Document:

Exhibit
4.10

 

 

	
  Crucell N.V.

  
	
  Confidential Materials Omitted and Filed Separately with the

  
	
  Securities and Exchange Commission.

  
	
  Confidential Portions denoted by [***].

  

 

 

 

18 June 2004

 

Berna Biotech Ltd

Rehhagstrasse 79

CH-3018 Bern

SWITZERLAND

 

Attention: Kuno Sommer, Chief
Executive Officer

 

Dear Kuno,

 

Letter of Amendment to Supply
Agreement

 

We refer to the Supply
Agreement dated 12 November 2001 (the Agreement)  between CSL Limited (CSL) and Berna
Biotech Ltd (Berna) for the supply of Product on a worldwide
non-exclusive basis subject to specified Exclusive and Excluded Territories.

 

As discussed, it is proposed
that the Agreement be amended as follows:

 

1.         Agreement to Supply

 

Under clause 1.7, the
Agreement pertains to the supply of Product for Northern Hemisphere influenza
vaccine manufacture by Berna. Supply of Product for Berna to manufacture
influenza vaccine for the Southern Hemisphere will be the subject of a separate
agreement if the parties agree to proceed.

 

2.         Term and Termination

 

Under Schedule 1 item 2, the
Initial Period of the contract is extended by two years to end on 31
December 2009.

 

3.         Supply of
Product(s) against Orders

 

a)        Under
Clause 3.1. Berna is to provide in November each year a five-year
indicative forecast to be discussed at a face to face meeting. At that meeting
CSL will confirm whether it expects to be able to supply the forecasted
quantity of Product and make adjustments to the indicative non-binding maximum
quantities for the five year forecast period.

 

 

As at the date of this
letter, the quantities outlined in the five-year indicative forecast and up to
the maximum quantities are as follows:

 

	
  Year

  	
   

  	
  Total GM HA

  	
   

  	
  25 mcgm doses

  	
   

  
	
  2005

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  2006

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  2007

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  2008

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  2009

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

CSL
shall use its best efforts to be able to supply to Berna the quantities
outlined in the five-year indicative forecast and up to the maximum quantities
as follows:

 

	
  Year

  	
   

  	
  Total GM HA

  	
   

  	
  25 mcgm doses

  	
   

  
	
  2005

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  2006

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  2007

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  2008

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  2009

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

Berna will, before 30
June each calendar year provide CSL with a written best estimate of its
supply requirements for the Product for the subsequent year. Within 8 weeks CSL
is to notify Berna whether CSL will be able to supply the forecasted quantity
of Product for the following season based on expected strains and yields. Berna
may, before 30 November each year, submit to CSL a revised best estimate
of its supply requirements.

 

b)        Under clause 3.3, each
order placed by Berna will be for a minimum quantity of HA for each calendar
year as follows:

 

	
  Year

  	
   

  	
  Total GM HA

  	
   

  	
  25 mcgm doses

  	
   

  
	
  2005

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  2006

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  2007

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  2008

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  2009

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

CSL confirms and Berna
understands and accepts that payment in full is required for the minimum
quantity, regardless of whether the minimum quantity is ordered/purchased.

 

c)        Under
clause 3.4, each of Berna’s orders for Product shall be in writing and shall
constitute a binding order upon CSL. Insofar as Berna requires quantities
exceeding those mentioned in Berna’s November best estimate CSL shall use
reasonable efforts to deliver such quantities.

 

4.         Price and Payment

 

a)        Under clause 4.1 the
Product(s) will be invoiced at the prices set out in Schedule 2. The price
will be based on the number of eggs used to manufacture the quantity of Product
ordered and delivered to Berna. The amount due per egg used will for the year
2005-2009 be as follows:

 

	
  2005

  	
   

  	
  A$

  	
  [***] per egg

  	
   

  
	
  2006

  	
   

  	
  A$

  	
  [***] per egg

  	
   

  
	
  2007

  	
   

  	
  A$

  	
  [***] per egg

  	
   

  
	
  2008

  	
   

  	
  A$

  	
  [***] per egg

  	
   

  
	
  2009

  	
   

  	
  A$

  	
  [***] per egg

  	
   

  

 

	
  Phone: +61 3 9389 1769

  	
   

  	
  CSL Limited ABN
  99 051 588 348

  45 Poplar Road Parkville Victoria 3052 Australia

  June.McKay@csl.com.au

  	
   

  	
  Fax: +61
  9389 1076

  

 

2

 

b)        Under Schedule 2 the 2005 calendar year
price for a trivalent dose (25 mcgm of each strain) will be based on an amount
of A$ [***] per egg used to manufacture the quantity of
Product(s) delivered to Berna. The relationship between price per egg used
to manufacture the Product and actual price paid per 25 mcgm HA of each strain
is dependant upon the egg yield. Using the five year average yield the price of A$ [***] per egg used relates to A$ [***] per 25 mcgm trivalent dose. With better than average yields the price
per dose reduces because the processing cost is fixed, as shown in the table
below:

 

	
  Yield

  	
   

  	
  Yield Per Egg

  (mcgm/egg)

  	
   

  	
  Price / Egg

  	
   

  	
  Price per

  25mcgm dose

  	
   

  
	
  10% above average

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  5 year average

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  
	
  10% below average

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  

 

Note: the above yields are
indicative only. The actual yield could be greater or less than ±10% from the
five-year average.

 

5.         Product Recall

 

Under clause 19.1 Berna will
inform CSL immediately by telephone or facsimile transmission (immediately
confirmed in writing) in the event of any circumstances giving rise to a
possible or actual recall of Finished Influenza Vaccine containing the
Product(s) where the recall is alleged to be due to Product(s). CSL will
inform Berna immediately by telephone or facsimile transmission (immediately
confirmed in writing) in the event of any circumstances giving rise to a
possible or actual recall of any batches of the Product(s) delivered to
Berna.

 

Clauses 19.2, 19.3 and 19.4
will continue in full force and effect.

 

6.         Adverse Drug Events

 

Clause 20.2 and 20.5 and Schedule 4 shall be deleted
without replacement. Clause 20.1, 20.3 and 20.4 are changed as follows and will
replace the previous provisions:

 

a)        Under
clause 20.1 CSL and Berna shall keep each other informed on all reports of
Adverse Drug Events (ADE) coming to either party’s knowledge with regard to the
Product(s) regardless of the origin of such reports. The term Reports
shall also include publications in journals and other media. If Berna receives
any ADE report which is both serious and unexpected and alleged to be caused by
the Product(s) Berna will report the matter to the Registration Authority
in compliance with the laws and regulations in the Territory.

 

b)        Under
clause 20.3 Berna will give immediate written notice to CSL of any alleged
manufacturing or other defect in the Products(s) of which Berna becomes
aware and of any possible expense, liability, cost, claim or proceeding arising
from the alleged defect.

 

c)        Under
clause 20.4 Berna will not make any admission of liability to any third party
with respect to claims either in the name of Berna or on behalf of CSL with
respect to any adverse experiences alleged to be caused by, and any alleged manufacturing
or other defects in the Product(s) without CSL’s prior written consent.

 

Terms used in this letter shall have the same meaning
as defined in the Agreement unless the context requires otherwise. Except as
amended by this letter, the terms of the Agreement remain in full force and
effect.

 

	
  Phone: +61 3 9389 1769

  	
   

  	
  CSL Limited ABN
  99 051 588 348

  45 Poplar Road Parkville Victoria 3052 Australia

  June.McKay@csl.com.au

  	
   

  	
  Fax: +61
  9389 1076

  

 

 

 

3

 

Please confirm Berna’s formal agreement to the above
by signing and returning the enclosed copy of this letter.

 

Yours sincerely

 

	
  /s/ Zita Cunningham

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

Zita Cunningham

Business Development Director, Pharmaceuticals Group

 

Accepted and agreed for and on behalf of Berna Biotech
Ltd by its duly authorised representative(s):

 

	
  Illegible, 24 June 2004

  	
   

  	
  /s/ Jorg von Manger-Koenig

  
	
  Place, date

  	
   

  	
  Name:

  	
  Jörg
  von Manger-Koenig

  
	
   

  	
   

  	
  Function:

  	
  Executive Vice President Legal,

  Regulatory Affairs & IP

  
	
   

  	
   

  	
   

  	
   

  
	
  Illegible,
  24.06.04

  	
   

  	
  /s/ Dr. Alexandra Fischer-Hauck

  
	
  Place, date

  	
   

  	
  Name:

  	
  Dr. Alexandra Fischer-Hauck

  
	
   

  	
   

  	
  Function:

  	
  Director, Global Product Management

  

 

	
  Phone: +61 3 9389 1769

  	
   

  	
  CSL Limited ABN
  99 051 588 348

  45 Poplar Road Parkville Victoria 3052 Australia

  June.McKay@csl.com.au

  	
   

  	
  Fax: +61 9389
  1076

  

 

4

 

THIS SUPPLY AGREEMENT is
made on the date last signed

 

	
  BETWEEN:

  	
   

  	
  CSL LIMITED ACN 051 588 348

  45 Poplar Road, Parkville, Victoria, Australia 3052

  Facsimile: (+613) 9389 1434

  	
   

  	
  (CSL)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  AND:

  	
   

  	
  BERNA BIOTECH LTD

  Rehhagstrasse 79, CH-3018 Berne, Switzerland

  Facsimile: (+41) 31 980 62 29

  	
   

  	
  (BERNA)

  

 

WHEREAS:

 

A.       CSL is engaged in the
manufacture and distribution of human and veterinary pharmaceutical and
diagnostic products.

 

B.        BERNA is active in the
manufacturing, distribution and marketing of similar products.

 

C.        BERNA wishes to obtain from
CSL and CSL wishes to supply to BERNA Bulk Inactivated Whole Virus Influenza
Concentrate — Monovalent Pooled Harvest as set out in this Agreement.

 

THE PARTIES AGREE

 

1.        Agreement to Supply

 

1.1       CSL
agrees to supply, and BERNA agrees to purchase, Product(s) on the terms
and conditions set out in this Agreement.

 

1.2       This
Agreement will oblige CSL to manufacture or (if it is not able to manufacture
by decisions  of the authority
concerned) to deliver the Product(s) as ordered by BERNA and accepted by
CSL.

 

1.3       Nothing
in this Agreement will restrict BERNA’s ability to deal in bulk influenza
vaccine (other than the Product) and Finished Influenza Vaccine formulated with
the Product or other vaccines utilising Virosome technology formulated with the
Product except that BERNA agrees not to sell such vaccines to any third party
where BERNA knows that same may be used within the Excluded Territory.

 

1.4       BERNA
will not use the Product(s) in any way other than as permitted under this
Agreement. In particular, BERNA will use the Product(s) only as a bulk
component in the formulation of Finished Influenza Vaccines and other vaccines
utilising Virosome technology.

 

1.5       Nothing
in this Agreement will restrict CSL’s ability to deal in bulk influenza vaccine
and Finished Influenza Vaccines except that CSL agrees not to sell Finished
Influenza Vaccines to any third party where CSL knows that same may be used
within the Exclusive Territory. BERNA may on or before 30 June 2002
request that the Exclusive Territory be expanded and CSL will notify BERNA of
its agreement or otherwise to such expansion on a country by country basis by
30 September 2002.

 

1.6       Regarding
new influenza products developed by BERNA, BERNA agrees to consider CSL as a
distributing partner for the Excluded Territory.

 

1.7       BERNA
is interested to purchase Product(s) for the Southern Hemisphere and CSL
agrees to consider BERNA’s request prior to 21 December 2001. If CSL
notifies BERNA that CSL is willing to supply such Product(s), CSL and BERNA
will negotiate in good faith an amendment to this Agreement to provide for the
supply of such Product(s).

 

1

 

3.        Supply of
Product(s) against Orders

 

3.1       BERNA
will, as soon as practicable after the Commencement Date, provide CSL with a
written best estimate of its supply requirements for each of the Product(s) for
the 2002 calendar year. BERNA will, before 30 June each calendar year,
provide CSL with a written best estimate of its supply requirements for each of
the Product(s) for the subsequent calendar year. BERNA may, before 30
November each year, submit a revised written best estimate of its supply
requirements for each of the Product(s) for the subsequent calendar year.

 

3.2       On  or before 28 February, BERNA will place a
firm written order with CSL for BERNA’s requirement for Product(s) for the
upcoming season. BERNA’s order must be for at least 75% of its 30
June written best estimate provided under clause 3.1.

 

3.3       Each
order will be for a minimum quantity of 100 gm HA per strain for the 2002
calendar year, 150 gm HA per strain for the 2003 calendar year and for each
subsequent calendar year a scaled up minimum quantity will be agreed between
CSL and Berna based on the agreed European SRID assay.

 

3.4       Each
order will be binding upon CSL unless within 14 days of receipt of an order CSL
notifies BERNA that it does not accept the order in excess of the minimum
quantity determined under clause 3.3.

 

3.5       Delivery
dates for the Product(s) for the Northern Hemisphere will be based on
yield and CSL will use its best endeavours to advise BERNA of estimated
delivery dates by 15 March. CSL will provide written confirmation of delivery
dates by 30 April, which will include any delivery date after 15 July. CSL will
use reasonable endeavours to deliver at least 11.5gmHA of each strain by 30
April for regulatory requirements. If BERNA require a commercial delivery
prior to 15 June 2002, CSL will only commit to deliver 75% of the quantity
ordered by Berna and accepted by CSL. CSL will use reasonable endeavours to
deliver the balance of the accepted order by July 15.

 

3.6       If
CSL delivers Product(s) in excess of BERNA’s firm order, BERNA must advise
CSL in writing of the quantity held in excess as soon as such excess is
determined. BERNA will process the excess quantity and store it for potential
use in the following Northern Hemisphere season. If the excess quantity is able
to be used in the following seasons, BERNA will pay CSL for the excess quantity
at the price applicable at the time of delivery within 30 days of the official
announcement of Northern Hemisphere strain selection. If the excess quantity is
unable to be used in the following season, BERNA will destroy the excess
quantity and notify CSL in writing that the excess quantity has been destroyed.

 

3.7       CSL
will use its reasonable endeavours to supply the Product(s) in accordance
with BERNA’s orders. However, CSL’s liability for any loss or damage which
BERNA may suffer or incur as a result of CSL’s failure to supply the
Product(s) in accordance with accepted BERNA orders will be limited to the
value of the accepted order (or part thereof) which CSL fails to supply. If CSL
delivers Product(s) for the Northern hemisphere to another customer and
fails to deliver the accepted Berna order (or part thereof), CSL is liable for
any loss or damage Berna may suffer as a result of unfilled Berna customer
orders.

 

3.8       An
indicative timing program for ordering and price negotiations is set out in
Schedule 3.

 

4.        Price and Payment

 

4.1       The
Product(s) will be invoiced at the prices set out in Schedule 2. For the
2002 calendar year the price will be based on an amount of A$ [***] per egg
used to manufacture that quantity of product delivered to Berna. For the 2003
calendar year the price will be based on an amount of [***] and for 2004
calendar year the price will be based on an amount of [***]. The  parties will negotiate in good faith a
new price for the 2005 calendar year and the 2006 calendar year prior to 30
April 2004. The parties will take into account any change in CSL’s
manufacturing costs and the general influenza market conditions. If this
agreement is renewed, the

 

2

 

parties will negotiate in
good faith a new price for the renewal period prior to 30 April of the
calendar year immediately prior to the initial year of the renewal term. The
parties will take into account any change in CSL’s manufacturing costs and the
general influenza market conditions.

 

4.2       Unless
otherwise agreed in writing all payments will be made under the terms and in
the currency set out in Schedule 2.

 

4.3       If the closing price of
the whole market spot rate for the Australian Dollar relative to the Swiss
Franc as reported in The Australian Financial Review deviates by more than 10%
from the closing price for the wholesale market spot rate reported in The
Australian Financial Review on the Commencement Date, the parties agree to
adjust any amounts due under this Agreement so as to ensure that each party
bears 50% of the exposure created by the deviation. Any further deviation of
more than 10% following any adjustment will result in a further adjustment on
the same terms.

 

5.        Packing, Delivery and Risk
in Transit

 

5.1       CSL
will sell the Product(s) ExWorks (lncoterms 2000), CSL’s Premises. CSL
will pack the Product(s) suitable for delivery to BERNA’s site in Berne,
Switzerland.

 

5.2       [Intentionally
Deleted]

 

5.3       If
CSL agrees to arrange delivery on behalf of BERNA (beyond CSL’s obligations
under clause 5.1) then the cost of freight and insurance arranged by CSL will
be to BERNA’s account, and CSL will be acting as BERNA’s forwarder. BERNA will
indemnify and keep indemnified CSL against all actions, claims, demands,
losses, damages, costs (including legal costs on a full indemnity basis) and
expenses for which CSL may become liable which relate directly or indirectly to
CSL’s acting as BERNA’s forwarder under this clause.

 

5.4       Subject
to product liability under clause 13, CSL’s obligations under clause 5.1 and
the quality control and acceptance procedures, risk in the Product(s) will
pass to BERNA upon ExWorks delivery. Property and ownership of the
Product(s) will pass to BERNA upon payment.

 

6.        Quality Control

 

6.1       CSL
will supply Product(s) free of defects in materials and manufacture, and
in compliance with the Specification and any Conditions of Registration
(including protocols to EU-regulations) set by the Registration Authority of
which BERNA has given CSL reasonable prior written notice.

 

6.2       CSL and BERNA will enter
into a GMP Agreement, which is to be reviewed annually on or before 30
November, that is to be consistent with terms of this Agreement.

 

6.3       CSL
will keep proper records and reference samples of all of its manufacturing and
quality control activities performed under this Agreement. CSL will provide, on
request, to Berna a copy of CSL’s current TGA certificate. BERNA may audit such
records and the production facilites at reasonable intervals, on reasonable
notice during normal business hours.

 

6.4       CSL
will notify BERNA of any special storage requirements for the Product(s).

 

6.5       BERNA
will store the Product(s) in suitable storage facilities having regard to
both the Specification and Conditions of Registration and in a manner which
ensures proper rotation of stock.

 

6.6       BERNA
will test samples of delivered Product(s) and if it believes a particular
Product(s) (hereinafter referred to as “the Notified Product”) does not
comply with clause 6.1, it will notify CSL advising the batch number. CSL will
examine and test from that batch a sample retained by it (hereinafter referred
to as  “the Batch Sample”). If CSL
finds the Batch Sample does not comply with clause 6.1 then CSL will if
practicable replace the Notified Product in due time and after discussion with
BERNA.

 

3

 

6.7       If
CSL finds the Batch Sample does comply with clause 6.1 and BERNA, based on its
own results, does not accept CSL’s findings, then a mutually agreed independent
testing agency will make a final decision with regard to the release
specification of the Notified Product, and that finding will be  conclusive for the two parties. If it
supports CSL findings it is evidence for all purposes that the Notified Product
complied with in clause 6.1 when loaded for delivery at CSL’s premises. CSL
will not be liable to replace or allow a credit in respect of the Notified
Product. The alleged failure of the Notified Product to comply with clause 6.1
will be deemed to have arisen or been caused by reason of an act or default of
a person (not being CSL or an employee or agent of CSL) or a cause independent
of human control occurring after the Notified Product was loaded for delivery
at CSL’s premises. If the releasing authority’s findings do not support CSL’s
findings the Product(s) CSL will if practicable replace the Notified
Product in due time and after discussion with BERNA. The cost of the
independent testing agency will be shared equally by CSL and BERNA regardless
of the outcome.

 

7.        BERNA’s and CSL’s Duties
and Obligations

 

7.1       BERNA
will:

 

(a)       only
distribute and sell Finished Influenza Vaccine and other vaccines utilising
Virosome technology containing the Product(s) as agreed under this
Agreement

 

(b)      comply
with all laws, ordinances, regulations, rules and administrative
directions applicable to or governing or controlling the importation of the
Product(s) into, and the sale and use of the Product(s) in, the
Territory

 

(c)       notify
CSL of any reason BERNA has to believe that a particular Product(s) does
not comply with clause 6.1 as soon as possible and preferably within fourteen
days of that reason coming to the attention of BERNA. The notification will
identify the particular Product’s batch number. BERNA will also notify CSL of
any Adverse Drug Events under clause 20.

 

7.2       BERNA
and CSL will ensure that their respective employees, agents and dealers are
acquainted with the obligations imposed by this Agreement to the extent
reasonably necessary to ensure compliance with the Agreement.

 

4

 

8.        Promotion and Marketing

 

8.1       BERNA
will have the absolute unilateral right to determine its promotion and
marketing activities, and the prices at which it will sell the Finished
Influenza Vaccine containing the Product(s) and to determine payment
arrangements with purchasers of the same. CSL does not desire to participate
and will not participate in any price determinations.

 

9.        Provision of Technical
Information

 

9.1       CSL,
at its expense, and as soon as practicable after the Commencement Date, will
make available to BERNA all technical information relating to the
Product(s) which CSL considers relevant to the reasonable needs of BERNA
under this Agreement and to the extent CSL has the right to divulge the
information. Nothing in this Agreement other than the required responses to the
Registration Authority will oblige CSL to make available to BERNA any
information, technical or otherwise, which is in any way referable to the
manufacture, formulation, production or processing of the Product(s).

 

9.2       BERNA may use any
technical information made available to it pursuant to this clause but only for
the proper discharge of its obligations. BERNA will not use any of the
technical information made available to it for any purpose after this Agreement
ends. For Confidential Material see clause 12.

 

10.      [Intentionally Deleted]

 

11.      Registration Requirements

 

11.1     BERNA
will effect, in its own name and at its expense, any necessary registrations of
the Product(s) in the Territory. BERNA will provide CSL with all data and
information and copies of all documentation to enable CSL to comply with its
obligations under this Agreement.

 

11.2     CSL
will assist BERNA with dossier preparation, at BERNA’s cost. CSL and BERNA will
consult and agree on all dossier requirements (updates) and CSL’s costs by 30
November each year for the following calendar year.

 

12.      Confidentiality

 

12.1     Each
party will:

 

(a)       keep
all Confidential Material disclosed to it by the other party confidential;

 

(b)      not
permit the other party’s Confidential Material to be disclosed other than in
confidence to its employees to the extent strictly necessary for the purposes
of this Agreement;

 

(c)       use
the other party’s Confidential Material only for the purpose of this Agreement
and not to use for any commercial purpose other than under a further agreement
with the other party;

 

(d)      not
copy or reduce to writing the other party’s Confidential Material except as
reasonably necessary for the purposes of this Agreement. Copies or reductions
to writing of Confidential Material of the other party shall be owned by that
party;

 

(e)       maintain
the other party’s Confidential Material in a way which provides adequate
protection from unauthorised disclosure, copying or use;

 

(f)       indemnify
and keep indemnified the other party against all actions, claims, demands,
losses, damages, costs and expenses for which the other party may become liable
which arise as a result of an unauthorised disclosure of the other party’s
Confidential Material; and

 

5

 

(g)      return
promptly to the other  party all
documents and materials (and all copies thereof) containing the other party’s
Confidential Material at the end of this Agreement.

 

12.2     “Confidential
Material” means all proprietary information disclosed by, or on behalf of, one
party to the other party relating to this Agreement and includes:

 

(a)       information
disclosed in writing, verbally or by any other means,

 

(b)      information
disclosed before, after or on the Commencement Date; and

 

(c)       information
relating to the other party’s operations, processes, plans, intentions,
production information, know-how, data, formulae, expertise, methodology,
drawings, specifications, design rights, trade secrets, market opportunities
and business affairs, and any new and novel combinations thereof.

 

but excludes information
which the receiving party proves:

 

(d)      is
in or has come into the public domain in any way without it breaching this
Agreement;

 

(e)       it
has developed independently as a result of its operations and activities;

 

(f)       it
has obtained or has available from a source other than the disclosing party
without breach of any obligation of confidentiality or non-use;

 

(g)      it
knew prior to being disclosed by the disclosing party; or

 

(h)      it
has disclosed with the prior written approval of the disclosing party.

 

12.3     Either
party may disclose the other party’s Confidential Material in confidence to the
Registration Authority to the extent required to comply with the law and its
obligations under this Agreement.

 

13.      Product Liability

 

13.1     CSL
will indemnify and keep indemnified BERNA against all actions, claims, demands,
losses, damages, costs (including legal costs on a full indemnity basis) and
expenses for which BERNA may become liable which relate directly or indirectly
to the Products, their uses or effects but only to the extent arising from a
breach of this Agreement (including failure of Product(s) to comply with
the Specifications) by, or the negligence or wilful default of, CSL.

 

13.2     BERNA
will indemnify and keep indemnified CSL against all actions, claims, demands,
losses, damages, costs (including legal costs on a full indemnity basis) and
expenses for which CSL may become liable which relate directly or indirectly to
BERNA’s altered Product in any form, whether bulk, finished or otherwise, their
uses or effects except to the extent arising from any breach of this Agreement
by, or the negligence or wilful default of, CSL.

 

14.      Term and Termination

 

14.1     This
Agreement will begin on the Commencement Date and remain in effect during the
Initial Period. It will thereafter be renewed for successive two year periods
until terminated.

 

14.2     Either
party may terminate this Agreement on 12 months notice to end at the end of the
Initial Period or any successive two year period thereafter.

 

14.3     The party not
affected may terminate this Agreement by giving to the other party written
notice to terminate on the date specified in the notice if:

 

6

 

(a)       a
party fails to rectify any breach of its obligations within 30 days of
receiving a written notice requiring it to do so;

 

(b)      if
a party becomes insolvent, is adjudged bankrupt, applies for judicial or
extra-judicial settlement with its creditors, makes an assignment for the
benefit of its creditors, voluntarily files for bankruptcy or has a receiver or
trustee (or the like) in bankruptcy appointed over its business, property or
assets, or becomes the subject of liquidation or dissolution (except for
reconstruction purposes such as mergers, etc) or involuntary bankruptcy
proceedings or otherwise discontinues business;

 

(c)       any
other right of termination in favour of the first party arises under this
Agreement; or

 

(d)      a
change in effective control of the other party.

 

14.4     If
an important parameter changes so materially that the continuation of this
agreement would lead to a material adverse financial effect for a party, that
party may by written notice request a negotiation in good faith to amend the terms
of this Agreement to address the change in that parameter. If the parties are
unable to agree on an appropriate amendment within three months of the date of
the notice, either party may terminate this Agreement by immediate written
notice. Such termination will not affect firm commitments made in connection
with the supply of Product(s) for the upcoming Northern Hemisphere
influenza season.

 

14.5     Termination
will not affect any other rights or obligations which may have accrued prior to
termination.

 

14.6     At
the end of this Agreement BERNA will promptly forward to CSL, at BERNA’s
expense, all technical information relating to this Agreement it received from
CSL BERNA will not keep any copies.

 

15.      General

 

15.1     No
waiver of any provision of this Agreement will be of any force or effect unless
confirmed in writing, signed by the parties. Then such waiver will be effective
only to the extent for which it is made.

 

15.2     The
invalidity or unenforceability of any provision of this Agreement will not
affect the validity and enforceability of all other provisions which are
self-sustaining and capable of separate enforcement.

 

15.3     This
Agreement constitutes the entire agreement and understanding between the
parties with respect to its subject matter. It replaces all previous agreements
between, or undertakings by either of, the parties with respect to its subject
matter.

 

15.4     This
Agreement can only be changed by written agreement of the parties.

 

15.5     Unless
expressly provided elsewhere in this Agreement, the relationship between the
parties is that of independent parties and will not be deemed to be that of
principal/agent, joint venture, partnership or otherwise.

 

15.6     The
laws of Victoria, Australia will govern this Agreement.

 

15.7     Clauses
11, 12,13,14.5 and 17.1 will continue to apply after this Agreement ends.

 

15.8     Neither
party will be liable for any failure or delay in the performance of its
obligations under this Agreement to the extent that such failure or delay
arises from any circumstance beyond its control including any Acts of Nature,
strikes, lock-outs, labour disputes or in the event of an influenza pandemic in
the Excluded Territory. Where such failure or delay continues for a continuous
period exceeding six months, the party not experiencing such failure or delay
may terminate this Agreement

 

7

 

without penalty by written notice. The parties
acknowledge that manufacturing and formulation of the Product(s) and
Finished Influenza Vaccine is an extremely time sensitive business and
therefore agree to notify each other as early as possible of any failure or
delay under this clause 15.8.

 

15.9     Each
party will bear its own legal costs and expenses of and incidental to the
preparation of this Agreement.

 

15.10   This Agreement will bind and enure for the benefit
of the parties and their respective successors in title. Neither party may
assign any of its rights and obligations without the prior written consent of
the other party.

 

16.      Notices

 

16.1     Any
written notice required under this Agreement must meet all of the following

 

(a)       be
given by pre-paid post, personal delivery or facsimile transmission;

 

(b)      be
sent to the contact address or facsimile number given above (or any other point
previously advised in writing by the recipient), and

 

(c)       be
marked to the attention of a signatory to this Agreement (or any other person
previously advised in writing by the recipient).

 

16.2     No
written notice is to be effective until received, or deemed to be received by the
other party as follows:

 

(a)       in
the case of personal delivery, upon delivery;

 

(b)      in
the case of a letter, on the fifth business day after posting; and

 

(c)       in
the case of a facsimile transmission, on the business day on which it is
despatched, or, if despatched on a non-business day, or after 5 pm on a
business day then on the next business day after day on which it is despatched.
A record from the despatching facsimile machine detailing the time and date of
the transmission will be evidence of transmission, unless proved to the
contrary.

 

Times and business days will be determined according
to the place of receipt.

 

17.      Arbitration

 

17.1     All
disputes arising under this Agreement will be finally settled under the
Rules of Conciliation and Arbitration of the International Chamber of
Commerce in Zurich, where CSL initiates the action, or in Melbourne, where
BERNA initiates the action, by one or more arbitrators appointed in accordance
with those Rules. All arbitrations will be conducted in the English language.

 

18.      Benefit of Indemnities

 

18.1     For
the avoidance of doubt, it is agreed that where a party agrees to indemnify the
other, the indemnified party will be or be deemed to be acting as agent for and
on behalf of and for the benefit of all persons who are or might be its
directors, officers, employees, consultants or agents from time to time and all
such persons will to this extent be or be deemed to be parties to this
Agreement.

 

19.      Product Recall

 

19.1     BERNA
will inform CSL immediately by telephone or facsimile transmission (immediately
confirmed in writing) in the event of any circumstances giving rise to a
possible or actual recall of any Finished Influenza Vaccine containing the
Product(s). CSL will inform BERNA immediately by telephone or

 

8

 

facsimile transmission (immediately confirmed in
writing) in the event of any circumstances giving rise to a possible or actual
recall of any batches of the Product(s) delivered to BERNA.

 

19.2     CSL
has the right (irrespective of any power granted by law to the Registration
Authority or other authority in the Territory) on the grounds of public health
and safety to require BERNA to evaluate and in case to discontinue sale of and
recover some or all batches of Finished Influenza Vaccine containing the
Product(s) specified by CSL. If BERNA does not so discontinue sale, any
sales made after the date of CSL’s request under this clause 19.2 will be made
solely at BERNA’s own risk and the indemnity in clause 13.1 will not apply.

 

19.3     Where
a product recall has been initiated whether by the Registration Authority or
other authority in the Territory or by BERNA or CSL under clause 19.2  BERNA will inform all purchasers of the
Product(s) so affected and shall require them to deliver or make available
for collection all such stocks of Finished Influenza Vaccine containing the
defective Product(s) in their possession. BERNA will ensure that all such
stocks of Finished Influenza Vaccine containing the defective Product(s) are
collected and stored in secure conditions on premises controlled by BERNA.

 

19.4     Costs
of any action taken under this clause 19 will be borne by BERNA unless the
costs are caused by the breach of this Agreement, (including failure of
Product(s) to comply with the Specifications) by, or negligence or wilful
default of, CSL, in which case CSL will indemnify BERNA against any and all
actions, claims, demands, losses, damages, costs and expenses for which BERNA
may become liable which arise from such breach, negligence or wilful default.

 

9

 

20.      Adverse Drug Events

 

20.1     If
BERNA receives any Adverse Drag Event (ADE) report which is both serious and
unexpected and alleged to be caused by Finished Influenza Vaccine containing
the Product(s) BERNA will report the matter according to Schedule 4 to the
Registration Authority in compliance with the laws and regulations of the
Territory, and inform CSL without delay by telephone or facsimile transmission
(immediately confirmed in writing). CSL will acknowledge receipt within 24
hours by facsimile transmission.

 

20.2     BERNA
will report to CSL by telephone or facsimile transmission (immediately
confirmed in writing) any other adverse experience occurring in the Territory
and alleged to be caused by Finished Influenza Vaccine containing the Product(s)
every three months.

 

20.3     
BERNA will give immediate written notice to CSL of any alleged manufacturing or
other defect in the Product(s) or Finished Influenza Vaccine containing the
Product(s) of which BERNA becomes aware and of any possible expense, liability,
cost, claim or proceedings arising from the alleged defect.

 

20.4     With
respect to any adverse experiences alleged to be caused by, and any alleged
manufacturing or other defects in, the Product (s) or Finished Influenza Vaccine
containing same BERNA will not make any admission of liability to any third
party with respect to claims either in the name of BERNA or on behalf of CSL
without CSL’s prior written consent.

 

20.5     For
the purpose of this clause 20, “serious” and “unexpected” will have the meaning
ascribed to it at the relevant time by the Registration Authority or as
otherwise notified by CSL from time to time.

 

21.      Definitions and
Interpretation

 

21.1     In
this Agreement:

 

(a)       Batch Sample  is defined in clause 6;

 

(b)      Commencement Date  means 1 November 2001;

 

(c)       Confidential Material is defined in clause 12;

 

(d)      CSL’s Premises  means CSL’s premises at 45 Poplar Road,
Parkville, Victoria, Australia, 3052 or suet other address notified to BERNA in
writing by CSL;

 

(e)       Exclusive Territory  means the territory set out in Item 1A of
Schedule 1;

 

(f)       Excluded Territory  means  the territory set out in Item IB
of Schedule 1;

 

(g)      Finished Influenza Vaccine  means product that is intended for the
prevention of influenza only and is formulated, filled in final container and
packed;

 

(h)      GMP Agreement  means an agreement which specifies the
Australian Code of Good Manufacturing responsibilities relating to the
manufacture of the Product(s);

 

(i)        ha  means haemaglutinin

 

(i)        Initial Period  means the period set out in Item 2 of
Schedule 1;

 

(i)        Notified Product is  defined
in clause 6;

 

(j)        SRID  means the single radial immunodifusion;

 

10

 

(k)       Territory  means  the
territory set out in Item IA of Schedule 1;

 

(l)        Product  means  the
product set out in Schedule 2;

 

(m)      Registration Authority  means  Swiss
Federal Office of Public Health or any other body responsible for the
registration of the Product(s) in the Territory from time to time;

 

(n)      Specification  means the Product Specification set out
in Schedule 2; and

 

(o)      Virosome  means virus-like particles consisting of
artificial bilayer liposomes with integrated viral surface antigens imitating a
virus as developed and used by BERNA;

 

21.2.    In this Agreement:

 

(a)       Words
denoting the singular number include the plural number and vice versa;

 

(b)      Words
denoting any gender include all genders;

 

(c)       References
to persons include bodies corporate and vice versa;

 

(d)      Words
defined in another part of this Agreement will have the meaning given in that
part;

 

(e)       References
to Recitals, clauses, sub-clauses, Schedules and Annexures are references to
Recitals, clauses, sub-clauses, Schedules and Annexures of or to this
Agreement;

 

(f)       References
to the parties include references to respective directors, officers, employees
and agents of the parties; and

 

(g)      Headings
are inserted for convenience only and will not affect interpretation.

 

22.      Enclosures

 

	
  Schedule 1:

  	
  Territory and Duration

  
	
  Schedule 2:

  	
  Product(s), Prices and Payment Terms

  
	
  Schedule 3:

  	
  Timings

  
	
  Schedule 4:

  	
  Adverse Drug Event (ADE) reporting Guidelines

  

 

11

 

SIGNED
as an Agreement by the parties

 

	
  Signed for and on behalf of 

  	
  )

  	
   

  	
   

  
	
  CSL Limited ACN
  051 588 348 

  	
  )

  	
  /s/ Colin Armit

  	
  12/11/01

  
	
  by its duly
  authorised 

  	
  )

  	
  Colin Armit 

  	
  (date)

  
	
  representatives

  	
  )

  	
  President Pharmaceuticals

  	
   

  
	
   

  	
  )

  	
   

  	
   

  
	
   

  	
  )

  	
  /s/ Peter Turvey

  	
  11/11/01

  
	
   

  	
  )

  	
  Peter Turvey

  	
  (date)

  
	
   

  	
  )

  	
  Company Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  )

  	
  /s/ Patrik Richard

  	
  02/11/2001

  
	
  Signed for and
  on behalf of 

  	
  )

  	
  Patrik Richard

  	
  (date)

  
	
  Berna Biotech
  Ltd

  	
   

  	
  Secretary General

  	
   

  
	
  by its duly
  authorised 

  	
   

  	
   

  	
   

  
	
  representatives

  	
   

  	
  /s/ Robert Mischler

  	
  02/11/2001

  
	
   

  	
   

  	
  Robert Mischler

  	
  (date)

  
	
   

  	
   

  	
  Head of Production

  	
   

  

 

 

 

12

 

SCHEDULE 1

to the Supply Agreement between CSL and BERNA

 

Territory and Duration

 

	
  1:

  	
  Territory:

  	
  Worldwide non-exclusive subject to 1A and 1B below.

  
	
  1A:

  	
  Exclusive Territory:

  	
  Switzerland, Italy, Spain and Portugal.

  
	
  1B:

  	
  Excluded Territory:

  	
  Australia and New Zealand.

  
	
  2.

  	
  Duration:

  	
  The Initial Period commencing from the Commencement
  Date and ending on 31 December 2006.

  

 

13

 

SCHEDULE 2

to the Supply Agreement between CSL and BERNA

 

Product(s), Prices
and Payment Terms

 

	
  Product(s):

  	
  Bulk Inactivated Whole Virus Influenza Concentrate —
  Monovalent Pooled Harvest.

  
	
  Price:

  	
  The 2002 calendar year price for a trivalent dose
  (25mcgm of each strain) will be based on an amount of [***] per egg used to
  manufacture the quantity of Product(s) delivered to BERNA. The
  relationship between price per egg used to manufacture the product and actual
  price paid per 25mcgm HA of each strain is dependant upon the egg yield.
  Using the average yield for the period l990-2000 the price of [***] per
  egg used relates to [***] per 25mcgm trivalent dose. With better than average yields the
  price per dose reduces because the processing cost price is fixed, as shown
  in the table below.

  

 

	
  Yield

  	
   

  	
  Yield Per Egg

  (mcgm/egg)

  	
   

  	
  Price/Egg

  	
   

  	
  Price Per

  25mcgm Dose

  
	
  10% above
  average

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  10 Year
  Average

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  
	
  10% below
  average

  	
   

  	
  [***]

  	
   

  	
  [***]

  	
   

  	
  [***]

  

 

Note: 

• the yield is indicative only, the actual yield
could be greater or lower than ± 10%.

 

CSL will notify BERNA of
indicative total cost of total order after one month of processing, ie
indicative yields will be communicated but accurate costs (total numbers of
eggs used) will not be finalised until completion of the total order. CSL will
notify BERNA with each delivery the total number of inoculated eggs used.

 

The quantity of Product(s) delivered
will be determined pursuant to the accepted SRID assay method using the agreed
SRID standard and the volume measured by CSL and BERNA. Any difference of 10%
or less between the CSL and BERNA test will result in a sharing of the variance
in terms of price on a 50:50 basis. If there is a difference of more than 10%
discrepancy between the CSL and BERNA test, CSL and BERNA will discuss in good
faith a resolution. If CSL and BERNA are unable to resolve the discrepancy,
then an independent testing agency tests the material. The accepted result will
be the average of the two closest results. The cost of the independent testing
agency will be shared equally by CSL and BERNA regardless of the outcome.

 

	
  Payment Terms:

  	
   

  	
  If not otherwise specified, payment is due 60 days
  from date of invoice. Prices in Australian Dollars Ex Works, Parkville,
  Victoria 3052 (Incoterms 2000).

  
	
  Product Specification:

  	
   

  	
  General Specifications according to Specifications
  of European Pharmacopoeia already delivered to CSL.

  

 

 

 

Any change of the EuPharm
monography on influenza vaccines and Product testing requirements shall be sent
by BERNA to CSL or CSL to BERNA as soon as possible.

 

The Specifications for the
strains for the coming season shall be fixed according to the recommendations
of WHO and EU respectively and set out in BERNA’s order to CSL.

 

14

 

SCHEDULE 3

to the Supply Agreement between CSL and BERNA

 

Timing of
Forecasts, Orders, etc

 

	
  Written best estimate from
  BERNA for following calendar year.

  	
   

  	
  30 June

  
	
   

  	
   

  	
   

  
	
  Update of
  written best estimate from BERNA for following calendar year.

  	
   

  	
  30 November

  
	
   

  	
   

  	
   

  
	
  Written
  notification from BERNA of packaging requirements.

  	
   

  	
  30 November

  
	
   

  	
   

  	
   

  
	
  GMP Agreement
  review and agreement regarding dossier preparation/updates.

  	
   

  	
  30 November

  
	
   

  	
   

  	
   

  
	
  Notification of
  Price Increase by CSL.

  	
   

  	
  31 January

  
	
   

  	
   

  	
   

  
	
  Firm order by
  BERNA.

  	
   

  	
  28 February

  
	
   

  	
   

  	
   

  
	
  Notification of
  Indicative Delivery Date by CSL.

  	
   

  	
  15 March

  
	
   

  	
   

  	
   

  
	
  Confirmation of
  Delivery Dates by CSL.

  	
   

  	
  30 April

  

 

15

 

SCHEDULE 4

to the Supply Agreement between CSL and BERNA

 

Adverse Drug Event
(ADE) Reporting Guidelines

(Clause 20)

 

1.         Principle:
The Adverse Drug Event (hereinafter ADE) reporting system shall correspond
basically to the European Union Directive (EU) 93/39 and the corresponding
regulations of each country of the Territories brought to knowledge of the
BERNA. The ADE shall preferably be forwarded using the format of the COMS-formulary.

 

2.         CSL
and the BERNA shall keep one another informed on all reports of ADEs coming to
either party’s knowledge with regard to the Product(s), regardless of the
origin of such reports. The term “Reports” shall also include publications in
journals and other media.

 

3.         Reports
on such ADEs which according to the informing party’s careful professional
evaluation may negatively affect the benefit-risk-ratio of the Product or may
have consequences regarding the Product’s Information (eg. labelling, data
sheets, package inserts) or may require immediate safety measures or regulatory
authorities (such as special information/warnings to the medical profession,
patients, authorities or withdrawal of the Product) shall be forwarded to the other
party without delay after having become known.

 

4.         The
same immediate forwarding, without delay shall apply in cases of reports on
ADEs being both serious and unexpected (ie. hitherto not specified in the
Product’s Information).

 

5.         The
informing party is invited to give both the primary reporter’s and its own
professional evaluation of such reports, in particular with regard to suspected
causality, with reasoning, either together with such information or at a later
date.

 

Categories for determining relationship of ADE to the
Product:

 

•  Certain

 

•  Probable

 

•  Possible

 

•  Unlikely

 

•  Unrelated

 

•  Insufficient Evidence

 

6.         The
aforementioned Information shall be addressed to

 

in case of CSL:  
CSL LIMITED ACN 051 588 348

 

	
  Attention:

  	
  Head Medical Department

  
	
  45 Poplar Road, Parkville, Victoria, Australia 3052

  
	
  Telephone:

  	
  +61 3 9389 1911

  
	
  Facsimile:

  	
  +61 3 9389 1434

  
	
   

  	
   

  
	
  BERNA BIOTECH LTD

  
	
  Attention:

  	
  Head Medical Department

  
	
  Rehhagstrasse 79, CH-3018 Berne, Switzerland

  
	
  Telephone:

  	
  +41 31 980 67 37

  
	
  Facsimile:

  	
  +41 31 980 67 75

  

 

or to such other address as may thereafter be provided
by either party.

 

7.         Reports
shall be established by BERNA and delivered according to clause 20 and
meetings, if necessary, shall be held at mutually convenient times and places,
for the purpose of discussing ADE issues.

 

8.         All
reports to be provided hereunder shall be in English, using the MeDRA adverse
reaction terminology.

 

16Exhibit 4.11

EXECUTION VERSION

	
  Crucell N.V.

  
	
  Confidential Materials Omitted and Filed
  Separately with the

  
	
  Securities and Exchange Commission.

  
	
  Confidential Portions denoted by [***]

  

 

COLLABORATION
AGREEMENT

This Collaboration
Agreement is made and entered into as of April 30,  2001 by and among Chiron Behring
GmbH &  Co, a company
incorporated in Germany, with offices at Emil von Behring Strasse 76, 35041
Marburg, Germany (“Chiron Behring”),
Chiron S.p.A., a company incorporated in Italy, with offices at Via Fiorentina
1, 53100 Siena, Italy (“Chiron S.p.A.”,
and together with Chiron Behring GmbH & Co, “Chiron”), Rhein Biotech N.V., a company
incorporated in the Netherlands, with offices at Gaetano Martinolaan 95, 6229
GS Maastricht, The Netherlands (“Rhein Biotech”),
and GreenCross Vaccine Corporation, a company incorporated in the Republic of
Korea, with offices at 303 Bojung-Ri, Koosung-Eup, Yongin 449-770,
Republic of Korea (“GCVC”, and
together with Rhein Biotech, “Rhein Biotech
and GCVC”).

RECITALS

A.   WHEREAS, Chiron and Rhein Biotech each has
developed expertise in the fields of vaccine research, development and
manufacturing.

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

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

D.   WHEREAS, Chiron, Rhein Biotech and GCVC
wish to collaborate on the research, development, manufacturing and
commercialization of one or more new pentavalent combination vaccines for
pediatric use on the terms and conditions set forth herein with a view to
reducing duplicative, unnecessary costs, exchanging ideas and developing
resulting products and technologies more rapidly than would otherwise be the
case.

NOW
THEREFORE in consideration of the premises and other good and
valuable consideration, Chiron and Rhein Biotech and GCVC agree as follows.

 

 

ARTICLE I

DEFINITIONS

 

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

 

1.2         Rules of Interpretation. For
the purposes ofthis Collaboration Agreement the following rules of interpretation
shall apply:

 

 

(a)          The descriptive headings of
Articles and Sections are inserted solely for convenience of reference and are
not intended as complete or accurate descriptions of the content of such
Articles or Sections.

 

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

 

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

 

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

 

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

 

ARTICLE 2 

COLLABORATION

 

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

 

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

 

2.3      Level of Effort. Each
Party shall use commercially reasonable efforts to perform the duties and
obligations assigned to it under this Collaboration Agreement and the Annual
Plans and Budgets and shall employ at least the level of effort and care that
such Party would use in performing similar activities in connection with its
own internal projects with comparable risk/reward profiles.

 

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

 

2.5      Acellular Product. The
Parties agree that they shall collaborate exclusively for a  period of twelve months from the
Effective Date to evaluate alternatives for implementation of the Collaboration
with respect to the Acellular Product. The provisions in the Collaboration and
Development Plan with respect to the Acellular Product shall be used as a basis
for such evaluation. If either Party, in its sole discretion, determines during
such twelve month evaluation that the Collaboration with respect to the
Acelluar Product should not proceed, such Party shall notify the other Party in
writing of such determination and the Collaboration with respect to the
Acellular Product shall be terminated with immediate effect. For the avoidance
of doubt, all R &  D
Expenses incurred by either Party prior to any such termination of the
Collaboration with respect to the Acellular Product shall be shared by the
Parties in accordance with the terms of Section 6.2.

 

 

ARTICLE 3

MANAGEMENT

 

3.1         Steering
Committeem The Parties shall establish a Steering
Committee. The Steering Committee will be comprised of four members, of which
two members shall be appointed by Chiron and two members shall be appointed by
Rhein Biotech and GCVC. Either Party, in its sole discretion, may from time to
time remove one or more of its appointees from the Steering Committee and
appoint new members with appropriate expertise in their place.

 

3.2         Functions.
In addition to other functions which may be
performed by the Steering Committee from time to time, the Steering Committee
shall

 

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

 

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

 

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

 

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

 

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

 

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

 

(g)          consider and determine
whether it is appropriate to grant to Third Parties any licenses or other
rights with respect to Collaboration Technology;

 

(h)          review and approve the
publication of any Collaboration Technology;

 

(i)           consider and determine a
patent strategy for Collaboration Technology;

 

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

 

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

 

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

 

 

3.3         Subcommittees.
The Steering Committee may from time to time
establish, and delegate certain of its responsibilities to, one or more
subcommittees (including, without limitation, a development committee, a
scientific subcommittee, a finance subcommittee, and a marketing
subcomunittee). Each such subcommittee shall be comprised of an equal number of
representatives from Chiron on the one hand and Rhein Biotech and GCVC on the
other hand. Either Party, in its sole discretion, may from time to time remove
one or more of its appointees from any such subcommittee and appoint new
members with appropriate expertise in their place.

 

3.4         Meetings. The
Steering Committee shall meet at least once every six months, and each standing
subcommittee shall meet at least once each calendar quarter at alternatively
Rhein Biotech and GCVC’s and Chiron’s facilities or another location mutually
agreed upon by the members of such committee. These meetings may be waived or
held by telephone or videoconference if agreed by all members of such
committee. The Steering Committee and each subcommittee may take action only by
the unanimous consent of the Parties (all the members of each committee
appointed by one Party collectively representing one voting right). The
Steering Committee shall be chaired by a representative from Chiron, on the one
hand, and a representative from Rhein Biotech and GCVC, on the other hand, in
alternating periods of six months. The chairman of the Steering Committee shall
prepare the agenda and subsequently prepare and circulate minutes of the
meetings within 30 days after each meeting, which shall be approved and signed
by each Party. Chiron shall provide the initial chairman of the Steering
Committee.

 

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

 

3.6         No Amendments or Waivers. For the avoidance
ofdoubt: except as expressly set forth herein, neither the Steering Committee
nor any subcommittee shall be authorized to amend or waive any provision of
this Collaboration Agreement. Any such amendment or waiver shall be in writing
as formal as this Collaboration Agreement and shall be signed by a duly
authorized executive officer of each Party.

 

ARTICLE 4

RESEARCH AND DEVELOPMENT

 

4.1         Research
and Development. The Parties jointly shall
conduct all the development activities of the Collaboration, as more fully set
forth in the-Collaboration and Development Plan and the applicable Annual Plan
and Budget.

 

4.2         R & D Expenses. R
& D Expenses shall be comprised of the following categories which shall be
determined on a cost per FTE basis: (a) research services; (b) preclinical and
clinical development; (c) costs and expenses associated with regulatory filings
and approvals and the maintenance of such approvals for the initial
registration of the Product in Korea; (d) and other fully burdened, fairly
allocable costs in direct support of other functions related to such research
and development services. R & D Expenses shall be calculated as follows:
(i) for each FTE participating in research and development activities on behalf
ofeach Party, the approved FTE amount shall be multiplied by the amount oftime
of such FTE participation; (ii) to such FTE calculated amount shall be added
the actual, direct expenses incurred by each Party supported by external
invoices for items which are specifically required for research and development
activities and which are in addition to the FTE amount, including, without limitation,
payment for

 

 

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

 

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

 

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

 

ARTICLE 5

COMMERCIALIZATION

 

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

 

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

 

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

 

provided,
however, that (i) neither the Rhein Biotech and GCVC Territory nor the  Chiron Territory shall include India or
Indonesia, (ii) the Territory shall include 
only countries and markets in which it is in accordance with applicable
law to sell  the Product, and
(iii) subject to the prior written approval of the Steering Committee,
either Rhein Biotech and GCVC or Chiron shall be permitted to sell  the Product in the other Party’s Territory in
a market in which such other Party is  not
selling the Product. 

 

 

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

 

(a)           in accordance with the terms of the Bulk Supply
Agreement with respect to Product
for sale in the Rhein Biotech and GCVC Territory; and

 

(b)           in accordance with the terms of the Supply and
Manufacturing Agreement with respect to Product for sale in the Chiron
Territory.

 

5.3         Transfer Price. The
Transfer Price with respect to the Product shall be calculated in accordance
with Schedule G to the Supply and Manufacturing Agreement and the Bulk Supply
Agreement.

 

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

 

5.5         Contract Requirements.
Chiron and Rhein Biotech and GCVC each shall be
obligated to provide the Chiron Materials and the Rhein Biotech and GCVC
Materials, respectively, in sufficient quantities to fuilfill the Minimum
Contract Requirements set forth in the Bulk Supply Agreement and the Supply and
Manufacturing Agreement.

 

ARTICLE 6
 PAYMENTS

 

6.1      Upfront Payments. Neither Party shall be
obligated to pay any upfront payments to the other Party.

 

6.2      R&D Cost-sharing Prior to Commercialization.

 

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

 

(i)        Rhein
Biotech and GCVC shall pay [***] and Chiron shall pay [***] of the R&D
Expenses incurred on or after December 1, 2000 for the Collaboration with
respect to the Whole Cell Product; and

 

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

 

(b)      The agreed accounting
methodologies for determining R&D Expenses are included in Schedule F to
this Collaboration Agreement.

 

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

 

6.3          Milestone
Payments.  Neither
Party shall be obligated to pay any milestone payments to the other Party.

 

 

6.4          Commercialization. 

 

(a)           The Supply and
Manufacturing Agreement and the Bulk Supply Agreement shall contain the terms
and conditions with respect to the commercialization of the Product. 

 

(b)           The accounting
methodologies that shall be applied by the Parties with respect to any
financial determinations in connection with the Collaboration are attached as
Schedule F to this Collaboration Agreement. 

 

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

 

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

 

6.6          Audit. At the request of either Party,
the other Party shall make such books of account and records available for
inspection during normal business hours for the sole purpose of determining
whether appropriate accounting and payment have been made hereunder. Such audit
shall be conducted by an certified public accountant or like person appointed
by the inspecting Party and reasonably acceptable to the other Party. The
inspecting Party shall bear the cost of any such audit, provided, that in the
event the audit discloses that costs charged to the inspecting Party hereunder
for any accounting period were excessive by more than five percent or profits
paid to the inspecting Party were deficient by more than five percent, the
other Party shall promptly reimburse the inspecting Party for the cost of such
independent audit and shall pay to the inspecting Party the amount of such
excess/deficiency. The inspecting party and its representatives shall be under
confidentiality obligations to the other Party and such accountant's report
shall only state the amount and accuracy of costs charged and payments made
under this Collaboration Agreement. 

 

 

ARTICLE 7

INTELLECTUAL PROPERTY

7.1      Ownership.

 

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

 

(b)      Contributed Rhein Biotech and GCVC Technology. All Contributed Rhein Biotech and GCVC
Technology shall be owned solely and exclusively by Rhein Biotech and GCVC. No
licenses are granted except as expressly set forth in Article 8 (Licenses)
or Article 14 (Termination).

 

(c)       Chiron/Rhein Biotech and GCVC Joint Background
Technology. All Chiron/Rhein
Biotech and GCVC Joint Background Technology shall continue to be owned
jointly by Chiron and Rhein Biotech and GCVC. Except as otherwise expressly set
forth in Article 14 (Termination), neither Party shall license its
interest in Chiron/Rhein Biotech and GCVC Joint Background Technology without
the prior written consent of the other Party.

 

7.2      Ownership of Collaboration
Technology.

 

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

 

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

 

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

 

7.4         Infringement
Action By A Third Party. Each Party shall promptly
notify the other Party in the event any legal proceedings are commenced or threatened
against any Party on the ground that the manufacture, use or sale of any
Product infringes an unaffiliated third party’s patents or misappropriates such
third party’s know-how. For the avoidance of doubt, the Parties do not intend
any such infringement. Chiron shall have the right (but not the obligation) to
assume and control the defense of any such action or claim, in its own name or
in the name of Rhein Biotech and GCVC, if necessary. If Chiron elects to
exercise such right, Rhein Biotech and GCVC may participate in, but not
control, such defense at its sole cost and expense. If Chiron does not exercise
its right to assume and manage the defense ofany such action or claim, Rhein Biotech
and GCVC shall have the rght to assume and manage such defense. Regardless of which
Party controls such defense, the other Party shall take all appropriate or
necessary actions to assist in the defense ofsuch action or claim and all costs
and expenses incurred by either Party in connection therewith (including, without
limitation, any damages required to be paid by the Parties) shall be shared,
with Chiron paying [***] of such costs and Rhein Biotech and GCVC paying [***] thereof.

 

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

 

 

7.6         Trademarks. The
Parties shall have the right to use multiple trademarks for the Product their
respective Territory, provided, however, that the marketing subcommittee
appointed pursuant to the terms of Section 3.3 of this Collaboration Agreement
shall approve the use of each such trademark. Each Party shall be solely
responsible for registering and enforcing any and all trademarks ituses to
identify the Product.

 

ARTICLE 8

LICENSES

8.1      License to Contributed
Chiron Technology. Subject to the terms and conditions of this
Collaboration Agreement, Chiron hereby grants to Rhein Biotech and GCVC a
worldwide royalty-free license, without the right to sublicense, under the
Contributed Chiron Technology, to make, use and sell the Product. Such license
shall be co-exclusive with Chiron.

 

8.2      License to Contributed
Rhein Biotech and GCVC Technology. Subject to the terms and
conditions of this Collaboration Agreement, Rhein Biotech and GCVC hereby
grants to Chiron a worldwide royalty-free license, without the right to
sublicense, under the Contributed Rhein Biotech and GCVC Technology, to have
made, use and sell the Product. Such license shall be co-exclusive with Rhein
Biotech and GCVC.

 

ARTICLE 9

MATERIALS

 

9.1         Rhein Biotech and GCVC Materials. Rhein
Biotech and GCVC is the sole and exclusive owner or licensee of the Rhein
Biotech and GCVC Materials. Chiron shall be permitted to use the Rhein Biotech
and GCVC Materials for purposes of the Collaboration and for no other purposes
whatsoever. Chiron shall have no rights or licenses to the Rhein Biotech and
GCVC Materials except as expressly set forth herein. Chiron shall not provide
any Rhein Biotech and GCVC Materials to any unaffiliated third party without
the prior written consent of Rhein Biotech and GCVC. Except as expressly set
forth herein or otherwise required by applicable law or regulations, upon the
termination of the Collaboration, Chiron shall cease to use the Rhein Biotech
and GCVC Materials and shall, at Rhein Biotech and GCVC’s option and expense,
either destroy the Rhein Biotech and GCVC Materials or return the Rhein Biotech
and GCVC Materials to Rhein Biotech and GCVC.

 

9.2         Chiron Materials.
Chiron is the sole and exclusive owner or licensee of the Chiron Materials.
Rhein Biotech and GCVC shall be permitted to use the Chiron Materials for
purposes of the Collaboration and for no other purposes whatsoever. Rhein
Biotech and GCVC shall have no rights or licenses to the Chiron Materials
except as expressly set forth herein. Rhein Biotech and GCVC shall not provide
any Chiron Materials to any unaffiliated third party without the prior written
consent of Chiron. Except as expressly set forth herein or otherwise required
by applicable law or regulations, upon the termination of the Collaboration,
Rhein Biotech and GCVC shall cease to use the Chiron Materials and shall, at
Chiron’s option and expense, either destroy the Chiron Materials or return the
Chiron Materials to Chiron.

 

 

9.3         No Warranties. The Chiron Materials and the
Rhein Biotech and GCVCMaterials shall be supplied without any warranties,
expressed or implied,including any warranty of merchantability or fitness for a
particular purpose.

 

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

 

ARTICLE 10

CONFIDENTIALITY

 

10.1      General.
During the term of this Collaboration Agreement and
for a period of five years following the expiration or early termination of
this Collaboration Agreement, each Party (the “Receiving Party”) shall maintain
in confidence any and all confidential information obtained from the other
Party (the “Disclosing Party”) in connection with the activities of the Parties
under this Collaboration Agreement, including, without limitation, any and all
commercial, scientific, technical or other information, whether in oral or
written form or physical object (“Confidential Information”).

 

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

 

The Receiving
Party shall deal with such information so as to protect it from disclosure with
a degree ofcare not less than that used by it in dealing with its own
information intended to remain exclusively within its knowledge and shall not
disclose such information to anyone other than its employees, agents or
consultants, and those of its Affiliates, (collectively, “Representatives’), as
are necessary in connection with the Receiving Party’s activities as
contemplated in this Collaboration Agreement. Each Party shall notify all of its
Representatives who have access to Confidential Information of its
confidentiality and the care therefor required, and shall obtain from any
non-employee Representative an agreement of confidentiality incorporating the
restrictions at least as restrictive as those contained herein.

 

The obligations
set forth in this Article 10 shall extend to copies, ifany, of Confidential
Information made by any Representatives referred to in Section 10.1 and to
documents in whatever form prepared by such Parties which embody or contain
Confidential Information.

 

10.2      Exceptions. The
obligation of confidentiality contained in this Article 10 shall not apply to
the extent that such information:

 

 

(a)      is
or hereafter becomes generally available to the public other than by reason of
any breach or default by the Receiving Party of its confidentiality obligation
under this Collaboration Agreement;

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

(c)       is
disclosed to the Receiving Party by a third-party not directly or indirectly
under a duty of confidentiality to the Receiving Party;

(d)      to
the extent such disclosure is reasonable necessary in connection with the
following:

(i)        filing,
prosecuting or maintaining Collaboration Patents;

(ii)       IND’s
or BLAs;

(iii)      prosecuting or defending litigation;

(iv)      compliance
with applicable laws or court orders.

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

Each party shall be entitled, in addition to any other right or remedy
it may have, at law or in equity, to an injunction, enjoining or restraining
any other party from any violation or threatened violation of this
Article 9.

10.3       Return of Confidential
Information. Within thirty (30) days after expiration or
earlier termination of this Collaboration Agreement, the Receiving Party shall
(and shall cause its Affiliates and their respective Representatives to) return
to the Disclosing Party or destroy all documents and tangible items (including
electronic format) then in its possession which contain, relate to or refer to
Confidential Information
received from the Disclosing Party; provided, however, that the Receiving Party
may retain one copy of each document in its legal files solely to permit the
Receiving Party to comply with its obligations hereunder.

 

 

ARTICLE
11

PUBLICATION

 

11.1      General. Any and all
proposed publications or communications relating in whole or in part to the
Collaboration or Collaboration Technology (including, without limitation,
posters) shall be reviewed and approved by both Parties. Any such proposed
publication or communication shall not include any Confidential Information. A
copy of any proposed publication or communication (including, in the case of
any proposed oral communication, a transcript) shall be sent by the publishing
Party to the other Party at least sixty (60) days before the projected
publication or communication in order to allow the other Party to request
deletion of any of its Confidential Information. In addition, Rhein Biotech and
GCVC or Chiron, as the case may be, may require delay in publication or
communication for a period not to exceed six months in order to have
appropriate patent applications filed. In the event that additional results are
necessary or appropriate to ensure patentability, Rhein Biotech and GCVC or
Chiron, as the case may be, may require further delay of the publication or
communication until the expected results have been obtained and, if
appropriate, have been included in a filed patent application. In no event
shall either Party publish, present or communicate Confidential Information of
the other Party without prior written approval by the other Party.

 

11.2      Authorship. Any
and all publications and communications relating to the Collaboration or
Collaboration Technology shall mention all Rhein Biotech and GCVC and Chiron
scientists that may be considered as co-author (as determined by the Scientific
Committee) and shall refer to Rhein Biotech and GCVC and Chiron as
participating in the Collaboration.

 

ARTICLE 12

REPRESENTATIONS
AND WARRANTIES

 

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

 

(a)          Each of Chiron Behring and Chiron S.p.A. is a corporation
and is validly existing and in good standing under the laws of its jurisdiction
of incorporation; each of Chiron Behring and Chiron S.p.A. has all necessary
corporate power to execute, deliver and perform this Collaboration Agreement
and to carry out its obligations hereunder this Collaboration Agreement; and
the execution and delivery of this Collaboration Agreement by each of Chiron
Behring and Chiron S.p.A. and the performance
by each of Chiron Behring and Chiron S.p.A of its obligations hereunder have
been duly authorized by all necessary corporate action on the part of each of
Chiron Behring and Chiron S.p.A;

 

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

 

(c)          the execution and delivery by each of Chiron Behring
and Chiron S.p.A. of this Collaboration Agreement and the performance by each
of Chiron Behring and Chiron S.p.A. of its obligations hereunder do not
conflict with or require the consent of any third party to any contract,
agreement, commitment, covenant, understanding or arrangement to which Chiron
Behring or Chiron S.p.A. is a party;

 

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

 

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

 

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

 

(a)          Each of Rhein Biotech and GCVC is a corporation and is
validly existing and in good standing under the laws of its jurisdiction of
incorporation; each of Rhein Biotech and GCVC has all necessary corporate power
to execute, deliver and perform this Collaboration Agreement and to carry out
its obligations hereunder this Collaboration Agreement; and the execution and delivery
of this Collaboration Agreement by each of Rhein Biotech and GCVC and the
performance by each of Rhein Biotech and GCVC of its obligations hereunder have
been duly authorized by all necessary corporate action on the part of each of
Rhein Biotech and GCVC;

 

 

(b)          no consent, license, permit, approval, order or authorization
of, or registration, declaration, qualification or filing
with, any foreign, federal, state, provincial or local governmental authority
is required to be obtained or made in connection with the execution and
delivery of this Collaboration Agreement by Rhein Biotech or GCVC or the
performance of its obligations hereunder;

 

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

 

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

 

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

 

ARTICLE 13

INDEMNIFICATION AND INSURANCE

 

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

 

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

 

13.3       Indemnification Procedures. Any person seeking indemnity
pursuant to this section (the “Indemnified Party”) shall notify the Party from
whom indemnification is sought (the “Indemnifying Party”) in writing promptly upon
becoming aware of any claim, threatened claim, damage, loss, suit, proceeding
or liability (“Claim”) to which such indemnification may apply. Failure to
provide such notice shall constitute a waiver ofthe Indemnifying Party’s
indemnity obligations hereunder if and to the extent the Indemnifying Party is
materially damaged thereby. The Indemnifying Party shall have the right to
assume and control the defense of the Claim at its own expense. If the right to
assume and control the defense is exercised, the Indemnified Party shall have
the right to participate in, but not control, such defense at its own expense
and the Indemnify Party’s indemnity obligations shall be deemed not to include
attorneys’ fees and litigation expenses incurred by the Indemnified Party after
the assumption of the defense by the Indemnifying Party. If the Indemnifying
Party does not assume the defense of the Claim, the Indemnified Party may
defend the Claim; provided, that the Indemnified Party will not settle or
compromise the Claim without consent of Indemnifying Party, which consent will
not be unreasonably withheld. The Indemnified Party shall cooperate with
Indemnifying Party and will make available to Indemnifying Party all pertinent
information under the control of the Indemnified Party.

 

 

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

 

13.5    Insurance. Each Party shall obtain and maintain comprehensive
general liability insurance, including product liability insurance, with a
reputable and financially secure insurance carrier(s), to cover its activities
under this Collaboration Agreement.

 

ARTICLE 14 

TERM, TERMINATION AND REMEDY FOR BREACH

 

14.1    Term. This Collaboration Agreement is effective as of the date
hereof and shall continue indefinitely unless terminated by either Party in
accordance with the terms hereof.

 

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

 

14.3    Termination for Material
Breach. Subject to the terms of this Section 14.3, either Party may
terminate the Collaboration and the Collaboration Documents by notice with
immediate effect in the event of the occurrence of a Material Breach by the
other Party, provided that:

 

 

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

 

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

 

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

 

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

 

(c)                                  in the event the non-breaching Party shall not have
cured such Material Breach by the Cure Date, neither the Steering Committee nor
the CEO’s of the Parties shall have been able to resolve the matter within one
week of the Cure Date.

 

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

 

14.4                   Immediate Termination. Either Party may
terminate the Collaboration and the Collaboration Documents with immediate
effect upon written notice to the other Party in the event:

 

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

 

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

 

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

 

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

 

(b)      neither
Party shall be relieved of any obligation which accrued prior to the effective
date of such termination; in particular, each Party shall remain obligated to
pay its share of all R&D Expenses incurred by the Parties prior to
termination in accordance with the provisions of Section 6.2 and both
Parties shall fulfill all payment and other obligations incurred with respect
to commercialization of the Product prior to the date of such termination in
accordance with the provisions of Section 6.4.

 

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

 

(d)      the
Parties shall continue to jointly own all Collaboration Technology developed
prior to such termination; each Party shall have the right to freely license
its interest in such Collaboration Technology without the consent of the other
Party; and neither Party shall be obligated to pay any royalties to the other
Party for the use of such Collaboration Technology by such Party or its
licensees;

 

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

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

(a)       In
the event (i) either Party shall breach Section 5.5 (Contract
Requirements) or (ii) there is a delay in the supply of any Materials
other than by reason of Force Majeure or by reason of any processing failure
beyond the reasonable control of the relevant Party by more than thirty (30)
days, the Party in breach or with respect to whose Materials such delay has
occurred shall pay to the other Party one percent(l%) of the then minimum
selling price of the Product per day as a penalty.

 

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

 

(c)       Any late payment due under any Collaboration Document
shall bear interest at the prime rate as specified in the Wall Street
Journal.

 

 

ARTICLE 15

MISCELLANEOUS

 

15. 1       Notices.

 

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

 

If to Chiron:

 

Chiron Behring
GmbH & Co

Emil von Behring
Strasse 76

35041 Marburg

Germany

 

Attention:
Business Development

Facsimile: 49
6421 39 5187

 

with a copy to:

 

Chiron S.p.A.

Via Fiorentina 1

53100 Siena

Italy

 

Attention: Project Development

Facsimile: 39 0577 24 3085

 

If to Rhein
Biotech and GCVC:

 

GreenCross
Vaccine Corporation

303 Bojung-Ri,
Koosung-Eup

Yongin 449-770

Republic of Korea

 

Attention:
Representative Director

Facsimile: 82 31
260 9012

 

with a copy to:

 

Rhein Biotech
N.Y.

Gaetano
Martinolaan 95

6229 GS
Maastricht

The Netherlands

 

Attention: CEO

Facsimile: 31 43
35 67 899

 

15.2        Entire
Agreement. The Collaboration Documents constitute the entire agreement between
the Parties hereto with respect to the subject matter hereof and supersede any
prior agreement whether written or oral.

 

15.3        Force
Majeure. Neither Party shall be held liable or
responsible to the other Party nor be deemed to have defaulted under or
breached the Agreement for failure or delay in fulfilling or performing any
term of the Agreement when such failure or delay is caused by or results from
causes beyond the reasonable control of the affected Party (including but not
limited to fire, floods, embargoes, war, acts of war (whether war be declared
or not), insurrections, riots, civil commotion, strikes, lockouts or other
labor disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other Party (collectively, “Events of Force Majeure”);
provided, however, that the affected Party (i) shall immediately notify
the other Party of the occurrence of any such Event of Force Majeure and
(ii) shall exert all reasonable efforts to eliminate, cure or overcome any
such Event of Force Majeure and to resume performance of its covenants with all
possible speed; and provided, further, that nothing contained herein shall
require any Party to settle on terms unsatisfactory to such Party any strike,
lockout or other labor difficulty, any investigation or proceeding by any
governmental authority or any litigation by any third-party. Notwithstanding
the foregoing, to the extent that an Event of Force Majeure continues for a
period in excess of six (6) months, the affected Party shall promptly
notify in writing the other Party of such Event of Force Majeure and within
four (4) months of the other Party’s receipt of such notice, the Parties
agree to negotiate in good faith either (i) to resolve the Event of Force
Majeure, if possible, (ii) to extend by mutual agreement the time period
to resolve, eliminate, cure or overcome such Event of Force Majeure, (iii) to
amend this Collaboration Agreement to the extent reasonably possible, or (iv)
to terminate this Collaboration Agreement.

 

 

15.4       Assignment. This Collaboration
Agreement shall not be assignable in whole or in part by either Party without
the prior written consent of the other Party. Each Party is, however,
authorized to assign this Collaboration Agreement in whole or in part to any of
its Affiliates provided that the assigning Party promptly informs the other
Party of the transfer of rights and obligations.

 

15.5      Waiver or
Modification. This Collaboration Agreement may not be
amended, modified or supplemented except by a written instrument manually
signed by all of the Parties hereto or thereto. No omission or delay on the
part of either Party in requiring the due and punctual fulfillment by the other
of any of the obligations hereunder shall constitute a waiver by the omitting
or delaying Party of any of its rights to require such due and punctual
fulfillment of any obligation hereunder, whether similar or otherwise, or a
waiver of any remedy it may have hereunder or otherwise.

 

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

 

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

 

15.8       Governing Law and Arbitration. This
Collaboration Agreement is construed and shall be governed by, interpreted and
enforced in accordance with thelawvs of England. In the event the Parties are
unable to reach accord using the procedures specified in Section 15.7, such
dispute shall be finally settled without recourse to the courts, in accordance
with the Rules of Conciliation and Arbitration of the International Chamber of
Commerce, by one arbitrator designated in conformity with those Rules.
Arbitration shall be held in English in San Francisco, California if initiated
by Rhein Biotech and GCVC and in Amsterdam, the Netherlands if initiated by
Chiron. Either party may ask the competent tribunal to confirm an arbitration
award or otherwise provide that it shall be enforceable.

 

15.9       Independent Contractors. The relationship
between Chiron and Rhein Biotech and GCVC created by this Collaboration
Agreement is one of independent contractors and neither Party shall have the
power or authority to bind or obligate the other except as expressly set forth
in this Collaboration Agreement.

 

15.10    Absence of Existing
Competition. Each of Rhein Biotech and GCVC represents
and warrants to Chiron that, to the best of its knowledge and belief, neither
of Rhein Biotech or GCVC nor any Affiliate of either Rhein Biotech or GCVC is
presently engaged in the business of manufacturing, marketing or distributing
the Product. Chiron represents and warrants to Rhein Biotech and GCVC that, to
the best of its knowledge and belief, neither Chiron nor any Affiliate of
Chiron is presently engaged in the business of manufacturing, marketing or
distributing the Product.

 

15.11    Absence of Future
Competition. Except as otherwise provided in this
Collaboration Agreement, each Party covenants and agrees that none of such
Party or any Affiliate of such Party (whether or not such Affiliate has
accepted a sublicense hereunder and agreed to be bound by the terms hereof) or
any of their respective successors in interest shall engage in the business of
developing, manufacturing, marketing or distributing any Product in the Field
other than through Chiron and Rhein Biotech and GCVC, as contemplated by this
Collaboration Agreement, provided, however, that in the event the Collaboration
with respect to the Acellular Product is terminated pursuant to the terms of Section 2.5,
then this Section 15.11 shall not apply to any acellular product in the
Field.

 

15.12    Ethical Business
Practices. Neither Party, nor any person employed by it
or representing it, has ever made, offered, provided or authorized, and
covenants that neither it, nor any person employed by it or representing it,
will make offer provide or authorize, direct or indirectly, any payment or
transfer of anything of value to any official, representative or employee of
any government agency or instrumentality, any political party or officer
thereof, or any candidate for public office for the purpose of influencing a
decision by any of them in their official capacity, and no officer, director,
partner, owner, principal, employee, or agent of either Party is an official or
employee of a governmental agency or instrumentality or a government owned
company in a position to influence action or a decision regarding the
activities of such Party contemplated in this Collaboration Agreement. Each
Party covenants that it will inform the other, if and as soon as any person
assumes such a position as an official or employee of a governmental agency or
instrumentality or government owned company, while at the same time remaining
an officer, director, partner, owner, principal, employee, or agent of such
Party.

 

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

 

 

15.14    Joint and Several Liability.

 

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

 

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

 

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

 

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

 

15.17   Counterparts. This
Collaboration Agreement has been executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.

 

 

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

 

 

	
  CHIRON
  BEHRING GMBH & CO

  	
  RHEIN
  BIOTECH N.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John Lambert

  	
   

  	
  By:

  	
  /s/ Jan Thio

  	
   

  
	
  Name:

  	
  John Lambert

  	
  Name:

  	
  Jan Thio

  
	
  Title:

  	
  President,
  Chiron Vaccines

  	
  Title:

  	
  Business
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kees
  Moonen

  	
   

  
	
  CHIRON
  S.P.A.

  	
  Name:

  	
  Kees Moonen

  
	
   

  	
  Title:

  	
  Legal
  Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John
  Lambert

  	
   

  	
  GREENCROSS
  VACCINE

  
	
  Name:

  	
  John Lambert

  	
  CORPORATION

  
	
  Title:

  	
  President,
  Chiron Vaccines

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ton
  Kuiper

  	
   

  
	
   

  	
  Name:

  	
  Ton Kuiper

  
	
   

  	
  Title:

  	
  Representative
  Director

  
												

 

 

List of Schedules

 

	
  Schedule A:

  	
  Definitions

  
	
   

  	
   

  
	
  Schedule B:

  	
  Contributed
  Chiron Patents

  
	
   

  	
   

  
	
  Schedule C:

  	
  Contributed
  Rhein Biotech and GCVC Patents

  
	
   

  	
   

  
	
  Schedule D:

  	
  Chiron
  Material

  
	
   

  	
   

  
	
  Schedule E:

  	
  Rhein
  Biotech and GCVC Material

  
	
   

  	
   

  
	
  Schedule F:

  	
  Accounting
  Methodologies

  
	
   

  	
   

  
	
  Schedule G:

  	
  Existing
  Royalty Agreements

  
	
   

  	
   

  
	
  Schedule H:

  	
  Collaboration
  and Development Plan

  
	
   

  	
   

  
	
  Schedule I:

  	
  2001 Annual
  Plan and Budget

  
	
   

  	
   

  
	
  Schedule J:

  	
  Form of Bulk
  Supply Agreement

  
	
   

  	
   

  
	
  Schedule K.

  	
  Form of
  Supply and Manufacturing Agreement

  
	
   

  	
   

  
	
  Schedule L:

  	
  Investment
  Plan

  

 

 

SCHEDULE A

 

DEFINITIONS

 

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

 

	
  1.1

  	
  [***]

  
	
   

  	
   

  
	
  1.2

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

  
	
   

  	
   

  
	
  1.3

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

  
	
   

  	
   

  
	
  1.4

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

  
	
   

  	
   

  
	
  1.5

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

  

 

 

 

	
   

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

  
	
   

  	
   

  
	
  1.6

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

  
	
   

  	
   

  
	
  1.7

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

  
	
   

  	
   

  
	
  1.8

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

  
	
   

  	
   

  
	
  1.9

  	
  “Bulk Rhein Biotech and GCVC
  Material” means the bulk form of
  the Rhein Biotech and GCVC Materials used as raw material in the Manufacture
  of the Product.

  
	
   

  	
   

  
	
  1.10

  	
  “Bulk Supply Agreement” means the bulk supply
  agreement dated as of the date of the Collaboration Agreement between Chiron
  and Rhein Biotech and GCVC, and all schedules, amendments and supplements
  thereto, a form of which is attached as Schedule J to the Collaboration
  Agreement.

  
	
   

  	
   

  
	
  1.11

  	
  “Certificate
  of Analysis”
  means the certificate of analysis confirming that the accompanying Product
  complies with the Product Specifications and cGMP.

  
	
   

  	
   

  
	
  1.12

  	
  “Chiron Contract Requirements” means one
  hundred percent (100%) of the quantity of the Product sold and/or distributed
  by Chiron in accordance with the terms of the Collaboration Agreement.

  
	
   

  	
   

  
	
  1.13

  	
  “Chiron Inventions” means inventions arising
  from the activities of the parties under the Collaboration Agreement and
  invented solely by employees of Chiron or persons obligated to assign their
  inventions to Chiron.

  
	
   

  	
   

  
	
  1.14

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

  

 

 

	
  1.15

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

  
	
   

  	
   

  
	
  1.16

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

  
	
   

  	
   

  
	
  1.17

  	
  “Chironl Rhein Biotech and GCVC Joint Background Technology” means

  
	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  all patents
  and patent applications claiming such inventions and other technology; all
  patents issued from such patent applications; and all reissues,
  confirmations, renewals, extensions, counterparts, divisions, continuations,
  continuations-in-part, supplemental protection certificates or utility models
  relating to such patents and patent applications.

  
	
   

  	
   

  
	
  1.17

  	
  “Chiron Territory” shall have the
  meaning ascribed to it in Section 5.I(b) of the Collaboration Agreement.

  
	
   

  	
   

  
	
  1.18

  	
  “COGS”
  stands for cost of goods sold and shall have the meaning ascribed to it in
  Schedule F to the Collaboration Agreement.

  
	
   

  	
   

  
	
  1.19

  	
  “Collaboration” shall have
  the meaning ascribed to it in Section 2.1 of the Collaboration Agreement.

  
	
   

  	
   

  
	
  1.20

  	
  “Collaboration
  Agreement” means
  the collaboration agreement dated as of April 30, 2001 between Chiron
  and Rhein Biotech and GCVC and all schedules, amendments and supplements
  thereto.

  
	
   

  	
   

  
	
  1.21

  	
  “Collaboration
  and Development Plan” means
  the collaboration and development plan attached as Schedule H to the
  Collaboration Agreement.

  
	
   

  	
   

  
	
  1.22

  	
  “Collaboration
  Documents”  means
  the Collaboration Agreement, the Bulk Supply Agreement and
  the Supply and Manufacturing Agreement.

  
	
   

  	
   

  
	
  1.23

  	
  “Collaboration
  Inventions” shall have the meaning ascribed to it in
  the definition of Collaboration Technology.

  
	
   

  	
   

  
	
  1.24

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

  

 

 

	
  1.23

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

  
	
   

  	
   

  
	
  1.24

  	
  “Collaboration
  Technology” means:

  
	
   

  	
   

  
	
   

  	
  (a)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

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

  
	
   

  	
   

  
	
  1.25

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

  
	
   

  	
   

  
	
  1.26

  	
  “Contributed Chiron Technology” means:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  all patents
  and patent applications Controlled by Chiron as of the Effective Date that
  cover the Product, including without limitation, the patents and patent
  applications listed on Schedule B to the Collaboration Agreement; for these
  purposes a patent or patent application shall be deemed to “cover” the
  Product if the manufacture, use or sale of the Product by Rhein Biotech and
  GCVC would infringe a claim in such patent or patent application but for the
  licenses contemplated hereby; all patents issued from such patent
  applications; and all reissues, confirmations, renewals, extensions,
  counterparts, divisions, continuations, continuations-in-part, supplemental
  protection certificates or utility models relating to such patents and patent
  applications; and

  

 

 

	
   

  	
  (b)

  	
  all
  unpublished scientific, engineering, economic, commercial and other technical
  data or information, research results, methods, processes, procedures,
  trade-secrets and know-how relating to the Product which are Controlled by
  Chiron as of the Effective Date.

  
	
   

  	
   

  
	
  1.27

  	
  “Contributed Rhein Biotech and GCVC Technology” means:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  all patents
  and patent applications Controlled by Rhein Biotech and GCVC as of the
  Effective Date that cover the Product, including without limitation, the
  patents and patent applications listed on Schedule C to the Collaboration
  Agreement; for these purposes a patent or patent application shall be deemed
  to “cover” the Product if the manufacture, use or sale of the Product by
  Chiron would infringe a claim in such patent or patent application but for
  the licenses contemplated hereby; all patents issued from such patent
  applications; and all reissues, confirmations, renewals, extensions,
  counterparts, divisions, continuations, continuations-in-part, supplemental
  protection certificates or utility models relating to such patents and patent
  applications; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  all
  unpublished scientific, engineering, economic, commercial and other technical
  data or information, research results, methods, processes, procedures,
  trade-secrets and know-how relating to the Product which are Controlled by
  Rhein Biotech and GCVC as of the Effective Date.

  
	
   

  	
   

  
	
  1.28

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

  
	
   

  	
   

  
	
  1.29

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

  
	
   

  	
   

  
	
  1.30

  	
  “Effective Date” means the date of the
  Collaboration Agreement.

  
	
   

  	
   

  
	
  1.31

  	
  “Excluded
  Expenses” means any and all costs and expenses
  incurred in defending, settling or otherwise discharging any liability to a
  third party, including, without limitation, any employee of either Party or
  their Affiliates, based upon tortious acts.

  

 

 

	
  1.32

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

  
	
   

  	
   

  
	
  1.33

  	
  “Field”
  means the field of pentavalent combination vaccines for pediatric use.

  
	
   

  	
   

  
	
  1.34

  	
  “Finance Committee” means the finance
  subcommittee established pursuant to the terms of Section 3.3 of the
  Collaboration Agreement.

  
	
   

  	
   

  
	
  1.35

  	
  “FTE” means the full time equivalent effort of one person who
  participates directly in the research and development activities of
  the Collaboration other than Third Party contractors determined in accordance
  with the terms of Section 3.2(d) of the Collaboration Agreement.

  
	
   

  	
   

  
	
  1.36

  	
  “G&A
  Markup” means
  any allocation of the Parties’ respective general and administration costs.

  
	
   

  	
   

  
	
  1.37

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

  
	
   

  	
   

  
	
  1.38

  	
  “Investment Plan” means the investment plan
  agreed by the Parties and attached to the Collaboration Agreement as Schedule
  L to the Collaboration Agreement.

  
	
   

  	
   

  
	
  1.39

  	
  “Joint Inventions” means inventions arising
  from the activities of the parties under the Collaboration Agreement and
  invented jointly by employees of Chiron (including persons obligated to
  assign inventions to Chiron) and employees of Rhein Biotech and GCVC
  (including persons obligated to assign inventions to Rhein Biotech and GCVC).

  
	
   

  	
   

  
	
  1.40

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

  
	
   

  	
   

  
	
  1.41

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

  
	
   

  	
   

  
	
  1.42

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

  

 

 

	
  1.43

  	
  “Master Batch Record” means, with respect to
  each Product to be Manufactured hereunder, a formal set of instructions for
  the Manufacture of such Product.

  
	
   

  	
   

  
	
  1.44

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

  
	
   

  	
   

  
	
  1.45

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

  
	
   

  	
   

  
	
  1.46

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

  
	
   

  	
   

  
	
  1.47

  	
  “Other Revenues” means any revenues arising
  out of Collaboration Technology other than Net Sales, including, without
  limitation, royalties or other amounts paid by Third Parties for licenses to
  Collaboration Technology.

  
	
   

  	
   

  
	
  1.48

  	
  “Parties”
  means Chiron and Rhein Biotech and GCVC and “Party” shall mean one of them.

  
	
   

  	
   

  
	
  1.49

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

  
	
   

  	
   

  
	
  1.50

  	
  “Product Addendum” means the addendum
  attached as Schedule C to the Bulk Supply Agreement and as Schedule C to the
  Manufacturing and Supply Agreement setting forth the Product Requirements,
  terms and presentations for each Product Manufactured under the Bulk Supply
  Agreement and the Manufacturing and Supply Agreement.

  
	
   

  	
   

  
	
  1.51

  	
  “Product Loss Allowance” means the
  allowances for losses of the finished Product as more specifically set forth
  in Schedule F to the Bulk Supply Agreement and the Supply and Manufacturing
  Agreement.

  
	
   

  	
   

  
	
  1.52

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

  

 

 

	
  1.53

  	
  “Product Specifications” means, with respect
  to the Product, the specifications and testing to be performed for the Bulk
  Chiron Material, the Bulk Rhein Biotech and GCVC Material, the Product and/or
  the stability program that are  set forth in the Rhein Biotech
  and GCVC SOPs and the Master Batch Records. The Product Specifications
  include all tests that Rhein Biotech and GCVC are required to conduct or
  cause to be conducted as specified in the Collaboration and Development Plan.
  The Product Specifications my be modified from time  to
  time only in accordance with the terms of the Collaboration Agreement.

  
	
   

  	
   

  
	
  1.54

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

  
	
   

  	
   

  
	
  1.55

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

  
	
   

  	
   

  
	
  1.56

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

  
	
   

  	
   

  
	
  1.57

  	
  “Residual Expenses” means, with respect to
  either Party, any Allowable Expenses which such Party incurs following any
  termination of the Collaboration Agreement and which such Party cannot reasonably
  eliminate.

  
	
   

  	
   

  
	
  1.58

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

  
	
   

  	
   

  
	
  1.59

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

  
	
   

  	
   

  
	
  1.60

  	
  “Rhein Biotech and GCVC Materials” means the materials
  described in Schedule E to the Collaboration Agreement and the additional
  biological materials, if any, which Rhein Biotech and GCVC provide to Chiron
  in connection with the Collaboration, together with (a) any part, progeny,
  mutant or hybrid thereof, (b) any nucleic acid or other genetic material
  therefrom, (c) any vector materials derived therefrom, and any progeny,
  derivatives or modifications of such vector particles, (d) any copy,
  complement or transcription or expression Whole Cell Product thereof, and (e)
  any combination of the foregoing with other substances (other than Chiron
  Materials, which combination shall be deemed Collaboration Materials).

  

 

 

	
  1.61

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

  
	
   

  	
   

  
	
  1.62

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

  
	
   

  	
   

  
	
  1.63

  	
  “Rhein Biotech and GCVC Territory” shall have the meaning
  ascribed to it in Section 5.1 of the Collaboration Agreement.

  
	
   

  	
   

  
	
  1.64

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

  
	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Costs
  associated with sales representatives such as compensation, benefits, travel,
  supervision and training of sales representatives, sales meetings and other
  sales expenses.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  Direct costs
  of marketing, promotion, advertising, professional education, product related
  to public relations, relationships with opinion leaders and professional
  societies, market research and other similar activities.

  
	
   

  	
   

  
	
  1.65

  	
  “Sales
  and Return Allowances” means
  the following sales and return allowances as determined under US GAAP:

  
	
   

  	
   

  
	
   

  	
  (a)

  	
  normal and
  customary trade and/or quantity discounts;

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  returns,
  rebates, credit for product defects actually;

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  to the
  extent separately stated on purchase orders and invoices or other documents
  of sale and actually taken:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  imported and
  export duties;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  excise,
  sales or use taxes;

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  value added
  taxes, and other governmental charges; and

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  transportation,
  transit and insurance for transportation, each to the extent separately
  invoiced and paid by the selling Party.

  
	
   

  	
   

  
	
  1.66

  	
  “SOPs”
  mean standard operating procedures for the Manufacture of the Product which
  shall be reviewed by both Parties.

  
	
   

  	
   

  
	
  1.67

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

  
	
   

  	
   

  
	
  1.68

  	
  “Supply
  and Manufacturing Agreement” means the supply and
  manufacturing agreement dated as of the date of the Collaboration Agreement
  between Chiron and Rhein Biotech and GCVC, and all schedules, amendments and
  supplements

  

 

 

	
   

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

  
	
   

  	
   

  
	
  1.69

  	
  “Termination Products” means the Whole Cell
  Product and the Acellular Product, if any, included within the Collaboration
  in accordance with the provisions of Section 2.1 to the Collaboration
  Agreement prior to the termination, if any, of the Collaboration Agreement.

  
	
   

  	
   

  
	
  1.70

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

  
	
   

  	
   

  
	
  1.71

  	
  “Testing Standards and Procedures” means,
  with respect to each Product Manufactured hereunder, the written standards
  and procedures for evaluating compliance with the applicable Product
  Specifications, as mutually agreed upon in writing by Chiron and Rhein
  Biotech and GCVC.

  
	
   

  	
   

  
	
  1.72

  	
  “Third Party” means any person or entity
  other than the Parties and their respective Affiliates.

  
	
   

  	
   

  
	
  1.73

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

  
	
   

  	
   

  
	
  1.74

  	
  “Transfer Price” means the transfer price
  set in accordance with the terms of the Collaboration Agreement and
  calculated in accordance with the formula indicated in Schedule G to the Bulk
  Supply Agreement and Schedule G to the Supply and Manufacturing Agreement.

  
	
   

  	
   

  
	
  1.75

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

  
	
   

  	
   

  
	
  1.76

  	
  “Whole Cell Product” means the whole cell
  pentavalent liquid combination vaccine for pediatric use DTwP-Hib-HBV for
  protection against Diptheria, Tetanus, Pertussis, Haemophilus Influenza type
  b and Hepatitis B.

  

 

 

SCHEDULE B

 

Contributed Chiron Patents

 

	
  Title

  	
   

  	
  No.

  
	
  Detoxified PT mutants

  	
   

  	
  Country

  	
   

  	
  Status

  	
   

  	
  issue/serial number

  
	
   

  	
   

  	
  United States

  	
   

  	
  pending

  	
   

  	
  08/261668

  
	
   

  	
   

  	
  United States

  	
   

  	
  pending

  	
   

  	
  08/261692

  
	
   

  	
   

  	
  United States

  	
   

  	
  issued

  	
   

  	
  5925546

  
	
   

  	
   

  	
  United States

  	
   

  	
  issued

  	
   

  	
  5889172

  
	
   

  	
   

  	
  Italy

  	
   

  	
  issued

  	
   

  	
  1223334

  
	
   

  	
   

  	
  Canada

  	
   

  	
  pending

  	
   

  	
  581889

  
	
   

  	
   

  	
  Japan

  	
   

  	
  issued

  	
   

  	
  2728275, 2857105

  
	
   

  	
   

  	
  Europe (Austria, Belgium,
  Switzerland, Germany, Spain, France, UK, Greece, Luxembourg, The Netherlands,
  Sweden)

  	
   

  	
  issued

  	
   

  	
  322533

  
	
   

  	
   

  	
  Singapore

  	
   

  	
  issued

  	
   

  	
  9591848-8

  
	
   

  	
   

  	
  Hong Kong

  	
   

  	
  issued

  	
   

  	
  1929/1995

  

 

	
  Detoxified PT mutants (double mutants)

  	
   

  	
  Country

  	
   

  	
  Status

  	
   

  	
  issue/serial number

  
	
   

  	
   

  	
  United States

  	
   

  	
  pending

  	
   

  	
  08/261691

  
	
   

  	
   

  	
  United States

  	
   

  	
  pending

  	
   

  	
  08/431673

  
	
   

  	
   

  	
  Europe (Austria, Belgium,
  Switzerland, Germany, Denmark, Spain, France, UK, Greece, Italy, Luxembourg,
  The Netherlands, Sweden)

  	
   

  	
  issued

  	
   

  	
  396964

  
	
   

  	
   

  	
  Canada

  	
   

  	
  pending

  	
   

  	
  2015677

  
	
   

  	
   

  	
  Japan

  	
   

  	
  issued

  	
   

  	
  2655583, 2852025

  
	
   

  	
   

  	
  Mexico

  	
   

  	
  issued

  	
   

  	
  177114

  
	
   

  	
   

  	
  Hong Kong

  	
   

  	
  issued

  	
   

  	
  170/1996

  
	
   

  	
   

  	
  Singapore

  	
   

  	
  issued

  	
   

  	
  9592061-7

  

 

 

SCHEDULE C

 

Contributed Rhein Biotech and GCVC Patents

 

	
  Title

  	
   

  	
  No.

  
	
  Process for preparing a Polypeptide
  by  culturing
  a  transformed
  Microorganism suitable

  	
   

  	
  EP 173
  378

  
	
  Therefore and DNA
  sequences suitable for preparing  such microorganism

  	
   

  	
   

  
	
   

  	
   

  	
  US 5, 240, 838

  
	
   

  	
   

  	
  US 5, 741
  672

  
	
  (“MOX”-patent)

  	
   

  	
  JP 2
  592444

  
	
   

  	
   

  	
  JP 2 675
  202

  
	
   

  	
   

  	
  JP 2
  575284

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Filed in DK, CA

  
	
   

  	
   

  	
   

  
	
  DNA-molecules coding for
  FMDH control regions and structured gene for a protein having FMDH-activity
  and their uses

  	
   

  	
  EP 299
  108

  
	
   

  	
   

  	
   

  
	
  (“FMD”-patent)

  	
   

  	
  US 5,
  389, 525

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CA 1,339,012

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Filed in DK (pending)

  
	
   

  	
   

  	
  JP 307
  299 3

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BR Pl 1100065-1

  
	
   

  	
   

  	
  Filed in CL (pipeline appl.)

  

 

 

SCHEDULE D

 

Chiron Material

 

1.                                                               DIPHTHERIA TOXOID

 

Diphtheria
toxoid is manufactured according to WHO Requirements (TRS 800, 1990) and
complies with the requirements of the Eur. Ph.

 

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

 

[***]

 

 

1.1                              SPECIFICATIONS AND ROUTINE TESTS

 

1.1.1
Specifications

 

The specifications for the
Diphtheria Toxoid Concentrate (without preservative) are indicated in the
following table.

 

Specifications for the Diphtheria Toxoid Concentrate
(without preservative)

 

[***]

 

1.1.2 Test
methods

 

pH

 

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

 

Nitrogen

 

[***]

 

 

Toxoid
content

 

[***]

 

Sulphate

 

[***]

 

Formaldehyde

 

[***]

 

Sodium
chloride

 

[***]

 

Sterility

 

[***]

 

 

Absence
of diphtheria toxin

 

[***]

 

Reversion
to toxicity

 

[***]

 

 

2.                                                               TETANUS TOXOID

 

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

 

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

 

[***]

 

 

2.1                              SPECIFICATIONS AND ROUTINE
TESTS

 

2.1.1
Specifications

 

The specifications for the
Tetanus Toxoid Concentrate (without preservative) are indicated in the
following table.

 

Specifications for the Tetanus Toxoid Concentrate (without
preservative)

 

[***]

 

2.1.2 Test
methods

 

pH

 

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

 

Nitrogen

 

[***]

 

 

[***]

 

Toxoid
content

 

[***]

 

Sulphate

 

[***]

 

Formaldehyde

 

[***]

 

Sodium
chloride

 

[***]

 

Sterility

 

[***]

 

 

Absence
of tetanus toxin

 

[***]

 

Reversion
to toxicity

 

[***]

 

 

3.                                                               PERTUSSIS CONCENTRATE

 

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

 

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

 

[***]

 

 

3.1                                SPECIFICATIONS AND ROUTINE TESTS

 

3.1.1 Specifications

 

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

 

Specifications for the Pertussis Toxoid Concentrate

 

[***]

 

3.1.2
Test methods

 

Agglutinogens

 

[***]

 

pH

 

[***]

 

Thiomersal

 

[***]

 

 

EDTA

 

[***]

 

Sterility

 

[***]

 

Turbidity

 

[***]

 

 

4.                                                                CRM-HIB
GLYCOCONJUGATE

 

[***]

 

 

4.1                               SPECIFICATIONS
AND ROUTINE TESTS

 

4.1.1
Specifications

 

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

 

[***]

 

 

4.1.2 Test methods

 

Hib Identity

 

[***]

 

CRM
Identity

 

[***]

 

Protein
content - micro BCA method

 

[***]

 

Free
Saccharide (by Ribitol)

 

[***]

 

 

[***]

 

Sterility

 

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

 

Endotoxin
content (LAL chromogenic kinetics method)

 

[***]

 

Endotoxin/Saccharide

 

[***]

 

Degree
of glycosilation (saccharide/protein)

 

[***]

 

kD

 

[***]

 

Total
Saccharide (Ribose content)

 

 

[***]

 

 

SCHEDULE E

 

Rhein Biotech and GCVC Material

 

Formaline
treated Hepatitis B surface antigen solution

 

Hepatitis B
vaccine is manufactured according to Minimum Requirement for Biologics of KFDA
and WHO Requirements (TRS No. 760, 1987)

 

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

 

[***]

 

 

1.                                     SPECIFICATION AND ROUTINE TESTS

 

1.1                  Specifications

 

The
specifications for the Hepatitis B vaccine derived from Hansenula polymorpha are indicated
in the following tables.

 

Specifications for the HBV Bulk concentrate.

 

[***]

 

 

1.2                  Test methods

 

Polysaccharide
content

 

[***]

 

Lipid
content

 

[***]

 

Formaldehyde
content

 

[***]

 

DNA
content

 

[***]

 

Agents
for purification process

 

Tween 20

 

[***]

 

CsC/

 

[***]

 

Protein
content

 

[***]

 

Antigenic
identity

 

SDS PAGE

 

[***]

 

Western blot

 

[***]

 

 

HPLC

 

[***]

 

Sterility

 

[***]

 

HBsAg
content

 

[***]

 

Pyrogenicity

 

[***]

 

 

SCHEDULE F

 

Accounting Principles and Methodologies

 

1.                                      Introduction

 

(a)                                  Accounting Principles and Methodologies. This
Schedule F sets forth the accounting principles and methodologies to be
followed in connection with the Collaboration,
including, without limitation, in connection with determining the Transfer Price,
Additional Payments and the sharing of expenses by the Parties. For such
purposes, this Schedule F sets out the principles for reporting actual and
projected results, the frequency of reporting and the use of a single
functional currency for the reporting method of determining payments and
results to the Parties.

 

(b)                                  Definitions.
This Schedule F also provides certain agreed upon definitions of financial
terms applicable to the Parties for purposes of the Collaboration. Capitalized
terms used in this Schedule F but not defined herein shall have the meanings
ascribed to them in Schedule A to the Collaboration Agreement and Schedule G to
the Bulk Supply Agreement and the Supply and Manufacturing Agreement.

 

2.                                      Generally Accepted Accounting Principles

 

Chiron and
Rhein Biotech and GCVC acknowledge that any issues which may emerge that are
not specifically addressed in the Collaboration Documents or this Schedule F
shall be resolved using U.S. Generally Accepted Accounting Principles (“GAAP”).
Where acceptable alternatives exist under GAAP, the Parties will document the
approach used (or agreed to be used) and if no conflict exists the
documentation will be added to this Schedule F. If a conflict exists, the issue
will be addressed by each of the Parties’ Finance Departments. If agreement
cannot be reached, the issue will be resolved by the Steering Committee.

 

3.                                      Accounting Periods

 

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

 

4.                                      Principles of Reporting

 

To the extent
necessary, each Party shall make the appropriate adjustments to all relevant
financial information it supplies pursuant to the Collaboration Documents in
order that such information shall conform to the format of reporting the
information as set forth below.

 

(a)                                  R&D Expense
Report Each party will provide a presentation of R&D Expenses
based on the following reporting format:

 

 

(i)                                     Head
count related expenses

 

	
   

  	
   

  	
  Ouarter

  	
   

  
	
  # of FTEs

  	
   

  	
  A

  	
   

  
	
  Average $ Rate per FTE

  	
   

  	
  B

  	
   

  

 

Head
count total US$                             AxB                                   

 

Average $ Rate
per FTE will be determined based on the Cost per FTE as described in Section
4.2 of the Collaboration Agreement.

 

(ii)                                  Non-head
count related expenses

 

	
  Process
  Development

  	
   

  	
   

  
	
  Clinical
  Trials

  	
   

  	
   

  
	
  Animal costs

  	
   

  	
   

  
	
  Other

  	
   

  	
   

  
	
  Non Head
  count total US$

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  Total R&D Expenses

  	
   

  	
  $

  

 

(b)                                  Gross
Margin Report

 

For the
purposes of setting the Transfer Price, each Party shall provide a presentation
for each of their respective distribution channels and countries based on Annex
A attached to this Schedule F detailing:

 

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

•                  projected results
used during the reporting 6 month period 

•                  proposed results
to be used during the next 6 month period

 

(c)                                  Cost of Goods Sold Report

 

For purposes
of setting the Transfer Price, each Party shall provide a presentation based on
Annex B attached to this Schedule F detailing:

 

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

•                  projected
results used during the reporting 6 month period

•                  proposed results
to be used during the next 6 month period

 

 

(d)                                  Additional
Payment Report

 

Each Party
will provide a presentation of results for each of their respective
distribution channels and countries, as relevant, based on Annex C attached to
this Schedule F.

 

5.                                      Frequency of Reporting

 

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

 

	
  Reporting Event

  	
   

  	
  Frequency

  	
   

  	
  Timing of Submission

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  R&D
  Expenses

  	
   

  	
  Quarterly

  	
   

  	
  QI-Q4

  +45days

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cost of
  Sales

  	
   

  	
  Semi
  Annually

  	
   

  	
  June 1 and
  December 1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gross Margin

  	
   

  	
  Semi
  Annually

  	
   

  	
  June 1 and
  December 1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Additional
  Payment

  	
   

  	
  Quarterly

  	
   

  	
  Q1-Q4 +60
  days

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Management
  Reporting

  	
   

  	
  Semi
  Annually

  	
   

  	
  September 1
  and March 1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual
  Forecast

  (Rest of year –
  by month)

  	
   

  	
  Semi
  Annually

  	
   

  	
  June 1 and December 1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Annual Plan and Budget

  (one year – by month)

  	
   

  	
  Annually

  	
   

  	
  November 30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Long Range
  Plan

  	
   

  	
  Annually

  	
   

  	
  November 30

  

 

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

 

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

 

Management
Reports of actual results compared to budget will be made to the Steering
Committee on a semi-annual basis. Line item variances from budgets judged to be
significant by the Steering Committee will only be allocable for R&D
Expense.

 

Each Party
shall be responsible for the preparation of each of the above reports for their
respective distribution channels and countries and for R&D Expenses. The
Finance Committee shall consolidate the reported information from the Parties
and prepare all final submissions to the Steering Committee.

 

 

Chiron and
Rhein Biotech and GCVC shall submit the reports required above in local
currency and the U S. dollar using the average foreign exchange rate as quoted
by the New York Branch of the United States Federal Reserve’s daily afternoon
rate for the reporting period.

 

6.                                      Foreign
Exchange

 

The functional
currency for accounting for the Transfer Price, Additional Payments and R&D
Expenses will be in U.S. Dollars.

 

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

 

Definitions

 

“Allocable
Overhead” means costs incurred by a Party or for its account which are
attributable to a Party’s supervisory, services, occupancy costs and its
payroll, information systems, human relations or purchasing functions and which
are allocated to the company departments based on space occupied or head count
or other activity-based method and shall not include any idle capacity. “Allocable
Overhead” shall not include any general and administrative costs such as
executive management, investor relations, business development, legal affairs
and finance.

 

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

 

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

 

 

“Cost of Goods
Sold” means the Cost of Sales of an Antigen or the Product in finished product
form, as determined by the Parties performing or contracting each stage of the
manufacturing process in accordance with GAAP consistently applied by such
Parties.

 

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

 

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

b)        All
of the Party’s allocable intellectual property acquisition and licensing costs
paid to third parties as it relates to the Product

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

d)        Bulk
Loss Allowance and Product Loss Allowance.

 

“Excluded
Expenses” means any and all costs and expenses incurred in defending, settling
or otherwise discharging any liability to a third party, including, without
limitation, any employee of either Party or their Affiliates, based upon
tortious acts.

 

“G&A
Markup” means any allocation of the Parties respective general and
administration costs.

 

“Manufacturing
Costs” means the manufacturing costs set forth in the Annex D to this Schedule
F.

 

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

 

“Other
Revenues” means any revenues arising out of the Collaboration Technology other
than Net Sales, including without limitation, royalties or other amounts paid
by Third Parties for licenses to Collaboration Technology.

 

“Product Loss
Allowance” means the allowances for losses of the finished Product as more
specifically set forth in Schedule F to the Bulk Supply Agreement and the
Supply and Manufacturing Agreement.

 

 

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

 

“Sales and
Marketing Expenses” means the following sales and marketing expenses for the
Product including:

 

(a)               Costs
associated with sales representatives such as compensation, benefits, travel,
supervision and training of sales representatives, sales meetings and other
sales expenses.

(b)              Direct
costs of marketing, promotion, advertising, professional education, product
related to public relations, relationships with opinion leaders and
professional societies, market research and other similar activities.

 

“Sales and
Return Allowances” means the following sales and return allowances as
determined under US GAAP:

 

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

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

(c)          to
the extent separately stated on purchase orders and invoices or other documents
of sale and actually taken:

(i)                       imported
and export duties;

(ii)                    excise,
sales or use taxes;

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

(d)         transportation, transit and insurance for
transportation, each to the extent separately invoiced and paid by the selling
Party;

 

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

 

 

ANNEX A

Chiron/Rhoin Biotech& GCVC Reporting

Gross Margin Reporting - Whole Cell Product

 

Frequency of Reporting: Every
6 months

Period Covered: 3 months of
actuals and 3 months of forecasted results

Due date: 4th  Month of the 6 month period

 

Month:

 

	
  Average Net Sales Price

  	
   

  
	
  Cost of Goods Sold

  	
  RB

  
	
   

  	
  Chiron

  
	
  Total Cost of Goods Sold
  per Unit

  	
   

  
	
   

  	
   

  
	
  Gross Margin per Unit

  	
   

  
	
   

  	
   

  
	
  Profit Share

  	
  RB - [***]

  
	
   

  	
  Chiron - [***]

  
	
   

  	
   

  
	
  Transfer Price

  	
  RB

  
	
   

  	
  Chiron

  

 

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

 

	
  GAAVI Price

  	
   

  	
  $

  
	
  Projected incremental

  	
   

  	
  $

  
	
  Capital
  Expenditures

  	
   

  	
  $

  
	
  Related
  Depreciation 

  	
   

  	
  $

  
	
  Impact
  on Cost per Unit

  	
  Per Antigen 

  	
  $

  
	
   

  	
  Blend

  	
  $

  
	
   

  	
  Fill

  	
  $

  
	
   

  	
  Finish

  	
  $

  

 

Definitions:

 

	
  Actual

  	
  Actual results for the
  month

  
	
  Forecasted

  	
  Forecasted results for the
  month

  
	
  Projected

  	
  Projected value as agreed
  for the 6 month period

  
	
  Proposed

  	
  Suggested value for the
  next 6 month period

  

 

	
  Distribution Channel 1

  	
   

  	
  Distribution Channel 2

  	
   

  	
  Distribution Channel 3

  
	
  Actual or

  Forecasted

  	
   

  	
  Projected

  	
   

  	
  Proposed

  	
   

  	
  Actual or

  Forecasted

  	
   

  	
  Projected

  	
   

  	
  Proposed

  	
   

  	
  Actual or

  Forecasted

  	
   

  	
  Projected

  	
   

  	
  Proposed

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
  $

  

 

 

ANNEX B

Chiron/Rhein
Biotech& GCVC Reporting

Cost of
Goods Sold Reporting - Whole Cell Product

 

Frequency of Reporting:
Every 6 months

Period Covered: 3 months of
actual and 3 months of forecasted results

Due date: 15 days after the 3rd Month of the 6 month period

 

	
  Per Unit
  Basis

  	
   

  
	
  Cost of Goods Sold 

  	
  HIB

  
	
   

  	
  DTP

  
	
   

  	
  Third Party Royalties 

  
	
   

  	
   

  
	
  Total Chiron Cost of Goods
  Sold

  	
   

  
	
   

  	
   

  
	
  Cost of Goods Sold

  	
  HBV

  
	
   

  	
  Blend

  
	
   

  	
  Fill

  
	
   

  	
  Finish

  
	
   

  	
  Third Party Royalties

  
	
   

  	
   

  
	
  Total RB/GCVC Cost of
  Goods Sold

  	
   

  
	
   

  	
   

  
	
  Incremental

  	
  Capital expenditure

  
	
   

  	
  Depreciation

  

 

 

	
  Actual

  	
  Actual results for the
  month

  
	
  Forecasted

  	
  Forecasted results for the
  month

  
	
  Projected

  	
  Projected value as agreed
  for the 6 month period

  
	
  Proposed

  	
  Suggested value for the
  next 6 month period

  

 

	
  Mth

  Actual

  	
   

  	
  Mth

  Actual

  	
   

  	
  Mth

  Actual

  	
   

  	
  Mth

  Forecast

  	
   

  	
  Mth

  Forecast

  	
   

  	
  Mth

  Forecast

  	
   

  	
  Projected

  	
   

  	
  Projected

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

ANNEX C

Chiron/Rhein
Biotech& GCVC Reporting

Additional Payment Reporting - Whole Cell Product

 

Frequency of Reporting: Every
3 months

Period Covered: 3 months of actual results

Due date: 30 days after the
3rd Month of the 6 month period

 

Actual Average Net Sales
Price

Projected Average Net Sales Price

Difference

 

Units Sold during the period
(FIFO basis)

	
  Total $ Difference 

  	
   

  
	
  Parties share

  	
  Chiron [***]

  
	
   

  	
  RB [***]

  

 

Additional Payment

 

Local Currency

Foreign Currency Rate

 

	
  Distribution
  Channel 1

  	
   

  	
  Distribution
  Channel 2

  	
   

  	
  Distribution
  Channel 3

  	
   

  	
   

  
	
  Month 1

  	
   

  	
  Month 2

  	
   

  	
  Month 3

  	
   

  	
  Month 1

  	
   

  	
  Month 2

  	
   

  	
  Month 3

  	
   

  	
  Month 1

  	
   

  	
  Month 2

  	
   

  	
  Month 3

  	
   

  	
  Total

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
  0

  	
   

  	
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Annex D

 

DEFINITION OF MANUFACTURING COST (“MC”)

 

I.      MC includes the direct, indirect and overhead cost incurred
in the manufacture of the Product.

 

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

 

Direct material costs include:

 

The cost of
raw materials, filters, manufacturing supplies, solvents, containers, container
components, packaging, labels and other printed materials used in production.

 

Direct labor costs include:

 

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

 

Direct Service
costs include:

 

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

 

•      Indirect Expense:

 

Production overhead cost include:

 

A reasonable
allocation of expenses associated with personnel supporting the direct
manufacturing of Product in accordance with cGMP requirements. This include
labor and overhead for Quality Control, Quality Assurance, raw material
acquisition and acceptance, Microbiology, Document Control, Calibration/Validation,
expenses for Process Development and Analytical Methods Development.

 

•      Overhead Expense:

 

Manufacturing
overhead cost include:

 

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

 

1

 

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

 

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

 

II.    Total
MC can be divided into two categories: Dedicated Facility Cost and Production Cost.

 

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

 

•      Labor and fringe for
departments such as facilities, validation /
calibration, and the portion of QC and Microbiology associated with
the facility rather than the product.

 

•      Equipment maintenance and
repairs

 

•      Equipment and facility
depreciation 

 

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

 

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

 

III.   MC does not include:

 

A. Interest.

 

B. General and
administrative expenses.

 

IV.   Production
Capacity:

 

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

 

 

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

 

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

 

•      No costs of back up or
second source capacity will be charged as part of Manufacturing Costs unless
and until Chiron and Rhein Biotech/Korea Green Cross mutually agree that such
additional capacity is necessary in order to meet the Collaboration
requirements.

 

V.         Idle Capacity:

 

•      Any significant shortfall in
market demand for the Product versus the Practical Capacity results in Idle
Capacity.

 

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

 

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

 

•      The cost of any shortfall
between Theoretical Capacity and Practical Capacity cannot be charged by either
Party.

 

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

 

 

SCHEDULE G

 

EXISTING ROYALTY AGREEMENTS

 

Chiron Royalty
Obligations and Estimated Financial Impact

 

Listed below
are the royalty obligations which reasonably could affect the Parties
collaboration given the countries the Product will be sold in based on the
agreed to Marketing Plan.

 

[***]

 

[***]

 

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

 

Rhein Biotech and GCVC Rovalty Obligations and Estimated Financial
Impact

 

None.

 

 

SCHEDULE
H

 

 

 

PROJECT DEVELOPMENT PLAN

Pentavalent
Vaccines

[***]

 

 

SCHEDULE I

 

	
  

  	
  Schedule I

  	
   

  
	
  Collaboration and Development Plan

  	
   

  

 

[***]

 

1

 

SCHEDULE J

 

EXECUTION VERSION

 

BULK SUPPLY AGREEMENT

 

This Supply Agreement is
made and entered into as of April 30, 2001 by and among Chiron Behring GmbH
& Co, a company incorporated in Germany, with offices at Emil von Behring
Strasse 76, 35041 Marburg, Germany (“Chiron
Behring”), Chiron S.p.A., a company incorporated in Italy, with
offices at Via Fiorentina 1, 53100 Siena, Italy (“Chiron S.p.A.”, and together with Chiron Behring GmbH &
Co, “Chiron”), Rhein Biotech N.V.,
a company incorporated in the Netherlands, with offices at Gaetano Martinolaan
95, 6229 GS Maastricht, The Netherlands (“Rhein
Biotech”), and GreenCross Vaccine Corporation, a company
incorporated in the Republic of Korea, with offices at 303 Bojung-Ri,
Koosung-Eup, Yongin 449-770, Republic of Korea (“GCVC”, and together with Rhein Biotech, “Rhein Biotech and GCVC”).

 

RECITALS

 

A.                WHEREAS,
Chiron, Rhein Biotech and GCVC have entered into a Collaboration Agreement
dated the date hereof the (“Collaboration Agreement”) pursuant to which they will
collaborate on the research, development and manufacturing of one or more new
pentavalent combination vaccines for pediatric use (as more specifically
defined herein, the “Product”).

 

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

 

NOW
THEREFORE in consideration of the premises and other good and
valuable consideration, Chiron and Rhein Biotech and GCVC agree as follows.

 

ARTICLE 1

DEFINITIONS

 

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

 

1

 

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

 

(a)                     The
descriptive headings of Articles and Sections are inserted solely for
convenience of reference and are not intended as complete or accurate
descriptions of the content of such Articles or Sections.

 

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

 

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

 

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

 

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

 

ARTICLE 2

COLLABORATION AND DEVELOPMENT
PLAN

 

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

 

2.2                   No Amendment of Collaboration and Development Plan.
The terms of the Collaboration and Development Plan may be varied or amended
only in accordance with the terms of the Collaboration Agreement. In the event
that the terms of the Collaboration and Development Plan are inconsistent with
the terms of this Agreement, the Collaboration and Development Plan shall
control, unless otherwise explicitly agreed to in writing by the Parties.

 

2.3                   Product Addendum. For each Product to be
Manufactured by Rhein Biotech and GCVC hereunder, the Parties shall agree in
writing upon a Product

 

2

 

Addendum. A Product
Addendum for the Whole Cell Product shall be approved by the Steering Committee
and attached hereto as Schedule C. The terms of a Product Addendum may be
varied or amended only in accordance with the terms of the Collaboration
Agreement applicable to variations or amendments to the Collaboration and
Development Plan.

 

ARTICLE 3

PURCHASE AND SUPPLY OF PRODUCT

 

3.1                   Agreement to Purchase and Supply. Pursuant
to the terms and conditions of this Agreement, Rhein Biotech and GCVC shall
purchase from Chiron the Bulk Chiron Material required for the Rhein Biotech
and GCVC Contract Requirements of the Product, and Rhein Biotech and GCVC shall
use good faith efforts to Manufacture the Minimum Contract Requirements of the
Product in accordance with Article 4 of this Agreement.

 

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

 

3.3                   Bulk Chiron Material Delivery. Chiron shall
deliver or  cause to be delivered
to Rhein Biotech and GCVC the amount of Bulk Chiron Material referred to in
Schedule B and the applicable Certificate of Analysis therefore by facsimile or
by e-mail at least seven (7) days in advance of the date set forth in the
applicable Product Addendum for Manufacture of the relevant Product. On receipt
of the Bulk Chiron Material as set forth above, Rhein Biotech and GCVC’s sole
obligation subject to any applicable regulatory requirements with respect to
evaluation of the Bulk Chiron Material shall be to review the accompanying
Certificate of Analysis to confirm that the Bulk Chiron Material conforms with
the Product Specifications. Each Batch of Bulk Chiron Material shall be
accompanied by a reference sample thereof.

 

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

 

3

 

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

 

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

 

ARTICLE 4

FORECASTS AND ORDERS

 

4.1                   Initial Forecasts. As of the date of
receipt by Rhein Biotech and GCVC of notice of the first regulatory approval
for the Product, Rhein Biotech and GCVC shall provide non-binding estimates for
deliveries of the Bulk Chiron Material for a twelve (12) month period divided
on a quarterly basis and for one subsequent twelve (12) month period to meet
the Parties’ estimated Contract Requirements for each Product, in accordance
with the terms of the Collaboration Agreement and the Collaboration and
Development Plan.

 

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

 

4.3                   Purchase Orders. The Parties shall agree a
form of Rhein Biotech and GCVC Purchase Order for Rhein Biotech and GCVC to
submit to Chiron covering Rhein Biotech and GCVC’s purchase of Bulk Chiron
Material pursuant to this Agreement.

 

4

 

ARTICLE 5

COMMERCIAL TERMS

 

5.1                   Purchase of Bulk Chiron Material. Title and
risk of loss with respect to each shipment of Bulk Chiron Material shall pass
to Rhein Biotech and GCVC upon delivery of the Bulk Chiron Material to a common
carrier at Chiron’s manufacturing facility pursuant to the terms of Section
6.1.

 

5.2                   Purchase Price. The Rhein Biotech and GCVC
Purchase Price to be paid by Rhein Biotech and GCVC to Chiron for the Bulk
Chiron Material shall be the Transfer Price calculated in accordance with
Schedule G attached hereto.

 

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

 

ARTICLE 6

SHIPMENT AND INVOICING

 

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

 

6.2                   Payment Terms. (a) The Rhein Biotech and
GCVC Purchase Price shall be paid by Rhein Biotech and GCVC to Chiron within
sixty (60) days of the later of (i) delivery of the Bulk Chiron Material to
Rhein Biotech and GCVC in accordance with the terms of this Agreement and the
relevant Purchase Order or (ii) receipt by Rhein Biotech and GCVC of an invoice
from Chiron. Payments not received within the specified time shall bear
interest in accordance with the terms of Section 14.6(c) of the Collaboration
Agreement; (b) All payments due to Chiron under any Collaboration Document
shall be remitted by telegraphic transfer in immediately available funds to a
bank account to be designated from time to time by Chiron. (c) Unless otherwise
agreed between the Parties, the invoiced currency shall be US Dollars.

 

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

 

5

 

ARTICLE 7

ACCEPTANCE OF BULK CHIRON
MATERIAL

 

7.1                   Bulk Chiron Material Conformity. Within
thirty (30) calendar days from the date of receipt of both the Bulk Chiron
Material and the Certificate of Analysis to Rhein Biotech and GCVC, Rhein
Biotech and GCVC shall determine whether any shipment of the Bulk Chiron
Material conforms to the Product Specifications. If any shipment of the Bulk
Chiron Material conforms to the Product Specifications, Rhein Biotech and GCVC
shall be deemed to have accepted the Bulk Chiron Material and waived its right
to revoke acceptance. If Rhein Biotech and GCVC fail to notify Chiron within
the thirty (30) calendar day period that any shipment of the Bulk Chiron
Material does not conform to the Certificate of Analysis, then Rhein Biotech
and GCVC shall be deemed to have accepted the Bulk Chiron Material and waived
its right to revoke acceptance. If Rhein Biotech and GCVC believe any shipment
of the Bulk Chiron Material does not conform to the Certificate of Analysis,
Rhein Biotech and GCVC shall notify Chiron including a detailed explanation of
the non-conformity. Upon receipt of such notice, Chiron will investigate such
alleged non-conformity and (i) if Chiron agrees such Bulk Chiron Material is
non-conforming, deliver to Rhein Biotech and GCVC a corrective action plan
within thirty (30) calendar days after receipt of Rhein Biotech and GCVC’s
written notice of non-conformity, or (ii) if Chiron disagrees with Rhein
Biotech and GCVC’s determination that the shipment of the Bulk Chiron Material
is non-conforming, Chiron shall so notify Rhein Biotech and GCVC by telephone
within the thirty (30) calendar day period and confirm such notice in writing
by overnight delivery. If the Parties dispute whether a shipment of the Bulk
Chiron Material is conforming or non-conforming, the shipment of the Bulk
Chiron Material will be submitted to a mutually acceptable laboratory or
consultant for resolution, whose determination of conformity or non-conformity
shall be binding upon the Parties. The incorrect Party shall bear the costs of
such laboratory or consultant. In the event that Chiron agrees that the
shipment of the Bulk Chiron Material is non-conforming or the laboratory
determines that the shipment of the Bulk Chiron Material is non-conforming,
Chiron shall replace such non-conforming Bulk Chiron Material within sixty (60)
calendar days from receipt of the written notice of non-conformity from Rhein
Biotech and GCVC or the laboratory determination, as the case may be. Such
replacement of the Bulk Chiron Material by Chiron shall be made at Chiron’s
expense, provided, however, that in the event a shipment of the Bulk Chiron
Material is determined to be non-conforming solely as a result of the acts or
omissions of Rhein Biotech and GCVC, then such replacement of the Bulk Chiron
Material by Chiron shall be at Rhein Biotech and GCVC’s expense.

 

7.2                   Non-conforming Product. For the avoidance
of doubt, if the Product fails to meet the Product Requirements, and such
failure is the result of non-conforming Bulk Chiron Material, then Chiron shall
supply Rhein Biotech and GCVC with the Bulk Chiron Material for replacement
Product, and Rhein Biotech and GCVC shall Manufacture a replacement Batch of
such Product as promptly as reasonably

 

6

 

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

 

ARTICLE 8

INTELLECTUAL PROPERTY

 

8.1                   Intellectual Property. The provisions of
Article 7 (Intellectual Property) and Article 8 (Licenses) of the Collaboration
Agreement shall apply mutatis mutandis to
this Agreement and are hereby incorporated by reference herein.

 

ARTICLE 9

MANUFACTURE OF THE PRODUCT

 

9.1                   Manufacture. Rhein Biotech and GCVC shall
Manufacture the Product in accordance with cGMP and any applicable laws or
regulations as set forth in the Collaboration and Development Plan.

 

9.2                   Inspections. Each Party shall have the
right to inspect the other Party’s facilities to determine compliance with the
terms and provisions of the Collaboration and Development Plan, the Product
Requirements and this Agreement.

 

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

 

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

 

7

 

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

 

9.6                   Material Safety Data Sheet. Rhein Biotech
and GCVC  shall maintain a
material safety data sheet for the Product. Rhein Biotech and GCVC shall
immediately notify Chiron of any unusual health or environmental occurrence
relating to the Product, including, but not limited to any claim or complaint
by any Rhein Biotech and GCVC employee or third party that the operations of
Rhein Biotech and GCVC pursuant to this Agreement have resulted in any adverse
health or safety effect on an employee or third party. Rhein Biotech and GCVC
shall advise Chiron immediately of any safety or toxicity problem of which it
becomes aware in connection with the Product.

 

9.7                   Intentionally Omitted.

 

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

 

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

 

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

 

8

 

ARTICLE 10

CONFIDENTIALITY

 

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

 

ARTICLE 11

RECALL OF PRODUCT

 

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

 

ARTICLE 12

REPRESENTATIONS AND WARRANTIES

 

12.1            Mutual Representations. Each Party hereby
represents and warrants to the other that (a) the person executing this
Agreement is authorized to execute this Agreement; (b) this Agreement is legal
and valid and the obligations binding upon such Party are enforceable by their
terms; and (c) the execution, delivery and performance of this Agreement does
not conflict with any agreement, instrument or understanding, oral or written,
to which such Party may be bound, nor violate any law or regulation of any
court, governmental body or administrative or other agency having jurisdiction
over it.

 

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

 

9

 

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

 

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

 

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

 

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

 

ARTICLE 13

INDEMNIFICATION AND INSURANCE

 

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

 

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

 

10

 

any of its obligations
hereunder

 

13.3            Indemnification
Procedures. Any person seeking indemnity pursuant to this section (the “Indemnified
Party”) shall notify the Party from whom indemnification is sought (the “Indemnifying
Party”) in writing promptly upon becoming aware of any claim, threatened claim,
damage, loss, suit, proceeding or liability (“Claim”) to which such
indemnification may apply. Failure to provide such notice shall constitute a
waiver of the Indemnifying Party’s indemnity obligations hereunder if and to
the extent the Indemnifying Party is materially damaged thereby. The
Indemnifying Party shall have the right to assume and control the defense of
the Claim at its own expense. If the right to assume and control the defense is
exercised, the Indemnified Party shall have the right to participate in, but
not control, such defense at its own expense and the Indemnify Party’s
indemnity obligations shall be deemed not to include attorneys’ fees and
litigation expenses incurred by the Indemnified Party after the assumption of
the defense by the Indemnifying Party. If the Indemnifying Party does not
assume the defense of the Claim, the Indemnified Party may defend the Claim;
provided, that the Indemnified Party will not settle or compromise the Claim
without consent of Indemnifying Party, which consent will not be unreasonably
withheld. The Indemnified Party shall cooperate with Indemnifying Party and will
make available to Indemnifying Party all pertinent information under the
control of the Indemnified Party.

 

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

 

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

 

ARTICLE 14

TERM, TERMINATION AND REMEDY FOR
BREACH

 

14.1            Term. This Agreement is effective as of the
date hereof and shall continue indefinitely unless terminated by either Party
in accordance with the terms hereof.

 

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

 

11

 

14.3            Effect of Termination. The Parties agree
that the effect of any termination of this Agreement shall be in accordance
with the termination provisions set forth in Section 14 in the Collaboration
Agreement.

 

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

 

14.5            Remedy for Breach. The Parties agree that
the sole remedies for breach under this Agreement shall be as set forth in
Section 14 of the Collaboration Agreement which is hereby incorporated by
reference herein.

 

ARTICLE 15

MISCELLANEOUS

 

15.1            Notices.

 

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

 

If to Chiron:

 

Chiron Behring GmbH &
Co

Emil von Behring Strasse
76

35041 Marburg

Germany

 

Attention: Business
Development

 

Facsimile: 49 6421 39
5187

 

with a copy to:

 

Chiron S.p.A.

Via Fiorentina 1

53100 Siena

Italy

 

12

 

Attention:   Project
Development

Facsimile:  39
0577 24 3085

 

If to Rhein Biotech and
GCVC:

 

GreenCross Vaccine Corporation

303 Bojung-Ri,
Koosung-Eup

Yongin 449-770

Republic of Korea

 

Attention:  Representative
Director

Facsimile: 82 31 260
9012

 

with a copy to:

 

Rhein Biotech N.V.

Gaetano Martinolaan 95

6229 GS Maastricht

The Netherlands

 

Attention:  CEO

Facsimile: 31 43 35
67 899

 

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

 

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

 

13

 

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

 

15.4            Assignment. This
Agreement shall not be assignable in whole or in part by either Party without
the prior written consent of the other Party. Each Party is, however,
authorized to assign this Agreement in whole or in part to any of its
Affiliates provided that the assigning Party promptly informs the other Party
of the transfer of rights and obligations.

 

15.5            Waiver or
Modification. This Agreement may not be amended, modified or supplemented
except by a written instrument manually signed by all of the Parties hereto or
thereto. No omission or delay on the part of either Party in requiring the due
and punctual fulfillment by the other of any of the obligations hereunder shall
constitute a waiver by the omitting or delaying Party of any of its rights to
require such due and punctual fulfillment of any obligation hereunder, whether
similar or otherwise, or a waiver of any remedy it may have hereunder or
otherwise.

 

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

 

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

 

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

 

14

 

15.9                        Independent
Contractors. The relationship between Chiron and Rhein Biotech and GCVC
created by this Agreement is one of independent contractors and neither Party
shall have the power or authority to bind or obligate the other except as
expressly set forth in this Agreement.

 

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

 

15.11                 Absence of Future
Competition. Except as otherwise provided in this Agreement, each Party
covenants and agrees that neither such Party nor any Affiliate of such Party
(whether or not such Affiliate has accepted a sublicense hereunder and agreed
to be bound by the terms hereof) nor shall any of their respective successors
in interest engage in the business of developing, manufacturing, marketing or
distributing any Product in the Field other than through Chiron and Rhein
Biotech and GCVC, as contemplated by this Agreement, provided, however, that in
the event the collaboration with respect to the Acellular Product is terminated
pursuant to the terms of Section 2.5 of the Collaboration Agreement, then this
Section 15.11 shall not apply to any acellular product in the Field.

 

15.12                 Ethical Business
Practices. Neither Party, nor any person employed by it or representing it,
has ever made, offered, provided or authorized, and covenants that neither it,
nor any person employed by it or representing it, will make offer provide or
authorize, direct or indirectly, any payment or transfer of anything of value
to any official, representative or employee of any government agency or
instrumentality, any political party or officer thereof, or any candidate for
public office for the purpose of influencing a decision by any of them in their
official capacity, and no officer, director, partner, owner, principal,
employee, or agent of either Party is an official or employee of a governmental
agency or instrumentality or a government owned company in a position to
influence action or a decision regarding the activities of such Party
contemplated in this Agreement. Each Party covenants that it will inform the
other, if and as soon as any person assumes such a position as an official or
employee of a governmental agency or instrumentality or government owned
company, while at the same time remaining an officer, director, partner, owner,
principal, employee, or agent of such Party.

 

15.13                 Change of
Control. The Parties agree that the terms of Section 14.4(b) of the
Collaboration Agreement apply mutatis
mutandis to this Agreement and are hereby incorporated by reference
herein.

 

15

 

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

 

15.15                 Joint and Several
Liability.

 

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

 

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

 

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

 

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

 

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

 

16

 

	
  CHIRON
  BEHRING GMBH & CO

  	
  RHEIN
  BIOTECH N.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John A Lambert

  	
   

  	
  By:

  	
  /s/ Jan Thio

  	
   

  
	
  Name:  John
  Lambert

  	
  Name:  Jan
  Thio

  
	
  Title:  President,
  Chiron Vaccines

  	
  Title:  Business
  Director

  
						

 

 

	
   

  	
  By:

  	
  /s/ Kees Moonen

  	
   

  
	
  CHIRON
  S.P.A.

  	
  Name:  Kees Moonen

  
	
   

  	
   

  	
   

  	
  Title:  Legal
  Counsel

  
						

 

 

	
  By:

  	
  /s/ John A Lambert

  	
   

  	
  GREENCROSS
  VACCINE 

  
	
  Name:  John
  Lambert

  	
  CORPORATION

  
	
  Title:  President,
  Chiron Vaccines

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ton Kuiper

  	
   

  
	
   

  	
  Name:  Ton
  Kuiper

  
	
   

  	
  Title:  Representative
  Director

  

 

17

 

List of Schedules

 

	
  Schedule A:

  	
  Definitions

  
	
   

  	
   

  
	
  Schedule B:

  	
  Minimum Contract Requirements

  
	
   

  	
   

  
	
  Schedule C:

  	
  Product Addendum

  
	
   

  	
   

  
	
  Schedule D:

  	
  Chiron Materials

  
	
   

  	
   

  
	
  Schedule E:

  	
  Rhein Biotech and GCVC Materials

  
	
   

  	
   

  
	
  Schedule F:

  	
  Loss Allowances

  
	
   

  	
   

  
	
  Schedule G:

  	
  Price Calculations

  

 

 

SCHEDULE A

 

DEFINITIONS

 

 

SCHEDULE A

 

DEFINITIONS

 

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

 

1.1                   [***]

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

1.10            “Bulk Supply Agreement” means the bulk
supply agreement dated as of the date of the Collaboration Agreement between
Chiron and Rhein Biotech and GCVC, and all schedules, amendments and
supplements thereto, a form of which is attached as Schedule J to the
Collaboration Agreement.

 

1.11            “Certificate of Analysis” means the
certificate of analysis confirming that the accompanying Product complies with
the Product Specifications and cGMP.

 

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

 

1.13            “Chiron Inventions” means inventions arising
from the activities of the parties under the Collaboration Agreement and
invented solely by employees of Chiron or persons obligated to assign their
inventions to Chiron.

 

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

 

2

 

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

 

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

 

1.17            “Chiron/Rhein Biotech
and GCVC Joint Background Technology” means

 

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

 

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

 

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

 

1.18            “COGS” stands for cost of goods sold and
shall have the meaning ascribed to it in Schedule F to the Collaboration
Agreement.

 

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

 

1.20            “Collaboration Agreement” means the
collaboration agreement dated as of April 30, 2001 between Chiron and Rhein
Biotech and GCVC and all schedules, amendments and supplements thereto.

 

1.21            “Collaboration and Development Plan” means
the collaboration and development plan attached as Schedule H to the
Collaboration Agreement.

 

1.22            “Collaboration Documents” means the
Collaboration Agreement, the Bulk Supply Agreement and the Supply and
Manufacturing Agreement.

 

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

 

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

 

3

 

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

 

1.24            “Collaboration
Technology” means:

 

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

 

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

 

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

 

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

 

1.26            “Contributed
Chiron Technology” means:

 

(a)                     all patents
and patent applications Controlled by Chiron as of the Effective Date that
cover the Product, including without limitation, the patents and patent
applications listed on Schedule B to the Collaboration Agreement; for these
purposes a patent or patent application shall be deemed to “cover” the Product
if the manufacture, use or sale of the Product by Rhein Biotech and GCVC would
infringe a claim in such patent or patent application but for the licenses
contemplated hereby; all patents issued from such patent applications; and all
reissues, confirmations, renewals, extensions, counterparts, divisions, continuations,
continuations-in-part, supplemental protection certificates or utility models
relating to such patents and patent applications; and

 

4

 

(b)                    all
unpublished scientific, engineering, economic, commercial and other technical
data or information, research results, methods, processes, procedures,
trade-secrets and know-how relating to the Product which are Controlled by
Chiron as of the Effective Date.

 

1.27            “Contributed Rhein Biotech and GCVC Technology” means:

 

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

 

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

 

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

 

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

 

1.30            “Effective Date” means the date of the
Collaboration Agreement.

 

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

 

5

 

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

 

1.33            “Field” means the field of pentavalent
combination vaccines for pediatric use.

 

1.34            “Finance Committee” means the finance
subcommittee established pursuant to the terms of Section 3.3 of the
Collaboration Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

1.43            “Master Batch Record” means, with respect to
each Product to be Manufactured hereunder, a formal set of instructions for the
Manufacture of such Product.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.51            “Product Loss Allowance” means the
allowances for losses of the finished Product as more specifically set forth in
Schedule F to the Bulk Supply Agreement and the Supply and Manufacturing
Agreement.

 

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

 

7

 

1.53            “Product Specifications” means, with respect
to the Product, the specifications and testing to be performed for the Bulk
Chiron Material, the Bulk Rhein Biotech and GCVC Material, the Product and/or
the stability program that are set forth in the Rhein Biotech and GCVC SOPs and
the Master Batch Records. The Product Specifications include all tests that
Rhein Biotech and GCVC are required to conduct or cause to be conducted as
specified in the Collaboration and Development Plan. The Product Specifications
my be modified from time to time only in accordance with the terms of the
Collaboration Agreement.

 

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

 

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

 

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

 

1.57            “Residual Expenses” means, with respect to
either Party, any Allowable Expenses which such Party incurs following any
termination of the Collaboration Agreement and which such Party cannot
reasonably eliminate.

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

(i)                        Costs
associated with sales representatives such as compensation, benefits, travel,
supervision and training of sales representatives, sales meetings and other
sales expenses.

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

 

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

 

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

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

(c)                      to the
extent separately stated on purchase orders and invoices or other documents of
sale and actually taken:

	
  (i)

  	
  imported and export duties;

  
	
  (ii)

  	
  excise, sales or usetaxes;

  
	
  (iii)

  	
  value added taxes, and other governmental charges;
  and

  

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

 

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

 

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

 

1.68            “Supply and Manufacturing Agreement” means
the supply and manufacturing  agreement
dated as of the date of the Collaboration Agreement between Chiron and Rhein
Biotech and GCVC, and all schedules, amendments and supplements

 

9

 

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

 

1.69            “Termination Products” means the Whole Cell
Product and the Acellular Product, if any, included within the Collaboration in
accordance with the provisions of Section 2.1 to the Collaboration Agreement
prior to the termination, if any, of the Collaboration Agreement.

 

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

 

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

 

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

 

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

 

1.74            “Transfer Price” means the transfer price
set in accordance with the terms of the Collaboration Agreement and calculated
in accordance with the formula indicated in Schedule G to the Bulk Supply
Agreement and Schedule G to the Supply and Manufacturing Agreement

 

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

 

1.76            “Whole Cell Product” means the whole cell
pentavalent liquid combination vaccine for pediatric use DTwP-Hib-HBV for
protection against Diptheria, Tetanus, Pertussis, Haemophilus Influenza type b
and Hepatitis B.

 

10

 

SCHEDULE B

 

MINIMUM CONTRACT REQUIREMENTS

 

[***]

 

 

SCHEDULE C

 

PRODUCT ADDENDUM

 

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

 

 

SCHEDULE D

 

CHIRON MATERIALS

 

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

 

 

SCHEDULE E

 

RHERN BIOTECH AND GCVC MATERIALS

 

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

 

 

SCHEDULE F

 

LOSS ALLOWANCES

 

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

 

 

SCHEDULE G

TO BULK SUPPLY

AGREEMENT

 

Transfer Pricing

 

1.                          Definitions

 

Capitalized terms used in this Schedule but not defined herein shall
have the meanings ascribed to them in Schedules A and F to the Collaboration
Agreement. The following  words and phrases
shall have the following meanings:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Market Condition Change” means an unexpected change in market
conditions beyond Rhein Biotech and GCVC’s control where an Indicative Tender
has occurred.

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Subsequent Period” means each twelve month period following the
Initial Period.

 

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

 

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

 

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

 

“Transfer Price” means
the Initial Period Transfer Price and each Subsequent Period Transfer Price.

 

 

2.                          Initial
Period Transfer Price Calculation

 

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

 

(b)         Setting of the Initial Period Transfer Price.
The Steering Committee shall agree on the Initial Period Transfer Price and all
components thereof except as set forth in Section 2 (d) below (i) with respect
to the Initial Period Transfer Price for the first six month portion of the
Initial Period, to the extent applicable, no later than two months before the
beginning of Initial Period, and (ii) with respect to the Initial Period Transfer Price for any subsequent portion of
the Initial Period, no later than the end of the fourth month of the first six
month portion of the Initial Period, provided, however, that if the Parties
fail to agree to a Transfer Price pursuant to Section 2 (b) (ii) above such
Transfer Price will be determined by applying the prior actual results as
follows:

 

The
Actual Average Net Sales Price will be the tender price for the last Indicative
Tender. The Actual Chiron
Cost of Goods Sold, Actual Rhein Biotech Cost of Goods Sold, and the Actual
Average Foreign Exchange Rate will be based on the average of last two months
of the preceding six month period of the Initial Period.

 

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

 

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

 

 

(c)          Market Condition Change. In the event of
the occurrence of a Market Condition Change, then Chiron and Rhein Biotech and
GCVC shall confer regarding a possible adjustment to the Projected Average Net
Sales Price for the relevant period and the resulting adjustment to the Initial
Period Transfer Price. Any such adjusted Projected Average Net Sales Price and
Initial Period Transfer Price shall apply prospectively with respect to all
calculations in connection with all Product shipped by Rhein Biotech and GCVC
during remainder of the relevant portion of the Initial Period. Only two such
adjustments to the Initial Period Transfer Price may be made during the Initial
Period, and only one may be made during the first six months, to the extent
applicable, of the Initial Period and only one during the second six months, if
any, of the Initial Period.

 

(d)         Initial Shipment of Bulk Chiron Material Transfer
Price The initial shipment of Bulk Chiron Material from Chiron to
Rhein Biotech and GCVC will be at the Initial Shipment Transfer Price. The  maximum number of Units that may be
included in the initial shipment at the Initial Shipment Transfer Price shall
be calculated by taking the amount of U.S. Dollars [***] divided by the per
Unit fully burdened Initial Transfer Price determined in Section 2 (a) above.
Only the Initial Shipment of Bulk
Chiron Material will be at the Initial Shipment Transfer Price. All subsequent
shipments during the Initial Period will be at the full Transfer Price detailed
in Section 2 (a).

 

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

 

On or before the date of the initial shipment of Bulk
Chiron Material to Rhein Biotech and GCVC, Rhein Biotech and GCVC shall provide
to Chiron an “On Demand” bank guarantee from ABN AMRO Bank N.V. or other such
internationally recognized bank in the United States in the amount of the
additional payment calculated in  accordance
with Section 7 (a). Chiron shall have the right to demand payment of the
guarantee on the date which is nine months from the date of the initial
shipment of Bulk Chiron Material to Rhein Biotech and GCVC.

 

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

 

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

 

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

 

 

3.                          Subsequent
Period Transfer Price Calculation

 

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

 

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

 

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

 

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

 

4.              Maximum Projected
Average Net Sales Price

 

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

 

 

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

 

5.              Minimum Projected
Average Net Sales Price.

 

Notwithstanding anything to the contrary contained in
this Agreement, the Projected Average Net Sales Price for the Product shall not
be less than the Minimum Projected Average Net Sales Price unless the Parties
meet, confer and agree on a different Projected Average Net Sales Price.
Notwithstanding the above stated Minimum Projected Average Net Sales Price the
Parties agree in the event  the
Actual Average Net Sales Price for three consecutive months is less than the
Minimum Projected Average Net Sales Price, the Parties shall meet and agree in
good faith a revised Minimum Projected Average Net Sales.

 

6.              Currency Translation

 

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

 

7.              Initial Period
Additional Payments

 

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

 

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

 

for the initial shipment of Bulk Chiron Material ,

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

 

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

 

 

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

 

8.              Subsequent Period
Additional Payments

 

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

 

For the Subsequent Periods, the additional payment, if any, each
calendar quarter for all sales in such quarter shall be calculated for the
relevant quarter

 

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

 

9.              Reports

 

(a)          Gross Margin Report

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

 

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

 

(b)          Cost of Goods Sold
Report

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

 

 

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

 

(c)          Additional Payment
Report

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

 

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

 

10.  [***]

 

 

SCHEDULE K

 

EXECUTION VERSION

 

SUPPLY AND MANUFACTURING AGREEMENT

 

This Supply and Manufacturing Agreement is
made and entered into as of April 30, 2001 by and among Chiron Behring GmbH
& Co, a company incorporated in Germany, with offices at Emil von Behring
Strasse 76, 35041 Marburg, Germany (“Chiron
Behring”), Chiron S.p.A., a company incorporated in Italy, with
offices at Via Fiorentina 1, 53100 Siena, Italy (“Chiron S.p.A.”, and together with Chiron Behring GmbH &
Co, “Chiron”), Rhein Biotech N.V.,
a company incorporated in the Netherlands, with offices at Gaetano Martinolaan
95,6229 GS Maastricht, The Netherlands (“Rhein
Biotech”), and GreenCross Vaccines Corporation, a company
incorporated in the Republic of Korea, with offices at 303 Bojung-Ri, Koosung-Eup,
Yongin 449-770, Republic of Korea (“GCVC”,
and together with Rhein Biotech, “Rhein
Biotech and GCVC”).

 

RECITALS

 

A.            WHEREAS, Chiron, Rhein
Biotech and GCVC have entered into a Collaboration Agreement dated the date
hereof the (“Collaboration Agreement”) pursuant to which they will collaborate
on the research, development and manufacturing of one or more new pentavalent
combination vaccines for pediatric use (as more specifically defined herein,
the “Product”).

 

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

 

NOW THEREFORE in consideration of the premises and other
good and valuable consideration, Chiron and Rhein Biotech and GCVC agree as
follows.

 

ARTICLE 1

DEFINITIONS

 

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

 

1.2          Rules of Interpretation. For the purposes of
this Agreement the following rules

 

1

 

of
interpretation shall apply:

 

(a)          The
descriptive headings of Articles and Sections are inserted solely for
convenience of reference and are not intended as complete or accurate
descriptions of the content of such Articles or Sections.

 

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

 

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

 

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

 

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

 

ARTICLE 2

COLLABORATION AND DEVELOPMENT PLAN

 

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

 

2.2          No Amendment of Collaboration and Development
Plan. The terms of the
Collaboration and Development Plan may be varied or amended only in accordance
with the terms of the Collaboration Agreement. In the event that the terms of
the Collaboration and Development Plan are inconsistent with the terms of this
Agreement, the Collaboration and Development Plan shall control, unless
otherwise explicitly agreed to in writing by the Parties.

 

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

 

2

 

by the Steering Committee and attached hereto as Schedule
C. The terms of a Product Addendum may be varied or amended only in accordance
with the terms of the Collaboration Agreement applicable to variations or
amendments to the Collaboration and Development Plan.

 

ARTICLE 3

PURCHASE AND SUPPLY OF PRODUCT

 

3.1          Agreement to Purchase and
Supply. Pursuant to the terms and conditions of this Agreement, Chiron shall
purchase from Rhein Biotech and GCVC the Chiron Contract Requirements of the
Product, and Rhein Biotech and GCVC shall use good faith efforts to Manufacture
and deliver to Chiron the Minimum Contract Requirements of the Product in
accordance with Article 4 of this Agreement.

 

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

 

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

 

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

 

3

 

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

 

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

 

ARTICLE 4

FORECASTS AND ORDERS

 

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

 

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

 

4.3          Purchase Orders. The Parties shall
agree a form of Chiron Purchase Order for Chiron to submit to Rhein Biotech and
GCVC covering Chiron’s purchase of Product pursuant to this Agreement.

 

ARTICLE 5

COMMERCIAL TERMS

 

5.1          Bulk Chiron Material on
Consignment. All Bulk Chiron Material delivered by Chiron to Rhein Biotech and GCVC
pursuant to the terms of this Agreement shall

 

4

 

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

 

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

 

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

 

ARTICLE 6

SHIPMENT AND INVOICING

 

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

 

6.2          Payment Terms. (a) The Purchase
Price shall be paid by Chiron to Rhein Biotech and GCVC within sixty (60) days
of the later of (i) delivery of the Product to Chiron in accordance with the
terms of this Agreement and the relevant Purchase Order or (ii) receipt by
Chiron of an invoice from Rhein Biotech and GCVC. Payments not received within
the specified time shall bear interest in accordance with the terms of Section
14.6(c) of the Collaboration Agreement. (b) All payments due to Rhein Biotech
and GCVC under any Collaboration Document shall be remitted by telegraphic
transfer in immediately available funds to a bank account to be designated from
time to time by Rhein Biotech and GCVC. (c) Unless otherwise agreed between the
Parties, the invoiced currency shall be US Dollars.

 

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

 

5

 

ARTICLE 7

ACCEPTANCE OF PRODUCT

 

7.1          Product Conformity. Within thirty (30)
calendar days from the date of receipt of both the Product and the Released
Executed Batch Record to Chiron or to a facility designated by Chiron, Chiron
shall test any shipment of the Product to determine whether it conforms to the
Product Requirements. If any shipment of the Product conforms to the Product
Requirements, Chiron shall be deemed to have accepted the Product and waived
its right to revoke acceptance. If Chiron fails to notify Rhein Biotech and
GCVC within the thirty (30) calendar day period that any shipment of the
Product does not conform to the Product Requirements, then Chiron shall be
deemed to have accepted the Product and waived its right to revoke acceptance.
If Chiron believes any shipment of the Product does not conform to the Product
Requirements, Chiron shall notify Rhein Biotech and GCVC including a detailed
explanation of the non-conformity. Upon receipt of such notice, Rhein Biotech
and GCVC will investigate such alleged nonconformity and (i) if Rhein Biotech
and GCVC agree such Product is non-conforming, deliver to Chiron a corrective
action plan within thirty (30) calendar days after receipt of Chiron’s written
notice of non-conformity, or (ii) if Rhein Biotech and GCVC disagree with
Chiron’s determination that the shipment of the Product is non-conforming,
Rhein Biotech and GCVC shall so notify Chiron by telephone within the thirty
(30) calendar day period and confirm such notice in writing by overnight
delivery. If the Parties dispute whether a shipment of the Product is
conforming or non-conforming, the shipment of the Product will be submitted to
a mutually acceptable laboratory or consultant for resolution, whose
determination of conformity or non-conformity shall be binding upon the
Parties. The incorrect Party shall bear the costs of such laboratory or
consultant. In the event that Rhein Biotech and GCVC agree that the shipment of
the Product is non-conforming or the laboratory determines that the shipment of
the Product is non-conforming, Rhein Biotech and GCVC shall replace such
non-conforming Product within sixty (60) calendar days from receipt of
replacement Bulk Chiron Material from Chiron, Chiron shall pay for all Product;
provided, however, in the event a shipment of the Product is determined to be
non-conforming solely as a result of the acts or omissions of Rhein Biotech and
GCVC, then Rhein Biotech and GCVC shall (a) reimburse Chiron for its actual
cost of the Bulk Chiron Material for the non-conforming shipment of the
Product, and (b) either (i) refund the purchase price of the non-conforming
Product, to the extent already paid or (ii) replace the non-conforming shipment
of the Product at Rhein Biotech and GCVC’s expense but subject to Chiron
supplying the replacement Bulk Chiron Material at Chiron’s expense.

 

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

 

6

 

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

 

ARTICLE 8

INTELLECTUAL PROPERTY

 

8.1          Intellectual Property. The provisions of
Article 7 (Intellectual Property) and Article 8 (Licenses) of the Collaboration
Agreement shall apply mutatis mutandis to
this Agreement and are hereby incorporated by reference herein.

 

ARTICLE 9

MANUFACTURE OF THE PRODUCT

 

9.1          Manufacture. Rhein Biotech and
GCVC shall Manufacture the Product in accordance with cGMP and any applicable
laws or regulations as set forth in the Collaboration and Development Plan.

 

9.2          Inspections. Each Party shall
have the right to inspect the other Party’s facilities to determine compliance
with the terms and provisions of the Collaboration and Development Plan, the
Product Requirements and this Agreement.

 

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

 

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

 

9.5          Stability Testing. Rhein Biotech and
GCVC shall perform all stability testing

 

7

 

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

 

9.6          Material Safety Data Sheet. Rhein Biotech and
GCVC shall maintain a material safety data sheet for the Product. Rhein Biotech
and GCVC shall immediately notify Chiron of any unusual health or environmental
occurrence relating to the Product, including, but not limited to any claim or
complaint by any Rhein Biotech and GCVC employee or third party that the
operations of Rhein Biotech and GCVC pursuant to this Agreement have resulted
in any adverse health or safety effect on an employee or third party. Rhein
Biotech and GCVC shall advise Chiron immediately of any safety or toxicity
problem of which it becomes aware in connection with the Product.

 

9.7          Intentionally Omitted.

 

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

 

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

 

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

 

ARTICLE 10

CONFIDENTIALITY

 

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

 

8

 

ARTICLE 11

RECALL OF PRODUCT

 

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

 

ARTICLE 12

REPRESENTATIONS AND WARRANTIES

 

12.1       Mutual Representations. Each Party hereby
represents and warrants to the other that (a) the person executing this
Agreement is authorized to execute this Agreement; (b) this Agreement is legal
and valid and the obligations binding upon such Party are enforceable by their
terms; and (c) the execution, delivery and performance of this Agreement does
not conflict with any agreement, instrument or understanding, oral or written,
to which such Party may be bound, nor violate any law or regulation of any
court, governmental body or administrative or other agency having jurisdiction
over it.

 

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

 

12.3       Disclaimer of Warranties. Except for those
warranties set forth in Sections 12.1 and 12.2 of this Agreement, Rhein Biotech
and GCVC make no other warranties, written, oral, express or implied, with
respect to the Product or the

 

9

 

Manufacture
of the Product. ALL OTHER WARRANTIES; EXPRESS OR IMPLIED; INCLUDING; WITHOUT
LIMITATION; THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE HEREBY ARE DISCLAIMED BY RHEIN BIOTECH AND GCVC.

 

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

 

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

 

ARTICLE
13

INDEMNIFICATION AND INSURANCE

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

ARTICLE 14

TERM, TERMINATION AND REMEDY FOR BREACH

 

14.1       Term. This Agreement is
effective as of the date hereof and shall continue indefinitely unless
terminated by either Party in accordance with the terms hereof.

 

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

 

14.3       Effect of Termination. The Parties agree
that the effect of any termination of this Agreement shall be in accordance
with the termination provisions set forth in Section 14 of the Collaboration
Agreement.

 

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

 

11

 

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

 

14.5       Remedy for Breach. The Parties agree
that the sole remedies for breach under this Agreement shall be as set forth in
Section 14 of the Collaboration Agreement which is hereby incorporated by
reference herein.

 

ARTICLE 15

MISCELLANEOUS

 

15.1       Notices.

 

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

 

If to Chiron:

 

Chiron Behring GmbH & Co

Emil von Behring Strasse 76

35041 Marburg

Germany

 

Attention: 
Business Development

 

Facsimile: 49 6421 39 5187

 

with a copy to:

 

Chiron S.p.A.

Via Fiorentina 1

53100 Siena

Italy

 

Attention: 
Project Development

Facsimile: 39 0577 24 3085

 

12

 

If to Rhein Biotech and GCVC:

 

GreenCross Vaccine Corporation

303 Bojung-Ri, Koosung-Eup

Yongin 449-770

Republic of Korea

 

Attention: Representative Director

Facsimile: 82 31 260 9012

 

with a copy to:

 

Rhein Biotech N.V.

Gaetano Martinolaan 95

6229 GS  Maastricht

The Netherlands

 

Attention: CEO

Facsimile: 31 43 35 67 899

 

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

 

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

 

13

 

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

 

15.4      Assignment. This Agreement
shall not be assignable in whole or in part by either Party without the prior
written consent of the other Party. Each Party is, however, authorized to
assign this Agreement in whole or in part to any of its Affiliates provided
that the assigning Party promptly informs the other Party of the transfer of
rights and obligations.

 

15.5      Waiver or Modification. This Agreement may
not be amended, modified or supplemented except by a written instrument
manually signed by all of the Parties hereto or thereto. No omission or delay
on the part of either Party in requiring the due and punctual fulfillment by
the other of any of the obligations hereunder shall constitute a waiver by the
omitting or delaying Party of any of its rights to require such due and
punctual fulfillment of any obligation hereunder, whether similar or otherwise,
or a waiver of any remedy it may have hereunder or otherwise.

 

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

 

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

 

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

 

15.9      Independent Contractors. The relationship
between Chiron and Rhein Biotech and GCVC created by this Agreement is one of
independent contractors and neither Party shall have the power or authority to
bind or obligate the other except as expressly set forth in this Agreement.

 

14

 

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

 

15.11    Absence of Future Competition. Except as
otherwise provided in this Agreement, each Party covenants and agrees that
neither such Party nor any Affiliate of such Party (whether or not such
Affiliate has accepted a sublicense hereunder and agreed to be bound by the
terms hereof) nor shall any of their respective successors in interest engage
in the business of developing, manufacturing, marketing or distributing any
Product in the Field other than through Chiron and Rhein Biotech and GCVC, as
contemplated by this Agreement, provided, however, that in the event the
collaboration with respect to the Acellular Product is terminated pursuant to
the terms of Section 2.5 of the Collaboration Agreement, then this Section
15.11 shall not apply to any acellular product in the Field.

 

15.12    Ethical Business Practices. Neither Party, nor
any person employed by it or representing it, has ever made, offered, provided
or authorized, and covenants that neither it, nor any person employed by it or
representing it, will make offer provide or authorize, direct or indirectly,
any payment or transfer of anything of value to any official, representative or
employee of any government agency or instrumentality, any political party or
officer thereof; or any candidate for public office for the purpose of
influencing a decision by any of them in their official capacity, and no
officer, director, partner, owner, principal, employee, or agent of either
Party is an official or employee of a governmental agency or instrumentality or
a government owned company in a position to influence action or a decision
regarding the activities of such Party contemplated in this Agreement. Each
Party covenants that it will inform the other, if and as soon as any person
assumes such a position as an official or employee of a governmental agency or
instrumentality or government owned company, while at the same time remaining
an officer, director, partner, owner, principal, employee, or agent of such
Party.

 

15.13    Change of Control. The Parties agree that the terms of Section
14.4(b) of the Collaboration Agreement apply mutatis
mutandis to this Agreement and are hereby incorporated by reference
herein.

 

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

 

15

 

15.15    Joint and Several Liability.

 

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

 

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

 

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

 

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

 

16

 

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

 

 

	
  CHIRON BEHRING GMBH &
  CO

  	
  RHEIN
  BIOTECH N.V.

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John Lambert

  	
   

  	
  By:

  	
  /s/ Jan Thio

  	
   

  
	
  Name:

  	
  John Lambert

  	
  Name:

  	
  Jan Thio

  
	
  Title:

  	
  President, Chiron Vaccines

  	
  Title:

  	
  Business Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kees Moonen

  	
   

  
	
  CHIRON S.P.A.

  	
  Name:

  	
  Kees Moonen

  
	
   

  	
  Title:

  	
  Legal Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John Lambert

  	
   

  	
  GREENCROSS VACCINES 

  
	
  Name:

  	
  John Lambert

  	
  CORPORATION

  
	
  Title:

  	
  President, Chiron Vaccines

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ton Kuiper

  	
   

  
	
   

  	
  Name:

  	
  Ton Kuiper

  
	
   

  	
  Title:

  	
  Representative Director

  
									

 

17

 

List of Schedules

 

	
  Schedule A:

  	
   

  	
  Definitions

  
	
   

  	
   

  	
   

  
	
  Schedule B:

  	
   

  	
  Minimum Contract
  Requirements

  
	
   

  	
   

  	
   

  
	
  Schedule C:

  	
   

  	
  Product Addendum

  
	
   

  	
   

  	
   

  
	
  Schedule D:

  	
   

  	
  Chiron Materials

  
	
   

  	
   

  	
   

  
	
  Schedule E:

  	
   

  	
  Rhein Biotech and GCVC
  Materials

  
	
   

  	
   

  	
   

  
	
  Schedule F:

  	
   

  	
  Loss Allowances

  
	
   

  	
   

  	
   

  
	
  Schedule G:

  	
   

  	
  Price Calculations

  

 

18

 

SCHEDULE A

 

DEFINITIONS

 

19

 

SCHEDULE A

 

DEFINITIONS

 

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

 

1.1         [***]

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

1.10      “Bulk Supply Agreement” means the bulk
supply agreement dated as of the date of the Collaboration Agreement between
Chiron and Rhein Biotech and GCVC, and all schedules, amendments and
supplements thereto, a form of which is attached as Schedule J to the
Collaboration Agreement.

 

1.11      “Certificate of Analysis” means the
certificate of analysis confirming that the accompanying Product complies with
the Product Specifications and cGMP.

 

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

 

1.13      “Chiron Inventions” means inventions
arising from the activities of the parties under the Collaboration Agreement
and invented solely by employees of Chiron or persons obligated to assign their
inventions to Chiron.

 

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

 

2

 

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

 

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

 

1.17      “Chiron/Rhein Biotech and
GCVC Joint Background Technology” means

 

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

 

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

 

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

 

1.18      “COGS” stands for cost of
goods sold and shall have the meaning ascribed to it in Schedule F to the
Collaboration Agreement.

 

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

 

1.20      “Collaboration Agreement” means the
collaboration agreement dated as of April 30, 2001 between Chiron and Rhein
Biotech and GCVC and all schedules, amendments and supplements thereto.

 

1.21      “Collaboration and
Development Plan” means the collaboration and development plan attached as Schedule H to
the Collaboration Agreement.

 

1.22      “Collaboration Documents” means the
Collaboration Agreement, the Bulk Supply Agreement and the Supply and
Manufacturing Agreement.

 

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

 

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

 

3

 

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

 

1.24      “Collaboration Technology” means:

 

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

 

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

 

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

 

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

 

1.26      “Contributed Chiron
Technology” means:

 

(a)             all patents and
patent applications Controlled by Chiron as of the Effective Date that cover
the Product, including without limitation, the patents and patent applications
listed on Schedule B to the Collaboration Agreement; for these purposes a
patent or patent application shall be deemed to “cover” the Product if the
manufacture, use or sale of the Product by Rhein Biotech and GCVC would
infringe a claim in such patent or patent application but for the licenses
contemplated hereby; all patents issued from such patent applications; and all
reissues, confirmations, renewals, extensions, counterparts, divisions,
continuations, continuations-in-part, supplemental protection certificates or
utility models relating to such patents and patent applications; and

 

4

 

(b)             all unpublished
scientific, engineering, economic, commercial and other technical data or
information, research results, methods, processes, procedures, trade-secrets
and know-how relating to the Product which are Controlled by Chiron as of the
Effective Date.

 

1.27      “Contributed Rhein Biotech
and GCVC Technology” means:

 

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

 

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

 

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

 

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

 

1.30      “Effective Date”  means the date of
the Collaboration Agreement.

 

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

 

5

 

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

 

1.33      “Field” means the field of
pentavalent combination vaccines for pediatric use.

 

1.34      “Finance Committee” means the finance
subcommittee established pursuant to the terms of Section 3.3 of the
Collaboration Agreement.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6

 

1.43      “Master Batch Record” means, with
respect to each Product to be Manufactured hereunder, a formal set of
instructions for the Manufacture of such Product.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1.51      “Product Loss Allowance” means the
allowances for losses of the finished Product as more specifically set forth in
Schedule F to the Bulk Supply Agreement and the Supply and Manufacturing
Agreement.

 

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

 

7

 

1.53      “Product Specifications” means, with
respect to the Product, the specifications and testing to be performed for the
Bulk Chiron Material, the Bulk Rhein Biotech and GCVC Material, the Product
and/or the stability program that are set forth in the Rhein Biotech and GCVC
SOPs and the Master Batch Records. The Product Specifications include all tests
that Rhein Biotech and GCVC are required to conduct or cause to be conducted as
specified in the Collaboration and Development Plan. The Product Specifications
my be modified from time to time only in accordance with the terms of the
Collaboration Agreement.

 

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

 

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

 

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

 

1.57      “Residual Expenses” means, with
respect to either Party, any Allowable Expenses which such Party incurs
following any termination of the Collaboration Agreement and which such Party
cannot reasonably eliminate.

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

(i)                               Costs associated
with sales representatives such as compensation, benefits, travel, supervision
and training of sales representatives, sales meetings and other sales expenses.

 

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

 

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

 

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

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

(c)                            to the extent
separately stated on purchase orders and invoices or other documents of sale
and actually taken:

(i)                         imported and export
duties;

(ii)                      excise, sales or
use taxes;

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

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

 

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

 

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

 

1.68                  “Supply and Manufacturing
Agreement” means the supply and manufacturing agreement dated as of the date of the
Collaboration Agreement between Chiron and Rhein Biotech and GCVC, and all
schedules, amendments and supplements

 

9

 

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

 

1.69                   “Termination Products” means the Whole
Cell Product and the Acellular Product, if any, included within the
Collaboration in accordance with the provisions of Section 2.1 to the
Collaboration Agreement prior to the termination, if any, of the Collaboration
Agreement.

 

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

 

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

 

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

 

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

 

1.74                   “Transfer Price” means the transfer
price set in accordance with the terms of the Collaboration Agreement and
calculated in accordance with the formula indicated in Schedule G to the Bulk
Supply Agreement and Schedule G to the Supply and Manufacturing Agreement.

 

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

 

1.76                   “Whole Cell Product” means the whole
cell pentavalent liquid combination vaccine for pediatric use DTwP-Hib-HBV for
protection against Diptheria, Tetanus, Pertussis, Haemophilus Influenza type b
and Hepatitis B.

 

10

 

SCHEDULE
B

 

MINIMUM
CONTRACT REQUIREMENTS

 

[***]

 

 

SCHEDULE
C

 

PRODUCT ADDENDUM

 

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

 

21

 

SCHEDULE D

CHIRON MATERIALS

 

22

 

Chiron Material

1.             DIPHTHERIA
TOXOID

 

Diphtheria toxoid is manufactured according to WHO Requirements (TRS
800, 1990) and complies with the requirements of the Eur. Ph.

 

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

 

[***]

 

23

 

1.1          SPECIFICATIONS AND ROUTINE TESTS

 

1.1.1  Specifications

 

The specifications for the
Diphtheria Toxoid Concentrate (without preservative) are indicated in the
following table.

 

Specifications for the
Diphtheria Toxoid Concentrate (without preservative)

 

[***]

 

1.1.2  Test methods

 

pH

 

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

 

Nitrogen

 

[***]

 

24

 

[***]

 

Toxoid
content

 

[***]

 

Sulphate

 

[***]

 

Formaldehyde

 

[***]

 

Sodium chloride

 

[***]

 

Sterility

 

[***]

 

25

 

Absence of diphtheria toxin

 

[***]

 

Reversion to toxicity

 

[***]

 

26

 

2.             TETANUS
TOXOID

 

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

 

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

 

[***]

 

27

 

2.1          SPECIFICATIONS
AND ROUTINE TESTS

 

2.1.1  Specifications

 

The specifications for the
Tetanus Toxoid Concentrate (without preservative) are indicated in the
following table.

 

Specifications for the Tetanus
Toxoid Concentrate (without preservative)

 

[***]

 

2.1.2  Test methods

 

pH

 

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

 

Nitrogen

 

[***]

 

28

 

[***]

 

Toxoid content

 

[***]

 

Sulphate

 

[***]

 

Formaldehyde

 

[***]

 

Sodium chloride

 

[***]

 

Sterility

 

[***]

 

29

 

Absence of tetanus toxin

 

[***]

 

Reversion to toxicity

 

[***]

 

30

 

3.             PERTUSSIS
CONCENTRATE

 

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

 

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

 

[***]

 

31

 

3.1          SPECIFICATIONS
AND ROUTINE TESTS

 

3.1.1 
Specifications

 

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

 

Specifications for
the Pertussis Toxoid Concentrate

 

[***]

 

3.1.2  Test methods

 

Agglutinogens

 

[***]

 

pH

 

[***]

 

Thiomersal

 

[***]

 

32

 

EDTA

 

[***]

 

Sterility

 

[***]

 

Turbidity

 

[***]

 

 

4.             CRM-HIB
GLYCOCONJUGATE

 

[***]

 

 

4.1          SPECIFICATIONS AND ROUTINE TESTS

 

4.1.1           Specifications

 

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

 

Specifications for the Glicoconjugate CRM-Hib Bulk
concentrate

 

[***]

 

 

4.1.2           Test methods

 

Hib
Identity

 

[***]

 

CRM
Identity

 

[***]

 

Protein
content - micro BCA method

 

[***]

 

Free
Saccharide (by Ribitol)

 

[***]

 

 

[***]

 

Sterility

 

[***]

 

Endotoxin
content (LAL chromogenic kinetics method)

 

[***]

 

Endotoxin/Saccharide

 

[***]

 

Degree
of glycosilation (saccharide/protein)

 

[***]

 

kD

 

[***]

 

Total
Saccharide (Ribose content)

 

 

[***]

 

 

SCHEDULE E

 

RHEIN BIOTECH AND GCVC MATERIALS

 

23

 

Rhein Biotech and GCVC Material

 

Formaline treated Hepatitis B surface antigen solution

 

Hepatitis B vaccine is
manufactured according to Minimum Requirement for Biologics of KFDA and WHO
Requirements (TRS No. 760, 1987)

 

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

 

[***]

 

 

1.             SPECIFICATION AND ROUTINE TESTS

 

1.1
Specifications

 

The specifications for the
Hepatitis B vaccine derived from Hansenula
polymorpha are indicated in the following tables.

 

Specifications for the HBV Bulk concentrate.

 

[***]

 

 

1.2          Test methods

 

Polysaccharide
content

 

[***]

 

Lipid
content

 

[***]

 

Formaldehyde
content

 

[***]

 

DNA
content

 

[***]

 

Agents
for purification process

Tween 20

 

[***]

 

CsCI

 

[***]

 

Protein
content

 

[***]

 

Antigenic
identity

SDS PAGE

 

[***]

 

Western blot

 

[***]

 

 

HPLC

 

[***]

 

Sterility

 

[***]

 

HBsAg
content 

 

[***]

 

Pyrogenicity

 

[***]

 

 

SCHEDULE F

 

LOSS ALLOWANCES

 

Bulk
Loss Allowances

 

The initial Bulk Loss
Allowances are set forth in the attached signed version of this Schedule F as
points one and two beneath the table.

 

Product
Loss Allowances

 

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

 

 

Schedule E: Bulk loss allowances

 

[***]

 

[SIGNATURE BLOCKS]

 

 

SCHEDULE G

 

PRICE CALCULATIONS

 

25

 

SCHEDULE G

TO SUPPLY AND

MANUFACTURING AGREEMENT

 

Transfer Pricing

 

1.             Definitions

 

Capitalized terms used in
this Schedule but not defined herein shall have the meanings ascribed to them
in Schedules A and F of the Collaboration Agreement. The following words and
phrases shall have the following meanings:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

“Indicative
Tender” means the last major tender or request won or lost in the Public Market
that the Parties agree may be reasonably expected to establish the price per
dose for subsequent tenders or requests.

 

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

 

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

 

Initial
Shipment Transfer Price means the Projected Rhein Biotech and GCVC Cost of
Goods Sold per Unit for the initial shipment of the Product.

 

“Market Condition Change”
means an unexpected change in market conditions beyond Chiron’s control for the
Public Market where an Indicative Tender has occurred and the for the Private
Market where the Actual Average Net Sales Price for a period of three
consecutive months is Substantially Different from the Projected Average Net
Sales Price for such three months.

 

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

 

 

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

 

“Minimum
Projected Average Net Sales Price” means the minimum Projected Average Net
Sales Price which minimum shall not be less than the initial agreed to GAVI
Projected Average Net Sales Price.

 

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

 

“Private Market” shall mean
the market the Product in the Territory other than Public Market and
Supranational Market.

 

“Projected Average Net Sales
Price” means the best estimate of the weighted average Net Sales price per Unit
of the Product invoiced to unaffiliated third parties in the Territory as
agreed by the Parties in good faith.

 

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

 

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

 

“Projected
Rhein Biotech and GCVC Cost of Goods Sold” is defined as the estimated Cost of
Goods Sold of the Rhein Biotech and GCVC Antigen and the blending, filling and
packaging costs of the Product as set forth in Annex A hereto.

 

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

 

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

 

“Subsequent
Period” means each twelve month period following the Initial Period.

 

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

 

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

 

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

 

 

“Transfer Price” means the
Initial period Transfer Price and each Subsequent Period Transfer Price.

 

2.            Initial Period
Transfer Price Calculation

 

(a)         Calculation of the Initial Period Transfer Price. The transfer price for the Product will be
fixed and remain in force for a six month period prospectively. The Transfer Price
for the Product for the Initial Period shall be calculated on per Unit basis by
(i)   multiplying the Projected Gross
Margin for the Initial Period by [***] and (ii) adding to such amount the
Projected Rhein Biotech and GCVC Cost of Goods Sold for the Initial Period
provided however that the Transfer Price for the initial shipment of the
Product shall be set forth in Section 2(d) below.

 

(b)         Setting of the Initial Period Transfer Price. The Steering Committee shall agree on the
Initial Period Transfer Price and all components thereof except as set forth in
Section 2 (d) below (i) with respect to the Initial Period Transfer Price for
the first six month portion of the Initial Period, to the extent applicable, no
later than two months before the beginning of the Initial Period, and (ii) with
respect to the Initial Period Transfer Price for any subsequent portion of the
Initial Period, no later than the end of the fourth month of the first six
month portion of the Initial Period provided, however, that if the Parties fail
to agree to a Transfer Price pursuant to this Section 2 (b) (ii) such Transfer
Price will be determined by applying the prior actual results as follows:

 

The
Actual Average Net Sales Price will be (i) for the Public Market based on the
tender price for the last Indicative Tender and (ii) for the Private Market
based on the Actual Average Net Sales Price of the last two months of the
preceding six month period of the Initial Period. The Actual Chiron Cost of
Goods Sold, Actual Rhein Biotech Cost of Goods Sold, and the Actual Average
Foreign Exchange Rate will be based on the average of last two months of the
preceding six month period of the Initial Period.

 

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

 

Each
party initially shall have the right to audit the other prior to the Steering
Committee agreeing the Initial Period Transfer Price. If the results of such
audit would result in a change of [***] then the Cost of Good Sold per Unit as
determined by the audit, will be the resulting Cost of Goods Sold per Unit used
in determining the Transfer Price. Each such Initial Period Transfer Price
shall be

 

 

fixed
and subject to change only in accordance with the provisions of Section 2(c)
below.

 

(c)        Market Condition Change. In the event of the
occurrence of a Market Condition Change in the Public Market and/or Private
Market, then Chiron and Rhein Biotech and GCVC shall confer regarding a
possible adjustment to the Projected Average Net Sales Price in the relevant
Public or Private Market for the relevant period and the resulting adjustment
to the Initial Period Transfer Price. Any such adjusted Projected Average Net
Sales Price and Initial Period Transfer Price shall apply prospectively with
respect to all calculations in connection with all Product shipped by Chiron
during remainder of the relevant portion of the Initial Period. Only two such
adjustments for each of the Public and Private Markets to the Initial Period
Transfer Price may be made during the Initial Period, and only one may be made
during the first six months, to the extent applicable, of the Initial Period
and only one during the second six months, if any, of the Initial Period.

 

(d)        Initial
shipment of Product Transfer Price The initial shipment of Product from Rhein Biotech and GCVC to Chiron
will be at the Initial Shipment Transfer Price. The maximum number of Units
that may be included in the initial shipment at the initial Shipment Transfer
Price shall be calculated by taking the amount of US Dollars [***] divided by
the per Unit fully burdened Initial Period Transfer Price determined in Section
2 (a) above. Only the Initial Shipment of Product will be at the Initial
Shipment Transfer Price. All subsequent shipments during the Initial Period
will be at the full Transfer Price detailed in Section 2 (a).

 

Notwithstanding
the use of the Initial Shipment Transfer Price, It is understood by the Parties
that while the Transfer Price for initial shipment of Product is set at the
Initial Shipment Transfer Price that Rhein Biotech and GCVC will recover its
full Transfer Price including the profit element as determined in Section 2 (a)
(i) above through the Initial Period Additional Payment mechanism set forth in
Section 7.

 

On
or before the date of the initial shipment of Product to Chiron from Rhein
Biotech and GCVC, Chiron shall provide to Rhein Biotech and GCVC an “On Demand”
bank guarantee from ABN AMRO Bank N.V. or other such Internationally recognized
bank in the United States in the amount of the additional payment calculated in
accordance with Section 7 (a). Rhein Biotech and GCVC shall have the right to
demand payment of the guarantee on the date which is nine months from the date
of the initial shipment of Product from Rhein Biotech and GCVC to Chiron.

 

Payment
for the additional payment for the initial shipment of Product to Chiron by
Rhein Biotech and GCVC set forth in Section 7 (a) will be due on the earlier of:

 

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

 

(b)      nine (9)
months from shipment of the Product from Rhein Biotech and GCVC to Chiron.

 

 

3.            Subsequent Period
Transfer Price Calculation

 

(a)  Calculation of the
Subsequent Period Transfer Price. The Transfer Price for the Product will be fixed and remain in force
for a six month period prospectively The Transfer Price for the Product each
Subsequent Period shall be calculated on a per Unit basis by (i) multiplying
the Projected Gross Margin for the relevant Subsequent Period as agreed upon in
Section 3(b) below by [***] and (ii) adding to this amount the Projected Rhein
Biotech and GCVC Cost of Goods Sold for such period.

 

(b)  Setting of the Subsequent Period Transfer
Price. Chiron shall
provide Rhein Biotech and GCVC with a Gross Margin Report within the timelines
and in the format described in Schedule F (Accounting Methodologies) to the
Collaboration Agreement. Based on the information in such Gross Margin Report
and on the information in the Cost of Goods Sold Report, the Steering Committee
shall agree on a Projected Gross Margin, the Projected Rhein Biotech and GCVC
Costs of Good Sold, and the Projected Forward Foreign Exchange Rates for the
Subsequent Period to be applied in calculating the relevant Subsequent Period
Transfer Price.

 

The
Steering Committee shall set the Subsequent Period Transfer Price for the first
six months of the first Subsequent Period at the beginning of the final month
of the Initial Period. Thereafter, the Subsequent Period Transfer Price shall
be set by the Steering Committee once every six months using the same
methodology. Each Subsequent Period Transfer Price shall be fixed for the
relevant six month period and shall be subject to change only in accordance
with the provisions of Section 3(c) below provided, however, if the parties
fail to agree to a Transfer Price pursuant to this section 2 (b)

 

the Transfer Price will be
determined by applying the prior actual results as follows.: The Actual Average
Net Sales Price will be (i) for the Public Market based on the tender price for
the last Indicative Tender and (ii) for the Private Market based on the Actual
Average Net Sales Price of the last two months of the preceding six month period
of the Initial Period. The Actual Chiron Cost of Goods Sold, Actual Rhein
Biotech Cost of Goods Sold, and the Actual Average Foreign Exchange Rate will
be based on the average of last two months of the preceding six month period of
the Subsequent Period.

 

With
respect to the setting of the COGS per unit, each Party initially shall have
the ongoing right to audit the other prior to the Steering Committee agreeing
the Subsequent Period Transfer Price. Each such Subsequent Period Transfer
Price shall be fixed and subject to change only in accordance with the
provisions of Section 3 (c) below.

 

(c)                    Market Condition Change. In the event of the occurrence of a Market
Condition Change in the Public Market and/or Private Market, then Chiron and
Rhein Biotech and GCVC shall confer regarding a possible adjustment to the
Projected Average Net Sales Price in the relevant Public or Private Market for
the relevant period and the resulting adjustment to the Subsequent Period
Transfer Price. Any such adjusted Projected Average Net Sales Price and
Subsequent Period Transfer Price shall apply prospectively with respect to all
calculations in connection with all Product shipped by Chiron during the
remainder of the relevant portion of such

 

 

Subsequent
Period. Only two such adjustments for each of the Public and Private Markets to
the Subsequent Period Transfer Price may be made during each Subsequent Period,
and only one may be made during the first six months of each Subsequent Period
and only one during the second six months of each Subsequent Period.

 

4.           Maximum Projected
Average Net Sales Price

 

The
Projected Average Net Sales Price used in calculating the Projected Gross
Margin and corresponding Transfer Price will not exceed the Maximum Projected
Average Net Sales Price. It is understood that the Maximum Projected Average
Net Sales Price is intended in part to ensure a fair and reasonable return to
Chiron for having assumed the risks and borne the costs associated with
distributing the Product in the Chiron Territory and accordingly shall apply
regardless of the Projected Average Net Sales Price for any period.

 

5            Minimum Projected
Average Net Sales Price

 

Notwithstanding anything to
the contrary contained in this Agreement, the Projected Average Net Sales Price
for the Product shall not be less than the Minimum Projected Average Net Sales
Price unless the Parties meet, confer and agree on a different Projected
Average Net Sales Price. Chiron will use its reasonable efforts to procure that
the Actual Average Net Sales Price will not be lower than the GAVI Actual
Average Net Sales Price to which a premium will be added which will be limited
to the relevant volumes. A minimum premium of [***] is suggested. [***]. The
Steering Committee will review the Minimum Projected Average Net Sales Price on
a regular basis.

 

Notwithstanding
the above stated Minimum Projected Average Net Sales Price the Parties agree in
the event the Actual Average Net Sales Price for three consecutive months is
less than the Minimum Projected Average Net Sales Price, the Parties shall meet
and agree in good faith a revised Minimum Projected Average Net Sales.

 

6             Currency
Translation

 

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

 

 

7              Initial
Period Additional Payments

 

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

 

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

 

(a)   (a) for the initial shipment of Product,

 

by
(i) taking the Actual Average Net Sales Price from Public and Private Market
user sales less the Initial Shipment Transfer Price (ii) multiplying that
figure by the number of Units shipped during the initial shipment and (iii)
multiplying the previous result by [***]. The applicable Initial Shipment
Transfer Price to be used in this calculation will be based on the price used
when the Units were shipped to Chiron from Rhein Biotech and GCVC on a
first-in, first-out (“FIFO”) basis.

 

(b)   (b) for all other shipments of Product other
than the initial shipment of Product,

 

by
(i) taking the Actual Average Net Sales Price from Public and Private Market
user sales less the Projected Average Net Sales Price (ii) multiplying that
figure by the number of Units shipped during the relevant quarter and (iii)
multiplying the previous result by [***]. The applicable Projected Average Net
Sales Price to be used in this calculation will be based on the price used when
the Units were shipped to Chiron from Rhein Biotech and GCVC on a first-in,
first-out (“FIFO”) basis.

 

8.           Subsequent Period
Additional Payments

 

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

 

For
the Subsequent Periods, the additional payment, if any,  each
calendar quarter for all sales in such quarter shall be calculated for the
relevant quarter

 

(a)
for all shipments of Product,

 

by
(i) taking the Actual Average Net Sales Price from Public and Private Market
sales less the Projected Average Net Sales Price. (ii) multiplying that figure
by the number of Units shipped during the relevant quarter and (iii)
multiplying the previous result by [***]. The applicable Projected Average Net
Sales Price to be used in this calculation will be based on the price used when
the Units were shipped to Chiron from Rhein Biotech and GCVC on a FIFO basis.

 

 

9.         Reports

 

(a)  Gross Margin Report

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

 

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

 

(b)  Cost of Goods Sold Report

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

 

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

 

(c)  Additional Payment Report

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

 

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

 

10.       [***]

 

 

SCHEDULE L

 

Investments for the Penta-valent projects

 

Major assumption: All regulatory activities related to the investments
need to be considered in the development masterplan (regulatory time-bar).

 

Investments Rhein Biotech / GCVC

 

1)             Capacity assumptions

•                  According to
business scenario 3b and optimistic [***]

•                  Current capacity
in Korea is [***] doses for bulk, fill and finish [***]

This capacity will remain as mono presentation related
and cannot be considered in the penta calculation.

•                  Investment
calculations for [***] doses and [***] doses (scenario 3b [***])

•                  Presentations
30% vials (of which 50% with syringe and 50% without) and 70% uniject.

 

2)             Investment planning
assumptions:

All current calculations are based on conceptual
studies with an accuracy of +/- [***] (on investment costs) and based on QC and
manufacturing process steps as per status of signing of this contract,
(Additional KFDA requests with regard to any of the antigens delivered are not
known and therefore not taken into account).

3)             The following
investments have been reviewed and agreed upon to be reasonable:

A)          QC/Animal Facility

approximately [***] Euro

assumptions: only release tests on final pentavalent
product and the base line mono quantities have been considered. One time
investment in existing facility, to cover full capacity up to [***] doses
(penta)

B)            HBV-bulk investment

Combination of remoddeling and bottle neck
compensation to cover the [***] (GCVC) [***] needs per year in [***] weeks. One
time investment in existing facility, to cover full capacity up to [***] doses
(penta). Estimate [***]

C)            Development related
investments [***] Euro

Upgrading of the existing pilot facility and the
existing formulation, filling and finishing installations in order to supply
the:

pre clinical penta
material

clinical penta material
(3 batches)

phase 3 penta material

Manufacturing consistency batches

D)           Formulation/filling/finishing/packaging
investments (over all investment [***] in first phase and [***] in total):

Assumptions:

*       One new building for all
productlines. Building shell and infrastructure as one time investment.

*       split into [***] product line
and [***] lines

*         I [***] compactline
(formulation >> packaging) [***] per minute

([***] vpm x [***]%
x [***] minutes x [***]hours per day x [***] weeks = [***] doses)

(capacity
expansion by extending working cycle as reserve)

Line cost [***]

*       [***] Two step investment
to cover [***] doses with [***] and extending with [***] up to [***] doses.
[***] doses per line

([***] upm x [***]
x [***] x [***] hours per day x [***] days x [***] weeks)

[***] per line

E)             Coldroom facility for
new finishing facility [***]

 

 

Investments of Chiron Vaccines:

 

1)             Capacity assumptions

•                  According to
business scenario 3b and optimistic [***] 

•                  Current
capacities are as follows:

T bulk capacity >> above [***] available for
project

D and wP bulk capacity [***] doses available for Penta
formulation

•                  Maximum capacity
investment plans are based on existing Chiron Vaccines Operations Strategy and
Investment plans.

•                  According to
current development plan for the DTwP pentavalent the “cleaned up” D
[***] for the DtaP pentavalent combo the new [***] Process for D are foreseen.

 

2)             Investment planning
assumptions:

All current calculations are based on conceptual
studies with an accuracy of [***] (on investment costs) and on aP realisation
under Chiron Vaccines control.

 

3)             The following
investments have been reviewed and agreed upon to be reasonable:

 

A) Expansion of D/wP facility
(FDA approved)

Approximately [***]

from [***] to [***] dose (technical measures, like
[***]) step to [***] poses by expanded working time.

B) Hib related investments

Approximately [***]. Capacity approx [***] doses in a
2 step approach. Initially [***] doses with [***]. Step 2: [***] for approx
another [***] dose. Current planning based on greenfield with existing site
infrastructure, designed as multi purpose facility for poly-sacharides.

To go up from [***] to [***] doses detailed planning
have to be initiated, including the existing poly-sacharrides facilities in
[***]. This will depend on the market needs for the other poly-sacharrides, and
therefore from Chiron Vaccines side not yet planned. The order of magnitude for
a potential upgrade would be around [***].

C) [***]

 

The timeschedules for individual project-commitment and spending are
attached to this schedule.

 

	
  Marburg, 22 March 2001

  
	
   

  
	
  Thomas Lingelbach

  	
  /s/ Thomas Lingelbach

  	
   

  
	
   

  
	
  Richard Holslag

  	
  /s/ Richard Holslag

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