-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lzzihj7cBxqu/dKD69IsWduZVPWcZE86TyB1JoVqNYS9Zf/xTvTFhaBLcMIPvdP5 WmMlAVVEmM+6hZz3rosLRA== 0000873591-99-000011.txt : 19990517 0000873591-99-000011.hdr.sgml : 19990517 ACCESSION NUMBER: 0000873591-99-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDIMMUNE INC /DE CENTRAL INDEX KEY: 0000873591 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 521555759 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14657 FILM NUMBER: 99623362 BUSINESS ADDRESS: STREET 1: 35 W WATKINS MILL RD CITY: GAITHERSBURG STATE: MD ZIP: 20878 BUSINESS PHONE: 3014170770 MAIL ADDRESS: STREET 1: 35 W WATKINS MILL ROAD CITY: GAITHERSBURG STATE: MD ZIP: 20878 10-Q 1 10-Q REPORT FOR MEDIMMUNE, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q {X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 Commission File No. 0-19131 MEDIMMUNE, INC. (Exact name of registrant as specified in its charter) Delaware 52-1555759 (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.) 35 West Watkins Mill Road, Gaithersburg, MD 20878 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (301)417-0770 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] As of March 31, 1999, 55,622,518 shares of Common Stock, par value $0.01 per share, were outstanding. MEDIMMUNE, INC. Index to Form 10-Q Part I Financial Page Item 1. Financial Statements Balance Sheets 1 Statements of Operations 2 Condensed Statements of Cash Flows 3 Notes to Financial Statements 4-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-11 Part II Other Information 11-12 Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K CytoGam and RespiGam are registered trademarks of the Company and Synagis is a trademark of the Company.
ITEM 1. FINANCIAL STATEMENTS MEDIMMUNE, INC. BALANCE SHEETS (in thousands, except share data) March 31, December 31, 1999 1998 ---------- ---------- ASSETS: (Unaudited) Cash and cash equivalents $ 30,090 $ 37,959 Marketable securities 163,964 96,923 Trade receivables, net 39,586 31,682 Contract receivables, net 2,743 3,155 Inventory, net 17,163 19,760 Deferred tax assets 21,568 22,595 Other current assets 929 4,292 ---------- ---------- Total Current Assets 276,043 216,366 Property and equipment, net 76,249 74,822 Inventory-noncurrent 4,312 4,949 Deferred tax assets, net 51,917 54,923 Other assets 8,320 2,060 ---------- ---------- Total Assets $416,841 $353,120 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY: Accounts payable, trade $ 2,045 $ 4,052 Accrued expenses 48,877 33,397 Product royalties payable 17,544 14,948 Accrued interest 1,515 2,580 Other current liabilities 2,904 2,993 --------- ---------- Total Current Liabilities 72,885 57,970 Long-term debt 80,926 83,195 Other liabilities 2,130 2,122 ---------- ---------- Total Liabilities 155,941 143,287 ---------- ---------- Commitments and Contingencies SHAREHOLDERS' EQUITY: Preferred stock, $.01 par value; authorized 5,524,525 shares; none issued or outstanding -- -- Common stock, $.01 par value; authorized 120,000,000 shares; issued and outstanding 55,622,518 at March 31, 1999 and 54,654,842 at December 31, 1998 556 547 Paid-in capital 311,541 289,318 Accumulated deficit (51,197) (80,032) --------- --------- Total Shareholders' Equity 260,900 209,833 --------- --------- Total Liabilities and Shareholders' Equity $416,841 $353,120 ========= =========
The accompanying notes are an integral part of these financial statements. 1
MEDIMMUNE, INC. STATEMENTS OF OPERATIONS (Unaudited) (in thousands except per share data) For the Three months ended March 31, ----------------- 1999 1998 ------- ------- Revenues: Product sales $126,996 $42,893 Other 1,725 16,445 -------- -------- Total revenues 128,721 59,338 Costs and Expenses: Cost of sales 31,267 22,275 Research and development 8,783 5,668 Selling, administrative and general 37,049 12,926 Other operating expenses 5,868 5,802 -------- -------- Total expenses 82,967 46,671 -------- -------- Operating Income 45,754 12,667 Interest income 2,187 1,700 Interest expense (928) (1,162) -------- -------- Income before income taxes 47,013 13,205 Provision for income taxes 18,178 - -------- -------- Net earnings $28,835 $13,205 ======== ======== Basic earnings per share $0.52 $0.25 ======== ======== Shares used in calculation of basic earnings per share 55,162 51,888 ======== ======== Diluted earnings per share $0.45 $0.22 ======== ======== Shares used in calculation of diluted earnings per share 65,468 63,155 ======== ========
The accompanying notes are an integral part of these financial statements. 2
MEDIMMUNE, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) For the three months ended March 31, 1999 1998 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $28,835 $13,205 Noncash items: Deferred taxes 18,103 - Depreciation and amortization 848 632 Amortization of discount on marketable securities (343) (413) Other (663) (445) Other changes in assets and liabilities 14,179 (2,181) -------- -------- Net cash provided by operating activites 60,959 10,798 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Increase in marketable securities (66,698) (68,177) Capital expenditures (1,583) (1,114) Other (6,350) - -------- -------- Net cash provided by investing activities (74,631) (69,291) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock and exercise of stock options 8,160 73,776 Decrease in long-term debt (2,357) (516) -------- -------- Net cash provided by financing activities 5,803 73,260 -------- -------- Net (decrease) increase in cash and cash equivalents (7,869) 14,767 Cash and cash equivalents at beginning of period 37,959 29,984 -------- -------- Cash and cash equivalents at end of period $30,090 $44,751 ======== ========
The accompanying notes are an integral part of these financial statements. 3 MEDIMMUNE, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) General The financial information presented as of March 31, 1999, and for the three months ended March 31, 1999 and 1998, is unaudited. In the opinion of the Company's management, the financial information contains all adjustments (which consist only of normal recurring adjustments) necessary for a fair presentation of such financial information. Inventory Inventory net of reserves, consists of the following (in thousands):
March 31, December 31, 1999 1998 ------------- ------------- Raw Materials $8,802 $9,794 Work in Process 7,957 9,188 Finished Goods 4,716 5,727 ------- -------- 21,475 24,709 Less noncurrent inventory (4,312) (4,949) ------- -------- $17,163 $19,760 ======== ========
The Company has purchased plasma and other raw materials for use in production in the Company's Frederick manufacturing facility, which is subject to U.S. Food and Drug Administration ("FDA") licensure and approval. Due to the uncertainty surrounding the likelihood and timing of FDA approval, all inventory for this facility has been classified as noncurrent in the accompanying balance sheet. As a result of the June 1998 FDA approval of the Company's second generation RSV product, Synagis, and the market acceptance of Synagis, the Company reserved approximately $9.2 million against its RespiGam inventory in the second quarter of 1998, as no further significant product sales are expected to result from this inventory in the foreseeable future. As of March 31, 1999, approximately $8.0 million of the reserve remains. The remaining RespiGam plasma inventory of $2.7 million has been written down to the value the Company expects to recover upon sale to third parties. Should the Company be unable to sell the plasma at its net book value, a further adjustment in a subsequent quarter may be necessary. Finished goods at March 31, 1999 and December 31, 1998 include approximately $1.6 million of by-products that result from the production of the Company's principal products at one of its contract manufacturers and are held for resale. The March 31, 1999 and December 31, 1998 balances are net of a reserve of $1.6 million. 4 Property and Equipment Property and equipment, stated at cost, consists of the following (in thousands):
March 31, December 31, 1999 1998 ------------ ------------ Land $ 2,147 $ 2,147 Buildings & building improvements 7,489 7,085 Leasehold improvements 13,235 12,736 Laboratory, manufacturing and facilities equipment 11,318 10,841 Office furniture, computers, and equipment 5,953 5,739 Construction in progress 48,748 48,067 --------- -------- 88,890 86,615 Less accumulated depreciation and amortization (12,641) (11,793) --------- --------- $76,249 $74,822 ========= =========
Construction in progress includes costs incurred in connection with the design and construction of the Company's manufacturing facility and includes capitalized interest costs of $6.0 million and $5.3 million at March 31, 1999 and December 31, 1998, respectively. Buildings includes the purchase in December 1998 of a new facility in Frederick, Maryland. This facility is expected to provide additional warehouse and administrative space. Buildings also includes costs associated with the portions of the Company's manufacturing facility placed in service during 1998. Construction of the manufacturing facility is complete and validation and start-up activities are ongoing. The Company will continue to capitalize costs, primarily capitalized interest, related to the facility until placed in service. The portions of the facility that are subject to inspection and approval by the FDA will be placed in service and depreciation will commence upon receipt of such approval. Income Tax Provision The income tax provision in the current quarter has been computed using an effective combined federal and state tax rate of 38.6%. The cash obligation of such provision has been offset by the utilization of deductions generated by the exercise of stock options and the utilization of deferred taxes, comprised mostly of net operating loss carryforwards. As required, the tax benefit of stock option exercise deductions has been recorded directly to stockholders' equity. Earnings per Share The Company computes earnings per share in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." Basic earnings per share is computed based on the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed based on the weighted average shares outstanding and the dilutive common stock equivalents outstanding during the period. The dilutive effect of convertible debt is measured using the "if converted" method. The dilutive effect of stock options is measured using the treasury stock method. Common stock equivalents are not included in periods where there is a loss as they are anti-dilutive. The following is a reconciliation of the numerators and denominators of the diluted EPS computation for the periods reported. 5
March 31, March 31, 1999 1998 ---------- ---------- Numerator: Net earnings $ 28,835 $13,205 Interest on 7% convertible notes, net of amounts capitalized and for 1999, net of related taxes 358 578 --------- --------- Numerator for diluted EPS $ 29,193 $13,783 ========= ========= Denominator: Weighted average shares outstanding 55,162 51,888 Effect of dilutive securities: Stock options 4,208 5,169 7% convertible notes 6,098 6,098 --------- -------- Denominator for diluted EPS 65,468 63,155 ========= ========
Options to purchase 1,315,100 shares of common stock with prices ranging from $55.00 to $59.50 per share were outstanding in the first quarter of 1999 and options to purchase 386,800 shares of common stock with prices ranging from $24.75 to $28.13 per share were outstanding in the first quarter of 1998, but were not included in the computation of diluted earnings per share because they were anti-dilutive. 6 Restatements Prior year share and per share amounts have been restated to give effect to the two-for-one stock split on December 31, 1998. New Accounting Pronouncement Derivative Instruments and Hedging Activities In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. SFAS No. 133 requires companies to recognize all derivatives as either assets or liabilities, with the instruments measured at fair value. The accounting for changes in fair value, gains or losses, depends on the intended use of the derivative and its resulting designation. The statement is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. The Company will adopt SFAS No. 133 by January 1, 2000. Because of the Company's minimal use of derivatives, management does not anticipate that the adoption of SFAS No. 133 will have a material effect on the earnings or financial position of the Company. 7 ITEM 2. MEDIMMUNE, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1999 AND 1998 Product sales increased 196% to $127.0 million in first quarter 1999 from $42.9 million in first quarter 1998, principally due to sales of Synagis. Sales of Synagis for the 1999 quarter were $116.2 million and during the 1998/1999 respiratory syncytial virus ("RSV") season totaled $226.0 million. Synagis sales in the first quarter of 1999 included $1.5 million of international sales to the Company's exclusive international distributor of Synagis, Abbott Laboratories. RespiGam sales of $0.3 million were recorded in first quarter 1999 versus $32.1 million in first quarter 1998, reflecting the shift in customer demand from RespiGam to Synagis for prevention of RSV disease and adequate levels of inventories of RespiGgam at wholesalers and hospitals. CytoGam sales decreased 10% to $9.7 million in the 1999 quarter from $10.8 million in first quarter 1998 reflecting a change in the sales mix of domestic versus international units, (international units have a lower selling price) and an increase in government rebate allowances, offset by a 9% increase in total units sold. Product sales in the 1999 quarter also include $0.8 million of by-product sales. Other revenues in the 1999 first quarter of $1.7 million primarily reflect payments from SmithKline Beecham ("SKB") for development of a human papillomavirus vaccine while the 1998 quarter included a $15.0 million payments from SKB upon signing of the collaborative alliance. Gross margins improved to 75% in the first quarter of 1999 versus 48% in the first quarter of 1998. Gross margins in 1999 were favorably impacted by Synagis sales, which carry a significantly lower per-unit cost than the Company's plasma-derived products. Research, development and clinical spending increased 55% to $8.8 million in the first quarter of 1999 from $5.7 million in the first quarter of 1998. Expenses in 1999 include costs of the Company's congenital heart disease clinical trial using Synagis and various clinical studies relating to MEDI-507, the Company's anti-CD2 monoclonal antibody. Selling, administrative and general expenses increased to $37.0 million in this year's quarter from $12.9 million in the 1998 quarter, an increase of 187%. Expenses in 1999 include increased marketing and selling expenses as well as commission charges and co-promotion expenses to the Ross Products Division of Abbott Laboratories, all in connection with the launch and continued promotion of Synagis. Marketing, selling and co-promotion expenses for Synagis are expected to continue to be higher than those for RespiGam or CytoGam. 8 Other operating expenses of $5.9 million in the 1999 period increased from $5.8 million in the 1998 period. Costs in 1998 include scale-up of production for Synagis at a third-party manufacturer as well as start-up activities at the Company's pilot plant and Frederick Manufacturing Center ("FMC"), while costs in 1999 include ongoing start-up and validation activities at the FMC. Interest income of $2.2 million was earned in the 1999 first quarter, compared to $1.7 million in the first quarter of 1998 reflecting higher cash balances available for investment, partially offset by a decrease in interest rates which lowered the overall portfolio yield. Interest expense of $1.0 million and $1.2 million was incurred in the 1999 and 1998 quarters, respectively, reflecting primarily interest due on the Company's convertible debt, net of capitalized interest. An income tax provision of $18.2 million was recorded for the first quarter of 1999. No income tax provision was recorded in the first quarter of 1998, due to the existence of net operating loss carryforwards as well as uncertainty surrounding achievement of profitability for the entire year. Net earnings in the 1999 first quarter were $28.8 million, or $0.52 basic and $0.45 diluted earnings per share. Shares used in computing basic and diluted earnings per share in 1999 were 55.2 million and 65.5 million, respectively. Net earnings for the first quarter of 1998 were $0.25 basic and $0.22 diluted earnings per share. Shares used in computing basic and diluted earnings per share in 1998 were 51.9 million, and 63.2 million shares, respectively. Quarterly financial results may vary significantly due to seasonality of Synagis product sales as well as fluctuations in CytoGam sales, milestone payments, research funding and expenditures for research, development and marketing. Synagis sales are expected to occur primarily during, and in proximity to, the RSV season, which typically occurs in the Northern Hemisphere between October and April. The Company believes that most of the Synagis needed for the 1998/1999 RSV season in the U.S. was purchased prior to the end of the first quarter 1999, and therefore, no further significant sales are expected for this season. LIQUIDITY AND CAPITAL RESOURCES Cash and marketable securities at March 31, 1999 were $194.1 million compared to $134.9 million at 1998 year end. Net cash provided by operating activities in the three months ended March 31, 1999 was $61.0 million, reflecting primarily the net earnings for the 1999 quarter and an increase in accrued expenses and royalties payable. Capital expenditures of $1.6 million, net of capitalized interest, for the quarter were primarily for lab equipment and facilities expansion and improvements at the Company's Gaithersburg manufacturing facility. The Company's existing funds at March 31, 1999, together with funds expected to be generated from product sales and investment income, are expected to provide sufficient liquidity to meet the anticipated needs of the business for the foreseeable future, absent the occurrence of any unforeseen events. 9 YEAR 2000 READINESS The Company has established a Year 2000 Project Team comprised of representatives from key functional areas to complete a review of its internal and external systems for Year 2000 readiness. The Year 2000 issue is expected to affect the systems of the Company and various entities with which the Company interacts, including the Company's marketing partners, suppliers and various vendors. The Year 2000 Project is designed to address three major areas: (1) information technology systems, (2) hardware, equipment and instrumentation, including embedded systems, and (3) third party relationships. The Company's plan involves inventorying, assessing and prioritizing those items which have Year 2000 implications; remediating (repairing, replacing or upgrading) non-compliant items; testing items with major exposure to ensure compliance; and developing contingency plans to minimize potential business interruption. The inventory, assessment and prioritization phase of the project is substantially complete. With regard to the Company's information technology systems, hardware, equipment and instrumentation, the Company has identified mission critical and non-critical items and is in the process of updating and/or replacing items that are non-compliant. The Company believes that it should be able to substantially complete implementation of critical aspects of its Year 2000 plan prior to the commencement of the year 2000. Because the Company has relied primarily on off-the-shelf software for its information technology needs and because much of the hardware, equipment and instrumentation is currently compliant, the Company does not anticipate that the costs for internal remediation efforts will be significant. The Company does not separately track the internal costs of its Year 2000 compliance efforts and therefore these costs are unknown. As of March 31, 1999, the Company estimates that it has spent no more than $75,000 replacing, upgrading or repairing the systems and/or equipment that are non-compliant and expects the cost to complete these efforts should not exceed $300,000. The Company presently anticipates that its remediation efforts will be substantially complete by June 1, 1999. Testing of certain business critical items is expected to be completed by the third quarter 1999. In addition to the risks associated with the Company's own computer systems and equipment, the Company has relationships with, and is in varying degrees dependent upon, a large number of third parties that provide information, goods and services to the Company. These include, but are not limited to, third party manufacturers, suppliers, customers, and distributors. The Company has identified and visited the facilities of third parties with whom the Company has material relationships to assess their Year 2000 readiness. Critical systems and Year 2000 plans were reviewed. The Company may also be affected by the failure of other third parties to be Year 2000 compliant even if they do not do business directly with the Company. For example, the failure of state, federal and private payers or reimbursers to be Year 2000 compliant and thus unable to make timely, proper or complete payments to sellers and users of the Company's products, could have a material adverse effect on the Company. 10 The Company does not currently have a Year 2000 contingency plan established. The Company expects to have finalized a contingency plan which will address the most likely worst case Year 2000 scenario by mid- 1999. The Company believes that its most likely worst case scenario would be delays in product shipments due to a complete or partial manufacturing shutdown. To mitigate this risk, the Company plans, among other things, to stock extra inventory. With regard to the Company's Year 2000 readiness plan, there can be no assurances: 1) that the Company will be able to identify all aspects of its business that are subject to Year 2000 problems, including issues of its customers or suppliers, 2) that the Company's software vendors, third parties and others will be correct in their assertions that they are Year 2000 ready, 3) that the Company's estimate of the cost of Year 2000 readiness will prove ultimately to be accurate, 4) that the Company will be able to successfully address its Year 2000 issues and that this could result in interruptions in, or failures of, certain normal business activities or operations that may have a material adverse effect on the Company's business, results of operations and financial condition. -------------------- THE STATEMENTS IN THIS QUARTERLY REPORT THAT ARE NOT DESCRIPTIONS OF HISTORICAL FACTS ARE FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS REFLECT MANAGEMENT'S CURRENT VIEWS, ARE BASED ON CERTAIN ASSUMPTIONS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO, REGULATORY APPROVAL TIMING, PRODUCT DEMAND AND MARKET ACCEPTANCE RISKS, PATENT AND INTELLECTUAL PROPERTY RISKS, YEAR 2000 RISKS, THE EARLY STAGE OF PRODUCT DEVELOPMENT AND RELIANCE ON THIRD-PARTY MANUFACTURERS INCLUDING, BUT NOT LIMITED TO, CAPACITY AND SUPPLY CONSTRAINTS, PRODUCTION YIELDS, REGULATORY APPROVAL TIMING AND FOREIGN EXCHANGE RISKS, AS WELL AS OTHER RISKS DETAILED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED AS A RESULT OF THE FOREGOING OR OTHER FACTORS. PART II OTHER INFORMATION Item 1. Legal Proceedings - None Item 2. Changes in Securities - None Item 3. Defaults upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders - None Item 5. Other Information - None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 11 10.95 Research and Assignment and License Agreement, dated as of February 24, 1999 by and between IXSYS, Inc. and MedImmune, Inc. 10.96 License Agreement, dated as of February 24, 1999 by and between IXSYS, Inc. and MedImmune, Inc. 10.97 Selection Agreement, dated as of February 24, 1999 by and between IXSYS, Inc. and MedImmune, Inc. 10.98 Stock Purchase Agreement, dated as of February 24, 1999 by and between IXSYS, Inc. and MedImmune, Inc. b) Reports on Form 8-K:
Report Date Event reported 2/1/99 MedImmune Reports Record Year 2/26/99 MedImmune and IXSYS Enter Four Product Antibody Alliance
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MEDIMMUNE, INC. (Registrant) Date: May 14, 1999 /s/David M. Mott Vice Chairman and Chief Financial Officer 12 EX-10.95 2 RESEARCH AND ASSIGNMENT AND LICENSE AGREEMENT Exhibit 10.95 RESEARCH AND ASSIGNMENT AND LICENSE AGREEMENT This Research and Assignment and License Agreement (this "Agreement") is effective as of February 24, 1999 ("the EFFECTIVE DATE") by and between Ixsys, Inc., a Delaware corporation, having an address at 3520 Dunhill Road, San Diego, CA 92121 ("IXSYS"), and MedImmune, Inc., a Delaware Corporation, having offices at 35 West Watkins Mill Road, Gaithersburg, MD 20878 ("MEDIMMUNE"). WHEREAS, MEDIMMUNE desires that IXSYS perform certain research and development to modify a certain antibody; and WHEREAS, IXSYS desires to perform such work on the terms and conditions of this Agreement. NOW THEREFORE in consideration of the mutual promises and other good and valuable consideration, the parties agree as follows: SECTION 1 - Definitions. The terms used in this Agreement have the following meaning: 1.1 "AFFILIATE," as applied to a person or entity, means any other person or entity controlling or controlled by or under common control with such person or entity. The term "control" means possession of the power to direct or cause the direction of the management and policies whether through the ownership of voting securities, by contract or otherwise. The ownership of voting securities of a person, organization or entity, however, shall not, in and of itself, constitute "control" for purposes of this definition, unless said ownership is of a majority of the outstanding securities entitled to vote of such person, organization or entity. Affiliate shall also mean a limited partnership in which a subsidiary of such person, organization or entity is a general partner. 1.2 "ANTIBODY" means an antibody that specifically binds to (CONFIDENTIAL TREATMENT REQUESTED) (including, but not limited to, variants, chimeric antibodies, humanized antibodies, recombinant antibodies, grafted antibodies, single chain antibodies, and the like) developed by IXSYS during the term of the PROGRAM or a fragment of such an antibody. 1.3 "ASSIGNED MATERIALS AND INFORMATION" means all ANTIBODIES, cell lines used by IXSYS for producing ANTIBODIES, polynucleotides encoding ANTIBODIES, assays, vectors and constructs for producing ANTIBODIES, sequence information regarding such ANTIBODIES and polynucleotides, and the results of the testing and evaluation of such ANTIBODIES and information and data useful for the manufacture, making and use of ANTIBODY, in each case which is developed by IXSYS during the term of the PROGRAM, and only in the case of assays, vectors and constructs, only to the extent IXSYS or its AFFILIATES has the right during the term of the PROGRAM to assign such to MEDIMMUNE. 1.4 "ASSIGNED PATENT(S)" means any patent or patent application (or equivalents thereof, such as extensions or other rights that give the right to exclude others such as Supplementary Protection Certificates) anywhere in the world to the extent a claim thereof would be infringed by the manufacture, use, or sale of a product comprising an ANTIBODY and that is based on ANTIBODY and/or ASSIGNED MATERIALS AND INFORMATION. 1.5 "DESIGNATED AMOUNT" means the total worldwide sales of products comprising the EXISTING ANTIBODY sold by or on behalf of MEDIMMUNE for the twelve-month period prior to the time a PRODUCT receives all licensing and pricing approvals for sale of PRODUCT in a country. 1.6 (CONFIDENTIAL TREATMENT REQUESTED) means (CONFIDENTIAL TREATMENT REQUESTED). 1.7 "EXISTING IXSYS PATENT(S)" means any patent or patent application (or equivalents thereof, such as extensions or other rights that give the right to exclude others such as Supplementary Protection Certificates) anywhere in the world to the extent the claims of which would be infringed by the manufacture, use or sale of a product comprising an ANTIBODY, and only to the extent that it is either owned by or licensed to IXSYS (with the right to grant sublicenses) or as to which IXSYS otherwise has licensable rights, in each case, as of the EFFECTIVE DATE. 1.8 "FIRST COMMERCIAL SALE" means, in each country, (a) the first sale of a PRODUCT by MEDIMMUNE, its AFFILIATE or SUBLICENSEE following approval of its marketing by the appropriate governmental agency for the country in which the sale is to be made, or (b) when governmental approval is not required, the first commercial sale of a PRODUCT by MEDIMMUNE, its AFFILIATE or SUBLICENSEE in that country. 1.9 "FTE" means one full time equivalent scientific investigator, together with all reasonably necessary materials, equipment and facilities used thereby. 1.10 "MATERIALS" means ANTIBODIES, cell lines used or developed by IXSYS for producing ANTIBODIES, polynucleotides encoding ANTIBODIES, and the assays, vectors and constructs for producing ANTIBODIES, in each case only to the extent owned by or licensed to IXSYS (with the right to grant sublicenses) or as to which IXSYS otherwise has transferable rights, and in the possession and control of IXSYS, in each case, that exists as of the EFFECTIVE DATE. 1.11 "NET SALES" means, with respect to any PRODUCT, the invoiced sales price of such PRODUCT sold by MEDIMMUNE, its AFFILIATES and SUBLICENSEES to independent customers who are not AFFILIATES, less (a) actual and customary credits, allowances, discounts and rebates to, and chargebacks from the account of, such independent customers for spoiled, damaged, out-dated, rejected or returned PRODUCT; (b) actual freight and insurance costs incurred in transporting such PRODUCT to such customers; (c) actual and customary cash, quantity and trade discounts; (d) sales, use, value-added and taxes or governmental charges (excluding what is commonly known as income taxes) incurred in connection with the exportation or importation of such PRODUCT; (e) the cost to MEDIMMUNE of the devices for dispensing or administering such PRODUCT as well as diluents or similar materials which accompany such PRODUCT as it is sold and (f) reasonable allowance for bad debt, all of the above in accordance with Generally Accepted Accounting Principles. For purposes of determining NET SALES, a sale shall have occurred when an invoice therefor shall be generated or the PRODUCT shipped for delivery. Sales of PRODUCTS by MEDIMMUNE, an AFFILIATE or SUBLICENSEE to any AFFILIATE or SUBLICENSEE which is a reseller thereof shall be excluded, and only the subsequent sale of such PRODUCTS by AFFILIATES or SUBLICENSEES to unrelated parties shall be deemed NET SALES hereunder. 1.12 "PRODUCT" means a product comprising (i) an ANTIBODY, the manufacture, use or sale of which infringes a VALID PATENT CLAIM under the ASSIGNED PATENTS or under the EXISTING IXSYS PATENTS as to which MEDIMMUNE retains a license under this Agreement, (ii) an ANTIBODY assigned to MEDIMMUNE by IXSYS under this Agreement, or (iii) an ANTIBODY which is derived from an ANTIBODY assigned to MEDIMMUNE under this Agreement. 1.13 "PROGRAM" means the research and development program described generally in Section 2.1. 1.14 "ROYALTY PERIOD" means, with respect to each PRODUCT in each country in the LICENSED TERRITORY, (a) if the manufacture, use, offer for sale, sale or import of such PRODUCT in such country at the time of the FIRST COMMERCIAL SALE infringes a VALID PATENT CLAIM (if in an issued patent) but for the license granted by this Agreement, the royalty period continues for as long as such VALID PATENT CLAIM remains in effect and (if in an issued patent) is infringed thereby but for the license granted by this Agreement, or (b) otherwise, (CONFIDENTIAL TREATMENT REQUESTED) years from the date of the FIRST COMMERCIAL SALE of such PRODUCT in such country. 1.15 (CONFIDENTIAL TREATMENT REQUESTED) 1.16 "SUBLICENSEE" means any AFFILIATE or THIRD PARTY that is granted a sublicense by MEDIMMUNE under this Agreement. 1.17 "THIRD PARTY(IES)" means a person or entity other than IXSYS or MEDIMMUNE or any of their AFFILIATES. 1.18 The term "VALID PATENT CLAIM" shall mean either (a) a claim of an issued and unexpired patent included within the ASSIGNED PATENTS or the EXISTING IXSYS PATENTS, which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise or (b) a claim of a pending patent application included within the ASSIGNED PATENTS or the EXISTING IXSYS PATENTS, which claim was filed in good faith and has not been abandoned or finally dis allowed without the possibility of appeal or refiling of such application, the subject matter of which has not been pending for more than five (5) years, including the pendency of any prior application. 1.19 The use herein of the plural shall include the singular, and the use of the masculine shall include the feminine. 1.20 All dollars are United States Dollars. SECTION 2 - The PROGRAM 2.1 (a) IXSYS shall perform a program of research and development in accordance with this Section 2 to produce modified antibodies to the (CONFIDENTIAL TREATMENT REQUESTED), and shall use its commercially reasonable efforts to produce a modified antibody of the (CONFIDENTIAL TREATMENT REQUESTED) that (CONFIDENTIAL TREATMENT REQUESTED) as compared to (CONFIDENTIAL TREATMENT REQUESTED), as measured in the (CONFIDENTIAL TREATMENT REQUESTED) model. (b) The parties shall prepare a mutually acceptable written workplan for the PROGRAM. Any such workplan shall be modified and supplemented from time to time only by the mutual written agreement of the parties. (c) The research and development work to be performed by IXSYS under the PROGRAM shall not be performed by a THIRD PARTY without the written approval of MEDIMMUNE. (d) IXSYS shall allocate not less than (CONFIDENTIAL TREATMENT REQUESTED) FTEs to conduct the PROGRAM and at the request of MEDIMMUNE upon sixty (60) days' prior written notice, IXSYS shall be required to allocate up to (CONFIDENTIAL TREATMENT REQUESTED) FTEs to conduct the PROGRAM, provided that once the FTEs are increased, MEDIMMUNE will not have the right to decrease the number of FTEs. (e) The PROGRAM shall commence on the date thirty (30) days after the EFFECTIVE DATE and continue for a term of (CONFIDENTIAL TREATMENT REQUESTED) thereafter provided however at the request of MEDIMMUNE, and upon sixty (60) days' prior written notice to IXSYS, the term shall be extended for up to (CONFIDENTIAL TREATMENT REQUESTED) in (CONFIDENTIAL TREATMENT REQUESTED) increments. 2.2 It is understood that MEDIMMUNE intends to measure the potency of ANTIBODY obtained from IXSYS in the (CONFIDENTIAL TREATMENT REQUESTED) model to determine the potency thereof with a view toward developing and commercializing such an ANTIBODY. It is further understood and agreed that ANTIBODY obtained from IXSYS that is tested, if any, shall be determined by MEDIMMUNE, within its sole and absolute discretion, that MEDIMMUNE, within its sole and absolute discretion, shall determine whether or not to develop and/or commercialize a PRODUCT and which, if any, PRODUCT shall be developed and commercialized and in which, if any, countries it should be developed and commercialized. 2.3 (a) MEDIMMUNE shall pay IXSYS at the rate equal to (CONFIDENTIAL TREATMENT REQUESTED) per FTE required to be allocated to the PROGRAM as set forth above, payable in equal quarterly installments of (CONFIDENTIAL TREATMENT REQUESTED) per FTE per quarter in advance on the EFFECTIVE DATE and each three (3) month anniversary thereof during the term of the PROGRAM for the period of Section 2.1(e) which amount covers both direct and indirect expenses. If the number of FTEs is increased in any quarter, the pro-rata amount for such quarter for such increase shall be paid for the remainder of such quarter (and provided that such payment shall be due on the effective date of such increase if the notice and effective date of such increase is in the same calendar quarter). (b) MEDIMMUNE shall not be required to make any payments to IXSYS for research that exceeds the aggregate amount described in Section 2.3(a), and IXSYS shall not be required to perform research or development under the PROGRAM that exceeds such aggregate amount, unless agreed to in writing by both parties. 2.4 Within ten (10) days after the EFFECTIVE DATE, MEDIMMUNE shall provide IXSYS with such quantity (as reasonably sufficient to enable IXSYS to conduct the PROGRAM) of the (CONFIDENTIAL TREATMENT REQUESTED), polynucleotides encoding the (CONFIDENTIAL TREATMENT REQUESTED) and (CONFIDENTIAL TREATMENT REQUESTED), the (CONFIDENTIAL TREATMENT REQUESTED) and together with any other information and data which the parties mutually agree is reasonably necessary for IXSYS to conduct the PROGRAM. Additionally, during the term of the PROGRAM, MEDIMMUNE shall provide IXSYS, at MEDIMMUNE's sole cost, with such technical assistance as IXSYS reasonably requests regarding the use of such assay under the PROGRAM. 2.5 During the term of the PROGRAM, IXSYS shall permit representatives of MEDIMMUNE, upon reasonable notice during normal business hours at MEDIMMUNE's expense, to visit the facilities where IXSYS is conducting the PROGRAM and during such visits shall make employees of IXSYS, who are performing research and development under the PROGRAM, reasonably available to representatives of MEDIMMUNE to discuss such research and development and the results thereof. 2.6 Not later less than once each calendar quarter during the term of the PROGRAM, and not more than thirty (30) days after conclusion of the term of the PROGRAM, IXSYS, at the cost and expense of IXSYS, shall transfer to MEDIMMUNE the ASSIGNED MATERIALS AND INFORMATION and any other MATERIALS not previously transferred to MEDIMMUNE hereunder. 2.7 For a period of six (6) months after the conclusion of the term of the PROGRAM, IXSYS, at the cost and expense of IXSYS, shall provide MEDIMMUNE with such technical assistance as reasonably requested by MEDIMMUNE with respect to the use of the ASSIGNED MATERIALS AND INFORMATION, and MATERIALS hereunder. 2.8 Except as permitted by MEDIMMUNE, during the term of the PROGRAM and for a period of (CONFIDENTIAL TREATMENT REQUESTED) years thereafter, IXSYS and its AFFILIATES shall not (1) research, develop, make, have made, use or sell any antibody or any antibody fragment directed to (CONFIDENTIAL TREATMENT REQUESTED) or any polynucleotide encoding the foregoing, (2) perform research or development work for a THIRD PARTY with respect to any such antibody, fragment or polynucleotide , or (3) research, develop, make, have made, use or sell or grant rights to a THIRD PARTY with respect to any such antibody, fragment or polynucleotide that was conceived or reduced to practice during the term of the PROGRAM or within a period of (CONFIDENTIAL TREATMENT REQUESTED) years thereafter. 2.9 IXSYS shall have the right to publish the results of IXSYS' work under the PROGRAM; provided, however, that IXSYS shall provide MEDIMMUNE the opportunity to review any proposed manuscripts or any other proposed disclosure describing such work sixty (60) days prior to their submission for publication or other proposed disclosure. MEDIMMUNE and IXSYS shall discuss whether or not such publication or disclosure should occur and it is expressly understood that MEDIMMUNE shall have the sole right to make a final determination as to whether or not such publication or disclosure shall occur provided that such determination is not unreasonable. It shall not be unreasonable to deny publication on the basis that the information proposed to be published is not generally available to the public and may aid a competitor in developing a competitive product. SECTION 3 - Assignment and License Grants. 3.1 (a) IXSYS hereby grants to MEDIMMUNE and MEDIMMUNE hereby accepts from IXSYS a sole and exclusive worldwide right and license (or sublicense, as applicable) (1) under and to EXISTING IXSYS PATENTS to research, develop, make, have made, use, import, export and sell, offer to sell or have sold PRODUCTS and (2) to make, have made and to use MATERIALS for all the purposes of Section 3.1(a)(1). Notwithstanding anything to the contrary in this Agreement, the rights and licenses granted to MEDIMMUNE under this Agreement exclude any right or license (express or implied) under any IXSYS patent rights or know-how regarding the generation, discovery or modification of antibody libraries, antibodies or fragments thereof, generally. (b) To the extent that the rights and licenses granted to MEDIMMUNE under Section 3.1(a) is a sublicense under a license agreement between IXSYS and a THIRD PARTY, the rights and licenses granted to MEDIMMUNE under such sublicense are limited to the extent that IXSYS has the right to grant sublicenses under such license agreement and such sublicense is subject to the terms, conditions and restrictions of such license agreement that are applicable to a sublicensee thereunder. MEDIMMUNE shall not take or omit to take any action the effect of which would cause IXSYS to be in breach of IXSYS' obligations under such license agreements (without regard to any applicable cure or notice requirements thereof). 3.2 MEDIMMUNE shall have the right to grant sublicenses under the licenses and sublicenses granted under Section 3.1 (with the right to grant further sublicenses, subject to any terms, conditions and restrictions on further sublicensing under any license agreement under which MEDIMMUNE is a sublicensee) to its AFFILIATES and THIRD PARTIES. Each such sublicense shall be subject to the terms and conditions of this Agreement. 3.3 The licenses granted hereunder include the right of MEDIMMUNE, its AFFILIATES and SUBLICENSEES to grant to the purchaser thereof the right to use and/or resell a purchased PRODUCT for which a royalty has been paid hereunder on NET SALES of such PRODUCT (determined in accordance with Section 1.11), without payment of any further royalty to IXSYS. 3.4 (a) IXSYS agrees to assign and hereby assigns to MEDIMMUNE all right, title and interest in and to the ASSIGNED MATERIALS AND INFORMATION together with all ASSIGNED PATENTS and other intellectual property rights arising therefrom. (b) IXSYS agrees to cooperate with MEDIMMUNE and cause its employees to cooperate with MEDIMMUNE and to perform all acts, at MEDIMMUNE's request on reasonable notice and during normal business hours, as reasonably necessary (i) to perfect MEDIMMUNE's ownership interest in and to the ASSIGNED MATERIALS AND INFORMATION together with all ASSIGNED PATENTS and other intellectual property rights arising therefrom, and (ii) to facilitate the preparation, filing, prosecution and enforcement of the ASSIGNED PATENTS. MEDIMMUNE shall reimburse IXSYS on demand for the reasonable cost to IXSYS (at the rate set forth in Section 2.3(a) plus all out-of-pocket expenses) incurred in connection therewith. (c) IXSYS hereby reserves the nonexclusive, nontransferable right to use information and data that are included in ASSIGNED MATERIALS AND INFORMATION for its own internal research use; provided, however, that IXSYS shall not use the ASSIGNED MATERIALS AND INFORMATION to make, have made, use or sell any antibody directed to (CONFIDENTIAL TREATMENT REQUESTED), or perform research or development work for a THIRD PARTY with respect to any such antibody. SECTION 4 - Confidentiality. 4.1 During the term of this Agreement, IXSYS agrees not to provide or disclose to a THIRD PARTY any MATERIALS without the written permission of MEDIMMUNE. 4.2 After the date of this Agreement, subject to Section 2.9, IXSYS agrees not to provide or disclose to a THIRD PARTY any ASSIGNED MATERIALS AND INFORMATION without the written permission of MEDIMMUNE. 4.3 During the term of this Agreement, it is contemplated that each party will disclose to the other party confidential information which is owned or controlled by the party providing such information or which that party is obligated to maintain in confidence and which is designated by the party providing such information as confidential ("Confidential Information"). Each party shall have the right to refuse to accept the other party's Confidential Information. Each party agrees to retain the other party's Confidential Information in confidence, to limit disclosure of any such Confidential Information to its officers, directors, employees, consultants, sublicensees and permitted assigns on a need to know basis, to use the other party's Confidential Information only for the purposes of this Agreement, and not to disclose any such Confidential Information to any other person or entity without the prior written consent of the party providing such Confidential Information. For the avoidance of doubt ASSIGNED MATERIALS AND INFORMATION are Confidential Information of MEDIMMUNE. 4.4 The obligations of confidentiality and non-use of Sections 4.1, 4.2 and 4.3 will not apply to: (i) Confidential Information generally known to the public prior to its disclosure hereunder; or (ii) Confidential Information that subsequently becomes known to the public by some means other than a breach of this Agreement; (iii) Confidential Information that is subsequently disclosed to the receiving party by a third party having a lawful right to make such disclosure; or (iv) is approved for release by the parties. 4.5 Neither party shall disclose any terms or conditions of this Agreement to any third party without the prior consent of the other party; provided, however, that a party may disclose the terms or conditions of this Agreement, (a) on a need-to-know basis to its legal and financial advisors to the extent such disclosure is reasonably necessary in connection with such party's activities expressly permitted by this Agreement and ordinary and customary business operations, and (b) to a third party in connection with (i) an equity investment in such party, (ii) a merger, consolidation, change in control or similar transaction by such party, or (iii) the transfer or sale of all or substantially all of the assets of such party. Notwithstanding the foregoing, prior to execution of this Agreement the parties have agreed upon the substance of information that may be used to describe the terms and conditions of this transaction, and each party may disclose such information, as modified by mutual written agreement of the parties, without the consent of the other party. 4.6 The obligations of this Section 4 shall not apply to the extent that a party is required to disclose information by applicable law, regulation or bona fide legal process, provided that the party required to make the disclosure takes reasonable steps to restrict and maintain confidentiality of such disclosure and provides reasonable prior notice to the other party. 4.7 Notwithstanding the foregoing, MEDIMMUNE shall have the right to disclose Confidential Information of IXSYS to a THIRD PARTY with whom MEDIMMUNE has or proposes to enter into a business relationship and who undertakes an obligation of confidentiality and non-use with respect to such information, at least as restrictive as the obligation under this Section 4. 4.8 The parties' obligations under this Section 4 shall terminate five (5) years after the expiration or termination of this Agreement. SECTION 5 - Royalties. 5.1 During the ROYALTY PERIOD, MEDIMMUNE shall pay royalties to IXSYS for PRODUCTS as follows: (a) (CONFIDENTIAL TREATMENT REQUESTED) of that portion of NET SALES of PRODUCTS in a calendar year up to the DESIGNATED AMOUNT; (b) (CONFIDENTIAL TREATMENT REQUESTED) of that portion of NET SALES of PRODUCTS in a calendar year above the DESIGNATED AMOUNT. The cumulative NET SALES for a calendar year shall be calculated based on worldwide NET SALES. 5.2 In the event that a PRODUCT is sold in combination with a therapeutically active component that is not a PRODUCT (such combination being a "Combination Product"), then NET SALES of such Combination Product upon which a royalty is paid shall be subject to the following adjustment. If the PRODUCT and the other therapeutically active component are sold separately in a country, then NET SALES of such Combination Product in such country upon which a royalty is paid shall be multiplied by the fraction A/A+B, where A equals the average sales price of such PRODUCT sold separately in such country, and B equals the average sales price of the other therapeutically active component sold separately in such country. Otherwise, the parties shall enter into good faith negotiations and attempt to reach mutual agreement to determine an appropriate adjustment to the NET SALES of such Combination Product in a country to reflect the relative contributions of the PRODUCT and the other therapeutically active component to the value of the Combination Product in such country. If such mutual agreement is not reached within ninety (90) days after commencement of such negotiations, then the NET SALES of such Combination Product in such country shall be determined by binding arbitration under Section 11.2. 5.3 MEDIMMUNE shall keep, and shall cause each of its AFFILIATES and SUBLICENSEES to keep, full and accurate books of account containing all particulars that may be necessary for the purpose of calculating all royalties payable to IXSYS. Such books of account, with all necessary supporting data, shall be kept at their principal place of business, and for the three (3) years next following the end of the calendar year to which each pertains, shall be open for inspection by an independent certified accountant selected by IXSYS and reasonably acceptable to MEDIMMUNE upon reasonable notice during normal business hours at IXSYS' expense for the sole purpose of verifying royalty statements or compliance with this Agreement, but in no event more than once in each calendar year. All information and data offered shall be used only for the purpose of verifying royalties and shall be treated as MEDIMMUNE Confidential Information subject to the obligations of this Agreement. 5.4 With each quarterly payment, MEDIMMUNE shall deliver to IXSYS a full and accurate accounting of the calculation of the royalties owing hereunder to include at least the following information: (a) Quantity of each PRODUCT subject to royalty sold (by country) by MEDIMMUNE, its AFFILIATES and SUBLICENSEES; (b) NET SALES for each PRODUCT (by country); (c) The calculation of the gross royalties (before deductions) for each PRODUCT (by country) and any deductions, offsets and credits therefrom; and (d) Total royalties payable to IXSYS for each PRODUCT (by country) and the total royalties payable to IXSYS for all PRODUCTS (for all countries). 5.5 In each year the amount of royalty due shall be calculated quarterly as of March 31, June 30, September 30 and December 31 (each being the last day of an "ACCOUNTING PERIOD") and shall be paid quarterly within the sixty (60) days next following such date. Every such payment shall be supported by the accounting prescribed in Section 5.4 and shall be made in United States currency. Whenever for the purpose of calculating royalties conversion from any foreign currency shall be required, such conversion shall be at the average of the rate of exchange (local currency per US$1) published in the Western Edition of The Wall Street Journal under the caption "Currency Trading" for the last business day of each month during the applicable ACCOUNTING PERIOD. 5.6 If the transfer of or the conversion into United States Dollar equivalent of any remittance due hereunder is not lawful or possible in any country, such remittance shall be made by the deposit thereof in the currency of the country to the credit and account of IXSYS or its nominee in any commercial bank or trust company located in that country, prompt notice of which shall be given to IXSYS. IXSYS shall be advised in writing in advance by MEDIMMUNE and provide to MEDIMMUNE a nominee, if so desired. 5.7 Any tax required to be withheld by MEDIMMUNE under the laws of any foreign country for the account of IXSYS shall be promptly paid by MEDIMMUNE for and on behalf of IXSYS to the appropriate governmental authority, and MEDIMMUNE shall furnish IXSYS with proof of payment of such tax. Any such tax actually paid on IXSYS' behalf shall be deducted from royalty payments due IXSYS. 5.8 Only one royalty shall be due and payable under each of the applicable subsections under this Section 5 for the manufacture, use and sale of a PRODUCT irrespective of the number of patents or claims thereof which cover the manufacture, use and sale of such PRODUCT. 5.9 (a) MEDIMMUNE shall pay to IXSYS the following milestone payments upon the occurrence of the following events with respect to a PRODUCT: Event Payment (i) Demonstration in the (CONFIDENTIAL TREATMENT REQUESTED) model that a PRODUCT has a (CONFIDENTIAL TREATMENT REQUESTED) as compared to (CONFIDENTIAL TREATMENT REQUESTED) $ (CTR) (ii) Demonstration in the (CONFIDENTIAL TREATMENT REQUESTED) model that a PRODUCT has a (CONFIDENTIAL TREATMENT REQUESTED) as compared to (CONFIDENTIAL TREATMENT REQUESTED) $ (CTR) (iii) Filing an IND (or its foreign equivalent) for a PRODUCT $ (CTR) (iv) Obtains approval of a Biologics License Application (or its foreign equivalent) for a PRODUCT $ (CTR) (b) The milestone payments under Section 5.9(a) are due and payable sixty (60) days after the applicable milestone occurs. (c) (CONFIDENTIAL TREATMENT REQUESTED) of all milestone payments paid under Section 5.9(a) are creditable against up to (CONFIDENTIAL TREATMENT REQUESTED) of each royalty payment that is to be made pursuant to Section 5.1 until the full amount of such credit has been taken.. (d) The total payment under Section 5.9(a)(i) and 5.9(a)(ii) shall not exceed (CONFIDENTIAL TREATMENT REQUESTED), and the total milestone payments for any and all PRODUCT shall not exceed (CONFIDENTIAL TREATMENT REQUESTED). SECTION 6 - Warranties. 6.1 Each of IXSYS and MEDIMMUNE warrants and represents to the other that: (a) it has the corporate power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder; (b) it has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder; and (c) this Agreement has been duly executed and delivered on its behalf, and constitutes a legal, valid, binding obligation, enforceable against it in accordance with its terms. 6.2 IXSYS represents and warrants to MEDIMMUNE that: (a) it has not previously granted and, prior to expiration or termination of this Agreement, will not grant any rights in the EXISTING IXSYS PATENTS, ASSIGNED PATENTS, MATERIALS, and ASSIGNED MATERIALS AND INFORMATION that conflict with the rights and licenses granted to MEDIMMUNE herein; (b) all persons performing research by or on behalf of IXSYS under the PROGRAM will be obligated to assign to IXSYS (for re-assignment to MEDIMMUNE hereunder), the ownership of ASSIGNED MATERIALS AND INFORMATION, the ASSIGNED PATENTS and all other intellectual property rights arising therefrom. 6.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN SECTIONS 6.1 and 6.2, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, OR VALIDITY OF ANY PATENT RIGHTS ISSUED OR PENDING. SECTION 7 - Indemnification. 7.1 MEDIMMUNE agrees to indemnify and hold harmless IXSYS, its directors, officers, employees and agents (collectively, the "Indemnitees") from and against all losses, liabilities, damages and expenses (including reasonable attorneys' fees and costs) incurred in connection with any claims, demands, actions or other proceedings by any third party arising from (a) the research, development, manufacture, use or sale of ANTIBODIES or PRODUCTS by MEDIMMUNE, its AFFILIATES or SUBLICENSEES, (b) the use of PRODUCTS by any purchasers thereof, (c) the use by MEDIMMUNE, its AFFILIATES or SUBLICENSEES of the EXISTING IXSYS PATENTS, the ASSIGNED MATERIALS AND INFORMATION or the ASSIGNED PATENTS, (d) any act or omission by MEDIMMUNE, its AFFILIATES OR SUBLICENSEES the effect of which would cause IXSYS to be in breach of its obligations under the license agreements described in Section 3.1(b) (without regard to any applicable cure or notice requirements thereof, or (e) patent infringement by IXSYS during the PROGRAM based on a claim that an ANTIBODY or ligand or assay provided by MEDIMMUNE to IXSYS infringes a patent of a THIRD PARTY. 7.2 If any such claims or actions are made, IXSYS shall be defended at MEDIMMUNE's sole expense by counsel selected by MEDIMMUNE and reasonably acceptable to IXSYS provided that IXSYS may, at its own expense, also be represented by counsel of its own choosing. 7.3 MEDIMMUNE's indemnification under Section 7.1 shall not apply to the extent any loss, liability, damage or expense is attributable to the gross negligence or intentional misconduct of the Indemnitees. 7.4 MEDIMMUNE may not settle any such claim, demand, action or other proceeding or otherwise consent to an adverse judgment in any such action or other proceeding that diminishes the rights or interests of the Indemnitees without the express written consent of the Indemnitees. 7.5 IXSYS shall notify MEDIMMUNE promptly of any claim, demand, action or other proceeding under Section 7.1 and shall reasonably cooperate with all reasonable requests of MEDIMMUNE with respect thereto. SECTION 8 - Assignment; Successors. 8.1 This Agreement shall not be assigned or otherwise transferred (in whole or in part, whether voluntarily, by operation of law or otherwise) by either of the parties without the prior written consent of the other party (which consent shall not be unreasonably withheld); provided, however, that either party may, without such consent, assign this Agreement and its rights and obligations hereunder to an AFFILIATE or in connection with the transfer or sale of all or substantially all of its business, or in the event of its merger, consolidation, change in control or similar transaction, provided that such assignment by IXSYS does not cause the termination of the rights and licenses granted to MEDIMMUNE under this Agreement. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any purported assignment or transfer in violation of this Section 8.1 shall be void. 8.2 Subject to the limitations on assignment herein, this Agreement shall be binding upon and inure to the benefit of said successors in interest and assigns of MEDIMMUNE and IXSYS. SECTION 9 - Term and Termination. 9.1 Except as otherwise specifically provided herein and unless sooner terminated pursuant to Section 9.2 or 9.3 of this Agreement, this Agreement and the licenses and rights granted thereunder shall remain in full force and effect until MEDIMMUNE has no further royalty obligation hereunder at which time MEDIMMUNE shall have a fully paid up, non-cancelable, nonexclusive license to make, have made and use MATERIALS to research, develop, make, have made, use, import, export, sell, offer to sell, or have sold PRODUCTS. 9.2 MEDIMMUNE shall have the right to terminate this Agreement upon ninety (90) days prior written notice to IXSYS. 9.3 IXSYS shall have the right to terminate this Agreement if and only if MEDIMMUNE breaches its obligations under Section 5 or 7. If such a breach shall occur, IXSYS shall provide MEDIMMUNE with written notice of such breach and if such breach is not cured within thirty (30) days after such written notice, IXSYS may terminate this Agreement by written notice to MEDIMMUNE, provided such written notice is given within thirty (30) days after the expiration of such initial thirty (30) day period. 9.4 Upon any termination of this Agreement, MEDIMMUNE, at its option, shall be entitled to sell any completed inventory of PRODUCT which remains on hand as of the date of the termination, so long as MEDIMMUNE pays to IXSYS the royalties applicable to said subsequent sales in accordance with the same terms and conditions as set forth in this Agreement. 9.5 In the event that this Agreement is terminated under Section 9.2 or 9.3, any sublicense granted under this Agreement shall remain in full force and effect as a direct license between IXSYS and the SUBLICENSEE under the terms and conditions of the sublicense agreement, subject to the SUBLICENSEE agreeing to be bound to IXSYS under such terms and conditions within thirty (30) days after IXSYS provides written notice to the SUBLICENSEE of the termination of this Agreement. At the request of MEDIMMUNE, IXSYS will acknowledge to a SUBLICENSEE IXSYS' obligations to the SUBLICENSEE under this paragraph. 9.6 The provisions of Sections 2.8, 2.9, 3.4(c), 4, 7, 9.4, 9.5 and 9.6 shall survive any expiration or termination of this Agreement. 9.7 Upon expiration or termination of this Agreement for any reason, nothing herein shall be construed to release either party from any obligation that matured prior to the effective date of such expiration or termination. 9.8 All rights and licensing granted under or pursuant to this Agreement by IXSYS to MEDIMMUNE are, and shall irrevocably be deemed to be, "intellectual property" as defined in Section 101(56) of the Bankruptcy Code. In the event of the commencement of a case by or against either party under any Chapter of the Bankruptcy Code, this Agreement shall be deemed an executory contract and all rights and obligations hereunder shall be determined in accordance with Section 365(n) thereof. Unless a party rejects this Agreement and the other party decides not to retain its rights hereunder, the other party shall be entitled to a complete duplicate of (or complete access to, as appropriate) all intellectual property and all embodiments of such intellectual property held by the party and the party shall not interfere with the rights of the other party, which are expressly granted hereunder, to such intellectual property and all embodiments of such intellectual property from another entity. Further, this Agreement shall be deemed, upon presentation to another entity, to be the same as an express instruction by the party to such other entity to provide such intellectual property and all embodiments of such intellectual property directly to the other party. Without limiting the foregoing provisions in this paragraph, the other party shall be entitled to all post- bankruptcy-petition improvements, updates, or developments of intellectual property created hereunder. If such intellectual property is not fully developed as of the commencement of any bankruptcy case, the other party shall have the right to complete development of the property. SECTION 10 - Force Majeure. 10.1 No failure or omission by the parties hereto in the performance of any obligation of this Agreement (other than an obligation for the payment of money) shall be a breach of this Agreement, nor shall it create any liability, if the same shall arise from any cause or causes beyond the reasonable control of the affected party, including, but not limited to, the following, which for purposes of this Agreement shall be regarded as beyond the control of the party in question: acts of God; acts or omissions of any government; any rules, regulations, or orders issued by any governmental authority or by any officer, department, agency or instrumentality thereof; fire; storm; flood; earthquake; accident; war; rebellion; insurrection; riot; invasion; strikes; and lockouts or the like; provided that the party so affected shall use its commercially reasonable efforts to avoid or remove such causes or nonperformance and shall continue performance hereunder with the utmost dispatch whenever such causes are removed. SECTION 11 - General Provisions. 11.1 The relationship between IXSYS and MEDIMMUNE is that of independent contractors. IXSYS and MEDIMMUNE are not joint venturers, partners, principal and agent, master and servant, employer or employee, and have no relationship other than as independent contracting parties. IXSYS shall have no power to bind or obligate MEDIMMUNE in any manner. Likewise, MEDIMMUNE shall have no power to bind or obligate IXSYS in any manner. 11.2 Any matter or disagreement under Section 5.2, which this Agreement specifies is to be resolved by arbitration shall be submitted to a mutually selected single arbitrator to so decide any such matter or disagreement. The arbitrator shall conduct the arbitration in accordance with the Rules of the American Arbitration Association, unless the parties agree otherwise. If the parties are unable to mutually select an arbitrator, the arbitrator shall be selected in accordance with the procedures of the American Arbitration Association. The decision and award rendered by the arbitrator shall be final and binding. Judgment upon the award may be entered in any court having jurisdiction thereof. Any arbitration pursuant to this section shall be held in San Diego, California or such other place as may be mutually agreed upon in writing by the parties. The prevailing party in any such arbitration shall be entitled to recover from the other party all reasonable attorneys' fees and costs incurred by the prevailing party in connection therewith. 11.3 This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and supersedes all prior agreements in this respect. There shall be no amendments or modifications to this Agreement, except by a written document which is signed by both parties. 11.4 This Agreement shall be construed and enforced in accordance with the laws of the State of California without regard to the conflicts of law principles thereof. 11.5 The headings in this Agreement have been inserted for the convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular article or section. 11.6 Any delay in enforcing a party's rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of a party's right to the future enforcement of its rights under this Agreement, excepting only as to an expressed written and signed waiver as to a particular matter for a particular period of time. 11.7 Any notices given pursuant to this Agreement shall be in writing, delivered by any means, addressed to the other party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor and (except as otherwise provided in this Agreement) shall be effective upon receipt by the addressee. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. IXSYS, INC. MEDIMMUNE, INC. By: /s/ Janine M. Taylor By: /s/ David M. Mott Name: Janine M. Taylor Name: David M. Mott Title: President & Chief Operating Title: Vice Chairman & Officer Chief Financial Officer EX-10.97 3 SELECTION AGREEMENT Exhibit 10.97 SELECTION AGREEMENT This Selection Agreement (this "Agreement") is effective as of February 24, 1999 ("the EFFECTIVE DATE") by and between Ixsys, Inc., a Delaware corporation, having an address at 3520 Dunhill Road, San Diego, CA 92121 ("IXSYS"), and MedImmune, Inc. a Delaware Corporation, having offices at 35 West Watkins Mill Road, Gaithersburg, MD 20878 ("MEDIMMUNE"). WHEREAS, MEDIMMUNE desires to have IXSYS perform certain research and development with respect to certain antibodies yet to be determined; and WHEREAS, IXSYS desires to perform such research and development on the terms and conditions of this Agreement. NOW THEREFORE in consideration of the mutual promises and other good and valuable consideration, the parties agree as follows: SECTION 1 - Antibody Selection. 1.1 Within twenty four (24) months after the EFFECTIVE DATE, MEDIMMUNE shall designate by written notice to IXSYS, two (2) antibodies for which MEDIMMUNE desires to have IXSYS perform separate research and development programs (each, a "PROGRAM") to modify such antibodies. 1.2 The written notice described in Section 1.1 for each PROGRAM shall specify the following: (a) the identity and sequence of the antibody; (b) the identity of the desired target ligand; (c) the desired assay by which to measure the specificity and affinity of the antibody and modifications to such antibody developed under the applicable PROGRAM; (d) the personnel resources (specified as the number of full time equivalent personnel) to be expended by Ixsys under the applicable PROGRAM, which shall not be less than (CONFIDENTIAL TREATMENT REQUESTED) or more than (CONFIDENTIAL TREATMENT REQUESTED) without the prior written consent of IXSYS; and (e) the term of the applicable PROGRAM, which shall not be less than (CONFIDENTIAL TREATMENT REQUESTED) months or more than (CONFIDENTIAL TREATMENT REQUESTED) months without the prior written consent of IXSYS. 1.3 Within thirty (30) days after MEDIMMUNE delivers to IXSYS the written notice described in Section 1.1 for a PROGRAM, the parties shall duly execute and deliver a Research and Assignment and License Agreement in the form attached hereto as Appendix A, with the blanks on Exhibit 1 thereto completed as provided above and only those modifications as the parties mutually agree in writing. SECTION 2 - Assignment; Successors. 2.1 This Agreement shall not be assigned or otherwise transferred (in whole or in part, whether voluntarily, by operation of law or otherwise) by either of the parties without the prior written consent of the other party (which consent shall not be unreasonably withheld); provided, however, that either party may, without such consent, assign this Agreement and its rights and obligations hereunder in connection with the transfer or sale of all or substantially all of its business, or in the event of its merger, consolidation, change in control or similar transaction. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any purported assignment or transfer in violation of this Section 2.1 shall be void. 2.2 Subject to the limitations on assignment herein, this Agreement shall be binding upon and inure to the benefit of said successors in interest and assigns of MEDIMMUNE and IXSYS. SECTION 3 - General Provisions. 3.1 The relationship between IXSYS and MEDIMMUNE is that of independent contractors. IXSYS and MEDIMMUNE are not joint venturers, partners, principal and agent, master and servant, employer or employee, and have no relationship other than as independent contracting parties. IXSYS shall have no power to bind or obligate MEDIMMUNE in any manner. Likewise, MEDIMMUNE shall have no power to bind or obligate IXSYS in any manner. 3.2 This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and supersedes all prior agreements in this respect. There shall be no amendments or modifications to this Agreement, except by a written document which is signed by both parties. 3.3 This Agreement shall be construed and enforced in accordance with the laws of the State of California without regard to the conflicts of law principles thereof. 3.4 The headings in this Agreement have been inserted for the convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular article or section. 3.5 Any delay in enforcing a party's rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of a party's right to the future enforcement of its rights under this Agreement, excepting only as to an expressed written and signed waiver as to a particular matter for a particular period of time. 3.6 Any notices given pursuant to this Agreement shall be in writing, delivered by any means, addressed to the other party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor and (except as otherwise provided in this Agreement) shall be effective upon receipt by the addressee. To MEDIMMUNE: MedImmune, Inc. 35 West Watkins Mill Road Gaithersburg, MD 20878 Copy to: Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein 6 Becker Farm Road Roseland, New Jersey 07068 Fax No. (973) 994-1744 Attn: Elliot M. Olstein, Esq. To IXSYS: Ixsys, Inc. 3520 Dunhill Road San Diego, CA 92121 Attention: President Copy to: Pillsbury Madison & Sutro LLP 235 Montgomery Street, 16th Floor San Francisco, California 94104 Attention: Thomas E. Sparks, Jr. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. IXSYS, INC. MEDIMMUNE, INC. By: /s/ Janine M. Taylor By: /s/ David M. Mott Name: Janine M. Taylor Name: David M. Mott Title: President & Chief Operating Title: Vice Chairman & Officer Chief Financial Officer EX-10.96 4 LICENSE AGREEMENT EXHIBIT 10.96 LICENSE AGREEMENT This License Agreement (this "Agreement") is effective as of February 24, 1999 ("the EFFECTIVE DATE") by and between Ixsys, Inc., a Delaware corporation, having an address at 3520 Dunhill Road, San Diego, CA 92121 ("IXSYS"), and MedImmune, Inc., a Delaware Corporation, having offices at 35 West Watkins Mill Road, Gaithersburg, MD 20878 ("MEDIMMUNE"). WHEREAS, MEDIMMUNE desires to obtain from IXSYS an exclusive worldwide right and license to certain antibodies; and WHEREAS, IXSYS desires to grant such rights on the terms and conditions of this Agreement. NOW THEREFORE in consideration of the mutual promises and other good and valuable consideration, the parties agree as follows: SECTION 1 - Definitions. The terms used in this Agreement have the following meaning: 1.1 "AFFILIATE," as applied to a person or entity, means any other person or entity controlling or controlled by or under common control with such person or entity. The term "control" means possession of the power to direct or cause the direction of the management and policies whether through the ownership of voting securities, by contract or otherwise. The ownership of voting securities of a person, organization or entity, however, shall not, in and of itself, constitute "control" for purposes of this definition, unless said ownership is of a majority of the outstanding securities entitled to vote of such person, organization or entity. Affiliate shall also mean a limited partnership in which a subsidiary of such person, organization or entity is a general partner. 1.2 "ANTIBODY(IES)" means (1) an antibody that specifically binds to (CONFIDENTIAL TREATMENT REQUESTED) (including, but not limited to, chimeric antibodies, humanized antibodies, recombinant antibodies, grafted antibodies, single chain antibodies, and the like) or an antibody fragment that specifically binds to (CONFIDENTIAL TREATMENT REQUESTED) or (2) a polynucleotide that encodes any of the foregoing. For the avoidance of doubt, ANTIBODY includes, but is not limited to, derivatives of (CONFIDENTIAL TREATMENT REQUESTED) antibody, fragments thereof and modifications, variants and derivatives thereof, such as humanized, chimeric, grafted and CDR modified versions thereof and fragments of such versions, including, but not limited to, the humanized antibody referred to as VITAXIN. Notwithstanding the foregoing, ANTIBODY shall exclude the (CONFIDENTIAL TREATMENT REQUESTED) murine antibody produced by the cell line (CONFIDENTIAL TREATMENT REQUESTED) deposited with the American Type Culture Collection. 1.3 "FIRST COMMERCIAL SALE" means, in each country, (a) the first sale of a PRODUCT by MEDIMMUNE, its AFFILIATE or SUBLICENSEE following approval of its marketing by the appropriate governmental agency for the country in which the sale is to be made, or (b) when governmental approval is not required, the first commercial sale of a PRODUCT by MEDIMMUNE, its AFFILIATE or SUBLICENSEE in that country. 1.4 "IXSYS KNOW-HOW" means all information and data (including, but not limited to, formulae, procedures, protocols, techniques and results of experimentation and testing) that are necessary or useful for MEDIMMUNE to make, use or sell an ANTIBODY (including an ANTIBODY that constitutes a component or ingredient of a product), in each case only to the extent owned by or licensed to IXSYS or its AFFILIATES (with the right to grant sublicenses) or as to which IXSYS or its AFFILIATES otherwise has licensable rights as of the EFFECTIVE DATE or (subject to Section 1.15) thereafter during the term of this Agreement. 1.5 "IXSYS LICENSE AGREEMENTS" means the agreements listed in Appendix A. 1.6 "IXSYS PATENT(S)" means any patent or patent application (or equivalents thereof, such as extensions or other rights that give the right to exclude others such as Supplementary Protection Certificates) anywhere in the world, to the extent the claims of which would be infringed by the manufacture, use or sale of a product comprising an ANTIBODY and only to the extent that it is either owned by or licensed to IXSYS or its AFFILIATES (with the right to grant sublicenses) or as to which IXSYS or its AFFILIATES otherwise has licensable rights, in each case, as of the EFFECTIVE DATE or (subject to Section 1.15) thereafter during the term of this Agreement (including, but not limited to, those of Appendix B and those licensed under the IXSYS LICENSE AGREEMENTS). 1.7 "LICENSED TERRITORY" means all countries of the world. 1.8 "MATERIALS" means ANTIBODIES, the cell lines for producing such ANTIBODIES, the polynucleotides encoding such ANTIBODIES, and the assays, vectors and constructs for producing such ANTIBODIES, in each case only to the extent owned by or licensed to IXSYS or its AFFILIATES (with the right to grant sublicenses) or as to which IXSYS or its AFFILIATES otherwise has transferable rights, and in the possession and control of IXSYS or its AFFILIATES, as of the EFFECTIVE DATE or (subject to Section 1.15) thereafter during the term of this Agreement. For the avoidance of doubt, MATERIALS includes the existing cell line and associated vectors for producing the humanized version of (CONFIDENTIAL TREATMENT REQUESTED) known as VITAXIN and VITAXIN variants in the possession and control of IXSYS as of the EFFECTIVE DATE. 1.9 "NET SALES" means, with respect to any PRODUCT, the invoiced sales price of such PRODUCT sold by MEDIMMUNE, its AFFILIATES and SUBLICENSEES to independent customers who are not AFFILIATES, less (a) actual and customary credits, allowances, discounts and rebates to, and chargebacks from the account of, such independent customers for spoiled, damaged, out-dated, rejected or returned PRODUCT; (b) actual freight and insurance costs incurred in transporting such PRODUCT to such customers; (c) actual and customary cash, quantity and trade discounts; (d) sales, use, value-added and taxes or governmental charges (excluding what is commonly known as income taxes) incurred in connection with the exportation or importation of such PRODUCT; (e) the cost to MEDIMMUNE of the devices for dispensing or administering such PRODUCT as well as diluents or similar materials which accompany such PRODUCT as it is sold, and (f) a reasonable allowance for bad debt, all in accordance with Generally Accepted Accounting Principles. For purposes of determining NET SALES, a sale shall have occurred when an invoice therefor shall be generated or the PRODUCT shipped for delivery. Sales of PRODUCTS by MEDIMMUNE, an AFFILIATE or SUBLICENSEE to any AFFILIATE or SUBLICENSEE which is a reseller thereof shall be excluded, and only the subsequent sale of such PRODUCTS by AFFILIATES or SUBLICENSEES to unrelated parties shall be deemed NET SALES hereunder. 1.10 "PRODUCT" means a product comprising (i) an ANTIBODY, the manufacture, use or sale of which infringes a VALID PATENT CLAIM as to which MEDIMMUNE retains a license under this Agreement, (ii) an ANTIBODY provided and licensed to MEDIMMUNE by IXSYS under this Agreement, or (iii) an ANTIBODY which is derived from an ANTIBODY provided and licensed to MEDIMMUNE under this Agreement. 1.11 "ROYALTY PERIOD" means, with respect to each PRODUCT in each country in the LICENSED TERRITORY, (a) if the manufacture, use, offer for sale, sale or import of such PRODUCT in such country at the time of the FIRST COMMERCIAL SALE infringes a VALID PATENT CLAIM (if in an issued patent) but for the license granted by this Agreement, the royalty period continues for as long as such VALID PATENT CLAIM remains in effect and (if in an issued patent) is infringed thereby but for the license granted by this Agreement, or (b) otherwise, (CONFIDENTIAL TREATMENT REQUESTED) years from the date of the FIRST COMMERCIAL SALE of such PRODUCT in such country. 1.12 "SUBLICENSEE" means any AFFILIATE or THIRD PARTY that is granted a sublicense by MEDIMMUNE under the licenses and sublicenses granted by this Agreement. 1.13 "THIRD PARTY(IES)" means a person or entity other than IXSYS or MEDIMMUNE or any of their AFFILIATES. 1.14 The term "VALID PATENT CLAIM" shall mean either (a) a claim of an issued and unexpired patent included within the IXSYS PATENTS, which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other gover nmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise or (b) a claim of a pending patent application included within the IXSYS PATENTS, which claim was filed in good faith and has not been abandoned or finally disallowed without the possibility of appeal or refiling of such application, the subject matter of which has not been pending for more than (CONFIDENTIAL TREATMENT REQUESTED) years, including the pendency of any prior application. 1.15 In the event of the good faith transfer or sale of all or substantially all of IXSYS' assets (including this Agreement) to a THIRD PARTY, or in the event of the good faith merger, consolidation, or similar transaction with a THIRD PARTY, in which IXSYS is not the surviving entity, (a) the subject matter of the ANTIBODIES, IXSYS KNOW-HOW, IXSYS PATENTS and MATERIALS shall not include any antibody or fragment, data or information, patent or patent application or material of the surviving entity or the purchaser of IXSYS' assets existing prior to the effective date of such transaction or acquired or arising on or after the effective date of such transaction, if the surviving entity or the purchaser of IXSYS' assets, prior to such effective date. was working on the research, development, manufacture or commercialization of an ANTIBODY, and (b) the subject matter of IXSYS KNOW-HOW and IXSYS PATENTS shall exclude any data or information, or patent or patent application, regarding antibody production generally, of the surviving entity or the purchaser of IXSYS' assets existing prior to the effective date of such transaction or acquired or arising on or after the effective date of such transaction, if the surviving entity or the purchaser of IXSYS' assets, prior to such effective date, was in the business of commercial production of antibodies. 1.16 The use herein of the plural shall include the singular, and the use of the masculine shall include the feminine. 1.17 All dollars are United States Dollars. SECTION 2 - Transfer of IXSYS KNOW-HOW and MATERIALS. 2.1 Within thirty (30) days of the EFFECTIVE DATE, IXSYS, at the cost and expense of IXSYS, shall transfer to MEDIMMUNE the IXSYS KNOW-HOW and MATERIALS existing as of the EFFECTIVE DATE. Promptly after the end of each calendar quarter thereafter during the term of this Agreement, IXSYS, at the cost and expense of IXSYS, shall transfer to MEDIMMUNE the IXSYS KNOW-HOW and MATERIALS not previously delivered to MEDIMMUNE. 2.2 For a period of six (6) months after the EFFECTIVE DATE, IXSYS, at the cost and expense of IXSYS, shall provide MEDIMMUNE with such technical assistance as reasonably requested by MEDIMMUNE with respect to the use of the IXSYS PATENTS, IXSYS KNOW-HOW and MATERIALS hereunder. 2.3 (a) IXSYS, at its cost and expense, shall deliver to MEDIMMUNE (i) a (CONFIDENTIAL TREATMENT REQUESTED) liter batch of the ANTIBODY that is a humanized form of (CONFIDENTIAL TREATMENT REQUESTED) antibody which humanized antibody is known as VITAXIN that is currently being produced by (CONFIDENTIAL TREATMENT REQUESTED) for IXSYS under Good Manufacturing Practices with delivery expected in (CONFIDENTIAL TREATMENT REQUESTED), and (ii) the associated documentation delivered by (CONFIDENTIAL TREATMENT REQUESTED) to IXSYS in connection therewith that is required for use in human clinical testing and commercial development and manufacturing of such produced VITAXIN. (b) In the event that IXSYS does not deliver VITAXIN in accordance with Section 2.3(a), then MEDIMMUNE shall have the right to deduct from any and all payments due and payable to IXSYS under this Agreement an amount equal to (CONFIDENTIAL TREATMENT REQUESTED). 2.4 IXSYS shall have the right to publish IXSYS' KNOW-HOW; provided, however, that IXSYS shall provide MEDIMMUNE the opportunity to review any proposed manuscripts or any other proposed disclosure describing such work sixty (60) days prior to their submission for publication or other proposed disclosure. MEDIMMUNE and IXSYS shall discuss whether or not such publication or disclosure should occur and it is expressly understood that MEDIMMUNE shall have the sole right to make a final determination as to whether or not such publication or disclosure shall occur provided that such determination is not unreasonable. It shall not be unreasonable to deny publication on the basis that the information proposed to be published is not generally available to the public and may aid a competitor in developing a competitive product. SECTION 3 - License Grants. 3.1 (a) IXSYS hereby grants to MEDIMMUNE and MEDIMMUNE hereby accepts from IXSYS a sole and exclusive right and license (or sublicense, as applicable) for the LICENSED TERRITORY (i) under and to IXSYS PATENTS and IXSYS KNOW-HOW to research, develop, make, have made, use, import, export and sell, offer to sell or have sold PRODUCTS and (ii) to make, have made and use the MATERIALS for all of the purposes of 3.1(a)(i). Notwithstanding anything to the contrary in this Agreement, the rights and licenses granted to MEDIMMUNE under this Agreement exclude any right or license (express or implied) under any IXSYS patent rights or know-how regarding the generation, discovery or modification of antibody libraries, antibodies or fragments thereof, generally. (b) To the extent that the rights and licenses granted to MEDIMMUNE under Section 3.1(a) is a sublicense under an IXSYS LICENSE AGREEMENT, the rights, and licenses granted to MEDIMMUNE under such sublicense are limited to the extent that IXSYS is licensed under the IXSYS LICENSE AGREEMENT and such sublicense is subject to the terms, conditions and restrictions of the IXSYS LICENSE AGREEMENT that are applicable to a sublicense thereunder. MEDIMMUNE shall not take or omit to take any action the effect of which would cause IXSYS to be in breach of IXSYS' obligations under the IXSYS LICENSE AGREEMENTS (without regard to any applicable cure or notice requirements thereof). 3.2 MEDIMMUNE shall have the right to grant sublicenses under the licenses and sublicenses granted under Section 3.1 to its AFFILIATES and THIRD PARTIES (with the right to grant further sublicenses, subject to any terms, conditions and restrictions on further sublicensing under IXSYS LICENSE AGREEMENTS). MEDIMMUNE shall deliver to IXSYS a copy of each such sublicense promptly after execution of the same. Each such sublicense shall be subject to the terms and conditions of this Agreement. 3.3 The licenses granted hereunder include the right of MEDIMMUNE, its AFFILIATES and SUBLICENSEES to grant to the purchaser thereof the right to use and/or resell a purchased PRODUCT for which a royalty has been paid hereunder on NET SALES of such PRODUCT (determined in accordance with Section 1.9), without payment of any further royalty to IXSYS. 3.4 The provisions of Section 11.3(b) set forth MEDIMMUNE's only diligence obligations to IXSYS with respect to research, development and commercialization of PRODUCT, and the sole and exclusive remedy for failure to meet such obligations. 3.5 IXSYS acknowledges that MEDIMMUNE is in the business of developing, manufacturing and selling of medical processes and products and that nothing in this Agreement shall be construed as restricting such business or imposing on MEDIMMUNE the duty to market, and/or sell and exploit PRODUCT for which royalties are due hereunder to the exclusion of or in preference to any other product or process. 3.6 Subject to Section 11.3(b), MEDIMMUNE shall have sole discretion for making all decisions relating to the commercialization and marketing of PRODUCT. 3.7 Except as otherwise expressly provided in this Agreement, or the parties otherwise expressly agree in writing, neither party shall obtain any right or license in any patent rights, know-how, materials or technology of the other party (by implication, estoppel or otherwise) for any purpose. 3.8 IXSYS shall in good faith request that its licensor under each IXSYS LICENSE AGREEMENT provide the consent of Appendix C. SECTION 4 - Confidentiality. 4.1 During the term of this Agreement, IXSYS agrees not to provide or disclose to a THIRD PARTY any MATERIALS without the written permission of MEDIMMUNE. 4.2 After the date of this Agreement, subject to Section 2.4, IXSYS agrees not to disclose to a THIRD PARTY any IXSYS KNOW- HOW without the written permission of MEDIMMUNE. 4.3 During the term of this Agreement, it is contemplated that each party will disclose to the other party confidential information which is owned or controlled by the party providing such information or which that party is obligated to maintain in confidence and which is designated by the party providing such information as confidential ("Confidential Information"). Each party shall have the right to refuse to accept the other party's Confidential Information. Each party agrees to retain the other party's Confidential Information in confidence, to limit disclosure of any such Confidential Information to its officers, directors, employees, consultants, sublicensees and permitted assigns on a need to know basis. Each party agrees to use the other party's Confidential Information only as permitted by this Agreement, and not to disclose any such Confidential Information to any other person or entity without the prior written consent of the party providing such Confidential Information. For the avoidance of doubt, IXSYS KNOW-HOW and MATERIALS will be Confidential Information of IXSYS. 4.4 The obligations of confidentiality and non-use of Sections 4.2 and 4.3 will not apply to: (a) Confidential Information generally known to the public prior to its disclosure hereunder; or (b) Confidential Information that subsequently becomes known to the public by some means other than a breach of this Agreement; (c) Confidential Information that is subsequently disclosed to the receiving party by a third party having a lawful right to make such disclosure; or (d) is approved for release by the parties. 4.5 Neither party shall disclose any terms or conditions of this Agreement to any third party without the prior consent of the other party; provided, however, that a party may disclose the terms or conditions of this Agreement, (a) on a need-to-know basis to its legal and financial advisors to the extent such disclosure is reasonably necessary in connection with such party's activities expressly permitted by this Agreement and ordinary and customary business operations, and (b) to a third party in connection with (i) an equity investment in such party, (ii) a merger, consolidation, change in control or similar transaction by such party, or (iii) the transfer or sale of all or substantially all of the assets of such party. Notwithstanding the foregoing, prior to execution of this Agreement the parties have agreed upon the substance of information that may be used to describe the terms and conditions of this transaction, and each party may disclose such information, as modified by mutual written agreement of the parties, without the consent of the other party. 4.6 The obligations of this Section 4 shall not apply to the extent that a party is required to disclose information by applicable law, regulation or bona fide legal process, provided that the party required to make the disclosure takes reasonable steps to restrict and maintain confidentiality of such disclosure and provides reasonable prior notice to the other party. 4.7 Notwithstanding the foregoing, MEDIMMUNE shall have the right to disclose Confidential Information of IXSYS to a THIRD PARTY with whom MEDIMMUNE has or proposes to enter into a business relationship and who undertakes an obligation of confidentiality and non-use with respect to such information, at least as restrictive as the obligation under this Section 4. 4.8 The parties' obligations under this Section 4 shall terminate five (5) years after the expiration or termination of this Agreement. SECTION 5 - Patents. 5.1 IXSYS (or its licensor) shall file, prosecute and maintain IXSYS PATENTS through patent counsel selected by IXSYS (or its licensor). IXSYS shall consult with and keep MEDIMMUNE advised with respect thereto. MEDIMMUNE shall pay all reasonable out-of-pocket costs (including reasonable attorneys' fees and costs) incurred in connection therewith by IXSYS after the EFFECTIVE DATE. 5.2 With respect to any IXSYS PATENTS, each patent application, office action, response to office action, request for terminal disclaimer, and request for reissue or reexamination or extension of any patent issuing from such application shall be provided to MEDIMMUNE sufficiently prior to the filing of such application, response or request to allow for review and comment by MEDIMMUNE. IXSYS agrees to consider such comments and follow reasonable comments unless IXSYS believes that such comments are adverse to the interests of IXSYS. 5.3 IXSYS shall not allow any IXSYS PATENTS licensed to MEDIMMUNE to lapse or be surrendered, or abandoned without the written consent of MEDIMMUNE (other than those that are abandoned in the ordinary course of prosecution in connection with the filing of a continuation or continuation in part application therefor). 5.4 The obligations of IXSYS under Sections 5.1 - 5.3 with respect to IXSYS PATENTS that are sublicensed to MEDIMMUNE shall only be to the extent that it is permitted under the IXSYS LICENSE AGREEMENTS. SECTION 6 - Royalties. 6.1 Subject to Sections 6.1, 6.2, 6.3, 6.4 and 6.12(e), during the ROYALTY PERIOD, MEDIMMUNE shall pay royalties to IXSYS for PRODUCTS as follows: (a) (CONFIDENTIAL TREATMENT REQUESTED) of that portion of NET SALES of PRODUCTS in a calendar year up to (CONFIDENTIAL TREATMENT REQUESTED); (b) (CONFIDENTIAL TREATMENT REQUESTED) of that portion of NET SALES of PRODUCTS in a calendar year in excess of (CONFIDENTIAL TREATMENT REQUESTED) up to (CONFIDENTIAL TREATMENT REQUESTED); (c) (CONFIDENTIAL TREATMENT REQUESTED) of that portion of NET SALES of PRODUCTS in a calendar year that exceeds (CONFIDENTIAL TREATMENT REQUESTED). (d) For a PRODUCT for which the ROYALTY PERIOD is (CONFIDENTIAL TREATMENT REQUESTED) years under Section 1.11 , the royalty rate under Section 6.1(a), (b) and (c), after taking into account any applicable increase or decrease, shall be reduced in each case by (CONFIDENTIAL TREATMENT REQUESTED) in any country in which one or more THIRD PARTIES is selling ANTIBODY (other than ANTIBODY intended for research use only), and the aggregate dollar volume of the sales of ANTIBODY by such THIRD PARTIES equals or exceeds (CONFIDENTIAL TREATMENT REQUESTED) of the aggregate market for ANTIBODY and all other products labeled for the same use in such country. Any dispute regarding the appropriate market for purposes of such determination shall be submitted to binding arbitration under Section 13.2. (e) The cumulative NET SALES for a calendar year shall be calculated based on worldwide NET SALES. 6.2 In the event that a PRODUCT is sold in combination with a therapeutically active component that is not a PRODUCT (such combination being a "Combination Product"), then NET SALES of such Combination Product upon which a royalty is paid shall be subject to the following adjustment. If the PRODUCT and the other therapeutically active component are sold separately in a country, then NET SALES of such Combination Product in such country upon which a royalty is paid shall be multiplied by the fraction A/A+B, where A equals the average sales price of such PRODUCT sold separately in such country, and B equals the average sales price of the other therapeutically active component sold separately in such country. Otherwise, the parties shall enter into good faith negotiations and attempt to reach mutual agreement to determine an appropriate adjustment to the NET SALES of such Combination Product in a country to reflect the relative contributions of the PRODUCT and the other therapeutically active component to the value of the Combination Product in such country. If such mutual agreement is not reached within ninety (90) days after commencement of such negotiations, then the determination shall be submitted to binding arbitration under Section 13.2. 6.3 With respect to any PRODUCT for which the cumulative royalty rate owed by MEDIMMUNE to a THIRD PARTY(IES) based on sales in any country, including the royalty rates under the IXSYS LICENSE AGREEMENTS, exceeds (CONFIDENTIAL TREATMENT REQUESTED), the royalty rate under Sections 6.1(b) and (c) for such PRODUCT in such country shall be reduced by (CONFIDENTIAL TREATMENT REQUESTED) of such excess, but in no event shall any of such royalty rates for such PRODUCT in such country be reduced to less than (CONFIDENTIAL TREATMENT REQUESTED). 6.4 With respect to any PRODUCT for which the cumulative royalty rate owed by MEDIMMUNE to a THIRD PARTY(IES) based on sales in any country, including the royalty rates under the IXSYS LICENSE AGREEMENTS, is less than (CONFIDENTIAL TREATMENT REQUESTED), the royalty rate under Sections 6.1(a), (b) and (c) for such PRODUCT in such country shall be increased by (CONFIDENTIAL TREATMENT REQUESTED) of such deficiency but in no event shall such royalty rates for such PRODUCT in such country be increased by more than (CONFIDENTIAL TREATMENT REQUESTED). 6.5 MEDIMMUNE additionally shall pay to IXSYS all royalties and other amounts owed by IXSYS under the IXSYS LICENSE AGREEMENTS that are based on development milestones, sales or manufacturing of PRODUCT by MEDIMMUNE, its AFFILIATES and SUBLICENSEES. IXSYS shall timely remit such amounts to the applicable THIRD PARTY. All other payments due under IXSYS LICENSE AGREEMENTS shall be paid by IXSYS. 6.6 MEDIMMUNE shall keep, and shall cause each of its AFFILIATES and SUBLICENSEES to keep, full and accurate books of account containing all particulars that may be necessary for the purpose of calculating all royalties payable to IXSYS. Such books of account, together with all necessary supporting data, shall be kept at their principal place of business, and for the three (3) years next following the end of the calendar year to which each pertains, shall be open for inspection by an independent certified accountant selected by IXSYS and reasonably acceptable to MEDIMMUNE upon reasonable notice during normal business hours at IXSYS' expense for the sole purpose of verifying royalty statements or compliance with this Agreement, but in no event more than once in each calendar year. All information and data offered shall be used only for the purpose of verifying royalties and shall be treated as MEDIMMUNE Confidential Information subject to the obligations of this Agreement. 6.7 With each quarterly payment, MEDIMMUNE shall deliver to IXSYS a full and accurate accounting of the calculation of the royalties owing hereunder to include at least the following information: (a) Quantity of each PRODUCT subject to royalty sold (by country) by MEDIMMUNE, its AFFILIATES and SUBLICENSEES; (b) NET SALES for each PRODUCT (by country); (c) The calculation of the gross royalties (before deductions) for each PRODUCT (by country) and any deductions, offsets and credits therefrom; and (d) Total royalties payable to IXSYS for each PRODUCT (by country) and the total royalties payable to IXSYS for all PRODUCTS (for all countries). 6.8 In each year the amount of royalty due shall be calculated quarterly as of March 31, June 30, September 30 and December 31 (each being the last day of an "ACCOUNTING PERIOD") and shall be paid quarterly within the sixty (60) days next following such date. Every such payment shall be supported by the accounting prescribed in Section 6.7 and shall be made in United States currency. Whenever for the purpose of calculating royalties conversion from any foreign currency shall be required, such conversion shall be at the average of the rate of exchange (local currency per US$1) published in the Western Edition of The Wall Street Journal under the caption "Currency Trading" for the last business day of each month during the applicable ACCOUNTING PERIOD. 6.9 If the transfer of or the conversion into United States Dollar equivalent of any remittance due hereunder is not lawful or possible in any country, such remittance shall be made by the deposit thereof in the currency of the country to the credit and account of IXSYS or its nominee in any commercial bank or trust company located in that country, prompt notice of which shall be given to IXSYS. IXSYS shall be advised in writing in advance by MEDIMMUNE and provide to MEDIMMUNE a nominee, if so desired. 6.10 Any tax required to be withheld by MEDIMMUNE under the laws of any foreign country for the account of IXSYS shall be promptly paid by MEDIMMUNE for and on behalf of IXSYS to the appropriate governmental authority, and MEDIMMUNE shall furnish IXSYS with proof of payment of such tax. Any such tax actually paid on IXSYS' behalf shall be deducted from royalty payments due IXSYS. 6.11 Only one royalty shall be due and payable under each of the applicable subsections under this Section 6 for the manufacture, use and sale of a PRODUCT irrespective of the number of patents or claims thereof which cover the manufacture, use and sale of such PRODUCT. 6.12 (a) MEDIMMUNE shall pay to IXSYS the following milestone payments upon the occurrence of the following events with respect to a PRODUCT and all or a portion of such milestone payment may be made by the purchase of common stock of IXSYS in accordance with Section 6.12(d): A. PRODUCT for (CONFIDENTIAL TREATMENT REQUESTED) indication Event Payment (1) Initiate Phase II Clinical Trial CTR (2) Initiate a Phase III Clinical Trial CTR (3) Submission of a Biologics License Application in the United States or an equivalent for Europe (or any country in Europe) or Japan CTR (4) Approval of a Biologics License Application in the United States CTR (5) Approval to sell in Europe (or any country in Europe) including pricing approvals CTR (6) Approval to sell in Japan including pricing approvals CTR B. PRODUCT for (CONFIDENTIAL TREATMENT REQUESTED) indication. Event Payment (1) Initiate Phase II Clinical Trial CTR (2) Initiate a Phase III Clinical Trial CTR (3) Submission of a Biologics License Application in the United States or an equivalent for Europe (or any country in Europe) or Japan CTR (4) Approval of a Biologics License Application in the United States CTR (5) Approval to sell in Europe (or any country in Europe) including pricing approvals CTR (6) Approval to sell in Japan including pricing approvals CTR C. Sales Milestones Event Payment (1) Cumulative NET SALES of PRODUCTS in a calendar year exceeds (CONFIDENTIAL TREATMENT REQUESTED) CTR (2) Cumulative NET SALES of PRODUCTS in a calendar year exceeds (CONFIDENTIAL TREATMENT REQUESTED) CTR (b) Each of the (CONFIDENTIAL TREATMENT REQUESTED) milestones shall be paid (CONFIDENTIAL TREATMENT REQUESTED) whereby the total milestone payment for all PRODUCTS is: (i) (CONFIDENTIAL TREATMENT REQUESTED) under Section 6.12(a) A ; (ii) (CONFIDENTIAL TREATMENT REQUESTED) under Section 6.12(a) B ; and (iii) (CONFIDENTIAL TREATMENT REQUESTED) under Section 6.12(a) C. (c) The milestone payments under Section 6.12(a) are due and payable sixty (60) days after the applicable milestone occurs. (d) At its option, MEDIMMUNE may make the milestone payment due under Section 6.12(a) in the form of a purchase of common stock of IXSYS on the date the applicable milestone payment is due in a dollar amount equal to the applicable milestone payment that is due at a price per share equal to (CONFIDENTIAL TREATMENT REQUESTED) per share if the milestone occurs prior to the first anniversary of the EFFECTIVE DATE, and thereafter at a price per share equal to the greater of (i) (CONFIDENTIAL TREATMENT REQUESTED) per share (which (CONFIDENTIAL TREATMENT REQUESTED) per share price shall be adjusted for stock splits that occur after the EFFECTIVE DATE), or (ii)(A) (CONFIDENTIAL TREATMENT REQUESTED) prior to the date the applicable milestone is achieved, or (B) if such shares are not traded on a stock exchange , (CONFIDENTIAL TREATMENT REQUESTED) of the most recent share price in a good faith, arm's length sale of equity securities of IXSYS to any THIRD PARTY (independent of an overall transaction that includes a transfer of technology or marketing rights and independent of a sale to employees of IXSYS pursuant to a stock plan) or to MEDIMMUNE. Any such purchase of IXSYS common stock shall be made pursuant to a stock purchase agreement substantially in the form of the stock purchase agreement described in Section 6.13. In no event shall MEDIMMUNE have the right to purchase a number of shares by which MEDIMMUNE and its AFFILIATES, in the aggregate, will own more than (CONFIDENTIAL TREATMENT REQUESTED) of the total outstanding shares of IXSYS, at the time, on a fully diluted basis. MEDIMMUNE will not have the right to make the milestone payment in the form of a purchase of common stock of IXSYS under this Section 6.12(d) if (i) at least (CONFIDENTIAL TREATMENT REQUESTED) of the total outstanding shares of IXSYS, on a fully diluted basis, is owned by a single person or entity, (ii) there has been a good faith merger, consolidation or similar transaction with a THIRD PARTY in which IXSYS is not the surviving entity, or (iii) there has been the good faith sale of all or substantially all of IXSYS' assets (including this Agreement) to a THIRD PARTY. (e) (CONFIDENTIAL TREATMENT REQUESTED) of all milestone payments paid in cash under Section 6.12(a) and (CONFIDENTIAL TREATMENT REQUESTED) of all milestone payments made by the purchase of common stock of IXSYS under Section 6.12(d), are creditable against up to (CONFIDENTIAL TREATMENT REQUESTED) of each royalty payment that is to be made pursuant to Section 6.1 until the full amount of such credit has been taken. 6.13 At the option of IXSYS, this Agreement shall terminate and be void ab initio if, by the end of the second business day after the EFFECTIVE DATE, MEDIMMUNE shall not have purchased common stock of IXSYS in a cumulative dollar amount equal to (CONFIDENTIAL TREATMENT REQUESTED) at a price per share of (CONFIDENTIAL TREATMENT REQUESTED) pursuant to a stock purchase agreement dated as of the EFFECTIVE DATE between the parties. SECTION 7 - Infringement. 7.1 (a) If any of the IXSYS PATENTS under which MEDIMMUNE is licensed hereunder is infringed by the sale by a THIRD PARTY of a PRODUCT, subject to the provisions of the IXSYS LICENSE AGREEMENTS, MEDIMMUNE shall have the right and option but not the obligation to bring an action for such infringement, at its sole expense, against such THIRD PARTY in the name of IXSYS and/or in the name of MEDIMMUNE and/or in the name of a licensor of IXSYS, as the case may be, and to join IXSYS or its licensor as a party plaintiff if required. MEDIMMUNE shall promptly notify IXSYS of any such infringement and shall keep IXSYS informed as to the prosecution of any action for such infringement. No settlement, consent judgment or other voluntary final disposition of the suit which adversely affects IXSYS PATENTS may be entered into without the consent of IXSYS, which consent shall not unreasonably be withheld. (b) In the event that MEDIMMUNE shall undertake the enforcement under Section 7.1(a) of the IXSYS PATENTS by litigation, subject to the provisions of the IXSYS LICENSE AGREEMENTS, any recovery of damages by MEDIMMUNE for any such suit shall be applied first pro rata in satisfaction of any unreimbursed out of pocket expenses and legal fees of MEDIMMUNE regarding such suit. The balance remaining from any such recovery shall be divided between MEDIMMUNE and IXSYS, as follows (i) for that portion, if any, based on lost profits, IXSYS shall recover the royalty IXSYS would have received under this Agreement if such sales had been made by MEDIMMUNE; and (ii) for any other recovery, IXSYS shall receive (CONFIDENTIAL TREATMENT REQUESTED) of the remaining amount. 7.2 In the event that MEDIMMUNE elects not to pursue an action for infringement, upon written notice to IXSYS by MEDIMMUNE that an unlicensed THIRD PARTY is an infringer of a VALID PATENT CLAIM of IXSYS PATENTS licensed to MEDIMMUNE, IXSYS shall have the right and option, but not the obligation at its cost and expense to initiate infringement litigation and to retain any recovered damages. 7.3 In any infringement suit either party may institute to enforce the IXSYS PATENTS pursuant to this Agreement, the other party hereto shall, at the request of the party initiating such suit, reasonably cooperate and, to the extent reasonably possible, have its employees testify when requested and make available relevant records, papers, information, samples, specimens, and the like. All reasonable out-of-pocket costs incurred in connection with rendering cooperation requested hereunder shall be paid by the party requesting cooperation. SECTION 8 - Warranties. 8.1 Each of IXSYS and MEDIMMUNE warrants and represents to the other that: (a) it has the corporate power and authority and the legal right to enter into this Agreement and to perform its obligations hereunder; (b) it has taken all necessary corporate action on its part to authorize the execution and delivery of this Agreement and the performance of its obligations hereunder; and (c) this Agreement has been duly executed and delivered on its behalf, and constitutes a legal, valid, binding obligation, enforceable against it in accordance with its terms. 8.2 IXSYS represents and warrants to MEDIMMUNE that: (a) it has not previously granted and, prior to expiration or termination of this Agreement, will not grant any rights in the IXSYS PATENTS or IXSYS KNOW-HOW that conflict with the rights and licenses granted to MEDIMMUNE herein; (b) IXSYS has provided to MEDIMMUNE a true, complete and correct copy of the IXSYS LICENSE AGREEMENTS (including any amendments thereto), IXSYS has performed all obligations under such agreements to enable IXSYS to grant the license granted to MEDIMMUNE hereunder, and there are no other requirements necessary for IXSYS to grant such license. IXSYS has neither received nor delivered any written notice of default under the IXSYS LICENSE AGREEMENTS. IXSYS hereby covenants and agrees that (i) it shall not consent to any amendment or modification or termination of the IXSYS LICENSE AGREEMENTS without the prior written consent of MEDIMMUNE; (ii) shall keep the IXSYS LICENSE AGREEMENTS in full force and effect during the respective terms thereof; (iii) shall not assign IXSYS LICENSE AGREEMENTS without the written consent of MEDIMMUNE (which consent shall not be unreasonably withheld), except that such consent shall not be required for assignment in connection with the transfer or sale of all or substantially all of its business, or in the event of its merger, consolidation, change in control or similar transaction, (x) provided that such assignment is subject to this Agreement and (y) such assignment does not adversely affect the IXSYS LICENSE AGREEMENTS or IXSYS rights thereunder; (iv) MEDIMMUNE will be promptly advised of any notice that IXSYS has breached or that an IXSYS LICENSE AGREEMENT will be terminated, and to the extent permitted under the IXSYS LICENSE AGREEMENTS, MEDIMMUNE shall have the right but not the obligation to cure any such breach; and (v) prior to the EFFECTIVE DATE, IXSYS has provided to MEDIMMUNE all information and data in its possession and control regarding the safety and efficacy of the ANTIBODY known as VITAXIN. (c) The IXSYS PATENTS that exist as of the Effective Date are listed in Appendix B. IXSYS has neither received nor delivered any written claim, nor has actual knowledge of any claim, asserting the invalidity, unenforceability or misuse of the IXSYS PATENTS. 8.3 Disclaimer. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN SECTIONS 8.1 and 8.2, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, OR VALIDITY OF ANY PATENT RIGHTS ISSUED OR PENDING. SECTION 9 - Indemnification. 9.1 MEDIMMUNE agrees to indemnify and hold harmless IXSYS, its directors, officers, employees and agents (collectively, the "Indemnitees") from and against all losses, liabilities, damages and expenses (including reasonable attorneys' fees and costs) incurred in connection with any claims, demands, actions or other proceedings by any third party arising from (a) the research, development, manufacture, use or sale of ANTIBODIES or PRODUCTS by MEDIMMUNE, its AFFILIATES or SUBLICENSEES, (b) the use of PRODUCTS by any purchasers thereof, (c) the use by MEDIMMUNE, its AFFILIATES or SUBLICENSEES of the IXSYS PATENTS, IXSYS KNOW-HOW or MATERIALS, or (d) any act or omission by MEDIMMUNE, its AFFILIATES OR SUBLICENSEES the effect of which would cause IXSYS to be in breach of its obligations under the IXSYS LICENSE AGREEMENTS (without regard to any applicable cure or notice requirements thereof). 9.2 If any such claims or actions are made, IXSYS shall be defended at MEDIMMUNE's sole expense by counsel selected by MEDIMMUNE and reasonably acceptable to IXSYS provided that IXSYS may, at its own expense, also be represented by counsel of its own choosing. 9.3 MEDIMMUNE's indemnification under Section 9.1 shall not apply to the extent any loss, liability, damage or expense is attributable to the gross negligence or intentional misconduct of the Indemnitees. 9.4 MEDIMMUNE may not settle any such claim, demand, action or other proceeding or otherwise consent to an adverse judgment in any such action or other proceeding that diminishes the rights or interests of the Indemnitees without the express written consent of the Indemnitees. 9.5 IXSYS shall notify MEDIMMUNE promptly of any claim, demand, action or other proceeding under Section 9.1 and shall reasonably cooperate with all reasonable requests of MEDIMMUNE with respect thereto. SECTION 10 - Assignment; Successors. 10.1 This Agreement shall not be assigned or otherwise transferred (in whole or in part, whether voluntarily, by operation of law or otherwise) by either of the parties without the prior written consent of the other party (which consent shall not be unreasonably withheld); provided, however, that either party may, without such consent, assign this Agreement and its rights and obligations hereunder to an AFFILIATE or in connection with the transfer or sale of all or substantially all of its business, or in the event of its merger, consolidation, change in control or similar transaction, provided that such assignment by IXSYS does not cause the termination of the rights and licenses granted to MEDIMMUNE under this Agreement. Any permitted assignee shall assume all obligations of its assignor under this Agreement. Any purported assignment or transfer in violation of this Section 10.1 shall be void. 10.2 Subject to the limitations on assignment herein, this Agreement shall be binding upon and inure to the benefit of said successors in interest and assigns of MEDIMMUNE and IXSYS. SECTION 11 - Term and Termination. 11.1 Except as otherwise specifically provided herein and unless sooner terminated pursuant to Section 11.2 or 11.3 of this Agreement, this Agreement and the licenses and rights granted thereunder shall remain in full force and effect until MEDIMMUNE has no further royalty obligation hereunder, at which time MEDIMMUNE shall have a fully paid-up, non-cancelable, nonexclusive license (i) under the IXSYS KNOW-HOW to research, develop, make, have made, use, import, export and sell, offer to sell or have sold PRODUCTS and (ii) to make, have made and use the MATERIALS for all of the purposes of Section 11.1(i). 11.2 MEDIMMUNE shall have the right to terminate this Agreement upon ninety (90) days prior written notice to IXSYS. 11.3 (a) In addition to the right to terminate under Section 11.3(b), IXSYS shall have the right to terminate this Agreement if and only if MEDIMMUNE breaches its obligations under Section 6 or 9. If such a breach shall occur, IXSYS shall provide MEDIMMUNE with written notice of such breach and if such breach is not cured within thirty (30) days after such written notice, IXSYS may terminate this Agreement by written notice to MEDIMMUNE, provided such written notice is given within thirty (30) days after the expiration of such initial thirty (30) day period. (b) If, in any calendar year, MEDIMMUNE (or its agent) has not performed one of the following with respect to a PRODUCT selected by MEDIMMUNE: (i) expended (CONFIDENTIAL TREATMENT REQUESTED) in the calendar year for research and/or development and/or production which in good faith is directed to a PRODUCT; (ii) engaged in good faith in a Phase I trial with respect to a PRODUCT; (iii) engaged in good faith in a Phase II trial with respect to a PRODUCT; (iv) engaged in good faith in a Phase III trial with respect to a PRODUCT; (v) good faith preparation and/or good faith review of documents for filing a Biologics License Application (or its equivalent) in the United States, Europe or Japan with respect to a PRODUCT; (vi) good faith review and/or good faith analysis of clinical protocols and/or data with respect to a PRODUCT including but not limited to investigating a serious adverse event in a clinical trial; (vii) engaged in good faith in the manufacturing of GMP ANTIBODY for use in human clinical trials in the United States, Europe or Japan, provided however that MEDIMMUNE shall in good faith commence such human clinical trials of such ANTIBODY within twelve (12) months after commencement of such manufacturing. (viii) a Biologics License Application (or its equivalent) is on file in the United States, Europe or Japan for a PRODUCT; (ix) a Biologics License Application (or its equivalent) has been approved for a PRODUCT in the United States, Japan or Europe. then in such event, as IXSYS' sole and exclusive remedy, within sixty (60) days after the end of such calendar year, IXSYS shall have the right to send a written notice to MEDIMMUNE that this Agreement shall be terminated, and if within sixty (60) days after MEDIMMUNE receives such written notice MEDIMMUNE has not cured such failure, this Agreement shall be terminated. (c) If MEDIMMUNE receives a notice of termination under Section 11.3(a) or 11.3(b), MEDIMMUNE shall have the right to contest such termination by requesting arbitration under Section 13.2, and if MEDIMMUNE requests such arbitration, this Agreement shall be terminated only if in such arbitration there is a final determination that IXSYS has the right to terminate this Agreement, as provided in this Section 11.3. 11.4 Upon any termination of this Agreement, MEDIMMUNE, at its option, shall be entitled to sell any completed inventory of PRODUCT which remains on hand as of the date of the termination, so long as MEDIMMUNE pays to IXSYS the royalties applicable to said subsequent sales in accordance with the same terms and conditions as set forth in this Agreement. 11.5 In the event that this Agreement is terminated under Section 11.2 or under Section 11.3 : (a) MEDIMMUNE shall take all actions necessary to assign and deliver to IXSYS all remaining quantities of all ANTIBODIES and PRODUCTS developed by or on behalf of MEDIMMUNE under this Agreement, all clinical and preclinical data and information regarding such ANTIBODIES and PRODUCTS, and all registrations and regulatory filings regarding such ANTIBODIES and PRODUCTS that exist as of the time of termination, in each case to the extent that MEDIMMUNE has transferable rights thereto. (b) IXSYS shall agree to pay a reasonable royalty to MEDIMMUNE to compensate MEDIMMUNE for the relative value of its contributions to ANTIBODIES and PRODUCT. The parties shall enter into good faith negotiations and attempt to reach mutual agreement to determine such a reasonable royalty. If such mutual agreement is not reached within ninety (90) days after commencement of such negotiations, then the determination shall be submitted to binding arbitration under Section 13.2. (c) Any sublicense granted under this Agreement shall remain in full force and effect as a direct license between IXSYS and the SUBLICENSEE under the terms and conditions of the sublicense agreement, subject to the SUBLICENSEE agreeing to be bound to IXSYS under such terms and conditions within thirty (30) days after IXSYS provides written notice to the SUBLICENSEE of the termination of this Agreement. At the request of MEDIMMUNE, IXSYS will acknowledge to a SUBLICENSEE IXSYS' obligations to the SUBLICENSEE under this paragraph. 11.6 The provisions of Sections 4, 9, 11.1, 11.4, 11.5 and 11.6 shall survive any expiration or termination of this Agreement. 11.7 Upon expiration or termination of this Agreement for any reason, nothing herein shall be construed to release either party from any obligation that matured prior to the effective date of such expiration or termination. 11.8 All rights and licensing granted under or pursuant to this Agreement by IXSYS to MEDIMMUNE are, and shall irrevocably be deemed to be, "intellectual property" as defined in Section 101(56) of the Bankruptcy Code. In the event of the commencement of a case by or against either party under any Chapter of the Bankruptcy Code, this Agreement shall be deemed an executory contract and all rights and obligations hereunder shall be determined in accordance with Section 365(n) thereof. Unless a party rejects this Agreement and the other party decides not to retain its rights hereunder, the other party shall be entitled to a complete duplicate of (or complete access to, as appropriate) all intellectual property and all embodiments of such intellectual property held by the party and the party shall not interfere with the rights of the other party, which are expressly granted hereunder, to such intellectual property and all embodiments of such intellectual property from another entity. Further, this Agreement shall be deemed, upon presentation to another entity, to be the same as an express instruction by the party to such other entity to provide such intellectual property and all embodiments of such intellectual property directly to the other party. Without limiting the foregoing provisions in this paragraph, the other party shall be entitled to all post- bankruptcy-petition improvements, updates, or developments of intellectual property created hereunder. If such intellectual property is not fully developed as of the commencement of any bankruptcy case, the other party shall have the right to complete development of the property. SECTION 12 - Force Majeure. 12.1 No failure or omission by the parties hereto in the performance of any obligation of this Agreement (other than an obligation for the payment of money) shall be a breach of this Agreement, nor shall it create any liability, if the same shall arise from any cause or causes beyond the reasonable control of the affected party, including, but not limited to, the following, which for purposes of this Agreement shall be regarded as beyond the control of the party in question: acts of God; acts or omissions of any government; any rules, regulations, or orders issued by any governmental authority or by any officer, department, agency or instrumentality thereof; fire; storm; flood; earthquake; accident; war; rebellion; insurrection; riot; invasion; strikes; and lockouts or the like; provided that the party so affected shall use its commercially reasonable efforts to avoid or remove such causes or nonperformance and shall continue performance hereunder with the utmost dispatch whenever such causes are removed. SECTION 13 - General Provisions. 13.1 The relationship between IXSYS and MEDIMMUNE is that of independent contractors. IXSYS and MEDIMMUNE are not joint venturers, partners, principal and agent, master and servant, employer or employee, and have no relationship other than as independent contracting parties. IXSYS shall have no power to bind or obligate MEDIMMUNE in any manner. Likewise, MEDIMMUNE shall have no power to bind or obligate IXSYS in any manner. 13.2 Any matter or disagreement under Section 6.1(d), 6.2, 11.3(c) or 11.5(b), which this Agreement specifies is to be resolved by arbitration shall be submitted to a mutually selected single arbitrator to so decide any such matter or disagreement. The arbitrator shall conduct the arbitration in accordance with the Rules of the American Arbitration Association, unless the parties agree otherwise. If the parties are unable to mutually select an arbitrator, the arbitrator shall be selected in accordance with the procedures of the American Arbitration Association. The decision and award rendered by the arbitrator shall be final and binding. Judgment upon the award may be entered in any court having jurisdiction thereof. Any arbitration pursuant to this section shall be held in San Diego, California or such other place as may be mutually agreed upon in writing by the parties. The prevailing party in any such arbitration shall be entitled to recover from the other party all reasonable attorneys' fees and costs incurred by the prevailing party in connection therewith. 13.3 This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and supersedes all prior agreements in this respect. There shall be no amendments or modifications to this Agreement, except by a written document which is signed by both parties. 13.4 This Agreement shall be construed and enforced in accordance with the laws of the State of California without regard to the conflicts of law principles thereof. 13.5 The headings in this Agreement have been inserted for the convenience of reference only and are not intended to limit or expand on the meaning of the language contained in the particular article or section. 13.6 Any delay in enforcing a party's rights under this Agreement or any waiver as to a particular default or other matter shall not constitute a waiver of a party's right to the future enforcement of its rights under this Agreement, excepting only as to an expressed written and signed waiver as to a particular matter for a particular period of time. 13.7 Any notices given pursuant to this Agreement shall be in writing, delivered by any means, addressed to the other party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addresser and (except as otherwise provided in this Agreement) shall be effective upon receipt by the addressee. To MEDIMMUNE: MedImmune, Inc. 35 West Watkins Mill Road Gaithersburg, MD 20878 Copy to: Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein 6 Becker Farm Road Roseland, New Jersey 07068 Fax No. (973) 994-1744 Attn: Elliot M. Olstein, Esq. To IXSYS: Ixsys, Inc. 3520 Dunhill Road San Diego, CA 92121 Attention: President Copy to: Pillsbury Madison & Sutro LLP 235 Montgomery Street, 16th Floor San Francisco, California 94104 Attention: Thomas E. Sparks, Jr. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. IXSYS, INC. MEDIMMUNE, INC. By: /s/ Janine M. Taylor By: /s/ David M. Mott Name: Janine M. Taylor Name: David M. Mott Title: President & Chief Operating Title: Vice Chairman & Officer Chief Financial Officer EX-10.98 5 STOCK PURCHASE AGREEMENT Exhibit 10.98 STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 24th day of February, 1999 by and between IXSYS, INC., a Delaware corporation (the "Company"), and MedImmune, Inc. ("Purchaser"). W I T N E S S E T H: WHEREAS, the Company and Purchaser have entered into a License Agreement dated as of even date herewith (the "License Agreement") pursuant to which the Company has granted the Purchaser a license to certain technology; and WHEREAS, pursuant to Section 6.13 of the License Agreement, the Purchaser has agreed to purchase the Common Stock described in this Agreement on the terms and conditions set forth herein: NOW, THEREFORE, the parties hereby agree as follows: 1. Purchase and Sale of Stock. 1.1 Sale and Issuance of Common Stock. Subject to the terms and conditions of this Agreement, Purchaser agrees to purchase and the Company agrees to sell and issue to Purchaser (CONFIDENTIAL TREATMENT REQUESTED) shares of the Company's Common Stock at the Closing for a purchase price (the "Purchase Price") of (CONFIDENTIAL TREATMENT REQUESTED) per share. 1.2 Closing. The purchase and sale of the Common Stock shall take place at the offices of the Company at 3520 Dunhill Street, San Diego, California, at 10:00 A.M. on February 24, 1999 (the "Closing"). At the Closing the Company shall deliver to Purchaser a certificate representing the Common Stock which Purchaser is purchasing against delivery to the Company by Purchaser of a bank wire in the amount of (CONFIDENTIAL TREATMENT REQUESTED) payable to the Company's order. 2. Representations and Warranties of the Company. The Company hereby represents and warrants to Purchaser that: 2.1 Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted and is qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which qualification is necessary under applicable law, except where the failure to be so qualified would not have a material adverse effect on its business. 2.2 Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder and the authorization, issuance and delivery of the Common Stock being sold hereunder, to the extent that the foregoing requires performance on or prior to the Closing, has been taken or will be taken on or prior to the Closing, and this Agreement constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms. 2.3 Valid Issuance of Common Stock. The Common Stock which is being purchased by Purchaser hereunder, when issued, sold and delivered in accordance with the terms hereof for the consideration expressed herein, will be duly and validly issued, fully paid and nonassessable. 2.4 Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state, local or provincial governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except for any post-sale filings pursuant to applicable state securities laws, which filings will be effected within the applicable time periods. 2.5 No Conflicts. Neither the execution, delivery and performance of this Agreement by the Company nor the consummation by the Company of the transactions contemplated hereby will result in the breach or violation of any of the terms and provisions of, or constitute a default under, any statute, any rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any of its properties, (ii) any agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the properties of the Company is subject or (iii) the certificate of incorporation or by-laws or other organizational documents of the Company, which breach or violation would be materially adverse to the Company. 2.6 Capitalization. At the Closing, the authorized capital stock of the Company will be (i) (CONFIDENTIAL TREATMENT REQUESTED) shares of Common Stock and (ii) (CONFIDENTIAL TREATMENT REQUESTED) shares of Preferred Stock. Immediately prior to the Closing, (CONFIDENTIAL TREATMENT REQUESTED) shares of common stock and (CONFIDENTIAL TREATMENT REQUESTED) shares of preferred stock (convertible as of the Closing into (CONFIDENTIAL TREATMENT REQUESTED) shares of Common Stock) were issued and outstanding. 3. Representations, Warranties and Covenants of Purchaser. Purchaser hereby represents, warrants and covenants that: 3.1 Authorization. This Agreement constitutes its valid and legally binding obligation. 3.2 No Conflicts. Neither the execution, delivery and performance of this Agreement by Purchaser nor the consummation by Purchaser of the transactions contemplated hereby will result in the breach or violation of any of the terms and provisions of, or constitute a default under, any statute, any rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over Purchaser or any of its properties, (ii) any agreement or instrument to which Purchaser is a party or by which Purchaser is a party or by which Purchaser is bound or to which any of the properties of Purchaser is subject or (iii) the certificate of incorporation or by-laws or other organizational documents of Purchaser, which breach or violation would be materially adverse to Purchaser. 3.3 Purchase Entirely for Own Account. This Agreement is made with Purchaser in reliance upon Purchaser's representation to the Company, which by Purchaser's execution of this Agreement Purchaser hereby confirms, that the Common Stock will be acquired for investment for Purchaser's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, Purchaser further represents that Purchaser does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Common Stock. Purchaser represents that it has full power and authority to enter into this Agreement. 3.4 Investment Experience. Purchaser acknowledges that it is able to fend for itself, can bear the economic risk of its investment and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Common Stock. 3.5 Restricted Common Stock. Purchaser understands that the shares of Common Stock it is purchasing are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act of 1933, as amended (the "Securities Act"), only in certain limited circumstances. In this connection Purchaser represents that it is familiar with Securities and Exchange Commission (the "SEC") Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. 3.6 Accredited Investor. Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D of the SEC under the Securities Act. 3.7 Confidentiality. Purchaser hereby represents, warrants and covenants that it shall maintain in confidence, and shall not use or disclose without the prior written consent of the Company, any information identified as confidential that is furnished to it by the Company in connection with this Agreement (as opposed to information furnished pursuant to the License Agreement or other agreements between the parties). This obligation of confidentiality shall not apply, however, to any information (a) in the public domain through no unauthorized act or failure to act by Purchaser, (b) lawfully disclosed to Purchaser by a third party who possessed such information without any obligation of confidentiality, (c) known previously by Purchaser or lawfully developed by Purchaser independent of any disclosure by the Company or (d) required to be disclosed by applicable law, regulation or bona fide legal process provided Purchaser takes reasonable steps to restrict and maintain the confidentiality of such disclosure and provides reasonable prior notice to the Company. Purchaser further covenants that Purchaser shall return to the Company all tangible materials containing such information upon request by the Company. This confidentiality covenant shall expire, as to any particular disclosure, five years after such disclosure. 3.8 Right of First Offer in Favor of the Company. Before any shares of the Common Stock purchased hereunder may be sold or transferred, such shares shall first be offered to the Company as follows: (a) Purchaser shall promptly deliver a notice to the Company stating (i) its bona fide intention to sell or transfer such shares, (ii) the number of such shares to be sold or transferred, and the basic terms and conditions of such sale or transfer, (iii) the price for which it proposes to sell or transfer such shares, and (iv) proof satisfactory to the Company that the proposed sale or transfer will not violate any applicable federal or state securities laws. The notice shall be signed by Purchaser and state that Purchaser has a binding commitment to sell the number of shares specified in such notice to a third party on the terms stated in such notice. (b) Within 30 days after the receipt of the notice (the "Notice Period"), the Company may elect to purchase all or a portion of the shares to which such notice refers, at the price per share specified in the notice. The election to purchase shall be made by written notice to Purchaser. If the Company elects not to purchase all such shares, the Company may assign its rights to purchase any shares not purchased by the Company. (c) If all of the shares to which the notice refers are not elected to be purchased, as provided in subparagraph 3.8(b) hereof, Purchaser may sell the shares to the purchaser or transferee disclosed to the Company as provided below at a price not less than the price specified in the notice, provided that (i) Purchaser has disclosed to the Company the identity of the proposed purchaser or transferee within five (5) business days of expiration of the Notice Period and prior to consummation of the sale or transfer, (ii) such sale or transfer is consummated within three months of the date of said notice to the Company, and (iii) any such sale is made in compliance with applicable federal and state securities laws and not in violation of any other contractual restrictions to which Purchaser is bound. The third-party purchaser shall acquire the shares of stock subject to the Company's rights of first offer and shall require compliance with the procedures described in this Section 3.8. (d) Any proposed transfer on terms and conditions different from those set forth in the notice, as well as any subsequent proposed transfer shall again be subject to the Company's rights of first offer and shall require compliance with the procedures described in this Section 3.8. (e) Notwithstanding anything to the contrary contained in this Agreement, this Section 3.8 shall be terminated and shall have no further force and effect six (6) months after the effective date of the Company's registration of its common equity securities pursuant to Section 12 of the Securities Exchange Act of 1934 (the "34 Act Registration"). 3.9 Further Limitations on Disposition. Without in any way limiting the representations set forth above and notwithstanding the provisions of Section 3.8, Purchaser further agrees that: (a) Purchaser shall not directly or indirectly sell, offer to sell, contract to sell, grant any option to purchase or otherwise transfer or dispose of all or any portion of the Common Stock purchased hereunder, in violation of the Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the rules of the Commission promulgated thereunder, including Rule 144 under the Securities Act. If reasonably requested by the Company, Purchaser shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company and its counsel, that any permitted transfer or disposition will not require registration of such shares under the Securities Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144, as currently in existence, except in unusual circumstances. (b) During the period commencing as of the Closing until (CONFIDENTIAL TREATMENT REQUESTED) months following the conclusion of the last research and development program conducted pursuant to the Research and Assignment and License Agreements entered into between Purchaser and the Company simultaneously herewith or which may later be entered into pursuant to the Selection Agreement entered into between Purchaser and the Company simultaneously herewith the number of shares of Common Stock of the Company purchased hereunder which Purchaser may, directly or indirectly, sell, offer to sell, contract to sell, grant any option to purchase or otherwise transfer or dispose of during the preceding (CONFIDENTIAL TREATMENT REQUESTED) shall not exceed (CONFIDENTIAL TREATMENT REQUESTED) of the Company's outstanding Common Stock or Common Stock into which outstanding Preferred Stock of the Company is then convertible. (c) During the period commencing as of the effective date of the Company's 34 Act Registration until (CONFIDENTIAL TREATMENT REQUESTED) days thereafter Purchaser shall not, directly or indirectly sell, offer to sell, contract to sell, grant any option to purchase or otherwise transfer or dispose of (i) any of the Common Stock purchased hereunder pursuant to this Agreement at any time during the first (CONFIDENTIAL TREATMENT REQUESTED) day(s) of such period and (ii) not more than (CONFIDENTIAL TREATMENT REQUESTED) of the Common Stock purchased hereunder at any time during the succeeding (CONFIDENTIAL TREATMENT REQUESTED) day(s) of such period. (d) Prior to Purchaser entering into any agreement or commitment to sell, grant options to purchase or otherwise transfer or dispose of any shares of Common Stock purchased hereunder, Purchaser agrees to provide the Board of Directors or President of the Company at least fourteen (14) days prior written notice of Purchaser's intent to transfer or dispose of such shares and to discuss with the Company in good faith a plan for transferring or disposing of the shares in any orderly fashion. (e) Without limiting the foregoing, prior to the effective date of the Company's 34 Act Registration, Purchaser shall not, without the prior written consent of the Company, directly or indirectly sell, offer to sell, grant an option to purchase or otherwise transfer or dispose of any of the Common Stock to any person engaged in any business directly competitive with the Company. For purposes of this subsection 3.9(d) "directly competitive" shall mean the field of(CONFIDENTIAL TREATMENT REQUESTED), or such other (CONFIDENTIAL TREATMENT REQUESTED) field in which at least (CONFIDENTIAL TREATMENT REQUESTED) of the Company's work force (on a full time equivalent basis) is engaged at the time of the proposed transfer. 3.10 Standstill Provisions. Commencing as of the Closing and until the first anniversary of the effective date of the Company's 34 Act Registration, Purchaser (including all affiliates or agents of Purchaser) shall not acquire beneficial ownership of any shares of common stock of the Company, any securities convertible into or exchangeable for common stock, or any other right to acquire common stock, except by way of stock dividends or other distributions to Purchaser as a holder of the Common Stock generally, from the Company or any other person or entity, without the prior written consent of the Company, which consent may be withheld in the Company's sole discretion, if such acquisition should cause Purchaser (including all affiliates of Purchaser) to beneficially own more (CONFIDENTIAL TREATMENT REQUESTED) of the Company's outstanding voting stock (assuming the full conversion of all convertible securities of the Company held by Purchaser and its affiliates); provided, however, that in no event shall (i) the original purchase of the Common Stock pursuant to this Agreement, (ii) the purchase of additional shares of Common Stock in lieu of milestone payments payable pursuant to the License Agreement or (iii) any reduction in the outstanding shares of the Company's capital stock (or rights or options), cause a violation of this Section 3.10. In order to facilitate Purchaser's compliance with this Section 3.10, upon the written request of Purchaser the Company shall inform Purchaser of the number of outstanding shares of the Company's voting stock, and Purchaser may rely on such information in any purchase it makes within 30 days of the receipt of such information. 3.11 Voting Agreement. Purchaser agrees that it shall, so long as it holds shares of the Company's Common Stock, vote such shares with respect to any proposed sale of all or substantially all of the assets, merger, combination or reorganization of the Company in the same manner as stockholders holding a majority of the voting securities of the Company and who are not themselves a party to any such sale, merger, combination or reorganization. This Section 3.11 shall terminate and shall have no further force and effect twelve (12) months after the effective date of the Company's 34 Act Registration. 3.12 Legends. It is understood that the certificates evidencing the Common Stock may bear one or all of the following legends: (a) "The securities represented by this certificate have not been registered under the Securities Act of 1933. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the securities under such Act or an opinion of counsel satis factory to the Company that such registration is not required or unless sold pursuant to Rule 144 of such Act." (b) "The securities represented by this certificate are subject to certain rights of first offer and repurchase and certain restrictions on resale set forth in the Stock Purchase Agreement dated February 24, 1999 between the Company and MedImmune, Inc. A copy of such restrictions and rights of first offer and repurchase may be obtained from the Company upon request." (c) Any legend required by the laws of the State of California or other jurisdiction. 3.13 Stop-Transfer Instructions. In order to enforce the provisions of Sections 3.8 and 3.9 hereof, the Company may impose stop-transfer instructions with respect to the shares of the Common Stock held by Purchaser (and the shares or securities of every other person subject to the foregoing restrictions). 3.14 Transfers to Affiliates. Notwithstanding the provisions of Sections 3.8 and 3.9(b) and (c) hereof, Purchaser may transfer the Common Stock to any affiliate of Purchaser who agrees to be bound by the terms of this Agreement. For purposes of this Section 3.14, "affiliate" shall mean any entity which controls or is controlled by Purchaser, and "control" shall mean ownership of at least (CONFIDENTIAL TREATMENT REQUESTED) of the voting stock or other ownership interest. 4. California Commissioner of Corporations. 4.1 Corporate Securities Law. THE SALE OF THE COMMON STOCK WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH COMMON STOCK OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF COMMON STOCK IS EXEMPT FROM QUALIFICATIONS BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT. 5. Covenants. 5.1 Delivery of Financial Statements. The Company shall deliver to Purchaser such financial statements of the Company which the Company from time to time distributes to other holders of the Company's Common Stock, concurrently with such distribution. 5.2 Registration Rights. Purchaser shall have such registration rights with respect to the Common Stock as are set forth on EXHIBIT A attached hereto; provided, however, that Purchaser shall agree to be bound by the provisions of such EXHIBIT A as a condition precedent to the enjoyment of any such rights and, at the written request of the Company in connection with any request by Purchaser to exercise such rights, Purchaser shall execute a specific acknowledgement and agreement to be so bound (or else Purchaser shall be deemed to have forfeited such rights). 6. Miscellaneous. 6.1 Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obli gations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 6.2 Governing Law. This Agreement shall be governed by and construed under the laws of the State of California (irrespective of its choice of law principles). 6.3 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 6.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 6.5 Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified (or upon the date of attempted delivery where delivery is refused) or, if sent by telecopier, telex, telegram, or other facsimile means, upon receipt of appropriate confirmation of receipt, or upon deposit with the United States Postal Service, by registered or certified mail, or next day air courier, with postage and fees prepaid and addressed to the party entitled to such notice at the address indicated for such party on the signature page hereof, or at such other address as such party may designate by 10 days' advance written notice to the other parties to this Agreement. 6.6 Finder's Fee. Each party represents that it neither is nor will be obligated for any finder's fee or commission in connection with this transaction. Purchaser agrees to indemnify and hold harmless the Company from any liability for any commission or compensation in the nature of a finder's fee (and the costs and expenses of defending against such liability or asserted liability) for which Purchaser or any of its officers, partners, employees or representatives is responsible. The Company agrees to indemnify and hold harmless Purchaser from any liability for any commission or compensation in the nature of a finder's fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its officers, employees or representatives is responsible. 6.7 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of a majority of the Common Stock purchased under this Agreement. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of Common Stock purchased under this Agreement at the time outstanding, each future holder of such Common Stock, and the Company. 6.8 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of this Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accor dance with its terms. 6.9 Entire Agreement. This Agreement and the Related Agreements embody the entire agreement and understanding of the parties hereto and thereto in respect of the subject matter contained herein and therein and supersede all prior agreements and understandings between the parties with respect to such subject matter. No party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. IXSYS, INC. MEDIMMUNE, INC. By: /s/ Janine M. Taylor By: /s/ David M. Mott Name: Janine M. Taylor Name: David M. Mott Title: President & Chief Operating Title: Vice Chairman & Officer Chief Financial Officer EX-27 6 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from MedImmune, Inc.'s quarterly report on Form 10-Q for the three months ended March 31, 1999 and is qualified in its entirety by reference to such filing. 0000873591 MEDIMMUNE, INC. 1,000 3-MOS Dec-31-1999 Mar-31-1999 30,090 163,964 42,329 0 21,475 276,043 76,249 0 416,841 72,885 80,926 0 0 556 260,344 416,841 126,996 128,721 31,267 82,967 0 0 928 47,013 18,178 28,835 0 0 0 28,835 0.52 0.45
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