
funding, see the LIMITATION OF FUNDS clause referenced in Part II, ARTICLE
I.2. Authorized Substitutions of Clauses.
	 
	e.	 	It is estimated that the amount currently allotted will cover performance
of the contract through September 25, 2004.
	 
	f.	 	The Contracting Officer may allot additional funds to the contract
without the concurrence of the Contractor.
	 
	g.	 	Future increments to be allotted to this contract are estimated as
follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FY
	 	PERIOD
	 	ESTIMATED COST
	 	FIXED FEE
	 	TOTAL AMOUNT

	04
	 	 	09/26/04-09/25/05	 	 	$	2,659,958	 	 	$	159,597	 	 	$	2,819,555	 
	05
	 	 	09/26/05-09/25/06	 	 	$	4,270,392	 	 	$	256,223	 	 	$	4,526,615	 
	06
	 	 	09/26/06-09/25/07	 	 	$	4,585,040	 	 	$	275,102	 	 	$	4,860,142	 
	07
	 	 	09/26/07-09/25/08	 	 	$	3,906,337	 	 	$	234,380	 	 	$	4,140,717	 

ARTICLE B.3. PROVISIONS APPLICABLE TO DIRECT COSTS

	a.	 	   Items Unallowable Unless Otherwise Provided

	 	 	 	Notwithstanding the clauses, ALLOWABLE COST AND PAYMENT, and FIXED FEE,
incorporated in this contract, unless authorized in writing by the
Contracting Officer, the costs of the following items or activities shall be
unallowable as direct costs:

	 	(1)	 	Acquisition, by purchase or lease, of any interest in real
property;
	 
	 	(2)	 	Special rearrangement or alteration of facilities;
	 
	 	(3)	 	Purchase or lease of any item of general purpose office furniture
or office equipment regardless of dollar value. (General purpose
equipment is defined as any items of personal property which are usable
for purposes other than research, such as office equipment and
furnishings, pocket calculators, etc.);
	 
	 	(4)	 	Travel to attend general scientific meetings;
	 
	 	(5)	 	Foreign travel - See Paragraph b.(2) below;

4

Table of Contents

	 	(6)	 	Consultant costs;
	 
	 	(7)	 	Subcontracts;
	 
	 	(8)	 	Patient care costs;
	 
	 	(9)	 	Accountable Government property (defined as both real and personal
property with an acquisition cost of $1,000 or more and a life
expectancy of more than two years) and “sensitive items” (defined and
listed in the Contractor’s Guide for Control of Government Property),
1990, regardless of acquisition value.

b. Travel Costs

	 	(1)	 	Domestic Travel

	 	(a)	 	Total expenditures for domestic travel (transportation,
lodging, subsistence, and incidental expenses) incurred in direct
performance of this contract shall not exceed $ 22,373 without the
prior written approval of the Contracting Officer.
	 
	 	(b)	 	The Contractor shall invoice and be reimbursed for all
travel costs in accordance with Federal Acquisition Regulations
(FAR) 31.205-46.

	 	(2)	 	Foreign Travel
	 
	 	 	 	Requests for foreign travel must be submitted at least six weeks in
advance and shall contain the following: (a) meeting(s) and place(s) to
be visited, with costs and dates; (b) name(s) and title(s) of Contractor
personnel to travel and their functions in the contract project; (c)
contract purposes to be served by the travel; (d) how travel of
contractor personnel will benefit and contribute to accomplishing the
contract project, or will otherwise justify the expenditure of NIH
contract funds; (e) how such advantages justify the costs for travel and
absence from the project of more than one person if such are suggested;
and (f) what additional functions may be performed by the travelers to
accomplish other purposes of the contract and thus further benefit the
project.

ARTICLE B.4. ADVANCE UNDERSTANDINGS

Other provisions of this contract notwithstanding, approval of the following
items within the limits set forth is hereby granted without further
authorization from the Contracting Officer.

	a.	 	Confidential Treatment of Sensitive Information
	 
	 	 	The Contractor shall guarantee strict confidentiality of the
information/data that it is provided by the Government during the
performance of the contract. The Government has determined that the
information/data that the Contractor will be provided during the performance
of the contract is of a sensitive nature.
	 
	 	 	Disclosure of the information/data, in whole or in part, by the Contractor
can only be made after the Contractor receives prior written approval from
the Contracting Officer. Whenever the Contractor is
uncertain with regard to the proper handling of information/data under the
contract, the Contractor shall obtain a written determination from the
Contracting Officer.
	 
	b.	 	Subcontract

5

Table of Contents

	 	 	To negotiate a cost reimbursement type subcontract with Emory University for
an amount not to exceed $ 4,740,167. Award of the subcontract shall not
proceed without the prior written approval of the Contracting Officer upon
review of the draft subcontract. After written approval of the subcontract
by the Contracting Officer, a copy of the signed, approved subcontract shall
be provided to the Contracting Officer.
	 
	 	 	To negotiate a cost reimbursement type subcontract with Tulane University
for an amount not to exceed $1,348,259. Award of the subcontract shall not
proceed without the prior written approval of the Contracting Officer upon
review of the supporting documentation as required by the Subcontracts
clause of the General Clauses incorporated in this contract and a copy of
the draft subcontract. After written approval of the subcontract by the
Contracting Officer, a copy of the signed, approved subcontract shall be
provided to the Contracting Officer.
	 
	c.	 	Contract Milestones
	 
	 	 	The Contractor shall complete all work in accordance with the Statement of
Work and the contract milestones set forth below. The distribution of the
fixed fee shall be paid in installments based on the Project Officer’s
written certification regarding the completion of these milestones as
follows:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	MILESTONES
	 	FIXED FEE

	 	1	 	 	Prepare baculovirus stocks expressing wild type SF162 HIV-1 viral genes for
production of HIV-1 VLPs.
	 	$	41,456	 
	 	2	 	 	Prepare CHO cell lines expressing wild type SF162 HIV-1 viral genes for
production of HIV-1 VLPs.
	 	$	41,456	 
	 	3	 	 	Prepare at least one lot (50 mg) for each HIV-1 VLP candidate for process
development and animal testing.
	 	$	41,456	 
	 	4	 	 	Evaluate immunogenicity of first generation SF162 HIV-1 VLPs in small
animals.
	 	$	41,456	 
	 	5	 	 	Pass DAIDS-contracted GMP audit of production facility intended for use in
VLP production.
	 	$	41,456	 
	 	6	 	 	Construct SF162 Env mutants and characterize them for surface expression
and reactivity with known neutralizing monoclonal antibodies, and levels of
incorporation into VLPs.
	 	$	41,456	 
	 	7	 	 	Prepare baculovirus stocks expressing Env mutant SF162 HIV-1 viral genes
for production of HIV-1 VLPs.
	 	$	41,456	 
	 	8	 	 	Prepare CHO cell lines expressing Env mutant SF162 HIV-1 viral genes for
production of HIV-1 VLPs.
	 	$	41,456	 
	 	9	 	 	Prepare at least one lot (50 mg) for Env mutant HIV-1 VLP candidate for
process development and animal testing.
	 	$	41,456	 
	 	10	 	 	Evaluate comparative immunogenicity of Env mutant and first generation
SF162 HIV-1 VLPs in small animals.
	 	$	41,456	 
	 	11	 	 	Produce animal testing lots (50 mg) of phenotypically mixed VLPs designed
to target antigen presenting cells or mucosal surfaces.
	 	$	41,456	 
	 	12	 	 	Evaluate immunogenicity of phenotypically mixed VLPs in small animals.
	 	$	41,456	 
	 	13	 	 	Prepare baculovirus stocks and/or CHO cell lines expressing Env proteins
from selected clade A or C HIV-1 isolates, and their deletion mutants, for
production of HIV-1 VLPs.
	 	$	41,456	 

6

Table of Contents

	 	 	 	 	 	 	 	 	 
	 	 	 	 	MILESTONES
	 	FIXED FEE

	 	14	 	 	Prepare lots (50 mg) of clade A or C Env (and Env mutant) HIV-1 VLP
candidates for process development and animal testing.
	 	$	41,456	 
	 	15	 	 	Evaluate comparative immunogenicity of Env mutant and wild type clade A or
C HIV-1 VLPs in small animals.
	 	$	41,456	 
	 	16	 	 	Select and prepare lot(s) of SF162 HIV-1VLP candidate(s) for nonhuman
primate testing.
	 	$	41,456	 
	 	17	 	 	Evaluate immune responses induced by candidate VLPs in nonhuman primates in
comparison with immune responses induced by same preparation(s) in small
animals.
	 	$	41,456	 
	 	18	 	 	Submit concept sheet to the HVTN; finalize assembly of HVTN team.
	 	$	41,456	 
	 	19	 	 	Prepare and qualify master and working cell banks of baculovirus stocks or
CHO cell lines expressing HIV-1 genes for VLP production.
	 	$	41,456	 
	 	20	 	 	Prepare GMP pilot clinical lot of VLPs for preclinical IND-enabling studies.
	 	$	41,456	 
	 	21	 	 	Assemble and submit pre-IND meeting materials in request of pre-IND meeting
with CBER/FDA.
	 	$	41,456	 
	 	22	 	 	Hold pre-IND meeting with CBER/FDA.
	 	$	41,456	 
	 	23	 	 	Conduct and complete IND-enabling preclinical GLP toxicologic and
immunologic studies on VLP clinical candidate.
	 	$	41,456	 
	 	24	 	 	Complete and vial GMP clinical lot (at least 250 mg in total) of vaccine
candidate VLPs for clinical trial.
	 	$	41,456	 
	 	25	 	 	Complete protocol development with the HVTN.
	 	$	41,456	 
	 	26	 	 	File DMF/IND with the FDA and clinical protocol with the HVTN for IRB
review.
	 	$	41,461	 

	d.	 	   Invoices - Cost and Personnel Reporting, and Variances from the Negotiated Budget

	 	(1)	 	The contractor agrees to provide a detailed breakdown on invoices of the following cost categories:

	 	(a)	 	Direct Labor - List individuals by name,
title/position, hourly/annual rate, level of effort, and amount
claimed.
	 
	 	(b)	 	Fringe Benefits - Cite rate and amount
	 
	 	(c)	 	Overhead - Cite rate and amount
	 
	 	(d)	 	Materials & Supplies - Include detailed breakdown
when total amount is over $1,000.
	 
	 	(e)	 	Travel - Identify travelers, dates, destination,
purpose of trip, and amount. Cite COA, if appropriate. List
separately, domestic travel, general scientific meeting travel,
and foreign travel.
	 
	 	(f)	 	Consultant Fees - Identify individuals and amounts.
	 
	 	(g)	 	Subcontracts - Attach subcontractor invoice(s).
	 
	 	(h)	 	G&A - Cite rate and amount.
	 
	 	(i)	 	Total Cost
	 
	 	(j)	 	Fixed Fee
	 
	 	(k)	 	Total CPFF

7

Table of Contents

	 	 	 	Monthly invoices must include the cumulative total expenses to date,
adjusted (as applicable) to show any amounts suspended by the
Government.
	 
	 	(2)	 	The contractor agrees to immediately notify the contracting
officer in writing if there is an anticipated overrun (any amount) or
unexpended balance (greater than 10 percent) of the amount allotted
to the contract, and the reasons for the variance. Also refer to the
requirements of the Limitation of Funds and Limitation of Cost
Clauses in the contract.

	e.	 	GMP Audit

	 	 	The Contractor will be audited for GMP, GLP and QC/QA capabilities within
four months of contract award. Noted deficiencies shall be corrected (or addressed) within six months
after issuance of the audit report.

SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT

ARTICLE C.1. STATEMENT OF WORK

	a.	 	Independently and not as an agent of the Government, the Contractor shall
furnish all the necessary services, qualified personnel, material,
equipment, and facilities, not otherwise provided by the Government as
needed to perform the Statement of Work, SECTION J, ATTACHMENT 1, dated
September 26, 2003, attached hereto and made a part of this contract.

ARTICLE C.2. REPORTING REQUIREMENTS

The Contractor is required to formally report progress once per year, through
submission of a written Technical Report, and once by holding a formal Site
Visit review to be attended by appropriate NIAID contract staff and program
officials, and the External Advisory Committee of the Team. The Contractor is
also required to submit Goals and Milestones Achievement Reports during the
contract period at appropriate times. Distribution of written reports is
listed in Article F.1.

	(1)	 	Goals and Milestones Achievement Reports. Since the
payment of contract fee portions will be tied to the accomplishment of
negotiated, predetermined goals and milestones, the Contractor will submit
Goals and Milestones Achievement Reports during the contract period as
appropriate. The original shall be submitted to the Contracting Officer,
and two (2) copies (one hard copy and a copy in a digital medium) to the
Project Officer. Each report must consist of:

	 	1.	 	A cover page
	 
	 	2.	 	Reports shall include but not be limited to the following:

Section A
– An introduction covering the goal or milestone

Section B
– A description of the results. Description shall
include pertinent data and/or figures in sufficient detail to
explain any significant results from analysis and scientific
evaluation of data accumulated to date under the goal or
milestone. When appropriate this report should detail
specific requests and approvals for the conduct of human
trials.

	 	(2)	 	Clinical Trials Protocol(s). NIAID has a
responsibility to ensure that mechanisms and procedures are in place
to protect the safety of participants in NIAID-supported studies.
Therefore, as described in the NIAID Clinical Terms of Award and
Guidance ( http://www.niaid.nih.gov/ncn/clinical/default_human.htm
), the Contractor shall develop a protocol for each clinical trial
and submit it for approval by the NIAID Prevention Science Review
Committee (PSRC). Protocols should include a description of the
research design and protocol development including definition of
objectives and approaches, planning, implementation, participant
recruitment and follow-up, data collection, quality control, data and
safety monitoring, final data analysis and

8

Table of Contents

	 	 	 	interpretation, and
publication of results. Final approval of this protocol must take
place prior to participant enrollment. [For trials to be conducted
through the DAIDS-sponsored HVTN, the protocol should be developed in
conjunction with the HVTN.]
	 
	 	(3)	 	Annual Technical Report. By the fifteenth
working day of the twelfth month of each Contract year, the
Contractor shall submit Annual Technical Progress Reports as
described below. The original shall be submitted to the Contracting
Officer, and two (2) copies (one hard copy and one copy in a digital
medium) to the Project Officer. The report should be factual and
concise and consist of the following:

	 	1.	 	A cover page
	 
	 	2.	 	Reports shall include but not be limited to the following:

Section A
– An introduction covering the purpose and scope of
the contract effort

Section B
– A description of overall progress plus a separate
description for each task or other logical segment of work on
which effort was expended during the reporting period. The
description shall include pertinent data and/or figures in
sufficient detail to explain any significant results from
analysis and scientific evaluation of data accumulated to date
under the project. Special emphasis shall be placed on goals
or milestones that were reached, or problems that were
encountered that prevented reaching a scheduled goal or
milestone during the reporting period and how those problems
were/will be addressed, and requests and approvals to conduct
human trials.

Section C
– A summary of the proposed goals and milestones for
the duration of the Contract, including any proposed revisions
based on results generated to date

	 	(4)	 	Annual Site Visit Review and Report. At the
middle (6 month mark) of each contract year, the Contractor shall
host, for NIAID contract and program staff and their External
Advisory Board, a site visit review. The Contractor’s Principal
Investigator and all co-investigators shall attend this meeting. An
update and summary of results generated on each sub-project shall be
presented by the co-investigator and/or other pertinent staff. These
presentations shall include summaries of all goals or milestones
reached during the review period and include a description of all
problems encountered that will impact the achievement of particular
goals and milestones as outlined in the Contractor’s research plan.
The Principal Investigator, co-investigator and staff representing
each project and sub-project shall describe goals and milestones and
development objectives for the coming year. Additionally,
application of the policies and procedures for monitoring the
direction of specific projects shall be presented. For Contractors
with foreign subcontracts, this annual site visit will also report
details about approvals for manufacturing or testing that have been
obtained from both the U.S. and foreign governments. A report of the
plan for, and results of, this site visit shall be prepared by the
Contractor and submitted to the Project Officer (in hard copy and
digital medium) and the Contracting Officer (original hard copy).
	 
	 	(5)	 	Final Technical Report. The Contractor
shall submit the final report documents, two (2) copies (one hard
copy and one copy in a digital medium) to the Project Officer, and
the original to the Contracting Officer, which shall summarize the
results of the entire contract work for the complete performance
period, and shall include the specifications of the optimized AIDS
vaccine product developed during the course of this Contract. These
specifications shall include: 1) the identity of the vaccine strain
or strains in the final product, 2) a detailed description of the
manipulations used in the vaccine design, 3) a detailed description
of all processes used to expand, attenuate, inactivate, or purify the
final vaccine product, 4) a detailed description of any adjuvants or
other potentiating agents used in the delivery of the final optimized
product, 5) a detailed description of the suggested immunization
schedule to be used for optimal reactivity in humans, and 6) evidence
that the vaccine product can be manufactured under GMP/GLP conditions
for use in human vaccine trials. In addition, the Contractor shall
indicate whether any INDs were filed in relation to vaccine products
developed during the course of the Contract, and provide a
description of
the IND and the results of the filings. For Contractors with
foreign subcontracts, this report shall include details concerning
approvals for manufacturing or testing that have been obtained for
or by the foreign subcontractors. The final report shall be
submitted by the completion date of the Contract.

9

Table of Contents

ARTICLE C.3. INVENTION REPORTING REQUIREMENT

All reports and documentation required by FAR Clause 52.227-11 including, but
not limited to, the invention disclosure report, the confirmatory license, and
the government support certification, shall be directed to the Extramural
Inventions and Technology Resources Branch, OPERA, NIH, 6705 Rockledge Drive,
Room 1040 A, MSC 7980, Bethesda, Maryland 20892-7980 (Telephone: 301-435-1986).
In addition, one copy of an annual utilization report, and a copy of the final
invention statement, shall be submitted to the Contracting Officer. The final
invention statement (see FAR 27.303(a)(2)(ii)) shall be submitted to the
Contracting Officer within 90 days after the expiration date of the contract to
the following address:

Contracting Officer

National Institutes of Health

National Institute of Allergy and Infectious Diseases, CMB

6700-B Rockledge Drive, Room 2230

Bethesda, Maryland 20892 -7612

If no invention is disclosed or no activity has occurred on a previously
disclosed invention during the applicable reporting period, a negative report
shall be submitted to the Contracting Officer at the address listed above.

To assist Contractors in complying with invention reporting requirements of the
clause, the NIH has developed “Interagency Edison,” an electronic invention
reporting system. Use of Interagency Edison is encouraged as it streamlines
the reporting process and greatly reduces paperwork. Access to the system is
through a secure interactive Web site to ensure that all information submitted
is protected. Interagency Edison and information relating to the capabilities
of the system can be obtained from the Web
(http://www.iedison.gov), or by contacting the Extramural
Inventions and Technology Resources Branch, OPERA, NIH.

SECTION D - PACKAGING, MARKING AND SHIPPING

All deliverables required under this contract shall be packaged, marked and
shipped in accordance with Government specifications. At a minimum, all
deliverables shall be marked with the contract number and contractor name. The
Contractor shall guarantee that all required materials shall be delivered in
immediate usable and acceptable condition.

SECTION E - INSPECTION AND ACCEPTANCE

	a.	 	The Contracting Officer or the duly authorized representative will
perform inspection and acceptance of materials and services to be
provided.
	 
	b.	 	For the purpose of this SECTION, the Project Officer is the authorized
representative of the Contracting Officer.
	 
	c.	 	Inspection and acceptance will be performed at the address listed in
Article G.1.
	 
	 	 	Acceptance may be presumed unless otherwise indicated in writing by the
Contracting Officer or the duly authorized representative within 30 days
of receipt.
	 
	d.	 	This contract incorporates the following clause by reference, with the
same force and effect as if it were given in full text. Upon request, the
Contracting Officer will make its full text available.
	 
	 	 	FAR Clause No. 52.246-9, INSPECTION OF RESEARCH AND DEVELOPMENT (SHORT
FORM) (APRIL 1984).

10

Table of Contents

SECTION F - DELIVERIES OR PERFORMANCE

ARTICLE F.1. DELIVERIES

Satisfactory performance of the final contract shall be deemed to occur upon
performance of the work described in Article C.1. and upon delivery and
acceptance by the Contracting Officer, or the duly authorized representative,
of the following items in accordance with the stated delivery schedule:

	a.	 	The items specified below as described in SECTION C, ARTICLE C. 2 . will
be required to be delivered F.O.B. Destination as set forth in FAR
52.247-35, F.O.B. DESTINATION, WITHIN CONSIGNEES PREMISES (APRIL 1984),
and in accordance with and by the dates specified below:

	 	 	 	 	 
	Item
	 	Description
	 	Delivery Schedule

	1

	 	Goals and Milestones Achievement Report
	 	Quarterly after Award
	2

	 	Clinical Trials Protocol(s)
	 	As required by the Project Officer
	3

	 	Annual Technical Report
	 	15th day of the twelfth month of each Contract Year
	4

	 	Annual Site Visit Review
	 	6th month of each Contract Year
	5

	 	Final Technical Report
	 	On or before Contract Expiration

	b.	 	The above items shall be addressed and delivered to:

	 	 	 	 	 
	Addressee
	 	Deliverable Item
	 	Quantity

	Contracting Officer

	 	Goals and Milestones Achievement Report
	 	—
	CMB, NIAID, NIH

	 	Clinical Trials Protocol(s)
	 	—
	Room 2230, MSC 7612

	 	Annual Technical Report
	 	1 Copy
	6700-B Rockledge Drive

	 	Annual Site Visit Review
	 	1 Copy
	Bethesda, MD 20892-7612

	 	Final Technical Report
	 	1 Copy
	 				
	Project Officer

	 	Goals and Milestones Achievement Report
	 	1 Copy *
	Vaccine & Prevention Research

	 	Clinical Trials Protocol(s)
	 	1 Copy *
	Program

	 	Annual Technical Report
	 	1 Copy *
	Division of AIDS, NIAID, NIH

	 	Annual Site Visit Review
	 	1 Copy *
	Room 4109, MSC 7628

	 	Final Technical Report
	 	1 Copy *
	6700-B Rockledge Drive
	 	 	 	 
	Bethesda, MD 20892-7628
	 	 	 	 

* Plus one copy on 3.5 inch, high density computer diskette or other
digital medium approved by the Project Officer.

ARTICLE F.2. CLAUSES INCORPORATED BY REFERENCE, FAR 52.252-2 (FEBRUARY 1998)

This contract incorporates the following clause by reference, with the same
force and effect as if it were given in full text. Upon request, the
Contracting Officer will make its full text available. Also, the full text of
a clause may be accessed electronically at this address:
http://www.arnet.gov/far/.

FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSE:
        52.242-15,
Stop Work Order (AUGUST 1989) with ALTERNATE I (APRIL
1984).

11

Table of Contents

SECTION G - CONTRACT ADMINISTRATION DATA

ARTICLE G.1. PROJECT OFFICER

The following Project Officer will represent the Government for the purpose of
this contract:

Stuart Z. Shapiro MD, PhD

Medical Officer, Preclinical Research & Development Branch

Vaccine & Prevention Research Program

Division of AIDS, NIAID, NIH

Room 4108, MSC 7628

6700-B Rockledge Drive

Bethesda, MD 20892-7628

Phone: (301) 402-0122

Fax: (301) 402-3684

Email: sshapiro@niaid.nih.gov

The Project Officer is responsible for: (1) monitoring the Contractor’s
technical progress, including the surveillance and assessment of performance
and recommending to the Contracting Officer changes in requirements; (2)
interpreting the Statement of Work and any other technical performance
requirements; (3) performing technical evaluation as required; (4) performing
technical inspections and acceptances required by this contract; and (5)
assisting in the resolution of technical problems encountered during
performance.

The Contracting Officer is the only person with authority to act as agent of
the Government under this contract. Only the Contracting Officer has authority
to: (1) direct or negotiate any changes in the Statement of Work; (2) modify or
extend the period of performance; (3) change the delivery schedule; (4)
authorize reimbursement to the Contractor any costs incurred during the
performance of this contract; or (5) otherwise change any terms and conditions
of this contract.

The Contracting Officer hereby delegates the Project Officer as the Contracting
Officer’s authorized representative responsible for signing software license
agreements issued as a result of this contract.

The Government may unilaterally change its Project Officer designation.

ARTICLE G.2. KEY PERSONNEL

Pursuant to the Key Personnel clause incorporated in this contract, the
following individual is considered to be essential to the work being performed
hereunder:

	 	 	 
	Name	 	Title
	Robin A. Robinson, Ph.D.

	 	Principal Investigator
	Richard W. Compans, Ph.D.

	 	Co-Principal Investigator, Emory University

ARTICLE G.3. INVOICE SUBMISSION/CONTRACT FINANCING REQUEST AND CONTRACT FINANCIAL REPORT

	a.	 	Invoice/Financing Request Instructions and Contract Financial Reporting
for NIH Cost-Reimbursement Type Contracts NIH(RC)-4 are attached and made
part of this contract. The instructions and the following directions for
the submission of invoices/financing request must be followed to meet the
requirements of a “proper” payment request pursuant to FAR 32.9.

12

Table of Contents

	 	 	These instructions also provide for the submission of financial and
personnel reporting required by HHSAR 342.7002.

	 	(1)	 	Invoices/financing requests shall be submitted as follows:
	 
	 	 	 	    An original and two copies to the following designated billing office:

Contracting Officer

Contract Management Branch

National Institute of Allergy and Infectious Diseases, NIH

Room 2230

6700-B ROCKLEDGE DRIVE, MSC 7612

BETHESDA, MD 20892-7612

	 	(2)	 	Inquiries regarding payment of invoices should be directed to
the designated billing office, (301)496-0612.

	b.	 	The Contractor shall include the following certification on every invoice
for reimbursable costs incurred with Fiscal Year funds subject to the
salary rate limitation provisions as specified in ARTICLE H.12. of this
contract. For billing purposes, certified invoices are required for the
billing period during which the applicable Fiscal Year funds were
initially charged through the final billing period utilizing the
applicable Fiscal Year funds:

“I hereby certify that the salaries charged in this
invoice are in compliance with P.L. 108-7 and ARTICLE
H.12. of the above referenced contract.”

ARTICLE G.4. INDIRECT COST RATES

In accordance with Federal Acquisition Regulation (FAR) (48 CFR Chapter 1)
Clause 52.216-7 (d)(2), Allowable Cost and Payment incorporated by reference in
this contract in Part II, Section I, the cognizant Contracting Officer
representative responsible for negotiating provisional and/or final indirect
cost rates is identified as follows:

Director, Division of Financial Advisory Services

Office of Acquisition Management and Policy

National Institutes of Health

6100 Building, Room 6B05

6100 EXECUTIVE BLVD MSC 7540

BETHESDA MD 20892-7540

These rates are hereby incorporated without further action of the Contracting
Officer.

ARTICLE G.5. GOVERNMENT PROPERTY

	a.	 	In addition to the requirements of the clause, GOVERNMENT PROPERTY,
incorporated in SECTION I of this contract, the Contractor shall comply
with the provisions of DHHS Publication, Contractor’s Guide for Control of
Government Property, 1990, which is incorporated into this contract by
reference. Among other issues, this publication provides a summary of the
Contractor’s responsibilities regarding purchasing authorizations and
inventory and reporting requirements under the contract. A copy of this
publication is available upon request to the Contracts Property
Administrator.
	 
	 	 	Requests for information regarding property under this contract should be
directed to the following office:

Division of Personal Property Services, NIH

6011Building, Suite 637

6011 EXECUTIVE BLVD MSC 7670

BETHESDA MD 20852-7670

(301) 496-6466

13

Table of Contents

	b.	 	Notwithstanding the provisions outlined in the DHHS Publication,
Contractor’s Guide for Control of Government Property, 1990 which is
incorporated in this contract in paragraph a. above, the contractor shall
use the form entitled, “Report of Government Owned, Contractor Held
Property” for performing annual inventories required under this contract.
This form is included as an attachment in SECTION J of this contract.

ARTICLE G.6. POST AWARD EVALUATION OF CONTRACTOR PERFORMANCE

	a.	 	Contractor Performance Evaluations
	 
	 	 	Interim and final evaluations of contractor performance will be prepared
on this contract in accordance with FAR 42.15. The final performance
evaluation will be prepared at the time of completion of work. In
addition to the final evaluation, interim evaluations will be prepared
annually to coincide with the anniversary date of the contract.
	 
	 	 	Interim and final evaluations will be provided to the Contractor as soon
as practicable after completion of the evaluation. The Contractor will be
permitted thirty days to review the document and to submit additional
information or a rebutting statement. If agreement cannot be reached
between the parties, the matter will be referred to an individual one
level above the Contracting Officer, whose decision will be final.
	 
	 	 	Copies of the evaluations, contractor responses, and review comments, if
any, will be retained as part of the contract file, and may be used to
support future award decisions.
	 
	b.	 	Electronic Access to Contractor Performance
Evaluations
	 
	 	 	Contractors that have Internet capability may access evaluations through a
secure Web site for review and comment by completing the registration form
that can be obtained at the following address:
	 
	 	 	        http://ocm.od.nih.gov/cdmp/cps_contractor.htm
	 
	 	 	The registration process requires the contractor to identify an individual
that will serve as a primary contact and who will be authorized access to
the evaluation for review and comment. In addition, the contractor will
be required to identify an alternate contact who will be responsible for
notifying the cognizant contracting official in the event the primary
contact is unavailable to process the evaluation within the required
30-day time frame.

SECTION H - SPECIAL CONTRACT REQUIREMENTS

ARTICLE H.1. REIMBURSEMENT OF COSTS FOR INDEPENDENT RESEARCH AND DEVELOPMENT PROJECTS

The primary purpose of the Public Health Service (PHS) is to support and
advance independent research within the scientific community. PHS has
established effective, time tested and well recognized procedures for
stimulating and supporting this independent research by selecting from
multitudes of applications those research projects most worthy of support
within the constraints of its appropriations. The reimbursement through the
indirect cost mechanism of independent research and development costs not
incidental to product improvement would circumvent this competitive process.

To ensure that all research and development projects receive similar and equal
consideration, all organizations may compete for direct funding of independent
research and development projects they consider worthy of support by submitting
those projects to the appropriate Public Health Service grant office for
review. Since these projects may be submitted for direct funding, the
Contractor agrees that no costs for any independent research and development
project, including all applicable indirect costs, will be claimed under this
contract.

14

Table of Contents

ARTICLE H.2. RESTRICTION FROM USE OF HUMAN SUBJECTS

NOTICE: UNDER GOVERNING REGULATIONS, FEDERAL FUNDS ADMINISTERED BY THE
DEPARTMENT OF HEALTH AND HUMAN SERVICES SHALL NOT BE EXPENDED FOR RESEARCH
INVOLVING HUMAN SUBJECTS, AND INDIVIDUALS SHALL NOT BE ENROLLED IN SUCH
RESEARCH, WITHOUT PRIOR APPROVAL BY THE OFFICE FOR HUMAN RESEARCH PROTECTIONS
(OHRP) OF AN ASSURANCE TO COMPLY WITH THE REQUIREMENTS OF 45 CFR 46 TO PROTECT
HUMAN RESEARCH SUBJECTS. THIS RESTRICTION APPLIES TO ALL
COLLABORATING SITES WITHOUT OHRP-APPROVED ASSURANCES, WHETHER DOMESTIC OR
FOREIGN, AND COMPLIANCE MUST BE ENSURED BY THE AWARDEE.

ARTICLE H.3. REQUIRED EDUCATION IN THE PROTECTION OF HUMAN RESEARCH PARTICIPANTS

NIH policy requires education on the protection of human subject participants
for all investigators receiving NIH contract awards for research involving
human subjects. For a complete description of the NIH Policy announcement on
required education in the protection of human subject participants, the
contractor should access the NIH Guide for Grants and
Contracts Announcement dated June 5, 2000 at the following website:
http://grants.nih.gov/grants/guide/notice-files/NOT-OD-00-039.html. The information below is a summary of the NIH Policy Announcement:

The contractor shall maintain the following information: (1) a list of the
names and titles of the principal investigator and any other individuals
working under the contract who are responsible for the design and/or conduct of
the research; (2) the title of the education program(s) in the protection of
human subjects that has been completed for each named personnel and; (3) a one
sentence description of the educational program(s) listed in (2) above. This
requirement extends to investigators and all individuals responsible for the
design and/or conduct of the research who are working as subcontractors or
consultants under the contract.

Prior to any substitution of the Principal Investigator or any other
individuals responsible for the design and/or conduct of the research under the
contract, the contractor shall provide the following written information to the
Contracting Officer: the title of the education program and a one sentence
description of the program that has been completed by the replacement.

ARTICLE H.4. DATA AND SAFETY MONITORING IN CLINICAL TRIALS

The contractor is directed to the full text of the NIH Policy regarding Data
and Safety Monitoring and Reporting of Adverse Events, which may be found at
the following web sites:

http://grants.nih.gov/grants/guide/notice-files/not98-084.html

http://grants.nih.gov/grants/guide/notice-files/not99-107.html

http://grants.nih.gov/grants/guide/notice-files/NOT-OD-00-038.html

The contractor must comply with the NIH Policy cited in these NIH
Announcements, the NIAID Clinical Terms of Award
(http://www.niaid.nih.gov/ncn/clinical/default_human.htm ),
and any other data and safety monitoring requirements found elsewhere in this
contract.

Data and Safety Monitoring shall be performed in accordance with the approved
Data and Safety Monitoring Plan. The Data and Safety Monitoring Board and Plan
shall be established and approved prior to beginning the conduct of the
clinical trial.

ARTICLE H.5. HUMAN MATERIALS

The acquisition and supply of all human specimen material (including fetal
material) used under this contract shall be obtained by the Contractor in full
compliance with applicable State and Local laws and the provisions of the
Uniform Anatomical Gift Act in the United States, and no undue inducements,
monetary or otherwise, will be offered to any person to influence their
donation of human material.

15

Table of Contents

ARTICLE H.6. CONTINUED BAN ON FUNDING OF HUMAN EMBRYO RESEARCH

	a.	 	Pursuant to Public Law(s) cited in paragraph b. , below, NIH is
prohibited from using appropriated funds to support human embryo
research. Contract funds may not be used for (1) the creation of a human
embryo or embryos for research purposes; or (2) research in which a human
embryo or embryos are destroyed, discarded, or knowingly subjected to risk
of injury or
death greater than that allowed for research on fetuses in utero under 45
CFR 46.208(a)(2) and Section 498(b) of the Public Health Service Act (42
U.S.C. 289g(b)). The term “human embryo or embryos” includes any
organism, not protected as a human subject under 45 CFR 46 as of the date
of the enactment of this Act, that is derived by fertilization,
parthenogenesis, cloning, or any other means from one or more human
gametes or human diploid cells.
	 
	 	 	Additionally, in accordance with a March 4, 1997 Presidential Memorandum,
Federal funds may not be used for cloning of human beings.

	 	 	 	 	 	 	 	 	 
	b.	 	Public Law and Section No.	 	Fiscal Year	 	Period Covered
	 

	 	P.L. 108-7, Division G, Title V-
	 	 	2003	 	 	10/1/02 - 9/30/03
	

	 	General Provisions, Section 510	 	 	 	 	 	 

ARTICLE H.7. NEEDLE EXCHANGE

	a.	 	Pursuant to Public Law(s) cited in paragraph b., below, contract funds
shall not be used to carry out any program of distributing sterile needles
or syringes for the hypodermic injection of any illegal drug.

	 	 	 	 	 	 	 	 	 
	b.	 	Public Law and Section No.	 	Fiscal Year	 	Period Covered
	 

	 	P.L. 108-7, Division G, Title V-
	 	 	2003	 	 	10/1/02 - 9/30/03
	

	 	General Provisions, Section 505	 	 	 	 	 	 

ARTICLE H.8. PRIVACY ACT

This procurement action requires the Contractor to do one or more of the
following: design, develop, or operate a system of records on individuals to
accomplish an agency function in accordance with the Privacy Act of 1974,
Public Law 93-579, December 31, 1974 (5 USC 552a) and applicable agency
regulations. Violation of the Act may involve the imposition of criminal
penalties.

The Privacy Act System of Records applicable to this project is Number
09-25-0200. This document may be accessed on the Internet at the following
URL: http://oma.od.nih.gov/ms/privacy/pa-files/0200.htm .

ARTICLE H.9. INTRODUCTION OF RODENTS AND RODENT PRODUCTS

No rodent or rodent product shall be delivered into the NIH, NCI environment
(NIH) directly, or through collaborative research or holding facilities under
contract to NCI except by permit. Direct shipments to NIH from a commercial
colony will be considered exempt. Non-exempt sources must be approved by
permit issued through the National Center for Research Resources (NCRR). The
permit must be obtained by the Contractor prior to the shipment to NIH of the
rodents and/or rodent products. The Contractor must be sure that this permit
exists and is current before transferring rodents or rodent products into the
NIH, NCI environment. Refusal or negligence to do so will be considered a
material breach of contract and may be treated as any other such material
breach. Applications for permits should be submitted not less than 30 days
prior to shipping date to: NIH Veterinary Resources Branch (VRP), National
Center for Research Resources (NCRR), Scientific Services Branch, Laboratory
Sciences Section, Building 28A, Room 111, 28 LIBRARY DR MSC 5210, BETHESDA MD
20892-5210, (301)496-2527.

16

Table of Contents

ARTICLE H.10. ANIMAL WELFARE

All research involving live, vertebrate animals shall be conducted in
accordance with the Public Health Service Policy on Humane Care and Use of
Laboratory Animals. This policy may be accessed at
http://grants1.nih.gov/grants/olaw/references/phspol.htm

ARTICLE H.11. RESTRICTION FROM USE OF LIVE VERTEBRATE ANIMALS

UNDER GOVERNING POLICY, FEDERAL FUNDS ADMINISTERED BY THE PUBLIC HEALTH SERVICE
(PHS) SHALL NOT BE EXPENDED FOR RESEARCH INVOLVING LIVE VERTEBRATE ANIMALS
WITHOUT PRIOR APPROVAL BY THE OFFICE FOR LABORATORY ANIMAL WELFARE (OLAW), OF
AN ASSURANCE TO COMPLY WITH THE PHS POLICY ON HUMANE CARE AND USE OF LABORATORY
ANIMALS. THIS RESTRICTION APPLIES TO ALL PERFORMANCE SITES WITHOUT
OLAW-APPROVED ASSURANCES, WHETHER DOMESTIC OR FOREIGN.

ARTICLE H.12. SALARY RATE LIMITATION LEGISLATION PROVISIONS

	a.	 	Pursuant to Public Law(s) cited in paragraph b., below, no NIH Fiscal
Year funds may be used to pay the direct salary of an individual through
this contract at a rate in excess of applicable amount shown for the
fiscal year covered. Direct salary is exclusive of fringe benefits,
overhead, and general and administrative expenses (also referred to as
“indirect cost” or “facilities and administrative (F&A) costs”). Direct
salary has the same meaning as the term “institutional base salary.” An
individual’s direct salary (or institutional base salary) is the annual
compensation that the contractor pays for an individual’s appointment
whether that individual’s time is spent on research, teaching, patient
care or other activities. Direct salary (or institutional base salary)
excludes any income that an individual may be permitted to earn outside of
duties to the contractor. The per year salary rate limit also applies to
individuals proposed under subcontracts. It does not apply to fees paid
to consultants. If this is a multiple year contract, it may be subject to
unilateral modifications by the Government if an individual’s salary rate
exceeds any salary rate ceiling established in future HHS appropriation
acts.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Dollar Amount of
	b.	 	Public Law No.	 	Fiscal Year	 	Salary Limitation*
	 

	 	P.L. 108-7, Division G, Title II-
	 	 	2003	 	 	Executive Level I
	

	 	General Provisions, Section 204	 	 	 	 	 	 

	c.	 	Direct salaries which will be paid with FY-03 funds are limited to the
Executive Level I rate which was in effect on the date(s) the expense was
incurred.

*For contract expenditures using FY-03 funds, the period 10/1/02 — 12/31/02 the
Executive Level rate is $166,700. Effective 1/1/03, for contract expenditures
using FY-03 funds, the Executive Level I rate is increased to $171,900 and will
remain at that level until such time as it is determined to raise the Executive
Schedule annual rates. See the web site listed below for Executive Schedule
rates of pay.

LINK to EXECUTIVE LEVEL SALARIES: http://www.opm.gov/oca/PAYRATES/index.htm

(Click on “Executive Schedule” for the current Fiscal Year’s salary rate or
scroll down to the “General Schedule Salary Tables from Previous Years” to
locate the Executive Level salary rates from previous years.)

ARTICLE H.13. PUBLICATION AND PUBLICITY

The contractor shall acknowledge the support of the National Institutes of
Health whenever publicizing the work under this contract in any media by
including an acknowledgment substantially as follows:

“This project has been funded in whole or in part with Federal funds from
the National Institute of Allergy and Infectious Diseases, National
Institutes of Health, Department of Health and Human Services, under
Contract No. N01-AI- 30029.”

17

Table of Contents

ARTICLE H.14. PRESS RELEASES

	a.	 	Pursuant to Public Law(s) cited in paragraph b., below, the contractor
shall clearly state, when issuing statements, press releases, requests for
proposals, bid solicitations and other documents describing projects or
programs funded in whole or in part with Federal money: (1) the percentage
of the total costs of the program or project which will be financed with
Federal money; (2) the dollar amount of Federal funds for the project or
program; and (3) the percentage and dollar amount of the total costs of
the project or program that will be financed by nongovernmental sources.

	 	 	 	 	 	 	 	 	 
	b.	 	Public Law and Section No.	 	Fiscal Year	 	Period Covered
	 

	 	P.L. 108-7, Division G, Title V-
	 	 	2003	 	 	10/1/02 - 9/30/03
	

	 	General Provisions, Section 507	 	 	 	 	 	 

ARTICLE H.15. REPORTING MATTERS INVOLVING FRAUD, WASTE AND ABUSE

Anyone who becomes aware of the existence or apparent existence of fraud, waste
and abuse in NIH funded programs is encouraged to report such matters to the
HHS Inspector General’s Office in writing or on the Inspector General’s
Hotline. The toll free number is 1-800-HHS-TIPS (1-800-447-8477). All
telephone calls will be handled confidentially. The e-mail address is
Htips@os.dhhs.gov and the mailing address
is:

Office of Inspector General

Department of Health and Human Services

TIPS HOTLINE

P.O. Box 23489

Washington, D.C. 20026

ARTICLE H.16. ANTI -LOBBYING

	a.	 	Pursuant to Public Law(s) cited in paragraph c., below, contract funds
shall not be used, other than for normal and recognized
executive-legislative relationships, for publicity or propaganda purposes,
for the preparation, distribution, or use of any kit, pamphlet, booklet,
publication, radio, television, or video presentation designed to support
or defeat legislation pending before the Congress or any State
legislature, except in presentation to the Congress or any State
legislature itself.
	 
	b.	 	Contract funds shall not be used to pay salary or expenses of the
contractor or any agent acting for the contractor, related to any activity
designed to influence legislation or appropriations pending before the
Congress or any State legislature.

	 	 	 	 	 	 	 	 	 
	c.	 	Public Law and Section No.	 	Fiscal Year	 	Period Covered
	

	 	for a., above: P.L. 108-7, Division G, Title V-
	 	 	2003	 	 	10/1/02 - 9/30/03
	

	 	    General Provisions, Section 503a	 	 	 	 	 	 
	

	 	for b., above: P.L. 108-7, Division G, Title V.
	 	 	2003	 	 	10/1/02 - 9/30/03
	

	 	    General Provisions, Section 503b	 	 	 	 	 	 

ARTICLE H.17. OBTAINING AND DISSEMINATING BIOMEDICAL RESEARCH RESOURCES

Unique research resources arising from NIH-funded research are to be shared
with the scientific research community. NIH provides guidance, entitled,
“Sharing Biomedical Research Resources: Principles and Guidelines for
Recipients of NIH Research Grants and Contracts,” (Federal Register Notice,
December 23, 1999 [64 FR 72090]), concerning the appropriate terms for
disseminating and acquiring these research resources. This guidance, found at
: http://ott.od.nih.gov/NewPages/64FR72090.pdf. is intended
to help contractors ensure that the conditions they impose and accept on the
transfer of research tools will facilitate further biomedical research,
consistent with the requirements of the Bayh-Dole Act and NIH funding policy.

18

Table of Contents

Note: For the purposes of this Article, the terms, “research tools,”
“research materials,” and “research resources” are used interchangeably and
have the same meaning.

ARTICLE H.18. PROHIBITION ON CONTRACTOR INVOLVEMENT WITH TERRORISM ACTIVITIES

The Contractor acknowledges that U. S. Executive Orders and Laws, including but
not limited to E.O. 13224 and P.L. 107-56, prohibit transactions with, and the
provision of resources and support to, individuals and organizations associated
with terrorism. It is the legal responsibility of the contractor to ensure
compliance with these Executive Orders and Laws. This clause must be included
in all subcontracts issued under this contract.

19

Table of Contents

PART II — CONTRACT CLAUSES

SECTION I — CONTRACT CLAUSES

ARTICLE I.1. GENERAL CLAUSES FOR A COST-REIMBURSEMENT RESEARCH AND DEVELOPMENT CONTRACT — FAR 52.252-2, CLAUSES INCORPORATED BY REFERENCE (FEBRUARY 1998)

This contract incorporates the following clauses by reference, with the same
force and effect as if they were given in full text. Upon request, the
Contracting Officer will make their full text available. Also, the full text
of a clause may be accessed electronically at this address:
http://www.arnet.gov/far/ .

a. FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES:

	 	 	 	 	 
	FAR	 	 	 	 
	CLAUSE NO.
	 	DATE
	 	TITLE

	52.202-1

	 	Dec 2001
	 	Definitions
	 
	 	 	 	 
	52.203-3

	 	Apr 1984
	 	Gratuities (Over $100,000)
	 
	 	 	 	 
	52.203-5

	 	Apr 1984
	 	Covenant Against Contingent Fees (Over $100,000)
	 
	 	 	 	 
	52.203-6

	 	Jul 1995
	 	Restrictions on Subcontractor Sales to the Government (Over $100,000)
	 
	 	 	 	 
	52.203-7

	 	Jul 1995
	 	Anti-Kickback Procedures(Over $100,000)
	 
	 	 	 	 
	52.203-8

	 	Jan 1997
	 	Cancellation, Rescission, and Recovery of Funds for Illegal or Improper Activity (Over $100,000)
	 
	 	 	 	 
	52.203-10

	 	Jan 1997
	 	Price or Fee Adjustment for Illegal or Improper Activity (Over $100,000)
	 
	 	 	 	 
	52.203-12

	 	Jun 2003
	 	Limitation on Payments to Influence Certain Federal Transactions (Over $100,000)
	 
	 	 	 	 
	52.204-4

	 	Aug 2000
	 	Printed or Copied Double-Sided on Recycled Paper (Over $100,000)
	 
	 	 	 	 
	52.209-6

	 	Jul 1995
	 	Protecting the Government’s Interests When Subcontracting With
	

	 	 	 	Contractors Debarred, Suspended, or Proposed for Debarment (Over $25,000)
	 
	 	 	 	 
	52.215-2

	 	Jun 1999
	 	Audit and Records — Negotiation (Over $100,000)
	 
	 	 	 	 
	52.215-8

	 	Oct 1997
	 	Order of Precedence — Uniform Contract Format
	 
	 	 	 	 
	52.215-10

	 	Oct 1997
	 	Price Reduction for Defective Cost or Pricing Data
	 
	 	 	 	 
	52.215-12

	 	Oct 1997
	 	Subcontractor Cost or Pricing Data (Over $500,000)
	 
	 	 	 	 
	52.215-14

	 	Oct 1997
	 	Integrity of Unit Prices (Over $100,000)
	 
	 	 	 	 
	52.215-15

	 	Dec 1998
	 	Pension Adjustments and Asset Reversions
	 
	 	 	 	 
	52.215-18

	 	Oct 1997
	 	Reversion or Adjustment of Plans for Post-Retirement Benefits (PRB) other than Pensions
	 
	 	 	 	 
	52.215-19

	 	Oct 1997
	 	Notification of Ownership Changes
	 
	 	 	 	 
	52.215-21

	 	Oct 1997
	 	Requirements for Cost or Pricing Data or Information Other Than Cost or Pricing Data — Modifications
	 
	 	 	 	 
	52.216-7

	 	Dec 2002
	 	Allowable Cost and Payment

20

Table of Contents

	 	 	 	 	 
	FAR	 	 	 	 
	CLAUSE NO.
	 	DATE
	 	TITLE

	52.216-8

	 	Mar 1997
	 	Fixed Fee
	 
	 	 	 	 
	52.219-8

	 	Oct 2000
	 	Utilization of Small Business Concerns (Over $100,000)
	 
	 	 	 	 
	52.219-9

	 	Jan 2002
	 	Small Business Subcontracting Plan (Over $500,000)
	 
	 	 	 	 
	52.219-16

	 	Jan 1999
	 	Liquidated Damages — Subcontracting Plan (Over $500,000)
	 
	 	 	 	 
	52.222-2

	 	Jul 1990
	 	Payment for Overtime Premium (Over
$100,000) (Note: The dollar amount in paragraph (a) of this clause is $0 unless otherwise
specified in the contract.)
	 
	 	 	 	 
	52.222-3

	 	Jun 2003
	 	Convict Labor
	 
	 	 	 	 
	52.222-26

	 	Apr 2002
	 	Equal Opportunity
	 
	 	 	 	 
	52.222-35

	 	Dec 2001
	 	Equal Opportunity for Special Disabled Veterans, Veterans of the Vietnam Era, and Other Eligible Veterans
	 
	 	 	 	 
	52.222-36

	 	Jun 1998
	 	Affirmative Action for Workers with Disabilities
	 
	 	 	 	 
	52.222-37

	 	Dec 2001
	 	Employment Reports on Special Disabled Veterans, Veterans of the
Vietnam Era, and Other Eligible Veterans
	 
	 	 	 	 
	52.223-6

	 	May 2001
	 	Drug-Free Workplace
	 
	 	 	 	 
	52.223-14

	 	Jun 2003
	 	Toxic Chemical Release Reporting
	 
	 	 	 	 
	52.225-1

	 	Jun 2003
	 	Buy American Act — Supplies
	 
	 	 	 	 
	52.225-13

	 	Jun 2003
	 	Restrictions on Certain Foreign Purchases
	 
	 	 	 	 
	52.227-1

	 	Jul 1995
	 	Authorization and Consent, Alternate I (Apr 1984)
	 
	 	 	 	 
	52.227-2

	 	Aug 1996
	 	Notice and Assistance Regarding
Patent and Copyright Infringement (Over $100,000)
	 
	 	 	 	 
	52.227-11

	 	Jun 1997
	 	Patent Rights — Retention by the Contractor (Short Form) (Note: In
accordance with FAR 27.303(a)(2), paragraph (f) is modified to
include the requirements in FAR 27.303(a)(2)(i) through (iv). The
frequency of reporting in (i) is annual.
	 
	 	 	 	 
	52.227-14

	 	Jun 1987
	 	Rights in Data — General
	 
	 	 	 	 
	52.232-9

	 	Apr 1984
	 	Limitation on Withholding of Payments
	 
	 	 	 	 
	52.232-17

	 	Jun 1996
	 	Interest (Over $100,000)
	 
	 	 	 	 
	52.232-20

	 	Apr 1984
	 	Limitation of Cost
	 
	 	 	 	 
	52.232-23

	 	Jan 1986
	 	Assignment of Claims
	 
	 	 	 	 
	52.232-25

	 	Feb 2002
	 	Prompt Payment, Alternate I (Feb 2002)
	 
	 	 	 	 
	52.232-34

	 	May 1999
	 	Payment by Electronic Funds Transfer—Other Than Central Contractor Registration
	 
	 	 	 	 
	52.233-1

	 	Jul 2002
	 	Disputes
	 
	 	 	 	 
	52.233-3

	 	Aug 1996
	 	Protest After Award, Alternate I (Jun 1985)
	 
	 	 	 	 
	52.242-1

	 	Apr 1984
	 	Notice of Intent to Disallow Costs
	 
	 	 	 	 
	52.242-3

	 	May 2001
	 	Penalties for Unallowable Costs (Over $500,000)

21

Table of Contents

	 	 	 	 	 
	FAR	 	 	 	 
	CLAUSE NO.
	 	DATE
	 	TITLE

	52.242-4

	 	Jan 1997
	 	Certification of Final Indirect Costs
	 
	 	 	 	 
	52.242-13

	 	Jul 1995
	 	Bankruptcy (Over $100,000)
	 
	 	 	 	 
	52.243-2

	 	Aug 1987
	 	Changes — Cost Reimbursement, Alternate V (Apr 1984)
	 
	 	 	 	 
	52.244-2

	 	Aug 1998
	 	Subcontracts, Alternate II (Aug 1998) *If written consent to
subcontract is required, the identified subcontracts are listed in
ARTICLE B, Advance Understandings.
	 
	 	 	 	 
	52.244-5

	 	Dec 1996
	 	Competition in Subcontracting (Over $100,000)
	 
	 	 	 	 
	52.245-5

	 	Jun 2003
	 	Government Property (Cost-Reimbursement, Time and Material, or
Labor-Hour Contract)
	 
	 	 	 	 
	52.246-23

	 	Feb 1997
	 	Limitation of Liability (Over $100,000)
	 
	 	 	 	 
	52.249-6

	 	Sep 1996
	 	Termination (Cost-Reimbursement)
	 
	 	 	 	 
	52.249-14

	 	Apr 1984
	 	Excusable Delays
	 
	 	 	 	 
	52.253-1

	 	Jan 1991
	 	Computer Generated Forms

	b.	 	DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR)
(48 CFR CHAPTER 3) CLAUSES:

	 	 	 	 	 
	HHSAR	 	 	 	 
	CLAUSE NO.
	 	DATE
	 	TITLE

	352.202-1

	 	Jan 2001
	 	Definitions — with Alternate paragraph (h) (Jan 2001)
	 
	 	 	 	 
	352.216-72

	 	Oct 1990
	 	Additional Cost Principles
	 
	 	 	 	 
	352.228-7

	 	Dec 1991
	 	Insurance — Liability to Third Persons
	 
	 	 	 	 
	352.232-9

	 	Apr 1984
	 	Withholding of Contract Payments
	 
	 	 	 	 
	352.233-70

	 	Apr 1984
	 	Litigation and Claims
	 
	 	 	 	 
	352.242-71

	 	Apr 1984
	 	Final Decisions on Audit Findings
	 
	 	 	 	 
	352.270-5

	 	Apr 1984
	 	Key Personnel
	 
	 	 	 	 
	352.270-6

	 	Jul 1991
	 	Publications and Publicity
	 
	 	 	 	 
	352.270-7

	 	Jan 2001
	 	Paperwork Reduction Act

[ End of GENERAL CLAUSES FOR A COST-REIMBURSEMENT RESEARCH AND DEVELOPMENT CONTRACT — Rev. 6/2003].

22

Table of Contents

ARTICLE I.2 AUTHORIZED SUBSTITUTION OF CLAUSES

ARTICLE I.1. of this SECTION is hereby modified as follows:

FAR Clause 52.219-9, SMALL BUSINESS SUBCONTRACTING PLAN (JANUARY 2002), and FAR
Clause 52.219-16, LIQUIDATED DAMAGES—SUBCONTRACTING PLAN (JANUARY 1999) are
deleted in their entirety.

FAR Clause 52.232-20, LIMITATION OF COST, is deleted in its entirety and FAR
Clause 52.232-22, LIMITATION OF FUNDS (APRIL 1984) is substituted therefor.
Note: When this contract is fully funded, FAR Clause 52.232-22, LIMITATION OF
FUNDS will no longer apply and FAR Clause 52.232-20, LIMITATION OF COST will
become applicable.

ARTICLE I.3. ADDITIONAL CONTRACT CLAUSES

This contract incorporates the following clauses by reference, with the same
force and effect, as if they were given in full text. Upon request, the
contracting officer will make their full text available.

	a.	 	FEDERAL ACQUISITION REGULATION (FAR) (48 CFR CHAPTER 1) CLAUSES

	 	(1)	 	FAR 52.215-17, Waiver of Facilities Capital Cost of Money (OCTOBER
1997).
	 
	 	(2)	 	FAR 52.219-4, Notice of Price Evaluation Preference for HUBZone
Small Business Concerns (JANUARY 1999).
	 
	 	 	 	    “(c) Waiver of evaluation preference.....
	 
	 	 	 	            [ ] Offeror elects to waive the evaluation preference.”
	 
	 	(3)	 	FAR 52.219-23, Notice of Price Evaluation Adjustment for Small
Disadvantaged Business Concerns (JUNE 2003).
	 
	 	 	 	    “(b) Evaluation adjustment. (1) The Contracting Officer will
evaluate offers by adding a factor of 10% to the price of all offers, except—...”
	 
	 	(4)	 	FAR 52.224-1, Privacy Act Notification (APRIL 1984)
	 
	 	(5)	 	FAR 52.224-2, Privacy Act (APRIL 1984)
	 
	 	(6)	 	FAR 52.227-14, Rights in Data — General (JUNE 1987).
	 
	 	(7)	 	FAR 52.242-3, Penalties for Unallowable Costs (MAY 2001).
	 
	 	(8)	 	FAR 52.247-63, Preference for U.S. Flag Air Carriers (JUNE 2003).

	b.	 	DEPARTMENT OF HEALTH AND HUMAN SERVICES ACQUISITION REGULATION (HHSAR)
(48 CHAPTER 3) CLAUSES:

	 	(1)	 	HHSAR 352.223-70, Safety and Health (JANUARY 2001). [This clause
is provided in full text in SECTION J — ATTACHMENTS.]
	 
	 	(2)	 	HHSAR 352.270-8, Protection of Human Subjects (JANUARY 2001).
	 
	 	 	 	Note: The Office for Human Research Protections (OHRP), Office of the
Secretary (OS), Department of Health and Human Services (DHHS) is the
office responsible for oversight of the Protection of Human subjects and
should

23

Table of Contents

	 	 	 	replace Office for Protection from Research Risks (OPRR),
National Institutes of Health (NIH) wherever it appears in this clause.
	 
	 	(3)	 	HHSAR 352.270-9, Care of Live Vertebrate Animals (JANUARY 2001).

	c.	 	NATIONAL INSTITUTES OF HEALTH (NIH) RESEARCH CONTRACTING (RC) CLAUSES:

	 	 	 	The following clauses are attached and made a part of this contract:
	 
	 	(1)	 	NIH (RC)-7, Procurement of Certain Equipment (APRIL 1984) (OMB
Bulletin 81-16).
	 
	 	(2)	 	NIH(RC)-11, Research Patient Care Costs (4/1/84).

ARTICLE I.4. ADDITIONAL FAR CONTRACT CLAUSES INCLUDED IN FULL TEXT

This contract incorporates the following clauses in full text.

FEDERAL ACQUISITION REGULATION (FAR)(48 CFR CHAPTER 1) CLAUSES:

	a.	 	FAR Clause 52.244-6, SUBCONTRACTS FOR COMMERCIAL ITEMS (APRIL 2003)

	 	(a)	 	Definitions. As used in this clause—
	 
	 	 	 	Commercial item, has the meaning contained in the clause at 52.202-1,
Definitions.
	 
	 	 	 	Subcontract, includes a transfer of commercial items between divisions,
subsidiaries, or affiliates of the Contractor or subcontractor at any
tier.
	 
	 	(b)	 	To the maximum extent practicable, the Contractor shall
incorporate, and require its subcontractors at all tiers to
incorporate, commercial items or nondevelopmental items as components
of items to be supplied under this contract.
(c) (1) The Contractor shall insert the following clauses in
subcontracts for commercial items:

	 	(i)	 	52.219-8, Utilization of Small Business Concerns
(OCT 2000) (15 U.S.C. 637(d)(2) and (3)), in all subcontracts
that offer further subcontracting opportunities. If the
subcontract (except subcontracts to small business concerns)
exceeds $500,000 ($1,000,000 for
construction of any public facility), the subcontractor must
include 52.219-8 in lower tier subcontracts that offer
subcontracting opportunities.
	 
	 	(ii)	 	52.222-26, Equal Opportunity (APR 2002) (E.O.
11246).
	 
	 	(iii)	 	52.222-35, Equal Opportunity for Special Disabled
Veterans, Veterans of the Vietnam Era, and Other Eligible
Veterans (DEC 2001) (38 U.S.C. 4212(a)).
	 
	 	(iv)	 	52.222-36, Affirmative Action for Workers with
Disabilities (JUN 1998) (29 U.S.C. 793).
	 
	 	(v)	 	52.247-64, Preference for Privately Owned U.S.-Flag
Commercial Vessels (APR 2003) (46 U.S.C. Appx 1241 and 10
U.S.C. 2631) (flow down required in accordance with paragraph
(d) of FAR clause 52.247-64).

	 	(2)	 	While not required, the Contractor may flow down to
subcontracts for commercial items a minimal number of additional
clauses necessary to satisfy its contractual obligations.

	(d)	 	The Contractor shall include the terms of this clause, including
this paragraph (d), in subcontracts awarded under this contract.

24

Table of Contents

PART III

SECTION J — LIST OF ATTACHMENTS

The following documents are attached and incorporated in this contract:

	1.	 	Statement of Work, September 26, 2003, 2 pages.
	 
	2.	 	Invoice/Financing Request and Contract Financial Reporting Instructions
for NIH Cost-Reimbursement Type Contracts, NIH(RC)-4, (5/97), 5 pages.
	 
	3.	 	Inclusion Enrollment Report, 5/01 (Modified OAMP: 10/01), 1 page.
	 
	4.	 	Annual Technical Progress Report Format for Each Study, July 1994, 1
page.
	 
	5.	 	Safety and Health, HHSAR Clause 352.223-70, (1/01), 1 page.
	 
	6.	 	Research Patient Care Costs, NIH(RC)-11, 4/1/84, 1 page.
	 
	7.	 	Procurement of Certain Equipment, NIH(RC)-7, 4/1/84, 1 page.
	 
	8.	 	Report of Government Owned, Contractor Held Property, 1 page.

25

Table of Contents

PART IV

SECTION K — REPRESENTATIONS AND CERTIFICATIONS

The following documents are incorporated by reference in this contract:

	1.	 	Representations and Certifications, dated September 4, 2003.
	 
	2.	 	Animal Welfare and Human Assurance Numbers

	 	 	 	 	 
	 

	 	Animal Welfare
	 	Human Assurances
	 
	 	 	 	 
	Novavax

	 	A3080-01
	 	To be established between
the Office for Human
Research Protection (OHRP)
and the contractor prior
to initiation of studies.
	 
	 	 	 	 
	Tulane University Health

Sciences Center

	 	A3552-01
	 	FWA 00002055
	 
	 	 	 	 
	Emory University

	 	A3180-01
	 	M1346

END of the SCHEDULE

(CONTRACT)

26

Table of Contents

STATEMENT OF WORK

Independently, and not as an agent of the Government, the Contractor shall
furnish all the necessary services, qualified personnel, materials, equipment,
and facilities, not otherwise provided by the Government under the terms of
this contract, as needed to perform the work set forth below.

Specifically, the Contractor shall:

	 	1.	 	Identify a specific vaccine concept to be pursued in a well planned
and managed, comprehensive, multidisciplinary, targeted development
effort culminating in the production and clinical testing of a
promising AIDS vaccine candidate.
	 
	 	2.	 	Articulate and implement a strategic research plan that includes.

	 	a.	 	key development objectives and a detailed work plan
describing proposed time schedules for achieving contract
objectives and milestones, and maintaining quality control over the
implementation and operation of the contract
	 
	 	b.	 	how decisions to proceed or not proceed will be made (i.e.
specific qualitative and quantitative criteria for advancement of
vaccine molecules or constructs through each stage of preclinical
product development) including decisions to proceed or not proceed
vis a vis human safety, immunogenicity, and testing
	 
	 	c.	 	plans for GMP vaccine lot production and for obtaining the
necessary government and ethical approvals to proceed.
	 
	 	 	 	The strategic plan shall articulate how the Team will efficiently
allocate and utilize the resources, redirect the focus (including
reallocation of funds) depending upon the project’s changing needs
and emerging new knowledge, obtain patent coverage and licensing of
the resulting HIV vaccine, and what procedures will be followed for
the resolution of potential legal issues that may arise.

	 	3.	 	Provide a research and administrative team that includes all
expertise needed for the development, optimization, pre-clinical and
clinical testing, and production of an HIV/AIDS vaccine based on the
concept chosen by the Contractor.
	 
	 	4.	 	Provide infrastructure, facilities, and resources for performing
all phases of this contract, including production of an optimized
vaccine under GMP (Good Manufacturing Practices, as defined in the US
Code of Federal Regulations — 21 CFR §211) conditions, GLP (Good
Laboratory Practices — 21 CFR §58) performance of IND-enabling
preclinical animal studies, and GCP (Good Clinical Practices — 21 CFR
§312 and ICH Guidelines document E6) performance of clinical studies in
humans if clinical studies will be performed by the Contractor, on its
own, rather than through the DAIDS HIV Vaccine Trials Network.
	 
	 	5.	 	Report progress according to Reporting Requirements (refer to the
“Deliverables and Reporting Requirements” in this contract).
	 
	 	6.	 	Meet with the Project Officer and the External Advisory Committee
associated with this Contract.

	 	a.	 	The Contractor and the NIH, after Contract award, shall
jointly establish an External Advisory Committee for the contract.
The Contractor’s key personnel shall meet with the

	 	 	 
	Statement of Wrok

	 	ATTACHMENT 1
	(September 26, 2003)

	 	Page 1

 

Table of Contents

	 	 	 	Project Officer
and the Team’s External Advisory Committee at periodic intervals to
be scheduled after contract award to review progress and
anticipated or existing problems.
	 
	 	b.	 	In the middle (6 month mark) of each contract year, the
Contractor shall host a site visit review for NIAID contract and
program staff, and their External Advisory Committee. The
Contractor’s Principal Investigator and all co-investigators shall
attend this meeting. The co-investigator and/or other pertinent
staff shall present an update and summary of results generated on
each sub-project. These presentations shall include summaries of
all goals or milestones reached during the review period and a
description of all problems encountered that will impact on the
achievement of particular goals and milestones as outlined in the
Contractor’s research plan. The Principal Investigator,
co-investigator and staff representing each project and sub-project
shall describe goals and milestones and development objectives for
the coming year. Additionally, application of the policies and
procedures for monitoring the direction of specific projects shall
be presented. For contractors with foreign subcontracts, this
annual site visit also will report details about approvals for
manufacturing or testing that have been obtained from both the U.S.
and foreign governments.

	 	 	 
	Statement of Work

	 	ATTACHMENT 1
	(September 26, 2003)

	 	Page 2

 

Table of Contents

INVOICE/FINANCING REQUEST AND CONTRACT FINANCIAL REPORTING

 INSTRUCTIONS FOR NIH COST-REIMBURSEMENT CONTRACTS, NIH(RC)-4

General: The contractor shall submit claims for reimbursement in the manner
and format described herein and as illustrated in the sample invoice/financing
request.

Format: Standard Form 1034, “Public Voucher for Purchases and Services Other
Than Personal,” and Standard Form 1035, “Public Voucher for Purchases and
Services Other Than Personal— Continuation Sheet,” or reproduced copies of
such forms marked ORIGINAL should be used to submit claims for reimbursement.
In lieu of SF-1034 and SF-1035, claims may be submitted on the payee’s
letter-head or self-designed form provided that it contains the information
shown on the sample invoice/financing request.

Number of Copies: As indicated in the Invoice Submission Clause in the
contract.

Frequency: Invoices/financing requests submitted in accordance with the
Payment Clause shall be submitted monthly unless otherwise authorized by the
contracting officer.

Cost Incurrence Period: Costs incurred must be within the contract performance
period or covered by precontract cost provisions.

Billing of Costs Incurred: If billed costs include: (l) costs of a prior
billing period, but not previously billed; or (2) costs incurred during the
contract period and claimed after the contract period has expired, the amount
and month(s) in which such costs were incurred shall be cited.

Contractor’s Fiscal Year: Invoices/financing requests shall be prepared in
such a manner that costs claimed can be identified with the contractor’s fiscal
year.

Currency: All NIH contracts are expressed in United States dollars. When
payments are made in a currency other than United States dollars, billings on
the contract shall be expressed, and payment by the United States Government
shall be made, in that other currency at amounts coincident with actual costs
incurred. Currency fluctuations may not be a basis of gain or loss to the
contractor. Notwithstanding the above, the total of all invoices paid under
this contract may not exceed the United States dollars authorized.

Costs Requiring Prior Approval: Costs requiring the contracting officer’s
approval, which are not set forth in an Advance Understanding in the contract
shall be so identified and reference the Contracting Officer’s Authorization
(COA) Number. In addition, any cost set forth in an Advance Understanding
shall be shown as a separate line item on the request.

Invoice/Financing Request Identification: Each invoice/financing request shall
be identified as either:

	(a)	 	Interim Invoice/Contract Financing Request - These are interim payment
requests submitted during the contract performance period.
	 
	(b)	 	Completion Invoice - The completion invoice is submitted promptly upon
completion of the work; but no later than one year from the contract
completion date, or within 120 days after settlement of the final indirect
cost rates covering the year in which this contract is physically complete
(whichever date is later). The completion invoice should be submitted
when all costs have been assigned to the contract and all performance
provisions have been completed.
	 
	(c)	 	Final Invoice - A final invoice may be required after the amounts owed
have been settled between the Government and the contractor (e.g.,
resolution of all suspensions and audit exceptions).

Preparation and Itemization of the Invoice/Financing Request: The contractor
shall furnish the information set forth in the explanatory notes below. These
notes are keyed to the entries on the sample invoice/financing request.

	NIH(RC)-4
Rev. 5/97	 	ATTACHMENT 2
Page 1

 

Table of Contents

	 	 	 
	Rev. 5/97

	 	Page 1

	(a)	 	Designated Billing Office Name and Address - Enter the designated billing
office and address, identified in the Invoice Submission Clause of the
contract, on all copies of the invoice/financing request.
	 
	(b)	 	Invoice/Financing Request Number - Insert the appropriate serial number
of the invoice/financing request.
	 
	(c)	 	Date Invoice/Financing Request Prepared - Insert the date the
invoice/financing request is prepared.
	 
	(d)	 	Contract Number and Date - Insert the contract number and the effective
date of the contract.
	 
	(e)	 	Payee’s Name and Address - Show the contractor’s name (as it appears in
the contract), correct address, and the title and phone number of the
responsible official to whom payment is to be sent. When an approved
assignment has been made by the contractor, or a different payee has been
designated, then insert the name and address of the payee instead of the
contractor.
	 
	(f)	 	Total Estimated Cost of Contract - Insert the total estimated cost of the
contract, exclusive of fixed-fee. For incrementally funded contracts,
enter the amount currently obligated and available for payment.
	 
	(g)	 	Total Fixed-Fee - Insert the total fixed-fee (where applicable). For
incrementally funded contracts, enter the amount currently obligated and
available for payment.
	 
	(h)	 	Billing Period - Insert the beginning and ending dates (month, day, and
year) of the period in which costs were incurred and for which
reimbursement is claimed.
	 
	(i)	 	Incurred Cost - Current - Insert the amount billed for the major cost
elements, adjustments, and adjusted amounts for the current period.
	 
	(j)	 	Incurred Cost - Cumulative - Insert the cumulative amounts billed for the
major cost elements and adjusted amounts claimed during this contract.
	 
	(k)	 	Direct Costs - Insert the major cost elements. For each element,
consider the application of the paragraph entitled “Costs Requiring Prior
Approval” on page 1 of these instructions.

	 	(l)	 	Direct Labor - Include salaries and wages paid (or accrued) for
direct performance of the contract. For Key Personnel, list each
employee on a separate line. List other employees as one amount unless
otherwise required by the contract.
	 
	 	(2)	 	Fringe Benefits - List any fringe benefits applicable to direct
labor and billed as a direct cost. Fringe benefits included in
indirect costs should not be identified here.
	 
	 	(3)	 	Accountable Personal Property - Include permanent research
equipment and general purpose equipment having a unit acquisition cost
of $1,000 or more and having an expected service life of more than two
years, and sensitive property regardless of cost (see the DHHS
Contractor’s Guide for Control of Government Property). Show permanent research equipment separate from general
purpose equipment. Prepare and attach Form HHS-565, “Report of
Accountable Property,” in accordance with the following instructions:
	 
	 	 	 	List each item for which reimbursement is requested. A reference shall
be made to the following (as applicable):

	 	-	 	The item number for the specific piece of equipment listed
in the Property Schedule.
	 
	 	-	 	The Contracting Officer’s Authorization letter and number,
if the equipment is not covered by the Property Schedule.
	 
	 	-	 	Be preceded by an asterisk (*) if the equipment is below
the approval level.

	 	 	 
	NIH(RC)-4

	 	ATTACHwMENT 2
	Rev. 5/97

	 	Page 2

 

Table of Contents

	 	(4)	 	Materials and Supplies - Include equipment with unit costs of less
than $1,000 or an expected service life of two years or less, and
consumable material and supplies regardless of amount.
	 
	 	(5)	 	Premium Pay - List remuneration in excess of the basic hourly rate.
	 
	 	(6)	 	Consultant Fee - List fees paid to consultants. Identify
consultant by name or category as set forth in the contract’s Advance
Understanding or in the COA letter, as well as the effort (i.e., number
of hours, days, etc.) and rate being billed.
	 
	 	(7)	 	Travel - Include domestic and foreign travel. Foreign travel is
travel outside of Canada, the United States and its territories and
possessions. However, for an organization located outside Canada, the
United States and its territories and possessions, foreign travel means
travel outside that country. Foreign travel must be billed separately
from domestic travel.
	 
	 	(8)	 	Subcontract Costs - List subcontractor(s) by name and amount
billed.
	 
	 	(9)	 	Other - List all other direct costs in total unless exceeding
$1,000 in amount. If over $1,000, list cost elements and dollar
amounts separately. If the contract contains restrictions on any cost
element, that cost element must be listed separately.

	(l)	 	Cost of Money (COM) - Cite the COM factor and base in effect during the
time the cost was incurred and for which reimbursement is claimed.
	 
	(m)	 	Indirect Costs—Overhead - Identify the cost base, indirect cost rate,
and amount billed for each indirect cost category.
	 
	(n)	 	Fixed-Fee Earned - Cite the formula or method of computation for the
fixed-fee (if any). The fixed-fee must be claimed as provided for by the
contract.
	 
	(o)	 	Total Amounts Claimed - Insert the total amounts claimed for the current
and cumulative periods.
	 
	(p)	 	Adjustments - Include amounts conceded by the contractor, outstanding
suspensions, and/or disapprovals subject to appeal.
	 
	(q)	 	Grand Totals

	The contracting officer may require the contractor to submit detailed support
for costs claimed on one or more interim invoices/financing requests.

	 	 	 
	NIH(RC)-4

	 	ATTACHMENT 2
	Rev. 5/97

	 	Page 3

 

Table of Contents

FINANCIAL REPORTING INSTRUCTIONS:

These instructions are keyed to the Columns on the sample invoice/financing
request.

Column
A-Expenditure Category — Enter the expenditure categories required by
the contract.

Column
B-Cumulative Percentage of Effort/Hrs.-Negotiated — Enter the
percentage of effort or number of hours agreed to doing contract negotiations
for each employee or labor category listed in Column A.

Column
C-Cumulative Percentage of Effort/Hrs.-Actual — Enter the percentage of
effort or number of hours worked by each employee or labor category listed in
Column A.

Column
D-Incurred Cost-Current — Enter the costs, which were incurred during
the current period.

Column
E-Incurred Cost-Cumulative — Enter the cumulative cost to date.

Column
F-Cost at Completion —  Enter data only when the contractor estimates
that a particular expenditure category will vary from the amount negotiated.
Realistic estimates are essential.

Column
G- Contract Amount - Enter the costs agreed to during contract
negotiations for all expenditure categories listed in Column A.

Column
H-Variance (Over or Under) - Show the difference between the estimated
costs at completion (Column F) and negotiated costs (Column G) when entries
have been made in Column F. This column need not be filled in when Column F is
blank. When a line item varies by plus or minus 10 percent, i.e., the
percentage arrived at by dividing Column F by Column G, an explanation of the
variance should be submitted. In the case of an overrun (net negative
variance), this submission shall not be deemed as notice under the Limitation
of Cost (Funds) Clause of the contract.

Modifications: Any modification in the amount negotiated for an item since the
preceding report should be listed in the appropriate cost category.

Expenditures Not Negotiated: An expenditure for an item for which no amount
was negotiated (e.g., at the discretion of the contractor in performance of its
contract) should be listed in the appropriate cost category and all columns
filled in, except for G. Column H will of course show a 100 percent variance
and will be explained along with those identified under H above.

	 	 	 
	NIH(RC)-4

	 	ATTACHMENT 2
	Rev. 5/97

	 	Page 4

 

Table of Contents

	

 

Table of Contents

	

 

Table of Contents

	

 

Table of Contents

HHSAR 352.223-70 SAFETY AND HEALTH (JANUARY 2001)

	(a)	 	To help ensure the protection of the life and health of all persons, and
to help prevent damage to property, the Contractor shall comply with all
Federal, State and local laws and regulations applicable to the work being
performed under this contract. These laws are implemented and/or enforced
by the Environmental Protection Agency, Occupational Safety and Health
Administration and other agencies at the Federal, State and local levels
(Federal, State and local regulatory/enforcement agencies).
	 
	(b)	 	Further, the Contractor shall take or cause to be taken additional safety
measures as the Contracting Officer in conjunction with the project or
other appropriate officer, determines to be reasonably necessary. If
compliance with these additional safety measures results in an increase or
decrease in the cost or time required for performance of any part of work
under this contract, an equitable adjustment will be made in accordance
with the applicable “Changes” Clause set forth in this contract.
	 
	(c)	 	The Contractor shall maintain an accurate record of, and promptly report
to the Contracting Officer, all accidents or incidents resulting in the
exposure of persons to toxic substances, hazardous materials or hazardous
operations; the injury or death of any person; and/or damage to property
incidental to work performed under the contract and all
violations for which the Contractor has been cited by any Federal, State
or local regulatory/enforcement agency. The report shall include a copy
of the notice of violation and the findings of any inquiry or inspection,
and an analysis addressing the impact these violations may have on the
work remaining to be performed. The report shall also state the required
action(s), if any, to be taken to correct any violation(s) noted by the
Federal, State or local regulatory/enforcement agency and the time frame
allowed by the agency to accomplish the necessary corrective action.
	 
	(d)	 	If the Contractor fails or refuses to comply promptly with the Federal,
State or local regulatory/enforcement agency’s directive(s) regarding any
violation(s) and prescribed corrective action(s), the Contracting Officer
may issue an order stopping all or part of the work until satisfactory
corrective action (as approved by the Federal, State or local
regulatory/enforcement agencies) has been taken and documented to the
Contracting Officer. No part of the time lost due to any stop work order
shall be subject to a claim for extension of time or costs or damages by
the Contractor.
	 
	(e)	 	The Contractor shall insert the substance of this clause in each
subcontract involving toxic substances, hazardous materials, or
operations. Compliance with the provisions of this clause by
subcontractors will be the responsibility of the Contractor.

(End of clause)

	 	 	 
	Safety and Health Clause

	 	ATTACHMENT 5
	HHSAR 352.223-70,(1/01)
	 	 

 

Table of Contents

RESEARCH PATIENT CARE COSTS

	(a)	 	Research patient care costs are the costs of routine and ancillary
services provided to patients participating in research programs described
in this contract.
	 
	(b)	 	Patient care costs shall be computed in a manner consistent with the
principles and procedures used by the Medicare Program for determining the
part of Medicare reimbursement based on reasonable costs. The Diagnostic
Related Group (DRG) prospective reimbursement method used to determine the
remaining portion of Medicare reimbursement shall not be used to determine
patient care costs. Patient care rates or amounts shall be established by
the Secretary of HHS or his duly authorized representative.
	 
	(c)	 	Prior to submitting an invoice for patient care costs under this
contract, the contractor must make every reasonable effort to obtain third
party payment, where third party payors (including Government agencies)
are authorized or are under a legal obligation to pay all or a portion of
the charges incurred under this contract for patient care.
	 
	(d)	 	The contractor must maintain adequate procedures to identify those
research patients participating in this contract who are eligible for
third party reimbursement.
	 
	(e)	 	Only those charges not recoverable from third party payors or patients
and which are consistent with the terms and conditions of the contract are
chargeable to this contract.

	 	 	 
	NIH(RC)-11

	 	ATTACHMENT 6
	(4/1/84)
	 	 

 

Table of Contents

PROCUREMENT OF CERTAIN EQUIPMENT

Notwithstanding any other clause in this contract, the Contractor will not be
reimbursed for the purchase, lease, or rental of any item of equipment listed
in the following Federal Supply Groups, regardless of the dollar value, without
the prior written approval of the Contracting Officer.

	 	 	 	 
	67

	-
	 	Photographic Equipment
	69

	-
	 	Training Aids and Devices
	70

	-
	 	General Purpose ADP Equipment, Software, Supplies and
Support (Excluding 7045-ADP Supplies and Support Equipment.)
	71

	-
	 	Furniture
	72

	-
	 	Household and Commercial Furnishings and Appliances
	74

	-
	 	Office Machines and Visible Record Equipment
	77

	-
	 	Musical Instruments, Phonographs, and Home-type Radios
	78

	-
	 	Recreational and Athletic Equipment

When equipment in these Federal Supply Groups is requested by the Contractor
and determined essential by the Contracting Officer, the Government will
endeavor to fulfill the requirement with equipment available from its excess
personal property sources, provided the request is made under a contract.
Extensions or renewals of approved existing leases or rentals for equipment in
these Federal Supply Groups are excluded from the provisions of this article.

	 	 	 
	NIH(RC)-7 (4/1/84)

	 	ATTACHMENT 7
	OMB Bulletin 81-16
	 	 

 

Table of Contentsexv4w1

 

Exhibit 4.1

DIACRIN, INC.

1997 STOCK OPTION PLAN

1. Purpose

     The purpose of this 1997 Stock Option Plan (the “Plan”) of Diacrin, Inc.,
a Delaware corporation (the “Company”), is to advance the interests of the
Company’s stockholders by enhancing the Company’s ability to attract, retain
and motivate persons who make (or are expected to make) important contributions
to the Company by providing such persons with equity ownership opportunities
and performance-based incentives and thereby better aligning the interests of
such persons with those of the Company’s stockholders. Except where the
context otherwise requires, the term “Company” shall include any present or
future subsidiary corporations of Diacrin, Inc. as defined in Section 424(f) of
the Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder (the “Code”).

2. Eligibility

     All of the Company’s employees, officers, directors, consultants and
advisors are eligible to be granted options (each, an “Option”) under the Plan
to purchase shares of the common stock, $0.01 par value per share, of the
Company (the “Common Stock”). Any person who has been granted an Option under
the Plan shall be deemed a “Participant.”

3. Administration, Delegation

     a. Administration by Board of Directors. The Plan will be
administered by the Board of Directors of the Company (the “Board”). The
Board shall have authority to grant Options and to adopt, amend and
repeal such administrative rules, guidelines and practices relating to
the Plan as it shall deem advisable. The Board may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or any
Option in the manner and to the extent it shall deem expedient to carry
the Plan into effect and it shall be the sole and final judge of such
expediency. All decisions by the Board shall be made in the Board’s sole
discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Option. No director or
person acting pursuant to the authority delegated by the Board shall be
liable for any action or determination relating to or under the Plan made
in good faith.

     b. Delegation to Executive Officers. To the extent permitted by
applicable law, the Board may delegate to one or more executive officers
of the Company the power to grant Options and exercise such other powers
under the Plan as the Board may determine, provided that the Board shall
fix the maximum number of shares subject to Options and the maximum
number of shares for any one Participant to be made by such executive
officers.

     c. Appointment of Committees. To the extent permitted by applicable
law, the Board may delegate any or all of its powers under the Plan to
one or more committees or

 

 

subcommittees of the Board (a “Committee”). All references in the
Plan to the “Board” shall mean the Board or a Committee of the Board or
the executive officer referred to in Section 3(b) to the extent that the
Board’s powers or authority under the Plan have been delegated to such
Committee or executive officer.

4. Stock Available for Options

     a. Number of Shares. Subject to adjustment under Section 4(c),
Options may be granted under the Plan for up to 1,200,000 shares of
Common Stock. If any Option expires or is terminated, surrendered or
canceled without having been fully exercised or results in any Common
Stock not being issued, the unused Common Stock covered by such Option
shall again be available for the grant of Options under the Plan,
subject, however, in the case of Incentive Stock Options (as hereinafter
defined), to any limitation required under the Code. Shares issued under
the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

     b. Per-Participant Limit. Subject to adjustment under Section 4(c),
the maximum number of shares with respect to which an Option may be
granted to any Participant under the Plan shall be 250,000 per calendar
year. The per-participant limit described in this Section 4(b) shall be
construed and applied consistently with Section 162(m) of the Code.

     c. Adjustment to Common Stock. In the event of any stock split,
stock dividend, recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, liquidation, spin-off or other similar
change in capitalization or event, or any distribution to holders of
Common Stock other than a normal cash dividend, (i) the number and class
of securities available under this Plan and (ii) the number and class of
security and exercise price per share subject to each outstanding Option
shall be appropriately adjusted by the Company (or substituted Options
may be granted, if applicable) to the extent the Board shall determine,
in good faith, that such an adjustment (or substitution) is necessary and
appropriate. If this Section 4(c) applies and Section 6(e)(1) also
applies to any event, Section 6(e)(1) shall be applicable to such event,
and this Section 4(c) shall not be applicable.

5. Terms and Conditions of Options

     a. General.
 The Board may grant Options and determine the number of
shares of Common Stock to be covered by each Option, the exercise price
of each Option and the conditions and limitations applicable to the
exercise of each Option, including conditions relating to applicable
federal or state securities laws, as it considers necessary or advisable.
An Option which is not intended to be an Incentive Stock Option (as
hereinafter defined) shall be designated a “Nonstatutory Stock Option.”

2

 

     b. Incentive Stock Options. An Option that the Board intends to be
an “incentive stock option” as defined in Section 422 of the Code (an
“Incentive Stock Option”) shall only be granted to employees of the
Company and shall be subject to and shall be construed consistently with
the requirements of Section 422 of the Code. The Company shall have no
liability to a Participant, or any other party, if an Option (or any part
thereof) which is intended to be an Incentive Stock Option is not an
Incentive Stock Option.

     c. Exercise Price. The Board shall establish the exercise price at
the time each Option is granted and specify it in the applicable option
agreement; provided, however, that in no event shall the exercise price
of any Option be less than the fair market value of the Common Stock at
the time of grant.

     d. Duration of Options. Each Option shall be exercisable at such
times and subject to such terms and conditions as the Board may specify
in the applicable option agreement, provided, however, that in no event
shall an Option be granted for a term in excess of ten years from the
date of grant.

     e. Exercise of Option. Options may be exercised only by delivery to
the Company of a written notice of exercise signed by the proper person
together with payment in full as specified in Section 5(f) for the number
of shares for which the Option is exercised.

     f. Payment Upon Exercise. Common Stock purchased upon the exercise
of an Option granted under the Plan shall be paid for as follows:

          (1) in cash or by check, payable to the order of the Company;

          (2) except as the Board may otherwise provide in an Option
Agreement, delivery of any irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds
to pay the exercise price, or delivery by the Participant to the Company
of a copy of irrevocable and unconditional instructions to a creditworthy
broker to deliver promptly to the Company cash or a check sufficient to
pay the exercise price;

          (3) to the extent permitted by the Board and explicitly provided in
an Option Agreement (i) by delivery of shares of Common Stock owned by
the Participant valued at their fair market value as determined by the
Board in good faith (“Fair Market Value”), which Common Stock was owned
by the Participant at least six months prior to such delivery, (ii) by
delivery of a promissory note of the Participant to the Company on terms
determined by the Board, or (iii) by payment of such other lawful
consideration as the Board may determine; or

          (4) any combination of the above permitted forms of payment.

3

 

6. General Provisions

     a. Transferability of Options. Except as the Board may otherwise
determine or provide in an Option, Options shall not be sold, assigned,
transferred, pledged or otherwise encumbered by the person to whom they
are granted, either voluntarily or by operation of law, except by will or
the laws of descent and distribution, and, during the life of the
Participant, shall be exercisable only by the Participant. References to
a Participant, to the extent relevant in the context, shall include
references to authorized transferees.

     b. Documentation. Each Option under the Plan shall be evidenced by
a written instrument in such form as the Board shall determine. Each
Option may contain terms and conditions in addition to those set forth in
the Plan.

     c. Board Discretion. Except as otherwise provided by the Plan, each
Option may be granted alone or in addition to any other Option. The
terms of each Option need not be identical, and the Board need not treat
Participants uniformly.

     d. Termination of Status. The Board shall determine the effect on
an Option of the disability, death, retirement, authorized leave of
absence or other change in the employment or other status of a
Participant and the extent to which, and the period during which, the
Participant, the Participant’s legal representative, conservator,
guardian or Designated Beneficiary may exercise rights under the Option.
As used herein, “Designated Beneficiary” means any beneficiary designated
by a Participant to exercise rights of the Participant in the event of
the Participant’s death.

     e. Acquisition Events.

          (1) Consequences of Acquisition Events. Upon the occurrence of an
Acquisition Event (as defined below), or the execution by the Company of
any agreement with respect to an Acquisition Event, the Board shall take
one of the following actions with respect to then outstanding Options:
(i) provide that outstanding Options shall be assumed, or equivalent
Options shall be substituted, by the acquiring or succeeding corporation
(or an affiliate thereof), provided that any such Options substituted for
Incentive Stock Options shall satisfy, in the determination of the Board,
the requirements of Section 424(a) of the Code; (ii) upon written notice
to the Participants, provide that all then unexercised Options will
become exercisable in full as of a specified time (the “Acceleration
Time”) prior to the Acquisition Event and will terminate immediately
prior to the consummation of such Acquisition Event, except to the extent
exercised by the Participants between the Acceleration Time and the
consummation of such Acquisition Event; and (iii) in the event of an
Acquisition Event under the terms of which holders of Common Stock will
receive upon consummation thereof a cash payment for each share of Common
Stock surrendered pursuant to such Acquisition Event (the “Acquisition

4

 

Price”), provide that all outstanding Options shall terminate upon
consummation of such Acquisition Event and each Participant shall
receive, in exchange therefor, a cash payment equal to the amount (if
any) by which (A) the Acquisition Price multiplied by the number of
shares of Common Stock subject to such outstanding Options (whether or
not then exercisable), exceeds (B) the aggregate exercise price of such
Options.

          An “Acquisition Event” shall mean: (a) any merger or consolidation which
results in the voting securities of the Company outstanding immediately prior
thereto representing immediately thereafter (either by remaining outstanding or
by being converted into voting securities of the surviving or acquiring entity)
less than 50% of the combined voting power of the voting securities of the
Company or such surviving or acquiring entity outstanding immediately after
such merger or consolidation; (b) any sale of all or substantially all of the
assets of the Company; or (c) the complete liquidation of the Company.

          (2) Assumption of Options Upon Certain Events. The Board may grant
Options under the Plan in substitution for stock and stock-based awards
held by employees of another corporation who become employees of the
Company as a result of a merger or consolidation of the employing
corporation with the Company or the acquisition by the Company of
property or stock of the employing corporation. The substitute Options
shall be granted on such terms and conditions as the Board considers
appropriate in the circumstances.

     f. Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by
law to be withheld in connection with Options to such Participant no
later than the date of the event creating the tax liability. The Board
may allow Participants to satisfy such tax obligations in whole or in
part in shares of Common Stock, including shares retained from the Option
creating the tax obligation, valued at their Fair Market Value. The
Company may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to a Participant.

     g. Amendment of Option. The Board may amend, modify or terminate
any outstanding Option, including but not limited to, substituting
therefor another Option of the same or a different type, changing the
date of exercise, and converting an Incentive Stock Option to a
Nonstatutory Stock Option; provided that the Participant’s consent to
such action shall be required unless the Board determines that the
action, taking into account any related action, would not materially and
adversely affect the Participant; and provided further that the Board may
not amend the exercise price, as determined in accordance with Section
5(c), of any outstanding Option subsequent to the time of grant, except
in accordance with the provisions of Section 4(c).

     h. Conditions on Delivery of Stock. The Company will not be
obligated to deliver any shares of Common Stock pursuant to the Plan or
to remove restrictions from shares

5

 

previously delivered under the Plan until (i) all conditions of the
Option have been met or removed to the satisfaction of the Company, (ii)
in the opinion of the Company’s counsel, all other legal matters in
connection with the issuance and delivery of such shares have been
satisfied, including any applicable securities laws and any applicable
stock exchange or stock market rules and regulations, and (iii) the
Participant has executed and delivered to the Company such
representations or agreements as the Company may consider appropriate to
satisfy the requirements of any applicable laws, rules or regulations.

     i. Acceleration. The Board may at any time provide that any Options
shall become immediately exercisable in full or in part.

7. Miscellaneous

     a. No Right To Employment or Other Status. No person shall have any
claim or right to be granted an Option, and the grant of an Option shall
not be construed as giving a Participant the right to continued
employment or any other relationship with the Company. The Company
expressly reserves the right at any time to dismiss or otherwise
terminate its relationship with a Participant free from any liability or
claim under the Plan, except as expressly provided in the applicable
Option.

     b. No Rights as Stockholder. Subject to the provisions of the
applicable Option, no Participant or Designated Beneficiary shall have
any rights as a stockholder with respect to any shares of Common Stock to
be distributed with respect to an Option until becoming the record holder
of such shares.

     c. Effective Date and Term of Plan. The Plan shall become effective
on the date on which it is adopted by the Board (March 17, 1997), but no
Option granted to a Participant designated as subject to Section 162(m)
by the Board shall become exercisable unless and until the Plan has been
approved by the Company’s stockholders. No Options shall be granted
under the Plan after March 17, 2007, but Options previously granted may
extend beyond that date.

     d. Amendment of Plan. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that no Option granted
to a Participant designated as subject to Section 162(m) by the Board
after the date of such amendment shall become exercisable (to the extent
that such amendment to the Plan was required to grant such Option to a
particular Participant), unless and until such amendment shall have been
approved by the Company’s stockholders.

     e. Stockholder Approval. For purposes of this Plan, stockholder
approval shall mean approval by a vote of the Stockholders in accordance
with the requirements of Section 162(m) of the Code.

     f. Governing Law. The provisions of the Plan and all Options made
hereunder shall be governed by and interpreted in accordance with the
laws of the State of Delaware without regard to any applicable conflicts
of law.

6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00062-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00062-of-00352.parquet"}]]