Document:

Blueprint

 

  Exhibit
10.1

 

 

TOLL MANUFACTURING AND SUPPLY AGREEMENT

 

 

effective as of this 21st day of December, 2018

 

 

 

 

by and among

 

 

BEIJING NOVARTIS PHARMA CO.,LTD.

 

NOVARTIS PHARMA AG

 

SHANGHAI CELLULAR BIOPHARMACEUTICAL GROUP LTD.

and

 

CELLULAR BIOMEDICINE GROUP, INC.,

 

 

Page 1 of
75

 

 

TABLE OF CONTENTS

 

 

	

1.

	

DEFINITIONS AND INTERPRETATIONS

	

5

	

2.

	

SCOPE OF THE AGREEMENT

	

19

	

3.

	

PRODUCT TECHNOLOGY TRANSFER PLAN AND RAMP-UP PERIOD

	

21

	

4.

	

MINIMUM AVAILABLE CAPACITY

	

22

	

5.

	

MATERIALS AND TOLLING MATERIALS

	

23

	

6.

	

FORECASTING, PRODUCT ORDERS AND DELIVERY

	

26

	

7.

	

PRICE AND PAYMENT TERMS

	

29

	

8.

	

QUALITY ASSURANCE

	

31

	

9.

	

CHANGES TO PRODUCTS

	

33

	

10.

	

EQUIPMENT

	

34

	

11.

	

EXCHANGE OF INFORMATION

	

35

	

12.

	

DEFECTIVE PRODUCT

	

35

	

13.

	

KPI, JOINT SUPPLY TEAM/SUPPLIER RELATIONSHIP

	

37

	

14.

	

RESPONSIBLE PROCUREMENT/NOVARTIS SUPPLIER CODE

	

38

	

15.

	

HSE, RISK MANAGEMENT AND BUSINESS CONTINUITY

	

38

	

16.

	

PRODUCT RECALLS, RETURNS

	

40

	

17.

	

INTELLECTUAL PROPERTY

	

40

	

18.

	

INDEMNIFICATION / LIABILITIES

	

42

	

19.

	

INSURANCE

	

44

	

20.

	

CONFIDENTIALITY

	

44

	

21.

	

TERM AND TERMINATION FOR CONVENIENCE

	

47

	

22.

	

EXTRAORDINARY TERMINATION

	

47

	

23.

	

EFFECTS OF TERMINATION OR EXPIRATION

	

49

	

25.

	

GOVERNING LAW AND ARBITRATION

	

52

	

25.

	

MISCELLANEOUS

	

54

 

 

 

 

Page 2 of
75

 

 

LIST OF ANNEXES

 

 

	

ANNEX 1

	

Product Price

	

ANNEX 2

	

Toll Materials & Toll Materials Reimbursement
Value

	

ANNEX 3

	

Critical Materials

	

ANNEX 4

	

Relationship Management

	

ANNEX 5

	

Data Protection Requirements

	

ANNEX 6

	

Additional HSE Requirements

	

ANNEX 7

	

Quality Agreement

	

ANNEX 8

	

Product Tech Transfer Plan

	

ANNEX 9

	

Product Specific Equipment

	

ANNEX 10

	

KPIs

 

 

 

 

 

 

 

Page 3 of
75

 

 

 

MANUFACTURING AND SUPPLY AGREEMENT

 

 

This TOLL MANUFACTURING AND SUPPLY AGREEMENT is entered into as of
21st day of December, 2018 (the “Effective
Date”), by and between
Beijing Novartis Pharma Co., Ltd. (“NOVARTIS
China”), a company
organized and existing under the laws of the People's Republic of
China, having its registered address at No. 31 Yong’an Road,
Changping District, Beijing, China, and its Affiliate Novartis
Pharma AG (“NOVARTIS
Parent”), a company
(Aktiengesellschaft) organized and existing under the laws of
Switzerland, having its principal place of business at Lichtstrasse
35, 4056 Basel, Switzerland, who will be required from time to time
to perform certain services as specified in this Agreement and as
further delegated to it by Beijing Novartis Pharma Co., Ltd
(Novartis Parent and Novartis China together referred to as,
“NOVARTIS”), Shanghai Cellular Biopharmaceutical
Group Ltd., a company organized and existing under the laws of the
PRC, whose legal address is located at 85 Faladi Road, Building
No.3, China (Shanghai) Pilot Free Trade Zone, Shanghai, China
(“CBMG
China”) and Cellular
Biomedicine Group, Inc. (“CBMG Parent”), a corporation organized and existing
under the laws of Delaware, having its principal place of business
at 1345 Avenue of the Americas, New York, New York, 10105, USA
(CBMG Parent and CBMG China together referred to as,
“CBMG”). Novartis and CBMG are each referred to
individually as a “Party” and, collectively, as the
“Parties”.

 

WHEREAS:

 

(A) NOVARTIS China is engaged in the manufacture,
marketing and sales of pharmaceutical products. NOVARTIS Parent is
engaged in the support of the development and commercialization of
pharmaceutical products.

 

(B) CBMG is a company engaged in the processing and
supply of pharmaceutical products and who will hold the necessary
Manufacturing Licenses and permits in this
respect.

 

(C) NOVARTIS Parent and CBMG entered into a License
and Collaboration Agreement on September 25th,
2018 (the “License
Agreement”) pursuant to
which the Parties agreed to negotiate and agree a Toll
Manufacturing and Supply Agreement (the “Agreement”) setting out the rights and the
obligations and the scope of their relationship related to the
commercial and clinical manufacture and supply of the

Product (as defined
below) as further detailed herein.

 

(D) In respect of NOVARTIS’ obligations under
this Agreement, NOVARTIS China will, among other things, manage the
aspects of this Agreement related to the Manufacture and supply of
the Product, including but not limited to accepting Delivery of
Product and payment of invoices. NOVARTIS Parent will, among other
things, manage certain specific aspects of this Agreement, being
the provision to CBMG China of Toll Materials, maintenance and
protection of any intellectual property created under or in
connection with this Agreement, the support of any Technical
Development activities and the implementation and oversight of the
Technology Transfer Activities.

 

(E) NOVARTIS desires to entrust CBMG China to perform
certain services related to the processing and supply of certain
pharmaceutical products in the Territory pursuant to the
Specifications (as such terms are defined below) and the terms and
conditions of this Agreement and CBMG China confirms being able to
properly perform such activities.

 

 

 

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(F) NOVARTIS desires to entrust CBMG Parent to perform
certain services including but not limited to the support of any
Technical Development activities and the implementation and
oversight of the Technology Transfer Activities and CBMG Parent
confirms being able to properly perform such
activities.

 

IT IS AGREED AS FOLLOWS:

 

1. DEFINITIONS AND
INTERPRETATIONS

 

1.1 Defined
Terms

 

The
following terms shall, unless the context otherwise requires, have
the respective meanings set out below and grammatical variations of
such terms shall have corresponding meanings:

 

“Accounting
Standards” means, with
respect to NOVARTIS, IFRS and, with respect to CBMG, GAAP, in each
case, as generally and consistently applied throughout such
Party’s organization. Each Party shall promptly notify the
other Party in the event that it changes the Accounting Standards
pursuant to which its records are maintained, it being understood
that each Party may only use internationally recognized accounting
principles (e.g., IFRS, GAAP, etc.).

 

“Acquirer”
means, collectively, the Third Party referenced in the definition
of Change of Control and such Third Party’s Affiliates, other
than the applicable Party in the definition of Change of Control
and such Party’s Affiliates, determined immediately prior to
the closing of such Change of Control or the entry into a
definitive agreement providing for a transaction or series of
transactions that would constitute a Change of Control, as
applicable.

 

“Affiliate”
means, with respect to a Person, any other Person that controls, is
controlled by, or is under common control with such Person. For
purposes of this Agreement, a Person will be deemed to control
another Person if it owns or controls, directly or indirectly, more
than fifty percent (50%) of the Equity Securities of such other
Person entitled to vote in the election of directors (or, in the
case that such other Person is not a corporation, for the election
of the corresponding managing authority), or otherwise has the
power to direct the management and policies of such other Person
(including any PRC domestic capital companies not controlled
through ownership of Equity Securities but through contracts under
a VIE structure). The Parties acknowledge that, in the case of
certain entities organized under the laws of certain countries
outside of the United States, the maximum percentage ownership
permitted by law for a foreign investor may be less than fifty
percent (50%), and that in such case such lower percentage will be
substituted in the preceding sentence; provided, that such foreign
investor has the power to direct the management and policies of
such entity.

 

“Agreement”
has the meaning set forth in the first paragraph of this
Agreement.

 

 

 

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75

 

 

 

 

“Annual
KPI Compliance Review” means a meeting between the Parties to discuss and
review CBMG China’s level of performance of the
KPIs.

 

“Annual Product
Price Review” has the meaning set forth in Clause
7.2

 

“Apparent
Defect” means any Defect
which is visible or easily detectible through routine incoming
quality control measures.

 

“Anti-Corruption
Laws” has the meaning set forth in the definition of
“Applicable
Law.”

 

“Applicable
Law” means, individually
and collectively, any federal, state, local, national, and
supra-national laws, treaties, statutes, ordinances, rules, and
regulations, including any rules, regulations, guidance,
guidelines, circulars, officially announced policies of any
Governmental Entity(ies), and requirements of any national
securities exchange or securities listing organization having the
binding effect of law, including: (a) those in effect in the
Territory (“Applicable PRC
Law”); (b) cGMP; and (c)
those concerning bribery, corruption, or illegal payments and
gratuities, including the United States Foreign Corrupt Practices
Act, the Hong Kong Prevention of Bribery Ordinance, the UK Bribery
Act 2010, the PRC Criminal Law, the PRC Unfair Competition Law, the
Interim Regulations on Prohibition of Commercial Bribery issued by
the SAIC, and any Applicable PRC Laws similar to any of the
foregoing (“Anti-Corruption
Laws”).

 

“Applicable PRC
Law” has the meaning set forth in the definition of
“Applicable
Law.”

 

“Applicable
Standards” means all
applicable cGxP as well as all laws, regulations, guidelines,
standards, permits and authorizations, including without limitation
those listed in the Quality Agreement and those governing health,
safety and environmental protection, applicable in the
Territory.

 

“Approved
Subcontractor(s)” means any Affiliate of CBMG China or any
other Third Party (including suppliers of Critical Materials or
Starting Materials) to which CBMG China has, with the prior
approval in writing of NOVARTIS, subcontracted in whole or in part
its obligations hereunder in accordance with the terms set out
herein and the Quality Agreement. Approved Subcontractors shall be
referenced in the Quality Agreement.

 

“Approved
Suppliers” means
the suppliers specified in
the Quality Agreement, or
otherwise notified in advance and in writing to CBMG China
by NOVARTIS from time to time,
for the supply of certain materials, tooling or equipment.

 

“Arbitrators”
has the meaning set forth in Clause 24.2.

 

“Availability
Calendar” has the meaning set forth in Clause
6.3.

 

“Batch”
means a defined quantity of Materials, including the Toll
Materials, processed in one process or series of processes, so that
it could be expected to be homogeneous, and producing sufficient
Product to treat one (1) patient (which shall include the PP2/PP3
Product, where required).

 

“Binding
Forecast” has the meaning set forth in Clause
6.3.

 

 

 

Page 6 of
75

 

 

 

 

“Business
Continuity Management”
has the meaning set forth in Clause 15.4(ii).

 

“Business
Continuity Plan” has the meaning set forth in Clause
15.4(iii).

 

“Business
Day” means a day other
than a Saturday, Sunday, or a bank or other public holiday in
Basel, Switzerland, New York, New York, or Shanghai,
PRC.

 

“Calendar
Quarter” means each
successive period of three (3) calendar months commencing on
January 1, April 1, July 1, and October 1, except that the first
(1st) Calendar Quarter of the Term shall commence on the Effective
Date and end on the day immediately prior to the first (1st) to
occur of January 1, April 1, July 1, or October 1 after the
Effective Date, and the last Calendar Quarter shall end on the last
day of the Term.

 

“Calendar
Year” means each
successive period of twelve (12) calendar months commencing on
January 1 and ending on December 31, except that the first (1st)
Calendar Year of the Term shall commence on the Effective Date and
end on December 31 of the year in which the Effective Date occurs,
and the last Calendar Year of the Term shall commence on January 1
of the year in which the Term ends and end on the last day of the
Term.

 

“CAPAs”
has the meaning set forth in Clause 8.4.

 

“CBMG
Background Intellectual Property” means any and all Patent Rights, Know-How,
and other intellectual property rights: (a) in existence and
Controlled by CBMG or its Affiliates as of the Effective Date of
the License Agreement; or (b) that arise outside of activities
under this Agreement and are Controlled by CBMG or its Affiliates
after the Effective Date of the License
Agreement.

 

“CBMG
Collaboration Technology” means: (a) any and all Know-How, compounds, data,
derivatives, designs, developments, discoveries, enhancements,
inventions, materials, modifications, molecules, new uses,
processes, products, research results, sequences, techniques,
writings, or other technology rights, whether or not patentable, in
each case, that are invented, conceived, reduced to practice, or
otherwise developed in the course of activities under this
Agreement solely by or on behalf of CBMG; and (b) any and all
Patent Rights and other intellectual property rights in any of the
foregoing.

 

“CBMG
Know-How”
means any Know-How Controlled by CBMG
or any of its Affiliates as of the Effective Date or thereafter
during the Term of this Agreement or the License Agreement, as
applicable, which is: (a) necessary or useful for the Manufacture,
or Commercialization of the Product; or (b) related to CBMG’s
serum-free medium or viral vectors.

 

“CBMG Production
Costs” has the meaning set out in Clause
7.1.

 

“CBMG Trade
Secrets” shall have the meaning given in Clause
20.8.

 

“CCL”
shall mean the NOVARTIS electronic logistic system known as Cell
Chain Link.

 

“CDA”
means that certain Confidentiality Agreement, by and between
Novartis Parent and CBMG Parent, dated December 4,
2017.

 

 

 

Page 7 of
75

 

 

 

 

“cGCP”
means the then-current ethical, scientific, and quality standards
required by the FDA for designing, conducting, recording, and
reporting trials that involve the participation of human subjects,
as set forth in FDA regulations in 21 C.F.R. Parts 11, 50, 54, 56,
and 312 and related FDA guidance documents, by the International
Conference on Harmonization E6: Good Clinical Practices
Consolidated Guideline, and as otherwise required by the SAMR,
including those set out in, or issued pursuant to, the Drug
Operation Quality Administrative Standards issued by the
SAMR.

 

“cGLP”
means the then-current good laboratory practices as required by the
FDA under 21 C.F.R. Part 58 and all applicable FDA rules,
regulations, orders, and guidances, and the requirements with
respect to current good laboratory practices prescribed by the
European Community, the OECD (Organization for Economic Cooperation
and Development Council) and the ICH Guidelines, or as otherwise
required by the SAMR, including those set out in, or issued
pursuant to, the Non-Clinical Drug Research Quality Administrative
Standards issued by the SAMR.

 

“cGMP”
means the then-current good manufacturing practices as required by
the FDA under 21 C.F.R. Parts 210 and 211 and all applicable FDA
rules, regulations, orders, and guidances, and the requirements
with respect to current good manufacturing practices prescribed by
the European Community under provisions of The Rules Governing
Medicinal Products in the European Community, Volume 4, Good
Manufacturing Practices, Guidelines on Good Manufacturing Practices
specific to Advanced Therapy Medicinal Products, or as otherwise
required by the SAMR, including under the Quality Administrative
Standard for Drug Manufacturing, any requirements issued pursuant
to the Regulation of Drug Manufacturing Administrative Procedures
issued by the SAMR, or the appendix thereto for biochemical
drugs. 

 

“cGxP”
means cGmP and, only where applicable in accordance with the terms
of this Agreement, cGlP or cGcP. 

 

“Change of
Control” means, with respect to a Party:
(a) a merger or consolidation of such Party or its parent company
with a Third Party that results in the voting securities of such
Party or its parent company outstanding immediately prior thereto,
or any securities into which such voting securities have been
converted or exchanged, ceasing to represent at least fifty percent
(50%) of the combined voting power of the surviving entity or the
parent company of the surviving entity immediately after such
merger or consolidation; (b) a transaction or series of related
transactions pursuant to which a Third Party, together with its
Affiliates, becomes the direct or indirect beneficial owner of more
than fifty percent (50%) of the combined voting power of the
outstanding securities of such Party or its parent company; or (c)
the sale or other transfer to a Third Party of all or substantially
all of such Party’s and its controlled Affiliates’
assets.

 

“Claim” means
any action, cause of action, claim, demand, proceeding, suit, or
judgment brought by a Third Party.

 

 

 

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“Clinical
Study” means a study in humans to obtain information
regarding a product which is authorized by the SAMR, the FDA, or
other applicable Regulatory Authority, including information
relating to the safety, tolerability, pharmacological activity,
pharmacokinetics, dose ranging, or efficacy of the
product.

 

“Collaboration
Technology” means, collectively, the CBMG
Collaboration Technology, the Novartis Collaboration Technology,
and the Joint Collaboration Technology.

 

“Commercialize”
means to market, promote, distribute, import or export (to the
extent permissible by law), offer to sell, or sell a pharmaceutical
or biological product or conduct other commercialization
activities, and “Commercialization” means marketing,
promoting, distributing, importing, exporting, offering for sale,
selling, or other commercialization activities with respect to a
pharmaceutical or biological product and “Commercial”
shall be interpreted accordingly.

 

“Commercially
Reasonable Efforts” shall mean, with respect to the
efforts to be expended by a Party to achieve any objective, a
requirement to use such diligent efforts and resources to
accomplish such objective as a similarly situated Party (with
respect to size, resources and assets) in the pharmaceutical
industry would normally use to accomplish a similar objective in
its own interests under similar circumstances.

 

“Competing
Product” means any
CART therapy targeting CD-19 other than the Product.

 

“Confidential
Information” means any and all confidential or
proprietary information and data and all other scientific,
pre-clinical, clinical, regulatory, Manufacturing, marketing,
financial, and commercial information or data, whether communicated
in writing or orally or by any other method, which is or has been
provided by or on behalf of one (1) Party to the other Party or its
designee in connection with this Agreement. “Confidential
Information” includes the following, which are transferred,
disclosed, or made available by the disclosing Party: confidential
and proprietary technical and commercial information, Know-How,
amino acid and nucleic acid sequences, biochemical, cell-based, and
animal assays, animal models, dosages, dosage schedules, drawings,
specifications, models, or designs relating to development,
manufacture, production, registration, promotion, distribution,
marketing, performance, or sale(s); experimental, manufacturing,
process, analytical, packaging, product, warehousing, quality
control, and quality assurance and marketing specifications,
standards, procedures, processes, methods, instructions, and
techniques, samples, prototypes, formulae, writings of any kind,
opinions, or otherwise unwritten data or in the form of computer
software or computer programs; biological, chemical, or physical
materials provided under this Agreement; and reports provided under
this Agreement.

 

“Confirmed
Delivery Date” has the
meaning in Clause 6.7(i)

 

“Confirmed
Product Order” has the meaning in Clause
6.7(i).

 

“Contract”
means any written contract, agreement, or
commitment.

 

 

 

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“Control”
or “Controlled”
means, with respect to any Know-How, or other intellectual property
right, the possession, legal authority, or right (whether by
ownership, license, or sublicense, other than by a license,
sublicense, or other right granted (but not assignment) pursuant to
this Agreement) by a Party of the ability to assign or grant to the
other Party the licenses, sublicenses, or rights to access and use
or disclose such Know-How, or other intellectual property right as
provided for in this Agreement, without paying any consideration to
any Third Party (now or in the future) or violating the terms of
any agreement or other arrangement with any Third Party in
existence as of the time such Party would be required hereunder to
grant such license, sublicense, or rights of access and
use.

 

“Critical
Materials” means the list of materials which are critical to
the Manufacture of the Product and which will be fully detailed in
the Quality Agreement in a list with the heading Critical
Materials. The currently envisaged list of which is contained in
ANNEX 3 Part II of this Agreement, to be updated by NOVARTIS to
CBMG China from time to time.

 

“Customer
Costs” shall have the meaning given in Clause
6.13.

 

“Data Protection
Laws” means any Applicable Law concerning the
protection or processing or both of personal data, including the
PRC Constitution, People’s Republic of China General
Principles of Civil Law effective January 1, 1987, Opinions of the
Supreme People’s Court on Several Issues Concerning the
Implementation of the People’s Republic of China General
Principles of Civil Law (Trial) effective January 26, 1988,
People’s Republic of China Regulations on Employment Services
and Employment Management (effective January 1, 2008),
People’s Republic of China Tortious Liability Law (effective
July 1, 2010), Regulating the Internet Information Service Market
Order Several Provisions (effective March 15, 2012), Decision of
the Standing Committee of the National People’s Congress on
the Strengthening of the Protection of Network Information
(effective December 28, 2012), Information Security Technology
Guidelines on Personal Information Protection within Information
Systems for Public and Commercial Services (effective February 1,
2013), Protection of Personal Information of Telecommunications and
Internet Users Provisions (effective September 1, 2013), Amendments
to the Consumer Protection Law (effective March 15, 2014),
Amendments to the People’s Republic of China Criminal Law
(9th set of amendments) (effective November 1, 2015),
People’s Republic of China Cyber Security Law (effective June
1, 2017), People’s Republic of China General Provisions of
Civil Law (effective October 1, 2017), and other Applicable Laws
relating to data protection and privacy.

 

“Date of First
Commercial Manufacture” means the Manufacture Start
Date for the first Commercial patient following receipt of all
relevant Regulatory Approvals.

 

“Defective
Product” means Product that: (i) was not Manufactured,
prepared, handled and/or shipped in compliance with applicable
cGxPs, Applicable Standards, the Quality Agreement, master Batch
records and/or any other procedures or documents agreed upon by the
Parties in writing; (ii) does not conform to the
Specifications or any other
Product related warranties or representations set out in this
Agreement; (iii) is adulterated within the meaning of the U.S.
Food, Drug and Cosmetic Act or similar provisions under Applicable
Standards; and/or (v) is considered to contain a defect as
determined under governing law and Applicable Standards in the
Territory. “Defect” shall be interpreted accordingly. For the
avoidance of doubt, any Product that NOVARTIS China is entitled to
reject pursuant to the Quality Agreement shall be regarded as
Defective Product for the purpose of this
Agreement.

 

 

 

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“Defective
Toll Materials” has the
meaning in Clause 5.11.

 

“Delay”
or “Delayed”
has the meaning in Clause 6.12.

 

“Deliver” or
“Delivery” shall
mean that CBMG China has prepared the Product in accordance with
the Quality Agreement and completed all relevant documentation in
the CCL being the Certificate of Analysis, Certificate of
Completion, executed Production Batch Record, and any applicable
Deviation reports (all as defined in the Quality Agreement), as
well as any other documentation required under the Quality
Agreement, pursuant to Clause 6.8, so that NOVARTIS China is able to start the review
process for final release and organise pick up at the exit of the
Facility of the Product filled in the final Product containers
(specified in the Quality Agreement). CBMG China shall provide the
origin, either preferential or non-preferential, of the Product on
the shipping documentation.

 

“Delivery
Failure” has the meaning
in Clause 6.14.

 

“Demand
Outlook” has the meaning set out in Clause
6.2.

 

“Deviated
Materials” has the
meaning in Clause 5.10.

 

“Dispute”
has the meaning set forth in Clause 24.2.

 

“Effective
Date” has the meaning set forth in the first paragraph
of this Agreement.

 

“Equipment”
means any equipment and machinery required in the Manufacture of
the Product at the Facility.

 

“Equity
Securities” means, with
respect to any Person that is a legal entity, any and all shares of
capital stock, membership interests, units, profits interests,
ownership interests, equity interests, registered capital, and
other equity securities of such Person, and any right, warrant,
option, call, commitment, conversion privilege, preemptive right or
other right to acquire any of the foregoing, or security
convertible into, exchangeable or exercisable for any of the
foregoing, or any Contract providing for the acquisition of any of
the foregoing.

 

“Facility(-ies)”
means CBMG China’s Manufacturing facility(-ies), located at
85 Faladi Road, Building No.3, China (Shanghai) Pilot Free Trade
Zone, Shanghai, China and such other facilities as may be approved
by NOVARTIS China from time to time in accordance with this
Agreement and the Quality Agreement.

 

“FDA”
means the United States Food and Drug Administration, any successor
entity thereto in the United States, or any equivalent entity
outside of the United States, as applicable.

 

“FD&C
Act” means the United
States Federal Food, Drug, and Cosmetic Act.

 

“FEFO”
has the meaning given in Clause 5.2.

 

 

 

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“Force
Majeure” has the meaning in Clause 25.6

 

“GAAP”
means generally accepted accounting principles as practiced in the
United States, as consistently applied.

 

“General
Equipment” has the
meaning given in Clause 10.1.

 

“Governmental
Entity” means any
federal, state, local or foreign government, regulatory,
legislative, or administrative body, or any agency, bureau, board,
commission, court, department, tribunal, or other instrumentality
thereof, including any Regulatory Authority.

 

“HSE” is
the abbreviation for “health, safety and environmental
protection”.

 

“HSE
Requirements” has the
meaning in Clause 15.2.

 

“IFRS”
means International Financial Reporting Standards, the set of
accounting standards and interpretations as promulgated by the
International Standards Accounting Board and as they may be updated
for time to time, as consistently applied.

 

“Indemnification
Claim Notice” has the
meaning set forth in Clause 18.2(ii).

 

“Initial
Product Price Review” has
the meaning set forth in Clause 7.2.

 

“Initial
Term” has the meaning set forth in Clause
21.2.

 

“Insolvency
Event” means, in relation
to either Party or an Affiliate thereof, as the case may be, any
one (1) of the following: (a)
that Party is the subject of voluntary or involuntary bankruptcy
proceedings instituted on behalf of or against such Party (except
for involuntary bankruptcy proceedings which are dismissed within
sixty (60) days, or withdrawn or terminated prior to the
declaration of insolvency of such Party); (b) an administrator, administrative
receiver, receiver and manager, interim receiver, custodian,
sequestrator, or similar officer is appointed in respect of that
Party (collectively, the “Receiver”) and that Party has not caused the
underlying action or the Receiver to be dismissed within sixty (60)
days after the Receiver’s appointment; (c) the board of directors or
shareholders’ meeting of such Party has passed a resolution
to wind up or deregister that Party (or other through a process
whereby the business is terminated and assets of such Party are
distributed amongst the creditors, equityholders, or investors), or
such a resolution shall have been passed, other than a resolution
for the solvent reconstruction or reorganization of that
Party; (d) a resolution
shall have been passed by that Party or that Party’s
directors or shareholders to make an application for an
administration order or to appoint an administrator, liquidation
committee, group, or similar body or Person; (e) that Party makes a general assignment,
composition, or arrangement with or for the benefit of all or the
majority of that Party’s creditors, or makes, suspends, or
threatens to suspend making payments to all or the majority of that
Party’s creditors; (f) any distress, execution,
sequestration, or other similar process being levied or enforced
upon or sued upon against the property or assets of that Party that
is not discharged within seven (7) days; (g) that Party cannot
repay debts that have fallen due, or its assets are insufficient to
pay all of its debts, or it manifestly lacks the ability to repay
its debts; or (h) in the case of any Person in the PRC, a
Governmental Entity cancels or withdraws any Permit needed for that
Party or its Affiliate to operate, or orders the dissolution of
such Party or its Affiliate as a result of, or in connection with,
any non-compliance with Applicable PRC Law.

 

 

 

Page 12 of
75

 

 

 

 

“Joint
Collaboration Technology”
means: (a) any and all Know-How, compounds, data, derivatives,
designs, developments, discoveries, enhancements, inventions,
materials, modifications, molecules, new uses, processes, products,
research results, sequences, techniques, writings, or other
technology rights, whether or not patentable, in each case, that
are invented, conceived, reduced to practice, or otherwise
developed in the course of activities under this Agreement jointly
by or on behalf of both Parties; and (b) any and all Patent Rights
and other intellectual property rights in any of the
foregoing.

 

“Joint
Supply Team” has the
meaning set forth in ANNEX 4.

 

“KPI”
means the key performance indicators set out in ANNEX 10, Part A and against which the performance by CBMG China
under this Agreement will be measured and monitored by
NOVARTIS.

 

“Know-How”
means all commercial, technical, scientific, and other know-how and
information, biochemical, cellular, and animal assays, animal
models, trade secrets, knowledge, technology, methods, processes,
practices, formulae, instructions, skills, techniques, procedures,
experiences, ideas, technical assistance, designs, drawings,
assembly procedures, computer programs, specifications, data and
results (including biological, chemical, pharmacological,
toxicological, pharmaceutical, physical, and analytical,
preclinical, clinical, safety, Manufacturing, and quality control
data and know-how, including regulatory data, study designs, and
protocols), and materials, in all cases, in written, electronic, or
any other form now known or hereafter developed, including the CBMG
Know-How and the Novartis Know-How, as
applicable.

 

“Latent
Defect” means any Defect
other than Apparent Defects.

 

“Leukapheresis
Materials” means the
[***]

 

“License
Agreement” has the meaning set out in the
Recitals.

 

“Losses”
means any and all liability, damage, loss, cost, or expense of any
nature (including reasonable attorneys’ fees and litigation
expenses).

 

“MAA”
means an application for the authorization to market the Product in
the Territory, as defined by Applicable Law and regulations and
filed with the applicable Regulatory Authority.

 

“Manufacture”
or “Manufacturing”
means all activities related to the manufacture of a pharmaceutical
or biological product, including manufacturing supplies, for the
Technical Development, Commercialization, packaging, in-process and
finished product testing, release of product or any component or
ingredient thereof, quality assurance and quality control
activities related to manufacturing and release of product, ongoing
stability tests, storage, Delivery, and regulatory activities
related to any of the foregoing. NOVARTIS China may request from
time to time that CBMG China performs additional activities in
connection with the Manufacture of the Product. Once agreed between
the Parties, such additional activities shall form part of the
definition of Manufacture.

 

 

 

Page 13 of
75

 

 

 

 

“Manufacturing
Slot” means a station at the Facility is available to
start the Manufacture of the Product.

 

“Manufacture Start
Date” shall mean each
date on which CBMG China utilizes an available Manufacturing Slot
to commence the Manufacture of the Product for supply to a
Commercial patient, as specified also in Clause
6.7(ii).

 

“Manufacturing
License(s)” means all licenses, permits, approvals,
authorizations and consents necessary for, or required in
connection with, the lawful Manufacture of the Product at the
Facility for use, exportation or importation (if applicable),
distribution, marketing, promotion, sale and placement of the
Product in the Territory, including those listed in Exhibit D to
the License Agreement, as updated or amended from time to
time.

 

“Margin”
has the meaning set forth in Clause 7.1.

 

“Marketing
Authorization” means, in respect of a Product, such marketing
authorization, approval, license, registration or other
authorizations issued by a Regulatory Authority in connection with
the placing of that Product on the market in the
Territory.

 

“Materials”
means, collectively, all raw materials, excipients and any other
materials, including the Critical Materials and the Starting
Materials, required to Manufacture the Product in accordance with
the Specifications.

 

“Novartis
Background Intellectual Property” means any and all Patent Rights, Novartis
Know-How, and other intellectual property rights: (a) in existence
and Controlled by NOVARTIS Parent or its Affiliates as of the
Effective Date of the License Agreement; or (b) that arise outside
of activities under this Agreement and are Controlled by Novartis
Parent or its Affiliates after the Effective Date of the License
Agreement.

 

“Novartis
Collaboration Technology”
means: (a) any and all Know-How, compounds, data, derivatives,
designs, developments, discoveries, enhancements, inventions,
materials, modifications, molecules, new uses, processes, products,
research results, sequences, techniques, writings, or other
technology rights, whether or not patentable, in each case, that
are invented, conceived, reduced to practice, or otherwise
developed in the course of activities under this Agreement solely
by or on behalf of NOVARTIS Parent or NOVARTIS China; and (b) any
and all Patent Rights and other intellectual property rights in any
of the foregoing.

 

“Novartis
Indemnitees” has the
meaning set forth in Clause 18.1.

 

“Novartis
Data Protection and Information Security Requirements”
has the meaning given in ANNEX 5 to
this Agreement.

 

“Novartis
Know-How” means any
Know-How Controlled by NOVARTIS Parent or any of its Affiliates as
of the Effective Date or thereafter during the Term that is
necessary for the Technical Development or Manufacture of the
Product.

 

“Novartis
Material” means Novartis
New Material and Novartis Original Material.

 

 

 

Page 14 of
75

 

 

 

 

“Novartis
New Material” means all
information, documents and materials that will be generated by
CBMG, any Approved Subcontractor or NOVARTIS under this Agreement,
including without limitation, Manufacturing and quality control
instructions or requirements under any quality control agreements
between the Parties (including the Quality Agreement), and
specifications necessary to Manufacture, label, package, store,
handle, stability test, quality control test and release the
Product, all in accordance with this Agreement, including without
limitation the Product and partially-Manufactured
Product.

 

“Novartis
Original Material” means
all information, documents and materials that will be or have been
provided by NOVARTIS to CBMG under this Agreement, including
without limitation, Confidential Information.

 

“Novartis Trade
Secrets” shall have the meaning set forth in Clause
20.8.

 

“Patent
Rights” means all patents and patent applications and
all substitutions, divisions, continuations, and
continuations-in-part, any patent issued with respect to any such
patent applications, any reissue, re-examination, utility models,
or designs, renewal, or extension (including any supplementary
protection certificate) of any such patent, and any confirmation
patent or registration patent or patent of addition based on any
such patent, and all counterparts thereof.

 

“Permit”
means all clearances, orders, declarations, approvals,
authorizations, qualifications, registrations, filings,
certifications, consents, licenses, waivers, and permits required
by any Governmental Entity(ies) or under Applicable
Law.

 

“Person” means
any natural person, corporation, unincorporated organization,
partnership, association, sole proprietorship, joint stock company,
joint venture, limited liability company, trust, government, or
Regulatory Authority, or any other similar entity.

 

“PP2/PP3
Product” has the meaning set forth in Clause
6.10.

 

“PRC”
means the People’s Republic of China, excluding the Hong Kong
Special Administrative Region, the Macau Special Administrative
Region, and Taiwan.

 

“Product”
means NOVARTIS Parents’s proprietary CD-19 targeting CART
therapy, generically known as tisagenlecleucel.

 

“Product Order(s)”
has the meaning set forth in Clause 6.7(i).

 

“Product Order Lead
Time” has the meaning set forth in Clause
6.7(i).

 

“Product Price”
means the price at which NOVARTIS China shall purchase and CBMG
China shall sell Product, as further defined in Clause 7.1 and
ANNEX 1. 

 

“Product
Price Cap per Calendar Year” has the meaning set out in
ANNEX 1. 

 

“Product
Specific Equipment” has the meaning set out in
Clause 10.1.

 

“Product
Tech Transfer Plan” has the meaning set forth in Clause
3.1.

 

 

 

Page 15 of
75

 

 

 

 

“Qualified
Personnel” means personnel
who (a) are able to communicate in fluent written and spoken
English; and (b) possess a degree of skill and experience which is
appropriate to the tasks to which they are allotted and the
performance which they are required to achieve and who shall
perform those tasks in a workmanlike and professional
manner.

 

“Quality
Agreement” means that applicable version of the quality
agreement between the Parties in relation to the Product and its
Manufacturing, including, without limitation by way of a master
agreement with a NOVARTIS Affiliate and the initial version of
which is attached hereto as ANNEX 7.

 

“Quality
Assurance” or
“QA”
means the sum total of the quality assurance arrangements made with
the purpose of ensuring that the Product meets the Specifications
and is of the quality required for its intended use and shall
specifically include all terms and activities as set forth in the
applicable version of the Quality Agreement.

 

“Quality
Audit” has the meaning set forth in Clause
8.4.

 

“Queued
Leukapheresis Materials” has the meaning set forth in
Clause 6.8.

 

“Receiver”
has the meaning set forth in the definition of “Insolvency
Event”.

 

“Registration”
means any and all governmental or Regulatory Authority approvals
necessary or required for the Manufacture, import, marketing,
distribution and sale of the Product or the finished product
comprised of the Product (as applicable) as labeled, packaged and
presented for sale to the pharmaceutical trade, and the term
“Registration” shall also apply to any renewals of such
approvals and to any other steps required to maintain such
approvals.

 

“Regulatory
Approval” means, with
respect to the Product in the Territory, all approvals,
registrations, licenses, or authorizations from a Regulatory
Authority in the Territory that are necessary to market and sell
the Product in the Territory.

 

“Regulatory
Authority” means the
competent SAMR registration authority in the
PRC.

 

“Regulatory
Documentation” means all: (a) documentation comprising
Regulatory Filings, Marketing Authorizations, Regulatory Approvals,
or other Permits for the Product, and including pre-clinical and
clinical data and information, regulatory materials, drug dossiers,
master files (including Drug Master Files, as defined in 21 C.F.R.
Part 314.420 and any non-U.S. equivalents), and any other reports,
records, regulatory correspondence, and other materials relating to
Regulatory Approvals for the Product or required to Manufacture the
Product, including any information that relates to pharmacology,
toxicology, chemistry, manufacturing, and controls data, batch
records, safety, and efficacy, and any safety database; and (b)
material correspondence and other filings relating to the Product
submitted to or received from any Governmental Entity (including
minutes and official contact reports relating to any communications
with any Governmental Entity) and relevant supporting documents
submitted to or received from Governmental Entities with respect
thereto, including all regulatory drug lists, final versions of
advertising and promotion documents, adverse event files and
complaint files.

 

 

 

Page 16 of
75

 

 

“Regulatory
Filings” means any submission to a Regulatory
Authority of any appropriate regulatory application, including any
MAA, including any submission to a regulatory advisory board and
any supplement or amendment thereto.

 

“Regulatory
Requirements” means all applicable rules, regulations,
decrees, guidance, pronouncements, circulars, standards, and
policies of SAMR and any other applicable Regulatory Authority,
including cGMP and, in respect of Technical Development work only,
cGLP, and cGCP.

 

“Renewal
Term” has the
meaning set forth in Clause 21.2.

 

“Representatives”
means, as to any Person, such Person’s or its
Affiliates’ officers, managers, directors, employees, agents,
and advisors (including attorneys, accountants, and financial
advisors).

 

“Requested Delivery
Date(s)” has
the meaning set forth in Clause 6.7(i).

 

“Required PRC
Approvals”
means all Permits required for the performance of the
Parties’ obligations under this Agreement and the License
Agreement under Applicable PRC Law.

 

“RMB”
shall mean the legal tender of the People's Republic of
China.

 

“Rolling
Forecast” has the meaning set forth in Clause
6.3.

 

“SAMR”
means the State Administration of
Market Regulation, the Chinese regulatory body in which the former
China Food and Drug Administration and SAIC functions have been
merged following a restructuring, and, where the context permits,
including a reference to the new State Drug Administration, and
their local authorized bodies.

 

“SDP
Price Reduction” has the
meaning in Clause 7.5.

 

“Senior
Officers” means, with
respect to NOVARTIS Parent, CEO, Oncology Business Unit or his/her
designee and, with respect to CBMG Parent, CEO or his/her
designee.

 

“Specifications”
means the specifications for the Product and the relevant Materials
(as the case may be) as further defined and referenced in the
Quality Agreement and which may be amended only upon the mutual
written agreement of the Parties.

 

“Starting
Materials” means the list
of starting materials which will be fully detailed in the Quality
Agreement but the currently envisaged list of which is contained in
ANNEX 3 Part I of this Agreement, to be updated by NOVARTIS to CBMG
China from time to time.

 

“Technical
Development” means any
and all technical and Manufacturing-related activities, including
test method development and stability testing, assay development,
process development, formulation development, quality assurance and
quality control development, validation and other testing,
packaging development, as well as record-keeping, data and database
development, management, storage, and retention activities relating
to any of the foregoing.

 

“Technical
Development Plan” has the meaning given in the License
Agreement.

 

“Technology
Transfer Activities”
means the performance of the Product Tech Transfer Plan.

 

 

 

Page 17 of
75

 

 

 

 

“Technical
Transfer out of the Facility” has the meaning set forth in Clause
23.8

 

“Term”
has the meaning set forth in Clause 21.2.

 

“Territory” means
the PRC.

 

“Toll
Material(s)” means those NOVARTIS Parent materials as
listed in ANNEX 2 which CBMG China is obligated to procure from
NOVARTIS Parent and which are supplied by NOVARTIS Parent to CBMG
China free of charge for the purpose of CBMG China Manufacturing
and supplying the Product to NOVARTIS China under this
Agreement.

 

“Toll
Materials Reimbursement Value” to be notified by NOVARTIS Parent to CBMG China
and included in ANNEX 2 at least 90 days prior to the date of First
Commercial Manufacture. Updated Toll Material Reimbursement Values
may be and notified to CBMG China by NOVARTIS Parent from time to
time. 

 

“Third
Party” means any Person other than a Party or an
Affiliate of a Party. 

 

“Trade
Secrets” shall have the meaning set forth in Clause
20.8.

 

“Validation”
or “Validate”
means (either collectively or separately, as applicable) (i) the
successful completion of all qualification activities in relation
to the Facility and the Equipment; (ii) the successful validation
of the analytical testing methods for the Product; and (iii) the
successful Manufacture, at commercial scale, of at least three (3)
validation Batches for the Product meeting predetermined validation
acceptance criteria, normal Product release criteria and stability
requirements as set forth in the Specifications and in a written
“Validation Plan”
to be mutually agreed by the
Parties.

 

“VIE”
means Variable Interest Entity.

 

1.2 Currency. Unless otherwise indicated, all monetary amounts
are expressed in this Agreement in RMB.

 

1.3 Interpretation. In
this agreement unless otherwise specified:

 

(a) the
division of this Agreement into clauses, sub-clauses and Annexes
and the insertion of headings are for convenience of reference only
and shall not affect the interpretation of this
Agreement;

 

(b) any
reference in this Agreement to a clause or an annex refers to the
specified Clause or Annex to this Agreement;

 

(c) the
terms “this Agreement”, “hereof”,
“herein”, “hereunder” and similar
expressions refer to this Agreement;

 

(d) a
statute or statutory instrument or any of their provisions is to be
construed as a reference to that statute or statutory instrument or
such provision as the same may have been or may from time to time
hereafter be amended or re-enacted;

 

(e) all
references to the singular shall include the plural and vice
versa;

 

(f) the
term “including” shall mean “including without
limitation”; and

 

(g) any
reference in this Agreement to a “day” or
“week” shall be references to a calendar day or
week.

 

 

 

Page 18 of
75

 

 

 

 

 

2. SCOPE OF THE
AGREEMENT

 

2.1 Manufacturing and
Supply. During the Term, CBMG China shall sell,
Manufacture and Deliver the Product to NOVARTIS China and its
designated Affiliates in accordance with the terms of this
Agreement. The Parties acknowledge that NOVARTIS China prioritizes
consistent high quality and timely supply of the Product to meet
patient demand and that supply disruptions may result in
irreparable harm to NOVARTIS and individual patients. To that
regard, CBMG China agrees to act in good faith in performing its
obligations under this Agreement and shall not willfully delay
Manufacturing nor withhold Delivery of the Product, and CBMG China
shall use Commercially Reasonable Efforts to comply with all such
obligations.

 

2.2 [***]

 

2.3 No restriction for NOVARTIS on
Third Party supply. Nothing in
this Agreement shall be construed as to prohibit NOVARTIS China or
its Affiliates from Manufacturing the Product directly or from
purchasing the Product from other suppliers.

 

2.4 CBMG
Warranty. CBMG China represents
and warrants that it shall Manufacture, store, test release,
Deliver and supply in accordance with Clause 6.8, the Product in
compliance with: (i) the Specifications; (ii) cGxP; (iii) the
Quality Agreement; (iv) the Manufacturing License(s); (v) the
Serialization Requirements; (vi) all Applicable Standards,
including those governing health, safety and environmental
protection; and (vii) all Applicable Laws, and that at Delivery the
Product is free from (i) any security interest, claims, demands,
liens and other encumbrances of any kind or character and (ii) any
Defects. CBMG China further represents and warrants that it shall
obtain and maintain all necessary and required Manufacturing
Licenses in order to Manufacture, process and supply the Product to
NOVARTIS China.

 

2.5 EXCEPT AS SET OUT IN CLAUSE 2.4 ABOVE, WHICH SHALL
AT ALL TIMES SUPERCEDE THIS CLAUSE 2.5, CBMG EXPRESSLY DISCLAIMS
ANY OTHER IMPLIED WARRANTIES EXISTING UNDER ANY APPLICABLE LAW WITH
RESPECT TO THE PRODUCT, INCLUDING, WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, ANY IMPLIED WARRANTIES OF QUALITY OR
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. NOVARTIS
agrees that, to the extent required by applicable law to be
effective, the disclaimers of implied warranties contained in this
Clause 2.5 are “conspicuous” disclaimers for purpose of
any applicable law, rule or order.

 

2.6 Subcontractors. CBMG
China shall not subcontract to any Third Party the performance of
CBMG China’s tasks and obligations under this Agreement
without first obtaining, in each case, NOVARTIS’s prior
written consent. If CBMG China enters into any subcontract
following receipt of such consent, it shall provide NOVARTIS, upon
NOVARTIS’s request, with a copy of any executed subcontract
agreement within [***] of any such agreement’s execution.
Where NOVARTIS provides its consent pursuant to this Clause 2.6,
such subcontractor will be deemed to be an Approved Subcontractor.
CBMG China shall ensure that any Approved Subcontractor performs
its obligations pursuant to the terms of this Agreement, including
the Quality Agreement and the HSE Requirements. Notwithstanding the
foregoing, CBMG China shall remain solely and fully liable for the
performance of any Approved Subcontractor or Supplier and shall
remain exclusively responsible for all costs associated with any
such subcontract or supply relationship.

 

 

 

Page 19 of
75

 

 

 

 

2.7 Facility. CBMG China will Manufacture the Product
exclusively for NOVARTIS in those dedicated suites at the Facility
which have been specified for use solely to Manufacture the Product
for NOVARTIS China and which have, at CBMG China’s own
expense, been developed, equipped, and qualified to provide
sufficient capacity to meet NOVARTIS China’s requirements,
CBMG’s obligations under this Agreement and requirements
under Applicable Standards.

 

2.8 NOVARTIS China Space at the
Facility. CBMG China commits to
provide a permanent office workspace for a maximum of [***]
NOVARTIS employees. A permanent workspace shall mean a chair and a
desk for each of the [***] employees which is not required to be
used for any other purpose at any time. CBMG China agrees to ensure
that this workspace is in a segregated, lockable room reserved
exclusively for NOVARTIS China.

 

2.9 Option to take Additional
Manufacturing Capacity. During
the initial [***] period of the Term of this Agreement, CBMG shall
not, directly or indirectly through an Affiliate, enter into any
agreement with any Third Party relating to any additional
Manufacturing lines at the Facility (the “Additional Manufacturing
Capacity”) without first
offering NOVARTIS China the option to utilize such Additional
Manufacturing Capacity (the “Option”). Immediately on a Third Party offer being
made (and in any event no later than [***] after receipt of such
Third Party offer), CBMG shall give NOVARTIS China written notice
of the Third Party offer (including the commercial and financial
details of such offer) and its right to exercise the Option.
NOVARTIS China shall have [***] to notify CBMG in writing of its
intention to exercise the Option. If NOVARTIS China does not so
notify CBMG within [***], the Option shall expire and CBMG shall be
free to enter into an agreement for the use of the Additional
Manufacturing Capacity with such Third Party. For the avoidance of
doubt, each new or amended offer by a Third Party (regardless of
whether it is the same Third Party or not) shall give rise to a new
Option and CBMG is required to notify NOVARTIS China of such
offer.

 

2.10 Novartis Material.
All Novartis Material, whether or not
patentable, shall be the sole and exclusive property of NOVARTIS
Parent. CBMG shall supply all Novartis New Material to
NOVARTIS Parent, NOVARTIS
China or its
designee in accordance with the terms of this Agreement.
CBMG shall not sell
or otherwise dispose of any Novartis Materials, except as expressly
authorized by NOVARTIS Parent. CBMG hereby grants, and shall cause its Approved
Subcontractors to grant, to NOVARTIS Parent, NOVARTIS China, its
designated representatives and employees the irrevocable right to
enter any premises where the Novartis Material is stored in order
to inspect or repossess it as NOVARTIS China shall in its sole
discretion deem fit.

 

 

 

Page 20 of
75

 

 

 

 

2.11 Authorizations
and Permits. CBMG shall obtain
and maintain the Required PRC Approvals and all other Manufacturing
Licenses or exemptions from any Regulatory Authority which are
required to perform its obligations and shall pay all legitimate
fees due in relation to them. Upon request, CBMG shall provide,
or shall cause its Approved Subcontractors to provide to NOVARTIS
China with copies of any Manufacturing Licenses or any other
approvals, permits, or exemptions. Without prejudice to any of
NOVARTIS’ other rights hereunder, CBMG shall inform NOVARTIS
China promptly in writing if any such Manufacturing Licenses or
other approvals or permits are not obtained in a timely manner or
are withdrawn or otherwise under investigation.

 

2.12 Registration
and Regulatory
Requirements. NOVARTIS China and its Affiliates shall be responsible for the
registration of the
Product with all relevant
Regulatory Authorities of the
Territory where they market the
Product. CBMG shall provide (and shall
cause its Approved Subcontractors and suppliers to provide) such
assistance as NOVARTIS China or
its Affiliates may reasonably
request, including providing NOVARTIS China with any information or documentation in its
possession, control or
ownership and to render any other assistance reasonably necessary
to enable NOVARTIS China to
make an application to any Regulatory Authority.

 

3. PRODUCT TECHNOLOGY
TRANSFER PLAN AND RAMP-UP PERIOD

 

3.1 The
Parties have formulated and agreed upon an initial version of a
plan (the “Product Tech Transfer
Plan”) to transfer the
applicable Manufacturing process in respect of the Product from
NOVARTIS Parent or an Affiliate to CBMG and such Product Tech
Transfer Plan, as may be amended from time to time, which was
signed between the Parties on October 23rd,
2018, is annexed to and incorporated by reference into this
Agreement at ANNEX 8. The Parties agree that the Product Tech
Transfer Plan included at ANNEX 8 is Version 1 of the Product Tech
Transfer Plan, based on an assessment of the work required as at
the Effective Date. The Parties further agree and acknowledge that
this plan is subject to change and shall be automatically updated
and replaced by future versions of the Product Tech Transfer Plan
which are agreed between the Parties in writing.
[***]

 

3.2 NOVARTIS Parent shall provide to CBMG China the
information as set out in the Product Tech Transfer Plan and CBMG
China shall perform the Technology Transfer Activities as set out in the
Product Tech Transfer Plan:

 

(i) in
accordance with its terms, this Agreement, cGxP, Applicable Laws and any guidelines, policies, or
procedures notified in advance and in writing to CBMG China or its
Affiliates by NOVARTIS Parent or its
Affiliates;

 

(ii) in
accordance with the standards of practice and levels of performance
that would reasonably be used by and expected from a well-managed
company performing similar services; and

 

(iii) using Qualified Personnel.

 

Time
shall be of the essence regarding CBMG China’s performance of
the Product Tech Transfer Plan.

 

3.3 As
part of the Technology Transfer Activities, CBMG China shall
Manufacture, store,
deliver and dispose of the
comparability batches and
validation batches as specified in the
relevant Product Tech Transfer Plan or as directed by NOVARTIS
Parent or NOVARTIS China.

 

 

 

Page 21 of
75

 

 

 

 

3.4 CBMG
China commits to implement, at its own cost, the CCL system at the
Facility as part of the Product Tech Transfer
Plan.

 

3.5 CBMG
must keep NOVARTIS Parent
regularly updated as to the progress of the Technology Transfer Plan and must notify
NOVARTIS Parent immediately in writing
of:

 

(i) the
achievement of each Phase
(including the basis on which it believes it has achieved
the Phase, together with any
further information that NOVARTIS Parent may reasonably request);
and

 

(ii) any
failure, or likely failure, to complete a Phase specified in the relevant
Technology Transfer Plan, or any other
event or circumstance which will, or which could reasonably be
expected to, cause a delay in the completion of the
Technology Transfer
Plan.

 

3.6 As a
back-up option, the Parties agree that during the period from
completion of all requirements set out in the Product Tech Transfer
Plan, as may be amended from time to time by mutual agreement of
the Parties, provided that the Facility is approved and holds the
necessary licenses required in order to perform the specific steps
detailed in sub clauses (i) to (iii) below, until the required
Registrations issued by the Regulatory Authorities have been
obtained which will allow CBMG China to Manufacture the Product in
the Territory, during the clinical phase, CBMG China may be
requested and may agree to perform the following initial
Manufacturing steps, being:

 

(i) freezing Leukapheresis Material supplied by
NOVARTIS Parent and arranging for shipment to NOVARTIS’
Affiliate in the U.S. for onward manufacturing into
Product;

 

(ii) Import of Product to China at NOVARTIS
China’s request; and

 

(iii) arrange for local QA release of imported Product,
at NOVARTIS China’s request.

 

4. MINIMUM AVAILABLE
CAPACITY.

 

(i)

[***]

 

(ii)

[***]

 

(iii)

[***]

 

(iv)

[***]

 

(v)

[***]

 

(vi) CBMG
China agrees that the processing of Product for NOVARTIS China in
accordance with the terms of this Agreement shall have priority
over the requirements of other customers that it serves, or will
serve, at the Facility.

 

 

 

Page 22 of
75

 

 

 

 

(vii) CBMG
China shall ensure the hiring of sufficient Qualified Personnel to
enable CBMG China to meet the Minimum Available Capacity, which may
be increased from time to time pursuant to Clause
4(v).

 

5. MATERIALS

 

5.1 Materials and Critical Materials. The Parties have
identified certain Materials which constitute Critical Materials in
respect of which the suppliers must be approved by NOVARTIS China,
and the list of Critical Materials and Approved Suppliers as of the
Effective Date are set out in ANNEX 3 of this Agreement and will
updated from time to time in the Quality Agreement. Save in respect
of the Toll Materials which are supplied directly by NOVARTIS
Parent, CBMG China shall ensure
that all Materials are procured and Manufactured in compliance with
the requirements of this Agreement, the Quality Agreement and the
HSE Requirements as well as the requirements of Applicable Law and
Regulation. CBMG China may not
procure Toll Materials from any supplier other than NOVARTIS
Parent. CBMG China shall and
shall cause its Approved Subcontractors, at its cost, to purchase,
qualify, test, inspect and approve all such Materials required in
the Manufacturing, storage, shipping or receiving of the Product.
In relation to its Approved Subcontractors and/or Approved
Suppliers of such Materials CBMG China shall:

 

(i) enter into contractual
relationships for the supply of such Materials, and keep NOVARTIS
China informed of the terms and status of such supply, subject to
any and all confidentiality agreements as may be in place with any
and all such Approved Subcontractors and/or Approved
Suppliers;

 

(ii) proactively manage its Approved
Subcontractors and/or Approved Suppliers of Materials, including by
regularly auditing and evaluating such Approved Subcontractors
and/or Approved Suppliers and by having effective performance
management and supplier relationship management
regimes;

 

(iii) ensure that Critical Materials
are only supplied from Approved Suppliers, as will be further
detailed in the Quality Agreement;

 

(iv) ensure that any changes to
Material suppliers are pre-approved by NOVARTIS China and comply
with the change control process specified in the Quality Agreement
with CBMG China being responsible to show that the new Material is
fit for use; and

 

(v) keep NOVARTIS China informed
without delay of any possible interruptions with respect to the
Material supply as soon as CBMG China becomes aware of such
interruption possibility. Time is of the essence for this
clause.

 

5.2 Stock
of Materials. During the Term
of this Agreement, CBMG China shall apply the first-expiry,
first out (“FEFO”) methods of usage to any stock of
Critical Materials, Starting Materials, Toll Materials or other
Materials. CBMG China shall
hold a safety stock of at least [***] for Critical Materials and
Starting Materials (excluding Leukapheresis Materials). Further,
CBMG China shall ensure that
the quantities of Materials ordered and stored by it relate
appropriately to Confirmed Product Orders so that the items in
stock do not become obsolete or unsaleable. CBMG China will use Commercially Reasonable
Efforts to wind down its safety stock inventory prior to the
expiration or termination of this Agreement.

 

 

 

Page 23 of
75

 

 

 

 

5.3 Alternative Sources.
NOVARTIS China may at any time
identify to CBMG China alternative suppliers from which CBMG China
may obtain any of the Materials (excluding the Toll Materials) at a
lower cost and/or higher quality, in accordance with this
Agreement. CBMG China may also, from time to time, request that
NOVARTIS China approve an alternative supplier of Materials
(excluding the Toll Materials) which has been identified by CBMG
China. In either event, CBMG China and NOVARTIS China shall collaborate in
order to obtain the necessary regulatory approvals and CBMG China
shall utilize the alternative suppliers identified by NOVARTIS
China following receipt of such approvals. CBMG China shall remain
solely and fully liable for the performance of such alternative
suppliers, including for the quality of the Materials delivered by
any of such alternative suppliers and compliance with this
Agreement, the Quality Agreement and the HSE
Requirements.

 

5.4 Supply of Toll
Materials. Solely for purpose
of CBMG China's Manufacturing of the Product hereunder, NOVARTIS
Parent undertakes from time to time to supply (or have supplied by
a designated Affiliate or Third Party) to CBMG China, free of any
charge, the Toll Materials required in the Manufacture of the
Product, in such quantities as may be ordered by CBMG China in
accordance with Clause 5.5. The Toll Materials will be
delivered DAP, the Facility
(“Delivered At Place”,
INCOTERMS® 2010).

 

5.5 Toll
Materials Forecast. CBMG China shall provide NOVARTIS with a written
non-binding rolling [***] forecast of the volume of the Toll
Materials, in accordance with NOVARTIS’ Rolling Forecast.
CBMG China shall submit written orders for the Toll Materials with
a lead time of at least [***]. NOVARTIS shall notify CBMG China on
or before [***] after receipt of an order if it is unable to meet
all or a portion of an order by the requested delivery
date.

 

5.6 Ownership of Toll
Materials. Toll Materials
delivered to CBMG China shall be held by CBMG China or the Approved
Subcontractors on behalf of NOVARTIS Parent in accordance with the
terms of this Agreement. The Toll Materials shall at all times
remain the property of NOVARTIS Parent. CBMG China must not use any
such Toll Materials delivered for any purpose other than to
Manufacture, package and test the Product in accordance with this
Agreement. CBMG China hereby irrevocably grants, and shall cause
its Approved Subcontractors to grant, to NOVARTIS China the right
for NOVARTIS China, its designated representatives and employees,
on behalf of NOVARTIS Parent, to access any premises where the Toll
Materials are stored in order to inspect or repossess the Toll
Materials.

 

5.7 Handling of Toll
Materials. As from its
delivery, CBMG China shall: (i) store and handle, at its own cost,
the Toll Materials in accordance with applicable cGxP, the Quality
Agreement, NOVARTIS' handling and storage instructions and, more
generally, in a safe and orderly manner and take all necessary care
to prevent its damage, loss or theft; (ii) clearly identify all
such Toll Materials in storage and in its books as goods belonging
to NOVARTIS Parent; (iii) never mix, alter or analyze the Toll
Materials except for the purpose of any testing; and (iv) always
use FEFO methods of usage.

 

 

 

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75

 

 

 

 

5.8 Loss of Toll
Materials. CBMG China shall
reimburse NOVARTIS Parent, at the Toll Materials Reimbursement
Value, as detailed in ANNEX 2, together with any additional direct fees,
including, but not limited to, transportation and insurance fees,
for any Toll Materials which (i) as a result of the negligence,
omission of or breach of contract by CBMG China, cannot be used in
the Manufacturing of the Product, or (ii) have been used in the
Manufacturing without resulting in Product that is free of Defects
(including without limitation any Toll Materials used in failed or
rejected Batches or in Defective Product). CBMG China shall
immediately inform NOVARTIS China of any loss or damage to Toll
Materials and promptly provide in writing all explanations and
evidence.

 

5.9 Quarterly Toll Materials
Inventory. CBMG China shall
maintain up-to-date records of all Toll Materials and Leukapheresis
Materials and, within the first week of each quarter or at such
other frequency as the Parties may agree, shall provide to NOVARTIS
China a complete and accurate list of all such items held by it on
the last day of the immediately preceding calendar month. Such
inventory list shall in particular specify the inventory balance of
each such item at the relevant date and shall contain a detailed
explanation for any inventory discrepancy exceeding
[***].

 

5.10 Deviated
Materials. Where CBMG China
receives Toll Materials or Leukapheresis Materials which do not
meet the Specifications (in each case, “Deviated
Materials”), it shall
immediately inform NOVARTIS China and NOVARTIS China shall
determine, in its discretion, whether such Deviated Materials can
be used in Manufacture. Where NOVARTIS China determines that such
Deviated Materials are able to be used in Manufacture, those
Deviated Materials shall be deemed conforming to the Specifications
for the purposes of this Agreement.

 

5.11 Defective
Toll Materials. Where NOVARTIS
China determines that such Toll
Materials are not in conformity with the Specifications and
NOVARTIS China determines that such Deviated Materials are not able
to be used in the Manufacture of the Product, such Materials shall
be deemed defective (“Defective Toll
Materials”):

 

(i) CBMG
China shall inform NOVARTIS China in case it discovers any
non-conformity of any of the Toll Materials with applicable
Specifications, such notification to be made promptly upon
discovery of such non-conformity.

 

(ii) CBMG
China shall return the Defective Toll Materials to NOVARTIS China
on behalf of NOVARTIS Parent or destroy them, as per
NOVARTIS’ China’s written request and instructions. In
no event shall CBMG China destroy said Toll Materials without
NOVARTIS China’s prior written consent.

 

 

 

Page 25 of
75

 

 

 

 

(iii) Subject to Clause 5.11(iv), NOVARTIS Parent
shall as soon as reasonably possible replace such Defective Toll
Materials with Toll Materials meeting the Specifications in
accordance with the provisions of this
Agreement.

 

(iv) Such
Toll Materials shall be replaced at CBMG China’s cost (at the
Toll Materials Reimbursement Value together with any additional
direct fees, including, but not limited to, transportation fees,
insurance fees, duty) if it is established that the non-conformity
with the Specifications occurred after delivery of the Toll
Materials to CBMG China or is due to any actions, omissions, breach
of this Agreement (including the Quality Agreement) or negligence
of CBMG China. In addition, in such case, CBMG China shall bear
sole responsibility for all reasonable costs associated with any
testing, return or destruction of the Defective Toll
Materials.

 

5.12 Dispute
Resolution. Clause 24.3 shall
apply if an unresolved dispute exists as to the determination of a
non-conformity with the Specifications of Toll Materials and/or the
root cause of such non-conformity.

 

 

6. FORECASTING, ORDERS AND
DELIVERY

 

6.1 Forecasting
Model. Unlike traditional
products, forecasting is based upon required manufacturing slots
rather than an estimated volume. This is to ensure sufficient
contingent capacity is available to ensure Delivery Period service
levels.

 

6.2 Demand
Outlook. NOVARTIS China shall
provide a non-binding demand outlook (“Demand
Outlook”) for [***]
following the Effective Date, to enable CBMG China to plan for
sizing the Facility and resource needs to be able to Manufacture
the Product for the forecasted number of patients per year, subject
always to the requirement to meet the Minimum Available
Capacity.

 

6.3 Product
Forecast. No later than [***]
before the anticipated Date of First Commercial Manufacture,
NOVARTIS China shall provide CBMG China with a written monthly
rolling [***] forecast (“Rolling Forecast”) that is binding for the initial [***]
period (“Binding
Forecast”) of the
required Product quantities with required delivery dates. The
Rolling Forecast shall be updated on a monthly basis and provided
to CBMG China. CBMG China shall ensure sufficient capacity to meet
the forecasted demand across the whole period of the Rolling
Forecast. CBMG China shall commit and specify the Manufacturing
start times [***] period of the Binding Forecast. All Manufacturing
slot commitment data (“Availability
Calendar”) will be
entered in CCL and CBMG China shall ensure that sufficient slots
are available to meet the requirements of the Binding
Forecast.

 

 

 

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6.4 Un-Forecasted Product
Orders. CBMG China shall use
its best efforts to fulfill Product Orders which exceed the Binding
Forecast and will inform NOVARTIS China immediately if it is not
able to do so.

 

6.5 Manufacturing Start-Date
Scheduling. The Parties shall
have weekly operational meetings to review the Manufacturing schedule and the timelines
for delivery of
Leukapheresis Material. Collaboration
in this respect is required during the [***] term prior to a scheduled treatment of a
patient.

 

6.6 Manufacturing
Schedule. In advance of
placing Product Orders for
the Product,
NOVARTIS China shall notify CBMG China
of the anticipated date of delivery of the Leukapheresis Material and the Parties shall agree
to the date that CBMG China must commence Manufacturing of the Product. The Manufacturing schedule at CBMG China shall be
fixed during the weekly operational meetings. CBMG China shall
support scheduling activities with NOVARTIS China, apheresis site
and infusion sites via CCL.

 

6.7 Product Order
Process

 

(i) Product Order Placement and
Product Order Lead Time.
NOVARTIS China will place orders for the Manufacture of Product in
CCL ("Product
Order(s)"). Any Product Orders
must be submitted via CCL and with a lead time of at least [***]
("Product
Order Lead Time") and shall set
forth the requested delivery date(s) in accordance with such
Product Order Lead Time ("Requested Delivery
Date(s)"). Without limiting the
foregoing, NOVARTIS China shall, whenever practicable, provide
Product Order Lead Times greater than [***]. Firm Orders shall be
submitted through CCL. Before placing a Product Order, NOVARTIS
China shall ensure that at the meetings referred to in Clause 6.5
above, NOVARTIS China has informed CBMG China of the anticipated
date of arrival of the Leukapheresis Materials and that the Parties
have agreed on the date on which CBMG China will commence
Manufacture using an available Manufacturing Slot (the
“Manufacture Start
Date”).

 

(ii) Order
Confirmation Process. Within
[***] of receipt of any Product Order, CBMG China shall acknowledge
receipt of such Product Order in CCL. Any Product Order which
complies with the Product Order Lead Time and which is in line with
the Binding Forecast shall be considered binding on the Parties
("Confirmed
Product Order"), as will the
Requested Delivery Date specified therein, provided that such date
complies with Clause 6.8 ("Confirmed Delivery
Date(s)"). CBMG China shall
Deliver any Confirmed Product Order which complies with the Product
Order Lead Time and is in line with the Binding Forecast. NOVARTIS
China gives no volume commitments other than those provided in
Confirmed Product Orders.

 

 

 

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75

 

 

 

 

(iii) Changes to Confirmed Product
Orders Requested by NOVARTIS.
CBMG China shall use Commercially Reasonable Efforts to comply with
any unplanned changes to Confirmed Product Orders requested in
writing and with reasonable notice by NOVARTIS China and shall
confirm any such changes within the timelines set forth in Clause
6.7(i), and in such case, CBMG China's supply related KPIs shall be
deemed adjusted accordingly. CBMG China shall not implement
unplanned changes to Confirmed Product
Orders where such changes will result in supplementary costs for
NOVARTIS China, without informing NOVARTIS China of the nature and
extent of such supplementary costs and obtaining the prior written
consent of NOVARTIS China.

 

6.8 Terms of
Delivery. Time is of the
essence for all Deliveries under this Agreement. CBMG China shall
Deliver the Product FCA, the Facility (“Free Carrier”,
INCOTERMS® 2010). Such [***] period, as applicable, is
referred to as the “Delivery
Period” in accordance
with the Quality Agreement. The Parties shall enter into a Trading
Service Procedure (“TSP”) and CBMG China shall comply with the TSP
upon its agreement between the Parties. CBMG China shall ensure
that the relevant documents listed in the Quality Agreement will be
submitted to NOVARTIS China for final release within [***] of the
Product being filled in the final Product containers (as specified
in the Quality Agreement).

 

6.9 Storage of Leukapheresis
Materials. Where CBMG China
accepts delivery of Leukapheresis Materials, but does not have an
available Manufacturing Slot, CBMG China agrees to store (not later
than [***] after delivery to CBMG China) such Leukapheresis
Materials in accordance with the Quality Agreement pending
allocation of a Manufacturing Slot (“Queued Leukapheresis
Materials”). The Parties
shall discuss and agree which Manufacturing Slots to allocate to
any Queued Leukapheresis Materials based on patient need and/or any
other factors they deem relevant.

 

6.10 Storage of PP2/PP3
Product. In addition to
short-term storage of
final Product prior to
shipment, CBMG China shall securely store and maintain any
additional Batches that have
been produced during the Manufacture of the Product (the “PP2/PP3
Product”) in accordance
with the Quality Agreement, for [***], whichever is the longer
“PP2/PP3 Storage
Period”). In the event
that NOVARTIS China
requests Delivery of all or
part of the PP2/PP3 Product,
CBMG China shall provide such PP2/PP3 Product immediately (upon request) and
free of charge to NOVARTIS
China. At the end of the PP2/PP3 Storage Period, CBMG China shall
request in writing that NOVARTIS China confirms, within [***] of
receipt of such request, its preference for the PP2/PP3 Product to
be either (i) returned to NOVARTIS China; or (ii) destroyed by CBMG
China, at NOVARTIS China’s election.

 

6.11 Packaging. CBMG China shall ensure that the packaging of
the Product, including (as
applicable) any packaging for transportation, fully complies with
the requirements set forth in this Agreement and the Quality Agreement. CBMG China shall facilitate the
orderly Delivery and the taking
over by the selected carrier of any Product Delivered to NOVARTIS China pursuant to Clause 6.8
above.

 

6.12 Product Price reduction for
late Delivery. In the event of
a late Delivery, the Product Price shall be reduced by [***] of the
Product Price for every full working day (9am to 5pm) of delay,
commencing on [***] (in each case a “Delayed”
Delivery).

 

 

 

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75

 

 

 

 

6.13 Cost
Cover for Delayed Delivery. If
Product Delivery is Delayed or there is a Delivery Failure for any
reason other than (i) a Force Majeure Event; or (ii) Defective Toll
Materials, or such Delay is otherwise determined to have been
caused by NOVARTIS; and as a consequence of such Delay, NOVARTIS
China is responsible to pay any costs, expenses, fees, penalties or
other damages to its affected customers (the
“Customer
Costs”), CBMG China
agrees that it shall be responsible for and shall reimburse
NOVARTIS China for any such Customer Costs. Such reimbursement
shall be reimbursed to NOVARTIS China as a credit against the
Product Price payable for future Batches, unless the Agreement has
been terminated and no further Batches are to be Manufactured, in
which case CBMG China shall reimburse the amount of the Customer
Costs to NOVARTIS’s designated bank
account.

 

6.14 Delivery
Failure. Without any prejudice
to any other rights or remedies available to NOVARTIS under this
Agreement, in the event of the failure to provide Delivery of any
Confirmed Product Order within [***] days of the Requested Delivery
Date (in each case for any reason other than as a result of a Force
Majeure Event, the acts, omissions or delay in acting by any
Regulatory Authority, NOVARTIS providing incorrect Specifications,
Defective Toll Materials or other fault of NOVARTIS), CBMG China
shall immediately notify NOVARTIS China and NOVARTIS China may, in
its sole discretion, cancel such Confirmed Order without any
penalty to NOVARTIS China.

 

7. PRICE AND PAYMENT
TERMS

 

7.1 [***]

 

7.2 Product
Price Adjustment Mechanism. The Product Price shall remain
unchanged from [***]. The Initial Product Price Review and the
Annual Product Price Review shall take into account (i) CBMG's
consistent adherence to the KPIs, (ii) NOVARTIS China’s
Rolling Forecast (i.e. volume requirements) for the upcoming
Calendar Year, and (iii) savings realized by CBMG China or the
Approved Subcontractors, including but not limited to, savings
realized due to improved Manufacturing procedures and increased
operational capacity. CBMG China and NOVARTIS China agree that
during the Initial Product Price Review and each Annual Product
Price Review, they shall use best efforts to reduce the CBMG
Production Costs by [***], such reduction to be applicable for the
following the Calendar Year

 

7.3 Conduct
of Initial Product Price Review and Annual Product Price Review. The Product
Price as increased or decreased upon agreement between Novartis
China and CBMG China shall take effect for all Batches of Product
Delivered by CBMG China from [***]. Each Party must keep complete,
true, and accurate books and records in accordance with its
Accounting Standards in relation to this Agreement with respect to
Product Price. Each Party will keep such books and records for at
least [***] following the Calendar Year to which they
pertain.

 

 

 

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75

 

 

 

 

7.4 No
Agreement on Revised Product Price. If Novartis China and
CBMG China are unable to agree on a Product Price revision on or
before [***] of the relevant Calendar Year, Novartis China and CBMG
China agree that the Product Price for the following Calendar Year
will remain as per the previous Calendar Year.

 

7.5 SDP
Price Reduction. Where CBMG China fails to achieve the
Supply Delivery Performance rate set out in the table below in any
given Calendar Year, the Product Price during that Calendar Year
will be reduced, by way of a credit note, following the end of such
Calendar Year in order to reflect the underachievement, as set
forth in ANNEX 10 and in accordance with the following table
(“SDP Price
Reduction”). For the avoidance of doubt, Batches
delivered under this Agreement as part of a Clinical Study shall
not count towards the SDP calculation:

 

   [***]

 

7.6 The SDP Price Reduction for a
given Calendar Year shall be effected by way of a credit note
issued by CBMG China in the following way. Within [***] following
the end of the Calendar Year, NOVARTIS China shall invoice the SDP
Price Reduction to CBMG China. CBMG China shall issue a credit note
for the invoiced amount to NOVARTIS China within [***] from its
receipt of such invoice (or, following the last Calendar Year only,
pay such amount to NOVARTIS China). For the avoidance of doubt, the
SDP Price Reduction shall be without prejudice to any other rights
and remedies available to NOVARTIS under this Agreement and/or the
governing law.

 

7.7 Payment
Terms. CBMG China shall
provide NOVARTIS China with an invoice setting forth the Product
Price (as applicable) due and payable for each Delivery of Product
made under this Agreement. Each such invoice shall, to the extent
applicable, identify the Product Order number, Product numbers,
Batch numbers, quantities of Product, shipping address, Product
Price and the total amount to be remitted by NOVARTIS China and the
applicable sales tax (if any) or such other information as may be
required by the applicable tax laws. NOVARTIS China shall pay all
such invoices on or before [***] after the receipt of such invoice,
unless otherwise agreed upon in writing by both Novartis China and
CBMG China.

 

7.8 All sums
due under this Agreement shall be paid in RMB by transferring an
amount in aggregate to the below account (or the account designated
in the relevant invoice). Any payment which falls due on a date
which is not a Business Day may be made on the next succeeding
Business Day:

 

Invoices will be
sent to:

 

Invoice
receipt: Contact: + [***]

 

Beijing
Novartis Pharma Co., Ltd.

 

[***]

 

 

 

Page 30 of
75

 

 

In
Chinese:

 

发票寄往:

 

北京诺华制药有限公司

 

地址:【***】

 

发票联系人:
诺华发票签收人 
【***】

 

7.9 Disputed
Invoices. If NOVARTIS China disputes in good faith its
obligation to pay all or part of any invoice submitted by CBMG
China under this Agreement, then non-payment of such invoice or
part of such invoice pending resolution of such dispute shall not
constitute a material breach of this Agreement by NOVARTIS
China. 

 

7.10 Tax Matters. Each Party shall be
responsible for all taxes, fees, duties, levies, or similar amounts
imposed on its income, assets, capital, employment, personnel, and
right or license to do business. Except as otherwise provided, each
Party shall be responsible for its own sales tax, use tax, excise
tax, value-added tax (VAT), goods and services tax (GST),
consumption tax, and similar taxes based upon its own activities
under this Agreement. Each Party shall use reasonable and legal
efforts to reduce tax withholding, to the extent permitted by
Applicable Law, on payments made pursuant to this Agreement. In the
event any payments due under this Agreement are subject to
withholding tax under Applicable Law, the paying Party shall deduct
the respective amount from the applicable payment and pay the
withholding tax to the relevant tax authority. The paying Party
shall deliver within [***] to the other Party evidence of such
payment. Each Party shall make all reasonable efforts to obtain
relief or reduction of withholding tax under the applicable tax
treaties, including the submission or issuance of requisite forms
and information. Any such amount deducted and paid to the
applicable tax authority shall be deemed fully paid to the other
Party in satisfaction of the applicable payment obligation under
this Agreement.

 

 

8. QUALITY
ASSURANCE

 

8.1 Quality
Assurance Agreement. The Parties agree and acknowledge
that Manufacture of the Product by CBMG China for clinical or
commercial purposes shall be subject to a written quality assurance
agreement (the “Quality
Agreement”) which the Parties shall enter into prior
to the commencement of clinical Manufacture or the Manufacturing
Start Date, as applicable, in accordance with this Agreement. The
Quality Agreement shall outline the responsibilities and key
contacts for quality and compliance-related issues. In the event
any terms of the Quality Agreement conflict with or are
inconsistent with the terms of this Agreement, the terms of the
Quality Agreement shall govern and control with regards to terms
related to quality assurance or control, and otherwise the terms of
this Agreement shall govern and control. CBMG China shall at all
times during the Term fully comply (and shall cause its Affiliates
and Approved Subcontractors to fully comply) with its obligations
under the Quality Agreement. A breach of the Quality Agreement
shall be considered a material breach of this
Agreement.

 

8.2 Quality
Control. CBMG
China shall maintain a quality assurance and quality control
program in accordance with cGMP, (and where applicable for
Technical Development work, GlP) Applicable Standards and the
Quality Agreement. Changes to the
Product (including any Materials), processing and/or the Facility
need prior written approval of the NOVARTIS China in accordance
with change control provisions to be defined in the Quality
Agreement (notice period and approval
requirements apply). Failure to maintain such a program
shall constitute a material breach of this Agreement.

 

 

 

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8.3 Pre-Approval
and Validation Inspections. In
accordance with the terms of the Quality Agreement and at no
additional cost to NOVARTIS China, CBMG China shall (and shall
cause its Affiliates and Approved Subcontractors and Suppliers to)
grant NOVARTIS and its Affiliates access to the Facility during
normal working hours in order to conduct pre-approval and
validation inspection of the Facility prior to commencement of
clinical or commercial Manufacturing. Such inspection must be to
NOVARTIS China’s absolute satisfaction, with any and all
corrective and preventative actions to be satisfactorily closed (as
confirmed by NOVARTIS China in writing), before the Date of First
Commercial Manufacture.

 

8.4 Quality
Audits and Regulatory Inspections. CBMG China grants to NOVARTIS, its
Affiliates, and its designees, upon reasonable prior notice, the
right to inspect CBMG China’s production facilities to
perform a quality audit in order to confirm CBMG China’s
compliance with cGMP, NOVARTIS’s quality requirements, and
Applicable Law (each, a “Quality Audit”): (i) NOVARTIS, its Affiliates or its designated
representatives or (ii) Regulatory Authorities to audit the
Facility, the Equipment used in the Manufacturing, packaging,
storage, testing, shipping or receiving of Product, the
Leukapheresis Materials and components, and the approved
subcontractors. Such audits may include: (i) initial GMP-baseline
audits; and (ii) for cause/event audits. NOVARTIS, its Affiliates
and its designated representatives shall comply with the
confidentiality obligations set forth in this Agreement in
exercising their rights hereunder. If Novartis reasonably
believes (as a result of a condition which it observes during a
Quality Audit or otherwise) that CBMG China may not be in
compliance with cGMP, NOVARTIS’s quality requirements, or
Applicable Law, then the Parties shall discuss and agree upon any
appropriate corrective actions to address such non-compliance
(collectively, the “CAPAs”), and CBMG China shall
promptly implement such CAPAs at its sole cost and
expense.

 

8.5 Communication
with Regulatory Authorities. NOVARTIS shall have the
exclusive right to correspond or communicate with Regulatory
Authorities regarding the Product in the Territory and other
regulatory matters under this Agreement. Unless required by
Applicable Law, CBMG and its Affiliates, sublicensees, and Approved
Subcontractors shall not correspond or communicate with any
Regulatory Authority regarding the Product or any other regulatory
matters under this Agreement without first obtaining, in each case,
NOVARTIS China’s prior written consent; provided, that, upon
NOVARTIS request, CBMG or its Affiliates shall attend any meeting
with a Regulatory Authority in the Territory regarding the Product
or any other regulatory matters under this Agreement. If CBMG or
its Affiliates, sublicensees, or Approved Subcontractors receives
any correspondence or other communication from a Regulatory
Authority in the Territory regarding the Product or any other
regulatory matter under this Agreement, CBMG shall provide NOVARTIS
with access to or copies of all such material written or electronic
correspondence promptly after its receipt for NOVARTIS review and
comment, and shall incorporate any and all of NOVARTIS comments
thereto.

 

 

 

Page 32 of
75

 

 

 

8.6 Person
in Plant. NOVARTIS shall have the right to have up to four
(4) personnel at the Facility ("Persons in Plant") during regular
business hours during a Manufacturing campaign for the Product and
as set forth in the Quality Agreement. Such personnel may either be
technical or quality personnel. NOVATIS’ personnel shall
comply with CBMG China 's procedures concerning cGMP, training,
safety, hygiene, confidentiality and controlled access to
facilities and documents as set forth under the Quality
Agreement.

 

8.7 Notice
of Regulatory Inspections. CBMG shall notify NOVARTIS
immediately upon receiving a notification from a Regulatory
Authority that it intends to conduct an audit and shall not submit
any response to a Regulatory Authority following such audit without
first consulting with NOVARTIS. Failure to comply with this Clause
8.7 shall constitute a material breach of this
Agreement.

 

8.8 Corrective
and Preventative Action Plans. Where any inspection by a
Regulatory Authority results in findings, which are required to be
remedied by CBMG China, NOVARTIS China reserves the right to
provide CBMG China with a CAPA plan and have [***] NOVARTIS
employees, paid for by CBMG China, located on a full time basis at
the Facility in order to ensure that the proposed remediation plan
is implemented.

 

9. CHANGES TO
PRODUCTS

 

9.1 Changes
to the Product (including the Materials), the Manufacturing or the
Facility may only be made in accordance with the Quality
Agreement.

 

9.2 CBMG
China shall solely bear all actual and related costs resulting
from:

 

(a) changes requested by CBMG China (on its own or on
behalf of any Approved Subcontractor), which are approved by
NOVARTIS in writing; and

 

(b) changes required under Applicable Standards or
requested or required by the Regulatory Authorities relating to the
Facility and to the Manufacture of pharmaceutical products, and all
changes related to the establishment, maintenance and improvement
of cGxP and/or other Applicable Standards; and

 

(c) changes in suppliers of the Materials (including
the Critical Materials and the Starting Materials but excluding the
Toll Materials and the Leukaphersis Materials).

 

 

9.3 NOVARTIS China shall solely
bear all actual and related costs resulting
from:

 

(a) changes requested by NOVARTIS;
and

 

 

 

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(b) changes requested or required by the Regulatory
Authorities relating to the marketing of the Product (other than
listed under Clause 9.2(c)); and

 

(c) changes in the text of prescribing information and
labeling. CBMG China shall be notified of all changes specific to
packaging or labeling sufficiently in advance of implementation to
allow time for process documentation change
control.

 

10. EQUIPMENT

 

10.1 The
Parties agree that CBMG China will purchase for its own account,
for use at the Facility exclusively in the Manufacture of the
Product, both (i) certain equipment and tooling listed in ANNEX 9
to this Agreement, as updated from time to time when agreed between
the Parties in writing, which is both (a) specifically required in
order to Manufacture the Product; and (b) could not reasonably be
expected to be able to be re-deployed by CBMG (the
“Product-Specific
Equipment”) and (ii) all
necessary equipment and tooling other than the Product Specific
Equipment (the “General
Equipment”) (together
with the Product Specific Equipment, the "Equipment"). Purchases of Equipment are subject to the
following conditions:

 

(i) any
such purchases shall be made on CBMG China's own behalf and not as
an agent for NOVARTIS China, CBMG China will be responsible for
(without limitation) the ordering, delivery, installation,
modification, maintenance, repair, qualification and activation of
all such Equipment in accordance with cGxP and Applicable Laws and
shall maintain such Equipment as its unencumbered property. Except
in instances where the Equipment may be leased, CBMG China shall
ensure that full ownership and the title in the Equipment passes
from the Third Party supplier to CBMG China at the latest upon
payment in full of the price of such Equipment to the Third Party
supplier.

 

(ii) CBMG
China shall purchase such Equipment and tooling from Approved
Suppliers and according to Specifications approved by NOVARTIS
China and shall insure the Equipment to the same extent as CBMG
China insures other, comparable equipment owned by CBMG China or
its Affiliates.

 

(iii) CBMG China shall ensure that has sufficient
Equipment available at the Facility to ensure that it can comply
with the Minimum Available Capacity commitments as set out in
Clause 4. NOVARTIS China shall provide reasonable assistance to
CBMG China in its assessment of the quantity of such Equipment
required in order to meet the Minimum Available Capacity
requirements.

 

10.2 Equipment Installation and
Maintenance. CBMG China shall
be responsible for installing, insuring and maintaining at all
times in good condition, all Equipment at the Facility, including
the Product-Specific Equipment and in accordance with the Quality
Agreement and HSE Requirements (as defined below) and for
performing its obligations in accordance with the terms of this
Agreement. NOVARTIS China and CBMG China agree that from time to
time, Equipment maintenance will be necessary. CBMG China agrees
and undertakes to give NOVARTIS China [***] advance written notice
of scheduled Equipment maintenance and undertakes that such
maintenance will not continue for more than
[***].

 

 

 

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75

 

 

 

 

10.3 Without prejudice to its other obligations under
this Agreement, CBMG China shall comply with the HSE Requirements
in all matters relating to the performance of this Clause 10.
Failure to comply with the HSE Requirements shall constitute a
material breach of this Agreement.

 

11. EXCHANGE OF
INFORMATION

 

Without
prejudice to NOVARTIS’ rights to information set forth in the
Quality Agreement, the Parties shall continually exchange
information and experiences in all matters pertaining to the
Manufacturing of the Product and Quality Assurance and shall inform
each other promptly in writing regarding all matters which could
jeopardize the Manufacturing of the Product whether for scientific,
legal, regulatory or other reasons.

 

12. DEFECTIVE
PRODUCT

 

12.1 Right of
Rejection. Within the
timeframes mentioned in this Clause 12.1, NOVARTIS China shall
have, at its sole discretion, the right to reject any Defective
Product. For the avoidance of doubt, it is expressly agreed that
any acknowledgement of receipt of Product by NOVARTIS China in
accordance with Clause 12.2 of this Agreement shall not constitute
any acceptance of Product as free of Defects or any waiver of any
rights by NOVARTIS China.

 

12.2 Notification. NOVARTIS China shall notify CBMG China of any
claims of Defective Product within the following
timelines:

 

(i) For
Apparent Defects, NOVARTIS China shall have the right to place a
Defective Product claim under this Clause 12 provided that such
claim is made in writing to CBMG China within [***] following
receipt of the Defective Product by NOVARTIS China at the NOVARTIS
China warehouse; and

 

(ii) For
Latent Defects of which it becomes aware, NOVARTIS China shall have
the right to place a Defective Product claim under this Clause 12
provided that such claim is made in writing to CBMG China within
[***] following discovery of the Defect.

 

12.3 Handling of Defective
Product. Without any prejudice
to any other rights or remedies available to NOVARTIS under this
Agreement, in the event that NOVARTIS China notifies CBMG China of
any Defect in accordance with this Clause 12.3, CBMG China shall,
in accordance with NOVARTIS China’s direction promptly (and
in no event any later than [***]), deliver PP2/PP3 Product (as set
forth in Clause 6.10 of this Agreement) to replace the Defective
Product at no additional charge to NOVARTIS China (even if
NOVARTIS' notice to CBMG China is untimely pursuant to Clause
12.2). NOVARTIS understands that where Product Delivered to
NOVARTIS China is Defective, PP2/PP3 Product may also be Defective,
however NOVARTIS China reserves its right to request Delivery of
the PP2/PP3 Product regardless. Additionally, if such Defect is
solely due to a willful misconduct or a fault of CBMG China, CBMG
China also shall:

 

 

 

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75

 

 

 

(i) where
PP2/PP3 Product is not available or also constitutes Defective
Product, at NOVARTIS China’s sole discretion and direction
either (i) promptly (and in no event any later than within [***])
replace any Defective Product with conforming Product (to the
extent sufficient Toll Materials are in CBMG China's possession or
can be resupplied by NOVARTIS Parent) at no additional cost to
NOVARTIS China; or (ii) refund to NOVARTIS China the Product Price
paid for such Defective Product if already paid by NOVARTIS China
or issue a credit note where not already paid;
and

 

(ii) bear
any costs, expenses, fees associated with the transportation,
testing and disposal (as applicable) of any rejected Defective
Product ; and

 

(iii) bear any actual, out-of-pocket costs, expenses,
fees, penalties or other damages incurred by NOVARTIS China under
Third Party customer agreements as a result of a Delivery Failure
due to Defective Product (if any).

 

12.4 Further, and without prejudice to NOVARTIS
China’s other rights hereunder, CBMG China shall promptly
instruct NOVARTIS China to either send back to CBMG China or
dispose of any Defective Product, at CBMG China's discretion. Any
remedial action taken by CBMG shall comply with the Quality
Agreement and CBMG China shall not rework or reprocess any rejected
Defective Product, unless expressly authorized in writing to do so
by NOVARTIS China.

 

12.5 Defective Product caused by
NOVARTIS. If any Defective
Product is determined to be Defective (i) as a result of the supply
by NOVARTIS of Defective or Deviated Toll Materials (as
applicable); (ii) where Leukapheresis Materials fail to grow
despite CBMG’s adherence to the Specifications and compliance with the Quality
Agreement, including any such failure due to the quality of the
patient blood; or (iii) after Delivery of Product to NOVARTIS
China, as a result of the actions, inactions or breach of NOVARTIS
China, its Affiliates or its subcontractors, CBMG China shall not
bear any cost thereof, but NOVARTIS China shall pay the Product
Price for such Defective Product supplied by CBMG China. Where
requested by NOVARTIS China, CBMG China shall promptly (and in no
event later than within [***]) deliver PP2/PP3 Product (as set
forth in Clause 6.10 of this Agreement) to replace the Defective
Product. In the event that NOVARTIS China requires the Product to
be Manufactured again, CBMG China agrees to Manufacture replacement
Product in accordance with timelines agreed by the Parties in
accordance with Clause 6.8 above.

 

 

 

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12.6 Product which is out of
Specification but not Defective. In the event that any Batch of Product is
Manufactured by CBMG China in accordance with this Agreement but
does not comply with the Specifications, NOVARTIS China may elect
to receive Delivery of the Product regardless. Provided that CBMG
China has notified NOVARTIS China of such out of Specification
Product no later than [***] after the Requested Delivery Date,
Clause 6.14 shall be dis-applied pending confirmation in writing
from NOVARTIS China of whether or not CBMG China should Deliver the
Product. Where NOVARTIS China elects to receive Delivery pursuant
to this Clause 12.6, such Delivery shall not be considered to be
Defective Product. CBMG China shall Deliver any such Product to
NOVARTIS China and NOVARTIS China shall pay to CBMG China the
Product Price in respect of such Product. Where NOVARTIS China
elects not to receive Delivery of the Product, such Product shall
be considered Defective Product. Where CBMG China does not agree
that such Product constitutes Defective Product then the mechanism
in Clause 24.3 shall apply.

 

12.7 Repeated Delivery of Defective
Product. Delivery of Defective
Product (other than pursuant to Clause 12.5 above) on more than
[***] in any consecutive [***] period shall constitute a material
breach of this Agreement.

 

12.8 Dispute Resolution for
Defective Product issues.
Clause 24.3 shall apply if an unresolved dispute exists as to the
existence and/or root cause of any Defective Product. For the
avoidance of doubt, the Parties agree that during any such
unresolved dispute, CBMG China shall, irrespective of the final
allocation of the cost for the replacement of such Defective
Product, Deliver any replacement requested by NOVARTIS China free
of charge in accordance with Clause 12.3 and in the event that the
Product(s) in question are found not to be Defective or to be
Defective Product caused by NOVARTIS as specified in Clause 12.4,
NOVARTIS China shall reimburse CBMG China for such replacement
Product.

 

13. SUPPLIER RELATIONSHIP
MANAGEMENT

 

13.1 KPIs Scoring and
Reporting. NOVARTIS wishes to
create additional transparency regarding CBMG China’s
performance and for that purpose, NOVARTIS has defined a
standardized KPI scoring mechanism as set out in
Annex 10, Part
B against which CBMG China
agrees to be measured. Such KPI scoring mechanism shall be updated
upon mutual agreement of the Parties from time to time and in such
case Annex
10, Part B shall be updated
accordingly.

 

13.2 KPI
Reporting. NOVARTIS shall
provide CBMG China with a report regarding CBMG China’s
performance in relation to the KPIs on a quarterly basis which also
includes feedback regarding CBMG China’s performance. Such
report shall be subject to the confidentiality provisions set out
in this Agreement, provided, however, that NOVARTIS shall have the
right to use such information in aggregate and anonymized form to
enable NOVARTIS to compare CBMG China with other suppliers in its
supplier base. Once per Calendar Year, the Parties will meet to
perform the Annual KPI Compliance Review.

 

13.3 KPI
Commitments. CBMG China shall
achieve the Supplier Delivery
Performance (“SDP”)
KPIs as set forth in ANNEX 10, Part
B. Any underachievement of the
average Supplier Delivery Performance for a period of a Calendar
Year shall reduce the Product Price in accordance with
Clause 7.5. Unless expressly stated otherwise in this
Agreement, any failure to meet any critical KPIs (as defined
in ANNEX
10, Part A) for a period of [***] will be construed as
material breach of this Agreement by CBMG
China.

 

 

 

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75

 

 

 

13.4 Relationship
Management. The Parties shall establish a Joint Supply Team
and procedure as set forth in ANNEX 4.

 

14. RESPONSIBLE
PROCUREMENT/ NOVARTIS SUPPLIER CODE

 

14.1 NOVARTIS
promotes the societal and environmental values of the United
Nations Global Compact to its external suppliers and uses its
influence where possible to encourage their adoption. CBMG
China shall:

 

(i) familiarize itself with the requirements of the
Novartis Supplier Code which can be viewed and downloaded from
(https://www.novartis.com/sites/www.novartis.com/files/novartis-Supplier-code-en-2017.pdf)

 

(ii) provide information on request to NOVARTIS
concerning labor, health and safety, environment, animal welfare,
anti-bribery and fair competition, and data protection and privacy
practices, in the form requested by NOVARTIS from time to
time;

 

(iii) use
best efforts to rectify identified non-compliances with the
Novartis Supplier Code and report remediation progress to NOVARTIS
on request including any non-compliance identified pursuant to an
audit conducted; and

 

(iv) permit NOVARTIS and/or its Affiliates to conduct
audits from time to time to assess compliance with the Novartis
Supplier Code.

 

14.2 CBMG
China acknowledges and agrees that the Novartis Supplier Code forms
an integral part of this Agreement and understands that failure to
adhere to these standards and/or obstructing or refusing NOVARTIS
China’s audit rights as stated in the Novartis Supplier Code
shall constitute a material breach of this Agreement and entitle
NOVARTIS to immediately terminate this Agreement by written
notice.

 

15. HSE, RISK MANAGEMENT
AND BUSINESS CONTINUITY

 

15.1 Hazards and Waste. NOVARTIS China shall inform CBMG China of any actual or potential health
and/or environmental hazards / biohazards known to it and related
to the Toll Materials, Product and Manufacturing process
(“Hazards”) and
promptly communicate to CBMG China any updated information about such
health or environmental Hazards that come to its attention. Each
Party shall promptly notify the other of any information that comes
to its attention concerning the safety of the Product, including
without limitation any threatened or pending action by any
Regulatory Authority.

 

15.2 HSE
Requirements. CBMG
China shall fully comply (and shall cause its Approved
Subcontractors and Suppliers to fully comply) with the HSE
requirements set forth in this Agreement including without
limitation (i) any Applicable Standards relating to HSE protection
(including REACH (Regulation (EC) No. 1907/2006)); (ii) any terms
of the Quality Agreement relating to HSE; and (iii)
ANNEX 6
(collectively, the
“HSE
Requirements”). Failure
to comply with the HSE Requirements will constitute a material
breach of this Agreement.

 

 

 

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75

 

 

 

 

15.3 HSE Audits. As further set out in ANNEX 6 and at no additional cost to NOVARTIS, CBMG China
shall (and shall cause its Affiliates, Approved Subcontractors and
Suppliers to) permit NOVARTIS China, its Affiliates or its
designated representatives to audit any facilities (including the
Facility) used by CBMG China, its Affiliates, its Approved
Subcontractors and/or its Suppliers in order to verify compliance
with the HSE Requirements under this Agreement.

 

15.4 Risk
Management. In order to ensure
continuity of supply and in connection with diligent Risk
Management practices, within [***], CBMG China will develop,
implement and keep current a Risk Management program including a
Business Continuity Management of which a Business Continuity Plan
is a key element and output. The Business Continuity Plan shall
detail strategies for responses to and recovery from a range of
potential disruptive incidents. Upon NOVARTIS’ request, CBMG
China will promptly make such Business Continuity Plan available to
NOVARTIS, its Affiliates or their designated representatives for
review. Such Business Continuity Plan shall, at a minimum, identify
available alternative facilities, infrastructure and adequate
inventories, and shall provide for security and protective measures
necessary to ensure minimal impact of the range of potential
disruptive events on NOVARTIS. The Business Continuity Plan does
not relieve CBMG China from any liability under
this Agreement. Once per Calendar Year (or at any other
frequency as NOVARTIS reasonably deem to be appropriate), CBMG
China will conduct a test and evaluation of the Business Continuity
Plan which, upon NOVARTIS’ request, may be witnessed by
NOVARTIS representatives to ensure systemic and process
responsiveness of CBMG China. The Parties agree that any issues
arising from the Risk Management and Business Continuity Management
will be promptly communicated to the other Party. In no event shall
CBMG China increase the Product Price as a result of the
development, existence or implementation of the Business Continuity
Plan.

 

For purposes of this Clause 15.4: 

 

(i) “Risk
Management” means the
identification, assessment, and prioritization of risks (as defined
in ISO 31000) followed by coordinated application of resources to
minimize, monitor, and control the probability and/or impact of
undesired incidents or to maximize the realization of
opportunities;

 

(ii) “Business Continuity
Management” means the
holistic management process which identifies potential threats to
an organization and the impacts to business operations those
threats, if realized, might cause and which provides a framework
for building organizational resilience with the capability of an
effective response that safeguards the interests of its key
stakeholders, reputation, brand and value-creating
activities.

 

(iii) “Business Continuity
Plan” means a plan
clearly defining and documenting a set of measures designed to (i)
allow a quick response to a disruptive incident so that the key
business processes are restored to a minimum required operational
level and (ii) recover the key business processes in a defined time
frame; such plan shall cover all key personnel, resources, services
and actions which are required to manage the Business Continuity
Management process.

 

 

 

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16. PRODUCT RECALLS,
RETURNS AND PHARMACOVIGILANCE

 

16.1 Recalls. Upon discovery that a Product should be recalled
or corrected, or may be required to be recalled or corrected, the
discovering Party shall give prompt notice to the QA contact of the
other Party, all subject to the terms of the Quality Agreement. The
decision to initiate a recall or to take some other corrective
action, if any, shall be made and implemented by NOVARTIS China.
The recall procedure is set forth in the Quality
Agreement.

 

16.2 NOVARTIS Complaints and
Returns. CBMG China shall fully
comply with the provisions of the Quality Agreement relating to
NOVARTIS complaints and NOVARTIS returns. NOVARTIS or its
Affiliates shall have full responsibility for handling such
NOVARTIS complaints and returns. CBMG China shall provide NOVARTIS
with such assistance as required under the terms of the Quality
Agreement.

 

17. INTELLECTUAL
PROPERTY

 

17.1 Background
IP. As between the Parties, NOVARTIS Parent shall own
all right, title and interest in and to the Novartis Background
Intellectual Property and CBMG shall own all right, title and
interest in and to the CBMG Background Intellectual Property,
subject to the rights and licenses granted pursuant to the terms of
the License Agreement. Except as expressly stated herein, nothing
in this Agreement shall constitute or grant any implied license or
ownership in proprietary rights or permission to file any patent,
copyright or any other intellectual property rights to either Party
under the other Party’s Background Intellectual
Property.

 

17.2 Collaboration
Technology.

 

(a)
Novartis Collaboration Technology. As between the Parties, Novartis
Collaboration Technology shall be the exclusive property of
NOVARTIS Parent. CBMG shall have a worldwide, perpetual,
non-exclusive, royalty-free, fully paid-up license under such
Novartis Background Intellectual Property, solely for the purpose
of the Manufacture of the Product for NOVARTIS China under this
Agreement.

 

(b)
CBMG Collaboration Technology. As between the Parties, CBMG
Collaboration Technology shall be the exclusive property of CBMG,
subject to any license granted thereunder pursuant to the License
Agreement.

 

(c)
Joint Collaboration Technology. As between the Parties, each Party
shall own an equal, undivided one-half (1/2) interest in any and
all Joint Collaboration Technology, subject to any licenses granted
thereunder pursuant to the License Agreement.

 

17.3 Assignment. Each Party shall and hereby does assign to the
other Party (or its Affiliate, to the extent required under the
License Agreement) any right, title, and interest it may have in or
to any Collaboration Technology, and agrees to execute such
documents and take such other actions reasonably requested by the
other Party to the extent necessary to give effect to the ownership
allocation set forth in Clause 17.2.

 

 

 

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17.4 Inventorship. All determinations of inventorship under this
Agreement shall be made in accordance with Section 11.1(b) of the
License Agreement.

 

17.5 Protection of Intellectual
Property. The prosecution &
maintenance (Section 11.2
of the License Agreement), enforcement
(Section 11.3 of the License Agreement), defense
(Section
11.4 of the License Agreement)
and recovery (Section 11.5
of the License Agreement) of any
Novartis Background Intellectual Property or CBMG Background
Intellectual Property shall be managed in accordance with the
provisions of Section 11.2
to 11.5 of the License Agreement.

 

17.6 Notification by
CBMG. CBMG shall promptly
disclose in writing and make available to NOVARTIS Parent and
NOVARTIS China in electronic form, and shall cause its Approved
Subcontractors to disclose in writing and make available to
NOVARTIS Parent and NOVARTIS China (directly or through CBMG) in
electronic form, all material results, inventions and improvements
(whether patentable or not) which are invented, discovered,
generated or derived under this Agreement, to the extent comprising
CBMG Know-How. 

 

17.7 Data
Protection

 

(i) The Parties
expect that performance of this Agreement may include the processing of
personal data, meaning information (as
defined by local rules and regulations), in any form (including
electronic and paper-based files), relating to an identified or
identifiable person.  To the extent the Agreement will include the processing of
personal data falling within the scope
of Data Protection Laws,
Novartis Personal Data Protection Requirements and
Information Security Requirements, as more particularly detailed
ANNEX 5 of this Agreement, shall apply.

 

(ii) CBMG
and its Affiliates represent and warrant that they have complied
with each relevant requirement of all applicable Data Protection
Laws.

 

(iii) CBMG confirms that neither it nor any of its
Affiliates has received a notice or allegation from a Governmental
Entity or any other Person: (A) alleging noncompliance with any
Data Protection Laws; (B) requiring it to change, cease using,
block, or delete any personal data; (C) prohibiting the transfer of
personal data to any place; or (D) requiring it to take any other
type of action with respect to the collection, use, transfer, or
deletion of personal information.

 

(iv) CBMG
and its Affiliates have obtained each necessary consent from data
subjects and has complied with each necessary condition to permit
it to process or use all relevant personal information in
connection with their respective businesses and, where appropriate,
any relevant purpose for which it would be necessary for NOVARTIS
to use such personal information in accordance with this
Agreement.

 

 

 

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75

 

 

 

 

(v) CBMG
shall (and shall cause its Affiliates, Approved Subcontractors and Approved Suppliers involved in the performance of
services in the scope of this Agreement to) permit a mutually-designated
independent Representatives, to
audit the Facility used by
CBMG, its Affiliates,
its Approved Subcontractors
and/or its Approved Suppliers
once a year, during the term of
this Agreement, during normal
business hours and upon reasonable notice to CBMG, in the scope of
this Agreement in
order to ensure (i) compliance with
all Applicable Data Protection
Laws and (ii) CBMG has in place appropriate technical and
organizational measures to ensure a level of security for
the Personal Data related to
this Agreement which is
appropriate to the risks to individuals that may result from the
accidental or unlawful destruction, loss, alteration, unauthorized
disclosure of, or access to the Personal Data related to this Agreement.

 

18. INDEMNIFICATION

 

18.1 CBMG
Indemnification. CBMG shall
defend, indemnify and hold NOVARTIS, its Affiliates and
sub-licensees and their respective officers, directors and
employees (the “NOVARTIS
Indemnitees”) harmless
against any and all Losses incurred by or imposed upon the NOVARTIS
Indemnitees or any of them in connection with any Claim, in each
case to the extent arising out of or resulting from: (i) the
Manufacture of the Product; (ii) any material breach of this
Agreement by CBMG; (iii) any Defect in the Product; (iv) any gross
negligence or willful misconduct of CBMG in connection with this
Agreement; (v) any patent infringement or infringement of any other
Intellectual Property with respect to CBMG’s Manufacture of
the Product or CBMG’s Manufacturing processes; or (vi)
any breach of the CBMG warranty, provided, however, that CBMG shall not be obliged
to so indemnify and hold harmless the NOVARTIS Indemnitees for any
Claims to the extent that such Claims arise from the material
breach, gross negligence, or willful misconduct of NOVARTIS or any
NOVARTIS Indemnitee. CBMG Parent and CBMG China shall be jointly
and severally liable for any Claims arising under this Clause
18.

 

18.2 Indemnification
Procedure. 

 

(i) For
the avoidance of doubt, all indemnification claims in respect of a
NOVARTIS Indemnitee shall be made solely by
NOVARTIS.

 

(ii) NOVARTIS shall notify CBMG in writing reasonably
promptly after the assertion against CBMG or any of its Affiliates
of any Claim or fact in respect of which NOVARTIS intends to base a
claim for indemnification hereunder (an “Indemnification Claim
Notice”); provided, that
the failure or delay to so notify CBMG shall not relieve CBMG of
any obligation or liability that it may have to NOVARTIS, except to
the extent that CBMG demonstrates that its ability to defend or
resolve such Claim is adversely affected thereby. The
Indemnification Claim Notice shall contain a description of the
Claim and the nature and amount of the Claim (to the extent that
the nature and amount of such Claim is known at such time). Upon
the request of CBMG, NOVARTIS shall furnish promptly to CBMG copies
of all correspondence, communications, and official documents
(including court documents) received or sent in respect of such
Claim.

 

 

 

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75

 

 

 

 

(iii) Subject to Clauses 18.2 (iv) and 18.2(v), CBMG
shall have the right, upon written notice given to NOVARTIS within
[***] after receipt of the Indemnification Claim Notice and only
with NOVARTIS’ prior written consent, to assume the defense
and handling of such Claim, at the CBMG’s sole expense, in
which case Clause 18.2(iv) shall govern. The assumption of the
defense of a Claim by CBMG shall not be construed as
acknowledgement that CBMG is liable to indemnify NOVARTIS with
respect to the Claim, nor shall it constitute a waiver by CBMG of
any defenses it may assert against any NOVARTIS’ claim for
indemnification. In the event that it is ultimately decided that
CBMG is not obligated to indemnify or hold NOVARTIS harmless from
and against the Claim, NOVARTIS shall reimburse CBMG for any and
all reasonable documented costs and expenses (including reasonable
attorneys’ fees and costs of suit) and any losses incurred by
CBMG in its defense of the Claim. If CBMG does not give written
notice to NOVARTIS, within [***] after receipt of the
Indemnification Claim Notice, of CBMG’s election to assume
the defense and handling of such Claim or NOVARTIS does not provide
such prior written consent, Clause 18.2(v) shall
govern.

 

(iv)  Upon assumption of the defense of a Claim by CBMG
with NOVARTIS’ prior written consent: (i) CBMG shall have the
right to and shall assume sole control and responsibility for
defending and handling the Claim; (ii) CBMG may, at its own cost,
appoint as counsel in connection with conducting the defense and
handling of such Claim any law firm or counsel reasonably selected
by CBMG ; (iii) CBMG shall keep NOVARTIS informed of the status of
such Claim; and (iv) CBMG shall have the right to settle such Claim
on any terms CBMG chooses; provided, however, that it shall not,
without the prior written consent of NOVARTIS (such consent not to
be unreasonably withheld, conditioned, or delayed), agree to a
settlement of any Claim which could lead to liability or create any
financial or other obligation on the part of the NOVARTIS
Indemnitees for which NOVARTIS is not entitled to indemnification
under this Agreement or which admits any wrongdoing or
responsibility for the Claim on behalf of NOVARTIS. NOVARTIS shall
cooperate with CBMG and shall be entitled to participate in, but
not control, the defense of such Claim with its own counsel and at
its own expense. In particular, NOVARTIS shall furnish such
records, information, and testimony, provide witnesses, and attend
such conferences, discovery proceedings, hearings, trials, and
appeals as may be reasonably requested in connection therewith.
Such cooperation shall include access during normal business hours
by CBMG to, and reasonable retention by NOVARTIS of, records and
information that are reasonably relevant to such Claim, and making
NOVARTIS, the NOVARTIS Indemnitees and its and their employees and
agents available on a mutually convenient basis to provide
additional information and explanation of any records or
information provided.

 

(v) If
CBMG does not assume the defense of NOVARTIS Claim in accordance
with Clause 18.2(iii), NOVARTIS may, at CBMG’s expense,
select counsel reasonably acceptable to CBMG in connection with
conducting the defense and handling of such Claim and defend or
handle such Claim in such manner as it may deem appropriate. In
such event, NOVARTIS shall keep CBMG reasonably informed of the
status of such Claim and shall not settle such Claim without the
prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld, conditioned, or delayed. If
NOVARTIS defends or handles such Claim, CBMG shall cooperate with
NOVARTIS, at CBMG’s request but at no expense to NOVARTIS,
and shall be entitled to participate in the defense and handling of
such Claim with its own counsel and at its own
expense.

 

 

 

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19. INSURANCE

 

19.1 CBMG
China represents and warrants that it has appropriate and adequate
insurance or self-insurance in the amounts sufficient to cover its
obligations under this Agreement, which in any case shall not be
less than USD [***] or its equivalent in RMB. All such insurance
shall be subject to deductibles and limits comparable to commercial
standards prevailing at the time of any claims or damages. CBMG
China shall provide copies of its insurance certificates, including
any renewals, to NOVARTIS China. In case of cancellation or any
material change to its insurance policies, CBMG shall provide at
least [***] prior written notice to NOVARTIS
China.

 

20. CONFIDENTIALITY

 

20.1 Duty of
Confidence. Subject to the
other provisions of this Clause 20, all Confidential Information
disclosed by a Party or its Affiliates under this Agreement shall
be maintained in confidence and otherwise safeguarded by the
recipient Party and, as the Party shall cause, its Affiliates. The
recipient Party may only use such Confidential Information for the
purposes of this Agreement and pursuant to the rights granted to
the recipient Party under this Agreement. Subject to the other
provisions of this Clause 20, the recipient Party and its
Affiliates shall hold as confidential such Confidential Information
of the other Party or its Affiliates in the same manner and with
the same protection as the recipient Party maintains its own
confidential information, but in any event with no less than
reasonable protections which are customary in the biopharmaceutical
industry. Subject to the other provisions of this Clause 20 and
Clause 23, a recipient Party may only disclose Confidential
Information of the other Party to its Affiliates and licensees or
sub-licensees and their respective employees, directors, agents,
contractors, consultants, and advisers, in each case, solely to the
extent reasonably necessary for the purposes of, and for those
matters undertaken pursuant to, this Agreement and, in the case of
NOVARTIS, in connection with the Manufacture of the Product outside
the Territory; provided, that any such Persons is bound to maintain
the confidentiality of the Confidential Information in a manner
consistent with the confidentiality provisions of this
Agreement.

 

20.2 Subject to Clause 20.3, CBMG shall maintain in
confidence and otherwise safeguard the Novartis Know-How to the
extent such Novartis Know-How is of a confidential and proprietary
nature.

 

20.3 Exceptions. The obligations under this Clause 20 shall not
apply to any information to the extent that such
information:

 

(i) is
(at the time of disclosure) or becomes (after the time of
disclosure) known to the public or part of the public domain
through no breach of this Agreement by the recipient Party or its
Affiliates;

 

(ii) was
known to, or was otherwise in the possession of, the recipient
Party or its Affiliates, as evidenced by written records, prior to
the time of disclosure by the disclosing Party or any of its
Affiliates;

 

(iii) is
disclosed to the recipient Party or any of its Affiliates on a
non-confidential basis by a Third Party who is entitled to disclose
it without breaching any confidentiality obligation to the
disclosing Party or any of its Affiliates; or

 

 

 

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(iv) is
independently developed by or on behalf of the recipient Party or
its Affiliates, as evidenced by written records, without reference
to the Confidential Information disclosed by the disclosing Party
or its Affiliates to the recipient Party or its Affiliates under
this Agreement.

 

20.4 Specific aspects or details of Confidential
Information shall not be deemed to be within the public domain or
in the possession of the recipient Party merely because the
Confidential Information is embraced by more general information in
the public domain or in the possession of the recipient Party.
Further, any combination of Confidential Information shall not be
considered in the public domain or in the possession of the
recipient Party merely because individual elements of such
Confidential Information are in the public domain or in the
possession of the recipient Party, unless the combination and its
principles are in the public domain or in the possession of the
recipient Party.

 

20.5 Authorized
Disclosures.

 

(i) In
addition to disclosures allowed under Clause 20.2, NOVARTIS may
disclose CBMG’s or its Affiliates' Confidential Information
to the extent such disclosure is necessary in the following
instances: (a) to competent authorities in connection with any
Registration or other Regulatory Filings for the Product; (b) in
connection with prosecuting or defending litigation as permitted by
this Agreement; (c) in complying with applicable court orders,
governmental regulations (including securities regulations) or
requirements of Regulatory Authorities; (d) in connection with the
sale of all or substantially all of its business or assets to which
this Agreement relates; or (e) to the extent otherwise necessary or
appropriate in connection with exercising the rights granted to it
hereunder.

 

(ii) In
addition, NOVARTIS or its Affiliates or sublicensees may disclose
CBMG’s or CBMG’s Affiliates' Confidential Information
to Third Parties as may be necessary or useful in connection with
the Manufacture of the Product as contemplated by this Agreement,
including in connection with subcontracting
transactions.

 

(iii) In
the event the recipient Party is required to disclose Confidential
Information of the disclosing Party pursuant to Applicable Law or
in connection with bona fide legal process, including disclosures
of the type contemplated by Clause 20.5(i)(d), such disclosure
shall not be deemed a breach of this Agreement; provided, that the
recipient Party: (i) informs the disclosing Party as soon as
reasonably practicable following it becoming aware of the required
disclosure; (ii) limits the disclosure to the required purpose; and
(iii) at the disclosing Party's request and expense, assists in
attempting to object to or limit the required
disclosure.

 

20.6 Terms of this
Agreement. Each of the Parties
agrees not to disclose to any Third Party the terms and conditions
of this Agreement without first obtaining, in each case, the prior
written consent of the other Party, except that either Party may
disclose this Agreement to its Affiliates, licensors, licensees, or
sub-licensees and their respective employees, directors, agents,
contractors, consultants, and advisers, or as otherwise permitted
for a disclosure of Confidential Information in this Clause
20.

 

 

 

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20.7 Use of Names. Neither Party shall use the name, symbol,
trademark, trade name, or logo of the other Party or its Affiliates
in any press release, publication, or other form of public
disclosure without first obtaining, in each case, the prior written
consent of the other Party (such consent not to be unreasonably
withheld, conditioned, or delayed), except for those disclosures
for which consent has already been obtained.

 

20.8 Trade
Secrets. Either Party may, from
time to time, identify and designate items of Know-How disclosed
hereunder by or on behalf of such Party as being a trade secret by:
(i) if such Know-How is disclosed in writing or other tangible
form, marking such Know-How as "Trade Secret" or similar manner to expressly designate it as
a trade secret; or (ii) if such Know-How is disclosed in any other
manner, by expressly indicating that such Know-How is a trade
secret at the time of initial disclosure and promptly thereafter
providing the other Party a written description of such Know-How
that is marked in a manner to expressly identify such Know-How and
indicate it is a trade secret (such Know-How so identified and
designated as a trade secret, collectively, in the case of CBMG,
"CBMG Trade
Secrets" and, in the case of
NOVARTIS, "Novartis Trade
Secrets").

 

(i) NOVARTIS shall have the right to use and disclose
CBMG Trade Secrets and CBMG shall have the right to use and
disclose Novartis Trade Secrets, in each case, solely to the extent
permitted under this Agreement or the License Agreement; provided,
however, that: (i) any such use or disclosure shall be limited to
CBMG or NOVARTIS's Affiliates and licensees, sublicensees, and
Third Parties with whom NOVARTIS or CBMG, as applicable, has a bona
fide contractual relationship and their respective employees,
directors, agents, contractors, consultants, and advisors, in each
case, solely to the extent such Person is bound by written
obligations of confidentiality (including of non-use and
non-disclosure) as protective of such CBMG Trade Secrets or
Novartis Trade Secrets, as applicable, as those set forth in this
Agreement; and (ii) NOVARTIS may use and disclose CBMG Trade
Secrets and CBMG may use and disclose Novartis Trade Secrets, in
each case, in accordance with Clauses 20.3 and 20.5. NOVARTIS shall
not use or disclose any CBMG Trade Secrets for any other purpose,
or otherwise authorize the same. CBMG shall not use or disclose any
Novartis Trade Secrets for any other purpose, or otherwise
authorize the same.

 

(ii) Without limiting the foregoing, NOVARTIS and CBMG
shall take reasonable measures to protect the secrecy of and avoid
disclosure and unauthorized use of the CBMG Trade Secrets and
Novartis Trade Secrets, as applicable, including by taking at least
those measures that it employs to protect its own trade
secrets.

 

(iii) Neither CBMG nor any of its Affiliates shall be
obligated under this Agreement to disclose or transfer to Novartis
or its Affiliates any trade secret of CBMG or its Affiliates,
except as expressly provided under this Agreement. Neither NOVARTIS
nor any of its Affiliates shall be obligated under this Agreement
to disclose or transfer to CBMG or its Affiliates any trade secret
of NOVARTIS or its Affiliates, except as expressly provided under
this Agreement.

 

 

 

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(iv) For
clarity: (i) CBMG Trade Secrets shall constitute Confidential
Information of CBMG; and (ii) Novartis Trade Secrets shall
constitute Confidential Information of NOVARTIS. In the event of a
conflict or inconsistency between this Clause 20.8 and any other
provision of Clause 20 or Clause 17.1, such other provision of
Clause 20 or Clause 17.1 will control.

 

20.9 Press Releases and Publicity
Related to this Agreement. CBMG
agrees not to issue any press release or other public statement,
whether oral or written, disclosing the existence of this
Agreement, the terms of this Agreement, or any information relating
to this Agreement without first obtaining, in each case, the prior
written consent of NOVARTIS, exercisable in its sole discretion.
CBMG shall provide NOVARTIS with any such proposed press release or
other public statement no less than [***] prior to the date on
which CBMG proposes to issue (subject to obtaining Novartis's prior
written consent) such press release or other public
statement.

 

20.10 Survival. The obligations of confidentiality and non-use
contained in this Clause 20 shall survive the duration of this Agreement for a
period of ten (10) years.

 

20.11 Return of Confidential
Information. Upon termination
or expiration of this Agreement for any reason, the receiving party
will promptly return to the disclosing party all Confidential
Information received from the disclosing party in connection with
this Agreement, including all copies made, except for one copy as
may be necessary to be retained for the purpose of regulatory
compliance. Further, nothing in this Clause 20 shall require the
receiving Party to delete or
otherwise destroy any copies of the disclosing party’s
Confidential Information that is
stored in electronic form in back-up archives of its information
technology systems that are not accessible to its employees in the
ordinary course of business.

 

21. TERM AND TERMINATION
FOR CONVENIENCE

 

21.1 Effective Date.
This Agreement shall come into force
on the Effective Date.

 

21.2 Term. This Agreement shall have an initial fixed term
of [***] from the 25th September 2018 (the
“Initial Term”). Thereafter, unless terminated in
accordance with Clause 22, it shall renew automatically for
successive periods of two (2) years (“Renewal Term”) unless terminated by NOVARTIS by written
notice to CBMG at least Ninety (90) days prior to such automatic
renewal. The Initial Term and any Renewal Term(s) are collectively
referred to as the “Term”.

 

22. EXTRAORDINARY
TERMINATION

 

22.1 Without prejudice to any grounds for extraordinary
termination available to a Party under Applicable Law, the Parties
agree that this Agreement may be terminated in accordance with the
terms set forth in this Clause 22. 

 

 

 

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22.2 Termination due to material
breach. If either Party is in
material breach of any material obligation under this Agreement,
the non-breaching Party may provide written notice to the breaching
Party specifying the claimed particulars of such material breach,
and in the event such material breach is capable of being cured but
is not cured within [***] after the receipt by the breaching Party
of such notice, then subject to Clause 24.2(vi), the non-breaching
Party shall have the right to terminate this Agreement immediately
by giving written notice to the breaching Party to such effect;
provided, however, that if such breach is capable of being cured
but cannot be cured within such [***] period and the breaching
Party initiates actions to cure such breach within such period and
thereafter diligently pursues such actions, the non-breaching Party
shall grant the breaching Party such additional period as is
reasonable under the circumstances to cure such breach. For
clarity, in the event that a material breach is not capable of
being cured, then the non-breaching Party shall have the right to
terminate this Agreement immediately by giving written notice to
the breaching Party to such effect.

 

22.3 Termination due to
Insolvency. Termination for
Insolvency. Either Party may terminate this Agreement upon written
notice if an Insolvency Event occurs in relation to the other
Party. If a Party becomes aware of the likely occurrence of any
Insolvency Event in regard to that Party, it shall promptly so
notify the other Party in sufficient time to give the other Party
sufficient notice to protect its interests under this Agreement.
NOVARTIS may terminate this Agreement in the event CBMG rejects
this Agreement under Section 365 of the United States Bankruptcy
Code, 11 U.S.C. § 101 et seq.

 

22.4 Termination due to termination
or expiry of License Agreement.
NOVARTIS may terminate this Agreement with immediate effect in the
event that NOVARTIS executes a termination right under the License
Agreement or the License Agreement expires.

 

22.5 Termination due to Regulatory
Authority. NOVARTIS may
terminate this Agreement immediately (in whole or in part) if any
Regulatory Authority takes any action, or raises any objection,
that prevents NOVARTIS China selling the Product or CBMG China from
Manufacturing the Product. Additionally, NOVARTIS shall have the
right to terminate this Agreement immediately (in whole or in part)
if the Product cannot be reasonably Commercialized for medical,
scientific or legal reasons.

 

22.6 Termination due to
Divestment. NOVARTIS may
unilaterally terminate this Agreement immediately where NOVARTIS
sells, assigns, transfers, conveys, licenses or otherwise divests
to a Third Party any material right in and to the Product in the
Territory.

 

 

 

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22.7 Termination due to Change of
Control. NOVARTIS may terminate
this Agreement upon [***] prior written notice upon a Change of
Control of CBMG’s or any Affiliate’s entry into a
definitive agreement providing for a transaction or series of
transactions that would constitute a Change of Control of CBMG
Parent or CBMG China (or both); provided, that, at the applicable
time, the Acquirer: (a) is researching, developing, manufacturing,
or commercializing any cell therapy or gene therapy product,
service, or technology that NOVARTIS determines competes with any
cell therapy or gene therapy product, service, or technology of
NOVARTIS Parent or any of its Affiliates; or (b) has not been,
during the [***] immediately preceding such time, in full
compliance with all Regulatory Requirements and NOVARTIS internal
regulatory and compliance standards; or (c) is researching,
developing, manufacturing, or commercializing a Competing Product;
or (d) recorded greater than [***] in worldwide net sales during
the prior [***] period (in each case, (a) through (d), as
determined in NOVARTIS sole discretion).

 

22.8 Termination by NOVARTIS for
Quality Audit Failure. NOVARTIS
may terminate this Agreement effective immediately if: (a) NOVARTIS
reasonably believes (as a result of a condition which it observes
during a Quality Audit or otherwise) that CBMG may not be in
compliance with cGMP, NOVARTIS's quality requirements, or
Applicable Law; and (b) CBMG fails to successfully implement the
CAPAs, as determined in NOVARTIS's sole discretion, within [***]
following the Parties' agreement on such CAPAs in accordance with
Clause 8.4.

 

22.9 Termination due to
Non-Compliance with the Novartis Supplier Code. NOVARTIS may terminate this Agreement with
immediate effect by written notice if CBMG China fails to comply
with Applicable Standards relating to Novartis Supplier
Code.

 

22.10 Termination due to the failure
to establish and agree upon the Business Continuity
Plan. NOVARTIS may terminate
this Agreement upon the failure of the Parties to establish and
agree upon the Business Continuity Plan within [***] following the
execution of this MSA, as detailed in Clause
15.4.

 

22.11 Compensation for
Termination. Subject to Clause
23 below, upon NOVARTIS’ termination, CBMG shall not be
entitled to any compensation, damages or other payment whatsoever,
whether in respect of goodwill, loss of profit or
otherwise.

 

23. EFFECTS OF TERMINATION
OR EXPIRATION

 

23.1 Termination for
Convenience. Upon termination
of this Agreement (in whole)
by NOVARTIS in accordance with
Clause 22, CBMG China shall complete the Manufacture of any semi-finished
Product pursuant to an existing
Product Order in accordance with this Agreement and shall supply the same to
NOVARTIS China at the Product Price
current at the termination date.

 

23.2 Extraordinary
Termination. Upon any
termination of this Agreement (in whole) by NOVARTIS in accordance
with Clause 22, unless NOVARTIS China and CBMG China otherwise
agree, all existing and undelivered Product Orders, other than
Confirmed Product Orders and Product Orders which are partially
Manufactured per Clause 23.1, shall be deemed to be cancelled. The
Parties agree that all Product Orders, including Confirmed Product
Orders, shall be cancelled in the event of termination due to
Regulatory Authority pursuant to Clause 22.5.

 

23.3 Return of Novartis
Material. Upon expiration or
termination of this Agreement for any reason, CBMG China shall
return to NOVARTIS Parent any unused Toll Materials provided by
NOVARTIS Parent to CBMG China free of charge and in the same
condition that it was provided to CBMG China.

 

 

 

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23.4 Survival. Except as otherwise expressly provided,
termination or expiration of this Agreement will not affect any
rights and obligations which, from the context thereof, are
intended to survive termination or expiration of this Agreement,
nor shall it prejudice any other remedies that the Parties may have
under this Agreement. Upon expiration or termination of this
Agreement all outstanding unpaid invoices shall become payable
immediately in place of the payment terms previously agreed by the
Parties.

 

23.5 Technical Transfer
out of the
Facility. Where NOVARTIS
exercises a right to terminate pursuant to Clause 22.2, Clause
22.3, Clause 22.4, Clause 22.5, Clause 22.7, Clause 22.8, or Clause
22.9 of this Agreement, at NOVARTIS's written request, CBMG shall
(and shall cause its Approved Subcontractors to) at CBMG’s
cost, transition to NOVARTIS or NOVARTIS Affiliate (or any Third
Party designated by NOVARTIS, in NOVARTIS’ absolute
discretion) any arrangement with any contractor from which CBMG
China or its Affiliates had arranged to obtain supply of the
Product or any Materials in accordance with this Agreement. In
addition, CBMG China shall support a full technical transfer
relating to the Manufacture of the Product and related analytical
testing methods (the “Technical Transfer out of the
Facility”) to NOVARTIS
China, NOVARTIS Parent, an Affiliate of NOVARTIS, or any Third
Party designated by NOVARTIS, in NOVARTIS’ absolute
discretion.

 

23.6 Where NOVARTIS exercises a right to terminate
pursuant to Clause 22.6, or CBMG executes a right to terminate
pursuant to Clause 22.2 or Clause 22.3, CBMG shall (and shall cause
its Approved Subcontractors to) at NOVARTIS China’s cost,
support the transition to NOVARTIS or an Affiliate of NOVARTIS (or
any Third Party designated by NOVARTIS, in NOVARTIS’ absolute
discretion) of any arrangement with any contractor from which CBMG
China or its Affiliates had arranged to obtain supply of the
Product or any Materials in accordance with this Agreement. CBMG
China shall also support the Technical Transfer out of the Facility
to NOVARTIS (or any Third Party designated by NOVARTIS, in
NOVARTIS’ absolute discretion).

 

23.7 In
the event of a Technical Transfer out of the Facility pursuant to
either Clause 23.5 or Clause 23.6 above, CBMG shall promptly
provide to NOVARTIS China (or NOVARTIS’s designated Third
Party) a copy of all data and other Know-How pertaining to the
Manufacture of the Product to the extent not previously provided to
NOVARTIS, and NOVARTIS shall have the right to use (and authorize
the use of) and to disclose all such data and other Know-How
following the expiration or termination of this Agreement for
purposes of Manufacturing the Product and otherwise exercising its
rights under this Agreement which survive termination in accordance
with this Clause 23. Further, to the extent CBMG has any remaining
obligations under the Technology Transfer Activities, CBMG shall
promptly complete such activities in accordance
therewith.

 

23.8 At
NOVARTIS request, as part of the Technical Transfer out of the
Facility pursuant to either Clause 23.5 or Clause 23.6 of this
Agreement, CBMG and its Affiliates shall also implement the
transfer of Know-How relating to the Manufacture of the Product and
related analytical testing methods from CBMG and/or Approved
Subcontractors to NOVARTIS, its Affiliates and/or a designated
Third Party. CBMG (or its Affiliates) shall fully cooperate with
NOVARTIS (or its Affiliates or designated Third Party) with regard
to such transfer and provide all reasonably required and customary
assistance to NOVARTIS (or its Affiliates or designated Third
Party) to enable NOVARTIS (or its Affiliates or designated Third
Party) to complete the Technical Transfer out of the Facility in a
timely and effective manner. In particular, CBMG
shall:

 

 

 

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(i) work
together with NOVARTIS and its Affiliates to agree in a written
description of the Technical Transfer out of the Facility
(including the scope of work for the transfer, the key deliverables
and milestones, the timeline for such key deliverables and
milestones and the respective responsibilities of the
Parties);

 

(ii) cooperate with NOVARTIS in such Technical Transfer
of the Facility to NOVARTIS, its Affiliates, or any Third Party
designated by NOVARTIS, including by (i) training or organizing the
training of personnel of NOVARTIS, its Affiliates, or any Third
Party designated by NOVARTIS for the Manufacture of the Product and
the related analytical testing methods; (ii) handing over all
documentation necessary and useful for the Manufacture of the
Product and the related analytical testing methods; and (iii)
granting access to the Facility and appropriately qualified experts
of CBMG;

 

(iii) take all reasonable steps to enable NOVARTIS, its
Affiliates, or such Third Party designated by NOVARTIS to
effectively take up the Manufacture of the Product;
and

 

(iv) effect such transfer of Manufacture of the Product
and of the related analytical testing methods to NOVARTIS, its
Affiliates or such Third Party designated by
NOVARTIS.

 

The
obligations set out in Clause 23.8 of this Agreement shall survive
termination of this Agreement and the License Agreement and shall
remain in effect until the Technical Transfer out of the Facility
described in this Clause 23.8 is complete. The Technical Transfer
out of the Facility shall be deemed to be complete once all
relevant Regulatory Approvals for the Manufacture of the Product by
NOVARTIS, its Affiliates and/or a designated Third Party have been
received.

 

23.9 Accrued
Obligations. Except as
otherwise expressly provided herein, the expiration or termination
of this Agreement for any reason shall not release either Party
from any liability that, at the time of such expiration or
termination, has already accrued to the other Party or that is
attributable to a period of time prior to such expiration or
termination, nor will any expiration or termination of this
Agreement preclude either Party from pursuing all rights and
remedies it may have under this Agreement, or at law or in equity,
with respect to breach of this Agreement prior to such expiration
or termination.

 

23.10 Termination Not Sole
Remedy. Termination is not the
sole remedy under this Agreement and, whether or not termination is
effected and notwithstanding anything contained in this Agreement
to the contrary, all other remedies at law or in equity will remain
available except as agreed to otherwise herein.

 

23.11 Liability. NOVARTIS Parent and NOVARTIS China shall be
jointly and severally liable for their obligations under this
Agreement, provided however that NOVARTIS Parent shall not have any
liability pursuant to Clause 7. CBMG China and CBMG Parent shall be
jointly and severally liable for their obligations under this
Agreement. A Party may release its co-obligor from any obligation
by notifying such co-obligor that it is so
released.

 

 

 

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24. GOVERNING LAW AND
ARBITRATION

 

24.1 Governing
Law. This Agreement shall be
governed by and construed in accordance with the laws of the State
of Delaware applicable to agreements made and to be performed
entirely within such State, without regard to the conflict of laws
principles of such State to the extent that the laws of another
jurisdiction would be required thereby. Notwithstanding the
foregoing, pursuant to Article 6 of the United Nations Convention
on Contracts for the International Sales of Goods (CISG), the
parties expressly exclude application of the CISG in its entirety
to this Agreement.

 

24.2 Arbitration.

 

(i) Any
claim, dispute, or controversy of whatever nature arising among the
Parties out of or in connection with this Agreement, including any
action or claim based on tort, contract, or statute (including any
claims of breach or violation of statutory or common law
protections from discrimination, harassment, and hostile working
environment), or concerning the interpretation, effect,
termination, validity, performance, or breach of this Agreement
(each, a “Dispute”), shall be resolved in accordance with
this Clause 24.1.

 

(ii) The
Parties shall use good-faith efforts to resolve each Dispute.
Notwithstanding the foregoing, any Dispute that a Party in its
absolute discretion considers cannot otherwise be resolved shall be
referred in writing by such Party to the Senior Officers. The
Senior Officers will attempt to resolve any such Dispute within
[***] after the referral of the Dispute. If the Senior Officers are
unavailable or unable to resolve a Dispute within the [***] period,
then the Dispute shall be resolved by final and binding arbitration
under the Rules of Arbitration of the International Chamber of
Commerce (the “ICC”) (the “Rules”) before a
panel of three (3) arbitrators (collectively, the
“Arbitrators”) appointed in accordance with the said
Rules; provided, however, that the president of the arbitral
tribunal shall be appointed by mutual agreement of the
co-Arbitrators.

 

(iii) The
seat of arbitration shall be New York, New York, United States of
America. The language of arbitration shall be English. The
Expedited Procedure Provisions of the Rules shall not apply. The
Parties shall make every effort to conduct the arbitration in an
expeditious and cost-effective manner, having regard to the
complexity and value of the Dispute. The Parties shall aspire to
work with the arbitral tribunal to complete the arbitration within
[***] after selection of the third (3rd)
Arbitrator.

 

(iv) The
decision or award rendered by the Arbitrators shall be final and
non-appealable, and judgment may be entered upon it in accordance
with Applicable Law in any court of competent jurisdiction. The
Arbitrators shall be authorized to award compensatory damages, but
shall not be authorized to reform, modify, or materially change
this Agreement or any other agreements contemplated
hereunder.

 

 

 

Page 52 of
75

 

 

 

 

(v) Each
Party shall bear its own attorneys’ fees, costs, and
disbursements arising out of the arbitration and the costs of the
Arbitrator selected by it, and shall pay an equal share of the fees
and costs of the president of the arbitral tribunal and the ICC
administrative expenses; provided, however, that the Arbitrators
shall be authorized to determine whether a Party is the prevailing
Party, and, if so, to award to that prevailing Party reimbursement
for its reasonable attorneys’ fees, costs, and disbursements
(including, for example, expert witness fees and expenses,
photocopy charges, travel expenses, etc.), or the fees and costs of
the Arbitrators and the ICC administrative
expenses.

 

(vi) In
the event that arbitration is commenced pursuant to Clause 24.2
with respect to any alleged breach hereunder, no purported
termination of this Agreement pursuant to Clause 22.2 shall take
effect until the resolution of such
arbitration.

 

24.3 Dispute Resolution through
Independent Laboratory. The
following shall apply in relation to any unresolved dispute as to
the existence and root cause of non-conforming Toll Materials or
Defective Product:

 

(i) either Party may request in writing for such
unresolved dispute to be determined by an independent first-class
laboratory;

 

(ii) upon
receipt of such request, the Parties shall jointly appoint an
independent first-class laboratory [***]. If the choice of
laboratory cannot be agreed within the timeframe stated, NOVARTIS
shall be solely entitled to appoint the independent laboratory. The
independent laboratory shall be bound to the Parties by obligations
of confidentiality no less exacting than those applying between the
Parties pursuant to this Agreement;

 

(iii) the
independent laboratory shall within [***] of its appointment
determine the root cause of the non-conformity or Defect and its
findings shall be conclusive and binding upon the Parties;
and

 

(iv) all
fees and expenses of the independent laboratory shall be borne
solely by the unsuccessful Party.

 

24.4 Waiver of Jury
Trial. TO THE EXTENT NOT
PROHIBITED BY APPLICABLE LAW THAT CANNOT BE WAIVED, THE PARTIES
HEREBY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT, OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN
ANY ACTION ARISING IN WHOLE OR IN PART UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT: (A)
NO REPRESENTATIVE OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; (B) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (C)
EACH PARTY MAKES THIS WAIVER VOLUNTARILY; AND (D) EACH PARTY HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 18.13. THE
PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH
WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND
BARGAINED-FOR AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE
THEIR RIGHTS TO TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER AMONG
THEM RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED
TRANSACTIONS AND WILL INSTEAD BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.

 

 

 

Page 53 of
75

 

 

 

25. MISCELLANEOUS

 

25.1 Notices. All notices, requests, consents, claims,
demands, waivers, and other communications under this Agreement
shall be in writing and shall be delivered personally or sent
electronic transmission, by a nationally-recognized overnight
courier service, or by registered or certified mail, postage and
fees prepaid, to the intended recipient at such Party’s
address shown below (or such other address as may be specified by
such Party in a notice given in the manner provided in this Clause
25.1). Such notice or other communication shall be deemed to have
been duly given: (a) when delivered, if delivered personally (with
written confirmation of receipt); (b) when sent, if sent by
electronic mail (if confirmed by reply electronic mail that is not
automated); provided, that any electronic mail sent at or after
5:00 p.m. prevailing Eastern Time shall be deemed to be sent at
9:00 a.m. prevailing Eastern Time on the following Business Day;
(c) one (1) Business Day after being sent, if sent overnight by a
nationally-recognized overnight courier service (with written proof
of delivery); or (d) five (5) Business Days after being sent, if
sent by registered or certified mail, return receipt requested,
with postage and fees prepaid.

 

If to NOVARTIS CHINA, to:

Beijing Novartis Pharma Co. Ltd.

[***]

 

 

If to NOVARTIS PARENT, to:

 

Novartis Pharma AG

[***]

 

And
with a further copy, in the case of notice to Novartis,
to:

Novartis
Pharmaceuticals Corporation

[***]

 

If to CBMG, to:

 

CBMG
China

85
Faladi Road

Building
No.3

Pilot
Free Trade Zone, Shanghai

China

 

with
copies, in the case of notice to CBMG, to:

 

Ellenoff
Grossman & Schole LLP

1345
Avenue of the Americas

New
York, New York 10105

Attention:
Sarah Williams, Esq.

 

 

Page 54 of
75

 

 

 

25.2 Annexes. All Annexes (and any amendments to such Annexes)
and their enclosures form an integral part of this Agreement and
are incorporated herein by reference.

 

25.3 Fees and
Expenses. Except as otherwise
specified in this Agreement, each of the Parties shall bear its own
costs and expenses (including investment banking and legal fees and
expenses) incurred in connection with this Agreement and the
transactions contemplated hereby

 

25.4 Order of
Priority. In the event of any conflict, inconsistency or
discrepancy between this Agreement and the License Agreement, or
this Agreement and the Annexes or the terms and conditions
referenced or incorporated in this Agreement or the Appendices the
following order of priority shall apply: (i) the License Agreement
(ii) the Quality Agreement (solely in respect of Quality Assurance,
quality management and compliance with the Applicable Standards),
(iii) this Agreement, (iv)
any Annexes, and (v) individual Product Orders.

 

25.5 Standard
Terms. Except as expressly otherwise agreed in writing by
the Parties, the provisions of this Agreement (including its
Annexes) shall apply to any Product Order for the Product as well
as any activity within the scope of this Agreement to the exclusion
of any standard terms and conditions of either Parties, even if
reference is made to such standard terms in conditions by either
Party in any Product Order, or any other
document.

 

25.6 Force
Majeure. Failure of any Party
to perform its obligations under this Agreement (other than of the
obligations to make any payments or of confidentiality) shall not
subject such Party to any liability or place them in breach of any
term or condition of this Agreement to the other Party if, and
solely to the extent, such failure is caused by Force Majeure. The
corresponding obligations of the other Party will be suspended to
the same extent. “Force
Majeure” shall mean any
unanticipated event beyond a Party’s reasonable control that
could not be avoided by due care of such non-performing Party,
including without limitation, acts of God, fire, explosion, flood,
earthquake, drought, war, hostility, revolution, riot, civil
disturbance, national emergency, sabotage, embargo; provided,
however, that the Party affected shall promptly notify the other
Party of the condition constituting Force Majeure as defined herein
and shall exert Commercially Reasonable Efforts to eliminate, cure
and overcome any such causes and to resume performance of its
obligations with all possible speed. If a condition constituting
Force Majeure as defined herein prevents, or would likely prevent,
a Party from performing its obligations under this Agreement for
more than [***], the Parties shall meet to negotiate a mutually
satisfactory solution to the problem, if practicable, including the
use of a third Party to fulfil the obligations hereunder of the
Party invoking Force Majeure at the expense of the Party invoking
Force Majeure.

 

25.7 Entire
Agreement. This Agreement (including the Annexes hereto)
constitutes the entire agreement between the Parties related to the
subject matter covered by this Agreement, and shall supersede and
prevail over any other prior or contemporaneous arrangements
regarding this subject matter, whether written or oral, and is
binding upon the Parties hereto and their successors, provided that
this Agreement shall not supersede the terms and conditions of the
License Agreement or the CDA applicable to any period prior to the
Effective Date. No modification of this Agreement will be binding
upon either Party unless made in writing and signed by both
Parties.

 

 

 

Page 55 of
75

 

 

 

 

25.8 Assignment. Unless otherwise provided for herein, this
Agreement and the rights and obligations hereunder may not be
assigned or transferred by CBMG without the prior written consent
of NOVARTIS. NOVARTIS may assign this Agreement upon written notice
to, but without the prior approval of CBMG to: (i) an Affiliate of
NOVARTIS; (ii) a Third Party in connection with the sale or
disposal of all or part of the assets of NOVARTIS; or (iii) if
NOVARTIS divests, out-licenses or otherwise disposes of the Product
or the business or assets relating to the
Product,
without prejudice to its right of
termination under Clause 22.6.

 

25.9 Delegation. NOVARTIS
may delegate any of the activities under this Agreement to any of
its Affiliates, including without limitation Quality Assurance,
regulatory ordering process, invoicing, artwork approval process,
or supply chain related activities. In such case, NOVARTIS shall
remain fully responsible for the performance of its obligations
under this Agreement by its Affiliate and CBMG shall have no
recourse against such Affiliate but shall address any claims or
demands to NOVARTIS.

 

25.10 Severability. If any term or provision of this Agreement or
the application of any such term or provision to any Person or
circumstance shall be held invalid, void, or unenforceable in any
respect by a court of competent jurisdiction, the remainder of the
terms and provisions of this Agreement shall remain in full force
and effect and shall in no way be affected, impaired, or
invalidated, so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner
materially adverse to either Party. Upon such a determination, the
Parties shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the Parties as closely as
possible in an acceptable manner in order that the agreement of the
Parties be consummated as originally contemplated to the fullest
extent possible.

 

25.11 Headings. The headings contained in this Agreement are
inserted for convenience only and shall not be considered in
interpreting or construing any of the provisions contained in this
Agreement.

 

25.12 Waiver and
Amendment. This Agreement may
be amended, modified, or supplemented only by a written mutual
agreement executed and delivered by each of the Parties. Except as
otherwise provided in this Agreement, any provision of this
Agreement may be waived by the Party entitled to the benefits
thereof only by a written instrument signed by the Party granting
such waiver. No failure or delay by either Party in exercising any
right, power, or privilege under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of
any other right, power, or privilege.

 

25.13 Third Party
Beneficiaries. This Agreement
is for the sole benefit of the Parties and their permitted
successors and assigns, and nothing herein express or implied shall
give or be construed to give to any Person, other than the Parties
and such permitted successors and assigns, any legal or equitable
rights hereunder, except with respect to Novartis Indemnitees, who
are Third Parties, solely with respect to Clause
18.

 

 

 

Page 56 of
75

 

 

 

 

25.14 Specific Performance and Other
Equitable Relief. The Parties
hereby expressly recognize and acknowledge that immediate,
extensive, and irreparable damage would result, no adequate remedy
at law would exist, and damages would be difficult to determine in
the event that any provision of this Agreement is not performed in
accordance with its specific terms or otherwise breached. It is
hereby agreed, notwithstanding the intent of the Parties to submit
claims to arbitration in accordance with Clause 24.2, that the
Parties shall be entitled to specific performance of the terms
hereof and immediate injunctive relief and other equitable relief,
without the necessity of proving the inadequacy of money damages as
a remedy, and the Parties further hereby agree to waive any
requirement for the securing or posting of a bond in connection
with the obtaining of such injunctive or other equitable relief.
The Parties further agree not to assert that a remedy of injunctive
relief, specific performance, or other equitable relief is
unenforceable, invalid, contrary to law, or inequitable for any
reason, nor to assert that a remedy of monetary damages would
provide an adequate remedy. Such remedies, and any and all other
remedies provided for in this Agreement, shall, however, be
cumulative in nature and not exclusive and shall be in addition to
any other remedies whatsoever which either Party may otherwise
have. Each of the Parties hereby acknowledges that the existence of
any other remedy contemplated by this Agreement does not diminish
the availability of specific performance of the obligations
hereunder or any other injunctive relief. Each of the Parties
further acknowledges and agrees that injunctive relief or specific
performance will not cause an undue hardship to such
Party.

 

25.15 Survivorship. Any of the provisions of this Agreement,
including the Annexes, that are expressed or implied to survive the
expiration or termination of this Agreement, shall remain in full
force and effect.

 

25.16 Performance by
Affiliates. CBMG acknowledges
and accepts that NOVARTIS may exercise its rights and perform its
obligations under this Agreement either directly or through one (1)
or more of its Affiliates. The NOVARTIS Affiliates shall have the
benefit of all rights of NOVARTIS under this Agreement, but not be
subject to NOVARTIS’s obligations, unless expressly provided
under this Agreement or to the extent that an Affiliate is
exercising a right hereunder, or in the case of a permitted
assignment. Accordingly, "NOVARTIS" shall be interpreted to mean
"Novartis or its Affiliates" where necessary to give NOVARTIS's
Affiliates the benefit of the rights provided to NOVARTIS under
this Agreement and the ability to perform its obligations under
this Agreement; provided, that NOVARTIS shall remain responsible
for the acts and omissions, including financial liabilities, of its
Affiliates.

 

25.17 Execution. This Agreement may be executed in two or more
counterparts, each of which, when executed, shall be an original,
but all counterparts shall together constitute one and the same
instrument. For purposes of this Agreement, .PDF and other
electronic signatures shall be deemed
originals.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

Page 57 of
75

 

 

 

Signed by the duly authorized representatives of each of the
Parties hereto as of the Effective Date.

 

 

 

	

BEIJING NOVARTIS PHARMA CO. LTD

(Company
Seal)

 

By: /s/
DARGENT                                               

Name: DARGENT  
                 
                 
        

Title: General
Manager                                        

 

 

 

	

SHANGHAI CELLULAR BIOPHARMACEUTICAL GROUP LTD

(Comapny
Seal)

 

By: /s/ Bizuo (Tony) Liu
                 
               
  

Name: Bizuo (Tony) Liu
                 
               
  

Title: Legal
Representative                                 

 

 

 

	
 

	
 

	

NOVARTIS PHARMA AG

 

 

By: /s/ Daniel
Stark                                             

Name: Daniel
Stark                                             

Title: Head External
Suppy,
CGT              
 
      

 

 

 

	

CELLULAR
BIOMEDICINE GROUP INC.

 

 

By: /s/ Bizuo (Tony) Liu
                 
               
  

Name: Bizuo (Tony) Liu
                 
               
  

Title: CEO    
                 
   
                                

 

 

 

 

	

 

 

By: /s/ Benoit Collin
                 
                 
       

Name: Benoit Collin  
                 
                 
     

Title: Global Category
Manager, CGT       
        

 

 

 

	
 

 

 

Page 58 of
75

 

ANNEX 1

 

PRICING

 

The
approach for the cost and man-hour estimation in respect of the
CBMG Production Costs is based on the best guess of major
activities involved in the Manufacture of the Product. The CBMG
Production Costs calculation is based on [***]

 

 

 

 

 

 

 

 

 

 

 

 

Page 59 of
75

 

 

ANNEX 2

 

TOLL MATERIALS AND TOLL MATERIALS REIMBURSEMENT VALUE

 

 

A. 

Toll
Material Reimbursement Value

 

[***]

 

 

B. 

Stock
Count Procedure for Toll Materials

 

 

	

Reporting
SUPPLIER

	
 

	

    Reporting

    Month:

	
 

	

Date:

	
 

 

1. 

Toll
Materials (free of charge Toll Materials)

 

[***]

 

2. 

Inventory
differences, write-offs and extraordinary consumption of Toll
Materials (in quantity of free of charge Toll
Material)

 

[***]

 

3. 

Reconciliation
Statement of physical count result and quantities reported to
Novartis (at least once per year)

 

CBMG
hereby confirms that the result of the physical stock count that
has been carried out in accordance with Applicable Law and
generally accepted accounting rules correspond to the quantities
reported under this report. NOVARTIS may request a stock take,
attend to it or ask for more supporting documentation.

 

	

 

Date of
physical count (or indication of inventory method)

	
 

	

 

Date of
next physical count

	
 

	

 

Signature

	
 

	
 

	
 

 

 

 

 

Page 60 of
75

 

 

ANNEX 3

 

CRITICAL MATERIALS AND STARTING MATERIALS

 

Per
Clause 5.2, CBMG China shall
hold a safety stock of at least [***].

 

 

 

 

 

 

Page 61 of
75

 

 

ANNEX 4

 

RELATIONSHIP MANAGEMENT

 

 

1. 
CBMG Representatives. CBMG
shall establish a NOVARTIS interface team headed by a dedicated key
account manager as primary point of contact to
NOVARTIS.

 

2. 
Joint Supply Team. Within
[***] of completion of the Technical Transfer Activities, the
Parties shall establish a joint supply team (the
“Joint
Supply Team”) which shall be composed of an equal
number of employees from NOVARTIS’ and CBMG’s
operational team responsible for the performance under this
Agreement. Either Party may replace any or all of its
representatives at any time by written or electronic notice to the
other Party.

 

3. 
Meetings. The Joint Supply
Team shall meet at least three (3) times per year, additional
meetings may be arranged as required, where agreed by the Joint
Supply Team. Meetings shall occur by teleconference,
videoconference or in person.

 

4. 
Responsibilities. The Joint
Supply Team shall supervise and coordinate the collaboration of the
Parties under this Agreement, including technical aspects,
logistics and planning, quality assurance, quality control,
regulatory aspects and compliance and shall serve as point of
escalation for all issues that arise during the performance of this
Agreement. In particular, the Joint Supply Team shall:

 

(a) regularly
discuss projected demand requirements and supply plans (S&OP)
for the Product;

 

(b) discuss
any proposed Manufacturing changes;

 

(c) review and
discuss a mutual continuous improvement and competitive best
practices strategy;

 

(d) review and
discuss the KPIs;

 

(e) perform
Product Price reviews; and

 

(f) carry out
any other duties that are allocated to it under this
Agreement.

 

5.  The
Joint Supply Team shall not have any authority to modify the terms
of this Agreement.

 

6. 
Minutes. Joint Supply Team
meetings shall be chaired by a Joint Supply Team member of
NOVARTIS. The chair shall be responsible to keep reasonably
detailed minutes of the relevant meetings. Minutes of Joint Supply
Team meetings shall be sent to all Joint Supply Team members, for
review and approval within [***]. Minutes shall be deemed approved
unless any Joint Supply Team member objects to the accuracy of such
minutes within [***] of receipt.

 

7.
Operational Meetings: In addition to the
Joint Supply Team meeting there are the following operational
meetings:

 

 

a) Weekly
operational meetings: to deal with shorter term topics and
some technical issues.

● 

Participants (NOVARTIS): Schedulers, Quality Assurance
Manager QAM, Product steward and during transfers tech transfer
lead and other experts as necessary.

● 

Participants (CBMG): key account manager
QA, QC and Production managers and technical experts as
necessary.

 

b) Change
control meeting: depending
on the load of changes weekly to monthly.

● 

Participants: change control coordinator
and the experts and QAM’s involved with the
change

 

c) Deviation
review board: As needed to address difficult deviations and
resolve them

● 

Participants: Product steward and QAM
involved with the deviation to be addressed.

 

 

Page 62 of
75

 

ANNEX 5

 

DATA PROTECTION & INFORMATION SECURITY REQUIRMENTS

 

Part A: Data Protection Requirements

 

1. Specification of the
Personal Data and Processing Activities

 

1.1 Nature and Purpose of the intended processing of
Personal Data

The nature and purpose of Processing of Personal Data by CBMG China
are defined in the Agreement.

 

1.2 Type of Personal Data

The Subject Matter of the processing of Personal Data comprises the
following data types/categories (to the extent permissible under
applicable law):

● 

Clinical Batches: The Subject Matter of the processing of Personal
Data comprises the following data types/categories: full or partial
date of birth, name or initials, weight, NOVARTIS patient number,
site number(s)

● 

Commercial Batches: The Subject Matter of the processing of
Personal Data comprises the following data types/categories: full
or partial date of birth, name or initials, weight, NOVARTIS
patient number, DIN/SEC#, site number(s), country.

 

1.3 Categories of Data Subjects

The Categories of Data Subjects comprise:

● 

Patients who received the Product Manufactured by CBMG China in the
scope of the Agreement .

 

2. Technical and
Organisational Measures

 

2.1 CBMG China shall carry out Processing activities
on Personal Data solely for the purpose specified in the Agreement
and as instructed by Novartis. All persons who have access to
Personal Data must maintain its confidentiality, the limitation of
use to specific purposes, and access shall be permitted on a
need-to-know basis to the extent required for the performance of
CBMG China’s obligations. CBMG China shall ensure that all
persons who have access to Personal Data have received appropriate
privacy and security training, which shall be updated periodically
in accordance with applicable laws, regulations, and industry
standards, or as otherwise requested by Novartis. CBMG China shall
not use or disclose any Personal Data that CBMG China creates,
receives, maintains, or transmits as a result of performance of
CBMG China’s obligations, other than as expressly permitted
or required by the Agreement.

 

2.2 CBMG China shall establish, on or before the
Effective Date of this Agreement, the minimum technical security
and organizational measures referenced in the Novartis Supplier
Code together with any additional requirements, if applicable, set
forth under Part B of this Schedule (“Additional Information Security
Requirements”). [***].
The technical and organisational measures are subject to technical
advancements and development. In this regard, it is permissible for
CBMG China to implement alternative adequate measures so long as
the minimum defined level of security is not reduced. Substantial
changes must be documented.

 

2.3 Throughout the term of the Agreement, CBMG China
will maintain and monitor a comprehensive, written privacy and
information security program, including data protection policies
and procedures, and consistent with any privacy compliance plan
established between the Parties and attached hereto, that contains
administrative, technical and physical safeguards designed to
protect against reasonably anticipated threats to the security,
confidentiality or integrity of, and the unauthorized Processing
of, Personal Data. CBMG China will periodically assess reasonably
foreseeable risks to the security, confidentiality, integrity, and
resilience of electronic, paper and other records containing
Personal Data and evaluate and improve, where necessary, the
effectiveness of its safeguards for limiting those internal and
external risks.

 

3. Rectification,
Restriction and Erasure of Personal Data

 

3.1 CBMG China may not on its own authority rectify,
erase or restrict the processing of Personal Data that is being
processed on behalf of Novartis, except by written instructions
from Novartis. CBMG China will notify Novartis promptly (and in any
event within [***] from receipt) of any communication received from
a Data Subject relating to the Data Subject’s rights to
access, modify, correct or delete Personal Data and to comply with
all instructions of Novartis in responding to such
communications.

 

4. Quality Assurance and
other Duties of CBMG China

 

4.1  CBMG China shall provide Novartis with the contact
details of CBMG China’s data protection officer or person
responsible for personal data protection for the purposes of direct
contact. Novartis shall be informed within [***] of any change of
the data protection officer or person.

 

4.2 CBMG China will notify Novartis in writing and as
soon as practical of any request made by any government, law
enforcement or regulatory agency (but no later than one (1)
Business Day from the date of any such request) for information
concerning, or access to, Personal Data, unless notification to
Novartis is prohibited by Data Protection Laws or other applicable
laws, rules, regulations or orders. CBMG China will cooperate with
Novartis in responding to such requests

 

4.3 Novartis shall be informed immediately of any
inspections and measures conducted by the supervisory authority,
insofar as they relate to the Processing of Personal Data. This
also applies insofar as CBMG China is under investigation or is
party to an investigation by a competent authority in connection
with infringements to any civil or criminal law, or administrative
rule or regulation regarding the processing of Personal Data in
connection with the Agreement.

 

Page 63 of
75

 

 5. CBMG
China Subcontracting
 

5.1 Subcontracting for the purpose of this ANNEX 5 are
to be understood as meaning services which relate directly to the
provision of the principal obligation related to the processing of
Personal Data pursuant to the Agreement. This does not include
ancillary services, such as telecommunication services, postal /
transport services, maintenance and user support services or the
disposal of data carriers, as well as other measures to ensure the
confidentiality, availability, integrity and resilience of the
hardware and software of data processing
equipment.

 

5.2  CBMG China understands and agrees that, without
limitation, the confidentiality, privacy and security requirements
contained in this Agreement also apply to any permitted
Subcontractors, temporary employees or other third-Parties who
receive any Personal Data as a result of this Agreement. CBMG China
shall only enter into sub-contract agreements that include data
protection provisions no less restrictive than the provisions set
forth in this ANNEX 5. Upon written request by Novartis, copies of
such sub-contracts shall be provided to Novartis within [***].
Novartis must be granted (a) the right to monitor and inspect
Subcontractors upon reasonable notice and (b) the right to obtain
information from CBMG China about the substance of the sub-contract
and the implementation of the data protection obligations within
the sub-contract relationship, upon written
request.

 

6. Data Security
Breach

 

6.1 At any time during the processing of Personal
Data, CBMG China shall notify Novartis immediately of any Data
Security Breach involving Personal Data, including any breach at
facilities, systems or equipment of CBMG China’s
subcontractors. CBMG China agrees to assist and cooperate with
Novartis concerning any disclosures to affected Parties, government
or regulatory agencies and with any other remedial measures
requested by Novartis or required under any law. CBMG China will
take such mutually agreeable steps to prevent the continuation or
repetition of such Data Security Breach.

 

6.2 Unless otherwise required by applicable Data
Protection Laws or any other law, rule, regulation or order, CBMG
China will make no disclosures to affected Parties or any
government, law enforcement or regulatory agencies concerning a
Data Security Breach relating to the Personal Data except as
directed by Novartis. Notwithstanding the foregoing, CBMG China may
contact local police in the event of a physical breach of CBMG
China facilities or theft of equipment or
documents.

 

6.3 CBMG China will assist and cooperate with Novartis
concerning any disclosures to such Parties or agencies, and with
any other remedial measures requested by Novartis or required under
any law, rule, regulation or order applicable to CBMG China or
Novartis, at CBMG China’s expense, including providing notice
to Data Subjects of a Data Security Breach and providing any other
services to such individuals.

 

7. Deletion and Return of
Personal Data

 

7.1 Copies or duplicates of Personal Data shall never
be created without the knowledge of Novartis, with the exception of
back-up copies as far as they are necessary to ensure orderly data
processing, as well as Personal Data required to meet regulatory
requirements to retain data.

 

7.2 Upon termination or expiration of the Agreement,
or as requested in writing by Novartis at any time, CBMG China
will, at its own expense and at Novartis’s option: (a)
promptly return all Personal Data; or (b) destroy all documents,
materials, and any other media that may contain Personal Data,
without retaining any portion or copy thereof. CBMG China will
provide Novartis with a Certificate of Destruction of Personal Data
in a form acceptable to Novartis, signed by an authorized employee
of CBMG who has supervised such destruction.

 

9. Definitions. 

 

“Personal
Data” – any
information that relates to an identified or identifiable person
including without limitation electronic data and paper based files
that is Processed directly or indirectly, by CBMG or Subcontractors
on behalf of and as instructed by Novartis. This may include: name
or initials, home or other physical address, cell/mobile or
telephone number; photograph and/or any data or information subject
to Data Protection Laws.

 

“Data Protection
Laws” – all laws,
rules, regulations, and orders of any jurisdiction or subdivision
thereof relating to the privacy, security, confidentiality and/or
integrity of Personal Data that are applicable to the operations,
services or products of CBMG China and Novartis, including but not
limited to China Cybersecurity Law and other laws and regulations
governing personal data protection.

 

“Data Security
Breach” – (a) the
loss, inadvertent disclosure, unauthorized access to or acquisition
of or misuse of Personal Data or any media containing Personal
Data; (b) the disclosure or use of Personal Data in a manner
inconsistent with Data Protection Laws, the Agreement or this ANNEX
5; or (c) any other act or omission that negatively impacts the
security, confidentiality, and/or integrity of Personal
Data.

 

“Data Subject” – an identified or identifiable
person whose Personal Data are processed, accessed, received,
transmitted, deleted, or maintained by CBMG China on behalf of and
under the instruction of Novartis. An identifiable person is one
who can be identified, directly or indirectly, in particular by
reference to an identification number or to one or more factors
specific to his/her physical, physiological, mental, economic,
cultural or social identity.

 

 “Process, Processed,
Processing” – any
handling of Personal Data by any means, including, without
limitation, collecting, accessing, receiving, using, transferring,
retrieving, manipulating, recording, organizing, storing,
maintaining, hosting, adapting, altering, possessing, sharing,
disclosing (by transmission, dissemination or otherwise making
available), blocking, erasing, destroying, selling, or
licensing.

 

Page 64 of
75

 

 

Part B: Additional Information Security Requirements

 

These
Additional Information Security Requirements (“AISRs”) are intended to supplement
any other information security requirements that may be contained
in the terms and conditions of this Agreement, including without
limitation the Minimum Information Security Requirements referenced
in the Novartis Supplier Code (such other information security
requirements being referred to as “Baseline Requirements”). In the
case of a conflict between the Baseline Requirements and the AISRs,
the stricter requirement (from an information security perspective)
shall prevail. CBMG China agrees and acknowledges that the AISRs
form part of the Agreement.

 

In
these AISRs the following capitalized expressions shall have the
following meanings unless stated otherwise or the context requires
otherwise:

 

 “Good
Industry Practice” means, the exercise of reasonable
skill and care, implementation of industry standards, efficiency,
security, promptness, timeliness, diligence, in a professional
manner, as expected from a skilled, trained and experienced
professional provider of similar services, including but not
limited to Security Industry Practice;

 

“Information Security Controls” means Novartis
Minimum Information Security Controls for suppliers as published on
Novartis public internet:
https://www.novartis.com/our-company/corporate-responsibility/codes-policies-guidelines
and which form part of the Novartis Supplier Code;

 

 “Novartis
Data” means all data, documents or records of whatever
nature (including Personal Data and Novartis Confidential
Information) and in whatever form relating to the business of
Novartis including details of customers, employees or otherwise,
whether subsisting before or after the date of the Agreement and
whether created or processed as part of, or in connection with, the
Services or provided by Novartis (or third Parties acting on their
behalf) to CBMG China in connection with the
Agreement;

 

“Novartis Environment” means any Novartis
system, Novartis data center, 3rd party system owned
by or licensed to Novartis, infrastructure managed by Novartis,
Novartis Affiliate or Novartis sub-contractor or any other system,
interface or infrastructure as notified by Novartis from time to
time;

 

“Novartis Supplier Code” means the Novartis
Supplier Code available at
https://www.novartis.com/our-company/corporate-responsibility/reporting-disclosure/codes-policies-guidelines;

 

 “Personal
Data” means any information that relates to an
identified or identifiable person including without limitation
electronic data and paper based files that is Processed directly or
indirectly, by CBMG China or Subcontractors on behalf of and as
instructed by Novartis. This may include: name or initials, home or
other physical address, cell/mobile or telephone number; photograph
and/or any data or information subject to Data Protection Laws.
Personal Data includes Special/Sensitive Personal Data as defined
below;

 

“Recovery point objective (RPO)” means the point
to which Novartis data must be restored after a disruptive incident
occurs. It is an information or data recovery objective that must
be achieved in order to allow an activity to resume after a
disruptive incident has occurred. RPO refers to a data recovery
objective;

 

“Recovery time objective (RTO)” means the
maximum amount of time allowed to resume an activity, recover
resources, or provide products and services after a disruptive
incident occurs. This target time period must be short enough to
ensure that adverse impacts do not become unacceptable. RTO refers
to a time period;

 

 

 

Page 65 of
75

 

 

 

“Security Incident” means an actual or imminent
event which may impact Novartis Data confidentiality, integrity,
availability or resilience;

 

“Security Industry Practice” means, then-current
and applicable practices as defined in the International
Organization for Standardization (ISO/IEC) ISO/IEC ISO27001,
ISO/IEC 27002:2013, SSAE-16, ISAE3402, National Institute of
Standards and Technology (NIST) NIST 800-44, the Open Web
Application Security Project (OWASP) Guide to Building Secure Web
Applications, and the Center for Internet Security (CIS) Standards
(or any successor to these security standards) or any other
industry security standards mutually agreed by
Parties;

 

“Special/Sensitive
Personal Data” (i) an individual’s physical,
physiological or mental characteristics, economic status, racial or
ethnic origin, political, ideological, religious opinions or
philosophical beliefs, trade union membership, health or medical
information including information related to payment for health
services, sex life or sexual preference, genetic material or
information, human biological samples or cells, unique biometric
data, personality profiles or (ii) an individual’s name or
initials in combination with the individual’s (1) Social
Security number, (2) alien registration number, (3) driver’s
license number, (4) passport number, visa number or other
government identifier, (5) credit card, debit card, or other
financial account numbers, with or without any associated code or
password that would permit access to such account, or (6)
mother’s maiden name. Special/Sensitive Personal Data is a
subset of Personal Data; and

 

“CBMG
China” includes, unless the context requires
otherwise, a reference to CBMG China, its Affiliates and their
respective subcontractors and agents;

 

1.  CBMG China Assessments: Section
9.5 of Novartis Supplier Code is supplemented as
follows:

 

1.1 Novartis
or nominated Third Party has the right to monitor, inspect and
assess organizational, technical and administrative safeguards
maintained by CBMG China and any respective measures employed to
ensure security, availability, integrity and resilience of Novartis
Data including without limitation processes, policies, systems,
business continuity test report and infrastructure. CBMG China
shall provide records and evidence about such measures in form and
timescale reasonably requested by Novartis. CBMG China shall
cooperate and support Novartis or nominated Third Party in such
assessment. Without prejudice to the aforementioned rights of
Novartis, CBMG China shall (or shall procure that its hosting
provider shall) maintain the following Third Party certifications
or audit reports (which shall be provided by CBMG China in
accordance with its obligations under this Agreement):

 

	

SUPPLIER CERTIFICATIONS/AUDIT REPORTS

	

VERSION / DATE

	
 

	
 

 

1.2 Novartis
shall have the right to perform detailed technical on-site or
off-site assessments evaluating effectiveness of implemented
measures to ensure confidentiality, availability, integrity and
resilience of the platform. Report(s) from such assessment will be
provided to CBMG China and CBMG China shall remediate gaps as
defined in Clause 1.5 of this Part B.

 

1.3 CBMG China
shall ensure penetration and security tests are periodically
performed in alignment with Good Industry Practice covering
then-current known vulnerabilities on the environment where
Novartis Data is being processed to identify gaps that help
increase security.

 

 

 

Page 66 of
75

 

 

 

1.4 No more
than [***] Novartis may perform or contract to perform, at its own
expense, an application and infrastructure penetration test.
Report(s) from penetration tests will be provided to CBMG China and
CBMG China shall remediate gaps as defined in Clause
1.5.

 

1.5 CBMG China
shall remediate any identified gaps without undue delay but not
later than as defined in the remediation plan. The Parties agree
that a second occurrence of assessment result in material
non-compliance or CBMG China’s failure to remediate
deficiencies according to the remediation plan shall be deemed as
an irremediable material breach of the Agreement.

 

2. Services to be provided according
recognized standards: Section 1 of Information Security
Controls is supplemented as follows:

 

 

2.1 CBMG China
shall process, treat and handle Novartis Data in accordance with
Good Industry Practice.

 

3. Minimum encryption and continuity
standards: Sections 2 and 6 of Information Security Controls
is supplemented as follows:

 

3.1 [***]

 

 

3.2 If the
Services may adversely impact any Novartis operations, the Parties
shall agree and specify in writing, Recovery Time Objective (RTO)
and Recovery Point Objectives (RPO) to be ensured by CBMG China. If
not otherwise specified in the Agreement, the RTO and RPO are set
out in table below:

 

[***]

 

4. Production data processing:
Sections 3 and 5 of Information Security Controls is supplemented
as follows:

 

4.1 In case
CBMG China may process or store Novartis Data, the Parties shall
agree and specify in the Agreement location of data and location
for which CBMG China may be accessing Novartis Data. If the
aforementioned locations are not specified in the Agreement, they
must be specified below (which shall be provided by CBMG China in
accordance with its obligations under this Agreement):

 

	
 

	

Location

	

Physical location
of Novartis Data

	
 

	

Location from which
Novartis Data is accessed by CBMG China

	
 

 

4.2 CBMG China
shall process production Novartis Data only in: (a) a secure
production environment; or (b) any other mutually agreed
environment where security measures are equivalent as in the
applicable production environment.

 

5. Novartis Environment: Sections
4, 7 and 15 of Information Security Controls is supplemented as
follows:

 

5.1 CBMG China
acknowledges and accepts that any interface, connection or
interaction with Novartis Environment shall be done only after
documented approval from Novartis (which may already be included as
part of this Agreement). Such connection to Novartis Environment
shall be maintained, protected and tested in line with Security
Industry Practice as mutually agreed between the Parties and
connection may be terminated or requested to be terminated by
Novartis at any time at its sole discretion.

 

 

 

Page 67 of
75

 

 

 

5.2 CBMG China
shall ensure that no: (a) viruses or other harmful code intended to
disable, damage or provide unauthorized access; or (b) code used to
keylogging or any software used to enforce licensing restrictions;
or (c) any other code providing functionality not intentionally
accepted by Novartis in writing is infiltrated into the Novartis
Environment by CBMG China or it personnel (including without
limitation, in all of the three aforementioned cases as a result of
failure to observe the requirements as defined in Clause 5.1 of
this Part B).

 

5.3 CBMG China
shall extract and access only data as defined by Novartis and shall
inform immediately Novartis if CBMG China is able to access or
extract other data than specified by Novartis. Such notification
should follow the provisions on Security Incident notification as
defined in Clause 8 of this Part B.

 

6. CBMG China personnel with access to
Novartis Environment: Section 8 of Information Security
Controls is supplemented as follows:

 

6.1 In the
event that any CBMG China personnel: (i) receives a Novartis issued
badge (or other access mechanism) providing them with access to
Novartis premises; (ii) a personalized Novartis network access
account (e.g. a Novartis 5-2-1 account) Novartis laptop, or (iii) a
Novartis e-mail account, or (iv) other type of access to Novartis
Environment, CBMG China shall ensure that such CBMG China personnel
shall follow any applicable information security policies of
Novartis and participate in Novartis trainings at no costs to
Novartis. CBMG China shall notify Novartis without undue delay of
any changes to the status of CBMG China’s or
Subcontractor’s personnel that may affect the right to access
to Novartis Environment. Such status changes may include without
limitation termination of personnel’s employment
relationship, change in area of work/responsibilities or
termination of subcontractor’s engagement.

 

7. Return of Novartis Data:
Section 10 of Information Security Controls is supplemented as
follows

 

7.1 As an
alternative option to the disposal of Novartis Data as per section
10 of Information Security Controls, Novartis shall have the right
to receive such Novartis Data in the form and timescale specified
by Novartis.

 

8. Security Incidents: Section 12
of Information Security Controls is supplemented as
follows: 

 

8.1 CBMG China
shall monitor, analyze and respond to Security Incidents as defined
in this Clause 8. CBMG China will engage and report to Novartis if
there is any actual or suspected Security Incident which could
impact Novartis or Novartis Data. Confirmed Security Incident is
always considered as priority 1 incident.

 

8.2 Novartis
contact for reporting Security Incident identified by CBMG China:
[***].

 

8.3 CBMG China
contact for reporting Security Incident identified by Novartis:
Phone: +[***]

 

8.4 CBMG China
shall follow as a minimum the following Security Incident
management process:

 

8.4.1 CBMG
China shall notify Novartis without undue delay, but not later than
[***] after Security Incident was evidenced

 

 

 

Page 68 of
75

 

 

 

 

8.4.2 If
Security Incident is confirmed, CBMG China shall take appropriate
actions to minimize further exposure of Novartis Data in
consultation with Novartis without undue delay, but not later than
in [***] after Security Incident was confirmed, where such actions
shall include without limitation:

 

8.4.2.1 stopping
inappropriate access or any other inappropriate activities with
Novartis Data;

 

8.4.2.2 defining
remediation actions to prevent repetition of such Security
Incident;

 

8.4.2.3 restoring
normal operations of the Services; and

 

8.4.2.4 informing
Novartis periodically on progress of remediation
actions.

 

After
above actions preventing repetition of Security Incident are
implemented, CBMG China shall provide a written report to Novartis
detailing actions performed and safeguards
implemented.

 

9. Patch management: Section 14 of
Information Security Controls is supplemented as
follows

 

9.1 CBMG China
shall monitor available patches, evaluate, test and implement them
in a timely manner for any systems involved in support of the
Services or in the processing of Novartis Data.

 

9.2 If a patch
has been evaluated to not be applied, CBMG China shall ensure: a)
alternative controls or safeguards are implemented to ensure the
confidentiality, integrity and availability for any systems
involved in support of the Services or in the processing of
Novartis Data; or b) evidence indicating the evaluation, the risk
it potentially imposes and the reason for the
decision.

 

Breach
of these AISRs shall be considered as a material breach of the
Agreement.

 

 

 

 

Page 69 of
75

 

 

ANNEX 6

 

ADDITIONAL HSE REQUIREMENTS

 

During
the Term, CBMG China shall comply with the additional HSE
requirements set forth in this ANNEX and shall procure that its
Approved Subcontractors and Suppliers similarly comply with each of
these additional HSE requirements on or before the Effective Date.
[***]

 

1. HSE
Audit Rights

 

a. CBMG
China shall establish and maintain a HSE audit program of its
Approved Subcontractors, its Suppliers and its supply chain
generally in order to ensure CBMG China’s compliance with the
HSE Requirements. Upon request CBMG China shall provide any audit
reports to NOVARTIS upon request.

 

b. CBMG China
shall (and shall cause its Approved Subcontractors and Suppliers
to) grant NOVARTIS, its Affiliates and its designated
representatives access to the Facility and to any other facilities
where any activities falling within the scope of this Agreement are
being performed. This includes access to Equipment, as well as to
any documents, records, reports, data, procedures, regulatory
submissions, and any other information required to be maintained
under the HSE Requirements, for the purposes of auditing compliance
with the HSE Requirements.

 

c. CBMG China
shall enable (and shall cause
its Approved Subcontractors and Suppliers to enable) NOVARTIS, its
Affiliates and designated representatives to take sufficient quantities of samples in order to
reasonably verify compliance with the HSE
Requirements.

 

2. HSE
Training. CBMG China shall
ensure that any person
engaged in activities falling within the scope of this Agreement
have adequate HSE training, including training in handling
hazardous materials (as defined under Applicable
Standards).

 

3. Incident
Reporting. CBMG China shall immediately report to NOVARTIS
any serious HSE incident (including fatalities, loss of body parts,
spills beyond facility boundaries, etc.) representing a failure to
comply with Applicable Standards relating to HSE. This includes,
without limitation, any incident resulting in involvement of
Regulatory Authorities or other governmental authorities or any HSE
related incidents with actual or potential impact on supply
continuity.

 

4. Contact
information. For each Facility or location where any of the
activities falling within the scope of this Agreement are being
performed, CBMG China shall communicate to NOVARTIS the name and
contact information (including telephone and e-mail address) of at
least one responsible and qualified contact person for HSE related
topics.

 

5. HSE
Management System. CBMG China shall, for each Facility or
location where any activities falling within the scope of this
Agreement are being performed, ensure that HSE management systems
are in place and maintained throughout the Term in accordance with
Applicable Standards as well as with the following:

 

[***]

 

If, on
the Effective Date, CBMG China does not have a HSE management
system in place which meets the above criteria, then CBMG China
shall promptly so notify NOVARTIS, provided, however, that on such
date, CBMG China shall have in place and maintain throughout the
Term the following minimum elements:

 

(a) HSE
policy;

(b) adequate
documentation on the effects of any Facility, services and
activities on the environment;

(c) HSE risk
assessment(s); and

(d) general
and detailed HSE targets and HSE requirements for CBMG
China’s own Suppliers.

 

 

 

 

Page 70 of
75

 

 

 

ANNEX 7

 

QUALITY AGREEMENT

 

(As attached, immediately following this page, and the remainder of
this page is left blank intentionally.)

 

[***]

 

 

 

 

Page 71 of
75

 

 

ANNEX 8

 

PRODUCT TECH TRANSFER PLAN

 

 

[***]

 

 

Page 72 of
75

 

 

ANNEX
9

 

LIST OF PRODUCT SPECIFIC EQUIPMENT

 

Process
Equipment

 

[***]

 

Media
Preparation Equipment

 

[***]

 

Instrumentation
for Analytical Testing

 

[***]

 

 

Page 73 of
75

 

 

ANNEX 10

 

PART A: KEY PERFORMANCE INDICATORS

 

	

KPI

	

Definition

	

Critical KPIs (Yes/No)

	

[***]

 

 

 

 

 

Page 74 of
75

 

 

PART B – KPI TARGETS & SCORING MECHANISM

 

[***]

 

 

 

 

 

Page 75 of
75Exhibit
4.1

 

THIS
NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “1933 ACT”)

 

US
$126,000.00

 

PROPANC
BIOPHARMA, INC.

8%
CONVERTIBLE REDEEMABLE NOTE

DUE
DECEMBER 24, 2019

 

FOR
VALUE RECEIVED, Propanc Biopharma, Inc. (the “Company”) promises to pay to the order of EAGLE EQUITIES, LLC and its
authorized successors and Permitted Assigns, defined below, (the “Holder”), the aggregate principal face amount
of One Hundred Twenty Six Thousand Dollars exactly (U.S. $126,000.00) on December 24, 2019 (the “Maturity Date”)
and to pay interest on the principal amount outstanding hereunder at the rate of 8% per annum commencing on December 24, 2018.The
interest will be paid to the Holder in whose name this 8% Convertible Redeemable Note (this “Note”) is registered
on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note
are payable at 91 Shelton Ave, Suite 107, New Haven, CT 06511, initially, and if changed, last appearing on the records of the
Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding
principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the
Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company.
The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy
and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest
shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein. Permitted Assigns means any “qualified
person”, “permitted assigns” or “prospective transferee” acquiring all or a portion of this Note
accompanied by an Opinion of Counsel, all in accordance with the terms provided in Sections 2(f) and 5(g) of the Securities Purchase
Agreement by and between the Holder and the Company dated as of December 24, 2018 (the “Securities Purchase Agreement”).

 

This
Note is subject to the following additional provisions:

 

1.
This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested
by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that
Holder shall pay any tax or other governmental charges payable in connection therewith and for the cost of any Opinion of Counsel
as maybe required under Section 5(g) of the Securities Purchase Agreement. To the extent that Holder subsequently transfers, assigns,
sells or exchanges any of the multiple lesser denomination notes, Holder acknowledges that it will provide the Company with an
Opinion of Counsel as provided for in Sections 2(f) and 5(g) of the Securities Purchase Agreement (“Opinions of Counsel”).

 

    	 

     

    

 

2.
The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

 

3.
This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (“Act”),
applicable state securities laws and Sections 2(f) and 5(f) of the Securities Purchase Agreement. Any attempted transfer to a
non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company
and any agent of the Company may treat the person in whose name this Note is duly registered on the Company’s records as
the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall
be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth
in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prequalified prospective transferee
of this Note, also is required to give the Company written confirmation that this Note is being converted (“Notice of
Conversion”) in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of
such Notice of Conversion shall be the Conversion Date. All notices of conversion will be accompanied by an Opinion of Counsel.

 

4.
(a) The Holder of this Note is entitled, at its option, at any time after the 6th monthly anniversary of this Note,
to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company’s common
stock (the “Common Stock”) at a price (“Conversion Price”) for each share of Common Stock
equal to 61% of the lowest closing bid price of the Common Stock as reported on the OTC Markets on which
the Company’s shares are then traded or any exchange upon which the Common Stock may be traded in the future (the “Exchange”),
for the ten prior trading days including the day upon which a Notice of Conversion is received by the Company
(provided such Notice of Conversion is duly executed by the Holder and is delivered together with a duly executed Opinion of Counsel,
by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the
Holder wishes to include the same day closing price). For purposes of the above calculations, a day shall not be considered a
trading day if there was no trading volume for the Company’s Common Stock for that particular day. If the shares have not
been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the
Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of
Conversion. Accrued, but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions
of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. To the
extent the Conversion Price of the Company’s Common Stock closes below the par value per share, the Company will take all
steps necessary to solicit the consent of the stockholders to reduce the par value to the lowest value possible under law or to
conduct a reverse split at a ratio determine by the Company’s board of directors. The Company agrees to honor all conversions
submitted pending this increase or such stock split, as applicable. In the event the Company experiences a DTC “Chill”
on its shares, the conversion price shall be decreased to 51% instead of 61% while that “Chill” is in effect.
If the Company fails to maintain the share reserve at the 2.5x discount of the note 60 days after the issuance of the note,
the conversion discount shall be increased by 10%. In no event shall the Holder be allowed to effect a conversion if such conversion,
along with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed 4.99% of
the outstanding shares of the Common Stock of the Company (which may be increased up to 9.9% upon 60 days’ prior written
notice by the Holder to the Company).

 

    	 	2	 

     

    

 

(b)
Interest on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the
Company in Common Stock (“Interest Shares”). Holder may, at any time, send in a Notice of Conversion to the Company
for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall
be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

 

(c)
The Note may be prepaid with the following penalties: (i) if the note is prepaid within 90 days of the issuance date, then at
115% of the face amount plus any accrued interest; (ii) if the note is prepaid after 90 days after the issuance date but less
than 181 days after the issuance date, then at 125% of the face amount plus any accrued interest. This Note may not be prepaid
after the 180th day. Such redemption must be closed and funded within 3 days of giving notice of redemption of the
right to redeem shall be null and void.

 

(d)
Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of
related transactions, (ii) a reclassification, capital reorganization (excluding an increase in authorized capital) or other change
or exchange of outstanding shares of the Common Stock, other than a forward or reverse stock split or stock dividend, or (iii)
any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity
(other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification,
conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and
(iii) being referred to as a “Sale Event”), then, in each case, the Company shall, upon request of the Holder, redeem
this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the
election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued
but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

 

(e)
In case of any Sale Event (not to include a sale of all or substantially all of the Company’s assets) in connection with
which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this
Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares
of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other
change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise
of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions
shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash,
the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

 

    	 	3	 

     

    

 

5.
No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the
principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

 

6.
The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice
of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for
hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

 

7.
The Company agrees to pay all costs and expenses, including reasonable attorneys’ fees and expenses, which may be incurred
by the Holder in collecting any amount due under this Note.

 

8.
If one or more of the following described “Events of Default” shall occur:

 

(a)
The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
or

 

(b)
Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements
heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or
the Securities Purchase Agreement under which this note was issued shall be false or misleading in any material respect; or

 

(c)
The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation
of the Company under this Note or any other note issued to the Holder; or

 

(d)
The Company shall (1) become insolvent (which does not include a “going concern opinion”); (2) admit in writing its
inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings
for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial
part of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such petition or have filed
against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

 

(e)
A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without
its consent and shall not be discharged within sixty (60) days after such appointment; or

 

    	 	4	 

     

    

 

(f)
Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody
or control of the whole or any substantial portion of the properties or assets of the Company; or

 

(g)
One or more money judgments, writs or warrants of attachment, or similar process, in excess of two hundred fifty thousand dollars
($250,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall
remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior
to the date of any proposed sale thereunder; or

 

(h)
The Company has defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered
and failed to cure such default within the appropriate grace period; or

 

(i)
The Company shall have its Common Stock delisted from an exchange (including the OTC Markets) or, if the Common Stock trades on
an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days or ceases to file its reports
under the Securities Exchange Act of 1934, as amended, with the SEC;

 

(j)
The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within
3 business days of its receipt of a Notice of Conversion which includes a duly executed Opinion of Counsel from a reputable law
firm expressing an opinion which supports the removal of a restrictive legend; or

 

(k)
The Company shall not replenish the reserve set forth in Section 12, within 3 business days of the written request of the Holder.

 

(l)
The Company shall be delinquent in its periodic report filings with the Securities and Exchange Commission (subject to applicable
extensions); or

 

(m)
The Company shall cause to lose the “bid” price for its stock in a market (including the OTC marketplace or other
exchange).

 

Then,
or at any time thereafter, unless cured within 5 days from the date that the Buyer notifies the Company in writing of such event
with reasonable detail), and in each and every such case, unless such Event of Default shall have been waived in writing by the
Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder’s
sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further)
notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note
or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any
period of grace, enforce any and all of the Holder’s rights and remedies provided herein or any other rights or remedies
afforded by law. Upon an Event of Default, interest shall accrue at a default interest rate of 24% per annum or, if such rate
is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of
Section 8(j) the parties agree that damages shall be difficult to determine and agree on liquidated damages in the amount of $250
per day the shares are not issued beginning on the 4thbusiness day after the conversion notice was delivered to the
Company. The agreed liquidated damages shall increase to $500 per day beginning on the 10thbusiness day. In the event
of a breach of Section 8(m), the parties agree that damages shall be difficult to determine and hereby agree to an increase of
the outstanding principal amounts by 20% as a liquidated damages payment. In case of a breach of Section 8(i), the parties agree
that damages will be difficult to determine and agree that the outstanding principal due under this Note shall increase by 50%
as a liquidated damages payment. Further, if a breach of Section 8(l) occurs or is continuing after the 6-month anniversary of
the Note, then the Holder shall be entitled to use the lowest closing bid price during the delinquency period as a base price
for the conversion. For example, if the lowest closing bid price during the delinquency period is $0.01 per share and the conversion
discount is 50% the Holder may elect to convert future conversions at $0.005 per share.

 

    	 	5	 

     

    

 

If
the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging
an attorney, then if the Holder prevails in such action, the Holder shall be reimbursed by the Company for its reasonable attorneys’
fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

9.
In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid
or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent
possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired
thereby.

 

10.
Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed
by the Company and the Holder.

 

11.
The Company represents that it is not a “shell” issuer and that if it previously has been a “shell” issuer
that at least 12 months have passed since the Company has reported Form 10 type information indicating it is no longer a “shell
issuer.

 

12.
The Company shall issue irrevocable transfer agent instructions reserving 30,000,000 shares of its Common Stock for conversions
under this Note (the “Share Reserve”). Upon full conversion of this Note, any shares remaining in the Share Reserve
shall be released from such reserve. The company should at all times reserve a minimum of 2.5 times the number of shares required
if the note would be fully converted. The Holder may reasonably request increases from time to time to reserve such amounts. The
Company will instruct its transfer agent to provide the outstanding share information to the Holder in connection with its conversions.

 

13.
The Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits,
recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.

 

14.
If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury,
the applicable provision shall automatically be revised to equal the maximum rate of interest or other amount deemed interest
permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it will not seek to claim
or take advantage of any law that would prohibit or forgive the Company from paying all or a portion of the principal or interest
on this Note.

 

15.
This Note shall be governed by and construed in accordance with the laws of Nevada applicable to contracts made and wholly to
be performed within the State of Nevada and shall be binding upon the successors and assigns of each party hereto. The Holder
and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the county
or city of New York, NY or in the Federal courts sitting in the county or city of New York, NY. This Agreement may be executed
in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

 

[Signature
page follows]

 

    	 	6	 

     

    

 

IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.

 

	Dated:
    December 24, 2018	 	 
	 	 	 
	 	PROPANC
    BIOPHARMA, INC.
	 	 	 
	 	By:
    	/s/
    James Nathanielsz
	 	Name:	James
    Nathanielsz
	 	Title:	CEO

 

    	 	7	 

     

    

 

EXHIBIT
A

 

NOTICE
OF CONVERSION

 

(To
be Executed by the Registered Holder in order to Convert the Note)

 

The
undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of Propanc
Biopharma, Inc. (“Shares”) according to the conditions set forth in such Note, as of the date written below.

 

If
Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes
and charges payable with respect thereto.

 

Date
of Conversion: ___________________________________________

Applicable
Conversion Price: ____________________________________

Signature:
___________________________________________________

[Print
Name of Holder and Title of Signer]

Address:
____________________________________________________

 _______________________________________________________

 

SSN
or EIN: _______________________________

Shares
are to be registered in the following name: ___________________________________

 

Name:
_____________________________________________________

Address:
___________________________________________________

Tel:
_______________________________________

Fax: 
______________________________________

SSN
or EIN: ________________________________

 

Shares
are to be sent or delivered to the following account:

 

Account
Name: ______________________________________________

Address:
___________________________________________________

 

    	 	8

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