STRATEGIC ALLIANCE: LICENSE AGREEMENT INFECTIOUS DISEASES

1.

DEFINITIONS

1.01

“ADDITIONAL ADJUVANT” shall mean any and all compounds or composition or components or formulation of components other than ADJUVANT included in PRODUCT, used to induce, augment, fine-tune or enhance an ANTIGEN specific active response of PRODUCT above the one already induced, augmented or enhanced by ADJUVANT in combination with one or more ANTIGENS.

1.02

“ADJUVANT’ shall mean CPG motifs and CPG oligonucleotides containing immunostimulatory unmethylated cytosine guanine dinucleotides and any and all compounds or compositions, whether produced naturally or by semisynthetic or synthetic means, alone or in admixture with another material (excluding “ADDITIONAL ADJUVANT”), in a suitable vehicle which is used to induce, augment, fine-tune or enhance an ANTIGEN specific immune response and which is covered by, or made with the use of TECHNOLOGY.

1.03

“AFFILIATE(S)” shall mean any corporation, firm, partnership or other entity, whether de jure or de facto, which directly or indirectly owns, is owned by or is under common ownership with a party to this Agreement to the extent of at least fifty percent (50%) of the equity (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) having the power to vote on or direct the affairs of the entity and any person, firm, partnership, corporation or other entity actually controlled by, controlling or under common control with a party to this Agreement.

1.04

“ANNUAL NET SALES VALUE” shall mean NET SALES VALUE of PRODUCTS and/or COMBINATIONS in a calendar year.

1.05 

“ANTIGEN” shall mean any active ingredient such as (but not limited to) live attenuated micro-organisms, whole killed micro-organisms or subunit vaccines (e.g. polysaccharides, polysaccharide conjugates, peptides, recombinant proteins, glycolipids), that elicits an immune response but excluding ANTIGENS which are nucleic acids expressed in vivo following introduction of an encoded gene.

1.06

“BENEFIT” shall mean with respect to an ANTIGEN other than a LICENSED ANTIGEN that:

1)

the protective and/or therapeutic response to such ANTIGEN is improved (e.g. increased) or;

2)

the dosage of such ANTIGEN is improved (i.e. less dose needed) or;

3)

the schedule of immunization or route of administration with such ANTIGEN is improved (e.g. number of inoculations).

1.07

“BROAD FIELD OF USE claim” shall mean a claim under existing PATENTS as mutually agreed between both parties which provides an enforceable monopoly right which can be used to effectively prevent a THIRD PARTY (other than the second CO-EXCLUSIVE licensee or other non-exclusive licensees in case of HIV) from developing, using, making or marketing any product comprising an ANTIGEN in combination with any immunostimulatory oligonucleotide intended for use in humans containing an unmethylated cytosine guanine dinucleotide. In the event of any dispute between the parties as to whether a claim is a BROAD FIELD OF USE claim, such dispute shall be resolved in accordance with Section 20.02.

1.08

“CO-EXCLUSIVE” or “CO-EXCLUSIVELY” shall mean that a commercial license to utilise ADJUVANT for use in the FIELD may not be granted hereunder to more than two (2) entities, including SB, or rather than granting such a license to a THIRD PARTY in addition to SB, CPG may retain for itself the right to develop, have developed, make, have made, use, have used, sell, offer for sale, have sold, keep and import ADJUVANT for use in the FIELD hereunder.

1.09

“COMBINATION” shall mean a PRODUCT which also contains ANTIGEN(s) other than the LICENSED ANTIGENS and in which ANTIGEN(S) other than LICENSED ANTIGENS do not BENEFIT from ADJUVANT. SB shall have the obligation to reasonably demonstrate to CPG that such ANTIGEN(S) other than a LICENSED ANTIGEN(S) does (do) not BENEFIT from ADJUVANT prior to selling any such COMBINATION.

1.10

“COMPOSITION OF MATTER” shall mean a claim which provides an enforceable monopoly right that can be used to effectively prevent a THIRD PARTY (other than the second CO-EXCLUSIVE licensee or other non- 4 exclusive licensees in case of HIV) from developing, using, making or marketing any product for use in humans comprising ANTIGEN in combination with an ADJUVANT which SB has incorporated into PRODUCT which is in preclinical or clinical testing or on the market.

1.11

“CONFIDENTIAL INFORMATION” shall mean any information, data, patents, documents, memoranda, reports, correspondence, drawings, clearly marked as CONFIDENTIAL and exchanged between both parties under this Agreement. Oral disclosure must be reduced to writing and marked CONFIDENTIAL within thirty (30) days of the disclosure to be considered as CONFIDENTIAL INFORMATION.

1.12

“DISPUTED PATENT” shall mean US patent application Ref. University of Iowa Research Foundation patent application No WO 96/02555 claiming priority to U.S. patent application Serial Number 08/276,358 dated 15/7/94 and all divisions and continuations of this application, all patents issuing from such applications, any reissues, reexaminations and extensions of all such patents and all foreign counterparts of the foregoing, and any other claim made in writing by THIRD PARTIES pertaining to any PATENT which has been made on or before the EFFECTIVE DATE or during the EVALUATION, PERIOD and which may adversely affect SB’s rights hereunder.

1.13

“DNA VACCINE” shall mean a pharmaceutical composition for PROPHYLACTIC IMMUNIZATION and/or THERAPEUTIC IMMUNIZATION

against infectious disease in humans, wherein the ANTIGEN (including LICENSED ANTIGENS) is encoded in nucleic acid and expressed in vivo following introduction of the nucleic acid.

1.14

“ESCROW” shall mean an account of SB opened at a Belgian bank from which no amounts can be withdrawn other than by mutual consent of both parties or from which amount can be released in accordance with the provisions of Section 8.09.

1.15

“EVALUATION PERIOD” shall mean the twelve (12) month period starting on the Effective Date (as such period may be extended in accordance with Section 3).

1.16

“FIELD” shall mean the use of ADJUVANT in combination with LICENSED ANTIGENS as part of a PRODUCT and/or COMBINATION for PROPHYLACTIC IMMUNIZATION and/or THERAPEUTIC IMMUNIZATION against infectious diseases in humans, expressly excluding the SPECIFIC FIELD.

1.17

“INFRINGE” or “INFRINGED” or “INFRINGEMENT” shall mean that on a country per country basis, a THIRD PARTY other than CPG or its second CO-EXCLUSIVE licensee hereunder or non exclusive licensees in case of HIV has registered a PLA for a product covered by CPG PATENT claims or is commercially manufacturing, commercially using or importing such a product, provided, however, that if CPG can demonstrate that CPG is, within a six (6) month period following such PLA registration of the THIRD PARTY product, actively negotiating with such THIRD PARTY a license in order to avoid INFRINGEMENT of the PATENT in all countries where such INFRINGEMENT exists and successfully enters into such license agreement, no INFRINGEMENT shall be deemed to exist or have existed. Failing to do so, INFRINGEMENT is deemed to exist as from the end of such six (6) month period. Notwithstanding the foregoing, in case of sale of such THIRD PARTY product, INFRINGEMENT shall be deemed to exist.

1.18

“KNOW-HOW” shall mean all present and future (including those deriving from the RESEARCH AND DEVELOPMENT PROGRAM) technical information,

materials and know-how which relate to ADJUVANT and which are now and/or at any time during the term of this Agreement developed, owned, proprietary to and/or controlled by CPG and/or any AFFILIATES of CPG and under which CPG has now, or in the future, the right to grant licenses, and which are necessary for or useful to the development, production and commercialisation of ADJUVANT within the FIELD. KNOW-HOW shall include, without limitation, all chemical, pharmacological, toxicological, clinical, assay, control and manufacturing data and any other information relating thereto and any materials, seeds, strains, reagents and media. KNOW-HOW shall not include PATENTS. A summary of KNOW-HOW is described in Appendix B. In all events shall KNOW-HOW be secret and substantial or contained in a PATENT or PATENT application in any country or described in Appendix B.

1.19

“LICENSED ANTIGEN” shall mean an ANTIGEN listed under Section 6 for which a license to use ADJUVANT with such ANTIGENS is granted to SB hereunder for the use specified in Section 6 as part of PRODUCT and/or COMBINATION in which ADJUVANT induces, augments or enhances the ANTIGEN specific immune response of such LICENSED ANTIGEN.

1.20

“NET SALES VALUE” shall mean the gross receipts from sales of PRODUCT and/or COMBINATION in the TERRITORY by SB and/or its AFFILIATES and/or its sublicensees to THIRD PARTIES less the following amounts actually paid or allowed by SB and/or its AFFILIATES and/or its sublicensees with respect to such sales:

(i)

transportation charges, including insurance; and

(ii)

SB’s standard costs for syringes and other administration devices combined with or contained in commercial packaging; and

(iii)

sales and excise taxes and duties levied on the sale or delivery of PRODUCT and/or COMBINATION and contributions and payments required by any governmental authorities as liability provisions and/or made pursuant to injury compensation schemes and/or as product liability insurance premiums; and

(iv)

trade and quantity and cash discounts, governmentally required commissions and other customary rebates; and

(v)

allowances or credits to customers or charges back from customers on account of rejection or return of PRODUCT and/or COMBINATION subject to royalty under this Agreement or on account of retroactive price reductions affecting such PRODUCT and/or COMBINATION ; and

(vi)

royalties payable and/or paid by SB to THIRD PARTIES on the manufacture, use and/or sale of PRODUCT and/or COMBINATION for the use in the FIELD of technology not encompassed within TECHNOLOGY and which is not the subject of the offset set forth in Section 9 hereof, and provided that deductions under this heading (vi) shall not exceed [****] percent ([*]%) of gross receipts from sales of PRODUCT and/or COMBINATION on which such royalty is payable hereunder in the TERRITORY by SB and/or its sublicensees and/or its AFFILIATES and/or it distributors.

(i)

By multiplying the NET SALES VALUE of the COMBINATION by the fraction A/A + B, where A is the gross selling price, during the royalty period in question, of PRODUCT(S) incorporating only LICENSED ANTIGENS, when sold

separately; and B is the gross selling price, during the royalty period in question, of product(s) incorporating only ANTIGENS other than LICENSED ANTIGENS, when sold separately; or

(ii)

In the event that no such separate sales are made of such components of such COMBINATION during the royalty period in question, NET SALES VALUE, for the purposes of determining royalty payments, shall be calculated using the above formula under (i) where A is the reasonably estimated commercial value of the PRODUCT(S) incorporating LICENSED ANTIGENS, when sold separately, and B is the reasonably estimated commercial value of the other product(s) incorporating only. ANTIGENS other than LICENSED ANTIGENS, when sold separately. Any such estimates shall be determined using criteria to be mutually agreed upon by the parties. Such estimates shall be reported to CPG with the reports to be provided to CPG pursuant to Section 15.02 hereof.

(iii)

If the parties cannot agree on any estimates as set forth in (ii) above, the matter shall be resolved pursuant to the provisions of Sections 20.2 and 20.03.

1.21

“OTHER PATENTS” shall mean patents and/or patent applications owned and/or controlled by THIRD PARTIES having claims which would be infringed by SB developing, having developed, making, having made, using, having used, selling or having sold ADJUVANT as part of PRODUCT and/or COMBINATION.

1.22

“PATENT(S)” shall mean all patents and patent applications which are or become owned and/or controlled, in whole or in part, by CPG and/or any AFFILIATES of CPG including PATENTS covering inventions made by CPG during the RESEARCH AND DEVELOPMENT PROGRAM and under which CPG has, now or in the future, the right to grant licenses and which generically or specifically claim ADJUVANT and/or use of ADJUVANT

and/or a process for manufacturing ADJUVANT, and/or intermediates used in such process, and which are useful in the FIELD. Included within the definition of PATENTS are any continuations, continuations-in-part, divisions, patents of addition, reissues, renewals or extensions including SPC’s thereof. Also included within the definition of PATENTS are any patents or patent applications which generically or specifically claim or have claims covering any improvements of ADJUVANT or intermediates or manufacturing processes required or useful for production of ADJUVANT which are developed by CPG, and/or under which CPG otherwise has the right to grant licenses or sublicenses, now or in the future, during the term of this Agreement and in all cases which relate to the FIELD. The list of patents and patent applications encompassed within PATENTS on the Effective Date is set forth in Appendix A attached hereto.

1.23

“PRODUCT” shall mean any and all pharmaceutical compositions for the PROPHYLACTIC IMMUNIZATION and/or THERAPEUTIC IMMUNIZATION against infectious diseases in humans comprising one or more of the LICENSED ANTIGENS in combination with ADJUVANT as an ingredient or component in any formulation, configuration, combination and/or delivery system, to the extent ADJUVANT induces, augments, fine-tunes or enhances the ANTIGEN specific immune response of such LICENSED ANTIGENS contained within PRODUCT.

1.24

“PROPHYLACTIC IMMUNIZATION” shall mean the use of PRODUCT or COMBINATION to immunize persons with no diagnosed relevant disease.

1.25

“REDUCED FINANCIAL TERMS” shall mean the financial terms set forth in Appendix E.

1.26

“RESEARCH AND DEVELOPMENT PROGRAM” shall mean the research and development program directed to the examination of the ADJUVANT mode of action in combination with LICENSED ANTIGEN within PRODUCT and/or COMBINATION in the context of THERAPEUTIC IMMUNIZATION within the FIELD. An outline of the RESEARCH AND DEVELOPMENT PROGRAM will be set forth in Appendix C.

1.27

“SIGNIFICANT COMPETITION” shall mean on a country-per-country and PRODUCT-per-PRODUCT basis including COMBINATIONS, the presence of a competitor other than the second CO-EXCLUSIVE licensee or CPG (or other non exclusive licensees in case of HIV) on such market who is selling a competing product which utilizes unmethylated cytosine guanine dinucleotides as adjuvant in combination with LICENSED ANTIGENS CO-EXCLUSIVELY licensed hereunder, to the extent such competitor obtained a market share of [******] percent ([**]%) or more or has doubled its market share in the previous year from a base market share of at least [****] percent ([*]%).

1.28

“SPC” shall mean all Supplementary Protection Certificates for medicinal products and their equivalents provided under the Council Regulation (EEC) N° 1768/92 of June 18, 1992.

1.29

“SPECIFIC FIELD” shall mean the use of ADJUVANT (i) as part of or in conjunction with a DNA VACCINE or (ii) other than in combination ^’ with a LICENSED ANTIGEN (except as permitted in Section 1.09 as part of a COMBINATION).

1.30

“STEERING COMMITTEE” shall mean the entity organized and acting pursuant to Section 5.

1.31

“TECHNOLOGY” shall mean KNOW HOW and/or PATENTS.

1.32

“TERRITORY” shall mean all the countries and territories in the world.

1.33

“THERAPEUTIC IMMUNIZATION” shall mean the use of PRODUCT or COMBINATION to immunize patients with diagnosed relevant disease.

1.34

“THIRD PARTY(IES)” shall mean any party which is neither a party to this Agreement nor an AFFILIATE.

1.35

“UPDATED FINANCIAL TERMS” shall mean the financial terms selected by SB during the EVALUATION PERIOD in accordance with Section 3, of which the lower limit and the upper limit are set forth in Appendix D.

1.36

“VALID CLAIM” shall mean a claim subsisting in a patent or in a pending patent application, being a claim that has not finally been canceled, revoked or held invalid by a final decision of a court or other authority having jurisdiction to decide the issue. A final decision in this context means a decision which has become legally binding either because no appeal has been taken and the time for appeal has expired, or because any appeal taken is no longer pending, leaving the decision of cancellation, revocation or invalidation standing without possibility of further appeal.

2.

SCOPE

3.

EVALUATION

3.01 

CPG shall during the EVALUATION PERIOD use its best efforts to resolve claims relating to the DISPUTED PATENTS to the satisfaction of SB. In resolving claims relating to the DISPUTED PATENTS, CPG shall successfully terminate any action which relates to the ownership of PATENTS and shall

not abandon any claim under any PATENT without prior approval of SB, which approval, with respect to routine patent prosecution matters, shall not be unreasonably withheld or delayed. SB shall at all times have the right to make comments regarding any proposal made by CPG hereunder or any proposed settlement or action.

3.02

CPG, to the extent legally possible, shall keep SB fully informed during the EVALUATION PERIOD (or any extension thereof) about the status of the resolution of the claims relating to the DISPUTED PATENT and shall disclose any information pertaining thereto to SB, including but not limited to copies of correspondence and documents.

3.03

The parties shall, during the EVALUATION PERIOD (or any extension thereof), collaborate in the prosecution and maintenance of the PATENTS in order to safeguard and/or improve the claims under PATENTS. [**]% of the amount paid by SB pursuant to Section 3.O1.b hereunder shall be dedicated to support such activities in accordance with a decision of the STEERING COMMITTEE.

3.04

Provided claims relating to DISPUTED PATENTS have been resolved during the EVALUATION PERIOD (or EXTENDED EVALUATION TERM as defined in Section 3.05) in accordance with Section 3.01, SB shall elect UPDATED FINANCIAL TERMS which shall be effective after the expiration of the EVALUATION PERIOD (or any extension thereof as the case may be). In determining the UPDATED FINANCIAL TERMS, SB shall take the following into account:

•

impact of the DISPUTED PATENTS and related settlements or proceedings on the patentability of claims under PATENTS;

•

likelihood of obtaining BROAD FIELD OF USE and/or COMPOSITION OF MATTER claims within the TERRITORY;

•

data obtained during the EVALUATION PERIOD (or any extension thereof as the case may be) through the RESEARCH AND AND DEVELOPMENT PROGRAM or otherwise which support the usefulness of the ADJUVANT within PRODUCTS in humans.

thereof as the case may be) shall be credited against the corresponding amounts of the UPDATED FINANCIAL TERMS, and parties shall enter into a restated contract no later than at the expiration of the EVALUATION PERIOD (or any extension thereof as the case may be) to incorporate such UPDATED FINANCIAL TERMS as elected by SB hereunder, into the Agreement and to provide payment for any balance due as continuation fee as set forth in Appendix D, and any other amounts then due.

3.05

If claims relating to DISPUTED PATENTS have not been resolved at the end of the EVALUATION PERIOD in accordance with Section 3.01, SB shall have the option (to be exercised no later than one (1) week before expiry of the EVALUATION PERIOD) to extend the EVALUATION PERIOD for an additional twelve (12) months (“EXTENDED EVALUATION TERM”) or to elect the REDUCED PAYMENT TERMS for a non-exclusive license or to elect the lower limit of the UPDATED FINANCIAL TERMS for a CO-EXCLUSIVE license.

3.06

Any determination made by SB pursuant to this Section 3 shall be made in good faith.

4.

RESEARCH AND DEVELOPMENT PROGRAM

4.01

Scope of RESEARCH AND DEVELOPMENT PROGRAM

4.02

Conduct of RESEARCH AND DEVELOPMENT

a)

undertake RESEARCH AND DEVELOPMENT PROGRAM with SB as set forth in Appendix C as further completed by the STEERING COMMITTEE, and such other activities which, from time to time, the STEERING COMMITTEE decides as being necessary for the success of the RESEARCH AND DEVELOPMENT PROGRAM, provided that such decision is consistent with the RESEARCH AND DEVELOPMENT PROGRAM and the terms and conditions of this Agreement. It is understood that (i) SB shall be under no, obligation to participate in the RESEARCH AND DEVELOPMENT PROGRAM other than by providing funding and scientific input as set forth herein and by participating in discussions during the EVALUATION PERIOD (as such period may be extended) regarding the PATENTS and potential claims thereafter and (ii) that CPG shall have no obligation to provide resources for the performance of the RESEARCH AND DEVELOPMENT

PROGRAM other than as set forth in Appendix C or as otherwise mutually agreed.

(b)

use all reasonable efforts and proceed diligently to perform or have performed the work set out for CPG in THE RESEARCH AND DEVELOPMENT PROGRAM in a timely manner. It is the intention of the parties to proceed in a cost-effective manner.

(c)

conduct the RESEARCH AND DEVELOPMENT PROGRAM in a good scientific manner, and in compliance in all material respects with all requirements of applicable laws, rules and regulations;

(d)

promptly provide an invention disclosure report to SB with respect to any CPG Invention or Joint Invention (as these terms are defined in Section 4.05 below);

(e)

allow representatives of SB, upon reasonable notice and during normal business hours, to visit the facilities of CPG or its contractees where the RESEARCH AND DEVELOPMENT PROGRAM is being conducted, and to consult informally, during such visits and by telephone, with CPG’s personnel performing work on the RESEARCH AND DEVELOPMENT PROGRAM.

4.03

Records

(a)

CPG shall maintain records, in sufficient detail and in good scientific manner, which shall be complete and accurate in all material respects and shall fully and properly reflect all work done and results achieved in the performance of the RESEARCH AND DEVELOPMENT PROGRAM (including all data in the form required under all applicable laws and regulations). During the Research Term, CPG shall provide quarterly reports to SB in mutually agreed form.

(b)

SB shall have the right, during normal business hours and upon reasonable notice, to inspect and copy all such records of CPG relating to the RESEARCH AND

DEVELOPMENT PROGRAM to the extent reasonably required for the performance of its obligations under this Agreement. SB shall maintain such records and the information contained therein in confidence in accordance with Section 12 and shall not use such records or information except to the extent otherwise permitted by this Agreement.

4.04

Budget

4.05

Inventions

4.06

Research Term

5.

STEERING COMMITTEE

5.01

Members

5.02

Responsibilities

(a)

to evaluate and determine scientific criteria to be implemented under the RESEARCH AND DEVELOPMENT PROGRAM;

(b)

to review, approve and modify the RESEARCH AND DEVELOPMENT PROGRAM and the budget included therein;

(c)

to review and evaluate progress under the RESEARCH AND DEVELOPMENT PROGRAM;

(d)

to provide for the exchange of information and materials relating to the RESEARCH AND DEVELOPMENT PROGRAM; and

(e)

to coordinate, monitor and approve publication of research results arising from the RESEARCH AND DEVELOPMENT PROGRAM.

(f)

to review and control the expenditures made in accordance with the budget.

5.03

Meetings

5.04

Decisions

(a)

All decisions of the STEERING COMMITTEE shall be made by unanimous agreement of the members present in person or by telephone at any meeting, with the CPG members cumulatively having one vote and the SB members cumulatively having one vote. A quorum for a meeting shall require at least one representative from CPG and at least one representative from SB.

(b)

In the event that the unanimity cannot be reached by the STEERING COMMITTEE with respect to a matter that is subject to its decision-making authority, then the matter shall be referred for further review and resolution to the President of SmithKline Beecham Biologicals S.A., (“SB BIO”) rue de I’Institut 89, 1330 Rixensart, Belgium or such other similar position designated by SB from time to time, and the President of CPG, or such other similar

position designated by CPG from time to time. The designated officers at each Party shall use reasonable efforts to resolve the matter within thirty (30) days after the matter is referred to them.

(c)

In the event the designated officers fail to resolve the matter in accordance with paragraph (b) above, the decision of SB BIO’s President shall prevail in all cases.

5.05

Minutes

5.06

Term

5.07

Expenses

6.

GRANT

(A1)

For PROPHYLACTIC IMMUNIZATION within the FIELD, CPG grants a CO-EXCLUSIVE license for the following LICENSED ANTIGENS (including combinations thereof) and no other ANTIGENS (except as provided in Section 1.09)

•

HPV ANTIGENS

•

HBV ANTIGENS

•

INFLUENZA ANTIGENS

•

Chlamydia ANTIGENS

•

Mycobacterium ANTIGENS

•

RSV ANTIGENS

•

Malaria ANTIGENS

(A2)

For PROPHYLACTIC IMMUNIZATION within the FIELD, CPG grants a non-exclusive license for the following LICENSED ANTIGENS and no other ANTIGENS (except as provided in Section 1.09) :

•

HIV ANTIGENS

(B)

For THERAPEUTIC IMMUNIZATION within the FIELD, CPG grants SB a CO-EXCLUSIVE license for the following LICENSED ANTIGENS (including combinations thereof) and no other ANTIGENS (except as provided in Section 1.09) :

•

HPV ANTIGENS

•

HBV ANTIGENS

•

Chlamydia ANTIGENS

•

Mycobacterium ANTIGENS

7.

PREFERENTIAL RIGHTS OF SB

7.01

If CPG elects to grant a CO-EXCLUSIVE license to a THIRD PARTY with more favorable terms regarding royalties or milestone payments or license fees (excluding consideration of any other nature) on a LICENSED ANTIGEN per LICENSED ANTIGEN basis and country by country basis, CPG will provide SB with a written summary of such Agreement and shall disclose to SB all information required for SB to make a considered judgment under this Section 7.01. In case the terms of such agreement are in the aggregate, on a LICENSED ANTIGEN per LICENSED ANTIGEN basis and country by country basis, more favorable in terms of royalties, milestone payments or license fees (excluding consideration of any other nature) than the relevant royalty rates, milestone payments or license fees due hereunder for such LICENSED ANTIGEN, SB shall have the option to elect in writing to apply the entire package of royalty rates (including offset provisions), milestone payments and license fees awarded to such THIRD PARTY in lieu of the respective provisions contained herein, solely with respect to such LICENSED ANTIGEN. Upon any such election, SB shall pay to CPG any sums due by virtue of such election or shall receive a credit against future payments due hereunder of any refunds due to SB (such differential shall be calculated based on all cash considerations, pro-rated if necessary per LICENSED ANTIGEN, which CPG has received for such LICENSED ANTIGEN from SB under this Agreement prior to SB’s decision to elect the offer of THIRD PARTY terms and conditions). If any non-cash consideration is received by CPG pursuant to any such THIRD PARTY license, CPG shall in good faith assign a reasonable cash value to such consideration which shall be included in any notice to SB hereunder. In addition, if any COMBINATION is sold for which alternative royalty calculations have been elected by SB pursuant to this Section 7.01 for one but not all LICENSED ANTIGENS of such COMBINATION, NET SALES VALUE shall be apportioned accordingly among the various LICENSED ANTIGENS using the method set forth in Section 1.20 for COMBINATIONS.

7.02

In the event that SB desires to develop and/or market a COMBINATION containing an ANTIGEN other than LICENSED ANTIGEN which BENEFITS from ADJUVANT, CPG agrees to negotiate in good faith with SB for a period not to exceed ninety (90) days a license for such purposes, provided that CPG is able at the time of such request to grant a license as requested by SB.

8.

LICENSE FEES, PATENT. GRANT FEES, MILESTONE PAYMENTS AND ROYALTIES

8.01.a 

In consideration of the license under PATENTS and KNOW-HOW resulting from the research performed by CPG prior to the Effective Date and the right to use the pre-clinical information developed by CPG prior to the Effective Date and granted to SB hereunder, SB shall pay the following amount to CPG: three million US dollars (US$ 300,000), which shall be paid on the first working day following the Effective Date.

8.01.b 

In consideration of PATENT prosecution of CPG during or prior to the first anniversary date of the Effective. Date, SB shall pay to CPG five hundred thousand US dollars (US$ 500,000) upon the first working day following the Effective Date

8.02

Subject to compliance with Section 13.02, in the event any of the PATENTS within the FIELD is granted, which PATENT remains unopposed and/or unchallenged (revocation, action, declaration of interference) by any THIRD PARTY for 1 (one) year, SB shall make the following payments (once only) on the first occurrence of each of the following events:

(a)

[**********************] US dollars (US$ [*******]) at the first anniversary date of grant of a “COMPOSITION OF MATTER” claim in the USA, provided that such COMPOSITION OF MATTER is useful for at least two (2) SB PRODUCTS;

(b)

[******************************] US dollars (US$ [*******]) at the first anniversary date of the date of grant of a “BROAD FIELD OF USE” claim in the USA; and

(c)

[******************************] US dollars (US$ [*******]) at the first anniversary date of grant of a “BROAD FIELD OF USE” claim in Europe (as defined in Section 8.07).

8.03

SB shall pay once only per LICENSED ANTIGEN the following amounts to CPG upon the first achievement of the following development milestones for each of the first five PRODUCTS or COMBINATIONS containing such LICENSED ANTIGEN(S) CO-EXCLUSIVELY licensed hereunder for PROPHYLACTIC IMMUNIZATION :

1.

Filing of IND in US or Canada or equivalent in Europe : [******************] US dollars (US$ [*******])

2.

Successful completion of first phase I clinical trial: [**********************] US dollars (US$ [*******])

3.

Initiation of pivotal phase III clinical trial: [********************] US dollars (US$ [*******])

4.

Submission and acceptance for regulatory review for marketing approval of PRODUCT or COMBINATION to the appropriate regulatory agency in USA or Canada or Europe: [********************] US dollars (US$ [*******])

5.

Marketing approval of PRODUCT or COMBINATION by the appropriate regulatory agency in the USA or Canada or Europe: [*********************] US dollars (US$ [*******]).

8.04

SB shall pay the following amounts once only per LICENSED ANTIGEN to CPG upon first achievement of the following milestones for each PRODUCTS or COMBINATIONS containing such LICENSED ANTIGEN(S) CO-EXCLUSIVELY licensed hereunder for THERAPEUTIC IMMUNIZATION:

1.

Filing of IND in US or Canada or e